Half Yearly Report

RNS Number : 8185K

TMT Investments PLC

28 August 2012

 

28 August 2012

TMT INVESTMENTS PLC

("TMT" or the "Company")

Half year report for the six months to 30 June 2012

EXECUTIVE DIRECTOR'S STATEMENT

In the first half of 2012, TMT Investments PLC ("TMT" or the "Company") continued executing its strategy of identifying promising investment opportunities in the Technology, Media and Telecommunications ("TMT") sector. 

During the period, the Company invested US$4.5 million across 6 companies.  In May 2012, two of our portfolio companies had revaluation events.  The One Page Company Inc. raised new equity capital, which triggered the conversion of TMT's convertible note into The One Page Company's equity at a 20% discount to the share price applicable to the equity fundraising and therefore resulted in a 25% increase in the fair value of TMT's investment in the One Page Company, Inc.  Gild, Inc. also raised additional equity capital, although at a discount to the equity valuation at which TMT originally invested in December 2011.  This resulted in a notable reduction in the fair value of TMT's investment in Gild, Inc.

On the corporate front, in June 2012 the Company restructured its management team by appointing German Kaplun and Alexander Morgulchik, who had previously been acting as Consultants to the Company, as Head of Strategy and Head of Business Development respectively.  In addition, Artyom Inyutin was appointed as Head of Investments.  Since his appointment, Mr. Inyutin has acquired shares in the Company representing 5.28% of the Company's issued equity capital.

Since 30 June 2012, the Company has made three investments: US$2.5 million in Backblaze, Inc., US$325,000 in Pipedrive, Inc., and US$250,000 in UsingMiles, Inc.

TMT has no outstanding debt and with approximately US$10 million in cash reserves, the Company continues to be well placed to capitalise on the investment opportunities available in the software applications, digital media and internet sectors.

We look forward to updating our shareholders on the Company's progress in the near future.

Alexander Selegenev

Executive Director

27 August 2012

TMT Investments Plc Mr. Alexander Selegenev www.tmtinvestments.com	[phone] [e-mail]
ZAI Corporate Finance Ltd. NOMAD and Broker Marc Cramsie/Irina Lomova	[phone]
Kinlan Communications David Hothersall	Tel. [phone] [e-mail]

Statements of Comprehensive Losses

		For the six months ended 30/06/2012		For the six months ended 30/06/2011
	Notes	USD		USD
Revenue	3	33,938		-
Expenses
Administrative expenses	4	(484,125)		(214,826)
Operating loss		(450,187)		(214,826)
Net finance income	6	76,636		41,765
Loss before taxation		(373,551)		(173,061)
Taxation	7	-		-
Loss attributable to equity shareholders		(373,551)		(173,061)
Other comprehensive loss for the year:
Change in fair value of available-for-sale financial assets	9	(129,544)		-
Total comprehensive loss for the period		(503,095)		(173,061)
Loss per share
Basic loss per share (cents per share)	8	(1.57)		(0.87)
Diluted loss per share (cents per share)	8	(1.57)		(0.87)

Statements of Financial Position

		At 30 June 2012, USD			At 31 December 2011, USD
Non-current assets	Notes
Investments in equity shares	9	8,689,233				5,944,459
Convertible notes receivable	9	3,183,356				1,392,252
Total non-current assets		11,872,589				7,336,711
Current assets
Trade and other receivables	10	89,449				49,510
Cash and cash equivalents	11	13,275,903				11,861,305
Total current assets		13,365,352				11,910,815
Total assets		25,237,941				19,247,526
Current liabilities
Trade and other payables	12	61,628				72,329
Total liabilities		61,628				72,329
Net assets		25,176,313				19,175,197
Equity
Share capital	13	26,136,248				19,636,247
Share-based payment  reserve	14	4,210				8,420
Fair value reserve	9	(129,544)				-
Retained losses		(834,601)				(469,470)
Total equity		25,176,313				19,175,197

Statements of Cash Flows

		For the six months ended 30/06/2012,		For the six months ended 30/06/2011,
	Notes	USD		USD
Operating activities
Operating loss		(450,187)		(214,826)
Adjustments for:
Share-based payment charge	14	4,210		3,265
Amortized costs of convertible notes receivable		20,335		-
		(425,642)		(211,561)
Changes in working capital:
Increase in trade and other receivables		(40,341)		(18,671)
(Decrease)/increase in trade and other payables		(10,701)		20,709
Net cash used by operating activities		(476,684)		(209,523)
Investing activities
Interest received		77,038		41,765
Purchase of investments in equity shares	9	(2,875,757)		-
Purchase of convertible notes receivable	9	(1,810,000)		(300,000)
Net cash used by investing activities		(4,608,719)		(258,235)
Financing activities
Proceeds from issue of shares	13	6,500,001		-
Net cash from financing activities		6,500,001		-
Increase/(decrease) in cash and cash equivalents		1,414,598		(467,758)
Cash and cash equivalents at the beginning of the period		11,861,305		19,648,821
Cash and cash equivalents at the end of the period		13,275,903		19,181,063

Statements of Changes in Equity

	Share capital		Share-based payment reserve		Fair value reserve	Retained losses		Total equity
	USD		USD		USD	USD		USD
Balance at 1 January 2011	19,636,247		-		-	(26,879)		19,609,368
Total comprehensive loss for the period	-		-		-	(173,061)		(173,061)
Share-based payment charge	-		3,265		-	-		3,265
Balance as at 30 June 2011	19,636,247		3,265		-	(199,940)		19,439,572
Balance at 1 January 2012	19,636,247		8,420		-	(469,470)		19,175,197
Total comprehensive loss for the period	-		-		(129,544)	(373,551)		(503,095)
Issue of shares	6,500,001		-		-	-		6,500,001
Share-based  payment charge	-		4,210		-	-		4,210
Transfer to retained losses	-		(8,420)		-	8,420		-
Balance at 30 June 2012	26,136,248		4,210		(129,544)	(834,601)		25,176,313

NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2012

1.         Company information

TMT Investments Plc ("TMT" or the "Company") is a company incorporated in Jersey with its registered office at Queensway House, Hilgrove Street, St Helier, JE1 1ES, Channel Islands.

The Company was incorporated and registered on 30 September 2010 in Jersey under the Companies (Jersey) Law 1991 with registration number 106628 under the name TMT Investments Limited. The Company obtained consent from the Jersey Financial Services Commission pursuant to the Control of Borrowing (Jersey) Order 1985 on 30 September 2010. On 1 December 2010 the Company re-registered as a public company and changed its name to TMT Investments PLC.

TMT is listed on the AIM market of the London Stock Exchange.

The memorandum and articles of association of the Company do not restrict its activities and therefore it has unlimited legal capacity. The Company's ability to implement its Investment Policy and achieve its desired returns will be limited by its ability to identify and acquire suitable investments. Suitable investment opportunities may not always be readily available.

The Company will seek to make investments in any region of the world.

The financial information relating to the six months ended 30 June 2012 is unaudited and does not constitute statutory accounts. The comparative figures for the financial year ended 31 December 2011 are not the Company's statutory accounts for that financial year.  Statutory accounts for the year ended 31 December 2011 were approved by the Board of Directors on 25 April 2012. The report of the auditors on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain any qualification.

These unaudited interim financial results were approved by the Board of Directors on 27 August 2012 and are available on the Company's website http://www.tmtinvestments.com/investor-relations/financial-reports/.

2.         Summary of significant accounting policies

2.1    Basis of presentation

The accounting policies applied by the Company in these unaudited interim results are based on International Financial Reporting Standards as adopted by the European Union, including IAS 34 'Interim Financial Reporting', and in accordance with the accounting policies which the Company expects to adopt in its next annual accounts for the year ending 31 December 2012 and are the same as those applied by the Company in its financial statements for the year ended 31 December 2011.

The Company's financial risk management objectives and policies are consistent with that disclosed in the financial statements for the year ended 31 December 2011.

For the purposes of IFRS 8 'Operating Segments' the Company currently has one segment, being 'Investing in the TMT sector'. No further operating segment financial information is therefore disclosed.

2.2       Foreign currency translation

(a) Functional and presentational currency

Items included in the financial statements of the Company are measured in United States Dollars ('US dollars', 'USD' or 'US$'), which is the Company's functional and presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into US$ using the exchange rates prevailing at the dates of the transactions. Exchange differences arising from the translation at the half year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of comprehensive income.

Conversation rates, USD
Currency					At 30/06/2012	Average rate, for six months ended 30/06/2012
British pounds, £					1.5708	1.6035

3          Revenue

	For the six months ended 30/06/2012		For the six months   ended 30/06/2011
	USD		USD
Gross interest income from convertible notes receivable	54,273		-
Amortized costs of convertible notes receivable	(20,335)		-
	33,938		-

4          Administrative expenses

Administrative expenses include the following amounts:

	For the six months ended 30/06/2012		For the six months   ended 30/06/2011
	USD		USD
Staff expenses (note 5)	243,933		98,510
Professional fees	157,768		95,723
Marketing expenses	36,610		-
Other expenses	28,021		2,624
Legal fees	5,245		-
Bank and LSE charges	8,454		5,817
Accounting fees	3,000		10,605
Currency exchange loss	1,094		1,547
	484,125		214,826

5          Staff expenses

	For the six months ended 30/06/2012		For the six months   ended 30/06/2011
	USD		USD
Directors' fees	148,780		95,245
Wages and salaries	90,943		-
Share-based payment charge (note 14)	4,210		3,265
	243,933		98,510

Wages and salaries shown above include salaries, bonuses and share option charges relating to the six months ended 30 June. These costs are included in administrative expenses.

On 6 December 2010, Alexander Selegenev, James Mullins, Petr Lanin and on 6 June 2011, Yuri Mostovoy, entered into letters of appointment with the Company whereby they agreed to provide services to the Company in return for fixed fees. The Directors' fees for six months ended 30 June 2012 and 2011 were as follows:

	For the six months ended 30/06/2012		For the six months ended 30/06/2011
	USD		USD
Alexander Selegenev	69,569		58,288
Yuri Mostovoy	50,000		7,197
James Mullins	15,968		16,257
Petr Lanin	13,243		13,503
	148,780		95,245

The Directors do not receive any pension contributions or other benefits

6        Net finance income

	For the six months ended 30/06/2012		For the six months    ended 30/06/2011
	USD		USD
Interest income	76,636		41,765
	76,636		41,765

7        Income tax expenses

	For the six months ended 30/06/2012		For the six months    ended 30/06/2011
	USD		USD
Current taxes
Current year	-		-
Deferred taxes
Deferred income taxes	-		-
	-		-

The Company is incorporated in Jersey. No tax reconciliation note has been presented as the income tax rate for Jersey companies is 0%.

8        Loss per share

The calculation of basic earnings per share is based upon the net loss for six months ended 30 June 2012 attributable to the ordinary shareholders of US$373,551 (for six months ended 30 June 2011: net loss of US$173,061) and the weighted average number of ordinary shares outstanding calculated as follows:

Loss per share	For the six months ended 30/06/2012		For the six months    ended 30/06/2011
Basic loss per share (cents per share)	(1.57)		(0.87)
Diluted loss per share (cents per share)	(1.57)		(0.87)
Net loss and total comprehensive loss for the period, USD	(373,551)		(173,061)

The weighted average number of ordinary shares outstanding before and after adjustment for the effects of all dilutive potential ordinary shares calculated as follows:

(in number of shares weighted during the period outstanding)	For the six months ended 30/06/2012		For the six months ended 30/06/2011
Weighted average number of shares in issue
Ordinary shares	23,852,044		20,000,002
	23,852,044		20,000,002
Effect of dilutive potential ordinary shares
Share options	24,099		-
Weighted average of shares for the period (fully diluted)	23,876,143		20,000,002

9        Non-current financial assets

	At 30 June 2012		At 31 December 2011
	USD		USD
Investments in equity shares (i)
- unlisted shares	8,689,233		5,944,459
Convertible notes receivable (ii)
- promissory notes	3,183,356		1,392,252
	11,872,589		7,336,711

(i) The Company's unlisted investments as at 30 June 2012 were as follows:

Investee company	Date of investment	Total cost of investment at 1 Jan 2012,  USD	Additions to net investment during the period, USD	Amount of capitalized consulting and legal services, USD	Changes in value of investment, USD	Total cost of investment at 30 June 2012,  USD	Proportion of equity shares held at period end,%
DepositPhotos	26/07/2011	911,988	2,107,496	-	-	3,019,484	30.00
RollApp	19/08/2011	360,000	-	-	-	360,000	9.70
Berryman/ Creat	30/08/2011	1,000,000	-	-	-	1,000,000	20.00
Unicell	15/09/2011	2,982,471	-	-	-	2,982,471	10.00
Wanelo	21/11/2011	355,000	-	-	-	355,000	6.53
Gild	05/12/2011	335,000	-	1,260	(179,350)	156,910	2.21
1-Page	06/02/2012	-	242,500	13,062	49,806	305,368	6.09
ThusFresh/ Undrip	26/03/2012	-	485,000	25,000	-	510,000	7.71
Total		5,944,459	2,834,996	39,322	(129,544)	8,689,233

(ii) The Company's other investments as at 30 June 2012 were as follows:

Investee company	Date of investment	Amortised cost of investment as at 1 Jan 2012,  USD	Additions to net investment during the period,  USD	Amount of capitalized consulting and legal services, USD	Amount of amortized costs,  USD	Amortized amount  of investment, USD	Interest rate,%
Ninua	08/06/2011	303,119	-	-	(1,662)	301,457	5.00
PeekYou	03/11/2011	130,400	-	-	(3,989)	126,411	5.00
Tracks	24/11/2011	454,062	-	-	(4,612)	449,450	5.00
Socialize	19/12/2011	504,671	-	-	(4,986)	499,685	6.00
Todoroo/Astrid	12/04/2012	-	400,000	-	-	400,000	8.00
Hotlist	18/04/2012	-	388,000	17,000	(3,400)	401,600	6.00
Wrike	12/06/2012	-	1,000,000	5,000	(247)	1,004,753	8.00
Total		1,392,252	1,788,000	22,000	(18,896)	3,183,356

Reconciliation of fair value measurements of non-current financial assets:

31 December 2011
		Available-for-sale				Total
		Unlisted shares		Promissory notes
		USD		USD		USD
Opening balance		-		-		-
Purchases		5,944,459		1,392,252		7,336,711
Closing balance		5,944,459		1,392,252		7,336,711

30 June 2012
		Available-for-sale				Total
		Unlisted shares		Promissory notes
		USD		USD		USD
Opening balance		5,944,459		1,392,252		7,336,711
Total gains or losses:
- in profit or loss		(1,439)		(18,896)		(20,335)
- in other comprehensive income		(129,544)		-		(129,544)
Purchases		2,875,757		1,810,000		4,685,757
Closing balance		8,689,233		3,183,356		11,872,589

Available-for-sale investments are carried at fair values. Where financial assets do not have a quoted market price in an active market and their fair values cannot be reliably measured they are measured at cost less any identified impairment losses at the end of reporting period, in accordance with IAS 39 para 46 (c) exemption. 

Where there has been a relevant transaction during the year that gives an indication of the fair value of the unlisted shares, the shares are included at that fair value and the increase or decrease in fair value is recognised in the fair value reserve.

The "price of recent investment" methodology is used mainly for investments in venture capital companies and includes cost of investment or valuation by reference to a subsequent financing round. Valuation increases above cost are only recognised if that round involved a new external investor and the company is meeting milestones set by investor.

The loss arising from a change in the fair value of unlisted shares for the six month ended 30 June 2012 was US$129,544.

10      Trade and other receivables

	At 30 June 2012		At 31 December 2011
	USD		USD
Prepayments	10,475		24,406
Interest receivable on promissory notes	66,891		12,618
Interest receivable on deposit	12,083		12,486
	89,449		49,510

11      Cash and cash equivalents

The cash and cash equivalents as at 30 June 2012 include cash on hand and in banks, deposits, net of outstanding bank overdrafts. The effective interest rate at 30 June 2012 was 0.13%. In March 2011 the Directors approved depositing US$10,000,000 with Investec Bank Plc in London with interest of 1.45% per year.

Cash and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to the related items in the statement of financial position as follows:

	At 30 June 2012		At 31 December 2011
	USD		USD
Deposits	10,000,000		10,000,000
Bank balances	3,275,903		1,861,305
	13,275,903		11,861,305

12        Trade and other payables

	At 30 June 2012		At 31 December 2011
	USD		USD
Directors' fees payable	24,289		37,978
Trade payables	23,054		10,650
Other current liabilities	14,285		16,383
Accrued expenses	-		7,318
	61,628		72,329

13      Share capital

On 30 June 2012 the Company had an authorised share capital of unlimited shares of no par value and had issued share capital of:

			As at 30 June 2012		As at 31 December 2011
			USD		USD
Share capital			26,136,248		19,636,247
Issued capital comprises:
Number of fully paid ordinary shares			24,642,860		20,000,002

On 6 February 2012, the Company allotted 4,642,858 new ordinary shares of no par value each in the Company at a price of US$1.4 per share, being a premium of 12% over the closing price of the Company's shares on 3 February 2012 and raising US$6.5 million.

14        Share-based payment charge

On 27 April 2011, on the recommendation of the independent directors, the Company granted share options to subscribe for up to 100,000 ordinary shares to Mr. Alexander Selegenev, an executive director of the Company.

The terms and conditions of the options granted are as follows:

	Options granted to Alexander Selegenev
Date granted	1 January 2011
Number of instruments	100,000
Vesting period	1-3 years
Expiry dates	(1)
Exercise price	US$1.00
Share-based compensation (USD) for the six months ended 30 June 2011	3,265
Share-based compensation (USD) for the six months ended 30 June 2012	4,210

Options granted to Mr. Alexander Selegenev vest as follows:

No. of ordinary shares	Exercise Price		Exercise Period
33,333	US$1		31/12/11-30/01/12*
33,333	US$1		31/12/12-30/01/13*
33,334	US$1		31/12/13-30/01/14*

* or a period of 30 days starting from the date on which certain circumstances preventing exercise during these periods have ended.

These options are exercisable by Mr. Alexander Selegenev only while he remains a director and will lapse on the termination of his appointment.

None of the options that vested to Mr. Selegenev in the year ended 31 December 2011 were exercised and therefore lapsed.

The weighted average exercise price and contractual life is as stated in the above tables.

The fair value of services received in return for share options granted is based on the fair value of share options and warrants granted, measured using the Black-Scholes formula, using the following assumptions:

(in USD, except for number of shares and per cent)	Options granted to Alexander Selegenev
Share price at grant date	1.03
Exercise price	1
Expected volatility, per cent	7.56%
Option life, years	1-3
Expected dividends, per cent	0
Risk free interest rate, per cent	3.14%

Expected volatility is estimated by considering the Company's data on AIM.

15      Subsequent events

On 24 July 2012, the Company completed an investment in Backblaze, Inc. ("Backblaze").   Incorporated in Delaware in 2007, Backblaze provides individuals and corporate customers with online data backup solutions.  TMT has acquired 295,598 newly issued preferred shares, 7,478 existing preferred shares and 288,120 existing common shares, collectively representing 9.86% of Backblaze's fully diluted equity capital, for an aggregate consideration of US$2,500,759.  In addition, TMT has agreed to acquire, on the first anniversary of the transaction, such number of newly issued and existing shares in Backblaze as will bring TMT's fully diluted equity stake in Backblaze to a minimum of 13.33% and a maximum of 19.05%, dependent on Backblaze's performance, for an additional aggregate consideration of US$2,500,759.

On 30 July 2012, the Company completed an investment in Pipedrive, Inc. ("Pipedrive").  Incorporated in Delaware, Pipedrive has developed a simple-to-use but powerful online sales management tool aimed at businesspeople who want to actively drive their sales process and spend less time on administration.  TMT's investment consists of a US$325,000 unsecured convertible promissory note in Pipedrive.

On 23 August 2012, the Company completed an investment in UsingMiles Inc. ("UsingMiles").  Incorporated in Delaware, UsingMiles helps its members keep track of when their miles or rewards expire, alerts them to special promotional programmes available and helps them find efficient ways to spend their rewards through a "one stop" easily accessible service.  As part of a series A equity financing round, TMT has acquired 1,093,614 preferred shares in UsingMiles for an aggregate consideration of US$250,000.  Assuming the series A equity round is fully subscribed, TMT's fully diluted equity stake in the company will be 3.00%.

 

END

 

 

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