IP GROUP Frontier IP specialises in assisting universities, research institutions and companies in the commercialisation and exploitation of their Intellectual Property.
Half year results for the six months to 31 December 2014
KEY POINTS
· Fair value of the portfolio at 31 December 2014 increased to £1,574,000 - an increase of 19% from 30 June 2014 (30 June 2014: £1,325,000) and an increase of 68% from 31 December 2013 (31 December 2013: £937,000)
· Total revenue decreased to £244,000 (2013: £345,000) - principally reflecting a lower gain on the revaluation of investments of £160,000 (2013: £243,000)
· Revenue from services of £84,000 (2013: £92,000)
· Loss before tax of £242,000 (2013: profit of £3,000)
· Basic loss per share of 1.07p (2013: basic earnings per share of 0.02p)
· Cash balances as at 31 December 2014 of £184,000 (30 June 2014: £587,000; 31 December 2013: £992,000)
· Net assets per share as at 31 December 2014 of 17p (30 June 2014: 18p; 31 December 2013: 18p)
· Further progress in the portfolio including:
- first spin-out company from the University of Cambridge - 40% shareholding
- successful fundraising completed for portfolio company, Nandi Proteins
· Post period-end
- Added new portfolio company Cambridge Sensor Technologies Limited, bringing the total number of portfolio companies to 17
- Portfolio company, Alusid Limited, announced its first fundraising
· Opportunities continue to be encouraging
Andrew Richmond, Chairman, commented,
"I am pleased to report that we made good progress over the first half of the financial year, in line with our strategy. We continued to pursue the growth of our portfolio and this was reflected in a 19% increase in the fair value of our portfolio compared to 30 June 2014 and in a 68% increase compared to 31 December 2013.
We also extended our access to sources of IP and added our first spin-out company from the University of Cambridge. We saw encouraging developments across our existing portfolio over the six months, including a sizeable fundraising for Nandi Proteins. We are also pleased to note continued progress in the second half so far as, post period-end, we have added a further portfolio company, Cambridge Sensor Technologies, and announced a fundraising for portfolio company Alusid.
Looking ahead, we expect to see further progress in our portfolio and remain very positive about the growth opportunities available to us."
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
Mark Percy / Catherine Leftley, Corporate Finance
David Banks, Corporate Broking
Peterhouse Corporate Finance Limited (Joint Broker)
T: 020 7469 0935
Lucy Williams
KTZ Communications
T: 020 3178 6378
Katie Tzouliadis / Deborah Walter
CHAIRMAN'S STATEMENT
Introduction
Frontier IP's growth strategy is built on generating value from its university relationships by becoming closely and actively involved in advising on the commercialisation of innovative IP. In exchange for providing our commercialisation and fundraising skills, Frontier IP receives equity shareholdings in university spin-out companies. The Company's goal is to develop a portfolio of companies which have the potential for significant value on exit and where we have strong industry experience. Currently, Frontier IP's portfolio totals 17 companies, at a range of stages of maturity.
I am pleased to report that we made good progress over the first half of the financial year, in line with our strategy. We continued to pursue the growth of our portfolio and this was reflected in a 19% increase in the fair value of our portfolio compared to 30 June 2014 and in a 68% increase compared to 31 December 2013. We have also extended our access to sources of IP and added a new portfolio company from the Department of Chemical Engineering and Biotechnology at the University of Cambridge, Cambridge Simulation Solutions Limited. Post period-end, we added a further portfolio company, Cambridge Sensor Technologies Limited, created to exploit technology developed by Dr. Mark Williamson, a lecturer and researcher at the same department at the University of Cambridge. Our 40% shareholdings in both companies represent significant positions and we are delighted to be engaged in the task of maximising the commercial potential of the very exciting technology which resides in both companies.
We saw encouraging developments across our existing portfolio companies over the six months, including a sizeable fundraising for Nandi Proteins Limited. Post period-end, we announced a further portfolio company fundraising for Alusid Limited.
Looking ahead, we expect to see further progress in our portfolio over the remainder of the financial year.
Results
Financial assets at fair value through profit and loss at 31 December 2014 increased to £1,574,000 (30 June 2014: £1,325,000; 31 December 2013: £937,000). Revenue from services over the first half decreased marginally to £84,000 (2013: £92,000) while the decrease in total revenue to £244,000 (2013: £345,000) largely reflected lower investment revaluations. The revaluation of investments (unrealised) totaled £160,000 (2013: £243,000). There was no dividend income in the first half against dividend income of £10,000 in the comparative period. The loss before tax was £242,000 (2013: profit £3,000). Reflecting the investment we have made in strengthening the management team, ongoing administrative expenses increased to £487,000 (2013: £316,000), with professional fees also affecting overheads. The basic loss per share was 1.07p (2013: earnings per share of 0.02p).
Cash balances stood at £184,000 as at 31 December 2014 (2013: £992,000). Net assets per share as at 31 December 2014 were 17p (30 June 2014: 18p; 31 December 2013: 18p).
Operational Review
During the period, we were pleased to add our first spin-out company from the University of Cambridge, Cambridge Simulation Solutions Limited ("CSS"). CSS has been formed to exploit technology developed by Dr. Vassilios Vassiliadis, a Senior Lecturer at the Department of Chemical Engineering and Biotechnology, who has developed a method to simulate and control complex chemical processes. Frontier IP received a 40% equity stake in CSS.
Post period-end, we were pleased to add a further portfolio company, Cambridge Sensor Technologies Limited ("CST"). CST was formed to exploit the technology developed by Dr. Mark Williamson, a lecturer and researcher at the Department of Chemical Engineering and Biotechnology at the University of Cambridge. CST develops heating system, sensors and control strategies for industrial processes in which the composition of the processing atmosphere is important. Frontier IP received a 40% equity stake in CST.
We have seen encouraging developments in a number of our portfolio companies over the period. In November 2014, drug discovery company ex scientia Ltd announced that it has signed a major collaboration agreement with Sunovion Pharmaceuticals Inc. to collaborate on the discovery and optimisation of novel medicines for psychiatric disorders. This agreement included an upfront payment of $1 million (USD) to ex scientia Ltd. Also in November, Nandi Proteins Limited completed a capital restructuring and funding round totaling £660,000 (gross), following which the Company's equity holding increased to 21%.
In March 2015, portfolio company Alusid Limited ("Alusid") announced its first funding, receiving commitments totaling £266,000, which will be invested in two tranches. Following this investment round, Frontier IP's holding in Alusid will be revalued and will show an uplift of over £0.68 million. Frontier IP will hold 39% of the issued share capital of Alusid following the investment of the second tranche. The revaluation will be recognised in Frontier IP's Annual Report & Financial Statements for the year ending 30 June 2015.
We continue to work with our existing and new partners in sourcing and identifying potentially valuable IP and are working on a range of pipeline projects.
Outlook
Frontier IP has made encouraging progress over the first half and the continuing growth of our portfolio is especially pleasing. We remain very positive about the growth opportunities available to us and look forward to reporting on further portfolio progress over the second half of the financial year.
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