Frontier IP eyes increasing maturity across portfolio companies


What Frontier IP does

Frontier IP Group Plc (LON:FIPP) is an investment and asset management company that focuses on providing consultancy services to universities and other research organisations to help them commercialise any intellectual property (IP) arising from their research.

The group aims to grow its value by taking equity stakes in any spin-out companies that arise from the commercialisation of IPs.

What it owns

As of 17 October 2019, Frontier’s portfolio consists of;

o Alusid – Develops SilicaStone, a stone substitute made from recycled industrial waste

o Nandi Proteins – Researches technology to improve the functional properties of proteins used in food-making such as eggs and whey

o The Vaccine Group – Makes vaccines for animals to prevent them from passing on illnesses to humans such as Ebola, SARS, AIDS, Marburg, and swine and bird flu

o Tarsis Technology – Develops tech that allows controlled delivery of active ingredients using metal-organic frameworks

o Porexpert – Provides software to help model porous structures and test their properties

o Pulsiv Solar – Develops technology to increase energy efficiency in solar farms as well as power converters for TVs, mobile phones and other electronics

o Exscientia – Uses artificial intelligence to automate the design of pharmaceutical drugs

o Cambridge Simulation Solutions – Provides methods of simulating and controlling complex discontinuous processes, such as how neural transmitters work in the brain

o Amprologix – Aims to introduce new classes of antibiotics to help combat antimicrobial resistance to treatments

o Molendotech – Provides a rapid assay to screen water for faecal contamination and other harmful bacteria without the need for laboratory testing

o Fieldwork Robotics – Develops robot technology to harvest fruits and vegetables

o NTPE – Develops a technology to print electronic circuits and semiconductors onto paper

o Elute – Software firm specialising in plagiarism detection

How it’s doing

For the year ended 30 June, Frontier IP reported a pre-tax profit of GBP2.35mln, up from GBP902,000 in 2018, while total revenues jumped 81% to GBP4.27mln, reflecting an unrealised profit on investments of GBP3.85mln.

The fair value of the group’s investment portfolio also increased by 47% to GBP13.25mln, while it ended the year with a cash balance of GBP1.47mln compared to GBP1.1mln last year.

Inflexion points

o The company has appointed John Price and Air Vice-Marshal Gary Waterfall to provide specialist expertise, insight and advice across the food and agriculture and defence industries respectively, to support the group and its portfolio companies.

o In October, the company took a 43% stake in Elute Intelligence, earning its equity by providing commercialisation services, including hands-on support and technical development

o In July, Exscientia signed a drug discovery deal with American biotech Rallybio to find small molecule treatments for rare diseases

o Exscientia signed another drug discovery deal in June, this time with Shanghai-based biotech GT Apeiron Therapeutics

o In May, Fieldwork Robotics completed initial field trials of its raspberry-picking robot system at a farm owned by leading soft-fruit grower Hall Hunter

Executive interview

Blue Sky

In its interim results at the end of March, Frontier IP’s chief executive Neil Crabb said the firm was seeing “strong interest” in its portfolio from a “growing number” of industry leading firms and that the momentum generated in the first-half had continued into the second, with Frontier’s performance for the full year expected to be “ahead of management expectations”.

“The first half of the year provides further evidence our approach is gaining traction with stakeholders,” Crabb said.

Speaking to Proactive in April, he added that going forward the company will “continue to build out the portfolio” and that the company was looking forward to “more of the same” from its companies.

“We’re seeing an increasingly mature portfolio, the formula is working…the growth of that portfolio in terms of both its individual constituents and the scale we think sets us up very well to deliver good results in the future”.

In terms of additions to the portfolio, Crabb says that there is “more than enough opportunity”, however striving for more organic growth doing the same thing is “what it’s all about”.

With shares trading at 66.5p as of 15 November 2019, Frontier IP has a market cap of GBP23.8mln.

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