QCA compliance

Statement of Compliance with the QCA Corporate Governance Code

Good governance is good business. It is vital for sustainable growth. Recent changes to the London Stock Exchange’s AIM Rules mean we must adopt and comply with a recognised corporate governance code. We also want to achieve the highest standards we can.

To these ends, we have adopted the Quoted Companies Alliance (QCA) Code introduced in April 2018.

The QCA Code takes the key elements of good governance and applies them in a manner which is workable for the different needs of growing companies. It outlines 10 broad principles and a set of disclosures. This report sets out each principle and explains how we are complying.

This disclosure was last reviewed and updated on 20 November 2023.

Establish a strategy and business model which promote long-term value for shareholders

Frontier IP’s purpose is to create high value businesses from deep technology: intellectual property developed by scientists and engineers and based on significant advances, discoveries and innovation. Companies across our portfolio are looking to help tackle fundamental challenges around climate, energy, water, health and food.

Our approach is different, innovative and capital efficient. We are involved typically before a company is even formed. Through our partnerships with universities, academics and industry, we are able to identify IP with commercial potential, often when it is still under development. We then incorporate a company, taking a founding equity stake. This is sweat equity, earned for the commercialisation and other support services we offer. These range from ensuring the IP is properly protected, and the business mechanics run smoothly to direct, hands-on support for technology. We invest time and expertise.

The next steps are to validate the technology and understand its market potential. Our industry partners provide insight into market needs and demands, and how best to scale up the technology. Such engagement means we listen to portfolio companies’ potential customers, concentrate on what industry wants and avoid the pitfalls and uncertainties involved in targeting consumer markets.

The focus on industry partnerships, and the hands-on work we do in supporting the portfolio means the composition of our board of directors and team is different to conventional IP commercialisation firms or venture capitalists focused on financial investments. Directors and employees are drawn from industry and have extensive business experience, many having developed and run major units in bigger corporations.

We assess IP based on our expertise and knowledge of underlying technologies and industrial processes, in particular when looking at how IP might be scaled up. Often similar processes can be applied across different businesses: for example, how to handle powders is as relevant to the pharmaceutical industry in making pills as it is to a tile company. Because of this, we place portfolio companies into clusters where they might share common development and manufacturing problems and solutions based on the underlying processes required for scale up. This allows us to exploit synergies in expertise and develop networks to drive value in a better way than taking a silo sector-based approach.

Traditionally, deep technology is seen as having high value potential but at the expense of consuming huge sums in capital. Our approach, based on expertise, means we are able to be more capital efficient.

Shareholder value is driven by the potential for realisations on exit, with the value of the portfolio representing potential deferred earnings. Our aim is to ensure the portfolio has companies at varying stages of development, with new IP identified and businesses incorporated as others approach exit opportunities. Two companies joined the portfolio during the year, plus a further one after the year end.

We continue to develop relationships with stakeholders to source, identify and evaluate IP. Shareholders in our portfolio businesses are usually universities, academics, institutions, private investors and ourselves. Typically, no shareholder has a controlling stake, ensuring interests are aligned across all those involved in building the business.

The Group generates additional revenue from its portfolio through board retainers and fees for bespoke business development, corporate and strategic advisory work.

We also provide capital raising services to our portfolio through Group subsidiary Frontier IP Management Limited, an Appointed Representative of Privium Fund Management (UK) Limited which is authorised and regulated by the Financial Conduct Authority in the UK. The Group’s fundraising activity for its spin out companies both enhances value in the portfolio and may also generate revenue for the Group. We continue to grow our network of sources of capital ranging from institutions, industry investors through to high-net worth individuals.

Our clusters approach

Frontier IP’s portfolio falls into six broad clusters. These are:

  • AI and Advanced Computing
  • Materials
  • Enabling Health
  • Food and Agritech
  • Energy
  • Water

How our portfolio companies and partnerships fall into each cluster

  • AI and Advanced Computing : AquaInSilico, Cambridge Raman Imaging, CamGraPhIC, Celerum, Elute Intelligence, Exscientia, Fieldwork Robotics, PoreXpert, Pulsiv, and The Vaccine Group
  • Materials: Alusid, AquaInSilico, CamGraPhIC, Cambridge Raman Imaging, DeakinBio, Des Solutio, GraphEnergyTech, PoreXpert and Nandi Proteins
  • Enabling health :Amprologix, Cambridge Raman Imaging, Enfold Health, Exscientia, Insignals Neurotech, Molendotech, Proteic and The Vaccine Group
  • Food and Agritech: AquaInSilico, Des Solutio, Fieldwork Robotics, Molendotech, Nandi Proteins, and The Vaccine Group
  • Energy: Alusid, CamGraPhIC, DeakinBio, GraphEnergyTech,  PoreXpert and Pulsiv
  • Water: AquaInSilico, Emporia 4KT and Molendotech

GraphEnergyTech: an example of our clusters approach

GraphEnergyTech develops advanced graphene technology for lower-cost and more environmentally-friendly solar cells – and we believe could help save global silver reserves from exhaustion, currently projected for 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 via 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.

The company was co-founded by one of the world’s most cited academics, Professor Michael Grätzel of the Ecole Polytechnique Federale de Lausanne (EPFL), and inventor of the dye sensitised solar cell. The CEO is Dr Thomas Baumeler, who earned his PhD at EPFL and is an expert in perovskite solar cells.

GraphEnergyTech fits into two of our clusters. The first is Materials because it is developing technology seeking to exploit graphene’s electronic properties. Our other graphene spin outs, Cambridge Raman Imaging and CamGraPhIC, use graphene’s opto-electronic properties. The second cluster is Energy, because the initial applications for GraphEnergyTech’s inks will be in solar cells.

Seek to understand and meet shareholder needs and expectations

The Board is pleased to regularly engage with shareholders and with the capital markets more broadly.

The Group communicates with shareholders and the market through the annual report and accounts, full-year and half-year announcements, the annual general meeting and one-to-one meetings with existing and potential institutional investors. We communicate openly, clearly and directly to ensure our strategy, business model and performance are clearly understood.

Shareholder feedback, support and agreement with our strategic objectives are critically important to developing our business, so we actively solicit their views. The Board is kept informed of the views and concerns of major shareholders.

We maintain regular contact and dialogue through regular meetings with key shareholders, the annual general meeting, roadshows, correspondence and digital channels, including our website www.frontierip.co.uk, social media and email. As the restrictions imposed by the pandemic ease, we are seeking to resume capital markets events for shareholders and other stakeholders.

Information about the Company is also disclosed in a timely manner through the RNS and RNS Reach services of the London Stock Exchange and our website. Our brokers are also in regular contact with institutional investors. Our Notice of AGM is sent to all shareholders with our published accounts.

Our investor communications are led by Andrew Johnson the Group’s director of communications and investor relations. His contact details are: andrew.johnson@frontierip.co.uk or on 07464 546 025. This information is clearly displayed in the Group’s announcements and on our website.

Take into account wider stakeholder and social responsibilities and their implications for long-term success

We are committed to meeting the needs of all our stakeholders. Aside from shareholders, stakeholders are key to our success and include employees, portfolio companies, universities, industry partners, suppliers and regulators. We maintain a regular dialogue with all our partners through a range of communication channels and actively solicit feedback. Engagement strengthens relationships and leads to better business decisions.

Employees

We strive to attract, develop and retain high-quality talent with the right skills to drive our business forward. Our people play a critical role in delivering our strategy to create long-term value by commercialising intellectual property.

Employees are actively encouraged to provide feedback and express their needs, interests and expectations through frequent formal and informal conversations.

We periodically and as appropriate, review our policies which relate to employees.

Universities

Universities supply us with intellectual property. They are critical to our success. We work with them through informal and formal relationships and maintain constant contact with them, our portfolio businesses, the academics and industry partners involved. When negotiating with our partners, from industry as well as universities, we strive to strike agreements where benefits are shared fairly among all.

Portfolio companies

Frontier IP’s goal is to develop and maximise value from its portfolio, we do so by taking founding shareholdings in portfolio companies and then working with them in partnership.

Where and when appropriate, we provide support to our portfolio companies to generate value for all stakeholders by providing support services including board representation, fundraising support, market validation, strategic advice and administrative support.

Suppliers

We aim to pay suppliers promptly and regularly review contracts with service providers, such as IT and our lawyers, to ensure a good service. Our contact with regulators is mediated and guided by our Nominated Adviser and other professional advisers.

Social and environment

Many of our portfolio companies have demonstrable social as well as potential economic, commercial and shareholder benefits. Sustainability is innate to what we do and how we work. We have put our sustainability reporting on a more formal basis by aligning the Group to the United Nations Sustainability Goals. For more information, please refer to the sustainability section of this website or the relevant parts of the Strategic Report and the Portfolio Review in the Annual Report where how individual companies contribute positively to society and the environment are explained.

When assessing intellectual property for potential spin outs, we are very aware of potential environmental, social and reputational risks and seek to mitigate them.

Regulators

Our contact with regulators is mediated and guided by our Nominated Adviser and other professional advisers.

The Group is subject to statutory reporting requirements and to rules and responsibilities prescribed by the London Stock Exchange. The Board has a balanced range of complementary skills and experience, with independent non-executive directors who provide oversight, and challenge decisions and policies as they see fit. The Board believe in robust and effective corporate governance structures and is committed to maintaining high standards and applying the principles of best practice. Compliance is maintained through the utilisation of recognised professional advisers, including the Company’s nominated adviser, and the Board would not hesitate to seek input in this regard from external regulators if necessary.

To enable us to provide fundraising support and raise capital for our portfolio, Group subsidiary Frontier IP Management Limited is an Appointed Representative of Privium Fund Management (UK) Limited which is authorised and regulated by the Financial Conduct Authority in the UK.

Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Group has an established framework of risk analysis and controls for which the Board is ultimately responsible and which it regularly reviews. There is also a clearly defined set of key performance indicators which the Board uses to monitor the Group’s progress towards meeting its strategic aims and objectives.

The Board is responsible for reviewing and approving the Group’s strategy, objectives and business plans. It is also responsible for ensuring any necessary corrective action is taken should performance materially vary from plans and forecasts.

Financial controls:

  • As the Group is a small business with few personnel and limited opportunity for segregation of duties, Board oversight provides the main overriding control
  • The Board receives and reviews detailed reports on financial performance and position against budget and forecast, use of cash, cash forecasts and detailed analysis of portfolio movements. Any material capital or unbudgeted overhead expenditure must be approved by the Board
  • The Board approves treasury and dividend policies and significant changes in accounting policies
  • The Annual Report and Financial Statements, the half-yearly report, interim management statements and any other reporting required by the AIM Rules for Companies (“AIM Rules”) is approved by the Board
  • The Audit Committee supports the board in discharging its financial control duties

Non-financial controls

Maintaining sound controls and discipline is critical to managing the risks of the business. Although we believe our capital-efficient business model mitigates many of the risks associated with start-up and early-stage companies, they are by their nature inherently riskier than more established businesses.

We believe the internal controls we have in place are appropriate for our size, complexity and risk profile. They include:

  • Close management of the everyday activities of the Group by the Executive Directors
  • Established processes in place, overseen by the Chief Executive Officer, to rigorously assess university intellectual property and its commercial potential
  • Executive Directors approving entry into strategic partnerships and collaborations with universities, other research institutions, and industry, and other material contracts
  • Board review and approval of the Group’s risk appetite, the effectiveness of its risk and control processes, and procedures for preventing fraud and bribery in line with the Group’s policies
  • Board review and approval of the Group’s clearly defined key performance indicators to ensure adherence to strategic aims and objectives

The Group is supported by its Nominated Adviser and other professional advisers to ensure compliance with all relevant regulations and laws in the countries in which it operates.

Key risk areas are regularly reviewed and reported on in the annual report and further consideration of risk areas are set out in the Key Risks and Challenges section of in the Group’s Annual Report and Accounts.

Maintain the board as well-functioning, balanced team, led by the Chair

At the year-end, the Group Board comprised the Non-Executive Chair, a Senior Independent Director, two Non-Executive Directors and four Executive Directors – an appropriate balance for the Group’s size and complexity. The Board considers, after careful review, that the Senior Independent Director and two Non-Executive Directors are independent. They are considered to be independent in character and judgement and receive no additional remuneration from the Group apart from a director’s fee.

The Board is satisfied it has the right balance of independence, knowledge and expertise to fulfil its duties and responsibilities effectively.

Six Board meetings are scheduled each year and a number of ad-hoc Boards to approve specific issues such as the interim and annual accounts are held. Each Directors’ attendance record at scheduled Board meetings will be disclosed in the annual report and accounts for the Company.

All Directors are encouraged to use their judgement and challenge all matters. In addition to regular communication with the Chief Executive Officer, the Chairman meets frequently with the Chief Financial Officer and Chief Operating Officer to ensure they are performing as required.

Board activities typically include:

  • Discussing and reviewing the Group’s business model, strategy, objectives and key performance indicators
  • Reviewing the Group’s portfolio companies and their performance, including plans, partnerships and forecasts
  • Continuing to communicate regularly with existing and potential investors in the Group and its portfolio businesses
  • Reviewing financial and non-financial policies, controls and stock market statements
  • Discussing the Group’s capital structure and financial structure, including loans and investments
  • Approving the recommendations of the Audit, Remuneration and Nominations committees
  • Approval and monitoring of the Group’s annual budget and approving extraordinary capital expenditure
  • Governance
  • Directors’ interests, share dealings and related party matters

Details of matters reserved for the board are available on our website.

Conflicts of interest:

The Group has systems in place to monitor and deal with conflicts of interests. Considering and, where appropriate, approving Directors’ conflicts of interest (in relation to the public company and its subsidiaries) is a matter reserved for the Board. Each Director has a statutory duty under the Companies Act 2006 to avoid a situation in which he or she has, or can have, a direct or indirect interest that conflicts or may potentially conflict with the interests of the Group. This duty is in addition to the continuing duty that a director owes to the Group to disclose to the Board any transaction or arrangement under consideration by the company in which he or she is interested.

The Board is aware of the other commitments and interests of its directors and any material changes are reported to and where appropriate agreed with the rest of the Board.

Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

A full list of Board directors can be found here.

Further details on their skills and experience can be found in the Annual Report and Financial Statements.

The Board considers it has an effective and appropriate balance of skills and experience, including in the areas of fund management, private equity, university spin outs and small-to-medium-sized businesses, science, innovation and technology. All Directors receive regular and timely information on the operational and financial performance of the Group and its portfolio companies. Information is circulated to the Board before meetings.

The Board decides the appointment and removal of Directors and there is a rigorous and transparent process in place. The Group’s Articles of Association demand that one-third of the Board must stand for re-election by shareholders annually in rotation and that all Directors must stand for re-election at least once every three years. Any new Directors appointed during the year must stand for election at the annual general meeting immediately following their appointment.

We are an equal opportunities company and ensure we recruit, develop, promote, support and retain skilled and motivated people regardless of disability, race, religion or belief, sex, sexual orientation, gender identification, marital status or age.  The Board acknowledges that certain groups are currently under-represented, and we remain vigilant in ensuring equal opportunities for current and potential members of our team.

All Directors can take independent professional advice to further their duties and are encouraged to engage in activities which further their professional development. Directors can also access the advice and services of the Group’s Company Secretary and Chief Financial Officer.

Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Board performance is closely linked to the performance of the Group. There are clearly defined and relevant key performance indicators, aligned with long-term value creation, which are:

  • Basic earnings per share: profit attributable to shareholders divided by the weighted average number of shares in issue during the year
  • Net assets per share: value of the group’s assets less the value of its liabilities per share outstanding
  • Total revenue and other operating income: growth in the aggregate of revenue from services, change in fair value of investments and realised profit on disposal of investments
  • Profit: profit before tax for the year
  • Total initial equity in new portfolio companies: aggregate percentage equity earned from new portfolio companies during the year

The Board’s performance is evaluated and reviewed against these metrics. How we performed during the year is set out in our Strategic Report at Key Performance Indicators.

In addition, the performance of our committees and individual Directors is reviewed and assessed on an ongoing basis by the Chairman and Chief Executive Officer.

We believe these measures are appropriate for a business of our size and complexity. However, as the business grows, we will continue to the adapt the process to ensure it is appropriate for the organisation and Board structure.

Promote a corporate culture that is based on ethical values and behaviours

Frontier IP is a small company with a very flat structure. The Board is expected to set an example and act in the best interests of the Group and its stakeholders – shareholders, employees, universities, industry partners, suppliers and our portfolio companies. The corporate culture aims to be open and fair in dealings with all stakeholders, working in partnerships to ensure mutual benefit. Ethical values and behaviours are recognised and respected.

It is central to our business model that we work equitably with universities, academics, founders, investors and industry partners. Our corporate values reflect that need.

Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

The Board is satisfied it has the appropriate structures and processes for a company of its size.

Scheduled Board meetings are held six times a year to set and review the Group’s direction, spread throughout the year and aligned as far as possible with its financial and operational calendar. Further meetings are held when necessary. Board meetings are held at the Group’s various office locations and remotely to give the Non-Executive Directors a better understanding of our team’s work.

The Board and its Committees receive relevant and timely information, including Board papers and presentations, before each meeting, which is run to a formal agenda.  All Directors are encouraged to challenge proposals, and decisions are taken on a vote after discussion and debate. Any concerns can be noted in the minutes of the meeting, which are then circulated to directors. Specific actions are agreed and followed up, as appropriate.

Senior executives below Board level attend Board meetings where appropriate to present business updates.

The Board is supported in its decision-making by the Audit, Remuneration and Nomination Committees, and the Company’s Nominated Adviser and other professional advisers when appropriate. The terms of reference for the Board committees can be found on this website.

There is a clear separation of responsibilities at the top. The Chairman, Andrew Richmond, is responsible for running the business of the Board, including meetings, and ensuring strategic focus and direction. The Chief Executive Officer, Neil Crabb, is responsible for setting strategy and ensuring it is executed.

The other Executive Directors support and challenge the Chief Executive Officer in formulating and executing the Group’s strategy, including setting and managing budgets, risk management and compliance with relevant regulations and laws.

While this is appropriate for a company of our size, the Board will review its governance framework regularly as the Group grows.

Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

Frontier IP holds a continuing dialogue with shareholders and other relevant stakeholders through regular updates, frequent conversations, the annual report and accounts, full-year and half-year announcements, the annual general meeting and one-to-one meetings with existing and potential institutional investors.  Investors and other stakeholders are encouraged to provide feedback. There are regular meetings and conversations between the Chief Executive Officer, the communications and investor relations director and shareholders. Board Directors are appraised of shareholder feedback.

Shareholders can vote at the annual general meeting. Group Directors stand down in rotation for re-election.

The Group aims to be transparent, clear and direct in communications with shareholders and stakeholders, including its employees, and university and industry partners.

Information about the Company is disclosed in a timely manner through the RNS and RNS Reach services of the London Stock Exchange and our website: www.frontierip.co.uk . Our Nomad and our Broker are also in regular contact with investors.

In addition, the Company uses several digital channels, including the website, social media and email.  A regular quarterly newsletter is also available to all shareholders via the Group’s internet site. The Chief Executive Officer, Neil Crabb, is regularly interviewed by specialist investor website Proactive Investors and we also hold events to which key stakeholders are invited.

Group corporate notices, including those for annual general meetings can be found here:

https://www.frontierip.co.uk/investors/shareholder-information/notices-and-circulars

Notices of the result of each AGM can be found here:

https://www.frontierip.co.uk/investors/regulatory-news

The result of voting in the 2021 annual general meeting will be presented on the Company website after the AGM has been completed.

Our annual and half-yearly reports can be found here: https://www.frontierip.co.uk/investors/results-centre