Fusion aiming to launch new companies after profits debut

FUSION IP, which turns university research into business, plans to create a number of new companies next year after reporting its first pre-tax profit.

Announcing its financial results for the year to July 31 yesterday, the Sheffield-based company said there were two or three projects in the pipeline which could be launched as companies as it posted a pre-tax profit of £1m – up from a £1.6m loss in 2010.

Fusion IP has long-term commercialisation agreements in place with the universities of Cardiff and Sheffield and a Memorandum of Understanding with Finance Wales.

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Chief executive David Baynes, pictured, said: “Several...promising opportunities have been identified, at various points of the pipeline, on both campuses and our commercialisation team is working with the university and academics to identify the best market applications and business proposals for these new technologies in 2012.”

Revenue and portfolio returns increased by 35 per cent to £5.9m from £4.4m and earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased by 650 per cent to £3m from £400,000. The company had cash balances of £2m.

Fusion IP said that it now had more than 20 companies in its portfolio employing nearly 250 members of staff.

A total of 15 funding rounds were completed by portfolio companies during the year with £1.6m invested by Fusion IP and £6.1m by third parties.

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Simcyp and magnetic technology firm Magnomatics were highlighted for growing turnover.

Simcyp increased its figure by 25 per cent to £5.9m and profit by 35 per cent to £2.3m, while Magnomatics increased turnover by 62 per cent to £1.3m.

It only created one new portfolio company – Perlemax – during the last financial year.

The new spin-out from Sheffield has developed microscopic bubble technology which its scientists believe could revolutionise chemical engineering.

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Mr Baynes said he hoped to see growth in a number of its companies over the next 12 months and that some technology companies might raise bigger sums than in previous years.

“We tend to raise small amounts of about £500,000 to £1m quite regularly but I could see some companies starting to raise £2-3m at a time going forward,” he said.

In addition, Mr Baynes said Fusion IP is considering selling some of its promising university spin-out companies as its portfolio begins to reach maturity.

“We hope to sell at least one business but it’s very difficult to predict,” he said. “We only started in 2005 so we are now beginning to get to the stage where we are starting to get a more mature portfolio.”

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In a statement, the group anticipated it would need to generate additional funds during the year through selling companies or dividends to accommodate further investment.

Mr Baynes said he did not have a fixed sum in mind but said that without selling some of its portfolio, IP Fusion would be restricted in how much it could support companies going forward.

Speaking about the group’s financial results in general, Mr Baynes said: “We are pleased to announce another successful year for the group, one in which we have increased revenue, portfolio returns, and EBITDA.

“The value of our portfolio has continued to grow and we anticipate we will be able to demonstrate this further in the current financial year, and remain focused on achieving our first cash realisation. We look forward with confidence.”

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Other highlights of the year included: Cardiff-based drug development company Diurnal completing a £335,000 funding round in August that will enable its Chronocort product to complete the profile stage of its phase one clinical trials. Chronocort helps patients with deficiencies in steroid hormones and associated conditions by regulating metabolism, growth development and puberty, tissue function and in determining mood.

Mesuro, the group’s Cardiff-based radio frequency technology company raised a further £440,000 in August to support its growing sales activity.

Meanwhile, in April, finance director Tony Gardiner left the group to pursue other business interests.

Chairman Doug Liversidge CBE said yesterday: “Our priority in the year ahead is to continue to focus on the growth of the portfolio and maximise value realisation, through trade sales or flotations, as appropriate.”

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He added: “The value of our portfolio is growing and we anticipate we will be able to demonstrate this further in the current financial year, and remain focused on achieving our first cash realisation.”

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