TIDMPRIM
RNS Number : 0348T
Primorus Investments PLC
12 November 2019
Primorus Investments plc
("Primorus" or the "Company")
Quarterly Investor Update
Primorus Investments plc (AIM: PRIM, NEX: PRIM) is pleased to
provide the quarter ending 30 September 2019 ("Q3" or the
"Quarter") investor update regarding its current holdings and
activities acquired and managed as per its investing policy.
Executive Director's Quarterly Comment - Alastair Clayton
In a Quarter when it has been almost too painful to switch on
the 6 o'clock news to witness the political paralysis afflicting
the UK, Primorus managed to generate a very positive Quarter.
Notably we completed our exit from the Zuuse Series B Loan Notes
and saw significant news flow from a diverse range of our
investments including Engage, Fresho and WeShop.
With the UK IPO market becalmed, we continue to observe a trend
away from public company investing and toward private and venture
equity. Despite some rather prominent failures in the space
recently, the Board of Primorus continue to believe that model of
offering a publicly listed company structure investing in largely
private companies is attractive on the proviso that methods used to
value these investments are conservative. To this end, we continue
to value our investments in a manner that doesn't inflate potential
gains based on potentially unjustifiable valuation events.
With our total Zuuse Series B investment outlay of GBP275,000
returned to treasury and 57,205 fully paid shares and 1m A$0.50
(26p) options now on the balance sheet it is likely this trade will
generate an excellent profit in the next set of accounts given we
understand that Zuuse has just closed an A$16m capital raise at
circa A$1 per share. Furthermore, a deep "grey" market exists for
these shares and options and as such we believe the ability to
realise value for these holdings in advance of any IPO or other
liquidity event is substantial. This has been a very pleasing trade
and my only regret is Primorus was unable to take a larger
investment.
Elsewhere Greatland Gold ("GGP.L") reported yet more significant
news from its Havieron JV with Newcrest Mining ("NCM.AX"). We
continue to see this investment as hugely undervalued and believe
the UK market is failing to understand the significance of the
drilling reported to date. More importantly we believe that given
the proximity and feed requirements of the large Telfer Gold/Copper
Mine, the eventual owner of the entire Havieron Project may be
somewhat self-evident.
In the last few days we have received updates from Fresho
("Fresho") and SOA Energy ("SOA") and elsewhere many of our
investments continue to perform well whilst some seem to be a
little stuck when it comes to securing further growth capital. We
shall discuss this in further detail below.
Following approval at an EGM on 16 October 2019, we completed a
1 for 20 share consolidation in an attempt to narrow the quoted
spread for our shares. We believe over time this will prove
successful.
The 23 November will mark the second anniversary since Primorus
last issued equity. Since then members of the Board have invested
significant sums buying shares in the Company. We continue to see
no short to medium term requirement to raise capital thereby
reducing the risk of any potential dilution to all of us existing
shareholders.
Highlights
-- As announced on 25 September 2019, Primorus exited its Zuuse
Series B Loan Note investment by fully redeeming the GBP275,000
face value of the notes and putting 57,205 fully paid shares and 1m
A$0.50 options on the balance sheet.
-- Further outstanding Gold and Copper assays reported from the
Havieron JV between Greatland Gold (GGP.L) and Newcrest Mining
(NCZ.AX) ('Newcrest"). Six rigs now drilling and 15 further holes
either complete or in train, doubling the hole count at the
project. We are expecting further updates soon.
-- Fresho Gross Order Volume up by 60% since April to nearly
A$500m in annualised orders now through the platform. Invoice
finance feature Freshopay launched. First UK user signed and we
expect Fresho to make huge inroads into the UK fresh food market
where a direct competitor has as yet to be identified.
-- Post-period we again topped up our investment in Engage
Technology Partners ("Engage") by GBP50,000 to GBP1.50m. We
recently received an update from Engage highlighting outstanding
growth in monthly recurring revenues and billable transactions on
the back of the first Self-Serve truly scalable SaaS products.
-- SOA Energy reports formation of Joint Operating Committee
("JOC") and completed rig inspection for the upcoming appraisal and
production testing programme with Delek Drilling at the Ofek Field.
We have been informed that rig mobilisation will occur early next
year and drilling not long thereafter.
-- Company finishes the quarter debt-free and the Board still
foresees no short to medium term need or intention to raise
capital.
Update on Investments
As described in some detail above, the Zuuse trade is an example
of the trades that Primorus aspires to. It was a highlight of the
Company's third quarter and one we hope to replicate when next such
an opportunity arises. Again, our frustration only lies in the fact
we don't have a larger balance sheet to take on larger such
investments in outstanding opportunities with outstanding companies
like Zuuse. We aim to rectify this.
We talk a lot about Greatland Gold and it features strongly on
our @priminvestments twitter page primarily because the company is
already AIM-listed. Australia's largest gold miner, Newcrest,
continues to report superb drill results of huge widths of high
tenor Gold and Copper mineralisation at Havieron. When initially
building our position in Greatland Gold we did recognise that the
share register being so disparate was a potential drag on the share
price. To be frank, we have been surprised at how much the apparent
high-volume, low conviction trading has affected the share price
over the last 12 months.
Clearly we would prefer to see the Greatland share price better
reflect the value and potential at Havieron and elsewhere across
their project portfolio. We are also mindful that the fundamentals
underpinning our investment have actually exceeded our initial
expectations.
As a previous Director of Extract Resources representing
Kalahari Minerals, I know this is not the first time a critical
resource was discovered near to a major mining houses' large but
depleting operating asset. In 2012 we achieved an incredible return
for our shareholders by being patient and we remain so with
Greatland Gold. It is our firm view that with continued exploration
success the ownership of Havieron may eventually change to fit the
production requirements of Newcrest's Telfer Mine just 40km
away.
It was with some pleasure that we received notification from the
CEO of SOA Energy that the JOC for the Ofek re-entry and appraisal
programme has commenced and that rig inspections and planning were
in full swing to kick off drilling early next year. Planning,
permitting and approvals for such activities across a range of
Government stakeholders always takes significant time and effort
and we would pay compliments to SOA for their doggedness and
persistence in moving the company forward to the point where the
real value accretion (drilling) for us as shareholders can
commence. I expect our Q1 2020 shareholder update to potentially
hold the first hard data for the initial outcomes of the Ofek
programme and on the back of that the likely timing to IPO or
exit.
As alluded to in our last shareholder report, Fresho has now
signed its first UK customer with planned product roll out to begin
in early 2020. We have been told anecdotally there is no known
direct competitor for the Fresho platform. We find this very
exciting and to this end expect a huge push into the UK market by
Fresho in 2020.
Elsewhere, the business is gathering pace. Gross Order Volume
("GOV") has now grown some 60% since April with nearly A$500m in
annualised sales through the platform at the end of October.
Furthermore, with the launch of FreshoPay, an innovative invoice
financing module unique to the fresh food industry, the overall
Fresho product suite is expanding into new areas.
Fresho have now cemented, and are leveraging off, their place in
their home market of Australia and are pushing hard into New
Zealand with the UK and North America to follow in 2020. Fresho are
choosing to grab market share by growing GOV as fast as possible
and aim to monetise much of that platform volume later on. This has
been done thus far from a balanced EBIDTA footing. By managing to
keep real EBIDTA at near neutral levels, Fresho is most definitely
not an endless consumer of operational cashflow. We expect a
further capital raise to occur before the end of 2019 to provide
additional funds to expand rapidly into the UK and examine the
North American opportunity. We have already been informed this
would be only available to existing shareholders.
In terms of monetising our Fresho investment, we are very much
of the opinion that the best multiples of growth will soon be
before us. We expect to be in a position to consider at least a
partial exit in 2020 having turned down one offer earlier this
year. We would stress however, that with continued outstanding
growth as evidenced above and disciplined management at the helm
our expectations of fair value have increased again.
Engage Technology Partners is our largest investment, now with a
total of GBP1.5m invested across four funding rounds. Engage has
great potential in the SME market for temporary and also permanent
recruitment, agency back office and payment and billing if it is
able to develop and release a pure SaaS, mass-market scalable
platform. This is very much a case of sitting back and watching the
Engage team execute this clearly defined business plan.
As flagged in our last report Engage recently undertook a modest
rolling fund-raising of circa GBP1m in equity (and debt) at GBP24
per share. We took another small amount of the equity, GBP50,000,
and may look to take another small amount in the coming months.
We will return to Engage as a separate update in the coming
period with a more detailed information as we did on the 1 October
2019.
In the quarter under review StreamTV has been focussing on the
financial and capital management side of the business. Whilst chip
manufacture and product commercialisation activities are moving
ahead. We are limited in what else we can say regarding StreamTV
until the outcomes of the various commercial funding and management
initiatives are clear.
WeShop had a very significant update to all shareholders during
the quarter. Primorus has invested a total of GBP875,000 in WeShop.
Recently Two Shields Investments ("TSI") made a further GBP400,000
investment into WeShop.
As evidenced by our July WeShop update, the company gained
considerable momentum in finalising the product and proposition for
user acquisition later this summer. Some significant commercial and
product agreements, and integration, have also been achieved.
As mentioned in our introduction, several investments in our
portfolio seem to have generated little material news we can report
to shareholders for some time. This doesn't mean that these
companies are static, it just means the material news we can report
has not eventuated yet. We are aware TruSpine and Sport80 are
actively working on funding packages to undertake vital product
development and in Sport80's case grow the already revenue
generating business through capital deployment. I can attest to how
difficult the capital markets are for small, early-stage companies
seeking to raise money in the UK. On the flip side all our investee
companies have thus far been able to raise sufficient capital or
are generating sufficient revenues to keep afloat without a call on
existing shareholders. This in itself is a good result. Elsewhere,
NOMAD Energy ("NOMAD") remains actively engaged in negotiations
with Government and VITOL. We do not as yet have any verifiable
outcomes to report to shareholders, however we have spoken to
NOMAD, and are, despite the prolonged timetable, hopeful that the
next Quarter may see some movement in at least one of these
commercial outcomes for NOMAD.
In terms of being judged by our shareholders this is still
disappointing as several of our long-term investments remain in
need of that all-important growth capital. To this end we remain
supportive of our investee companies and always assist when asked
in terms of commercial advice and introductions. Quite simply it is
in our interests to do so.
Summary
So as we head towards Christmas, the Quarter has been another
one of very significant progress at the majority of our core
holdings, a very satisfying result from the Zuuse Loan exit and
more frustrating news from some of our investments. We have managed
to generate returns and grow the balance sheet in a manner that has
not required us to raise capital for nearly two years, thereby
avoiding diluting shareholders. To this end we can tolerate the
share price not reflecting the underlying investments for a limited
amount of time but believe this has persisted for far too long. As
evidenced by the above report, there are plenty of reasons to be
very optimistic about the outlook for the Company's investment
portfolio going forward, even in these uncertain times. The Board
would like to thank shareholders once again for their support and
reiterate that it is committed to delivering shareholder returns
via share price appreciation and/or direct distributions to
shareholders when it is in a position to responsibly do so.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Forward Looking Statements
This announcement contains forward-looking statements relating
to expected or anticipated future events and anticipated results
that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market
and business conditions, competition for qualified staff, the
regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political
jurisdiction, uncertainties regarding the results of exploration,
uncertainties regarding the timing and granting of prospecting
rights, uncertainties regarding the Company's ability to execute
and implement future plans, and the occurrence of unexpected
events. Actual results achieved may vary from the information
provided herein as a result of numerous known and unknown risks and
uncertainties and other factors.
For further information, please contact:
Primorus Investments plc: +44 (0) 20 7440 0640
Alastair Clayton
Nominated Adviser: +44 (0) 20 7213 0880
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
Broker: +44 (0) 20 3621 4120
Turner Pope Investments
Andy Thacker
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 rns@lseg.com or visit www.rns.com.
END
DOCBRBDBIXBBGCB
(END) Dow Jones Newswires
November 12, 2019 02:01 ET (07:01 GMT)
Primorus Investments (LSE:PRIM)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Primorus Investments (LSE:PRIM)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
