TIDMTMT
RNS Number : 8058J
TMT Investments PLC
16 April 2020
16 April 2020
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2019 and Notice of
AGM
TMT Investments Plc (AIM: TMT), the venture capital company
investing in high-growth technology companies, is pleased to
announce its final results for the year ended 31 December 2019.
Highlights :
-- NAV per share of US$3.52 (up 13.9% from US$3.09 as of 31
December 2018, or 20.4% if the dividend is included)
-- Total NAV of US$102.8 million (up from US$90.3 million as at 31 December 2018)
-- US$3.5 million of net cash proceeds from full and partial exits during 2019
-- US$8.6 million of new investments across 10 companies in 2019
-- US$5.8 million (US$0.20 per ordinary share) special dividend
paid to shareholders in July 2019
-- Diversified portfolio of over 30 companies focused mainly
around big data/cloud, e-commerce, marketplaces and SaaS
(software-as-a-service) solutions
-- Covid-19's short-term effect on portfolio companies is mixed,
with future performance dependent on how the situation unfolds in
coming months
-- Expectations of both positive and negative revaluations in 2020
-- Proposed changes to the Company's Investing Policy, primarily
to enable investment in other funds, as further detailed below
-- US$10.2 million in cash reserves as at 15 April 2020
Alexander Selegenev, Executive Director of TMT, commented:
"2019 was another successful year for the Company, with several
sizeable positive revaluations across our portfolio. The Company's
net asset value benefited from various revaluations during the year
including the 120% increase in the value of our investment in
Backblaze, the global data backup and cloud storage company. These
revaluations more than offset the smaller write-downs that we
accounted for in order to maintain our portfolio free from poorly
performing investments."
"Our top five portfolio companies (Bolt, Backblaze,
Depositphotos, Pipedrive and Scentbird), accounting for
approximately 75% of the Company's NAV, 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, which we believe should therefore
enable them to better adapt to the current environment."
"In the current situation of increased uncertainty, TMT is
applying a cautious approach to new investments, whilst continuing
to evaluate opportunities and remaining ready to benefit from the
opportunities that may emerge in the coming months. With over
US$10m in cash reserves, TMT is in a strong position to invest in
outstanding opportunities that may emerge as a result of Covid-19.
We are also proposing changes to our Investing Policy, which are
primarily designed to allow TMT to benefit from potentially
establishing and/or investing in other venture capital investment
vehicles."
"We expect to see a mix of both positive and negative impacts on
the value of our investments over the remainder of 2020, and we
look forward to keeping shareholders updated on relevant
developments."
Notice of AGM
The Company's Annual General Meeting will be held on 30 July
2020 at 13 Castle Street, St. Helier, Jersey , JE1 1ES at 14:30
(BST).
Copies of the Annual Report and Accounts for the year ended 31
December 2019 and Notice of AGM will shortly be available on the
Company's website at www.tmtinvestments.com .
For further information contact:
TMT Investments PLC +44 (0)1534 281 800
Alexander Selegenev (Computershare - Company Secretary)
Executive Director
www.tmtinvestments.com 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 +44 (0)20 7638 3435
David Hothersall davidh@kinlan.net
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
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 55 companies to date and has net
assets of US$102m as of 31 December 2019. 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 .
ABOUT TMT INVESTMENTS
TMT Investments Plc ("TMT" or "the Company") provides its
shareholders with access to a diversified portfolio of companies in
the TMT (technology, media and telecommunications) sector.
We are passionate about our work. Members of our team have been
investing in and building start-ups since the 1990s, and we are
experienced in the challenges many founders and entrepreneurs face.
We are therefore highly selective in our investments, leveraging
the team's collective experience to identify the best risk/reward
entry point when making an investment.
When we joined the AIM market of the London Stock Exchange in
December 2010, we were one of the first publicly traded venture
capital vehicles in the UK to provide investors with access to the
universe of high-growth international private technology
companies.
Since then, we have invested in over 55 companies and realised
14 profitable full and partial exits. We were one of the earliest
investors into some of our most successful companies, including
Wrike, Bolt (previously called Taxify), Pipedrive and
Backblaze.
Experienced investors
We are a team of experienced investors: our team has been
investing in and building start-ups since the 1990s. We are proud
to leverage this experience to identify and invest in companies at
a relatively early stage of their development, with a number having
achieved significant growth and returns for investors. Identifying
and investing in such companies at an early stage, before they have
fully proven themselves, is not easy. This is the value we bring to
our shareholders: using our years of experience to identify and
execute investments capable of generating significant returns for
shareholders, whilst seeking to minimise risks.
Global investors
We are global investors and have no restrictions on where we
invest. Our key investment criteria include the requirement that
companies have a scalable business model and are led by a
management team with the resilience and ability to execute in
high-growth environments. To date, we have typically invested in
companies that are headquartered in the US and operate globally,
though we continue to analyse and consider investment opportunities
globally, regardless of location.
Specialist investors
Investing in private companies in the TMT sector requires a
specialist set of skills and investment approach, in contrast to
investing in publicly listed companies. Information available on
private companies is typically much scarcer than for publicly
listed companies, especially at an early stage of their
development, and requires a dedicated and specialist investment
process that includes evaluating other factors. Our proprietary
four-filter investment process is specially designed to reduce risk
and identify the best opportunities in early-stage investing.
TMT AS A PUBLIC COMPANY
Investors who choose to invest directly in private companies
typically face less liquidity when it comes to exiting their
investment compared to those in publicly traded companies.
Investors wishing to exit from their investment in a private
company will need to identify current shareholders who are willing
to acquire more shares, or new investors willing to acquire their
shares. Some private companies may have additional restriction on
new investors. Other potential exit events could include a
potential sale to an acquirer or a listing on a stock exchange,
neither of which can be guaranteed, and may require agreement among
major shareholders.
TMT was established to solve this problem by providing investors
with the daily liquidity that a publicly traded company offers,
through a diversified portfolio of high-growth, private
companies.
Investing in private companies requires a specialist skill set,
access to investment opportunities and extensive research. Our
focus is on building and managing a diversified portfolio of
high-growth TMT companies for the benefit of our shareholders. For
the last five years, our NAV-based IRR (internal rate of return)
has been 23.8% per annum.
Benefits of investing via TMT
-- Liquidity - investing via publicly traded TMT shares provides
shareholders with venture capital exposure combined with the
benefits of publicly traded liquidity
-- Diversification - access to a diversified portfolio of
high-growth, private companies in the TMT sector
-- Rare exposure - most successful start-ups move to their next
level of financing and revenues within just one to two years, at
which point they become practically inaccessible to private
investors until such time as they subsequently undertake a
listing/IPO
-- Experience - TMT's shareholders benefit from the experience
of a specialist investment team with a track record of success
OUR INVESTMENT STRATEGY
Through our investment criteria, TMT seeks to identify companies
that have, amongst other features:
-- Competent and motivated management founders - managing
high-growth companies requires a rare combination of skills
-- High growth potential - companies with a product or service that can be scaled up globally
-- Growth stage - we highly favour investing in companies that
are already generating revenues (we have a typical minimum revenue
threshold of US$100,000 per month)
-- Viable exit opportunities - when we invest, we are already assessing potential exit scenarios
We invest in our core sectors. TMT currently focuses on
identifying attractive investment opportunities in the following
segments of the TMT sector:
-- Big data and cloud solutions
-- SaaS tools
-- e-commerce
-- Marketplaces
Whilst we focus our attention on these segments, we are not
constrained in our ability to consider making investments across
the TMT sector.
We invest globally:
The Company is not geographically restricted in terms of where
it can invest. It will consider any geographical area, to the
extent that the investment fits within the Company's investment
criteria.
Our investment selection process
Our investment selection process is based on analysing companies
through our four-filter process. Our tried and tested process is
the fruit of our extensive hands-on experience in building and
growing start-ups combined with a deep analysis of key operational
and financial metrics.
Preliminary filter
The basic filter ensures that we are comfortable with the
company's segment within the TMT sector, growth stage, the market
trends in which it operates, and its exit potential.
Numbers filter
The numbers filter analyses a company's financial performance,
operational metrics and fundraising terms, considering our
assessment of the company's competitive landscape.
Product filter
We analyse a company's product from a customer's perspective,
including user experience, by drawing on our experience of
assessing competing products as part of the investment selection
process.
People filter
Managing a company in high growth or hyper growth scenarios
requires a rare combination of high levels of resilience,
organisation and commercial acumen, amongst others. We interview a
company's founders to identify these abilities, drawing upon our
experience of working with hundreds of start-up company management
teams.
Post-investment engagement
We have funded over 50 companies since inception. Our engagement
with companies continues after our initial investment, and is
tailored to each company's needs and size, including attending
investee board meetings, facilitating introductions to new
investors, providing strategic advice and exploring synergies with
partner companies, including TMT's portfolio companies.
Investment radar
Companies that have successfully passed through the majority of
the filters though not received investment from us, are added to
our investment radar, whereby we monitor their development for
possible future investment.
INVESTING POLICY
The Company's objective is to generate an attractive rate of
return for shareholders, predominantly through capital
appreciation, by taking advantage of opportunities to invest in the
TMT sector. The Company aims to provide equity, debt, and
equity-related investment capital, such as convertible loans, to
private companies which are seeking capital for growth and
development, consolidation or acquisition, or as pre-IPO financing.
In addition, the Company may invest in "digital assets" defined as
an electronically stored right or title to digital or non-digital
property or service, including but not limited to intellectual
property, software, or cryptocurrencies. In addition, the Company
may invest in publicly traded equities which have securities listed
on a stock exchange or over-the-counter market. These investments
may be in combination with additional debt or equity-related
financing, and in appropriate circumstances in collaboration with
other value added financial and/or strategic investors. The Company
is not geographically restricted in terms of where it will consider
making investments. It will consider any geographical area, to the
extent that the investment fits within the Company's investment
criteria. The Directors and senior managers have the relevant
expertise to invest in the TMT sector, whether through equity,
debt, or other equity related investment capital and in "digital
assets" (including cryptocurrencies). This will include investments
in small and mid-sized private companies. The Company will not be
subject to any borrowing or leveraging limits.
Private Companies
The Company will target small and mid-sized companies and will
seek to secure at least blocking stakes and board representation,
where it considers that the Company and/or an investee company
would benefit from such an appointment. The Company will consider
making equity investments in lower than blocking stakes only where
it sees ways to increase the stakes to blocking or controlling
stakes at a later date. Each investment is expected to be at least
US$250,000. The investments targeted by the Company will aim to
support rapidly growing private companies to increase market share
and achieve long-term shareholder value. If the Company invested in
a private company prior to that company listing on a stock market,
the Company may retain a part of its investment in the listed
entity going forward. Wherever appropriate, the Company intends to
work closely with the management of each investee company to create
value by focusing on driving growth through revenue creation,
margin enhancement and extracting cost efficiencies, as well as
implementing appropriate capital structures to enhance returns.
Public Companies
When investing in public equities, the Company will seek to
select companies with a dominant market share or strong growth
potential in their respective segments. No restrictions will be
placed on the size of public companies in which the Company may
make an investment. The Directors intend to make investments in
companies or assets with attractive valuation, growth potential,
and competent and motivated management.
Realisation of Returns
The Directors will, when appropriate, consider how best to
realise value for Shareholders whether through a trade sale,
flotation or secondary refinancing of the investee companies. The
proposed exit route will form a key consideration of the initial
investment analysis. The Company expects to derive returns on
investments principally through long-term capital gains and/or the
payment of dividends by investees. The primary ways in which the
Company expects to realise these returns include: (a) the sale or
merger of a company; (b) the sale of securities of a company by
means of public or private offerings; and (c) the disposal of
public equity investments through the stock exchanges on which they
are listed. For private investee companies the Company believes
that its typical investment holding period should provide
sufficient time for investee companies to adequately benefit from
the capital and operational improvements resulting from the
Company's investment. The targeted holding period shall be reviewed
on a regular basis by the Company, but it is expected that this
will typically be between two to four years. For public equities
the Company's objective is to maximise capital appreciation.
Following the acquisition, the Company will continue to monitor the
investment. Importance will be placed on the timing of any disposal
which will follow a thorough review of market conditions and those
reports and sources that are available to investors. Should the
Company consider that the capital appreciation of a particular
public equity investment has reached its peak or is likely to or
has begun to decline, then the Company will consider the sale of
that investment.
EXECUTIVE DIRECTOR'S STATEMENT
2019 was another successful year for the Company, with a number
of significant revaluations and US$3.5 million in cash realisations
across our portfolio. As a result, even after the payment of the
special dividend of 20 cents per share in July 2019, TMT's net
asset value ("NAV") per share, as of 31 December 2019, increased to
US$3.52 (up 13.9% from US$3.09 as of 31 December 2018, or 20.4% if
the dividend is included).
In addition to a number of smaller revaluations, the Company's
NAV benefited significantly from increased revaluations in two of
its larger holdings: Backblaze, the data backup and cloud storage
company, and Bolt (previously called Taxify), the global
ride-hailing and transportation platform.
NAV per share
The Company's NAV per share in 2019 increased 13.9% to US$3.52
(31 December 2018: US$3.09).
Operating Expenses
In 2019, the Company's administrative expenses of US$1,174,466
were slightly below the 2018 levels (US$1,200,045), highlighting
the Company's continued focus on maintaining cost-efficient
operations.
Financial position
As of 31 December 2019, the Company had no financial debt and
cash reserves of approximately US$11.7 million. As of 15 April
2020, the Company had cash reserves of approximately US$10.2
million.
Bonus Plan
Under the Company's Bonus Plan, subject to achieving 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 ended 30 June 2019, the
total amount of bonus accrued was US$2,007,694.
Dividend
We were pleased to pay a special dividend of US$5.8 million
(US$0.20 per ordinary share) to shareholders following the
Company's profitable cash exit from Wrike at the end of 2018. The
dividend was paid on 31 July 2019 and represented the Company's
second special dividend paid to shareholders, the first being
US$2.9 million (US$0.10 per ordinary share) in November 2016,
following our partial cash exit from Depositphotos.
Amendment to the Investing Policy
As TMT's brand and expertise become increasingly recognised in
the venture capital space, the Company is encountering a growing
number of opportunities to establish and/or invest in other
investment vehicles, providing an opportunity for TMT to earn
additional advisory, consulting and performance fees. Accordingly,
we propose to seek shareholder consent at the Company's forthcoming
Annual General Meeting to amend the Company's existing Investing
Policy, primarily by adding the ability for the Company to invest
in other investing vehicles or funds, as well as by making some
other changes. The proposed amended Investing Policy is shown
below, followed by a blackline version illustrating the specific
changes made to our existing Investing Policy:
Proposed new investing policy - clean
"The Company's objective is to generate an attractive rate of
return for shareholders, predominantly through capital
appreciation, by investing in primarily venture capital and private
equity opportunities in the Technology, Media and
Telecommunications ("TMT") sector.
The Company aims to provide equity, debt, and equity-related
investment capital, such as convertible loans, primarily to small
and mid-sized private companies, which are seeking capital for
growth and development, consolidation or acquisition, or as pre-IPO
financing. In addition, the Company may invest in "digital assets"
defined as an electronically stored right or title to digital or
non-digital property or service, including but not limited to
intellectual property, software, or cryptocurrencies. The Company
may also invest in publicly traded equities which have securities
listed on a stock exchange or over-the-counter market.
The Company may make investments either directly into individual
companies or indirectly through similar investment vehicles or
funds focused primarily on venture capital and private equity
opportunities in the TMT sector, provided such indirect investments
in other investment vehicles or funds in total do not exceed 20% of
the Company's latest audited or announced net asset value at the
time of the investment. The Company may also set up (and
potentially co-invest in) other investment vehicles or funds and
generate income by providing advisory and consulting services to
other investment vehicles or funds.
The Company is not geographically restricted in terms of where
it will consider making investments. It will consider any
geographical area, to the extent that the investment fits within
the Company's investment criteria. The Company's Directors and
senior managers have the relevant expertise to invest in the TMT
sector, whether in the form of equity, debt, equity related
instruments, collective investment vehicles, or "digital assets".
The Company is not subject to any borrowing or leveraging
limits.
Private Companies
The Company will target primarily small and mid-sized companies.
Each investment is expected to be at least US$250,000. The
investments targeted by the Company will aim to support
rapidly-growing private companies to increase market share and
achieve long-term shareholder value. If the Company invested in a
private company prior to that company listing on a stock market,
the Company may retain a part of its investment in the listed
entity going forward. Wherever appropriate, the Company intends to
work closely with the management of each investee company to create
value by focusing on driving growth through revenue creation,
margin enhancement and extracting cost efficiencies, as well as
implementing appropriate capital structures to enhance returns.
Public Companies
When investing in public equities, the Company will seek to
select companies with strong growth potential in their respective
segments. No restrictions will be placed on the size of public
companies in which the Company may make an investment.
Realisation of Returns
The Company will, when appropriate, consider how best to realise
value for Shareholders whether through a trade sale, flotation or
secondary sale of the investee companies. The proposed exit route
will form a key consideration of the initial investment analysis.
The Company expects to derive returns on investments principally
through long-term capital gains and/or the payment of dividends by
investees. The primary ways in which the Company expects to realise
these returns include: (a) the sale or merger of a company; (b) the
sale of securities of a company by means of public or private
offerings; and (c) the disposal of public equity investments
through the stock exchanges on which they are listed. For private
investee companies the Company believes that its typical investment
holding period should provide sufficient time for investee
companies to adequately benefit from the capital and operational
improvements resulting from the Company's investment. The targeted
holding period shall be reviewed on a regular basis by the Company,
but it is expected that this will typically be between two to six
years. For public equities, following the investment, the Company
will continue to monitor its position. Importance will be placed on
the timing of any disposal. Should the Company consider that the
capital appreciation of a particular investment has reached its
peak or is likely to or has begun to decline, then the Company will
consider the sale of that investment."
Proposed new investing policy - blacklined
The Company's objective is to generate an attractive rate of
return for shareholders, predominantly through capital
appreciation, by taking advantage of investing in primarily venture
capital and private equity opportunities to invest in the
Technology, Media and Telecommunications ("TMT") sector.
The Company aims to provide equity, debt, and equity-related
investment capital, such as convertible loans, primarily to small
and mid-sized private companies, which are seeking capital for
growth and development, consolidation or acquisition, or as pre-IPO
financing. In addition, the Company may invest in "digital assets"
defined as an electronically stored right or title to digital or
non-digital property or service, including but not limited to
intellectual property, software, or cryptocurrencies. In addition,
the The Company may also invest in publicly traded equities which
have securities listed on a stock exchange or over-the-counter
market.
These The Company may make investments may be in combination
with additional debt either directly into individual companies or
indirectly through similar investment vehicles or funds focused
primarily on venture capital and private equity-related financing,
and opportunities in the TMT sector, provided such indirect
investments in appropriate circumstances in collaboration with
other investment vehicles or funds in total do not exceed 20% of
the Company's latest audited or announced net asset value added
financial at the time of the investment. The Company may also set
up (and/or strategic investors. potentially co-invest in) other
investment vehicles or funds and generate income by providing
advisory and consulting services to other investment vehicles or
funds.
The Company is not geographically restricted in terms of where
it will consider making investments. It will consider any
geographical area, to the extent that the investment fits within
the Company's investment criteria. The Company's Directors and
senior managers have the relevant expertise to invest in the TMT
sector, whether through in the form of equity, debt, or other
equity related instruments, collective investment capital and in
vehicles, or "digital assets" (including cryptocurrencies). This
will include investments in small and mid-sized private companies.
The Company will is not be subject to any borrowing or leveraging
limits.
Private Companies
The Company will target small and mid-sized companies and will
seek to secure at least blocking stakes and board representation,
where it considers that the Company and/or an investee company
would benefit from such an appointment. The Company will consider
making equity investments in lower than blocking stakes only where
it sees ways to increase the stakes to blocking or controlling
stakes at a later date. The Company will target primarily small and
mid-sized companies. Each investment is expected to be at least
US$250,000. The investments targeted by the Company will aim to
support rapidly-growing private companies to increase market share
and achieve long-term shareholder value. If the Company invested in
a private company prior to that company listing on a stock market,
the Company may retain a part of its investment in the listed
entity going forward. Wherever appropriate, the Company intends to
work closely with the management of each investee company to create
value by focusing on driving growth through revenue creation,
margin enhancement and extracting cost efficiencies, as well as
implementing appropriate capital structures to enhance returns.
Public Companies
When investing in public equities, the Company will seek to
select companies with a dominant market share or strong growth
potential in their respective segments. No restrictions will be
placed on the size of public companies in which the Company may
make an investment. The Directors intend to make investments in
companies or assets with attractive valuation, growth potential,
and competent and motivated management.
Realisation of Returns
The Directors Company will, when appropriate, consider how best
to realise value for Shareholders whether through a trade sale,
flotation or secondary refinancing sale of the investee companies.
The proposed exit route will form a key consideration of the
initial investment analysis. The Company expects to derive returns
on investments principally through long-term capital gains and/or
the payment of dividends by investees. The primary ways in which
the Company expects to realise these returns include: (a) the sale
or merger of a company; (b) the sale of securities of a company by
means of public or private offerings; and (c) the disposal of
public equity investments through the stock exchanges on which they
are listed. For private investee companies the Company believes
that its typical investment holding period should provide
sufficient time for investee companies to adequately benefit from
the capital and operational improvements resulting from the
Company's investment. The targeted holding period shall be reviewed
on a regular basis by the Company, but it is expected that this
will typically be between two to four six years. For public
equities the Company's objective is to maximise capital
appreciation. Following the acquisition , following the investment,
the Company will continue to monitor the investment. its position.
Importance will be placed on the timing of any disposal which will
follow a thorough review of market conditions and those reports and
sources that are available to investors. Should the Company
consider that the capital appreciation of a particularpublic equity
investment has reached its peak or is likely to or has begun to
decline, then the Company will consider the sale of that
investment.
Effect of COVID-19 and recent market volatility
As previously announced, even before the recent negative
developments caused by COVID-19 and oil price volatility, the
venture capital community was becoming more focused on start-ups'
ability to achieve underlying profitability, or at least to control
the cost of their growth. The 'growth at any cost' mentality that
had often prevailed among start-ups and venture capital investors,
was gradually being replaced with a more pragmatic approach of
seeking to achieve more cost-efficient growth. As this balanced
approach has always been one of TMT's key selection criteria, we
are pleased to see that the majority of our portfolio companies are
seeing the fruits of having adopted this approach early on.
Especially in turbulent times like these, this approach now allows
them to efficiently control their burn rates and cash liquidity
levels.
Our top five portfolio companies (Bolt, Backblaze,
Depositphotos, Pipedrive and Scentbird), accounting for
approximately 75% of the Company's NAV, 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, which TMT believes should
therefore enable them to better adapt to the current environment.
As technology-driven companies, their staff are also used to
working remotely.
Ride-hailing and delivery service Bolt is active in over 150
cities globally. Whilst turnover for the core ride-hailing business
has been negatively affected as a result of COVID-19, the drop in
variable costs is resulting in lower cash burn rates for Bolt. On
26 March 2020, Bolt announced the launch of its Bolt Business
Delivery service. This service can be used by all kinds of
businesses, from restaurants and supermarkets to florists, with
same-day or even same-hour B2C delivery. Although this was not in
direct response to COVID-19, the development underlines Bolt's
ability to scale up and make best use of its existing
infrastructure and resources, which is a feature that we always
seek to identify as one of our key investment criteria. In light of
COVID-19, Bolt will be refining and expanding its delivery service
to capitalise on the opportunities created. With the EUR50 million
quasi-equity facility agreement with the European Investment Bank
secured in January 2020, Bolt entered 2020 with a strong cash
balance, though its future performance and liquidity position will
depend on how much longer its key markets remain under various
degrees of quarantine as a result of COVID-19.
Online data backup and cloud storage provider Backblaze 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. TMT believes that the short-term impact on
Backblaze's revenues is likely to be neutral, with longer-term
outlook potentially positive.
Stock photo and video marketplace Depositphotos entered this
period operationally profitable, with sizeable cash reserves and a
well-diversified international customer base. TMT believes that the
short-term impact on Depositphotos' revenues is likely to be
neutral with the longer-term outlook potentially negative if the
COVID-19 effect deepens.
Sales CRM software Pipedrive is operationally profitable, with
very significant cash reserves and a well-diversified customer base
of over 90,000 companies worldwide. TMT believes that the
short-term impact on Pipedrive's revenues is likely to be
neutral.
Perfume and other beauty products subscription service Scentbird
entered this period operationally profitable, with sizeable cash
reserves. TMT believes that the short-term impact on Scentbird's
revenues is likely to be neutral with the longer-term outlook
potentially negative if the COVID-19 effect deepens.
The remainder of our portfolio consists of over 25 companies and
is diversified across our four core investment sectors: Big
Data/Cloud, SaaS (software-as-a-service), Marketplaces and
E-commerce. While some of the portfolio companies most exposed to
sectors immediately affected (such as event management software
company Attendify, electric scooter sharing platform Go X, and
fashion rental platform Le Tote) will have to face some important
and potentially serious challenges, a notable number of our
portfolio companies (such as remote learning company MEL Science,
parent-teacher communication platform ClassTag, Central American
delivery company Hugo, and game coaching service Legionfarm) have
experienced an increase in demand for their products. The effect on
other portfolio companies is therefore mixed, and a lot 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
TMT has now invested in over 55 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. With a strong cash balance, TMT's
current strategy is to be extremely selective in identifying any
new investment opportunities, and we do not expect to deploy any
significant funds towards new investments in the next few months as
we await to see the full impact of the COVID-19 pandemic. We expect
a number of revaluations (both negative and positive) across our
portfolio in 2020 and will update shareholders on relevant
developments as appropriate.
Alexander Selegenev
Executive Director
15 April 2020
CASE STUDIES
Bolt
"Bolt continued to grow rapidly in 2019, recording triple-digit
growth in revenue and number of users"
Bolt is an international ride-hailing platform active in over
150 cities globally, up from 70 cities at the end of 2018.
In September 2014, TMT became one of the earliest investors in
Bolt, when it was a one year old start up present in four cities in
Estonia and Latvia. In contrast to other of its peer companies,
Bolt's management team has led the company into meteoric growth
without resorting to huge marketing budgets. Bolt's expansion
strategy was initially focused on entering underserved markets.
More recently Bolt has expanded into more established markets. In
2019, Bolt continued to record triple-digit growth in revenue and
number of users.
On 28 June 2019, TMT announced that its portfolio company Bolt
(formerly known as Taxify), had completed a new funding round. The
transaction represented a revaluation uplift of US$5.04 million (or
29.5%) in the fair value of TMT's investment in Bolt, compared to
the previous reported amount as of 31 December 2018.
In January 2020, TMT announced that Bolt had recently entered
into a EUR50 million quasi-equity facility agreement with the
European Investment Bank (EIB), the European Union's long-term
lending institution, to fund further expansion.
www.bolt.eu
Backblaze
"TMT is proud to have identified Backblaze's potential early on
and became its first institutional external investor in 2012"
Backblaze is a leading online data backup and cloud storage
provider with over 600,000 paying customers.
Backblaze is an outstanding example of a company that has
succeeded in recording strong organic growth without recurring to
large and dilutive equity fund raises. In 2019, Backblaze continued
to register double-digit revenue growth, exceeding 600,000 paying
customers, whilst its "B2" cloud storage revenue is growing at over
100% year-on-year.
In August 2019, TMT entered into an agreement with a third-party
private investor to dispose of approximately 9% of its interest in
Backblaze for a cash consideration of US$2.0 million. The partial
disposal to a third-party private investor implied a substantial
increase in the value of TMT's interest in Backblaze to US$23.2
million, being the value of its remaining interest and the
consideration received, representing an increase of approximately
US$12.7 million (or approximately 120%) on the value of the
Company's interest in Backblaze of US$10.5 million as of 31
December 2018.
www.backblaze.com
Pandadoc
"Pandadoc's focus on product market fit and its own sales
pipeline is impressive"
Pandadoc is a document automation SaaS provider used by over
16,000 companies worldwide.
TMT invested in Pandadoc in 2014, impressed by the company's
focus on product development and how it was growing its own sales
pipeline. Pandadoc is a good example of one of our portfolio
companies that has achieved solid growth by seeking to continuously
improve its product market fit, whilst simultaneously remaining
focussed on growing its sales, supported by integration
partnerships. Pandadoc simplifies the process to create, send,
track and eSign sales documents, helping its clients close deals
faster and more efficiently. It counts major corporations among its
clients, including Hilton, Tata Steel and SGS.
In June 2019 Pandadoc completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.98 million (or
79.5%) in the fair value of TMT's interest in Pandadoc, compared to
the previous reported amount as of 31 December 2018.
www.pandadoc.com
PORTFOLIO DEVELOPMENTS
We were delighted with the performance of our portfolio
companies in 2019, which continued 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 year. In
tandem, the majority of our other portfolio companies have
continued growing their businesses quietly in the background.
Portfolio Performance
The following developments had an impact on and are reflected in
the Company's NAV and/or financial statements as at 31 December
2019 in accordance with applicable accounting standards:
Full and partial cash exits, and positive non-cash
revaluations:
-- In February 2019, the Company received a total net cash
consideration of US$547,972 for the disposal of its entire
investment in The IRApp, Inc.
-- In June 2019, PandaDoc, a document automation SaaS provider (
www.pandadoc.com ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.98 million (or
79.5%) in the fair value of TMT's interest in PandaDoc, compared to
the previous reported amount as of 31 December 2018.
-- As announced on 28 June 2019, Bolt, a leading international
ride-hailing company ( www.bolt.eu ) formerly known as Taxify,
completed a new funding round. The transaction represented a
revaluation uplift of US$5.04 million (or 29.5%) in the fair value
of TMT's interest in Bolt, compared to the previous reported amount
as of 31 December 2018.
-- In July 2019, Workiz, a field service management SaaS
provider ( www.workiz.com ), completed a new equity funding round.
The transaction represented a revaluation uplift of US$0.18 million
(or 67.6%) in the fair value of TMT's interest in Workiz, compared
to the previous reported amount as of 31 December 2018.
-- In August 2019, eAgronom, a farm management SaaS provider (
www.eagronom.com ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$54,024 (or
23.1%) in the fair value of TMT's interest in eAgronom, compared to
the previous reported amount as of 31 December 2018.
-- In August 2019, TMT entered into an agreement with a
third-party private investor to dispose of approximately 9% of its
interest in Backblaze Inc. ("Backblaze"), a leading data backup and
cloud storage company ( www.backblaze.com ), for a cash
consideration of US$2.0 million. The partial disposal to a
third-party private investor implied a substantial increase in the
value of TMT's interest in Backblaze to US$23.2 million, being the
value of its remaining interest and the consideration received,
representing an increase of approximately US$12.7 million (or
approximately 120%) on the value of the Company's interest in
Backblaze of US$10.5 million as of 31 December 2018.
-- In November 2019, online fashion rental start-up Le Tote (
www.letote.com ) acquired Lord & Taylor, the US's oldest
department store. The transaction resulted in an increase of
approximately US$0.75 million (or 37.7%) in the value of TMT's
interest in Le Tote, compared to the previous reported amount as of
31 December 2018.
-- In December 2019, Platform as a Service (PaaS) provider of
enterprise-class networking services Remote.it ( www.remote.it )
completed an equity financing round. The transaction resulted in an
increase of approximately US$2.2 million (or 282%) in the value of
TMT's interest in Remote.it, compared to the previous reported
amount as of 31 December 2018.
-- In January 2020, Central American delivery and transportation
technology company Hugo ( www.hugoapp.com ) completed an equity
financing round. The transaction resulted in an increase of
approximately US$0.58 million (or 290%) in the value of TMT's
interest in Hugo, compared to the original amount invested in Hugo
in January 2019.
-- In February 2020, Accern, an AI-based data design company
that helps automate research and data analysis processes within
organisations ( www.accern.com ), completed an equity financing
round. The transaction resulted in an increase of approximately
US$0.28 million (or 28.3%) in the value of TMT's interest in
Accern, compared to the original amount invested in Accern in
August 2019.
Negative revaluations:
-- In July 2019, the Company entered into a definitive agreement
to sell its entire holding in Unicell for a total net cash
consideration of US$965,729. The transaction represented a
reduction of US$14,271 in the fair value of TMT's interest in
Unicell, compared to the previous reported amount as of 31 December
2018.
The following of the Company's portfolio investments were also
negatively revalued in 2019:
Portfolio Write-down Reduction Reasons for write-down
Company amount as % of fair
(US$) value reported
as of 31 Dec
2018
Lack of progress; Board's
Sixa 900,000 100% assessment of value
----------- ---------------- --------------------------
Lack of progress; Board's
Drupe 595,142 100% assessment of value
----------- ---------------- --------------------------
Key developments for the five largest portfolio holdings in 2019
(source: TMT's portfolio companies):
Bolt (ride-hailing service):
-- Active in over 150 cities over the world (from "over 70" cities as of 31 December 2018)
-- Triple-digit growth in revenue and number of users
-- Raised a new equity round in the first half of 2019 at an increased valuation
Backblaze (online data backup and cloud storage provider):
-- Double-digit revenue growth, exceeding 600,000 paying customers
-- "B2" cloud storage revenue grew at over 100% year-on-year
Depositphotos (stock photo marketplace):
-- Double-digit growth in revenue and number of files in the photobank
-- New graphic design software product Crello growing fast in both users and revenue
Pipedrive (sales CRM software):
-- Double-digit growth in revenue
-- Over 90,000 paying customers (from "over 85,000" as of 31 December 2018)
Scentbird (perfume and other beauty product subscription
service):
-- Double-digit growth in revenue and number of customers
-- Over 330,000 subscribers (from "over 250,000" as of 31 December 2018)
New investments
Following the disposal of our investment in Wrike, Inc.
("Wrike") at the end of 2018 for US$24.7 million (net), we were
busy directing those proceeds towards investing in additional
exciting companies that met our investment criteria of having
outstanding management teams, high growth potential based on
globally scalable business models, viable exit opportunities and
already generating revenue.
In 2019, the Company made the following investments:
-- US$200,000 in Hugo ( www.hugoapp.com ), a Central American on-demand delivery service;
-- US$2 million in MEL Science Limited ( www.melscience.com ), a
UK EdTech company using Virtual Reality (VR) to focus on early
science education. The company's main products are subscription
kits and VR software for learning chemistry and other
disciplines;
-- GBP200,000 (US$253,615) in HealthyHealth-UK Ltd, a UK InsurTech and HealthTech company ( www.healthyhealth.uk );
-- US$350,000 in Cheetah X, Inc., the developer of the electric scooter sharing platform Go-X ( www.goxapp.com );
-- US$1.5 million in Scalarr, Inc., a machine learning-based
fraud detection solution focused on the advertising market (
www.scalarr.io );
-- US$1.0 million in Accern Corporation, an AI-based data design
company that helps automate research and data analysis processes
within organisations ( www.accern.com ). Accern's clients include
IBM, MetLIfe, Credit Suisse and Moody's, as well as other Fortune
500 companies;
-- US$1.4 million in Rocket Games Entertainment LLC, the owner
of Legionfarm, an online game coaching service that helps gamers
master complex games by hiring professional players (
www.legionfarm.com );
-- US$1.0 million in Affise Technologies Ltd, a performance
marketing SaaS solution for the affiliate industry (
https://affise.com/en/ );
-- US$0.65 million in Ad Intelligence Inc., trading as
RetargetApp, an online solution aimed at monitoring ad campaigns
and automatically managing daily budgets, audience and bids to
improve the quality of retargeting ( https://retargetapp.com );
and
-- US$0.22 million in Timbeter OÜ, a cloud-based mobile software
solution for round wood measurement, timber inventory management
and reporting ( https://timbeter.com ).
Events after the reporting period
In February 2020, the Company invested US$400,000 in ClassTag,
Inc., a parent-teacher communication platform currently connecting
over 2 million families across 25,000 schools ( www.classtag.com
).
In April 2020, the Company invested GBP150,000 in 3S Money Club
Limited, an online banking service focusing on international trade
( www.3s.money ).
In the year to date, the global economy was affected by the
COVID-19 pandemic and the related market volatility. Whilst the
Company's operations and liquidity position were not directly
impacted, the principal activity of the Company was naturally
affected through the impact on and therefore potential performance
of the Company's investee companies. The current and potential
near-term impact of these developments on the Company is discussed
in the Executive Director's statement.
These events after the reporting period are not reflected in the
NAV and/or the financial statements as at 31 December 2019.
INVESTMENT PORTFOLIO
The Company's ten largest portfolio investments (as of 31
December 2019) were as follows:
Portfolio Company Fair value (US$), as % of total
Name as of 31 December portfolio
2019 value
Bolt 22,132,548 24.27
Backblaze 21,201,508 23.25
Depositphotos 10,836,105 11.88
Pipedrive 10,257,098 11.25
Scentbird 3,340,404 3.66
Remote.it 3,025,285 3.32
Le Tote 2,749,812 3.01
PandaDoc 2,215,118 2.43
MEL Science 1,999,992 2.19
Wanelo 1,825,596 2.00
Other 11,623,724 12.74
BOARD OF DIRECTORS
Yuri Mostovoy , Non-executive Chairman, was appointed to the
Board in June 2011. Yuri brings over 36 years expertise in
investment banking, software development and business to his role
as Chairman of the Company. Yuri completed his Ph.D. program at the
Moscow Aviation Institute in 1972 and has a M.Sc. in Electrical
Engineering from that same institution. Yuri has held a number of
previous Board positions at a number of companies, and brings this
experience to the Board. He has been involved in a number of
internet start-ups in the areas of medical devices, software
development, and social media.
Yuri Mostovoy is actively involved in the start-up investment
community, especially in some of the tech hubs in the USA, meeting
with technological companies seeking investments on a regular
basis. Through this process of direct contact with investee
companies, Yuri keeps updated on sector developments.
Alexander Selegenev , Executive Director, was appointed to the
Board in December 2010. The Executive Director has the
responsibility of leading the business and the executive management
team, ensuring that strategic and commercial objectives are met.
Alexander has over 20 years of experience in investment banking and
venture capital, with specific expertise in international corporate
finance, equity capital markets and mergers and acquisitions at a
number of City of London firms including Teather & Greenwood
Limited, Daiwa Securities SMBC Europe Limited, and Sumitomo Bank
Limited. Throughout his career he worked on a large number of AIM
IPOs and private equity and merger and acquisition transactions. He
has an MSc (Hons) and a BSc (Hons) in Business from the Peoples'
Friendship University of Russia in Moscow and a Bachelor of
Business Studies (Major in Management) from Monash International
University in Australia. He brings strong experience of working
with public markets. Alexander's public markets and financial
experience make him an ideal conduit to engaging with the Company's
Nomad, investors and make him an effective conduit between the
Board and the Company's other team members.
Alexander Selegenev is an active member of the Company's
investment committee, allowing him to keep very close to
developments and current thinking on new technologies, market
trends, company valuations and fundraising activities.
Alexander Selegenev is a member of the Company's Nomination
Committee.
James Mullins , independent Non-executive Director, was
appointed to the Board in December 2010. He brings to the Company a
strong combination of accountancy, experience of working with
public markets and institutional investors. James, with his
financial background, provides the experience required as chairman
of the audit committee to challenge the business internally and
also the Group auditors. From 2004 to 2007, he was the Finance
Director at Rambler Media and was involved in its successful
admission on AIM and subsequent sale. He has been a director of
numerous funds and companies including the Russian Federation First
Mercantile Fund. This Fund (Class A shares) is listed on the
Bermuda Stock Exchange. He was previously a partner in First
Mercantile and FM Asset Management Ltd. He previously worked for
PricewaterhouseCoopers, Deloitte and British Coal where he was a
national investment manager. He was recently Chairman of the
Scottish Salmon Company, which is listed on the Oslo Bors. James is
a Fellow of the Association of Chartered Certified Accountants and
he holds a Bachelor of Science degree and a Master of Arts degree
from Trinity College, Dublin. James is also an active entrepreneur
and investor.
James Mullins has recently completed an online course with
University of Oxford Said Business School entitled Oxford
Blockchain Strategy Programme.
James Mullins serves as Chairman of the Audit, Remuneration and
Nomination committees.
Petr Lanin , independent Non-executive Director, was appointed
to the Board in December 2010. Petr's experience in investment and
brokerage that he brings to the Company allows him to review and
challenge decisions and opportunities presented both within the
formal arena of the Boardroom and as called upon when needed by
senior management.
He began his career as an equity analyst in the Russian
information agency "RosBusinessConsulting" ("RBC") in 1995. Between
1996-2000 he served as chief of the share department in
Makprombank. Between 2000 and 2006 he held the position of general
director of the investment company "Maxwell Capital". Following his
appointment as general director of "Maxwell Asset Management" in
2003, Mr. Lanin was key in the establishment and management of many
investment funds. He was also one of the managing directors of
venture capital fund "Maxwell Biotech" which was a closed mutual
fund set up and operated by Maxwell Asset Management. In 2008,
Maxwell Asset Management established a UK FSA registered subsidiary
in which Petr Lanin held a controlled function. At present, Petr is
a chief of the Purchases and Supply Department in Federal State
Organisation "Clinical hospital #1". Petr holds an MBA degree in
finance and credit from the Plekhanov Russian Academy of
Economics.
Petr Lanin is a member of the Company's Audit and Remuneration
Committees.
CORPORATE GOVERNANCE
AIM quoted companies are required, pursuant to the AIM Rules for
Companies, to set out details of the recognised corporate
governance code that the Board of Directors has decided to adopt,
how the Company complies with that code and provide reasons for any
departures where it does not comply with that code.
Introduction
The Board of TMT Investments Plc ("TMT" or the "Company") fully
endorses the importance of good corporate governance and has
adopted the 2018 Quoted Companies Alliance Corporate Governance
Code for Small and Mid-Sized Companies (the "QCA Code"), which the
Board believes to be the most appropriate corporate governance code
given the Company's size, stage of development and that its shares
are admitted to trading on AIM. The QCA Code is a practical,
outcome-oriented approach to corporate governance that is tailored
for small and mid-size quoted companies in the UK and which
provides the Company with the framework and effective oversight to
help ensure that a strong level of governance is maintained.
In accordance with the QCA Code and AIM Rule 26, the report
below provides a high level overview of how TMT has applied the
principles of the QCA Code and any areas in which the Company's
governance structures and practices depart from or differ from the
expectations of the QCA Code.
Chairman's Corporate governance statement
Dear Shareholder,
As Chairman, it remains my responsibility, working with my
fellow Board colleagues, to ensure that good standards of corporate
governance are embraced throughout the Company. I am therefore
pleased to report that, in accordance with the revisions made to
the AIM Rules for Companies effective 28 September 2018, the Board
chose to adopt the QCA Code with immediate effect.
The adoption of the QCA Code supports the Company's success by
creating and supporting a strong corporate governance environment
for the benefit of the Company, its shareholders and its
stakeholders.
The Board is committed to good governance across the business,
at executive level and throughout its operations and we believe
that the QCA Code provides us with the right governance framework:
a flexible but rigorous outcome-oriented environment in which we
can continue to develop our governance model to support our
business. The Company applies the QCA Code by seeking to address
all of its requirements and ensuring that the QCA Code is embedded
in the Company's operations and corporate culture.
As Chairman, I am responsible for leading an effective Board,
fostering a good corporate governance culture, maintaining open
communications with shareholders and ensuring appropriate strategic
focus and direction for the Company.
The Board not only sets expectations for the business but works
towards ensuring that strong values are set and carried out by the
Directors across the business. The Company's corporate culture is
based on the three values of transparency, innovation and
continuous improvement. These three values support the Company's
objectives, strategy and business model.
As a publicly quoted company that provides investors with a
liquid route to investing in private companies, transparency is
fundamental to how we operate and communicate with our
shareholders. The Company therefore endorses a culture of
transparency and seeks to provide investors with as much
information as is practically possible regarding its portfolio
investments and its own operations as a company.
Innovation supports the Company's objective of investing in
successful, long-term companies that have innovation at the core of
their own business models. In parallel, the Company seeks to apply
an innovative approach to how it manages its own operations. The
Company therefore seeks to review its operations and capabilities
on an ongoing basis to ensure it can continue to successfully
operate as an investing company and make best use of its range of
capabilities.
Continuous improvement reflects the Company's objective of
assessing its own performance and identifying areas for improvement
across its investment processes and operations on an ongoing
basis.
We place a special focus on monitoring and promoting a healthy
corporate culture, which the Company currently enjoys.
Nevertheless, there is always room for improvement and we will
continue to pursue programmes that keep us advancing in this
regard.
The importance of engaging with our shareholders underpins the
essence of the business, and we welcome investors' continued
engagement with both the Board and executive team.
In the statements that follow, we explain our approach to
corporate governance, how the Board and its committees operate, and
how we seek to comply with the QCA's 10 principles.
Yuri Mostovoy
Chairman
PRINCIPLE 1
ESTABLISH A STRATEGY AND BUSINESS MODEL WHICH PROMOTE LONG-TERM
VALUE FOR SHAREHOLDERS
The Company has been established for the purpose of making
investments in the Technology, Media and Telecommunications sector
("TMT sector") where the Directors believe there is potential for
growth and the creation of shareholder value.
Investment Strategy
TMT currently focuses on identifying attractive investment
opportunities in the following segments of the TMT sector:
-- Big data and cloud solutions
-- Software-as-a-service (SaaS)
-- E-commerce
-- Marketplaces
Among other features, TMT seeks to identify companies that
have:
-- Competent and motivated management founders - managing
high-growth companies requires a rare combination of skills
-- High growth potential - companies with a product or service
that can be scaled up globally
-- Growth stage - we highly favour investing in companies that
are already generating revenues (we have a typical minimum revenue
threshold of US$100,000 per month)
-- Viable exit opportunities - when we invest, we are already
assessing potential exit scenarios
The Company has identified a number of challenges in executing
its strategy. We describe these risks and how we manage them in
Principle 4.
The Company believes it is well placed to deliver shareholder
value in the medium and long-term through the application of its
business model, investment strategy and risk mitigation measures,
as described in this document.
PRINCIPLE 2
SEEK TO UNDERSTAND AND MEET SHAREHOLDER NEEDS AND
EXPECTATIONS
The Company places great importance on communication with
shareholders and potential investors, which it undertakes through a
variety of channels, including the annual reports and accounts,
interim accounts, and regulatory announcements that are available
on the Company's website www.tmtinvestments.com . On request, hard
copies of the Company's reports and accounts can be mailed to
shareholders and other parties who have an interest in the
Company's performance.
The Directors review the Company's investment strategy on an
ongoing basis. Any material change to the Investing Policy will be
subject to the prior consent of the shareholders in a general
meeting.
Developing a good understanding of the needs and expectations of
all elements of the Company's shareholder base is fundamental to
the Company's progress. The Company has developed a number of
initiatives that it holds on a regular basis to meet this need. As
part of its regular dialogue with shareholders, the Company seeks
to understand the motivations behind shareholder voting decisions
as well as manage shareholders' expectations.
The Company's shareholder base has grown in numbers as well as
become more diversified since its admission to AIM in December
2010. The Company's shareholder base is comprised of institutional
investors, family offices, high net worth individuals and retail
investors.
In addition to communicating with shareholders through the
Company's annual reports, interim results, regulatory
announcements, and the opportunity for shareholders to engage with
the Company at the AGM, the Company's broker and other advisors
arrange regular meetings with UK institutional investors and
private client brokers, to introduce the Company and its investment
strategy.
The Company has been increasing its engagement with retail
investors by holding private investor events arranged by the
Company's public relations adviser. As part of these retail
investor events, feedback surveys are provided to attendees. The
feedback includes information on amount, type and quality of
information provided, presentation style and areas of investor
interest. Investor feedback collected is incorporated into the
planning of future events on an ongoing basis. Interested parties
are able to subscribe for notifications of such future events by
contacting tmt@kinlancommunications.com
In addition, the Company engages with the financial media on a
regular basis in order to generate interest among a wider number of
potential shareholders.
In 2019, the Company integrated share price feeds into its
website, with the aim of increasing shareholder engagement and to
better meet shareholders' information needs.
Shareholder enquiries should be directed to Alexander Selegenev,
Executive Director at ir@tmtinvestments.com , or to the Company's
advisors, contact details for whom are included on the Company's
web site.
PRINCIPLE 3
TAKE INTO ACCOUNT WIDER STAKEHOLDER AND SOCIAL RESPONSIBILITIES
AND THEIR IMPLICATIONS FOR LONG-TERM SUCCESS
The Company's business model is that of a publicly quoted
venture capital investing company investing in the TMT sector. As
such, it relies on the continued growth of the TMT sector and
access to good investment opportunities. In relation to its wider
stakeholders, the Company needs to ensure that it:
-- Maintains a good reputation as a credible investor in its chosen investment sector;
-- Is fully compliant with all regulatory requ irements;
-- Takes into account its wider stakeholders' needs; and
-- Takes into account its social responsibilities and their
implications for long-term success.
The Company regards its employees, advisors, shareholders and
investee companies, as well as the technology and start-up
community, to be the core of its wider stakeholder group:
The technological and start-up community
The Company sources its investments from the global
technological universe of companies. All members of the Company's
team maintain good relationships with the global technological
start-up community through arranging meetings with prospective
investees, attending tech and tech investor events, and through
ongoing building of their professional networks. This has led to a
valuable level of accumulated tech knowledge and access to a
pipeline of suitably attractive investments.
Professional advisors
The Company's professional advisors include its Nominated
Advisor (Nomad), Broker, Accountants, Auditors, and Legal and
Financial PR advisors. The Company works closely with its
professional advisors to ensure that it is fully compliant with all
regulatory requirements at all times.
Regulators
The Company is quoted on AIM and is subject to regulation by the
London Stock Exchange. The Company is also subject to the UK City
Code on Takeovers and Mergers.
Other suppliers
The Company has banking relationships in place to service its
operations as well as a number of administrative and other
suppliers, such as the Registrar and Company Secretary.
Internal stakeholders
The Company's workforce
The Company's investment performance relies on the retention and
incentivisation of its directors, employees and consultants.
The Company has put in place a bonus plan ("Bonus Plan") for
Directors, officers, employees of, or consultants to, the Company.
This initial 3-year Bonus Plan was approved by the Board on 2
December 2015. Under the Bonus Plan, subject to achieving minimum
hurdle rate and high watermark conditions in respect of the
Company's net asset value ("NAV"), the team receives 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. In June 2018, the
Company extended its Bonus Plan for the next three years (until 30
June 2021) on the same terms, with slightly amended initial
allocations of the Bonus Pool among the current participants.
The Company engages with its stakeholders during the course of
its day to day activities, seeking feedback as the occasion arises.
The Company evaluates feedback and assesses its incorporation into
its decisions and actions and, if appropriate, its operations, on
an ongoing basis. Details of the Company's most regular
interactions with shareholders, through which the Company gains
feedback from shareholders, are provided in the disclosures on
Principle 2 above.
PRINCIPLE 4
Embed effective risk management, considering both opportunities
and threats, throughout the organisation
The Directors are responsible for the Company's internal control
framework and for reviewing its effectiveness. Each year the Board
reviews all controls, including financial, operational and
compliance controls and risk management procedures. The Directors
are responsible for ensuring that the Company maintains a system of
internal control to provide them with reasonable assurance
regarding the reliability of financial information used within the
business and for publication, and that assets are safeguarded.
There are inherent limitations in any system of internal financial
control. On the basis that such a system can only provide
reasonable but not absolute assurance against material misstatement
or loss, and that it relates only to the needs of the business at
the time, the system as a whole was found by the Directors at the
time of approving the accounts to be appropriate given the size of
the business.
In determining what constitutes a sound system of internal
controls the Board considers:
-- The nature and extent of the risks which they regard as
acceptable for the Company to bear within its particular
business;
-- The threat of such risks becoming reality;
-- The Company's ability to reduce the incidence and impact on
its business if the risk crystallises; and
-- The costs and benefits resulting from operative relevant controls.
The Board has taken into account the relevant provisions of the
QCA Code and associated guidance in formulating the systems and
procedures which it has put in place. The Board is aware of the
need to conduct regular risk assessments to identify the
deficiencies in the controls currently operating over all aspects
of the Company.
The Board regularly reviews the risks faced by the Company and
ensures the mitigation strategies in place are the most effective
and appropriate to the Company. There may be additional risks and
uncertainties which are not known to the Board and there are risks
and uncertainties which are currently deemed to be less material,
which may also adversely impact performance. It is possible that
several adverse events could occur and that the overall impact of
these events would compound the possible impact on the Company. Any
number of the below risks could materially adversely affect the
Company's business, financial condition, results of operations
and/or the market price of the ordinary shares.
The Company has identified the following principal risks in
executing its strategy and addresses these in the following
ways:
Key people risk
The Company's management team is relatively small in number and
the resignation or unavailability of members of the management team
could potentially have an effect on the performance of the
Company.
Mitigation:
In order to mitigate this risk, the Company has put in place a
Bonus Plan. The Company ensures that the databases it maintains for
investment selection and monitoring are shared across the senior
management team, reducing the possibility of loss of information
due to any one individual leaving or not being available.
The Company invests in early stage companies
Investing in early stage companies is inherently risky. These
businesses may not successfully develop their technology or
offering, may fail to secure the necessary funding and/or attract
further investment and may lose key personnel, amongst other
risks.
Mitigation:
The TMT team is experienced in investing in early stage
technology companies and conducts extensive analysis through its
four-filter investment process, as well as extensive due diligence
on the companies before it makes any investment.
Portfolio valuation may be dominated by single or limited number
of companies
The success or failure of companies in our portfolio in growing
revenues and/or attracting further investment is likely to have a
significant impact on their valuation, increasing or decreasing
significantly. These valuations are driven by market forces and are
outside of our control.
Mitigation:
The Company has built and continues to build a diversified
portfolio across its core investment sectors. The Company also
sells partial stakes from time to time in its more successful
holdings in order to reinvest in other companies and/or keep the
Company's portfolio appropriately balanced.
Large number of investment opportunities
The sectors in which the Company invests are characterised by
large numbers of new companies being launched with similar business
models and across many countries. The sheer multitude of companies
can make identifying the best companies a challenge in terms of
analysis, the monitoring of performance before investing and the
overall assessment of an investee's potential.
Mitigation:
The Company focuses on a small number of core segments within
the TMT sector in which it has expertise and established
professional networks, in order to benefit from its competitive
information advantage.
Employing a filtering system that is designed to identify
companies with the best potential to become scalable businesses
with strong growth potential. A special emphasis is placed on
assessing the exit opportunities for investments under
consideration, taking into account sector trends, valuations,
M&A trends and other relevant criteria.
Speed of technological change
Technological change is taking place at ever increasing tempos.
The speed of technological innovation can make it harder to assess
an investee company's potential, especially at an early stage of
development.
Mitigation:
We address this challenge by typically investing in companies
that are already generating revenue and therefore have a proven
revenue generating business model at the time of the Company's
initial investment.
Valuation of investments
The Company invests in companies that at times operate in very
competitive sectors. Given the nature of the companies we invest
in, it is not likely that all will be a success. It is therefore
inevitable that some investments will require impairment.
Mitigation:
To mitigate this risk, the Company reviews all its investments,
as a minimum, every six months. For each of its portfolio
companies, the Company maintains a database registering data
provided by the portfolio companies that includes key performance
indicators. Through this process, the Company actively monitors the
performance of its portfolio and can affect fair value revaluations
as required, whilst remaining focussed on managing a portfolio of
growing companies.
The Company has a small number of shareholders who hold a large
proportion of the total share capital of the Company
The decision by one or more of these shareholders to dispose of
their holding in the Company may have an adverse effect on the
Company's share price.
Mitigation
The Company seeks to build a mutual understanding of objectives
between itself and its shareholders. The Company maintains regular
contact with its shareholders through meetings and presentations
held throughout the year.
Non-controlling positions in portfolio companies
Non-controlling interests in portfolio companies may lead to a
limited ability to protect the Company's position in such
investments.
Mitigation
As part of its investment in portfolio companies, the Company
will seek to secure significant stakes and board representation,
where it considers that the Company and/or an investee company
would benefit from such an appointment.
Proceeds from the realisation of investments may vary
substantially from year to year
The timing of portfolio company realisations is uncertain and
depends on factors beyond the Company's control. As an investing
company that does not generate sales, the Company faces the
potential challenge of insufficient funds to meet its financial
obligations or make new investments. Cash returns from the
Company's portfolio are therefore not predictable.
Mitigation
To address this challenge, the Company focuses on investing in
companies that it considers to have good exit opportunities, via a
trade sale, IPO or other exit route. This increases the likelihood
of generating cash returns, which can then be used to reinvest or
satisfy financial obligations if necessary. The Company has also
conducted a number of equity fundraises since its admission to
trading on AIM. As part of its fundraising efforts, the Company has
committed significant resources to developing its shareholder base.
The Company seeks to maintain sufficient cash resources to manage
its ongoing operating and investment commitment and undertakes
regular working capital reviews.
The Company's approach to managing liquidity is to ensure that
it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company.
The Company has low liquidity risk due to maintaining adequate
cash reserves, by continuously monitoring actual cash flows and by
matching the maturity profiles of financial assets and current
liabilities.
The Company believes it is well placed to deliver shareholder
value in the medium and long-term through the application of its
business model and investment strategy and risk mitigation, as
described above.
PRINCIPLE 5
MAINTAIN THE BOARD AS A WELL-FUNCTIONING, BALANCED TEAM LED BY
THE CHAIR
The Board is responsible to shareholders for the overall
management of the Company and may exercise all the powers of the
Company, subject to the provisions of relevant statutes and any
directions given by special resolution of the shareholders.
The Board, led by the Chairman, consists of four directors,
three of whom are Non-executive.
The Board comprises of the Non-executive Chairman (Yuri
Mostovoy), two Non-executive Directors (James Joseph Mullins and
Petr Lanin) and the Executive Director (Alexander Selegenev). James
Mullins and Petr Lanin, both Non-executives, are considered by the
Board to be independent. Both James Mullins and Petr Lenin were
appointed to the Board in December 2010. Whilst they have now
served as independent Non-executive Directors for over nine years,
the QCA Code states that the fact that a director has served for
over nine years does not automatically affect independence. The
Board is satisfied that both James Mullins and Petr Lanin continue
to be free from any business or other relationship which could
interfere with the exercise of their independent judgement. In line
with the QCA Code recommended good practice, both James Mullins and
Petr Lanin will now be subject to annual re-election on an ongoing
basis.
The Board considers that it has the necessary industrial,
financial, public markets and governance experience, possessing the
necessary mix of experience, skills, personal qualities and
capabilities to deliver the strategy of the Company for the benefit
of the shareholders over the medium to long-term (details of which
are set out in the responses to Principle 6 of the QCA Code
below).
The Non-executive Chairman is required to dedicate at least
seven days every month to his duties with the Company. The
Executive Director is expected to dedicate the substantial part of
his time to his duties with the Company. The Non-executive
Directors are normally required to dedicate at least two days a
month to their duties with the Company.
The Board delegates certain responsibilities to its Committees,
so that it can operate efficiently and give an appropriate level of
attention and consideration to relevant matters. The Company has an
Audit Committee, a Remuneration Committee and a Nomination
Committee, all of which operate within a scope and remit defined by
specific terms of reference determined by the Board. The Board and
its Committees are provided with high quality information in a
timely manner to facilitate proper assessment of the matters
requiring a decision or insight.
The Directors have access to the Company's advisers and are able
to obtain advice from other external bodies as and when
required.
Board meetings
There were 11 Board meetings held in 2019. The number of Board
meetings attended by the Directors is set out below.
Board Audit Committee Remuneration Committee
Director meetings meetings meetings
--------------------- --------- ---------------- -----------------------
Yuri Mostovoy 11
Alexander Selegenev 11
Petr Lanin 11 1 1
James Mullins 11 1 1
--------------------- --------- ---------------- -----------------------
Total meetings 11 1 1
--------------------- --------- ---------------- -----------------------
PRINCIPLE 6
ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY
UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES
The Board considers that it has the necessary industrial,
financial, public markets and governance experience, possessing the
necessary mix of experience, skills, personal qualities and
capabilities to deliver the strategy of the Company for the benefit
of the shareholders over the medium to long-term. The Directors'
individual experience is set out below.
Yuri Mostovoy , Non-executive Chairman, was appointed to the
Board in June 2011. Yuri brings over 36 years expertise in
investment banking, software development and business to his role
as Chairman of the Company. Yuri completed his Ph.D. program at the
Moscow Aviation Institute in 1972 and has a M.Sc. in Electrical
Engineering from that same institution. Yuri has held a number of
previous Board positions at a number of companies, and brings this
experience to the Board. He has been involved in a number of
internet start-ups in the areas of medical devices, software
development, and social media.
Yuri Mostovoy is actively involved in the start-up investment
community, especially in some of the tech hubs in the USA, meeting
with technological companies seeking investments on a regular
basis. Through this process of direct contact with investee
companies, Yuri keeps updated on sector developments.
Alexander Selegenev , Executive Director, was appointed to the
Board in December 2010. The Executive Director has the
responsibility of leading the business and the executive management
team, ensuring that strategic and commercial objectives are met.
Alexander has over 20 years of experience in investment banking and
venture capital, with specific expertise in international corporate
finance, equity capital markets and mergers and acquisitions at a
number of City of London firms including Teather & Greenwood
Limited, Daiwa Securities SMBC Europe Limited, and Sumitomo Bank
Limited. Throughout his career he worked on a large number of AIM
IPOs and private equity and merger and acquisition transactions. He
has an MSc (Hons) and a BSc (Hons) in Business from the Peoples'
Friendship University of Russia in Moscow and a Bachelor of
Business Studies (Major in Management) from Monash International
University in Australia. He brings strong experience of working
with public markets. Alexander's public markets and financial
experience make him an ideal conduit to engaging with the Company's
Nomad, investors and make him an effective conduit between the
Board and the Company's other team members.
Alexander Selegenev is an active member of the Company's
investment committee, allowing him to keep very close to
developments and current thinking on new technologies, market
trends, company valuations and fundraising activities.
Alexander Selegenev is a member of the Company's Nomination
Committee.
James Mullins , independent Non-executive Director, was
appointed to the Board in December 2010. He brings to the Company a
strong combination of accountancy, experience of working with
public markets and institutional investors. James, with his
financial background, provides the experience required as chairman
of the audit committee to challenge the business internally and
also the Group auditors. From 2004 to 2007, he was the Finance
Director at Rambler Media and was involved in its successful
admission on AIM and subsequent sale. He has been a director of
numerous funds and companies including the Russian Federation First
Mercantile Fund. This Fund (Class A shares) is listed on the
Bermuda Stock Exchange. He was previously a partner in First
Mercantile and FM Asset Management Ltd. He previously worked for
PricewaterhouseCoopers, Deloitte and British Coal where he was a
national investment manager. He was recently Chairman of the
Scottish Salmon Company, which is listed on the Oslo Bors. James is
a Fellow of the Association of Chartered Certified Accountants and
he holds a Bachelor of Science degree and a Master of Arts degree
from Trinity College, Dublin. James is also an active entrepreneur
and investor.
James Mullins has recently completed an online course with
University of Oxford Said Business School entitled Oxford
Blockchain Strategy Programme.
James Mullins serves as Chairman of the Audit, Remuneration and
Nomination committees.
Petr Lanin , independent Non-executive Director, was appointed
to the Board in December 2010. Petr's experience in investment and
brokerage that he brings to the Company allows him to review and
challenge decisions and opportunities presented both within the
formal arena of the Boardroom and as called upon when needed by
senior management.
He began his career as an equity analyst in the Russian
information agency "RosBusinessConsulting" ("RBC") in 1995. Between
1996-2000 he served as chief of the share department in
Makprombank. Between 2000 and 2006 he held the position of general
director of the investment company "Maxwell Capital". Following his
appointment as general director of "Maxwell Asset Management" in
2003, Mr. Lanin was key in the establishment and management of many
investment funds. He was also one of the managing directors of
venture capital fund "Maxwell Biotech" which was a closed mutual
fund set up and operated by Maxwell Asset Management. In 2008,
Maxwell Asset Management established a UK FSA registered subsidiary
in which Petr Lanin held a controlled function. At present, Petr is
a chief of the Purchases and Supply Department in Federal State
Organisation "Clinical hospital #1". Petr holds an MBA degree in
finance and credit from the Plekhanov Russian Academy of
Economics.
Petr Lanin is a member of the Company's Audit and Remuneration
Committees.
PRINCIPLE 7
EVALUATE BOARD PERFORMANCE BASED ON CLEAR AND RELEVANT
OBJECTIVES, SEEKING CONTINUOUS IMPROVEMENT
The Company conducts evaluation of the effectiveness of its
Board and committees and that of the Executive and Non-executive
Directors' performance in accordance with the QCA Code. The results
of such reviews are used to determine whether any alterations are
needed or whether any additional training would be beneficial.
After considering different alternatives the Board made the
decision to undertake the evaluations internally.
The second such formal evaluation for the year ended December
2019 started in January 2020 and concluded in March 2020. The
previous such evaluation had been for the year ended December 2018,
which concluded in March 2019. Compared to the previous year, the
responses to the various questionnaires that formed the evaluation
showed similar and positive results.
The evaluations involved both a numeric and discursive
self-assessment by each Board member, in response to a
questionnaire, on the role and functioning of the Board and its
members and Committees. Responses were collated and fed back to the
Board at its meeting held in April 2020.
In general, the responses found the Board, its members and
Committees to be operating effectively. We provide further
information below on the various evaluations that took place and
their outcomes.
Board effectiveness
The Board effectiveness evaluation involved the completion of a
detailed questionnaire by Board directors. The following items and
their respective criteria were assessed as a measure of
effectiveness at Board level, whereby all Board members were asked
to provide a rating (on a scale of 1 - 5). The evaluation addressed
the following items:
-- Board composition - Evaluating the Board's right balance of
skills, knowledge and experience to govern the Company
effectively.
-- Board engagement - How timely is the Board's engagement with
its internal and external stakeholders
-- Governance structure - Is the Board's Committee structure
clear and providing members with assurance to discharge their
duties effectively.
-- Risk management - How well is the Board addressing the key
business risks and adhering to internal controls;
-- Board agenda and forward plan - Is the Board's meeting agenda
and forward plan ensuring that members are focusing on the right
areas at the right time.
-- Director's self-assessment of awareness of current issues faced by the Company;
-- Board reporting - How comprehensive, accurate, easy to
understand, timely and appropriate is the information received by
Board members
-- Board dynamics - How effectively do Board members operate as
a team, striking the right balance between trust and challenge.
-- Personal development - how well are development needs identified and satisfy requirements
-- Chair's leadership - How effective is the Chair as a leader of the Board.
-- Performance evaluation - Are the Board members continually
improving as a group and as individuals.
-- Succession planning for Board members - How robust is succession planning
The Board effectiveness evaluation concluded that the Board was
operating effectively.
Audit Committee effectiveness
As part of the Audit Committee evaluation exercise, the two
members of the Audit Committee completed a self-assessment
questionnaire. Each member was asked to rate (on a scale of 1 - 5)
the extent to which the Audit Committee is properly constituted,
with regard to the knowledge, behaviours and processes relevant to
the effective functioning of the Audit Committee. The evaluation
concluded the committee was functioning effectively. The evaluation
identified some minor improvements to be made regarding the number
of meetings as well as reviewing the terms of reference on an
annual basis. These have now been incorporated into the Audit
Committee planning timetable for 2020.
Remuneration committee effectiveness
As part of the Remuneration Committee evaluation, the two
members of the Remuneration Committee completed a self-assessment
questionnaire. Each member was asked to rate (on a scale of 1 - 5)
the extent to which the Remuneration Committee is properly
constituted, with regard to the knowledge, behaviours and processes
relevant to the correct functioning of the Remuneration Committee.
The evaluation concluded the committee was functioning
effectively.
Nomination committee effectiveness
The Nomination Committee did not convene during the financial
year ended 31 December 2019 as there were no new Board or senior
management appointments during the year.
By way of evaluation of succession planning, all Board members
were asked to respond to a questionnaire which reviewed succession
planning and the processes by which the Company determines board
and other senior appointments. The evaluation concluded that the
processes in place for succession planning are adequate in view of
the size and scope of operations of the Company.
The Nomination committee works closely with the Board to
identify the skills, experience, personal qualities and
capabilities required for any next stages in the Company's
development, linking the Company's strategy to future changes on
the Board.
Individual effectiveness
The individual effectiveness evaluation involved the completion
of a detailed questionnaire. The following items and their
respective criteria were assessed as a measure of effectiveness at
the individual level, whereby all Board members were asked to
provide a rating (on a scale of 1 - 5). The evaluation concluded
that all Board members were operating effectively. The evaluation
addressed the following items:
-- Relationships with the Board of directors and major shareholders
-- Knowledge of the Company's business as it continues to evolve
-- Active engagement in robust discussions during and between board meetings
-- Personal accountability for promoting the success of the Company
-- An open and questioning approach to reviewing risk in the organisation
-- Strategic planning, financial management, people management
and relationships, and conduct of business
-- Assessing the time commitment required from each director
-- Development, training or mentoring needs of individual directors
The Board reviews on an ongoing basis the human resource needs
of the Company and the expected availability of its directors,
employees and consultants. The review seeks to identify any
potential changes in the make-up of the Board and senior
management, in order to allow sufficient planning to appoint a
replacement or other suitable arrangements.
PRINCIPLE 8
PROMOTE A CORPORATE CULTURE THAT IS BASED ON ETHICAL VALUES AND
BEHAVIOURS
The Board not only sets expectations for the business but works
towards ensuring that strong values are set and carried out by the
Directors across the business. The Board places significant
importance on the promotion of ethical values and good behaviour
within the Company and takes ultimate responsibility for ensuring
that these are promoted and maintained throughout the organisation
and that they guide the Company's business objectives and strategy.
The Board ensures sound ethical practices and behaviours are
deployed at Company board meetings.
The Company's corporate culture is based on the three values of
transparency, innovation and continuous improvement. These three
values support the Company's objectives, strategy and business
model. These are explained in more detail in the Chairman's
corporate governance statement, which reflects how the Company's
corporate culture is consistent with the Company's objectives,
strategy and business model.
The Board has very regular interaction with Company employees,
thereby ensuring that ethical values and behaviours are recognised
and respected. Given the size of the Company, the Board believes
this is the most efficient way of ensuring that a good corporate
culture is maintained, which the Board deems to be good and
healthy.
The Company's approach to governance, and how that culture is
consistent with both the Company's objectives and the creation of
long-term stakeholder value, is set out in the Chairman's statement
on corporate governance at the start of this document.
PRINCIPLE 9
MAINTAIN GOVERNANCE STRUCTURES AND PROCESSES THAT ARE FIT FOR
PURPOSE AND SUPPORT GOOD DECISION-MAKING BY THE BOARD
Yuri Mostovoy, as Chairman, is responsible for leading an
effective Board, fostering a good corporate governance culture and
ensuring appropriate strategic focus and direction.
Alexander Selegenev, as Executive Director, has overall
responsibility for managing the group's business and promoting,
protecting and developing the investment business of the Company.
Alexander also has active responsibility for the implementation of
and adherence to the financial reporting procedures adopted by the
Company and the Company's financial reporting obligations under the
AIM Rules.
The Board's committees
The Board is assisted by various standing committees which
report regularly to the Board. The membership of these committees
is regularly reviewed by the Board. When considering committee
membership and chairmanship, the Board aims to ensure that undue
reliance is not placed on particular Directors. The terms of
reference of the Audit Committee, Remuneration Committee and
Nomination Committee provide that no one other than the particular
committee chairman and members may attend a meeting unless invited
to attend by the relevant committee.
Details of the committees of the Board are set out below.
Audit Committee
The Audit Committee currently comprises James Mullins and Petr
Lanin being non-executive members of the Board, with James Mullins
appointed as chairman. The Audit Committee should meet at least
twice a year. The committee is responsible for the functions
recommended by the QCA Code including:
-- Review of the annual financial statements and interim reports
prior to approval, focusing on changes in accounting policies and
practices, major judgemental areas, significant audit adjustments,
going concern and compliance with accounting standards, AIM and
legal requirements;
-- Receive and consider reports on internal financial controls,
including reports from the auditors and report their findings to
the Board;
-- Consider the appointment of the auditors and their
remuneration including the review and monitoring of independence
and objectivity;
-- Meet with the auditors to discuss the scope of their audit,
issues arising from their work and any matters the auditors may
wish to raise;
-- Develop and implement policy on the engagement of the
external auditor to supply non-audit services; and
-- Review the Company's corporate review procedures and any
statement on internal control prior to endorsement by the
Board.
Remuneration Committee
The Remuneration Committee currently comprises James Mullins and
Petr Lanin, with James Mullins appointed as chairman. The committee
has the following key duties:
-- Reviewing and recommending the emoluments, pension
entitlements and other benefits of any Executive Directors and
other senior executives; and
-- Reviewing the operation of any share option schemes and/or
bonus plans implemented by the Company and the granting of options
and/or bonus awards under such schemes.
Nomination Committee
The Company has established a Nomination Committee, which
considers the appointment of directors to the Company's Board and
makes recommendations in this respect. The Nomination Committee
currently comprises James Mullins and Alexander Selegenev, with
James Mullins appointed as Chairman.
Matters reserved for the Board
The Board of Directors of the Company meets at least four times
per year, or more often if required. The matters reserved for the
attention of the Board include inter alia:
-- The preparation and approval of the financial statements and
interim reports, together with the approval of dividends,
significant changes in accounting policies and other accounting
issues;
-- Board membership and powers, including the appointment and
removal of Board members, and determining the terms of reference of
the Board and establishing and maintaining the Company's overall
control framework;
-- Approval of major communications with shareholders, including
any shareholder circulars and financial results required to be
announced pursuant to the AIM Rules or the Market Abuse
Regulation;
-- Senior management and Board appointments and remuneration,
contracts, approval of bonus plans, and grant of share options;
-- Financial matters including the approval of the budget and
financial plans, and changes to the Company's capital structure,
business strategy and investing policy (subject to shareholder
approval); and
-- Other matters including regulatory and legal compliance.
Share dealings
The Company has adopted a model code for share dealings in its
ordinary shares which is appropriate for an AIM company, including
compliance with Rule 21 of the AIM Rules for Companies relating to
Directors and employees' dealings in the Company's shares. Jersey
law contains no statutory pre-emption rights on the allotment and
issue by the Company of equity securities (being shares in the
Company, or rights to subscribe for, or to convert securities into,
such shares). However, the Company's articles of association
contain certain provisions as to Directors' authority to issue
equity securities and pre-emption rights on issues of equity
securities by the Company, further details of which are set out in
paragraphs 8 and 9 of Part 3 of the Company's AIM Admission
Document which can be found on the Company's website.
As the Company grows, the directors will ensure that the
governance framework remains in place to support the development of
the business.
PRINCIPLE 10
COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY
MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS
The Company communicates with shareholders through the annual
report and accounts, regulatory announcements, the annual general
meeting and one-to-one meetings with large existing shareholders or
potential investors. A range of corporate information (including
all Company announcements and presentations) is also available on
the Company's website. In addition, the Company seeks to maintain
dialogue with shareholders through the organisation of shareholder
events, and employee stakeholders are regularly updated on the
development of the Company and its performance.
Audit Committee report
The Company has established an audit committee, which comprises
James Mullins (Chairman) and Petr Lanin. The audit committee's main
functions include, inter alia, reviewing and monitoring internal
financial control systems and risk management systems on which the
Company is reliant, considering annual and interim accounts and
audit reports, making recommendations to the Board in relation to
the appointment and remuneration of the Company's auditors and
monitoring and reviewing annually their independence, objectivity,
effectiveness and qualifications.
The Audit Committee met formally once during 2019 to formally
approve the full year report and accounts for the year ended 31
December 2018.
Remuneration committee report
The Company has established a remuneration committee, which
comprises James Mullins (Chairman) and Petr Lanin. The remuneration
committee met on one occasion during 2019, to discuss and approve
the final bonus allocations for the fourth year of the Company's
Bonus Plan ended 30 June 2019.
The Company seeks to publicly disclose the outcomes of all
shareholder votes in a clear and transparent manner, although
voting decisions (including votes withheld or abstentions) are not
posted on the Company's website or contained in the announcement
released via RNS. The outcomes of all shareholder votes are
publicly notified to the market via RNS and are available for
review in the Company's regulatory announcements section of its AIM
Rule 26 website.
If a significant proportion of independent votes were to be cast
against a resolution at any general meeting, the Board's policy
would be to engage with the shareholders concerned in order to
understand the reasons behind the voting results. Following this
process, the Board would make an appropriate public statement
regarding any different action it has taken, or will take, as a
result of the vote.
The Company's financial reports for the last five years can be
found on the Investor Relations sections of the TMT Investments Plc
website .
Notices of General Meetings of the Company for the last five
years can be found on the Investor Relations sections of the TMT
Investments Plc website .
All of the Company's RNS announcements, including those
confirming voting results, can be found on the Investor Relations
sections of the TMT Investments Plc website .
DIRECTORS' REPORT
FOR THE YEARED 31 DECEMBER 2019
The Directors present their report and audited financial
statements of the Company for the year ended 31 December 2019.
Principal activity and review of the business
TMT Investments plc ("TMT Investments" or the "Company") was
incorporated under the laws of Jersey. The Company has been
established for the purpose of making investments in the TMT sector
where the Directors believe there is a potential for growth and the
creation of shareholder value. The Company primarily targets
companies operating in markets that the Directors believe have
strong growth potential and having the potential to become
multinational businesses. The Company can invest in any region of
the world.
Results and dividends
The gain for the year amounted to US$18,389,511 which includes a
profit on changes in fair value of financial assets at FVPL ("Fair
Value through profit and loss") of US$21,275,927.
Further information on the Company's results and financial
position is included in the financial statements.
Company listing
TMT is traded on the AIM market ("AIM") of the London Stock
Exchange. The Company's ticker is TMT. Information required by AIM
Rule 26 is available in the 'Investor Relations' section of the
Company's website at www.tmtinvestments.com .
Changes in share capital
The Company has one class of ordinary share that carries no
right to fixed income, and each share carries the right to one vote
at general meetings of the Company. As at 31 December 2019 and the
date of this report, the Company's issued share capital consists of
29,185,831 ordinary shares of no par value each in the Company.
Substantial shareholdings
The Directors are aware of the following shareholdings of 3% or
more of the issued share capital of the Company as of 14 April
2020.
Shareholders Number of ordinary % of issued
shares ordinary share
capital
Nelli Morgulchik (via Macmillan Trading
Company Limited) 7,031,874 24.09%
German Kaplun (via Ramify Consulting
Corp) 5,348,980 18.33%
Andrey Kareev (via Wissey Trade &
Invest Ltd) 5,000,000 17.13%
Nika Kirpichenko (via Eclectic Capital
Limited) 2,800,000 9.59%
Zaur Ganiev 2,443,810 8.37%
Dmitry Kirpichenko (via Menostar Holdings
Limited) 1,790,000 6.13%
Others 4,771,167 16.35%
Total 29,185,831 100.00%
Concert Party
A concert party, as defined in the City Code on Takeovers and
Mergers (the "Code"), currently exists, consisting of the following
shareholders:
Shareholder (Legal holder / Beneficial No. of ordinary % of issued
holder) shares share capital
Macmillan Trading Company Limited
Nelli Morgulchik (Adult daughter of
Alexander Morgulchik, TMT's Head of
Business Development) 7,031,874 24.09%
Ramify Consulting Corp.
German Kaplun (TMT's Head of Strategy) 5,348,980 18.33%
Wissey Trade & Invest Ltd ("Wissey")
Andrey Kareev 5,000,000 17.13%
Eclectic Capital Limited ("Eclectic")(1)
Nika Kirpichenko 2,800,000 9.59%
Menostar Holdings Limited ("Menostar")(1)
Dmitry Kirpichenko 1,790,000 6.13%
Natalia Inyutina (Adult daughter of
Artemii Iniutin) 727,156 2.49%
Vlada Kaplun (Adult Daughter of German
Kaplun) 363,578 1.25%
Marina Kedrova (Adult Daughter of German
Kaplun) 363,578 1.25%
Artemii Iniutin (TMT's Head of Investments)(2) - -
Total 23,425,166 80.26%
Notes:
(1) The majority of the ordinary shares held by Eclectic were
previously held by Menostar, who invested in the Company at the
time of its Admission. As announced by the Company on 22 June 2016,
the Company was notified that Menostar no longer had an interest in
the Company and that Eclectic was interested in 4,650,000 ordinary
shares. As announced on 17 October 2019, Eclectic notified the
Company that it had sold ordinary shares such that it interested in
2,800,000 ordinary shares and Menostar notified the Company that it
had acquired 1,790,000 ordinary shares. The beneficial owner of
Eclectic is Nika Kirpichenko who is the wife of Dmitry Kirpichenko,
the beneficial owner of Menostar. Wissey and Menostar both invested
in the Company on its Admission and, along with Eclectic, have
invested in and/or been otherwise involved with other business
ventures associated with the two founders of the Company Alexander
Morgulchik and German Kaplun (the "Founders").
(2) Artemii Iniutin also has a relationship with the Founders,
having invested in and/or been otherwise involved with other
business ventures associated with them. Whilst Mr Iniutin does not
currently hold any ordinary shares, he has in the past held
ordinary shares and, in the future, may acquire an interest in
ordinary shares. Mr Iniutin's name is also transliterated to Artyom
Inyutin, and has appeared as such in previous Company announcements
and other public disclosures.
Since September 2013, when the Company became subject to the
Code, the concert party has been interested in, in aggregate, more
than 50% of the Company's issued share capital at all times.
The Company will update this disclosure in future annual
financial reports and, if relevant, via RNS announcements.
Directors
During the financial year the following Directors held
office:
Yuri Mostovoy Non-executive Chairman
Alexander Selegenev Executive Director
James Joseph Mullins Independent Non-executive Director
Petr Lanin Independent Non-executive Director
The Directors' fees and bonuses for 2019 were as follows:
Director Directors' fees Bonuses
--------------------- ----------------- -----------
Yuri Mostovoy US$50,000 US$130,500
Alexander Selegenev US$100,000 US$381,485
James Joseph Mullins US$25,547 -
Petr Lanin US$10,000 -
--------------------- ----------------- -----------
Subsequent events post the period end
In February 2020, the Company invested US$400,000 in ClassTag,
Inc., a parent-teacher communication platform currently connecting
over 2 million families across 25,000 schools ( www.classtag.com
).
In April 2020, the Company invested GBP150,000 in 3S Money Club
Limited, an online banking service focusing on international trade
( www.3s.money ).
In the year to date, the global economy was affected by the
COVID-19 pandemic and related market volatility. Whilst the
Company's operations and liquidity position were not directly
impacted, the principal activity of the Company was naturally
affected through the impact on and therefore potential performance
of the Company's investee companies. The current and potential
near-term impact of these developments on the Company is discussed
in the Executive Director's statement.
Statement of Directors' responsibilities in respect of the
annual report and the financial statements
The Directors are responsible for preparing the Annual Report
and Accounts in accordance with applicable law and International
Financial Reporting Standards ("IFRSs") as adopted by the European
Union.
The Companies (Jersey) Law 1991 (as amended) ("Companies Law")
requires the Directors to prepare financial statements for each
financial year. The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that its financial statements comply with the Companies Law.
They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and
to prevent and detect fraud and other irregularities.
The Directors are responsible for the preparation of the
Directors' report and corporate governance statement. The Directors
are responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website.
Legislation in Jersey governing the preparation and dissemination
of financial statements may differ from legislation in other
jurisdictions.
The Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Company and of the profit or loss for that
period. In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable IFRSs as adopted by the European
Union ("EU") have been followed, subject to any material departures
disclosed and explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
Directors' responsibility statement
Each of the Directors, whose names are listed in the Directors
section above confirm that, to the best of each person's knowledge
and belief:
-- the financial statements, prepared in accordance with IFRSs
as adopted by the EU, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company;
and
-- the Directors' report contained in the annual report includes
a true and fair review of the development and performance of the
business and the position of the Company.
Going concern
The Company's business activities together with the factors
which may impact its activities are described in the relevant
sections above. The financial position of the Company is described
in the financial statements and notes to the financial
statements.
The Directors have a reasonable expectation that the Company
will have adequate cash resources to continue in operational
existence for the foreseeable future, and for at least one year
from the date of approval of these financial statements and they
have therefore adopted the going concern basis in preparing the
financial statements.
Auditors
Each of the persons who is a Director at the date of approval of
this annual report confirms that:
-- so far as the Directors are aware, there is no relevant audit
information of which the Company's auditors are unaware; and
-- the Directors have taken steps that they ought to have taken
to make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
On behalf of the Board of Directors
Alexander Selegenev
Executive Director
15 April 2020
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF TMT INVESTMENTS PLC
FOR THE YEARED 31 DECEMBER 2019
Opinion
We have audited the financial statements of TMT Investments plc
(the 'company') for the year ended 31 December 2019, which comprise
the Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Cash Flows, the Statement of Changes in
Equity and the notes to the financial statements, including a
summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion, the financial statements:
-- give a true and fair view of the state of the company's
affairs as at 31 December 2019 and of the company's profit for the
year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the European Union; and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the company's ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months
from the date when the financial statements are authorised for
issue.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Our assessment of risks of material misstatements
We identified the following risks of material misstatement that
we believe had the greatest impact on our overall audit strategy
and scope, the allocation of resources in the audit, and directing
the efforts of the team. This is not a complete list of all risks
identified by our audit.
Key audit matter How our audit addressed the key audit
matter
Management override of controls
Management override of controls We reviewed journals and cash transactions
is deemed to be a significant to identify any unusual or exceptional
risk in accordance with ISAs transactions.
(UK) and presents the risk that We investigated and tested a sample
management or those charged with of items to ensure that amounts paid
governance could override the during the year related to business
internal controls of the company expenses and that transactions were
in preparing the financial statements appropriate.
resulting in a material misstatement. We also considered areas of the financial
statements that contain estimates
and are therefore open to judgement
and assessed whether there was any
management bias in such areas.
On the basis of our testing performed,
we are satisfied that there were
no instances of management override
of controls.
Valuation of investments
The company is investing in pre-growth We obtained a copy of the directors'
companies in a very competitive assessment of the investment valuations.
industry. Given the nature of We reviewed the valuations of all
the companies being invested the investments at the year-end to
in, it is not likely that all ensure that these were based on an
will be a success. appropriate valuation method to the
These investments are carried underlying instrument and that the
at fair value in the financial assumptions used in the valuation
statements. There is a risk that were appropriate and had been correctly
fair value has not been appropriately applied. This included the review
applied for all of the investments of the method of valuation and agreeing
and therefore that the value this to the International Private
of investments held at year-end Equity and Venture Capital Valuation
may be misstated. Guideline (IPEV).
We obtained supporting documentation
for sales and purchases of investments
during the year and confirmed the
validity of the transactions and
that they had been correctly treated
in the financial statements.
The results of our testing did not
indicate any material misstatement
in the investment valuations included
in the financial statements.
Our application of materiality
The scope and focus of our audit was influenced by our
assessment and application of materiality. We apply the concept of
materiality both in planning and performing our audit, and in
evaluating the effect of misstatements on our audit and on the
financial statements.
We define financial statement materiality as the magnitude by
which misstatements, including omissions, could influence the
economic decisions taken on the basis of the financial statements
by reasonable users.
We also determine a level of performance materiality which we
use to determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole.
Overall materiality: We determined materiality for the financial
statements as a whole to be $1,750,000.
For the Statement of Comprehensive Income, we established a
materiality level of $350,000
How we determined it: Based on the main key indicators, being
investments held at 31 December 2019 and profits before tax.
Rationale for benchmarks applied: We believe that these
benchmarks are appropriate due to the status of the company and the
nature of its activities.
Performance materiality: On the basis of our risk assessment,
together with our assessment of the company's control environment,
our judgement is that performance materiality for the financial
statements should be 75% of materiality, amounting to
$1,312,500.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgements, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed
sufficient work to be able to give an opinion on the financial
statements as a whole, taking into account an understanding of the
structure of the company, its activities, the accounting processes
and controls, and the industry in which they operate. Our planned
audit testing was directed accordingly and was focused on areas
where we assessed there to be the highest risk of material
misstatement. During the audit we reassessed and re-evaluated audit
risks and tailored our approach accordingly.
The audit testing included substantive testing on significant
transactions, balances and disclosures, the extent of which was
based on various factors such as our overall assessment of the
control environment, the effectiveness of controls and the
management of specific risk.
We communicated with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant findings, including any significant deficiencies in
internal control that we identify during the audit.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditors'
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information.
If, based on the work we have performed, we conclude that there
is a material misstatement of this other information; we are
required to report that fact. We have nothing to report in this
regard.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in
relation to which the Companies (Jersey) Law 1991 requires us to
report to you if, in our opinion:
-- adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors'
responsibilities statement above, the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal controls
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at www.frc.org.uk/auditorsresponsibilities . This
description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with Article 113A of the Companies (Jersey) Law 1991.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of UHY Hacker Young
Chartered Accountants
Statutory Auditor
Quadrant House
4 Thomas More Square
London
E1W 1YW
15 April 2020
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the
For the year year ended
ended 31/12/2019 31/12/2018
Notes USD USD
Gains on investments 3 21,275,927 22,168,230
------------------------------------------ ------ ------------------ ------------
21,275,927 22,168,230
Expenses
Bonus scheme payment charge 6 (2,007,694) (1,530,251)
Administrative expenses 5 (1,174,466) (1,200,045)
Other operating expenses (13,079) -
------------------------------------------ ------ ------------------ ------------
Operating gain 18,080,688 19,437,934
Net finance income 7 308,823 54,558
------------------------------------------ ------ ------------------ ------------
Gain before taxation 18,389,511 19,492,492
Taxation 8 - -
------------------------------------------ ------ ------------------ ------------
Gain attributable to equity shareholders 18,389,511 19,492,492
Total comprehensive income for the year 18,389,511 19,492,492
Gain per share
Basic and diluted gain per share (cents
per share) 9 63.01 67.58
------------------------------------------ ------ ------------------ ------------
Statement of Financial Position
At 31 December At 31 December
2019 2018
Notes USD USD
Non-current assets
Financial assets at FVPL 10 91,207,190 64,890,144
Total non-current assets 91,207,190 64,890,144
Current assets
Trade and other receivables 11 711,957 23,804,395
Cash and cash equivalents 12 11,700,074 3,270,088
Total current assets 12,412,031 27,074,483
Total assets 103,619,221 91,964,627
Current liabilities
Trade and other payables 13 805,191 1,702,942
Total current liabilities 805,191 1,702,942
----------------------------- ------ ------------------------ ----------- --------------------
Total liabilities 805,191 1,702,942
----------------------------- ------ ------------------------ ----------- --------------------
Net assets 102,814,030 90,261,685
----------------------------- ------ ------------------------ ----------- --------------------
Equity
Share capital 14 34,790,174 34,790,174
Retained profit 68,023,856 55,471,511
Total equity 102,814,030 90,261,685
----------------------------- ------ ------------------------ ----------- --------------------
The financial statements were approved by the Board of Directors
on 15 April 2020 and were signed on its behalf by:
Alexander Selegenev
Executive Director
Statement of Cash Flows
For the For the
year year
ended ended
31/12/2019 31/12/2018
Notes USD USD
Operating activities
Operating gain 18,080,688 19,437,934
------------------------------------------------- ----- ------------ ------------
Adjustments for non-cash items:
Changes in fair value of financial assets
at FVPL 3 (21,269,830) 1,293,378
Amortised costs of convertible notes
receivable 3 - 651
Write-down of loans to portfolio companies 7 - (27,240)
(3,189,142) 20,704,723
------------------------------------------------- ----- ------------ ------------
Changes in working capital:
Decrease/(increase) in trade and other
receivables 11 23,092,438 (23,733,735)
(Increase)/decrease in trade and other
payables 13 (897,751) 635,952
Net cash generated from/(used in) operating
activities 19,005,545 (2,393,060)
------------------------------------------------- ----- ------------ ------------
Investing activities
Interest received 7 275,741 81,798
Purchase of financial assets at FVPL 10 (8,581,128) (934,200)
Proceeds from sale of financial assets at
FVPL 10 3,533,912 2,193,194
Other financial income 7 33,082 -
------------------------------------------------- ----- ------------ ------------
Net cash (used in)/generated from investing
activities (4,738,393) 1,340,792
------------------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from issue of shares - 3,336,664
Dividends paid (5,837,166) -
Net cash (used in)/generated from financing
activities (5,837,166) 3,336,664
------------------------------------------------- ----- ------------ ------------
Increase in cash and cash equivalents 8,429,986 2,284,396
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the beginning
of the year 3,270,088 985,692
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the end of
the year 12 11,700,074 3,270,088
------------------------------------------------- ----- ------------ ------------
Statement of Changes in Equity
For the year ended 31 December 2018 and for the year ended 31
December 2019, USD
Share capital Retained losses Total
Note USD USD USD
Balance at 31 December 2017 31,453,510 35,979,019 67,432,529
--------------------------------------------------------------- -------------- ---------------- -------------
Gain for the year - 19,492,492 19,492,492
Total comprehensive income for the year - 19,492,492 19,492,492
Transactions with owners in their capacity as owners:
Issue of shares 3,336,664 - 3,336,664
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
--------------------------------------------------------------- -------------- ---------------- -------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2019
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company
incorporated in Jersey with its registered office at Queensway
House, Hilgrove 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
The principal accounting policies applied by the Company in the
preparation of these financial statements are set out below and
have been applied consistently.
The financial statements have been prepared on a going concern
basis, under the historical cost basis as modified by the fair
value of financial assets at fair value through profit and loss
("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 Going concern
In the year to date, the global economy was affected by the
COVID-19 pandemic and related market volatility. Whilst the
Company's operations and liquidity position were not directly
impacted, the principal activity of the Company was naturally
affected through the impact on and therefore potential performance
of the Company's investee companies. Accordingly, the potential
negative effect of COVID-19 and related market volatility, while
potentially affecting the future fair value of the Company's
investments, does not impact the Company's liquidity position.
The Directors confirm that, after giving due consideration to
the financial position and expected cash flows of the Company; they
have a reasonable expectation that the Company will have adequate
cash resources to continue in operational existence for the
foreseeable future, and for at least one year from the date of
approval of these financial statements and they have therefore
adopted the going concern basis in preparing the financial
statements.
2.3 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
who is responsible for allocating resources and assessing
performance of the operating segments and which has been identified
as the Board that make strategic decisions. For the purposes of
IFRS 8 'Operating Segments' the Company currently has one segment,
being 'Investing in the TMT sector'.
Even though the Company only invests in the TMT sector, there
are still geographical disclosures that need to be made to comply
with IFRS 8 'Operating Segments'.
The Company analyses non-current financial assets according to
the geographical location of the investment (see note 4).
2.4 Foreign currency translation
(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 Average
As at 31.12.2019 rate, 2019
----------------- ----------------- ------------
British pounds,
GBP 1.3113 1.2769
Euro, EUR 1.1202 1.1165
--------------------- ----------------- ------------
2.5 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand,
deposits held at call with banks, bank overdrafts and other
short-term highly liquid investments with maturities of three
months or less from the date of acquisition.
2.6 Financial instruments
Recognition and measurement
The Company recognises financial assets and liabilities when it
becomes party to the contractual provisions of the instrument.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are
transferred.
A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Financial assets are initially measured at fair value adjusted
for transaction costs (where applicable).
Financial assets are classified into the following
categories:
-- amortised cost;
-- fair value through profit or loss (FVPL); and
-- fair value through other comprehensive income (FVOCI).
In the periods presented, the Company does not have any
financial assets categorised as FVOCI.
The classification is determined by both:
-- the entity's business model for managing the financial asset; and
-- the contractual cash flow characteristics of the financial asset.
Subsequent measurement
FVPL
The Company manages its investments with a view to profiting
from the receipt of dividends and changes in fair value of equity
investments.
Financial assets of the Company comprise of unlisted equity
investments, convertible promissory notes and SAFEs. All the
financial assets are not for trading and are classified as
financial assets at FVPL. Directly attributable transaction costs
are recognised in profit or loss as incurred.
Financial assets at fair value through profit or loss are
measured at fair value, and changes therein are recognised in
profit or loss.
When measuring the fair value of a financial instrument, the
Company uses relevant transactions during the year or shortly after
the year end, which gives an indication of fair value and considers
other valuation methods to provide evidence of value. The "price of
recent investment" methodology is used mainly for venture capital
investments, and the fair value is derived by reference to the most
recent equity financing round or sizeable partial disposal. Fair
value change is only recognised if that round involved a new
external investor. From time to time, the Company may assess the
fair value in the absence of a relevant independent equity
transaction by relying on other market observable data and
valuation techniques.
Fair values are categorised into different levels in a fair
value hierarchy based on the inputs used in the valuation
techniques as follows:
Level 1: The fair value of financial instruments traded in
active markets is based on quoted market prices at the end of the
reporting period. The quoted market price used for financial assets
held by the Company is the current bid price. These instruments are
included in level 1.
Level 2: The fair value of financial instruments that are not
traded in an active market is determined using valuation techniques
which maximise the use of observable market data and rely as little
as possible on entity-specific estimates. Specific valuation
techniques used to value financial instruments include the use of
quoted market prices or dealer quotes for similar instruments.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in level
3.
Financial assets that qualify as an associate, as 20% or more of
the voting rights are held by the company, are exempt from IAS 28
'Investments in Associates', as TMT is a venture capital
organisation. Such investments are therefore treated as financial
assets at FVPL.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions:
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash flows;
and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial. The Company's cash and
cash equivalents, trade and other receivables fall into this
category of financial instruments.
Impairment of Financial Assets
In relation to the impairment of financial assets, IFRS 9
requires an expected credit loss model to be applied. The expected
credit loss model requires the Company to account for expected
credit losses and changes in those expected credit losses at each
reporting date to reflect changes in credit risk since initial
recognition of the financial assets.
IFRS 9 requires the Company to recognise a loss allowance for
expected credit losses on receivables.
In particular, IFRS 9 requires the Company to measure the loss
allowance for a financial instrument at an amount equal to the
lifetime expected credit losses (ECL) if the credit risk on that
financial instrument has increased significantly since initial
recognition, or if the financial instrument is a purchased or
originated credit -- impaired financial asset. However, if the
credit risk on a financial instrument has not increased
significantly since initial recognition, the Company is required to
measure the loss allowance for that financial instrument at an
amount equal to 12 months ECL.
Income
Interest income from convertible notes receivable is recognised
as it accrues by reference to the principal outstanding and the
effective interest rate applicable, which is the rate that exactly
discounts the estimated future cash flows through the expected life
of the financial asset to the asset's carrying value.
2.7 Net finance income
Net finance income comprises interest income on deposits and
dividends from portfolio companies. Interest income is recognised
as it accrues in the statement of comprehensive income, using the
effective interest method.
2.8 Taxation
Deferred tax is provided in full using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that, at the time of the transaction, affects
neither accounting nor taxable profit or loss. Deferred tax is
determined using tax rates that are expected to apply when the
related deferred tax asset is realised or when the deferred tax
liability is settled. Deferred tax assets are recognised to the
extent that it is probable that future taxable profits will be
available against which the temporary differences can be
utilised.
2.9 Equity instruments
Ordinary shares are classified as equity. Costs directly
attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
2.10 New IFRSs and interpretations
The IASB has issued the following standards and interpretations
which have been endorsed by the European Union to be applied to
financial statements with periods commencing on or after the
following dates:
Effective for period beginning on or after
--------------- ------------------------------------------
IFRS 16 Leases 1 January 2019
------- ------ ------------------------------------------
IFRS 16 sets out requirements for recognising and measuring,
presentation and disclosure of leases. The standard provides a
single lessee accounting model, requiring lessees to recognise
assets and liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value.
As the lease held by the Company is less than 12 months, the
Company has not processed any transition adjustments on adopting
IFRS 16. The company recognises the lease payments associated with
these leases as expenses on a straight-line basis over the lease
term.
2.11 Accounting estimates and judgements
Estimates and judgements need to be regularly evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Company makes estimates and
assumptions concerning the future. The resulting accounting
estimates will, by definition, rarely equal the related actual
results.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
The estimates significant to the financial statements during the
year and at the year-end is the consideration of the fair value of
financial assets at FVPL as set out in the relevant accounting
policies shown above. A number of the financial assets at FVPL held
by the Company are at an early stage of their development. The
Company cannot yet carry out regular reliable fair value estimates
of some of these investments. Future events or transactions
involving the companies invested in may result in more accurate
valuations of their fair values (either upwards or downwards) which
may affect the Company's overall net asset value.
3 Gains on investments
For the year ended 31/12/2019 For the year ended 31/12/2018
USD USD
Gross interest income from convertible notes
receivable 21,698 33,761
Amortised costs of convertible notes receivable - (651)
Net interest income from convertible notes
receivable 21,698 33,110
Gains on changes in fair value of financial assets
at FVPL 21,269,830 22,904,054
Success fee attributable to consultants (15,601) (768,934)
Total net gains on investments 21,275,927 22,168,230
---------------------------------------------------- ------------------------------ ------------------------------
4 Segmental analysis
Geographic information
The Company has investments in the USA, Estonia, the United
Kingdom, BVI, Cyprus and Israel.
Non-current financial assets
As at 31/12/2018
United
USA Israel BVI Estonia Cyprus Kingdom Total
USD USD USD USD USD USD USD
-------------------- ----------- ---------- ---- ----------- ------- --------- -----------
Equity investments 43,321,261 1,870,183 - 17,094,470 - 62,285,914
Convertible
notes & SAFEs 2,370,030 - - 234,200 - 2,604,230
Total 45,691,291 1,870,183 - 17,328,670 - 64,890,144
-------------------- ----------- ---------- ---- ----------- ------- --------- -----------
As at 31/12/2019
United
USA Israel BVI Estonia Cyprus 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 & SAFEs 6,452,735 - - - 650,000 350,000 7,452,735
Total 64,240,341 291,781 779,000 22,642,461 650,000 2,603,607 91,207,190
-------------------- ----------- -------- -------- ----------- -------- ---------- -----------
5 Administrative expenses
Administrative expenses include the following amounts:
For the year ended 31/12/2019 For the year ended 31/12/2018
USD USD
------------------------------- ------------------------------ ------------------------------
Staff expenses (note 6) 648,170 591,741
Professional fees 241,480 303,649
Legal fees 45,732 39,053
Bank and LSE charges 13,620 23,973
Audit fees 26,328 25,881
Accounting fees 15,200 15,200
Rent 94,596 94,596
Other expenses 106,897 96,206
Currency exchange loss (gain) (17,557) 9,746
------------------------------- ------------------------------ ------------------------------
1,174,466 1,200,045
------------------------------- ------------------------------ ------------------------------
6 Staff expenses
For the year ended 31/12/2019 For the year ended 31/12/2018
USD USD
-------------------- ------------------------------ ------------------------------
Directors' fees 185,570 186,261
Wages and salaries 462,600 405,480
648,170 591,741
-------------------- ------------------------------ ------------------------------
Wages and salaries shown above include salaries relating to
2019. Bonus Plan costs are not included in administrative expenses
and are shown separately.
The Bonus Plan payments charge for the year is analysed as
follows:
For the year ended 31/12/2019 For the year ended 31/12/2018
USD USD
------------- ------------------------------ ------------------------------
Directors 511,962 421,307
Other staff 1,495,732 1,108,944
2,007,694 1,530,251
------------- ------------------------------ ------------------------------
The Directors' fees and bonuses for 2019 were as follows:
For the year ended 31/12/2019 For the year ended 31/12/2018
USD USD
---------------------- ------------------------------ ------------------------------
Alexander Selegenev 481,485 399,898
Yuri Mostovoy 180,500 170,980
James Joseph Mullins 25,547 26,690
Petr Lanin 10,000 10,000
---------------------- ------------------------------ ------------------------------
697,532 607,568
---------------------- ------------------------------ ------------------------------
The Directors' fees shown above are all classified as 'short
term employment benefits' under International Accounting Standard
24. The Directors do not receive any pension contributions or other
benefits. The average number of staff employed (excluding
Directors) by the Company during the year was 5 (2018: 5).
Key management personnel of the Company are defined as those
persons having authority and responsibility for the planning,
directing and controlling the activities of the Company, directly
or indirectly. Key management of the Company are therefore
considered to be the Directors of the Company. There were no
transactions with the key management, other than their fees,
bonuses, and reimbursement of business expenses.
7 Net finance income
For the year ended 31/12/2019 For the year ended 31/12/2018
USD USD
-------------------------------------------- ------------------------------ ------------------------------
Interest income 202,224 12,646
Dividends received 73,517 69,152
Write-down of loans to portfolio companies - (27,240)
Other finance income 33,082 -
308,823 54,558
-------------------------------------------- ------------------------------ ------------------------------
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 year ended 31 December 2019 attributable to the
ordinary shareholders of US$18,389,511 (2018: net gain of
US$19,492,492) and the weighted average number of ordinary shares
outstanding calculated as follows:
Gain (Loss) per share For the year ended 31/12/2019 For the year ended 31/12/2018
---------------------------------------------------- ------------------------------ ------------------------------
Basic gain (loss) per share (cents per share) 63.01 67.58
Gain (Loss) attributable to equity holders of the
entity 18,389,511 19,492,492
---------------------------------------------------- ------------------------------ ------------------------------
The weighted average number of ordinary shares outstanding
before and after adjustment for the effects of all dilutive
potential ordinary shares calculated as follows:
(in number of shares weighted and fully diluted For the year ended 31/12/2019 For the year ended 31/12/2018
during the year outstanding)
---------------------------------------------------- ------------------------------ ------------------------------
Weighted average and fully diluted number of shares
in issue
Ordinary shares 29,185,831 28,842,391
29,185,831 28,842,391
---------------------------------------------------- ------------------------------ ------------------------------
The Company does not have any dilutive instruments in issue.
10 Non-current financial assets
At 31 December 2019 At 31 December 2018
Financial assets at FVPL, USD:
Investments in equity shares (i)
- unlisted shares 83,754,455 62,285,914
Convertible notes receivable (ii)
- promissory notes 3,452,735 1,404,230
- SAFEs 4,000,000 1,200,000
----------------------------------- -------------------- --------------------
91,207,190 64,890,144
----------------------------------- -------------------- --------------------
Reconciliation of fair value measurements of non-current
financial assets:
Financial assets at FVPL Total
----------------------------------------------- ------------------------------ -------------
Unlisted Convertible
shares notes & SAFEs
USD USD USD
----------------------------------------------- ------------- --------------- -------------
Balance as at 31 December 2017 57,120,436 9,452,503 66,572,939
------------------------------------------------ ------------- --------------- -------------
Total gains or losses in 2018:
- changes in fair value 22,974,039 (69,985) 22,904,054
Purchases (including consulting & legal fees) 74,053 934,200 1,008,253
Disposal of investment (carrying value) (25,464,451) (130,651) (25,595,102)
Conversion and other movements 7,581,837 (7,581,837) -
------------------------------------------------ ------------- --------------- -------------
Balance as at 31 December 2018 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 31 December 2019 83,754,455 7,452,735 91,207,190
------------------------------------------------ ------------- --------------- -------------
Financial assets at fair value through profit or loss are
measured at fair value, and changes therein are recognised in
profit or loss.
When measuring the fair value of a financial instrument, the
Company uses relevant transactions during the year or shortly after
the year end, which gives an indication of fair value and considers
other valuation methods to provide evidence of value. The "price of
recent investment" methodology is used mainly for venture capital
investments, and the fair value is derived by reference to the most
recent equity financing round or sizeable partial disposal. Fair
value change is only recognised if that round involved a new
external investor. From time to time, the Company may assess the
fair value in the absence of a relevant independent equity
transaction by relying on other market observable data and
valuation techniques.
(i) Equity investments as at 31 December 2019:
Additions Gain/loss
to equity from changes
Value investments Conversions in fair
at during from value of Value
Date of 1 Jan the loan equity at 31 Equity
Investee initial 2019, period, notes, investments, Disposals, Dec 2019, stake
company investment USD USD USD USD USD USD owned
--------------- ------------ ------------ ------------ ------------ ------------- ------------ ----------- -------
Unicell 15.09.2011 980,000 - - (14,271) (965,729) - -
Depositphotos 26.07.2011 10,836,105 - - - - 10,836,105 16.41%
Wanelo 21.11.2011 1,825,596 - - - - 1,825,596 4.69%
Backblaze 24.07.2012 10,533,334 - - 12,668,178 (2,000,003) 21,201,509 11.78%
E2C 15.02.2014 136,781 - - - - 136,781 5.51%
Drippler 01.05.2014 3,260 - - - (3,260) - 0.00%
Remote.it 13.06.2014 791,510 - - 2,233,775 - 3,025,285 1.68%
Le Tote 21.07.2014 1,997,073 - - 752,739 - 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%
Drupe 02.09.2014 595,142 - - (595,142) - - 7.46%
Bolt 15.09.2014 17,094,470 - - 5,038,078 - 22,132,548 1.63%
Pipedrive 30.07.2012 10,257,098 - - - - 10,257,098 2.41%
PandaDoc 11.07.2014 1,233,770 - - 981,348 - 2,215,118 1.65%
The IRApp 16.08.2016 547,972 - - 16,948 (564,920) - 0.00%
FullContact 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 263,878 - - 178,281 - 442,159 2.13%
Vinebox 06.05.2016 450,015 - - - - 450,015 2.41%
19.01.
Hugo 2019 - 200,000 - 579,000 - 779,000 1.94%
MEL Science 25.02.2019 - 1,999,992 - - - 1,999,992 4.45%
Healthy
Health 06.06.2019 - 253,615 - - - 253,615 2.27%
eAgronom 31.08.2018 - 5,833 282,391 - - 288,224 2.13%
Rocket
Games
(Legionfarm) 16.09.2019 - 200,000 - - - 200,000 2.00%
05.12.
Timbeter 2019 - 221,688 - - - 221,688 4.64%
Total 62,285,914 2,881,128 282,391 21,838,934 (3,533,912) 83,754,455
------------ ------------ ------------ ------------- ------------ -----------
(ii) Convertible loan notes as at 31 December 2019:
Additions Gain/loss
to from changes
convertible in fair
Value at note value of
Date of 1 Jan investments equity Value at
Investee initial 2019, during the Conversions, investments, 31 Dec Term, Interest
company investment USD period, USD USD USD 2019, USD years 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%
eAgronom 31.08.2018 234,200 - (282,391) 48,191 - - 3.00%
Accern 21.08.2019 - 1,000,000 - 282,705 1,282,705 - 5.00%
Affise 18.09.2019 - 1,000,000 - - 1,000,000 - 5.00%
------------
Total 1,404,230 2,000,000 (282,391) 330,896 3,452,735
------------------------- ---------- ------------ ------------- ------------- ---------- ----------- ----------
(iii) SAFEs as at 31 December 2019:
Additions Gain/loss
to from changes
convertible in fair
note value of
Date of Value at 1 investments SAFE Value at 31
Investee initial Jan 2019, during the Conversions, investments, Disposals, Dec 2019,
company investment USD period, USD USD USD USD USD
-------------- ------------- ------------ ------------ ------------- ------------- ------------- ------------
Sixa 28.07.2016 900,000 - - (900,000) - -
Spinbackup 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) 16.09.2019 - 1,200,000 - - - 1,200,000
------------
Total 1,200,000 3,700,000 - (900,000) - 4,000,000
----------------------------- ------------ ------------ ------------- ------------- ------------- ------------
11 Trade and other receivables
At 31 December 2019 At 31 December 2018
USD USD
----------------------------------------- -------------------- --------------------
Prepayments 326,648 311,839
Other receivables 264,361 23,401,258
Interest receivable on promissory notes 105,548 89,683
Interest receivable on deposits 15,400 1,615
711,957 23,804,395
----------------------------------------- -------------------- --------------------
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2019 include
cash on hand and in banks and deposits. The effective interest rate
at 31 December 2019 was 2.21%.
Cash and cash equivalents comprise the following:
At 31 December 2019 At 31 December 2018
USD USD
--------------- -------------------- --------------------
Deposits 6,500,000 1,500,000
Bank balances 5,200,074 1,770,088
--------------- -------------------- --------------------
11,700,074 3,270,088
--------------- -------------------- --------------------
The following table represents an analysis of cash and
equivalents by rating agency designation based on Fitch rating or
their equivalent:
At 31 December 2019 At 31 December 2018
USD USD
--------------- -------------------- --------------------
Bank balances
BBB+ rating 5,200,074 1,770,088
--------------- -------------------- --------------------
5,200,074 1,770,088
--------------- -------------------- --------------------
Deposits
BBB+ rating 6,500,000 1,500,000
--------------- -------------------- --------------------
6,500,000 1,500,000
--------------- -------------------- --------------------
Total 11,700,074 3,270,088
--------------- -------------------- --------------------
13 Trade and other payables
At 31 December 2019 At 31 December 2018
USD USD
--------------------------- -------------------- --------------------
Salaries payable - 162,500
Directors' fees payable 15,732 9,183
Bonuses payable 748,626 720,632
Trade payables 11,912 789,265
Other current liabilities 9 100
Accruals 28,912 21,262
--------------------------- -------------------- --------------------
805,191 1,702,942
--------------------------- -------------------- --------------------
14 Share capital
On 31 December 2019 the Company had an authorised share capital
of unlimited ordinary shares of no par value and had issued
ordinary share capital of:
At 31 December 2019 At 31 December 2018
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 Number of shares
----------------------------- -------------------- ----------------------
Balance at 31 December 2018 29,185,831 27,744,962
Issue of ordinary shares - 1,440,869
Balance at 31 December 2019 29,185,831 29,185,831
----------------------------- -------------------- ----------------------
There have been no changes to the Company's ordinary share
capital between the year-end date and the date of approval of these
financial statements.
15 Capital management
The capital structure of the Company consists of equity share
capital, reserves, and retained earnings.
The Board's policy is to maintain a strong capital base so as to
maintain investor and market confidence and to enable the
successful future development of the business.
The Company is not subject to externally imposed capital
requirements.
No changes were made to the objectives, policies and process for
managing capital during the year.
16 Financial risk management and financial instruments
The Company has identified the following risks arising from its
activities and has established policies and procedures to manage
these risks. The Company's principal financial assets are cash and
cash equivalents, investments in equity shares, and convertible
notes receivable.
Credit risk
As at 31 December 2019 the largest exposure to credit risk
related to cash and cash equivalents (US$11,700,074) . The exposure
risk is reduced because the counterparties are banks with high
credit ratings ("BBB+" Liquidity banks) assigned by international
credit rating agencies. The Directors intend to continue to spread
the risk by holding the Company's cash reserves in more than one
financial institution.
(i) Exposure to credit risk
The carrying amount of the following assets represents the
maximum credit exposure. The maximum exposure to credit risk as at
31 December is as follows:
At 31 December 2019 At 31 December 2018
USD USD
-------------------------------------- -------------------- --------------------
Convertible notes receivable & SAFEs 5,970,030 2,604,230
Trade and other receivables 711,957 23,804,395
Cash and cash equivalents 11,700,074 3,270,088
-------------------------------------- -------------------- --------------------
18,382,061 29,678,713
-------------------------------------- -------------------- --------------------
Market risk
The Company's financial assets are classified as financial
assets at FVPL. The measurement of the Company's investments in
equity shares and convertible notes is largely dependent on the
underlying trading performance of the investee companies, but the
valuation and other items in the financial statements can also be
affected by the interest rate and fluctuations in the exchange
rate.
COVID-19 and related market volatility, whilst not directly
affecting the Company's operations and liquidity position, impact
the underlying performance and therefore future fair market values
of the Company's investee companies.
Interest rate risk
Changes in interest rates impact primarily cash and cash
equivalents by changing either their fair value (fixed rate
deposits) or their future cash flows (variable rate deposits).
Management does not have a formal policy of determining how much of
the Company's exposure should be to fixed or variable rates.
As at 31 December 2019, the Company had a cash deposit of
US$6,500,000, earning a variable rate of interest. The Board
monitors the interest rates available in the market to ensure that
returns are maximised.
Foreign currency risk management
The Company is exposed to foreign currency risks on investments
and salary and director remuneration payments that are denominated
in a currency other than the functional currency of the Company.
The currency giving rise to this risk is primarily GBP and EUR. The
exposure to foreign currency risk as at 31 December 2019 was as
follows:
For the year For the For the year For the year
ended 31/12/2019 year ended ended 31/12/2018 ended 31/12/2018
31/12/2019
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 484,295 8,705 182,220 820
Current liabilities
Trade and other payables (291,853) - (139,547) -
------------------------------- ------------------------- ------------ -------------------- ------------------
Net (short) long position 192,442 8,705 42,673 820
------------------------------- ------------------------- ------------ -------------------- ------------------
Net exposure currency 146,757 7,771 33,618 717
------------------------------- ------------------------- ------------ -------------------- ------------------
Net exposure currency
(assuming a 10% movement
in exchange rates) 173,198 7,834 38,406 738
------------------------------- ------------------------- ------------ -------------------- ------------------
Impact on exchange movements
in the statement of
comprehensive income 19,244 870 4,267 82
------------------------------- ------------------------- ------------ -------------------- ------------------
The foreign exchange rates of the USD at 31 December were as
follows:
31/12/2019 31/12/2018
----------------------- ----------- -----------
Currency
British pounds, GBP 1.3113 1.3441
Euro, EUR 1.1202 1.1942
----------------------- ----------- -----------
This analysis assumes that all other variables, in particular
interest rates, remain constant.
Fair value and liquidity risk management
The Company's approach to managing liquidity is to ensure that
it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company.
The Company has low liquidity risk due to maintaining adequate
banking facilities, by continuously monitoring actual cash flows
and by matching the maturity profiles of financial assets and
current liabilities.
As at 31 December 2019, the cash and equivalents of the Company
were US$ 11,700,074 .
The following are the maturities of current liabilities as at 31
December 2019:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
--------------------------- ---------------- ---------------- ---------- ------------------
Directors' fees payable 15,732 15,732 - -
Bonuses payable 748,626 748,626 - -
Trade payables 11,912 11,912 - -
Other current liabilities 9 9 - -
Accruals 28,912 28,912 - -
805,191 805,191 - -
--------------------------- ---------------- ---------------- ---------- ------------------
The following table analyses the fair values of financial
instruments measured at fair value by the level in the fair value
hierarchy as at 31 December 2019:
Level 1 Level 2 Level 3 Total
USD USD USD USD
-------------------------- --------- ----------- -------- -----------
Financial assets
Financial assets at FVPL - 91,207,190 - 91,207,190
91,207,190 91,207,190
------------------------------------ ----------- -------- -----------
17 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.
18 Subsequent events
In February 2020, the Company invested US$400,000 in ClassTag,
Inc., a parent-teacher communication platform currently connecting
over 2 million families across 25,000 schools ( www.classtag.com
).
In April 2020, the Company invested GBP150,000 in 3S Money Club
Limited, an online banking service focusing on international trade
( www.3s.money ).
In the year to date, the global economy has been affected by the
COVID-19 pandemic and related market volatility. Whilst the
Company's operations and liquidity position were not directly
impacted, the principal activity of the Company was naturally
affected through the impact on and therefore potential performance
of the Company's investee companies. The current and potential
near-term impact of these developments on the Company is discussed
in the Executive Director's statement.
19 Control
The Company is not controlled by any one party. Details of
significant shareholders are shown in the Directors' Report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BIGDSSUBDGGU
(END) Dow Jones Newswires
April 16, 2020 02:00 ET (06:00 GMT)
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