REG - Frontier IP Group - Unaudited Half Year Results
14/03/2024 07:00
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RNS Number : 7822G Frontier IP Group plc 14 March 2024
RNS
AIM: FIPP
14 March 2024
Frontier IP Group plc
("Frontier IP" or the "Group")
UNAUDITED HALF-YEAR RESULTS FOR THE SIX MONTHS TO 31 DECEMBER 2023
Frontier IP, a specialist in commercialising intellectual property, is pleased
to announce its unaudited interim results for the six month period ended 31
December 2023.
KEY POINTS
· Pre-tax profit of £1.4 million (31 December 2022: pre-tax loss of
£0.5 million)
· Basic earnings per share of 2.67p (31 December 2022: 0.49p)
· Net assets per share of 84.2p as at 31 December 2023 (30 June 2023:
81.8p; 31 December 2022: 88.2p)
· Unrealised profit on the revaluation of investments increased to
£2.8 million (31 December 2022: unrealised profit of £0.4 million)
· Fair value of the equity portfolio increased by c.6 per cent to
£35.1 million at 31 December 2023 (30 June 2023: £33.0 million; 31 December
2022: £36.1 million) reflecting disposals of £0.8 million, additions of
£0.1 million and fair value increases of £2.8 million
· Part disposal of holding in Exscientia generated cash of £0.8
million in the period under review (30 June 2023: £4.9 million; 31 December
2022: £3.4 million)
· Cash balances of £2.7 million at 31 December 2023 (30 June 2023:
£4.6 million; 31 December 2022: £5.8 million)
· Significant commercial and technical progress across the portfolio
Frontier IP enjoyed a good first half of the financial year, overcoming
difficult market and economic conditions to return to profitability. Basic
earnings per share rose, reflecting an increase in the fair value of the
equity portfolio.
Several portfolio companies achieved important commercial, technical and
financial developments both during the six-month period under review and post
the period close; bringing closer the opportunity for potential exits within
the portfolio. Significant experience was recruited to strengthen boards of
directors and management teams, companies raised funds and it was announced
that one new spin-out company had joined the portfolio.
Frontier IP also announced changes to the Group's Board of Directors. Dame
Julia King, Baroness Brown of Cambridge, DBE FREng, FRS, FMedSci, became
independent Non-Executive Chair at the annual general meeting in December. She
replaced Andrew Richmond, who stepped down from the Board of Directors after
11 years of service. Julia brings a very wide range of experience to the board
and chairs the House of Lords Science and Technology Committee. The Company
also announced in November 2023 that Jim Fish is to step down as Chief
Financial Officer no later than the end of May 2024.
PORTFOLIO AND OPERATIONAL HIGHLIGHTS
The six months to 31 December 2023 saw companies across the portfolio either
achieve or make strong progress towards meeting commercial, technical and
funding goals. Developments included:
· Pulsiv appointed Dr Mark Gerhard as Chairman and Dr Tim Moore as
Chief Product Officer. Mark is a serial entrepreneur and technology pioneer
with a long history of growing and exiting businesses. Tim joined the company
full time from his role as Chief Technology Officer for SharkNinja, a
Nasdaq-listed consumer electronics group. Post period end, the company
announced plans to launch a highly efficient 65W USB C for adapters, chargers
and in-wall sockets
· Alusid raised £500,000 through equity funding from Octopus
Investments via the Octopus AIM VCT plc and Octopus AIM VCT 2 plc funds as
part of wider funding round raising £1.13 million from existing and new
investors. The company is exploring options for an initial public offering
· One company joined the portfolio. Deakin Bio-Hybrid Materials
("DeakinBio") makes sustainable materials from natural materials such as
organic waste and inorganic powders. Initial applications provide alternatives
to traditional ceramic tiles. Frontier IP took a 33.3 per cent equity stake in
the company
· CamGraPhIC put in place a new loan facility to provide funding of up
to £1.5 million to support progress. The company has since strengthened
existing industry relationships, developed new partnerships and is actively
seeking to raise further funds
· Fieldwork Robotics completed a fundraising of £2.1m with Elbow Beach
Capital investing £1.5 million and the remainder being procured from Seedrs
and existing shareholders. They also won a UK government grant and appointed
David Fulton as the new Chief Executive Officer
· GraphEnergyTech was selected as part of the Swiss National Start-up
Team as one of the 10 most promising Swiss start-ups. Strengthened team with
two expert hires, one post period end
· The Vaccine Group created an Advisory Board to support scale up of
its novel herpesvirus-based vaccine platform. This board consists of three
high-ranking veterinary experts with strong business experience and
connections to major companies and other organisations in the animal health
sector
· Nandi Proteins signed a commercial license with a leading global food
ingredients business who will take Nandi's meat/fat replacer to market
worldwide
· Jim Fish is to step down as Chief Financial Officer by the end of May
2024 after 10 years of service. Following the appointment of a new Group CFO
and his resignation from the Board, Jim will take up a new position in the
Group as Portfolio Finance Director to support portfolio companies.
Discussions on the appointment of a new Group CFO are at an advanced stage and
we anticipate a successor will be announced shortly
Post period end:
· The Group sold the remaining 324,991 American Depositary Shares in
Exscientia plc for net proceeds of approximately £1.7 million. In total, the
Group sold 1,564,800 Exscientia ADSs between 10 January 2022 and 29 February
2024 for net proceeds of approximately £14.0 million. The original cost for
these shares was less than £2,000
Chief Executive Neil Crabb said: "I was delighted to see us return to
profitability during the first half of the year. The improved performance
comes in the teeth of the cold gales created by the prevailing market,
economic and geopolitical conditions, and reflects the solid progress made
across the portfolio during the period and beyond. Alusid, CamGraPhIC,
Fieldwork Robotics, Nandi Proteins, Pulsiv and The Vaccine Group are among the
companies picking up pace as they stride towards commercial viability and
futures replete with success.
After the period end, we sold our remaining stake in Exscientia. Exscientia
has been an excellent exemplar of our business model, based on founding equity
in companies originating from universities with world leading technology,
realising that equity as its value builds and becomes clearer. We realised a
total of approximately £14 million in Exscientia and we look forward to
demonstrating further success with companies in the current portfolio.
Alusid recently took investment from Octopus Investments via two AIM VCT
funds, as it progresses plans on its proposed initial public offering.
To win the support of one of Europe's leading venture funds validates Alusid's
green technology, its capital efficient business model and its potential for
growth. Alusid is exploring international opportunities in northern Europe to
build on the success it has enjoyed in the UK with Topps Tiles and further
afield with Starbucks EMEA. On the new product front, work on the floor tiles
is developing well and Alusid is experimenting with glazes made from recycled
materials. This would take the recycled content of its tiles from more than 90
per cent to close to 100 per cent.
Other companies are also beginning to gain significant industrial traction.
Nandi Proteins achieved a commercial breakthrough, signing an agreement to
provide its meat and fat replacement ingredients to a major manufacturer. The
company is also involved in promising talks about its egg white replacers -
ideal for companies looking to make vegetarian products vegan friendly. I am
also excited by the possibilities for a methylcellulose replacer Nandi is
currently developing. Methylcellulose is a synthetic compound widely used as
an emulsifier in highly processed foods and as a bulk-forming laxative.
As companies mature, prove their technology, and build the industry engagement
needed to prosper, it is important they have the right management teams,
directors, and advisers in place. Pulsiv has scaled its technology,
established a global distribution network, and is in discussions with
potential customers. Therefore, I was delighted to see Mark Gerhard and Tim
Moore appointed respectively as Chairman and Chief Product Officer during the
period.
Mark is a serial entrepreneur and technology pioneer with substantial
experience of growing and exiting businesses. Most famously, he was CEO of
Jagex, the developer of Runescape, when it was sold for $250 million in 2010.
Tim has extensive experience developing innovative products, and was Chief
Technology Officer of SharkNinja and ghd, both global consumer technology
brands.
The Vaccine Group is another now moving forward to commercialisation having
built up a strong pipeline of vaccine candidates. To help through the next
stage, it has appointed an Advisory Board of three high-ranking experts with
exceptional business experience and industry connections. They include a
senior figure in Merck Life Sciences, an advisor to Kela Pharma and board
director for GALVmed, and a former senior manager at Zoetis. To attract such
candidates to the TVG Advisory Board shows the high quality of the company's
technology.
A new Chief Executive joined Fieldwork Robotics during the period. David
Fulton has more than 30 years' experience in business, and the company now
aims to have more than 100 robots available for harvesting as a service by
2025.
I would also draw attention to CamGraPhIC, whose graphene photonics technology
has the potential to revolutionise data and telecommunications. The company is
now attracting serious interest and the Board are excited by its future
prospects.
As one company, Exscientia, leaves the portfolio, so another one joins. It is
important to maintain our pipeline of new portfolio companies, so it was good
to see Deakin Bio-Hybrid Materials joining the Frontier family. The company is
developing new and advanced materials based on organic waste and inorganic
powders, with initial applications aimed at replacing ceramics. It's a good
demonstration of our clusters approach, with clear affinities to Alusid and
others in our Materials cluster; with its use of organic waste, such as
chickpea broth, it is also able to call on expertise and contacts within our
Food and Agritech cluster.
I am optimistic there will be many other companies to follow Exscientia and to
provide us with successful exits. Our business model is of course based on
delivering such exits. It is important we deliver one to fund any unplanned
investments in our portfolio companies and cover operating expenditure beyond
the next 12 months. Our portfolio is addressing some of the major challenges
we face today, from food and energy to climate and water. We are a deep
technology commercialisation company. This means progress can take time -
maybe a decade or more - as research is validated, scaled up and then
commercialised before realisation is possible. It is not an easy process:
problems arise and must be solved. But this only raises the barriers to entry
for anyone looking to follow. Although not all our companies might prove
successful, our model does, I believe, maximise our chances of success.
Finally, I would like to thank Jim Fish who, as previously announced, is
stepping down as Chief Financial Officer after 10 years on our Board of
Directors. Jim has played a crucial role in building Frontier IP as we have
grown. Although he is stepping down from the Board, he will remain involved in
a new role supporting our portfolio companies, and so we will be working
together for a while yet.
Despite the difficult market conditions we are facing, we remain confident
about our business and its 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
Harry Gooden / James Fischer
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 and post period close in
developing portfolio companies and creating value for shareholders by:
· Supporting Alusid as the company started exploring options for an
initial public offering. During the period, Alusid attracted a £500,000
investment from Octopus Investments as part of a larger funding round.
· Strengthening the board of directors with Dame Julia King, Baroness
Brown of Cambridge, DBE, FREng FRS FMedSci assuming the role as Chair of
Frontier IP having previously been the senior independent non-executive on the
board.
· Helping portfolio companies strengthen their boards of directors and
management teams.
· Bringing one new company into the portfolio, Deakin Bio-Hybrid
Materials.
· Post period end, the Group raised £1.7 million by selling its
remaining equity stake in Exscientia.
Operational Review
The Group and its portfolio companies made good commercial and technical
progress during the half year to 31 December 2023. Our portfolio is maturing
and several companies are moving closer to the stage where they could provide
a potential exit for the Group. We further developed our relationships with
university, government and industry partners. Further positive newsflow is
expected in the coming months as the portfolio continues to mature.
Portfolio developments included:
CamGraPhIC: Frontier IP stake 20.8 per cent
CamGraPhIC is developing ground-breaking graphene-based photonics for
scalable, faster and cheaper optical transceivers, devices at the heart of
high-speed data and telecommunication networks. Partners include leading
multinationals from the telecoms and semiconductor sectors. They believe the
company's technology could prove an important enabler for the 5G and 6G
telecoms networks of the future and for advanced computing applications. There
is also potential for uses in other sectors. Current versions of the
technology have achieved speeds about twice that of equivalent technologies,
and they consume 70 per cent less energy. During the period, CamGraPhIC
announced it had put in place a new loan facility to provide funding of up to
£1.5 million to support progress. The company is attracting serious
commercial interest from organisations across multiple sectors and is
exploring its funding options.
Fieldwork Robotics: Frontier IP stake 19.2 per cent
Fieldwork Robotics has developed advanced AI-supported harvesting robots,
initially focused on soft fruits, such as raspberries, to help solve the
problem of worker shortages, increase farm efficiency and reduce food wastage.
During the period, the company completed a fundraising of £2.1 million with
Elbow Beach Capital investing £1.5 million and the remainder being procured
from Seedrs and existing shareholders. It also appointed a new Chief Executive
Officer, David Fulton.
GraphEnergyTech: Frontier IP stake 30.4 per cent
GraphEnergyTech is developing advanced high-conductivity graphene inks.
Initial applications are to create graphene electrodes to replace expensive
silver electrodes in solar cells. Silver is the most commonly used material
for solar cell electrodes, but the rising popularity of solar power means
global reserves could be exhausted by 2050, according to research from the
University of New South Wales, Australia. The company was incorporated in the
UK during the first half of the last financial year with operations in
Switzerland and was co-founded by Professor Michael Grätzel of the Ecole
Polytechnique Federale de Lausanne. He is one of the world's most cited
academics. Since incorporation, the company was selected during the period to
represent the Swiss National Start-up Team in the 4YFN section of the Mobile
World congress in Barcelona. This means the company is one of 10 most
promising start-ups in Switzerland. It has also recruited its first two
employees: a graphene manufacturing specialist in the UK during the period,
and, post period end, a materials deposition expert in Lausanne.
Pulsiv: Frontier IP stake 18.2 per cent
Pulsiv's technology significantly improves the energy efficiency of power
supplies, battery chargers and LED lighting, cutting energy consumption and
customer bills. The technology also extracts more energy from photovoltaic
solar cells. Because it uses fewer components, it can be incorporated into
more compact designs and is cost effective for manufacturers. Commercial
traction is strong and growing: the company is in advanced discussions with
major manufacturers and has put in place a global distribution network. During
the period, serial entrepreneur and technology pioneer Dr Mark Gerhard joined
as chairman and Dr Tim Moore full time as Chief Product Officer. Mark has
extensive experience growing and exiting businesses in the video games,
artificial intelligence and cyber security sectors. They include Jagex,
developer of Runescape, which was sold for $250 million when Mark was Chief
Executive Officer. Tim, a Pulsiv non-executive director, joined full time as
Chief Product Officer from his post as Chief Technology Officer for
Nasdaq-listed consumer electronics group SharkNinja. Post period end the
company announced plans to launch a 65W USB C for adapters, chargers and wall
sockets able to operate at 95 per cent efficiency.
The Vaccine Group: Frontier IP stake 17 per cent
The Vaccine Group is developing a novel herpesvirus-based vaccine technology
able to form a platform for a wide range of vaccines targeted at diseases in
livestock and companion animals. The company has developed a strong vaccine
pipeline: diseases targeted include porcine reproductive and respiratory
syndrome, streptococcus suis, African swine fever and bovine tuberculosis.
During the period, TVG created an Advisory Board to support scale up. The
three high-ranking members have extensive veterinarian and industry expertise
and networks. They are: Christophe Barnier-Quer, who works for Merck Life
Sciences in a senior role; Johan Dreesen, a member of the Advisory Council to
Kela Pharma and GALVmed board member; and Vaughn Kubiak, who brings 40 years'
experience in global animal health.
Nandi: Frontier IP stake 19.8 per cent
Nandi's protein technology transforms commodity proteins into functional food
ingredients. The company signed a commercial agreement with a global food
ingredients company who will manufacture and take to market Nandi's first
commercial ingredients once scale up and final application tests have been
completed successfully. The ingredients are collagen-based meat and fat
replacers for use in processed meat products, such as sausages and burgers,
reducing calories and cost. The company is also advanced in developing a
second product, a vegetable protein-based egg white replacer that has been
successfully tested in a range of applications including meringues,
alternative meat products and multiple bakery products. Other products include
vegetable proteins to replace methylcellulose, a widely used binder in
plant-based meat, and whey proteins to replace chemical emulsifiers in baked
products.
Alusid: Frontier IP stake 35.4 per cent
Alusid makes beautiful, premium-quality tiles, tabletops and other surfaces by
recycling industrial waste, ceramics and glass, much of which would otherwise
go to landfill. The company's patented formulations and processes use less
energy and water than conventional tile manufacturing. During the period, the
company concluded a funding round raising £1.13 million. The company is
scaling up a hard-wearing floor tile for mass manufacture and is investigating
the use of glazes made from recycled materials to further increase the amount
of recycled content in its tiles, currently at industry-leading levels of 90
per cent or more.
Deakin Bio: Frontier IP stake 33.3 per cent
One company joined the portfolio. Frontier IP took an equity stake in Deakin
Bio-Hybrid Materials, a company developing advanced bio-based materials from
organic waste such as chickpea broth and widely available non-organic powders.
Corporate developments
Dame Julia King, Baroness Brown of Cambridge, DBE FREng FRMedSci, previously
the Company's senior independent non-executive director, became independent
Non-Executive Chair at the annual meeting in December 2023, replacing Andrew
Richmond. Andrew stepped down from the Board of Directors having served on the
Frontier IP board for 11 years. Jim Fish is to step down from the Board of
Directors as Chief Financial Officer by the end of May 2024. He will remain
with the Group in a new role as Portfolio Finance Director to continue
supporting portfolio companies.
Post period end, the Group completed its exit of Exscientia, realising a
further £2.54 million to support its balance sheet. In return for a nominal
investment, the Group has realised a total of approximately £14 million from
Exscientia.
Outlook
Frontier IP faces the future with confidence. There are a number of highly
promising developments within the portfolio as companies gain industry
traction, scale up and achieve commercial viability. Others are at or
approaching inflection points. We continue to add companies to the portfolio
to ensure we have a broad spread of maturity throughout.
Despite the difficult market and economic conditions, we are optimistic about
the longer-term prospects for the Group.
Neil Crabb
Chief Executive Officer
Results Summary
Financial assets at fair value through profit and loss at 31 December 2023
increased to £41,530,000 (30 June 2023: £37,589,000; 31 December 2022:
£41,065,000). This reflects an unrealised profit on the revaluation of
investments of £2,849,000, the partial disposal of the Group's investment in
Exscientia of £784,000 and investments in other portfolio companies of
£1,876,000. Unrealised profit on the revaluation of investments over the
first half increased by c.600 per cent to £2,849,000 (2022: unrealised profit
of £400,000), the profit deriving from unquoted equity investments
£2,697,000, the remaining holding in quoted company Exscientia £123,000 and
debt investments of £29,000. Revenue from services remained level at
£203,000 (2022: £203,000). The Group sold part of its holding in Exscientia
for net proceeds of £839,000, realising profits of £54,000 in the period
under review. The remaining holding in Exscientia was sold post period end for
net proceeds of £1,708,000, realising profits of £72,000 post period end and
£195,000 in the current financial year. A profit before tax of £1,415,000
(2022: loss £469,000) reflected the increase in the unrealised profit on the
revaluation of investments offset by a lower realised profit on disposal of
investments and increased administrative expenses while profit after tax
increased by c.450 per cent to £1,488,000 (2022: £269,000). Administrative
expenses increased by 26 per cent to £1,803,000 (2022: £1,429,000) of which
personnel expenses accounted for 19% of the increase. The share-based payment
charge increased to £122,000 (2022: £70,000). Basic earnings per share were
2.67pp (2022: 0.49p).
Cash balances stood at £2,737,000 as at 31 December 2023 (30 June 2023:
£4,603,000; 31 December 2022: £5,850,000). Post 31 December 2023, the Group
disposed of its remaining holding in Exscientia for net proceeds of
£1,708,000. Net assets per share as at 31 December 2023 were 84.2p (30 June
2023: 81.8p; 31 December 2022: 88.2p).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2023
Six months ended 31 December 2023 (unaudited) Six months ended 31 December 2022 (unaudited) Year ended 30 June 2023 (audited)
Notes
£'000 £'000 £'000
Revenue
Revenue from services 203 203 372
Other operating income
Unrealised profit/(loss) on the revaluation of
investments 8 2,849 400 (966)
Realised profit/(loss) on disposal of investments
54 307 (786)
3,106 910 (1,380)
Administrative expenses (1,803) (1,429) (3,130)
Share based payments (122) (70) (155)
Interest income on debt investments 188 102 232
Other income 18 5 13
Profit/(loss) from operations 1,387 (482) (4,420)
Interest income on short-term bank deposits 28 13 50
Profit/(loss) from operations and before tax 1,415 (469) (4,370)
Taxation 6 73 738 1,126
Profit/(loss) and total comprehensive income/(expense) attributable to the equity holders of the Company
1,488 269 (3,244)
Profit per share attributable to the equity
holders of the parent
Basic earnings/(loss) per share 7 2.67 0.49p (5.85)p
Diluted earnings/(loss) per share 7 2.60 0.47p (5.64)p
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 2023
As at As at As at
31 December 31 December 30 June
2023 (unaudited) 2022 2023 (audited)
£'000 (unaudited) £'000
£'000
ASSETS Notes
Non-current assets
Tangible fixed assets 10 9 13
Goodwill 1,966 1,966 1,966
Financial assets at fair value through profit and loss
Equity investments 8 35,068 36,098 32,964
Debt investments 8 6,462 4,967 4,625
43,506 43,040 39,568
Current assets
Trade receivables and other current assets
1,532 942 1,026
Advances - - 793
Cash and cash equivalents 2,737 5,850 4,603
4,269 6,792 6,422
Total assets 47,775 49,832 45,990
LIABILITIES
Non-current liabilities
Deferred taxation (138) (484) (211)
(138) (484) (211)
Current liabilities
Trade and other payables (351) (270) (241)
(351) (270) (241)
Total liabilities (489) (754) (452)
Net assets
47,286 49,078 45,538
EQUITY
Called up share capital 5,617 5,566 5,566
Share premium account 14,792 14,627 14,627
Reverse acquisition reserve (1,667) (1,667) (1,667)
Share based payment reserve 1,335 1,318 1,291
Retained earnings 27,209 29,234 25,721
Total equity
47,286 49,078 45,538
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six-months ended 31 December 2023
Share-
Share Reverse acquisition based Profit
Share premium reserve payment and loss
capital account reserve account Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1(st) July 2022 5,501 14,576 (1,667) 1,324 28,965 48,699
Issue of shares 65 51 - (18) - 98
Share-based payments
- - - 12 - 12
Profit/comprehensive income for the period
- - - - 269 269
At 31 December 2022 5,566 14,627 (1,667) 1,318 29,234 49,078
Share-based payments
- - - (27) - (27)
Profit/comprehensive income for the period
- - - - (3,513) (3,513)
At 30 June 2023 5,566 14,627 (1,667) 1,291 25,721 45,538
Issue of shares 51 165 - (78) - 138
Share-based payments
- - - 122 - 122
Profit/comprehensive income for the period
- - - - 1,488 1,488
At 31 December 2023 5,617 14,792 (1,667) 1,335 27,209 47,286
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 31 December 2023
Six months ended 31 December Six months ended 31 December Year ended 30 June
2023 (unaudited) 2022 (unaudited) 2023 (audited)
£'000 £'000 £'000
Cash flows from operating activities
Cash used in operations (993) (954) (3,248)
Taxation paid - (3) -
Net cash used in operating activities (993) (957) (3,248)
Cash flows from investing activities
Purchase of tangible fixed assets (2) (7) (16)
Purchase equity investments (68) (573) (691)
Disposal of equity investments 839 3,433 4,926
Purchase of debt investments (1,808) (525) (884)
Interest received 28 13 50
Net cash from/(used in) investing activities (1,011) 2,341 3,385
Cash flows from financing activities
Proceeds from issue of equity shares 138 98 98
Net cash generated from financing activities
138 98 98
Net (decrease)/increase in cash and cash equivalents
(1,866) 1,482 235
Cash and cash equivalents at beginning of period
4,603 4,368 4,368
Cash and cash equivalents at end of period
2,737 5,850 4,603
Cash used in operations
Profit/(loss)before tax 1,415 (469) (4,370)
Adjustments for:
Share-based payments 122 70 155
Depreciation 5 4 9
Interest received (28) (13) (50)
Unrealised (profit)/loss on revaluation of investments
(2,849) (400) 966
Realised (profit) on disposal of investments (54) (307) 786
Changes in working capital:
Trade and other receivables (507) 109 26
Advances 793 - (793)
Trade and other payables 110 52 23
(993) (954) (3,248)
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 13 March 2024.
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 2023 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 2023, which have
been prepared in accordance with UK adopted International Financial Reporting
Standards (IFRS).
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 2023 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 qualified on the basis that they were
unable to obtain sufficient appropriate audit evidence in respect of the
valuation of certain early stage equity investments valued at £1.2 million.
3. Going Concern
The accounts for the full year ended 30 June 2023 drew attention to the
existence of a material uncertainty that cast significant doubt on the Group's
ability to continue as a going concern. The material uncertainty was the
dependence on the timing and amount of exit proceeds from the Group's sole
quoted investment in Exscientia valued at £2.3 million at 30 June 2023. Since
30 June 2023 the Group has sold its remaining shares in Exscientia for over
£2.5 million and the Group has sufficient cash to cover its operating
expenditure for the next 12 months. However, to fund any unplanned investments
and to cover operating expenditure beyond the next 12 months the Group needs
to realise cash through further portfolio exits, the timing and amount of
which is subject to material uncertainty.
4. 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 2023 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.
5. 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.
6. Taxation
The taxation income for the six months to 31 December 2023 of £73,000 (31
December 2022: income of £738,000) represents movements in deferred tax on
unrealised fair value gains, available tax losses and share-based payments.
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.
7. Earnings per share
The calculation of the basic earnings per share for the six months ended 31
December 2023 and 31 December 2022 and for the year ended 30 June 2023 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 2023 1,488 55,807,325 2.67
Six months ended 31 December 2022 269 55,108,403 0.49
Year ended 30 June 2023 (3,244) 55,409,606 (5.85)
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 2023 1,488 57,271,415 2.60
Six months ended 31 December 2022 269 57,319,284 0.47
Year ended 30 June 2023 (3,244) 57,542,781 (5.64)
8. 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 2022 29,580 10,132 39,712
Additions 573 - 573
Disposals (3,125) (3,125)
Fair value increases 2,505 2,505
Fair value decreases (24) (3,543) (3,567)
At 31(st) December 2022 32,634 3,464 36,098
Additions 172 - 172
Fair value increases
Disposals - (2,588) (2,588)
Fair value increases 315 1,421 1,736
Fair value decreases (2,454) - (2,454)
At 30(th) June 2023 30,667 2,297 32,964
Additions 68 - 68
Disposals - (784) (784)
Fair value increases 2,944 123 3,067
Fair value decreases (247) - (247)
At 31(st) December 2023 33,432 1,636 35,068
The valuation of the Group's investment in GraphEnergyTech increased by
£1,230,000 during the six months to 31 December 2023, 44 per cent of the net
fair value increase in unquoted equity investments. The valuation of the
Group's investment in Pulsiv at 31 December 2023 increased by £862,000 over
the six months to December 2023, 31 per cent of the net fair value increase in
equity investments. Pulsiv's valuation at 31 December 2023 was £10,365,000,
30 per cent of the Group's total equity investments and 22 per cent of its net
assets at 31 December 2023.
During the six months to 31 December 2023 the Group sold 168,559 American
Depositary Shares of Exscientia for net proceeds of £839,000 resulting in a
realised profit of £54,000. The Group's remaining investment in Exscientia,
324,991 American Depositary Shares, increased in value by £123,000 during the
six months to 31 December 2023. The valuation of the Group's investment in
Exscientia at 31 December 2023 was £1,636,000, 5 per cent of the Group's
total equity investments and 3 per cent of its net assets at 31 December 2023.
Debt investments comprise the following:
Unquoted Debt Instruments
£'000
At 1(st) July 2022 2,981
Additions 525
Fair value increases 1,507
Fair value decreases (46)
At 31(st) December 2022 4,967
Additions 359
Fair value increases
Conversion of debt (54)
Fair value decreases (647)
At 30(th) June 2023 4,625
Additions 1,808
Fair value increases 216
Fair value decreases (187)
At 31(st) December 2023 6,462
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 loan made during the six months to 31 December 2023 was
to CamGraPhIC (£1,457,000). £170,000 was loaned to Celerum and £150,000 to
The Vaccine Group. The most significant debt investments at 31 December 2023
were loans to CamGraPhIC (£4,252,000), Nandi Proteins (£911,000) and Elute
Intelligence (£483,000). The valuation of the Group's debt investments in
CamGraPhIC increased by £183,000 during the six months to 31 December 2023,
85 per cent of the fair value increases in unquoted debt instruments; the
valuation of the debt investment in Elute decreased by £139,000 in the same
period, 74 per cent of the fair value decreases in debt investments.
9. 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 20(th)
March 2024.
10. Equity holdings
All Group equity holdings in portfolio companies in the interim
management statement are as at 31 December 2023.
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