Source - LSE Regulatory
RNS Number : 0351U
Tern PLC
31 March 2021
 

31 March 2021

Tern Plc (the "Company", or the "Group")

Final results for the year ended 31 December 2020

Tern Plc (AIM: TERN), the investment company specialising in the Internet of Things ("IoT"), is pleased to announce its final results for the year ended 31 December 2020.

Highlights

·    Net asset growth of 27% and increase in net assets per share to 7.3p (2019: 7.0p)

•     31 December 2020 net assets: £24.0 million (31 December 2019: £18.9 million)

•     Investments valued at £21.9 million as at 31 December 2020 (31 December 2019: £17.9 million)

•     Profit before tax: £0.8 million (2019: Loss before tax £0.8 million)

·   Robust reaction to the COVID-19 pandemic by Tern and its portfolio companies, safeguarding employees, investments and carefully managing liquidity

·    Despite a challenging environment due to the global pandemic, there were notable commercial successes in each of the portfolio companies, particularly during the last quarter of the year

·    Initiated a portfolio CEO round table twice a month, attended by Tern board members, to share experiences, initially in relation to COVID-19 and this has developed into ongoing strategy sessions to share vision and best practice

·    Even during a year of uncertainty, portfolio companies continued to deliver with aggregate year-over-year turnover growth of 18%

·    Further validation of business model through a net £2 million fair value uplift, £2.6 million achieved for Wyld Networks, partially offset by £0.4 million foreign exchange loss on translation of Device Authority investment

·    New investment in data technology company, Talking Medicines, in November 2020

·   Additional capital raised of £4.5 million before expenses with £2.0 million of this invested during 2020 in portfolio companies, including the £0.86 million investment in Talking Medicines, to enable growth and generate third-party interest

Commenting on the results, Tern CEO, Al Sisto said:

"The Covid-19 pandemic ensured 2020 was a difficult year for everyone, both personally and in business.  However, I am pleased to say that all our portfolio companies rose to the challenge and demonstrated both resilience and significant progress and they grasped the opportunities available.  This was highlighted by a number of material commercial successes by our portfolio companies, particularly in the later part of the year, a trend that has continued into 2021.

 

"2020 was also an important year strategically for Tern as we accelerated our transformation to becoming a leader in IoT investments by pooling our expertise and networks to help our companies adapt to an ever-changing world.  This was particularly important in the pandemic environment as we ensured we leveraged the synergies of our portfolio. We established a solidarity between our portfolio company leaders and quickly created safe and productive working environments to maintain momentum. In particular, we focused our ecosystem's customers and partners on the new opportunities created by the accelerated adoption of digital IoT technology due to the pandemic.

 

"We believe the Tern portfolio today is appropriately diversified across sectors and geographies, using technologies in novel and ground-breaking ways that are relevant and will be attractive to much larger enterprises who need new sources of revenue from state-of-the-art products and services.  We are working hard to ensure that the value created is unlocked in time through third-party investments and ultimately the exit from our holdings."

 

Online Investor Presentation and Q&A Session

Tern's management and management from certain of Tern's portfolio companies will be hosting an online presentation and Q&A session at 5.30 p.m. BST on Tuesday 4 May 2021. This session is open to all existing and prospective shareholders. Those who wish to attend should email tern@investor-focus.co.uk and they will be provided with access details. Participants will have the opportunity to submit questions during the session, but questions are welcomed in advance and may be submitted to: tern@investor-focus.co.uk.

 

Enquiries

Tern Plc

Al Sisto (CEO)

Sarah Payne (CFO)

via IFC Advisory

 

Allenby Capital Limited

(Nominated Adviser and Broker)

David Worlidge / Alex Brearley (Corporate Finance)

Matt Butlin / Kelly Gardiner (Sales and Corporate Broking)

 

Tel: 0203 328 5656

 

IFC Advisory

(Financial PR and IR)

Tim Metcalfe

Graham Herring

Florence Chandler

 

Tel: 0203 934 6630

tern@investor-focus.co.uk

 

 

 

Chairman's Statement

 

I am pleased to report that our portfolio of companies in the Internet of Things ("IoT") sector continues to perform well despite the challenges thrown up by the global pandemic.

Our mission remains to identify, invest in and support entrepreneurial companies to develop IoT solutions which improve productivity, connectivity and security and within that objective we are increasingly embracing the strongly growing industrial and medical fields (IIOT and IOMT).

As with all other companies, our businesses activities have been affected by the COVID-19 pandemic and since the pandemic began, almost all work for the last year has been performed by staff working from their homes. I am pleased to report, however, that productivity has been maintained and that all our portfolio companies have continued to win new business despite the difficult economic climate.

The strength of our management teams has helped our businesses to progress and cope with the uncertainty that has arisen and the Tern team has taken an active role in helping our portfolio companies, particularly through the difficult first half of the year when most adjustments had to be made quickly. As part of these support mechanisms, we instituted a regular video call attended by all the company CEOs where they have an opportunity to share their progress and challenges with their peers and share practical advice, support and identify opportunities to partner on projects.

I was particularly pleased that we were able to add to our portfolio this year with our new investment in Talking Medicines, a company that promises to revolutionise the ability of the world's pharmaceutical companies to engage more effectively with their customers. With much of their technology already in place, our investment is aimed at enabling them to productise and grow their market substantially. I would also like to highlight the exciting developments at Wyld Networks, which through its Wyld Connect Satellite IoT solution it has developed, and is now undertaking, a key part of the delivery of communications technology via emerging constellations of low earth orbit satellites.

As a board, we have been examining our portfolio with a view to the ESG (environmental, social and governance) criteria they exhibit. These standards measure the ethical impact and sustainability of investment in a company. I am pleased to say that our portfolio's activities score well in this regard. It was particularly welcome that our latest investment, Talking Medicines, is a female-led business.                          

I would like to take this opportunity to thank all of our Tern executives for their hard work over the year as, along with most other enterprises, we have been unable this year to meet together in person. Their determination to manage 'business as usual' in these circumstances has been admirable.

We remain proud to enable access for our shareholders to share in the opportunities and value offered by exciting high-growth IoT companies, and we look forward to the further development of our portfolio companies and identifying new attractive investment opportunities in the future.

Ian Ritchie CBE, FREng, FRSE

Chairman

 

 

 

 

CEO's Statement

 

2020 was an important year strategically for Tern. Our portfolio companies demonstrated increased traction as we accelerated our transformation to becoming a leader in IoT investments by pooling our expertise and networks to help our companies adapt to an ever-changing world. We accomplished this without compromising on results, to generate value for our shareholders. In these unprecedented times our portfolio companies have demonstrated resilience and their teams the proven agility to maintain the momentum needed to grow and build great companies. We continued to progress the honing of our business model to create a portfolio of synergistic companies that leverage each other's resources, experiences and technologies to facilitate growth, reduce risk to our shareholders and attract new investment opportunities. We remain committed to providing UK entrepreneurs with more than just the capital they need to become global leaders. With our hands-on approach, the benefit of our experience, our network of industry specialists and access to the resources they require to become global leaders, we believe that we can facilitate significant value creation. At the same time, we provide investors in Tern with exposure to a diversified range of investments in the fast-growing IoT markets of healthcare and industrial 4.0, by giving them access to high growth, privately owned technology companies, while still providing liquidity to this generally unavailable class of assets.

 

During the year we maintained our emphasis on building on this momentum, despite the hardships created by the pandemic. In 2020, we have assisted our companies to recruit the best talent in their segments to ensure that they have the infrastructure to support growth. We achieved success in finding the best resources available across the portfolio, including the addition of Peter Stephens as the new CEO of InVMA, while maintaining our dedication to the founding teams. We also remained committed to building best-in-class practices and processes at Tern, to strengthen the integrity and agility of our investment methodology. A methodology that is built upon sharing our know-how with our exciting businesses to help them successfully navigate through the very challenging current environment and prepare to operate in the 'new normal'.

 

Performance

I am very pleased with the performance of the Company and how the portfolio performed in the year. Early in the year, we were pleased to see Seal Software acquired by DocuSign, providing an almost two times return on investment.  We set aggressive targets for our KPIs at the start of the year in the areas we believe demonstrate business growth and expansion, prior to the pandemic impacting every aspect of business and society. Despite the market backdrop, the Tern portfolio still delivered critical growth. During the year, we recorded a net asset growth of 27% and increased our net asset per share to 7.3p from 7.0p. Gross year-over-year turnover of the portfolio companies grew by 18%, a key metric, while maintaining a cautious eye towards expenses. During the year the employee base of the portfolio companies was unchanged, reflecting the quality and 31% expansion of the employee base in 2019. All of these metrics exclude the incremental growth in Talking Medicines since investment.

 

At the year end, Tern's assets under management were £21.9 million, up from £17.9 million at the end of 2019, following investments in portfolio companies amounting to £2 million. Our total operating costs for 2020 were £1.5 million compared to £1.3 million in 2019, driven by an increase in administration costs. The majority of this cost increase compared to 2019 was due to a new investment director, Matthew Scherba, joining the Company in December 2019.

 

Income from our portfolio companies was comparable to the previous year at £151,159 (2019: £124,766). As an operating principle, the Company does not charge high fees for access to our expertise or as invested capital is put to work within our portfolio companies to drive growth and value creation. Total investment income increased by £1.7 million, or 412%, from £0.4 million in 2019 to £2.1 million in 2020. The fair value increase was driven primarily by the Wyld Networks fair value uplift recognised of £2.6 million after an offset of foreign exchange losses. Specifically, Device Authority is valued in US dollars and because of the pound strengthening during 2020 this resulted in a £0.4 million non-cash exchange rate loss as compared to a £0.6 million non-cash exchange rate loss in 2019.

 

Other expenses include costs relating to share-based payment charges and recharged legal costs to the portfolio companies which increased in the year primarily due to our investment into Talking Medicines.

 

As a result, the Company is pleased to recognise a profit of £803,891 in 2020 compared to loss of £780,643 in 2019, resulting in an earnings per share of 0.3p.

 

Early in the year and of critical importance, the Company was able to strengthen its balance sheet with a capital raise of £0.8 million, before expenses, despite the challenging environment created by the global pandemic. This, along with the £1.5 million fundraise in July 2020, helped protect the portfolio from the business uncertainties as a result of the pandemic.

 

Additionally, we were delighted to successfully complete an oversubscribed fundraise via our broker and a PrimaryBid retail offer, raising a total of £2.2 million, before expenses, in November 2020. We were very pleased by the broad interest in this fundraise and we appreciated the strong interest by retail investors who participated. We are humbled by their support and look forward to continuing to put our expertise to work for our shareholders by generating significant value from our unique assets.

 

We are in a strong financial position entering 2021 with total capital raised during 2020 of £4.5 million, before expenses, with £2.0 million of this invested during 2020 to enable growth, generate outside interest and to take advantage of disruptive opportunities in the fast-growing IoT environments of Healthcare and Industry 4.0.

 

COVID-19

COVID-19 became world news in January 2020 and it has since grown to affect nearly every country on earth, becoming a global pandemic. We have all experienced the impact personally in the ways we live and work. Governments around the world implemented lock-downs and controls in attempts to limit the spread of the disease. These necessary actions by governments, however, dramatically upended the operations of many businesses across the globe, creating the necessity to rapidly adapt, use new working methods and constantly innovate to achieve their business ambitions.

 

Tern was quick to react to this challenge of COVID-19 and leveraged the synergies of our portfolio by creating a round table of our portfolio CEOs and Tern's board to share ideas, measure employee welfare and respond to what has become the 'new normal'. We established a solidarity between our portfolio company leaders and quickly created safe and productive working environments to maintain momentum. In particular, we focused our ecosystem's customers and partners on the new opportunities created by the accelerated adoption of digital IoT technology due to the pandemic.

 

As is often attributed to Albert Einstein, "in the midst of every crisis, lies great opportunity" and we endeavoured with the management of our portfolio companies to address the changing needs and reflect the opportunities available. Participating with our companies individually and at our round table has enabled Tern to solidify its important advisory role by helping our CEOs maintain their core teams and to rapidly create new solutions for their customers to address the digital transformation and contactless requirements.

 

The CEO round tables continue to be held in 2021 and have helped produce an opportunity rich environment in our targeted IoT markets with new and existing customers and partners, resulting in a new investment for the Company, new business wins and a healthy pipeline of future opportunities for our portfolio.  One example of this is where a portfolio company CEO has made an introduction to their customer which has resulted in  a potential opportunity for another portfolio company. 

 

The Tern board see the results from the round table going beyond the original objective of maintaining momentum and they are now an integral part of generating value and synergies across the portfolio.

 

I am delighted by the developments by our portfolio companies in 2020 and this momentum has continued into 2021. I believe that we are well positioned to benefit from the continuing long-term trends and this will generate significant value for Tern's shareholders.

 

I am especially grateful to all those who have worked from home to continue to deliver support and services to their customers, colleagues and business partners, while observing the strict guidelines imposed and maintaining their family life.

 

Portfolio Highlights

Most of our companies spent much of the first half of 2020 focused on re-engineering how they do business, so it is pleasing to see just how fully they recovered by the end of the year. In our portfolio update announcements, we have highlighted the recent performance of Tern's portfolio companies. We believe that as a result of our early work to create cohesion between our CEOs to manage the turbulence created by the COVID-19 pandemic and the emphasis we placed on our portfolio company leadership to create a solidarity with their customers and ecosystems partners, our aggregate portfolio sales momentum that began during Q3 2020 only strengthened in Q4.

For the fourth quarter most of our portfolio companies exceeded their quarterly targets, reflecting both their accelerating development and signalling that enterprise customers are back in buying mode.

Device Authority

 

At Device Authority we saw the further expansion and development of its relationship with Microsoft. Adding some key integration and complimentary value to the Microsoft Azure platform in the Azure Marketplace has resulted in securing joint customers using these new capabilities.

 

Device Authority showed year-over-year turnover growth with some key sales wins in the healthcare, industrial and automotive markets, working with Microsoft Azure, Wipro and nCipher (now EnTrust) as key technology partners.

 

Device Authority also continued to build its brand and platform recognition, via commentary in a number of important analyst and industry reports from firms like Forrester and the SPARK matrix report from Quadrant.

 

We expect Device Authority to continue to accelerate its annual recurring revenue growth with its subscription base and its new modularized license platform, KeyScaler. As we return to the 'new normal', Device Authority plans to expand and grow its resources in North America and the EMEA markets during 2021. Healthcare and industrial, with a focus on automotive, continue to be the primary areas for investment and growth, whilst continuing to build and expand its Microsoft Azure partnership and providing additional value to its customers with new KeyScaler Azure innovations during the year.

 

InVMA

 

InVMA strengthened its senior management team in mid-2020 with the addition of Peter Stephens, an experienced leader of applications software companies, as CEO. We believe Peter is the right person to lead InVMA's evolution to a product centric business. During 2020, InVMA began to scale up its Industrial IoT connected asset SaaS product, AssetMinder®, from several initial pilot customers to create product adoption momentum moving into 2021. InVMA is now experiencing expanded interest from much larger industrial customers who are looking to connect large numbers of assets to AssetMinder®, particularly as the COVID-19 crisis accelerated the need for contactless monitoring of factory and remote assets.

 

InVMA has also expanded its go-to-market capabilities. It began the year selling through one channel partner and expanded through 2020 to sales now via four channel partners across Europe and the USA. Entering 2021, its sales pipeline is an order of magnitude greater than it was at the beginning of 2020, creating the opportunity for the expansion of revenues and the global deployment of AssetMinder®, through both new and existing users.

 

FundamentalVR

 

At our portfolio company FundamentalVR, we experienced the most impact from the global pandemic, as it changed the priorities of care, but also impacted the delivery and adoption of new procedures and medical devices. Traditional methods no longer worked in a contactless world and we believe will not in the 'new normal' as the crisis dramatically accelerated the plans for an adoption of digital methods. In the second half of 2020 FundamentalVR experienced expanded interest in its platform from new customers and repeat sales to its existing customer base. The most significant use for FundamentalVR was to provide pharma and medical companies' customers continued and active engagement with their medical user base. Showing great agility, FundamentalVR launched its unlimited multiuser remote collaboration capability 'Multiuser VR' to train the customers' sales forces and create master class capabilities, activities that were previously done face to face. FundamentalVR has experienced strong interest and adoption of its platform as a result, having had a record fourth quarter in 2020. During the year, FundamentalVR also launched into the ophthalmology marketplace utilising its precision HapticVR capability, showcasing this breakthrough simulation technology with Novartis and Orbis. We believe this very specialised area of surgery, requiring unique instruments that need a high degree of feel by a surgeon, is an important proof point for the haptics capability developed by FundamentalVR and a potential game changer for the precision procedure healthcare markets.

 

We believe the adoption by the market will accelerate in 2021 as FundamentalVR's customers and its competitors need to quickly replace the traditional methods of distribution and training. FundamentalVR was also successful in expanding the recognition of its brand and relevance to the market. During 2020 FundamentalVR became the first and only Haptics VR simulation business to achieve full centre accreditation with the Royal College of Surgeons as well as procedure accreditation (for its orthopaedic procedures) from the American Academy of Orthopaedic Surgeons. The recognition of the quality of FundamentalVR's simulation and education content from these two groups are significant proof points of its platform and its importance to the business of medicine and the opportunity to generate better patient outcomes.

 

Wyld Networks

 

Wyld Networks made important progress in 2020 with the continued commercialisation of Wyld Connect, its terrestrial LPWAN IoT module, securing further commercial deals with existing and new customers, specifically addressing one of the issues hampering the growth and roll out of IoT applications, notably a lack of affordable global wireless connectivity. As a result, Tern recognised an increase in fair value of £2.6 million at 31 December 2020 to take its holding valuation to £4 million, which was supported by an external fundraise valuation post year end.  During the year, Wyld signed a contract with a large global satellite operator to jointly develop a hybrid satellite and terrestrial LPWAN IoT Module with the ambition to create an affordable, easy to implement, commercial solution for deployment in 2021 connecting IoT devices and sensors directly to a Low Earth Orbiting (LEO) satellite constellation.

 

Wyld also launched Wyld Mesh and Fusion in 2020, which is a unique solution for delivering location aware, relevant and actionable content over 4G, WiFi and mesh networks for a range of applications in retail, venues, hospitality, transportation and smart factories. In light of the COVID-19 pandemic, Wyld pivoted the deployment of Wyld Mesh and Fusion during the year to also provide a solution to manage, monitor and alert social distance practices in healthcare and education. We believe this to be a critical benefit for governments and healthcare and we remain steady in our belief that the traditional market application for Wyld Mesh and Fusion will be realised as retail, large venues and hospitality emerge back to business in the 'new normal' during 2021.

 

During the second half of 2020, Wyld Networks successfully adopted a go-to-market strategy of using resellers across the globe to help promote and commercialise Wyld solutions. Wyld signed reseller agreements with multiple parties including ASCOM, a global ICT solution vendor, Alliance Corporation based in North America and Wezen in LATAM. These are significant proof points of the global appeal and relevance of their products and create a large force for their revenue generation efforts.

 

Talking Medicines

 

Talking Medicines, our most recent investment undertaken in November 2020, embarked on the pivotal final developments to create proprietary AI, ML and NLP models to capture and translate what people post about their medicines on social media into medical speak. This work has been completed, market tested and has also resulted in filing a patent for its breakthrough IP.

 

Based on feedback from paying pharmaceutical customers in 2020, the data offering from Talking Medicines, including AI capabilities, has now been launched as the new PatientMetRx service providing AI driven social intelligence by medicine. Talking Medicines has enhanced its branding and is phasing a global launch to commercial marketeers in pharmaceutical companies.

 

Following investment by Tern in November 2020, I have joined the Talking Medicine board as non-executive chairman and with our early capital the employee base has been strengthened with key hires in product management, engineering and data quality.

 

Talking Medicine's ambition in 2021 is to establish the PatientMetRx data service as the gold service standard provider of intelligence on patient experience by medicine. Driven by its specialised AI, it has the goal of driving better patient outcomes and a better understanding of the use of the specific medicines by the prescribers and distributors.

 

Strategy and opportunity - Investing for future growth

 

Our goal remains to become the leading investment company specialising in the IoT sector by unlocking disruptive opportunities others overlooked or did not have the expertise to develop to deliver significant returns for their stakeholders and Tern shareholders. These private companies are generally investments not available to public company investors. We also bring our years of experience and our network of contacts, including our direct access to the Silicon Valley ecosystem. We provide more than money and work to become trusted mentors for our entrepreneurs to help stimulate ideas that can prove to be the difference between a company flourishing or crashing. As a key pillar of our strategy, we provide battle-tested knowledge of how to tackle startup issues and work constructively with our entrepreneurs to help focus or pivot their business to achieve repeatable growth and category leadership.

 

An important element of our investment strategy focuses on creating deal flow from the entrepreneur community, the wider IoT ecosystem and other investors with similar interests. We aim to find the most innovative private IoT technology companies in the UK with the potential to become global leaders. The Tern team reviews hundreds of companies' business plans a year and takes a more in depth look at about ten to fifteen with enterprise values less than £10 million. We generally seek to invest in product proven UK IoT technology companies with customer validation to mitigate the product development risks. As part of our strategy to build value, we start with a small initial investment at the seed or late seed stage round with mutually agreed performance targets. We typically participate in follow-on A series rounds, where we target bringing in new investors. Investment in this manner enables the Tern team to utilise its experience to help professionalise the management team with key hires at an early stage, provide access to potential customers, partners, future sources of capital and potential acquisitions.

 

How we decide on which companies pass through our filter process centres on leveraging the deep technological knowledge of the Tern team and its advisors to identify those companies we believe to have and use market disruptive technologies that will create value over a time horizon of the next five years or more.

 

Our approach takes a market sector view and then rather than researching industries or specific products, we focus on understanding the game changing technologies that will create sustainable growth by the start-ups that deploy them.

 

We are focussed on two broad market categories, healthcare and industrial IoT, because of their strategic importance to governments and society. The significance of which was highlighted by the pandemic and high profile cyber security breaches.

 

These two sectors also represent fast growing markets with the greatest total available market of installed devices and the critical applications that use them. For example:

 

Heathcare:

The IoT healthcare market size is projected to reach US$534.3 billion by 2025, expanding at a CAGR of 20% between 2019 and 2025 (Grand View Research Inc, March 2020)

Industrial:

•     The global Industrial Internet of Things (IIoT) market is expected to reach a value of US$110.6 billion by 2025 (Marketsandmarkets, 2019)

 

Tern divides its analysis of these by technology, not sector, as both are leading the way in digital transformation. This transformation is led by the key market drivers of society's desire for a better environment, governments' desire to recapture control of strategic industries and large enterprises' desire to improve their customers' experience. At Tern we are seeking out entrepreneurs who share our passion for change and who lead businesses that use technology to create differentiated positioning.

Using our experience, advisors, and network of contacts we centre our interest in the following areas of technology that we believe will help shape the future of healthcare and the modern industrial world.

Tern's current five areas of primary interest are:

1)    Cryptographic innovations in credential management and blockchain;

2)    Next Generation Internet access and distribution of data and services;

3)    Autonomous action from machine learning (ML), natural language processing (NLP) and artificial intelligence (AI);

4)    Autonomous process control and condition management/monitoring; and

5)   Innovations in haptic and human sensory applications and devices that measure (collect data), instruct and improve targeted outcomes.

Each area is abounding with companies that are seeking to develop paradigm-changing technologies. At Tern, we are looking at and investing in the very few who we believe have passionate leadership, a clear market changing ambition and position, with global aspirations. Keeping to our broad five-year horizon, we believe the Tern portfolio today is diversified across sectors and geographies, using technologies in novel and ground-breaking ways that are relevant and will be attractive to much larger enterprises who need new sources of revenue from state-of-the-art products and services.

We remain one of a small number of companies with the resources to provide support to early-stage businesses to help them succeed and benefit from the key technology trends, particularly as part of the post COVID-19 recovery. We are continuing to see a strong pipeline of exciting opportunities and look forward to maintaining our patient and targeted investment process.

Our portfolio holdings are held at fair value, with the value created unlocked in time through third-party investments and ultimately the exit from our holdings.

 

Sustainability

Central to our business philosophy is to do the right thing in every facet of our business. We are committed to further incorporating environmental, social and governance best practice into our own operations and those of our investee companies, building on our existing business culture. The board is committed to the importance of ESG and has made ESG a standing agenda item at our board meetings with the goal of emphasising ESG best practices in our portfolio and new investments. The board is committed to generating positive change and sustainability both in our own business and within our approach to new investments and our existing portfolio companies. With a focus on IoT, specifically healthcare and industry 4.0, our portfolio companies continue to address some of the world's biggest challenges by contributing to a healthier, more environmentally friendly and energy efficient society. As an investing company focused on the innovative uses of the key elements of IoT, AI, ML, VR-haptics and security in the healthcare and industrial markets, ESG is a critical consideration to meeting our objective to outperform the traditional venture capital models by achieving above market-rate financial returns. By extending our 'hands on' model to ESG management, we believe we will achieve an added synergy to our portfolio resulting in improved productivity and better customer outcomes for our target segments.

We believe our strategy of finding and developing the best-in-class entrepreneurial IoT companies and technologies, enhanced by our commitment to ESG will enable Tern to deliver positive economic, social and environmental impacts, through our investments, that help transform our societies for the better.

 

Summary

 

We are pleased with progress made by our portfolio companies during these very difficult and uncertain times. The board believes the pragmatism developed early on during the pandemic to sharpen the focus and resources on key markets and customers will accelerate the trend to the cloud and contactless solutions for healthcare and Industry which our portfolio businesses focus on.

 

We entered the new financial year with a resilient and tested portfolio and remain optimistic to carry the positive momentum generated in the second half of 2020 across the portfolio into the new year.

 

The Tern team, further strengthened during the year with the appointment of Matthew Scherba as an investment director, remains committed to building a portfolio of exceptional companies to deliver above average value creation to our shareholders.

 

Key to our progress was and will be the stewardship of the Tern team to help mobilise our investee companies to leverage their synergies alongside their customers and partners to face the crisis and to become more relevant. The board remains confident about the long-term prospects for the company and our portfolio and would like to thank both our new shareholders and long-term holders for their support and confidence in our busines model and our companies.

 

Albert Sisto

CEO

 

Financial Review

During the year ended 31 December 2020, Tern has continued to build on the strategy of providing investors with access to some of the best private IoT technology focused companies in the UK.  The year was impacted by COVID-19 related uncertainty and an increased risk level, particularly early in the year.  However, the Company and its portfolio companies acted prudently to preserve cash reserves and finished the year with a strong final quarter as strong traction emerged across the portfolio.  During the year the Company successfully completed three equity fundraises, including a PrimaryBid offering and our portfolio companies continued to progress, including an external fundraise and significant value uplift for one.

New equity capital of £0.8 million was raised in March 2020 to strengthen the balance sheet and was fortuitously timed just before the beginning of the lockdown in the UK, providing a strong balance sheet to manage the uncertainty faced by the Company and its portfolio companies.  The portfolio companies weathered the worst of the uncertainty well and emergency funding was not required. In July 2020, a further £1.5 million was raised which enabled a £0.9 million investment in Talking Medicines in early November 2020. In November 2020 a further £2.2 million was raised, £0.5 million of this via PrimaryBid, enabling all shareholders to participate in the fundraise.  With a strong balance sheet, the Company has been able to maintain its influential holding at its existing portfolio companies and invest in a new portfolio company in a key area of focus for the Company as well as continue to progress pipeline opportunities with credibility.

As an investment company, Tern does not consolidate the results of its portfolio companies and instead holds the companies on the balance sheet as assets.  The fair value of these assets is assessed at the balance sheet date with reference to previous fundraises or investment valuation, a comparison to transaction multiples in comparable market sectors and an evaluation of the 2021 sales pipeline.

The value of the Company's investment holdings has increased from £17.9 million at 31 December 2019 to £21.9 million at 31 December 2020. The investment valuation includes additional investments of £2.0 million, including the £0.9 million addition of Talking Medicines and fair value growth of £2.0 million. This primarily comprises a £2.6 million fair value gain for Wyld Networks offset by a £0.4 million exchange rate loss on the Device Authority investment. Device Authority is valued in US dollars and the pound strengthened during 2020 resulting in a £0.4 million exchange rate loss. This compared to a £0.6 million exchange rate loss in 2019.

Net assets increased by 27% to £24.0 million at 31 December 2020 (31 December 2019: £18.9 million) and include a strong cash balance of £2.1 million. There is no debt on the balance sheet.

Cash and cash equivalents increased by £1.1 million in the year, ending the year at £2.1 million (2019: £1.0 million). This was after £1.2 million cash used in operations, £2.0 million invested in the existing portfolio companies, £0.1 million from the sale of Seal Software and a net £4.2 million raised through three equity fundraisings.

Income Statement and Statement of Comprehensive Income

Revenue from the portfolio companies remained fairly stable at £151,159 (2019: £124,766). The Company does not charge high monitoring or board fees to ensure capital is not deducted at source and is instead reinvested in the portfolio companies to drive value creation. Total investment income increased to £2.1 million (2019: £0.4 million) a £1.7 million increase compared to 2019. This has been driven primarily by the fair value uplift for Wyld Networks offset by foreign exchange losses on the revaluation of the investment portfolio.

Overheads overall were fairly stable at £1.5 million in 2020 (2019: £1.3 million). This consisted of administration costs of £1.3 million and other expenses of £0.2 million. The administration costs included a £0.25 million increase in directors' fees compared to 2019.  Matthew Scherba joined in December 2019 and pension contributions and a performance related bonus were paid to directors for the first time.  These increases were partly offset by the 20% reduction in fees taken by all directors for six months of the year. This action was taken to ensure a strong balance sheet was maintained during a period of heightened uncertainty.

Other expenses include costs relating to a share-based payment charge for options issued in 2019 and 2020 and recharged legal costs to the portfolio companies which increased in the year due to the acquisition of Talking Medicines. 

Events after the end of the reporting period

On 28 January 2021, it was announced that Wyld Networks had completed a £0.75 million fundraise at an increased valuation. The Company's investment in Wyld Networks is now valued at £4.1 million, which included an additional investment of £0.15 million by Tern in this round.

Key performance indicators

The Company's principal activity is that of investing in companies. Accordingly, the Company's financial Key Performance Indicators (KPIs) are focused on return on investment: increasing portfolio company value, delivering consistent investee company turnover growth and focusing on year-on-year net asset growth. The Company also monitors non-financial KPIs, the primary focus being on increase in employee numbers at the portfolio companies which is an indicator of growth to support commercial success. These indicators are monitored closely by the Tern board and the details of performance against these are given below.

The return on investments:
Unrealised fair value:

·    Device Authority: £12.8 million valuation (2019:12.7 million): The valuation has increased due to additional investment in the Company via convertible loans, offset by a foreign exchange loss when converting the investment to sterling.  The fair value has taken into consideration the most recent fundraise in April 2016 and the valuation has been independently verified this year;

·    InVMA: £1.2 million valuation (2019: £1 million): The equity value of InVMA increased due to additional investment in the company via convertible loans. The investment is valued at a fair value which has been based upon the most recent equity fundraise in September 2017. This valuation has been assessed as reasonable, taking into consideration the current performance of the company;

·    Wyld Networks Limited: £4.0 million valuation (2019: £0.9 million): The equity valuation has increased due to additional investment in the company via convertible loans and a fair value uplift based on the recent equity fundraise in January 2021;

·    FundamentalVR: £3 million valuation (2019: £3 million): The investment value remains unchanged and is held at fair value where the price of the most recent valuation in October 2019 has been taken into account;

·    Push Technology: £34,205 valuation (2019: £34,205): The investment is unchanged and valued at fair value with the price of the most recent valuation taken into account;

·    Talking Medicines: £0.9 million valuation (2019: n/a): This is a new investment in the year and is held at fair value with the purchase value in November 2020 taken into account; and

·    These investee companies are early stage businesses in evolving markets where there is a lack of comparative businesses available on which to provide a comparable valuation and therefore value has been based on an assessment of numerous factors which includes the underlying value of the Device Authority patent portfolio, the multiples achieved in comparable markets on recent transactions, and an assessment by the board on the strength of the sales pipeline and achievability of the 2021 sales forecast. This valuation has been supported by an independent valuation undertaken this year.

The net assets of the Company at 31 December 2020 were £24.0 million (2019: £18.9 million). The net asset value per ordinary share as at 31 December 2020 was 7.3p (2019: 7.0p).

Investee company turnover growth: the year-over-year growth in the aggregate revenue of our portfolio companies increased by 18% from 2019 to 2020 (27% from 2018 to 2019) which provides an indication of growth in the overall portfolio. This growth was achieved against a backdrop of extreme uncertainty caused by the global pandemic.

The Company has non-financial KPIs which are also monitored regularly by the board. The non-financial KPIs are focused around the investee company employee number growth in our portfolio companies. We believe these factors help serve as leading indicators of the future performance and our impact on our stakeholders:

Portfolio company employee number growth remained unchanged from 2019 to 2020 (31% from 2018 to 2019), highlighting a prudence in managing costs during a period of risk and uncertainty.

Sarah Payne

CFO

 

Investment Report

The Company's current investment portfolio consists of the following investments, all of which are unquoted:

Portfolio Companies

Device Authority Limited ("Device Authority")

Market segment: Internet of Things (IoT)

Fair value:                                                               Cost: £7.4 million                  Valuation: £12.8 million

Consists of:

Equity ownership: 56.8% 'A' shares, 12,406 'B' shares

Convertible loan with a balance outstanding of £2.9 million                                                               

Valuation is based on a probability analysis of the potential outcomes relating to the conversion or redemption of the convertible loan note, translated at the exchange rate at the balance sheet date. The fair value was supported by an evaluation of a combination of factors, including the price of shares in the most recent fund raise (April 2016), a comparison to transaction multiples in comparable market sectors and an evaluation of sales pipeline and 2021 trading forecast. The valuation has also been independently prepared and the value held falls within the range provided in the independent report.

 

Device Authority is a global leader in Identity and Access Management (IAM) for the Internet of Things ("IoT"); focused on the automotive, medical device (IoMT) and industrial (IIoT) sectors. Device Authority's KeyScalerTM platform provides zero touch provisioning and complete automated lifecycle management for securing IoT devices and data at scale. Their patented KeyScalerTM platform delivers unrivalled simplicity, flexibility and trust to secure IoT devices at scale, with frictionless deployment across device provisioning, authentication, credential management, policy based end-to-end data security/encryption and secure OTA and HSM updates.  KeyScalerTM is system agnostic and protects their customers' global IoT deployments at the edge, in the cloud and integrating into complex policy-driven requirements, independent of the customers' proprietary hardware and software environments. KeyScalerTM is deployed both direct, and through key platform and system integrator partners such as Microsoft, Wipro, EPS Global/Intrinsic ID.

Device Authority CEO, Darron Antill said:

"Tern continues to be a supportive investor to Device Authority, leveraging industry contacts across our focus sectors of automotive, industrial IoT and healthcare, spurring further growth opportunities. Over the past 12 months as we all navigated the impact of COVID-19, the collaboration across Tern's portfolio of companies has also been insightful. With direct leadership from the Tern team, and the interaction with the other senior leaders, the strategic discussions around the market uncertainties has helped to clarify and progress into a 'new normal', and one focused on market relevance, growth and success."

 

InVMA Limited ("InVMA")

Market segment: Sensor based applications

Fair value:                                                                    Cost: £1.2 million                         Valuation: £1.2 million

Consists of:

Equity ownership: 50%

Convertible loan with a balance outstanding of £0.2 million.

Valuation is based on a combination of factors including an assessment of sales pipeline and 2021 trading forecast.

 

InVMA helps industrial and manufacturing companies prosper by converging their physical assets with new transformational digital insights.  InVMA's AssetMinder® is a modular, industry 4.0, IoT SaaS platform, using a wide range of analytical tools and AI and machine learning algorithms to connect up whole factory floors and processes as well as managing resources into and out of the factory. AssetMinder® assesses the effectiveness and efficiencies of entire operations, putting customers in control of their assets and therefore directly impacting productivity, efficiency and business outcomes.

InVMA CEO, Peter Stephens said:

"Tern continues to be a valued partner and trusted advisor to InVMA as we launch and expand our AssetMinder® SaaS Industrial product into new verticals and into new international markets.  Tern has been with us every step of the way with sound advice, drawing on very relevant experience and helping InVMA to professionalise our business further and to deliver a robust B2B SaaS offering.  We have been pleased with Tern's valuable contributions on our board as well as the input from the greater Tern team on a range of commercial, strategic, technical, fundraising and operating considerations in various portfolio working sessions and fortnightly Tern and portfolio CEO meetings.  Tern has a very good foundation when advising companies at our stage of development and they have provided tangible value to us on a consistent basis.  We believe our future is bright with the support of Tern."

 

FVRVS Limited ("FundamentalVR")

 

Market segment: SAAS immersive platform for medical and surgical education driving data insight

Equity ownership: 26.9%                                   Cost: £2.4 million                              Valuation: £3.0 million

Valuation is based on the price of shares in the most recent fundraise in October 2019.

 

FundamentalVR provides the Company with exposure to the rapidly growing medical simulation market using low cost open-system IoT devices. Their proprietary HapticVRTM platform replaces wet labs and cadaveric training with remote, collaborative training to accelerate life science product adoption.

FundamentalVR CEO, Richard Vincent said:

"Tern's decision to provide seed finance and series A support provided FundamentalVR the funding to enhance our platform and create a market leading solution for Life Science companies. Whilst COVID-19 initially impacted the medical marketplace, FundamentalVR has seen strong demand in 2020 and this momentum has carried forward into 2021. We are making significant progress in our mission to deliver highly effective HapticVR solutions for our clients to aid in their faster deployment of cutting edge surgical and pharma medical procedures."

Wyld Networks Limited ("Wyld")

 

Market segment: Project management of research and innovation projects in technology

Fair value:                                                           Cost: £1.3 million           Valuation: £4.0 million

Consists of:

Equity ownership: 97%                                       

Convertible loan with balance outstanding of £1.3 million.        

Valuation is based on a combination of factors including an assessment of sales pipeline, 2021 trading forecast and 2021 fundraise

 

 

Wyld Networks mission is to develop and market innovative solutions to create global and affordable wireless connectivity for people and things, from connecting IoT devices in hard-to-reach areas with satellite IoT solutions to connecting smartphones together in mesh networks without the need for WiFi or 4G. 

Wyld CEO, Alistair Williamson said:

"Tern brings not only the funding that allowed us to focus unhindered on executing and successfully delivering on our strategy; but also a wealth of real world experience in building companies from start-up through to scale-up, providing operational support and access to a unrivalled rolodex of industry contacts."

 

 

Talking Medicines Limited ("Talking Medicines")

Market segment: Data distribution software

Equity ownership: 23.4%                                        Cost: £860,000                                 Valuation: £860,000

 

Valuation is based on fair value, which has been assessed as the price of shares in the most recent fundraise in November 2020.

 

 

Talking Medicines is a social intelligence company designed specifically for the pharmaceutical industry. By structuring and translating the patient's voice on social media into actionable intelligence, it focuses on assisting pharmaceutical companies in delivering a greater return on investment for marketing and delivering better health outcomes for patients. It's platform, PatientMetRx, is an artificial intelligence ("AI") and natural language processing ("NLP") powered social intelligence service, to provide pharmaceutical companies with insights on patient experience on a scale and depth not previously possible.

Talking Medicines CEO, Jo Halliday said:

"We were delighted to secure investment from Tern Plc in Q4 2020. Given that a global pandemic was raging in the background gaining investment could have become difficult, but Tern adapted to an online approach to onboarding. The due diligence process was thorough and straightforward with working meetings to explore specific topics. The investment itself is significant for Talking Medicines but alongside that the advice, mentoring and Tern network has also added significant value for the team. Al Sisto joined the Talking Medicines Board as Chair, and we are looking forward to growing together in 2021."

 

Push Technology Limited ("Push")

 

Market segment: Data distribution software

Equity ownership: <1%  Cost: £120,197   Valuation: £34,205

Valuation is based on fair value, which has been assessed as the price of shares in the most recent fundraise in April 2020.

 

Push significantly enhances the ability of organisations to communicate in real-time. This includes direct communication as well as indirect, for example, by refreshing data displayed information in real-time rather than when a user explicitly asks for an update. Interactive applications are infinitely more engaging, updating in real-time as new data becomes available.

Investing Policy

Tern's investment policy is to invest principally, but not exclusively, in the information technology sector within Europe. The Directors believe that the Company can invest in and acquire information technology businesses, improve them by a combination of new management and investment and realise the value created which will be returned to shareholders. The Company may be either an active investor and acquire control of a single company or it may acquire non-controlling shareholdings. Once a target has been identified, additional funds may need to be raised by the Company to complete a transaction.

The Directors see IT as having considerable growth potential for the foreseeable future and many of the prospects they have identified are in this sector. The Company holds investments in six investee companies, five of which comprise the portfolio companies and the Directors believe there are further opportunities to invest in and acquire established IT businesses which have good technology, marquee customers and could better exploit their assets with the injection of experienced management and new funds with the intention of creating value for shareholders.

Although the main focus of the investment policy has been on the exploitation of IT businesses, which the Directors intend to continue; this will not preclude the Company from considering investment in suitable projects in other sectors where the Directors believe that there are high-growth opportunities.

The Directors believe the main driver of success for the Company is the expertise that can be provided by the Directors to the management involved in its investee companies and the value creation that the team of people is capable of realising. The Company is, and intends to continue to be, an active investor. Accordingly, it has sought and may seek in future investments, representation on the board of investee companies.

The new capital available to the Company will be used to support and assist its investee companies to grow, where appropriate, and used to locate, evaluate and select investment opportunities that offer satisfactory potential capital returns for shareholders. The Company may require further funds in order to invest further in its principal portfolio companies and take up these opportunities. It is the intention of the Directors to undertake further fundraising, if such an opportunity should arise. The Company's investments may take the form of equity, debt or convertible instruments. Investments may be made in all types of assets falling within the remit of the Investing Policy and there will be no investment restrictions.

The Directors may consider it appropriate to take an equity interest in any proposed investment which may range from a minority position to 100 percent ownership. Proposed investments may be made in either quoted or unquoted companies and structured as a direct acquisition, joint venture or as a direct interest in a project.

The Company has made investments and will seek further investment opportunities which can be developed through the investment of capital or where part of or all of the consideration could be satisfied by the issue of new Ordinary Shares or other securities in the Company. The investments the Company has made and any new opportunities have, or would generally have, some or all of the following characteristics, namely:

·    a majority of their revenue derived from IT or the use of IT, and strongly positioned to benefit from market growth;

·    a trading history which reflects past profitability or potential for significant capital growth going forward; and

·    where all or part of the consideration could be satisfied by the issue of new Ordinary Shares or other securities in the Company.

The Company will identify and assess potential investment targets and where it believes further investigation is required, intends to appoint appropriately qualified advisers to assist.

The Company proposes to carry out a comprehensive and thorough project review process in which all material aspects of any potential investment will be subject to rigorous due diligence, as appropriate. It is likely that the Company's financial resources will be invested in a small number of projects or investments.

 

 

 

Income Statement and Statement of Comprehensive Income

For the year ended 31 December 2020

 

 

 

2020

£

2019

£

Fee income

 

151,159

124,766

Movement in fair value of investments

 

1,992,891

293,756

Total investment income

 

2,144,050

418,522

Administration costs

 

(1,341,802)

(1,028,605)

Other expenses

 

(206,845)

(245,414)

Operating profit/(loss)

 

595,403

(855,497)

Finance income

 

208,488

74,854

Profit/(loss) before tax

 

803,891

(780,643)

Tax

 

-

-

Profit/(loss) and total comprehensive income/(loss) for the period

 

803,891

(780,643)

 

Since there is no other comprehensive income, the loss for the year is the same as the total comprehensive income for the year.

EARNINGS PER SHARE:                                                                 

Basic and diluted earnings per share                                                                                  0.3 pence                     (0.3) pence

Statement of Financial Position

As at 31 December 2020

 

ASSETS

NON--CURRENT ASSETS

Investments

 

2020

£

21,904,791

2019

£

17,882,660

 

 

21,904,791

17,882,660

CURRENT ASSETS

 

 

 

Trade and other receivables

 

261,301

174,486

Cash and cash equivalents

 

2,130,166

1,007,965

 

 

2,391,467  

1,182,451

TOTAL ASSETS

 

24,296,258

19,065,111

EQUITY AND LIABILITIES

 

 

 

Share capital

 

1,367,635

1,355,571

Share premium

 

26,740,789

22,578,619

Retained earnings

 

(4,107,767)

(5,021,113)

 

 

24,000,657

18,913,077

CURRENT LIABILITIES

 

 

 

Trade and other payables

 

295,601

152,034

TOTAL CURRENT LIABILITIES

 

295,601

152,034

TOTAL LIABILITIES

 

295,601

152,034

TOTAL EQUITY AND LIABILITIES

 

24,296,258

19,065,111

 

 

 

Statement of Changes in Equity

For the year ended 31 December 2020

 

 

 

Share capital

£

Share premium

£

Retained earnings

£

Total equity

£

Balance at 31 December 2018                       

1,348,903

19,660,434

(4,257,564)

16,751,773

Total comprehensive income                            

-

-

(780,643)

(780,643)

Transactions with owners

 

 

 

 

Issue of share capital                                        

6,668

3,243,335

-

3,250,003

Share issue costs                                                 

-

(325,150)

-

(325,150)

Share based payment charge                           

-

-

17,094

17,094

Balance at 31 December 2019                       

1,355,571

22,578,619

(5,021,113)

18,913,077

Total comprehensive income                            

-

-

803,891

803,891

Transactions with owners

 

 

 

 

Issue of share capital                                        

12,064

4,488,336

-

4,500,400

Share issue costs                                                 

-

(326,166)

-

(326,166)

Share based payment charge                           

-

-

109,455

109,455

Balance at 31 December 2020                       

1,367,635

26,740,789

(4,107,767)

24,000,657

           

 

 

Statement of Cash Flows

For the year ended 31 December 2020

 

 

Notes

2020

£

2019

£

OPERATING ACTIVITIES

 

 

 

Net cash used in operations

20

(1,189,481)

(1,337,878)

Purchase of investments

 

(1,957,248)

(2,496,366)

Cash received from sale of investments

 

93,421

-

Interest received

 

1,275

3,555

Net cash used in operating activities

 

(3,052,033)

(3,830,689)

FINANCING ACTIVITIES

 

 

 

Proceeds on issues of shares

 

4,500,400

3,250,003

Share issue expenses

 

(326,166)

(325,150)

Net cash from financing activities

 

4,174,234

2,924,853

Increase/(decrease) in cash and cash equivalents

 

1,122,201

(905,836)

Cash and cash equivalents at beginning of year

 

1,007,965

1,913,801

Cash and cash equivalents at end of year

 

2,130,166

1,007,965

 

 

 

Notes

1. BASIS OF PREPARATION

 

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 December 2020 or 2019.  The financial information for the year ended 31 December 2019 is derived from the statutory accounts for that year, which were prepared under IFRSs, and which have been delivered to the Registrar of Companies.  The auditor's report on those accounts was unqualified, did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006. For the year ended 31 December 2019 it did include an emphasis of matter paragraph in relation to the impact of COVID-19 on the Company.

 

The financial information for the year ended 31 December 2020 is derived from the audited statutory accounts for the year ended 31 December 2020 on which the auditors have given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis. The statutory accounts will be delivered to the Registrar of Companies following the Company's annual general meeting.

 

The financial statements of the Company have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006.  The financial statements have been prepared on the basis of the recognition and measurement principles of the IFRS that were applicable at 31 December 2020. The accounting policies are consistent with those applied in the preparation of the interim results for the period ended 30 June 2020.  The accounting policies are also consistent with the statutory accounts for the year ended 31 December 2019.

 

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates.

 

In accordance with IFRS 10, para 4 the Directors consider the Company to be an investment company and has taken the exemption not to present consolidated financial statements or apply IFRS3 when it obtains control of another entity as it is an investing company that measures all of its investments at fair value through the income statement in accordance with IFRS 9.

1.1 GOING CONCERN

 

The financial statements have been prepared on the going concern basis.

 

The directors have a reasonable expectation that the Company has adequate resources to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Company's financial statements. This has been assessed using detailed cash flow analysis so that the Board can conclude that the Company has sufficient working capital resources to continue for at least 12 months without any additional financing requirement. The impact of COVID-19 has been considered as part of this assessment. In the event that opportunities are presented such that additional funding was required, management are confident that they would be able to obtain additional funds from various sources

2. NON-CURRENT ASSETS

INVESTMENTS

 

2020

£

2019

£

Fair value of investments brought forward

17,882,660

14,856,239

Reclassification of cash flow loans from other debtors

-

165,000

Interest accrued on convertible loan note

171,473

71,299

Additions

1,957,248

2,496,366

Disposals

(99,481)

-

Fair value of investments carried forward

19,911,900

17,588,904

Fair value adjustment to investments

1,992,891

293,756

Fair value of investments carried forward

21,904,791

17,882,660

 

 

The convertible loan facility issued to Device Authority is a financial asset with multiple derivatives and the entire contract has been designated at FVTPL, with any movement in fair value taken to profit or loss for the year. As at 31 December 2020 the principal of the convertible loan outstanding was £2,925,900 (2019: £2,527,848). The convertible loan note has been secured with a charge over Device Authority's intellectual property.

 

The convertible loan facility issued to InVMA is a financial liability with multiple derivatives and the entire contract has been designated at FVTPL, with any movement in fair value taken to profit or loss for the year. In 2020 the value of the convertible loan outstanding was £175,000 (2019: £50,000).

 

The cashflow loan issued to Wyld Networks was converted into a secured convertible loan note in May 2020. It is a financial liability with multiple derivatives and the entire contract has been designated at FVTPL, with any movement in fair value taken to profit or loss for the year. As at 31 December 2020, the investment was adjusted in line with fair value and resulted in a fair value increase of £2.6m. As at 31 December 2020 the value of the convertible loan outstanding was £1,298,332 (2019: £853,332). The convertible loan note has been secured with a charge over Wyld Networks' intellectual property. Since the balance sheet date, this loan was converted into equity in Wyld Networks.

 

 

3. EARNINGS PER SHARE

 

2020

£

2019

£

Profit/(loss) for the purposes of basic and fully diluted profit/(loss) per share

£803,891

£(780,643)

 

2020

2019

 

Number

Number

Weighted average number of ordinary shares:

 

 

For calculation of basic earnings per share

290,768,708

251,945,498

For calculation of fully diluted earnings per share

290,768,708

251,945,498

 

2020

2019

Earnings/(loss) per share:

 

 

Basic and diluted earnings/(loss) per share

0.3 pence

(0.3) pence

 

4. POSTING OF ANNUAL REPORT AND ANNUAL GENERAL MEETING (AGM)

 

The annual report for the year ended 31 December 2020 will shortly be available from the company website (https://www.ternplc.com/investors) and will shortly be posted to shareholders.  The annual report contains a notice of the AGM which will be held at 3pm on 4 May 2021 at Gridiron, One Pancras Square, London N1C 4AG.

 

In light of the prevailing guidance from the UK Government in relation to the COVID-19 pandemic and specifically the restrictions on unnecessary travel and large gatherings indoors, the Annual General Meeting will be convened with the minimum quorum of shareholders (which will be facilitated by the Company's management) in order to conduct the business of the meeting and voting on each resolution at the meeting will be by poll and will include all valid proxy votes received. Accordingly, the Company strongly encourages all shareholders to submit their Form of Proxy in advance of the meeting, appointing the Chairman of the Annual General Meeting as proxy rather than a named person. In the interests of safety and in accordance with applicable UK Government guidance, entry to the Annual General Meeting will be refused to any Shareholder, proxy or corporate representative (other than those required for a quorum to exist) who attempt to attend the Annual General Meeting in person.

 

Any shareholders who have specific questions on any of the resolutions should address these to the Chairman of the Company via info@ternplc.com by 5.30pm on Tuesday 27 April 2021 and answers to these questions will be published on the Company's website in advance of the AGM.

 

The Company will continue to closely monitor the developing impact of COVID-19, including the latest UK Government guidance. Should it become appropriate to revise the current arrangements for the General Meeting, any such changes will be notified to Shareholders through the Company's website at www.ternplc.com and, where appropriate, by announcement made by the Company to a Regulatory Information Service.

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