TRENDLINES: Laser-focused on achieving exits of mature portfolio companies

It's coming to a year since Trendlines Group announced, in Nov 2022, that it would prioritise the achievement of exits for its relatively mature portfolio companies.

And, of course, with exits -- especially the big juicy ones -- come a likely declaration of long-awaited dividends for shareholders of this Singapore-listed company. Trendlines, headquartered in Israel, invents, incubates, and invests in medtech and agrifood technology companies in Israel and Singapore.

Trendlines had said it would, starting in 2023, suspend investments in new start-ups.

This may sound like a minor fine-tuning of capital and management resources -- but Chairman Steve Rhodes' elaboration this week on a 1H2023 earnings call provides a deeper insight:

"I don't think you can imagine how much time and effort and capital are required to start new companies. It's not a minor issue. We were reviewing more than 600 opportunities a year. Narrowing that down -- it's a long complicated process and then bringing those companies into the shop where we provided significant capital and significant management timing and resources. Today, all of the capital, all of that management time has been freed up to focus on our existing portfolio companies and focus on getting to exits."

Out of its current 54 portfolio companies, Trendlines has labelled 20 as being at an "advanced stage" -- ie, they have achieved significant developmental milestones and 17 are already producing revenues.

While Trendlines management works in the background on negotiations with potential acquirers, there are positive operating results in 1H2023:

• Operating, general, and administrative expenses decreased by 11.75% in H1 2023, compared to H1 2022.

Stock price	10 c
52-week range	8.1-10.2 c
Market cap	S$94 m
PE (ttm)	--
Dividend yield	--
P/B	0.67
Shares outstanding	935 m
Source: Yahoo!

• Net profit came in at US$4.3 million, a US$16.0 million turnaround from net loss in H1 2022, primarily due to an increase in the value of certain portfolio companies.

• Non-IFRS Portfolio Fair Value*: US$152.8 million, 51.3% greater than IFRS Portfolio Fair Value.

(*For explanation on Non-IFRS values, see announcement on 7 March 2023)

So what are the talks that Trendlines management has been having with potential acquirers of its portfolio companies? Will there be exits this year, or pretty soon?

Chairman Todd Dollinger said:

It's really valuable to understand that we are often in conversations about the sale of portfolio companies and we don't announce that in part because not all of these conversations go the way we might hope. There can be a whole host of reasons for that. These are long complex negotiations that include dealing with many parties -- with the shareholders in the company, with the executives of the company and, of course, one or more potential acquirers. I don't think there's a time when we aren't in conversations about potential exits.

There was an update during the earnings call regarding Trendlines Medical Singapore.

Established in 2017, it is supporting eight Singaporean startups developing advanced medical devices and technologies.

EricLoh 11.2017 "We actively partner with institutions like the National Healthcare Group and other healthcare institutions to develop early stage medtech concepts with the involvement of physicians to align with clinical needs," said CEO Eric Loh (photo).

The portfolio companies enjoy strong support from government agencies, he said, citing Enterprise Singapore that provides developmental grants and facilitates strong connectivity to local and overseas medtech ecosystems.

He highlighted portfolio company NICE Surgical that is developing a surgical instrument that enables the resection (cutting out of tissue) of diseased colon without any incision.

The company received very positive feedback from industry leaders in the field of colorectal surgery during an International Conference in Canada in April this year. It has also been selected as a finalist from 400 companies internationally at a coveted medtech innovator award.

Trendlines' 1H2023 online presentation covered its financial performance, key portfolio companies' achievements, Q&A with investors, etc.
Catch all that in the video below:

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TRENDLINES: Laser-focused on achieving exits of mature portfolio companies

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