Quarterly Investor Update

RNS Number : 9557U

Primorus Investments PLC

18 July 2018

 

Primorus Investments plc

("Primorus" or the "Company")

Quarterly Investor Update

Primorus Investments plc (AIM: PRIM, NEX: PRIM) is pleased to provide the Quarter ending June 30, 2018 ("Q2") periodic portfolio update regarding its current holdings and activities acquired and managed as per its investment mandate.

Executive Director's Quarterly Comment - Alastair Clayton

I am pleased to be able to provide shareholders and stakeholders with a review of our activities in Q2. As evidenced below, many of our investments are maturing to the point where we hope to soon see tangible rewards via either IPO or trade sale. Add to this the long-awaited commencement of the HH-1 Extended Well Test and we are confident that the coming Quarter will be a very exciting one for shareholders.

Highlights for the period were as follows:

·      Horse Hill Developments Limited's ("HHDL") Extended Flow Test of the HH-1 oil discovery has commenced. Relevant updates as they are received from HHDL will be released to shareholders.

·      In recent days we invested a further £250,000 at £22 per share in Engage Technology Partners, taking our total investment in this £22 per share round to £750,000. Engage have recently added a very high-profile global fast-food chain to its customer list and now has 55 corporate users, up from 24 last quarter. Engage now discussing investment entry points with several large technology investors in advance of planned IPO in 2019.

·      WeShop appointed Andrew Lawley, former Group Director of Strategy at Dixons Carphone Warehouse PLC as Managing Director. Early-stage IPO preparations underway.

·      Sport:80 have nearly completed IPO documentation and we have been advised that, subject to successful completion and capital raise, admission to AIM is expected to occur in Q3 or Q4 2018.

·      SOA final approvals from the Israeli Government for a farm-in/funding deal may be imminent. Should this approval be granted we understand the Company will target a UK listing late in Q1 2019.

·      Fresho continues to grow strongly and we are informed by management that gross order value run rate is over A$200m per year. The number of new businesses waiting to be "onboarded" to the platform is now quite significant and points to impressive product take-up.

·      TruSpine have been informed the FaciLOK patent is ready to be granted and have also received an R&D Tax Credit Rebate of approximately £425,000. Strategic partnerships and FDA approvals progressing well.

·      StreamTV continues commercial negations with key international investor groups. We await their successful conclusion.

·      Nomad Energy continued to negotiate a gas sales agreement with the Government of Ivory Coast to commercialise its gas reserves.

·      FOMO full investment returned to Primorus treasury following FOMO's inability to secure debt on terms acceptable to shareholders.

Investment news flow can be a little like busses in that you don't see much for a while, and then a whole lot all comes along at once. That is a good analogy for Q2 in that we have in recent days and weeks received many updates from our investment portfolio that we have included in this review.

Key to our central strategy of investing in Pre-IPO is then demonstrating tangible IPO results and pleasingly two of our investments, Sport:80 and WeShop are undergoing the formal IPO process and are proposing to gain admission in Q3/Q4 2018 and Q1 2019 respectively.

Sport:80 has now largely completed its IPO documentation following the appointment of both a broker and NOMAD to support admission to the AIM market. In a recent meeting with management we were informed that they have received encouraging marketing responses from potential investors in the IPO and once the traditionally slow summer period draws to a close, Sport:80 intends to raise the IPO funds and, subject to this, gain admission to the AIM market in Q3 or Q4 2018.

Whilst we only have a £100,000 investment in Sport:80 we expect this to be our first investment to go through to IPO. In that respect it will be pleasing for us as management to demonstrate the investment model in action.

WeShop is one of our larger investments with £875,000 invested in two tranches. Our initial investment of £200,000 was at £5.36 per share and our later £675,000 at £5.98 per share. On the 9^th of July we were pleased to read that another AIM-listed investment company, Two Shields Investments Plc (TSI.L) invested £150,000 at £5.98 per share. Furthermore, the already impressive Board of WeShop was significantly bolstered by the appointment of Andrew Lawley, former group director of strategy at Dixons Carphone Warehouse PLC, to the role of Managing Director.

Subsequently we have been informed by WeShop that they have commenced the IPO documentation process with the goal of listing on the main market (Standard Segment) of the LSE by Q1 2019.

We look forward to keeping shareholders abreast of progress towards a WeShop IPO as it progresses, especially given the relative size of our investment in this company.

Shareholders will recall that Fresho provides seamless middleware to allow large national and global food suppliers to interact directly with a myriad of small and medium-sized businesses. Uptake of the platform by industry continues to grow so fast that the backlog of prospective users requiring onboarding to the Fresho platform is now very large. As a result, the key technology spend at Fresho involves improving an automating the onboarding process for new users. As this technology enhancement evolves we expect the new user backlog reduce and unleash the full potential of the platform.

We are informed by management that gross order value run rate is over A$200m per year.  We will be likely to give shareholders a further, more detailed update on Fresho once we meet management in mid-September but as it stands we still hope to see a liquidity event on this investment in 2019.

We have £500,000 invested in TruSpine and it is one of our earlier investments. TruSpine is an example of a company that has been hamstrung by lack of funding in the past. As reported in our last Quarterly review we believed that the appointment of Simon Stephens as the new CEO would help unlock funding and we are pleased to report we were largely correct.

Recently TruSpine secured additional investment funding from a private investor as well as a circa £425,000 R&D Tax Credit rebate from HM Treasury allowing the patent and FDA processes to get moving again. As a result, the TruSpine has been now been informed that its pending patent for its FaciLOK product is now ready to be granted. On top of this, the additional funding has allowed TruSpine to keep its first FDA clearance moving.

In terms of bigger picture funding to complete the FDA approvals process and commence the IPO, we have been informed by management that TruSpine has been involved in detailed talks with two separate groups, both of which involve a potential significant investment, and assistance with product commercialisation and manufacturing. Whilst successful outcomes of these discussions are not guaranteed we believe these overtures illustrate the value in the company's products and potential.

Given the mature nature of the discussions with both funding groups above, we expect in the coming weeks and months to be above to be able to update shareholders further on progress at TruSpine if/when contractual negotiations on any of the above complete.

It is testimony to the level of activity in our portfolio that our discussion regarding Engage Technology Partners has taken this long to get to in this document. As outlined above in the highlights we invested a further £250,000 at £22 per share in Engage Technology Partners, taking our total investment in this £22 per share round to £750,000. We have also invested £400,000 in an earlier £15 share round back in 2017 taking our total investment to £1,150,000 representing circa 3% of the equity in Engage.

The growth and sales at Engage has been particularly pleasing. Notably Engage have recently added a very high-profile global fast-food chain to its customer list and now has 55 corporate users in the UK, up from 24 last quarter and its sales pipeline is extensive. On the corporate side we are informed by management that Engage is now discussing investment entry points with several large and noteworthy technology investors and is working closely with a City broker to close a large investment in the coming months as a pathway to the planned 2019 IPO. We are aware that two global players in the HR/Payroll technology industry are already seeking negotiations with Engage to discuss options. Management have told us they believe it is still too early to contemplate any deals just yet and we tend to agree with them.

In the coming months we are likely to dedicate a larger and more detailed shareholder update on Engage as we hope that several key sales, product and corporate discussions understood to be in train come to a conclusion.

NOMAD energy continues to negotiate with the Ivorian Government regarding an off-take for its domestic gas reserves in conjunction with its project partner VITOL. We look forward to updating shareholders if/when these negotiations reach a conclusion.

In recent discussions with management, we are told that StreamTV continues commercial negations with key international investor groups.  If any funding deal is contractually concluded we will update shareholders as appropriate.

Sometimes we make investments in a company that, for a range of reasons, don't work, FOMO Money is an example of this. Shareholders may recall Primorus invested A$400,000 (approximately £240,000) in FOMO Money Pty Ltd ("FOMO Money") on a pre-new money valuation of circa A$6m.  FOMO Money is an online lending business which was to offer personal loans and, in time, brokered home loans that will target the millennial market. 

Key to FOMO's business model was securing senior debt on a scale and at a price that made its products competitive. Subsequently, and largely due to a deterioration in the alternative lending markets associated with significant banking reform in Australia, we were informed that FOMO's preferred senior debt provider was no longer able to offer attractive financing. After a broader search for better-priced debt lasting some 6-9 months, it was concluded recently that the offers available to FOMO were materially different to those contemplated when we invested.

As such, it was agreed jointly between Primorus and FOMO that we would effectively cancel the binding obligation to invest, and our total investment monies would be freed to invest elsewhere.

Pleasingly we can confirm that this has indeed occurred and that we have been able to re-deploy some of this investable cash into more Engage shares as outlined above. We would like to thank the Board of FOMO Money for being so open and transparent with us throughout this protracted process and believe they have acted in a manner that is a credit to themselves and their Company. We wish them well for the future.

So in summary and as evidenced above, the portfolio continues to evolve and mature over time to the point where we are expecting the first of our investments to IPO in the coming Quarter or just after. We continue to invest heavily in Engage Technology as it grows and develops its business and may look to invest further should the opportunity arise. Our oil and gas investments are dominated by our interest in the HHDL and the ongoing EWT at the HH-1 oil discovery. We are however hopeful that further news regarding SOA and NOMAD will be forthcoming in the quarter. We look forward to reporting back from our meeting with Fresho management in mid-September.

Lastly we would like to thank our shareholders for their continued support and I look forward to keeping all stakeholders updated with news regarding our portfolio as it occurs.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information, please contact:

Primorus Investments plc:	[phone]
Alastair Clayton
Nominated Adviser:	[phone]
Cairn Financial Advisers LLP
James Caithie / Sandy Jamieson
Broker:	[phone]
Turner Pope Investments
Andy Thacker

FORWARD LOOKING STATEMENTS:

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur.  Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information.

 

END

 

 

UPDMMGMNGNDGRZZ