Preliminary results for year ended 30 June 2015
19 November 2015
AIM: FIPP
Frontier IP Group plc
("Frontier IP", the "Group" or "the Company")
Audited final results for the year ended 30 June 2015
Frontier IP Group Plc is focused on the commercialisation of intellectual property
Financial Highlights
· Total revenue increased by 102% to £1,591,000 (2014: £786,000) - reflecting an unrealised profit on the revaluation of investments of £1,421,000 (2014: £608,000)
· Fair value of portfolio companies increased by 118% to £2,812,000 (2014: £1,291,000)
· Profit before tax of £647,000 (2014: £27,000)
· Basic earnings per share of 2.76p (2014: 0.13p)
· Cash balances at 30 June 2015 of £636,000 (2014: £587,000)
· Net assets per share as at 30 June 2015 of 20.9p (2014: 18.1p)
Operational Highlights
· Placing raised £854,000 (gross)
· Two new portfolio companies added, both from the University of Cambridge
· Portfolio companies Nandi Proteins Ltd and Alusid Ltd secured funding
· Post year-end, portfolio company Pulsiv Solar Ltd secured funding
Neil Crabb, Chief Executive Officer of Frontier IP, said,
"The Group is making good progress in line with its strategy. I am particularly pleased to report the growth in value of our portfolio, as evidenced by the recent fundraisings. We continue to see strong commercial progress in our Core Portfolio building the potential for further uplift in value."
Enquiries
|
Frontier IP Group Plc |
|
T: 0131 240 1251 |
|
Neil Crabb, Chief Executive |
|
|
|
Company website: www.frontierip.co.uk
|
|
|
|
Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker) |
|
T: 020 7894 7000 |
|
David Foreman, Catherine Leftley, Corporate Finance |
|
|
|
David Banks, Corporate Broking |
|
|
|
|
|
|
|
Peterhouse Corporate Finance Limited (Joint Broker) |
|
T: 020 7469 0935 |
|
Lucy Williams |
|
|
|
|
|
|
|
Kreab |
|
T: 020 7074 1800 |
|
Robert Speed, Matthew Jervois |
|
|
Notes to Editors:
Frontier IP specialises in assisting institutions and companies in the commercialisation and exploitation of their intellectual property. It establishes formal and informal relationships with sources of exploitable IP, principally universities. Its core business is building and growing a portfolio of equity stakes in spin-out companies by taking an active involvement in the commercialisation and funding of these businesses. Frontier IP currently has seventeen companies in its portfolio, which exploit IP from a range of institutions. www.frontierip.co.uk
Chairman's Statement
Performance
I am pleased to report that Frontier IP has made good progress during the year with a significant increase in the value of its portfolio and in extending its access to the highest quality IP.
Frontier IP's core strategy is to generate value by providing best practice IP commercialisation services to institutions and start-ups, to develop a portfolio of companies capable of commercial success and by providing access to capital for these portfolio companies. The Group has made progress in each of these areas over the year.
During the period we extended our sources of deal flow with the addition of two new start-up companies to our portfolio, both based on the work of academics at the Department of Chemical Engineering and Biotechnology at the University of Cambridge.
We have seen excellent progress in our Core Portfolio and we are pleased to report a 118% increase in the value of our portfolio overall.
We provided access to capital for three of our Core Portfolio companies. Nandi Proteins Limited and Alusid Limited both completed successful fundraisings during the period as did, after the year end, Pulsiv Solar Limited. All three fundraisings were achieved at significantly higher valuations, with the latter two driving increased total revenue for the year. Alusid Limited has since commissioned a pilot plant facility to commence manufacture of construction products from waste materials. Nandi continues to make good commercial progress receiving a high level of support from the Frontier IP team and anticipates a further fundraising at a price which would represent a substantial uplift to the last round.
Portfolio
In line with our move towards earning more significant equity holdings in spin-out companies, we received a 40% stake in each of our two most recent portfolio additions, Cambridge Sensor Innovation Limited (formerly Cambridge Sensor Technologies Limited) and Cambridge Simulation Solutions Limited. Both companies were formed to exploit technologies developed by academics at the Department of Chemical Engineering and Biotechnology at the University of Cambridge.
Our portfolio now comprises 17 companies and we look forward to increasing the number and size of our portfolio stakes as we continue to engage with a wide range of potential sources of commercialisable IP.
Results
For the year to 30 June 2015, total revenue increased by 102% to £1,591,000 (2014: £786,000) as a result of booking an unrealised profit of £1,421,000 (2014: £608,000) on the revaluation of investments, principally due to the movement in fair value of two portfolio companies - Alusid Limited and Pulsiv Solar Limited - following successful fundraisings, with Pulsiv Solar's fundraising completing post year end. Revenue from services, principally board retainers, fund management fees and license income, decreased by 4% to £170,000 (2014: £178,000).
The fair value of our portfolio increased by 118% to £2,812,000 (2014: £1,291,000).
Profit before tax increased to £647,000 (2014: £27,000) reflecting the increased revenue offset by the cost of additional resources. The profit per share was 2.76p (2014: 0.13p).
Outlook
Looking ahead, we are working on a number of new opportunities and intend to continue to grow our portfolio by taking more significant stakes and extending our sources of deal flow. In line with our strategy of broadening the range of capital available to our portfolio companies, we expect to see further portfolio fundraisings during the current financial year. We look forward to seeing further progress in these areas over the new financial year.
Andrew Richmond
Chairman
Our Performance
Chief Executive Officer's Statement
The Group is making good progress in line with its strategy. I am particularly pleased to report the growth in value of our portfolio, as evidenced by the recent fundraisings. We continue to see strong commercial progress in our Core Portfolio building the potential for further uplift in value.
Key Performance Indicators
The key performance indicators for the Group are:
|
KPI |
Description |
2015 Performance |
|
Change in fair value of the portfolio |
Movement in the value of equity in the portfolio |
£2,812,000 (2014: £1,291,000) |
|
Growth in total revenue |
Growth in the aggregate of revenue from services and change in fair value of the portfolio |
£1,591,000 (2014: £786,000) |
|
Profit |
Profit before tax for the year |
£647,000 (2014: £27,000) |
|
Net Assets |
Value of the Group's assets less the value of its liabilities |
£5,557,000 (2014: £4,069,000) |
|
Total initial equity in new portfolio companies |
Aggregate percentage equity earned from new portfolio companies during the year |
80% (2014: 31%) |
The Chairman's Statement and Operational Review contains information on progress in the business during the year.
The Group's services revenue for the year to 30 June 2015 decreased to £170,000 (2014: £178,000) and, with administrative expenses of £945,000 (2014: £769,000), the Group continues to consume significant cash from operating activities. However, the Directors continue to pursue opportunities that will assist in closing the gap.
Operational Review
Corporate
Frontier IP completed a placing in April 2015 to support the development and growth of its relationships, advisory roles and portfolio companies. The placing comprised 4,066,667 new ordinary shares of 10p at a price of 21p per share, raising £854,000 before expenses.
Portfolio
The Group added two new spin-out companies to its portfolio during the year. These were Cambridge Simulation Solutions Limited and Cambridge Sensor Innovation Limited (formerly Cambridge Sensor Technologies Limited).
The Group received a 40% equity stake in Cambridge Simulation Solutions Limited, a spin-out from the University of Cambridge. Cambridge Simulation was established to exploit the technology developed by Dr. Vassilios Vassiliadis, a Senior Lecturer at the Department of Chemical Engineering and Biotechnology. Dr. Vassiliadis has developed a method to simulate and control complex chemical processes, which potentially has a wide range of commercial applications in industry, including the food and pharmaceutical sectors.
The Group more recently received a 40% equity stake in Cambridge Sensor Innovation Limited, established to exploit a number of technologies developed by Dr. Mark Williamson, a lecturer and researcher at the Department of Chemical Engineering and Biotechnology at the University of Cambridge. Dr. Williamson develops temperature and humidity sensors and control strategies for industrial processes in which the composition of the processing atmosphere is important.
During the year two of our portfolio companies Nandi Proteins Limited and Alusid Limited completed successful fundraisings, as did Pulsiv Solar Limited after the year end. Alusid Limited has since commissioned a pilot plant facility to commence manufacture of construction products from waste materials. Nandi continues to make good commercial progress receiving a high level of support from the Frontier IP team and anticipates a further fundraising at a price which would represent a substantial uplift to the last round.
Sources of IP
In line with reviewing and extending our portfolio pipeline for sources of high-quality IP we have this year added to our portfolio with two companies based on IP developed within the Department of Chemical Engineering and Biotechnology at the University of Cambridge.
Access to Funding
We continue to extend and make use of our network in managing funding rounds for our portfolio companies, with a particular focus on our Core Portfolio. The recent investments in Nandi Proteins, Pulsiv Solar and Alusid were a successful demonstration of this approach. Frontier IP is building an extensive network of funders ranging from institutions, industry investors through to private individuals.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2015
|
|
2015 |
|
2014 |
|
|
£'000 |
|
£'000 |
|
Revenue |
|
|
|
|
Revenue from services Other operating income Unrealised profit on the revaluation of investments |
170
1,421 |
|
178
608 |
|
Total revenue |
1,591 |
|
786 |
|
Administrative expenses |
(945) |
|
(769) |
|
Dividend income on financial assets at fair value through profit or loss |
- |
|
10 |
|
Profit from operations |
646 |
|
27 |
|
Interest income on short term deposits |
1 |
|
- |
|
Profit from operations and before tax |
647 |
|
27 |
|
Taxation |
- |
|
- |
|
Profit and total comprehensive income attributable to |
|
|
|
|
the equity holders of the parent |
647 |
|
27 |
|
Profit per share attributable to the equity holders of the Company: |
|
|
|
|
Basic earnings per share |
2.76p |
|
0.13p |
|
Diluted earnings per share |
2.71p |
|
0.13p |
All of the Group's activities are classed as continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 30 June 2015
|
|
2015 |
|
2014 |
|
|
£'000 |
|
£'000 |
|
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Tangible fixed assets |
2 |
|
2 |
|
Goodwill |
1,966 |
|
1,966 |
|
Financial assets at fair value through profit and loss |
2,859 |
|
1,325 |
|
Trade receivables |
29 |
|
86 |
|
|
4,856 |
|
3,379 |
|
Current assets |
|
|
|
|
Trade receivables and other current assets |
188 |
|
213 |
|
Cash and cash equivalents |
636 |
|
587 |
|
|
824 |
|
800 |
|
Total assets |
5,680 |
|
4,179 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
(123) |
|
(110) |
|
|
(123) |
|
(110) |
|
|
|
|
|
|
Net assets |
5,557 |
|
4,069 |
|
|
|
|
|
|
Equity |
|
|
|
|
Called up share capital |
2,660 |
|
2,253 |
|
Share premium account |
5,200 |
|
4,794 |
|
Reverse acquisition reserve |
(1,667) |
|
(1,667) |
|
Share based payment reserve |
45 |
|
125 |
|
Retained earnings |
(681) |
|
(1,436) |
|
Total equity |
5,557 |
|
4,069 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
|
|
Share capital |
Share premium account |
Reverse acquisition reserve |
Share- based payment reserve |
Retained earnings |
Total equity attributable to equity holders of the Company |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
At 1 July 2013 |
1,305 |
4,457 |
(1,667) |
119 |
(1,463) |
2,751 |
|
|
|
|
|
|
|
|
|
Issue of shares |
948 |
337 |
- |
- |
- |
1,285 |
|
Share-based payments |
- |
- |
- |
6 |
- |
6 |
|
Profit/total comprehensive income for the year |
- |
- |
- |
- |
27 |
27 |
|
|
|
|
|
|
|
|
|
At 30 June 2014 |
2,253 |
4,794 |
(1,667) |
125 |
(1,436) |
4,069 |
|
|
|
|
|
|
|
|
|
Issue of shares |
407 |
406 |
- |
- |
- |
813 |
|
Share-based payments |
- |
- |
- |
28 |
- |
28 |
|
Transfer on expiry of warrants in prior year |
|
|
|
(108) |
108 |
- |
|
Profit/total comprehensive income for the year |
- |
- |
- |
- |
647 |
647 |
|
|
|
|
|
|
|
|
|
At 30 June 2015 |
2,660 |
5,200 |
(1,667) |
45 |
(681) |
5,557 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2015
|
|
|
2015 |
2014 |
|
|
|
£'000 |
£'000 |
|
Cash flows from operating activities |
|
|
|
|
Cash used in operations |
|
(730) |
(617) |
|
Taxation paid |
|
- |
- |
|
Net cash used in operating activities |
|
(730) |
(617) |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Purchase of tangible fixed assets |
|
(1) |
(3) |
|
Purchase of financial assets at fair value through profit and loss |
|
(33) |
(26) |
|
Net cash used in investing activities |
|
(34) |
(29) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Proceeds from issue of equity shares |
|
854 |
1,142 |
|
Costs of share issue |
|
(41) |
(64) |
|
Net cash generated from financing activities |
|
813 |
1,078 |
|
Net increase in cash and cash equivalents |
|
49 |
432 |
|
Cash and cash equivalents at beginning of year |
|
587 |
155 |
|
Cash and cash equivalents at end of year |
|
636 |
587 |
Cash used in operations
|
Profit before tax |
647 |
27 |
|
Adjustments for: |
|
|
|
Share-based payments Depreciation Fair value (gain) on financial assets through profit and loss Cost of share issue Changes in working capital: |
28 2 (1,421) - |
6 1 (608) 26 |
|
Trade and other receivables Trade and other payables |
1 13 |
(93) 24 |
|
Cash flows from operating activities |
(730) |
(617) |
NOTES
1. General information
This preliminary announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 18 November 2015.
2. Basis of preparation
The financial information set out in this announcement does not constitute statutory financial statements for the year ended 30 June 2015 or 30 June 2014. The report of the auditor on the statutory financial statements for the year ended 30 June 2015 and 30 June 2014 was not qualified, but drew attention by way of emphasis to the uncertainty regarding the Group's ability to generate sufficient working capital to support the ongoing requirements of the Group and the preparation of the financial statements on a going concern basis.
The report of the auditor on the statutory financial statements for each of the years ended 30 June 2015 and 30 June 2014 did not contain statements under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for the year ended 30 June 2014 have been delivered to the Registrar of Companies. The financial statements for the year ended 30 June 2015 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
Going Concern
The Group's strategy is to develop a growing portfolio of spin-out companies that will provide cash inflows through realisation of investments and in the meantime will make use of the Group's services in return for cash fees. However, based on forecast income and expenditure for the next 12 months, the Group's cash income will be insufficient to cover the Group's expenditure. Consequently, the Group will require to raise additional capital in order to continue in operational existence for at least the next 12 months. The Directors anticipate undertaking an equity placing by early 2016 and also intend to seek authority to allot securities at the forthcoming Annual General Meeting in December 2015. The Directors have concluded that the necessity to raise additional capital represents a material uncertainty that casts significant doubt upon the Group's ability to continue as a going concern and that should it be unable to raise further funds, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, considering the success of previous fundraisings and the current performance of the business, the Directors have a reasonable expectation of raising sufficient additional capital to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group's financial statements.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS.
3. Segmental information
The Group operates in one market sector, the commercialisation of university Intellectual Property, and wholly within the UK. Therefore, revenue, profit on ordinary activities before tax and net assets do not need to be analysed by segment.
4. Taxation
There is no charge to taxation for the year ended 30 June 2015 (2014: Nil) due to the Group making a taxable loss.
The Group's deferred tax assets, other than those relating to short term timing differences, are not recognised in accordance with Group policy.
5. Earnings per share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to the shareholders of Frontier IP Group Plc by the weighted average number of shares in issue during the year.
|
|
Profit attributable to shareholders £'000 |
Weighted average number of shares |
Basic earnings per share amount in pence |
|
Year ended 30 June 2015 |
647 |
23,414,536 |
2.76 |
|
Year ended 30 June 2014 |
27 |
20,091,931 |
0.13 |
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: share options. A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market value share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
|
|
Profit attributable to shareholders £'000 |
Weighted average number of shares adjusted for share options |
Diluted earnings per share amount in pence |
|
Year ended 30 June 2015 |
647 |
23,854,707 |
2.71 |
|
Year ended 30 June 2014 |
27 |
20,376,926 |
0.13 |
6. Availability of statutory financial statements
Copies of the full statutory financial statements will be available from the Company's offices at 93 George Street, Edinburgh EH2 3ES no later than 27 November 2015 and are available on its website at www.frontierip.co.uk
This information is provided by RNS
Latest directors dealings
- 7 hours ago Johnson Matthey
- 9 hours ago Galliford Try
- 9 hours ago Galliford Try
- 9 hours ago Centrica
- 10 hours ago Smith & Nephew