TIDMTMT
RNS Number : 9821F
TMT Investments PLC
25 March 2022
25 March 2022
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2021 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 2021.
Highlights :
-- NAV per share of US$9.00 (up 47.5% from US$6.10 as of 31 December 2020)
-- Total NAV of US$283.1 million (up from US$177.9 million as of 31 December 2020)
-- 5-year IRR of 38.2% per annum
-- US$18.5 million of net cash proceeds from exits during 2021
-- US$40.5 million of investments across 31 new and existing companies in 2021
-- US$19.3 million of new equity capital raised in October 2021, at US$8.50 per share
-- Diversified global portfolio of over 50 companies focused
mainly around big data/cloud, e-commerce, marketplaces, EdTech,
FinTech, SaaS (software-as-a-service) and FoodTech solutions
-- US$6.7 million of investments post year-end
-- Negative effect of the military conflict in Ukraine on
portfolio companies is limited (US$4.6 million of potential new
write-downs currently identified), with future impact dependent on
how the situation unfolds in coming months
-- US$18.6 million in cash reserves as of 22 March 2021
Alexander Selegenev, Executive Director of TMT, commented:
"2021 was a very strong year for TMT, which saw excellent
revaluations on its investments in Bolt and PandaDoc, a successful
fundraise from current and new shareholders to fund new
investments, and the IPO of its portfolio company Backblaze on
Nasdaq. It was also one of our busiest years for making new
investments, with US$40.5 m deployed across 31 new and existing
companies in 2021 .
Whilst TMT specialises in investing in earlier-stage technology
companies, typically at pre-Series A and Series A stages, a
material proportion of TMT's current NAV is now heavily weighted
towards three large and globally established companies: Bolt,
Backblaze and PandaDoc. This is thanks to their excellent growth,
having been early-stage start-ups when TMT first invested. These
are now well funded companies capable of raising large sums (in
2021-22 Bolt raised EUR1.23bn, Backblaze raised US$100m and
PandaDoc raised an undisclosed Series C round), which are still
expanding and represent approximately two thirds of TMT's total
portfolio value. The remainder of the portfolio is highly
diversified among over 50 early and mid-stage companies, as part of
planning the next generation of the portfolio's potential winners
across big data/cloud, e-commerce, marketplaces, EdTech, FinTech,
SaaS (software-as-a-service) and FoodTech solutions.
Our portfolio's combination of globally established sector
leaders and a highly diversified mix of companies provides a
favourably hedged position against a backdrop of heightened global
uncertainty. Many of TMT's investees entered this period of
volatility with freshly raised funds and continued to successfully
grow their businesses. Some of these are already showing strong
promise and have been revalued significantly higher since TMT's
original investment.
Investing globally is one of TMT's key advantages and
differentiators, enabling TMT to seek the best risk / reward
investment opportunities worldwide for its shareholders. As
technology business models and trends start in one region and
spread to or are replicated in others, they may well command
significantly different valuation levels based on geography and
stage of development. The significant valuation disparities that
can arise provide attractive entry points into companies. This
investment approach is already bearing fruit, with the successful
exit of Central American food delivery app Hugo and the strong
growth of cloud kitchen and virtual food brand operator Muncher in
Latin America being good examples.
TMT seeks to pay special attention to not "overpaying" when it
makes an investment, preferring to reject an investment opportunity
where it considers the risk / reward balance is not sufficiently
attractive given the stage of an investee's development. In
parallel, TMT has an active policy of seeking to reduce the value
of underperforming investees as soon as there is enough evidence to
support such a decision. This combined approach has led to a
well-maintained portfolio.
Despite the recent volatility, investors continue to be
interested in very high-quality technology businesses, and TMT will
continue to identify such opportunities selectively and at
appropriate valuation levels, whilst employing an extremely
cautious general investment approach for the time being. The
Company expects a number of positive revaluations across its
portfolio in 2022 and will update shareholders on relevant
developments as appropriate."
Notice of AGM
The Company's Annual General Meeting will be held on 23 May 2022
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 2021 and Notice of AGM will shortly be available on the
Company's website at www.tmtinvestments.com .
Directorate Change
Petr Lanin has advised the Company that he will not offer
himself for re-election as a director at the Company's forthcoming
Annual General Meeting and accordingly will resign from the Board
with effect from the date of the Annual General Meeting. The
Company will be appointing an additional independent non-executive
director to replace Mr Lanin, and it is expected that such
appointment will be announced prior to or at the time of the Annual
General Meeting.
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)
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 a current investment portfolio of over 50 companies
and net assets of US$283 million as of 31 December 2021. The
Company's objective is to generate an attractive rate of return for
shareholders, predominantly through capital appreciation. The
Company is traded on the AIM market of the London Stock Exchange.
www.tmtinvestments.com .
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EXECUTIVE DIRECTOR'S STATEMENT
2021 saw continued growth across the TMT Investments Plc ("TMT"
or the "Company") portfolio, with structural business and economic
drivers continuing to benefit the Company's global portfolio of
high-growth technology companies. The period also saw sustained
investor interest in the high-growth potential of business models
based on digital, online and remote technologies, resulting in a
significant increase in fundraising activities by technology
companies around the world. These two factors resulted in a
continued trend of positive revaluations and cash realisations
across TMT's portfolio.
Following the disposal of the Company's investments in Pipedrive
for US$41 million at the end of 2020 and Depositphotos for US$14
million in 2021, we were busy directing those proceeds towards
investing in successful existing investees as well as new
companies, at mainly Series A stages, that met our investment
criteria of having outstanding management teams, a product or
service that can be scaled up globally, fast revenue growth, and
viable exit opportunities.
NAV per share
The Company's NAV per share increased by 47.5% in 2021 to
US$9.00 (from US$6.10 as of 31 December 2020), mainly as a result
of the significant upward revaluation of TMT's investments in Bolt
and PandaDoc.
Operating expenses
In 2021, the Company's administrative expenses of US$1,924,650
were above the corresponding 2020 levels (US$1,234,005), reflecting
the Company's significantly increased level of investment and
business development activities.
2021 Bonus
The total amount of bonus accrued for the year ended 31 December
2021 was US$9,676,043 which was above the corresponding 2020 level
(US$6,086,948).
Previous years' bonus pool adjustment
Due to a technical error in the calculation of the bonus pools
in the bonus periods from July 2016 to December 2020 (the "Affected
Bonus Periods"), the bonus pools in each of the Affected Bonus
Periods were calculated on the basis of the opening position being
the previous period's "adjusted NAV before bonus". Pursuant to the
terms of the Company's bonus plan, each of the Affected Bonus
Periods should have seen the calculation assess the annual growth
in NAV from an opening position of "adjusted NAV after bonus".
As a result, the amount of bonuses actually accrued in the
Affected Bonus Periods were understated by an aggregate of
US$372,556 (the "Underpaid Bonus"), of which US$93,972 related to
directors of the Company. As the total amount of the Underpaid
Bonus is considered immaterial, the error has been corrected, and
the Underpaid Bonus has been included in the current financial
statements as an additional charge for the current period.
Financial position
On 4 October 2021, the Company announced that it had raised
US$19.3 million (before expenses) from new and existing
shareholders, at a price of US$8.50 per share. The Company was
pleased to note this vote of confidence, from current and new
shareholders, in the Company's investment strategy.
As of 31 December 2021, the Company had no financial debt and
cash reserves of approximately US$25.5 million. As of 22 March
2022, the Company had cash reserves of approximately US$18.6
million, as a result of the deployment of capital into new
investments in the period after 31 December 2021.
Outlook
TMT has a diversified investment portfolio of over 50 companies,
focused primarily on big data/cloud, e-commerce, SaaS
(software-as-a-service), marketplaces, FinTech, EdTech and
FoodTech, most of which continue to benefit from the accelerated
shift to online consumer habits and remote working. Indeed, some of
the portfolio companies recently added to TMT's portfolio have
already raised further funds since TMT's investment at
significantly higher valuation levels. The general trends in the
digital technology sector continue to generate exciting new
investment and exit opportunities and the tech venture capital
investment space continues to be one of the few beneficiaries of
the new market environment created by COVID-19.
The sizeable correction in the valuations of publicly-traded
technology companies that took place in the beginning of 2022 has
had a mixed effect on the Company. Whilst the valuation of
NASDAQ-traded Backblaze (TMT's second largest portfolio holding)
has been directly negatively affected, the Company's largest
investee, Bolt, in January 2022 raised its largest equity round to
date at an over 50% premium to the valuation achieved just five
months prior. As for the rest of the portfolio, many of the
Company's investees entered that period of volatility with freshly
raised funds and continued to successfully grow their
businesses.
According to the BVP Cloud Index ( https://cloudindex.bvp.com/
), median valuation multiples for the relevant companies have
broadly returned to the more sustainable levels seen in 2014-2019.
While this period of uncertainty has not been long enough to have a
broad and sustained negative effect on the underlying businesses of
technology companies, the recent public market correction has
started to be reflected in reduced valuations of earlier stage
privately held start-ups. This is generally beneficial to TMT as an
investor specialising in earlier stage technology companies,
allowing for more attractive investment entry points.
The recent military conflict in Ukraine, followed by the broad
sanctions against Russia, have undoubtedly added to the global
market uncertainty. TMT invests globally and its portfolio is
highly diversified in terms of revenue origin from its underlying
companies. Given the international nature of online/digital
businesses, a small number of the Company's earlier stage portfolio
companies have various degrees of exposure to Russia and Ukraine.
TMT has identified eight of its portfolio companies that are most
likely to be negatively affected by the military conflict in
Ukraine. If the conflict had taken place in 2021, TMT would have
reduced the fair value of the relevant investees by a total of
approximately US$4.6 million (see the Subsequent Events section for
further details).
All these events have added to a high level of share price
volatility across all equities, to which the technology sector has
not been immune. The current global situation is affecting the
wider global economy, and the ultimate effect on the global tech
sector and its participants will depend on how global dynamics
unfold in the coming months.
Despite the recent volatility, investors continue to be
interested in very high quality technology businesses, and TMT will
continue to identify such opportunities very selectively and at
appropriate valuation levels, whilst employing an extremely
cautious general investment approach for the time being. The
Company expects a number of positive revaluations across its
portfolio in 2022 and will update shareholders on relevant
developments as appropriate.
Alexander Selegenev
Executive Director
24 March 2022
CASE STUDIES
Bolt
Bolt is a ride-hailing and food delivery service which is
transforming mobility worldwide ( www.bolt.eu ). In 2021, Bolt
expanded strongly and its full suite of mobility and delivery
products are currently used by more than 100 million customers in
45 countries and over 400 cities across Europe and Africa. In 2021,
Bolt experienced triple-digit growth across all verticals.
Bolt's ability to raise EUR1.23bn in 2021 and 2022 in two fund
raises is testament to strong investor confidence in Bolt's
business model, management team and execution strengths. The
transactions collectively represented a revaluation uplift of
US$67.2 million (or 186%) in the fair value of TMT's investment,
compared to the previous reported amount as of 31 December 2020. As
one of Bolt's earliest investors in 2014, TMT is delighted to
witness this company's remarkable trajectory.
Backblaze
Backblaze, a leading cloud storage platform ( www.backblaze.com
), announced on 10 November 2021 the pricing of its initial public
offering of 6.25m shares of its Class A common stock at a price to
the public of US$16.00 per share, for gross proceeds to Backblaze
of US$100m. Backblaze's Class A common stock began trading on the
Nasdaq Global Market on 11 November 2021 under the ticker symbol
"BLZE." The US$100m offering closed on 15 November 2021.
At the closing mid-market price of US$16.89 per share on 31
December 2021, the value of TMT's investment in Backblaze was
valued at approximately US$63.2 million, which represented a
revaluation uplift of US$5.1 million (or 9%) in the value of TMT's
investment in Backblaze, compared to the previously announced
valuation as of 31 December 2020 (adjusted for the value of TMT's
additional investment made in Backblaze in the second half of
2021). At the closing mid-market price of US$11.53 per share on 21
March 2022, the value of TMT's investment in Backblaze was
approximately US$43.1 million.
PandaDoc
PandaDoc is a leading proposal automation and contract
management software provider ( www.pandadoc.com ) which in 2021
continued its double-digital annualised revenue growth. In 2021
PandaDoc completed a new equity funding round. The transaction
represented a revaluation uplift of US$10.4 million (or 286%) in
the fair value of TMT's investment, compared to the previous
reported amount as of 31 December 2020.
Shortly thereafter, TMT sold 11% of its interest in PandaDoc to
a large institutional investor for a cash consideration of US$2.0
million. The transaction represented a further revaluation uplift
of US$4.2 million (or 30%) in the fair value of TMT's investment in
PandaDoc. Collectively, the value of TMT's investment in PandaDoc
in 2021 increased to US$18.2 million, being the value of its
remaining interest and the consideration received, representing an
increase of US$14.6 million (or approximately 402%) on the value of
the Company's interest in PandaDoc as of 31 December 2020.
3S Money Club
3S Money Club, a UK-based bank challenger providing corporate
clients with multi-currency bank accounts in over 190 countries (
www.3s.money ), completed two new equity funding rounds in 2021.
The transactions collectively represented a revaluation uplift of
US$4.3 million (or 693%) in the fair value of TMT's investment,
compared to the previous reported amount as of 31 December 2020
(adjusted for the value of TMT's additional investments made in 3S
Money in 2021).
3S Money Club's digital accounts are designed for high-value
import and export transactions, dividend distributions, finance and
treasury operations, with 3S Money handling all aspects of
cross-border payments and FX risk management.
Workiz
Workiz, a leading SaaS provider for the field service industry (
www.workiz.com ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$3.0 million
(387%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020 (adjusted for the
value of TMT's additional investments made in Workiz in 2021).
Workiz's easy-to-use services make managing home service teams
dramatically more efficient by improving workflow, efficiency and
lead management, among many other features. Schedule jobs,
dispatches, invoice, and get paid - all in one place. Workiz is
trusted by over 100,000 home service professionals across the US
and Canada, from plumbing to electrics, computer repair to
landscaping.
PORTFOLIO DEVELOPMENTS
We are delighted with our portfolio companies' performance in
2021, which has sustained the Company's historical trend of
positive revaluations and cash realisations. A number of portfolio
companies received further validation for their business models by
raising fresh equity capital at higher valuations. In tandem, most
of our other portfolio companies have continued to grow their
businesses quietly in the background. In addition, the Company
continues its policy of seeking to reduce the value of
underperforming investees as soon as there is enough evidence to
support such decisions.
Portfolio performance:
The following developments have had an impact on and are
reflected in the Company's NAV and/or financial statements as of 31
December 2021 in accordance with applicable accounting
standards:
Full and partial cash exits, and positive revaluations:
-- Bolt, a ride-hailing and food delivery platform ( www.bolt.eu
), completed two consecutive equity funding rounds in August 2021
and January 2022. The transactions collectively represented a
revaluation uplift of US$67.2 million (or 186%) in the fair value
of TMT's investment, compared to the previous reported amount as of
31 December 2020.
-- PandaDoc, a proposal automation and contract management
software provider ( www.pandadoc.com ), completed a new equity
funding round. The transaction represented a revaluation uplift of
US$10.4 million (or 286%) in the fair value of TMT's investment,
compared to the previous reported amount as of 31 December 2020.
Shortly thereafter, TMT sold 11% of its interest in PandaDoc to a
large institutional investor for a cash consideration of US$2.0
million. The transaction represented a further revaluation uplift
of US$4.2 million (or 30%) in the fair value of TMT's investment in
PandaDoc. Collectively, the value of TMT's investment in PandaDoc
in 2021 increased to US$18.2 million, being the value of its
remaining interest and the consideration received, representing an
increase of US$14.6 million (or approximately 402%) on the value of
the Company's interest in PandaDoc as of 31 December 2020.
-- Backblaze, a leading cloud storage platform, announced on 10
November 2021 the pricing of its initial public offering of
6,250,000 shares of its Class A common stock at a price to the
public of US$16.00 per share, for gross proceeds to Backblaze of
US$100,000,000. Backblaze's Class A common stock began trading on
the Nasdaq Global Market on 11 November 2021 under the ticker
symbol "BLZE." The US$100,000,000 offering closed on 15 November
2021. At the closing mid-market price of US$16.89 per share on 31
December 2021, the value of TMT's investment in Backblaze was
valued at approximately US$63.1 million, which represented a
revaluation uplift of US$5.1 million (or 9%) in the value of TMT's
investment in Backblaze, compared to the previously announced
valuation as of 31 December 2020 ( adjusted for the value of TMT's
additional investment made in Backblaze in the second half of 2021)
. At the closing mid-market price of US$11.53 per share on 21 March
2022, the value of TMT's investment in Backblaze was approximately
US$43.1 million.
-- 3S Money Club, a UK-based bank challenger providing corporate
clients with multi-currency bank accounts ( www.3s.money ),
completed two new equity funding rounds in 2021. The transactions
collectively represented a revaluation uplift of US$4.3 million (or
693%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020 (adjusted for the
value of TMT's additional investments made in 3S Money in
2021).
-- Depositphotos, a leading stock photo and video marketplace (
www.depositphotos.com ) was acquired by VistaPrint, a Cimpress
company. As part of the transaction, TMT agreed to dispose of its
entire holding in Depositphotos for a cash consideration of US$14.3
million (the "Disposal"), including the US$1.4 million hold-back
amount. TMT received the initial consideration of US$12.9 million
in October 2021. The Disposal represented a revaluation uplift of
US$3.5 million (or 32%) in the fair value of TMT's investment
compared to the previous reported amount as of 31 December 2020,
assuming the entire hold-back amount is received in full.
-- Workiz, a leading SaaS provider for the field service
industry ( www.workiz.com ), completed a new equity funding round.
The transaction represented a revaluation uplift of US$3.0 million
(or 387%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020 (adjusted for the
value of TMT's additional investments made in Workiz in 2021).
-- Delivery Hero SE, one of the world's leading local delivery
platforms, announced that it had entered into an agreement with
TMT's portfolio company, Hugo Technologies Ltd. ("Hugo") (
www.hugoapp.com ) , to acquire its multi-category marketplace's
core food delivery and quick commerce business . As part of the
transaction, TMT agreed to dispose of its entire holding in Hugo
for a cash consideration of approximately US$3.8 million (the
"Disposal"), including a hold-back amount to be confirmed. The
Disposal represented a revaluation uplift of US$2.0 million (or
111%) in the fair value of TMT's investment compared to the
previous reported amount as of 31 December 2020, assuming the
entire hold-back amount is received in full. The transaction is
expected to close in Q2 2022 and is subject to relevant regulatory
approvals.
-- Novakid, an online English language school for children (
www.novakidschool.com ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$1.8 million (or
362%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020.
-- Qumata (formerly HealthyHealth), a digital data analytical
solution for Life and Health insurers ( www.qumata.com ), completed
a new equity funding round. The transaction represented a
revaluation uplift of US$0.9 million (or 206%) in the fair value of
TMT's investment, compared to the previous reported amount as of 31
December 2020 (adjusted for the value of TMT's additional
investments made in Qumata in 2021).
-- KitApps, trading as Attendify, a SaaS-based virtual and hybrid event management platform ( www.attendify.com ), was acquired by event management platform Hopin. The transaction represented a revaluation uplift of US$0.5 million (or 91%) in the fair value of TMT's investment, compared to the previous reported amount as of 31 December 2020.
-- Klear, an influencer marketing platform ( www.klear.com ),
was acquired by Meltwater B.V., a leading global SaaS provider of
media intelligence and social analytics, for a total consideration
of US$17.8 million, funded by a combination of cash and earn-out.
TMT's total expected cash proceeds from this disposal are
approximately US$0.5 million. The transaction represented a
revaluation uplift of US$0.3 million (or 211%) in the fair value of
TMT's investment, compared to the previous reported amount as of 31
December 2020.
-- Volumetric Biotechnologies. Inc. ("Volumetric") was acquired
by 3D Systems Corporation (NYSE:DDD) (the "Acquisition"). The
Acquisition was structured as a US$45 million closing payment, with
up to US$355 million of further consideration due on an earnout
basis subject to the achievement of certain milestones linked to
the attainment of significant steps in the demonstration of human
applications (the "Contingent Consideration"), with all such
payments comprising approximately half cash and half equity in 3D
Systems. TMT received its part of the closing cash payment equal to
US$0.32 million, plus 11,810 shares of 3D Systems, worth, as of 31
December 2021, approximately US$0.25 million. The initial part of
the transaction (i.e. excluding any potential future Contingent
Consideration) represented a revaluation uplift of US$0.36 million
(or 177%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020.
-- eAgronom, a farm management software provider for grain
producers ( www.eagronom.com ), completed a new equity funding
round. The transaction represented a revaluation uplift of US$0.2
million (or 55%) in the fair value of TMT's investment, compared to
the previous reported amount as of 31 December 2020.
-- Hinterview, a leading video recruitment software provider (
www.hinterview.com ), completed a new equity funding round. The
transaction represented a revaluation uplift of US$0.2 million (or
35%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2020.
Negative revaluations:
The following of the Company's portfolio investments were
negatively revalued in 2021:
Portfolio Write-down Reduction as Reasons for write-down
Company amount (US$) % of fair value
reported as
of 31 Dec 2020
Lack of progress in the last
Wanelo 1,223,149 67% 2 years
-------------- ----------------- -------------------------------
Lack of progress in the last
Anews 670,000 67% 2 years
-------------- ----------------- -------------------------------
Lack of progress in the last
Remote.it 1,512,643 50% 2 years
-------------- ----------------- -------------------------------
Market changes in 2021 outside
Scalarr 1,378,281 50% of Scalarr's control
-------------- ----------------- -------------------------------
Lack of progress in the last
Moeco 500,000 50% 1.5 years
-------------- ----------------- -------------------------------
Total 5,284,073
-------------- ----------------- -------------------------------
Key developments for the five largest portfolio holdings in 2021
(source: TMT's portfolio companies):
Bolt (ride-hailing and food delivery service):
-- Active in over 400 cities globally (up from over 200 cities as of 31 December 2020)
-- Triple-digit growth across all verticals
Backblaze (cloud storage provider):
-- Double-digit annualised revenue growth continued
-- IPO on NASDAQ raising US$100 million
PandaDoc (proposal automation and contract management
software):
-- Double-digit annualised revenue growth continued
-- Over 30,000 paying clients (from over 23,000 as of 31 December 2020)
3S Money Club (provider of corporate multi-currency bank
accounts):
-- Revenue increased 3.6 times
-- Profitable and cash flow positive
Scentbird (Perfume, wellness and beauty product subscription
service):
-- Stable revenue
-- EBITDA-profitable
-- Launched in Canada
New investments:
TMT was highly active during 2021, investing approximately
US$40.5 million across the following investments:
-- Additional GBP3,971,825 (via acquisition of new and existing
shares) in 3S Money Club Limited, a UK-based online banking service
focusing on international trade ( www.3s.money );
-- Additional US$228,933 (via acquisition of existing shares) in
Workiz, a SaaS solution for the field service industry (
www.workiz.com );
-- Additional US$2,000,000 in Affise, a performance marketing
SaaS solution ( https://affise.com/en/ );
-- Additional GBP399,997 in Qumata (previously HealthyHealth),
an InsurTech and HealthTech company ( www.healthyhealth.com );
-- US$1,000,000 in 3DLook Inc., a body scanning and measuring
technology solution for the online retail industry ( www.3dlook.me
);
-- Additional EUR975,000 in Postoplan OÜ, a social network
marketing platform, which helps create, schedule, and promote
content ( www.postoplan.app );
-- GBP200,000 in Balanced Ventures Limited, trading as FemTech
Lab, Europe's first tech accelerator focused on female founders (
www.femtechlab.com );
-- US$500,000 in Agendapro, Inc., a SaaS-based scheduling,
payment and marketing solution for the beauty and wellness industry
in Latin America ( www.agendapro.com );
-- US$4,000,000 in Muncher Inc., a cloud kitchen and virtual
food brand operator in Latin America ( www.muncher.com.co );
-- US$1,000,000 in Aurabeat Technology International Limited,
the producer of air purifiers that are FDA-certified to destroy
viruses and bacteria ( www.aurabeat-tech.com );
-- US$500,000 in Cyberwrite Inc., a platform offering
third-party cyber risk quantification and proactive mitigation (
www.cyberwrite.com );
-- US$2,000,000 in CloudBusiness Inc., trading as Synder, an
accounting solution for e-commerce businesses ( www.synderapp.com
);
-- EUR500,000 in Outvio, a fulfilment and delivery management
platform for the e-commerce industry ( www.outvio.com );
-- Additional US$640,000 in Novakid, an online English language
school for children ( www.novakidschool.com );
-- US$2,000,000 in Collectly, Inc., a tech-enabled patient
billing platform ( www.collectly.co );
-- US$1,099,999 in VertoFX Ltd, a UK-based cross-border payments
and foreign exchange solution facilitating commerce for modern
businesses, rapidly expanding in Africa ( www.vertofx.com );
-- US$1,000,000 in Metro Speedy Technologies Inc., a technology
based local delivery company providing on-demand, same day or
scheduled delivery services ( www.metrospeedy.com );
-- US$1,000,000 in Academy of Change, a personalised educational
service for women on lifestyle topics ( www.akademiaperemen.ru
);
-- A dditional US$2,000,000 in cloud storage provider Backblaze ( www.backblaze.com );
-- EUR1,500,000 in EstateGuru, a leading pan-European
marketplace for short-term, property-backed loans (
www.estateguru.co );
-- Additional US$250,000 in Ad Intelligence Inc., trading as
Adwisely (formerly RetargetApp), an online solution aimed a
monitoring ad campaigns and automatically managing daily budgets,
audience and bids to improve the quality of retargeting (
www.adwisely.com );
-- US$1,800,000 in Prodly Inc., an Applications Operations
(AppOps) software platform that simplifies change management for
Salesforce and helps businesses to automate deployments, regression
testing, governance, and version control for enterprise
applications ( https://prodly.co );
-- GBP500,000 in SonicJobs App Ltd., an award-winning mobile app
helping blue collar workers find and apply for jobs (
www.sonicjobs.co.uk );
-- US$500,000 in Adorum, Inc., trading as OneNotary, an online
notary service ( www.onenotary.us );
-- Additional GBP1,000,000 in Feel Holdings Limited, a
subscription-based multivitamin and supplement producer
( www.wearefeel.com );
-- US$1,500,000 into Study space, Inc., trading as EdVibe, an
all-in-one language teaching platform ( https://edvibe.com/en
);
-- US$2,000,000 into Bafood Global Limited, a hyper local
ready-to-eat food delivery and cloud kitchen operator in Eastern
Europe ( https://bafood.com.ua/en );
-- US$1,000,000 in Educate Online Inc., an education platform
that allows children aged 4-19 to study in leading international
schools remotely ( www.educate-online.io );
-- US$850,000 in My Device Inc., trading as Whizz, a
device-as-a-service company that provides mobility, sports and
high-tech devices on a subscription basis to corporate and
individual clients ( www.getwhiz.co );
-- US$1,000,000 in Lulu Systems, Inc., trading as Mobilo, an
eco-friendly smart business card solution that allows users to
digitally share contact details and turn meetings into leads (
www.mobilocard.com ); and
-- US$500,000 in Alippe, Inc., trading as 1Fit, a mobile app
with single membership that gives access to multiple gyms and yoga
studios in Kazakhstan ( www.1fit.app ).
Events after the reporting period:
In January 2022, the Company invested:
-- EUR825,000 in Bairrissimo, LDA, trading as Bairro, an instant
food and grocery delivery company in Portugal ( www.bairro.io
);
-- US$4,000,000 in SOAX Ltd, a SaaS-enabled marketplace of tools
to collect publicly available data on a scale ( https://soax.com
);
-- Additional EUR400,000 in Postoplan OÜ, a social network
marketing platform, which helps create, schedule, and promote
content ( www.postoplan.app ); and
-- GBP500,000 in Laundryheap Limited, a marketplace for
on-demand laundry and dry-cleaning services ( www.laundryheap.com
).
In March 2022, the Company invested an additional GBP499,918 in
Laundryheap Limited, a marketplace for on-demand laundry and
dry-cleaning services ( www.laundryheap.com ).
As a result of the recent military conflict in Ukraine, followed
by the broad sanctions against Russia, TMT has identified eight of
its portfolio companies that are most likely to be negatively
affected by the situation in Ukraine and Russia. If the conflict
had taken place in 2021, TMT would have reduced the fair value of
the relevant investees as follows:
Portfolio Company Potential Potential reduction
write-down as % of fair value
amount (US$) reported as of 31
Dec 2021
Anews 330,000 100%
-------------- --------------------
StudyFree 500,000 50%
-------------- --------------------
Allright 386,250 50%
-------------- --------------------
Academy of Change 660,000 66%
-------------- --------------------
EdVibe 750,001 50%
-------------- --------------------
Bafood 1,000,000 50%
-------------- --------------------
Educate Online 500,000 50%
-------------- --------------------
My Device 425,000 50%
-------------- --------------------
These events after the reporting period are not reflected in the
NAV and/or the financial statements as of 31 December 2021.
INVESTMENT PORTFOLIO
# Portfolio Company Fair value (US$) As % of total
portfolio value
1 Bolt 103,375,800 38.94
------------------ ----------------- -----------------
2 Backblaze 63,146,440 23.79
------------------ ----------------- -----------------
3 PandaDoc 16,185,773 6.10
------------------ ----------------- -----------------
4 3S Money Club 10,299,630 3.88
------------------ ----------------- -----------------
5 Scentbird 6,590,954 2.48
------------------ ----------------- -----------------
6 Muncher 4,059,999 1.53
------------------ ----------------- -----------------
7 Workiz 3,971,659 1.50
------------------ ----------------- -----------------
8 Hugo 3,756,540 1.42
------------------ ----------------- -----------------
9 Affise 3,470,870 1.31
------------------ ----------------- -----------------
10 Feel 3,399,212 1.28
------------------ ----------------- -----------------
Other 47,197,259 17.78
------------------ ----------------- -----------------
Total 265,454,136 100.00
------------------ ----------------- -----------------
BOARD OF DIRECTORS
Yuri Mostovoy , Non-Executive Chairman, was appointed to the
Board in June 2011. Yuri brings over 38 years expertise in
investment banking, software development and business to his role
as Chairman of the Company. 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
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, corporate
brokers, 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 innovative 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 Group auditors. From 2004 to 2007, he was the Finance
Director at Rambler Media and was involved in its successful
admission on AIM and subsequent sale. He has been a director of
numerous funds and companies including a fund 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 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 1995. Between
1996-2000 he served as head of equities in Makprombank. Between
2000 and 2006 he held the position of general director of
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.
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.
Good governance is the fundamental underpinning of ESG
The focus on ESG (Environmental, Social & Governance) is
intensifying rapidly. The devastating social and economic fallout
from the COVID pandemic has served to put the ESG agenda into
sharper view and has accelerated the intensity of focus. Investor
attention has been driven by three factors: regulatory pressure,
underlying investor demand; and a recognition that the existing ESG
data opacity provides for a market inefficiency to exploit.
The Company has been monitoring ESG issues before they reached
the mainstream investment agenda. As such, we have made a number of
investments in ESG-focused companies that also meet TMT's
investment objectives. This year we started to formalise our ESG
framework under the guiding principles that it be relevant,
realistic and accountable. We are pleased to announce our ESG
Initial Policy in this Annual Report 2021, which will be fully
published in the Interim Report 2022 and subsequently updated as
required.
A corporate culture based 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
-- FinTech
-- FoodTech
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 - companies that are already generating revenues
(TMT's typical minimum revenue threshold is US$100,000 per
month)
-- Series A / Pre-Series A stage TMT's typical investment range: US$0.5m-2.5m
-- Viable exit opportunities - assessing potential exit scenarios from the start
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. During the
restrictions imposed by the Covid-19 pandemic, the Company made
increased use of online and social media 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 promising 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 network, both online and in
person. This is essential to maintaining a valuable level of
accumulated tech knowledge, being connected to the latest
developments in our core sectors and having access to a pipeline of
attractive investments in the innovative world of technology
investing.
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 conducts a formal risk assessment on an
annual basis but will also report by exception on any material
changes during the year.
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:
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. In
addition, the Company's bonus plan serves to ensure that
compensation is benchmarked to ensure staff retention.
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.
The Company uses a filtering system that is designed to identify
companies with the best potential to become scalable businesses
with rapid 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
extremely 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 with data provided by
its portfolio companies that includes their key performance
indicators (KPIs). Through this process, the Company actively
monitors the performance of KPIs and other indicators that can
affect fair value revaluations.
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 extremely 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 fund raises 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 thanks 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.
Board meetings
Six board meetings were held in 2021. One meeting of the Audit
Committee and one meeting of the Remuneration Committee were held
in 2021. The number of meetings attended by the Directors is set
out below. In addition to the table below a board committee meeting
was held on 5 October 2021 regarding the allotment of shares for
the fund raise conducted by the Company in October 2021, attended
by Yuri Mostovoy and Alexander Selegenev.
Board Audit Committee Remuneration Committee
Director meetings meetings meetings
--------------------- --------- ---------------- -----------------------
Yuri Mostovoy 6 - -
Alexander Selegenev 2 - -
Petr Lanin 6 1 1
James Mullins 6 1 1
--------------------- --------- ---------------- -----------------------
Total meetings 6 1 1
--------------------- --------- ---------------- -----------------------
PRINCIPLE 6
ENSURE THAT BETWEEN THEM THE DIRECTORS HAVE THE NECESSARY
UP-TO-DATE EXPERIENCE, SKILLS AND CAPABILITIES
The Board considers that it has the necessary industrial,
financial, public markets and governance experience, possessing the
necessary mix of experience, skills, personal qualities and
capabilities to deliver the strategy of the Company for the benefit
of the shareholders over the medium to long-term. The Directors'
individual experience is set out 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 fourth such formal evaluation for the year ended December
2021 took place in February 2022. The previous such evaluation had
been for the year ended December 2020, which started in January
2021 and concluded in February 2021. 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 2022.
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).
In 2021, the QCA published a "Board Performance Review Guide"
that concluded that more attention be paid to board performance
reviews and that these should address recent and ongoing
developments at the company and its operating context in more
detail. Overall, they should be viewed as an ongoing improvement
exercise in conjunction to how a board is structured and
operates.
It made six recommendations:
1. Be led by the Chair, including performance of the Chair.
2. Be dynamic and context-specific.
3. Focus on value-adding board activities.
4. Take into account the views of a variety of internal and
external stakeholders.
5. Be understood as continuous improvement.
6. Be transparent and disclosed in appropriate detail in the
annual report and on the company website.
The Board believes questionnaires circulated to TMT Board
members in previous years addressed most of these topics, however
notes that the 2021 performance questionnaire was updated and
restructured where necessary to ensure that the six
recommendations, as adapted to TMT's specific needs and
circumstances, were reflected.
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 is
confident that it is addressing the key issues facing the company
at its stage of development, size, business and operating model
needs, complexity and shareholder structure. The Board was also
confident it is maintaining its competitive advantage and examining
the creation of new advantages and strengths. The Board had
reviewed the success of the fund raise undertaken in 2021 and
identified the learning points and areas for improvement to prepare
for future fund raises.
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 2021 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.
Disclosure Committee effectiveness
The Disclosure Committee conducted an annual review in 2021 of
its procedures, performance, constitution and terms of reference,
which concluded it was operating effectively.
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.
The Company has started to formalise its ESG (Environmental,
Social & Governance) framework under the guiding principles
that it be relevant, realistic and accountable, following guidance
from the QCA Practical Guide to ESG 2021 and additional relevant
research. The initial ESG framework is published in the TMT Annual
Report 2021, and will be fully published in the Interim Report 2022
and subsequently updated as required.
The Company has been monitoring and following ESG issues before
they reached the mainstream agenda. As such, TMT has made a number
of investments since inception in ESG-focused companies that also
meet TMT's investment objectives.
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 Board has formally established
Audit, Remuneration and Nomination Committees in accordance with
the recommendations of the QCA Corporate Governance Code ("QCA
Code") as well as a Disclosure Committee, which was established in
2021.
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.
Disclosure Committee
The Company has established a Disclosure Committee, which
considers matters relating to the management and disclosure of
inside information by the Company. The Disclosure Committee
currently comprises Alexander Selegenev, German Kaplun, Levan
Kavtaradze and Andrey Konstantinov, with Alexander Selegenev
appointed as Chairman. Andrey Konstantinov is the Company's Legal
Counsel.
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
(save where such communications have been delegated to the
Disclosure Committee of the Board in accordance with the terms of
reference of the Disclosure Committee) ;
-- 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 share dealing code and all Company
directors, officers and employees receive annual training on the
share dealing code and insider dealing requirements (including,
without limitation, the provisions of MAR). The share dealing code
was updated in 2021 and approved at the Board of Directors meeting
held in March 2022. 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.
Conflicts of interest policy
The Company's directors, officers and employees ("Applicable
Persons") may not: (a) appropriate for their benefit, or for the
benefit of any family member or any other third person, any
business opportunity that comes to their knowledge and that may
directly or indirectly relate to, compete or lead to competition
with, or might be of benefit to, the Company's business or (b)
divert or redirect any business opportunities away from the
Company.
It is an Applicable Person's responsibility to disclose any
transaction or relationship that could reasonably be expected to
give rise to a conflict of interest with the Company to the Initial
Investment Committee, which shall be responsible for determining
whether such transaction or relationship constitutes a conflict of
interest.
From time to time, Applicable Persons may want to personally
invest in certain opportunities that may fall within the Company's
Investing Policy or may otherwise conflict with the Company's
interests. In order to avoid conflicts of interest and ensure such
Applicable Persons' continuing focus on their TMT-related duties,
the Company has adopted a Conflict of Interest Policy.
As the Company grows, the directors will ensure that the
governance framework remains in place to support the development of
the business.
PRINCIPLE 10
COMMUNICATE HOW THE COMPANY IS GOVERNED AND IS PERFORMING BY
MAINTAINING A DIALOGUE WITH SHAREHOLDERS AND OTHER RELEVANT
STAKEHOLDERS
The Company communicates with shareholders through the annual
report and accounts, regulatory announcements, the annual general
meeting and one-to-one meetings with large existing shareholders or
potential investors. A range of corporate information (including
all Company announcements and presentations) is also available on
the Company's website. In addition, the Company seeks to maintain
dialogue with shareholders through the organisation of shareholder
events, and employee stakeholders are regularly updated on the
development of the Company and its performance.
Audit Committee report
The Company has established an audit committee, which comprises
James Mullins (Chairman) and Petr Lanin. The audit committee's main
functions include, inter alia, reviewing and monitoring internal
financial control systems and risk management systems on which the
Company is reliant, considering annual and interim accounts and
audit reports, making recommendations to the Board in relation to
the appointment and remuneration of the Company's auditors and
monitoring and reviewing annually their independence, objectivity,
effectiveness and qualifications.
The Audit Committee met formally once during 2021 to approve the
2020 Annual Report & Accounts.
Remuneration committee report
The Company has established a remuneration committee, which
comprises James Mullins (Chairman) and Petr Lanin. The remuneration
committee met once during 2021 to discuss and approve the
allocation of the 2020 bonus pool.
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
INITIAL ESG POLICY
Introduction
As with most business sectors, technology has the capacity to
make the world a better place. Given the high pace of technology
innovation we are witnessing, TMT believes this capacity is
intensified in the case of technology. However, technological
innovation for its own sake is meaningless unless it results in
tangible benefits in terms of productivity, improved user
experience, higher efficiency, positive impact in its chosen
sectors, improved profitability or whichever other objectives.
ESG evaluation can be carried out in a number of different ways.
Its effectiveness will depend on the questions being asked, the
principles being applied and the quality of data available, among
other factors. Indeed, at times the prioritising of some principles
will have a negative impact on others, given the asymmetric nature
of benefits that can sometimes arise, for example in a mismatch
between the time lengths of when benefits may be delivered.
As an investment company, TMT has been monitoring ESG issues and
taking them into account before they began to enter the mainstream
investment agenda. As such, the Company has made a number of
investments in ESG-focused companies that also meet TMT's
investment criteria. These include Timbeter, a SaaS solution for
quick and accurate timber measurement and data management, which is
making the forestry industry more sustainable, profitable and
efficient; eAgronom, which provides a unique combination of
services to grain farmers: carbon programmes, an AI-powered
consulting service and farm management software enabling farmers to
build sustainable businesses and preserve nature; and Mobilo, an
eco-friendly solution allowing users to digitally share contact
details instead of using paper/plastic business cards and turn
meetings into leads.
The social and economic fallout from the COVID pandemic has
served to put the ESG agenda into sharper relief and has
accelerated the intensity of focus. TMT has therefore started to
formalise its approach to ESG and is pleased to announce its
initial ESG Policy in this 2021 Annual Report, which will be fully
published in the 2022 Interim Report and subsequently updated as
required.
TMT holds minority positions in its portfolio companies and
therefore can exert influence on ESG matters in two main ways:
first, by screening investments for exclusion from investment and
second, by engaging in constructive dialogue with portfolio
companies and monitoring progress. The Company's ESG policy
reflects this approach.
TMT itself, as an investment company with limited internal
resources, has little impact on the environment. The Company's team
is mindful of reducing its travel, paper consumption, energy costs
and other environmental impact wherever possible. TMT has adopted
the Quoted Companies Alliance (QCA) Corporate Governance Code for
Small & Mid-Sized Companies, which already covers a number of
well-established ESG items.
TMT's initial ESG policy is outlined below.
TMT's 3 guiding ESG principles for portfolio companies:
relevant, realistic and accountable
TMT's three ESG principles guide and inform potential portfolio
companies of the Company's approach to ESG and are at the core of
what good ESG looks like. They are specific and challenging, whilst
allowing portfolio companies to engage with them both at an earlier
stage of development and as they grow in size.
Relevant
-- Is the investee addressing ESG where it can make the greatest
impact in terms of its business model?
-- Has the investee undertaken an ESG materiality assessment
and, if so, how has this informed its ESG framework?
-- Have ESG risks, as well as opportunities, been identified?
Realistic
-- Is the investee developing an ESG roadmap as part of its business plan?
-- Are the investee ESG objectives achievable in view of its current resources?
-- What resources does the investee need to consider in order to progress on its ESG roadmap?
Accountable
-- How is the investee evaluating its ESG activities and engagement?
-- Is the investee conducting ESG benchmarking against its peers?
-- Does the investee review its ESG metrics and reporting
process in view of latest ESG, scientific and technological
developments?
TMT's approach
TMT's initial ESG policy is based on a 3-step approach:
Step 1: Filter out by Exclusion list
TMT's exclusion list sets out the sectors, businesses and
activities in which the Company will not invest due to having as
their objective, or direct impact on, any of the following:
1. Slavery, human trafficking, forced or compulsory labour, or unlawful / harmful child labour.
2. Production or sale of illegal or banned products, or involvement in illegal activities.
3. Activities that compromise endangered or protected wildlife.
4. Production or sale of hazardous chemicals, pesticides and waste.
5. Manufacture, distribution or sale of arms or ammunitions.
6. Manufacture of, or trade in, tobacco or drugs.
7. Manufacture or sale of pornography.
8. Trade in human body parts or organs.
9. Animal testing other than for the satisfaction of medical regulatory requirements.
10. Production or other trade related to unbonded asbestos fibres.
Step 2: Assess level of ESG Engagement
Step 2 focuses on assessing how the proposed portfolio company
incorporates ESG in its business model and company culture.
In its investment selection process, TMT examines how each
potential investee company is addressing and incorporating ESG
issues based on TMT's principles of being relevant, realistic and
accountable, feeding the results into an evaluation sheet for
presentation to TMT's Initial Investment Committee and the Formal
Investment Committee. If necessary, remedial actions or areas for
improvement are agreed with the investee company. For follow-on
investments we require a formal update from the investee
highlighting any divergence from TMT's initial assessment.
Step 3: Engagement with portfolio companies on ESG
ESG by its very nature is a journey, which needs to adapt to
changing environmental, social and governance dynamics, in view of
latest developments. Two-way dialogue and engagement with portfolio
companies is an essential part of this journey, in which both
parties are sharing and learning. TMT therefore includes ESG topics
as part of its continuous engagement with portfolio companies.
DIRECTORS' REPORT FOR THE YEARED 31 DECEMBER 2021
The Directors present their report and audited financial
statements of the Company for the year ended 31 December 2021.
Principal activity and review of the business
TMT Investments Plc ("TMT" 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$86,711,815 which includes a
profit on changes in fair value of financial assets at FVPL ("Fair
Value through profit and loss") of US$98,741,409.
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 (2020: 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 2021. One meeting of the
Audit Committee and one meeting of the Remuneration Committee were
held in 2021. 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 2 - -
Petr Lanin 6 1 1
James Mullins 6 1 1
--------------------- --------- ---------------- -----------------------
Total meetings 6 1 1
--------------------- --------- ---------------- -----------------------
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 2021 and the
date of this report, the Company's issued share capital consists of
31,451,538 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
2022.
Shareholders Number of ordinary % of issued
shares ordinary share
capital
------------------------------------------- ---------------------------------- ----------------
Alexander Morgulchik, German Kaplun,
Artemii Iniutin (via Macmillan Trading
Company Limited) 6,975,436 22.18%
------------------------------------------- ---------------------------------- ----------------
Andrey Kareev (via Wissey Trade &
Invest Ltd) 5,000,000 15.90%
------------------------------------------- ---------------------------------- ----------------
German Kaplun (via Ramify Consulting
Corp) 4,728,576 15.03%
------------------------------------------- ---------------------------------- ----------------
Zaur Ganiev 2,443,810 7.77%
------------------------------------------- ---------------------------------- ----------------
Canaccord Genuity Group Inc 2,154,939 6.85%
------------------------------------------- ---------------------------------- ----------------
Artemii Iniutin (via Merit Systems
Inc.) 2,054,865 6.53%
------------------------------------------- ---------------------------------- ----------------
Nika Kirpichenko (via Eclectic Capital
Limited) 1,800,000 5.72%
------------------------------------------- ---------------------------------- ----------------
Dmitry Kirpichenko (via Menostar Holdings
Limited) 1,790,000 5.69%
------------------------------------------- ---------------------------------- ----------------
Others 4,503,912 14.32%
------------------------------------------- ---------------------------------- ----------------
Total 31,451,538 100.00%
------------------------------------------- ---------------------------------- ----------------
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
(if different to No. of Ordinary % of issued
Shareholder (legal holder) legal holder) Shares share capital
Alexander Morgulchik
45.05%, German Kaplun
Macmillan Trading Company 37.17%, Artemii
Limited ("Macmillan") Iniutin 17.78%, 6,975,436 22.18%
Wissey Trade & Invest
Ltd ("Wissey") Andrey Kareev 5,000,000 15.90%
Ramify Consulting Corp.
("Ramify") German Kaplun 4,728,576 15.03%
Merit Systems Inc. Artemii Iniutin 2,054,865 6.53%
Eclectic Capital Limited
("Eclectic") Nika Kirpichenko 1,800,000 5.72%
Menostar Holdings Limited
("Menostar") Dmitry Kirpichenko 1,790,000 5.69%
Natalia Inyutina (Adult daughter of Artemii
Iniutin) 727,156 2.31%
Artemii Iniutin 380,877 1.21%
Vlada Kaplun (Adult Daughter of German Kaplun) 363,578 1.16%
Marina Kedrova (Adult Daughter of German
Kaplun) 363,578 1.16%
German Kaplun 138,938 0.44%
Alexander Morgulchik 138,938 0.44%
Total 24,461,942 77.78%
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 7,460,055 23.72%
Andrey Kareev 5,000,000 15.90%
Artemii Iniutin 3,676,194 11.69%
Alexander Morgulchik 3,281,381 10.43%
Nika Kirpichenko 1,800,000 5.72%
Dmitry Kirpichenko 1,790,000 5.69%
Natalia Inyutina 727,156 2.31%
Vlada Kaplun 363,578 1.16%
Marina Kedrova 363,578 1.16%
Total 24,461,942 77.78%
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 and underpaid previous years` bonuses for
2021 were as follows:
Director Previous years'
Directors' fees Bonuses
--------------------- ---------------- ----------------
Yuri Mostovoy US$55,000 US$23,863
Alexander Selegenev US$110,000 US$70,109
James Joseph Mullins US$30,259 -
Petr Lanin US$11,000 -
--------------------- ---------------- ----------------
The minimum initial allocation of the Bonus Pool accrued for the
period ended 31 December 2021 among the Directors who are
predetermined participants of the Bonus Plan is as follows:
Directors The minimum initial The minimum initial
allocation of the allocation of the
Bonus Pool (%) Bonus Pool (US$)
Alexander Selegenev 16.5% 1,596,547
-------------------- --------------------
Yuri Mostovoy 5.0% 483,802
-------------------- --------------------
Subsequent events post the period end
Refer to the "Events after the reporting period" in the
"Portfolio Developments" section above.
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 UK-adopted
International Financial Reporting Standards ("IFRSs").
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 UK-adopted IFRSs 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
UK-adopted IFRSs, 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 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 2022
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TMT INVESTMENTS PLC
FOR THE YEARED 31 DECEMBER 2021
Opinion
We have audited the financial statements of TMT Investments plc
(the 'company') for the year ended 31 December 2021 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
significant accounting policies. The financial reporting framework
that has been applied in the preparation of the company's financial
statements is applicable law and UK Adopted International Financial
Reporting Standards (IFRSs).
In our opinion, the financial statements:
-- give a true and fair view of the state of company's affairs
as at 31 December 2021 and of the company's profit and cash flows
for the year then ended;
-- have been properly prepared in accordance with UK Adopted IFRSs; 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.
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 and ownership of Our audit work included, but was not
investments restricted to:
The company is investing in * Initially at planning, before reviewing management's
pre-growth companies in a very chosen valuation methodologies, we have considered
competitive industry. Given for our sample of investments what we consider the
the nature of the companies most appropriate valuation methodology to be.
being invested in, it is not
likely that all will be a success.
The value of the investments
is one of the most material * We obtained an understanding of management's
balances in the company's financial assessment of the investment valuations and obtained
statements. an understanding of how they are performed.
These investments are carried
at fair value through the profit
or loss in the financial statements, This involved evaluating whether the
and the valuation is based method chosen was in accordance with
on significant judgement and published guidance and reviewing and
assumptions. Given the majority challenging the assumptions applied
of the investment portfolio to the valuation inputs.
is in unlisted companies, there
is inherent estimation uncertainty Where the valuation methodology differed
as to the fair value of these from our expectation for what valuation
investments as at the year-end methodology we believed would have
date. Due to the nature of been used from our planning, we challenged
the company's activities, there this with management and ensured the
is a risk that the fair value methodology used by management is the
has not been appropriately most appropriate.
applied for all of the investments,
and therefore that the value * We verified and benchmarked key inputs and estimates
of investments held at year-end to independent information from our own research and
may be misstated. against metrics from the investments.
We also recognised a risk over
the ownership of the investments.
This is to ensure that the * Where appropriate, we have performed sensitivity
investments were indeed held analysis on the valuation calculations.
at the year-end date by the
company, given the investment
balances are highly material.
* 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.
* We agreed ownership to share certificates and
third-party evidence that the company holds the
shares in the investee companies.
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 GBP7,293,000.
------------------------------------------
How we determine it Based 2.5% of gross assets held
at 31 December 2021.
------------------------------------------
Rationale for benchmarks applied We believe that this benchmark
is appropriate due to the investments
being the key driver of the company
and the nature of its activities
along with it being a key point
of reference for potential investors.
------------------------------------------
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 GBP5,469,750.
------------------------------------------
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 GBP200,000
and performance materiality of
GBP100,000.
------------------------------------------
Reporting threshold We agreed with the Audit Committee
that we would report to them all
misstatements over GBP364,650 (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.
------------------------------------------
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' At 31 December 2021, the Company
going concern assessment and held cash of GBP25,527,801 at bank.
performed the following procedures:
* We assessed the appropriateness of the cash flow The Company's cash flow forecasts
forecasts in the context of the Company's 2021 to 31 March 2023 ('the going concern
financial performance. period') have been approved by
the Board. These are prepared based
on certain key assumptions, which
we have reviewed and consider appropriate.
* We evaluated the key assumptions in the forecast, These included considering further
which were consistent with our knowledge of the investments being made along with
business and considered whether these were supported the ongoing increasing operating
by the evidence we obtained. costs.
The forecast shows that the Company
has at all times available cash
* We also reviewed the disclosures relating to the and liquidity to meets its liabilities
going concern basis of preparation and found that as they fall due.
these provided an explanation of the Directors'
assessment that was consistent with the evidence we Based on the audit procedures performed
obtained. we concluded that the Company has
appropriately adopted the going
concern basis of preparation. Further,
we did not identify any material
disclosures that should be included
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.
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, set out 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,
testing of journals, and testing of the valuation of investments
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 2022
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the
For the year year ended
ended 31/12/2021 31/12/2020
Notes USD USD
Gains on investments 3 98,741,409 82,259,735
Dividend income 48,333 129,897
------------------------------------------ ------ ------------------ ------------
Total investment income 98,789,742 82,389,632
Expenses
Bonus scheme payment charge 6 (9,676,043) (6,086,948)
Underpaid previous years' bonuses (372,556) -
Administrative expenses 5 (1,924,650) (1,234,005)
Operating gain 86,816,493 75,068,679
Net finance income 7 - 61,444
Currency exchange loss (104,678) (21,446)
------------------------------------------ ------ ------------------ ------------
Gain before taxation 86,711,815 75,108,677
Taxation 8 - -
------------------------------------------ ------ ------------------ ------------
Gain attributable to equity shareholders 86,711,815 75,108,677
Total comprehensive income for the year 86,711,815 75,108,677
Gain per share
Basic and diluted gain per share (cents
per share) 9 291.58 257.35
------------------------------------------ ------ ------------------ ------------
Statement of Financial Position
At 31 December At 31 December
2021 2020
Notes USD USD
Non-current assets
Financial assets at FVPL 10 265,454,136 144,803,154
Total non-current assets 265,454,136 144,803,154
Current assets
Trade and other receivables 11 2,050,649 487,838
Cash and cash equivalents 12 25,527,801 39,004,288
Total current assets 27,578,450 39,492,126
Total assets 293,032,586 184,295,280
Current liabilities
Trade and other payables 13 9,904,823 6,372,573
Total current liabilities 9,904,823 6,372,573
----------------------------- ------ ------------------------ ----------- ---------------------
Total liabilities 9,904,823 6,372,573
----------------------------- ------ ------------------------ ----------- ---------------------
Net assets 283,127,763 177,922,707
----------------------------- ------ ------------------------ ----------- ---------------------
Equity
Share capital 14 53,283,415 34,790,174
Retained profit 229,844,348 143,132,533
Total equity 283,127,763 177,922,707
----------------------------- ------ ------------------------ ----------- ---------------------
The financial statements were approved by the Board of Directors
on 24 March 2022 and were signed on its behalf by:
Alexander Selegenev
Executive Director
Statement of Cash Flows
For the For the
year year
ended ended
31/12/2021 31/12/2020
Notes USD USD
Operating activities
Operating gain 86,816,493 75,068,679
------------------------------------------------- ----- ------------ ------------
Adjustments for non-cash items:
Changes in fair value of financial assets
at FVPL 3 (98,600,052) (82,294,256)
Currency exchange loss (104,678) (21,446)
(11,888,237) (7,247,023)
------------------------------------------------- ----- ------------ ------------
Changes in working capital:
(Increase)/Decrease in trade and other
receivables 11 (1,562,811) 224,119
Increase in trade and other payables 13 7,275,871 5,567,382
Net cash used in operating activities (6,175,177) (1,455,522)
------------------------------------------------- ----- ------------ ------------
Investing activities
Interest received 7 - 61,444
Purchase of financial assets at FVPL 10 (40,540,924) (12,503,095)
Proceeds from sale of financial assets at
FVPL 10 18,489,994 41,201,387
Other financial income 7 - -
------------------------------------------------- ----- ------------ ------------
Net cash (used in)/ generated from investing
activities (22,050,930) 28,759,736
------------------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from issue of shares 14,749,620 -
------------------------------------------------- ----- ------------ ------------
Net cash generated from financing activities 14,749,620 -
------------------------------------------------- ----- ------------ ------------
(Decrease)/Increase in cash and cash equivalents (13,476,487) 27,304,214
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the beginning
of the year 39,004,288 11,700,074
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the end of
the year 12 25,527,801 39,004,288
------------------------------------------------- ----- ------------ ------------
Statement of Changes in Equity
For the year ended 31 December 2020 and for the year ended 31
December 2021, USD
Share capital Retained losses Total
Note USD USD USD
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
------------------------------------------------- -------------- ---------------- -------------
Gain for the year - 86,711,815 86,711,815
Total comprehensive income for the year - 86,711,815 86,711,815
Issue of shares 18,493,241 - 18,493,241
------------------------------------------------- -------------- ---------------- -------------
Balance at 31 December 2021 53,283,415 229,844,348 283,127,763
------------------------------------------------- -------------- ---------------- -------------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2021
1. Company information
TMT Investments Plc ("TMT" or the "Company") is a company
incorporated in Jersey with its registered office at 13 Castle
Street, St Helier, 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 Investment Policy
and achieve its desired returns will be limited by its ability to
identify and acquire suitable investments. Suitable investment
opportunities may not always be readily available.
The Company will seek to make investments in any region of the
world.
Financial statements of the Company are prepared by and approved
by the Directors in accordance with International Financial
Reporting Standards, UK-adopted International Accounting Standards
and their interpretations issued or adopted by the International
Accounting Standards Board ("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.
On 15 September 2021, the Company established 100%-owned
subsidiary TMT Investments II GP Limited. As the subsidiary was
dormant at the year-end, consolidated accounts have not been
prepared.
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
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 31.12.2021 rate, 2021
----------------- ----------------- ------------
British pounds,
GBP 1.3477 1.3755
Euro, EUR 1.1319 1.1830
--------------------- ----------------- ------------
2.5 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand,
deposits held at call with banks, 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 mid-market price at the time. 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
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
profit and loss account because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The
company's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
end date.
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.
The Company is incorporated in Jersey. There is no current tax
expense recognised in the Statement of comprehensive income as the
income tax rate for Jersey companies is 0%.
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 Application of new and revised International Financial Reporting Standards (IFRSs)
New and amended Standards and Interpretations applied
The following new and amended Standards and Interpretations have
been issued and are effective for the current financial period of
the company.
Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment
to IFRS 16)
The amendment is effective for annual periods that begin on or
after 1 April 2021, however early application is permitted. As the
company has no such rental expenses in the year ended 31 December
2021, the revised standard would have no impact on the accounts of
the entity and thus early adoption has not been considered
necessary.
Other amendments
There are no other relevant Standards or amendments issued by
the IASB that are effective for an annual period that begins on or
after 1 January 2021.
New and revised Standards and Interpretations in issue but not
yet effective
At the date of authorisation of these financial statements, the
company has not early adopted the following
amendments to Standards and Interpretations that have been
issued but are not yet effective:
Standard or Interpretation Effective for annual periods
commencing on or after
-----------------------------
Narrow scope amendments to IFRS 1 January 2022
3, IAS 16 and IAS 37
--------------------------------------- -----------------------------
Annual improvements to IFRS Standards 1 January 2022
2018-2020
--------------------------------------- -----------------------------
Amendments to IAS 1: Classification 1 January 2023
of Liabilities as Current or
Non-Current
--------------------------------------- -----------------------------
Amendments to IAS 1 and IFRS 1 January 2023
Practice Statement 2: Disclosure
of Accounting Policies
--------------------------------------- -----------------------------
Amendments to IAS 8: Definition 1 January 2023
of Accounting Estimates
--------------------------------------- -----------------------------
Amendments to IAS 12: Deferred 1 January 2023
Tax Related to Assets and Liabilities
arising from a Single Transaction
--------------------------------------- -----------------------------
As yet, none of these have been endorsed for use in the UK and
will not be adopted until such time as endorsement is confirmed.
The directors do not expect any material impact as a result of
adopting the standards and amendments
listed above in the financial year they become effective.
2.11 Accounting estimates and judgements
Estimates and judgements need to be regularly evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Company makes estimates and
assumptions concerning the future. The resulting accounting
estimates will, by definition, rarely equal the related actual
results.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
The estimates significant to the financial statements during the
year and at the year-end is the consideration of the fair value of
financial assets at FVPL as set out in the relevant accounting
policies shown above. A number of the financial assets at FVPL held
by the Company are at an early stage of their development. The
Company cannot yet carry out regular reliable fair value estimates
of some of these investments. Future events or transactions
involving the companies invested in may result in more accurate
valuations of their fair values (either upwards or downwards) which
may affect the Company's overall net asset value.
3 Gains on investments
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
Gross interest income from convertible notes
receivable 41,290 82,879
Net interest income from convertible notes
receivable 41,290 82,879
Gains on changes in fair value of financial assets
at FVPL 98,600,052 82,294,256
Other gains/(losses) on investment 100,067 (117,400)
Total net gains on investments 98,741,409 82,259,735
---------------------------------------------------- ------------------------------ ------------------------------
4 Segmental analysis
Geographic information
The Company has investments in geographical areas - USA, Estonia
and the United Kingdom, Israel, BVI, Cyprus and the Cayman
Islands.
Non-current financial assets
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
-------------------- ----------- -------- ---------- ----------- ---------- ---------- ------------
As at 31/12/2021
Cayman United
USA Islands BVI Estonia Cyprus Kingdom Total
USD USD USD USD USD USD USD
-------------------- ------------ ---------- ---------- ------------ ---------- ----------- ------------
Equity investments 112,296,648 - 3,756,540 106,437,128 1,000,000 20,017,105 243,507,421
Convertible
notes & SAFEs 14,620,030 1,030,000 - 1,332,985 3,600,000 1,363,700 21,946,715
Total 126,916,678 1,030,000 3,756,540 107,770,113 4,600,000 21,380,805 265,454,136
-------------------- ------------ ---------- ---------- ------------ ---------- ----------- ------------
5 Administrative expenses
Administrative expenses include the following amounts:
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
------------------------- ------------------------------ ------------------------------
Staff expenses (note 6) 805,459 653,318
Professional fees 502,124 254,172
Legal fees 393,682 97,100
Bank and LSE charges 31,434 18,336
Audit fees 38,183 31,625
Accounting fees 16,220 15,200
Rent - 94,608
Other expenses 137,548 69,646
1,924,650 1,234,005
------------------------- ------------------------------ ------------------------------
The foreign exchange loss has been presented separately in the
current financial period from administrative expenses. Accordingly,
the respective amount of foreign exchange loss in the period ended
31 December 2020 has also been presented separately for comparison.
As a result, administrative expenses for the year ended 31 December
2020 decreased by 1.7% from US$1,255,451 to US$1,234,005. The
relevant amounts in the Statement of Cash Flows for the year ended
31 December 2020 have been affected correspondingly.
6 Staff expenses
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
-------------------- ------------------------------ ------------------------------
Directors' fees 206,259 185,798
Wages and salaries 599,200 467,520
805,459 653,318
-------------------- ------------------------------ ------------------------------
Wages and salaries shown above include fees and salaries
relating to the year ended 31 December 2021. Bonus Plan costs are
not included in administrative expenses and are shown
separately.
The Directors' fees for 2021 and underpaid previous years'
bonuses were as follows:
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
---------------------- ------------------------------ ------------------------------
Alexander Selegenev 180,109 100,000
Yuri Mostovoy 78,863 50,000
James Joseph Mullins 30,259 25,798
Petr Lanin 11,000 10,000
---------------------- ------------------------------ ------------------------------
300,231 185,798
---------------------- ------------------------------ ------------------------------
Due to a technical error in the calculation of the bonus pools
in the bonus periods from July 2016 to December 2020 (the "Affected
Bonus Periods"), the bonus pools in each of the Affected Bonus
Periods were calculated on the basis of the opening position being
the previous period's "adjusted NAV before bonus". Pursuant to the
terms of the Company's bonus plan, each of the Affected Bonus
Periods should have seen the calculation assess the annual growth
in NAV from an opening position of "adjusted NAV after bonus". As a
result, the amount of bonuses actually accrued in the Affected
Bonus Periods were understated by an aggregate of US$372,556 (the
"Underpaid Bonus"). As the total amount of the Underpaid Bonus is
considered immaterial, the error has been corrected, and the
Underpaid Bonus has been included in the current financial
statements as an additional charge for the current period.
Of the US$372,556 Underpaid Bonus amount, US$93,972 relates to
directors of the Company.
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 7 (2020: 6).
Key management personnel of the Company are defined as those
persons having authority and responsibility for the planning,
directing and controlling the activities of the Company, directly
or indirectly. Key management of the Company are therefore
considered to be the Directors of the Company. There were no
transactions with the key management, other than their fees,
bonuses, and reimbursement of business expenses.
Under the Company's Bonus Plan, subject to achieving a minimum
hurdle NAV and high watermark conditions, the team receives an
annual cash bonus equal to 10% of the net increases in the
Company's NAV, adjusted for any changes in the Company's equity
capital resulting from issuance of new shares, dividends, share
buy-backs and similar corporate transactions. The Company`s bonus
year runs from 1 January to 31 December. For the bonus period from
1 January 2021 to 31 December 2021, the total amount of bonus
accrued was US$9,676,043. The exact allocation of the accrued bonus
is expected to be approved and paid to the participants of the
Company`s Bonus Plan shortly after the publication of this
report.
The minimum initial allocation of the 2021 Bonus Pool among the
predetermined participants of the Bonus Plan is as follows:
Participants of the The minimum initial The minimum initial allocation
Bonus Plan allocation of the of the Bonus Pool (US$)
Bonus Pool (%)
Artemii Iniutin (Employee) 16.5% 1,596,547
-------------------- -------------------------------
German Kaplun (Employee) 16.5% 1,596,547
-------------------- -------------------------------
Alexander Morgulchik
(Employee) 16.5% 1,596,547
-------------------- -------------------------------
Alexander Selegenev
(Director) 16.5% 1,596,547
-------------------- -------------------------------
Yuri Mostovoy (Director) 5.0% 483,802
-------------------- -------------------------------
Alexander Pak (Employee) 10.0% 967,604
-------------------- -------------------------------
Levan Kavtaradze (Employee) 8.0% 774,083
-------------------- -------------------------------
To be allocated 11.0% 1,064,366
-------------------- -------------------------------
Total 100.0% US$9,676,043
-------------------- -------------------------------
7 Net finance income
For the year ended 31/12/2021 For the year ended 31/12/2020
USD USD
----------------- ------------------------------- ------------------------------
Interest income - 61,444
- 61,444
-------------------------------- ---------------- ------------------------------
Given the extremely low interest rates in 2021, the Company did
not keep any cash in bank deposits during the period.
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 2021 attributable to the
ordinary shareholders of US$86,711,815 (2020: net gain of
US$75,108,677) and the weighted average number of ordinary shares
outstanding calculated as follows:
Gain per share For the year ended 31/12/2021 For the year ended 31/12/2020
--------------------------------------------------- ------------------------------ ------------------------------
Basic gain per share (cents per share) 291.58 257.35
Gain attributable to equity holders of the entity 86,711,815 75,108,677
--------------------------------------------------- ------------------------------ ------------------------------
The weighted average number of ordinary shares outstanding was
calculated as follows:
For the year ended 31/12/2021 For the year ended 31/12/2020
-------------------------------------------- ------------------------------ ------------------------------
Weighted average number of shares in issue
Ordinary shares 29,738,291 29,185,831
29,738,291 29,185,831
-------------------------------------------- ------------------------------ ------------------------------
10 Non-current financial assets
Reconciliation of fair value measurements of non-current
financial assets:
At 31 December 2021 At 31 December 2020
Investments held at fair value through profit and loss, USD:
- unlisted shares (i) 241,461,421 136,443,491
- promissory notes (ii) 4,266,715 2,753,663
- SAFEs (iii) 17,680,000 5,606,000
- Shares to be issued (iv) 2,046,000 -
-------------------------------------------------------------- -------------------- --------------------
265,454,136 144,803,154
-------------------------------------------------------------- -------------------- --------------------
At 31 December 2021 At 31 December 2020
USD USD
Opening valuation 144,803,154 91,207,190
Purchases (including consulting and legal fees) 40,540,924 12,503,095
Disposal proceeds (18,489,994) (41,201,387)
Impairment losses in the year - (585,745)
Realised gain 6,294,635 29,314,214
Unrealised gains 92,305,417 53,565,787
Closing valuation 265,454,136 144,803,154
------------------------------------------------- -------------------- --------------------
Movement in unrealised gains
Opening accumulated unrealised gains 111,980,464 68,114,510
Movement in unrealised gains 92,305,417 53,565,787
Transfer of previously unrealised gains to realised reserve on disposal of Investments (8,578,993) (9,699,833)
Closing accumulated unrealised gains 195,706,888 111,980,464
---------------------------------------------------------------------------------------- ------------ ------------
Reconciliation of investments, if held under the
cost (less impairment) model:
Historic cost basis
Opening book cost 32,822,690 23,092,680
Purchases (including consulting and legal fees) 40,540,924 12,503,095
Disposals on sale of investment (3,616,366) (2,187,340)
Impairment losses in the year - (585,745)
Closing book cost 69,747,248 32,822,690
------------------------------------------------- ------------ ------------
Valuation methodology
Mid-market price 63,146,440 -
Revenue multiple 6,590,954 62,595,291
Cost and price of recent investment (reviewed for impairment and fair value
adjustment) 195,716,742 82,207,863
265,454,136 144,803,154
-------------------------------------------------------------------------------------- ------------ ------------
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 2021:
Gain/loss
Additions from changes
Value to equity Conversions in fair
at investments from value Value
Date of 1 Jan during loan of equity at 31 Equity
Investee initial 2021, the period, notes, investments, Disposals, Dec 2021, stake
company investment USD USD USD USD USD USD owned
--------------- ------------ ------------ ------------ ------------ ------------- ------------- ------------ -------
DepositPhotos 26.07.2011 10,836,105 - - 3,454,987 (14,291,092) - -
Wanelo 21.11.2011 1,825,596 - - (1,223,149) - 602,447 4.69%
Backblaze 24.07.2012 56,004,337 - 2,000,000 5,142,103 - 63,146,440 9.97%
Remote.it 13.06.2014 3,025,285 - - (1,512,642) - 1,512,643 1.64%
Anews 25.08.2014 1,000,000 - - (670,000) - 330,000 9.41%
Klear 01.09.2014 155,000 - - 327,798 (482,798) - -
Bolt 15.09.2014 36,201,527 - - 67,174,273 - 103,375,800 1.38%
PandaDoc 11.07.2014 3,621,279 - - 14,564,491 (1,999,997) 16,185,773 1.18%
Full Contact 11.01.2018 244,506 - - - - 244,506 0.19%
ScentBird 13.04.2015 6,590,954 - - - - 6,590,954 4.43%
Workiz 16.05.2016 768,845 228,933 - 2,973,881 - 3,971,659 1.89%
Usual
(formely
Vinebox) 06.05.2016 450,015 - - - - 450,015 1.99%
19.01.
Hugo 2019 1,780,250 - - 1,976,290 - 3,756,540 3.55%
MEL Science 25.02.2019 2,663,696 - - - - 2,663,696 3.58%
Qumata
(Healthy
Health) 06.06.2019 415,737 545,156 - 857,929 - 1,818,822 3.03%
eAgronom 31.08.2018 288,224 - - 158,863 - 447,087 1.51%
Roket
Games
(Legionfarm) 16.09.2019 200,000 - - - - 200,000 1.26%
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 3,328,576 - 4,304,184 - 8,253,630 9.51%
Hinterview 21.09.2020 660,197 1,546 - 229,364 - 891,107 4.97%
Virtual
Mentor
(Allright) 12.11.2020 772,500 - - - - 772,500 2.95%
NovaKid 13.11.2020 500,000 640,001 - 1,809,854 - 2,949,855 1.22%
MTL Financial
(OutFund) 17.11.2020 1,322,100 - - - - 1,322,100 5.25%
Scalarr 15.08.2019 2,756,563 - - (1,378,281) - 1,378,282 7.66%
Accern 21.08.2019 1,282,705 - - - - 1,282,705 5.11%
Feel 13.08.2020 2,035,512 - - - - 2,035,512 8.60%
Affise 18.09.2019 - 2,068,902 1,401,968 - - 3,470,870 8.71%
3D Look 03.03.2021 - 1,000,000 - - - 1,000,000 3.87%
FemTech 30.03.2021 - 274,220 - - - 274,220 9.63%
Muncher 23.04.2021 - 2,059,999 - - - 2,059,999 4.77%
CyberWrite 20.05.2021 - 500,000 - - - 500,000 3.71%
Outvio 22.06.2021 - 612,353 - - - 612,353 4.00%
VertoFX 16.07.2021 - 1,132,999 - - - 1,132,999 3.24%
Academy
of change 02.08.2021 - 1,000,000 - - - 1,000,000 7.69%
EstateGuru 06.09.2021 - 1,780,200 - - - 1,780,200 2.73%
Prodly 09.09.2021 - 1,800,000 - - - 1,800,000 4.39%
Sonic
Jobs 15.09.2021 - 712,018 - - - 712,018 2.88%
EdVibe
(Study
Space,
Inc) 02.11.2021 - 1,500,001 - - - 1,500,001 7.36%
1Fit (Alippe,
Inc) 24.12.2021 - 500,000 - - - 500,000 4.70%
Agendapro 03.09.2021 - 206,000 309,000 - - 515,000 2.00%
Total 136,443,491 19,890,904 3,710,968 98,189,945 (16,773,887) 241,461,421
------------ ------------ ------------ ------------- ------------- ------------
(ii) Convertible loan notes as at 31 December 2021:
Additions Gain/loss
to from changes
convertible in fair
Value at note value of
Date of 1 Jan investments equity Value at
Investee initial 2021, during the Conversions, investments, Disposals, 31 Dec Term, Interest
company investment USD period, USD USD USD USD 2021, USD years rate, %
------------- ------------ ---------- ------------ ------------- ------------- ------------ ---------- ------ ---------
Sharethis 26.03.2013 570,030 - - - 570,030 5.0 1.09%
KitApps 10.07.2013 600,000 - - 546,125 (1,146,125) - - -
Affise 18.09.2019 1,401,968 - (1,401,968) - - - -
Postoplan 08.12.2020 181,665 1,151,320 - - 1,332,985 1.0 2.00%
Metrospeedy 16.07.2021 - 1,000,000 - - 1,000,000 - -
Feel 08.10.2021 - 1,363,700 - - - 1,363,700
------------
Total 2,753,663 3,515,020 (1,401,968) 546,125 (1,146,125) 4,266,715
-------------- ----------- ---------- ------------ ------------- ------------- ------------ ---------- ------
(iii) SAFEs as at 31 December 2021:
Gain/loss
from changes
Additions in fair
Value at to SAFE value of
Date of 1 Jan investments Conversions SAFE Value at
initial 2021, during the to equity, investments, Disposals, 31 Dec
Investee company investment USD period, USD USD USD USD 2021, USD
--------------------- ------------ ---------- ------------ ------------ ------------- ----------- -----------
Spin Technology 17.12.2018 300,000 - - - - 300,000
Cheetah (Go-X) 29.07.2019 350,000 - - - - 350,000
Adwisely (formerly
Retarget) 24.09.2019 1,350,000 250,000 - - - 1,600,000
Roket 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 - - (500,000) - 500,000
Volumetric 24.07.2020 206,000 - - 363,982 (569,982) -
StudyFree 08.12.2020 1,000,000 - - - - 1,000,000
Agendapro 15.04.2021 - 309,000 (309,000) - - -
Aurabeat 03.05.2021 - 1,030,000 - - - 1,030,000
Synder
(CloudBusiness Inc) 26.05.2021 - 2,060,000 - - - 2,060,000
Collectly 13.07.2021 - 2,060,000 - - - 2,060,000
Backblaze 10.08.2021 - 2,000,000 (2,000,000) - - -
OneNotary (Adorum) 01.10.2021 - 500,000 - - - 500,000
BaFood 05.11.2021 - 2,000,000 - - - 2,000,000
Educate online 16.11.2021 - 1,000,000 - - - 1,000,000
My Device Inc 30.11.2021 - 850,000 - - - 850,000
Mobilo (Lulu
Systems, Inc) 09.12.2021 - 1,030,000 - - - 1,030,000
Muncher 13.12.2021 - 2,000,000 - - - 2,000,000
------------
Total 5,606,000 15,089,000 (2,309,000) (136,018) (569,982) 17,680,000
----------------------------------- ---------- ------------ ------------ ------------- ----------- -----------
(iv) Shares to be issued as at 31 December 2021:
Gain/loss
Additions from changes
Value to equity Conversions in fair
at investments from value
Date of 1 Jan during loan of equity Value at 31
Investee initial 2021, the period, notes, investments, Disposals, Dec 2021,
company investment USD USD USD USD USD USD
---------- ------------- -------- ------------- ------------ -------------- ----------- ------------
3S Money
Club - 2,046,000 - - - 2,046,000
------------------------- ------- ------------- ------------ -------------- ----------- ------------
Total 2,046,000 2,046,000
----------------------------------- ------------- ------------ -------------- ----------- ------------
11 Trade and other receivables
At 31 December 2021 At 31 December 2020
USD USD
----------------------------------------- -------------------- --------------------
Prepayments 53,412 26,631
Other receivables 1,917,843 272,779
Interest receivable on promissory notes 79,394 188,428
2,050,649 487,838
----------------------------------------- -------------------- --------------------
The fair value of trade and other receivables approximate to
their carrying amounts as presented above. During the years ended
31 December 2021 and 2020 no balances were past due or impaired,
and no credit losses had been expected.
Other receivables as of 31 December 2021 represent amounts due
from the disposal of the investments in Klear, KitApps and
DepositPhotos.
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2021 include
cash on hand and in banks.
Cash and cash equivalents comprise the following:
At 31 December 2021 At 31 December 2020
USD USD
--------------- -------------------- --------------------
Bank balances 25,527,801 39,004,288
--------------- -------------------- --------------------
25,527,801 39,004,288
--------------- -------------------- --------------------
The following table represents an analysis of cash and
equivalents by rating agency designation based on Moody`s rating or
their equivalent:
At 31 December 2021 At 31 December 2020
USD USD
--------------- -------------------- --------------------
Bank balances
A3 rating 25,512,940 39,004,288
Baa3 rating 3,296 -
Not rated 11,565 -
--------------- -------------------- --------------------
Total 25,527,801 39,004,288
--------------- -------------------- --------------------
13 Trade and other payables
At 31 December 2021 At 31 December 2020
USD USD
------------------------- -------------------- --------------------
Salaries payable 82,500 40,000
Directors' fees payable 40,534 22,954
Bonuses payable 9,676,043 6,257,560
Trade payables 73,042 27,491
Accruals 32,704 24,568
------------------------- -------------------- --------------------
9,904,823 6,372,573
------------------------- -------------------- --------------------
The fair value of trade and other payables approximate to their
carrying amounts as presented above.
14 Share capital
On 31 December 2021, 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 2021 At 31 December 2020
USD USD
----------------------------- -------------------- --------------------
Share capital 53,283,415 34,790,174
Issued capital comprises: Number Number
Fully paid ordinary shares 31,451,538 29,185,831
----------------------------- -------------------- --------------------
Number of shares Number of shares
----------------------------- -------------------- --------------------
Balance at 31 December 2020 29,185,831 29,185,831
Issue of ordinary shares 2,265,707 -
Balance at 31 December 2021 31,451,538 29,185,831
----------------------------- -------------------- --------------------
In connection with the capital raising of US$19,258,510 (before
expenses) completed in October 2021, the Company issued and
allotted, in aggregate, 2,265,707 new ordinary shares, at US$8.50
per ordinary share. 598,799 of the new ordinary shares were
subscribed for by Executive Director Alexander Selegenev and
certain members of the Company's founding management team and their
connected parties, at the same issue price, and US$3,743,621 of the
relevant placing proceeds were settled against the Company's
outstanding bonus liabilities to those parties.
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 2021 the largest exposure to credit risk
related to cash and cash equivalents (US$25,527,801) . 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 2021 At 31 December 2020
USD USD
-------------------------------------- -------------------- --------------------
Convertible notes receivable & SAFEs 21,946,715 8,359,663
Trade and other receivables 2,050,649 487,838
Cash and cash equivalents 25,527,801 39,004,288
-------------------------------------- -------------------- --------------------
49,525,165 47,851,789
-------------------------------------- -------------------- --------------------
Market risk
The Company's financial assets are classified as financial
assets at FVPL. The measurement of the Company's investments in
equity shares and convertible notes is largely dependent on the
underlying trading performance of the investee companies, but the
valuation and other items in the financial statements can also be
affected by the interest rate and fluctuations in the exchange
rate.
COVID-19 and related market volatility, whilst not directly
affecting the Company's operations and liquidity position, impact
the underlying performance and therefore future fair market values
of the Company's investee companies
Interest rate risk
Changes in interest rates impact primarily cash and cash
equivalents by changing either their fair value (fixed rate
deposits) or their future cash flows (variable rate deposits).
Management does not have a formal policy of determining how much of
the Company's exposure should be to fixed or variable rates.
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 2021 was as
follows:
For the For the For the year For the year
year ended year ended ended 31/12/2020 ended 31/12/2020
31/12/2021 31/12/2021
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 534,672 294,597 94,261 7,987
Current liabilities
Trade and other payables (50,106) (1,215) (4,309) -
------------------------------- ------------ ------------ ------------------ ------------------
Net (short) long position 484,566 293,382 89,951 7,987
------------------------------- ------------ ------------ ------------------ ------------------
Net exposure currency 359,550 259,195 65,903 6,506
------------------------------- ------------ ------------ ------------------ ------------------
Net exposure currency
(assuming a 10% movement
in exchange rates) 436,109 264,044 80,956 7,188
------------------------------- ------------ ------------ ------------------ ------------------
Impact on exchange movements
in the statement of
comprehensive income 48,457 29,338 8,995 799
------------------------------- ------------ ------------ ------------------ ------------------
The foreign exchange rates of the USD at 31 December were as
follows:
31/12/2021 31/12/2020
----------------------- ----------- -----------
Currency
British pounds, GBP 1.3477 1.3649
Euro, EUR 1.1319 1.2276
----------------------- ----------- -----------
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 2021, the cash and equivalents of the Company
were US$ 25,527,801 .
The following are the maturities of current liabilities as at 31
December 2021:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
------------------------- ---------------- ---------------- ---------- ------------------
Salaries 82,500 82,500 - -
Directors' fees payable 40,534 40,534 - -
Bonuses payable 9,676,043 9,676,043 - -
Trade payables 73,042 73,042 - -
Accruals 32,704 32,704 - -
9,904,823 9,904,823 - -
------------------------- ---------------- ---------------- ---------- ------------------
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 2021:
Level 1 Level 2 Level 3 Total
USD USD USD USD
-------------------------- ----------- ------------ ---------- ------------
Financial assets
Financial assets at FVPL 63,146,440 195,716,742 6,590,954 265,454,136
63,146,440 195,716,742 6,590,954 265,454,136
-------------------------- ----------- ------------ ---------- ------------
17 Related party transactions
The Company's Directors receive fees and bonuses from the
Company, details of which can be found in Note 6.
18 Subsequent events
Refer to the "Events after the reporting period" in the
"Portfolio Developments" section above.
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 (as amended).
This information is provided by RNS, the news service of the
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END
FR MZGZFLDGGZZM
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