Final Results

RNS Number : 3960Y

Frontier IP Group plc

01 December 2014

 



AIM: FIPP

Frontier IP Group plc

("Frontier IP", the "Group" or "the Company")

Audited final results for the year ended 30 June 2014

Frontier IP Group Plc is focused on the commercialisation of intellectual property

Key Points

·      Two new portfolio companies added

·      Revenue from services increased to £178,000 (2013: £174,000)

·      Total revenue increased to £786,000 (2013: £117,000) - reflecting an unrealised profit on the revaluation of investments of £608,000 (2013: unrealised loss of £57,000)

·      Profit before tax of £27,000 (2013: loss of £368,000)

·      Profit per share of 0.13p (2013: loss of 3.51p)

·      Cash balances at 30 June 2014 of £587,000  (2013: £155,000)

·      Net assets per share as at 30 June 2014 of 18.1p (2013: 21.1p)

·      Two placings during the year raising £1,142,000 (gross)

·      Post year-end

-      portfolio company Nandi Proteins Limited secured funding

-      first spin-out from University of Cambridge, bringing the total number of portfolio companies to 16

·      Board remains encouraged about prospects for further progress with portfolio companies and partnerships

Andrew Richmond, Chairman of Frontier IP, said,

"Frontier has made encouraging progress over the year and we are also seeing positive developments in a number of our existing portfolio companies.  We have added new portfolio companies and intend to take more significant stakes as we grow our portfolio and extend our sources of deal flow.

Looking ahead, we have strengthened management team, bringing on board additional expertise, and expect to see further progress across our activities as we continue to develop the business."

Enquiries

Frontier IP Group Plc		T: 0131 240 1251
Neil Crabb, Chief Executive
Company website: www.frontierip.co.uk
Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker)		T: 020 7894 7000
Mark Percy / Catherine Leftley, Corporate Finance
David Banks / Paul Jewell, Corporate Broking
Peterhouse Corporate Finance Limited (Joint Broker)		T: 020 7469 0935
Jon Levinson / Lucy Williams
KTZ Communications		T: 020 3178 6378
Katie Tzouliadis / Deborah Walter

Notes to Editor:

Frontier IP Group plc ("Frontier IP") specialises in the commercialisation of Intellectual Property. It establishes partnerships with individual universities and research institutions to assist with their spin-out and licensing activities and helps to maximise the commercial value of technologies emerging from their research programmes. www.frontierip.co.uk.

Chairman's Statement

Introduction

Frontier IP's core strategy is to generate value from its university partnerships by providing best practice advisory services, developing a portfolio of companies capable of commercial success and providing access to capital for its portfolio companies.  I am pleased to report that the Group has made progress in each of these areas over the year.

The increase in our personnel resource and new additions to our board during the year have secured a platform for growth which is already enabling us to extend the range of services we offer.  Our expertise in life sciences and energy has also been enhanced by these appointments.

In line with our move towards increasing the size of our equity holdings in portfolio companies, we added two new spin-out companies to our portfolio, including PulsiV Solar Limited, a spin-out from Plymouth University, in which we received a 21% stake.  We have also seen encouraging developments in a number of our existing portfolio companies.

After the period end, we were also pleased to announce our first spin-out company with the University of Cambridge and specifically the Department of Chemical Engineering and Biotechnology.  The new portfolio company, Cambridge Simulations Solutions Limited, which has developed a method to simulate and control complex chemical processes, takes the total number of portfolio companies to 16.

Our work in providing access to capital for portfolio companies has borne fruit with, post period-end, the completion of a fundraising in Nandi Proteins Limited indicating a significant increase in its value which is reflected in increased total revenue for the year.  We continue to pursue our sector-specific fund activities and are exploring a number of opportunities.

Results

For the year to 30 June 2014, revenue from services increased marginally to £178,000 (2013: £174,000).  However total revenue increased as a result of booking an unrealised profit of £608,000 (2013: unrealised loss of £57,000) on the revaluation of investments, principally due to the adjustment to the holding value of one portfolio company, Nandi Proteins Limited, following a significant fundraising. Total revenue showed an increase to £786,000 (2013: £117,000).

The profit before tax position was £27,000 (2013: loss of £368,000) and excluding the impact of unrealised profit or losses on the revaluation of investments, the adjusted loss before tax increased by 87% to £581,000 (2013: £311,000).  The profit per share was 0.13p (2013: loss of 3.51p).

Cash balances stood at £587,000 at 30 June 2014 (2013: £155,000), principally reflecting the share placings completed in August and December 2013 as previously reported.  Net assets per share as at 30 June 2014 were 18.1p (2013: 21.1p).

The Board

In the year, we were pleased to welcome Michael Bourne and Dr. Campbell Wilson to our board as Non-executive Directors.  Mike brings investment management expertise in the technology, life sciences and clean technology, whilst Campbell has 35 years' experience in the global pharmaceutical industry with experience in both scientific and business development roles at a senior level. 

In addition, the Group welcomed a new executive board member, James Fish, replacing Marilyn Cole as Finance Director and Company Secretary. I would like extend the board's thanks to Marilyn for her significant contribution to Frontier IP during her time as Finance Director.  Jim, a chartered accountant, has over 25 years' experience in senior financial positions and a wide range of commercial experience including venture capital funded small/medium-sized enterprises and start-up companies.

Outlook

As we look ahead, we expect to see further progress across our activities over the new financial year.  We are working on a number of new spin-out opportunities and intend to continue to grow our core portfolio by taking more significant stakes and extending our sources of deal flow.  In line with our strategy of broadening the range of capital available to portfolio companies, we expect to see further portfolio fundraisings during the current financial year.

Andrew Richmond

Chairman 

28 November 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2014

	2014		2013
	£'000		£'000
Revenue
Revenue from services Other operating income Unrealised profit/(loss) on the revaluation of investments	178 608		174 (57)
Total revenue	786		117
Administrative expenses	(769)		(604)
Release of bad debt provision	-		119
Dividend income on financial assets at fair value through profit or loss	10		-
Profit/(loss) from operations and before tax	27		(368)
Taxation	-		-
Profit/(loss) and total comprehensive income/expense attributable to
the equity holders of the parent	27		(368)
Profit/(loss) per share attributable to the equity holders of the Company:
Basic and diluted earnings / (loss) per share	0.13p		(3.51p)

All of the Group's activities are classed as continuing.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2014

	2014		2013
	£'000		£'000
Assets
Non-current assets
Tangible fixed assets	2		-
Goodwill	1,966		1,966
Financial assets at fair value through profit and loss	1,325		494
	3,293		2,460
Current assets
Trade receivables and other current assets	299		222
Cash and cash equivalents	587		155
	886		377
Total assets	4,179		2,837
Liabilities
Current liabilities
Trade and other payables	(110)		(86)
	(110)		(86)
Net assets	4,069		2,751
Equity
Called up share capital	2,253		1,305
Share premium account	4,794		4,457
Reverse acquisition reserve	(1,667)		(1,667)
Share based payment reserve	125		119
Retained earnings	(1,436)		(1,463)
Total equity	4,069		2,751

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2014

	Share capital	Share premium account	Reverse acquisition reserve	Share- based payment reserve	Retained earnings	Total equity attributable to equity holders of the Company
	£'000	£'000	£'000	£'000	£'000	£'000
At 1 July 2012	697	4,457	(1,667)	115	(1,095)	2,507
Issue of shares	608	-	-	-	-	608
Share-based payments	-	-	-	4	-	4
Loss/total comprehensive expense for the year	-	-	-	-	(368)	(368)
At 30 June 2013	1,305	4,457	(1,667)	119	(1,463)	2,751
Issue of shares	948	337	-	-	-	1,285
Share-based payments	-	-	-	6	-	6
Profit/total comprehensive income for the year	-	-	-	-	27	27
At 30 June 2014	2,253	4,794	(1,667)	125	(1,436)	4,069

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2014

		2014	2013
		£'000	£'000
Cash flows from operating activities
Cash used in operations		(617)	(434)
Taxation paid		-	-
Net cash used in operating activities		(617)	(434)
Cash flows from investing activities
Purchase of tangible fixed assets		(3)	-
Purchase of financial assets at fair value through profit and loss		(26)	(19)
Net cash used in investing activities		(29)	(19)
Cash flows from financing activities
Proceeds from issue of equity shares		1,142	608
Costs of share issue		(64)	(44)
Net cash generated from financing activities		1,078	564
Net increase in cash and cash equivalents		432	111
Cash and cash equivalents at beginning of year		155	44
Cash and cash equivalents at end of year		587	155

Cash used in operations

Loss before tax	27	(368)
Adjustments for:
Share-based payments              Depreciation              Fair value (gain)/loss on financial assets through profit and loss              Cost of share issue Changes in working capital:	6 1 (608) 26	4 - 57 44
Trade and other receivables              Trade and other payables	(93) 24	(142) (29)
Cash flows from operating activities	(617)	(434)

NOTES

1.     General information

This preliminary announcement was approved for issue by a duly appointed and authorised committee of the Board of Directors on 28 November 2014.

2.     Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the year ended 30 June 2014 or 30 June 2013.  The report of the auditor on the statutory financial statements for the year ended 30 June 2014 was not qualified, but drew attention by way of emphasis to the uncertainty regarding the Group's ability to generate sufficient working capital to support the ongoing requirements of the Group and the preparation of the financial statements on a going concern basis.

The report of the auditor on the statutory financial statements for the year ended 30 June 2013 was not qualified and did not include references to any matters to which the auditor drew attention by way of emphasis without modifying their report. The report of the auditor on the statutory financial statements for each of the years ended 30 June 2014 and 30 June 2013 did not contain statements under section 498(2) or (3) of the Companies Act 2006. The statutory financial statements for the year ended 30 June 2013 have been delivered to the Registrar of Companies.  The financial statements for the year ended 30 June 2014 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

Going Concern

It is expected that the existing university partnerships will continue to deliver a growing portfolio of spin-out companies that in turn will make use of the Group's services in return for cash fees, while over the medium term an increasing contribution is expected from sharing in licence income and from fund management activities.  However, based on forecast income and expenditure for the next 12 months, the Group is not yet in a position where cash income will be sufficient to cover the Group's expenditure. Consequently, the Group will require to raise additional capital in order to continue in operational existence for at least the next 12 months. The Directors intend to seek authority to allot securities at the forthcoming Annual General Meeting in December 2014 with a view to conducting a placing in early 2015. The Directors have concluded that the requirement for additional capital represents a material uncertainty that casts significant doubt upon the Group's ability to continue as a going concern and that, therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Nevertheless, following discussions with the Group's Nominated Advisor and Joint Broker about the potential investor demand and considering that the previous two fundraisings in 2013 were oversubscribed, the Directors have a reasonable expectation of successfully raising sufficient additional capital to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group's financial statements.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS.

3.     Segmental information

The chief operating decision-maker has been identified as the Group board of directors.  The board reviews the Group's internal reporting in order to assess performance and allocate resources. Currently the Group has one operating activity, the commercialisation of University IP.  All of the Group's activities are carried out in the UK.

4.     Taxation

There is no charge to taxation for the year ended 30 June 2014 (2013: Nil) due to the Group making a taxable loss.

The Group's deferred tax assets, other than those relating to short term timing differences, are not recognised in accordance with Group policy.

5.     Earnings per share

(a)   Basic

Basic earnings per share is calculated by dividing the profit/(losses) attributable to the shareholders of Frontier IP Group Plc by the weighted average number of shares in issue during the year.

	Profit/(loss) attributable to shareholders £'000	Weighted average number of shares	Basic earnings/(loss) per share amount in pence
Year ended 30 June 2014	27	20,091,931	0.13
Year ended 30 June 2013	(368)	10,470,247	(3.51)

(b)   Diluted

Diluted earnings per share is calculated by adjusting the weighted number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of dilutive potential ordinary shares: share options. A calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market value share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.

	Profit/(loss) attributable to shareholders £'000	Weighted average number of shares adjusted for share options	Basic earnings/(loss) per share amount in pence
Year ended 30 June 2014	27	20,376,926	0.13
Year ended 30 June 2013	(368)	10,470,247	(3.51)

6.     Availability of statutory financial statements

Copies of the full statutory financial statements will be available from the Company's offices at 93 George Street, Edinburgh EH2 3ES no later than 5 December 2014 and are available on its website at www.frontierip.co.uk 

 

END

 

 

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