Tern PLC: Subscription for GBP1.5 million and H1 2020 Portfolio Update (1097105)
July 20 2020 - 4:00AM
UK Regulatory
Tern PLC (TERN)
Tern PLC: Subscription for GBP1.5 million and H1 2020 Portfolio Update
20-Jul-2020 / 09:00 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.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7
OF THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 ("MAR"). IN ADDITION,
MARKET SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS
ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH
INSIDE INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS
SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
20 July 2020
Tern Plc ("Tern" or the "Company")
Subscription for GBP1.5 million and H1 2020 Portfolio Update
Tern Plc (AIM:TERN), the investment company specialising in the Internet of
Things ("IoT"), announces that it has raised GBP1.5 million before expenses
through a subscription of 17,647,058 new ordinary shares of 0.02p each (the
"Subscription Shares") at a price of 8.5 pence per new ordinary share (the
"Issue Price") (the "Subscription"), conditional upon admission to AIM.
Tern also provides an update on the activities of the Company and its
portfolio companies during the six months ended 30 June 2020 (H1 2020),
ahead of publishing its interim results on 21 September 2020.
Highlights
· The funds raised via the Subscription are intended to be used to
facilitate a new investment to expand Tern's portfolio and will also:
· provide additional working capital generally; and
· facilitate follow-on investment opportunities in Tern's principal
portfolio companies as appropriate
· 62% year-on-year increase in turnover of principal portfolio companies1
for H1 2020. The Directors view this as an important positive result given
the slow down across the economy during this period
· 7% year-on-year increase in employees within principal portfolio
companies, a key growth measurement (H1 2019: 9%). This measure has been
impacted in the latter half of the period by a slowdown in recruitment to
ensure prudent management through the Covid-19 period
1 * Principal portfolio companies excludes Push Technology Limited, in which
Tern has a <1% holding and minimal influence.
Portfolio Highlights for H1 2020
· Device Authority significantly expanded its sales channel - KeyScaler is
now available on the Microsoft Azure Marketplace, an online store
· FundamentalVR received centre accreditation from the Royal College of
Surgeons of England and its orthopaedic education simulations were awarded
accreditation status by the American Academy of Orthopaedic Surgeons
(AAOS)
· Wyld signed an agreement with Highland Health Ventures Limited (HHVL) to
test and deploy its Wyld mesh technology into certain care homes in
Scotland
· InVMA signed a partnership agreement with Senseye [1] Limited, the
industrial software company specialising in predictive maintenance
Tern's CEO Al Sisto said:
"We are very pleased to have secured this support via the Subscription for
future investment opportunities and look forward to providing updates when
we finalise a transaction. Having successfully supported our existing
portfolio companies over recent months, many of which are making important
contributions to help their customers and partners navigate this challenging
time, we believe our investment thesis to provide an active platform for
early stage, high potential IoT businesses has been validated. We are
therefore excited to build on this by adding exciting, high growth companies
to our portfolio and in doing so, to further de-risk our business."
Further Information about the Subscription
The Directors intend to use the net proceeds of the Subscription to
facilitate securing a new investment to expand Tern's portfolio. The
Subscription will also provide additional general working capital and
strengthen the Company's balance sheet to enable the Company to pursue
follow-on investment opportunities in the Company's principal portfolio
companies, as appropriate, from a position of negotiating strength. Tern has
a strong pipeline of new investment opportunities and anticipates securing
at least one new investment before the year end.
Application will be made for the 17,647,058 Subscription Shares to be
admitted to AIM ("Admission") and it is expected that Admission will take
place and trading in the Subscription Shares will commence on 24 July 2020.
In accordance with the Financial Conduct Authority's Disclosure, Guidance
and Transparency Rules, the Company confirms that on completion of the
Subscription and following Admission, the Company's enlarged issued ordinary
share capital will comprise 300,999,434 ordinary shares of 0.02p each. The
Company does not hold any shares in Treasury. Therefore, from Admission, the
total number of voting rights in the Company will be 300,999,434. Following
the completion of the Subscription and Admission, the above figure may be
used by shareholders in the Company as the denominator for the calculations
to determine if they are required to notify their interest in, or a change
to their interest in the Company, under the Disclosure Guidance and
Transparency Rules.
H1 2020 Update
Tern has experienced a solid start to the year, despite the current
unprecedented times. Tern's Board has continued to hold regular sessions
with the senior leadership teams of its principal portfolio companies to
share insights on employee wellbeing, business agility and to leverage the
synergies within its portfolio companies' businesses to help them adapt to
the new challenges presented by the Covid-19 crisis.
The Company has also monitored costs closely during the Covid-19 pandemic
with continued Director salary reductions and mitigation activities in the
principal portfolio companies, primarily salary reductions and some limited
use of furlough schemes where relevant. It has also supported its portfolio
companies in applying for Innovate UK grants, where applicable, to support
their ongoing innovative projects.
Tern had an unaudited cash balance of GBP0.8 million on 30 June 2020 which
will be strengthened by the net proceeds of the Subscription announced
today. The year-on-year increase in turnover of the principal portfolio
companies1 for the first six months of 2020 was 62%. The Directors view this
as a positive result given the slow down across the economy during this
period. The year-on-year increase in employees within the principal
portfolio companies1, a key growth measurement, increased by 7% in the six
months to June 2019. This measure has been impacted in the latter half of
the period by a slowdown in recruitment to ensure prudent management through
the Covid-19 period.
Portfolio update
Device Authority ("DA")
Tern holding: 56.8%
Outstanding loan: $3.6 million
Sector: Security and Device Operations Management
Invested Since: September 2014
In June 2020 Device Authority announced the availability of KeyScaler in the
Microsoft Azure Marketplace [2], an online store providing applications and
services for use on Azure. The marketplace significantly expands DA's sales
channel as it lets customers worldwide discover, try, and deploy KeyScaler
solutions that are certified and optimized to run on Azure. The company has
also secured contract renewals via key channel partners and their customers
during the period.
FundamentalVR ("FVR")
Tern holding: 26.9%
Sector: Healthcare IoT
Invested Since: May 2018
In April 2020, FVR announced the expansion of the Fundamental Surgery [3]
platform, with the addition of a new education modality @HomeVR. In this
time where rapid learning and remote access has never been more relevant,
this has enabled health care professionals to prepare to use new equipment
and undertake new procedures. Its multiuser support enables its enterprise
customers to provide virtual master classes to accelerate the adoption of
new products and procedures. This ability to access training remotely
worldwide via the cloud enables collaboration in a virtual operating room or
clinic with no requirement for physical presence. In the current Covid-19
environment, its shared virtual setting also improves the overall
communication process among surgeons and trainees.
In June 2020, FundamentalVR achieved another important milestone as all the
orthopaedic education simulations available on the Fundamental Surgery
platform have been reviewed by the American Academy of Orthopaedic Surgeons
(AAOS) and awarded accreditation status. This recognition demonstrates the
AAOS's commitment to innovation in medical education and will allow
orthopaedic surgeons to collect continuing medical education (CME) credits
while utilising the unique cutting-edge haptic FVR platform. This was
followed in July 2020 by the company receiving centre accreditation from the
Royal College of Surgeons of England. This kite mark of quality has been
adopted by many leading organisations that develop world-class surgical
education courses, solutions and platforms.
Wyld Networks ("Wyld")
Holding: 100%
Outstanding loan: GBP1.1 million
Sector: IoT Communications Enablement
Invested Since: June 2016
In May 2020, Wyld announced that it had signed an agreement with Highland
Health Ventures Ltd [4] (HHVL) to test and deploy its Wyld mesh technology
into care homes in Scotland to help protect residents, staff and visitors,
and prevent the spread of Covid-19 or other viruses. The patented solution
connects smartphones directly to smartphones, without the need for WiFi or
cellular connectivity, to create an infrastructure-lite wireless mesh
communication network, as well as provide social distance monitoring and
alerting.
HHVL is an independent company with a Collaboration Agreement with NHS
Highland [5] for the purpose of developing innovations in healthcare.
In July 2020, Wyld announced the launch of Wyld Mesh and Fusion, its
innovative mobile mesh networking technology, data curation and content
delivery platform. Wyld Mesh and Fusion provides businesses with an
innovative way to generate new revenue streams, operate more efficiently,
get back to work safely and monitor social distancing practices. Wyld Mesh
harnesses the power of mobile devices to create wireless mesh communication
networks with applications in enterprise, healthcare, retail, education,
events and industry.
In the first half of the year Wyld also announced it had signed an agreement
with a global satellite operator to co-develop and co-market a LoraWAN
direct to satellite solution that is intended to bring the cost of satellite
IoT services in line with terrestrial based IoT solutions, aimed at opening
up a new frontier in the deployment of IoT solutions.
InVMA
Holding: 50%
Outstanding loan: GBP50,000
Sector: IoT enablement
Invested Since: September 2017
In June 2020, InVMA announced that it had signed a partnership agreement
with Senseye [1] Limited, the Industry 4.0 software company using
machine-learning algorithms for predictive maintenance. Via this
partnership, InVMA customers will now be able to more easily, and cost
effectively, capture and share their shop-floor and machine performance
data, driving better predictive maintenance insights to improve shop floor
productivity, product quality and to proactively reduce downtime.
Although Covid-19 has had a material impact on the industrial sector,
interest in remote monitoring remains. InVMA has carefully managed demand
for their services and products while effectively utilising government
furlough support as required. During this time InVMA has continued to focus
on the growth of its Software as a Service (SaaS) product AssetMinder(R)
[6], at a time when the Directors believe that remote monitoring has rapidly
moved to the forefront of industrial and manufacturing agendas.
AssetMinder(R) [6] enables its customers to remotely collect, monitor and
aggregate real-time data on assets, devices and equipment; providing
predictive insights to drive intelligence-based decisions across individual
machines and manufacturing lines to a portfolio of facilities.
Information for Distributors
Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated
Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing
measures (together, the "Product Governance Requirements"), and disclaiming
all and any liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the Product Governance Requirements)
may otherwise have with respect thereto, the Subscription Shares have been
subject to a product approval process by Allenby Capital Limited, which has
determined that the Subscription Shares are: (i) compatible with an end
target market of retail investors and investors who meet the criteria of
professional clients and eligible counterparties, each as defined in MiFID
II; and (ii) eligible for distribution through all distribution channels as
are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding
the Target Market Assessment, investors should note that: the price of the
Subscription Shares may decline and investors could lose all or part of
their investment; Subscription Shares offer no guaranteed income and no
capital protection; and an investment in Subscription Shares is compatible
only with investors who do not need a guaranteed income or capital
protection, who (either alone or in conjunction with an appropriate
financial or other adviser) are capable of evaluating the merits and risks
of such an investment and who have sufficient resources to be able to bear
any losses that may result therefrom. The Target Market Assessment is
without prejudice to the requirements of any contractual, legal or
regulatory selling restrictions in relation to the Subscription.
Furthermore, it is noted that, notwithstanding the Target Market Assessment,
only investors who have met the criteria of professional clients and
eligible counterparties have been procured. For the avoidance of doubt, the
Target Market Assessment does not constitute: (a) an assessment of
suitability or appropriateness for the purposes of MiFID II; or (b) a
recommendation to any investor or group of investors to invest in, or
purchase, or take any other action whatsoever with respect to Subscription
Shares.
Enquiries
Tern Plc via Newgate Communications
Al Sisto/Sarah Payne
Allenby Capital Tel: 020 3328 5656
(Nomad and joint broker)
David Worlidge/Alex Brearley
Whitman Howard Tel: 020 7659 1234
(Joint broker)
Nick Lovering/Christopher Furness
Newgate Communications Tel: 020 3757 6880
Elisabeth Cowell/Megan Kovach
ISIN: GB00BFPMV798
Category Code: MSCU
TIDM: TERN
LEI Code: 2138005F87SODHL9CQ36
Sequence No.: 76631
EQS News ID: 1097105
End of Announcement EQS News Service
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(END) Dow Jones Newswires
July 20, 2020 04:00 ET (08:00 GMT)
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