Quarterly Update

RNS Number : 0505F

Primorus Investments PLC

12 November 2020

 

Primorus Investments plc

("Primorus" or the "Company")

Quarterly Investor Update

Primorus Investments plc (AIM: PRIM, AQSE: PRIM) is pleased to provide the quarter ending 30 September 2020 ("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

It is with a great deal of pleasure that I write to shareholders to report on the Company's Q3 progress in what will be my, and Jeremy Taylor-Firth's, last Quarterly Investment Update before leaving the Company later this month. A further announcement will be made in due course. Our investee companies, on the whole, have made pleasing progress in what have clearly been challenging times, and most are currently well positioned to execute their business models. As Jeremy and I step away to pursue other interests, we would like to thank shareholders for their continuing patience and belief in the Company. Jeremy and I believe that further gains remain to be realised across the Company's portfolio. I would like to wish Rupert Labrum and his team a warm welcome to the Company and have no doubt that under their stewardship the future prospects for all shareholders in Primorus is very bright indeed. The Company has unallocated cash reserves of approximately £4.8m and a world of opportunity in front of it.

Highlights

• Fully exited its investment in Greatland Gold PLC ("Greatland"), as announced on 4 November 2020, via a recently completed programme of sales of the remaining 20m Greatland shares for gross proceeds of approximately  £4.6m to compliment the 6m Greatland share sale announced on 1 October 2020 which grossed £0.888m. Total gross proceeds have been received in the Quarter of circa £5.5m.

• Total Greatland investment was approximately £633k giving a gross return over investment of approximately £5.9m or a 933% ROI over the life of the investment.

• Invested A$1.86m (approximately £1.1m) in 2m Zuuse shares as part of a now complete circa A$50m capital raise alongside IFM Investors Pty Ltd ("IFM"), a leading Australian fund manager with over A$150bn under management, and Leigh Jasper, co-founder of Aconex construction software which was bought by Oracle in 2018 for A$1.6bn.

• Jeremy Larkin and Adrian Kerley, both of IFM, have joined the Board of Zuuse as non-executive directors alongside Leigh Jasper who has also become a non-executive director.

• Fresho annualised Gross Order Volumes have rebounded to over A$500m which is approaching pre-COVID levels. B2C gains over 75k sign-ups and Fresho retains a significant cash balance.

• The Company finishes the Quarter debt-free with significant cash reserves.

Update on Investments

Greatland Gold Plc ("Greatland") (AIM: GGP)

Greatland's shares began the Quarter at 12p and closed on 30 September at 20.1p representing a quarterly increase of some 68%. Post-period, we sold our remaining stake of 20m Greatland shares for gross proceeds of approximately £4.6m at an average price of 23.09p per share.

Our full exit from Greatland in no way reflects a pessimistic view towards Greatland and its prospects. Having invested in Greatland in late 2018 and early 2019 at an average price of 1.71p per share, the Company is simply realising substantial profits. This has been an outstanding investment for Primorus.

Zuuse Limited ("Zuuse")

Zuuse is a Melbourne-based construction software vendor with significant operations in the UK, USA, Australia and New Zealand. In 2018 , Primorus invested A$500k in a Series B loan note which was subsequently repaid in full with interest taken as 57,205 Zuuse shares. The Company also received 1m options to convert into Zuuse shares (on a 1:1 basis) at a conversion price of A$0.50 per option.

Following discussions with Zuuse, an opportunity was identified to invest alongside IFM as part of a funding package to accelerate growth. Following the recent capital raise, Primorus now holds 2,057,205 fully paid shares in Zuuse and 1m options, representing circa 1.7% per cent. of Zuuse's fully diluted enlarged share capital.

Zuuse's underlying construction payments software businesses continue to perform extremely well despite the challenges associated with the COVID-19 pandemic, with only a small dip in revenues in the Quarter to 30 June and has seen a renewed upward trajectory since. Revenues and EBITDA are on track to surpass those of FY 2019 whilst the platform itself processes in excess of US$2bn per month of construction invoices with that figure growing at a significant compound rate.

By investing now as part of a substantial growth accelerator financing, the Company gains significant exposure to a potentially high-growth, highly profitable business that is already scaling aggressively across the US, UK and Australasia. The deal also brings to the board of Zuuse an impressive group of finance and technology experts, notably Leigh Jasper. Zuuse exhibits many attributes that are desirous for technology investors and we believe our participation represents an outstanding opportunity on a risk-weighted basis for Primorus.

Fresho Pty Ltd ("Fresho")

Fresho reports that it is in many ways returning to business as usual with B2B annualised Gross Order Volumes picking up significantly as the hospitality sector re-opened across much of Australia and New Zealand.  The B2C business continues to grow with over 75k consumers onboard. The two businesses complement each other well and open up a database of over 100k users.  Fresho is re-starting its push into the UK market with a UK general manager appointed and commencing work in February 2021. Fresho is well funded with A$4.3m cash on hand as well as an additional A$1m R&D rebate grant expected soon. With this operational and financial strength, further market opportunities may start to present themselves.  Fresho continues to build out its technology stack and enhanced product suite to service new and existing customers. Whilst focussing on growth, Fresho believes its current cash reserves are adequate to drive the company to positive cashflow as well. This is a highly encouraging update from Fresho and in light of recent global events demonstrates a significant robustness in the underlying business model.

Engage Technology Partners ("Engage")

Engage recently raised £4.2m in a combination of equity and convertible loan notes, to which the UK Government's Future Fund was a major contributor and in which Primorus also participated.

Whist hiring and business operational freezes associated with the first COVID-19 lockdowns impacted on Engage's monthly revenues significantly, we are pleased to learn that, as with Fresho, the business is rebounding strongly and approaching pre-COVID levels. Interestingly, the number of live corporate customers has now exceeded its previous peak.

Engage recently signed its largest ever client, G4S, to initially provide services to management controls at their national COVID-19 testing facilities. This also presents opportunities with their other business units, with the potential of achieving significant national and international scale. Despite the recent challenges, Engage has remained steadfast in the execution of its business plan which is to become a pure SaaS (software as a service) offering, thereby delivering exceptional products and service from a very low cost base. Further, Engage has now made remote working permanent [in its own operations] to improve productivity and reduce recurring costs.

With Engage now well-funded for the next 24-36 months and on a path to break-even, Primorus looks forward to watching Engage's business flourish. We believe the most likely exit scenario remains a secondary or trade sale to a complimentary sector provider who will acquire Engage to augment their own business model. Given the scale and depth of the industry we believe there should be no shortage of potential suitors.

WeShop Limited ("WeShop")

WeShop raised £9m to accelerate its business plan and Yoav Keren, the founder and CEO of Israeli technology company Brandshield, recently joined the Board. We see both of these events as very positive because all plans are just plans in the absence of funds to make them reality and management to execute. With global E-commerce one of the huge beneficiaries of the global pandemic, we see this now as a pivotal opportunity for WeShop to make real inroads into the sector. We await news of progress now that these key elements are in place.

TruSpine Technologies plc ("TruSpine")

TruSpine's shares were admitted to trading on the Aquis Exchange (the AQSE Growth Market) on 20 August and whilst the price performance has been poor on very tight liquidity, we view the next few months as an exciting time for the company as it awaits its fast-tracked FDA approval for its Faci-LOK device. If granted, we would expect the share price to recover strongly as this should provide the necessary impetus for TruSpine to be in a position to market and sell its products.

Sport:80 Services Ltd ("Sport:80")

Prior to March, Sport :80 had said that 2020 was shaping up nicely with a forecasted revenue increase on 2019 and a second consecutive year of profit. However, with the challenges of the COVID-19 pandemic taking hold from March, transactional revenues fell dramatically as events planning and delivery ground to a halt.  Sport:80 adjusted its forecast revenue downward by 25% for the year and advised that revenues are largely in line with this revised forecast. Despite this, Sport:80 continues to add new clients and expects revenue to recover well when clients' sales activity increases through 2021 and 2022. Management indicates that despite these downgrades, Sport:80 does not need to raise capital in the short-term.

Seecubic Inc./StreamTV Networks, Inc. ("StreamTV")

StreamTV, now Seecubic Inc. has been the subject of a n ongoing shareholder action to remove the previous management. This was instigated by the largest shareholders and supported by us in the form of joining a Shareholder Action Group. Given we are a very small shareholder compared to the very large family offices and hedge funds leading the group our financial contribution to bring about change was minimal (~£7,000). With an exciting technology suite, the major shareholders became frustrated with a lack of acceptable progress towards commercialisation and a perceived lack of experience of the management group in negotiating and securing large (>US$250m) investments and production contracts amongst other shortcomings. We see the Shareholder Action Group as being successful in its aims and this should only reflect well on the prospects for our investment.

SOA Energy ("SOA")

SOA has already advised shareholders that drilling at the Ofek oil discovery shall resume as soon as border restrictions are lifted in Israel and that continues to remain the case.

Nomad Energy ("NOMAD")

Elsewhere in our energy investments, Nomad remains a concern. Political gridlock in the Ivory Coast appears endless and we declined to participate in a dilutionary capital raise recently and as such the outlook for this investment remains poor unless management can somehow recover value.

Corporate Update

We mentioned in our half year report that we would explore the possibility of the Company buying back, where appropriate, up to 10% of its issued share capital via a share buy-back programme. However, upon further review, the Board has concluded not to proceed with a share buyback programme at present.

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

 

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