Tern PLC Reports 64% Loss Improvement in H1 2025 Interim Results

Tern PLC H1 2025 interim results: 64% loss improvement, tighter costs, careful cash

Tern PLC’s half-year numbers show meaningful progress on cost discipline and reported losses, while underscoring a tight cash position and the need for continued shareholder support. The headline: a 64% improvement in the loss for the period, helped by a further 7% reduction in administration costs. Portfolio valuations dipped modestly, largely due to currency movements.

Alongside two fundraises during the period and another immediately after, Tern also made its first new investment in three years, adding Sure Ventures plc to broaden exposure across AI, AR/VR and IoT. The Board is clear that 2025 remains about disciplined cash management, meeting commitments, and supporting the portfolio to create long-term value.

Key numbers from Tern’s H1 2025

What drove the half-year: cost control, FX headwinds, and new diversification

The improved loss performance is real and welcome. Operating costs remain tightly managed and fee income picked up modestly, helped by new director services at Purple Transform. However, net assets eased to £10.3 million, with a £0.4 million fair value reduction driven mainly by foreign exchange on Device Authority (USD) and Wyld Networks (SEK).

Cash is the key watch-out. Cash and cash equivalents were £74,000 at 30 June 2025, so the post-period £642,486 raise is important. Management reiterates a disciplined approach to liquidity and emphasises the priority of meeting investment and loan commitments, noting that default would be a significant risk to shareholder value.

Going concern and shareholder signals you should not ignore

The Board has prepared the accounts on a going concern basis but flags a material uncertainty. Continuation depends on executing one or more of the following: further equity raises, realising assets, additional debt, or potential investment income (including from Sure Ventures plc). None of these are guaranteed. The AGM’s rejection of disapplying pre-emption rights also matters – it limits flexibility on future placings, though the Board is clearly seeking alignment with shareholders.

Portfolio performance: mixed macro, specific product wins

Across Tern’s key portfolio companies, aggregated annual recurring revenue (ARR) decreased 17% year-on-year, reflecting tighter enterprise budgets and lengthening decision cycles. Headcount fell 15% across the portfolio as companies preserved cash. ARR per employee slipped 2%, which – while a step back – still hints at decent underlying productivity given the conditions.

Device Authority – product momentum, valuation trimmed by FX

Valuation: £4.0 million (down from £4.3 million). Holding: 25.3%.

Device Authority delivered a busy half: launching KeyScaler Discovery, integrating KeyScaler AI with Microsoft Copilot, releasing KeyScaler 2025, and deepening its Microsoft and CyberArk collaboration. Strategically, that’s strong positioning in IoT and OT security, with a clear nod to NIST and Zero Trust frameworks. The valuation fall was currency-driven rather than performance-led, which is a notable distinction.

FundamentalVR – award recognition underpins healthcare training strategy

Valuation: £3.6 million (unchanged). Holding: 10.3%.

Winning Best Healthcare & Wellness Solution at the 2025 Auggie Awards is valuable validation in the crowded XR space. For hospitals and training bodies seeking scalable simulation, this sort of third-party recognition can shorten sales cycles and open doors with partners.

Talking Medicines – AI positioning and US push

Valuation: £2.1 million (stable, with nominal uplift from accrued CLN interest). Holding: 23.8% including £0.3 million CLNs.

Drug-GPT continues to sharpen the product edge, turning unstructured HCP conversations into actionable analytics. The Silicon Valley residency under Scottish Enterprise should help US traction. It is a sensible blend of product and go-to-market progress.

SVV2 – deployment cadence and AI-centric pipeline

Valuation: £0.8 million (up from £0.7 million). Holding: 6.1%.

SVV2 added Inephany, Capably.AI and Literal Labs, with a follow-on in Captur and support for Purple Transform, plus an investment in Elelem. The fund aims to reach 19 companies by year-end and c.30 over the five-year period. This is about broad exposure to early-stage UK tech in AI, immersive and cybersecurity – consistent with government policy focus areas.

Sure Ventures plc – new holding, portfolio catalysts emerging

Valuation: £0.2 million. Holding: 2.7%.

By investing £0.175 million in January, Tern gained indirect exposure to a complementary set of high-growth companies at a discount to NAV. Notable events include Infinite Reality’s reported $12.25 billion indicative valuation after a $3 billion raise and SVV1’s exit of Getvisibility at 4.5x cash return. While no dividend was declared for the year to 31 March 2025, the board of SV PLC flagged potential one-off special dividends when liquidity events allow and is exploring options for iR liquidity.

DiffusionData and Wyld Networks – small positions, diverging moves

DiffusionData: valuation down to £0.01 million after an April fundraise reset. Wyld Networks: valuation up to £0.007 million on price and FX, with a fully subscribed July 2025 rights issue post-period and a new US patent for its Fusion Platform.

Capital movements and commitments: what changed in H1

• Two raises in the Period: ~£0.2 million placing (February) and ~£0.3 million underwritten Open Offer (May), with the latter significantly oversubscribed.
• Invested £0.16 million into SVV2 and £0.17 million into Sure Ventures plc.
• Short-term loan of £170,000 at 12% due September 2025; a separate £45,000 bridging loan in July was repaid on 1 August 2025.
• Post-period, £642,486 raised via an Open Offer (31 July 2025).

My take: the good, the bad, and what to watch

Positives

• Loss improved 64% with administration costs down again – the cost discipline is real.
• Portfolio progress at Device Authority, FundamentalVR and Talking Medicines – tangible product and market moves, not just slideware.
• Strategic diversification via Sure Ventures plc and ongoing commitment to SVV2 gives Tern broader exposure to AI, AR/VR and cybersecurity.
• Post-period fundraise meaningfully bolsters liquidity.

Negatives and risks

• Cash at 30 June was £74,000 – extremely tight before the July raise. Liquidity remains the central risk factor.
• Going concern carries material uncertainty and depends on future raises, disposals, debt or investment income.
• Portfolio ARR fell 17% year-on-year – macro pressure is still biting enterprise tech budgets.
• NAV per share dipped to 1.8p, and FX volatility can keep nudging valuations around.
• Pre-emption disapplication not passed at the AGM, potentially limiting future fundraising flexibility.

Why this matters for shareholders

Tern is leaning into what it can control – costs, disciplined capital allocation, and portfolio support – while acknowledging the funding reality. The broadened exposure through SVV2 and Sure Ventures offers more shots on goal in areas of strong structural growth. But the investment case still pivots on liquidity management and portfolio monetisation. Execution on follow-on funding, asset realisations, or income events will be the swing factors for NAV and sentiment.

What to watch in H2 2025

• Cash runway post the July raise and any further financing steps.
• Commercial traction and potential revenue inflection at Device Authority, FundamentalVR and Talking Medicines.
• SVV2 deployment pace and any notable portfolio milestones or exits.
• Developments at Sure Ventures plc, especially any liquidity events and special dividend decisions.
• Resolution of the £170,000 short-term loan by September 2025.

Bottom line: the first half shows disciplined progress and a welcome shrink in losses, but the funding and macro backdrop means Tern must keep threading the needle. If the team can maintain liquidity, support portfolio wins, and capture upside from SVV2 and Sure Ventures, the path to creating long-term value remains intact – but it requires careful execution from here.