Tern Plc : Final Results

26 January 2016

Tern Plc
("Tern" or the "Company")

Final results for the year ended 31 December 2015

Tern Plc, the investment company focused on the cloud and mobile technology sector announces its final results for the year ended 31 December 2015.

Operational highlights

All investments are making good progress against their development strategies with increased revenues, customer numbers and performance to plan

• Cryptosoft infrastructure is complete and the emphasis is on sales
• Cryptosoft is one of only two security specialists to be selected in the CIO Review's Top IOT Solution Providers 2015.
• Tern's executive team and Board strengthened
• Growth in key performance indicators at 31 December 2015:

• Total assets 2015: £1,825,261 (2014: £1,367,308)
• Net assets 2015: £1,691,881 (2014: £943,631)

Commenting on the results, Angus Forrest, Executive Chairman of Tern, said:

"Tern has achieved much in its first two years including establishing a portfolio of prospering private information technology companies.  As our portfolio companies become more established, so the pace of their growth is increasing.  Cryptosoft's CEO started on 1 July and has since recruited an experienced VP of Global sales who started in November and a new VP of Sales in North America who is due to start in the first quarter of 2016.  We are excited by the sales pipeline, which has been growing since September, opportunities in both North America and Europe are being developed, with some close to launch.  As Cryptosoft is often supplied to global companies for incorporation into their products, timescales are difficult to estimate accurately.  We expect that contracts, when awarded, will be of significant value and we are now in discussions with several global companies.  We will keep shareholders up to date with developments as they occur."

Enquiries:

Tern plc	Tel: [phone]
Angus Forrest
WH Ireland NOMAD and Broker	Tel: [phone]
John Wakefield
Peterhouse Corporate Finance  (Joint broker)	Tel. [phone]
Duncan Vasey/ Lucy Williams

Chairman's Statement
Tern has achieved much in its first two years including establishing a portfolio of private Information Technology (IT) companies.  As our portfolio becomes more established, so the pace of their growth is increasing.  In 2015 we concentrated on ensuring each of our portfolio companies continued to expand, build value and make themselves ready for eventual sale.  There have been some noteworthy achievements which are identified in the Investment Report in the Report and Accounts, a copy of which can be accessed on the Company website (www.ternplc.com). 

One characteristic feature, among our portfolio companies, has been the growth in revenues and new client wins. I believe this growth, over the past two years, supports the value of Tern's investment philosophy. Tern seeks to invest in businesses with strong, innovative products targeted at changing and growing markets.  As appropriate, we work to enhance the management and daily operations of these businesses concentrating on sales and marketing including strategic alliances in the UK and overseas.

A feature of Tern's business model which merits particular attention is our highly targeted acquisition strategy: Tern seeks to acquire businesses with products in commercial service with blue chip customers, which in our view, have not achieved their commercial potential.  This enables us to acquire proven products, typically with reference sites and case studies to assist in winning other large customers.  We believe whilst this investment strategy limits the risk of acquisitions it offers major advantages in the speed and cost savings associated with building business success.  Within the framework of this model, Tern acts as the transformational catalyst, applying its expertise and network to create above average returns through buying, building and later selling its portfolio companies.  In addition, Tern works to structure post acquisition companies, in a manner that aligns the interests of all parties and allows the original entrepreneurs the opportunity to share in the upside of success, if they stay with the business.

Tern's financial position has again strengthened during the year as measured by two important metrics of business success: total assets and net assets.

As Tern has evolved there have been changes in the Board of Directors, as well as the addition of other affiliated individuals. I would like to thank the directors including those who have left for their contribution and welcome Sarah Payne, Finance Director, Alan Howarth, Non-executive Director and Bruce Judson, senior advisor, who joined during the year. Sarah, Alan and Bruce all bring expertise and experience which adds to our ability to provide the transformational catalyst that should further enable Tern to successfully execute the objectives of our business model as outlined above. 

Events after the reporting period
There have been no significant post year end events.

Outlook
The ecosystem of technologies which surround the cloud computing and mobile markets, together with the associated Internet of Things ('IoT') and Machine-to-Machine ('M2M') sectors, continue to grow strongly as new technology offers real commercial and competitive advantages that can be evaluated and measured.  This continues to attract larger companies, which have a strategy of growth by acquisition.  As a consequence, there has been some interest in Tern's portfolio companies. We anticipate such interest, from larger companies, which participate in these sectors, should lead to at least one sale in 2016.

During 2015, we focused, in part, on building an experienced management team at Cryptosoft, which we believe will lead the company to realise its business potential.  Now, with Cryptosoft's management team in place, Tern is able to look for other investment opportunities, which match Tern's criteria and those sought by our shareholders.  In 2016, Tern will be actively investigating such opportunities.

Finally, I wish to thank all shareholders for their support and acknowledge the hard work of the directors and our advisors.

Angus Forrest
Chairman

26 January 2016

INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2015			2015	2014
			£	£
Turnover			162,500	41,000
Movement in fair value of investments			63,492	100,000
Gross profit			225,992	141,000
Administration costs			(298,896)	(161,654)
Share based payment charge			(99,523)	-
Operating loss			(172,427)	(20,654)
Finance income			11,786	105
Finance costs			(24,480)	(33,146)
Loss before tax			(185,121)	(53,695)
Tax			-	-
Loss for the period			(185,121)	(53,695)
Since there is no other comprehensive income, the loss for the period is the same as the total comprehensive income for the period.
EARNINGS PER SHARE:
Basic loss per share			(0.37) pence	(0.33) pence
Fully diluted loss per share			(0.37) pence	(0.33) pence

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015		2015	2014
		£	£
ASSETS
NON-CURRENT ASSETS
Investments held for trading Loans to investee companies		810,350 619,413	631,978 -
		1,429,763	631,978
CURRENT ASSETS
Trade and other receivables		117,042	301,056
Cash and cash equivalents		278,456	434,274
		395,498	735,330
TOTAL ASSETS		1,825,261	1,367,308
EQUITY AND LIABILITIES
Share capital		1,314,118	1,310,613
Share premium		8,393,536	7,563,193
Loan note equity reserve		20,650	53,624
Share option and warrant reserve		897,296	797,773
Retained earnings		(8,933,719)	(8,781,572)
		1,691,881	943,631
CURRENT LIABILITIES
Trade and other payables		35,986	162,763
TOTAL CURRENT LIABILITIES		35,986	162,763
NON-CURRENT LIABILITIES
Borrowings		97,394	260,914
TOTAL NON-CURRENT LIABILITIES		97,394	260,914
TOTAL LIABILITIES		133,380	423,677
TOTAL EQUITY AND LIABILITIES		1,825,261	1,367,308

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015	Share	Share	Loan note equity	Option and warrant	Retained	Total
	capital	premium	reserve	reserve	earnings	equity
	£	£	£	£	£	£
Balance at 31 December 2013	1,303,746	6,646,376	29,341	797,773	(8,752,553)	24,683
Total comprehensive income	-	-	-	-	(53,695)	(53,695)
Transactions with owners
Issue of share capital	6,867	952,685	-	-	-	959,552
Share issue costs	-	(35,868)	-	-	-	(35,868)
Transfer on conversion of convertible loan notes	-	-	(24,676)	-	24,676	-
Issue of convertible loan notes	-	-	48,959	-	-	48,959
Balance at 31 December 2014	1,310,613	7,563,193	53,624	797,773	(8,781,572)	943,631
Total comprehensive income	-	-	-	-	(185,121)	(185,121)
Transactions with owners
Issue of share capital	3,505	865,243	-	-	-	868,748
Share issue costs	-	(34,900)	-	-	-	(34,900)
Transfer on conversion of convertible loan notes	-	-	(32,974)	-	32,974	-
Share based payment charge	-	-	-	99,523	-	99,523
Balance at 31 December 2015	1,314,118	8,393,536	20,650	897,296	(8,933,719)	1,691,881

SHARE CAPITAL
The amount subscribed for shares at nominal value.

SHARE PREMIUM
This represents the excess of the amount subscribed for share capital over the nominal value of the respective shares net of share issue expenses.

LOAN NOTE EQUITY RESERVE
This represents the equity component of convertible loans issued

OPTION AND WARRANT RESERVE
This represents the calculated value of the options and warrants issued

RETAINED EARNINGS
Cumulative loss of the Company.

STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015

		2015	2014
		£	£
OPERATING ACTIVITIES
Net cash used in operations		(79,159)	(326,328)
INVESTING ACTIVITIES
Purchase of investments		(114,880)	(407,952)
Loan to investee companies		(610,000)	-
Net cash used in investing activities		(724,880)	(407,952)
FINANCING ACTIVITIES
Proceeds on issues of shares		720,000	757,500
Share issue expenses		(34,900)	(35,868)
Proceeds from issue of convertible loan notes		-	300,000
Proceeds from exercise of warrants		10,748	-
Repayment of loan stock		(50,000)	-
Interest received		2,373	105
Net cash from financing activities		648,221	1,021,737
Increase/(decrease) in cash and cash equivalents		(155,818)	287,457
Cash and cash equivalents at beginning of year		434,274	146,817
Cash and cash equivalents at end of year		278,456	434,274

1.	BASIS OF PREPARATION
	These financial statements have been prepared in accordance with International Financial Reporting Standards (as adopted by the European Union) and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

2.	EARNINGS PER SHARE
		2015	2014
		£	£
	Loss for the purposes of basic and fully diluted earnings per share	(185,121)	(53,695)
		2015	2014
		Number	Number
	Weighted average number of ordinary shares:
	For calculation of basic earnings per share	49,375,127	16,142,804
	For calculation of fully diluted earnings per share (see note below)	49,375,127	16,142,804
		2015	2014
	Earnings per share:
	Basic loss per share	(0.37 pence)	(0.33 pence)
	Fully diluted loss per share (see note below)	(0.37 pence)	(0.33 pence)
	Note.  The fully diluted loss per share for 2015 is the same as the basic loss per share as the loss for the year has an anti-dilutive effect on earnings per share.
3.	Annual General Meeting (AGM)
	The annual report will be available from the company website from 26 January 2016 and will be posted to shareholders on or before 1 February 2016.  The annual report contains a notice of the AGM which will be held at 9.30am on 17 March 2016 at the offices of WH Ireland, 24 Martin Lane, London, EC4R 0DR.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Tern Plc via Globenewswire

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