Primorus Inv. Regulatory News (PRIM)

Primorus Investments plc

("Primorus" or the "Company")

Quarterly Investor Update

Primorus Investments plc (AIM: PRIM, NEX: PRIM) is pleased to provide the quarter ending 30 September 2019 ("Q3" or the "Quarter") investor update regarding its current holdings and activities acquired and managed as per its investing policy.

Executive Director's Quarterly Comment - Alastair Clayton

In a Quarter when it has been almost too painful to switch on the 6 o'clock news to witness the political paralysis afflicting the UK, Primorus managed to generate a very positive Quarter. Notably we completed our exit from the Zuuse Series B Loan Notes and saw significant news flow from a diverse range of our investments including Engage, Fresho and WeShop.

With the UK IPO market becalmed, we continue to observe a trend away from public company investing and toward private and venture equity. Despite some rather prominent failures in the space recently, the Board of Primorus continue to believe that model of offering a publicly listed company structure investing in largely private companies is attractive on the proviso that methods used to value these investments are conservative. To this end, we continue to value our investments in a manner that doesn't inflate potential gains based on potentially unjustifiable valuation events.

With our total Zuuse Series B investment outlay of £275,000 returned to treasury and 57,205 fully paid shares and 1m A$0.50 (26p) options now on the balance sheet it is likely this trade will generate an excellent profit in the next set of accounts given we understand that Zuuse has just closed an A$16m capital raise at circa A$1 per share. Furthermore, a deep "grey" market exists for these shares and options and as such we believe the ability to realise value for these holdings in advance of any IPO or other liquidity event is substantial. This has been a very pleasing trade and my only regret is Primorus was unable to take a larger investment.

Elsewhere Greatland Gold ("GGP.L") reported yet more significant news from its Havieron JV with Newcrest Mining ("NCM.AX"). We continue to see this investment as hugely undervalued and believe the UK market is failing to understand the significance of the drilling reported to date. More importantly we believe that given the proximity and feed requirements of the large Telfer Gold/Copper Mine, the eventual owner of the entire Havieron Project may be somewhat self-evident.

In the last few days we have received updates from Fresho ("Fresho") and SOA Energy ("SOA") and elsewhere many of our investments continue to perform well whilst some seem to be a little stuck when it comes to securing further growth capital. We shall discuss this in further detail below.

Following approval at an EGM on 16 October 2019, we completed a 1 for 20 share consolidation in an attempt to narrow the quoted spread for our shares. We believe over time this will prove successful.

The 23 November will mark the second anniversary since Primorus last issued equity. Since then members of the Board have invested significant sums buying shares in the Company. We continue to see no short to medium term requirement to raise capital thereby reducing the risk of any potential dilution to all of us existing shareholders.

Highlights

·; As announced on 25 September 2019, Primorus exited its Zuuse Series B Loan Note investment by fully redeeming the £275,000 face value of the notes and putting 57,205 fully paid shares and 1m A$0.50 options on the balance sheet.

·; Further outstanding Gold and Copper assays reported from the Havieron JV between Greatland Gold (GGP.L) and Newcrest Mining (NCZ.AX) ('Newcrest"). Six rigs now drilling and 15 further holes either complete or in train, doubling the hole count at the project. We are expecting further updates soon.

·; Fresho Gross Order Volume up by 60% since April to nearly A$500m in annualised orders now through the platform. Invoice finance feature Freshopay launched. First UK user signed and we expect Fresho to make huge inroads into the UK fresh food market where a direct competitor has as yet to be identified.

·; Post-period we again topped up our investment in Engage Technology Partners ("Engage") by £50,000 to £1.50m. We recently received an update from Engage highlighting outstanding growth in monthly recurring revenues and billable transactions on the back of the first Self-Serve truly scalable SaaS products.

·; SOA Energy reports formation of Joint Operating Committee ("JOC") and completed rig inspection for the upcoming appraisal and production testing programme with Delek Drilling at the Ofek Field. We have been informed that rig mobilisation will occur early next year and drilling not long thereafter.

·; Company finishes the quarter debt-free and the Board still foresees no short to medium term need or intention to raise capital.

Update on Investments

As described in some detail above, the Zuuse trade is an example of the trades that Primorus aspires to. It was a highlight of the Company's third quarter and one we hope to replicate when next such an opportunity arises. Again, our frustration only lies in the fact we don't have a larger balance sheet to take on larger such investments in outstanding opportunities with outstanding companies like Zuuse. We aim to rectify this.

We talk a lot about Greatland Gold and it features strongly on our @priminvestments twitter page primarily because the company is already AIM-listed. Australia's largest gold miner, Newcrest, continues to report superb drill results of huge widths of high tenor Gold and Copper mineralisation at Havieron. When initially building our position in Greatland Gold we did recognise that the share register being so disparate was a potential drag on the share price. To be frank, we have been surprised at how much the apparent high-volume, low conviction trading has affected the share price over the last 12 months.

Clearly we would prefer to see the Greatland share price better reflect the value and potential at Havieron and elsewhere across their project portfolio. We are also mindful that the fundamentals underpinning our investment have actually exceeded our initial expectations.

As a previous Director of Extract Resources representing Kalahari Minerals, I know this is not the first time a critical resource was discovered near to a major mining houses' large but depleting operating asset. In 2012 we achieved an incredible return for our shareholders by being patient and we remain so with Greatland Gold. It is our firm view that with continued exploration success the ownership of Havieron may eventually change to fit the production requirements of Newcrest's Telfer Mine just 40km away.

It was with some pleasure that we received notification from the CEO of SOA Energy that the JOC for the Ofek re-entry and appraisal programme has commenced and that rig inspections and planning were in full swing to kick off drilling early next year. Planning, permitting and approvals for such activities across a range of Government stakeholders always takes significant time and effort and we would pay compliments to SOA for their doggedness and persistence in moving the company forward to the point where the real value accretion (drilling) for us as shareholders can commence. I expect our Q1 2020 shareholder update to potentially hold the first hard data for the initial outcomes of the Ofek programme and on the back of that the likely timing to IPO or exit.

As alluded to in our last shareholder report, Fresho has now signed its first UK customer with planned product roll out to begin in early 2020. We have been told anecdotally there is no known direct competitor for the Fresho platform. We find this very exciting and to this end expect a huge push into the UK market by Fresho in 2020.

Elsewhere, the business is gathering pace. Gross Order Volume ("GOV") has now grown some 60% since April with nearly A$500m in annualised sales through the platform at the end of October. Furthermore, with the launch of FreshoPay, an innovative invoice financing module unique to the fresh food industry, the overall Fresho product suite is expanding into new areas.

Fresho have now cemented, and are leveraging off, their place in their home market of Australia and are pushing hard into New Zealand with the UK and North America to follow in 2020. Fresho are choosing to grab market share by growing GOV as fast as possible and aim to monetise much of that platform volume later on. This has been done thus far from a balanced EBIDTA footing. By managing to keep real EBIDTA at near neutral levels, Fresho is most definitely not an endless consumer of operational cashflow. We expect a further capital raise to occur before the end of 2019 to provide additional funds to expand rapidly into the UK and examine the North American opportunity. We have already been informed this would be only available to existing shareholders.

In terms of monetising our Fresho investment, we are very much of the opinion that the best multiples of growth will soon be before us. We expect to be in a position to consider at least a partial exit in 2020 having turned down one offer earlier this year. We would stress however, that with continued outstanding growth as evidenced above and disciplined management at the helm our expectations of fair value have increased again.

Engage Technology Partners is our largest investment, now with a total of £1.5m invested across four funding rounds. Engage has great potential in the SME market for temporary and also permanent recruitment, agency back office and payment and billing if it is able to develop and release a pure SaaS, mass-market scalable platform. This is very much a case of sitting back and watching the Engage team execute this clearly defined business plan.

As flagged in our last report Engage recently undertook a modest rolling fund-raising of circa £1m in equity (and debt) at £24 per share. We took another small amount of the equity, £50,000, and may look to take another small amount in the coming months.

We will return to Engage as a separate update in the coming period with a more detailed information as we did on the 1 October 2019.

In the quarter under review StreamTV has been focussing on the financial and capital management side of the business. Whilst chip manufacture and product commercialisation activities are moving ahead. We are limited in what else we can say regarding StreamTV until the outcomes of the various commercial funding and management initiatives are clear.

WeShop had a very significant update to all shareholders during the quarter. Primorus has invested a total of £875,000 in WeShop. Recently Two Shields Investments ("TSI") made a further £400,000 investment into WeShop.

As evidenced by our July WeShop update, the company gained considerable momentum in finalising the product and proposition for user acquisition later this summer. Some significant commercial and product agreements, and integration, have also been achieved.

As mentioned in our introduction, several investments in our portfolio seem to have generated little material news we can report to shareholders for some time. This doesn't mean that these companies are static, it just means the material news we can report has not eventuated yet. We are aware TruSpine and Sport80 are actively working on funding packages to undertake vital product development and in Sport80's case grow the already revenue generating business through capital deployment. I can attest to how difficult the capital markets are for small, early-stage companies seeking to raise money in the UK. On the flip side all our investee companies have thus far been able to raise sufficient capital or are generating sufficient revenues to keep afloat without a call on existing shareholders. This in itself is a good result. Elsewhere, NOMAD Energy ("NOMAD") remains actively engaged in negotiations with Government and VITOL. We do not as yet have any verifiable outcomes to report to shareholders, however we have spoken to NOMAD, and are, despite the prolonged timetable, hopeful that the next Quarter may see some movement in at least one of these commercial outcomes for NOMAD.

In terms of being judged by our shareholders this is still disappointing as several of our long-term investments remain in need of that all-important growth capital. To this end we remain supportive of our investee companies and always assist when asked in terms of commercial advice and introductions. Quite simply it is in our interests to do so. 

Summary

So as we head towards Christmas, the Quarter has been another one of very significant progress at the majority of our core holdings, a very satisfying result from the Zuuse Loan exit and more frustrating news from some of our investments. We have managed to generate returns and grow the balance sheet in a manner that has not required us to raise capital for nearly two years, thereby avoiding diluting shareholders. To this end we can tolerate the share price not reflecting the underlying investments for a limited amount of time but believe this has persisted for far too long. As evidenced by the above report, there are plenty of reasons to be very optimistic about the outlook for the Company's investment portfolio going forward, even in these uncertain times. The Board would like to thank shareholders once again for their support and reiterate that it is committed to delivering shareholder returns via share price appreciation and/or direct distributions to shareholders when it is in a position to responsibly do so. 

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's ability to execute and implement future plans, and the occurrence of unexpected events. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.

For further information, please contact: