TIDMPRIM
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 .
Caution regarding forward looking statements
Certain statements in this announcement, are or may be deemed to
be, forward-looking statements. Forward-looking statements are
identi ed 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 re ect 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
Sandy Jamieson/James Caithie +44 (0) 20 7213 0880
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 GBP250,000 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 GBP1.513 million (2021: loss
of GBP0.041 million). The net loss after tax was GBP1.484 million
(2021: profit of GBP0.109 million). Total assets including cash at
31 December 2022 amounted to GBP7.656 million (2021:
GBP8.990 million).
The cash balance was GBP0.114 million as at 31 December 2022
(2021: GBP0.941 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 GBP000 GBP000
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 GBP000 GBP000
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
Total
Share attributable
based to owners
Share Share payment Retained of the
capital premium reserve earnings company
GBP000 GBP000 GBP000 GBP000 GBP000
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
GBP000 GBP000
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 (GBP) and all
values are rounded to the nearest thousand pounds (GBP000) 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 GBP114,000. The Company also has
listed financial investments of
GBP1,203,000 as at 31st December 2022 and a convertible loan
note of GBP861,000, 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
GBP000 GBP000 GBP000 GBP000
Level Level Level Total
1 2 3
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 GBP000 GBP000 GBP000 GBP000
follows:
Level Level Level Total
1 2 3
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
======== ============= ======== ========
GBP000 GBP000 GBP000 GBP000
Level Level Level Total
(Loss)/profits on investments held at 1 2 3
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
GBP374,805 (2021: GBP105,693). This represents an impairment of
GBP406,740 in respect of Rambler Metals and Mining PLC and a
reinstatement of value of GBP31,935 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 GBP411,000 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 GBP1.0 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 GBP514,000 of shares and
sold GBP114,000 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 Company (1.061) 0.078
-------- ------
Total basic earnings per share attributable
to the ordinary equity holders of the Company (1.061) 0.078
======== ======
(ii) Diluted earnings per share
2022 2021
pence pence
From continuing operations attributable to the
ordinary equity holders of the Company (1.061) 0.072
-------- ------
Total diluted earnings per share attributable
to the ordinary equity holders of the Company (1.061) 0.072
======== ======
(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 GBP406,740 for the full value of the shares
held at the year-end.
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