Frontier IP Group plc Placing to raise £2.49 million (4672H)

TIDMFIPP

RNS Number : 4672H

Frontier IP Group plc

15 November 2018

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

15 November 2018

Frontier IP Group plc

("Frontier IP" or the "Company")

Placing to raise approximately GBP2.49 million

Frontier IP, which specialises in commercialising university intellectual property, is pleased to announce that it has raised approximately GBP2.49 million before expenses through a placing of 3,827,852 new ordinary shares of 10 pence each ("Placing Shares") at an issue price of 65 pence per share (the "Placing").

Transaction highlights

   --     Placing to raise approximately GBP2.49 million before expenses 
   --     Strong support from existing and new investors 

-- The net proceeds of the Placing are intended to be used to build out the core Frontier IP team and strengthen the working capital of the Company

-- The Placing Shares will represent approximately 9.09 per cent. of the enlarged issued share capital of the Company

Andrew Richmond, Chairman of Frontier IP Group plc, said:

"I am delighted to announce the successful completion of this fundraising, which was over-subscribed. The support shown by both existing and new shareholders in this placing is very pleasing and a clear endorsement of our business model. I would like to thank our advisers and investors for their support as we enter an exciting period for Frontier IP."

Neil Crabb, CEO of Frontier IP Group plc, commented:

"Frontier IP is going from strength to strength. There is strong evidence that our distinctive approach to intellectual property commercialisation, designed to address the needs of both universities and industry, is gaining traction. This fundraising will ensure we can take advantage of future opportunities as they arise. We are confident we are set to make significant progress as the Group and its portfolio companies develop."

Summary of and reasons for the Placing

The Company has raised approximately GBP2.49 million before expenses by means of a Placing with certain new and existing investors of 3,827,852 Placing Shares at 65 pence per share.

The net proceeds of the Placing, estimated to be GBP2.34 million, are intended to be used to build out the core Frontier IP team and strengthen the working capital of the Company. The Directors believe that the fundraising will help support the Company's growth by enabling it to continue to develop and grow its portfolio and key relationships.

Results

The Company has today announced results for the 12 months ended 30 June 2018. The key financial highlights for this financial period are as follows:

   --     Fair value of portfolio companies increased by 34% to GBP9,041,000 (2017: GBP6,729,000) 

-- Total revenue increased by 2% to GBP2,363,000 (2017: GBP2,309,000) - reflecting an unrealised profit on the revaluation of investments of GBP2,064,000 (2017: GBP2,045,000)

   --     Revenue from services increased by 13% to GBP299,000 (2017: GBP264,000) 
   --     Profit before tax decreased by 27% to GBP902,000 (2017: GBP1,229,000) 
   --     Basic earnings per share decreased to 2.36p (2017: 3.73p) 
   --     Cash balances at 30 June 2018 of GBP1,111,000 (2017: GBP2,329,000) 
   --     Net assets per share as at 30 June 2018 of 33.2p (2017: 30.7p) 

Current trading and outlook

Frontier IP has made highly encouraging progress since its year end. We have grown our portfolio with the addition of three new spinouts, our industry and public-sector partnerships have developed and funding activity within the portfolio continues to pick up pace.

We welcomed our first two spin outs in Portugal, both resulting from our formal relationship with the NOVA University Lisbon - NOVA School of Science and Technology, Portugal. NTPE develops novel technology to print electronic circuits, sensors and semiconductors onto paper and with a team of over 65 researchers it has already been backed with substantial funding. Des Solutio develops safer and greener alternatives to chemicals currently used to make beauty, pharmaceutical and personal care products and the technology has already attracted keen interest from these industries. We are excited by the technologies we are seeing from our university partnerships, both formal and informal, and expect to announce further additions during the year.

Industry partnerships are an important part of our business model, enabling our portfolio companies to validate their technologies to ensure they meet real-world demands. Since our year end, we have continued to see a high level of collaboration with industry across our portfolio companies. This has included Molendotech adding to its industry partnership with Palintest by signing a collaboration agreement with G's Group, a leading fresh produce company, and Tarsis Technology's agreement with a global crop protection company to research the use of its metal-organic frameworks technology. We continue to work with our portfolio companies on a number of industry partnerships potentially key to their success.

Ensuring our portfolio companies are appropriately funded is essential to their growth and we are seeing our portfolio attracting funding from both private and public sources. Highlights have included Alusid raising GBP1.34m of equity finance from new and existing investors to support the planning for a factory to transform its production capacity, and Pulsiv and The Vaccine Group securing grant awards from Innovate UK and the global Bacterial Vaccine Network respectively. We are working on further funding in our portfolio from both private and public sources.

Beyond our work directly with universities as sources of commercialisable IP, our links with the public sector, most recently with our partnership with UK Department for International Trade in Portugal, are valuable to us and our portfolio. We expect to see our engagement across the public sector gaining momentum.

We continue to strengthen our team to support our progress and to enable us to meet demand. In September this year, we were very pleased to welcome Matthew White, former Head of Innovation at AB Sugar, who joined us in a non-board role as Director of Commercialisation.

We are delighted to report continued strong interest from industry, investors, universities and the public sector in the work of our portfolio companies and in Frontier IP itself. Activity and engagement levels with existing and potential partners are rising significantly as we position ourselves for future growth.

Further details of the Placing

The Company has conditionally raised, in aggregate, approximately GBP2.49 million (approximately GBP2.34 million net of expenses) by way of a Placing of 3,827,852 Placing Shares with certain new and existing investors. The Placing Shares are to be issued pursuant to the Company's existing share authorities. All Placing Shares will be issued at the Placing Price of 65 pence per new ordinary share.

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM ("Admission"), which is expected to occur on or around 21 November 2018 at 8.00 a.m.. The Placing Shares will rank, pari passu, in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of the Ordinary Shares following Admission.

Allenby Capital Limited ("Allenby Capital") has entered into the Placing Agreement with the Company under which Allenby Capital has, on the terms and subject to the conditions set out therein (including Admission), undertaken to act as settlement agent for the Placing. The Placing Agreement contains certain warranties and indemnities from the Company in favour of Allenby Capital. The Placing is not being underwritten by Allenby Capital or any other person.

The Placing is conditional, inter alia, on:

- Admission becoming effective by no later than 8.00 a.m. on 21 November 2018 (or such later time and/or date, being no later than 8.00 a.m. on 14 December 2018, as the Company and Allenby Capital may agree); and

   -           the Placing Agreement not being terminated prior to Admission. 

Accordingly, if any of such conditions are not satisfied, or, if applicable, waived, the Placing will not proceed.

Directors' participation in the Placing

Mike Bourne, a Non-Executive Director, has conditionally subscribed to 32,932 Placing Shares. Accordingly, on Admission, Mike Bourne will hold 303,170 ordinary shares in the Company, representing 0.72 per cent. of the enlarged issued share capital.

Proposed grant of options

It is anticipated that the Company's remuneration committee will shortly approve the grant of options to certain Executive Directors and members of senior management. The options will be granted pursuant to the Company's share option scheme, 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. Further details will be announced in due course.

Related party transactions

710,067 Placing Shares were conditionally subscribed by Canaccord Genuity Group Inc. ("Canaccord"), 1,283,052 Placing Shares were conditionally subscribed by Miton Group plc ("Miton") and 972,691 Placing Shares were conditionally subscribed by Quilter Cheviot Limited ("Quilter"). Canaccord, Miton and Quilter are substantial shareholders in the Company, as defined in the AIM Rules for Companies ("AIM Rules") and accordingly their participation in the Placing is deemed to be a related party transaction under the AIM Rules. In addition, as Mike Bourne is a Director of the Company, his participation is deemed to be a related party transaction under the AIM Rules. The Directors (excluding Mike Bourne), having consulted with Allenby Capital Limited, the Company's nominated adviser, consider that the participation of Canaccord, Miton, Quilter and Mike Bourne in the Placing is fair and reasonable insofar as the shareholders of Frontier IP are concerned.

Total Voting Rights

Upon Admission, the Company's issued share capital will consist of 42,106,372 Ordinary Shares with one voting right each. The Company does not hold any ordinary shares in treasury. Therefore, the total number of ordinary shares and voting rights in the Company will be 42,106,372. With effect from Admission, this figure may be used by Shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Market Abuse Regulation (MAR)

MAR came into effect from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

Information for Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Subscription Shares have been subject to a product approval process, which has determined that the Subscription Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, investors should note that: the price of the Subscription Shares may decline and investors could lose all or part of their investment; Subscription Shares offer no guaranteed income and no capital protection; and an investment in Subscription Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Subscription. Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Subscription Shares.

Enquiries:

 
 Frontier IP Group plc                         T: 0131 240 1251 
 Neil Crabb, Chief Executive 
 Andrew Johnson, Communications & Investor     M: 07464 546 
  Relations                                     025 
 www.frontierip.co.uk 
 
 Allenby Capital Limited (Nominated Adviser    T: 0203 328 5656 
  and Broker) 
 Nick Athanas / Nicholas Chambers (Corporate 
  Finance) 
 Amrit Nahal (Equity Sales) 
 

Notes to Editors:

Frontier IP unites science and commerce by identifying strong intellectual property and accelerating its development through a range of commercialisation services. 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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November 15, 2018 04:30 ET (09:30 GMT)