Tekcapital announces 108% Net Asset increase in FY21

Trading update:

Tekcapital (TEK Follow | TEK), an intellectual property investment group, released impressive audited results for the year ended 30 November 2021 ("FY21").

Net assets increased by 108% to a record $68.1m, generating total income of $29.2m, an increase of over 243% from FY20.

Profit after tax increased 243% to $26.4m (FY20: $7.7m), driven mostly by a $28.1m (FY20: $8.7m) increase in fair value of TEK's investment portfolio.

NAV per share increased 37%. 

Operating cash outflow of $1.8m was bolstered by share placings totalling $9.4m during the period, resulting in a robust balance sheet with cash and cash equiv. of $3.5m on 30 November 2021.

Portfolio update:

TEK holds an investment portfolio consisting of mainly 4 companies: Salarius (97.2% ownership), Lucyd (100% ownership), Guident (100% ownership), and Belluscura (15% ownership). The companies were all were started by Tekcapital, venturing in university-developed disruptive technologies across multiple sectors. 

Most notably, the IP screening process looks robust given most have grown significantly since initial investment in 2018:

Summary of TEK holdings and recent highlights:

Giudent, a US subsidiary, is TEK's largest holding accounting for 47% of Company value. Guident has been in the news this week after announcing development of an advanced autonomous vehicle connectivity solution and related patent, as well as selection as vendor for Jacksonville's mass transit modernisation project.

Both contracts utilise Guident's ultra low-latency remote monitoring and control system (RMCC) and software, aimed at improving safety of autonomous vehicles and delivery drones.

Lucyd, a US subsidiary, is focused on developing smart eyewear and was the first company to deliver prescription glasses with Bluetooth technology in 2019. Lucyd technology enables common smartphone tasks to be performed handsfree, increasing pedestrian safety.

Lucyd signed a distribution agreement with D. Landstrom Associates for distribution of Lucyd® Lyte® smart-glasses in large retail stores in the US. Lucyd's subsidiary Innovative Eyewear has filed a registration statement for a potential IPO on NASDAQ, seeking to raise $10m.

Belluscura, a medical technology company, has developed an advanced, modular, user-serviceable portable oxygen concentrator ("POC"), providing on-the-go supplemental oxygen. The product has been cleared by the FDA. The company is focused on reducing the price of POCs for 300 million people who suffer from COPD worldwide.

Belluscura value has increased tenfold during the year ended 30 November 2021 with a valuation of $22.7m compared to $2m on 30 November 2020, following an IPO on London AIM in May 2021.

Since 30 November 2021, the company has signed an agreement to manufacture its X-PLO2R® portable oxygen concentrator in China, expected to double manufacturing capacity; and also been awarded a Distribution and Pricing Agreement ("DAPA") by the US Defense Logistics Agency.

Salarius, a US subsidiary, has patented Microsalt®, an all-natural non-GMO salt that contains approximately half the sodium content of regular table salt. Excessive sodium consumption has been linked to cardiovascular disease. Salarius has sought to alleviate the issue by developing an advanced process for producing salt crystals, resulting in the same taste at half the sodium content.

Salarius' product is now found in SaltMe® potato chips, sold in 2,200 Kroger supermarkets in the US, as well as 200 other retail locations.

Dr. Clifford Gross, Chairman and CEO, summarised the year:

"We are glad to report very strong full-year performance for the Group, with net assets increasing by 108% to US$68.0m, a record level. Our key portfolio companies are progressing well and should reach significant additional milestones by the end of 2022. We are also pleased to highlight Belluscura's successful IPO during the period, Lucyd's subsidiary Innovative Eyewear, Inc.'s filing of its registration statement for a potential IPO with a listing on the NASDAQ, the roll-out of MicroSalt's SaltMe! Crisps in Kroger supermarkets throughout the U.S., and Guident's demonstration of their remote monitoring and control center with industry leading, low glass-to-glass latency. We are excited about what our portfolio companies have achieved in 2021 and their prospects for 2022." 

View From Vox

Overall, a very strong showing for the company in 2021, which investors have rewarded with TEK shares up 161% over the past 12 months. 

Over the past three months, shares have traded between 27.5p and 35p, following a dip to 25.5p in March. 

Prospects are positive after Tekcapital's bets on multiple disruptive technologies have paid off thus far.

TEK's portfolio approach stands investors in good stead as demonstrated in this set of results, following Guident's small dip in value during FY21. Guident, being historically the stand out performer in the portfolio, is now being surpassed by Belluscura increasing in book value from $2m in November 2020 to over $22m in November 2021.

However, Lucyd is the stand-out performer in 2H 21 in percentage terms, increasing in book value from $8m to over $17m over the six month period.

Indeed, the TEK portfolio now looks more balanced than ever with Guident, Belluscura, and Lucyd all being valued in 8 figures!

Many investors in Tekcapital believe the IPs of these investee companies, addressing multiple billion dollar markets, could themselves become worth 9 figures, and the market appears to agree.

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