Broken Record Time!!!
So, My diary on this blog is solely focused on thinking I'm smarter than I actually am, and losing money in the process.
Often Wrong - Never in Doubt.
Well After over a year of writing a detailed blog about Frontier IP (Frontier IP Group) I'm putting pen to paper again as its been, lets be honest, a horror show. They've announced today a placing at 28p a share (no discount to previous day trading). However, the previous time I put pen to paper - they were trading at 48p a share..... Well-called by myself!
So, What went wrong, and should I take another lick? Is it going to be a delicious gain in a years time, or another turd.
Basically - Run out of money. Always the big risk and it hit. Admin Expenses of £3.5M a year + £250K from Share-based Payments = £3.75M a Year drag to keep the lights on. It's always going to be challenging keeping the churn of IPOs and Exits high with this going on.
Current Market Cap = £15.7M
Shareprice / Placing - 28P (Adding around 20% to Sharecount)
NAV per Share 79.9p.
NAV if full uptake = 69P
So if we agree with the NAV, it'll be good investment. The problem from FIPP is that it ran out of cash before being able to make a successful exit. So lets look closely at this;
June 2023 - Cash £4.6M + £2.3M Shares in Exscientia.
June 2024 - £2.3M Cash / No Shares.
So Liquidity has gone from £6.9M to £2.3M, or a £4.6M Swing.
Trade Receivables increased from £1M to £1.6M
It also mentions Frontier purchased equity & debt investments of £2,225,000.
After the Fund Raising - £2.3M Cash and £3.1M Raised + £1M possibly from retail = £5.4M (or £6.4M).
So, the question remains - if this gets us close to 2023 levels, how are we going to realise profit over the coming period.
Neil mentions 3 companies close to Exits, Pulsiv, Alusid & CampGrahIC
I'm very keen on both Pulsiv & CamGraphic. Less so on Alusid.
Pulsiv (17.9% Stake)
I valued it at £9M last year. Since then, FIPP has gone from 18.3% down to 17.9%. In the latest annual reports, FIPP mentioned it is completing a funding round and its considering Exit Options. At Companies house - it mentions it's looking to raise £1.5M and to date had raised £580K, issuing 12,625 shares.
Back in 2022 it raised £1.5M, valuing the business at £50M.
So back of fag packet for companies house and what I think;
£500K = 10k Shares
£5M = £100k
£50M = £1M Shares
Current Shareholding = 1,333,929. This implies value of £65M.
After doing rounding down and up, make it a value of £12M.
CamGraphic (18.71% Stake)
Stake down from 20.8% stake - so a -2% drop.
Companies house announce post accounts date that it's looking to raise £21M. I'm being honest - I had really high hopes so was left disappointed with the lack of mention during the Full-Year results. I honestly thought it would have been announced - due to all the research and new investors they've brought on.
I noted in my last report that debt to Campgraphic in June was £2.6M and that hasn't changed this year. It did increasing drastically to a total of £4.2M in December23 before dropping back down to £2.6M as of June.
Why is this? They talk about losses on debt investments of £1,187,000. Is this related?
In 2023 it talks about increase of CamGraphic value by £1.4M and increase of debt investment related to CampGraphic of £724K.
in FY24, it doesn't mention specifics of gains and losses, just an increase of value of equity investments by £2.46M and a decrease of debt investments by £1,187,000M.
FY24 talks about a Series A funding raising. If I'm honest, I don't know how to value Campgrahic.
Frontier IP have 14 companies at Stage 4, valued at £28.8M. If I'm valuing Pulsiv at £9M from latest fundraise, then I'd value CamGraphic at circa £5M for Frontier. Finger in the air approach. This is very much on the low side - where I've been alot more conservative than with Pulsiv.
Alusid
2023 = 37.4% Shareholding. 2024 = 35.4% Shareholding.
£1.13M was raised during the period and talks about European distribution over the next few months.
I'm not going to put a value on Alusid. I don't personally value it, and I'll be wrong. As of course its a value, but doing something like this will help with my safety net.
So for the top 3 companies, I have a value of £17M. This, with the existing cash on the balance sheet - gets us to Market Cap for the FIPP.
Nandi Proteins
Nandi Proteins - has £500k investment via convertible loan and looking to secure a total of £1.5M.
Reading through Confirmation Statements , Nesta acquired 19122 shares for 500k. Puts Frontier IP shares at £1M.
The Vaccine Group
17% (2023) down to 16.7%
23 Talks about decreasing value at Vaccine Group (-£2,164,000).
No mention in 24, but lots of activity, including winning grants of £1M to help drive pipeline and move them along before making ££.
I'm not assigning a value to The Vaccine Group. I put £5M on it last year, but on reflecting - will take it down to £0 due to the high risk nature of it.
Cambridge Raman Imaging
2023 - 26.8%
2024 - 26.8%
Trading Ahead of Expectations, so FIPP put in a loan to help with working capital arrangements (£600K).
Talks on companies house around funding post period end (December 2023). Apparently want to raise a substantial amount. As of May 2022 - FIPPs stake was worth £1.6M. I intend to keep it on the books for this amount.
Fieldwork Robotics
2023 - 22.1%
2024 - 18.2%
So circa 50k additional shares this year compared to last. Assuming these shares are worth the £1.5M fund round would mean FIPPs shares worth a similar amount, £1.5M/£2.M
Deakin-BIO
2024 - 33.3%
New Company - New Investment. Circa 47k shares issued for £680K. FIPPs holding of 68,200 shares means I reckon it holds circa £750K as investment.
GraphEnergyTech
2023 32.1%
2024 30.4%
Raised £1M during the period. Unknown value but assume FIPPs is £1M.
Too Low to make a massive difference to NAV
Amprologix
Diagen AI
Molendotech
Plastometrex
Zero Value
AquainSilco
Celerum
Des Solutio
Elute Intelligence
The formatting is terrible - but I can live with it.
Talking to my future self - I'm down in FIPP but will invest. The credentials looks good for me still. I might have over-valued Pulsiv but I have put 0 value to both Alusid & Vaccine Group. A number of other holdings are 0 value too, which could turn out to be good.
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