TIDMTMT
RNS Number : 3817U
TMT Investments PLC
28 March 2023
28 March 2023
TMT INVESTMENTS PLC
("TMT" or the "Company")
Results for the year ended 31 December 2022 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 2022.
Highlights :
-- NAV per share of US$6.41 (down 28.7% from US$9.00 as of 31 December 2021)
-- Total NAV of US$ 201.7 million (down from US$283.1 million as of 31 December 2021)
-- 5-year IRR of 22.8% per annum
-- US$9.6 million of investments across 9 new and existing companies in 2022
-- Diversified global portfolio of over 50 companies focused
mainly around SaaS (software-as-a-service), marketplaces, big
data/cloud, EdTech, FinTech, e-commerce, and FoodTech solutions
-- US$11.4 million in cash and cash equivalent reserves as of 27 March 2023
Alexander Selegenev, Executive Director of TMT, commented:
"Despite global political and economic volatility, 2022 saw
continued investor interest in high-growth, high-quality digital
technology companies, resulting in positive revaluations of several
of TMT's portfolio companies. Accern, Outfund, FemTech, Spin
Technology, Muncher, Cyberwrite and Feel received further
validation for their business models by raising fresh equity
capital at higher valuations. In tandem, many other portfolio
companies have continued to either grow their businesses quietly in
the background, or diligently react to the evolving market
situation, adapting and repositioning their businesses as required.
At the same time, as always, TMT has proactively been reducing
valuations in the portfolio companies that have started to
experience difficulties adapting to the current environment, whose
business models have not been proven quickly enough, or those with
unclear prospects of raising new capital.
A challenging macro-economic environment in 2022 meant that many
companies, both tech and non-tech, large and small, are having to
react to the changed outlook and improve their business models and
financial management.
At TMT, we believe that the current macro-economic and market
challenges will widen the gap between winners and losers in the
technology sector. This is a double-edged sword, with the better
companies being rewarded more handsomely as investors pay up for
the best quality companies, whilst the weaker companies are likely
to suffer more than under previously more benign environments. We
are therefore favouring companies demonstrating profitability or a
clear path to profitability and with the management skills,
commercial acumen and adaptability to succeed against a tougher
macro-economic backdrop.
Given the high level of market uncertainty and volatility, TMT
chose to invest selectively in 2022, investing approximately US$9.6
million into 4 new portfolio companies and making 6 additional
investments into portfolio companies.
TMT's five largest holdings by value (Bolt, Backblaze, 3S Money,
Pandadoc and Scentbird) make up 64% of TMT's portfolio value, and
are companies that are generating double or triple digit revenue
growth, with the exception of Scentbird. Scentbird generated single
digit revenue growth in 2022, a no mean feat in the current
environment, and is targeting positive EBITDA in 2023. All of TMT's
five largest holdings are well capitalised, with well-established
business operating models and strong management that place them in
good stead in the current environment.
Early and mid-stage companies represented 45% of TMT's total
portfolio value and 93% of the total number of portfolio companies,
providing a large pipeline from which to keep growing tomorrow's
winners.
The significantly reduced share prices of publicly traded
technology companies negatively affected the value of TMT's equity
stake in NASDAQ-traded cloud storage company Backblaze (
www.backblaze.com ), resulting in a US$40.2 million reduction in
the value of TMT's investment in Backblaze as of 31 December 2022.
Despite such financial market volatility, Backblaze's business has
been developing well, recording 26% revenue growth in 2022 compared
to 2021. Backblaze remains well capitalised with a preliminary
announced unaudited net cash position of approximately US$32
million as of 31 December 2022.
Consistent with TMT's prudent valuation policy, the Company has
also decided to reduce the fair value of its equity stake in Bolt (
www.bolt.eu ) by 33%, despite the fact that the previous valuation
level was established on the back of Bolt's successful EUR628
million equity raise, which completed in January 2022 and after the
market correction had started. This decision reflects the reduction
in the values of Bolt's publicly traded peers, namely Uber, as of
31 December 2022. Business-wise, Bolt continued to perform
reasonably well in 2022, recording double-digit revenue growth,
making progress towards operating profitability and enjoying the
benefits of its significant net cash reserves. As a business, Bolt
also benefits from a highly diversified geographical revenue base,
with over 100 million customers in more than 45 countries across
the globe, as well as leveraging its technology to serve six
business segments: rides, scooter rental, car sharing, food
delivery, grocery delivery and business travel.
TMT is continuing to identify investment opportunities very
selectively and at appropriate valuation levels, whilst employing
an extremely cautious general investment approach for the time
being. With no financial debt and cash and cash equivalent reserves
of approximately US$11.4 million as of 27 March 2023, TMT is well
positioned to ride out the current market volatility and make
selective investments and realise disposals when the right
opportunities present themselves."
Notice of AGM
The Company's Annual General Meeting will be held on 23 May 2023
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 2022 and Notice of AGM will shortly be available on the
Company's website at www.tmtinvestments.com .
For further information contact:
TMT Investments Plc +44 (0)1534 281 800
Alexander Selegenev (Computershare - Company Secretary)
Executive Director
www.tmtinvestments.com alexander.selegenev@tmtinvestments.com
Strand Hanson Limited
(Nominated Adviser)
James Bellman / James Dance +44 (0)20 7409 3494
Cenkos Securities plc
(Joint Broker)
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
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).
About TMT Investments Plc
TMT Investments Plc invests in high-growth technology companies
globally across a number of core specialist sectors. Founded in
2010, TMT has a current investment portfolio of over 50 companies
and net assets of US$202 million as of 31 December 2022. 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
2022 saw substantially increased market and economic volatility,
with the larger-cap public market sell-off throughout the year
leading to reduced valuations for some privately held start-ups. A
challenging macro-economic environment has meant that many
companies, both tech and non-tech, large and small, are having to
react to the changed outlook and improve their business models and
financial management.
Developments in the Technology Venture Capital Sector
As 2022 progressed, we observed an acceleration of two existing
trends: first, an increasing focus by investors on examining a tech
start-up's profitability/path to profitability, and second,
increasing divergence in how tech companies are reacting to the
changed market and operational environment.
Turning to the first trend, venture capital investors are now
much more reticent than previously to subsidise revenue growth or
market share gains at the expense of profitability or a clear path
to profitability. This rebalancing by investors towards a greater
focus on profitability and away from "revenue growth at any cost"
accelerated as 2022 progressed. This is to be expected: an
innovative technology solution only becomes valuable to investors
if it can achieve a product market fit (right product or service
for the right client at the right price) that is ultimately focused
on profitability.
TMT was early to observe this trend and we commented on this
already in our 2020 Annual Report, when tech companies' business
models were tested by the COVID-caused disruption in 2020, and had
already sought to implement this insight in terms of TMT's
portfolio selection by tilting the portfolio toward companies that
recognised the importance of having viable business models focused
on visible profitability and strong management of their financial
resources.
Turning to the second trend, the knock-on effect of this
rebalancing in the venture capital industry is now forcing the
majority of start-ups of all stages to prioritise profitability
over growth, with growth only being rewarded if it is achieved in a
tightly controlled cost environment. This means that being a tech
company with an innovative business model, product or service has
ceased to be sufficient per se to attract immediate investor
attention. As a result, tech companies are having to reassess their
underlying business models and profitability timelines and work
harder to ensure their product market fit is well positioned to
retain and grow market share.
The marked change in how investors value technology companies is
creating a "survival of the fittest" market dynamic, as companies
react to a changed market environment and how they are valued by
investors. On the one hand, companies with superior business models
that have reacted quickly and adopted successful measures have
continued to grow and flourish, albeit at lower speeds. On the
other hand, companies with weaker business models that were more
dependent on future funding and have failed to react successfully
have come under increased pressure.
TMT's portfolio has not been immune to these developments, and
we are naturally seeing an increasing divergence between the
stronger and weaker performers. A first group of companies were
quick to react in early 2022 by reducing burn-rates and
accelerating their paths to profitability, continuing to refine
their business models, or taking other required measures. In many
cases this has led to lower revenue growth rates, but a stronger
and more sustainable business position overall. A second group only
started reacting in late 2022 / early 2023. Those companies that
were slower to react to the tougher economic environment may have
grown their revenues a bit faster compared to the first group, but
their recent aggressive burn rates are now forcing them to have to
look for new funds at lower valuation levels and/or implement
business optimisation measures in a more stressed environment. A
third group includes well capitalised companies with high levels of
cash reserves and typically low burn rates or close to achieving
profitability. Such companies are in the fortunate position of
being able to choose whether to focus on revenue growth or
profitability, depending on what they see as a priority for success
in their respective market sectors.
Technology Company Valuations
Despite the challenging macroeconomic and political outlook,
investors in 2022 continued to back high-growth, high-quality
digital technology companies, taking into account the above noted
trends in the tech company universe. This resulted in positive
revaluations of several of TMT's portfolio companies. We were
pleased to see Accern, Outfund, FemTech, Spin.ai, Muncher, and
Cyberwrite receive further validation for their business models by
raising fresh equity capital at higher valuations to TMT's previous
entry points.
TMT adopts a conservative approach to valuing its portfolio
investments and therefore regularly reviews and writes down
investments that are not showing the progress TMT believes is
required to justify the previously reported valuation level. As a
result, in addition to Bolt and Backblaze, TMT partially or fully
wrote down the value of twelve of its smaller investments during
the period (excluding further write-downs related purely to
exchange rate fluctuations).
The significantly reduced share prices of publicly traded
technology companies negatively affected the value of TMT's equity
stake in NASDAQ-traded cloud storage company Backblaze (
www.backblaze.com ), resulting in a US$40.2 million reduction in
the value of TMT's investment in Backblaze as of 31 December 2022.
Despite such financial market volatility, Backblaze's business has
been developing well, recording 26% revenue growth in 2022 compared
to 2021. Backblaze remains well capitalised with a preliminary
announced unaudited net cash position of approximately US$32
million as of 31 December 2022.
Consistent with TMT's prudent valuation policy, the Company has
also decided to reduce the fair value of its equity stake in Bolt (
www.bolt.eu ) by 33%, despite the fact that the previous valuation
level was established on the back of Bolt's successful EUR628
million equity raise, which completed in January 2022 and after the
market correction had started. This decision reflects the reduction
in the values of Bolt's publicly traded peers, namely Uber, as of
31 December 2022. Business-wise, Bolt continued to perform
reasonably well in 2022, recording double-digit revenue growth,
making progress towards operating profitability and enjoying the
benefits of its significant net cash reserves. As a business, Bolt
also benefits from a highly diversified geographical revenue base,
with over 100 million customers in more than 45 countries across
the globe, as well as leveraging its technology to serve six
business segments: rides, scooter rental, car sharing, food
delivery, grocery delivery and business travel.
As can be seen from the BVP Cloud Index (
https://cloudindex.bvp.com/ ), median valuation multiples for
larger-cap publicly traded technology companies have fallen
sharply, in effect returning to the more sustainable levels seen in
2013-2017.
The negative effect of increased market and economic volatility
on earlier-stage start-ups has been the generally lower
disbursement levels of funding that we are currently seeing, as
investors continue to carefully assess how tech companies are
reacting to the current challenges. 'Dry powder' cash levels
available for investment remain very high globally, as the State of
European Tech 2022 report indicates, but founders are having to go
the extra mile to prove the quality and potential of their
businesses as investors become more discerning. This is to be
expected and bodes well for high levels of funding to continue
being available to tech companies with strong business models, a
successful differentiated offering and savvy financial
management.
NAV per share
The Company's NAV per share in 2022 decreased by 28.7% to
US$6.41 as of 31 December 2022 (31 December 2021: US$9.00), mainly
as a result of the significant downward revaluation of Backblaze
and Bolt during 2022.
Operating expenses
In 2022, the Company's administrative expenses of US$ 1,443,395
were below corresponding 2021 levels (2021: US$ 1,924,650 ),
reflecting the Company's reduced level of investment and business
development activities during the period.
Financial position
As of 31 December 2022, the Company had no financial debt and
cash reserves of approximately US$10.1 million (31 December 2021:
US$25.5 million). As of 27 March 2023, the Company had cash and
cash equivalent reserves of approximately US$11.4 million.
With regard to the recent developments surrounding Silicon
Valley Bank ("SVB"), TMT's main banking partner , the Company notes
that, after the measures implemented by the USA's Federal Deposit
Insurance Corporation and Federal Reserve, the Company expects to
retain access to all its funds held at SVB and that therefore the
developments regarding SVB are not expected to have any impact on
TMT's financial position. For the same reasons the Company does not
believe that the recent developments at SVB will have any material
impact on the financial position of its portfolio companies. As of
27 March 2023, the Company had approximately US$2.9 million in cash
held with SVB.
Outlook
TMT has a diversified investment portfolio of over 50 companies,
focused primarily on big data/cloud, SaaS (software-as-a-service),
marketplaces, e-commerce, FinTech, EdTech and FoodTech, most of
which continue to benefit from the ongoing shift to online consumer
habits and remote working.
2022 saw a dramatic change for the venture capital and
technology company environment, with most investors "returning to
basics" by looking to support ultimately profitable business models
at sensible valuations. Start-ups have now realised that the
"growth at any cost" approach has rapidly been replaced with a
focus on "fundamentally profitable growth at the right valuation".
Start-ups' ability to reposition and adjust to the changed market
environment will largely define their success/survival rate in the
near future.
The recent military conflict in Ukraine and more recently the US
and European bank liquidity issues have undoubtedly added
significantly to global market uncertainty. A number of negative
trends and factors continue to affect the prospects of the wider
global economy, and the ultimate effect on the technology sector
and its participants will depend on how global dynamics unfold in
the coming months.
Despite the ongoing volatility, investors continue to be
interested in high-quality technology businesses at the right
valuation levels. TMT is continuing to identify such opportunities
very selectively, whilst employing an extremely cautious general
investment approach for the time being. With no financial debt and
cash reserves of approximately US$11.4 million as of 27 March 2023,
TMT is well positioned to ride out the current market volatility
and to continue making investments and realising full and partial
disposals when the right opportunities present themselves.
Alexander Selegenev
Executive Director
27 March 2023
PORTFOLIO DEVELOPMENTS
The following developments have had an impact on, and are
reflected in, the Company's NAV and/or financial statements as of
31 December 2022 in accordance with applicable accounting
standards.
Full and partial cash exits, and positive revaluations:
-- Accern, a no-code AI platform for the financial service
industry ( www.accern.com ), completed a new equity funding round.
The transaction represented a revaluation uplift of US$1.6 million
(or 124%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2021.
-- MTL Financial, trading as Outfund, a revenue-based financing
provider ( www.out.fund ), completed a new equity funding round.
The transaction represented a revaluation uplift of US$1.2 million
(or 94%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2021.
-- FemTech, a London-based technology accelerator focused on
female founders ( www.femtechlab.com ), completed two new equity
funding rounds in July 2022 and February 2023. The latest
transaction represented a revaluation uplift of US$0.5 million (or
196%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2021.
-- Spin.ai, an all-in-one SaaS data protection platform for
mission-critical SaaS apps ( www.spin.ai ), completed a new equity
funding round. The transaction represented a revaluation uplift of
US$0.7 million (or 221%) in the fair value of TMT's investment,
compared to the previous reported amount as of 31 December
2021.
-- Muncher, a cloud kitchen and virtual food brand operator in
South America ( www.muncher.com.co ), completed a new equity
funding round. The transaction represented a revaluation uplift of
US$1.6 million (or 41%) in the fair value of TMT's investment,
compared to the previous reported amount as of 31 December
2021.
-- Cyberwrite, an AI cyber insurance platform providing
cybersecurity insights and risk quantification for businesses
worldwide ( www.cyberwrite.com ), completed a new equity funding
round. The transaction represented a revaluation uplift of US$0.5
million (or 95%) in the fair value of TMT's investment, compared to
the previous reported amount as of 31 December 2021.
-- In its 2021 Annual Report, the Company reported that Delivery
Hero SE, one of the world's leading local food delivery platforms,
had announced in October 2021 that it had entered into an agreement
with TMT's portfolio company Hugo Technologies Ltd. ("Hugo") (
www.hugoapp.com ) , to acquire Hugo's multi-category marketplace's
core food delivery and quick commerce business in Central America
(the "Original Disposal") . In November 2022, the Original Disposal
finally completed with slightly amended terms (the "Final
Disposal"). As part of the Final Disposal, TMT received an initial
dividend payment of US$0.2 million from Hugo in November 2022.
-- TMT's equity stake in 3S Money Club Limited ( www.3s.money )
was revalued on the back of independent secondary equity
transactions in 3S Money shares. The relevant secondary
transactions represented a revaluation uplift of US$3.8 million (or
37%) in the fair value of TMT's investment, compared to the
previous reported amount as of 31 December 2021.
In addition, TMT's investment in eAgronom had a minor increase
in value thanks to the exchange rate movement as of 31 December
2022.
Negative revaluations:
The following of the Company's portfolio investments were
negatively revalued in 2022:
Portfolio Write-down Reduction as Reasons for write-down
Company amount (US$) % of fair value
reported as
of 31 Dec 2021
Based on the closing mid-market
price of US$6.15 per share
Backblaze 40,153,509 64% on 31 December 2022
-------------- ----------------- -----------------------------------
Based on comparable company
analysis, and supported by
a partial buying order received
by TMT from a bona fide financial
Bolt 33,618,816 33% buyer
-------------- ----------------- -----------------------------------
Based on comparable company
Pandadoc 5,341,305 33% analysis
-------------- ----------------- -----------------------------------
Based on comparable company
Affise 1,675,190 48% analysis
-------------- ----------------- -----------------------------------
Independent convertible note
Remote.it 1,381,443 91% round
-------------- ----------------- -----------------------------------
Based on comparable company
analysis; lack of progress
MEL Science 1,758,040 66% in the last 2 years
-------------- ----------------- -----------------------------------
Based on comparable company
analysis (plus exchange rate
effect) ; extra exposure
to the current financial
Estateguru 979,500 55% market volatility
-------------- ----------------- -----------------------------------
Serious lack of progress
StudyFree 1,000,000 100% in the last 2 years
-------------- ----------------- -----------------------------------
Insufficient progress in
the last 1.5 years; revenue
EdVibe 750,001 50% exposure to Russia
-------------- ----------------- -----------------------------------
Insufficient progress in
Academy the last 1.5 years; previous
of Change 670,000 67% revenue exposure to Russia
-------------- ----------------- -----------------------------------
Lack of progress in the last
3D Look 499,999 50% 2 years
-------------- ----------------- -----------------------------------
Independent highly dilutive
Usual 450,015 100% equity capital raise
-------------- ----------------- -----------------------------------
Acquisition by Delivery Hero
announced in Oct 2021 completed
in Nov 2022. Value of TMT's
investment partially reduced
due to the expedited receipt
Hugo 338,222* 9% of relevant proceeds.
-------------- ----------------- -----------------------------------
Anews 330,000 100% Company liquidated
-------------- ----------------- -----------------------------------
Total 88,946,040
-------------- ----------------- -----------------------------------
*- adjusted for the US$0.2 million dividend TMT received from
Hugo in November 2022.
In addition, the following of TMT's non-USD denominated
investments decreased in value due to exchange rate fluctuations as
of 31 December 2022: Feel, Timbeter, Hinterview, MTL (Outfund),
Conte.ai (Postoplan), Outvio, Sonic Jobs, Bairro, and Laundry
Heap.
Key developments for the five largest portfolio holdings in 2022
(source: TMT's portfolio companies):
Bolt (ride-hailing and food delivery service):
-- Active in over 500 cities globally (up from over 400 cities as of 31 December 2021)
-- Double-digit revenue growth
Backblaze (cloud storage provider):
-- Double-digit revenue growth
-- Multiple new integrations and partnerships building basis for future growth
-- Targeting adjusted EBITDA breakeven point in Q4 2023
PandaDoc (proposal automation and contract management
software):
-- Double-digit revenue growth
-- Over 40,000 paying clients (from over 30,000 as of 31 December 2021)
-- Acquisition of LiveNotary to launch a remote online notarisation service
3S Money Club (provider of corporate multi-currency bank
accounts):
-- Triple-digit revenue growth
-- Profitable and cash flow positive
Scentbird (Perfume, wellness and beauty product subscription
service):
-- Single-digit revenue growth
-- Acquisition of car air freshener company Drift
-- Targeting positive EBITDA in 2023
New investments:
Given the high level of market uncertainty and volatility, TMT
was even more selective in 2022, investing approximately US$9.6
million across the following companies:
-- Initial EUR825,000 in Bairrissimo, LDA, trading as Bairro, an
instant food and grocery delivery company in Portugal (
https://bairro.io )
-- Initial US$4,000,000 in SOAX Ltd, a SaaS-enabled marketplace
of tools to collect publicly available data at scale (
https://soax.com )
-- Initial GBP500,000 and additional GBP999,918 in Laundryheap
Limited, a marketplace for on-demand laundry and dry-cleaning
services ( https://www.laundryheap.co.uk/ )
-- Initial US$1,000,000 in MedVidi Inc., an online mental
healthcare provider ( www.medvidi.com );
-- Additional EUR400,000 in Postoplan OÜ, trading as Conte.ai, a
social network marketing platform, which helps create, schedule,
and promote content ( www.conte.ai );
-- Additional US$250,000 in Legionfarm, Inc., an online game
coaching platform ( www.legionfarm.com );
-- Additional GBP250,000 in Feel Holdings Limited, a
subscription-based multivitamin and supplement producer (
www.wearefeel.com );
-- Additional US$500,000 in Bafood Global Limited, a hyper local
ready-to-eat food delivery and cloud kitchen operator in Eastern
Europe ( https://bafood.app ); and
-- Additional US$200,000 in My Device Inc., trading as Whizz, a
device-as-a-service e-bike rental company ( www.getwhiz.co ).
Events after the reporting period
In January and March 2023, TMT received a total additional
US$1.6 million in dividends from Hugo, as part of the consideration
for Hugo's disposal of its food delivery and quick commerce
business in Central America to Delivery Hero.
In February 2023, TMT invested an additional US$0.1 million in
Cyberwrite, an AI cyber insurance platform providing cybersecurity
insights and risk quantification for businesses worldwide (
www.cyberwrite.com ).
In February 2023, TMT invested an additional GBP45,861 in
FemTech, a London-based technology accelerator focused on female
founders ( www.femtechlab.com ) .
In February 2023, TMT received US$0.3 million from Backblaze,
Inc., as a settlement payment in respect of TMT's additional
investment in Backblaze in 2021.
In March 2023, Silicon Valley Bank ("SVB"), a key banking
partner of TMT and many of its investee companies , experienced
liquidity issues. As a result of the various measures implemented
by the USA's Federal Deposit Insurance Corporation and Federal
Reserve, the Company expects to retain access to all its funds held
at SVB and that therefore the developments regarding SVB are not
expected to have any material impact on the financial position of
TMT or any of its portfolio companies.
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) by
both businesses and society at large continued to evolve in 2022,
as countries around the world emerged from the devastating social
and economic fallout provoked by the COVID pandemic. Investor
attention has been driven by three main factors: regulatory
pressure, underlying investor demand and a recognition that current
levels of ESG data available remain opaque and under-developed in
many sectors, resulting in new business opportunities to meet this
shortfall.
The Company has been monitoring ESG issues before they reached
the mainstream investment agenda. As such, TMT has made a number of
investments in ESG-focused companies that also meet TMT's
investment objectives.
In 2021, TMT started formalising its ESG Policy under the
guiding principles that it be relevant, realistic and accountable,
and finalised it as published in its Interim Results 2022. Starting
with 2022 and going forward, TMT will also be providing an annual
update on ESG developments in TMT's portfolio.
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.
The Company engages two brokers, Cenkos Securities plc
("Cenkos") and Hybridan LLP ("Hybridan") as Joint Brokers to TMT.
Together with the Company's other advisors, both brokers arrange
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 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
Andrea Nastaj) and the Executive Director (Alexander Selegenev).
James Mullins and Andrea Nastaj, both Non-executives, are
considered by the Board to be independent. James Mullins was
appointed to the Board in December 2010. Whilst James Mullins has
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 James Mullins continues 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, James Mullins will 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 2022. One meeting of the Audit
Committee, one meeting of the Remuneration Committee and one
meeting of the Nomination Committee were held in 2022. The number
of meetings attended by the Directors is set out below.
Board Audit Committee Remuneration Committee Nomination Committee
Director meetings meetings meetings meetings
--------------------- --------- ---------------- ----------------------- ---------------------
Yuri Mostovoy 6 - -
Alexander Selegenev 5 - - 1
Petr Lanin 1 1 1
Andrea Nastaj 3
James Mullins 6 1 1 1
--------------------- --------- ---------------- ----------------------- ---------------------
Total meetings 6 1 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 below.
Yuri Mostovoy , Non-Executive Chairman, was appointed to the
Board in June 2011. Yuri brings over 39 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.
Andrea Nastaj , independent Non-executive Director, was
appointed to the Board in May 2022, succeeding Petr Lanin. Andrea
is an experienced executive within the financial sector, having
held senior positions at a number of financial institutions. He
has, for the past decade, served as Head of Compliance for Capital
Mill OÜ, the commercial real estate investor and manager. Prior to
this, Andrea held the position of Vice-President at Banque Profil
de Gestion, the independent bank whose primary services are private
and investment banking. Banque Profil de Gestion merged with One
Swiss Bank SA in June 2021 and is listed on the SIX Swiss Exchange
(SIX:ONE). His appointment to the Board as an independent
non-executive director of the Company brings to the team a wealth
of corporate governance, compliance and financial services
experience. Andrea has a Master's in Accounting and Finance from
the University of St. Gallen, Switzerland.
Andrea Nastaj is a member of the Company's Audit and
Remuneration Committees.
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 fifth such formal evaluation for the year ended December
2022 took place in February 2023. The previous such evaluation had
been for the year ended December 2021, which started in January
2022 and concluded in February 2022. Compared to the previous year,
the responses to the various evaluation questionnaires 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 2023.
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).
TMT's Board effectiveness questionnaire content had been updated
in 2021 in light of the QCA's "Board Performance Review Guide"
published by the QCA in 2021, and as detailed in TMT's 2021 Annual
Report (Board effectiveness review). TMT therefore continued to
make use of the same board effectiveness questionnaire to conduct
its 2022 evaluation, with some minor updates.
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.
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 2020.
Nomination Committee effectiveness
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 2022 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.
In 2021, TMT started formalising its ESG Policy under the
guiding principles that it be relevant, realistic and accountable,
and finalised it as published in its Interim Results 2022. Starting
with 2022 and going forward, TMT will also be providing an annual
update on ESG developments in TMT's portfolio.
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 should meet at least twice a year and
currently comprises James Mullins and Andrea Nastaj being
non-executive members of the Board, with James Mullins appointed as
chairman. The Audit Committee reviews its terms of reference
annually. 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 judgmental 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
Andrea Nastaj, 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 Andrea Nastaj. 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 in March 2022 to approve
the 2021 Annual Report & Accounts. The aforementioned Audit
Committee meeting was attended by James Mullin (Chairman) and Petr
Lanin (Non-executive director and Audit Committee member at the
time).
Remuneration committee report
The Company has established a remuneration committee, which
comprises James Mullins (Chairman) and Andrea Nastaj. The
remuneration committee met once in April 2022 to discuss and
approve the allocation of the 2021 bonus pool. The aforementioned
Remuneration Committee meeting was attended by James Mullin
(Chairman) and Petr Lanin (Non-executive director and Remuneration
Committee member at the time).
Nomination committee report
The Company has established a nomination committee, which
comprises James Mullins (Chairman) and Alexander Selegenev. The
nomination committee met once in May 2022 to discuss and approve
the appointment of Andrea Nastaj as Non-executive director.
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
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 other desired objectives.
ESG evaluation can be carried out in a number of different ways.
Among other factors, its effectiveness will depend on the questions
being addressed, the principles being applied and the quality of
data available. Indeed, at times the prioritising of some
principles can have a negative impact on others, given the
asymmetric nature of benefits that can sometimes arise. An example
is when alleviation of poverty in the short term comes at a higher
environmental cost.
The social and economic fallout from the COVID-19 pandemic
served to put the ESG agenda into sharper relief and has
accelerated the intensity of focus. As an investing company, TMT
has been monitoring ESG issues and taking them into account before
they began to enter the mainstream investment agenda. TMT started
to formalise its approach to ESG in its initial ESG Policy
announced in its 2021 Annual Report.
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 investing 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 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 red flags, as well as opportunities, been identified?
Realistic
-- Is the investee developing an ESG roadmap as part of its business plan?
-- Are the investee's ESG objectives achievable and
proportionate in view of its current resources?
-- What resources does the investee need to consider in order to progress 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 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 a 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, TMT requires
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.
ESG developments in TMT's portfolio
As the understanding and application of ESG evolves over time,
an increasing number of companies globally are focusing or seeking
to incorporate ESG frameworks within their business models. TMT
recognizes that a sound application of ESG objectives can help
companies create a distinct offering that meets evolving customer
requirements and makes for a stronger business model.
TMT therefore takes into account an investee's approach to ESG
when reviewing investment opportunities alongside TMT's main
investment criteria, the latter being as follows:
-- 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
We classify TMTs' portfolio companies according to their
intensity of focus on ESG as part of their business model. To do
this we review their stated level of engagement with the United
Nations Social & Development Goal (UN SDGs).
ESG-focused: Companies whose business objectives focus on one or
more of the UN SDGs
ESG-partial: Companies that address one or more of the UN SDGs
in the way they conduct their business
Non-ESG: Companies that do not focus or explicitly address one
or more of the UN SDGs in the way they conduct their business
ESG-focused companies in TMT's portfolio
At present, there are seven companies in TMT's portfolio whose
business objectives focus on one or more of the UN SDGs. During
2022 all of them made good progress in developing their business
models and revenues. This gives us confidence that their ESG focus
is leading to a distinct offering that meets market demand and
strengthens their business model.
Timbeter, a SaaS solution for quick and accurate timber
measurement and data management, which is making the forestry
industry more sustainable, profitable and efficient (
www.timbeter.com ); SDG 13 & 15
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 ( www.eagronom.com ); SDG 13 &
15
Mobilo, an eco-friendly solution allowing users to digitally
share contact details instead of using paper/plastic business cards
and turn meetings into leads ( www.mobilocard.com ); SDG 12 &
13
FemTechLab, Europe's first tech accelerator focused on female
founders ( www.femtechlab.com ); SDG 5
Go-x, US-based electric scooter hiring company (
https://goxapp.com ); SDG 11 & 13
Laundryheap, a professional laundry and dry cleaning company (
https://www.laundryheap.co.uk ); SDG 12 & 13
3S Money Club, an international payments service (
https://3s.money ); SDG 8 & 10
ESG-partial companies in TMT's portfolio
At present, there are eight companies in TMT's portfolio that
address one or more of the UN SDGs in the way they conduct their
business. These are VertoFX, 3D Look, Bolt, Feel, Metrospeedy,
Moeco, Muncher and My Device Inc., trading as Whizz.
We continue to monitor developments in ESG initiatives among
TMT's portfolio companies in order to better evaluate their ongoing
contribution to investees' overall business models.
DIRECTORS' REPORT FOR THE YEARED 31 DECEMBER 2022
The Directors present their report and audited financial
statements of the Company for the year ended 31 December 2022.
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 loss for the year amounted to US$81,393,833 (2021: profit of
US$ 86,711,815), which includes a loss on changes in fair value of
financial assets at Fair Value through profit and loss ("FVPL") of
US$79,638,928 (2021: profit of US$ 98,741,409) .
Further information on the Company's results and financial
position is included in the financial statements.
The board has decided that it will not recommend a final
dividend (2021: 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 2022. One meeting of the
Audit Committee, one meeting of the Remuneration Committee and one
meeting of the Nomination Committee were held in 2022. The number
of meetings attended by the Directors is set out below.
Board Audit Committee Remuneration Committee Nomination Committee
Director meetings meetings meetings meetings
--------------------- --------- ---------------- ----------------------- ---------------------
Yuri Mostovoy 6 - -
Alexander Selegenev 5 - - 1
Petr Lanin 1 1 1
Andrea Nastaj 3
James Mullins 6 1 1 1
--------------------- --------- ---------------- ----------------------- ---------------------
Total meetings 6 1 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 2022 and the
date of this report, the Company's issued share capital consisted
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 27 March
2023.
Shareholders Number of ordinary % of issued ordinary
shares share capital
----------------------------------- ------------------- ---------------------
Macmillan Trading Company Limited 7,076,058 22.50%
----------------------------------- ------------------- ---------------------
Wissey Trade & Invest Ltd 5,000,000 15.90%
----------------------------------- ------------------- ---------------------
Ramify Consulting Corp 4,728,576 15.03%
----------------------------------- ------------------- ---------------------
Zaur Ganiev 2,443,810 7.77%
----------------------------------- ------------------- ---------------------
Canaccord Genuity Group Inc 2,154,939 6.85%
----------------------------------- ------------------- ---------------------
Merit Systems Inc. 2,054,865 6.53%
----------------------------------- ------------------- ---------------------
Menostar Holdings Limited 1,734,458 5.51%
----------------------------------- ------------------- ---------------------
Eclectic Capital Limited 1,355,806 4.31%
----------------------------------- ------------------- ---------------------
Others 4,903,026 15.59%
----------------------------------- ------------------- ---------------------
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% 7,076,058 22.50%
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 1,355,806 4.31%
Menostar Holdings Limited
("Menostar") Dmitry Kirpichenko 1,734,458 5.51%
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 24,062,828 76.51%
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 as follows:
Beneficial holder No. of Ordinary % of issued share
Shares capital
German Kaplun 7,497,458 23.84%
Andrey Kareev 5,000,000 15.90%
Artemii Iniutin 3,694,092 11.75%
Alexander Morgulchik 3,326,702 10.58%
Nika Kirpichenko 1,355,806 4.31%
Dmitry Kirpichenko 1,734,458 5.51%
Natalia Inyutina 727,156 2.31%
Vlada Kaplun 363,578 1.16%
Marina Kedrova 363,578 1.16%
Total 24,062,828 76.51%
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. 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 (resigned on 23
May 2022)
Andrea Nastaj Independent Non-Executive Director (appointed on
23 May 2022)
The Directors' fees for 2022 and 2021 were as follows:
Director 2022 2021
------------------------ ----------- -----------
Yuri Mostovoy US$55,000 US$55,000
Alexander Selegenev US$110,000 US$110,000
James Joseph Mullins US$ 27,081 US$30,259
Petr Lanin US$ 9,347 US$ 11,000
Andrea Nastaj US$ 10,738 -
------------------------ ----------- -----------
Subsequent events post the period end
In January and March 2023, TMT received a total additional
US$1.6 million dividend from Hugo, as part of the consideration for
Hugo's disposal of its food delivery and quick commerce business in
Central America to Delivery Hero.
In February 2023, TMT invested an additional US$0.1 million in
Cyberwrite, an AI cyber insurance platform providing cybersecurity
insights and risk quantification for businesses worldwide (
www.cyberwrite.com ).
In February 2023, TMT invested an additional GBP45,861 in
FemTech, a London-based technology accelerator focused on female
founders ( www.femtechlab.com ) .
In February 2023, TMT received US$0.3 million from Backblaze,
Inc., as a settlement payment in respect of TMT's additional
investment in Backblaze in 2021.
In March 2023, Silicon Valley Bank ("SVB"), a key banking
partner of TMT and many of its investee companies , experienced
liquidity issues. As a result of the various measures implemented
by the USA's Federal Deposit Insurance Corporation and Federal
Reserve, the Company expects to retain access to all its funds held
at SVB and that therefore the developments regarding SVB are not
expected to have any material impact on the financial position of
TMT or any of its portfolio companies.
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 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
27 March 2023
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TMT INVESTMENTS
PLC FOR THE YEARED 31 DECEMBER 2022
Opinion
We have audited the financial statements of TMT Investments PLC
(the 'Company') for the year ended 31 December 2022 which comprise
the statement of comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity,
and notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation of the financial
statements is UK adopted international accounting standards, as
applied in accordance with the provisions of the Companies (Jersey)
Law 1991.
In our opinion, the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 December 2022 and of the Company's loss for the
year then ended; and
-- have been properly prepared in accordance with UK adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the nancial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the nancial statements is appropriate. Our
evaluation of the Directors' assessment of the Company's ability to
continue to adopt the going concern basis of accounting
included:
-- Analysing the financial performance and financial strength of
the business based on recently audited annual results; and
-- Assessment of the liquidity of the business, including
analysis of the quantum of investments that are readily realisable
for cash; and
-- Evaluating the on-going liabilities profile of the business
not including performance-based expenses such as bonus fees;
and
-- Analysis of the share price over the past 12 months to ensure
there have been no signi cant movements that suggest the Company's
reputation in the marketplace presents a material threat to going
concern; and
-- Review of events and transactions subsequent to the balance
sheet date that present a material threat to going concern.
Based on the work we have performed, we have not identi ed any
material uncertainties relating to events or conditions that,
individually or collectively, may cast signi cant doubt on the
Company's ability to continue as a going concern for a period of at
least twelve months from when the nancial statements are authorised
for issue.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements.
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.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
2022 2021 (based on 2022 approach)
Materiality $4,034,679 $5,662,500
----------------------------- ----------------------------------
Basis for determining 2% of net assets 2% of net assets
materiality
----------------------------- ----------------------------------
Rationale for The Company's principal The Company's principal
benchmark applied activity of that of venture activity of that of venture
capital investment, as capital investment, as
such business performance such business performance
is driven by the underlying is driven by the underlying
value of investment assets value of investment assets
held by the Company. held by the Company.
----------------------------- ----------------------------------
Performance materiality $2,824,275 $3,963,750
----------------------------- ----------------------------------
Basis for determining 70% of materiality 70% of materiality
performance materiality
----------------------------- ----------------------------------
Rationale for Given the judgemental Given the judgemental
benchmark applied nature of the valuation nature of the valuation
of investments as well of investments as well
as the Company's AIM-listed as the Company's AIM-listed
status a performance status a performance materiality
materiality has been has been applied reflecting
applied reflecting that that this is a higher
this is a higher risk risk engagement.
engagement.
----------------------------- ----------------------------------
We reported all audit differences found in excess of our
triviality threshold of $201,734 ($283,125) to the directors and
the management board.
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. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
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 by our audit.
Valuation of investments US$195,260,535 (2021: US$265,454,136)
Significance and nature How our audit addressed the key risk
of key risk We reviewed the investments portfolio
The Company's investment and selected a sample of individual
strategy targets early investments to review in detail. The
stage/start-up businesses. selection basis for these investments
To this end valuations was based on their relative value in
of individual investments the statement of financial position
can be highly subjective, as well as investments that applied
especially in the case valuation methodologies that involved
of valuations linked to increased inherent uncertainty. This
earnings-based multiples. sample covered 96% of the total stated
investments in the financial statements.
Given the inherent uncertainty
as well as the highly We confirmed the ownership percentage
material nature of the of each investment to appropriate signed
balance in the statement documentation. Where investments are
of financial position valued based on cost we have also vouched
this is considered to the initial cost of purchase to these
be a key risk area. documents as well.
Furthermore, as investments For equity-based valuations we have
are carried at fair value obtained the source documentation determining
through the profit or the fair value per share and assessed
loss in the financial this for reasonableness of assumptions
statements investment made.
gains and losses in the
year also drive underlying For earnings-based multiples we have
business performance. obtained the valuation calculations
and considered reasonableness of assumptions
The Company's investments made, including the multiple applied.
accounting policy is outlined
in note 2.6 of these financial For listed market investments we have
statements. independently recalculated the value
of the Company's shareholding based
on the market price as at 31 December
2022.
In the case of all investments we considered
potential impairment indicators that
might suggest a material overstatement
of the investment value.
With respect to valuation methodologies
subject to increased estimation uncertainty
our specialist valuations team considered
the reasonableness of the assumptions
used.
-----------------------------------------------
Key observations communicated to the Audit Committee
While there is inherent uncertainty in the valuation of many
of the Company's investments, due to the very nature of the
companies invested in, we have no material concerns over the
appropriateness of the valuation methodologies applied, including
individual assumptions made, with respect to investments reviewed
as part of the statutory audit.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
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,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed noncompliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor report
thereon. 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.
In connection with our audit of the financial statements, 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
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. 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
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.
Capability of the audit in detecting irregularities, including
fraud
Based on our understanding of the company and industry, and
through discussion with the directors and other management (as
required by auditing standards), we identified that the principal
risks of non-compliance with laws and regulations related to
anti-bribery. 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 the Companies
(Jersey) Law 1991. We communicated identified laws and regulations
throughout our team and remained alert to any indications of
non-compliance throughout the audit. 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 management
bias in accounting estimates and judgemental areas of the financial
statements such as the valuation of investments. Audit procedures
performed by the engagement team included:
-- Discussions with management and assessment of known or
suspected instances of non-compliance with laws and regulations and
fraud, and review of the reports made by management; and
-- Assessment of identified fraud risk factors; and
-- Identifying and assessing the design effectiveness of
controls that management has in place to prevent and detect fraud;
and
-- Review of the integrity of banking records; and
-- Challenging assumptions and judgements made by management in
its significant accounting estimates; and
-- Performing analytical procedures to identify any unusual or
unexpected relationships, including related party transactions,
that may indicate risks of material misstatement due to fraud;
and
-- Confirmation of related parties with management, and review
of transactions throughout the period to identify any previously
undisclosed transactions with related parties outside the normal
course of business; and
-- Reading minutes of meetings of those charged with governance,
reviewing internal audit reports and reviewing correspondence with
relevant tax and regulatory authorities; and
-- Review of the valuation methodology and associated assumptions for investments held; and
-- Review of significant and unusual transactions and evaluation
of the underlying financial rationale supporting the transactions;
and
-- Use of data analytics in identifying and testing journal
entries, in particular any manual entries made at the year end for
financial statement preparation.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the directors.
-- Conclude on the appropriateness of the directors' use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company's
ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in
our auditor's report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future events or
conditions may cause the Company to cease to continue as a going
concern.
-- Evaluate the overall presentation, structure and content of
the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
-- Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the Company audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
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.
Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor)
For and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
London
Date:
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the
For the year year ended
ended 31/12/2022 31/12/2021
Notes USD USD
(Losses)/Gains on investments 3 (79,864,874) 98,741,409
Dividend income 105,844 48,333
----------------------------------------- ------ ------------------ ------------
Total investment (loss)/income (79,759,030) 98,789,742
Expenses
Bonus scheme payment charge 6 - (9,676,043)
Underpaid previous years' bonuses 6 - (372,556)
Administrative expenses 5 (1,443,395) (1,924,650)
Operating (Loss)/Gain (81,202,425) 86,816,493
Net finance income 7 9,729 -
Currency exchange loss (201,137) (104,678)
----------------------------------------- ------ ------------------ ------------
(Loss)/Gain before taxation (81,393,833) 86,711,815
Taxation 8 - -
----------------------------------------- ------ ------------------ ------------
(Loss)/Gain attributable to equity
shareholders (81,393,833) 86,711,815
Total comprehensive (loss)/income for
the year (81,393,833) 86,711,815
(Loss)/Gain per share
Basic and diluted (loss)/gain per share
(cents per share) 9 (258.78) 291.58
----------------------------------------- ------ ------------------ ------------
Statement of Financial Position
At 31 December At 31 December
2022 2021
Notes USD USD
Non-current assets
Financial assets at FVPL 10 195,260,535 265,454,136
Total non-current assets 195,260,535 265,454,136
Current assets
Trade and other receivables 11 1,382,811 2,050,649
Cash and cash equivalents 12 10,102,683 25,527,801
Total current assets 11,485,494 27,578,450
Total assets 206,746,029 293,032,586
Current liabilities
Trade and other payables 13 5,012,099 9,904,823
Total current liabilities 5,012,099 9,904,823
------------------------------ ------ ------------------------ ---------- ---------------------
Total liabilities 5,012,099 9,904,823
------------------------------ ------ ------------------------ ---------- ---------------------
Net assets 201,733,930 283,127,763
------------------------------ ------ ------------------------ ---------- ---------------------
Equity
Share capital 14 53,283,415 53,283,415
Retained profit 148,450,515 229,844,348
Total equity 201,733,930 283,127,763
------------------------------ ------ ------------------------ ---------- ---------------------
Statement of Cash Flows
For the For the
year year
ended ended
31/12/2022 31/12/2021
Notes USD USD
Operating activities
Operating (loss)/gain (81,202,425) 86,816,493
------------------------------------------------ ----- ---------------- ------------
Adjustments for non-cash items:
Changes in fair value of financial assets
at FVPL 3 79,638,928 (98,600,052)
Currency exchange loss (201,137) (104,678)
Impairment of receivables 249,060 -
(1,515,574) (11,888,237)
------------------------------------------------ ----- ---------------- ------------
Changes in working capital:
Decrease/(Increase) in trade and other
receivables 11 418,778 (1,562,811)
(Decrease)/Increase in trade and other
payables 13 (4,892,724) 7,275,871
Net cash used in operating activities (5,989,520) (6,175,177)
------------------------------------------------ ----- ---------------- ------------
Investing activities
Purchase of financial assets at FVPL 10 (9,608,593) (40,540,924)
Proceeds from sale/disposal of financial
assets at FVPL 10 163,266 18,489,994
Interest received 7 9,729 -
------------------------------------------------ ----- ---------------- ------------
Net cash used in investing activities (9,435,598) (22,050,930)
------------------------------------------------ ----- ---------------- ------------
Financing activities
Proceeds from issue of shares - 14,749,620
------------------------------------------------ ----- ---------------- ------------
Net cash generated from financing activities - 14,749,620
------------------------------------------------ ----- ---------------- ------------
Decrease in cash and cash equivalents (15,425,118) (13,476,487)
------------------------------------------------ ----- ---------------- ------------
Cash and cash equivalents at the beginning
of the year 25,527,801 39,004,288
------------------------------------------------ ----- ---------------- ------------
Cash and cash equivalents at the end of
the year 12 10,102,683 25,527,801
------------------------------------------------ ----- ---------------- ------------
Statement of Changes in Equity
For the year ended 31 December 2021 and for the year ended 31
December 2022, USD
Share capital Retained profit Total
Note USD USD USD
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
------------------------------------------------- -------------- ---------------- ---------------
Loss for the year - (81,393,833) (81,393,833)
Total comprehensive loss for the year - (81,393,833 ) (81,393,833)
Balance at 31 December 2022 53,283,415 148,450,515 201,733,390
------------------------------------------------- -------------- ---------------- ---------------
The financial statements were approved by the Board of Directors
on 27 March 2023 and were signed on its behalf by:
Alexander Selegenev
Executive Director
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEARED 31 DECEMBER
2022
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 10 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 seeks to make investments in any region of the
world. The Company invests in high-growth technology companies
globally across a number of core specialist sectors. The Company's
objective is to generate an attractive rate of return for
shareholders, predominantly through capital appreciation.
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. We consider this entity to be highly immaterial to the
Company's financial statements.
2.2 Going concern
The Directors confirm that, after giving due consideration to
the financial position and expected cash flows of the Company and
due to availability of highly liquid investments readily realisable
for cash should this be needed; 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. Foreign
currency monetary items are translated using the closing rate (i.e.
mid-market price investments).
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was measured. (i.e. comparable company analysis and
cost-based investments as these are effectively re-fair valued at
each year-end).
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.
Conversion rates, USD
------------------------------------------------------
Currency Average
As at 31.12.2022 rate, 2022
----------------- ----------------- ------------
British pounds,
GBP 1.2039 1.2367
Euro, EUR 1.0676 1.0537
--------------------- ----------------- ------------
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 did 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
All financial investments of the Company are measured at fair
value through profit or loss and are subject to a fair value
revaluation at year end date.
The Company manages its investments with a view of 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 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.
Transfers between levels of the fair value hierarchy, for the
purpose of preparing these financial statements, are deemed to have
occurred at the beginning of the reporting period.
Where an active market is established for an investment it is
classified to level 1 with a mid-market price valuation methodology
applied. Where observable market data becomes available for an
investment, including for comparable companies within an active
market, it is classified to level 2 with comparable company
analysis used as the valuation methodology. The investment
otherwise remains classified to level 3, with the cost of
investment or price of recent investment valuation methodology
applied.
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.
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
expenses 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 New IFRSs and interpretations
The following standards and amendments became effective from 1
January 2022, but did not have any impact on the Company:
-- Amendments to IAS 16 "Property, Plant and Equipment"
-- Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Asserts"
-- Amendments to IFRS 3 "Business Combination"
2.11 Future IFRS changes
The following table summarises changes to IFRS adoption which is
mandatory for periods beginning in 2023 and beyond:
Standard Effective date Overview
IFRS 17 Insurance Contracts 1 January 2023 IFRS 17 will replace IFRS 4 Insurance
(early adoption Contracts, a temporary standard which
permitted) permits a variety of accounting practices
for insurance contracts.
------------------------------ ----------------- -----------------------------------------------
Amendments to IFRS 17 1 January 2023 Many insurance entities will now be
- Initial Application (early adoption applying both IFRS 17 and IFRS 9 for
of IFRS 17 & IFRS 9 permitted) the first time in annual reporting
periods beginning on or after 1 January
2023.
----------------- -----------------------------------------------
Comparative Information
----------------- -----------------------------------------------
Amendments to IAS 1 1 January 2023 The standard has been amended to clarify
- Presentation of Financial (early adoption that the classification of liabilities
Statements permitted) as current or non-current should be
based on rights that exist at the
end of the reporting period.
----------------- -----------------------------------------------
Classification of Liabilities
as Current or Non-current
----------------- -----------------------------------------------
Amendments to IAS 1 1 January 2023 The amendments to IAS 1 will require
and IFRS Practice Statement (early adoption an entity to disclose material accounting
2 - Making Materiality permitted) policies.
Judgements
-----------------
Disclosure of Accounting Accounting policy information is likely
Policies to be considered material if users
need the
disclosure to understand other material
information in the accounts.
----------------- -----------------------------------------------
Amendments to IAS 12 1 January 2023 The amendment to IAS 12 Income Taxes
- Income Taxes (early adoption introduces an exception to the "initial
permitted) recognition exemption" when the transaction
gives rise to equal taxable and deductible
temporary differences.
----------------- -----------------------------------------------
Deferred Tax related
to Assets and Liabilities
arising from a Single
Transaction
Amendments to IAS 8 1 January 2023 The amendments introduce a definition
- Accounting Policies, (early adoption for accounting estimates which is
Changes in Accounting permitted) 'monetary amounts in financial statements
Estimates and Errors that are subject to measurement uncertainty'.
Measurement uncertainty will arise
when monetary amounts required to
apply an accounting policy cannot
be observed directly. In such cases,
accounting estimates will need to
be developed using judgements and
assumptions.
----------------- -----------------------------------------------
Definition of Accounting
Estimates
----------------- -----------------------------------------------
2.12 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.
As summarised in note 10 the Company has investments held at
year-end of US$87,192,406 (2021: US$6,590,954) classified as level
2 in the fair value hierarchy, valued on a comparable company
analysis basis. The Company has a further US$85,075,197 (2021:
US$195,716,742) classified as level 3, valued at cost or price of
recent investment (less any currency exchange-related impairment
charges). Generally, when impairments are used in the comparable
company valuation methodology, impairments are allocated on a
50%-66% basis when management determine that there is increased
uncertainty over the investee's business prospects and/or exit
strategy, or a 100% basis when management determine that it is
unlikely that a successful exit outcome could be achieved. Readers
of these financial statements should consider the inherent
uncertainty principle involved when considering these investment
valuations.
3 Gains (Losses) on investments
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
Gross interest income from convertible notes
receivable 40,012 41,290
Net interest income from convertible notes
receivable 40,012 41,290
(Losses)/Gains on changes in fair value of
financial assets at FVPL (79,638,928) 98,600,052
Impairment of receivables (249,060) -
Other (losses)/gains on investment (16,898) 100,067
Total net (losses)/gains on investments (79,864,874) 98,741,409
---------------------------------------------------- ------------------------------ ------------------------------
During the year ended 31 December 2022, impairment losses
related to receivables for previously disposed investments of
US$249,060 were recognised (2021: none).
4 Segmental analysis
Geographic information
The Company has investments in the following geographic areas:
the USA, Estonia, the United Kingdom, Portugal, BVI, Cyprus and the
Cayman Islands.
Non-current financial assets
Cayman United
USA Islands BVI Estonia Cyprus Kingdom Portugal Total
--------------
As at USD
31/12/2022 USD USD USD USD USD USD USD
-------------- ----------- ---------- ---------- ----------- ---------- ----------- --------- ------------
Equity
investments 66,393,603 - 3,255,052 71,759,682 330,000 30,481,358 - 172,219,695
Convertible
notes
& SAFEs 14,800,030 1,030,000 - 1,628,090 4,100,000 601,950 880,770 23,040,840
Total 81,193,633 1,030,000 3,255,052 73,387,772 4,430,000 31,083,308 880,770 195,260,535
-------------- ----------- ---------- ---------- ----------- ---------- ----------- --------- ------------
Cayman United
USA Islands BVI Estonia Cyprus Kingdom Portugal Total
--------------
As at USD USD
31/12/2021 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 31/12/2022 For the year ended 31/12/2021
USD USD
------------------------- ------------------------------ ------------------------------
Staff expenses (note 6) 825,366 805,459
Professional fees 326,651 502,124
Legal fees 82,941 393,682
Bank and LSE charges 15,069 31,434
Audit fees 59,577 38,183
Accounting fees 17,480 16,220
Other expenses 116,311 137,548
1,443,395 1,924,650
------------------------- ------------------------------ ------------------------------
6 Staff expenses
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
-------------------- ------------------------------ ------------------------------
Directors' fees 212,166 206,259
Wages and salaries 613,200 599,200
825,366 805,459
-------------------- ------------------------------ ------------------------------
Wages and salaries shown above include fees and salaries
relating to the year ended 31 December 2022.
The Directors' fees for 2022 were as follows:
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
--------------------------------- ------------------------------ ---- ------------------------------
Alexander Selegenev 110,000 110,000
Yuri Mostovoy 55,000 55,000
James Joseph Mullins 27,081 30,259
Petr Lanin 9,347 11,000
Andrea Nastaj 10,738 -
--------------------------------- ------------------------------ ---- ------------------------------
212,166 206,259
--------------------------------- ------------------------------ ---- ------------------------------
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 (2021: 7).
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 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. As the Company's adjusted
NAV decreased in 2022, no bonus was accrued and expected to be
accrued for the year ended 31 December 2022.
7 Net finance income
For the year ended 31/12/2022 For the year ended 31/12/2021
USD USD
---------------- ------------------------------ ------------------------------
Interest income 9,729 -
9,729 -
---------------- ------------------------------ ------------------------------
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 (Loss)/Gain per share
The calculation of basic gain per share is based upon the net
losses for the year ended 31 December 2022 attributable to the
ordinary shareholders of US$81,393,833 (2021: net gain of
US$86,711,815) and the weighted average number of ordinary shares
outstanding calculated as follows:
Gain per share For the year ended 31/12/2022 For the year ended 31/12/2021
---------------------------------------------------- ------------------------------ ------------------------------
Basic (loss)/gain per share (cents per share) (258.78) 291.58
(Loss)/Gain attributable to equity holders of the
entity (81,393,833) 86,711,815
---------------------------------------------------- ------------------------------ ------------------------------
The weighted average number of ordinary shares outstanding was
calculated as follows:
For the year ended 31/12/2022 For the year ended 31/12/2021
-------------------------------------------- ------------------------------ ------------------------------
Weighted average number of shares in issue
Ordinary shares 31,451,538 31,451,538
31,451,538 31,451,538
-------------------------------------------- ------------------------------ ------------------------------
10 Non-current financial assets
Reconciliation of fair value measurements of non-current
financial assets:
At 31 December 2022 At 31 December 2021
Investments held at fair value through profit and loss, USD:
- listed and unlisted shares (i) 172,219,695 241,461,421
- promissory notes (ii) 4,830,070 4,266,715
- SAFEs (iii) 18,210,770 17,680,000
- Shares to be issued (iv) - 2,046,000
-------------------------------------------------------------- -------------------- --------------------
195,260,535 265,454,136
-------------------------------------------------------------- -------------------- --------------------
At 31 December 2022 At 31 December 2021
USD USD
Opening valuation 265,454,136 144,803,154
Purchases (including consulting and legal fees) 9,608,593 40,540,924
Disposal proceeds (163,266) (18,489,994)
Impairment losses in the year (1,280,016) -
Realised gain - 6,294,635
Unrealised (losses)/ gains (78,358,912) 92,305,417
Closing valuation 195,260,535 265,454,136
------------------------------------------------- -------------------- --------------------
Movement in unrealised gains/ (losses)
Opening accumulated unrealised gains 195,706,888 111,980,464
Unrealised (losses)/ gains (78,358,912) 92,305,417
Transfer of previously unrealised gains to realised reserve on disposal of
Investments (105,606) (8,578,993)
Closing accumulated unrealised gains 117,242,370 195,706,888
-------------------------------------------------------------------------------- ---------------- --------------
Reconciliation of investments, if held under the cost and price
of recent investment model:
Historic cost basis
Opening book cost 69,747,248 32,822,690
Purchases (including consulting and legal fees) 9,608,5 93 40,540,924
Disposals on sale of investment (57,660) (3,616,366)
Impairment losses in the year (1,280,016) -
Closing book cost 78,018,165 69,747,248
------------------------------------------------- -------------- --------------
Valuation methodology
Mid-market price 22,992,932 63,146,440
Comparable company analysis 94,755,170 6,590,954
Cost or price of recent investment 77,512,433 195,716,742
195,260,535 265,454,136
------------------------------------ ------------ ------------
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.
Valuation methodologies can be changed from time to time, the
following table shows the changes made for 2022 compared to 2021.
These investments were held at cost or price of recent investments
of the total value of USD 133,457,069 as at 31 December 2021:
Company name 2022 2021
3D Look Comparable company analysis Cost or price of recent investment
Affise Comparable company analysis Cost or price of recent investment
Academy of change Comparable company analysis Cost or price of recent investment
Bolt Comparable company analysis Cost or price of recent investment
EstateGuru Comparable company analysis Cost or price of recent investment
MEL Science Comparable company analysis Cost or price of recent investment
Moeco Comparable company analysis Cost or price of recent investment
PandaDoc Comparable company analysis Cost or price of recent investment
Scalarr Comparable company analysis Cost or price of recent investment
Study Space, Inc (EdVibe) Comparable company analysis Cost or price of recent investment
Wanelo Comparable company analysis Cost or price of recent investment
The list of fully impaired investments, in which the Company
still maintained ownership as of 31 December 2022, was as
follows:
Investment
Company name amount (USD) Year of impairment
-------------------------------- -------------- -------------------
Rollapp 350,000 2018
UsingMiles/Help WW/Source Inc. 250,000 2018
Favim 300,000 2018
AdInch 1,000,000 2018
E2C 124,731 2020
Drupe 225,000 2019
Virool/Turgo 600,000 2017
Sixa 300,000 2019
Usual Beverage Co. 300,000 2022
StudyFree 1,000,000 2022
--------------
Total 4,449,731
--------------
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 equity round or partial
disposal 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
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 2022:
Gain/loss
Additions from changes
Value to equity Conversions in fair
at investments from value Value
Date 1 Jan during loan of equity at 31 Equity
Investee of initial 2022, the period, notes, investments, Disposals, Write-offs, Dec 2022, stake
company investment USD USD USD USD USD USD USD owned
--------------- ------------ ------------ ------------ ------------ ------------- ----------- ------------ ------------ -------
Wanelo 21.11.2011 602,447 - - - - - 602,447 4.69%
Backblaze 24.07.2012 63,146,440 - - (40,153,509) - - 22,992,931 11.20%
Remote.it 13.06.2014 1,512,643 - - (1,381,443) - - 131,200 1.64%
Anews 25.08.2014 330,000 - - - - (330,000) - -
Bolt 15.09.2014 103,375,800 - - (33,618,816) - - 69,756,984 1.26%
PandaDoc 11.07.2014 16,185,773 - - (5,341,305) - - 10,844,468 1.17%
Full Contact 11.01.2018 244,506 - - - - - 244,506 0.19%
ScentBird 13.04.2015 6,590,954 - - - - - 6,590,954 4.18%
Workiz 16.05.2016 3,971,659 - - - - - 3,971,659 1.89%
Usual/Vinebox 06.05.2016 450,015 - - - (450,015) - 1.91%
Hugo 19.01.2019 3,756,540 - - (338,222) (163,266) - 3,255,052 3.55%
MEL Science 25.02.2019 2,663,696 - - (1,758,040) - - 905,656 3.21%
Qumata
(Healthy
Health) 06.06.2019 1,818,822 - - - - - 1,818,822 2.52%
eAgronom 31.08.2018 447,087 - - 7,591 - - 454,678 1.41%
Rocket
Games
(Legionfarm) 16.09.2019 200,000 - - - - - 200,000 1.26%
Timbeter 05.12.2019 221,688 - - (8,168) - - 213,520 4.64%
Classtag 03.02.2020 200,000 - - - - - 200,000 1.66%
3S Money
Club 07.04.2020 8,253,630 - 2,046,000 3,790,966 - - 14,090,596 11.38%
Hinterview 21.09.2020 891,107 - - (78,377) - - 812,730 2.52%
Virtual
Mentor
(Allright) 12.11.2020 772,500 - - - - - 772,500 2.95%
NovaKid 13.11.2020 2,949,855 - - - - - 2,949,855 1.51%
MTL Financial
(OutFund) 17.11.2020 1,322,100 - - 1,243,818 - - 2,565,918 3.66%
Scalarr 15.08.2019 1,378,282 - - - - - 1,378,282 7.66%
Accern 21.08.2019 1,282,705 - - 1,591,179 - - 2,873,884 3.17%
Feel 13.08.2020 2,035,512 320,467 1,363,700 (66,459) - - 3,653,220 11.11%
Affise 18.09.2019 3,470,870 - - (1,675,190) - - 1,795,680 8.70%
3D Look 03.03.2021 1,000,000 - - (500,000) - - 500,000 3.77%
FemTech 30.03.2021 274,220 - - 536,386 - - 810,606 9.74%
Muncher 23.04.2021 2,059,999 - - 1,647,396 - - 3,707,395 6.10%
CyberWrite 20.05.2021 500,000 - - 475,741 - - 975,741 3.52%
Outvio 22.06.2021 612,353 - - (78,553) - - 533,800 4.00%
VertoFX 16.07.2021 1,132,999 - - - - - 1,132,999 3.24%
Academy
of change 02.08.2021 1,000,000 - - (670,000) - - 330,000 7.69%
EstateGuru 06.09.2021 1,780,200 - - (979,500) - - 800,700 2.73%
Prodly 09.09.2021 1,800,000 - - - - - 1,800,000 4.39%
Sonic
Jobs 15.09.2021 712,018 - - (92,009) - - 620,009 2.77%
EdVibe
(Study
Space,
Inc) 02.11.2021 1,500,001 - - (750,001) - - 750,000 7.36%
1Fit (Alippe,
Inc) 24.12.2021 500,000 - - - - - 500,000 4.70%
Agendapro 03.09.2021 515,000 - - - - - 515,000 2.00%
Laundry
Heap 28.01.2022 - 1,325,393 - (121,592) - - 1,203,801 2.44%
SOAX 21.01.2022 - 4,000,000 - - - - 4,000,000 9.41%
Spin.ai 17.12.2018 964,102 - - - 964,102 1.69%
Total 241,461,421 5,645,860 4,373,802 (78,318,107) (163,266) (780,015) 172,219,695
------------ ------------ ------------ ------------- ----------- ------------ ------------
(ii) Convertible loan notes as at 31 December 2022:
Additions
to
convertible
Value at note Gain/loss from
Date of 1 Jan investments changes in fair
Investee initial 2022, during the Conversions, value of equity Disposals, Value at 31 Term, Interest
company investment USD period, USD USD investments, USD USD Dec 2022, USD years rate, %
------------- ------------ ---------- ------------ ---------------- ------------------- ------------- --------------- -------- -----------
Sharethis 26.03.2013 570,030 - - - - 570,030 5.0 1.09%
Conte.ai/
Postoplan 08.12.2020 1,332,985 451,200 - (156,095) - 1,628,090 1.0 2.00%
Metrospeedy 16.07.2021 1,000,000 - - - - 1,000,000 - -
Feel 08.10.2021 1,363,700 - (1,363,700) - - - - -
MedVidi 27.09.2021 - 1,030,000 - - - 1,030,000 - -
Laundry Heap 21.11.2022 589,300 - 12,650 - 601,950
------------
Total 4,266,715 2,070,500 (1,363,700) (143,445) - 4,830,070
--------------------------- ---------- ------------ ------------ -------------- --------------- ----------------- -------- ----------
(iii) SAFEs as at 31 December 2022:
Gain/loss
from changes
Additions in fair
to SAFE value of
Date of Value at 1 investments Conversions SAFE Value at
Investee initial Jan 2022, during the to equity, investments, Disposals, Write-offs, 31 Dec
company investment USD period, USD USD USD USD USD 2022, USD
---------------- ------------ ----------- ------------ ------------ ------------- ----------- ------------ -----------
Spin.ai 17.12.2018 300,000 - (964,102) 664,102 - -
Cheetah (Go-X) 29.07.2019 350,000 - - - - 350,000
Adwisely
(Retarget) 24.09.2019 1,600,000 - - - - 1,600,000
Rocket Games
(Legionfarm) 17.09.2019 1,200,000 250,000 - - - 1,450,000
Classtag 03.02.2020 200,000 - - - - 200,000
Moeco 08.07.2020 500,000 - - - - 500,000
StudyFree 08.12.2020 1,000,000 - - - (1,000,000) -
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
OneNotary
(Adorum) 01.10.2021 500,000 - - - - 500,000
BaFood 05.11.2021 2,000,000 500,000 - - - 2,500,000
Educate online 16.11.2021 1,000,000 - - - - 1,000,000
My Device Inc 30.11.2021 850,000 200,000 - - - 1,050,000
Mobilo (Lulu
Systems, Inc) 09.12.2021 1,030,000 - - - - 1,030,000
Muncher 13.12.2021 2,000,000 - - - - 2,000,000
Bairro 12.01.2022 - 942,233 - (61,463) - 880,770
------------
Total 17,680,000 1,892,233 (964,102) 602,639 - (1,000,000) 18,210,770
------------------------------ ----------- ------------ ------------ ------------- ----------- ------------ -----------
(iv) Shares to be issued as at 31 December 2022:
Gain/loss
Additions from changes
Value to equity Conversions in fair
at investments from value
Date 1 Jan during loan of equity Disposals Value at
Investee of initial 2022, the period, notes, investments, / conversions, 31 Dec 2022,
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 2022 At 31 December 2021
USD USD
----------------------------------------- -------------------- --------------------
Prepayments 42,550 53,412
Other receivables 1,219,506 1,917,843
Interest receivable on promissory notes 113,214 79,394
Interest receivable on deposit 7,541 -
1,382,811 2,050,649
----------------------------------------- -------------------- --------------------
The fair value of trade and other receivables approximate to
their carrying amounts as presented above.
Other receivables as of 31 December 2022 represented amounts due
from the previously disposed investments in Klear, Volumetric (in
the form of publicly traded shares of 3D Systems Inc.) and
DepositPhotos.
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2022 include
cash on hand and in banks.
Cash and cash equivalents comprise the following:
At 31 December 2022 At 31 December 2021
USD USD
--------------- -------------------- --------------------
Deposits 2,502,188 -
Bank balances 7,600,495 25,527,801
--------------- -------------------- --------------------
10,102,683 25,527,801
--------------- -------------------- --------------------
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 2022 At 31 December 2021
USD USD
--------------- -------------------- --------------------
Bank balances
A3 rating 7,587,687 25,512,940
Baa3 rating 2,447 3,296
Not rated 10,361 11,565
--------------- -------------------- --------------------
Total 7,600,495 25,527,801
--------------- -------------------- --------------------
At 31 December 2022 At 31 December 2021
USD USD
---------- -------------------- --------------------
Deposits
A1 rating 2,502,188 -
---------- -------------------- --------------------
2,502,188 -
---------- -------------------- --------------------
13 Trade and other payables
At 31 December 2022 At 31 December 2021
USD USD
------------------------- -------------------- --------------------
Salaries payable 81,838 82,500
Directors' fees payable 66,100 40,534
Bonuses payable 4,817,785 9,676,043
Trade payables 7,702 73,042
Other current liability 3,307 -
Accruals 35,367 32,704
------------------------- -------------------- --------------------
5,012,099 9,904,823
------------------------- -------------------- --------------------
The fair value of trade and other payables approximate to their
carrying amounts as presented above.
14 Share capital
On 31 December 2022 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 2022 At 31 December 2021
USD USD
----------------------------- -------------------- --------------------
Share capital 53,283,415 53,283,415
Issued capital comprises: Number Number
Fully paid ordinary shares 31,451,538 31,451,538
----------------------------- -------------------- --------------------
Number of shares Number of shares
----------------------------- -------------------- --------------------
Balance at 31 December 2021 31,451,538 29,185,831
Issue of ordinary shares - 2,265,707
Balance at 31 December 2022 31,451,538 31,451,538
----------------------------- -------------------- --------------------
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 2022 the largest exposure to credit risk
related to convertible notes receivable and SAFEs (US$23,040,840),
and cash and cash equivalents (US$10,102,683) .
The Company's exposure to credit risk is influenced mainly by
the individual characteristics of each investee company. The credit
quality of investments in equity shares and convertible promissory
notes is based on the financial performance of the individual
portfolio companies. For those assets that are not impaired it is
believed that the risk of default is small and that capital
repayments and interest payments will be made in accordance with
the agreed terms and conditions of the Company's investment. In
other cases, an appropriate asset impairment is recorded to reflect
the fair value. The exposure to credit risk is approved and
monitored on an on-going basis individually for all significant
investee companies.
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 was as follows:
At 31 December 2022 At 31 December 2021
USD USD
-------------------------------------- -------------------- --------------------
Convertible notes receivable & SAFEs 23,040,840 21,946,715
Trade and other receivables 1,382,811 2,050,649
Cash and cash equivalents 10,102,683 25,527,801
-------------------------------------- -------------------- --------------------
34,526,334 49,525,165
-------------------------------------- -------------------- --------------------
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 fluctuations in interest and currency exchange
rates.
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. At 31
December 2022 the Company had cash deposit of USD 2,502,188,
earning a variable rate of interest. The Board of Directors
monitors the interest rates available in the market to ensure that
returns are maximized.
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 2022 was as
follows:
For the For the For the For the
year ended year ended year ended year ended
31/12/2022 31/12/2022 31/12/2021 31/12/2021
GBP EUR GBP EUR
Current assets
Cash and cash equivalents 171,705 177,998 534,672 294,597
Current liabilities
Trade and other payables (14,861) - (50,106) (1,215)
------------------------------ ------------ ------------ ------------ ------------
Net (short) long position 156,844 177,998 484,566 293,382
------------------------------ ------------ ------------ ------------ ------------
Net exposure currency 130,280 166,727 359,550 259,195
------------------------------ ------------ ------------ ------------ ------------
Net exposure currency
(assuming a 10% movement
in exchange rates) 141,160 160,198 436,109 264,044
------------------------------ ------------ ------------ ------------ ------------
Impact on exchange
movements in the statement
of comprehensive income 15,684 17,800 48,457 29,338
------------------------------ ------------ ------------ ------------ ------------
The foreign exchange rates of the USD at 31 December were as
follows:
31/12/2022 31/12/2021
----------------------- ----------- -----------
Currency
British pounds, GBP 1.2039 1.3477
Euro, EUR 1.0676 1.1319
----------------------- ----------- -----------
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 2022, the cash and equivalents of the Company
were US$ 10,102,683 .
The following are the maturities of current liabilities as at 31
December 2022:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
--------------------------- ---------------- ---------------- ---------- ------------------
Salaries 81,838 81,838 - -
Directors' fees payable 66,100 66,100 - -
Bonuses payable 4,817,785 4,817,785 - -
Trade payables 7,702 7,702 - -
Other current liabilities 3,307 3,307
Accruals 35,367 35,366 - -
5,012,099 5,012,098 - -
--------------------------- ---------------- ---------------- ---------- ------------------
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 2022:
Level 1 Level 2 Level 3 Total
USD USD USD USD
-------------------------- ----------- ----------- ----------- ------------
Financial assets
Financial assets at FVPL 22,992,932 77,512,433 94,755,170 195,260,535
22,992,932 77,512,433 94,755,170 195,260,535
-------------------------- ----------- ----------- ----------- ------------
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
In January and March 2023, TMT received a total additional
US$1.6 million dividend from Hugo, as part of the consideration for
Hugo's disposal of its food delivery and quick commerce business in
Central America to Delivery Hero.
In February 2023, TMT invested an additional US$0.1 million in
Cyberwrite, an AI cyber insurance platform providing cybersecurity
insights and risk quantification for businesses worldwide (
www.cyberwrite.com ).
In February 2023, TMT invested an additional GBP45,861 in
FemTech, a London-based technology accelerator focused on female
founders ( www.femtechlab.com ) .
In February 2023, TMT received US$0.3 million from Backblaze,
Inc., as a settlement payment in respect of TMT's additional
investment in Backblaze in 2021.
In March 2023, Silicon Valley Bank ("SVB"), a key banking
partner of TMT and many of its investee companies , experienced
liquidity issues. As a result of the various measures implemented
by the USA's Federal Deposit Insurance Corporation and Federal
Reserve, the Company expects to retain access to all its funds held
at SVB and that therefore the developments regarding SVB are not
expected to have any material impact on the financial position of
TMT or any of its portfolio companies.
19 Control
The Company is not controlled by any one party. Details of
significant shareholders are shown in the Directors' Report.
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END
FR GZGZFLNVGFZM
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March 28, 2023 02:00 ET (06:00 GMT)
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