Tern Plc (LON:TERN), the company focused on value creation from Internet of Things technology businesses, has announced its audited results for the year ended 31 December 2022.
Highlights
· Net assets of the Company at 31 December 2022 of £24.9m (31 December 2021: £32.4m). The net asset value per ordinary share as at 31 December 2022 decreased to 6.4p (31 December 2021: 9.2p)
· The reduction in net assets of the Company as at 31 December 2022 principally due to movements in investments held at fair value through the profit or loss and a reduction in the cash balance
· The unaudited aggregated annual recurring revenue (“ARR”) of our portfolio1 increased by 97% from 2021 to 2022 and the year-on- year growth in aggregated revenue grew by 5%. A key focus for our portfolio is on recurring revenue as it is a primary driver of valuation growth
· The aggregated employee numbers of our portfolio increased by 66% from 2021 to 2022 (35% from 2020 to 2021), and this increase was balanced by an associated increase in ARR such that ARR per employee increased by 19% from 2021 to 2022
1. Our ‘portfolio companies and holdings’ being portfolio companies: Device Authority Limited, InVMA Limited (trading as Konektio), FVRVS Limited (Trading as FundamentalVR) and Talking Medicines Limited, and holdings: Wyld Networks AB, or collectively ‘our portfolio’: as further described in the section headed ‘Portfolio Companies and Holdings below and as detailed in note 3.
Commenting on the results, Tern’s CEO, Al Sisto said:
“Whilst it is disappointing to report a reduction in the unrealised fair value of a number of our companies, a large part of the fair value decrease at the year end, is a reflection of the dramatic decrease in valuation metrics and models in the technology sector rather than the underlying prospects of our companies. Despite short-term challenges posed by macroeconomic factors and geopolitical conflicts, we remain confident in the long-term potential of our portfolio and the IoT markets in which we operate.
“As hands-on managers, we are committed to continuing to work closely with our companies, providing them with the benefit of our expertise and resources to help them navigate the road ahead. The IoT technology markets, which remain a core focus for us, continue to offer long-term growth potential and we are excited to see what the future holds.
“At the heart of our investment strategy is a focus on ARR growth, which we believe is the key driver of valuations for start-ups. However, we understand the importance of our portfolio balancing their growth with achieving profitability to drive efficient growth, and we are dedicated to supporting our portfolio as they chart their path to success.
“We believe that our portfolio remain well positioned for successful exits at the right time. While uncertainty may persist in the shorter term, we are heartened by the indicators we are seeing in the market that point to a return to improvements in valuations.”
Notice of AGM
The annual report for the year ended 31 December 2022, which contains a notice of the Annual General Meeting, will shortly be available from the Company’s website https://www.ternplc.com/investors and will shortly be posted to shareholders.
The Company’s AGM will be held at 9.00am on Thursday 29 June 2023 at the offices of Reed Smith, The Broadgate Tower, 20 Primrose Street, London, EC2A 2RS.
Investor Presentation and Q&A Session
The Company’s Chairman, Ian Ritchie, and CEO, Al Sisto, will conduct a live question and answer session for investors on 12 June 2023 at 5:30 pm BST. The session is open to all existing and potential shareholders.
Those who wish to attend should register via the following link where they will be provided with access details:
https://us02web.zoom.us/webinar/register/WN_YYea-W2XQgeqJ7WUDPHnuQ
Participants will have the opportunity to submit questions during the session, but questions are welcomed in advance and may be submitted to: tern@investor-focus.co.uk.
