TIDMTERN
RNS Number : 7464N
Tern PLC
25 January 2023
25 January 2023
Tern Plc
("Tern" or the "Company")
Portfolio Update
Investor Presentation
Tern Plc (AIM:TERN), the company focused on value creation from
Internet of Things ("IoT") technology businesses, is pleased to
provide an update on the recent activities of its portfolio
companies.
Highlights
-- Further significant progress across Tern's portfolio
companies during 2022, with important year-on-year growth in the
number of recurring revenue contracts.
-- Device Authority continued its positive business momentum in
2022, with the business being particularly focused on growing
recurring revenues from its software security platform,
KeyScaler(R). Device Authority recorded a material increase in
multi-year bookings and annual recurring revenues ("ARR") compared
to those achieved in 2021. This included new customer wins in the
UK, the EU and US, as well as closing their first KeyScaler(R)
software as a service (" KSaaS") and 'Edge' contracts, following
the release of new product capability.
-- In December 2022, Wyld Networks launched its pioneering
satellite IoT network service providing 100% global connectivity
for the IoT. Wyld Networks has signed over 40 alliances with launch
partners from a wide array of sectors and built a significant
purchase order book for Wyld Connect units along with data service
orders. In aggregate, Wyld has announced orders of approximately
SEK 53 million (approximately GBP4.2 million), that are anticipated
to contribute revenue to the business in 2023.
-- FundamentalVR made excellent progress in 2022 and was the
first of Tern's investee companies to achieve a Series B growth
equity financing round in August 2022, providing an initial GBP13.2
million, supported by new institutional investors. This funding is
supporting further global deployments of FundamentalVR's
Fundamental Surgery platform for surgical training.
-- Following Konektio's fundraise in December 2021 , the focus
for Konektio in 2022 was on the completion of the productisation of
the next release of its AssetMinder(R) platform, using a
product-led growth model to incorporate new customer driven
features. During 2022, Konektio also released new AssetMinder(R)
modules, expanded its sales organisation and further honed the
organisation to add scale to the business. Additionally, Matthew
Scherba, a director of Tern, joined the Konektio executive team at
the start of 2023 to assist with the development of the Konektio
business, a secondment that has now been extended for an indefinite
period.
-- During 2022 Talking Medicines redefined its go-to-market
strategy with a focus on selling to the larger advertising agencies
who work on behalf of major pharmaceutical companies, where Talking
Medicines seeks to be retained by those agencies to supply patient
intelligence. This strategy has successfully led to a number of
global advertising agencies and networks engaging Talking Medicines
for proof of concept and paid subscriptions, which is expected to
lead to significant revenue growth in 2023.
Commenting Al Sisto, CEO of Tern, said :
"The goal of Tern is to help build companies, providing them
with the capital and hands-on support they need, including
introducing third party investors, so that they have the means to
flourish and grow to the point where Tern can exit and deliver
quantifiable returns to its shareholders. Each of our companies is
at a different stage in this journey and despite the continuing
challenging macroeconomic environment, our optimism around the
potential from Tern's investment strategy and our portfolio
companies continue to grow. We believe that each of our companies
has, and continues to make, substantial progress towards the point
where it will be appropriate for Tern to exit when the market
conditions are right.
"However, as I have previously said, building great companies
takes time and resources. As each company experiences increasing
customer and market interest, it brings consequent challenges and
opportunities. In particular, the interest they are experiencing
from a broader set of investors, the majority of whom have
significantly greater financial firepower than Tern, sees such
investors seeking to capture value from our companies, at the
expense of Tern. This recognition of value creation requires Tern
to have the financial firepower to offer our companies more than
just our hands-on approach in order to protect and enhance the Tern
position for our shareholders. We have therefore continued to
strengthen our balance sheet with two fundraises in the latter part
of 2022 and will continue to deploy these funds to protect our
interests, strengthen our companies and assist their growth as we
believe is appropriate to generate shareholder value.
"Our hands-on approach has been further demonstrated by the
secondment of Matthew Scherba, a director of Tern, to the Konektio
executive team. Matthew's secondment has now been extended for an
indefinite period so that Tern can directly assist with the
development of the Konektio business. We believe this will result
in Konektio ultimately delivering a higher return for Tern
shareholders and in the meantime reduces Tern's costs.
"The goal of our model, at the point any of our portfolio
companies reach sufficient maturity and the market dynamics are
appropriate, continues to be to provide our shareholders with
continuous access to returns as we exit investments. We are
continually evaluating the future for our companies and will
explore and exploit any appropriate exit opportunities as they are
presented or can be originated."
Note: 'Tern's portfolio companies' or 'its companies' or 'our
portfolio companies' or 'our companies': Device Authority Limited,
Wyld Networks AB, InVMA Limited (trading as Konektio), FVRVS
Limited (trading as FundamentalVR) and Talking Medicines Limited,
which are companies Tern has interests in and excludes Push
Technology Limited, in which Tern has a <1% holding and minimal
influence.
Portfolio Company Update
Device Authority Limited ("Device Authority")
Holding: 53.8%
Device Authority is a global leader in securing machine
identities and enabling 'zero trust' security policies for IoT.
Device Authority's KeyScaler(R) software security platform is
believed to be the only platform to automate and manage machine
identities throughout their lifecycle, delivering automated device
provisioning, authentication, credential management, policy-based
end-to-end data security/encryption and secure updates and
providing complete device, data and operational trust.
Device Authority continued its positive business momentum in
2022, with the business being particularly focused on growing
recurring revenues from KeyScaler(R). Device Authority recorded a
material increase in multi-year bookings and ARR compared to those
achieved in 2021. This included new customer wins in the UK, the EU
and US, as well as closing their first KeyScaler(R) software as a
service (" KSaaS") and 'Edge' contracts, following the release of
new product capability.
New commercial agreements were signed in Device Authority's key
sectors of automotive, industrial, healthcare and US Government,
including a US$1.2 million agreement over five years, with a tier
one automotive supply chain customer in December 2022, and further
agreements to secure IoT machinery, healthcare devices, smart
devices for utilities and electric vehicle companies in both the
automotive and heavy machinery sectors.
The Virginia Innovative Partnership Corporation ("VIPC")
project, in conjunction with Crossroads Innovation Group, which is
focused on US IoT security standards securing IoT infrastructure,
as announced on 16 March 2022, has been successfully built and
deployed. Phase two of this project has commenced to extend
demonstrator proof of concept to secure digital environments and
critical infrastructure for US agencies, as well as in private
sector organisations. This combined solution approach, which
includes multiple participants, aims to provide critical
cybersecurity proof points across a range of technologies involved
in the deployment of diverse IoT technologies and use-cases.
Device Authority's commercial partnerships with Entrust, Venafi
and Microsoft have also continued to develop over the past year.
The first KSaaS contracts were sold via the Microsoft Marketplace,
and Device Authority was accepted into the Microsoft IP co-sell
ready programme, providing both Microsoft and Microsoft partners
with commercial incentives for selling KeyScaler(R). Device
Authority's global collaboration with Entrust has been focused on
sales enablement and executing a joint go-to-market strategy
targeting key customer accounts with an integrated joint offering
for digital identity. This partnership is expected to continue to
develop in 2023 across the US, EU and APAC regions.
More recently, on 18 January 2022, Device Authority announced
that it had partnered with CYFIRMA, a leading external threat
landscape management platform company, based in Singapore to
integrate CYFIRMA's rich, real-time threat data with Device
Authority's KeyScaler(R) platform to provide the intelligence to
automatically detect and remediate threats to edge networks,
devices and applications. The combined offering is designed to give
enterprises end-to-end visibility of organisation-wide threats,
risks and vulnerabilities, all from an outside-in perspective.
The release of the KeyScaler(R) 7 platform has introduced a
robust new capability for Edge environments, providing fully
automated identity lifecycle management, and a new 'Authorization
Service Connector' enabling continuous validation of devices, a
proactive best-practice security approach for achieving 'Zero
Trust'. This automates the provisioning and management of
certificates for both online and offline Edge devices, including
complex Nested Edge set-ups for industrial use cases, further
aligning KeyScaler(R) with Microsoft's strategy of enabling
companies to build more resilient supply chains by extending cloud
capabilities to remote and offline settings.
Additionally, KeyScaler's enhanced 'Authorization Service
Connector', introduced in 2022, provides a framework for continuous
assurance and authorisation to support the new Software Bill of
Materials requirement outlined in the White House Executive Order
14028, and to help organisations comply with the EU Cyber
Resilience Act. It enforces real-time authentication check-ins with
external threat detection platforms to assess threat levels for
devices, mitigates new threats, and helps remediate against
critical vulnerabilities found in device software.
Device Authority has become a market leader in its field of IoT
identity and access management, validated through independent
market analysts in the 2022 SPARK Matrix(TM) for 'IoT Identity
& Access Management'. Additionally, ABI Research, in its annual
'Top Technology Companies' whitepaper, confirmed Device Authority
as overall leader in 'IoT Device Identity Lifecycle Management',
and a 'Top Innovator and Implementer'.
Wyld Networks AB (publ) ("Wyld Networks" or "Wyld")
Holding: 41.2%
Wyld Networks, quoted on the NASDAQ First North Growth Market in
Stockholm, enables affordable connectivity across the globe in
areas where wireless coverage is unavailable. The company
specialises in providing wireless connectivity between IoT sensors
and Low-Earth-Orbit ("LEO") satellites with its Wyld Connect
solution.
In December 2022, Wyld launched its pioneering satellite IoT
network service, providing 100% global connectivity for the IoT.
According to Wyld Networks' research only approximately 15% of the
world's surface currently has access to the internet. According to
McKinsey, it is this lack of global connectivity that is holding
back the growth of the IoT from adding US$ 2-3 trillion to the
global GDP over the next ten years(1) . Wyld Connect solves this
problem by allowing businesses and governments to connect their IoT
devices anywhere in the world using LEO satellites to collect data
to improve their operational efficiencies and support their
sustainability goals. With the launch of the satellite IoT network
service, Wyld can address in part the satellite IoT market demand,
which according to a forecast by Rethink IoT, will be worth
US$5.9bn by 2025.(2)
Wyld have signed over 40 alliances with launch partners from a
wide array of sectors, including signing during 2022 with Agrology
(USA), Snow Acres (Canada), TrakAssure (USA), Axceta (Canada),
Instituto Constanta De Inovac a o (Brazil), Hazera (Israel),
Treevia (Brazil), Constanta Industrial (Brazil), Brinja (Sweden),
HartBR (Brazil), IMAE (Brazil) and DEWA (UAE). ATSS (Saudi Arabia),
Khomp (Brazil), IoTMaxi (Brazil), British American Tobacco
(Brazil), and Spider Digital (UAE, UK, North America and
Bangladesh).
Additionally, Wyld Networks has partnered with Miromico, a Swiss
IoT company, to resell Wyld Connect and focus on integrated
circuits, electronic systems and software products to meet the
growing demand for connectivity for the IoT.
On 8 December 2022, Wyld Networks announced that it had a
purchase order book of approximately SEK 34 million (approximately
GBP2.7 million) for both Wyld Connect units along with data service
orders. Since that date, Wyld Networks has announced two further
significant orders of SEK 12.6 million (approximately GBP1 million)
and SEK 6.29 million, (approximately GBP0.5 million) respectively.
Wyld Networks anticipates starting to convert its order book into
revenue for the business in 2023, together with entering into
additional partnerships and customer agreements, as it continues to
solve the complex problem of connecting data at low power to LEO
satellites and delivering that data to the customers that need
it.
Sources:
(1) Agriculture's technology future: How connectivity can yield
new growth - McKinsey Center for Advanced Connectivity and the
McKinsey Global Institute
(2) Nanosats and new use cases will propel satellite IoT to
$5.9bn by 2025 - Rethink IoT (rethinkresearch.biz)
FVRVS Limited ("FundamentalVR")
Holding: 16.58%
FundamentalVR delivers virtual reality ("VR") haptic 'flight
simulators' for surgery creating a safe, measurable and repeatable
space to refine skills. FundamentalVR's goal is to transform the
way surgeons prepare, practice and refine their skills. It has
built an immersive, surgical simulation application platform,
Fundamental Surgery, to provide medical professionals with the
opportunity to rehearse, practice, and test themselves within a
safe, controllable space that is as close to real-life as
possible.
FundamentalVR made excellent progress in 2022 and was the first
of Tern's investee companies to achieve a Series B growth equity
financing round in August 2022, providing an initial GBP13.2
million, supported by new institutional investors. This funding is
supporting further global deployments of FundamentalVR's
Fundamental Surgical platform for surgical training.
Key successful deployments of FundamentalVR's technology in 2022
included with CMR Surgical, a global surgical robotics business,
where its Versius Virtual Reality solution, produced in partnership
with FundamentalVR, became the first soft-tissue surgical robotics
system to offer virtual reality ("VR") training and was launched as
part of CMR Surgical's 'Surgical Professional' education
program.
FundamentalVR has continued to build out its platform
capabilities and Tern believes it is unique in being able to offer
customers a scalable range of VR solutions from standalone VR
through to FundamentalVR's flagship patented HapticVR which enables
full skills transfer.
The company's CollaborationVR system is increasingly being
utilised by customers across the globe, allowing surgical experts
to come together in virtual learning spaces without the need for
physical travel. For example, FundamentalVR and Houston Methodist
Institute for Technology, Innovation and Education (MITIESM)
recently announced the introduction of the MITIEverse(TM), an
extensive collaboration and shared space learning environment.
FundamentalVR has been recognised globally as a leader in its
field, being awarded the 'Best Mixed Reality Solution' at the AX
Awards 2022 and nominated for 'Most Innovative Product', 'Best
Education and Training Solution' and 'Best Mixed Reality Solution'.
at the XR Awards, together with being nominated for 'Best
Healthcare and Wellness Solution' at the AWE 2022 Auggie
Awards.
InVMA Limited (trading as "Konektio")
Holding: 36.8%
Following Konektio's GBP2.125 million fundraise in December
2021, led by fund managers Foresight and Mercia, the focus for
Konektio in 2022 was on further developing its AssetMinder(R)
modular, industry 4.0, IoT (software as a service) SaaS platform
and building an appropriate organisation to further scale the
business.
During 2022 Konektio released new AssetMinder(R) modules,
including 'Predict', to enable predictive analytics so that
customers can minimise unplanned downtime, and 'Impact', which
enables optimisation of customer maintenance schedules, allowing
them to monitor high energy consumption processes and the
environmental impact of their machines. Konektio is experiencing
strong demand for both modules.
To support this growth, Konektio has expanded its sales
organisation, hiring key senior salespeople in Europe and the US.
Additionally, Matthew Scherba, a director of Tern, joined the
Konektio executive team at the start of 2023, for an initial
two-month secondment period, which has now been extended to be an
ongoing secondment, terminable by either Tern or Konektio on four
weeks' notice, to assist with the development of the Konektio
business and the completion of the productisation of the next
release of AssetMinder(R).
Talking Medicines Limited ("Talking Medicines")
Holding: 23.8%
Talking Medicines is a data technology company using artificial
intelligence, natural language processing and machine learning as
social listening technologies to give patients a voice.
In 2022 Talking Medicines redefined its go-to-market strategy
with a focus on selling to the larger advertising agencies who work
on behalf of major pharmaceutical companies, where Talking
Medicines is seeking to be retained by those agencies to supply
patient intelligence. This strategy has successfully led to a
number of global advertising agencies and networks engaging Talking
Medicines for proof of concept and paid subscriptions, which is
expected to lead to significant revenue growth in 2023.
Led by Talking Medicines' Chief Customer Officer, based in New
York, who was appointed in Q1 2022, the Talking Medicines team has
been focussed on the expansion of revenue within the advertising
agency network groups through offering trials as a mechanism to win
sales. Clients trial the PatientMetRx(R) platform alongside their
current solution to experience the difference. Sign-ups to the
trials have significantly exceeded Talking Medicines' management's
expectations in recent months.
Through the trial undertaken, Talking Medicines has been able to
demonstrate greater efficiency and effectiveness to its clients
through its unique artificial intelligence classification models
that curate the patient voice, with clients reporting on average an
80% time saving on data collection.
In 2022 PatientMetRx(R) was transformed from the display of a
Patient Confidence Score(TM), providing a measure of brand health
for medicines, to a platform with depth that allows advertising
agency clients to create impactful patient-led messaging to win and
retain business with their pharmaceutical clients. Feature
developments in 2022 have enabled clients to discover and measure
patient insights across drugs and therapy areas of interest in a
way that was not previously possible.
In 2023, Talking Medicines will be focused on establishing a
repeatable commercial model based on the work it has done to date,
including seeking subscribers for the artificial intelligence
models that already classify the patient voice across a significant
number of top drug brands. Additionally, PatientMetRx 2.0 is in
development, based on feedback from clients, which will seek to
integrate prediction into the offering, based on the next stage of
the company's artificial intelligence modelling.
In December 2022, a leading US-based pharmaceutical marketing
publication, PM360, announced that Talking Medicines was the winner
of its 'Most Innovative Services to Advertising Agencies'
award.
Online Investor Presentation and Q&A Session
Tern's management and management from certain of Tern's
portfolio companies will be hosting an online presentation and
Q&A session at 5 p.m. GMT on Tuesday 7 February 2023. This
session is open to all existing and prospective shareholders.
Those who wish to attend should register via the following link
where they will be provided with access details:
https://us02web.zoom.us/webinar/register/WN_BBh-OCkhT8C413sPS3Wsrw
Participants will have the opportunity to submit questions
during the session, but questions are welcomed in advance and may
be submitted to: tern@investor-focus.co.uk .
Enquiries
Tern Plc via IFC Advisory
Al Sisto (CEO)
Sarah Payne (CFO)
Allenby Capital Limited Tel: 0203 328 5656
(Nominated Adviser and Broker)
David Worlidge / Alex Brearley /
Dan Dearden-Williams (Corporate
Finance)
Kelly Gardiner (Sales and Corporate
Broking)
IFC Advisory Tel: 0203 934 6630
(Financial PR and IR) tern@investor-focus.co.uk
Tim Metcalfe
Graham Herring
Florence Chandler
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