Results for the year ended 31 December 2023

Tern PLC

30 May 2024

 

30 May 2024

Tern Plc

("Tern" or the "Company")

Audited results for the year ended 31 December 2023

Tern Plc (AIM: TERN), the investment company specialising in supporting high growth, early-stage, disruptive Internet of Things ("IoT") technology businesses, announces its audited results for the year ended 31 December 2023.

Highlights

·    Net assets of the Company at 31 December 2023 of £12.3m (31 December 2022: £24.9m). The net asset value per ordinary share as at 31 December 2023 decreased to 3.2p (31 December 2022: 6.4p).

·    The reduction in net assets of the Company as at 31 December 2023 of £12.6m is principally due to movements in investments held at fair value through the profit or loss of £11.0m, and a reduction in the Company's cash balance of £0.6m.

·    The unaudited aggregated annual recurring revenue ("ARR") of our holdings¹ increased by 50% from 2022 to 2023 (97% from 2021 to 2022).

·    The aggregated employee numbers in our holdings decreased by 1% from 2022 to 2023 (increased by 66% from 2021 to 2022), however this decrease was balanced by an associated increase in ARR such that ARR per employee increased by 51% (19% from 2021 to 2022).

¹Our 'holdings' includes the positions we hold in our portfolio companies and the publicly traded Wyld Networks AB:  Our portfolio at the end 31 December 2023 included: Device Authority Limited, InVMA Limited (trading as Konektio, from 5 March 2024 InVMA Limited was no longer included in the portfolio), FVRVS Limited (trading as FundamentalVR) and Talking Medicines Limited, collectively 'our portfolio': as further described in the section headed 'Portfolio Companies and Holdings' below and as detailed in note 2 to the accounts. 

Availability of Annual Report and Notice of AGM

The annual report for the year ended 31 December 2023 will shortly be available from the Company's website https://www.ternplc.com/investors  and will be posted to shareholders today.

The Company's Annual General Meeting ("AGM") will be held at 9.30am on Thursday 27 June 2024 at the offices of Allenby Capital, 5 St Helen's Place, London, EC3A 6AB. The notice of AGM will shortly be available from the Company's website https://www.ternplc.com/investors and will be posted to shareholders today, together with the form of proxy.

Enquiries

Tern Plc Ian Ritchie (Chairman)	via IFC Advisory
Allenby Capital Limited (Nominated Adviser and Broker) Alex Brearley / Dan Dearden-Williams (Corporate Finance) Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)	Tel: [phone]
IFC Advisory (Financial PR and IR) Tim Metcalfe Graham Herring Florence Chandler	Tel: [phone] [e-mail]

Chairman's Statement

Whilst market conditions remain challenging, I am pleased to report that 2023 was a year of significant underlying progress for Tern and the majority of its portfolio companies.

We are an AIM-quoted provider of venture capital ("VC") to exciting Internet of Things companies, seeking to create value from investing in disruptive start-ups not generally available to AIM investors. This model gives our shareholders the opportunity to effectively act as Limited Partners (LPs), akin to the capital model in a traditional VC fund, but with the benefit of daily liquidity for your holding on the London Stock Exchange and no obligation to provide further capital.

Tern has built a portfolio of high-growth businesses where we see opportunities in sectors poised for substantial growth. We actively drive significant value creation from the organic growth of our companies and seek well-timed exits to realise a high return on the investment in due course.

Regrettably, the historically least successful company in our portfolio, InVMA (trading as Konektio), has recently entered administration and its value has been written down to zero. During 2023 we had lost confidence in this company to the extent that we declined to participate in its last investment round following which other existing, established shareholders followed suit.

Despite the fair value decrease, our portfolio is not just surviving, but thriving - a performance that I believe is much better than most early-stage investment portfolios in their space.

·    Device Authority has raised significant new funds from an industry specialist investor allowing it to fully capitalise on its industry recognised technology and build on its partnerships with Microsoft, Entrust, Cybertrak and PTC.

·    Wyld Networks has strong relationships with the European Space Agency, Eutelsat, Bayer Crop Science and Thales and has signed deployment deals in Saudi Arabia, Australia, Argentina and Brazil.

·    FundamentalVR's revenue and gross margin have continued to improve in 2023. The company has made significant progress in expanding its contracted annual recurring revenue. Apple's continued expansion of activity in the metaverse space and Meta's global advertising campaign which featured FundamentalVR are both significant opportunities for the company.

·    Talking Medicines is currently exceeding its management's forecasts. They have secured partnerships with for example data aggregator Socialgist, published with Sermo Physician Community and signed contracts with multiple US based Healthcare Advertising Agencies/Advertising Holding Companies that serve Pharmaceutical Companies.

Each of these companies and their services have developed into recognised technology leaders in their targeted markets and are now firmly into their growth stage.

Unlike in the traditional VC model, Tern provides more than just funding; it proactively supports the growth of its portfolio companies. Organic delivery has been strong, with significant commercial traction and growing recurring revenues, a key metric in establishing value for a trade sale, IPO or secondary buyout by another venture/PE backer.

During the year, we have taken the opportunity to increase our efficiency by significantly cutting our operating costs by 40%, halving our senior leadership team from four to two, and moving to a lower cost office.

However, we do need to retain the ability to continue to support our portfolio companies, especially successful ones, as they grow, otherwise we are at risk of being disproportionately diluted as they raise further funds. We always look for ways of realising capital from our portfolio where appropriate, but Tern also needs to retain the ability to issue new ordinary shares as the need arises.

It is worth noting that we have invested in each of our portfolio companies at an early-stage - in most cases before they had developed their products or built any meaningful routes to market. What each of them had demonstrated to us was exciting opportunities to develop new high growth businesses. We have, and continue to, invest significant time and effort with these companies to ensure that they create effective business models, grow their team effectively, and develop their market opportunities.

In particular, your Company gains notable value from the enormous experience of Bruce Leith and Al Sisto as veteran experienced technology entrepreneurs over many years, and particularly Al Sisto, who is based in the USA, and is embedded in current business development cultures there. This has enabled us to build strong US-based trading businesses for most of our portfolio companies, operating effectively in the world's strongest technology market.

Our goal is to build value in these businesses. Unlike other VCs we do not load management fees onto our companies, as we want them to use all their resources to grow in value. In addition, companies in these growth stages are not in any position to pay dividends - our return comes when we achieve a liquidity event. Thus, we strive to ensure that the value of our portfolio companies grow by at least 20% per year and when we do realise the value in these businesses (by trade sale or public listing) our goal is to return significant value to our shareholders, after taking into account the need for reinvestment in our portfolio. Whilst the carrying values of our portfolio companies at the year-end do not reflect this targeted annual increase in value, reflecting the required valuation methodology for our audited accounts, I believe that the true value that will ultimately be realised will be far higher.

One of the key characteristics of early-stage deep tech investments is that we have very little control of when a liquidity event is likely to emerge. What we must do is ensure that our companies continue to present significant value to an acquiring corporation. Also, in the ups and downs of the technology economies, there are seasons where acquisitions and public listings can happen, and other seasons where it is very difficult to achieve a good price. In these circumstances we must 'wait it out' until a good price can be achieved.

It is the Board's intention that the Company will not invest in any companies or entities not already part of Tern's existing portfolio until such time as the Company has realised material value from its current portfolio.

We consider that holding shares in Tern should therefore always be seen as a long-term investment. If our companies are growing well, as they are, the value should eventually be realised, and our shareholders will benefit from the funds received.

Our current portfolio has been working well, evidenced by the ability of every one of them to either achieve a listing on a stock market (Wyld Networks on NASDAQ First North Growth Market), or to raise later stage investment from new independent third-party investors (Device Authority, FundamentalVR, Talking Medicines). These achievements have been even more impressive by occurring during a challenging time for tech companies to raise capital, indicating that our positive confidence in the excellent potential of our companies is shared by other sources of risk capital.

I would also like to take the opportunity to recognise the outstanding performance of our senior leadership team during this year. We are very much a 'hands-on' team who actively participate in the strategy and development of our various investment companies. I would also like to thank my fellow non-executive directors, Alan Howarth and Sarah Payne, who changed role from CFO to non-executive director in September 2023, for their excellent judgment and advice.

In short, a stake in Tern should be seen as an ability to participate in the development of attractive businesses generally not available to private investors whose growth, with our guidance and access to our network of resources, is aimed at providing long-term capital gains.

It is our job to ensure that we work to achieve the strongest return for your investment, and we assure you that we will continue to make that our principal goal.

Ian Ritchie CBE, FREng, FRSE

Chairman

Financial Review

All sectors, excluding energy, saw a decline in venture investing and valuations during 2023 from higher valuations and catch-up investing post Covid in 2021. This valuation adjustment flowed through to some of our portfolio companies and holdings. However, with the exception of Konektio, further details of which can be found below, our portfolio continued to focus on their fundamentals, showing growth through the period with a focus on maximising growth of annual recurring revenue.

Statement of Financial Position

Net assets at 31 December 2023 were £12.5m, a reduction of £12.4m from the net assets of £24.9m at 31 December 2022. This is principally due to movements in investments held at fair value through the profit or loss ("FVTPL").

The negative impact of foreign exchange movements at Device Authority and Wyld Networks add to the decreases in the fair value of the portfolio leading to an overall decrease in our investments of £11.1m. Our cash balance was £0.6m lower at 31 December 2023 compared to 31 December 2022. Whilst our administration costs and other expenses declined in 2023 compared to 2022, we received no proceeds from the issue of new shares in 2023. Trade and other payables is £0.3m higher at 31 December 2023 compared to 31 December 2022.

Investments held at FVTPL of £12.8m relate to our portfolio of high- growth technology companies. During the year, the fair value of this portfolio decreased by £11.1m, resulting from investments made of £1.4m, disposal of assets of £1.5m, foreign exchange decrease of £0.3m and a negative movement in the fair value of investments held at FVTPL of £10.6m.

Income Statement and Statement of Comprehensive Income

The total comprehensive loss for the year was £12.5m (2022: loss of £10.4m), primarily due to a net negative movement in the fair value of investments held at FVTPL of £10.6m.

The Company seeks to keep its fees charged to portfolio companies at modest levels, as the Company's preference is for capital to instead be reinvested in the portfolio to drive value creation.

Administration costs decreased to £1.7m in 2023 (2022: £1.8m). Other expenses decreased to £0.1m in 2023 (2022: £0.4m).

Statement of Cashflows

During the year, £1.4m was used in the Company's operations, £1.2m deployed within our existing portfolio, via equity and loan investments.

A £0.5m loan was provided to the Company during the year and £0.1m was repaid.

Key performance indicators

The Company's financial Key Performance Indicators ("KPIs") are focused on increasing net asset value, increasing net asset value per share and delivering consistent revenue growth of our portfolio. The Company also monitors non-financial KPIs, the primary focus being on the increase in employee numbers and revenue per employee in our portfolio which is an indicator of growth to support commercial success. These indicators are monitored closely by the Board and the details of performance against these are given below.

The return on investments

Unrealised fair value:

·    Wyld Networks: £2.4m valuation (31 December 2022: £6.0m): The equity valuation has decreased due to a realisation of £1.5m in disposed Wyld Networks shares, the reduction in Wyld Networks' market capitalisation of £2.0m (reduction in share price) plus an exchange rate loss of £0.05m;

·    Device Authority: £4.4m valuation (31 December 2022: £11.9m): The valuation has decreased due to a fair value reduction of £7.6m, including a foreign exchange rate loss of £0.2m. The valuation decrease arose from applying Device Authority's latest fundraise valuation. The convertible loan notes of £0.7m provided by Tern to the company was converted to equity in December 2023. (For further details on Device Authority, please see note 2);

·    Konektio: Nil valuation (31 December 2022: £0.5m): The equity value of Konektio was written off due to the company entering into administration;

·    FundamentalVR: £3.6m valuation (31 December 2022: £3.6m): The valuation has remained static;

·    Talking Medicines: £2.0m valuation (31 December 2022: £1.8m): The valuation has increased due to additional funding provided to the company of £0.2m via CLN which was outstanding at the year end;

·    Diffusiondata (previously Push Technology): £0.02m valuation (31 December 2022: £0.02m): The investment is valued at fair value with the price of the most recent valuation taken into account; and

·    SVVUK: £0.3m valuation (31 December 2022: £0.1m): The investment is valued at fair value at the value provided by the SVVUK fund. The fair value decrease of £0.1m was offset by the Tern investment of £0.3m.

Wyld Networks valuation is determined by reference to the appropriate quoted market price at the reporting date.

The global downturn in technology company valuations and multiples applied to early-stage businesses was taken into consideration when assessing the fair value of the portfolio.

The net assets of the Company at 31 December 2023 showed a reduction to £12.3m (31 December 2022: £24.9m). The net asset value per ordinary share as at 31 December 2023 decreased to 3.2p (31 December 2022: 6.4p).

The year-on-year unaudited annual recurring revenue ("ARR") of our portfolio companies (level 3 investments) increased by 50% from 2022 to 2023 (97% from 2021 to 2022).

The Company has non-financial KPIs which are also monitored regularly by the Board. The non-financial KPIs are focused on the growth in employee numbers in our portfolio. We believe these factors help serve as leading indicators of the future performance and our impact on our stakeholders:

Employees in our portfolio companies decreased by 1% from 2022 to 2023 (increase of 66% from 2021 to 2022), however this decrease was balanced by an associated increase in ARR such that ARR per employee increased by 51% from 2022 to 2023 (19% from 2021 to 2022).

Portfolio Companies and Holdings as at 31 December 2023

Wyld Networks AB (publ) ("Wyld Networks" or "Wyld")

Valuation: £2.4m (31 December 2022: £6.0m)

Holding: 22.5%*

Wyld Networks, quoted on the NASDAQ First North Growth Market in Stockholm, enables affordable connectivity across the globe in areas where wireless coverage is unavailable. The company specialises in providing wireless connectivity between IoT sensors and Low-Earth-Orbit ("LEO") satellites supporting ISM, S and L band spectrum with its Wyld Connect solution for governments and businesses. The company has expanded its portfolio in launching Wyld Fusion a hybrid terrestrial and satellite IoT platform

Wyld Networks CEO, Alastair Williamson said: "As we continue to move further into our commercialisation phase, we are appreciative for the continued support and guidance that Tern provides, helping us promote the company and our solution, navigate the challenges and capitalise on the further opportunities that lie ahead."

*Pursuant to Tern's funding facility announced on 12 June 2023, under which £418,205 was the balance outstanding as at 31 December 2023, Tern is required to maintain in escrow shares in Wyld at a value of not less than 1.5 times the value of outstanding amounts drawn down and accrued interest, as security for the Facility.

Device Authority Limited ("DA" or "Device Authority")

Valuation: £4.4m (31 December 2022: £11.9m)

Equity ownership: 35.7% (before any dilution on exercise of share options)

Device Authority is a pioneering force in Identity and Access Management (IAM) tailored for interconnected device ecosystems, empowering organizations to realize 'Zero Trust' security on a comprehensive scale. In the realm of security, Zero Trust demands unwavering authentication, authorization, and ongoing validation of all users, irrespective of their network positioning, ensuring their adherence to stringent security configurations and postures prior to accessing applications and data. Central to this paradigm is Device Authority's acclaimed KeyScaler® platform, meticulously crafted to streamline and automate the management of IoT machine identities across their complete lifecycle. By furnishing end-to-end trust in devices, data, and operational integrity, KeyScaler® epitomizes a cornerstone in fortifying organizational security frameworks.

Device Authority CEO, Darron Antill said: "Last year saw key breakthroughs for Device Authority, as winners of the Microsoft Global award and developing our Enterprise class SaaS platform (KSaaS) to meet demand and the shift in consumption models from customers. Working with Board and our lead investor Tern we developed a strategy to bring in new investment and particularly cyber security investors to help accelerate the company trajectory into key vertical markets."

FVRVS Limited ("FundamentalVR")

Valuation: £3.6m (31 December 2022: £3.6m)

Equity ownership: 12.1% (before any dilution on exercise of share options)

A global leader in immersive surgical training, FundamentalVR was founded with the mission to accelerate human capability in surgery and medicine through virtual technologies to improve patient outcomes. The company's innovative approach accelerates the industry shift towards digital surgery, addressing the competency gap at scale in training for intelligent operating rooms.

Its purpose-built Fundamental Surgery platform allows for full rehearsal of medical and surgical procedures, and its patented HapticVRTM technology mimics the physical touch, weight, resistance and feedback of surgical actions and accurately simulates the sensations of soft tissue, bone textures and muscle.

With over 15,000 competency-building sessions conducted globally and accredited by and affiliated with institutions like the American Academy of Opthalmology (AAO), the American Academy of Orthopaedic Surgeons (AAOS), and the Royal College of Surgeons of England, FundamentalVR remains committed to elevating performance and training skilled surgeons and Operating Room teams at scale.

FundamentalVR CEO, Richard Vincent said: "This has been an exciting year of growth and technological development for FundamentalVR as we have pushed both the spatial immersive VR and haptic capabilities of our platform and its use cases within the MedTech industry. We're thrilled with the progress we've made, and we're grateful for the steadfast support of Tern Plc, whose partnership continues to be instrumental in our journey."

Talking Medicines Limited ("Talking Medicines")

Valuation: £2.0m (31 December 2022: £1.8m)

Equity ownership: 23.8% (before any dilution on exercise of share options)

Talking Medicines harnesses Advanced Data Science and Artificial Intelligence to empower healthcare advertising agencies, enabling them to consistently secure and retain Pharma clients while achieving heightened productivity and rapid project delivery. With a vision to transform the $30 billion healthcare marketing landscape, Talking Medicines unlocks strategic intelligence embedded within conversational data. By structuring conversational data, Talking Medicines empowers customers to gain strategic advantages in analysis, measurement, and the cultivation of enhanced brand equity.

Talking Medicines' goal is to revolutionise the pharmaceutical industry with its cutting-edge social intelligence platform, PatientMetRx. By harnessing the power of artificial intelligence (AI) and natural language processing (NLP), the platform provides pharmaceutical companies with unparalleled insights into patient and healthcare providers (HCPs) experience and preferences using social data.

This allows companies to deliver a greater return on investment for marketing and to ultimately improve health outcomes for patients. With PatientMetRx, pharmaceutical companies have access to a level of scale and depth of patient insights that was previously impossible, enabling them to make data-driven decisions that drive success.

Talking Medicines CEO, Jo Halliday said: "Al Sisto and Tern have continued to add valuable support behind our strategic direction as we have grown both our AI product offering, and successfully expanded into the US market. We value this continued input and direction from an experienced team."

Diffusiondata (previously Push Technology)

Valuation: £0.02m (31 December 2022: £0.2m)

Equity ownership: <1%

Diffusiondata elevates organizations' capacity for real-time communication. This extends beyond direct interactions to encompass indirect channels, such as automatically refreshing displayed data in real-time, without necessitating user prompts for updates. Interactive applications thrive on this capability, becoming infinitely more engaging as they seamlessly update in real-time with the arrival of new data.

Sure Valley Ventures UK Software Technology Fund ("SVVUK")

Valuation: £0.3m (31 December 2022: £0.1m)

Equity ownership: 5.9%

SVVUK stands as a venture capital powerhouse, directing its investments towards a diverse array of private UK software companies, with a particular focus on the burgeoning immersive technology and metaverse sectors. This encompasses ventures involved in augmented and virtual reality, artificial intelligence, and cybersecurity. Presently, SVVUK boasts investments in two promising enterprises: RETìníZE Limited, a dynamic creative tech firm headquartered in Belfast, and Opsmatix Systems Limited, operating under the brand Jaid, an innovative technology company offering cutting-edge AI-driven human communication solutions. With an unwavering commitment to innovation, the SVVUK team remains dedicated to assessing additional investment prospects within their target sectors, including immersive tech, SaaS, cybersecurity, and IoT. Notably, many of these opportunities leverage artificial intelligence at their core, aligning seamlessly with SVVUK's overarching investment strategy.

Income Statement and Statement of Comprehensive Income

For the year ended 31 December 2023

		2023 £	2022 £
Fee income		199,233	66,013
Movement in fair value of investments		(11,046,575)	(8,415,781)
Profit on disposal		28,589	11,208
Total investment loss		(10,818,753)	(8,338,560)
Administration costs		(1,711,892)	(1,792,523)
Other expenses		(194,317)	(366,596)
Movement in fair value of derivative financial instrument		35,749	-
Operating loss		(12,689,213)	(10,497,679)
Finance income		81,083	50,915
Loss before tax		(12,608,130)	(10,446,764)
Tax		-	-
Loss and total comprehensive income for the period		(12,608,130)	(10,446,764)

Since there is no other comprehensive income, the loss for the year is the same as the total comprehensive income for the year.

LOSS PER SHARE:

Basic loss per share	(3.24) pence	(2.92) pence
Diluted loss per share	(3.24) pence	(2.92) pence

 

Statement of Financial Position

As at 31 December 2023

ASSETS NON--CURRENT ASSETS Investments		2023 £ 12,778,617	2022 £ 23,881,769
		12,778,617	23,881,769
CURRENT ASSETS
Trade and other receivables		73,533	363,765
Cash and cash equivalents		297,565	931,765
		371,098	1,295,530
TOTAL ASSETS		13,149,715	25,177,299
EQUITY AND LIABILITIES
Share capital		1,379,503	1,379,282
Share premium		33,390,997	33,341,218
Retained earnings		(22,469,224)	(9,868,199)
		12,301,276	24,852,301
CURRENT LIABILITIES
Trade and other payables		325,379	342,998
Short Term Loan		418,205	-
Derivative Financial Instruments		104,855	-
TOTAL CURRENT LIABILITIES		848,439	342,998
TOTAL LIABILITIES		848,439	342,998
TOTAL EQUITY AND LIABILITIES		13,149,715	25,177,299

Statement of Changes in Equity

For the year ended 31 December 2023

	Share capital £		Share premium £	Retained earnings £	Total equity £
Balance at 31 December 2021	1,371,970		30,546,569	498,010	32,416,549
Total comprehensive income		-	-	(10,446,764)	(10,446,764)
Transactions with owners
Issue of share capital		7,312	3,114,249	-	3,121,561
Share issue costs		-	(319,600)	-	(319,600)
Share based payment charge		-	-	80,555	80,555
Balance at 31 December 2022		1,379,282	33,341,218	(9,868,199)	25,852,301
Total comprehensive income		-	-	(12,608,130)	(12,608,130)
Transactions with owners
Issue of share capital		221	49,779	-	50,000
Share based payment charge		-	-	7,105	7,105
Balance at 31 December 2023		1,379,503	33,390,997	(22,469,224)	12,301,276

Statement of Cash Flows

For the year ended 31 December 2023

		2023 £	2022 £
OPERATING ACTIVITIES
Net cash used in operations		(1,372,647)	(2,055,814)
Purchase of investments		(1,382,994)	(1,670,194)
Cash received from sale of investments		1,534,913	42,346
Loans to portfolio companies		136,389	(144,757)
Interest received		18,600	1,020
Net cash used in operating activities		(1,065,739)	(3,827,399)
FINANCING ACTIVITIES
Proceeds on issues of shares		-	3,121,561
Share issue expenses		-	(319,600)
Loan receipt		500,000	-
Loan repayment		(68,461)	-
Net cash from financing activities		431,539	2,801,961
(Decrease) in cash and cash equivalents		(634,200)	(1,025,438)
Cash and cash equivalents at beginning of year		931,765	1,957,203
Cash and cash equivalents at end of year		297,565	931,765

Notes

1. BASIS OF PREPARATION

The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 December 2023 or 2022.  The financial information for the year ended 31 December 2022 is derived from the statutory accounts for that year, which were prepared under UK adopted international financial reporting standards in conformity with the requirements of the Companies Act 2006, and which have been delivered to the Registrar of Companies.  The auditor's report on those accounts was unqualified, did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006.

The financial information for the year ended 31 December 2023 is derived from the audited statutory accounts for the year ended 31 December 2023 on which the auditors have given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis. The statutory accounts will be delivered to the Registrar of Companies following the Company's annual general meeting.

The financial statements of the Company have been prepared in accordance with UK-adopted international accounting standards.  The financial statements have been prepared on the basis of the recognition and measurement principles of the UK adopted international financial reporting standards that were applicable at 31 December 2023. The accounting policies are consistent with those applied in the preparation of the interim results for the period ended 30 June 2023. The accounting policies are also consistent with the statutory accounts for the year ended 31 December 2022.

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may ultimately differ from those estimates.

In accordance with IFRS 10, para 4 the Directors consider the Company to be an investment company and has taken the exemption not to present consolidated financial statements or apply IFRS3 when it obtains control of another entity as it is an investing company that measures all of its investments at fair value through the income statement in accordance with IFRS 9.

1.1 GOING CONCERN

The financial statements have been prepared on the going concern basis.

The directors have a reasonable expectation that the Company has adequate resources to continue operating for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Company's financial statements. This has been assessed using detailed cash flow analysis so that the Board can conclude that the Company has sufficient working capital resources to continue for at least 12 months from the approval of the financial statements. In the event that additional funding was required, management are confident that they would be able to obtain additional funds from various sources. For example, the Company can exit part of its investment in its level one held investments with the risk that such transactions are determined by an inherent and undetermined market risk.

2.    FAIR VALUE MEASUREMENT

For Level 3 investments, private company portfolio companies, the fair value assessment was made by the directors using the price of the shares in the most recent fundraise, where this was available, as well as an assessment of market valuations placed on comparable businesses, a review of the underlying asset values and a review of the sales pipeline and forecast to support any valuation applied.

NON-CURRENT ASSETS

INVESTMENTS

	2023 £	2022 £
Fair value of investments brought forward	23,881,769	30,612,047
Interest accrued on convertible loan note	66,754	46,447
Additions	1,382,994	1,670,194
Disposals	(1,506,325)	(31,138)
Fair value of investments carried forward	23,825,192	32,297,550
Fair value adjustment to investments	(11,046,575)	(8,415,781)
Fair value of investments carried forward	12,778,617	23,881,769

	Cost	Valuation	Equity ownership
	£000	£000	%
Wyld Networks AB	2,299	2,439	22.5
Device Authority Limited	9,305	4,445	35.7
FVRVS Limited (FundamentalVR)	2,928	3,630	12.1
Talking Medicines Limited	1,448	1,991	23.8
Diffusiondata Limited	120	23	<1
Sure Valley Ventures UK Software Technology Fund	472	251	5.9
InVMA Limited (Konektio)	2,267	-	8.8
	18,839	12,779

The audited valuation of Device Authority at 31 December 2023, stands at £4.4m, lower than previously announced unaudited valuations due to accounting adjustments necessitated for Level 3 investments. The convertible loan facility issued to Device Authority was converted to equity during the year with any movements in fair value taken to profit or loss for the year.

The convertible loan facility issued to InVMA was converted into equity during the year with any movements in fair value taken to profit or loss for the year.

The convertible loan facility issued to Talking Medicines is a financial asset with multiple derivatives and the entire contract has been designated at FVTPL, with any movement in fair value taken to profit or loss for the year. As at 31 December 2023, the principal of the convertible loan outstanding was £187,500 (2022: Nil).

3. LOSS PER SHARE

	2023	2022
Loss for the purposes of basic and fully diluted profit per share	£(12,608,130))	£(10,446,764)
	2023	2022
	Number	Number
Weighted average number of ordinary shares:
For calculation of basic earnings per share	389,182,934	357,424,413
For calculation of fully diluted earnings per share	389,182,934	357,424,413
	2023	2022
Loss per share:
Basic loss per share	(3.24) pence	(2.92) pence
Diluted loss per share	(3.24) pence	(2.92) pence

In 2023 the fully diluted loss per share is the same as the basic loss per share as the share options were underwater which would have an anti-dilutive effect on loss per share.  

4. POSTING OF ANNUAL REPORT

The annual report for the year ended 31 December 2023 will shortly be available from the Company's website (https://www.ternplc.com/investors) and will be posted to shareholders.

 

END