Tern Plc Tern Plc : Final Results

 
TIDMTERN 
 
   17 February 2017 
 
   Tern Plc 
 
   (AIM: TERN) 
 
   Final results for the year ended 31 December 2016 
 
   Tern Plc (AIM:TERN; www.ternplc.com) the investment company specialising 
in the Internet of Things is pleased to announces its final results for 
the year ended 31 December 2016. 
 
   Operational highlights 
 
 
   -- Achieved a 560% uplift in net asset value and a profit for the year for 
      Tern 
 
   -- Our investee company, Device Authority, acquired a venture backed Silicon 
      Valley technology company with a base of operations in North America and 
      9 patents to strengthen the business 
 
   -- Completed our first sale of a business and its assets, Concerto, to 
      Ingram Micro 
 
   -- Led a GBP2.5 million investment into Device Authority in October 2016, 
      strengthening our ownership position. 
 
   -- Finances further strengthened: 
 
          -- Total assets 2016: GBP11,464,696 (2015: GBP1,825,261) 
 
          -- Net assets 2016: GBP11,187,739 (2015:GBP1,691,881) 
 
          -- Profit/(loss) 2016: GBP5,296,633 (2015:GBP(185,121)) 
 
 
   Commenting on the results, Al Sisto, Chairman of Tern, said: 
 
   "2016 was a pivotal year for Tern, with the Company reaching several key 
business milestones whilst also undergoing significant, positive change. 
As a result, we enter the new year with a sharpened investment focus and 
a management team that has been realigned to play to its strengths. 
 
   Going forwards, we see a great deal of growth potential in our flagship 
investment, Device Authority, as well as the wider Internet of Things 
ecosystem, and I look forward to reporting progress on both fronts in 
the coming months. 
 
   I would like to take this opportunity to thank all of our shareholders 
for their support and enthusiasm, our portfolio employees for their 
commitment, and our Directors for their dedication to the Company and 
its mission." 
 
   Enquiries: 
 
 
 
 
Tern plc                        Tel: [phone] 
 Al Sisto/ Sarah Payne 
 
  WH Ireland                      Tel: [phone] 
  (NOMAD and broker) 
  Mike Coe / Ed Allsop 
 
  Whitman Howard                  Tel: [phone] 
  (Joint broker) 
  Nick Lovering/ Francis North 
 
   Chairman's Statement 
 
   I am pleased to present our annual report for the fiscal year ended 31 
December 2016.  Over the course of the year, the Tern team began 
executing on the next phase of its business model, designed to create a 
sound financial structure and to establish a platform for sustainable 
growth. I am gratified to report that we have accomplished these 
objectives. In 2016, Tern achieved a 560% uplift in net asset value and 
recognised a profit for the year, whilst controlling administrative 
expenses (GBP455,000 for the year after deducting one-time costs of 
GBP155,000 which include exceptional legal costs, write off of the 
Device Authority facility fee on the convertible loan note and 
non-recurring advice relating to fund raising activities). We focused on 
working closely with our portfolio companies to bring them in-line with 
best operating practices, creating strategic force multiplying 
relationships and controlling expenses to ensure growth and continuous 
value creation. 
 
   Overview 
 
   Tern's fundamental goal is to find interesting technology opportunities 
that lead to significant returns and create value for shareholders. In 
2016, the Board of Directors and management focused on two primary 
objectives: firstly, we took a hard look at our capabilities, with the 
result that we sharpened the focus of our investment strategy. Then, to 
successfully position the company to execute this investment strategy, 
we aligned our 
 
   management structure, our investment portfolio, and identified 
additional 2017 initiatives that would help us bring these plans to 
fruition.  Secondly, in 2016 the Board focused on ensuring that Device 
Authority Limited (formerly Cryptosoft Limited) was positioned for 
success in the rapidly evolving Internet of Things ("IoT") market. 
Beginning with the acquisition of Fremont-based Device Authority Inc. by 
Cryptosoft Limited, we worked with management to define and execute a 
series of strategic initiatives which included the development of a 
series of valuable, mutually beneficial relationships with a number of 
the world's leading technology companies, and additional actions 
detailed below. 
 
   Tern's investment strategy 
 
   Tern now focuses on building companies with technologies and services 
within the fast-growing Internet of Things market. This reflects our 
assessment of where we see potential and where we believe our assets and 
experience can add value to companies and ultimately create strong 
returns for shareholders. The increasing need for unique security 
solutions to underpin the growth of the IoT applications is widely 
recognised and in 2016, Device Authority Limited ("Device Authority"), 
Tern's flagship investment, was repeatedly recognised by industry 
experts and analysts as a core participant. Our experience with Device 
Authority puts us in a strong position to seek out and build companies 
in other areas of the IoT market. In working with Device Authority, we 
have gained practical knowledge of what is required to successfully 
build a company in the space, substantial expertise in the IoT ecosystem 
and a web of relationships with a number of the world's leading 
technology companies. 
 
   Management realignment 
 
   The Board concluded that, as an experienced technology company executive, 
I would serve as the most effective leader for the Company. In making 
this decision, the Board placed particular emphasis on several broad 
aspects of my background: experience as a senior operating executive at 
technology companies, board level participation in the growth of many 
successful technology start-ups, practical knowledge of the IoT 
ecosystem developed over the past two years as the Chairman of Device 
Authority, and resulting high-level relationships with executives at 
technology companies now involved in the IoT market. In realigning our 
management, the Board also recognised that the Company would benefit 
from additional senior-level expertise in technology. As a result, we 
anticipate recruiting in 2017 a Chairman for the Board who will bring 
skills and experiences that are complementary to the Board.  The Board 
and I would like to thank Angus Forrest, who previously served as 
Chairman and founder of Tern, for bringing us to this stage of our 
development. Angus brings a wealth of transactional management expertise 
to the Company and will continue to oversee this critical aspect of 
Tern's activities. 
 
   Device Authority: Poised for growth 
 
   In 2016, Tern's management team worked extensively with the management 
of Device Authority, our flagship investment, to ensure it is positioned 
for success in 2017 and beyond. During 2015 and into 2016, Cryptosoft 
Limited and Device Authority Inc (a United States based firm, whose 
owners include Alsop Louie Partners, one of the leading venture capital 
firms in Silicon Valley) established ever deeper ties through an OEM 
partnership. As the complementary capabilities of the two business 
became clear, it was agreed that a merger was in the best interests of 
both companies and their shareholders. Additionally, with Device 
Authority Inc's headquarters in Fremont, CA, and Cryptosoft's 
headquarters in Bracknell, the combined firm would have a strong 
presence in two critical hubs for IoT and exposure to prospective 
customers and partners. In April 2016, Cryptosoft announced the 
acquisition of Device Authority Inc and chose to use the Device 
Authority name as the continuing brand. The resulting company, Device 
Authority Limited, was valued at GBP13.6 million (post new money) and 
represented an increase in the asset value of Cryptosoft to GBP6.1 
million (pre new money) on the 21 April 2016 from GBP961,439 at 31 
December 2015. The new Device Authority Limited realised several 
milestones in 2016 that are noteworthy. They included: (1) The company 
reported its first significant customer, a key goal outlined in last 
year's annual report; (2) Device Authority's Internet of Things Security 
Solution has been formally reviewed and analysed, and deemed effective 
by a number of the world's leading analysts and technology companies, 
including Gartner, PTC's ThingWorx, Intel, and Dell, amongst others. 
This included being named a Gartner "Cool Vendor." 
 
   Rationalising the investment portfolio 
 
   In June 2016, Tern made an offer to buy certain assets of Flexiant 
Limited for GBP75,000. Tern was an early stage investor in Flexiant 
Limited. The 2016 purchase price included two divisions of Flexiant 
Limited, Concerto and what is now flexiOPS Limited (previously Flexiant 
Research), a profitable technology consulting company. We believe that 
flexiOPS may be the source of valuable technology expertise to assist 
current and future Tern portfolio companies. In November 2016, the 
Company announced that it completed the sale of the assets and business 
of Concerto, a multi cloud management software business, to Ingram Micro, 
the world's largest technology distributor and a leading technology 
sales, marketing and logistics company for the IT industry worldwide. 
The total consideration was $500,000 in cash, payable $425,000 on 
completion with $75,000 at the end of 12 months. Tern acquired Concerto 
alongside Flexiant Research in June 2016 for a combined total of 
GBP75,000 in cash. The valuations of the two businesses were not 
disclosed separately at the time of the acquisition. The Board believes 
the sale of Concerto represented good value, and the realised funds are 
being used to create new opportunities. Tern retains its stake in 
flexiOPS Limited which remains profitable. The sale of Concerto is our 
first portfolio company exit and represents an overall profit, net of 
all costs on this sale of GBP150,043, while still retaining the 
profitable flexiOPS. 
 
   Year-end funding and related activities 
 

   In October 2016, the Company announced that it had invested GBP2 million 
in Device Authority Ltd, as the lead investor in a GBP2.5 million 
funding round. Alsop Louie Partners and all existing A Preference 
shareholders also participated and took up their pro-rata share. 
Following this fund-raising Tern now owns 56.9% of the issued capital of 
Device Authority Ltd and 50.6% of the A preference shares. The funding 
is being used to expand Device Authority's sales and marketing teams to 
respond to their new and growing go to market partnerships and to meet 
the  increased demand in the Industrial and Healthcare IoT markets. In 
addition, Device Authority is expanding its development team to 
accelerate product development and innovation in its recently launched 
KeyScaler(TM) IoT security platform. We believe that the benefits of 
this strengthened financial position and increased ownership, will 
ensure that Device Authority and Tern can each execute on their 
respective strategies and subsequently yield superior results for our 
shareholders. 
 
   Moving into 2017 and beyond 
 
   For Tern, 2016 was, in many ways, a period where we put the final 
building blocks in place to position the Company for success. With much 
of this positioning now in place, we approach 2017 with optimism and 
confidence. 
 
   Events after the operating period 
 
   On 31 January 2017 Device Authority was pleased to announce the 
appointment of George Samenuk to the Device Authority board as a 
non-executive Director. George Samenuk, is the former Chairman and CEO 
of McAfee (NYSE: MFE), the world's largest dedicated software security 
business. Mr Samenuk has served on the boards of Symbol Technologies 
(sold to Motorola for $3.9 billion) and other privately-owned companies. 
He also spent over twenty years at IBM, holding a variety of executive 
positions and ended his career there as General Manager of the Americas, 
responsible for $45 billion in revenue. 
 
   Finally, I would like to thank all of our shareholders for the support 
and enthusiasm, all our portfolio employees for their commitment and our 
Directors for their dedication to the Company and its mission 
 
   Al Sisto 
 
   Chairman 
 
   17 February 2017 
 
   Strategic Report 
 
   Business review 
 
   The Company is positioned as a quoted platform to invest in, develop and 
sell private software companies with proven technology, based in the UK 
but with global opportunities and ambition. These businesses are 
predominantly in the cloud, Internet of Things and mobile sectors. A 
more detailed review of the activity and progress of the business, 
including the portfolio of investments, is contained in the Chairman's 
Statement and Investment Report, which form part of the Strategic 
Report. 
 
   Future developments 
 
   As explained in the Chairman's Statement the Company has undertaken a 
series of initiatives to position the Company for lasting success and 
has continued to build a portfolio of investments and a pipeline of 
investment opportunities in IoT enablement. It is also in the process of 
recruiting a new Chairman to bring further technology experience to the 
Board. 
 
   Key performance indicators 
 
   Whilst the Company currently has limited investments in unquoted 
companies, as referred to above, the Company's principal activity is 
that of investing in companies. Accordingly, the Company's financial Key 
Performance Indicators (KPIs) are the return on investments and the net 
assets position of the Company including net assets per share. These 
indicators are monitored closely by the Board and the details of 
performance against these are given below. 
 
   -- The return on investments: 
 
   -- Realised - Concerto was sold in November 2016 for $500,000 with 
direct costs, including investment cost, of GBP98,811, resulting in a 
profit after all costs of GBP150,043. 
 
   -- Unrealised - Device Authority Limited, Push Technology Limited and 
Seal Software Group Limited have been revalued in line with IFRS to a 
level consistent with recent fund raisings. The unrealised gain on 
Device Authority Limited has arisen due to the acquisition of Device 
Authority Inc by Device Authority Limited (formerly Cryptosoft Limited). 
Device Authority is an early stage business in an emerging market where 
there is a lack of comparative businesses available on which to provide 
a comparable valuation and therefore valuation was based on the price of 
shares in the most recent fund raise, which is taken as fair value and 
an unrealised gain of GBP6.1 million was recognised. 
 
   -- The net assets of the Company at 31 December 2016 totalled 
GBP11,187,739 (2015: GBP1,691,881). The net assets per ordinary share as 
at 31 December 2016 were 9.44p (2015: 2.70p). 
 
   The Company has non-financial KPIs which are also monitored regularly by 
the Board. These non-financial KPIs are focused around the number and 
quality of investment opportunities seen and the impact on the pipeline. 
 
   Principal business risks and uncertainties 
 
   The management of the business and the nature of the Company's strategy 
are subject to a number of risks. The directors have set out below the 
principal risks facing the business. Where possible, processes are in 
place to monitor and mitigate such risks. The Company operates a system 
of internal control and risk management in order to provide assurance 
that the Board is managing risk whilst achieving its business objectives 
with the assistance of the Audit Committee. No system can fully 
eliminate risk and, therefore, the understanding of operational risk is 
central to the management process. Identifying, evaluating and managing 
the principal risks and uncertainties facing the Company is an integral 
part of the way the business operates. The Company has policies and 
procedures in place throughout its operations, embedded within the 
management structure and as part of the normal operating processes. 
Market and economic conditions are recognised as one of the principal 
risks in the current trading environment. This risk is mitigated by the 
close monitoring of trading conditions and the performance of the 
Company's investment portfolio. The Company is affected by a number of 
risks and uncertainties, not all of which are wholly within its control 
as they relate to the wider macroeconomic and legislative environment 
within which the Company operates. 
 
   To enable shareholders to appreciate what the business considers are the 
main operational risks, they are briefly outlined below: 
 
 
 
 
            Risk                                                           Potential impact                                             Strategy 
Reliance                                                                                                                                The Company offers a remuneration package designed 
on key        The Company is unable to retain key individuals               --    Loss of knowledge and expertise                        to attract, motivate and retain key individuals. 
people                                                                                                                                   Key individuals in the investment companies are offered 
                                                                            --    Disruption for the Company or its investment           an attractive remuneration package and either shares 
                                                                                  companies                                              or share option incentives 
Investment  An investment fails to perform as anticipated:                 --    Investment may require additional finance              The Company actively takes an influential role in 
risk         -- Investee companies may be operating in highly competitive  --    Inability to create maximum value in a timely fashion   the strategic direction of its investments and monitors 
             markets with rapid technological change                       --    Difficulty in realising investment                      all investments regularly, 
             -- Investee companies may be companies in early stage                                                                       The Company's strategy has been formulated by the 
             of commercial development. Generation of significant                                                                        management team with a strong track record of generating 
             revenues is difficult to predict and not guaranteed.                                                                        gains from early stage companies within the technology 
                                                                                                                                         sector. 
                                                                                                                                         The Company is building a portfolio of investments 
                                                                                                                                         to insulate itself against poor performance of any 
                                                                                                                                         one. 
Liquidity   The Company is unable to raise new funds                       --    May have a detrimental effect on the Company's         The Company will maintain sufficient cash balance 
                                                                                 ability to cover administration and other costs         to finance itself for a prudent period, or ensure 
                                                                           --    May adversely affect returns of investee companies if   that it has access to funds. 
                                                                                 they need to raise further funds 
 
   Assessment of business risk 
 

   The Board regularly reviews operating and strategic risks, with the 
assistance of its committees. The Company's operating procedures include 
a system for reporting financial and non-financial information to the 
Board including: 
 
   -- reports from management with a review of the business at each Board 
meeting, focusing on any new decisions/risks arising; 
 
   -- reports on the performance of investments; 
 
   -- reports on selection criteria of new investments; 
 
   -- discussion with senior personnel; and 
 
   -- consideration of reports prepared by third parties. 
 
   Angus Forrest 
 
   Director 
 
   17 February 2017 
 
   Investment Report 
 
   The Company's current investment portfolio consists of the following 
investments, all of which are unquoted: 
 
 
 
 
Device Authority Limited 
Market segment: Data Security software 
Equity ownership: 56.9% 'A' Shares      Cost: GBP4.34 million      Valuation: GBP10.47 million 
Valuation is based on the price of shares in the most 
 recent fund raise, which is taken as fair value. 
 
 
 Device Authority Limited (formerly Cryptosoft Limited) 
 is an Internet of Things (IoT) security automation 
 company. Device Authority provides simple, innovative 
 solutions to address the challenges of securing applications 
 and their devices while using the Internet with a 
 robust, end-to-end security architecture that delivers 
 efficiencies at scale. The Device Authority KeyScaler(TM) 
 IoT security platform is purpose-built to address 
 these challenges through automated device provisioning, 
 credential management, secure updates and policy-driven 
 data encryption. 
 In April 2016 Cryptosoft Limited acquired Device Authority 
 Inc. based in Fremont, CA. Subsequently Cryptosoft 
 Limited changed its company name to Device Authority 
 Limited. Post the acquisition, progress has been made 
 throughout 2016 to strengthen the management team 
 within Device Authority including a new Chief Technology 
 Officer and Financial Controller. The acquisition 
 of the Device Authority Inc technology has enhanced 
 the software offerings from Cryptosoft. DeviceAuthority 
 Inc software adds policy driven key and certificate 
 management, to Cryptosoft's original IoT data security 
 software platform. 
 In Q4 2016, Device Authority Limited launched the 
 merged software platform KeyScaler. The goal of the 
 integrated solution is to deliver rapid security automation 
 and active security posture enforcement to address 
 the new and evolving security challenges of the IoT 
 market. The KeyScaler platform allows customers to 
 securely register, provision and update their devices 
 through active, policy-based security controls which 
 are designed to protect IoT applications and services. 
 Device Authority Limited have also adapted the software 
 to integrate seamlessly with several of its Go-to-Market 
 partners, including PTC's ThingWorx Platform, Intel, 
 DigiCert, Dell, Cumulocity and others. Specific details, 
 videos and white papers can be reviewed on the Device 
 Authority Limited website. 
 Device Authority Limited will continue to focus on 
 building its contract base and device registrations, 
 as well as developing its strategic alliances and 
 OEM integration of the KeyScaler platform. Focus is 
 also being driven to the thoughts around developing 
 a white labelled version of KeyScaler and co-branding 
 with other IoT platform providers. 
 Key announcements in 2016 included: 
 
 --    Device Authority Limited was awarded the coveted Cool 
       Vendor Award by Gartner, May 2016, this follows 
       Device Authority Inc. winning the same award in 2015. 
 
 --    In June 2016 Device Authority Limited was also 
       awarded the InfoSecurity and TechUK Award for the 
       'UK's Most Innovative Small Cyber Security Company 
 
 --    Device Authority Limited secured its first OEM 
       contract in June 2016 with MachineShop Inc, an IoT 
       middleware supplier, to provide its services-based 
       technology in a variety of deployment models. 
 
 --    In April 2016, PTC's primary EMEA integration partner, 
       InVMA, signed to partner Device Authority Limited. 
       InVMA and Device Authority Limited have since jointly 
       presented at events such as PTC Forum Europe and IoT 
       Solutions World Congress. 
 
 --    Marketing and selling alliance partnerships were also 
       signed with Intel, Dell, Symantec, Cumulocity and 
       DigiCert. 
 
 --    Tern Plc invested GBP2 million in Device Authority 
       Ltd as the lead investor in a GBP2.5 million funding 
       round. At 31 December 2016 the Company owned 56.9% of 
       the issued capital of Device Authority Limited and 
       50.6% of the A preference shares. 
 
 
 For more information visit: www.deviceauthority.com 
 
 
 
 
 
 
 
 
 flexiOPS Limited 
Market segment: Project management of research and 
 innovation projects in technology 
Equity ownership: 100%                  Cost: GBP37,500*          Valuation: GBP37,500 
* Cost is 50% of the purchase price of two business 
 units flexiOPS and Concerto. Concerto was sold in 
 2016. Valuation is based on cost, which is taken as 
 fair value. 
 
  flexiOPS Limited ("flexiOPS") , was an established 
  business unit of Flexiant Limited. It runs project 
  management and innovation technology projects with 
  associated grant funding, many of these projects are 
  incorporated in the Flexiscale Technologies Limited 
  FCO product. It works across a portfolio of projects 
  including Horizon 2020, the European Commission's 
  EU Framework Programme for Research and Innovation, 
  whose purpose is securing Europe's global competitiveness. 
  flexiOPS will work with other Tern portfolio companies 
  on their innovation projects together with sourcing 
  associated grant funding. 
  For more information visit: www.flexiops.com 
 
 
 
 
Push Technology Limited 
Market segment: Data distribution 
software 
Equity ownership: <1%                 Cost: GBP120,197           Valuation: GBP34,205 
Valuation is based on the price of shares in the most 
 recent fund raise, which is taken as fair value. 
 
  Push Technology Limited ("Push") significantly enhances 
  the ability of organisations to communicate in real-time. 
  This includes direct communication as well as indirect 
  for example by refreshing data displayed information 
  in real time rather than when a user explicitly asks 
  for an update. Interactive applications are infinitely 
  more engaging, updating in real-time as new data becomes 
  available. 
  Key announcements in 2016 included: 
 
  --    New standard product with new SaaS business model 
        released 
 
  --    Upgraded products released for enterprise and SaaS 
        solutions 
 
  --    New bank customers 
 
 
  For more information visit: www.pushtechnology.com. 
 
 
 
 
Seal Software Group Limited 
Market segment: Database Analytics and Search software 
Equity ownership: <1%                  Cost: GBP50,000    Valuation: 62,714 
Valuation is based on the price of shares in the most 
 recent fundraise, which is taken as fair value. 
 Seal Software Group Limited ("Seal") specialises in 
 writing software which performs complex analysis of 
 contractual data. Seal Software is specifically designed 
 to locate and examine contractual documents and extract 
 and present key contractual information related to 
 language, clauses, clause combinations, and the significant 
 contextual metadata held within them. 
 In 2016 Seal unveiled a new version of its leading 
 contract discovery and analytics solution called Version 
 5.0. The new version introduces two major capabilities, 
 the first called "Analyse This Now" (ATN) and the 
 second is User Driven Machine Learning (UDML). Both 
 are designed to empower business users, putting more 
 of the capabilities of Seal in their hands, and removing 
 work from legal operations or other administrative 
 resources. Version 5 reduces the costs, and speeds 
 the time for many contract management and analysis 
 processes. 
 In 2016 the notable events included: 
 --    Winner of Awards including: Legal Tech News 
       Innovation Award, Silver Stevie Award, IACCM 
       Innovation Award, 2016 KMWorld Promise Award 
 --    Seal was the 148th Fastest Growing Company in 
       Deloitte's 2016 Technology Fast 500 
 --    Customer numbers top 100 in March 2016 
 Customers include Dropbox, Microsoft, Bosch, hp, Merck, 
 Vodafone and many other multi-national organisations. 
 For more information visit: 
 www.seal-software.com 
 
 
 
 
 Income Statement and Statement of Comprehensive Income 
  For the year ended 31 December 2016 
                                                                   2016              2015 
                                                                    GBP               GBP 
 
Turnover                                                             69,715       162,500 
Sale of investment                                                  383,489             - 
Movement in fair value of investments                             5,758,480        63,492 
Cost of investment sold                                            (98,811)             - 
Gross profit                                                      6,112,873       225,992 
 
Administration costs                                              (609,680)     (298,896) 
Share based payment charge                                        (191,299)      (99,523) 
Operating profit/(loss)                                           5,311,894     (172,427) 
 
Finance income                                                        1,198        11,786 
Finance costs                                                      (16,459)      (24,480) 
Profit/(Loss) before tax                                          5,296,633     (185,121) 
 
Tax                                                                       -             - 
 
Profit/(Loss) for the period                                      5,296,633     (185,121) 
 
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 profit/(loss) per share                                     6.4 pence  (0.37) pence 
Fully diluted profit/(loss) per share                             6.4 pence  (0.37) pence 
 
 
 
 
Statement of Financial Position 
 As at 31 December 2016 
                                       2016         2015 
                                        GBP          GBP 
ASSETS 
NON-CURRENT ASSETS 
Investments held for trading        10,601,330     810,350 
 Loans to investee companies             -         619,413 
                                     10,601,330    1,429,763 
CURRENT ASSETS 
Trade and other receivables             100,515      117,042 
Cash and cash equivalents               762,851      278,456 
                                        863,366      395,498 
TOTAL ASSETS                         11,464,696    1,825,261 
 
EQUITY AND LIABILITIES 
Share capital                         1,325,270    1,314,118 
Share premium                        12,390,310    8,393,536 
Loan note equity reserve                 20,650       20,650 
Share option and warrant reserve      1,088,595      897,296 
Retained earnings                   (3,637,086)  (8,933,719) 
                                     11,187,739    1,691,881 
 
CURRENT LIABILITIES 
Trade and other payables                172,517       35,986 
TOTAL CURRENT LIABILITIES               172,517       35,986 
NON-CURRENT LIABILITIES 
Borrowings                              104,440       97,394 
TOTAL NON-CURRENT LIABILITIES           104,440       97,394 
TOTAL LIABILITIES                       276,957      133,380 
TOTAL EQUITY AND LIABILITIES         11,464,696    1,825,261 
 
 
 
 
 
 
 Statement of Changes in Equity 
  For the year ended 31 December 2016 
                                                    Option 
                                        Loan note     and 
                   Share      Share       equity    warrant    Retained         Total 
                  capital    premium     reserve    reserve    earnings        equity 
                    GBP        GBP         GBP        GBP         GBP             GBP 
 
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 
Total 
 comprehensive 
 income                  -           -          -          -    5,296,633   5,296,633 
Transactions 
with owners 
Issue of share 
 capital            11,152   4,210,311          -          -            -   4,221,463 
Share issue 
 costs                   -   (213,537)          -          -            -   (213,537) 
Share based 
 payment 
 charge                  -           -          -    191,299            -     191,299 
Balance at 31 
 December 2016   1,325,270  12,390,310     20,650  1,088,595  (3,637,086)  11,187,739 
 
   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 2016 
                                                    2016         2015 
                                                     GBP         GBP 
 OPERATING ACTIVITIES 
 Net cash used in operations                        (64,729)    (79,159) 
 
 INVESTING ACTIVITIES 
 Purchase of investments                         (3,460,000)   (114,880) 
 Loan to investee companies                                -   (610,000) 
 Net cash used in investing activities           (3,460,000)   (724,880) 
 
 FINANCING ACTIVITIES 
 Proceeds on issues of shares                      4,217,500     720,000 
 Share issue expenses                              (213,537)    (34,900) 
 Proceeds from exercise of warrants                    3,963      10,748 
 Repayment of loan stock                                   -    (50,000) 
 Interest received                                     1,198       2,373 
 Net cash from financing activities                4,009,124     648,221 
 
 Increase/(decrease) in cash and cash 
  equivalents                                        484,395   (155,818) 
 Cash and cash equivalents at beginning of year      278,456     434,274 
 Cash and cash equivalents at end of year            762,851     278,456 
 
 
 
 
 
 
 
 
1.  BASIS OF PREPARATION 
    The financial statements of the Company have been 
     prepared in accordance with International Financial 
     Reporting Standards (IFRSs) adopted by the European 
     Union (EU)and therefore the financial statements comply 
     with Article 4 of the EU IAS Regulation. 
     IFRS is subject to amendment and interpretation by 
     the International Accounting Standards Board (IASB) 
     and the International Financial Reporting Interpretations 
     Committee (IFRIC) and there is an ongoing process 
     of review and endorsement by the European Commission. 
     The financial statements have been prepared on the 
     basis of the recognition and measurement principles 
     of the IFRS that were applicable at 31 December 2016. 
     The preparation of financial statements in conformity 
     with generally accepted accounting principles requires 
     the use of estimates and assumptions that affect the 
     reported amounts of assets and liabilities at the 
     date of the financial statements and the reported 
     amounts of revenues and expenses during the reporting 
     period. Although these estimates are based on management's 
     best knowledge of the amount, event or actions, actual 
     results may ultimately differ from those estimates. 
     The financial statements have been prepared on the 
     historical cost basis. Historical cost is generally 
     based on the fair value of the consideration given 
     in exchange for the assets. The principal accounting 
     policies set out below have been consistently applied 
     to all periods presented, except where stated. 
     In accordance with IFRS 10, par 4 the Company has 
     taken the exemption not to present consolidated financial 
     statements as it is an investing company and measures 
     all of its investments at fair value through the income 
     statement. 
 
 
 
 
2.   EARNINGS PER SHARE 
                                                            2016         2015 
                                                            GBP          GBP 
 
 Profit/(Loss) for the purposes of basic and fully 
  diluted earnings per share                              5,296,633     (185,121) 
                                                               2016          2015 
                                                             Number        Number 
     Weighted average number of ordinary shares: 
 For calculation of basic earnings per share             82,298,281    49,375,127 
 For calculation of fully diluted earnings per share     82,298,281    49,375,127 
                                                               2016          2015 
 Earnings per share: 
 Basic earnings/(loss) per share                          6.4 pence  (0.37 pence) 
 Fully diluted earnings/(loss) per share                  6.4 pence  (0.37 pence) 
 
 
3.   Annual General Meeting (AGM) 
 The annual report will be available from the company 
  website from 17 February 2017 and will be posted to 
  shareholders on or before 24 February 2017. The annual 
  report contains a notice of the AGM which will be 
  held at 9.30am on 16 March 2017 at the offices of 
  Reed Smith, The Broadgate Tower, 20 Primrose Street, 
  London, EC2A 2RS. 
 
 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq 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 
 
 
 
 

(END) Dow Jones Newswires

February 17, 2017 02:00 ET (07:00 GMT)

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