REG - TMT Investments - Half-year Report
18 August 2021
TMT INVESTMENTS PLC
("TMT" or the "Company")
Half-year report for the six months to 30 June 2021
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 2021.
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 positive
· NAV per share of US$7.49 (up 22.8% from US$6.10 as of 31 December 2020)
- US$1.6 million from two full profitable exits
- US$3.3 million in proactive (non-transaction based) negative revaluations
· A number of portfolio companies raised fresh equity capital at higher valuations during the period, further validating their business models
· US$14.1 million of investments across 13 new and existing portfolio companies in 6 months to 30 June 2021
· 5-year NAV-based IRR of 34.2% per annum
· Only two portfolio companies (31.4% of the investment portfolio) are valued on multiples
· US$14.3 million in cash reserves as of 17 August 2021
Post period end
Completed a further 7 investments totalling US$8.3 million in new (Collectly, VertoFX, MetroSpeedy and Academy of Change) and existing (Postoplan, Novakid and Backblaze) companies
- Collectly, Inc., a tech-enabled patient billing platform (www.collectly.co)
- VertoFX Ltd, a UK-based cross-border payments and foreign exchange solution facilitating commerce for modern businesses, rapidly expanding in Africa (www.vertofx.com)
- Metro Speedy Technologies Inc., a technology based local delivery company providing on-demand, same day or scheduled delivery services (www.metrospeedy.com)
- Academy of Change, a personalised educational service for women on lifestyle topics (www.akademiaperemen.ru)
Alexander Selegenev, Executive Director of TMT, commented:
"We are delighted with our portfolio companies' performance since the beginning of the year, which has sustained the trend of positive revaluations and cash realisations. Most of TMT's investee companies are continuing to benefit from the accelerated shift to online consumer habits and remote working, led by outstanding management teams and supportive shareholders.
"The US$41m windfall generated by the disposal of our investment in Pipedrive at the end of 2020 placed TMT in an excellent position to actively reinvest the proceeds during the course of 2021 to date into successful existing portfolio as well as new companies. We added to investments in existing portfolio companies that are performing well and invested in new companies that meet our investment criteria in sectors we know well and where we believe we have a competitive advantage. TMT's investment criteria are stringent but fundamental to success given the multitude of opportunities available. Coupled with TMT's global investment horizons they have led TMT to invest early in 3 portfolio companies that have reached unicorn status since TMT's admission to AIM in December 2010 (Wrike, Pipedrive and Bolt). We are strongly encouraged by the propitious environment for technology companies and continue to scour the globe for the most attractive investment opportunities, adding value to shareholders through the construction and management of a diversified portfolio of high-growth technology companies.
"We expect a number of positive revaluations across our portfolio in the coming months and will update shareholders on relevant developments as appropriate".
For further information contact:
TMT Investments Plc
Alexander Selegenev
Executive Director
+44 (0)1534 281 800
(Computershare - Company Secretary)
alexander.selegenev@tmtinvestments.com
Strand Hanson Limited
(Nominated Adviser)
James Bellman / James Dance
+44 (0)20 7409 3494
Cenkos Securities plc
(Joint Broker)
Ben Jeynes
+44 (0)20 7397 8900
Hybridan LLP
(Joint Broker)
Claire Louise Noyce
+44 (0)20 3764 2341
Kinlan Communications
David Hothersall
+44 (0)20 7638 3435
This announcement is released by TMT Investments plc and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
About TMT Investments Plc
TMT Investments Plc invests in high-growth technology companies across a number of core specialist sectors and has a significant number of Silicon Valley investments in its portfolio. Founded in 2010, TMT has a current investment portfolio of over 45 companies and net assets of US$218 million as of 30 June 2021. The Company's objective is to generate an attractive rate of return for shareholders, predominantly through capital appreciation. The Company is traded on the AIM market of the London Stock Exchange. www.tmtinvestments.com.
EXECUTIVE DIRECTOR'S STATEMENT
The first half of 2021 saw continued growth across the TMT Investments Plc ("TMT" or the "Company") portfolio, with structural business and economic drivers continuing to benefit the Company's global portfolio of high growth technology investee companies as a result of evolving customer trends and the accelerated shift to remote working. The period also saw sustained investor interest in the high-growth potential of business models based on digital, online and remote technologies, resulting in a significant increase in fundraising activities by technology companies around the world. These two factors resulted in a continued trend of positive revaluations and cash realisations across TMT's portfolio.
Following the disposal of our investment in Pipedrive, Inc ("Pipedrive") at the end of 2020 for US$41 million, we have been busy directing those proceeds towards investing in successful existing as well as new portfolio companies that meet our investment criteria of having outstanding management teams, a product or service that can be scaled up globally, fast revenue growth, Series A / Pre-Series A stage and viable exit opportunities.
NAV per share
The Company's NAV per share in the first half of 2021 increased by 22.8% to US$7.49 (from US$6.10 as of 31 December 2020), mainly as a result of the significant upward revaluation of our investments in Bolt and PandaDoc. If, pursuant to the Company's bonus plan, the bonus attributable to the NAV increase from 1 January 2021 to 30 June 2021 had been accrued during the period, it would have resulted in an additional bonus charge of US$4,108,784, equivalent to approximately US$0.14 per share and reducing the NAV to US$7.35 per share as of 30 June 2021.
Operating expenses
In the first half of 2021, the Company's administrative expenses of US$802,919 were above the corresponding 2020 levels (US$560,093), reflecting the Company's significantly increased level of investment and business development activities.
Previous years' bonus pool adjustment
Due to a technical error in the calculation of the bonus pools in the bonus periods from July 2016 to December 2020 (the "Affected Bonus Periods"), the bonus pools in each of the Affected Bonus Periods were calculated on the basis of the opening position being the previous period's "adjusted NAV before bonus". Pursuant to the terms of the Company's bonus plan, each of the Affected Bonus Periods should have seen the calculation assess the annual growth in NAV from an opening position of "adjusted NAV after bonus". As a result, the amount of bonuses actually accrued in the Affected Bonus Periods were understated by an aggregate of US$372,556 (the "Underpaid Bonus"). As the total amount of the Underpaid Bonus is considered immaterial, the error has been corrected, and the Underpaid Bonus has been included in the current financial statements as an additional charge for the current period. The exact allocation of the Underpaid Bonus is expected to be approved and paid to the participants of the Company`s bonus plan shortly after the publication of this interim report.
Financial position
As of 30 June 2021, the Company had no financial debt and cash reserves of approximately US$22.9 million. As of 17 August 2021, the Company had cash reserves of approximately US$14.3 million, as a result of the deployment of a significant amount of capital into new investments in the period after 30 June 2021.
Outlook
TMT has a diversified investment portfolio of over 45 companies, focused primarily on big data/cloud, e-commerce, SaaS (software-as-a-service), marketplaces and EdTech, most of which continue to benefit from the accelerated shift to online consumer habits and remote working. Indeed, some of the portfolio companies recently added to TMT's portfolio have already raised further funds at significantly higher valuation levels. The general trends in the digital technology sector continue to generate new exciting investment and exit opportunities and the tech venture capital investment space continues to be one of the few beneficiaries of the new market environment caused by COVID-19.
The first half of 2021 further demonstrated increased investor interest in the high-growth potential of business models based on digital, online and remote technologies, leading to a significant increase in fundraising activities by technology companies around the world. 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
17 August 2021
PORTFOLIO DEVELOPMENTS
We are delighted with our portfolio companies' performance since the beginning of the year, which has sustained the trend of positive revaluations and cash realisations. A number of portfolio companies received further validation for their business models by raising fresh equity capital at higher valuations during the period. In tandem, most of our other portfolio companies have continued to grow their businesses quietly in the background. In addition, the Company continues its policy of seeking to reduce the value of underperforming investees as soon as there is enough evidence to support such decisions.
Portfolio performance:
The following developments have had an impact on and are reflected in the Company's NAV and/or financial statements as of 30 June 2021 in accordance with applicable accounting standards:
Full and partial cash exits, and positive revaluations:
· 3S Money Club, a UK-based bank challenger providing corporate clients with multi-currency bank accounts (www.3s.money), completed a new equity funding round. The transaction represented a revaluation uplift of US$1.9 million (or 305%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020 (adjusted for the value of TMT's additional investments made in 3S Money in the first half of 2021).
· Klear, an influencer marketing platform (www.klear.com), was acquired by Meltwater B.V., a leading global SaaS provider of media intelligence and social analytics, for a total consideration of US$17.8 million, funded by a combination of cash and earn-out. TMT's total expected cash proceeds from this disposal is US$0.5 million. The transaction represented a revaluation uplift of US$0.3 million (or 211%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
· 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$10.4 million (or 286%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
· KitApps, trading as Attendify, a SaaS-based virtual and hybrid event management platform (www.attendify.com), was acquired by event management platform Hopin. TMT's total expected cash proceeds from this disposal is US$1.2 million, with US$1.06 million already received. The transaction represented a revaluation uplift of US$0.5 million (or 91%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
· Novakid, an online English language school for children (www.novakidschool.com), completed a new equity funding round. The transaction represented a revaluation uplift of US$1.8 million (or 362%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
· eAgronom, a farm management software provider for grain producers (www.eagronom.com), completed a new equity funding round. The transaction represented a revaluation uplift of US$0.2 million (or 55%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
· Bolt, a ride-hailing and food delivery platform (www.bolt.eu), completed a new equity funding round. The transaction represented a revaluation uplift of US$30 million (or 83%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
Negative revaluations:
The following of the Company's portfolio investments were negatively revalued in the first half of 2021:
Portfolio Company
Write-down amount (US$)
Reduction as % of fair value reported as of 31 Dec 2020
Reasons for write-down
Wanelo
1,223,149
67%
Lack of progress in the last 2 years
Anews
670,000
67%
Lack of progress in the last 2 years
Scalarr
1,378,281
50%
Market changes outside of Scalarr's control
Key developments for the five largest portfolio holdings in the first half of 2021 (source: TMT's portfolio companies):
Backblaze (cloud storage provider):
· Double-digit annualised revenue growth continued
· Cloud-to-cloud migration programme and Object Lock for ransomware protection launched
Bolt (ride-hailing and food delivery service):
· Active in over 300 cities globally (up from over 200 cities as of 31 December 2020)
· Proprietary food delivery brand gains pace both in terms of the client base and countries of operation
PandaDoc (proposal automation and contract management software):
· Double-digit annualised revenue growth continued
· Over 27,000 paying clients (from over 23,000 as of 31 December 2020)
Depositphotos (stock photo and video marketplace):
· Stable revenue growth continued
· New graphic design software product Crello continued growing at faster rate
Scentbird (Perfume, wellness and beauty product subscription service):
· Double-digit annualised revenue growth continued
· The company continues to launch new products
New investments:
TMT continued its intensive investing mode and made the following investments in the first half of the year:
· Additional £1,971,825 (via acquisition of new and existing shares) in 3S Money Club Limited, a UK-based online banking service focusing on international trade (www.3s.money);
· Additional US$228,933 (via acquisition of existing shares) in Workiz, a SaaS solution for the field service industry (www.workiz.com);
· Additional US$2,000,000 in Affise, a performance marketing SaaS solution (https://affise.com/en/);
· Additional £399,997 in Qumata (previously HealthyHealth), an InsurTech and HealthTech company (www.healthyhealth.com);
· US$1,000,000 in 3DLook Inc., a body scanning and measuring technology solution for the online retail industry (www.3dlook.me);
· Additional €575,000 in Postoplan OÜ, a social network marketing platform, which helps create, schedule, and promote content (www.postoplan.app);
· £200,000 in Balanced Ventures Limited, trading as FemTech Lab, Europe's first tech accelerator focused on female founders (www.femtechlab.com);
· US$300,000 in Agendapro, Inc., a SaaS-based scheduling, payment and marketing solution for the beauty and wellness industry in Latin America (www.agendapro.com);
· US$2,000,000 in Muncher Inc., a dark kitchen and virtual food brand operator in Latin America (www.muncher.com.co);
· US$1,000,000 in Aurabeat Technology International Limited, the producer of air purifiers that are FDA-certified to destroy viruses and bacteria (www.aurabeat-tech.com);
· US$500,000 in Cyberwrite Inc., a platform offering third-party cyber risk quantification and proactive mitigation (www.cyberwrite.com);
· US$2,000,000 in CloudBusiness Inc., trading as Synder, an accounting solution for e-commerce businesses (www.synderapp.com); and
· €500,000 in Outvio, a fulfilment and delivery platform for the e-commerce industry (www.outvio.com).
Events after the reporting period:
In July 2021, the Company invested an additional €400,000 in Postoplan OÜ, a social network marketing platform, which helps create, schedule, and promote content (www.postoplan.app).
In July 2021, the Company invested an additional US$640,000 in Novakid, an online English language school for children (www.novakidschool.com).
In July 2021, the Company invested US$2,000,000 in Collectly, Inc., a tech-enabled patient billing platform (www.collectly.co).
In July 2021, the Company invested US$1,099,999 in VertoFX Ltd, a UK-based cross-border payments and foreign exchange solution facilitating commerce for modern businesses, rapidly expanding in Africa (www.vertofx.com).
In July 2021, the Company invested US$1,000,000 in Metro Speedy Technologies Inc., a technology based local delivery company providing on-demand, same day or scheduled delivery services (www.metrospeedy.com).
In August 2021, the Company invested US$1,000,000 in Academy of Change, a personalised educational service for women on lifestyle topics (www.akademiaperemen.ru).
In August 2021, the Company invested an additional US$2,000,000 in cloud storage provider Backblaze (www.backblaze.com).
These events after the reporting period are not reflected in the NAV and/or the financial statements as of 30 June 2021.
FINANCIAL STATEMENTS
Statement of Comprehensive Income (unaudited)
For the six months ended 30/06/2021
For the six months ended 30/06/2020
Notes
USD
USD
Gains/(Losses) on investments
2
41,971,813
(1,264,916)
Dividend income
-
70,868
Total investment income/(loss)
41,971,813
(1,194,048)
Expenses
Bonus scheme payment charge
6
(372,556)
-
Administrative expenses
5
(802,919)
(560,093)
Operating gain/(loss)
40,796,338
(1,754,141)
Net finance income
7
-
52,868
Currency exchange loss
(81,059)
(23,938)
Gain/(Loss) before taxation
40,715,279
(1,725,211)
Taxation
8
-
-
Gain/(Loss) attributable to equity shareholders
40,715,279
(1,725,211)
Total comprehensive income/(loss) for the year
40,715,279
(1,725,211)
Gain/(Loss) per share
Basic and diluted gain/(loss) per share (cents per share)
9
139.5
(5.91)
Statement of Financial Position
At 30 June
2021
USD
At 31 December
2020
USD
Unaudited
Audited
Notes
Non-current assets
Financial assets at FVPL
10
199,108,188
144,803,154
Total non-current assets
199,108,188
144,803,154
Current assets
Trade and other receivables
11
779,225
487,838
Cash and cash equivalents
12
22,870,620
39,004,288
Total current assets
23,649,845
39,492,126
Total assets
222,758,033
184,295,280
Current liabilities
Trade and other payables
13
4,120,047
6,372,573
Total current liabilities
4,120,047
6,372,573
Total liabilities
4,120,047
6,372,573
Net assets
218,637,986
177,922,707
Equity
Share capital
14
34,790,174
34,790,174
Retained profit
183,847,812
143,132,533
Total equity
218,637,986
177,922,707
Statement of Cash Flows (unaudited)
For the six months ended 30/06/2021
For the six months ended 30/06/2020
Notes
USD
USD
Operating activities
Operating gain/(loss)
40,796,338
(1,754,141)
Adjustments for non-cash items:
Changes in fair value of financial assets at FVPL
3
(41,852,901)
1,181,529
Currency exchange loss
(81,059)
(23,938)
(1,137,622)
(596,550)
Changes in working capital:
Increase in trade and other receivables
11
(291,387)
(428,642)
Decrease in trade and other payables
13
(2,252,526)
(518,281)
Net cash used in operating activities
(3,681,535)
(1,543,473)
Investing activities
Interest received
7
-
52,868
Purchase of financial assets at FVPL
10
(14,081,056)
(1,020,870)
Proceeds from sale of financial assets at FVPL
10
1,628,923
-
Net cash used in investing activities
(12,452,133)
(968,002)
Financing activities
Net cash from financing activities
-
-
Decrease in cash and cash equivalents
(16,133,668)
(2,511,475)
Cash and cash equivalents at the beginning of the period
12
39,004,288
11,700,074
Cash and cash equivalents at the end of the period
12
22,870,620
9,188,599
Statement of Changes in Equity (unaudited)
Share capital
Retained profit
Total
USD
USD
USD
Balance at 01 January 2020
34,790,174
68,023,856
102,814,030
Gain for the year
-
75,108,677
75,108,677
Total comprehensive income for the year
-
75,108,677
75,108,677
Balance at 31 December 2020
34,790,174
143,132,533
177,922,707
Gain for the period
-
40,715,279
40,715,279
Total comprehensive income for the period
-
40,715,279
40,715,279
Balance at 30 June 2021
34,790,174
183,847,812
218,637,986
NOTES TO THE FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2021
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company incorporated in Jersey with its registered office at 13 Castle Street, St Helier, 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 investing 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 2021 and 2020 are unaudited and were approved by the Directors on 17 August 2021. They do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial statements for the year ended 31 December 2020 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 ("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.
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 30/06/2021
Average rate, for six months ended 30/06/2021
British pounds, £
1.3819
1.3882
Euro, €
1.1862
1.2051
2.3 New IFRSs and interpretations
The following standards and amendments became effective from 1 January 2021, but did not have any material impact on the Company:
• Amendments to IFRS 4 "Insurance Contracts" - Deferral of IFRS 9
• Amendments to IFRS 9 "Financial Instruments"
• Amendments to IAS 39 "Financial Instruments: Recognition and Measurement"
• Amendments to IFRS 7 "Financial Instruments: Disclosures"- Interest Rate Benchmark Reform - Phase 2
3 Gain/(Loss) on investments
For six months ended 30/06/2021
For six months
ended 30/06/2020
USD
USD
Gross interest income from convertible notes receivable
18,844
34,013
Net interest income from convertible notes receivable
18,844
34,013
Gains/(Losses) on changes in fair value of financial assets at FVPL
41,852,901
(1,181,529)
Other gains/(losses) on investment
100,068
(117,400)
Total gain/(loss) on investments
41,971,813
(1,264,916)
4 Segmental analysis
Geographic information
The Company has investments in six principal geographical areas - USA, Estonia, the United Kingdom, BVI, Cyprus and the Cayman Islands.
Non-current financial assets
As at 31/12/2020
USA
Israel
BVI
Cyprus
Estonia
United Kingdom
Total
USD
USD
USD
USD
USD
USD
USD
Equity investments
90,078,690
155,000
1,780,250
-
36,711,439
7,718,112
136,443,491
Convertible notes & SAFEs
6,827,998
-
-
1,350,000
181,665
-
8,359,663
Total
96,906,688
155,000
1,780,250
1,350,000
36,893,104
7,718,112
144,803,154
As at 30/06/2021
USA
Cayman Islands
BVI
Cyprus
Estonia
United Kingdom
Total
USD
USD
USD
USD
USD
USD
USD
Equity investments
106,244,120
-
1,780,250
-
67,502,624
13,147,379
188,674,373
Convertible notes & SAFEs
7,195,030
1,030,000
-
1,350,000
858,785
-
10,433,815
Total
113,439,150
1,030,000
1,780,250
1,350,000
68,361,409
13,147,379
199,108,188
5 Administrative expenses
Administrative expenses include the following amounts:
For six months ended 30/06/2021
For six months ended
30/06/2020
USD
USD
Staff expenses (note 6)
395,818
326,349
Professional fees
228,715
115,522
Legal fees
83,048
14,102
Bank and LSE charges
8,034
8,364
Audit and accounting fees
17,851
14,371
Rent
-
47,298
Other expenses
69,453
34,087
802,919
560,093
The foreign exchange loss in the current financial period has been presented separately from administrative expenses. Accordingly, the respective amount of foreign exchange loss in the period ended 30 June 2020 has also been presented separately for comparison. As a result, administrative expenses for the six months ended 30 June 2020 decreased by 4.1% from US$584,031 to US$560,093. The relevant amounts in the Statement of Cash Flows for the period ended 30 June 2020 have been affected correspondingly.
6 Staff expenses
For six months ended 30/06/2021
For six months ended 30/06/2020
USD
USD
Directors' fees
103,218
92,589
Wages and salaries
292,600
233,760
395,818
326,349
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 2021 and 2020 were as follows:
For six months ended 30/06/2021
For six months ended
30/06/2020
USD
USD
Alexander Selegenev
55,000
50,000
Yuri Mostovoy
27,500
25,000
James Joseph Mullins
15,218
12,589
Petr Lanin
5,500
5,000
103,218
92,589
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 7 (six months ended 30 June 2020: 6).
Key management personnel of the Company are defined as those persons having authority and responsibility for the planning, directing and controlling the activities of the Company, directly or indirectly. Key management of the Company are therefore considered to be the Directors of the Company. There were no transactions with the key management, other than their Directors fees, bonuses and reimbursement of business expenses.
Under the Company's bonus plan, subject to achieving a minimum hurdle NAV and high watermark conditions, the team receives an annual cash bonus equal to 10% of the net increases in the Company's NAV, adjusted for any changes in the Company's equity capital resulting from issuance of new shares, dividends, share buy-backs and similar corporate transactions. The Company`s bonus year runs from 1 January to 31 December.
If, pursuant to the Company's bonus plan, the bonus attributable to the NAV increase from 1 January 2021 to 30 June 2021 had been accrued during the period, it would have resulted in an additional bonus charge of US$4,108,784. As the NAV increase attributable to the first half of 2021 has not yet been realised, the respective bonus expenses have not been accrued in the current financial statements.
Due to a technical error in the calculation of the bonus pools in the bonus periods from July 2016 to December 2020 (the "Affected Bonus Periods"), the bonus pools in each of the Affected Bonus Periods were calculated on the basis of the opening position being the previous period's "adjusted NAV before bonus". Pursuant to the terms of the Company's bonus plan, each of the Affected Bonus Periods should have seen the calculation assess the annual growth in NAV from an opening position of "adjusted NAV after bonus". As a result, the amount of bonuses actually accrued in the Affected Bonus Periods were understated by an aggregate of US$372,556 (the "Underpaid Bonus"). As the total amount of the Underpaid Bonus is considered immaterial, the error has been corrected, and the Underpaid Bonus has been included in the current financial statements as an additional charge for the current period. The exact allocation of the Underpaid Bonus is expected to be approved and paid to the participants of the Company`s bonus plan shortly after the publication of this interim report.
Of the US$372,556 Underpaid Bonus amount, US$93,972 relates to directors of the Company.
7 Net finance income
For six months ended 30/06/2021
For six months ended 30/06/2020
USD
USD
Interest income
-
52,868
-
52,868
The Company had no deposits in the six months ended 30 June 2021.
8 Income tax expense
The Company is incorporated in Jersey. No tax reconciliation note has been presented as the income tax rate for Jersey companies is 0%.
9 Gain/(Loss) per share
The calculation of basic gain per share is based upon the net gain for the six months ended 30 June 2021 attributable to the ordinary shareholders of US$40,715,279 (for the six months ended 30 June 2020: net loss of US$1,725,211) and the weighted average number of ordinary shares outstanding calculated as follows:
Gain/(Loss) per share
For the six months ended 30/06/2021
For six months ended 30/06/2020
Basic gain/(loss) per share (US$ cents per share)
139.5
(5.91)
Gain/(Loss) attributable to equity holders of the entity
40,715,279
(1,725,211)
The weighted average number of ordinary shares outstanding was calculated as follows:
For the six months ended 30/06/2021
For the six months ended 30/06/2020
Weighted average number of shares in issue
Ordinary shares
29,185,831
29,185,831
29,185,831
29,185,831
During the six months ended 30 June 2021 and 30 June 2020 there were no dilutive instruments in issue.
10 Non-current financial assets
Reconciliation of fair value measurements of non-current financial assets:
At 30 June 2021
USD
At 31 December 2020
USD
Investments held at fair value through profit and loss
- unlisted shares (i)
188,674,373
136,443,491
- promissory notes (ii)
1,428,815
2,753,663
- SAFEs (iii)
9,005,000
5,606,000
199,108,188
144,803,154
At 30 June 2021
USD
At 31 December 2020
USD
Opening valuation
144,803,154
91,207,190
Purchases (including consulting and legal fees)
14,081,056
12,503,095
Disposal proceeds
(1,628,923)
(41,201,387)
Impairment losses in the year
-
(585,745)
Realised gain
873,923
29,314,214
Unrealised gains
40,978,978
53,565,787
Closing valuation
199,108,188
144,803,154
Movement in unrealised gains
Opening accumulated unrealised gains
111,980,464
68,114,510
Movement in unrealised gains
40,978,978
53,565,787
Transfer of previously unrealised gains to realised reserve on disposal of Investments
-
(9,699,833)
Closing accumulated unrealised gains
152,959,442
111,980,464
Reconciliation of investments, if held under the cost (less impairment) model:
Historical cost basis
Opening book cost
32,822,690
23,092,680
Purchases (including consulting & legal fees)
14,081,056
12,503,095
Disposals on sale of investment
(755,000)
(2,187,340)
Impairment losses in the year
-
(585,745)
Closing book cost
46,148,746
32,822,690
Valuation methodology
Revenue multiple
62,595,291
62,595,291
Cost and price of recent investment (reviewed for impairment and fair value adjustment)
136,512,897
82,207,863
199,108,188
144,803,154
Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.
When measuring the fair value of a financial instrument, the Company uses relevant transactions during the year or shortly after the year end, which gives an indication of fair value and considers other valuation methods to provide evidence of value. The "price of recent investment" methodology is used mainly for venture capital investments, and the fair value is derived by reference to the most recent equity financing round or sizeable partial disposal. Fair value change is only recognised if that round involved a new external investor. The Company may assess the fair value in the absence of a relevant independent equity transaction by relying on other market observable data and valuation techniques, such as the analysis of revenue multiples of comparable companies and/or comparable transactions. The nature of such valuation techniques is highly judgmental and dependent on the market sentiment at the time of the analysis.
(i) Equity investments as at 30 June 2021:
Investee company
Date of initial investment
Value at
1 Jan 2021,
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 2021, USD
Equity stake owned
DepositPhotos
26.07.2011
10,836,105
-
-
-
-
10,836,105
16.67%
Wanelo
21.11.2011
1,825,596
-
-
(1,223,149)
-
602,447
4.69%
Backblaze
24.07.2012
56,004,337
-
-
-
-
56,004,337
9.97%
Remote.it
13.06.2014
3,025,285
-
-
-
-
3,025,285
1.64%
Anews
25.08.2014
1,000,000
-
-
(670,000)
-
330,000
9.41%
Klear
01.09.2014
155,000
-
-
327,798
(482,798)
-
-
Bolt
15.09.2014
36,201,527
-
-
30,019,969
-
66,221,496
1.42%
PandaDoc
11.07.2014
3,621,279
-
-
10,367,205
-
13,988,484
1.32%
Full Contact
11.01.2018
244,506
-
-
-
-
244,506
0.19%
ScentBird
13.04.2015
6,590,954
-
-
-
-
6,590,954
4.43%
Workiz
16.05.2016
768,845
228,933
-
-
-
997,778
2.32%
Vinebox
06.05.2016
450,015
-
-
-
-
450,015
2.42%
Hugo
19.01.2019
1,780,250
-
-
-
-
1,780,250
3.55%
MEL Science
25.02.2019
2,663,696
-
-
-
-
2,663,696
3.58%
Qumata (HealthyHealth)
06.06.2019
415,737
545,156
-
-
-
960,893
3.03%
eAgronom
31.08.2018
288,224
-
-
158,863
-
447,087
1.70%
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
2,713,976
-
1,894,517
-
5,229,363
9.00%
Hinterview
21.09.2020
660,197
1,398
-
-
-
661,595
6.44%
Virtual Mentor (Allright)
12.11.2020
772,500
-
-
-
-
772,500
3.00%
NovaKid
13.11.2020
500,000
-
-
1,809,854
-
2,309,854
1.22%
MTL Financial (OutFund)
17.11.2020
1,322,100
-
-
-
-
1,322,100
5.25%
Scalarr
15.08.2019
2,756,563
-
-
(1,378,281)
-
1,378,282
7.66%
Accern
21.08.2019
1,282,705
-
-
-
-
1,282,705
5.11%
Feel
13.08.2020
2,035,512
-
-
-
-
2,035,512
8.60%
Affise
18.09.2019
-
2,068,902
1,401,968
-
-
3,470,870
8.63%
3DLook
03.03.2021
-
999,999
-
-
-
999,999
3.77%
Fem Tech
30.03.2021
-
274,220
-
-
-
274,220
9.63%
Muncher
23.04.2021
-
2,059,999
-
-
-
2,059,999
4.77%
CyberWrite
20.05.2021
-
500,000
-
-
-
500,000
3.71%
Outvio
22.06.2021
-
612,353
-
-
-
612,353
4.00%
Total
136,443,491
10,004,936
1,401,968
41,306,776
(482,798)
188,674,373
(ii) Convertible loan notes as at 30 June 2021:
Investee company
Date of initial investment
Value at 1 Jan 2021,
USD
Additions to convertible note investments during the period, USD
Conversions to equity, USD
Gain/loss from changes in fair value of convertible notes, USD
Disposals, USD
Value at 30 Jun 2021, USD
Term, years
Interest rate, %
Sharethis
26.03.2013
570,030
-
-
-
-
570,030
5.0
1.09%
KitApps
10.07.2013
600,000
-
-
546,125
(1,146,125)
-
-
-
Affise
18.09.2019
1,401,968
-
(1,401,968)
-
-
-
-
-
Postoplan
08.12.2020
181,665
677,120
-
-
-
858,785
1.0
2.00%
Total
2,753,663
677,120
(1,401,968)
546,125
(1,146,125)
1,428,815
(iii) SAFEs as at 30 June 2021:
Investee company
Date of initial investment
Value at 1 Jan 2021,
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 2021, USD
Spin Technology
17.12.2018
300,000
-
-
-
300,000
Cheetah (Go-X)
29.07.2019
350,000
-
-
-
350,000
Retarget
24.09.2019
1,350,000
-
-
-
1,350,000
Rocket Games (Legionfarm)
24.09.2019
1,200,000
-
-
-
1,200,000
Classtag
03.02.2020
200,000
-
-
-
200,000
Moeco
08.07.2020
1,000,000
-
-
-
1,000,000
Volumetric
24.07.2020
206,000
-
-
-
206,000
Study Free
08.12.2020
1,000,000
-
-
-
1,000,000
Agendapro
15.04.2021
-
309,000
-
-
309,000
Aurabeat
03.05.2021
-
1,030,000
-
-
1,030,000
Synder (Cloud Business Inc)
26.05.2021
-
2,060,000
-
-
2,060,000
Total
5,606,000
3,399,000
-
-
9,005,000
11 Trade and other receivables
At 30 June 2021
At 31 December 2020
USD
USD
Prepayments
67,190
26,631
Other receivables
655,087
272,779
Interest receivable on promissory notes
56,948
188,428
779,225
487,838
The fair values of trade and other receivables approximate to their carrying amounts as presented above. During the six months ended 30 June 2021 and 2020 no balances were past due or impaired, and no credit losses had been expected.
Other receivables as of 30 June 2021 represent amounts due from the disposal of the investments in Klear and KitApps.
12 Cash and cash equivalents
The cash and cash equivalents as at 30 June 2021 include cash on hand and in banks.
Cash and cash equivalents comprise the following:
At 30 June 2021
At 31 December 2020
USD
USD
Bank balances
22,870,620
39,004,288
22,870,620
39,004,288
The following table represents an analysis of cash and equivalents by rating agency designation based on Moody`s Investors Service and Standards & Poor`s credit rating or their equivalent:
At 30 June 2021
At 31 December 2020
USD
USD
Bank balances
BBB+ rating
22,870,620
39,004,288
22,870,620
39,004,288
13 Trade and other payables
At 30 June 2021
At 31 December 2020
USD
USD
Salaries payable
105,833
40,000
Directors' fees payable
28,282
22,954
Bonus payable
3,940,083
6,257,560
Trade payables
35,284
27,491
Other accrued expenses
10,565
24,568
4,120,047
6,372,573
The fair values of trade and other payables approximate to their carrying amounts as presented above.
14 Share capital
On 30 June 2021 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 2021
At 31 December 2020
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 2020
29,185,831
29,185,831
Balance at 30 June 2021
29,185,831
29,185,831
There have been no changes to the Company's ordinary share capital between 30 June 2021 and the date of approval of these financial statements.
15 Related party transactions
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 2021, the Company invested additional €400,000 in Postoplan OÜ, a social network marketing platform, which helps create, schedule, and promote content (www.postoplan.app).
In July 2021, the Company invested additional US$640,000 in Novakid, an online English language school for children (www.novakidschool.com).
In July 2021, the Company invested US$2,000,000 in Collectly, Inc., a tech-enabled patient billing platform (www.collectly.co).
In July 2021, the Company invested US$1,099,999 in VertoFX Ltd, a UK-based cross-border payments and foreign exchange solution facilitating commerce for modern businesses, rapidly expanding in Africa (www.vertofx.com).
In July 2021, the Company invested US$1,000,000 in Metro Speedy Technologies Inc., a technology based local delivery company providing on-demand, same day or scheduled delivery services (www.metrospeedy.com).
In August 2021, the Company invested US$1,000,000 in Academy of Change, a personalised educational service for women on lifestyle topics (www.akademiaperemen.ru).
In August 2021, the Company invested an additional US$2,000,000 in cloud storage provider Backblaze (www.backblaze.com).
These events after the reporting period are not reflected in the NAV and/or the financial statements as of 30 June 2021.
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