31 March 2020
TMT INVESTMENTS PLC
("TMT" or the "Company")
Update re COVID-19 and Annual Accounts
TMT Investments PLC (AIM: TMT.L), the venture capital company investing in high-growth technology companies, today provides the following business update in light of COVID-19 as well as an update on the timing of its final results for the year ended 31 December 2019.
In respect of COVID-19, TMT confirms:
· No disruption to the Company's activities;
· Strong balance sheet with cash reserves of approximately US$10.7 million and no financial debt;
· Increased engagement with the Company's portfolio companies to assess impact of COVID-19 and providing advice and support where needed;
· Majority of TMT's portfolio companies are well positioned to weather the impact of COVID-19; and
· Selective investment approach given COVID-19, will likely mean no significant new investments in the coming months.
TMT's own team has always been internationally based and are therefore used to working remotely. As a result, there has not been any disruption to our operations.
Our top five portfolio companies (Bolt, Backblaze, Depositphotos, Pipedrive and Scentbird), accounting for approximately 75% of the Company's NAV, 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, which TMT believes should therefore enable them to better adapt to the current environment. As technology-driven companies, their staff are also used to working remotely.
Bolt is active in over 150 cities globally. Whilst turnover for the core ride-hailing business has been negatively affected as a result of COVID-19, the drop in variable costs is resulting in lower cash burn rates for Bolt. On 26 March 2020, Bolt announced the launch of its Bolt Business Delivery service. This service can be used by all kinds of businesses, from restaurants and supermarkets to florists, with same-day or even same-hour B2C delivery. Although this was not in direct response to COVID-19, the development underlines Bolt's ability to scale up and make best use of its existing infrastructure and resources, which is a feature that we always seek to identify as one of our key investment criteria. In light of COVID-19, Bolt will be refining and expanding its delivery service to capitalise on the opportunities created.
Backblaze is operationally profitable, with significant cash reserves and over 600,000 customers globally. Backblaze offers a low-cost cloud storage product that is well positioned for growth in the current cost saving environment.
Depositphotos entered this period operationally profitable, with sizeable cash reserves and a well-diversified international customer base. TMT believes that the short-term impact on Depositphotos' revenues is likely to be neutral with the longer-term outlook potentially negative if the COVID-19 effect deepens.
Pipedrive is operationally profitable, with very significant cash reserves and a well-diversified customer base of over 90,000 companies worldwide. TMT believes that the short-term impact on Pipedrive's revenues is likely to be neutral.
Scentbird is currently operationally profitable, with sizeable cash reserves. TMT believes that the short-term impact on Scentbird's revenues is likely to be neutral with the longer-term outlook potentially negative if the COVID-19 effect deepens.
The remainder of our portfolio consists of over 25 companies and is diversified across our four core investment sectors: Big Data/Cloud, SaaS (software-as-a-service), Marketplaces and E-commerce. While some of the portfolio companies most exposed to sectors immediately affected (such as event management software company Attendify and fashion rental platform Le Tote) will have to face some important and potentially serious challenges, a notable number of our portfolio companies (such as remote learning company MEL Science and game coaching service Legionfarm) have experienced an increase in demand for their products. The effect on other portfolio companies is therefore mixed, and a lot will depend on how the situation develops in the coming months.
As previously noted, even before the recent negative developments caused by COVID-19 and oil price volatility, the venture capital community was becoming more focused on start-ups' ability to achieve underlying profitability, or at least to control the cost of their growth. The 'growth at any cost' mentality that had often prevailed among start-ups and venture capital investors, was gradually being replaced with a more pragmatic approach of seeking to achieve more cost-efficient growth. As this balanced approach has always been one of TMT's key selection criteria, we are pleased to see that the majority of our portfolio companies are seeing the fruits of having adopted this approach early on. Especially in turbulent times like these, this approach now allows them to efficiently control their burn rates and cash liquidity levels.
A more detailed update on COVID-19 will be provided in the Company's final results for the year 2019, which were originally planned to be announced in the week of 30 March 2020, but will now be delayed due to the availability of some of our professional advisers as a result of COVID-19.
Alexander Selegenev, Executive Director of TMT Investments PLC, said: "TMT has now invested in over 50 companies since its admission to AIM in December 2010 and has a diversified portfolio of over 30 investments, focused primarily on Big Data/Cloud, SaaS, Marketplaces and E-commerce. With a strong cash balance, TMT's current strategy is to be extremely selective in identifying any new investment opportunities, and we do not expect to deploy any significant funds towards new investments in the next few months."
This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information contact:
TMT Investments PLC Alexander Selegenev Executive Director www.tmtinvestments.com |
+44 (0)1534 281 800 (Computershare - Company Secretary) [email protected] |
Strand Hanson Limited (Nominated Adviser) Richard Tulloch / James Bellman |
+44 (0)20 7409 3494 |
Hybridan LLP (Broker) Claire Louise Noyce |
+44 (0)20 3764 2341 |
Kinlan Communications David Hothersall |
+44 (0)20 7638 3435 [email protected] |
About TMT Investments PLC
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 50 companies to date and has net assets of US$107m as of 30 June 2019. 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.
