REG - Primorus Investments - Final Results
16/06/2023 15:30
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RNS Number : 0493D Primorus Investments PLC 16 June 2023
Primorus Investments plc
("Primorus" or the "Company")
Final Results
Primorus Investments plc (AIM: PRIM) is pleased to report its final results
for the year ended 31 December 2022. The Annual Report & Accounts for
the year ended 31 December 2022 ("Annual Report") are available on the
Company's website, www.primorusinvestments.com
(http://www.primorusinvestments.com) .
Caution regarding forward looking statements
Certain statements in this announcement, are or may be deemed to be,
forward-looking statements. Forward-looking statements are identified by
their use of terms and phrases such as ''believe'', ''could'', "should"
''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'',
"expect", ''will'' or the negative of those, variations or comparable
expressions, including references to assumptions. These forward-looking
statements are not based on historical facts but rather on the Directors'
current expectations and assumptions regarding the Company's future growth,
results of operations, performance, future capital and other expenditures
(including the amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward-looking
statements reflect the Directors' current beliefs and assumptions and are
based on information currently available to the Directors. While management
believes that these forward-looking statements are reasonable as and when
made, there can be no assurance that future developments affecting the Company
will be those that it anticipates.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.
For further information please contact:
Primorus Investments plc
Matthew Beardmore, Chief Executive Officer +44 (0) 20 8154 7907
Nominated Adviser
Cairn Financial Advisers LLP +44 (0) 20 7213 0880
Sandy Jamieson/James Caithie
Chairman's Statement
Overview
I am pleased to present the Chairman's Statement and Strategic Report for the
financial results of Primorus Investments plc for the year ended 31 December
2022.
Introduction
The period under review was one again of significant change. The COVID-19
pandemic was overtaken by the events of the Russian invasion of Ukraine.
Global interest rates have risen as central banks attempt to stem the rise of
inflation. This has made for an uncertain macro-economic environment as
companies, especially small caps, have struggled where cheap liquidity is no
longer available. Primorus has remained in a favourable position where it has
not needed to raise new funds.
It has again been pleasing to see the progress made by several of our investee
companies which have taken the opportunity to grow significantly. Some of the
investee companies have continued to struggle in this economic environment and
will need to raise capital - we took the view that some of these legacy
investments will not be core to Primorus in the future. We have and will
continue to look for opportunities to divest our holdings in them. Any non-
material divestments will be updated on the website.
Concurrent with reviewing the Company's existing investments, the management
team was also presented with many new proposals and opportunities during the
period. The management team carefully reviewed each opportunity in accordance
with the strategy highlighted last year and decided to invest in one new
company this year, Interpac Limited, with further details set out below.
The Directors continue to align themselves with shareholders as demonstrated
by numerous share purchases by Directors on the market culminating in a
current combined Director holding of over 25% of shares in issue.
Investment highlights
• The Company made a new investment of £250,000 into Interpac Ltd
("Interpac"). Interpac was founded in 2013 to create a new corrugation process
for the manufacture of cardboard which is more cost-efficient and
environmentally friendly than current manufacturing processes.
• In February 2022, the Company divested its convertible loan notes ("CLNs")
issued by Mustang Energy PLC ("Mustang"), a special purpose acquisition
company listed on the Standard list of the London Stock Exchange's main market
"Standard List"). Due to Mustang not being in a position to complete its
reverse takeover and readmission by the applicable maturity date, Primorus
exercised its right to enact the backstop arrangement. Under this provision
Primorus converted its CLN into a new CLN with Bushveld Minerals PLC ("BMN").
In 2022, two tranches of the CLN were exercised and the resulting holding of
BMN shares were sold into the market. The remainder of the CLN will either be
converted or the balance plus interest of 10% repaid in July 2023.
• The Company's investment into Alteration Earth PLC ("ALTE") commenced
trading on the Standard List on 1st July 2022. ALTE is still seeking a reverse
acquisition target. We look forward to ALTE fulfilling its strategy and
delivering a value enhancing outcome for its shareholders.
• Fresho Pty Ltd ("Fresho") had another successful year and continued to
progress throughout 2022. Engagement continues to increase year on year and
this resulted in an annualized gross merchandise volume of +60% to $1.9bn.
Orders increased 50% to 370,000 per month with 45% more venues. This resulted
in revenue increasing by 60%. With continued planned investment further
significant growth is forecasted.
• The Payapps group ("Payapps") has continued to perform well during 2022
with both sales and revenue growth increasing over the comparative period for
2021. This growth reflects the investments made in the business in 2021 and
has been supported by largely positive macroeconomic conditions in Australia
and the UK post COVID lockdowns in 2021. Sales results have been very strong
within all regions achieving a record sales year.
• Engage Technology Partners Limited ("Engage"), the end-to end workforce
management platform provider looked to move their focus towards Managed
Service Providers. This will allow Engage to scale up and to expand
internationally. As Engage moved away from Outsourced Payroll they have
managed to exceed their pre Covid revenues and allow future revenues to now
come purely from SaaS products.
• SOA Energy ("SOA") SOA is working on acquiring new offshore assets and
creating a new partnership with a European oil major company after which SOA
intends to seek a listing on the London Stock Exchange in Q4 2023.
• Clean Power Hydrogen ("CPH2") encountered a number of issues. Supply chain
problems meant commissioning and delivery of its first MF220 units experienced
delays and therefore impacted planned commissioning schedules. A further issue
was identified in the design and operation of the cryostat unit. The
appointment of a CTO and the manufacturing agreement with Fabrum Solutions Ltd
will hopefully lead to a swift resolution and accelerate the delivery of the
technology to an ever-growing market.
Primorus holds several legacy investments which do not form part of its
long-term strategy and which the Board considers a distraction to the
Company's current and strategic future goals. Consequently, the Company
intends to dispose of these investments when there is a suitable liquidity
event, or a fair value offer is available.
The legacy investments include Sport80, WeShop, Stream TV and MEVIE. These
investments are now classified on the website under non-core investments. In
2022 we have sold the majority of our holding in Supernatural Foods and Nomad
Energy is in the process of liquidation. Since the year-end, we have disposed
of our entire holdings in Truspine and Rogue Baron.
Primorus will continue to actively manage its investments and liquidity which
may involve holding certain market tradeable investments. Where active
management involves non-material transactions, it will not be reported via an
RNS, but instead, the Company's website shall be updated periodically to
reflect any changes to the investments held by the Company. These changes may
include the purchase of additional shares or the disposal in part or in whole
of any individual investment.
Financial highlights
The operating loss for the year was £1.513 million (2021: loss of £0.041
million). The net loss after tax was £1.484 million (2021: profit of £0.109
million). Total assets including cash at 31 December 2022 amounted to £7.656
million (2021:
£8.990 million).
The cash balance was £0.114 million as at 31 December 2022 (2021: £0.941
million)
Investee companies
The majority of the Company's investments in underlying investee companies are
minority investments. Whilst we may offer advice to management of the investee
companies, specifically pertaining to their business objectives and goals,
they can and sometimes do ignore such advice. Similarly, those investee
companies which are privately held do not have similar disclosure obligations
to publicly quoted companies and therefore any updates they provide in
relation to their businesses can be piecemeal and, in certain cases,
non-existent save where the Board specifically requests an update.
Primorus has no operational capacity insofar as it pertains to any of its
investee companies, and whilst the Board will look to structure investments in
a format where Primorus can have a high degree of oversight, this was not done
with the Company's historic investments and, as such, there are inherent risks
in that investee companies are not as accountable to the Company as the Board
would prefer them to be. The Board intends, wherever possible, to seek more
oversight in any significant new investments which the Company makes into
private companies or unquoted public companies. It is unlikely the Company
will make investments into either such companies unless there is a clear route
to a relatively near- term liquidity event such as a trade sale or an IPO.
In relation to its investment in Alteration Earth PLC, the Company has a
nominated director on the board to ensure there is oversight on behalf of
Primorus. This is a significant step for the Company because it is the first
investment where the Company will get an insight into the operation of the
investee company and be able to actively voice its opinions, concerns and
constructive advice instead of being informed of decisions after the event.
Hedley Clark has also been appointed as a Non-Executive director on the board
of Interpac.
Summary and Outlook
The year under review saw the Company start to gain some meaningful traction.
Although there have been several headwinds for Primorus and the markets in
general, the Board feels the Company is in a strong position to take advantage
of opportunities as they present themselves. The drive to net zero carbon is
clearly necessary for the benefit of the wider community and the Board feels
that it can position Primorus in this investment space for the benefit of the
Company and its shareholders.
The Company did not need to raise any capital in 2022 and the Board sees no
immediate need to do so due to the Company's holdings of liquid instruments
and cash. The Board is not ruling out the possibility of raising capital if
the right opportunity presents itself, but at the time of writing the Company
is not considering any potential investments which would necessitate a capital
raising to be undertaken.
The management team of the Company was awarded share options to incentivise
the future growth of the Company. These options have since been cancelled, at
the unanimous decision of the management team members, to better align the
interests of the management team with the interests of the Company's
shareholders. I anticipate that all shareholders would prefer that the
management team be awarded a non-dilutive means of remuneration if their
performance merits such award. This also aligns with our decision last year to
complete a capital reduction, which provided a further means of potentially
rewarding shareholders, either by means of a share buyback or the payment of
dividends.
The Board will continue to look at innovative ways to enhance the Company's
value which may involve looking at various alternative company structures.
It is also important to enhance clarity of those investments which the Company
holds. In the past, it has been hard to get an accurate valuation of some of
our investments but as we move towards investments with greater liquidity this
should enable the Company to be valued at a more realistic value to its net
asset value ("NAV"). Whilst it is usual for investment companies to trade at a
discount to their NAV, the Board believes the Company to be significantly
undervalued given its current share price and resultant market capitalisation.
The Company's positioning into holding more liquid investments should
hopefully ensure it trades closer to its NAV.
We remain highly focused on costs, especially in these inflationary times and
will always focus on efficiency whilst working to achieve shareholder value.
The Board would like to thank all shareholders for their continued support and
understanding in this period of unsettling and exceptional circumstances and
wish them well during this time.
2023
The Board remains committed to its strategic criteria for each new investment
and has reiterated the core requirements below:
• It must enable Primorus the opportunity to acquire a meaningful stake in
the investee company.
• A clear and realistic exit route must be in place.
• There should be an opportunity for the Board to play an active role in the
investee company's development.
• The Board and the investee company's management team must share a common
vision and strategic alignment.
• The investment committed by the Company will be proportionate to the
risk/reward opportunity.
• There should be a greater opportunity for the Company's shareholders to
benefit directly from the increase in capital values from each investment.
Our operational targets for the remainder of 2023, in line with our investing
policy, are:
• To continue to focus on applying financial resources diligently, with
controlled corporate costs and focused investment.
• To continue to build working capital, preferably through organic means, by
exiting investments which have generated significant returns on investment.
• To continue to build our external network and to develop our managerial
team to provide confidence in the market of our abilities to achieve our
strategic business objective of identifying significant value-enhancing
investment opportunities.
• To proactively continue the work the Board has already started to achieve
with the crystallisation of value from certain investment opportunities which
it has identified.
• To continue to review new opportunities and where financially and
operationally practical to make investments in such opportunities which
present the most upside to the Company.
• To retain sufficient capital resources through cash or liquid investments
to enable the Company to have access to immediate capital for the purposes of
deploying into larger positions that are the most strategically aligned
opportunities.
• To divest the non-core investments when suitable liquidity events arise,
or fair value can be achieved by alternative means.
Statement in accordance with section 172 of the Companies Act 2006
As required by section 172 of the Companies Act 2006, a director of a company
must act in a way they consider, in good faith, would most likely promote the
success of the company for the benefit of its shareholders. In doing this, the
director must have regard, amongst other matters, to the:
• likely consequences of any decision in the long term;
• interests of the Company's employees;
• need to foster the Company's business relationships with suppliers,
customers and others;
• impact of the Company's operations on the community as well as the
environment;
• company's reputation for high standards of business conduct; and
• need to act fairly as between members of the Company.
As a Board our aim is always to uphold the highest standards of governance and
business conduct, taking decisions in the interests of the long-term
sustainable success of the Company, generating value for our shareholders and
contributing to wider society. We recognise that our business can only grow
and prosper over the long term by understanding the views and needs of our
stakeholders. Engaging with stakeholders is key to ensuring the Board has
informed discussions and factors stakeholder interests into decision-making.
The Board of Directors is collectively responsible for formulating the
Company's strategy, which is to invest in businesses where prospects appear to
be exceptional at an attractive price and deliver good risk-adjusted
investment returns to the shareholders. The Board places equal importance on
all shareholders and strives for transparent and effective external
communications, within the regulatory confines of a listed company. The
primary communication method for regulatory matters and matters for material
substance is through the Regulatory News Services (RNS).
As always, I am available for any shareholder to contact me directly about any
concerns or suggestions they may have.
Details of the Board's decisions for the year ending 31 December 2022 to
promote long-term success, and how it engaged with stakeholders and considered
their interests when making those decisions, can be found throughout the
Chairman's Statement, Directors' Report and Corporate Governance Statements.
Rupert Labrum Chairman
Date 15 June 2023
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2022
2022 2021
Note £000 £000
Income
Investment income 93 141
Realised (loss)/gain on financial investments (288) 323
Unrealised (loss)/gain on financial investments (542) 19
Gross (loss)/profit (737) 483
Administrative expenses (401) (418)
Impairment of financial investments 2 (375) (106)
Loss before tax (1,513) (41)
Tax credit 29 150
(Loss)/profit for the year (1,484) 109
Total comprehensive income (1,484) 109
2022 2021
Pence Pence
Earnings per share attributable to the ordinary equity holders of the parent
Basic 3 (1.061) 0.078
Diluted 3 (1.061) 0.072
Statement of Financial Position
As at 31 December 2022
2022 2021
Note £000 £000
Assets
Non-current assets
Financial investments 2 5,444 7,533
5,444 7,533
Current assets
Financial investments 2 2,064 511
Trade and other receivables 34 5
Bank and cash balances 114 941
2,212 1,457
Total assets 7,656 8,990
Liabilities
Non-current liabilities
Current liabilities
Trade and other liabilities 110 44
Contract liabilities - 37
110 81
Total liabilities 110 81
Net assets 7,546 8,909
Issued capital and reserves
Share capital 280 280
Other reserves - 13
Retained earnings 7,266 8,616
TOTAL EQUITY 7,546 8,909
Statement of Changes in Equity
For the year ended 31 December 2022
Share capital Share premium Share based payment reserve Retained earnings Total attributable to owners of the company
£000 £000 £000 £000 £000
At 1 January 2021 15,391 35,296 - (41,901) 8,786
Profit for the year - - - 109 109
Total comprehensive income for the year - - - 109 109
Shares cancelled during the year (15,111) (35,296) - 50,408
Share based payment expense - - 13 - 13
Total contributions by and distributions to owners (15,111) (35,296) 13 50,408 14
At 31 December 2021 280 13 8,616 8,909
At 1 January 2022 280 - 13 8,616 8,909
Loss for the year - - (1,484) (1,484)
Total comprehensive income for the year - - - (1,484) (1,484)
Share based payment expense - - 121 - 121
Reclassification upon cancellation of
share options - - (134) 134 -
Total contributions by and distributions
to owners - - (13) 134 121
At 31 December 2022 280 - - 7,266 7,546
Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
£000 £000
Cash flows from operating activities
(Loss)/profit for the year (1,484) 109
Adjustments for
Loss/(Gain) on disposal of financial investments 288 (323)
Fair value movements on financial investments 542 (19)
Impairment provision on unlisted investments 375 106
Share-based payment expense 121 13
Interest income on investments (93) (142)
Net foreign exchange (gain)/loss (112) 55
Income tax (credit) (29) (150)
(392) (351)
Movements in working capital:
Increase in trade and other receivables - (3)
Increase/(decrease) in trade and other payables 66 (11)
Cash generated from operations (326) (365)
Income taxes paid (36) (260)
Net cash used in operating activities (362) (625)
Cash flows from investing activities
Proceeds on sale of financial investments 1,937 3,474
Purchase of financial investments (2,402) (6,468)
Net cash decrease in cash and cash equivalents (827) (3,619)
Cash and cash equivalents at the beginning of year 941 4,560
Cash and cash equivalents at the end of the year 114 941
1. Accounting policies
1.1 Basis of preparation
Primorus Investments plc is a public company incorporated and domiciled in the
United Kingdom. The Company's registered office is 48 Chancery Lane, London,
WC2A 1JF. The Company's shares are listed on the AIM market of the London
Stock Exchange.
The Financial Statements are for the year ended 31 December 2022 and have been
prepared under the historical cost convention, except for debt and equity that
have been measured at fair value.
The financial statements have been prepared in accordance with the Companies
Act 2006 and UK-adopted international accounting standards (UK-adopted IAS)
and related interpretations.
These financial statements have been prepared and approved by the Directors on
15 June 2023 and signed on their behalf by Rupert Labrum and Hedley Clark.
The accounting policies have been applied consistently throughout the
preparation of these financial statements and the financial report is
presented in Pound Sterling (£) and all values are rounded to the nearest
thousand pounds (£000) unless otherwise stated.
1.2 Going concern
The Directors noted the operating losses that the Company has made for the
year ended 31 December 2022. The Directors have prepared cash flow forecasts
for a period of at least twelve months from the date of the approval of these
financial statements, i.e. up to 30 June 2024 which take account of the
current cost and operational structure of the Company.
The cost structure of the Company comprises a high proportion of discretionary
spend and therefore in the event that cash flows become constrained, costs can
be quickly reduced to enable the Company to operate within its available
funding.
These forecasts demonstrate that the Company has sufficient cash and liquid
funds (i.e investments in listed companies) available to allow it to continue
in business for a period of at least twelve months from the date of the
approval of these financial statements. Accordingly, the financial statements
have been prepared on a going concern basis.
It is the prime responsibility of the Board to ensure the Company remains a
going concern. At 31 December 2022, the Company had cash and cash equivalents
of £114,000. The Company also has listed financial investments of
£1,203,000 as at 31st December 2022 and a convertible loan note of £861,000,
including accrued interest, that is due to be repaid in July 2023. The Company
has minimal contractual expenditure commitments and the Board considers the
present funds together with the convertible loan note and future disposals of
its listed financial investments sufficient to maintain the working capital of
the Company for a period of at least 12 months from the date of signing the
Annual Report and Financial Statements. For these reasons the Directors adopt
the going concern basis in preparation of the Financial Statements.
2. Financial Investments
£000 £000 £000 £000
Level 1 Level 2 Level 3 Total
Fair value at 31 December 2021 633 - 7,409 8,042
Additions 2,153 - 1,552 3,705
Transfer 350 - (350) -
Fair value changes (542) - - (542)
Loss on disposals (288) - - (288)
Disposal (696) - (2,450) (3,146)
Impairment provision (407) - 32 (375)
Foreign exchange - - 112 112
Fair value at 31 December 2022 1,203 - 6,305 7,508
The financial assets are split as follows: £000 £000 £000 £000
Level 1 Level 2 Level 3 Total
Current assets - listed 1,203 - - 1,203
Current assets - unlisted convertible loans - - 861 861
Non-current assets - unlisted - - 5,444 5,444
Total 1,203 - 6,305 7,508
£000 £000 £000 £000
Level 1 Level 2 Level 3 Total
(Loss)/profits on investments held at fair value through profit or loss
Fair value (loss)/gain on investments (542) - - (542)
Realised (loss)/gain on disposal of investments (288) - - (288)
Net profit on investments held at fair value through profit or loss (830) - - (830)
Level 1 represent those assets, which are measured using unadjusted quoted prices for
identical assets
Level 2 applies inputs other than quoted prices included in Level 1 that are
observable for the assets either directly (as prices) or indirectly (derived
from prices).
Level 3 applies inputs, which are not based on observable market data
Investments are held at fair value through profit and loss using a three-level
hierarchy for estimating fair value.
The Directors have reviewed the carrying value of the investments, and have
determined an impairment is required of £374,805 (2021: £105,693). This
represents an impairment of £406,740 in respect of Rambler Metals and Mining
PLC and a reinstatement of value of £31,935 in respect of the Supernatural
Foods Limited shares that were disposed of during the year.
Investments comprise both listed and unlisted investments. The listed
investments are traded on stock markets throughout the world and are held by
the Company as a mix of strategic and short-term investments.
Significant additions and disposals during the year
Mustang Energy PLC ("Mustang") and Bushveld Minerals Limited ("Bushveld")
In January 2022 the Company sold $1.0 million of its US$2.5 million CLN in
Mustang , plus accrued interest, to certain existing Mustang CLN investors. In
March 2022 the Company converted the remainder of the CLN plus accrued
interest in Mustang to a CLN in Bushveld. In April and May 2022 the Company
exercised its rights under the CLN with Bushveld and converted a total of
£411,000 of the CLN to shares, of which it subsequently disposed. The CLN is
due to be repaid on 14th July 2023, along with accrued interest.
Clean Power Hydrogen PLC
In February 2022 the Company invested £1.0 million in Clean Power Hydrogen
PLC, a manufacturer of the membrane-free electrolyser which is used to create
hydrogen and medical grade oxygen. The company is listed on the UK Alternative
Investment Market.
Rambler Metals & Mining PLC ("Rambler")
During the year the Company acquired £514,000 of shares and sold £114,000 of
shares in Rambler. Subsequent to the year-end, Rambler went into liquidation.
As a result, the directors have made an impairment provision for the full
value of the remaining shares.
3. Earnings per share
(i) Basic earnings per share
2022 2021
pence Pence
From continuing operations attributable to the ordinary equity holders of the (1.061) 0.078
Company
Total basic earnings per share attributable to the ordinary equity holders of (1.061) 0.078
the Company
(ii) Diluted earnings per share
2022 2021
pence pence
From continuing operations attributable to the ordinary equity holders of the (1.061) 0.072
Company
Total diluted earnings per share attributable to the ordinary equity holders (1.061) 0.072
of the Company
(iii) Weighted average number of shares used as the denominator
2022 2021
No. No.
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
139,830,968 139,830,968
Options - 12,000,000
Weighted average number of ordinary shares and potential ordinary shares used
as the denominator in calculating diluted earnings per share
139,830,968
151,830,968
4. Events after the reporting date
Subsequent to the year-end, Rambler Metals and Mining PLC went into
liquidation. As a result, the directors have made an impairment provision of
£406,740 for the full value of the shares held at the year-end.
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