PIRI.L Regulatory News (PIRI)

29 September 2022

Pires Investments PLC

("Pires" or the "Company")

Unaudited interim results for the six months ended 30 June 2022

Pires Investments plc (AIM: PIRI), the investment company focused on next-generation technology, is pleased to announce its unaudited interim results for the six-month period ended 30 June 2022.

Highlights

Company highlights

· Profit of £992,000 during the period (six months ended 30 June 2021: profit before taxation of £1.53 million)

· Net asset value ("NAV") of £8,702,000 as at the period end (31 December 2021: £7,223,000), equating to an increase of 20% since 31 December 2021

· Pires is now trading at a 41% discount to its NAV per share of 5.23 pence

· Warrants exercised over 12,211,425 ordinary shares in the Company at 4 pence per share with total net proceeds to the Company of £488,457

Portfolio highlights

· Portfolio valuation increased to £9,398,000 from £7,390,000, an increase of 27% since 31 December 2021

· Significant increase in the valuation of the Company's holdings in Getvisibility as a result of a €10 million fundraise by this company in March 2022

· The first Sure Valley Ventures fund ("SVV1") has increased its NAV by 10.7% over the period

· Sure Ventures plc ("SV plc") grew its NAV by 6.2% to 125.8p per share and its share price increased by 11.4% over the period to 107.5p

· £5 million commitment over the 10-year life of the fund to invest in a new Sure Valley Ventures fund ("SVV2") alongside the British Business Bank, an investment arm of the British Government

· Smarttech247, a recent portfolio investment, is actively progressing a stock market listing

· Merger of Admix with LandVault Inc

Post-period end highlights

· Placing to raise £500,000 before expenses, completed in August 2022

Nicholas Lee, Director of Pires, commented:

"The Company has made strong progress during this period, with a significant uplift in the valuation of its portfolio, driven by the increasing valuation of Getvisibility, in which it has both direct and indirect interests via SVV1 and SV plc. Given the growth in NAV, the Company is now trading at a 41% discount to its NAV.

"The Company has also invested a further £300,000 in SVV1 during the period. SVV1 includes a number of companies, such as Getvisibility, Admix and CameraMatics, which have grown materially in value as a result of both organic growth and new investment resulting in upward revaluations. Furthermore, SVV1 has now almost completed its initial investment phase and we are now looking forward to further increases in the value of the portfolio companies and subsequent exits, resulting in cash returns to the Company.

"In March 2022, Pires invested £90,000 in SVV2 alongside the British Business Bank, which has committed to invest £50 million in this new fund. In March 2022, SVV2 led a seed round raising £2 million for RETìníZE Limited, the award-winning creative-tech company based in Belfast, Northern Ireland, marking this fund's first investment. We look forward to following further developments from SVV2 in due course.

"Going forward, the Company has a clear and proven strategy of investing in next-generation technology and realising returns from its investments which it will continue to implement. Our portfolio of investments remains well-poised to achieve significant growth, delivering value to Pires and its shareholders."

Investment overview

Summary

The Company's principal investment portfolio categories are summarised below:

Investment in Sure Valley Ventures

Pires has exposure to the Sure Valley Ventures funds via:

- a 13% direct investment in SVV1

- a 23.3% holding in Sure Ventures plc, the principal investments of which comprise a 25.9% interest in SVV1 and a holding in VividQ

- a 5.9% interest in SVV2 alongside the British Business Bank

Pires therefore has an aggregate direct and indirect interest in SVV1 of circa 20%.

As at the period end, SVV1 had a portfolio of 14 investee companies at different stages of development, spanning a range of sectors. The portfolio provides Pires with exposure to a number of key, cutting-edge and rapidly growing technology sectors. Further details of the portfolio companies and recent developments are set out below:

Getvisibility is a leader in data visibility and control, using state-of-the-art Artificial Intelligence ("AI") to classify and secure unstructured information. Getvisibility also provides risk and compliance assessments as well as enforcing protection on sensitive data. The company operates across the US, Europe, the Middle East and North Africa with a presence in several industry sectors including banking, healthcare and the public sector. Getvisibility's clients include a leading global producer of energy and chemicals, a major airport group, one of the largest financial institutions in the Middle East as well as US government entities in the pharmaceutical and manufacturing sectors.

Getvisibility is continuing to rapidly build revenue whilst taking on new clients, retaining existing clients and signing a number of multi-year contracts. The company has also expanded its pipeline by US$6 million and has onboarded 31 new channel partners across seven countries.

In March 2022, Getvisibility raised €10 million from new investors including Alpha Intelligence Capital, a global venture capital firm which invests in deep artificial intelligence/machine learning technology-based companies, and Fortino Capital Partners, a leading B2B software venture capital and growth equity firm. Pires made its original investment of €250,000 in March 2020, with a follow-on investment of €62,000 in June 2021. Since then, Getvisibility has made significant progress such that, based on the post-funding round valuation, Pires' direct stake in Getvisibility (including its additional investment) is now valued at circa €1,500,000 or over 4 times its total investment cost to date since it made its first investment two and a half years ago. In addition, Pires has a further interest in Getvisibility via its 13% interest in SVV1 and an indirect interest through its holding in SV plc, which together are now valued at circa €1,337,000. Pires' effective interest in Getvisibility, in aggregate, is therefore now valued at circa €2,837,000. 

CameraMatics is a disruptive technology for fleet and driver risk management. The CameraMatics SaaS-based full-stack platform is a modular software platform based on camera technology, vision systems, AI, machine learning and telematics, combined with fleet safety modules that help fleet operators to drive new safety standards across their fleet and drivers. The company is growing revenues significantly in the UK and US and has recently been shortlisted for the Fleet Safety Product Award as part of the UK Fleet Champions Award 2022.

VividQ, a leading software and IP developer for holography has developed a framework for real-time 3D holographic displays for use in heads-up displays and AR headsets and glasses. In April 2022, the company announced that it was partnering with Zemax Optics Studio to demonstrate how computer-generated holography has become an accessible display for original design manufacturers who want to release high performance AR products and to showcase the prototyping of miniaturised optical engines for AR devices. In May 2022, the company launched its proprietary Alpha Optical Engine Demonstrator aimed at manufacturers of high-end augmented reality headsets. In July 2022, the company appointed a new Chairman, Francois Auque. He is a partner at InfraVia Capital, a leading independent European private equity firm and also serves as a member of the Board of Directors of Rexel, a wholesale electrical distributor. His experience in dealing with large corporations, paired with his knowledge as an investor in deep tech start-ups will prove valuable in supporting the company in its continued advancement of breakthrough technology.

Admix, the leading In-Play monetisation company that bridges the gap between gaming content and brands, announced on 20 June 2022, that it is merging with LandVault Inc ("LandVault"), a builder of virtual experiences in metaverse worlds like The Sandbox and Decentraland, aimed at attracting people into blockchain and metaverse ecosystems, in order to enter into Web3.

By merging with LandVault, Admix aims to become a go-to service provider for major intellectual property holders and brands, enabling large companies across all industries to enter the metaverse and be monetised with its in-game advertising technology. The combined company, which will be known as LandVault, will be able to access US$25 million in growth capital from Admix's Series B round in October 2021. Samuel Huber, Founder and Chief Executive Officer of Admix, will remain as Chief Executive Officer of the combined business.

Smarttech247 is a global artificial intelligence-based cyber security cloud business that protects enterprises from cyber-attacks. Smarttech247 has over 100 technology partners, including IBM and Microsoft, and more than 50 clients based in Europe and the US. The company has recently won a number of new clients and has just launched a new MDR product, Vision X. It is also actively progressing a stock market listing.

SV plc grew its NAV by 6.2% to 125.8p per share and its share price increased by 11.4% over the period to 107.5p. SV plc's principal investment is a 25.9% stake in SVV1 and a shareholding in VividQ.

During the period, the Company also invested in a second SVV fund, SVV2. The principal investor in SVV2 is the British Business Bank ("BBB"), an investment arm of the UK Government. The first close of this fund amounted to £85 million, with BBB investing up to £50 million and other investors ("Private Investors"), including Pires, investing up to £35 million over the 10-year life of the fund.

Pires has initially invested circa £90,000, in SVV2 and expects to invest up to £5 million in total over the 10-year life of the fund which would provide it with a circa 5.9% interest. SVV2 will invest in a range of private UK software companies with a focus on companies in the Metaverse, Artificial Intelligence and Cybersecurity sectors. This fund has already made its first investment in RETìníZE Limited, a technology company based in Belfast which is developing an innovative software product called Animotive which is harnessing the latest VR technologies to transform the 3D animation production process.

SVV2 is being managed by the same team which, to date, has been highly successful in achieving a number of cash realisations from, and upward revaluations of, companies in SVV1. The profit share arrangements within SVV2 are designed to encourage the involvement of the private investors alongside the BBB, meaning that Pires and the other private investors would expect to receive a significantly enhanced share of the total return generated by the fund compared to industry standard. 

Direct investments

Low6

Low6 has developed a next-generation sports gaming technology platform that powers franchises with their own branded gaming experiences to engage their digital fanbases.

The company's current focus is to charge customers, typically iGaming operators and sporting franchises, for developing and licensing digital free-to-play games that they embed in their mobile apps/websites as a way of driving users to their core operations. The current financial year is progressing well with signed contracts, signed term sheets or advanced contractual negotiations being achieved in respect of a significant portion of that year's revenue which, due to the investment made in the company's technology platform, is expected to be high margin. At the same time the company's cost base and burn rate have been reduced significantly. The company is currently working with its advisers and cornerstone investors to raise more capital for the business to support revenue growth and the move towards breakeven. 

PreCog

A security solution platform company that provides data intelligence to combat crime, terrorism and protect vulnerable people. Customers include leading law enforcement and security agencies and transport infrastructure groups. The company is busy establishing new contracts and trials.

Getvisibility

Pires' direct stake in Getvisibility (including its additional investment) is now valued at circa €1,500,000 or over 4 times its total investment cost to date since it made its first investment two years ago. See above for further detail.

Pluto Digital

Pluto Digital PLC ("Pluto") is a Web3 technology company with a focus on the Metaverse, blockchain gaming and NFTs. During the period, Pluto has been working with Maze Theory Limited ("Maze Theory"), a London-based digital entertainment studio, with a view to developing high-quality games that incorporate token economics. Pluto is working on a corporate transaction which will include Emergent Games, a new Web3 gaming studio which is a joint venture with Maze Theory. A further announcement on the progress of this transaction is expected in Q4 2022.

As at 30 June 2022, the Company's equity holding in Pluto was valued at almost £2 million based on a price of 6 pence per share, which is the price at which the company's most recent fundraising took place and the price at which Pluto's corporate transaction with Maze is expected to take place. This represents a very significant uplift on the Company's initial investment in this sector.

Key financial indicators

The key unaudited performance indicators are set out below: 

The Company has generated significant profits during the period driven by increases in value of its investment portfolio. Whilst the Company's net assets have continued to increase, we do not believe that the Company's net asset value fairly represents its financial potential, given the scope for significant valuation uplift for the companies within the portfolio. This is clearly demonstrated by a series of gains, both realised and unrealised, that have been achieved to date from its investment portfolio. Furthermore, realisations that are achieved within the SVV portfolio result in cash distributions to the Company and are not retained within the fund thereby delivering a real cash return to the Company.

During the period, the holders of warrants over 12,211,425 ordinary shares in the Company exercised their warrants at 4 pence per share with total net proceeds to the Company of £488,457. All warrants issued in June 2020 have now been exercised or have expired by 30 June 2022.

In July 2022, the recommended offer for Pires by Tern plc, whilst being supported by the majority of Pires shareholders voting both by number of shareholders and number of shares held, was not approved by the requisite number to effect a scheme of arrangement, and therefore lapsed.

Post the period end, the Company raised an additional £500,000 before expenses and a further 6,250,000 warrants were issued exercisable at 8 pence, in conjunction with 12,500,000 shares issued as part of the placing on 26 August 2022.

Outlook

We remain encouraged by the progress made to date by our investee companies and the outlook for the respective sectors in which they operate.

We expect that in the coming months we will see some additional realisations or liquidity events from the investment portfolio. Furthermore, it is important to note that, as previously mentioned, the SVV1 fund has now substantially completed its deployment phase and so is moving towards a realisation phase which is expected to generate further cash inflows for the Company.

In summary, we believe that our investment strategy in the technology sector has already proven successful. Going forward, the Company is well positioned to become a leading next-generation technology investment company with an exciting portfolio of technology companies that have the potential for significant growth and the ability to deliver real returns for shareholders.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation. The person who arranged the release of this information is Nicholas Lee, Director of the Company.

Enquiries:

Notes to Editors

About Pires Investments plc

Pires Investments plc (AIM: PIRI) is an investment company providing investors with access to a portfolio of next-generation technology businesses with significant growth potential.

The Company is building an investment portfolio of high-tech businesses across areas such as Artificial Intelligence, Internet of Things, Cyber Security, Machine Learning, Immersive Technologies and Big Data, which the Board believes demonstrate evidence of traction and the potential for exponential growth, due to increasing global demand for development in these sectors.

 For further information, visit: https://piresinvestments.com/.

UNAUDITED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2022

UNAUDITED STATEMENT OF FINANCIAL POSITION

As at 30 June 2021

UNAUDITED CASH FLOW STATEMENT

For the six months ended 30 June 2022

Notes to the Unaudited Interim Report

1. GENERAL INFORMATION

Pires Investments plc (the "Company") is a company domiciled in England whose registered office address is 9th Floor, 107 Cheapside, London EC3V 6DN. The condensed interim financial statements of the Company for the six months ended 30 June 2022 is that of the Company only.

The condensed interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

The financial information for the year ended 31 December 2021 has been extracted from the statutory accounts for that period which were prepared in accordance with International Financial Reporting Standards ("IFRS"). The auditors' report on the statutory accounts was unqualified. A copy of those financial statements has been filed with the Registrar of Companies.

The financial information for the six months ended 30 June 2021 and 30 June 2022 were also prepared in accordance with IFRS.

The condensed interim financial statements do not include all of the information required for full annual financial statements. 

The condensed interim financial statements were authorised for issue on 28 September 2022.

2. BASIS OF ACCOUNTING

The financial statements are unaudited and have been prepared on the historical cost basis in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS") using the same accounting policies and methods of computation as were used in the annual financial statements for the year ended 31 December 2021. As permitted, the interim report has been prepared in accordance with the AIM rules for Companies and is not compliant in all respects with IAS 34 Interim Financial Statements. The condensed interim financial statements do not include all the information required for full annual financial statements and hence cannot be construed as in full compliance with IFRS.

3. PROFIT/LOSS PER SHARE

The calculation of the basic profit per share is based on the following data:

4. STATEMENT OF CHANGES IN EQUITY

5. DISTRIBUTION OF INTERIM REPORT

Copies of the Interim Report for the six months ended 30 June 2022 are available on the Company's website, www.piresinvestments.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.