Tern swings to profit after decent first half
Technology-focussed investment company Tern reported net assets of £19.9m at the end of its first half on Monday, rising from £17.48m year-on-year, although its current assets slid to £0.96m from £2.15m.
The AIM-traded firm said its total assets came in at £20.09m at period end on 30 June, up from £17.95m a year earlier, as the company swung to a profit of £0.14m from a loss of £0.62m in the first half of 2019.
Its net asset value per share ended the half-year at 7p, making marginal gains from 6.9p in the six months ended 30 June.
The board said the period-on-period increase in turnover of principal portfolio companies was 62%, which it described as a “particularly pleasing” result given the impact Covid-19 had on the economy during the time.
An exchange rate gain on the revaluation of its investment in Device Authority led to a £0.7m increase in fair value, which delivered the profit for the period.
In the six months ended 30 June 2019, there was no material exchange rate impact.
The year-on-year increase in the number of employees within the principal portfolio companies, which the board sees as a key growth measurement, was 7%.
A sale of Seal Software was achieved during the half-year, which was one of Tern's early minority investments with a holding of less than 1%.
Tern invested £50,000 in Seal Software, and achieved an exit of 99% return on invested capital.
A total of £0.8m was raised during the period, strengthening the firm’s balance sheet and improving its investment options.
Of that, £0.5m was re-invested in existing portfolio companies.
As at 30 June, Tern had £0.8m cash on the balance sheet, which was further increased by a post-balance sheet fundraise of £1.5m in July.
Cost management continued to be a “central focus”, with operating costs for the period similar to the comparable period in 2019.
“We recognise the challenges created by the pandemic, but we also see the opportunities,” said chief executive officer Al Sisto.
“Early in the year, we acted quickly to minimise the potential disruption presented by the Covid-19 virus.#
“First, we acted to protect our employee base, whose safety and wellbeing are critical to our portfolio's success and second, we ensured we and our companies created plans to safeguard and preserve the capital needed to maintain momentum.”
Sisto said that, despite the restrictions established to contain the spread of the virus, the company’s portfolio remained operational and, given its internet-of-things focus, was “well-positioned” to participate in the acceleration towards a contactless digital work and business environment.
“Looking forward we are confident in making at least one new investment during the second half of 2020 and are focused on achieving at least one further syndicated investment event by the end of the first quarter of 2021.
“Our portfolio companies have solidified their leadership positions during the first six months of the year and we at Tern are aggressively seeking the very best internet-of-things technology companies which can provide compelling solutions to the healthcare and industrial sectors in order to grow our net asset value per share.”
At 0940 BST, shares in Tern were down 8.13% at 7.35p.