Tern PLC (TERN)
Tern PLC: Portfolio Update
28-Jan-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
28 January 2020
Tern Plc ("Tern" or the "Company")
Portfolio Update
Tern Plc (AIM:TERN), the investment company specialising in the Internet of
Things ("IoT"), is pleased to provide an update on the activities of the
Company and its principal portfolio companies following the Company's and
portfolio companies' year end on 31 December 2019.
2019 has been a year of validation for Tern's investment strategy, evidenced
both through the achievement of additional third-party funding in an
investee company and through the implementation of key commercial
initiatives across the portfolio.
On 30 October 2019, Tern announced the completion of a successful Series A
fundraise of GBP4.3 million by FVRVS Limited ("FundamentalVR"). This fundraise
was completed at a valuation which resulted in a 27% uplift on the initial
GBP1.9 million investment made by Tern in FundamentalVR during 2018 and
attracted a syndicate of leading strategic and financial investors. The
fundraise resulted in an increase in the carrying value of Tern's investment
in FundamentalVR but, more significantly, is expected to facilitate
significant commercial progress by FundamentalVR in 2020.
On 13 January 2020, Tern announced the achievement by InVMA of an order
commitment for its industry critical AssetMinder product worth GBP817,000 over
a two-year period. This is a very significant milestone for InVMA and was
achieved as a result of the re-positioning of InVMA from a service to a
product business, in which Tern has been instrumental.
Tern now has a genuinely diversified portfolio of investments in high growth
companies, with each of its principal portfolio companies having a
disruptive technology in a global market and they are all at very exciting
stages of their respective developments. Furthermore, each of Tern's
principal portfolio companies is working with world class partners to
accelerate the adoption of their products which the Directors of Tern
believe will provide significant prospective value enhancements.
The Directors of Tern are confident that its portfolio companies will
achieve further milestones during 2020, some of which may result in
revaluations to the carrying values of investments and consequent increases
in the net asset value ("NAV") of Tern. Management also continues to review
new investment opportunities.
Al Sisto, CEO of Tern, said:
"FundamentalVR's syndicated Series A funding was an important recognition of
the company's progress and a validation of Tern's business model. Each of
our principal portfolio companies demonstrated the market viability of their
product offerings during 2019. We expect our portfolio companies to achieve
further value enhancing events during 2020 and hope to see increases in the
NAV of Tern as a result."
2019 portfolio performance
The aggregate turnover of Tern's principal* portfolio companies for the year
ended 31 December 2019 is anticipated to be 27% ahead of the turnover
achieved in 2018.
This figure was adversely affected by some delays in commercial orders that
were expected during Q4 2019, which are now anticipated early in 2020.
These, together with InVMA's January 2020 contract win, are expected to
contribute to a rapid start to 2020.
The growth in turnover, customers and partners achieved by Tern's principal
portfolio companies was supported by a 31% increase in aggregate employees
across the portfolio in 2019, compared to 2018 which the Directors believe
will provide a strong foundation for growth in 2020.
* Principal portfolio company growth excludes Seal Software Group Limited
and Push Technology Limited, in which Tern has a <1% holding and minimal
influence.
FundamentalVR
Tern holding: 26.9%
Sector: Healthcare IoT
Invested Since: May 2018
Tern's shareholding in FundamentalVR is 26.9% and following the fundraise
announced in October 2019, this holding had a valuation of GBP3.0 million.
On 30 October 2019, FundamentalVR announced a GBP4.3 million Series A
fundraise, including a GBP0.5 million convertible loan note conversion by
Tern, at a post-money valuation of GBP11.3 million. This validated the Tern
business model, as it represented an increase in fair value within a year
from Tern's most recent previous investment and involved the introduction of
trade and financial investment investors to this portfolio company, thereby
reducing the risk profile of Tern's investment.
In December 2019, FundamentalVR announced that it had secured another
significant new contract (worth GBP0.5 million) to create a Virtual Reality
Haptic Simulation platform for a new customer, a global pharmaceutical
company. As a result, FundamentalVR's technology is now being used by an
array of customer groups including clinics and medical centres, device
companies and pharmaceutical companies.
InVMA Limited ("InVMA")
Holding: 50%
Sector: IoT enablement
Invested Since: September 2017
Tern has a 50% holding in InVMA and as at 30 June 2019, this holding had a
valuation of GBP1 million.
In January 2020, InVMA announced that it had secured an initial order
commitment worth GBP817,000 over a two-year period to provide its AssetMinder
solution to a global, multi-billion Euro revenue supplier to the industrial
and construction sectors. This order commitment was achieved with close
support and mentoring from Tern and represents a significant strategic
relationship for InVMA which validates the AssetMinder solution and
reinforces the company's strategy of becoming a provider of IoT products and
services rather than a services company.
Wyld Networks Limited ("Wyld Networks")
Holding: 100%
Sector: IoT enablement
Invested Since: June 2016
Tern has a 100% holding in Wyld Networks and as at 30 June 2019, this
holding had a valuation of GBP78,000. Tern also has a short-term loan balance
of GBP0.5 million.
Wyld Networks has been building on its framework contract with Delta-T
Devices, to build a network of meshed smartphones and IoT devices at the
edge of the network in enterprise communication and IoT, improving
operational efficiencies in healthcare, smart factories and transportation.
Device Authority Limited ("DA")
Tern holding: 56.8%
Sector: Security
Invested Since: September 2014
Tern has a 56.8% holding in DA, which specialises in IoT security, and as at
30 June 2019, this holding had a valuation of GBP12.3 million.
DA continues to work with and develop product sales via its active partner
base. Additionally, the company expanded its ability to penetrate the
enterprise IoT markets with the addition of its Microsoft Azure IoT central
connector in December 2019. This enables an end-to-end service offering in
the cloud with enhanced security. This key enhancement to KeyScaler is
designed to optimise and leverage the investment in IoT deployments by
Microsoft Azure's large customer base which represents an important new
segment for Device Authority growth.
Enquiries
Tern Plc via Newgate Communications
Al Sisto/Sarah Payne
Allenby Capital Limited Tel: 0203 328 5656
(Nomad and Joint broker)
David Worlidge/Alex Brearley
Whitman Howard Tel: 020 7659 1234
(Joint broker)
Nick Lovering/Christopher Furness
Newgate Communications Tel: 020 3757 6880
Elisabeth Cowell/Megan Kovach
ISIN: GB00BFPMV798
Category Code: PFU
TIDM: TERN
LEI Code: 2138005F87SODHL9CQ36
Sequence No.: 42957
EQS News ID: 962027
End of Announcement EQS News Service
(END) Dow Jones Newswires
January 28, 2020 02:00 ET (07:00 GMT)
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