Primorus Investments plc Financial statements For the year ended 31 December 2021 Registered number: 03740688 Primorus Investments plc Company Information Directors Matthew Paul Beardmore Hedley Stuart Clark Rupert Labrum Company secretary Simon William Holden Registered number 03740688 Registered office Independent auditor Bankers Solicitors Registrars Nominated Adviser & Broker 48 Chancery Lane C/O Keystone Law (Attn: S Holden) London WC2A 1JF PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD Barclays Bank plc One Churchill Place London E14 5HP Keystone Law Limited 48 Chancery Lane London WC2A 1JF Share Registrars Limited The Courtyard 17 West Street Farnham GU9 7DR Cairn Financial Advisers LLP 9th Floor 107 Cheapside London EC2V 6DN Page 1 Primorus Investments plc Contents Chairman's report incorporating the strategic report Directors' report Governance report Independent auditors' report Statement of Profit or Loss and Other Comprehensive Income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Page 3 - 6 7 - 10 11-15 16 - 20 21 22 23 24 25 - 45 Page 2 Primorus Investments plc Chairman's Report incorporating the Strategic Report For the year ended 31 December 2021 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 2021. Introduction The period under review was one again of significant change. The COVID-19 pandemic continued to have an impact with macroeconomic changes and inflation coming to the forefront. During the period, COP26 was especially important, with countries signing up to various net zero charters which was both much needed and should also present many opportunities for Primorus to make investments in this sector. It has again been pleasing to see the progress made by several of our investee companies, in the face of some exceptional challenges brought on by the COVID-19 pandemic. Some of the investee companies have continued to struggle in the economic environment and will need to raise capital. Concurrent with reviewing the Company’s existing investments, the management team was also presented with many new opportunities during the period. The management team carefully reviewed each opportunity and decided that it was in the best interests of the Company and its shareholders as a whole to put in place a new, more robust strategy, that underpins all future investments. This includes a focus on quoted investments as well as those where there is the expectation of a liquidity event in the short to medium term. Post-financial period, the Company has made investments in three publicly quoted issuers. Primorus completed a capital reduction, as announced by the Company on 7 October 2021. The result of the capital reduction changed the retained deficit that was then on the Company’s balance sheet of £41 million into a surplus of £8.6 million. Together with strengthening the Company’s balance sheet, this will allow the Company to complete share buybacks or pay dividends if the Board feels such actions are in the best interests of the Company and its shareholders as a whole. An additional post-financial period event to highlight is the cancellation of certain share options which had previously been granted to members of the Company’s management team. I strongly believe that remuneration should be based on success and that a more appropriate incentive will be included on a non-dilutive basis. Investment highlights • Fresho Pty Ltd (“Fresho”) successfully raised AUD$12m of new equity capital at $0.90 per share in April 2022. In March 2021, Primorus made a further investment for 2,000,000 in new shares at a price of AUD$0.575 for a total consideration of AUD$1.15 million (approximately £637k), bringing its total shareholding in Fresho to 3,415,723 shares. Over 21,000 + businesses are now using Fresho. Fresho also expanded into the UK in 2021. • The Company exercised 1 million options in Zuuse Limited (“Zuuse”) at a price per option (on the basis of one option being exercisable over one share in the capital of Zuuse) of AUD$0.50 in September 2021. Zuuse rebranded to “Payapps” to align it more with its strategic direction and growth opportunities. Both UK and US businesses have exceeded a 50 % growth rate over the second half of 2021 and have invested strongly in headcount with an increase of 85% over 2020 which is expected to generate revenue growth throughout 2022 and beyond. • Engage Technology Partners Limited (“Engage”), the end-to end workforce management platform provider, completed an equity fundraise, resulting in the conversion of certain loan notes held by investors, including the Company, at a 20% discount to the price per share subscribed for by investors who participated in the equity fundraise. Engage continues to build momentum through the development of Managed Service Providers and Back Office Systems (“BOS”) as products essential for growth. • In April 2021, the Company invested US$2.5m into convertible loan notes (“CLNs”) issued by Mustang Energy PLC (“Mustang”), a special purpose acquisition company listed on the Standard segment of the London Stock Exchange Main Page 3 Primorus Investments plc Chairman's Report incorporating the Strategic Report (continued) For the year ended 31 December 2021 Market. 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 acquire shares in AIM-quoted Bushveld Minerals Ltd (see post period end comments), which were provided as a backstop mechanism under the CLNs. • In October 2021, the Company invested £350k in Alteration Earth PLC, a special purpose acquisition company established to make acquisitions in the clean technology and renewable energy sectors. The Board believes there will be many opportunities within these sectors. • SOA Energy (“SOA”) successfully completed the re-entry of the Ofek-2ST well without the need for a side track. The well moved directly for testing operations. • SOA is working on acquiring new off-shore 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. Primorus holds several legacy investments which do not form part of its long-term strategy. The legacy investments include Nomad Energy, Sport 80, TruSpine, Weshop, Stream TV, Supernatural Foods, MEVIE and Rogue Baron. These investments will now be classified on the website under non-core holdings. 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, these will not be reported via an RNS, but instead the Company’s website shall be updated on a regular basis 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 £0.041 million (2020: profit of £4.616 million). The net profit after tax was £0.109 million (2020: profit of £4.169 million). Total assets including cash at 31 December 2021 amounted to £8.990 million (2020: £9.401 million). The cash balance was £0.941 million as at 31 December 2021. Board Changes I was pleased to announce in June 2021 that Matthew Beardmore accepted the role of Chief Executive Officer of the Company. Matthew has and I am sure will continue to make an outstanding contribution to the success of the Company. I am very grateful for Matthew’s efforts as I am to all my fellow Directors for their effort and enthusiasm. 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 in future look to structure investments in a format where Primorus can have a high degree of oversight, other than with Alteration Earth PLC, this has not been done with the Company’s investments to date, 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. In relation to its investment in Alteration Earth PLC, the Company has nominated a director onto the board to ensure there is oversight on behalf of Primorus. This is a significant step for the Company because it is the first investment where the Company will get an insight into the operation of the investee company and be able to actively voice its opinions, concerns and constructive advice instead of being informed of decisions after the event. Page 4 Primorus Investments plc Chairman's Report incorporating the Strategic Report (continued) For the year ended 31 December 2021 Summary and Outlook During 2021, the Board spent a significant amount of time reviewing many potential investment opportunities. Although there have been several headwinds for Primorus and the markets in general, the Board feels the Company is in a strong position to take advantage of opportunities as they present themselves. The drive to net zero carbon is clearly necessary for the benefit of the wider community and the Board feels that it can position Primorus in this investment space for the benefit of the Company and its shareholders as a whole. The Company did not need to raise any capital in 2021 and the Board sees no immediate need to do so due to the Company’s holdings of liquid instruments and cash. The Board is not ruling out the possibility of raising capital if the right opportunity presents itself, but at the time of writing the Company is not considering any potential investments which would necessitate a capital raising to be undertaken. The management team of the Company was awarded share options to incentivise the future growth of the Company. These options have since been cancelled, at the unanimous decision of the management team members, to better align the interests of the management team with the interests of the Company’s shareholders. I anticipate that all shareholders would prefer that the management team be awarded a non-dilutive means of remuneration if their performance merits such award. This also aligns with our decision to complete a capital reduction, which provided a further means of potentially rewarding shareholders, either by means of a share buyback or by the payment of dividends. The Board will continue to look at innovative ways to enhance the Company’s value which may involve looking at various alternative company structures. It is also important to enhance clarity on those investments which the Company holds. In the past, it has been hard to get an accurate valuation of some of our investments but as we move towards investments with greater liquidity this should enable the Company to be valued at a more realistic value to its net asset value (“NAV”). Whilst it is usual for investment companies to trade at a discount to their NAV, the Board believes the Company to be significantly undervalued given its current share price and resultant market capitalisation. The Company’s positioning into holding more liquid investments should hopefully ensure it trades closer to its NAV. We remain highly focused on costs, especially in these inflationary times and will always focus on efficiency whilst working to achieve shareholder value. The Board would like to thank all shareholders for their continued support and understanding in this period of unsettling and exceptional circumstances and wish them well during this time. 2022 The Board remains committed to its strategic criteria for each new investment and has reiterated the core requirements below: • It must enable Primorus the opportunity to acquire a meaningful stake in the investee company. • A clear and realistic exit route must be in place. • There should be an opportunity for the Board to play an active role in the investee company’s development. • The Board and the investee company’s management team must share a common vision and strategic alignment. • The investment committed by the Company will be proportionate to the risk/reward opportunity. Our operational targets for the remainder of 2022, in line with our investing policy, are: • To continue to focus on applying financial resources diligently, with controlled corporate costs and focused investment. • To continue to build working capital, preferably through organic means, by exiting investments which have generated significant returns on investment. • To continue to review new opportunities. • To retain sufficient capital resources through cash or liquid investments to enable the Company to have access to immediate capital for the purposes of deploying into investment opportunities. • To consider divesting the non-core investments when suitable liquidity events arise or fair value can be achieved by alternative means. Page 5 Primorus Investments plc Chairman's Report incorporating the Strategic Report (continued) For the year ended 31 December 2021 Statement in accordance with section 172 of the Companies Act 2006 As required by section 172 of the Companies Act 2006, a director of a company must act in a way they consider, in good faith, would most likely promote the success of the company for the benefit of its shareholders. In doing this, the director must have regard, amongst other matters, to the: • likely consequences of any decision in the long term; • need to foster the Company’s business relationships with suppliers, and others; • impact of the Company’s operations on the community as well as the environment; • company’s reputation for high standards of business conduct; and • need to act fairly as between members of the Company. As a Board our aim is always to uphold the highest standards of governance and business conduct. Our decisions are made in the interests of the long-term sustainable success of the Company, generating value for our shareholders. We recognise that our business can only grow and prosper over the long term by understanding the views and needs of our stakeholders. As a board we believe it is important to engage with stakeholders to ensure the Board has informed discussions and factors stakeholder interests into decision-making. As always, I am available for any shareholder to contact me directly about any concerns or suggestions they may have. Details of the Board’s decisions for the year ending 31 December 2021 to promote long-term success, and how it engaged with stakeholders and considered their interests when making those decisions, can be found throughout the Chairman’s Statement, Directors’ Report and Corporate Governance Statements. Rupert Labrum Chairman Date 10 June 2022 Page 6 Primorus Investments plc Directors' Report For the year ended 31 December 2021 The directors present their report and the financial statements for the year ended 31 December 2021. Principal activity Primorus Investments plc is an investing company with a focus to establish and/or acquire a diverse portfolio of direct and indirect interests in companies and/or projects at any stage of their development or operational lifecycle. With a particular focus on the natural resources, energy, clean technology, financial technology, business technology, infrastructure, property, consultancy, brand licensing and leisure sectors. However, the Company will consider opportunities in all sectors as they arise if the Board considers there is an opportunity to generate potential value for Shareholders. The Company will consider possible opportunities anywhere in the world. Results and dividends The profit for the year, after taxation, amounted to £109,000 (2020 - profit £4,169,000). The Directors do not recommend payment of a dividend (2020: £nil). Business review A review of the business for the year, and future developments are set out in the Chairman's Statement incorporating the Strategic Report on pages 3 to 6. Post year end events Details of significant events occurring since the year end are set out in note 19. Directors' remuneration and interests The company remunerates the Directors at a level commensurate with the size of the company and the experience of its Directors. The Remuneration Committee has reviewed the Directors' remuneration and believes it upholds the objectives of the company with regard to this issue. Details of the Directors' emoluments and payments made for professional services rendered are set out in Note 6 of the Financial Statements. All the Directors below served throughout the period unless otherwise stated: Rupert Labrum Matthew Beardmore Hedley Clark Executive Chairman Chief Executive Officer Non-executive Director Page 7 Primorus Investments plc Directors' Report (continued) For the year ended 31 December 2021 Substantial shareholding At 7 June 2022, the Company was aware of the following substantial shareholdings in the ordinary share capital, over 3%: Shareholder HSDL Nominees Limited Hargreaves Lansdown (Nominees) Limited Interactive Investor Services Nominees Limited Rock Nominees JIM Nominees Limited John Alexander Melvin Hemming** Lawshare Nominees Barclays Direct Investing Nominees Stephen Ball** Number of ordinary shares Percentage holding 41,191,743 24,170,473 23,683,918 9,687,545 6,338,583 5,592,809 5,930,082 4,692,247 4,210,822 29.46% 17.29% 16.94% 6.93% 4.53% 4.00% 4.24% 3.36% 3.01% . ** These shareholdings are also included witihn the nominee accounts stated holdings. The serving directors hold a beneficial interest in the ordinary share capital of the Company as follows: Rupert Labrum* Hedley Clark* Matthew Beardmore *including connected party holdings. Suppliers' payment policy Number of ordinary shares 29,500,000 1,471,759 100,000 Percentage holding 21.10% 1.05% 0.07% It is the Company's policy to agree appropriate terms and conditions for its transactions with suppliers ranging from standard terms and conditions to individually negotiated contracts and to pay suppliers according to agreed terms and conditions, provided that the supplier meets those terms and conditions. The Company does not have a standard code dealing specifically with the payment of suppliers. Trade payables at the year end all relate to sundry administrative overheads and disclosure of the number of days purchases represented by year end payables is therefore not meaningful. Charitable contributions During the year the Company made charitable donations amounting to £Nil (2020: £Nil) Directors' indemnities The Company has put in place qualifying third party indemnity provisions for all the Directors of the Company which was in force at the date of approval of this report. Principal risks and uncertainties The principal risks and uncertainties facing the Company are detailed within the Governance report. Page 8 Primorus Investments plc Directors' Report (continued) For the year ended 31 December 2021 Internal control A key objective of the Directors is to safeguard the value of the business and assets of the Company. This requires the development of relevant policies and appropriate internal controls to ensure proper management of the Company's resources and the identification and mitigation of risks which might serve to undermine them. The Directors are responsible for the Company's system of internal control and for reviewing its effectiveness. It should, however, be recognised that such a system can provide only reasonable not absolute assurance against material misstatement or loss. Directors' responsibilities statement The directors are responsible for preparing the Directors' Report and the financial statements, in accordance with applicable law. Company law requires the directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with UK-adopted international accounting standards (UK- adopted IAS). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the financial statements, the directors are required to: • • • • • select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether they have been prepared in accordance with UK-adopted international accounting standards (UK- adopted IAS), subject to any material departures disclosed and explained in the financial statements; assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements and other information included in Directors' Reports may differ from legislation in other jurisdictions. Disclosure of information to auditors Each of the persons who are directors at the time when this Directors' Report is approved has confirmed that: • • so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information. Auditors The auditors, PKF Littlejohn LLP, will be proposed for reappointment in accordance with section 489 of the Companies Act 2006. Page 9 Primorus Investments plc Directors' Report (continued) For the year ended 31 December 2021 Annual general meeting Notice of the forthcoming AGM will be enclosed separately. This report was approved by the board on 10 June 2022 and signed on its behalf. Hedley Clark Director Page 10 Primorus Investments plc Governance report For the year ended 31 December 2021 The Board of Primorus Investments plc are committed to the principles of good corporate governance and believe in the importance and value of robust corporate governance and in our accountability to our shareholders and stakeholders. The AIM Rules for companies (as updated on 1 January 2021) required AIM companies to apply a recognised corporate governance code from 28 September 2018. Primorus has chosen to adhere to the Quoted Company Alliance’s Corporate Governance Code for Small and Mid-Size Quoted Companies (the “QCA Code”) and listed below are the 10 broad principles of the QCA Code and the Company’s disclosure with respect to each point. The Principles of the QCA Code 1. Principle One Business Model and Strategy The Board has concluded that the highest medium and long term value can be delivered to its shareholders by the adoption of an investing strategy for the Company. Primorus Investments plc is an investing company with a focus to acquire a diverse portfolio of direct and indirect interests in exploration and producing projects and assets in the natural resources sector in addition to acquisitions in the leisure, corporate services, consultancy and brand licensing sectors. The Company will consider possible opportunities anywhere in the world. 2. Principle Two Understanding Shareholder Needs and Expectations The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. Shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting. Investors also have access to current information on the Company though its website, www.primorusinvestments.com, and via Rupert Labrum, Executive Chairman, who is available to answer investor relations enquiries. 3. Principle Three Considering wider stakeholder and social responsibilities The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its investee companies and stakeholders. The Board is therefore charged with the responsibility to ensure that there is as close as practicable oversight and contact with its key investee companies and shareholder relationships. Furthermore the Board considers the wider impacts of any investee company in terms of their social and environmental impacts. 4. Principle Four Risk Management In addition to its other roles and responsibilities, the Audit Committee is responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies their ownership and the controls that are in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The following principal risks and controls to mitigate them, have been identified: Page 11 Primorus Investments plc Governance report (continued) For the year ended 31 December 2021 Activity Risk Impact Control(s) Financial Liquidity, market and credit risk Inability to continue as going Inappropriate controls and accounting policies concern Reduction in asset values Incorrect reporting of assets Regulatory adherence Breach of rules Censure Strategic Damage to reputation Inability to secure new capital of investments Inadequate disaster recovery procedures Loss of key operational and financial data Robust capital management policies and procedures The board agrees and signs off all annual reports which detail accounting policies Due to size of the company - the board discusses and agrees all payments over £25,000 Audit Committee Strong compliance regime instilled at all levels of the Company Effective communications with shareholders coupled with consistent messaging to potential investees Robust compliance Off-site storage of data Management Recruitment and retention of Reduction in operating capability Stimulating and safe working key people environment Balancing salary with longer term incentive plans The Directors have established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the Executive Chairman, Rupert Labrum. However, the Board will continue to monitor the need for an internal audit function. The Board works closely with and has regular ongoing dialogue with the Company financial controller and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems. 5. Principle Five A Well Functioning Board of Directors As at the date hereof the Board comprised: the Executive Chairman Rupert Labrum, Chief Executive Officer, Matthew Beardmore and a Non-executive Director, Hedley Clark. Biographical details of the current Directors are set out within Principle Six below. Executive and Non-Executive Directors are subject to re-election at intervals of no more than 3 years. The Executive Chairman and the Chief Executive Officer are considered to be full time employees whilst the Non-Executive Director is considered to be part time but are expected to provide as much time to the Company as is required. The Board elects a Chairman to chair every meeting. The Board meets formally at least 3 times per annum but regular contact is maintained so that all directors are informed of relevant developments and are able to have discussions whenever required. It has established an Audit Committee and a Remuneration Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not created a Nominations Committee. The Board considers that this is appropriate given the Company’s current stage of operations. It shall continue to monitor the need to match resources to its operational performance and costs and the matter will be kept under review going forward. Page 12 Primorus Investments plc Governance report (continued) For the year ended 31 December 2021 Hedley Clark is considered by the Board to be an Independent Director. The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be two independent non-executives. As it has only one independent non-executive director, the Board does not currently fully comply with this requirement and will consider making further appointments as the scale and complexity of the Company grows, which is expected to be when the Company achieves a market capitalisation of over £10 million. Attendance at Board and Committee Meetings The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. To date in the current financial year the Directors have a 100% record of attendance at such meetings. In order to be efficient, the Directors meet formally and informally both in person and by telephone. To date there have been at least quarterly formal meetings of the Board, and the volume and frequency of such meetings is expected to continue at this rate. 6. Principle Six Appropriate Skills and Experience of the Directors The Board currently consists of three Directors. The Company believes that the current balance of skills in the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries and each of the Directors has experience in public markets. The Board recognises that it currently has a limited diversity and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required. The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal. Currently each of the board are involved in financial markets and increase their awareness and skills via reading and participation in commercial transactions from time to time. Mr Rupert Labrum Executive Chairman Rupert Labrum is a former investment banker, who retired after a successful career in the City of London. He was involved with Treasury and funding operations of international banks and building societies. He worked as a fund manager at Gartmore Investment Management and previously ran a proprietary derivatives trading desk at Deutsche Bank. Over the last several years, Mr Labrum has been an active investor in multiple private and publicly quoted companies. He has held notifiable positions in several AIM-quoted companies, and is the Company’s largest shareholder, holding an aggregate interest in its shares of approximately 21%. Mr Matthew Beardmore Chief Executive Officer Matthew Beardmore is a practising solicitor and commercial manager. He has acted on many investments, commercial transactions, property transactions and major projects amounting to several billion pounds during his career. Mr Beardmore was previously a non-executive director of AIM-quoted lnfraStrata plc, where he was instrumental in both completing and managing the company’s EU grant applications. Mr Hedley Clark Non-executive Director Hedley Clark is a Fellow of the Institute of Chartered Accountants in England and Wales. After nine years working in private practice, the last five at KPMG, he left to take up senior financial and management roles in various companies where he gained a wealth of international business experience. This included two successful start-ups. Until the recent sale of the business, for the last 12 years, Mr Clark’s principal role had been as the Managing Director of Credence Background Screening Limited, a successful background screening company which, since his initial involvement in 2009, saw significant revenue and profits growth. Page 13 Primorus Investments plc Governance report (continued) For the year ended 31 December 2021 7. Principle Seven Evaluation of Board Performance Internal evaluation of the Board, the Committee and individual Directors is undertaken on an annual basis in the form of informal discussions. The annual report details the progress which the board and company has made for the year. No succession planning is deemed necessary at this point due to the small size of the company. Each director is also assessed by shareholders on a three year rotation basis at AGM when their re-appointment is due. 8. Principle Eight Corporate Culture The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. A large part of the Company’s activities are centred upon what needs to be an open and respectful dialogue with investee companies and investors and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The directors consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016. 9. Principle Nine Maintenance of Governance Structures and Processes Ultimate authority for all aspects of the Company’s activities rests with the Board, the respective responsibilities of the Chairman and Chief Executive Officer arising as a consequence of delegation by the Board. The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board, management of the Company’s business and primary contact with shareholders. Audit Committee During the current financial year, the Audit Committee comprised of Hedley Clark (Chairman) and Rupert Labrum. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported. It receives reports from the executive management and auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee shall meet not less than twice in each financial year and it has unrestricted access to the Company’s auditors. Remuneration Committee The Remuneration Committee is chaired by Hedley Clark. The Remuneration Committee reviews the performance of the executive directors and employees and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also considers and approves the granting of share options pursuant to the share option plan and the award of shares in lieu of bonuses pursuant to the Company’s Remuneration Policy. Page 14 Primorus Investments plc Governance report (continued) For the year ended 31 December 2021 Nominations Committee The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee. Non-Executive Directors The Board has appointed 1 Non-Executive Director. Due to the small size of the Company, it is deemed not necessary to appoint further non-executive directors until the Company’s market capitalisation is over £10m. In accordance with the Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or arrangement. There are no plans at this stage to increase the governance framework until the company achieves minimum £10m market capitalisation. 10. Principle Ten Shareholder Communication The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders. shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting. Investors also have access to current information on the Company though its website, www.primorusinvestments.com, and via Rupert Labrum, Executive Chairman, who is available to answer investor relations enquiries. The company is currently considering, subject to the necessary formalities, to move to electronic communications with shareholders in order to maximise efficiency. The company’s website details various information: annual reports, AGM notice of meetings and RNS announcements detailing results of meetings and other relevant information. The Company shall include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees. Page 15 Independent Auditors' Report to the Members of Primorus Investments plc For the year ended 31 December 2021 Opinion We have audited the financial statements of Primorus Investments plc for the year ended 31 December 2021 which comprise the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and Notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK- adopted international accounting standards. In our opinion the financial statements: • • • give a true and fair view of the state of the Company's affairs as at 31 December 2021 and of its profit for the year then ended; have been properly prepared in accordance with UK-adopted international accounting standards; and have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the Company's ability to continue to adopt the going concern basis of accounting included: a) Reviewing management’s assessment of going concern including cash flow forecasts covering period up to 12 months from the date of approval for financial statements; b) Reviewing and challenging key underlying assumptions used in the forecasts and reviewing for reasonableness; c) Reviewing post-year end bank statements , Regulatory News Service announcements and management accounts and assessing post year-end performance and the latest financial position of the company; d) We sensitised the cash flow forecasts and performed stress tests, in order to assess the impact on cash reserves of a shortfall against budget; and e) Assessing the adequacy of going concern disclosures within the Annual Report and Financial Statements Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. Our application of materiality In planning and performing our audit we applied the concept of materiality. We used the concept of materiality to both focus our testing and to evaluate the impact of misstatements identified. Based on our professional judgement, we determined overall materiality for the financial statements as a whole to be £125,000 (2020: £130,000) based on approximately 1.5% of gross assets on the basis that the company’s investments are the main components of the Statement of financial position. Page 16 Independent Auditors' Report to the Members of Primorus Investments plc (continued) For the year ended 31 December 2021 We used a lower level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial statements. Performance materiality was set based on 60% of overall materiality as adjusted for the judgements made with regard to the entity’s risk and our evaluation of the specific risks of each audit area, taking into account the internal control environment. Where considered appropriate, performance materiality may be reduced to a lower level, such as, for related party transactions and directors’ remuneration. We agreed with the Audit Committee to report to it all identified errors in excess of £6,250 (2020:£6,500), which is based on 5% of overall materiality. Errors below that threshold would also be reported to it if, in our opinion as auditor, disclosure was required on qualitative grounds. Our approach to the audit In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we looked at areas involving significant accounting estimates and judgements by the directors in respect of the carrying values of the company’s investments and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluation whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud. Key Audit Matter How our scope addressed this matter Valuation, classification and impairment of investments (Note 8) The company held investments with a value of £8.04m as at 31 December 2021. These are valued in accordance with International Financial Reporting Standards (IFRS) 13 and the investments held and ensuring that the carrying values are fair value hierarchy; and classified as per IFRS 9. Our work in this area included: • Reviewing the valuation methodology for the There is the risk that these investments have not been valued in accordance with IFRS 13 or classified in accordance with IFRS 9 and require impairment or reclassification. The investees are generally early stage private companies which do not have readily available fair values under the fair value hierarchy. Calculating a fair value can therefore involve title to the investments held; a significant level of judgement. supported by sufficient and appropriate audit evidence; • Ensuring that all asset types are categorised according to IFRS, including the accounting disclosures as required under IFRS 9; • Reviewing the movement in investments to ensure they are accounted for and disclosed correctly in line with IFRS 9; • Ensuring that Primorus Investments Plc has full •Performed a post year-end review of regulatory news service announcements, board minutes, bank statements and ledgers to identify transactions to support the 31 December 2021 carrying value. • Ensuring that appropriate disclosures surrounding the estimates made in respect of any valuations are included in the financial statements; and • Considering whether the transactions have been accounted for correctly within the financial statements. Page 17 Independent Auditors' Report to the Members of Primorus Investments plc (continued) For the year ended 31 December 2021 Other information The other information comprises the information included in the Annual Report, other than the financial statements and our auditors' report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements. Page 18 Independent Auditors' Report to the Members of Primorus Investments plc (continued) For the year ended 31 December 2021 Matters on which we are required to report by exception In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • • • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or the financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors' remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Responsibilities of directors As explained more fully in the directors' responsibilities statement on page 9, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditors' responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, industry research, application of cumulative audit knowledge and experience of the sector etc. This is evidenced by discussion of laws and regulations with the management, reviewing minutes of meetings of those charged with governance and RNSs and review of legal or professional expenditures. • We determined the principal laws and regulations relevant to the company in this regard to be those arising from Companies Act 2006, AIM rules, GDPR, Employment Law, Health and Safety Law, Anti-Bribery and Money Laundering Regulations and QCA compliance. • We designed our audit procedures to ensure the audit team considered whether there were any indications of non- compliance by the company with those laws and regulations. These procedures included, but were not limited to: o Discussion with management regarding potential non-compliance; o Review of legal and professional fees to understand the nature of the costs and the existence of any non-compliance with laws and regulations; and o Review of minutes of meetings of those charged with governance and RNSs • We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in Page 19 Independent Auditors' Report to the Members of Primorus Investments plc (continued) For the year ended 31 December 2021 addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias was identified in relation to the carrying value of the investments and we addressed this by challenging the assumptions and judgements made by management when auditing that significant accounting estimate. • As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business and review of bank statements during the year to identify any large and unusual transactions where the business rationale is not clear. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report. Use of our report This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed. Zahir Khaki (Senior statutory auditor) for and on behalf of PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD 10 June 2022 Page 20 Primorus Investments plc Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2021 Income Investment income Realised gain on financial investments Unrealised (loss)/gain on financial investments Operating expenses Administrative expenses Impairment of financial investments (Loss)/profit before tax Tax credit/(expense) Profit for the year Total comprehensive income Earnings per share attributable to the ordinary equity holders of the parent Basic Diluted The notes on pages 25 to 45 form part of these financial statements. Note 3 3 2021 £000 141 323 19 483 2020 £000 14 6,033 (323) 5,724 4,5 (418) (475) 8 7 9 9 (106) (633) (41) 4,616 150 109 (447) 4,169 109 4,169 2021 Pence 2020 Pence 0.078 0.072 2.981 2.981 Page 21 Primorus Investments plc - Registered number: 03740688 Statement of Financial Position As at 31 December 2021 Assets Non-current assets Financial investments Current assets Financial investments Trade and other receivables Cash and cash equivalents Total assets Liabilities Current liabilities Bank overdraft Trade and other liabilities Corporation tax Net assets Issued capital and reserves Share capital Share premium reserve Share based payment reserve Retained earnings TOTAL EQUITY Note 2021 £000 2020 £000 8 8 10 18 18 11 13 7,533 7,533 511 5 941 1,457 4,612 4,612 113 3 4,673 4,789 8,990 9,401 - 44 37 81 113 55 447 615 8,909 8,786 280 - 13 8,616 15,391 35,296 - (41,901) 8,909 8,786 The financial statements on pages 21 to 45 were approved and authorised for issue by the board of directors on 10 June 2022 and were signed on its behalf by: Rupert Labrum Director Hedley Clark Director The notes on pages 25 to 45 form part of these financial statements. Page 22 Share capital £000 Share premium £000 Share based payment reserve £000 Retained earnings £000 15,391 35,296 683 (46,613) Primorus Investments plc Statement of changes in equity For the year ended 31 December 2021 At 1 January 2020 Profit for the year Total comprehensive income for the year Cancellation of share options Termination and settlement of share options Total contributions by and distributions to owners At 31 December 2020 At 1 January 2021 Profit for the year Total comprehensive income for the year Issuance of share options - - - - - - - - - - 15,391 35,296 15,391 - 35,296 - - - - - Shares cancelled during the year (15,111) (35,296) Total contributions by and distributions to owners (15,111) (35,296) At 31 December 2021 280 - The notes on pages 25 to 45 form part of these financial statements. Total attributable to owners of the company £000 4,757 4,169 4,169 - (140) - - (543) (140) 4,169 4,169 543 - (683) 543 (140) - - - - 13 - 13 13 (41,901) 8,786 (41,901) 8,786 109 109 - 50,408 50,408 8,616 109 109 13 - 14 8,909 Page 23 Primorus Investments plc Statement of Cash Flows For the year ended 31 December 2021 Cash flows from operating activities Profit for the year Adjustments for (Loss) on disposal of financial investments Fair value movements on financial investments Impairment provision on unlisted investments Share based payment Interest income on investments Net foreign exchange loss/(gain) Income tax (credit) Movements in working capital: (Increase)/decrease in trade and other receivables Decrease in trade and other payables Cash generated from operations Income taxes paid Net cash used in operating activities Cash flows from investing activities Proceeds on sale of financial investments Purchase of financial investments Net cash (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of the year The notes on pages 25 to 45 form part of these financial statements. 2021 £000 2020 £000 109 4,169 (323) (19) 106 13 (142) 55 (150) (6,033) 323 633 (140) (14) (65) - (351) (1,127) (3) (11) (365) (260) (625) 12 (53) (1,168) 447 (721) 3,474 (6,468) 6,939 (1,703) (3,619) 4,515 4,560 45 941 4,560 Page 24 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies 1.1 Basis of preparation Primorus Investments plc is a public company incorporated and domiciled in the United Kingdom. The Company's registered office is 48 Chancery Lane, London, WC2A 1JF. The Company's shares are listed on the AIM market of the London Stock Exchange. The Financial Statements are for the year ended 31 December 2021 and have been prepared under the historical cost convention, except for debt and equity that have been measured at fair value. The financial statements have been prepared in accordance with the Companies Act 2006 and UK-adopted international accounting standards (UK-adopted IAS) and related interpretations. These financial statements have been prepared and approved by the Directors on 10 June 2022 and signed on their behalf by Rupert Labrum and Hedley Clark. The accounting policies have been applied consistently throughout the preparation of these financial statements and the financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£000) unless otherwise stated. Page 25 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.2 Investing policy The Company’s Investing Policy is to establish and/or acquire a diverse portfolio of direct and indirect interests in companies and/or projects at any stage of their development or operational lifecycle with a particular focus on the natural resources, energy, clean technology, financial technology, business technology, infrastructure, property, consultancy, brand licensing and leisure sectors. However, the Company will consider opportunities in all sectors as they arise if the Board considers there is an opportunity to generate potential value for Shareholders. The Company will consider possible opportunities anywhere in the world. The Directors have considerable experience in investing, both in structuring and executing deals and in raising capital. The Directors will use this experience to identify and investigate potential opportunities, and to negotiate acquisitions and investments. Wherever necessary, the Company will engage suitably qualified technical personnel to carry out specialist due diligence prior to making an acquisition or an investment. The Company may invest by way of outright acquisition of assets, including the intellectual property, of a relevant business, or by entering into partnerships, joint ventures or other forms of collaborative arrangements. Such investments may result in the Company acquiring the whole or part of a company or project (which in the case of an investment in a company may be private or listed on a stock exchange, and which may be pre-revenue), and such investments may constitute a minority stake in the company or project in question or the Company may create new entities for the purposes of investing in such assets. The Company may be an active and/or a passive investor depending on the nature of the individual investments. Although the Company intends to be a long-term investor, the Directors will place no minimum or maximum limit on the length of time that any investment may be held. One principal area of investment focus for the Company moving forward shall be to invest, as a founder or cofounder investor, seed investor and/or cornerstone investor in special purpose acquisition companies (“SPACs”) which are established for the purpose of identifying suitable acquisition targets. The Company will seek to invest in SPACs which are focused on identifying suitable acquisition targets which operate within the sectors that the Company itself wishes to concentrate on. The Company anticipates that it will principally invest in SPACs whose shares are traded on, or are intended to be traded on, the Standard segment of the Main Market or the AIM market of the London Stock Exchange. However, the Company shall be permitted to invest in SPACs whose shares are traded on, or are intended to be traded on, any securities exchange, without geographic limitation. The Directors may offer new ordinary shares in the capital of the Company by way of consideration and/or cash, thereby helping to preserve the Company’s cash for working capital and as a reserve against unforeseen contingencies including, but not limited to, delays in collecting accounts receivable, unexpected changes in the economic environment and unforeseen operational problems. The Company may in appropriate circumstances issue debt securities or otherwise borrow money to complete an acquisition or investment. The Directors do not intend to acquire any cross-holdings in other corporate entities that have an interest in the ordinary shares in the capital of the Company. There are no restrictions on the type of investments that the Company might make or the type of opportunity that may be considered providing they meet the objectives of this Investing Policy. In addition, the Directors may consider, from time to time, other means of facilitating returns to shareholders including dividends, share repurchases, demergers, and schemes of arrangement or liquidation. Page 26 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.3 Going concern The Directors noted the operating losses that the Company has made for the year ended 31 December 2021. The Directors have prepared cash flow forecasts for a period of at least twelve months from the date of the approval of these financial statements, i.e. up to 30 June 2023 which take account of the current cost and operational structure of the Company. The cost structure of the Company comprises a high proportion of discretionary spend and therefore in the event that cash flows become constrained, costs can be quickly reduced to enable the Company to operate within its available funding. These forecasts demonstrate that the Company has sufficient cash funds available to allow it to continue in business for a period of at least twelve months from the date of the approval of these financial statements. Accordingly, the financial statements have been prepared on a going concern basis. It is the prime responsibility of the Board to ensure the Company remains a going concern. At 31 December 2021, the Company had cash and cash equivalents of £941,000. The Company has minimal contractual expenditure commitments and the Board considers the present funds together with future disposals of its listed financial investments sufficient to maintain the working capital of the Company for a period of at least 12 months from the date of signing the Annual Report and Financial Statements. For these reasons the Directors adopt the going concern basis in preparation of the Financial Statements. 1.4 New standards, amendments and interpretations adopted by the Company No new and/or revised Standards and Interpretations have been required to be adopted, and/or are applicable in the current year by/to the Company, as standards, amendments and interpretations which are effective for the financial year beginning on 1 January 2021 are not material to the Company. 1.5 New standards, amendments and interpretations not yet adopted There are no IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company. Page 27 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.6 Key accounting judgements and estimates The preparation of the Financial Statements requires the Company to make estimates, judgements and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. The Directors base their estimates on historic experiences and various other assumptions that they believe are reasonable under the circumstances, the results of which form the basis of making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods. Unlisted investments The company is required to make judgements over the carrying value of investments in unquoted companies where fair values cannot be readily established and evaluate the size of any impairment required. It is important to recognise that the carrying value of such investments cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realised immediately. Management's significant judgement in this regard is that the value of their investment represents their cost less previous impairment. Further details relating to management's assessment of the carrying value of unlisted investments can be found in the Chairman's report. Share based payments At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. 1.7 Income Income is measured by reference to the fair value of consideration received or receivable by the Company as a result of its investment activities. Income is credited to the Income Statement in the period it is deemed to be earned. For quoted financial investments, where the quoted price at the date of these financial statements is different from the original cost or value at the end of the previous account period, the Company reflects the change in value as either a recognised gain or loss. Dividend and interest income Dividend income from investments is recognised when the shareholder's right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably). Interest income from a financial asset at FVTPL is recognised when it is possible that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition. Page 28 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.8 Finance income and costs Finance income and costs are reported on an accruals basis. 1.9 Segment reporting Segmental analysis is not applicable as there is only one operating segment of the continuing business - investment activities. 1.10 Taxation Current tax is the tax currently payable based on taxable profit for the year. Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between the carrying amount of assets and liabilities and their tax bases for financial reporting purposes at the reporting date. However, deferred tax is not provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Company and it is probable that the reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other income tax credits to the Company are assessed for recognition as deferred tax assets. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date. Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statement, except where they relate to items that are charged or credited directly to equity in which case the related deferred tax is also charged or credited directly to equity. The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Page 29 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.11 Foreign Currencies Transactions in foreign currencies are translated at the exchange rate ruling at the date of transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. Non-monetary items that are measured at historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Any exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were initially recorded are recognised in the profit or loss in the period in which they arise. Exchange differences on non-monetary items are recognised in other comprehensive income to the extent that they relate to a gain or loss on that non-monetary item taken to other comprehensive income, otherwise such gains and losses are recognised in the statement of profit or loss. 1.12 Equity Equity comprises the following: • • "Share capital" representing the nominal value of equity shares. "Share premium" representing the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue. "Share based payment reserve" represents the value of equity benefits provided to employees and directors as part of their remuneration and provided to consultants and advisors hired by the Company from time to time as part of the consideration paid. "Retained earnings" representing retained profits. • • 1.13 Share capital Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability. The Company's ordinary shares are classified as equity instruments. 1.14 Fair value measurement IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Company uses to assess the fair value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards. 1.15 Financial instruments A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial investments Financial assets are classified, at initial recognition, as subsequently measured at amortised cost and fair value through profit or loss. Financial investments at fair value through profit or loss Non-derivative financial assets comprising the Company's strategic financial investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. These assets are classified as financial assets at fair value through profit or loss. They are carried at fair value with changes in fair value recognised through the income statement. Where there is a significant or prolonged decline in the fair value of a financial investment (which Page 30 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.15 Financial instruments (continued) constitutes objective evidence of impairment), the full amount of the impairment is recognised in the income statement. Due to the nature of these assets being unlisted investments or held for the longer term, the investment period is likely to be greater than 12 months and therefore these financial assets are shown as non-current assets in the Statement of financial position. Listed investments are valued at closing bid price on 31 December 2021. For measurement purposes, financial investments are designated at fair value through the income statement. Gains and losses on the realisation of investments are recognised in the income statement for the period. The difference between the market value of financial instruments and book value to the Company is shown as a gain or loss in the income statement for the period. Trade and other receivables Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Trade and other receivables are accounted for at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non- payment, taking into account the age of the debt, historical experience and general economic conditions. If a trade debt is determined to be uncollectable, it is written off, firstly against any provisions already held and then to the statement of comprehensive income. Subsequent recoveries of amounts previously written provided for are credited to the statement of comprehensive income. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss in accordance with the expected credit loss model under IFRS 9. For trade and other receivables which do not contain a significant financing component, the Company applies the simplified approach. This approach requires the allowance for expected credit losses to be recognised at an amount equal to lifetime expected credit losses. For other debt financial assets the Company applies the general approach to providing for expected credit losses as prescribed by IFRS 9, which permits for the recognition of an allowance for the estimated expected loss resulting from default in the subsequent 12 month period. Exposure to credit loss is monitored on a continual basis and, where material, the allowance for expected credit losses is adjusted to reflect the risk of default during the lifetime of the financial asset should a significant change in credit risk be identified. The majority of the Company's financial assets are expected to have a low risk of default. A review of the historical occurrence of credit losses indicates that credit losses are insignificant due to the size of the Company's clients and the nature of its activities. The outlook for the natural resources industry is not expected to result in a significant change in the Company's exposure to credit losses. As lifetime expected credit losses are not expected to be significant the Company has opted not to adopt the practical expedient available under IFRS 9 to utilise a provision matrix for the recognition of lifetime expected credit losses on trade receivables. Allowances are calculated on a case-by-case basis based on the credit risk applicable to individual counterparts Trade and other payables Trade and other payables are held at amortised cost which equates to nominal value and, in the case of loans and borrowings including bank overdrafts, net of directly attributable transaction costs. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, current balances with banks and similar institutions and liquid investments generally with maturities of 3 months or less. They are readily convertible into known amounts of cash and have an insignificant risk of changes in value. Page 31 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 1. Accounting policies (continued) 1.16 Share-Based Payments The company has a share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company. The fair value of the employee services received in exchange for the grant of the options is recognised as an employee benefits expense. The total amount to be expensed is determined by reference to the fair value of the options granted, which is calculated by reference to Black Scholes model: • • • including any market performance conditions; excluding the impact of any service and non-market performance vesting conditions (for example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period; and including the impact of any non-vesting conditions (for example, the requirement for employees to save). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. In addition, in some circumstances, employees may provide services in advance of the grant date, and therefore the grant-date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. When the options are exercised, the Company issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium. 2. Functional and presentation currency These financial statements are presented in pound sterling, which is the Company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. 3. Income The Company operates a single primary activity to invest in businesses so as to generate a return for the shareholders. Investment income - interest received on loan notes Realised gain/(loss) on financial investments Unrealised gain/(loss) on financial investments Total income 2021 £000 141 323 19 483 2020 £000 14 6,033 (323) 5,724 Page 32 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 4. Operating profit The operating loss/profit is stated after charging/(crediting): Differences on foreign exchange Operating lease rentals Legal fees Other general overheads Total administrative expenses excluding auditors remuneration 5. Auditor's remuneration Fees payable for the audit of the annual accounts 2021 £000 55 - 38 301 394 2021 £000 24 2020 £000 (65) 9 7 506 457 2020 £000 18 Page 33 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 6. Information regarding directors and employees Employment costs, including Directors, during the year: Wages and salaries Social security costs Average number of persons, including Directors, employed: Administration Directors' remuneration Emoluments Social security costs Share based payment 2021 £000 2020 £000 114 12 126 No. 3 3 283 31 314 No. 4 4 £000 £000 114 12 9 269 30 0 The Company operates only the basic pension plan required under UK legislation, contributions thereto during the year amounts to £Nil (2020: £1,400). Directors’ interest in share options is set out in Note 17. Emoluments of the individual Directors 2021 R Labrum M Beardmore H Clark 2020 A Clayton1 D Strang2 J Taylor Firth1 R Labrum3 M Beardmore3 H Clark3 1 Resigned 12th November 2020 2 Resigned 27th October 2020 3 Appointed 27th October 2020 Fees and salaries £000 48 42 24 114 Share based payments £000 3 3 3 9 £000 157 47 48 6 4 4 266 £000 - - - - - - - Total £000 51 45 27 123 £000 157 47 48 6 4 4 266 Key management personnel The key management personnel are considered to be the directors. Their remuneration is included in the note above. Page 34 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 7. Tax expense Income tax recognised in profit or loss Current tax Current tax on profits for the year Total current tax Total tax expense Tax expense 2021 £000 (150) (150) (150) (150) (150) 2020 £000 447 447 447 447 447 The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profits for the year are as follows: Profit for the year Income tax expense (including income tax on associate, joint venture and discontinued operations) (Loss)/profit before income taxes Tax using the Company's domestic tax rate of 19% (2020:19%) Expenses not deductible for tax purposes Income not taxable for tax purposes Chargeable gain Set off against tax losses Deferred tax not recognised Other deductions for tax purposes Prior year period adjustments Total tax (credit)/expense 2021 £000 109 (150) (41) (8) 37 (61) 65 - - - (183) (150) 2020 £000 4,169 447 4,616 877 184 (1,146) - (431) 990 (27) - 447 Page 35 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 8. Financial investments Fair value at 31 December 2020 Additions Transfer Fair value changes Gains on disposals Disposal Impairment provision Foreign exchange £000 Level 1 339 3,402 23 19 323 (3,473) - - £000 Level 2 - - - - - - - £000 Level 3 4,386 3,207 (23) - - - (106) (55) £000 Total 4,725 6,609 - 19 323 (3,473) (106) (55) Fair value at 31 December 2021 633 7,409 8,042 The financial assets are split as follows: Current assets - listed Non-current assets - listed Non-current assets - unlisted Non-current assets - unlisted convertible loans Total Profits on investments held at fair value through profit or loss Fair value gain on investments Realised gain on disposal of investments Net profit on investments held at fair value through profit or loss £000 Level 1 511 122 - - 633 £000 Level 2 - - - - - £000 Level 3 - - 5,434 1,975 7,409 £000 Total 511 122 5,434 1,975 8,042 £000 Level 1 £000 Level 2 £000 Level 3 19 323 342 - - - - - - £000 Total 19 323 342 Level 1 Level 2 Level 3 represent those assets, which are measured using unadjusted quoted prices for identical assets applies inputs other than quoted prices that are observable for the assets either directly (as prices) or indirectly (derived from prices). applies inputs, which are not based on observable market data Investments are held at fair value through profit and loss using a three-level hierarchy for estimating fair value. The Directors have reviewed the carrying value of the unlisted investments, and have determined an impairment is required of £105,693 (2020: £633,000). Investments comprise both listed and unlisted investments. The listed investments are traded on stock markets throughout the world and are held by the Company as a mix of strategic and short term investments. Page 36 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 Significant additions and disposals during the year Mustang Energy PLC In April 2021 the Company invested US$2.5 million in Mustang Energy PLC through the purchase of 50 Convertible Loan Notes (“CLNs”) each with a nominal value US$50,000. The CLNs attracted an interest rate of 10 per cent per annum. Fresho Pty Limited In March 2021, as part of a fundraising exercise by Fresho, the Company subscribed for 2,000,000 new shares for a total consideration of A$1,150,000, thereby increasing the Company’s holding to approximately 5% on a fully diluted basis 9. Earnings per share (i) Basic earnings per share From continuing operations attributable to the ordinary equity holders of the Company (ii) Diluted earnings per share From continuing operations attributable to the ordinary equity holders of the Company (iii) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share Options 2021 Pence 2020 Pence 0.078 2.981 2021 Pence 2020 Pence 0.072 2.981 2021 No. 2020 No. 139,830,968 139,830,968 12,000,000 - Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 151,830,968 139,830,968 Page 37 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 10. Trade and other receivables Other receivables Prepayments and accrued income Total trade and other receivables 2021 £000 2020 £000 1 4 5 1 2 3 The directors consider that the carrying amount of trade and other receivables approximates to their fair value. 11. Trade and other payables Bank loans and overdrafts Trade payables Other payables (incl directors loans) Accruals and deferred income 2021 £000 - 12 - 32 44 2020 £000 113 20 1 34 168 Page 38 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 12. Risk management objectives and policies Financial assets by category The categories of financial asset included in the balance sheet and the headings in which they are included are as follows: Current assets Listed investments Unlisted investments Trade and other receivables Cash 2021 £000 511 - 5 941 1,457 2020 £000 - 113 3 4,673 4,789 Financial liabilities by category The categories of financial liability included in the balance sheet and the headings in which they are included are as follows: Current liabilities Bank loans and overdrafts Trade and other payables 2021 £000 - 44 44 2020 £000 113 55 168 The company is exposed to market risk through its use of financial instruments and liquidity risk which result from both its operating and investing activities. The Company’s risk management is coordinated at its headquarters, in close co-operation with the Board of Directors, and focuses actively securing the Company’s short to medium term cash flows by minimising the exposure to financial markets. Long term financial investments are managed to generate lasting returns. In order to provide on-going working capital the Company engages in the short term trading of financial assets but does not write options. The most significant financial risks to which the Company is exposed to are described below. Interest rate sensitivity The Company is not substantially exposed to interest rate sensitivity, other than in relation to interest bearing bank accounts. Credit risk analysis None of the Company’s financial assets are secured by collateral or other credit enhancements. The credit risk for liquid funds and other short-term financial assets is considered negligible since the counterparties are reputable banks with high quality external credit ratings. Currency risk The Company holds certain financial investments in foreign currencies, notably US Dollars and Australian Dollars, which expose the Company to the risk that the exchange rates against pound sterling will change in a manner which adversely impacts the Company’s net profit and net assets attributable to shareholders. A 10% decrease in the value of sterling would result in an increase in the fair value of financial investments by £448,000 and a corresponding increase in the value of sterling would result in a decrease in the value of financial investments by £407,000. Page 39 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 Liquidity risk analysis The Company’s continued future operations depend on the ability to raise sufficient working capital through the issue of the equity share capital. The Directors are confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed. Capital management The Company’s capital management objectives are: • To ensure the Company’s ability to continue to ensure sufficient working capital; and • To provide a return to shareholders The capital structure of the Company consists of total shareholders’ equity as set out in the ‘Consolidated statement of changes in equity’. All working capital requirements are financed from existing cash resources. Capital is manged on a day to day basis to ensure the Company is able to operate as a going concern. The Board reviews forward looking cash flow projections at periodic intervals during the year as well as information regarding cash balances. At the balance sheet date the Company had cash balances of £941,000 and the financial forecasts indicate the Company has sufficient liquid resources to meet its obligations under all reasonably expected circumstances and will not need to establish overdraft of other borrowing facilities. Market risk Market price risk arises from uncertainty about the future valuations of financial instruments held in accordance with the Company’s investment objectives. These future valuations are determined by many factors but include the operational and financial performance of the underlying investee companies, as well as market perceptions of the future of the economy and its impact upon the economic environment in which these companies operate. The Company holds investments in companies that are listed on stock markets. The value at the balance sheet date is £633,000 (2020: £339,000). If there were to be a 10% decrease in overall share prices of these financial investments, the impact on the comprehensive income and net assets would be a decrease of £63,000 (2020:£34,000). There would be a similar increase in the event there was a 10% increase in overall share prices Fair value of financial assets and liabilities Financial assets and liabilities are carried in the Statement of Financial position at either their fair value (financial investments) or at a reasonable approximation of the fair value (trade and other receivables, trade and other payables and cash and cash equivalents). The fair values are included at the amount at which the instrument could be exchanged in the current transaction between willing parties, other than in a forced or liquidation sale. Page 40 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 13. Share capital Authorised Shares treated as equity Ordinary shares of £0.0020 each Deferred shares of £0.4500 each A deferred shares of £0.0400 each B deferred shares of £0.0099 each Issued and fully paid Ordinary shares of £0.0020 each 2021 Number 2021 £000 2020 Number 139,830,968 280 139,830,968 - - - - - - 28,976,581 28,976,581 92,230,985 2020 £000 280 13,039 1,159 913 139,830,968 280 290,015,115 15,391 2021 Number 2021 £000 2020 Number 2020 £000 At 1 January and 31 December 139,830,968 280 139,830,968 280 Deferred shares of £0.4500 each At 1 January Shares cancelled At 31 December A deferred shares of £0.0400 each At 1 January Shares cancelled At 31 December 2021 Number 2021 £000 2020 Number 2020 £000 28,976,581 13,039 28,976,581 13,039 (28,976,581) (13,039) - - - - 28,976,581 13,039 2021 Number 2021 £000 2020 Number 2020 £000 28,976,581 1,159 28,976,581 (28,976,581) (1,159) - - - 28,976,581 1,159 - 1,159 Page 41 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 13. Share capital (continued) B deferred shares of £0.0099 each At 1 January Shares cancelled At 31 December 14. Capital commitments 2021 Number 2021 £000 2020 Number 2020 £000 92,230,985 (92,230,985) 913 (913) 92,230,985 - - - 92,230,985 913 - 913 The Directors have confirmed that there were no contingent liabilities or capital commitments which should be disclosed as at 31 December 2021. No provision has been made in the financial statements for any amounts in relation to any capital expenditure requirements of the Company’s associate or investments, and such costs are expected to be fulfilled in the normal course of the operations of the Company. 15. Related party transactions During the year the company purchased due diligence services for £1,700 plus VAT from Garancie Limited, a company in which Mr H Clark is a director and shareholder. There was no balance outstanding at the year end. Page 42 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 16. Share schemes During the year the Company granted Share Options as set below. Options are exercisable at the price agreed at the date of the grant. The vesting period is five years. The exercise of options is dependent upon the share price of the Company reaching a mid-market closing value of 0.06p. 0.08p and 0.10p. One third of the Share Options will vest at each value. Full details of the Share Options, including their exercise prices and periods, are set out below: Share options R Labrum H Clark M Beardmore S Holden At 1 January 2021 Issued during the year Terminated during the year At 31 December 2021 Exercise Price Date from which exercisable Expiry date No. - - - - No. 3,000,000 3,000,000 3,000,000 3,000,000 No. - - - - No. 3,000,000 3,000,000 3,000,000 3,000,000 £ 0.041 0.041 0.041 0.041 - 12,000,000 - 12,000,000 01/03/2021 01/03/2026 01/03/2021 01/03/2026 01/03/2021 01/03/2026 01/03/2021 01/03/2026 The weighted average values of options are as follows: Weighted average exercise price of options granted Weighted average exercise price of options exercisable at the end of the year Weighted average option life remaining 2021 0.041p 2020 0.00p 0.041p 0.00p 4.2 years 0 years The share options represent approximately 8.58 per cent of the current issued share capital of the Company. On a fully diluted basis, the share options represent approximately 7.9 per cent. of the enlarged issued share capital of the Company. Subsequent to the year end the holders of the Share Options agreed to terminate all of the 12,000,000 share options. A modified Black-Scholes model has been used to determine the fair value of the share options on the date of grant. The fair value is expensed to the income statement on a straight-line basis over the vesting period, which is determined annually. The model assesses a number of factors in calculating the fair value. These include the market price on the date of grant, the exercise price of the share options, the expected share price volatility of the Company’s share price, the expected life of the options, the risk-free rate of interest and the expected level of dividends in future periods. Page 43 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 For those options granted where IFRS 2 "Share-Based Payment" is applicable, the fair values were calculated using the BlackScholes model. The inputs into the model were as follows: 1 March 2021 Risk Free Rate 0.25% Share Price Volatility 68% Expected life 4.2 years Share price at date of grant 0.041 Expected volatility was determined by calculating the historical volatility of the Company's share price for 12 months prior to the date of grant. The expected life used in the model is the term of the options. Charges to the statement of comprehensive income 2021 £000 13 2020 £000 (140) 17. Ultimate controlling party It is considered that there is no ultimate controlling party of the Company. 18. Notes supporting statement of cash flows Cash at bank available on demand Cash and cash equivalents in the statement of financial position Bank overdrafts used for cash management purposes Cash and cash equivalents in the statement of cash flows 2021 £000 941 941 - 941 2020 £000 4,673 4,673 (113) 4,560 Page 44 Primorus Investments plc Notes to the Financial Statements For the year ended 31 December 2021 19. Events after the reporting date In February 2022, the Company has made an investment in Clean Power Hydrogen PLC by way of subscription of 2,222,222 shares at £0.45p per share. In March 2022, the Company re-negotiated its investment in Mustang Energy PLC, whereby the Company was issued Convertible Loan Notes (“CLNs") in Bushveld Minerals Limited (“BNM”). These CLNs are convertible into ordinary shares of BMN. The conversion mechanism for the CLNs is as follows: • The principal amount is US$1,500,000 plus accrued and unpaid interest (as at 25 March 2022) of US$136,849 (total $1,636,849). • The above amount has been converted into £GBP at an agreed exchange rate of 1.3589 USD/GBP which means the CLNs are worth £1,208,988. • At the agreed BMN share price of £0.098987 the CLNs (as at 25 March 2022) would equate to 12,213,607 BMN Shares if they were all converted. • If Primorus issues a conversion notice, the loan notes will convert into shares in the capital of BMN. To date the Company has issued two conversion notices for 4,157,637 ordinary shares of BMN. On 16th March 2022 it was announced that the holders of the Share Options agreed to terminate all of the 12,000,000 share options exercisable at £0.041p per ordinary share. Page 45