THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND REQUIRE YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser authorised under the Financial Services and Markets Act 2000, as amended ("FSMA") if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

If you sell or have sold or otherwise transferred all of your Existing Shares, you should send this document, together with the accompanying Application Form and Form of Proxy, as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for delivery to the purchaser or the transferee, except that such documents should not be forwarded or transmitted into the United States, any other Excluded Territory or any other jurisdiction where doing so may constitute a violation of the registration or other local securities laws or regulations. If you have sold or otherwise transferred part of your certificated holding of Existing Shares prior to 10 March 2015 (the date when the Existing Shares are expected to be marked "exentitlement" by the London Stock Exchange), please consult the stockbroker, bank or other agent through whom the sale or transfer was effected and refer to the instructions regarding split applications set out in the Application Form. If your registered holding of Existing Shares which were sold or transferred were held in uncertificated form and were sold or transferred before 10 March 2015, a claim transaction will automatically be generated by CREST which, on settlement, will transfer the appropriate number of Open Offer Entitlements to the purchaser or transferee.

The distribution of this document and the accompanying documents, and/or the transfer of the Open Offer Entitlements through CREST, into jurisdictions other than the United Kingdom may be restricted by law. Therefore, persons into whose possession this document and any accompanying documents come should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, subject to certain exceptions, such documents should not be distributed or forwarded to, or transmitted in or into, the United States or any other Excluded Territory. The attention of Overseas Shareholders and any other person (including, without limitation, stockbrokers, banks and other agents) who has a contractual or other legal obligation to forward this document into a jurisdiction other than the United Kingdom is drawn to paragraph 6 of Appendix 2 of this document.

This document, which comprises: (i) a circular prepared in compliance with Chapter 13 of the Listing Rules; and (ii) a prospectus relating to the Capital Raising Shares prepared in accordance with the Prospectus Rules of the UK Listing Authority under section 73A of FSMA, has been approved by the FCA in accordance with section 87A of FSMA and made available to the public in accordance with Rule 3.2.1 of the Prospectus Rules.

The Company and the Directors whose names appear on page 30 of this document accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect its import.

The Capital Raising Shares have not been, and will not be, registered under the US Securities Act or qualified for sale under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the United States except pursuant to an applicable exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer in the United States. Subject to certain exceptions, this document and the Application Form should not be distributed or forwarded to, or transmitted in or into, the United States or any other Excluded Territory.

The Existing Shares are listed on the Official List maintained by the UK Listing Authority and are traded on the London Stock Exchange's main market for listed securities. Application has been made to the UK Listing Authority and to the London Stock Exchange for the Capital Raising Shares to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities respectively. It is expected that Admission will become effective, and that dealings on the London Stock Exchange's main market for listed securities in the Capital Raising Shares will commence, at 8.00 a.m. on 27 March 2015.

IP Group plc

(Incorporated in England and Wales with registered no. 04204490)

Proposed Firm Placing of 51,111,111 Capital Raising Shares and proposed Placing and Open Offer of 5,777,777 Capital Raising Shares, each at an Issue Price of 225 pence per share

Application for admission of 56,888,888 Capital Raising Shares in IP Group in connection with the Capital Raising to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities

and

Notice of General Meeting

Sponsor, Broker, Underwriter and Financial Adviser

Numis Securities Limited

Your attention is drawn to the letter from the Chairman of IP Group which is set out in Part I of this document. You should read the whole of this document and any documents incorporated herein by reference. Shareholders, and any other persons considering whether or not to make an application pursuant to the Open Offer or in connection with an investment in the Capital Raising Shares, should review the section of this document entitled "Risk Factors" for a discussion of certain factors that should be considered when deciding on what action to take in relation to the Open Offer and in deciding whether or not to make an application pursuant to the Open Offer or invest in the Capital Raising Shares.

The latest time and date for acceptance and payment in full under the Open Offer is 11.00 a.m. on 25 March 2015. The procedure for acceptance and payment is set out in Appendix 2 of this document and, where relevant, in the Application Form. Qualifying CREST Shareholders should refer to paragraph 4.2 of Appendix 2 of this document.

Notice of the General Meeting of the Company, to be held at the offices of the Company at 24 Cornhill, London EC3V 3ND at 10.00 a.m. on 26 March 2015, is set out in Part VIII of this document. Shareholders will find enclosed a Form of Proxy for use at the General Meeting. Shareholders are requested to complete and return the Form of Proxy whether or not they intend to be present at the General Meeting. To be valid, Forms of Proxy should be completed and signed in accordance with the instructions printed thereon and returned by hand only so as to reach Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and, in any event, not later than 10.00 a.m. on 24 March 2015 or in accordance with the reply paid details. The completion and return of a Form of Proxy will not preclude a Shareholder from attending and voting at the General Meeting.

This document, the Application Form, the Open Offer Entitlements and the Excess CREST Open Offer Entitlements, do not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to acquire, Capital Raising Shares by any person in any jurisdiction in which such an offer or solicitation is unlawful.

Numis, which is authorised and regulated in the UK by the FCA, is acting exclusively for IP Group and no-one else in connection with the Capital Raising or Admission and will not regard any other person (whether or not a recipient of this document) as its client in relation to the Capital Raising or Admission and will not be responsible to anyone other than IP Group for providing the protections afforded to its clients or providing advice in connection with the Capital Raising or Admission or any other matter referred to in this document.

Investors should only rely on the information contained in this document. No person has been authorised to give any information or make any representations in relation to the Capital Raising or Admission other than those contained in this document and, if given or made, such information or representation must not be relied upon as having been authorised by IP Group, the Directors or Numis.

Apart from the responsibilities and liabilities, if any, which may be imposed on Numis by FSMA, Numis does not accept any responsibility whatsoever or make any representation or warranty, express or implied, for or in respect of the contents of this document, including its accuracy, completeness or verification, or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Open Offer Entitlements, the Excess CREST Open Offer Entitlements, the Capital Raising or Admission and nothing in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Numis accordingly disclaims all and any liability, whether arising in tort, contract or otherwise, which it might otherwise be found to have in respect of this document or any such statement. Without prejudice to any legal or regulatory obligation on IP Group to publish a supplementary prospectus pursuant to section 87G of FSMA and paragraph 3.4 of the Prospectus Rules, neither the delivery of this document nor Admission shall under any circumstances create any implication that there has been no change in the business or affairs of the Group taken as a whole since the date of this document or that the information in it is correct as of any time after the date of this document.

The Capital Raising Shares will, on Admission, rank in full for all dividends and other distributions declared, made or paid on the Shares after Admission and otherwise will rank pari passu in all respects with the Existing Shares.

Qualifying Non-CREST Shareholders will receive an Application Form. Qualifying CREST Shareholders (who will not receive an Application Form) will receive a credit to their stock accounts in CREST in respect of the Open Offer Entitlements which will be enabled for settlement on 11 March 2015. Applications under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim arising out of a sale or transfer of Existing Shares prior to the date on which the Shares were marked "ex" the entitlement by the London Stock Exchange.

If the Open Offer Entitlements are for any reason not enabled by 3.00 p.m. on 11 March 2015 or such later time and/or date as the Company and Numis may decide, an Application Form will be sent to each Qualifying CREST Shareholder in substitution for the Open Offer Entitlements credited to its stock account in CREST. Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer. The Application Form is personal to Qualifying Shareholders and cannot be transferred, sold or assigned except to satisfy bona fide market claims.

NOTICE TO OVERSEAS SHAREHOLDERS

The Capital Raising Shares are being offered and sold outside the US to non-US Persons (as defined in Regulation S under the US Securities Act) in reliance on Regulation S under the US Securities Act and within the US to a limited number of persons reasonably believed to be (i) (a) QIBs or (b) Accredited Investors and (ii) Qualified Purchasers in private placement transactions not subject to the registration requirements of the US Securities Act. Subject to certain exceptions, the Capital Raising Shares may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US unless in reliance on an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. For a description of the restrictions on offers, sales and transfers of the Capital Raising Shares and the distribution of this document, please see paragraph 6 of Appendix 2 of this document. By accepting this document, you shall be deemed to have represented that (a) you and any customers you represent are a non-US Person that is located outside the US (within the meaning of Regulation S) or (b) you are a QIB or an Accredited Investor that in either case is also a Qualified Purchaser acquiring the securities referred to in this document for your own account and/or for another QIB or an Accredited Investor that in either case is also a Qualified Purchaser.

The Capital Raising Shares, the Application Form, Open Offer Entitlements, Excess CREST Open Offer Entitlements and this document have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Capital Raising Shares or the accuracy or adequacy of the Application Form, Open Offer Entitlements, Excess CREST Open Offer Entitlements, or this document. Any representation to the contrary is a criminal offence in the US.

Subject to certain exceptions, this document and the Application Form do not constitute an offer of the Capital Raising Shares to any person with a registered address, or who is resident or located, in the US or any of the other Excluded Territories. The Capital Raising Shares have not been, and will not be, registered or qualified under the relevant laws of any state, province or territory of the US or any of the Excluded Territories and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US or any Excluded Territory except pursuant to an applicable exemption from registration or qualification requirements. Resales of Capital Raising Shares may only be made (i) outside the US in offshore transactions in reliance on Regulation S or (ii) within the US to investors that are both QIBs and Qualified Purchasers. The Company will require the provision of a letter by investors in the US and any transferees in the US containing representations as to status under the US Securities Act and the Investment Company Act. The Company will refuse to issue or transfer Capital Raising Shares to investors that do not meet the foregoing requirements. There will be no public offer of the Capital Raising Shares in the US. The Company is not and does not intend to become an "investment company" under the US Investment Company Act and is not engaged and does not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities. Accordingly, the Company has not been and will not be registered under the US Investment Company Act, and investors will not be entitled to the benefits of that act.

All Overseas Shareholders and any other person (including, without limitation, a nominee, custodian or trustee) who has a contractual or other legal obligation to forward this document or any Application Form, if and when received, or other document to a jurisdiction outside the UK, should read paragraph 6 of Appendix 2 of this document.

In addition, until 40 days after the commencement of the Capital Raising, an offer, sale or transfer of the Capital Raising Shares within the US by a dealer (whether or not participating in the Capital Raising) may violate the registration requirements of the US Securities Act.

Notwithstanding anything to the contrary herein, each prospective investor may disclose to any and all persons, without limitation of any kind, the US federal income tax treatment and tax structure of IP Group and of the transactions contemplated by IP Group. For this purpose, "tax structure" shall mean any fact that may be relevant to understanding the purported or claimed US federal tax treatment of the transaction, provided that none of the following shall for this purpose constitute tax treatment or tax structure information: the name of or other identifying information regarding IP Group, its shareholders or their affiliates; and financial or other information relating to the performance of IP Group or its operations.

NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE, NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE, CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421 B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT, NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION, MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

		page
SUMMARY		4
RISK FACTORS		17
	EXPECTED TIMETABLE OF PRINCIPAL EVENTS	28
	CAPITAL RAISING STATISTICS	29
	DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS	30
	IMPORTANT INFORMATION	31
PART I	LETTER FROM THE CHAIRMAN OF IP GROUP	36
PART II	INFORMATION ON IP GROUP	51
PART III	OPERATING AND FINANCIAL REVIEW OF IP GROUP	67
PART IV	HISTORICAL FINANCIAL INFORMATION	80
	PART 1 HISTORICAL FINANCIAL INFORMATION ON IP GROUP	80
	PART 2 UNAUDITED PRELIMINARY RESULTS OF IP GROUP FOR THE 12 MONTHS ENDED 31 DECEMBER 2014	82
PART V	ADDITIONAL INFORMATION	135
PART VI	DOCUMENTS INCORPORATED BY REFERENCE	230
PART VII	DEFINITIONS AND GLOSSARY	233
PART VIII	NOTICE OF GENERAL MEETING	243
APPENDIX 1	QUESTIONS AND ANSWERS ABOUT THE FIRM PLACING,
	PLACING AND OPEN OFFER	246
APPENDIX 2	TERMS AND CONDITIONS OF THE OPEN OFFER	253
APPENDIX 3	TERMS AND CONDITIONS OF THE FIRM PLACING AND THE PLACING	281

SUMMARY

Summaries are made up of disclosure requirements known as 'Elements'. These elements are numbered in Sections A – E (A.1 – E.7).

This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of 'not applicable'.

		SECTION A – INTRODUCTIONS AND WARNINGS
A.1	Introduction and Warnings	WARNING:
		THIS SUMMARY SHOULD BE READ AS AN INTRODUCTION TO THE PROSPECTUS;
		ANY DECISION TO INVEST IN THE SECURITIES SHOULD BE BASED ON CONSIDERATION OF THIS DOCUMENT AS A WHOLE BY THE INVESTOR;
		Where a claim relating to the information contained in this document is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating this document before the legal proceedings are initiated; and
		Civil liability attaches only to those persons who have tabled this summary, including any translation of this summary, but only if this summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus, or it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities.
A.2	Consent for intermediaries	Not applicable, as no consent has been given by the Company or any person responsible for drawing up this document to the use of this document for subsequent resale or final placement of securities by financial intermediaries.

SECTION B – THE ISSUER
B.1	Legal & commercial name	IP Group plc The Company's legal and commercial name is IP Group plc.
B.2	Domicile/Legal form/Legislation/ Country of incorporation	The Company was incorporated with limited liability in England and Wales under the Companies Act 1985 on 4 April 2001 and is domiciled in the United Kingdom. The principal legislation under which the Company operates is the Companies Act and the regulations made thereunder. The Company is subject to the City Code.

		The Group
B.3	The Group's Business	The Group was established to invest in scientific and technical innovation developed in the UK's leading research institutions. The Group's business model is to form, or assist in the formation of, start-up companies based on that innovation, to take a significant minority equity stake in those companies and then to grow the value of that equity over time through active participation in the development of such companies. The Group's strategy has been to build significant minority equity stakes in a diversified portfolio of companies designed to achieve strong equity returns over the medium to long term.
		An important aspect of the Group's strategy is its ability to access a wide range of leading scientific research. This has been achieved primarily through long term partnerships with a number of leading research universities in the UK. The Group entered into its first long term partnership with the University of Oxford's Chemistry Department in 2000 and now has direct arrangements covering fifteen of the UK's leading universities.
		The Company was admitted to AIM in October 2003 and moved to the Official List in June 2006. Subsequent to its admission to AIM, the Group has raised approximately £183 million of net proceeds from equity investors, predominantly to invest in and develop its portfolio of spin-out companies.
		In March 2014, IP Group completed the acquisition of Fusion IP, resulting in a more diversified portfolio for the Group.
		As at 31 December 2014, the Group had equity holdings in a portfolio of 90 companies in which its combined stake was valued at approximately £349.9 million (calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited preliminary accounts of the Group for the year ended 31 December 2014). Approximately 73 per cent. of the value in the Group's portfolio resides within its top ten companies (by value), many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. As at 31 December 2014, the aggregate value of the companies in which the Group had an investment exceeded £1.9 billon.
		The Group's portfolio is diverse with exposure to four main sectors – Biotech, Cleantech, Healthcare and Technology.
B.4a	Recent trends	2014 was a transformational year of growth for IP Group with the acquisition of Fusion in March 2014 creating a Group with an enlarged specialised team and a greater breadth of coverage. Whilst the macroeconomic environment improved in the UK and the USA, the AIM market (where approximately 40 per cent. of the Group's portfolio companies are quoted) lost 17.5 per cent. of its value. When considered against this backdrop, the Group's financial performance was satisfactory, although much lower when compared with 2013. For the Group's portfolio companies, 2014 was, in the main, an encouraging year with a number continuing to grow their businesses, raise additional growth capital

		for development and achieve both technical and commercial milestones. During 2014, the Group continued to and will, going forward, continue to explore opportunities to expand its access to leading scientific innovation by broadening and deepening its arrangements with its existing university partners and other research intensive institutions and entering into collaborations with new partners, both in the UK and the US. Such arrangements are expected to continue to provide the Group with opportunities to invest in early stage projects and companies based on scientific and technical innovation. The Board is confident that this flow of opportunities, coupled with the Group's ability to continue to increase the capital deployed into its portfolio companies as a result of the Capital Raising, will continue to drive the Group's growth. These factors give the Board confidence that the Group is well placed to continue to deliver medium to long-term value for Shareholders.
B.5	Group Structure	The Company is the parent company of the Group. The following table contains a list of the principal subsidiaries of the Company (which are owned, directly or indirectly, by the Company) as at the date of this document:
			Proportion of
		Name of subsidiary	share capital held
		IP2IPO	100
		IP2IPO FI Limited	100
		IP2IPO Management Limited	100
		IP2IPO Management II Limited	100
		IP2IPO Management IV Limited	100
		IP2IPO Management VI Limited IP2IPO Management VII Limited	100 100
		IP2IPO (Europe) Limited	100
		Top Technology Ventures Limited	100
		IP Venture Fund (GP) Limited	100
		Techtran Group Limited	100
		North East Technology (GP) Limited	100
		IP Venture Fund II (GP) LLP	100
		IP2IPO Americas Limited	100
		IP Group, Inc. Modern Biosciences plc	100 61.1
		PIMCO 2664 Limited	61.1
		Fusion IP plc	100
		Fusion IP Sheffield Limited	100
		Fusion IP Cardiff Limited	100
		Fusion IP Nottingham Limited	100
		Fusion IP Two Limited	100
		IP2IPO FI Limited	100
		Major shareholders and other interests
B.6	Notifiable interests/	The interests of the Directors, and (so far as is known to the
	Voting rights	Directors having made appropriate enquiries) of all such persons connected within the meaning of section 252 of the Companies Act with the Directors in the issued share capital of the Company are as follows:

			31 December
			2014
			Number of	Percentage of
		Name	Shares	Existing Shares
		Bruce Smith	236,592	0.05
		Alan Aubrey	2,368,537	0.49
		Michael Townend	1,011,023	0.21
		Gregory Smith	289,919	0.06
		David Baynes	426,066	0.09
		Lynn Gladden	–	–
		Jonathan Brooks	60,000	0.01
		Mike Humphrey	80,000	0.02
		Douglas Liversidge	75,297	0.02
		As at 9 March 2015 (being the latest practicable date prior to the publication of this document), the Directors were aware of the following persons who, in addition to the Directors set out above, directly or indirectly, were interested in three per cent. or more of the Company's share capital or voting rights:
		Name		Percentage of Existing Shares
		IAML		25.7
		Lansdowne Partners Limited		15.1
		Baillie Gifford & Co		10.5
		Woodford Investment Management		7.1
		Sand Aire Limited		5.5
		Oppenheimer Funds, Inc.		4.3
		None of the Shareholders has voting rights differing from those of any other Shareholder, nor is the Company directly or indirectly owned or controlled by any person.
		Financial Information on the Company
B.7	Key financial information	The table below sets out the summary financial information of the Group for the three financial years ended 31 December 2013, the six month periods ended 30 June 2013 and 30 June 2014, and the financial year ended 31 December 2014 which has been extracted without material adjustment from the annual report and accounts of the Company for the financial periods ended 31 December 2011, 31 December 2012 and 31 December 2013, and the interim results of the Company for the six months ended 30 June 2013 and 30 June 2014 and the unaudited preliminary results of the Company for the financial period ended 31 December 2014:

Key consolidated statement of comprehensive income data
	Unaudited		Audited		Audited	Audited
	Year	Unaudited	Year	Unaudited	Year	Year
	ended 31	6 months	ended 31	6 months	ended 31	ended 31
	December	ended 2014 30 June 2014	December	ended 2013 30 June 2013	December 2012	December 2011
	£ million	£ million	£ million	£ million	£ million	£ million
Portfolio return and revenue
Change in fair value of equity
and debt instruments	20.7	17.8	82.4	2.2	38.0	0.9
Profit/(loss) on
disposal of equity investments	1.6	1.3	(0.2)	(0.1)	11.8	2.3
Change in fair
value of limited
partnership investments	0.5	0.2	0.8	0.3	0.4	0.6
Other portfolio income	0.2	–	–	–	–	–
Licensing income Revenue from services	2.1	–	–	–	–	–
and other income	2.4	1.2	2.4	1.4	2.3	2.1
	––––––– 27.5	––––––– 20.5	––––––– 85.4	––––––– 3.8	––––––– 52.5	––––––– 5.9
Administrative expenses
Research and development expenses	(0.9)	(0.3)	(0.4)	(0.4)	(0.3)	(0.2)
Share-based
payment charge	(0.9)	(0.2)	(0.9)	(0.3)	(0.8)	(0.7)
Change in fair value of Oxford Equity
Rights asset	(1.8)	(0.9)	(5.0)	(2.5)	(6.0)	(6.0)
Amortisation of intangible assets Acquisition costs	(4.9) (1.1)	(1.5) (1.0)	– –	– –	– –	– –
Other administrative
expenses	(9.0) –––––––	(4.2) –––––––	(6.9) –––––––	(3.0) –––––––	(5.6) –––––––	(5.1) –––––––
	(18.6)	(8.1)	(13.2)	(6.2)	(12.7)	(12.0)
Operating profit/(loss)	––––––– 8.9	––––––– 12.4	––––––– 72.2	––––––– (2.4)	––––––– 39.8	––––––– (6.1)
Finance income –
interest receivable	0.6 –––––––	0.2 –––––––	0.4 –––––––	0.4 –––––––	0.9 –––––––	0.6 –––––––
Profit/(loss) before taxation	9.5	12.6	72.6	(2.0)	40.7	(5.5)
Taxation	–	–	–	–	–	–
Profit/(loss) and total	–––––––	–––––––	–––––––	–––––––	–––––––	–––––––
comprehensive
income for the period	9.5 –––––––	12.6 –––––––	72.6 –––––––	(2.0) –––––––	40.7 –––––––	(5.5) –––––––
Attributable to:
Equity holders of the Company	9.1	12.6	73.0	(1.9)	40.7	(5.5)
Non-controlling interest	0.4 –––––––	– –––––––	(0.4) –––––––	(0.1) –––––––	– –––––––	– –––––––
	9.5	12.6	72.6	(2.0)	40.7	(5.5)
Earnings/(loss) per share	–––––––	–––––––	–––––––	–––––––	–––––––	–––––––
Basic earnings/(loss)
per IP Group Share	1.97 –––––––	2.83 –––––––	19.60 –––––––	(0.51) –––––––	11.13 –––––––	(1.76) –––––––
Diluted earnings/(loss)
per IP Group Share	1.96 –––––––	2.81 –––––––	19.27 –––––––	(0.51) –––––––	10.71 –––––––	(1.76) –––––––
Investment portfolio Cash and short-term	349.9	319.6	285.9	191.9	181.8	123.8
deposits	97.3	122.6	24.1	38.1	47.9	60.5
Total assets	533.1	532.3	339.4	262.0	263.5	222.2
Total liabilities	6.9 –––––––	3.7 –––––––	2.8 –––––––	0.4 –––––––	0.4 –––––––	0.6 –––––––
Net assets	526.2 –––––––	528.6 –––––––	336.6 –––––––	261.6 –––––––	263.1 –––––––	221.6 –––––––
The following events took place during or subsequent to, the

period covered by the historical key financial information of the
Group and constitute a significant				change	to the financial
condition and operating results of the Group:

(i) the Company carried out equity fundraisings in January 2011
and February 2014 to raise gross proceeds of £55 million and
£100 million respectively; and

(ii) in March 2014, the Company acquired the entire issued share
capital of Fusion IP, by way of a scheme of arrangement
under Part 26 of the Companies Act.

Save as set out above, there has been no significant change to the
Group's financial condition and operating results during or after

		the period covered by the historical key financial information on the Group set out in this Element.
B.8	Pro-forma information	Not applicable. No pro-forma information is included within this document.
B.9	Profit forecast	Not applicable. No profit forecasts or estimates are included within this document.
B.10	Audit report qualifications	Not applicable. None of the Company's annual audit reports on the historical financial information included in this document contain any qualifications by the Company's auditors.
B.11	Working capital insufficiency	Not applicable. The Company is of the opinion that the working capital available to it is sufficient for the present requirements of the Group, that is, for at least twelve months from the date of this document.

	SECTION C – SECURITIES
C.1	Description of Securities	The Company's share capital The Company is proposing to issue 56,888,888 Capital Raising Shares pursuant to the Capital Raising.
		The ISIN of the Capital Raising Shares is GB00B128J450 and the SEDOL of the Capital Raising Shares is B128J45.
		The ISIN of the Open Offer Entitlement is GB00BVF9PP89.
		The ISIN of the Excess CREST Open Offer Entitlement is GB00BVF9PR04.
C.2	Currency of the Issue	The Shares are denominated in Sterling and the Issue Price is payable in Sterling.
C.3	Issued Shares	The Company has 479,524,397 Shares of 2 pence each in issue, each of which are fully paid or credited as fully paid.
		Rights attaching to the Company's shares
C.4	Rights attaching to securities	The rights attaching to the Shares are uniform in all respects and they form a single class for all purposes. Holders of Shares have one vote on a show of hands and, on a poll, one vote for every such Share held. Distributions of income or capital are to be distributed amongst the holders of Shares according to the nominal amounts (excluding any premium) paid up on the Shares held by them at any time.
C.5	Restrictions on transferability	The Board may decline to register a transfer of any Share which is not fully paid, provided that any such refusal will not prevent dealings in the shares from taking place on an open and proper basis.
		There are no restrictions on the free transferability of the Shares, save that the Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States or under applicable securities laws of Australia, Canada, Japan, New Zealand or the Republic of South Africa and, subject to certain exceptions, the Shares may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within, into or in the United States, Australia, Canada, Japan, New

		Zealand or the Republic of South Africa or any other jurisdiction where such offer or sale would violate the relevant securities laws of such jurisdiction.
		Application for admission
C.6	Application for admission	Application has been made to the UK Listing Authority and to the London Stock Exchange for the Capital Raising Shares to be admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities respectively. It is expected that Admission will become effective, and that dealings on the London Stock Exchange's main market for listed securities in the Capital Raising Shares will commence, at 8.00 a.m. on 27 March 2015.
		Dividend policy
C.7	Dividend policy	The Board's current intention is to retain the Group's earnings in the foreseeable future to finance growth and expansion. It is, however, the Directors' intention to pay dividends when, in the view of the Directors, the Company has sufficient cash for this purpose.

		SECTION D – RISKS
D.1	Key information on the key risks relating to the Company and the Company's business	• The Group's operations, and the operations of the majority of its portfolio companies, are based in the UK. Accordingly, the performance of the Group is influenced by the general economic climate and trading conditions in the UK. The recent recession in the UK, and subsequent limited growth, may contribute to a lack of potential co-investors in early stage technology businesses as investors find it difficult to raise new capital or exit their existing investments in order to realise capital. As a result, the Group and its portfolio companies may take longer, or find it difficult, to secure funding to finance their ongoing and future development and the commercialisation of their IP.
		• The Group is exposed to market risks, principally equity securities price risk, as a result of its equity investments in publicly traded companies, private companies and investments in limited partnerships. The market price of the Group's investments in portfolio companies could be affected by a number of factors including a change in sentiment in the market regarding the portfolio companies, the market's appetite for specific asset classes and the financial or operational performance of the portfolio companies. There may also be a lack of liquidity in investments in the Group's portfolio companies.
		• The Group's business is partially dependent upon the continuation of the Partnerships and the other collaborative arrangements which the Group has secured with universities, research intensive institutions and commercial partners pursuant to which it has access to technology and scientific innovation. If any of these arrangements were to be terminated or expire at the end of their term and not be

renewed, then the Group would lose any exclusive rights that it has to act as the private sector partner in the commercialisation of IP being generated by such universities or other research intensive institutions.

There are a number of competitors seeking to provide commercialisation services to universities and research intensive institutions in the UK. In addition, certain universities and other institutions may in the future become increasingly proactive at seeking to raise private sector funding to support their in-house technology commercialisation activities. Further, other universities, research institutions and companies may create IP that competes, directly or indirectly, with that generated by the Group's portfolio companies.
Investments made by the Group in portfolio companies are generally made at an early stage of development when the portfolio company's technology is materially unproven. Such investments are subject to the following risks typically associated with early stage investments: (a) early stage portfolio companies may not be able to secure subsequent rounds of funding which may restrict their ability to fund ongoing research and the development and commercialisation of their IP; (b) portfolio companies may not be able to source and/or retain appropriately skilled personnel; (c) competing technologies may enter the market which may adversely affect the portfolio companies' ability to commercialise their IP or the portfolio companies may not have been able to adequately protect their IP; (d) the portfolio companies may not be able to develop their IP into commercially viable products or technologies or into products or technologies with sufficiently compelling benefits for customers; and (e) there is no certainty that the portfolio companies will generate any, or any significant returns for their shareholders or that the Group will be able to secure a profitable exit in any or all of the portfolio companies.
The Group has a portfolio of equity and debt interests in technology based companies and there is a high risk that certain of the Group's current and future investments in portfolio companies may fail, resulting in an impairment on the Group's value and profitability. In addition, failure of companies within the Group's portfolio may make it more difficult for other companies within the Group's portfolio to raise additional capital.
The scope of patent protection is dependent upon the relevant invention being kept confidential before the patent application is filed. Where inventions are published by a university or other research intensive institution before a patent has been obtained, this could have a material adverse effect on the business and prospects of the Group. There is no assurance that the portfolio companies will be successful in applying for patent protection for their IP or, if granted, will

		have sufficient financial resources to enforce its rights against infringing third parties. Alternatively, the Group's portfolio companies may be subject to claims that they are infringing the IP rights of a third party. Making or defending any such claim could result in a portfolio company incurring significant costs and expenses and could materially divert the focus and energies of such company's technical and management personnel. An adverse outcome for a portfolio company in any such claim could lead to such portfolio company having to pay substantial damages (and/or legal costs) and/or being required to cease the manufacture, use or sale of infringing IP and/or to develop or use non-infringing technology.
		• It is the Group's policy generally to maintain a significant minority interest (i.e. an interest of less than 50 per cent.) in its portfolio companies. Where the Group maintains such a minority interest in a portfolio company, it will not typically be able to exercise control over any of the affairs of that company. Further, if a portfolio company raises capital by way of an issue of shares, the Group may face dilution if it does not participate in such financing and/or be required to become subject to provisions which could force the Group to exit from that portfolio company at a time and/or price determined by other investor(s) (for example, by the exercise of drag-along rights). There may also be restrictions on the transfer of shares (e.g. pre-emption rights) which mean that the Group will not be able to freely transfer its interest in a portfolio company.
D.3	Key information on the key risks specific to the securities	• The Shares have not been registered in the United States under the US Securities Act or under any other applicable securities laws and are subject to restrictions on transfer contained in such laws. There are additional restrictions on the resale of the Shares by Shareholders who are in the United States and on the resale of the Shares by any Shareholder to any person who is in the United States. These restrictions could make it more difficult to resell the Shares in many instances and this could have an adverse effect on the market value of the Shares.

	SECTION E – THE CAPITAL RAISING
		The Capital Raising
E.1	Net proceeds and expenses	The Company intends to raise gross proceeds of approximately £128 million through the Capital Raising, assuming the Resolutions are duly passed by the Shareholders and the maximum number of Capital Raising Shares are issued pursuant to the Firm Placing and the Placing and Open Offer. The total expenses incurred (or to be incurred) by the Company in connection with the Capital Raising are estimated to be £3.3 million and accordingly the maximum net proceeds of the Capital Raising are expected to be approximately £124.7 million.

		Reasons for the Capital Raising
E.2a	Reasons for the Offer and Use of Proceeds	The Group has built a platform for the systematic commercialisation of IP which, to date, has been primarily sourced from within UK universities with which the Group has Partnerships.
		The Board believes that there is a significant opportunity to accelerate the growth of the Group by increasing its overall rate of investment in both its current portfolio and in new opportunities in the UK and the US that progress to the post-seed stage, whilst still seeking to preserve the returns that it has historically been able to achieve.
		The Board considers that the Group is in a highly advantageous position to assess the merits of further investments in its post-seed portfolio companies, given its well-established and in-depth understanding of the relevant company in each case.
		The Capital Raising will enable the Group to continue to have flexibility to lead these subsequent investment rounds in both existing and future post-seed companies, decreasing its reliance on external capital and allowing it to maintain significant minority equity stakes with a view to continuing to generate strong equity returns.
		The Directors continue to consider that there are attractive opportunities for the Group to deploy its business model internationally and, to this end, in 2013 established a presence on the east coast of the US. The Board of IP Group believes that this area, and indeed the broader US, represents a rich source of potentially world-class IP which has seen only limited systematic commercialisation efforts to date. The Directors believe that this mismatch of funding creates an attractive opportunity for IP Group.
		Having successfully established initial commercialisation agreements with each of the University of Pennsylvania, Columbia University and Princeton University and a commercialisation initiative with FedIMPACT to identify and develop early stage technologies from a select group of DoE Laboratories, the Directors believe that the increased strength of the Group's balance sheet following completion of the Capital Raising will enable IP Group to continue to build upon and strengthen the relationships with these universities and organisations and to further establish its reputation in the US market place.
		The Group will continue to seek to identify compelling IP based opportunities arising out of its current UK Partnerships and current agreements and initiatives within the US. In addition, the Group may source further opportunities from or with other research intensive institutions both in the UK and the US and will continue to explore other relationships or collaborations that seek to enable or preserve access to research emanating from premier UK and US based universities.
		The Directors believe that the increased strength of its balance sheet following completion of the Capital Raising will enhance the

		Group's ability to attract new early stage commercialisation opportunities from, and collaborations with, research intensive institutions, both in the UK and the US; attract and retain talent within the Group; and attract experienced management teams and co-investment partners, as appropriate, into portfolio companies as they develop.
		Use of proceeds The Board currently anticipates that it will utilise the net proceeds of the Capital Raising as follows: (i) approximately 75 per cent., in continuing to increase investment into the Group's IP commercialisation business (both in the UK and the US); (ii) approximately 12.5 per cent., in continuing to expand its access to and provide capital to enable the development of technology from its partner universities and other research intensive institutions; and (iii) approximately 12.5 per cent., to provide capital to fund the growth of the Group's US business. In addition, it is possible that some of the proceeds may be used to expand the Group's fund management operations should the opportunity arise and be deemed by the Directors to be in the Group's best interests (although no such opportunity has been identified as at the date of this document).
		The terms of the Firm Placing and the Placing and Open Offer
E.3	Terms and conditions	56,888,888 Capital Raising Shares will be issued pursuant to the Firm Placing and the Placing and Open Offer. The actual number of Capital Raising Shares to be issued pursuant to the Capital Raising will be notified by the Company via a Regulatory Information Service announcement prior to Admission.
		The Capital Raising is underwritten by Numis.
		All the Capital Raising Shares to be issued in connection with the Capital Raising will be issued at the Issue Price of 225 pence per share. The Issue Price represents a discount of 15.9 pence (being approximately 6.6 per cent.) to the closing middle-market price (as derived from the Daily Official List) of 240.9 pence per Share on 9 March 2015 (being the last trading day prior to the announcement of the Capital Raising).
		Open Offer Shares will be allocated to Qualifying Shareholders
		under the Open Offer on a pre-emptive basis. The Capital Raising is conditional, inter alia, upon:
		• the passing of the Resolutions at the General Meeting;
		• the Placing Agreement having become unconditional in all respects save for the condition as to Admission and not having been terminated in accordance with its terms prior to Admission; and
		• Admission occurring by no later than 8.00 a.m. on 27 March 2015 (or such later time and date as the Company and Numis may agree, being not later than 8.00 a.m. on 10 April 2015).

		The Firm Placing The Firm Placees have conditionally agreed to subscribe for 51,111,111 Capital Raising Shares in aggregate at the Issue Price (representing gross proceeds of approximately £115 million). The Firm Placed Shares are not subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer and are not part of the Placing or Open Offer.
		Open Offer
		Qualifying Shareholders are being given the opportunity to apply for Open Offer Shares at the Issue Price, pro rata to their holdings of Existing Shares on the Record Date on the basis of 1.2049 Open Offer Shares for every 100 Record Date Shares.
		The Open Offer Shares have been conditionally placed by Numis, as agent for the Company. The Open Offer Shares are subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer and, at the discretion of the Directors (in consultation with Numis), the Excess Application Facility.
		Excess Application Facility under the Open Offer
		Qualifying Shareholders who take up all of their Open Offer Entitlements may also apply under the Excess Application Facility for additional Capital Raising Shares that they would otherwise not be entitled to. The Excess Application Facility will comprise Open Offer Shares which are not taken up by Qualifying Shareholders pursuant to their Open Offer Entitlement and which have been clawed back from Non-Firm Placees.
		Placing
		The Non-Firm Placees have conditionally agreed to subscribe for 5,777,777 Capital Raising Shares in aggregate at the Issue Price. Such Capital Raising Shares are subject to clawback in favour of valid applications under the Open Offer and the Excess Application Facility.
		Admission
		It is expected that Admission will become effective and that dealings on the London Stock Exchange in the Capital Raising Shares will commence at 8.00 a.m. on 27 March 2015. No application is currently intended to be made for the Existing Shares or the Capital Raising Shares to be admitted to listing or dealing on any other exchange.
		Material interests
E.4	Material interests	Not applicable – no interest is material to the Capital Raising.
		Lock-up arrangements
E.5	Lock-up arrangements	No lock-up arrangements are being entered into in connection with the Capital Raising.
		Interests and dilution
E.6	Interests and dilution	If a Qualifying Shareholder does not take up his Open Offer Entitlements such Qualifying Shareholder's holding will be diluted by approximately 10.6 per cent. as a result of the Capital Raising (assuming that such Qualifying Shareholder is not a

		Placee). Furthermore, a Qualifying Shareholder who does take up his Open Offer Entitlements in full in respect of the Open Offer (and does not receive any other Capital Raising Shares pursuant to the Capital Raising) will suffer dilution of approximately 9.5 per cent. to his shareholding in the Company as a result of the Firm Placing.
E.7	Expenses charged to investor	Not applicable. No expenses will be charged to investors by the Company in connection with the Capital Raising.

RISK FACTORS

An investment in the Company and the Capital Raising Shares is subject to a number of risks. Accordingly, prior to subscribing for any Capital Raising Shares, Shareholders and other prospective investors should consider carefully all of the information set out in this document (including the information incorporated by reference) and the risks attaching to an investment in the Company. The following risks are those material risks of which the Directors are aware. Additional risks and uncertainties not presently known to the Directors, or that the Directors currently consider to be immaterial, may also have an adverse effect on the Group.

The business, financial condition in the longer term and/or results of operations of the Group could be materially and adversely affected by any of the risks described below. In such case, the market price of the Shares and Capital Raising Shares may decline and Shareholders and other prospective investors may lose all or part of their investment. Shareholders and other prospective investors should consider carefully whether an investment in the Company is suitable for them in the light of the information in this document (including the information incorporated by reference) and the financial reserves available to them.

This section describes the risk factors considered by the Directors to be material in relation to the Group.

RISKS RELATING TO THE GROUP

General economic climate and trading conditions in the UK

The operations of the Group, as well as the operations of the majority of its portfolio companies, are currently based primarily in the UK. Consequently, the performance of the Group is influenced by the general economic climate and trading conditions in the UK. The recent recession in the UK, and subsequent limited growth, have had (and may continue to have) an adverse effect on trading conditions in the UK and may contribute to a lack of potential co-investors in early stage technology businesses as investors find it difficult to raise new capital and/or to exit their existing investments in order to realise capital. As a result, the Group and portfolio companies may take longer, or find it difficult, to secure funding to finance their ongoing and future development and the commercialisation of their respective IP.

The Group is exposed to market risks, principally equity securities price risk, as a result of its equity holdings and holdings in limited partnerships. The Group has equity holdings in a number of quoted companies which are publicly traded on AIM and/or the ISDX Markets and also in private companies whose shares are not traded on a public market. The market price of the Group's investments in portfolio companies could be affected by a number of factors including, but not limited to, a change in sentiment in the market regarding the portfolio companies, the market's appetite for specific asset classes and the financial or operational performance of the portfolio companies. There may also be a lack of liquidity in investments in the Group's portfolio companies.

Each of these factors could adversely affect the value of the Group's portfolio companies and, consequently, the business, financial condition, results of operations and prospects of the Group.

Loss of key personnel from the Group

The industry in which the Group operates is a specialised area and the Group requires highly qualified and experienced employees. Further, given the relatively small size of the Group, its operations are reliant on a small number of key individuals including the Chief Executive Officer, the other executive Directors, the head of each of the Group's four divisions; Biotech, Cleantech, Healthcare and Tech, and the Director of IP Exec. There is a risk that the Group's employees could be approached and solicited by competitors of the Group or other technology based companies or organisations or could otherwise choose to leave the Group. The loss of key employees of the Group could have an adverse effect on the Group's business, financial condition, results of operations and/or prospects.

Termination of the Partnerships and collaborations and/or the Group's fund management arrangements

The Group's business, results of operations and prospects are partially dependent upon the continuation of the Partnerships pursuant to which it has direct or indirect access to technology and scientific innovation. Whilst as at the date of this document the Directors are not aware of any matters that could cause these arrangements to be terminated, if such arrangements were to be terminated (for example, as a result of the Group's failure to perform certain contractual obligations under the relevant contracts) or expire at the end of their term and not be renewed, then the Group would lose any rights that it has to act as the private sector partner in the commercialisation of IP being generated by such universities or other research intensive institutions. This could potentially have a material adverse effect on the Group's business, results of operations, performance and prospects. In particular, the Group's University of Oxford Partnership is due to expire in November 2015. A summary of the terms of the agreements with the University of Oxford is set out in paragraph 14.1 of Part V (Additional Information) of this document. If this agreement cannot be extended or renewed, the Group would lose its right to its share of the University of Oxford's founder equity in spin-out companies from the Department of Chemistry. This could potentially have an adverse effect on the Group's business as it may result in the Group not being able to participate in the future potential returns from spin-out companies from the University of Oxford's Department of Chemistry.

Certain of the above arrangements (including some of the Partnerships) contain provisions which entitle the counterparty to terminate such arrangements in the event of a change in control of the Company or other members of the Group. This could make an offer for the Company less attractive to a potential bidder as such bidder would need to secure the consent of each such counterparty to the proposed change of control in order to give it certainty that the counterparties will not exercise their right to terminate their arrangements with the Group in the event that any takeover offer is successful.

Availability of future partnerships/collaborative arrangements

The Group's ability to expand its business through the entering into of further partnerships and/or other collaborative arrangements with universities, research intensive institutions and other commercial partners will depend on the willingness of organisations of suitable quality to enter into such arrangements on terms acceptable to the Group (including, without limitation, as to exclusivity and duration).

Availability to the Group of the substantial shareholdings exemption

The substantial shareholdings exemption regime provides that a gain on a disposal by a company of shares (or an interest in shares or certain assets related to shares) will not be a chargeable gain for corporation tax purposes provided that three conditions are met. Broadly, these conditions are: (i) the "investing company requirement" (i.e. the company or group making the disposal meet certain "trading" conditions); (ii) the "investee company requirement" (i.e. the company whose shares are being disposed of must meet similar "trading" conditions); and (iii) the "investing company" must have held the shares in the "investee company" in such number, and for such time, so as to satisfy the "substantial shareholding requirement".

Shareholders and other prospective investors should note that if, in the future, HM Revenue & Customs determined that the Group ceased to meet the "investing company requirement" referred to above, then the substantial shareholdings exemption would no longer be available to the Group. This would mean that any gains made by the Group on subsequent disposals of shares (or an interest in shares or certain assets related to shares) in its portfolio companies would not benefit from the relief from corporation tax afforded by the substantial shareholdings exemption and the Group would be liable for corporation tax on any such gains at the then prevailing rate.

In addition, if, in the future, any of the Group's portfolio companies does not meet (or is determined by HM Revenue & Customs not to meet) the "investee company requirement" or the shares held in the portfolio company do not satisfy the "substantial shareholding requirement" at the time that the Group disposes of any shares (or an interest in shares or certain assets related to shares) in such portfolio company, then the substantial shareholdings exemption would not be available to the Group in relation to that disposal and the Group would be liable for corporation tax on any gain on such disposal at the then prevailing rates of corporation tax (currently 21 per cent.).

Future revenue from the Group's fund management business

The Group manages third party funds via Top Technology Ventures, its venture capital subsidiary, which specialises in providing equity funding for early stage technology based growth companies. Additional funds broaden the source of financing potentially available to the Group's portfolio companies in circumstances where such investment is aligned with the relevant fund's investment mandate. The Group's fund management activities also leverage the Group's existing competencies to provide additional recurring revenue for the Group and, potentially, performance related fees.

The Group's ability to manage funds and to raise further funds in future will depend in part upon the performance of the third party funds that the Group currently manages, future investor appetite for funds investing in early stage companies and the continued authorisations from the Financial Conduct Authority for Top Technology Ventures to manage such funds. If the Group is unable to continue to manage third party funds and/or raise further funds in future, this would lead to a reduction in the Group's recurring revenue.

The Group may face increased competition, including from organisations with access to greater capital than the Group

Other universities, research institutions and companies may create IP that competes, directly or indirectly, with that generated by the Group's portfolio companies.

There are a number of other companies and other organisations seeking to commercialise intellectual property and/or provide capital to spin-out companies from universities and research intensive institutions in the UK. These operate a variety of business models and include Cambridge Innovation Capital plc, Epidarex, Frontier IP plc, Imperial Innovations Group plc, Imprimatur Capital, Invoke Capital, Mercia Technologies plc, NetScientific plc, Parkwalk Advisors, Rock Spring Ventures, Spark Ventures, regional development authorities (e.g. Finance Wales, Finance Yorkshire and Scottish Enterprise), the technology transfer offices of certain universities, certain institutional investors and angel investors. In addition, certain universities and other research intensive institutions may in the future become increasingly proactive themselves at seeking to raise private sector funding to support their in-house technology commercialisation activities. Furthermore, there are a number of companies and other organisations seeking to commercialise intellectual property and/or provide capital to spin-out companies in other jurisdictions in which the Group currently operates or may operate, including, for example, strategic investments by corporations, private venture capital companies, and other publicly traded venture capital firms. Examples may include Allied Minds plc, Osage Partners, PureTech and Safeguard Scientific, Inc. in the United States. As a result, the Group may face significant competition (including competition from organisations which have much greater capital resources than the Group). There is no assurance that the Group will in future be able to compete successfully in such a marketplace.

Need for further investment in the Group

The Group will require additional capital in the future for expansion activity, business development and/or further investment in its current portfolio companies, whether from equity realisations from its portfolio companies or new equity or debt sources. If the Group's equity realisations from its portfolio companies are not sufficient and/or if the Group is unable to obtain additional capital on acceptable terms, or at all, it may be forced to curtail or abandon such planned expansion activity, further investment in its portfolio companies and/or business development, which may have a material adverse effect on the business, financial condition or results of operations and prospects of the Group. Further, in the event the Group issues equity to raise such additional capital in the future, such further issue of Shares may be dilutive to Shareholders (see risk factor on page 24 entitled "Further Issuances of Shares may be dilutive to current Shareholders").

Changes in legislation, Government policy and levels of research funding

Each of the jurisdictions in which the Group currently operates requires compliance with a significant number of laws, regulations, administrative requirements and policies, which relate to, among other matters, national, local and other laws, IP regulation and protection, securities laws, taxation and employment. Changes in legislation (including tax legislation) and Government policy may occur which may adversely affect the Group, its business and/or the position of the Shareholders and which may reduce the return that Shareholders receive on their investment in the Group.

Specifically, any change to law and/or regulation relating to the funding and resources available to universities and other research intensive institutions could adversely affect the ability of such organisations to carry out research and therefore result in a reduction in the quantity and quality of IP in which the Group may have the opportunity to invest. Any such changes to law and/or regulation may also result in such institutions being unable, or it not being commercially viable for them, to own, develop, exploit and/or protect the IP that they generate.

Furthermore, although the UK Government announced as part of its comprehensive spending review in October 2010 that Government's investment in science and research will be "ring-fenced" (i.e. that it will not be subject to reductions or cuts), it may decide (or a future Government may decide) to cease or reduce its funding of technology. A reduction in funding in the UK and/or the US could also lead to a reduction in the research carried out by universities and other research intensive organisations. In addition, changes to the funding of technology may adversely impact the development activities carried out by portfolio companies by, for example, increasing the costs incurred by a portfolio company in carrying out its business and/or may result in a portfolio company needing to alter the way in which it conducts its business. Any such event may have a material adverse effect on the value of a portfolio company and therefore on the business, financial condition, results of operations and prospects of the Group.

Closure of technology transfer offices and/or spin-out equity management offices at universities and other research intensive institutions

One or more of the universities or other research intensive institutions with which the Group has a Partnership or other collaborative relationship may choose to close its technology transfer office and/or spin-out equity management offices (i.e. those parts of the university which are dedicated to identifying research which has potential commercial interest, identifying strategies for how to exploit such research and managing the university or other institution's holdings of spin-out equity).

The technology transfer offices and/or spin-out equity management offices will act as the link between the Group and the universities and other research intensive organisations and, consequently, the closure of such an office would make it more difficult for the Group to identify and source opportunities emanating from that university or other organisation.

RISKS RELATING TO THE GROUP'S INVESTMENTS IN PORTFOLIO COMPANIES

Investments are generally into companies at an early stage of their development

Investments made by the Group in portfolio companies are generally made at an early stage of a portfolio company's development when the portfolio company's technology is materially unproven. Such investments are subject to the following risks typically associated with early stage investments:

(a) early stage portfolio companies may not be able to secure subsequent rounds of funding which may restrict their ability to fund ongoing research and the development and commercialisation of their IP. Any such lack of funding could, in some cases, result in a portfolio company being forced to sell off its assets or in the sale of the portfolio company as a whole or the insolvency of the portfolio company;
(b) portfolio companies may not be able to source and/or retain appropriately skilled personnel. In particular, they may not have the financial resources to compete with the salary and other incentivisation packages offered by their competitors or other technology-based companies or organisations;
(c) competing technologies may enter the market which may adversely affect the portfolio companies' ability to commercialise their IP or the portfolio companies may not have been able to adequately protect their IP (whether due to lack of financial resource or otherwise) or patent applications made by the portfolio companies may not proceed through to grant or third parties may be able to defeat the portfolio company's claims to IP;
(d) the technology developed by any portfolio company may fail and/or the portfolio companies may not be able to develop their IP into commercially viable products or technologies or into products which offer sufficiently compelling benefits to customers. The success of portfolio companies may depend upon regulatory approval for certain clinical trials being granted and there is no certainty that such regulatory approval will be forthcoming; and
(e) there is no certainty that the portfolio companies will generate any, or any significant, returns for their shareholders or that the Group will be able to secure a profitable exit from its investment in any or all of the portfolio companies.

The occurrence of any of these risks or a combination of these risks may adversely affect the development and value of the portfolio companies and, consequently, the business, financial condition, results of operations and prospects of the Group.

Appetite for investment and ability to realise equity shareholdings

Some of the Group's portfolio companies may have significant funding requirements in the future. The success of these portfolio companies may be influenced by the market's appetite for investment in early stage companies, which may be insufficient to meet the funding demands of the relevant portfolio companies. As a result, it may take longer than anticipated to develop the business of a portfolio company or it may not be able to develop its business at all.

Consequently, it may take longer for the Group to realise value from its equity investments in portfolio companies which have significant funding requirements and the consideration received by the Group on any sale or other disposal of its investments may include shares and/or deferred cash consideration (the value of which may depend upon the future performance of the relevant portfolio company). Alternatively, the Group may not realise value from such investments at all.

Companies within the Group's portfolio, that may be dominated by one or a limited number of companies, may fail, lose value or fail to generate the anticipated level of returns

There is a high risk that certain of the Group's current and future investments in portfolio companies may fail or not succeed as anticipated, resulting in an impairment on the Group's value and profitability. In addition, failure of companies within the Group's portfolio may make it more difficult for other companies within the Group's portfolio to raise additional capital given the impact such failure(s) may have on the reputation and track record of, and therefore investor confidence in, the Group, its management team and/or its portfolio companies.

At any time, a large proportion of the aggregate value of the portfolio companies held by the Group may be accounted for by one, or very few, companies which could exacerbate the impact on the Group if one or more of such companies were to fail. As at 31 December 2014, the Group's portfolio of 90 companies included 52 post-seed businesses. Of these 52 post-seed businesses, the top ten by value represented approximately 73 per cent. of the aggregate value of the Group's portfolio as at 31 December 2014 with the Group's holding in Oxford Nanopore Technologies Limited accounting for approximately 36.7 per cent. of the aggregate value of the Group's portfolio as at such date.

As equity realisations from the Group's portfolio companies are expected to be achieved through liquidity events, including trade sales and initial public offerings, the total cash received from these sources could vary significantly from year to year.

Protection of IP developed by the Group's portfolio companies

The Group is subject to the normal risks experienced by companies and organisations with investments in portfolio companies operating in technology and IP based industries.

The technology transfer market is based on the principles of identification and protection of IP and its subsequent transfer to commercial partners where appropriate. The scope of patent protection is dependent upon the relevant invention being kept confidential before the patent application is filed. The Group has no contractual right to prevent the universities and other research intensive institutions with which it has collaborative relationships (including those with which it has Partnerships) from publishing their inventions before the point at which the IP is transferred to a spin-out company in which the Group has a direct or indirect equity or debt investment. Where inventions are published before a patent has been obtained, this could have a material adverse effect on the business and prospects of the Group.

There is no assurance that, in the event that the portfolio companies apply for patent or other IP protections, such protections will be granted to the portfolio companies by the relevant regulatory authorities.

Notwithstanding the grant of any such protections, unauthorised third parties may infringe the IP rights of the portfolio companies. It is likely to be difficult for the portfolio companies to police such infringement of their IP rights and, even if they become aware of any such infringement, they may not have the financial resources to enforce their IP rights against such infringing third parties.

Alternatively, the Group's portfolio companies may be subject to claims that they are infringing the IP rights of a third party. Making or defending any such claim could result in a portfolio company incurring significant costs and expenses (including legal and other professional costs) and could materially divert the focus and energies of such company's technical and management personnel. An adverse outcome for a portfolio company in any such claim or subsequent litigation could lead to such portfolio company having to pay substantial damages (and/or legal costs) and/or being required to cease the manufacture, use or sale of infringing IP and/or to develop or use non-infringing technology.

Under English law, IP generated by employees of a company or other organisation in the course of their normal duties would typically be owned by the company or other organisation. Under US law, the precise terms of IP ownership must be addressed in an employee's employment contract or terms of employment. Employee inventors may, in some cases, receive compensation which could be substantial. Should the relevant legislation in the countries in which the Group operates or may operate change so as to allow employees rights to own or exploit IP which they have generated themselves, or to give employees a material share of resulting revenue, the universities and other research intensive institutions with which the Group has Partnerships or other collaborative arrangements and the portfolio companies of the Group may be required to implement such changes and this may have an adverse impact on the value of the IP available for the portfolio companies and, indirectly, the Group.

Furthermore, there is no assurance that other companies and organisations will not independently develop similar or competing technologies which do not infringe the portfolio companies' IP rights, but which adversely affect the commercial viability and/or results of operations of the portfolio companies and therefore, indirectly, the Group.

The influence and control of the Group over its portfolio companies may be limited and interests may not align

Whilst the size of the Group's equity investment in each portfolio company will vary between portfolio companies, it will be the Group's policy generally to maintain a significant minority voting interest (i.e. a voting interest of less than 50 per cent.), although it may have majority holdings in some companies from time to time.

Where the Group maintains such a minority voting interest in a portfolio company, it will not typically be able to exercise control over any of the affairs of that company. Further, if a portfolio company raises capital by way of an issue of shares, the Group may face dilution if it does not participate in such financing and/or be required to become subject to provisions which could force the Group to exit from that portfolio company at a time and/or price determined by other investor(s) (for example, by the exercise of drag-along rights). There may also be restrictions on the transfer of shares (e.g. pre-emption rights) which mean that the Group will not be able to freely transfer its interest in a portfolio company. In addition, many portfolio companies will have, or are entitled to put in place, employee share plans which may dilute the Group's interest in a portfolio company.

If the business or other affairs of one or more of the Group's portfolio companies is conducted in a manner that is detrimental to the interests or intentions of the Group, or the Group is forced to exit its investment in a portfolio company, is unable to realise its investment, or suffers a dilution of its interest in a portfolio company, this may have a material adverse effect on the business, financial condition, results of operations or prospects of the Group.

RISKS RELATING TO SHARES AND SHARE ISSUES

A limited number of Shareholders own a significant percentage of the Group and are likely to continue to do so following the Capital Raising. This concentration of ownership could adversely affect the trading price of the Shares

The ten largest Shareholders, by the number of Shares in which they are interested, own approximately 76.7 per cent. of the Existing Share Capital.

These Shareholders may be in a position to exert significant influence on the Group. If any of these Shareholders were to act in concert with each other, such Shareholders could have the ability to influence the outcome of matters requiring shareholder approval, including appointments to the Board and significant corporate transactions, such as an acquisition or other change of control of the Group, and, to a lesser extent, matters requiring the approval of the Board, including the election of Directors, significant corporate transactions and payment of dividends. While the Directors believe that these Shareholders are supportive of the Capital Raising and the Group's strategy, these Shareholders may not remain supportive of the Group generally or any of its specific initiatives. The interests of these Shareholders, moreover, may be different from the interests of the Group or other Shareholders.

Furthermore, this significant concentration of share ownership may adversely affect the market value of the Enlarged Share Capital if investors believe that there are disadvantages in owning shares in the companies with significant shareholder concentration and, also, may reduce the liquidity of the Enlarged Share Capital if these principal Shareholders retain or increase their holdings. Any such decrease in liquidity could have a material adverse effect on the trading price of the Enlarged Share Capital. The concentration of ownership may also deter a third party from making a takeover offer for the Group.

Shareholders will experience dilution in their ownership of IP Group as a result of the Firm Placing and Shareholders who do not acquire Capital Raising Shares in the Open Offer will experience further dilution in their ownership of IP Group

Qualifying Shareholders who do not participate in the Firm Placing will suffer an immediate dilution in their proportion of ownership and voting interests in the Enlarged Share Capital following the issue of Capital Raising Shares pursuant to the Firm Placing. Qualifying Shareholders who do not take up their Open Offer Entitlements in full pursuant to the Open Offer, will suffer an immediate further dilution in their proportionate ownership and voting interests in the Enlarged Share Capital following the issue of the Capital Raising Shares pursuant to the Placing and Open Offer. In addition Qualifying Shareholders who take up the Open Offer Entitlements may still suffer dilution by reason of the Placing and Open Offer.

The Group's share price may fluctuate significantly in response to a number of factors, some of which may be outside of the Group's control

The market price of the Shares could be subject to significant fluctuations due to a change in sentiment in the market regarding the Shares or in response to a variety of factors including, but not limited to, the financial performance of the Group, speculation about the business of the Group or its portfolio companies in the press, media or the investment community, changes to the Group's revenues or profit estimates, the availability and use of debt finance by the Group, regulatory changes affecting the business of the Group and/or its portfolio companies, the publication of research reports by analysts, the Group's ability or decision to pay dividends in accordance with its dividend policy, current affairs and general market conditions.

General fluctuations in stock markets may have an adverse impact on the market price of the Shares, even though such fluctuations are unrelated to the Group's operating performance or prospects. There are a relatively small number of companies with comparable business models to that of the Group. Accordingly, any event which detrimentally affects the companies in this comparator group may adversely affect the value of the Group and the value of the Shares. Furthermore, the operating results and prospects from time to time of the Group may be below the expectations of market analysts and Shareholders. Any of these events could result in a decline in the market price of the Shares.

Suitability of the Shares as an investment

The Shares may not be a suitable investment for all the recipients of this document. Before making a final decision, Shareholders and other prospective investors are advised to consult an appropriate independent financial adviser authorised under FSMA if such Shareholder or other prospective investor is resident in the UK or, if not, from another appropriately authorised independent financial adviser who specialises in advising on acquisitions of shares and other securities.

The value of the Shares, and the income received from them, can go down as well as up and Shareholders may receive less than their original investment.

In the event of a winding-up of the Company, the Shares will rank behind any liabilities of the Company and therefore any return for Shareholders will depend on the Company's assets being sufficient to meet the prior entitlements of creditors.

The Board may apply the proceeds of the Capital Raising to uses that the Shareholders may not agree with and may make investments that fail to produce income or capital growth or that lose value

The Board will have considerable discretion in the application of the net proceeds of the Capital Raising and Shareholders must rely on the judgement of the Board regarding the application of such proceeds. The net proceeds may be placed in investments that fail to produce income or capital growth or that lose value which, in any such case, may affect the business, financial condition, results of operations and/or prospects of the Group.

The Company's ability to pay dividends in the future is not certain

The ability of the Company to pay dividends is dependent upon it having sufficient cash resources and, where necessary, sufficient distributable reserves out of which any proposed dividend may be paid, which, in the main, is dependent upon the receipt by it of dividends and other distributions from its subsidiaries and realisations made by the Company on its investments in its portfolio companies. The Company can give no assurance that it will be able to pay a dividend on the Shares in the future (whether in cash or any other form, including Shares) or in respect of the amount of any dividend. The dividend policy of the Company is described in paragraph 31 of Part II of this document.

A disposal of Shares by major Shareholders could adversely affect the market price of the Shares

Sales of a substantial number of Shares in the market after the Capital Raising, whether from Shareholders who acquired Capital Raising Shares in the Firm Placing, the Placing and/or Open Offer or from pre-existing Shareholders, or the perception that these sales might occur, could depress the market price of the Shares.

Further issuances of Shares may be dilutive to current Shareholders

It is possible that the Company may decide to offer additional Shares in the longer term, either to raise capital or for other purposes. If the Company decides to issue further Shares, certain Shareholders located outside of the UK may not be able to participate in such future offerings, and the securities laws of certain jurisdictions may restrict the Company's ability to allow participation by Shareholders in such jurisdictions in any future offering of Shares carried out by the Company. If Shareholders do not take up such an offer of Shares, or are not eligible to participate in such an offering, their proportionate ownership and voting interests in the Company will be reduced and the percentage that their Shares will represent of the total issued share capital of the Company will be reduced accordingly. An additional offering could have a material adverse effect on the market price of Shares as a whole.

Shareholders and other prospective investors outside the UK may not be able to subscribe for or receive Capital Raising Shares pursuant to the Capital Raising

The securities laws of certain jurisdictions may restrict the Company's ability to allow participation by Shareholders and other prospective investors in the Capital Raising Shares and other issues of Shares. In particular, holders of Capital Raising Shares who are located in the US may not be able to exercise their rights unless such an offering is registered under the US Securities Act or made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. The Capital Raising will not be registered under the US Securities Act. Securities laws of certain other jurisdictions may restrict IP Group's ability to allow participation by Shareholders or other prospective investors, in such jurisdictions in any future issue of shares carried out by the Company. The holdings of Qualifying Shareholders located outside the UK who are not able to receive Capital Raising Shares may be diluted by any such offering of Capital Raising Shares. Qualifying Shareholders who have registered addresses outside the UK or who are citizens of, or resident or located in, countries other than the UK (including, without limitation, the US or any of the Excluded Territories) should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities in order to enable them to receive Capital Raising Shares or to take up their entitlements to the Open Offer.

Restrictions relating to Non-Qualified Holders and information request

The Shares have not been and will not be registered in the United States under the US Securities Act or under any other applicable securities laws and are subject to restrictions on transfer contained in such laws. Moreover, the Shares are only being offered and sold (i) outside the United States to non-US Persons (as defined in Regulation S under the US Securities Act) and (ii) pursuant to the US Private Placement to persons located inside the United States or US Persons that are (a) "qualified institutional buyers" (as the term is defined in Rule 144A under the US Securities Act) or (b) "accredited investors" as defined in Rule 501 of Regulation D under the US Securities Act that are also, in the case of (ii)(a) or (ii)(b) "qualified purchasers" within the meaning of Section 2(a)(51) of the US Investment Company Act in reliance on the exemption from registration provided by Rule 506 of Regulation D under the US Securities Act.

The Board of the Company may refuse to register a transfer of Shares if the transfer is in favour of any person, as determined by the Directors, to whom a sale or transfer of Shares, or whose direct, indirect or beneficial ownership of Shares, would or might (i) cause the Company to be required to register as an "investment company" under the US Investment Company Act (including because the Shareholder of the Shares is not a "qualified purchaser" as defined in the US Investment Company Act) or to lose an exemption or status thereunder to which it might otherwise be entitled; (ii) cause the Company to be required to register under the US Commodity Exchange Act; (iii) cause the Company to be required to register under the US Exchange Act or any similar legislation; (iv) cause the Company not to be considered a "foreign private issuer" as such term is defined in Rule 3b-4(c) under the US Exchange Act; (v) result in any Shares being owned, directly or indirectly, by "benefit plan investors" as such term is defined in Section 3(42) of ERISA or by any person (other than a "benefit plan investor") that has discretionary authority or control with respect to the assets of the Company or that provides investment advice to or any affiliate of a "benefit plan investor" (a "Controlling Person") other than, in the case of "benefit plan investors", persons that acquire the Shares on or prior to listing of the Shares on the Official List and admission to trading on the main market of the London Stock Exchange with the written consent of the Company, and, in the case of Controlling Persons, persons that acquire the Shares with the written consent of the Company; (vi) cause the assets of the Company to be considered "plan assets" under the US Department of Labor's plan asset regulations; (vii) cause the Company to be a "controlled foreign corporation" for the purposes of the US Code; (viii) result in withholding obligations on payments to such person in connection with the Foreign Account Tax Compliance Act ("FATCA") or otherwise prevent the Company from qualifying as, or complying with any obligations or requirements imposed on, a "Participating FFI" within the meaning of US Treasury Regulation Section 1.1471-1(b)(85) or a "deemed-compliant FFI" within the meaning of US Treasury Regulation Section 1.1471-5(f); or (ix) cause the Company to be in violation of the US Investment Company Act, the US Exchange Act, the US Commodity Exchange Act, ERISA, the US Code or any applicable federal, state, local, non-US or other laws or regulations that are substantially similar to section 406 of ERISA or Section 4975 of the US Code (any such person a "Non-Qualified Holder").

The Directors may, by notice to a Shareholder, at any time request a Shareholder to furnish a declaration, in a form satisfactory to the Directors, as to his place of residence, citizenship or domicile and any such information as may be reasonably required by the Directors to satisfy themselves that such person is not a Non-Qualified Holder or is otherwise qualified to hold Shares in the Company, or any such information as the Directors determine is necessary or appropriate to permit the Company to satisfy applicable United States tax withholding, reporting or filing requirements arising with respect to the Shareholder's ownership interest in the Company under the US Code or FATCA.

The Company is not, and does not intend to become, regulated as an investment company under the US Investment Company Act and related rules

Accordingly, the Company will not be subject to the vast majority of the provisions of the US Investment Company Act, including provisions that: (a) require the oversight of independent directors; (b) impose qualifications as to who may serve as custodian for the Company's assets; and (c) limit the ability of the Company to utilise leverage in connection with effecting purchases and sales of the Company's investments.

However, if the Company were to become subject to the US Investment Company Act because of a change of law or otherwise, the various restrictions imposed by the US Investment Company Act, and the substantial costs and burdens of compliance therewith, could adversely affect the operating results and financial performance of the Company. Moreover, parties to a contract with an entity that has improperly failed to register as an investment company under the US Investment Company Act may be entitled to cancel or otherwise void their contracts with the unregistered entity and shareholders in that entity may be entitled to withdraw their investment. In order to ensure compliance with exemptions that permit the Company to avoid being required to register as an investment company under the US Investment Company Act and related rules, the Company has implemented restrictions on the ownership and transfer of Shares, which may materially affect an investor's ability to hold or transfer Shares and may in certain circumstances require the investor to transfer or sell its Shares.

The ability of Overseas Shareholders to bring actions or enforce judgments against the Company or the Directors may be limited

The ability of an Overseas Shareholder to bring an action against the Company may be limited under law. IP Group is a public limited company incorporated in England and Wales. The rights of holders of Shares are governed by the laws of England and by the Articles. These rights differ from the rights of shareholders in typical US corporations and some other non-UK corporations. An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors or other executive officers of the Company. All of the Directors and executive officers are residents of the UK. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within the Overseas Shareholder's country of residence or to enforce against the Directors and executive officers judgments of courts of the Overseas Shareholder's country of residence based on civil liabilities under that country's securities laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgment in any civil and commercial matter, or any judgment under the securities laws of countries other than the UK, against the Directors or executive officers who are residents of the UK or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on foreign securities laws brought against IP Group or the Directors or the executive officers in a court of competent jurisdiction in England or other countries.

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States. Publicly available information about the issuers of securities listed on the Official List differs from and, in certain respects, is less detailed than the information that is regularly published by or about listed companies in the United States. In addition, regulations governing the main market of the London Stock Exchange may not be as extensive in all respects as those in effect on United States markets.

The Company's financial statements are not prepared in accordance with US GAAP

Financial Statements prepared under IFRS differ from those prepared under US GAAP in a number of respects including, but not limited to, revenue recognition, share option compensation, accounting for business combinations and acquisitions of IP and accounting for capital instruments. Potential investors are advised to consult their own professional advisers as to the significance of these differences. In making an investment decision, investors must rely upon their own examination of IP Group, the terms of the offering and the financial information. Potential investors should consult their own professional advisors for an understanding of the differences between IFRS and US GAAP, and how those differences might affect the financial information herein.

The Company believes that it was a "passive foreign investment company" for US federal income tax purposes for 2014 and expects to be a "passive foreign investment company" for the current year, which status may result in adverse tax consequences to US investors

The Company believes that it was a passive foreign investment company ("PFIC") for US federal income tax purposes for 2014 and expects to be a PFIC for the current year and may, depending on the circumstances, be classified as a PFIC in future taxable years.

If a US investor does not make a QEF Election or a mark-to-market election in respect of its investment in the Company, such investor will be subject to certain adverse tax rules with respect to any "excess distribution" made by the Company (for these purposes, any gain realised by a US investor upon disposition of its investment in the Company will generally be characterised as an "excess distribution"). The tax payable by a US investor on an excess distribution will be determined by allocating such excess distribution rateably to each day of the US investor's holding period for its shares. The amount of excess distribution allocated to the taxable year of such distribution and any period prior to the first day of the first taxable year in which the Company was a PFIC will be included as ordinary income for the current taxable year. The amount of excess distribution allocated to any other period included in the US investor's holding period cannot be offset by any net operating losses of the investor and will be taxed at the highest marginal rates applicable to ordinary income for each such period and, in addition, an interest charge will be imposed on the amount of tax for each such period. A US investor may be able to mitigate the adverse consequences of the Company's PFIC status described above by making either a QEF Election or a mark-to-market election. See paragraph 13.2 of Part V of this document.

ERISA prohibited transaction rules might apply to certain transactions of the Company

Although the Company expects to qualify as a venture capital operating company ("VCOC") under the US Department of Labor's "plan asset regulations", the Company cannot predict in advance, nor can there be any continuing assurance, that the VCOC exception will apply. If the Company does not qualify as a VCOC (or ceases to qualify as a VCOC), and benefit plan investors (as described in paragraph 13.2 of Part V of this document) own 25 per cent. or more of any class of equity in the Company, assets of the Company may be deemed to be plan assets, and prohibited transaction rules under ERISA may restrict certain transactions of the Company. There is no guarantee that an exemption from such prohibited transaction rules will be available.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Event	Time/Date
Record Date for entitlement under the Open Offer	5.00 p.m. on 9 March 2015
Announcement of the Capital Raising	10 March 2015
Ex-entitlement date for the Open Offer	10 March 2015
Publication and posting of the Prospectus, Form of Proxy and Application Form	10 March 2015
Open Offer Entitlements credited to stock account of Qualifying CREST Shareholders in CREST	as soon as possible after 8.00 a.m. on 11 March 2015
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST	4.30 p.m. on 19 March 2015
Latest time and date for depositing Open Offer Entitlements into CREST	3.00 p.m. on 20 March 2015
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 23 March 2015
Latest time and date for receipt of Forms of Proxy and receipt of electronic proxy appointments via the CREST system	10.00 a.m. on 24 March 2015
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant
CREST instructions	11.00 a.m. on 25 March 2015
General Meeting	10.00 a.m. on 26 March 2015
Expected date of announcement of results of the General Meeting and the Capital Raising through the Regulatory Information Service	26 March 2015
Expected date of Admission and commencement of dealings in Capital Raising Shares	8.00 a.m. on 27 March 2015
Capital Raising Shares in uncertificated form expected to be credited to accounts as soon as practicable in CREST	27 March 2015
Expected date of despatch of definitive share certificates for Capital Raising Shares in certificated form	by 7 April 2015

General notes:

All references to time in this document are to London time unless otherwise stated.
1. The times and dates set out in the expected timetable of principal events above and mentioned throughout this document may be adjusted by IP Group, in which event details of the new times and dates will be notified to a Regulatory Information Service and, where appropriate, Qualifying Shareholders. In particular, in the event that withdrawal rights arise under section 87Q of FSMA prior to Admission, IP Group and Numis may agree to defer Admission until such time as such withdrawal rights no longer apply.
1. Different deadlines and procedures for return of forms may apply in certain cases.
1. If you have any queries on the procedure for acceptance and payment, you should refer to the Appendices to this document which answers some of the questions most frequently asked by shareholders about placings and open offers or, alternatively, you should contact the Capita Asset Services on 0871 664 0321 (UK only) or on +44 (0)208 639 3399 (if calling from outside the UK). This Shareholder Helpline is available from 9.00 a.m. until 5.30 p.m. (London time) Monday to Friday. For legal reasons, the Shareholder Helpline will not be able to provide advice on the merits of the Placing and Open Offer or to provide financial, tax or investment advice. Calls from within the UK are charged at 10 pence per minute (including VAT) from a BT landline. Other service providers' costs may vary. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different call charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes.

CAPITAL RAISING STATISTICS

Issue Price per Capital Raising Share	225 pence
Open Offer Entitlements under the Open Offer	1.2049 Open Offer Shares for every 100 Record Date Shares
Number of Shares in issue as at the date of this document	479,524,397
Number of Capital Raising Shares expected to be issued by the Company pursuant to the Firm Placing	51,111,111
Maximum number of Capital Raising Shares that may be issued by the Company pursuant to the Open Offer	5,777,777
Maximum number of Capital Raising Shares that may be issued pursuant to the Capital Raising	56,888,888
Enlarged Share Capital following completion of the Capital Raising	536,413,285
Maximum number of Capital Raising Shares as a percentage of the Enlarged Share Capital	10.6 per cent.
Estimated net proceeds receivable by the Company after deducting the expenses of the Capital Raising	£124.7 million
Estimated expenses of the Capital Raising	£3.3 million

DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

Directors:	Dr Bruce Gordon Smith (Non-executive Chairman) Alan John Aubrey (Chief Executive Officer) Michael Charles Nettleton Townend (Chief Investment Officer) Gregory Simon Smith (Chief Financial Officer) David Graham Baynes (Chief Operating Officer) Mike Humphrey (Senior Non-executive Director) Jonathan Brooks (Non-executive Director) Prof. Lynn Faith Gladden (Non-executive Director) Douglas Brian Liversidge (Non-Executive Director)
	all of:
Registered Office:	24 Cornhill London EC3V 3ND
Company Secretary:	Angela Leach
Sponsor, broker, underwriter and financial adviser:	Numis Securities Limited The London Stock Exchange Building Paternoster Square London EC4M 7LT
Auditors:	KPMG LLP 15 Canada Square London E14 5GL
Reporting Accountant:	BDO LLP 55 Baker Street London W1U 7EU
Legal advisers to the Company:	as to English law Pinsent Masons LLP 30 Crown Place London EC2A 4ES	as to US law Willkie Farr & Gallagher LLP CityPoint, 1 Ropemaker Street London EC2Y 9AW
Legal advisers to the sponsor, broker, underwriter and financial adviser as to English and US law:	Travers Smith LLP 10 Snow Hill London EC1A 2AL
Registrar:	Capita Asset Services The Registry Beckenham Road, Beckenham Kent BR3 4TU
Receiving Agent:	Capita Asset Services Corporate Actions The Registry Beckenham Road, Beckenham Kent BR3 4TU

IMPORTANT INFORMATION

PRESENTATION OF FINANCIAL INFORMATION

The Company publishes its financial statements in pounds sterling ("£" or "sterling"). The abbreviations "£m" or "£ million" represent millions of pounds sterling and references to "pence" and "p" represent pence sterling.

The financial information presented in a number of tables in this document has been rounded to the nearest whole number or the nearest decimal place. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this document reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded number.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

As required by the Companies Act and Article 4 of the European Union IAS Regulation, the consolidated financial statements of the Company are prepared in accordance with IFRS and IAS issued by the IASB and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB, as adopted by the European Union.

FORWARD-LOOKING STATEMENTS

This document contains certain forward-looking statements which may refer to one or more of the following: the Company's or its portfolio companies' financial condition, results of operations, dividends, financing plans, business strategies, budgets, capital and other expenditures, competitive positions, potential growth opportunities, plans and objectives of the Directors and other management and other matters. Statements in this document that are not historical facts are hereby identified as "forward-looking statements". Such forward-looking statements, including, without limitation, those relating to future business prospects, revenue, capital needs, interest costs and income, in each case relating to the Group or its portfolio companies, wherever they occur in this document, are necessarily based on assumptions reflecting the views of IP Group and involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. Such forward-looking statements should therefore be considered in light of various important factors. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: economic and business cycles, earnings, financial position, returns on capital, anticipated investments and capital expenditure, competition in the Company's or its portfolio companies' principal markets, acquisitions or disposals of interests in portfolio companies and trends in the Company's or its portfolio companies' principal industry sectors.

These forward-looking statements are further qualified by the risk factors disclosed, or incorporated by reference, in this document that could cause actual results to differ materially from those in the forward-looking statements. For further details, please see the section of this document entitled "Risk Factors".

These forward-looking statements speak only as at the date of this document. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any other law or regulation, IP Group does not have any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, further events or otherwise. Except as required by the Listing Rules, the Disclosure and Transparency Rules, the Prospectus Rules and any other law or regulation, IP Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this document to reflect any change in IP Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this document might not occur. Shareholders and other prospective investors should specifically consider the factors identified in this document which could cause actual results to differ before making an investment decision.

Nothing in the preceding paragraphs should be taken as limiting the working capital statement in paragraph 11 of Part V of this document.

NOTICE TO US SHAREHOLDERS AND SHAREHOLDERS IN EXCLUDED TERRITORIES

The Capital Raising Shares have not been and will not be approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Capital Raising Shares or the accuracy or adequacy of this document or the Application Form. There will be no public offer of the Capital Raising Shares in the US. The Company is not and does not intend to become an "investment company" under the US Investment Company Act and is not engaged and does not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities. Accordingly, the Company has not been and will not be registered under the US Investment Company Act, and investors will not be entitled to the benefits of that act. Any representation to the contrary is a criminal offence in the US.

Subject to certain exceptions, this document does not constitute an offer of the Capital Raising Shares to any person with a registered address, or who is resident or located, in the US or any other Excluded Territory. The Capital Raising Shares have not been and will not be registered under the relevant laws of any state, province or territory of the US or any other Excluded Territory and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the US or any other Excluded Territory except pursuant to an applicable exemption from the registration requirements of such jurisdiction.

Each person to whom the Capital Raising Shares are distributed, offered or sold outside the US will be deemed by its subscription for, or purchase of, the Capital Raising Shares to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the Capital Raising Shares, that:

(a) it is acquiring the Capital Raising Shares from the Company or Numis in an "offshore transaction" as defined in Regulation S;
(b) the Capital Raising Shares have not been offered to it by the Company or Numis by means of any "directed selling efforts" as defined in Regulation S; and
(c) it is not a US Person (as defined in Regulation S under the US Securities Act) and is not acquiring Capital Raising Shares for the account or benefit of a US Person.

Each person to whom the Capital Raising Shares are distributed, offered or sold inside the US will be deemed by its subscription for, or purchase of, the Capital Raising Shares to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the Capital Raising Shares, that:

(a) it is either a QIB that is also a Qualified Purchaser or an Accredited Investor that is also a Qualified Purchaser acquiring the Capital Raising Shares for its own account or for the account of either a QIB that is also a Qualified Purchaser or an Accredited Investor that is also a Qualified Purchaser; and
(b) the Capital Raising Shares have not been offered to it by the Company or Numis by means of any form of any "general solicitation" or "general advertising" (as such terms are defined in Regulation D).

The Capital Raising Shares will be "restricted securities" within the meaning of Rule 144(a) (3) under the US Securities Act. Resales of Capital Raising Shares may only be made; (i) outside the US in offshore transactions in reliance on Regulation S; or (ii) within the US to investors that are either (a) QIBs or (b) Accredited Investors and, in the case of either (a) or (b) above, are Qualified Purchasers. The Company will require the provision of a letter by investors in the US and any transferees in the US containing representations as to status under the US Securities Act and the Investment Company Act. The Company will refuse to issue or transfer Capital Raising Shares to investors that do not meet the foregoing requirements.

The ability of an Overseas Shareholder to bring an action against the Company may be limited by law. The Company is a public limited company incorporated in England and Wales. The rights of holders of Shares are governed by English law and by the Articles. These rights differ from the rights of shareholders in typical US corporations and some other non-UK corporations.

NOTICE TO EEA SHAREHOLDERS

In relation to each member state of the EEA which has implemented the Prospectus Directive (each, a "relevant member state") (except for the UK), with effect from and including the date on which the Prospectus Directive was implemented in that relevant member state (the "relevant implementation date") no Capital Raising Shares have been offered or will be offered pursuant to the Capital Raising to the public in that relevant member state prior to the publication of a prospectus in relation to the Capital Raising Shares which has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in the relevant member state, all in accordance with the Prospectus Directive, except that with effect from and including the relevant implementation date, offers of Capital Raising Shares may be made to the public in that relevant member state at any time:

(a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;
(b) to any legal entity which has two or more of: (i) an average of at least 250 employees during the last financial year; (ii) a total balance sheet of more than €43 million; and (iii) an annual turnover of more than €50 million, as shown in its last annual or consolidated accounts; or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Capital Raising Shares shall result in a requirement for the publication by the Company or Numis of a prospectus pursuant to Article 3 of the Prospectus Directive.

The expression an "offer of any Capital Raising Shares to the public" in relation to any Capital Raising Shares in any relevant member state means the communication in any form, and by any means, of sufficient information on the terms of the Capital Raising and any Capital Raising Shares to be offered so as to enable an investor to decide to purchase any Capital Raising Shares, as the same may be varied in that relevant member state by any measure implementing the Prospectus Directive in that relevant member state, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state.

In the case of any Capital Raising Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the Capital Raising Shares acquired by it in the Capital Raising have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any Capital Raising Shares to the public other than their offer or resale in a relevant member state to qualified investors as so defined or in circumstances in which the prior consent of the Company or Numis has been obtained to each such proposed offer or resale. Each of the Company and Numis and their respective affiliates, and others, will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.

NOTICE TO OVERSEAS SHAREHOLDERS

All Overseas Shareholders and any person (including, without limitation, a nominee, custodian or trustee) who has a contractual or other legal obligation to forward this document or any Application Form, if and when received, or other document to a jurisdiction outside the UK, should read paragraph 6 of Appendix 2 of this document.

An Overseas Shareholder may not be able to enforce a judgment against some or all of the Directors and executive officers of the Company. All of the Directors and executive officers are residents of the UK. Consequently, it may not be possible for an Overseas Shareholder to effect service of process upon the Directors and executive officers within the Overseas Shareholder's country of residence or to enforce against the Directors and executive officers judgments of courts of the Overseas Shareholder's country of residence based on civil liabilities under that country's securities laws. There can be no assurance that an Overseas Shareholder will be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than the UK against the Directors or executive officers who are residents of the UK or countries other than those in which judgment is made. In addition, English or other courts may not impose civil liability on the Directors or executive officers in any original action based solely on the foreign securities laws brought against IP Group or the Directors or the executive officers in a court of competent jurisdiction in England or other countries.

NOTICE TO ALL SHAREHOLDERS

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contents or use of any information contained in this document for any purpose other than considering an investment in the Capital Raising Shares is prohibited. By accepting delivery of this document, each offeree of the Capital Raising Shares agrees to the foregoing.

The distribution of this document and/or the Application Form into jurisdictions other than the UK may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, subject to certain exceptions, such documents should not be distributed or forwarded to, or transmitted in or into, the US or the Excluded Territories or into any other jurisdiction where the extension or availability of the Capital Raising would breach any applicable law. For further information on the manner of distribution of the Capital Raising Shares, and transfer restrictions to which they are subject, please see paragraph 6 of Appendix 2 of this document.

No action has been taken by the Company or by Numis that would permit an offer of the Capital Raising Shares, or possession or distribution of this document or any other offering or publicity material, in any jurisdiction where action for that purpose is required other than in the UK.

In connection with the Capital Raising, Numis and any of its affiliates, acting as investors on their own accounts, may take up Capital Raising Shares and in that capacity may retain, purchase or sell for their own account such Capital Raising Shares or related investments otherwise than in connection with the Capital Raising. Accordingly, references in this document to Capital Raising Shares being offered or placed should be read as including any offering or placement of Capital Raising Shares to Numis or any of its affiliates acting in such capacity. Numis does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

The contents of this document should not be construed as legal, business or tax advice. Each prospective investor should consult his, her or its legal adviser, financial adviser or tax adviser for advice. Neither the Company, Numis nor any of their respective directors, employees or representatives is making any representation to any offeree or purchaser or acquirer of the Capital Raising Shares regarding the legality of an investment in the Capital Raising Shares by such offeree or purchaser or acquirer under the laws applicable to such offeree or purchaser or acquirer.

Any reproduction or distribution of this document, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than in considering an investment in the Capital Raising Shares offered or otherwise made available hereby is prohibited. By accepting delivery of this document, each offeree of the Capital Raising Shares agrees to the foregoing.

Recipients of this document acknowledge that: (i) they have not relied on Numis or any of its affiliates in connection with any investigation of the accuracy of any information contained in, or incorporated by reference into, this document or their investment decision; and (ii) they have relied only on the information contained in, or incorporated by reference into, this document. In making an investment decision, each prospective investor must rely on its own examination, analysis and enquiry of the Group and the terms of the Placing and Open Offer, including the merits and risks involved.

REFERENCES TO DEFINED TERMS

Capitalised terms have the meanings ascribed to them in Part VII of this document.

GENERAL NOTICE

Nothing contained in this document is intended to constitute investment, legal, tax, accounting or other professional advice. This document is for your information only and nothing in this document is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

NO INCORPORATION OF WEBSITE INFORMATION

The contents of the websites of IP Group and its portfolio companies do not form part of this document.

PART I

LETTER FROM THE CHAIRMAN OF IP GROUP

(incorporated in England and Wales with registered number 04204490)

Registered Office: 24 Cornhill London EC3V 3ND United Kingdom

10 March 2015

Dear Shareholder

Proposed Firm Placing of 51,111,111 Capital Raising Shares and proposed Placing and Open Offer of 5,777,777 Capital Raising Shares, each at an Issue Price of 225 pence per share

and

Notice of General Meeting

1. INTRODUCTION

The Company announced today that it intends to raise approximately £128 million (approximately £124.7 million net of all Capital Raising costs and expenses) in a Capital Raising by way of a Firm Placing and a Placing and Open Offer consisting of the issue of 56,888,888 Capital Raising Shares in aggregate at an issue price of 225 pence per Capital Raising Share. 51,111,111 Capital Raising Shares will be issued through the Firm Placing and 5,777,777 Capital Raising Shares will be issued through the Placing and Open Offer. The Capital Raising is fully underwritten by Numis.

The Capital Raising is conditional upon, amongst other things, the passing of the Resolutions by Shareholders at the General Meeting, the Placing Agreement becoming unconditional in all respects and not having been terminated and Admission. Accordingly, Shareholders will be asked to approve the Resolutions at the General Meeting which has been convened for 10.00 a.m. on 26 March 2015 at the Company's offices at 24 Cornhill, London EC3V 3ND. Details of the Resolutions are set out in paragraph 8 of Part I of this document and the Notice of General Meeting is set out in Part VIII of this document.

The purpose of this document is to set out the background to, and reasons for, the Capital Raising, and:

to explain the Resolutions to be put to Shareholders at the General Meeting; and
to recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

It is the Board's opinion that the Capital Raising will strengthen the financial position of the Group and enable it to both deploy more capital into new and existing commercialisation opportunities and to take advantage of opportunities to broaden its access to potentially world class IP, both in the UK and internationally. The Board therefore considers the Capital Raising to be in the best interests of IP Group and IP Group Shareholders as a whole and unanimously recommends that IP Group Shareholders vote in favour of the Resolutions.

2. INFORMATION ON IP GROUP

IP Group was established in 2000 to commercialise scientific innovation developed in leading research institutions. IP Group's business model is to form, or assist in the formation of, start-up companies based on scientific and technical innovation, to take a significant minority equity stake in these companies and then to grow the value of that equity over time through taking an active role in the development of these companies. IP Group's strategy has been to build significant minority equity stakes across a diversified portfolio of companies designed to achieve strong equity returns over the medium to long term.

In March 2014, IP Group completed the acquisition of Fusion IP. This has resulted in a stronger combined team, a larger and more diversified portfolio and greater exposure to new spin-out companies from Fusion IP's university relationships.

2.1 Partnerships and other collaborative arrangements with UK universities and research intensive institutions

An important aspect of IP Group's strategy is its ability to access a wide range of leading scientific research. This has been achieved primarily through long-term partnerships with a number of leading research universities in the UK. IP Group entered into its first long term partnership with the University of Oxford's Chemistry Department in 2000. Since this time, the Group has entered into further partnerships and now has direct arrangements covering fifteen of the UK's leading universities.

In addition to these direct contractual arrangements, IP Group holds a stake in, and has an informal commercialisation alliance with, Technikos, a venture capital fund specialising in early-stage medical technologies with a long-term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering. IP Group also has a strategic holding in Cambridge Innovation Capital plc, which supports the growth of innovative businesses located in the "Cambridge Cluster" and is supported by the University of Cambridge's commercialisation office, Cambridge Enterprise. IP Group and Cambridge Innovation Capital have also entered into a memorandum of understanding to share information on investment and co-investment opportunities.

IP Group also has informal arrangements with other universities in the UK and it leverages the capabilities of its in-house sourcing team to identify and pursue compelling standalone opportunities arising from such universities.

The most recent Research Excellence Framework (the "REF"), undertaken in 2014, assessed the quality of research in UK higher education institutions ("HEIs"), replacing the Research Assessments Exercise last carried out in 2008. One output of the REF was an overall quality profile for each HEI showing the proportion of research activity judged to have met each of four starred quality levels, and generated a measure of research power based on this assessment of research quality and the number of Category A staff at each HEI. IP Group currently has access, either through a direct contractual relationship or its relationship with and stake in Technikos and Cambridge Innovation Capital, to 11 of the top 20 HEIs by this measure. The Directors believe that no other organisation seeking to provide commercialisation services to UK HEIs has as broad a range of access to high quality research in the UK.

2.2 IP commercialisation agreements with US research institutions

IP Group has access to intellectual property emanating from research carried out in the United States through its IP commercialisation agreements with each of the following:

Columbia Technology Ventures, the technology transfer office of Columbia University;
the University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme ("UPstart"); and
Princeton University.

Each agreement has an initial pilot phase of eighteen months and focuses on early stage, proof of principle opportunities based on intellectual property developed at each university.

In addition, in November 2014, IP Group launched a commercialisation initiative with FedIMPACT to identify and develop early stage technologies from a select group of US Department of Energy National Laboratories including Pacific Northwest National Laboratory and The National Renewable Energy Laboratory.

Further details on each of these agreements and initiatives are set out in paragraphs 14.23, 14.24, 14.25 and 14.26 of Part V of this document.

2.3 IP Group's portfolio

IP Group was quoted on AIM in October 2003 and moved to the Official List in June 2006. Subsequent to its admission to AIM, IP Group has raised approximately £183 million of net proceeds from equity investors, predominantly to build its portfolio of companies.

IP Group works with its university partners and other collaborators to identify promising intellectual property and to create and build businesses around this intellectual property. IP Group's extensive expertise in systematically identifying and commercialising intellectual property, combined with its inside knowledge of both industry and finance, has enabled the Group to create a strong and diverse portfolio with exposure to four main sectors – Biotech, Cleantech, Healthcare and Technology.

As at 31 December 2014, IP Group had a portfolio of 90 companies in which its combined stake was valued at approximately £349.9 million1. Approximately 73 per cent. of the value in IP Group's portfolio resides within its top ten companies (by value), many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. In 2014, IP Group invested a total of £23 million in its top ten companies (by value) representing approximately 49 per cent. of the aggregate annual investment into the portfolio. As at 31 December 2014, the aggregate value of the companies in which IP Group had an investment exceeded £1.9 billion2.

IP Group's current portfolio falls broadly into the following three categories:

Pre-seed: these comprise businesses or pre-incorporation projects that are generally at a very early stage of development. Opportunities at this stage typically involve investments of less than £200,000 from IP Group, predominantly allowing for proof of concept work to be carried out. Incubation projects generally have a duration of nine to eighteen months, following which the opportunity is progressed to seed financing, terminated or retained at the pre-seed stage for a further period to allow additional proof of concept work to be carried out;
Seed: these comprise businesses which have typically received financing of up to £1.0 million in total, primarily from IP Group, in order to continue to progress towards agreed commercial and technology milestones and to enable the recruitment of management teams and early commercial engagement; and
Post-seed: these comprise businesses that have received some level of further funding from co-investors external to IP Group, with total funding received generally in excess of £1.0 million. Although each business can vary significantly in its rate and manner of development, such additional funding is generally used to progress towards key milestones and commercial validation, to build senior level capability in the business and to attract experienced non-executive directors to their boards. This category is further broken down into post-seed

^1. Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the Group's unaudited preliminary results for the year ended 31 December 2014.

^2. Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited preliminary results of the Group for the year ended 31 December 2014 and grossed up to reflect the overall value of such portfolio companies.

private and post-seed quoted companies. Post-seed quoted companies consist of companies quoted on either AIM or the ISDX Markets.

Over the last 14 years, IP Group has developed a rigorous opportunity appraisal process that is designed to enable the assessment and development of technology businesses, initially with low levels of cash investment. During this early stage development phase, IP Group works closely with the business to help shape the strategic direction of the opportunity, occasionally taking an interim management role until such time as the business reaches a sufficient stage of maturity and has the resources to recruit an external leadership team. Through this approach, IP Group seeks to progressively eliminate risk, to monitor progress against milestones and to revise strategic direction based on commercial feedback, whilst minimising capital deployed at the earlier stages of such a business' development, with a view to building a robust portfolio of successful post-seed companies.

At the appropriate stage, IP Group will utilise its in-house executive search consultancy, IP Exec, to recruit experienced and high calibre individuals to lead its developing businesses alongside founders and the Group team members, who continue to provide strategic guidance in an executive or nonexecutive capacity. Further, IP Group, through its in-house division, IP Impact, has developed a series of innovative programmes that, by working with the CEOs and boards of portfolio companies, seek to help accelerate company growth. In addition, the Group's in-house capital markets function may assist the Group's portfolio companies, primarily those at the post-seed stage, by providing corporate finance advice in connection with fundraisings and/or exits, including facilitating introductions to co-investors. The Group also provides operational, legal, business and company secretarial support to its companies with a view to minimising the most common administrative factors that can contribute to early-stage company failure.

As at 31 December 2014, IP Group's portfolio of 90 companies consisted of 13 pre-seed businesses, 25 seed businesses and 52 post-seed businesses of which 19 were quoted. Of the 52 post-seed businesses, the top ten by value represented approximately 73 per cent. of the IP Group's overall portfolio value2. Further details on these ten companies, including a description of their businesses, amounts invested and realised by IP Group during the year ended 31 December 2014 and the values of IP Group's holdings as at 31 December 2014 is set out in paragraph 28 of Part II of this document.

2.4 Fund management

IP Group also manages certain third-party funds where the Directors believe such funds provide strategic benefits to IP Group's core business. These funds broaden the sources of financing potentially available to IP Group's existing portfolio companies and also provide specialist limited partner investors with access to opportunities in IP Group's existing portfolio and enable them to benefit from IP Group's expertise in IP sourcing and business building. Fund management also leverages IP Group's existing competencies to provide additional recurring income and, potentially, performance-related fees. Through Top Technology Ventures, IP Group's FCA-regulated venture capital fund management subsidiary, IP Group currently manages three funds, the £31 million IP Venture Fund, the £30 million IP Venture Fund II and the £25 million North East Technology Fund.

IP Venture Fund is no longer making investments in new portfolio companies. IP Venture Fund II invests alongside IP Group in new spin-out companies, from pre-seed stage through seed and postseed stage, from IP Group's UK university partnerships and other collaborations, with an investment ratio of 70:30 (IP Group: IP Venture Fund II).

The North East Technology Fund invests in technology companies in the North East region of the UK, from seed through to growth stages of development, and may include opportunities from the leading research universities in that region.

2.5 Modern Biosciences plc ("MBS")

In 2006, IP Group established Modern Biosciences plc, a subsidiary company, for the purposes of inlicensing and developing intellectual property relating to new therapeutic treatments. In November 2014, MBS entered into an R&D alliance and global option and license agreement with Janssen Biotech, Inc. in relation to MBS' novel bone-protective compounds for the treatment of rheumatoid arthritis ("RA"). Current treatments for RA include the anti-TNF class of drugs which had sales in excess of \$20 billion in 2013.3 The goal of the collaboration, facilitated by the Johnson & Johnson Innovation Centre in London, is to develop new drugs for the treatment of RA.

Under the terms of the exclusive agreement, Modern Biosciences will receive an up-front payment and is eligible to receive development, regulatory and commercialisation milestone payments up to a potential total of £176 million. In addition, MBS will receive royalties on future sales of any products that may result from the alliance upon successful launch and commercialisation.

The most advanced of MBS' compounds is currently in pre-clinical development and is due to enter Phase 1 clinical studies in 2015.

2.6 The Directors and management team

IP Group is led by an experienced board which currently comprises a Non-executive Chairman, Chief Executive Officer, Chief Investment Officer, Chief Financial Officer, Chief Operating Officer and four additional Non-executive Directors. The Board collectively possesses considerable investment, commercial and financial experience, with particular expertise in the development of technologybased businesses.

It was announced on 29 October 2014, that I will be stepping down from my position as the Non-executive Chairman of the Board and as a Director once a suitably qualified and experienced successor had been appointed. As announced today, the Board has approved the Nomination Committee's recommendation to appoint Mike Humphrey as the Non-executive Chairman of the Board. Mr. Humphrey, currently the Group's senior independent director and chairman of the Remuneration Committee, will assume office with effect from 24 March 2015. I will formally step down from the Board on the same date.

The Board is supported by an experienced management team, including a team that has primary responsibility for sourcing, evaluating and building new and early stage opportunities (comprising pre-seed and seed). This team comprises four independently managed divisions, each with specialist expertise in a particular technology area: Biotech, Cleantech, Healthcare and Technology. In addition, IP Group leverages its extensive network of highly experienced individuals with expertise spanning financial, technical, industry and academic specialisms, as well as its own in-house recruitment capability, to build and strengthen the boards of IP Group's spin-out companies.

3. BACKGROUND TO, AND REASONS FOR, THE CAPITAL RAISING

The Group has built a platform for the systematic commercialisation of intellectual property which, to date, has been primarily sourced from within UK universities with which the Group has Partnerships.

The Board believes that there is a significant opportunity to accelerate the growth of the Group by increasing its overall rate of investment in both its current portfolio and in new opportunities in the UK and the US, whilst preserving the returns that it has historically been able to achieve. As companies within the Group's portfolio mature, they generally require an increased level of investment, commensurate with their advancing stage of development, in order to achieve their technical, commercial and strategic objectives. The Board considers that, where such companies continue to make progress towards achieving these objectives, there can be advantages for the Group in maintaining significant minority equity stakes in these companies in order to seek to maximise its level of returns.

The Board considers that the Group is in a highly advantageous position to assess the merits of further investments in its post-seed portfolio companies, given its well-established and in-depth understanding of the relevant company in each case. These investment opportunities are typically more mature (in that technology proof of concept has generally been achieved and demonstrated) and additional capital is required to bring the technology to, or towards, commercial validation. The Capital Raising will enable the Group to continue to have flexibility to lead these subsequent investment rounds in both existing and future post-seed

^3. Based on 2013 sales figures published by HUMIRA, Enbrel and Remicade.

companies, decreasing its reliance on external capital and allowing it to maintain significant minority equity stakes with a view to continuing to generate strong equity returns.

The Directors continue to consider that there are attractive opportunities for the Group to deploy its business model internationally and, to this end, in 2013 established a presence on the east coast of the US. The Board believes that this area, and indeed the broader US, represents a rich source of potentially world-class IP which has seen only limited systematic commercialisation efforts to date. For example, a report published in December 2013 by the State University of New York reported that, for the US in 2012, whilst 87 per cent. of academic research funding was focused on the 'hard' sciences (physical and life), only 44 per cent. of venture capital investment was in these areas and, in contrast, whilst only 3 per cent. of academic research funding was in the area of Information Technology, this area attracted 40 per cent. of all venture capital investment. Separately, by comparing the level of R&D spending4 at top US universities5 in each State against the corresponding level of VC investment6, it is clear that there is a substantial geographic imbalance. For example, California received less than 20 per cent. of the R&D funding provided to top universities nationally across the life sciences, physical sciences and engineering disciplines in 2012, but accounted for 56 per cent. of the venture capital investment in 2014. At the same time the corresponding figures for Massachusetts were 16 per cent. of R&D funding and 10 per cent. of venture capital investment, for Pennsylvania 9 per cent. of R&D funding and 2 per cent. of venture capital investment, North Carolina 7 per cent. of R&D funding and 1 per cent. of venture capital investment, and Michigan 6 per cent. of R&D funding and less than 1 per cent. of venture capital investment. This is against a backdrop of a level of national university R&D expenditure that has risen during each year from 2008 to 2012. The Directors believe that this mismatch of funding creates an attractive opportunity for IP Group.

Having successfully established initial commercialisation agreements with each of the University of Pennsylvania, Columbia University and Princeton University, all of whom featured in the top 20 of both the Times Higher Education World University Rankings and the QS World University Rankings for 2014/15, the Group announced the formation of its first US university spin-out company in December 2014. In addition, in November 2014, IP Group launched a commercialisation initiative with FedIMPACT to identify and develop early stage technologies from a select group of US Department of Energy National Laboratories ("DOE Laboratories"), including Pacific Northwest National Laboratory and The National Renewable Energy Laboratory. The Directors believe that the increased strength of the Group's balance sheet following completion of the Capital Raising will enable IP Group to continue to build upon and strengthen the relationships with these universities, FedIMPACT and the DOE Laboratories in order to deploy capital into commercialisation opportunities based on potentially world class intellectual property arising from the same, and to further establish its reputation in the US market place.

The Group will continue to seek to identify compelling IP-based opportunities arising from its current UK Partnerships and its current agreements and initiatives within the US. In addition, the Group may source further opportunities from or with other research intensive institutions both in the UK and the US. Consistent with its belief in a partnership approach to the sourcing of intellectual property commercialisation opportunities, the Group will also continue to explore other relationships or collaborations that seek to enable or preserve access to research emanating from premier UK- and US-based universities in such a manner that allows it to manage its capital risk, such as through participation in university captive funds, whether structured as special purpose vehicles or otherwise.

The Directors believe that the increased strength of its balance sheet following completion of the Capital Raising will also enhance the Group's ability to: attract new early stage commercialisation opportunities from, and collaborations with, research intensive institutions both in the UK and the US; attract and retain high quality talent within the Group; and attract experienced management teams and co-investment partners, as appropriate, into portfolio companies as they develop.

^4. As measured by the National Science Foundation Higher Education Research and Development Survey 2012

^5. Classified as those ranking in the top 100 in the 2014/15 Times Higher Education World University Rankings

^6. As measured by the PriceWaterhouseCoopers / National Venture Capital Association MoneyTree™ Report accessed on 29 January 2015

The Board has given careful consideration to the structure of the proposed fundraising and has concluded that the most appropriate structure for the Company and its Shareholders at this time is the Capital Raising, comprising the Firm Placing to raise gross proceeds of £115 million and the Placing and Open Offer to raise gross proceeds of £13 million. Shareholders holding in aggregate approximately 85.4 per cent. of the Existing Shares have been approached and given the opportunity to participate in the Firm Placing. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the fundraising by both subscribing for their respective Open Offer Entitlements and by subscribing for Excess Shares under the Excess Application Facility. The Open Offer constitutes approximately 10.2 per cent. of the maximum number of Capital Raising Shares made available pursuant to the Capital Raising. The Board considers the Open Offer to be primarily of benefit to those smaller Shareholders who have not been approached to participate in the Firm Placing. Shareholders, including those who have agreed to take up Firm Placed Shares and subscribe for Placing Shares (and who together hold 80.3 per cent. of the Existing Shares as at 9 March 2015 (being the latest practicable date prior to the publication of this document)) have agreed not to apply for any of their Open Offer Entitlements or for any Excess Shares through the Excess Application Facility. Accordingly, the Board expects that a substantial proportion of the Open Offer Shares will be available to satisfy applications under the Excess Application Facility, should the Directors exercise their discretion to claw back Open Offer Shares which have been placed with Non-Firm Placees under the Placing. The allocation of Excess Shares is to be determined by the Board in its absolute discretion. In determining such allocation, the Board intends to favour Qualifying Shareholders who validly apply under the Excess Application Facility and who have not been given the opportunity to participate in the Firm Placing. However, no assurance can be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full or in part or at all.

The Capital Raising is conditional upon Shareholders passing the Resolutions at the General Meeting.

4. USE OF PROCEEDS

IP Group is proposing to raise approximately £128 million (before expenses) via the Capital Raising, with the net proceeds being used to:

continue to increase investment into the Group's IP commercialisation business both in the UK and the US in order to maintain or increase its stakes through subsequent financing rounds in those post-seed investment opportunities which the Board considers to be the most promising;
continue to expand its access to, and provide capital to enable the development of, technology originating from its partner universities and other research intensive institutions – to include, where appropriate, through the establishment of new, or extensions and/or amendments to existing, partnerships or other collaborative relationships with such institutions and/or other relationships that seek to enable exposure to research emanating from premier UK- and US-based universities in such a manner that allows the Group to manage its capital risk;
provide capital to fund the continued growth of the Group's US business, building upon, strengthening and potentially adding to its existing university relationships and its initiative with FedIMPACT and the DoE Laboratories, including providing capital to spin-out companies from such universities and the DoE laboratories.

In addition, it is possible that the Group may use some of the proceeds to expand its fund management operations should the opportunity arise and be deemed by the Directors to be in the Group's best interests (although no such opportunity has been identified as at the date of this document).

Also, the Board currently anticipates that it will utilise (subject, amongst other things, to the individual circumstances of, and rate of realisations obtained from, its portfolio companies) approximately 75 per cent. of the aggregate net proceeds of the Capital Raising in continuing to increase investment into the Group's UK and US IP commercialisation business to maintain or increase its stakes through subsequent funding rounds in post-seed investments, approximately 12.5 per cent. of such aggregate net proceeds towards continuing to expand its access to, and provide capital to enable the development of, technology originating from its partner universities and other research intensive institutions and approximately 12.5 per cent. of such aggregate net proceeds to fund the continued growth of the Group's US business.

5. CURRENT TRADING AND PROSPECTS

5.1 Interim Management Statement announced on 13 November 2014

On 13 November 2014, IP Group issued its interim management statement for the period from 30 June 2014 to 12 November 2014. The information below is extracted from that announcement.

Portfolio update

As at 11 November 2014, the fair value of the Group's portfolio was £342.5m compared to £319.6m at 30 June 2014. This represents a net unrealised fair value increase of £5.0m, excluding the investments and realisations described below. This net fair value increase was primarily driven by a £17.8m fair value gain as a result of Oxford Nanopore Technologies Limited's £35m fundraising in August 2014, combined with positive movements in the quoted portfolio, notably Xeros Technology Group plc (£2.4m), Ilika plc (£1.6m) and Medaphor Group plc (£1.4m). These were partially offset by decreases in the fair values of the Group's holdings in Applied Graphene Materials plc (£5.7m) and Avacta Group plc (£5.5m), as a result of share price decreases.

From 1 July 2014 to 11 November 2014, the Group provided pre-seed, seed and development capital totalling £22.4m to 22 portfolio companies. During the period covered by the Group's Q3 IMS, a total of £14.2m was provided to 18 companies. The Group also generated cash proceeds of £4.6m (Q3 2013 IMS: £0.6m), primarily as a result of the realisation of the Group's holding in Synairgen plc. As at 13 November 2014, the Group's portfolio consists of holdings in 88 intellectual property based companies, compared to 86 companies as at 30 June 2014.

Significant developments in the Group's portfolio companies since 30 June 2014 have included:

In October 2014, Oxford Nanopore Technologies Limited ("Oxford Nanopore"), a spin-out company from the University of Oxford that specialises in nanopore-based electronic molecular analysis systems, released details of its PromethION product, a tablet-sized benchtop instrument, which is designed to be scalable to high throughput if required and is complementary to existing products. This followed the completion in August 2014 of a significantly oversubscribed £35m fundraising, with funds being used to further develop Oxford Nanopore's commercial and manufacturing infrastructure that has been serving early customers through its MinION Access Programme. The financing resulted in a fair value uplift in the Group's resultant 19.9% interest of £17.8m.
In August 2014, IP Group led a tranched £6m financing into Diurnal Limited to support a Phase III clinical trial for its lead Chronocort® programme, contributing up to £4.1m. Having been the subject of a positive Phase II trial in the treatment of Congenital Adrenal Hyperplasia earlier this year, the company has already commenced Phase III activities as it seeks to progress Chronocort towards market authorisation, with the pivotal trial due to commence in the first half of 2015. At 11 November 2014, the Group's 46.2% interest in Diurnal was valued at £6.8m.
In August 2014, MedaPhor Group plc ("Medaphor"), the global provider of advanced ultrasound education and training for medical professionals, gained admission to AIM and raised gross proceeds of £4.7m in a placing. In September 2014, Medaphor announced in its half-year financial report that its sales had increased by 10% to £662,000; that it had established a US subsidiary, MedaPhor North America, Inc.; the expansion of its UK and US sales teams; the launch of a new radiology training simulator platform, and the strengthening of its management team as part of its IPO. The Group's 47.2% interest was valued at £5.4m at 11 November 2014.
In September 2014, Retroscreen Virology Group plc ("Retroscreen"), a spin-out from Queen Mary University of London, raised £33.6m before expenses through an oversubscribed placing. The Group contributed £4.0m towards the placing. Retroscreen, which pioneered the commercialisation of the hVIVO Human Challenge Model of disease, seeks to leverage its hVIVO platform as a powerful tool in biomarker discovery and in the development of new disease models. The Group's 17.5% interest in Retroscreen was valued at £32.0m at 11 November 2014.

• In October 2014, Ceres Power Holdings plc ("Ceres"), a world-leading developer of low cost, next generation fuel cell technology for use in distributed generation and other applications, announced that it had signed a joint development agreement with a leading global Japanese power systems company following a successful period of extensive testing both in the UK and Japan during the past year. This followed the raising of £20.0m (gross of expenses) for working capital purposes by way of an oversubscribed placing in July 2014, of which IP Group committed £4.0m. The fair value of the Group's 23.2% interest in Ceres was valued at £13.5m at 11 November 2014.

Operational update

On 6 November 2014, the Group announced that it had formed a pilot initiative with FedIMPACT to identify and develop early-stage technologies from a select group of US Department of Energy ("DOE") Laboratories. The initiative includes technologies in materials, clean technology, life science, medical and human sciences, information technology, electronics, communications and robotics. FedIMPACT will seek early-stage technologies from an initial pilot group of DOE Laboratories, including Pacific Northwest National Laboratory and the National Renewable Energy Laboratory.

5.2 Developments since the Interim Management Statement announced on 13 November 2014

On 20 November 2014, Modern Biosciences plc ("MBS") announced that it had been awarded a grant of up to £2.4 million by the UK Government-backed Biomedical Catalyst. The award will be used to provide support for MBS' lead programme for the development of novel bone-protective compounds in the treatment of rheumatoid arthritis ("RA").

On 26 November 2014, Genomics Ltd ("Genomics"), a spin-out from the University of Oxford that has developed an analytical platform for genomic sequence data analysis, announced that it had completed a £10.3 million fundraising.

On 27 November 2014, MBS announced that it had entered into an R&D alliance and global option and licence agreement with Janssen Biotech, Inc. in relation to MBS' novel bone protective compounds for the treatment of RA. The goal of the collaboration, facilitated by the Johnson & Johnson Innovation Centre in London, is to develop new drugs for the treatment of RA. Under the terms of the exclusive agreement, MBS will receive an up-front payment and is eligible to receive development, regulatory and commercialisation milestone payments up to a potential total of £176 million. In addition, MBS will receive royalties on future sales of any products that may result from the alliance upon successful launch and commercialisation.

On 31 December 2014, IP Group completed its first spin-out from a US university with the University of Pennsylvania. The Company agreed to provide initial working capital of up to \$1.0 million for a significant stake in Exyn Technologies, Inc., which has developed software to control multi-sensory rotorcraft micro aerial vehicles as well as communication between flying vehicles. The initial capital will be provided in tranches subject to the successful attainment of commercial and technical milestones.

On 22 Jan 2015, Tissue Regenix Group plc announced that it had raised approximately £20 million (before expenses) at 19p per share, of which IP Group provided approximately £2.5 million. Following the completion of the placing, IP Group holds 13.6 per cent. of the enlarged share capital of the company.

5.3 Portfolio and cash update7

At 31 December 2014, the Group's portfolio consisted of holdings in 90 companies compared to 72 at 31 December 2013. The portfolio was valued at approximately £349.9 million (2013: £285.9 million), representing a net unrealised fair value increase for the year of approximately £20.7 million excluding the investments and realisations described below.

During the year to 31 December 2014, the Group provided pre-seed, seed and post-seed capital totalling approximately £46.8 million to its portfolio companies. The Group generated cash proceeds from the sale of equity investments of approximately £9.7 million (2013: £5.5 million). Cash, cash

^7. Portfolio and cash information is extracted from the Group's unaudited preliminary results for the year ended 31 December 2014.

equivalents and deposits at 31 December 2014 totalled approximately £97.3 million (2013: £24.1 million).

5.4 Outlook

2014 was a transformational year of growth for IP Group with the acquisition of Fusion in March 2014 creating a Group with an enlarged specialised team and a greater breadth of coverage. Whilst the macroeconomic environment improved in the UK and the USA, the AIM market (where approximately 40 per cent. of the Group's portfolio companies are quoted) lost 17.5 per cent. of its value. When considered against this backdrop, the Group's financial performance was satisfactory, although much lower when compared with 2013. For the Group's portfolio companies, 2014 was, in the main, an encouraging year with a number continuing to grow their businesses, raise additional growth capital for development and achieve both technical and commercial milestones. During 2014, the Group continued to and will, going forward, continue to explore opportunities to expand its access to leading scientific innovation by broadening and deepening its arrangements with its existing university partners and other research intensive institutions and entering into collaborations with new partners, both in the UK and the US. Such arrangements are expected to continue to provide the Group with opportunities to invest in early stage projects and companies based on scientific and technical innovation. The Board is confident that this flow of opportunities, coupled with the Group's ability to continue to increase the capital deployed into its portfolio companies as a result of the Capital Raising, will continue to drive the Group's growth. These factors give the Board confidence that the Group is well placed to continue to deliver medium to long-term value for Shareholders.

6. PRINCIPAL TERMS AND CONDITIONS OF THE CAPITAL RAISING

IP Group is proposing to raise gross proceeds of approximately £128 million (approximately £124.69 net of expenses) by the issue of 56,888,888 Capital Raising Shares by way of the Firm Placing and the Placing and Open Offer at 225 pence per share. The Capital Raising is underwritten by Numis. 51,111,111 Capital Raising Shares will be issued through the Firm Placing and 5,777,777 Capital Raising Shares will be issued through the Placing and Open Offer.

The Board considers the Firm Placing and the Placing and Open Offer to be a suitable fundraising structure as it will allow access to a variety of new institutional investors to broaden the Company's shareholder base whilst providing existing Shareholders with the opportunity to participate in the fundraising to an extent through the Open Offer.

Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. The Open Offer Shares have been conditionally placed with Non-Firm Placees pursuant to the Placing and are subject to clawback to satisfy valid applications under the Open Offer and the Excess Application Facility. Qualifying Shareholders are not being offered the right to subscribe for the Firm Placed Shares. Qualifying Shareholders applying for their Open Offer Entitlements may also apply, under the Excess Application Facility, for Excess Shares in excess of their Open Offer Entitlements as described below.

All elements of the Capital Raising have the same Issue Price. The Issue Price was set having regard to the prevailing market conditions and the size of the Issue and represents a discount of approximately 6.6 per cent. to the Closing Price of 240.9 pence per Share on 9 March 2015 (being the last Business Day before the announcement of the Capital Raising). The Board believes that both the Issue Price and the discount are appropriate.

The Capital Raising Shares, when issued and fully paid, will rank in full for all dividends or distributions made, paid or declared after Admission and otherwise pari passu in all respects with the Existing Shares. 56,888,888 Capital Raising Shares are to be issued pursuant to the Capital Raising (representing 11.9 per cent. of the existing issued share capital).

Some questions and answers in relation to the Open Offer, together with details of further terms and conditions of the Open Offer, including the procedure for application and payment and the procedure in respect of entitlements not taken up, are set out in Appendix 1 and Appendix 2 to this document and, where relevant, are set out in the Application Form.

Firm Placing

The Firm Placees have conditionally agreed to subscribe for 51,111,111 Capital Raising Shares in aggregate at the Issue Price (representing gross proceeds of approximately £115 million). The Firm Placed Shares are not subject to clawback to satisfy the valid applications by Qualifying Shareholders under the Open Offer and are not part of the Placing and Open Offer. The terms and conditions of the Firm Placing and the Placing are set out in Appendix 3 to this document.

Open Offer

The Directors recognise the importance of pre-emption rights to Shareholders and consequently 5,777,777 Capital Raising Shares are being offered to existing Shareholders by way of the Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the Capital Raising by both subscribing for their respective Open Offer Entitlements and by subscribing for Excess Shares under the Excess Application Facility, subject to availability.

The Open Offer Shares have been conditionally placed with Non-Firm Placees pursuant to the Placing and are subject to clawback to satisfy valid applications under the Open Offer and, if the Directors determine (having consulted with Numis), the Excess Application Facility.

To the extent that valid applications are not received in respect of Open Offer Shares under the Open Offer, such Open Offer Shares may be allocated to Qualifying Shareholders to meet any valid applications under the Excess Application Facility.

Open Offer Entitlements

Qualifying Shareholders are being given the opportunity on, and subject to, the terms and conditions of the Open Offer to apply for Open Offer Shares at the Issue Price, pro rata to their holdings of Shares on the Record Date on the basis of:

1.2049 Open Offer Shares for every 100 Record Date Shares

Open Offer Entitlements under the Open Offer will be rounded down to the nearest whole number and any fractional entitlements to Open Offer Shares will not be allocated but will be aggregated and made available under the Excess Application Facility and/or the Placing.

If you have sold or otherwise transferred all of your Existing Ordinary Shares before the ex-entitlement date, you are not entitled to participate in the Open Offer.

Qualifying Shareholders are also being offered the opportunity to subscribe for Excess Shares in excess of their Open Offer Entitlements pursuant to the Excess Application Facility as described below.

Excess Application Facility

Qualifying Shareholders may apply to subscribe for Excess Shares using the Excess Application Facility, should they wish. Qualifying Non-CREST Shareholders wishing to apply to subscribe for Excess Shares may do so by completing the relevant sections on the Application Form. Qualifying CREST Shareholders who wish to apply to subscribe for more than their Open Offer Entitlements will have Excess CREST Open Offer Entitlements credited to their stock account in CREST and should refer to paragraphs 2, 4.1.4 and 4.2.3 of Appendix 2 of this document for information on how to apply for Excess Shares pursuant to the Excess Application Facility.

The Excess Application Facility will comprise Open Offer Shares that are not taken up by Qualifying Shareholders under the Open Offer pursuant to their Open Offer Entitlements and which have been clawed back from Non-Firm Placees.

The maximum amount of Capital Raising Shares to be issued under the Excess Application Facility (the "Maximum Excess Application Number") will be limited to: (a) the maximum size of the Issue; less (b) the aggregate of the Firm Placed Shares, the Capital Raising Shares issued under the Open Offer pursuant to Qualifying Shareholders' Open Offer Entitlements and any Capital Raising Shares that the Directors determine to issue under the Placing. Excess Applications will therefore only be satisfied to the extent that: (a) other Qualifying Shareholders do not apply for their Open Offer Entitlements in full; (b) where fractional entitlements have been aggregated and made available under the Excess Application Facility; (c) the Directors exercise their discretion to claw back Capital Raising Shares from the Placing to satisfy valid applications under the Excess Application Facility. Qualifying Shareholders can apply for up to the Maximum Excess Application Number of Capital Raising Shares under the Excess Application Facility, although if applications exceed the maximum number available, the applications will be scaled back. Excess monies in respect of applications which are not met in full will be returned to the applicant (at the applicant's risk) without interest as soon as practicable thereafter by way of cheque or CREST payment, as appropriate.

Placing

Pursuant to the Placing Agreement, Non-Firm Placees have conditionally agreed to subscribe for the Open Offer Shares. Such Open Offer Shares are subject to clawback to satisfy valid applications received from Qualifying Shareholders under the Open Offer and the Excess Application Facility. The terms and conditions of the Placing are set out in Appendix 3.

Dilution

If a Qualifying Shareholder does not take up his Open Offer Entitlement, such Qualifying Shareholder's holding will be diluted by approximately 10.6 per cent. as a result of the Capital Raising (assuming that such Qualifying Shareholder is not a Placee). Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlement in respect of the Open Offer (and does not receive any other Capital Raising Shares pursuant to the Capital Raising, including the Excess Application Facility) will suffer dilution of approximately 9.5 per cent. to his shareholding in the Company as a result of the Firm Placing.

Fractions

Fractions of Open Offer Shares will not be allocated to Qualifying Shareholders in the Open Offer and fractional entitlements under the Open Offer will be aggregated and made available under the Excess Application Facility and/or the Placing.

Basis of allocation under the Capital Raising

The Open Offer is being made on a pre-emptive basis to Qualifying Shareholders and is not subject to scaling back or clawback in favour of the Placing. Any Capital Raising Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to their Open Offer Entitlements and under the Excess Application Facility will be subscribed by Non-Firm Placees under the Placing, subject to the terms of the Placing Agreement.

Conditionality

The Capital Raising is conditional upon:

the passing of the Resolutions without amendment to be proposed at the General Meeting to be held on 26 March 2015;
the Placing Agreement having become unconditional in all respects save for the condition relating to Admission and not being terminated in accordance with its terms before Admission occurs; and
Admission occurring by not later than 8.00 a.m. on 27 March 2015 (or such later time and date as the Company and Numis may agree, being not later than 8.00 a.m. on 10 April 2015).

Prior to Admission, Numis may terminate the Placing Agreement in certain defined circumstances. Following Admission, the Placing Agreement cannot be terminated.

If the conditions of the Placing Agreement are not fulfilled on or before 8.00 a.m. on 10 April 2015, application monies will be returned to applicants (at the applicant's risk) without interest as soon as possible thereafter.

The Capital Raising is conditional upon Shareholders passing the Resolutions at the General Meeting.

Important notice

The Capital Raising Shares are not being made available in whole or in part to the public except under the terms of the Open Offer. The Open Offer is not being made to persons in the United States or in any jurisdiction in which such an offer or solicitation would be unlawful. Accordingly, Application Forms are not (subject to certain exceptions) being sent to, and Open Offer Entitlements and Excess CREST Open Offer Entitlements are not being credited to, Overseas Shareholders. The attention of Overseas Shareholders is drawn to paragraph 6 of Appendix 2 of this document.

The Open Offer is not a rights issue. Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims and the Application Form is not a document of title and cannot be traded. Qualifying Shareholders should be aware that, in the Open Offer, unlike in the case of a rights issue, any Open Offer Shares not applied for under the Open Offer will not be sold in the market or placed for the benefit of Qualifying Shareholders, but will be taken up under the Excess Application Facility and/or the Placing, with the proceeds retained for the benefit of the Company.

To be valid, completed Application Forms and payment in full must be received by Capita Asset Services no later than 11.00 a.m. on 25 March 2015. Further information on the Open Offer, including the procedure for application and payment, is set out in Appendix 2 of this document and, where applicable, the Application Form.

7. FINANCIAL IMPACT OF THE CAPITAL RAISING

The Capital Raising will result in an increase in cash and other short term funds of approximately £124.7 million with a corresponding increase in the net assets of IP Group.

8. PROPOSALS TO BE VOTED ON AT THE GENERAL MEETING

Part VIII of this document contains a notice convening a general meeting of the Company which is to be held at the Company's offices at 24 Cornhill, London EC3V 3ND at 10.00 a.m. on 26 March 2015. The full text of the Resolutions is set out in the Notice of General Meeting.

Resolution 1 – Approval of Capital Raising

Resolution 1 is an ordinary resolution to approve the terms of the Firm Placing and the Placing and Open Offer (including the Excess Application Facility) and to direct the Directors to implement the Capital Raising and authorise the exercise of the powers conferred by this Resolution and all the powers of the Company to the extent that the Directors (or a duly appointed committee thereof) determine it necessary or desirable to implement the Capital Raising.

Resolution 2 – Authority to allot Capital Raising Shares

Resolution 2 is an ordinary resolution as required by section 551 Companies Act which will, if passed, authorise the Directors to allot the Capital Raising Shares pursuant to the Capital Raising. Resolution 2 is subject to the passing of Resolution 1.

Resolution 3 – Disapplication of pre-emption rights for the issue of the Capital Raising Shares

Resolution 3 is a special resolution as required by section 570 of the Companies Act and is conditional upon the passing of Resolution 2. If passed, this Resolution will disapply the statutory pre-emption rights in relation to the allotment of equity securities pursuant to the Capital Raising. The maximum amount of equity securities to which the disapplication will apply is 56,888,888 Capital Raising Shares, being the maximum number of Capital Raising Shares that could be allotted.

9. OVERSEAS SHAREHOLDERS

The attention of Overseas Shareholders who have registered addresses outside the United Kingdom, or who are citizens of, or residents or located in, countries other than the United Kingdom, or who are holding Existing Shares for the benefit of such persons (including, without limitation, nominees, custodians and trustees), or have a contractual or legal obligation to forward this document, the Form of Proxy or the Application Form to such persons, is drawn to the information on the cover of this document and which appears in paragraph 6 of Appendix 2 of this document.

In particular, Qualifying Shareholders who have registered addresses outside the UK, or who are citizens of, or resident or located in, countries other than the UK (including, without limitation, the US or any of the Excluded Territories) should consult their professional advisers as to whether they require any governmental or other consent or need to observe any other formalities to enable them to take up their entitlements in the Open Offer.

10. TAXATION

Certain information about UK and US taxation in relation to the Firm Placing, Placing and Open Offer is set out in paragraph 13 of Part V of this document. If you are in any doubt as to your tax position, or you are subject to tax in a jurisdiction other than the United Kingdom or the US, you should consult your own independent tax adviser without delay.

11. ACTION TO BE TAKEN

11.1 General Meeting

You will find enclosed with this document a Form of Proxy for use at the General Meeting or any adjournment thereof. Whether or not you propose to attend the General Meeting in person, it is important that you complete and sign the Form of Proxy in accordance with the instructions printed on it and return it to the Company's Registrar, by hand only to Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or in accordance with the reply paid details, as soon as possible and, in any event, so as to be received not later than 10.00 a.m. on 24 March 2015. The completion and return of a Form of Proxy (or the electronic appointment of a proxy) will not preclude you from attending the General Meeting and voting in person, if you so wish.

Qualifying Non-CREST Shareholders (i.e. holders of Existing Shares who hold their Existing Shares in certificated form)

If you are a Qualifying Non-CREST Shareholder you will receive an Application Form which gives details of your maximum entitlement under the Open Offer (as shown by the number of Open Offer Entitlements set out in Box 4). Under the Excess Application Facility, provided you are a Qualifying non-CREST Shareholder and have agreed to take up your Open Offer Entitlement in full, you may apply for more than the amount of your Open Offer Entitlement should you wish to do so. If you wish to apply for Open Offer Shares under the Open Offer or the Excess Application Facility, you should complete the Application Form in accordance with the procedure for application set out in paragraph 4.1 of Appendix 2 of this document and on the Application Form itself. Completed Application Forms, accompanied by full payment in accordance with the instructions in paragraph 4.1 of Appendix 2 of this document, should be posted in the accompanying pre-paid envelope or returned by post or by hand (and, if by hand, during normal business hours only) to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to arrive as soon as possible and, in any event, so as to be received by no later than 11.00 a.m. on 25 March 2015. If you do not wish to apply for any Open Offer Shares under the Open Offer, you should not complete or return the Application Form.

11.2 Open Offer

Qualifying CREST Shareholders

If you are a Qualifying CREST Shareholder no Application Form will be sent to you and you will receive a credit to your appropriate stock account in CREST in respect of the Open Offer Entitlements under the Open Offer and also an Excess CREST Open Offer Entitlements for use in connection with the Excess Application Facility. You should refer to the procedure for application set out in Appendix 2 of this document.

The latest time for applications under the Open Offer to be received whether from Qualifying Non-CREST Shareholders or from Qualifying CREST Shareholders is 11.00 a.m. on 25 March 2015. The procedure for application and payment depends on whether, at the time at which the application and payment is made, you have an Application Form in respect of your entitlement under the Open Offer or have your Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to your stock account in CREST in respect of such entitlements. The procedures for application and payment are set out in Appendix 2 of this document. Further details also appear in the Application Form which has been sent to Qualifying Non-CREST Shareholders.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with this document and the Open Offer.

The attention of Overseas Shareholders is drawn to paragraph 6 of Appendix 2 of this document.

If you are in any doubt as to the action you should take, you should immediately seek your own personal financial advice from an independent professional adviser authorised under FSMA, if you are in the United Kingdom or, if you are not, from another appropriately authorised independent professional adviser.

12. FURTHER INFORMATION AND RISK FACTORS

Your attention is drawn to the further information set out in Parts II to VIII of this document. In addition, your attention is drawn to the section entitled "Risk Factors" at the front of this document after the section entitled "Summary". You are advised to read the whole of this document, and the documents incorporated by reference, and not to rely solely on the information contained in this letter.

13. DIRECTORS' INTERESTS

The Directors are not participating in the Capital Raising. Further information on their interests can be found in paragraph 9.4 of Part V of this document.

14. RECOMMENDATION

The Board considers the Capital Raising and the passing of each of the Resolutions to be in the best interests of the Company and the Shareholders as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of each of the Resolutions to be put to the General Meeting as they intend to do, or procure, in respect of their own beneficial holdings, amounting in aggregate to 4,547,434 Existing Shares, representing approximately 0.95 per cent. of the Existing Shares.

Yours sincerely

Dr Bruce Smith CBE Chairman

PART II

INFORMATION ON IP GROUP

1. INTRODUCTION

1.1 IP Group was established in 2000 to commercialise scientific innovation developed in the UK's leading research institutions.
1.2 IP Group's business model is to form, or assist in the formation of, spin-out companies based on that innovation, to take a significant minority equity stake in these spin-out companies and then to grow the value of that equity over time by taking an active role in the development of such spin-out companies. IP Group's strategy has been to build significant minority equity stakes across a diversified portfolio of companies designed to achieve strong equity returns over the medium to long term.
1.3 An important aspect of IP Group's strategy is its ability to access a wide range of leading scientific research. This has been achieved primarily through long-term partnerships with a number of leading research universities in the UK. IP Group entered into its first long term partnership with the University of Oxford's Chemistry Department in 2000. Since then the Group has entered into further partnerships and now has direct arrangements covering fifteen of the UK's leading universities.

In addition to these direct contractual arrangements, IP Group holds a stake in, and has a commercialisation alliance with, Technikos, a venture capital fund specialising in early-stage medical technology with a long-term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering. IP Group also has a strategic holding in Cambridge Innovation Capital plc, which supports the growth of innovative businesses located in the "Cambridge Cluster" and is supported by the University of Cambridge's commercialisation office, Cambridge Enterprise. IP Group and Cambridge Innovation Capital have also entered into a memorandum of understanding to share information on investment and co-investment opportunities.

1.4 IP Group has access to intellectual property emanating from research carried out in the United States through its IP commercialisation agreements with each of the following:
Columbia Technology Ventures, the technology transfer office of Columbia University;
the University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme ("UPstart"); and
Princeton University.

Each agreement has an initial pilot phase of eighteen months and focuses on early stage, proof of principle opportunities based on intellectual property developed at each university.

1.5 As at 31 December 2014, IP Group had a portfolio of 90 companies in which its combined stake was valued at approximately £349.9 million8 . Approximately 73 per cent. of the value in the IP Group's

^8. Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the Group's unaudited preliminary results for the year ended 31 December 2014.

portfolio resides within its top ten companies (by value), many of which have made significant progress in the last twelve months towards achieving key milestones and commercial validation. As at 31 December 2014, the aggregate value of companies in which IP Group has an investment exceeded £1.9 billion.9

1.6 In addition, IP Group has a FCA regulated venture capital fund management subsidiary, Top Technology Ventures, which specialises in providing equity funding for early stage technology based growth companies and currently manages three funds, the £31 million IP Venture Fund, the £25 million North East Technology Fund and the £30 million IP Venture Fund II.

2. BACKGROUND TO IP Group

2.1 In December 2000, Evolution Beeson Gregory (then known as Beeson Gregory Limited) entered into the University of Oxford Partnership (the first of its kind) and formed a separate company to manage this venture. In August 2001, Beeson Gregory Group plc (subsequently acquired by Evolution in July 2002) made the decision to transfer this company to a separate holding company, IP Group.
2.2 IP Group was quoted on AIM in October 2003 and subsequently moved to the Official List in June 2006. Subsequent to its admission to AIM, IP Group has raised approximately £183 million of net proceeds from equity investors which has enabled it to invest in and develop its portfolio of spin out companies.
2.3 In March 2014, IP Group completed the acquisition of Fusion IP plc. This has resulted in a stronger combined team, a larger and more diversified portfolio and greater exposure to new spin-out companies from Fusion IP's historical university relationships.
2.4 As at 31 December 2014 IP Group had equity holdings in a portfolio of 90 companies. This portfolio falls broadly into the following three categories:
2.4.1 Pre-seed: these comprise businesses or pre-incorporation projects that are generally at a very early stage of development. Opportunities at this stage usually involve investments of less than £200,000 from IP Group, predominantly allowing for proof of concept work to be carried out. Incubation projects generally have a duration of nine to eighteen months, following which the opportunity is progressed to seed financing, terminated or retained at the pre-seed stage for a further period to allow additional proof of concept work to be carried out;
2.4.2 Seed: these comprise businesses which have typically received financing of up to £1.0 million in total, primarily from IP Group, in order to continue to progress towards agreed commercial and technology milestones and to enable the recruitment of management teams and early commercial engagement; and
2.4.3 Post-seed: these comprise businesses which have received some level of further funding from co-investors external to IP Group, with total funding received generally in excess of £1.0 million. Although each business can vary significantly in its rate and manner of development, such additional funding is generally used to progress towards key milestones and commercial validation, to build senior level capability in the business and to attract experienced non-executive directors to their boards. This category is further broken down into post-seed private and post seed quoted companies. Post-seed quoted companies consist of companies quoted on either AIM or the ISDX Markets.
2.5 As at 31 December 2014, the Group's portfolio of 90 companies consisted of 13 pre-seed businesses, 25 seed businesses and 52 post-seed businesses of which 19 were quoted. The Group's holdings in pre-seed and seed businesses were valued at approximately £16.9 million (in aggregate) at

^9. Calculated by reference to the values attributed to the Group's investments in such portfolio companies in the unaudited preliminary results of the Group for the year ended 31 December 2014 and grossed up to reflect the overall value of such portfolio companies.

31 December 2014 and its holdings in post-seed businesses at approximately £333 million (in aggregate)10. Of the 52 post seed businesses, the top ten by value represented approximately 73 per cent. of the Group's overall portfolio value. Further details on these ten companies, including a description of their businesses, amounts invested and realised by IP Group during the year to 31 December 2014 and the values of the IP Group's holdings as at 31 December 2014, is set out in paragraph 28 of this Part II.

2.6 IP Group's portfolio is diverse with exposure to four main sectors Biotech, Cleantech, Healthcare and Technology.
2.7 The experienced Board currently comprises a Non-executive Chairman, Chief Executive Officer, Chief Investment Officer, Chief Financial Officer, Chief Operating Officer and four additional Non-executive Directors. The Board collectively possesses considerable investment, commercial and financial experience, with particular expertise in the development of technology-based businesses.
2.8 The Board is supported by an experienced management team, including a team that has primary responsibility for sourcing, evaluating and building new and early stage opportunities (comprising pre-seed and seed). This team comprises four independently managed divisions, each with specialist expertise in a particular technology area: Biotech, Cleantech, Healthcare and Technology. In addition, IP Group leverages its extensive network of highly experienced individuals with expertise spanning financial, technical, industry and academic specialisms, as well as its own in-house recruitment capability, to build and strengthen the boards of the IP Group's spin-out companies.
2.9 As at 31 December 2014, IP Group employed 58 staff (including the executive Directors) and operated principally from offices at 24 Cornhill, London EC3V 3ND, with smaller regional offices in Oxford, Leeds, Newcastle, Sheffield, Cardiff and Nottingham.

3. PARTNERSHIPS AND OTHER COLLABORATIVE ARRANGEMENTS

3.1 IP Group's core business is the creation of value for its shareholders and partners through the commercialisation of IP, and the provision of capital and expertise to, spin-out companies originating from universities and other research intensive institutions.
3.2 Through its Partnerships, IP Group seeks to:
3.2.1 be a party to mid to long-term arrangements with universities under which IP Group has access to potentially world class IP and may receive a significant minority interest in spin-out companies formed on the basis of, and/or income derived from the licensing of, such IP;
3.2.2 gain access to potentially world class IP from additional universities and research intensive institutions, both in the UK and on the east coast of the US, and to commercialisation and investment opportunities in spin-out companies based on such IP;
3.2.3 work with the universities and research institutions concerned to develop and improve the processes by which they seek to commercialise the IP that they generate through spin-out companies;
3.2.4 work closely with spin-out companies from those universities and research institutions in which IP Group has an interest with a view to improving their prospects of success through operational, commercial, technical and strategic guidance; and
3.2.5 realise value from its portfolio of spin-out companies through the creation of exit opportunities by way of trade sales and initial public offerings or the creation of profitable businesses paying dividends to shareholders (including IP Group).

^10. Calculated by reference to the values attributed to the Group's investments in the unaudited preliminary results of the Company for the year ended 31 December 2014.

3.3 IP Group has entered into mid to long term Partnerships with fifteen universities in the UK and currently has access to the IP created at one additional university in the UK, as well as an additional department at the University of Oxford and three universities in the US. Through its initiative with FedIMPACT, IP Group currently has access to the IP created at a select group of US Department of Energy National Laboratories. A description of each of these arrangements, including the ways in which IP Group generates income for itself and its partners and other collaborators through the commercialisation of the IP generated by such universities, initiatives and arrangements through spinout companies, is set out below and in paragraph 14 of Part V.

4. UNIVERSITY OF OXFORD PARTNERSHIP

4.1 Under the terms of the University of Oxford Partnership, IP2IPO is entitled to:
4.1.1 50 per cent. of the University of Oxford's share in the equity of spin-out companies based around IP created at the University of Oxford's Chemistry Department (after the allocation of shares in the spin-out company to its academic founders). This entitlement applies to all such spin-out companies formed during the period between the commencement of the University of Oxford Partnership (December 2000) and November 2015 (or termination of the Partnership, if earlier). However, IP Group's entitlement to such 50 per cent. of the University of Oxford's share in the equity of spin-out companies is pro-rated downwards by the number of the academic founders who are not in the Chemistry Department (e.g. if a spin-out company was founded by two academics, one of whom was not in the University of Oxford's Chemistry Department, IP Group's entitlement reduces to 25 per cent.); and
4.1.2 50 per cent. of the University of Oxford's share of the income derived from the licensing of IP arising out of the University of Oxford's Chemistry Department (after the allocation of income to its academic founders). This entitlement applies to all licensing agreements entered into during the term of the University of Oxford Partnership.
4.2 In January 2011, IP Group broadened its relationship with the University of Oxford through the acquisition of a strategic stake in Technikos, a venture capital fund specialising in early-stage medical technology which has a long-term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering ("IBME"). IP Group now provides access to its commercialisation, capital markets and scientific expertise and works alongside the Technikos team to assist with the creation of new spin-outs based on science generated by the IBME. For further details of IP Group's arrangements with Technikos, please see paragraph 20 below.
4.3 Please refer to paragraph 14.1 of Part V for further information.

5. UNIVERSITY OF SOUTHAMPTON PARTNERSHIP

5.1 Under the terms of the University of Southampton Partnership, IP2IPO committed, subject to the quality and quantity of the potential investment opportunities, to make available to its subsidiary, IP2IPO Management Limited, the £5m Southampton Fund for investment in spin-out companies based on IP created at the University of Southampton.
5.2 The terms of the University of Southampton Partnership provide that IP2IPO is entitled to:
5.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Southampton as a result of investments made by IP2IPO Management Limited out of the £5m Southampton Fund; and
5.2.2 an indirect interest in such spin-out companies by virtue of IP2IPO's 20 per cent. shareholding in Southampton Asset Management Limited. Southampton Asset Management Limited is a company that has been set up to own the University of Southampton's equity interests in spin-out companies (after the allocation of shares in the spin-out company to its academic founders) acquired during the term of the University of Southampton Partnership.

The remaining 80 per cent. of Southampton Asset Management Limited is owned by the University of Southampton.

5.3 In accordance with the terms of the University of Southampton Partnership, IP2IPO holds all of its indirect interests in the University of Southampton spin-out companies on its own balance sheet. In practice, IP Group and the University of Southampton have agreed that, rather than holding its 'indirect interest' entitlement through Southampton Asset Management Limited (as described above), IP2IPO holds this directly through IP2IPO Management Limited.
5.4 The University of Southampton Partnership commenced in March 2002 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances.
5.5 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £3.6 million of the £5 million Southampton Fund had been invested or committed.
5.6 Please refer to paragraph 14.2 of Part V for further information.

6. KING'S COLLEGE LONDON PARTNERSHIP

6.1 Under the terms of the original Partnership with King's College London entered into in 2003, IP2IPO committed to make available to its subsidiary, IP2IPO Management II Limited, the £5 million King's College Fund for seed capital investment in spin-out companies based on IP created at King's College London.
6.2 The terms of the King's College London Partnership were revised in 2009 and under the revised agreement IP2IPO agreed to target investing the remaining £3.2 million of the £5m King's Fund over a three year period which commenced on 12 November 2009. This target was dependent on the quality and quantity of the investment opportunities that come through the Partnership. KCL cannot, however, require IP Group to make any additional funds available to the extent that this amount is fully invested.
6.3 The terms of the King's College London Partnership provide that IP2IPO is entitled to a direct equity shareholding in spin-out companies based on IP created at King's College London as a result of investments made out of the £5 million King's Fund.
6.4 The King's College London Partnership commenced in November 2009 and will terminate on 14 May 2028, subject to earlier termination in certain limited circumstances.
6.5 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £1.8 million of the £5 million King's Fund had been invested.
6.6 Please refer to paragraph 14.4 of Part V for further information.

7. CENTRE FOR NOVEL AGRICULTURAL PRODUCTS ("CNAP") PARTNERSHIP

7.1 Pursuant to the terms of the CNAP Partnership entered into in 2003, IP2IPO has invested £1.15 million in Amaethon Limited, a technology commercialisation company formed to commercialise CNAP's IP. Initially, the University of York owns CNAP's IP, but Amaethon Limited has the right to manage this IP and to call for its transfer to CNAP or its nominee.
7.2 The terms of the CNAP Partnership provide that IP2IPO:
7.2.1 is entitled to a direct equity shareholding in spin-out companies based on CNAP's IP acquired as a result of IP2IPO's investment; and
7.2.2 is entitled to a 40 per cent. interest in Amaethon Limited (which in turn owns the University of York's interest in spin-out companies and licences based on CNAP's IP), with the balance being owned by the University of York.
7.3 IP2IPO has committed, subject to the quality and quantity of the potential investment opportunities, to invest up to a total of £750,000 over three years, commencing in September 2003, in spin-out companies based on CNAP's IP and this amount may be extended at IP2IPO's option.
7.4 As at 9 March 2015, being the last practicable date prior to publication of this document, approximately £0.2 million had been invested under the CNAP Partnership.
7.5 Please refer to paragraph 14.3 of Part V for further information.

8. UNIVERSITY OF YORK PARTNERSHIP

8.1 IP2IPO entered into a wider partnership to cover the entire University of York in March 2006 and which was varied in March 2009. IP2IPO committed to invest the £5m York Fund in spin-out companies based on IP created at the University of York (excluding the CNAP Partnership). IP2IPO's investments in spin-out companies from the £5 million York Fund will be directly owned by IP2IPO. The University of York Partnership provides that the £5 million York Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a 7 year period commencing in March 2006.
8.2 The terms of the University of York Partnership (as varied) provide that IP2IPO is entitled to:
8.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of York as a result of investments made out of the £5 million York Fund; and
8.2.2 an "automatic" interest in the University of York's spin-out companies by virtue of IP2IPO's entitlement to a 25 per cent. shareholding in any spin-out company formed from the University of York whilst the Partnership continues (prior to any investment from the £5 million York Fund) in the event that IP2IPO proposes, and the University of York agrees, that the commercialisation opportunity is progressed and the Fund invests in the spin-out company and a 5 per cent. shareholding in the spin-out company in certain other circumstances in the event that the Fund does not invest.
8.3 The University of York Partnership commenced in March 2006 and has a term of 25 years, subject to earlier termination in certain limited circumstances. IP2IPO has the right, but not the obligation, to extend the £5 million York Fund. In the event that IP2IPO does not extend the £5m York Fund, the Partnership will terminate.
8.4 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £0.1 million had been invested from the £5 million York Fund.
8.5 Please refer to paragraph 14.9 of Part V for further information.

9. UNIVERSITY OF LEEDS PARTNERSHIP

9.1 Under the terms of the original partnership with the University of Leeds entered into on 15 July 2005 (the "Original Agreement"), the Company committed to invest the £5 million Leeds Fund in spin-out companies based on IP created at the University of Leeds. The Original Agreement provided that the £5 million Leeds Fund would, subject to the quantity and quality of investment opportunities, be invested over a period of 5 years commencing on 15 July 2005. The entire £5 million Leeds Fund has now been invested.
9.2 Pursuant to a variation agreement dated 17 March 2011 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the Original Agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.
9.3 Under the Variation Agreement, the Company has agreed that, it will work with the University of Leeds to, subject to the quality and quantity of the investment opportunities, seek to attain the following investment targets: (i) a base-line of grub fund investments of £200,000 per annum in

aggregate; and (ii) a base-line of seed fund investments of £500,000 per annum in aggregate. The parties intend that such targets will be the subject of ongoing review.

9.4 The terms of the University of Leeds Partnership provide that IP Group is entitled to:
9.4.1 a direct equity shareholding in spin-out companies based on IP created at the University of Leeds as a result of seed fund investments made by the Company;
9.4.2 subject to certain exceptions) an "automatic" interest, amounting to a 30 per cent. shareholding, in any spin-out company formed from the University of Leeds whilst the Partnership continues (prior to any investment by IP Group); and
9.4.3 30 per cent. of the net revenues received by the University of Leeds in respect of out-licensing in certain limited circumstances (i.e. where such licensing opportunity is managed by IP Group and either (i) the opportunity results from the conversion of an IP Group incubated company or (ii) IP Group has otherwise had significant input (including finding the potential licensee and negotiating the commercial heads of terms with such licensee) in relation to such opportunity).
9.5 The University of Leeds Partnership shall continue until midnight on 19 December 2027. The next formal review of the University of Leeds Partnership shall occur on 30 April 2017.
9.6 Please refer to paragraph 14.6 of Part V for further information.

10. UNIVERSITY OF BRISTOL PARTNERSHIP

10.1 Under the terms of the University of Bristol Partnership, IP2IPO committed to provide expertise and assistance to the University of Bristol in respect of its technology transfer activities. IP2IPO committed to invest the £5 million Bristol Fund in spin-out companies based on IP created at the University of Bristol. The University of Bristol Partnership provides that the £5 million Bristol Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a period of 5 years commencing in December 2005.
10.2 The terms of the University of Bristol Partnership provide that IP2IPO is entitled to:
10.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Bristol as a result of investments made out of the £5 million Bristol Fund; and
10.2.2 an "automatic" interest in the University of Bristol's spin-out companies by virtue of IP2IPO's entitlement to a 13.3 per cent. shareholding in any spin-out company formed from the University of Bristol whilst the Partnership continues.
10.3 The University of Bristol Partnership commenced in December 2005 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO has the right, but not the obligation, to extend the £5 million Bristol Fund.
10.4 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £1.1 million of the £5 million Bristol Fund had been invested.
10.5 Please refer to paragraph 14.7 of Part V for further information.

11. UNIVERSITY OF SURREY PARTNERSHIP

11.1 Under the terms of the University of Surrey Partnership, IP2IPO committed to provide expertise and assistance to the University of Surrey in respect of its technology transfer activities. IP2IPO committed to invest the £5m Surrey Fund in spin-out companies based on IP created at the University of Surrey. The University of Surrey Partnership provides that the Surrey Fund will subject to the quality and quantity of the potential investment opportunities, be invested over a period of 7 years commencing in February 2006.
11.2 The terms of the University of Surrey Partnership provide that IP2IPO is entitled to:
11.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Surrey as a result of investments made out of the £5m Surrey Fund; and
11.2.2 an "automatic" interest in the University of Surrey's spin-out companies by virtue of IP2IPO's entitlement to a 13.3 per cent. shareholding in any spin-out company formed from the University of Surrey whilst the Partnership continues.
11.3 The University of Surrey Partnership commenced in February 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO has the right, but not the obligation, to extend the £5m Surrey Fund.
11.4 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £0.5 million of the £5 million Surrey Fund has been invested.
11.5 Please refer to paragraph 14.8 of Part V for further information.

12. UNIVERSITY OF BATH PARTNERSHIP

12.1 Under the terms of the University of Bath Partnership, IP2IPO committed to provide expertise and assistance to the University of Bath with a view to creating value from the IP of the University of Bath. IP2IPO committed to invest the £5 million Bath Fund in spin-out companies based on IP created at the University of Bath. The University of Bath Partnership provides that the £5 million Bath Fund will, subject to the quality and quantity of the potential investment opportunities, be invested over a period of 7 years commencing in September 2006.
12.2 The terms of the University of Bath Partnership (as amended in 2007, 2009, 2010 and 2015) provide that IP Group (together with FP Venture Fund II in respect of up to 30 per cent. of the total seed capital requirement of any relevant spin-out company) is entitled to:
12.2.1 a direct equity shareholding in spin-out companies based on IP created at the University of Bath as a result of investments made out of the £5 million Bath Fund;
12.2.2 an interest amounting to the greater of: (i) 20 per cent. of the shareholding of the University of Bath in any spin-out company; and (ii) 10 per cent. of the initial equity in that spin-out company or joint venture spin-out (prior to any investment from the £5 million Bath Fund) formed under the Partnership in circumstances where IP Group has been actively engaged on the opportunity;
12.2.3 in the event that the University of Bath, during the term of the Partnership, licences or assigns IP to a company which is not a spin-out company, then IP2IPO is entitled to 20 per cent. of the shareholding to which the University of Bath is entitled in circumstances where IP Group has been actively engaged on the opportunity (and 10 per cent. of the shareholding where it has not been actively engaged); and
12.2.4 an interest in licence fees generated by the University of Bath from its IP not commercialised through spin-out companies.
12.3 The University of Bath Partnership commenced in September 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO has the right, but not the obligation, to extend the £5 million Bath Fund.
12.4 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £0.2 million of the £5 million Bath Fund has been invested.
12.5 Please refer to paragraph 14.12 of Part V for further information.

13. UNIVERSITY OF GLASGOW PARTNERSHIP

13.1 Under the terms of the University of Glasgow Partnership, IP2IPO committed to identifying and progressing spin-out company opportunities within the University of Glasgow with a view to creating value from the IP of the University of Glasgow. IP2IPO committed to invest the £5 million Glasgow Fund in spin-out companies based on IP created at the University of Glasgow. The University of Glasgow Partnership provides that the £5 million Glasgow Fund will, subject to the quantity and quality of the potential investment opportunities, be invested over a period of 5 years commencing in October 2006.

13.2 The terms of the University of Glasgow Partnership provide that IP2IPO is entitled to:
13.2.1 an "automatic" interest, amounting to a 12 per cent. shareholding, in each spin-out company or joint venture spin-out based on IP created by the University of Glasgow formed during the term of the Partnership (prior to any investment from the £5 million Glasgow Fund); and
13.2.2 in the event that the University of Glasgow, during the term of the Partnership, licences or assigns IP to a company which is not a spin-out company, then IP2IPO is entitled to 10 per cent. of the revenue received by the University of Glasgow as a result of the disposal of its shareholding in such company.
13.3 The University of Glasgow Partnership commenced in October 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO has the right, but not the obligation, to extend the £5 million Glasgow Fund.
13.4 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £1.2 million of the £5 million Glasgow Fund had been invested.
13.5 Please refer to the paragraph 14.13 of Part V for further information.

14. QUEEN MARY PARTNERSHIP

14.1 Under the terms of the Queen Mary Partnership (the "Original Agreement"), IP2IPO is committed to taking an active role in identifying and progressing such commercialisation opportunities as are envisaged by QMUL, with a view to creating value from IP created by QMUL.
14.2 IP2IPO committed to invest the initial amount of £3 million in spin-out companies based on IP created at QMUL. The Queen Mary Partnership provides that the initial amount of £3 million will, subject to the quantity and quality of the potential investment opportunities, be invested over a period of 7 years commencing in October 2006, and will be increased to £5 million upon full investment of the £3 million or earlier at the discretion of IP2IPO.
14.3 The terms of the Queen Mary Partnership initially provide that IP2IPO is entitled to:
14.3.1 10 per cent. of all licence fees, after deducting all patent costs incurred by the University of London in relation to the relevant IP;
14.3.2 an "automatic" interest, amounting to a 13.3 per cent. shareholding, in each spin-out company formed during the term of the Partnership (prior to any investment from the £5m QMUL Fund) which is replaced, pursuant to the terms and conditions of the Variation Agreement (such as set out above), with a warrant over an equivalent amount of shares exercisable at seed; and
14.3.3 in the event that QMUL, during the term of the Partnership, licences or assigns IP to a company which is not a spin-out company in return for equity, then IP2IPO is entitled to 10 per cent. of each class of equity (or capital) to which QMUL.
14.4 Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the Original Agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.
14.5 Under the Variation Agreement, the parties agreed that IP2IPO's right to a share of licensing fees (as referred to in paragraph 14.3.3 above) shall be removed save where (a) there is the conversion of an IP2IPO incubated company into an out-licensing opportunity, (b) IP2IPO establish a company as a licensing vehicle for platform technology, and/or (c) IP2IPO has otherwise had significant input in

respect of the relevant out licensing opportunity (which would include both finding the potential licensee and undertaking negotiation of the commercial head of terms with such party). In addition, pursuant to the Variation Agreement, IP2IPO's initial founder equity right (as described in paragraph 14.3.2 above) has been removed and replaced with a right to receive a warrant to subscribe for an equivalent amount of shares in the relevant spin-out company exercisable at the seed investment stage. However, in situations where (i) IP2IPO shall have expended efforts at an early stage to work up the relevant commercialisation opportunity to the stage where it is presented to the investment committee of IP2IPO; (ii) that relevant opportunity is declined for investment from IP2IPO; and (iii) as a consequence, the relevant spin-out company subsequently raises money from a third party and or achieves an Exit Event (as defined in the relevant warrant instrument), then QMUL shall, until such time as an Exit Event is achieved, hold such number of equity shares in the relevant spin-out company as is equal to the proportion of initial equity that IP2IPO would have been entitled to under the Original Agreement, being 13.3 per cent. of the initial equity, on bare trust for IP2IPO.

14.6 The Queen Mary Partnership commenced in July 2006 and has a term of at least 25 years, subject to earlier termination in certain limited circumstances. IP2IPO has the right, but not the obligation, to extend the £5m QMUL Fund.
14.7 As at 9 March 2015, being the latest practicable date prior to publication of this document, approximately £0.7 million of the £5m QMUL Fund had been invested.
14.8 Please refer to paragraph 14.11 of Part V for further information.

15. UNIVERSITY OF SHEFFIELD

15.1 Under the terms of original agreement with the University of Sheffield entered into on 26 January 2005, Fusion IP committed to invest funds in the University of Sheffield in exchange for the exclusive rights to commercialise any university-owned medical life science IP, through either licensing or the creation of spin-out companies. In addition, Fusion IP has agreed that it will invest £8,750 per month for the provision of services by the University of Sheffield to enable Fusion IP Sheffield to identify and patent the University of Sheffield's IP.
15.2 The terms of this agreement were revised on 7 July 2008 and under the revised agreement, the parties agreed to add all physical sciences to the original agreement, such that Fusion IP has the right to acquire all the IP owned by the University of Sheffield, through either licensing or the creation of spin-out companies. Fusion IP's exclusive rights to acquire all physical sciences IP owned by the University of Sheffield expire on 17 July 2018 and Fusion IP's exclusive rights to acquire all IP with a medical application pursuant to the revised agreement expired on 16 February 2015.
15.3 IP Group and the University of Sheffield are currently in negotiations in respect of a potential new agreement which, if entered into, will provide IP Group with continued access to IP with a medical application.
15.4 Please refer to paragraph 14.5 of Part V for further information.

16. CARDIFF UNIVERSITY

16.1 Under the terms of the Cardiff University Agreement, Fusion IP committed to invest funds in Cardiff University in exchange for the exclusive rights to commercialise any university-owned IP, through the creation of spin-out companies. In addition, Fusion IP has agreed that it will invest £17,500 per month for the provision of services by Cardiff University to enable Fusion IP Cardiff to identify and patent Cardiff University's IP.
16.2 The terms of the Cardiff University Agreement provide that Fusion IP is entitled to direct that all IP created through research at the Cardiff University be licenced to a then existing or newly incorporated company in which the Fusion IP group will acquire an equity investment for the purposes of undertaking the commercialisation of such IP.
16.3 The Cardiff University Agreement commenced in 2007 and has a term of 10 years, subject to earlier termination in certain limited circumstances.
16.4 Please refer to paragraph 14.14 of Part V for further information

17. THE UNIVERSITY OF NOTTINGHAM

17.1 Under the terms of the Nottingham MOU, Fusion IP committed to work in close partnership with the University of Nottingham's in-house commercial team to identify IP with the most commercial potential and to work with the academic team to turn the original academic research into a fundable business plan.
17.2 The terms of the Nottingham MOU provide that Fusion IP then invests cash and management resources to create a spin-out company, in which it owns a 10 per cent. equity shareholding prior to any investment.
17.3 The Nottingham MOU commenced in 2013 and has a term of 5 years, subject to earlier termination by either party.
17.4 Please refer to paragraph 14.18 of Part V for further information.

18. SWANSEA UNIVERSITY

18.1 Under the terms of the Swansea MOU, Fusion IP committed to work in close partnership with the Swansea University's in-house commercial team to identify IP with the most commercial potential and to work with the academic team to turn the original academic research into a fundable business plan.
18.2 The terms of the Swansea MOU provide that Fusion IP then invests cash and management resources to create a spin-out company, in which it owns a 10 per cent. equity shareholding prior to any investment.
18.3 The Swansea MOU commenced in 2013 and has an initial term of 5 years, subject to earlier termination by either party.
18.4 Please refer to paragraph 14.19 of Part V for further information.

19. FINANCE WALES CO-INVESTMENT MOU

19.1 Under the terms of the Finance Wales Co-Investment MOU, the parties committed to continue their co-investment strategy for investing in opportunities arising from Fusion IP's IP pipeline agreements with its portfolio of Welsh universities and to provide Fusion IP with continued access to substantial additional funding for its portfolio of companies.
19.2 The Finance Wales Co-Investment MOU commenced in 2007 and has been renewed in 2013 for a term of 5 years, subject to earlier termination by either party.
19.3 Please refer to paragraph 14.21 of Part V for further information.

20. ARRANGEMENTS WITH TECHNIKOS

20.1 On 13 January 2011, IP Group acquired a strategic stake in Technikos. Technikos is a specialist medical technology fund with a long term commercialisation agreement with the University of Oxford's Institute of Biomedical Engineering ("IBME").
20.2 IP Group will assist Technikos to spin out companies from the IBME. In addition, IP Group will provide the Technikos team with access to its commercialisation, capital markets and scientific expertise.
20.3 To date, Technikos has spun out eleven companies from the IBME, including Eykona Limited and OrganOx Limited.
20.4 Under the terms of its agreement with the University of Oxford (the "IBME Agreement"), Technikos has the right to acquire 50 per cent. of the issued or to be issued share capital held by the University of Oxford in spin-out companies based on IP created at the IBME, 50 per cent. of the University of Oxford's revenue from licences of IP created at the IBME save that, in each case, the percentage share entitlement will be reduced to the extent that all the founder academics to which the relevant IP relates are not based in the IBME.
20.5 The IBME Agreement commenced in June 2006 and shall continue until the date falling 15 years from the date on which the fit-out works on the IBME are completed (being 1 October 2007 and thus an end date of 1 October 2022) subject to earlier termination in certain limited circumstances. At the commencement of the fourteenth year following completion of the fit-out works, the parties will discuss and agree whether or not to extend the term of the agreement for an additional period of three years.
20.6 Please refer to paragraph 14.16 of Part V for further information.

21. UNIVERSITY OF MANCHESTER IP COMMERCIALISATION AGREEMENT

21.1 Under the terms of the Manchester IP commercialisation agreement, the Group has created a Proof of Principle ("PoP") funding facility for the identification and formation of new spin-out companies. The Group has agreed to make available an initial facility of up to £5 million to provide capital to new proof of principle projects intended for commercialisation through spin-out companies.
21.2 The terms of the commercialisation agreement provide that IP Group is entitled to receive equity stakes in such spin-out companies on pre-agreed terms, and invest further in these companies as they progress.
21.3 The Group will provide access to its relevant experts, business building expertise, mentoring, coaching and co-investing networks, recruitment and business support.
21.4 The agreement, which is a for a minimum term of four years, or five years subject to certain conditions, covers the majority of the areas of materials and clean technology, electronics and communications and all non-therapeutic life, medical and human sciences and information technology.
21.5 Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the original Manchester IP commercialisation agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.
21.6 Under the Variation Agreement, it has been agreed to widen the scope of the original POP fund agreement and more particularly the technology areas to include graphene and other 2-D materials. Furthermore, the parties agreed that, given this increase in the scope of the original POP fund agreement, IP2IPO shall attempt to seek to increase its aggregate funding commitment under the original POP funding agreement from £5 million to up to £7.5 million within an agreed time period.
21.7 Please refer to paragraph 14.17 of Part V for further information.

22. SUMMARY OF ARRANGEMENTS WITH CAMBRIDGE INNOVATION CAPITAL

22.1 Pursuant to a subscription agreement dated 9 October 2013, the Group has completed an investment of £5 million in Cambridge Innovation Capital plc, in return for which the Group has acquired an 8 per cent. stake.
22.2 In addition, the Group and Cambridge Innovation Capital have entered into a Memorandum of Understanding to share information on investment and co-investment opportunities in the "Cambridge Cluster" and, where practicable and alongside other co-investors, to provide each other with access to such co-investment opportunities.

22.3 Please refer to paragraph 14.22 of Part V for further information.

23. COMMERCIALISATION AGREEMENT WITH COLOMBIA UNIVERSITY

23.1 Pursuant to a collaboration agreement dated 24 October 2013 and made between the Group and the Trustees of Columbia University in the City of New York, on behalf of Columbia Technology Ventures, the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with the commercialisation of early-stage, proof of principle opportunities based on intellectual property developed at Columbia University and geared towards the formation of spin-out companies. Broadly summarised, these arrangements entitle the Group, at its sole discretion and determination, to fund proof of principle opportunities up to an aggregate level of US \$500,000 over a period of 18 months from the date of the agreement.
23.2 Please refer to paragraph 14.23 of Part V for further information.

24. COMMERCIALISATION AGREEMENT WITH UNIVERSITY OF PENNSYLVANIA

24.1 Pursuant to the terms of a collaboration agreement entered into between the Group and The Trustees of the University of Pennsylvania ("Penn"), the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with early-stage, proof of principle opportunities for the Group to invest in technologies and companies based on Penn IP through Upstart (the UPstart company formation program of Penn's Centre for Technology Transfer). Broadly summarised, these arrangements entitle the Group, at its sole discretion and determination, to fund proof of principle opportunities up to an aggregate level of US \$500,000 over a period of 18 months from the date of the agreement.
24.2 Please refer to paragraph 14.24 of Part V for further information.

25. COMMERCIALISATION AGREEMENT WITH PRINCETON UNIVERSITY

25.1 Pursuant to the terms of a collaboration agreement entered into between the Group and The Trustees of Princeton University, the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with early-stage, proof of principle opportunities for the Group to invest in technologies and companies based on Princeton IP. Broadly summarised, these arrangements entitle the Group, at its sole discretion and determination, to fund proof of principle opportunities up to an aggregate level of US \$500,000 over a period of 18 months from the date of the agreement.
25.2 Please refer to paragraph 14.25 of Part V for further information.

26. FEDIMPACT, LLC OPERATING AGREEMENT

26.1 Under the terms of an operating agreement, TNT Management, LLC, IP2IPO FI Limited and IP Group, Inc. agreed to establish a limited liability company in the State of Delaware under the name FedIMPACT, LLC to carry on the business of identifying, funding, developing and commercialising promising technologies sourced from an initial group of US Department of Energy National Laboratories including Pacific Northwest National Laboratory and National Renewable Energy Laboratory (together the "DOE Laboratories") pursuant to a pilot engagement with such laboratories over a period of 18 months from the date of the agreement.
26.2 Please refer to paragraph 14.26 of Part V for further information

27. OTHER UNIVERSITY PARTNERSHIPS

IP Group will continue to assess further opportunities, and to enter into partnerships or other collaborative arrangements with leading research universities, on a selective basis where it identifies institutions which the Directors believe have sufficient breadth and depth of research and the right innovative culture to build a diversified portfolio of high growth spin-out companies over the lifetime of the partnership or other collaborative arrangement. In addition and consistent with its belief in a partnership approach to the sourcing of intellectual property commercialisation opportunities, the Group will also continue to explore other relationships or collaborations that seek to enable or preserve access to research emanating from premier UK- and US-based universities in such a manner that allows it to manage its capital risk, such as through participation in captive university funds, whether structured as special purpose vehicles or otherwise.

28. CURRENT PORTFOLIO

28.1 As at 31 December 2014, IP Group's portfolio of 90 companies consisted of 13 pre-seed businesses, 25 seed businesses and 52 post-seed businesses of which 19 were quoted. Of the 52 post-seed businesses, the top ten by value represented approximately 73 per cent. of IP Group's overall portfolio value.11
28.2 The following table sets out IP Group's equity interests in its top ten post-seed businesses by value as at 31 December 2014. The information below is extracted from IP Group's unaudited preliminary results for the financial year ended 31 December 2014:

				Year to 31 December
		Group Stake at 31 December 2014 %	Fair value of Group holding at 31 December 2013 £m	Net investment/ (divestment) £m	Fair value movement £m	Fair value of Group holding at 31 December 2014 £m
Company name Oxford Nanopore Technologies Limited	Description Single molecule detection 1st application in 3rd generation DNA sequencing ("\$1000 genome")	19.9	104.3	6.0	18.0	128.3
Retroscreen Virology Group plc	Viral challenge and "virometrics" specialist ("conquering viral disease")	17.5	30.5	4.0	(6.1)	28.4
Tissue Regenix Group plc	Regenerative dCELL® soft tissue body parts	13.7	20.7	–	(2.7)	18.0
Ceres Power Holdings plc	Ceramic fuel cell technology for distributed generation	23.5	10.3	4.2	1.9	16.4
Actual Experience plc	Optimising the human experience of networked applications	29.7	4.7	–	9.4	14.1
Xeros Technology Group plc	Polymer bead cleaning systems	11.9	3.2	2.2	8.4	13.8
Tracsis plc	Resource optimisation software for the transport industry	10.5	5.5	–	5.8	11.3
Diurnal Limited	Novel treatment of hormone deficiency	51.7	4.0	5.1	1.0	10.1
Avacta Group plc	Reagents, arrays and instruments for human and animal healthcare	26.9	12.2	2.5	(6.3)	8.4
Applied Graphene Materials plc	Producer of speciality graphene materials	20.3	14.9	–	(8.7)	6.2

29. FUND MANAGEMENT BUSINESS

29.1 IP Group acquired Top Technology Ventures, an FCA-regulated venture capital fund management company which specialises in providing equity funding for early stage technology based growth companies, in June 2004. Top Technology Ventures was founded in 1986 and has earned a reputation for significant expertise in the early stage UK technology sector.

^11. Portfolio and cash information is extracted from the Group's unaudited preliminary results for the year ended 31 December 2014.

29.2 Top Technology Ventures currently manages:
29.2.1 IP Venture Fund, a £31 million venture capital fund which was established in July 2006 in partnership with the European Investment Fund. IP Venture Fund's primary investment objective is to provide up to 25 per cent. of the capital invested or to be invested in post-seed financing rounds of IP Group's portfolio companies; IP Venture Fund is no longer making investments in new portfolio companies;
29.2.2 The North East Technology Fund, a £25 million, ten year venture capital fund which was set up to invest in technology companies in the North East region of England from seed through to the growth stages of development (including opportunities from the leading research universities based in the region). In August 2014, the investment period of the North East Technology Fund was extended by a period of one year, and the amount available to invest from the Fund increased by the limited partner to a total of £27m; and
29.2.3 IP Venture Fund II, a £30 million venture capital fund which was established in May 2013 in partnership with the European Investment Fund. IP Venture Fund II invests alongside IP Group in new spin-out companies, from incubation stage through seed and post-seed stage, from IP Group's university partnerships and other collaborations, with an investment ratio of 30:70 (IP Venture Fund II: IP Group).
29.3 Top Technology Ventures is a member of the British Venture Capital Association and is authorised and regulated by the FCA.
29.4 The Directors believe that the management of third party funds brings a number of benefits to IP Group as specified in paragraph 2.4 of Part I of this document.
29.5 Top Technology Ventures also earns fees and commissions through providing corporate finance services to IP Group's portfolio companies.

30. THE COMPETITIVE ENVIRONMENT

30.1 IP Group's revenue and increases in net assets are principally derived from its core business of commercialising IP and providing capital and expertise to spin-out companies originating from universities and other research intensive institutions.
30.2 There are a number of companies and other organisations which are seeking to commercialise intellectual property and/or provide capital to spin-out companies arising from universities and other research institutions in the UK. These include Cambridge Innovation Capital plc, Frontier IP plc, Imperial Innovations Group plc, Imprimatur Capital, Invoke Capital, Mercia Technologies plc, NetScientific plc, Epidarex, Parkwalk Advisors, Rock Spring Ventures and Spark Ventures. As a result of its Partnerships, IP Group has direct contractual arrangements with fifteen universities in the UK and accordingly has preferred access to provide capital and expertise to spin-out companies arising from such universities. In addition, there are a number of companies and other organisations seeking to commercialise intellectual property and/or provide capital to spin-out companies in other jurisdictions in which the Group operates or may operate, including, for example, Allied Minds, Inc., Osage Partners, PureTech and Safeguard Scientific, Inc. in the United States.
30.3 However, where IP Group does not have preferred access to invest in the spin-out companies arising from a university or other research institutions through a direct contractual arrangement and that university, research institution, their technology transfer office and/or individual spin-out companies are prepared to work with a number of different person or entities, then IP Group will be competing with those other commercialisation organisations, regional development authorities, venture capital funds, certain institutional investors and angel investors to provide capital to the spin-out companies created by such university or research institution.
30.4 Further, the technology transfer offices of certain universities or research institutions may themselves seek to commercialise the IP that they generate which could reduce the number of commercialisation opportunities available to IP Group.
30.5 IP Group's portfolio companies may now, or in future, be competing with other technologies in the market. They also compete with other companies and organisations for funding, appropriately skilled personnel and industry attention (including, for example, interest from potential development partners, customers and potential acquirers or investors). Such competition is not limited to companies or organisations operating within the same industry sector as IP Group's portfolio companies and the portfolio companies may compete with early stage businesses in other sectors and markets.
30.6 IP Group may need additional capital in future for expansion activity and/or business development, whether from equity or debt sources. If there is a lack of funding in the market, then IP Group will be competing with other businesses to secure this funding. Competing businesses may also be looking to recruit highly qualified and experienced employees similar to those of IP Group, which may lead to competition to recruit and retain employees of the desired calibre.
30.7 The Directors believe that IP Group is in a strong competitive position relative to other companies and organisations that are seeking to provide commercialisation services to universities and other research institutions in the UK for the following reasons:
30.7.1 IP Group has secured access to a wide range of leading scientific innovation through its Partnerships, which have resulted in it having arrangements covering fifteen of the UK's leading research universities;
30.7.2 IP Group also has good working relationships with a number of other universities and research intensive institutions;
30.7.3 the rigorous opportunity appraisal process developed by, and proprietary to, IP Group means that IP Group is well placed to assess early stage technology businesses with a view to identifying and developing the most promising opportunities;
30.7.4 the Board collectively possesses considerable investment, commercial and financial experience, with particular expertise in the development of IP-based businesses. The Board is supported by an experienced management team, including a highly qualified team specialising in four sectors: Biotech, Cleantech, Healthcare and Technology;
30.7.5 IP Group is able to leverage its extensive network of highly experienced individuals with expertise spanning financial, technical, industry and academic specialisms, as well as its own in-house recruitment capability, to build and strengthen the boards of its portfolio companies; and
30.7.6 IP Group has a strong cash position (as a result of the Capital Raising) and, in addition, the third party funds which IP Group manages broadens the sources of finance potentially available to its portfolio companies in circumstances where the investment is aligned with the relevant fund's investment mandate.

31. DIVIDEND POLICY

The Board's current intention is to retain IP Group's earnings in the foreseeable future to finance growth and expansion. It is, however, the Directors' intention to pay dividends when, in the view of the Directors, IP Group has sufficient cash for this purpose.

PART III

OPERATING AND FINANCIAL REVIEW OF IP GROUP

1. INTRODUCTION

Some of the information contained in this review and elsewhere in this document includes forward-looking statements that involve risks and uncertainties. See "Forward-looking statements" on page 31 for a discussion of important factors that could cause actual results to differ materially from the results described in the forward-looking statements contained in this document.

This review should be read in conjunction with: (i) the Group's audited annual report and accounts for the three years ended 31 December 2013 and the notes thereto explaining such annual report and accounts; (ii) the Group's interim results for the six months ended 30 June 2014, each of which are incorporated by reference into this document as explained in Part VI of this document; and (iii) the Group's unaudited preliminary results for the financial year ended 31 December 2014 as set out in Part 2 of Part IV of this document.

Unless otherwise indicated, the selected financial information included in this Part IV has been extracted without material adjustment from the Group's audited annual report and accounts for the three years ended 31 December 2013 and the Group's unaudited preliminary results for the financial year ended 31 December 2014. The financial information set out in this Part III does not constitute statutory accounts for any company within the meaning of section 435 of the Companies Act.

Each Shareholder and other person contemplating a purchase of Capital Raising Shares should read the whole of this document and the documents incorporated herein by reference and should not rely solely on the summary operating and financial information set out in this Part III.

2. SIGNIFICANT FACTORS AFFECTING THE GROUP'S RESULTS OF OPERATIONS AND OUTLOOK

2.1 Overview

As described more fully in Part I of this document, IP Group was established in 2000 to commercialise scientific innovation developed in the UK's leading universities primarily through the creation and development of spin-out companies. The Group also manages a number of venture capital funds through its FCA-regulated subsidiary, Top Technology Ventures, and allocates capital to the in-licensing and development of early-stage drug-discovery opportunities through certain of its subsidiary companies.

Success of the Group's operations depends on a number of factors and set out below are those factors that the Directors consider have affected the Group's results of operations to date or could do so in the future.

2.2 Commercialisation activities

2.2.1 Sourcing and evaluation of new commercialisation opportunities

The Directors consider that one of the key differentiators of the IP Group business model is its ability to access a wide range of leading scientific research. This has been achieved primarily through long-term partnerships with a number of leading research universities in the UK. IP Group entered into its first long term Partnership with the University of Oxford's Chemistry Department in 2000. Since this time, the Group has entered into further partnerships and now has direct arrangements covering fifteen of the UK's leading universities.

IP Group has access to intellectual property emanating from research carried out in the United States through its IP commercialisation agreements with each of the following:

Columbia Technology Ventures, the technology transfer office of Columbia University;
the University of Pennsylvania and the University of Pennsylvania's Center for Technology Transfer's UPstart company formation programme ("UPstart"); and
Princeton University.

Each agreement has an initial pilot phase of eighteen months and focuses on early stage, proof of principle opportunities based on intellectual property developed at each university.

Further details on each of these agreements and initiatives are set out in paragraphs 14.23, 14.24, 14.25 and 14.26 of Part V of this document.

Although each commercialisation opportunity can vary significantly in its rate and manner of development, the Group has developed a rigorous investment appraisal process which is designed to enable the assessment and development of early stage (comprising incubation and seed) technology businesses, initially with low levels of cash investment. During this early stage development phase, members of the Group's in-house sourcing team work closely with the businesses to shape the strategic direction of the opportunity, frequently taking an interim management role (typically at no additional cost to the relevant spin-out company) until such time as the business is sufficiently developed and has the resources to recruit an external management team. The Directors intend to continue to apply this methodology with a view to creating new investment opportunities.

The Group's commercialisation activities are reliant on its ability to source, evaluate, allocate capital to and develop new technologies arising from research carried out in universities and other research institutions. Consequently the Group's ongoing ability to successfully identify and to create spin-out companies is dependent on the ability of research-intensive universities and similar institutions to produce scientific research of sufficient quality and with sufficient commercial potential and for the Group to be able access such research.

2.2.2 Portfolio performance

The Group's results are impacted significantly by the performance of its holdings in portfolio companies. Progress in the portfolio can be assessed most immediately by the movement in the fair value of the Group's holdings from one period to the next. However, market volatility can mean that this does not always give an accurate or fair reflection of the progress made by individual companies.

The Directors consider that the macro environment in which the Group operates has shown some improvement since 2010 and it is believed that this has contributed, at least in part, to the increase in the fair value of the Group's portfolio over the last three to four years. Many of the Group's portfolio companies have achieved technical and commercial milestones during this time that have contributed to an increase in their fair value.

Over the longer term, the Directors believe that the successful attainment of commercial and technical milestones in portfolio companies should continue to result in an increase in the fair value either through subsequent financing rounds or through a sale of the Group's holding.

Once a portfolio company progresses beyond seed stage, additional funding is generally sought and this is used to progress towards key milestones and commercial validation (potentially including the launching of products or services or the securing of licensing arrangements), to build the senior level capability in the business and to attract experienced non-executive directors to its board. Historically, the Group has provided some level of this post-seed capital and leveraged further capital from a number of sources, including industrial partners, venture capital financiers (including the Group's managed funds where appropriate), public markets and angels and high net worth individuals. While it is envisaged that capital from third-party sources will continue to be an important factor in the development of the Group's portfolio companies, it is intended that a proportion of the aggregate proceeds from the Capital Raising will be used to enable the Group to provide a significant proportion of the capital required by portfolio companies at this stage of development, where the Group considers this to be appropriate.

Through the approach described above, the Group seeks to progressively eliminate risk, to monitor progress against milestones and to revise strategic direction based on commercial feedback, whilst minimising capital deployed at the earlier stages of such a business' development, with a view to building a robust portfolio of successful post-seed companies whose fair values will increase over time.

2.2.3 Realisations

Investment realisations arise from the sale of the Group's stakes in its portfolio companies to industrial purchasers or financial investors. Realisations generate cash proceeds for the Group and, if a sale is completed at a value above or below the relevant investment's holding value in the Group's financial statements, a fair value gain or loss is realised which impacts the Group's financial results.

Since its formation in 2000 the Group has generated cash realisations in excess of £50 million including the sale of Proximagen Group plc in 2012 for up to £375 million which resulted in an initial cash payment to the Group of £15.4 million, approximately 35 times the Group's total investment of £0.4 million in that company. During 2014, the Group realised cash proceeds of approximately £9.7 million.

As the Group's portfolio businesses continue to mature, management have and will continue to pursue and assess opportunities to realise cash when market conditions and/or specific circumstances make it attractive to do so.

2.3 Operating revenues

The majority of the Group's current operating revenues are currently generated from the following three key sources:

2.3.1 Venture capital fund management fees

The Group receives recurring fund management fees which are generally earned as a fixed percentage of either total funds under management or the remaining cost of investments in the portfolio of the given fund. In addition, the Group may receive performance related fees as a fixed percentage of the returns of a given fund above a generally fixed level of preferred return. Through Top Technology Ventures, the Group's FCA-regulated venture capital fund management subsidiary, the Group currently manages three funds for which it receives fees, the £31 million IP Venture Fund, the £25 million North East Technology Fund and the £30 million IP Venture Fund II. It should be noted that, since the Group currently has a 33 per cent. limited partnership interest in IP Venture Fund II, its results are consolidated into those of the Group.

While the limited partnership agreements provide that both IP Venture Fund, The North East Technology Fund and IP Venture Fund II have definitive terms, the underlying fund management agreements contemplate that the Group will continue as fund manager for the foreseeable future. Subject to any extension that may be agreed by its limited partners, the limited partnership with the shortest remaining operating lifespan is IP Venture Fund, which is currently anticipated to reach the end of its term in August 2017.

Factors affecting fund management fee income in the future are expected to include the level of assets held by third-party funds managed by the Group, the investment performance of such third-party funds, the ability of the Group to attract further funds under management in the future and the Group's continued authorisation to do so by the Financial Conduct Authority.

2.3.2 Corporate finance fees

The Group receives corporate finance advisory fees and commissions as a result of advising on capital raising activities for certain portfolio companies. These are generally either based on a fixed percentage of funds raised or calculated as a fixed fee. Such fees may be payable in cash, equity or equity-like instruments by portfolio companies. Factors affecting this fee income in the future include the number and size of financings undertaken by portfolio companies, the proportion of such financings advised on by the Group and the terms negotiated by the Group as principal or agent.

2.3.3 Commercialisation, consultancy and business support services

The Group provides a number of commercialisation and consultancy services to its portfolio companies including the provision of executive or non-executive directors, executive search and selection, review of legal documentation and business support services. Such services can result in the Group receiving fees based on the nature and extent of services provided and factors affecting the level of fees include the number of portfolio companies, the proportion of these that require such services and the terms under which the Group may agree to provide them.

In addition to the above, in 2005, IP Group established MBS, a subsidiary company that is currently 61.1 per cent. owned, for the purposes of in-licensing and developing intellectual property relating to new therapeutic compounds. As described in Part I of this document, in 2014 MBS entered into an exclusive R&D alliance and global option and license agreement with Janssen Biotech, Inc. in relation to MBS's novel bone-protective compounds for the treatment of rheumatoid arthritis. Under the terms of this agreement, MBS will receive an up-front payment and is eligible to receive development, regulatory and commercialisation milestone payments all up to a potential total of £176 million. In addition, MBS will receive royalties on future sales of any products that may result from the alliance upon successful launch and commercialisation. The Group may in future receive income from MBS by way of a repayment of inter-company debt or as a dividend.

2.4 Operating and administrative expenses

As a result of its operations, the Group has three significant categories of operating expenditure being staff costs, other expenses and research and development expenditure.

2.4.1 Staff costs

A significant proportion of the Group's operating expenses arise through costs relating to the remuneration of staff and directors. Since the Group operates in a specialised sector, there is a need to attract, motivate and retain employees, the majority of which are required to be highly qualified and experienced. Staff costs include salaries, bonuses benefits and taxes thereon, as well as accounting charges as a result of certain share-based incentives used by the Group. The factors affecting staff costs include the number of staff and directors employed by the business, the competitive environment and the mix of remuneration offered by the Group.

Staff costs have seen modest increases over the past three years largely as a result of strengthening the Group's team, with a more significant increase experienced as a result of the integration of the former Fusion IP plc team in 2014 following its acquisition by the Group in March 2014. As the scale of the Group's activities continues to increase and in order to remain competitive in its highly specialised field, the Directors anticipate that it will be necessary to continue to build its employee base and that further increases in staff costs will be seen in 2015 and beyond.

2.4.2 Other expenses

Other expenses consists of general administrative expenditure, including rent on the Group's four leased premises in the UK and US, regulatory fees, legal fees, other professional fees, office administration travel, marketing and insurance. The total of such expenses has remained at materially similar levels in recent years as a result of the Group's operations remaining broadly consistent during this time. The Group's intended increased activity in the US may give rise to some level of increase in the cost of the Group's operations and the Directors anticipate that other expenses of this nature will increase broadly in line with increases in the number of staff employed by the Group.

2.4.3 Research and development expenditure

The Group, through one or more subsidiary companies, including MBS currently carries out in-licensing and intellectual property development activities relating to new potential therapeutic compounds. Through this subsidiary, and potentially other existing or new subsidiaries or other vehicles in future, the Group incurs, and intends to continue to incur, research and development expenditure in connection with the development of such new therapeutic compounds.

2.5 Taxation

No corporation tax liability has arisen during any of the Group's most recent three financial periods due to an overall loss being sustained in those periods or as a result of tax losses carried forward. In each of the years ended 31 December 2014, 2013, 2012 and 2011 the Group has also received research and development tax credits as a result of the activities carried out by its drug discovery subsidiary, Modern Biosciences.

For tax purposes, the Directors consider that the Group has been and continues to be substantially trading in nature. Consequently, the Directors consider that the Company and other relevant members of the Group continue to meet the "investing company requirement" (i.e. the company making the disposal meets certain "trading" conditions) which must, in addition to other conditions, be satisfied in order for the Group to benefit from the substantial shareholdings exemption which provides that a gain on disposal by a company of shares (or an interest in shares or certain assets related to shares) will not normally be a chargeable gain for corporation tax purposes. As such, the Group does not recognise a provision for deferred taxation in respect of uplifts in value on equity holdings that meet the qualifying criteria.

At 31 December 2014, deductible temporary differences and unused tax losses for which no deferred tax asset had been recognised totalled £62.7 million. No asset was recognised in the Group's financial statements due to current uncertainties surrounding the reversal of the underlying temporary differences.

If UK tax legislation was to change, or the nature of the Group's activities were to change such that they no longer meet the "investing company requirement" referred to above, UK corporation tax would become due on gains arising from the disposal of the Group's investments at the then prevailing rate. In addition, if any of the Group's interest in portfolio companies does not meet (or is determined by HM Revenue & Customs not to meet) the necessary conditions for the substantial shareholdings exemption at the time when the Group disposes of its interest in such portfolio company, then the substantial shareholdings exemption would not be available to the Group in relation to that disposal and the Group would be liable for corporation tax on any gain on such disposal at the then prevailing rate. Also, were the Group to have taxable profits in the future, the currently unrecognised deferred tax asset would be recovered if the underlying temporary differences and/or unused tax losses could be deducted from such profits.

3. FINANCIAL REVIEW, RESULTS OF OPERATIONS AND KEY PERFORMANCE INDICATORS

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2014 is set out in Part 2 of Part IV of this document.

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2013 can be found in the "Strategic Report" section on pages 1 to 31 of its annual report and accounts for the financial year ended 31 December 2013 which is incorporated by reference into this document.

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2012 can be found in the "Chairman's Statement", "Business Review" and "Directors' Report" sections on pages 8 to 23 and pages 50 and 51 of its annual report and accounts for the financial year ended 31 December 2012 which is incorporated by reference into this document.

The key information that describes the results of the Group's operations and sets out the key performance indicators for the year ended 31 December 2011 can be found in the "Chairman's Statement", "Business Review" and "Director's Report" sections on pages 6 to 23 and pages 32 to 33 of its annual report and accounts for the financial year ended 31 December 2011 which is incorporated by reference into this document.

See Part VI of this document for further details of information that has been incorporated by reference into this document.

4. LIQUIDITY AND CAPITAL RESOURCES

4.1 Cash, cash equivalents and deposits

As at 31 December 2014, the Group had cash, cash equivalents and deposits of £97.3 million (2013: £24.1 million; 2012: £47.9 million; 2011: £60.5 million), consisting of £67.3 million cash and cash equivalents and £30.0 million deposits.

The following table analyses the Group's consolidated cash flows for the financial years ended 31 December 2014, 2013, 2012 and 2011:

	2014	2013	2012	2011
	£ million	£ million	£ million	£ million
Net cash inflow/(outflow) from operating activities	(31.4)	25.6	14.9	(45.5)*
Net cash outflow from investing activities	(35.4)	(21.9)	(10.0)	(11.3)
Net cash inflow from financing activities	115.0	–	–	53.3*
Net increase/(decrease) in cash and cash equivalents	48.2	3.7	4.9	(3.5)
Cash and cash equivalents at the beginning of the year 19.1		15.4	10.5	14.0
Cash and cash equivalents at the end of the year	67.3	19.1	15.4	10.5
Deposits held	30.0	5.0	32.5	50.0
Total cash, cash equivalents and deposits at the
end of the year	97.3	24.1	47.9	60.5

* Restated balances as reported in 2012.

Net cash inflow/outflow from operating activities

The Group's net cash outflow from operating activities for the year ended 31 December 2014 was £31.4 million (2013: net cash inflow of £25.6 million; 2012: net cash inflow of £14.9 million; 2011: net cash outflow of £45.5 million, being the restated balance as reported in 2012). The outflow was primarily due to the placing of cash on short term deposit (£25 million) and net operating expenses including staff costs, research and development expenditure and other administrative expenses, partially offset by revenue from services and other income.

Net cash outflow from investing activities

The Group had a £35.4 million net cash outflow from investing activities for the year ended 31 December 2014 (2013: £21.9 million; 2012: £10.0 million; 2011: £11.3 million). The cash outflow was primarily due to the Group's equity and debt investments in portfolio companies and investments in limited partnership funds. This outflow was partially offset by proceeds from the sale of equity investments. The table below provides an analysis of cash investment.

	2014	2013	2012	2011
	£ million	£ million	£ million	£ million
Incubation projects	0.8	0.2	0.5	0.1
Seed businesses	8.2	4.2	4.2	2.1
Post-seed private businesses	22.3	13.7	13.1	5.8
Post-seed quoted businesses	15.5	9.4	8.5	6.3
Total	–––––––– 46.8	–––––––– 27.5	–––––––– 26.3	–––––––– 14.3
Proceeds from sales of equity investments	–––––––– 9.7	–––––––– 5.5	–––––––– 16.7	–––––––– 3.7

Net cash inflow from financing activities

There were total cash inflows of £115.0 million arising from financing activities for the year ended 31 December 2014 (2013: £nil inflow/outflow; 2012: £nil inflow/outflow; 2011: £53.3 million inflow, being the restated balance as reported in 2012). These arose primarily from the issue of capital by the Group in February 2014 resulting in net proceeds of £97.4 million and the acquisition of Fusion IP resulting in net proceeds of £17.6 million.

The Group's strategy is to maintain healthy cash and short-term deposit balances that enable it to participate in all investments ratified by the Group's investment committee, whilst having sufficient cash reserves to meet all working capital requirements in the foreseeable future.

The Group's policy is to place cash which is surplus to near term working capital requirements in low risk treasury funds rated "AA" or above, or on short-term (generally defined as having an original maturity not exceeding 13 months) and overnight deposits with financial institutions that meet the Group's treasury policy criteria.

The Group currently has no borrowings although the Directors may in the future consider introducing a modest level of gearing into the business if this is considered to be in the best interests of the Group at the time. The Group has limited foreign currency deposits denominated in US Dollars and Euros that are primarily held to meet near-term operating requirements in its US operations or for paying for goods and services provided by suppliers in the US or Europe or other countries.

Subject to the need to maintain cash for working capital requirements, there are no material legal or economic restrictions on the ability of subsidiary companies to transfer cash funds to the Company in the form of cash dividends, loans or advances. Top Technology Ventures Limited, which is authorised and regulated by the FCA, is required to maintain a minimum level of regulatory capital which is calculated based on the company's overheads. For the year to 31 December 2014, this regulatory capital requirement was less than £1 million.

At 31 December 2013, the Group had cash and short-term deposits of £24.1 million. As at 31 December 2014 the Group had cash, cash equivalents and deposits of £97.3 million. The movement in this balance since 31 December 2013 represents the effects of the Group's issue of capital and acquisition of Fusion IP, investments in portfolio companies and limited partnerships offset by the proceeds of realisations, as well as operating expenditure offset by operating income and interest.

4.2 Capital and other commitments

A number of the Group's partnerships with research intensive universities in the UK include certain arrangements to provide seed capital to spin-out companies arising from such universities. As at 31 December 2014, the balances were as follows:

		Invested to
	Original	31 December	Remaining
partnership	commitment	2014	commitment
	£ million	£ million	£ million

2002	5.0	3.6	1.4
2003	5.0	1.8	3.2
2003	0.8	0.2	0.6
2005	4.2	0.7	3.5
2005	5.0	1.1	3.9
2006	5.0	0.5	4.5
			4.9
			4.3
			4.8
			3.8
2013	7.5	0.1	7.4
	52.5	10.2	–––––––– 42.3
Queen Mary, University of London(vii)	First year of 2006 2006 2006 2006	5.0 5.0 5.0 5.0 ––––––––	0.1 0.7 0.2 1.2 ––––––––

Notes:

(i) Under the terms of an agreement entered into in 2002 between the Group, the University of Southampton and certain of the University of Southampton's subsidiaries, IP2IPO agreed to make £5.0 million available for the purposes of making investments in University of Southampton spin-out companies. The contractual commitment and the basis for investment is currently under review.
(ii) Under the terms of an agreement entered into during 2003 between the Group and King's College London ("KCL") and King's College London Business Limited (formerly KCL Enterprises Limited), the Group agreed to make £5.0 million available for the purposes of making investments in spin-out companies. Under the terms of this agreement, KCL was previously able to require the Company to make a further £5.0 million available for investments in spin-out companies on the tenth anniversary of the partnership. However, the 2003 agreement was terminated and replaced by a revised agreement on 12 November 2009. Under the revised agreement, the Group has agreed to target investing the remaining commitment of £3.2 million over a three-year period. If, and to the extent this amount is fully invested, KCL cannot require the Group to make any additional funds available. Other changes effected by the revised agreement included the removal of the Group's automatic entitlement to initial partner equity in every spin-out company and/or a share of KCL's licensing fees from intellectual property commercialisation and to the termination rights of the parties.
(iii) In 2003 the Group entered into an agreement with the University of York. The agreement relates to a specialist research centre within the University of York; the Centre for Novel Agricultural Products ("CNAP"). The Group has committed to invest up to a total of £0.8 million in spin-out companies based on CNAP's intellectual property. In 2006 the Group extended its partnership with the University of York to cover the entire university. The Group has committed to invest £5.0 million in University of York spin outs over and beyond the £0.8 million commitment as part of the Group's agreement with CNAP. The agreement with York was amended in 2009 so as to alter the process by which the Group evaluates commercialisation opportunities and the level of initial partner equity the Group is entitled to as a result. Further, the Group's automatic entitlement to share in any of York's proceeds from out-licensing has been removed from the agreement.
(iv) The Group extended its partnership with the University of Leeds in July 2005 by securing the right with associated contractual commitment to invest up to £5.0 million in University of Leeds spin-out companies. This agreement was revised in March 2011 so as to provide for a more detailed process by which the Group and the University of Leeds' commercialisation services team evaluate commercialisation opportunities and to remove the Group's entitlement to a share of out-licensing income generated by the University of Leeds except in certain specific circumstances where the Group is involved in the relevant out-licensing opportunity. Under the terms of the variation agreement, subject to quality and quantity of the investment opportunities, the Company, Techtran and the University of Leeds have agreed to target

annual investments of at least £0.7 million in aggregate and, subject to earlier termination or the parties otherwise agreeing alternative target, to review this target on 30 April 2017.

(v) In December 2005, the Group entered into an agreement with the University of Bristol. The Group has committed to invest up to a total of £5.0 million in University of Bristol spin-out companies.
(vi) Under the terms of an agreement entered into in 2006 between the Group and the University of Surrey ("Surrey"), the Group has committed to invest up to a total of £5.0 million in spin-out companies based on Surrey's intellectual property.
(vii) In July 2006, the Group entered into an agreement with Queen Mary, University of London ("QM") to invest in QM spinout companies. The Group has committed to invest up to a total of £5.0 million in QM spin out companies.
(viii)In September 2006, the Group entered into an agreement with the University of Bath ("Bath") to invest in Bath spin-out companies. The Group has committed to invest up to a total of £5.0 million in Bath spin-out companies. The agreement with Bath was amended during 2010 so as to remove the Group's automatic entitlement to a share of the initial equity or licence fees (as applicable) received by Bath from the commercialisation of its intellectual property in the event the Group and its employees have not been actively involved in developing the relevant opportunity.
(ix) In October 2006, the Group entered into an agreement with the University of Glasgow ("Glasgow") to invest in Glasgow spin-out companies. The Group has committed to invest up to a total of £5.0 million in Glasgow spin-out companies.
(x) In February 2013, the Group entered into a commercialisation agreement with the University of Manchester. Initially the Group had agreed to make available an initial facility of up to £5.0m to provide capital to new proof of principle projects (excluding grapheme projects) intended for commercialisation through spin-out companies. During January 2014, the Group extended its agreement to include funding for Graphene projects, increased the capital commitment by a further £2.5m, bringing the total to £7.5m, and extended the agreement to 2019.

IP Venture Fund and IP Venture Fund II

IP2IPO has a 10 per cent. limited partnership interest in IP Venture Fund. Pursuant to the terms of the IP Venture Fund limited partnership agreement, IP2IPO has committed to invest up to £3.1 million into the fund and as at 31 December 2014 had invested a total of £3.0 million resulting in an outstanding commitment of £0.1 million.

IP2IPO has a 33 per cent. limited partnership interest in IP Venture Fund II. Pursuant to the terms of the IP Venture Fund II limited partnership agreement, IP2IPO has committed to invest up to £10 million into the fund and at 31 December 2014 had invested a total of £1.7 million resulting in an outstanding commitment of £8.3 million.

Off-balance sheet arrangements

Other than operating leases in respect of its leasehold properties, the Group is not a party to any material off-balance sheet arrangements.

5. CAPITALISATION AND INDEBTEDNESS

5.1 Capitalisation

The table below sets forth the Group's total capitalisation as at 30 June 2014, extracted without material adjustment from the Company's interim results for the six months ended 30 June 2014 (which are incorporated by reference into this document). This table should be read together with such interim results and the notes to those interim results incorporated by reference into this document.

	£ million
Shareholders' equity
Share Capital	9.6
Legal reserves
Share premium account	327.6
Other reserves
Merger reserve	12.8
Total capitalisation as at 30 June 2014	–––––––– 350.0

–––––––– Total capitalisation excludes retained earnings, which amounted to £179.0 million at 30 June 2014.

There has been no material change to the capitalisation of the Group since 30 June 2014.

5.2 Indebtedness

The table below sets out the indebtedness of the Group as at 31 December 2014.

	£ million
Total current debt
Guaranteed	Nil
Secured	Nil
Unguaranteed/unsecured	Nil
	–––––––– Nil
Total non-current debt
Guaranteed	Nil
Secured	Nil
Unguaranteed/unsecured	Nil ––––––––
	Nil
	––––––––

The statement of indebtedness is unaudited.

Whilst as at the date of this document the Group has no indebtedness, it may in future consider introducing a modest level of gearing into the business if this is considered to be in the best interests of the Group at that time dependent on, amongst other things, obtaining appropriate terms and Board approval.

The following table sets out the unaudited net consolidated financial funds of the Group as at 31 December 2014.

	£ million
Cash	67.3
Cash equivalents	30.0
Trading securities	– ––––––––
Total liquidity	97.3
Current bank debt	–––––––– Nil
Current portion of non-current debt	Nil
Other current financial debt	Nil
Current financial debt	–––––––– Nil ––––––––
Net current financial funds	97.3 ––––––––
Non-current bank debt	Nil
Bonds issued	Nil
Other non-current financial indebtedness	Nil
Non-current financial indebtedness	–––––––– Nil
Net financial funds	–––––––– 97.3
	––––––––

The Group has no indirect or contingent indebtedness as at 31 December 2014.

6. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT FINANCIAL RISKS

The operations of the Group and the implementation of its objectives and strategy are subject to a number of key risks and uncertainties. Risks are formally reviewed by the Board on an annual basis and appropriate procedures are put in place to monitor and, to the extent possible, mitigate these risks. Were more than one of the risks to occur, the overall impact on the Group may be compounded.

In the course of its normal operations, the Group uses a number of financial instruments including cash, deposits, and equity and debt investments in portfolio companies and is therefore exposed to a number of financial risks, the most significant of which are market, liquidity and credit risks.

(a) Market risk

(i) Price risk

The Group is exposed to equity securities price risk as a result of the equity investments and investments in limited partnerships held by the Group and categorised at fair value through profit or loss. The Group holds investments which are publicly traded on either AIM or the ISDX Markets and investments which are not traded on an active market.

The valuation of quoted and unquoted investments depends on a combination of market factors, including investor sentiment and availability of liquidity and appetite for specific asset classes, as well as the specific performance of each underlying company. As a result of the Group's focus on UK-based IP, its portfolio companies tend to be based in, or have significant operations in, the UK and are therefore influenced by the general economic climate, trading and market conditions in the UK.

Whilst to date the majority of the Group's portfolio companies have tended to be based in, or have significant operations in, the UK, the Group does have a growing business in the US. Accordingly, the Directors believe that the proportion of the Group's portfolio companies that are based in, or exposed to, the US, is likely to increase. The Group therefore has a degree of exposure to general economic and market conditions in the US, and the Directors expect this US exposure to increase over time.

The Group seeks to mitigate price risk by having an established investment appraisal process and asset-specific monitoring procedures which are subject to overall review by the Board. In a number of cases these monitoring procedures can include members of the Group's executive team and other staff serving in an advisory capacity to portfolio companies (including secondments and non-executive directorships). The Group has also established capital markets and communications teams dedicated to supporting portfolio companies with fundraising activities and investor relations.

(ii) Interest rate risk

As the Group has no significant borrowings, it has only a limited interest rate risk. The primary impact to the Group is the impact on income and operating cash flow as a result of the interest-bearing deposits and cash and cash equivalents held by the Group.

The Group mitigates this risk, in co-ordination with liquidity risk, by managing its proportion of fixed to floating rate financial assets.

The Group has no undrawn committed borrowing facilities.

(b) Liquidity risk

The Group is exposed to liquidity risk arising from the need to have finance available to make investments in portfolio companies and to meet payments for administrative and other costs as they fall due.

The Group seeks to manage its liquidity risk to ensure sufficient cash is available to meet foreseeable needs and to invest cash assets safely and profitably. Accordingly, the Group only places working capital on overnight deposits with clearing banks or in short-term instruments issued by reputable counterparties. The Group continually monitors rolling cash flow forecasts to ensure sufficient cash is available for anticipated cash requirements.

(c) Credit risk

Credit risk arises from the exposure to the risk of loss if counterparty fails to perform its financial obligations to the Group. This could include non-repayment of cash and cash equivalents held with financial institutions or defaults of individual trade debtors. Reasons for counterparty defaults include general economic or sector specific downturns or the failure of an individual financial institution or other entity.

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 investing in treasury funds with an "AA" credit rating or above managed by institutions, or by making short-term deposits with counterparties. Short-term deposit counterparties are required to have most recently reported total assets in excess of £3 billion and, 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).

The Group's exposure to credit risk on debt investments is managed in a similar way to equity 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, receivables and other financial assets is represented by their carrying amount.

Capital risk management

The Group's key objective when managing capital is to safeguard the Group's ability to continue as a going concern so that it can continue to provide returns for Shareholders and benefits 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 the 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 issue new shares, return capital or pay dividends to shareholders, or dispose of interests in selected portfolio companies.

The Group's strategy is to maintain healthy cash and short term deposit balances that enable it to participate in all investments ratified by the Group's investment committee, whilst having sufficient cash reserves to meet all working capital requirements in the foreseeable future.

Fair values of financial assets and liabilities

	2014	2013
	£ million	£ million
Equity rights	1.3	3.1
Equity investments	345.9	283.1
Debt investments	4.0	2.8
Other financial assets	–	0.7
Contingent value rights	1.4	1.4
Investment in limited partnerships	4.6	4.8
Trade and other receivables	4.8	0.8
Deposits	30.0	5.0
Cash and cash equivalents	67.3	19.1
Trade and other payables	(2.1)	(1.5)
Loans from limited partners of consolidated funds	(4.5)	(1.3)
Contingent loans from university partners	(0.3) ––––––––	– ––––––––
Total at 31 December	452.2	318.0

IFRS requires financial assets to be categorised 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 assets 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.

The Group's investment portfolio was categorised as follows as at 31 December 2014:

	Level 1		Level 2	Level 3
	Equity	Equity	Unquoted	Equity
	investments	investments	debt	investments
	in quoted	in unquoted	investments	in unquoted
	spin-out	spin-out	in spin-out	spin-out
	companies	companies	companies	companies	Total
	£ million	£ million	£ million	£ million	£ million
Group
At 1 January 2014	135.1	131.0	2.8	17.0	285.9
Investments during the year	11.4	32.8	2.6	–	46.8
Acquired with Fusion	–	11.1	2.4	11.4	24.9
Fusion reclassified as subsidiary	(20.5)	–	–	–	(20.5)
Transaction-based
reclassifications during
the year	–	3.1	(3.1)	–	–
Other transfers between
hierarchy levels during
the year	20.4	(12.3)	–	(8.1)	–
Disposals	(5.7)	(2.2)	–	–	(7.9)
Change in fair value in the year	(2.5) ––––––––	29.7 ––––––––	(0.7) ––––––––	(5.8) ––––––––	20.7 ––––––––
At 31 December 2014	138.2	193.2	4.0	14.5	349.9
	––––––––	––––––––	––––––––	––––––––	––––––––

Cash, cash equivalents and deposits are considered to be level 1 assets, while the equity rights asset, other financial asset and the investments in limited partnerships are considered to be level 3 assets.

PART IV

HISTORICAL FINANCIAL INFORMATION

PART 1: HISTORICAL FINANCIAL INFORMATION ON IP GROUP 1. HISTORICAL FINANCIAL INFORMATION

The consolidated interim results of IP Group for the six months ended 30 June 2014 and the consolidated financial statements of IP Group and its subsidiaries included in the annual report and accounts of IP Group for each of the financial years ended 31 December 2013, 2012 and 2011, together with the audit reports thereon, are incorporated by reference into this document. BDO LLP, of 55 Baker Street, London W1U 7EU, a member firm of the Institute of Chartered Accountants in England and Wales, has issued unqualified audit opinions on the consolidated financial statements of IP Group and its subsidiaries included in the annual report and accounts of IP Group for each of the financial years ended 31 December 2013, 2012 and 2011. The independent auditor's report for the financial year ended 31 December 2013 is set out on page 77 to 79 (inclusive) of the annual report and accounts for the financial year ended 31 December 2013. The independent auditor's report for the financial year ended 31 December 2012 is set out on page 54 of the annual report and accounts of the Company for the financial year ended 31 December 2012. The independent auditor's report for the financial year ended 31 December 2011 is set out on page 49 of the annual report and accounts of the Company for the financial year ended 31 December 2011.

Please refer to Part VI of this document for further details about information that has been incorporated by reference into this document.

2. SELECTED FINANCIAL INFORMATION ON THE GROUP

The financial information for the six months ended 30 June 2014 and the financial years ended 31 December 2014, 2013, 2012 and 2011 as set out below has been extracted without material adjustment from, and should be read together with, the consolidated interim results of IP Group for the six months ended 30 June 2014 and IP Group's audited consolidated financial statements included in its annual report and accounts for each of the financial years ended 31 December 2013, 2012 and 2011, which are each incorporated by reference into this document and the consolidated unaudited preliminary results of IP Group for the financial year ended 31 December 2014 as set out in Part 2 of Part IV of this document.

Key consolidated statement of comprehensive income data

		Unaudited		Unaudited
	Unaudited	6 months	Audited	6 months	Audited	Audited
	Year ended	ended	Year ended	ended	Year ended	Year ended
	31 December	30 June	31 December	30 June	31 December	31 December
	2014	2014	2013	2013	2012	2011
	£million	£ million	£ million	£ million	£ million	£ million
Portfolio return and revenue
Change in fair value of equity
and debt instruments	20.7	17.8	82.4	2.2	38.0	0.9
Profit/(loss) on disposal of
equity investments	1.6	1.3	(0.2)	(0.1)	11.8	2.3
Change in fair value of limited
partnership investments	0.5	0.2	0.8	0.3	0.4	0.6
Revenue from services and
other income	2.6 ––––––––	1.2 ––––––––	2.4 ––––––––	1.4 ––––––––	2.3 ––––––––	2.1 ––––––––
	25.4	20.5	85.4	3.8	52.5	5.9
	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––

		Unaudited		Unaudited
	Unaudited	6 months	Audited	6 months	Audited	Audited
	Year ended	ended	Year ended	ended	Year ended	Year ended
	31 December	30 June	31 December	30 June	31 December	31 December
	2014	2014	2013	2013	2012	2011
	£million	£ million	£ million	£ million	£ million	£ million
Administrative expenses
Research and development
expenses	(0.9)	(0.3)	(0.4)	(0.4)	(0.3)	(0.2)
Share-based payment charge	(0.9)	(0.2)	(0.9)	(0.3)	(0.8)	(0.7)
Change in fair value of Oxford
Equity Rights asset	(1.8)	(0.9)	(5.0)	(2.5)	(6.0)	(6.0)
Amortisation of intangible assets	(4.9)	(1.5)	–	–	–	–
Acquisition costs	(1.1)	(1.0)	–	–	–	–
Other administrative expenses	(9.0)	(4.2)	(6.9)	(3.0)	(5.6)	(5.1)
	–––––––– (18.6)	–––––––– (8.1)	–––––––– (13.2)	–––––––– (6.2)	–––––––– (12.7)	–––––––– (12.0)
Operating profit/(loss)	–––––––– 8.9	–––––––– 12.4	–––––––– 72.2	–––––––– (2.4)	–––––––– 39.8	–––––––– (6.1)
Finance income – interest
receivable	0.6 ––––––––	0.2 ––––––––	0.4 ––––––––	0.4 ––––––––	0.9 ––––––––	0.6 ––––––––
Profit/(loss) before taxation	9.5	12.6	72.6	(2.0)	40.7	(5.5)
Taxation	–	–	–	–	–	–
Profit/(loss) and total comprehensive income for
the period	9.5 ––––––––	12.6 ––––––––	72.6 ––––––––	(2.0) ––––––––	40.7 ––––––––	(5.5) ––––––––
Attributable to:
Equity holders of the Company	9.1	12.6	73.0	(1.9)	40.7	(5.5)
Non-controlling interest	0.4	–	(0.4)	(0.1)	–	–
	–––––––– 9.5	–––––––– 12.6	–––––––– 72.6	–––––––– (2.0)	–––––––– 40.7	–––––––– (5.5)
Earnings/(loss) per share	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––
Basic earnings/(loss) per IP Group
Share	1.97	2.83	19.60	(0.51)	11.13	(1.76)
Diluted earnings/(loss) per IP Group
Share	1.96	2.81	19.27	(0.51)	10.71	(1.76)

Key consolidated statement of financial position data

		Unaudited		Unaudited
	Unaudited	6 months	Audited	6 months	Audited	Audited
	Year ended	ended	Year ended	ended	Year ended	Year ended
	31 December	30 June	31 December	30 June	31 December	31 December
	2014	2014	2013	2013	2012	2011
	£million	£ million	£ million	£ million	£ million	£ million
Investment portfolio	349.9	319.6	285.9	191.9	181.8	123.8
Cash and short-term deposits	97.3	122.6	24.1	38.1	47.9	60.5
Total assets	533.1	532.3	339.4	262.0	263.5	222.2
Total liabilities	5.8 ––––––––	3.9 ––––––––	2.8 ––––––––	0.4 ––––––––	0.4 ––––––––	0.6 ––––––––
Net assets	526.2	528.6	336.6	261.6	263.1	221.6
	––––––––	––––––––	––––––––	––––––––	––––––––	––––––––

As a result of the issue of the Capital Raising Shares (approximately £124.7 million net of expenses) the Company's net assets will be increased by approximately £124.7 million. The issue of the Capital Raising Shares will have no effect on the Company's earnings, save for interest earned on the net proceeds of the Capital Raising.

PART 2: UNAUDITED PRELIMINARY RESULTS OF IP GROUP FOR FINANCIAL YEAR ENDED 31 DECEMBER 2014

The following is the full text of the preliminary results announcement issued by IP Group plc on 10 March 2015, for the financial year ended 31 December 2014.

These preliminary results are not audited, however, the Company's auditor, KPMG LLP of 8 Salisbury Square, London EC4Y 8BB, has agreed that this information is substantially consistent with the final figures to be published in the Group's audited annual report and accounts for the financial year ended 31 December 2014.

FOR RELEASE ON 10 MARCH 2015

("IP Group" or "the Group" or "the Company")

IP Group plc Annual Results Release

Net assets up to £526m, £100m raised, 70% increase in investment rate

IP Group plc (LSE: IPO), the developer of intellectual property-based businesses, today announces its annual results for the year ended 31 December 2014.

2014 HIGHLIGHTS

Positive progress against key strategic objectives

Net assets increased to £526.2m (2013: £337.0m)
70% increase in capital provided to portfolio companies: £46.8m (2012: £27.5m)
Portfolio of 90 companies (2013: 72)
£100m (before expenses) raised through issue of new equity capital in February 2014
Acquisition of Fusion IP plc completed and now fully integrated within the Group, bringing additional expertise and broader portfolio
Further expansion into the US; now engaged with Princeton, Pennsylvania and Columbia universities.

Financial highlights

Net assets excluding intangibles and the Oxford equity rights asset increased to £451.3m (2013: £315.5m)
Net cash and deposits as at 31 December 2014: £97.3m (2013: £24.1m)
Adjusted profit before tax of £16.2m (2013: £77.6m), excluding £6.7m reduction in fair value of Oxford Equity Rights asset and amortisation of intangible assets (2013: £5.0m).

Portfolio highlights

Fair value of portfolio: £349.9m (2013: £285.9m)
Portfolio realisations: £9.7m (2013: £5.5m)
Group's portfolio companies raised in excess of £200m in new capital (2013: £160m)
Modern Biosciences agreed collaboration with Johnson & Johnson Innovation Centre and Janssen Biotech, Inc. potentially worth up to £176m plus royalties
Oxford Nanopore Technologies Limited completed £35m private financing and launched heavily oversubscribed MinION Access Programme
Diurnal Limited successfully completed phase II trials for the treatment of Congenital Adrenal Hyperplasia and raised £6m to support phase III trials
Xeros Technology Group plc ("Xeros"), MedaPhor Group plc ("MedaPhor") and Actual Experience plc ("Actual Experience") admitted to AIM with Xeros and MedaPhor raising gross proceeds of £27.6m and £4.7m respectively and Actual Experience valued at £15.6m at the introduction price.

Post-year-end highlights

– Significantly oversubscribed proposed firm placing, placing and open offer to raise gross proceeds of £128m to help fuel the next phase of the Group's growth.

Commenting on the Group's annual results, Alan Aubrey, Chief Executive Officer of IP Group, said:

"Both the Group and its portfolio companies had a very active year in 2014. The equity fundraising in the first quarter of 2014, as well as that announced today, add further strength to the Group's financial position and enable it to continue to significantly increase the rate of capital deployed into its portfolio companies. Furthermore, the Group has benefitted from the additional expertise and larger, more diversified portfolio that the acquisition of Fusion IP plc has brought to the business. Last year, we continued to expand into the US, through the formation of further partnerships, and we were delighted to complete our US first spin-out, from our partnership with the University of Pennsylvania, at the end of the year. The Group will continue to seek partnership and commercialisation opportunities both there and in the UK.

Overall, our portfolio companies progressed well in 2014 with Oxford Nanopore, Modern Biosciences and Diurnal in particular achieving important milestones. Xeros, MedaPhor and Actual Experience, which successfully floated on AIM, all contributed considerable positive fair value to the Group's portfolio although the decline seen by that index over the year was also experienced by some of our quoted company holdings.

We continue to see a wealth of potentially disruptive intellectual property emanating from academic scientific research that we believe has the potential to form the basis of viable commercial businesses. The proposed capital raising, announced today, will add further impetus to the Group's plans for growth as we maintain our focus on exploring these early-stage opportunities as well as supporting our portfolio companies with both human and financial capital. We remain confident that the Group will be able to deliver on its strategy of achieving attractive returns for its shareholders and funds limited partners over the long term."

For more information, please contact:

IP Group plc	www.ipgroupplc.com
Alan Aubrey, Chief Executive Officer	+44 (0) 20 7444 0050
Greg Smith, Chief Financial Officer	+44 (0) 20 7444 0050
Vicki Bradley, Communications	+44 (0) 20 7444 0050
FTI Consulting
James Melville-Ross/Simon Conway/
Victoria Foster Mitchell	+44 (0) 20 3727 1000

Further information on IP Group is available on our website: www.ipgroupplc.com

Notes

(i) Nature of announcement

This Annual Results Release was approved by the directors on 9 March 2015.

The financial information set out in this Annual Results Release does not constitute the company's statutory accounts for 2014 or 2013. Statutory accounts for the years ended 31 December 2014 and 31 December 2013 have been reported on by the Independent Auditor. The Independent Auditor's Reports on the Annual Report and Financial Statements for 2014 and 2013 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar following the Company's annual general meeting.

The 2014 Annual Report and Accounts will be published in April 2015 and a copy will be posted on the Group's website (www.ipgroupplc.com). In accordance with Listing Rule 9.6.1 a copy of the Annual Report and Accounts will also be submitted to the National Storage Mechanism on or around this date and will be available for inspection at: www.Hemscott.com/nsm.do from that time.

Throughout this Annual Results Release the Group's holdings in portfolio companies reflect the undiluted beneficial equity interest excluding debt, unless otherwise explicitly stated.

(ii) Forward looking statements

This Annual Report and Accounts may contain forward looking statements. These statements reflect the Board's current view, are subject to a number of material risks and uncertainties and could change in the future. Factors which could cause or contribute to such changes include, but are not limited to, the general economic climate and market conditions, as well as specific factors relating to the financial or commercial prospects or performance of individual companies within the Group's portfolio.

STRATEGIC REPORT

Chairman's summary

In my last statement as Chairman, I am pleased to report that 2014 has been a busy year for IP Group and today's announced £128m proposed funding will help to fuel the next phase in the Group's development. Since its admission to AIM in 2003, the year I first became Chairman, the Group has experienced significant growth, with a tenfold increase in its market capitalisation to over £1bn today.

IP Group's mission is to evolve great ideas into world-changing businesses. Until 2013, the Group concentrated solely on opportunities in the UK. However, during that year, it established a presence in the US – a country that the Board believes offers a rich source of accessible world-class IP. The Group now has pilot commercialisation agreements with three US IP Group League universities and announced its first spinout from the University of Pennsylvania in December.

The Group's UK operations have also seen significant developments during 2014. In March, the Group acquired Fusion IP plc, a complementary business in which the Group had held a strategic stake since 2009. The acquisition has created a Group with an enlarged specialised team and greater breadth of coverage, enabling deeper access to a pool of intellectual property while also allowing the Group to improve the service offering to existing and potential research institutions. Looking at the UK business overall, on balance I consider that the Group's portfolio companies are progressing well and many have achieved significant milestones during the year. Of these, I particularly highlight Modern Biosciences' collaboration with Johnson & Johnson Innovation Centre and Janssen Biotech, Inc.

Financial performance

In 2014, although the macroeconomic environment improved in the UK and the US, and equity markets were generally positive, AIM, where approximately 40% of the Group's portfolio companies by value are quoted, lost 17.5% of its value. When considered against this backdrop, the Group's financial performance in 2014 was satisfactory although much lower than compared to 2013. Net assets, excluding intangibles and the Oxford Equity Rights asset, increased to £451.3m (2013: £315.5m) while the Group recorded an adjusted profit before tax of £16.2m excluding the £6.7m reduction in the value of the Oxford Equity Rights Asset and amortisation of intangible assets (2013: £77.6m profit; £5.0m reduction in the value of the Oxford Equity Rights Asset). Profit after tax was £9.5m (2013: £72.6m). As highlighted in my 2013 statement, shareholders should continue to consider IP Group as a long-term business and therefore profits and cash realisations will fluctuate from year to year.

Organisational structure

The operational integration of Fusion IP has increased the Group's size and depth of expertise. In order to support this and the Group's continued growth, the two-tiered governance and management structure comprising the Group Board and the Executive Committee has been formalised. In order to further deepen the Group's sectoral knowledge and capability, the core opportunity evaluation and business building team has now been formally divided into four specialist divisions – Biotech, Cleantech, Healthcare and Technology. The Board believes that this new Group structure allows the business to operate more effectively and to the benefit of the Group and its partners, and stakeholders as a whole.

Board changes

As I announced in my 2013 statement, Professor Lynn Gladden joined the Board in 2014 and brings with her an impressive background in academia and industry. I was also pleased to welcome David Baynes and Doug Liversidge – who joined the Group from Fusion IP plc – to the Board as Chief Operating Officer and Non-executive Director respectively. David and Doug bring with them a wealth of knowledge and expertise and, along with Lynn, have already made a significant contribution to the Company.

During the year, Charles stepped down from the Group's Board as an Executive Director to pursue other opportunities and Francis Carpenter stepped down as Non-executive Director of the Group following the completion of his second three-year term in office.

It was announced in October that I would be stepping down as Non-executive Chairman and a director of the Company once a suitably qualified and experienced successor had been appointed. As announced today, after a rigorous process, the Board has approved the Nominations Committee's recommendation to appoint Mike Humphrey as the Group's Non-executive Chairman. Mike currently the Group's Senior Independent Director and Chair of its Remuneration Committee, will assume office with effect from the end of the Group's Board meeting to be held on 24 March 2015. The Board considered Mike's experience internationally and with institutional investors, and in leading and growing a major corporation built on innovation into the FTSE100, made him an exceptional candidate for the role. The role of Senior Independent Director will be assumed by Doug Liversidge and Jonathan Brooks will become Chairman of the Remuneration Committee with effect from this same date. The Group intends to appoint a further Non-executive Director and will update shareholders to this end in due course.

Our stakeholders

The success of the Group relies on the hard work and dedication of many people and, over the twelve years I have served on the Board of IP Group, it has been my privilege to meet and work with so many talented teams. I would like to extend my sincere thanks to the Board, IP Group's staff, its academic partners and the management teams of its portfolio companies for these efforts. I would also like to express my sincere gratitude to the Company's shareholders and limited partners for their support over the years.

Building a sustainable business

Building a sustainable, viable business is fundamental to the Group's future success and we continually strive to run our operations, and respond to issues, in a responsible manner with consideration for all our stakeholders' needs. The Group is also committed to minimising the business' environmental impact as well as having a positive influence on the communities where it operates. Major portfolio themes for IP Group have included, and will continue to include, business opportunities focused on developing clean technology, environmental improvement and resource efficiency. Sustainable and ethical practices are integrated into our business model and will continue to underpin how the Group operates and does business with its partners.

Since I joined the Board in 2002, and first became Chairman in 2003 and again in 2007, the Group has undergone a period of rapid growth and transformation and I am very proud of what has been achieved by the team. Together we have created a business that today has a large specialised team, access to intellectual property from 15 of the UK's, and three of the US's, top research universities and a portfolio with a value of £350m and approximately £97m in cash. This is my last Chairman's statement and I would like to wish IP Group's Board, staff, partners and shareholders every success for the future.

Dr Bruce Smith Chairman

Business model: evolving great ideas into world-changing businesses

Deal flow: maintaining a pipeline of potentially disruptive commercialisable intellectual property

IP Group seeks to access a wide range of leading scientific research through the formation of long-term partnerships and relationships with the top research universities in the UK and the US. The Group's specialist in-house sourcing team works with its partners, as well as academics from other universities and research institutions, to identify and pursue compelling opportunities across four core sectors.

Business Building: a rigorous and systematic approach to opportunity appraisal, development and business building

During the early stages of an opportunity's development, members of the Group's team work closely with its founders to help shape its strategic direction, often taking an interim management role until such time as the business reaches a sufficient stage of maturity and has the resources to recruit a full external leadership team. The Group team members continue to provide strategic guidance in an executive or non-executive capacity. The Group supports businesses from cradle to maturity with strategic and commercial expertise, executive search and development, innovative and structured programmes for CEOs and boards, and a range of administrative services.

Capital: access to sources of capital to finance businesses as they develop

IP Group provides patient capital for the development of its portfolio companies from its own balance sheet. In addition, IP Group has an FCA-regulated venture capital fund management subsidiary, Top Technology Ventures ("TTV"), which specialises in providing funding for early stage technology businesses. TTV currently manages three funds: IP Venture Fund ("IPVF"), IP Venture Fund II L.P. ("IVPFII") and the Finance for Business North East Technology Fund ("NETF") which, subject to investment guidelines, can provide further additional sources of capital to the Group's portfolio companies. TTV and the Group also work with a wide network of co-investors which can provide further capital alongside the Group.

Long-term value: systematic commercialisation of intellectual property

IP Group seeks to form, or assist in the formation of, a diversified range of spin-out companies based on scientific innovation. IP Group's approach is to take a significant minority equity stake in those spin-out companies, to grow the value of that equity over time – by taking an active role in company development – and to ultimately achieve strong equity returns over the medium to long term.

Operational review

During 2014, the Group continued to strengthen its financial position and expand its access to commercialisable science, both in the UK and the US, in order to pursue its purpose of evolving great ideas into world-changing businesses. This will remain our focus for 2015 and beyond.

Fusion IP plc is now fully integrated within the Group and we are already benefitting from the additional expertise and the larger, more diversified portfolio that this acquisition has brought to the business. The proposed placing of £128m (before expenses) announced today will enable the Group to deploy further capital into its portfolio companies as well as allowing it to expand its access to research and compelling commercialisation opportunities across all its sectors in the UK and the US.

Three core objectives support the Group's purpose: to create and maintain a pipeline of compelling intellectual property-based opportunities, to develop and support these opportunities into a diversified portfolio of robust businesses and to deliver attractive financial returns on our assets and third party funds. Our performance against these objectives is considered in more detail below.

Portfolio company performance

The fair value of the Group's portfolio increased to £349.9m (2013: £285.9m) across 90 businesses that are supported and managed by four specialist sector teams. Tracsis plc, Ilika plc and new entrants to AIM Xeros Technology Group plc, Actual Experience plc and MedaPhor Group plc all contributed significantly to an uplift in the fair value of the portfolio. However, there were some reductions in fair value, which were primarily due to the negative share price performance of some of the quoted companies with Applied Graphene Materials plc, Retroscreen Virology Group plc and Avacta Group plc among the most significant detractors. Some of the key developments of the Group's portfolio companies during the year are highlighted below:

Oxford Nanopore Technologies Limited ("Oxford Nanopore") completed a significantly oversubscribed £35m fundraising round and launched a community-focused access programme – the "MinION Access Programme" – to allow researchers to begin using its nanopore sequencing technology. All aspects of the technology have been trialled, improved and developed during the programme with the changes leading to an increase in performance and helping to expand the range of applications being developed by the community. In late 2014, publications outlining novel applications for the MinION began to appear. Two waves of participants joined the programme during the year and, at the beginning of 2015, Oxford Nanopore opened the programme to fresh applications.
Modern Biosciences plc ("MBS"), the Group's 61.1% owned subsidiary, agreed a collaboration with Johnson & Johnson Innovation Centre and Janssen Biotech, Inc ("Janssen") in relation to MBS' lead programme for the development of novel bone-protective compounds in the treatment of rheumatoid arthritis. The collaboration could be worth up to £176m comprising an upfront payment, an option fee exercisable after or during the Phase 1 programme and development-related milestone payments. Assuming developmental and regulatory success, the majority of the £176m could be received over the next 7-10 years. In addition, MBS will receive royalties on any future sales of products that may result from the alliance upon successful launch and commercialisation of any treatment. During the year, MBS was also awarded a further £2.4m grant by the UK Government's Biomedical Catalyst.
With respect to the portfolio acquired with Fusion IP, Diurnal Limited successfully completed Phase 2 trials for the treatment of Congenital Adrenal Hyperplasia, and raised £6m to support Phase 3 trials, while MedaPhor Group plc, a provider of advanced ultrasound education and training simulators for medical professionals, successfully floated on AIM. Overall, however, due to fair value reductions in a few of the private companies, the Group's holdings in spin-out companies from Fusion IP's partnerships experienced a net fair value reduction of approximately £2m. We remain positive about the prospects for the businesses over the long term.

Further detailed analysis is provided in the Portfolio review.

Supporting our portfolio companies

A key differentiator for the Group in its sectors, and an integral part of its business model, is the active involvement of its people in the development of its spin-out companies. During the early stages of an opportunity, members of the Group's team work closely with its founders to help shape its strategic direction, often taking an interim management role until such time as is appropriate to recruit a full external leadership team. The Group's business-building team members continue to provide strategic guidance in an executive or non-executive capacity. The Group currently has board representation on more than 80% of the portfolio companies. IP Exec, the Group's specialist in-house executive search function, assists portfolio companies with the recruitment of experienced and able leadership, sourcing high quality candidates from a range of backgrounds and disciplines. During the year, IP Exec expanded its team to support the Group's portfolio companies more effectively and placed 16 senior executives with the Group's portfolio companies during the year, an increase on the previous year. IP Impact, which has developed a series of innovative programmes to work with CEOs and boards of portfolio companies, has also had a successful year and continues to contribute to the Group's growth. CEOs from more than 20 of the Group's portfolio companies have now participated in these specialist programmes. In 2014, the Group's specialist business support team provided administrative services to 42 of the Group's portfolio companies.

Expanding and nurturing our partnerships

IP Group's ability to access a wide range of innovative scientific research, by creating and developing long-term relationships with leading research institutions in the UK and US, are considered to be an important element of its business model. Some of our achievements in 2014 in this regard are highlighted below:

At the beginning of the year, the Group announced that it had expanded its "proof of concept" partnership with the University of Manchester to include graphene projects and had extended the term to 2019.
During the year, the number of US partnerships was increased following the signing of an IP commercialisation agreement with Princeton University. The partnership, which has an initial pilot phase of 18 months, will concentrate on developing early-stage, proof of principle opportunities based on intellectual property developed at the university. The Group now has partnerships with three IP Group League universities in the US including the University of Pennsylvania and Columbia University.
In November, the Group formed a pilot initiative with FedIMPACT to identify and develop early-stage technologies from a select group of US Department of Energy ("DOE") Laboratories. FedIMPACT will combine its insight and knowledge of the DOE network with IP Group's unique model of commercialising early-stage technology.

The Group's first commercialisation contract was signed with the University of Oxford's Department of Chemistry in 2000 and will expire in November 2015. The Group will continue to benefit from access to spin-out companies arising from the University of Oxford's Institute of Biomedical Engineering ("IBME") as a result of its strategic stake in, and informal commercialisation alliance with, Technikos LLP ("Technikos"), a venture capital fund specialising in early-stage medical technologies. Technikos' long-term commercial agreement with the IBME is in place until 2023. The acquisition of Fusion IP has enabled a greater degree of exposure to spin-out opportunities emanating from its four partner universities.

Maintaining a strong pipeline

The Group seeks to maintain a pipeline of new opportunities across a wide variety of scientific disciplines and we continue to see many potentially exciting IP commercialisation opportunities across all of our partnerships. In 2014, 10 opportunities received initial incubation or seed funding during the year (2013: 8). At the end of 2014, we completed our first spin-out in the US from our partnership with the University of Pennsylvania. The Group agreed to provide initial capital of up to \$1m for a significant minority stake in Exyn Technologies Inc. which has developed software to control multi-sensory rotorcraft micro aerial vehicles as well as communication between flying vehicles.

Deploying capital to support our portfolio

An important component of the Group's business model is its ability to support both its existing portfolio companies and new early-stage opportunities through the provision of patient capital. The £97.4m (net of expenses) raised by the Group through the issue of new equity at the beginning of the year, added further strength to the Group's financial position and, as per our commitment at that time, the rate of capital deployment into our portfolio companies increased significantly to £46.8m for the year (2013: £27.5m). The Group also assisted its portfolio companies to access capital from a variety of sources and, during the year, they raised approximately £165m, in aggregate (2013: £160m). The £128m total capital raising announced today will enable the Group to continue this trend towards increased support for its most promising portfolio company holdings both in the UK and US.

In addition, the Group provides capital from its managed funds: Top Technology Ventures Limited, the Group's FCA-regulated subsidiary, manages three venture capital funds – IP Venture Fund, The North East Technology Fund ("NETF") and IP Venture Fund II with assets under management totalling £85m at 31 December 2014. IP Venture Fund, which is no longer making investments in new portfolio companies, achieved realisations of £11.1m this year. Having launched in 2013, IP Venture Fund II has invested a total of £4.5m across 17 spin-out companies alongside the Group. NETF completed a total of 32 investments during the year into companies in the North East of England bringing its total investments since inception close to its committed capital of £25m. The Group has access to additional follow-on finance for technology companies in the North East of England during 2015.

Outlook

Leading research institutions in the UK and the US continue to carry out world-class research and this provides a wealth of scientific discoveries for the Group to seek to commercialise alongside its partners. The sector in which the Group operates appears to have attracted a number of new entrants during the period and, as a result, the availability of, and competition for, capital and opportunities has increased. However, IP Group has a solid track record, experienced board and senior management team and a strong financial position including £97.3m of cash and a diverse portfolio valued at £349.9m and this gives the Board confidence that the Company has the necessary credentials to continue to exploit this significant opportunity and ultimately deliver attractive returns to shareholders over the long term.

PORTFOLIO REVIEW

Overview

At 31 December 2014 the value of the Group's portfolio had increased to £349.9m, from £285.9m in 2013, as a result of a significant increase in net investment following the Group's equity capital raising of £100m (before expenses), portfolio companies acquired with Fusion IP plc ("Fusion IP") and the fair value movements set out below. The portfolio comprised holdings in 90 companies, compared with 72 at 31 December 2013, with the ten most valuable portfolio companies accounting for almost 73% of the total portfolio value (2013: 79%).

During the year to 31 December 2014, the Group provided pre-seed, seed and post-seed capital totalling approximately £46.8m to its portfolio companies, including a £5.5m investment into what were previously Fusion IP portfolio companies. This rate of deployment is a 70% increase on the £27.5m provided in 2013 and is consistent with the commitments made by management at the time of the Group's 2014 placing. The Directors continue to believe that the Group's ability to utilise its increased capital to maintain its equity interests in its most promising companies will contribute a significant fair value increase in the portfolio over the medium to long term.

The Group not only increased total capital deployed into its portfolio in 2014 but additionally increased the number of new spin-out opportunities supported, with initial capital being deployed by the Group into 11 companies during the year (2013: 9). Four companies were sold during the period, one of which was to another portfolio company, while a further two companies were closed or fully provided against with a total historic cost of £2.7m.

During the year, cash proceeds from the realisation of investments increased to £9.7m (2013: £5.5m). The proceeds predominantly arose from realisations of the Group's holdings in Synairgen plc, Rock Deformation Research Limited and Velocys plc, whilst the prior year was primarily driven by the partial disposal of interests in Tracsis plc and Velocys plc.

Performance summary

A summary of the gains and losses across the portfolio is as follows:

	2014	2013
	£m	£m
Unrealised gains on the revaluation of investments	63.2	90.3
Unrealised losses on the revaluation of investments	(42.5) ––––––––	(7.9) ––––––––
Net fair value gains	20.7	82.4
Profit/(loss) on disposals of equity investments	1.6	(0.2)
Change in fair value of Limited Partnership interests	0.5	0.8
Net portfolio gains	–––––––– 22.8	–––––––– 83.0
	––––––––	––––––––

The most significant contributors to unrealised gains on the revaluation of investments comprised Oxford Nanopore Technologies Limited (£18.0m), Actual Experience plc (£9.4m) and Xeros Technology Group plc (£8.4m). The major contributors to the unrealised losses on the revaluation of investments were Applied Graphene Materials plc (£8.7m), Retroscreen Virology Group plc (£6.1m – net of the £0.5m uplift in the fair value of Activiomics Limited upon its acquisition) and Avacta Group plc (£6.3m).

The performance of the Group's holdings in companies quoted on either AIM or ISDX saw a net unrealised fair value decrease of £2.5m while the Group's holdings in unquoted companies experienced a net fair value increase of £23.2m. Excluding fair value increases to portfolio companies that listed on AIM during the year, which include Actual Experience plc and Xeros Technology Group plc as noted in the Operational review, above, the performance of the Group's listed portfolio was consistent with the overall performance of the AIM market during 2014. Management believes that despite the poor performance of the quoted market in 2014 the increasing maturity, and technical and commercial progress, of many of its underlying portfolio businesses, both quoted and unquoted, will continue to contribute to significant future increases in fair value.

Investments and realisations

The Group's rate of capital deployment increased during 2014, with a total of £46.8m being deployed across 51 new and existing projects (2013: £27.5m; 44 projects), as follows:

	2014	2013
Cash investment analysis by company stage	£m	£m
Incubation opportunities	0.8	0.2
Seed businesses	8.2	4.2
Post-seed private businesses	22.3	13.7
Post-seed quoted businesses	15.5 ––––––––	9.4 ––––––––
Total	46.8 ––––––––	27.5 ––––––––
Proceeds from sales of equity investments	9.7	5.5
	––––––––	––––––––

Incubation opportunities comprise businesses or pre-incorporation projects that are generally at a very early stage of development. Opportunities at this stage usually involve capital of less than £200,000 from IP Group, predominantly allowing for proof of concept work to be carried out. Incubation projects generally have a duration of nine to eighteen months, following which the opportunity is progressed to seed financing, terminated or retained at the pre-seed stage for a further period to allow additional proof of concept work to be carried out. Seed businesses are those that have typically received financing of up to £1m in total, primarily from IP Group, in order to continue to progress towards agreed commercial and technology milestones and to enable the recruitment of management teams and early commercial engagement.

Post-seed businesses are those that have received some level of further funding from co-investors external to IP Group, with total funding received generally in excess of £1m. Although each business can vary significantly in its rate and manner of development, such additional funding is generally used to progress towards key milestones and commercial validation, to build senior level capability in the business and to attract experienced non-executive directors to their boards. This category is further broken down into post-seed private and post-seed quoted companies. Post-seed quoted companies consist of companies quoted on either AIM or the ISDX markets.

The Group has continued to contribute to the development of its post-seed businesses with a number announcing further financings supported by the Group and/or IPVF, the dedicated follow-on venture capital fund managed by the Group. IPVF invested a total of £2.7m into existing Group portfolio businesses during the year (2013: £1.4m). This fund has sufficient capital commitments from its limited partners to invest approximately £0.2m further into its existing portfolio.

Since its inception in May 2013, IP Venture Fund II, the £30m venture capital successor fund to IP Venture Fund, has invested alongside the Group in 17 companies spun-out from IP Group's university partnerships and other collaborations. At 31 December 2014, IPVFII had invested £4.5m into spin-out companies from incubation stage through seed and post-seed stage, with an investment ratio of 30:70 (IP Venture Fund II: IP Group) further, IP Group holds a 33% interest in IP Venture Fund II. In complying with IFRS 10, the Group consolidates the assets, liabilities and results of IPVFII. In order to reflect meaningful information to its shareholders, the detailed sectoral analysis tables included in this Portfolio review reflect the Group's economic interest in portfolio company holdings, including an estimate of its "look through" interest via IPVFII, which as noted above is calculated as one third of IPVFII's holdings in such companies. The minority interest ownership, i.e. that element of IPVFII's holdings that is attributable to external Limited Partners, is reflected in a separate section within those tables.

During the year, 13 companies were added to the Group's portfolio as a result of the Fusion IP acquisition. In addition, ten opportunities received initial incubation or seed funding during the year (2013: eight) and one initial opportunity received post-seed funding. During the period one existing incubation project progressed to seed stage (2013: two).

The eleven new opportunities included:

– Genomics Limited (University of Oxford) has developed a unique analytical platform for genomic sequence data analysis and interpretation and has already been awarded two grants funded by the Department of Health and managed by Genomics England to develop its technology. The company is also working with pharmaceutical companies to bring the benefits of genomic analysis to the drug development process;

Ultrahaptics Limited has developed a unique technology that uses ultrasound to project sensations through the air and directly onto the user. Users can "feel" touchless buttons, get feedback for midair gestures or interact with virtual objects;
Intelligent Ultrasound Limited (University of Oxford), aims to improve the reliability and timeliness of diagnosis for patients requiring ultrasound scans, won the award for Best Emerging Medtech Company at the OBN Annual Awards in October; and
OxSyBio Limited (University of Oxford) will develop 3D printing techniques to produce tissue-like synthetic materials for wound healing and drug delivery. In the longer term the company aims to print synthetic tissues for organ repair or replacement.

The average level of capital deployed per company increased from £620,000 to £920,000 in 2014. Excluding the Group's participation in Oxford Nanopore Technology Limited's 2013 and 2014 financing rounds, the average investment per company increased to £820,000 from £530,000 in 2013. The average investment per company is expected to increase in the future.

Portfolio analysis – by stage of company maturity

At 31 December 2014, the Group's portfolio fair value of £349.9m was distributed across stages of company maturity as follows:

		As at 31 December 2014			As at 31 December 2013
	Fair value				Fair value
Company stage	£m	%	Number	%	£m	%	Number	%
Incubation opportunities	0.9	–	13	13%	0.1	–	8	11%
Seed businesses	16.0	5%	25	29%	11.3	4%	20	28%
Post-seed private businesses	194.8	56%	33	37%	139.4	49%	26	36%
Post-seed quoted businesses	138.2	39%	19	21%	135.1	47%	18	25%
All portfolio businesses	349.91	100%	90	100%	285.9	100%	–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– 72	100%
							–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

1 Total fair value includes £4.2m (2013: £0.1m) attributable to minority interests represented by third party limited partners in the consolidated fund, IPVFII.

Of the 90 companies in the Group's portfolio, 73% (2013: 79%) of the fair value resides in the ten most valuable companies and the Group's holdings in these businesses are valued at a total of £255.1m (2013: £225.2m).

Portfolio analysis – by sector

The Group funds spin-out companies based on a wide variety of scientific research emerging from leading research intensive institutions and does not limit itself to funding companies from particular areas of science. During 2014, after the acquisition of Fusion IP, the Group formally split its core opportunity evaluation and business building team into four specialist divisions, being Biotech, Cleantech, Healthcare and Technology. The new divisional structure for monitoring and categorising the portfolio is depicted in the following table:

		As at 31 December 2014			As at 31 December 2013
	Fair value				Fair value
Sector	£m	%	Number	%	£m	%	Number	%
Healthcare	213.1	61%	31	34%	176.3	62%	24	33%
Technology	58.6	17%	25	28%	48.8	17%	21	29%
Cleantech	56.2	16%	18	20%	34.2	12%	18	25%
Biotech	16.4	5%	13	15%	6.8	2%	5	7%
Multiple sectors	5.6	1%	3	3%	19.8	7%	4	6%
	349.91	100%	–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– 90	100%	285.9	100%	72	100%
			–––––––– –––––––– –––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

1 Total fair value includes £4.2m (2013: £0.1m) attributable to minority interests represented by third party limited partners in the consolidated fund, IPVFII.

As can be seen from the table, the Group's portfolio by number of companies is well diversified across the four main sectors. By fair value, however, the portfolio is currently more concentrated in the healthcare sector, largely as a result of the relative valuations of the Group's holdings in Oxford Nanopore Technologies Limited, Retroscreen Virology Group plc and Tissue Regenix Group plc.

A more detailed analysis of each sector is set out below.

Healthcare

				Year to 31 December 2014 ————————————————————————
Company name Description	Group stake at 31 Dec 2014(i) %	Fair value of Group holding at 31 Dec 2013 £m	Net investment/ (divestment) £m	Acquired with Fusion £m	Fair value movement £m	Fair value of Group holding at 31 Dec 2014 £m
Oxford Nanopore Technologies Limited	Single-molecule detection. 1st application in 3rd generation DNA sequencing ("\$1000 genome")	19.9%	104.3	6.0	–	18.0	128.3
Retroscreen Virology Group plc	Viral challenge and "virometrics" specialist ("conquering viral disease")	17.5%	30.5(ii)	4.0	–	(6.1)	28.4
Tissue Regenix Group plc	Regenerative dCELL® soft tissue body parts	13.7%	20.7	–	–	(2.7)	18.0
Avacta Group plc	Reagents, arrays and instruments for human and animal healthcare	26.9%	12.2	2.5	–	(6.3)	8.4
Genomics Limited	Platform for analysis and interpretation of genomic sequence data	18.6%	–	2.3	–	2.5	4.8
MedaPhor Group plc	Advanced ultrasound education and training simulators	41.6%	0.5	1.4	1.5	1.2	4.6
Other companies			8.1 ––––––––	5.2 ––––––––	4.3 ––––––––	0.3 ––––––––	17.9 ––––––––
IP Group total Value not attributable to equity holders			176.3 –	21.4 1.9	5.8 –	6.9 0.8	210.4 2.7
Total			–––––––– 176.3 ––––––––	–––––––– 23.3 ––––––––	–––––––– 5.8 ––––––––	–––––––– 7.7 ––––––––	–––––––– 213.1 ––––––––

(i) Represents the Group's undiluted beneficial equity interest (excluding debt) including the portion of IPVFII's stake attributable to the Group.

(ii) Includes Activiomics Limited, another Group portfolio company, which was acquired by Retroscreen Virology in March 2014, for paper valued at £1.4m, representing an uplift of £0.5m on its opening value. The opening value of Retroscreen Virology has been increased to reflect the opening fair value of Activiomics Limited.

Companies in the Healthcare division saw the most significant amount of capital contribution and fair value increase during the year. The major contributors to the healthcare portfolio's fair value increase were Oxford Nanopore (£18.0m) and Genomics Limited (£2.5m), which both raised money at a premium to their previous financing rounds. However, these fair value increases were offset by the poor performance of the share prices of the division's quoted portfolio, specifically Retroscreen Virology (£6.1m unrealised fair value decrease – net of the £0.5m uplift in the fair value of Activiomics Limited upon its acquisition), Avacta Group plc (£6.3m decrease) and Tissue Regenix (£2.7m decrease).

Oxford Nanopore Technologies Limited ("Oxford Nanopore"), a spin-out company from the University of Oxford, which specialises in nanopore-based electronic molecular analysis systems, announced in August 2014 that it had completed a significantly oversubscribed £35m fundraising. Funds from the financing are being used to further develop Oxford Nanopore's commercial and manufacturing infrastructure that has been serving early customers through its MinION Access Programme ("MAP"), its programme designed to give life science researchers access to nanopore sequencing technology. The financing resulted in a fair value uplift in the Group's resultant 19.9% interest of £17.8m. Early in the year, Oxford Nanopore announced that excellent progress had been made in the early phase of MAP and, since the period end, Oxford Nanopore has opened the programme to fresh applications.

In August, Retroscreen Virology Group plc ("Retroscreen Virology"), a spin-out from Queen Mary University of London, announced that it had raised £33.6m before expenses in an oversubscribed placing. The Group contributed £4.0m to the placing, which resulted in a holding of 17.5%. Retroscreen Virology, which pioneered the commercialisation of the hVIVO Human Challenge Models of disease, seeks to leverage its hVIVO platform as a powerful tool in biomarker discovery and the development of new disease models.

In May, Avacta Group plc ("Avacta"), a provider of innovative diagnostic tools, consumables and reagents for human and animal healthcare, raised £10.1m before expenses. The proceeds are being used to accelerate Avacta's development and commercialisation of affimers, engineered proteins that mimic specificity and binding affinities of antibodies.

MedaPhor Group plc ("MedaPhor"), a spin-out from the University of Cardiff, announced its admission to AIM in August. MedaPhor is a provider of advanced ultrasound education and training simulators for medical professionals. Its lead product is the ScanTrainer ultrasound simulator training platform which assists students, doctors and sonographers to acquire ultrasound scanning skills with minimal expert supervision and without the need of a patient on which to practise. In January 2015, the company announced the availability of its first radiology-focused Super Assessment module for its award-winning ScanTrainer simulator. The module will form part of the new Upper Abdomen Education Packages which are a range of solution bundles, designed specifically for radiology, aimed at teaching complex trans-abdominal ultrasound scanning skills in a self-learning environment.

Genomics Limited ("Genomics"), a spin-out from the University of Oxford, has developed a unique analytical platform for genomic sequence data analysis and interpretation and has already been awarded two grants, funded by the Department of Health and managed by Genomics England, to develop its technology. Genomics is also working with pharmaceutical companies to bring the benefits of genomic analysis to the drug development process. In November, the company completed a £10.3m fundraising of which the Group (including the Group's share of IPVFII's investment) contributed £2.3m.

In June 2014, Tissue Regenix Group plc ("Tissue Regenix"), the regenerative medical devices company, launched its DermaPure™ "de-cellularised" dermis product in the US. In February 2015, the company completed a £20m placing of which the Group contributed £2.5m. Tissue Regenix continues to expand its distribution network around the US and currently has a network of over 60 representatives there.

An analysis of the number and value of portfolio companies in the sector by stage of development is as follows:

Stage	Number	Value (£m)
Incubation	5	0.2
Seed	7	5.2
Post-seed	14	145.5
Quoted	5	59.5
Value not attributable to equity holders	n/a	2.7
Total	––––––– 31 –––––––	––––––– 213.1 –––––––

Technology

				Year to 31 December 2014 ————————————————————————
		Group stake at 31 Dec 2014(i)	Fair value of Group holding at 31 Dec 2013	Net investment/ (divestment)	Acquired with Fusion	Fair value movement	Fair value of Group holding at 31 Dec 2014
Company name	Description	%	£m	£m	£m	£m	£m
Actual Experience plc	Optimising the human experience of networked applications	29.7%	4.7	–	–	9.4	14.1
Tracsis plc	Resource optimisation software for the transport industry	10.5%	5.5	–	–	5.8	11.3
Applied Graphene Materials plc	Producer of speciality graphene materials	20.3%	14.9	–	–	(8.7)	6.2
Surrey Nanosystems Limited	Low temperature carbon nanotube growth	21.6%	2.3	0.6	–	0.7	3.6
Phase Focus Limited	Aberration-free quantitative phase imaging	38.4%	–	1.0	3.3	(1.4)	2.9
Other companies			21.3 ––––––––	2.8 ––––––––	2.7 ––––––––	(6.6) ––––––––	20.2 ––––––––
IP Group total Value not attributable to equity holders			48.7 0.1 ––––––––	4.4 0.2 ––––––––	6.0 – ––––––––	(0.8) – ––––––––	58.3 0.3 ––––––––
Total			48.8 ––––––––	4.6 ––––––––	6.0 ––––––––	(0.8) ––––––––	58.6 ––––––––

(i) Represents the Group's undiluted beneficial equity interest (excluding debt) including the portion of IPVFII's stake attributable to the Group.

Companies in the Technology division received net investment of £4.6m and saw a fair value decrease of £0.8m during the year. Significant unrealised fair value gains were achieved as a result of an increase in Actual Experience plc's share price since its admission to AIM as well as Tracsis plc's share performance. However, this was offset by the poor performance of Applied Graphene Materials plc's share price, by Phase Focus Limited's funding at a price lower than its previous funding round and impairments to a number of the division's smaller portfolio companies.

In February, Actual Experience plc, an "analytics as a service" spin-out from Queen Mary University of London, listed on AIM. Actual Experience plc's technology enables the measurement of digital performance quality, allowing customers to improve the performance of the software business applications that they provide to their staff and their own clients. This reduces costs while improving the experience of the user. In January 2015, the company announced that it had made material commercial progress with its channel partners, and had achieved national media coverage of its analysis, following its publication in Ofcom's triennial infrastructure report. In addition, Actual Experience plc strengthened its sales and senior management teams, and established a US operation.

Developments at Tracsis plc ("Tracsis"), a leading provider of operational planning software to the passenger transport industries, included its acquisition of rail software company Datasys Integration Limited, the establishment of its North American pilot programme and increases in its revenues of 106% to £22.4m (2013: £10.8m). In contrast to the general performance of AIM in 2014, Tracsis's share price performed well and saw over 100% appreciation in value.

In July, Surrey NanoSystems Limited announced that it had launched the world's darkest material, Vantablack®, that can be used to enhance the range and sensitivity of optics. The company's patented nanotechnology has the highest thermal conductivity and lowest mass-volume of any material that can be used in high-emissivity applications.

In March, Schlumberger announced that it had acquired Rock Deformation Research, a company specialising in geological software development and structural geology consultancy for the oil and gas industry.

An analysis of the number and value of portfolio companies in the sector by stage of development is as follows:

Stage	Number	Value (£m)
Incubation	5	0.3
Seed	7	4.7
Post-seed	7	15.8
Quoted	6	37.5
Value not attributable to equity holders	n/a	0.3
Total	––––––– 25 –––––––	––––––– 58.6 –––––––

Cleantech

				Year to 31 December 2014 ————————————————————————
		Group stake at 31 Dec 2014(i)	Fair value of Group holding at 31 Dec 2013	Net investment/ (divestment)	Acquired with Fusion	Fair value movement	Fair value of Group holding at 31 Dec 2014
Company name	Description	%	£m	£m	£m	£m	£m
Ceres Power Holdings plc	Ceramic fuel cell technology for distributed generation	23.5%	10.3	4.2	–	1.9	16.4
Xeros Technology Group plc	Polymer bead cleaning systems	11.9%	3.2	2.2	–	8.4	13.8
Ilika plc	Development of new materials for energy and electronics applications	7.6%	0.9	0.5	–	3.4	4.8
Seren Photonics Limited	Nano-engineered structures to enhance the properties of LEDs	66.3%	0.9	0.5	2.3	–	3.7
Magnomatics Limited	High torque magnetic transmissions	51.8%	1.0	0.6	1.9	–	3.5
Velocys plc	Speciality catalysts for the generation of clean fuels	–	1.2	(1.2)	–	–	–
Other companies			16.7	2.0	1.2	(7.1)	12.8
IP Group total			–––––––– 34.2	–––––––– 8.8	–––––––– 5.4	–––––––– 6.6	–––––––– 55.0
Value not attributable to equity holders			–	1.1	–	0.1	1.2
Total			–––––––– 34.2 ––––––––	–––––––– 9.9 ––––––––	–––––––– 5.4 ––––––––	–––––––– 6.7 ––––––––	–––––––– 56.2 ––––––––

(i) Represents the Group's undiluted beneficial equity interest (excluding debt) including the portion of IPVFII's stake attributable to the Group.

The unrealised fair value gain of 19% seen by the Cleantech division portfolio was largely as a result of an increase in value of Xeros Technology Group plc (£8.4m), following its IPO on AIM, as well as Ilika plc (£3.4m), and Ceres Power Holdings plc (£1.9m), whose share prices performed positively during the year. This increase was partially offset by a decrease of £7.1m from the remainder of the division's portfolio.

Ceres Power Holdings plc ("Ceres"), a world-leading developer of low cost, next generation fuel cell technology for use in distributed generation and other applications, announced in July that it had raised £20m (gross of expenses) by way of an oversubscribed placing. The purpose of the placing was to provide the company with sufficient working capital to enable it to respond to the commercial interest it has generated, to continue to develop its technology roadmap and to enhance its manufacturing capability.

In March, Xeros Technology Group plc ("Xeros"), a spin-out from the University of Leeds that has developed a patented polymer bead cleaning system, gained admission to AIM and raised gross proceeds of £27.6m. The admission and fundraising allowed Xeros to accelerate the roll-out of its technology in commercial laundries and to fund the research and development process through to commercialisation in other identified applications, not least the home. In May, Xeros announced that the first major utility company in the US had launched energy incentive programmes for customers who commit to reducing their energy consumption through the use of a Xeros Commercial Laundry System. To date, eight utility companies in the US have launched similar energy incentive programmes.

During 2014, the Group exited its remaining interest in Velocys plc. From the Group's initial investment date into Velocys in 2005 to the final exit date in 2014, the Group had invested £0.4m in the company and realised cumulative proceeds of £12.9m.

An analysis of the number and value of portfolio companies in the sector by stage of development is as follows:

Stage	Number	Value (£m)
Incubation	1	0.1
Seed	7	5.0
Post-seed	5	9.8
Quoted	5	40.1
Value not attributable to equity holders	n/a	1.2
Total	–––––––– 18	–––––––– 56.2
	––––––––	––––––––

Biotech

					Year to 31 December 2014	————————————————————————
Company name	Description	Group stake at 31 Dec 2014(i) %	Fair value of Group holding at 31 Dec 2013 £m	Net investment/ (divestment) £m	Acquired with Fusion £m	Fair value movement £m	Fair value of Group holding at 31 Dec 204 £m
Diurnal Limited	Novel treatments of hormone deficiency	51.7%	–	4.0	5.1	1.0	10.1
Absynth Biologics Limited	Vaccines and therapeutic antibodies	45.0%	–	0.3	1.5	–	1.8
Karus Therapeutics Limited	Inflammatory disease and cancer	8.6%	0.9	0.6	–	–	1.5
Synairgen plc Other companies	Respiratory diseases	–	4.3 1.6	(4.3) 0.5	– 0.9	– –	– 3.0
IP Group total			–––––––– 6.8	–––––––– 1.1	–––––––– 7.5	–––––––– 1.0	–––––––– 16.4
Value not attributable to equity holders			–	–	–	–	–
Total			–––––––– 6.8 ––––––––	––––––– 1.1 ––––––––	–––––––– 7.5 ––––––––	–––––––– 1.0 ––––––––	–––––––– 16.4 ––––––––

(i) Represents the Group's undiluted beneficial equity interest (excluding debt) including the portion of IPVFII's stake attributable to the Group.

Diurnal Limited ("Diurnal"), a spin-out company from the University of Sheffield, announced positive Phase 2 data for its lead product, Chronocort®. Chronocort is in development for the treatment of Congenital Adrenal Hyperplasia ("CAH"), a rare condition characterised by a lack of the natural steroid-hormone, cortisone. Chronocort represents an entirely novel approach to a debilitating disease that is inadequately controlled by current drugs and is the subject of Orphan Drug designation from the European Medicines Agency. During 2014, the Group took the decision to lead a round designed to fund Chronocort's pivotal Phase 3 studies, with a view to eventually taking the product to market. The Group anticipates that Diurnal's lead product Chronocort and its second product, Infacort®, for the treatment of childhood CAH, will enter Phase 3 studies during 2015.

Modern Biosciences plc ("MBS"), a subsidiary company of the Group that in-licenses and develops intellectual property relating to new therapeutic compounds using a virtual drug-discovery model, entered into an R&D alliance and global option and licence agreement with Janssen Biotech, Inc. in relation to MBS's novel bone-protective compounds for the treatment of rheumatoid arthritis ("RA"). The goal of the collaboration, facilitated by the Johnson & Johnson Innovation Centre in London, is to develop new drugs for the treatment of RA. The collaboration could be worth up to £176m comprising an upfront payment, an option fee exercisable after or during the Phase 1 programme and development-related milestone payments. Assuming developmental and regulatory success, the majority of the £176m could be received over the next 7-10 years. In addition, MBS will be eligible to receive royalties on future sales of any products that may result from the alliance upon successful launch and commercialisation. As MBS is currently consolidated into the Group's results, it is not attributed any value in the Group's portfolio.

Synairgen plc ("Synairgen"), a spin-out from the University of Southampton focused on respiratory disease, also announced a global licensing deal for its lead asthma/COPD drug SNG001 with AstraZeneca. Total deal size was \$232.5m, including a \$7.25m upfront payment and potential developmental, regulatory and commercial milestones, plus royalties. Shortly after the announcement of this deal, the Group exited its position in Synairgen, realising proceeds of £4.3m against total capital deployed of £1.3m.

An analysis of the number and value of portfolio companies in the sector by stage of development is as follows:

Stage	Number	Value (£m)
Incubation	2	0.1
Seed	3	–
Post-seed	6	16.0
Quoted	2	0.3
Value not attributable to equity holders	n/a	–
Total	–––––––– 13	–––––––– 16.4
	––––––––	––––––––

FINANCIAL REVIEW

Statement of comprehensive income

A summary analysis of the Group's financial performance during the year is provided below:

	2014	2013
	£m	£m
Net portfolio gains	22.8	83.0
Licensing income	3.0	–
Other income	2.6	2.4
Change in fair value of Oxford Equity Rights asset	(1.8)	(5.0)
Amortisation of intangible assets	(4.9)	–
Acquisition costs	(1.1)	–
Administrative expenses – Modern Biosciences plc	(1.8)	(0.5)
Administrative expenses – all other businesses	(9.9)	(7.7)
Finance income	0.6	0.4
Profit and total comprehensive income for the year	–––––––– 9.5	–––––––– 72.6
	––––––––	––––––––

Net portfolio gains consist primarily of realised and unrealised fair value gains and losses from the Group's equity and debt holdings in spin-out businesses as well as changes in the fair value of its limited and limited liability partnership interests. A detailed analysis of fair value gains and losses is provided in the Portfolio review, above.

Other income for the year remained relatively consistent at £2.6m (2013: £2.4m). Other income comprises fund management fees as well as consulting and similar fees typically chargeable to its portfolio companies for services including executive search and selection, legal and administrative support. Fund management fees are received from the Group's three managed funds, two of which also have the potential to generate performance fees from successful investment performance (IP Venture Fund ("IPVF") and North East Technology Fund ("NETF")). As a result of an extension by its limited partner during the period, the NETF's "investment period" is now anticipated to continue until the end of 2015, while that of IPVF ceased in 2012. The fund management fees for both funds reduce following the cessation of their investment periods. The results of the Group's third managed fund, IPVFII, are consolidated into those of the Group and accordingly the fund management fees received are not reflected in the statement of comprehensive income.

As a result of Modern Bioscience plc's R&D alliance and global option and licence agreement with Janssen Biotech, Inc. ("Janssen") the Group became entitled to an upfront payment of £3.0m (£2.1m net of sublicensing and other costs) during the period, which was subsequently received in cash in January 2015. The Group allocated an increased level of capital to the evaluation and development of certain early-stage therapeutic programmes, including through its subsidiary Modern Bioscience plc ("MBS"), during the year. The majority of these costs related to the OxteoRx programme that is the subject of the R&D alliance with Janssen. All development costs are expensed to the statement of comprehensive income as they are incurred. MBS continued to benefit from the recovery of a proportion of the OsteoRx costs through a Biomedical Catalyst grant, with the net expense being reflected in the statement of comprehensive income. The Group intends to continue developing a small number of early-stage therapeutic assets.

The Group's administrative expenses, excluding those relating to MBS, increased during the period to £9.9m (2013: £7.7m). This is predominantly due to an increase in the cost base, following the Fusion IP plc ("Fusion IP") acquisition, and is inclusive of an IFRS 2 share-based payments charge totalling £0.9m (2013: £0.9m), which relates to the Group's Long-Term Incentive Plan and Annual Incentive Scheme awards. 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".

As a result of the Group's £97.4m equity capital raising (net of expenses) at the beginning of the year, and the resultant increased average cash balance during the year, the Group's interest receivable during the period increased to £0.6m (2013: £0.4m).

Statement of financial position

The Group ended the period with net assets attributable to shareholders of £526.2m, representing an increase of £189.2m from the position at 1 January 2014 (£337.0m). As described above, the most significant contributing factors to the increase in net assets during the period was the £97.4m (net of expenses) capital raising, the acquisition of Fusion IP and the performance of the Group's portfolio of holdings in spin-out companies. "Hard" net assets, i.e. those excluding intangible assets and the Oxford Equity Rights asset, totalled £451.3m at 31 December 2014 (2013: £315.5m).

At 31 December 2014 the Group held cash and deposits of £97.3m (2013: £24.1m) and a diversified portfolio of equity and debt investments in 90 private and publicly listed technology companies (2013: 72), 13 of which were added to the Group's portfolio as a result of the Fusion IP acquisition.

The value of the Group's holdings in portfolio companies increased to £349.9m at year end (2013: £285.9m) after net unrealised fair value gains of £20.7m and net investment of £37.1m (2013: £82.4m net unrealised fair value gain; £22.0m net investment). The Portfolio review above contains a detailed description of the Group's portfolio of equity and debt investments including key developments and movements during the year.

The Group's statement of financial position includes goodwill of £57.1m (2013: £18.4m), acquired intangible assets of £16.5m and an equity rights asset of £1.1m (2013: £2.9m). The goodwill and acquired intangible assets values arose as a result of the Group's acquisition of Fusion IP. The previous year's goodwill balance arose from historical acquisitions of Techtran Group Limited (university partnership business, £16.3m; 2013: £16.3m) and Top Technology Ventures Limited (venture capital fund management business, £2.1m; 2013: £2.1m). The intangible assets are separately identifiable assets resulting from Fusion IP's agreements with its partner universities. The fair value of the intangible assets will be amortised on a straight line basis over each partnership's useful economic life.

The equity rights asset represents amounts paid to the University of Oxford in 2000 and 2001 giving the Group the right to receive 50% of the university's entitlement to equity in any spin-out company and of any licensing income emanating from the University of Oxford's Department of Chemistry until November 2015. Based on the Directors' calculations, and as described more fully in note 14 to the Group's financial statements, the fair value of the contract at 31 December 2014 has reduced by £1.8m (2013: £5.0m) to £1.3m (2013: £3.1m) and its value by 31 December 2015 will be £nil.

Due to the nature of its activities, the Group has limited current assets or current liabilities other than its cash and short-term deposit balances, which are considered in more detail below.

Cash, cash equivalents and short-term deposits ("Cash")

The principal constituents of the movement in Cash during the year are summarised as follows:

	2014	2013
	£m	£m
Net cash used in operating activities (excluding cash flows to/from deposits)	(6.4)	(1.9)
Net cash used in investing activities	(35.4)	(21.9)
Issued share capital	97.4	–
Acquisition of subsidiary	17.6	–
Movement during period	–––––––– 73.2	–––––––– (23.8)
	––––––––	––––––––

At 31 December 2014, the Group's Cash totalled £97.3m, an increase of £73.2m from a total of £24.1m at 31 December 2013 predominantly due to a net £97.4m increase from the issue of new equity capital and £17.6m through the acquisition of Fusion IP offset by net investment in the Group's spin-out companies.

The Group's net cash used in investing activities increased during 2014, reflecting both an increase in investments (2014: £46.8m; 2013: £27.5m) and an increase in realisations (2014: £9.7m; 2013: £5.5m). As described in more detail in the Portfolio review above, the Group allocated a total of £46.8m across 51 portfolio companies during the period (2013: £27.5m; 44 companies).

A further £0.3m was committed to IP Venture Fund (2013: £0.2m), which in turn invested £2.7m across eight portfolio companies (2013: £1.4m; 6 companies). The Group received a distribution of £1.1m following IP Venture Fund realising £11.1m from two exits and one partial disposal.

Overall, net cash used in investing activities totalled £35.4m (2013: £21.9m).

Primarily as a result of an increase in the Group's cost base post the acquisition of Fusion IP, cash used in operating activities increased to £6.4m (2013: £1.9m).

It remains the Group's policy to place cash, which 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 "A" or above. The Group's treasury policy is described in detail in note 2 to the Group financial statements alongside details of the credit ratings of the Group's cash and deposit counterparties.

At 31 December 2014, the Group recognised £4.5m of loans (2013: £1.3m) from the limited partners of IPVFII, a fund raised during 2013 that is consolidated by the Group. These loans are repayable only upon IPVFII generating sufficient returns to repay the limited partners. Whilst the Group continued to have no borrowings, it may in the future consider introducing a modest level of gearing into the business if this is considered to be in the best interests of the Group.

At 31 December 2014 the Group had a total of £1.2m (2013: £0.1m) in US Dollars held to meet the short term working capital requirements of its US operations, including capital anticipated to be required by new and existing spin-out company opportunities.

Taxation

Since the Group's activities, including its activities in the US, are substantially trading in nature the Directors continue to believe that the Group qualifies for the Substantial Shareholdings Exemption ("SSE") on chargeable gains arising on the disposal of qualifying holdings and, as such, the Group has continued not to recognise a provision for deferred taxation in respect of uplifts in value on those equity stakes which meet the qualifying criteria. The Group's unrecognised deferred tax assets and liabilities are set out in note 9 to the financial statements.

PRINCIPAL RISKS AND UNCERTAINTIES

The operations of the Group, and the implementation of its objectives and strategy, are subject to a number of key risks and uncertainties. All levels of management have responsibility for identifying and reporting on risks, which are reviewed by the Board at least twice a year, and appropriate procedures are put in place to monitor and, to the extent possible, mitigate these risks. Were more than one of the risks to occur together, the overall impact on the Group may be compounded. A summary of the key risks affecting the Group and the steps taken to manage these is set out below.

Risk and description Impact Mitigation

The returns and cash proceeds from the Group's early-stage companies can be very uncertain.

The following risks are typically associated with early-stage companies:

may not be able to secure later rounds of funding;
may not be able to source or retain appropriately skilled staff;
competing technologies may enter the market;
technology can be materially unproven and may fail;
IP may be infringed, copied or stolen;
may be more susceptible to cybercrime; and
other administrative, taxation or compliance issues may lead to company failure.
The Group's staff have – Portfolio company failure directly impacts the Group's value and profitability.
At any time, a large proportion of the Group's portfolio value may be accounted for by one, or very few, companies which could exacerbate the impact of any impairment or failure of one or more of these companies.
Cash realisations from the Group's portfolio through trade sales and IPOs could vary significantly from year to year.
significant experience in sourcing, developing and growing early-stage technology companies to significant value, including systematic opportunity evaluation and business building methodologies.
Members of the Group's senior team often serve as non-executive directors or advisers to portfolio companies to help identify and remedy critical issues promptly.
Support on operational, legal and company secretarial matters is offered to minimise failures due to common administrative factors.
The Group has spin-out company holdings across different sectors to reduce the impact of a single company failure or sector demise.
The Group maintains significant cash balances and seeks to employ a capital efficient process deploying low levels of initial capital to enable identification and mitigation of potential failures at the earliest possible stage.

Risk and description Impact Mitigation

It may be difficult for the Group and its early-stage companies to attract capital.

The Group's operations are reliant on capital markets, particularly those in the UK. As the Group's operations, and the operations of the majority of its portfolio companies, are based in the UK, the financial and operational performance of the Group and particularly the ability of its portfolio companies to attract development capital is influenced by the general economic climate and trading conditions in the UK.

Universities or other research intensive institutions may terminate their partnerships or other collaborative relationships with the Group.

The Group's business, results of operations and prospects are at least partially dependent on competitive advantage gained from access to leading scientific research through partnerships and other collaborative arrangements with research intensive institutions and commercial partners, such as Technikos LLP and Cambridge Innovation Capital. The Group may be unable to recreate these elements of its competitive advantage in other geographies in which it may seek to operate (such as the US).

The UK's recession has had (and may continue to have) an adverse effect on trading conditions and availability of capital in the UK, particularly for smaller businesses.
The success of those portfolio companies which require significant funding in the future may be influenced by the market's appetite for investment in early stage companies, which may not be sufficient.
Failure of companies within the Group's portfolio may make it more difficult for the Group or its spin-out companies to raise additional capital.
Termination or non-renewal of arrangements through failure to perform obligations may result in the loss of exclusive rights.
The loss of exclusive rights may limit the Group's ability to secure attractive IP opportunities to commercialise.
This could potentially have a material adverse effect on the Group's long-term business, results of operations, performance and prospects.
With several new entrants to our market, this may reduce our opportunities to create new spin-out businesses.
The Group has significant balance sheet and managed funds capital to deploy in attractive portfolio opportunities.
The Group operates a corporate finance function which carries 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.
The Group continues to consider and, where appropriate, enter into new and innovative partnerships and collaborations with research institutions.
The Group has been able to source opportunities through non-exclusive relationships and other sources.
Members of the Group's senior team work closely with partner institutions to ensure that each commercial relationship is mutually beneficial and productive.
The Group's track record in IP commercialisation may make the Group a partner of choice for other institutions, acting as a barrier to entry to competitors.

Risk and description Impact Mitigation

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 approached and solicited by competitors or other technology-based companies and organisations, or could otherwise choose to leave the Group. Given the relatively small size of the Group, its operations are reliant on a small number of key individuals. Scaling the team, particularly into foreign jurisdictions such as the US, presents an additional potential risk.

– Senior team succession – Loss of key executives and employees of the Group or an inability to attract, retain and integrate appropriately skilled and experienced staff could have an adverse effect on the Group's competitive advantage, business, financial condition, operational results and/or future prospects.

plans are in place and updated regularly.
The Group carries out regular market comparisons for staff and executive remuneration.
The Group seeks to offer 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 long-term incentives for all senior staff are in the form of shares in the Group and all executives are shareholders in the business.
The Group encourages staff development and inclusion through coaching and mentoring.

Risk and description Impact Mitigation

There may be changes to, or impacts from, legislation, government policy and regulation.

There may be unforeseen changes in, or impacts from, government policy, regulation or legislation (including taxation legislation). This could include changes to funding levels or to the terms upon which public moneys are made available to universities and research institutions and the ownership of any resulting intellectual property.

Changes could result in universities and research institutions no longer being able to own, exploit or protect intellectual property.
Changes in government policy or legislation may make it unattractive for research academics to participate in the commercialisation of the IP that they create.
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.
The Group operates an FCAauthorised subsidiary and regulatory changes or breaches could ultimately lead to withdrawal of regulatory permissions, loss of fund management contracts, reputational damage or fines.
University partners are incentivised to protect their IP for exploitation as the partnership agreements share returns between universities, academic founders and the Group.
The Group's university partners also maintain close links with the government to manage their position with respect to future legislative changes.
The Group utilises professional advisers as appropriate to support its monitoring of, and response to changes in, tax or other legislation.
The Group has internal policies and procedures to ensure its compliance with applicable FCA regulations and these are subject to external review.

In addition, through its normal operations the Group is exposed to a number of financial risks, comprising liquidity, market and credit risks. Further quantitative information is set out in note 2 to the Group's consolidated financial information.

The Strategic Report, as set out above, has been approved by the Board.

ON BEHALF OF THE BOARD

Dr Bruce Smith Chairman

9 March 2015

CONSOLIDATED FINANCIAL INFORMATION

The financial information set out below has been extracted from the Annual Report and Accounts of IP Group plc for the year ended 31 December 2014 and is an abridged version of the full financial statements, not all of which are reproduced in this announcement.

DIRECTORS' RESPONSIBILITIES STATEMENT

The responsibility statement set out below has been reproduced from the Annual Report and Accounts, which will be published in April 2015, and relates to that document and not this announcement.

Each of the directors confirms to the best of their knowledge:

The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.
The Annual Report and Accounts includes a fair review of the development and performance of the business and the financial position of the group and the parent company, together with a description or the principal risks and uncertainties that they face.

ON BEHALF OF THE BOARD

Bruce Smith Alan Aubrey Chairman Chief Executive Officer

9 March 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2014

		2014	2013
	Note	£m	£m
Portfolio return and revenue
Change in fair value of equity and debt investments	15	20.7	82.4
Profit/(loss) on disposal of equity investments		1.6	(0.2)
Change in fair value of limited and limited liability partnership interests		0.5	0.8
Other portfolio income		0.2	–
Licensing Income		3.0	–
Revenue from services and other income	4	2.4 ––––––––	2.4 ––––––––
		28.4 ––––––––	85.4 ––––––––
Administrative expenses
Research and development costs		(1.5)	(0.4)
Share-based payment charge	21	(0.9)	(0.9)
Change in fair value of Oxford Equity Rights asset		(1.8)	(5.0)
Amortisation of intangible assets		(4.9)	–
Acquisition costs		(1.1)	–
Other administrative expenses		(9.3) ––––––––	(6.9) ––––––––
		(19.5) ––––––––	(13.2) ––––––––
Operating profit	7	8.9	72.2
Finance income – interest receivable		0.6 ––––––––	0.4 ––––––––
Profit before taxation		9.5 ––––––––	72.6 ––––––––
Taxation	9	– ––––––––	– ––––––––
Profit and total comprehensive income for the year		9.5 ––––––––	72.6 ––––––––
Attributable to:
Equity holders of the parent		9.1	73.0
Non-controlling interest		0.4 ––––––––	(0.4) ––––––––
		9.5 ––––––––	72.6 ––––––––
Earnings per share
Basic (p)	10	1.97	19.60
Diluted (p)	10	1.96	19.27
		––––––––	––––––––

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2014

		2014	2013
	Note	£m	£m
ASSETS
Non-current assets
Intangible assets:
Goodwill	11	57.1	18.4
Acquired intangible assets	12	16.5	–
Property, plant and equipment		0.2	0.2
Oxford Equity Rights asset and related contract costs	14	1.3	3.1
Portfolio:
Equity investments	15	345.9	283.1
Debt investments	15	4.0	2.8
Limited and limited liability partnership interests	22	4.6	4.8
Other financial asset		–	0.7
Contingent value rights	17	1.4 ––––––––	1.4 ––––––––
Total non-current assets		431.0 ––––––––	314.5 ––––––––
Current assets
Trade and other receivables	16	4.8	0.8
Deposits		30.0	5.0
Cash and cash equivalents		67.3	19.1
Total current assets		–––––––– 102.1	–––––––– 24.9
Total assets		–––––––– 533.1	–––––––– 339.4
EQUITY AND LIABILITIES		––––––––	––––––––
Equity attributable to owners of the parent
Share capital	19	9.6	7.5
Share premium account		327.6	150.4
Merger reserve		12.8	12.8
Retained earnings		176.2 ––––––––	166.3 ––––––––
Total equity attributable to equity holders		526.2 ––––––––	337.0 ––––––––
Non-controlling interest		– ––––––––	(0.4) ––––––––
Total equity		526.2	336.6
		––––––––	––––––––
Current liabilities
Trade and other payables	18	2.1 ––––––––	1.5 ––––––––
Non-current liabilities
Loans from limited partners of consolidated funds		4.5	1.3
Contingent loans from university partners		0.3 ––––––––	– ––––––––
Total equity and liabilities		533.1	339.4
		––––––––	––––––––

Registered number: 4204490

Approved by the Board of Directors and authorised for issue on 9 March 2015 and were signed on its behalf by:

Greg Smith Chief Financial Officer

Alan Aubrey Chief Executive Officer

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2014

	2014	2013
	£m	£m
Operating activities
Profit before taxation	9.5	72.6
Adjusted for:
Finance income – interest receivable	(0.6)	(0.4)
Change in fair value of equity and debt investments	(20.7)	(82.4)
Change in fair value of limited and limited liability partnership interests	(0.5)	(0.8)
(Profit)/loss on disposal of equity investments	(1.6)	0.2
Depreciation of property, plant and equipment	0.1	0.1
Amortisation of intangible non-current assets	4.9	–
Change in fair value of Oxford equity rights asset	1.8	5.0
Share-based payment charge	0.9	0.9
Other portfolio income classified as investing activities cash flows	(0.2)	(0.3)
Changes in working capital
(Increase)/decrease in trade and other receivables	(3.2)	0.1
(Increase)/decrease in trade and other payables	(0.5)	1.1
Increase in non-current liabilities	3.2	1.3
Net cash flow (to)/from deposits	(25.0)	27.5
Other operating cash flows
Interest received	0.5	0.7
Net cash outflow/inflow from operating activities	–––––––– (31.4) ––––––––	–––––––– 25.6 ––––––––
Investing activities
Purchase of property, plant and equipment	(0.1)	–
Purchase of equity and debt investments	(46.8)	(27.5)
Investment in limited and limited liability partnerships	(0.3)	(0.2)
Proceeds from sale of equity investments	9.7	5.5
Distributions from limited and limited liability partnerships	1.1	0.2
Proceeds from other financial asset	0.8	–
Other portfolio income received	0.2	0.1
Net cash outflow from investing activities	–––––––– (35.4) ––––––––	–––––––– (21.9) ––––––––
Financing activities
Proceeds from the issue of share capital	97.4	–
Proceeds from acquisition of subsidiary	17.6	–
Net cash inflow from financing activities	–––––––– 115.0	–––––––– –
Net increase in cash and cash equivalents	–––––––– 48.2	–––––––– 3.7
Cash and cash equivalents at the beginning of the year	19.1	15.4
Cash and cash equivalents at the end of the year	–––––––– 67.3	–––––––– 19.1

–––––––– ––––––––

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2014

						Non-
	Share capital £m	Share premium(i) £m	Merger reserve(ii) £m	Retained earnings(iii) £m	Total £m	controlling interest(iv) £m	Total equity £m
At 1 January 2013	7.3	150.4	12.8	92.6	263.1	–	263.1
Comprehensive income	–	–	–	73.0	73.0	(0.4)	72.6
Issue of equity	0.2	–	–	(0.2)	–	–	–
Equity settled share based payments	–	–	–	0.9	0.9	–	0.9
At 1 January 2014	–––––––– 7.5	–––––––– 150.4	–––––––– 12.8	–––––––– 166.3	–––––––– 337.0	–––––––– (0.4)	–––––––– 336.6
Comprehensive income	–	–	–	9.1	9.1	0.4	9.5
Issue of equity	2.0	177.2	–	–	179.2	–	179.2
Issue of shares in connection with LTIP Equity settled share based	0.1	–	–	(0.1)	–	–	–
payments	– ––––––––	– ––––––––	– ––––––––	0.9 ––––––––	0.9 ––––––––	– ––––––––	0.9 ––––––––
At 31 December 2014	9.6 ––––––––	327.6 ––––––––	12.8 ––––––––	176.2 ––––––––	526.2 ––––––––	– ––––––––	526.2 ––––––––

Attributable to equity holders of the parent ————————————————————————————

(i) Share premium – Amount subscribed for share capital in excess of nominal value, net of directly attributable issue costs.

(ii) Merger reserve – Amount subscribed for share capital in excess of nominal value in relation to the qualifying acquisition of subsidiary undertakings.

(iii) Retained earnings – Cumulative net gains and losses recognised in the consolidated statement of comprehensive income net of associated share-based payments credits.

(iv) Non-controlling interest – Share of losses attributable to the Limited Partners of IP Venture Fund II L.P. – a consolidated fund which was created in May 2013.

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

1. ACCOUNTING POLICIES

Basis of preparation

The results are based on the Group financial statements, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") and the International Financial Reporting Interpretations Committee's interpretations as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. This release does not include all of the information required for full annual financial statements. Copies of the 2014 Annual Report and Accounts will be published on the Group's website and will be available upon request.

The accounting policies are consistent with those applied by the Group in its 2013 annual report and accounts except as described below. On 1 January 2014 the Group adopted the following new accounting standards and amendments to standards:

Amendment to IFRS 10 – Investment Entities: The amendments define an investment entity and require a parent that is an investment entity to measure its investments in particular subsidiaries at fair value through profit or loss, rather than consolidating them in its consolidated financial statements. Measurement at fair value through profit or loss must also be applied to an investment entity's separate financial statements. The amendments also introduce disclosure requirements for investment entities into IFRS 12 Disclosure of Interests in Other Entities and amend IAS 27 Separate Financial Statements. The Group, after examination, does not qualify for the investment entity exemption and consequently the amendment has not resulted in changes to the preparation and presentation of the Group's subsidiaries, associates or Limited Partnerships.

No other new standards, interpretations and amendments effective for the first time from 1 January 2014 have had a material effect on the Group's financial statements.

2. FINANCIAL RISK MANAGEMENT

As set out in the Principal risks and uncertainties section above, 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.

(a) Market risk

(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 categorised 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 has also established corporate finance and communications teams dedicated to supporting portfolio companies with fundraising activities and investor relations.

The Group holds investments which are publicly traded on AIM (18 companies) or ISDX (1 company) and investments which are not traded on an active market.

The net increase in fair value of the Group's equity and debt investments during 2014 of £20.7m represents a 7% change against the opening balance (2013: net increase of £82.4m, 45%) and a similar increase or decrease in the prices of quoted and unquoted investments is considered to be reasonably possible. The table below summarises the impact of a 1% increase/decrease in the price of both quoted and unquoted investments on the Group's post-tax profit for the year and on equity.

	2014			2013
	Quoted Unquoted Total			Quoted Unquoted	Total
	£m	£m	£m	£m	£m	£m
Equity investments and investments
in limited partnerships	1.4	2.1	3.5	1.4	1.5	2.9

(ii) Interest rate risk

As the Group has no significant borrowings it has only a limited interest rate risk. The primary impact to the Group is the impact on income and operating cash flow as a result of the interest-bearing deposits and cash and cash equivalents held by the Group.

The Group mitigates this risk, in co-ordination with liquidity risk, by managing its proportion of fixed to floating rate financial assets. The table below summarises the interest rate profile of the Group.

	2014			2013
	Fixed	Floating	Interest		Fixed	Floating	Interest
	rate	rate	free	Total	rate	rate	free	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Financial assets
Equity rights	–	–	1.1	1.1	–	–	2.9	2.9
Equity investments	–	–	345.9	345.9	–	–	283.1	283.1
Debt investments	0.2	–	3.8	4.0	0.6	–	2.2	2.8
Limited and limited
liability partnership interests	–	–	4.6	4.6	–	–	4.8	4.8
Contingent value rights	–	–	1.4	1.4	–	–	1.4	1.4
Deposits	30.0	–	–	30.0	5.0	–	–	5.0
Cash and cash equivalents	–	67.3	–	67.3	–	19.1	–	19.1
Other financial assets	–	–	–	–	–	–	0.7	0.7
Trade receivables	–	–	4.8	4.8	–	–	0.4	0.4
Other receivables	– –––––––	– –––––––	– –––––––	– –––––––	– –––––––	– –––––––	0.4 ––––––– –––––––	0.4
	30.2	67.3	361.6	459.1	5.6	19.1	295.9	320.6
Financial liabilities	–––––––	–––––––	–––––––	–––––––	–––––––	–––––––	––––––– –––––––
Trade payables	–	–	(1.5)	(1.5)	–	–	(0.1)	(0.1)
Other accruals and
deferred income	–	–	(0.6)	(0.6)	–	–	(1.4)	(1.4)
Loans from limited partners of
consolidated funds	–	–	–	–	–	–	(1.3)	(1.3)
	––––––– – –––––––	––––––– – –––––––	––––––– (2.1) –––––––	––––––– (2.1) –––––––	––––––– – –––––––	––––––– – –––––––	––––––– ––––––– (2.8) ––––––– –––––––	(2.8)

At 31 December 2014, if interest rates had been 1% higher/lower, post-tax profit for the year, and other components of equity, would have been £0.7m (2013: £0.2m) higher/lower as a result of higher interest received on floating rate cash deposits.

(b) Liquidity risk

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 at any one point in time 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. Accordingly, the Group only invests working capital in short-term instruments issued by reputable counterparties. The Group continually monitors rolling cash flow forecasts to ensure sufficient cash is available for anticipated cash requirements.

(c) Credit risk

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 "AA" credit rating or above managed by institutions. Short-term deposit counterparties are required to have most recently reported total assets in excess of £3bn and, 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 below. All other financial assets are unrated.

	2014	2013
Credit rating	£m	£m
P1	68.7	14.2
P2	28.6	9.9
AA	– ––––––––	– ––––––––
Total deposits and cash and cash equivalents	97.3	24.1
	––––––––	––––––––

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 maximum single counterparty limit for deposits at 31 December 2014 was £25m (2013: £10m).

The Group's exposure to credit risk on debt investments is managed in a similar way to equity price risk, as described earlier, 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, receivables and other financial assets is represented by their carrying amount.

3. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The Directors make judgements and estimates concerning the future. 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 investments

The judgements required, in order to determine the appropriate valuation methodology of unquoted equity investments, have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities. These judgements include making assessments of the future earnings potential of portfolio companies, appropriate earnings multiples to apply, and marketability and other risk discounts.

(ii) Impairment of goodwill

The Group is required to test, at least annually, whether goodwill has suffered any impairment. The recoverable amount is determined using a number of value-in-use and fair-value-less-costs-to-sell calculations. The use of these methods requires the estimation of future cash flows, and the selection of a suitable discount rate in order to calculate the present value of these cash flows as well as the selection of applicable and reasonable multiples.

(iii) Acquired Intangible Assets

At the date of its acquisition by IP Group, Fusion IP plc had contractual arrangements with four UK universities. The Group separately recognised each of these contractual arrangements as intangible assets at the fair value of these assets at acquisition date. As the intangible assets are not quoted on an active market, the fair value at acquisition date was determined by averaging the inflation and venture capital industry activity adjusted true cost of all university contracts that IP Group was aware of and that have had costs associated with those contracts.

As the contractual agreements are for a finite term the intangible assets are subsequently measured at amortised cost. Amortisation will occur over the remaining term (or useful life) of each contractual arrangement with each of the four universities

Discussion of sensitivity analyses is included in the relevant note for each of the above estimates and judgements.

4. REVENUE FROM SERVICES

All revenue from services is derived from either the provision of advisory and venture capital fund management services, or the licensing of internally developed therapeutic compounds.

5. OPERATING SEGMENTS

For both the year ended 31 December 2014 and the year ended 31 December 2013 the Group's revenue and profit/loss before taxation were derived almost entirely from its principal activities within the UK. Though the Group has initiated operations in the US the associated revenues and costs are currently immaterial and accordingly no additional geographical disclosures are given. For management reporting purposes, the Group is currently organised into three operating segments: (i) the commercialisation of intellectual property via the formation of long-term partner relationships with universities; (ii) the management of venture funds focusing on early-stage UK technology companies; and (iii) the in-licensing of drugable intellectual property from research intensive institutions. These activities are described in further detail in the Strategic report.

	University partnership	Venture capital fund	In-licensing
Year ended 31 December 2014	business £m	management £m	activity £m	Consolidated £m
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and
debt investments	20.7	–	–	20.7
Gain on disposal of equity investments	1.6	–	–	1.6
Change in fair value of limited and limited
liability partnership interests	0.5	–	–	0.5
Other portfolio income	0.2	–	–	0.2
Licensing Income	–	–	3.0	3.0
Revenue from services and other income	0.8	0.3	–	1.1
Revenue from fund management services	–	1.3	–	1.3
Change in fair value of Oxford Equity
Rights asset	(1.8)	–	–	(1.8)
Amortisation of intangible assets	(4.9)	–	–	(4.9)
Administrative expenses	(9.5) ––––––––	(1.4) ––––––––	(1.9) ––––––––	(12.8) ––––––––
Operating profit	7.6	0.2	1.1	8.9
Finance income – interest receivable	0.6	–	–	0.6
Profit before taxation	–––––––– 8.2	–––––––– 0.2	–––––––– 1.1	–––––––– 9.5
Taxation	–	–	–	–
Profit and total comprehensive income	––––––––	––––––––	––––––––	––––––––
for the year	8.2	0.2	1.1	9.5
STATEMENT OF FINANCIAL POSITION	––––––––	––––––––	––––––––	––––––––
Assets	520.6	9.4	3.1	533.1
Liabilities	(5.8)	(0.1)	(1.0)	(6.9)
Net assets	–––––––– 514.8	–––––––– 9.3	–––––––– 2.1	–––––––– 526.2
Other segment items	––––––––	––––––––	––––––––	––––––––
Capital expenditure	(0.1)	–	–	(0.1)
Depreciation	(0.1) ––––––––	– ––––––––	– ––––––––	(0.1) ––––––––

	University partnership business	Venture capital fund management	In-licensing activity	Consolidated
Year ended 31 December 2013	£m	£m	£m	£m
STATEMENT OF COMPREHENSIVE INCOME
Portfolio return and revenue
Change in fair value of equity and
debt investments	82.4	–	–	82.4
Loss on disposal of equity investments	(0.2)	–	–	(0.2)
Change in fair value of limited and limited
liability partnership interests	0.8	–	–	0.8
Revenue from advisory services and other
portfolio income	0.8	0.3	–	1.1
Revenue from fund management services	–	1.3	–	1.3
Change in fair value of Oxford Equity
Rights asset Amortisation of intangible assets	(5.0) –	– –	– –	(5.0) –
Administrative expenses	(6.9)	(0.8)	(0.5)	(8.2)
Operating profit/(loss)	–––––––– 71.9	–––––––– 0.8	–––––––– (0.5)	–––––––– 72.2
Finance income – interest receivable	0.4	–	–	0.4
Profit/(loss) before taxation	–––––––– 72.3	–––––––– 0.8	–––––––– (0.5)	–––––––– 72.6
Taxation	–	–	–	–
Profit/(loss) and total comprehensive	––––––––	––––––––	––––––––	––––––––
income for the year	72.3 ––––––––	0.8 ––––––––	(0.5) ––––––––	72.6 ––––––––
STATEMENT OF FINANCIAL POSITION
Assets	332.8	6.4	0.2	339.4
Liabilities	(1.3)	(1.4)	(0.1)	(2.8)
Net assets	–––––––– 331.5	–––––––– 5.0	–––––––– 0.1	–––––––– 336.6
Other segment items	––––––––	––––––––	––––––––	––––––––
Capital expenditure	–	–	–	–
Depreciation	0.1 ––––––––	– ––––––––	– ––––––––	0.1 ––––––––

6. AUDITOR'S REMUNERATION

Details of the auditor's remuneration are set out below:

	2014	2013
	£000	£000
Fees payable to the Company's auditor for the audit of the Company's
annual accounts	70	64
The audit of the Company's subsidiaries, pursuant to legislation	94 ––––––––	36 ––––––––
Total fees for audit services	164	100
Audit-related assurance services	33 ––––––––	23 ––––––––
Total assurance services	197	123
Tax compliance services	–	46
Taxation advisory services	–	26
All other services	– ––––––––	7 ––––––––
Total non-assurance services	–	79
	–––––––– 197	–––––––– 202
	––––––––	––––––––

During 2014 KPMG LLP was appointed as auditor of IP Group plc to replace BDO LLP. BDO LLP remain engaged by the Group as tax advisors.

7. PROFIT/(LOSS) FROM OPERATIONS

Profit/(loss) from operations has been arrived at after charging:

	2014	2013
	£m	£m
Amortisation of intangible assets	(4.9)	–
Depreciation of tangible assets	(0.1)	(0.1)
Employee costs (see note 8)	(6.1)	(5.1)
Operating leases – property	(0.4)	(0.4)
Profit/(loss) on disposal of equity investments	1.6	(0.2)
	––––––––	––––––––

8. EMPLOYEE COSTS

Employee costs (including directors) comprise:

	2014	2013
	£m	£m
Salaries	4.4	3.7
Defined contribution pension cost	0.3	0.1
Share-based payment charge (see note 21)	0.9	0.9
Equity bonuses (released)/accrued in the year	(0.1)	–
Social security	0.6 ––––––––	0.4 ––––––––
	6.1	5.1

The average monthly number of persons (including Executive Directors) employed by the Group during the year was 49, all of whom were involved in management and administration activities (2013: 35). Details of the Directors' remuneration can be found in the Directors' Remuneration Report in the full Annual Report and Accounts.

–––––––– ––––––––

9. TAXATION

	2014	2013
	£m	£m
Current tax	– ––––––––	– ––––––––
Deferred tax	–	–
	––––––––	––––––––

The amount for the year can be reconciled to the profit per the statement of comprehensive income as follows:

	2014	2013
	£m	£m
Profit before tax	9.5	72.6
Tax at the UK corporation tax rate of 21.5% (2013: 23.5%)	–––––––– 2.0	–––––––– 16.9
Expenses not deductible for tax purposes	1.3	–
Non taxable income	–	(19.9)
Fair Value movement on investments qualifying for SSE	(3.4)	–
Movement on share based payments	(1.0)	–
Unrecognised other temporary differences	(2.1)	–
Movement in tax losses arising not recognised	3.2	3.0
Tax credit	–––––––– –	–––––––– –
	––––––––	––––––––

At 31 December 2014, deductible temporary differences and unused tax losses for which no deferred tax asset has been recognised totalled £62.7m (2013: £53.0m). An analysis is shown below:

		2014		2013
	Amount	Deferred tax	Amount	Deferred tax
	£m	£m	£m	£m
Share-based payment costs	5.0	1.0	13.7	2.7
Unused tax losses	57.7	11.5	39.3	7.9
	––––––––– 62.7	––––––––– 12.5	––––––––– 53.0	––––––––– 10.6
	–––––––––	–––––––––	–––––––––	–––––––––

At 31 December 2014, deductible temporary differences and unused tax losses for which a deferred tax asset/(liability) has been recognised totalled £nil (2013: £nil). An analysis is shown below:

	2014		2013
	Amount	Deferred tax	Amount	Deferred tax
	£m	£m	£m	£m
Temporary timing differences	11.3	2.3	–	–
Unused tax losses	(11.3) –––––––––	(2.3) –––––––––	– –––––––––	– –––––––––
	–	–	–	–
	–––––––––	–––––––––	–––––––––	–––––––––
10. EARNINGS PER SHARE
			2014	2013
Earnings			£m	£m
Earnings for the purposes of basic and dilutive earnings per share			9.1	73.0

–––––––– ––––––––

	2014	2013
	Number of	Number of
Number of shares	shares	shares
Weighted average number of ordinary shares for
the purposes of basic earnings per share	462,466,944	372,513,387
Effect of dilutive potential ordinary shares:
Long-Term Incentive Plan	2,523,968	6,515,903
Weighted average number of ordinary shares for	–––––––––––	–––––––––––
the purposes of diluted earnings per share	464,990,912	379,029,290
	–––––––––––	–––––––––––

The Group has only one class of potentially dilutive ordinary share. These are contingently issuable shares arising under the Group LTIP.

11. GOODWILL

	£m
At 1 January 2013	18.4 ––––––––
At 1 January 2014	18.4
Recognised on acquisition of subsidiary (see note 27)	38.7 ––––––––
At 31 December 2014	57.1
	––––––––

The Group conducts annual impairment tests on the carrying value of goodwill, based on the recoverable amount of the CGUs to which the goodwill has been allocated. The goodwill allocated to each CGU is summarised in the table below. A number of both value-in-use and fair-value-less-costs-to-sell calculations are used to assess the recoverable values of the CGUs, details of which are specified below.

	2014	2013
	£m	£m
University partnership CGU	55.0	16.3
Fund management CGU	2.1	2.1
	–––––––– 57.1	–––––––– 18.4
	––––––––	––––––––

Impairment review of venture capital fund management CGU

The key assumptions of the DCF model used to assess the value in use, and the range of multiples applied in calculating the fair-value-less-costs-to-sell based on a percentage of assets under management are shown below:

	2014	2013
Discount rate	9%–11%	9%–11%
Number of funds under management	3	3
Management fee	2%–3.5%	2%–3.5%
Cost inflation	3%	3%
Percentage of assets under management	2%–7%	2%–7%
	–––––––––	–––––––––

A number of different value-in-use models were assessed in order to evaluate the recoverable value of the CGU, none of which resulted in an impairment being required.

Impairment review of the university partnership CGU

The key assumptions of the DCF models used to assess the value in use are shown below.

For the purposes of impairment testing, the university partnership CGU comprises those elements connected with the Group's university partnership business other than those that specifically relate to the Group's contract with the University of Oxford's Department of Chemistry (see note 14). The Directors consider that for each of the key variables which would be relevant in determining a recoverable value for the university partnership CGU, there is a range of reasonably possible alternative values. The key variable ranges are set out below:

	2014	2013
Number of spin-out companies per year	10–15	7–10
Annual investment rate	£40m–£60m	£20m–£35m
Rate of return achieved	18%–22%	18%–22%
Initial equity stake acquired by the Group under the
university partnership	15%–35%	12%–30%
Proportion of spin-out companies failing	32%–45%	32%–45%
Weighted average holding period (years)	3–5	3–5
Dilution rates prior to exit as a result of financing for
spin-out companies	40%–60%	40%–60%
Proportion of IPO exits	25%–35%	25%–35%
IPO exit valuations	£30m–£40m	£35m–£45m
Proportion of disposal exits	28%–32%	28%–32%
Disposal valuations	£25m–£35m	£25m–£35m
Discount rate	9%–11%	9%–11%
	––––––––––	––––––––––

When determining the key variables management has, where possible and appropriate, used historical performance data as a basis. In instances where the forecasted volumes and scale of activity do not align with the Group's prior performance management applies its judgement in determining said variables. A number of different value-in-use models were assessed in order to evaluate the recoverable value of the CGU, none of which resulted in an impairment being required.

12. INTANGIBLE ASSETS

	Total
Cost	£m
At 1 January 2014	–
Additions through acquisition of subsidiary (see note 27)	21.4
At 31 December 2014	–––––––– 21.4
Accumulated amortisation	––––––––
At 1 January 2014	–
Charge for the year	4.9 ––––––––
At 31 December 2014	4.9
Net book value	––––––––
At 31 December 2014	16.5
At 31 December 2013	–––––––– –

The intangible assets represents contractual arrangements and memorandums of understanding with four UK universities acquired through acquisition of a subsidiary. The contractual arrangements have fixed terms and, consequently, the intangible assets have a finite life which align with the remaining terms which, at the end of the period, range from two months to 39 months. The individual contractual arrangements are amortised in a straight line over the remainder of their terms with the expense being presented directly on the primary statements.

––––––––

13. CATEGORISATION OF FINANCIAL INSTRUMENTS

		At fair value through
		profit or loss
		Designated
	Held for	upon initial	Loans and
	trading	recognition	receivables	Total
Financial assets	£m	£m	£m	£m
At 31 December 2014
Equity rights	1.3	–	–	1.3
Equity investments	–	345.9	–	345.9
Debt investments	–	4.0	–	4.0
Other financial assets	–	–	–	–
Contingent value rights	–	1.4	–	1.4
Limited and limited liability partnership interests	–	4.6	–	4.6
Trade and other receivables	–	–	4.8	4.8
Deposits	–	–	30.0	30.0
Cash and cash equivalents	– ––––––––	– ––––––––	67.3 ––––––––	67.3 ––––––––
Total	1.3	355.9	102.1	459.3
At 31 December 2013	––––––––	––––––––	––––––––	––––––––
Equity rights	3.1	–	–	3.1
Equity investments	–	283.1	–	283.1
Debt investments	–	2.8	–	2.8
Other financial assets	0.7	–	–	0.7
Contingent value rights	–	1.4	–	1.4
Limited and limited liability partnership interests	–	4.8	–	4.8
Trade and other receivables	–	–	0.8	0.8
Deposits	–	–	5.0	5.0
Cash and cash equivalents	– ––––––––	– ––––––––	19.1 ––––––––	19.1 ––––––––
Total	3.8 ––––––––	292.1 ––––––––	24.9 ––––––––	320.8 ––––––––

All financial liabilities are categorised as other financial liabilities and recognised at amortised cost.

The Group does not consider that any change in fair value of financial assets in the year is attributable to credit risk (2013: £nil).

All net fair value gains in the year are attributable to financial assets designated at fair value through profit or loss on initial recognition (2013: all net fair value gains attributable to financial assets designated at fair value through profit or loss on initial recognition).

All interest income is attributable to financial assets not classified as fair value through profit and loss.

	Equity rights £m	Contract costs £m	Total £m
Cost
At 1 January 2014 and 31 December 2014	19.9 ––––––––	0.5 ––––––––	20.4 ––––––––
Aggregate amortisation and change in fair value of contract costs
At 1 January 2014	(17.0)	(0.3)	(17.3)
Change in fair value during the year	(1.8)	–	(1.8)
At 31 December 2014	–––––––– (18.8)	–––––––– (0.3)	–––––––– (19.1)
Net book value	––––––––	––––––––	––––––––
At 31 December 2014	1.1	0.2	1.3
At 31 December 2013	–––––––– 2.9	–––––––– 0.2	–––––––– 3.1
	–––––––– Equity	–––––––– Contract	––––––––
	rights	costs	Total
	£m	£m	£m
Cost
At 1 January 2013 and 31 December 2013	19.9 ––––––––	0.5 ––––––––	20.4 ––––––––
Aggregate amortisation and change in fair value of contract costs
At 1 January 2013	(12.0)	(0.3)	(12.3)
Change in fair value during the year	(5.0)	–	(5.0)
At 31 December 2013	–––––––– (17.0)	–––––––– (0.3)	–––––––– (17.3)
Net book value	––––––––	––––––––	––––––––
At 31 December 2013	2.9	0.2	3.1
At 31 December 2012	–––––––– 7.9	–––––––– 0.2	–––––––– 8.1

14. EQUITY RIGHTS AND RELATED CONTRACT COSTS

Carrying amount of equity rights

Equity rights represent consideration paid to the University of Oxford between December 2000 and June 2001.

–––––––– –––––––– ––––––––

In return for the non-refundable, non-interest bearing, advance totalling £20.1m, the Group has the right to receive from the University the following over its 15-year term:

50% of the university's equity shares in any spin-out company, which is created, based on intellectual property created by academics that are considered to be part of the Department of Chemistry (i.e. equity instruments in unlisted companies); and
50% of the university's share of any cash payments received by the university from parties who have licensed intellectual property created by academics that are considered to be part of the Department of Chemistry.

The contract expires on 23 November 2015.

The Directors consider that for each of the key variables which would be relevant in determining a fair value for this financial instrument, there is a range of reasonably possible alternative values. The key variable ranges are set out below:

2014	2013

1	1–2

20%–25%	20%–25%
30%–40%	30%–40%

35%–60%	35%–60%
30%–40%	30%–40%
£30m–£50m	£30m–£50m
25%–35%	25%–35%
£30m–£40m	£30m–£40m
9%–11%	9%–11%

These key variable ranges result in a wide range of fair value estimates for the equity rights agreement, from £nil to £2.9m using a range of reasonably possible variables, with the number of spin-outs being the variable giving rise to the widest variation in estimated fair values. In order to calculate a more accurate valuation figure given the multitude of reliable scenarios generated when altering the discounted cash flows variables, a probability weighting expected return method is utilised. Having applied probabilities to the various possible scenarios, the method returned an estimated asset value of £1.3m at 31 December 2014 (2013: £3.1m).

––––––––––– –––––––––––

15. INVESTMENT PORTFOLIO

	Level 1		Level 2	Level 3
	Equity	Equity	Unquoted	Equity
		investments investments		debt investments
		in quoted in unquoted investments in unquoted
	spin-out	spin-out	in spin-out	spin-out
	companies	companies	companies	companies	Total
	£m	£m	£m	£m	£m
Group
At 1 January 2014	135.1	131.0	2.8	17.0	285.9
Investments during the year	11.4	32.8	2.6	–	46.8
Acquired with Fusion	–	11.1	2.4	11.4	24.9
Fusion reclassified as subsidiary	(20.5)	–	–	–	(20.5)
Transaction-based reclassifications
during the year	–	3.1	(3.1)	–	–
Other transfers between hierarchy levels
during the year	20.4	(12.3)	–	(8.1)	–
Disposals	(5.7)	(2.2)	–	–	(7.9)
Change in fair value in the year	(2.5) ––––––––	29.7 ––––––––	(0.7) ––––––––	(5.8) ––––––––	20.7 ––––––––
At 31 December 2014	138.2 ––––––––	193.2 ––––––––	4.0 ––––––––	14.5 ––––––––	349.9 ––––––––

	Level 1		Level 2	Level 3
	Equity	Equity	Unquoted	Equity
		investments investments		debt investments
		in quoted in unquoted investments in unquoted
	spin-out	spin-out	in spin-out	spin-out
	companies	companies	companies	companies	Total
	£m	£m	£m	£m	£m
At 1 January 2013	84.6	86.5	3.9	6.8	181.8
Investments during the year	9.4	14.1	4.0	–	27.5
Transaction-based reclassifications
during the year	–	3.6	(3.7)	0.1	–
Other transfers between hierarchy levels
during the year	0.6	(12.0)	(0.4)	11.8	–
Disposals	(5.6)	(0.2)	–	–	(5.8)
Change in fair value in the year	46.1 ––––––––	39.0 ––––––––	(1.0) ––––––––	(1.7) ––––––––	82.4 ––––––––
At 31 December 2013	135.1 ––––––––	131.0 ––––––––	2.8 ––––––––	17.0 ––––––––	285.9 ––––––––

Fair values of unquoted spin-out companies classified as Level 3 in the fair value hierarchy have been determined in part or in full by valuation techniques that are not supported by observable market prices or rates. Investments in 27 companies have been classified as Level 3 and the individual valuations for each of these have been arrived at using a variety of valuation techniques and assumptions.

Where fair values are based upon the most recent market transaction, but that transaction occurred more that twelve months prior to the balance sheet date, the investments are classified as Level 3 in the fair value hierarchy. The fair values of investments categorised as Level 3 are analysed on a monthly basis to determine business factors which may make the most recent investment rate no longer a representation of fair value.

There are no identified unobservable inputs to which the Level 3 fair values would be materially sensitive. This is represented by the fact that if the fair value of all Level 3 investments were to decrease by 10%, the net assets figure would decrease by £1.5m, with a corresponding increase if the unobservable inputs were to increase by 10%.

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 tiers 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 tier 2, and those changes post are attributed to tier 1.

If the assumptions used in the valuation techniques for the Group's holding in each company are varied by using a range of possible alternatives, there is no material difference to the carrying value of the respective spin-out company. The effect on the consolidated statement of comprehensive income for the period is also not expected to be material.

Transfers between Level 2 and 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 £20.4m.

Transfers between Level 1 and Level 2 would occur when a quoted investment's market becomes inactive. There have been no such instances in the current period.

Transfers between Level 3 and Level 2 occur when an investment which previously had a most recent investment of over twelve months ago undertake an investment, resulting in an observable market rate. In the current period transfer of this nature amounted to £20.5m.

Transfers between Level 2 and Level 3 occur when an investment's recent investment becomes more than twelve months old, with the price becoming deemed unobservable. In the current period transfers of this nature amounted to £12.4m.

Fair value changes in Level 3 investments have been a loss of £5.8m in the period, recognised in as change in fair value of equity and debt investments in the condensed consolidated statement of comprehensive income.

Change in fair value in the year

	2014	2013
	£m	£m
Fair value gains	63.2	90.3
Fair value losses	(42.5)	(7.9)
	–––––––– 20.7	–––––––– 82.4
	––––––––	––––––––

The Company's interests in subsidiary undertakings are listed in note 2 to the Company's financial statements.

16. TRADE AND OTHER RECEIVABLES

	2014	2013
	£m	£m
Trade debtors	4.6	0.3
Prepayments	0.2	0.1
Other receivables	–	0.4
	–––––––– 4.8	–––––––– 0.8

–––––––– –––––––– The directors consider the carrying amount of trade and other receivables to approximate their fair value. All receivables are interest free, repayable on demand and unsecured.

17. CONTINGENT VALUE RIGHTS

As a result of the disposal of Proximagen Group plc in August 2012, the Group received contingent consideration, in the form of contingent value rights ("CVRs"), based upon future net revenues of two associated drug programmes. In line with the Group's policies, these have been recognised as financial assets at fair value through profit and loss, and have been fair valued at £1.4m (2013: £1.4m). The Group considers this asset to be Level 3 in the fair value hierarchy throughout the current and previous financial years. If the assumptions used in the valuation techniques are varied by using a range of possible alternatives, there is no material difference to the statement of financial position nor the consolidated statement of comprehensive income.

18. TRADE AND OTHER PAYABLES

	2014	2013
Current liabilities	£m	£m
Trade payables	1.3	0.1
Social security expenses	0.2	0.1
Other accruals and deferred income	0.6 ––––––––	1.3 ––––––––
	2.1	1.5

–––––––– ––––––––

	2014	2013
Non-current liabilities	£m	£m
Loans drawn down from the Limited Partners of consolidated funds	4.5	1.3
Contingent loans from university partners	0.3	–
	–––––––– 4.8	–––––––– 1.3

–––––––– ––––––––

19. SHARE CAPITAL

	2014		2013
Issued and fully paid:	Number	£m	Number	£m
Ordinary Shares of 2p each
At 1 January	375,258,859	7.5	365,763,664	7.3
Issued under share placing	60,606,060	1.2	–	–
Issued under Fusion IP plc acquisition	39,150,484	0.8	–	–
Issued under employee share plans	4,508,994	0.1	9,495,195	0.2
At 31 December	––––––––––– 479,524,397	––––––––––– 9.6	––––––––––– 375,258,859	––––––––––– 7.5
	–––––––––––	–––––––––––	–––––––––––	–––––––––––

In February 2014 the Group issued 60,606,060 new ordinary shares with a par value of 2p as part of a fundraising which raised £97.4m net of expenses. In March 2014, the Group issued 39,150,484 shares to the shareholders of Fusion IP plc in exchange for the remaining 79.9% equity stake in the company. In March 2014 the Group issued 4,508,994 new ordinary shares with a par value of 2p in order to settle the 2011 LTIP scheme which partially achieved its vesting conditions and consequently became payable to the Group's employees. The Company has one class of 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.

20. OPERATING LEASE ARRANGEMENTS

	2014	2013
	£m	£m
Payments under operating leases recognised in the statement of
comprehensive income for the year	0.4	0.4
	––––––––	––––––––

At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

	2014 £m	2013 £m
Within one year	0.3	0.3
In the second to fifth years inclusive	0.3 ––––––––	0.6 ––––––––
	0.6 ––––––––	0.9 ––––––––

Operating lease payments represent rentals and other charges payable by the Group for its office properties. Leases are negotiated for an average term of five years and rentals are fixed for an average of one year.

21. SHARE-BASED PAYMENTS

Annual Incentive Scheme ("AIS")

In 2014, the Group continued to incentivise employees through its Long-Term Incentive Plan and Annual Incentive Schemes. The AIS awards include an element of IP Group shares, which are subject to further timebased vesting over two years (typically 50% after year one and 50% after year two). As at 31 December 2014, the 2013 AIS options or shares had been granted and are expected to vest in 2015 and 2016. However, as the number shares to be granted are based as a percentage of employees' salary, the share-based payments line includes the associated expense incurred in 2014. No associated expense has been incurred for the 2014 AIS as the financial performance targets were not achieved.

Long-Term Incentive Plan ("LTIP") awards

Awards under the LTIP take 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. Further information on the Group's LTIP is set out in the Directors' Remuneration Report set out in the full Annual Report and Accounts.

For reasons detailed in the Directors Remuneration Report, the 2013 and 2014 LTIP awards were both made in 2014. The awards will respectively ordinarily vest on 31 March 2016 and 31 March 2017, to the extent that the performance conditions have been met. The awards are based on the performance of the Group's Hard NAV and Total Shareholder Return ("TSR"). Both performance measures are combined into a matrix format to most appropriately measure performance relative to the business, as shown in the Directors' Remuneration Report in the full Annual Report and Accounts. The total award is subject to an underpin based on the relative performance of the Group's TSR to that of the FTSE250 index, which can reduce the awards by up to 50%. The 2014 LTIP matrix is designed such that up to 100% of the award (prior to the application of the underpin) will vest in full in the event of both Hard NAV increasing by 15% per year on a cumulative basis, from 1 January 2014 to 31 December 2016 (2013 LTIP: 1 January 2013 to 31 December 2015), and TSR increasing by 15% per year on a cumulative basis from the date of award to 31 March 2017 (2013 LTIP: to 31 March 2016), using an industry-standard average price period at the beginning and end of the performance period. Further, the matrix is designed such that 30% of the award shall vest (again prior to the application of the underpin) if the cumulative increase is 8% per annum for both measures over their respective performance periods ("threshold performance"). A straight-line sliding scale is applied for performance between the distinct points on the matrix of vesting targets.

No LTIP awards were made in 2013.

The 2012 LTIP awards will ordinarily vest on 31 March 2015 to the extent that the performance conditions have been met. The awards are based on the performance of Group's Hard NAV and TSR. Both performance measures are combined into a matrix format to most appropriately measure performance relative to the business, as shown in the Directors' Remuneration Report in the full Annual Report and Accounts. The total award is subject to an underpin based on the relative performance of the Group's TSR to that of the FTSE Small Cap index, which can reduce the awards by up to 50%. The matrix is designed such that up to 100% of the award (prior to the application of the underpin) will vest in full in the event of both Hard NAV increasing by 15% per year on a cumulative basis, from 1 January 2012 to 31 December 2014, and TSR increasing by 15% per year on a cumulative basis from the date of award to 31 March 2015, using an industry-standard average price period at the beginning and end of the performance period. Further, the matrix is designed such that 30% of the award shall vest (again prior to the application of the underpin) if the cumulative increase is 8% per annum for both measures over their respective performance periods ("threshold performance"). A straight-line sliding scale is applied for performance between the distinct points on the matrix of vesting targets.

The 2011 LTIP awards vested on 31 March 2014 and thereafter shares in IP Group were issued via the Group's employee benefit trust to the relevant members of the Group's staff accordingly. The table below sets out the performance measures relating to the 2011 LTIP awards and the actual performance achieved.

Performance condition	Target performance	Actual/forecast performance
Hard NAV (at 31 Dec 2013)	8%: £236.7m 15%: £285.8m	£315.5m (18.8% p.a. growth)
Annual TSR1 (share price)	8%: 63.0p 15%: 76.0p	194.0p (73% p.a. growth)
Comparative TSR1	FTSE Small cap +72%	IP Group +288%

As the performance measures were achieved in full and the underpin was exceeded, 100% of the 2011 LTIP awards vested on 31 March 2014.

The movement in the number of shares notionally awarded under the LTIP is set out below:

	2014	2013
At 1 January	6,163,436	18,000,923
Forfeited during the year	(144,129)	(2,342,292)
Vested during the year	(4,508,994)	(9,495,195)
Notionally awarded during the year	2,140,180	–
Notionally awarded during the year – as part of the Fusion acquisition	1,338,000	–
At 31 December	––––––––– 4,988,493	––––––––– 6,163,436

––––––––– ––––––––– The fair value of shares notionally awarded during 2014 were calculated using Monte Carlo pricing models with the following key assumptions:

	2014	2013
Share price at date of award	£1.775	£1.775
Exercise price	£nil	£nil
Fair value at grant date	£0.52	£0.85
Expected volatility (median of historical 50-day moving average)	32%	32%
Expected life (years)	2.83	1.83
Expected dividend yield	0%	0%
Risk-free interest rate	1.0%	1.0%
	––––––––	––––––––

The fair value charge recognised in the statement of comprehensive income during the year in respect of share awards was £0.9m (2013: £0.9m).

22. LIMITED AND LIMITED LIABILITY PARTNERSHIP INTERESTS

	£m
At 1 January 2013	4.0
Additions during the year	0.2
Realisations in the year	(0.2)
Change in fair value during the year	0.8 ––––––––
At 1 January 2014	4.8
Additions during the year	0.4
Realisations in the year	(1.1)
Change in fair value during the year	0.5
At 31 December 2014	4.6
	––––––––

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. If the assumptions used in the valuation techniques for the Group's holding in each company are varied by using a range of possible alternatives, there is no material difference to the carrying value of the respective spin-out company. The effect on the consolidated statement of comprehensive income for the period is also not expected to be material.

23. RELATED PARTY TRANSACTIONS

The Group has various related parties arising from its key management, subsidiaries, equity stakes in portfolio companies and management of certain limited partnership funds.

(a) Limited partnerships

The Group manages a number of investment funds structured as limited partnerships. Group entities have a limited partnership interest (see note 1) and act as the general partners of these limited partnerships. The Group therefore has power to exert significant influence over these limited partnerships. The following amounts have been included in respect of these limited partnerships:

	2014	2013
	£m	£m
Statement of comprehensive income
Revenue from services	1.3	1.3
	–––––––– 2014	–––––––– 2013
	£m	£m
Statement of financial position
Investment in limited partnerships	3.2	3.6
Amounts due from related parties	–	–
	––––––––	––––––––

(b) Key management transactions

Key management had investments in the following spin-out companies as at 31 December 2014:

		Number	Number	Number
		of shares	of shares	of shares
		held at	acquired/	held at
		1 January	(disposed) in	31 December
Director	Company name	2014	the period	2014	%
Alan Aubrey	Amaethon Limited – A Shares	104	–	104	3.1%
	Amaethon Limited – B Shares	11,966	–	11,966	1.0%
	Amaethon Limited – Ordinary shares	21	–	21	0.3%
	Avacta Group plc	20,276,113	–	20,276,113	0.4%
	Capsant Neurotechnologies Limited	11,631	–	11,631	0.8%
	Chamelic Limited	26	–	26	0.4%
	Cloud Sustainability Limited1	19	–	19	0.5%
	Crysalin Limited	1,447	–	1,447	0.1%
	EmDot Limited	15	–	15	0.9%
	Evocutis plc	767,310	–	767,310	0.1%

	Getech Group plc	15,000	–	15,000	<0.1%
	Green Chemicals plc	108,350	–	108,350	0.8%
	Ilika plc	117,500	(48,210)	69,290	0.2%
	Karus Therapeutics Limited	223	–	223	0.1%
	Mode Diagnostics Limited – Ordinary shares	3,226	–	3,226	0.4%
	Mode Diagnostics Limited – A shares	–	229	229	0.5%
	Modern Biosciences plc	1,185,150	–	1,185,150	1.7%
	Modern Water plc	519,269	–	519,269	0.7%
	Oxford Advanced Surfaces Group plc	2,172,809	–	2,172,809	1.1%
	Oxford Nanopore Technologies Limited	114,420	1,246	115,666	0.5%
	Oxtox Limited	25,363	–	25,363	0.1%
	Plexus Planning Limited	1,732	–	1,732	0.6%
	Retroscreen Virology Group plc	37,160	–	37,160	<0.1%
	Revolymer plc	88,890	–	88,890	0.2%
	Salunda Limited	53,639	–	53,639	<0.1%
	Structure Vision Limited	212	–	212	1.0%
	Surrey Nanosystems Limited	393	60	453	0.2%
	Sustainable Resource Solutions Limited	30	–	30	1.3%
	Tissue Regenix Group plc	2,389,259	–	2,389,259	0.4%
	Tracsis plc	121,189	–	121,189	0.5%
	Velocys plc	21,518	(21,518)	–	0.0%
	Xeros Technology Group plc	40,166	–	40,166	<0.1%
	Mike Townend Amaethon Limited – A Shares	104	–	104	3.1%
	Amaethon Limited – B Shares	11,966	–	11,966	1.0%
	Amaethon Limited – Ordinary shares	21	–	21	0.3%
	Avacta Group plc	931,367	–	931,367	<0.1%
	Capsant Neurotechnologies Limited	11,282	–	11,282	0.8%
	Chamelic Limited	23	–	23	0.3%
	Cloud Sustainability Limited1	18	–	18	0.5%
	Crysalin Limited	1,286	–	1,286	0.1%
	EmDot Limited	14	–	14	0.8%
	Getech Group plc	20,000	–	20,000	<0.1%

		Number	Number	Number
		of shares	of shares	of shares
		held at	acquired/	held at
		1 January	(disposed) in	31 December
Director	Company name	2014	the period	2014	%

Mike Townend
(continued)	Green Chemicals plc	113,222	–	113,222	0.8%
	Ilika plc	10,000	–	10,000	<0.1%
	Mode Diagnostics Limited	1,756	–	1,756	0.2%
	Modern Biosciences plc	1,185,150	–	1,185,150	1.7%
	Modern Water plc	575,000	–	575,000	0.7%
	Oxford Advanced Surfaces Group plc	932,994	–	932,994	0.5%

	Oxford Advanced Surfaces Limited	–	5,000	5,000	0.2%
	Oxford Nanopore Technologies Limited	34,900	380	35,280	<0.1%
	Oxtox Limited	25,363	–	25,363	0.1%
	Retroscreen Virology Group plc	37,160	–	37,160	<0.1%
	Revolymer plc	35,940	–	35,940	<0.1%
	Structure Vision Limited	212	–	212	1.0%
	Surrey Nanosystems Limited	350	54	404	0.2%
	Sustainable Resource Solutions Limited	28	–	28	1.2%
	Synairgen plc	20,000	–	20,000	<0.1%
	Tissue Regenix Group plc	1,950,862	–	1,950,862	0.3%

	Tracsis plc	25,430	–	25,430	<0.1%
	Velocys plc	5,000	(5,000)	–	0.0%
	Xeros Technology Group plc	35,499	–	35,499	<0.1%
Greg Smith	Avacta Group plc	390,407	–	390,407	<0.1%

	Capsant Neurotechnologies Limited	896	–	896	<0.1%
	Chamelic Limited	3	–	3	<0.1%
	Cloud Sustainability Limited1	6	–	6	0.2%
	Crysalin Limited	149	–	149	<0.1%
	EmDot Limited	4	–	4	0.2%
	Encos Limited	5,671	–	5,671	0.3%
	Getech Group plc	8,000	–	8,000	<0.1%
	Green Chemicals plc	4,830	–	4,830	<0.1%
	Mode Diagnostics Limited – Ordinary shares	361	–	361	<0.1%
	Mode Diagnostics Limited – A shares	–	28	28	<0.1%
	Modern Biosciences plc	313,425	–	313,425	0.6%

	Modern Water plc	7,250	–	7,250	<0.1%
	Oxford Nanopore Technologies Limited	1,500	–	1,500	<0.1%
	Retroscreen Virology Group plc	61,340	–	61,340	0.1%
	Revolymer plc	4,500	–	4,500	<0.1%
	Summit Therapeutics plc2	798	–	798	<0.1%
	Surrey Nanosystems Limited	76	12	88	<0.1%
	Sustainable Resource Solutions Limited	9	–	9	0.4%
	Tissue Regenix Group plc	175,358	–	175,358	<0.1%
	Velocys plc	2,559	–	2,559	<0.1%
	Xeros Technology Group plc	5,499	–	5,499	<0.1%

David Baynes	Diurnal Limited	82	36	118	0.2%

Bruce Smith	Capsant Neurotechnologies Limited	20,724	–	20,724	1.4%
	Evocutis plc	15,241	–	15,241	<0.1%
	Getech Group plc	15,000	–	15,000	0.1%
	iQur Limited	2,000	–	2,000	0.8%
	Synairgen plc	200,000	–	200,000	0.3%
	Velocys plc	10,000	(10,000)	–	<0.1%

Angela Leach	Avacta Group plc	74,152	–	74,152	<0.1%
	Capsant Neurotechnologies Limited	1,858	–	1,858	0.1%
	Chamelic Limited	3	–	3	<0.1%
	Cloud Sustainability Limited1	6	–	6	0.2%
	Evocutis plc	7,990	–	7,990	<0.1%
	Getech Group plc	2,083	–	2,083	<0.1%

	Mode Diagnostics Limited – Ordinary Shares	606	–	606	<0.1%
	Mode Diagnostics Limited – A Shares	–	102	102	<0.1%

		Number	Number	Number
		of shares	of shares	of shares
		held at	acquired/	held at
		1 January	(disposed) in	31 December
Director	Company name	2014	the period	2014	%
Angela Leach
(continued)	Modern Water plc	29,800	–	29,800	<0.1%
	Oxford Advanced Surfaces Group plc	68,101	–	68,101	<0.1%
	Oxford Nanopore Technologies Limited	1,500	16	1,516	<0.1%
	Retroscreen Virology Group plc	25,903	–	25,903	<0.1%
	Revolymer plc	4,500	–	4,500	<0.1%
	Structure Vision Limited	21	–	21	0.1%
	Surrey Nanosystems Limited	78	12	90	<0.1%
	Sustainable Resource Solutions Limited	9	–	9	0.4%
	Tissue Regenix Group plc	329,172	–	329,172	<0.1%
	Xeros Technology Group plc	5,666	–	5,666	<0.1%

1 Cloud Sustainability Limited was formerly known as Revise Limited
2 Summit Therapeutics was formerly known as Summit Corporation plc and completed a 20:1 share consolidation in 2014. Share numbers shown are post-consolidation.

Compensation to key management comprises that paid to executive and non-executive directors of the Group. Full details of directors' compensation are disclosed in the Directors' Remuneration Report in the full Annual Report and Accounts and these amounts are included within the employee costs set out in note 8.

(c) Portfolio companies

The Group earns fees from the provision of business support services and corporate finance advisory to portfolio companies in which the Group has an equity stake. The following amounts have been included in respect of these fees:

	2014	2013
	£m	£m
Statement of comprehensive income
Revenue from services	0.9	0.7
	–––––––– 2014	–––––––– 2013
	£m	£m
Statement of financial position
Trade receivables	0.6	0.3
	––––––––	––––––––

(d) Subsidiary companies

Subsidiary companies that are not 100% owned either directly or indirectly by the parent company have intercompany balances with other Group companies totalling as follows:

	2014	2013
	£m	£m
Intercompany balances with other Group companies	8.5	7.8
	––––––––	––––––––

These intercompany balances represent funding loans provided by Group companies that are interest free, repayable on demand and unsecured.

(e) 2014 capital raising and acquisition of Fusion IP plc

In February 2014 the Group completed a firm placing and placing, open offer and offer for subscription to raise gross proceeds of £100m (the "Fund Raise") and in March 2014 completed the acquisition, by way of a scheme of arrangement, of Fusion IP plc (the "Acquisition"). In accordance with Listing Rule 11.1.10(2)(c) the following related party transactions occurred as part of the Fund Raise and Acquisition:

Invesco Perpetual, Lansdowne Partners Limited and Baillie Gifford & Co., all of whom each held in excess of 10% of the Group's issued share capital at the time, subscribed for £14.2m, £5.0m and £10.5m respectively in the Fund Raise.
Lansdowne Partners Limited and Invesco Perpetual received 8,094,900 and 6,243,656 new consideration shares respectively as a result of the completion of the Acquisition.

25. CAPITAL MANAGEMENT

The Group's key objective when managing capital is to safeguard the Group's ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits 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 issue new shares or dispose of interests in more mature portfolio companies.

During 2014, the Group's strategy, which was unchanged from 2013, was to maintain healthy cash and short-term deposit balances that enable it to provide capital to all portfolio companies as determined by the Group's investment committee, whilst having sufficient cash reserves to meet all working capital requirements in the foreseeable future.

26. CAPITAL COMMITMENTS

Commitments to university partnerships

	Year of	Original	Invested	Remaining
	commencement	commitment	to date	commitment
Partnership	of partnership	£m	£m	£m
University of Southampton(i)	2002	5.0	3.6	1.4
King's College London(ii)	2003	5.0	1.8	3.2
University of York – CNAP(iii)	2003	0.8	0.2	0.6
University of Leeds(iv)	2005	4.2	0.7	3.5
University of Bristol(v)	2005	5.0	1.1	3.9
University of Surrey(vi)	2006	5.0	0.5	4.5
University of York(iii)	2006	5.0	0.1	4.9
Queen Mary University of London(vii)	2006	5.0	0.7	4.3
University of Bath(viii)	2006	5.0	0.2	4.8
University of Glasgow(ix)	2006	5.0	1.2	3.8
University of Manchester(x)	2013	7.5	0.1	7.4
		–––––––– 52.5	–––––––– 10.2	–––––––– 42.3

I. Under the terms of an agreement entered into in 2002 between the Group, the University of Southampton and certain of the University of Southampton's subsidiaries, IP2IPO Limited agreed to make £5.0m available for the purposes of making investments in University of Southampton spin-out companies.

–––––––– –––––––– ––––––––

II. Under the terms of an agreement entered into during 2003 between the Group and King's College London ("KCL") and King's College London Business Limited (formerly KCL Enterprises Limited), the Group agreed to make £5.0m available for the purposes of making investments in spin-out companies. Under the terms of this agreement, KCL was previously able to require the Company to make a further £5.0m available for investments in spin-out companies on the tenth anniversary of the partnership. However, the 2003 agreement was terminated and replaced by a revised agreement between the same parties on 12 November 2010. Under the revised agreement, the Group has agreed to target investing the remaining commitment of £3.2m over a three-year period; KCL cannot, however, require the Group to make any additional funds available. Other changes effected by the revised agreement included the removal of the Group's automatic entitlement to initial partner equity in every spin-out company and/or a share of KCL's licensing fees from intellectual property commercialisation and to the termination rights of the parties.

III. In 2003, the Group entered into an agreement with the University of York. The agreement relates to a specialist research centre within the University of York, the Centre for Novel Agricultural Products ("CNAP"). The Group has committed to invest up to a total of £0.8m in spin-out companies based on CNAP's intellectual property. In 2006 the Group extended its partnership with the University of York to cover the entire university. The Group has committed to invest £5.0m in University of York spin-outs over and beyond the £0.8m commitment as part of the Group's agreement with CNAP. The agreement with the University of York was amended during 2013 so as to alter the process by which the Group evaluates commercialisation opportunities and the level of initial partner equity the Group is entitled to as a result. Further, the Group's automatic entitlement to share in any of the University of York's proceeds from out-licensing has been removed from the agreement.
IV. The Group extended its partnership with the University of Leeds in July 2005 by securing the right with associated contractual commitment to invest up to £5.0m in University of Leeds spin-out companies. This agreement was varied in March 2011 to, amongst other things, remove the Group's entitlement to a share of out-licensing income generated by the University of Leeds except in certain specific circumstances where the Group is involved in the relevant out-licensing opportunity. Under the terms of the variation agreement, subject to quality and quantity of the investment opportunities, the Group, Techtran Group Limited and the University of Leeds have agreed to target annual investments of at least £0.7m in aggregate and, subject to earlier termination or the parties otherwise agreeing alternative target, to review this target on 30 April 2017.
V. In December 2005, the Group entered into an agreement with the University of Bristol. The Group has committed to invest up to a total of £5.0m in University of Bristol spin-out companies.
VI. Under the terms of an agreement entered into in 2006 between the Group and the University of Surrey, the Group has committed to invest up to a total of £5.0m in spin-out companies based on the University of Surrey's intellectual property.
VII. In July 2006, the Group entered into an agreement with Queen Mary University of London ("QM") to invest in QM spin-out companies. The Group has committed to invest up to a total of £5.0m in QM spin-out companies. The agreement was amended in January 2014 primarily to remove the Group's entitlement to licence fees save where it is involved in the development or licensing of the relevant IP and in most cases to replace the Group's automatic entitlement to a share of the initial equity in any spin-out company with an equivalent warrant exercisable at the seed stage of the relevant company.
VIII.In September 2006, the Group entered into an agreement with the University of Bath to invest in University of Bath spin-out companies. The Group has committed to invest up to a total of £5.0m in University of Bath spin-out companies. The agreement with University of Bath was amended during 2009 so as to remove the Group's automatic entitlement to a share of the initial equity or licence fees (as applicable) received by University of Bath from the commercialisation of its intellectual property in the event that the Group and its employees have not been actively involved in developing the relevant opportunity.
IX. In October 2006, the Group entered into an agreement with the University of Glasgow to invest in University of Glasgow spinout companies. The Group has committed to invest up to a total of £5.0m in University of Glasgow spin-out companies.
X. In February 2013, the Group entered into a commercialisation agreement with the University of Manchester. Initially the Group had agreed to make available an initial facility of up to £5.0m to provide capital to new proof of principle projects (excluding graphene projects) intended for commercialisation through spin-out companies. During January 2014, the Group extended its agreement to include funding for graphene projects; increased the capital commitment by a further £2.5m, bringing the total to £7.5m; and extended the agreement to 2019.

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 2014:

	Year of	Original	Invested	Remaining
	commencement	commitment	to date	commitment
Partnership	of partnership	£m	£m	£m
IP Venture Fund	2006	3.1	3.0	0.1
IP Venture Fund II L.P.	2013	10.0	1.7	8.3
		–––––––– 13.1	–––––––– 4.7	–––––––– 8.4
		––––––––	––––––––	––––––––

27. ACQUISITION OF SUBSIDIARIES

Acquisition of Fusion IP plc

In 2009, the Group subscribed for a 20.1% stake in Fusion IP plc ("Fusion IP"), a similar intellectual property commercialisation firm, and entered into an agreement with Fusion IP under which it acquired coinvestment rights in all future IP Fusion portfolio companies. On 20 March 2014, the Group acquired the remaining 79.9% equity stake in Fusion IP, in exchange for 39,150,484 shares in IP Group plc. The acquisition has been accounted for using the acquisition method. The consolidated financial statements for the year ending 31 December 2014 include the results of Fusion IP for the nine-month period from the acquisition date.

	Fair value
	net assets/
	(liabilities)
	£m
Net assets acquired:
Acquired intangible assets	21.4
Investment portfolio	24.9
Trade and other receivables	1.1
Cash and cash equivalents	17.6
Trade and other payables less than one year	(1.1)
Trade and other payables more than one year	(0.3)
Net assets	–––––––– 63.6
Less: fair value of 20.1% interest previously held(i)	(20.5)
Share of net assets acquired	–––––––– 43.1
Goodwill	38.7
Total consideration	–––––––– 81.8
Consideration satisfied by:	––––––––
Issue of share capital (39,150,484 shares at 209 pence(ii))	81.8

–––––––– (i) In the period from 1 January 2014 to the date of acquisition, the fair value of the Group's existing stake in Fusion increased in value by £6.0m and is recognised in the change in fair value of equity and debt investments in the consolidated statement of comprehensive income.

(ii) being the closing price of IP Group plc shares on 20 March 2014; the date of acquisition.

From the date of acquisition, Fusion IP has contributed £2.6m of gains through the acquired portfolio companies to the fair value gains, £0.2m to revenue from services and other income and £2.7m in expenses for the year. If the acquisition had occurred on 1 January 2014, the acquisition would have contributed £3.0m to fair value gains, £0.4m to revenue from services and other income and £3.4m expense for the period.

The Group incurred acquisition costs of £1.1m relating to, amongst other items, broker's fees, legal costs and due diligence costs. These costs are reflected separately on the consolidated statement of comprehensive income.

The balances noted above for trade and other receivables, as well as trade and other payables less than one year, represent the fair value of the receivables at the date of acquisition and are not materially different from the carrying values held by Fusion IP prior to acquisition. The fair value of the acquired trade and other receivables is equivalent to the gross contractual amounts receivable, being the best estimate at the acquisition date of the contractual cash flows expected to be collected.

Prior to acquisition, Fusion recognised an additional £1.5m in trade and other payables due over more than one year relating to balances owed to university partners on the basis of the values of associated spin-out companies. On applying the Group's valuation policies (as described in note 1) to these spin-outs a number were impaired and, correspondingly, the fair value of the associated liability has been adjusted to reflect these fair value changes. The remaining balances owed to Fusion IP's university partners are contingent upon both timing and value of the realisation of the associated spin-outs.

At the date of its acquisition by the Group, Fusion IP had contractual arrangements and memorandums of understanding with four UK universities. At the date of acquisition of Fusion IP, the acquired intangible assets were valued at £21.4m. The fair value of the acquired intangible assets was calculated on an indexed cost basis as there is a limited number of such arrangements with universities and there is no active market. As the contractual agreements are for a finite term the intangible assets will be subsequently measured at amortised cost. Amortisation will occur over the remaining term, or useful life, of each contractual arrangement. Both the acquired intangible assets and the associated cost of amortisation are shown in individual lines on the consolidated statement of financial position and the consolidated statement of comprehensive income respectively.

Goodwill arising on the acquisition of Fusion IP primarily relates to the expertise, knowledge and processes concerning successful commercialisation of intellectual properties through early investment and development gained by the Group. The goodwill forms part of the university partnership CGU. None of the goodwill is expected to be deductible for tax purposes. Further detail on goodwill can be found in the note above.

28. POST BALANCE SHEET EVENTS

On 10 March 2015, the Group announced a proposed firm placing, placing and open offer to raise gross proceeds of £128m.

PART V

ADDITIONAL INFORMATION

1. RESPONSIBILITY

IP Group and the Directors, whose names are set out on page 30 of this document, accept responsibility for the information contained in this document. To the best of the knowledge and belief of IP Group and the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect its import.

2. INCORPORATION

2.1 The Company was incorporated in England and Wales with registered number 04204490 on 4 April 2001 under the Companies Act 1985 as a private company limited by shares with the name De facto 929 Limited. The Company changed its name to IP2IPO on 22 May 2001 and subsequently to IP2IPO Group Limited on 31 July 2001. On 29 September 2003, the Company was re-registered as a public limited company under the Companies Act 1985 and changed its name to IP2IPO Group plc. On 25 April 2006, the Company changed its name to IP Group plc.
2.2 The principal legislation under which the Company operates is the Companies Act and the regulations made thereunder. The Existing Shares are listed on the premium segment of the Official List and admitted to trading on the main market for listed securities of the London Stock Exchange.
2.3 The registered office, and the principal place of business, of the Company is at 24 Cornhill, London EC3V 3ND, United Kingdom (telephone number +44 (0)845 074 2929), which is also the business address of each of the Directors.

3. SHARE CAPITAL

3.1 As at 9 March 2015 (being the latest practicable date prior to the publication of this document), the issued share capital of the Company was £9,590,487.94 divided into 479,524,397 Shares, each of which are fully paid or credited as fully paid. As at 9 March 2015, (being the latest practicable date prior to the publication of this document), the Company did not hold any Shares in treasury.
3.2 The following changes in the share capital of the Company occurred between 1 January 2011 and 9 March 2015 (being the latest practicable date prior to the publication of this document):
3.2.1 the issued share capital of the Company as at 1 January 2011 was £5,115,273.28 divided into 255,763,664 Shares;
3.2.2 on 23 June 2011, the Company issued 110,000,000 Shares pursuant to a placing and open offer;
3.2.3 as at 1 January 2013, the issued share capital of the Company was £7,315,273.28 divided into 365,763,664 Shares;
3.2.4 on 16 April 2013, the Company issued 9,495,195 Shares at nominal value of 2p each in order to settle 2010 LTIP awards which achieved their vesting conditions and consequently became due to the Group's employees;
3.2.5 as at 31 December 2013, the issued share capital of the Company was £7,505,177 divided into 375,258,859 Shares;
3.2.6 on 14 February 2014, 60,606,060 Shares were issued pursuant to a firm placing, placing, open offer and offer for subscription of the Company;
3.2.7 on 20 March 2014, 39,150,484 Shares were issued as consideration pursuant to the Company's acquisition of Fusion IP; and
3.2.8 on 31 March 2014, the Company issued 4,508,994 Shares at nominal value of 2p each in order to settle 2011 LTIP awards which achieved their vesting conditions and consequently became due to the Group's employees.
3.3 Immediately following completion of the Firm Placing, the Placing and the Open Offer (and assuming that no further Shares are issued as a result of any provisional awards of Shares under the Share Schemes between the date of the publication of this document and the date of Admission), the issued share capital of the Company will be £10,728,265.70 divided into 536,413,285 Shares.
3.4 On 13 May 2014, by or pursuant to resolutions passed by the Shareholders at the annual general meeting of the Company:
(a) the Directors were generally and unconditionally authorised for the purposes of section 551 of the Companies Act to exercise all the powers of the Company to:
- (i) allot shares in the Company and to grant rights to subscribe for or convert any security into such shares in the Company ("Rights") up to an aggregate nominal amount of £3,196,829.30 (being approximately one third of the Company's total ordinary share capital in issue as at 7 April 2014, being the latest practicable date prior to the publication of the notice of such general meeting) (such amount to be reduced by the nominal amount allotted or granted under paragraph (ii) below); and
- (ii) allot equity securities of the Company (as defined in section 560 of the Companies Act) up to a further aggregate nominal amount of £3,196,829.30 (being approximately one third of the Company's total ordinary share capital in issue as at 7 April 2014, being the latest practicable date prior to the publication of the notice of such general meeting) in connection with an offer by way of a rights issue,

provided that: (i) such authorities shall expire on the earlier of the conclusion of the Company's 2015 annual general meeting and 1 August 2015; and (ii) before such expiry the Company may make any offer or agreement which would or might require shares or equity securities to be allotted or Rights to be granted after such expiry and the Directors may allot such shares or equity securities and grant such Rights pursuant to any such offer or agreement as if the authority conferred by the above resolution had not expired. These authorities are in substitution for all other authorities granted to the Directors to allot shares or equity securities and grant Rights.

For the purposes of the above resolution and the resolution referred to in paragraph (b) below, "rights issue" means an offer to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings (and, if applicable, to the holders of any other class of equity security in accordance with the rights attached to such class) to subscribe further securities by means of the issue of a renounceable letter (or other negotiable document) which may be traded for a period before payment for the securities is due, subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractions of such securities, the issue, transfer and/or holding of any securities in certificated form or in uncertificated form, the use of one or more currencies for making payments in respect of such offer, any such shares or other securities being represented by depositary receipts, treasury shares or any legal or practical problems arising under the laws of, or the requirements of any regulatory body or any stock exchange in, any territory;

(b) the Directors were generally empowered pursuant to sections 570 and 573 of the Companies Act to allot equity securities (as defined in section 560 of the Companies Act), payment for which is to be wholly in cash as if section 561(1) did not apply to any such allotment provided that such power shall be limited:

(i) pursuant to the authority conferred on the Directors by paragraph (i) of the resolution referred to in paragraph (a) above:
(1) to or in connection with any rights issue, open offer or other pre-emptive offer, open for acceptance for a period determined by the Directors, to the holders of Shares on the register on any fixed record date in proportion (as nearly as may be practicable) to their holdings of Shares (and, if applicable, to the holders of any other class of equity security in accordance with the rights attached to such class), subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractions of such securities, the issue, transfer and/or holding of any securities in certificated form or in uncertificated form, the use of one or more currencies for making payments in respect of such offer, any such shares or other securities being represented by depository receipts, treasury shares or any legal or practical problems arising under the laws of, or the requirements of any regulatory body or any stock exchange in, any territory; and
(2) to the allotment of equity securities (other than pursuant to paragraph (b)(i) (1) above) up to an aggregate nominal amount of £479,524.40, representing less than 5 per cent. of the nominal value of the issued share capital of the Company as at 7 April 2014, being the latest practicable date prior to the publication of the notice of such general meeting; and
(ii) pursuant to the authority conferred on the Directors by paragraph (ii) of the resolution referred to in paragraph (a) above, to the allotment of equity securities in connection with a rights issue.

References in such resolution to the allotment of equity securities include the sale of treasury shares (within the meaning of section 724 of the Companies Act). The authority given by the above resolution expires at such time as the authorities conferred on the Directors by the resolution referred to in paragraph (a) above expire save that, before the expiry of such authority, the Company may make any offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to any such offer or agreement as if the power conferred by the resolution referred to in this paragraph (b) had not expired.

3.5 The Capital Raising Shares will be created, allotted and issued pursuant to the authority to be granted under the Resolutions, which are set out in the Notice of General Meeting that is to be found in Part VIII of this document. It is proposed that the Resolutions will be voted on at the General Meeting to be held on 26 March 2015 for the purpose of implementing the Capital Raising by:
(1) approving the terms of the Capital Raising and directing the Directors to implement it;
(2) authorising the Directors for the purpose of section 551 of the Companies Act to exercise all the power of the Company to allot equity securities (as defined in section 510 of the Companies Act) in the Company up to an aggregate nominal amount of £1,137,777.76 pursuant to the Capital Raising (being approximately 11.9 per cent. of the Shares in issue as at 9 March 2015, being the latest practicable date prior to the publication of this document) such authority to expire on the date three months after passing of the Resolution and before such expiry the Company may make any offer or agreement which would or might require shares to be allotted after such expiry and the directors may allot such shares pursuant to any such offer or agreement as if the authority conferred by this Resolution had not expired; and
(3) empowering the Directors pursuant to section 570 of the Companies Act to allot equity securities (as defined in section 560 of the Companies Act) for cash pursuant to the foregoing resolution, as if section 560(1) of the Companies Act did not apply to such allotment up to an aggregate nominal amount of £1,137,777.76 pursuant to the Capital Raising (being approximately 11.9 per cent. of the Shares in issue as at 9 March 2015, being the latest

practicable date prior to the publication of this document). The authority given by this resolution shall expire at such time as the authority conferred by the foregoing resolution shall expire save that, before the expiry of this power, the Company may make any offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities pursuant to such offer or agreement as if the power conferred hereby had not expired.

These authorities are in addition, and without prejudice, to all existing authorities granted to the Directors to allot shares or equity securities and grant rights to subscribe for or to convert any security into such shares in the Company.

3.6 The ISIN in respect of the Existing Shares is GB00B128J450 and the SEDOL of the Capital Raising Shares is B128J45. The Existing Shares are created and issued pursuant to the laws of England and Wales and are denominated in pounds sterling, being the lawful currency of England and Wales.
3.7 The Existing Shares are admitted to CREST. Accordingly, settlement of transactions in the Shares may take place within CREST if individual Shareholders so wish. CREST is a voluntary system and holders of Shares who wish to receive and retain share certificates are able to do so.
3.8 None of the shares in the capital of the Company are held by or on behalf of the Company itself or by any subsidiary of the Company.
3.9 Save as set out in paragraph 6 of this Part V, the Company does not have outstanding any convertible or exchangeable securities or securities with warrants.
3.10 Details of the Company's significant subsidiaries are set out in paragraph 18 of this Part V.

4. SUMMARY OF THE COMPANY'S ARTICLES

4.1 The objects of the Company are unlimited. The Companies Act abolished the requirement for a company to have an authorised share capital, and the Articles (which were adopted on 27 April 2010) reflect this. The Articles contain, amongst other things, provisions to the following effect:

4.1.1 Rights attaching to shares

(a) Income

The profits of the Company which may be distributed in respect of any financial year or other period shall be distributed pari passu among the holders of the Shares according to the nominal amounts (excluding any premium) paid up on the Shares held by them respectively.

(b) Capital

On a distribution of assets on liquidation or otherwise, the surplus assets of the Company remaining after payment of its liabilities shall be distributed amongst the holders of Shares according to the nominal amounts (excluding any premium) paid up on the Shares held by them respectively.

Subject to any special rights or restrictions as to voting attached to any shares by or in accordance with the Articles and or any resolution authorising the creation of such shares, on a show of hands every member who is present in person or by proxy shall have one vote and, on a poll, every member who is present in person or by proxy shall have one vote for every share held by him.

4.1.2 Variation of class rights

(a) Subject to the Companies Act, all or any of the rights and restrictions attached to any class of shares may from time to time be altered, added to or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of such shares.

(b) At any such separate general meeting all the provisions of the Articles relating to general meetings shall apply, mutatis mutandis, but so that the necessary quorum shall be two or more persons holding or representing by proxy not less than one-third in nominal value of the issued shares of the relevant class, that every holder of shares of the class present or represented by proxy shall be entitled to one vote on a show of hands and on a poll to one vote for every such share held by him, that any holder of shares of the class present in person or by proxy may demand a poll and that at any adjourned meeting of such holders one holder present in person or by proxy (whatever the number of shares held by them) shall be a quorum.
(c) The rights conferred upon the holders of any class of shares shall be deemed to be varied or abrogated by the reduction of the capital paid up on such shares or by the allotment of further shares ranking in priority thereto for payment of a dividend or repayment of capital but shall not, unless otherwise expressly provided in the Articles, be deemed to be altered by the creation or issue of further shares ranking pari passu therewith or subsequent thereto or by a purchase by the Company of its own shares.

4.1.3 Transfers of Shares

(a) Any member may, subject to the Articles, transfer all or any of his shares in the case of certificated shares by an instrument of transfer in the usual common form or in any other manner (whether or not by written instrument) which the Board may approve. Any written instrument of transfer of a share shall be signed by or on behalf of the transferor (and, in the case of a partly paid share by or on behalf of the transferee) and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register in respect thereof.
(b) The Board may, without giving any reason, decline to register a transfer of any share which is not fully paid, providing that any such refusal will not prevent dealings in the shares from taking place on an open and proper basis.
(c) The Board may refuse to register any transfer in favour of a person known to be a minor, bankrupt or person who is mentally disordered or a patient for the purpose of any statute relating to mental health.
(d) The Board may decline to register any transfer unless any written instrument of transfer, duly stamped, is lodged with the Company, accompanied by the relevant certificate and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer, the instrument is in respect of only one class of share and, in the case of a transfer to joint holders, the number of joint holders does not exceed four.
(e) There are no provisions in the Company's Articles that would have the effect of delaying, deferring or preventing a change in control of the Company.

4.1.4 Section 793 of the Companies Act

Where any registered holder of any shares in the Company, or any named person in respect of any shares in the Company, fails to comply with any notice (a "statutory notice") given by the Board under section 793 of the Companies Act requiring him to give particulars of any interest in respect of shares in the Company, the Company may, no earlier than fourteen days after the service of the statutory notice, give the registered holder of such shares a notice (a "restriction notice") stating, or to the effect, that the shares in respect of which the default has occurred ("default shares") are subject to certain sanctions for so long as the default continues and (unless the Board otherwise determines) seven days thereafter but may be cancelled by the Board at any time.

For a shareholding of less than 0.25 per cent. of the relevant class, the only sanction is that the member may be prohibited from attending and voting at meetings (either in person or by proxy); for a shareholding of 0.25 per cent. or more of the relevant class, the Articles also provide for the withholding of the payment of dividends (including shares issued in lieu of dividends) on the default shares and, subject to those limitations being approved by the London Stock Exchange, restrictions on the transfer of the default shares.

4.1.5 General meetings

(a) The Board shall convene and the Company shall hold general meetings and annual general meetings in accordance with the requirements of the Companies Act at such times and places as the Board shall appoint.
(b) The Board may, whenever it thinks fit, convene a general meeting and general meetings shall be convened on such requisition or in default may be convened by such requisition as is provided by the Companies Act. If there are not within the UK sufficient directors to call a general meeting, any director or member may call the meeting.
(c) All members of the Company are entitled to attend a general meeting.

4.1.6 Directors

(a) Unless and until the Company in general meeting shall otherwise determine, the number of directors shall not be less than two.
(b) Subject to the Companies Act and the Articles, no director shall be disqualified by his office from entering into any contract or arrangement with the Company either with regard to his tenure of any office or employment or as a vendor, purchaser or otherwise. Nor shall any such contract be liable to be avoided. Nor shall any director so contracting be liable to account to the Company for any remuneration, profit or other benefit realised by any such contract or arrangement by reason of such director holding that office or of the fiduciary relationship thereby established, but such director shall declare the nature of his interest in accordance with the Companies Act.

4.1.7 Restrictions on voting by directors

(a) Save as otherwise provided by the Articles, a director shall not vote (nor be counted in the quorum) on any resolution of the Board concerning his own appointment as the holder of any office or place of profit with the Company or any other company in which the Company is interested.
(b) Save as otherwise provided in the Articles, a director shall not vote at a meeting of directors or of a committee of directors on any resolution concerning a matter in which he has, directly or indirectly, an interest or duty which is material and which conflicts with the interests of the Company unless his interest or duty arises only because the case falls within one or more of the following paragraphs:
(i) the giving to him of a guarantee, security or indemnity in respect of money lent or an obligation incurred by him for the benefit of the Company or any of its subsidiaries;
(ii) the giving of a guarantee, security or indemnity to a third party in respect of an obligation of the Company or any of its subsidiaries for which the director has assumed responsibility in whole or in part and whether alone or jointly with others under a guarantee or indemnity or by the giving of security;
(iii) his interest arises by virtue of his subscribing or agreeing to subscribe for any shares, debentures or other securities of the Company or any of its subsidiaries,

or by virtue of his being, or intending to become, a participant in the underwriting or sub-underwriting of an offer of any such shares, debentures, or other securities by the Company or any of its subsidiaries for subscription, purchase or exchange;

(iv) any proposal concerning a retirement, death or disability benefits scheme or a share option scheme, share incentive scheme or profit-sharing scheme which either relates to both employees and directors of the Company and/or directors of any subsidiary and does not provide any director of the Company as such with any privilege or advantage not accorded to the employees to whom such scheme or fund relates or has been approved by, or is conditional on approval by, HM Revenue & Customs for tax purposes; and/or
(v) any proposal concerning an insurance which the Company is empowered to purchase and/or maintain for the benefit of and against any liability incurred by, any directors or persons who include the directors of the Company.

4.1.8 Remuneration of directors

(a) The remuneration (whether by way of salary, commission, participation in profits or otherwise) of any executive director shall be such as the Board may determine, and shall be either in addition to, or in lieu of, his remuneration as a director.
(b) Each of the directors may be paid a fee at such rates as may from time to time be determined by the Board provided that the aggregate of all such fees so paid to directors (excluding amounts payable under any other Article) shall not exceed £250,000 per annum or such larger amount as may from time to time be determined by ordinary resolution of the Company.
(c) Each director may be paid all reasonable travelling, hotel and incidental expenses of attending and returning from meetings of the Board or committees of the Board or general meetings or meetings of the holders of any class of shares or of debentures of the Company or otherwise in connection with the business of the Company or the discharge of his duties as a director. Any director who, by request, goes to reside abroad for any purposes of the Company or who performs services which in the opinion of the directors go beyond the ordinary duties of a director may be paid such extra remuneration (whether by way of salary, commission, participation in profit or otherwise) as the Board may determine and such extra remuneration shall be in addition to any remuneration provided for by, or pursuant to, any other Article.

4.1.9 Appointments to office

(a) Subject to the Companies Act, the Company may by ordinary resolution elect any person to be a director, either to fill a vacancy or as an addition to the existing Board. The Board shall have power at any time and from time to time to appoint any person to be a director.
(b) The Company may by special resolution, or by ordinary resolution, of which special notice has been given in accordance with the Companies Act, remove any director before the expiration of his period of office. No person other than a director retiring at the meeting shall, unless recommended by the Board, be eligible for election to the office of director at any general meeting unless, not less than seven days and not more than twenty-eight clear days before the day appointed for the meeting, there has been given notice in writing by some member entitled to attend and vote at the meeting for which such notice is given of his intention to propose such person for election and also notice in writing signed by the person to be proposed of his willingness to be elected.

4.1.10 Retirement of directors

(a) At every annual general meeting any director:
(i) who has been appointed by the Board since the last annual general meeting; or
(ii) who held office at the time of the two preceding annual general meetings and who did not retire at either of them; or
(iii) who has held office with the Company, other than employment or executive office, for a continuous period of nine years or more at the date of the meeting shall retire from office and may offer himself for re-appointment by the members.
(b) A director who retires at the annual general meeting shall be eligible for re-election. If he is not reappointed he shall retain office until the meeting appoints someone in his place or, if it does not do so, until the end of the meeting.

4.1.11 Borrowing Powers

(a) Subject to the Articles and the Companies Act, the Board may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (present or future) and uncalled capital or any part thereof and (subject to section 551 of the Companies Act) to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
(b) The Board shall restrict the borrowings of the Company and exercise all other rights, powers of control or rights of influence exercisable by the Company in relation to its subsidiaries so as to secure that the aggregate amount for the time being remaining outstanding of all monies borrowed by the Group shall not at any time exceed an amount equal to four times the Adjusted Capital and Reserves (as defined by the Articles) without the previous sanction of any ordinary resolution of the Company in general meeting.

4.1.12 Pensions, gratuities etc.

The directors may, subject to the provisions of the Companies Act, exercise all the powers of the Company to grant pensions, annuities or other allowances and benefits in favour of any person including any director or former director or the relations, connections or dependants of any director or former director, provided that no pension, annuity or other allowance or benefit (except such as may be provided for by the Articles) shall be granted to a director or former director who has not been an executive director or held any other office or place of profit under the Company or any of its subsidiaries or to a person who has no claim on the Company except as a relation, connection or dependant of such a director or former director without the approval of an ordinary resolution of the Company.

4.1.13 Dividends

(a) Subject to the Companies Act, the Company in general meeting may from time to time declare dividends to be paid to members according to their rights and interests in the profits available for distribution, but no dividend shall be declared in excess of the amount recommended by the Board.
(b) Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provides, all dividends shall be declared and paid according to the amounts paid up on the shares (but no amount paid up on a share in advance of calls shall be treated for this purpose as paid up on such share), and shall be apportioned and paid pro rota to the amounts paid up on the shares during any portion of the period in respect of which the dividend is paid.
(c) The Board may pay to the members such interim dividends as appear to the Board to be justified by the profits of the Company and, in particular, if at any time the share capital of the Company is divided into different classes, the Board may pay such interim dividends in respect of those shares in the capital of the Company which confer on the holders thereof deferred or non preferential rights (as well as in respect of those shares which confer on the holders thereof preferential rights with regard to dividend), but no interim dividend shall be paid on shares carrying deferred or nonpreferential rights if at the time of payment any preferential dividend is in arrears.
(d) No dividend shall be paid otherwise than out of profits available for distribution in accordance with the Companies Act.

4.1.14 Unclaimed dividends

Any dividend unclaimed for a period of twelve years from the date such dividend becomes due for payment shall be forfeited and shall revert to the Company and the payment by the Board of any unclaimed dividend, interest or other sum payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof.

4.1.15 Untraced shareholders

(a) When the registered address of any member appears to the Board to be incorrect or out of date such member may, if the Board so resolves, be treated as if he had no registered address and thereafter the Company will not obliged to send cheques, warrants or notices of meetings to such member. No such resolution shall be proposed unless cheques or warrants sent to the registered address of such member have been returned by the Post Office or left uncashed on at least two consecutive occasions or, following one such occasion, reasonable enquiries have failed to establish any new address of such member.
(b) If, for a period of twelve years, at least three dividends have become payable and not been cashed and no communication has been received from the member (or any person entitled to the member's shares by transmission), the Company shall be entitled to sell such shares at the best obtainable price if, after giving notice in a leading newspaper and a newspaper circulating in the region of the member's registered address, it has not had any communication from the member (or anyone entitled to his shares by transmission) within three months.

5. OTHER RELEVANT LAWS AND REGULATIONS

5.1 The City Code applies to the Company. Under the City Code, if an acquisition of the Shares were to increase the aggregate holding of the acquirer and any parties acting in concert with it to Shares carrying 30 per cent. or more of the voting rights in the Company, the acquirer and, depending on the circumstances, its concert parties (if any) would be required (except with the consent of the Panel) to make a cash offer for the Shares not already owned by the acquirer and its concert parties (if any) at a price not less than the highest price paid for the Shares by the acquirer or its concert parties (if any) during the pervious 12 months. A similar obligation to make such a mandatory cash offer would also arise on the acquisition of Shares by a person holding (together with its concert parties, if any) Shares carrying at least 30 per cent. but not more than 50 per cent. of the voting rights in the Company if the effect of such acquisition were to increase the percentage of the aggregate voting rights held by the acquirer and its concert parties (if any).
5.2 Under the Companies Act, if a person who has made a general offer to acquire the Shares (the "offeror") were to acquire, or unconditionally contract to acquire, 90 per cent. of the shares to which the offer relates and 90 per cent. of the voting rights attached to the Shares within three months of the last day on which its offer can be accepted, the offeror could then compulsorily acquire the remaining 10 per cent. The offeror would do so by sending a notice to outstanding Shareholders telling them that the offeror will compulsorily acquire their Shares and then, six weeks later, executing a transfer of the

outstanding Shares in the offeror's favour and paying the consideration to the Company, which would hold the consideration on trust for outstanding Shareholders. The consideration offered to those Shareholders whose Shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the general offer.

5.3 The Companies Act gives minority Shareholders a right to be bought out in certain circumstances by a person who has made a general offer. If a takeover offer related to all the Shares and, at any time before the end of the period within which the general offer can be accepted, the offeror holds or has agreed to acquire not less than 90 per cent. of the shares to which the offer relates, any holder of the Shares to which the general offer relates who has not accepted the general offer can, by a written communication to the offeror, require it to acquire that holder's Shares.
5.4 The offeror is required to give each Shareholder notice of his right to be bought out within one month of that right arising. The offeror may impose a time limit on the rights of minority Shareholders to be bought out, but that period cannot end less than three months after the end of the acceptance period. If a Shareholder exercises his rights, the offeror is entitled and bound to acquire those Shares on the terms of the offer or on such other terms as may be agreed.
5.5 No public takeover bid has been made in relation to the Company during the last financial year or the current financial year.
5.6 The Disclosure and Transparency Rules apply to the Company and require that, subject to certain exemptions, a person is required to notify the Company of the percentage of voting rights in the Company it holds, or is deemed to hold through its direct or indirect holding of certain financial instruments, if the percentage of those voting rights reach, exceed or fall below 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10% and each 1% threshold thereafter up to 100%.

6. EMPLOYEE SHARE PLANS

6.1 The Company's Long Term Incentive Plan (the "LTIP")

The Company currently operates the LTIP under which eligible employees may, to the extent that relevant performance conditions are met, acquire (or, if appropriate, not forfeit) Shares. All employees, including executive directors, employed by any one or more companies within the Group are eligible to participate in the LTIP at the discretion of the Remuneration Committee. Awards may be granted under the LTIP to US eligible employees, subject to certain additional provisions to ensure compliance with relevant US legislation.

The LTIP provides for two forms of award – conditional awards and split interest share awards. Awards under the LTIP generally take the form of a conditional award over Shares. Conditional awards vest over the prescribed performance period to the extent that objective performance conditions, imposed by the Remuneration Committee on the grant of the awards have been met, such conditions taking account of the views of the Company's larger institutional investors from time to time.

LTIP awards vest on the notification to participants by the Remuneration Committee of its determination, following the end of the relevant performance period, of the extent to which the performance conditions attaching to the LTIP awards have been met. The performance conditions attaching to LTIP awards granted in 2014 are based on the performance of the Group's net asset value, excluding intangible assets and the equity rights asset ("NAV") over a period of three financial years ending on 31 December 2016 (31 December 2015, in the case of LTIP awards granted in 2014 to take account of LTIP awards which the Company was not able to grant in 2013 due to prohibited periods (the "2013 LTIP Awards")) and total shareholder return ("TSR") from March 2014 to March 2017 (March 2013 to March 2016, in the case of the 2013 LTIP Awards). The total LTIP awards is subject to an underpin based on the relative performance of the Group's TSR to that of the FTSE 250 Index which can reduce the LTIP awards by up to 50 per cent. The LTIP awards will vest in full (prior to the application of the underpin) in the event of both NAV and TSR increasing by 15 per cent. per year on a cumulative basis over the relevant three-year period, for TSR using an industry-standard average price period at the beginning and end of the performance period. Thirty per cent. of the LTIP awards shall vest (again prior to the application of the underpin) if the cumulative increase is 8 per cent. per annum for both measures over their respective performance periods. A straight line sliding scale is applied for performance between the distinct vesting targets. Malus and clawback may be applied in respect of the LTIP awards. The LTIP awards are subject to a two year holding period following the end of the performance period (one year, in the case of the 2013 LTIP Awards).

On 31 March 2014, the Company issued 4,508,994 Shares following the vesting of the 2011 LTIP awards.

6.2 The Company's Annual Incentive Scheme (the "AIS")

All staff employed by the Group on 1 January each year, including executive directors, will be eligible to receive a potential award under the AIS subject to their continued employment with the Group, the achievement of performance targets and the overall discretion of the Remuneration Committee.

The maximum level of an individual's potential award for a given year shall be expressed as a percentage of his or her base salary (as pro-rated for any part-time working).

The level of the actual awards pool (the "Awards Pool") in respect of any financial year will be determined by reference to IP Group's profitability, as measured by the growth in IP Group's NAV, during the relevant financial year. The performance targets for an individual will be split across corporate objectives and personal objectives.

6.3 The Company's Deferred Bonus Share Plan (the "DBSP")

The DBSP provides for deferral in Shares for participants in the AIS. DBSP awards, which are in the form of deferred nil cost option awards are granted, at the discretion of the Remuneration Committee, to employees who have participated in the AIS (or other bonus plan of the Company) for the preceding financial year (the "Relevant Year") whose bonus plan outcome for the Relevant Year, calculated in accordance with the applicable performance targets ("Bonus Plan Outcome"), is at or above a specified monetary value. Awards may also be granted under the DBSP to US eligible employees, subject to certain additional provisions to ensure compliance with relevant US legislation.

The first DBSP awards were granted in 2014 to employees, including executive directors, whose Bonus Plan Outcome was equal to or above £20,000. Such DBSP awards will be granted over such number of Shares as have an aggregate market value at the date of the DBSP awards equivalent to fifty per cent. of the Bonus Plan Outcome, rounded up to the nearest whole Share. Alternative percentages of the Bonus Plan Outcome may be specified for the making of subsequent DBSP awards.

DBSP awards are normally exercisable over some or all of the Shares over which the awards were made ("DBSP Award Shares") on or after one or more vesting dates, each as determined by the Remuneration Committee in its discretion. Fifty per cent. of the 2014 DBSP Award Shares will normally vest and become exercisable on the first anniversary of the DBSP awards date and 50 per cent. on the second anniversary of the DBSP awards date.

6.4 The Company's Sharesave Plan

Under the Sharesave Plan, eligible employees, including executive directors, who enter into an approved savings contract for a period of three or five years are granted options to acquire Shares at the end of that period using the proceeds of their savings contract (and, if applicable, any bonus or interest payable in relation to the savings contract). The exercise price of an option is fixed by the Remuneration Committee at the time the invitation to apply for an option is issued and will not be less than 80% of the market value of a Share at that time.

6.5 The Company's US ESPP

Under the US ESPP, an eligible US employee who enters into an approved savings contract for a maximum period of 24 months will be granted an option to acquire Shares at the end of that period using the proceeds of his savings contract (and, if applicable, any interest payable in relation to the savings contract). The exercise price of an option is fixed by the Remuneration Committee at the date of grant of an option and will not be less than 85 per cent. of the market value of a Share at that time.

The Directors' participations in the Group's LTIP, Sharesave Plan and DBSP as at 9 March 2015 (the latest practicable date prior to publication of this document) are set out in paragraph 9.4.2 of this Part V.

7. EMPLOYEES

The table below sets out the average number of persons employed by the Group during each of the financial years referred to below. All of the Group's employees are involved in management and administration activities and are either based in the UK or the United States.

	Average number of persons,
	including executive directors,
Financial year (each ended on 31 December)	employed by the Group
2014	58
2013	35
2012	34
2011	35

8. CORPORATE GOVERNANCE AND COMMITTEES

The Company is committed to high standards of corporate governance. Corporate governance can be defined as the high level system by which an organisation is directed and controlled to enable it to achieve its business objectives in a manner which is responsible and in accordance with highest standards of integrity, transparency and accountability.

The Group has been in compliance with all relevant requirements of the Corporate Governance Code published by the Financial Reporting Council in September 2014.

	Chairman	Members
Nomination Committee	Bruce Smith	Bruce Smith, Mike Humphrey, Jonathan Brooks, Lynn Gladden and Douglas Liversidge
Remuneration Committee	Mike Humphrey	Mike Humphrey, Jonathan Brooks, Lynn Gladden and Douglas Liversidge
Audit Committee	Jonathan Brooks	Mike Humphrey, Jonathan Brooks, Lynn Gladden and Douglas Liversidge

From time to time, separate committees may be set up by the Board to consider specific issues when the need arises. Each of these committees operates under terms of reference which have been established by the Board.

8.1 The Nomination Committee

The Nomination Committee assists the Board in discharging its responsibilities relating to the composition of the Board. The Nomination Committee considers the appointment of both executive and non-executive directors. It also advises the Board on matters generally relating to senior appointments.

8.2 The Remuneration Committee

The Remuneration Committee's objective is to develop remuneration packages for executive directors that enable the Group to attract, retain and motivate executives of the appropriate calibre without paying more than is necessary. No director is involved in deciding his or her own remuneration. The Board's policies on executive remuneration, and the details of executive directors' individual remuneration packages, are fixed by the Remuneration Committee or the Board. It is the Group's policy to take into account the pay and employment conditions of employees throughout the Group when determining directors' remuneration.

8.3 The Audit Committee

The Audit Committee examines and reviews internal controls, together with accounting policies and practices, the form and context of financial reports and statements and general matters raised by the auditor. It reviews the interim financial information and annual accounts before they are submitted to the Board and makes recommendations to the Board in connection with their submission. In addition, the Audit Committee makes recommendations to the Board regarding the appointment of the external auditor, reviews its independence and objectivity and monitors the scope and results of the audit. The Audit Committee is also responsible for agreeing the level of audit fees and monitoring the provision of non-audit services provided by the Group auditor. The Audit Committee assesses the likely impact on the auditor's independence and objectivity before awarding it any material contract for additional services. The Board has identified Jonathan Brooks, a fellow of the Chartered Institute of Management Accountants, as having recent and relevant financial experience. The Board considers that collectively the members have the requisite financial literacy, skills and attributes to enable the Audit Committee to properly discharge its responsibilities.

9. DIRECTORS

Details of the Directors, their business addresses and functions in the Company are set out on page 30 of this document and in paragraphs 2.3, 9.1 and 9.2 of this Part V.

9.1 Executive Directors

9.1.1 Alan John Aubrey – Chief Executive Officer

Alan Aubrey (aged 53) co-founded Techtran Group Limited in 2002 and was its CEO when the business was acquired by IP Group in January 2005. Previously, he was a partner in KPMG where he specialised in corporate finance advice to technology based fast growth businesses and has significant experience in helping them raise money and prepare for sale or flotation. Alan joined the Board in January 2005, becoming Chief Executive Officer on 1 January 2006 and has overall responsibility for the operational management of the Group.

9.1.2 Michael Charles Nettleton Townend – Chief Investment Officer

Mike Townend (aged 52) was formerly managing director within the European Equities business of Lehman Brothers with responsibility for equity sales to hedge funds. Mike has over 17 years of experience in all aspects of equity capital markets. Mike was appointed a director of the Company in March 2007.

9.1.3 Gregory Simon Smith – Chief Financial Officer

Greg Smith (aged 36) joined IP Group as Group Financial Controller in January 2008 and was appointed Chief Financial Officer in June 2011. Previously Greg spent three years at Tarchon Capital Management, a multi-billion dollar fund of hedge funds business where he had day to day responsibility for building and managing the operations and accounting team as well as external operational due diligence on investee hedge funds. Prior to Tarchon, Greg spent four years in KPMG's London Financial Services practice working with asset management, insurance and banking clients. Greg is a Chartered Accountant and holds a degree in Mathematics from the University of Warwick.

9.1.4 David Graham Baynes – Chief Operating Officer

David Baynes (aged 51) was appointed as a Director in March 2014, following the Company's acquisition of Fusion IP. David was Chief Executive Officer and one of the founders of Fusion IP, having been a director of Fusion IP since 2004. David previously worked at Celsis International plc from its incorporation to its flotation on the main market of the London Stock Exchange in July 1993; Toad plc (now 21st Century Technology PLC), which he co-founded and was responsible for taking the company from start-up to a full listing on the London Stock Exchange in 1995; Whereonearth Limited and Codemasters Limited.

9.2 Non-Executive Directors

9.2.1 Dr Bruce Gordon Smith – Non-executive Chairman

Bruce Smith (aged 75) is chairman of the Council of Smith Institute for Industrial Mathematics and System Engineering. He was the chairman and majority shareholder of Smith System Engineering Limited until 1997. Bruce is a fellow of the Royal Academy of Engineering, the Institute of Engineering and Technology and the Institute of Physics. Bruce became a director of the Company in September 2002 and is also Chairman of the Group's Nomination Committee.

9.2.2 Jonathan Brooks – Non-executive Director

Jonathan Brooks (aged 59) Jonathan was the Chief Financial Officer of ARM Holdings plc from 1995 until 2002 where he was responsible for finance, investor relations, legal, and IT, and where he managed the dual-listed IPO process of ARM on the London Stock Exchange and Nasdaq in 1998. He is a non-executive director of Aveva Group Plc, a provider of engineering data and design IT systems, and Chairman of Nasdaq-listed Xyratex Ltd, a provider of data storage systems. He joined IP Group's board in August 2011 and is also Chairman of the Group's Audit Committee.

9.2.3 Prof. Lynn Faith Gladden – Non-executive Director

Lynn Gladden (aged 53) was appointed as a Director in March 2014. Lynn is Pro-Vice-Chancellor for Research for the University of Cambridge, the Shell Professor of Chemical Engineering and the former Head of the Department of Chemical Engineering and Biotechnology. She also serves as a Director of Cambridge Enterprise Limited, is a former member of the Council of the Engineering and Physical Sciences Research Council (EPSRC) and, in 2013, was appointed to the Shell Science Council. Lynn is a Fellow of the Royal Society, the Royal Academy of Engineering, the Institution of Chemical Engineers, the Royal Society of Chemistry and the Institute of Physics and is a chartered engineer and chartered chemist. In 2009, she was awarded a CBE for services to chemical engineering following an OBE for services to chemistry awarded in 2001.

9.2.4 Mike Humphrey – Senior Non-executive Director

Mike Humphrey (aged 63) Mike is the former CEO of Croda International plc. He was appointed to the Board of Croda in 1995 and became chief executive of its group at the beginning of 1999. He joined Croda in 1969 as a management trainee and was appointed Managing Director of Croda Singapore in 1988, Croda Application Chemicals in 1990 and Croda Chemicals in 1991. Mike joined IP Group's Board in October 2011 and retired from Croda at the end of 2011. Mike is Chairman of the Group's Remuneration Committee.

9.2.5 Douglas Brian Liversidge – Non-executive Director

Douglas Liversidge (aged 78) was appointed as a Director upon the Company's acquisition of Fusion in March 2014. Mr Liversidge was employed for 21 years at British Steel, before moving to GWThornton Limited as Managing Director and subsequently Chief Executive and guided the company through its flotation on the full list of the London Stock Exchange in March 1987. In 1991 Mr Liversidge was awarded South Yorkshire Businessman of the Year. Mr Liversidge acts as a Senior Industrial Advisor to the University of Sheffield and was awarded the CBE in the 2000 New Year's Honours List for services to industry.

9.3 Directors' Service Agreements and Letters of Appointment

Alan Aubrey has a service contract which commenced on 20 January 2005 and contains a contractual notice period of six months by either party. Mike Townend has a service contract which commenced on 5 March 2007 and contains a contractual notice period of six months by either party. David Baynes has a service contract with IP2IPO Limited dated 22 January 2014 but which commenced on 20 March 2014 and contains a contractual notice period of six months by either party. Gregory Smith has a service contract which commenced on 2 June 2011 and contains a contractual notice period of six months by either party. The contracts for executive Directors do not provide any predetermined amounts of compensation in the event of early termination. In the event of early termination, payments for loss of office would be determined by the Remuneration Committee which would take account of the particular circumstances of each case, including the unexpired term of the service contract.

Dr Bruce Smith has a letter of appointment which commenced on 3 September 2007. Mike Humphrey has a letter of appointment which commenced on 9 March 2015, which replaced his letter of appointment which commenced on 14 October 2011. Jonathan Brooks has a letter of appointment which commenced on 31 August 2011. Douglas Liversidge has a letter of appointment dated 22 January 2014 and which commenced on 20 March 2014. Lynn Gladden has a letter of appointment dated 3 March 2014 and which commenced on 26 March 2014. Each appointment is for an initial term of three years, renewable for a further three years. The appointment is terminable on three months' notice by either party.

Executive Directors may accept other outside non-executive appointments. Where an executive Director accepts an appointment to the board of directors of a company in which the Group is a shareholder, the Group generally retains the related fees. In the limited circumstances where the executive Directors receive such fees directly, such sums are deducted from their base salary. Fees earned for directorships of companies in which the Group does not have a shareholding are normally retained by the Director.

Save as referred to in this paragraph 9.3 of this Part V, there are no service agreements between any Director and any member of the Group, other than agreements, expiring or determinable by the employing company without payment of compensation (other than statutory compensation) and no such contracts are proposed. There are no benefits payable upon termination of such service agreements.

There is no arrangement under which any Director has waived, or agreed to waive, future emoluments nor has there been any waiver of emoluments during the financial year immediately preceding the date of this document.

The aggregate remuneration (including salaries, fees, pension contributions, bonus payments and benefits in kind) payable to directors of the Company who served the Group during the financial year ended on 31 December 2014 amounted to £1,254,000, further details of which are provided below:

Base salary/fees	Benefits	Pension1

		23
		16
		23
		18
		6

		–
		–
		–
		–
		–
22	–	–
1,254	21	–––––––– 88
	191 181 231 180 129 65 45 45 29 29 –––––––– ––––––––	4 4 7 4 2 – – – – – –––––––– ––––––––

Notes

Pension includes payments made to defined benefit schemes on behalf of the Directors or the value of any cash equivalent if applicable.
In addition, Alan Aubrey retained board fees in 2014 totalling £68,333 from portfolio companies in which the Group is a shareholder that were deducted from his base salary.
1. David Baynes was appointed to the Board with effect from 20 March 2014.
1. Charles Winward stepped down from the Board with effect from 13 May 2014.
1. In addition, Charles Winward retained board fees up to his resignation date in 2014 totalling £5,000 from portfolio companies in which the Group is a shareholder that were deducted from his base salary.
1. Doug Liversidge was appointed to the Board with effect from 20 March 2014.
1. Lynn Gladden was appointed to the Board with effect from 26 March 2014.
1. Francis Carpenter retired from the Board with effect from 30 June 2014.

9.4 Directors' interests

9.4.1 As at 9 March 2015 (being the latest practicable date prior to the publication of this document) and immediately following Admission, the interests of the Directors, and (so far as is known to the Directors having made appropriate enquiries) of all such persons connected with the Directors (which expression shall be construed in accordance with section 252 of the Companies Act), in the issued share capital of the Company are set out in the table below:

			Percentage
	Number of	Percentage of	of Enlarged
Name		Shares Existing Shares	Share Capital
Bruce Smith	236,592	0.05	0.04
Alan Aubrey	2,368,537	0.49	0.44
Michael Townend	1,011,023	0.21	0.19
Gregory Smith	289,919	0.06	0.05
David Baynes	426,066	0.09	0.08
Lynn Gladden	–	–	–
Jonathan Brooks	60,000	0.01	0.01
Mike Humphrey	80,000	0.02	0.01
Douglas Liversidge	75,297	0.02	0.01

9.4.2 The Directors' participations in the Group's LTIP, Sharesave Plan and DBSP as at 9 March 2015 (the latest practicable date prior to publication of this document) are set out in the table below:

		Share price at grant
	Potential conditional	date of conditional	Earliest
	interest in Shares	award (p)	vesting date
Directors
Alan Aubrey
2012 LTIP	302,695	135.5	21.03.15
2013 LTIP	143,239	179	31.03.16
2014 LTIP	147,042 ––––––––	179	31.03.17
	592,976
Mike Townend	––––––––
2012 LTIP	230,625	135.5	31.03.15
2013 LTIP	114,592	179	31.03.16
2014 LTIP	117,634 ––––––––	179	31.03.17
	462,851
Gregory Smith	––––––––
2012 LTIP	142,768	135.5	31.03.15
2013 LTIP	81,127	179	31.03.16
2014 LTIP	94,310 ––––––––	179	31.03.17
	318,205
David Baynes*	––––––––
2014 LTIP	117,634	179	31.03.17
2014 LTIP (Fusion)	446,000 ––––––––	N/A	31.12.17
	563,634
Total	–––––––– 1,937,666
	––––––––

Notes:

* David Baynes joined the Board with effect from 20 March 2014. As part of the acquisition of Fusion, his Fusion IP LTIPs were converted into LTIPs over 446,000 Shares at the equivalent value of his Fusion IP LTIP interests.

			Share price at date of grant date of
	Number of Shares		option(p)	Exercise period
Gregory Smith
Sharesave Plan 2014		4,105		198.5 01.08.2017 – 01.02.2018
David Baynes
Sharesave Plan 2014		4,975		198.5 01.08.2017 – 01.02.2018
Total	–––––––– ––––––––	9,080
			Share price at
	Number of Shares		date of option(p)	Earliest exercise date
Directors
Alan Aubrey
DBSP 2014		66,074	192.4	50% on 15.04.2015 and
				50% on 15.04.2016
Mike Townend
DBSP 2014		44,048	192.4	50% on 15.04.2015 and
				50% on 15.04.2016
Gregory Smith
DBSP 2014		31,186	192.4	50% on 15.04.2015 and
	––––––––			50% on 15.04.2016
Total	141,308 ––––––––

9.5 Directors' current and previous directorships

The Directors hold or have held directorships of the companies (excluding the Company and its subsidiaries) and/or are or were partners of the partnerships specified opposite their respective names below within the past five years prior to the date of this document.

Director	Current directorships and partnerships	Previous directorships and partnerships
Bruce G. Smith	Industrial Technology Securities Limited	Spectrum (General Partner) Limited Imagineer Systems Limited
	Oregan Networks Limited	Imagineer Consulting Limited
	Smith Institute	Mirriad Limited
Alan J. Aubrey	Avacta Group plc	The Northern Entrepreneurs Fund
	Axiomlab Group Limited	Co-Investment LLP
	Axiomlab Investments Limited	Avacta Limited
	Biz 2 Bizz Investments Limited	Axiomlab
	Ceres Power Holdings Plc	Evocutis Plc
	Ceres Power Intermediate Holdings	Flowgroup Plc
	Limited	Scissor Search Limited
	Eureka! The National Children's	Syntopix Limited
	Museum	Tissue Regenix Group plc
	Inhoco 2835 Limited
	Oxford Nanopore Technologies Limited
	Proactis Holdings Plc
	Proactis Group Limited
	The Northern Entrepreneurs Fund
	LLP

Director Michael C. N. Townend	Current directorships and partnerships Applied Graphene Materials plc Green Urban Transport Limited Modern Water plc Revolymer Plc	Previous directorships and partnerships Evocutis Plc
Gregory S. Smith	None	None
David G. Baynes	Arthurian Life Sciences Limited Biohydrogen Limited Demasq Limited Lifestyle Choices Limited Mantelum Limited Medaphor Group plc Medaphor Limited Morvus Technology Limited Nick Baynes Property Consulting Limited Out Of The Blue Consulting Limited Proflu Limited Rheometrix Microsystems Limited Wound Genetics Prognostics Limited Wound Genetics Therapeutics Limited	Absynth Biologics Limited Magnomatics Limited Medella Therapeutics Limited Medipex Limited Mesuro Limited Perlemax Limited Phase Focus Limited
Lynn F. Gladden	Cambridge Centre for Advanced Research in Energy Efficiency in Singapore Ltd Cambridge Enterprise Limited Cambridge Network Limited Cambridge University Technical Services Ltd	The Institute of Applied Catalysis
Jonathan Brooks	Aveva Group Plc Aveva Solutions Limited FDM Group (Holdings) plc	Clearly So Limited E2V Technologies Plc Skrill Holdings Limited Picochip, Inc. Xyratex Limited
Mike Humphrey	SK Spice Holdings S.A.R.L. Moorland Close Property Management Co Limited	Croda International plc Croda Europe Limited Croda Overseas Holdings Limited Croda Polymers International Limited Croda World Traders Limited Croda Colloids Limited Croda Chemicals Limited Croda Leek Limited

Croda Universal Limited

	Current directorships	Previous directorships
Director	and partnerships	and partnerships
Douglas B. Liversidge	Medis Diagnostics Ltd	SLW Architectural Aluminium
	Quest Investment Limited	Limited
	Surgical Innovations Group plc
	Tool & Steel Products Limited
	U-PAC Containers Limited
	Wakeco (237) Limited

9.6 Miscellaneous

At the date of this document, no Director has:

(a) any unspent convictions in relation to fraudulent offences;
(b) been declared bankrupt or been subject to any individual voluntary arrangement;
(c) been a director of any company which has been placed in receivership, compulsory liquidation, creditors' voluntary liquidation, administration, company voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors whilst he was a director of that company or within 12 months after he ceased to be a director of that company;
(d) been a partner in any partnership which has been placed in compulsory liquidation, administration or partnership voluntary arrangement whilst he was a partner of that partnership or within 12 months after he ceased to be a partner in that partnership;
(e) been the owner of any asset or been a partner in any partnership which had an asset placed in receivership whilst he was a partner of that partnership or within the 12 months after he ceased to be a partner of that partnership; or
(f) been subject to any public criticisms by any statutory or regulatory authorities (including authorised professional bodies) or been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company.
9.7 There are no outstanding loans granted by any member of the Group to any of the Directors and there are no guarantees provided by any member of the Group for the benefit of any of the Directors.
9.8 Certain of the Directors are directors of, and/or shareholders in, one or more of IP Group's portfolio companies. These directorships and shareholdings potentially give rise to a conflict of interest between the relevant Directors' duties to the Company and their duties to, or interests in, the relevant portfolio company.

For example, if the Group has offered to provide capital to one of its portfolio companies on which one of its Directors sits on the board, that Director owes certain duties to the portfolio company in his or her capacity as a director when that company considers such offer, such as the duty to avoid conflicts of interest, to exercise independent judgement and to promote the success of the company for the benefit of its members as a whole. It may be that in seeking to exercise such duties, this conflicts with the same duties that Director owes to the Company. In such circumstances, the Director will ensure that he declares all such conflicts in accordance with the Companies Act and may be required to abstain from taking part in the discussions and/or voting on any decisions to be taken in respect thereof. In the same way, if a Director is a shareholder in a portfolio company to which the Group is considering providing capital, it may be that his personal interests are potentially in conflict with the duties that Director owes to the Company in considering the merits of the provision of such capital. Again, such Director will fully declare all such conflicts of interest in accordance with the Companies Act and may be required to abstain from taking part in the discussions and/or voting on any decisions to be taken in respect thereof.

9.9 Save as referred to in paragraph 9.8 above, there are no potential conflicts of interest between the Directors' duties to the Company and their private interests and other duties.

10. SIGNIFICANT SHAREHOLDINGS

10.1 As at 9 March 2015 (being the latest practicable date prior to the publication of this document), the Directors were aware of the following persons who, directly or indirectly, were interested in three per cent. or more of the Company's capital or voting rights:

Name	Percentage of Existing Shares
IAML	25.7
Lansdowne Partners Limited	15.1
Baillie Gifford & Co	10.5
Woodford Investment Management	7.1
Sand Aire Limited	5.5
Oppenheimer Funds, Inc.	4.3

10.2 None of the above persons has voting rights differing from those of any other Shareholder. The Company is not aware that it is directly or indirectly controlled by any person or persons acting in concert. The Company is not controlled directly or indirectly by any Shareholder, nor is it aware of any arrangement which may at a subsequent date result in a change of control of the Company.

11. WORKING CAPITAL

The Company is of the opinion that the working capital available to it is sufficient for the present requirements of the Group, that is, for at least twelve months from the date of this document.

12. DIVIDENDS

No dividends have been paid by IP Group in respect of the financial years ended 31 December 2014, 31 December 2013, 31 December 2012 and 31 December 2011.

13. TAXATION

13.1 United Kingdom Taxation

The following statements do not constitute tax advice and are intended as a general guide to certain UK tax considerations only and do not purport to be an analysis of all potential UK tax consequences of subscribing for, holding or disposing of Placing and Open Offer Shares. The following statements are based on current UK legislation and published HM Revenue & Customs practice as at the date of this document, both of which are subject to change at any time, possibly with retrospective effect.

The following statements deal only with the position of Shareholders who are resident (and, in the case of individuals only, ordinarily resident and domiciled) solely in the UK for tax purposes (except where the position of a non-UK tax resident is expressly referred to) and who hold their Existing Shares as an investment and who are the absolute beneficial owners of the Existing Shares and of all dividends of any kind paid in respect of them. The statement are not addressed to: (i) special class of Shareholders such as, for example, dealers in securities, broker-dealers, insurance companies and collective investment schemes; (ii) Shareholders who hold Placing and Open Offer Shares as part of hedging or conversion transactions; and (iii) Shareholders who have (or are deemed to have) acquired their Existing Shares by virtue of a right or opportunity available to them in consequence of an office or employment.

Shareholders who are in any doubt as to their tax position regarding the acquisition, ownership or disposal of their Placing and Open Offer Shares or are subject to tax in a jurisdiction other than the UK, and Shareholders who are not resident for tax purposes in the UK, should consult their own independent tax advisers before taking any action.

13.1.1 Dividends

Under current UK tax legislation, no tax is withheld from dividends paid by the Company.

UK resident individual shareholders are treated as having received income of an amount equal to the sum of the dividend and its associated tax credits, the tax credit for dividends being 10 per cent. of the combined amount of the dividend and the tax credit (i.e. the tax credit will be one ninth of the dividend). The tax credit will effectively satisfy a UK resident individual shareholder's lower and basic rate (but not the higher rates) income tax liability in respect of the dividend. UK resident individual shareholders who are subject to the higher rate of tax at 40 per cent. will have to account for additional tax. The gross rate of tax set for the higher rate. taxpayer who receive dividends is 32.5 per cent. After taking account of the 10 per cent., tax credit, such a tax payer would have to account for additional tax of 22.5 per cent. This additional 22.5 per cent. tax liability equates to an effective rate of income tax on the net cash dividend actually received of 25 per cent. Taxpayers who pay the additional rate of tax of 45 per cent. will also have to account for additional tax. The gross rate of tax set for the additional rate taxpayer who receives dividends is 42.5 per cent. After taking account of the 10 per cent. tax credit, such a taxpayer would have to account for additional tax of 32.5 per cent. This additional 32.5 per cent. tax liability equates to an effective rate of income tax on the cash dividend actually received of 30.6 per cent.

UK tax resident corporate shareholders will not normally be liable to UK corporation tax in respect of any dividend received from the Company.

Whether a shareholder who is not resident in the UK is entitled to a tax credit in respect of dividends paid by the Company will depend, in general, on the terms of any double tax treaty between the UK and their country of residence. A non-UK resident shareholder may also be subject to foreign taxation on dividend income.

Non-UK resident shareholders and shareholders subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser concerning their liabilities to tax on dividends received.

13.1.2 Taxation of Chargeable Gains

Any disposal of Shares by a shareholder resident or ordinarily resident for tax purposes in the UK or a non-UK resident shareholder who carries on a trade, profession or vocation in the UK through a branch or agency and has used, held or acquired the Shares for the purposes of such trade, profession or vocation or such branch or agency may, depending on the shareholder's circumstances, and subject to any available exemptions, allowances or reliefs, give rise to a chargeable gain or an allowable loss for the purposes of UK capital gains tax (or for companies, corporation tax on chargeable gains).

Special rules apply to disposals by individuals at a time when they are temporarily not resident or not ordinarily resident in the UK.

13.1.3 UK Inheritance Tax

The Shares will be assets situated in the UK for the purposes of UK inheritance tax. A gift of such assets by, or on the death of, an individual holder of such assets may (subject to certain exemptions and reliefs) give rise to a liability to UK inheritance tax. This is regardless of whether or not the individual holder is domiciled or deemed to be domiciled in the UK and whether or not the holder is resident and/or ordinarily resident in the UK for tax purposes. For inheritance tax purposes, a transfer of assets at less than full market value may be treated as a gift and particular rules apply where the donor reserves or retains some interest or benefit in the property being transferred.

If an individual is resident in the UK but not domiciled in the UK, professional advice should be sought.

Special rules apply to trustees of settlements who hold Shares bringing them within the charge to UK inheritance tax.

13.1.4 Stamp Duty and Stamp Duty Reserve Tax ("SDRT")

Any transfer or sale of Shares will generally give rise to a liability on the purchaser to ad valorem stamp duty currently at a rate equivalent to 50p for every £100 or part of £100 of the consideration paid. An unconditional agreement to transfer such Shares will be subject to SDRT at a rate of 0.5 per cent., of the amount or value of the consideration. However, when an instrument of transfer is executed and duly stamped before the expiry of a period of six years beginning with the date of that agreement, a claim can normally be made to cancel or obtain repayment of the SDRT liability. Special rules apply to the agreements made by market makers in the ordinary course of their business, brokerdealers and certain other persons. Agreements relating to the transfer of Shares to charities will not give rise to SDRT or stamp duty.

The information in this paragraph is intended as a general summary of certain elements of the UK tax position and should not be construed as constituting advice. Potential investors should obtain advice from their own investment or taxation adviser.

13.2 United States Taxation

United States Federal Income Taxation

The following discussion is a general summary under present law of certain US federal income tax considerations relevant to the acquisition, ownership and disposition of the Capital Raising Shares. The summary is not a complete description of all tax considerations that may be relevant. It applies only to US Holders (as defined below) that acquire Capital Raising Shares in this Capital Raising, hold the Capital Raising Shares as capital assets and use the US dollar as their functional currency. It does not address the tax treatment of persons subject to special rules, such as financial institutions, dealers or traders, insurance companies, tax exempt entities, persons owning 10 per cent. or more of the Company's share capital, persons holding Capital Raising Shares as part of a hedge, straddle, conversion or constructive sale transaction or persons holding Capital Raising Shares in connection with a permanent establishment in the United Kingdom. It also does not address US state and local tax considerations.

EACH PROSPECTIVE PURCHASER SHOULD SEEK ADVICE FROM AN INDEPENDENT TAX ADVISOR ABOUT THE TAX CONSEQUENCES UNDER ITS OWN PARTICULAR CIRCUMSTANCES OF INVESTING IN THE PLACING AND OPEN OFFER SHARES UNDER THE LAWS OF THE UNITED KINGDOM, THE UNITED STATES AND ITS CONSTITUENT JURISDICTIONS, AND ANY OTHER JURISDICTIONS WHERE THE PURCHASER MAY BE SUBJECT TO TAXATION.

As used in this section, "US Holder" means a beneficial owner of Capital Raising Shares that for US federal income tax purposes, is (i) a US citizen or individual resident of the United States, (ii) a corporation or other business entity treated as a corporation created or organized under the laws of the United States or its political subdivisions, (iii) a trust subject to the control of a US person and the primary supervision of a US court or (iv) an estate the income of which is subject to US federal income tax without regard to its source. The US federal income tax treatment of a partner in a partnership of the Capital Raising Shares generally will depend on the status of the partner and the activities of the partnership. Partners in a partnership that holds Capital Raising Shares should consult their own tax advisors regarding the specific US federal income tax consequences to them in respect of the acquisition, ownership and disposition of the Capital Raising Shares by the partnership.

Tax Basis

A US Holder's basis in the Capital Raising Shares will be the US dollar value of the purchase price. US Holders should consult their own tax advisers regarding the rules applicable to the acquisition of Capital Raising Shares in a currency other than the US dollar.

Passive Foreign Investment Company

In general, the Company will be considered a passive foreign investment company ("PFIC") for any taxable year in which: (i) 75 per cent. or more of its gross income consists of passive income; or (ii) 50 per cent. or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, if the Company, directly or indirectly, owns at least 25 per cent. by value of the stock of another corporation, then the Company would be treated as if it held its proportionate share of the assets of such other corporation and received directly its proportionate share of the income of such other corporation. Passive income generally includes dividends, interest, rents, royalties and capital gains. The Company may meet the PFIC income and/or asset tests for the current year. In addition, the Company may make acquisitions of equity interests in PFICs, referred to herein as "Lower-tier PFICs" and there is no guarantee that the Company would cease to be a PFIC once it has made these acquisitions. Consequently, the Company can provide no assurance that it will not be a PFIC for either the current year or for any subsequent year.

Under certain attribution rules, if the Company is a PFIC, US Holders will be deemed to own their proportionate share of Lower-tier PFICs, and will be subject to US federal income tax on: (i) certain distributions on the shares of a Lower-tier PFIC; and (ii) a disposition of shares of a Lower-tier PFIC, both as if the holder directly held the shares of such Lower-tier PFIC. If the Company is a PFIC for any taxable year during which a US Holder holds its Capital Raising Shares or is deemed to hold an interest in a Lower-tier PFIC, such US Holder will be subject to significant adverse US federal income tax rules. Unless a holder makes a timely "QEF Election" or "mark-to-market" election, each as described below, gain recognised upon a disposition (including, under certain circumstances, a pledge) of Capital Raising Shares by such US Holder, or upon an indirect disposition of shares of a Lower-tier PFIC, will be allocated rateably over the US Holder's holding period for such shares and will not be treated as capital gain. Instead, the amounts allocated to the taxable year of disposition and to the years before the relevant company became a PFIC, if any, will be taxed as ordinary income. The amount allocated to each PFIC taxable year will be subject to tax at the highest rate in effect for such taxable year for individuals or corporations, as appropriate, and an interest charge (at the rate generally applicable to underpayments of tax due in such year) will be imposed on the tax attributable to such allocated amounts. Any loss recognised will be capital loss, the deductibility of which is subject to limitations. Further, to the extent that any distribution received by a US Holder on its Capital Raising Shares (or a distribution by a Lower-tier PFIC to its shareholder that is deemed to be received by a US Holder) exceeds 125 per cent. of the average of the annual distributions on such shares received during the preceding three years or the US Holder's holding period, whichever is shorter, such excess distribution will be subject to taxation as described above.

If the Company is a PFIC for any taxable year during which a US Holder holds Capital Raising Shares, the Company will continue to be treated as a PFIC with respect to the US Holder for all succeeding years during which the US Holder holds Capital Raising Shares, regardless of whether the Company actually continues to be a PFIC. The US Holder may terminate this deemed PFIC status by electing to recognise gain (which will be taxed under the adverse tax rules discussed in the preceding paragraph) as if the US Holder's Capital Raising Shares had been sold on the last day of the last taxable year for which the Company was a PFIC.

Qualified Electing Fund Election ("QEF Election")

A US Holder may be able to make timely elections to treat the Company and any Lower-tier PFICs controlled by the Company as qualified electing funds ("QEF Elections") to avoid the foregoing rules with respect to excess distributions on, and dispositions of, Capital Raising Shares. If a US Holder makes a QEF Election, the US Holder would be currently taxable on its pro rata share of the Company's ordinary earnings and net capital gain (at ordinary income and capital gains rates, respectively) for each taxable year for which the Company is classified as a PFIC, regardless of whether the US Holder received any dividend distributions from the Company. To the extent of such income inclusions, the US Holder would not be required to include in income any subsequent dividend distributions received from the Company. For purposes of determining a gain or loss on the disposition (including redemption or retirement) of Capital Raising Shares, the US Holder's initial tax basis in the Capital Raising Shares (as discussed above under "— Tax Basis") would be increased by the amount included in gross income as a result of a QEF Election and decreased by the amount of any nontaxable distributions on the Capital Raising Shares. In general, a US Holder making a timely QEF Election will recognise, on the sale or disposition (including redemption and retirement) of Capital Raising Shares, capital gain or loss equal to the difference, if any, between the amount realised upon such sale or disposition and that US Holder's adjusted tax basis in those Capital Raising Shares. Such gain will be long-term if the US Holder has held the Capital Raising Shares for more than one year on the date of disposition. Similar rules will apply to any Lower-tier PFICs for which QEF Elections are timely made. Certain distributions on, and gain from dispositions of, equity interests in Lower-tier PFICs for which no QEF Election is made will be subject to the general PFIC rules described above.

Each US Holder who desires to make QEF Elections must individually make QEF Elections with respect to each entity, including any Lower-tier PFIC. Each QEF Election is effective for the US Holder's taxable year for which it is made and all subsequent taxable years and may not be revoked without the consent of the IRS. In general, a US Holder must make a QEF Election on or before the due date for filing its income tax return for the first year to which the QEF Election is to apply. If a US Holder makes a QEF Election in a year following the first taxable year during such US Holder's holding period in which a company is classified as a PFIC, the general PFIC rules described above will continue to apply unless the US Holder elects to recognise gain as if the US Holder has sold shares in the Company or Lower-tier PFIC for their fair market value on the first day of the US Holder's taxable year for which the US Holder makes the QEF Election with respect to the Company or Lower-tier PFIC. Any gain recognised on this deemed sale would be subject to the general PFIC rules described above. In order to comply with the requirements of a QEF Election, a US Holder must receive certain information from the Company or the Lower-tier PFIC, as applicable. If the Company receives any requests to provide such information, it will consider all facts and circumstances (including the cost of providing such information) in determining whether it is in the best interests of the Company and the investors to provide such information. If the Company elects to provide such information, such information would be provided as promptly as practicable, upon the request of registered holders of Capital Raising Shares with US addresses and other Shareholders, following the end of the Company's initial taxable year and any other taxable year in which the Company and any Lower-tier PFIC determines that it is a PFIC. There is no assurance, however, that the Company will have timely knowledge of its status as a PFIC, that it will be able to obtain the required information from any Lower-tier PFICs, or that the information that the Company provides will be adequate to allow US Holders to make a QEF Election. US Holders should consult with their own tax advisers as to the advisability of, consequences of, and procedures for making, a QEF Election.

Mark-to-Market Election

Alternatively, a US Holder may be able to make a mark-to-market election with respect to the Capital Raising Shares (but not with respect to the shares of any Lower-tier PFICs) if the Capital Raising Shares are "regularly traded" on a "qualified exchange". In general, the Capital Raising Shares will be treated as "regularly traded" in any calendar year in which more than a de minimis quantity of Ordinary Shares are traded on a qualified exchange on at least 15 days during each calendar quarter. The Company believes the London Stock Exchange is a qualified exchange. However, the Company can make no assurance that the Capital Raising Shares will be listed on a "qualified exchange" or that there will be sufficient trading activity for the Capital Raising Shares to be treated as "regularly traded". Accordingly, US Holders should consult their own tax advisers as to whether the Ordinary Shares would qualify for the mark-to-market election.

If a US Holder makes the mark-to-market election, for each year in which the Company is a PFIC, the holder will generally include as ordinary income the excess, if any, of the fair market value of the Capital Raising Shares at the end of the taxable year over their adjusted tax basis, and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted tax basis of the Capital Raising Shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). If a US Holder makes the election, the holder's tax basis in the Capital Raising Shares will be adjusted to reflect any such income or loss amounts. Any gain recognised on the sale or other disposition of Capital Raising Shares will be treated as ordinary income.

A mark-to-market election applies to the taxable year in which the election is made and to each subsequent year, unless the Capital Raising Shares cease to be marketable (as described above) or the IRS consents to the revocation of the election. If a mark-to-market election is not made for the first year in which a US Holder owns Capital Raising Shares and the Company is a PFIC, the interest charge described above will apply to any mark-to-market gain recognised in the later year that the election is first made.

A mark-to-market election under the PFIC rules with respect to the Capital Raising Shares would not apply to a Lower-tier PFIC, and a US Holder would not be able to make such a mark-to-market election in respect of its indirect ownership interest in any Lower-tier PFIC. Consequently, US Holders of Capital Raising Shares could be subject to the PFIC rules with respect to income of any Lower-tier PFIC. US Holders should consult their own tax advisers regarding the availability and advisability of making a mark-to-market election in their particular circumstances. In particular, US Holders should consider the impact of a mark-to-market election with respect to their Ordinary Shares, given that the Company does not expect to pay regular dividends, at least in the short to medium term, and given that the Company may have Lower-tier PFICs for which such election is not available.

The rules dealing with PFICs, QEF Elections, deemed sale elections and mark-to-market elections are complex and affected by various factors in addition to those described above. As a result, US Holders should consult their own tax advisers concerning the Company's PFIC status and the tax considerations relevant to an investment in a PFIC including the availability of and the merits of making QEF Elections (including the timing thereof), deemed sale elections, or mark-to-market elections.

Consequences of Not Being a PFIC – Dividends

If the Company is not treated as a PFIC, dividends on the Capital Raising Shares (including the amount of tax withheld, if any) should be included in a US Holder's gross income as ordinary income from foreign sources when actually or constructively received. Dividends will not be eligible for the dividends-received deduction generally available to US corporations. Dividends received by eligible non-corporate US holders, however, might be taxable at the preferential rate allowed for qualified dividend income if the Company were eligible for the benefits of the income tax treaty between the United States and the United Kingdom and the US Holder met applicable holding period requirements. A US Holder will not be eligible for this preferential rate if the Company is treated as a PFIC in the taxable year in which the distribution is received or in the preceding taxable year.

Dividends paid in a currency other than US dollars will be includable in income in a US dollar amount based on the exchange rate in effect on the date of receipt whether or not the payment is converted into US dollars at that time. A US holder's tax basis in the non-US currency will equal the US dollar amount included in income. Any gain or loss on a subsequent conversion of the non-US currency into US dollars for a different amount generally will be US source ordinary income or loss and will not be treated as a dividend.

Subject to generally applicable limitations, US Holders may claim a deduction or a foreign tax credit for non-US tax withheld at the appropriate rate. In computing a non-corporate US Holder's foreign tax credit limitation, only a portion of any dividend taxed at the reduced rate for qualified dividend income will be treated as income from foreign sources. Dividends received by certain individuals, trusts or estates may constitute "net investment income" subject to additional tax.

Consequences of Not Being a PFIC – Dispositions

If the Company is not treated as a PFIC, a US Holder will recognize capital gain or loss on the sale or other disposition of Capital Raising Shares in an amount equal to the difference between the US Holder's adjusted tax basis in the Capital Raising Shares (as discussed above under "— Tax Basis") and the US dollar value of the amount realised from the disposition. Any gain or loss realised by a US Holder generally will be treated as arising from US sources. It will be long-term capital gain or loss if the holder has held Capital Raising Shares for more than one year. Regardless of a US Holder's holding period, however, any loss may be long-term capital loss to the extent the US Holder has received a dividend qualified for the reduced tax rate discussed above that, when aggregated with other dividends in the same consecutive 85 day period, exceeds 10 per cent. of the US Holder's basis in its Capital Raising Shares. Deductions for capital losses are subject to significant limitations.

A US Holder that receives a currency other than US dollars on the disposition of Capital Raising Shares will realize an amount equal to the US dollar value of the currency received at the spot rate on the date of sale (or, in the case of cash basis and electing accrual basis US Holders, the settlement date). An accrual basis US Holder that does not elect to determine the amount realized using the spot rate on the settlement date will recognize foreign currency gain or loss equal to the difference between the US dollar value of the amount received based on the spot exchange rates in effect on the date of sale or other disposition and the settlement date. A US Holder will have a tax basis in the currency received equal to the US dollar value of the currency received on the settlement date. Any gain or loss on a subsequent disposition or conversion of the currency will be US source ordinary income or loss.

Gain on the disposition of the Capital Raising Shares by certain individuals, trusts or estates may constitute "net investment income" subject to additional tax.

Information reporting and backup withholding

Under US federal income tax laws, certain categories of US Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation (including IRS Forms 926). Penalties for failure to file certain of these information returns are severe. For any year in which the Company is a PFIC, each US Holder will be required to file an information statement on IRS Form 8621 regarding such US Holder's ownership interest in the Company. US Holders of Capital Raising Shares should consult with their own tax advisers regarding the requirements of filing information returns and QEF and mark-to-market elections.

Dividends on and proceeds from the sale or other disposition of the Capital Raising Shares may be reported to the IRS unless the holder is a corporation or otherwise establishes a basis for exemption. Backup withholding may apply to amounts subject to reporting if the holder fails to provide an accurate taxpayer identification number or otherwise establish a basis for exemption. A US Holder can claim a credit against its US federal income tax liability for amounts withheld under the backup withholding rules, and can claim a refund of amounts in excess of its tax liability by providing the appropriate information to the IRS.

Certain US Holders may be required to report information with respect to investments in the Capital Raising Shares not held through an account with a financial institution annually with their tax returns including, among others, IRS Form 8938 (Statement of Foreign Financial Assets). Investors who fail to report required information could become subject to substantial penalties. Potential investors are encouraged to consult with their own tax advisors about these and any other reporting obligations arising from their investment in the Capital Raising Shares.

THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN THE PLACING AND OPEN OFFER SHARES IN LIGHT OF THE INVESTOR'S OWN CIRCUMSTANCES.

Certain ERISA Considerations

The US Employee Retirement Income Security Act of 1974, as amended ("ERISA") and Internal Revenue Code of 1986, as amended (the "Code") impose restrictions on employee benefit plans and other investors that are subject to ERISA and/or Section 4975 of the Code (collectively "Plans"), and on persons that are parties in interest (including parties in interest under Section 406 of ERISA and disqualified persons under Section 4975 of the Code) with respect to such Plans. ERISA, the Code, and rules and regulations of the US Department of Labor (the "DOL") promulgated thereunder contain provisions that should be considered by fiduciaries of those Plans and their legal advisers.

Plan Assets

DOL regulations address whether an equity investment by a Plan in an entity will result in the assets of the entity being deemed "plan assets." Those regulations contain a general rule that if the interest acquired by the Plan is neither regulated by the US Securities and Exchange Commission nor a security issued by an investment company that is registered under the US Investment Company Act of 1940, the Plan's assets include both the equity interest in the entity and an undivided interest in the entity's underlying assets, unless (i) the entity qualifies as an "operating company," which includes a "venture capital operating company" (as described more fully below), or (ii) the aggregate equity participation in each class of equity in the Company by "benefit plan investors" (as defined in Section 3(42) of ERISA) is less than 25% of the total value of such class of equity securities in the Company.

An entity is a venture capital operating company ("VCOC") if: (i) on its "initial valuation date" and on at least one day within each "annual valuation period," at least 50% of the entity's assets, valued at cost (other than short-term investments pending long-term commitment or distribution to investors), are invested in operating companies (other than VCOCs) as to which the entity has or obtains "management rights" or derivative investments (i.e., venture capital investments that have ceased to be such by reason of the occurrence of certain public offerings, or exchanges, of the entity's securities) and (ii) the entity, in the ordinary course of its business, actually exercises such "management rights" at least annually with respect to one or more of the operating companies in which it invests.

"Management rights" are direct contractual rights between the investor and the portfolio operating company to substantially participate in, or substantially influence the conduct of, the management of the operating company. The term "initial valuation date" is the date on which an entity first makes an investment that is not a short-term investment of funds pending long-term commitment. An entity's "annual valuation period" is a pre-established period not exceeding 90 days in duration, which begins no later than the first anniversary of the entity's initial valuation date.

The term "benefit plan investor" includes (a) any employee benefit plan (as defined in Section 3(3) of ERISA) subject to the provisions of Title I of ERISA, (b) any Plan subject to Section 4975 of the US Internal Revenue Code of 1986, as amended (the "Code") and (c) any entity whose underlying assets include plan assets by reason of a Plan's investment in the entity. For purposes of this determination, the value of equity interests held by a person (other than a benefit plan investor) that has discretionary authority or control with respect to the assets of the Fund or that provides investment advice for a fee (direct or indirect) with respect to such assets (or any affiliate of such person) is disregarded.

The Company believes that it qualifies as a VCOC and expects to continue to qualify as a VCOC. Accordingly, the Company expects that if a Plan invests in the Company, the assets of the Company (including the Company's investment in the portfolio companies) will not be plan assets for purposes of ERISA or the Code. However, we cannot predict in advance, nor can there be any continuing assurance, that the VCOC exception will apply, because of the factual nature of the analysis required by the DOL's regulations.

If the Company does not qualify as a VCOC (or ceases to qualify as a VCOC), and benefit plan investors own 25 per cent. or more of any class of equity in the Company, assets of the Company may be deemed to be plan assets, and ERISA's prohibited transaction rules may restrict certain transactions of the Company. There is no guarantee that an exemption from such prohibited transaction rules will be available.

Fiduciary Duty

In deciding upon an investment in the Company, ERISA plan fiduciaries should consider their basic fiduciary duties under ERISA Section 404, which require them to discharge their investment duties prudently and solely in the interests of the plan participants and beneficiaries. Plan fiduciaries must give appropriate consideration to the role that an investment in the Company would play in the plan's overall investment portfolio. In analyzing the prudence of an investment in the Company, special attention should be given to the DOL's regulation on investment duties (29 C.F.R. § 2550.404a-1). That regulation requires, among other things (i) a determination that each investment is designed reasonably, as part of the portfolio, to further the plan's purposes, (ii) an examination of risk and return factors and (iii) consideration of the Company composition with regard to diversification, the liquidity of the investment relative to anticipated cash flow needs of the plan, and the projected return of the investment relative to the plan's funding objectives. ERISA also requires a fiduciary to discharge such duties in accordance with the documents governing the plan insofar as they are consistent with ERISA.

Fiduciaries that are considering an investment in the Company should also consider the applicability of the prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment and confirm that such investment will not constitute or result in a prohibited transaction (e.g., by reason of the Company being a VCOC) or any other violation of an applicable requirement of ERISA.

Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing any Interests.

The sale of Capital Raising Shares to a Plan is in no respect a representation or warranty that the investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan. Prospective investors such as pension funds and individual retirement accounts that are subject to the provisions of ERISA or the Code should consult with their counsel and advisers as to the provisions of ERISA and the Code that apply to an investment in the Company.

14. IP GROUP MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of IP Group within the two years immediately preceding the date of this document and/or have been entered into by members of the Group and contain provision under which any member of the Group has any obligation or entitlement which is material to the Group as at the date of this document:

14.1 Summary of the agreements relating to the University of Oxford Partnership

14.1.1 Equity Agreement

Pursuant to an equity agreement dated 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001 (the "Equity Supplemental Agreement")) made between (1) Evolution Beeson Gregory Limited, (2) IP2IPO, (3) the University of Oxford and (4) ISIS Innovations Limited ("ISIS"), the University of Oxford granted IP2IPO (in consideration of the sum of £10,000 paid by IP2IPO to the University of Oxford) the right to purchase (subject to certain exceptions) 50 per cent. of the share capital issued to the University of Oxford in companies (each a "University of Oxford Spin-Out Company") where some or all of the founding shareholders are members of the University of Oxford's Department of Chemistry ("OUCD"). The equity agreement was varied by the Equity Supplemental Agreement such that, amongst other things, the Company replaced Evolution Beeson Gregory.

The term of the equity agreement (as amended) is 15 years from 23 November 2000 but the term may be determined earlier with the agreement of the parties or if: (i) IP2IPO becomes insolvent; (ii) the Company or IP2IPO commits any material breach of the equity agreement (not being capable of remedy); or (iii) the Company or IP2IPO fails to remedy any material remediable breach after a cure period.

IP2IPO's right to purchase a 50 per cent. interest in each University of Oxford Spin-Out Company arises upon the earliest of: (i) the date on which the first investor (other than the founder researchers) and the University of Oxford subscribe for shares in the University of Oxford Spin-Out Company; (ii) the date falling three months after shares in the University of Oxford Spin-Out Company have been allotted to the founder researchers; and (iii) the date an agreement is entered into for the sale of the whole of the issued share capital of that University of Oxford Spin-Out Company or for the sale of the whole or substantially the whole of the assets and/or business of that University of Oxford Spin-Out Company.

The price to be paid by IP2IPO in consideration for 50 per cent. of the University of Oxford's shares in a University of Oxford Spin-Out Company is: (i) the fair value of the shares (as agreed or certified by the auditors of the University of Oxford Spin-Out Company); or (ii) if the purchase is taking place at the same time as an investor is subscribing for shares in that University of Oxford Spin-Out Company, a price not materially different from the price paid by that investor taking into account the rights attaching to the shares being subscribed for by that investor and the shares being purchased by IP2IPO. However, once IP2IPO has paid, in aggregate, a sum equal to £19,890,000 for shares in University of Oxford Spin Out Companies, then the purchase price to be paid for further purchases of shares in University of Oxford Spin-Out Companies shall be the par value of such shares.

The equity agreement establishes a procedural framework for the exploitation of IP arising within the OUCD. IP2IPO's involvement includes assisting ISIS in the identification of exploitable IP within the OUCD, the evaluation of all projects established by ISIS and, where appropriate, the production of an investment proposal in respect of any exploitable IP. The parties agreed to establish a steering committee (consisting of three representatives from the Company and IP2IPO, two representatives from the University of Oxford and one representative from ISIS). The steering committee is empowered to review progress in the exploitation of the relevant IP and the effectiveness of the framework and procedures which the parties have adopted for exploitation purposes and to advise the University of Oxford and ISIS on the processes of achieving exploitation. The quorum of the steering committee is two representatives of the Company and IP2IPO and two representatives from the University of Oxford and ISIS. Administration of the steering committee is provided by IP2IPO and one of the representatives appointed by IP2IPO normally acts as chairman of the steering committee. The chairman does not have a casting vote. To the extent that the steering committee is unable to agree on any matter before it, the matter is referred to the Registrar of the University of Oxford and the chief executive of the Company.

The Company guarantees to the University of Oxford the due performance by IP2IPO of its obligations under the equity agreement.

14.1.2 Revenue Sharing Agreement

Pursuant to a revenue sharing agreement dated 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001 (the "Revenue Supplemental Agreement")) and made between (1) Evolution Beeson Gregory Limited, (2) IP2IPO and (3) ISIS, ISIS (in consideration of the sum of £100,000 paid by IP2IPO to ISIS) agreed to pay to IP2IPO a sum equal to 50 per cent. of the net revenue derived from the exploitation by ISIS of IP rights in work done (in whole or in part) by members of the OUCD through the grant of licences or in other ways that would otherwise be for distribution to elements of the University of Oxford as set out in the University of Oxford's Statutes, Decrees and Regulations from time to time. The revenue sharing agreement was varied by the Revenue Supplemental Agreement such that, amongst other things, the Company replaced Evolution Beeson Gregory Limited.

The term of the revenue sharing agreement (as amended) is fifteen years from 23 November 2000 but the term may be determined earlier with the agreement of the parties to the revenue sharing agreement or if: (i) IP2IPO becomes insolvent; (ii) the Company or IP2IPO shall commit any material breach of the agreement (not being capable of remedy); or (iii) the Company or IP2IPO fails to remedy any material remediable breach of the agreement after a cure period.

The Company guarantees to ISIS the due performance by IP2IPO of its obligations under the revenue sharing agreement.

14.1.3 Loan Agreement

Pursuant to a loan agreement dated 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001 (the "Loan Supplemental Agreement")) and made between (1) Evolution Beeson Gregory Limited, (2) IP2IPO and (3) the University of Oxford, IP2IPO agreed to make an interest free loan of £19,890,000 (the "Loan") available to the University of Oxford. The Loan was paid to the University of Oxford in two tranches, both of which tranches have been paid in full. The loan agreement (as amended) provides that sums due by IP2IPO to the University of Oxford in respect of the purchase by IP2IPO of shares from the University of Oxford in any University of Oxford Spin-Out Company will be offset against, and will be applied in the reduction of, the outstanding balance of the Loan. To the extent that there is any balance of the Loan outstanding as at 31 March 2016, then such outstanding balance will be written off and all amounts due from the University of Oxford to IP2IPO in respect of the Loan will be deemed to have been discharged on that date. The loan agreement was varied by the Loan Supplemental Agreement such that, amongst other things, the Company replaced Evolution Beeson Gregory Limited.

The Company guarantees to the University of Oxford the due performance by IP2IPO of its obligations under the loan agreement.

14.2 Summary of the agreements relating to the University of Southampton Partnership

14.2.1 Framework Agreement

Pursuant to a framework agreement dated 20 March 2002 and made between (1) the University of Southampton, (2) University of Southampton Holdings Limited, a wholly owned subsidiary of the University of Southampton ("USHL"), (3) IP2IPO, (4) IML and (5) Southampton Asset Management Limited ("SAM"), the parties agreed certain arrangements with regard to the commercialisation of IP created by the University of Southampton's academic staff, students and third parties which vests in the University of Southampton ("University of Southampton IP"). Broadly summarised, these arrangements entitle IP2IPO to a 20 per cent. interest in SAM (which holds the University of Southampton's interest in any company established with a view to the commercialisation of University of Southampton IP (each a "University of Southampton Spin-Out Company")), a 20 per cent. interest in the University of Southampton's interest in shares acquired as a result of the University's licensing activities (other than Out-Licensing as defined in sub-paragraph (iv) below) and an interest, through IML, in investments from the £5m Southampton Fund in University of Southampton Spin-Out Companies.

The principal provisions of the framework agreement are as follows:

(i) IP2IPO will make the £5m Southampton Fund available to IML so as to enable IML to make seed capital investments in University of Southampton Spin-Out Companies made in accordance with the investment protocol set out in the framework agreement and in companies formed to commercialise University of Southampton IP which is partially owned by the University of Southampton and partially owned by third parties;

(ii) that the University of Southampton IP policy and certain other contracts grant the University of Southampton ownership of University of Southampton IP and that the University of Southampton has agreed that it will not amend the IP policy (other than by reason of any change of law) with the objective of materially diminishing any interest which IP2IPO may have in University of Southampton Spin-Out Companies;
(iii) subject to the provisions of sub-paragraph (iv) below, the University of Southampton will use all reasonable endeavours and act in good faith to procure that during the term of the framework agreement all commercialisation opportunities relating to the creation of University of Southampton Spin-Out Companies will be channelled through SAM. As from the date of the framework agreement, SAM owns outright the equity in University of Southampton Spin Out Companies corresponding to the University of Southampton's interest in that company;
(iv) whilst generally University of Southampton IP will be commercialised by the University of Southampton licensing or assigning the relevant IP to a University of Southampton Spin-Out Company, in some instances greater benefit may be derived by the University of Southampton licensing the relevant University of Southampton IP to a company which may be regarded as "established" (i.e. it is not "early stage" or "developmental") in return for cash or deferred cash consideration ("Out-Licensing"). Under the framework agreement the parties acknowledge that IP2IPO has a vested interest in the creation of University of Southampton Spin-Out Companies but no such interest in Out-Licensing and they agree, that, where such alternative commercialisation routes present themselves the presumption as between the parties is that the preferred route is the formation of a University of Southampton Spin-Out Company where the arguments in favour of such formation outweigh the arguments in favour of Out-Licensing. However, subject to the University of Southampton acting in good faith and giving due consideration to the views of the steering committee (as referred to in sub-paragraph (x) below), the University of Southampton's decision with respect to the selection of the preferred commercialisation route is final;
(v) investment decisions in relation to University of Southampton Spin-Out Companies will be made by the investment committee (other than in relation to certain de minimis investments, being investments: (i) of less than £50,000 made prior to the formation of a University of Southampton Spin-Out Company with the unanimous consent of the investment committee; and (ii) of less than £20,000 provided that not more than five of such investments are made in any one year). The investment committee comprises the director of the University of Southampton's Centre for Enterprise and Innovation, the chief executive officer of IP2IPO (who is to be chairman with a second and casting vote), the non-executive directors of SAM (excluding non-executive directors who are University of Southampton Academic Staff (as defined in sub-paragraph (vii) below) or full time employees of the University of Southampton or IP2IPO) and two persons nominated by IP2IPO. Any investment decision requires the affirmative vote of the chief executive officer of IP2IPO. If such affirmation is not given, the matter is to be referred to the steering committee (see sub-paragraph (x) below);
(vi) investments in University of Southampton Spin-Out Companies are made on the basis of a pre-money valuation of £750,000. It is intended that IML has the right of first access to University of Southampton Spin-Out Companies in order to supply IML with opportunities to invest the £5m Southampton Fund and the parties to the framework agreement are obliged to use reasonable endeavours to ensure, whenever possible, that IML is placed in a position where it has the first opportunity to invest in any University of Southampton Spin-Out Company. Whilst it is the intention that IML

shall have first access to each University of Southampton Spin-Out Company, in certain cases other sources of finance closely associated with the University of Southampton will have co-investment rights;

(vii) the division of equity in a University of Southampton Spin-Out Company (prior to any £5m Southampton Fund investment by IML and any third party investment and prior to the issue of shares or options to University of Southampton Spin-Out Company management (other than academic staff employed by the University of Southampton ("University of Southampton Academic Staff")) shall, as between the University of Southampton and the relevant University of Southampton Academic Staff, be assessed on a case by case basis. However, the University of Southampton has given assurances that it is reasonable for the parties to assume that in most cases, SAM will be entitled to hold not less than 50 per cent. of the equity in a University of Southampton Spin-Out Company prior to any investment in that company (and excluding any shares issued to management who are not University of Southampton Academic Staff);
(viii) IML is obliged to make the £5m Southampton Fund available for the purposes of investing in University of Southampton Spin-Out Companies over four years (i.e. at £1.25 million per annum before charges) although any monies not invested in any given year are rolled into the following year's allocation of £1.25 million. With the unanimous consent of the investment committee, IML is entitled to make investments exceeding £1.25 million in any year. It is envisaged that the average investment will be of the order of £250,000 but no single investment greater than £500,000 can be made without the unanimous consent of the investment committee and the board of directors of IML. The £5m Southampton Fund may also be invested in a small number of cases on a pre-incorporation basis (not to exceed £50,000 in any case) for the purpose of enabling an identifiable project to progress to the point where formation of a University of Southampton Spin-Out Company becomes practicable;
(ix) IP2IPO is entitled to charge, and IML shall pay, a fee chargeable against the £5m Southampton Fund of 2 per cent. per annum (that is 2 per cent. of £5 million). The fee is payable annually in arrears. No fee is payable once the £5m Southampton Fund is fully invested;
(x) a steering committee (comprising three representatives of IP2IPO, two representatives of the University of Southampton and one representative of SAM (being one SAM non-executive director)) shall be established to conduct those activities set out in the framework agreement, including, monitoring and reviewing the activities of the parties in relation to the framework agreement with a view to maximising the benefits of the parties, suggesting improvements and changes to the arrangements contained in the framework agreement and considering and suggesting solutions in relation to any issue arising between the parties in relation to the framework agreement;
(xi) the University of Southampton acknowledges that IP2IPO may wish to supply business development services to any University of Southampton Spin Out Company and it shall not object to the same being so provided;
(xii) IP2IPO is also obliged to provide certain other services to the University of Southampton and SAM, including the provision of a secondee to work with the University's Centre for Enterprise and Innovation, subject to IP2IPO indemnifying the University of Southampton in respect of certain acts of the same;
(xiii) the University of Southampton undertakes not to enter into any similar agreement or arrangement with third parties during the term of the framework agreement without the consent of IP2IPO;
(xiv) an acknowledgement that in some cases it may be beneficial for IP2IPO to hold its indirect interest in a University of Southampton Spin-Out Company (that is, the interest in a spin-out company to which IP2IPO is entitled by virtue of its holding of 20 per cent. of the issued share capital of SAM) directly rather than indirectly through its shareholding in SAM. Provided that the University of Southampton and SAM are each satisfied that neither of them shall be prejudiced or disadvantaged in any way, IP2IPO is entitled to require those shares in that University of Southampton Spin-Out Company which correspond to its 20 per cent. of the interest held by SAM to be issued to it. In such a case, IP2IPO shall have no further rights in respect of the shares in that University of Southampton Spin-Out Company which are held by SAM and the articles of association of SAM give effect to that requirement;
(xv) IP2IPO and IML each warrant to the University of Southampton and SAM that each of them has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed by each of them;
(xvi) upon the full utilisation of the £5m Southampton Fund, or the expiry of eight years from 20 March 2002, then the provisions of the framework agreement in relation to the £5m Southampton Fund will cease to have effect but the parties will enter into good faith negotiations as to the establishment of a further fund on similar terms;
(xvii) the framework agreement may be terminated as follows:
(1) broadly, after the twenty-fifth anniversary of the term of the framework agreement if the University of Southampton decides that it is not in the best interests of the University of Southampton to continue with the framework agreement;
(2) immediately by notice in writing given either by the University of Southampton or by IP2IPO if: (aa) either party or any member of that party's group are in material, continuing or irremediable breach of any of its obligations under the framework agreement and, in relation to breaches capable of being remedied, fails to remedy the same within a period of 30 days after written notice of the breach; or (bb) that party is suffering some form of insolvency (as more particularly described in the framework agreement);
(3) if during the term of the framework agreement there has been a significant change of control (defined as any person other than The Evolution Group plc or any member of its group) acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO or IML;
(4) if the chief executive officer of IP2IPO fails to affirm in any twelve month period three or more decisions of the investment committee (ignoring any failures to affirm which the steering committee decides were justified);
(5) if IP2IPO ceases to be actively engaged in the commercialisation of IP of universities or other public sector research institutions either after the £5m Southampton Fund has been fully utilised (ignoring any sum of less than £20,000) or on the expiry of 8 years from the date of the framework agreement; or
(6) IP2IPO may terminate the framework agreement if there has been a change of law or tax change which results in it no longer being economic for IML to invest in the University of Southampton Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IML (for example no formal proposals being received by the investment committee for a two year period) or the University of Southampton or SAM ceases to own IP created at the University of Southampton.

14.2.2 Subscription and Shareholders Agreement

Pursuant to a subscription and shareholders agreement dated 20 March 2002 and made between (1) USHL, (2) IP2IPO and (3) SAM, USHL agreed to subscribe at par for 78 "A" ordinary shares of £1 each in SAM (which, when aggregated with USHL's existing holding of 2 "A" ordinary shares, gave USHL 80 per cent. of the issued share capital of SAM) and IP2IPO agreed to subscribe at par for 20 "B" ordinary shares of £1 each in SAM (which gave IP2IPO 20 per cent. of the issued share capital of SAM).

The principal provisions of the subscription and shareholders' agreement are as follows:

(a) SAM gave warranties in respect of its post incorporation status to each of USHL and IP2IPO;
(b) IP2IPO has the right to appoint one director to the board of directors of SAM and the right to remove or replace any such director from time to time. Pending any such appointment, IP2IPO has the right to appoint, remove and replace an observer who shall be entitled to attend and speak, but not vote, at meetings of the board of directors of SAM. Any director appointed by IP2IPO may report back to the Company in relation to the proceedings of the board of directors of SAM and at each meeting of such board of directors may represent the position of the Company. IP2IPO shall be responsible for and shall indemnify USHL and SAM against any claim made by any director or observer appointed and subsequently removed by it;
(c) until IP2IPO ceases to hold (in aggregate) 20 per cent. of the entire issued share capital of SAM, the parties to the agreement have agreed that certain minority protection rights in favour of IP2IPO shall apply, including the following prohibitions without the prior written consent of IP2IPO: the issue of new shares in SAM; the alteration to the memorandum and articles of association of SAM; the borrowing of any money by SAM; the disposal of any of its business or undertaking; and any change in the nature and scope of the business of SAM;
(d) no transfer of shares in the share capital of SAM by a shareholder in SAM is allowed unless the transfer is in accordance with the permitted transfer provisions of the articles of association of SAM or with the prior written consent of the other shareholder; and
(e) the subscription and shareholders' agreement shall continue unless and until the earlier of: (a) IP2IPO or USHL ceasing to hold any shares in SAM; (b) a resolution is passed or an order is made to wind-up SAM; (c) a listing of SAM's share capital is achieved; or (d) the parties agree that such agreement should terminate.

14.2.3 Articles of Association of SAM

The articles of association adopted by SAM under the terms of the subscription and shareholders' agreement provide that:

(a) the "A" ordinary shares and "B" ordinary shares rank equally but the holders of "B" ordinary shares (held by IP2IPO) have the right to appoint one director;
(b) no shareholder may transfer, create or dispose of any interest in any share other than to members of its group or to a bare nominee or, in the case of a holder of "B" ordinary shares, to any investment fund or trustee, nominee or custodian; and

give effect to the arrangement specified in sub-paragraph (xiv) above in the summary of the framework agreement relating to the University of Southampton Partnership.

14.3 Summary of the agreements relating to the CNAP Partnership

14.3.1 Framework Agreement

(a) Pursuant to a framework agreement dated 19 September 2003 and made between (1) the University of York, (2) IP2IPO, and (3) Amaethon Limited ("AL") (as amended on 16 March 2005), the parties agreed certain arrangements with regard to the exploitation of IP created or owned by certain persons based at the Centre of Novel Agricultural Products within the Biology Department of the University of York ("CNAP IP"). Broadly summarised, these arrangements entitle IP2IPO to a 40 per cent. interest, through AL, in: (i) any company established with a view to the commercialisation of CNAP IP (each a "CNAP Spin-Out Company"), and (ii) benefits (including licence fees) arising from the licensing or assignment of CNAP IP (other than to a CNAP Spin-Out Company). IP2IPO will also be entitled to shares in CNAP Spin-Out Companies following an investment from the CNAP Fund (as defined in sub-paragraph (b) (vi) below).
(b) The principal provisions of the framework agreement are as follows:
(i) AL will be owned as to 60 per cent. by the University of York and 40 per cent. by IP2IPO;
(ii) both the University of York and, subject to the University of York exercising such right, IP2IPO have the option at any time thirty days before AL raises capital by way of an issue of equity shares or the admission to a recognised investment exchange of AL or any equity shares in AL, to a certain percentage of AL's income thereafter received subject to a proportion of its shares in AL being converted into deferred shares which carry no right or entitlement;
(iii) the University of York agrees for the duration of the framework agreement to make all CNAP IP exclusively (subject to certain limited exceptions) available to AL and AL may call for CNAP IP to be transferred either to itself or to whomever it may direct. AL shall seek to exploit CNAP IP through the formation of CNAP Spin-Out Companies or through licensing agreements (entered into during the term of the framework agreement) under which AL licences out CNAP IP to a third party in return for a fee;
(iv) AL shall be the sole and exclusive IP commercialisation company for CNAP IP and shall be responsible for the exploitation of CNAP IP;
(v) the University of York and AL each undertake not to enter into any similar agreement or arrangement with third parties during the term of the framework agreement in respect of CNAP IP without the consent of IP2IPO. However, if the CNAP Fund is not extended beyond the initial term of three years, then AL may enter into arrangements with third parties in relation to the provision of seed capital;
(vi) IP2IPO will make a fund (the "CNAP Fund"), initially in the amount of £750,000, available to enable seed capital investments in CNAP Spin-Out Companies to be made. Investments in any CNAP Spin-Out Company are to made in accordance with the investment protocol set out in the framework agreement. In addition, IP2IPO will also be able to invest the CNAP Fund in companies formed to commercialise CNAP IP that is partially owned by AL and partially owned by third parties;
(vii) the objective is that the CNAP Fund is invested over three years. Once the CNAP Fund has been fully invested, IP2IPO shall have the right to extend the CNAP Fund;
(viii) IP2IPO will invest the CNAP Fund on the basis of a standard valuation for all CNAP Spin-Out Companies, namely a pre-money valuation of £500,000 at the point at which the investment is made. This valuation assumes that the CNAP Spin-Out Company will already have issued shares to AL and the relevant academic staff of the University of York or CNAP Research Centre staff who generated the relevant CNAP IP ("Inventors"), and, where relevant, the CNAP Spin-Out Company's initial management and any third party with a prior interest in the relevant IP. Investment in any CNAP Spin-Out Company shall not exceed £300,000 unless the members of the investment committee unanimously agree;
(ix) IP2IPO may also invest the CNAP Fund, subject to certain financial limits, in projects which are close to the point of commercialisation and require a relatively small amount of funding specifically for the purposes of advancing the project to the point where it is possible to form a CNAP Spin-Out Company or enter into a licence of the relevant CNAP IP;
(x) investment decisions in relation to CNAP Spin-Out Companies will be made by an investment committee. The investment committee comprises the chief executive of AL and three persons nominated by the University of York, the chief executive officer of IP2IPO (who shall be chairman with a second and casting vote) and two persons nominated by IP2IPO. IP2IPO is only entitled or obliged to make an investment from the CNAP Fund if the investment committee is satisfied that IP2IPO has sufficient control over its investment;
(xi) the framework agreement specifies how any licence fees on out-licensing shall be allocated between the inventors of the relevant CNAP IP and AL. In addition, the framework agreement provides that the Inventors' pre-money share in the relevant CNAP Spin-Out Companies will be 28 per cent., with the remaining 72 per cent., being held by AL;
(xii) IP2IPO was obliged to provide AL with working capital of up to £1,000,000. Thereafter, the working capital was to be provided by IP2IPO in three tranches as follows. Once the framework agreement became unconditional, IP2IPO made a payment to AL of £333,333 in subscription for 333,333 B shares of £1 each in AL (such B shares carry no right or entitlement). On AL meeting the target of completing the seed funding of one or more CNAP Spin-Out Companies and entering into two or more out licences by the first anniversary of the date upon which the framework agreement becomes effective, IP2IPO became obliged to provide an additional £333,333 to AL in subscription for a further 333,333 B shares. Finally, once certain minimum performance targets as set by the board of directors of AL (which shall be no less than the target above) were achieved in the period between the first and second anniversaries of the date on which the framework agreement became effective, IP2IPO become obliged to provide a final payment of £333,334 to AL in subscription for a further 333,334 B shares. In 2005, the parties subsequently agreed to the amendment of this agreement such that IP2IPO subscribed for the second and third tranches of B shares without the milestone conditions having been satisfied in full and the Group shareholding in AL was increased to 40 per cent.;
(xiii) to enable AL to hire an additional member of staff, IP2IPO will over a three year period pay AL £50,000 each year in subscription at par for 50,000 B shares;
(xiv) the parties acknowledged that an exit for AL is desirable and that they would work together in good faith to realise value for the shareholders in AL;
(xv) IP2IPO will provide services and assistance to AL including attracting new investors and providing advice with respect to commercialisation projects and IP2IPO will be entitled to sell its corporate development services to CNAP Spin-Out Companies;
(xvi) the parties gave certain limited warranties to each other;
(xvii) the framework agreement may be terminated as follows:
(1) immediately by notice in writing given either by the University of York or by IP2IPO: if (aa) either party or any member of that party's group are in material, continuing or irremediable breach of any of its obligations under the framework agreement and, in any such case (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach; or (bb) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
(2) IP2IPO may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for AL to invest in CNAP Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available in relation to CNAP IP (for example no formal proposals being received by the investment committee for a two year period) or the University of York or AL ceasing to own CNAP IP (other than anticipated under the framework agreement) which, in any such case, cannot be rectified or, as the case may be, rectified after notice;
(xviii) if AL suffers from some form of insolvency (as more particularly described in the framework agreement) then, subject to the University of York not intentionally causing such event to occur or materially contributing to it occurring and/or rejecting an offer of finance which would enable AL to return to solvency, then the University of York may notify the other parties that all future CNAP IP will cease to be available to AL;
(xix) the framework agreement commenced on 19 September 2003 and subsists for a period of 25 years from the date upon which the agreement becomes effective; and
(xx) on the date that the framework agreement came into effect the parties entered into the subscription and shareholders' agreement referred to below.

14.3.2 Subscription and Shareholders' Agreement

(a) Pursuant to a subscription and shareholders' agreement entered into on 31 October 2003 between (1) the University of York, (2) IP2IPO and (3) AL, the University of York agreed to subscribe at par for 6,566 ordinary shares of 1 pence each in AL (which when aggregated with the University's existing holding of 100 A ordinary shares of 1 pence each in AL gave the University of York two-thirds of the issued share capital of AL) and IP2IPO agreed to subscribe at par for 3,333 A ordinary shares of 1 pence each in AL (which gave IP2IPO one-third of the issued share capital of AL).
(b) The principal provisions of the subscription and shareholders' agreement are as follows:
(i) AL gave warranties in respect of its post incorporation status to each of the University of York and IP2IPO;
(ii) the University of York has the right to appoint up to four directors to the board of directors of AL and IP2IPO has the right to appoint up to two directors to the board of directors of AL, together with the right to remove or replace any such director from time to time. Any director appointed by IP2IPO may report back to the Company in relation to the proceedings of the board of directors of AL and at each meeting of such board of directors may represent the position of the Company. IP2IPO shall be responsible for, and shall indemnify the University of York and AL against, any claim made by any director appointed and subsequently removed by it;
(iii) until IP2IPO ceases to hold (in aggregate) 20 per cent. of the entire issued share capital of AL, the parties to the agreement have agreed that certain minority protection rights in favour of IP2IPO shall apply, including the following prohibitions without the prior written consent of IP2IPO; the issue of new shares in AL; any alteration to the memorandum and articles of association of AL; the disposal of any of its business or undertaking; the transfer of any shares in AL; and the disposal of any IP otherwise than in the ordinary course of business or in a manner consistent with the framework agreement;
(iv) AL will, provided it has sufficient working capital, distribute its distributable profits at least annually provided that no such distributions shall be made within two years of the date of the subscription and shareholders' agreement;
(v) upon signature of the subscription and shareholders' agreement, AL was obliged to deliver a warrant to IP2IPO entitling it, if AL issues shares (subject to certain exceptions) at a price of less than £1, to subscribe at par for such further A ordinary shares of 1 pence each as is equal to the number of A ordinary shares it then holds; and
(vi) the subscription and shareholders' agreement shall continue unless and until the earlier of (a) IP2IPO or the University of York ceasing to hold any shares in AL; (b) a resolution is passed or an order is made to wind-up AL; (c) the admission of AL's share capital to any recognised investment exchange; or (d) the parties agree that such agreement should terminate.

14.3.3 Articles of Association of AL

The articles of association adopted by AL under the terms of the subscription and shareholders' agreement provide that:

(a) the ordinary shares and A ordinary shares rank equally but the holders of ordinary shares have the right to appoint up to four directors and to remove, substitute or replace any of such directors and the holders of A ordinary shares have the right to appoint up to two A directors and to remove, substitute or replace any of such directors;
(b) the B shares of £1 each carry no right or entitlement;
(c) no shareholder may transfer, create or dispose of any interest in any share other than to members of its group or to a bare nominee or in the case of a holder of A ordinary shares or B shares to any investment fund or trustee, nominee or custodian provided that beneficial ownership does not vest in anyone who is not a member of the same group as that shareholder; and
(d) on a take-over or admission of the share capital of AL to any recognised investment exchange the holders of ordinary shares and A ordinary shares shall be entitled to such proportion of the proceeds as the number of ordinary and A ordinary shares held by them bears to the total of ordinary and A ordinary shares then in issue.

14.4 Summary of the agreements relating to the King's College London Partnership

14.4.1 Commercialisation Agreement

Pursuant to a commercialisation agreement dated 12 November 2009 and made between (1) King's College London, (2) King's College London Business Limited ("KB") and (3) IP2IPO, the parties agreed certain arrangements with regard to the commercialisation of IP created by King's College London's academic staff, students and third parties which vests in King's College London ("KCL IP"), including by way of companies established in conjunction with, or with the consent of, King's College London with a view to the commercialisation of KCL IP (each a "KCL Spin-Out Company"). Broadly summarised, these arrangements entitle IP2IPO to invest in KCL Spin-Out Companies a sum of £3,200,000 (being the balance of the original £5m King's Fund not utilised at the date of the commercialisation agreement) in approximately equal tranches of £1,000,000 over a period of three years from the date of the agreement.

The principal provisions of the commercialisation agreement are as follows:

(a) IP2IPO shall make a designated employee experienced in commercialising IP via spin-out companies (the "Account Manager") available to KB to advise KB on the commercialisation of KCL IP. The Account Manager shall spend approximately 50 per cent. of the hours of a full time employee on this role;
(b) KB may at its sole discretion submit to the Account Manager for review a proposal for IP2IPO to invest in a KCL Spin-Out Company or a proposed KCL Spin-Out Company. IP2IPO shall review the proposal in detail and shall respond to KB in writing within one month of its receipt of KB's proposal, attaching a plan (if relevant) setting out how IP2IPO proposes to progress with regard to the relevant KCL Spin-Out Company;
(c) IP2IPO's right to invest in a KCL Spin-Out Company will expire if it fails to meet any of the relevant deadlines prescribed in the agreement or if it has not subscribed for shares in the relevant KCL Spin-Out Company within seven months of its receipt of KB's proposal in respect thereof;
(d) the initial objective is for IP2IPO to invest a sum of £3,200,000 over a three year period in approximately equal tranches of £1,000,000 per year in KCL Spin-Out Companies (and proposed KCL Spin-Out Companies), although this will depend on the quantity and quality of investment opportunities. In circumstances where it may be more appropriate for IP2IPO to invest a lesser amount, such an investment would be made in the form of an unsecured interest free convertible loan and would generally be of an amount of up to £50,000. Investments in KCL Spin-Out Companies are made on the basis of a pre-money valuation of £750,000 in the case of seed funding. This valuation assumes that, prior to the Group's investment, the spin-out company will already have issued equity to KCL and the relevant founders of the spin-out company and, where relevant, the spin-out companies initial management team;
(e) IP2IPO agrees not to unreasonably withhold its consent to a third party seed capital investment in KCL Spin-Out Companies on the same terms as those made available to IP2IPO;
(f) King's College London and KB jointly and severally agree that they will not during the term of the agreement enter into an agreement with any third party whereby KB may systematically offer a third party the opportunity to make investments in KCL Spin-Out Companies. However, this does not prevent King's College London or KB from offering to third parties on an ad hoc basis the opportunity to make seed capital or other investments in KCL Spin-Out Companies;
(g) the agreement shall terminate on 14 May 2028 unless terminated earlier as follows:
(i) the agreement may be terminated by any party without cause on the seventh anniversary of the date of the agreement by giving the other parties at least sixty days' prior written notice. If notice is not served, the parties' right to terminate shall lapse; and
(ii) the agreement may be terminated by any party immediately by written notice to the others if: (1) another party commits a material breach of the agreement which it does not remedy within thirty days of receiving written notice of the breach; or (2) an interim order is applied for or made, or a voluntary arrangement approved, or a petition for a bankruptcy order is presented, or any circumstances arise which entitle the court or a creditor or the company or its directors to appoint a receiver, administrative receiver or administrator; and
(h) the agreement shall not automatically terminate in the event of a merger. In the event of a merger by King's College London, IP2IPO will enter into a consultation phase with King's College London and the university with which King's College London proposes to merge to ascertain whether and how IP2IPO can become involved in the commercialisation of the merged entity's IP on similar terms to those set out in the commercialisation agreement.

14.5 Agreement with the University of Sheffield

Pursuant to an agreement dated 26 January 2005 and made between (1) Fusion IP, (2) Fusion IP Trading Limited (now Fusion IP Sheffield Limited) ("Fusion IP Sheffield"), (3) Sheffield University Enterprises Limited ("SUEL") and (4) the University of Sheffield, the parties agreed certain arrangements with regard to the commercialisation of the University of Sheffield's application of knowledge about chemistry, living organisms, and their components or molecules or techniques that affect their behaviour ("Medical Life Science IP").

Pursuant to a variation agreement dated 7 July 2008, the parties agreed to amend and restate the original agreement and also agreed certain arrangements with respect to certain "life sciences" intellectual property developed by the University of Sheffield pursuant to which Fusion IP Group's (through its wholly owned subsidiary, Fusion IP Sheffield) entitlement under the original agreement extends to all IP created by the University of Sheffield, save for IP arising or developed on behalf of or in association with the Advanced Manufacturing and Research Centre.

The principal provisions of the amended and restated University of Sheffield Agreement are as follows:

(a) Fusion IP is entitled to direct that all IP be assigned (or, if it so chooses, licensed), at market value, to a then existing or newly incorporated company in which the Fusion IP Group will acquire an equity investment;
(b) Fusion IP Sheffield is also entitled, subject to approval by the University of Sheffield, to licence such IP to a third party on behalf of the University of Sheffield and, in return for the implementation, administration and management of such licences, Fusion IP Sheffield is entitled to 50 per cent. of the net income from such licences. Such entitlement is to last for ten years in relation to IP other than Medical Life Science IP, and until February 2015 in relation to Medical Life Science IP (being the ten year period provided for in the University of Sheffield Agreement);
(c) Fusion IP Sheffield's entitlement is subject to the terms of financing and third party collaborative research agreements into which the University of Sheffield enters into in the ordinary course as follows:
(i) if Fusion IP Sheffield has not elected, within eighteen months following the relevant IP first being brought to the attention of Fusion IP Sheffield, for it to be assigned or licensed to a portfolio company and no written plan is prepared

for the commercialisation in the following twelve months or Fusion IP Sheffield does not adhere to any plan so prepared, the University of Sheffield may exclude the relevant IP from this entitlement;

(ii) if IP that has been assigned or licensed to a portfolio company of Sheffield and has not had third party funding of £50,000, or more or the consideration for which IP has not been paid in full, and is not used by such portfolio company for a continuous period of 18 months, the University of Sheffield is entitled to recover ownership of it or to terminate any licence granted to such portfolio company where a written business plan for the commercialisation of the IP is not adhered to by Fusion IP Sheffield;
(iii) this 18 month period is shortened to 12 months if the University of Sheffield demonstrates to Fusion IP Sheffield that it can commercialise the IP itself, if Fusion IP Sheffield elects not to do so on that proposed basis and if a member of the group is already using IP for the same purpose;
(iv) if Fusion IP Sheffield's current account balance falls below £500,000 or it remains in unremedied breach of the University of Sheffield Agreement or the Sheffield Portfolio Sheffield Loan Notes (referred to below) for 30 days or more, the University of Sheffield can suspend this entitlement;
(d) the consideration payable by Fusion IP Sheffield pursuant to the University of Sheffield Agreement comprises:
(i) the allotment and issue to the University of Sheffield of up to 4,347,826 Fusion IP shares; this has been amended in 2008 to reflect that such Fusion IP shares were only issued to the University of Sheffield to the extent that following such issue the University of Sheffield does not hold more than 3.5 per cent. of the issued share capital of Fusion IP than is held by Cardiff University. Therefore, the University of Sheffield was issued 3,140,000 Fusion IP shares. The parties agreed that the remaining 1,207,826 Fusion IP shares will be issued to the University of Sheffield if and when and to the extent that by reason of a dilution of the Fusion IP share holdings of the University of Sheffield and Cardiff University, such Fusion IP shares can be issued to the University of Sheffield without giving rise to the University of Sheffield's current Fusion IP share holding representing more than 3.5 per cent. of the issued share capital more than Cardiff University's current Fusion IP shareholding;
(ii) any reasonable transaction costs incurred by the University of Sheffield up to a maximum of £40,000;
(iii) an amount equal to 2.5 per cent. of any future funds raised by Fusion IP to be paid by Fusion IP to the University of Sheffield which are to be used in investing in Non-Life Science IP generated at the University of Sheffield subject to a maximum payment of £100,000;
(iv) a monthly payment of £8,750 by Fusion IP Sheffield to the University of Sheffield for the provision of services by the University of Sheffield to enable Fusion IP Sheffield to identify and patent the University of Sheffield's IP;
(e) either Fusion IP Sheffield or the University of Sheffield had an option, exercisable on or prior to the third anniversary of completion of the amended and restated University of Sheffield Agreement, to call for the transfer by the University of Sheffield to Fusion IP Sheffield of shares in certain existing spin-out companies that have already been established to commercialise the University of Sheffield-generated IP, being Blastech Limited, Conteque Limited, Limited State Limited, Material State Limited, Vulcan Solutions Limited and Webelements Limited:
(i) on the exercise of such option, the shares have been paid for by loan notes issued by Fusion IP Sheffield to the University of Sheffield (the "Sheffield Loan Notes") secured against the shares in question by a fixed charge over those shares;
(ii) the Sheffield Loan Notes carry a floating rate of interest being 1.5 per cent. above LIBOR for six months deposits, calculated every six months, and will be repayable on the tenth anniversary of the issue of the loan note, but only to the extent that Fusion IP Sheffield realises value from the relevant shares by way of receiving a dividend or sale or listing of the shares; and
(f) the University of Sheffield Agreement is subject to earlier termination if Fusion IP Sheffield becomes insolvent or ceases to be wholly owned by the Fusion IP Group.

14.6 Summary of the agreements relating to the University of Leeds Partnership

14.6.1 Agreement for the Provision of Technology Transfer Services

Pursuant to an agreement for the provision of technology transfer services dated 15 July 2005 made between (1) the University of Leeds, (2) Techtran and (3) the Company, the parties agreed certain arrangements with regard to the commercialisation of IP created by the University of Leeds' academic staff which vests in the University of Leeds (the "Leeds IP").

Broadly summarised, these arrangements entitle the Group to an approximate 30 per cent. interest in the shares in any company established with a view to the commercialisation of Leeds IP (each a "Leeds Spin-Out Company") where it has been recommended that the relevant Leeds IP be exploited (which is approved by the IPEC (as defined below)) and an interest in investments from the £5 million Leeds Fund in Leeds Spin-Out Companies.

The principal provisions of the agreement are as follows:

(a) the relationship between the Company and the University of Leeds (including the process of reviewing new opportunities, monitoring the portfolio of investments and relationship management) is conducted through the following four committees:
(i) the Intellectual Property Executive Committee (the "IPEC") this comprises one person nominated by the Company and two persons nominated by the University of Leeds. The role of the IPEC is to set and monitor strategy in relation to the protection of Leeds IP, including encouraging inventors to give the Company formal notification of all new opportunities to commercialise Leeds IP. The IPEC is required to meet as necessary, but at least six times a year;
(ii) the Investment Committee the role of the investment committee is to review the merits of investment proposals on a case by case basis and to reject, clarify or approve such proposals and to review the pipeline of potential forthcoming opportunities. The investment committee comprises three persons nominated by the University of Leeds and two persons nominated by the Company and meets as required, but not less once every three months. Meetings of the investment committee are chaired by a person nominated by the Company. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such a veto can only be exercised once in any twelve month period and only on commercial grounds;
(iii) Portfolio Monitoring Committee this comprises four members, two nominated by each of the University of Leeds and the Company. The primary responsibility of the committee is the ongoing review of the performance of the portfolio of Leeds IP managed by the Company or in which the Company has

an economic interest. This committee meets as required, but at least three times a year; and

(iv) Relationship Management Committee this comprises at least two persons nominated by each of the University of Leeds and the Company and meets every six months to conduct an ongoing review into operational matters to accommodate the need to establish a transparent, accountable, efficient and cost effective process and to review the level of service offered by the Company;
(b) the Company agreed to pay the University of Leeds £1.4 million in consideration of the transfer of 50 per cent. of the University of Leeds' holdings in three companies to the Company;
(c) any proceeds (net of tax) received by the University of Leeds from a sale of the whole or part of their shareholding in a Portfolio Company (as defined in the agreement but including those companies referred to in paragraph (b) above, certain other specified companies ("Innovations Companies") and Leeds Spin-Out Companies formed or acquired to commercialise Leeds IP under the agreement (or an earlier agreement entered into in 2002) in which the Company is entitled to a stake) are to be divided, subject to certain limited qualifications, such that the University of Leeds receives the value of its interest in 2002 as specified in the agreement (if any) and thereafter in the proportions 25:75 as between the University of Leeds and the Company until such time as the Company has received £1.4 million in aggregate. Thereafter, the parties will retain any proceeds from the sale of their respective shares, save where the University of Leeds sells an Innovations Company in which it holds shares on behalf of the Company in which case the balance of the sale proceeds will be divided equally;
(d) the Company has agreed to provide such assistance in relation to the commercialisation of Leeds IP as the parties agree from time to time, it being the intention that the Company will usually be involved in: (i) identifying IP with the assistance of the University of Leeds, inventors, students and employees; (ii) assisting in the incorporation of Leeds Spin-Out Companies; (iii) marketing, negotiating and agreeing Leeds IP licensing agreements; (iv) providing assistance to Leeds Spin-Out Companies in their commercial development; (v) advising on the most effective method of commercialising Leeds IP; and (vi) acting as a focal point for the commercialisation of Leeds IP. The Company has agreed to ensure that an average of not less than four full time staff with due experience are exclusively dedicated to delivering the services;
(e) the University of Leeds will promote the Company as its technology transfer partner in the process of the commercialisation of Leeds IP;
(f) if, following notification of the Company's recommendation to commercialise Leeds IP (as provided in the agreement) the University of Leeds chooses to commercialise Leeds IP through licensing, the Company is entitled to 30 per cent. of the net revenue and is responsible for the sourcing of the licensee;
(g) the Company may provide commercialisation services to Leeds Spin-Out Companies;
(h) the Company will make the £5 million Leeds Fund available with the initial objective of investing the initial £5 million over a period of 5 years from the date of the agreement in approximately equal tranches of £1 million a year. No investment in a single opportunity of greater than £300,000 may be made without the consent of the investment committee. The Company has the right, but not the obligation, to extend the £5 million Leeds Fund;
(i) the parties agree that they shall use their voting rights in respect of any Leeds Spin-Out Company to endeavour to ensure that the £5m Leeds Fund has the first right to

make seed fund investments in Leeds Spin-Out Companies. The agreement recognises that there may be circumstances where the founder of a Leeds Spin-Out Company may not want to accept seed capital from the £5m Leeds Fund and in such a case the University of Leeds will not be in breach of its obligations under the agreement. There are a number of other sources of seed capital finance who have the right to invest on terms no less favourable than those available to the £5 million Leeds Fund up to one half of the total aggregate being invested in the Leeds Spin-Out Company by the £5 million Leeds Fund;

(j) the £5 million Leeds Fund is divided into two elements being £4.5 million (the "Seed Fund") and £0.5 million. The Seed Fund will invest on the basis of a standard valuation for all Leeds Spin-Out Companies, namely a pre-money valuation of £750,000 at the point when the Seed Fund invests. This valuation assumes that the Leeds Spin-Out Company will have already issued shares to the University of Leeds and the staff of the University of Leeds who made a valuable contribution to the development of the relevant Leeds IP and, where relevant, the initial management team of the Leeds Spin-Out Company. The £0.5 million fund will make small "proof of concept" investments through unsecured non-interest bearing debt instruments converting at the time of Seed Fund investment at the pre-money valuation of £750,000;
(k) the £5 million Leeds Fund shall not be entitled to make investments in any Leeds Spin-Out Company in any subsequent fund raising rounds without the consent of the investment committee;
(l) if the IPEC does not approve the exploitation of Leeds IP which IP Group has recommended, or if IP Group is not given access to Leeds IP to assess it, then IP Group is entitled to such number of shares in the relevant Leeds Spin-Out Company as is equal to 5/95ths of the then fully diluted equity share capital issued to the University of Leeds and staff who made a valuable contribution to the development of the relevant Leeds IP;
(m) the University of Leeds has confirmed that, during the period that the £5 million Fund is available, it will not enter into arrangements with a third party to make available a fund or funds of a similar nature to exploit Leeds IP;
(n) the agreement continues until midnight on 19 December 2027. The term of the agreement is divided into the period ending on 30 April 2010 (the "First Period") and each subsequent period (a "Subsequent Period") is of a duration which the parties agree (which in each case shall not be less than seven years);
(o) within 30 days following the end of the First Period, IP Group is required to submit a statement certified by an independent accountant setting out the "Aggregate Value" and "Realisable Value" as at the end of the First Period. IP Group must ensure that as at that date the "Aggregate Value" (as defined in the agreement) is at least £7 million and the "Realisable Value" (as defined in the agreement) included within the Aggregate Value is at least £3 million in each case. If IP Group has not met these targets, then the University of Leeds may terminate the agreement within a specified period, failing which its right to terminate lapses. The parties are then required to seek to negotiate new targets for the next Subsequent Period, failing which the University of Leeds may ultimately terminate the agreement. The same process is applied in respect of each Subsequent Period; and
(p) the agreement may be terminated as follows:
(i) by the University of Leeds on six months' notice if IP Group is in breach of its commitments under the agreement and has failed following three months' written notice to remedy such breach;
(ii) by either party if the other is suffering from insolvency (as more particularly described in the agreement); and
(iii) by IP Group if the Leeds' Socially Responsible Investment Policy is changed and IP Group reasonably believes that as a result it is unable to substantially continue with its commitment with regard to commercialisation services pursuant to the agreement and the University of Leeds has been unable to offer a satisfactory solution following 28 days notice of such concern.

14.6.2 Variation Agreement

Pursuant to a variation agreement dated 17 March 2011 between (1) the University of Leeds, (2) Techtran and (3) IP Group, the parties agreed certain variations, clarifications and supplemental terms to the agreement for the provision of technology transfer services dated 15 July 2005 (the "Original Agreement") which, in the event of a direct conflict, shall prevail over the terms of the Original Agreement.

The principal provisions of the variation agreement are as follows:

(a) the parties shall work together to ensure the provision of a healthy pipeline of initial opportunity descriptions ("IODs") and to ensure that the Company receives a healthy stream of opportunities for its review;
(b) a revised process of IOD selection will apply from the date of the variation agreement to ensure that all IODs are logged, tagged and disclosed by the University of Leeds' Commercialisation Services Team (the "CS Team") to the Company. The parties expect that 65 IODs per annum will be disclosed to the Company under this revised process of IOD selection, although this is not a fixed target;
(c) under the revised process of IOD selection "tags" will be attributed to those IODs which are determined in accordance with the terms of the variation agreement to be:
(i) "social enterprises", being not-for-profit enterprises;
(ii) "knowledge based businesses", being potential businesses that: (i) do not own and/or are not based on patentable IP or are unlikely to generate patentable IP; and (ii) which are primarily reliant on know-how and copyright;
(iii) "licensing opportunities" (see further paragraph (d) below);
(iv) "lower value businesses", being companies which are anticipated to have a maximum potential value of no more than £5 million; and
(v) "vetoed opportunities", being commercial opportunities which would otherwise have been available for the parties to exploit together but in respect of which the relevant inventor is unwilling to work with the Company.

The Company will have no right to subscribe or otherwise acquire equity in such tagged IODs or to receive any percentage of the net revenue generated by licensing the IP the subject of the tagged IODs.

(d) however, in relation to IODs which are tagged because they are "licensing opportunities" and where:
(i) such licensing opportunity results from the conversion of an IP Group incubated company;
(ii) the Company establishes a company as a licensing vehicle for platform technology; and/or
(iii) the Company has otherwise had significant input (including finding the potential licensee and negotiating the commercial heads of terms with such licensee);

then those IODs will be managed by the Company and, in respect of (i) and (iii) above, the Company will be entitled to receive 30 per cent. of the net revenues received directly by the University of Leeds in respect thereof;

(e) the Company agrees that, in the three years from the date of the variation agreement (the "Initial Period"), it will work with the University of Leeds to seek to attain the following investment targets: (i) a base-line of grub fund investments of £200,000 per annum in aggregate; and (ii) a base-line of seed fund investments of £500,000 per annum in aggregate. Failure of the Company to attain these targets during the Initial Period will neither constitute a breach of the variation agreement nor entitle the University of Leeds to exercise the rights referred to in paragraph (f) below;
(f) the investment targets referred to in paragraph (e) above will be continually assessed during the Initial Period and alternative targets (which may be higher or lower) may be agreed by the parties following the Initial Period. Failure to attain investment at the levels specified after the Initial Period shall entitle the University of Leeds to:
(i) place a moratorium on the payment of its share of profits from equity sales under the Original Agreement to the Company until the Company has attained investment at the levels specified; or
(ii) terminate or suspend the Company's exclusive right to disclosure of IODs as envisaged in the variation agreement;
(g) the parties will establish guidelines for managing the expectations of the University of Leeds' inventors as to the likely failure rate of grub funded projects, the likely causes for failure and potential strategies for mitigating any failures, as well as establishing agreed protocols for clean wind-ups of Leeds Spin-Out Companies which are not progressing from grub funding to seed investment or have otherwise failed;
(h) the Company will work with the University of Leeds to unlock approximately £200,000 per annum of external "proof of concept" funding via grants and other forms of investment;
(i) new valuation targets will apply as follows:
(i) Part One: a valuation component that captures the fair value of the equity portfolio as at 30 April 2010, which shall be subject to growth parameters at least in line with the fair value anticipated by the Company. However, should the growth of the value of the University of Leeds' equity holdings not outperform the FTSE 250 Index percentage growth performance by 10 per cent. per annum, then the University of Leeds shall have the right to terminate the agreement on 30 April 2017; and
(ii) Part Two: a valuation target for newly created ventures generated via this agreement from 17 March 2011 onwards. This target is in line with the target

and experience from the date of the Original Agreement to the date of the variation agreement, being a target to achieve additional market capital valuation on top of that referred to in paragraph (i) above. This new valuation target will also be subject to an anticipated annual growth rate of 10 per cent. per annum over and above the FTSE 250 Index percentage growth performance (which shall be measured in respect of each new Leeds Spin-Out Company from the date of commitment of seed investment by the Company);

(j) provision for the University of Leeds to charge royalties on net sales (of not less than 1 per cent. but not greater than 2 per cent.) in the IP licences that it enters into with Leeds Spin-Out Companies formed after 17 March 2011. Formerly, IP was licensed to the Leeds Spin-Out Companies on a royalty-free basis. However, such royalties will only be charged:
(i) after the relevant business venture is generating profit;
(ii) after the date which is 24 months following the date of incorporation of the relevant Leeds Spin-Out Company;
(iii) where the annual financial statements of the relevant Leeds Spin-Out Company report EBIT in excess of £25,000 per annum for at least two concurrent years; and
(iv) after the University of Leeds' equity stake in the relevant Leeds Spin-Out Company has fallen below 5 per cent. on a fully diluted basis.

In the event that the Company is not applying the royalty model referred to above on a consistent basis, the University of Leeds shall have the rights referred to in paragraph (f) above.

(k) a party may terminate the variation agreement and the Original Agreement on 17 March 2014 (the "Break Date") by serving twelve months' notice in writing on the other parties at any time within the period of 30 days prior to the Break Date. If no such notice of termination is served, the next formal review of the variation agreement and the Original Agreement shall occur on 30 April 2017; and
(l) the activities of the University of Leeds under, and the operational management of, the Original Agreement and variation agreement, together with the ongoing relationship between the parties shall, with effect from the date of the variation agreement, lie within the remit of three committees: the Intellectual Property Executive Committee, the Partnerships Operations Group and the Partnership Review Group, the purpose, methodology and membership of each is as detailed further in the variation agreement.

14.7 Summary of the agreement relating to the University of Bristol Partnership

14.7.1 Pursuant to a framework agreement dated 4 December 2005 and made between (1) the University of Bristol and (2) IP2IPO, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Bristol academic staff, students and third parties which vests in the University of Bristol ("Bristol IP"). Broadly summarised, these arrangements entitle IP2IPO to a 13.3 per cent. interest in the shares in any company established with a view to the commercialisation of Bristol IP (a "Bristol Spin-Out Company"), and an interest in investments from the £5m Bristol Fund in Bristol Spin-Out Companies.

The principal provisions of the framework agreement are as follows:

(a) IP2IPO will make the £5m Bristol Fund available to make seed capital investments in any Bristol Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO is also able to invest the £5m Bristol Fund in companies formed to commercialise Bristol IP that is partially owned by the University of Bristol and partially owned by third parties;

(b) the University of Bristol has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO may have in Bristol Spin-Out Companies and/or which IP2IPO have under the framework agreement;
(c) IP2IPO has the first right to make seed capital investments in Bristol Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Bristol Spin-Out Company may not want to accept seed capital from the £5m Bristol Fund and in such a case the University of Bristol will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance (including a university challenge fund) who have a co-investment right alongside IP2IPO but IP2IPO has the right to invest a minimum of 60 per cent. of the total seed capital invested in the Bristol Spin-Out Company;
(d) once the £5m Bristol Fund has been fully invested, IP2IPO has the right but not the obligation to extend the £5m Bristol Fund;
(e) investment decisions in relation to Bristol Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of Enterprise at the University of Bristol, three persons nominated by the University of Bristol, a director of IP2IPO (who shall be chairman of the meeting) and two persons nominated by IP2IPO. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
(f) the £5m Bristol Fund shall not be entitled to make investments in any Bristol Spin-Out Company in any subsequent fund raising rounds;
(g) the £5m Bristol Fund will invest on the basis of a standard valuation for all Bristol Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Bristol Fund invests. This valuation assumes that the Bristol Spin-Out Company will have already issued shares to the University of Bristol and academic staff employed by the University of Bristol who were substantially involved in the generation of the Bristol IP relative to that Bristol Spin-Out Company and, as appropriate, the Bristol Spin-Out Company initial management team;
(h) it is envisaged that the £5m Bristol Fund would be invested over a period of about five years at a rate of about £1 million per annum;
(i) IP2IPO is also obliged to provide certain services to the University of Bristol, including the provision of a secondee to work with the University of Bristol on technology transfer and the commercialisation of Bristol IP;
(j) the University of Bristol recognises that IP2IPO may wish to supply business development services to any Bristol Spin-Out Company and it shall not object to the same being so provided;
(k) the University of Bristol undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO;
(l) a steering committee (comprising three representatives of IP2IPO and three representatives of the University of Bristol) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression

of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and considering and suggesting solutions in relation to any issue arising between the parties in relation to the framework agreement;

(m) IP2IPO warrants to the University of Bristol that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
(n) the framework agreement commenced on 4 December 2005 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
(o) the framework agreement may be terminated as follows:
(i) immediately by notice in writing given either by the University of Bristol or by IP2IPO if: (aa) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach and the breach is both material and has been "finally determined" (as defined in the framework agreement); or (bb) that party is suffering some form of insolvency (as more particularly described in the framework agreement);
(ii) IP2IPO may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for IP2IPO to invest in Bristol Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IP2IPO (for example no formal proposals being received by the investment committee for a two year period) or the University of Bristol ceases to own IP created at the University of Bristol which, in any such case, cannot be rectified or, as the case may be, rectified after notice;
(iii) the University of Bristol may terminate the framework agreement if during the term:
- (1) the £5m Bristol Fund has not invested at least £250,000 in any consecutive twelve month period (subject to the Investment Committee having received reasonably complete formal proposals for the same) and seed capital investment of not less than £250,000 in aggregate having been made in not less than two Bristol Spin-out Companies based or largely based on Bristol IP by third parties in that period and formal proposals having been made in respect of such opportunities to the Investment Committee in that period; or
- (2) IP Group having materially failed to meet its performance obligations and, in relation to breaches which are remediable, IP Group having failed to remedy the same within a period of 30 days after written notice of the breach by the University of Bristol, and any such breach (whether remediable or not) continuing notwithstanding that the matter has been referred to and considered by the Steering Committee (but such referral shall not give rise to an automatic commitment to follow the further dispute resolution procedures); or
- (3) IP Group having lost more than 50 per cent. of its "Key Personnel" which they have not been able to replace within a period of twelve months, save where the business need for the skills of such person are no longer required in the performance of the services under the agreement.

For these purposes "Key Personnel" means the Board as at 31 December each year; or

(4) a material change of law or change in taxation policy or practice which results in it no longer being economic for the University of Bristol (in its reasonable opinion) to commercialise IP through Spin-out Companies; or
(5) any person (other than a Group Company acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO.

14.8 Summary of the agreement relating to the University of Surrey Partnership

14.8.1 Pursuant to a framework agreement dated 9 February 2006 and made between (1) the University of Surrey and (2) IP2IPO, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Surrey academic staff, students and third parties which vests in the University of Surrey ("Surrey IP"). Broadly summarised, these arrangements entitle IP2IPO to a 13.3 per cent. interest in the shares in any company established with a view to the commercialisation of Surrey IP (a "Surrey Spin-Out Company"), and an interest in investments from the £5m Surrey Fund in Surrey Spin-Out Companies.

The principal provisions of the framework agreement are as follows:

(a) IP2IPO will make the £5m Surrey Fund available to make seed capital investments in any Surrey Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO is also able to invest the £5m Surrey Fund in companies formed to commercialise Surrey IP that is partially owned by the University of Surrey and partially owned by third parties;
(b) the University of Surrey has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO may have in Surrey Spin-Out Companies and/or which IP2IPO have under the framework agreement;
(c) IP2IPO has the first right to make seed capital investments in Surrey Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Surrey Spin-Out Company may not want to accept seed capital from the £5m Surrey Fund and in such a case the University of Surrey will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance (including a university challenge fund) who have a co-investment right alongside IP2IPO but IP2IPO has the right to invest a minimum of 60 per cent. of the total seed capital invested in the Surrey Spin-Out Company;
(d) once the £5m Surrey Fund has been fully invested, IP2IPO has the right but not the obligation to extend the £5m Surrey Fund;
(e) investment decisions in relation to Surrey Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of Enterprise at the University of Surrey, three persons nominated by the University of Surrey, a director of IP2IPO (who shall be chairman of the meeting) and two persons nominated by IP2IPO. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
(f) the £5m Surrey Fund shall not be entitled to make investments in any Surrey Spin-Out Company in any subsequent fund raising rounds;
(g) the £5m Surrey Fund will invest on the basis of a standard valuation for all Surrey Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Surrey Fund invests. This valuation assumes that the Surrey Spin-Out Company will have already issued shares to the University of Surrey and academic staff employed by the University of Surrey who were substantially involved in the generation of the Surrey IP relative to that Surrey Spin-Out Company and, as appropriate, the Surrey Spin-Out Company initial management team;
(h) it is envisaged that the £5m Surrey Fund will be invested over a period of about seven years at a rate of about £0.7 million per annum;
(i) IP2IPO is also obliged to provide certain services to the University of Surrey, including the provision of a secondee to work with the University of Surrey on technology transfer and the commercialisation of Surrey IP;
(j) the University of Surrey recognises that IP2IPO may wish to supply business development services to any Surrey Spin-Out Company and it shall not object to the same being so provided;
(k) the University of Surrey undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO;
(l) a steering committee (comprising three representatives of IP2IPO and three representatives of the University of Surrey) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to consider and suggest solutions in relation to any issue arising between the parties in relation to the framework agreement;
(m) IP2IPO warrants to the University of Surrey that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
(n) the framework agreement commenced on 9 February 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
(o) the framework agreement may be terminated as follows:
(i) immediately by notice in writing given either by the University of Surrey or by IP2IPO if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach and the breach is both material and has been "finally determined" (as defined in the framework agreement); or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
(ii) IP2IPO may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for IP2IPO to invest in Surrey Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IP2IPO (for example no formal proposals being received by the investment committee for a

two year period) or the University of Surrey ceases to own IP created at the University of Surrey which, in any such case, cannot be rectified or, as the case may be, rectified after notice;

(p) the University of Surrey may terminate the framework agreement if during the term:
(i) the £5m Surrey Fund has not invested at least £250,000 in any consecutive twelve month period (subject to the investment committee having received reasonably complete formal proposals for same) and seed capital investment of not less than £250,000 in aggregate having been made in not less than two Surrey Spin-out Companies based or largely based on Surrey IP by third parties in that period and formal proposals having been made in respect of such opportunities to the investment committee in that period;
(ii) IP2IPO having materially failed to meet its performance obligations and, in relation to breaches which are remediable, IP2IPO having failed to remedy the same within a period of 30 days after written notice of the breach by the University of Surrey, and any such breach (whether remediable or not) continuing notwithstanding that the matter has been referred to and considered by the steering committee (but such referral shall not give rise to an automatic commitment to follow the further dispute resolution procedures set out in the agreement);
(iii) a material change of law or change in taxation policy or practice which results in it no longer being economic for the University of Surrey (in its reasonable opinion) to commercialise IP through Surrey Spin-Out Companies; or
(iv) any person (other than a Group company acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO.

14.9 Summary of the agreements relating to the University of York Partnership

14.9.1 Framework Agreement

Pursuant to a framework agreement dated 10 March 2006 and made between (1) the University of York and (2) IP2IPO, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of York academic staff and others which vests in the University of York (but excluding CNAP IP) ("York IP"). Broadly summarised, these arrangements entitle IP2IPO to a 15 per cent. interest in the shares in any company established with a view to the commercialisation of York IP (a "York Spin-Out Company"), and an interest in investments from the £5m York Fund in York Spin-Out Companies. The initial 15 per cent. interest in York Spin-Out Companies rises to 25 per cent. if the £5m York Fund makes an investment in that Spin-Out Company.

The principal provisions of the framework agreement are as follows:

(a) IP2IPO Limited will make the £5m York Fund available to make seed capital investments in any York Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO is also able to invest the £5m York Fund in companies formed to commercialise York IP that is partially owned by the University of York and partially owned by third parties;
(b) the University of York has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective or effect of fundamentally avoiding or materially diminishing any interest which IP2IPO may have in York Spin-Out Companies and/or which IP2IPO has under the framework agreement;
(c) IP2IPO has the first right to make seed capital investments in York Spin-Out Companies. The framework agreement recognises that there may be some

circumstances where the founder of a York Spin-Out Company may not want to accept seed capital from the £5m York Fund and in such a case University of York will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance who have a co-investment right alongside IP2IPO but IP2IPO has the right to invest a minimum of 60 per cent. of the total seed capital invested in the York Spin-Out Company;

(d) once the £5m York Fund has been fully invested, IP2IPO has the right but not the obligation to extend the £5m York Fund;
(e) investment decisions in relation to York Spin-Out Companies will be made by an investment committee. The investment committee comprises a senior officer of the University of York, two other persons nominated by the University of York, a director of IP2IPO and two persons nominated by IP2IPO. Meetings of the investment committee are to be chaired by the senior officer of the University of York or his nominee. The parties may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
(f) the £5m York Fund shall not be entitled to make investments in any York Spin-Out Company in any subsequent fund raising rounds;
(g) the £5m York Fund will invest on the basis of a standard valuation for all York Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m York Fund invests. This valuation assumes that the York Spin-Out Company will have already issued shares to the University of York and academic staff employed by the University of York who were substantially involved in the generation of the York IP relative to that York Spin-Out Company and, as appropriate, the York Spin-Out Company initial management team. The parties will review the standard pre-money valuation following each seventh year of the agreement by reference to the pre-money valuations at which other funds are invested at the relevant time by IP2IPO in other university collaborations;
(h) it is envisaged that the £5m York Fund will be invested over a period of about seven years at a rate of about £0.7 million per annum;
(i) IP2IPO is also obliged to provide certain services to the University of York, including the provision of personnel equivalent to not less than two full time persons to work with the University of York on technology transfer and the commercialisation of York IP;
(j) the University of York recognises that IP2IPO may wish to supply business development services to any York Spin-Out Company and it shall not object to the same being so provided;
(k) the University of York undertakes not to enter any agreement or arrangement with third parties during the term of this framework agreement which gives rise to a material conflict with the intent and objectives of this agreement without the consent of IP2IPO;
(l) a steering committee (comprising an equal number of senior representatives of each of the University of York and IP2IPO) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to consider and suggest solutions in relation to any issue arising between the parties in relation to the framework agreement;
(m) IP2IPO warrants to the University of York that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
(n) the framework agreement commenced on 10 March 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
(o) the framework agreement may be terminated as follows:
(i) immediately by notice in writing given either by the University of York or by IP2IPO if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 30 days after written notice of the breach and the breach is both material and, save in certain limited circumstances, has been "finally determined" (as defined in the framework agreement); or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement);
(ii) IP2IPO may terminate the framework agreement if there has been, in summary, a change of law or tax change which results in it no longer being economic for IP2IPO to invest in York Spin-Out Companies or there being a fundamental and drastic shortage of investment opportunities available to IP2IPO (for example no formal proposals being received by the investment committee for a two year period) or the University of York ceases to own IP created at the University of York or the merger of the University of York with another institution of equivalent size and scale which, in any such case, cannot be rectified or, as the case may be, rectified after notice;
(iii) the University of York may terminate the framework agreement if during the term IP2IPO has failed to provide monies from the £5m York Fund within a reasonable period after the investment committee has approved an investment proposal, or there has been a material change in law which results in it no longer being economic for the University of York to commercialise York IP through York Spin-Out Companies, or IP2IPO has failed to reasonably satisfy the University of York that it has the funds to meet the obligations of the £5m York Fund such that the University of York in good faith considers that IP2IPO may not be in a position to meet the obligations in relation to the £5m York Fund as and when they fall due; and
(iv) by either party once the £5m York Fund has been fully invested if the collaboration between the parties has been proceeding with a reasonable pipeline of IP and York Spin-Out Company opportunities and IP2IPO does not extend the £5m York Fund.

14.9.2 Side Agreement to the Framework Agreement

Pursuant to a side agreement to the framework agreement dated 27 March 2009 between (1) the University of York and (2) IP2IPO, the parties agreed to certain changes to the rights and obligations under the framework agreement. Broadly summarised, the changes provide that IP2IPO no longer has the obligation to provide any one or more full time employees and shall instead provide the University of York with assistance and resource on an "as and when needed" basis or in response to the University of York's reasonable request.

The principal provisions of the side agreement are as follows:

(a) where IP2IPO is informed of any new opportunity it shall have one month to evaluate such opportunity and to request that such opportunity be granted Opportunity Evaluation Status ("OES");
(b) IP2IPO shall have a further five months from the date on which OES is granted to evaluate the opportunity and to request that such opportunity is granted Active Opportunity Status ("AOS") by providing the University of York with a written proposal setting out proposals for the commercialisation of the relevant York IP by way of a York Spin-Out Company;
(c) if the University of York opts to move the opportunity to AOS and proceed with the creation of a York Spin-Out Company or an element of grub funding, IP2IPO agrees to provide business building assistance to develop the early proposition and onwards towards securing and completing see and follow on venture capital funding;
(d) in respect of each York Spin-Out Company which obtains AOS, IP2IPO shall subscribe for 25 per cent. of the initial equity in cash at par;
(e) in respect of each York Spin-Out Company which does not obtain AOS but which IP2IPO recommended should proceed to AOS, IP2IPO will subscribe (in each case on or before the University of York assigns or licences the relevant York IP to the York Spin-Out Company) for 5 per cent. of the initial equity in cash at par;
(f) IP2IPO shall have no right or entitlement in respect of "Out Licensing" and/or to any "Licence Fees" (as defined in the framework agreement); and
(g) the term of the side agreement was for a period of 12 months, and the parties agreed that at least 30 days prior to the expiry of this period the steering committee shall formally review the relationship following which they shall commence negotiations to agree appropriate permanent amendments to the framework agreement. To the extent that the parties cannot agree on the amendments, the provisions of the framework agreement shall automatically be reinstated on an unamended basis.

14.10 Summary of agreements relating to the IP Venture Fund

14.10.1 Management Agreement

Pursuant to a management agreement dated 6 July 2006 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) Top Technology Ventures Limited (the "Manager"), the parties agreed that the Manager will act as a discretionary manager of the IP Venture Fund so as to enable the General Partner to fulfil its obligations under the limited partnership agreement as detailed above.

The Manager's responsibilities under the agreement include sourcing, evaluating and negotiating investment opportunities, monitoring investments and participating in the management of the businesses in which the IP Venture Fund had invested and arranging for the realisation of investments.

Under the agreement, the Manager is required to exercise such degree of care and diligence as a prudent investment manager would reasonably be expected to exercise in the selection and management of the IP Venture Fund's portfolio of investments.

The management agreement may be terminated with immediate effect by either party by written notice to the other provided that the Manager shall not be entitled to terminate the agreement while the General Partner is the general partner of the IP Venture Fund. The agreement shall terminate on the happening of any of the following events:

(a) the termination of the IP Venture Fund;
(b) the removal or withdrawal of the General Partner as general partner of the IP Venture Fund unless the General Partner is replaces by an associate;
(c) the Manager ceasing to be authorised under FSMA to manage or operate the IP Venture Fund or to act as manager of the IP Venture Fund's investment portfolio;
(d) the Manager committing a material breach of its obligations (including if the breach is capable of being remedied and the Manager fails to remedy the same within 20 business days after service of notice); or
(e) the insolvency, dissolution of liquidation of the Manager.

The Manager shall be entitled to be paid by the General Partner 100 per cent. of the amounts the General Partner receives from the IP Venture Fund. In addition, the Manager shall be entitled to accept and retain all syndication fees, corporate finance fees, any other transaction fees, directors' fees and management fees earned and received by it from the company in which the IP Venture Fund has invested or from third party investors.

The Manager shall be free to render similar services to third parties, subject to the provision of services to the IP Venture Fund not being materially adversely affected thereby.

14.10.2 Limited Partnership Agreement

Pursuant to a limited partnership agreement dated 1 August 2007 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) IP Venture Fund (FP) Limited Partnership (the "Founding Partner"), the parties agreed certain changes to the IP Venture Fund which was established on 21 June 2006 by an agreement between the General Partner and Magnus Goodlad. Pursuant to a supplemental limited partnership agreement dated 5 July 2006 Magnus Goodlad transferred his entire interest as a limited partner to the Founding Partner. The Founding Partner has made a capital contribution of £772,475 to the IP Venture Fund. IP Group has subscribed for 3.09 participations in the IP Venture Fund, amounting to a total of £3,090,000. Each of the investors in the IP Venture Fund is required to advance loans pro rata their number of participations held up to an aggregate amount of £999,990 in respect of each participation subscribed by it.

IP Venture Fund was established by Top Technology Ventures Limited ("TTVL") on 21 June 2006 to carry on the business of identifying, making, monitoring and realising investments in venture capital opportunities. The 2007 agreement amends and supersedes the original 2006 agreement such that the purpose of the IP Venture Fund is to carry on the business of an investor and to identify, research and negotiate investment opportunities and make and monitor the progress of and arrange the sale of investments (which include, but are not limited to, the purchase, acquisition, sale and disposal of ordinary shares, preference shares of venture capital transactions) with the principal objective of providing investors (as limited partners in the IP Venture Fund) with a high overall rate of return by means of both income and capital. The IP Venture Fund will not make any investment in venture capital or private equity funds or any other pooled investment vehicle.

The responsibility for the operation of the IP Venture Fund is vested exclusively in the General Partner, who may appoint a manager to operate the IP Venture Fund and manage its investment portfolio on a discretionary basis. All of the income of the partners will be distributed to them at such times as the General Partner in its discretion decides. Distributions of a capital nature shall be made as soon as practicable after the relevant amount becomes available for distribution and in any event no later than two months after receipt by the IP Venture Fund.

The term of the IP Venture Fund shall continue until the earlier of the expiration of ten years from the final closing date (as defined in the agreement) or 18 December 2017 although the life of the IP Venture Fund may be extended at any time prior to these dates by the election of the General Partner and unanimous written consent of all investors, by a period or consecutive periods not exceeding two years in aggregate.

The General Partner may not resign during the term of the IP Venture Fund unless the investors provide their consent. The limited partnership agreement shall terminate upon the happening of any of the following events:

(a) the bankruptcy, insolvency, dissolution or liquidation of the General Partner (save where the Partnership may be reconstituted pursuant to the agreement);
(b) the agreement to such termination of the General Partner and investors;
(c) the resignation or removal of the General Partner (save where the limited partnership may be reconstituted pursuant to the agreement);
(d) the limited partnership ceasing to be fiscally transparent in the UK or the General Partner determining that it is illegal for the limited partnership to continue; or
(e) all the assets of the limited partnership are disposed of and there is no ability to make new investments.

14.11 Summary of the agreements relating to the Queen Mary Partnership

14.11.1 Framework Agreement

Pursuant to a framework agreement dated 20 July 2006 and made between (1) Queen Mary and Westfield College, University of London ("QMUL") and (2) IP2IPO, the parties agreed certain arrangements with regard to the commercialisation of the IP created by QMUL academic staff, students and third parties which vests in QMUL ("QMUL IP"). Broadly summarised, these arrangements entitle IP2IPO to a 10 per cent. of all licence fees and a 13.3 per cent. interest in the shares in any company established with a view to the commercialisation of QMUL IP (a "QMUL Spin-Out Company").

The principal provisions of the framework agreement are as follows:

(a) IP2IPO will make the £5m QMUL Fund available to make seed capital investments in any QMUL Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO is also able to invest the £5m QMUL Fund in companies formed to commercialise QMUL IP that is partially owned by QMUL and partially owned by third parties;
(b) QMUL has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO may have in QMUL Spin-Out Companies and/or which IP2IPO have under the framework agreement;
(c) IP2IPO has the first right to make seed capital investments in QMUL Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a QMUL Spin-Out Company may not want to accept seed capital from the £5m QMUL Fund and in such a case QMUL will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance which have a co-investment right alongside IP2IPO;
(d) once the £5m QMUL Fund has been fully invested, IP2IPO has the right but not the obligation to extend the £5m QMUL Fund;
(e) investment decisions in relation to QMUL Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of the Innovation & Enterprise division of QMUL, three persons nominated by QMUL, a director of IP2IPO (who shall be chairman of the meeting) and two persons nominated by IP2IPO. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
(f) the £5m QMUL Fund will be invested on the basis of a standard valuation for all QMUL Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m QMUL Fund invests. This valuation assumes that the QMUL Spin-Out Company will have already issued shares to QMUL and academic staff employed by QMUL who were substantially involved in the generation of the QMUL IP relative to that QMUL Spin-Out Company and, as appropriate, the QMUL Spin-Out Company initial management team;
(g) it is envisaged that the £5m QMUL Fund will be invested over a period of about seven years at a rate of about £0.4 million per annum to £0.7 million per annum;
(h) IP2IPO is also obliged to provide certain services to QMUL, including the provision of personnel equivalent to one full time employee to be fully integrated into QMUL Innovation & Enterprise to work with QMUL on commercialisation of QMUL IP;
(i) QMUL recognises that IP2IPO may wish to provide business development and other services to any QMUL Spin-Out Company and it shall not object to the same being so provided;
(j) QMUL undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO;
(k) a steering committee (comprising three representatives of IP2IPO and three representatives of QMUL) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to discuss and resolve areas of conflict or other problems on an informal basis as well as providing part of a formal dispute resolution process in relation to any issue arising between the parties in relation to the framework agreement;
(l) IP2IPO warrants to QMUL that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
(m) the framework agreement commenced on 20 July 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
(n) the framework agreement may be terminated as follows:
(i) immediately by notice in writing given either by QMUL or by IP2IPO if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
(ii) IP2IPO may terminate the framework agreement if there has been, in summary: (a) a change of law or tax change which results in it no longer being economic for IP2IPO to invest in QMUL Spin-Out Companies; or (b) there being a fundamental and drastic shortage of investment opportunities available to IP2IPO (for example no formal proposals being received by the investment committee for a three year period); (c) QMUL ceasing to own all or substantially all of the IP which would otherwise vest in QMUL; or (d) the merger of QMUL with another institution of equivalent size and scale; and
(o) QMUL may terminate the framework agreement if during the term:
(i) IP2IPO has not invested in a QMUL Spin-Out Company within a reasonable period following a validly constituted investment committee approval of an investment proposal submitted and bindingly approved in accordance with the investment protocol;
(ii) IP2IPO has materially failed to meet its performance obligations, giving rise to a persistent and continuing failure to service the requirements of potential QMUL Spin-Out Companies which has a profound and materially adverse affect on the ability to launch QMUL Spin-Out Companies;
(iii) a material change of law or change in taxation policy or practice which results in it no longer being economic for QMUL (in its reasonable opinion) to commercialise IP through QMUL Spin-Out Companies;
(iv) any person (other than a Group company) acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO; or
(v) IP2IPO has not extended the £5m QMUL Fund by the tenth anniversary of the date of the framework agreement by an additional £3 million where the arrangements between the parties are proceeding positively with a pipeline of University IP and QMUL Spin-Out Company opportunities being generated.

14.11.2 Variation Agreement

Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the Original Agreement which, in the event of a direct conflict, prevail over the terms of the Original Agreement.

The principal provisions of the variation agreement are as follows:

(a) the Company's obligation of providing a full time employee, "FTE" to QMLU (such as this term is defined in the Original Agreement), is removed and replaced with an IP2IPO Representative;
(b) a revised and constructive way in which the IP2IPO Representative (and members of IP2IPO's client sourcing team) will work with Queen Mary Innovation Limited ("QMI") on the ground to identify commercialisation opportunities is suggested;
(c) the parties agreed that IP2IPO's right to a share of licensing fees (as described in the first paragraph of paragraph 14.11.1 above) shall be removed save where (a) there is the conversion of an IP2IPO incubated company into an out-licensing opportunity, (b) IP2IPO establish a company as a licensing vehicle for platform technology, and/or (c) IP2IPO has otherwise had significant input in respect of the relevant Out Licensing opportunity (which would include both finding the potential licensee and undertaking negotiation of the commercial head of terms with such party);
(d) IP2IPO initial founder equity right (as described in the first paragraph of paragraph 14.11.1 above) shall be removed and replaced with a warrant over an equivalent amount of shares in the relevant spin-out company exercisable at seed investment stage, save in situations whereby IP2IPO shall have expended efforts at an early stage to work up the relevant commercialisation opportunity to the stage where it is presented to the investment committee of IP2IPO but that the relevant opportunity is declined for investment from IP2IPO and as a consequence the relevant spin-out company goes onto raise money form a third party and or achieve an exit event (as defined in the relevant warrant instrument), then QMUL shall, until such time as an exit event is achieved, hold such number of equity shares in the relevant spin-out company as is equal to the proportion of Initial Equity that IP2IPO would have been entitled under the Original Agreement, being 13.3 per cent. of the initial equity, on bare trust for IP2IPO; in the even that QMUL is unable to hold such equity shares on bare trust for IP2IPO, QMUL agrees and undertakes to ensure that IP2IPO receives an equivalent proportion of its share of any realisation proceeds generated by the exit event and actually received by QMUL in respect thereof.
(e) more regular reviews of the agreement between the parties are set down.

14.12 Summary of the agreements relating to the University of Bath Partnership

14.12.1 Framework Agreement

Pursuant to a framework agreement dated 7 September 2006 and made between (1) the University of Bath, (2) IP2IPO and (3) IP Group, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Bath academic staff, students and third parties which vests in the University of Bath ("Bath IP"). Broadly summarised, these arrangements entitle IP2IPO to a 20 per cent. interest in the shares in any company established with a view to the commercialisation of Bath IP (a "Bath Spin-Out Company"), a 20 per cent. interest in the licence fees of the University of Bath and an interest in investments from the £5m Bath Fund in Bath Spin-Out Companies. As noted in paragraph 14.12.3 below, the Group's entitlements do not arise in the event that the Group or its employees have not been actively involved in developing the relevant opportunity.

The principal provisions of the framework agreement are as follows:

(a) IP2IPO will make the £5m Bath Fund available to make seed capital investments in any Bath Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO is also able to invest the £5m Bath Fund in companies formed to commercialise Bath IP that is partially owned by the University of Bath and partially owned by third parties;
(b) the University of Bath has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO may have in Bath Spin-Out Companies and/or which IP2IPO have under the framework agreement;
(c) IP2IPO has the first right to make seed capital investments in Bath Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Bath Spin-Out Company may not want to accept seed capital from the £5m Bath Fund and in such a case the University of Bath will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance (including the Sulis Seedcorn Fund) who have a co-investment right alongside IP2IPO but IP2IPO has the right to invest a minimum of 60 per cent. of the total seed capital invested in the Bath Spin Out Company;
(d) once the £5m Bath Fund has been fully invested, IP2IPO has the right but not the obligation to extend the £5m Bath Fund;
(e) investment decisions in relation to Bath Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of the Research and Innovation Services division of the University of Bath, three persons nominated by the University of Bath, a director of IP2IPO (who shall be chairman of the meeting) and two persons nominated by IP2IPO. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
(f) the £5m Bath Fund will invest on the basis of a standard valuation for all Bath Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Bath Fund invests. This valuation assumes that the Bath Spin-Out Company will have already issued shares to the University of Bath and academic staff employed by the University of Bath who were substantially involved in the generation of the Bath IP relative to that Bath Spin-Out Company and, as appropriate, the Bath Spin-Out Company initial management team;
(g) it is envisaged that the £5m Bath Fund will be invested over a period of about seven years at a rate of about £0.7 million per annum;
(h) IP2IPO is also obliged to provide certain services to the University of Bath, including the provision of a secondee to work with the University of Bath on technology transfer and the commercialisation of Bath IP;
(i) the University of Bath recognises that IP2IPO may wish to supply advisory services to any Bath Spin-Out Company and it shall not object to the same being so provided;
(j) the University of Bath undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO;
(k) a steering committee (comprising three representatives of IP2IPO and three representatives of the University of Bath) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to discuss and resolve areas of conflict or other problems on an informal basis as well as providing part of a formal dispute resolution process in relation to any issue arising between the parties in relation to the framework agreement;
(l) IP2IPO warrants to the University of Bath that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
(m) the framework agreement commenced on 7 September 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
(n) the framework agreement may be terminated as follows:
(i) immediately by notice in writing given either by the University of Bath or by IP2IPO if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
(ii) IP2IPO may terminate the framework agreement if there has been, in summary: (a) a change of law or tax change which results in it no longer being economic for IP2IPO to invest in Bath Spin-Out Companies; or (b) there being a fundamental and drastic shortage of investment opportunities available to IP2IPO (for example no formal proposals being received by the investment committee for a three year period) or (c) the University of Bath ceases to own IP created at the University of Bath;
(o) the University of Bath may terminate the framework agreement if during the term:
(i) the £5m Bath Fund has not invested cash for equity in accordance with a decision of the investment committee within 20 working days of such decision being made (unless otherwise agreed);
(ii) the £5m Bath Fund has not invested at least £250,000 in any consecutive twelve month period (subject to the investment committee having received reasonably complete formal proposals for same) and seed capital investment of not less than £250,000 in aggregate having been made in not less than two Bath Spinout Companies based or largely based on Bath IP by third parties in that period and formal proposals having been made in respect of such opportunities to the investment committee in that period;
(iii) IP2IPO having materially failed to meet its performance obligations and, in relation to breaches which are remediable, IP2IPO having failed to remedy the same within a period of 90 days after written notice of the breach by the University of Bath, and any such breach (whether remediable or not) continuing;
(iv) IP2IPO having lost more than 50 per cent. of its key personnel which they have not been able to replace within a period of 12 months;
(v) a material change of law or change in taxation policy or practice which results in it no longer being economic for the University of Bath (in its reasonable opinion) to commercialise IP through Bath Spin-Out Companies; or
(vi) any person (other than a Group company) acquiring control (within the meaning of section 840 Income and Corporation Taxes Act 1988) of IP2IPO.

14.12.2 Amendment to framework agreement relating to use of IP2IPO fund for Pre-Incorporation Investment

Pursuant to the agreement dated 13 December 2007 between (1) the University of Bath, (2) IP2IPO and (3) the Company, the parties agreed to establish sufficient legal and other safeguards to protect the Pre-Incorporation Investment (as defined in the University of Bath Partnership) on the formation of a Bath Spin-Out Company. Broadly summarised, the agreement substitutes the terms of schedule 1 of the framework agreement dated 7 September 2006 and provides that the Pre Incorporation Investment shall not exceed £50,000 without the unanimous approval of the Investment Committee.

Where following the making of Pre-Incorporation Investment, the University of Bath elects to form a Bath Spin-Out Company, the amount of the Pre-Incorporation Investment shall be treated as a loan from IP2IPO, used to purchase shares in the relevant Bath Spin-Out Company at the same price per share as any other cash investment in the first seed round of funding.

IP2IPO will be granted a fully paid up irrevocable option to subscribe from the £5m Bath Fund for shares in a Bath Spin-Out Company formed in respect of the identifiable project in which the Pre-Incorporation Investment was made. The maximum seed investment of IP2IPO from the £5m Bath Fund in any Bath Spin-Out Company is £500,000, calculated in accordance with the framework agreement.

The Sulis Seedcorn Fund shall have the right to invest up to 40 per cent. of the total seed capital requirement of a Bath Spin-Out Company (in which it is agreed the £5m Bath Fund will invest) provided that the £5m Bath Fund shall have the right to invest a minimum of 60 per cent. of the total seed capital requirements on terms which are no less favourable to those available to Sulis. IP2IPO and Sulis shall be entitled to invest further seed capital requirements of the relevant Bath Spin-Out Company on the basis that IP2IPO may invest up to 60 per cent. and Sulis may invest up to 40 per cent. of the cash requirement of the relevant Bath Spin-Out Company.

Where, following the making of the Pre-Incorporation Investment, the identifiable project does not lead to a Bath Spin-Out Company but does progress to an Out Licence (as defined), an amount equal to the Pre-Incorporation Investment shall be repaid to the £5m Bath Fund out of the licence proceeds prior to any other use or distribution of the same by or to the University of Bath. Where, following the making of the Pre-Incorporation Investment, the identifiable project does not lead to the establishment of a Bath Spin-Out Company or an Out Licence, the loan from the Fund to the University of Bath in respect of the Pre Incorporation Investment shall be written off in full.

14.12.3 Side Agreement to the Commercialisation of IP Framework Agreement

Pursuant to the side agreement dated 24 March 2010 between (1) the University of Bath, (2) IP2IPO and (3) the Company, the parties agreed certain changes to the framework agreement dated 7 September 2006.

Broadly summarised, this agreement terminated and replaced a previous side agreement (dated 2 March 2009). It provided that the Group's entitlements under the University of Bath Partnership in respect of licence fees and its "automatic" interest in equity would not arise if the Group or its employees had not been actively involved in working up the relevant commercialisation opportunity and provides that IP2IPO is not obliged to procure that there be a single dedicated member of IP2IPO staff working on the University's commercialisation projects on a substantially full time basis. Instead IP2IPO shall appoint a principal point of contact in respect of the relationship between the parties, who shall engage with the Bath ventures team on a day-to-day basis.

The parties further agreed that any reference to the Sulis Fund in the framework agreement should be replaced by a reference to the University of Bath Crescent Seedcorn Fund, which is held exclusively by the University of Bath.

14.12.4 Further Side Agreement to the Commercialisation of IP Framework Agreement

Pursuant to the side agreement dated 6 February 2015 between, the University of Bath, IP2IPO and IP Group, the parties agreed to vary the terms of the framework agreement dated 7 September 2006 to enable IP Venture Fund II to co-invest alongside IP2IPO in respect of up to 30 per cent. of the total seed capital requirement of the relevant spin-out company on terms no less favourable than those applicable to IP2IPO's investment, where such investments are made at the same time.

14.13 Summary of agreements relating to the University of Glasgow Partnership

14.13.1 Framework Agreement

Pursuant to a framework agreement dated 10 October 2006 and made between (1) the University Court of the University of Glasgow (the "University of Glasgow") and (2) IP2IPO, the parties agreed certain arrangements with regard to the commercialisation of the IP created by the University of Glasgow academic staff, students and third parties which vests in the University of Glasgow ("Glasgow IP"). Broadly summarised, these arrangements entitle IP2IPO to a 12 per cent. interest in the shares in any company established with a view to the commercialisation of Glasgow IP (a "Glasgow Spin-Out Company").

The principal provisions of the framework agreement are as follows:

(a) IP2IPO will make the £5m Glasgow Fund available to make seed capital investments in any Glasgow Spin-Out Company made in accordance with the investment protocol set out in the framework agreement. IP2IPO is also able to invest the £5m Glasgow Fund in companies formed to commercialise Glasgow IP that is partially owned by the University of Glasgow and partially owned by third parties;
(b) the University of Glasgow has agreed that it will not amend its IP policy (other than by reason of any change of law) with the objective of fundamentally avoiding or materially diminishing any interest which IP2IPO may have in Glasgow Spin-Out Companies and/or which IP2IPO have under the framework agreement;
(c) IP2IPO has the first right to make seed capital investments in Glasgow Spin-Out Companies. The framework agreement recognises that there may be some circumstances where the founder of a Glasgow Spin-Out Company may not want to accept seed capital from the £5m Glasgow Fund and in such a case the University of Glasgow will not be in breach of its obligations under the framework agreement. There are a number of other sources of seed capital finance who have a co-investment right alongside IP2IPO (including a university challenge fund known as the Synergy Fund) but IP2IPO has the right to invest up to 75 per cent. of the total seed capital invested in the Glasgow Spin-Out Company;
(d) once the £5m Glasgow Fund has been fully invested, IP2IPO has the right but not the obligation to extend the £5m Glasgow Fund;
(e) investment decisions in relation to Glasgow Spin-Out Companies will be made by an investment committee. The investment committee comprises the Director of the Research and Enterprise division of the University of Glasgow, three persons nominated by the University of Glasgow, a director of IP2IPO (who shall be chairman of the meeting) and two persons nominated by IP2IPO. The chairman of the investment committee may veto what would have been an affirmative decision of the investment committee, however such veto can only be exercised once in any twelve month period;
(f) the £5m Glasgow Fund will be invested on the basis of a standard valuation for all Glasgow Spin-Out Companies, namely a pre-money valuation of £750,000 at the point at which the £5m Glasgow Fund invests. This valuation assumes that the Glasgow Spin-Out Company will have already issued shares to the University of Glasgow and academic staff employed by the University of Glasgow who were substantially involved in the generation of the Glasgow IP relative to that Glasgow Spin-Out Company and, as appropriate, the Glasgow Spin-Out Company initial management team;
(g) it is envisaged that the £5m Glasgow Fund will be invested over a period of about five years at a rate of about £1 million per annum;
(h) IP2IPO is also obliged to provide certain services to the University of Glasgow, including the provision of personnel equivalent to one full time employee to be fully integrated into the University of Glasgow's Research and Enterprise division to work with the University of Glasgow on commercialisation of Glasgow IP;
(i) the University of Glasgow recognises that IP2IPO may wish to provide business development and other services to any Glasgow Spin-Out Company and it shall not object to the same being so provided;
(j) the University of Glasgow undertakes not to enter any similar agreement or arrangement with third parties during the term of this framework agreement without the consent of IP2IPO;
(k) a steering committee (comprising three representatives of IP2IPO and three representatives of the University of Glasgow) shall be established to conduct those activities set out in the framework agreement, including, monitoring the progression of the relationship between the parties, identifying areas for improvement and suggesting and agreeing improvements and changes to the arrangements contained in the framework agreement and to discuss and resolve areas of conflict or other problems on an informal basis as well as providing part of a formal dispute resolution process in relation to any issue arising between the parties in relation to the framework agreement;
(l) IP2IPO warrants to the University of Glasgow that it has the capacity and authority to enter into and perform the framework agreement and that the framework agreement has been duly executed;
(m) the framework agreement commenced on 10 October 2006 and subsists for a period of 25 years from that date, subject to the rights to terminate earlier as set out immediately below;
(n) the framework agreement may be terminated as follows:
(i) immediately by notice in writing given either by the University of Glasgow or by IP2IPO if: (a) either party or any member of that party's group are in material breach of any of its obligations under the framework agreement and (in relation to breaches capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or (b) that party is suffering some form of insolvency (as more particularly described in the framework agreement); and
(ii) IP2IPO may terminate the framework agreement if there has been, in summary: (a) a change of law or tax change which results in it no longer being economic for IP2IPO to invest in Glasgow Spin-Out Companies; or (b) there being a fundamental and drastic shortage of investment opportunities available to IP2IPO (for example no formal proposals being received by the investment committee for a three year period); or (c) the University of Glasgow ceasing to own all or substantially all of the IP which would otherwise vest in the University of Glasgow; (d) the merger of the University of Glasgow with another institution of equivalent size and scale; or (e) the University of Glasgow failing to provide additional resource or to permit IP2IPO to provide a second employee within a reasonable period following a determination by the steering committee that it agrees with IP2IPO;
(o) the University of Glasgow may terminate the framework agreement if during the term:
(i) IP2IPO has not provided monies from the Fund at the relevant time to the relevant Glasgow Spin-Out Company in accordance with the relevant investment proposal after a validly constituted investment committee has approved the investment;
(ii) IP2IPO has failed to submit any investment proposals in any rolling twelve month period;
(iii) IP2IPO has failed to invest at least £500,000 in one or more Glasgow Spin-Out Companies in any rolling 24 month period;
(iv) there is a repeated failure to attend meetings of the investment committee by all IP Group representatives;
(v) there is a failure to recruit the full time employee (see above) within four months of the date of entry into of the framework agreement or to terminate or replace such employee within a reasonable period at the University of Glasgow's request;
(vi) there is a failure to extend the £5m Glasgow Fund beyond the initial £5 million once the £5m Glasgow Fund has been fully invested;
(vii) IP2IPO brings the University of Glasgow into disrepute;
(viii) the £5m Glasgow Fund is restructured such that it in any way causes pecuniary loss to or otherwise materially prejudices or damages the interest of the University of Glasgow; and
(ix) IP2IPO fails to meet the performance targets further detailed in the framework agreement in relation to the amount of the £5m Glasgow Fund which has been invested or the cash/tradable equity levels within any review period;

provided that if such breach is remedied within a 30 day period then the notice of termination shall be null and void and shall have no effect.

14.14 Agreement with Cardiff University

Pursuant to an agreement dated 29 November 2006 and made between (1) Fusion IP, (2) Fusion IP Cardiff Limited, (3) Cardiff University, (4) University College Cardiff Consultants Limited and (5) Cardiff Partnership Fund, the parties agreed certain arrangements with regard to Fusion IP Cardiff's entitlement with respect to IP generated through research undertaken by staff employed by Cardiff University.

The principal provisions of the agreement are as follows:

(a) Fusion IP Cardiff is entitled to direct that all IP created at Cardiff University be licenced to a then existing or newly incorporated company in which the Fusion IP group will acquire an equity investment for the purposes of undertaking the commercialisation of such IP;
(b) such licence are for a fixed term of 24 months, exclusive, worldwide, royalty free, nonassignable and for all uses, and, subject to £200,000 (or such lesser amount that Fusion IP can demonstrate is required to commercialise such IP) having been raised in respect of that IP, Fusion IP Cardiff can require that such IP be assigned to a Cardiff portfolio company;
(c) Fusion IP Cardiff's entitlement is subject to the terms of financing and third party collaborative research agreements into which Cardiff University enters into in the ordinary course as follows:
(i) if Cardiff University is not able to procure the assignment or licence of all such IP because of the terms of third party collaborative research agreements, it will instead grant a licence to the fullest extent possible to the relevant Cardiff portfolio company for the use of the IP;
(ii) if Fusion IP Cardiff has not elected, within eighteen months following the relevant IP first being brought to the attention of Fusion IP Cardiff, for it to be assigned or licensed to a portfolio company and no written plan is prepared for the commercialisation in the following twelve months or Fusion IP Cardiff does not

adhere to any plan so prepared, Cardiff University may exclude the relevant IP from this entitlement;

(iii) if IP that has been assigned or licensed to a Cardiff portfolio company has not had third party funding of £50,000 or more and is not used by a Cardiff portfolio company for a continuous period of eighteen months, Cardiff University is entitled to recover ownership of it or to terminate any licence granted to a Cardiff portfolio company where a written business plan for commercialisation of the IP is not adhered to by Fusion IP Cardiff;
(iv) this eighteen month period is shortened to twelve months if Cardiff University demonstrates to Fusion IP Cardiff that it can commercialise the IP itself, if Fusion IP Cardiff elects not to do so on that proposed basis and if a member of the Group is already using IP for the same purpose;
(v) if Fusion IP Cardiff's current account balance falls below £500,000, or it remains in unremedied breach of the Cardiff Agreement or the Portfolio Company Loan Notes (referred to below) for 30 days or more, Cardiff University can suspend this entitlement;
(d) the consideration payable by Fusion IP pursuant to the Cardiff University Agreement comprises:
(i) the allotment and issue to Cardiff University of 10,997,541 Fusion IP shares;
(ii) a cash payment of approximately £180,000 (being 2.5 per cent. of those funds raised pursuant to a placing of up to 5,349,997 Fusion IP shares on or around 9 January 2007 which are to be used in investing in Cardiff portfolio companies) together with any reasonable transaction costs incurred by Cardiff University up to a maximum of £80,000 (plus VAT);
(iii) a monthly payment of £17,500 by Fusion IP Cardiff to Cardiff University for the provision of services by Cardiff University to enable Fusion IP Cardiff to identify and patent Cardiff University's IP; and
(iv) an agreement from Fusion IP Cardiff to use all of the funds raised pursuant to the placing on or around 9 January 2007 (net of agreed costs) plus £1,000,000 of its own resources exclusively in the operation of the business governed by the Cardiff University Agreement;
(e) the Cardiff University Agreement also provided for the transfer to Fusion IP Cardiff by University College Cardiff Consultants Limited and Cardiff Partnership Fund of shares in each of Abcellute Limited, Art of Xen Limited, Cardiff Protides Limited, Insect Investigations Limited, Medaphor Limited, Muscagen Limited and Q Chip Limited that have already been established to commercialise Cardiff University-generated IP as follows:
(i) these shares have been paid for by Cardiff Loan Notes (as defined in this agreement) issued by Fusion IP Cardiff to Cardiff University (the "Cardiff Loan Notes") secured against the shares in question by a fixed charge over those shares; and
(ii) the Cardiff Loan Notes each carry a floating rate of interest being 1.5 per cent. above LIBOR for 6 month deposits, calculated every six months, and will be repayable in full on the tenth anniversary of the issue of the loan note, but only to the extent that Fusion IP Cardiff realises value from the relevant shares by way of receiving a dividend or selling or listing the shares. Fusion IP will guarantee the obligations of Fusion IP Cardiff to Cardiff University under the Cardiff Agreement and the Cardiff Loan Notes; and

(f) the agreement shall terminate after 10 years unless terminated earlier in the event of Fusion IP Cardiff becoming insolvent, ceasing to be wholly owned by the group or being in material, unremedied breach of the Cardiff University Agreement.

14.15 Summary of agreements relating to The North East Technology Fund L.P.

14.15.1 Limited Partnership Agreement (December 2009)

Pursuant to a limited partnership agreement dated 22 December 2009 between (1) IP Europe (GP) Limited (the "General Partner") and (2) Magnus Goodlad ("MG"), the parties agreed to form The North East Technology Fund LP to carry on the business of making investments, with a view to producing profits for distribution.

Under the agreement, the partnership shall continue in existence, notwithstanding any change in its composition and further persons may be admitted as limited partners at any time with the prior written consent of the General Partner.

The General Partner and MG agreed to contribute £1.00 each to the capital of the partnership and any further persons admitted as limited partners will contribute such amount of capital as the General Partner specifies on the date of their admission to the partnership.

The General Partner is responsible, under the agreement, for ensuring that the partnership is always managed and operated by a person who is authorised under Part IV of FSMA. The limited partner, MG, shall take no part in the operation of the partnership or the management or control of its business and affairs.

The profits of the partnership are distributed in the following order:

(a) payment of expenses and liabilities of the partnership;
(b) payment of £1,000 annually to the General Partner as a priority profit share; and
(c) the balance, if any, shall be allocated to the limited partners pro rata in proportion to their capital contributions.

The partnership shall terminate upon the happening of any of the following events:

(a) if all partners unanimously agree in writing that the partnership should so terminate; or
(b) if an order is made by the courts, or an effective resolution is passed for, the liquidation, winding-up or administration of the General Partner.

The limited partner is not permitted to sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of all or any part of its interest in the partnership unless it has obtained prior written approval of the General Partner and the transferee first agrees to be bound by the terms of the agreement.

14.15.2 Limited Partnership Agreement (January 2010)

Pursuant to a limited partnership agreement dated 6 January 2010 between (1) IP Ventures (Scotland) Limited (the "General Partner") and (2) Magnus Goodlad ("MG"), the parties agreed to establish the North East Technology (FP) LP (the "FP Partnership") to carry on the business of participating in other limited partnerships and making investments, with a view to producing profits for distribution.

Under the agreement, the FP Partnership shall continue in existence, notwithstanding any change in its composition and further persons may be admitted as limited partners at any time with the prior written consent of the General Partner.

The General Partner and MG agreed to contribute £1.00 each to the capital of the FP Partnership and any further persons admitted as limited partners will contribute such amount of capital as the General Partner specifies on the date of their admission to the FP Partnership.

The General Partner is responsible, under the agreement, for ensuring that the FP Partnership is always managed and operated in accordance with Scots law. The limited partners, including the initial limited partner MG, shall take no part in the operation of the FP Partnership or the management or control of its business and affairs nor engage in any transactions on behalf of the FP Partnership. No limited partner shall have the right to:

(a) withdraw or reduce its capital contribution;
(b) bring an action for partition against the FP Partnership; or
(c) cause the termination of the FP Partnership;

except as otherwise stated in the partnership agreement.

The profits of the FP Partnership are distributed in the following order:

(a) payment of expenses and liabilities of the FP Partnership;
(b) payment to the General Partner the lower of: (i) £100 per annum; and (ii) five per cent. of the profits of the FP Partnership (and any other sums available for distribution per annum) as a priority profit share; and
(c) the balance, if any, shall be allocated to the limited partners pro rata in proportion to their capital contributions.

The FP Partnership shall terminate upon the happening of any of the following events:

(a) if all partners unanimously agree in writing that the FP Partnership should so terminate; or
(b) if an order is made by the courts, or an effective resolution is passed for, the liquidation, winding-up or administration of the General Partner.

The limited partner is not permitted to sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of all or any part of its interest in the FP Partnership unless it has obtained prior written approval of the General Partner and the transferee first agreeing to be bound by the terms of the partnership agreement.

14.15.3 Limited Partnership Agreement – North East Technology Fund

Pursuant to a limited partnership agreement ("LPA") dated 31 March 2010 (as amended on 22 August 2014) between (1) North East Technology (GP) Limited ("General Partner"), (2) the North East Technology Fund (FP) LP ("Carried Interest Partner") and (3) North East Finance (Holdco) Limited ("Investor"), the parties agreed to form a limited partnership, the North East Technology Fund LP (the "NETF"), to carry on the business of identifying, negotiating, making, monitoring and realising investments.

The Carried Interest Partner contributed £20 and the Investor contributed £80 to the capital of the NETF, which shall only be repaid on the termination or liquidation of the NETF. The maximum size of the NETF is £35 million and it will invest in the general technology sector, with particular focus in energy, process technologies and health sciences and healthcare.

The investment targets for the NETF under the LPA include the following:

(a) to invest in at least 60 companies in the period to 31 December 2015, with the average investment size of the fund to be approximately £415,000; and

(b) to generate at least the following annual cash receipts from investments:
(i) Year 1: £0;
(ii) Year 2: £700,000;
(iii) Year 3: £1,000,000;
(iv) Year 4: £1,350,000;
(v) Year 5: £3,000,000;
(vi) Year 6: £5,000,000; and
(vii) Year 7: £5,000,000.

The output targets for the NETF under the LPA include the following:

(a) 900 new jobs created;
(b) 550 jobs safeguarded;
(c) £35 million private sector funds leveraged by the Fund in total;
(d) 9 new start-up Small and Medium sized Enterprises ("SMEs") assisted; and
(e) 51 existing SMEs assisted.

The manager of the NETF is Top Technology Ventures Limited (the "Managers"). The investment period under the LPA ends on 31 December 2014 although it may be extended with the Investor's consent. The Manager is responsible for the management and operation of the partnership and shall manage all investments, money, assets or borrowings of the partnership on a discretionary basis.

All net income of the NETF and all realisations of capital in respect of each investment shall be applied in the following order of priority:

(a) in repaying the investment loan (up to £25,000,000) to the Investor;
(b) in repaying the management loan (up to £4,065,000) to the Investor;
(c) in the repayment of the General Partner's share (as set out in the LPA), any interestfree loan and any repayment of contributions;
(d) in paying the preferred return (as defined in the LPA) to the Investor;
(e) in paying the Carried Interest Partner an amount equal to 25 per cent. of the preferred return;
(f) in paying any further sums to the Investor and the Carried Interest Partner such that the balance on their respective income accounts after such payments are pro rata to their respective capital contributions; and
(g) finally in repayment of the capital contribution accounts of the Investor and the Carried Interest Partner.

The General Partner may not resign as a general partner during the period of 12 months from the date of the LPA and thereafter may not resign without the approval of the Investor and by giving 12 months' notice in writing to each limited partner.

The partnership shall not be terminated by the death, bankruptcy, insolvency, dissolution or liquidation of a limited partner or Carried Interest Partner. The partnership shall terminate on the tenth anniversary of the date of the LPA or upon the happening of any of the following events:

(a) bankruptcy, insolvency, dissolution or liquidation of the General Partner (save that the partnership may be reconstituted pursuant to the LPA);
(b) the agreement as to such termination of the General Partner and of the Investors;
(c) the resignation or removal of the General Partner (save that the partnership may be reconstituted pursuant to the LPA);
(d) the Investor determining that the partnership should be terminated;
(e) notice sent by the General Partner to the limited partners or by the Investor to the General Partner following any change in the law as a result of which the continuation of the partnership becomes unlawful or impracticable or inadvisable; or
(f) the partnership ceasing to be fiscally transparent in the UK.

The life of the partnership may be extended at any time prior to the tenth anniversary of the date of the LPA by the election of the General Partner and the Investor by a period (or consecutive periods) not exceeding two years in aggregate (having been extended by one year pursuant to the amendments made on 22 August 2014). If the partnership is terminated, it may be reconstituted and its business continued pursuant to the unanimous written consent of all Limited Partners electing to continue the partnership and electing a new General Partner.

The LPA includes certain indemnities for the General Partner and the Manager as well as investment and operational guidelines.

14.15.4 Fund Management Agreement – North East Technology Fund

Pursuant to a fund management agreement ("FMA") dated 31 March 2010 (as amended on 22 August 2014 by a deed of amendment between such parties and North East Finance (Holdco) Limited) between (1) the North East Technology Fund LP ("NETF") and (2) Top Technology Ventures Limited ("TTVL"), TTVL was appointed as the investment manager of the NETF to identify, negotiate and make investments and to monitor and dispose of otherwise realise investments and to act as operator of the NETF under the terms of the FMA. TTVL was also appointed to carry on the regulated activity of operating an unregulated collective investment scheme in respect of the NETF. TTVL provides standard warranties under the FMA, which also includes certain indemnities.

The objective of the NETF is to invest in technology companies at any stage of their development or maturity. The NETF is expected to make equity investments and to seek to maximise co-investment with privately funded co-investors, to stimulate interest among business angel investors and privately funded venture capital institutions in the investment opportunities in the North East region. The manager is required to use its reasonable endeavours to invest the aggregate amount available for drawdown and investments by the NETF (currently £25,000,000, but with the ability to be increased at the discretion of North East Finance (Holdco) Limited by up to an additional £17,500,000) to achieve the objectives of the NETF and outputs specified in the LPA as detailed in paragraph 14.15.3 above and the business plan.

TTVL is required to devote such time and have all necessary competent personnel and equipment as may be required to enable it to carry out its obligations properly and efficiently, with a view to:

(a) maximise the returns while minimising the operational costs and the costs to investee companies and businesses;

(b) maximising the additional investment made by private sector co-investors into investee companies and businesses;
(c) managing the investment portfolio to add value to investee companies and businesses and achieving profitable exists for the NETF;
(d) encouraging further expansion in the North East region of indigenous SMEs;
(e) attracting new SMEs to the North East region;
(f) creating an environment to encourage more start-ups;
(g) assisting the development of new products and processes through to commercial exploitation;
(h) assisting businesses in achieving world-class company status; and
(i) supporting and encouraging management of existing SMEs.

TTVL shall be entitled to be paid such fee as may (from time to time) be agreed between the General Partner and the Manager, not exceeding the General Partner's share. The General Partner's share is 3.25 per cent. per annum of the maximum amount available for drawdown by the partnership from time to time.

The provision of services by TTVL under the FMA is not exclusive and TTVL shall be free to render the same or similar services to others. The NETF may engage other persons to provide it with services similar to those provided by TTVL.

TTVL shall at all times act in the best interests of the NETF, so far as is practicable having regard to its obligations to other clients. Where a proposed transaction by the NETF represents a material conflict of interest between the interests of TTVL, its associates or their other clients and the interests of the Fund, TTVL shall disclose the same to the Fund.

Under the FMA, the Manager is eligible to participate in a discretionary bonus scheme introduced to incentivise the manager to exceed the mandatory outputs and target outputs of the NETF as further detailed in the LPA.

Either party may terminate the FMA on six months' prior written notice to the other. The NETF may terminate the FMA by notice to TTVL in certain circumstances, including if:

(a) TTVL commits a material breach of the FMA which cannot be remedied;
(b) TTVL commits a breach of the FMA which can be remedied but fails to remedy the breach within 20 business days or receipt of written notice;
(c) TTVL has a receive, administrator or provisional liquidator appointed or passes a resolution for its winding up;
(d) TTVL ceases or threatens to cease to trade;
(e) TTVL experiences a change in control which has not been approved in writing by the North East Finance (Holdco) Limited; or
(f) North East Finance (Holdco) Limited notifies the fund that it has reasonable grounds for suspecting fraud or dishonesty on the part of TTVL or any of its officers, employees agents or sub-contractors.

The FMA and the appointment of TTVL shall terminate immediately on the happening of any of the following events:

(a) termination of TTVL's appointment by mutual agreement between the NETF and TTVL;

(b) the General Partner ceasing for any reason to be a general partner of the NETF;
(c) the termination of the NETF; or
(d) upon the written notice issued by North East Finance (Holdco) Limited to TTVL confirming the termination of the FMA.

14.16 Summary of Limited Liability Partnership Agreement relating to Technikos LLP

Pursuant to a limited liability partnership agreement dated 16 June 2006 between (1) Technikos LLP, (2) SRPE LLP and (3) persons listed in the agreement ("Members"), the parties entered into the agreement to govern the mutual rights and duties of Technikos LLP and the present, and future, Members from time to time. On 13 January 2011, the Company acquired an A membership share in Technikos LLP from an outgoing limited partner and, accordingly, became a Member for the purposes of the limited liability partnership agreement and the rights accruing to each of the limited partners thereunder.

The principal purpose of Technikos LLP is the carrying on of the business of negotiating, making, monitoring and realising investments in accordance with the investment policy. The commercial intention of the Members was that shares in Technikos LLP or another corporate entity to which all or substantially all of the investments are transferred are to be listed on the London Stock Exchange, the Alternative Investment Market or another recognised exchange by 2009.

SRPE LLP agreed to act as Managing Member and operator of Technikos LLP so long as it is appropriately authorised by the FCA. After the second anniversary of the final closing date (as defined in the agreement) Members holding at least 75 per cent. of the voting interests of all members may, by written resolution, remove the Managing Member as a member of Technikos LLP and terminate its appointment as Managing Member. In such circumstances, the Managing Member shall be entitled to compensation for termination of its appointment as set out in the agreement. The Managing Member may be removed at any time without compensation for termination of office if such termination is as a result of the Managing Member's gross negligence, fraud, wilful misconduct, bad faith or reckless disregards of its obligations and duties as managing member of Technikos LLP. In August 2010, the relevant proportion of the Members approved the appointment of Burnahyll LLP as Managing Member in place of SRPE LLP.

Cash representing profits of Technikos LLP shall be distributed in the following order of priority (after payment of all expenses and liabilities of Technikos LLP):

(a) first, in payment of any C Member's share;
(b) second, in payment of any amounts as may have been agreed to be paid to any Member by way of drawings;
(c) third, to the Members in repayment of their drawn commitments in the relevant proportions; and
(d) fourth, as to the remaining balance 8 per cent. to the B Members in the proportions allocated to each B Member and as to 92 per cent. to the investors in their commitment proportions.

Technikos LLP shall terminate on the twentieth anniversary of the final closing date or shall terminate prior to such date upon the happening of any of the following events:

(a) the agreement to such termination by the unanimous written consent of all the Members who are investors; or
(b) the completion of sale of all of the investments and distributions to Members of profits and capital in accordance with the LLP agreement.

The life of Technikos LLP may be extended prior to twentieth anniversary of the final closing date by a Members' resolution of 60 per cent. of the voting interests of the founder Members (acting on the recommendation of Technikos LLP) by up to two one year periods to such later date not exceeding 22 years from the final closing date. Technikos LLP may be terminated at any time prior to the twentieth anniversary of the final closing date and at yearly intervals thereafter (acting on the recommendation of Technikos LLP) by Members' written resolution of 60 per cent. of the voting interests of the founder Members.

If Technikos LLP is terminated, it may be reconstituted and its business continued pursuant to the unanimous written consent of Members who are investors electing to continue Technikos LLP.

14.17 Summary of agreements relating to the University of Manchester

14.17.1 Summary of the proof of principle fund agreement relating to the University of Manchester

Pursuant to an agreement relating to a proof of principle fund dated 25 February 2013 and made between (1) The University of Manchester ("UOM"), (2) The University of Manchester 13 Limited ("UMI3") and (3) IP2IPO, the parties agreed certain arrangements with regard to the creation and operation of a proof of principle fund. Broadly summarised, these arrangements entitle IP2IPO to fund proof of principle projects (the "UOM Projects") offered by UOM and/or UMI3 in specific technology areas such as set out below. IP2IPO will be entitled to an equity share in each spin-out company formed by UOM and/or UMI3 from a UOM Project funded by IP2IPO.

The principal provisions of the agreement are as follows:

(a) IP2IPO shall provide funding for UOM Projects offered by UOM and/or UMI3 in the following technology areas:
(i) materials and clean technology;
(ii) all non-therapeutic life, medical and human sciences technologies and information technology;
(iii) electronics and communications; and
(iv) any other areas agreed by the parties in writing.

Whilst the agreement provided that IP2IPO shall have no right to fund any UOM Projects in the area of graphene technology (all matters relating to graphene and other so termed 2-D materials technology) unless UOM elects to discuss any such project with IP2IPO, it was subsequently expanded to include graphene pursuant to the Variation Agreement summarised in paragraph 14.17.2 below.

(b) IP2IPO has agreed to invest the following amounts in UOM Projects (other than in the area of graphene technology):
(1) IP2IPO has agreed to fund UOM Projects up to an aggregate funding commitment of £5,000,000 to be applied over a maximum period of 5 years from the effective date (being 25 September 2013) and with a maximum amount to be committed towards UOM Projects on a per annum basis of £1,000,000;
(2) IP2IPO is entitled to reduce its funding commitment by up to £2,500,000, to no less than £2,500,000, in the event that IP2IPO sources a matching funder or funders which are acceptable to UOM and agree to fund such amount; and
(3) UOM is entitled to continue to seek an additional third party funder or funders (subject to certain restrictions) to provide funding of up to a maximum of £2,500,000 for a period of up to 5 years, in which event such funder(s) would fund UOM Projects on an equal basis with IP2IPO;
(c) Subject to the investment committee's prior approval, UOM is entitled to fund in cash either itself or through a non-commercial funder, up to fifty per cent. of the required funding for each UOM Project, provided that such entitlement may be reduced by the investment committee in the event that UOM has secured wider matched funding from third parties;
(d) Investment decisions in relation to funding UOM Projects will be made by the investment committee by a simple majority vote. The investment committee comprises two persons nominated by IP2IPO, one person nominated by UOM, one person nominated by UMI3 and an independent chairperson appointed unanimously by the other members of the investment committee. All members shall have one vote with the chairperson having no second or casting vote. It has been agreed that no UOM Project shall be put forward for formal approval at the investment committee for funding unless it has first been considered by IP2IPO's investment committee;
(e) IP2IPO is entitled to an equity stake in each spin-out company funded by it on such terms as are agreed between the parties and in accordance with UOM's IP policy from time to time. The UOM policy as at the effective date provides that funders contributing £95,000 (or less) would be entitled to receive 15 per cent. of the equity and funders contributing £140,000 (or greater) would be entitled to receive 30 per cent. of the equity, in the relevant spin-out company, with a sliding scale in between;
(f) IP2IPO has an option, but is not obliged, to provide further funding to a spin-out company beyond initial proof of principle funding, to act as the lead investor, and (subject to agreement of terms), arranger, of extended proof of principle funding. Any such funding is to be made at a valuation for the relevant spin-out company to be agreed amongst the parties and the relevant spin-out company at the relevant time, Where no such agreement is reached, third party funding may be sought, provided that (i) such third party funding shall be on no less favourable terms than those which were offered by IP2IPO; or (ii) before accepting any third party funding where the terms are more favourable than those which were offered by IP2IPO, IP2IPO shall be given the opportunity for a defined period to invest on such more favourable terms;
(g) A steering committee that comprise two representatives of each of the parties at a senior level shall be established and maintained in order to review the proper operation of the agreement and to recommend any modifications and amendments to it;
(h) Subject to certain specified exceptions, UOM and UMI3 each undertake to IP2IPO that they will not enter into any agreement or arrangement with any third party regarding the provision of proof of principle funding for spin-out company propositions which gives rise to a material conflict with the intent and objectives of this agreement;
(i) The agreement may be terminated:
(i) on the date falling one month after IP2IPO shall have made its final cash commitment to a UOM Project, provided that such agreement has not been renewed;
(ii) immediately by notice in writing by either party if:
- (1) the parties agree to do so; or
- (2) either party or any member of that party's group are in material irremediable breach of any of its obligations under the agreement and, in any such case (in relation to any breach which is capable of being remedied), fails to remedy the same within a period of 90 days after written notice of the breach; or
(3) that party is subject to an insolvency event;
(iii) by six months' notice served by either party if, by not earlier than third anniversary of the effective date and not later than 30 days thereafter in the event that by the third anniversary of the effective date:
(1) the investment committee of IP2IPO has not approved at least fifteen UOM Projects for funding by IP2IPO under the agreement; or
(2) IP2IPO has not deployed at least half of the funds it has committed to UOM Projects either annually against the applicable annual targets in each of the first three years or in aggregate as required during the said three year period.
(j) Each party has agreed to indemnify the other against all and any costs, claims liabilities or proceedings brought by any third party, or incurred, as a result of a breach of this agreement or the default, negligence or breach of duty or responsibility by that party, subject to certain financial limitations.

14.17.2 Summary of the variation agreement regarding proof of principle fund agreement relating to the University of Manchester

(a) Pursuant to a variation agreement dated 23 January 2014 (the "Variation Agreement"), the parties agreed certain variations, clarifications and supplemental terms to the original Manchester IP commercialisation agreement which, in the event of a direct conflict, prevail over the terms of the original agreement with effect from the date of the Variation Agreement.
(b) The principal provisions of the Variation Agreement are as follows:
(i) the scope of the original POP fund agreement is widened to include graphene and other 2-D materials; IP2IPO shall provide funding in the following technology areas: (1) clean/environmental technology, (2) all non-therapeutic life, medical and human sciences technologies and information technology, (3) electronics and communications, (4) advanced materials including, without limitation, graphene and other two dimensional and/or nanoscale materials; and (5) any other areas agreed by the parties in writing;
(ii) parties agree that graphene projects may be sourced by UMI3 both from within UOM and beyond and that each such graphene project shall be offered to IP2IPO for investment as follows:
- (1) during the regional growth fund period commencing on 11 July 2013 and ending on 31 May 2015 and only after the party appointed to manage the investment from the Regional Grow Fund Round 4, presently Greater Manchester Combined Authority (GMCA), has received its grant from the Regional Grow Fund Round 4 (if at all), IP2IPO shall be offered the right to co-invest on a pari passu basis alongside the regional growth fund managed fund in graphene projects which have already been approved for investment by UMI3 and/or by a spin-out panel constituted by UMI3 for this purpose; in the event the grant as aforementioned is never received, IP2IPO shall be offered the right to invest in all graphene projects in accordance with the proof of principle agreement described in paragraph 14.17.1 above; and
- (2) during the period on and from the end of the regional growth fund funding period and ending on the date which is 5 years from the date of the Variation Agreement, all graphene projects shall be offered to

IP2IPO for investment in accordance with the provisions of the proof of principle agreement as described in 14.17.1 above.

(iii) given this increase in the scope of the original POP fund agreement, IP2IPO shall attempt to seek to increase its aggregate funding commitment under the original POP funding agreement from £5 million to up to £7.5 million within an agreed time period.
(iv) in case the additional commitment is not made by the 30 June 2014, UMI3 shall be entitled to, upon service of at least 60' days written notice by UMI3 on IP2IPO not later than 30 days after the 30 June 2014, require that the Technology Areas clause be amended so as to remove any rights which IP2IPO may have under the variation agreement to fund graphene projects. This right shall be without prejudice to (i) any graphene project that has been funded prior to the receipt of such notice in respect of which the provisions of the agreement will continue to apply and (ii) the remaining provisions of the agreement which shall continue to be in full force and effect save where the same require variation to give effect to the terms of the notice.

14.18 Memorandum of understanding with the University of Nottingham

Pursuant to a memorandum of understanding dated 28 February 2013 and made between (1) Fusion IP and (2) the University of Nottingham, the parties agreed certain arrangements in connection with identifying and creating new spin-out companies to hold intellectual property created by research conducted at the University of Nottingham.

The principal provisions of the Nottingham MOU are as follows:

(a) Fusion IP will, among other things, provide the services of the equivalent of one full time employee to work at the University of Nottingham, which may be fulfilled by one or more person. The role of the employee(s) will be to assist the University of Nottingham to identify and develop its business opportunities in connection with the creation of new spin-out companies to hold intellectual property created by research conducted at the University of Nottingham;
(b) if such opportunities are identified, Fusion IP may elect to assist the University of Nottingham develop such opportunity (a "Project") by the creation of a new company to hold the intellectual property rights relating to the Project or the licencing of the Project;
(c) on incorporation of a new company, Fusion IP shall be issued with up to 10 per cent. of the share capital of such new company, whilst the remaining share capital shall be issued to the University of Nottingham and those persons who created the intellectual property relating to the Project and held by the new company (in accordance with the university's internal policies);
(d) thereafter, Fusion IP and the University of Nottingham may invest, in aggregate, up to £750,000 (or such other amount as the parties agree) in the new company (in equal proportions). Prior to such new investment, the new company's deemed value shall be £500,000;
(e) each party may arrange for their proportion to be funded by their associate or a co-investor. To the extent Fusion IP or the University of Nottingham do not take up their right to make such investment in the new company (in whole or in part) after the date which is six months from the date of incorporation of the new company, the other party may make an additional investment in the new company in respect of the investment opportunity not so taken up;
(f) Fusion IP shall assist the new company to identify potential third party funders, including the Company;
(g) if a new company is not established in connection with a Project, Fusion IP and the University of Nottingham agree that any net revenue received by the University of Nottingham in connection with licencing the Project will be shared equally between Fusion IP and the University of Nottingham until such time as Fusion IP has received its cash investment in the Project and, thereafter, Fusion IP shall receive 10 per cent. of any such net revenue; and
(h) the Nottingham MOU shall be in place for an initial period of five years, to be reviewed annually, and may be terminated by either party at any time.

14.19 Memorandum of understanding with Swansea University

Pursuant to a memorandum of understanding dated 17 March 2013 and made between (1) Fusion IP and (2) the University of Swansea, the parties agreed certain arrangements in connection with identifying and creating new spin-out companies to hold intellectual property created by research conducted at the Swansea University.

The principal provisions of the Swansea MOU are as follows:

(a) pursuant to the terms of the Swansea MOU, Fusion IP will provide the services of its employees to Swansea University to assist in identifying and developing its business opportunities in connection with the creation of new spin-out companies to hold intellectual property created by research conducted at Swansea University;
(b) if such opportunities are identified, Fusion IP may elect to assist Swansea University to develop such opportunity (a "Project") by the creation of a new company to hold the intellectual property rights relating to the Project or the licencing of the Project;
(c) on incorporation of a new company, Fusion IP shall be issued with up to 10 per cent. of the share capital of such new company, whilst the remaining share capital of the new company shall be issued to Swansea University and those persons who created the intellectual property relating to the Project and held by the new company (in accordance with the university's internal policies);
(d) thereafter, Fusion IP and Swansea University may invest, in aggregate, up to £750,000 (or such other amount as the parties agree) in the new company (in equal proportions). Prior to such new investment, the deemed value of such new company shall be £500,000;
(e) each party may arrange for their proportion to be funded by their associate or a co-investor. To the extent Fusion IP or Swansea University do not take up their right to make such investment in the new company (in whole or in part) after the date which is six months from the date of incorporation of the new company, the other party may make an additional investment in such new company in respect of the investment opportunity not so taken up;
(f) Fusion IP shall assist the new company to identify potential third party funders, including the Company;
(g) if a new company is not established in connection with a Project, Fusion IP and Swansea University agree that any net revenue received by Swansea University in connection with licencing the Project will be shared equally between Fusion IP and Swansea University until such time as Fusion IP has received its cash investment in the Project and, thereafter, Fusion IP shall receive 10 per cent. of any such net revenue; and
(h) the Swansea MOU shall be in place for an initial period of five years, to be reviewed annually thereafter, and may be terminated by either party at any time.

14.20 Summary of agreements relating to the IP Venture Fund II L.P.

14.20.1 Limited Partnership Agreement

Pursuant to a limited partnership agreement (the "LPA") dated 21 May 2013 between (1) IP Venture Fund II (GP) LLP (the "General Partner") and (2) IP2IPO (the "Initial Limited Partner"), the parties agreed certain changes to the IP Venture Fund II L.P. ("IP Venture Fund II" or the "Partnership") which was established on 1 May 2013 by an original agreement between the General Partner and the Initial Limited Partner.

IP Venture Fund II was established by Top Technology Ventures Limited on 1 May 2013 to carry on the business of identifying, making, monitoring and realising investments in venture capital opportunities. The 21 May 2013 agreement amends and supersedes the original 1 May 2013 agreement such that the purpose of the IP Venture Fund II is to carry on the business of an investor and in particular but without limitation to identify, research and negotiate investment opportunities and make and monitor the progress of and arrange the sale of investments (which include, but are not limited to, the purchase, acquisition, sale and disposal of ordinary shares, preference shares and subordinated loan stocks of venture capital transactions) with the principal objective of providing investors with a high overall rate of return by means of both income and capital. It is agreed that no more than 15 per cent. of the total commitments can be used to acquire investments in any one investee company (including any follow-on investments) and that the Partnership is not allowed to make loans to portfolio companies in an aggregate amount at any time greater than 20 per cent. of total commitments (excluding loans to portfolio companies which are linked to equity funding of an investee company or which take the form of convertible loan stock or similar instruments which are convertible to equity share capital in accordance with their terms of issue). It is also agreed that the IP Venture Fund II will not make any investment in venture capital or private equity funds or any other pooled investment vehicle.

IP Group (or any associate thereof) agreed to subscribe on the date on which the first investor is admitted as a limited partner to the Partnership for a commitment of £10,000,000. Any further persons admitted as limited partners and investors must subscribe for a minimum commitment of £1,000,000 (or such lesser amount as the General Partner may agree). Each investor agreed to contribute 0.001 per cent. of its commitment to the capital of the Partnership. Each of the investors in the IP Venture Fund II are required to advance loans to the Partnership pro rata to the commitment held by it up to an aggregate amount equal to 99.999 per cent. of the commitment subscribed by it.

The responsibility for the operation of the IP Venture Fund II is vested exclusively in the General Partner, who ensures that the Partnership is always managed and operated, and that its investment portfolio is always managed on a discretionary basis under the supervision and authority of the General Partner, by an entity who is authorised to do so under FSMA. The General Partner may appoint a manager to operate the IP Venture Fund II and manage its investment portfolio on a discretionary basis. The limited partners shall take no part in the operation of the Partnership or the management or control of its business and affairs.

All net income of the Partnership and all realisations of capital in respect of each investment shall be applied in the following order of priority:

(a) in repaying ongoing expenses (as defined in the LPA); and
(b) in the repayment of the General Partner's share (as set out in the LPA), any interestfree loan and any repayment of contributions;

Thereafter, all cash and any Partnership assets distributed in specie shall be applied:

(a) in repaying the loan (or tranches thereof) to the investors pro rata to the amount of such loans (or tranche(s)) outstanding to such investors;

(b) in paying any further sums to the investors such that the balance on their respective current accounts after such payments are pro rata to their respective capital contributions; and
(c) finally in repayment of the capital contribution accounts of the investor on termination or liquidation of the Partnership.

Subject to these provisions, all of the income of the General Partner and/or all or any of the limited partners, as the case may require, will be distributed to them at such times as the General Partner in its discretion decides. Distributions of a capital nature shall be made as soon as practicable after the relevant amount becomes available for distribution and in any event no later than two months after receipt by the Partnership.

The General Partner may not resign as a general partner during the term of the Partnership un less first consented to by an investor's special consent.

The Partnership shall not be terminated by the death, bankruptcy, insolvency, dissolution or liquidation of a limited partner. The term of the IP Venture Fund II shall continue until the expiration of ten years from the final closing date (as defined in the LPA) although the life of the IP Venture Fund II may be extended at any time prior to this date by the election of the General Partner and the Investors acting by an Investors' Special Consent (as defined in the LPA) by a period or consecutive periods not exceeding two years in aggregate.

The Partnership shall terminate upon the happening of any of the following events:

(a) the bankruptcy, insolvency, dissolution or liquidation of the General Partner (save where the Partnership may be reconstituted pursuant to the LPA);
(b) the agreement to such termination of the General Partner and investors;
(c) the resignation or removal of the General Partner (save where the limited partnership may be reconstituted pursuant to the LPA);
(d) the limited partnership ceasing to be fiscally transparent in the UK or the General Partner determining that it is illegal for the limited partnership to continue; or
(e) all the assets of the Partnership are disposed of and there is no ability to make new investments.

The General Partner shall not sell, assign, transfer, exchange, pledge, encumber or otherwise dispose of all or any part of its rights and obligations as a general partner, or voluntarily withdraw as the General Partner of the Partnership without the sanction of an Investors' special consent except that the General Partner may transfer its rights and obligations in the Partnership to an associate (as defined in the LPA) without requiring such consent.

No transfer of any investor's interest in the Partnership is valid or effective except with the consent of the General Partner which may be withheld if specific conditions such as set out in the LPA are not met.

The LPA includes certain indemnities for the General Partner and the manager as well as investment and operational guidelines.

If IP Venture Fund II is terminated, it may be reconstituted and its business continued pursuant to an investor's special consent electing to continue the Partnership and electing a new General Partner.

Pursuant to a side letter dated 1 May 2013 between (1) IP Venture Fund II (GP) LLP, (2) Top Technology Ventures Limited and (3) European Investment Fund, the LPA has been amended (such as set out below) with respect to the commitment of European Investment Fund as limited partner and investor of the Partnership.

14.20.2 Subscription Agreement for IP Venture Fund II L.P.

Pursuant to a subscription agreement dated 22 May 2013 between (1) IP Venture Fund II (GP) LLP and (2) European Investment Fund (the "EIF"), the parties agreed that EIF will subscribe for a commitment of £20,000,000 and become a limited partner and investor under the LPA of IP Venture Fund II, subject to the provisions of the side letter dated 1 May 2013 between (1) IP Venture Fund II (GP) LLP, (2) Top Technology Ventures Limited and (3) EIF (as set out below).

14.20.3 Side Letter regarding the European Investment Fund investment

Pursuant to a side letter dated 1 May 2013 and made between (1) IP Venture Fund II (GP) LLP, (2) Top Technology Ventures Limited and (3) European Investment Fund (the ("EIF"), the parties agreed the following principal points:

(a) EIF's commitment is due at a time when (i) the total commitments of the investors in IP Venture Fund II equal at least £30,000,000 and (ii) all registrations, licences, approvals and consents that are necessary for the establishment and carrying on the business of the Partnership have been obtained;
(b) EIF is entitled to appoint one person to the investors' advisory committee of IP Venture Fund II, such seat being maintained for as long as EIF remains an investor in the IP Venture Fund II;
(c) EIF is authorised to transfer its commitment or interest in IP Venture Fund II to the European Investment Bank and the General Partner will not withhold its consent to the transfer. This transfer is not subject to a right of first refusal by the other investors provided that any transfer complies with all applicable anti-money laundering requirements that are in place;
(d) EIF's investment shall rank pari passu with market oriented investors investing in the IP Venture Fund II and such pari passu rank is to be reflected in the LPA;
(e) Confirmation by IP Venture Fund II (GP) Limited that the majority of the capital being invested in portfolio companies under the co-investment arrangements between IP Group and IP Venture Fund II Limited is provided by an entity operating in circumstances corresponding to the market economy investor principle;
(f) IP Venture Fund II (GP) Limited undertakes that EIF's indirect participation in any portfolio company shall not exceed 25 per cent. of the total shareholding in any such portfolio company;
(g) No distribution in specie will be made to EIF without prior notice; and
(h) No changes to the investment policy of the Partnership shall be made without prior written consent of EIF.

The parties further agree that the provisions of this letter will prevail in the event of conflict between the provisions of the LPA and/or Subscription Agreement and the provisions of this letter.

14.20.4 Management Agreement

Pursuant to a management agreement dated 21 May 2013 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) Top Technology Ventures Limited (the "Manager") the parties agreed that the Manager will act as a discretionary manager of the IP Venture Fund II so as to enable the General Partner to fulfil its obligations under the LPA as detailed above.

The Manager's responsibilities under the agreement include sourcing, evaluating and negotiating investment opportunities, monitoring investments, evaluating, negotiating and arranging for the realisation of investments and preparing the reports and accounts of the Partnership in accordance with the provisions of the LPA.

Neither the Manager nor its officers, directors, shareholders, agents, partners or employees shall have any liability for any loss to IP Venture Fund II or the partners arising in connection with the services to be performed, save in respect of any matter resulting from such person's fraud, wilful misconduct, bad faith or reckless disregard for its obligations and duties in relation to IP Venture Fund II, or its gross negligence, or, in the case of the Manager, for any breach of any rules of the FCA or any provision of FSMA binding upon it.

The management agreement may be terminated with immediate effect by either party by written notice to the other. The agreement shall terminate on the happening of any of the following events:

(a) the removal or withdrawal of the General Partner as general partner of the IP Venture Fund II unless the General Partner is replaced by an associate (as this term is defined under the LPA);
(b) the termination of the IP Venture Fund II;
(c) the Manager ceasing to be authorised under FSMA to manage or operate the IP Venture Fund II or to act as Manager of the IP Venture Fund's II investment portfolio;
(d) the insolvency, dissolution of liquidation of the Manager; or
(e) the General Partner deciding, on behalf of IP Venture Fund II, to terminate the management agreement and notifying the Manager of such decision.

The Manager shall be entitled to be paid by the General Partner such fee as may from time to time be agreed between the General Partner and the Manager.

The Manager shall be free to render similar services to third parties, subject to the provision of services to the IP Venture Fund II not being materially adversely affected thereby.

14.20.5 Deed of variation of the LPA

Pursuant to a deed of variation dated 21 November 2013 between (1) IP Venture Fund (GP) Limited (the "General Partner") and (2) IP2IPO (the "Initial Limited Partner"), the parties agreed certain variations, clarifications and supplemental terms to the limited partnership agreement (the "LPA") dated 21 May 2013 (the "Original Agreement").

The principal provisions of the deed of variation are as follows:

(a) an additional possibility of drawings by the General Partner is introduced entitling the General Partner to make drawings out of the Partnership (i) on the date of submission of the first drawdown notice in respect of an investment to be made in a Relevant Investee Company (the "Agreed Fee Drawdown Date"), on account of fifty per cent. (50 per cent.) of the Agreed Fee; and (ii) on the date which is the earlier of (i) 6 months from the Agreed Fee Drawdown Date or (ii) the Last Completion Date, on account of the remaining fifty per cent. (50 per cent.) of the Agreed Fee not drawn down pursuant to (i) above;
(i) "Agreed Fee" meaning £402,739.73, being the amount equivalent to what the General Partner's share of Net Income and Capital Gains (as defined in the LPA

as varied) would have been under Clause 6.3.1 assuming the same had been accruing during the Agreed Period;

(ii) "Agreed Period" means the period commencing on the Effective Date and ending on the First Closing Date (being 22 May 2013);
(iii) "Effective Date" means 1 August 2012;
(iv) "Last Completion Date" means the date of legal completion of the last transfer of a Relevant Investee Company to the Fund (excluding, for these purposes, any Relevant Investee Company or Companies which, despite all reasonable efforts, the Group and/or its associates are unable to procure the transfer to the Fund of the same as a result of circumstances beyond their control); and
(v) "Relevant Investee Companies" means those companies which have been first invested in by the Initial Limited Partner (whether by way of convertible loan or subscription for equity) during the Agreed Period and which, immediately prior to such first investment, would have fallen within the investment policy of the Fund, being Medaphor Limited, Cryptographiq Limited, Clyde Biosciences Limited, Azuri Technologies Limited, Magnomatics Limited, Oxehealth Limited, Magnetometer Limited, Ubiquigent Limited, Leeds Label Free Detection Limited and Fault Current Limited; and
(b) one of the investment policies set out in Schedule III of the LPA regarding the fact that the Fund shall only invest in Investee Companies which are not companies in which IP Group, IP Venture Fund I ("IPVF I") or any of their associates have invested in, at the time of the First Closing Date, shall not apply in Relevant Investee Companies is allowed.

14.20.6 Investors' Special Consent

Investors' special consent and General Partner consent letters have been granted in respect of the deed of variation of the LPA on 21 November 2013.

14.21 Summary relating to the Finance Wales Co-Investment MOU

Further to their initial 2007 agreement, the parties agreed, pursuant to a memorandum of understanding dated 25 June 2013 and made between (1) Fusion IP and (2) Finance Wales, certain arrangements in connection with their co-investment strategy for investing in opportunities arising from Fusion IP's IP pipeline agreements with its portfolio of Welsh universities.

The principal provisions of the Finance Wales Co-Investment MOU are as follows:

(a) Finance Wales will provide Fusion IP with continued access to substantial additional funding for its portfolio of companies;
(b) Finance Wales proposed a tiered approach, including:
(i) initial seed investment for technology development and market validation purposes;
(ii) a series A round investment to fund product/business development and a move toward full commercialisation; and
(iii) a capital growth round as businesses move towards IPO or exit;
(c) the parties will share due diligence costs and seek to mirror investment structure to facilitate such co-investments;
(e) each party has the right to declined to invest on a deal by deal basis and round by round basis; and

(f) the Finance Wales Co-Investment MOU shall be in place until April 2018 and may be terminated by either party at any time.

14.22 Summary of Cambridge Innovation Capital Agreements

14.22.1 Subscription Agreement and Shareholders' Agreement

Pursuant to a subscription agreement entered into on 9 October 2013 between (1) Cambridge Innovation Capital plc ("CIC") and (2) IP2IPO and a shareholders' agreement entered into on 16 July 2013 between (1) The Chancellor, Masters, and Scholars of the University of Cambridge (the "University of Cambridge"), (2) RBC CEES Trustee Limited, (3) CIC and (4) Cambridge Innovation Capital (Jersey) Limited ("Subsidiary"), IP2IPO agreed to subscribe for 4,000,000 B shares of £1 each in the capital of CIC at a subscription price of £1.25 per share (which gave IP2IPO an 8 per cent. of the issued share capital of CIC).

14.22.2 Articles of association of CIC

The articles of association adopted by CIC provide that:

(a) the A shares, the B shares and the B1 shares are separate classes of shares but shall rank pari passu, except in respect of a return of assets prior to a listing of CIC, where the holders of B shares shall first be paid an amount equal to the aggregate subscription price paid for the B shares, secondly the holders of A shares and B1 shares shall be paid an amount equal to 25 per cent. of the amount paid to the holders of B shares and the balance shall be paid equally between the holders of shares of whatever class pro rata to the number of shares held by them; and
(b) the board of directors shall refuse to register any transfer of any share unless such transfer is made in compliance with the pre-emption provisions of the articles of association.

14.23 Summary of the agreement relating to Columbia University

14.23.1 Collaboration Agreement relating to the IP Commercialisation Partnership

Pursuant to a collaboration agreement dated 24 October 2013 and made between (1) IP Group, Inc., (2) IP2IPO Americas Limited (together "IPG") and (3) The Trustees of Columbia University in the City of New York, on behalf of Columbia Technology Ventures (the "Columbia University"), the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with the commercialisation of early-stage, proof of principle opportunities based on intellectual property developed at Columbia University and geared towards the formation of spin-out companies. Broadly summarised, these arrangements entitle IPG, at its sole discretion and determination, to fund proof of principle ("POP") opportunities up to an aggregate level of \$500,000 over a period of 18 months from the date of the agreement (the "Pilot Term").

During the Pilot Term, IPG shall support and work in co-operation with the University in its identification of potential commercialisation opportunities in or relating to technologies developed within the University.

14.24 Summary of the agreement relating to the University of Pennsylvania

14.24.1 Collaboration Agreement relating to the IP Commercialisation Partnership

Pursuant to a collaboration agreement dated 11 November 2013 and made between (1) IP Group, Inc., (2) IP2IPO Americas Limited (together "IPG") and (3) The Trustees of the University of Pennsylvania ("Penn"), the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with early-stage, proof of principle opportunities for IPG to invest in technologies and companies based on Penn IP through Upstart (the UPstart company formation program of Penn's Centre for Technology Transfer). Broadly summarised, these arrangements entitle IPG, at its sole discretion and determination, to fund proof of principle ("POP") opportunities up to an aggregate level of US \$500,000 over a period of 18 months from the date of the agreement (the "Pilot Term").

During the Pilot Term, IPG shall support and work in co-operation with Penn in its identification of potential commercialisation opportunities in or relating to technologies designated by Upstart.

14.25 Summary of the agreement relating to the Princeton University

14.25.1 Collaboration Agreement relating to the IP Commercialisation Agreement

Pursuant to a collaboration agreement dated 28 March 2014 and made between (1) IP Group, Inc., (2) IP2IPO Americas Limited (together "IPG") and (3) The Trustees of Princeton University, the parties agreed certain arrangements with regard to an IP commercialisation partnership in connection with the commercialisation of early-stage, proof of principle opportunities based on intellectual property developed at Princeton University and geared towards the formation of spin-out companies. Broadly summarised, these arrangements entitle IPG, at its sole discretion and determination, to fund proof of principle ("POP") opportunities up to an aggregate level of US \$500,000 over a period of 18 months from the date of the agreement (the "Pilot Term").

14.26 Summary of the FedIMPACT, LLC Operating Agreement

Pursuant to an operating agreement dated 3 October 2014 between (1) TNT Management, LLC ("TNT") and (2) IP2IPO FI Limited and IP Group, Inc. (together "IPG Group"), the parties agreed to establish a limited liability company in the State of Delaware under the name FedIMPACT, LLC ("FedIMPACT" or the "LLC") to carry on the business of identifying, funding, developing and commercialising promising technologies sourced from an initial group of US Department of Energy National Laboratories including Pacific Northwest National Laboratory and National Renewable Energy Laboratory (together the "DOE Laboratories") pursuant to a pilot engagement with such laboratories (the "DOE Pilot").

The principal provisions of the operating agreement are as follows:

(a) IPG Group contributed \$75,000 to the capital of the LLC and agreed to contribute, prior to the first day of each fiscal quarter, additional capital contributions to the LLC in the amount equal to the LLC's operating budget contained in such operating plan;
(b) the "Class A Interests" (held by TNT) shall be voting, participating interests and the "Class B Interests" (held by IPG Group) shall be non-voting, participating interests;
(c) the board of managers consists of three members, one of whom IPG Group shall have the right to appoint and two of whom TNT shall have the right to appoint;
(d) the board of managers shall not have the right to take certain actions without the prior written approval of both IPG Group and TNT including:
(i) any amendment or change to the formation documents;
(ii) redemptions or repurchases of interests, issuance of interests or recapitalisations of any type or any changes including in capital structure;
(iii) the sale, licence, assignment, transfer, lease, sublease, mortgage, pledge, disposal etc. of all or substantially all of the LLC's assets;
(iv) approving the operating plan and expenditures over and above the budget included in the operating plan;
(v) dissolution or liquidation of the LLC or any subsidiary of the LLC;
(vi) entering into joint-venture agreements, formal strategic alliance or other partnership type arrangement or collaboration, etc.;
(vii) declaration or payment of dividends, distributions, special payments or reimbursements etc.;
(viii) changing the composition of the board of managers;
(ix) adding or removing any laboratory from the DOE Pilot or changing the scope of the DOE Pilot;
(x) investing any POC Funding or Seed Funding (as defined below);
(xi) entering into any technology licensing agreements with any of the DOE Laboratories; or
(xii) entering into any management or consultancy agreements,

except as otherwise stated in the operating agreement;

(e) the LLC will be responsible for delivering the objectives of the DOE Pilot and will be the primary interface during the DOE Pilot with the DOE Laboratories;
(f) in coordination with the IPG Group, the LLC will select technologies sourced from the DOE Laboratories as being suitable for investment, either through proof of concept funding with additional technical development to be performed at the DOE Laboratory ("POC Funding") or through more mature seed investments made directly into independent spin-out companies ("Seed Funding");
(g) for POC Funding, the LLC will in addition to the POC Funding provide program management services under a sponsored research agreement with the relevant DOE Laboratory and enter into an option to licence the proof of concept technology ("Technology Option");
(h) for Seed Funding resulting out of a POC Funding ("Type A Seed Technologies"), it is anticipated that, subject to agreement by the relevant DOE Laboratory, 55% of the equity in each new company ("NewCo") formed to develop the Type A Seed Technology will be issued to the LLC in exchange for contribution by the LLC to the NewCo of the Technology Option rights, technology and know-how; it is further anticipated that, subject to agreement by the relevant DOE Laboratory, the NewCo enter into a license agreement with the relevant DOE Laboratory to obtain the exclusive rights to the Type A Seed Technology in exchange for a combination of 45% NewCo equity issued to the relevant DOE Laboratory and royalties payable to the DOE Laboratory;
(g) for Seed technologies not requiring any prior POC Funding ("Type B Seed Technologies"), it is anticipated that, subject to agreement by the relevant DOE Laboratory, 33% of the equity in each NewCo formed to develop the Type B Seed Technology will be issued to the LLC; it is further anticipated that, subject to agreement by the relevant DOE Laboratory, the NewCo enter into a license agreement with the relevant DOE Laboratory to obtain the exclusive rights to the Type B Seed Technology in exchange for a combination of 67% NewCo equity issued to the relevant DOE Laboratory and royalties payable to the DOE Laboratory;
(h) concurrent with the Seed Funding and in consideration of the capital contributions made by IPG Group to the LLC under the operating agreement, the LLC will make a distribution of the NewCo equity held by the LLC to TNT (80%) and IPG Group (20%);
(i) IPG Group has the option, during the period commencing on the 3 October 2014 and ending one month following the end of the 18 months DOE Pilot, to purchase all of the Class A Interests held by TNT for an aggregate purchase price of \$250,000, subject to distributing any NewCo equity held by the LLC and equity to be held by the LLC on the basis of already made POC Funding to TNT (80%) and IPG Group (20%);
(j) upon IPG Group's decision to cease funding or failure to exercise the purchase option as described in (j) above, the IPG Group Class B Interests shall be transferred to TNT for no additional consideration; following such transfer, TNT may choose (i) to continue the term of the LLC under its sole ownership provided that any remaining cash assets shall promptly be distributed one hundred percent to IPG or (ii) determine that the LLC shall be wound up and dissolved in which case the assets of the LLC are distributed in the following order:
(i) payment of expenses and liabilities of the LLC;
(ii) setting up of reserves for contingent liabilities at the sole discretion of the board of managers;
(iii) any NewCo equity held by the LLC to TNT (80%) and IPG Group (20%);
(iv) any rights arising from existing POC Funding, Technology Options, technology, know-how, equipment or tangible assets or assets (other than cash) to TNT (100%); and
(v) remaining cash assets to IPG Group (100%).
(k) the operating agreement shall terminate at any time upon the mutual written agreement of IPG Group and TNT.

14.27 Other Material Contracts

(a) The Placing Agreement

Pursuant to the terms and conditions contained in the Placing Agreement, the Company has appointed Numis as (i) sponsor in connection with Admission; (ii) its agent for the purpose of publishing the Open Offer; (iii) its agent for implementing the Placing, in relation to which Numis has agreed to use its reasonable endeavours to procure Non-Firm Placees for the Placing Shares at the Issue Price; and (iv) its agent for implementing the Firm Placing, in relation to which Numis has agreed to its reasonable endeavours to procure Firm Placees for all of the Firm Placed Shares at the Issue Price. Numis has agreed to underwrite the Capital Raising. Accordingly, Numis shall subscribe as principal for any Capital Raising Shares not taken up at the Issue Price as underwriter of the Capital Raising.

In consideration of Numis' services under the Placing Agreement, the Company has agreed to pay to Numis, subject to and conditional upon Admission, a placing fee of two per cent. of the total aggregate gross proceeds of the Capital Raising and all properly incurred costs or expenses of, or in connection with the Firm Placing, the Placing and Open Offer, Admission and the Placing Agreement.

The obligations of Numis under the Placing Agreement are subject to certain conditions being satisfied including, amongst others: (i) the passing of the Resolutions (without material amendment) at the General Meeting; (ii) the Company having complied with all its obligations, in each case under the Placing Agreement or under the terms and conditions of the Placing and Open Offer, which fall to be performed or satisfied prior to Admission; (iii) Admission becoming effective by not later than 8.00 a.m. on 27 March 2015 (or such later time and date as Numis and the Company may agree); and (iv) there being no material breach of the warranties given in the Placing Agreement.

If any of the conditions is not satisfied (or waived by Numis) or becomes incapable of being satisfied by the required time and date being 8.00 a.m. on 10 April 2015 and/or such later time and date as Numis may agree, then Numis' obligations under the Placing Agreement shall cease and determine, without prejudice to any liability for any prior breach of the agreement and pursuant to certain surviving provisions. Additionally, Numis may, by notice, terminate the Placing Agreement in certain circumstances including, amongst others, where, there shall have been a material adverse change in the condition or the earnings, results of operations, management, business affairs or prospects of the Company and its subsidiaries and subsidiary undertakings from time to time, but only prior to Admission. Numis is not entitled to terminate the Placing Agreement after Admission.

The Company has given certain customary warranties and indemnities to Numis. The liabilities of the Company under those warranties and indemnities are unlimited as to time and amount.

In addition, the Company has further agreed that, subject to certain customary exceptions (including the issue of Shares under the Company's share option schemes) between the date hereof and the date falling 180 days after the date of the Placing Agreement, it will not, without the prior written consent of Numis, enter into any commitment or agreement, or put itself in a position where it is obliged to announce that any commitment or agreement may be entered into, which is or may be material in the context of the Capital Raising or any of the transactions contemplated under the Placing Agreement, or issue any shares or options over shares or securities convertible or exchangeable into shares or enter into any agreement or undertaking to do the same. Numis has agreed that neither it nor any person acting on its behalf will procure Placees for any of the Capital Raising Shares to be allotted and issued pursuant to the Capital Raising other than in accordance with certain selling restrictions.

(b) Placing agreement in respect of 2014 firm placing and placing and open offer and offer for subscription

Pursuant to the terms and conditions contained in the 2014 placing agreement, the Company had appointed Numis as (i) sponsor in connection with admission; (ii) its agent for the purpose of publishing the open offer and the offer for subscription; (iii) its agent for implementing the placing, in relation to which Numis had agreed to use its reasonable endeavours to procure non-firm placees for the placing shares; and (iv) its agent for implementing the firm placing, in relation to which Numis had agreed to its reasonable endeavours to procure firm placees for all of the firm placed shares at the issue price and, to the extent that Numis failed to procure such firm placees, Numis would have subscribed as principal for any firm placed shares not taken up at the issue price as underwriter of the firm placing. Numis had not agreed to underwrite the placing, the open offer or the offer for subscription.

In consideration of Numis' services under the placing agreement, the Company agreed to pay to Numis a commission of 2 per cent. of the total aggregate gross proceeds of the capital raising and all properly incurred costs or expenses of, or in connection with, the placing, open offer, capital raising and the placing agreement.

The obligations of Numis under the placing agreement were subject to certain conditions being satisfied.

The Company had given certain customary warranties and indemnities to Numis. The liabilities of the Company under those warranties and indemnities were unlimited as to time and amount.

In addition, the Company had further agreed that, subject to certain customary exceptions (including the issue of shares under the Company's share option schemes) between the date of the capital raising and the date falling 180 days after the date of the placing agreement, it would not, without the prior written consent of Numis, enter into any commitment or agreement, or put itself in a position where it would have been obliged to announce that any commitment or agreement were entered into, which was or may have been material in the context of the capital raising or any of the transactions contemplated under the placing agreement, or issue any shares or options over shares or securities convertible or exchangeable into shares or enter into any agreement or undertaking to do the same. Numis had agreed that neither it nor any person acting on its behalf would procure placees for any of the capital raising shares to be allotted and issued pursuant to the capital raising other than in accordance with certain selling restrictions.

15. LITIGATION

There are no, and have been no, governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the period of twelve months immediately preceding the date of this document which may have, or have had in the recent past, significant effects on the Company's financial position or profitability.

16. PENSIONS

IP Group operates a group pension scheme for which all employees are eligible. The assets of the scheme are held separately from those of IP Group in an independently administered fund. IP Group makes contributions at an agreed level on behalf of each of its employees (including the executive Directors) to either this scheme or to a personal pension scheme which has been nominated by the relevant employee for such purpose. IP Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due.

17. SIGNIFICANT SUBSIDIARIES

The following table contains a list of the principal subsidiaries of the Company as at 9 March 2015 (being the latest practicable date prior to the publication of this document), each of which is considered by the Company to be likely to have a significant effect on the assessment of the assets and liabilities, the principal position and/or the profits and losses of IP Group:

		Proportion of	Proportion of
		ownership	voting power
Name of subsidiary	Country of incorporation	interest (%)	held (%)
IP2IPO	England and Wales	100	100
IP2IPO FI Limited	England and Wales	100	100
IP2IPO Management Limited	England and Wales	100	100
IP2IPO Management II Limited	England and Wales	100	100
IP2IPO Management IV Limited	England and Wales	100	100
IP2IPO Management VI Limited	England and Wales	100	100
IP2IPO Management VII Limited	England and Wales	100	100
IP2IPO (Europe) Limited	England and Wales	100	100
Top Technology Ventures Limited	England and Wales	100	100
IP Venture Fund (GP) Limited	England and Wales	100	100
Techtran Group Limited	England and Wales	100	100
North East Technology (GP) Limited	England and Wales	100	100
IP Venture Fund II (GP) LLP	England and Wales	100	100
IP2IPO Americas Limited	England and Wales	100	100
IP Group, Inc.	United States of America	100	100
Modern Biosciences plc	England and Wales	61.1	69
PIMCO 2664 Limited	England and Wales	61.1	69
Fusion IP plc	England and Wales	100	100
Fusion IP Sheffield Limited	England and Wales	100	100
Fusion IP Cardiff Limited	England and Wales	100	100
Fusion IP Nottingham Limited	England and Wales	100	100
Fusion IP Two Limited	England and Wales	100	100
IP2IPO FI Limited	England and Wales	100	100

18. PROPERTY, PLANT AND EQUIPMENT

As at 31 December 2014, the net book value of property, plant and equipment held by IP Group was £0.2 million. There have been no material changes in the net book value of the property, plant and equipment held by IP Group since that date.

19. SIGNIFICANT CHANGE

The fair value of the Group's portfolio at 31 January 2015 (being the latest unaudited figures available prior to the publication of this document) was approximately £353 million, compared to approximately £349.9 million as at 31 December 2014, representing investments of approximately £0.5 million and a net fair value increase for the one month period of approximately £2.5 million excluding net investments and realisations. Cash, cash equivalents and deposits at 31 January 2015 totalled approximately £99.0 million, compared to £97.3 million as at 31 December 2014. Other than this increase in fair value of the Group's portfolio and increase in its cash, cash equivalents and deposits, there has been no significant change in the financial or trading position of the Group since 31 December 2014, being the date to which the latest published financial statements of IP Group were prepared.

20. RELATED PARTY TRANSACTIONS

20.1 Save as set out in paragraph 20.2 below or disclosed in note 23 to the unaudited preliminary results for the twelve months ended 31 December 2014 set out in Part 2 of Part IV of this document, in note 8 to the Company's interim results for the six months ended 30 June 2014, in note 24 to the Company's annual report and accounts for the financial year ended 31 December 2013, in note 24 to the Company's annual report and accounts for the financial year ended 31 December 2012 and in note 23 to the Company's annual report and accounts for the financial year ended 31 December 2011 (which financial information is each incorporated by reference into this document), no member of IP Group has entered into a related party transaction during the period commencing on 1 January 2011 and ending on 9 March 2015 (being the latest practicable date prior to the publication of this document).
20.2 Details of all related party transactions that have been entered into by a member of IP Group during the period commencing on 1 January 2011 and ending on 9 March 2015 (being the latest practicable date prior to the publication of this document) are set out below:

(a) Limited partnerships

IP Group manages a number of investment funds structured as limited partnerships. IP Group entities have a limited partnership interest and act as the general partners of these limited partnerships. IP Group therefore has power to exert significant influence over these limited partnerships. The following amounts in respect of these limited partnerships are included within the IP Group's accounting records as at 31 December 2014:

	Period to
	31 December 2014
Statement of comprehensive income	£'m
Revenue from services	1.3
	As at
	31 December 2014
Statement of financial position	£'m
Investment in limited partnerships	3.2
Amounts due from related parties	–

(b) Director transactions

The Directors had beneficial interests in shares in the following portfolio companies in which the Group is interested as at 9 March 2015 (the latest practicable date prior to publication of this document):

		Number of
		shares held at
Director	Company name	9 March 2015	%
Bruce Smith	Capsant Neurotechnologies Limited	20,724	1.4%
	Evocutis plc	15,241	<0.1%
	Getech Group plc	15,000	0.1%
	iQur Limited	2,000	0.8%
	Synairgen plc	200,000	0.3%
Alan Aubrey	Amaethon Limited – A Shares	104	3.1%
	Amaethon Limited – B Shares	11,966	1.0%
	Amaethon Limited – Ordinary shares	21	0.3%
	Avacta Group plc	20,276,113	0.4%
	Capsant Neurotechnologies Limited	11,631	0.8%
	Chamelic Limited	26	0.4%
	Cloud Sustainability Limited	26	0.5%
	Crysalin Limited	1,447	0.1%
	EmDot Limited	15	0.9%
	Evocutis plc	767,310	0.1%
	Getech Group plc	15,000	<0.1%
	Green Chemicals plc	108,350	0.8%
	Ilika plc	69,290	0.2%
	Karus Therapeutics Limited	223	0.1%
	Mode Diagnostics Limited – Ordinary shares	3,226	0.4%
	Mode Diagnostics Limited – A shares	229	0.5%
	Modern Biosciences plc	1,185,150	1.7%
	Modern Water plc	519,269	0.7%
	Oxford Advanced Surfaces Group plc	2,172,809	1.1%
	Oxford Nanopore Technologies Limited	115,666	0.5%
	Oxtox Limited	25,363	0.1%
	Plexus Planning Limited	1,732	0.6%
	Retroscreen Virology Group plc	37,160	<0.1%
	Revolymer plc	88,890	0.2%
	Salunda Limited	53,639	<0.1%
	Structure Vision Limited	212	1.0%

	Surrey Nanosystems Limited	453	0.2%
	Sustainable Resource Solutions Limited	30	1.3%
	Tissue Regenix Group plc	2,389,259	0.4%
	Tracsis plc Xeros Technology Group plc	121,189 40,166	0.5% <0.1%
Mike Townend	Amaethon Limited – A Shares	104	3.1%
	Amaethon Limited – B Shares	11,966	1.0%
	Amaethon Limited – Ordinary shares	21	0.3%
	Avacta Group plc	931,367	<0.1%
	Capsant Neurotechnologies Limited	11,282	0.8%
	Chamelic Limited	23	0.3%
	Cloud Sustainability Limited	25	0.5%
	Crysalin Limited	1,286	0.1%
	EmDot Limited	14	0.8%
	Getech Group plc	20,000	<0.1%

		Number of
		shares held at
Director	Company name	9 March 2015	%
Mike Townend	Green Chemicals plc	113,222	0.8%
(continued)	Ilika plc	10,000	<0.1%
	Mode Diagnostics Limited	1,756	0.2%
	Modern Biosciences plc	1,185,150	1.7%
	Modern Water plc	575,000	0.7%
	Oxford Advanced Surfaces Group plc	932,994	0.5%
	Oxford Advanced Surfaces Limited	5,000	0.2%
	Oxford Nanopore Technologies Limited	35,280	<0.1%
	Oxtox Limited	25,363	0.1%
	Retroscreen Virology Group plc	37,160	<0.1%
	Revolymer plc	35,940	<0.1%
	Structure Vision Limited	212	1.0%
	Surrey Nanosystems Limited	404	0.2%
	Sustainable Resource Solutions Limited	28	1.2%
	Synairgen plc	20,000	<0.1%
	Tissue Regenix Group plc	1,950,862	0.3%
	Tracsis plc	25,430	<0.1%
	Xeros Limited	35,499	<0.1%
Greg Smith	Avacta Group plc	390,407	<0.1%
	Capsant Neurotechnologies Limited	896	<0.1%
	Chamelic Limited	3	<0.1%
	Cloud Sustainability Limited	8	0.2%
	Crysalin Limited	149	<0.1%
	EmDot Limited	4	0.2%
	Encos Limited	5,671	0.3%
	Getech Group plc	8,000	<0.1%
	Green Chemicals plc	4,830	<0.1%
	Mode Diagnostics Limited – Ordinary shares	361	<0.1%
	Mode Diagnostics Limited – A shares	28	<0.1%
	Modern Biosciences plc	313,425	0.6%
	Modern Water plc	7,250	<0.1%
	Oxford Nanopore Technologies Limited	1,500	<0.1%
	Retroscreen Virology Group plc	61,340	0.1%
	Revolymer plc	4,500	<0.1%
	Summit Therapeutics plc1	798	<0.1%
	Surrey Nanosystems Limited	88	<0.1%
	Sustainable Resource Solutions Limited	9	0.4%
	Tissue Regenix Group plc	175,358	<0.1%
	Velocys plc	2,559	<0.1%
	Xeros Technology Group plc	5,499	<0.1%
David Baynes	Diurnal Limited	118	0.2%
Lynn Gladden	None
Jonathan Brooks	None
Mike Humphrey	None
Douglas Liversidge	None

^1. Summit Corporation plc completed a 20:1 share consolidation in 2014. Share numbers shown are the adjusted amounts.

(c) Portfolio companies

IP Group earns fees from the provision of business support services and corporate finance advisory to portfolio companies in which IP Group has an equity stake. The following amounts in respect of these fees are included within IP Group's accounting records as at 31 December 2014:

	Period to
	31 December 2014
Statement of comprehensive income	£'m
Revenue from services	0.9
	As at
	31 December 2014
Statement of financial position	£'m
Trade receivables	0.6

(d) Subsidiary companies

Subsidiary companies which are not 100% owned either directly or indirectly by the parent company have intercompany balances with other Group companies totalling as follows:

	As at
	31 December 2014
	£'m
Intercompany balances with other Group companies	8.5

These intercompany balances represent funding loans provided by Group companies that are interest free, repayable on demand and unsecured.

(e) The Firm Placing and Placing

IAML, which currently holds 25.7 per cent. of the Company's outstanding share capital, has committed to subscribe for 13,200,300 Firm Placing Shares and 1,466,700 Placing Shares (subject to claw back under the terms of the Open Offer and the Excess Application Facility). Baillie Gifford & Co ("Baillie Gifford"), which currently holds 10.5 per cent. of the Company's outstanding share capital, has committed to subscribe for 2,400,300 Firm Placing Shares and 266,700 Placing Shares (subject to claw back under the terms of the Open Offer and the Excess Application Facility). The commitment to subscribe for the Capital Raising Shares by each of IAML and Baillie Gifford, each of which is a substantial shareholder of the Company under Chapter 11 of the Listing Rules, constitutes a related party transaction under Listing Rule 11.1.10.

21. MISCELLANEOUS

21.1 The total cost and expenses of, and incidental to, the Capital Raising payable by the Company are estimated to amount to approximately £3.3 million.
21.2 The auditors of the Group in respect of the three financial years ended 31 December 2013 were BDO LLP, whose address is 55 Baker Street, London W1U 7EU. BDO LLP is a member firm of the Institute of Chartered Accountants in England and Wales.
21.3 The auditors of the Group in respect of the financial year ended 31 December 2014 and currently are KPMG LLP, whose address is 15 Canada Square, London E14 5GL. KPMG LLP is a member firm of the Institute of Chartered Accountants in England and Wales.
21.4 The Company's Registrar is Capita Asset Services, whose address is at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
21.5 Numis has given, and has not withdrawn, its written consent to the issue of this document with the inclusion herein of its name and references to it in the form and context in which they appear.
21.6 KPMG LLP has given and has not withdrawn its written consent to the inclusion on page 82 of this document of the statement attributed to it in the form and context in which it appears and has authorised the contents of that statement for the purposes of Prospectus Rule 5.5.3R(2)(f).
21.7 The financial information contained in this document does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act. Statutory accounts of the Company for each of the financial years ended 31 December 2013, 31 December 2012 and 31 December 2011 have been delivered to the Registrar of Companies and the Company's auditors have made a report under section 495 of the Companies Act in respect of each of those statutory accounts and each such report was an unqualified report and did not contain a statement under section 498(2) or (3) of the Companies Act.
21.8 The Existing Shares are in registered form, are capable of being held in uncertificated form and are admitted to the premium segment of the Official List and are traded only on the main market for listed securities of the London Stock Exchange. Application for trading of the Capital Raising Shares is not being, and will not be, sought on any other stock exchange other than the main market for listed securities of the London Stock Exchange. The Capital Raising Shares will be admitted with the ISIN GB00B128J450.
21.9 The Capital Raising Shares will be in registered form and, subject to the provisions of the Regulations, the Directors may permit the holding of shares of any class in uncertificated form and title to such shares may be transferred by means of a relevant system (as defined in the Regulations). Where shares are held in certificated form, share certificates will be sent to the registered members by first class post. Where shares are held in CREST, the relevant CREST stock account of the registered members will be credited.
21.10 The Capital Raising Shares will be issued at 225 pence per share. The Issue Price represents a 6.6 per cent. discount to the closing middle-market price of 240.9 pence per Share on 9 March 2015 (being the latest practicable date before the announcement of the terms of the Capital Raising).
21.11 Save in respect of the Open Offer, none of the Capital Raising Shares have been marketed or are available to the public in conjunction with the application for the Capital Raising Shares to be admitted to the premium segment of the Official List.
21.12 The Company will make an appropriate announcement to a Regulatory Information Service giving details of the results of the Capital Raising in accordance with the Listing Rules.
21.13 The Company confirms that where information in this document has been sourced from a third party, the source of this information has been provided, the information has been accurately reproduced and, as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

22. DOCUMENTS AVAILABLE FOR INSPECTION

22.1 Copies of the following documents will be available for inspection at the offices of Pinsent Masons LLP, 30 Crown Place, London EC2A 4ES and at the registered office of the Company during usual business hours on any day (except Saturdays, Sundays and public holidays) from and including the date of this document until Admission and will also be available at the General Meeting for at least 15 minutes prior to, and during, the meeting:
22.1.1 the Articles;
22.1.2 the interim results for the six months ended 30 June 2014 and the annual report and accounts of the Company for the three financial years ended 31 December 2013, 2012 and 2011;
22.1.3 the written consents referred to in paragraphs 21.5 and 21.6 of this Part V of this document;
22.1.4 the Directors' service contracts and letters of appointment referred to in paragraph 9.3 of this Part V of this document;
22.1.5 the Placing Agreement; and
22.1.6 this document.
22.2 In addition, copies of this document are available on the Company's website, www.ipgroupplc.com, or via the National Storage Mechanism (NSM) website located at www.morningstar.co.uk/uk/nsm.

10 March 2015

PART VI

DOCUMENTS INCORPORATED BY REFERENCE

The interim results for the six months ended 30 June 2014 together with the annual report and accounts of IP Group for the financial years ended 31 December 2013, 31 December 2012 and 31 December 2011 are available for inspection in accordance with paragraph 22 of Part V of this document and contain information which is relevant to the Capital Raising. These documents are also available on IP Group's website at www.ipgroupplc.com.

The table below sets out the various sections of such documents which are incorporated by reference into this document, so as to provide the information required under the Prospectus Rules and to ensure that Shareholders and others are aware of all information which, according to the particular nature of IP Group and of the Capital Raising Shares, is necessary to enable Shareholders and others to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of IP Group. It should be noted that other sections of such documents that are not incorporated by reference are either not relevant to Shareholders and others or are covered elsewhere in this Document.

		Page numbers in
Document	Section	such document
Half-yearly report for the six months ended 30 June 2014	Highlights	1
Half-yearly report for the six months ended 30 June 2014	Interim management report	2 to 11 inclusive
Half-yearly report for the six months ended 30 June 2014	Condensed consolidated statement of comprehensive income	12
Half-yearly report for the six months ended 30 June 2014	Condensed consolidated statement of cash flows	14
Half-yearly report for the six months ended 30 June 2014	Condensed consolidated statement of changes in equity	15
Half-yearly report for the six months ended 30 June 2014	Note to the half-yearly condensed set of financial statements	16 to 26 inclusive
Half-yearly report for the six months ended 30 June 2014	Statement of directors' responsibilities	27
Half-yearly report for the six months ended 30 June 2014	Independent review report	28
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Chairman's statement	2 to 3 inclusive
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Operational review	12 to 13 inclusive
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Director's report	74 to 75 inclusive
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Independent auditor's report	77 to 79 inclusive
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Consolidated statement of comprehensive income	80

Document	Section	Page numbers in such document
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Consolidated statement of financial position	81
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Consolidated statement of cash flows	82
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Consolidated Statement of changes in equity	83
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Notes to the consolidated financial statements	84 to 107 inclusive
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Company balance sheet	108
Annual report and accounts for the financial year ended 31 December 2013, together with the audit report thereon	Notes to the financial statements	109 to 111 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Chairman's statement	8 to 9 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Chief Executive's statement	10 to 11 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Director's report	50 to 51 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Independent auditor's report	54
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of comprehensive income	55
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of financial position	56
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated statement of cash flows	57
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Consolidated Statement of changes in equity	58
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Notes to the consolidated financial statements	59 to 80 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Company balance sheet	81

Document	Section	Page numbers in such document
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Notes to the financial statements	82 to 84 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Chairman's statement	6 to 7 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Chief Executive's statement	8 to 9 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Portfolio review	10 to 19 inclusive
Annual report and accounts for the financial year ended 31 December 2012, together with the audit report thereon	Financial review	20 to 23 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Director's report	32 to 34 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Independent auditor's report	49
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of comprehensive income	50
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of financial position	51
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of cash flows	52
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Consolidated statement of changes in equity	53
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Notes to the consolidated financial statements	54 to 76 inclusive
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Company balance sheet	77
Annual report and accounts for the financial year ended 31 December 2011, together with the audit report thereon	Notes to the Company's financial statements	78 to 80 inclusive

PART VII

DEFINITIONS AND GLOSSARY

The following definitions apply throughout this document, unless the context otherwise requires:

"£5m Bath Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Bath spin-out companies pursuant to the terms of the University of Bath Partnership
"£5m Bristol Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Bristol spin out companies pursuant to the terms of the University of Bristol Partnership
"£5m Glasgow Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Glasgow spin out companies pursuant to the terms of the University of Glasgow Partnership
"£5m King's Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in King's College London spin-out companies pursuant to the terms of the King's College London Partnership
"£5m Leeds Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Leeds spin-out companies pursuant to the terms of the University of Leeds Partnership
"£5m Southampton Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of Southampton spin-out companies pursuant to the terms of the University of Southampton Partnership
"£5m Surrey Fund"	the fund of up to £5 million which the Group has committed towards making seed capital investments in the University of Surrey spin-out companies pursuant to the terms of the University of Surrey Partnership
"£5m QMUL Fund"	the fund of up to £5 million which the Group has committed towards making seed capital investments in QMUL spin-out companies pursuant to the terms of the Queen Mary Partnership
"£5m York Fund"	the fund of £5 million which the Group has committed towards making seed capital investments in the University of York spin-out companies pursuant to the terms of the University of York Partnership
"Accredited Investor"	an "accredited investor" as defined in Section 501 of Regulation D under the US Securities Act
"Admission"	the admission of the Capital Raising Shares (i) to the premium segment of the Official List and (ii) to trading on the London Stock Exchange's main market for listed securities, becoming effective in accordance, respectively, with LR 3.2.7G of the Listing Rules and paragraph 2.1 of the Admission and Disclosure Standards

"Admission and Disclosure Standards"	the requirements contained in the publication "Admission and Disclosure Standards" containing, amongst other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's main market for listed securities
"AIM"	the market of that name operated by the London Stock Exchange
"AIS"	the IP Group Annual Incentive Scheme
"Application Form"	the personalised application form on which Qualifying Non CREST Shareholders who are registered on the register of members of the Company at the Record Date may apply for Open Offer Shares under the Open Offer
"Articles"	the articles of association of the Company, summary details of which are set out in paragraph 4 of Part V of this document
"Audit Committee"	the audit committee established by the Board
"Board" or "Directors"	the board of directors of the Company
"Business Day"	any day (excluding Saturdays, Sundays and public holidays) on which banks are open in London for the transaction of normal banking business
"Cambridge Innovation Capital Agreements"	the arrangements entered into on 9 October 2013 between (1) Cambridge Innovation Capital plc and (2) IP2IPO and (1) the University of Cambridge (2) RBC CEES Trustee Limited (3) Cambridge Innovation Capital plc and (4) Cambridge Innovation Capital (Jersey) Limited, further details of which are set out in paragraph 14.22 of Part V
"Capital Raising"	the Firm Placing and the Placing and Open Offer
"Capital Raising Shares"	the Firm Placed Shares, the Placing Shares and the Open Offer Shares to be allotted and issued by IP Group pursuant to the Capital Raising
"Cardiff University Agreement"	means the arrangements entered into on 29 November 2006 between (1) Fusion IP, (2) Fusion IP Cardiff Limited, (3) Cardiff University, (4) University College Cardiff Consultants Limited and (5) Cardiff Partnership Fund, further details of which are set out in paragraph 14.14 of Part V
	"certificated" or "in certificated form" a share or security which is not in uncertificated form
"City Code"	the City Code on Takeovers and Mergers issued by the Panel
"Closing Price"	the closing middle-market price of a Share as derived from the Daily Official List
"CNAP Partnership"	the arrangements entered into on 19 September 2003 between (1) the University of York, (2) IP2IPO and (3) Amaethon Limited (as subsequently amended on 16 March 2005), further details of which are set out in paragraph 14.3 of Part V of this document
"Companies Act"	the Companies Act 2006, as amended
"Company" or "IP Group"	IP Group plc, a company incorporated in England and Wales with registered number 04204490

"Corporate Governance Code"	the UK Corporate Governance Code published by the Financial Reporting Council in September 2014
"CREST"	the relevant system, as defined in the CREST Regulations, for the holding of shares in uncertificated form in respect of which Euroclear is the operator (as defined in the CREST Regulations)
"CREST Manual"	the rules governing the operation of CREST, consisting of the CREST Reference Manual, CREST International Manual, CREST Central Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedures and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July 1996 and as amended since)
"CREST member"	a person who has been admitted to Euroclear as a system member (as defined in the CREST Regulations)
"CREST participant"	a person who is, in relation to CREST, a system-participant (as defined in the CREST Regulations)
"CREST Regulations" or "Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001 no. 3755), as amended
"CREST sponsor"	a CREST participant admitted to CREST as a CREST sponsor
"CREST sponsored member"	a CREST member admitted to CREST as a sponsored member
"Daily Official List"	the daily record setting out the prices of all trades in shares and other securities conducted on the London Stock Exchange
"Deferred Bonus Share Plan" or "DBSP"	the IP Group Deferred Bonus Share Plan approved by shareholders of the Company by ordinary resolution passed on 13 May 2014, and as subsequently amended by the Remuneration Committee on 18 July 2014
"Disclosure and Transparency Rules"	the disclosure and transparency rules of the UK Listing Authority made in accordance with section 73A of FSMA, as amended from time to time
"EEA"	the European Economic Area
"Enlarged Share Capital"	the issued ordinary share capital of the Company following completion of the Capital Raising (assuming, unless otherwise provided, that no provisional awards of Shares vest under the LTIP between the date of posting of this document and the completion of the Capital Raising)
"ERISA"	the US Employment Retirement Income Security Act of 1974 as amended
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST
"Excess Application Facility"	the arrangement pursuant to which Qualifying Shareholders may apply for Open Offer Shares in excess of their Open Offer Entitlement provided they have agreed to take up their Open Offer Entitlement in full as set out in this document, in the case of Qualifying Non-CREST Shareholders, the Application Form

"Excess CREST Open Offer Entitlement"	in respect of each Qualifying CREST Shareholder, the entitlement (in addition to his Open Offer Entitlement) to apply for Excess Shares, credited to his stock account in CREST, pursuant to the Excess Application Facility, which is conditional on such Qualifying CREST Shareholder agreeing to take up its Open Offer Entitlement in full set out in this document
"Excess Shares"	the Open Offer Shares for which Qualifying Shareholders may apply under the Excess Application Facility
"Excluded Territory" or "Excluded Territories"	Australia, Canada, Japan, New Zealand, the Republic of South Africa and the United States
"Existing Shares"	the Shares in issue as at the date of this document
"FCA"	the Financial Conduct Authority of the United Kingdom
"FedIMPACT"	means FedIMPACT, LLC, a limited liability company incorporated in the State of Delaware
"FedIMPACT LLC Operating Agreement"	means the operating agreement entered into on 3 October 2014 between (1) TNT Management, LLC ("TNT") and (2) IP2IPO FI Limited and IP Group Inc., further details of which are set out in paragraph 14.26 of Part V
"Firm Placed Shares"	the 51,111,111 new Shares to be allotted and issued by the Company pursuant to the Firm Placing
"Firm Placees"	any persons who have agreed to subscribe for Firm Placed Shares pursuant to the Firm Placing
"Firm Placing"	the conditional placing by Numis, on behalf of the Company, of the Firm Placed Shares pursuant to the Placing Agreement
"Finance Wales"	means Finance Wales Investment Limited
"Finance Wales Co-Investment MOU"	means the non-binding agreement entered into on 25 June 2013 between (1) Fusion IP and (2) Finance Wales, further details of which are set out in paragraph 14.21 of Part V
"Form of Proxy"	the form of proxy accompanying this document for use by Shareholders in relation to the General Meeting
"FSMA"	the Financial Services and Markets Act 2000, as amended
"Fusion IP"	Fusion IP plc, a company incorporated in England and Wales, with registered number 05275732, being a wholly owned subsidiary of the Company
"General Meeting"	the general meeting of the Company convened for 10.00 a.m. on 26 March 2015, notice of which is set out in Part VIII of this document, and including any adjournment thereof
"Group"	IP Group and its subsidiary undertakings
"IAML"	Invesco Asset Management Limited of 30 Finsbury Square, London EC2A 1AG, a wholly owned subsidiary of Invesco Ltd
"IAS"	International Accounting Standards
"IASB"	International Accounting Standards Board

"IBME"	the University of Oxford's Institute of Biomedical Engineering
"IFRS"	International Financial Reporting Standards
"Intellectual Property" or "IP"	means any and all patents, trade marks, rights in designs, get-up trade, business or domain names, copyrights, and topography rights, (whether registered or not and any applications to register or rights to apply for registration of any of the foregoing), rights in inventions, know-how, trade secrets and other confidential information, rights in databases and all other intellectual property rights of a similar or corresponding character which may now or in the future subsist in any part of the world
"IP2IPO"	IP2IPO, a company incorporated in England and Wales with registered number 04072979, being a wholly owned subsidiary of the Company
"IP2IPO Management Limited" or "IML"	IP2IPO Management Limited, a company incorporated in England and Wales with registered number 04368104, being a wholly owned subsidiary of the Company
"IP2IPO Management II Limited" or "IM2"	IP2IPO Management II Limited, a company incorporated in England and Wales with registered number 04709243, being a wholly owned subsidiary of the Company
"IP Venture Fund II"	IP Venture Fund II L.P., a limited partnership in which IP2IPO and the European Investment Fund are each limited partners
"ISDX Markets"	the ISDX main board and the ISDX growth market, each operated by ICAP Securities and Derivatives Exchange Limited
"Issue"	the issue of Capital Raising Shares pursuant to the Capital Raising
"Issue Price"	225 pence per Capital Raising Share
"KB"	King's College London Business Limited, a company incorporated in England and Wales with registered number 02714181, being a wholly owned subsidiary of King's College London
"King's College London" or "KCL"	King's College London, a body corporate incorporated by Royal Charter
"King's College London Partnership"	the arrangements entered into on 12 November 2009 between (1) King's College London, (2) KB and (3) IP2IPO, further details of which are set out in paragraph 14.4 of Part V
"Listing Rules"	the listing rules made by the FCA under Part VI of FSMA, as amended from time to time
"London Stock Exchange"	London Stock Exchange plc
"LTIP"	the IP Group Long-Term Incentive Plan, adopted by shareholders of the Company at the annual general meeting in 2007, and as subsequently amended with approval of shareholders on 21 June 2011 and by the Remuneration Committee on 20 May 2014 and 18 July 2014
"Member account ID"	the identification code or number attached to any member account in CREST

"Modern Biosciences" or "MBS"	Modern Biosciences plc, a company incorporated in England and Wales with registered number 0544023, being a subsidiary of the Company
"Money Laundering Regulations"	the Money Laundering Regulations 2007 (SI 2007/2157), as amended from time to time
"Nomination Committee"	the nomination committee established by the Board
"Non-Firm Placees"	any persons who have agreed or shall agree to subscribe for Placing Shares pursuant to the Placing
"Notice of General Meeting"	the notice of General Meeting set out in Part VIII of this document
"Nottingham MOU"	means the memorandum of understanding entered into on 28 February 2013 between (1) Fusion IP and (2) the University of Nottingham, further details of which are set out in paragraph 14.18 of Part V
"Numis"	Numis Securities Limited of The London Stock Exchange Building 10 Paternoster Square, London EC4M 7LT, acting as sponsor, financial adviser, underwriter and broker
"Official List"	the Official List of the FCA pursuant to Part VI of FSMA
"Open Offer"	the offer to Qualifying Shareholders, constituting an invitation to apply for the Open Offer Shares, including pursuant to the Excess Application Facility, on the terms and subject to the conditions set out in this document and, in the case of Qualifying Non-CREST Shareholders, in the Application Form
"Open Offer Entitlement"	the pro rata entitlement of Qualifying Shareholders on the Record Date to apply for Open Offer Shares pursuant to the Open Offer
"Open Offer Shares"	the 5,777,777 Capital Raising Shares to be offered to Qualifying Shareholders under the Open Offer
"OUCD"	University of Oxford's Department of Chemistry
"Overseas Shareholders"	Shareholders and/or Scheme Shareholders (as the context permits) with a registered addresses outside the UK or who are citizens or residents of, or located in, countries outside the UK
"Oxford Equity Rights"	the right to future shares in spin-out companies from the University of Oxford's Chemistry Department with an original cost of £20.1 million
"Panel"	the Panel on Takeovers and Mergers
"participant ID"	the identification code or membership number used in CREST to identify a particular CREST member or other CREST participant
"Partnerships"	a long-term arrangement made by the Group with a university or other research intensive institution, including (where relevant) the University of Oxford Partnership, the University of Southampton Partnership, the King's College London Partnership, the University of Leeds Partnership, the University of Surrey Partnership, the University of Bristol Partnership, the CNAP Partnership, the University of York Partnership, the Queen Mary Partnership, the University of Bath Partnership and the University of Glasgow

	Partnership and the University of Sheffield Partnership, the Cardiff University Partnership, the University of Manchester Partnership, the Finance Wales Co-Investment MOU, the memorandum of understanding with each of the University of Nottingham and Swansea University the arrangements with Technikos, the arrangements between the Group and each of Columbia University, the University of Pennsylvania and Princeton University and the initiative with FedIMPACT, LLC
"Placed Shares"	the Firm Placed Shares and those Placing Shares allotted by the Company to Non-Firm Placees pursuant to the Placing
"Placees"	the Firm Placees and the Non-Firm Placees
"Placing"	the conditional subscription by the Non-Firm Placees for the Placing Shares which is subject to clawback to satisfy valid applications from Qualifying Shareholders under the Open Offer and the Excess Application Facility
"Placing Agreement"	the placing agreement dated 10 March 2015 between (1) IP Group and (2) Numis, further details of which are set out in paragraph 14.27(a) of Part V of this document
"Placing Shares"	the new Shares to be allotted and issued by the Company to Non Firm Placees pursuant to the Placing as the same may be increased or decreased at the discretion of the Directors as set out in this document
"Prospectus Rules"	the prospectus rules of the UK Listing Authority made in accordance with section 73A of FSMA, as amended from time to time
"Qualified Purchaser"	qualified purchaser, as defined in section 2(a)(51) of the US Investment Company Act
"QMUL"	Queen Mary and Westfield College University of London, a body incorporated by Royal Charter
"QIB"	qualified institutional buyers, as defined in Rule 144A under the US Securities Act
"Qualifying CREST Shareholders"	Qualifying Shareholders holding Shares in uncertificated form in CREST
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Shares in certificated form
"Qualifying Shareholders"	Shareholders on the register of members of the Company at the Record Date with the exclusion (subject to certain exceptions) of persons with a registered address or located or resident in the US or an Excluded Territory
"Queen Mary Partnership"	the arrangements entered into on 20 July 2006 between (1) QMUL and (2) IP2IPO as amended, further details of which are set out in paragraph 14.11 of Part V
"Receiving Agent"	Capita Asset Services of The Registry, 34 Beckenham Road Beckenham, Kent BR3 4TU
"Record Date"	5.30 p.m. on 9 March 2015

"Record Date Shares"	the Shares in issue as at the Record Date
"Registrar"	Capita Asset Services of The Registry, 34 Beckenham Road Beckenham, Kent BR3 4TU
"Registrar of Companies"	the Registrar of Companies in England and Wales
"Regulation D"	Regulation D under the US Securities Act
"Regulation S"	Regulation S under the US Securities Act
"Regulatory Information Service"	one of the regulatory information services authorised by the UK Listing Authority to receive, process and disseminate regulatory information in respect of listed companies
"Remuneration Committee"	the remuneration committee of the Board or a duly authorised committee of non-executive Directors established by the Board
"Resolutions"	the resolutions to be proposed at the General Meeting (and set out in the Notice of General Meeting) being (1) an ordinary resolution to approve the Capital Raising, (2) an ordinary resolution to authorise the Directors to allot Capital Raising Shares pursuant to the Capital Raising and (3) a special resolution to disapply statutory pre-emption rights in relation to the allotment of equity securities pursuant to the Capital Raising
"Share"	an ordinary share of 2 pence in the capital of the Company and "Shares" shall be construed accordingly
"Share Schemes"	the LTIP, the Sharesave Plan, the Deferred Bonus Share Plan and the AIS
"Shareholders" and each a "Shareholder"	holders of Shares
"Sharesave Plan"	the IP Group Sharesave Plan approved by shareholders of the Company by ordinary resolution passed on 13 May 2014
"stock account"	an account within a member account in CREST in which a holding of a particular share or other security in CREST is admitted
"Swansea MOU"	means the memorandum of understanding entered into on 17 March 2013 between (1) Fusion IP and (2) Swansea University, further details of which are set out in paragraph 14.19 of Part V
"Technikos"	Technikos LLP, a limited liability partnership registered in England and Wales with number OC319725
"Techtran"	Techtran Group Limited, a company incorporated in England and Wales with registered number 04544276, being a wholly owned subsidiary of the Company
"Top Technology Ventures"	Top Technology Ventures Limited, a company incorporated in England and Wales with registered number 1977742, being the venture capital fund management subsidiary of the Company
"UK Listing Authority" or "UKLA"	the FCA acting in its capacity as the competent authority for the purposes of Part VI of FSMA and in the exercise of its functions in respect of admission to the Official List
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland

"United States" or "US"	the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia
"University of Bath Partnership"	the arrangements entered into on 13 December 2007 between (1) the University of Bath, (2) IP2IPO and (3) the Company, further details of which are set out in paragraph 14.12 of Part V
"University of Bristol Partnership"	the arrangements entered into on 4 December 2005 between (1) the University of Bristol and (2) IP2IPO, further details of which are set out in paragraph 14.7 of Part V
"University of Cambridge"	the Chancellor, Masters and Scholars of the University of Cambridge
	"University of Glasgow Partnership" the arrangements entered into on 10 October 2006 between (1) the University Court of the University of Glasgow and (2) IP2IPO, further details of which are set out in paragraph 14.13 of Part V
"University of Leeds Partnership"	the arrangements entered into on 15 July 2005 (as varied by a supplemental agreement dated 17 March 2011) between (1) the University of Leeds, (2) Techtran and (3) the Company, further details of which are set out in paragraph 14.6 of Part V
"University of Manchester Partnership"	the arrangements entered into on 25 February 2013 between the University of Manchester (2) the University of Manchester 13 Limited and (3) IP2IPO, as subsequently varied, further details of which are set out in paragraph 14.17 of Part V
"University of Oxford"	the Chancellor, Masters and Scholars of the University of Oxford
"University of Oxford Partnership"	the arrangements entered into on 14 December 2000 (as varied by a supplemental agreement dated 13 September 2001) between (1) the University of Oxford and (2) IP2IPO (and others), further details of which are set out in paragraph 14.1 of Part V
"University of Sheffield Agreement"	means the arrangements entered into on 26 January 2005 and made between (1) Fusion IP, (2) Fusion IP Trading Limited (now Fusion IP Sheffield Limited), (3) Sheffield University Enterprises Limited and (4) the University of Sheffield, as subsequently varied, further details of which are set out in paragraph 14.5 of Part V
"University of Southampton Partnership"	the arrangements entered into on 20 March 2002, between (1) the University of Southampton, (2) University of Southampton Holdings Limited, (3) IP2IPO, (4) IML and (5) Southampton Asset Management Limited, as subsequently varied, further details of which are set out in paragraph 14.2 of Part V
"University of Surrey Partnership"	the arrangements entered into on 9 February 2006 between (1) the University of Surrey and (2) IP2IPO, further details of which are set out in paragraph 14.8 of Part V
"University of York Partnership"	the arrangements entered into on 10 March 2006 (as supplemented by a side agreement dated 27 March 2009) between (1) the University of York and (2) IP2IPO, further details of which are set out in paragraph 14.9 of Part V
"USE"	Unmatched Stock Event

"USE Instruction"	a USE instruction sent to Euroclear by Qualifying CREST Shareholders
"US Code"	the US Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder
"US Commodity Exchange Act"	the US Commodity Exchange Act of 1936, as amended
"US ESPP"	the IP Group US Employee Stock Purchase Plan adopted by the Remuneration Committee on 18 July 2014
"US Exchange Act"	the US Securities and Exchange Act of 1934, as amended
"US Investment Company Act"	the US Investment Company Act of 1940, as amended
"US Securities Act"	the US Securities Act of 1933, as amended
"US Securities and Exchange Commission"	the US government agency having primary responsibility for enforcing the federal securities laws and regulating the securities industry/stock market

All references to "pounds", "pounds sterling", "sterling", "£", "pence" and "p" are to the lawful currency of the UK.

All references to "dollars", "US dollars", "US\$", "\$" and "cents" are to the lawful currency of the United States.

All references in this document to times are, unless the context otherwise requires, references to the time in London, UK.

PART VIII

NOTICE OF GENERAL MEETING

IP Group plc

Incorporated in England and Wales with registered number 04204490

NOTICE IS HEREBY GIVEN that a GENERAL MEETING of IP Group plc (the "Company") will be held at the offices of the Company at 24 Cornhill, London EC3V 3ND at 10.00 a.m. on 26 March 2015 for the purposes of considering and, if thought fit, passing the following resolutions of which resolutions 1 and 2 will be proposed as ordinary resolutions and resolution 3 will be proposed as a special resolution.

Unless expressly stated otherwise, terms defined in the prospectus of the Company dated 10 March 2015 (the "Prospectus") shall have the same meaning when used in this Notice of General Meeting.

RESOLUTION 1 – APPROVAL OF CAPITAL RAISING

The terms of the Firm Placing, the Placing and the Open Offer (including the Excess Application Facility) (the "Capital Raising") as set out in the Prospectus be and are approved and the directors of the Company be and are hereby directed to implement the Capital Raising and generally and unconditionally authorised to exercise the powers conferred by this Resolution and all the powers of the Company to the extent that the directors of the Company (or a duly appointed committee thereof) determine it necessary or desirable to implement the Capital Raising.

RESOLUTION 2 – AUTHORITY TO ALLOT CAPITAL RAISING SHARES IN CONNECTION WITH THE CAPITAL RAISING

Subject to the passing of resolution 1, the directors of the Company be and are hereby generally and unconditionally authorised for the purposes of section 551 of the Companies Act 2006 (the "Companies Act") to exercise all the powers of the Company to allot equity securities (as defined in section 560(1) of the Companies Act) up to an aggregate nominal amount of £1,137,777.76 in connection with the Capital Raising, such authority to expire on the date three months after the passing of this resolution (save that the Company may before such expiry make any offer or agreement which would or might require equity securities to be allotted after such expiry and the directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired). This authority is in addition to any existing such authority.

RESOLUTION 3 – DISAPPLICATION OF PRE-EMPTION RIGHTS FOR ISSUE OF CAPITAL RAISING SHARES

Subject to the passing of resolutions 1 and 2, the directors of the Company be and are hereby empowered pursuant to section 570 of the Companies Act and the authority conferred on the directors of the Company by resolution 2 to allot equity securities (within the meaning of section 560 of that Act) as if section 561(1) of that Act did not apply to such allotment up to an aggregate nominal amount of £1,137,777.76 in connection with the Capital Raising, such authority to expire on the date three months after the passing of this resolution (save that the Company may before such expiry make any offer or agreement which would or might require equity securities to be allotted after such expiry and the directors of the Company may allot equity securities pursuant to any such offer or agreement as if the authority had not expired). This authority is in addition to any existing such authority.

By order of the Board

Angela Leach Company Secretary

10 March 2015

Notes:

1. Members are entitled to appoint a proxy to exercise all or any of their rights to attend, speak and vote on their behalf at the meeting. A shareholder may appoint more than one proxy in relation to the General Meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that shareholder. A proxy need not be a shareholder of the Company but must attend the General Meeting to represent you. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice. If you do not have a proxy form and believe that you should have one, or if you require additional forms, please contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal or tax advice.
1. To be valid, the proxy form must be completed and lodged, together with the power of attorney or other authority (if any) under which it is signed, or a duly certified copy of such power or authority, with the Company's registrars, by hand only to Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or in accordance with the reply paid details, not less than 48 hours before the time appointed for holding the General Meeting.
1. The return of a completed proxy form, other such instrument or any CREST Proxy Instruction (as described in paragraph 8 below) will not prevent a shareholder attending the General Meeting and voting in person if he/she wishes to do so.
1. Any person to whom this notice is sent who is a person nominated under section 146 of the Companies Act to enjoy information rights (a "Nominated Person") may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. Such persons should direct any communications and enquiries to the registered holder of the shares by whom they were nominated and not to the Company or its registrars.
1. The statement of the rights of shareholders in relation to the appointment of proxies in paragraphs 1 and 2 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by shareholders of the Company.
1. To be entitled to attend and vote at the General Meeting (and for the purpose of the determination by the Company of the votes they may cast), shareholders must be registered in the Register of Members of the Company at 6.00 p.m. on 24 March 2015 (or, if the General Meeting is adjourned, at 6.00 p.m. on the date which is two business days before the start of the adjourned meeting). Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the General Meeting.
1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
1. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent (CREST ID No. RA10) by 10.00 a.m. on 24 March 2015. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
1. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
1. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
1. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided they do not do so in relation to the same shares.
1. In conjunction with its registrar, the Company has in place a facility to allow each shareholder to register proxy votes electronically. Detailed information of how to do this is set out on the form of proxy. A shareholder can register proxy votes electronically by either logging on to the registrars' website, www.capitashareportal.com and following the instructions, or, CREST members may register proxy votes following the procedures set out in the CREST Manual. To use the registrars' website www.capitashareportal.com, you will need to log in to your Share Portal account or register for the Share Portal if you have not already done so. To register for the Share Portal you will need your investor code. Once registered you will immediately be able to vote.
1. Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the meeting for the question to be answered.
1. A copy of this notice, and other information required by section 311A of the Companies Act, can be found at www.ipgroupplc.com/reports.
1. You may not use any electronic address provided either in the notice of General Meeting or any related documents (including the Chairman's letter and proxy form) to communicate for any purposes other than those expressly stated.
1. Mobile telephones may not be used in the meeting room and cameras, tapes and video recorders are not allowed in the meeting room.
1. Your personal data includes all data provided by you, or on your behalf, which relates to you as a shareholder, including your name and contact details, the votes you cast and your reference number (as attributed to you by the Company or its registrars). The Company determines the purposes for which, and the manner in which, your personal data is to be processed. The Company and any third party to whom it discloses the data (including the Company's registrars) may process your personal data for the purposes of compiling and updating the Company's records, fulfilling its legal obligations and processing the shareholder rights you exercise.
1. As at 9 March 2015 (being the last business day prior to the publication of this Notice) the Company's issued share capital consists of 479,524,397 ordinary shares, carrying one vote each. Therefore, the total voting rights in the Company as at 9 March 2015 are 479,524,397.

APPENDIX I

QUESTIONS AND ANSWERS ABOUT THE FIRM PLACING AND PLACING AND OPEN OFFER

The questions and answers set out in this Appendix I are intended to be in general terms only and, as such, you should read Appendices 2 and 3 to this document for full details of what action to take. If you are in any doubt as to the action you should take, you are recommended to seek your own personal financial advice immediately from your stockbroker, bank, fund manager, solicitor, accountant or other appropriate independent financial adviser who is authorised under FSMA if you are resident in the United Kingdom, or, if not, from another appropriately authorised independent financial adviser.

This Appendix I deals with general questions relating to the Firm Placing, Placing and Open Offer and more specific questions relating principally to persons resident in the United Kingdom who hold their Shares in certificated form only. If you are an Overseas Shareholder, you should read paragraph 6 of Appendix 2 to this document and you should take professional advice as to whether you are eligible and/or you need to observe any formalities to enable you to take up your Open Offer Entitlement or apply for Excess Shares pursuant to the Excess Application Facility. If you hold your Existing Shares in uncertificated form (that is, through CREST) you should read Appendix 2 to this document for full details of what action you should take. If you are a CREST sponsored member, you should also consult your CREST sponsor. If you do not know whether your Existing Shares are in certificated or uncertificated form, please call Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that, for legal reasons the Shareholder Helpline is only able to provide information contained in this document and information relating to the Company's register of members and is unable to give advice on the merits of the Capital Raising or provide legal, business, financial tax or investment advice.

The contents of this document should not be construed as legal, business, accounting, tax, investment or other professional advice. Each prospective investor should consult his, her or its own appropriate professional advisers for advice. This document is for your information only and nothing in this document is intended to endorse or recommend a particular course of action.

1. WHAT IS AN OPEN OFFER?

An open offer is a way for companies to raise money. Companies do this by giving their existing shareholders a right to acquire further shares at a fixed price in proportion to their existing shareholdings.

The Open Offer is an invitation by IP Group to Qualifying Shareholders to apply to subscribe, for 5,777,777 Open Offer Shares at a price of 225 pence per Open Offer Share. If you hold Shares on the Record Date or have a bona fide market claim (other than, subject to certain exceptions, where you are a Shareholder with a registered address in, or are located or resident in, the United States or an Excluded Territory) you will be entitled to subscribe for Open Offer Shares under the Open Offer. If you hold Shares in certificated form, your entitlement will be set out in your Application Form.

The Open Offer is being made on the basis of 1.2049 Open Offer Shares for every 100 Existing Share held by Qualifying Shareholders on the Record Date. If your entitlement to Open Offer Shares is not a whole number, you will not be entitled to subscribe for any fraction of an Open Offer Share and your entitlement will be rounded down to the nearest whole number.

Open Offer Shares are being offered to Qualifying Shareholders in the Open Offer at a discount to the share price on the last dealing day before the details of the Capital Raising were announced on 10 March 2015. The issue price of 225 pence per Open Offer Share represents a 6.6 per cent. discount to the closing middlemarket price quotation as derived from the Daily Official List of 240.9 pence per Share on 9 March 2015 (being the last dealing day before details of the Capital Raising were announced).

An Open Offer is not a rights issue and, therefore, if you are a Qualifying Shareholder and you do not wish to subscribe for Open Offer Shares to which you are entitled you will not be able to sell or transfer your entitlement to those Open Offer Shares.

Qualifying Shareholders are also being given the opportunity, provided they take up their Open Offer Entitlement in full, to apply, under the Excess Application Facility, for Excess Shares in excess of their Open Offer Entitlements. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for.

Valid applications by Qualifying Shareholders will be satisfied in full up to the amount of their individual Open Offer Entitlement (excluding any Capital Raising Shares applied for through the Excess Application Facility).

2. WHAT IS A FIRM PLACING?

A firm placing is where specific institutional investors agree to subscribe for shares and the number of shares subject to the placing are fixed and are not subject to clawback or re-allocation to a different element of the capital raising. A firm placing provides a company with certainty of new funds and an opportunity to introduce new institutional investors to its share register.

The Company proposes to issue 51,111,111 Capital Raising Shares at a price of 225 pence per Capital Raising Share under the Firm Placing. The Capital Raising Shares under the Firm Placing do not form part of the Open Offer and are not subject to clawback or re-allocation to the Placing, Open Offer or Excess Application Facility. Unless you are a Firm Placee, you will not participate in the Firm Placing.

3. WHAT IS A PLACING? AM I ELIGIBLE TO PARTICIPATE IN THE PLACING?

A placing is where certain existing institutional and other new investors conditionally agree to subscribe for a number of shares, but the number of shares to be allocated to each such investor is not fixed. Capital Raising Shares to be allocated to, and issued under, the Placing are subject to clawback to the extent that Qualifying Shareholders take up Open Offer Entitlements, at the discretion of the Directors (after consultation with Numis), apply under the Excess Application Facility. The number of Placing Shares to be allocated and issued under the Placing will therefore be reduced to the extent that valid applications are received from Qualifying Shareholders under the Open Offer and, if the Directors so determine, the Excess Application Facility. Unless you are a Placee you will not therefore participate in the Placing.

4. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. HOW DO I KNOW I AM ELIGIBLE TO PARTICIPATE IN THE OPEN OFFER?

If you receive an Application Form and, subject to certain exceptions, are not a holder with a registered address in, or located or resident in, the United States or any Excluded Territory, then you should be eligible to participate in the Open Offer as long as you have not sold all of your Existing Shares before 10 March 2015 (the time when the Existing Shares are expected to be marked "ex-entitlement" by the London Stock Exchange).

5. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. HOW DO I KNOW HOW MANY OPEN OFFER SHARES I AM ENTITLED TO TAKE UP?

If you hold your Existing Shares in certificated form and, subject to certain exceptions, do not have a registered address in, and are not located or resident in, the United States or any Excluded Territory, you will be sent an Application Form that shows:

5.1 how many Existing Shares you held on the Record Date;
5.2 how many Open Offer Shares are comprised in your Open Offer Entitlement; and

5.3 how much you need to pay if you want to take up in full your entitlement to Open Offer Shares.

If you are an Overseas Shareholder, subject to certain exceptions, you will not have received and will not receive an Application Form.

If you would like to apply for any or all of the Open Offer Shares, you should complete the Application Form in accordance with the instructions printed on it and the information provided in this document. Completed Application Forms should be returned, along with a cheque or banker's draft drawn in the appropriate form in the accompanying pre-paid envelope or returned by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal office hours only) so as to be received by Capita Asset Services by no later than 11.00 a.m. on 25 March 2015, after which time Application Forms will not be valid. Please allow at least four Business Days for delivery if sent by first class post from within the UK.

6. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM AND AM ELIGIBLE TO RECEIVE AN APPLICATION FORM. WHAT ARE MY CHOICES IN RELATION TO THE OPEN OFFER?

6.1 If you do not want to take up your Open Offer Entitlement

If you do not want to take up the Open Offer Shares to which you are entitled, you do not need to do anything. In these circumstances, you will not receive any Open Offer Shares. You will also not receive any money when the Open Offer Shares you could have taken up are sold, as would happen under a rights issue. You cannot sell your Application Form or your Open Offer Entitlement to anyone else.

If you do not take up your Open Offer Entitlement and assuming that you are not a Placee, then following the issue of the Open Offer Shares pursuant to the Open Offer, your interest in the Company will be diluted by approximately 10.6 per cent.

6.2 If you want to take up some, but not all, of your Open Offer Entitlement

If you want to take up some, but not all, of the Open Offer Shares to which you are entitled, you should write the number of Open Offer Shares you want to take up in Box 6 of your Application Form. For example, if you are entitled to take up 100 shares but you only want to take up 50 shares, then you should write "50" in Box 6. To work out how much you need to pay for the Open Offer Shares, you need to multiply the number of Open Offer Shares you want (in this example, "50") by 225 pence, which is the price in pence of each Open Offer Share (giving you an amount of £112.50 in this example). You should write this amount in Box 9 and this should be the amount that your cheque or banker's draft made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C payee only" is made out for. You should then sign the Application Form (ensuring that all joint holders sign (if applicable)) and return the completed Application Form, together with a cheque or banker's draft for the relevant amount, in the accompanying pre-paid envelope by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal office hours only) so as to be received by Capita Asset Services by no later than 11.00 a.m. on 25 March 2015, after which time Application Forms will not be valid. If you post your Application Form by first-class post, you should allow at least four Business Days for delivery if sent by first class post from within the UK.

6.3 If you want to take up all of your Open Offer Entitlement

If you want to take up all of the Open Offer Shares to which you are entitled, all you need to do is sign the Application Form (ensuring that all joint holders sign (if applicable)) and send the Application Form, together with your cheque or banker's draft for the amount (as indicated in Box 5 of your Application Form) made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C payee only", in the accompanying pre-paid envelope by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal office hours only) so as to be received by Capita Asset Services by no later than 11.00 a.m. on 25 March 2015, after which time Application Forms will not be valid. If you post your Application Form by first-class post, you should allow at least four Business Days for delivery if sent by first class post from within the UK.

6.4 If you want to apply for more than your Open Offer Entitlement

Provided that you have agreed to take up your Open Offer Entitlement in full, you can apply for further Open Offer Shares using the Excess Application Facility. You should write the number of Open Offer Shares that you wish to take up, including those for which you are applying under the Excess Application Facility in Box 8 in addition to completing the remainder of and signing the Application Form.

Please note that applications for Excess Shares will only be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and Excess Shares are clawed back from the Placing. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications may be scaled back pro rata to the number of Excess Shares applied for.

6.5 How do I pay

All payments must be in pounds sterling and made by cheque or banker's draft made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C payee only". Cheques must be drawn on the personal account of the individual investor, which must have sole or joint title to the funds. Cheques or banker's drafts must be drawn in pounds sterling on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker's drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right hand corner and must be for the full amount payable for the application. Third party cheques will not be accepted with the exception of building society cheques or banker's drafts where the building society or bank has confirmed the name of the account holder and the number of an account held in the applicant name at the building society or bank by stamping or endorsing the cheque or draft to such effect. The account name should be the same as that shown on the Application Form. Post-dated cheques will not be accepted. Third party cheques (other than building society cheques or banker's drafts where the building society or bank has confirmed that the relevant Qualifying Shareholder has title to the underlying funds) will be subject to the Money Laundering Regulations which will delay Shareholders receiving their Open Offer Shares.

Cheques or banker's drafts will be presented for payment upon receipt. The Company reserves the right to instruct Capita Asset Services, as receiving agent, to seek special clearance of cheques and banker's drafts to allow the Company to obtain value for remittances at the earliest opportunity. No interest will be paid on payments made before they are due. It is a term of the Open Offer that cheques shall be honoured on first presentation and the Company may elect to treat as invalid acceptances in respect of which cheques are not so honoured. All documents, cheques and banker's drafts sent through the post will be sent at the risk of the sender. Payments via CHAPS, BACS or electronic transfer will not be accepted.

A definitive share certificate will then be sent to you for the Open Offer Shares that you take up. Your definitive share certificate for Open Offer Shares is expected to be despatched to you by 7 April 2015.

7. I HOLD MY EXISTING ORDINARY SHARES IN UNCERTIFICATED FORM IN CREST. WHAT DO I NEED TO DO IN RELATION TO THE OPEN OFFER?

CREST members should follow the instructions set out in Part I of this document. Persons who hold Existing Shares through a CREST member should be informed by the CREST member through which they hold their Existing Shares of the number of Open Offer Shares which they are entitled to take up or apply for under their Open Offer Entitlement and their Excess CREST Open Offer Entitlement respectively, and should contact them if they do not receive this information.

8. I ACQUIRED MY EXISTING SHARES PRIOR TO THE RECORD DATE AND HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHAT IF I DO NOT RECEIVE AN APPLICATION FORM OR I HAVE LOST MY APPLICATION FORM?

If you do not receive an Application Form but hold your Existing Shares in certificated form, this probably means that you are not eligible to participate in the Open Offer. Some Qualifying Non-CREST Shareholders, however, will not receive an Application Form but may still be eligible to participate in the Open Offer, namely:

8.1 Qualifying CREST Shareholders who held their Existing Shares in uncertificated form on 9 March 2015 and who have converted them to certificated form;
8.2 Qualifying Non-CREST Shareholders who bought Existing Shares before 8.00 a.m. on 10 March 2015 but were not registered as the holders of those shares at the close of business on 9 March 2015; and
8.3 certain Overseas Shareholders.

If you do not receive an Application Form but think that you should have received one, or you have lost your Application Form, please contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal business, accounting, tax, investment or other professional advice.

9. I AM A QUALIFYING SHAREHOLDER, DO I HAVE TO APPLY FOR ALL THE OPEN OFFER SHARES I AM ENTITLED TO APPLY FOR?

You can take up any number of the Open Offer Shares allocated to you under your Open Offer Entitlement. Your maximum Open Offer Entitlement is shown on your Application Form. Any applications by a Qualifying Shareholder for a number of Open Offer Shares which is equal to or less than that person's Open Offer Entitlement will be satisfied, subject to the Open Offer becoming unconditional. If you decide not to take up all of the Open Offer Shares comprised in your Open Offer Entitlement, then your proportion of the ownership and voting interest in IP Group will be reduced. Please refer to the answer to questions 6 and 14 for further information.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. As such, Qualifying Non-CREST Shareholders should note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST, they will have limited settlement capabilities (for the purposes of market claims only), the Open Offer Entitlements will not be tradable or listed and applications in respect of the Open Offer may only be made by the Qualifying Shareholders originally entitled or by a person entitled by virtue of a bona fide market claim. Open Offer Shares for which application has not been made under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up their Open Offer Entitlement will have no rights under the Open Offer or receive any proceeds from it.

10. WHAT IF I CHANGE MY MIND?

If you are a Qualifying Non-CREST Shareholder, once you have sent your Application Form and payment to the Registrar you cannot withdraw your application or change the number of Open Offer Shares for which you have applied, except in the very limited circumstances which are set out in Appendix 2 of this document.

11. WHAT IF THE NUMBER OF OPEN OFFER SHARES TO WHICH I AM ENTITLED IS NOT A WHOLE NUMBER? AM I ENTITLED TO FRACTIONS OF OPEN OFFER SHARES?

If the number is not a whole number, you will not receive a fraction of an Open Offer Share and your entitlement will be rounded down to the nearest whole number. The resulting fractions of Open Offer Shares will be aggregated and made available in the Excess Application Facility or the Placing for the benefit of the Company.

12. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHAT SHOULD I DO IF I WANT TO SPEND MORE OR LESS THAN THE AMOUNT SET OUT IN BOX 5 OF THE APPLICATION FORM?

If you want to spend less than the amount set out in Box 5, you should divide the amount you want to spend by £2.25, (being the price of each Open Offer Share under the Open Offer). This will give you the number of Open Offer Shares you should apply for. You can only apply for a whole number of Open Offer Shares. For example, if you want to spend £100 you should divide £100 by £2.25. You should round that down to the nearest whole number to give you the number of shares you want to take up and write that number in Box 6 and in Box 8. To then get an accurate amount to put on your cheque or banker's draft, you should multiply the whole number of Open Offer Shares you want to apply for by £2.25 and then fill in that amount in Box 9 and on your cheque or banker's draft accordingly.

Under the Excess Application Facility, provided that you are a Qualifying Non-CREST Shareholder and you have agreed to take up your Open Offer Entitlement in full, you may apply for more than the amount of your Open Offer Entitlement should you wish to do so.

You should note that the number of available Open Offer Shares under the Excess Application Facility is dependant on the level of take up of Open Offer Entitlements and the Directors exercising their discretion (in consultation with Numis) to claw back such Shares from the Placing. Please note that applications for Excess Shares will only be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and the Directors decide (after consultation with Numis) to claw back shares from the Placing. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. If every Qualifying Shareholder takes up their Open Offer Entitlements in full there will be no Open Offer Shares available under the Excess Application Facility. Qualifying Non-CREST Shareholders whose applications under the Excess Application Facility are scaled back will receive a pounds sterling amount equal to the number of Open Offer Shares applied and paid for, but not allocated to them, under the Excess Application Facility multiplied by the Issue Price. Monies will be returned as soon as reasonably practicable thereafter, without payment of interest and at the applicant's sole risk.

13. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHAT SHOULD I DO IF I HAVE SOLD SOME OR ALL OF MY EXISTING SHARES?

If you hold shares in the Company directly, and you have sold or sell some or all of your Existing Shares before 5.30 p.m. on 9 March 2015, you should contact the buyer or the person/company through whom you sold your shares. The buyer may be entitled to apply for Open Offer Shares under the Open Offer. If you sell any of your Existing Shares on or after 5.30 p.m. on 9 March 2015, you may still take up and apply for the Open Offer Shares as set out on your Application Form.

14. WILL THE EXISTING SHARES THAT I HOLD NOW BE AFFECTED BY THE OPEN OFFER?

If you decide not to apply for any of the Open Offer Shares to which you are otherwise entitled under the Open Offer, or you only apply for some of your entitlement, your proportionate ownership and voting interest in the Company will be reduced.

15. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHEN DO I HAVE TO DECIDE IF I WANT TO APPLY FOR OPEN OFFER SHARES?

Capita Asset Services must receive the Application Form by no later than 11.00 a.m. on 25 March 2015, after which time Application Forms will not be valid. If an Application Form is being sent by first-class post in the UK, Qualifying Shareholders are recommended to allow at least four Business Days for delivery.

16. I HOLD MY EXISTING SHARES IN CERTIFICATED FORM. WHEN WILL I RECEIVE MY NEW SHARE CERTIFICATE?

It is expected that the Registrar will post all new share certificates by 7 April 2015.

17. HOW DO I TRANSFER MY ENTITLEMENTS INTO THE CREST SYSTEM?

If you are a Qualifying Non-CREST Shareholder, but are a CREST member and want your Open Offer Shares to be in uncertificated form, you should complete the CREST deposit form (contained in the Application Form) and ensure it is delivered to the Crest Courier and Sorting Service ("CCSS") in accordance with the instructions in the Application Form. CREST sponsored members should arrange for their CREST sponsors to do this.

18. IF I BUY EXISTING SHARES AFTER THE RECORD DATE, WILL I BE ELIGIBLE TO PARTICIPATE IN THE OPEN OFFER?

If you bought your Existing Shares after the Record Date, you are unlikely to be able to participate in the Open Offer in respect of such Existing Shares. If you are in any doubt, please consult your stockbroker, bank manager or other appropriate financial adviser.

19. WILL THE PLACING AND OPEN OFFER AFFECT DIVIDENDS ON THE EXISTING SHARES?

The Capital Raising Shares will, when issued and fully paid, rank equally in all respects with the Existing Shares, including with regard to the right to receive all dividends or other distributions made, paid or declared, if any, by reference to a record date after the date of their issue.

20. WILL I BE TAXED IF I TAKE UP MY ENTITLEMENTS?

Information on taxation with regard to the Open Offer is set out in paragraph 13 of Part V of this document. This information is intended as a general guide only and Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser immediately.

21. WHAT SHOULD I DO IF I LIVE OUTSIDE THE UNITED KINGDOM?

Your ability to apply to acquire Open Offer Shares may be affected by the laws of the country in which you live and you should take professional advice as to whether you require any governmental or other consents or need to observe any other formalities to enable you to take up your Open Offer Entitlement. Shareholders with registered addresses in, or who are located or resident in, the United States or any Excluded Territory are, subject to certain exceptions, not eligible to participate in the Open Offer. Your attention is drawn to the information in paragraph 6 of Appendix 2 of this document.

22. FURTHER ASSISTANCE

Should you require further assistance, please call Capita Asset Services on 0871 664 0321 from within the UK or on + 44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that, for legal reasons, the Shareholder Helpline is only able to provide information contained in this document and information relating to the Company's register of members and is unable to give advice on the merits of the Capital Raising or to provide legal, business, accounting, tax, investment or other professional advice. Calls may be recorded and monitored for security and training purposes.

APPENDIX 2 TERMS AND CONDITIONS OF THE OPEN OFFER

1. INTRODUCTION

As explained in Part I of this document, the Company is proposing to issue 56,888,888 Capital Raising Shares to raise approximately £128 million (before expenses) through the Firm Placing and the Placing and Open Offer.

Of the Capital Raising Shares being issued, 51,111,111 will be issued through the Firm Placing and 5,777,777 will be issued through the Placing and Open Offer.

Qualifying Shareholders are being offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Save for certain institutional Shareholders, Qualifying Shareholders are not being offered the right to subscribe for the Firm Placed Shares or the Placing Shares.

This Appendix 2 and, for certificated Shareholders, the accompanying Application Form, contain the formal terms and conditions of the Open Offer. Your attention is drawn to the letter from the Chairman in Part I of this document which sets out the background to and reasons for the Capital Raising.

Upon completion of the Capital Raising, the Capital Raising Shares will represent approximately 10.6 per cent. of the Enlarged Share Capital and the Record Date Shares will represent approximately 89.4 per cent. of the Enlarged Share Capital. Capital Raising Shares issued as part of the Firm Placing will account for approximately 9.5 per cent. of the Enlarged Share Capital and the Placing and Open Offer will account for approximately 1.1 per cent. of the Enlarged Share Capital.

The Open Offer is an opportunity for Qualifying Shareholders to apply for, in aggregate, 5,777,777 Open Offer Shares pro rata to their holdings on the Record Date and, pursuant to the Excess Application Facility, to apply for Excess Shares, at the issue price of 225 pence per Capital Raising Share in accordance with the terms of the Open Offer assuming in both cases, that such Qualifying Shareholders are not Placees.

The Record Date for entitlements under the Open Offer for Qualifying CREST Shareholders and Qualifying Non-CREST Shareholders is 5.00 p.m. on 9 March 2015. Application Forms for Qualifying Non-CREST Shareholders accompany this document and Open Offer Entitlements and Excess CREST Open Offer Entitlements are expected to be credited to stock accounts of Qualifying CREST Shareholders in CREST as soon as practicable after 8.00 a.m. on 11 March 2015. The latest time and date for receipt of completed Application Forms and payment in full under the Open Offer and settlement of relevant CREST instructions (as appropriate) is expected to be 11.00 a.m. on 25 March 2015 with Admission and commencement of dealings in Open Offer Shares expected to take place at 8.00 a.m. on 27 March 2015.

The Capital Raising is conditional on the Resolutions being duly passed at the General Meeting.

This document and, for Qualifying Non-CREST Shareholders only, the Application Form contains the formal terms and conditions of the Open Offer. Your attention is drawn to paragraph 2 of this Appendix 2, which gives details of the procedure for application and payment for the Open Offer Shares including any Excess Shares applied for pursuant to the Excess Application Facility. The attention of Overseas Shareholders is drawn to paragraph 6 of this Appendix 2 below.

The Capital Raising is underwritten by Numis.

Any Qualifying Shareholder who has sold or transferred all or part of his/her registered holding(s) of Existing Shares prior to 5.00 p.m. on 9 March 2015 is advised to consult his or her stockbroker, bank or other agent through or to whom the sale or transfer was effected as soon as possible since the invitation to apply for Open Offer Shares under the Open Offer may be a benefit which may be claimed from him/her by the purchaser(s) under the rules of the London Stock Exchange.

Application has been made to the UK Listing Authority for the Open Offer Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Open Offer Shares to be admitted to trading on the London Stock Exchange's main market for listed securities.

2. THE OPEN OFFER

Subject to the terms and conditions set out below (and, in the case of Qualifying Non-CREST Shareholders, in the Application Form), Qualifying Shareholders are being given the opportunity to apply for any number of Open Offer Shares at the Issue Price (payable in full on application and free of all expenses) up to a maximum of their pro rata entitlement which shall be calculated on the basis of:

1.2049 Open Offer Share for every 100 Record Date Shares

registered in the name of each Qualifying Shareholder on the Record Date and so in proportion for any greater or lesser number of Existing Shares then held.

The Open Offer Shares, when issued and fully paid, will be identical to and rank in full for all dividends or other distributions declared, made or paid after Admission and otherwise will rank equally with the Existing Shares. The Open Offer Shares are not being made available in whole or in part to the public except under the terms of the Open Offer.

Fractions of Open Offer Shares will not be offered to Qualifying Shareholders. Entitlements will be rounded down to the nearest whole number of Open Offer Shares and any fractional entitlements to Open Offer Shares that would otherwise have arisen will be aggregated and made available in the Excess Application Facility or the Placing as the Directors (in consultation with Numis) determine.

Qualifying Shareholders are also being given the opportunity, provided that they take up their Open Offer Entitlement in full, to apply for Excess Shares through the Excess Application Facility. Please note that applications for Excess Shares will only be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and such Excess Shares are clawed back from the Placing. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for.

Valid applications by Qualifying Shareholders will be satisfied in full up to the maximum amount of their individual Open Offer Entitlement (excluding any Excess Shares applied for through the Excess Application Facility).

Holdings of Existing Shares in certificated and uncertificated form will be treated as separate holdings for the purpose of calculating entitlements under the Open Offer, as will holdings under different designations and in different accounts.

If you are a Qualifying Non-CREST Shareholder, the Application Form shows the number of Existing Shares registered in your name on the Record Date (in Box 3) and also shows the maximum number of Shares for which you are entitled to apply if you take up your Open Offer Entitlement in full (in Box 4).

Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST and should refer to paragraph 4.2 of this Appendix 2 and also to the CREST Manual for further information on the relevant CREST procedures.

Qualifying Shareholders may apply for any number of Open Offer Shares up to the maximum to which they are entitled under the Open Offer and may apply for any number of Excess Shares pursuant to the Excess Application Facility, save that the maximum amount of Capital Raising Shares to be allotted under the Excess Application Facility will be limited by the maximum size of the Capital Raising less the aggregate of the Firm Placed Shares, the Capital Raising Shares issued under the Open Offer pursuant to Qualifying Shareholders' Open Offer Entitlements and any Capital Raising Shares that the Directors determine to issue under the Placing.

If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for.

Excess applications may be allocated in such manner as the Directors may determine in their absolute discretion and no assurance can be given that excess applications by Qualifying Shareholders will be met in full or in part or at all.

If a Qualifying Shareholder does not take up his Open Offer Entitlement in full, such Qualifying Shareholder's holding will be diluted by approximately 10.6 per cent. as a result of the Capital Raising (assuming that such Qualifying Shareholder is not a Placee). Furthermore, a Qualifying Shareholder who takes up his Open Offer Entitlements in full in respect of the Open Offer (and does not receive any other Capital Raising Shares pursuant to the Capital Raising) will suffer dilution of approximately 9.5 per cent. to his shareholding in the Company as a result of the Firm Placing.

The Open Offer Shares have been conditionally placed with Non-Firm Placees and are subject to clawback in favour of the Open Offer and, if the Directors so determine, the Excess Application Facility. Any Open Offer Shares not applied for under the Open Offer may be allocated by the Directors to the Placing or the Excess Application Facility and the net proceeds held for the benefit of the Company.

The Open Offer will remain open for acceptance until 11.00 a.m. on 25 March 2015.

Any Qualifying Shareholder who validly completes and returns an Application Form or requests registration of the Open Offer Shares comprised therein, or who is a CREST member or CREST sponsored member who makes or is treated as making a valid acceptance in accordance with the procedures set out in this Appendix 2 will be deemed to make the representations and warranties to the Company contained in paragraph 4.1.6 of this Appendix 2.

The attention of Overseas Shareholders or any person (including, without limitation, a custodian, nominee or trustee) who has a contractual or other legal obligation to forward this document into a jurisdiction other than the UK is drawn to paragraph 6 of this Appendix 2. Subject to certain limited exceptions, the Placing and Open Offer will not be made into certain territories. Subject to the provisions of paragraph 6, Shareholders with a registered address in the US or an Excluded Territory will not be sent an Application Form.

Qualifying Shareholders should be aware that the Open Offer is not a rights issue. Qualifying Non-CREST Shareholders should also note that their Application Forms are not negotiable documents and cannot be traded. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be credited to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Open Offer Shares not applied for under the Open Offer will not be sold in the market for the benefit of those who do not apply under the Open Offer and Qualifying Shareholders who do not apply to take up Open Offer Shares will have no rights under the Open Offer.

The Existing Shares are already admitted to CREST. No further application for admission to CREST is accordingly required for the Capital Raising Shares. All Shares, when issued and fully paid, may be held and transferred by means of CREST.

Application has been made for the Open Offer Entitlements and the Excess CREST Open Offer Entitlements to be credited to Qualifying CREST Shareholders' CREST accounts. The Open Offer Entitlements and the Excess CREST Open Offer Entitlements are expected to be credited to CREST accounts on 11 March 2015.

3. CONDITIONS AND FURTHER TERMS OF THE OPEN OFFER

The Open Offer is conditional, inter alia, upon:

3.1 the passing, without amendment, of the Resolutions at the General Meeting;

3.2 Admission taking place by no later than 8.00 a.m. on 27 March 2015 (or such later time and date as the Company and Numis may agree); and
3.3 the Placing Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms.

Accordingly, if these and the other conditions to the Open Offer are not satisfied or waived (where capable of waiver) by 27 March 2015, the Capital Raising will not proceed and any applications made by Qualifying Shareholders will be rejected. In such circumstances, application monies received by the Receiving Agent in respect of the Open Offer will be returned (at the applicant's sole risk), without payment of interest, as soon as practicable thereafter. The Capital Raising will not be revoked after Admission.

No temporary documents of title will be issued in respect of Open Offer Shares held in uncertificated form. Definitive certificates in respect of Open Offer Shares taken up are expected to be posted to those Qualifying Shareholders who have validly elected to hold their Open Offer Shares in certificated form by 16 April 2015. In respect of those Qualifying Shareholders who have validly elected to hold their Open Offer Shares in uncertificated form, the Open Offer Shares are expected to be credited to their stock accounts maintained in CREST by 8.00 a.m. 27 March 2015.

Applications will be made to the UKLA for the Capital Raising Shares to be listed on the premium segment of the Official List and to the London Stock Exchange for the Capital Raising Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. Admission is expected to occur on 27 March 2015, when dealings in the Capital Raising Shares are expected to begin.

All monies received by the Receiving Agent in respect of Open Offer Shares will be placed on deposit in a non-interest bearing account by the Receiving Agent.

If for any reason it becomes necessary to adjust the expected timetable as set out in this document, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates.

4. PROCEDURE FOR APPLICATION AND PAYMENT

If you are in any doubt as to the action you should take, or the contents of this document, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent adviser duly authorised under FSMA if you are in the UK or if not another appropriate independent professional adviser who specialises in advising on the acquisition of shares and other securities.

The action to be taken by Qualifying Shareholders in respect of the Open Offer depends on whether, at the relevant time, such Qualifying Shareholder has an Application Form in respect of his or her entitlement under the Open Offer, including the Excess Application Facility, or has had Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to his or her CREST stock account in respect of such entitlement.

Qualifying Shareholders who have validly elected to hold their Existing Shares in certificated form and who hold such shares on the Record Date will, save as provided in paragraph 6 of this Appendix 2, receive an Application Form. Qualifying Shareholders who have validly elected to hold Existing Shares in uncertificated form will not receive an Application Form but will receive a credit to their stock account in CREST of their Open Offer Entitlements equal to the maximum number of Open Offer Shares for which they are entitled to apply under the Open Offer.

CREST sponsored members should refer to their CREST sponsor as only their CREST sponsor will be able to take the necessary action specified below to apply under the Open Offer in respect of the Open Offer Entitlements and Excess CREST Open Offer Entitlements of such members held in CREST. CREST members who wish to apply under the Open Offer in respect of their Open Offer Entitlements and Excess CREST Open Offer Entitlements in CREST should refer to the CREST Manual for further information on the CREST procedures referred to below.

Qualifying Shareholders who do not want to apply for the Open Offer Shares under the Open Offer should take no action and should not complete or return the Application Form. Qualifying Shareholders are, however, encouraged to vote at the General Meeting by attending in person or by completing and returning the Form of Proxy enclosed with this document.

4.1 If you have an Application Form in respect of your entitlement under the Open Offer

4.1.1 General

Save as provided in paragraph 6 of this Appendix 2 in relation to certain Overseas Shareholders, Qualifying Non-CREST Shareholders will receive an Application Form. The Application Form shows the number of Existing Shares registered in their name on the Record Date in Box 3. It also shows the maximum number of Open Offer Shares for which they are entitled to apply under the Open Offer, as shown by the total number of Open Offer Entitlements allocated to them set out in Box 4. Box 5 shows how much they would need to pay if they wish to take up their Open Offer Entitlements in full. Qualifying Non-CREST Shareholders may apply for less than their Open Offer Entitlement should they wish to do so. Qualifying Non-CREST Shareholders may also hold such an Application Form by virtue of a bona fide market claim.

Under the Excess Application Facility, provided they have agreed to take up their Open Offer Entitlement in full, Qualifying Shareholders may apply for more than the amount of their Open Offer Entitlement should they wish to do so. If you are in any doubt as to the action you should take, or the contents of this document, you should immediately seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant, fund manager or other independent adviser duly authorised under FSMA if you are in the UK or if not another appropriate independent professional adviser who specialises in advising on the acquisition of shares and other securities.

The instructions and other terms set out in the Application Form, form part of the terms of the Open Offer in relation to Qualifying Non-CREST Shareholders.

4.1.2 Bona fide market claims

Applications to acquire Open Offer Shares may only be made on the Application Form and may only be made by the Qualifying Non-CREST Shareholder named in it or by a person entitled by virtue of a bona fide market claim in relation to a purchase of Existing Shares through the market prior to the date upon which the Existing Shares will be marked "ex" the entitlement to participate in the Open Offer. Application Forms may not be assigned, transferred or split, except to satisfy bona fide market claims the latest time for which is 3.00 p.m. on 23 March 2015. The Application Form is not a negotiable document and cannot be separately traded. A Qualifying Non-CREST Shareholder who has sold or otherwise transferred all or part of his or her holding of Existing Shares prior to the date upon which the Existing Shares were marked "ex" the entitlement to participate in the Open Offer, should consult his broker or other professional adviser as soon as possible as the invitation to acquire Open Offer Shares under the Open Offer may be a benefit which may be claimed by the transferee. Qualifying Non-CREST Shareholders who have sold or otherwise transferred all of their registered holdings should, if the market claim is to be settled outside CREST, complete Box 10 on the Application Form and immediately send it (together with this document) to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee in accordance with the instructions set out in the Application Form. Qualifying Non CREST Shareholders who have sold or otherwise transferred some only of the Existing Shares shown in Box 3 on the Application Form prior to 9 March 2015, should contact the stockbroker, bank or other agent through whom the sale or transfer was effected to arrange for split Application Forms to be obtained. Subject to certain exceptions, the Application Form should not, however, be forwarded to, or transmitted in or into, the United States or any Excluded Territory. If the market claim is to be settled outside CREST, the beneficiary of the claim should follow the procedures set out in the accompanying Application Form. If the market claim is to be settled in CREST, the beneficiary of the claim should follow the procedure set out in paragraph 4.2 of this Appendix 2 below.

4.1.3 Application procedures

Qualifying Non-CREST Shareholders wishing to apply to acquire all or any of the Open Offer Shares in respect of their Open Offer Entitlement (or any Excess Shares under the Excess Application Facility) should complete the Application Form in accordance with the instructions printed on it.

Qualifying Non-CREST Shareholders may only apply for Excess Shares under the Excess Application Facility if they have agreed to take up their Open Offer Entitlement in full. The total number of Open Offer Shares is fixed and will not be increased. Applications for Excess Shares will be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlement, and the Excess Shares are clawed back from the Placing. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. Excess monies in respect of applications which are not met in full will be returned to the applicant (at the applicant's risk) without interest as soon as practicable thereafter by way of cheque.

Completed Application Forms should be posted in the accompanying pre-paid envelope by post to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by hand (during normal business hours only) to Capita so as to be received by no later than 11.00 a.m. on 25 March 2015, after which time Application Forms will not be valid (subject to certain exceptions described below). Application Forms delivered by hand will not be checked and no receipt will be provided. Qualifying Non-CREST Shareholders should note that applications, once made, will be irrevocable and receipt thereof will not be acknowledged. If an Application Form is being sent by first-class post in the UK, Qualifying Shareholders are recommended to allow at least four Business Days for delivery.

All payments must be in pounds sterling and made by cheque or banker's draft made payable to "Capita Registrars Limited re: IP Group plc Open Offer" and crossed "A/C Payee Only". Cheques must be drawn on the personal account of the individual investor who must have sole or joint title to the funds. Cheques or banker's drafts must be drawn in pounds sterling and on a bank or building society or branch of a bank or building society in the United Kingdom or Channel Islands which is either a settlement member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company Limited or which has arranged for its cheques and banker's drafts to be cleared through the facilities provided by any of those companies or committees and must bear the appropriate sort code in the top right hand corner and must be for the full amount payable on application. Third party cheques will not be accepted with the exception of building society cheques or banker's drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the cheque or draft to such effect. The account name should be the same as that shown on the application. Post-dated cheques will not be accepted. Third party cheques (other than building society cheques or banker's drafts where the building society or bank has confirmed that the relevant Qualifying Shareholder has title to the underlying funds) will be subject to the Money Laundering Regulations which would delay Shareholders receiving their Open Offer Shares (please see paragraph 5 below).

Cheques or banker's drafts will be presented for payment upon receipt. The Company reserves the right to instruct Capita Asset Services, as receiving agent to seek special clearance of cheques and banker's drafts to allow the Company to obtain value for remittances at the earliest opportunity. No interest will be paid on payments made before they are due. It is a term of the Open Offer that cheques shall be honoured on first presentation and the Company may elect to treat as invalid acceptances in respect of which cheques are not so honoured. All documents, cheques and banker's drafts sent through the post will be sent at the risk of the sender. Payments via CHAPS, BACS or electronic transfer will not be accepted.

If cheques or banker's drafts are presented for payment before all of the conditions of the Capital Raising are fulfilled, the application monies will be kept in a separate interest bearing bank account with any interest being retained for the Company until all conditions are met. If the Capital Raising does not become unconditional, no Open Offer Shares will be issued and all monies will be returned (at the applicant's sole risk), without payment of interest, to applicants as soon as practicable following the lapse of the Capital Raising.

The Company may in its sole discretion, but with the prior consent of Numis, treat an Application Form as valid and binding on the person by whom or on whose behalf it is lodged, even if not completed in accordance with the relevant instructions or not accompanied by a valid power of attorney where required, or if it otherwise does not strictly comply with the terms and conditions of the Open Offer. The Company further reserves the right (but shall not be obliged), with the prior consent of Numis to accept either:

(a) Application Forms received after 11.00 a.m. on 25 March 2015; or
(b) applications in respect of which remittances are received before 11.00 a.m. on 25 March 2015 from authorised persons (as defined in FSMA) specifying the Open Offer Shares applied for and undertaking to lodge the Application Form in due course but, in any event, within two Business Days.

Multiple applications will not be accepted. All documents and remittances sent by post by or to an applicant (or as the applicant may direct) will be sent at the applicant's own risk.

If Open Offer Shares have already been allotted to a Qualifying Non-CREST Shareholder and such Qualifying Non-CREST Shareholder's cheque or banker's draft is not honoured upon first presentation or such Qualifying Non-CREST Shareholder's application is subsequently otherwise deemed to be invalid, the Registrar shall be authorised (in its absolute discretion as to manner, timing and terms) to make arrangements, on behalf of the Company, for the sale of such Qualifying Non-CREST Shareholder's Open Offer Shares and for the proceeds of sale (which for these purposes shall be deemed to be payments in respect of successful applications) to be paid to and retained by the Company. None of the Registrar, Numis or the Company, nor any other person, shall be responsible, or have any liability, for any loss, expense or damage suffered by such Qualifying Non-CREST Shareholder as a result.

4.1.4 Excess Application Facility

Provided Qualifying Non-CREST Shareholders choose to take up their Open Offer Entitlement in full, the Excess Application Facility enables a Qualifying Non-CREST Shareholder to apply for Excess Shares.

The total number of Open Offer Shares is fixed and will not be increased, save to the extent that the Directors claw back Capital Raising Shares to the Excess Application Facility from the Placing. Applications for Excess Shares will be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and such Excess Shares are not allocated to the Placing. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. Excess monies in respect of applications which are not met in full will returned to the applicant (at the applicant's risk) without interest as soon as practicable thereafter by way of cheque.

Qualifying Non-CREST Shareholders who wish to apply for Open Offer Shares in excess of their Open Offer Entitlement must complete the Application Form in accordance with the instructions set out on the Application Form.

Qualifying Non-CREST Shareholders who make applications for Excess Shares under the Excess Application Facility which are not met in full and from whom payment in full has been made will receive a pounds sterling amount equal to the number of Open Offer Shares applied and paid for, but not allocated to, the relevant Qualifying Non-CREST Shareholder, multiplied by the Issue Price. Monies will be returned as soon as reasonably practicable thereafter, without payment of interest and at the applicant's sole risk.

Fractions of Excess Shares will not be issued under the Excess Application Facility and fractions of Excess Shares will be round down to the nearest whole number.

4.1.5 Undertaking not to take up Open Offer Entitlements or apply for Excess Shares

Each Placee subscribing for Firm Placed Shares under the Firm Placing and/or Placing Shares under the Placing has undertaken pursuant to paragraph 4 of Appendix 3 not to apply for, or take up, its Open Offer Entitlement and not to apply under the Excess Application Facility.

Accordingly, if you are a Qualifying Non-CREST Shareholder in breach of this undertaking, the Company may, in its absolute discretion, treat your application for Open Offer Shares or Excess Shares submitted via the Application Form as invalid, in which event the monies payable on acceptance of the Open Offer or under the Excess Application Facility shall be returned to the applicant (at the acceptor's risk) without interest as soon as practicable thereafter by way of cheque.

4.1.6 Effect of application

By completing and delivering an Application Form, the applicant:

(a) represents and warrants to the Company and Numis that he has the right, power and authority, and has taken all action necessary, to make the application under the Open Offer and to execute, deliver and exercise his rights and perform his obligations under any contracts resulting therefrom and that he is not a person otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares or acting on behalf of any such person on a non-discretionary basis;
(b) agrees with the Company and Numis that all applications under the Open Offer and any contracts or non-contractual obligations resulting therefrom shall be governed by, and construed in accordance with, the laws of England;
(c) confirms to the Company and Numis that in making the application he is not relying on any information or representation in relation to the Group other than that contained in (or incorporated by reference in) this document and the applicant accordingly agrees that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any such information or representation not so contained and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all information in relation to the Group contained (or incorporated by reference) in this document;
(d) confirms to the Company and Numis that no person has been authorised to give any information or to make any representation concerning the Group and/or the Capital Raising Shares (other than as contained in this document) and, if given or made, any such other information or representation should not be, and has not been, relied upon as having been authorised by the Company or Numis;
(e) represents and warrants to the Company and Numis that he is the Qualifying Shareholder originally entitled to the Open Offer Entitlements or that he received such Open Offer Entitlements by virtue of a bona fide market claim;
(f) represents and warrants to the Company and Numis that if he has received some or all of his Open Offer Entitlements from a person other than the Company he is entitled to

apply under the Open Offer in relation to such Open Offer Entitlements by virtue of a bona fide market claim;

(g) requests that the Open Offer Shares to which he will become entitled, be issued to him on the terms set out in this document and the Application Form and subject to the Articles;
(h) represents and warrants to the Company and Numis that he is not, nor is he applying on behalf of any person who is, in the United States or is a citizen or resident, or which is a corporation, partnership or other entity created or organised in or under any laws, of the United States or any other Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law and he is not applying with a view to re-offering, re-selling, transferring or delivering any of the Open Offer Shares which are the subject of his application in the United States or to, or for the benefit of, a person who is a citizen or resident, or which is a corporation, partnership or other entity created or organised in or under any laws, of the United States or any Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law (except where proof satisfactory to the Company has been provided to the Company that he is able to accept the invitation by the Company free of any requirement which it (in its absolute discretion) regards as unduly burdensome), nor acting on behalf of any such person on a non discretionary basis nor person(s) otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares under the Open Offer;
(i) represents and warrants to the Company and Numis that he is not, and nor is he applying as a nominee or agent for, a person who is a Placee;
(j) represents and warrants to the Company and Numis that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (depository receipts) or section 96 (clearance services) of the Finance Act 1986; and
(k) confirms to the Company and Numis that in making the application, he is not relying and has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or his investment decision.

All enquiries in connection with the procedure for application and completion of the Application Form should be made to Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal or tax advice.

Qualifying Non-CREST Shareholders who do not want to take up or apply for the Open Offer Shares under the Open Offer should take no action and should not complete or return the Application Form. Qualifying Non-CREST Shareholders are, however, encouraged to vote at the General Meeting by attending in person or by completing and returning the Form of Proxy enclosed with this document.

4.2 If you have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to your stock account in CREST in respect of your entitlement under the Open Offer

4.2.1 General

Save as provided in paragraph 6 of this Appendix 2 in relation to certain Overseas Shareholders, each Qualifying CREST Shareholder will receive a credit to his stock account in CREST of his Open Offer Entitlement equal to the maximum number of Open Offer Shares for which he is entitled to apply to acquire under the Open Offer and also an Excess CREST Open Offer Entitlement (see paragraph 4.2.3 below for further details).

The CREST stock account to be credited will be the account under the participant ID and member account ID which applies to the Existing Shares held on the Record Date by the Qualifying CREST Shareholder in respect of which the Open Offer Entitlements and Excess CREST Open Offer Entitlements have been allocated.

If for any reason the Open Offer Entitlements and/or Excess CREST Open Offer Entitlements cannot be admitted to CREST by, or the stock accounts of Qualifying CREST Shareholders cannot be credited by 3.00 p.m. on 11 March 2015, or such later time and/or date as the Company and Numis may decide, the Application Form will be sent to each Qualifying CREST Shareholder in substitution for the Open Offer Entitlement and Excess CREST Open Offer Entitlement which should have been credited to his stock account in CREST. In these circumstances the expected timetable as set out in this document will be adjusted as appropriate and the provisions of this document applicable to Qualifying Non-CREST Shareholders with Application Forms will apply to Qualifying CREST Shareholders who receive such Application Forms.

CREST members who wish to apply to acquire some or all of their entitlements to Open Offer Shares and Excess CREST Open Offer Entitlements should refer to the CREST Manual for further information on the CREST procedures referred to below. Should you need advice with regard to these procedures, please contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline cannot provide advice on the merits of the Capital Raising nor give any financial, legal or tax advice. If you are a CREST sponsored member you should consult your CREST sponsor if you wish to apply for Open Offer Shares as only your CREST sponsor will be able to take the necessary action to make this application in CREST.

4.2.2 Bona fide Market claims

Each of the Open Offer Entitlements and the Excess CREST Open Offer Entitlements will constitute a separate security for the purposes of CREST. Although Open Offer Entitlements and Excess CREST Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of Open Offer Entitlements and Excess CREST Open Offer Entitlements may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim transaction. Transactions identified by the CREST Claims Processing Unit as "cum" the Open Offer Entitlement and the Excess CREST Open Offer Entitlement will generate an appropriate market claim transaction and the relevant Open Offer Entitlement(s) and Excess CREST Open Offer Entitlement(s) will thereafter be transferred accordingly.

4.2.3 Excess Application Facility

Provided Qualifying CREST Shareholders choose to take up their Open Offer Entitlement in full, the Excess Application Facility enables Qualifying CREST Shareholders to apply for Open Offer Shares in excess of their Open Offer Entitlement.

There is no limit on the amount of Capital Raising Shares that can be applied for under the Excess Application Facility, save that the maximum amount of Capital Raising Shares to be allotted under the Excess Application Facility will be limited by the maximum size of the Capital Raising less the aggregate of the Firm Placed Shares, the Capital Raising Shares issued under the Open Offer pursuant to Qualifying Shareholders' Open Offer Entitlements and any Capital Raising Shares that the Directors determine to issue under the Placing. Applications for Excess Shares will be satisfied to the extent that other Qualifying Shareholders do not apply for their Open Offer Entitlements and their Excess Shares are clawed back from the Placing. If applications under the Excess Application Facility are received for more than the maximum number of Shares available, then such applications will be scaled back pro rata to the number of Excess Shares applied for. Excess monies in respect of applications which are not met in full will returned to the applicant (at the applicant's risk) without interest as soon as practicable thereafter by way of cheque.

Each Qualifying CREST Shareholder will initially be credited with Excess CREST Open Offer Entitlements equal to ten times its Open Offer Entitlement. If a Qualifying CREST Shareholder would like to apply for Excess Shares over and above the number of Excess CREST Open Offer Entitlements which have been credited, such Qualifying CREST Shareholder should contact Capita Asset Services to request that further Excess CREST Open Offer Entitlements be credited, subject at all times to the Maximum Excess Application Number.

All enquiries in connection with the procedure for application for Excess CREST Open Offer Entitlements should be made to Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. Please note that Capita Asset Services is unable to give advice on the merits of the Open Offer, as to whether applicants should take up their Open Offer Entitlements or apply for Excess Shares or to provide legal, business, financial, tax or investment advice.

An Excess CREST Open Offer Entitlement may not be sold or otherwise transferred. Save as provided in paragraph 6 of this Appendix 2 in relation to certain Overseas Shareholders, the CREST accounts of Qualifying CREST Shareholders will be credited with an Excess CREST Open Offer Entitlement in order for any applications for Excess Shares to be settled through CREST. The credit of such Excess CREST Open Offer Entitlement does not in any way give Qualifying CREST Shareholders a right to the Open Offer Shares attributable to the Excess CREST Open Offer Entitlement as an Excess CREST Open Offer Entitlement is subject to scaling back in accordance with the terms of this document.

To apply for Excess Shares pursuant to the Open Offer, Qualifying CREST Shareholders should follow the instructions above and must not return a paper form and cheque.

Should a transaction be identified by the CREST Claims Processing Unit as "cum" the Open Offer Entitlement and the relevant Open Offer Entitlement(s) be transferred, the Excess CREST Open Offer Entitlement(s) will not transfer with the Open Offer Entitlement(s) claim, but will be transferred as a separate claim. Should a Qualifying CREST Shareholder cease to hold all of his or her Existing Shares as a result or one or more bona fide market claims, the Excess CREST Open Offer Entitlement credited to CREST, and allocated to the relevant Qualifying Shareholder, will be transferred to the purchaser. Please note that an additional USE Instruction must be sent in respect of any application under the Excess CREST Open Offer Entitlement.

A Qualifying CREST Shareholder who has made a valid application for Excess Shares under the Excess Application Facility which is not met in full, and from whom payment in full for Excess Shares has been received, will receive a pounds sterling amount equal to the number of Open Offer Shares applied and paid for, but not allocated to, the relevant Qualifying CREST Shareholder, multiplied by the Issue Price. Monies will be returned as soon as reasonably practicable thereafter, without payment of interest and at the applicant's sole risk.

Fractions of Excess Shares will not be issued under the Excess Application Facility and fractions of Excess Shares will be rounded down to the nearest whole number.

4.2.4 USE instructions

Qualifying CREST Shareholders who are CREST members and who want to apply for Open Offer Shares in respect of all or some of their Open Offer Entitlement in CREST must send (or if they are CREST sponsored members, procure that their CREST sponsor sends) an Unmatched Stock Event ("USE") instruction ("USE Instruction") to Euroclear which, on its settlement, will have the following effect:

(a) the crediting of a stock account of the Registrar under the participant ID and member account ID specified below, with a number of Open Offer Entitlements corresponding to the number of Open Offer Shares applied for; and
(b) the creation of a CREST payment, in accordance with the CREST payment arrangements in favour of the payment bank of the Registrar in respect of the amount specified in the USE Instruction which must be the full amount payable on application for the number of Open Offer Shares referred to in paragraph 4.2.4(a) above.

4.2.5 Content of USE instruction in respect of Open Offer Entitlements

The USE Instruction must be properly authenticated in accordance with Euroclear's specifications and must contain, in addition to the other information that is required for settlement in CREST, the following details:

(a) the number of Open Offer Shares for which application is being made (and hence the number of the Open Offer Entitlement(s) being delivered to the Registrar);
(b) the ISIN of the Open Offer Entitlement. This is GB00BVF9PP89;
(c) the CREST participant ID of the accepting CREST member;
(d) the CREST member account ID of the accepting CREST member from which the Open Offer Entitlements are to be debited;
(e) the participant ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 7RA33;
(f) the member account ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 28493IPG;
(g) the amount payable by means of a CREST payment on settlement of the USE Instruction. This must be the full amount payable on application for the number of Open Offer Shares referred to in paragraph 4.2.4(a) above;
(h) the intended settlement date. This must be on or before 11.00 a.m. on 25 March 2015; and

(i) the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.

In order for an application under the Open Offer to be valid, the USE Instruction must comply with the requirements as to authentication and contents set out above and must settle on or before 11.00 a.m. on 25 March 2015.

In order to assist prompt settlement of the USE Instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE Instruction:

(i) a contact name and telephone number (in the free format shared note field); and
(ii) a priority of at least 80.

CREST members and, in the case of CREST sponsored members, their CREST sponsors, should note that the last time at which a USE Instruction may settle on 25 March 2015 in order to be valid is 11.00 a.m. on that day.

In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 27 March 2015 or such later time and date as the Company and Numis determine (being no later than 8.00 a.m. on 10 April 2015), the Capital Raising will lapse, the Open Offer Entitlements admitted to CREST will be disabled and the Registrar will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies (if any) will be retained for the benefit of the Company.

4.2.6 USE Instructions

Qualifying CREST Shareholders who are CREST members and who want to apply for Excess Shares in respect of all or some of their Excess CREST Open Offer Entitlement in CREST must send (or, if they are CREST sponsored members, procure that their CREST sponsor sends) a USE instruction to Euroclear which, on its settlement, will have the following effect:

(a) the crediting of a stock account of the Registrar under the participant ID and member account ID specified below, with a number of Excess CREST Open Offer Entitlements corresponding to the number of Excess Shares applied for; and
(b) the creation of a CREST payment, in accordance with the CREST payment arrangements in favour of the payment bank of the Registrar in respect of the amount specified in the USE Instruction which must be the full amount payable on application for the number of Excess Shares referred to in paragraph 4.2.6(a) above.

4.2.7 Content of USE instruction in respect of Excess CREST Open Offer Entitlements

(a) the number of Excess Shares for which application is being made (and hence the number of the Excess CREST Open Offer Entitlement(s) being delivered to the Registrar);
(b) the ISIN of the Excess CREST Open Offer Entitlement. This is GB00BVF9PR04;
(c) the CREST participant ID of the accepting CREST member;
(d) the CREST member account ID of the accepting CREST member from which the Excess CREST Open Offer Entitlements are to be debited;
(e) the participant ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 7RA33;
(f) the member account ID of the Receiving Agent in its capacity as a CREST receiving agent. This is 28493IPG;
(g) the amount payable by means of a CREST payment on settlement of the USE Instruction. This must be the full amount payable on application for the number of Open Offer Shares referred to in paragraph 4.2.6(a) above;
(h) the intended settlement date. This must be on or before 11.00 a.m. on 25 March 2015; and
(i) the Corporate Action Number for the Open Offer. This will be available by viewing the relevant corporate action details in CREST.

In order to assist prompt settlement of the USE Instruction, CREST members (or their sponsors, where applicable) may consider adding the following non-mandatory fields to the USE Instruction:

(i) a contact name and telephone number (in the free format shared note field); and
(ii) a priority of at least 80.

In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 27 March 2015 or such later time and date as the Company and Numis determine (being no later than 8.00 a.m. on 10 April 2015), the Capital Raising will lapse, the Excess CREST Open Offer Entitlements admitted to CREST will be disabled and the Registrar will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies (if any) will be retained for the benefit of the Company.

4.2.8 Deposit of Open Offer Entitlements and Excess CREST Open Offer Entitlements into, and withdrawal from, CREST

A Qualifying Non-CREST Shareholder's entitlement under the Open Offer, as shown by the number of Open Offer Entitlements set out in his Application Form in Box 4, including the entitlement to apply under the Excess Application Facility may be deposited into CREST (either into the account of the Qualifying Shareholder named in the Application Form or into the name of a person entitled by virtue of a bona fide market claim). Similarly, Open Offer Entitlements and Excess CREST Open Offer Entitlements held in CREST may be withdrawn from CREST so that the entitlement under the Open Offer and entitlements to apply under Excess Application Facility is reflected in an Application Form. Normal CREST procedures (including timings) apply in relation to any such deposit or withdrawal, subject (in the case of a deposit into CREST) as set out in the Application Form.

A holder of an Application Form who is proposing to deposit the entitlement set out in such form into CREST (in accordance with the instructions contained in the Application Form) is recommended to ensure that the deposit procedures are implemented in sufficient time to enable the person holding or acquiring the Open Offer Entitlements and the entitlement to apply under the Excess Application Facility following their deposit into CREST to take all necessary steps in connection with taking up the entitlement prior to 11.00 a.m. on 25 March 2015. After depositing their Open Offer Entitlement into their CREST account, CREST holders will shortly thereafter receive a credit for their Excess CREST Open Offer Entitlement, which will be managed by the Registrar. CREST holders inputting the withdrawal of their Open Offer Entitlement from their CREST account must ensure that they withdraw both their Open Offer Entitlement and their Excess CREST Open Offer Entitlement.

In particular, having regard to normal processing times in CREST and on the part of the Receiving Agent, the recommended latest time for depositing an Application Form with the CREST Courier and Sorting Service, where the person entitled wishes to hold the entitlement under the Open Offer set out in such Application Form as an Open Offer Entitlement and an Excess CREST Open Offer Entitlement in CREST, is 3.00 p.m. on 20 March 2015 and the recommended latest time for receipt by Euroclear of a dematerialised instruction requesting withdrawal of an Open Offer Entitlement or an Excess CREST Open Offer Entitlement from CREST is 4.30 p.m. on 19 March 2015 in either case so as to enable the person acquiring or (as appropriate) holding the Open Offer Entitlement and the entitlement to apply under the Excess Application Facility or an Excess CREST Open Offer Entitlement following the deposit or withdrawal (whether as shown in an Application Form or held in CREST) to take all necessary steps in connection with applying in respect of the Open Offer Entitlements and under the Excess Application Facility or in respect of the Excess CREST Open Offer Entitlement, as the case may be, prior to 11.00 a.m. on 25 March 2015.

Delivery of an Application Form with the CREST deposit form duly completed whether in respect of a deposit into the account of the Qualifying Shareholder named in the Application Form or into the name of another person, shall constitute a representation and warranty to the Company and the Receiving Agent by the relevant CREST member(s) that it/they is/are not in breach of the provisions of the notes under the paragraph headed "Instructions for depositing entitlements under the Open Offer into CREST" on page 3 of the Application Form, and a declaration to the Company and the Registrar from the relevant CREST member(s) that it/they is/are not citizen(s) or resident(s) of the US, any Excluded Territory or any other jurisdiction in which the application for Open Offer Shares is prevented by law and, where such deposit is made by a beneficiary of a market claim, a representation and warranty that the relevant CREST member(s) is/are entitled to apply under the Open Offer by virtue of a bona fide market claim.

4.2.9 Validity of application

A USE Instruction complying with the requirements as to authentication and contents set out above which settles by no later than 11.00 a.m. on 25 March 2015 will constitute a valid application under the Open Offer.

4.2.10 CREST procedures and timings

CREST members and (where applicable) their CREST sponsors should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in relation to the input of a USE Instruction and its settlement in connection with the Open Offer. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST sponsored member, to procure that his CREST sponsor takes) such action as shall be necessary to ensure that a valid application is made as stated above by 11.00 a.m. on 25 March 2015. In this connection CREST members and (where applicable) their CREST sponsors are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

4.2.11 Incorrect or incomplete applications

If a USE Instruction includes a CREST payment for an incorrect sum, the Company, through the Registrar, reserves the right:

(a) to reject the application in full and refund the payment to the CREST member in question (without interest);

(b) in the case that an insufficient sum is paid, to treat the application as a valid application for such lesser whole number of Open Offer Shares as would be able to be applied for with that payment at the Issue Price, refunding any unutilised sum to the CREST member in question (without interest); and
(c) in the case that an excess sum is paid, to treat the application as a valid application for all the Open Offer Shares referred to in the USE Instruction, refunding any unutilised sum to the CREST member in question (without interest).

4.2.12 Undertaking not to take up Open Offer Entitlements or apply for Excess Shares

Accordingly, if you are a Qualifying CREST Shareholder in breach of this undertaking, the Company may, in its absolute discretion, treat your application for Open Offer Shares or Excess Shares submitted (whether in CREST or via the Application Form) as invalid, in which event the Open Offer Entitlements and Excess CREST Open Offer Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies, if any, will be retained for the benefit of the Company.

4.2.13 Effect of valid application

A CREST member or CREST sponsored member who makes or is treated as making a valid application in accordance with the above procedures thereby:

(a) represents and warrants to the Company and Numis that he has the right, power and authority, and has taken all action necessary, to make the application under the Open Offer and to execute, deliver and exercise his rights, and perform his obligations, under any contracts resulting therefrom and that he is not a person otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares or acting on behalf of any such person on a non-discretionary basis;
(b) agrees to pay the amount payable on application in accordance with the above procedures by means of a CREST payment in accordance with the CREST payment arrangements (it being acknowledged that the payment to the Registrar's payment bank in accordance with the CREST payment arrangements shall, to the extent of the payment, discharge in full the obligation of the CREST member to pay to the Company the amount payable on application);
(c) agrees with the Company and Numis that all applications and any contracts or noncontractual obligations resulting therefrom under the Open Offer shall be governed by, and construed in accordance with, the laws of England;
(d) confirms to the Company and Numis that in making the application he is not relying on any information or representation in relation to the Group other than that contained in (or incorporated by reference in) this document, and the applicant accordingly agrees that no person responsible solely or jointly for this document or any part thereof, or involved in the preparation thereof, shall have any liability for any such information or representation not so contained and further agrees that, having had the opportunity to read this document, he will be deemed to have had notice of all the information in relation to the Group contained in this document (including information incorporated by reference);
(e) confirms to the Company and Numis that no person has been authorised to give any information or to make any representation concerning the Group and/or the Capital Raising Shares (other than as contained in this document) and, if given or made, any such other information or representation should not be, and has not been, relied upon as having been authorised by the Company or Numis;
(f) represents and warrants to the Company and Numis that he is the Qualifying Shareholder originally entitled to the Open Offer Entitlements and Excess CREST Open Offer Entitlements or that he has received such Open Offer Entitlement and Excess CREST Open Offer Entitlement by virtue of a bona fide market claim;
(g) represents and warrants to the Company and Numis that if he has received some or all of his Open Offer Entitlement and Excess CREST Open Offer Entitlement from a person other than the Company, he is entitled to apply under the Open Offer in relation to such Open Offer Entitlement and Excess CREST Open Offer Entitlement by virtue of a bona fide market claim;
(h) requests that the Open Offer Shares to which he will become entitled be issued to him on the terms set out in this document, subject to the Articles;
(i) represents and warrants to the Company and Numis that he is not, nor is he applying on behalf of any person who is, in the United States or is a citizen or resident, or which is a corporation, partnership or other entity created or organised in or under any laws, of the US or any other Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law and he is not applying with a view to re-offering, re-selling, transferring or delivering any of the Open Offer Shares which are the subject of his application in the United States or to, or for the benefit of, a person who is a citizen or resident or which is a corporation, partnership or other entity created or organised in or under any laws of any Excluded Territory or any jurisdiction in which the application for Open Offer Shares is prevented by law (except where proof satisfactory to the Company has been provided to the Company that he is able to accept the invitation by the Company free of any requirement which it (in its absolute discretion) regards as unduly burdensome), nor acting on behalf of any such person on a non-discretionary basis nor (a) person(s) otherwise prevented by legal or regulatory restrictions from applying for Open Offer Shares under the Open Offer;
(j) represents and warrants to the Company and Numis that he is not, and nor is he applying as a nominee or agent for, a person who is a Placee;
(k) represents and warrants to the Company and Numis that he is not, and nor is he applying as nominee or agent for, a person who is or may be liable to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the increased rates referred to in section 93 (depository receipts) or section 96 (clearance services) of the Finance Act 1986; and
(l) confirms to the Company and Numis that in making the application he is not relying and has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or his investment decision.

4.2.14 Company's discretion as to the rejection and validity of applications

The Company may in its sole discretion but with the prior consent of Numis:

(a) treat as valid (and binding on the CREST member concerned) an application which does not comply in all respects with the requirements as to validity set out or referred to in this Appendix 2;

(b) accept an alternative properly authenticated dematerialised instruction from a CREST member or (where applicable) a CREST sponsor as constituting a valid application in substitution for or in addition to a USE Instruction and subject to such further terms and conditions as the Company may determine;
(c) treat a properly authenticated dematerialised instruction (in this paragraph the "first instruction") as not constituting a valid application if, at the time at which the Registrar receives a properly authenticated dematerialised instruction giving details of the first instruction or thereafter, either the Company or the Registrar has received actual notice from Euroclear of any of the matters specified in Regulation 35(5)(a) of the CREST Regulations in relation to the first instruction. These matters include notice that any information contained in the first instruction was incorrect or notice of lack of authority to send the first instruction; and
(d) accept an alternative instruction or notification from a CREST member or CREST sponsored member or (where applicable) a CREST sponsor, or extend the time for settlement of a USE Instruction or any alternative instruction or notification, in the event that, for reasons or due to circumstances outside the control of any CREST member or CREST sponsored member or (where applicable) CREST sponsor, the CREST member or CREST sponsored member is unable validly to apply for Open Offer Shares by means of the above procedures. In normal circumstances, this discretion is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or any part of CREST) or on the part of the facilities and/or systems operated by the Registrar in connection with CREST.

4.2.15 Lapse of the Open Offer

In the event that the Capital Raising does not become unconditional by 8.00 a.m. on 27 March 2015 or such later time and date as the Company and Numis may agree, the Capital Raising will lapse, the Open Offer Entitlements and Excess CREST Open Offer Entitlements admitted to CREST will be disabled and the Receiving Agent will refund the amount paid by a Qualifying CREST Shareholder by way of a CREST payment, without interest, as soon as practicable thereafter. The interest earned on such monies, if any, will be retained for the benefit of the Company.

5. MONEY LAUNDERING REGULATIONS

5.1 Holders of Application Forms

To ensure compliance with the Money Laundering Regulations, the Receiving Agent may require, at its absolute discretion, verification of the identity of the person by whom or on whose behalf the Application Form is lodged with payment (which requirements are referred to below as the "verification of identity requirements"). If the Application Form is submitted by a UK regulated broker or intermediary acting as agent and which is itself subject to the Money Laundering Regulations, any verification of identity requirements are the responsibility of such broker or intermediary and not of the Receiving Agent. In such case, the lodging agent's stamp should be inserted on the Application Form.

The person lodging the Application Form with payment and in accordance with the other terms as described above (the "acceptor"), including any person who appears to the Receiving Agent to be acting on behalf of some other person, accepts the Open Offer in respect of such number of Open Offer Shares as is referred to therein (for the purposes of this paragraph 5.1 the "relevant Open Offer Shares") shall thereby be deemed to agree to provide the Registrar with such information and other evidence as the Receiving Agent may require to satisfy the verification of identity requirements.

If the Registrar determines that the verification of identity requirements apply to any acceptor or application, the relevant Open Offer Shares (notwithstanding any other term of the Open Offer) will not be issued to the relevant acceptor unless and until the verification of identity requirements have been satisfied in respect of that acceptor or application. The Receiving Agent is entitled, in its absolute discretion, to determine whether the verification of identity requirements apply to any acceptor or application and whether such requirements have been satisfied, and neither the Receiving Agent nor the Company will be liable to any person for any loss or damage suffered or incurred (or alleged), directly or indirectly, as a result of the exercise of such discretion.

If the verification of identity requirements apply, failure to provide the necessary evidence of identity within a reasonable time may result in delays in the despatch of share certificates or in crediting CREST accounts. If, within a reasonable time following a request for verification of identity, the Receiving Agent has not received evidence satisfactory to it as aforesaid, the Company may, in its absolute discretion, treat the relevant application as invalid, in which event the monies payable on acceptance of the Open Offer will be returned (at the acceptor's risk) without interest to the account of the bank or building society on which the relevant cheque or banker's draft was drawn. This is without prejudice to the right of the Company to take proceedings to recover any loss suffered by it as a result of failure to provide satisfactory advice.

Submission of an Application Form with the appropriate remittance will constitute a warranty to each of the Company, the Receiving Agent and Numis from the applicant that the Money Laundering Regulations will not be breached by application of such remittance.

The verification of identity requirements will not usually apply:

(a) if the applicant is an organisation required to comply with the Money Laundering Directive (2005/60/EC of the European Parliament and of the EC Council of 26 October on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing); or
(b) if the acceptor is a regulated United Kingdom broker or intermediary acting as agent and is itself subject to the Money Laundering Regulations; or
(c) if the applicant (not being an applicant who delivers his application in person) makes payment by way of a cheque drawn on an account in the applicant's name; or
(d) if the aggregate subscription price for the Open Offer Shares is less than €15,000 (approximately £11,255).

In other cases the verification of identity requirements may apply. Satisfaction of these requirements may be facilitated in the following ways:

(i) if payment is made by cheque or banker's draft in sterling drawn on a branch in the United Kingdom of a bank or building society which bears a UK bank sort code number in the top right hand corner the following applies. Cheques, should be made payable to "Capita Registrars Limited re: IP Group plc Open Offer" in respect of an application by a Qualifying Shareholder and crossed "A/C Payee Only". Cheques should be drawn on the personal account of the individual investor to which they have sole or joint title to the funds. Third party cheques may not be accepted with the exception of building society cheques or bankers' drafts where the building society or bank has confirmed the name of the account holder by stamping or endorsing the cheque/bankers' draft to such effect. However, third party cheques will be subject to the Money Laundering Regulations which would delay Shareholders receiving their Open Offer Shares. The account name should be the same as that shown on the Application Form; or
(ii) if the Application Form is lodged with payment by an agent which is an organisation of the kind referred to in (a) above or which is subject to anti-money laundering regulation in a country which is a member of the Financial Action Task Force (the non-European Union members of which are Argentina, Australia, Brazil, Canada, China, Gibraltar, Hong Kong, Iceland, Japan, Mexico, New Zealand, Norway, Russian Federation, Singapore, South Africa, Switzerland, Turkey, UK Crown Dependencies and the US and, by virtue of their membership of the Gulf Cooperation Council, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), the agent should provide with the Application Form written confirmation that

it has that status and a written assurance that it has obtained and recorded evidence of the identity of the person for whom it acts and that it will on demand make such evidence available to the Receiving Agent. If the agent is not such an organisation, it should contact Capita Registrars on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK.

To confirm the acceptability of any written assurance referred to in (b) above, or in any other case, the acceptors should contact Capita Asset Services on 0871 664 0321 from within the UK or on +44 (0)20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The helpline cannot provide advice on the merits of the Placing and/or Open Offer nor give any financial, legal or tax advice.

If the Application Form is in respect of Open Offer Shares with an aggregate subscription price of €15,000 (approximately £11,255) or more and is/are lodged by hand by the acceptor in person, or if the Application Form in respect of Open Offer Shares is/are lodged by hand by the acceptor and the accompanying payment is not the acceptor's own cheque, he or she should ensure that he or she has with him or her evidence of identity bearing his or her photograph (for example, his or her passport) and separate evidence of his or her address.

If, within a reasonable period of time following a request for verification of identity, and in any case by no later than 11.00 a.m. on 27 March 2015, the Receiving Agent has not received evidence satisfactory to it as aforesaid, the Receiving Agent may, at its discretion, as agent of the Company, reject the relevant application, in which event the monies submitted in respect of that application will be returned without interest to the account at the drawee bank from which such monies were originally debited (without prejudice to the rights of the Company to undertake proceedings to recover monies in respect of the loss suffered by it as a result of the failure to produce satisfactory evidence as aforesaid).

5.2 Open Offer Entitlements in CREST

If you hold your Open Offer Entitlements in CREST and apply for Open Offer Shares in respect of all or some of your Open Offer Entitlements as agent for one or more persons and you are not a UK or EU regulated person or institution (e.g. a UK financial institution), then, irrespective of the value of the application, the Receiving Agent is obliged to take reasonable measures to establish the identity of the person or persons on whose behalf you are making the application. You must therefore contact the Receiving Agent before sending any USE Instruction or other instruction so that appropriate measures may be taken.

Submission of a USE Instruction which on its settlement constitutes a valid application as described above constitutes a warranty and undertaking by the applicant to provide promptly to the Receiving Agent such information as may be specified by the Receiving Agent as being required for the purposes of the Money Laundering Regulations. Pending the provision of evidence satisfactory to the Receiving Agent as to identity, the Receiving Agent may in its absolute discretion take, or omit to take, such action as it may determine to prevent or delay issue of the Open Offer Shares concerned. If satisfactory evidence of identity has not been provided within a reasonable time, then the application for the Open Offer Shares represented by the USE Instruction will not be valid. This is without prejudice to the right of the Company to take proceedings to recover any loss suffered by it as a result of failure to provide satisfactory evidence.

6. OVERSEAS SHAREHOLDERS

This document has been approved by the FCA, being the competent authority in the United Kingdom.

Accordingly, the making of the Open Offer to persons resident in, or who are citizens of, or who have a registered address in, countries other than the United Kingdom may be affected by the law or regulatory requirements of the relevant jurisdiction. The comments set out in this paragraph 6 are intended as a general guide only and any Overseas Shareholders who are in any doubt as to their position should consult their professional advisers without delay.

6.1 General

The distribution of this document and the Application Form and the making of the Open Offer to persons who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, or which are corporations, partnerships or other entities created or organised under the laws of countries other than the United Kingdom or to persons who are nominees of or custodians, trustees or guardians for citizens, residents in or nationals of, countries other than the United Kingdom may be affected by the laws or regulatory requirements of the relevant jurisdictions. Those persons should consult their professional advisers as to whether they require any governmental or other consents or need to observe any applicable legal requirement or other formalities to enable them to apply for Open Offer Shares under the Open Offer.

No action has been or will be taken by the Company, Numis or any other person to permit a public offering or distribution of this document (or any other offering or publicity materials or application form(s) relating to the Open Offer Shares) in any jurisdiction where action for that purpose may be required, other than in the United Kingdom.

Receipt of this document and/or an Application Form and/or a credit of Open Offer Entitlements to a stock account in CREST will not constitute an invitation or offer of securities for subscription, sale or purchase in those jurisdictions in which it would be illegal to make such an invitation or offer and, in those circumstances, this document and/or the Application Form must be treated as sent for information only and should not be copied or redistributed.

Application Forms will not be sent to, and Open Offer Entitlements and Excess Open Offer Entitlements will not be credited to stock accounts in CREST of, persons with registered addresses in the United States or any other Excluded Territory or their agent or intermediary, except where the Company is satisfied that such action would not result in the contravention of any registration or other legal requirement in any jurisdiction.

No person receiving a copy of this document and/or an Application Form and/or a credit of Open Offer Entitlements and Excess Open Offer Entitlements to a stock account in CREST in any territory other than the United Kingdom may treat the same as constituting an invitation or offer to him or her, nor should he or she in any event use any such Application Form and/or credit of Open Offer Entitlements to a stock account in CREST unless, in the relevant territory, such an invitation or offer could lawfully be made to him or her and such Application Form and/or credit of Open Offer Entitlements to a stock account in CREST could lawfully be used, and any transaction resulting from such use could be effected, without contravention of any registration or other legal or regulatory requirements. In circumstances where an invitation or offer would contravene any registration or other legal or regulatory requirements, this document and/or the Application Form must be treated as sent for information only and should not be copied or redistributed.

It is the responsibility of any person (including, without limitation, custodians, agents, nominees and trustees) outside the United Kingdom wishing to apply for Open Offer Shares under the Open Offer to satisfy himself or herself as to the full observance of the laws of any relevant territory in connection therewith, including obtaining any governmental or other consents that may be required, observing any other formalities required to be observed in such territory and paying any issue, transfer or other taxes due in such territory.

Neither the Company, Numis, nor any of their respective directors, employees or representatives, is making any representation to any offeree or purchaser of the Capital Raising Shares regarding the legality of an investment in the Capital Raising Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser.

Persons (including, without limitation, custodians, agents, nominees and trustees) receiving a copy of this document and/or an Application Form and/or a credit of Open Offer Entitlements to a stock account in CREST, in connection with the Open Offer or otherwise, should not distribute or send either of those documents nor transfer Open Offer Entitlements in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If a copy of this document and/or an Application Form and/or a credit of Open Offer Entitlements to a stock account in CREST is received by any person in any such territory, or by his or her custodian, agent, nominee or trustee, he or she must not seek to apply for Open Offer Shares in respect of the Open Offer unless the Company and Numis determine that such action would not violate applicable legal or regulatory requirements. Any person (including, without limitation, custodians, agents, nominees and trustees) who does forward a copy of this document and/or an Application Form and/or transfers Open Offer Entitlements into any such territory, whether pursuant to a contractual or legal obligation or otherwise, should draw the attention of the recipient to the contents of this Appendix 2 and specifically the contents of this paragraph 6.

Subject to paragraphs 6.2 to 6.6 below, any person (including, without limitation, custodians, agents, nominees and trustees) outside the United Kingdom wishing to apply for Open Offer Shares in respect of the Open Offer must satisfy himself or herself as to the full observance of the applicable laws of any relevant territory, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories.

The Company reserves the right to treat as invalid any application or purported application for Open Offer Shares that appears to the Company or its agents to have been executed, effected or dispatched from the United States or any other Excluded Territory or in a manner that may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of the share certificates of Open Offer Shares or in the case of a credit of Open Offer Entitlements to a stock account in CREST, to a CREST member whose registered address would be, in the United States or any other Excluded Territory or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates or make such a credit.

The attention of Overseas Shareholders is drawn to paragraphs 6.2 to 6.6 below.

Notwithstanding any other provision of this document or the Application Form, the Company reserves the right to permit any person to apply for Open Offer Shares in respect of the Open Offer if the Company, in its sole and absolute discretion, is satisfied that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

Overseas Shareholders who wish, and are permitted, to apply for Open Offer Shares should note that payment must be made in sterling denominated cheques or bankers' drafts or where such Overseas Shareholder is a Qualifying CREST Shareholder, through CREST.

Due to restrictions under the securities laws of the United States and the other Excluded Territories, and subject to certain exceptions, Qualifying Shareholders in the United States or who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, the US or any other Excluded Territory will not qualify to participate in the Open Offer and will not be sent an Application Form nor will their stock accounts in CREST be credited with Open Offer Entitlements.

The Open Offer Shares have not been and will not be registered under the relevant laws of the United States or any other Excluded Territory or any state, province or territory thereof and may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, in or into the United States or any other Excluded Territory or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, the US or any other Excluded Territory except pursuant to an applicable exemption.

No public offer of Open Offer Shares is being made by virtue of this document or the Application Forms into the United States or any other Excluded Territory. Receipt of this document and/or an Application Form and/or a credit of an Open Offer Entitlement to a stock account in CREST will not constitute an invitation or offer of securities for subscription, sale or purchase in those jurisdictions in which it would be illegal to make such an invitation or offer and, in those circumstances, this document and/or the Application Form must be treated as sent for information only and should not be copied or redistributed.

6.2 United States

The Company is not and does not intend to become an "investment company" within the meaning of the US Investment Company Act, and is not engaged and does not propose to engage in the business of investing, reinvesting, owning, holding or trading in securities. Accordingly, the Company has not been and will not be registered in the United States as an investment company under the US Investment Company Act. The US Investment Company Act provides certain protections to investors and imposes certain restrictions on companies that are registered as investment companies. As the Company is not so registered and does not plan to be so registered, none of these protections or restrictions is or will be applicable to the Company. As a result, restrictions on the ownership and transfer of the Open Offer Shares may materially affect certain Shareholders' ability to transfer the Open Offer Shares.

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States. Publicly available information about the issuers of securities listed on the London Stock Exchange differs from and, in certain respects, is less detailed than the information that is regularly published by or about listed companies in the United States. In addition, regulations governing the London Stock Exchange may not be as extensive in all respects as those in effect on United States markets.

Financial Statements prepared under IFRS differ from those prepared under US GAAP in a number of respects including, but not limited to, revenue recognition, share option compensation, accounting for business combinations and acquisitions of intellectual property and accounting for capital instruments. Potential investors are advised to consult their own professional advisers as to the significance of these differences. In making an investment decision, investors must rely upon their own examination of the Group, the terms of the offering and the financial information in respect of the Group. Potential investors should consult their own professional advisers for an understanding of the differences between IFRS and US GAAP, and how those differences might affect the financial information herein.

The Capital Raising Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, into, in or within the United States, except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of the Capital Raising Shares in the United States.

The Capital Raising Shares are being offered or sold only: (a) outside the United States to non-US Persons (as defined in Regulation S under the US Securities Act) in offshore transactions within the meaning of, and in accordance with, the safe harbour from the registration requirements provided by Regulation S; and (b) within, into or in the United States to persons reasonably believed to be either (a) QIBs or (b) Accredited Investors and that, in either case, are Qualified Purchasers solely in private placement transactions not involving any public offering in reliance on the exemption from the registration requirements of Section 5 of the US Securities Act provided by Section 4(a)(2) under the US Securities Act or another applicable exemption therefrom.

Accordingly, the Company is not extending the Open Offer into the US unless an exemption from the registration requirements of the US Securities Act is available and, subject to certain exceptions, neither this document nor the Application Form constitutes or will constitute an offer or an invitation to apply for or an offer or an invitation to acquire any Capital Raising Shares in the US. Subject to certain exceptions, neither this document nor an Application Form will be sent to, and no Capital Raising Shares will be credited to a stock account in CREST of, any Qualifying Shareholder with a registered address in the US. Subject to certain exceptions, Application Forms sent from or postmarked in the US will be deemed to be invalid and all persons acquiring Capital Raising Shares and wishing to hold such Capital Raising Shares in registered form must provide an address for registration of the Capital Raising Shares issued upon exercise thereof outside the US.

Subject to certain exceptions, any person who acquires Capital Raising Shares will be deemed to have declared, warranted and agreed, by accepting delivery of this document or the Application Form and delivery of the Capital Raising Shares, that they are not, and that at the time of acquiring the Capital Raising Shares they will not be, in the US or acting on behalf of, or for the account or benefit of a person on a non-discretionary basis in the US or any state of the US.

The Company and Numis reserve the right to treat as invalid any Application Form that: (i) appears to the Company and Numis or their respective agents to have been executed in, or despatched from, the US, or that provides an address in the US for the receipt of Capital Raising Shares, or (ii) which does not make the warranty set out in the Application Form to the effect that the person accepting the Application Form does not have a registered address and is not otherwise located in the US and is not acquiring the Capital Raising Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Capital Raising Shares in the US or (iii) where the Company believes acceptance of such Application Form may infringe applicable legal or regulatory requirements. The Company will not be bound to allot (on a non-provisional basis) or issue any Capital Raising Shares to any person with an address in, or who is otherwise located in, the US in whose favour a Application Form or any Capital Raising Shares may be transferred. In addition, the Company, and/or Numis reserve the right to reject any USE Instruction sent by or on behalf of any CREST member with a registered address in the US in respect of the Capital Raising Shares.

Notwithstanding the foregoing, Capital Raising Shares may be offered to and acquired by Shareholders in the United States pursuant to an available exemption from registration under the US Securities Act. Any Shareholder to whom Capital Raising Shares are offered and by whom Capital Raising Shares are acquired will be required, among other things, to warrant, to undertake or to acknowledge certain information and/or obligations, as the case may be, in order to participate in the transaction. Such warranties will include, among others, warranties as to the fact that: (a) the Shareholder is (i) either (x) a QIB or (y) an Accredited Investor and (ii) a Qualified Purchaser; (b) the Shareholder did not become aware of nor were the Capital Raising Shares offered to the Shareholder by any form of any "general solicitation" or "general advertising" (as such terms are defined in Regulation D); (c) the Shareholder is acquiring the Capital Raising Shares as principal for its own account or for the account of either a QIB or an Accredited Investor that is in either case a Qualified Purchaser and such Shareholder and any such transferee of such Shareholder is not acquiring the Capital Raising Shares with a view to or for distributing or reselling such Capital Raising Shares or any portion thereof, without prejudice, however, to its right at all times to sell or otherwise dispose of all or any part of such Capital Raising Shares in compliance with applicable United States federal and state securities laws; and (e) the Capital Raising Shares were offered to the Shareholder solely by means of the Prospectus and by direct contact between the investor and the Company.

Each Shareholder acknowledges that the Capital Raising Shares are "restricted securities" within the meaning of Rule 144(a)(3) of the US Securities Act and it represents that it will not resell the Capital Raising Shares absent registration or an available exemption or safe harbour from registration under the US Securities Act. Resales of Capital Raising Shares may only be made (i) outside the US in offshore transactions in reliance on Regulation S or (ii) within the US to investors that are both QIBs and Qualified Purchasers. The Company will require the provision of a letter by investors in the US and any transferees in the US containing representations as to status under the US Securities Act and the Investment Company Act. The Company will refuse to issue or transfer Capital Raising Shares to investors that do not meet the foregoing requirements.

In addition, until 40 days after the commencement of the Open Offer, an offer, sale or transfer of the Capital Raising Shares within the US by a dealer (whether or not participating in the Placing and Open Offer) may violate the registration requirements of the US Securities Act.

6.3 Excluded Territories

Due to restrictions under the securities laws of the Excluded Territories and subject to certain exemptions, Shareholders who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, any of the Excluded Territories will not qualify to participate in the Open Offer and will not be sent an Application Form nor will their stock accounts in CREST be credited with any Open Offer Entitlement or any Excess CREST Open Offer Entitlement.

The Open Offer Shares have not been and will not be registered under the relevant laws of any Excluded Territory or any state, province or territory thereof and may not be offered, sold, resold, delivered or distributed, directly or indirectly, in or into any Excluded Territory or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, any Excluded Territory except pursuant to an applicable exemption.

No offer of Open Offer Shares is being made by virtue of this document or the Application Forms into any Excluded Territory.

6.4 Other overseas territories

Application Forms will be sent to Qualifying Non-CREST Shareholders and Open Offer Entitlements and Excess CREST Open Offer Entitlements will be credited to the stock account in CREST of Qualifying CREST Shareholders. Qualifying Shareholders in jurisdictions other than the United States or the Excluded Territories may, subject to the laws of their relevant jurisdiction, take up Open Offer Shares under the Open Offer in accordance with the instructions set out in this document and the Application Form.

Qualifying Shareholders who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, countries other than the United Kingdom should consult appropriate professional advisers as to whether they require any governmental or other consents or need to observe any further formalities to enable them to apply for any Capital Raising Shares in respect of the Open Offer.

Each person to whom the Capital Raising Shares or the Application Forms are distributed, offered or sold outside the US will be deemed by its subscription for, or purchase of, the Capital Raising Shares to have represented and agreed, on its behalf and on behalf of any investor accounts for which it is subscribing for or purchasing the Capital Raising Shares, as the case may be, that:

6.4.1 it is acquiring the Capital Raising Shares from the Company or Numis in an "offshore transaction" as defined in Regulation S; and
6.4.2 the Capital Raising Shares have not been offered to it by the Company or Numis by means of any "directed selling efforts" as defined in Regulation S.

6.5 Representations and warranties relating to Overseas Shareholders

6.5.1 Qualifying Non-CREST Shareholders

Any person completing and returning an Application Form or requesting registration of the Open Offer Shares comprised therein represents and warrants to the Company, Numis and the Receiving Agent that, except where proof has been provided to the Company's satisfaction (in its absolute discretion) that such person's completion of an Application Form or request for registration of the Open Offer Shares comprised therein will not result in the contravention of any applicable legal requirements in any jurisdiction: (i) such person is not requesting registration of the relevant Open Offer Shares from within the United States or any Excluded Territory; (ii) such person is not in any territory in which it is unlawful to make or accept an offer to acquire Open Offer Shares in respect of the Open Offer or to use the Application Form in any manner in which such person has used or will use it; (iii) such person is not acting on a non-discretionary basis for a person located within the United States, any Excluded Territory (or any territory referred to in (ii) above) at the time the instruction to accept was given (except as otherwise expressly agreed with the Company); and (iv) such person is not acquiring Open Offer Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Open Offer Shares into any of the above territories. The Company, Numis and/or the Receiving Agent in consultation with Numis may treat as invalid any acceptance or purported acceptance of the allotment of Open Offer Shares comprised in an Application Form if it: (i) appears to the Company and/or Numis or their respective agents to have been executed, effected or dispatched from the United States or an Excluded Territory or in a manner that may involve breach of the laws or regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements; or (ii) provides an address in the United States or an Excluded Territory for delivery of the share certificates of Open Offer Shares (or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates); or (iii) purports to exclude the representation and warranty required by this paragraph 6.5.

6.5.2 Qualifying CREST Shareholders

A CREST member or CREST sponsored member who makes a valid acceptance in accordance with the procedures set out in Appendix 2 represents and warrants to the Company, Numis and the Receiving Agent that, except where proof has been provided to the Company's satisfaction (in its absolute discretion) that such person's acceptance will not result in the contravention of any applicable legal requirement in any jurisdiction: (i) neither it nor its client is within the United States or any Excluded Territory; (ii) neither it nor its client is in any territory in which it is unlawful to make or accept an offer to acquire Open Offer Shares; (iii) it is not accepting on a non-discretionary basis for a person located within any Excluded Territory (except as otherwise expressly agreed with the Company) or any territory referred to in (ii) above at the time the instruction to accept was given; and (iv) neither it nor its client is acquiring any Open Offer Shares with a view to the offer, sale, resale, transfer, delivery or distribution, directly or indirectly, of any such Open Offer Shares into any of the above territories.

6.6 Waiver

The provisions of this paragraph 6 and of any other terms of the Open Offer relating to Overseas Shareholders may be waived, varied or modified as regards specific persons or on a general basis by the Company and Numis in their absolute discretion. Subject to this, the provisions of this paragraph 6 supersede any terms of the Open Offer inconsistent herewith. References in this paragraph 6 to the Shareholders shall include references to the person or persons executing an Application Form and, in the event of more than one person executing an Application Form, the provisions of this paragraph 6 shall apply to them jointly and to each of them.

7. WITHDRAWAL RIGHTS

Persons wishing to exercise or direct the exercise of statutory withdrawal rights pursuant to section 87Q(4) of FSMA after the issue by the Company of a prospectus supplementing this document must do so by despatching a written notice of withdrawal within two Business Days commencing on the Business Day after the date on which the supplementary prospectus is published. The withdrawal notice must include the full name and address of the person wishing to exercise statutory withdrawal rights and, if such person is a CREST member, the participant ID and the member account ID of such CREST member. The notice of withdrawal must be either deposited by hand (during normal business hours only) or by post with the Registrar at Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by email to [email protected] so as to be received before the end of the withdrawal period. Notice of withdrawal given by any other means or which is deposited with the Registrar after the expiry of such period will not constitute a valid withdrawal, provided that the Company will not permit the exercise of withdrawal rights after payment by the relevant person for the Open Offer Shares applied for in full and the allotment of such Open Offer Shares to such person becoming unconditional save to the extent required by statute. In such event, Shareholders are advised to seek independent legal advice.

If you have any queries please call Capita Asset Services on 0871 664 0321 from within the UK or on +44 20 8639 3399 if calling from outside the UK. Calls to the 0871 664 0321 number cost 10 pence per minute from a BT landline. Other network providers' costs may vary. Lines are open 9.00 a.m. to 5.30 p.m. (London time) Monday to Friday. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rate. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline cannot provide advice on the merits of the Open Offer nor give any financial, legal or tax advice.

8. ADMISSION, SETTLEMENT AND DEALINGS

The result of the Open Offer is expected to be announced on 26 March 2015. Applications will be made to the UKLA for the Capital Raising Shares to be admitted to the premium segment of the Official List and to the London Stock Exchange for the Capital Raising Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. It is expected that Admission will become effective, and that dealings in the Capital Raising Shares, fully paid, will commence at 8.00 a.m. on 27 March 2015.

The Existing Shares are already admitted to CREST. No further application for admission to CREST is accordingly required for the Capital Raising Shares. All such shares, when issued and fully paid, may be held and transferred by means of CREST.

Open Offer Entitlements and Excess CREST Open Offer Entitlements held in CREST are expected to be disabled in all respects after 11.00 a.m. on 25 March 2015 (being the latest time and date for applications under the Open Offer). If the condition(s) to the Open Offer described above are satisfied, Capital Raising Shares will be issued in uncertificated form to those persons who submitted a valid application by utilising the CREST application procedures and whose applications have been accepted by the Company. On 27 March 2015, the Receiving Agent will instruct Euroclear to credit the appropriate stock accounts of such persons with such persons' Capital Raising Shares with effect from Admission (expected to be 27 March 2015). The stock accounts to be credited will be accounts under the same CREST participant IDs and CREST member account IDs in respect of which the USE Instruction was given.

Notwithstanding any other provision of this document, the Company reserves the right, with the prior written consent of Numis, to send Qualifying CREST Shareholders an Application Form instead of crediting the relevant stock account with Open Offer Entitlements and Excess CREST Open Offer Entitlements, and to allot and/or issue any Open Offer Shares in certificated form. In normal circumstances, this right is only likely to be exercised in the event of any interruption, failure or breakdown of CREST (or of any part of CREST) or on the part of the facilities and/or systems operated by the Registrar in connection with CREST.

For Qualifying Non-CREST Shareholders who have applied by using an Application Form, share certificates in respect of the Capital Raising Shares validly taken up and any Excess Shares successfully applied for under the Excess Application Facility are expected to be despatched by post by 7 April 2015. No temporary documents of title will be issued and, pending the issue of definitive certificates, transfers will be certified against the UK share register of the Company. All documents or remittances sent by or to applicants, or as they may direct, will be sent through the post at their own risk. For more information as to the procedure for application, Qualifying Non-CREST Shareholders are referred to paragraph 4.1 of this Appendix 2 and their respective Application Form.

9. TIMES AND DATES

The Company shall, in agreement with Numis and after consultation with its financial and legal advisers, be entitled to amend the dates that Application Forms are despatched or amend or extend the latest date for acceptance under the Open Offer and all related dates set out in this document and in such circumstances shall notify the UKLA, and make an announcement on a Regulatory Information Service and, if appropriate, to Shareholders but Qualifying Shareholders may not receive any further written communication.

If a supplementary prospectus is issued by the Company two or fewer Business Days prior to the latest time and date for acceptance and payment in full under the Open Offer specified in this document, the latest date for acceptance under the Open Offer shall be extended to the date that is three Business Days after the date of issue of the supplementary prospectus (and the dates and times of principal events due to take place following such date shall be extended accordingly).

10. TAXATION

Certain statements regarding United Kingdom and United States taxation in respect of the Capital Raising Shares and the Open Offer are set out in paragraph 13 of Part V of this document. Shareholders who are in any doubt as to their tax position in relation to taking up their entitlements under the Open Offer, or who are subject to tax in any jurisdiction other than the United Kingdom, should immediately consult a suitable professional adviser.

11. FURTHER INFORMATION

Your attention is drawn to the further information set out in this document and also, in the case of Qualifying Non-CREST Shareholders and other Qualifying Shareholders to whom the Company has sent Application Forms, to the terms, conditions and other information printed on the accompanying Application Form.

12. GOVERNING LAW AND JURISDICTION

The terms and conditions of the Open Offer as set out in this document, the Application Form and any noncontractual obligations related thereto shall be governed by, and construed in accordance with, the laws of England and Wales. The courts of England and Wales are to have exclusive jurisdiction to settle any dispute which may arise out of, or in connection with, the Open Offer, this document or the Application Form including, without limitation, disputes relating to any non-contractual obligations arising out of, or in connection with, the Open Offer, this document or the Application Form. By taking up Open Offer Shares, whether by way of their Open Offer Entitlement alone or also through the Excess Application Facility, in accordance with the instructions set out in this document and, where applicable, the Application Form, Qualifying Shareholders irrevocably submit to the jurisdiction of the courts of England and Wales and waive any objection to proceedings in any such court on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

APPENDIX 3 TERMS AND CONDITIONS OF THE FIRM PLACING AND THE PLACING

1. Introduction

Participation in the Firm Placing and the Placing is only available to persons who are invited to participate by Numis. These terms and conditions apply to persons making an offer to subscribe for Firm Placed Shares under the Firm Placing and Placing Shares under the Placing. The Placee hereby agrees with Numis and the Company to be bound by these terms and conditions as being the terms and conditions upon which Firm Placed Shares will be sold under the Firm Placing and Placing Shares will be sold under the Placing. A Placee shall, without limitation, become so bound if Numis confirms its allocation of Firm Placed Shares under the Firm Placing and Placing Shares under the Placing to such Placee.

Upon being notified of its allocation of Firm Placed Shares under the Firm Placing and Placing Shares under the Placing through receipt of a contract note or execution of a placing letter, a Placee shall, subject to the provisions of paragraph 5 of this Appendix 3 with respect to the Placed Shares, be contractually committed to acquire the number of Firm Placed Shares and Placing Shares allocated to them (subject to clawback of the Placing Shares to the Open Offer, or if determined by the Directors in consultation with Numis, to the Excess Application Facility) at the Issue Price and to the fullest extent permitted by law, will be deemed to have agreed not to exercise any rights to rescind or terminate or otherwise withdraw from such commitment. Dealing may not begin before any notification is made.

2. Agreement to acquire Firm Placed Shares and Placing Shares

Each of the Firm Placing and the Placing is conditional upon the following conditions:

(i) the Resolutions being passed at the General Meeting;
(ii) the Placing Agreement having become unconditional in all respects save for the condition relating to Admission, and not being terminated in accordance with its terms before Admission becomes effective; and
(iii) Admission becoming effective by not later than 8.00 a.m. (London time) on 27 March 2015 (or such later time and/or date as the Company and Numis may agree (being no later than 10 April 2015) in accordance with the terms of the Placing Agreement).

Subject to the above conditions, a Placee agrees to become a Shareholder and agrees to acquire Firm Placed Shares and Placing Shares at the Issue Price. The number of Firm Placed Shares issued to such Placee under the Firm Placing and Placing Shares issued to such Placee under the Placing shall be in accordance with the arrangements described above, subject to the provisions of paragraph 6 of this Appendix with respect to the Placing Shares.

3. Payment for Firm Placed Shares and Placing Shares

Each Placee undertakes to pay the Issue Price for each Firm Placed Share and Placing Share issued to such Placee in such manner as shall be directed by Numis. In the event of any failure by a Placee to pay as so directed by Numis, the relevant Placee shall be deemed hereby to have appointed Numis or any nominee of Numis to sell (in one or more transactions) any or all of the Firm Placed Shares and Placing Shares in respect of which payment shall not have been made as so directed and to have agreed to indemnify on demand Numis in respect of any liability for UK stamp duty and/or stamp duty reserve tax arising in respect of any such sale or sales.

4. Undertaking not to take up Open Offer Entitlements or apply for Excess Shares

Each Placee subscribing for Firm Placed Shares under the Firm Placing and Placing Shares under the Placing undertakes not to apply for, or take up, its Open Offer Entitlement and not to apply for any Excess Shares pursuant to the Excess Application Facility. The Company may, in its absolute discretion, treat any application for Open Offer Shares or Excess Shares submitted (whether in CREST or via the Application Form) in breach of this undertaking as invalid, in which event the monies payable on acceptance of the Open Offer shall be returned (at the acceptor's risk) without interest to the account of the bank or building society on which the relevant cheque or banker's draft was drawn or otherwise refunded.

5. Representations and Warranties

By receiving this document, each Placee and, in the case of paragraph 5.15 of this Appendix 3, any person confirming his agreement to subscribe for Firm Placed Shares and Placing Shares on behalf of a Placee or authorising Numis to notify a Placee's name to the Registrars, is deemed to acknowledge, agree, undertake, represent and warrant to each of Numis, the Registrars and the Company that:

5.1 the Placee has read this document in its entirety and acknowledges that its participation in the Firm Placing and the Placing (as applicable) shall be made solely on the terms and subject to the conditions set out in these terms and conditions, the Placing Agreement and the Articles. Such Placee agrees that these terms and conditions and the contract note issued by, or placing letter entered into with, Numis to such Placee represents the whole and only agreement between the Placee, Numis and the Company in relation to the Placee's participation in the Firm Placing and the Placing and supersedes any previous agreement between any of such parties in relation to such participation. Accordingly, all other terms, conditions, representations, warranties and other statements which would otherwise be implied (by law or otherwise) shall not form part of these terms and conditions. Such Placee agrees that neither the Company, Numis nor any of their respective officers or directors will have any liability for any such other information or representation and irrevocably and unconditionally waives any rights it may have in respect of any such other information or representation;
5.2 the Placee has the power and authority to subscribe for the Placing Shares under the Placing and the Firm Placed Shares under the Firm Placing and to execute and deliver all documents necessary for such subscription;
5.3 neither Numis nor any person affiliated with Numis or acting on its behalf is responsible for or shall have any liability for any information, representation or statement contained in this document or any information previously published by or on behalf of the Company or any member of the Group and will not be liable for any decision by a Placee to participate in the Firm Placing and the Placing based on any information, representation or statement contained in this document or otherwise;
5.4 the Placee acknowledges that the Capital Raising Shares will be admitted to the Official List, and the Company is therefore required to publish certain business and financial information in accordance with the rules and practices of the FCA (collectively, the "Exchange Information"), which includes a description of the nature of the Company's business and the Company's most recent balance sheet and profit and loss account and that the Placee is able to obtain or access such Exchange Information without undue difficulty and is able to obtain access to such information or comparable information concerning any other publicly traded company whose securities are admitted to the Official List without undue difficulty;
5.5 the Placee acknowledges that neither Numis, nor any person affiliated with Numis, nor any person acting on its behalf is making any recommendations to it or advising it regarding the suitability or merits of any transaction it may enter into in connection with the Firm Placing and the Placing, and that participation in the Firm Placing and the Placing is on the basis that it is not and will not be a client of Numis for the purposes of the Firm Placing and the Placing (as applicable) and the Placee acknowledges that neither Numis, nor any person affiliated with Numis, nor any person acting on its behalf has any duties or responsibilities to the Placee for providing the protections afforded to its clients or for providing advice in relation to the Firm Placing and the Placing or in respect of any representations, warranties, undertakings or indemnities contained in the Placing Agreement or for the

exercise or performance of any of Numis's rights and obligations thereunder, including any right to waive or vary any condition or exercise any termination right contained therein;

5.6 the Placee has not relied on Numis or any person affiliated with Numis in connection with any investigation of the accuracy of any information contained in this document or its investment decision and the Placee has relied on its own investigation with respect to the Firm Placed Shares and the Placing Shares and the Company in connection with its investment decision;
5.7 in agreeing to purchase Firm Placed Shares under the Firm Placing and Placing Shares under the Placing, the Placee is relying on this document and/or any supplementary prospectus issued by the Company in connection with the Capital Raising (as the case may be) or any regulatory announcement that may be issued by the Company and not on any other information or representation concerning the Group, the Firm Placing, the Placing, the Firm Placed Shares or the Placing Shares;
5.8 save in the event of fraud on its part (and to the extent permitted by the rules of the FCA), neither Numis nor any of its directors or employees shall be liable to a Placee for any matter arising out of the role of Numis as the Company's adviser and broker or otherwise, and that where any such liability nevertheless arises as a matter of law each Placee will immediately waive any claim against Numis and any of its directors and employees which a Placee may have in respect thereof;
5.9 the Placee has complied with all such laws and such Placee will not infringe any applicable law as a result of such Placee's agreement to purchase Firm Placed Shares under the Firm Placing and Placing Shares under the Placing and/or acceptance thereof or any actions arising from such Placee's rights and obligations under the their agreement to purchase Firm Placed Shares under the Firm Placing and Placing Shares under the Placing and/or acceptance thereof or under the Articles;
5.10 the Placee has accepted that its application is irrevocable and if for any reason it becomes necessary to adjust the expected timetable as set out in this document, the Company will make an appropriate announcement to a Regulatory Information Service giving details of the revised dates. In particular, the Company shall, in agreement with Numis, be entitled to extend the last time and/or date for applications under the Firm Placing and the Placing, and any such extension will not affect applications already made, which will continue to be irrevocable;
5.11 to the fullest extent permitted by law, the Placee acknowledges and agrees to the disclaimers contained in this document and acknowledges and agrees to comply with the selling restrictions set out in this document;
5.12 the Shares have not been and will not be registered under the US Securities Act, or under the securities legislation of, or with any securities regulatory authority of, any state or other jurisdiction of the United Sates or under the applicable securities laws of any other Excluded Territories or where to do so may contravene local securities laws or regulations;
5.13 the Placee is either: (i) located outside the United States and is not a US person as defined in Regulation S and is subscribing for Firm Placed Shares and/or Placing Shares only in "offshore transactions" as defined in and pursuant to Regulation S; or (ii) either (a) a QIB or (b) an Accredited Investor and that is, in the case of either (ii) (a) or (ii) (b), a Qualified Purchaser subscribing for Firm Placed Shares and/or Placing Shares in a private placement transaction falling within Section 4(a)(2) under the US Securities Act;

The Placee is not subscribing for Firm Placed Shares and/or Placing Shares as a result of any "directed selling efforts" as defined in Regulation S or by means of any form of "general solicitation" or "general advertising" as such terms are defined in Regulation D under the US Securities Act.

5.14 the Placee is not a resident of the Excluded Territories or the United States, in the case of 5.13(i) above, and acknowledges that the Firm Placed Shares and the Placing Shares have not been and will not be registered nor will a prospectus be prepared in respect of the Firm Placed Shares and the Placing Shares under the securities legislation of any other Excluded Territories or the United States and, subject to certain exceptions, may not be offered or sold, directly or indirectly, in or into those jurisdictions;

5.15 the Placee does not have a registered address in, and is not a citizen, resident or national of, any jurisdiction in which it is unlawful to make or accept an offer of the Firm Placed Shares or Placing Shares and it is not acting on a non-discretionary basis for any such person;
5.16 the Placee has not, directly or indirectly, distributed, forwarded, transferred or otherwise transmitted this document or any other offering materials concerning the Firm Placing or the Placing to any persons within the United States or any other Excluded Territory, nor will it do any of the foregoing;
5.17 the Placee accepts that if either or both of the Placing or the Firm Placing does not proceed or the conditions to the Placing Agreement are not satisfied or the Placing Shares or Firm Placed Shares for which valid applications are received and accepted are not admitted to listing on the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities for any reason whatsoever then none of Numis or the Company, nor persons controlling, controlled by or under common control with any of them nor any of their respective employees, agents, officers, members, stockholders, partners or representatives, shall have any liability whatsoever to it or any other person;
5.18 in the case of a person who confirms to Numis on behalf of a Placee an agreement to purchase Firm Placed Shares under the Firm Placing and Placing Shares under the Placing and/or who authorises Numis to notify such Placee's name to the Registrars, that person represents and warrants that he has authority to do so on behalf of the Placee;
5.19 the Placee has complied with its obligations in connection with money laundering and terrorist financing under the Criminal Justice Act 1993, the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Anti-Terrorism Crime and Security Act 2001 and the Money Laundering Regulations 2007 and undertakes to provide satisfactory evidence of its identity within such reasonable time (in each case to be determined in the absolute discretion of Numis) to ensure compliance with the Money Laundering Regulations and that if it is making payment on behalf of a third party, that satisfactory evidence has been obtained and recorded by it to verify the identity of the third party as required by the Money Laundering Regulations;
5.20 the Placee is not, and is not applying as nominee or agent for, a person to whom the issue would give rise to a liability under any of sections 67, 70, 93 and 96 of the Finance Act 1986 (depository receipts and clearance services) and that the Firm Placed Shares and/or the Placing Shares (as applicable) are not being acquired in connection with arrangements to issue depository receipts or to issue or transfer Firm Placed Shares and/or Placing Shares (as applicable) into a clearing system;
5.21 if you are a resident in the European Economic Area, you are a "qualified investor" within the meaning of the law in the Relevant Member State implementing Article 2(1)(e)(i), (ii) or (iii) of the Prospectus Directive (Directive 2003/71/EC);
5.22 the Placee has not offered or sold and will not offer or sell any Firm Placed Shares and/or Placing Shares (as applicable) to persons in the UK prior to Admission except to "qualified investors" as defined in Article 2(1)(e) of the Prospectus Directive;
5.23 the Placee is (a) a person falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "FPO") or (b) a person falling within article 49(2)(a) to (d) of the FPO and undertakes that it will acquire, hold, manage or dispose of any Firm Placed Shares and Placing Shares that are allocated to it for the purposes of its business or (c) a person to whom this document may otherwise be lawfully communicated;
5.24 the Placee has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) relating to the Firm Placed Shares or the Placed Shares in circumstances in which section 21(1) of FSMA does not require approval of the communication by an authorised person;
5.25 the exercise by Numis of any rights or discretions under the Placing Agreement shall be within its absolute discretion and Numis need not have any reference to any Placee and shall have no liability

to any Placee whatsoever in connection with any decision to exercise or not to exercise any such right and each Placee agrees that it shall have no rights against Numis or its directors or employees under the Placing Agreement;

5.26 the Placee acknowledges that any money held in an account with Numis on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and regulations of the FCA. The Placee further acknowledges that the money will not be subject to the protections conferred by the client money rules. As a consequence, this money will not be segregated from Numis' money in accordance with the client money rules and will be used by Numis in the course of its own business and the Placee will rank only as a general creditor of Numis;
5.27 the Placee accepts that the allocation of Placing Shares and Firm Placed Shares shall be determined by Numis in its absolute discretion but in consultation with the Company and that Numis may scale down any commitments for this purpose on such basis as it may determine; and
5.28 time shall be of the essence as regards its obligations to settle payment for the Placing Shares and the Firm Placed Shares and to comply with its other obligations under the Placing or Firm Placing.

The Placee acknowledges and understands that the Company and Numis will rely upon the truth and accuracy of the foregoing representations, warranties, agreements, acknowledgements and undertakings.

The Placee indemnifies on an after-tax basis and agrees to hold harmless Numis and each person affiliated with Numis and any person acting on their behalf from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgements, agreements and undertakings in this Appendix 3 of this document and further agrees that the provisions of this Appendix 3 of this document shall survive after completion of the Firm Placing and the Placing.

6. Clawback of the Placing Shares

The Placing Shares to be issued under the Placing are subject to claw back to satisfy valid applications received from Qualifying Shareholders under the Open Offer, and at the discretion of the Directors (in consultation with Numis), under the Excess Application Facility. The number of Placing Shares to be clawed back from Placees will be calculated pro rata to Placees' commitments to subscribe for Placing Shares.

7. Miscellaneous

The rights and remedies of Numis, the Registrars and the Company under these terms and conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one will not prevent the exercise of others.

On application, each Placee may be asked to disclose, in writing or orally to Numis:

(i) if he is an individual, his nationality; or
(ii) if he is a discretionary fund manager, the jurisdiction in which the funds are managed or owned.

All documents will be sent at the Placee's risk. They may be sent by post to such Placee at an address notified to Numis.

The provisions of these terms and conditions of the Firm Placing and the Placing may be waived, varied or modified as regards specific Placees or on a general basis by Numis in its sole discretion.

The contract to subscribe for Firm Placed Shares and Placing Shares and the appointments and authorities mentioned herein will be governed by, and construed in accordance with, the laws of England and Wales. For the exclusive benefit of Numis, the Company and the Registrars, each Placee irrevocably submits to the exclusive jurisdiction of the courts of England and Wales in respect of these matters. This does not prevent an action being taken against a Placee in any other jurisdiction. Each Placee waives any objection to proceedings in the Courts of England and Wales on the ground of venue or on the ground that proceedings have been brought in an inconvenient forum.

In the case of a joint agreement to subscribe for Firm Placed Shares and Placing Shares, references to a "Placee" in these terms and conditions are to each of such Placees and such joint Placees' liability is joint and several.

In addition to the provisions of paragraph 6 of this Appendix 3, Numis and the Company each expressly reserve the right to modify the Firm Placing and/or the Placing (including, without limitation, its timetable and settlement) at any time before allocations of Firm Placed Shares under the Firm Placing and of Placing Shares under the Placing are determined.

AI assistant

IP Group PLC — Capital/Financing Update 2015

4852_prs_2015-03-10_625a37e0-0902-4d8a-8ee7-64e4baef176e.pdf

IP Group plc

Notice of General Meeting

Numis Securities Limited

NOTICE TO OVERSEAS SHAREHOLDERS

NOTICE TO NEW HAMPSHIRE RESIDENTS

CONTENTS

SUMMARY

RISK FACTORS

RISKS RELATING TO THE GROUP

General economic climate and trading conditions in the UK

Loss of key personnel from the Group

Termination of the Partnerships and collaborations and/or the Group's fund management arrangements

Availability of future partnerships/collaborative arrangements

Availability to the Group of the substantial shareholdings exemption

Future revenue from the Group's fund management business

The Group may face increased competition, including from organisations with access to greater capital than the Group

Need for further investment in the Group

Changes in legislation, Government policy and levels of research funding

Closure of technology transfer offices and/or spin-out equity management offices at universities and other research intensive institutions

RISKS RELATING TO THE GROUP'S INVESTMENTS IN PORTFOLIO COMPANIES

Investments are generally into companies at an early stage of their development

Appetite for investment and ability to realise equity shareholdings

Companies within the Group's portfolio, that may be dominated by one or a limited number of companies, may fail, lose value or fail to generate the anticipated level of returns

Protection of IP developed by the Group's portfolio companies

The influence and control of the Group over its portfolio companies may be limited and interests may not align

RISKS RELATING TO SHARES AND SHARE ISSUES

A limited number of Shareholders own a significant percentage of the Group and are likely to continue to do so following the Capital Raising. This concentration of ownership could adversely affect the trading price of the Shares

Shareholders will experience dilution in their ownership of IP Group as a result of the Firm Placing and Shareholders who do not acquire Capital Raising Shares in the Open Offer will experience further dilution in their ownership of IP Group

The Group's share price may fluctuate significantly in response to a number of factors, some of which may be outside of the Group's control

Suitability of the Shares as an investment

The Board may apply the proceeds of the Capital Raising to uses that the Shareholders may not agree with and may make investments that fail to produce income or capital growth or that lose value

The Company's ability to pay dividends in the future is not certain

A disposal of Shares by major Shareholders could adversely affect the market price of the Shares

Further issuances of Shares may be dilutive to current Shareholders

Shareholders and other prospective investors outside the UK may not be able to subscribe for or receive Capital Raising Shares pursuant to the Capital Raising

Restrictions relating to Non-Qualified Holders and information request

The Company is not, and does not intend to become, regulated as an investment company under the US Investment Company Act and related rules

The ability of Overseas Shareholders to bring actions or enforce judgments against the Company or the Directors may be limited

The Company's corporate disclosure may differ from the disclosure made by similar companies in the United States

The Company's financial statements are not prepared in accordance with US GAAP

The Company believes that it was a "passive foreign investment company" for US federal income tax purposes for 2014 and expects to be a "passive foreign investment company" for the current year, which status may result in adverse tax consequences to US investors

ERISA prohibited transaction rules might apply to certain transactions of the Company

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

General notes:

CAPITAL RAISING STATISTICS

DIRECTORS, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS

IMPORTANT INFORMATION

PRESENTATION OF FINANCIAL INFORMATION

INTERNATIONAL FINANCIAL REPORTING STANDARDS

FORWARD-LOOKING STATEMENTS

NOTICE TO US SHAREHOLDERS AND SHAREHOLDERS IN EXCLUDED TERRITORIES

NOTICE TO EEA SHAREHOLDERS

NOTICE TO OVERSEAS SHAREHOLDERS

NOTICE TO ALL SHAREHOLDERS

REFERENCES TO DEFINED TERMS

GENERAL NOTICE

NO INCORPORATION OF WEBSITE INFORMATION

PART I

LETTER FROM THE CHAIRMAN OF IP GROUP

Proposed Firm Placing of 51,111,111 Capital Raising Shares and proposed Placing and Open Offer of 5,777,777 Capital Raising Shares, each at an Issue Price of 225 pence per share

Notice of General Meeting

1. INTRODUCTION

2. INFORMATION ON IP GROUP

2.1 Partnerships and other collaborative arrangements with UK universities and research intensive institutions

2.2 IP commercialisation agreements with US research institutions

2.3 IP Group's portfolio

2.4 Fund management

2.5 Modern Biosciences plc ("MBS")

2.6 The Directors and management team

3. BACKGROUND TO, AND REASONS FOR, THE CAPITAL RAISING

4. USE OF PROCEEDS

5. CURRENT TRADING AND PROSPECTS

5.1 Interim Management Statement announced on 13 November 2014

Portfolio update

Operational update

5.2 Developments since the Interim Management Statement announced on 13 November 2014

5.3 Portfolio and cash update7

IP Group PLC Capital/Financing Update 2015