Primorus Investments plc (AIM: PRIM) is pleased to provide the Quarter ending March 31, 2018 (“Q1”) periodic portfolio update regarding its current holdings and activities acquired and managed as per its investing policy.
Executive Director Alastair Clayton commented: “I am pleased to be able to provide shareholders and stakeholders with a review of our activities in Q1. As is customary now, I will make comment on certain underlying themes that are driving the investment decisions and also provide, where appropriate, some thoughts as to the potential outlook for the coming Quarter and beyond.”
Highlights for the period were as follows:
- Horse Hill Developments Limited (“HHDL”) received final decision notices from Surrey County Council (“SCC”), discharging all of the pre-commencement conditions for the Extended Flow Test of the HH-1 oil discovery with site civil activities commenced;
- Engage Technology Partners Limited (“Engage”) reported significant growth in corporate users and Primorus invested a further £500,000 at £22 per share, being a 46% premium to its earlier investment level. Engage has commenced discussions regarding appointing a broker, paving way for a potential IPO in 2019.
- Sale of a 5% interest in HHDL to Solo Oil Plc (“Solo”) for £650,000 and 9,973,011 Solo Oil shares.
- WeShop Limited (“WeShop”) registered users surged 76% in Quarter to 150,000 and unique users topped 1m for the first time.
- Sport:80 plc (“Sport:80”) has informed us that it has commenced initial IPO documentation and discussions with advisers and funders to support the proposed IPO.
- Fresho Pty Ltd (“Fresho”) growth continues apace in Australia and also in New Zealand, where the business has signed 2 large suppliers and the first multi-venue user going live in the Quarter.
- StreamTV Networks Inc (“StreamTV”) announce joint cooperation with Beijing Optical and Electric (“BOE”) to commercialise its Ultra-D Glasses-Free 3D technology in its next generation 8K panels.
- TruSpine Technologies Ltd (“TruSpine”) made key senior appointments whilst protracted funding negotiations begin to show progress.
With all the interruptions of New Year and Easter, Q1 is a short business Quarter but despite this we managed to complete a number of transactions in line with our investing policy. Furthermore, we continue to monitor closely the progress of a number of our investments as they move towards IPO and / or trade sale.
It is important for shareholders to understand that whilst we do everything possible to support our existing investments because it is in our interest to do so, we do not have a direct effect on the exact timing of any given IPO and or trade sale. We do however maintain regular dialogue with the companies in question and use the Board’s extensive experience in public markets to make a value judgement on when and if a transaction may occur. Thus, these timings may change over time as the facts change but we will update shareholders as material changes occur.
With this in mind, the central message for Quarter is one of sustained core investment progress, portfolio rebalancing and more clarity on the likely timing of several of our investments towards IPO.
The central message for the outlook for the coming Quarter is we hope to receive material news from several of our investments as they commence the formal IPO process.
As announced in late February, Primorus sold a 5% stake in HHDL to Solo for £650,000 in cash and 9,973,011 ordinary shares in Solo. This sale was designed to increase existing cash reserves, rebalance the portfolio make-up and reduce the expected cash calls resulting from the soon-to-commence 90 day extended flow test (“EWT”) of the HH-1 discovery well. As a result of this transaction, Primorus retains a 5% direct shareholding in HHDL. We remain optimistic that the EWT will return substantial flow-rates
Pleasingly the Fresho platform continues to perform strongly with order volumes and customers numbers in Australia and now New Zealand growing strongly. Fresho maintains a strong cash balance and it is anticipated that it should get to a breakeven basis, including R&D spend, sometime in the second half of 2018. Whilst much of the data regarding Fresho is now “commercial in confidence”, the Board of Primorus believes the Fresho platform is exceeding our expectations.
Engage has developed, and is now selling, access to a unique, fully-integrated SaaS platform servicing the HR industry surrounding the contingent workforce in the UK. In recent shareholder updates we have been informed that the platform has already reached £1m of Annual Recurring Revenue (“ARR”). We upped our shareholding in February by subscribing for £500,000 worth of shares at £22 per share and now hold approximately 3.6% of the issued share capital of Engage. As flagged in our announcement of 13 March 2018, we remain optimistic regarding Engage as an investment because of the rapid pace of uptake of the product from UK corporates. It is also noteworthy that Engage has begun discussions with City brokers regarding a potential IPO in 2019. The Company is hoping to invest further in Engage in the coming Quarter should the opportunity arise.
As mentioned previously, our second-round investment in WeShop may well have been well timed. A larger fundraising WeShop had planned for completion in Q1 2018 has now been postponed, allowing the business to benefit from outstanding platform growth rates observed over the last few months. We have been informed by management that the key metric of Registered Users has grown to circa 150,000 versus 85,000 at the end of last Quarter (+76%) and unique users have grown to over 1,000,000 versus circa 750,000 at the end of the last Quarter (+33%). The Management of WeShop inform us that they are seeking an institutional fundraise ahead of a proposed IPO in 2018.
At TruSpine, work is ongoing for the FDA fast-track approval of both FaciLok and CerviFAS, but we have been informed TruSpine will require further funding to complete this. We understand TruSpine is in negotiations with a funder at the current time to provide all the funding required.
Importantly, TruSpine has appointed Mr Simon Stephens as its new interim CEO. Most recently, Simon has held the position of Research Director for London Valve Therapies, where he was responsible for the provision of a new service for the analysis of CT/Echocardiography scans for bleeding edge transcathether cardiac interventions mainly for Mitral Valve/Left Ventricular procedures. He is also a Research Fellow at the Royal Brompton & Harefield NHS Foundation Trust. In a previous role as CTO for Hometrack, he was responsible for developing software technologies that resulted in the company being sold in 2017 for £120m. In addition to Mr Stephens, Professor Abdallah Raweh has joined the medical advisory board. He is a professor of Cardiology who was trained in Italy, the UK and US, and who now operates internationally.
We view the appointment of Mr Stephens and Professor Raweh as key steps in helping to secure the remaining funding required to complete the FDA fast-track approvals process and build a credible Board in advance of an IPO. We look forward to updating shareholders in the near future as to the progress of the aforementioned TruSpine funding, as that is key to unlocking the FDA fast-track and IPO processes.
Sport:80 remains on track to formally kick off the IPO process soon with our best estimate suggesting a likely Q3 2018 listing subject to financing and regulatory approvals. We view Sport:80 as a strong IPO candidate and subject to available funds, may participate in any IPO funding round.
In terms of our other oil and gas investments we are encouraged by funding progress made by SOA and whilst confidential, we expect a funding deal to be completed soon, subject to various Israeli Government approvals. At Nomad we have been informed that negotiations over off-take pricing for its domestic gas project are moving forward albeit more slowly than first anticipated. Completing this off-take is the final step in allowing Nomad to monetise the asset with its partner VITOL and thereby potential providing a good return on our investment. We will keep shareholders up to date as these matter progress.
The Board remains confident that the private and pre-IPO markets remain significantly under-served and, as such, significant opportunities exist for the Company going forward. We look forward to 2018 being one in which we can demonstrate our business model by exiting some more of our investment positions, thereby realising tangible value for all shareholders.