Annual Results: TMT Investments Plc - Most Successful Year to Date - NAV per Share +73% for YE Dec 2020
UNITED KINGDOM / AGILITYPR.NEWS / March 25, 2021 / TMT Investments Plc (AIM: TMT.L), the AIM-quoted venture capital company investing in high growth technology companies, is pleased to announce its annual results for the year ended 31 December 2020.
- NAV per share of US$6.10 (up 73.3% from US$3.52 as of 31 December 2019)
- US$34.6 million in cash reserves as of 24 March 2021
- 10 years since admission to AIM in December 2010
- Diversified portfolio of over 35 companies focused mainly around big data/cloud, e-commerce, marketplaces, EdTech and SaaS (software-as-a-service) solutions
25 March 2021
TMT INVESTMENTS PLC
(“TMT” or the “Company”)
Results for the year ended 31 December 2020 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 2020.
Highlights:
- NAV per share of US$6.10 (up 73.3% from US$3.52 as of 31 December 2019)
- Total NAV of US$177.9 million (up from US$102.8 million as at 31 December 2019)
- 10 years since admission to AIM in December 2010
- NAV per share up 6.4 times since admission (including dividends paid to date)
- 5-year IRR of 28.7% per annum
- US$41 million of net cash proceeds from exits during 2020
- US$12.5 million of investments across 16 new and existing companies in 2020
- Diversified portfolio of over 35 companies focused mainly around big data/cloud, e-commerce, marketplaces, EdTech and SaaS (software-as-a-service) solutions
- Covid-19’s effect on portfolio companies is mainly neutral or positive, with future performance dependent on how the situation unfolds in coming months
- US$34.6 million in cash reserves as of 24 March 2021
Alexander Selegenev, Executive Director of TMT, commented:
“2020 was the most successful year for the Company to date, recording a large number of significant revaluations across the portfolio, led by TMT’s second multi-million cash exit when TMT exited its stake in Pipedrive to Vista Equity Partners for US$41m. The Pipedrive exit generated a total cash return of over 51 times on TMT’s original investments in Pipedrive, a superb return for shareholders.
“In December 2020, TMT celebrated 10 years since its admission to AIM. Since admission, TMT has invested in over 65 companies, realised 14 profitable full and partial exits, and established a strong track record in identifying successful, high-growth companies at an early stage of their development. Since admission to AIM in December 2010, TMT’s NAV per share has increased 6.4x (including dividends paid to date).
“The cash proceeds from the Pipedrive exit are already being actively invested. We have been increasing our investment in those of our current portfolio companies that are growing strongly as well as investing in new companies. With cash on the balance sheet of US$34.6m as of the date of this report, TMT is in an excellent position to continue seeking suitable investment opportunities and identify tomorrow’s winners.
“In the first half of 2020, when COVID-19 first caused significant uncertainty and volatility in the market, we were pleased to see that the majority of our portfolio companies benefited from the previously adopted pragmatic approach of seeking cost-efficient growth, as opposed to ‘growth at any cost’. This approach allowed them to control their burn rates and cash liquidity levels effectively in those turbulent months. The second half of 2020 was marked by renewed investor interest in the high-growth potential of tech start-ups, which in turn removed liquidity concerns for high-quality, fast growing companies (including many of our investees) and allowed them to return to the more usual ‘invest for growth’ mode.
“Having naturally slowed down the pace of new investments in the second quarter of 2020, we returned to full investing mode in the second half of the year. This resulted in the Company investing in 16 new and existing portfolio companies.
“TMT’s strategy continues to be very selective in identifying new investment opportunities, while seeking to capitalise on the new and existing investment themes continuously developing in the technology space, and we look forward to keeping shareholders updated on relevant developments.”
Notice of AGM
The Company's Annual General Meeting will be held on 29 July 2021 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 2020 and Notice of AGM will shortly be available on the Company’s website at www.tmtinvestments.com.
For further information contact:
TMT Investments PLC
Alexander Selegenev
Executive Director
+44 (0)1534 281 800
(Computershare - Company Secretary)
alexander.selegenev@tmtinvestments.com
Strand Hanson Limited
(Nominated Adviser)
James Bellman / James Dance
+44 (0)20 7409 3494
Cenkos Securities plc
(Joint Broker)
Russell Cook / Ben Jeynes
+44 (0)20 7397 8900
Hybridan LLP
(Joint Broker)
Claire Louise Noyce
+44 (0)20 3764 2341
Kinlan Communications
David Hothersall
+44 (0)20 7638 3435
EXECUTIVE DIRECTOR’S STATEMENT
At the time of the publication of TMT’s interim results in September 2020, it was still not possible to predict that the tech venture capital investment space would become one of the few beneficiaries of the new market environment caused by COVID-19. However, the second half of 2020 revealed increased investor interest in the high-growth potential of business models based on digital, online and remote technologies, leading to a significant increase in fundraising activities by technology companies around the world. In turn, this resulted in a large number of significant revaluations and cash realisations across our portfolio, making 2020 the most successful year for the Company to date.
TMT’s net asset value (“NAV”) per share as of 31 December 2020 increased significantly to US$6.10 (up 73.3% from US$3.52 as of 31 December 2019). In particular, the Company’s NAV benefited significantly from increased valuations in three of our significant holdings: sales CRM company Pipedrive (+US$29.1 million in NAV), global ride-hailing and food delivery company Bolt (+US$14.1 million in NAV), and cloud storage company Backblaze (+US$34.8 million in NAV). In accordance with IFRS standards, valuations for the Company’s investments in Backblaze and Scentbird as of 31 December 2020 have utilised comparable company revenue multiple analysis (with appropriate discounts to publicly traded comparable companies applied for lack of marketability) to revalue these investments as part of the accounts preparation and audit process, in order to reflect the continuing positive progress of those investee companies, in the absence of recent equity fundraising activity in those companies, which would otherwise have been our preferred valuation method.
The majority of our portfolio companies have been navigating the turmoil caused by COVID-19 successfully, with many investees actually benefiting from the changed market environment. A large number of our investees have taken advantage of increased investor interest in growing technology companies and raised capital for further expansion.
Despite making only two new investments in the first half of the year, the Company finished the year with investments in a total of 16 new and existing portfolio companies in 2020. Out of over 35 portfolio investee companies, the Company registered only 2 impairments during the period. The only notable impairment was in respect of Le Tote, whose department store and fashion rental business was directly affected by COVID-19 and associated lock downs, resulting in the company filing for bankruptcy in August 2020.
In December 2020, TMT celebrated 10 years since its admission to AIM in December 2010, when it was one of only a handful of publicly quoted companies investing in privately held technology companies at the time. We are delighted that TMT’s NAV per share has grown 6.4 times in that 10-year period (including dividends paid to date), which has seen two multi-million dollar exits (the US$22.6m cash exit from Wrike in December 2018 and the US$41m cash exit from Pipedrive in 2020). With cash on the balance sheet of $34.6m as of the date of this report, TMT is in an excellent position to continue seeking suitable investment opportunities and identify tomorrow’s winners. We thank all our team for their hard work and our shareholders for their investment commitment over the last decade.
NAV per share
The Company’s NAV per share in 2020 increased by 73.3% to US$6.10 (from US$3.52 as of 31 December 2019), mainly as a result of the significant upward revaluations of our investments in Pipedrive, Backblaze and Bolt.
Operating Expenses
In 2020, the Company’s administrative expenses of US$1,255,451 were slightly above the corresponding 2019 levels (US$1,174,466), reflecting the Company’s increased investment activity in the second half of 2020.
Financial position
As of 31 December 2020, the Company had no financial debt and cash reserves of approximately US$39 million. As of 24 March 2021, the Company had cash reserves of approximately US$34.6 million.
Bonus Plan
The Company has put in place the bonus plan for Directors, officers, employees of, or consultants to, the Company (the “Bonus Plan”). The initial 3-year Bonus Plan was approved by the Board on 2 December 2015. Under the Bonus Plan, subject to achieving minimum hurdle rate and high watermark conditions in respect of the Company’s net asset value (“NAV”), the team received 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 or similar corporate transactions. In June 2018, the Company extended the Bonus Plan for three years (until 30 June 2021) on the same terms, with slightly amended initial allocations of the bonus pool among the participants.
On 25 November 2020, the Board announced that it had approved the amendment of the Bonus Plan in order to simplify its administration by bringing the calculation of the bonus pool in line with the Company’s financial year end of 31 December and accordingly, the “bonus year-end date” was amended from 30 June to 31 December.
In addition, given the increase in the size of the Company and its team since the Bonus Plan was first introduced in 2015, the team’s consistent outperformance in growing the Company’s NAV and to bring it more in line with typical structures within the venture capital sector in which TMT operates, the Board announced on 25 November 2020 that the Bonus Plan’s bonus pool was increased from 7.5% to 10% of the net increase in the Company’s adjusted NAV, starting from 1 January 2021 until 31 December 2024.
The total amount of bonus accrued for the period ended 31 December 2020 was US$6,086,948.
Update on the continuing effect of COVID-19
In the first half of 2020, when COVID-19 first caused significant uncertainty and volatility in the market, we were pleased to see that the majority of our portfolio companies benefited from the previously adopted pragmatic approach of seeking cost-efficient growth, as opposed to ‘growth at any cost’. This approach allowed them to control their burn rates and cash liquidity levels effectively in those turbulent months. The second half of 2020 was marked by renewed investor interest in the high-growth potential of tech start-ups, which in turn removed liquidity concerns for high-quality, fast growing companies (including many of our investees) and allowed them to return to the more usual “invest for growth” mode.
Our top five portfolio companies (Backblaze, Bolt, Depositphotos, Scentbird and PandaDoc), accounting for approximately 78% of investment portfolio value, are well-established, more mature businesses, with globally diversified revenues, strong cash reserves and tens of thousands of customers. They are operationally nimble, cost conscious companies that have grown rapidly, without undertaking large funding rounds to support expanded cost bases, compared to some of their peers.
Cloud storage provider, Backblaze (www.backblaze.com), continued to perform well, with over 450,000 customers globally. Backblaze offers easy-to-use, affordable cloud storage that is well positioned for growth in the current cost-saving environment. While there is still some uncertainty given the continuing COVID-19 pandemic, Backblaze achieved double digit growth and strong continued momentum in 2020.
Bolt (www.bolt.eu), a leading international ride-hailing and food delivery company, is active in over 200 cities globally. Whilst turnover for the core ride-hailing business had been negatively affected as a result of COVID-19 at the beginning of the pandemic in Q2 of 2020, Bolt’s track record as a highly competitive and cost-efficient ride-hailing operator allowed it to not only survive the most difficult COVID-19 lockdown months without laying off a single employee, but also launch new services and raise (in May 2020) €100 million in additional capital through a convertible note. Since the easing of strict lockdown restrictions in most of Bolt’s key markets, its turnover and revenue have rapidly increased. Bolt resumed its geographic and product expansion and, in December 2020, successfully raised a further €150 million in an equity finance round led by D1 Capital Partners.
Stock photo and video marketplace Depositphotos (www.depositphotos.com) entered the recent turbulent period operationally profitable, with sizeable cash reserves and a well-diversified international customer base. As estimated in our 2019 Annual Report, the short-term impact on Depositphotos proved neutral.
Perfume, wellness and beauty product subscription service, Scentbird (www.scentbird.com), entered the COVID-19 period operationally profitable, with sizeable cash reserves. Contrary to our more pessimistic expectations in our 2019 Annual Report, the short-term impact on Scentbird’s revenues proved positive. Scentbird continued to grow its annualised revenue at double digits, and its subscriber base exceeded 400,000 (from “over 330,000” as of 31 December 2019).
Proposal automation and contract management software provider, PandaDoc (www.pandadoc.com), has recently become TMT’s fifth largest portfolio holding, following completion of a recent new equity round which resulted in a revaluation of TMT’s investment to US$3.6 million. Post COVID-19, its solutions, which enable sales teams to remotely manage their selling processes “from propose to close”, have become even more relevant, and the company continues to grow.
The remainder of our portfolio consists of over 30 companies and is diversified across our five core investment sectors: Big Data/Cloud, SaaS (software-as-a-service), Marketplaces, EdTech and E-commerce. While a limited number of our portfolio companies were significantly exposed to sectors immediately affected by COVID-19 related disruptions and faced challenges (with Le Tote being the only sizeable example), many of our portfolio companies have experienced a notable increase in demand for their products. The further effect of COVID-19’s implications on our portfolio companies will depend on how the situation develops in the coming months.
TMT’s own team has always been internationally based and is therefore used to working remotely. As a result, there has been no disruption to our operations.
Outlook
Throughout the recent crisis, and especially following the gradual removal of strict COVID-19-related restrictions in many markets, the venture capital industry has continued to actively invest in fast-growing, cost-conscious tech companies. TMT has now invested in over 65 companies since its admission to AIM in December 2010 and has a diversified portfolio of over 35 investments, focused primarily on Big Data/Cloud, SaaS, Marketplaces, EdTech and E-commerce. TMT’s strategy remains to be very selective in identifying new investment opportunities, while seeking to capitalise on the new and existing investment themes continuously developing in the technology space.
Alexander Selegenev
Executive Director
24 March 2021
About Us
TMT Investments PLC invests in high-growth technology companies across a number of core specialist sectors and has a significant number of Silicon Valley investments in its portfolio. Founded in 2010, TMT has invested in over 65 companies to date and has net assets of US$178 million as of 31 December 2020. 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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