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 April 2020.
Highlights
· Investment of £1.1 million in Sure Valley Ventures (“SVV”)
· Return of €803,000 achieved from the sale of Artomatix, one of the companies within the SVV portfolio, representing a 60% return on the initial SVV investment
· Placing to raise gross proceeds of £1.06 million from both new and existing investors to support the Company’s technology strategy
· Direct investment of €250,000 in Getvisibility, an artificial intelligence data management and security company
· Increase in value of other portfolio investments, such as VR Education Holdings plc (AIM: VRE) and Admix
· New SVV investments made during the period, including Buymie, the artificial intelligence based same day grocery delivery company and Getvisibility, as well as a follow-on investment in Admix which has developed a programmatic monetisation platform for gaming and other entertainment developers
· Cash at period end was £0.4 million, increasing to a current figure of £1.1 million
Chairman’s Statement
The six-month period to 30 April 2020 was extremely busy for Pires. In November 2019, the Company invested £1.1 million to acquire a 13% interest in SVV, a venture capital fund focused on investing in the software technology sector with a specific focus on artificial intelligence (“AI”), the internet of things (“IoT”) and augmented and virtual reality (“AR/VR”). SVV has a portfolio of 12 investee companies at different stages of development spanning these sectors. The details of the portfolio companies are set out below:
Artificial intelligence | |
Getvisibility | An artificial intelligence security company addressing the substantial problem faced by corporations in storing, sorting, accessing and protecting data. |
Nova Leah | An artificial intelligence cyber-security assessment and protection platform for connected medical devices. |
Buymie | An artificial intelligence-based same day grocery delivery company. |
Internet of things | |
Wia | Provides a platform solution for smart buildings, helping people get back to work post Covid-19. |
Cameramatics | Platform enabling transport fleet managers to reduce risk, increase driver safety and comply with growing industry governance and compliance. |
Ambisense | Provides sensors and an analysis platform to allow real-time gas and environmental monitoring. |
AR/VR | |
VR Education | A virtual reality company which has transformed how training and education are delivered and consumed globally. |
Admix | A platform enabling the monetisation of interactive programmatic brand placements in, for example, video games. |
Warducks | A game development studio known for the production of leading games and is soon to launch an AR game that could be the next Pokémon Go. |
VividQ | A deep tech software company which has developed a framework for real-time 3D holographic displays for use in heads-up displays and AR headsets and glasses. |
Volograms | A reality capture and volumetric video company. |
Other | |
NDRC Arclabs Fund | Accelerator to source and develop start-up opportunities for potential SVV investment. |
This portfolio provides Pires with exposure to some key, cutting-edge and rapidly growing technology sectors.
The investment in SVV has already proved to be successful for Pires with a realisation and a cash distribution being achieved soon after the investment, as a result of the sale of one of the portfolio companies, Artomatix. This company uses AI software technology that can substantially reduce the cost of creation for animated films, video games and other applications. Artomatix was sold at a valuation some 500% of the price of the original investment in the company. Additionally, a number of the portfolio companies have increased in value during the period. This revaluation is principally based on subsequent funding rounds which have taken place at higher valuations than at the time of the initial investment.
Pires also made a direct investment of €250,000 in Getvisibility, an artificial intelligence security company addressing the substantial and increasing problem faced by corporations in storing, sorting, accessing and protecting data.
Further progress has also continued to be made since the period end. Following the progress made by VR Education, which is listed on AIM, SVV realised the value of its original investment through the partial disposal of its holding, thereby returning around £65,000 to the Company. This is the second cash realisation to be made from the Company’s investment in SVV in the seven months since the initial investment. SVV has retained the balance of its holding in VR Education and this company’s share price , has also increased further since the period end. In addition, the valuation of Buymie has increased by some 200% since the original investment in April 2020, as part of a second round of investment of €5.8 million into this company, in which SVV participated. Furthermore, SVV has recently made a new investment in Volograms Limited, a company whose technology enables consumers to create their own immersive AR and VR content for use in apps, social media and VR headsets with a particular application in the mobile VR market which is expected to grow significantly.
For the period under review, the Company reported a loss before taxation of £427,068 (six months ended 30 April 2019: profit before taxation of £659,048) and net assets of £3,078,269 as at the period end (31 October 2019: £2,564,582). The profit or loss for the Company takes into account unrealised gains/losses in the portfolio of quoted equity investments which are marked to market which substantially explains the recent profit volatility, plus any return from and adjustment to the carrying value of our unlisted investments, which now comprise much the greater part of our portfolio and are almost all in the technology sector. During the period, the Company’s residual holding in Eco (Atlantic Oil & Gas) Limited (“Eco”), which has now been substantially disposed of, reduced in value compared to the significant profits realised in previous periods. Meanwhile, gains were made from the Company’s technology investments, principally driven by the sale of Artomatix which has provided a 60% return on Pires original investment in SVV. As at the period end, over 90% of the Company’s net asset value comprised cash, placing proceeds and technology-related investments.
Although the Company’s net assets have increased over the period, we do not believe that this fairly represents the Company’s financial potential, given the scope for significant valuation uplift of the companies within the portfolio. This is clearly demonstrated by the gains, both realised and unrealised, that have been achieved to date from the portfolio. Furthermore, it is worth reiterating that realisations that are achieved within the SVV portfolio result in cash distributions to the Company and are not retained within the fund.
During the period, the Company undertook a placing to raise gross proceeds of £1.06 million from both existing and new investors, including the well-known technology investor Chris Akers. All the cash from the placing was received post the period end.
With regard to Covid-19, we have been fortunate in our ability to be trading as normal. Furthermore, based on respected VC market research firm Dealroom, who have evaluated the effect of the pandemic on various industries, we firmly believe that the investments we have made are well positioned against this backdrop. Our investment strategy is focused on high-tech businesses with significant potential for accelerated growth across sectors such as AI, IoT and AR/VR. We remain encouraged by the progress made to date by each of our portfolio companies and the outlook for the respective sectors in which they operate.
In summary, our investment in the technology sector have already proven to have been successful, with a substantial amount of our original investment already having been returned to the Company. Going forward, the Company is very well positioned to become a leading next generation technology investment company with an interest in a portfolio of high-growth technology companies that have the potential for significant growth.
Peter Redmond
Chairman
pires-inv