Tern PLC: Portfolio Update (962027)

 
 Tern PLC (TERN) 
Tern PLC: Portfolio Update 
 
28-Jan-2020 / 07:00 GMT/BST 
Dissemination of a Regulatory Announcement that contains inside information 
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
28 January 2020 
 
        Tern Plc ("Tern" or the "Company") 
 
        Portfolio Update 
 
 Tern Plc (AIM:TERN), the investment company specialising in the Internet of 
    Things ("IoT"), is pleased to provide an update on the activities of the 
   Company and its principal portfolio companies following the Company's and 
                portfolio companies' year end on 31 December 2019. 
 
2019 has been a year of validation for Tern's investment strategy, evidenced 
        both through the achievement of additional third-party funding in an 
           investee company and through the implementation of key commercial 
                initiatives across the portfolio. 
 
  On 30 October 2019, Tern announced the completion of a successful Series A 
fundraise of GBP4.3 million by FVRVS Limited ("FundamentalVR"). This fundraise 
  was completed at a valuation which resulted in a 27% uplift on the initial 
       GBP1.9 million investment made by Tern in FundamentalVR during 2018 and 
     attracted a syndicate of leading strategic and financial investors. The 
fundraise resulted in an increase in the carrying value of Tern's investment 
         in FundamentalVR but, more significantly, is expected to facilitate 
                significant commercial progress by FundamentalVR in 2020. 
 
     On 13 January 2020, Tern announced the achievement by InVMA of an order 
commitment for its industry critical AssetMinder product worth GBP817,000 over 
   a two-year period. This is a very significant milestone for InVMA and was 
     achieved as a result of the re-positioning of InVMA from a service to a 
                product business, in which Tern has been instrumental. 
 
Tern now has a genuinely diversified portfolio of investments in high growth 
          companies, with each of its principal portfolio companies having a 
  disruptive technology in a global market and they are all at very exciting 
        stages of their respective developments. Furthermore, each of Tern's 
       principal portfolio companies is working with world class partners to 
       accelerate the adoption of their products which the Directors of Tern 
            believe will provide significant prospective value enhancements. 
 
       The Directors of Tern are confident that its portfolio companies will 
         achieve further milestones during 2020, some of which may result in 
 revaluations to the carrying values of investments and consequent increases 
 in the net asset value ("NAV") of Tern. Management also continues to review 
                new investment opportunities. 
 
                Al Sisto, CEO of Tern, said: 
 
"FundamentalVR's syndicated Series A funding was an important recognition of 
   the company's progress and a validation of Tern's business model. Each of 
our principal portfolio companies demonstrated the market viability of their 
 product offerings during 2019. We expect our portfolio companies to achieve 
 further value enhancing events during 2020 and hope to see increases in the 
                NAV of Tern as a result." 
 
                2019 portfolio performance 
 
The aggregate turnover of Tern's principal* portfolio companies for the year 
       ended 31 December 2019 is anticipated to be 27% ahead of the turnover 
                achieved in 2018. 
 
 This figure was adversely affected by some delays in commercial orders that 
      were expected during Q4 2019, which are now anticipated early in 2020. 
     These, together with InVMA's January 2020 contract win, are expected to 
                contribute to a rapid start to 2020. 
 
 The growth in turnover, customers and partners achieved by Tern's principal 
  portfolio companies was supported by a 31% increase in aggregate employees 
  across the portfolio in 2019, compared to 2018 which the Directors believe 
                will provide a strong foundation for growth in 2020. 
 
* Principal portfolio company growth excludes Seal Software Group Limited 
and Push Technology Limited, in which Tern has a <1% holding and minimal 
influence. 
 
                FundamentalVR 
 
                Tern holding: 26.9% 
 
                Sector: Healthcare IoT 
 
                Invested Since: May 2018 
 
   Tern's shareholding in FundamentalVR is 26.9% and following the fundraise 
    announced in October 2019, this holding had a valuation of GBP3.0 million. 
 
         On 30 October 2019, FundamentalVR announced a GBP4.3 million Series A 
     fundraise, including a GBP0.5 million convertible loan note conversion by 
   Tern, at a post-money valuation of GBP11.3 million. This validated the Tern 
   business model, as it represented an increase in fair value within a year 
from Tern's most recent previous investment and involved the introduction of 
 trade and financial investment investors to this portfolio company, thereby 
                reducing the risk profile of Tern's investment. 
 
       In December 2019, FundamentalVR announced that it had secured another 
   significant new contract (worth GBP0.5 million) to create a Virtual Reality 
      Haptic Simulation platform for a new customer, a global pharmaceutical 
    company. As a result, FundamentalVR's technology is now being used by an 
      array of customer groups including clinics and medical centres, device 
                companies and pharmaceutical companies. 
 
                InVMA Limited ("InVMA") 
 
                Holding: 50% 
 
                Sector: IoT enablement 
 
                Invested Since: September 2017 
 
  Tern has a 50% holding in InVMA and as at 30 June 2019, this holding had a 
                 valuation of GBP1 million. 
 
       In January 2020, InVMA announced that it had secured an initial order 
 commitment worth GBP817,000 over a two-year period to provide its AssetMinder 
 solution to a global, multi-billion Euro revenue supplier to the industrial 
     and construction sectors. This order commitment was achieved with close 
      support and mentoring from Tern and represents a significant strategic 
         relationship for InVMA which validates the AssetMinder solution and 
reinforces the company's strategy of becoming a provider of IoT products and 
                services rather than a services company. 
 
                Wyld Networks Limited ("Wyld Networks") 
 
                Holding: 100% 
 
                Sector: IoT enablement 
 
                Invested Since: June 2016 
 
       Tern has a 100% holding in Wyld Networks and as at 30 June 2019, this 
 holding had a valuation of GBP78,000. Tern also has a short-term loan balance 
                 of GBP0.5 million. 
 
      Wyld Networks has been building on its framework contract with Delta-T 
    Devices, to build a network of meshed smartphones and IoT devices at the 
          edge of the network in enterprise communication and IoT, improving 
 operational efficiencies in healthcare, smart factories and transportation. 
 
                Device Authority Limited ("DA") 
 
                Tern holding: 56.8% 
 
                Sector: Security 
 
                Invested Since: September 2014 
 
Tern has a 56.8% holding in DA, which specialises in IoT security, and as at 
                30 June 2019, this holding had a valuation of GBP12.3 million. 
 
  DA continues to work with and develop product sales via its active partner 
       base. Additionally, the company expanded its ability to penetrate the 
 enterprise IoT markets with the addition of its Microsoft Azure IoT central 
  connector in December 2019. This enables an end-to-end service offering in 
      the cloud with enhanced security. This key enhancement to KeyScaler is 
      designed to optimise and leverage the investment in IoT deployments by 
     Microsoft Azure's large customer base which represents an important new 
                segment for Device Authority growth. 
 
Enquiries 
 
Tern Plc                          via Newgate Communications 
 
Al Sisto/Sarah Payne 
 
Allenby Capital Limited                   Tel: [phone] 
 
(Nomad and Joint broker) 
 
David Worlidge/Alex Brearley 
 
                   Whitman Howard         Tel: [phone] 
 
                   (Joint broker) 
 
Nick Lovering/Christopher Furness 
 
           Newgate Communications         Tel: [phone] 
 
    Elisabeth Cowell/Megan Kovach 
 
ISIN:          GB00BFPMV798 
Category Code: PFU 
TIDM:          TERN 
LEI Code:      2138005F87SODHL9CQ36 
Sequence No.:  42957 
EQS News ID:   962027 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

January 28, 2020 02:00 ET (07:00 GMT)