Fusion hails the success of its spin-outs

The Sheffield-based business incubator said it expects to report a “significant uplift” in the value of its portfolio companies when it posts numbers for the year to the end of July in October. The carrying value of its investments had grown by 19 per cent to £12.9m in the six months to the end of January.

Fusion said Sheffield-based Simcyp, its simulation technology spin-out, continued to grow strongly over the year.

It said the firm, which simulates how the body deals with new drugs in development, expects to beat its forecasts for the seventh year in a row. Last year Simcyp grew earnings by 42 per cent to £1.7m and sales by 21 per cent to £4.7m.

Fusion said this year, unaudited numbers suggest a 25 per cent increase in Simcyp’s turnover and a 35 per cent increase in pre-tax profits.

“The company remains cash-rich and expects strong growth to continue into 2012 and beyond,” said Fusion.

The investment company said another of its Sheffield-based spin-outs, Phase Focus, raised £865,000 late last month through selling equity.

The microscopy and imaging company raised the cash to grow sales and seal commercial deals.

As a result of this investment Fusion’s stake reduced to 49.1 per cent. Phase Focus has developed Virtual Lens, a product which eliminates the need for high-quality lenses in microscopes by transferring image-producing to a computer programme.

Fusion chief executive David Baynes said: “I am delighted with the performance of our portfolio and that three more of our portfolio companies have been able to raise additional funding over the last month.

“The Phase Focus fundraising is particularly pleasing, as the funding achieved a significant uplift in value for Fusion, with the company on the verge of signing a number of significant commercial deals which this money will enable it to conclude. This brings a positive end to what has been another good year for the group.”

The investment group also hailed progress made by Sheffield-based spin-out Seren Photonics, which has developed high-brightness light emitting diode (LED) technology for use in TVs, architectural lighting and laptops.

Seren’s new processing technique has been shown to double the light output of LEDs, which either means much brighter lamps, or less power-hungry lamps.

In December, Fusion announced Seren had raised £475,000 of funding to help it win customers among Asian technology giants.

Yesterday Fusion said Seren is close to closing its first commercial deals. Magnomatics, Fusion’s Sheffield-based magnetic motor company, grew “strongly” during the year and won new clients in the automotive, aerospace and defence sectors. Fusion said Magnomatics continues to make progress with product development, and its like-for-like turnover is expected to grow by 70 per cent in 2011.

Fusion’s Cardiff-based drug development company Diurnal raised £335,000 of funding at the start of August to allow its lead product, Chronocort, to continue and complete its first phase of clinical trials.

Earlier this month, Mesuro, its radio frequency technology company, raised a further £440,000 to support sales growth. Fusion added Cardiff-based medical device company Asalus continues to hit its key milestones.

WORKING WELL WITH ITS BROTHER

Fusion IP sold a “strategic” stake to its stock market-listed big brother IP Group in November 2009.

Sheffield-based Fusion sold a 20 per cent stake to IP Group for £3m, also giving its new partner the option to invest in any new companies it creates.

IP Group has the right to buy 12 per cent of any new company Fusion forms, for a set price of £500,000.

Forty per cent goes to the academics involved, and Fusion is left with just under half its equity.

Under the deal, IP Group gives new Fusion spin-outs support in return.

Fusion chief executive David Baynes has described IP Group as “well-aligned joint shareholders”.

IP Group helps spin out and grow companies from 10 universities including Leeds and York.