REG - TMT Investments - Final Results and Notice of AGM
25/03/2022 07:16
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RNS Number : 9821F TMT Investments PLC 25 March 2022
25 March 2022
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2021 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 2021.
Highlights:
· NAV per share of US$9.00 (up 47.5% from US$6.10 as of 31 December
2020)
· Total NAV of US$283.1 million (up from US$177.9 million as of 31
December 2020)
· 5-year IRR of 38.2% per annum
· US$18.5 million of net cash proceeds from exits during 2021
· US$40.5 million of investments across 31 new and existing companies
in 2021
· US$19.3 million of new equity capital raised in October 2021, at
US$8.50 per share
· Diversified global portfolio of over 50 companies focused mainly
around big data/cloud, e-commerce, marketplaces, EdTech, FinTech, SaaS
(software-as-a-service) and FoodTech solutions
· US$6.7 million of investments post year-end
· Negative effect of the military conflict in Ukraine on portfolio
companies is limited (US$4.6 million of potential new write-downs currently
identified), with future impact dependent on how the situation unfolds in
coming months
· US$18.6 million in cash reserves as of 22 March 2021
Alexander Selegenev, Executive Director of TMT, commented:
"2021 was a very strong year for TMT, which saw excellent revaluations on its
investments in Bolt and PandaDoc, a successful fundraise from current and new
shareholders to fund new investments, and the IPO of its portfolio company
Backblaze on Nasdaq. It was also one of our busiest years for making new
investments, with US$40.5m deployed across 31 new and existing companies in
2021.
Whilst TMT specialises in investing in earlier-stage technology companies,
typically at pre-Series A and Series A stages, a material proportion of TMT's
current NAV is now heavily weighted towards three large and globally
established companies: Bolt, Backblaze and PandaDoc. This is thanks to their
excellent growth, having been early-stage start-ups when TMT first invested.
These are now well funded companies capable of raising large sums (in 2021-22
Bolt raised €1.23bn, Backblaze raised US$100m and PandaDoc raised an
undisclosed Series C round), which are still expanding and represent
approximately two thirds of TMT's total portfolio value. The remainder of the
portfolio is highly diversified among over 50 early and mid-stage companies,
as part of planning the next generation of the portfolio's potential winners
across big data/cloud, e-commerce, marketplaces, EdTech, FinTech, SaaS
(software-as-a-service) and FoodTech solutions.
Our portfolio's combination of globally established sector leaders and a
highly diversified mix of companies provides a favourably hedged position
against a backdrop of heightened global uncertainty. Many of TMT's investees
entered this period of volatility with freshly raised funds and continued to
successfully grow their businesses. Some of these are already showing strong
promise and have been revalued significantly higher since TMT's original
investment.
Investing globally is one of TMT's key advantages and differentiators,
enabling TMT to seek the best risk / reward investment opportunities worldwide
for its shareholders. As technology business models and trends start in one
region and spread to or are replicated in others, they may well command
significantly different valuation levels based on geography and stage of
development. The significant valuation disparities that can arise provide
attractive entry points into companies. This investment approach is already
bearing fruit, with the successful exit of Central American food delivery app
Hugo and the strong growth of cloud kitchen and virtual food brand operator
Muncher in Latin America being good examples.
TMT seeks to pay special attention to not "overpaying" when it makes an
investment, preferring to reject an investment opportunity where it considers
the risk / reward balance is not sufficiently attractive given the stage of an
investee's development. In parallel, TMT has an active policy of seeking to
reduce the value of underperforming investees as soon as there is enough
evidence to support such a decision. This combined approach has led to a
well-maintained portfolio.
Despite the recent volatility, investors continue to be interested in very
high-quality technology businesses, and TMT will continue to identify such
opportunities selectively and at appropriate valuation levels, whilst
employing an extremely cautious general investment approach for the time
being. The Company expects a number of positive revaluations across its
portfolio in 2022 and will update shareholders on relevant developments as
appropriate."
Notice of AGM
The Company's Annual General Meeting will be held on 23 May 2022 at 13 Castle
Street, St. Helier, Jersey, JE1 1ES at 14:30 (BST).
Copies of the Annual Report and Accounts for the year ended 31 December 2021
and Notice of AGM will shortly be available on the Company's website at
www.tmtinvestments.com (http://www.tmtinvestments.com) .
Directorate Change
Petr Lanin has advised the Company that he will not offer himself for
re-election as a director at the Company's forthcoming Annual General Meeting
and accordingly will resign from the Board with effect from the date of the
Annual General Meeting. The Company will be appointing an additional
independent non-executive director to replace Mr Lanin, and it is expected
that such appointment will be announced prior to or at the time of the Annual
General Meeting.
For further information contact:
TMT Investments Plc +44 (0)1534 281 800
Alexander Selegenev (Computershare - Company Secretary)
Executive Director
www.tmtinvestments.com (http://www.tmtinvestments.com) alexander.selegenev@tmtinvestments.com
(mailto:alexander.selegenev@tmtinvestments.com)
Strand Hanson Limited +44 (0)20 7409 3494
(Nominated Adviser)
James Bellman / James Dance
Cenkos Securities plc +44 (0)20 7397 8900
(Joint Broker)
Ben Jeynes
Hybridan LLP +44 (0)20 3764 2341
(Joint Broker)
Claire Louise Noyce
Kinlan Communications +44 (0)20 7638 3435
David Hothersall davidh@kinlan.net (mailto: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 a current
investment portfolio of over 50 companies and net assets of US$283 million as
of 31 December 2021. 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 (http://www.tmtinvestments.com) .
Twitter (https://twitter.com/TMT_PLC)
LinkedIn (http://www.linkedin.com/company/tmt-investments-plc)
Facebook (https://www.facebook.com/TmtInvestmentsPlc/)
EXECUTIVE DIRECTOR'S STATEMENT
2021 saw continued growth across the TMT Investments Plc ("TMT" or the
"Company") portfolio, with structural business and economic drivers continuing
to benefit the Company's global portfolio of high-growth technology companies.
The period also saw sustained investor interest in the high-growth potential
of business models based on digital, online and remote technologies, resulting
in a significant increase in fundraising activities by technology companies
around the world. These two factors resulted in a continued trend of
positive revaluations and cash realisations across TMT's portfolio.
Following the disposal of the Company's investments in Pipedrive for US$41
million at the end of 2020 and Depositphotos for US$14 million in 2021, we
were busy directing those proceeds towards investing in successful existing
investees as well as new companies, at mainly Series A stages, that met our
investment criteria of having outstanding management teams, a product or
service that can be scaled up globally, fast revenue growth, and viable exit
opportunities.
NAV per share
The Company's NAV per share increased by 47.5% in 2021 to US$9.00 (from
US$6.10 as of 31 December 2020), mainly as a result of the significant upward
revaluation of TMT's investments in Bolt and PandaDoc.
Operating expenses
In 2021, the Company's administrative expenses of US$1,924,650 were above the
corresponding 2020 levels (US$1,234,005), reflecting the Company's
significantly increased level of investment and business development
activities.
2021 Bonus
The total amount of bonus accrued for the year ended 31 December 2021 was
US$9,676,043 which was above the corresponding 2020 level (US$6,086,948).
Previous years' bonus pool adjustment
Due to a technical error in the calculation of the bonus pools in the bonus
periods from July 2016 to December 2020 (the "Affected Bonus Periods"), the
bonus pools in each of the Affected Bonus Periods were calculated on the basis
of the opening position being the previous period's "adjusted NAV before
bonus". Pursuant to the terms of the Company's bonus plan, each of the
Affected Bonus Periods should have seen the calculation assess the annual
growth in NAV from an opening position of "adjusted NAV after bonus".
As a result, the amount of bonuses actually accrued in the Affected Bonus
Periods were understated by an aggregate of US$372,556 (the "Underpaid
Bonus"), of which US$93,972 related to directors of the Company. As the total
amount of the Underpaid Bonus is considered immaterial, the error has been
corrected, and the Underpaid Bonus has been included in the current financial
statements as an additional charge for the current period.
Financial position
On 4 October 2021, the Company announced that it had raised US$19.3 million
(before expenses) from new and existing shareholders, at a price of US$8.50
per share. The Company was pleased to note this vote of confidence, from
current and new shareholders, in the Company's investment strategy.
As of 31 December 2021, the Company had no financial debt and cash reserves of
approximately US$25.5 million. As of 22 March 2022, the Company had cash
reserves of approximately US$18.6 million, as a result of the deployment of
capital into new investments in the period after 31 December 2021.
Outlook
TMT has a diversified investment portfolio of over 50 companies, focused
primarily on big data/cloud, e-commerce, SaaS (software-as-a-service),
marketplaces, FinTech, EdTech and FoodTech, most of which continue to benefit
from the accelerated shift to online consumer habits and remote working.
Indeed, some of the portfolio companies recently added to TMT's portfolio have
already raised further funds since TMT's investment at significantly higher
valuation levels. The general trends in the digital technology sector
continue to generate exciting new investment and exit opportunities and the
tech venture capital investment space continues to be one of the few
beneficiaries of the new market environment created by COVID-19.
The sizeable correction in the valuations of publicly-traded technology
companies that took place in the beginning of 2022 has had a mixed effect on
the Company. Whilst the valuation of NASDAQ-traded Backblaze (TMT's second
largest portfolio holding) has been directly negatively affected, the
Company's largest investee, Bolt, in January 2022 raised its largest equity
round to date at an over 50% premium to the valuation achieved just five
months prior. As for the rest of the portfolio, many of the Company's
investees entered that period of volatility with freshly raised funds and
continued to successfully grow their businesses.
According to the BVP Cloud Index (https://cloudindex.bvp.com/
(https://cloudindex.bvp.com/) ), median valuation multiples for the relevant
companies have broadly returned to the more sustainable levels seen in
2014-2019. While this period of uncertainty has not been long enough to have
a broad and sustained negative effect on the underlying businesses of
technology companies, the recent public market correction has started to be
reflected in reduced valuations of earlier stage privately held start-ups.
This is generally beneficial to TMT as an investor specialising in earlier
stage technology companies, allowing for more attractive investment entry
points.
The recent military conflict in Ukraine, followed by the broad sanctions
against Russia, have undoubtedly added to the global market uncertainty. TMT
invests globally and its portfolio is highly diversified in terms of revenue
origin from its underlying companies. Given the international nature of
online/digital businesses, a small number of the Company's earlier stage
portfolio companies have various degrees of exposure to Russia and Ukraine.
TMT has identified eight of its portfolio companies that are most likely to be
negatively affected by the military conflict in Ukraine. If the conflict had
taken place in 2021, TMT would have reduced the fair value of the relevant
investees by a total of approximately US$4.6 million (see the Subsequent
Events section for further details).
All these events have added to a high level of share price volatility across
all equities, to which the technology sector has not been immune. The
current global situation is affecting the wider global economy, and the
ultimate effect on the global tech sector and its participants will depend on
how global dynamics unfold in the coming months.
Despite the recent volatility, investors continue to be interested in very
high quality technology businesses, and TMT will continue to identify such
opportunities very selectively and at appropriate valuation levels, whilst
employing an extremely cautious general investment approach for the time
being. The Company expects a number of positive revaluations across its
portfolio in 2022 and will update shareholders on relevant developments as
appropriate.
Alexander Selegenev
Executive Director
24 March 2022
CASE STUDIES
Bolt
Bolt is a ride-hailing and food delivery service which is transforming
mobility worldwide (www.bolt.eu (http://www.bolt.eu) ). In 2021, Bolt expanded
strongly and its full suite of mobility and delivery products are currently
used by more than 100 million customers in 45 countries and over 400 cities
across Europe and Africa. In 2021, Bolt experienced triple-digit growth across
all verticals.
Bolt's ability to raise €1.23bn in 2021 and 2022 in two fund raises is
testament to strong investor confidence in Bolt's business model, management
team and execution strengths. The transactions collectively represented a
revaluation uplift of US$67.2 million (or 186%) in the fair value of TMT's
investment, compared to the previous reported amount as of 31 December 2020.
As one of Bolt's earliest investors in 2014, TMT is delighted to witness this
company's remarkable trajectory.
Backblaze
Backblaze, a leading cloud storage platform (www.backblaze.com
(http://www.backblaze.com) ), announced on 10 November 2021 the pricing of its
initial public offering of 6.25m shares of its Class A common stock at a price
to the public of US$16.00 per share, for gross proceeds to Backblaze of
US$100m. Backblaze's Class A common stock began trading on the Nasdaq Global
Market on 11 November 2021 under the ticker symbol "BLZE." The US$100m
offering closed on 15 November 2021.
At the closing mid-market price of US$16.89 per share on 31 December 2021, the
value of TMT's investment in Backblaze was valued at approximately US$63.2
million, which represented a revaluation uplift of US$5.1 million (or 9%) in
the value of TMT's investment in Backblaze, compared to the previously
announced valuation as of 31 December 2020 (adjusted for the value of TMT's
additional investment made in Backblaze in the second half of 2021). At the
closing mid-market price of US$11.53 per share on 21 March 2022, the value of
TMT's investment in Backblaze was approximately US$43.1 million.
PandaDoc
PandaDoc is a leading proposal automation and contract management software
provider (www.pandadoc.com (http://www.pandadoc.com) ) which in 2021 continued
its double-digital annualised revenue growth. In 2021 PandaDoc completed a new
equity funding round. The transaction represented a revaluation uplift of
US$10.4 million (or 286%) in the fair value of TMT's investment, compared to
the previous reported amount as of 31 December 2020.
Shortly thereafter, TMT sold 11% of its interest in PandaDoc to a large
institutional investor for a cash consideration of US$2.0 million. The
transaction represented a further revaluation uplift of US$4.2 million (or
30%) in the fair value of TMT's investment in PandaDoc. Collectively, the
value of TMT's investment in PandaDoc in 2021 increased to US$18.2 million,
being the value of its remaining interest and the consideration received,
representing an increase of US$14.6 million (or approximately 402%) on the
value of the Company's interest in PandaDoc as of 31 December 2020.
3S Money Club
3S Money Club, a UK-based bank challenger providing corporate clients with
multi-currency bank accounts in over 190 countries (www.3s.money
(http://www.3s.money) ), completed two new equity funding rounds in 2021.
The transactions collectively represented a revaluation uplift of US$4.3
million (or 693%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020 (adjusted for the value of
TMT's additional investments made in 3S Money in 2021).
3S Money Club's digital accounts are designed for high-value import and export
transactions, dividend distributions, finance and treasury operations, with 3S
Money handling all aspects of cross-border payments and FX risk management.
Workiz
Workiz, a leading SaaS provider for the field service industry (www.workiz.com
(http://www.workiz.com) ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$3.0 million (387%) in the
fair value of TMT's investment, compared to the previous reported amount as of
31 December 2020 (adjusted for the value of TMT's additional investments made
in Workiz in 2021).
Workiz's easy-to-use services make managing home service teams dramatically
more efficient by improving workflow, efficiency and lead management, among
many other features. Schedule jobs, dispatches, invoice, and get paid - all in
one place. Workiz is trusted by over 100,000 home service professionals across
the US and Canada, from plumbing to electrics, computer repair to landscaping.
PORTFOLIO DEVELOPMENTS
We are delighted with our portfolio companies' performance in 2021, which has
sustained the Company's historical trend of positive revaluations and cash
realisations. A number of portfolio companies received further validation
for their business models by raising fresh equity capital at higher
valuations. In tandem, most of our other portfolio companies have continued
to grow their businesses quietly in the background. In addition, the Company
continues its policy of seeking to reduce the value of underperforming
investees as soon as there is enough evidence to support such decisions.
Portfolio performance:
The following developments have had an impact on and are reflected in the
Company's NAV and/or financial statements as of 31 December 2021 in accordance
with applicable accounting standards:
Full and partial cash exits, and positive revaluations:
· Bolt, a ride-hailing and food delivery platform (www.bolt.eu),
completed two consecutive equity funding rounds in August 2021 and January
2022. The transactions collectively represented a revaluation uplift of
US$67.2 million (or 186%) in the fair value of TMT's investment, compared to
the previous reported amount as of 31 December 2020.
· PandaDoc, a proposal automation and contract management software
provider (www.pandadoc.com (http://www.pandadoc.com) ), completed a new equity
funding round. The transaction represented a revaluation uplift of US$10.4
million (or 286%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020. Shortly thereafter, TMT
sold 11% of its interest in PandaDoc to a large institutional investor for a
cash consideration of US$2.0 million. The transaction represented a further
revaluation uplift of US$4.2 million (or 30%) in the fair value of TMT's
investment in PandaDoc. Collectively, the value of TMT's investment in
PandaDoc in 2021 increased to US$18.2 million, being the value of its
remaining interest and the consideration received, representing an increase of
US$14.6 million (or approximately 402%) on the value of the Company's interest
in PandaDoc as of 31 December 2020.
· Backblaze, a leading cloud storage platform, announced on 10 November
2021 the pricing of its initial public offering of 6,250,000 shares of its
Class A common stock at a price to the public of US$16.00 per share, for gross
proceeds to Backblaze of US$100,000,000. Backblaze's Class A common stock
began trading on the Nasdaq Global Market on 11 November 2021 under the ticker
symbol "BLZE." The US$100,000,000 offering closed on 15 November 2021. At
the closing mid-market price of US$16.89 per share on 31 December 2021, the
value of TMT's investment in Backblaze was valued at approximately US$63.1
million, which represented a revaluation uplift of US$5.1 million (or 9%) in
the value of TMT's investment in Backblaze, compared to the previously
announced valuation as of 31 December 2020 (adjusted for the value of TMT's
additional investment made in Backblaze in the second half of 2021). At the
closing mid-market price of US$11.53 per share on 21 March 2022, the value of
TMT's investment in Backblaze was approximately US$43.1 million.
· 3S Money Club, a UK-based bank challenger providing corporate clients
with multi-currency bank accounts (www.3s.money (http://www.3s.money) ),
completed two new equity funding rounds in 2021. The transactions
collectively represented a revaluation uplift of US$4.3 million (or 693%) in
the fair value of TMT's investment, compared to the previous reported amount
as of 31 December 2020 (adjusted for the value of TMT's additional investments
made in 3S Money in 2021).
· Depositphotos, a leading stock photo and video marketplace
(www.depositphotos.com (http://www.depositphotos.com) ) was acquired by
VistaPrint, a Cimpress company. As part of the transaction, TMT agreed to
dispose of its entire holding in Depositphotos for a cash consideration of
US$14.3 million (the "Disposal"), including the US$1.4 million hold-back
amount. TMT received the initial consideration of US$12.9 million in October
2021. The Disposal represented a revaluation uplift of US$3.5 million (or
32%) in the fair value of TMT's investment compared to the previous reported
amount as of 31 December 2020, assuming the entire hold-back amount is
received in full.
· Workiz, a leading SaaS provider for the field service industry
(www.workiz.com (http://www.workiz.com) ), completed a new equity funding
round. The transaction represented a revaluation uplift of US$3.0 million
(or 387%) in the fair value of TMT's investment, compared to the previous
reported amount as of 31 December 2020 (adjusted for the value of TMT's
additional investments made in Workiz in 2021).
· Delivery Hero SE, one of the world's leading local delivery
platforms, announced that it had entered into an agreement with TMT's
portfolio company, Hugo Technologies Ltd. ("Hugo") (www.hugoapp.com
(http://www.hugoapp.com) ), to acquire its multi-category marketplace's core
food delivery and quick commerce business. As part of the transaction, TMT
agreed to dispose of its entire holding in Hugo for a cash consideration of
approximately US$3.8 million (the "Disposal"), including a hold-back amount to
be confirmed. The Disposal represented a revaluation uplift of US$2.0
million (or 111%) in the fair value of TMT's investment compared to the
previous reported amount as of 31 December 2020, assuming the entire hold-back
amount is received in full. The transaction is expected to close in Q2 2022
and is subject to relevant regulatory approvals.
· Novakid, an online English language school for children
(www.novakidschool.com (http://www.novakidschool.com) ), completed a new
equity funding round. The transaction represented a revaluation uplift of
US$1.8 million (or 362%) in the fair value of TMT's investment, compared to
the previous reported amount as of 31 December 2020.
· Qumata (formerly HealthyHealth), a digital data analytical solution
for Life and Health insurers (www.qumata.com (http://www.qumata.com) ),
completed a new equity funding round. The transaction represented a
revaluation uplift of US$0.9 million (or 206%) in the fair value of TMT's
investment, compared to the previous reported amount as of 31 December 2020
(adjusted for the value of TMT's additional investments made in Qumata in
2021).
· KitApps, trading as Attendify, a SaaS-based virtual and hybrid event
management platform (www.attendify.com (http://www.attendify.com) ), was
acquired by event management platform Hopin. The transaction represented a
revaluation uplift of US$0.5 million (or 91%) in the fair value of TMT's
investment, compared to the previous reported amount as of 31 December 2020.
· Klear, an influencer marketing platform (www.klear.com
(http://www.klear.com) ), was acquired by Meltwater B.V., a leading global
SaaS provider of media intelligence and social analytics, for a total
consideration of US$17.8 million, funded by a combination of cash and
earn-out. TMT's total expected cash proceeds from this disposal are
approximately US$0.5 million. The transaction represented a revaluation
uplift of US$0.3 million (or 211%) in the fair value of TMT's investment,
compared to the previous reported amount as of 31 December 2020.
· Volumetric Biotechnologies. Inc. ("Volumetric") was acquired by 3D
Systems Corporation (NYSE:DDD) (the "Acquisition"). The Acquisition was
structured as a US$45 million closing payment, with up to US$355 million of
further consideration due on an earnout basis subject to the achievement of
certain milestones linked to the attainment of significant steps in the
demonstration of human applications (the "Contingent Consideration"), with all
such payments comprising approximately half cash and half equity in 3D
Systems. TMT received its part of the closing cash payment equal to US$0.32
million, plus 11,810 shares of 3D Systems, worth, as of 31 December 2021,
approximately US$0.25 million. The initial part of the transaction (i.e.
excluding any potential future Contingent Consideration) represented a
revaluation uplift of US$0.36 million (or 177%) in the fair value of TMT's
investment, compared to the previous reported amount as of 31 December 2020.
· eAgronom, a farm management software provider for grain producers
(www.eagronom.com (http://www.eagronom.com) ), completed a new equity funding
round. The transaction represented a revaluation uplift of US$0.2 million
(or 55%) in the fair value of TMT's investment, compared to the previous
reported amount as of 31 December 2020.
· Hinterview, a leading video recruitment software provider
(www.hinterview.com (http://www.hinterview.com) ), completed a new equity
funding round. The transaction represented a revaluation uplift of US$0.2
million (or 35%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020.
Negative revaluations:
The following of the Company's portfolio investments were negatively revalued
in 2021:
Portfolio Company Write-down amount (US$) Reduction as % of fair value reported as of 31 Dec 2020 Reasons for write-down
Wanelo 1,223,149 67% Lack of progress in the last 2 years
Anews 670,000 67% Lack of progress in the last 2 years
Remote.it 1,512,643 50% Lack of progress in the last 2 years
Scalarr 1,378,281 50% Market changes in 2021 outside of Scalarr's control
Moeco 500,000 50% Lack of progress in the last 1.5 years
Total 5,284,073
Key developments for the five largest portfolio holdings in 2021 (source:
TMT's portfolio companies):
Bolt (ride-hailing and food delivery service):
· Active in over 400 cities globally (up from over 200 cities as of 31
December 2020)
· Triple-digit growth across all verticals
Backblaze (cloud storage provider):
· Double-digit annualised revenue growth continued
· IPO on NASDAQ raising US$100 million
PandaDoc (proposal automation and contract management software):
· Double-digit annualised revenue growth continued
· Over 30,000 paying clients (from over 23,000 as of 31 December 2020)
3S Money Club (provider of corporate multi-currency bank accounts):
· Revenue increased 3.6 times
· Profitable and cash flow positive
Scentbird (Perfume, wellness and beauty product subscription service):
· Stable revenue
· EBITDA-profitable
· Launched in Canada
New investments:
TMT was highly active during 2021, investing approximately US$40.5 million
across the following investments:
· Additional £3,971,825 (via acquisition of new and existing shares) in
3S Money Club Limited, a UK-based online banking service focusing on
international trade (www.3s.money (http://www.3s.money) );
· Additional US$228,933 (via acquisition of existing shares) in Workiz, a
SaaS solution for the field service industry (www.workiz.com
(http://www.workiz.comy) );
· Additional US$2,000,000 in Affise, a performance marketing SaaS
solution (https://affise.com/en/ (https://affise.com/en/) );
· Additional £399,997 in Qumata (previously HealthyHealth), an
InsurTech and HealthTech company (www.healthyhealth.com
(http://www.healthyhealth.com) );
· US$1,000,000 in 3DLook Inc., a body scanning and measuring technology
solution for the online retail industry (www.3dlook.me (http://www.3dlook.me)
);
· Additional €975,000 in Postoplan OÜ, a social network marketing
platform, which helps create, schedule, and promote content
(www.postoplan.app (http://www.postoplan.app) );
· £200,000 in Balanced Ventures Limited, trading as FemTech Lab,
Europe's first tech accelerator focused on female founders (www.femtechlab.com
(http://www.femtechlab.com) );
· US$500,000 in Agendapro, Inc., a SaaS-based scheduling, payment and
marketing solution for the beauty and wellness industry in Latin America
(www.agendapro.com (http://www.agendapro.com) );
· US$4,000,000 in Muncher Inc., a cloud kitchen and virtual food brand
operator in Latin America (www.muncher.com.co (http://www.muncher.com.co) );
· US$1,000,000 in Aurabeat Technology International Limited, the
producer of air purifiers that are FDA-certified to destroy viruses and
bacteria (www.aurabeat-tech.com (http://www.aurabeat-tech.com) );
· US$500,000 in Cyberwrite Inc., a platform offering third-party cyber
risk quantification and proactive mitigation (www.cyberwrite.com
(http://www.cyberwrite.com) );
· US$2,000,000 in CloudBusiness Inc., trading as Synder, an accounting
solution for e-commerce businesses (www.synderapp.com
(http://www.synderapp.com) );
· €500,000 in Outvio, a fulfilment and delivery management platform
for the e-commerce industry (www.outvio.com (http://www.outvio.com) );
· Additional US$640,000 in Novakid, an online English language school
for children (www.novakidschool.com (http://www.novakidschool.com) );
· US$2,000,000 in Collectly, Inc., a tech-enabled patient billing
platform (www.collectly.co);
· US$1,099,999 in VertoFX Ltd, a UK-based cross-border payments and
foreign exchange solution facilitating commerce for modern businesses, rapidly
expanding in Africa (www.vertofx.com);
· US$1,000,000 in Metro Speedy Technologies Inc., a technology based
local delivery company providing on-demand, same day or scheduled delivery
services (www.metrospeedy.com (http://www.metrospeedy.com) );
· US$1,000,000 in Academy of Change, a personalised educational service
for women on lifestyle topics (www.akademiaperemen.ru
(http://www.akademiaperemen.ru) );
· Additional US$2,000,000 in cloud storage provider Backblaze
(www.backblaze.com (http://www.backblaze.com) );
· €1,500,000 in EstateGuru, a leading pan-European marketplace for
short-term, property-backed loans (www.estateguru.co
(http://www.estateguru.co) );
· Additional US$250,000 in Ad Intelligence Inc., trading as Adwisely
(formerly RetargetApp), an online solution aimed a monitoring ad campaigns and
automatically managing daily budgets, audience and bids to improve the quality
of retargeting (www.adwisely.com (http://www.adwisely.com) );
· US$1,800,000 in Prodly Inc., an Applications Operations (AppOps)
software platform that simplifies change management for Salesforce and helps
businesses to automate deployments, regression testing, governance, and
version control for enterprise applications (https://prodly.co
(https://prodly.co) );
· £500,000 in SonicJobs App Ltd., an award-winning mobile app helping
blue collar workers find and apply for jobs (www.sonicjobs.co.uk
(http://www.sonicjobs.co.uk) );
· US$500,000 in Adorum, Inc., trading as OneNotary, an online notary
service (www.onenotary.us (http://www.onenotary.us) );
· Additional £1,000,000 in Feel Holdings Limited, a subscription-based
multivitamin and supplement producer (www.wearefeel.com
(http://www.wearefeel.com) );
· US$1,500,000 into Study space, Inc., trading as EdVibe, an all-in-one
language teaching platform (https://edvibe.com/en (https://edvibe.com/en) );
· US$2,000,000 into Bafood Global Limited, a hyper local ready-to-eat
food delivery and cloud kitchen operator in Eastern Europe
(https://bafood.com.ua/en (https://bafood.com.ua/en) );
· US$1,000,000 in Educate Online Inc., an education platform that
allows children aged 4-19 to study in leading international schools remotely
(www.educate-online.io (http://www.educate-online.io) );
· US$850,000 in My Device Inc., trading as Whizz, a device-as-a-service
company that provides mobility, sports and high-tech devices on a subscription
basis to corporate and individual clients (www.getwhiz.co
(http://www.getwhiz.co) );
· US$1,000,000 in Lulu Systems, Inc., trading as Mobilo, an eco-friendly
smart business card solution that allows users to digitally share contact
details and turn meetings into leads (www.mobilocard.com
(http://www.mobilocard.com) ); and
· US$500,000 in Alippe, Inc., trading as 1Fit, a mobile app with single
membership that gives access to multiple gyms and yoga studios in Kazakhstan
(www.1fit.app (http://www.1fit.app) ).
Events after the reporting period:
In January 2022, the Company invested:
· €825,000 in Bairrissimo, LDA, trading as Bairro, an instant food
and grocery delivery company in Portugal (www.bairro.io (http://www.bairro.io)
);
· US$4,000,000 in SOAX Ltd, a SaaS-enabled marketplace of tools to collect
publicly available data on a scale (https://soax.com (https://soax.com) );
· Additional €400,000 in Postoplan OÜ, a social network marketing
platform, which helps create, schedule, and promote content
(www.postoplan.app (http://www.postoplan.app) ); and
· £500,000 in Laundryheap Limited, a marketplace for on-demand laundry
and dry-cleaning services (www.laundryheap.com (http://www.laundryheap.com) ).
In March 2022, the Company invested an additional £499,918 in Laundryheap
Limited, a marketplace for on-demand laundry and dry-cleaning services
(www.laundryheap.com (http://www.laundryheap.com) ).
As a result of the recent military conflict in Ukraine, followed by the broad
sanctions against Russia, TMT has identified eight of its portfolio companies
that are most likely to be negatively affected by the situation in Ukraine and
Russia. If the conflict had taken place in 2021, TMT would have reduced the
fair value of the relevant investees as follows:
Portfolio Company Potential write-down amount (US$) Potential reduction as % of fair value reported as of 31 Dec 2021
Anews 330,000 100%
StudyFree 500,000 50%
Allright 386,250 50%
Academy of Change 660,000 66%
EdVibe 750,001 50%
Bafood 1,000,000 50%
Educate Online 500,000 50%
My Device 425,000 50%
These events after the reporting period are not reflected in the NAV and/or
the financial statements as of 31 December 2021.
INVESTMENT PORTFOLIO
# Portfolio Company Fair value (US$) As % of total portfolio value
1 Bolt 103,375,800 38.94
2 Backblaze 63,146,440 23.79
3 PandaDoc 16,185,773 6.10
4 3S Money Club 10,299,630 3.88
5 Scentbird 6,590,954 2.48
6 Muncher 4,059,999 1.53
7 Workiz 3,971,659 1.50
8 Hugo 3,756,540 1.42
9 Affise 3,470,870 1.31
10 Feel 3,399,212 1.28
Other 47,197,259 17.78
Total 265,454,136 100.00
BOARD OF DIRECTORS
Yuri Mostovoy, Non-Executive Chairman, was appointed to the Board in June
2011. Yuri brings over 38 years expertise in investment banking, software
development and business to his role as Chairman of the Company. 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 the 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 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, corporate brokers, 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
innovative technologies, market trends, company valuations and fund raising
activities.
Alexander Selegenev is a member of the Company's Nomination Committee.
James Mullins, independent 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 a fund 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 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, independent Non-executive Director, was appointed to the Board in
December 2010. Petr's experience in investment and brokerage that he brings to
the Company allows 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 1995. Between 1996-2000 he served
as head of equities 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.
Petr Lanin is a member of the Company's Audit and Remuneration Committees.
CORPORATE GOVERNANCE
AIM quoted companies are required, pursuant to the AIM Rules for Companies, to
set out details of the recognised corporate governance code that the Board of
Directors has decided to adopt, how the Company complies with that code and
provide reasons for any departures where it does not comply with that code.
Introduction
The Board 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.
In accordance with the QCA Code and AIM Rule 26, the report below provides a
high-level overview of how TMT has applied the principles of the QCA Code and
any areas in which the Company's governance structures and practices depart
from or differ from the expectations of the QCA Code.
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, the Board chose to
adopt the QCA Code effective 28 September 2018.
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.
Good governance is the fundamental underpinning of ESG
The focus on ESG (Environmental, Social & Governance) is intensifying
rapidly. The devastating social and economic fallout from the COVID pandemic
has served to put the ESG agenda into sharper view and has accelerated the
intensity of focus. Investor attention has been driven by three factors:
regulatory pressure, underlying investor demand; and a recognition that the
existing ESG data opacity provides for a market inefficiency to exploit.
The Company has been monitoring ESG issues before they reached the mainstream
investment agenda. As such, we have made a number of investments in
ESG-focused companies that also meet TMT's investment objectives. This year we
started to formalise our ESG framework under the guiding principles that it be
relevant, realistic and accountable. We are pleased to announce our ESG
Initial Policy in this Annual Report 2021, which will be fully published in
the Interim Report 2022 and subsequently updated as required.
A corporate culture based on transparency, innovation and continuous
improvement
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
As a publicly quoted company that provides investors with a liquid route to
investing in private companies, transparency is fundamental to how we operate
and communicate with our shareholders. 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
Innovation supports the Company's objective of investing in successful,
long-term companies that have innovation at the core of their own business
models. In parallel, 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
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/Cloud
· SaaS (software-as-a-service)
· Marketplaces
· EdTech
· E-commerce
· FinTech
· FoodTech
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 - companies that are already generating revenues (TMT's
typical minimum revenue threshold is US$100,000 per month)
· Series A / Pre-Series A stage TMT's typical investment range:
US$0.5m-2.5m
· Viable exit opportunities - assessing potential exit scenarios from the
start
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 report and accounts, interim accounts, and regulatory
announcements that are available on the Company's website
www.tmtinvestments.com (http://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.
On 17 February 2021, the Company announced the appointment of Cenkos
Securities plc ("Cenkos") as Joint Broker to TMT. Cenkos, together with the
Company's other advisors, is arranging regular meetings with UK institutional
investors and private client brokers, seeking to broaden the Company's
shareholder base. 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 continues to be committed to engaging with retail investors by
holding 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. During the restrictions imposed by the
Covid-19 pandemic, the Company made increased use of online and social media
communications to maintain communication with all types of investors.
Interested parties are able to subscribe for notifications of such future
events by contacting tmt@kinlancommunications.com.
Shareholder enquiries should be directed to Alexander Selegenev, Executive
Director at ir@tmtinvestments.com (mailto: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 promising 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
its 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 network, both online and in person.
This is essential to maintaining a valuable level of accumulated tech
knowledge, being connected to the latest developments in our core sectors and
having access to a pipeline of attractive investments in the innovative world
of technology investing.
Professional advisors
The Company's professional advisors include its Nominated Adviser (Nomad),
Brokers, 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 the Bonus Plan for Directors, officers, employees
of, or consultants to, the Company, as summarised in the Executive Director's
Statement above. In November 2020, the Company announced an extension to its
Bonus Plan until 31 December 2024. Under the Company's Bonus Plan, subject
to achieving a minimum hurdle NAV and high watermark conditions, 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 and similar
corporate transactions. As announced on 25 November 2020, this has been
increased from 7.5% to 10.0% with effect from 1 January 2021.
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 conducts a formal risk assessment on an
annual basis but will also report by exception on any material changes during
the year.
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:
The Company ensures that the databases it maintains for investment selection
and monitoring are shared across the senior management team, reducing the
possibility of loss of information due to any one individual leaving or not
being available. In addition, the Company's bonus plan serves to ensure that
compensation is benchmarked to ensure staff retention.
The Company invests in earlier stage companies
Investing in earlier stage companies is inherently risky. These businesses may
not successfully scale up their technology or offering, may fail to secure the
necessary funding (attract further investment) and may lose key personnel,
amongst other risks.
Mitigation:
The TMT team is experienced in investing in earlier stage technology companies
and conducts extensive analysis through its four-filter investment process, as
well as 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 sectors. 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, the monitoring of performance
before investing and the overall assessment of an investee's potential.
Mitigation:
The Company focuses on a small number of core segments within the TMT sector
in which it has expertise and established professional networks, in order to
benefit from its competitive information advantage.
The Company uses a filtering system that is designed to identify companies
with the best potential to become scalable businesses with rapid 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 extremely
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 with data provided by its portfolio companies that includes their key
performance indicators (KPIs). Through this process, the Company actively
monitors the performance of KPIs and other indicators that can affect fair
value revaluations.
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 board representation where possible. Fundamentally, however, the
success of a start-up depends greatly on the abilities of its
founder-managers. The Company therefore places extremely high importance on
investing in companies backed by highly skilled, professional and trustworthy
founders.
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 unpredictable.
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 fund raises 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 and 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 thanks 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 by the Board to be independent. Both James
Mullins and Petr Lenin were appointed to the Board in December 2010. Whilst
they have now served as independent Non-executive Directors for over ten
years, the QCA Code states that the fact that a director has served for over
nine years does not automatically affect independence. The Board is satisfied
that both James Mullins and Petr Lanin continue to be free from any business
or other relationship which could interfere with the exercise of their
independent judgement. In line with the QCA Code recommended good practice,
both James Mullins and Petr Lanin will now be subject to annual re-election on
an ongoing basis.
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
Six board meetings were held in 2021. One meeting of the Audit Committee and
one meeting of the Remuneration Committee were held in 2021. The number of
meetings attended by the Directors is set out below. In addition to the table
below a board committee meeting was held on 5 October 2021 regarding the
allotment of shares for the fund raise conducted by the Company in October
2021, attended by Yuri Mostovoy and Alexander Selegenev.
Board Audit Committee Remuneration Committee
Director meetings meetings meetings
Yuri Mostovoy 6 - -
Alexander Selegenev 2 - -
Petr Lanin 6 1 1
James Mullins 6 1 1
Total meetings 6 1 1
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 in the Board of Directors section
of this report.
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. After considering different alternatives the
Board made the decision to undertake the evaluations internally.
The fourth such formal evaluation for the year ended December 2021 took place
in February 2022. The previous such evaluation had been for the year ended
December 2020, which started in January 2021 and concluded in February 2021.
Compared to the previous year, the responses to the various questionnaires
that formed the evaluation showed similar and positive results.
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 held in March 2022.
In general, the responses found the Board, its members and Committees to be
operating effectively. We provide further information below on the various
evaluations 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).
In 2021, the QCA published a "Board Performance Review Guide" that concluded
that more attention be paid to board performance reviews and that these should
address recent and ongoing developments at the company and its operating
context in more detail. Overall, they should be viewed as an ongoing
improvement exercise in conjunction to how a board is structured and operates.
It made six recommendations:
1. Be led by the Chair, including performance of the Chair.
2. Be dynamic and context-specific.
3. Focus on value-adding board activities.
4. Take into account the views of a variety of internal and external
stakeholders.
5. Be understood as continuous improvement.
6. Be transparent and disclosed in appropriate detail in the annual report and
on the company website.
The Board believes questionnaires circulated to TMT Board members in previous
years addressed most of these topics, however notes that the 2021 performance
questionnaire was updated and restructured where necessary to ensure that the
six recommendations, as adapted to TMT's specific needs and circumstances,
were reflected.
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 is confident that
it is addressing the key issues facing the company at its stage of
development, size, business and operating model needs, complexity and
shareholder structure. The Board was also confident it is maintaining its
competitive advantage and examining the creation of new advantages and
strengths. The Board had reviewed the success of the fund raise undertaken in
2021 and identified the learning points and areas for improvement to prepare
for future fund raises.
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, taking into consideration
as well the updated QCA Audit Committee Guide 2019.
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,
taking into consideration as well the updated QCA Remuneration Committee Guide
2019.
Nomination Committee effectiveness
The Nomination Committee did not convene during the financial year ended 31
December 2021 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, the processes
by which the Company determines board and other senior appointments and the
professional development of the Company's employees and management. 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.
Disclosure Committee effectiveness
The Disclosure Committee conducted an annual review in 2021 of its procedures,
performance, constitution and terms of reference, which concluded it was
operating effectively.
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.
The Company has started to formalise its ESG (Environmental, Social &
Governance) framework under the guiding principles that it be relevant,
realistic and accountable, following guidance from the QCA Practical Guide to
ESG 2021 and additional relevant research. The initial ESG framework is
published in the TMT Annual Report 2021, and will be fully published in the
Interim Report 2022 and subsequently updated as required.
The Company has been monitoring and following ESG issues before they reached
the mainstream agenda. As such, TMT has made a number of investments since
inception in ESG-focused companies that also meet TMT's investment objectives.
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 Board has formally established Audit, Remuneration and
Nomination Committees in accordance with the recommendations of the QCA
Corporate Governance Code ("QCA Code") as well as a Disclosure Committee,
which was established in 2021.
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.
Disclosure Committee
The Company has established a Disclosure Committee, which considers matters
relating to the management and disclosure of inside information by the
Company. The Disclosure Committee currently comprises Alexander Selegenev,
German Kaplun, Levan Kavtaradze and Andrey Konstantinov, with Alexander
Selegenev appointed as Chairman. Andrey Konstantinov is the Company's Legal
Counsel.
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, and determining the terms of reference of
the Board and establishing and maintaining the Company's overall control
framework;
• Approval of major communications with shareholders,
including any shareholder circulars and financial results required to be
announced pursuant to the AIM Rules or the Market Abuse Regulation (save where
such communications have been delegated to the Disclosure Committee of the
Board in accordance with the terms of reference of the Disclosure Committee);
• Senior management and Board appointments and
remuneration, contracts, approval of bonus plans, and grant of share options;
• Financial matters including the approval of the budget and
financial plans, and changes to the Company's capital structure, business
strategy and investing policy (subject to shareholder approval); and
• Other matters including regulatory and legal
compliance.
Share dealings
The Company has adopted a share dealing code and all Company directors,
officers and employees receive annual training on the share dealing code and
insider dealing requirements (including, without limitation, the provisions of
MAR). The share dealing code was updated in 2021 and approved at the Board of
Directors meeting held in March 2022. 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.
Conflicts of interest policy
The Company's directors, officers and employees ("Applicable Persons") may
not: (a) appropriate for their benefit, or for the benefit of any family
member or any other third person, any business opportunity that comes to their
knowledge and that may directly or indirectly relate to, compete or lead to
competition with, or might be of benefit to, the Company's business or (b)
divert or redirect any business opportunities away from the Company.
It is an Applicable Person's responsibility to disclose any transaction or
relationship that could reasonably be expected to give rise to a conflict of
interest with the Company to the Initial Investment Committee, which shall be
responsible for determining whether such transaction or relationship
constitutes a conflict of interest.
From time to time, Applicable Persons may want to personally invest in certain
opportunities that may fall within the Company's Investing Policy or may
otherwise conflict with the Company's interests. In order to avoid conflicts
of interest and ensure such Applicable Persons' continuing focus on their
TMT-related duties, the Company has adopted a Conflict of Interest Policy.
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 on 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 2021 to approve the 2020 Annual
Report & Accounts.
Remuneration committee report
The Company has established a remuneration committee, which comprises James
Mullins (Chairman) and Petr Lanin. The remuneration committee met once during
2021 to discuss and approve the allocation of the 2020 bonus pool.
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.
The Company's financial reports for the last five years can be found on the
Investor Relations sections of the TMT Investments Plc website
www.tmtinvestments.com (http://www.tmtinvestments.com)
Notices of General Meetings of the Company for the last five years can be
found on the Investor Relations sections of the TMT Investments Plc website
www.tmtinvestments.com (http://www.tmtinvestments.com)
All of the Company's RNS announcements, including those confirming voting
results, can be found on the Investor Relations sections of the TMT
Investments Plc website www.tmtinvestments.com (http://www.tmtinvestments.com)
INITIAL ESG POLICY
Introduction
As with most business sectors, technology has the capacity to make the world a
better place. Given the high pace of technology innovation we are witnessing,
TMT believes this capacity is intensified in the case of technology. However,
technological innovation for its own sake is meaningless unless it results in
tangible benefits in terms of productivity, improved user experience, higher
efficiency, positive impact in its chosen sectors, improved profitability or
whichever other objectives.
ESG evaluation can be carried out in a number of different ways. Its
effectiveness will depend on the questions being asked, the principles being
applied and the quality of data available, among other factors. Indeed, at
times the prioritising of some principles will have a negative impact on
others, given the asymmetric nature of benefits that can sometimes arise, for
example in a mismatch between the time lengths of when benefits may be
delivered.
As an investment company, TMT has been monitoring ESG issues and taking them
into account before they began to enter the mainstream investment agenda. As
such, the Company has made a number of investments in ESG-focused companies
that also meet TMT's investment criteria. These include Timbeter, a SaaS
solution for quick and accurate timber measurement and data management, which
is making the forestry industry more sustainable, profitable and efficient;
eAgronom, which provides a unique combination of services to grain farmers:
carbon programmes, an AI-powered consulting service and farm management
software enabling farmers to build sustainable businesses and preserve nature;
and Mobilo, an eco-friendly solution allowing users to digitally share contact
details instead of using paper/plastic business cards and turn meetings into
leads.
The social and economic fallout from the COVID pandemic has served to put the
ESG agenda into sharper relief and has accelerated the intensity of focus. TMT
has therefore started to formalise its approach to ESG and is pleased to
announce its initial ESG Policy in this 2021 Annual Report, which will be
fully published in the 2022 Interim Report and subsequently updated as
required.
TMT holds minority positions in its portfolio companies and therefore can
exert influence on ESG matters in two main ways: first, by screening
investments for exclusion from investment and second, by engaging in
constructive dialogue with portfolio companies and monitoring progress. The
Company's ESG policy reflects this approach.
TMT itself, as an investment company with limited internal resources, has
little impact on the environment. The Company's team is mindful of reducing
its travel, paper consumption, energy costs and other environmental impact
wherever possible. TMT has adopted the Quoted Companies Alliance (QCA)
Corporate Governance Code for Small & Mid-Sized Companies, which already
covers a number of well-established ESG items.
TMT's initial ESG policy is outlined below.
TMT's 3 guiding ESG principles for portfolio companies: relevant, realistic
and accountable
TMT's three ESG principles guide and inform potential portfolio companies of
the Company's approach to ESG and are at the core of what good ESG looks like.
They are specific and challenging, whilst allowing portfolio companies to
engage with them both at an earlier stage of development and as they grow in
size.
Relevant
· Is the investee addressing ESG where it can make the greatest impact
in terms of its business model?
· Has the investee undertaken an ESG materiality assessment and, if so,
how has this informed its ESG framework?
· Have ESG risks, as well as opportunities, been identified?
Realistic
· Is the investee developing an ESG roadmap as part of its business
plan?
· Are the investee ESG objectives achievable in view of its current
resources?
· What resources does the investee need to consider in order to
progress on its ESG roadmap?
Accountable
· How is the investee evaluating its ESG activities and engagement?
· Is the investee conducting ESG benchmarking against its peers?
· Does the investee review its ESG metrics and reporting process in view
of latest ESG, scientific and technological developments?
TMT's approach
TMT's initial ESG policy is based on a 3-step approach:
Step 1: Filter out by Exclusion list
TMT's exclusion list sets out the sectors, businesses and activities in which
the Company will not invest due to having as their objective, or direct impact
on, any of the following:
1. Slavery, human trafficking, forced or compulsory labour, or
unlawful / harmful child labour.
2. Production or sale of illegal or banned products, or involvement in
illegal activities.
3. Activities that compromise endangered or protected wildlife.
4. Production or sale of hazardous chemicals, pesticides and waste.
5. Manufacture, distribution or sale of arms or ammunitions.
6. Manufacture of, or trade in, tobacco or drugs.
7. Manufacture or sale of pornography.
8. Trade in human body parts or organs.
9. Animal testing other than for the satisfaction of medical
regulatory requirements.
10. Production or other trade related to unbonded asbestos fibres.
Step 2: Assess level of ESG Engagement
Step 2 focuses on assessing how the proposed portfolio company incorporates
ESG in its business model and company culture.
In its investment selection process, TMT examines how each potential investee
company is addressing and incorporating ESG issues based on TMT's principles
of being relevant, realistic and accountable, feeding the results into an
evaluation sheet for presentation to TMT's Initial Investment Committee and
the Formal Investment Committee. If necessary, remedial actions or areas for
improvement are agreed with the investee company. For follow-on investments we
require a formal update from the investee highlighting any divergence from
TMT's initial assessment.
Step 3: Engagement with portfolio companies on ESG
ESG by its very nature is a journey, which needs to adapt to changing
environmental, social and governance dynamics, in view of latest developments.
Two-way dialogue and engagement with portfolio companies is an essential part
of this journey, in which both parties are sharing and learning. TMT therefore
includes ESG topics as part of its continuous engagement with portfolio
companies.
DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2021
The Directors present their report and audited financial statements of the
Company for the year ended 31 December 2021.
Principal activity and review of the business
TMT Investments Plc ("TMT" 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$86,711,815 which includes a profit on
changes in fair value of financial assets at FVPL ("Fair Value through profit
and loss") of US$98,741,409.
Further information on the Company's results and financial position is
included in the financial statements.
Given the quantum of further investment opportunities available to the
Company, the board has decided that it will not recommend a final dividend
(2020: nil).
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 (http://www.tmtinvestments.com) .
Board meetings
There were 6 Board meetings held in 2021. One meeting of the Audit Committee
and one meeting of the Remuneration Committee were held in 2021. The number of
meetings attended by the Directors is set out below.
Board Audit Committee Remuneration Committee
Director meetings meetings meetings
Yuri Mostovoy 6 - -
Alexander Selegenev 2 - -
Petr Lanin 6 1 1
James Mullins 6 1 1
Total meetings 6 1 1
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 2021 and the date of this report, the
Company's issued share capital consists of 31,451,538 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 24 March 2022.
Shareholders Number of ordinary shares % of issued ordinary share capital
Alexander Morgulchik, German Kaplun, Artemii Iniutin (via Macmillan Trading 6,975,436 22.18%
Company Limited)
Andrey Kareev (via Wissey Trade & Invest Ltd) 5,000,000 15.90%
German Kaplun (via Ramify Consulting Corp) 4,728,576 15.03%
Zaur Ganiev 2,443,810 7.77%
Canaccord Genuity Group Inc 2,154,939 6.85%
Artemii Iniutin (via Merit Systems Inc.) 2,054,865 6.53%
Nika Kirpichenko (via Eclectic Capital Limited) 1,800,000 5.72%
Dmitry Kirpichenko (via Menostar Holdings Limited) 1,790,000 5.69%
Others 4,503,912 14.32%
Total 31,451,538 100.00%
Concert Party
A concert party, as defined in the City Code on Takeovers and Mergers (the
"Code"), currently exists, consisting of the following shareholders:
Shareholder (legal holder) Beneficial holder No. of Ordinary Shares % of issued share capital
(if different to legal holder)
Macmillan Trading Company Limited ("Macmillan") Alexander Morgulchik 45.05%, German Kaplun 37.17%, Artemii Iniutin 17.78%, 6,975,436 22.18%
Wissey Trade & Invest Ltd ("Wissey") Andrey Kareev 5,000,000 15.90%
Ramify Consulting Corp. ("Ramify") German Kaplun 4,728,576 15.03%
Merit Systems Inc. Artemii Iniutin 2,054,865 6.53%
Eclectic Capital Limited ("Eclectic") Nika Kirpichenko 1,800,000 5.72%
Menostar Holdings Limited ("Menostar") Dmitry Kirpichenko 1,790,000 5.69%
Natalia Inyutina (Adult daughter of Artemii Iniutin) 727,156 2.31%
Artemii Iniutin 380,877 1.21%
Vlada Kaplun (Adult Daughter of German Kaplun) 363,578 1.16%
Marina Kedrova (Adult Daughter of German Kaplun) 363,578 1.16%
German Kaplun 138,938 0.44%
Alexander Morgulchik 138,938 0.44%
Total 24,461,942 77.78%
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 total direct and indirect interest in TMT by the concert party's
beneficial holders are now as follows:
Beneficial holder No. of Ordinary Shares % of issued share capital
German Kaplun 7,460,055 23.72%
Andrey Kareev 5,000,000 15.90%
Artemii Iniutin 3,676,194 11.69%
Alexander Morgulchik 3,281,381 10.43%
Nika Kirpichenko 1,800,000 5.72%
Dmitry Kirpichenko 1,790,000 5.69%
Natalia Inyutina 727,156 2.31%
Vlada Kaplun 363,578 1.16%
Marina Kedrova 363,578 1.16%
Total 24,461,942 77.78%
NOTES:
The majority of the ordinary shares held by Eclectic were previously held by
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. As announced on 17 October 2019,
Eclectic notified the Company that it had sold ordinary shares such that it is
interested in 2,800,000 ordinary shares and Menostar notified the Company that
it had acquired 1,790,000 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 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 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 and underpaid previous years` bonuses for 2021 were as
follows:
Director Directors' fees Previous years' Bonuses
Yuri Mostovoy US$55,000 US$23,863
Alexander Selegenev US$110,000 US$70,109
James Joseph Mullins US$30,259 -
Petr Lanin US$11,000 -
The minimum initial allocation of the Bonus Pool accrued for the period ended
31 December 2021 among the Directors who are predetermined participants of the
Bonus Plan is as follows:
Directors The minimum initial allocation of the Bonus Pool (%) The minimum initial allocation of the Bonus Pool (US$)
Alexander Selegenev 16.5% 1,596,547
Yuri Mostovoy 5.0% 483,802
Subsequent events post the period end
Refer to the "Events after the reporting period" in the "Portfolio
Developments" section above.
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 UK-adopted International Financial
Reporting Standards ("IFRSs").
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 UK-adopted IFRSs 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 UK-adopted
IFRSs, 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.
In the year to date, the global economy was affected by the COVID-19 pandemic
and related market volatility. Whilst the Company`s operations and liquidity
position were not directly impacted, the principal activity of the Company was
naturally affected through the impact on and therefore potential performance
of the Company investee companies. Accordingly, the potential negative effect
of COVID-19 and related market volatility, while potentially affecting the
future fair value of the Company`s investments, does not impact the Company`s
liquidity position.
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.
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
24 March 2022
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TMT INVESTMENTS PLC FOR THE
YEAR ENDED 31 DECEMBER 2021
Opinion
We have audited the financial statements of TMT Investments plc (the
'company') for the year ended 31 December 2021 which comprise the Statement of
Comprehensive Income, the Statement of Financial Position, the Statement of
Cash Flows, the Statement of Changes in Equity and the notes to the financial
statements, including significant accounting policies. The financial reporting
framework that has been applied in the preparation of the company's financial
statements is applicable law and UK Adopted International Financial Reporting
Standards (IFRSs).
In our opinion, the financial statements:
· give a true and fair view of the state of company's affairs as at 31
December 2021 and of the company's profit and cash flows for the year then
ended;
· have been properly prepared in accordance with UK Adopted IFRSs; 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 in the UK, 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.
Our approach to the 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 enough 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 it operates. Our
planned audit testing was directed accordingly and was focused on areas where
we assessed there to be the highest risk of material misstatement.
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 communicate 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.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, 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. This is not a complete list of
all risks identified during our audit.
Key audit matters How our audit addressed the key audit matters
Valuation and ownership of investments Our audit work included, but was not restricted to:
The company is investing in pre-growth companies in a very competitive · Initially at planning, before reviewing management's chosen valuation
industry. Given the nature of the companies being invested in, it is not methodologies, we have considered for our sample of investments what we
likely that all will be a success. The value of the investments is one of consider the most appropriate valuation methodology to be.
the most material balances in the company's financial statements.
· We obtained an understanding of management's assessment of the
These investments are carried at fair value through the profit or loss in the investment valuations and obtained an understanding of how they are performed.
financial statements, and the valuation is based on significant judgement and
assumptions. Given the majority of the investment portfolio is in unlisted
companies, there is inherent estimation uncertainty as to the fair value of
these investments as at the year-end date. Due to the nature of the company's This involved evaluating whether the method chosen was in accordance with
activities, there is a risk that the fair value has not been appropriately published guidance and reviewing and challenging the assumptions applied to
applied for all of the investments, and therefore that the value of the valuation inputs.
investments held at year-end may be misstated.
Where the valuation methodology differed from our expectation for what
We also recognised a risk over the ownership of the investments. This is to valuation methodology we believed would have been used from our planning, we
ensure that the investments were indeed held at the year-end date by the challenged this with management and ensured the methodology used by management
company, given the investment balances are highly material. is the most appropriate.
· We verified and benchmarked key inputs and estimates to independent
information from our own research and against metrics from the investments.
· Where appropriate, we have performed sensitivity analysis on the
valuation calculations.
· Alternative valuations methods were considered and discussed with
management to provide alternative views on the value of the investments.
· We agreed the purchase and sale of investments to supporting evidence
of the transaction and cash movements on a sample basis and recalculated the
realised gains and losses on the sale of investments for both the individual
transactions on a sample basis and for the total portfolio.
· We agreed ownership to share certificates and third-party evidence
that the company holds the shares in the investee companies.
The Company's accounting policy on fixed asset investments held at fair value
through profit or loss is shown in note 2.6 to the Financial Statements and
related disclosures are included in note 10.
Key observations
From our audit work undertaken, we did not identify any material misstatement
in the investment valuations included in the financial statements.
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 reasonably be expected to influence
the economic decisions taken on the basis of the financial statements by
reasonable users.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Materiality Measure Company
Overall materiality We determined materiality for the financial statements as a whole to be
£7,293,000.
How we determine it Based 2.5% of gross assets held at 31 December 2021.
Rationale for benchmarks applied We believe that this benchmark is appropriate due to the investments being the
key driver of the company and the nature of its activities along with it being
a key point of reference for potential investors.
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, and was set at
£5,469,750.
Specific materiality We also determine a lower level of specific materiality for certain areas such
as Director's remuneration. Area materiality for the disclosure of the cash
element of Director's remuneration has been set at £200,000 and performance
materiality of £100,000.
Reporting threshold We agreed with the Audit Committee that we would report to them all
misstatements over £364,650 (5% of overall materiality) identified during the
audit, as well as differences below that threshold that, in our view, warrant
reporting on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation
of the Financial Statements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's
use of the going concern basis of accounting in the preparation of the
financial statement is appropriate.
Our evaluation of the director's assessment of the entity's ability to
continue to adopt the going concern basis of accounting included:
Evaluation of management assessment Key observations
We evaluated the Directors' going concern assessment and performed the At 31 December 2021, the Company held cash of £25,527,801 at bank.
following procedures:
· We assessed the appropriateness of the cash flow forecasts in
the context of the Company's 2021 financial performance. The Company's cash flow forecasts to 31 March 2023 ('the going concern
period') have been approved by the Board. These are prepared based on certain
key assumptions, which we have reviewed and consider appropriate. These
included considering further investments being made along with the ongoing
· We evaluated the key assumptions in the forecast, which were increasing operating costs.
consistent with our knowledge of the business and considered whether these
were supported by the evidence we obtained.
The forecast shows that the Company has at all times available cash and
liquidity to meets its liabilities as they fall due.
· We also reviewed the disclosures relating to the going concern basis
of preparation and found that these provided an explanation of the Directors'
assessment that was consistent with the evidence we obtained.
Based on the audit procedures performed we concluded that the Company has
appropriately adopted the going concern basis of preparation. Further, we did
not identify any material disclosures that should be included regarding any
material uncertainty in respect of the going concern basis of preparation.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the entity's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report
other than the financial statements and our auditors' report thereon. The
directors are responsible for the other information contained within the
annual report. 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.
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 course of 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 this gives rise to a material misstatement in the financial
statements themselves.
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
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the directors' report.
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:
· proper accounting records have not been kept by the company, or proper
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 statement of directors' responsibilities, set
out above, 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 control 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.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Based on our understanding of the Company and the industry in which it
operates, we identified that the principal risks of non-compliance with laws
and regulations related to the acts by the Company which were contrary to
applicable laws and regulations including fraud and we considered the extent
to which non-compliance might have a material effect on the Financial
Statements. We also considered those laws and regulations that have a direct
impact on the preparation of the Financial Statements such as Part 16 of
Companies (Jersey) Law 1991. We evaluated management's incentives and
opportunities for fraudulent manipulation of the Financial Statements
(including the risk of override of controls), and determined that the
principal risks were related to inflated investment valuations and profit.
Audit procedures performed included: review of the Financial Statement
disclosures to underlying supporting documentation, review of correspondence
with legal advisors, and enquiries of management in so far as they related to
the Financial Statements, testing of journals, and testing of the valuation of
investments and evaluating whether there was evidence of bias by the Directors
that represented a risk of material misstatement due to fraud.
There are inherent limitations in the audit procedures described above and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the Financial Statements, the less likely we
would become aware of it. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
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
(http://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 and Statutory Auditor
UHY Hacker Young
4 Thomas More Square
London E1W 1YW
24 March 2022
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the year ended 31/12/2021 For the year ended 31/12/2020
Notes USD USD
Gains on investments 3 98,741,409 82,259,735
Dividend income 48,333 129,897
Total investment income 98,789,742 82,389,632
Expenses
Bonus scheme payment charge 6 (9,676,043) (6,086,948)
Underpaid previous years' bonuses (372,556) -
Administrative expenses 5 (1,924,650) (1,234,005)
Operating gain 86,816,493 75,068,679
Net finance income 7 - 61,444
Currency exchange loss (104,678) (21,446)
Gain before taxation 86,711,815 75,108,677
Taxation 8 - -
Gain attributable to equity shareholders 86,711,815 75,108,677
Total comprehensive income for the year 86,711,815 75,108,677
Gain per share
Basic and diluted gain per share (cents per share) 9 291.58 257.35
Statement of Financial Position
At 31 December At 31 December
2021 2020
Notes USD USD
Non-current assets
Financial assets at FVPL 10 265,454,136 144,803,154
Total non-current assets 265,454,136 144,803,154
Current assets
Trade and other receivables 11 2,050,649 487,838
Cash and cash equivalents 12 25,527,801 39,004,288
Total current assets 27,578,450 39,492,126
Total assets 293,032,586 184,295,280
Current liabilities
Trade and other payables 13 9,904,823 6,372,573
Total current liabilities 9,904,823 6,372,573
Total liabilities 9,904,823 6,372,573
Net assets 283,127,763 177,922,707
Equity
Share capital 14 53,283,415 34,790,174
Retained profit 229,844,348 143,132,533
Total equity 283,127,763 177,922,707
The financial statements were approved by the Board of Directors on 24 March
2022 and were signed on its behalf by:
Alexander Selegenev
Executive Director
Statement of Cash Flows
For the year For the year
ended ended
31/12/2021 31/12/2020
Notes USD USD
Operating activities
Operating gain 86,816,493 75,068,679
Adjustments for non-cash items:
Changes in fair value of financial assets at FVPL 3 (98,600,052) (82,294,256)
Currency exchange loss (104,678) (21,446)
(11,888,237) (7,247,023)
Changes in working capital:
(Increase)/Decrease in trade and other receivables 11 (1,562,811) 224,119
Increase in trade and other payables 13 7,275,871 5,567,382
Net cash used in operating activities (6,175,177) (1,455,522)
Investing activities
Interest received 7 - 61,444
Purchase of financial assets at FVPL 10 (40,540,924) (12,503,095)
Proceeds from sale of financial assets at FVPL 10 18,489,994 41,201,387
Other financial income 7 - -
Net cash (used in)/ generated from investing activities (22,050,930) 28,759,736
Financing activities
Proceeds from issue of shares 14,749,620 -
Net cash generated from financing activities 14,749,620 -
(Decrease)/Increase in cash and cash equivalents (13,476,487) 27,304,214
Cash and cash equivalents at the beginning of the year 39,004,288 11,700,074
Cash and cash equivalents at the end of the year 12 25,527,801 39,004,288
Statement of Changes in Equity
(http://en.wikipedia.org/wiki/Statement_of_changes_in_equity)
For the year ended 31 December 2020 and for the year ended 31 December 2021,
USD
Share capital Retained losses Total
Note USD USD USD
Balance at 31 December 2019 34,790,174 68,023,856 102,814,030
Gain for the year - 75,108,677
75,108,677
Total comprehensive income for the year - 75,108,677
75,108,677
Balance at 31 December 2020 34,790,174 143,132,533 177,922,707
Gain for the year - 86,711,815
86,711,815
Total comprehensive income for the year - 86,711,815
86,711,815
Issue of shares 18,493,241 - 18,493,241
Balance at 31 December 2021 53,283,415 229,844,348 283,127,763
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company incorporated in
Jersey with its registered office at 13 Castle Street, St Helier, Jersey, 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,
UK-adopted International Accounting Standards and their interpretations issued
or adopted by the International Accounting Standards Board ("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
FVPL, 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.
On 15 September 2021, the Company established 100%-owned subsidiary TMT
Investments II GP Limited. As the subsidiary was dormant at the year-end,
consolidated accounts have not been prepared.
2.2 Going concern
In the year to date, the global economy was affected by the COVID-19 pandemic
and related market volatility. Whilst the Company's operations and liquidity
position were not directly impacted, the principal activity of the Company was
naturally affected through the impact on and therefore potential performance
of the Company's investee companies. Accordingly, the potential negative
effect of COVID-19 and related market volatility, while potentially affecting
the future fair value of the Company's investments, does not impact the
Company's liquidity position.
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 non-current financial assets according to the
geographical location of the investment (see note 4).
2.4 Foreign currency translation
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.
Conversation rates, USD
Currency As at 31.12.2021 Average rate, 2021
British pounds, £ 1.3477 1.3755
Euro, € 1.1319 1.1830
2.5 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand, deposits held
at call with banks, 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 and liabilities when it becomes party
to the contractual provisions of the instrument. Financial assets are
derecognised when the contractual rights to the cash flows from the financial
asset expire, or when the financial asset and substantially all the risks and
rewards are transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires. Financial assets are initially
measured at fair value adjusted for transaction costs (where applicable).
Financial assets are classified into the following categories:
• amortised cost;
• fair value through profit or loss (FVPL); and
• fair value through other comprehensive income (FVOCI).
In the periods presented, the Company does not have any financial assets
categorised as FVOCI.
The classification is determined by both:
• the entity's business model for managing the financial asset; and
• the contractual cash flow characteristics of the financial asset
Subsequent measurement
FVPL
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 FVPL. 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
relevant transactions during the year or shortly after the year end, which
gives an indication of fair value and considers other valuation methods to
provide evidence of 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 or sizeable partial
disposal. Fair value change is only recognised if that round involved a new
external investor. From time to time, the Company may assess the fair value in
the absence of a relevant independent equity transaction by relying on other
market observable data and valuation techniques, such as the analysis of
revenue multiples of comparable companies and/or comparable transactions. The
nature of such valuation techniques is highly judgmental and dependent on the
market sentiment at the time of the analysis.
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 mid-market
price at the time. 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 FVPL.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the
following conditions:
• they are held within a business model whose objective is to hold the
financial assets and collect its contractual cash flows; and
• the contractual terms of the financial assets give rise to cash flows that
are solely payments of principal and interest on the principal amount
outstanding.
After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Company's cash and cash equivalents, trade and
other receivables fall into this category of financial instruments
Impairment of Financial Assets
In relation to the impairment of financial assets, IFRS 9 requires an expected
credit loss model to be applied. The expected credit loss model requires the
Company to account for expected credit losses and changes in those expected
credit losses at each reporting date to reflect changes in credit risk since
initial recognition of the financial assets. IFRS 9 requires the Company to
recognise a loss allowance for expected credit losses on receivables. In
particular, IFRS 9 requires the Company to measure the loss allowance for a
financial instrument at an amount equal to the lifetime expected credit losses
(ECL) if the credit risk on that financial instrument has increased
significantly since initial recognition, or if the financial instrument is a
purchased or originated credit-impaired financial asset. However, if the
credit risk on a financial instrument has not increased significantly since
initial recognition, the Company is required to measure the loss allowance for
that financial instrument at an amount equal to 12 months ECL.
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
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the profit and loss account
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the reporting end
date.
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.
The Company is incorporated in Jersey. There is no current tax expense
recognised in the Statement of comprehensive income as the income tax rate for
Jersey companies is 0%.
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 Application of new and revised International Financial Reporting
Standards (IFRSs)
New and amended Standards and Interpretations applied
The following new and amended Standards and Interpretations have been issued
and are effective for the current financial period of the company.
Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
The amendment is effective for annual periods that begin on or after 1 April
2021, however early application is permitted. As the company has no such
rental expenses in the year ended 31 December 2021, the revised standard would
have no impact on the accounts of the entity and thus early adoption has not
been considered necessary.
Other amendments
There are no other relevant Standards or amendments issued by the IASB that
are effective for an annual period that begins on or after 1 January 2021.
New and revised Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the company has
not early adopted the following
amendments to Standards and Interpretations that have been issued but are not
yet effective:
Standard or Interpretation Effective for annual periods commencing on or after
Narrow scope amendments to IFRS 3, IAS 16 and IAS 37 1 January 2022
Annual improvements to IFRS Standards 2018-2020 1 January 2022
Amendments to IAS 1: Classification of Liabilities as Current or Non-Current 1 January 2023
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting 1 January 2023
Policies
Amendments to IAS 8: Definition of Accounting Estimates 1 January 2023
Amendments to IAS 12: Deferred Tax Related to Assets and Liabilities arising 1 January 2023
from a Single Transaction
As yet, none of these have been endorsed for use in the UK and will not be
adopted until such time as endorsement is confirmed. The directors do not
expect any material impact as a result of adopting the standards and
amendments
listed above in the financial year they become effective.
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 on investments
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
Gross interest income from convertible notes receivable 41,290 82,879
Net interest income from convertible notes receivable 41,290 82,879
Gains on changes in fair value of financial assets at FVPL 98,600,052 82,294,256
Other gains/(losses) on investment 100,067 (117,400)
Total net gains on investments 98,741,409 82,259,735
4 Segmental analysis
Geographic information
The Company has investments in geographical areas - USA, Estonia and the
United Kingdom, Israel, BVI, Cyprus and the Cayman Islands.
Non-current financial assets
As at 31/12/2020
USA Israel BVI Estonia Cyprus United Kingdom Total
USD USD USD USD USD USD USD
Equity investments 90,078,690 155,000 1,780,250 36,711,439 - 7,718,112 136,443,491
Convertible notes & SAFEs 6,827,998 - - 181,665 1,350,000 - 8,359,663
Total 96,906,688 155,000 1,780,250 36,893,104 1,350,000 7,718,112 144,803,154
As at 31/12/2021
USA Cayman Islands BVI Estonia Cyprus United Kingdom Total
USD USD USD USD USD USD USD
Equity investments 112,296,648 - 3,756,540 106,437,128 1,000,000 20,017,105 243,507,421
Convertible notes & SAFEs 14,620,030 1,030,000 - 1,332,985 3,600,000 1,363,700 21,946,715
Total 126,916,678 1,030,000 3,756,540 107,770,113 4,600,000 21,380,805 265,454,136
5 Administrative expenses
Administrative expenses include the following amounts:
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
Staff expenses (note 6) 805,459 653,318
Professional fees 502,124 254,172
Legal fees 393,682 97,100
Bank and LSE charges 31,434 18,336
Audit fees 38,183 31,625
Accounting fees 16,220 15,200
Rent - 94,608
Other expenses 137,548 69,646
1,924,650 1,234,005
The foreign exchange loss has been presented separately in the current
financial period from administrative expenses. Accordingly, the respective
amount of foreign exchange loss in the period ended 31 December 2020 has also
been presented separately for comparison. As a result, administrative expenses
for the year ended 31 December 2020 decreased by 1.7% from US$1,255,451 to
US$1,234,005. The relevant amounts in the Statement of Cash Flows for the year
ended 31 December 2020 have been affected correspondingly.
6 Staff expenses
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
Directors' fees 206,259 185,798
Wages and salaries 599,200 467,520
805,459 653,318
Wages and salaries shown above include fees and salaries relating to the year
ended 31 December 2021. Bonus Plan costs are not included in administrative
expenses and are shown separately.
The Directors' fees for 2021 and underpaid previous years' bonuses were as
follows:
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
Alexander Selegenev 180,109 100,000
Yuri Mostovoy 78,863 50,000
James Joseph Mullins 30,259 25,798
Petr Lanin 11,000 10,000
300,231 185,798
Due to a technical error in the calculation of the bonus pools in the bonus
periods from July 2016 to December 2020 (the "Affected Bonus Periods"), the
bonus pools in each of the Affected Bonus Periods were calculated on the basis
of the opening position being the previous period's "adjusted NAV before
bonus". Pursuant to the terms of the Company's bonus plan, each of the
Affected Bonus Periods should have seen the calculation assess the annual
growth in NAV from an opening position of "adjusted NAV after bonus". As a
result, the amount of bonuses actually accrued in the Affected Bonus Periods
were understated by an aggregate of US$372,556 (the "Underpaid Bonus"). As the
total amount of the Underpaid Bonus is considered immaterial, the error has
been corrected, and the Underpaid Bonus has been included in the current
financial statements as an additional charge for the current period.
Of the US$372,556 Underpaid Bonus amount, US$93,972 relates to directors of
the Company.
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 7
(2020: 6).
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.
Under the Company's Bonus Plan, subject to achieving a minimum hurdle NAV and
high watermark conditions, the team receives an annual cash bonus equal to 10%
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 and similar corporate transactions. The Company`s bonus year
runs from 1 January to 31 December. For the bonus period from 1 January 2021
to 31 December 2021, the total amount of bonus accrued was US$9,676,043. The
exact allocation of the accrued bonus is expected to be approved and paid to
the participants of the Company`s Bonus Plan shortly after the publication of
this report.
The minimum initial allocation of the 2021 Bonus Pool among the predetermined
participants of the Bonus Plan is as follows:
Participants of the Bonus Plan The minimum initial allocation of the Bonus Pool (%) The minimum initial allocation of the Bonus Pool (US$)
Artemii Iniutin (Employee) 16.5% 1,596,547
German Kaplun (Employee) 16.5% 1,596,547
Alexander Morgulchik (Employee) 16.5% 1,596,547
Alexander Selegenev (Director) 16.5% 1,596,547
Yuri Mostovoy (Director) 5.0% 483,802
Alexander Pak (Employee) 10.0% 967,604
Levan Kavtaradze (Employee) 8.0% 774,083
To be allocated 11.0% 1,064,366
Total 100.0% US$9,676,043
7 Net finance income
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
Interest income - 61,444
- 61,444
Given the extremely low interest rates in 2021, the Company did not keep any
cash in bank deposits during the period.
8 Income tax expense
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 per share
The calculation of basic gain per share is based upon the net gain for the
year ended 31 December 2021 attributable to the ordinary shareholders of
US$86,711,815 (2020: net gain of US$75,108,677) and the weighted average
number of ordinary shares outstanding calculated as follows:
Gain per share For the year ended 31/12/2021 For the year ended 31/12/2020
Basic gain per share (cents per share) 291.58 257.35
Gain attributable to equity holders of the entity 86,711,815 75,108,677
The weighted average number of ordinary shares outstanding was calculated as
follows:
For the year ended 31/12/2021 For the year ended 31/12/2020
Weighted average number of shares in issue
Ordinary shares 29,738,291 29,185,831
29,738,291 29,185,831
10 Non-current financial assets
Reconciliation of fair value measurements of non-current financial assets:
At 31 December 2021 At 31 December 2020
Investments held at fair value through profit and loss, USD:
- unlisted shares (i) 241,461,421 136,443,491
- promissory notes (ii) 4,266,715 2,753,663
- SAFEs (iii) 17,680,000 5,606,000
- Shares to be issued (iv) 2,046,000 -
265,454,136 144,803,154
At 31 December 2021 At 31 December 2020
USD USD
Opening valuation 144,803,154 91,207,190
Purchases (including consulting and legal fees) 40,540,924 12,503,095
Disposal proceeds (18,489,994) (41,201,387)
Impairment losses in the year - (585,745)
Realised gain 6,294,635 29,314,214
Unrealised gains 92,305,417 53,565,787
Closing valuation 265,454,136 144,803,154
Movement in unrealised gains
Opening accumulated unrealised gains 111,980,464 68,114,510
Movement in unrealised gains 92,305,417 53,565,787
Transfer of previously unrealised gains to realised reserve on disposal of (8,578,993) (9,699,833)
Investments
Closing accumulated unrealised gains 195,706,888 111,980,464
Reconciliation of investments, if held under the
cost (less impairment) model:
Historic cost basis
Opening book cost 32,822,690 23,092,680
Purchases (including consulting and legal fees) 40,540,924 12,503,095
Disposals on sale of investment (3,616,366) (2,187,340)
Impairment losses in the year - (585,745)
Closing book cost 69,747,248 32,822,690
Valuation methodology
Mid-market price 63,146,440 -
Revenue multiple 6,590,954 62,595,291
Cost and price of recent investment (reviewed for impairment and fair value 195,716,742 82,207,863
adjustment)
265,454,136 144,803,154
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
relevant transactions during the year or shortly after the year end, which
gives an indication of fair value and considers other valuation methods to
provide evidence of 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 or sizeable partial
disposal. Fair value change is only recognised if that round involved a new
external investor. From time to time, the Company may assess the fair value in
the absence of a relevant independent equity transaction by relying on other
market observable data and valuation techniques, such as the analysis of
revenue multiples of comparable companies and/or comparable transactions. The
nature of such valuation techniques is highly judgmental and dependent on the
market sentiment at the time of the analysis.
(i) Equity investments as at 31 December 2021:
Investee company Date of initial investment Value at Additions to equity investments during the period, USD Conversions from loan notes, USD Gain/loss from changes in fair value of equity investments, USD Disposals, USD Value at 31 Dec 2021, USD Equity stake owned
1 Jan 2021,
USD
DepositPhotos 26.07.2011 10,836,105 - - 3,454,987 (14,291,092) - -
Wanelo 21.11.2011 1,825,596 - - (1,223,149) - 602,447 4.69%
Backblaze 24.07.2012 56,004,337 - 2,000,000 5,142,103 - 63,146,440 9.97%
Remote.it 13.06.2014 3,025,285 - - (1,512,642) - 1,512,643 1.64%
Anews 25.08.2014 1,000,000 - - (670,000) - 330,000 9.41%
Klear 01.09.2014 155,000 - - 327,798 (482,798) - -
Bolt 15.09.2014 36,201,527 - - 67,174,273 - 103,375,800 1.38%
PandaDoc 11.07.2014 3,621,279 - - 14,564,491 (1,999,997) 16,185,773 1.18%
Full Contact 11.01.2018 244,506 - - - - 244,506 0.19%
ScentBird 13.04.2015 6,590,954 - - - - 6,590,954 4.43%
Workiz 16.05.2016 768,845 228,933 - 2,973,881 - 3,971,659 1.89%
Usual (formely Vinebox) 06.05.2016 450,015 - - - - 450,015 1.99%
Hugo 19.01. 2019 1,780,250 - - 1,976,290 - 3,756,540 3.55%
MEL Science 25.02.2019 2,663,696 - - - - 2,663,696 3.58%
Qumata (Healthy Health) 06.06.2019 415,737 545,156 - 857,929 - 1,818,822 3.03%
eAgronom 31.08.2018 288,224 - - 158,863 - 447,087 1.51%
Roket Games (Legionfarm) 16.09.2019 200,000 - - - - 200,000 1.26%
Timbeter 05.12. 2019 221,688 - - - - 221,688 4.64%
Classtag 03.02.2020 200,000 - - - - 200,000 1.18%
3S Money Club 07.04.2020 620,870 3,328,576 - 4,304,184 - 8,253,630 9.51%
Hinterview 21.09.2020 660,197 1,546 - 229,364 - 891,107 4.97%
Virtual Mentor (Allright) 12.11.2020 772,500 - - - - 772,500 2.95%
NovaKid 13.11.2020 500,000 640,001 - 1,809,854 - 2,949,855 1.22%
MTL Financial (OutFund) 17.11.2020 1,322,100 - - - - 1,322,100 5.25%
Scalarr 15.08.2019 2,756,563 - - (1,378,281) - 1,378,282 7.66%
Accern 21.08.2019 1,282,705 - - - - 1,282,705 5.11%
Feel 13.08.2020 2,035,512 - - - - 2,035,512 8.60%
Affise 18.09.2019 - 2,068,902 1,401,968 - - 3,470,870 8.71%
3D Look 03.03.2021 - 1,000,000 - - - 1,000,000 3.87%
FemTech 30.03.2021 - 274,220 - - - 274,220 9.63%
Muncher 23.04.2021 - 2,059,999 - - - 2,059,999 4.77%
CyberWrite 20.05.2021 - 500,000 - - - 500,000 3.71%
Outvio 22.06.2021 - 612,353 - - - 612,353 4.00%
VertoFX 16.07.2021 - 1,132,999 - - - 1,132,999 3.24%
Academy of change 02.08.2021 - 1,000,000 - - - 1,000,000 7.69%
EstateGuru 06.09.2021 - 1,780,200 - - - 1,780,200 2.73%
Prodly 09.09.2021 - 1,800,000 - - - 1,800,000 4.39%
Sonic Jobs 15.09.2021 - 712,018 - - - 712,018 2.88%
EdVibe (Study Space, Inc) 02.11.2021 - 1,500,001 - - - 1,500,001 7.36%
1Fit (Alippe, Inc) 24.12.2021 - 500,000 - - - 500,000 4.70%
Agendapro 03.09.2021 - 206,000 309,000 - - 515,000 2.00%
Total 136,443,491 19,890,904 3,710,968 98,189,945 (16,773,887) 241,461,421
(ii) Convertible loan notes as at 31 December 2021:
Investee company Date of initial investment Value at 1 Jan 2021, Additions to convertible note investments during the period, USD Conversions, USD Gain/loss from changes in fair value of equity investments, USD Disposals, USD Value at 31 Dec 2021, USD Term, years Interest rate, %
USD
Sharethis 26.03.2013 570,030 - - - 570,030 5.0 1.09%
KitApps 10.07.2013 600,000 - - 546,125 (1,146,125) - - -
Affise 18.09.2019 1,401,968 - (1,401,968) - - - -
Postoplan 08.12.2020 181,665 1,151,320 - - 1,332,985 1.0 2.00%
Metrospeedy 16.07.2021 - 1,000,000 - - 1,000,000 - -
Feel 08.10.2021 - 1,363,700 - - - 1,363,700
Total 2,753,663 3,515,020 (1,401,968) 546,125 (1,146,125) 4,266,715
(iii) SAFEs as at 31 December 2021:
Investee company Date of initial investment Value at 1 Jan 2021, Additions to SAFE investments during the period, USD Conversions to equity, USD Gain/loss from changes in fair value of SAFE investments, USD Disposals, USD Value at 31 Dec 2021, USD
USD
Spin Technology 17.12.2018 300,000 - - - - 300,000
Cheetah (Go-X) 29.07.2019 350,000 - - - - 350,000
Adwisely (formerly Retarget) 24.09.2019 1,350,000 250,000 - - - 1,600,000
Roket Games (Legionfarm) 17.09.2019 1,200,000 - - - - 1,200,000
Classtag 03.02.2020 200,000 - - - - 200,000
Moeco 08.07.2020 1,000,000 - - (500,000) - 500,000
Volumetric 24.07.2020 206,000 - - 363,982 (569,982) -
StudyFree 08.12.2020 1,000,000 - - - - 1,000,000
Agendapro 15.04.2021 - 309,000 (309,000) - - -
Aurabeat 03.05.2021 - 1,030,000 - - - 1,030,000
Synder (CloudBusiness Inc) 26.05.2021 - 2,060,000 - - - 2,060,000
Collectly 13.07.2021 - 2,060,000 - - - 2,060,000
Backblaze 10.08.2021 - 2,000,000 (2,000,000) - - -
OneNotary (Adorum) 01.10.2021 - 500,000 - - - 500,000
BaFood 05.11.2021 - 2,000,000 - - - 2,000,000
Educate online 16.11.2021 - 1,000,000 - - - 1,000,000
My Device Inc 30.11.2021 - 850,000 - - - 850,000
Mobilo (Lulu Systems, Inc) 09.12.2021 - 1,030,000 - - - 1,030,000
Muncher 13.12.2021 - 2,000,000 - - - 2,000,000
Total 5,606,000 15,089,000 (2,309,000) (136,018) (569,982) 17,680,000
(iv) Shares to be issued as at 31 December 2021:
Investee company Date of initial investment Value at Additions to equity investments during the period, USD Conversions from loan notes, USD Gain/loss from changes in fair value of equity investments, USD Disposals, USD Value at 31 Dec 2021, USD
1 Jan 2021,
USD
3S Money Club - 2,046,000 - - - 2,046,000
Total 2,046,000 2,046,000
11 Trade and other receivables
At 31 December 2021 At 31 December 2020
USD USD
Prepayments 53,412 26,631
Other receivables 1,917,843 272,779
Interest receivable on promissory notes 79,394 188,428
2,050,649 487,838
The fair value of trade and other receivables approximate to their carrying
amounts as presented above. During the years ended 31 December 2021 and 2020
no balances were past due or impaired, and no credit losses had been expected.
Other receivables as of 31 December 2021 represent amounts due from the
disposal of the investments in Klear, KitApps and DepositPhotos.
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2021 include cash on hand and
in banks.
Cash and cash equivalents comprise the following:
At 31 December 2021 At 31 December 2020
USD USD
Bank balances 25,527,801 39,004,288
25,527,801 39,004,288
The following table represents an analysis of cash and equivalents by rating
agency designation based on Moody`s rating or their equivalent:
At 31 December 2021 At 31 December 2020
USD USD
Bank balances
A3 rating 25,512,940 39,004,288
Baa3 rating 3,296 -
Not rated 11,565 -
Total 25,527,801 39,004,288
13 Trade and other payables
At 31 December 2021 At 31 December 2020
USD USD
Salaries payable 82,500 40,000
Directors' fees payable 40,534 22,954
Bonuses payable 9,676,043 6,257,560
Trade payables 73,042 27,491
Accruals 32,704 24,568
9,904,823 6,372,573
The fair value of trade and other payables approximate to their carrying
amounts as presented above.
14 Share capital
On 31 December 2021, 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 2021 At 31 December 2020
USD USD
Share capital 53,283,415 34,790,174
Issued capital comprises: Number Number
Fully paid ordinary shares 31,451,538 29,185,831
Number of shares Number of shares
Balance at 31 December 2020 29,185,831 29,185,831
Issue of ordinary shares 2,265,707 -
Balance at 31 December 2021 31,451,538 29,185,831
In connection with the capital raising of US$19,258,510 (before expenses)
completed in October 2021, the Company issued and allotted, in aggregate,
2,265,707 new ordinary shares, at US$8.50 per ordinary share. 598,799 of the
new ordinary shares were subscribed for by Executive Director Alexander
Selegenev and certain members of the Company's founding management team and
their connected parties, at the same issue price, and US$3,743,621 of the
relevant placing proceeds were settled against the Company's outstanding bonus
liabilities to those parties.
15 Capital management
The capital structure of the Company consists of equity share capital,
reserves, and retained earnings.
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.
16 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 2021 the largest exposure to credit risk related to cash and
cash equivalents (US$25,527,801). 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 2021 At 31 December 2020
USD USD
Convertible notes receivable & SAFEs 21,946,715 8,359,663
Trade and other receivables 2,050,649 487,838
Cash and cash equivalents 25,527,801 39,004,288
49,525,165 47,851,789
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.
COVID-19 and related market volatility, whilst not directly affecting the
Company's operations and liquidity position, impact the underlying performance
and therefore future fair market values of the Company's investee companies
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.
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 2021 was as follows:
For the year ended 31/12/2021 For the year ended 31/12/2021 For the year ended 31/12/2020 For the year ended 31/12/2020
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 534,672 294,597 94,261 7,987
Current liabilities
Trade and other payables (50,106) (1,215) (4,309) -
Net (short) long position 484,566 293,382 89,951 7,987
Net exposure currency 359,550 259,195 65,903 6,506
Net exposure currency (assuming a 10% movement in exchange rates) 436,109 264,044 80,956 7,188
Impact on exchange movements in the statement of comprehensive income 48,457 29,338 8,995 799
The foreign exchange rates of the USD at 31 December were as follows:
31/12/2021 31/12/2020
Currency
British pounds, £ 1.3477 1.3649
Euro, € 1.1319 1.2276
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 2021, the cash and equivalents of the Company were
US$25,527,801.
The following are the maturities of current liabilities as at 31 December
2021:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
Salaries 82,500 82,500 - -
Directors' fees payable 40,534 40,534 - -
Bonuses payable 9,676,043 9,676,043 - -
Trade payables 73,042 73,042 - -
Accruals 32,704 32,704 - -
9,904,823 9,904,823 - -
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 2021:
Level 1 Level 2 Level 3 Total
USD USD USD USD
Financial assets
Financial assets at FVPL 63,146,440 195,716,742 6,590,954 265,454,136
63,146,440 195,716,742 6,590,954 265,454,136
17 Related party transactions
The Company's Directors receive fees and bonuses from the Company, details of
which can be found in Note 6.
18 Subsequent events
Refer to the "Events after the reporting period" in the "Portfolio
Developments" section above.
19 Control
The Company is not controlled by any one party. Details of significant
shareholders are shown in the Directors' Report.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European (Withdrawal) Act 2018 (as amended).
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