Primorus Investments : Annual Report & Accounts - 12/31/2022

Primorus Investments plc

Company Information

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Primorus Investments plc

Contents

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Primorus Investments plc

Chairman's Report incorporating the Strategic Report

For the year ended 31 December 2022

Overview

I am pleased to present the Chairman's Statement and Strategic Report for the financial results of Primorus Investments plc ("Primorus" or the "Company") 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 £250,000 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.

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Primorus Investments plc

Chairman's Report incorporating the Strategic Report (continued)

For the year ended 31 December 2022

• 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 £1.513 million (2021: loss of £0.041 million). The net loss after tax was £1.484 million

(2021: profit of £0.109 million). Total assets including cash at 31 December 2022 amounted to £7.656 million (2021: £8.990 million).

The cash balance was £0.114 million as at 31 December 2022 (2021: £0.941 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.

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