Preliminary Results

RNS Number : 7864O

Frontier IP Group plc

23 September 2011

 



FIPP

 

Frontier IP Group Plc

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

Preliminary Results for the year ended 30 June 2011

Frontier IP Group plc is focused on the commercialisation of university IP

Key Points

·     Encouraging progress over the year

-     admission to AIM and placing to raise £1.0m (gross) completed, January 2011

-     third university partnership secured with Plymouth University, May 2011

-     new equity stake in spinout company from existing university partner

·     Total revenue from services of £307,000 (2010: £94,000)

·     Loss before tax of £269,000 (2010: loss of £326,000)

·     Loss per share of 3.86p (2010: loss of 6.55p)*

·     Net assets per share as at 30 June 2011 of 41.4p (2010: 48.1p)*

·     Cash balances as at 30 June 2011 of £582,000 (2010: £330,000)

·     Post year-end, two new equity stakes in spinout companies received from university partner

·     Group well positioned for continued development

* Loss per share and net assets per share calculated for 2010 as if share consolidation had happened then.

Neil Crabb, Executive Chairman of Frontier IP, said:

"Frontier IP achieved significant progress on several fronts over the year to 30 June 2011.  We moved from PLUS to AIM in January 2011, at the same time, raising £1.0 million (gross) and, in May, we secured our third long-term IP commercialisation partnership, with Plymouth University after a competitive tender process.

We added a new spinout company in the financial year and since the year-end, have received new stakes in two spinout companies and one of our portfolio companies, Counterweight Limited, achieved its first funding round.

There has been an encouraging upturn in activity since the start of the new financial year and the number of strong opportunities in the pipeline of spinouts gives us the confidence that we shall continue to build on the foundations already established.  We believe that Frontier IP is well placed to make further progress and the Board remains confident about the opportunities for growth in the new financial year and beyond."

Enquiries

Frontier IP Group plc	Neil Crabb, Chairman	T: 0131 220 9491
Biddicks	Katie Tzouliadis /Sophie McNulty	T: 020 3178 6378
Arbuthnot Securities Ltd	Tom Griffiths /Ed Groome	T: 020 7012 2000

Company website: www.frontierip.co.uk

Executive Chairman's Statement

Introduction

Frontier IP Group plc ("Frontier IP", "the Group" or "the Company") achieved significant progress on several fronts over the year to 30 June 2011.  We moved from PLUS to AIM in January 2011, at the same time raising £1.0 million (gross) in an associated placing and, in May, we reached an important milestone when we secured our third long-term IP commercialisation partnership with Plymouth University after a competitive tender process. 

In addition, our portfolio of companies, whilst not unaffected by the economic environment, added a new spinout company in the financial year.  Since the year-end, we have received new stakes in two spinout companies, therefore the Group now holds direct equity stakes in nine spinout companies, and one of our portfolio companies, Counterweight Limited, achieved its first funding round.

Results

Total revenue was £307,000, more than double last year's result (2010: £94,000). The increase partly reflected the uplift in value of the Group's portfolio holdings, where we saw an unrealised gain of £149,000 (2010: loss of £48,000). Revenue from services increased by 11% to £158,000 (2010: £142,000). After a profit of £69,000 in the first half, the second half of the year was affected by the write down of equity and fees relating to one of the Group's portfolio of companies, B1 Medical, which was placed in administration, and the loss before tax was therefore £269,000 (2010: loss of £326,000).  The loss per share was 3.86p (2010: on comparative basis, loss of 6.55p).

Cash balances stood at £582,000 at 30 June 2011 (2010: £330,000).  Net assets per share as at 30 June 2011 were 41.4p (2010: on a comparative basis, 48.1p).

Operational Review

The Group made very good progress over the year.

We took the decision to move from PLUS to AIM to help accelerate the Company's development and on 31 January 2011, the Company's shares were admitted to trading on AIM.  At the same time, we completed a placing to raise £1.0 million (gross).  This move has improved Frontier IP's brand and market recognition.  It also provides us with better access to funding and greater flexibility in executing possible acquisitions and investment opportunities.

In May 2011, we secured the Group's third long term IP commercialisation partnership, signing a 10-year agreement with Plymouth University, with a mutual option to extend for a further 10 years.  Under the terms of the agreement, Frontier IP will assist the university in the commercialisation of its IP across all faculties. In return for its advisory services, Frontier IP will receive a share of the income from all new licences and a percentage of the equity in each new spinout company. Plymouth University is Frontier IP's third university partner, in addition to University of Dundee and Robert Gordon University, Aberdeen.

Plymouth University is ranked as one of the top 50 research universities in the UK (Source: Research Fortnight) and 80 per cent. of its research has been judged "of international repute", according to the latest Research Assessment Exercise (published in 2008). In particular, Plymouth University has a world-class reputation for its research in marine sciences, medical sciences, computer science and informatics and environmental sciences. It also has a well established reputation for fostering innovation and has sought to build strong links between its research activities and industry. We are encouraged by the progress in the partnership to date and especially by the potential in its research base.

During the year, we increased our portfolio of companies, receiving an equity stake in Intelligent Flow Solutions Limited, a spinout company from Robert Gordon University, Aberdeen.  Intelligent Flow Solutions provides innovative Real Time Engineering and Software Solutions to ensure Integrated Flow Assurance Management in the oil and gas industry. It offers an integrated approach to long-term production maintenance and a reduction in non-productive time.

There have been encouraging developments amongst our existing portfolio companies, offsetting the disappointment of B1 Medical being placed into administration.  In particular, I am pleased to report that after the year end, Counterweight Limited completed its first funding round from investors, including the RGU Ventures Investment Fund, the Scottish Investment Bank's Co-Investment Fund and the management team.  Counterweight develops and sells a low-cost, clinician-led weight management programme which provides general practitioners and practice nurses with an evidence-based approach to weight loss management.

I am also pleased to announce today that we have received two new equity stakes in spinout companies from University of Dundee.  These are Glycobiochem Limited and Kinetic Discovery Limited.

Glycobiochem Limited is a biopharmaceutical company focused on the discovery and development of novel small molecules for research and treatment of human diseases. The company currently markets a software product called PRODRG, which is designed to generate three-dimensional models of chemicals for use in applications such as rational drug design. In addition, Glycobiochem will also market a range of unique innovative molecular and chemical tools developed specifically for research into carbohydrate processing enzymes, implicated in several diseases including cancer, Alzheimer's disease and diabetes. Glycobiochem is also developing a drug discovery programme in collaboration with the Daan van Aalten Laboratory at University of Dundee, which is focused on novel targets implicated in the development of Alzheimer's disease.

The second, Kinetic Discovery Limited, is a drug discovery services company, specialising in biosensor-based screening. Biosensor-based screening offers the customer the advantage of determining the kinetics of molecular interactions. The kinetics of drug-protein interactions are an important factor in understanding how molecular interactions translate into clinical efficacy. The company offers assay development, fragment screening and kinetic characterisation services using state-of the-art technology. A particular specialism is its expertise in developing biosensor assays for membrane protein, based on the founders' pioneering research in this area. The company has now established a global reputation in its field with customers based in the UK, USA and Europe, including many of the major pharmaceutical companies.

The pipeline of opportunities from university partners offers a number of good prospects and we will be focusing heavily on delivering revenues and value from these spinouts in the new financial year.

The Board and Management

We made a number of changes to the Board.  In September 2011, I assumed the role of Executive Chairman, having previously been Non-executive Chairman and at the same appointed two new executive directors while Alister Minty stepped down from the Board.  Jackie McKay was appointed to the Board as Partnership Director and David Cairns joined as Executive Director. In January 2011, we also appointed Michael Brennand as Regional Director North West.

Outlook

While the wider economic backdrop is challenging and there are pressures on budgets and the availability of capital both within the university and the financial sectors, which we remain cautious about, we are encouraged by the upturn in activity since the start of the new financial year.  In particular, the number of strong opportunities in the pipeline of spinouts gives us the confidence that we shall continue to build on the foundations already established. In addition, we believe that the Group is positioned to grow its net revenue by ensuring value is generated within its existing university partnerships and by selectively adding new relationships as appropriate.

In summary, we believe that Frontier IP should be well placed to make further progress and the Board remains confident about the opportunities for growth in the new financial year and beyond.

Neil Crabb

Chairman

22 September 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

For the year ended 30 June 2011

		Audited 2011		Audited 2010
	Notes	£'000		£'000
Revenue
Revenue from services Other operating income Unrealised profit / (loss) on the revaluation of investments		158 149		142 (48)
Total revenue		307		94
Administrative expenses (net)		(576)		(422)
Loss from operations		(269)		(328)
Finance income		-		2
Loss before tax		(269)		(326)
Taxation	5	-		-
Loss/total comprehensive expense for the year		(269)		(326)
Loss per share attributable to the equity holders of the Company:
Basic and diluted loss per share*	6	3.86p		6.55p

*The calculation of loss per share has been restated for 2010 as if the share consolidation had taken place to give comparable figures.

All of the Group's activities are classed as continuing and there were no comprehensive gains or losses in either year other than those included in the statement of comprehensive income.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2011

		Audited 2011		Audited 2010
		£'000		£'000
Assets
Non-current assets
Tangible fixed assets		1		-
Goodwill		1,966		1,966
Financial assets at fair value through profit and loss		400		179
		2,367		2,145
Current assets
Trade receivables Other current assets		21 28		13 13
Cash and cash equivalents		582		330
		631		356
Total assets		2,998		2,501
Liabilities
Current liabilities
Trade and other payables		(112)		(107)
		(112)		(107)
Net assets		2,886		2,394
Equity
Called up share capital		697		497
Share premium account		4,457		3,898
Reverse acquisition reserve Share based payment reserve		(1,667) 114		(1,667) 112
Retained earnings		(715)		(446)
Total equity		2,886		2,394

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2011

	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 2009	497	3,898	(1,667)	78	(120)	2,686
Loss/total comprehensive expense for the year Share-based payments	- -	- -	- -	- 34	(326) -	(326) 34
At 30 June 2010	497	3,898	(1,667)	112	(446)	2,394
Issue of shares	200	800	-	-	-	1,000
Costs of issue	-	(241)	-	-	-	(241)
Loss/total comprehensive expense for the year	-	-	-	-	(269)	(269)
Share-based payments	-	-	-	2	-	2
At 30 June 2011	697	4,457	(1,667)	114	(715)	2,886

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 30 June 2011

			Audited	Audited
			2011	2010
			£'000	£'000
Cash flows from operating activities
Cash used in operations			(434)	(194)
Taxation paid			-	-
Net cash used in operating activities			(434)	(194)
Cash flows from investing activities
Purchase of tangible fixed assets			(1)	-
Purchase of financial assets at fair value through profit and loss			(72)	(188)
Interest received			-	2
Net cash used in investing activities			(73)	(186)
Cash flows from financing activities
Proceeds from issue of equity shares			1,000	-
Cost of share issue			(241)	-
Net cash generated from financing activities			759	-
Net increase /(decrease) in cash and cash equivalents			252	(380)
Cash and cash equivalents at beginning of year			330	710
Cash and cash equivalents at end of year			582	330

Cash used in operations

Loss before tax	(269)	(326)
Adjustments for:
Share-based payments Adjustment for finance income Fair value (gain)/loss on financial assets through profit and loss Changes in working capital:	2 - (149)	34 (2) 48
Trade and other receivables Trade and other payables	(23) 5	(9) 61
Cash flows from operations	(434)	(194)

NOTES

1.   General information

The Company is a limited liability company incorporated in England and with its registered office at NorthWest Wing, Bush House, Aldwych, London WC2B 4EZ.  The Company's trading office is situated at 41 Charlotte Square, Edinburgh EH2 4HQ.

The Company is quoted on AIM after successful admission on 31 January 2011.  Prior to this the Company was quoted on the PLUS market.

This preliminary announcement was approved for issue by a duly appointed and authorised

committee of the Board of Directors on 22 September 2011.

2.   Basis of preparation

The financial information set out in this announcement does not constitute statutory financial statements for the year ended 30 June 2011 or 30 June 2010.  The report of the auditor on the statutory financial statements for each of the years ended 30 June 2011 and 30 June 2010 were (i) unqualified; (ii) did not include references to any matters to which the auditor drew attention by way of emphasis without qualifying their report; and (iii) 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 2010 have been delivered to the Registrar of Companies.  The statutory financial statements for the year ended 30 June 2011 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

3.   Accounting policies

      The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2010 as described in the Group's Annual Report for that year and as available on our website www.frontierip.co.uk.

Where the Group receives equity in companies when they are spun out by a university and there is no associated funding round, the Group applies an initial standard valuation amount as a means of estimating fair value.  Subsequently the fair value of these investments and the Group's other unlisted investments is established using IPEV Guidelines.

4.   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.

5.   Taxation

There is no charge to taxation for the year ended 30 June 2011 (2010: Nil) due to the Group making a taxable loss.

The tax asset relating to the Group losses is not recognised, in accordance with Group policy. The Group has cumulative tax losses of £150k available for use to offset future profits.

6.   Loss per share

The calculation of the basic loss per share for the year ended 30 June 2011 and 30 June 2010 is based on the losses attributable to the shareholders of Frontier IP Group Plc divided by the weighted average number of shares in issue during the year.

	Losses attributable to shareholders £'000	Weighted average number of shares	Basic loss per share amount in pence
Year ended 30 June 2011	269	6,972,165	3.86
Period ended 30 June 2010*	326	4,972,165	6.55

*The weighted average number of shares has been adjusted so comparable figures are as if share consolidation had happened in 2010.

No warrant or option is potentially dilutive as the average market price of the ordinary shares during the year was less than the exercise price of the warrants and options, hence basic and diluted loss per share are the same.

7.   Availability of statutory financial statements

Copies of the full statutory financial statements will be available in due course on the Company's website, www.frontierip.co.uk, and at the Company's offices at 41 Charlotte Square, Edinburgh EH2 4HQ.

 

END

 

 

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