REG - Tekcapital plc - 2024 Review - Year End Portfolio Update

TekcapitalAnnouncement

17/02/2025 07:00

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RNS Number : 2601X  Tekcapital plc  17 February 2025

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 
 
                   17 February 2025

 

Tekcapital plc

("Tekcapital", the "Company" or the "Group")

2024 Review - Year End Portfolio Update

 

Tekcapital Plc (AIM: TEK), the UK intellectual property investment group
focused on transforming university technologies into valuable products that
can improve people's lives, is pleased to announce a review of 2024 and its
unaudited, 2024 year-end portfolio valuation.

 

Highlights

 

·    Investment Portfolio holdings valued at US $64.2m, an increase of 38%
over the previous year

 

·    Two of our Investment Portfolio companies (MicroSalt plc & GenIP)
floated on AIM in 2025 and as a result four out of five portfolio companies
are now public

 

·    Guident, the remaining private company, preparing to float on NASDAQ
in 2025

 

·    Commercial success at the Investment Portfolio level driven by their
strategic positioning and relevance to addressing pressing global needs

 

Dr. Clifford M. Gross, Chairman said:

 

"We are excited to provide this 2024 summary report which describes a few of
our portfolio company achievements and their contribution to our profitability
and growth. In 2024 our unaudited net assets reached US$65.1m, an increase of
~36%, over the previous year, with an NAV per share of US $0.31 or £0.25.

 

"Our performance reflects strong commercial progress through the completion of
two AIM listings (MicroSalt plc & GenIP plc) which we are keen to hold. As
a result of this progress, four of our five portfolio companies are now
listed. Additionally, we observed significant commercial traction for
Innovative Eyewear Inc. as they achieved several new product and go-to-market
milestones. We were also pleased to note Microsalt has received new and
follow-on B2B orders from a major snack food manufacturer. Further, we believe
that Guident Corp's commercial advancements coupled with improving market
conditions in the autonomous vehicle industry, have created the ideal
opportunity for Tekcapital to further crystalise its balance sheet in 2025.

"This year in review offers a snapshot of Tekcapital plc's 2024 performance.
The story is one of profitability, strategic foresight, and a portfolio well
suited in our view to helping address several pressing global needs.
Tekcapital's success in 2024 is a testament to its portfolio companies'
strategic positioning and relevance.

"Tekcapital's core business objective is to grow its net assets and return
material levels of capital generated from its portfolio companies' successes
to shareholders via special dividends. As ever, we remain committed to this
objective, and our portfolio companies' progress in 2024 means we have taken
strides forward in delivering on our long-term strategy.

2024: A Year of Exceptional Performance

Tekcapital plc's exceptional 2024 performance represents a compelling
narrative of innovation and strategic foresight. The Company's ~36% increase
in net assets to US$65.1m demonstrates its ability to execute effectively in
challenging market conditions. This performance is particularly noteworthy
when compared to similar IP commercialization and technology investment
companies and, at some level, is reflected in the 2024 Share Price Performance
Comparison against other indices.

·      Tekcapital plc: +27% (London Stock Exchange, n.d.)

·      AIM All-Share Index: -5.5% (London Stock Exchange, n.d.)

·      FTSE 250: +5.69% (London Stock Exchange, n.d.)

This outperformance validates Tekcapital's differentiated approach of
identifying and nurturing groundbreaking university technologies that have the
potential to improve the quality of life of the customers we serve.

In our view Tekcapital's year-end share price discount to NAV of ~64% appears
unwarranted given the company's strong execution and portfolio maturation.
According to Morningstar, the average market cap discount to NAV for UK
closed-end funds (a close analogue) in 2024 was 16.6%. By peer comparison:

 

·      Molten Ventures plc trades at a 52% discount to NAV (Molten
Ventures plc, 2024)

·      IP Group plc trades at a 45% discount to NAV (IP Group plc, 2024)

·      Frontier IP Group plc trades at a 35% discount to NAV (Frontier
IP Group plc, 2024)

·      Mercia Asset Management plc trades at a 25% discount to NAV
(Mercia Asset Management plc, 2024).

With four of five portfolio companies now publicly listed and demonstrating
commercial traction, we believe there is a strong probability that
Tekcapital's valuation gap may narrow, particularly if its fifth portfolio
company achieves a public listing or one of the other portfolio companies
achieves noteworthy commercial milestones.

Tekcapital's strengthened financial position, combined with its strategic
portfolio of companies operating in high-growth, globally relevant sectors
like sodium reduction (MicroSalt), respiratory care (Belluscura), autonomous
vehicle safety (Guident), smart eyewear (Innovative Eyewear) and AI-driven
innovation (GenIP), positions the company for continued growth in the value of
our investment portfolio. Each portfolio company addresses critical market
needs and has demonstrated meaningful commercial progress in 2024.

Tekcapital's future outlook is supported by:

·      A proven ability to identify and commercialize university
technologies

·      Strong portfolio company execution and public market validation

·      Operating leverage from our efficient corporate structure

·      Multiple potential catalysts for value creation in 2025

Tekcapital has the lowest operating cost structure among its peers, with 2024
administrative expenses of just US $2.2m, compared to IP Group plc, Molten
Ventures plc, Mercia Asset Management plc or Frontier IP Group plc. We believe
that this is partly due to the selectivity and small number of our portfolio
companies.

We are thankful to our steadfast shareholders for their unwavering support and
to our portfolio company management teams which have punched significantly
above their weight.

As always, we remind investors that our net asset values and revenues will
fluctuate from period to period, sometimes significantly, due to individual
portfolio company performance, valuations and changes in market conditions and
macro-economic financial conditions. Additionally, the preliminary financial
information discussed herein are subject to audit review and may be adjusted.

For further information, please contact:

 

 Tekcapital Plc                                                                 Via Flagstaff
 Clifford M. Gross, Ph.D.

 SP Angel Corporate Finance LLP                                                 +44 (0) 20 3470 0470

 (Nominated Adviser and Broker)
 Richard Morrison/Charlie Bouverat (Corporate Finance)

 Abigail Wayne / Rob Rees (Corporate Broking)

 Flagstaff Strategic and Investor Communications                                +44 (0) 20 7129 1474
 Tim Thompson/Andrea Seymour/Fergus Mellon

 

About Tekcapital plc

Tekcapital creates value from investing in new, university-developed
discoveries that can enhance people's lives. Tekcapital is quoted on the AIM
market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in
the UK. For more information, please visit www.tekcapital.com
(http://www.tekcapital.com) .

 

LEI: 213800GOJTOV19FIFZ85

Overview of Investment Portfolio Companies

MicroSalt PLC: Pioneering Global Health Through Sodium Reduction - Responding
to Regulatory Shifts and Health Crises.

 

o  Investment Thesis: To become the global leader in low-sodium salt,
proactively addressing the massive and rapidly growing market demand for
healthier food options. This demand is now further accelerated by global
regulatory changes like the FDA's proposed front-of-package labeling for
sodium, empowering consumers to make healthier choices and directly impacting
food industry practices. Moreover, MicroSalt addresses the broader global
health imperative of reducing sodium intake to combat hypertension and
cardiovascular diseases, one of the leading and largely preventable cause of
death and a growing concern for health organizations worldwide.

 

o  AIM Admission: Listing on the AIM market was a pivotal strategic move,
providing MicroSalt with enhanced visibility and access to the capital
necessary for rapid expansion and accelerating its global market
penetration just as the regulatory and consumer landscape is shifting in its
favour.

 

o  Product & B2B Expansion: Increased product placements and secured B2B
orders are strong indicators of growing market traction and robust demand for
MicroSalt's innovative low-sodium solutions, clearly validating their market
fit and the global need for their products, now further amplified by
regulatory tailwinds and increasing consumer awareness.

 

On 30 October 2024 MicroSalt announced it had received several new bulk
purchase orders including from a new B2B customer.

 

·    Customer C is one of the world's largest food, soft drink and snack
manufacturers. Following a lengthy testing period across multiple product
lines, MicroSalt has received an initial purchase order for approximately
50,000 lbs with customer production using MicroSalt expected in November.
MicroSalt® is to be used in one of the customer's category leading food
product lines. Annualized projections discussed with the customer exceed
200,000 lbs. The Company also anticipates additional purchase orders for
Microsalt® in two more product lines, including a globally distributed cereal
brand and energy bars in the first quarter of 2025.

·    Customer B is the Mexican business of Customer C and one of
MicroSalt's longest standing B2B customers. Customer B has placed further
orders for 63,860 lbs of MicroSalt® for delivery in January 2025. The
Company expects this volume to annualize at approximately 640,000 lbs.

·    A new B2B customer ordered approximately 3,000 lbs from one of the
world's largest spice and ingredient companies to be used in their production
of a lower sodium seasoning.

 

o  Intellectual Property: Continued IP development and a rapidly growing IP
portfolio reinforces MicroSalt's competitive advantage and will help to firmly
secure its position as a recognized leader in this increasingly critical
health-focused market.

 

 

Guident Ltd.: Ensuring Safety of the Autonomous Vehicle Revolution -
Addressing Edge Cases.

 

o  Investment Thesis: To become the recognized leading provider of remote
monitoring and control center (RMCC) software solutions specifically designed
for autonomous vehicles. This directly addresses the critical safety,
operational efficiency, and regulatory compliance needs of the rapidly
expanding autonomous vehicle industry and the broader smart mobility
sector, particularly essential as autonomous vehicles navigate complex "edge
cases" and require human oversight for safe and reliable operation.

 

o  Strategic Partnerships & Grant Funding: Expanding strategic
partnerships with key players in the automotive and technology sectors and
securing significant grant funding from Space Florida to integrate satellite
monitoring into its RMCC helped to actively fuel Guident's rapid growth within
the autonomous vehicle safety sector. This also serves as strong industry
validation of their crucial role in the safe and scalable deployment of
autonomous technologies, at a time when public trust and regulatory
frameworks for autonomous vehicles are still developing.

 

o  Security Robot market: Guident Corp also announced a Strategic Partnership
agreement with Star Robotics, a leading Spanish company, which is
revolutionizing the robotics industry with its visionary approach to offering
robotic products and services tailored for operation in real human
environments. This marks Guident's entrance into the security robot market,
expanding use cases and the addressable market for its RMCC services.

 

o  Patent Portfolio Growth: Consistent IP portfolio enhancements underscore
Guident's progress and market leadership within teleoperations, further
positioning themselves as a critical enabler of safe and reliable autonomous
vehicle deployment to help address a core need for the autonomous vehicle
industry's maturation.

 

o  Sales Pipeline: Guident  has a significant sales pipeline of both
municipal and corporate clients for its RMCC service business.

 

GenIP: Revolutionizing Innovation Investment with the Power of AI as the pace
of innovation quickens.

 

o  Investment Thesis: To leverage the transformative power of cutting-edge
Generative AI (GenAI) to fundamentally transform the landscape of intellectual
property early staged technology assessment and strategic investment. This
aims to provide a uniquely powerful and efficient tool to identify, evaluate,
and capitalize on promising innovations with unprecedented speed, accuracy,
and scalability, crucial in a world experiencing an explosion of innovation
and intellectual property creation. Choosing winners has never been more
difficult or important.

o  Spin-Out & AIM Listing: The strategic spin-out and successful AIM
listing of GenIP to capitalize on the disruptive potential of GenAI was a bold
and forward-thinking move. This has already yielded significant portfolio
revaluation gains and strategically positions GenIP at the forefront of
AI-driven investment analysis and financing, at a time when AI is rapidly
reshaping industries and investment strategies.

 

 

Business Development

 

o  GenIP announced they have received an order for 30 Invention Evaluator
GenAI analytical assessments ("IE Reports") from a leading Fortune 100
technology company client, the largest single order since the launch of
Generative AI enhanced services on 1(st) September 2024.

o  GenIP also announced it has signed a commercial agreement with a leading
Saudi Arabian research institution, GenIP's first client in the Kingdom.

Innovative Eyewear Inc.: Redefining Eyewear Through Seamless Technology
Integration -Addressing Distracted Pedestrian Concerns and Enhancing Urban and
Workplace Safety.

 

o  Investment Thesis: To fundamentally revolutionize the eyewear market by
seamlessly integrating cutting-edge technology into stylish and functional
frames. This aims to support an entirely new category of smart eyewear that
enhances daily life, caters directly to the burgeoning wearable technology
trend, and merges fashion with advanced functionality, while also offering
solutions to emerging safety concerns like the increase in pedestrian
fatalities, partially attributed to distracted walking and distracted
drivers. Innovative Eyewear's open-ear audio technology provides a safer
alternative to in-ear headsets, allowing users to stay aware of their
surroundings while enjoying audio, directly addressing a growing urban safety
challenge.

 

o  Addressing Safety Concerns: Innovative Eyewear's open-ear audio directly
tackles the problem of distracted pedestrians (and drivers) by allowing users
to listen to music or take calls while maintaining situational awareness, a
crucial feature as pedestrian fatalities rise in urban environments,
particularly in the US. Additionally, its new smart safety eyewear provides
this open ear audio with advanced worker connectivity with the first walkie
smart eyewear incorporating ANSI certified safety lens.

 

o  Technological Advantage: The open-ear audio, combined with stylish
eyewear, positions Innovative Eyewear as a device of choice for those seeking
both technological convenience and enhanced safety in urban and workplace
environments, offering a compelling alternative to traditional headsets that
can isolate users from their surroundings. Basically, combining glasses with a
blue tooth head set at the same price as proper prescription glasses.

 

Business Development

 

o  Innovative Eyewear announced that its Lucyd Lyte frames are now being sold
on Target.com.

 

o  Innovative Eyewear launched Armor, an American National Standards
Institute (ANSI) certified smart safety eyewear in Q4 2024. Combined with
steady revenue growth from its already existing, diverse smart eyewear product
offering, we believe this represents a significant additional sales
opportunity for the Company in many different markets including industrial,
logistics and medical.

 

o  Innovative Eyewear announced a new partnership with Windsor Eyes, a
leading 50 year old eyewear manufacturing and distribution firm in Q2 2024
with strong relationships with big box stores throughout the U.S. as the
Company has oriented its focus on product placement with large national
retailers.

 

Belluscura PLC: Transforming Affordable Respiratory Care with Advanced
Portable Oxygen Technology.

 

o  Investment Thesis: To revolutionize the portable oxygen concentrator
(POC) market by developing and commercializing a new generation of
significantly smaller, lighter, and more efficient devices. This directly
addresses the critical limitations of existing POC technology and directly
responds to the rapidly growing global need for improved, patient-centric,
cost-effective (e.g., modular) oxygen therapy solutions, a need exacerbated
by the rise in respiratory illnesses worldwide, potentially linked to factors
like air pollution, ageing of the population and the long-term effects of
respiratory infections.

 

o  Addressing a Critical Need: Belluscura is focused on creating POCs that
dramatically improve patient mobility and quality of life. Their innovative
designs aim to overcome the bulk and limitations of traditional devices,
making oxygen therapy more convenient, accessible and affordable for a growing
patient population.

 

o  Global Market Opportunity: The market for portable oxygen concentrators
is substantial and expanding due to aging global populations and the
increasing prevalence of respiratory conditions. Belluscura is strategically
positioned to capture a share of this market by offering superior yet
cost-effective technology and patient-focused designs, at a time when
respiratory health is becoming an even greater global concern.

 

o  Innovation in Design & Technology: Belluscura is committed to
continuous innovation in POC technology, focusing on advancements in size
reduction, weight minimization, battery efficiency, and overall device
performance as well as additional products that can leverage their core
technology in areas such as wound care. This dedication to technological
advancement whilst maintaining value pricing is key in our view to their
competitive advantage and long-term success.

 

General Risk Factors and Forward-Looking Statements

This Announcement is not being made available to persons in Australia, Canada,
Japan, the Republic of Ireland, the Republic of South Africa or any other
jurisdiction in which it may be unlawful to do so, and it should not be
delivered or distributed, directly or indirectly, into or within any such
jurisdictions.

Investors must rely on their own examination of the legal, taxation, financial
and other consequences of an investment in the Com-pany, including the merits
of investing and the risks involved. Prospective investors should not treat
the contents of this Announcement as advice relating to legal, taxation or
investment matters and are advised to consult their own professional advisers
concerning any acquisition of shares in the Company. Certain of the
information contained in this Announcement has been obtained from published
sources prepared by other parties. Certain other information has been
extracted from unpublished sources prepared by other parties which have been
made available to the Company. The Company has not carried out an independent
investigation to verify the accuracy and completeness of such third-party
information. No responsibility is accepted by the Company or any of its
directors, officers, em-ployees or agents for the accuracy or completeness of
such information.

All statements of opinion and/or belief contained in this Announcement and all
views expressed represent the directors' own current as-sessment and
interpretation of information available to them as at the date of this
Announcement In addition, this Announcement contains certain "forward-looking
statements", including but not limited to, the statements regarding the
Company's overall objectives and strategic plans, timetables and capital
expenditures. Forward-looking statements express, as at the date of this
Announcement, the Company's plans, estimates, valuations, forecasts,
projections, opinions, expectations or beliefs as to future events, results or
performance. Forward-looking statements involve a number of risks and
uncertainties, many of which are beyond the Company's control, and there can
be no assurance that such statements will prove to be accurate. No assurance
is given that such forward looking statements or views are correct or that the
objectives of the Company will be achieved. Further, valuations of Company's
portfolio investments and net asset value can and will fluctuate over time due
to a wide variety of factors both company specific and macro-economic. Changes
in net asset values can have a significant impact on revenue and earnings of
the Company and its future prospects. As a result, the reader is cautioned not
to place reliance on these statements or views and no responsibility is
accepted by the Company or any of its directors, officers, employees or agents
in respect thereof. The Company does not undertake to update any
forward-looking statement or other information that is contained in this
Announcement. Neither the Company nor any of its shareholders, directors,
officers, agents, employees or advisers take any responsibility for, or will
accept any liability whether direct or indirect, express or implied,
contractual, tortious, statutory or otherwise, in respect of, the accuracy or
completeness of the information contained in this Announcement or for any of
the opinions contained herein or for any errors, omissions or misstatements or
for any loss, howsoever arising, from the use of this Announcement. Neither
the issue of this Announcement nor any part of its contents is to be taken as
any form of contract, commitment or recommendation on the part of the Company
or the directors of the Company. In no circumstances will the Company be
responsible for any costs, losses or expenses incurred in connection with any
appraisal, analysis or investigation of the Company. This Announcement should
not be considered a recommendation by the Company or any of its affiliates in
relation to any prospective acquisition or disposition of shares in the
Company. No undertaking, warranty or other assurance, express or implied, is
made or given by or on behalf of the Company or any of its affiliates, any of
its directors, of-ficers or employees or any other person as to the accuracy,
completeness or fairness of the information or opinions contained in this
Announcement and no responsibility or liability is accepted for any such
errors or omissions.

Intellectual Property Risk Factors

Tekcapital's mission is to create valuable products from university
intellectual property that can improve people's lives.  Therefore, our
ability to compete in the market may be negatively affected if our portfolio
companies lose some or all of their intellectual property rights, if patent
rights that they rely on are invalidated, or if they are unable to obtain
other intellectual property rights. Our success will depend on the ability of
our portfolio companies to obtain and protect patents on their technology and
products, to protect their trade secrets, and for them to maintain their
rights to licensed intellectual property or technologies. Their patent
applications or those of our licensors may not result in the issue of patents
in the United States or other countries. Their patents or those of their
licensors may not afford meaningful protection for our technology and
products. Others may challenge their patents or those of their licensors by
proceedings such as interference, oppositions and re-examinations or in
litigation seeking to establish the invalidity of their patents. In the event
that one or more of their patents are challenged, a court may invalidate the
patent(s) or determine that the patent(s) is not enforceable, which could harm
their competitive position and ours. If one or more of our portfolio company
patents are invalidated or found to be unenforceable, or if the scope of the
claims in any of these patents is limited by a court decision, our portfolio
companies could lose certain market exclusivity afforded by patents owned or
in-licensed by us and potential competitors could more easily bring products
to the market that directly compete with our own. The uncertainties and costs
surrounding the prosecution of their patent applications and the cost of
enforcement or defense of their issued patents could have a material adverse
effect on our business and financial condition.

 

To protect or enforce their patent rights, our portfolio companies may
initiate interference proceedings, oppositions, re-examinations or litigation
against others. However, these activities are expensive, take significant time
and divert management's attention from other business concerns. They may not
prevail in these activities. If they are not successful in these activities,
the prevailing party may obtain superior rights to our claimed inventions and
technology, which could adversely affect their ability of our portfolio
companies to successfully market and commercialise their products and
services. Claims by other companies may infringe the intellectual property
rights on which our portfolio companies rely, and if such rights are deemed to
be invalid it could adversely affect our portfolio companies and ourselves as
investors in these companies.

 

From time to time, companies may assert patent, copyright and other
intellectual proprietary rights against our portfolio company's products or
technologies. These claims can result in the future in lawsuits being brought
against our portfolio companies or their holding company. They and we may not
prevail in any lawsuits alleging patent infringement given the complex
technical issues and inherent uncertainties in intellectual property
litigation. If any of our portfolio company products, technologies or
activities, from which our portfolio companies derive or expect to derive a
substantial portion of their revenues and were found to infringe on another
company's intellectual property rights, they could be subject to an injunction
that would force the removal of such product from the market or they could be
required to redesign such product, which could be costly. They could also be
ordered to pay damages or other compensation, including punitive damages and
attorneys' fees to such other company. A negative outcome in any such
litigation could also severely disrupt the sales of their marketed products to
their customers, which in turn could harm their relationships with their
customers, their market share and their product revenues. Even if they are
ultimately successful in defending any intellectual property litigation, such
litigation is expensive and time consuming to address, will divert our
management's attention from their business and may harm their reputation and
ours.

 

Several of our portfolio companies may be subject to complex and costly
regulations, and if government regulations are interpreted or enforced in a
manner adverse to them, they may be subject to enforcement actions, penalties,
exclusion, and other material limitations on their operations that could have
a negative impact on their financial performance.

 

Further, the results presented herein are preliminary and are subject to audit
and potential adjustment. All of the above-listed risks can have a material,
negative effect on our net asset value, revenue, performance and the success
of our business and the portfolio companies we have invested in.

 

ENDS

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