Interim / Quarterly Report • Sep 17, 2018
Interim / Quarterly Report
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Dissemination of a RegulatoryAnnouncement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
17 September 2018
Tern Plc ("Tern" or the "Company"), the AIM quoted investment company specialising in the Internet of Things ("IoT") market, is pleased to announce its interim results for the six months to 30 June 2018.
| 30 June 2018 | 30 June 2017 | 31 December 2017 | |
|---|---|---|---|
| £ | £ | £ | |
| Netassets | 13,942,757 | 10,787,236 | 10,580,802 |
| Currentassets | 2,671,784 | 429,729 | 850,675 |
| Total assets | 14,221,704 | 11,031,059 | 11,069,300 |
| Loss for the period | (221,252) | (469,116) | (1,689,555) |
"I am pleased thatTern has made posi6ve progress in terms of posi6oning our companyasa leading investor in technology companies specialising in the IoTsector in the UK. Our recent ac6vi6es, which include strengthening our balance sheet and makinginvestments into new and poten6ally high-growth companiesataFrac6ve valua6ons, place us in a more solid posi6on for the full yearand beyond.
"Tern's hands-on approach, consulta6ve support and excellent industry network represents an appealing proposi6on to the IoT companies in which we seek to invest. As a result, we believe that we are on track to meet our goal of havinga dozen companies in our por9olio by the 2019 year-end, as we outlined at our Annual General Mee6ng (AGM) in April this year. The increased turnover reported by our por9olio companies reflect their posi6ve progressand we are confident that we can con6nue to support this type of success in the future.
"At this point of our company's development, we believe we have the components in place fora scalable founda6on that will drive sustainable growth for our shareholders, brought about by our management'syears of experience in growing technology businesses; a unique approach in finding opportuni6es;and afocus on the dynamicIoTsector. Lookingforward, over the next six months, we are planning to expand our team, by addingaddi6onal technology exper6se to support the growing por9olio."
Note 1: Por9olio companygrowth excludes Seal and Push, in which Tern has a <1% holdingand minimal influence.
| Enquiries: | |
|---|---|
| Tern Plc AlbertSisto/Sarah Payne |
via Redleaf |
| Allenby Capital Limited (Nomad and joint broker) David Worlidge/Alex Brearley |
Tel: 0203 328 5656 |
| Whitman Howard (Joint broker) Nick Lovering/ChristopherFurness |
Tel: 020 7659 1234 |
During the first six months of 2018, Tern focused on building a por9olio of exci6ng IoT companies in the UK that the Board believes will be aFrac6ve candidates foracquisi6on or IPO, with valua6ons between £1million to £10million.
Our focus remains on delivering consistent investee company turnover growth; growing and expanding the exis6ng investment business, as measured by investee company employee numbergrowth;and focusing on year-on-year netassetgrowth.
With this in mind, we were pleased to have added an investment in an addi6onal company to our por9olio during the period. Accordingly, the absolute net asset value of our holdings increased by 32% during the period. Notably, since our 2017 half year end, we have increased the number of por9olio companies from four to six. Our stated objec6ve is to hold twelve investments by 31 December 2019 within a synergis6c por9olio and this con6nues to be afocus of the Company.
Whilstacquiringinvestments has been one focus of the Board, it hasalso worked on suppor6ng our por9olio companiesand developing strategic rela6onshipsamong our por9olio companies, with the aim of successfully exi6ng investments within a 6meframe of 36 - 60 months aNer our ini6al investment. With this in mind, we delivered follow-on investmentand supportamoun6ngto £0.7m duringthe period. In par6cular, we are pleased by how Device Authority con6nues to expand its important market ecosystem and its strategic alliances and partnershipsagainst our stated objec6ves outlined in the 2017 annual report. We are also pleased to see the rapid progressFundamentalVR has made in conver6ng to a SaaSrevenue model and expandinginto the important North America market since receiving our £0.8m investment.
Key to ourvalue crea6on is the increase in turnover delivered by our por9olio companies. Pleasingly, the year-over-yeargrowth in the aggregate revenue of our principal por9olio companies 1 increased by 126% from calendar year 2016 to calendar year 2017 and we expect the growth in the aggregate revenue of our investee companies from calendar year 2017 to calendar year 2018 to be of the order of 12%. This growth would increase to 50% if the reduc6on in turnover from flexiOPS is removed, reflec6ng an increase in customer contracts secured and delivered. flexiOPS received the last of the EU grants in the first six months of 2018 and is now focused on growing and securing contracts for Wyld Technologies. Another important indicator in the growth and success of our principal por9olio companies 1 :year-over-year employee headcount growth, increased by 55% from calendaryear 2016 to calendaryear 2017,and 12% in the six months to June 2018, highligh6ngacon6nuing growth in the por9olio overall.
The period also saw us build up our balance sheet resources. Duringthe first six months of 2018, Tern re6red the conver6ble loan notes obtained at the end 2017. We subsequently raised £3.1 million to improve our deployment capabili6es. Our strategy was further developed in July 2018, when we added £2.9million to our balance sheet to bolster our financial posi6on for upcominginvestment opportuni6es and to provide addi6onal finance to develop the businesses of the exis6ng por9olio companies. While our net asset value per share decreased by 16% duringthe period, primarily due to our fundingac6vi6es in late 2017 and early 2018, during the laFer half of this period and looking forward into the second half of the year, fundingac6vi6es have been netassetvalue per share genera6ve.
With the world becoming more connected than ever, we believe that 2018/19 will be an inflec6on point for the IoTsector. The IoT sector will be facinggreater investment and more widespread adop6on of IoT applica6ons. An increase in IoT devices encompasses a wide range of physical devices with embedded electronics, soNware, sensors or actuators, with many of them allowing objects to be sensed or controlled remotely across networks. As a result, businesses are becoming the top adopters of IoT solu6ons, mo6vated by lower opera6ng costs and increased produc6vity. IoT devices play acrucial role in the management of ourglobal cri6cal infrastructure and furtheradop6on in cri6cal infrastructure is expected to increase rapidly. For example,a Business Intelligencereport "The IOTForecast Book 2018" suggests that by 2023:
The Board believes thatTern is building a strong por9olio in industries that support companies within several of these cri6cal infrastructure sectors with ourcompaniesaddressingthose segments of these markets where u6lisa6on and adop6on isalready occurring.
Note 1: Por9olio companygrowth excludes Seal and Push, in which Tern has a <1% holdingand minimal influence
Device Authority isan award winning, industry-recognised, interna6onal business deliveringinnova6ons in IoTsecurity with offices in the UK and Silicon Valley.Since our ini6al investment in CryptosoN Limited over three years ago, Device Authority has expanded its product por9olio, world class team and ecosystem of well-established business partners.Tern today isa 56.8% shareholder in Device Authority.
We were disappointed that the original objec6ves for 2017 were delayed by product integra6on issues, delays in customer implementa6on and restructuring. During the first six months of 2018, Device Authority con6nued to build on a strong base of strategic partners, includingSyroCon Consul6ngand Eon6, Larsen and Toubro Infotech ('LTI') and Gemalto. Furthermore, itannounced support for the MicrosoN Azure IoT Hub. Device Authorityalso con6nued to be recognised asacri6cal force in the global IoTsecurity market.For example,gainingrecogni6on as a 2018 Emerging Star in the IOT Security Market b y Quadrant Knowledge Solu6ons. The Board is pleased with Device Authority's con6nued focus and is encouraged by the recent pipeline development for KeyScaler.
Followingthe announcement of astrategic partnership with Thales, Device Authorityand Thalesannounced the launch of their joint blueprint to secure the connected health industry. This IoT market is a strategic focus for Device Authority as healthcare forecasts predictgrowth to reach \$612bn by 2024,accordingto areport by Grand View Research, Inc published in 2016.
Duringthe period, Device Authorityannounced the launch of KeyScaler As A Service, providingIoTSecurity in the Cloud. This service enables IoT service providers and manufacturers to offer their customers the best security for IoT devices without the infrastructure or runningcosts associated with on-premise environments, expandingisability to make market for its pla9orm by simplifyingcustomer deployment op6ons.
Device Authority's fundraising ac6vi6es with US Capital Partners con6nue in the US. A fundraise has not yet been completed but interested
par6es con6nue to meet with Device Authority. In the mean6me, the Device Authority shareholders have supported the con6nued progress of the company by providing a total of \$2.9 million in the form of conver6ble loan notes since November 2017, \$1.7m of this provided by Tern (\$0.5m post 30 June 2018).
As at 30 June 2018, the value of Tern's shareholding in Device Authority has increased to £9.9million (31 December 2017: £9.7 million) as a result of favourable exchange rate movements.
The annual reportand accounts for Device Authority for the year ended 31 December 2017 are expected to be released in September 2018.
Tern invested £0.8m in FundamentalVR in May 2018 fora 18.3% holding. FundamentalVR provides Tern with exposure to the rapidly growing medical simula6on market using low cost open system IoT devices, a market an6cipated to grow to \$2.3bn by 2021 according to a 2016 report by MarketsandMarketsand providesa basis for developing our IoTanaly6cs pillar of the Tern investment strategy.
FundamentalVR has already begun to use the funds received from Tern to further refine its SaaS delivery model and expand into the US market. Americaisan important strategic market for the company and over the next six monthsFundamentalVR will focus on the US medical industry as the next stage of theirambi6on of buildinga world leadingSaaS based immersive surgical simula6on and datagathering pla9orm.
It is important to note that the decrease in turnoveratFundamentalVR from £1m in the year ended 31 December 2016 to £0.3m in the year ended 31 December 2017 reflects the beginning of the change in its business model from one of bespoke sales to that of a growingsubscrip6on-based recurringrevenue model which is securingand growingthe value of the business.
flexiOPS,a wholly-owned Tern investment, completed its historic por9olio ofEU funded research and development cloud projects during 2018. It has now re-focused on suppor6ngthe networking element of our IoT enablement strategy by aiding the growth and development of the Wyld Technology Limited ("Wyld Technology") ad-hocmesh networking offeringfollowingtheiracquisi6on in late 2017.
During the first six months of 2018, Wyld Technology has focused on building out its development team and product pla9orm, and now has a product roadmap that is in line with current market requirementsviaits ability to deliverand collect cri6cal data via its ad-hoc mesh networking pla9orm in the all cri6cal "last mile:".
Mesh networks enable data to be transmiFed from different devices simultaneously. This topology can withstand high trafficand even if one of the components fail,an alterna6ve isalwaysavailable, ensuring datatransfer is notaffected. As mesh network topology is self-forming and selfhealingit is more efficientat crea6ngrobustad-hoc networks; providingassured quality to ensure con6nuity of service.
InVMA, a company in which Tern has a 50% holding, delivers IoTapplica6ons, based on the industry leading PTC/Thingworx development pla9orm that deliver real business value and compe66ve advantage to its customers. Its founding team combines years of world-class industrial design exper6se with the Thingworx pla9orm to create state of the art IoT systemsand products in the medical and industrial IoT market segments.
Since our investment in late 2017, InVMA, as part of its business transforma6on, has launched AssetMinder, a product which monitors and manages datafrom all types of sensors that providesalerts when pre-determined thresholds or rules have been met or broken. In the first half of 2018, InVMA has focused on genera6ng AssetMinder product sales to drive value crea6on. InVMA also announced the integra6on of InVMA's AssetMinder with Device Authority's KeyScaler which is an important proof point of Tern's influence in integra6ngthe products and technologies of its por9olio companies.
Real-time monitoring's many benefitsar e fuelling IoTgrowth and 69% of manufacturersare relying on real-6me monitoring to increase the accuracy of tracking produc6on 6me, down6me, total parts created, rejects and parts remaining to be produced, according to a 2018 report by IQMS ManufacturingSoNware.
Accordingto a report by Grand View Research published in 2016, the global industrial IoT market is expected to reach US\$933.62 billion by 2025 from \$109.28bn in 2016. Growth in this segment can be aFributed to the developing cloud compu6ng market, increasing government ini6a6ves for suppor6ngsustainable smart factoriesgrowth,and rising number of connected devices thatgenerate alarge amount of data. InVMA have also secured new strategic partnerships and contract wins in key segments of this market already, including the announcement of a contract with ESAB, part of the Colfax Group, to support the architecture of a new ESAB WorldCloud pla9orm which will be powered my MicrosoN Azure IOT and PTC'sThingWorx pla9orm.
The annual reportand accounts for InVMA for the year ended 31 December 2017 are expected to be released in September 2018.
Duringthe first half of 2018,Seal SoNware,acompany in which Tern holds less than 1%,aleader in contract discoveryand analy6cs, has con6nued to grow and develop its business with numerousawards, new contractsand strategic partnershipsannounced.Specifically:
We have been informed by management that Push Technology,acompany in which Tern holds less than 1%, con6nues on its path to profitability followinga 2017 strategicrealignment from a product focused company to acustomercentriccompany outwardly focused on expandinginto new markets. This includesareduc6on in the sales cycle and a move to work more efficientlyand control costs.
The annual reportand accounts for Push Technology for the year ended 31 December 2017 are expected to be released in September 2018.
Duringthe six months ended 30 June 2018, the Board focused on strengtheningthe balance sheet to support the exis6ng por9olio companiesand to enable investments in new exci6ng growth IoT companies. As a result, the total assets of Tern increased to £14.2 million at 30 June 2018, compared to £11.1million at 31 December 2017. The total assetsat 30 June 2018 included acash balance of £1.5m and net currentassets of £2.4m, of which £0.9m related to the conver6ble loans issued to Device Authority during 2017 and 2018.
The improved loss for the period reflects a close focus on cost management, with monthlyadministra6ve costs over the period remaining comparable to the monthly burn rate in the year ended 31 December 2017. A small increase in the fair value of the investment por9olio was recognised, reflec6ng a posi6ve exchange rate variance for Device Authority Limited (£0.2m) and a 100% increase in the valua6on of Seal SoNware Group Limited followingarecent fundraise.
The net asset value per share fell slightly during the period, caused by the conversion of the loan note in 2017 with shares issued in 2018 and a furtherconversion in January 2018.
A placing of 11,192,307 ordinary shares at an issue price of 26 pence raisinggross proceeds of £2.9m was completed in July 2018, which has strengthened the cash and currentasset posi6on of the Company. The proceeds place the Company in a stronger financial posi6on for upcoming investment nego6a6onsand also providesaddi6onal finance to develop the exis6ng por9olio company businesses.
The Board remains commiFed to increasing our investment in the IoT market in the UK, focusing on adding new technology companies to the por9olio, including UK companies delivering pla9orms that include AI and machine learning for IoT, while con6nuously suppor6ng and growing the exis6ng por9olio. Addingan addi6onal technology strong director to the Tern team will help support thisaim.
We have set for ourselves a financial benchmark of achievingan average of 20% year-on-year growth in por9olio value by year end 2019 and at the half year we have achieved a 13% growth in the por9olio and stand well posi6oned to deliver over the full year with significant cash balances remainingto deploy.
By changingthe tradi6onal venture capital model and making our exper6se accessible to a widergroup of companies we believe we are breaking new ground. Our partnership approach offers Tern investors access to exci6ng technology companies which may not otherwise be available to them.The placings of £3.1 million in the first six months of 2018, gives us addi6onal capacity and nego6a6ngstrength and is a valida6on of that model, havingaFracted support from high profile new investors,as well as the strong exis6ngshareholder base.
We feel confident of making further progress duringthe second half of 2018 and look forward to making more announcements about business performance, new developments and improvements for each of our por9olio companies and repor6ng exci6ng new addi6ons to the Tern por9olio.
Finally, I wish to thankall shareholders for their supportand acknowledge the hard work of the all the directorsand ouradvisors.
AlSisto
Chief Execuve Officer
14 September 2018
| Notes | 6months to 30 June 2018 |
6months to 30 June 2017 |
12months to 31 December 2017 |
|
|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Audited) | ||
| £ | £ | £ | ||
| Revenue | 64,245 | 42,639 | 97,940 | |
| Movement in fairvalue of investments | 282,987 | - | (757,705) | |
| Gross Profit/(Loss) | 347,232 | 42,639 | (659,765) | |
| Administra6on costs | (571,952) | (522,105) | (1,030,603) | |
| Opera6ngloss | (224,720) | (479,466) | (1,690,368) | |
| Finance income | 4,376 | 10,484 | 1,020 | |
| Finance costs | (908) | (134) | (207) | |
| Loss before tax | (221,252) | (469,116) | (1,689,555) | |
| Tax | - | - | - | |
| Loss for the period | (221,252) | (469,116) | (1,689,555) | |
| Earnings pershare | 6 | |||
| Basic | (0.1)p | (0.4)p | (1.4)p | |
| Diluted | (0.1)p | (0.4)p | (1.4)p |
| 30 June 2018 (Unaudited) |
30 June 2017 (Unaudited) |
31 December 2017 (Audited) |
||||||
|---|---|---|---|---|---|---|---|---|
| Note | £ | £ | £ | |||||
| Assets | ||||||||
| Investments held for trading | 11,549,920 | 10,601,330 | 10,218,625 | |||||
| Loans to investee companies | - | - | - | |||||
| Non-current assets | 11,549,920 | 10,601,330 | 10,218,625 | |||||
| Current assets | ||||||||
| Trade and other receivables | 1,133,132 | 93,763 | 576,849 | |||||
| Cash and cash equivalents | 1,538,652 | 335,966 | 273,826 | |||||
| 2,671,784 | 429,729 | 850,675 | ||||||
| 14,221,704 | 11,031,059 | 11,069,300 | ||||||
| Total assets | ||||||||
| Equity a <ributable company's="" equity="" holders<="" td="" the="" to=""> | ||||||||
| Share capital | 7 | 1,346,665 | 1,325,614 | 1,330,225 | ||||
| Share premium | 16,833,172 | 12,420,593 | 13,237,362 | |||||
| Loan note equity reserve | - | 17,479 | 123,482 | |||||
| Share op6on and warrant reserve | - | 1,126,581 | 175,982 | |||||
| Retained earnings | (4,237,080) | (4,103,031) | (4,286,249) | |||||
| 13,942,757 | 10,787,236 | 10,580,802 | ||||||
| Current liabili1es | ||||||||
| Trade payables Accrualsand other payables |
34,024 244,923 |
542 168,077 |
47,600 229,564 |
|||||
| 278,947 | 168,619 | 277,164 | ||||||
| Non-current liabili1es | ||||||||
| Borrowings | - | 75,204 | 211,334 | |||||
| Total liabili1es | 278,947 | 243,823 | 488,498 | |||||
| Total equity and liabili1es | 14,221,704 | 11,031,059 | 11,069,300 |
| Loan note | ||||||
|---|---|---|---|---|---|---|
| Share | Share | equity | Op6on and warrant | Retained | Total | |
| capital | premium | reserve | reserve | earnings | equity | |
| £ | £ | £ | £ | £ | £ | |
| Balance at 1 January 2017 | 1,325,270 12,390,310 | 20,650 | 1,088,595 (3,637,086) | 11,187,739 | ||
| Total comprehensive income | - | - | - | - | (469,116) | (469,116) |
| Issue of share capital | 344 | 30,283 | - | - | - | 30,627 |
| Transfer on conversion of conver6ble loan notes | - | - | (3,171) | - | 3,171 | - |
| Share based payment charge | - | - | - | 37,986 | - | 37,986 |
| Balance at 30 June 2017 | 1,325,614 12,420,593 | 17,479 | 1,126,581 (4,103,031) | 10,787,236 | ||
| Total comprehensive income | - | - | - | - | (1,220,439) | (1,220,439) |
| Issue of share capital | 4,611 | 941,925 | - | - | - | 946,536 |
| Issue of conver6ble loan note | - | - | 112,563 | - | - | 112,563 |
| Share and loan issue costs | - | (125,156) | - | - | - | (125,156) |
| Transfer on conversion of conver6ble loan notes | - | - | (6,560) | - | 6,560 | - |
| Transfer of lapsed and exercised warrants | - | - | - | (713,326) | 713,326 | - |
| Transfer of op6on reserve | - | - | - | (199,287) | 199,287 | - |
| Share based payment charge | - | - | - | (37,986) | 118,048 | 80,062 |
| Balance at 31 December 2017 | 1,330,225 13,237,362 | 123,482 | 175,982 (4,286,249) | 10,580,802 | ||
| Total comprehensive income | - | - | - | - | (221,252) | (221,252) |
| Issue of share capital | 16,440 | 3,953,310 | - | - | - | 3,969,750 |
| Share and loan issue costs | - | (357,500) | - | - | - | (357,500) |
| Conversion of conver6ble loan notes | - | - | (123,482) | - | - | (123,482) |
| Transfer of lapsed warrants | - | - | (175,982) | 175,982 | - | |
|---|---|---|---|---|---|---|
| Share based payment charge | - | - | - | - | 94,439 | 94,439 |
| Balance at 30 June 2018 | 1,346,665 16,833,172 | - | - | (4,237,080) | 13,942,757 |
| 6months to 30 June 2018 |
6months to 30 June 2017 |
12months to 31 December 2017 |
||
|---|---|---|---|---|
| (Unaudited) | (Unaudited) | (Audited) | ||
| Note | £ | £ | £ | |
| Cash flows from opera1ng ac1vi1es | ||||
| Net cash used in opera6ons | 8 | (503,436) | (438,760) | (783,866) |
| Purchase of investments | (1,048,309) | - | (375,000) | |
| Loan to investment company | (465,240) | - | (402,436) | |
| Netcash from opera1ng ac1vi1es | (2,016,985) | (438,760) | (1,561,302) | |
| Cash flows from financing ac1vi1es | ||||
| Proceeds on issue of shares | 3,100,000 | - | 603,110 | |
| Proceeds on issue of loan note | 550,000 | - | 550,000 | |
| Share issue expensesand Loan note issue | ||||
| expenses | (357,500) | - | (125,156) | |
| Proceeds from exercise of warrants | - | 2,377 | 34,303 | |
| Proceeds from exercise of op6ons | 8,500 | 9,000 | 9,000 | |
| Repayment of loan stock | (20,000) | - | - | |
| Interest received | 811 | 498 | 1,020 | |
| Netcash from financing ac1vi1es | 3,281,811 | 11,875 | 1,072,277 | |
| Increase/(decrease) in cash and cash | ||||
| equivalents | 1,264,826 | (426,885) | (489,025) | |
| Cash and cash equivalents at beginning of period |
273,826 | 762,851 | 762,851 | |
| Cash and cash equivalents at end of period | 1,538,652 | 335,966 | 273,826 |
Notes to the unaudited interim statement for the 6months ended 30 June 2018
The Company is a public limited company which has its ordinary shares admiFed to trading on the AIMmarket operated by the London Stock Exchange and is incorporated in England and Wales.
The address of its registered office is 27-28 Eastcastle Street, London, W1W 8DH. Items included in the financial statements of the Company are measured in Pound Sterling which is the currency of the primary economic environment in which the en6ty operates. The financial statements are also presented in Pound Sterling which is the Company's presenta6onal currency.
The interim financial statements of Tern Plc have been prepared in accordance with IAS 34, Interim Financial Repor6ng, as adopted by the European Union (EU). They do not include all of the informa6on required for full annual financial statements,and should be read in conjunc6on with Tern plc's audited financial statements for the year ended 31 December 2017. The financial informa6on for the year ended 31 December 2017 set out in this interim report does not cons6tute statutory accounts as defined in Sec6on 434 of the Companies Act 2006. The Company's statutory financial statements for the year ended 31 December 2017 have been filed with the Registrar of Companies and can be found on the website www.ternplc.com. The auditor's report on those financial statements was unqualified and did not contain statements underSec6on 498 (2) orSec6on 498 (3) of the Companies Act 2006.
These interim financial statements have been prepared under the historical cost conven6on and have been approved for issue by the Board of Directors.
The financial statements have been prepared on the goingconcern basis.
The directors have areasonable expecta6on that the Company has adequate resources to con6nue opera6ng for the foreseeable future. For this reason, they con6nue to adopt the goingconcern basis in preparingthe Company's financial statements
Es6matesand judgementsare con6nually evaluated and are based on historical experience and other factors, including expecta6ons of future events thatare believed to be reasonable under the circumstances.
The Company makes es6mates and assump6ons concerning the future. The resul6ng accoun6ng es6mates will, by defini6on, rarely equal the related actual results. The es6mates and assump6ons that have a significant risk of causing a material adjustment to the carrying amounts of
Judgement is required in determining the Company's provision for income tax. Where the final tax outcome is different from the amounts that were ini6ally recorded, the differences will impact the income tax and deferred tax provisions in the period in which such determina6on is made.
The Company holds investments that have been designated as held for trading on ini6al recogni6on. Where prac6cable the Company determines the fairvalue of these financial instruments thatare not quoted (Level 3) usingthe most recent bid price at which atransac6on has been carried out. These techniques are significantly affected by certain key assump6ons, such as market liquidity. Given the nature of the investments being early stage business, othervalua6on methods such as discounted cash flow analysis assess es6mates of future cash flows to derive fairvalue es6mates cannotalways be substan6ated by comparison with independent marketsand, in many cases, may not be capable of beingrealised immediately.
The calcula6on of the fair value of equity-seFled share based awards and the resul6ng charge to the statement of comprehensive income requires assump6ons to be made regarding future events and market condi6ons. These assump6ons include the future vola6lity of the Company's share price.These assump6onsare then applied to arecognised valua6on model in order to calculate the fairvalue of the awards.
The accoun6ng policy for iden6fying segments is based on internal management repor6ng informa6on that is regularly reviewed by the chief opera6ng decision maker, which is iden6fied as the Board of Directors.
In iden6fying its opera6ng segments, management generally follows the Company's service lines which represent the main products and services provided by the Company.The directors believe that the Company's con6nuinginvestment opera6ons comprise one segment.
Earnings per share is calculated by reference to the weighted average shares in issue as follows:
| 6months to | 6months to | 12months to | |
|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 31 December 2017 | |
| Weighted average number of ordinaryshares (see note below): | |||
| Forcalcula6on of basic earnings per share | 199,609,225 | 119,668,783 | 124,586,665 |
| Forcalcula6on of fully diluted earnings per share | 199,609,225 | 119,668,783 | 124,586,665 |
The same number of shares is used for the calcula6on of the diluted loss per share as for the basic loss per share for the six months to 30 June 2018 as the losses in these periods have an an6-dilu6ve effect.
| 30 June 2018 | 30 June 2017 | 31 December 2017 | |
|---|---|---|---|
| Number | Number | Number | |
| Issued and fully paid: | |||
| Ordinary shares of £0.0002 | 225,484,580 | 120,230,677 | 143,286,855 |
| Deferred shares of £29.999 | 42,247 | 42,247 | 42,247 |
| Deferred shares of £0.00099 | 34,545,072 | 34,545,072 | 34,545,072 |
| £ | £ | £ | |
| Issued and fully paid: | |||
| Ordinary shares of £0.0002 | 45,097 | 24,046 | 28,657 |
| Deferred shares of £29.999 | 1,267,368 | 1,267,368 | 1,267,368 |
| Deferred shares of £0.00099 | 34,200 | 34,200 | 34,200 |
| 1,346,665 | 1,325,614 | 1,330,225 |
The deferred shares have negligible value, beingsubject to restric6onsas to vo6ng, par6cipa6on and redemp6on accordingto the new Ar6cles of Associa6on then adopted, norare they quoted on the AIMmarket of the London StockExchange.
| 6months to 30 June 2018 (Unaudited) |
6months to 30 June 2017 (Unaudited) |
12months to 31 Dec 2017 (Audited) |
|
|---|---|---|---|
| £ | £ | £ | |
| Loss for the period | (221,252) | (469,116) | (1,689,555) |
| Adjustments for items not included in cash flow: | |||
| Movement in fairvalue of investments | (282,987) | - | (17,621) |
| Exchange rate loss | - | - | 775,326 |
| Share based payment charge | 94,439 | 37,986 | 118,048 |
| Finance expense | - | - | 207 |
| Finance income | (4,376) | (10,484) | (1,020) |
| Opera6ngcash flows before movements in workingcapital | (414,176) | (441,614) | (814,615) |
|---|---|---|---|
| Adjustments forchanges in workingcapital: | |||
| - (Increase)/decrease in trade and other receivables (excludingloan to investee companies) |
(91,043) | 6,752 | (73,898) |
| - Increase/(decrease) in trade and other payables | 1,783 | (3,898) | 104,647 |
| Cash used in opera6ons | (503,436) | (438,760) | (783,866) |
Copies of this report will be available from the Company's website www.ternplc.com.
Tern will be hos6ngashareholderconference call with accompanying presenta6on slidesat 10:30 AMGMT on Thursday 20 September 2018.
The call will be hosted by the Tern's CEO, Al Sisto, who will discuss the recent results, as well as answering submiFed shareholder ques6ons. To submit a ques6on, please email [email protected] no later than 24 hours before the scheduled call 6me. Unfortunately, the Company will be unable to accept ques6ons submiFed aNer 10:30 AMGMT on 19 September 2018. Al Sisto will aim to answeras many pre-submiFed ques6ons as possible duringthe call.
To par6cipate in this conference call, please enter your local dial-in number and 64 70 02 62 followed by the hash key on any telephone device. Please note thatall lines will be muted with the excep6on of the Tern host.
A presenta6on will be live to accompany the call once it has commenced, and be available to view on desktop, smart phones and tablets during the event, but will require a Cisco WebEx applica6on to be installed on certain devices.
To view the presenta6on on a desktop computer, please click on this link hFps://arkadin-event.webex.com/arkadin-event/onstage/g.php? MTID=ee37e5f410943dfc6deaddf89c24e6577, followed by event password 301 240 867. If you wish to view the presenta6on on a smartphone or tablet, please first download the WebEx applica6on and follow the instruc6ons on the screen, enteringthe password 702 631 511 foraccess.
It isadvisable to check compa6bilityand login 10minutesahead of the call to ensure asmooth experience.
A recording of the call will be available on the Company's website as soon as prac6cable.
ISIN: GB00BFPMV798 Category Code:IR TIDM: TERN LEICode: 2138005F87SODHL9CQ36 Sequence No.: 6028 EQS News ID: 724049
End ofAnnouncementEQS News Service
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