REG - TMT Investments - Final Results and Notice of AGM
28/03/2023 07:00
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RNS Number : 3817U TMT Investments PLC 28 March 2023
28 March 2023
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2022 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 2022.
Highlights:
· NAV per share of US$6.41 (down 28.7% from US$9.00 as of 31 December
2021)
· Total NAV of US$201.7 million (down from US$283.1 million as of 31
December 2021)
· 5-year IRR of 22.8% per annum
· US$9.6 million of investments across 9 new and existing companies in
2022
· Diversified global portfolio of over 50 companies focused mainly
around SaaS (software-as-a-service), marketplaces, big data/cloud, EdTech,
FinTech, e-commerce, and FoodTech solutions
· US$11.4 million in cash and cash equivalent reserves as of 27 March
2023
Alexander Selegenev, Executive Director of TMT, commented:
"Despite global political and economic volatility, 2022 saw continued investor
interest in high-growth, high-quality digital technology companies, resulting
in positive revaluations of several of TMT's portfolio companies. Accern,
Outfund, FemTech, Spin Technology, Muncher, Cyberwrite and Feel received
further validation for their business models by raising fresh equity capital
at higher valuations. In tandem, many other portfolio companies have
continued to either grow their businesses quietly in the background, or
diligently react to the evolving market situation, adapting and repositioning
their businesses as required. At the same time, as always, TMT has
proactively been reducing valuations in the portfolio companies that have
started to experience difficulties adapting to the current environment, whose
business models have not been proven quickly enough, or those with unclear
prospects of raising new capital.
A challenging macro-economic environment in 2022 meant that many companies,
both tech and non-tech, large and small, are having to react to the changed
outlook and improve their business models and financial management.
At TMT, we believe that the current macro-economic and market challenges will
widen the gap between winners and losers in the technology sector. This is a
double-edged sword, with the better companies being rewarded more handsomely
as investors pay up for the best quality companies, whilst the weaker
companies are likely to suffer more than under previously more benign
environments. We are therefore favouring companies
demonstrating profitability or a clear path to profitability and with the
management skills, commercial acumen and adaptability to succeed against a
tougher macro-economic backdrop.
Given the high level of market uncertainty and volatility, TMT chose to invest
selectively in 2022, investing approximately US$9.6 million into 4 new
portfolio companies and making 6 additional investments into portfolio
companies.
TMT's five largest holdings by value (Bolt, Backblaze, 3S Money, Pandadoc and
Scentbird) make up 64% of TMT's portfolio value, and are companies that are
generating double or triple digit revenue growth, with the exception of
Scentbird. Scentbird generated single digit revenue growth in 2022, a no
mean feat in the current environment, and is targeting positive EBITDA in
2023. All of TMT's five largest holdings are well capitalised, with
well-established business operating models and strong management that place
them in good stead in the current environment.
Early and mid-stage companies represented 45% of TMT's total portfolio value
and 93% of the total number of portfolio companies, providing a large pipeline
from which to keep growing tomorrow's winners.
The significantly reduced share prices of publicly traded technology companies
negatively affected the value of TMT's equity stake in NASDAQ-traded cloud
storage company Backblaze (www.backblaze.com (http://www.backblaze.com) ),
resulting in a US$40.2 million reduction in the value of TMT's investment in
Backblaze as of 31 December 2022. Despite such financial market volatility,
Backblaze's business has been developing well, recording 26% revenue growth in
2022 compared to 2021. Backblaze remains well capitalised with a preliminary
announced unaudited net cash position of approximately US$32 million as of 31
December 2022.
Consistent with TMT's prudent valuation policy, the Company has also decided
to reduce the fair value of its equity stake in Bolt (www.bolt.eu
(http://www.bolt.eu) ) by 33%, despite the fact that the previous valuation
level was established on the back of Bolt's successful €628 million equity
raise, which completed in January 2022 and after the market correction had
started. This decision reflects the reduction in the values of Bolt's
publicly traded peers, namely Uber, as of 31 December 2022. Business-wise,
Bolt continued to perform reasonably well in 2022, recording double-digit
revenue growth, making progress towards operating profitability and enjoying
the benefits of its significant net cash reserves. As a business, Bolt also
benefits from a highly diversified geographical revenue base, with over 100
million customers in more than 45 countries across the globe, as well as
leveraging its technology to serve six business segments: rides, scooter
rental, car sharing, food delivery, grocery delivery and business travel.
TMT is continuing to identify investment opportunities very selectively and at
appropriate valuation levels, whilst employing an extremely cautious general
investment approach for the time being. With no financial debt and cash and
cash equivalent reserves of approximately US$11.4 million as of 27 March 2023,
TMT is well positioned to ride out the current market volatility and make
selective investments and realise disposals when the right opportunities
present themselves."
Notice of AGM
The Company's Annual General Meeting will be held on 23 May 2023 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 2022
and Notice of AGM will shortly be available on the Company's website at
www.tmtinvestments.com (http://www.tmtinvestments.com) .
For further information contact:
TMT Investments Plc +44 (0)1534 281 800
Alexander Selegenev (Computershare - Company Secretary)
Executive Director
www.tmtinvestments.com (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)
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).
About TMT Investments Plc
TMT Investments Plc invests in high-growth technology companies globally
across a number of core specialist sectors. Founded in 2010, TMT has a
current investment portfolio of over 50 companies and net assets of US$202
million as of 31 December 2022. 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
2022 saw substantially increased market and economic volatility, with the
larger-cap public market sell-off throughout the year leading to reduced
valuations for some privately held start-ups. A challenging macro-economic
environment has meant that many companies, both tech and non-tech, large and
small, are having to react to the changed outlook and improve their business
models and financial management.
Developments in the Technology Venture Capital Sector
As 2022 progressed, we observed an acceleration of two existing trends: first,
an increasing focus by investors on examining a tech start-up's
profitability/path to profitability, and second, increasing divergence in how
tech companies are reacting to the changed market and operational environment.
Turning to the first trend, venture capital investors are now much more
reticent than previously to subsidise revenue growth or market share gains at
the expense of profitability or a clear path to profitability. This
rebalancing by investors towards a greater focus on profitability and away
from "revenue growth at any cost" accelerated as 2022 progressed. This is to
be expected: an innovative technology solution only becomes valuable to
investors if it can achieve a product market fit (right product or service for
the right client at the right price) that is ultimately focused on
profitability.
TMT was early to observe this trend and we commented on this already in our
2020 Annual Report, when tech companies' business models were tested by the
COVID-caused disruption in 2020, and had already sought to implement this
insight in terms of TMT's portfolio selection by tilting the portfolio toward
companies that recognised the importance of having viable business models
focused on visible profitability and strong management of their financial
resources.
Turning to the second trend, the knock-on effect of this rebalancing in the
venture capital industry is now forcing the majority of start-ups of all
stages to prioritise profitability over growth, with growth only being
rewarded if it is achieved in a tightly controlled cost environment. This
means that being a tech company with an innovative business model, product or
service has ceased to be sufficient per se to attract immediate investor
attention. As a result, tech companies are having to reassess their
underlying business models and profitability timelines and work harder to
ensure their product market fit is well positioned to retain and grow market
share.
The marked change in how investors value technology companies is creating a
"survival of the fittest" market dynamic, as companies react to a changed
market environment and how they are valued by investors. On the one hand,
companies with superior business models that have reacted quickly and adopted
successful measures have continued to grow and flourish, albeit at lower
speeds. On the other hand, companies with weaker business models that were
more dependent on future funding and have failed to react successfully have
come under increased pressure.
TMT's portfolio has not been immune to these developments, and we are
naturally seeing an increasing divergence between the stronger and weaker
performers. A first group of companies were quick to react in early 2022 by
reducing burn-rates and accelerating their paths to profitability, continuing
to refine their business models, or taking other required measures. In many
cases this has led to lower revenue growth rates, but a stronger and more
sustainable business position overall. A second group only started reacting
in late 2022 / early 2023. Those companies that were slower to react to the
tougher economic environment may have grown their revenues a bit faster
compared to the first group, but their recent aggressive burn rates are now
forcing them to have to look for new funds at lower valuation levels and/or
implement business optimisation measures in a more stressed environment. A
third group includes well capitalised companies with high levels of cash
reserves and typically low burn rates or close to achieving profitability.
Such companies are in the fortunate position of being able to choose whether
to focus on revenue growth or profitability, depending on what they see as a
priority for success in their respective market sectors.
Technology Company Valuations
Despite the challenging macroeconomic and political outlook, investors in 2022
continued to back high-growth, high-quality digital technology companies,
taking into account the above noted trends in the tech company universe.
This resulted in positive revaluations of several of TMT's portfolio
companies. We were pleased to see Accern, Outfund, FemTech, Spin.ai,
Muncher, and Cyberwrite receive further validation for their business models
by raising fresh equity capital at higher valuations to TMT's previous entry
points.
TMT adopts a conservative approach to valuing its portfolio investments and
therefore regularly reviews and writes down investments that are not showing
the progress TMT believes is required to justify the previously reported
valuation level. As a result, in addition to Bolt and Backblaze, TMT
partially or fully wrote down the value of twelve of its smaller investments
during the period (excluding further write-downs related purely to exchange
rate fluctuations).
The significantly reduced share prices of publicly traded technology companies
negatively affected the value of TMT's equity stake in NASDAQ-traded cloud
storage company Backblaze (www.backblaze.com (http://www.backblaze.com) ),
resulting in a US$40.2 million reduction in the value of TMT's investment in
Backblaze as of 31 December 2022. Despite such financial market volatility,
Backblaze's business has been developing well, recording 26% revenue growth in
2022 compared to 2021. Backblaze remains well capitalised with a preliminary
announced unaudited net cash position of approximately US$32 million as of 31
December 2022.
Consistent with TMT's prudent valuation policy, the Company has also decided
to reduce the fair value of its equity stake in Bolt (www.bolt.eu
(http://www.bolt.eu) ) by 33%, despite the fact that the previous valuation
level was established on the back of Bolt's successful €628 million equity
raise, which completed in January 2022 and after the market correction had
started. This decision reflects the reduction in the values of Bolt's
publicly traded peers, namely Uber, as of 31 December 2022. Business-wise,
Bolt continued to perform reasonably well in 2022, recording double-digit
revenue growth, making progress towards operating profitability and enjoying
the benefits of its significant net cash reserves. As a business, Bolt also
benefits from a highly diversified geographical revenue base, with over 100
million customers in more than 45 countries across the globe, as well as
leveraging its technology to serve six business segments: rides, scooter
rental, car sharing, food delivery, grocery delivery and business travel.
As can be seen from the BVP Cloud Index (https://cloudindex.bvp.com/
(https://cloudindex.bvp.com/) ), median valuation multiples for larger-cap
publicly traded technology companies have fallen sharply, in effect returning
to the more sustainable levels seen in 2013-2017.
The negative effect of increased market and economic volatility on
earlier-stage start-ups has been the generally lower disbursement levels of
funding that we are currently seeing, as investors continue to carefully
assess how tech companies are reacting to the current challenges. 'Dry
powder' cash levels available for investment remain very high globally, as the
State of European Tech 2022 report
(https://stateofeuropeantech.com/4.investors/4.1-fundraising#C4-2-cam-pac-dp)
indicates, but founders are having to go the extra mile to prove the quality
and potential of their businesses as investors become more discerning. This
is to be expected and bodes well for high levels of funding to continue being
available to tech companies with strong business models, a successful
differentiated offering and savvy financial management.
NAV per share
The Company's NAV per share in 2022 decreased by 28.7% to US$6.41 as of 31
December 2022 (31 December 2021: US$9.00), mainly as a result of the
significant downward revaluation of Backblaze and Bolt during 2022.
Operating expenses
In 2022, the Company's administrative expenses of US$1,443,395 were below
corresponding 2021 levels (2021: US$1,924,650), reflecting the Company's
reduced level of investment and business development activities during the
period.
Financial position
As of 31 December 2022, the Company had no financial debt and cash reserves of
approximately US$10.1 million (31 December 2021: US$25.5 million). As of 27
March 2023, the Company had cash and cash equivalent reserves of approximately
US$11.4 million.
With regard to the recent developments surrounding Silicon Valley Bank
("SVB"), TMT's main banking partner, the Company notes that, after the
measures implemented by the USA's Federal Deposit Insurance Corporation and
Federal Reserve, the Company expects to retain access to all its funds held at
SVB and that therefore the developments regarding SVB are not expected to have
any impact on TMT's financial position. For the same reasons the Company
does not believe that the recent developments at SVB will have any material
impact on the financial position of its portfolio companies. As of 27 March
2023, the Company had approximately US$2.9 million in cash held with SVB.
Outlook
TMT has a diversified investment portfolio of over 50 companies, focused
primarily on big data/cloud, SaaS (software-as-a-service), marketplaces,
e-commerce, FinTech, EdTech and FoodTech, most of which continue to benefit
from the ongoing shift to online consumer habits and remote working.
2022 saw a dramatic change for the venture capital and technology company
environment, with most investors "returning to basics" by looking to support
ultimately profitable business models at sensible valuations. Start-ups have
now realised that the "growth at any cost" approach has rapidly been replaced
with a focus on "fundamentally profitable growth at the right valuation".
Start-ups' ability to reposition and adjust to the changed market environment
will largely define their success/survival rate in the near future.
The recent military conflict in Ukraine and more recently the US and European
bank liquidity issues have undoubtedly added significantly to global market
uncertainty. A number of negative trends and factors continue to affect the
prospects of the wider global economy, and the ultimate effect on the
technology sector and its participants will depend on how global dynamics
unfold in the coming months.
Despite the ongoing volatility, investors continue to be interested in
high-quality technology businesses at the right valuation levels. TMT is
continuing to identify such opportunities very selectively, whilst employing
an extremely cautious general investment approach for the time being. With
no financial debt and cash reserves of approximately US$11.4 million as of 27
March 2023, TMT is well positioned to ride out the current market volatility
and to continue making investments and realising full and partial disposals
when the right opportunities present themselves.
Alexander Selegenev
Executive Director
27 March 2023
PORTFOLIO DEVELOPMENTS
The following developments have had an impact on, and are reflected in, the
Company's NAV and/or financial statements as of 31 December 2022 in accordance
with applicable accounting standards.
Full and partial cash exits, and positive revaluations:
· Accern, a no-code AI platform for the financial service industry
(www.accern.com (http://www.accern.com) ), completed a new equity funding
round. The transaction represented a revaluation uplift of US$1.6 million
(or 124%) in the fair value of TMT's investment, compared to the previous
reported amount as of 31 December 2021.
· MTL Financial, trading as Outfund, a revenue-based financing provider
(www.out.fund (http://www.out.fund) ), completed a new equity funding round.
The transaction represented a revaluation uplift of US$1.2 million (or 94%) in
the fair value of TMT's investment, compared to the previous reported amount
as of 31 December 2021.
· FemTech, a London-based technology accelerator focused on female
founders (www.femtechlab.com (http://www.femtechlab.com) ), completed two new
equity funding rounds in July 2022 and February 2023. The latest transaction
represented a revaluation uplift of US$0.5 million (or 196%) in the fair value
of TMT's investment, compared to the previous reported amount as of 31
December 2021.
· Spin.ai, an all-in-one SaaS data protection platform for
mission-critical SaaS apps (www.spin.ai (http://www.spin.ai) ), completed a
new equity funding round. The transaction represented a revaluation uplift
of US$0.7 million (or 221%) in the fair value of TMT's investment, compared to
the previous reported amount as of 31 December 2021.
· Muncher, a cloud kitchen and virtual food brand operator in South
America (www.muncher.com.co (http://www.muncher.com.co) ), completed a new
equity funding round. The transaction represented a revaluation uplift of
US$1.6 million (or 41%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2021.
· Cyberwrite, an AI cyber insurance platform providing cybersecurity
insights and risk quantification for businesses worldwide (www.cyberwrite.com
(http://www.cyberwrite.com) ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.5 million (or 95%) in the
fair value of TMT's investment, compared to the previous reported amount as of
31 December 2021.
· In its 2021 Annual Report, the Company reported that Delivery Hero
SE, one of the world's leading local food delivery platforms, had announced in
October 2021 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 Hugo's multi-category marketplace's
core food delivery and quick commerce business in Central America (the
"Original Disposal"). In November 2022, the Original Disposal finally
completed with slightly amended terms (the "Final Disposal"). As part of the
Final Disposal, TMT received an initial dividend payment of US$0.2 million
from Hugo in November 2022.
· TMT's equity stake in 3S Money Club Limited (www.3s.money
(http://www.3s.money) ) was revalued on the back of independent secondary
equity transactions in 3S Money shares. The relevant secondary transactions
represented a revaluation uplift of US$3.8 million (or 37%) in the fair value
of TMT's investment, compared to the previous reported amount as of 31
December 2021.
In addition, TMT's investment in eAgronom had a minor increase in value thanks
to the exchange rate movement as of 31 December 2022.
Negative revaluations:
The following of the Company's portfolio investments were negatively revalued
in 2022:
Portfolio Company Write-down amount (US$) Reduction as % of fair value reported as of 31 Dec 2021 Reasons for write-down
Backblaze 40,153,509 64% Based on the closing mid-market price of US$6.15 per share on 31 December 2022
Bolt 33,618,816 33% Based on comparable company analysis, and supported by a partial buying order
received by TMT from a bona fide financial buyer
Pandadoc 5,341,305 33% Based on comparable company analysis
Affise 1,675,190 48% Based on comparable company analysis
Remote.it 1,381,443 91% Independent convertible note round
MEL Science 1,758,040 66% Based on comparable company analysis; lack of progress in the last 2 years
Estateguru 979,500 55% Based on comparable company analysis (plus exchange rate effect); extra
exposure to the current financial market volatility
StudyFree 1,000,000 100% Serious lack of progress in the last 2 years
EdVibe 750,001 50% Insufficient progress in the last 1.5 years; revenue exposure to Russia
Academy of Change 670,000 67% Insufficient progress in the last 1.5 years; previous revenue exposure to
Russia
3D Look 499,999 50% Lack of progress in the last 2 years
Usual 450,015 100% Independent highly dilutive equity capital raise
Hugo 338,222* 9% Acquisition by Delivery Hero announced in Oct 2021 completed in Nov 2022.
Value of TMT's investment partially reduced due to the expedited receipt of
relevant proceeds.
Anews 330,000 100% Company liquidated
Total 88,946,040
*- adjusted for the US$0.2 million dividend TMT received from Hugo in November
2022.
In addition, the following of TMT's non-USD denominated investments decreased
in value due to exchange rate fluctuations as of 31 December 2022: Feel,
Timbeter, Hinterview, MTL (Outfund), Conte.ai (Postoplan), Outvio, Sonic Jobs,
Bairro, and Laundry Heap.
Key developments for the five largest portfolio holdings in 2022 (source:
TMT's portfolio companies):
Bolt (ride-hailing and food delivery service):
· Active in over 500 cities globally (up from over 400 cities as of 31
December 2021)
· Double-digit revenue growth
Backblaze (cloud storage provider):
· Double-digit revenue growth
· Multiple new integrations and partnerships building basis for future
growth
· Targeting adjusted EBITDA breakeven point in Q4 2023
PandaDoc (proposal automation and contract management software):
· Double-digit revenue growth
· Over 40,000 paying clients (from over 30,000 as of 31 December 2021)
· Acquisition of LiveNotary to launch a remote online notarisation
service
3S Money Club (provider of corporate multi-currency bank accounts):
· Triple-digit revenue growth
· Profitable and cash flow positive
Scentbird (Perfume, wellness and beauty product subscription service):
· Single-digit revenue growth
· Acquisition of car air freshener company Drift
· Targeting positive EBITDA in 2023
New investments:
Given the high level of market uncertainty and volatility, TMT was even more
selective in 2022, investing approximately US$9.6 million across the following
companies:
· Initial €825,000 in Bairrissimo, LDA, trading as Bairro, an instant
food and grocery delivery company in Portugal (https://bairro.io
(https://bairro.io) )
· Initial US$4,000,000 in SOAX Ltd, a SaaS-enabled marketplace of tools
to collect publicly available data at scale (https://soax.com
(https://soax.com) )
· Initial £500,000 and additional £999,918 in Laundryheap Limited, a
marketplace for on-demand laundry and dry-cleaning services
(https://www.laundryheap.co.uk/ (https://www.laundryheap.co.uk/) )
· Initial US$1,000,000 in MedVidi Inc., an online mental healthcare
provider (www.medvidi.com (http://www.medvidi.com) );
· Additional €400,000 in Postoplan OÜ, trading as Conte.ai, a social
network marketing platform, which helps create, schedule, and promote content
(www.conte.ai (http://www.conte.ai) );
· Additional US$250,000 in Legionfarm, Inc., an online game coaching
platform (www.legionfarm.com (http://www.legionfarm.com) );
· Additional £250,000 in Feel Holdings Limited, a subscription-based
multivitamin and supplement producer (www.wearefeel.com
(http://www.wearefeel.com) );
· Additional US$500,000 in Bafood Global Limited, a hyper local
ready-to-eat food delivery and cloud kitchen operator in Eastern Europe
(https://bafood.app (https://bafood.app) ); and
· Additional US$200,000 in My Device Inc., trading as Whizz, a
device-as-a-service e-bike rental company (www.getwhiz.co
(http://www.getwhiz.co) ).
Events after the reporting period
In January and March 2023, TMT received a total additional US$1.6 million in
dividends from Hugo, as part of the consideration for Hugo's disposal of its
food delivery and quick commerce business in Central America to Delivery Hero.
In February 2023, TMT invested an additional US$0.1 million in Cyberwrite, an
AI cyber insurance platform providing cybersecurity insights and risk
quantification for businesses worldwide (www.cyberwrite.com
(http://www.cyberwrite.com) ).
In February 2023, TMT invested an additional £45,861 in FemTech, a
London-based technology accelerator focused on female founders
(www.femtechlab.com (http://www.femtechlab.com) ).
In February 2023, TMT received US$0.3 million from Backblaze, Inc., as a
settlement payment in respect of TMT's additional investment in Backblaze in
2021.
In March 2023, Silicon Valley Bank ("SVB"), a key banking partner of TMT and
many of its investee companies, experienced liquidity issues. As a result of
the various measures implemented by the USA's Federal Deposit Insurance
Corporation and Federal Reserve, the Company expects to retain access to all
its funds held at SVB and that therefore the developments regarding SVB are
not expected to have any material impact on the financial position of TMT or
any of its portfolio companies.
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) by both businesses
and society at large continued to evolve in 2022, as countries around the
world emerged from the devastating social and economic fallout provoked by the
COVID pandemic. Investor attention has been driven by three main factors:
regulatory pressure, underlying investor demand and a recognition that current
levels of ESG data available remain opaque and under-developed in many
sectors, resulting in new business opportunities to meet this shortfall.
The Company has been monitoring ESG issues before they reached the mainstream
investment agenda. As such, TMT has made a number of investments in
ESG-focused companies that also meet TMT's investment objectives.
In 2021, TMT started formalising its ESG Policy under the guiding principles
that it be relevant, realistic and accountable, and finalised it as published
in its Interim Results 2022. Starting with 2022 and going forward, TMT will
also be providing an annual update on ESG developments in TMT's portfolio.
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.
The Company engages two brokers, Cenkos Securities plc ("Cenkos") and Hybridan
LLP ("Hybridan") as Joint Brokers to TMT. Together with the Company's other
advisors, both brokers arrange 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 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 Andrea Nastaj) and the
Executive Director (Alexander Selegenev). James Mullins and Andrea Nastaj,
both Non-executives, are considered by the Board to be independent. James
Mullins was appointed to the Board in December 2010. Whilst James Mullins has
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 James
Mullins continues 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, James Mullins will 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 2022. One meeting of the Audit Committee, one
meeting of the Remuneration Committee and one meeting of the Nomination
Committee were held in 2022. The number of meetings attended by the Directors
is set out below.
Board Audit Committee Remuneration Committee Nomination Committee
Director meetings meetings meetings meetings
Yuri Mostovoy 6 - -
Alexander Selegenev 5 - - 1
Petr Lanin 1 1 1
Andrea Nastaj 3
James Mullins 6 1 1 1
Total meetings 6 1 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 below.
Yuri Mostovoy, Non-Executive Chairman, was appointed to the Board in June
2011. Yuri brings over 39 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.
Andrea Nastaj, independent Non-executive Director, was appointed to the Board
in May 2022, succeeding Petr Lanin. Andrea is an experienced executive within
the financial sector, having held senior positions at a number of financial
institutions. He has, for the past decade, served as Head of Compliance for
Capital Mill OÜ, the commercial real estate investor and manager. Prior to
this, Andrea held the position of Vice-President at Banque Profil de Gestion,
the independent bank whose primary services are private and investment
banking. Banque Profil de Gestion merged with One Swiss Bank SA in June 2021
and is listed on the SIX Swiss Exchange (SIX:ONE). His appointment to the
Board as an independent non-executive director of the Company brings to the
team a wealth of corporate governance, compliance and financial services
experience. Andrea has a Master's in Accounting and Finance from the
University of St. Gallen, Switzerland.
Andrea Nastaj is a member of the Company's Audit and Remuneration Committees.
PRINCIPLE 7
EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT OBJECTIVES, SEEKING
CONTINUOUS IMPROVEMENT
The Company conducts evaluation of the effectiveness of its Board and
committees and that of the Executive and Non-executive Directors' performance
in accordance with the QCA Code. The results of such reviews are used to
determine whether any alterations are needed or whether any additional
training would be beneficial. After considering different alternatives the
Board made the decision to undertake the evaluations internally.
The fifth such formal evaluation for the year ended December 2022 took place
in February 2023. The previous such evaluation had been for the year ended
December 2021, which started in January 2022 and concluded in February 2022.
Compared to the previous year, the responses to the various evaluation
questionnaires 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 2023.
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).
TMT's Board effectiveness questionnaire content had been updated in 2021 in
light of the QCA's "Board Performance Review Guide" published by the QCA in
2021, and as detailed in TMT's 2021 Annual Report (Board effectiveness
review). TMT therefore continued to make use of the same board effectiveness
questionnaire to conduct its 2022 evaluation, with some minor updates.
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.
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
2020.
Nomination Committee effectiveness
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 2022 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.
In 2021, TMT started formalising its ESG Policy under the guiding principles
that it be relevant, realistic and accountable, and finalised it as published
in its Interim Results 2022. Starting with 2022 and going forward, TMT will
also be providing an annual update on ESG developments in TMT's portfolio.
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 should meet at least twice a year and currently comprises
James Mullins and Andrea Nastaj being non-executive members of the Board, with
James Mullins appointed as chairman. The Audit Committee reviews its terms of
reference annually. 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
judgmental 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 Andrea
Nastaj, 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 Andrea Nastaj. 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 in March 2022 to approve the 2021 Annual
Report & Accounts. The aforementioned Audit Committee meeting was attended
by James Mullin (Chairman) and Petr Lanin (Non-executive director and Audit
Committee member at the time).
Remuneration committee report
The Company has established a remuneration committee, which comprises James
Mullins (Chairman) and Andrea Nastaj. The remuneration committee met once in
April 2022 to discuss and approve the allocation of the 2021 bonus pool. The
aforementioned Remuneration Committee meeting was attended by James Mullin
(Chairman) and Petr Lanin (Non-executive director and Remuneration Committee
member at the time).
Nomination committee report
The Company has established a nomination committee, which comprises James
Mullins (Chairman) and Alexander Selegenev. The nomination committee met once
in May 2022 to discuss and approve the appointment of Andrea Nastaj as
Non-executive director.
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)
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
other desired objectives.
ESG evaluation can be carried out in a number of different ways. Among other
factors, its effectiveness will depend on the questions being addressed, the
principles being applied and the quality of data available. Indeed, at times
the prioritising of some principles can have a negative impact on others,
given the asymmetric nature of benefits that can sometimes arise. An example
is when alleviation of poverty in the short term comes at a higher
environmental cost.
The social and economic fallout from the COVID-19 pandemic served to put the
ESG agenda into sharper relief and has accelerated the intensity of focus. As
an investing company, TMT has been monitoring ESG issues and taking them into
account before they began to enter the mainstream investment agenda. TMT
started to formalise its approach to ESG in its initial ESG Policy announced
in its 2021 Annual Report.
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 investing 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 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 red flags, as well as opportunities, been identified?
Realistic
· Is the investee developing an ESG roadmap as part of its business
plan?
· Are the investee's ESG objectives achievable and proportionate in
view of its current resources?
· What resources does the investee need to consider in order to
progress 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 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 a
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, TMT requires 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.
ESG developments in TMT's portfolio
As the understanding and application of ESG evolves over time, an increasing
number of companies globally are focusing or seeking to incorporate ESG
frameworks within their business models. TMT recognizes that a sound
application of ESG objectives can help companies create a distinct offering
that meets evolving customer requirements and makes for a stronger business
model.
TMT therefore takes into account an investee's approach to ESG when reviewing
investment opportunities alongside TMT's main investment criteria, the latter
being as follows:
· 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
We classify TMTs' portfolio companies according to their intensity of focus on
ESG as part of their business model. To do this we review their stated level
of engagement with the United Nations Social & Development Goal (UN SDGs).
ESG-focused: Companies whose business objectives focus on one or more of the
UN SDGs
ESG-partial: Companies that address one or more of the UN SDGs in the way they
conduct their business
Non-ESG: Companies that do not focus or explicitly address one or more of the
UN SDGs in the way they conduct their business
ESG-focused companies in TMT's portfolio
At present, there are seven companies in TMT's portfolio whose business
objectives focus on one or more of the UN SDGs. During 2022 all of them made
good progress in developing their business models and revenues. This gives us
confidence that their ESG focus is leading to a distinct offering that meets
market demand and strengthens their business model.
Timbeter, a SaaS solution for quick and accurate timber measurement and data
management, which is making the forestry industry more sustainable, profitable
and efficient (www.timbeter.com (http://www.timbeter.com) ); SDG 13 & 15
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
(www.eagronom.com (http://www.eagronom.com) ); SDG 13 & 15
Mobilo, an eco-friendly solution allowing users to digitally share contact
details instead of using paper/plastic business cards and turn meetings into
leads (www.mobilocard.com (http://www.mobilocard.com) ); SDG 12 & 13
FemTechLab, Europe's first tech accelerator focused on female founders
(www.femtechlab.com (http://www.femtechlab.com) ); SDG 5
Go-x, US-based electric scooter hiring company (https://goxapp.com
(https://goxapp.com) ); SDG 11 & 13
Laundryheap, a professional laundry and dry cleaning company
(https://www.laundryheap.co.uk (https://www.laundryheap.co.uk) ); SDG 12 &
13
3S Money Club, an international payments service (https://3s.money
(https://3s.money) ); SDG 8 & 10
ESG-partial companies in TMT's portfolio
At present, there are eight companies in TMT's portfolio that address one or
more of the UN SDGs in the way they conduct their business. These are VertoFX,
3D Look, Bolt, Feel, Metrospeedy, Moeco, Muncher and My Device Inc., trading
as Whizz.
We continue to monitor developments in ESG initiatives among TMT's portfolio
companies in order to better evaluate their ongoing contribution to investees'
overall business models.
DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 2022
The Directors present their report and audited financial statements of the
Company for the year ended 31 December 2022.
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 loss for the year amounted to US$81,393,833 (2021: profit of
US$86,711,815), which includes a loss on changes in fair value of financial
assets at Fair Value through profit and loss ("FVPL") of US$79,638,928 (2021:
profit of US$98,741,409).
Further information on the Company's results and financial position is
included in the financial statements.
The board has decided that it will not recommend a final dividend (2021: 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 2022. One meeting of the Audit Committee,
one meeting of the Remuneration Committee and one meeting of the Nomination
Committee were held in 2022. The number of meetings attended by the Directors
is set out below.
Board Audit Committee Remuneration Committee Nomination Committee
Director meetings meetings meetings meetings
Yuri Mostovoy 6 - -
Alexander Selegenev 5 - - 1
Petr Lanin 1 1 1
Andrea Nastaj 3
James Mullins 6 1 1 1
Total meetings 6 1 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 2022 and the date of this report, the
Company's issued share capital consisted 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 27 March 2023.
Shareholders Number of ordinary shares % of issued ordinary share capital
Macmillan Trading Company Limited 7,076,058 22.50%
Wissey Trade & Invest Ltd 5,000,000 15.90%
Ramify Consulting Corp 4,728,576 15.03%
Zaur Ganiev 2,443,810 7.77%
Canaccord Genuity Group Inc 2,154,939 6.85%
Merit Systems Inc. 2,054,865 6.53%
Menostar Holdings Limited 1,734,458 5.51%
Eclectic Capital Limited 1,355,806 4.31%
Others 4,903,026 15.59%
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% 7,076,058 22.50%
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 1,355,806 4.31%
Menostar Holdings Limited ("Menostar") Dmitry Kirpichenko 1,734,458 5.51%
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 24,062,828 76.51%
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 as follows:
Beneficial holder No. of Ordinary Shares % of issued share capital
German Kaplun 7,497,458 23.84%
Andrey Kareev 5,000,000 15.90%
Artemii Iniutin 3,694,092 11.75%
Alexander Morgulchik 3,326,702 10.58%
Nika Kirpichenko 1,355,806 4.31%
Dmitry Kirpichenko 1,734,458 5.51%
Natalia Inyutina 727,156 2.31%
Vlada Kaplun 363,578 1.16%
Marina Kedrova 363,578 1.16%
Total 24,062,828 76.51%
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. 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 (resigned on 23 May 2022)
Andrea
Nastaj
Independent Non-Executive Director (appointed on 23 May 2022)
The Directors' fees for 2022 and 2021 were as follows:
Director 2022 2021
Yuri Mostovoy US$55,000 US$55,000
Alexander Selegenev US$110,000 US$110,000
James Joseph Mullins US$27,081 US$30,259
Petr Lanin US$9,347 US$11,000
Andrea Nastaj US$10,738 -
Subsequent events post the period end
In January and March 2023, TMT received a total additional US$1.6 million
dividend from Hugo, as part of the consideration for Hugo's disposal of its
food delivery and quick commerce business in Central America to Delivery Hero.
In February 2023, TMT invested an additional US$0.1 million in Cyberwrite, an
AI cyber insurance platform providing cybersecurity insights and risk
quantification for businesses worldwide (www.cyberwrite.com
(http://www.cyberwrite.com) ).
In February 2023, TMT invested an additional £45,861 in FemTech, a
London-based technology accelerator focused on female founders
(www.femtechlab.com (http://www.femtechlab.com) ).
In February 2023, TMT received US$0.3 million from Backblaze, Inc., as a
settlement payment in respect of TMT's additional investment in Backblaze in
2021.
In March 2023, Silicon Valley Bank ("SVB"), a key banking partner of TMT and
many of its investee companies, experienced liquidity issues. As a result of
the various measures implemented by the USA's Federal Deposit Insurance
Corporation and Federal Reserve, the Company expects to retain access to all
its funds held at SVB and that therefore the developments regarding SVB are
not expected to have any material impact on the financial position of TMT or
any of its portfolio companies.
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 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
27 March 2023
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TMT INVESTMENTS PLC FOR
THE YEAR ENDED 31 DECEMBER 2022
Opinion
We have audited the financial statements of TMT Investments PLC (the
'Company') for the year ended 31 December 2022 which comprise the statement of
comprehensive income, statement of financial position, statement of cash
flows, statement of changes in equity, and notes to the financial statements,
including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation of the
financial statements is UK adopted international accounting standards, as
applied in accordance with the provisions of the Companies (Jersey) Law 1991.
In our opinion, the financial statements:
· give a true and fair view of the state of the Company's affairs as at
31 December 2022 and of the Company's loss for the year then ended; and
· have been properly prepared in accordance with UK adopted
international accounting standards; 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Company's ability to continue to adopt the going concern
basis of accounting included:
· Analysing the financial performance and financial strength of the
business based on recently audited annual results; and
· Assessment of the liquidity of the business, including analysis of
the quantum of investments that are readily realisable for cash; and
· Evaluating the on-going liabilities profile of the business not
including performance-based expenses such as bonus fees; and
· Analysis of the share price over the past 12 months to ensure there
have been no significant movements that suggest the Company's reputation in
the marketplace presents a material threat to going concern; and
· Review of events and transactions subsequent to the balance sheet
date that present a material threat to going concern.
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 Company'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.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
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.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
2022 2021 (based on 2022 approach)
Materiality $4,034,679 $5,662,500
Basis for determining materiality 2% of net assets 2% of net assets
Rationale for benchmark applied The Company's principal activity of that of venture capital investment, as The Company's principal activity of that of venture capital investment, as
such business performance is driven by the underlying value of investment such business performance is driven by the underlying value of investment
assets held by the Company. assets held by the Company.
Performance materiality $2,824,275 $3,963,750
Basis for determining performance materiality 70% of materiality 70% of materiality
Rationale for benchmark applied Given the judgemental nature of the valuation of investments as well as the Given the judgemental nature of the valuation of investments as well as the
Company's AIM-listed status a performance materiality has been applied Company's AIM-listed status a performance materiality has been applied
reflecting that this is a higher risk engagement. reflecting that this is a higher risk engagement.
We reported all audit differences found in excess of our triviality threshold
of $201,734 ($283,125) to the directors and the management board.
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. As in all of our
audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
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 by our audit.
Valuation of investments US$195,260,535 (2021: US$265,454,136)
Significance and nature of key risk How our audit addressed the key risk
The Company's investment strategy targets early stage/start-up businesses. To We reviewed the investments portfolio and selected a sample of individual
this end valuations of individual investments can be highly subjective, investments to review in detail. The selection basis for these investments was
especially in the case of valuations linked to earnings-based multiples. based on their relative value in the statement of financial position as well
as investments that applied valuation methodologies that involved increased
inherent uncertainty. This sample covered 96% of the total stated investments
in the financial statements.
Given the inherent uncertainty as well as the highly material nature of the
balance in the statement of financial position this is considered to be a key
risk area.
We confirmed the ownership percentage of each investment to appropriate signed
documentation. Where investments are valued based on cost we have also vouched
the initial cost of purchase to these documents as well.
Furthermore, as investments are carried at fair value through the profit or
loss in the financial statements investment gains and losses in the year also
drive underlying business performance.
For equity-based valuations we have obtained the source documentation
determining the fair value per share and assessed this for reasonableness of
assumptions made.
The Company's investments accounting policy is outlined in note 2.6 of these
financial statements.
For earnings-based multiples we have obtained the valuation calculations and
considered reasonableness of assumptions made, including the multiple applied.
For listed market investments we have independently recalculated the value of
the Company's shareholding based on the market price as at 31 December 2022.
In the case of all investments we considered potential impairment indicators
that might suggest a material overstatement of the investment value.
With respect to valuation methodologies subject to increased estimation
uncertainty our specialist valuations team considered the reasonableness of
the assumptions used.
Key observations communicated to the Audit Committee
While there is inherent uncertainty in the valuation of many of the Company's
investments, due to the very nature of the companies invested in, we have no
material concerns over the appropriateness of the valuation methodologies
applied, including individual assumptions made, with respect to investments
reviewed as part of the statutory audit.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that 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, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed noncompliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to
become aware of it.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Matters on which we are required to report by exception
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
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.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the company and industry, and through discussion
with the directors and other management (as required by auditing standards),
we identified that the principal risks of non-compliance with laws and
regulations related to anti-bribery. 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 the Companies (Jersey) Law
1991. We communicated identified laws and regulations throughout our team and
remained alert to any indications of non-compliance throughout the audit. 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 management
bias in accounting estimates and judgemental areas of the financial statements
such as the valuation of investments. Audit procedures performed by the
engagement team included:
· Discussions with management and assessment of known or suspected
instances of non-compliance with laws and regulations and fraud, and review of
the reports made by management; and
· Assessment of identified fraud risk factors; and
· Identifying and assessing the design effectiveness of controls that
management has in place to prevent and detect fraud; and
· Review of the integrity of banking records; and
· Challenging assumptions and judgements made by management in its
significant accounting estimates; and
· Performing analytical procedures to identify any unusual or
unexpected relationships, including related party transactions, that may
indicate risks of material misstatement due to fraud; and
· Confirmation of related parties with management, and review of
transactions throughout the period to identify any previously undisclosed
transactions with related parties outside the normal course of business; and
· Reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence with relevant
tax and regulatory authorities; and
· Review of the valuation methodology and associated assumptions for
investments held; and
· Review of significant and unusual transactions and evaluation of the
underlying financial rationale supporting the transactions; and
· Use of data analytics in identifying and testing journal entries, in
particular any manual entries made at the year end for financial statement
preparation.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance.
As part of an audit in accordance with ISAs (UK), we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
· Conclude on the appropriateness of the directors' use of the going
concern basis of accounting and, based on the audit evidence obtained, whether
a material uncertainty exists related to events or conditions that may cast
significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw
attention in our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our
auditor's report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Company to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the Company
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
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.
Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date:
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the year ended 31/12/2022 For the year ended 31/12/2021
Notes USD USD
(Losses)/Gains on investments 3 (79,864,874) 98,741,409
Dividend income 105,844 48,333
Total investment (loss)/income (79,759,030) 98,789,742
Expenses
Bonus scheme payment charge 6 - (9,676,043)
Underpaid previous years' bonuses 6 - (372,556)
Administrative expenses 5 (1,443,395) (1,924,650)
Operating (Loss)/Gain (81,202,425) 86,816,493
Net finance income 7 9,729 -
Currency exchange loss (201,137) (104,678)
(Loss)/Gain before taxation (81,393,833) 86,711,815
Taxation 8 - -
(Loss)/Gain attributable to equity shareholders (81,393,833) 86,711,815
Total comprehensive (loss)/income for the year (81,393,833) 86,711,815
(Loss)/Gain per share
Basic and diluted (loss)/gain per share (cents per share) 9 (258.78) 291.58
Statement of Financial Position
At 31 December At 31 December
2022 2021
Notes USD USD
Non-current assets
Financial assets at FVPL 10 195,260,535 265,454,136
Total non-current assets 195,260,535 265,454,136
Current assets
Trade and other receivables 11 1,382,811 2,050,649
Cash and cash equivalents 12 10,102,683 25,527,801
Total current assets 11,485,494 27,578,450
Total assets 206,746,029 293,032,586
Current liabilities
Trade and other payables 13 5,012,099 9,904,823
Total current liabilities 5,012,099 9,904,823
Total liabilities 5,012,099 9,904,823
Net assets 201,733,930 283,127,763
Equity
Share capital 14 53,283,415 53,283,415
Retained profit 148,450,515 229,844,348
Total equity 201,733,930 283,127,763
Statement of Cash Flows
For the year For the year
ended ended
31/12/2022 31/12/2021
Notes USD USD
Operating activities
Operating (loss)/gain (81,202,425) 86,816,493
Adjustments for non-cash items:
Changes in fair value of financial assets at FVPL 3 79,638,928 (98,600,052)
Currency exchange loss (201,137) (104,678)
Impairment of receivables 249,060 -
(1,515,574) (11,888,237)
Changes in working capital:
Decrease/(Increase) in trade and other receivables 11 418,778 (1,562,811)
(Decrease)/Increase in trade and other payables 13 (4,892,724) 7,275,871
Net cash used in operating activities (5,989,520) (6,175,177)
Investing activities
Purchase of financial assets at FVPL 10 (9,608,593) (40,540,924)
Proceeds from sale/disposal of financial assets at FVPL 10 163,266 18,489,994
Interest received 7 9,729 -
Net cash used in investing activities (9,435,598) (22,050,930)
Financing activities
Proceeds from issue of shares - 14,749,620
Net cash generated from financing activities - 14,749,620
Decrease in cash and cash equivalents (15,425,118) (13,476,487)
Cash and cash equivalents at the beginning of the year 25,527,801 39,004,288
Cash and cash equivalents at the end of the year 12 10,102,683 25,527,801
Statement of Changes in Equity
(http://en.wikipedia.org/wiki/Statement_of_changes_in_equity)
For the year ended 31 December 2021 and for the year ended 31 December 2022,
USD
Share capital Retained profit Total
Note USD USD USD
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
Loss for the year - (81,393,833)
(81,393,833)
Total comprehensive loss for the year - (81,393,833)
(81,393,833)
Balance at 31 December 2022 53,283,415 148,450,515 201,733,390
The financial statements were approved by the Board of Directors on 27 March
2023 and were signed on its behalf by:
Alexander Selegenev
Executive Director
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
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 10 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 seeks to make investments in any region of the world. The Company
invests in high-growth technology companies globally across a number of core
specialist sectors. The Company's objective is to generate an attractive
rate of return for shareholders, predominantly through capital appreciation.
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. We consider this entity to be
highly immaterial to the Company's financial statements.
2.2 Going concern
The Directors confirm that, after giving due consideration to the financial
position and expected cash flows of the Company and due to availability of
highly liquid investments readily realisable for cash should this be needed;
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. Foreign currency monetary items
are translated using the closing rate (i.e. mid-market price investments).
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
measured. (i.e. comparable company analysis and cost-based investments as
these are effectively re-fair valued at each year-end).
Exchange differences arising from the translation at the year-end exchange
rates of monetary assets and liabilities denominated in foreign currencies are
recognised in the statement of comprehensive income.
Conversion rates, USD
Currency As at 31.12.2022 Average rate, 2022
British pounds, £ 1.2039 1.2367
Euro, € 1.0676 1.0537
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 did 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
All financial investments of the Company are measured at fair value through
profit or loss and are subject to a fair value revaluation at year end date.
The Company manages its investments with a view of 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
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.
Transfers between levels of the fair value hierarchy, for the purpose of
preparing these financial statements, are deemed to have occurred at the
beginning of the reporting period.
Where an active market is established for an investment it is classified to
level 1 with a mid-market price valuation methodology applied. Where
observable market data becomes available for an investment, including for
comparable companies within an active market, it is classified to level 2 with
comparable company analysis used as the valuation methodology. The investment
otherwise remains classified to level 3, with the cost of investment or price
of recent investment valuation methodology applied.
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. 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 expenses
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 New IFRSs and interpretations
The following standards and amendments became effective from 1 January 2022,
but did not have any impact on the Company:
· Amendments to IAS 16 "Property, Plant and Equipment"
· Amendments to IAS 37 "Provisions, Contingent Liabilities and
Contingent Asserts"
· Amendments to IFRS 3 "Business Combination"
2.11 Future IFRS changes
The following table summarises changes to IFRS adoption which is mandatory for
periods beginning in 2023 and beyond:
Standard Effective date Overview
IFRS 17 Insurance Contracts 1 January 2023 (early adoption permitted) IFRS 17 will replace IFRS 4 Insurance Contracts, a temporary standard which
permits a variety of accounting practices for insurance contracts.
Amendments to IFRS 17 - Initial Application of IFRS 17 & IFRS 9 1 January 2023 (early adoption permitted) Many insurance entities will now be applying both IFRS 17 and IFRS 9 for the
first time in annual reporting periods beginning on or after 1 January 2023.
Comparative Information
Amendments to IAS 1 - Presentation of Financial Statements 1 January 2023 (early adoption permitted) The standard has been amended to clarify that the classification of
liabilities as current or non-current should be based on rights that exist at
the end of the reporting period.
Classification of Liabilities as Current or Non-current
Amendments to IAS 1 and IFRS Practice Statement 2 - Making Materiality 1 January 2023 (early adoption permitted) The amendments to IAS 1 will require an entity to disclose material accounting
Judgements policies.
Disclosure of Accounting Policies Accounting policy information is likely to be considered material if users
need the
disclosure to understand other material information in the accounts.
Amendments to IAS 12 - Income Taxes 1 January 2023 (early adoption permitted) The amendment to IAS 12 Income Taxes introduces an exception to the "initial
recognition exemption" when the transaction gives rise to equal taxable and
deductible temporary differences.
Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
Amendments to IAS 8 - Accounting Policies, Changes in Accounting Estimates and 1 January 2023 (early adoption permitted) The amendments introduce a definition for accounting estimates which is
Errors 'monetary amounts in financial statements that are subject to measurement
uncertainty'. Measurement uncertainty will arise when monetary amounts
required to apply an accounting policy cannot be observed directly. In such
cases, accounting estimates will need to be developed using judgements and
assumptions.
Definition of Accounting Estimates
2.12 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.
As summarised in note 10 the Company has investments held at year-end of
US$87,192,406 (2021: US$6,590,954) classified as level 2 in the fair value
hierarchy, valued on a comparable company analysis basis. The Company has a
further US$85,075,197 (2021: US$195,716,742) classified as level 3, valued at
cost or price of recent investment (less any currency exchange-related
impairment charges). Generally, when impairments are used in the comparable
company valuation methodology, impairments are allocated on a 50%-66% basis
when management determine that there is increased uncertainty over the
investee's business prospects and/or exit strategy, or a 100% basis when
management determine that it is unlikely that a successful exit outcome could
be achieved. Readers of these financial statements should consider the
inherent uncertainty principle involved when considering these investment
valuations.
3 Gains (Losses) on investments
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
Gross interest income from convertible notes receivable 40,012 41,290
Net interest income from convertible notes receivable 40,012 41,290
(Losses)/Gains on changes in fair value of financial assets at FVPL (79,638,928) 98,600,052
Impairment of receivables (249,060) -
Other (losses)/gains on investment (16,898) 100,067
Total net (losses)/gains on investments (79,864,874) 98,741,409
During the year ended 31 December 2022, impairment losses related to
receivables for previously disposed investments of US$249,060 were recognised
(2021: none).
4 Segmental analysis
Geographic information
The Company has investments in the following geographic areas: the USA,
Estonia, the United Kingdom, Portugal, BVI, Cyprus and the Cayman Islands.
Non-current financial assets
As at 31/12/2022 USA Cayman Islands BVI Estonia Cyprus United Kingdom Portugal Total
USD USD USD USD USD USD USD USD
Equity investments 66,393,603 - 3,255,052 71,759,682 330,000 30,481,358 - 172,219,695
Convertible notes & SAFEs 14,800,030 1,030,000 - 1,628,090 4,100,000 601,950 880,770 23,040,840
Total 81,193,633 1,030,000 3,255,052 73,387,772 4,430,000 31,083,308 880,770 195,260,535
As at 31/12/2021 USA Cayman Islands BVI Estonia Cyprus United Kingdom Total
Portugal
USD 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 31/12/2022 For the year ended 31/12/2021
USD USD
Staff expenses (note 6) 825,366 805,459
Professional fees 326,651 502,124
Legal fees 82,941 393,682
Bank and LSE charges 15,069 31,434
Audit fees 59,577 38,183
Accounting fees 17,480 16,220
Other expenses 116,311 137,548
1,443,395 1,924,650
6 Staff expenses
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
Directors' fees 212,166 206,259
Wages and salaries 613,200 599,200
825,366 805,459
Wages and salaries shown above include fees and salaries relating to the year
ended 31 December 2022.
The Directors' fees for 2022 were as follows:
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
Alexander Selegenev 110,000 110,000
Yuri Mostovoy 55,000 55,000
James Joseph Mullins 27,081 30,259
Petr Lanin 9,347 11,000
Andrea Nastaj 10,738 -
212,166 206,259
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
(2021: 7).
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 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. As the Company's adjusted NAV decreased in
2022, no bonus was accrued and expected to be accrued for the year ended 31
December 2022.
7 Net finance income
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
Interest income 9,729 -
9,729 -
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 (Loss)/Gain per share
The calculation of basic gain per share is based upon the net losses for the
year ended 31 December 2022 attributable to the ordinary shareholders of
US$81,393,833 (2021: net gain of US$86,711,815) and the weighted average
number of ordinary shares outstanding calculated as follows:
Gain per share For the year ended 31/12/2022 For the year ended 31/12/2021
Basic (loss)/gain per share (cents per share) (258.78) 291.58
(Loss)/Gain attributable to equity holders of the entity (81,393,833) 86,711,815
The weighted average number of ordinary shares outstanding was calculated as
follows:
For the year ended 31/12/2022 For the year ended 31/12/2021
Weighted average number of shares in issue
Ordinary shares 31,451,538 31,451,538
31,451,538 31,451,538
10 Non-current financial assets
Reconciliation of fair value measurements of non-current financial assets:
At 31 December 2022 At 31 December 2021
Investments held at fair value through profit and loss, USD:
- listed and unlisted shares (i) 172,219,695 241,461,421
- promissory notes (ii) 4,830,070 4,266,715
- SAFEs (iii) 18,210,770 17,680,000
- Shares to be issued (iv) - 2,046,000
195,260,535 265,454,136
At 31 December 2022 At 31 December 2021
USD USD
Opening valuation 265,454,136 144,803,154
Purchases (including consulting and legal fees) 9,608,593 40,540,924
Disposal proceeds (163,266) (18,489,994)
Impairment losses in the year (1,280,016) -
Realised gain - 6,294,635
Unrealised (losses)/ gains (78,358,912) 92,305,417
Closing valuation 195,260,535 265,454,136
Movement in unrealised gains/ (losses)
Opening accumulated unrealised gains 195,706,888 111,980,464
Unrealised (losses)/ gains (78,358,912) 92,305,417
Transfer of previously unrealised gains to realised reserve on disposal of (105,606) (8,578,993)
Investments
Closing accumulated unrealised gains 117,242,370 195,706,888
Reconciliation of investments, if held under the cost and price of recent
investment model:
Historic cost basis
Opening book cost 69,747,248 32,822,690
Purchases (including consulting and legal fees) 9,608,593 40,540,924
Disposals on sale of investment (57,660) (3,616,366)
Impairment losses in the year (1,280,016) -
Closing book cost 78,018,165 69,747,248
Valuation methodology
Mid-market price 22,992,932 63,146,440
Comparable company analysis 94,755,170 6,590,954
Cost or price of recent investment 77,512,433 195,716,742
195,260,535 265,454,136
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.
Valuation methodologies can be changed from time to time, the following table
shows the changes made for 2022 compared to 2021. These investments were held
at cost or price of recent investments of the total value of USD 133,457,069
as at 31 December 2021:
Company name 2022 2021
3D Look Comparable company analysis Cost or price of recent investment
Affise Comparable company analysis Cost or price of recent investment
Academy of change Comparable company analysis Cost or price of recent investment
Bolt Comparable company analysis Cost or price of recent investment
EstateGuru Comparable company analysis Cost or price of recent investment
MEL Science Comparable company analysis Cost or price of recent investment
Moeco Comparable company analysis Cost or price of recent investment
PandaDoc Comparable company analysis Cost or price of recent investment
Scalarr Comparable company analysis Cost or price of recent investment
Study Space, Inc (EdVibe) Comparable company analysis Cost or price of recent investment
Wanelo Comparable company analysis Cost or price of recent investment
The list of fully impaired investments, in which the Company still maintained
ownership as of 31 December 2022, was as follows:
Company name Investment amount (USD) Year of impairment
Rollapp 350,000 2018
UsingMiles/Help WW/Source Inc. 250,000 2018
Favim 300,000 2018
AdInch 1,000,000 2018
E2C 124,731 2020
Drupe 225,000 2019
Virool/Turgo 600,000 2017
Sixa 300,000 2019
Usual Beverage Co. 300,000 2022
StudyFree 1,000,000 2022
Total 4,449,731
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 equity round or partial
disposal 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 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 2022:
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 Write-offs, Value at 31 Dec 2022, USD Equity stake owned
USD
1 Jan 2022,
USD
Wanelo 21.11.2011 602,447 - - - - - 602,447 4.69%
Backblaze 24.07.2012 63,146,440 - - (40,153,509) - - 22,992,931 11.20%
Remote.it 13.06.2014 1,512,643 - - (1,381,443) - - 131,200 1.64%
Anews 25.08.2014 330,000 - - - - (330,000) - -
Bolt 15.09.2014 103,375,800 - - (33,618,816) - - 69,756,984 1.26%
PandaDoc 11.07.2014 16,185,773 - - (5,341,305) - - 10,844,468 1.17%
Full Contact 11.01.2018 244,506 - - - - - 244,506 0.19%
ScentBird 13.04.2015 6,590,954 - - - - - 6,590,954 4.18%
Workiz 16.05.2016 3,971,659 - - - - - 3,971,659 1.89%
Usual/Vinebox 06.05.2016 450,015 - - - (450,015) - 1.91%
Hugo 19.01.2019 3,756,540 - - (338,222) (163,266) - 3,255,052 3.55%
MEL Science 25.02.2019 2,663,696 - - (1,758,040) - - 905,656 3.21%
Qumata (Healthy Health) 06.06.2019 1,818,822 - - - - - 1,818,822 2.52%
eAgronom 31.08.2018 447,087 - - 7,591 - - 454,678 1.41%
Rocket Games (Legionfarm) 16.09.2019 200,000 - - - - - 200,000 1.26%
Timbeter 05.12.2019 221,688 - - (8,168) - - 213,520 4.64%
Classtag 03.02.2020 200,000 - - - - - 200,000 1.66%
3S Money Club 07.04.2020 8,253,630 - 2,046,000 3,790,966 - - 14,090,596 11.38%
Hinterview 21.09.2020 891,107 - - (78,377) - - 812,730 2.52%
Virtual Mentor (Allright) 12.11.2020 772,500 - - - - - 772,500 2.95%
NovaKid 13.11.2020 2,949,855 - - - - - 2,949,855 1.51%
MTL Financial (OutFund) 17.11.2020 1,322,100 - - 1,243,818 - - 2,565,918 3.66%
Scalarr 15.08.2019 1,378,282 - - - - - 1,378,282 7.66%
Accern 21.08.2019 1,282,705 - - 1,591,179 - - 2,873,884 3.17%
Feel 13.08.2020 2,035,512 320,467 1,363,700 (66,459) - - 3,653,220 11.11%
Affise 18.09.2019 3,470,870 - - (1,675,190) - - 1,795,680 8.70%
3D Look 03.03.2021 1,000,000 - - (500,000) - - 500,000 3.77%
FemTech 30.03.2021 274,220 - - 536,386 - - 810,606 9.74%
Muncher 23.04.2021 2,059,999 - - 1,647,396 - - 3,707,395 6.10%
CyberWrite 20.05.2021 500,000 - - 475,741 - - 975,741 3.52%
Outvio 22.06.2021 612,353 - - (78,553) - - 533,800 4.00%
VertoFX 16.07.2021 1,132,999 - - - - - 1,132,999 3.24%
Academy of change 02.08.2021 1,000,000 - - (670,000) - - 330,000 7.69%
EstateGuru 06.09.2021 1,780,200 - - (979,500) - - 800,700 2.73%
Prodly 09.09.2021 1,800,000 - - - - - 1,800,000 4.39%
Sonic Jobs 15.09.2021 712,018 - - (92,009) - - 620,009 2.77%
EdVibe (Study Space, Inc) 02.11.2021 1,500,001 - - (750,001) - - 750,000 7.36%
1Fit (Alippe, Inc) 24.12.2021 500,000 - - - - - 500,000 4.70%
Agendapro 03.09.2021 515,000 - - - - - 515,000 2.00%
Laundry Heap 28.01.2022 - 1,325,393 - (121,592) - - 1,203,801 2.44%
SOAX 21.01.2022 - 4,000,000 - - - - 4,000,000 9.41%
Spin.ai 17.12.2018 964,102 - - - 964,102 1.69%
Total 241,461,421 5,645,860 4,373,802 (78,318,107) (163,266) (780,015) 172,219,695
(ii) Convertible loan notes as at 31 December 2022:
Investee company Date of initial investment Value at 1 Jan 2022, 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 2022, USD Term, years Interest rate, %
USD
Sharethis 26.03.2013 570,030 - - - - 570,030 5.0 1.09%
Conte.ai/ Postoplan 08.12.2020 1,332,985 451,200 - (156,095) - 1,628,090 1.0 2.00%
Metrospeedy 16.07.2021 1,000,000 - - - - 1,000,000 - -
Feel 08.10.2021 1,363,700 - (1,363,700) - - - - -
MedVidi 27.09.2021 - 1,030,000 - - - 1,030,000 - -
Laundry Heap 21.11.2022 589,300 - 12,650 - 601,950
Total 4,266,715 2,070,500 (1,363,700) (143,445) - 4,830,070
(iii) SAFEs as at 31 December 2022:
Investee company Date of initial investment Value at 1 Jan 2022, 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 Write-offs, USD Value at 31 Dec 2022, USD
USD
Spin.ai 17.12.2018 300,000 - (964,102) 664,102 - -
Cheetah (Go-X) 29.07.2019 350,000 - - - - 350,000
Adwisely (Retarget) 24.09.2019 1,600,000 - - - - 1,600,000
Rocket Games (Legionfarm) 17.09.2019 1,200,000 250,000 - - - 1,450,000
Classtag 03.02.2020 200,000 - - - - 200,000
Moeco 08.07.2020 500,000 - - - - 500,000
StudyFree 08.12.2020 1,000,000 - - - (1,000,000) -
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
OneNotary (Adorum) 01.10.2021 500,000 - - - - 500,000
BaFood 05.11.2021 2,000,000 500,000 - - - 2,500,000
Educate online 16.11.2021 1,000,000 - - - - 1,000,000
My Device Inc 30.11.2021 850,000 200,000 - - - 1,050,000
Mobilo (Lulu Systems, Inc) 09.12.2021 1,030,000 - - - - 1,030,000
Muncher 13.12.2021 2,000,000 - - - - 2,000,000
Bairro 12.01.2022 - 942,233 - (61,463) - 880,770
Total 17,680,000 1,892,233 (964,102) 602,639 - (1,000,000) 18,210,770
(iv) Shares to be issued as at 31 December 2022:
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 / conversions, USD Value at 31 Dec 2022, USD
1 Jan 2022,
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 2022 At 31 December 2021
USD USD
Prepayments 42,550 53,412
Other receivables 1,219,506 1,917,843
Interest receivable on promissory notes 113,214 79,394
Interest receivable on deposit 7,541 -
1,382,811 2,050,649
The fair value of trade and other receivables approximate to their carrying
amounts as presented above.
Other receivables as of 31 December 2022 represented amounts due from the
previously disposed investments in Klear, Volumetric (in the form of publicly
traded shares of 3D Systems Inc.) and DepositPhotos.
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2022 include cash on hand and
in banks.
Cash and cash equivalents comprise the following:
At 31 December 2022 At 31 December 2021
USD USD
Deposits 2,502,188 -
Bank balances 7,600,495 25,527,801
10,102,683 25,527,801
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 2022 At 31 December 2021
USD USD
Bank balances
A3 rating 7,587,687 25,512,940
Baa3 rating 2,447 3,296
Not rated 10,361 11,565
Total 7,600,495 25,527,801
At 31 December 2022 At 31 December 2021
USD USD
Deposits
A1 rating 2,502,188 -
2,502,188 -
13 Trade and other payables
At 31 December 2022 At 31 December 2021
USD USD
Salaries payable 81,838 82,500
Directors' fees payable 66,100 40,534
Bonuses payable 4,817,785 9,676,043
Trade payables 7,702 73,042
Other current liability 3,307 -
Accruals 35,367 32,704
5,012,099 9,904,823
The fair value of trade and other payables approximate to their carrying
amounts as presented above.
14 Share capital
On 31 December 2022 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 2022 At 31 December 2021
USD USD
Share capital 53,283,415 53,283,415
Issued capital comprises: Number Number
Fully paid ordinary shares 31,451,538 31,451,538
Number of shares Number of shares
Balance at 31 December 2021 31,451,538 29,185,831
Issue of ordinary shares - 2,265,707
Balance at 31 December 2022 31,451,538 31,451,538
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 2022 the largest exposure to credit risk related to
convertible notes receivable and SAFEs (US$23,040,840), and cash and cash
equivalents (US$10,102,683).
The Company's exposure to credit risk is influenced mainly by the individual
characteristics of each investee company. The credit quality of investments in
equity shares and convertible promissory notes is based on the financial
performance of the individual portfolio companies. For those assets that are
not impaired it is believed that the risk of default is small and that capital
repayments and interest payments will be made in accordance with the agreed
terms and conditions of the Company's investment. In other cases, an
appropriate asset impairment is recorded to reflect the fair value. The
exposure to credit risk is approved and monitored on an on-going basis
individually for all significant investee companies.
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 was as
follows:
At 31 December 2022 At 31 December 2021
USD USD
Convertible notes receivable & SAFEs 23,040,840 21,946,715
Trade and other receivables 1,382,811 2,050,649
Cash and cash equivalents 10,102,683 25,527,801
34,526,334 49,525,165
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 fluctuations in interest and currency
exchange rates.
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. At 31 December 2022 the Company had cash deposit of USD 2,502,188,
earning a variable rate of interest. The Board of Directors monitors the
interest rates available in the market to ensure that returns are maximized.
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 2022 was as follows:
For the year ended 31/12/2022 For the year ended 31/12/2022 For the year ended 31/12/2021 For the year ended 31/12/2021
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 171,705 177,998 534,672 294,597
Current liabilities
Trade and other payables (14,861) - (50,106) (1,215)
Net (short) long position 156,844 177,998 484,566 293,382
Net exposure currency 130,280 166,727 359,550 259,195
Net exposure currency (assuming a 10% movement in exchange rates) 141,160 160,198 436,109 264,044
Impact on exchange movements in the statement of comprehensive income 15,684 17,800 48,457 29,338
The foreign exchange rates of the USD at 31 December were as follows:
31/12/2022 31/12/2021
Currency
British pounds, £ 1.2039 1.3477
Euro, € 1.0676 1.1319
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 2022, the cash and equivalents of the Company were
US$10,102,683.
The following are the maturities of current liabilities as at 31 December
2022:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
Salaries 81,838 81,838 - -
Directors' fees payable 66,100 66,100 - -
Bonuses payable 4,817,785 4,817,785 - -
Trade payables 7,702 7,702 - -
Other current liabilities 3,307 3,307
Accruals 35,367 35,366 - -
5,012,099 5,012,098 - -
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 2022:
Level 1 Level 2 Level 3 Total
USD USD USD USD
Financial assets
Financial assets at FVPL 22,992,932 77,512,433 94,755,170 195,260,535
22,992,932 77,512,433 94,755,170 195,260,535
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
In January and March 2023, TMT received a total additional US$1.6 million
dividend from Hugo, as part of the consideration for Hugo's disposal of its
food delivery and quick commerce business in Central America to Delivery Hero.
In February 2023, TMT invested an additional US$0.1 million in Cyberwrite, an
AI cyber insurance platform providing cybersecurity insights and risk
quantification for businesses worldwide (www.cyberwrite.com
(http://www.cyberwrite.com) ).
In February 2023, TMT invested an additional £45,861 in FemTech, a
London-based technology accelerator focused on female founders
(www.femtechlab.com (http://www.femtechlab.com) ).
In February 2023, TMT received US$0.3 million from Backblaze, Inc., as a
settlement payment in respect of TMT's additional investment in Backblaze in
2021.
In March 2023, Silicon Valley Bank ("SVB"), a key banking partner of TMT and
many of its investee companies, experienced liquidity issues. As a result of
the various measures implemented by the USA's Federal Deposit Insurance
Corporation and Federal Reserve, the Company expects to retain access to all
its funds held at SVB and that therefore the developments regarding SVB are
not expected to have any material impact on the financial position of TMT or
any of its portfolio companies.
19 Control
The Company is not controlled by any one party. Details of significant
shareholders are shown in the Directors' Report.
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