Quarterly Investor Update

RNS Number : 0267P

Primorus Investments PLC

15 February 2021

 

Primorus Investments plc

("Primorus" or the "Company")

Quarterly Investor Update

Primorus Investments plc (AIM: PRIM) is pleased to provide an investor update for the quarter ended 31 December 2020 ("Q4" or the "Quarter").

Executive Chairman's Quarterly Comment - Rupert Labrum

As set out in our last quarterly update, significant changes were implemented at Board level, with the three previous directors stepping away from the Company to pursue their other interests whilst I, together with Hedley Clark and Matthew Beardmore, the non-executive directors, joined the Company with a view to bringing a fresh perspective to the Company and its business. We were joined by Simon Holden, a corporate lawyer with significant capital markets experience, who serves as the Company Secretary. Having been in situ since the end of October, we implemented a wide range of cost-cutting measures. Directors' fees and salaries were significantly reduced together with other ancillary costs which we felt were unnecessary, including the dual quotation of the Company's shares on the Aquis Stock Exchange ("AQSE").

As previously announced, Primorus disposed of its entire stake in Greatland Gold plc ("GGP") during the Quarter, which resulted in the Company having a significant net cash position at the end of the year, also being the financial year end of the Company. At the end of Q4, the Company's only other publicly quoted investment was TruSpine Technologies Plc ("TruSpine"), which is quoted on AQSE. All the Company's other investments were in privately held companies.

The Board spent a significant amount of time reviewing and discussing the Company's current portfolio of investments. We had several telephone and video calls with management teams of the existing portfolio of investee companies, with a view principally to introducing ourselves and subsequently ascertaining how those companies were progressing against their stated objectives, specifically in light of the challenges brought about by the global COVID-19 pandemic, and to what extent, if any, Primorus might be able to assist them. In addition to spending a lot of time focused on our current investments, we were actively assessing new investment opportunities. We spoke to prospective investee companies and intermediaries acting on behalf of such companies. Whilst the Company has yet to make any new investments, the process during Q4 was very enthusing, specifically because:

-  We feel that a couple of the larger investments the Company has made are particularly promising, and while Primorus may choose not to commit further capital to them, that should not be considered a loss of faith or confidence in them or their future prospects .

-  The Board has a solid network of contacts, principally in the technology, resources, and clean and renewable energy sectors. We spoke to several privately held companies with renewable energy solutions, and there appears to be a deep pool of companies in the UK which are intent in leading from the front in addressing and tackling climate change. We saw this in a positive light given that we anticipate this sector will attract significant new capital over the next several years.

-  Whilst the COVID-19 pandemic has been nothing short of catastrophic, on a global scale, it appears there is a real desire to get back to some semblance of normality. We spoke to management teams who extolled the virtues of remote working and the cost savings that were being achieved and those based in Australia where it is almost like 'business as usual' again given the country's notable success in being able to contain outbreaks of the virus. We feel there will be a significant uptick in economic activity as vaccine programmes are rolled out globally and have assessed, and continue to assess, investment opportunities on this basis.

After a bumpy past year in terms of the overall macro-economic situation, specifically pertaining to the Quarter, we feel there are encouraging signs. The US and UK capital markets have performed strongly since the stock market declines in March last year when the first domestic and international enforced lockdowns were being implemented.

Update on investments

As stated above, we assessed each investee company during the Quarter. As part of the process, we cross-referred to previous announcements made by Primorus in respect of those companies. We then followed up with each of the investee companies to establish their prevailing situations and referred, where we felt it appropriate to do, so to any previous announcements where updates had been given regarding those companies' objectives and expectations. It became clear to us that most of Primorus's smaller investments face significant challenges, including regarding funding, and such challenges were not likely to be abated in the short to medium term. Rather than detail each of the Company's investments, we would like to provide an update to our shareholders of those two larger investments which we have focused most of our time on to date.

Fresho Pty Ltd ("Fresho")

We were, and remain, particularly impressed with the Fresho management team and their business model. Whilst COVID-19 posed significant challenges, specifically relating to international expansion efforts (including in the UK), the team remained committed to achieving its stated objectives. What has most impressed us is the team's candour and willingness to talk about challenges faced by the business in 2020 just as much as the highlights. Some of those challenges and highlights are set out below.

Pleasingly, Fresho is growing rapidly again and emerging from COVID-19 in a more robust position. The team navigated through a significantly reduced hospitality sector due to the COVID-19 outbreak, particularly in Melbourne and London. The pandemic was an opportunity to operate the business more efficiently, such as utilising remote-based sales and implementation processes. Temporary supplier fee reductions were offered during the height of the pandemic, which are now being wound back. Also, there was the successful launch of the direct-to-consumer business ("B2C"), with over 90,000 B2C sign-ups in 2020. B2B volumes have increased significantly to be 55% up on the quarter ending September and over 30% up on the same time last year. Other highlights include: launched in California; large and growing sales pipeline; a significant amount of development features were launched on the Fresho platform; revenue above pre-COVID levels; and strong balance sheet position with A$4.5m cash on hand.

For further information, please see: https://www.fresho.com/

Engage Technology Partners Limited ("Engage")

Engage has developed and operates a cloud-based end-to-end workforce management platform that connects recruitment agencies, end hirers and contractors. The platform creates visibility across the "paid to recruit" process, as well as ensuring worker compliance and helping companies mitigate their tax liability risk.

As with Fresho, we have been impressed with the commitment and deep industry knowledge of the Engage management team. The team believes the nature of its business is essentially "COVID-19 proof" and the opportunity to grow through restricted economic conditions remains. The team believes its cloud-based solution will be particularly attractive to contractors and companies alike with the impending implementation of IR35 which is anticipated to become effective on 6 April 2021. Throughout the Quarter, Engage adopted, and adapted to, complete remote working, onboarded new staff, won its largest contract to date with G4S COVID-19 Testing Centres and increased its overall customer base.

Revenues have recovered to pre-COVID levels and the belief is that revenues will continue to grow due to a strong pipeline of new work. Revenues for the financial period from 1 June 2020 to 31 December 2020 were £595,000 and with ongoing live projects, the target revenue for the financial year ending 31 May 2021 is expected to be £1.25 million.

Engage is currently undertaking a fundraising, which is EIS qualifying, the proceeds of which will be used to accelerate growth. Primorus is supportive of Engage's funding strategy, but will not be participating at the current time.

For further information, please see: https://www.engagetech.com/

Summary

The Company finds itself in an extremely healthy position. With the complete divestment of its stake in GGP in Q4, the Company's current cash and listed investments is more than £4.8 million. Further, the cost-saving initiatives implemented by the Board towards the end of the Quarter saw the Company reduce its annual operational expenses significantly, with the directors' fees and associated costs now approximately 30 per cent compared to the financial year ended 31 December 2019. The Board believes that the Company is positioned strongly at the present time to continue to review both prospective and existing investments without any need to commit capital unless presented with a compelling case to do so. We also believe that the current climate suits the Company incredibly well, in that there are companies looking to raise capital at attractive valuations which we feel will be accretive to the Company, especially following the further global rollout of vaccines.

Future quarterly updates

Whilst we appreciate that shareholders may look forward to receiving quarterly updates, we feel that the lack of liquid investments held by the Company, which we consider has been the case for some time now, simply does not necessitate regular quarterly updates. As a result, we also feel that the news relating to the Company's private company investments has been repetitive at times. At times, we feel that expectations may have been set which have not been fully borne out. By their very nature, private company investments can take a significant amount of time to bear fruit. Management teams of investee companies will face challenges from time to time, none more so than in recent times, which simply mean that investors in those companies must practice more patience than they may have intended to do. This said, this will be the last quarterly update that the Company prepares. Updates relating to the Company and its investments will be included in our half-yearly and annual reports, and whilst the Company will cease releasing quarterly updates, it will make such announcements to the market that it is required to, in accordance with all applicable rules and regulations.

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]

Rupert Labrum

Nominated Adviser and Broker

Cairn Financial Advisers LLP  [phone]

James Caithie / Sandy Jamieson

 

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