Admission to AIM

RNS Number : 3166A

Frontier IP Group plc

31 January 2011

 



FIPP

Frontier IP Group Plc

("Frontier IP" or "the Company")

Admission to AIM

·       Shares in Frontier IP, which specialises in the commercialisation of university intellectual property, today begin trading on AIM.

·       Frontier IP has raised £1.0 million (gross) by way of a placing of 2,000,000 New Ordinary Shares ("Placing") at 50 pence per share ("Placing Price").  The net proceeds will provide working capital to support new commercialisation relationships and complementary advisory roles and capital commitments to new funds to be launched in the foreseeable future.

·       Arbuthnot Securities Limited is acting as nominated adviser and broker to Frontier IP in relation to the Placing and Admission to AIM.

·       At the Placing Price, Frontier IP's market capitalisation will be approximately £3.5m.

·       The Board believes that the Placing and Admission to AIM should assist the Company in its continued development. Expected benefits include: enhanced brand and market recognition; increased liquidity; improved funding opportunities and greater flexibility in executing possible acquisitions and investment opportunities.

·       The Company already has two existing long term relationship agreements, with the University of Dundee and Robert Gordon University, Aberdeen.  Under the terms of these agreements, Frontier IP has preferential access to spin-out opportunities to generate equity and licensing revenue and has established a fledgling portfolio of equity. In addition, in 2009, the Company launched dedicated funds for each university relationship, in line with its strategy to generate revenues from long term venture funds.

·       It is the Board's intention to seek other university relationships throughout the UK and a number of discussions are already underway with other universities and research institutions.

·       The Board also believes that in addition to the acquisition of new relationships, there is also the opportunity for consolidation in the university IP commercialisation sector and it aims to participate in this process.

Commenting on the Placing and Admission, Neil Crabb, Executive Chairman of Frontier IP, said:

"We are very pleased to have completed the Placing and to have expanded our shareholder list to include a number of new institutional and other investors, including IP Group plc. We have enjoyed a strong start to the year and have ambitions to develop the significant growth opportunities we see for Frontier IP. The move up to AIM is a positive step forward in our plans for the business."

Capitalised terms used in this announcement shall have the same meaning as ascribed in the Admission Document.

For further information please contact:

Frontier IP Group Plc Neil Crabb, Executive Chairman	0131 220 9491
Arbuthnot Securities Limited Tom Griffiths Ed Groome	020 7012 2000
Biddicks Katie Tzouliadis Sophie Lane	020 3178 6378

Further Information on Frontier IP

Placing Statistics

Placing Price	50p
Number of Ordinary Shares in issue at the date of this document	4,972,165
Number of New Ordinary Shares being placed on behalf of the Company	2,000,000
Gross proceeds of the Placing	£1.0 million
Percentage of Enlarged Share Capital being placed pursuant to the Placing	28.7 per cent.
Number of Ordinary Shares in issue immediately following Admission	6,972,165
Market capitalisation of the Company at the Placing Price immediately following the Placing and Admission	£3.5 million
AIM symbol	FIPP.L
ISIN code	GB00B63PS212

Introduction and Background

Frontier IP Limited was incorporated in Scotland on 10 January 2008, as a wholly-owned subsidiary of Sigma, for the purpose of furthering and consolidating the activities of Sigma in the commercialisation of intellectual property developed by universities. Sigma, via funds managed by its subsidiary, Sigma Technology Management Limited, had a history of investing in university spin-out projects. On 13 May 2009, the Company was admitted to trading on PLUS by way of a reverse takeover of Frontier IP Limited by ARH Leisure Investments Plc, raising approximately £0.63 million, following which Sigma held approximately 77.4 per cent. of the Existing Share Capital.

The focus and purpose of Frontier IP is to provide consultancy services to assist universities and research organisations in the commercialisation of intellectual property arising from their research. Frontier IP combines:

Ÿ    sector expertise with a blend of relevant skills;

Ÿ    two existing university relationship agreements, namely with the University of Dundee and Robert Gordon University, Aberdeen, with more relationships in the pipeline;

Ÿ     equity and licensing revenue from these existing relationships; and

Ÿ     a fledgling equity portfolio.

The Frontier IP team has substantial experience of involvement in the IP commercialisation sector and in spin-out companies. Neil Crabb, co-founder and former Chief Investment Officer of Sigma, is Executive Chairman of Frontier IP and has over 14 years' investment experience in university spin-outs. Jackie McKay, Partnership Director, has 10 years' experience in the venture capital industry, in particular in the university IP sector. Marilyn Cole, Finance Director, has 13 years' experience as a finance director of publicly quoted companies, including as Finance Director and Company Secretary of Sigma. David Cairns, who joined the Company in September 2010 as Executive Director, has 25 years' experience in developing technology, including 15 years at Optos plc, from concept through to commercialisation.

Frontier IP seeks to generate value through working with universities and research institutions in the commercialisation of IP by:

Ÿ     establishing long-term relationship agreements;

Ÿ     sharing in the successful commercialisation of IP; and

Ÿ     establishing related long-term venture funds.

The Company also earns fees from spin-out company retainers and advisory work.

Existing Relationships

Frontier IP establishes relationships with individual universities to assist with spin-out and licensing activities and to help maximise the commercial value of technologies emerging from their research programmes. Frontier IP has already established a strong presence with long-term contracts with two Scottish universities, which have preferential access to spin-out opportunities.

The University of Dundee

Frontier IP has a 10-year relationship with University of Dundee covering all disciplines under which, in return for commercialisation support, it is entitled to receive equity in each spin-out company. The University of Dundee is one of the UK's leading universities and is internationally recognised for its expertise across a range of disciplines. It has a reputation for excellence in research with 54 per cent. of its research achieving 'world leading' or 'internationally excellent' standards in the most recent ResearchAssessment Exercise. For the 2009-2010 academic year the total research award value was approximately £93 million. The University of Dundee has a focus on medicine, life sciences and engineering, with the College of Life Sciences ranked, in the 2008 Research Assessment Exercise, as one of the UK's top five universities for Biological Sciences, ahead of Cambridge University and Imperial College. According to the Times Higher Education 2010 survey (based on Thomson Reuters Essential Science Indicators), it is also ranked top in the world for the impact of its research in pharmacology. It has good links with industry and key industry funders and collaborators include Wellcome Trust, Wyeth Pharmaceutical, AstraZeneca, Cancer Research UK and GlaxoSmithKline.

In September 2009, Frontier IP launched the University of Dundee Venture Fund, a 10-year fund, which also secured partnership status with Scottish Enterprise's Scottish Co-investment Fund. The Dundee Fund launched with committed funds at its first closing of £0.75 million. Frontier IP and the University of Dundee have agreed to subscribe for commitments in the Dundee Fund, to be drawn down in tranches over the life of the Dundee Fund at the discretion of the manager of the Dundee Fund. The Dundee Fund remains open to new investors for a further two years from launch.

The relationship with the University of Dundee, which commenced in November 2006, is for a period of 10 years and may be extended by the mutual agreement of Frontier IP Limited, a wholly owned subsidiary of Frontier IP, and the University of Dundee.

Robert Gordon University, Aberdeen

Frontier IP has a 25-year relationship with Robert Gordon University covering all disciplines under which, in return for commercialisation support, it is entitled to receive equity in each spin-out company. Frontier IP is also entitled to a percentage of income from licensing received by the RGU.

RGU has three cross-disciplinary research institutes with a focus on applied research: the Institute for Health & Welfare Research; the Institute for Innovation, Design & Sustainability Research; and the Institute for Management, Governance and Society Research. In the 2008 Research Assessment Exercise, 70 per cent. of its research was classed as of 'international quality', which contributed to a 99 per cent. increase in the research award for 2009-10 on the previous year. It also has close links to Aberdeen's oil and gas industry.

In July 2009, Frontier IP launched the RGU Ventures Investment Fund, a 10-year fund, which also secured partnership status with Scottish Enterprise's Scottish Co-investment Fund. The RGU Fund launched with committed funds at its first closing of £1.1 million. Frontier IP and RGU have agreed to subscribe for commitments in the RGU Fund, to be drawn down in tranches over the life of the RGU Fund at the discretion of the manager of the RGU Fund. The RGU Fund remains open to new investors for a further two years from launch.

The relationship with RGU, which commenced in August 2006, is for a period of 25 years and may be terminated by either Frontier IP Limited, a wholly owned subsidiary of Frontier IP, or RGU by giving not less than one year's prior written notice to the other, which notice may only be given after the fifth anniversary of the commencement of the relationship.

Strategy

The Frontier IP business model is low cost with potential for high quality earnings and capital appreciation. It is the Board's intention to seek other university relationships throughout the UK and a number of discussions are already underway with other universities and research institutions. The Board also believes that in addition to the acquisition of new relationships, there is also the opportunity for consolidation in the university IP commercialisation sector and it aims to participate in this process.

Relationships

The strategy is to grow the portfolio of commercialisation relationship agreements, participate in sector consolidation and generate value and revenue by:

Ÿ   holding equity in spin-out companies;

Ÿ generating income from licensing;

Ÿ retainers which will accrue to the Company; and

Ÿ bespoke advisory work in the sector.

The model is to forge close commercialisation relationships with universities and research institutions whereby, as a result of the assistance provided to these organisations in the commercialisation of the IP produced from their research activities, Frontier IP seeks to share in the founder equity and licence revenue that these organisations receive from the commercialisation of this research.

Venture Funds

In addition to the founder equity for services and the associated fee income created through advisory fees and retainers, Frontier IP intends, where appropriate, to establish dedicated funds for each of the relationships in order to help to accelerate the commercialisation process and provide a source of revenue for Frontier IP. It also intends to make capital commitments to these funds. The model is that such funds potentially provide recurring fund management income and rights to investment gains and carried interest.

Frontier IP Limited, as the operating subsidiary of Frontier IP, intends shortly to seek authorisation from the FSA to enable it to be appointed manager of these dedicated funds. Currently, the management of the Dundee Fund and the RGU Fund is sub-contracted to Sigma Technology Management Limited as part of the Sigma Services Agreement, under which Frontier IP receives the benefit of the management fee. Under the limited partnership agreements for the Funds, Frontier IP is entitled to a share of investment gains and carried interest.

The Dundee Fund and the RGU Fund have partnership status with the Scottish Enterprise - Scottish Co-investment Fund and Frontier IP plans to seek partnership status for new funds established in Scotland. This scheme potentially provides for matched funding of up to 100 per cent. of any partner's investment in qualifying Scottish companies.

Summary Financial Information

The selected financial information on Frontier IP set out below has been extracted without material adjustment from the financial information set out in Part IV of the Admission Document.

		2010	2009
		£'000	£'000
Revenue		94	53
Operating loss		(328)	(120)
Loss before taxation		(326)	(120)
Cash and cash equivalents		330	710

Current trading and future prospects

The Company is in discussions with a number of universities regarding potential new relationships and has developed a pipeline of opportunities to further its aim of securing additional long-term partnerships, including having signed one Memorandum of Understanding and one non-binding Heads of Agreement.  These pipeline relationships are potentially all long-term and include a share of spin-out equity and licensing revenue.

The Company intends, where appropriate, to establish dedicated funds for its new partner universities and also to develop sector-specific funds.  The Company is also seeking additional limited partners for its existing Funds.

The Company announced on 31 December 2010 that it had made encouraging progress in the first half of its financial year and that the Board expected the Group to deliver total revenues for the full year significantly ahead of market expectations, in particular driven by an IFRS uplift in the value of its portfolio.

Portfolio

Frontier IP has interests in the following spin-out companies:

Advanced Underwater Surveys Limited ("ADUS")

ADUS was spun out from the University of Dundee and the University of St Andrews.  It delivers high resolution sonar imaging for the inspection of underwater assets.  ADUS sonargrams offer photographic like detail of vessels, underwater structures and wrecks. The results provide a tool for those engaged in the management, development and research of the marine environment.  The company has secured commercial customers.

www.adus-uk.com

The Company currently holds approximately 5 per cent. of the issued share capital of ADUS.

Aridhia Informatics Limited ("Aridhia")

Aridhia is a joint venture between the University of Dundee, Sumerian Europe Limited and Scottish Health Equities Limited.  Aridhia develops an intelligent data analysis service for the medical and life sciences sector which represents key performance indicators for both management and clinical purposes.

www.aridhia.com

The Company currently holds approximately 1.1 per cent. of the issued share capital of Aridhia.

B1 Medical Limited ("B1 Medical")

B1 Medical is an orthopaedic product development and commercialisation company established to exploit an exclusive 10 year pipeline of IP from NHS Grampian, the University of Aberdeen and RGU. B1 Medical's commercial model is a combination of an OEM model, to develop and subsequently sell products through the channels of a larger orthopaedic company and to on-license "close to manufacture" product lines to major orthopaedics companies. B1 Medical is characterised by its expertise and speed to market in its chosen orthopaedic sectors, particularly trauma and elective surgery where it has a growing network of IP relationships.

www.b1medical.com

The Company receives an annual retainer from B1 Medical.

Counterweight Limited ("Counterweight")

The Counterweight Programme is an evidence and theory based intervention programme for obesity management, fully evaluated in Primary Care in the UK.  Counterweight is a flexible and sustainable model which can be adapted to deliver tailored programmes in general practice, pharmacies and wider community- based settings.

www.counterweight.org

The Company currently holds approximately 10 per cent. of the issued share capital of Counterweight.

Living in the Moment Limited ("LIM")

LIM has been set up by the University of Dundee and the University of St Andrews to develop tools to support people suffering from dementia and their carers.

www.computing.dundee.ac.uk/projects/lim/

The Company currently holds approximately 4.55 per cent. of the issued share capital of LIM.

Nandi Proteins Limited ("Nandi")

Nandi is a spin-out from Heriot-Watt University and is commercialising technology which improves the functional properties of proteins used in the food sector.

www.nandiproteins.com

The Company currently holds approximately 3 per cent. of the issued share capital of Nandi and also receives an annual retainer.

Rapid Quality Systems Limited ("RQS")

Spun out from the University of Dundee, RQS is a software development company which has launched its first software product, Code Rocket, which is a software tool which simplifies and supports the design of software systems.

www.getcoderocket.com

The Company currently holds approximately 5 per cent. of the issued share capital of RQS.

Directors and senior management

The Frontier IP management team has substantial experience in the IP commercialisation sector and in spin-out companies. In addition, Frontier IP plans, in due course, to recruit additional members to the management team to support new commercialisation relationships and advisory activities.

Board of Directors

Neil Crabb, Executive Chairman, (Aged 43)

Neil Crabb is the co-founder and former Chief Investment Officer of Sigma. Neil has considerable investment management experience, particularly in technology and smaller companies. Prior to co-founding Sigma, Neil spent two years, from 1995 to 1996, with Duncan Lawrie Limited where he was an investment manager with responsibility for a range of managed portfolios. These portfolios invested primarily in UK smaller companies. Whilst at Duncan Lawrie, Neil was responsible for investment activity in unquoted technology companies. From 1990 to 1994, he worked for the Equitable Life Assurance Society, latterly as investment analyst with investment authority for approximately one-third of the Society's UK smaller company holdings, as well as larger stocks in the electronics sector. Neil is an approved person under FSMA.

Jacqueline McKay, Partnership Director, (Aged 51)

Jackie has substantial experience in the private equity industry having been with Sigma for over 10 years, latterly as Corporate Development Director. She has experience of the university IP sector in particular, including structuring and executing university relationship agreements and venture funds. She has been working with Frontier IP since its inception to help develop new and existing university relationships for the Company. Prior to joining Sigma, Jackie spent 12 years with the Bank of Scotland. Jackie is responsible for structuring and executing new relationship agreements and funds and for the operation of existing university relationships.

Marilyn Cole, FCA, Finance Director and Company Secretary (Age 56)

Marilyn qualified as a chartered accountant with Deloitte Haskins & Sells. She moved to Pannell Kerr Forster in 1985 and spent eight years in its corporate finance department assisting clients on a variety of transactions, including flotations, acquisitions, disposals and fundraisings. In 1993 Marilyn set up her own business advisory practice working with local businesses and also undertaking work for the DTI and The Competition Commission. During this period, she undertook consultancy work for Northamber plc which she subsequently joined as finance director in 1997. Marilyn joined Sigma in January 2000 and was appointed Finance Director in April 2000. Marilyn is an approved person under FSMA.

David Cairns, Executive Director, (Aged 46)

David has been developing technology from concept through to commercialisation for 25 years. He spent 15 years with Optos plc, the retinal imaging company, where he was an integral part of the business growth from commercial launch in 2000 to achievement of annual sales exceeding $100 million in 2008. David served on the Optos plc board until 2005, prior to its flotation on the London Stock Exchange. Latterly, as Chief Technology Officer, he played a key role in evolving the company's product IP, which included liaising with universities. David is responsible for developing and managing Frontier IP's relationship equity and licensing portfolio.

Timothy Cockroft, Non-Executive Director, (Aged 43)

Tim is Chief Executive of Singer Capital Markets Limited, the independent stockbroking business. He was previously Chief Executive Officer of KBC Peel Hunt Limited, having been a founding member of Peel Hunt Limited in 1989. Tim is an approved person under FSMA.

Graham Barnet, Non-Executive Director, (Aged 47)

Graham Barnet is Chief Executive Officer and co-founded Sigma with Neil Crabb in 1996. Graham is a qualified lawyer, having specialised whilst in private practice in corporate finance and corporate law. Graham worked at Shepherd and Wedderburn, Noble Grossart and Edinburgh Financial Trust prior to forming his own specialist investment company, Merchant Investments Limited, in 1994. Graham is an approved person under FSMA.

Senior Management

Michael Brennand, Regional Director North West, (Aged 54)

Michael has had an extensive career in food and related industries and is currently Executive Chairman of Nandi Proteins Ltd, a portfolio company of Frontier IP. On Admission, Michael is being appointed to assist both with regional development and a potential food fund dedicated to IP commercialisation in the food and drink sector.

In addition, Frontier IP plans, in due course, to recruit additional members to the team to support new commercialisation relationships and advisory activities. Frontier IP intends that these additional team members will provide support for the transaction element of its advisory activities and for the technical evaluation of its projects.

ENDS

 

END

 

 

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