TIDMFIPP
RNS Number : 7792R
Frontier IP Group plc
31 October 2023
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations
2019/310 ("MAR"). With the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
31 October 2023
Frontier IP Group Plc
("Frontier IP" or the "Group")
Final results for the year ended 30 June 2023
Financial highlights
-- Net assets per share as at 30 June 2023 decreased 8% to 81.8p (30 June 2022: 88.5p)
-- Basic loss per share of 5.85p (2022: earnings per share of 18.60p)
-- Part-disposal of holding in Exscientia generated cash of
GBP4,926,000 in the period under review (2022: GBP6,525,000)
realising a loss of GBP786,000 (2022: profit of GBP2,867,000)
-- Unrealised loss on the revaluation of investments of
GBP966,000 (2022: unrealised gain of GBP10,908,000)
-- Fair value of our equity portfolio decreased by 17% to
GBP32,964,000 (2022: GBP39,712,000) following disposals of
GBP5,713,000 (2022: GBP3,659,000) and additions of GBP745,000
(2022: GBP1,378,000)
-- Loss before tax of GBP4,370,000 (2022: profit before tax GBP10,879,000)
-- Cash balances at 30 June 2023 of GBP4,603,000 (2022: GBP4,368,000)
Corporate highlights
-- Generated cash proceeds of GBP4.93 million from selling
shares in portfolio company Exscientia during the year. Following
the Exscientia share sales, Frontier IP is interested in 493,550
Advanced Depositary Shares in Exscientia representing 0.4% of
Exscientia's issued share capital. In total the Group has raised
net proceeds of GBP11.45 million through selling Exscientia shares
since January 2022. During the period a total of GBP2.4 million was
invested in the portfolio by Frontier IP off its own balance sheet
through debt and equity investments and through advances of which
GBP1.08 million was invested into CamGraPhIC.
-- Appointed Nigel Grierson and Dr David Holbrook as independent
Non-Executive Directors and Professor Dame Julia King, Baroness
Brown of Cambridge DBE FREng FRS became a Senior Independent
Director in March 2023. All are members of the audit, remuneration
and nomination committees. Campbell Wilson stepped down as a
Non-Executive Director in April 2023, having served nine years on
the board of directors.
-- Expanded our portfolio with the incorporation of two new
portfolio companies during the year: Enfold Health and
GraphEnergyTech. After the year end, the Group took an equity stake
in early-stage company Deakin Bio-Hybrid Materials.
-- Post period end the Group announced that Chairman Andrew
Richmond would not be offering himself for re-election at the
coming Annual General Meeting, having served for over eleven years
as an independent Non-Executive Director, the majority of which
time was as Chairman. Baroness Brown will become Group Chair
following the AGM in December.
Portfolio highlights
-- The portfolio continues to mature. Several companies are
generating revenues having achieved commercial traction. Others
have made significant industrial and technical progress and are
either at or reaching their inflection points. Chief Executive
Officers were appointed at two companies during the year and one
post-year end as we strengthened management teams. Two new
portfolio companies were incorporated, and a further one joined the
portfolio after the end of the year. Despite difficult market
conditions, several portfolio companies raised funds.
Highlights included:
o Alusid launched its first range of mass-produced wall tiles
made from sustainable materials with Topps Tiles, the retail arm of
Topps Tiles plc the UK's no.1 tile specialist. The company is now
developing its first range of floor tiles following a collaboration
with Imerys, a world leader in speciality minerals
o CamGraPhIC raised GBP1.26 million to develop and scale up its
graphene-based photonics and announced that Sir Michael Rake, the
former chair of BT Group, is to join the board of directors. Post
year end, the company secured a loan facility for up to a further
GBP1.5 million
o Pulsiv launched Pulsiv Osmium, a technology to improve the
energy efficiency of nearly all mains-powered applications,
including power supplies and battery chargers. The company raised
GBP1.5 million, has built a global distribution network, sent
reference designs to potential customers and is in talks with major
manufacturers
o Celerum appointed David Gladding as CEO during the year and
successfully renewed its contract with Colin Lawson Transport, the
first customer for its Truck Logistics System software. Post year
end, the company added two more customers including Grampian
Continental, its first operating internationally
o Steve Cable was appointed CEO of Elute. He has a history of
growing software companies as part of his 25 years' experience. The
company is testing a beta version of an IP analysis product for
investment professionals
o Cambridge Raman Imaging made first sales of its graphene-based
ultra-fast lasers for use in Raman imaging microscopes. In tests,
its digital imaging technology helped histopathologists detect
tumours ahead of traditional methods
o The Vaccine Group successfully completed two government-backed
projects to develop candidates for a transmissible Lassa fever
vaccine and a Streptococcus suis vaccine. After the year end, the
company announced plans to expand its vaccine portfolio
-- Other post period end developments included:
o Pulsiv appointed serial technology entrepreneur Mark Gerhard
as chair, and Tim Moore joined full time from his role at
SharkNinja
o Fieldwork Robotics announced a GBP1.5 million fundraise from
Elbow Beach Capital, and appointed David Fulton as Chief Executive
Officer
Key extracts from the Annual Report can also be viewed below
which include the basis for a qualified audit opinion and material
uncertainty relating to going concern.
ENQUIRIES
Frontier IP Group Plc T: 020 3968 7815
Neil Crabb, Chief Executive neil@frontierip.co.uk
Andrew Johnson, Communications & Investor M: 07464 546 025
Relations
Company website: www.frontierip.co.uk
Allenby Capital Limited (Nominated T: 0203 328 5656
Adviser)
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.
Chairman's Statement
Performance
The year to June 2023 was a period of excellent commercial and
technical progress for Frontier IP's portfolio. Although it was
disappointing to report our first pre-tax loss, the numbers in fact
represented a resilient performance when placed in the context of
exceptionally difficult markets, particularly for early-stage
technology companies, and continued economic uncertainty, high
inflation and interest rates. Neil addresses some of the issues in
his statement, highlighting the success some companies have enjoyed
in moving beyond inflection points to winning commercial contracts.
Briefly, revenue generation within the portfolio is increasing as
seen in Alusid, Celerum and Fieldwork Robotics. Pulsiv has put in
place a global distribution network, and launched its first
commercial product, Pulsiv Osmium to improve the power efficiency
of almost all mains-powered devices.
Others are approaching inflection points, the stage at which
potential starts to be realised, the technology validated and the
route to scale up clear. The Vaccine Group successfully completed
two government-funded projects; CamGraPhIC is now gaining industry
traction from beyond the telecoms industry and Elute Intelligence
is beta testing a product aimed at investment professionals.
CamGraPhIC and Pulsiv completed funding rounds during the year.
It's important we maintain the pipeline of new companies joining
the portfolio, so it was pleasing to see Enfold Health and
GraphEnergyTech incorporated during the year with DeakinBio, an
existing firm in which we took an equity stake, added after the
year end.
A crucial element of our business model is to strengthen the
management of our portfolio companies when they reach the point of
achieving commercial viability. So, it is highly encouraging to see
a number of important appointments made during the course of the
year and beyond. Portfolio companies also bolstered their
management teams, with Steve Cable and David Gladding becoming
chief executives of Elute and Celerum respectively during the year,
with David Fulton filling the same role at Fieldwork Robotics and
significant appointments at Pulsiv after the year end. Alusid
appointed Stuart Christie as chief financial officer.
We've also enhanced our own board. Two new independent
Non-Executive Directors were appointed to the Frontier IP Board of
Directors during the year. Nigel Grierson and Dr David Holbrook
have many years of experience in industry and finance at the
highest levels.
Nigel has 20 years' experience in the IT industry with positions
in product development, marketing, and senior management, and, as
Managing Director of venture capital funds managing investments of
over $500 million in start-up companies across Europe. He was
co-Managing Director of the Doughty Hanson Technology Fund and has
held senior roles at Intel Corporation, including running strategic
programmes working directly for Intel's then Chief Executive
Officer Dr Andrew Grove and Chief Operating Officer Dr Craig
Barrett.
David is a leading healthcare technology investment professional
with 30 years' experience in the life sciences sectors. He has sat
on more than 20 boards of directors during his career. He is
currently a non-executive director at AIM quoted Oxford BioDynamics
plc, a senior advisor to digital health investor RYSE Asset
Management and Chairman of The Liver Group Charity. Involved in
healthcare for 40 years, David has been a physician, held senior
business development roles with major multinationals and spent the
last 25 years specialising in the innovation space with much of
that time in seed venture investing focused primarily on university
spin outs.
They joined Dame Julia King, Baroness Brown of Cambridge, as
part of the non-executive team on the board. Julia was appointed
our Senior Independent Director in March this year and will become
Chair at our Annual Meeting in December 2023. I will not be
standing for re-election having served for more than eleven years
as an independent Non-Executive Director, the majority of which as
Chair.
To attract such high-calibre and experienced directors to our
board is, I believe, a very strong vindication of Frontier IP's
innovative business model, the expertise and skill of our team, and
the quality of companies within our portfolio.
The appointments of Nigel and David followed the decision of
Campbell Wilson to step down from his role as a Non-Executive
Director in April having served on the Board for nearly nine years.
Campbell played a vital part in helping Frontier develop and grow.
I am delighted to say he remains involved with the Group in an
advisory role with several portfolio companies and would like to
express my thanks to him for his work on behalf of the Group for
the past nine years.
This is my final statement as your Chairman. Having served
eleven years on the Board of Directors, it is time for me to leave,
so I will not be standing for re-election as this year's Annual
General Meeting. Replacing me is Professor Dame Julia King,
Baroness Brown of Cambridge, DBE FREng FRS FMedSci. It has been an
immense privilege to serve on the board of such an exciting company
and to witness the Group's growth during my time here. Julia has
already proved to be an invaluable member of the board. In the two
years she has been with us, she has put her extensive experience
and knowledge of industry, academic and the political world to
Frontier IP's great benefit. The Group is in capable hands.
Our governance
Good governance is vital for long-term sustainable growth, and
we strive to achieve the highest standards for a business our size.
We have adopted the Quoted Companies Alliance Corporate Governance
Code, introduced in April 2018. To see more details about how we
apply the principles of the Code, see the Our Governance section of
this report and our website:
https://www.frontierip.co.uk/about/governance/ .
Results
The results represented a resilient performance in what continue
to be challenging markets for technology companies and their
investors. The fall in fair value of our equity portfolio to
GBP32,964,000 reflected disposals of GBP5,713,000 and additions of
GBP745,000. We made an unrealised loss on the revaluation of
investments of GBP966,000, against an unrealised gain for the year
to June 2022 of nearly GBP11 million.
The part-disposal of our holding in Exscientia, generated nearly
GBP5 million cash during the year. Our cash balances at 30 June
2023 were GBP4.6 million.
Outlook
The markets and economic outlook remain difficult to predict
given the high levels of global uncertainty. However, I am
confident about the prospects for both the group and the portfolio,
which is addressing some of the most critical global challenges we
face today.
Andrew Richmond
Chairman
30 October 2023
Chief Executive Officer's Statement
Despite a difficult year financially, I am delighted with the
significant commercial and technical progress made by companies
across the portfolio this year and into the period beyond. Alusid,
Nandi Proteins, Cambridge Raman Imaging, Celerum, and Fieldwork
Robotics are all either generating revenues or are about to start,
taking further strides forward to commercial viability. The day
moves closer for a second portfolio company to follow Exscientia in
launching an initial public offering or to execute a trade
sale.
Alusid has said it is exploring options for an IPO in 2024. The
company enjoyed a breakthrough year after successfully completing a
deal with Topps Tiles, the UK's no. 1 tile specialist, and
Starbucks - Alusid is now selling to franchisees across Europe and
the Middle East. The company also made good technical progress in
developing a hard-wearing floor tile for which industry interest is
already high.
Other companies to watch include Nandi Proteins, which
successfully scaled up its technology to create functional food
ingredients and is now looking forwards to making important
commercial progress in the coming year. Industrial interest in the
company's products is high.
CamGraPhIC is another company making excellent technical and
commercial progress with its graphene-based photonics technology.
The company was already working closely with major multinationals
in data and telecommunications but is now starting to gain traction
from beyond the sector and from governmental organisations.
Celerum secured its first repeat customer and additional new
customers for AI-driven Truck Logistics Software, and Cambridge
Raman Imaging gained important validation for its technology with
the first sales of its graphene-based ultra-fast lasers for medical
imaging. Fieldwork Robotics continues to develop its
raspberry-harvesting robots. These are already picking raspberries
for supermarkets, and the company's new Chief Executive David
Fulton is aiming to have more than a hundred commercially available
robots by the end of 2025.
All this represents great progress in the context of an
increasingly difficult economic and market backdrop of rising
costs, rising inflation and rising interest rates. If there is not
going to be an economic contraction in the UK, growth is still
likely to be sluggish. Of course, it has taken companies several
years to reach this point, perhaps longer than anticipated. But
developing the kind of deep technologies, based on substantiative
scientific or engineering advances, in which we specialise, takes
time. It is not easy. This is a positive: competitors attempting to
replicate the technologies successfully developed across our
portfolio will find the task hard. The barriers to entry are
high.
There are things that could be done to make deep technology
commercialisation easier, however. The fear, uncertainty and doubt
now stalking the markets are exposing and exacerbating long-term
structural problems within the UK: the failure of the education and
capital markets to connect properly.
We are home to some of the world's best universities and
researchers. There is not a shortage of scientific and engineering
expertise, of ideas or innovation, or people to make them work. We
are home to a globally important financial sector able to deploy
deep and vast reserves of liquidity. Money is available.
However, the sources of innovation and the sources of capital
are not linking efficiently together.
Part of the problem reflects the fact that public equity markets
have struggled for some time. In 1966, there were comfortably more
than 4,000 companies listed on London's main market; by the end of
2022, the number was about 1,100. Many factors have been put
forward for this market failure, including the weightier burdens
and greater costs of regulation. Alternative sources of finance,
such as venture capital and private equity have grown and prospered
in consequence. These changing trends accelerated post the
financial crisis as central banks slashed interest rates and
launched quantitative easing. Cheap money flooded the markets.
The unwillingness of the UK pension and investment industry to
commit to equity investment especially in technology stocks, has
compounded the problem. Much of the pension fund money has been
switched into bonds as part of a broader move towards indexation to
mitigate risks. You could argue that buying long-dated bonds at low
yields guarantees only poor returns at best when held to maturity
and substantial losses when interest rates go up. Yet it is the
case that Arm is owned by Japanese group SoftBank and is listed on
Nasdaq; and Oxford Nanopore and Exscientia received no money from
traditional UK venture capital backers as they grew. One is now
listed in London, the other in New York.
Other possible challenges are emerging. One is the National
Security Investment Act. The Act introduces constraints on who can
invest in areas defined as strategic by the government. It risks
further costs and delays. The full impact has yet to be felt, but
unintended consequences could be losing important technologies to
foreign markets as companies seek capital abroad or technologies
failing because there is no capital.
Therefore, it is good to see government persuading major pension
funds to enter a voluntary agreement to commit 5 per cent of their
investments to early-stage businesses by 2030, even though it is
not mandated that this should be solely in UK companies. It is a
small step, but a welcome one.
More can be done. To encourage pension funds to commit capital
to technology, I would suggest linking the substantial tax benefits
they enjoy to investing in venture capital. The regulatory
framework should be tweaked to encourage more asset diversification
and longer-term, strategic thinking. From our perspective,
incorporating new companies and working with very young businesses,
the Enterprise Investment Scheme (EIS) and Seed EIS are important.
They were limited by European Union state aid rules, but
post-Brexit there is the opportunity to take a more expansive
approach.
Despite the challenges, I remain optimistic about the potential
for our companies to achieve success.
Crises spur innovation. Wars are the most commonly cited
example, but depressions have an impact too. The United States, for
example, following the Wall Street crash, enjoyed a decade of then
unprecedented technological progress in the run up to its entry
into the Second World War in 1941. Important steps were made in
areas such as electrical and chemical engineering, aeronautics, and
power generation.
Today, the world is facing crises around climate, energy, food,
water and health, as well as the uncertainty caused by the Ukraine
war and around the direction in the economy and markets. Technology
is at the heart of our efforts to meet these challenges and provide
a path to prosperity.
And when times are tough, there is always a greater emphasis on
costs. Our approach, driven by our industry expertise and
partnerships with major companies is highly responsive to their
requirements. And given the current economic climate, they are
obviously concerned with costs and as swift a return on technology
deployment as possible.
Pulsiv's novel technology cuts the amount of energy wasted in
converting power from about half to less than 10 per cent. It has
the potential to cut costs for manufacturers and energy bills for
consumers and, if deployed at scale, it has the potential to reduce
the strain on national power grids. The company has successfully
built out a global distribution network and made two major board
appointments after the year end. Mark Gerhard became chairman. Mark
is a serial entrepreneur with a very strong record of growing and
exiting technology businesses. And Tim Moore, a Pulsiv
non-executive director, left his job as Chief Technology Officer of
Nasdaq-listed consumer electronics group SharkNinja to join the
company full time as Chief Product Officer. Both appointments
support our belief that Pulsiv will become a significant green
technology company. Mark said on his appointment that Pulsiv is
"highly analogous" to Arm.
CamGraPhIC's graphene-based photonics run at higher speed and
lower temperatures than equivalent technologies - therefore using
less energy. Data centres, which are reckoned to consume about one
per cent of global energy output, are one potential market for the
company's optical transceivers.
Our pipeline of new companies is also in robust health. One,
GraphEnergyTech, is developing graphene inks to replace silver
electrodes in photovoltaic solar cells. This could prove to be a
critically vital technology. A study from the University of New
South Wales said on current rates of solar energy growth, the
industry could consume all known global silver reserves within the
next decade. Another new company, DeakinBio, is developing new
materials for tiles and other surfaces, joining Alusid in
developing technologies that reduces the energy consumed by
manufacturing.
The impacts of ultra-processed foods and obesity and the mighty
costs they impose on health services are subject to widespread
concern. Nandi Protein can help. Its technology uses natural
ingredients such as fava beans and whey to replace fat, gluten and
chemical, E-number additives in a wide range of different foods.
The Vaccine Group is focused on using its novel herpesvirus-based
vaccine platform to develop animal vaccines to combat economically
harmful and zoonotic diseases. Fieldwork Robotics' fruit and
vegetable harvesters address the global shortage of labour prepared
to work in the fields. AquaInSilico and Molendotech are both
striving towards better water quality. AquaInSilico through its
novel software algorithms to improve wastewater treatment,
Molendotech with faster tests for harmful bacteria in water, which
cut the time needed from days into hours, or even quicker.
We took the decision during the year to strengthen our Board of
Directors with two new independent Non-Executive directors,
broadening the board's skills base and helping position us for the
next phase of our evolution. More recently we announced that Andrew
Richmond would not be offering himself for re-election at the
coming Annual General Meeting and that Baroness Brown would replace
Andrew as Group Chair following the AGM in December. I would like
to take this opportunity to thank Andrew for his service, support
and counsel over the years of our growth. I wish him every success
for the future.
Our companies are striving towards creating technologies with
the potential to make material impacts in the areas in which they
operate. The pipeline of innovation remains fruitful, as shown by
the three new companies added during the year and after. Our strong
relationships with industry partners and their engagement with the
portfolio gives us confidence that companies are meeting market
needs and demands. For all the challenges, I remain upbeat about
the Group's future prospects.
Neil Crabb, Chief Executive Officer
30 October 2023
Basis for qualified audit opinion
As noted within the external auditor's report set out in the
Annual Report and Financial Statements, expected to be published
and sent to shareholders on or around 20 November 2023, the
Directors were not able to provide the external auditor with
sufficient and appropriate evidence in relation to the estimation
of fair value for certain investments, specifically being those
investments described as 'Stage 2' in the accounting policies,
which have been valued at GBP1.2 million (representing 3.6% of
equity investments of GBP32.9 million and 2.6% of net assets) as at
30 June 2023. As a result, the external auditor was unable to
conclude in respect of the valuation of these investments and was
unable to perform alternative procedures. Consequently, this formed
the basis for a qualified opinion on these Stage 2 investments.
The external auditors were therefore unable to determine whether
any adjustment was necessary to these amounts as at 30 June 2023 or
whether there was any consequential effect on the Group and Parent
Company's other comprehensive income for the year ended 30 June
2023.
Material uncertainty related to going concern
We draw attention to the accounting policies in the financial
statements, which indicate that the Group has insufficient cash to
cover its operating expenditure for the 12 months from the date of
the signing of these Group and Parent Company financial statements.
However, the Directors intend to realise further cash from the
Group's sole quoted investment in Exscientia, valued at GBP2.3
million at 30 June 2023, which they expect will provide the Group
and Parent Company with sufficient cash to cover its operating
expenditure for this period. The timing and amount of exit proceeds
is subject to uncertainty. This condition, and the other matters
noted in the accounting policies, indicate the existence of a
material uncertainty that may cast significant doubt on the Group's
and Parent Company's ability to continue as a going concern. The
financial statements do not include any adjustments that may be
necessary if the Group or Parent Company were not a going
concern.
Key Performance Indicators and Alternative Performance
Measures
The Key Performance Indicators and Alternative Performance
Measures for the Group are:
KPI / APM Description 2023
Performance
Basic earnings Profit Loss of 5.8p
per attributable (2022:
share (KPI) to profit of
shareholders 18.6p)
divided
by the
weighted
average
number of
shares in
issue during
the year.
------------------------------------- ---------------------------------------
Net assets per Value of the 81.8p (2022:
share Group's 88.5p)
(KPI) assets less
the value
of its
liabilities
per share
outstanding
------------------------------------- ---------------------------------------
Total revenue Growth in the Negative income
and aggregate of
other of revenue GBP1,380,000
operating from (2022:
income services, positive income
(KPI) change in of
fair value GBP14,104,000)
of
investments
and
realised
profit on
disposal of
investments
------------------------------------- ---------------------------------------
Profit (KPI) Profit before Loss of
tax GBP4,370,000
for the year (2022: profit
of
GBP10,879,000)
------------------------------------- ---------------------------------------
Aggregate
percentage
Total initial equity
equity earned from
in new new
portfolio portfolio
companies companies
(APM) Note during the
1 year 108% (2022:20%)
------------------------------------- ---------------------------------------
Note 1 - The total initial equity in portfolio companies is not
an IFRS measure. It is used by Directors to measure the total
percentage equity stakes received in all new spin-out companies
during the year. It does not reflect holdings in individual
spin-outs and does not include equity received through post
spin-out investment. For 2023 it is the aggregate percentage
holding from two new spin-out companies during the year.
The Group achieved its initial equity Alternative Performance
Measure but failed to achieve its four Key Performance Indicators
reflecting the difficult market conditions during the year.
Net assets per share decreased by 8% to 81.8p (2022: 88.5p)
reflecting a loss after tax of GBP3,244,000. The value of the
Group's investments decreased to GBP37,589,000 (2023:
GBP42,693,000) reflecting the opening value of Exscientia shares
sold of GBP5,713,000, purchase of investments of GBP1,576,000 and
net unrealised losses on revaluation of GBP966,000. The Exscientia
shares sold generated proceeds of GBP4,926,000. Loss after tax for
the Group for the year to 30 June 2023 was GBP3,244,000 (2022:
profit of GBP10,230,000) after a deferred tax credit of
GBP1,126,000 (2022: charge of GBP649,000). This result includes a
realised loss on disposal of investments of GBP786,000 (2022: gain
of GBP2,867,000), an unrealised loss on the revaluation of
investments of GBP966,000 (2022: gain of GBP10,908,000) and
reflects an increase in services revenue to GBP372,000 (2022:
GBP329,000) Administrative expenses of GBP3,130,000 (2022:
GBP3,104,000) were flat primarily due to no bonuses being paid in
2023.
Operational Review
During the year, we took the opportunity to refresh our Board of
Directors with the appointments of Nigel Grierson and David
Holbrook as independent Non-Executive Directors from 15(th) March
2023. Both Nigel and David have extensive experience in industry
and finance.
Professor Dame Julia King, Baroness Brown of Cambridge DBE FREng
FRS FMedSci, who joined the Board in October 2021, became Senior
Independent Director on the same date. Campbell Wilson stepped down
in April 2023 having served as a Non-Executive Director for nine
years but continues to support the Group in an advisory capacity
with selected portfolio companies.
Companies across the portfolio continued to make good technical
and commercial progress, with several starting to generate revenues
for the first time as longer-term industry engagement started to
translate into contracts and sales. We continued to strengthen
management teams across the portfolio. Elute Intelligence and
Celerum appointed Chief Executive Officers during the year, as did
Fieldwork Robotics after the year end. Pulsiv and CamGraPhIC
successfully raised funds during the year, with Fieldwork Robotics
following after the year end.
As a people focussed business, we took steps to expand our team
and to ensure we attract and retain the best people. We hired four
full-time employees to the Frontier IP team during the year.
Our Remuneration Committee began to implement the changes to our
remuneration arrangements recommended in last year's external
review. Progress is set out in in detail in the Remuneration
Committee Report.
Portfolio Review
Frontier IP strives to develop and maximise value from its
portfolio. We do so by taking founding stakes in companies at
incorporation and then working in long-term partnerships with
shareholders, academic and industry partners.
As part of our sustainability agenda, we have mapped our
portfolio companies to relevant United Nations Sustainability
Development Goals (UN SDGs). All equity holdings are as at 30 June
2023.
Core portfolio
Alusid: Frontier IP stake: 37.4 per cent
Alusid creates beautiful, premium-quality tiles, tabletops and
other surfaces by recycling industrial waste ceramics and glass,
most of which would otherwise be sent to high-impact landfill.
The company has successfully scaled up its technology for mass
production on industry-standard manufacturing equipment and during
the year signed a contract to sell its first mass-manufactured tile
range, Principle, through Topps Tiles, the UK's no.1 tile
specialist.
Alusid also successfully completed a collaboration with one of
the world's leading specialty minerals group, Imerys, which
resulted in the company developing floor tiles, a missing product
from its ranges. Pilot trials are now underway to see if the floor
tiles can be mass produced, with high industry interest in the
product.
The company is also selling products to Starbucks franchisees
across Europe, Middle East and Africa. Other customers include
H&M, Cos, Nando's, the BBC and the Stonehenge Visitor Centre,
run by English Heritage.
UN Sustainable Development Goal mapping: SDG 9, industry,
innovation and infrastructure; SDG 12, responsible consumption and
production.
Amprologix: Frontier IP stake: 10.0 per cent
Amprologix was created to commercialise the work of Mathew
Upton, Professor of Medical Microbiology at Plymouth's Institute of
Translational and Stratified Medicine.
The company continued to make progress with development of its
new family of antibiotics based epidermicin, which is derived from
bacteria found on human skin, to tackle antimicrobial-resistant
MRSA and other superbugs. Ingenza, a leader in industrial
biotechnology and synthetic biology, is also a shareholder and is
working with Amprologix to develop and scale up the technology.
COVID-19 heightened interest in other threats to human health
globally. During the year, the World Health Organisation reiterated
its warnings about the threats from antimicrobial-resistant
superbugs and called for a step up in efforts to create new
antibiotics.
UN SDG mapping: SDG 3, good health and well-being
AquaInSilico: Frontier IP stake: 29.0 per cent
AquaInSilico is developing sophisticated software tools able to
understand and predict how biological and chemical processes unfold
in different operating conditions.
These can be used to optimise wastewater treatment across many
industries, including municipal wastewater treatment plants, oil
groups, brewers, pulp, paper and steel makers, food processing and
waste recovery businesses.
During the year, the company saw its digital tools implemented
by a client in Cape Verde as part of the Phos-Value project to
recycle environmentally harmful nutrients as biofertilisers and
improve water quality
in the islands. The project was supported by the United Nations
Development Program. AquaInSilico was also selected to take part in
a European PathFinder project to develop sustainable products and
made good progress in gaining municipal and industrial interest in
its UPWATER(R) technology.
UN SDG mapping: SDG 6, clean water and sanitation, SDG 12,
responsible consumption and production, SDG 14, life below
water
Cambridge Raman Imaging: Frontier IP stake: 26.8 per cent
Our first graphene spin out, Cambridge Raman Imaging (CRI) is
developing Raman imaging technology based on graphene-based
ultra-fast lasers, to detect and monitor tumours. The company was
formed as a result of a partnership between the University of
Cambridge and the Politecnico di Milano in Italy.
The main application creates digital images of patient cells and
tissue, and the company is developing FFAI based analysis of
chemical signatures for accurately differentiating between healthy
tissue and diseased tissue in the patient samples, augmenting or
replacing subjective diagnosis of samples by histopathologists. The
technology removes the need for chemical staining - eliminating a
major contributor to sample variation seen between one lab and the
next.
During the year, the company successfully integrated its laser
with a widely available commercial microscope and sold its first
lasers. Tests showed histopathologists could identify tumours at an
earlier stage from digital images generated by CRI's technology
than they could from other technologies.
UN SDG mapping: SDG 3 good health and well-being
CamGraPhIC : Frontier IP stake: 20.8 per cent
CamGraPhIC develops graphene-based photonics for high-speed data
and telecommunications. Graphene photonics are seen as a key
enabler for the massive data increases being demanded by 5G and 6G
technologies by the company's industrial partners.
Initial applications are high-speed optical transceivers. In
laboratory conditions these have worked at 100Gb per second, around
twice the speed of equivalent technologies, and across multiple
wavebands. They are projected to consume at least 70 per cent less
energy. Other uses include high-performance computing and in
networks able to meet the demands of processor intensive artificial
intelligence applications.
The company raised GBP1.26 million through an equity funding
round during the year to accelerate development and scale up of the
technology, and announced that Sir Michael Rake, the former BT
Group Chairman would be joining its board of directors at an
appropriate time. After the year end, CamGraPhIC put in place a
loan facility worth up to GBP1.5 million, with Frontier IP
subscribing to loan notes worth GBP1.32 million.
UN SDG mapping: SDG 9, industry, innovation and infrastructure,
SDG 11, sustainable cities and infrastructure
Celerum: Frontier IP stake: 33.8 per cent
Celerum is developing novel artificial intelligence to improve
the operational efficiency of logistics and supply chains.
The company's technology uses specialist algorithms based on
nature-inspired computing, software and algorithms based on natural
processes and behaviours.
During the year, the company appointed David Gladding as Chief
Executive Officer. David has more than 30 years' experience in
software and IT services companies, including those specialising in
fleet management. The company is now winning customers for its
first commercial product Truck Logistics System, launched during
the year to June 2022. After the year end, the company announced it
had won its first international customer, Grampian Continental, and
was successfully developing more sophisticated versions of the
software to meet the needs of further customers.
UN SDG mapping: SDG 9, industry, innovation and
infrastructure
Des Solutio: Frontier IP stake: 25.0 per cent
Des Solutio is developing safer and greener alternatives to the
toxic solvents currently used to extract active ingredients by the
pharmaceutical, personal care, household goods and food
industries.
It does this through the use of Natural Deep Eutectic Solvents.
These are combinations of naturally occurring (often plant based)
sugars, acids, alcohols and amino acids that can be used as safe
solvents. These new green solvents can be used to replace toxic
organic solvents used in conventional processing , such as ethanol,
employed currently. This means it is contributing to the
environmentally sound management of chemicals, and reducing their
release to air, water and soil.
During the year, the company was selected as one of 10 start-ups
to take part in the UK hub of the European Institute of Innovation
& Technology's Food Network and started validation trials of a
natural food preservative.
UN SDG mapping: SDG 9 industry, innovation and infrastructure;
SDG 12, responsible consumption and production
Elute Intelligence: Frontier IP stake: 42.2 per cent
Elute's software tools are designed to help users intelligently
search, compare and analyse complex documents by mimicking the way
people read. There are a huge range of potential applications, from
searching patents and contracts, to detecting evidence of
plagiarism, collusion and copyright infringement. The company's
tools help to enhance research, support improved technological
capabilities and innovation. Existing customers for the company's
CopyCatch plagiarism detection software include UCAS, The Open
University, and Slicethepie, the largest paid review site on the
internet.
During the year, Elute announced the appointment of Steve Cable
as Chief Executive Officer and is developing Investor Insights, an
IP analyst tool for investment firms, which is now in beta
phase.
UN SDG mapping: SDG 9, industry, innovation and
infrastructure
Enfold Health: Frontier IP stake 75.8 per cent
Enfold Health, incorporated during the year, is developing novel
technology for attacking the pathogenic bacteria that drive gum
disease (gingivitis and periodontitis). The incorporation resulted
from a collaboration between Frontier IP and Dr Ioanna Mela, an
Associate Professor in the Department of Pharmacology at the
University of Cambridge.
Periodontitis increases the risk of developing many common
chronic diseases, including cardiovascular disease, Type 2
diabetes, Alzheimer's, rheumatoid arthritis and pneumonia, and
worsens associated symptoms.
Enfold's Board of Directors includes Gerard Majoor, the former
Vice President, Innovation and Development, Business Group Health
and Wellness, for Philips Oral Health Care and Mother and Child
Care.
UN SDG mapping: UN SDG 3 good health and wellbeing
Exscientia: Frontier IP stake: 0.4 per cent
Exscientia, a spin out from the University of Dundee, was the
first in our portfolio to IPO, raising total gross proceeds of $510
million through a public offer and private placements with SoftBank
and the Bill & Melinda Gates Foundation. It is listed on
Nasdaq.
Now based in Oxford, Exscientia is a world leader in artificial
intelligence-driven drug discovery. It is the company behind the
first AI-created drugs to enter human clinical trials, taking years
off traditional drug discovery processes.
During the year, the company continued to expand its pipeline of
drug candidates, with four new molecules advancing further into
clinical trials during the first half of its financial year to 30
June 2023 alone. The company is also developing its capabilities:
it is building its own hardware and software solutions to automate
a wide range of laboratory processes.
UN SDG mapping: SDG 3, good health and well-being
Fieldwork Robotics: Frontier IP stake: 22.1 per cent
Fieldwork Robotics is looking to have more than 100 robots
available for farmers to hire by 2025 following a post-year end
funding round to accelerate further development of the company's
raspberry pickers.
The moves follow the start of commercial trials of the raspberry
harvesters in Portugal, and the continued focus is on making the
robots faster and scaling up the technology.
After the year end, the company also appointed David Fulton as
Chief Executive Officer, replacing Rui Andres who is focusing full
time on Molendotech as CEO. David has more than 30 years' business
experience, most recently as co-founder and director of LAB+BONE, a
service to protect dogs' identity by using DNA. Before starting
LAB+BONE, he was Chief Executive Office of WeSee, a company using
advanced computer vision technology mimicking the human brain's
ability to understand and process visual information. He previously
held executive positions with Expedia, Adform and Microsoft.
Robotic fruit and vegetable harvesting technology has the
potential to improve agricultural productivity, reduce food waste
by more accurate picking and minimising human contact, and result
in better quality jobs, with harvesting labour replaced by skilled
robot operators. There is also potential for cutting carbon
emissions through reduced need for migrant labour.
UN SDG mapping: SDG 2, zero hunger; SDG 12 responsible
consumption and production
GraphEnergyTech: Frontier IP stake 32.1 per cent
GraphEnergyTech is developing advanced graphene technology for
lower-cost and more environmentally-friendly solar cells - and
could help save global silver reserves from exhaustion by 2050.
The company, which was incorporated into our portfolio during
the year, is developing high-conductivity graphene inks. Initial
applications are for graphene electrodes to replace expensive
silver electrodes in solar cells. Silver is the most commonly used
material for solar cell electrodes, and the solar industry is
currently using 100 million troy ounces a year at a cost of at
least $2 billion.
Research by the University of New South Wales, Australia, states
more than 85 per cent of current silver reserves could be consumed
by solar by 2050, with the upper end of its estimates as high as
113 per cent.
GraphEnergyTech's electrodes are 22 per cent cheaper than silver
at pilot stage with further reductions expected as the technology
is scaled up. The technology also enables high-efficiency
perovskite solar cells by eliminating the risk of performance
degradation caused by metal migration. Manufacturing is also easy -
the graphene inks can be applied a low-cost screen-printing
process, compatible with existing equipment.
Using graphene inks will also reduce the environmentally
damaging extraction of metals, including the use of mercury and
cyanide.
UN SDG mapping: UN SDG 7 affordable and clean energy, UN SDG 9,
industry, innovation and infrastructure,
InSignals Neurotech: Frontier IP stake: 32.9 per cent
InSignals Neurotech continues to make progress with its novel
technology to analyse the motor symptoms of Parkinson's disease and
other neurological disorders. The company is developing wireless
devices to measure motor symptoms, such as wrist rigidity, in real
time to help surgeons and neurologists assess the extent of the
disease. Initial prototypes were designed to help identify the best
locations to place implants in the brain. However, an improved
version can now be used to monitor symptoms more broadly for
disease tracking and to understand better how patients are
responding to treatment. A multi-centred clinical trial has been
established to test the devices., and a collaboration with the
University of Santiago de Compostela in Spain confirmed how object
measurements could produce deeper insights into disease
progression. A mobile application of the technology is now under
development.
The spin out from the Portuguese Institute for Systems and
Computer Engineering, Technology and Science ("INESC TEC"), with
the support of São João University Hospital, part of the University
of Porto.
UN SDG mapping: SDG 3 good health and well-being
Molendotech: Frontier IP stake: 10.4 per cent
Molendotech has developed Bacterisk+, a proprietary screening
test for faecal contamination in water. The tests, which can be
used on site, cuts testing times from up to two days to under 30
minutes because samples do not need to be sent to a laboratory,
enabling environmental agencies and other authorities to assess
water quality swiftly. It has been used to screen marine bathing
waters, inland recreational waters, irrigation water and food
process water.
The company has also developed a test to detect specific
bacterial strains, including pathogens, for use in the food
industry, animal feeds, veterinary practices and ballast
waters.
UN SDG mapping: SDG 6, clean water and sanitation; SDG 12
responsible consumption and production
Nandi Proteins: Frontier IP stake: 19.8 per cent
Nandi Proteins successfully demonstrated commercial scale up of
its egg white replacer further extending its range of customised
ingredients based on vegetable and animal proteins. The company
continued to develop industry relationships over the year, which is
expected to result in significant commercial progress in the
future.
The company's technology is able to create a wide range of
customised ingredients based on naturally occurring vegetable and
animal proteins. Nandi's functional proteins can be used to replace
undesirable ingredients, such as fat, gluten and chemical E-number
additives in processed foods, or to replace animal proteins with
vegetable proteins.
Nandi's technology has the potential to contribute to more
sustainable agriculture and food production by supporting the
plant-based alternative meat industry, by reducing chemical
ingredients in processed and ultra-processed foods and by reducing
the amount of meat used in processed meat products.
UN SDG mapping: SDG 2, end hunger; SDG 12, responsible
consumption and production
PoreXpert: Frontier IP stake: 15.0 per cent
PoreXpert, a software and consultancy firm, has developed novel
software and methods to model the voids within porous materials and
how gases, liquids and colloidal suspensions behave within
them.
Applications include helping companies understand and exploit
the nature of oil and gas reserves to improve the efficiency of
exploration and extraction, supporting industry efforts to reduce
their impact on the environment. It is also being used to help
maximise the lifespan of the UK's Advanced Gas Cooled nuclear
reactors, which generate 20 per cent of the national energy
requirement, without greenhouse gas emissions.
UN SDG mapping: SDG 7, affordable and clean energy; SDG 12,
responsible consumption and production
Pulsiv: Frontier IP stake: 18.2 per cent
Pulsiv's progress during the year included the launch of its
first commercial product, Pulsiv Osmium, building out a global
distribution network and a funding round that raised GBP1.5
million. The fundraising valued the company at GBP50 million pre
money.
The company also established a global distribution network after
signing agreements with partners across North America, Europe and
Asia. The company continues to evolve and post period-end
significantly strengthened its board with two key appointments of
serial entrepreneur Mark Gerhard as chair and Tim Moore, who joined
full time as Chief Product Officer from his role at SharkNinja.
Pulsiv's technology has the potential to make a profound impact
on the energy sector. It cuts the amount of energy consumed by
devices, therefore reducing the strain on power grids, and can
boost the output of photovoltaic solar cells. Pulsiv Osmium is
initially aimed at improving the efficiency of power supplies, LED
lighting and battery chargers, but it can be used across nearly all
mains-powered devices.
Because the technology uses fewer components, its new power
conversion techniques can be incorporated in smaller, lighter and
more cost-effective designs, so the technology has the potential to
reduce strains on power grids and cut costs for manufacturers and
bills for consumers.
It also works from device to mains, significantly improving the
efficiency of renewable sources. The company is also working on a
solar microinverter to maximise the output from photovoltaic solar
cells.
UN SDG mapping: SDG 7, affordable and clean energy; SDG 13,
climate action
The Vaccine Group: Frontier IP stake: 17.0 per cent
The Vaccine Group is creating a wide range of vaccines based on
a novel herpesvirus-based platform. Its core focus is on preventing
the spread of economically damaging diseases in livestock.
During the year, the company successfully completed two
government-funded projects. The first funded by the UK and Chinese
governments, developed a vaccine candidate for Streptococcus suis,
a bacterial disease carried by pigs that causes significant
productivity losses in the global pig industry. However, it can
also cause meningitis and other symptoms in humans. The disease is
currently poorly served as there are no highly effective vaccines
and treatment uses antibiotics but is showing signs of resistance.
A Chinese commercial collaborator, the Pulike Biological
Engineering Company has demonstrated candidate vaccine production
using commercial manufacturing techniques at pilot scale.
The second project involved developing a transmissible candidate
vaccine against a virus, Lassa fever, for use in the rats that
spread the disease. A small-scale trial showed the candidate could
be transmitted between rats, significantly improve their immunity
to Lassa fever and reduce its spread between them. Technology to
scale up for commercial production was also developed as part of
the project, and the company is now in discussion with potential
partners about further development. The work was funded by the US
Defense Advanced Research Projects Agency, led by the University of
California Davis, and involved TVG collaborating with academic
partners from around the world.
TVG now has eight vaccine candidates approaching proof of
principle. Its most advanced projects are for pigs: in addition to
streptococcus suis, the company is also developing vaccines for
porcine reproductive and respiratory syndrome virus, porcine
circovirus and African swine fever. It is adding more candidates to
its pipeline to target diseases affecting horses, cattle, cats and
dogs.
UN SDG mapping: SDG 2, end hunger; SDG 3 good health and
well-being
Core Portfolio Summary at 30 June 2023
Portfolio Company % Issued About Source
Share Capital
Alusid Limited 37.39% Recycled materials University of
Central Lancashire
--------------- ---------------------------- ------------------------
Amprologix Limited 10.0% Novel antibiotics Universities
to tackle antimicrobial of Plymouth and
resistance Manchester
--------------- ---------------------------- ------------------------
AquaInSilico Lda 29.0% Digital tools to FCT Nova
optimise wastewater
treatment
--------------- ---------------------------- ------------------------
Cambridge Raman 26.8% Medical imaging using University of
Imaging Limited ultra-fast lasers Cambridge and
Politecnico di
Milano
--------------- ---------------------------- ------------------------
CamGraPhIC Limited 20.8% Graphene-based photonics University of
Cambridge and
CNIT
--------------- ---------------------------- ------------------------
Celerum Limited 33.8% Near real-time automated Robert Gordon
fleet scheduling University
--------------- ---------------------------- ------------------------
Des Solutio Lda 25.0% Green alternatives FCT Nova
to industrial toxic
solvents
--------------- ---------------------------- ------------------------
Elute Intelligence 42.2% Software tools able Existing business
Holdings Limited to intelligently
search, compare and
analyse unstructured
data
--------------- ---------------------------- ------------------------
Enfold Health Limited 75.8% Improved oral health University of
Cambridge
--------------- ---------------------------- ------------------------
Exscientia Limited 0.4% Novel informatics University of
and experimental Dundee
methods for drug
discovery
--------------- ---------------------------- ------------------------
Fieldwork Robotics 22.1% Robotic harvesting University of
Limited technology for challenging Plymouth
horticultural applications
--------------- ---------------------------- ------------------------
GraphEnergyTech 32.1% High conductivity University of
Limited graphene inks Cambridge/École
Polytechnique
Fédérale
de Lausanne
--------------- ---------------------------- ------------------------
Insignals Neurotech 32.9% Wearable medical INESC TEC
Lda devices supporting
deep brain surgery
--------------- ---------------------------- ------------------------
Molendotech Limited 10.4% Rapid detection of University of
water borne bacteria Plymouth
--------------- ---------------------------- ------------------------
Nandi Proteins 19.8% Food protein technology Heriot-Watt University,
Limited Edinburgh
--------------- ---------------------------- ------------------------
PoreXpert Limited 15.0% Analysis and modelling University of
of porous materials Plymouth
--------------- ---------------------------- ------------------------
Pulsiv Limited 18.2% High efficiency power University of
conversion and solar Plymouth
power generation
--------------- ---------------------------- ------------------------
The Vaccine Group 17.0% Herpesvirus-based University of
Limited vaccines for the Plymouth
control of bacterial
and viral diseases
--------------- ---------------------------- ------------------------
The Group holds equity stakes in 6 further portfolio companies.
The combined value of these holdings was GBP575,000, equivalent to
1.7% of the fair value of the Group's equity investments at 30 June
2023.
Financial Review
Key Highlights
Net assets per share decreased by 8% to 81.8p (2022: 88.5p)
reflecting a loss after tax of GBP3,244,000. The loss was driven by
a net decrease on revaluation of investments of GBP966,000 and a
realised loss on part disposal of the Group's holding in Exscientia
of GBP786,000.
Loss after tax for the Group for the year to 30 June 2023 was
GBP3,244,000 (2022: profit of GBP10,230,000) after a deferred tax
credit of GBP1,126,000 (2022: charge of GBP649,000). This result
includes a realised loss on disposal of investments of GBP786,000
(2022: gain of GBP2,867,000), an unrealised loss on the revaluation
of investments of GBP966,000 (2022: gain of GBP10,908,000) and
reflects an increase in services revenue to GBP372,000 (2022:
GBP329,000) and flat administrative expenses of GBP3,130,000 (2022:
GBP3,104,000) primarily due to no bonuses being paid in 2023.
Revenue and Other Operating Income
Services revenue increased by 13% to GBP372,000 (2022:
GBP329,000) but other operating income, comprising realised and
unrealised gains and losses on investments decreased to a loss of
GBP1,752,000 (2022: gain of GBP13,775,000). The realised loss on
disposal of investments was GBP786,000 (2022: gain of GBP2,867,000)
and the unrealised loss on the revaluation of investments was
GBP966,000 (2022: gain of GBP10,908,000). The fall during the year
in the value of Exscientia, the Group's only quoted company
holding, was a significant contributor to these losses. During the
year, the Group sold a further part of its holding in Exscientia
for GBP4,926,000 realising a loss of GBP786,000 on the value of the
holding at 30 June 2022, 100% of the realised loss for the year to
30 June 2023. The decrease in the value of the Group's remaining
holding in Exscientia over the year to 30 June 2023 was
GBP2,123,000, 49% of loss before tax for the year to 30 June 2023.
The unrealised loss on the revaluation of investments of GBP966,000
comprises losses on equity investments of GBP1,780,000 and gains on
debt investments of GBP814,000. The significant contributors to the
unrealised loss on equity investments were The Vaccine Group
(decrease of GBP2,164,000), Exscientia (decrease of GBP2,123,000)
and CamGraPhIC (increase of GBP1,430,000). An increase in the value
of the Group's debt investment in CamGraPhIC of GBP724,000 was the
primary contributor to the unrealised gain on debt investments.
Administrative Expenses
Administrative expenses increased by 1% to GBP3,130,000 (2022:
GBP3,104,000). Prior year expenses included the payment of bonuses
totalling GBP480,000 that were paid to employees of the Group.
Excluding prior year bonuses, administrative expenses increased by
19%, primarily due to increased employee costs.
Share Based Payments
Share based payments decreased 53% to GBP155,000 (2022:
GBP329,000) reflecting option grants during the year.
Earnings Per Share
Basic loss per share was 5.85p (2022: earnings per share of
18.60p). Diluted loss per share was 5.64p (2022: earnings per share
17.53p).
Statement of Financial Position
The principal items in the statement of financial position at 30
June 2023 are financial assets at fair value through profit and
loss comprising equity investments of GBP32,964,000 (2022:
GBP39,712,000) and debt investments of GBP4,625,000 (2022:
GBP2,981,000). The carrying value of these items is determined by
the Directors using their judgement when applying the Group's
accounting policies. The matters taken into account when assessing
the fair value of the portfolio companies are detailed in the
accounting policy on investments. The movement during the year in
equity and debt investments is detailed in notes 13 and 14 to the
financial statement, respectively.
The Group had goodwill of GBP1,966,000 at 30 June 2023 (2022:
GBP1,966,000). The considerations taken into account by the
Directors when reviewing the carrying value of goodwill are
detailed in Note 10 to the financial statements.
The Group had net current assets at 30 June 2023 of GBP6,181,000
(2022: GBP5,201,000) reflecting primarily advances of GBP793,000
(2022: nil) made to portfolio companies prior to formalising as
loans. The current assets at 30 June 2023 include trade receivables
of GBP604,000 which are more than 90 days overdue. The portfolio
company debtors are in the process of raising funds and the
directors are confident that the amounts due to the company will be
paid.
Net assets per share
Net assets of the Group decreased to GBP45,538,000 at 30 June
2023 (30 June 2022: GBP48,699,000) resulting in net assets per
share of 81.8p (30 June 2022: 88.5p).
Cash
The Group's cash balances increased during the year by
GBP235,000 to GBP4,603,000 at 30 June 2023. Operating activities
consumed GBP3,247,000 (2022: GBP3,006,000), the increase reflecting
primarily advances made to portfolio companies prior to formalising
as loans. Investing activities generated GBP3,384,000 (2022:
GBP5,382,000). This reflected proceeds on disposal of part of
our holding in Exscientia of GBP4,926,000 (2022: GBP6,525,000) and
the purchase of equity and debt investments of GBP1,576,000 (2022:
GBP1,141,000) across nine of our portfolio companies.
Principal Risks and Challenges affecting the Group
The specific financial risks of price risk, interest rate risk,
credit risk and liquidity risk are discussed in note 1 to the
financial statements. The principal broader risks - financial,
operational, cash flow and personnel - are considered below.
The key financial risk in our business model is the inability to
realise sufficient income through the sale of our holdings in
portfolio companies to cover operating costs and investment
capital. GBP4.9 million of cash was generated during the year from
selling shares in portfolio company Exscientia. The remaining
holding in Exscientia was valued at GBP2.3 million at 30 June 2023.
The other principal financial risk of the business is a fall in the
value of the Group's portfolio. With regards to the value of the
portfolio itself, the fair value of each portfolio company
represents the best estimate at a point in time and may be impaired
if the business does not perform as well as expected, directly
impacting the Group's value and profitability. This risk is
mitigated as the number of companies in the portfolio increases. T
he Group continues to pursue its aim of actively seeking
realisation opportunities within its portfolio to reduce the
requirement for additional capital raising.
The principal operational risk of the business is management's
ability to continue to identify spin out companies from its formal
and informal university relationships, to increase the revenue
streams that will generate cash in the short term and achieve
realisations from the portfolio.
Early-stage companies are particularly sensitive to downturns in
the economic environment. There are currently several areas of
concern that could affect the UK and wider global markets and
economy. Global risks include the continuing war in Ukraine and
emerging conflict and instability in the middle east. The impact of
both, particularly the dangers of escalation, on geopolitics,
economically and on markets, are uncertain and difficult to
predict. Inflation and interest rates are rising. Longer-term risks
include uncertainties in the US, where economic growth continues to
be slow and around next year's presidential elections, and in
China, which is facing demographic challenges and pressures in its
property sector.
Any economic downturn would mean considerable uncertainty in
capital markets, resulting in a lower level of funding activity for
such companies and a less favourable exit environment. The impact
of this may be to constrain the growth and value of the Group's
portfolio and to reduce the potential for revenue from advisory
work. The Group seeks to mitigate these risks by maintaining a
strong balance sheet, relationships with co-investors, industry
partners and financial institutions, as well as controlling the
cash burn rate in portfolio companies.
COVID-19 remains a risk with the possibility of new variants
emerging. The likeliest impacts on the Group are operational:
Frontier IP and portfolio company employees may contract the virus
and be unavailable for work for extended periods of time. The Group
seeks to mitigate these risks by maintaining a safe working
environment and e nsuring portfolio companies have considered and
addressed risks.
Changes to the basis on which IP is licensed in the Higher
Education sector might lead to reduced opportunity or a need to
vary the business model. Any uncertainty in the sector may have an
impact on the operation of the Group's commercialisation
partnerships in terms of lower levels of intellectual property
generation and therefore commercialisation activity. The Group
seeks to mitigate these risks by continuing to seek new sources of
IP from a wide range of institutions both within and outside of the
UK.
The Group is dependent on its executive team for its success and
there can be no assurance that it will be able to retain the
services of key personnel. This risk is mitigated by the Group
through recruiting additional skilled personnel and ensuring that
the Group's reward and incentive framework aids our ability to
recruit and retain key personnel. We expanded our team during the
year and, post period-end, commissioned an external review of our
remuneration framework.
After making appropriate enquiries, the Directors consider that
it remains appropriate to adopt the going concern basis in
preparing the financial statements. However, the Directors intend
to realise further cash from the Group's quoted investment in
Exscientia valued at GBP2.3 million at 30 June 2023 which they
reasonably expect will provide the Group with sufficient cash to
cover its operating expenditure for this period. The Directors also
expect that this realisation will, where appropriate, assist the
Group in supporting portfolio companies during this period. The
dependence on the amount realised from this one quoted technology
company represents a material uncertainty. More detail is provided
in the Directors' Report.
By order of the Board
Neil Crabb
Director
30 October 2023
Remuneration Review Implementation
Following the review of the Group's remuneration policy during
FY 2022, the aim of which was to ensure that the policy continued
to reinforce long-term value creation by enhancing the Group's
ability to attract and retain the best people, t he Group began the
implementation of the key findings of the Remuneration Review
during the year.
Salary
As recommended, Director's full-time equivalent salaries were
raised to GBP200,000 for the CEO, and to GBP160,000 for each of the
CFO, CCO, and COO in January 2023. The Committee is expecting to
implement further increases in FY24 which are likely to be less
than the increase in FY23 and will disclose these in the relevant
directors' remuneration report.
All non-director staff also received salary increases in order
to ease cost of living pressures during the year.
Annual Bonus
Our business model means that the availability of cash to pay
bonuses will be dependent on cash being raised through asset
realisations, and the bonus opportunity in any financial year is
dependent on this activity and will only be paid where the Group
determines there is a sufficient surplus to the medium-term
operating cash requirement.
Following review, the Remuneration Committee concluded that no
bonuses were to be paid, consequently no bonus payments were made
during the period.
LTIP
In line with Remuneration Review recommendations, the Group
implemented the 'LTIP' as set out in an advisory resolution, and
supported by shareholders, at the Company's 2022 Annual General
Meeting.
The first awards made under the LTIP were granted in March 2023,
to all staff including directors. Details of share options held by
Directors who were in office at 30 June 2023 are set out below.
Option awards were also granted to Group non-director employees
under the Group's Company Share Option Plan.
Directors' remuneration
An analysis of remuneration by director is given in Note 6 of
these financial statements.
Contracts of service
Neil Crabb's, Jacqueline McKay's, James Fish's and Matthew
White's service agreements are subject to a six-month notice
period.
Share options
The Company currently has three share option schemes.
The Frontier IP Group plc Employee Share Option Scheme 2011, as
adopted by the Board of Directors of the Company on 30 November
2012 and amended by the Board of Directors of the Company on 26
March 2018, was able to grant both options which are Enterprise
Management Incentive (EMI) approved. This scheme remains in place,
but no new options will be granted as the Group has ceased to be a
qualifying company for EMI purposes.
Two further schemes are in place: the Frontier IP Group PLC
Company Share Option Plan 2021 ("CSOP") and the Frontier IP Group
PLC Unapproved Share Option Plan 2021, as amended by Board of
Directors Resolution on 7 March 2023 ("LTIP"). During the period,
191,496 share options were granted under the CSOP and 643,376 share
options were granted under the LTIP.
Details of share options held by Directors who were in office at
30 June 2023 are set out below:
The market price of the Company's shares at 30 June 2023 was
46.0p. The range of prices during the year was 46.0p to 89.0p.
Directors' interests in shares
The Directors in office at 30 June 2023 had the following
interests in the ordinary shares of 10p each in the Company at the
year end.
2023 2022
Number Number
Neil Crabb 3,445,538 2,988,713
Jacqueline McKay 208,637 12,855
Andrew Richmond 850,000 1,000,000
James Fish 100,000 100,000
All of the above interests are beneficial.
Professor Dame Julia King, Baroness Brown of Cambridge
Chair of the Remuneration Committee
30 October 2023
Audit Committee Report
Key Responsibilities
The Committee's terms of reference are available on the Group's
website. The Committee is required, amongst other things, to:
-- monitor the integrity of the financial statements of the
Group, reviewing significant financial reporting issues and the
judgements they contain;
-- review and challenge where necessary the accounting policies
used, the application of accounting standards and the clarity of
disclosure in the financial statements;
-- keep under review the effectiveness of the Group's internal
controls and risk management systems; and
-- oversee the relationship with the external auditor, reviewing
their performance and advising the Board on their appointment and
remuneration.
Committee Governance
The Committee comprised of three non-executive directors and was
chaired by Andrew Richmond until 13 March 2023 following which the
Committee comprised of four non-executive directors and David
Holdbrook replaced Andrew Richmond as chair. It meets a minimum of
two times per year with the external auditors present. In addition,
executive directors are asked to attend.
Activities of the Audit Committee during the year
The Committee met on three occasions during the year under
review and up to the date of this Annual Report with all members
present and the external auditors in attendance. The main areas
covered by the Committee are outlined below:
Internal controls and risk management
The Board has overall responsibility for internal controls and
risk management. As the Board's three non-executive directors were
also the Committee members during the year, the Group's risk
analysis and controls policy was reviewed and updated by the Board.
Further details of business risks identified can be found in Key
Risks and Challenges Affecting the Group. The risk management
process is continually being developed and improved.
Significant estimates and judgements
The focus at the Committee meetings was on the significant
estimates, assumptions and judgements used in the financial
statements in arriving at the value of investments, reviewing
goodwill for impairment and assessing the recoverability of amounts
owed to the Group by portfolio companies. The Committee was
satisfied that such estimates, assumptions and judgements used were
reasonable and appropriate. Details of critical accounting
estimates and assumptions and of critical accounting judgements can
be found in Note 2 to the Financial Statements.
External audit
The external auditor reports to the Committee on actions taken
to comply with professional and regulatory requirements and is
required to rotate the lead audit partner every five years. BDO LLP
were first appointed as external auditor in FY19 following their
merger with Moore Stephens LLP who were the external auditor in
place since FY15 following their merger with Chantrey Vellacott DFK
LLP who were first appointed in FY08. Timothy West was appointed
lead partner in FY17. Chris Meyrick was appointed lead partner in
FY22. The Committee has confirmed it is satisfied with the
independence, objectivity and effectiveness of BDO LLP and has
recommended to the Board that the auditors be reappointed, and
there will be a resolution to this effect at the forthcoming Annual
General Meeting. In addition to their statutory duties, BDO LLP are
also engaged to provide non-audit services where it is felt their
knowledge of the business best places them to provide those
services, such as review of the interim results, and where these
non-audit services are permitted under the Financial Reporting
Council's ethical guidelines.
Basis for qualified audit opinion
As noted within the external auditor's report, the Directors
were not able to provide the external auditor with sufficient and
appropriate evidence in relation to the estimation of fair value
for certain investments, specifically being those investments
described as 'Stage 2' in the accounting policies, which have been
valued at GBP1.2million (representing 3.6% of equity investments of
GBP32.9 million and 2.6% of net assets) as at 30 June 2023. As a
result, the external auditor was unable to conclude in respect of
the valuation of these investments and was unable to perform
alternative procedures. Consequently, this formed the basis for
their qualified opinion on these Stage 2 investments.
David Holbrook
Chairman of the Audit Committee
30 October 2023
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2023
2023 2022
Notes GBP'000 GBP'000
Revenue
Revenue from services
3 372 329
Other operating income
Unrealised (loss)/profit on the revaluation
of investments 13,14 (966) 10,908
Realised (loss)/profit on disposal of investments (786) 2,867
(1,380) 14,104
Administrative expenses 5 (3,130) (3,104)
Share based payments (155) (329)
Interest income on debt investments 232 155
Other income 13 52
(Loss)/profit from operations (4,420) 10,878
Interest income on short term deposits 50 1
(Loss)/profit from operations and before tax (4,370) 10,879
Taxation 7 1,126 (649)
(Loss)/profit and total comprehensive (expense)/income
attributable to the equity holders of the Company (3,244) 10,230
========== =========
(Loss)/profit per share attributable to the
equity holders of the Company:
(5.85)
Basic (loss) / earnings per share 8 p 18.60p
(5.64)
Diluted (loss) / earnings per share 8 p 17.53p
All of the Group's activities are classed as continuing.
There is no other comprehensive income in the year (2022:
nil).
Consolidated Statement of Financial Position
At 30 June 2023
2023 2022
Notes GBP'000 GBP'000
Assets
Non-current assets
Tangible fixed assets 9 13 6
Goodwill 10 1,966 1,966
32,96
Equity investments 13 4 39,712
Debt investments 14 4,625 2,981
39,568 44,665
--------- ---------
Current assets
Trade receivables and other current assets 15 1,026 1,051
Advances 16 793 -
Cash and cash equivalents 4,603 4,368
--------- ---------
6,422 5,419
--------- ---------
Total assets 45,990 50,084
--------- ---------
Liabilities
Non-current liabilities
Deferred taxation 7 (211) (1,167)
--------- ---------
(211) (1,167)
--------- ---------
Current liabilities
Trade and other payables 17 (241) (218)
---------
(241) (218)
--------- ---------
Total liabilities (452) (1,385)
--------- ---------
Net assets 45,538 48,699
========= =========
Equity
Called up share capital 18 5,566 5,501
Share premium account 18 14,627 14,576
Reverse acquisition reserve 19 (1,667) (1,667)
Share based payment reserve 19 1,291 1,324
Retained earnings 19 25,721 28,965
--------- ---------
Total equity 45,538 48,699
========= =========
Consolidated Statements of Changes in Equity
For the year ended 30 June 2023
Group
Share- Total equity
Share Reverse based attributable
Share premium acquisition payment Retained to
capital account reserve reserve earnings equity holders
of the Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2021 5,501 14,576 (1,667) 1,276 18,735 38,421
Issue of shares - - -
Share-based payments - - - 48 48
Profit/total comprehensive
income for the year - - - - 10,230 10,230
At 30 June 2022 5,501 14,576 (1,667) 1,324 28,965 48,699
---------- ---------- -------------- --------- ----------- ----------------
Issue of shares 65 51 - (18) - 98
Share-based payments - - - (15) - (15)
(Loss)/total comprehensive
expense for the
year - - - - (3,244) (3,244)
At 30 June 2023 5,566 14,627 (1,667) 1,291 25,721 45,538
========== ========== ============== ========= =========== ================
Consolidated Statements of Cash Flows
For the year ended 30 June 2022
Group Group
2023 2022
Notes GBP'000 GBP'000
Cash flows from operating activities 22 (3,248) (3,006)
Cash flows from investing activities
Purchase of tangible fixed assets 9 (16) (3)
Purchase of equity investments 13 (691) (614)
Disposal of equity investments 4,926 6,525
Purchase of debt investments 14 (884) (527)
Net amounts receivable from group - -
undertakings
Interest income 50 1
Net cash from investing activities 3,385 5,382
-------- --------
Cash flows from financing activities
Proceeds from issue of equity 98 -
shares
Costs of share issue - -
Net cash generated from financing 98 -
activities
-------- --------
Net increase/(decrease) in cash
and cash equivalents 235 2,376
Cash and cash equivalents at beginning
of year 4,368 1,992
Cash and cash equivalents at
end of year 4,603 4,368
======== ========
Notes to the Financial Statements
1. Financial risk management
Financial risk factors
(a) Market risk
Interest rate risk
As the Group has no borrowings it only has limited interest rate
risk. The impact is on income, debt investments and operating cash
flow and arises from changes in market interest rates. Cash
resources are held in floating rate accounts.
Price risk
The Group is exposed to equity securities price risk because of
equity investments classified on the consolidated statement of
financial position as financial assets at fair value through profit
and loss. The maximum exposure is the fair value of these assets
which is GBP32,964,000 (2022: GBP39,712,000) of which quoted equity
investments comprise GBP2,298,000 (2022: GBP10,132,000). Equity
investments are valued in accordance with the Group's accounting
policy on equity investments. Management's monitoring of and
contact with portfolio companies provides sufficient information to
value the unquoted companies and the Board regularly reviews their
progress, prospects and valuation. Information on reasonable
possible shifts in the valuation of equity investments is provided
in note 13 to the financial statements.
(b) Credit risk
The Group's credit risk is primarily attributable to its debt
investments, trade receivables, other debtors and cash equivalents.
The Group's current cash and cash equivalents are held with two UK
financial institutions, the Bank of Scotland plc and Barclays Bank
plc, both of which have a credit rating of "P1" from credit agency
Moody's, indicating that Moody's consider that these banks have a
"superior" ability to repay short-term debt obligations. The
concentration of credit risk from trade receivables and other
debtors varies throughout the year depending on the timing of
transactions and invoicing of fees. Details of major customers to
the Group are set out in Note 4. Details of trade receivables and
other current assets are set out in note 15. Details of significant
debt investments are set out in Note 14. Management's assessment is
aided through representation on the Board and/or through providing
advisory services to the companies.
The maximum exposure to credit risk for debt investments, trade
receivables, other current asset and cash equivalents is
represented by their carrying amount.
(c) Capital risk management
The Group is funded by equity finance only. Total capital is
calculated as 'total equity' as shown in the consolidated statement
of financial position. The Group's objectives for managing capital
are to safeguard the Group's ability to continue as a going concern
in order to provide returns for shareholders and benefits for other
stakeholders and to manage the cost of capital. In order to
maintain the capital structure, the Group may issue new shares as
required. The Group currently has no debt. There were no changes in
the Group's approach to capital management during the year.
(d) Liquidity risk
The Group seeks to manage liquidity risk to ensure sufficient
liquidity is available to meet the requirements of the business and
to invest cash assets safely and profitably. The Group's business
model is to realise cash through the sale of investments in
portfolio companies and in the absence of such realisations the
Group would plan to raise additional capital. The Board reviews
available cash to ensure there are sufficient resources for working
capital requirements and investments. At 30 June 2023 and 30 June
2022 all amounts shown in the consolidated statement of financial
position under current assets and current liabilities mature for
payment within one year.
2. Critical accounting estimates and assumptions
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates and
judgements.
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are addressed below:
(i) Valuation of investments
In applying valuation techniques to determine the fair value of
unquoted equity investments the Group makes estimates and
assumptions regarding the future potential of the investments. As
the Group's unquoted investments are in seed, start-up and
early-stage businesses it can be difficult to assess the outcome of
their activities and to make reliable forecasts. Given the
difficulty of producing reliable cash flow projections for use in
discounted cash flow valuations, this technique is applied with
caution. Adjustments made to fair value are, by their very nature,
subjective and determining the fair value is a critical accounting
estimate. In applying valuation techniques to determine the fair
value of debt investments the Group makes estimates and assumptions
regarding the time to repayment or conversion, discount rate and
credit risk. A 25% increase in the time to repayment or conversion
reduces the value of debt investments from GBP4,625,000 to
GBP4,590,000 and a 25% increase in the discount rate reduces the
value of the debt investments from GBP4,625,000 to GBP4,569,000.
Where warrants are attached to a debt instrument, the fair value is
determined using the Black-Scholes-Merton valuation model. The
significant inputs to the model are provided in note 14. The price
at which debt investments were made is 65% of the fair value of
debt investments at 30 June 2023 (2022: 94%).
(ii) Impairment of goodwill
The Group tests annually whether goodwill has suffered any
impairment, in accordance with the stated accounting policy. The
recoverable amount is determined using a value in use value model
which requires a number of estimations and assumptions about the
timing and amount of future cash flows. As future cash flows relate
primarily to proceeds from sale of investments, these estimates and
assumptions are subject to a high degree of uncertainty. Note 10
describes the key assumptions and sensitivity applied.
(iii) Consideration of credit losses
The matters taken into account in the recognition of credit
losses include historic current and forward-looking information The
matters taken into account in the recognition of credit losses
include historic current and forward-looking information. The
Group's exposure to credit losses is with companies from its own
portfolio whose ability to settle their debts is primarily
dependant on their ability to raise capital rather than their
current trading. The age of debt is not considered in assessing
credit loss as the outcome is expected to be binary. The debt is
also concentrated in a small number of companies; four companies
account for 81% of trade receivables four account for 89% of debt
investments at 30 June 2023. Management has in-depth knowledge of
these companies and is providing the fundraising service for all
four of them. The Group's history of credit loss is not significant
and therefore management focus on the factors which impact the
ability of these companies to successfully raise capital and a
probability of default as a result of the failure to raise capital
is applied to determine the expected credit loss. Details of the
expected credit loss are provided in note 15.
The Group believes that the most significant judgement areas in
the application of its accounting policies are establishing the
fair value of its unquoted equity investments and the consideration
of any impairment to goodwill. The matters taken into account by
the Directors when assessing the fair value of the unquoted equity
investments are detailed in the accounting policy on
investments.
The considerations taken into account by the Directors when
reviewing goodwill are detailed in Note 10. In addition, the
Directors judge that the Group is exempt from applying the equity
method of accounting for associates in which it has interests of
over 20% as they consider the Group to be similar to a venture
capital organisation and elects to hold such investments at fair
value in the statement of financial position.
IAS28 Investments in Associates and Joint Ventures permits
investments held by entities which are similar to venture capital
organisations to be excluded from its scope where those investments
are designated, upon initial recognition, as at fair value through
profit and loss.
3. Revenue from services
During the year the Group earned revenue from the provision of
services to portfolio companies and university partners as
follows:
2023 2022
GBP'000 GBP'000
Retainers with portfolio companies 336 313
Corporate finance fees from portfolio company 30 -
fundraisings
Advisory fees from universities on initial
spin-outs 3 7
License income from universities 3 9
372 329
======== ========
4. Major customers
During the year the Group had five major customers that
accounted for 86% of its revenue from services (2022: five
customers accounted for 76%). Four of these customers were also in
the top five in 2022. The revenues generated from each customer
were as follows:
2023 2022
GBP'000 GBP'000
Customer 1 78 78
Customer 2 70 72
Customer 3 52 48
Customer 4 48 44
Customer 5 40 42
-------- --------
288 284
======== ========
5. Administration expenses
Expenses included in administrative expenses are analysed
below.
2023 2022
GBP'000 GBP'000
Employee costs 2,117 2,320
Consultant 133 81
Travel and subsistence 21 7
Depreciation 9 8
Bad and doubtful debts 169 141
Fees payable to auditor:
- audit fee 92 60
- non-audit services 3 5
Legal, professional and financial costs 378 313
Premises lease 140 113
Administration costs 68 56
3,130 3,104
======== ========
6. Directors and employees
The average number of people employed by the Group during the
year was:
2023 2022
Number Number
Business and corporate development 20 16
======= =======
2023 2022
GBP'000 GBP'000
Wages and salaries 1,518 1,714
Social security 197 218
Pension costs - defined contribution plans 186 208
Non-executive directors' fees 126 105
Other benefits 52 75
Recruitment 38 -
-------- --------
Total employee administration expenses 2,117 2,320
======== ========
At 30(th) June 2023, all employees with the exception of
Jacqueline McKay were employed by Frontier IP Group plc. Post
year-end, Jacqueline McKay's employment contract was changed from
subsidiary Frontier IP Limited to Frontier IP Group plc.
The key management of the Group and the Company comprise the
Frontier IP Group Plc Board of Directors. The remuneration of the
individual Board members is shown below.
Remuneration comprises basic salary, pension contributions and
benefits in kind, being private health insurance and life
assurance. The type of remuneration is constant from year to year.
Ad hoc bonuses may be paid to reward exceptional performance and
bonuses were paid during the year to 30 June 2022. Such bonuses are
decided by the Remuneration Committee. Share options are also
awarded to employees from time to time. The granting of share
options to individual employees is determined taking into account
seniority, commitment to the business and recent performance.
The total remuneration for each director is shown below.
Amounts in GBP'000
Salary Bonus Other benefits Pension Share option Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
Executive
N Crabb 177 143 0 143 5 5 17 14 43 64 242 368
J McKay 74 41 0 106 5 5 76 85 36 57 191 294
J Fish 125 112 0 74 4 4 31 37 37 58 197 287
M White 152 134 0 30 3 4 15 26 34 54 204 247
Non-executive
A Richmond 48 45 - - - - - - - - 48 45
M Bourne
* - 12 - - - - - - - - - 12
C Wilson
* 23 27 - - - - - - - - 23 27
J King 34 22 - - - - - - - - 34 22
N Grierson 10 - - - - - - - - - 10 -
D Holbrook 10 - - - - - - - - - 10 -
----- ----- -------- ------- ------ -----
653 536 0 353 17 18 139 162 150 233 959 1,302
===== ===== ===== ===== ======== ======= ===== ===== ======= ====== ===== ======
* Former directors
7. Taxation
2023 2022
GBP'000 GBP'000
Current tax - -
Deferred tax (1,126) 649
Tax (credit)/charge for the year (1,126) 649
======== ========
A reconciliation from the reported (loss)/profit before tax to
the total tax (credit)/charge is shown below:
2023 2022
GBP'000 GBP'000
(Loss)/profit before tax (4,370) 10,879
======== ========
-
(Loss)/profit before tax at the effective rate
of corporation tax in the UK of 20.5% (2022:
19%) (895) 2,067
Effects of:
Fair value movement in investments not recognised
in deferred tax (69) (1,689)
Expenses not deductible for tax purposes 31 63
Movement in deferred tax asset of losses not
recognised - 36
Adjustments arising from difference between (169) -
average and deferred tax rates
Deferred tax recognised in equity (171) -
Other adjustments 147 172
Tax (credit)/charge for the year (1,126) 649
======== ==========
Deferred Tax
Group Group
Deferred tax liabilities at 30 June 2023 2022
Unrealised gains investments (689) (2,485)
Short-term timing differences - fixed assets (1) -
----------------- -------------------
(690) (2,485)
----------------- -------------------
Deferred tax assets at 30 June 2023
Tax losses 277 830
Short-term timing differences - pension 6 11
Short-term timing differences - outstanding share
options 196 476
Short-term timing differences - fixed assets - 1
479 1,318
----------------- -------------------
Net deferred tax (liability) / asset (211) (1,167)
----------------- -------------------
Company Company
Deferred tax liabilities at 30 June 2023 2022
Unrealised gains investments (138) (137)
Short-term timing differences - fixed assets - -
---------------------- -------------------
(138) (137)
---------------------- -------------------
Deferred tax assets at 30 June
Tax losses 272 825
Short-term timing differences - pension - -
Short-term timing differences - outstanding share
options 196 476
468 1,301
---------------------- -------------------
Net deferred tax (liability) / asset 330 1,164
---------------------- -------------------
Group Company
Deferred tax movement
(Liability)/asset at 1 July 2021 237 (2,047)
Credited 649 602
Debited to equity 281) 281
------------------- -------------------
At 30 June 2022 1,167 (1,164)
------------------- -------------------
Group Company
Deferred tax movement
(Liability)/asset at 1 July 2022 (1,167) 1,164
Credited 1,126 (664)
Debited to equity (170) (170)
------------------- -------------------
At 30 June 2023 (211) 330
------------------- -------------------
No deferred tax liability has been recognised on the difference
between base cost and fair value of certain financial assets at
fair value through profit and loss which qualify as equity
investments and which are expected to be exempt from tax under the
substantial Shareholding Exemption on their subsequent
disposal.
The Group has a net unrecognised deferred tax at year end of
GBP420,000 (Period ended 30 June 2022: GBP420,000) calculated at
25% in respect of its unutilised pre-April 2017 trading losses of
GBP1,680,000 (gross). This is due to uncertainty in respect of
future probable trading profits in Frontier IP Limited against
which these losses can be utilised.
8. Earnings per share
a) Basic
Basic earnings per share is calculated by dividing the profit
attributable to the shareholders of Frontier IP Group Plc by the
weighted average number of shares in issue during the year.
(Loss) / Weighted Basic
profit attributable average (loss)
to shareholders number of / earnings
GBP'000 shares per share
amount
in pence
Year ended 30 June 2023 (3,244) 55,409,626 (5.85)
--------------------- ----------- ------------
Year ended 30 June 2022 10,230 55,005,546 18.60
--------------------- ----------- ------------
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.
(Loss) / Weighted Diluted
profit attributable average (loss)
to shareholders number of / earnings
GBP'000 shares adjusted per share
for share amount
options in pence
Year ended 30 June 2023 (3,244) 57,542,781 (5.64)
--------------------- ----------------- ------------
Year ended 30 June 2022 10,230 58,339,949 17.53
--------------------- ----------------- ------------
9. Tangible fixed assets
Fixtures
and equipment
GBP'000
Cost
At 1 July 2021 36
Additions 3
Disposals -
---------------
At 30 June 2022 39
---------------
Additions 16
Disposals (12)
At 30 June 2023 43
Depreciation
Accumulated depreciation at 1 July 2021 25
Charge for the year to 30 June 2022 8
Disposals -
Accumulated depreciation at 30 June 2022 33
Charge for the year to 30 June 2023 9
Disposals (12)
---------------
Accumulated depreciation at 30 June 2023 30
---------------
Net book value
At 30 June 2022 6
===============
At 30 June 2023 13
===============
10 Goodwill
Group Company
GBP'000 GBP'000
Cost
At 1 July 2021, 30 June 2022 and at 30 June 1,966 -
2023
Impairment
At 1 July 2021, 30 June 2022 and at 30 June - -
2023
-------- --------
Carrying value
At 30 June 2022 1,966 -
======== ========
At 30 June 2023 1,966 -
======== ========
The Group conducts an annual impairment test on the carrying
value of goodwill based on the recoverable amount of the Group as
one cash generating operating unit. The recoverable amount is
determined using a value in use model. The net present value of
projected cash flows is compared with the carrying value of the
Group's investments and goodwill. Projected cash flows are based on
management approved budgets for a period of three years and key
assumptions over a further seven years. When determining the key
assumptions, management has used both past experience and
management judgement, but as future cash inflows are derived
primarily from the realisation of investments, these assumptions
are subject to a high degree of uncertainty. The key assumptions
used in the model were rate of return 29% (2022: 33%); average
yearly realisations 6.7% (2022: 6.7%); annual growth in trading
income 7.2% (2022:8%); annual growth in the cost base 7.8% (2022:
11%; discount 14% (2022: 11%). The Board considers that a
reasonable possible change in the rate of return or in the discount
rate would cause the carrying amount of the cash generating unit to
exceed its recoverable amount. A decrease in the rate of return
from 29% to 17% or an increase in the discount rate from 14% to 20%
would cause the recoverable amount to equal the carrying amount.
The Board considers that the recoverable amount of the Group as one
cash generating operating unit is greater than its carrying
value.
11. Categorisation of Financial Instruments
At fair
value through Amortised
profit or cost Total
Financial assets loss GBP'000 GBP'000
GBP'000
At 30 June 2022
Equity investments 39,712 - 39,712
Debt investments 2,981 - 2,981
Trade and other receivables - 1,052 1,052
Cash and cash equivalents - 4,368 4,368
--------------- ------------ ----------
Total 42,693 5,420 48,113
--------------- ------------ ----------
At 30 June 2023
Equity investments 32,964 - 32,964
Debt investments 4,625 - 4,625
Trade and other receivables - 1,026 1,026
Advances 793 - 793
Cash and cash equivalents - 4,603 4,603
--------------- ------------ ----------
Total 38,382 5,629 44,011
--------------- ------------ ----------
All financial liabilities are categorised as other financial
liabilities and recognized at amortised cost.
All net fair value losses in the year are attributable to
financial assets designated at fair value through profit or loss.
(2022: all net fair value gains were attributable to financial
assets designated at fair value through profit or loss.)
12. Investment in subsidiaries
Company Company
2023 2022
GBP'000 GBP'000
At 1 July 2,383 2,383
Provision for impairment - -
-------- --------
At 30 June 2,383 2,383
======== ========
Group Investments
The Company has investments in the following subsidiary
undertakings.
Country of Proportion
incorporation of ordinary
shares directly
held by the
Company
Frontier IP Limited
- principal activity is commercialisation
of IP Scotland 100%
Frontier IP Management Limited
- principal activity is investment
advisory and marketing services Scotland 100%
FIP Portugal, Unipessoal, Lda.
- principal activity is commercialisation
of IP Portugal 100%
The registered office of all subsidiaries registered in Scotland
is c/o CMS Cameron McKenna Nabarro Olswang LLP, Saltire Court, 20
Castle Terrace, Edinburgh EH1 2EN.
The registered office of FIP Portugal, Unipessoal, Lda is Rua
João Frederico Ludovice 22--, Loja
1500-357, Benfica, Lisbon, Portugal.
13. Equity investments
Equity investments are valued individually at fair value in
accordance with the Group's accounting policy on investments. All
but one of the Group's equity investments are unquoted and these
have been categorised as being level 3, that is, valued using
unobservable inputs. The quoted investment are categorised as being
level 1, that is, valued using quoted prices in active markets for
identical assets or liabilities which the Group can access at the
measurement date. All gains and losses relate to assets held at the
year end, and the fair value movement has been shown in the income
statement as other operating income.
Equity Investments Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 39,712 31,982 26,963 16,011
Additions 691 614 691 614
Conversion of debt investments 54 764 54 764
Disposals (5,713) (3,659) - -
Unrealised (loss)/profit
on revaluation (1,780) 10,011 551 9,574
At 30 June 32,964 39,712 28,259 26,963
======== ======== ======== ========
The table below sets out the movement during the year in the
value of unquoted equity investments by the valuation matrix stages
described in the accounting policy on equity investments:
Equity Investments
Stage Stage Stage Stage Stage Stage Total
1 2 3 4 5 6
Fair value category 3 3 3 3 3 1
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 July 2021 31 232 5,078 26,641 - - 31,982
Transfers between
stages (16) 16 - (13,210) - 13,210 -
Fair value change
through other
operating income 6 550 1,008 7,866 - 581 10,011
Additions 10 - - 1,368 - - 1,378
Disposals - - - - (3,659) (3,659)
-------- -------- -------- --------- -------- -------- --------
30 June 2022 31 798 6,086 22,665 - 10,132 39,712
-------- -------- -------- --------- -------- -------- --------
Transfers between
stages - 44 2,234 (2,278) - - -
Fair value increase
through other
operating income (31) 351 (2,447) 2,469 - (2,122) (1,780)
Additions - - - 745 - - 745
Disposals - - - - - (5,713) (5,713)
-------- -------- -------- --------- -------- -------- --------
30 June 2023 - 1,193 5,873 23,601 - 2,297 32,964
======== ======== ======== ========= ======== ======== ========
The table below provides information about equity investment
fair value measurements. (See the accounting policy on investments
for a description of the valuation matrix stages)
Valuation No of Fair Inputs Reasonable possible
matrix Investments value shift
stage
GBP'000 % +/- GBP000
At 30 June 2022
The company is valued
at fair value which is
Stage typically at a notional
1 3 31 value of around GBP50,000 20% 6
Management's assessment
of the value of IP transferred
and valuation of grants
Stage from which economic benefit
2 3 798 is derived 31% 248
Management's assessment
of performance against
Stage milestones and discussions
3 7 6,086 of likely imminent fundraising 40% 2,434
The price of last funding
round provides unobservable
input into the valuation
of any individual investment.
However, subsequent to
the funding round, management
are required to re-assess
the carrying value of
investments at each year-end
which result in unobservable
Stage inputs into the valuation
4 10 22,665 methodology. 28% 6,382
Stage - - Discounted comparable - -
5 public company valuation.
Unobservable inputs into
discounted cash-flow
are forecasts of future
cash-flows, probabilities
of project failure, and
evaluation of the time
value of money.
Stage 6 1 10,132 Based on bid price at - -
balance sheet date.
--------------
30 June 2022 39,712 23% 9,070
-------- --------------
At 30 June 2023
Stage 4 - The company is valued - -
1 at fair value which is
the cost of the initial
equity. If advisory services
are provided by the Group
prior to spin out in
return for its equity
stake, the cost is the
value of services invoiced.
If no advisory services
have been invoiced prior
to spin out, the cost
is the nominal value
of the shares received.
Management's assessment
of the value of IP transferred
and the value of grants
Stage from which economic benefit
2 4 1,193 is derived. 36% 429
Management's assessment
of performance against
Stage milestones and discussions
3 6 5,873 of likely imminent fundraising. 42% 2,467
The price of latest funding
round provides unobservable
input into the valuation
of any individual investment.
However, subsequent to
the funding round, management
are required to re-assess
the carrying value of
investments at each year
end which result in unobservable
Stage inputs into the valuation
4 9 23,601 methodology. 31% 7,316
Stage - - Discounted comparable - -
5 public company valuation.
Unobservable inputs into
discounted cash flow
are forecasts of future
cash flows, probabilities
of project failure and
evaluation of the time
cost of money.
Stage Based on bid price at
6 1 2,297 balance sheet date. - -
30 June 2023 32,964 31% 10,212
======== ==============
The percentage reasonable possible shift for each stage is the
blended percentage reasonable possible shift of each company at
that stage which are based on the Directors' assessment of the
level of uncertainty attached to the valuation inputs.
Equity investments are carried in the statement of financial
position at fair value even though the Group may have significant
influence over those companies. This treatment is permitted by
IAS28, Investments in Associates. At 30 June 2023 the Group held an
economic interest of 20% or more in the following companies:
Name of Undertaking Registered Address % Issued Share Share
Capital Class
2023 2022
----------------------------------------------------------- ------- ---------
Avenida Tenente Valadim, n
. 17, 2 F, 2560-275 Torres
AquaInSilico Vedras, Portugal 29.0% 29.0% Ordinary
------------------------------------- ------- -------- ---------
Richard House, Winckley Square,
Alusid Limited Preston, Lancashire, PR1 3HP 37.4% 38.9% Ordinary
------------------------------------- ------- -------- ---------
Cambridge Raman Botanic House,100 Hills Road,
Imaging Limited Cambridge, CB2 1PH 26.8% 26.8% Ordinary
------------------------------------- ------- -------- ---------
Botanic House,100 Hills Road,
CamGraPhIC Limited Cambridge, CB2 1PH 20.8% 20.8% Ordinary
------------------------------------- ------- -------- ---------
30 East Park Road, Kintore,
Celerum Limited Inverurie, AB51 0FE 33.8% 33.8% Ordinary
------------------------------------- ------- -------- ---------
Avenida Tenente Valadim, n
Des Solutio . 17, 2 F, 2560-275 Torres
LDA Vedras, Portugal 25.0% 25.0% Ordinary
------------------------------------- ------- -------- ---------
Elute Intelligence 21 Church Road, Tadley, RG26
Holdings Limited 3AX 42.2% 41.2% Ordinary
------------------------------------- ------- -------- ---------
The Officers' Mess, Royston
Enfold Health Road, Duxford, Cambridgeshire,
Limited United Kingdom, CB22 4QH 75.8% 0.0% Ordinary
------------------------------------- ------- -------- ---------
Research And Innovation Floor
2 Marine Building, Plymouth
Fieldwork Robotics University, Plymouth, PL4
Limited 8AA 22.1% 24.5% Ordinary
------------------------------------- ------- -------- ---------
The Officers' Mess, Royston
GraphEnergyTech Road, Duxford, Cambridgeshire,
Limited United Kingdom, CB22 4QH 32.1% 0.0% Ordinary
------------------------------------- ------- -------- ---------
Rua Passeio Alegre, 20 Centro
de Incubacyo e Aceleracyo
Insignals Neurotech Do Porto, Porto 4150-570,
Lda Portugal 32.9% 32.9% Ordinary
------------------------------------- ------- -------- ---------
Avenida Tenente Valadim, n
. 17, 2 F, 2560-275PortugalVedras,
NTPE LDA Portugal 47.9% 47.9% Ordinary
------------------------------------- ------- -------- ---------
The nature of these companies' business is provided in the
Portfolio Review section of the Strategic Report where the holding
carries a value.
14. Debt investments
Debt investments are loans to portfolio companies to fund
early-stage costs, provide funding alongside grants and bridge to
an equity fundraise. Loans ranging from GBP15,000 to GBP200,000
were made to seven companies during the period. All debt
investments are categorised as fair value through profit or loss
and measured at fair value. T hese have been categorised as being
level 3, that is, valued using unobservable inputs. The Group uses
valuation techniques that management consider appropriate in the
circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs The price at
which the debt investment was made may be a reliable indicator of
fair value at that date but management consider the financial
position and prospects for the portfolio company borrower when
valuing debt investments at subsequent measurement dates.
Certain debt investments carry warrants granting the option to
purchase shares. The exercise price is generally the price of
shares issued at the first equity fundraising following the grant
and the period of exercise is generally at any time from the first
equity fundraising to an exit event. The fair value of the warrants
is determined using the Black-Scholes-Merton valuation model. The
significant inputs into the model for each warrant were the
exercise price, the current share price valuation, volatility of
70% (2022: 70%), expected life of between three months and six
years and annual risk-free interest rates to end of term of between
4.45% and 5.30% (2022: 2.07% and 2.07%). The value of warrants
included in debt investments at 30 June 2023 is GBP1,597,000 (2022:
GBP827,000).
The movement of debt investments during the year is set out
below:
Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
At 1 July 2,981 2,320 2,297 1,759
Additions 884 527 575 427
Conversion to unquoted equity
investments (54) (764) (54) (764)
Unrealised profit on revaluation 814 898 739 875
At 30 June 4,625 2,981 3,557 2,297
======== ======== ======== ========
Debt investments with three portfolio companies accounted for
89% of the value of debt investments at 30 June 2023: CamGraPhIC
(GBP2,612,000), Nandi Proteins (GBP884,000) and Elute Intelligence
(GBP623,000)
Conversions of debt investments are non-cash transactions, so
not reflected in the statement of cashflows. All debt investments
are classed as non-current. Certain debt instruments have
conversion or repayment terms dependent on the amount and timing of
an equity fundraising by the portfolio company borrower. The
exercise of a conversion right would reclass the debt investment as
a non-current equity investment. The expectation is to exercise the
right to repayment, however there is uncertainty over the timing
and amount of equity fundraisings. Furthermore, notwithstanding the
right to repayment being triggered, the Group may decide, depending
on the circumstance at the time, to defer repayment or convert into
equity for the benefit of the portfolio company borrower in which
the Group also holds an equity stake.
15. Trade receivables and other current assets
Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables 529 388 338 279
Receivables from Group undertakings - - 357 285
VAT 7 12 - 9
Prepayments and accrued income 71 386 30 284
Other debtors 74 128 17 67
Accrued interest 448 180 286 84
1,129 1,094 1,028 1,008
Expected credit loss at 1 July 43 - 27 -
Other current assets provided
for in the year 60 43 62 27
Other current assets written - - - -
off in the year
-------- -------- -------- --------
Expected credit loss at 30 June 103 43 89 27
-------- -------- -------- --------
Less receivables from Group
undertakings - non current - - 357 285
Current portion 1,026 1,051 582 696
======== ======== ======== ========
Trade receivables
Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade receivables not past due 32 28 18 21
Trade receivables past due 1-30
days 35 29 23 21
Trade receivables past due 31-60
days 33 26 18 18
Trade receivables past due 61-90
days 32 27 21 18
Trade receivables past due over
90 days 604 376 383 279
-------- -------- -------- --------
Gross trade receivables at 30
June 736 486 463 357
-------- -------- -------- --------
Expected credit loss at 1 July 98 - 78 -
Debts provided for in the year 109 98 47 78
Debts written off in the year - - - -
-------- -------- -------- --------
Expected credit loss at 30 June 207 98 125 78
-------- -------- -------- --------
Net trade receivables at 30
June 529 388 338 279
======== ======== ======== ========
Trade receivables are amounts due from portfolio companies for
services provided with net amounts recorded as revenue in the
consolidated statement of comprehensive income. The expected credit
losses are estimated by reference to the financial position and
specific circumstances of the portfolio companies, by reference to
past default experience and by assessment of the current and
forecast economic conditions. The nature of the services provided
to portfolio companies means the Group has in-depth knowledge of
the companies' prospects both for trading and raising capital and
the number of companies with past due receivables is small enabling
a full assessment of recoverability by company. The Group also
considers if a general provision for expected loss through applying
the historical rate of portfolio company failures is material. The
Group's history of credit loss is not sufficiently material to
inform future expectations and therefore management focus on the
factors which impact the ability of its debtor companies to
successfully raise capital and a probability of default as a result
of the failure to raise capital is applied to determine the
expected credit loss.
Receivables from Group undertakings carry interest of 2.0% above
Bank of England base rate (2022: 2.0%).
16. Advances
Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Advances 793 - 785 -
======== ======== ======== ========
Prior to 30 June 2023 the Group advanced funds to two portfolio
companies prior to execution of loan documentation. GBP785,000 of
advances were to CamGraPhIC. The advances were reclassed as Debt
Investments post year-end.
17. Trade and other payables
Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 23 41 42 62
Payables to group undertakings - - 3,366 192
Social security and other taxes 68 53 - -
VAT 9 - 9 -
Other creditors 14 10 - -
Accruals and deferred income 127 114 109 69
-------- -------- ---------- --------
At 30 June 241 218 3,526 323
Less payables to Group undertakings
- non current - - (3,366) (192)
-------- -------- ---------- --------
Current portion 241 218 160 131
======== ======== ========== ========
18. Share capital and share premium
Number Ordinary
of shares shares Share
issued of 10p premium Total
and fully
paid
GBP'000 GBP'000 GBP'000
At 30 June 2022 55,005,546 5,501 14,576 20,077
Exercise of options 652,607 65 51 116
At 30 June 2023 55,658,153 5,566 14,627 20,193
=========== ========= ========== ========
19. Reserves
The reverse acquisition reserve was created on the reverse
takeover of Frontier IP Group Plc. The fair value of equity-settled
share-based payments is expensed on a straight-line basis over the
vesting period and the amount expensed in each year is transferred
to the share-based payment reserve. The amount by which the
deferred tax asset arising on the intrinsic value of the
outstanding share options differs from the cumulative expense is
also transferred to the share-based payment reserve. Included in
retained earnings are unrealised profits amounting to GBP28,562,000
(2022: GBP35,233,000). Consequently, there were no distributable
reserves at 30 June 2023 or 30 June 2022. The movement in reserves
for the years ended 30 June 2023 and 2022 is set out in the
Consolidated and Company Statement of Changes in Equity.
20. Share options
Frontier IP has three option schemes:
Under the Frontier IP Group Plc Employee Share Option Scheme
2011 - Amended 26 March 2018, both enterprise management incentive
options and unapproved options are granted. No payment is required
from option holders on the grant of an option. The options are
exercisable starting three years from the date of the grant with no
performance conditions. The scheme runs for a period of ten years
but no new options can be granted as the Group has ceased to be a
qualifying company for EMI purposes No options were granted during
the year under this scheme.
Under the Frontier IP Group plc Company Share Option Plan 2021
("CSOP"), no payment is required from option holders on grant of an
option. The options are exercisable starting three years from the
date of the grant with no performance conditions. The scheme runs
for a period of ten years. 191,496 share options were granted
during the year under the CSOP.
Under the Frontier IP Group plc Unapproved Share Option Plan
2021 ("LTIP"), no payment is required from option holders on grant
of an option. The options are exercisable starting three years from
the date of grant provided certain performance conditions have been
met. The scheme runs for a period of ten years. 643,376 share
options were granted during the year under the LTIP.
Movements in the number of share options outstanding and their
related weighted average exercise prices were as follows:
2023 2023 2022 2022
Weighted average Weighted
exercise price Options average exercise Options
price
Pence per share Pence per
share
At 1 July 31.71 4,986,726 31.99 5,030,181
Granted 24.43 834,872 - -
Exercised 15.00 (652,607) - -
Lapsed 63.76 (69,927) 64.36 (43,455)
At 30 June 32.22 5,099,064 31.71 4,986,726
========== ==========
Of the 5,099,064 outstanding options (2022: 4,986,726) 3,570,616
had vested at 30 June 2023 (2022: 2,836,000). The vested options
have a weighted average exercise price of 32.46p.
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
Exercise 2023 2022
price Number Number
Pence per
share
2024 26.88 432,393 432,393
2026 26.63 650,000 650,000
2027 40.00 399,000 399,000
2028 65.00 246,000 246,000
2028 10.00 456,000 456,000
2029 66.00 652,612 694,050
2029 10.00 734,611 736,946
2030 65.00 383,260 409,414
2030 10.00 310,316 310,316
2032 85.00 74,646 -
2033 66.00 116,850 -
2033 10.00 643,376 -
=========== ========= =========
The weighted average remaining contractual life of the
outstanding options is 5.8 years.
The weighted average fair value of options granted to executive
Directors and employees during the year determined using the
Black-Scholes-Merton valuation model was 48.02p per option. The
significant inputs into the model were the exercise prices shown
above, weighted average share price of 68.5p, volatility of 9.9%,
dividend yield of 0%, expected life of 5 years and annual risk-free
interest rate of 3.41%. Future volatility has been estimated based
on 5 years' historical daily data.
21. Leases
2023 2022
Land Land &
& Buildings Buildings
GBP'000 GBP'000
Commitments under non-cancellable leases expiring:
Within one year 90 91
Within two to five years - -
After five years - -
------------- -----------
90 91
============= ===========
The leases relate to rental of serviced offices. Under the terms
of the rental agreements, the supplier has the right to terminate
the agreement during the period of use, however at inception of the
agreement this was not considered likely to occur. For short term
leases (12 months or less) and leases of low value assets, the
Group has opted to recognise a lease expense on a straight-line
basis as permitted by IFRS 16's transitional rules. Currently the
longest lease ends in March 2024.
22. Cash used in operations
Group Group Company Company
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) before tax (4,370) 10,879 (873) 8,136
Adjustments for:
Share-based payments 155 329 155 329
Depreciation 9 8 - -
Interest received (50) (1) (52) (1)
Unrealised loss/(profit) on
the revaluation of investments 966 (10,908) (1,290) (10,449)
Realised loss/(profit) on disposal
of investments 786 (2,867) - -
Changes in working capital:
Trade and other receivables* 26 (456) 122 (250)
Advances (793) - (785) -
Trade and other payables 23 10 19 50
Cash flows from operating activities (3,248) (3,006) (2,704) (2,185)
======== =========== ========== ===========
*Movement in trade and other receivables includes non-cash
accrued interest on debt investments with portfolio companies
The movements in liabilities from financing cashflows are
nil.
23. Related party transactions
Neil Crabb is a director of PoreXpert Limited, Pulsiv Limited,
CamGraPhIC Ltd, Cambridge Raman Imaging Ltd and Alusid Limited.
Campbell Wilson, a former director of Frontier IP, is a principal
of Wilson Biopharma Consulting. Matthew White is a director of The
Vaccine Group Limited, Nandi Proteins Limited and Fieldwork
Robotics Limited. All these companies, with the exception of Wilson
Biopharma Consulting, are portfolio companies of the Group. The
Group charged fees to these companies and was owed amounts from
these companies as follows:
By the Group Fees Fees Amounts Amounts
charged charged owed owed
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Nandi Proteins Limited 78 78 213 120
Pulsiv Limited 24 44 5 5
Alusid Limited 70 72 127 43
The Vaccine Group Limited 48 48 77 34
Celerum Limited 52 5 52 -
Fieldwork Robotics Limited 30 - - 104
CamGraPhIC Ltd 40 - 112 -
Cambridge Raman Imaging 24 - - -
Ltd
By Related Parties
Wilson Biopharma Consulting 12 12 - -
24. Subsequent events
There were no subsequent events to report.
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END
FR NKKBNBBDBNKN
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October 31, 2023 03:00 ET (07:00 GMT)
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