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RNS Number : 9693C Tern PLC 05 September 2024
5 September 2024
Tern Plc
("Tern" or the "Company")
Unaudited interim results for the six months to 30 June 2024
Tern Plc (AIM: TERN), the company focused on value creation from Internet of
Things ("IoT") technology businesses, announces its unaudited interim results
for the six months to 30 June 2024 (the "Period").
Company highlights
· Net asset value ("NAV") of £10.7 million as at 30 June 2024 (30 June
2023: £22.2 million, 31 December 2023: £12.3 million). This resulted in a
reduction in net asset value per share from 3.2p as at 31 December 2023 to
2.5p as at 30 June 2024.
· Portfolio valuation of £11.1 million as at 30 June 2024 (31 December
2023: £12.8 million).
· £1.7 million reduction in the value of the portfolio during the
Period since 31 December 2023. This was primarily due to a £2.0 million
reduction in the value of Tern's holding in Wyld Networks, reflecting a
reduced market price of Wyld Networks' shares as at 30 June 2024.
· £0.3 million was invested by Tern in its existing portfolio
companies during the Period (six months to 30 June 2023: £1.1 million),
supporting the portfolio companies' growth and development, together with
allowing Tern to maintain significant positions in certain portfolio
companies.
· Two placings in the period generated gross proceeds of £0.82 million
through the issue of new ordinary shares. Additionally, warrants exercised
raised a further £0.11 million for the Company.
Portfolio highlights
· Progress across the portfolio* in the Period:
o the year-on-year increase in unaudited aggregated Annual Recurring Revenue
("ARR") of the portfolio, excluding Konektio** was 22% (six months ended 30
June 2023: 46% (43% including Konektio), year ended 31 December 2023: 51% (50%
including Konektio); and
o the year-on-year decrease in the number of employees within the portfolio,
excluding Konektio* was 25% (six months ended 30 June 2023: 27% increase (23%
increase including Konektio). This supported a year-on-year increase in ARR
per employee of 62% (six months ended 30 June 2023: 15% (16% including
Konektio)).
· Device Authority remains focused on expanding its partner ecosystem,
recently launching new partnerships with PlaxidityX (formerly Argus) and
CyberArk. The company's collaboration with Microsoft is also strengthening,
with Device Authority being named by Microsoft as part of its
next-generation automotive and mobility security solution.
· FundamentalVR strengthened its market position through partnerships
and investment in Generative AI (Artificial Intelligence) within the
Fundamental Surgery Immersive VR Platform.
· Talking Medicines has achieved significant success in the Period with
its Drug-GPT platform, with record revenue bookings and significant
advancement of its innovative interface.
* In this context Tern's portfolio is: Device Authority Limited, FVRVS Limited
(trading as FundamentalVR) and Talking Medicines Limited, which are portfolio
companies Tern has interests in as well as Wyld Networks AB, a Tern holding
and excludes DiffusionData Limited, in which Tern has a <1% holding and
minimal influence, and SVV2.
**As announced on 5 March 2024, InVMA Limited, which traded as Konektio, was
placed into administration in March 2024 and from that point Tern's holding in
Konektio was held at zero value. Konektio has therefore not been included in
the ARR and number of employee data for the Period shown above, and is not
included in the portfolio review below.
Enquiries:
Tern Plc via IFC Advisory
Ian Ritchie (Chairman)
Allenby Capital Limited Tel: 0203 328 5656
(Nominated Adviser and Broker)
Alex Brearley / Dan Dearden-Williams (Corporate Finance)
Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)
IFC Advisory Tel: 0203 934 6630
(Financial PR and IR)
Tim Metcalfe
Graham Herring
Florence Chandler
Chairman's statement
The Board remains committed to growing the value of Tern's portfolio
companies. While the first six months of 2024 continued to pose challenges for
early-stage technology businesses, the majority of our portfolio companies
made significant progress. However, we must report a decrease in the
unrealised fair value of our investments since 31 December 2023, primarily due
to the reduced Wyld Networks share price at the period end. Although we exited
our day-to-day involvement with Wyld following their public offering and no
longer hold a seat on its board, we remain optimistic in its longer-term
prospects.
However, on 2 September 2024, Wyld announced inter alia that, subject to
approval at an Wyld Networks extraordinary general meeting to be held on 2
October 2024, the board of Wyld Networks had resolved to carry out a new issue
of units, containing shares and warrants of series TO6, with preferential
rights for existing shareholders, to raise approximately SEK 74.2 million (the
"Wyld Networks Rights Issue"). The Tern board does not believe that the Wyld
Networks Rights Issue is in the best interests of Wyld Networks' shareholders,
including Tern, and does not currently intend to support the resolutions at
Wyld Networks' extraordinary general meeting. Tern and its advisers are
investigating alternative proposals that may be put to Wyld Networks and its
shareholders and further announcements will be made in due course, as
appropriate.
We maintain regular active engagement with our direct investment portfolio
companies, helping shape their strategies and tactics. Additionally, we
leverage our extensive network to introduce these companies to new markets and
investors, particularly in the USA. With Tern's support, with the exception of
Konektio, these companies have demonstrated year-over-year growth in annual
and monthly recurring revenues during the period, which are key indicators of
progress and ultimately realisable value.
Corporately, we have maintained strict control over operational costs.
Following our board and management restructuring in 2023, our spending is 42%
lower in the Period than in the same period last year. However, as an
AIM-quoted company, we still incur substantial professional fees and costs
associated with our portfolio companies, many of which are largely fixed.
Following the failure to pass the resolution required to issue new ordinary
shares disapplying statutory pre-emption rights at the Annual General Meeting
held on 27 June 2024, the Tern board has been investigating ways to
appropriately raise funds to protect Tern's position in, and progress, Tern's
portfolio companies, whilst also providing Tern with funding as an AIM
company. The post-Period sale of a modest proportion of our holding in Device
Authority, at no discount to the value that Device Authority raised funds in
December 2023 post period end, as announced on 9 August 2024, provided a
further £233,000 to our cash resources. However, as an investing company
with periodic requirements to provide funding to our portfolio, the Company
does require further funding and we are announcing separately today an open
offer to existing Tern shareholders to subscribe for up to 48,077,813 new
ordinary shares at an issue price of 1.25 pence per share to raise up to
£600,972 of additional funding for the Company (the "Open Offer").
In addition to the funds generated from the August 2024 disposal of part of
its shareholding in Device Authority and the Open Offer, the Directors believe
that having the authority to issue additional new Ordinary Shares is important
for an investment company such as Tern as, among other things, it provides the
Company with the flexibility to raise, or have access to, further funding,
potentially at short notice, to support its portfolio companies as required
and for general corporate purposes. We are therefore also announcing
separately today the convening of a general meeting on 23 September 2024 to
seek Shareholder approval for the Directors to have the general authority to
allot up to 150,000,000 new Ordinary Shares and an authority to disapply
statutory pre-emption rights in relation to an issue of up to 100,000,000 new
Ordinary Shares.
The focus of the Tern board and executive management is to be on realisations.
Our goal is to maximise the value of Tern's portfolio companies to achieve
successful exits from our investments at the appropriate time, ultimately
seeking strong returns for our shareholders. In addition, the skills and
experience of the Tern team are such that we are being presented with
opportunities to assist third parties with their portfolio realisations. We
are assessing these investment opportunities on their individual merits and
will only get involved where we see that significant incremental value can be
added to Tern, for the benefit of its shareholders, without distracting from
the primary purpose of delivering value from Tern's own portfolio.
Financial review
6 months to 6 months to 12 months to
30 June 2024 30 June 2023 31 December 2023
£000 £000 £000
Investments 11,102 21,825 12,779
Net assets 10,708 22,209 12,302
Administration costs 595 1,023 1,712
Loss for the period (2,475) (2,840) (12,608)
Net asset value per share 2.5p 5.7p 3.2p
During the first half of 2024, the Company focused on managing cash resources
whilst supporting the growth and business development of the existing
portfolio and allowing Tern to maintain significant positions in certain
portfolio companies.
The net asset value during the period fell to £10.7 million (31 December
2022: £12.3 million) The valuation of the portfolio as at 30 June 2024
reflected a £2.0 million reduction in the fair value which was offset by a
£0.3 million re-investment into the existing portfolio companies (£0.1
million in Talking Medicines, £0.2 million in SVV 2 and a nominal investment
of approximately £33,000 into Wyld Networks for the exercise of 245,699 TO4
warrants). The net asset value per share was 2.5p as at 30 June 2024 (31
December 2023: 3.2p).
Wyld Networks' fair value decreased by £2.0 million as a result of the
decline in the market value of Wyld Networks' shares. As Wyld Networks is
traded on an active financial market, its fair value is determined by the
market price as of 30 June 2024.
The Company had an unaudited cash balance of £0.1 million as at 30 June 2024.
The Company has a £3 million loan facility which was announced on 12 June
2023. The loan facility was entered into to provide Tern with a stronger
negotiating position and access to funding for follow-on investment
opportunities in future syndicated fundraises undertaken by Tern's existing
portfolio companies. The Company is currently unable to make further drawdowns
under the loan facility until such time as it is able to issue the required
warrants as a transaction cost associated with further drawdowns, pursuant to
the terms of the loan facility. The issue of any further warrants will require
shareholder approval to provide the Directors with authority to allot ordinary
shares, disapplying pre-emption rights. As at 30 June 2024, the principal
amount outstanding drawn down under the facility is £0.2 million (31 December
2023: £0.4 million). Under the terms of the facility, Tern was required to
maintain in escrow shares in Wyld Networks at a value of not less than 1.5
times the value of outstanding amounts drawn down and accrued interest, as
security for the facility. However, on 4 September 2024, the facility
provider agreed to amend the terms of the facility to remove this security
condition and extend the repayment period by 12 months, in return for a fee
equal to 10 per cent. of the outstanding balance currently payable under the
facility.
During the Period, the Company recorded a loss of £2.7 million, compared to a
loss of £2.8 million in the six months to 30 June 2023. The loss included the
fair value reduction of £2.0 million (six months to 30 June 2023: reduction
of £2.0 million).
Overall operating costs reduced to £0.6 million compared to £1.1 million for
the same period in 2023. Staff costs fell by 49% following the Board
restructuring in August 2023, compared to the same period in 2023, as well as
a significant reduction of all other comparable operating expenses.
Portfolio review
The portfolio* achieved a 22% year-on-year growth in annual recurring revenue
(ARR) for the six months ended 30 June 2024 (six months ended 30 June 2023:
46%, or 43% including Konektio).
Despite a year-on-year decrease of 25% in the number of employees within the
portfolio* during this Period (six months ended 30 June 2023: a 27% increase,
or 23% including Konektio), this reduction-an intentional strategy to control
burn rate and expedite the path to profitability-took place in conjunction
with ARR growth. As a result, ARR per employee saw a significant 62%
year-on-year increase (six months ended 30 June 2023: 15%, or 16% including
Konektio).
Device Authority Limited ("Device Authority")
Valuation of holding: £4.5 million
Holding: 31.7% (reducing to 30.0% post period end)
Device Authority, a global leader in identity and access management (IAM) for
the IoT, has sustained strong business momentum in the first half of the year.
The company's KeyScaler® and KeyScaler Edge® solutions deliver comprehensive
end-to-end security lifecycle management, from Edge to Enterprise, for leading
IoT cloud platforms such as Microsoft Azure, Avnet IoTConnect, AWS, PTC
ThingWorx, and Google. These solutions ensure robust device security while
offering the scalability needed to support both new and legacy IoT
deployments.
Device Authority secures the connected future by automating Zero Trust
security at scale and is a recognized global leader in IAM for Enterprise IoT
ecosystems catering to Industrial, Automotive, Healthcare, and Critical
Infrastructure markets.
Its KeyScaler-as-a-Service (KSaaS®) solution enables organizations to reduce
human error, accelerate incident response and minimize risk, ensuring complete
device and data trust. It's innovative KeyScaler AI functionality also enables
trusted AI in any connected environment. This cloud-first approach saw Device
Authority make a strong start to the year with new blue-chip customers coming
on board as well as a number of Proof of Concept and pilot projects from
recognised Enterprise companies. These companies are recognising the benefits
of the scalable and cost-effective solution that can automate the security of
new as well as remote and brownfield devices, authenticating, issuing
certificates and registering them in under 10 seconds which is 60 times
faster than a human.
Device Authority's partner ecosystem continues to be a focus for the company,
having recently launched a partnership with PlaxidityX (formerly Argus) as
well as with CyberArk. Its partnership with Microsoft also continues to grow
with the company being named by Microsoft as part of its next generation
automotive and mobility security solution.
Device Authority has also received significant external recognition for its
innovative solutions, including IoThinkTank's IoT Security Product of the
Year, IoT HealthTech's Innovation Award and the IoTSF's IoT Security Champion
Award. The company was also named as a Leader in the Quadrant Knowledge
Solutions Spark Matrix for IoT IAM for the fifth consecutive year, ranking the
highest in the industry for Technology Excellence.
As at 30 June 2024, the unaudited fair value of Tern's shareholding in Device
Authority increased to £4.5 million (31 December 2023: £4.4 million), which
was due to a £0.1 million fair value increase due to the foreign exchange
movement on the sterling value of Device Authority which is valued in US
Dollars.
FVRVS Limited ("FundamentalVR")
Valuation of holding: £3.6 million
Holding: 12.1% (reducing to 10.3% post period end)
FundamentalVR is a leading virtual reality and data analysis platform, driven
by surgical training experts and top technologists, with a mission to
revolutionize surgical education globally. By making surgical simulation
accessible and affordable, FundamentalVR empowers medical professionals
worldwide with cutting-edge tools.
The platform leverages widely available virtual reality (VR) devices, such as
Meta's Oculus Quest, and integrates advanced haptics technology to create a
highly realistic simulation system compatible with any modern computer setup.
This innovative system offers surgeons a more immersive, hands-on training
experience, better preparing them for real-life scenarios and ultimately
leading to improved patient outcomes.
Recent published data presented in the Journal of Robotic Surgery supports the
value of immersive VR for robotics training, by showing favourable results
when training in an operating room set-up with CMR's Versius robot, a long
term FundamentalVR customer.
FundamentalVR is building awareness in the medical device marketplace,
receiving recognition for their award-winning platform. Partnerships and new
capabilities developed with the newly released Apple Vision Pro, as well as
Logitech's Stylus MX INK, have strengthened its market positioning in the
field of immersive training and spatial computing.
The company continues to invest in Generative AI, and recently launched Maia,
a virtual tutor designed to support learners throughout their training
journey, which has been implemented into the Fundamental Surgery Immersive VR
Platform.
In the first half of 2024, the company won two of the prestigious digital BOLD
Awards in the EdTech and Metaverse categories for its partnership with AbioMed
and with Sana Kliniken, for advancing clinical education throughout the care
continuum.
FundamentalVR continued to build its ARR during the first half of 2024, with
important wins from existing customers across a variety of procedural areas
including ophthalmology, robotics and endovascular.
As at 30 June 2024, the unaudited fair value of Tern's shareholding in
FundamentalVR remained steady at £3.6 million (31 December 2023: £3.6
million).
Post-Period end, FundamentalVR secured an additional £5.5 million from
existing third party institutional investors as a follow on tranche of its
Series B financing. Tern did not participate in the funding round, leading to
a reduction in its holding, although the unaudited fair value of Tern's
shareholding in FundamentalVR is expected to remain unchanged.
Wyld Networks AB ("Wyld Networks" or "Wyld")
Valuation of holding: £0.4 million
Holding: 19.9%
Wyld Networks, quoted on the NASDAQ First North Growth Market in Stockholm,
enables affordable connectivity across the globe in areas where wireless
coverage is unavailable or congested. The company specialises in providing
wireless connectivity between IoT sensors and low Earth orbit ("LEO")
satellites with its Wyld Connect solution (a satellite IoT terminal and
module).
In the first half of 2024, Wyld Networks continued to see growth in securing
new customers. The Company launched its L-Band product into the market, a
significant milestone in providing customers with global IoT connectivity.
Post period end, Wyld also launched a satellite IoT tracker product with an
initial application in tracking moving assets.
Wyld Networks entered into an agreement with Brazil-based GeoApis to monitor
bee colonies using Wyld's low-orbit satellites to increase yields and improve
sustainability for beekeepers. Wyld Networks partnered with innovative British
company SugaROx that develops biostimulant products that increases crop
productivity and resilience in Brazil. The company signed a partnership with
Harper Adams University - a leading university in the UK for agriculture,
animal and rural management and environmental management. The aim is to
monitor soil for crops with an initial project to deliver soil moisture data
for cabbage crops within the 550-hectare research fields at Harper Adams in
Shropshire, UK.
In addition, the company partnered with Actility - the global leader in IoT
connectivity platforms. This partnership leverages Actility's ThingPark
Exchange, the industry's first and leading global LoRaWAN® peering hub.
The company has focused its geographical commercial coverage predominately in
South America, North America, Africa and the Middle East and has now engaged
in Asia Pacific initially in Australia.
During the Period Wyld Networks received approximately SEK 6.4 million
(approximately £0.5 million) from the exercise of its TO4 warrants, which had
the effect of diluting Tern's holding in Wyld Networks.
As outlined above, Wyld announced, post Period end, on 2 September 2024, the
proposed Wyld Networks Rights Issue to raise approximately SEK 74.2 million.
The Tern board does not believe that the Wyld Networks Rights Issue is in the
best interests of Wyld Networks' shareholders, including Tern, and Tern and
its advisers are investigating alternative proposals that may be put to Wyld
Networks and its shareholders.
As at 30 June 2024, the unaudited fair value of Tern's shareholding in Wyld
Networks decreased to £0.4 million (31 December 2023: £2.4 million)
primarily due to the fair value decrease (£2.0 million), which included a
£0.02 million foreign exchange movement on the Sterling value of Wyld
Networks which is valued in Swedish Krona. Wyld Networks' shares are traded on
an active financial market and the fair value is therefore determined by
reference to the quoted market price at the reporting date.
Talking Medicines Limited ("Talking Medicines")
Valuation of holding: £2.1 million
Holding: 23.8%
Convertible loan notes of £0.3 million
Talking Medicines, a pioneering leader in healthcare intelligence leveraging
Advanced Data Science and Artificial Intelligence, showed significant progress
in the first half of 2024 for its innovative interface Drug-GPT. The Company
is headquartered in Glasgow with a growing sales presence in New Jersey/New
York/Philadelphia.
Drug-GPT with its innovative technology has garnered substantial interest and
significant revenue from leading global healthcare advertising agencies, who
recognize its potential to transform strategies for their pharmaceutical
clients, in the context of the US$30 billion (annual) spend on US Drug
Marketing. External forces are propelling change in the industry in 2024,
including the mass adoption of Generative AI, alongside Pharmaceutical
Companies moving toward precision and personalised medicine helping to drive
need and momentum, changing away from traditional generalist data insight
collection methods such as focus groups, toward AI solutions. Drug-GPT
offers an 80% uplift in productivity that continues to be validated by
clients, enhancing the efficiency and effectiveness of intelligence gathering
through high quality curated results.
Among Talking Medicines' clients are some of the world's most prominent
healthcare ad agency networks, reaffirming the efficacy for Drug-GPT in
providing key intelligence derived from aggregated patient and healthcare
professional conversations. By tapping into previously unseen data, Talking
Medicines empowers its clients to drive better strategies and make informed
decisions in relation to the pharmaceutical landscape. In both onboarding new
clients and expanding its role with existing ones, the company has been able
to grow its US based client list, with opportunities for further expansion in
the second half of 2024 into 2025.
Partnerships are playing a key role in both working with data communities to
source raw data for clients, as well as with clients themselves as they look
for a competitive advantage. Drug-GPT will continue to evolve, led by data
science. The Talking Medicines team continue to publish on academic forums to
share their leading knowledge and points of differentiation, the latest
publication is a comparative study on Patient Language across Therapeutic
Domains. This scientific R&D enhances the protective IP moat around the
use of Advanced Data Science and AI by Talking Medicines in Healthcare.
Looking ahead, Talking Medicines remains committed to driving its customer
base and US presence, seeking a thought leadership position on AI in
Healthcare Intelligence. Enhanced features within Drug-GPT will, Talking
Medicines management believes, continue to excite customers, with Talking
Medicines positioning itself as the preferred partner for patient and Health
Care Practitioner intelligence to achieve healthcare marketing excellence.
As at 30 June 2024, the unaudited fair value of Tern's shareholding in Talking
Medicines increased to £2.1 million (31 December 2023: £2.0 million) due to
additional investments from Tern of approximately £0.1 million via
convertible loan notes during the Period.
Sure Valley Ventures Enterprise Capital Fund ("SVV2" or the "Fund")
Valuation of holding: £0.4 million
Holding: 5.9%
SVV2 is a venture capital fund that invests in a diverse portfolio of private
UK software companies, with a particular emphasis on those in the immersive
technology and metaverse sectors. This includes companies specializing in
augmented and virtual reality, artificial intelligence, and security.
In the first half of the year, the Fund had invested £6 million across five
companies. The Fund's first investment was £1 million in RETìníZE Limited,
a creative tech company based in Belfast, made in March 2022. In June 2024, an
additional £500,000 was allocated as follow-on capital for RETìníZE,
expected to be completed in Q3. In November 2022, the Fund made its second
investment of £1.05 million in Jaid (trading as Opsmatix Limited), an
innovative technology firm specializing in AI-powered human communication
solutions. The Fund also had the option to invest an additional £350,000
within six months under the same terms, which it exercised in Q2 this year.
Additionally, the Fund agreed to invest a further £1 million in the form of
convertible loan notes, with £300,000 called in June 2024 and set to be
deployed in Q3 2024.
The third company in the portfolio, Captur, received a £1.5 million
investment in September 2023. Captur is an AI company that leverages Computer
Vision for AI-powered workflow automation. Q2 2024 marked the most successful
investment period to date, with three new investments closed, two follow-on
rounds completed, and three additional prospective deals in the legal process.
In June 2024, SVV2 closed a £750,000 investment in Vortex IQ (formerly
Saasvortex), a high-demand deal as the company recently graduated from the
Techstars London Accelerator. The first Manchester-based investment occurred
in June 2024, with a £650,000 investment in Ittybit, an innovative AI media
optimization platform. Finally, the Fund committed £1 million to Phinxt
Robotics, a promising AI robotics startup, with the funds called and deployed
post period end in July 2024.
As at 30 June 2024, the unaudited fair value of Tern's shareholding in SVV2
was £0.4 million (31 December 2023: £0.3 million). Tern's additional
investment during the Period was in part offset by fees charged by the fund.
DiffusionData Limited ("DiffusionData")
Valuation of holding: £0.02 million
Holding: <1%
DiffusionData is a leader in real-time data streaming and messaging solutions.
Established to address the global challenges of real-time systems, application
connectivity, and data distribution, the company has a diverse international
team of business and technology experts. Its flagship product, the Diffusion®
Intelligent Data Platform, simplifies the process of consuming, enriching, and
reliably delivering data.
As at 30 June 2024, the unaudited fair value of Tern's shareholding in
DiffusionData was £0.02 million (31 December 2023: £0.02 million).
Unaudited Income Statement and Statement of Comprehensive Income
For the six months ended 30 June 2024
Notes 6 months to 30 June 2024 6 months to 30 June 2023 12 months to 31 December 2023
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Fee income 7 156 199
Movement in fair value of investments 7 (1,988) (1,988) (11,047)
Profit on disposal - 9 29
Total investment deficit (1,981) (1,823) (10,819)
Administration costs (595) (1,023) (1,712)
Other expenses (17) (29) (194)
Movement in fair value of derivative financial instruments (83) - 36
Operating loss (2,676) (2,875) (12,689)
Finance income 13 35 81
Loss before tax (2,663) (2,840) (12,608)
Tax - - -
Loss and total comprehensive loss for the period (2,663) (2,840) (12,608)
Earnings per share 6
Basic and diluted loss per share (0.64)p (0.73)p (3.24)p
Unaudited Statement of Financial Position
As at 30 June 2024
30 June 30 June 31 December 2023
2024 2023
(Unaudited) (Unaudited) (Audited)
Note £000 £000 £000
Assets
Non-current assets
Investments 7 11,102 21,825 12,779
11,102 21,825 12,779
Current assets
Trade and other receivables 71 352 73
Cash and cash equivalents 121 741 298
192 1,093 371
Total assets 11,294 22,918 13,150
Equity and liabilities
Share capital 8 1,389 1,380 1,380
Share premium 34,451 33,391 33,391
Share warrant reserve - 140 -
Retained earnings (25,132) (12,702) (22,469)
10,708 22,209 12,302
Current liabilities
Trade and other payables 384 346 325
Short Term Loan 9 202 191 418
Derivative Financial Instruments - - 105
Total current liabilities 586 537 848
Borrowings 9 - 172 -
Total non-current liabilities - 172 -
Total liabilities 586 709 848
Total equity and liabilities 11,294 22,918 13,150
Unaudited Statement of Changes in Equity
For the six months ended 30 June 2024
Share Share Retained Total
capital premium Share warrant reserve earnings equity
£000 £000 £000 £000 £000
Balance at 31 December 2022 1,379 33,341 - (9,868) 24,852
Total comprehensive income - - - (2,840) (2,840)
Transactions with owners
Issue of share capital 1 50 - - 51
Issue of warrants 140 - 140
Share based payment charge - - - 6 6
Balance at 30 June 2023 1,380 33,391 140 (12,702) 22,209
Total comprehensive income - - (9,768) (9,768)
Transactions with owners - - - - -
Issue of warrants - - (140) - (140)
Share based payment charge - - - 1 1
Balance at 31 December 2023 1,380 33,391 - (22,469) 12,302
Total comprehensive income - - - (2,663) (2,663)
Transactions with owners
Issue of share capital 8 813 - - 821
Issue of shares upon exercise of warrants 1 296 - - 297
Share issue costs - (49) - - (49)
Balance at 30 June 2024 1,389 34,451 - (25,132) 10,708
Unaudited Statement of Cash Flows
For the six months ended 30 June 2024
6 months to 30 June 2024 6 months to 30 June 2023 12 months to 31 December 2023
(Unaudited) (Unaudited) (Audited)
Note £000 £000 £000
OPERATING ACTIVITIES
Net cash used in operations 10 (507) (846) (1,373)
Purchase of investments (303) (1,133) (1,383)
Cash received from sale of investments 4 1,238 1,535
Loans to portfolio companies - - 136
Interest received - - 19
Net cash used in operating activities (806) (741) (1,066)
FINANCING ACTIVITIES
Proceeds on issue of shares 821 50 -
Share issue expenses (49) - -
Proceeds on the exercise of warrants 110 - -
Loan receipt - 500 500
Loan repayment (253) - (68)
Net cash from financing activities 629 550 432
(Decrease) in cash and cash equivalents (177) (191) (634)
Cash and cash equivalents at beginning of period 298 932
932
Cash and cash equivalents at end of period 121 741 298
Notes to the Unaudited Interim Statements
For the six months ended 30 June 2024
1. General information
Tern is an investing company specialising in private software companies,
predominantly in the Internet of Things (IoT).
The Company is a public limited company, incorporated in England and Wales,
with its shares traded on AIM, a market of that name operated by the London
Stock Exchange.
The address of Tern's registered office is 27/28 Eastcastle Street, London W1W
8DH. Items included in the financial statements of the Company are measured in
Pounds Sterling, which is the Company's presentational and functional
currency.
2. Basis of preparation
The interim financial information in this report has been prepared in
accordance with UK-adopted international accounting standards. The financial
statements have been prepared on the basis of the recognition and measurement
principles of the IFRS that were applicable at 30 June 2024. They do not
include all of the information required for full annual financial statements
and should be read in conjunction with Tern's audited financial statements for
the year ended 31 December 2023. The financial information for the year
ended 31 December 2023 set out in this interim report does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006. The
Company's statutory financial statements for the year ended 31 December 2023
have been filed with the Registrar of Companies and can be found on the
Company's website: www.ternplc.com (http://www.ternplc.com) . The auditor's
report on those financial statements was unqualified and did not contain
statements under Section 498 (2) or Section 498 (3) of the Companies Act
2006. These interim financial statements have been prepared under the
historical cost convention as adjusted for the valuation of investments and
have been approved for issue by the Board of Directors.
3. Going concern
The financial statements have been prepared on the going concern basis, as the
directors have a reasonable expectation that the Company has adequate
resources to continue operating for the foreseeable future. This has been
assessed using detailed cash flow analysis so that the Board can conclude that
the Company has sufficient working capital resources available from a variety
of sources to continue for at least 12 months from the approval of the
financial statements.
Following the results of the June 2024 Annual General Meeting (AGM), the
directors have had to apply additional judgment on the capital resources
available. As noted in the Chairman's statement the Company does require
further funding and this analysis assumes that further funding is available.
The directors are confident that the Company can secure the necessary funding
either by way of the allotment of equity securities, or through the partial
sale of its portfolio holdings, or a combination of the two.
4. Investments
The investment valuation consists primarily of equity investments.
In accordance with IFRS 10, paragraph 4B, investments are recognised at fair
value through profit and loss (FVTPL) in line with guidance set out in IFRS
9. Changes in foreign exchange rates impact investments valued in a foreign
currency.
5. Critical accounting judgements and key sources of
estimation uncertainty
Estimates and judgements are continually 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 key sources of estimation uncertainty that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are outlined below.
ESTIMATES
Fair value of financial instruments
The Company holds unquoted investments of £10.7 million that have been
designated as held for trading on initial recognition. Where practicable the
Company determines the fair value of these financial instruments that are not
quoted using the most recent bid price at which a transaction has been carried
out. These techniques are significantly affected by certain key assumptions,
such as market liquidity. Given the nature of the investments being
early-stage businesses, other valuation methods such as discounted cash flow
analysis to assess estimates of future cash flows and derive fair value
estimates cannot always be substantiated by comparison with independent
markets and, in many cases, may not be capable of being realised immediately
at that value.
JUDGEMENTS
Investments held at FVTPL
The critical judgement is the assessment that the investments should not be
consolidated. This assessment was reached following a review of all the key
conditions for an investment entity, as set out in IFRS 10 and the Company was
judged to have met those key conditions as follows:
· The Company obtains funds from one or more investors for the purpose
of providing those investor(s) with investment management services;
· The Company commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation, investment income,
or both; and
· The Company measures and evaluates the performance of substantially
all its investments on a fair value basis.
In coming to this conclusion, the Company also judged that its
investment-related activities do not represent a separate substantial business
activity or a separate substantial source of income to the investment entity.
6. Loss per share
Loss per share is calculated by reference to the weighted average shares in
issue as follows:
6 months to 6 months to 12 months to
30 June 2024 30 June 2023 31 December 2023
£000
£000 £000
Loss for the purposes of basic and fully diluted loss per share (2,663) (2,480) (12,608)
Weighted average number of ordinary shares (see note below): Number Number Number
For calculation of basic and fully diluted loss per share 414,309,389 388,681,380 389,182,934
Loss per share
Basic and diluted loss per share (0.64)p (0.73)p (3.24)p
At 30 June 2024, 31 December 2023 and 30 June 2023 the fully diluted loss per
share is the same as the basic loss per share as the share options were
underwater which would have an anti-dilutive effect on earnings per share.
7. Investments
30 June 2024 30 June 2023 31 December 2023
£000 £000 £000
Fair value of investments brought forward 12,779 23,882 23,882
Interest accrued on convertible loan notes 12 27 67
Additions 303 1,133 1,383
Disposals (4) (1,229) (1,506)
13,090 23,813 23,825
Fair value adjustment to investments (1,988) (1,988) (11,047)
Fair value of investments carried forward 11,102 21,825 12,779
The convertible loan facility issued to Talking Medicines is a financial asset
with multiple derivatives and the entire contract has been designated at
FVTPL, with any movement in fair value taken to profit or loss for the year.
As at 30 June 2024, the principal of the convertible loan outstanding was
£287,500 (30 June 2023: £187,500)
8. Issued share capital
30 June 2024 30 June 2023 31 December 2023
Number Number Number
Issued and fully paid:
Ordinary shares of £0.0002 432,700,318 389,676,311 389,676,311
Deferred shares of £29.999 42,247 42,247 42,247
Deferred shares of £0.00099 34,545,072 34,545,072 34,545,072
£000 £000 £000
Issued and fully paid:
Ordinary shares of £0.0002 88 79 79
Deferred shares of £29.999 1,267 1,267 1,267
Deferred shares of £0.00099 34 34 34
1,389 1,380 1,380
The deferred shares have no voting or dividend rights. The deferred shares are
not quoted on the AIM market of the London Stock Exchange.
On 30 January 2024, 20,000,000 ordinary shares were issued at 2p per share
raising £0.4million in cash before expenses.
On 18 April 2024, 17,500,000 ordinary shares were issued at 2.4p per share
raising £0.4million in cash before expenses.
On 22 May 2024, 5,524,007 warrants over ordinary shares were exercised at 2.0p
per share raising £0.1million in cash.
9. Short Term Loan
30 June 2024 30 June 2023 31 Dec 2023
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Short term loan 202 191 418
As at 30 June 2024, the principal outstanding of the loan is £0.2 million (31
December 2023: £0.4 million). As per the agreement, the loan was secured
against Wyld Networks AB shares equal to 1.5 times the value of the
outstanding loan balance. Post period-end, the security condition of the loan
was removed and the repayment period extended by 12 months. The short term
loan is held at amortised cost with a market rate of interest of 12%.
The Company is currently unable to make further drawdowns under the loan
facility until such time as it is able to issue the required warrants as a
transaction cost associated with further drawdowns, pursuant to the terms of
the loan facility. The issue of any further warrants will require shareholder
approval to provide the Directors with authority to allot ordinary shares,
disapplying pre-emption rights.
10. Cash flow from operations
6 months to 30 June 2024 6 months to 30 June 2023 12 months to 31 Dec 2023
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
(Loss) for the period (2,663) (2,840) (12,608)
Adjustments for items not included in cash flow:
Movement in fair value of investments 1,988 1,988 11,047
(Profit) on disposal - (9) (29)
Share-based payment charge - 6 7
Amortisation of loan implementation fee 17 - 17
Derivative financial instrument costs - - 140
Movement in fair value of derivative financial instrument 83 - (36)
Finance expenses 20 3 20
Finance income (13) (35) (81)
Operating cash flows before movements in working capital (568) (887) (1,523)
Adjustments for changes in working capital:
- Decrease in trade and other receivables (excluding loans to investee 2 20 153
companies)
- Increase/(decrease) in trade and other payables 59 21 (3)
Cash used in operations (507) (846) (1,373)
11. Events after the reporting period
On 9 August 2024, the Company announced that it has sold 5.3% of its
shareholding in Device Authority Limited for a total cash consideration
of £233,000.
12. Availability of interim results
Copies of this report will be available from the Company's website
www.ternplc.com (http://www.ternplc.com) .
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