TIDMTMT
RNS Number : 4124T
TMT Investments PLC
25 March 2021
25 March 2021
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2020 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 2020.
Highlights :
-- NAV per share of US$6.10 (up 73.3% from US$3.52 as of 31 December 2019)
-- Total NAV of US$177.9 million (up from US$102.8 million as at 31 December 2019)
-- 10 years since admission to AIM in December 2010
-- NAV per share up 6.4 times since admission (including dividends paid to date)
-- 5-year IRR of 28.7% per annum
-- US$41 million of net cash proceeds from exits during 2020
-- US$12.5 million of investments across 16 new and existing companies in 2020
-- Diversified portfolio of over 35 companies focused mainly
around big data/cloud, e-commerce, marketplaces, EdTech and SaaS
(software-as-a-service) solutions
-- Covid-19's effect on portfolio companies is mainly neutral or
positive, with future performance dependent on how the situation
unfolds in coming months
-- US$34.6 million in cash reserves as of 24 March 2021
Alexander Selegenev, Executive Director of TMT, commented:
"2020 was the most successful year for the Company to date,
recording a large number of significant revaluations across the
portfolio, led by TMT's second multi-million cash exit when TMT
exited its stake in Pipedrive to Vista Equity Partners for US$41m.
The Pipedrive exit generated a total cash return of over 51 times
on TMT's original investments in Pipedrive, a superb return for
shareholders.
"In December 2020, TMT celebrated 10 years since its admission
to AIM. Since admission, TMT has invested in over 65 companies,
realised 14 profitable full and partial exits, and established a
strong track record in identifying successful, high-growth
companies at an early stage of their development. Since admission
to AIM in December 2010, TMT's NAV per share has increased 6.4x
(including dividends paid to date).
"The cash proceeds from the Pipedrive exit are already being
actively invested. We have been increasing our investment in those
of our current portfolio companies that are growing strongly as
well as investing in new companies. With cash on the balance sheet
of US$34.6m as of the date of this report, TMT is in an excellent
position to continue seeking suitable investment opportunities and
identify tomorrow's winners.
"In the first half of 2020, when COVID-19 first caused
significant uncertainty and volatility in the market, we were
pleased to see that the majority of our portfolio companies
benefited from the previously adopted pragmatic approach of seeking
cost-efficient growth, as opposed to 'growth at any cost'. This
approach allowed them to control their burn rates and cash
liquidity levels effectively in those turbulent months. The second
half of 2020 was marked by renewed investor interest in the
high-growth potential of tech start-ups, which in turn removed
liquidity concerns for high-quality, fast growing companies
(including many of our investees) and allowed them to return to the
more usual 'invest for growth' mode.
"Having naturally slowed down the pace of new investments in the
second quarter of 2020, we returned to full investing mode in the
second half of the year. This resulted in the Company investing in
16 new and existing portfolio companies.
"TMT's strategy continues to be very selective in identifying
new investment opportunities, while seeking to capitalise on the
new and existing investment themes continuously developing in the
technology space, and we look forward to keeping shareholders
updated on relevant developments."
Notice of AGM
The Company's Annual General Meeting will be held on 29 July
2021 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 2020 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)
James Bellman / James Dance +44 (0)20 7409 3494
Cenkos Securities plc
(Joint Broker)
Russell Cook / Ben Jeynes +44 (0)20 7397 8900
Hybridan LLP
(Joint Broker)
Claire Louise Noyce +44 (0)20 3764 2341
Kinlan Communications +44 (0)20 7638 3435
David Hothersall davidh@kinlan.net
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 65 companies to date and has net
assets of US$178 million as of 31 December 2020. The Company's
objective is to generate an attractive rate of return for
shareholders, predominantly through capital appreciation. The
Company is traded on the AIM market of the London Stock Exchange.
www.tmtinvestments.com .
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EXECUTIVE DIRECTOR'S STATEMENT
At the time of the publication of TMT's interim results in
September 2020, it was still not possible to predict that the tech
venture capital investment space would become one of the few
beneficiaries of the new market environment caused by COVID-19.
However, the second half of 2020 revealed increased investor
interest in the high-growth potential of business models based on
digital, online and remote technologies, leading to a significant
increase in fundraising activities by technology companies around
the world. In turn, this resulted in a large number of significant
revaluations and cash realisations across our portfolio, making
2020 the most successful year for the Company to date.
TMT's net asset value ("NAV") per share as of 31 December 2020
increased significantly to US$6.10 (up 73.3% from US$3.52 as of 31
December 2019). In particular, the Company's NAV benefited
significantly from increased valuations in three of our significant
holdings: sales CRM company Pipedrive (+US$29.1 million in NAV),
global ride-hailing and food delivery company Bolt (+US$14.1
million in NAV), and cloud storage company Backblaze (+US$34.8
million in NAV). In accordance with IFRS standards, valuations for
the Company's investments in Backblaze and Scentbird as of 31
December 2020 have utilised comparable company revenue multiple
analysis (with appropriate discounts to publicly traded comparable
companies applied for lack of marketability) to revalue these
investments as part of the accounts preparation and audit process,
in order to reflect the continuing positive progress of those
investee companies, in the absence of recent equity fundraising
activity in those companies, which would otherwise have been our
preferred valuation method.
The majority of our portfolio companies have been navigating the
turmoil caused by COVID-19 successfully, with many investees
actually benefiting from the changed market environment. A large
number of our investees have taken advantage of increased investor
interest in growing technology companies and raised capital for
further expansion.
Despite making only two new investments in the first half of the
year, the Company finished the year with investments in a total of
16 new and existing portfolio companies in 2020. Out of over 35
portfolio investee companies, the Company registered only 2
impairments during the period. The only notable impairment was in
respect of Le Tote, whose department store and fashion rental
business was directly affected by COVID-19 and associated lock
downs, resulting in the company filing for bankruptcy in August
2020.
In December 2020, TMT celebrated 10 years since its admission to
AIM in December 2010, when it was one of only a handful of publicly
quoted companies investing in privately held technology companies
at the time. We are delighted that TMT's NAV per share has grown
6.4 times in that 10-year period (including dividends paid to
date), which has seen two multi-million dollar exits (the US$22.6m
cash exit from Wrike in December 2018 and the US$41m cash exit from
Pipedrive in 2020). With cash on the balance sheet of $34.6m as of
the date of this report, TMT is in an excellent position to
continue seeking suitable investment opportunities and identify
tomorrow's winners. We thank all our team for their hard work and
our shareholders for their investment commitment over the last
decade.
NAV per share
The Company's NAV per share in 2020 increased by 73.3% to
US$6.10 (from US$3.52 as of 31 December 2019), mainly as a result
of the significant upward revaluations of our investments in
Pipedrive, Backblaze and Bolt.
Operating Expenses
In 2020, the Company's administrative expenses of US$1,255,451
were slightly above the corresponding 2019 levels (US$1,174,466),
reflecting the Company's increased investment activity in the
second half of 2020.
Financial position
As of 31 December 2020, the Company had no financial debt and
cash reserves of approximately US$39 million. As of 24 March 2021,
the Company had cash reserves of approximately US$34.6 million.
Bonus Plan
The Company has put in place the bonus plan for Directors,
officers, employees of, or consultants to, the Company (the "Bonus
Plan"). The 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 received 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 June 2018, the Company extended the
Bonus Plan for three years (until 30 June 2021) on the same terms,
with slightly amended initial allocations of the bonus pool among
the participants.
On 25 November 2020, the Board announced that it had approved
the amendment of the Bonus Plan in order to simplify its
administration by bringing the calculation of the bonus pool in
line with the Company's financial year end of 31 December and
accordingly, the "bonus year-end date" was amended from 30 June to
31 December.
In addition, given the increase in the size of the Company and
its team since the Bonus Plan was first introduced in 2015, the
team's consistent outperformance in growing the Company's NAV and
to bring it more in line with typical structures within the venture
capital sector in which TMT operates, the Board announced on 25
November 2020 that the Bonus Plan's bonus pool was increased from
7.5% to 10% of the net increase in the Company's adjusted NAV,
starting from 1 January 2021 until 31 December 2024.
The total amount of bonus accrued for the period ended 31
December 2020 was US$6,086,948.
Update on the continuing effect of COVID-19
In the first half of 2020, when COVID-19 first caused
significant uncertainty and volatility in the market, we were
pleased to see that the majority of our portfolio companies
benefited from the previously adopted pragmatic approach of seeking
cost-efficient growth, as opposed to 'growth at any cost'. This
approach allowed them to control their burn rates and cash
liquidity levels effectively in those turbulent months. The second
half of 2020 was marked by renewed investor interest in the
high-growth potential of tech start-ups, which in turn removed
liquidity concerns for high-quality, fast growing companies
(including many of our investees) and allowed them to return to the
more usual "invest for growth" mode.
Our top five portfolio companies (Backblaze, Bolt,
Depositphotos, Scentbird and PandaDoc), accounting for
approximately 78% of investment portfolio value, are
well-established, more mature businesses, with globally diversified
revenues, strong cash reserves and tens of thousands of customers.
They are operationally nimble, cost conscious companies that have
grown rapidly, without undertaking large funding rounds to support
expanded cost bases, compared to some of their peers.
Cloud storage provider, Backblaze ( www.backblaze.com ),
continued to perform well, with over 450,000 customers globally.
Backblaze offers easy-to-use, affordable cloud storage that is well
positioned for growth in the current cost-saving environment. While
there is still some uncertainty given the continuing COVID-19
pandemic, Backblaze achieved double digit growth and strong
continued momentum in 2020.
Bolt ( www.bolt.eu ), a leading international ride-hailing and
food delivery company, is active in over 200 cities globally.
Whilst turnover for the core ride-hailing business had been
negatively affected as a result of COVID-19 at the beginning of the
pandemic in Q2 of 2020, Bolt's track record as a highly competitive
and cost-efficient ride-hailing operator allowed it to not only
survive the most difficult COVID-19 lockdown months without laying
off a single employee, but also launch new services and raise (in
May 2020) EUR100 million in additional capital through a
convertible note. Since the easing of strict lockdown restrictions
in most of Bolt's key markets, its turnover and revenue have
rapidly increased. Bolt resumed its geographic and product
expansion and, in December 2020, successfully raised a further
EUR150 million in an equity finance round led by D1 Capital
Partners.
Stock photo and video marketplace Depositphotos (
www.depositphotos.com ) entered the recent turbulent period
operationally profitable, with sizeable cash reserves and a
well-diversified international customer base. As estimated in our
2019 Annual Report, the short-term impact on Depositphotos proved
neutral.
Perfume, wellness and beauty product subscription service,
Scentbird ( www.scentbird.com ), entered the COVID-19 period
operationally profitable, with sizeable cash reserves. Contrary to
our more pessimistic expectations in our 2019 Annual Report, the
short-term impact on Scentbird's revenues proved positive.
Scentbird continued to grow its annualised revenue at double
digits, and its subscriber base exceeded 400,000 (from "over
330,000" as of 31 December 2019).
Proposal automation and contract management software provider,
PandaDoc ( www.pandadoc.com ), has recently become TMT's fifth
largest portfolio holding, following completion of a recent new
equity round which resulted in a revaluation of TMT's investment to
US$3.6 million. Post COVID-19, its solutions, which enable sales
teams to remotely manage their selling processes "from propose to
close", have become even more relevant, and the company continues
to grow.
The remainder of our portfolio consists of over 30 companies and
is diversified across our five core investment sectors: Big
Data/Cloud, SaaS (software-as-a-service), Marketplaces, EdTech and
E-commerce. While a limited number of our portfolio companies were
significantly exposed to sectors immediately affected by COVID-19
related disruptions and faced challenges (with Le Tote being the
only sizeable example), many of our portfolio companies have
experienced a notable increase in demand for their products. The
further effect of COVID-19's implications on our portfolio
companies will depend on how the situation develops in the coming
months.
TMT's own team has always been internationally based and is
therefore used to working remotely. As a result, there has been no
disruption to our operations.
Outlook
Throughout the recent crisis, and especially following the
gradual removal of strict COVID-19-related restrictions in many
markets, the venture capital industry has continued to actively
invest in fast-growing, cost-conscious tech companies. TMT has now
invested in over 65 companies since its admission to AIM in
December 2010 and has a diversified portfolio of over 35
investments, focused primarily on Big Data/Cloud, SaaS,
Marketplaces, EdTech and E-commerce. TMT's strategy remains to be
very selective in identifying new investment opportunities, while
seeking to capitalise on the new and existing investment themes
continuously developing in the technology space.
Alexander Selegenev
Executive Director
24 March 2021
CASE STUDIES
Pipedrive
Pipedrive is a leading sales CRM (customer relationship
management) solution. Founded in 2010, it is now used by over
95,000 companies in 150 countries.
2010: Pipedrive is born
After selling everything from newspaper ads to insurance and
training tens of thousands of sales professionals for companies
like Coca-Cola and Nissan, Timo Rein and Urmas Purde spot a gap in
the CRM market.
In their combined 40 years of experience, they hadn't found a
sales management tool catering to the needs of people doing the
actual selling. So they decide to create their own. They team up
with fellow co-founders Martin Henk, Ragnar Sass and Martin Tajur
to create a CRM software that puts the needs of salespeople first.
Pipedrive is born.
2012-13: TMT identifies potential unicorn in Pipedrive
TMT identifies the makings of a potential unicorn company in
Pipedrive early on, when it makes its first investment of $328,945
in 2012 and an additional $450,000 in 2013 into Pipedrive's
convertible notes, just two years into Pipedrive's foundation.
Pipedrive fits TMT's investment criteria: competent and
motivated management founders, high growth potential that can be
scaled up globally, already generating revenues and with viable
exit opportunities.
2015 - 2019 Pipedrive attracts interest from large venture
capital
As Pipedrive enters its expansion phase and records strong
growth globally, its success leads to attracting US$90 million of
investment from large venture capital funds including Atomico,
Bessemer Venture Partners and Rembrandt Venture Partners.
2020 Pipedrive receives majority investment from Vista Equity
Partners
By 2020, Pipedrive has a well-diversified customer base of over
90,000 companies worldwide, very significant cash reserves and
continues to be operationally profitable.
In November 2020 Pipedrive signs a definitive conditional
agreement regarding a majority investment from Vista Equity
Partners, a leading US investment firm. As part of the transaction,
TMT agrees to dispose of its entire holding in Pipedrive to Vista
for a cash consideration of US$41 million. The transaction is
completed in December 2020. The disposal represented a substantial
valuation uplift of US$29.3 million (or 247%) in the value of TMT's
investment in Pipedrive prior to the disposal, being the sum of the
previous reported amount as of 31 December 2019 plus the value of
Pipedrive shares acquired by TMT in July 2020.
Backblaze
Backblaze offers easy-to-use, affordable cloud storage that is
well positioned for growth in the current cost-saving
environment.
A business model with global appeal
TMT became Backblaze's first institutional external investor in
2012. Backblaze had been launched five years earlier, when in 2007
the company's five founders quit their jobs to provide backup
services to their friends and family's computers working from an
apartment.
Since then, Backblaze's technology offering has made it one of
the world leaders in computer backup and cloud storage, with
customers in over 175 countries. Backblaze prides itself on making
back up processes very easy while improving clients' operational
expenses vs. Amazon S2 and other providers.
Backblaze's success in generating strong organic growth without
recurring to large and dilutive equity fund raises means that TMT
retains a significant 10.85% stake in Backblaze's equity. The fair
value of TMT's investment in Backblaze was revalued in 2020 using
comparable company revenue multiples, as a result of continued
growth of the business, coupled with the absence of recent equity
capital raises by (or partial exit transactions in) Backblaze.
Bolt
Bolt is a ride-hailing and food delivery service active in over
200 cities globally.
From local minnow to global player
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. Since then Bolt has become a global player,
active in over 200 cities globally and has leveraged its technology
and user base to expand into electric scooter, food and business
parcels delivery.
In May 2020 Bolt raised EUR100 million (US$110 million) in
additional capital through a convertible note. In December 2020
Bolt successfully raised EUR150 million (US$182 million) in an
equity finance round led by D1 Capital Partners to support growth.
Bolt's ability in raising significant amounts of capital to fund
growth during the Covid-19 pandemic represents strong investor
confidence in Bolt's management team, its business model and the
outlook for the company.
PORTFOLIO DEVELOPMENTS
Although the first half of 2020 was understandably quieter for
TMT in terms of new investments and revaluations, the second half
of 2020 more than compensated the lack of activity in the first
half of the year. We were delighted with our highly profitable
US$41 million cash exit from Pipedrive, as well as the underlying
performance of the majority of our other portfolio companies. A
number of portfolio companies (PandaDoc, HealthyHealth, Scalarr,
MEL Science, Bolt, Feel, and Affise) received further validation
for their business models by raising fresh equity capital at higher
valuations. In tandem, some of our portfolio companies (ClassTag,
Legionfarm, and RetargetApp) raised additional capital in the form
of convertible instruments. While the latter did not trigger
immediate revaluations for TMT, they featured notably higher
conversion caps compared to the levels at which TMT invested in
those companies, therefore creating potential upside for the
Company's NAV.
Portfolio Performance
The following developments had an impact on and are reflected in
the Company's NAV and/or financial statements as of 31 December
2020 in accordance with applicable accounting standards:
Full and partial cash exits, and positive revaluations:
-- In June 2020, insurtech and healthtech company HealthyHealth
( www.healthyhealth.com ) completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.16 million (or
63.9%) in the fair value of TMT's investment in HealthyHealth,
compared to the previous reported amount as of 31 December
2019.
-- In August 2020, PandaDoc, a proposal automation and contract management software provider ( www.pandadoc.com ), completed a new equity funding round. The transaction represented a revaluation uplift of US$1.41 million (or 63.5%) in the fair value of TMT's investment in PandaDoc, compared to the previous reported amount as of 31 December 2019.
-- In November 2020, Pipedrive, a leading sales CRM solution (
www.pipedrive.com ), signed a definitive conditional agreement
regarding a majority investment from Vista Equity Partners
("Vista"), a leading US investment firm. As part of the
transaction, TMT agreed to dispose of its entire holding in
Pipedrive to Vista for a cash consideration of US$41 million (the
"Disposal"). The Disposal was completed in December 2020 and
represented a substantial valuation uplift of US$29.3 million (or
247%) in the value of TMT's investment in Pipedrive prior to the
Disposal, being the sum of the previous reported amount as of 31
December 2019 plus the value of Pipedrive shares acquired by TMT in
July 2020.
-- In November 2020, MEL Science, an EdTech company focused on
VR-assisted chemistry and physics experiment subscription kits for
children ( www.melscience.com ), completed a new US$14 million
equity funding round. The transaction represented a revaluation
uplift of US$0.66 million (or 33.2%) in the fair value of TMT's
investment in MEL Science, compared to the previous reported amount
as of 31 December 2019.
-- In November 2020, Scalarr, a machine learning-based fraud
detection solution focused on the advertising market (
www.scalarr.io ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.76 million (or
50.4%) in the fair value of TMT's investment in Scalarr, compared
to the previous reported amount as of 31 December 2019.
-- In December 2020, Feel Holdings Limited ("Feel"), a
subscription-based innovative multivitamin and supplement producer
( www.wearefeel.com ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.36 million (or
104.4%) in the fair value of TMT's original investment in Feel
completed in August 2020.
-- In December 2020, Bolt, a leading international ride-hailing
and food delivery company ( www.bolt.eu ), successfully raised
EUR150 million (US$182 million) in an equity finance round led by
D1 Capital Partners. The transaction represented a substantial
valuation uplift of US$14.1 million (or 64%) in the fair value of
TMT's investment in Bolt, compared to the previous reported amount
as of 31 December 2019.
-- In February 2021, Affise Technologies Ltd, a performance
marketing SaaS solution ( https://affise.com/en/ ), completed a new
equity funding round. The transaction represented a revaluation
uplift of US$0.40 million (or 40.0%) in the fair value of TMT's
investment in Affise, compared to the previous reported amount as
of 31 December 2019.
In addition, the following portfolio companies were revalued
using comparable company revenue multiples:
Portfolio Upward revaluation Upward revaluation Reasons for upward revaluation
Company amount (US$) amount as % of
fair value reported
as of 31 Dec 2019
Continued growth of the
business, coupled with
the absence of recent
equity capital raises
by (or partial exit transactions
Backblaze 34,802,829 164% in) the portfolio company
------------------- --------------------- ----------------------------------
Scentbird 2,920,647 87%* Continued growth of the
business, coupled with
the absence of recent
equity capital raises
by (or partial exit transactions
in) the portfolio company
------------------- --------------------- ----------------------------------
* - adjusted for the value of the additional investment made
during 2020.
As of the date of this report, portfolio companies valued at
comparable company revenue multiples (as opposed to actual equity
transactions or at cost) constituted 43.2% of the total value of
the Company's investment portfolio.
Negative revaluations:
The following of the Company's portfolio investments were
negatively revalued in the first half of 2020:
Portfolio Write-down Reduction as Reasons for write-down
Company amount (US$) % of fair value
reported as
of 31 Dec 2019
Company filed for bankruptcy
Le Tote 2,749,812 100% in August 2020
-------------- ----------------- -----------------------------
Lack of progress in the last
E2C 136,781 100% 3 years
-------------- ----------------- -----------------------------
Key developments for the five largest portfolio holdings in 2020
(source: TMT's portfolio companies):
Backblaze (cloud storage provider):
-- Double-digit revenue growth continued
-- Launched key new initiatives including compatibility with the
Amazon S3 cloud storage ecosystem
Bolt (ride-hailing and food delivery service):
-- Active in over 200 cities globally (up from 150 cities as of 31 December 2019)
-- As announced in May and December 2020, raised a total of
EUR250 million in additional capital to support growth
-- Revenue recovered rapidly from the COVID-related lows in April 2020
Depositphotos (stock photo and video marketplace):
-- Flat revenue was offset by organic cost savings
-- New graphic design software product Crello continued growing fast in both users and revenue
Scentbird (perfume, wellness and beauty product subscription
service):
-- Double-digit revenue growth continued
-- Over 400,000 subscribers (from over 330,000 as of 31 December 2019)
PandaDoc (proposal automation and contract management
software):
-- Annual recurring revenue grew 63%
-- Over 23,000 paying clients (from over 17,000 as of 31 December 2019)
New investments
Having naturally slowed down the pace of new investments in the
second quarter of 2020, we returned to full investing mode in the
second half of the year. This resulted in the Company investing in
16 new and existing portfolio companies that met our investment
criteria of having fast growing revenue, outstanding management
teams, high growth potential based on globally scalable business
models and viable exit opportunities.
In 2020, the Company made the following investments:
-- US$400,000 in ClassTag, Inc., a parent-school communication
platform currently connecting over 2 million families across 25,000
schools in the USA ( www.classtag.com );
-- GBP500,000 (in two separate rounds) in 3S Money Club Limited,
a UK-based online banking service focusing on international trade (
www.3s.money );
-- US$1,000,000 in Moeco IoT, Inc., an end-to-end solution for
valuable data generation and delivery through simple non-intrusive
sensors and a secure software platform ( www.moeco.io );
-- US$329,903 (via acquisition of existing shares) in portfolio
company Scentbird ( www.scentbird.com );
-- US$1,630,075 (via acquisition of existing shares) in
portfolio company Pipedrive ( www.pipedrive.com );
-- US$200,000 in Volumetric Biotechnologies, Inc., an advanced
biomaterial and bio-fabrication company ( www.volumetricbio.com
);
-- Additional US$1,001,250 in Central American delivery and
transportation technology company Hugo ( www.hugoapp.com );
-- GBP1,262,000 (in two separate rounds) in Feel Holdings
Limited, a subscription-based innovative multivitamin and
supplement producer ( www.wearefeel.com );
-- GBP500,000 in Hinterview Limited, a specialist video platform for the recruitment industry ( https://hello.hinterview.com/ );
-- US$1,000,000 in StudyFree, Inc., an EdTech SaaS platform that
connects students with international opportunities and helps them
secure financing through scholarships and grants (
www.international.studyfree.org/ );
-- Additional US$700,000 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 );
-- US$750,000 in Virtual Mentor Inc., trading as All Right, an
online school for children learning English ( www.allright.com/en/
);
-- US$500,000 in NovaKid Inc., an online school for children
learning English ( www.novakidschool.com );
-- GBP 1,000 ,000 in MTL Financial Ltd, trading as Outfund, a
UK-based revenue-based financing provider ( www.out.fund );
-- A dditional US$500,000 in Scalarr, Inc., a machine
learning-based fraud detection solution focused on the advertising
market ( www.scalarr.io ); and
-- EUR150,000 in Postoplan OÜ, a social network marketing
platform, which helps create, schedule, and promote content (
www.postoplan.app ).
Events after the reporting period
In January 2021, the Company invested an additional GBP135,825
(via acquisition of existing shares) in 3S Money, a UK-based online
banking service focusing on international trade ( www.3s.money
).
In January 2021, the Company invested an additional US$228,933
(via acquisition of existing shares) in Workiz, a SaaS solution for
the service field industry ( www.workiz.com ).
In February 2021, the Company invested an additional
US$2,000,000 in Affise, a performance marketing SaaS solution (
https://affise.com/en/ ).
In February 2021, the Company invested an additional GBP399,997
in HealthyHealth, an insurtech and healthtech company (
www.healthyhealth.com ).
In March 2021, the Company invested US$1,000,000 in 3DLook Inc.,
a body scanning and measuring technology solution for the online
retail industry ( www.3dlook.me ).
These events after the reporting period are not reflected in the
NAV and/or the financial statements as at 31 December 2020.
INVESTMENT PORTFOLIO
Portfolio Company Fair value (US$) As % of total portfolio
value
Backblaze 56,004,337 38.68
----------------- ------------------------
Bolt 36,201,527 25.00
----------------- ------------------------
DepositPhotos 10,836,105 7.48
----------------- ------------------------
ScentBird 6,590,954 4.55
----------------- ------------------------
PandaDoc 3,621,279 2.50
----------------- ------------------------
Remote.it 3,025,285 2.09
----------------- ------------------------
Scalarr 2,756,563 1.90
----------------- ------------------------
MEL Science 2,663,696 1.84
----------------- ------------------------
Feel 2,035,512 1.41
----------------- ------------------------
Wanelo 1,825,596 1.26
----------------- ------------------------
Other 19,242,300 13.29
----------------- ------------------------
Total 144 ,803,154 100.00
----------------- ------------------------
BOARD OF DIRECTORS
Yuri Mostovoy , Non-Executive Chairman, was appointed to the
Board in June 2011. Yuri brings over 37 years of 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 fund raising 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 external 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 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, the Board chose to adopt the QCA Code
effective 28 September 2018.
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.
A corporate culture bases on transparency, innovation and
continuous improvement
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.
Transparency
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
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
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/Cloud
-- SaaS (software-as-a-service)
-- Marketplaces
-- EdTech
-- E-commerce
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 report 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.
On 17 February 2021, the Company announced the appointment of
Cenkos Securities plc ("Cenkos") as Joint Broker to TMT. Cenkos,
together with the Company's other advisors, is arranging regular
meetings with UK institutional investors and private client
brokers, seeking to broaden the Company's shareholder base. 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.
The Company continues to be committed to engaging 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. In view of the
restrictions imposed by the Covid-19 pandemic, the Company is
making use of online communications to maintain communication with
all types of investors. Interested parties are able to subscribe
for notifications of such future events by contacting
tmt@kinlancommunications.com.
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
Adviser (Nomad), Brokers, 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 the Bonus Plan for Directors,
officers, employees of, or consultants to, the Company, as
summarised in the Executive Director's Statement above. In November
2020, the Company announced an extension to its Bonus Plan until 31
December 2024. Under the Company's Bonus Plan, subject to achieving
a minimum hurdle NAV and high watermark conditions, the team
receives an annual cash bonus equal to 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 and similar corporate transactions. As announced on 25
November 2020, this has been increased from 7.5% to 10.0% with
effect from 1 January 2021.
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 earlier stage companies
Investing in earlier stage companies is inherently risky. These
businesses may not successfully scale up their technology or
offering, may fail to secure the necessary funding (attract further
investment) and may lose key personnel, amongst other risks.
Mitigation:
The TMT team is experienced in investing in earlier stage
technology companies and conducts extensive analysis through its
four-filter investment process, as well as 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 board representation, where possible.
Fundamentally, however, the success of a start-up depends greatly
on the abilities of its founder-managers. The Company therefore
places very high importance on investing in companies backed by
highly skilled, professional and trustworthy founders.
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 unpredictable.
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 ten 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.
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 in the Board of Directors section
of this report.
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 third such formal evaluation for the year ended December
2020 took place in January 2021. The previous such evaluation had
been for the year ended December 2019, which started in January
2020 and concluded in March 2020. 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 March 2021.
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, taking into
consideration as well the updated QCA Audit Committee Guide
2019.
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,
taking into consideration as well the updated QCA Remuneration
Committee Guide 2019.
Nomination committee effectiveness
The Nomination Committee did not convene during the financial
year ended 31 December 2020 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, the processes by which the Company determines board and
other senior appointments and the professional development of the
Company's employees and management. 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 twice during 2020 to approve
the 2020 interim report and 2019 report and accounts.
Remuneration committee report
The Company has established a remuneration committee, which
comprises James Mullins (Chairman) and Petr Lanin. The remuneration
committee met formally twice during 2020, to discuss and approve
the extension of the bonus plan to 31 December 2024 and new fees
for directors, staff and advisers from 1 January 2021.
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 www.tmtinvestments.com
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 www.tmtinvestments.com
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
www.tmtinvestments.com
DIRECTORS' REPORT FOR THE YEARED 31 DECEMBER 2020
The Directors present their report and audited financial
statements of the Company for the year ended 31 December 2020.
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$75,108,677 which includes a
profit on changes in fair value of financial assets at FVPL ("Fair
Value through profit and loss") of US$82,294,256.
Further information on the Company's results and financial
position is included in the financial statements.
Given the quantum of further investment opportunities available
to the Company, the board has decided that it will not recommend a
final dividend (2019: nil).
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 .
Board meetings
There were 6 Board meetings held in 2020. Two meetings of the
Audit Committee and two meetings of the Remuneration Committee were
held in 2020. The number of meetings attended by the Directors is
set out below.
Board Audit Committee Remuneration Committee
Director meetings meetings meetings
--------------------- --------- ---------------- -----------------------
Yuri Mostovoy 6
Alexander Selegenev 5
Petr Lanin 6 2 2
James Mullins 6 2 2
--------------------- --------- ---------------- -----------------------
Total meetings 6 2 2
--------------------- --------- ---------------- -----------------------
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 2020 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 24 March
2021.
Shareholders Number of ordinary % of issued
shares ordinary share
capital
------------------------------------------- ------------------- ----------------
Alexander Morgulchik, German Kaplun,
Artemii Iniutin, Nelli Morgulchik
(via Macmillan Trading Company Limited) 6,817,063 23.36%
------------------------------------------- ------------------- ----------------
German Kaplun (via Ramify Consulting
Corp) 5,348,980 18.33%
------------------------------------------- ------------------- ----------------
Andrey Kareev (via Wissey Trade &
Invest Ltd) 5,000,000 17.13%
------------------------------------------- ------------------- ----------------
Zaur Ganiev 2,443,810 8.37%
------------------------------------------- ------------------- ----------------
Nika Kirpichenko (via Eclectic Capital
Limited) 1,800,000 6.17%
------------------------------------------- ------------------- ----------------
Dmitry Kirpichenko (via Menostar Holdings
Limited) 1,790,000 6.13%
------------------------------------------- ------------------- ----------------
Canaccord Genuity Group Inc. 1,484,996 5.09%
------------------------------------------- ------------------- ----------------
Artemii Iniutin (via Merit Systems
Inc.) 1,191,218 4.08%
------------------------------------------- ------------------- ----------------
Others 3,309,764 11.34%
------------------------------------------- ------------------- ----------------
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:
Beneficial holder No. of
(if different to legal Ordinary % of issued
Shareholder (legal holder) holder) Shares share capital
Alexander Morgulchik
45.05%, German Kaplun
37.17%, Artemii Iniutin
9.90%,
Macmillan Trading Company Nelli Morgulchik
Limited ("Macmillan") 7.88% 6,817,063 23.36%
Ramify Consulting Corp. ("Ramify") German Kaplun 5,348,980 18.33%
Wissey Trade & Invest Ltd
("Wissey") Andrey Kareev 5,000,000 17.13%
Eclectic Capital Limited
("Eclectic") Nika Kirpichenko 1,800,000 6.17%
Menostar Holdings Limited
("Menostar") Dmitry Kirpichenko 1,790,000 6.13%
Merit Systems Inc. Artemii Iniutin 1,191,218 4.08%
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 241,939 0.83%
Total 23,643,512 81.01%
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 total direct and indirect interest in TMT by the concert
party's beneficial holders are now as follows:
Beneficial holder No. of Ordinary % of issued share
Shares capital
German Kaplun 7,882,664 27.01%
Andrey Kareev 5,000,000 17.13%
Alexander Morgulchik 3,071,087 10.52%
Artemii Iniutin 2,108,046 7.22%
Nika Kirpichenko 1,800,000 6.17%
Dmitry Kirpichenko 1,790,000 6.13%
Natalia Inyutina 727,156 2.49%
Nelli Morgulchik 537,403 1.84%
Vlada Kaplun 363,578 1.25%
Marina Kedrova 363,578 1.25%
Total 23,643,512 81.01%
NOTES:
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 is 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 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 for 2020 were as follows:
Director Directors' fees
--------------------- -----------------
Yuri Mostovoy US$50,000
Alexander Selegenev US$100,000
James Joseph Mullins US$25,798
Petr Lanin US$10,000
--------------------- -----------------
The minimum initial allocation of the Bonus Pool accrued for the
period ended 31 December 2020 among the Directors who are
predetermined participants of the Bonus Plan is as follows:
Directors The minimum initial The minimum initial
allocation of the allocation of the
Bonus Pool (%) Bonus Pool (US$)
Alexander Selegenev 16.5% 1,004,346
-------------------- --------------------
Yuri Mostovoy 5.0% 304,347
-------------------- --------------------
Subsequent events post the period end
In January 2021, the Company invested an additional GBP135,825
(via acquisition of existing shares) in 3S Money, a UK-based online
banking service focusing on international trade ( www.3s.money
).
In January 2021, the Company invested an additional US$228,933
(via acquisition of existing shares) in Workiz, a SaaS solution for
the service field industry ( www.workiz.com ).
In February 2021, the Company invested an additional
US$2,000,000 in Affise, a performance marketing SaaS solution (
https://affise.com/en/ ).
In February 2021, the Company invested an additional GBP399,997
in HealthyHealth, an insurtech and healthtech company (
www.healthyhealth.com ).
In March 2021, the Company invested US$1,000,000 in 3DLook Inc.,
a body scanning and measuring technology solution for the online
retail industry ( www.3dlook.me ).
These events after the reporting period are not reflected in the
NAV and/or the financial statements as at 31 December 2020.
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.
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.
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
24 March 2021
INDEPENT AUDITORS' REPORT TO THE MEMBERS OF TMT INVESTMENTS PLC
FOR THE YEARED 31 DECEMBER 2020
Opinion
We have audited the financial statements of TMT Investments plc
(the 'company') for the year ended 31 December 2020 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 the preparation of the company's
financial statements 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 company's affairs
as at 31 December 2020 and of the company's profit and cash flows
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 in the UK, 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
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statement is appropriate.
Our evaluation of the director's assessment of the entity's
ability to continue to adopt the going concern basis of accounting
included:
Evaluation of management assessment Key observations
We evaluated the Directors'
going concern assessment and At 31 December 2020, the Company
performed the following procedures: held cash of GBP39,004.288 at
* We assessed the appropriateness of the cash flow bank.
forecasts in the context of the Company's 2020 The Company's cash flow forecasts
financial performance and evaluated the Directors' to 31 March 2022 ('the going
sensitivities performed against this forecast. concern period') have been approved
by the Board. These are prepared
based on certain key assumptions,
against which plausible sensitivities
* We evaluated the key assumptions in the forecast, have been applied. These included
which were consistent with our knowledge of the considering further investments
business and considered whether these were supported being made along with the ongoing
by the evidence we obtained. operating costs.
The forecast shows that the
Company has at all times available
cash and liquidity to meets
* We compared the prior year forecast against current its liabilities as they fall
year actual performance to assess management's due.
ability to forecast accurately. Based on the audit procedures
performed we concluded that
the Company has appropriately
adopted the going concern basis
* We also reviewed the disclosures relating to going of preparation. Further, we
concern basis of preparation and found that these did not identify any material
provided an explanation of the Directors' assessment disclosures that should be included
that was consistent with the evidence we obtained. regarding any material uncertainty
in respect of the going concern
basis of preparation.
----------------------------------------
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
entity's ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our approach to the 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
enough 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 it operates. Our planned
audit testing was directed accordingly and was focused on areas
where we assessed there to be the highest risk of material
misstatement.
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 communicate 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.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, 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.
This is not a complete list of all risks identified during our
audit.
Key audit matters How our audit addressed the
key audit matters
------------------------------------- -----------------------------------------------------------------------
Valuation of investments Our audit work included, but
was not restricted to:
The company is investing in
pre-growth companies in a very * We obtained an understanding of management's
competitive industry. Given assessment of the investment valuations and obtained
the nature of the companies an understanding of how they are performed.
being invested in, it is not
likely that all will be a success.
The value of the investment
is one of the most material This involved evaluating whether
balances in the company's financial the method chosen was in accordance
statements. with published guidance and
reviewing and challenging the
These investments are carried assumptions applied to the valuation
at fair value in the financial inputs.
statements and the valuation
is based on significant judgement * We verified and benchmarked key inputs and estimates
and assumptions. Due to the to independent information from our own research and
nature of the company's activities, against metrics from the investments.
there is a risk that the fair
value has not been appropriately
applied for all of the investments
and therefore that the value * Where appropriate, we have performed sensitivity
of investments held at year-end analysis on the valuation calculations.
may be misstated.
* Alternative valuations methods were considered and
discussed with management to provide alternative
views on the value of the investments.
* We agreed the purchase and sale of investments to
supporting evidence of the transaction and cash
movements on a sample basis and recalculated the
realised gains and losses on the sale of investments
for both the individual transactions on a sample
basis and for the total portfolio.
The Company's accounting policy
on fixed asset investments held
at fair value through profit
or loss is shown in note 2.6
to the Financial Statements
and related disclosures are
included in note 10.
Key observations
From our audit work undertaken,
we did not identify 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 reasonably be
expected to influence the economic decisions taken on the basis of
the financial statements by reasonable users.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Materiality Measure Company
Overall materiality We determined materiality for the
financial statements as a whole
to be GBP2,765,000.
------------------------------------------
How we determine it Based on 1.5% of gross assets held
at 31 December 2020.
------------------------------------------
Rationale for benchmarks applied We believe that these benchmarks
are appropriate due to the investments
being the key driver 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, and
was set at GBP2,073,750
------------------------------------------
Specific materiality We also determine a lower level
of specific materiality for certain
areas such as Director's remuneration.
Area materiality for the disclosure
of the cash element of Director's
remuneration has been set at GBP2,000
and performance materiality of
GBP1,000.
------------------------------------------
Reporting threshold We agreed with the Audit Committee
that we would report to them all
misstatements over GBP11,150 (5%
of overall materiality) identified
during the audit, as well as differences
below that threshold that, in our
view, warrant reporting on qualitative
grounds. We also report to the
Audit Committee on disclosure matters
that we identified when assessing
the overall presentation of the
Financial Statements.
------------------------------------------
Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditors'
report thereon. The directors are responsible for the other
information contained within the annual report. 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.
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 course of 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 this gives rise to a material misstatement in the financial
statements themselves.
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
In the light of the knowledge and understanding of the company
and its environment obtained in the course of the audit, we have
not identified material misstatements in the directors' report.
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:
-- proper accounting records have not been kept by the company,
or proper 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 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 control
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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- Based on our understanding of the Company and the industry in
which it operates, we identified that the principal risks of
non-compliance with laws and regulations related to the acts by the
Company which were contrary to applicable laws and regulations
including fraud and we considered the extent to which
non-compliance might have a material effect on the Financial
Statements. We also considered those laws and regulations that have
a direct impact on the preparation of the Financial Statements such
as Part 16 of Companies (Jersey) Law 1991. We evaluated
management's incentives and opportunities for fraudulent
manipulation of the Financial Statements (including the risk of
override of controls), and determined that the principal risks were
related to inflated investment valuations and profit.
-- Audit procedures performed included: review of the Financial
Statement disclosures to underlying supporting documentation,
review of correspondence with legal advisors, and enquiries of
management in so far as they related to the Financial Statements,
and testing of journals and evaluating whether there was evidence
of bias by the Directors that represented a risk of material
misstatement due to fraud.
There are inherent limitations in the audit procedures described
above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the
Financial Statements, the less likely we would become aware of it.
Also, the risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through
collusion.
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 and Statutory Auditor
UHY Hacker Young
4 Thomas More Square
London E1W 1YW
24 March 2021
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the
For the year year ended
ended 31/12/2020 31/12/2019
Notes USD USD
Gains on investments 3 82,259,735 21,275,927
Dividend income 129,897 73,517
------------------------------------------ ------ ------------------ ------------
Total investment income 82,389,632 21,349,444
Expenses
Bonus scheme payment charge 6 (6,086,948) (2,007,694)
Administrative expenses 5 (1,255,451) (1,174,466)
Other operating expenses - (13,079)
------------------------------------------ ------ ------------------ ------------
Operating gain 75,047,233 18,154,205
Net finance income 7 61,444 235,306
------------------------------------------ ------ ------------------ ------------
Gain before taxation 75,108,677 18,389,511
Taxation 8 - -
------------------------------------------ ------ ------------------ ------------
Gain attributable to equity shareholders 75,108,677 18,389,511
Total comprehensive income for the year 75,108,677 18,389,511
Gain per share
Basic and diluted gain per share (cents
per share) 9 257.35 63.01
------------------------------------------ ------ ------------------ ------------
Statement of Financial Position
At 31 December At 31 December
2020 2019
Notes USD USD
Non-current assets
Financial assets at FVPL 10 144,803,154 91,207,190
Total non-current assets 144,803,154 91,207,190
Current assets
Trade and other receivables 11 487,838 711,957
Cash and cash equivalents 12 39,004,288 11,700,074
Total current assets 39,492,126 12,412,031
Total assets 184,295,280 103,619,221
Current liabilities
Trade and other payables 13 6,372,573 805,191
Total current liabilities 6,372,573 805,191
----------------------------- ------ ------------------------ ----------- --------------------
Total liabilities 6,372,573 805,191
----------------------------- ------ ------------------------ ----------- --------------------
Net assets 177,922,707 102,814,030
----------------------------- ------ ------------------------ ----------- --------------------
Equity
Share capital 14 34,790,174 34,790,174
Retained profit 143,132,533 68,023,856
Total equity 177,922,707 102,814,030
----------------------------- ------ ------------------------ ----------- --------------------
The financial statements were approved by the Board of Directors
on 24 March 2021 and were signed on its behalf by:
Alexander Selegenev
Executive Director
Statement of Cash Flows
For the For the
year year
ended ended
31/12/2020 31/12/2019
Notes USD USD
Operating activities
Operating gain 75,047,233 18,154,205
------------------------------------------------ ----- ------------ ------------
Adjustments for non-cash items:
Changes in fair value of financial assets
at FVPL 3 (82,294,256) (21,269,830)
(7,247,023) (3,115,625)
------------------------------------------------ ----- ------------ ------------
Changes in working capital:
Decrease in trade and other receivables 11 224,119 23,092,438
Increase/(Decrease) in trade and other
payables 13 5,567,382 (897,751)
Net cash (used in)/generated from operating
activities (1,455,522) 19,079,062
------------------------------------------------ ----- ------------ ------------
Investing activities
Interest received 7 61,444 202,224
Purchase of financial assets at FVPL 10 (12,503,095) (8,581,128)
Proceeds from sale of financial assets at
FVPL 10 41,201,387 3,533,912
Other financial income 7 - 33,082
------------------------------------------------ ----- ------------ ------------
Net cash generated from/(used in) investing
activities 28,759,736 (4,811,910)
------------------------------------------------ ----- ------------ ------------
Financing activities
Dividends paid - (5,837,166)
Net cash used in financing activities - (5,837,166)
------------------------------------------------ ----- ------------ ------------
Increase in cash and cash equivalents 27,304,214 8,429,986
------------------------------------------------ ----- ------------ ------------
Cash and cash equivalents at the beginning
of the year 11,700,074 3,270,088
------------------------------------------------ ----- ------------ ------------
Cash and cash equivalents at the end of
the year 12 39,004,288 11,700,074
------------------------------------------------ ----- ------------ ------------
Statement of Changes in Equity
For the year ended 31 December 2019 and for the year ended 31
December 2020, USD
Share capital Retained profit Total
Note USD USD USD
Balance at 1 January 2019 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
--------------------------------------------------------------- -------------- ---------------- -------------
Gain for the year - 75,108,677 75,108,677
Total comprehensive income for the year - 75,108,677 75,108,677
Balance at 31 December 2020 34,790,174 143,132,533 177,922,707
--------------------------------------------------------------- -------------- ---------------- -------------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2020
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company
incorporated in Jersey with its registered office at 13 Castle
Street, St Helier, Jersey, JE1 1ES, Channel Islands.
The Company was incorporated and registered on 30 September 2010
in Jersey under the Companies (Jersey) Law 1991 (as amended) with
registration number 106628 under the name TMT Investments Limited.
The Company obtained consent from the Jersey Financial Services
Commission pursuant to the Control of Borrowing (Jersey) Order 1985
on 30 September 2010. On 1 December 2010 the Company re-registered
as a public company and changed its name to TMT Investments Plc.
The Company's ordinary shares were admitted to trading on the AIM
market of the London Stock Exchange on 1 December 2010.
The memorandum and articles of association of the Company do not
restrict its activities and therefore it has unlimited legal
capacity. The Company's ability to implement its Investing Policy
and achieve its desired returns will be limited by its ability to
identify and acquire suitable investments. Suitable investment
opportunities may not always be readily available.
The Company will seek to make investments in any region of the
world.
Financial statements of the Company are prepared by and approved
by the Directors in accordance with International Financial
Reporting Standards, International Accounting Standards and their
interpretations issued or adopted by the International Accounting
Standards Board as adopted by the European Union ("IFRSs"). The
Company's accounting reference date is 31 December.
2. Summary of significant accounting policies
2.1 Basis of presentation
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 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 31.12.2020 rate, 2020
----------------- ----------------- ------------
British pounds,
GBP 1.3649 1.2839
Euro, EUR 1.2276 1.1416
--------------------- ----------------- ------------
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 assets
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, such as the analysis of revenue multiples of
comparable companies and/or comparable transactions. The nature of
such valuation techniques is highly judgmental and dependent on the
market sentiment at the time of the analysis.
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 following standards and amendments became effective from 1
January 2020, but did not have any material impact on the
Company:
-- Amendments to References to Conceptual Framework in IFRS
Standards
-- Amendments to IFRS 9 and IFRS 7 - Interest rate benchmark
reform
-- Amendments to IAS 1 and IAS 8 - Definition of Materiality
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 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 31/12/2020 For the year ended 31/12/2019
USD USD
Gross interest income from convertible notes
receivable 82,879 21,698
Net interest income from convertible notes
receivable 82,879 21,698
Gains on changes in fair value of financial assets
at FVPL 82,294,256 21,269,830
Success fee attributable to consultants - (15,601)
Other losses on investment (117,400) -
Total net gains on investments 82,259,735 21,275,927
---------------------------------------------------- ------------------------------ ------------------------------
4 Segmental analysis
Geographic information
The Company has investments in the following geographical areas:
USA, Estonia, the United Kingdom, BVI, Cyprus and Israel
Non-current financial assets
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 6,802,735 - - - 650,000 - 7,452,735
Total 64,590,341 291,781 779,000 22,642,461 650,000 2,253,607 91,207,190
-------------------- ----------- -------- -------- ----------- -------- ---------- -----------
As at 31/12/2020
United
USA Israel BVI Estonia Cyprus Kingdom Total
USD USD USD USD USD USD USD
-------------------- ----------- -------- ---------- ----------- ---------- ---------- ------------
Equity investments 90,078,690 155,000 1,780,250 36,711,439 - 7,718,112 136,443,491
Convertible
notes & SAFEs 6,827,998 - - 181,665 1,350,000 - 8,359,663
Total 96,906,688 155,000 1,780,250 36,893,104 1,350,000 7,718,112 144,803,154
-------------------- ----------- -------- ---------- ----------- ---------- ---------- ------------
5 Administrative expenses
Administrative expenses include the following amounts:
For the year ended 31/12/2020 For the year ended 31/12/2019
USD USD
------------------------------- ------------------------------ ------------------------------
Staff expenses (note 6) 653,318 648,170
Professional fees 254,172 241,480
Legal fees 97,100 45,732
Bank and LSE charges 18,336 13,620
Audit fees 31,625 26,328
Accounting fees 15,200 15,200
Rent 94,608 94,596
Other expenses 69,646 106,897
Currency exchange loss (gain) 21,446 (17,557)
------------------------------- ------------------------------ ------------------------------
1,255,451 1,174,466
------------------------------- ------------------------------ ------------------------------
6 Staff expenses
For the year ended 31/12/2020 For the year ended 31/12/2019
USD USD
-------------------- ------------------------------ ------------------------------
Directors' fees 185,798 185,570
Wages and salaries 467,520 462,600
653,318 648,170
-------------------- ------------------------------ ------------------------------
Wages and salaries shown above include salaries relating to
2020. Bonus Plan costs are not included in administrative expenses
and are shown separately.
The Directors' fees for 2020 were as follows:
For the year ended 31/12/2020 For the year ended 31/12/2019
USD USD
---------------------- ------------------------------ ------------------------------
Alexander Selegenev 100,000 100,000
Yuri Mostovoy 50,000 50,000
James Joseph Mullins 25,798 25,570
Petr Lanin 10,000 10,000
---------------------- ------------------------------ ------------------------------
185,798 185,570
---------------------- ------------------------------ ------------------------------
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 6 (2019: 6).
Key management personnel of the Company are defined as those
persons having authority and responsibility for the planning,
directing and controlling the activities of the Company, directly
or indirectly. Key management of the Company are therefore
considered to be the Directors of the Company. There were no
transactions with the key management, other than their fees,
bonuses, and reimbursement of business expenses.
Under the Company's Bonus Plan, subject to achieving a minimum
hurdle NAV and high watermark conditions, the team receives an
annual cash bonus equal to 7.5% (increasing to 10% from 1 January
2021) of the net increases in the Company's NAV, adjusted for any
changes in the Company's equity capital resulting from issuance of
new shares, dividends, share buy-backs and similar corporate
transactions. For the bonus period from 1 July 2020 to 31 December
2020, the total amount of bonus accrued was US$6,086,948. The exact
allocation of the accrued bonus is expected to be approved and paid
to the participants of the Company's Bonus Plan shortly after the
publication of this report.
The minimum initial allocation of the Bonus Pool among the
predetermined participants of the Bonus Plan is as follows:
Participants of the The minimum initial The minimum initial
Bonus Plan allocation of the allocation of the
Bonus Pool (%) Bonus Pool (US$)
Artemii Iniutin (Employee) 16.5% 1,004,346
-------------------- --------------------
German Kaplun (Employee) 16.5% 1,004,346
-------------------- --------------------
Alexander Morgulchik
(Employee) 16.5% 1,004,346
-------------------- --------------------
Alexander Selegenev
(Director) 16.5% 1,004,346
-------------------- --------------------
Yuri Mostovoy (Director) 5.0% 304,347
-------------------- --------------------
Alexander Pak (Employee) 10.0% 608,695
-------------------- --------------------
Levan Kavtaradze (Employee) 8.0% 486,956
-------------------- --------------------
To be allocated 11.0% 669,566
-------------------- --------------------
Total 100% US$6,086,948
-------------------- --------------------
7 Net finance income
For the year ended 31/12/2020 For the year ended 31/12/2019
USD USD
---------------------- ------------------------------ ------------------------------
Interest income 61,444 202,224
Other finance income - 33,082
61,444 235,306
---------------------- ------------------------------ ------------------------------
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 per share
The calculation of basic gain per share is based upon the net
gain for the year ended 31 December 2020 attributable to the
ordinary shareholders of US$75,108,677 (2019: net gain of
US$18,389,511) and the weighted average number of ordinary shares
outstanding was calculated as follows:
Gain per share For the year ended 31/12/2020 For the year ended 31/12/2019
--------------------------------------------------- ------------------------------ ------------------------------
Basic gain per share (cents per share) 257.35 63.01
Gain attributable to equity holders of the entity 75,108,677 18,389,511
--------------------------------------------------- ------------------------------ ------------------------------
The weighted average number of ordinary shares outstanding was
calculated as follows:
For the year ended 31/12/2020 For the year ended 31/12/2019
-------------------------------------------- ------------------------------ ------------------------------
Weighted average number of shares in issue
Ordinary shares 29,185,831 29,185,831
29,185,831 29,185,831
-------------------------------------------- ------------------------------ ------------------------------
During the years ended 31 December 2020 and 31 December 2019
there were no dilutive instruments in issue.
10 Non-current financial assets
At 31 December 2020 At 31 December 2019
Financial assets at FVPL, USD:
Investments in equity shares (i)
- unlisted shares 136,443,491 83,754,455
Convertible notes receivable (ii)
- promissory notes 2,753,663 3,452,735
- SAFEs 5,606,000 4,000,000
----------------------------------- -------------------- --------------------
144,803,154 91,207,190
----------------------------------- -------------------- --------------------
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 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
------------------------------------------------ ------------- --------------- -------------
Total gains or losses in 2020:
- changes in fair value 81,892,288 401,968 82,294,256
Purchases (including consulting & legal fees) 8,873,494 3,629,601 12,503,095
Disposal of investment (carrying value) (41,201,387) - (41,201,387)
Conversion and other movements 3,124,641 (3,124,641) -
------------------------------------------------ ------------- --------------- -------------
Balance as at 31 December 2020 136,443,491 8,359,663 144,803,154
------------------------------------------------ ------------- --------------- -------------
Financial assets at fair value through profit or loss are
measured at fair value, and changes therein are recognised in
profit or loss.
When measuring the fair value of a financial instrument, the
Company uses relevant transactions during the year or shortly after
the year end, which gives an indication of fair value and considers
other valuation methods to provide evidence of value. The "price of
recent investment" methodology is used mainly for venture capital
investments, and the fair value is derived by reference to the most
recent equity financing round or sizeable partial disposal. Fair
value change is only recognised if that round involved a new
external investor. 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, such as the analysis of revenue multiples of
comparable companies and/or comparable transactions. The nature of
such valuation techniques is highly judgmental and dependent on the
market sentiment at the time of the analysis.
(i) Equity investments as at 31 December 2020:
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 2020, period, notes, investments, Disposals, Dec 2020, stake
company investment USD USD USD USD USD USD owned
--------------- ------------ ----------- ------------ ------------ ------------- ------------- ------------ -------
DepositPhotos 26.07.2011 10,836,105 - - - - 10,836,105 16.67%
Wanelo 21.11.2011 1,825,596 - - - - 1,825,596 4.69%
Backblaze 24.07.2012 21,201,509 - - 34,802,828 - 56,004,337 10,85%
E2C 15.02.2014 136,781 - - (136,781) - -
Remote.it 13.06.2014 3,025,285 - - - - 3,025,285 1.64%
Le Tote 21.07.2014 2,749,812 - - (2,749,812) - - 0.69%
Anews 25.08.2014 1,000,000 - - - - 1,000,000 9.41%
Klear 01.09.2014 155,000 - - - - 155,000 3.04%
Bolt 15.09.2014 22,132,548 - - 14,068,979 - 36,201,527 1.48%
Pipedrive 30.07.2012 10,257,098 1,630,075 - 29,314,214 (41,201,387) - -
PandaDoc 11.07.2014 2,215,118 - - 1,406,161 - 3,621,279 1.55%
FullContact 11.01.2018 244,506 - - - - 244,506 0.19%
ScentBird 13.04.2015 3,340,404 329,903 - 2,920,647 - 6,590,954 4.43%
Workiz 16.05.2016 442,159 - - 326,686 - 768,845 2.32%
Vinebox 06.05.2016 450,015 - - - - 450,015 2.42%
19.01.
Hugo 2019 779,000 1,001,250 - - - 1,780,250 3.55%
MEL Science 25.02.2019 1,999,992 - - 663,704 - 2,663,696 3,64%
Healthy
Health 06.06.2019 253,615 - - 162,122 - 415,737 2.17%
eAgronom 31.08.2018 288,224 - - - - 288,224 2.13%
Rocket
Games
(Legionfarm) 16.09.2019 200,000 - - - - 200,000 1.96%
05.12.
Timbeter 2019 221,688 - - - - 221,688 4.64%
Classtag 03.02.2020 - 200,000 - - - 200,000 1.18%
3S Money
Club 07.04.2020 - 620,870 - - - 620,870 4.83%
Hinterview 21.09.2020 - 660,197 - - - 660,197 6.47%
Virtual
Mentor
(Allright) 12.11.2020 - 772,500 - - - 772,500 3.01%
NovaKid 13.11.2020 - 500,000 - - - 500,000 1.65%
MTL Financial
(OutFund) 17.11.2020 - 1,322,100 - - - 1,322,100 5.71%
Scalarr 15.08.2019 - 499,999 1,500,000 756,564 - 2,756,563 7.66%
Accern 21.08.2019 - - 1,282,705 - - 1,282,705 5.12%
Feel 13.08.2020 - 1,336,600 341,936 356,976 - 2,035,512 9.07%
Total 83,754,455 8,873,494 3,124,641 81,892,288 (41,201,387) 136,443,491
----------- ------------ ------------ ------------- ------------- ------------
(ii) Convertible loan notes as at 31 December 2020:
Additions Gain/loss
to from changes
convertible in fair
Value at note value of
Date of 1 Jan investments equity Value at
Investee initial 2020, during the Conversions, investments, 31 Dec Term, Interest
company investment USD period, USD USD USD 2020, 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%
Accern 21.08.2019 1,282,705 - (1,282,705) - - - -
Affise 18.09.2019 1,000,000 - - 401,968 1,401,968 - 5.00%
Feel 13.08.2020 - 341,936 (341,936) - - - -
Postoplan 08.12.2020 - 181,665 - - 181,665 1.0 2.00%
----------- ------------ ---------- ------------ ------------- ------------- ---------- ----------- ----------
Total 3,452,735 523,601 (1,624,641) 401,968 2,753,663
------------------------- ---------- ------------ ------------- ------------- ---------- ----------- ----------
(iii) SAFEs as at 31 December 2020:
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 2020, during the Conversions, investments, Disposals, Dec 2020,
company investment USD period, USD USD USD USD USD
-------------- ------------- ------------ ------------ ------------- ------------- ------------- ------------
Spin 17.12.2018 300,000 - - - - 300,000
Cheetah
(Go-X) 29.07.2019 350,000 - - - - 350,000
Scallar 15.08.2019 1,500,000 - (1,500,000) - - -
Retarget 24.09.2019 650,000 700,000 - - - 1,350,000
Rocket Games
(Legionfarm) 17.09.2019 1,200,000 - - - - 1,200,000
Classtag 03.02.2020 - 200,000 - - - 200,000
Moeco 08.07.2020 - 1,000,000 - - - 1,000,000
Volumetric 24.07.2020 - 206,000 - - - 206,000
StudyFree 08.12.2020 - 1,000,000 - - - 1,000,000
------------
Total 4,000,000 3,106,000 (1,500,000) - - 5,606,000
----------------------------- ------------ ------------ ------------- ------------- ------------- ------------
11 Trade and other receivables
At 31 December 2020 At 31 December 2019
USD USD
----------------------------------------- -------------------- --------------------
Prepayments 26,631 264,361
Other receivables 272,779 326,648
Interest receivable on promissory notes 188,428 105,548
Interest receivable on deposits - 15,400
487,838 711,957
----------------------------------------- -------------------- --------------------
The fair values of trade and other receivables approximate to
their carrying amounts as presented above. During 2020 and 2019 no
balances were past due or impaired, and no credit losses had been
expected.
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2020 include
cash on hand and in banks.
Cash and cash equivalents comprise the following:
At 31 December 2020 At 31 December 2019
USD USD
--------------- -------------------- --------------------
Deposits - 6,500,000
Bank balances 39,004,288 5,200,074
--------------- -------------------- --------------------
39,004,288 11,700,074
--------------- -------------------- --------------------
The following table represents an analysis of cash and
equivalents by rating agency designation based on Standard and
Poor's rating or their equivalent:
At 31 December 2020 At 31 December 2019
USD USD
--------------- -------------------- --------------------
Bank balances
BBB+ rating 39,004,288 5,200,074
--------------- -------------------- --------------------
39,004,288 5,200,074
--------------- -------------------- --------------------
Deposits
BBB+ rating - 6,500,000
--------------- -------------------- --------------------
- 6,500,000
--------------- -------------------- --------------------
Total 39,004,288 11,700,074
--------------- -------------------- --------------------
13 Trade and other payables
At 31 December 2020 At 31 December 2019
USD USD
--------------------------- -------------------- --------------------
Salaries payable 40,000 -
Directors' fees payable 22,954 15,732
Bonuses payable 6,257,560 748,626
Trade payables 27,491 11,912
Other current liabilities - 9
Accruals 24,568 28,912
--------------------------- -------------------- --------------------
6,372,573 805,191
--------------------------- -------------------- --------------------
The fair values of trade and other payables approximate to their
carrying amounts as presented above.
14 Share capital
On 31 December 2020 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 2020 At 31 December 2019
USD USD
----------------------------- -------------------- --------------------
Share capital 34,790,174 34,790,174
Issued capital comprises: Number Number
Fully paid ordinary shares 29,185,831 29,185,831
----------------------------- -------------------- --------------------
Number of shares Number of shares
----------------------------- -------------------- ----------------------
Balance at 31 December 2019 29,185,831 29,185,831
Issue of ordinary shares - -
Balance at 31 December 2020 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 2020 the largest exposure to credit risk
related to cash and cash equivalents (US$39,004,288) . 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 2020 At 31 December 2019
USD USD
-------------------------------------- -------------------- --------------------
Convertible notes receivable & SAFEs 8,359,663 5,970,030
Trade and other receivables 487,838 711,957
Cash and cash equivalents 39,004,288 11,700,074
-------------------------------------- -------------------- --------------------
47,851,789 18,382,061
-------------------------------------- -------------------- --------------------
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 and SAFEs 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, may
impact the underlying performance and therefore future fair market
values of the Company's investee companies. A 10% increase in
company valuations would impact the value of the investment
portfolio and unrealised gains by US$14.45 million.
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 of
31 December 2020 the Company was not exposed to the interest rate
risk as it did not have any interest bearing bank deposit
balances.
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 2020 was as
follows:
For the year For the For the year For the year
ended 31/12/2020 year ended ended 31/12/2019 ended
31/12/2020 31/12/2019
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 94,261 7,987 484,295 8,705
Current liabilities
Trade and other payables (4,309) - (291,853) -
------------------------------- ----------------------- ------------ ------------------------- -------------
Net (short) long position 89,951 7,987 192,442 8,705
------------------------------- ----------------------- ------------ ------------------------- -------------
Net exposure currency 65,903 6,506 146,757 7,771
------------------------------- ----------------------- ------------ ------------------------- -------------
Net exposure currency
(assuming a 10% movement
in exchange rates) 80,956 7,188 173,198 7,834
------------------------------- ----------------------- ------------ ------------------------- -------------
Impact on exchange movements
in the statement of
comprehensive income 8,995 799 19,244 870
------------------------------- ----------------------- ------------ ------------------------- -------------
The foreign exchange rates of the USD at 31 December were as
follows:
31/12/2020 31/12/2019
----------------------- ----------- -----------
Currency
British pounds, GBP 1.3649 1.3113
Euro, EUR 1.2276 1.1202
----------------------- ----------- -----------
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 2020, the cash and equivalents of the Company
were US$ 39,004,288 .
The following are the maturities of current liabilities as at 31
December 2020:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
------------------------- ---------------- ---------------- ---------- ------------------
Salaries 40,000 40,000 - -
Directors' fees payable 22,954 22,954 - -
Bonuses payable 6,257,560 6,257,560 - -
Trade payables 27,491 27,491 - -
Accruals 24,568 24,568 - -
6,372,573 6,372,573 - -
------------------------- ---------------- ---------------- ---------- ------------------
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 2020:
Level 1 Level 2 Level 3 Total
USD USD USD USD
-------------------------- --------- ----------- ----------- ------------
Financial assets
Financial assets at FVPL - 82,207,863 62,595,291 144,803,154
82,207,863 62,595,291 144,803,154
------------------------------------ ----------- ----------- ------------
17 Related party transactions
Since May 2012 until 31 December 2020, TMT's Moscow-based staff
were located in an office that belongs to a company ("Orgtekhnika")
controlled by Mr. Alexander Morgulchik and Mr. German Kaplun, the
Company's senior managers. Alexander Morgulchik and German Kaplun
also have a beneficial interest over 10.52% and 27.01% respectively
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 was US$7,883 per month. The
lease was short-term (less than one year) in nature and so was
recognised directly in expenses. With TMT's directors, employees
and advisers increasingly working remotely from various
international locations, the Company has not renewed (and does not
intend to renew) its agreement with Orgtekhnika beyond 31 December
2020.
The Company's Directors receive fees and bonuses from the
Company, details of which can be found in Note 6.
18 Subsequent events
In January 2021, the Company invested an additional GBP135,825
(via acquisition of existing shares) in 3S Money, a UK-based online
banking service focusing on international trade ( www.3s.money
).
In January 2021, the Company invested an additional US$228,933
(via acquisition of existing shares) in Workiz, a SaaS solution for
the service field industry ( www.workiz.com ).
In February 2021, the Company invested an additional
US$2,000,000 in Affise, a performance marketing SaaS solution (
https://affise.com/en/ ).
In February 2021, the Company invested an additional GBP399,997
in HealthyHealth, an insurtech and healthtech company (
www.healthyhealth.com ).
In March 2021, the Company invested US$1,000,000 in 3DLook Inc.,
a body scanning and measuring technology solution for the online
retail industry ( www.3dlook.me ).
These events after the reporting period are not reflected in the
NAV and/or the financial statements as at 31 December 2020.
19 Control
The Company is not controlled by any one party. Details of
significant shareholders are shown in the Directors' Report.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European (Withdrawal)
Act 2018.
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END
FR DGGDXBGDDGBS
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