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Two Shields Investments

Two Shields Investments Plc a year of transformation

Two Shields Investments Plc (LON: TSI), the AIM-quoted investment company, has today announced its final results for the year ended 31 March 2019. Extracts from the Annual Report and financial statements for the year ended 31 March 2019 are set out below.

Copies of the Company’s Annual Report and financial statements for the year ended 31 March 2019 will shortly be sent to shareholders and will be available at the Company’s website: www.twoshields.co.uk/.

The Company also gives notice that its Annual General Meeting (‘AGM’) will be held at the offices of Hill Dickinson LLP, The Broadgate Tower, 20 Primrose St, London EC2A 2EW on 26 September 2019 at 12 noon.

Chairman’s statement

2018/19 has been a year of transformation for Two Shields Investments plc, laying the foundations to rebuild shareholder value. This included the change of name to Two Shields Investments plc in April 2018 and the transition of its portfolio of assets to reflect the Company’s strategic direction.

Strategy

A new and experienced senior team has been assembled in line with the Company’s updated strategy. The team will seek to apply its extensive and highly complementary expertise and knowledge to identifying, assessing and executing investment opportunities that have the potential to deliver attractive returns to shareholders.

The Company has undertaken a strategic review of its mining assets and explored the options available to realise those investments as liquidity options emerge. These options may include partnering with operators that the Board feels can extract more optimal value from existing holdings. The Board believes there are currently limited opportunities within the mining sector delivering the level of growth that it is currently seeking to achieve from its investments and therefore, in the short term, the Company is unlikely to complete a cash investment in mining exploration activities.

The Board sees considerable value opportunity in focusing on the existing high growth investments within the portfolio and will seek to increase the Company’s exposure to existing investments in BrandShield Limited, an anti-counterfeiting, anti-phishing and online brand protection solution, and WeShop Limited, an innovative social commerce platform offering a new way to shop online and earn rewards.

Where resources allow, the Board will also seek to expand the portfolio, concentrating on the provision of capital to high growth potential digital assets, financial technologies, services, consumer focused businesses and technology enabled businesses. Target businesses will typically have proven customer demand and differentiated proprietary technology. Such businesses will have a clear path to profitability. The TSI Board will take an active role in advising such portfolio companies on growth and on exit or liquidity opportunities.

Board

The appointment of myself and John Taylor to the Board during the year has significantly strengthened the management team of TSI.

John Taylor joined the Board on 1 March 2019 and brings AIM board experience to TSI especially in technology companies. He is a former director of AIM-quoted Bidstack Group plc and currently a director of Sabien Technology Group plc and Pathfinder Minerals plc.

I was appointed to the Board on 20 December 2018 and am a qualified accountant, with extensive experience in both the corporate and private equity sectors with a specialisation in M&A. I have previously held senior operating positions at companies including Dixons Carphone plc, RBS Equity Finance and RBS Debt Ventures.

Together with Sandy Barblett, also serving as a Non-executive Director who has considerable experience in the technology sector, having held leadership positions within former FTSE 250 company Pace Plc, I believe that we now have a team of highly experienced and knowledgeable individuals who will be able to successfully execute our new strategy.

WeShop Ltd

WeShop is an innovative, digital social network platform focused on the rapidly growing and highly valuable social e-commerce sector forecast to become a US$350 billion market over the mid-term. WeShop’s digital platform enhances online shopping experiences by combining social media’s assets of reviews, likes, and shares with an engaging retail e-commerce offering, specifically tailored to the individual user. Users benefit from gaining access to thousands of brands and millions of products on one platform plus a two-way sharing of ideas with friends to participate in a rewards system; brands/retailers benefit from increased sales and awareness.

Led by highly experienced and proven technology and retail professionals James Sowerby, who previously led Global New Business Development at Avon Cosmetics, the oldest and one of the most successful global social selling networks, and non-executive Chairman, Matthew Hammond who is Group Managing Director and CFO of mail.ru, one of the largest internet companies in the Russian speaking market.

WeShop recently delivered an investor update and the Board feels it is in the interests of TSI shareholders to continue to support this exciting business as it approaches what we believe will be a highly expansive period.

WeShop has also launched phase 1 of its new rewards programme, designed to drive ongoing engagement and retention of users by enabling them to earn WeCoins™ for creation and distribution of quality content, shopping through WeShop verified merchants, and browsing. The WeCoins™ can be redeemed with over 100+ redemption partners, including Uber, Spotify, Just Eat, Amazon, Starbucks and many others. Phase 1 allows users to redeem their WeCoins™ for a digital voucher. Phase 2 will allow users to redeem their live WeCoin™ balance against products on WeShop, in combination with cash. This creates a true ecosystem where WeCoins™ are earned and redeemed within the platform.

During the period, TSI invested a total of £350,000 into WeShop. Post year end the Company invested a further £100,000 and completed a share swap for a total consideration of £1,355,468. The Board will look to increase its exposure into WeShop in the near future as the opportunity arises. TSI now has a 6.7% shareholding.

BrandShield Ltd

Post year end, on 25 July 2019, TSI announced that BrandShield had upgraded its product offering to position itself clearly in the cyber security and threat intelligence industry in addition to the brand protection space. Therefore, it provides “A Solution from Brand Protection to Online Threat Hunting”.

BrandShield continues adding more capabilities across all platforms – websites, marketplaces, social media, paid ads and apps. BrandShield’s improved product offering includes capabilities such as strong reporting creation options and constant expansion of monitoring capabilities to new marketplaces and to new social media platforms.

BrandShield covers all of the major marketplaces as well as hundreds of smaller marketplaces and covers social media platforms including the latest addition of WeChat (the Chinese social and IM network). WeChat is a multi-purpose messaging, social media and mobile payment app first released in 2011. WeChat is one of the world’s largest standalone mobile apps with over 1 billion monthly active users and has been described as China’s “app for everything” and a “super app” because of its wide range of functions. BrandShield continues to win customers from a variety of sectors including the financial industry, pharmaceuticals, online, sports, entertainment and more.

In March 2019, the Company hosted an investor relations roadshow in London for BrandShield and introduced the BrandShield CEO to a large number of existing and new investors on the scale of the opportunity within this portfolio investment. The BrandShield CEO also met with a number of corporate advisors with a view to assessing future options given BrandShield’s high growth trajectory. The Board will continue to advise BrandShield closely on its strategic growth plan.

As announced on 4 March 2019, the Company completed its post year end investment of $300,000 in a convertible loan note in BrandShield. In addition, on 24 April 2019 TSI completed a Share Swap and as a result, TSI holds 11.34% of the issued share capital of BrandShield.

Other Investments

Xantus Inc and Nashan Holdings – At the year end TSI held a 40% interest in Xantus Inc and a 30% interest in Nashwan Holdings Ltd, both holding exploration licences in southern Mali, which has high potential for lithium pegmatite deposits. On 27 August 2019, TSI announced that binding heads of agreement (“Heads of Agreement”) have been signed with Leopard Lithium Pty Ltd (“Leopard Lithium”), an Australia registered private company, to sell TSI’s interests in Nashwan Holdings Ltd (“Nashwan”) and Mansa Lithium Inc (“Mansa”). The two binding Heads of Agreement set out the terms upon which Leopard Lithium agrees to acquire 100% of the issued shares in both Nashwan and Mansa. In addition, the Directors prudently decided to revise the carried value of the assets proportionately downward to reflect the effective dilution to Leopard Lithium and therefore have reduced the carrying value of the Mali based lithium assets to £1,140,000 in total from £1,512,000.

Kalahari Key Mineral Exploration Company (Pty) Ltd – is a special purpose company set up by an experienced team of explorers to search for base metals and platinum group metals in Botswana. TSI has 17.8% of the shares in Kalahari Key.

International Geoscience Services Limited – is a global consulting group which was spun out of the British Geological Survey, the world’s oldest national geological survey, founded in 1835. TSI holds 29.9% of the shares in IGS.

Power Metals Resources plc (POW) – is an AIM quoted, Africa focused, resource company exploring for the key metals used in next generation batteries that fuel the new electric vehicle revolution. Led by a management team with a proven track record in mineral exploration and development, POW has a rapid development strategy in place to become a significant explorer, developer and ultimately producer of battery metals. TSI has a 4.13%interest in POW.

Financials

The loss for the Company for the twelve months ended 31 March 2019 was £2,553,673 (2018: loss of £768,851) was in line with expectations. Cash held by the Company as at 31 March 2019 was £561,636 (2018: £512,507).

Outlook

Following the completion of our strategic review, we continue to implement our strategy of focusing on rapidly growing, disruptive markets including social e-commerce and cyber security. With the changes made throughout the Company in 2018, the Board believes that TSI is now in a position to capitalise on the carefully laid foundations and execute on its investment strategy to recreate value for shareholders. As well as thanking our supportive shareholder base, I would like to express my gratitude to our investee companies and look forward to updating shareholders as our investments develop.

Andrew Lawley – Chairman