TIDMTMT
RNS Number : 5655D
TMT Investments PLC
27 June 2019
27 June 2019
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2018 and Notice of
AGM
TMT Investments Plc (AIM: TMT), the venture capital company
investing in high-growth technology companies, is pleased to
announce its final results for the year ended 31 December 2018.
-- NAV per share of US$3.09 (up 27.3% from US$2.43 as at 31 December 2017)
-- Total NAV is US$90.3 million (up from US$67.4 million as at 31 December 2017)
-- US$24.7 million of net cash proceeds from full and partial
exits during 2018, of which US$22.3 million was received post
year-end in respect of Wrike, Inc. ("Wrike")
-- US$3.5 million (before expenses) raised from investors,
including a UK institutional investor
-- Diversified portfolio of over 25 companies focused around big
data/cloud, e-commerce, marketplaces and SaaS
(software-as-a-service) solutions
-- Many portfolio companies continue to experience rapid growth
-- Strong expectations of positive revaluations in 2019
-- Active pipeline of new investment opportunities
-- US$22.2 million in current cash reserves
Alexander Selegenev, Executive Director of TMT, commented: "2018
was another successful year for the Company, with several sizeable
positive revaluations and exits across our portfolio. The Company's
net asset value benefited from various revaluations during the year
including the 350% increase in the value of our investment in Bolt
(previously called Taxify), the global ride-hailing and
transportation company which became the first 'unicorn' in our
portfolio, and Wrike, the collaborative work platform, which we
realised in December 2018, achieving a 173% uplift on our carrying
value. These events more than offset the smaller write-downs that
we accounted for in order to maintain our portfolio free from
poorly performing investments.
"As of 31 December 2018, TMT had successfully exited from 12
investments (including 4 partial exits), generating US$37 million
in net cash proceeds (including deferred amounts) since our
admission to AIM in December 2010. This demonstrates our ability to
identify highly promising companies with exceptional leadership at
an early stage and to actively manage our portfolio. We are very
pleased to see that a significant number of our portfolio companies
have become star performers led by outstanding management teams
that continue to experience rapid growth and attract additional
capital at significantly higher valuations. We look forward to
further positive revaluations across our portfolio during 2019.
"Following the realisation of Wrike, we are now well capitalised
to take advantage of the significant number of opportunities
available to us and I look forward to keep shareholders updated on
our progress."
The Company's Annual General Meeting will be held on 30 July
2019 at Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES
at 14:30 (BST).
Copies of the Annual Report and Accounts for the year ended 31
December 2018 and Notice of AGM will shortly be available on the
Company's website at www.tmtinvestments.com.
For further information contact:
TMT Investments PLC +44 (0)1534 281 800
Alexander Selegenev (Computershare - Company Secretary)
Executive Director
www.tmtinvestments.com alexander.selegenev@tmtinvestments.com
Strand Hanson Limited (Nominated
Adviser)
Richard Tulloch / James Dance
/ Eric Allan +44 (0)20 7409 3494
Hybridan LLP (Broker)
Claire Louise Noyce +44 20 3764 2341
Kinlan Communications +44 20 7638 3435
David Hothersall davidh@kinlan.net
About TMT Investments PLC
TMT Investments PLC invests in high-growth technology companies
across a number of core specialist sectors and has a significant
number of Silicon Valley investments in its portfolio. Founded in
2010, TMT has invested in over 45 companies to date and has latest
announced net assets of US$90m. The Company's objective is to
generate an attractive rate of return for shareholders,
predominantly through capital appreciation. The Company is traded
on the AIM market of the London Stock Exchange.
www.tmtinvestments.com.
ABOUT TMT INVESTMENTS
TMT Investments Plc ("TMT" or "the Company") provides its
shareholders with access to a diversified portfolio of companies in
the TMT (technology, media and telecommunications) sector.
We are passionate about our work. Members of our team have been
investing in and building start-ups since the 1990s, and we are
experienced in the challenges many founders and entrepreneurs face.
We are therefore highly selective in our investments, leveraging
the team's collective experience to identify the best risk/reward
entry point when making an investment.
When we joined the AIM market of the London Stock Exchange in
December 2010, we were one of the first publicly traded venture
capital vehicles in the UK to provide investors with access to the
universe of high-growth international private technology
companies.
Since then, we have invested in over 45 companies and realised
12 profitable full and partial exits. We were one of the earliest
investors into some of our most successful companies, including
Wrike, Bolt (previously called Taxify) and Pipedrive.
Experienced investors
We are a team of experienced investors: our team has been
investing in and building start-ups since the 1990s. We are proud
to leverage this experience to identify and invest in companies at
a relatively early stage of their development, with a number having
achieved significant growth and returns for investors. Identifying
and investing in such companies at an early stage, before they have
fully proven themselves, is not easy though it has the potential to
generate significant returns as evidenced by our recent exit from
Wrike, which generated a return of 23 times on our initial
investment. This is the value we bring to our shareholders: using
our years of experience to identify and execute investments capable
of generating significant returns for shareholders, whilst seeking
to minimise risks.
Global investors
We are global investors and have no restrictions on where we
invest. Our key investment criteria include the requirement that
companies have a business model that is globally scalable and are
led by a management team, with the resilience and ability to
execute in high-growth environments. To date, we have largely
invested in companies that are headquartered in the US and operate
globally but we continue to scrutinise investment opportunities
globally, regardless of location.
Specialist investors
Investing in private companies in the TMT sector requires a
specialist set of skills and investment approach, in contrast to
investing in publicly listed companies. Information on private
companies is typically much scarcer than for publicly listed
companies, especially at an early stage of their development, and
requires a dedicated and specialist investment process that
includes other factors. Our proprietary four-filter investment
process is specially designed to reduce risk and identify the best
opportunities in early-stage investing.
TMT AS A PUBLIC COMPANY
Investors who invest in private companies directly typically
face less liquidity when it comes to exiting their investment
compared to those in publicly traded companies. Investors wishing
to exit from their investment in a private company will need to
identify current shareholders who are willing to acquire more
shares, or new investors. Some private companies may have
additional restriction on new investors. Other suitable exit events
could include a potential sale to an acquirer or a listing on a
stock exchange, neither of which can be guaranteed, and may require
agreement among major shareholders.
TMT was established to solve this problem by providing investors
with the daily liquidity that a publicly traded company offers,
whilst providing access to a diversified portfolio of high-growth,
private companies in the TMT sector.
Investing in private companies requires a specialist skill set,
access to companies and extensive research. Our shareholders trust
in us to build and manage a diversified portfolio of high-growth
technology companies. For the last five years, our NAV-based IRR
(internal rate of return) has been 20% per annum.
Benefits of investing via TMT
-- Liquidity - investing via publicly traded TMT shares provides
shareholders with venture capital exposure combined with the
benefits of publicly traded liquidity
-- Diversification - access to a diversified portfolio of
high-growth, private companies in the TMT sector
-- Rare exposure - most successful start-ups move to their next
level of financing and revenues within just one to two years, at
which point they become practically inaccessible to private
investors until such time as they subsequently undertake a
listing/IPO
-- Experience - TMT's shareholders benefit from the experience
of a specialist investment team with a track record of success
OUR INVESTMENT STRATEGY
Through our investment criteria, TMT seeks to identify companies
that have, amongst other features:
-- Competent and motivated management founders - managing
high-growth companies requires a rare combination of skills
-- High growth potential - companies with a product or service that can be scaled up globally
-- Growth stage - we highly favour investing in companies that
are already generating revenues (we have a typical minimum revenue
threshold of US$50,000 per month)
-- Viable exit opportunities - when we invest, we are already assessing potential exit scenarios
We invest in our core sectors. TMT currently focuses on
identifying attractive investment opportunities in the following
segments of the TMT sector:
-- Big data and cloud solutions
-- SaaS tools
-- e-commerce
-- Marketplaces
Whilst we focus our attention on these segments, we are not
constrained to these segments and will consider making investments
throughout the TMT sector.
We invest globally:
The Company is not geographically restricted in terms of where
it can invest. It will consider any geographical area, to the
extent that the investment fits within the Company's investment
criteria.
Our investment selection process
Our investment selection process is based on analysing companies
through our four-filter process. Our tried and tested process is
the fruit of our extensive hands-on experience in building and
growing start-ups combined with analysing key operational and
financial metrics.
Preliminary filter
The basic filter ensures that we are comfortable with the
company's segment within the TMT sector, growth stage, the market
trends in which it operates, and its exit potential.
Numbers filter
The numbers filter analyses a company's financial performance,
operational metrics and fundraising terms, considering our
assessment of the company's competitive landscape.
Product filter
We analyse the company's product from a customer's perspective,
including user experience, by drawing on our experience of
assessing competing products as part of the investment selection
process.
People filter
Managing a company in high growth or hyper growth scenarios
requires a rare combination of high levels of resilience,
organisation and commercial acumen, amongst others. We interview
the company's founders to identify these abilities, drawing upon
our experience of working with hundreds of start-up company
management teams.
Post-investment engagement
We have funded over 45 companies since inception. Our engagement
with companies continues after our investment, and is tailored to
each company's needs and size, including attending investee board
meetings, facilitating introductions to new investors, providing
strategic advice and exploring synergies with partner companies,
including TMT's portfolio companies.
Investment radar
Companies that have successfully passed through the majority of
the filters though not received investment from us, are added to
our investment radar, whereby we monitor their development for
possible future investment.
INVESTING POLICY
The Company's objective is to generate an attractive rate of
return for shareholders, predominantly through capital
appreciation, by taking advantage of opportunities to invest in the
TMT sector. The Company aims to provide equity, debt, and
equity-related investment capital, such as convertible loans, to
private companies which are seeking capital for growth and
development, consolidation or acquisition, or as pre-IPO financing.
In addition, the Company may invest in "digital assets" defined as
an electronically stored right or title to digital or non-digital
property or service, including but not limited to intellectual
property, software, or cryptocurrencies. In addition, the Company
may invest in publicly traded equities which have securities listed
on a stock exchange or over-the-counter market. These investments
may be in combination with additional debt or equity-related
financing, and in appropriate circumstances in collaboration with
other value added financial and/or strategic investors. The Company
is not geographically restricted in terms of where it will consider
making investments. It will consider any geographical area, to the
extent that the investment fits within the Company's investment
criteria. The Directors and senior managers have the relevant
expertise to invest in the TMT sector, whether through equity,
debt, or other equity related investment capital and in "digital
assets" (including cryptocurrencies). This will include investments
in small and mid-sized private companies. The Company will not be
subject to any borrowing or leveraging limits.
Private Companies
The Company will target small and mid-sized companies and will
seek to secure at least blocking stakes and board representation,
where it considers that the Company and/or an investee company
would benefit from such an appointment. The Company will consider
making equity investments in lower than blocking stakes only where
it sees ways to increase the stakes to blocking or controlling
stakes at a later date. Each investment is expected to be at least
US$250,000. The investments targeted by the Company will aim to
support rapidly growing private companies to increase market share
and achieve long-term shareholder value. If the Company invested in
a private company prior to that company listing on a stock market,
the Company may retain a part of its investment in the listed
entity going forward. Wherever appropriate, the Company intends to
work closely with the management of each investee company to create
value by focusing on driving growth through revenue creation,
margin enhancement and extracting cost efficiencies, as well as
implementing appropriate capital structures to enhance returns.
Public Companies
When investing in public equities, the Company will seek to
select companies with a dominant market share or strong growth
potential in their respective segments. No restrictions will be
placed on the size of public companies in which the Company may
make an investment. The Directors intend to make investments in
companies or assets with attractive valuation, growth potential,
and competent and motivated management.
Realisation of Returns
The Directors will, when appropriate, consider how best to
realise value for Shareholders whether through a trade sale,
flotation or secondary refinancing of the investee companies. The
proposed exit route will form a key consideration of the initial
investment analysis. The Company expects to derive returns on
investments principally through long-term capital gains and/or the
payment of dividends by investees. The primary ways in which the
Company expects to realise these returns include: (a) the sale or
merger of a company; (b) the sale of securities of a company by
means of public or private offerings; and (c) the disposal of
public equity investments through the stock exchanges on which they
are listed. For private investee companies the Company believes
that its typical investment holding period should provide
sufficient time for investee companies to adequately benefit from
the capital and operational improvements resulting from the
Company's investment. The targeted holding period shall be reviewed
on a regular basis by the Company, but it is expected that this
will typically be between two to four years. For public equities
the Company's objective is to maximise capital appreciation.
Following the acquisition, the Company will continue to monitor the
investment. Importance will be placed on the timing of any disposal
which will follow a thorough review of market conditions and those
reports and sources that are available to investors. Should the
Company consider that the capital appreciation of a particular
public equity investment has reached its peak or is likely to or
has begun to decline, then the Company will consider the sale of
that investment.
EXECUTIVE DIRECTOR'S STATEMENT
2018 was another successful year for the Company, with a number
of significant revaluations and cash realisations across our
portfolio. As a result, TMT's net asset value ("NAV") per share as
of 31 December 2018 increased to US$3.09 (up 27.3% from US$2.43 as
of 31 December 2017).
The Company' net asset value benefited significantly from
increased revaluations in two of its holdings: Bolt (previously
called Taxify), the global ride-hailing and transportation company,
and Wrike Inc. ("Wrike"), the collaborative work platform.
As announced on 30 May 2018, Bolt, a leading international
ride-hailing company (www.bolt.eu), completed a US$175 million
funding round led by global automotive leader Daimler AG. European
venture capital fund, Korelya Capital, and TransferWise's
co-founder, Taavet Hinrikus, joined Didi Chuxing and a number of
Bolt's existing shareholders in the round, which valued Bolt at
US$1.0 billion. This resulted in a significant revaluation uplift
of TMT's investment in Bolt of US$13.3 million (or 350%) to US$17.1
million.
In November 2018, Wrike announced a majority investment from
Vista Equity Partners and on 31 December 2018, the Company entered
into an agreement with Vista to dispose of its interest in Wrike
for a total consideration of US$22.6 million (adjusted), resulting
in a significant increase in Wrike's fair value as at 31 December
2018. In January 2019, the Company confirmed receipt of the initial
net consideration of US$22.3 million for the disposal of its
shareholding in Wrike. The Wrike exit generated a total return of
over 23 times on our original investment of US$1.0 million, when we
became Wrike's first institutional investor in 2012. The exit from
Wrike represents our largest cash realisation since the Company's
inception and demonstrates our ability to identify high-growth
companies that will generate significant value for our
shareholders.
Both Bolt and Wrike demonstrate the outsize returns that well
researched, earlier stage investing can generate.
In March 2018, the Company also raised US$3.5 million (before
expenses) from new and existing shareholders, to fund further
investments.
NAV per share
The Company's net asset value ("NAV") per share in 2018
increased 27.3% to US$3.09 (31 December 2017: US$2.43). This was
mainly on the back of significant revaluations during the year for
Bolt and Wrike as outlined above and after taking account of our
prudent approach to writing down poorly performing investments. If,
pursuant to the Bonus Plan, the bonus attributable to the NAV
increase from 1 July 2018 to 31 December 2018 had been accrued for
during the period, it would have resulted in an additional bonus
charge of approximately US$0.02 per share as at 31 December
2018.
Operating Expenses
In 2018, the Company's administrative expenses of US$1,200,045
were above the 2017 levels (US$1,039,957), primarily due to the
additional fees related to the Company's equity fundraise in March
2018, appointment of a new Nomad in October 2018, QCA/Corporate
Governance requirements and currency exchange fluctuations.
Financial position
On 29 March 2018, the Company announced that it had raised
US$3.5 million (before expenses) from new and existing
shareholders, at a price of US$2.43 per share.
Disposals of TMT's stakes in Wrike and Pipedrive further
improved the Company's liquidity position.
As of 31 December 2018, the Company had no financial debt and
cash reserves of approximately US$3.3 million. Following receipt of
the initial consideration of US$22.3 million from the disposal of
Wrike and following a number of investments made since in 2019, as
at 26 June 2019, the Company had cash reserves of approximately
US$22.2 million.
Bonus Plan
In June 2018, the Company extended its bonus plan for the next
three years (until 30 June 2021) on the same terms as the original
bonus plan introduced in 2015, with slightly amended initial
allocations of the bonus pool among the current participants, being
directors, officers, employees of, or consultants to, the Company.
Under the Bonus Plan, subject to achieving minimum hurdle rate and
high watermark conditions in respect of the Company's NAV, the team
receives an annual cash bonus equal to 7.5% of the net increases in
the Company's NAV, adjusted for any changes in the Company's equity
capital resulting from issuance of new shares, dividends, share
buy-backs or similar corporate transactions in each relevant year.
The Company's bonus year runs from 1 July to 30 June.
Updated Announcement Policy
In the context of the Company's continuing growth, the Company
has decided to update its policy for the announcement of new
investments, disposals and other portfolio developments (the
"Announcement Policy"). In the future, any single investment or
disposal (including a follow-on investment or partial disposal)
representing less than 3% of the Company's net assets, will not be
considered price-sensitive. For the avoidance of doubt, the Company
will announce portfolio developments of any size, if they are
deemed price-sensitive for reasons other than size under the AIM
Rules.
Outlook
We are delighted with our portfolio company performance in 2018,
especially from Bolt, which has now become the first "unicorn" in
our portfolio, and Wrike, which has become the Company's largest
cash exit to date.
As a result of the performance, the Board believes that the
Company is increasingly being recognised as one of very few AIM
quoted vehicles providing investors with exposure to earlier stage,
primarily US-based, tech companies, and we were pleased to welcome
a UK institutional investor as well as other new professional
investors to the register in March 2018 as part of the
fundraise.
The proceeds of the recent disposal of our Wrike investment are
being directed towards investing in additional exciting companies
that meet our investment criteria of having outstanding management
teams and globally scalable business models and we have made 3 new
investments so far in 2019. The Directors continue to review the
Company's investment pipeline and depending on capital utilisation
following the Wrike realisation, may consider distributing some of
the proceeds in the form of a special dividend. The Company will
keep shareholders updated in this regard.
TMT has now invested in over 45 companies since its admission to
AIM in December 2010 and has a diversified portfolio of over 25
investments focused primarily on big data/cloud, e-commerce, SaaS
(software-as-a-service) and marketplaces. We continue to see
exciting investment and exit opportunities in our chosen sectors,
and expect to complete a number of new investments in the second
half of 2019. We look forward to updating our shareholders on the
Company's progress in the near future.
Alexander Selegenev
Executive Director
26 June 2019
WRIKE CASE STUDY
Our investment in and exit from Wrike demonstrates the outsize
returns that can be generated from identifying an outstanding
company with exceptional management at an early stage of its
development. We were Wrike's first institutional investor in 2012
and as Wrike's success began to draw attention, it raised
additional funding at higher valuations from Bain Capital Partners
and Scale Venture Partners. In November 2018, Wrike announced a
majority investment from Vista Equity Partners, a large, specialist
US private equity firm. By the end of 2018, Wrike was being used by
over 17,000 organisations, with 1 million users in 130
countries.
Wrike met our key investment criteria, operating in the B2B
software sector and ability to scale up globally:
-- Competent and motivated management founders - Andrey Filev,
founder and CEO, launched his first IT start-up at the age of 17.
He founded Wrike in 2006 and before it had received is first
investments, had already signed-up eBay, T-Mobile, Adobe and
Salesforce.
-- High growth potential and proven revenue growth - Wrike
demonstrated tremendous scaling potential by building a powerful
business development juggernaut, leading to high revenue growth.
Whilst a strong product or service is very important for a
start-up's success, our job as investors is to closely assess how
this translates into high revenue growth.
-- Viable exit opportunities - the quality of Wrike's
management, their focus on growth and the high levels of M&A
activity in the B2B software sector meant the company had an above
average likelihood of becoming a potential take-over candidate.
PORTFOLIO DEVELOPMENTS
The companies in TMT's portfolio are at various stages of
development: early, growth and expansion. As such, they attract
investment or can be acquired at a variety of valuation levels
depending on their stage of growth and demand from investors or
acquirers, amongst other factors.
In 2018, two of our fastest growing companies attracted
multi-million dollar investments: global ride-hailing company Bolt
received a US$175 million investment, and collaborative work
platform Wrike agreed a majority investment from Vista Equity
Partners. Bolt and Wrike are good examples of companies that have
scaled up globally and attracted large sums of investment in a
relatively short period of time. We were one of their earliest
institutional investors in both companies, having first invested in
Wrike in 2012 and in Bolt in 2014, thereby providing early access
to TMT's investors to such investments that the Board believes
would not otherwise be readily available to them. Both of these
investments have demonstrated the outsize returns that
well-researched, earlier stage investing can generate.
Portfolio Performance
The following developments had an impact on and are reflected in
the Company's NAV and/or financial statements as at 31 December
2018 in accordance with applicable accounting standards:
Full and partial cash exits, and positive non-cash
revaluations:
-- In April 2018, IoT (Internet of Things) solutions provider
Remot3.it (www.remot3.it) completed an additional equity capital
raise, triggering conversion of TMT's convertible note in
Remot3.it. The transaction represented a revaluation uplift of
US$8.835 (or 1.2%) in the fair value of TMT's investment in
Remot3.it, compared to the previous reported amount as of 31
December 2017.
-- As announced on 30 May 2018, Bolt, a leading international
ride-hailing company (www.bolt.eu) formerly known as Taxify,
completed a US$175 million funding round led by global automotive
leader Daimler AG. European venture capital fund Korelya Capital
and TransferWise's co-founder Taavet Hinrikus joined Didi Chuxing
and a number of Bolt's other existing shareholders in the round
that brought Bolt's valuation to US$1 billion. Daimler also joined
Bolt's board. The transaction represented a revaluation uplift of
US$13.30 million (or 350%) in the fair value of TMT's investment in
Bolt, compared to the previous reported amount as of 31 December
2017.
-- As announced on 30 May 2018, TMT sold a small part of its
holding in Pipedrive, a leading sales CRM (Customer Relationship
Management) software provider (www.pipedrive.com), for a total
consideration of US$2.0 million. The transaction represented a
revaluation uplift of US$3.14 million (or 34.4%) in the fair value
of TMT's remaining interest in Pipedrive, compared to the previous
reported amount as of 31 December 2017.
-- In June 2018, wine subscription service Vinebox
(www.getvinebox.com) completed a new equity capital round. The
transaction represented a revaluation uplift of US$150,015 (or 50%)
in the fair value of TMT's investment in Vinebox, compared to the
previous reported amount as of 31 December 2017.
-- In July 2018, the Company invested US$100,000 in FriendlyData
(www.friendlydata.io), a natural language search interface for
enterprise data. In October 2018, FriendlyData was acquired by
NYSE-traded ServiceNow (NYSE: NOW). The transaction represented a
cash profit of US$30,000 (or 30%) on TMT's investment in
FriendlyData, thus making it the quickest profitable exit for the
Company to date.
-- In December 2018, as announced on 2 January 2019, TMT entered
into an agreement with Vista Equity Partners to dispose of its
entire holding in collaborative work management platform Wrike
(www.wrike.com) for a total net cash consideration of US$22.6
million (adjusted) (with approximately US$0.3 million of this
amount being deferred consideration that will be payable subject to
certain adjustments over a period of 18 months). The total
consideration represented a substantial valuation uplift of US$14.2
million (or 170%) in the fair value of TMT's investment in Wrike,
compared to the previous reported amount as of 31 December
2017.
-- In February 2019, the Company sold its entire investment in
The IRApp, Inc. (www.theirapp.com) for a total net cash
consideration of US$547,972. The transaction represented a
revaluation uplift of US$247,972 (or 82.7%) in the fair value of
TMT's investment in the IRApp, compared to the previous reported
amount as of 31 December 2017.
Negative non-cash revaluations:
-- As announced on 30 May 2018, Scentbird, a subscription-based
service for luxury fragrances and other beauty products
(www.scentbird.com), completed a further funding round to raise
US$18.6 million from a group of investors led by Goodwater Capital,
the consumer technology investment firm, and included Y Combinator,
Rainfall Ventures, FundersClub, Soma Capital, Scrum Ventures, ERA,
and others. The transaction represented a reduction of US$3.67
million in the fair value of TMT's investment in Scentbird,
compared to the previous reported amount as of 31 December
2017.
-- As announced on 2 January 2019, TMT continues to exercise a
diligent impairment policy, with the Company's management using its
discretion to impair individual portfolio companies based on their
perceived prospects, even in the absence of formal transactions.
Accordingly, TMT decided to impair its investment in Wanelo, the
online curated shopping mall (www.wanelo.com), by 66% to more
accurately reflect Wanelo's likely current valuation. This
represented a reduction of approximately US$3.5 million in the fair
value of TMT's investment in Wanelo, compared to the previous
reported amount as of 31 December 2017. Having originally invested
only US$350,000 in Wanelo in 2011, the new impaired value of US$1.8
million still represents significant potential upside for TMT.
The following of the Company's portfolio investments were also
negatively revalued in 2018:
Portfolio Write-down Reduction Reasons for write-down
Company amount as % of fair
(US$) value reported
as of 31 Dec
2018
Final write-down of the previously
revalued investment; Board's
Adinch 300,000 100% assessment of value
----------- ---------------- -----------------------------------
Final write-down of the previously
revalued investment; Board's
Favim 127,525 100% assessment of value
----------- ---------------- -----------------------------------
Final write-down of the previously
revalued investment; Board's
Ninua 250,000 100% assessment of value
----------- ---------------- -----------------------------------
Lack of progress; Board's
Oriense 59,096 100% assessment of value
----------- ---------------- -----------------------------------
Lack of progress; Board's
RollApp* 627,240 100% assessment of value
----------- ---------------- -----------------------------------
Final write-down of the previously
Try The revalued investment; company
World 18,250 100% is in liquidation
----------- ---------------- -----------------------------------
Unicell 475,088 32.7% Ongoing transaction
----------- ---------------- -----------------------------------
Final write-down of the previously
revalued investment; Board's
UsingMiles 29,273 100% assessment of value
----------- ---------------- -----------------------------------
* including the outstanding loan and accumulated interest
payable to TMT.
Key developments for the five largest portfolio holdings in 2018
(source: TMT's portfolio companies):
Bolt (ride-hailing service):
-- Active in over 70 cities over the world (from "over 30" cities as of 31 December 2017)
-- Continuing triple-digit growth in revenue and number of users
-- Raised US$175 million from Daimler AG and others, valuing it at US$1.0 billion
Depositphotos (stock photo marketplace):
-- Continuing double-digit growth in revenue and number of files in the photobank
-- New graphic design software product Crello growing fast in both users and revenue
Backblaze (online data backup and cloud storage provider):
-- Continuing double-digit growth in revenues, exceeding 500,000 paying customers
-- "B2" cloud storage revenue grew at nearly 400% year-on-year
Pipedrive (sales CRM software):
-- Continuing double-digit growth in revenue and number of paid accounts
-- Over 85,000 paying customers (from "over 70,000" as of 31 December 2017)
Scentbird (perfume and other beauty product subscription
service):
-- Continuing double-digit growth in revenue and number of customers
-- Over 250,000 subscribers (from "over 200,000" as of 31 December 2017)
-- Raised US$18.7 million in a new equity round
New investments
In 2018, the Company made the following investments:
-- US$300,000 prepayment for Telegram's tokens, as part of the
pre-ICO (Initial Coin Offering) conducted by Telegram Group, Inc.
The tokens are still to be issued.
-- An additional US$300,000 in cloud-based PC emulator Sixa (www.sixa.io)
-- US$100,000 in FriendlyData (www.friendlydata.io), a natural
language search interface for enterprise data. FriendlyData was
acquired by NYSE-traded ServiceNow (NYSE: NOW) in October 2018
-- US$234,200 in online farm management software platform eAgronom (www.eagronom.com)
-- US$300,000 in Spinbackup, a SaaS backup and security solutions provider (www.spinbackup.com)
Events after the reporting period
Further to the Company's announcement of 2 January 2019
regarding the disposal of its entire holding in Wrike, on 11
January 2019 the Company confirmed receipt of the initial net
consideration of US$22.3 million. In April 2019, the Company
received a further net cash consideration of US$54,414 in respect
of the US$0.3 million deferred consideration.
In January 2019, the Company invested US$200,000 in Central
American on-demand delivery service Hugo (www.hugoapp.com).
In February 2019, the Company received a total net cash
consideration of US$547,972 for the disposal of its entire
investment in The IRApp, Inc.
As announced on 26 February 2019, the Company invested US$2
million in MEL Science, an educational start-up focused on early
science education, with a combination of modern technologies and
hands-on experience. The company's main current products are
monthly subscription to chemistry kits, and chemistry VR lessons
for schools (www.melscience.com).
In June 2019, the Company invested GBP200,000 in UK InsurTech
and HealthTech company HealthyHealth (www.healthyhealth.uk).
In June 2019, the Company's portfolio company PandaDoc, a
document automation SaaS provider (www.pandadoc.com), completed a
new equity funding round. The transaction represents a revaluation
uplift of US$0.98 million (or 79.5%) in the fair value of TMT's
investment in PandaDoc, compared to the latest reported amount as
of 31 December 2018.
These events after the reporting period are not reflected in the
NAV and/or the financial statements as at 31 December 2018.
INVESTMENT PORTFOLIO
The Company's ten largest portfolio investments (as of 31
December 2018) were as follows:
Portfolio Company Fair value (US$), as % of total
Name as of 31 December portfolio
2018 value
Bolt 17,094,470 26.34
------------------- --------------
Depositphotos 10,836,105 16.70
------------------- --------------
Backblaze 10,533,334 16.23
------------------- --------------
Pipedrive 10,257,098 15.81
------------------- --------------
Scentbird 3,340,404 5.15
------------------- --------------
LeTote 1,997,073 3.08
------------------- --------------
Wanelo 1,825,596 2.81
------------------- --------------
PandaDoc 1,233,770 1.90
------------------- --------------
Anews 1,000,000 1.54
------------------- --------------
Unicell 980,000 1.51
------------------- --------------
Other 5,792,294 8.93
------------------- --------------
BOARD OF DIRECTORS
Yuri Mostovoy, Non-Executive Chairman
Yuri Mostovoy was appointed to the Board in June 2011. Yuri
brings over 36 years expertise in investment banking, software
development and business to his role as Chairman of the Company.
Yuri completed his PhD program at the Moscow Aviation Institute in
1972 and has a MSc in Electrical Engineering from that same
institution. Yuri has held a number of previous Board positions at
a number of companies and brings this experience to the Board. He
has been involved in a number of internet start-ups in areas of
medical devices, software development, and social media.
Yuri Mostovoy is actively involved in the start-up investment
community, especially in some of the tech hubs in the USA, meeting
with technological companies seeking investments on a regular
basis. Through this process of direct contact with investee
companies, Yuri keeps updated on sector developments.
Alexander Selegenev, Executive Director
Alexander Selegenev was appointed to the Board in December 2010.
The Executive Director has the responsibility of leading the
business and the executive management team, ensuring that strategic
and commercial objectives are met. Alexander has over 20 years of
experience in investment banking and venture capital, with specific
expertise in international corporate finance, equity capital
markets and mergers and acquisitions at a number of City of London
firms including Teather & Greenwood Limited, Daiwa Securities
SMBC Europe Limited and Sumitomo Bank Limited. Throughout his
career he worked on a large number of AIM IPOs and private equity
and merger and acquisition transactions. He has an MSc (Hons) and a
BSc (Hons) in Business from the Peoples' Friendship University of
Russia in Moscow and a Bachelor of Business Studies (Major in
Management) from Monash International University in Australia. He
brings strong experience of working with public markets.
Alexander's public markets and financial experience make him an
ideal conduit to engaging with the Company's Nomad, investors and
other advisers, and make him an effective link between the Board
and the Company's other team members.
Alexander Selegenev is an active member of the Company's
investment committee, allowing him to keep very close to
developments and current thinking on new technologies, market
trends, company valuations and fund raising activities.
Alexander Selegenev is a member of the Company's Nomination
Committee.
James Mullins, Non-Executive director
James Mullins was appointed to the Board in December 2010. He
brings to the Company a strong combination of accountancy,
experience of working with public markets and institutional
investors. James, with his financial background, provides the
experience required as chairman of the audit committee to challenge
the business internally and also the Group auditors. From 2004 to
2007, he was the Finance Director at Rambler Media and was involved
in its successful admission on AIM and subsequent sale. He has been
a director of numerous funds and companies including the Russian
Federation First Mercantile Fund. This Fund (Class A shares) is
listed on the Bermuda Stock Exchange. He was previously a partner
in First Mercantile and FM Asset Management Ltd. He previously
worked for PricewaterhouseCoopers, Deloitte and British Coal where
he was a national investment manager. He was recently Chairman of
the Scottish Salmon Company, which is listed on the Oslo Bors.
James is a Fellow of the Association of Chartered Certified
Accountants and he holds a Bachelor of Science degree and a Master
of Arts degree from Trinity College, Dublin. James is also an
active entrepreneur and investor.
James Mullins serves as Chairman of the Audit, Remuneration and
Nomination Committees.
James Mullins has recently completed an online course with
University of Oxford Said Business School entitled Oxford
Blockchain Strategy Programme.
Petr Lanin, Non-Executive director
Petr Lanin was appointed to the Board in December 2010. Petr
brings his experience in investment and brokerage to his position
as independent non-executive director. His experience in
investments allow him to review and challenge decisions and
opportunities presented both within the formal arena of the
Boardroom and as called upon when needed by senior management.
He began his career as an equity analyst in the Russian
information agency RosBusinessConsulting ("RBC") in 1995. Between
1996-2000 he served as head of the equities trading department in
Makprombank. Between 2000 and 2006 he held the position of general
director of investment company Maxwell Capital. Following his
appointment as general director of Maxwell Asset Management in
2003, Mr. Lanin was key in the establishment and management of many
investment funds. He was also one of the managing directors of
venture capital fund Maxwell Biotech, which was a closed mutual
fund set up and operated by Maxwell Asset Management. In 2008,
Maxwell Asset Management established a UK FSA registered subsidiary
in which Petr Lanin held a controlled function. At present, Petr
heads the Purchases and Supply Department of Federal State
Organisation "Clinical hospital #1". Petr holds an MBA degree in
finance and credit from the Plekhanov Russian Academy of
Economics.
Petr Lanin is a member of the Company's Audit and Remuneration
Committees.
CORPORATE GOVERNANCE
Introduction
The Board of the Company fully endorses the importance of good
corporate governance and has adopted the 2018 Quoted Companies
Alliance Corporate Governance Code for Small and Mid-Sized
Companies (the "QCA Code"), which the Board believes to be the most
appropriate corporate governance code given the Company's size,
stage of development and that its shares are admitted to trading on
AIM. The QCA Code is a practical, outcome-oriented approach to
corporate governance that is tailored for small and mid-size quoted
companies in the UK and which provides the Company with the
framework and effective oversight to help ensure that a strong
level of governance is maintained.
Chairman's Corporate governance statement
Dear Shareholder,
As Chairman, it remains my responsibility, working with my
fellow Board colleagues, to ensure that good standards of corporate
governance are embraced throughout the Company. I am therefore
pleased to report that, in accordance with the revisions made to
the AIM Rules for Companies effective 28 September 2018, the Board
chose to adopt the QCA Code with immediate effect.
The adoption of the QCA Code supports the Company's success by
creating and supporting a strong corporate governance environment
for the benefit of the Company, its shareholders and its
stakeholders.
The Board is committed to good governance across the business,
at executive level and throughout its operations and we believe
that the QCA Code provides us with the right governance framework:
a flexible but rigorous outcome-oriented environment in which we
can continue to develop our governance model to support our
business. The Company applies the QCA Code by seeking to address
all of its requirements and ensuring that the QCA Code is embedded
in the Company's operations and corporate culture.
As Chairman, I am responsible for leading an effective Board,
fostering a good corporate governance culture, maintaining open
communications with shareholders and ensuring appropriate strategic
focus and direction for the Company.
The Board not only sets expectations for the business but works
towards ensuring that strong values are set and carried out by the
Directors across the business. The Company's corporate culture is
based on the three values of transparency, innovation and
continuous improvement. These three values support the Company's
objectives, strategy and business model.
Transparency is fundamental to us as a publicly quoted company
that provides investors with a liquid route to investing in private
companies. The Company therefore endorses a culture of transparency
and seeks to provide investors with as much information as is
practically possible regarding its portfolio investments and its
own operations as a company.
Innovation supports the Company's objective of investing in
successful, long-term companies that have innovation at the core of
their own business model. At the same time, the Company seeks to
apply an innovative approach to how it manages its own operations.
The Company therefore seeks to review its operations and
capabilities on an ongoing basis to ensure it can continue to
successfully operate as an investing company and make best use of
its range of capabilities.
Continuous improvement reflects the Company's objective of
assessing its own performance and identifying areas for improvement
across its investment processes and operations on an ongoing
basis.
We place a special focus on monitoring and promoting a healthy
corporate culture, which the Company currently enjoys.
Nevertheless, there is always room for improvement and we will
continue to pursue programmes that keep us advancing in this
regard.
The importance of engaging with our shareholders underpins the
essence of the business, and we welcome investors' continued
engagement with both the Board and executive team.
In the statements that follow, we explain our approach to
corporate governance, how the Board and its committees operate, and
how we seek to comply with the QCA's 10 principles.
Yuri Mostovoy
Chairman
PRINCIPLE 1
ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTE LONG-TERM
VALUE FOR SHAREHOLDERS
The Company has been established for the purpose of making
investments in the Technology, Media and Telecommunications sector
("TMT sector") where the Directors believe there is potential for
growth and the creation of shareholder value.
Investment Strategy
TMT currently focuses on identifying attractive investment
opportunities in the following segments of the TMT sector:
-- Big data and cloud solutions
-- Software-as-a-service (SaaS)
-- E-commerce
-- Marketplaces
Among other features, TMT seeks to identify companies that
have:
-- Competent and motivated management founders - managing
high-growth companies requires a rare combination of skills
-- High growth potential - companies with a product or service
that can be scaled up globally
-- Growth stage - we highly favour investing in companies that
are already generating revenues (we have a typical minimum revenue
threshold of US$50,000 per month)
-- Viable exit opportunities - when we invest, we are already
assessing potential exit scenarios
The Company has identified a number of challenges in executing
its strategy. We describe these risks and how we manage them in
Principle 4.
The Company believes it is well placed to deliver shareholder
value in the medium and long-term through the application of its
business model, investment strategy and risk mitigation measures,
as described in this document.
PRINCIPLE 2
SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND
EXPECTATIONS
The Company places great importance on communication with
shareholders and potential investors, which it undertakes through a
variety of channels, including the annual reports and accounts,
interim accounts, and regulatory announcements which are available
on the Company's website www.tmtinvestments.com. On request, hard
copies of the Company's reports and accounts can be mailed to
shareholders and other parties who have an interest in the
Company's performance.
The Directors review the Company's investment strategy on an
ongoing basis. Any material change to the Investing Policy will be
subject to the prior consent of the shareholders in a general
meeting.
Developing a good understanding of the needs and expectations of
all elements of the Company's shareholder base is fundamental to
the Company's progress. The Company has developed a number of
initiatives that it holds on a regular basis to meet this need. As
part of its regular dialogue with shareholders, the Company seeks
to understand the motivations behind shareholder voting decisions
as well as manage shareholders' expectations.
The Company's shareholder base has grown in numbers as well as
become more diversified since its admission to AIM in December
2010. The Company's shareholder base is comprised of institutional
investors, family offices, high net worth individuals and retail
investors.
In addition to communicating with shareholders through the
Company's annual reports, interim results, regulatory
announcements, and the opportunity for shareholders to engage with
the Company at the AGM, the Company's broker and other advisors
arrange regular meetings with UK institutional investors and
private client brokers, to introduce the Company and its investment
strategy.
The Company has been increasing its engagement with retail
investors by holding large private investor events arranged by the
Company's public relations adviser. As part of these retail
investor events, feedback surveys are provided to attendees. The
feedback includes information on amount, type and quality of
information provided, presentation style and areas of investor
interest. Investor feedback collected is incorporated into the
planning of future events on an ongoing basis. Interested parties
are able to subscribe for notifications of such future events by
contacting tmt@kinlancommunications.com
In addition, the Company engages with the financial media on a
regular basis in order to generate interest among a wider number of
potential shareholders.
The Company has recently launched a new Company website, with
the aim of increasing shareholder engagement and better meet
shareholders' information needs.
Shareholder enquiries should be directed to Alexander Selegenev,
Executive Director at ir@tmtinvestments.com, or to the Company's
advisors, contact details for whom are included on the Company's
web site.
PRINCIPLE 3
TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES
AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS
The Company's business model is that of a publicly quoted
venture capital investing company investing in the TMT sector. As
such, it relies on the continued growth of the TMT sector and
access to good investment opportunities. In relation to its wider
stakeholders, the Company needs to ensure that it:
-- Maintains a good reputation as a credible investor in its chosen investment sector;
-- Is fully compliant with all regulatory requirements;
-- Takes into account its wider stakeholders' needs; and
-- Takes into account its social responsibilities and their
implications for long-term success.
The Company regards its employees, advisors, shareholders and
investee companies, as well as the technology and start-up
community, to be the core of the wider stakeholder group:
The technological and start-up community
The Company sources its investments from the global
technological universe of companies. All members of the Company's
team maintain good relationships with the global technological
start-up community through arranging meetings with prospective
investees, attending tech and tech investor events, and through
ongoing building of their professional networks. This has led to a
valuable level of accumulated tech knowledge and access to suitably
attractive investments.
Professional advisors
The Company's professional advisors include its Nominated
Advisor (Nomad), Broker, Accountants, Auditors, and Legal and
Financial PR advisors. The Company works closely with its
professional advisors to ensure that it is fully compliant with all
regulatory requirements at all times.
Regulators
The Company is quoted on AIM and is subject to regulation by the
London Stock Exchange. The Company is also subject to the UK City
Code on Takeovers and Mergers.
Other suppliers
The Company has banking relationships in place to service its
operations as well as a number of administrative and other
suppliers, such as the Registrar and Company Secretary.
Internal stakeholders
The Company's workforce
The Company's investment performance relies on the retention and
incentivisation of its directors, employees and consultants.
The Company has put in place a bonus plan ("Bonus Plan") for
Directors, officers, employees of, or consultants to, the Company.
This initial 3-year Bonus Plan was approved by the Board on 2
December 2015. Under the Bonus Plan, subject to achieving minimum
hurdle rate and high watermark conditions in respect of the
Company's net asset value ("NAV"), the team receives annual cash
bonus equal to 7.5% of the net increases in the Company's NAV,
adjusted for any changes in the Company's equity capital resulting
from issuance of new shares, dividends, share buy-backs or similar
corporate transactions in each relevant year. In June 2018, the
Company extended its Bonus Plan for the next three years (until 30
June 2021) on the same terms, with slightly amended initial
allocations of the Bonus Pool among the current participants.
The Company engages with its stakeholders during the course of
its day to day activities, seeking feedback as the occasion arises.
The Company evaluates feedback and assesses its incorporation into
its decisions and actions and, if appropriate, its operations on an
ongoing basis. Details of the Company's most regular interactions
with shareholders, through which the Company gains feedback from
shareholders, are provided in the disclosures on Principle 2
above.
PRINCIPLE 4
Embed effective risk management, considering both opportunities
and threats, throughout the organisation
The Directors are responsible for the Company's internal control
framework and for reviewing its effectiveness. Each year the Board
reviews all controls, including financial, operational and
compliance controls and risk management procedures. The Directors
are responsible for ensuring that the Company maintains a system of
internal control to provide them with reasonable assurance
regarding the reliability of financial information used within the
business and for publication, and that assets are safeguarded.
There are inherent limitations in any system of internal financial
control. On the basis that such a system can only provide
reasonable but not absolute assurance against material misstatement
or loss, and that it relates only to the needs of the business at
the time, the system as a whole was found by the Directors at the
time of approving the accounts to be appropriate given the size of
the business.
In determining what constitutes a sound system of internal
controls the Board considers:
-- The nature and extent of the risks which they regard as
acceptable for the Company to bear within its particular
business;
-- The threat of such risks becoming reality;
-- The Company's ability to reduce the incidence and impact on
its business if the risk crystallises; and
-- The costs and benefits resulting from operative relevant controls.
The Board has taken into account the relevant provisions of the
QCA Code and associated guidance in formulating the systems and
procedures which it has put in place. The Board is aware of the
need to conduct regular risk assessments to identify the
deficiencies in the controls currently operating over all aspects
of the Company.
The Board regularly reviews the risks faced by the Company and
ensures the mitigation strategies in place are the most effective
and appropriate to the Company. There may be additional risks and
uncertainties which are not known to the Board and there are risks
and uncertainties which are currently deemed to be less material,
which may also adversely impact performance. It is possible that
several adverse events could occur and that the overall impact of
these events would compound the possible impact on the Company. Any
number of the below risks could materially adversely affect the
Company's business, financial condition, results of operations
and/or the market price of the ordinary shares.
The Company has identified the following principal risks in
executing its strategy and addresses these in the following
ways:
Key people risk
The Company's management team is relatively small in number and
the resignation or unavailability of members of the management team
could potentially have an effect on the performance of the
Company.
Mitigation:
In order to mitigate this risk, the Company has put in place a
Bonus Plan. The Company ensures that the databases it maintains for
investment selection and monitoring are shared across the senior
management team, reducing the possibility of the loss of
information due to any one individual leaving or not being
available.
The Company invests in early stage companies
Investing in early stage companies is inherently risky. These
businesses may not successfully develop their technology or
offering and may fail to secure the necessary funding and/or
attract further investment and may lose key personnel, amongst
other risks.
Mitigation:
The TMT team is experienced in investing in early stage
technology companies and conducts extensive analysis through its
four-filter investment process, as well as extensive due diligence
on the companies before it makes any investment.
Portfolio valuation may be dominated by single or limited number
of companies
The success or failure of companies in our portfolio in growing
revenues and/or attracting further investment is likely to have a
significant impact on their valuation, increasing or decreasing
significantly. These valuations are driven by market forces and are
outside of our control.
Mitigation:
The Company has built and continues to build a diversified
portfolio across its core investment sector, TMT. The Company also
sells partial stakes from time to time in its more successful
holdings in order to reinvest in other companies and/or keep the
Company's portfolio appropriately balanced.
Large number of investment opportunities
The sectors in which the Company invests are characterised by
large numbers of new companies being launched with similar business
models and across many countries. The sheer multitude of companies
can make identifying the best companies a challenge in terms of
analysis, monitoring of performance before investing and the
overall assessment of an investee's potential.
Mitigation:
Focusing on a small number of core segments within the TMT
sector in which the Company has expertise and established
professional networks, in order to benefit from its competitive
information advantage.
Employing a filtering system that is designed to identify
companies with the best potential to become scalable businesses
with strong growth potential. A special emphasis is placed on
assessing the exit opportunities for investments under
consideration, taking into account sector trends, valuations,
M&A trends and other relevant criteria.
Speed of technological change
Technological change is taking place at ever increasing tempos.
The speed of technological innovation can make it harder to assess
an investee company's potential, especially at an early stage of
development.
Mitigation:
We address this challenge by typically investing in companies
that are already generating revenue and therefore have a proven
revenue generating business model at the time of the Company's
initial investment.
Valuation of investments
The Company invests in companies that at times operate in very
competitive sectors. Given the nature of the companies we invest
in, it is not likely that all will be a success. It is therefore
inevitable that some investments will require impairment.
Mitigation:
To mitigate this risk, the Company reviews all its investments,
as a minimum, every six months. For each of its portfolio
companies, the Company maintains a database registering data
provided by the portfolio companies that includes key performance
indicators. Through this process, the Company actively monitors the
performance of its portfolio and can affect fair value revaluations
as required, whilst remaining focussed on managing a portfolio of
growing companies.
The Company has a small number of shareholders who hold a large
proportion of the total share capital of the Company
The decision by one or more of these shareholders to dispose of
their holding in the Company may have an adverse effect on the
Company's share price.
Mitigation
The Company seeks to build a mutual understanding of objectives
between itself and its shareholders. The Company maintains regular
contact with its shareholders through meetings and presentations
held throughout the year.
Non-controlling positions in portfolio companies
Non-controlling interests in portfolio companies may lead to a
limited ability to protect the Company's position in such
investments.
Mitigation
As part of its investment in portfolio companies, the Company
will seek to secure significant stakes and board representation,
where it considers that the Company and/or an investee company
would benefit from such an appointment.
Proceeds from the realisation of investments may vary
substantially from year to year
The timing of portfolio company realisations is uncertain and
depends on factors beyond the Company's control. As an investing
company that does not generate sales, the Company faces the
potential challenge of insufficient funds to meet its financial
obligations or make new investments. Cash returns from the
Company's portfolio are therefore not predictable.
Mitigation
To address this challenge, the Company focuses on investing in
companies that it considers to have good exit opportunities, via a
trade sale, IPO or other exit route. This increases the likelihood
of generating cash returns, which can then be used to reinvest or
satisfy financial obligations if necessary. The Company has also
conducted a number of equity fundraises since its admission to
trading on AIM. As part of its fundraising efforts, the Company has
committed significant resources to developing its shareholder base.
The Company seeks to maintain sufficient cash resources to manage
its ongoing operating and investment commitment. The Company
undertakes regular working capital reviews.
The Company's approach to managing liquidity is to ensure that
it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company.
The Company has low liquidity risk due to maintaining adequate
cash reserves, by continuously monitoring actual cash flows and by
matching the maturity profiles of financial assets and current
liabilities.
The Company believes it is well placed to deliver shareholder
value in the medium and long-term through the application of its
business model and investment strategy and risk mitigation, as
described above.
PRINCIPLE 5
MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY
THE CHAIR
The Board is responsible to shareholders for the overall
management of the Company and may exercise all the powers of the
Company, subject to the provisions of relevant statutes and any
directions given by special resolution of the shareholders.
The Board, led by the Chairman, consists of four directors,
three of whom are Non-executive.
The Board comprises of the Non-executive Chairman (Yuri
Mostovoy), two Non-executive Directors (James Joseph Mullins and
Petr Lanin) and the Executive Director (Alexander Selegenev). James
Mullins and Petr Lanin, both Non-executives, are considered to be
independent.
The Board considers that it has the necessary industrial,
financial, public markets and governance experience, possessing the
necessary mix of experience, skills, personal qualities and
capabilities to deliver the strategy of the Company for the benefit
of the shareholders over the medium to long-term (details of which
are set out in the responses to Principle 6 of the QCA Code
below).
The Non-executive Chairman is required to dedicate at least
seven days every month to his duties with the Company. The
Executive Director is expected to dedicate the substantial part of
his time to his duties with the Company. The Non-executive
Directors are normally required to dedicate at least two days a
month to their duties with the Company.
The Board delegates certain responsibilities to its Committees,
so that it can operate efficiently and give an appropriate level of
attention and consideration to relevant matters. The Company has an
Audit Committee, a Remuneration Committee and a Nomination
Committee, all of which operate within a scope and remit defined by
specific terms of reference determined by the Board. The Board and
its Committees are provided with high quality information in a
timely manner to facilitate proper assessment of the matters
requiring a decision or insight.
The Directors have access to the Company's advisers and are able
to obtain advice from other external bodies as and when
required.
Board meetings
There were 16 Board meetings held in 2018. The number of Board
meetings attended by the Directors is set out below.
Board Audit Committee Remuneration Committee
Director meetings meetings meetings
--------------------- --------- ---------------- -----------------------
Yuri Mostovoy 16
Alexander Selegenev 16
Petr Lanin 16 1 2
James Mullins 15 1 2
--------------------- --------- ---------------- -----------------------
Total meetings 16 1 2
--------------------- --------- ---------------- -----------------------
PRINCIPLE 6
ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY
UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES
The Board considers that it has the necessary industrial,
financial, public markets and governance experience, possessing the
necessary mix of experience, skills, personal qualities and
capabilities to deliver the strategy of the Company for the benefit
of the shareholders over the medium to long-term. The Directors'
individual experience is set out below.
Yuri Mostovoy, Non-Executive Chairman, was appointed to the
Board in June 2011. Yuri brings over 36 years expertise in
investment banking, software development and business to his role
as Chairman of the Company. Yuri completed his Ph.D. program at the
Moscow Aviation Institute in 1972 and has a M.Sc. in Electrical
Engineering from that same institution. Yuri has held a number of
previous Board positions at a number of companies, and brings this
experience to the Board. He has been involved in a number of
internet startups in areas of medical devices, software
development, and social media.
Yuri Mostovoy is actively involved in the start-up investment
community, especially in some of the tech hubs in the USA, meeting
with technological companies seeking investments on a regular
basis. Through this process of direct contact with investee
companies, Yuri keeps updated on sector developments.
Alexander Selegenev, Executive Director, was appointed to the
Board in December 2010. The Executive Director has the
responsibility of leading the business and the executive management
team, ensuring that strategic and commercial objectives are met.
Alexander has over 20 years of experience in investment banking and
venture capital, with specific expertise in international corporate
finance, equity capital markets and mergers and acquisitions at a
number of City of London firms including Teather & Greenwood
Limited, Daiwa Securities SMBC Europe Limited, and Sumitomo Bank
Limited. Throughout his career he worked on a large number of AIM
IPOs and private equity and merger and acquisition transactions. He
has an MSc (Hons) and a BSc (Hons) in Business from the Peoples'
Friendship University of Russia in Moscow and a Bachelor of
Business Studies (Major in Management) from Monash International
University in Australia. He brings strong experience of working
with public markets. Alexander's public markets and financial
experience make him an ideal conduit to engaging with the Company's
Nomad, investors and make him an effective conduit between the
Board and the Company's other team members.
Alexander Selegenev is an active member of the Company's
investment committee, allowing him to keep very close to
developments and current thinking on new technologies, market
trends, company valuations and fund raising activities.
Alexander Selegenev is a member of the Company's Nomination
Committee.
James Mullins, non-executive director, was appointed to the
Board in December 2010. He brings to the Company a strong
combination of accountancy, experience of working with public
markets and institutional investors. James, with his financial
background, provides the experience required as chairman of the
audit committee to challenge the business internally and also the
Group auditors. From 2004 to 2007, he was the Finance Director at
Rambler Media and was involved in its successful admission on AIM
and subsequent sale. He has been a director of numerous funds and
companies including the Russian Federation First Mercantile Fund.
This Fund (Class A shares) is listed on the Bermuda Stock Exchange.
He was previously a partner in First Mercantile and FM Asset
Management Ltd. He previously worked for PricewaterhouseCoopers,
Deloitte and British Coal where he was a national investment
manager. He was recently Chairman of the Scottish Salmon Company,
which is listed on the Oslo Bors. James is a Fellow of the
Association of Chartered Certified Accountants and he holds a
Bachelor of Science degree and a Master of Arts degree from Trinity
College, Dublin. James is also an active entrepreneur and
investor.
James Mullins has recently completed an online course with
University of Oxford Said Business School entitled Oxford
Blockchain Strategy Programme.
James Mullins serves as Chairman of the Audit, Remuneration and
Nomination committees.
Petr Lanin was appointed to the Board in December 2010. Petr
brings his experience in investment and brokerage to his position
as independent non-executive director. His experience in
investments allow him to review and challenge decisions and
opportunities presented both within the formal arena of the
Boardroom and as called upon when needed by senior management.
He began his career as an equity analyst in the Russian
information agency "RosBusinessConsulting" ("RBC") in 1995. Between
1996-2000 he served as chief of the share department in
Makprombank. Between 2000 and 2006 he held the position of general
director of the investment company "Maxwell Capital". Following his
appointment as general director of "Maxwell Asset Management" in
2003, Mr. Lanin was key in the establishment and management of many
investment funds. He was also one of the managing directors of
venture capital fund "Maxwell Biotech" which was a closed mutual
fund set up and operated by Maxwell Asset Management. In 2008,
Maxwell Asset Management established a UK FSA registered subsidiary
in which Petr Lanin held a controlled function. At present, Petr is
a chief of the Purchases and Supply Department in Federal State
Organisation "Clinical hospital #1". Petr holds an MBA degree in
finance and credit from the Plekhanov Russian Academy of
Economics.
Petr Lanin is a member of the Company's Audit and Remuneration
Committees.
PRINCIPLE 7
EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT
OBJECTIVES, SEEKING CONTINUOUS IMPROVEMENT
The Company conducts evaluation of the effectiveness of its
Board and committees and that of the Executive and Non-executive
Directors' performance in accordance with the QCA Code. The results
of such reviews are used to determine whether any alterations are
needed or whether any additional training would be beneficial.
The first such formal evaluation was carried out starting in
December 2018 and concluded in March 2019. Comparisons to prior
reviews are therefore not possible. After considering different
alternatives the Board made the decision to undertake the
evaluations internally.
The evaluations involved both a numeric and discursive
self-assessment by each Board member, in response to a
questionnaire, on the role and functioning of the Board and its
members and Committees. Responses were collated and fed back to the
Board at its meeting in June 2019.
In general, the responses found the Board, its members and
Committees to be operating effectively. We provide further
information below on the various evaluation that took place and
their outcomes.
Board effectiveness
The Board effectiveness evaluation involved the completion of a
detailed questionnaire by Board directors. The following items and
their respective criteria were assessed as a measure of
effectiveness at Board level, whereby all Board members were asked
to provide a rating (on a scale of 1 - 5). The evaluation addressed
the following items:
-- Board composition - Evaluating the Board's right balance of
skills, knowledge and experience to govern the Company
effectively.
-- Board engagement - How timely is the Board's engagement with
its internal and external stakeholders
-- Governance structure - Is the Board's Committee structure
clear and providing members with assurance to discharge their
duties effectively.
-- Risk management - How well is the Board addressing the key
business risks and adhering to internal controls;
-- Board agenda and forward plan - Is the Board's meeting agenda
and forward plan ensuring that members are focusing on the right
areas at the right time.
-- Director's self-assessment of awareness of current issues faced by the Company;
-- Board reporting - How comprehensive, accurate, easy to
understand, timely and appropriate is the information received by
Board members
-- Board dynamics - How effectively do Board members operate as
a team, striking the right balance between trust and challenge.
-- Personal development - how well are development needs identified and satisfy requirements
-- Chair's leadership - How effective is the Chair as a leader of the Board.
-- Performance evaluation - Are the Board members continually
improving as a group and as individuals.
-- Succession planning for Board members - How robust is succession planning
The Board effectiveness evaluation concluded that the Board was
operating effectively. Whilst time is dedicated at regular board
meetings to discuss the Company's strategy, the evaluation
identified the possibility to consider an additional "away day"
annual strategy meeting or conference call for the Board, and the
Board has agreed to consider holding such annual strategy meetings
in the future.
Audit Committee effectiveness
As part of the Audit Committee evaluation exercise, the two
members of the Audit Committee completed a self-assessment
questionnaire. Each member was asked to rate (on a scale of 1 - 5)
the extent to which the Audit Committee is properly constituted,
with regard to the knowledge, behaviours and processes relevant to
the effective functioning of the Audit Committee. The evaluation
concluded the committee was functioning effectively. The evaluation
identified some minor improvements to be made regarding the number
of meetings and reviewing the terms of reference.
Remuneration committee effectiveness
As part of the Remuneration Committee evaluation, the two
members of the Remuneration Committee completed a self-assessment
questionnaire. Each member was asked to rate (on a scale of 1 - 5)
the extent to which the Remuneration Committee is properly
constituted, with regard to the knowledge, behaviours and processes
relevant to the correct functioning of the Remuneration Committee.
The evaluation concluded the committee was functioning
effectively.
Nomination committee effectiveness
The Nomination Committee did not convene during the financial
year ended 31 December 2018 as there were no new Board or senior
management appointments during the year.
By way of evaluation of succession planning, all Board members
were asked to respond to a questionnaire which reviewed succession
planning and the processes by which the Company determines board
and other senior appointments. The evaluation concluded that the
processes in place for succession planning are adequate in view of
the size and scope of operations of the Company.
The Nomination committee works closely with the Board to
identify the skills, experience, personal qualities and
capabilities required for any next stages in the Company's
development, linking the Company's strategy to future changes on
the Board.
Individual effectiveness
The individual effectiveness evaluation involved the completion
of a detailed questionnaire. The following items and their
respective criteria were assessed as a measure of effectiveness at
the individual level, whereby all Board members were asked to
provide a rating (on a scale of 1 - 5). The evaluation concluded
that all Board members were operating effectively. The evaluation
addressed the following items:
-- Relationships with the Board of directors and major shareholders
-- Knowledge of the Company's business as it continues to evolve
-- Active engagement in robust discussions during and between board meetings
-- Personal accountability for promoting the success of the Company
-- An open and questioning approach to reviewing risk in the organisation
-- Strategic planning, financial management, people management
and relationships, and conduct of business
-- Assessing the time commitment required from each director
-- Development, training or mentoring needs of individual directors
The Board reviews on an ongoing basis the human resource needs
of the Company and the expected availability of its directors,
employees and consultants. The review seeks to identify any
potential changes in the make-up of the Board and senior
management, in order to allow sufficient planning to appoint a
replacement or other suitable arrangements.
PRINCIPLE 8
PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND
BEHAVIOURS
The Board not only sets expectations for the business but works
towards ensuring that strong values are set and carried out by the
Directors across the business. The Board places significant
importance on the promotion of ethical values and good behaviour
within the Company and takes ultimate responsibility for ensuring
that these are promoted and maintained throughout the organisation
and that they guide the Company's business objectives and strategy.
The Board ensures sound ethical practices and behaviours are
deployed at Company board meetings.
The Company's corporate culture is based on the three values of
transparency, innovation and continuous improvement. These three
values support the Company's objectives, strategy and business
model. These are explained in more detail in the Chairman's
corporate governance statement, which reflects how the Company's
corporate culture is consistent with the Company's objectives,
strategy and business model.
The Board has very regular interaction with Company employees,
thereby ensuring that ethical values and behaviours are recognised
and respected. Given the size of the Company, the Board believes
this is the most efficient way of ensuring that a good corporate
culture is maintained, which the Board deems to be good and
healthy.
The Company's approach to governance, and how that culture is
consistent with both the Company's objectives and the creation of
long-term stakeholder value, is set out in the Chairman's statement
on corporate governance at the start of this document.
PRINCIPLE 9
MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR
PURPOSE AND SUPPORT GOOD DECISION-MAKING BY THE BOARD
Yuri Mostovoy, as Chairman, is responsible for leading an
effective Board, fostering a good corporate governance culture and
ensuring appropriate strategic focus and direction.
Alexander Selegenev, as Executive Director, has overall
responsibility for managing the group's business and promoting,
protecting and developing the investment business of the Company.
Alexander also has active responsibility for the implementation of
and adherence to the financial reporting procedures adopted by the
Company and the Company's financial reporting obligations under the
AIM Rules.
The Board's committees
The Board is assisted by various standing committees which
report regularly to the Board. The membership of these committees
is regularly reviewed by the Board. When considering committee
membership and chairmanship, the Board aims to ensure that undue
reliance is not placed on particular Directors. The terms of
reference of the Audit Committee, Remuneration Committee and
Nomination Committee provide that no one other than the particular
committee chairman and members may attend a meeting unless invited
to attend by the relevant committee.
Details of the committees of the Board are set out below.
Audit Committee
The Audit Committee currently comprises James Mullins and Petr
Lanin being non-executive members of the Board, with James Mullins
appointed as chairman. The Audit Committee should meet at least
twice a year. The committee is responsible for the functions
recommended by the QCA Code including:
-- Review of the annual financial statements and interim reports
prior to approval, focusing on changes in accounting policies and
practices, major judgemental areas, significant audit adjustments,
going concern and compliance with accounting standards, AIM and
legal requirements;
-- Receive and consider reports on internal financial controls,
including reports from the auditors and report their findings to
the Board;
-- Consider the appointment of the auditors and their
remuneration including the review and monitoring of independence
and objectivity;
-- Meet with the auditors to discuss the scope of their audit,
issues arising from their work and any matters the auditors may
wish to raise;
-- Develop and implement policy on the engagement of the
external auditor to supply non-audit services; and
-- Review the Company's corporate review procedures and any
statement on internal control prior to endorsement by the
Board.
Remuneration Committee
The Remuneration Committee currently comprises James Mullins and
Petr Lanin, with James Mullins appointed as chairman. The committee
has the following key duties:
-- Reviewing and recommending the emoluments, pension
entitlements and other benefits of any Executive Directors and
other senior executives; and
-- Reviewing the operation of any share option schemes and/or
bonus plans implemented by the Company and the granting of options
and/or bonus awards under such schemes.
Nomination Committee
The Company has established a Nomination Committee, which
considers the appointment of directors to the Company's Board and
makes recommendations in this respect. The Nomination Committee
currently comprises James Mullins and Alexander Selegenev, with
James Mullins appointed as Chairman.
Matters reserved for the Board
The Board of Directors of the Company meets at least four times
per year, or more often if required. The matters reserved for the
attention of the Board include inter alia:
-- The preparation and approval of the financial statements and
interim reports, together with the approval of dividends,
significant changes in accounting policies and other accounting
issues;
-- Board membership and powers including the appointment and
removal of Board members, determining the terms of reference of the
Board and establishing the overall control framework;
-- AIM-related issues including the approval of communications
to the AIM and communications with shareholders;
-- Senior management and Board appointments and remuneration,
contracts and grant of share options;
-- Key commercial matters, including approval and disposal of investments;
-- Financial matters including the approval of the budget and
financial plans, changes to the Company's capital structure, the
Company's business strategy, investment commitments, acquisitions
and disposals of investments, and capital expenditure; and
-- -- Other matters including insurance, regulatory and legal compliance.
Share dealings
The Company has adopted a model code for share dealings in its
ordinary shares which is appropriate for an AIM company, including
compliance with Rule 21 of the AIM Rules for Companies relating to
Directors and employees' dealings in the Company's shares. Jersey
law contains no statutory pre-emption rights on the allotment and
issue by the Company of equity securities (being shares in the
Company, or rights to subscribe for, or to convert securities into,
such shares). However, the Company's articles of association
contain certain provisions as to Directors' authority to issue
equity securities and pre-emption rights on issues of equity
securities by the Company, further details of which are set out in
paragraphs 8 and 9 of Part 3 of the Company's AIM Admission
Document which can be found on the Company's website.
As the Company grows, the directors will ensure that the
governance framework remains in place to support the development of
the business.
PRINCIPLE 10
COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY
MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS
The Company communicates with shareholders through the annual
report and accounts, regulatory announcements, the annual general
meeting and one-to-one meetings with large existing shareholders or
potential investors. A range of corporate information (including
all Company announcements and presentations) is also available on
the Company's website. In addition, the Company seeks to maintain
dialogue with shareholders through the organisation of shareholder
events, and employee stakeholders are regularly updated with the
development of the Company and its performance.
Audit Committee report
The Company has established an audit committee, which comprises
James Mullins (Chairman) and Petr Lanin. The audit committee's main
functions include, inter alia, reviewing and monitoring internal
financial control systems and risk management systems on which the
Company is reliant, considering annual and interim accounts and
audit reports, making recommendations to the Board in relation to
the appointment and remuneration of the Company's auditors and
monitoring and reviewing annually their independence, objectivity,
effectiveness and qualifications.
The Audit Committee met formally once during 2018 to formally
approve the full year report and accounts for the year ended 31
December 2017.
Remuneration committee report
The Company has established a remuneration committee, which
comprises James Mullins (Chairman) and Petr Lanin. The remuneration
committee met on two occasions during 2018, to discuss and approve
the extension of the Company's Bonus Plan, and approve the final
bonus allocations for the third year of the Company's Bonus Plan
ended 30 June 2018.
The Company seeks to publicly disclose the outcomes of all
shareholder votes in a clear and transparent manner, although
voting decisions (including votes withheld or abstentions) are not
posted on the Company's website or contained in the announcement
released via RNS. The outcomes of all shareholder votes are
publicly notified to the market via RNS and are available for
review in the Company's regulatory announcements section of its AIM
Rule 26 website.
If a significant proportion of independent votes were to be cast
against a resolution at any general meeting, the Board's policy
would be to engage with the shareholders concerned in order to
understand the reasons behind the voting results. Following this
process, the Board would make an appropriate public statement
regarding any different action it has taken, or will take, as a
result of the vote.
DIRECTORS' REPORT
FOR THE YEARED 31 DECEMBER 2018
The Directors present their report and audited financial
statements of the Company for the year ended 31 December 2018.
Principal activity and review of the business
TMT Investments Plc ("TMT Investments" or the "Company") was
incorporated under the laws of Jersey. The Company has been
established for the purpose of making investments in the TMT sector
where the Directors believe there is a potential for growth and the
creation of shareholder value. The Company primarily targets
companies operating in markets that the Directors believe have
strong growth potential and having the potential to become
multinational businesses. The Company can invest in any region of
the world.
Results and dividends
The gain for the year amounted to US$19,492,492 which includes a
profit on changes in fair value of financial assets at FVPL ("Fair
Value through profit and loss") of US$22,904,054. The Directors
continue to review the Company's investment pipeline and depending
on capital utilisation following the Wrike realisation, may
consider distributing some of the proceeds in the form of a special
dividend. The Company will keep shareholders update in this
regard.
Further information on the Company's results and financial
position is included in the financial statements.
Company listing
TMT is traded on the AIM market ("AIM") of the London Stock
Exchange. The Company's ticker is TMT. Information required by AIM
Rule 26 is available in the 'Investor Relations' section of the
Company's website at www.tmtinvestments.com.
Changes in share capital
The Company has one class of ordinary share that carries no
right to fixed income, and each share carries the right to one vote
at general meetings of the Company. As at 31 December 2018 and the
date of this report, the Company's issued share capital consists of
29,185,831 ordinary shares of no par value each in the Company.
Substantial shareholdings
The Directors are aware of the following shareholdings of 3% or
more of the issued share capital of the Company as of 26 June
2019.
Shareholders Number of ordinary % of issued
shares ordinary share
capital
----------------------------------------- ------------------- ----------------
Nelli Morgulchik (via Macmillan Trading
Company Limited) 7,240,544 24.81%
----------------------------------------- ------------------- ----------------
German Kaplun (via Ramify Consulting
Corp) 5,348,980 18.33%
----------------------------------------- ------------------- ----------------
Andrey Kareev (via Wissey Trade &
Invest Ltd) 5,000,000 17.13%
----------------------------------------- ------------------- ----------------
Nika Kirpichenko (via Eclectic Capital
Limited) 4,590,000 15.73%
----------------------------------------- ------------------- ----------------
Zaur Ganiev 2,453,152 8.40%
----------------------------------------- ------------------- ----------------
Others 4,553,155 15.60%
----------------------------------------- ------------------- ----------------
Total 29,185,831 100.00%
----------------------------------------- ------------------- ----------------
Update regarding the impact of the applicability of the City
Code on Takeovers and Mergers (the "Code") to the Company and the
existence of a Concert Party under the Code.
On the Company's admission to trading on AIM in December 2010
("Admission"), the Company was not subject to the Code, as it was
considered by the Panel on Takeovers and Mergers to have its place
of central management and control outside the UK, the Isle of Man
and the Channel Islands.
However, in September 2013, the 'residency test', in relation to
UK, Isle of Man and Channel Islands public companies, quoted on
AIM, was removed from the Code, and, therefore, the Company became
subject to the provisions of the Code at that time.
At the time of the Company coming under the Code, no one at the
Company nor its advisers considered the Code implications in
respect of the Company's material shareholders. It should be noted
that all material shareholders properly and timely disclosed to the
Company all required information on dealings in the Company shares,
pursuant to the FCA's Disclosure Guidance and Transparency Rules
and the AIM Rules for Companies.
As part of Strand Hanson's recent take-on due diligence to
become Nominated Adviser to the Company, Strand Hanson undertook a
review of the Company's shareholder structure and identified the
existence of a potential concert party as defined in the Code (the
"Concert Party").
The Company has subsequently agreed with the Panel on Takeovers
and Mergers that a Concert Party does currently exist, consisting
of the following shareholders:
Shareholder Details (Legal holder / No. of Ordinary % of issued
Beneficial holder) Shares share capital
Macmillan Trading Company Limited
Nelli Morgulchik (Adult daughter of
Alexander Morgulchik, TMT's Head of
Business Development) 7,240,544 24.81%
Ramify Consulting Corp.
German Kaplun (TMT's Head of Strategy) 5,348,980 18.33%
Wissey Trade & Invest Ltd ("Wissey")
Andrey Kareev 5,000,000 17.13%
Eclectic Capital Limited ("Eclectic")(1)
Nika Kirpichenko 4,590,000 15.73%
Natalia Inyutina (Adult daughter of
Artemii Iniutin)
Natalia Inyutina 727,156 2.49%
Vlada Kaplun (Adult Daughter of German
Kaplun)
Vlada Kaplun 363,578 1.25%
Marina Kedrova (Adult Daughter of German
Kaplun)
Marina Kedrova 363,578 1.25%
Artemii Iniutin, TMT's Head of Investments(2) - -
---------------- ---------------
Total 23,633,836 80.98%
Notes:
(1) The majority of the Ordinary Shares held by Eclectic were
previously held by Menostar Holdings Limited ("Menostar"), who
invested in the Company at the time of its Admission. As announced
by the Company on 22 June 2016, the Company was notified that
Menostar no longer had an interest in the Company and that Eclectic
was interested in 4,650,000 Ordinary Shares. The beneficial owner
of Eclectic is Nika Kirpichenko who is the wife of Dmitry
Kirpichenko, the beneficial owner of Menostar.
Wissey and Menostar (such Ordinary Shares now held by Eclectic)
both invested in the Company on its Admission and, along with
Eclectic, have invested in and/or been otherwise involved with
other business ventures associated with the two founders of the
Company Alexander Morgulchik and German Kaplun (the
"Founders").
(2) Artemii Iniutin also has a relationship with the Founders,
having invested in and/or been otherwise involved with other
business ventures associated with them. Whilst Mr Iniutin does not
currently hold any Ordinary Shares, he has in the past held
Ordinary Shares and, in the future, may acquire an interest in
Ordinary Shares. Mr Iniutin's name is also transliterated to Artyom
Inyutin, and has appeared as such in previous Company announcements
and other public disclosures.
Since September 2013, when the Company became subject to the
Code, the Concert Party has been interested in, in aggregate, more
than 50% of the Company's issued share capital at all times.
The Company will update this disclosure in future annual
financial reports and, if relevant, via RNS announcements.
Directors
During the financial year the following Directors held
office:
Yuri Mostovoy Non-executive Chairman
Alexander Selegenev Executive Director
James Joseph Mullins Independent Non-Executive Director
Petr Lanin Independent Non-Executive Director
The Directors' fees for 2018 were as follows:
Director
--------------------- -----------
Yuri Mostovoy US$50,000
Alexander Selegenev US$100,000
James Joseph Mullins US$26,690
Petr Lanin US$10,000
--------------------- -----------
Subsequent events post the period end
Further to the Company's announcement of 2 January 2019
regarding the disposal of its entire holding in Wrike, on 11
January 2019 the Company confirmed receipt of the initial net
consideration of US$22.3 million. In April 2019, the Company
received a further net cash consideration of US$54,414 in respect
of the US$0.3 million deferred consideration.
In January 2019, the Company invested US$200,000 in Central
American on-demand delivery service Hugo (www.hugoapp.com).
In February 2019, the Company received a total net cash
consideration of US$547,972 for the disposal of its entire
investment in The IRApp, Inc.
As announced on 26 February 2019, the Company invested US$2
million in MEL Science, an educational startup focused on early
science education, with a combination of modern technologies and
hands-on experience. The company's main current products are
monthly subscription to chemistry kits, and chemistry VR lessons
for schools (www.melscience.com).
In June 2019, the Company invested GBP200,000 in UK InsurTech
and HealthTech company HealthyHealth (www.healthyhealth.uk).
In June 2019, the Company's portfolio company PandaDoc, a
document automation SaaS provider (www.pandadoc.com), completed a
new equity funding round. The transaction represents a revaluation
uplift of US$0.98 million (or 79.5%) in the fair value of TMT's
investment in PandaDoc, compared to the latest reported amount as
of 31 December 2018.
Statement of Directors' responsibilities in respect of the
annual report and the financial statements
The Directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and International
Financial Reporting Standards ("IFRSs") as adopted by the European
Union.
The Companies (Jersey) Law 1991 (as amended) ("Companies Law")
requires the Directors to prepare financial statements for each
financial year. The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that its financial statements comply with the Companies Law.
They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
The Directors are responsible for the preparation of the
Directors' report and corporate governance statement. The Directors
are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
The Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Company and of the profit or loss for that
period. In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union ("EU") have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
Directors' responsibility statement
Each of the Directors, whose names are listed in the Directors
section above confirm that, to the best of each person's knowledge
and belief:
-- the financial statements, prepared in accordance with IFRSs
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company;
and
-- the Directors' report contained in the annual report includes
a true and fair review of the development and performance of the
business and the position of the Company.
Going concern
The Company's business activities together with the factors
which may impact its activities are described in the relevant
sections above. The financial position of the Company is described
in the financial statements and notes to the financial
statements.
The Directors have a reasonable expectation that the Company
will have adequate cash resources to continue in operational
existence for the foreseeable future, and for at least one year
from the date of approval of these financial statements and they
have therefore adopted the going concern basis in preparing the
financial statements.
Auditors
Each of the persons who is a Director at the date of approval of
this annual report confirms that:
-- so far as the Directors are aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- the Directors have taken steps that they ought to have taken
to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
On behalf of the Board of Directors
Alexander Selegenev
Executive Director
26 June 2019
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF TMT INVESTMENTS PLC
FOR THE YEARED 31 DECEMBER 2018
Opinion
We have audited the financial statements of TMT Investments Plc
(the 'Company') for the year ended 31 December 2018 which comprise
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the Statement of Cash
Flows and the notes to the financial statements, including a
summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2018 and of the company's profit for the
year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Our assessment of risks of material misstatements
We identified the following risks of material misstatement that
we believe had the greatest impact on our overall audit strategy
and scope, the allocation of resources in the audit, and directing
the efforts of the team. This is not a complete list of all risks
identified by our audit.
Key audit matter How our audit addressed the key audit matter
Management override of
controls We reviewed journals and cash transactions
Management override of to identify any unusual or exceptional transactions.
controls is deemed to
be a significant risk We investigated and tested a sample of items
in accordance with ISAs to ensure that amounts paid during the year
(UK) and presents the related to business expenses and that transactions
risk that management or were appropriate.
those charged with governance
could override the internal On the basis of our testing performed, we
controls of the company are satisfied that there were no instances
in preparing the financial of management override of controls.
statements resulting in
a material misstatement.
-------------------------------------------------------
Valuation of investments
The company is investing We obtained a copy of the directors' assessment
in pre-growth companies of the investment valuations. We reviewed
in a very competitive the revaluations of the investments in the
industry. Given the nature year to ensure that these were based on an
of the companies being appropriate valuation method to the underlying
invested in, it is not instrument and that the assumptions used
likely that all will be in the valuation were appropriate and had
a success. IFRS 9 has been correctly applied.
been implemented for the
first time and requires We obtained supporting documentation for
that all of these investments sales and purchases of investments during
are carried at fair value the year and confirmed the validity of the
in the financial statements. transactions and that they had been correctly
There is a risk that fair treated in the financial statements.
value has not been appropriately
applied for all of the The results of our testing did not indicate
investments and therefore any material misstatement in the investment
that the value of investments valuations included in the financial statements.
held at year-end may be
misstated.
-------------------------------------------------------
Our application of materiality
The scope and focus of our audit was influenced by our
assessment and application of materiality. We apply the concept of
materiality both in planning and performing our audit, and in
evaluating the effect of misstatements on our audit and on the
financial statements.
We define financial statement materiality as the magnitude by
which misstatements, including omissions, could influence the
economic decisions taken on the basis of the financial statements
by reasonable users.
We also determine a level of performance materiality which we
use to determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
Overall materiality: We determined materiality for the financial
statements as a whole to be $1,500,000.
For the Statement of Comprehensive Income, we established a
materiality level of $200,000
How we determined it: Based on the main key indicators, being
investments held at 31 December 2018 and profits before tax.
Rationale for benchmarks applied: We believe that these
benchmarks are appropriate due to the status of the company and the
nature of its activities.
Performance materiality: On the basis of our risk assessment,
together with our assessment of the company's control environment,
our judgement is that performance materiality for the financial
statements should be 75% of materiality, amounting to
$1,125,000.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial
statements as a whole, taking into account an understanding of the
structure of the company, its activities, the accounting processes
and controls, and the industry in which they operate. Our planned
audit testing was directed accordingly and was focused on areas
where we assessed there to be the highest risk of material
misstatement. During the audit we reassessed and re-evaluated audit
risks and tailored our approach accordingly.
The audit testing included substantive testing on significant
transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the
control environment, the effectiveness of controls and the
management of specific risk.
We communicated with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant findings, including any significant deficiencies in
internal control that we identify during the audit.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditors'
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information; we are
required to report that fact. We have nothing to report in this
regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies (Jersey) Law 1991 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement set out on page 33, the directors are responsible for the
preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal controls
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
Chartered Accountants
Statutory Auditor
Quadrant House
4 Thomas More Square
London
E1W 1YW
26 June 2019
FINANCIAL STATEMENTS
Statement of Comprehensive Income
Restated
for the
For the year year ended
ended 31/12/2018 31/12/2017
Notes USD USD
Gains on investments 3 22,168,230 16,509,456
------------------------------------------ ------ ------------------ ------------
22,168,230 16,509,456
Expenses
Bonus scheme payment charge 6 (1,530,251) (610,107)
Administrative expenses 5 (1,200,045) (1,039,957)
Other operating gain - 12,275
------------------------------------------ ------ ------------------ ------------
Operating gain 19,437,934 14,871,667
Net finance income 7 54,558 2,441
------------------------------------------ ------ ------------------ ------------
Gain before taxation 19,492,492 14,874,108
Taxation 8 - -
------------------------------------------ ------ ------------------ ------------
Gain attributable to equity shareholders 19,492,492 14,874,108
Total comprehensive income for the year 19,492,492 14,874,108
Gain per share
Basic and diluted gain per share (cents
per share) 9 67.58 53.61
------------------------------------------ ------ ------------------ ------------
Statement of Financial Position
Restated
At 31 December at 31 December
2018 2017
Notes USD USD
Non-current assets
Financial assets at FVPL 10 64,890,144 66,572,939
Total non-current assets 64,890,144 66,572,939
Current assets
Trade and other receivables 11 23,804,395 171,954
Cash and cash equivalents 12 3,270,088 985,692
Total current assets 27,074,483 1,157,646
Total assets 91,964,627 67,730,585
Current liabilities
Trade and other payables 13 1,702,942 148,056
Total current liabilities 1,702,942 148,056
----------------------------- ------ ------------------------ ----------- --------------------
Long term liabilities
Other payables 14 - 150,000
----------------------------- ------ ------------------------ ----------- --------------------
Total long-term liabilities - 150,000
----------------------------- ------ ------------------------ ----------- --------------------
Total liabilities 1,702,942 298,056
----------------------------- ------ ------------------------ ----------- --------------------
Net assets 90,261,685 67,432,529
----------------------------- ------ ------------------------ ----------- --------------------
Equity
Share capital 15 34,790,174 31,453,510
Retained profit (losses) 55,471,511 35,979,019
Total equity 90,261,685 67,432,529
----------------------------- ------ ------------------------ ----------- --------------------
The financial statements were approved by the Board of Directors
on 26 June 2019 and were signed on its behalf by:
Alexander Selegenev
Executive Director
Statement of Cash Flows
For the Restated
year for the
ended year ended
31/12/2018 31/12/2017
Notes USD USD
Operating activities
Operating gain 19,437,934 14,871,667
------------------------------------------------- ----- ------------ ------------
Adjustments for non-cash items:
Changes in fair value of financial assets
at FVPL 3 1,293,378 (16,462,187)
Amortised costs of convertible notes
receivable 3 651 2,638
Write-down of loans to portfolio companies 7 (27,240) -
20,704,723 (1,587,882)
------------------------------------------------- ----- ------------ ------------
Changes in working capital:
(Increase)/decrease in trade and other
receivables 11 (23,733,735) 54,753
Decrease/(Increase) in trade and other
payables 13 635,952 (414,010)
Net cash used in operating activities (2,393,060) (1,947,139)
------------------------------------------------- ----- ------------ ------------
Investing activities
Interest received 7 81,798 2,651
Purchase of financial assets at FVPL 10 (934,200) (350,000)
Proceeds from sale of financial assets at
FVPL 2,193,194 2,223,082
------------------------------------------------- ----- ------------ ------------
Net cash used in investing activities 1,340,792 1,875,733
------------------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from issue of shares 3,336,664 -
Net cash used in financing activities 3,336,664 -
------------------------------------------------- ----- ------------ ------------
Increase/(Decrease) in cash and cash equivalents 2,284,396 (71,406)
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the beginning
of the year 985,692 1,057,098
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the end of
the year 12 3,270,088 985,692
------------------------------------------------- ----- ------------ ------------
Statement of Changes in Equity
For the year ended 31 December 2017 and for the year ended 31
December 2018, USD
Share capital Fair value reserve Retained losses Total
Note USD USD USD USD
Balance at 01 January 2017 as
originally presented 31,453,510 29,393,774 (8,288,863) 52,558,421
------------------------------------- ----- -------------- ------------------- ---------------- -------------
Change in accounting policy due to
adoption IFRS 9 2.10 - (29,393,774) 29,393,774 -
------------------------------------- ----- -------------- ------------------- ---------------- -------------
Restated total equity at the
beginning of the financial year 31,453,510 - 21,104,911 52,558,421
------------------------------------- ----- -------------- ------------------- ---------------- -------------
Gain for the year (restated) 2.10 - - 14,874,108 14,874,108
Total comprehensive income for the
year - - 14,874,108 14,874,108
------------------------------------- ----- -------------- ------------------- ---------------- -------------
Balance at 31 December 2017 31,453,510 - 35,979,019 67,432,529
------------------------------------- ----- -------------- ------------------- ---------------- -------------
Gain for the year - - 19,492,492 19,492,492
Total comprehensive income for the
year - - 19,492,492 19,492,492
Transactions with owners in their
capacity as owners:
Issue of shares 3,336,664 - - 3,336,664
Balance at 31 December 2018 34,790,174 - 55,471,511 90,261,685
------------------------------------- ----- -------------- ------------------- ---------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2018
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company
incorporated in Jersey with its registered office at Queensway
House, Hilgrove Street, St Helier, JE1 1ES, Channel Islands.
The Company was incorporated and registered on 30 September 2010
in Jersey under the Companies (Jersey) Law 1991 (as amended) with
registration number 106628 under the name TMT Investments Limited.
The Company obtained consent from the Jersey Financial Services
Commission pursuant to the Control of Borrowing (Jersey) Order 1985
on 30 September 2010. On 1 December 2010 the Company re-registered
as a public company and changed its name to TMT Investments Plc.
The Company's ordinary shares were admitted to trading on the AIM
market of the London Stock Exchange on 1 December 2010.
The memorandum and articles of association of the Company do not
restrict its activities and therefore it has unlimited legal
capacity. The Company's ability to implement its Investment Policy
and achieve its desired returns will be limited by its ability to
identify and acquire suitable investments. Suitable investment
opportunities may not always be readily available.
The Company will seek to make investments in any region of the
world.
Financial statements of the Company are prepared by and approved
by the Directors in accordance with International Financial
Reporting Standards, International Accounting Standards and their
interpretations issued or adopted by the International Accounting
Standards Board as adopted by the European Union ("IFRSs"). The
Company's accounting reference date is 31 December.
2. Summary of significant accounting policies
2.1 Basis of presentation
The principal accounting policies applied by the Company in the
preparation of these financial statements are set out below and
have been applied consistently.
The financial statements have been prepared on a going concern
basis, under the historical cost basis as modified by the fair
value of financial assets at FVTPL, as explained in the accounting
policies below, and in accordance with IFRS. Historical cost is
generally based on the fair value of the consideration given in
exchange for assets.
2.2 Going concern
The Directors confirm that, after giving due consideration to
the financial position and expected cash flows of the Company; they
have a reasonable expectation that the Company will have adequate
cash resources to continue in operational existence for the
foreseeable future, and for at least one year from the date of
approval of these financial statements and they have therefore
adopted the going concern basis in preparing the financial
statements.
2.3 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
who is responsible for allocating resources and assessing
performance of the operating segments and which has been identified
as the Board that make strategic decisions. For the purposes of
IFRS 8 'Operating Segments' the Company currently has one segment,
being 'Investing in the TMT sector'.
Even though the Company only invests in the TMT sector, there
are still geographical disclosures that need to be made to comply
with IFRS 8 'Operating Segments'.
The Company analyses revenue and non-current financial assets
according to the geographical location of the investment (see note
4).
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of the Company are
measured in United States Dollars ('US dollars', 'USD' or 'US$'),
which is the Company's functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into US$ using the
exchange rates prevailing at the dates of the transactions.
Exchange differences arising from the translation at the year-end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the statement of comprehensive
income.
Conversion rates, USD
------------------------------------------------------
Currency Average
As at 31.12.2018 rate, 2018
----------------- ----------------- ------------
British pounds,
GBP 1.26936 1.308292
Euro, EUR 1.14400 1.167199
--------------------- ----------------- ------------
2.5 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand,
deposits held at call with banks, bank overdrafts and other
short-term highly liquid investments with maturities of three
months or less from the date of acquisition.
2.6 Financial assets
Recognition and measurement
The Company recognises financial assets when it becomes party to
the contractual provisions of the instrument. The Company manages
its investments with a view to profiting from the receipt of
dividends and changes in fair value of equity investments.
Financial assets of the Company comprise of unlisted equity
investments, convertible promissory notes and SAFEs. All the
financial assets are not for trading and are classified as
financial assets at FVTPL. Directly attributable transaction costs
are recognised in profit or loss as incurred.
Financial assets at fair value through profit or loss are
measured at fair value, and changes therein are recognised in
profit or loss.
When measuring the fair value of a financial instrument, the
Company uses market observable data as far as possible, including
relevant transactions during the year or shortly after the year
end, which gives an indication of fair value. The "price of recent
investment" methodology is used mainly for venture capital
investments, and the fair value is derived by reference to the most
recent equity financing round. Fair value change is only recognised
if that round involved a new external investor.
Fair values are categorised into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: The fair value of financial instruments traded in
active markets is based on quoted market prices at the end of the
reporting period. The quoted market price used for financial assets
held by the Company is the current bid price. These instruments are
included in level 1.
Level 2: The fair value of financial instruments that are not
traded in an active market is determined using valuation techniques
which maximise the use of observable market data and rely as little
as possible on entity-specific estimates. Specific valuation
techniques used to value financial instruments include the use of
quoted market prices or dealer quotes for similar instruments.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in level
3.
Financial assets that qualify as an associate, as 20% or more of
the voting rights are held by the company, are exempt from IAS 28
'Investments in Associates', as TMT is a venture capital
organisation. Such investments are therefore treated as financial
assets at FVTPL.
Income
Interest income from convertible notes receivable is recognised
as it accrues by reference to the principal outstanding and the
effective interest rate applicable, which is the rate that exactly
discounts the estimated future cash flows through the expected life
of the financial asset to the asset's carrying value.
2.7 Net finance income
Net finance income comprises interest income on deposits and
dividends from portfolio companies. Interest income is recognised
as it accrues in the statement of comprehensive income, using the
effective interest method.
2.8 Taxation
Deferred tax is provided in full using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that, at the time of the transaction, affects
neither accounting nor taxable profit or loss. Deferred tax is
determined using tax rates that are expected to apply when the
related deferred tax asset is realised or when the deferred tax
liability is settled. Deferred tax assets are recognised to the
extent that it is probable that future taxable profits will be
available against which the temporary differences can be
utilised.
2.9 Equity instruments
Ordinary shares are classified as equity. Costs directly
attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
2.10 New IFRSs and interpretations
The IASB has issued the following standards and interpretations
which have been endorsed by the European Union to be applied to
financial statements with periods commencing on or after the
following dates:
Effective for period beginning on or after
IFRS 9 Financial Instruments 1 January 2018
====== ===================== ==========================================
IFRS 9 sets out requirements for recognising and measuring
financial assets, financial liabilities and some contracts to buy
or sell non-financial items. This standard replaces IAS 39
Financial Instruments: Recognition and Measurement.
The details of new significant accounting policies and the
nature and effect of the changes to previous accounting policies
are set out below.
Under IFRS 9, on initial recognition, a financial asset is
classified as measured at: amortised cost; FVOCI - debt investment;
FVOCI - equity investment; or FVTPL. The classification of
financial assets under IFRS 9 is generally based on the business
model in which a financial asset is managed and its contractual
cash flow characteristics.
The following table and the accompanying notes below explain the
original measurement categories under IAS 39 and the new
measurement categories under IFRS 9 for each class of the Group's
financial assets as at 1 January 2018.
Financial assets Original New classification Original carrying Original carrying
classification under under IFRS9 amount under IAS39 amount under IFRS9
IAS 39
======================= ====================== ======================= ===================== =====================
USD USD
======================= ====================== ======================= ===================== =====================
Financial assets at Available-for-sale Financial assets at
FVPL financial assets FVPL 66,572,939 66,572,939
======================= ====================== ======================= ===================== =====================
The comparative information for the year ended 31 December 2017
has been restated to reflect the adoption of IFRS 9 using
retrospective approach.
The following table explains the changes in the treatment of
movements in fair value for the year ended 31 December 2017 in the
Statement of Comprehensive Income.
Original results Restated results
for the year for the year
ended 31/12/2017 ended 31/12/2017
USD USD
Gain (Loss) attributable to equity
shareholders (2,580,237) 14,874,108
Other comprehensive income for the
year:
Change in fair value of available-for-sale 17,454,345 -
financial assets
-------------------------------------------- ------------------ ------------------
Total comprehensive income for the
year 14,874,108 14,874,108
-------------------------------------------- ------------------ ------------------
In addition to the above changes the fair value reserve of
US$29,393,774 was reclassified to Retained Earnings as at 1 January
2017.
2.11 Accounting estimates and judgements
Estimates and judgements need to be regularly evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Company makes estimates and
assumptions concerning the future. The resulting accounting
estimates will, by definition, rarely equal the related actual
results.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
The estimates significant to the financial statements during the
year and at the year-end is the consideration of the fair value of
financial assets at FVPL as set out in the relevant accounting
policies shown above. A number of the financial assets at FVPL held
by the Company are at an early stage of their development. The
Company cannot yet carry out regular reliable fair value estimates
of some of these investments. Future events or transactions
involving the companies invested in may result in more accurate
valuations of their fair values (either upwards or downwards) which
may affect the Company's overall net asset value.
3 Gains (Losses) on investments
For the year ended 31/12/2018 Restated for the year ended 31/12/2017
USD USD
Gross interest income from convertible
notes receivable 33,761 49,907
Amortised costs of convertible notes
receivable (651) (2,638)
Net interest income from convertible notes
receivable 33,110 47,269
Gains (losses) on changes in fair value of
financial assets at FVPL 22,904,054 16,462,187
Success fee attributable to consultants (768,934) -
Total net gains (losses) on investments 22,168,230 16,509,456
------------------------------------------- ------------------------------ ---------------------------------------
4 Segmental analysis
Geographic information
The Company has investments in three principal geographical
areas - USA, Estonia and Israel.
Non-current financial assets
As at 31/12/2017
USA Israel BVI Estonia Russia Total
USD USD USD USD USD USD
-------------------- ----------- ---------- -------- ---------- ------- -----------
Equity investments 50,734,468 2,351,598 127,525 3,847,749 59,096 57,120,436
Convertible notes
& SAFE's 9,452,503 - - - - 9,452,503
-------------------- ----------- ---------- -------- ---------- ------- -----------
Total 60,186,971 2,351,598 127,525 3,847,749 59,096 66,572,939
-------------------- ----------- ---------- -------- ---------- ------- -----------
As at 31/12/2018
USA Israel BVI Estonia Russia Total
USD USD USD USD USD USD
-------------------- ----------- ---------- ---- ----------- ------- -----------
Equity investments 43,321,261 1,870,183 - 17,094,470 - 62,285,914
Convertible notes
& SAFEs 2,370,030 - - 234,200 - 2,604,230
Total 45,691,291 1,870,183 - 17,328,670 - 64,890,144
-------------------- ----------- ---------- ---- ----------- ------- -----------
5 Administrative expenses
Administrative expenses include the following amounts:
For the year ended 31/12/2018 For the year ended 31/12/2017
USD USD
------------------------------- ------------------------------ ------------------------------
Staff expenses (note 6) 591,741 583,127
Professional fees 303,649 221,717
Legal fees 39,053 5,073
Bank and LSE charges 23,973 14,112
Audit fees 25,881 28,473
Accounting fees 15,200 15,200
Rent 94,596 70,947
Other expenses 96,206 113,978
Currency exchange loss (gain) 9,746 (12,670)
------------------------------- ------------------------------ ------------------------------
1,200,045 1,039,957
------------------------------- ------------------------------ ------------------------------
6 Staff expenses
For the year ended 31/12/2018 For the year ended 31/12/2017
USD USD
-------------------- ------------------------------ ------------------------------
Directors' fees 186,261 186,647
Wages and salaries 405,480 396,480
591,741 583,127
-------------------- ------------------------------ ------------------------------
Wages and salaries shown above include salaries relating to
2018. Bonus Plan costs are not included in administrative expenses
and are shown separately.
The Bonus Plan payments charge for the year is analysed as
follows:
For the year ended 31/12/2018 For the year ended 31/12/2017
USD USD
------------- ------------------------------ ------------------------------
Directors 421,307 167,780
Other staff 1,108,944 442,327
1,530,251 610,107
------------- ------------------------------ ------------------------------
The Directors' fees and bonuses for 2018 were as follows:
For the year ended 31/12/2018 For the year ended 31/12/2017
USD USD
---------------------- ------------------------------ ------------------------------
Alexander Selegenev 399,898 219,704
Yuri Mostovoy 170,980 98,809
James Joseph Mullins 26,690 25,914
Petr Lanin 10,000 10,000
---------------------- ------------------------------ ------------------------------
607,568 354,427
---------------------- ------------------------------ ------------------------------
The Directors' fees shown above are all classified as 'short
term employment benefits' under International Accounting Standard
24. The Directors do not receive any pension contributions or other
benefits. The average number of staff employed (excluding
Directors) by the Company during the year was 5 (2017: 5).
Key management personnel of the Company are defined as those
persons having authority and responsibility for the planning,
directing and controlling the activities of the Company, directly
or indirectly. Key management of the Company are therefore
considered to be the Directors of the Company. There were no
transactions with the key management, other than their fees,
bonuses, and reimbursement of business expenses.
7 Net finance income
For the year ended 31/12/2018 For the year ended 31/12/2017
USD USD
-------------------------------------------- ------------------------------ ------------------------------
Interest income 12,646 2,441
Dividends received 69,152 -
Write-down of loans to portfolio companies (27,240) -
54,558 2,441
-------------------------------------------- ------------------------------ ------------------------------
8 Income tax expense
For the year ended 31/12/2018 For the year ended 31/12/2017
USD USD
---------------------- ------------------------------ ------------------------------
Current taxes
Current year - -
---------------------- ------------------------------ ------------------------------
Deferred taxes
Deferred income taxes - -
---------------------- ------------------------------ ------------------------------
- -
---------------------- ------------------------------ ------------------------------
The Company is incorporated in Jersey. No tax reconciliation
note has been presented as the income tax rate for Jersey companies
is 0%.
9 Gain (Loss) per share
The calculation of basic gain per share is based upon the net
gain for the year ended 31 December 2018 attributable to the
ordinary shareholders of US$19,492,492 (2017: net gain of
US$14,874,108) and the weighted average number of ordinary shares
outstanding calculated as follows:
Gain (Loss) per share For the year ended 31/12/2018 Restated for the year ended 31/12/2017
------------------------------------------- ------------------------------ ---------------------------------------
Basic gain (loss) per share (cents per
share) 67.58 53.61
Gain (Loss) attributable to equity holders
of the entity 19,492,492 14,874,108
------------------------------------------- ------------------------------ ---------------------------------------
The weighted average number of ordinary shares outstanding
before and after adjustment for the effects of all dilutive
potential ordinary shares calculated as follows:
(in number of shares weighted during the year For the year ended 31/12/2018 For the year ended 31/12/2017
outstanding)
---------------------------------------------------- ------------------------------ ------------------------------
Weighted average number of shares in issue
Ordinary shares 28,842,391 27,744,962
28,842,391 27,744,962
---------------------------------------------------- ------------------------------ ------------------------------
Effect of dilutive potential ordinary shares
Share options - -
---------------------------------------------------- ------------------------------ ------------------------------
Weighted average of shares for the year (fully
diluted) 28,842,391 27,744,962
---------------------------------------------------- ------------------------------ ------------------------------
10 Non-current financial assets
At 31 December 2018 At 31 December 2017
Financial assets at FVPL, USD:
Investments in equity shares (i)
- unlisted shares 62,285,914 57,120,436
Convertible notes receivable (ii)
- promissory notes 1,404,230 7,052,503
- SAFEs 1,200,000 2,400,000
----------------------------------- -------------------- --------------------
64,890,144 66,572,939
----------------------------------- -------------------- --------------------
Reconciliation of fair value measurements of non-current
financial assets:
Financial assets at FVPL Total
----------------------------------------------- ------------------------------ -------------
Unlisted Convertible
shares notes & SAFEs
USD USD USD
----------------------------------------------- ------------- --------------- -------------
Balance as at 31 December 2016 48,335,876 3,650,596 51,986,472
------------------------------------------------ ------------- --------------- -------------
Total gains or losses in 2017:
- changes in fair value 10,456,569 6,104,545 16,561,114
Purchases (including consulting & legal fees) 294,506 300,000 594,506
Disposal of investment (carrying value) (2,067,626) (502,638) (2,570,264)
Conversion and other movements 101,111 (100,000) 1,111
------------------------------------------------ ------------- --------------- -------------
Balance as at 31 December 2017 57,120,436 9,452,503 66,572,939
------------------------------------------------ ------------- --------------- -------------
Total gains or losses in 2018:
- changes in fair value 22,974,039 (69,985) 22,904,054
Purchases (including consulting & legal fees) 74,053 934,200 1,008,253
Disposal of investment (carrying value) (25,464,451) (130,651) (25,595,102)
Conversion and other movements 7,581,837 (7,581,837) -
------------------------------------------------ ------------- --------------- -------------
Balance as at 31 December 2018 62,285,914 2,604,230 64,890,144
------------------------------------------------ ------------- --------------- -------------
Financial assets at fair value through profit or loss are
measured at fair value, and changes therein are recognised in
profit or loss.
When measuring the fair value of a financial instrument, the
Company uses market observable data as far as possible, including
relevant transactions during the year or shortly after the year
end, which gives an indication of fair value. The "price of recent
investment" methodology is used mainly for venture capital
investments, and the fair value is derived by reference to the most
recent equity financing round. Fair value change is only recognised
if that round involved a new external investor.
(i) Equity investments as at 31 December 2018:
Additions Gain/loss
to equity from changes
Value investments Conversions in fair
at during from value of Value
Date 1 Jan the loan equity at 31 Equity
Investee of initial 2018, period, notes, investments, Disposals, Dec 2018, stake
company investment USD USD USD USD USD USD owned
--------------- ------------ ------------ ------------ ------------ ------------- ------------- ------------ -------
Unicell 15.09.2011 1,455,088 - - (475,088) - 980,000 2.36%
DepositPhotos 26.07.2011 10,836,105 - - - - 10,836,105 16.41%
RollApp 19.08.2011 600,000 - - (600,000) - - 10.00%
Wanelo 21.11.2011 5,369,400 - - (3,543,804) - 1,825,596 4.69%
Backblaze 24.07.2012 10,533,334 - - - - 10,533,334 12.78%
UM Liquidating
Trust 15.07.2014 29,273 - - (29,273) - - 5.89%
Favim 24.10.2012 127,525 - - (127,525) - 20.00%
Adinch 19.02.2013 300,000 - - (300,000) - - 22.43%
Wrike 12.06.2012 8,395,508 - - 15,005,750 (23,401,258) - 0.00%
Oriense 27.01.2014 59,096 - - (59,096) - - 5.45%
E2C 15.02.2014 136,781 - - - - 136,781 5.51%
Drippler 01.05.2014 9,587 - - (3,761) (2,566) 3,260 0.00%
Remot3.it 13.06.2014 750,000 5,398 27,277 8,835 - 791,510 1.68%
Le Tote 21.07.2014 1,997,073 - - - - 1,997,073 1.32%
Anews 25.08.2014 1,000,000 - - - - 1,000,000 9.41%
Twtrland 01.09.2014 155,000 - - - - 155,000 3.04%
Drupe 02.09.2014 595,142 - - - - 595,142 7.46%
Bolt 15.09.2014 3,797,234 - - 13,297,236 - 17,094,470 1.77%
Pipedrive 30.07.2012 9,127,249 - - 3,139,961 (2,010,112) 10,257,098 2.41%
PandaDoc 11.07.2014 1,233,770 - - - - 1,233,770 1.76%
VitalFields 20.12.2013 50,515 - - - (50,515) - 0.00%
The IRApp 16.08.2016 300,000 - - 247,972 - 547,972 4.04%
Try the
World 11.10.2016 18,250 - - (18,250) - - 0.00%
FullContact 11.01.2018 244,506 - - - - 244,506 0.21%
ScentBird 13.04.2015 - 54,838 6,954,545 (3,668,979) - 3,340,404 4.01%
Workiz 16.05.2016 - 13,817 150,000 100,061 - 263,878 2.93%
Vinebox 06.05.2016 - - 450,015 - - 450,015 2.41%
Total 57,120,436 74,053 7,581,837 22,974,039 (25,464,451) 62,285,914
------------ ------------ ------------ ------------- ------------- ------------
(ii) Convertible loan notes as at 31 December 2018:
Additions Gain/loss
to from changes
convertible in fair
Value at note value of
Date of 1 Jan investments Amortised equity Value at
Investee initial 2018, during the costs, Conversions, investments, 31 Dec Term, Interest
company investment USD period, USD USD USD USD 2018, USD years rate, %
----------- ------------ ---------- ------------ ---------- ------------- ------------- ---------- ------ ---------
Ninua 08.06.2011 250,000 - - - (250,000) - 1 5.00%
Sharethis 26.03.2013 570,126 - (96) - - 570,030 5.0 1.09%
KitApps 10.07.2013 600,000 - - - - 600,000 1.0 2.00%
ScentBird 13.04.2015 5,454,545 - - (5,454,545) - - 2.0 4.00%
Remot3.it 05.10.2015 27,277 - - (27,277) - - 1.0 7.70%
Workiz 16.05.2016 150,555 - (555) (150,000) - - 2.0 4.00%
eAgronom 31.08.2018 - 234,200 - - - 234,200 - 3.00%
------------ ----------
Total 7,052,503 234,200 (651) (5,631,822) (250,000) 1,404,230
------------------------- ---------- ------------ ---------- ------------- ------------- ---------- ------ ---------
(iii) SAFEs as at 31 December 2018:
Additions Gain/loss
to from changes
convertible in fair
note value of
Date of Value at 1 investments SAFE Value at 31
Investee initial Jan 2018, during the Conversions, investments, Disposals, Dec 2018,
company investment USD period, USD USD USD USD USD
-------------- ------------- ------------- ------------ ------------- ------------- ------------- -------------
ScentBird 13.04.2015 1,500,000 - (1,500,000) - - -
Vinebox 06.05.2016 300,000 - (450,015) 150,015 - -
Sixa 28.07.2016 600,000 300,000 - - - 900,000
FriendlyData 21.07.2018 - 100,000 - 30,000 (130,000) -
Spinbackup 17.12.2018 - 300,000 - - - 300,000
------------
Total 2,400,000 700,000 (1,950,015) 180,015 (130,000) 1,200,000
----------------------------- ------------- ------------ ------------- ------------- ------------- -------------
11 Trade and other receivables
At 31 December 2018 At 31 December 2017
USD USD
----------------------------------------- -------------------- --------------------
Prepayments 311,839 14,647
Other receivables 23,401,258 -
Interest receivable on promissory notes 89,683 142,217
Interest receivable on deposits 1,615 90
Loans to portfolio companies - 15,000
23,804,395 171,954
----------------------------------------- -------------------- --------------------
Other receivables include the total net consideration due to the
Company for the disposal of its entire holding in Wrike Inc. on 31
December 2018 for US$22.6 million, US$22.35m of which has been
received post the year end and US$0.25 million is receivable as
deferred consideration that will be payable subject to certain
adjustments over a period of 18 months.
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2018 include
cash on hand and in banks, deposits, net of outstanding bank
overdrafts. The effective interest rate at 31 December 2018 was
1.25%.
Cash and cash equivalents comprise the following:
At 31 December 2018 At 31 December 2017
USD USD
--------------- -------------------- --------------------
Deposits 1,500,000 150,000
Bank balances 1,770,088 835,692
--------------- -------------------- --------------------
3,270,088 985,692
--------------- -------------------- --------------------
The following table represents an analysis of cash and
equivalents by rating agency designation based on Fitch rating or
their equivalent:
At 31 December 2018 At 31 December 2017
USD USD
--------------- -------------------- --------------------
Bank balances
BBB+ rating 1,770,088 835,692
--------------- -------------------- --------------------
1,770,088 835,692
--------------- -------------------- --------------------
Deposits
BBB rating 1,500,000 150,000
--------------- -------------------- --------------------
1,500,000 150,000
--------------- -------------------- --------------------
Total 3,270,088 985,692
--------------- -------------------- --------------------
13 Trade and other payables
At 31 December 2018 At 31 December 2017
USD USD
--------------------------- -------------------- --------------------
Salaries payable 162,500 10,600
Directors' fees payable 9,183
Bonuses payable 720,632 -
Trade payables 789,265 43,995
Other current liabilities 100 -
Accruals 21,262 93,461
--------------------------- -------------------- --------------------
1,702,942 148,056
--------------------------- -------------------- --------------------
14 Other payables
At 31 December 2018 At 31 December 2017
USD USD
------------------------------- --------------------- --------------------
Other non-current liabilities - 150,000
------------------------------- ---------------------- --------------------
- 150,000
---------------------- ------------------------------ --------------------
15 Share capital
On 31 December 2018 the Company had an authorised share capital
of unlimited ordinary shares of no par value and had issued
ordinary share capital of:
At 31 December 2018 At 31 December 2017
USD USD
----------------------------- -------------------- --------------------
Share capital 34,790,174 31,453,510
Issued capital comprises: Number Number
Fully paid ordinary shares 29,185,831 27,744,962
----------------------------- -------------------- --------------------
Number of shares Share capital,
USD
----------------------------- -------------------- ----------------------
Balance at 31 December 2017 27,744,962 27,744,962
Issue of ordinary shares 1,440,869 -
Balance at 31 December 2018 29,185,831 27,744,962
----------------------------- -------------------- ----------------------
There have been no changes to the Company's ordinary share
capital between the year-end date and the date of approval of these
financial statements.
16 Capital management
The capital structure of the Company consists of equity share
capital, reserves, and retained losses.
The Board's policy is to maintain a strong capital base so as to
maintain investor and market confidence and to enable the
successful future development of the business.
The Company is not subject to externally imposed capital
requirements.
No changes were made to the objectives, policies and process for
managing capital during the year.
17 Financial risk management and financial instruments
The Company has identified the following risks arising from its
activities and has established policies and procedures to manage
these risks. The Company's principal financial assets are cash and
cash equivalents, investments in equity shares, and convertible
notes receivable.
Credit risk
As at 31 December 2018 the largest exposure to credit risk
related to cash and cash equivalents (US$3,270,088) and other
receivables (US$23,804,395). The exposure risk is reduced because
the counterparties are banks with high credit ratings ("BBB"
Liquidity banks) assigned by international credit rating agencies.
The Directors intend to continue to spread the risk by holding the
Company's cash reserves in more than one financial institution.
(i) Exposure to credit risk
The carrying amount of the following assets represents the
maximum credit exposure. The maximum exposure to credit risk as at
31 December is as follows:
At 31 December 2018 At 31 December 2017
USD USD
-------------------------------------- -------------------- --------------------
Convertible notes receivable & SAFEs 2,604,230 9,452,503
Trade and other receivables 23,804,395 171,954
Cash and cash equivalents 3,270,088 985,692
-------------------------------------- -------------------- --------------------
29,678,713 10,610,149
-------------------------------------- -------------------- --------------------
Market risk
The Company's financial assets are classified as financial
assets at FVPL. The measurement of the Company's investments in
equity shares and convertible notes is largely dependent on the
underlying trading performance of the investee companies, but the
valuation and other items in the financial statements can also be
affected by the interest rate and fluctuations in the exchange
rate.
Interest rate risk
Changes in interest rates impact primarily cash and cash
equivalents by changing either their fair value (fixed rate
deposits) or their future cash flows (variable rate deposits).
Management does not have a formal policy of determining how much of
the Company's exposure should be to fixed or variable rates.
As at 31 December 2018, the Company had a cash deposit of
US$1,500,000, earning a variable rate of interest. The Board
monitors the interest rates available in the market to ensure that
returns are maximised.
Foreign currency risk management
The Company is exposed to foreign currency risks on investments
and salary and director remuneration payments that are denominated
in a currency other than the functional currency of the Company.
The currency giving rise to this risk is primarily GBP and EUR. The
exposure to foreign currency risk as at 31 December 2018 was as
follows:
For the year For the For the year For the year
ended 31/12/2018 year ended ended 31/12/2017 ended 31/12/2017
31/12/2018
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 182,220 820 27,726 1,200
Current liabilities
Trade and other payables (139,547) - (25,389) -
------------------------------- ------------------ ------------ ------------------ ------------------
Net (short) long position 42,673 820 2,336 1,200
------------------------------- ------------------ ------------ ------------------ ------------------
Net exposure currency 33,618 717 1,738 1,005
------------------------------- ------------------ ------------ ------------------ ------------------
Net exposure currency
(assuming a 10% movement
in exchange rates) 38,406 738 2,103 1,080
------------------------------- ------------------ ------------ ------------------ ------------------
Impact on exchange movements
in the statement of
comprehensive income 4,267 82 234 120
------------------------------- ------------------ ------------ ------------------ ------------------
The foreign exchange rates of the USD at 31 December were as
follows:
31/12/2018 31/12/2017
----------------------- ----------- -----------
Currency
British pounds, GBP 1.26936 1.3441
Euro, EUR 1.14400 1.1942
----------------------- ----------- -----------
This analysis assumes that all other variables, in particular
interest rates, remain constant.
Fair value and liquidity risk management
The Company's approach to managing liquidity is to ensure that
it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company.
The Company has low liquidity risk due to maintaining adequate
banking facilities, by continuously monitoring actual cash flows
and by matching the maturity profiles of financial assets and
current liabilities.
As at 31 December 2018, the cash and equivalents of the Company
were US$3,270,088.
The following are the maturities of current liabilities as at 31
December 2018:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
--------------------------- ---------------- ---------------- ---------- ------------------
Salaries payable 162,500 162,500 - -
Directors' fees payable 9,183 9,183
Bonuses payable 720,632 720,632
Trade payables 789,265 789,265 - -
Other current liabilities 100 100 - -
Accruals 21,262 21,262
1,702,942 1,702,942 - -
--------------------------- ---------------- ---------------- ---------- ------------------
The following table analyses the fair values of financial
instruments measured at fair value by the level in the fair value
hierarchy as at 31 December 2018:
Level 1 Level 2 Level 3 Total
USD USD USD USD
-------------------------- --------- ----------- -------- -----------
Financial assets
Financial assets at FVPL - 64,890,144 - 64,890,144
64,890,144 64,890,144
------------------------------------ ----------- -------- -----------
18 Related party transactions
Since May 2012, TMT's Moscow-based staff have been located in an
office that belongs to a company ("Orgtekhnika") controlled by Mr.
Alexander Morgulchik and Mr. German Kaplun, the Company's senior
managers. German Kaplun also owns 18.33% of the issued share
capital of TMT. Thus, Orgtekhnika is considered a related party.
Together with other related expenses (support personnel, company
car, security services, etc.), the total office rent costs to TMT
from 1 April 2017 has been US$7,883 per month.
On 29 March 2018, the Company announced that it had raised
US$3.5 million (before expenses) from new and existing
shareholders, at a price of US$2.43 per share. The following
related parties participated in the relevant share
subscription:
No. of subscription Consideration
shares (US$)
Alexander Selegenev 20,576 50,000
Macmillan Trading Company Limited 144,033 350,000
As announced on 16 August 2018, the Company extended its Bonus
Plan for the next three years (until 30 June 2021). The Company's
Directors Yuri Mostovoy and Alexander Selegenev, and German Kaplun,
who is a substantial shareholder, are participants in the Company's
Bonus Plan.
The Company's Directors receive fees and bonuses from the
Company, details of which can be found in Note 6.
19 Subsequent events
Further to the Company's announcement of 2 January 2019
regarding the disposal of its entire holding in Wrike, on 11
January 2019 the Company confirmed receipt of the initial net
consideration of US$22.3 million. In April 2019, the Company
received a further net cash consideration of US$54,414 in respect
of the US$0.3 million deferred consideration.
In January 2019, the Company invested US$200,000 in Central
American on-demand delivery service Hugo (www.hugoapp.com).
In February 2019, the Company received a total net cash
consideration of US$547,972 for the disposal of its entire
investment in The IRApp, Inc.
As announced on 26 February 2019, the Company invested US$2
million in MEL Science, an educational startup focused on early
science education, with a combination of modern technologies and
hands-on experience. The company's main current products are
monthly subscription to chemistry kits, and chemistry VR lessons
for schools (www.melscience.com).
In June 2019, the Company invested GBP200,000 in UK InsurTech
and HealthTech company HealthyHealth (www.healthyhealth.uk).
In June 2019, the Company's portfolio company PandaDoc, a
document automation SaaS provider (www.pandadoc.com), completed a
new equity funding round. The transaction represents a revaluation
uplift of US$0.98 million (or 79.5%) in the fair value of TMT's
investment in PandaDoc, compared to the latest reported amount as
of 31 December 2018.
20 Control
The Company is not controlled by any one party. Details of
significant shareholders are shown in the Directors' Report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BLGDLIUDBGCL
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