Company Prioritises Value Realisation Over New Investments
Tern plc (LSE:TERN) has released its audited results for 2025 and announced a General Meeting scheduled for 9 July 2026, where shareholders will be asked to approve the annual accounts, reappoint the company’s auditors and vote on the directors’ remuneration report.
The investment company said its primary focus is now on generating returns from its existing portfolio rather than pursuing significant new investments. Management believes this approach better reflects current venture capital market conditions and aligns capital allocation decisions more closely with shareholder interests.
The strategy marks a shift towards portfolio realisation as several investments mature and move closer to potential liquidity events.
More Conservative Valuation Approach Reduces Reported Portfolio Value
Tern disclosed that it has adopted a revised methodology for valuing its portfolio holdings, resulting in a lower reported fair value for its investments.
The updated approach places greater emphasis on Tern’s specific ownership positions and takes account of factors such as preference share structures, bridge financing arrangements and other elements that can affect the value ultimately attributable to ordinary shareholders.
Management stressed that the valuation adjustment reflects a more conservative accounting approach rather than a deterioration in the underlying operational progress of its portfolio companies.
No Exits Completed During 2025 or 2026 to Date
The company noted that no portfolio exits were completed during 2025 and that no disposals have been achieved so far in 2026.
While the absence of exits has delayed value crystallisation for shareholders, management remains focused on positioning portfolio companies for future strategic transactions and liquidity events.
The board reiterated its intention to return capital to shareholders following any material realisations achieved in the future.
Core Portfolio Companies Continue to Make Progress
Despite the reduction in reported portfolio value, Tern highlighted ongoing commercial progress across several of its key holdings.
Management pointed to growing market traction at Device Authority, which operates in the Internet of Things security sector, as well as continued development at Talking Medicines, which applies artificial intelligence and data analytics to healthcare and pharmaceutical markets.
The company believes these businesses, along with other core investments, continue to offer significant long-term value creation potential.
Investor Communication Strategy Aims to Narrow Valuation Discount
The board acknowledged the persistent gap between Tern’s market valuation and the underlying value of its investment portfolio.
As part of its strategy, management intends to increase engagement with investors and improve communication around portfolio developments and valuation drivers.
The company believes greater transparency may help narrow the discount at which its shares trade relative to net asset value.
Outlook Reflects Ongoing Challenges and Long-Term Potential
Tern’s outlook remains constrained by weak financial performance, including lower revenue, significant losses and negative operating and free cash flow.
Technical indicators continue to suggest a prolonged period of share price weakness, although some measures indicate early signs of stabilisation following an extended decline.
Valuation remains difficult to assess using conventional earnings-based metrics due to ongoing losses and the absence of a dividend.
However, management maintains confidence in the long-term prospects of its portfolio and believes future exits could unlock substantial shareholder value.
More about Tern
Tern plc is an AIM-listed investment company focused on identifying, supporting and developing technology businesses operating in the Internet of Things, artificial intelligence, machine learning and data analytics sectors.
The company takes active minority positions in early-stage and growth-stage businesses, providing strategic support alongside capital. Its portfolio includes investments in companies such as Device Authority, FundamentalVR and Talking Medicines, with exposure to markets including healthcare, industrial technology, automotive systems and cybersecurity.
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