TIDMTERN
RNS Number : 0606F
Tern PLC
17 March 2022
17 March 2022
Tern Plc (the "Company")
Results for the year ended 31 December 2021
Tern Plc (AIM: TERN), the company focused on value creation from
Internet of Things ("IoT") technology businesses, is pleased to
announce its audited results for the year ended 31 December
2021.
Highlights
-- A successful year with improved results delivered across all financial indicators
-- Net asset growth of 35% to GBP32.4m (2020: GBP24.0m) and a
26% increase in net assets per share to 9.2p (2020: 7.3p)
-- Basic earnings per share (EPS) increased by 350% in 2021 to
1.35p (2020: 0.3p) and the Company reported positive retained
reserves for the first time
-- Our network of companies(1) delivered aggregate
year-over-year revenue growth of 47% (2020: 18%)
-- Our network of companies increased employee numbers in
aggregate by 35% to 132 (31 December 2020: 106) and revenue per
employee increased by 25% (2020: 31% and 24% increases
respectively)
-- Additional capital raised during the year of GBP4m (before
expenses) with GBP2.5m of this injected in 2021 into our network of
companies to support their value enhancing fundraises
-- Wyld Networks value more than doubled from GBP4.0m at 31
December 2020 to GBP8.7m at 31 December 2021 following a successful
IPO on the Nasdaq First North Growth Market in Stockholm
-- Further validation of business model through a net GBP6.2m
fair value uplift across four companies, GBP4.7m achieved for Wyld
Networks, and the remainder from Device Authority, Konektio and
Talking Medicines
1. Our 'network of companies' or 'our companies': Device
Authority Limited, Wyld Networks AB, InVMA Limited (trading as
Konektio), FVRVS Limited (Trading as FundamentalVR) and Talking
Medicines Limited, which are companies that Tern has interests in,
as further described in the section headed 'Network of Companies'
below and as detailed in note 2.
Commenting on the results, Tern's CEO, Al Sisto said:
"2021 was an excellent year for Tern in terms of growth in our
financial indicators, but I believe it was even more significant
than that. The majority of our network of companies attracted
additional support and investment from independent third parties
during the year, after they all conducted thorough due diligence,
demonstrating confidence in their business models and future
prospects. These actions resulted in uplifts to their value and
helped accelerate their monthly recurring revenues, which we view
as being a key metric in establishing their market value in a
prospective trade sale or IPO. I am proud of the progress that all
of our companies have made during 2021. Most are now well-funded
and in the best commercial shape since Tern's inception.
"At Tern we have sought, and continue to seek out, companies at
crucial stages of their development, often early in their first
rapid expansion phase, bringing our wealth of market knowledge and
business building expertise to the table during this critical time
to maximise the impact on the business and set the stage for rapid
growth. Based on identifying a clear path to market, coupled with a
clearly identified customer value programme, Tern acts as an active
strategic advisor, bringing a 'hands-on' approach, combined with
board level experience to strategically guide our entrepreneurs
through the minefield of bringing innovation to the market at speed
and scale, successfully. The critical benefit Tern offers is the
synergies within the core technologies of our companies to create a
'network effect' for collaboration. Our partnership businesses do
not exist in silos, they are part of a thriving collaborative
network of like-minded companies, that proactively share
experiences, insights and information for the benefit of all
stakeholders.
"Helping our network of companies build this sustainable and
realisable value is a journey that sometimes demands courage to
take difficult and complicated actions to put them on a proper
growth trajectory that is the critical component in delivering
value for Tern shareholders. Whilst we continually focus on this
growth-led value creation, we are also constantly evaluating the
appropriateness of IPOs as well as trade sales for all of the
companies in our network on a case-by-case basis, although
recognising that getting the timing right is key to maximising
shareholder value.
"As the world emerges from the challenges of the pandemic, Tern
will continue to help build the next generation of IoT solutions
that will accelerate transformation, security, and sustainability.
I fundamentally believe that our network of companies have very
exciting futures ahead of them, and 2022 will be a year of further
significant progress ."
Notice of AGM
The annual report for the year ended 31 December 2021, which
contains a notice of the Annual General Meeting ("AGM"), will
shortly be available from the Company's website
(https://www.ternplc.com/investors) and will shortly be posted to
shareholders.
The Company's AGM will be held at 9.30am on Wednesday 27 April
2022 at the offices of Reed Smith, The Broadgate Tower, 20 Primrose
Street, London, EC2A 2RS. Further details concerning the AGM are
set out at the end of this announcement.
Online Investor Presentation and Q&A Session
Tern's management and management from certain of Tern's network
of companies will be hosting an online presentation and Q&A
session at 5p.m. BST on Wednesday 27 April 2022 after the AGM
earlier in the day. This session is open to all existing and
prospective shareholders.
Those who wish to attend should register via the following link
where they will be provided with access details:
https://us02web.zoom.us/webinar/register/WN_WBJhT6wfSOiSPkwu1NTkaA
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 via IFC Advisory
Al Sisto (CEO)
Sarah Payne (CFO)
Allenby Capital Limited Tel: 0203 328 5656
(Nominated Adviser and Broker)
David Worlidge / Alex Brearley (Corporate
Finance)
Matt Butlin / Kelly Gardiner (Sales
and Corporate Broking)
IFC Advisory Tel: 0203 934 6630
(Financial PR and IR) tern@investor-focus.co.uk
Tim Metcalfe
Graham Herring
Florence Chandler
Chairman's Statement
I believe 2021 was your Company's most successful year to date.
Each one of the companies in our network has made substantial and
demonstrable progress during the year, despite the continuing
challenges of the global COVID-19 pandemic, both in terms of
revenue growth and in value.
The majority of the companies in our network attracted
additional support and investment from independent third parties
this year after they conducted thorough reviews, demonstrating
ongoing confidence in their business models and future prospects.
Third parties, in addition to Tern, provided additional resources
to accelerate the development of new products and expand the base
of satisfied users which led to increased Monthly Recurring Revenue
(MRR).
I would like to take this opportunity to thank Al Sisto and the
Tern executives for their hard work over the year. It is through
their extraordinary efforts that we have achieved such excellent
results. I would also like to note my appreciation for the support
of our other non-executive director, Alan Howarth, who always adds
sound advice based on his considerable business and financial
experience.
Our philosophy is to add expertise and value to exceptional
early-stage technology businesses in the key growth areas of
Internet of Things (IoT), Artificial Intelligence (AI) and Data
Science but in doing so we have always made sure that we add much
more than just money. One of our team serves as a director on the
board of each of our companies and we strive collectively to
actively help each company with their strategic challenges, whether
it is sourcing key management skills, identification of target
markets, or establishing new key sales offices.
During the COVID-19 pandemic, each of our companies have been
required to substantially change the way they operate. In many
cases this has involved staff working remotely and they have been
forced to make, not only creative use of videoconferencing, but
also good use of other technology tools to ensure that their
teamwork remains effective.
In these circumstances extra efforts have been required to
ensure that 'esprit de corps' attitudes are maintained among teams.
Fortunately, much technology development can be achieved
effectively through remote working and productivity has generally
been maintained.
Tern has also gathered the CEOs of all of the companies in our
network in regular themed joint videoconferencing calls to report
successes and challenges. As a result, one of our companies
frequently offers help and support to another, and key lessons are
learned and shared creating a force multiplier effect.
We have also established a separate ESG (Environmental, Social,
and Governance) committee among the companies in our network, in
which each of these businesses can share their plans and collective
conscientiousness for social and environmental factors. We aim to
build metrics by which in future our ESG 'score' can be
measured.
During 2021 we raised GBP4m in fresh funding which we have
predominantly utilised to ensure that we continue to support our
network of companies as they grow.
In one particular case, one of our companies, Wyld Networks,
which listed on NASDAQ First North Growth Market in July 2021,
achieved a market value of over GBP8m and has become a category
leader. In another, our most recent addition to our network,
Talking Medicines, has successfully raised external investment,
from a leading life science investor to continue its value creation
path and begin its expansion into the US.
As someone who has been involved with early-stage technology
businesses for over 25 years, I feel that Tern, as a public
company, takes a very honest and straightforward approach to its
operations and our shareholders are free to buy and sell their
shares at any time. But I must point out that as the companies in
Tern's network are all early-stage, and although we work hard in
conjunction with these companies and their leadership teams to
create substantial value, we are regulated by market dynamics and
have relatively little control over when such value will be
realised.
In short, a stake in Tern should be seen as an ability to
participate in the development of attractive businesses, generally
not available to private investors, whose growth, with our
guidance, will provide long-term capital gains.
It is our job to ensure that we work to achieve the strongest
return for your investment, and we assure you that we will continue
to make that our principal goal.
Ian Ritchie CBE, FREng, FRSE
Chairman
CEO's Statement
I am pleased to report a record year for Tern, delivering growth
in all key performance areas during a year of significant
disruption to society, industry and particularly the technology
sector. In a year when the world continued to stay at home the
companies in Tern's network adapted to meet their customers'
requirements and delivered more products and services than ever
before. Performance by our network of companies resulted in an
increase in our net assets of 35%, an increase in net assets per
share of 26% and an increase in basic earnings per share of
350%.
As we adjusted to this 'new normal', no one predicted the
pandemic's far-reaching economic impact, nor how industry would
rapidly adopt technology and digital transformation. A vast
proportion of these transformations were and are being led by the
IoT, which has become a critical strategic component in developing
new innovative digitally based solutions and new business
opportunities.
We leveraged these wholesale changes of how businesses now need
to operate and actively supported directly, and with our network of
partners, to strengthen our businesses, resulting in uplifts to
their value and in accelerating their Monthly Recurring Revenue
("MRR"), which we consider to be a key metric in establishing their
market value in a trade sale or Initial Public Offering
("IPO").
Our record performance and growth in 2021 is a testament to our
strategy, built on our operational expertise, network of industry
experts here and in the US, and hands on approach. A strategy that
has helped our management teams adapt to the changing requirements
of customers and markets, grow their businesses, secure additional
third-party support and to make Tern the 'go to IoT company' for UK
start-ups in healthcare and deep tech industrial IoT that are
seeking to become industry leaders on the global stage.
Strategy Update
Tech M&A surged to a staggering US$1.1 trillion during 2021,
an increase of 71% compared to 2020 and accounted for 20% of the
US$5.9 trillion in the year's global M&A deal value and where
software deals dominated the 2021 tech M&A landscape (Refinitiv
Reports 2021 Q4 - Global M&A Financial Advisors).
We expect the robust pace of deal making to continue in 2022 and
beyond. We expect the tech M&A market to stay competitive in
2022, as strategic buyers continue to accelerate expansion through
transformative M&A and as private equity firms head into the
year with ample dry powder and hundreds of Special Purpose
Acquisition Companies (SPACs) seek possible business combination
targets.
As a result, the strategy of developing early-stage technology
companies has changed to reflect the key market drivers of the
acquirers. Today, all of the companies in our network are on a
strong path, creating product lines that are unique in their
solutions and are consistently developing an accelerated repetitive
revenue model, or MRR, to drive their market leadership and value.
We believe the following to represent the key drivers of value that
we work to achieve with our network of companies:
-- True SaaS (Software as a service), or SaaS, subscription-based revenues;
-- Demonstrated brand recognition and revenue retention;
-- Historical and forward growth that achieves the 'Rule of 40'
trade-off between profitability and growth;
-- IoT solutions that drive critical business insights and action;
-- In-house engineering team with strong employee retention; and
-- IoT solutions that become an integral part of managing customers' businesses.
Hence our focus on obtaining year over year increases in MRR, as
well as broader support from additional independent new third
parties to help support them alongside Tern.
Additionally, we believe the process to create these great
businesses requires focus and attention. We expect to continue to
build a network of companies centred around the key components of
the IoT ecosystem that are critical to usage in Healthcare (IMoT)
and Industrial (IIoT) such as:
-- Connectivity Services
o LoRA, Satellite, Connectivity Management
-- End to End Security (Security by Design)
o Device Management, Connectivity Management, Two Way
Control
-- Data Analytics and Visualization
o Virtual Reality/Augmented Reality, Digital Twins
-- Application Enablement
o Data Curation, Artificial Intelligence, Machine Learning
Leading to Insights
With Tern's collective expertise and our hands on approach this
enables us to deliver, where helpful, the advice and support our
companies' need to assist them to achieve their strategic and
operational goals, whilst not diluting our efforts across an overly
broad set of generalist businesses. We work to provide founders
with the tools we wished we had when we were in their shoes.
As a group of former founders and operators we focus our help
across our companies specifically in four key areas:
-- use of capital;
-- revenue and go-to market;
-- product; and
-- talent.
As mentors and advisors, we relentlessly hustle to deliver value
in these four areas. We give our time liberally, listen intently,
and take action immediately.
We have travelled this road many times and have a deep
understanding of the challenges facing founders. Winning is a
mindset.
We are as ambitious as our founders and know that winning
requires passion, grit, and both dynamic and orthogonal thinking
that we can deliver from our diverse expertise, broad networks and
experience.
Our common thread is supporting disruptive companies and teams
with strong products in large markets where we can help accelerate
their brand recognition and MRR growth and path to success
quickly.
Our Values and Culture
We strongly believe that values and culture are just as
important as strategy. We seek to partner with ambitious
entrepreneurs who want to tackle big, hard problems in ways most
think not possible to create a better future. In this regard, we
believe that integrity, transparency, humility, and a commitment to
excellence are paramount to our mutual success. Those values
underpin a culture that is team-first, non-hierarchical and
meritocratic.
Operations and Financial Performance
Tern's collective operating experience in SaaS Software, Deep
Tech, and Healthcare IoT technologies has helped each of the
companies in our network to make substantial progress during 2021,
which I believe has significantly increased the value that will
ultimately be delivered for Tern shareholders. Value that can be
measured in accelerated commercial progress, a continued increase
in year-over-year MRR and the willingness of third-party partners
to join us on the journey.
We achieved this key operating improvement by working side by
side with the companies in our network through the global economic
paralysis in the early days of the COVID-19 pandemic to adjust to
the new normal, resulting in renewed and enhanced commercial
traction and growth.
Keeping a careful eye on our companies' liquidity and their
access to additional resources when needed, were and are, we
believe, the imperative to preserving shareholder value during
economic shocks, such as our most recent experience caused by the
global pandemic. We are vigilant and continue to be relentless with
our support and are continuously working to create pathways towards
sustainable multi-year growth that is several multiples over what
has already been achieved. I am pleased to say that with the
support of our shareholders, Tern was able to support our companies
with additional resources, as required, during these times. In
addition, to leverage the synergies of our network of IoT focused
companies, we continued our series of fortnightly CEO round tables
discussing the topics relevant to growing disruptive businesses and
how to maximise value creation in the businesses, for example, by
sharing go-to-market strategies and technologic advancements.
Three successful 2021 examples of the value created for our
shareholders resulting from our vigilance and hands-on approach are
Wyld Networks, InVMA (trading as Konektio) and Device
Authority.
Today, Wyld Networks is a virtual satellite network operator
that develops and delivers innovative wireless technology solutions
that enable affordable connectivity for IoT devices and sensors
anywhere in the world, especially for the 85% of the world's
surface where there are no traditional cellular networks. Starting
from humble beginnings in Brighton and Cambridge, we saw in the two
founders' ideas and passion the ability to disrupt access to the
Internet. Securing new commercial partners and helping to form the
creation of a global IoT consortium, they have engaged customers to
create a new market segment with launch partner agreements with
end-users in energy and agriculture with customers such as Chevron
and Bayer. Their relevance is also validated by their consortium
partners which include some of the world's largest terrestrial
LoRaWAN(R) IoT operators such as American Tower and Senet, with an
objective to offer their existing and new customers the Wyld
Connect satellite IoT solution to provision for 100% global
coverage. Strong performance by the company has validated our
approach and has created value for our shareholders.
Similarly at Konektio we, in collaboration with the founders,
saw the opportunity to synthesise years of experience in designing
and creating control systems as an engineering services business
into a remote sensor/device monitoring SaaS based application which
is now in the market as AssetMinder Ò . It is a product that
connects legacy and existing systems and IoT based sensors to
provide contactless data driven insight into their performance and
state of operation.
Our commitment to supporting Konektio's transformation from a
services business to a SaaS software company using AssetMinder Ò as
the catalyst is another proof point in how our network of resources
help founders create new and exciting business models that solve
critical problems in large global markets. Business models that
accelerate value creation through an MRR based metric and that
attract additional partners to help us continue the journey in
making AssetMinder Ò an industry leading product.
Lastly, and of significant importance was Device Authority's
strategic partnership transaction with Venafi, a US$1.15 billion
market cap industry leader , announced on 2 December 2021. This was
the fulfilment of a commitment we made previously. We believe
obtaining an active strategic partner with solid cybersecurity
credentials and a large presence in the United States will help
catapult Device Authority into North America. Venafi, with its
major investor Thoma Bravo, fulfils this goal. However, in crafting
this strategic transaction we did not lose sight of our ultimate
objective to continue to create and return value to our
shareholders.
Helping to build a company creating sustainable value is a
journey that demands courage to take difficult and sometimes
complicated actions to help put our companies on a proper
trajectory for growth that is the critical component to drive value
creation for our shareholders. Our network of companies are now
well-funded and in the best commercial shape since our inception.
The Tern team is fully focused on delivering another year of
successful progress. We are constantly focused on building our
companies to their next stage to maximise the opportunities
available in the IoT market.
I fundamentally believe that our network of companies have very
exciting futures ahead of them and 2022 will be a further year of
further significant progress.
Sustainability and Governance
The excellent performance and results by the Company in 2021 are
testament to the collective efforts of not just the Board, but of
every employee at Tern and at our network of companies.
Since our humble beginnings in 2013, Tern has worked from a
foundation built upon a strong corporate ethic in all its dealings
and always strives to act in the best interests of its
stakeholders. Proactive engagement with all stakeholder groups
remains fundamentally important to our Board. We are members of the
Quoted Companies Alliance (QCA) and have adopted their code of
conduct and recommendations for industry best practices as part of
our operating culture. For example, whilst the COVID-19 lockdowns
and remote working imperatives curtailed face-to-face engagement
during the past two years, Tern has been proactive using digital
technologies to communicate such as podcasts, blogs and online
Capital Markets Day events.
During the year we established an Environmental, Social and
Governance (ESG) committee comprised of highly motivated employees
from the companies in our network as many of these companies are
developing technologies which help society, improve the quality of
life, and ultimately help reduce carbon emissions. To ensure a
unified mission, the ESG Committee is led by Alan Howarth and
supported by Sarah Payne, our CFO. Leveraging Sarah's passion for
ESG, and the committee's broad levels of expertise from the
participants, we are now identifying key metrics to allow our
network of companies to contribute positively to society's needs,
minimising their carbon footprint, driven by good business sense
and strong governance. The committee is also chartered to provide
Tern with an ESG checklist for consideration in all new company
building activity.
We look forward to reporting further on the committee's
activities during the year and its work towards making Tern and its
companies' leaders in ESG practices for the mutual benefit of all
stakeholders and the planet as we strive to become carbon neutral
in 2022.
Outlook and Summary
Our record financial results succinctly reflect the quality of
the business which we have transformed by using the expertise of
our team and network of resources. We greatly appreciate the
continuing inspiration and support of our shareholders and advisers
and are pleased to be delivering on our Key Performance Indicators
(KPIs) and independent third-party validation of value creation
throughout our companies.
Digital Transformation is leading the way in the markets we
target and helping to create a new economic normality. We believe
this heightened interest in using IoT devices, both new and
installed, will accelerate during 2022. Acceleration that will
bolster aggregate MRR growth across our companies now and for the
foreseeable future. 2021 was a very good year with new independent
third-party partners brought into our companies and we expect the
continued MRR growth to drive additional strategic interest this
year to help solidify their market segment leadership.
Having received new capital to fund their disruptive ambitions,
we believe we will see significant further growth in employment
across the companies in our network to aid in the execution of our
plans to expand.
As we are continually evaluating the possibilities for our
network of companies, we are also continuously evaluating additions
and or replacements to support the growth of Tern and to stimulate
additional value creation for our shareholders. We expect the Tern
team to review additional opportunities to expand our network of
companies during this year with an objective of securing an
interest in at least one new exciting company to be added to the
network that will add new capabilities, talent and the opportunity
to support our growth objectives and improve our results.
Tern has grown significantly since its modest inception in 2013
via a combination of organic initiatives and shareholder support.
We anticipate that this combined approach will continue during the
next three years along with non-organic initiatives to continue
increasing the total value of our business and the holdings of our
shareholders. The successful execution of Tern's strategy by our
team, despite the uncertainties created by the pandemic and
government responses, has materially grown shareholder value and is
a proof point that the Tern hands-on model works.
As CEO, I am extremely proud to be part of Team Tern and its
culture, which is comprised of outstanding people who care about
each other, our companies, our stakeholders and, importantly, who
care about our planet.
I look forward to updating you, our shareholders throughout the
year to report on our execution, growing confidence, expanding
ambition, and value creation.
Albert Sisto
CEO
Financial Review
2021 was a successful year of growth, measured by an improvement
across all Tern's KPIs. Following 2020, when attention was rightly
focused on ensuring all of our network of companies protected their
position at a time of extreme uncertainty, 2021 marked a period of
growth and progress for these companies. As a Company we continued
to focus on providing shareholders with access to some of the best
private Internet of Things (IoT) technology focused companies in
the UK. During the year one of these companies successfully listed
on the Nasdaq First North Growth Market, while another two
successfully completed value enhancing fundraises with
well-respected partners.
We further strengthened our balance sheet by raising new equity
capital of GBP4m in July 2021. This enabled the Company to continue
to support our network of companies as they focus on developing and
growing their Monthly Recurring Revenue (MRR).
The value of interests in our network of companies has increased
by 40% from GBP21.9m as at 31 December 2020 to GBP30.6m as at 31
December 2021. The valuation includes additional funding of
GBP2.5m, including alongside new syndicated partners at Device
Authority and Konektio and fair value growth of GBP6.2m. This
primarily comprises a GBP4.5m fair value gain for Wyld Networks and
an aggregated GBP1.7m gain across Device Authority, Konektio and
Talking Medicines.
Net assets increased by 35% to GBP32.4m as at 31 December 2021
(31 December 2020: GBP24.0m) and included a strong cash balance of
GBP2.0m (31 December 2020: GBP2.1m). There is no debt on the
balance sheet.
During the year, GBP1.5m of cash was used in company operations,
GBP2.5m deployed in the existing network of companies and a net
GBP3.8m raised through the July 2021 equity fundraising.
Income Statement and Statement of Comprehensive Income
The Company does not charge high board fees to ensure capital is
not deducted at source and is instead reinvested in the companies
in our network to drive value creation. Total investment income
increased to GBP6.1m, a GBP4m increase compared to 2020. This has
been driven primarily by the fair value uplift for Wyld Networks as
well as fair value uplifts across three of the five other
companies.
Overheads overall were fairly stable at GBP1.7m in 2021 (2020:
GBP1.5m). This consisted of administration costs of GBP1.6m and
other expenses of GBP0.1m. The administration costs included a
GBP0.1m increase in directors' fees compared to 2020 which included
small increases in salary and benefits as well as the return to
full salary following the six-month reduction in fees in 2020 due
to COVID-19 related management of 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 companies
in our network.
Events after the end of the reporting period impacting 2021
results
On 1 February 2022, it was announced that Talking Medicines had
completed a GBP1.59m fundraise at an increased valuation. The
Company's investment in Talking Medicines is now valued at
GBP1.79m, which included an additional investment of GBP0.4m by
Tern in this round. This valuation was taken into account in the 31
December 2021 valuation of Talking Medicines.
Key performance indicators
The Company's financial Key Performance Indicators (KPIs) are
focused on increasing net asset value, increasing net asset value
per share and delivering consistent turnover growth from our
network of companies. The Company also monitors non-financial KPIs,
the primary focus being on the increase in employee numbers and
turnover per employee at our network of companies which is an
indicator of growth to support commercial success. These indicators
are monitored closely by the Board and the details of performance
against these are given below.
The return on investments:
Unrealised fair value:
-- Wyld Networks Limited: GBP8.7m valuation (31 December 2020:
GBP4.0m): The equity valuation has increased due to additional
funding provided to the company and a fair value uplift based on
the market capitalisation as at 31 December 2021;
-- Device Authority: GBP14.7m valuation (31 December 2020:
GBP12.8m): The valuation has increased due to additional funding
provided to the company and a fair value uplift based on the recent
strategic equity fundraise in December 2021;
-- Konektio: GBP2.2m valuation (31 December 2020: GBP1.2m): The
equity value of Konektio increased due to additional funding
provided to the company and a fair value uplift based on the recent
equity fundraise in December 2021;
-- FundamentalVR: GBP3.6m valuation (31 December 2020: GBP3m):
The valuation has increased due to additional funding provided to
the company via a convertible loan note. The equity value remains
unchanged and is held at fair value, taking into consideration the
current and expected performance of the company. As part of the
valuation in the current year, the directors have not considered it
necessary to recognise a fair value movement (from the most recent
third-party valuation performed in October 2019);
-- Talking Medicines: GBP1.4m valuation (31 December 2020:
GBP0.9m): The investment is held at fair value with the most recent
equity fundraise in January 2022 taken into account. The additional
investment in January 2022 is not included in the 2021 results;
and
-- Push Technology: GBP0.02m valuation (31 December 2020:
GBP0.03m): The investment is valued at fair value with the price of
the most recent valuation taken into account.
The companies in our network 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 multiples achieved in comparable markets on recent
transactions, and an assessment by the Board on the strength of our
companies' sales pipelines and achievability of their 2022 sales
forecasts. Wyld Networks is measured as a Level 1 company under
IFRS and as such the value is determined by reference to the
appropriate quoted market price at the reporting date.
The net assets of the Company at 31 December 2021 showed strong
growth to GBP32.4m (2020: GBP24.0m). The net asset value per
ordinary share as at 31 December 2021 also increased to 9.2p (2020:
7.3p).
The year-over-year growth in the aggregate revenue of our
network of companies increased by 47% from 2020 to 2021 (18% from
2020 to 2021) which provides an indication of growth in the overall
portfolio.
The Company has non-financial KPIs which are also monitored
regularly by the Board. The non-financial KPIs are focused around
the growth in employee numbers in our network of companies. We
believe these factors help serve as leading indicators of the
future performance and our impact on our stakeholders:
Employees in our network of companies increased by 35% from 2020
to 2021 (0% from 2019 to 2020), and this increase was balanced by
an associated increase in revenues such that revenue per employee
also increased by 25% from 2020 to 2021.
Sarah Payne
CFO
Network of Companies
Wyld Networks AB (publ) ("Wyld Networks" or "Wyld")
Holding: 58.7%
Wyld's ongoing success has meant more and more customers signing
up to their low-cost, high-value data solution.
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 Networks CEO, Alastair Williamson said:
"Tern brings a wealth of real-world experience in building
companies from start-up through to scale-up. The collaborative
nature of the way we all work is invaluable in sharing expertise
and knowledge that helps us all grow as businesses."
Device Authority Limited ("DA" or "Device Authority")
Holding: 53.8%
Device Authority is a global leader in Identity and Access
Management (IAM) for the IoT; focused on the automotive, medical
device (IoMT) and industrial (IIoT) sectors. Device Authority's
KeyScaler(TM) platform provides zero touch provisioning and
complete automated lifecycle management for securing IoT devices
and data at scale, with frictionless deployment across device
provisioning, authentication, credential management, policy based
end-to-end data security/encryption and secure OTA (over the air)
and HSM (hardware security module) 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. KeyScaler(TM) 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:
"We've been working with Tern since we started, and they've not
only helped us in advancing our technology, but also helped us gain
access to the markets which are key to our continued commercial
success."
InVMA Limited (trading as "Konektio")
Holding: 36.8%
Konektio is pioneering the next generation of Industrial IoT,
delivering value by connecting businesses' people, process, places
and things.
Konektio helps industrial and manufacturing companies prosper by
converging their physical assets with new transformational digital
insights. Konektio's AssetMinder(R) 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(R) assesses the effectiveness and efficiencies
of entire operations, putting customers in control of their assets
and therefore directly impacting productivity, efficiency and
business outcomes.
Konektio CEO, Peter Stephens said:
"We're so excited about the next developments of our
AssetMinder(R) tool, we can't bring them online fast enough. We
think our future is bright with the support of Tern."
FVRVS Limited ("FundamentalVR")
Holding: 26.9%, plus convertible loan of GBP530,000
Providing a solution that is revolutionising Life Science
companies' approach to surgery practice and education,
FundamentalVR is making huge strides in its markets in Europe and
the US.
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 brought a wealth of experience in how to build a business,
and for the last few years we've been doing exactly that, growing
from where we were as a company of just three people, to where we
are today."
Talking Medicines Limited ("Talking Medicines")
Holding: 23.4%
Talking Medicines continue on their mission to become the gold
standard in patient intelligence by medicine.
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. Its 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:
"Tern is a very different type of partner, they are with you for
the long-term and are a real team player as you build your
business."
Income Statement and Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
GBP GBP
-------------------------------------- ----------- -----------
Fee income 63,783 151,159
Movement in fair value of investments 6,240,095 1,992,891
Loss on disposal (199,115) -
--------------------------------------- ----------- -----------
Total investment income 6,104,763 2,144,050
Administration costs (1,635,058) (1,341,802)
Other expenses (75,372) (206,845)
--------------------------------------- ----------- -----------
Operating profit 4,394,333 595,403
Finance income 183,988 208,488
--------------------------------------- ----------- -----------
Profit before tax 4,578,321 803,891
Tax - -
-------------------------------------- ----------- -----------
Profit and total comprehensive income
for the period 4,578,321 803,891
--------------------------------------- ----------- -----------
Since there is no other comprehensive income, the profit for the
year is the same as the total comprehensive income for the
year.
EARNINGS PER SHARE:
Basic earnings per share 1.35 pence 0.30 pence
Diluted earnings per share 1.33 pence 0.30 pence
Statement of Financial Position
As at 31 December 2021
ASSETS 2021 2020
NON--CURRENT ASSETS GBP GBP
Investments 30,612,047 21,904,791
----------------------------- ----------- -----------
30,612,047 21,904,791
----------------------------- ----------- -----------
CURRENT ASSETS
Trade and other receivables 189,354 261,301
Cash and cash equivalents 1,957,203 2,130,166
------------------------------ ----------- -----------
2,146,557 2,391,467
----------------------------- ----------- -----------
TOTAL ASSETS 32,758,604 24,296,258
------------------------------ ----------- -----------
EQUITY AND LIABILITIES
Share capital 1,371,970 1,367,635
Share premium 30,546,569 26,740,789
Retained earnings 498,010 (4,107,767)
------------------------------ ----------- -----------
32,416,549 24,000,657
----------------------------- ----------- -----------
CURRENT LIABILITIES
Trade and other payables 342,055 295,601
------------------------------ ----------- -----------
TOTAL CURRENT LIABILITIES 324,055 295,601
------------------------------ ----------- -----------
TOTAL LIABILITIES 342,055 295,601
------------------------------ ----------- -----------
TOTAL EQUITY AND LIABILITIES 32,758,604 24,296,258
------------------------------ ----------- -----------
Statement of Changes in Equity
For the year ended 31 December 2021
Share capital Share premium Retained earnings Total equity
GBP GBP GBP GBP
---------------------------- ----------------- ----------------- --------------------- -------------------
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
---------------------------- ----------------- ----------------- --------------------- -------------------
Total comprehensive income - - 4,578,321 4,578,321
---------------------------- ----------------- ----------------- --------------------- -------------------
Transactions with owners
Issue of share capital 4,335 4,031,665 - 4,036,000
Share issue costs - (225,885) - (225,885)
Share based payment charge - - 27,456 27,456
---------------------------- ----------------- ----------------- --------------------- -------------------
Balance at 31 December 2021 1,371,970 30,546,569 498,010 32,416,549
---------------------------- ----------------- ----------------- --------------------- -------------------
Statement of Cash Flows
For the year ended 31 December 2021
2021 2020
GBP GBP
---------------------------------------- ----------- -----------
OPERATING ACTIVITIES
Net cash used in operations (1,535,722) (1,189,481)
Purchase of investments (2,504,185) (1,957,248)
Cash received from sale of investments - 93,421
Interest received 56,829 1,275
----------------------------------------- ----------- -----------
Net cash used in operating activities (3,983,078) (3,052,033)
----------------------------------------- ----------- -----------
FINANCING ACTIVITIES
Proceeds on issues of shares 4,000,000 4,500,400
Share issue expenses (225,885) (326,166)
Proceeds from exercise of options 36,000 -
Net cash from financing activities 3,810,115 4,174,234
----------------------------------------- ----------- -----------
(Decrease)/increase in cash and
cash equivalents (172,963) 1,122,201
----------------------------------------- ----------- -----------
Cash and cash equivalents at beginning
of year 2,130,166 1,007,965
----------------------------------------- ----------- -----------
Cash and cash equivalents at end
of year 1,957,203 2,130,166
----------------------------------------- ----------- -----------
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 2021 or 2020. The financial information for the year ended
31 December 2020 is derived from the statutory accounts for that
year, which were prepared under IFRSs in conformity with the
requirements of the Companies Act 2006 , 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 2020 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 2021 is
derived from the audited statutory accounts for the year ended 31
December 2021 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 UK-adopted international accounting standards . The
financial statements have been prepared on the basis of the
recognition and measurement principles of the IFRS that were
applicable at 31 December 2021. The accounting policies are
consistent with those applied in the preparation of the interim
results for the period ended 30 June 2021. The accounting policies
are also consistent with the statutory accounts for the year ended
31 December 2020.
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 from the approval of
the financial statements 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.
For example, the Company can exit part of its investment in listed
equity securities with the risk that such transactions are
determined by an inherent and undetermined market risk.
2. NON-CURRENT ASSETS
INVESTMENTS
2021 2020
GBP GBP
-------------------------------------- ----------- -----------
Fair value of investments brought
forward 21,904,791 17,882,660
Interest accrued on convertible
loan note 162,091 171,473
Additions 2,504,185 1,957,248
Disposals (199,115) (99,481)
-------------------------------------- ----------- -----------
Fair value of investments carried
forward 24,371,952 19,911,900
Fair value adjustment to investments 6,240,095 1,992,891
-------------------------------------- ----------- -----------
Fair value of investments carried
forward 30,612,047 21,904,791
-------------------------------------- ----------- -----------
Cost Valuation Equity ownership
GBP000 GBP000 %
------------------------- ------- ---------- -----------------
Wyld Networks AB 1,788 8,746 58.7
Device Authority 8,565 14,686 53.8
InVMA Limited 1,525 2,189 36.8
FVRVS Limited 2,928 3,576 26.9
Talking Medicines
Limited 860 1,392 23.4
Push Technology Limited 120 23 <1
------------------------- ------- ---------- -----------------
15,786 30,612
------------------------- ------- ---------- -----------------
The convertible loan facility issued to FVRVS is a financial
asset with multiple derivatives and the entire contract has been
designated at FVTPL (fair value through profit and loss), with any
movement in fair value taken to profit and loss for the year. In
2021 the value of the convertible loan outstanding was GBP530,000
(2020: nil)
The convertible loan facilities issued to Device Authority,
InVMA and Wyld Networks were converted into equity with any
movements in fair value taken to profit and loss for the year.
3. EARNINGS PER SHARE
2020 2019
GBP GBP
------------------------------------------------------------- ------------ -----------
Profit for the purposes of basic and fully diluted GBP4,578,321 GBP803,891
profit per share
------------------------------------------------------------- ------------ -----------
2021 2020
Number Number
------------------------------------------------------------- ------------ -----------
Weighted average number of ordinary shares:
For calculation of basic earnings per share 339,559,205 290,768,708
342,975,205
For calculation of fully diluted earnings per
share ,205 290,768,708
------------------------------------------------------------- ------------ -----------
2021 2020
------------------------------------------------------------- ------------ -----------
Earnings per share:
Basic earnings per share 1.35 pence 0.30 pence
Diluted earnings per share 1.33 pence 0.30 pence
------------------------------------------------------------- ------------ -----------
4. POSTING OF ANNUAL REPORT AND ANNUAL GENERAL MEETING
The annual report for the year ended 31 December 2021 will
shortly be available from the Company's website (
https://www.ternplc.com/investors) and will be posted to
shareholders. The annual report contains a notice of the AGM which
will be held at 9.30am on Wednesday 27 April 2022 at the offices of
Reed Smith, The Broadgate Tower, 20 Primrose Street, London, EC2A
2RS.
While it is currently anticipated that there will be no
restrictions on social contact or meeting format at the time of the
AGM, shareholders should carefully consider whether or not it is
appropriate to attend the AGM. The Board remains keen to ensure the
wellbeing of all employees and shareholders is protected and to
minimise any public health risks from public gatherings.
Shareholders are strongly encouraged to exercise their voting
rights by completing and submitting a Form of Proxy in advance of
the meeting, appointing the Chairman of the Annual General Meeting
as proxy rather than a named person. Shareholders are asked not to
attend the AGM if they are displaying any symptoms of COVID-19, or
have recently been in contact with anyone who has tested positive.
To minimise transmission we encourage shareholders to take a rapid
lateral flow test before attending the meeting, and subject to
conditions on the day of the meeting, shareholders may be required
to wear face masks.
The Company will continue to closely monitor the developing
impact of COVID-19, including the latest UK Government guidance. If
a change to Government guidelines is announced after the date of
this Notice is published and such guidelines limit gatherings and
shareholder attendance at the AGM, any changes to the AGM
arrangements will be notified to shareholders through the Company's
website www.ternplc.com and, where appropriate, by announcement
made by the Company to a Regulatory Information Service.
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 Wednesday 20 April 2022 and answers
to these questions will be published, as appropriate, on the
Company's website in advance of the AGM.
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END
FR BKABQBBKBOND
(END) Dow Jones Newswires
March 17, 2022 03:00 ET (07:00 GMT)
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