REG - TMT Investments - Half-year Report
15 September 2020
TMT INVESTMENTS PLC
("TMT" or the "Company")
Half year report for the six months to 30 June 2020
TMT Investments PLC, the venture capital company investing in high-growth, technology companies across a number of core specialist sectors, is pleased to announce its unaudited interim results for the half-year ended 30 June 2020.
The interim report will shortly be available on the Company's website, www.tmtinvestments.com.
Highlights
· COVID-19's overall effect on portfolio companies is mostly neutral or positive
· NAV per share of US$3.46 (decrease of 1.7% from US$3.52 as of 31 December 2019)
- US$1.57 million in positive revaluations (PandaDoc and HealthyHealth)
- US$2.75 million in impairments (Le Tote)
· Majority of portfolio companies continue to grow in double digits, with some investees specifically benefiting from the COVID-related market changes (MEL Science, Vinebox, Legionfarm, Hugo, ClassTag, Scentbird, etc.)
· A number of portfolio companies raised capital at significantly higher conversion caps, creating future revaluation upside potential (Bolt, Legionfarm, and ClassTag)
· Two new investments made during the period (ClassTag and 3S Money Club)
Post period end
· Completed a further 6 investments in new (Moeco, Volumetric, and Feel Holdings) and existing (Pipedrive, Hugo, and Scentbird) companies and remain well funded to continue to expand and support the Company's investment portfolio
- Moeco IoT, Inc., an end-to-end solution for valuable data generation and delivery through simple non-intrusive sensors and a secure software platform (www.moeco.io)
- Volumetric Biotechnologies, Inc., an advanced biomaterial and bio-fabrication company (www.volumetricbio.com)
- Feel Holdings Limited, a subscription-based innovative multivitamin and food additive producer (www.wearefeel.com)
Alexander Selegenev, Executive Director of TMT, commented: "We are pleased to see that the majority of our portfolio companies continue to grow in double digits and that a number of them are directly benefiting from COVID-related market changes. Demand among investors to invest in the tech winners of tomorrow remains very strong and competition to invest in the best companies at attractive valuations is fierce. We have continued to diligently scour and research the market during this turbulent time, in the belief that crises can generate excellent investment opportunities. This has led to two new investments during the period in companies that are growing strongly (parent-school communication service ClassTag (www.classtag.com) and specialist international trade fintech company 3S Money Club (www.3s.money)).
Since the period end, we have made a further 6 investments. These include further investment in or adding to our stakes in some of our best performing companies (Hugo, Pipedrive and Scentbird) and new investments in 3 exciting companies, Moeco IoT, Inc., Volumetric Biotechnologies, Inc., and Feel Holdings Limited.
We expect a number of positive revaluations across our portfolio in the next months and will update shareholders on relevant developments as appropriate."
TMT Investments PLC
Alexander Selegenev
Executive Director
+44 (0)1534 281 800
(Computershare - Company Secretary)
alexander.selegenev@tmtinvestments.com
Strand Hanson Limited (Nominated Adviser)
Richard Tulloch / James Bellman
+44 (0)20 7409 3494
Hybridan LLP (Broker)
Claire Louise Noyce
+44 (0)20 3764 2341
Kinlan Communications
David Hothersall
+44 (0)20 7638 3435
About TMT Investments PLC
TMT Investments PLC invests in high-growth technology companies across a number of core specialist sectors and has a significant number of Silicon Valley investments in its portfolio. Founded in 2010, TMT has invested in over 60 companies to date and has net assets of US$101m as of 30 June 2020. 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.
EXECUTIVE DIRECTOR'S STATEMENT
The majority of our portfolio companies have been navigating the turmoil caused by COVID-19 successfully, with some investees actually benefiting from the changed market environment. Some investees have taken advantage of increased investor interest in growing technology companies and raised capital for further expansion via convertible notes or similar instruments at higher conversion caps. Although such transactions did not trigger immediate revaluations of TMT's investments in such companies, such events provide a strong basis for potential value uplifts in the future.
Fast growing companies with ambitious management that are confident in their prospects are understandably reticent to sell too much of their equity to investors at an early stage of their development. Indeed, as investors, one of our investment requirements is that management retain a significant stake in their companies during the early stages of high growth. This allows management to remain highly incentivized to increase the value of their equity, thereby aligning themselves with investors' interests. A convertible note or similar instrument can therefore be a favoured funding route for some companies, especially at an early stage of development. The fact that some of our portfolio companies were able to raise capital at higher conversion caps is a strong indication of investors' confidence in the potential of those companies.
The Company's first half of 2020 was relatively quieter in terms of new investments (ClassTag, Inc. and 3S Money Club Limited) and positive revaluations (PandaDoc and HealthyHealth). Of over 30 investee companies, the Company's only impairment during the period was in respect of Le Tote, whose department store and fashion rental business was directly affected by COVID-19 and associated lock downs, resulting in the company filing for bankruptcy in August 2020.
Despite making only a few new investments during the period, we were busy researching investments into both existing portfolio companies and new companies, and are pleased to report that, since the period end, we have made a total of six investments into existing and new companies.
NAV per share
The Company's NAV per share in the first half of 2020 decreased by 1.7% to US$3.46 (from US$3.52 as of 31 December 2019), mainly as a result of the impairment of Le Tote (US$2.75m).
Operating Expenses
In the first half of 2020, the Company's administrative expenses of US$584,031 were below the corresponding 2019 levels (US$603,554), reflecting the Company's reduced business activity during the lock-down period in key markets in Q2 of 2020.
Financial position
As of 30 June 2020, the Company had no financial debt and cash reserves of approximately US$9.2 million. As of 14 September 2020, the Company had cash reserves of approximately US$5.5 million.
Bonus Plan
Under the Company's Bonus Plan, subject to achieving a minimum hurdle rate and high watermark conditions in respect of the Company's NAV, the team receives an annual cash bonus equal to 7.5% of the net increases in the Company's NAV, adjusted for any changes in the Company's equity capital resulting from issuance of new shares, dividends, share buy-backs or similar corporate transactions in each relevant year. The Company's bonus year runs from 1 July to 30 June. As the Company's adjusted NAV per share decreased, no bonus was accrued for the bonus year to 30 June 2020.
Update on the continuing effect of COVID-19 and recent market volatility
We are pleased to see that the majority of our portfolio companies continue to benefit from the early adoption of a more pragmatic approach of seeking cost-efficient growth as opposed to 'growth at any cost'. This approach has allowed them to control their burn rates and cash liquidity levels effectively in recent turbulent times.
Our top five portfolio companies (Bolt, Backblaze, Depositphotos, Pipedrive and PandaDoc), accounting for approximately 75% of investment portfolio value, are well-established, more mature businesses, with globally diversified revenues, strong cash reserves and tens of thousands of customers. They are operationally nimble, cost conscious companies that have grown rapidly, without undertaking large funding rounds to support expanded cost bases, compared to some of their peers.
Bolt (www.bolt.eu), a leading international ride-hailing and transportation company, is active in over 150 cities globally. Whilst turnover for the core ride-hailing business had been negatively affected as a result of COVID-19, Bolt's track record as a highly competitive and cost-efficient ride-hailing operator allowed it to not only survive the most difficult COVID-19 lockdown months without laying off a single employee, but also launch new services and raise €100 million in additional capital through a convertible note. The convertible note featured a conversion cap of €1.7 billion (c.US$1.87 billion), which is significantly higher than Bolt's equity valuation following completion of its last equity funding round in June 2019. However, as the conversion cap did not establish a new firm equity valuation level, TMT has not increased the fair value of its interest in Bolt. Since the easing of strict lockdown restrictions in most of Bolt's key markets, its turnover and revenue have been rapidly increasing.
Online data backup and cloud storage provider Backblaze (www.backblaze.com) is operationally profitable, with significant cash reserves and over 600,000 customers globally. Backblaze offers a low-cost cloud storage product that is well positioned for growth in the current cost-saving environment. As estimated in our 2019 Annual Report, the short-term impact on Backblaze's revenues proved largely neutral, with the longer-term outlook as a result of COVID-19 remaining positive.
Stock photo and video marketplace Depositphotos (www.depositphotos.com) entered the recent turbulent period operationally profitable, with sizeable cash reserves and a well-diversified international customer base. As estimated in our 2019 Annual Report, the short-term impact on Depositphotos' revenues proved neutral. We have now changed our assessment of the longer-term outlook for Depositphotos as a result of COVID-19 from "potentially negative" to "largely neutral".
Sales CRM software Pipedrive (www.pipedrive.com) is operationally profitable, with very significant cash reserves and a well-diversified customer base of over 90,000 companies worldwide. As estimated in our 2019 Annual Report, the short-term impact on Pipedrive's revenues proved neutral. TMT believes that the longer-term outlook for Pipedrive as a result of COVID-19 is likely to be positive.
Proposal automation and contract management software provider PandaDoc (www.pandadoc.com) has recently become TMT's fifth largest portfolio holding, following completion of a recent new equity round which resulted in a revaluation of TMT's investment to US$3.6 million. Post COVID-19, its contract automation software solution, which enables sales teams to remotely manage their selling processes "from propose to close", has become even more relevant. TMT believes that the longer-term outlook for PandaDoc as a result of COVID-19 is likely to be positive.
TMT's previous fifth largest holding, perfume and other beauty products subscription service Scentbird (www.scentbird.com) entered the COVID-19 period operationally profitable, with sizeable cash reserves. Contrary to our expectations in our 2019 Annual Report, the short-term impact on Scentbird's revenues proved positive. Scentbird continued to grow its annualised revenue at double digits, and its subscriber base reached over 400,000 (from "over 330,000" as of 31 December 2019). We have now changed our assessment of the longer-term outlook for Scentbird as a result of COVID-19 from "potentially negative" to "positive".
The remainder of our portfolio consists of over 30 companies and is diversified across our four core investment sectors: Big Data/Cloud, SaaS (software-as-a-service), Marketplaces and E-commerce. While a limited number of our portfolio companies most exposed to sectors immediately affected by COVID-19 disruptions faced challenges (with Le Tote being the only sizeable negative example), a notable number of our portfolio companies (such as remote learning company MEL Science, parent-teacher communication platform ClassTag, Central American delivery company Hugo, wine subscription service Vinebox and online game coaching service Legionfarm) have experienced a notable increase in demand for their products. The further effect of COVID-19's implications on our portfolio companies will depend on how the situation develops in the coming months.
TMT's own team has always been internationally based and is therefore used to working remotely. As a result, there has been no disruption to our operations.
Outlook
Throughout the recent crisis, and especially following the gradual removal of strict COVID-19-related restrictions in many markets, the venture capital industry has continued to invest in fast-growing, cost-conscious tech companies. TMT has now invested in over 60 companies since its admission to AIM in December 2010 and has a diversified portfolio of over 30 investments, focused primarily on Big Data/Cloud, SaaS, Marketplaces and E-commerce. TMT's strategy remains to be very selective in identifying new investment opportunities, while seeking to capitalise on the new and existing investment themes continuously developing in the technology, software and internet space.
We expect a number of positive revaluations across our portfolio in the coming months and will update shareholders on relevant developments as appropriate.
Alexander Selegenev
Executive Director
14 September 2020
PORTFOLIO DEVELOPMENTS
Against the COVID-19 background, the first half of 2020 was understandably quieter in terms of TMT's new investments and revaluations. We were nevertheless delighted with the underlying performance of the majority of our portfolio companies. A number of portfolio companies (PandaDoc and HealthyHealth) received further validation for their business models by raising fresh equity capital at higher valuations during the period. In tandem, some of our portfolio companies (ride-hailing platform Bolt, parent-school communication platform ClassTag, and online game coaching service Legionfarm) raised additional capital in the form of convertible instruments. While the latter did not trigger immediate revaluations for TMT, they featured significantly higher conversion caps compared to the levels at which TMT invested in those companies, therefore creating potential upside for the Company's NAV.
Portfolio Performance
The following developments had an impact on and are reflected in the Company's NAV and/or financial statements as of 30 June 2020 in accordance with applicable accounting standards:
Full and partial cash exits, and positive revaluations:
· In August 2020, PandaDoc, a proposal automation and contract management software provider (www.pandadoc.com), completed a new equity funding round. The transaction represented a revaluation uplift of US$1.41 million (or 63.5%) in the fair value of TMT's investment in PandaDoc, compared to the previous reported amount of US$2.22 million as of 31 December 2019.
· In June 2020, insurtech and healthtech company HealthyHealth (www.healthyhealth.com) completed a new equity funding round. The transaction represented a revaluation uplift of US$162,122 (or 63.9%) in the fair value of TMT's investment in HealthyHealth, compared to the previous reported amount as of 31 December 2019.
Negative revaluations:
The following of the Company's portfolio investments were negatively revalued in the first half of 2020:
Portfolio Company
Write-down amount (US$)
Reduction as % of fair value reported as of 31 Dec 2019
Reasons for write-down
Le Tote
2,749,812
100%
Company filed for bankruptcy in August 2020
Key developments for the five largest portfolio holdings in the first half of 2020 (source: TMT's portfolio companies):
Bolt (ride-hailing and delivery service):
· Active in over 150 cities globally (no material change from 31 December 2019)
· As announced on 28 May 2020, raised €100 million (US$110 million) in the form of a convertible note
· Revenue has been recovering rapidly from the lows in April 2020
Backblaze (online data backup and cloud storage provider):
· Double-digit annualised revenue growth continued despite COVID-19's impact
· "B2" cloud storage revenue continued to grow at a faster rate
Depositphotos (stock photo and video marketplace):
· Small drop in revenues was offset by organic cost savings
· New graphic design software product Crello continued growing fast in both users and revenue
Pipedrive (sales CRM software):
· Growth in revenue continued, although at a slower rate
· Over 90,000 paying customers (no material change from 31 December 2019)
PandaDoc (proposal automation and contract management software):
· Double-digit annualised revenue growth continued despite COVID-19's impact
· Over 20,000 subscribers (from over 17,000 as of 31 December 2019)
New investments
We naturally slowed down the pace of new investments in the second quarter of 2020, though we have continued to be very active throughout in researching investments into both existing portfolio companies and new companies. This has resulted in the Company making six investments in new and existing portfolio companies that meet our investment criteria of having fast growing revenue, outstanding management teams, high growth potential based on globally scalable business models, and viable exit opportunities.
In the first half of 2020, the Company made the following investments:
· US$400,000 in ClassTag, Inc., a parent-school communication platform currently connecting over 2 million families across 25,000 schools in the USA (www.classtag.com).
· £500,000 in 3S Money Club Limited, a UK-based online banking service focusing on international trade (www.3s.money).
Events after the reporting period
In July 2020, the Company invested US$1,000,000 in Moeco IoT, Inc., an end-to-end solution for valuable data generation and delivery through simple non-intrusive sensors and a secure software platform (www.moeco.io).
In July 2020, the Company acquired existing shares in portfolio companies Scentbird and Pipedrive from third parties for US$329,903 and US$1,630,075 respectively.
In July 2020, the Company invested US$200,000 in Volumetric Biotechnologies, Inc., an advanced biomaterial and bio-fabrication company (www.volumetricbio.com).
In August 2020, the Company invested an additional US$1,000,000 in Central American delivery and transportation technology company Hugo (www.hugoapp.com).
In August 2020, the Company invested £262,000 in Feel Holdings Limited, a subscription-based innovative multivitamin and food additive producer (www.wearefeel.com).
These events after the reporting period are not reflected in the NAV and/or the financial statements as at 30 June 2020.
FINANCIAL STATEMENTS
Statement of Comprehensive Income (unaudited)
For the six months ended 30/06/2020
For the six months ended 30/06/2019
Notes
USD
USD
(Loss)/Gains on investments
3
(1,264,916)
18,919,501
(1,264,916)
18,919,501
Expenses
Bonus scheme payment charge
6
-
(2,007,693)
Administrative expenses
5
(584,031)
(603,554)
Other operating expenses
-
(13,078)
Operating (loss)/gain
(1,848,947)
16,295,176
Net finance income
7
123,736
122,959
(Loss)/Gain before taxation
(1,725,211)
16,418,135
Taxation
8
-
-
(Loss)/Gain attributable to equity shareholders
(1,725,211)
16,418,135
Total comprehensive (loss)/income for the year
(1,725,211)
16,418,135
(Loss)/Gain per share
Basic and diluted gain (loss) per share (cents per share)
9
(5.91)
56.25
Statement of Financial Position
At 30 June
2020
USD
At 31 December
2019
USD
Unaudited
Audited
Notes
Non-current assets
Financial assets at FVPL
10
91,046,531
91,207,190
Total non-current assets
91,046,531
91,207,190
Current assets
Trade and other receivables
11
1,140,599
711,957
Cash and cash equivalents
12
9,188,599
11,700,074
Total current assets
10,329,198
12,412,031
Total assets
101,375,729
103,619,221
Current liabilities
Trade and other payables
13
286,910
805,191
Total current liabilities
286,910
805,191
Total liabilities
286,910
805,191
Net assets
101,088,819
102,814,030
Equity
Share capital
14
34,790,174
34,790,174
Retained profit
66,298,645
68,023,856
Total equity
101,088,819
102,814,030
Statement of Cash Flows (unaudited)
For the six months ended 30/06/2020
For the six months ended 30/06/2019
Notes
USD
USD
Operating activities
Operating (loss)/gain
(1,848,947)
16,295,176
Adjustments for non-cash items:
Changes in fair value of financial assets at FVPL
3
1,181,529
(18,922,586)
Bonus scheme payment charge
-
2,007,693
(667,418)
(619,717)
Changes in working capital:
(Increase)/decrease in trade and other receivables
11
(428,642)
23,104,922
(Decrease) in trade and other payables
13
(518,281)
(1,602,928)
Net cash (used by)/generated from operating activities
(1,614,341)
20,882,277
Investing activities
Interest received
7
52,868
96,757
Purchase of financial assets at FVPL
10
(1,020,870)
(2,453,607)
Proceeds from sale of financial assets at FVPL
10
-
568,180
Other financial income
7
70,868
26,202
Net cash used in investing activities
(897,134)
(1,762,468)
Financing activities
Proceeds from issue of shares
-
-
Net cash from financing activities
-
-
(Decrease)/Increase in cash and cash equivalents
(2,511,475)
19,119,809
Cash and cash equivalents at the beginning of the period
12
11,700,074
3,270,088
Cash and cash equivalents at the end of the period
12
9,188,599
22,389,897
Statement of Changes in Equity (unaudited)
Share capital
Retained profit
Total
USD
USD
USD
Balance at 31 December 2018
34,790,174
55,471,511
90,261,685
Gain for the year
-
18,389,511
18,389,511
Total comprehensive income for the year
-
18,389,511
18,389,511
Transactions with owners in their capacity as owners:
Dividends paid
(5,837,166)
(5,837,166)
Balance at 31 December 2019
34,790,174
68,023,856
102,814,030
Loss for the period
-
(1,725,211)
(1,725,211)
Total comprehensive income for the period
-
(1,725,211)
(1,725,211)
Balance at 30 June 2020
34,790,174
66,298,645
101,088,819
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2020
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company incorporated in Jersey with its registered office at 13 Castle Street, St Helier, JE1 1ES, Channel Islands.
The Company was incorporated and registered on 30 September 2010 in Jersey under the Companies (Jersey) Law 1991 (as amended) with registration number 106628 under the name TMT Investments Limited. The Company obtained consent from the Jersey Financial Services Commission pursuant to the Control of Borrowing (Jersey) Order 1985 on 30 September 2010. On 1 December 2010 the Company re-registered as a public company and changed its name to TMT Investments Plc. The Company's ordinary shares were admitted to trading on the AIM market of the London Stock Exchange on 1 December 2010.
The memorandum and articles of association of the Company do not restrict its activities and therefore it has unlimited legal capacity. The Company's ability to implement its Investment Policy and achieve its desired returns will be limited by its ability to identify and acquire suitable investments. Suitable investment opportunities may not always be readily available.
The Company will seek to make investments in any region of the world.
Financial statements of the Company are prepared by and approved by the Directors in accordance with International Financial Reporting Standards, International Accounting Standards and their interpretations issued or adopted by the International Accounting Standards Board as adopted by the European Union ("IFRSs"). The Company's accounting reference date is 31 December.
2. Summary of significant accounting policies
2.1 Basis of presentation
Interim financial statements for the six months ended 30 June 2020 are unaudited and were approved by the Directors on 14 September 2020. The financial statements for the year ended 31 December 2019 were prepared in accordance with International Financial Reporting Standards as adopted by the EU. The report of the auditor on those financial statements was unqualified and did not draw attention to any matters by way of emphasis of matter.
The principal accounting policies applied by the Company in the preparation of these unaudited financial statements are set out below and have been applied consistently.
The financial statements have been prepared on a going concern basis, under the historical cost basis as modified by the fair value of financial assets at ("FVTPL"), as explained in the accounting policies below, and in accordance with IFRS. Historical cost is generally based on the fair value of the consideration given in exchange for assets.
2.2 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of the Company are measured in United States Dollars ('US dollars', 'USD' or 'US$'), which is the Company's functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into US$ using the exchange rates prevailing at the dates of the transactions. Exchange differences arising from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
Conversation rates, USD
Currency
At 30/06/2020
Average rate, for six months ended 30/06/2020
British pounds, £
1.2615
1.2677
Euro, €
1.1023
1.1373
2.3 New IFRSs and interpretations
The following standards and amendments became effective from 1 January 2020, though did not have any material impact on the Company:
• Amendments to References to Conceptual Framework in IFRS Standards
• Amendments to IFRS 9 and IFRS 7 - Interest rate benchmark reform
• Amendments to IAS 1 and IAS 8 - Definition of Materiality
3 (Loss)/Gain on investments
For six months ended 30/06/2020
For six months
ended 30/06/2019
USD
USD
Gross interest income from convertible notes receivable
34,013
12,516
Net interest income from convertible notes receivable
34,013
12,516
(Losses)/Gains on changes in fair value of financial assets at FVPL
(1,181,529)
18,922,586
Success fee attributable to consultants
-
(15,601)
Other losses on investment
(117,400)
-
Total (loss)/gain on investments
(1,264,916)
18,919,501
4 Segmental analysis
Geographic information
The Company has investments in six geographical areas - USA, Estonia, the United Kingdom, BVI, Cyprus and Israel.
Non-current financial assets
As at 31/12/2019
USA
Israel
BVI
Cyprus
Estonia
United Kingdom
Total
USD
USD
USD
USD
USD
USD
USD
Equity investments
57,787,606
291,781
779,000
-
22,642,461
2,253,607
83,754,455
Convertible notes & SAFE's
6,802,735
-
-
650,000
-
-
7,452,735
Total
64,590,341
291,781
779,000
650,000
22,642,461
2,253,607
91,207,190
As at 30/06/2020
USA
Israel
BVI
Cyprus
Estonia
United Kingdom
Total
USD
USD
USD
USD
USD
USD
USD
Equity investments
57,926,660
291,781
779,000
-
22,642,461
3,036,599
84,676,501
Convertible notes & SAFE's
5,720,030
-
-
650,000
-
-
6,370,030
Total
63,646,690
291,781
779,000
650,000
22,642,461
3,036,599
91,046,531
5 Administrative expenses
Administrative expenses include the following amounts:
For six months ended 30/06/2020
For six months ended
30/06/2019
USD
USD
Staff expenses (note 6)
326,349
321,842
Professional fees
115,522
144,640
Legal fees
14,102
26,674
Bank and LSE charges
8,364
7,445
Audit and accounting fees
14,371
10,396
Rent
47,298
47,298
Other expenses
34,087
44,002
Currency exchange loss
23,938
1,257
584,031
603,554
6 Staff expenses
For six months ended 30/06/2020
For six months ended 30/06/2019
USD
USD
Directors' fees
92,589
93,002
Wages and salaries
233,760
228,840
326,349
321,842
Wages and salaries shown above include fees and salaries relating to the six months ended 30 June. Bonus Plan costs are not included in administrative expenses and are shown separately.
The Directors' fees for the six months ended 30 June 2020 and 2019 were as follows:
For six months ended 30/06/2020
For six months ended
30/06/2019
USD
USD
Alexander Selegenev
50,000
50,052
Yuri Mostovoy
25,000
24,998
James Joseph Mullins
12,589
12,952
Petr Lanin
5,000
5,000
92,589
93,002
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 six months ended 30 June was 6 (six months ended 30 June 2019: 6).
Key management personnel of the Company are defined as those persons having authority and responsibility for the planning, directing and controlling the activities of the Company, directly or indirectly. Key management of the Company are therefore considered to be the Directors of the Company. There were no transactions with the key management, other than their Directors fees, bonuses and reimbursement of business expenses.
Under the Company's Bonus Plan, subject to achieving a minimum hurdle rate and high watermark conditions in respect of the Company's NAV, the team receives an annual cash bonus equal to 7.5% of the net increases in the Company's NAV, adjusted for any changes in the Company's equity capital resulting from issuance of new shares, dividends, share buy-backs or similar corporate transactions in each relevant year. The Company's bonus year runs from 1 July to 30 June. For the bonus year to 30 June 2019, the total amount of bonus accrued was US$2,007,693. As the Company's adjusted NAV per share decreased, no bonus was accrued for the bonus year to 30 June 2020.
7 Net finance income
For six months ended 30/06/2020
For six months ended 30/06/2019
USD
USD
Interest income
52,868
96,757
Dividends received
70,868
-
Other financial income
-
26,202
122,736
122,959
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 (loss)/gain per share is based upon the net (loss)/gain for the six months ended 30 June 2020 attributable to the ordinary shareholders of US$1,725,211 (for the six months ended 30 June 2019: net gain of US$16,418,135) and the weighted average number of ordinary shares outstanding calculated as follows:
(Loss)/Gain per share
For the six months ended 30/06/2020
Restated for the six months
ended 30/06/2019
Basic (loss)/gain per share (cents per share)
(5.91)
56.25
(Loss)/Gain attributable to equity holders of the entity
(1,725,211)
16,418,135
The weighted average number of ordinary shares outstanding as follows:
(in number of shares weighted during the year outstanding)
For the six months ended 30/06/2020
For the six months ended 30/06/2019
Weighted average number of shares in issue
Ordinary shares
29,185,831
29,185,831
29,185,831
29,185,831
The Company does not have any dilutive instruments in issue.
10 Non-current financial assets
At 30 June 2020
USD
At 31 December 2019
USD
Financial assets at FVPL:
Investments in equity shares (i)
- unlisted shares
84,676,501
83,754,455
Convertible notes receivable (ii)
- promissory notes
2,170,030
3,452,735
- SAFEs
4,200,000
4,000,000
91,046,531
91,207,190
Reconciliation of fair value measurements of non-current financial assets:
Financial assets at FVPL
Total
Unlisted
shares
Convertible
notes & SAFE's
USD
USD
USD
Balance as at 1 January 2019
62,285,914
2,604,230
64,890,144
Total gains or losses in 2019:
- changes in fair value
21,838,934
(569,104)
21,269,830
Purchases (including consulting & legal fees)
2,881,128
5,700,000
8,581,128
Disposal of investment (carrying value)
(3,533,912)
-
(3,533,912)
Conversion and other movements
282,391
(282,391)
-
Balance as at 1 January 2020
83,754,455
7,452,735
91,207,190
Total gains or losses in 2020:
- changes in fair value
(1,181,529)
-
(1,181,529)
Purchases (including consulting & legal fees)
820,870
200,000
1,020,870
Disposal of investment (carrying value)
-
-
-
Conversion and other movements
1,282,705
(1,282,705)
Balance as at 30 June 2020
84,676,501
6,370,030
91,046,531
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 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.
(i) Equity investments as at 30 June 2020:
Investee company
Date of initial investment
Value at
1 Jan 2020,
USD
Additions to equity investments during the period, USD
Conversions from loan notes, USD
Gain/loss from changes in fair value of equity investments, USD
Disposals, USD
Value at 30 Jun 2020, USD
Equity stake owned
DepositPhotos
26.07.2011
10,836,105
-
-
-
-
10,836,105
16.67%
Wanelo
21.11.2011
1,825,596
-
-
-
-
1,825,596
4.69%
Backblaze
24.07.2012
21,201,509
-
-
-
-
21,201,509
10.85%
E2C
15.02.2014
136,781
-
-
-
-
136,781
5.51%
Remote.it
13.06.2014
3,025,285
-
-
-
-
3,025,285
1.64%
Le Tote
21.07.2014
2,749,812
-
-
(2,749,812)
-
-
0.69%
Anews
25.08.2014
1,000,000
-
-
-
-
1,000,000
9.41%
Klear
01.09.2014
155,000
-
-
-
-
155,000
3.04%
Bolt
15.09.2014
22,132,548
-
-
-
-
22,132,548
1.60%
Pipedrive
30.07.2012
10,257,098
-
-
-
-
10,257,098
2.36%
PandaDoc
11.07.2014
2,215,118
-
-
1,406,161
-
3,621,279
1.55%
Full Contact
11.01.2018
244,506
-
-
-
-
244,506
0.19%
ScentBird
13.04.2015
3,340,404
-
-
-
-
3,340,404
4.01%
Workiz
16.05.2016
442,159
-
-
-
-
442,159
2.13%
Vinebox
06.05.2016
450,015
-
-
-
-
450,015
2.41%
Hugo
19.01.2019
779,000
-
-
-
-
779,000
1.94%
MEL Science
25.02.2019
1,999,992
-
-
-
-
1,999,992
4.45%
Healthy Health
06.06.2019
253,615
-
-
162,122
-
415,737
2.17%
eAgronom
31.08.2018
288,224
-
-
-
-
288,224
2.13%
Rocket Games (Legionfarm)
16.09.2019
200,000
-
-
-
-
200,000
2.00%
Timbeter
05.12.2019
221,688
-
-
-
-
221,688
4.64%
Classtag
03.02.2020
-
200,000
-
-
-
200,000
1.18%
3S Money Club
07.04.2020
-
620,870
-
-
-
620,870
4.40%
Accern
21.08.2019
-
-
1,282,705
-
-
1,282,705
5.19%
Total
83,754,455
820,870
1,282,705
(1,181,529)
-
84,676,501
(ii) Convertible loan notes as at 30 June 2020:
Investee company
Date of initial investment
Value at 1 Jan 2020,
USD
Additions to convertible note investments during the period, USD
Amortized costs, USD
Conversions from loan notes, USD
Gain/loss from changes in fair value of convertible notes, USD
Disposals, USD
Value at 30 Jun 2020, USD
Term, years
Interest rate, %
Sharethis
26.03.2013
570,030
-
-
-
-
-
570,030
5.0
1.09%
KitApps
10.07.2013
600,000
-
-
-
-
-
600,000
1.0
2.00%
Accern
21.08.2019
1,282,705
-
-
(1,282,705)
-
-
-
-
-
Affise
18.09.2019
1,000,000
-
-
-
-
-
1,000,000
-
5.00%
Total
3,452,735
-
-
(1,282,705)
-
-
2,170,030
(iii) SAFEs as at 30 June 2020:
Investee company
Date of initial investment
Value at 1 Jan 2020,
USD
Additions to SAFE investments during the period, USD
Gain/loss from changes in fair value of SAFE investments, USD
Disposals, USD
Value at 30 Jun 2020, USD
Spin Technology
17.12.2018
300,000
-
-
-
300,000
Cheetah (Go-X)
29.07.2019
350,000
-
-
-
350,000
Scalarr
15.08.2019
1,500,000
-
-
-
1,500,000
Retarget
24.09.2019
650,000
-
-
-
650,000
Rocket Games (Legionfarm)
24.09.2019
1,200,000
-
-
-
1,200,000
Classtag
03.02.2020
-
200,000
-
-
200,000
Total
4,000,000
200,000
-
-
4,200,000
11 Trade and other receivables
At 30 June 2020
At 31 December 2019
USD
USD
Prepayments
17,442
326,648
Other receivables
979,975
264,361
Interest receivable on promissory notes
139,562
105,548
Interest receivable on deposits
3,620
15,400
1,140,599
711,957
12 Cash and cash equivalents
The cash and cash equivalents as at 30 June 2020 include cash on hand in banks and bank deposits, net of outstanding bank overdrafts. The effective interest rate at 30 June 2020 was 0.67%.
Cash and cash equivalents comprise the following:
At 30 June 2020
At 31 December 2019
USD
USD
Deposits
6,500,000
6,500,000
Bank balances
2,688,599
5,200,074
9,188,599
11,700,074
The following table represents an analysis of cash and equivalents by rating agency designation based on Fitch rating or their equivalent:
At 30 June 2020
At 31 December 2019
USD
USD
Bank balances
BBB+ rating
2,688,599
5,200,074
2,688,599
5,200,074
Deposits
BBB+ rating
6,500,000
6,500,000
6,500,000
6,500,000
9,188,599
11,700,074
13 Trade and other payables
At 30 June 2020
At 31 December 2019
USD
USD
Salaries payable
42,293
-
Directors' fees payable
27,688
15,732
Bonus payable
172,354
748,626
Trade payables
39,035
11,912
Other current liabilities
-
9
Accrued expenses
5,540
28,912
286,910
805,191
14 Share capital
On 30 June 2020 the Company had an authorised share capital of unlimited ordinary shares of no par value and had issued ordinary share capital of:
At 30 June 2020
At 31 December 2019
USD
USD
Share capital
34,790,174
34,790,174
Issued capital comprises:
Number
Number
Fully paid ordinary shares
29,185,831
29,185,831
Number of shares
Share capital,
USD
Balance at 31 December 2019
29,185,831
29,185,831
Balance at 30 June 2020
29,185,831
29,185,831
There have been no changes to the Company's ordinary share capital between 30 June 2020 and the date of approval of these financial statements.
15 Related party transactions
Since May 2012, TMT's Moscow-based staff have been located in an office that belongs to a company ("Orgtekhnika") controlled by Mr. Alexander Morgulchik and Mr. German Kaplun, the Company's senior managers. German Kaplun also owns 18.33% of the issued share capital of TMT. Thus, Orgtekhnika is considered a related party. Together with other related expenses (support personnel, company car, security services, etc.), the total office rent costs to TMT from 1 April 2017 has been US$7,883 per month.
The Company's Directors receive fees and bonuses from the Company, details of which can be found in Note 6.
16 Subsequent events
In July 2020, the Company invested US$1,000,000 in Moeco IoT, Inc., an end-to-end solution for valuable data generation and delivery through simple non-intrusive sensors and a secure software platform (www.moeco.io).
In July 2020, the Company acquired existing shares in portfolio companies Scentbird and Pipedrive from third parties for US$329,903 and US$1,630,075 respectively.
In July 2020, the Company invested US$200,000 in Volumetric Biotechnologies, Inc., an advanced biomaterial and bio-fabrication company (www.volumetricbio.com).
In August 2020, the Company invested an additional US$1,000,000 in Central American delivery and transportation technology company Hugo (www.hugoapp.com).
In August 2020, the Company invested £262,000 in Feel Holdings Limited, a subscription-based innovative multivitamin and food additive producer (www.wearefeel.com).
These events after the reporting period are not reflected in the NAV and/or the financial statements as at 30 June 2020.
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