REG - Frontier IP Group - Unaudited Half Year Results
17/03/2022 07:00
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RNS Number : 0574F Frontier IP Group plc 17 March 2022
17 March 2022
Frontier IP Group plc
("Frontier IP" or the "Group" or the "Company")
UNAUDITED HALF YEAR RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2021
Frontier IP, a specialist in commercialising intellectual property, is pleased
to announce its unaudited interim results for the six month period ended 31
December 2021.
KEY POINTS
· Pre-tax profits rose by 239 per cent to £10.3 million (31 December
2020: £3.0 million)
· Unrealised profit on the revaluation of investments rose by 197 per
cent to £11.9 million (31 December 2020: £4.0 million)
· Fair value of portfolio rose by 37 per cent to £43.9 million at 31
December 2021 (30 June 2021: £32.0 million; 31 December 2020: £23.4 million)
· Basic earnings per share increased by 162 per cent. to 14.54p (31
December 2020: 5.56p)
· Net assets per share increased to 84.7p as at 31 December 2021 (30
June 2021: 69.8p; 31 December 2020: 56.8p)
· Post period end, the Group realised approximately £6.1 million
through the sale of 25% of its holding in Exscientia
Frontier IP made strong progress during the first half of the financial year.
The results are ahead of management expectations, as anticipated in the
trading update released on 12 January 2022.
The Group saw good progress across its portfolio, with a focus on the
achievement of technical, commercial, or funding milestones and building
management teams.
The highlight was Exscientia's successful listing on the Nasdaq Global Select
Market at a valuation of $2.9 billion in October 2021, the first of our
portfolio companies to float. After the period end, the Group sold 25% of its
shareholding in the company, raising a total of approximately £6.1 million in
cash for an aggregate realised gain of £2.79 million. The Group intends to
use the cash proceeds to provide further support for the portfolio and for
general working capital purposes. Frontier IP retains 1,173,600 shares in
Exscientia.
The Vaccine Group announced a major technical milestone in the development of
its next-generation COVID-19 vaccine for use in humans with successful
pre-clinical trials.
CamGraPhIC raised £1.6 million through an equity fundraising to accelerate
development and scale up of its graphene-based photonics technology for
high-speed telecommunications.
Pulsiv strengthened its management team with the appointment of Adam Westcott
as Chief Financial Officer.
Post period end, Celerum launched its first commercial product and announced
it had signed its first customer. A pan-European project coordinated by
Cambridge Raman Imaging was awarded €3.3 million by the European Innovation
Council to develop a high-speed, low-cost Raman imaging device with the
potential to transform cancer diagnosis and treatment.
The Group was also delighted to welcome Dame Julia King, Baroness Brown of
Cambridge, DBE FREng FRS to the Frontier IP board as an independent
non-executive director. Her immense experience across industry and government
will be invaluable.
The proceeds raised from the sale of Exscientia shares significantly
strengthened the balance sheet. The Group is well placed to provide support to
its business and portfolio for the foreseeable future, despite the risks and
uncertainties currently faced. These include the impact of the Russian
invasion of Ukraine, energy costs and inflation, as well as the continued
impact of COVID-19. Progress across the portfolio remains encouraging and the
Group looks forward to announcing further positive news in the coming months.
PORTFOLIO AND OPERATIONAL HIGHLIGHTS
The six months to 31 December 2021 saw momentum growing across the portfolio
and continuing after the period end. Several companies are now at or
approaching important inflection points:
· Exscientia raised a total of $510.4 million through an upsized
initial public offering and concurrent private placement as it listed on the
Nasdaq Global Select Market with a valuation of $2.9 billion. The company also
announced a $70 million collaboration agreement with the Bill & Melinda
Gates Foundation to develop antiviral therapeutics.
· The Vaccine Group announced a significant milestone in the
development of its next generation COVID-19 vaccine. Pre-clinical pig trials
demonstrated the company's vaccine candidate had the potential to provide
broad immunity against SARS-CoV-2 and future variants.
· CamGraPhIC raised £1.6 million through an equity funding round to
accelerate development and scale up of its graphene-based photonics technology
for scalable, faster, cheaper and more energy efficient optical transceivers.
· Pulsiv strengthened its management team with the appointment of Adam
Westcott as Chief Financial Officer. Adam has more than 20 years' finance
experience at senior levels.
· Dame Julia King, Baroness Brown of Cambridge DBE FREng FRS joined the
Frontier IP Group board as an independent non-executive director. She replaced
Michael Bourne, who stepped down during the period under review.
Post period end:
· Frontier IP significantly strengthened its balance sheet by raising
approximately £6.1 million through the sale of part of its stake in
Exscientia, which is the Group's first realisation from the portfolio.
· Exscientia announced a strategic research collaboration with Sanofi
to accelerate the discovery of new drugs across oncology and immunology. The
agreement is worth $100 million to Exscientia in an upfront cash payment with
the potential for $5.2 billion in total milestones plus tiered royalties.
· Cambridge Raman Imaging announced it is coordinating a pan-European
project to develop high-speed, low-cost Raman imaging devices for cancer
diagnosis and treatment. The project, called CHARM, has been awarded €3.3
million by the European Innovation Council.
· Celerum has launched Truck Logistics System, its first commercial
product using novel artificial intelligence based on nature inspired
computing. The software improves road haulage efficiency, cutting costs,
carbon emissions and delivery times. A road haulier has become the first
customer.
FINANCIAL HIGHLIGHTS
· Profit before tax increased 239 per cent. to £10,281,000 (31
December 2020: £3,033,000), with the increase reflecting the higher gain on
revaluation of investments
· Unrealised profit on the revaluation of investments increased 197 per
cent. to £11,914,000 (31 December 2020: £4,009,000)
· Fair value of the portfolio of equity investments increased 37 per
cent. to £43,892,000 at 31 December 2021 (30 June 2021: £31,982,000), an
increase of 87 per cent. year on year (31 December 2020: £23,449,000)
· Revenue from services decreased 11 per cent. to £163,000 (31
December 2020: £184,000)
· Basic earnings per share increased by 162 per cent. to 14.54p (31
December 2020: 5.56p)
· Net assets per share increased to 84.7p as at 31 December 2021 (30
June 2021: 69.8p; 31 December 2020: 56.8p)
· Cash balances stood at £346,000 as at 31 December 2021 (30 June
2021: £1,992,000; 31 December 2020: £3,818,000). Post period end, the
Group raised an aggregate of £6,088,000 through the sale of 25% of its
holding in Exscientia
Chief Executive Neil Crabb said: "These results are ahead of management
expectations and reflect an excellent performance for the first half of the
year. The growth in fair value and unrealised profit on revaluation of
investments demonstrates our distinctive business model and innovative
approach to commercialising intellectual property continues to deliver. The
results demonstrate good growth and gathering momentum across the portfolio.
This time last year, I said we would be looking to strengthen management teams
across the portfolio as companies reached important inflection points and
started to gain tangible commercial traction. We then announced the
appointments of Darrel Kingham, Jeremy Salt and David Flower as Chief
Executive Officers of Pulsiv, The Vaccine Group and Nandi Proteins
respectively.
During the first half of this year, we continued to build our portfolio
management teams. Pulsiv appointed Adam Westcott as Chief Financial Officer.
He has more than 20 years' experience in senior finance roles, which will
prove invaluable as the company moves forward.
I am delighted with the impact the strengthened teams are having on
accelerating progress within our companies. The Vaccine Group announced highly
encouraging progress in developing a next-generation COVID-19 vaccine with the
potential to provide broad immunity against SARS-CoV-2 and any future
variants. Pulsiv and Nandi are also developing strongly: we are hopeful of
positive news in the coming months.
Post period end, Celerum launched its first commercial product and announced
its first customer. The company is developing novel artificial intelligence
based on nature-inspired computing. A project coordinated by Cambridge Raman
Imaging to develop high-speed, low-cost Raman imaging technology and
artificial intelligence to transform cancer diagnosis and treatment won a
€3.3 million grant from the European Innovation Council, also after the
period end.
Two portfolio companies raised equity funding during the period. CamGraPhIC
raised £1.6 million to accelerate development of its graphene-based photonics
technology, which has the potential to become a core enabling technology for
5G telecommunications and beyond. It has garnered strong interest from major
telecom companies.
Exscientia is now firmly established as a world leader in using artificial
intelligence to drive the discovery of new drugs several years faster than
industry benchmarks. The company successfully raised a total of $510 million
in October 2021 through an upsized initial public offering on Nasdaq and
private placement. It also announced a $70 million collaboration with the Bill
& Melinda Gates Foundation to develop new anti-viral therapeutics against
coronavirus and other viruses with pandemic potential. Post period end, the
company unveiled a strategic research collaboration with Sanofi with an
upfront payment of $100 million.
In January and February, we sold a quarter of our holding in Exscientia,
raising a total of approximately £6.1 million in cash, our first realisation.
Frontier IP was one of the founding shareholders in the company, so we are
very proud of its success and have every confidence in its future prospects.
We are now in a time of considerable economic and market uncertainty. Even
before the Russian invasion of Ukraine, risks were building. The COVID-19
pandemic has yet to end; there remains the possibility of new variants
emerging. Supply chains, such as those for semiconductors, are under pressure.
There are other potential political flashpoints outside of Ukraine. Energy
prices and inflation were already rising before the war began and, of course,
the conflict could compound these problems. All these could affect the ability
of our portfolio companies to continue to make progress at the desired rate.
This is a challenge we are managing. We have reviewed the portfolio to
identify specific risk factors to be in a position to mitigate or manage them.
In these febrile times, it is difficult to predict what might happen in the
coming months and how we might be affected. However, the companies in our
portfolio are seeking to help tackle some of the most pressing long-term
problems we face today. Pulsiv, for example, could have a major impact on the
energy sector by significantly reducing the energy taken from the grid by a
huge range of different devices, and improving the output from photovoltaic
cells. Celerum improves the efficiency of supply chains and logistics: Alusid
cuts the energy needed to make a tile by up to 29 per cent. Exscientia, The
Vaccine Group, and Cambridge Raman Imaging are all striving for better health
outcomes, while Fieldwork Robotics and Nandi Proteins meet a range of food and
agricultural challenges.
The Exscientia share sales mean we have a strong balance sheet. We are well
placed to provide additional support to our portfolio companies should it be
required. The fundamentals of our business and those of our portfolio
companies remain. We are in a good position to weather the highly uncertain
climate we are currently experiencing and stay confident in our future
prospects."
ENQUIRIES
Frontier IP Group Plc T: 020 3968 7815 neil@frontierip.co.uk (mailto:neil@frontierip.co.uk)
Neil Crabb, Chief Executive
M: 07464 546 025
Andrew Johnson, Communications & Investor Relations andrew.johnson@frontierip.co.uk (mailto:andrew.johnson@frontierip.co.uk)
Company website: www.frontierip.co.uk (http://www.frontierip.co.uk/)
Allenby Capital Limited (Nominated Adviser) T: 0203 328 5656
Nick Athanas / George Payne
Singer Capital Markets (Broker) T: 0207 496 3000
Sandy Fraser / Harry Gooden / George Tzimas
ABOUT FRONTIER IP
Frontier IP unites science and commerce by identifying strong intellectual
property and accelerating its development through a range of commercialisation
services. A critical part of the Group's work is involving relevant industry
partners at an early stage of development to ensure technology meets real
world demands and needs.
The Group looks to build and grow a portfolio of equity stakes and licence
income by taking an active involvement in spin-out companies, including
support for fund raising and collaboration with relevant industry partners at
an early stage of development.
Interim Management Statement
Summary
Frontier IP made strong progress during the period in developing portfolio
companies and creating value for shareholders by:
· Realising funds from the portfolio. Post period end, the Group raised
approximately £6.1 million by selling part of its stake Exscientia to ensure
financial strength for the foreseeable future.
· Supporting portfolio fundraisings: CamGraPhIC completed a £1.6
million equity funding round.
· Strengthening the board of directors. Dame Julia King, Baroness Brown
of Cambridge DBE FREng FRS joined the Group as an independent non-executive
director and now sits on the audit and remuneration committees. She is an
engineer with immense experience across industry and government, and has held
senior roles at Rolls-Royce, Imperial College and Aston University. She is
currently chair of the Carbon Trust.
· Helping to support industry partnerships across the portfolio. Alusid
has signed a commercial agreement to supply a major tile retailer. We expect
to announce further positive news in the coming months.
· Increasing portfolio value: fair value of the portfolio of equity
investments increased 37 per cent. to £43,892,000 at 31 December 2021 (30
June 2021: £31,982,000), an increase of 87 per cent. year on year (31
December 2020: £23,449,000).
Operational Review
The Group and its portfolio companies made strong financial, commercial and
technical progress during the half year to 31 December 2021. Our portfolio
continues to grow in value and mature with several companies now at or
approaching important inflection points. We further developed our
relationships with university, government and industry partners, and
strengthened our board of directors. Much of the work conducted during the
first half of the year is expected to result in strong positive news flow in
the coming months.
Portfolio developments included:
Alusid: Frontier IP stake 35.6 per cent
Alusid's innovative formulations and processes create beautiful,
premium-quality tiles, tabletops and other surfaces by recycling industrial
waste ceramics and glass, most of which would otherwise be sent to landfill.
Its processes also use less energy and water than conventional tile
manufacturing.
Alusid's sustainable process technology uses up to 29 per cent less energy
than conventional tile manufacture while still running on the same equipment,
reducing CO(2) emissions. Its product is made from recycled waste, much of
which would otherwise end in high-impact landfill. During the period, Alusid
signed a commercial agreement to supply a major tile retailer.
CamGraPhIC: Frontier IP stake 20.8 per cent
CamGraPhIC is developing graphene-based photonics for high-speed data and
telecommunications. These are seen by the company's industrial partners as a
key enabler for 5G technologies and beyond, and they have potential
applications in other sectors. Current versions of the technology have
indicated speeds of up to 100Gbps per lane, operation across multiple
wavebands and very low energy loss. Their speed is about twice that achieved
in laboratory conditions by equivalent technologies, while they consume 75 per
cent less energy. The company raised £1.6 million during the period to
accelerate development and scale up of the technology.
Exscientia: Frontier IP stake 1.3 per cent
Exscientia is a world leader in using artificial intelligence for drug
discovery, taking years off the time it takes to develop new drugs through
traditional methods. The company is collaborating with a range of
pharmaceutical firms, including Bristol Myers Squibb, Bayer, Apeiron and
Rallybio. During the period, the company listed on the Nasdaq Global Select
Market, raising a total of $510.4 million through an upsized initial public
offering and concurrent private placement. The company also announced a $70
million collaboration agreement with the Bill & Melinda Gates Foundation
to develop antiviral therapeutics to tackle coronaviruses and other viruses
with pandemic potential. After the period end, the company announced a
strategic research collaboration with Sanofi, worth $100 million in upfront
payments and with the potential for a further $5.2 billion in milestone and
tiered royalty payments.
Pulsiv: Frontier IP stake 18.3 per cent
Pulsiv is developing a unique power conversion technology which significantly
improves the efficiency with which electricity is converted from AC to DC and
vice versa. Conventional technologies waste up to half the energy consumed by
a device - one reason, for example, that laptop power converters get warm as
the wasted energy is lost through heat. Pulsiv's technology converts about 90
per cent of electricity going into a device. The company is gaining commercial
traction, and its solutions have the potential to enhance a broad range of
mains-powered products, battery chargers and lighting applications. It can
also extract more power from photovoltaic solar cells. During the period, the
company announced the appointment of Adam Westcott as Chief Financial Officer.
Adam has more than 20 years' experience at senior levels for both
entrepreneurial growth businesses and in investment banking, where he advised
companies working on equity, debt, mergers and acquisitions.
The Vaccine Group: Frontier IP stake 17 per cent
The Vaccine Group is developing novel herpesvirus-based vaccines to protect
against infectious diseases that can have significant social and economic
impact. They fall into two broad categories: zoonotic diseases, such as
COVID-19, which jump from animals to humans; and diseases which have a high
impact on production of economically important livestock. The company is
developing vaccines to address a growing number of diseases, all for use in
animals with the exception of its COVID-19 vaccine, which is being developed
for use in humans. Diseases targeted include Lassa fever, Ebola, streptococcus
suis (an emerging zoonotic disease in pigs), African swine fever, and porcine
reproductive and respiratory syndrome. This is being developed in
collaboration with The Pirbright Institute and ECO Animal Health Group. During
the period, the company announced that pre-clinical trials in pigs
demonstrated that its next-generation COVID-19 vaccine candidate had the
potential to provide broad immunity against SARS-CoV-2 and future variants.
Other post period end portfolio developments
Cambridge Raman Imaging: Frontier IP stake 25.8 per cent
Cambridge Raman Imaging (CRI) is developing graphene-based ultrafast lasers
and artificial intelligence to generate digital images of patient tissue,
removing the need for chemical staining. The images can also be viewed
remotely, allowing histopathologists to work more efficiently and to support
regions and countries short of qualified staff. CRI is part of CRIMSON, a
pan-European project developing technology to monitor diseases, such as
cancers, unfolding in cells in real time. This has the potential to deepen
understanding of the cellular origins of disease and enable the development of
new treatments. The company is also collaborating with Motic, a major medical
devices manufacturer. After the period close, CRI announced it was
coordinating a pan-European project awarded €3.3 million by the European
Innovation Council. The project, CHARM, aims to develop a low-cost, high-speed
Raman imaging technology and artificial intelligence to transform cancer
diagnosis and treatment. Partners include the University of Cambridge, the
Politecnico di Milano and Consiglio Nazionale Delle Ricerche and Jena
University Hospital.
Celerum: Frontier IP stake 33.8 per cent
Celerum is developing novel artificial intelligence based on nature inspired
computing to optimise the operational efficiency of logistics and supply
chains. Nature inspired computing creates algorithms using lessons from the
natural world where evolution has overcome inefficiency. For example, bees and
ants are extremely good at finding the best routes to food sources or
returning to their nests. A pilot project including Celerum organised
by Highlands and Islands Enterprise found that NIC-based artificial
intelligence cut carbon emissions by up to 40 per cent across food and drink
supply chains when allied to behavioural changes such as load sharing between
producers and hauliers. A wider ranging follow-up project is now being
planned. Post period end, Celerum announced the launch of its first commercial
product, Truck Logistics System, which has won its first customer, a road
haulier.
Corporate developments
The Group appointed Dame Julia King, Baroness Brown of Cambridge DBE, FREng
FRS, as an independent non-executive director in October 2021. Baroness Brown
is an engineer with immense experience across industry and government.
Following an academic career at the University of Cambridge, Julia held senior
engineering and business roles at Rolls-Royce, before returning to academia as
Principal of Engineering at Imperial College and then as Vice Chancellor and
Chief Executive of Aston University. She is currently chair of the Carbon
Trust and chairs the Science and Technology Committee in the House of Lords,
where she is a crossbench peer.
After the period close, the Group realised approximately £6.1 million in cash
by selling part of its stake in Exscientia.
Outlook
Frontier IP faces the future with confidence. However, we are mindful of the
likelihood of a period of uncertainty driven by a number of global factors
including, most recently, the Russian invasion of Ukraine. The money raised
through the partial sale of our Exscientia equity holding means our balance
sheet is strong, providing us with the capital to support the Group and its
portfolio companies.
Across the portfolio we are seeing continued momentum, with companies reaching
important inflection points marking significant commercial, technical and
industry progress. We expect this progress to be reflected by strong positive
news flow in the months to come.
Neil Crabb
Chief Executive Officer
Results Summary
Financial assets at fair value through profit and loss at 31 December 2021
increased to £46,665,000 (30 June 2021: £34,302,000; 31 December 2020:
£25,093,000). Unrealised profit on the revaluation of investments over the
first half increased by 197 per cent. to £11,914,000 (2020: £4,009,000) with
the increase in the value of Exscientia providing the most significant
contribution. Revenue from services decreased to £163,000 (2020: £184,000).
The profit before tax increased by 239 per cent. to £10,281,000 (2020:
£3,033,000) reflecting the higher investment revaluations while profit after
tax increased by 164 per cent. to £7,998,000 (2020: £3,033,000).
Administrative expenses increased by 65 per cent. to £1,733,000 (2020:
£1,049,000) reflecting a company-wide bonus of £494,000, which is to be paid
in March 2022. The share-based payment charge remained flat at £161,000
(2020: £160,000). Basic earnings per share were 14.54p (2020: 5.56p).
Cash balances stood at £346,000 as at 31 December 2021 (30 June 2021:
£1,992,000; 31 December 2020: £3,818,000). Post period end, the Group
realised £6,088,000 through the sale of 25% of its holding in Exscientia. Net
assets per share as at 31 December 2021 were 84.7p (30 June 2021: 69.8p; 31
December 2020: 56.8p). Debt investments reflecting loans made to portfolio
companies stood at £2,773,000 as at 31 December 2021 (30 June 2021:
£2,320,000; 31 December 2020: £1,644,000).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2021
Six months ended 31 December 2021 (unaudited) Six months ended 31 December 2020 (unaudited) Year ended 30 June 2021 (audited)
Notes
£'000 £'000 £'000
Revenue
Revenue from services 163 184 362
Other operating income
Unrealised profit on the revaluation of
investments 7 11,914 4,009 12,306
12,077 4,193 12,668
Administrative expenses (1,733) (1,049) (2,171)
Share based payments (161) (160) (368)
Other income 97 25 104
Profit from operations 10,280 3,009 10,233
Interest income on short-term bank deposits 1 24 9
Profit from operations and before tax 10,281 3,033 10,242
Taxation 5 (2,283) - (676)
Profit and total comprehensive income attributable to the equity holders of the Company
7,998 3,033 9,566
Profit per share attributable to the equity
holders of the parent
Basic earnings per share 6 14.54p 5.56p 17.47p
Diluted earnings per share 6 13.67p 5.31p 16.62p
All the Group's activities are classed as continuing and there were no
comprehensive gains or losses in any period other than those included in the
statement of comprehensive income.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2021
As at 31 December As at 31 December As at
2021 (unaudited) 2020 (unaudited) 30 June
£'000 £'000 2021 (audited)
£'000
ASSETS Notes
Non-current assets
Tangible fixed assets 9 8 11
Goodwill 1,966 1,966 1,966
Financial assets at fair value through profit and loss
Equity investments 7 43,892 23,449 31,982
Debt investments 7 2,773 1,644 2,320
Trade receivables and other non-current assets
- 9 -
48,640 27,076 36,279
Current assets
Trade receivables and other current assets
924 506 595
Cash and cash equivalents 346 3,818 1,992
1,270 4,324 2,587
Total assets 49,910 31,400 38,866
LIABILITIES
Non-current liabilities
Deferred taxation (2,507) - (237)
(2,507) - (237)
Current liabilities
Trade and other payables (809) (159) (208)
(809) (159) (208)
Total liabilities (3,316) (159) (445)
Net assets
46,594 31,241 38,421
EQUITY
Called up share capital 5,501 5,501 5,501
Share premium account 14,576 14,576 14,576
Reverse acquisition reserve (1,667) (1,667) (1,667)
Share based payment reserve 1,451 637 1,276
Retained earnings 26,733 12,194 18,735
Total equity
46,594 31,241 38,421
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six-months ended 31 December 2021
Share-
Share Reverse acquisition based Profit
Share premium reserve payment and loss
capital account reserve account Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1st July 2020 5,076 12,819 (1,667) 477 9,161 25,866
Issue of shares 425 1,757 - - - 2,182
Share-based payments - - - 160 - 160
Profit/comprehensive income for the period
- - - - 3,033 3,033
At 31 December 2020 5,501 14,576 (1,667) 637 12,194 31,241
Share-based payments - - - 639 - 639
Profit/comprehensive income for the period
- - - - 6,541 6,541
At 30 June 2021 5,501 14,576 (1,667) 1,276 18,735 38,421
Share-based payments - - - 175 - 175
Profit/comprehensive income for the period
- - - - 7,998 7,998
At 31 December 2021 5,501 14,576 (1,667) 1,451 26,733 46,594
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 December 2021
Six months ended 31 December Six months ended 31 December Year ended 30 June
2021 (unaudited) 2020 (unaudited) 2021 (audited)
£'000 £'000 £'000
Cash flows from operating activities
Cash used in operations (1,196) (573) (1,466)
Taxation paid - - -
Net cash used in operating activities (1,196) (573) (1,466)
Cash flows from investing activities
Purchase of tangible fixed assets (2) (6) (12)
Purchase equity investments (69) (52) (71)
Purchase of debt investments (380) (725) (1,618)
Disposal of debt investments - - -
Interest received 1 24 9
Other income - - -
Net cash used in investing activities (450) (759) (1,692)
Cash flows from financing activities
Proceeds from issue of equity shares - 2,334 2,334
Costs of share issue - (152) (152)
Net cash generated from financing activities - 2,182 2,182
Net (decrease) / increase in cash and cash equivalents (1,646) 850 (976)
Cash and cash equivalents at beginning of period 1,992 2,968 2,968
Cash and cash equivalents at end of period 346 3,818 1,992
Cash used in operations
Profit before tax 10,281 3,033 10,242
Adjustments for:
Share-based payments 161 160 368
Depreciation 4 3 6
Interest received (1) (24) (9)
Other income - - -
Fair value (gain) on financial assets at fair value through profit or loss
(11,914) (4,009) (12,306)
Changes in working capital:
Trade and other receivables (329) 315 235
Trade and other payables 602 (51) (2)
(1,196) (573) (1,466)
NOTES
1. General information
The Company is a limited liability company incorporated in England and with
its registered office at c/o CMS Cameron McKenna Nabarro Olswang LLP, 78
Cannon Street, London EC4N 6AF. The Company's main trading office is situated
at 93 George Street, Edinburgh, EH2 3ES.
The Company is quoted on the AIM market.
This condensed consolidated interim financial information was approved and
authorised for issue by a duly appointed and authorised committee of the Board
of Directors on 16(th) March 2022.
This condensed interim financial information has not been audited or reviewed
by the Company's auditor.
2. Basis of preparation
This condensed consolidated interim financial information for the six months
ended 31 December 2021 has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting". The condensed
consolidated interim financial information should be read in conjunction with
the annual financial statements for the year ended 30 June 2021, which have
been prepared in accordance with International Financial Reporting Standards
(IFRS) as adopted by the EU.
This condensed consolidated interim financial information does not constitute
statutory accounts within the meaning of section 434 of the Companies Act
2006. The comparatives for the full year ended 30 June 2021 are not the
Company's full statutory accounts for that year. A copy of the statutory
accounts for that year has been delivered to the Registrar of Companies. The
auditor's report on those accounts was unqualified and did not contain a
statement under sections 498(2) or 498(3) of the Companies Act 2006.
3. Accounting policies
The accounting policies applied by the Group in these unaudited half year
results are consistent with those applied in the annual financial statements
for the year ended 30 June 2021 as described in the Group's Annual Report for
that year and as available on our website www.frontierip.co.uk
(http://www.frontierip.co.uk) . No new standards that have become effective in
the period have had a material effect on the Group's financial statements.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual earnings.
4. Segmental information
The chief operating decision-maker has been identified as the Group's board of
directors. The board reviews the Group's internal reporting to assess
performance and allocate resources. Currently the board considers that the
Group has one operating activity, the commercialisation of intellectual
property. The Group's revenue and profit before taxation were derived almost
entirely from its principal activities within the UK. Though the Group has a
Portuguese subsidiary as well as partnerships and spin outs in Portugal the
associated revenues and costs are currently immaterial and, accordingly, no
additional geographical disclosures are given.
5. Taxation
The taxation expense for the six months to 31 December 2021 of £2,283,000 (31
December 2020: nil) represents the recognition of a deferred tax liability on
unrealised fair value gains less the recognition of available tax losses.
A deferred tax asset in respect of trading losses arising before 1 April 2017
has not been recognised in view of the uncertainty as to the level of future
taxable trading profits.
6. Earnings per share
The calculation of the basic earnings per share for the six months ended 31
December 2021 and 31 December 2020 and for the year ended 30 June 2021 is
based on the earnings attributable to the shareholders of Frontier IP Group
Plc in each period divided by the weighted average number of shares in issue
during the period.
Basic earnings per share Weighted average number of shares
Earnings attributable to shareholders Basic earnings
per share
£'000 Number Pence
Six months ended 31 December 2021 7,998 55,005,546 14.54
Six months ended 31 December 2020 3,033 54,521,275 5.56
Year ended 30 June 2021 9,566 54,761,420 17.47
Weighted average number of shares
Diluted earnings per share Earnings attributable to shareholders Diluted earnings
per share
£'000 Number Pence
Six months ended 31 December 2021 7,998 58,509,845 13.67
Six months ended 31 December 2020 3,033 57,119,246 5.31
Year ended 30 June 2021 9,566 57,548,082 16.62
7. Financial assets at fair value through profit and loss
Equity investments comprise the following:
Unquoted Equity Investments Quoted Equity Investments Total
£'000 £'000 £'000
At 1(st) July 2020 19,444 - 19,444
Additions 52 - 52
Fair value increases 4,512 - 4,512
Fair value decreases (559) - (559)
At 31(st) December 2020 23,449 - 23,449
Additions 20 - 20
Disposals - - -
Conversion of debt 276 - 276
Fair value increases 8,325 - 8,325
Fair value decreases (88) - (88)
At 30(th) June 2021 31,982 - 31,982
Additions 69 - 69
Conversion of debt 135 - 135
Reclassification (13,211) 13,211 -
Fair value increases 2,044 9,695 11,739
Fair value decreases (33) - (33)
At 31(st) December 2021 20,986 22,906 43,892
The valuation of the Group's investment in Exscientia at 31 December 2021 was
£22,906,000, 52% of the Group's total equity investments and 49% of its net
assets at 31 December 2021. The increase in the value of the Group's holding
in Exscientia over the six months to 31 December 2021 was £9,695,000, 81% of
the Group's net unrealised profit on the revaluation of investments and 94% of
profit before tax for the six months to 31 December 2021.
Debt investments comprise the following:
Unquoted Debt Instruments
£'000
At 1(st) July 2020 863
Additions 725
Fair value increases 136
Fair value decreases (80)
At 31(st) December 2020 1,644
Additions 893
Fair value increases
Disposals -
Conversion of debt (276)
Fair value increases 136
Fair value decreases (77)
At 30(th) June 2021 2,320
Additions 380
Conversion of debt (135)
Reclassification -
Fair value increases 246
Fair value decreases (38)
At 31(st) December 2021 2,773
Debt investments are loans to portfolio companies to fund early-stage costs,
provide funding alongside grants and bridge to an equity fundraise. Certain
debt investments carry warrants granting the option to purchase shares.
The most significant loans made during the six months to 31 December 2021 were
to CamGraPhIC. (£170,000) and Alusid (£100,000). The most significant debt
investments at 31 December 2021 were loans to CamGraPhIC (£1,117,000), Nandi
Proteins (£606,000) and Alusid (£351,000).
8. Copies of Half Yearly Report
Copies of the Half Yearly Report will be available on the Company's website,
www.frontierip.co.uk (http://www.frontierip.co.uk/) , and on request from the
Company's offices at 93 George Street, Edinburgh EH2 3ES no later than 21(st)
March 2022.
9. Subsequent events
After the period end, the Group sold 25% of its shareholding in Exscientia,
raising a total of approximately £6.1 million in cash for a realised gain of
£2.79 million.
10. Equity holdings
All Group equity holdings in portfolio companies in the interim management
statement are as at 31 December 2021.
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