TIDMPRIM
RNS Number : 6436Y
Primorus Investments PLC
10 May 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 31 March 2019 ("Q1" or the "Quarter")
periodic portfolio update regarding its current holdings and
activities acquired and managed as per its investment mandate.
Executive Director's Quarterly Comment - Alastair Clayton
The first Quarter of 2019 has been another good one for Primorus
despite rather negative sentiment in UK markets. The Quarter has
been punctuated by really good news in some of our larger oil and
technology investments and several of our longer-term investments
beginning to hit their straps. We also welcomed several TR1
shareholder notifications and launched our Twitter page
(@priminvestments) and I would encourage interested shareholders to
follow us to keep up to date with our investee companies first
hand
I don't need to tell shareholders the current macro-political
situation in the UK is difficult and whilst probably not directly
affecting many/most of our investments, it does act as a drag on
City confidence. To that end the IPO market in London is, by
historical standards, pretty weak at the moment.
The good news for shareholders is, as demonstrated by our highly
profitable exit from Horse Hill Developments Limited ("HHDL") in Q4
2018 and the recent offer for our Fresho stake (which we declined),
that we are not solely reliant on the IPO market to exit our
investments.
There are a whole range of potential acquirers for our
investments including; industry players, other pre-IPO investors,
venture capitalists, incoming later-stage investors, high net worth
individuals and family offices to name a few.
We are regularly talking to many of these types of investors to
discuss future exits from our investments so, whilst frustration at
face-value with a lack of IPO activity in the timeframes we
estimate/provide guidance for may be warranted, it does not
necessarily detract from our ability to generate returns from our
investments. This is important to consider when evaluating the
overall performance of our investee companies.
Highlights for the period:
Our largest investment, GBP1.4 million in Engage Technology
Partners reports that its monthly recurring revenues and billable
transactions have increased significantly on the back of the much
awaited first Self-Serve truly scalable SaaS products. More to come
in Q2.
Greatland Gold (GGP.L) signs a Farm-in Agreement with Newcrest
Mining (NCZ.AX) ("Newcrest") over the Havieron Project. Newcrest
has the right to acquire up to a 70% interest in 12 blocks within
E45/4701 that cover the Havieron target by spending up to US$65
million (circa GBP50 million or AUD$90 million) and completing a
series of exploration and development milestones in a four-stage
farm-in over six years.
SOA Energy ("SOA") execute a farm-in with Delek Drilling
("Delek"), one of Israel's largest Oil and Gas companies with a
market capitalisation of circa US$3.5 billion. According to the
agreement, Delek will invest up to US$8.3 million, in return Delek
will assume a 25%, non-operated stake in each of the Ofek and Yahel
licences, leaving SOA with a 45% stake in each permit. The IPO and
drilling programme is still on track for 2019.
Fresho press ahead on its accelerated growth programme and
completes a heavily backed A$2.55 million capital raise at 47%
premium to our initial investment price. Primorus received a bid
for its stake but declined the offer.
Zuuse completes its UK institutional roadshow as it contemplates
a UK IPO in 2020. Primorus holds A$500,000 in Series B loan notes
attracting a (rolled up) coupon of 12% due December 2019 as well as
1,000,000 options in Zuuse exercisable at A$0.50. We expect Zuuse
to next raise capital at a price greater than A$1.00.
WeShop strengthens its Board ahead of an anticipated institution
funding pitch in Q2.
The Company finishes the Quarter debt-free and the Board still
foresees no short-term need or intention to raise capital.
Update on Investments
Engage Technology Partners ("Engage") is our largest investment
with a total of GBP1.4 million invested across two funding rounds.
We invested in Engage because we believe it has potential to sweep
the SME market for temporary and permanent recruitment, agency back
office and pay and bill, would be hugely valuable if they could
develop and release a pure SaaS, mass-market, scalable
platform.
I am very happy to report that the first Self-Sign-Up
"Registration & Compliance" went live on 25 March and this will
be joined before the end of Q2 2019 by "Vacancies", "Placements"
and "Timesheets" for agencies; "Vendor Management Service" for
hirers; and "in-app" invitations between agencies and hirers to
drive unassisted "network" sales.
As a result, Engage has already seen monthly recurring revenue
and billable transactions increase significantly and we eagerly
await further exponential growth and complimentary
revenue-generating product releases to join the suite
imminently.
What this means for Primorus as investors is that the product
derived from the core proposition we invested in some time ago can
now be sold and we can observe its progress in the market and map
the key metrics.
We expect Engage to undertake further modest fund-raising
activities in the near-term as part of its considered capital
deployment plan to maintain the momentum of product releases as
they drive towards breakeven on a cashflow basis later in 2019. In
terms of timing, exiting our investment in Engage is really
dependent on the product growth and performance over the next six
months. Continued success and confirmation of the power of Engage
will clearly give us and Engage the largest number of options to
consider. IPO, trade sale or secondary sell-down are all possible
outcomes we may need to consider.
We are very pleased to report that Fresho is pressing ahead with
its plans for growth of sales and product development. As
shareholders will recall in March, we participated in a fully
subscribed A$1.5 million capital raise at 47% premium to our
initial investment price. In doing this we maintained our circa
3.4% shareholding.
Since the end of the Quarter, Fresho have accepted a further
A$1.05 million in subscriptions from several high-profile
technology investors. This has diluted our shareholding to circa
3.1%. We are expecting some press soon discussing their
participation and believe once known, their investment in Fresho
should prove a huge endorsement and open many doors for the company
both in Australia and internationally.
Shareholders will recall that in March we were offered a price
for our shareholding in Fresho which we decided not to accept and
whilst we are well ahead on our investment already, we consider the
real growth in value of our investment is only just beginning.
Greatland Gold PLC ("Greatland") has announced they are soon to
kick off exploration at their Black Hills prospect in the Paterson
Province in Western Australia. This follows on from the exploration
commencement at the Firetower Project in Tasmania and very soon the
much anticipated Havieron exploration programme recommences.
Of course the huge news during the Quarter was the Farm-in
Agreement with Newcrest Mining (NCZ.AX) ('Newcrest") over the
Havieron Project. Newcrest has the right to acquire up to a 70%
interest in 12 blocks within E45/4701 that cover the Havieron
target by spending up to US$65 million (circa GBP50 million or
AUD$90 million) and completing a series of exploration and
development milestones in a four-stage farm-in over six years.
Clearly, the farm-in by Newcrest supports our belief that the
results to date make Havieron one of the most outstanding
Gold/Copper projects globally. It was pleasing to be able to get
our shareholders exposure to Havieron before Newcrest.
We believe recent share price softness in Greatland is simply a
function of market impatience and short-sightedness. I was asked
recently by a shareholder why Primorus bought its shares in
Geatland. The simple answer is because we believe the share price
will appreciate substantially and that the market is asleep to the
opportunity before it. With exploration kicking off now across
multiple projects we hope to soon be proven correct.
As flagged in our Q4 report, SOA Energy were close to concluding
a significant farm-in deal over its prospects in Israel. We were
therefore very pleased to report in late March that a farm-in with
Delek Drilling ("Delek"), one of Israel's largest Oil and Gas
companies with a market capitalisation of circa US$3.5 billion had
been executed. According to the agreement, Delek will invest up to
US$8.3 million, in return Delek will assume a 25% non-operated
stake in each of the Ofek and Yahel licences, leaving SOA with a
45% stake in each permit.
This now allows for Ofek's re-entry/appraisal well drilling
programme to get underway, most likely in Q2/Q3. Upon successful
conclusion this will allow long-held plans to list the company in
London to commence. We look forward to the commencement of drilling
activities and are pleased that this significant hurdle to "value
unlock" for our investment has now finally been cleared.
We are eagerly awaiting news from NOMAD Energy on their
sensitive negotiations with VITOL and the Ivorian Government. We
will report back as soon as we have any information cleared for
release.
Zuuse is an international construction payments and lifecycle
software vendor with significant operations in the UK, United
States and Australia. With forecast revenues in CY2020 of circa
US$30 million and already EBITDA positive, the company is now
evaluating the potential for a UK listing in 2020 to support
further global growth ambitions. With some US$1.2 billion per month
through the platform globally and growing at a compound 5-6% per
month we see Zuuse as a strong candidate for a successful IPO in
the coming 12-18 months.
Shareholders will recall we also hold A$500,000 in loan notes
due December 2019 at an attractive rolled up coupon of 12% as well
as some options. Given we expect the next capital raise by Zuuse to
be greater than A$1.00 per share and with a total of 1,000,000
options at A$0.50 in Zuuse it is fair to say we are pleased with
the performance of this investment already.
We believe this investment is a good example of taking
opportunities that arise in niche funding rounds that in a
relatively short space of time can be very lucrative.
We are not yet in a position to be able to provide a detailed
update from StreamTV, who we understand are in the process of
arranging a significant capital injection to expedite their push to
commercial sales in 2019. We will report back once we have a full
update. As we stated last quarter, once the company locks down a
large funding package we can discuss what we feel our valuation
relative to initial investment on this investment might be and what
the next steps to realising it might look like.
Similarly, we understand TruSpine are in the process of mapping
out a route to IPO presently having garnered interest from several
investors recently. As such, and once plans have been finalised, we
will report back to shareholders with a more detailed update.
On the Sport:80 front we now believe an IPO in the short-term is
unlikely. A delay due to a protracted disagreement with a
shareholder means that realistically the window for an IPO (given
significant softness in the IPO market in the London) has now
closed. While disappointing, we also believe it is the right
outcome. We would prefer Sport:80 to focus on growing its business
rather than spending significant cash on an IPO process that would,
in all likelihood, be met with an anaemic market response. We will
get a more detailed update from Sport:80 in the coming quarter.
WeShop have yet to give us any further update other than the
investment update we released in mid-March.
Summary
The message from this Quarterly is that regardless of a weak IPO
market, we have a number of other ways of exiting our investments
including trade sales and secondary sell downs. This has already
been demonstrated not only by our HHDL exit but also the bid for
our Fresho stake which in this case we declined.
Several of our longer-standing and larger investments really
began to hit their straps with Engage and SOA passing significant
commercial milestones that we have been eagerly awaiting and Fresho
pushing forward with a rapid expansion of their business, something
we have advocated for some time. Our Zuuse debt and options
investment package looks very well timed and lucrative and with
three concurrent drilling programmes across Australia we believe
Greatland Gold/Newcrest will be generating a significant amount of
news flow in the coming Quarters.
With no debt and no foreseeable need to raise capital, we are in
a position to maximise any potential uplifts and exits in our
portfolio as it stands today.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
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
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END
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