TIDMTMT
RNS Number : 7111F
TMT Investments PLC
29 April 2014
29 April 2014
TMT INVESTMENTS PLC
("TMT" or the "Company")
Final results for the year ended 31 December 2013
TMT Investments PLC, which invests in high-growth,
internet-based companies across a variety of sectors, is pleased to
announce its final results for the year ended 31 December 2013.
Key highlights
-- US$1.30 NAV per share (up from US$1.09 as of 31 December 2012)
-- US$2.3 million invested in five new companies
-- Additional US$3.1 million invested in four existing portfolio companies
-- 29 investments to date since IPO
-- Multi-diversified portfolio by business sector, customer base, growth stage and geography
-- US$2.3m in cash reserves, with zero debt
-- 2 profitable exits, 1 write-off and a number of significant positive portfolio revaluations
Alexander Selegenev, Executive Director of TMT, commented:
"We are pleased to report that in 2013 a number of TMT's
portfolio companies demonstrated strong growth and attracted
further investment from a number of prominent investors as they
continued to develop and refine their successful business models.
The NAV of US$1.30 per share reflects the increased valuation of
the portfolio, up from US$1.09 at the end of 2012.
2013 was our third full year as a publicly traded company during
which we reviewed over two hundred investment opportunities.
TMT largely invests in earlier-stage companies typically at
valuations of up to $20m that we believe have the potential to
outgrow their competitors. We believe that at present this is where
the best risk/reward opportunities in the internet sector lie and
where we see the potential for significant increases in valuation.
Whilst there are a myriad of opportunities available, careful
selection and assessment remain key to distinguish potential
winners from also-rans.
We remained attentive to attractive opportunities in 2013 and
invested US$2.3 million in five new companies (mobile advertising
platform Adinch, social media sharing tool provider ShareThis,
online publishing and distribution platform Graphicly, event
planning mobile app platform Attendify, and farm management
software provider VitalFields).
2013 was a year in which we closely monitored the evolution of
the bulk of our investments made in 2011 and 2012. We invested an
additional US$3.1 million in four existing portfolio companies
(Tracks Media, rollApp, Backblaze and Pipedrive) that have either
pivoted their business (Tracks Media, renamed as Kanvas) or are
showing good progress (the latter three).
In order to reduce overall portfolio risk, we have made 29
investments to date since inception and constructed a portfolio
that is highly diversified by business sector, customer base (B2B
and B2C), growth stage and geography.
We continue to see a stream of exciting investment opportunities
and expect to announce a number of notable developments in our
existing investee companies in due course."
For further information contact:
TMT Investments Plc +44 1534 281 843
Mr. Alexander Selegenev alexander.selegenev@tmtinvestments.com
www.tmtinvestments.com
ZAI Corporate Finance Ltd.
NOMAD and Broker
Ray Zimmerman/Richard Morrison/Irina
Lomova +44 20 7060 2220
Kinlan Communications Tel. +44 20 7638 3435
David Hothersall davidh@kinlan.net
EXECUTIVE DIRECTOR'S STATEMENT
In 2013, the Company had a number of exciting developments,
overall contributing to a significant increase in its net asset
value.
Portfolio Performance
Similarly to 2012, the biggest "reporting challenge" faced by
the Company in 2013 was due to the fact that the majority of our
investments are made in privately held companies, which do not have
a sufficiently long history of earnings. This means that,
regardless of how impressively (or otherwise) some of our portfolio
companies may have grown in terms of operating metrics (downloads,
audience rankings, paying clients, etc.) and revenue, changes in
fair value of our earlier-stage portfolio companies cannot be
justified under the IFRS rules unless there has been an independent
equity financing round or other measurable reliable evidence to
support a change in the valuation. As of 31 December 2013,
DepositPhotos remains the only company in our portfolio suitable
for the Òearnings methodÓ of valuation under the IFRS rules.
However, with the growing number of investee companies, we now see
a consistent stream of corporate finance activity across our
portfolio, which provides the basis for relevant revaluations.
In 2013, the following developments took place in the Company's
portfolio:
Cash and part-cash exits:
-- In March 2013, Socialize, Inc., which generates greater user engagement and more downloads by making mobile apps
more social, was acquired by ShareThis, Inc. ("ShareThis"), a leading social media sharing tool provider. TMT's
total maximum consideration for the transaction is US$713,991, representing a premium of approximately US$214,000
(or 43%) to the value of TMT's original investment in Socialize made in December 2011, or an internal rate of
return ("IRR") of up to 28%.
-- In May 2013, Todoroo, Inc. ("Astrid"), a leading online "to-do" manager, was acquired by Yahoo! Inc. TMT's total
consideration for the transaction was US$673,665, representing a premium of approximately US$273,000 (or 68%) to
the value of TMT's original investment in Astrid made in April 2012, or an IRR of 57%.
-- The entire principal of the Company's convertible note in PeekYou, together with all applicable interest, was
repaid to TMT in a number of monthly tranches in 2013, generating a 5% IRR for the Company. TMT's original
investment in PeekYou was made on 3 November 2011 and consisted of a US$123,671 unsecured convertible promissory
note in PeekYou.
Impairments and write-offs:
-- In the first half of 2013, Hotlist, Inc. ("Hotlist"), a mobile app for discovering events, experienced
significant difficulties. The Hotlist online service and mobile applications were suspended. Under the
circumstances, at the time of the interim results published in September 2013 the Board of TMT considered it
prudent to incur an impairment charge equal to 100% of the fair value of the Company's investment in Hotlist
(approx. US$415,000). Hotlist has subsequently been dissolved.
Positive non-cash revaluations:
-- In February 2013, Gild, Inc. ("Gild"), which identifies and ranks outstanding IT programmers through harnessing
big data and its own proprietary algorithm, completed a new equity financing round. The transaction represents
an uplift of approximately US$13,000 (or 15%) in the fair value of TMT's investment in Gild, compared to the
amount reported as of 31 December 2012.
-- In June 2013, rollApp, Inc. ("rollApp"), which delivers third-party software to any web-browser-equipped device,
completed the initial closing of a new US$1,000,000 equity financing round. As part of the initial closing, TMT
acquired newly issued preferred shares in rollApp for an aggregate consideration of US$50,000. The transaction
represents an uplift of approximately US$140,000 (or 39%) in the fair value of TMT's investment in rollApp,
compared to the amount reported as of 31 December 2012.
-- In the first half of 2013, Wanelo, Inc. ("Wanelo"), the online social shopping platform, completed an equity
financing round led by a number of prominent investors. The transaction represents an uplift of approximately
US$5 million (or 1,413%) in the fair value of TMT's investment in Wanelo, compared to the amount reported as of
31 December 2012.
-- In August 2013, Graphicly, Inc. ("Graphicly") completed the initial closing of a new equity financing round.
Pursuant to the terms of the Company's convertible promissory note in Graphicly, the outstanding principal and
unpaid accrued interest of the note amounting to US$358,458 was automatically converted into Graphicly's
preference shares. The transaction represents an uplift of approximately US$130,000 (or 36%) in the fair value
of TMT's original investment in Graphicly made in April 2013.
-- In August 2013, Wrike, Inc. ("Wrike") completed a new equity financing round led by Bain Capital Ventures. The
transaction represents an uplift of approximately US$990,000 (or 99%) in the fair value of TMT's investment in
Wrike, compared to the amount announced as of 30 June 2013.
Negative non-cash revaluations:
-- In August 2013, as part of a mutually agreed recapitalization programme, in which all promissory note holders
agreed to convert their notes into equity, the outstanding principal of the Company's convertible promissory
notes in Tracks Media, Inc. ("Tracks"), amounting to US$536,500 was converted into Tracks's common shares. As
part of the recapitalisation, all the outstanding accrued interest on the convertible notes has been waived. At
the end of 2013, Tracks completed a new equity round, which resulted in the reduction of approximately US$199,000
(or 37%) in the fair value of TMT's investment in Tracks, compared to the amount announced as of 30 June 2013.
Key Portfolio Company Developments in 2013 (compared to 2012;
source: TMT's portfolio companies)
Adinch (online advertising platform):
-- European data centre built
-- Sales team expanded
-- Product fully launched at the end of 2013
AppsIndep (online games developer):
-- Beta version of online game Affected Zone launched
-- Too early to assess results
-- US$720,000 raised via convertible notes
Backblaze (online data backup provider):
-- Revenues up 42%
-- Total number of licensed computers up 41%
-- Rated #1 of 41 online backup services by About.com
-- Won prestigious SIIA CODiE award for "Best Cloud Storage & Back Up Solution"
-- Opened a large new data centre with space for 500 petabytes of cloud storage
Depositphotos (photobank):
-- Revenues up 50%
-- Total number of authors up 151%
-- Total number of files in the photobank up 76%
-- New mobile application Clashot successfully launched
Pipedrive (sales CRM software):
-- Revenues up 190%
-- Total paying customers up 135%
-- New US$2.4 million convertible note (with a US$17 million conversion cap)
-- Management relocated to the USA
rollApp (provider of access to 3rd party apps from any
browser):
-- Total applications available on the platform up 131%
-- Monthly active users up 112%
-- Website traffic (total number of visits) grew by 3,861%
-- US$1 million new equity capital raised
Sharethis (provider of social media plug-ins and sharing
insights):
-- Revenues and number of clients growing steadily
-- Ranked 35 on Forbes' "America's Most Promising Companies List"
Unicell (mobile application service and content provider):
-- Returned to profitability
Wanelo (online social shopping platform):
-- >US$10 million new equity raised
-- "Best e-commerce Application" (Crunchies Awards 2013)
-- Currently 300,000 stores and 12 million products on the platform
Wrike (project management and collaboration software):
-- Revenues up 76%
-- Total number of paid accounts up 62%
-- US$10m new equity raised
New investments
In 2013, the Company invested US$2.3 million in five new
companies (mobile advertising platform Adinch, social media sharing
tool provider ShareThis, online publishing and distribution
platform Graphicly, event planning mobile app platform Attendify,
and farm management software provider VitalFields), as well as an
additional US$3.1 million in four existing portfolio companies
(Tracks Media, rollApp, Backblaze and Pipedrive).
Buy-back of the Company's shares
On 4 June 2013, TMT agreed to purchase 636,363 ordinary shares
in the Company from one of the Company's shareholders at a price of
US$1.10 per share, at a cost of US$699,999. As the shares were
acquired at a discount to the Company's net asset value per share,
the purchase has contributed positively to the Company's NAV per
share. The acquired shares were subsequently cancelled, and the
Company does not hold any shares in treasury.
NAV per share
The Company's net asset value per share as of 31 December 2013
increased to US$1.30 (31 December 2012: US$1.09).
Operating Expenses
In 2013, the Company's Administrative Expenses of US$1,293,538
were generally in line with 2012 levels (US$1,189,268). Total
Operating Expenses increased in the reporting period due to the
higher share-based option charge of US$576,207 (2012: US$128,183).
This is a non-cash item resulting from the Company's share option
program adopted in October 2012.
Financial position
In March 2013 the Company raised US$1.12 million at US$1.50 per
share from a number of new investors. The Company's portfolio
realisations have also contributed to the Company's cash reserves.
Accordingly, despite the Company's share buy-back and continuing
investment programme, as of the date of this report, the Company
has no debt and approximately US$2.3 million in cash reserves.
Other developments: Changes to the UK Take-over Code
At the time of TMT's admission to AIM, the Company was not
subject to the UK Take-over Code ("Code"). However, in order to
provide the Company's shareholders with certain customary
protections, some of the Code's provisions were incorporated into
the Articles. As of 30 September 2013, all UK, Channel Island and
Isle of Man incorporated public companies that have securities
admitted to trading on AIM have become subject to the Code,
irrespective of their place of central management and control. As a
result, TMT has become subject to the Code from 30 September 2013.
Although the Code-related provisions in the Articles were drafted
in such a way that they automatically ceased to have effect when
the Company became subject to the Code on 30 September 2013, in
order to avoid any potential confusion, the Company intends to
remove those provisions from its Articles altogether. To that end,
the Company intends to propose a relevant resolution at the
Company's next General Meeting to approve the necessary
changes.
Outlook
Since 31 December 2013, the Company has invested US$200,000 in
two new companies (technology developer for visually impaired
people PROvision/Oriense, and smartphone solution provider for
senior citizens E2C), as well as US$250,000 in existing portfolio
companies KitApps/Attendify and rollApp.
We continue to have a strong pipeline of new investment
opportunities, and intend to complete a number of new and follow-on
investments in 2014. With a number of our portfolio companies
experiencing rapid growth, we expect a number of positive
revaluations of our investee companies. At the same time, given the
risky nature of earlier-stage venture capital investments, we
expect some negative revaluations in due course as well.
We look forward to updating our shareholders on the Company's
progress in the near future.
Alexander Selegenev
Executive Director
Statement of Comprehensive Income
For the year For the
ended 31/12/2013 year ended
31/12/2012
Notes USD USD
(Losses)/gains on investments 3 (29,593) 315,049
-------------------------------------------- ------ ------------------ ------------
(29,593) 315,049
Expenses
Share-based payment charge 15 (576,207) (128,183)
Administrative expenses 5 (1,293,538) (1,189,268)
-------------------------------------------- ------ ------------------ ------------
Operating loss (1,899,338) (1,002,402)
Net finance income 7 50,035 127,251
-------------------------------------------- ------ ------------------ ------------
Loss before taxation (1,849,303) (875,151)
Taxation 8 - -
-------------------------------------------- ------ ------------------ ------------
Loss attributable to equity shareholders (1,849,303) (875,151)
Other comprehensive income for the year:
Change in fair value of available-for-sale
financial assets 16 5,932,139 2,005,228
-------------------------------------------- ------ ------------------ ------------
Total comprehensive income for the year 4,082,836 1,130,077
-------------------------------------------- ------ ------------------ ------------
Loss per share
Basic and diluted loss per share (cents
per share) 9 (7.42) (3.62)
-------------------------------------------- ------ ------------------ ------------
Statement of Financial Position
At 31 December At 31 December
2013,USD 2012,USD
Notes
Non-current assets
Investments in equity shares 10 26,932,335 15,434,540
Convertible loan notes receivable 10 2,193,304 3,691,691
Total non-current assets 29,125,639 19,126,231
Current assets
----------------------------------- ------ ------------------------ ------------------------
Trade and other receivables 11 79,532 203,988
Cash and cash equivalents 12 3,242,269 7,717,554
Total current assets 3,321,801 7,921,542
Total assets 32,447,440 27,047,773
Current liabilities
Trade and other payables 13 96,008 114,315
Total liabilities 96,008 114,315
----------------------------------- ------ ------------------------ ------------------------
Net assets 32,351,432 26,933,458
----------------------------------- ------ ------------------------ ------------------------
Equity
Share capital 14 26,895,179 26,136,248
Share-based payment reserve 16 695,970 128,183
Fair value reserve 16 7,937,367 2,005,228
Retained losses 16 (3,177,084) (1,336,201)
Total equity 32,351,432 26,933,458
----------------------------------- ------ ------------------------ ------------------------
Statement of Cash Flows
For the year For the
ended year ended
31/12/2013, 31/12/2012,
USD USD
Notes
Operating activities
Operating loss 16 (1,899,338) (1,002,402)
------------------------------------------------- ----- ------------ ------------
Adjustments for non-cash items:
Profit on disposal of available-for-sale
assets 3 (320,563) (200,000)
Gain on conversion of loan notes to equity (92,841) -
Impairment of available-for-sale assets
and accrued interest 3 458,863 -
Employee salaries settled by issue of
shares 14 300,000 -
Share-based payment charge 15 576,207 128,183
Amortized costs of convertible notes
receivable 3 28,263 48,853
(949,409) (1,025,366)
------------------------------------------------- ----- ------------ ------------
Changes in working capital:
Decrease/(increase) in trade and other
receivables 11 56,276 (154,478)
(Decrease)/increase in trade and other
payables 13 (18,307) 41,986
Net cash used by operating activities (911,440) (1,137,858)
------------------------------------------------- ----- ------------ ------------
Investing activities
Interest received 7 50,035 127,251
Purchase of available-for-sale assets 10 (5,412,720) (10,833,145)
Proceeds from sale of available-for-sale
assets 10 1,339,909 1,200,000
------------------------------------------------- ----- ------------ ------------
Net cash used by investing activities (4,022,776) (9,505,894)
------------------------------------------------- ----- ------------ ------------
Financing activities
Cash proceeds from issue of shares 14 1,158,930 6,500,001
Purchase of own shares 14 (699,999) -
------------------------------------------------- ----- ------------ ------------
Net cash from financing activities 458,931 6,500,001
------------------------------------------------- ----- ------------ ------------
Decrease in cash and cash equivalents (4,475,285) (4,143,751)
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the beginning
of the year 7,717,554 11,861,305
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the end of
the year 12 3,242,269 7,717,554
------------------------------------------------- ----- ------------ ------------
Statement of Changes in Equity
For the year ended 31 December 2013 and for year ended 31
December 2012, USD
Share capital Share-based Fair value reserve Retained losses Total
payment reserve
Notes USD USD USD USD USD
Balance at 31
December 2011 19,636,247 8,420 - (469,470) 19,175,197
------------------- ------ -------------- ------------------- ------------------- ---------------- -------------
Total
comprehensive
income/(loss)
for the year - - 2,005,228 (875,151) 1,130,077
------------------- ------ -------------- ------------------- ------------------- ---------------- -------------
Issue of shares 6,500,001 - - 6,500,001
Share based
payment charge 15 - 128,183 - - 128,183
Lapse of share
options 15 - (8,420) - 8,420 -
Balance at 31
December 2012 26,136,248 128,183 2,005,228 (1,336,201) 26,933,458
------------------- ------ -------------- ------------------- ------------------- ---------------- -------------
Total
comprehensive
income/(loss)
for the year - - 5,932,139 (1,849,303) 4,082,836
------------------- ------ -------------- ------------------- ------------------- ---------------- -------------
Issue of shares 14 1,458,930 - - - 1,458,930
Buy back and
cancellation of
shares 14 (699,999) - - - (699,999)
Share-based
payment charge 15 - 576,207 - - 576,207
Lapse of share
options 15 - (8,420) - 8,420 -
Balance at 31
December 2013 26,895,179 695,970 7,937,367 (3,177,084) 32,351,432
------------------- ------ -------------- ------------------- ------------------- ---------------- -------------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2013
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.
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.
Financial statements of the Company are prepared by and approved
by the Directors in accordance with International Financial
Reporting Standards, International Accounting Standards and their
interpretations issued or adopted by the International Accounting
Standards Board as adopted by the European Union ("IFRS"). The
CompanyÕs accounting reference date is 31 December.
2. Summary of significant accounting policies
2.1 Basis of presentation
The principal accounting policies applied by the Company in the
preparation of these financial statements are set out below and
have been applied consistently.
The financial statements have been prepared on a going concern
basis, under the historical cost basis as modified by the fair
value of available-for-sale financial assets, as explained in the
accounting policies below, and in accordance with IFRS. Historical
cost is generally based on the fair value of the consideration
given in exchange for assets.
2.2 Going concern
The Directors confirm that, after giving due consideration to
the financial position and expected cash flows of the Company; they
have a reasonable expectation that the Company will have adequate
cash resources to continue in operational existence for the
foreseeable future, and for at least one year from the date of
approval of these financial statements and they have therefore
adopted the going concern basis in preparing the financial
statements.
2.3 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker
who is responsible for allocating resources and assessing
performance of the operating segments and which has been identified
as the Board of Directors that make strategic decisions. For the
purposes of IFRS 8 'Operating Segments' the Company currently has
one segment, being 'Investing in the TMT sector'.
Even though the Company only has one segment, there are still
geographical disclosures that need to be made to comply with IFRS 8
'Operating Segments'.
The Company analyses revenue and non-current financial assets
according to the geographical location of the investment (see note
4).
2.4 Foreign currency translation
(a) Functional and presentation 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 year end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the statement of comprehensive
income.
Conversation rates, USD
-----------------------------------------------
Currency Average
At 31.12.2013 rate, 2013
----------------- -------------- ------------
British pounds,
GBP 1.6495 1.5649
Euro 1.381 1.3283
----------------- -------------- ------------
2.5 Cash and cash equivalents
Cash and cash equivalents consist of cash at bank and in hand,
deposits held at call with banks, bank overdrafts and other
short-term highly liquid investments with maturities of three
months or less from the date of acquisition.
2.6 Financial assets
Recognition and measurement
Investments are recognized and de-recognized on a date where the
purchase or sale of an investment is under a contract whose terms
require the delivery or settlement of the investment. The Company
manages its investments with a view to profiting from the receipt
of dividends and changes in fair value of equity investments.
"Available-for-sale" financial instruments include unlisted
equity investments and convertible promissory loan notes. Equity
instruments classified as available-for-sale are those which are
neither classified as held-for-trading nor designated as fair value
through profit or loss. Convertible promissory loan notes are
treated as similar in nature to the unlisted equity investments and
designated as available-for-sale.
Available-for-sale investments are carried at fair values except
for financial assets that do not have a quoted market price in an
active market and whose fair value cannot be reliably measured
which are measured at cost less any identified impairment losses at
the end of the period in accordance with the IAS 39 para 46 (c)
exemptions. Fair value information has therefore not been disclosed
for those investments.
Where there has been a relevant transaction during the year that
gives an indication of the fair value of the available-for-sale
unlisted shares, the shares are included at that fair value and the
increase or decrease in fair value is recognised in the investment
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 investors.
Investments are classified on recognition as "fair value through
profit and loss" when their fair values can be estimated reliably
on a regular basis and when they are managed on a fair value basis.
Fair value changes of investments at fair value through profit and
loss are included within profit/loss in the income statement. At 31
December 2013 all investments are classified as
"available-for-sale" and none are classified as "fair value through
profit and loss".
Financial assets that qualify as an associate as 20% or more of
the voting rights are held by the company, are exempt from IAS 28
'Investments in Associates', as TMT Investments plc is a venture
capital organisation. Such investments are therefore treated as
available-for-sale financial assets.
Income
Interest income from convertible notes receivable is recognized
as it accrues by reference to the principal outstanding and the
effective interest rate applicable, which is the rate that exactly
discounts the estimated future cash flows through the expected life
of the financial asset to the asset's carrying value.
Impairment of available-for-sale financial assets
A financial asset is considered to be impaired if objective
evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset. In case of
available for sale assets, a significant or prolonged decline in
the fair value of the financial asset below its cost is considered
an indicator that the financial assets are impaired.
If objective evidence indicates that financial assets that are
carried at cost need to be tested for impairment, calculations are
based on information derived from business plans and other
information available for estimating their fair value. Any
impairment loss is included in profit/loss for the year in the
Statement of Comprehensive Income.
2.7 Net finance income
Net finance income comprises interest income on deposits.
Interest income is recognized as it accrues in the statement of
comprehensive income, using the effective interest method. Finance
costs comprise interest expenses on borrowings and the unwinding of
the discount on provisions.
2.8 Taxation
Deferred tax is provided in full using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements.
Deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a
business combination that, at the time of the transaction, affects
neither accounting nor taxable profit or loss. Deferred tax is
determined using tax rates that are expected to apply when the
related deferred tax asset is realised or when the deferred tax
liability is settled. Deferred tax assets are recognised to the
extent that it is probable that future taxable profits will be
available against which the temporary differences can be
utilised.
2.9 Equity instruments
Ordinary shares are classified as equity. Costs directly
attributable to the issue of new shares are shown in equity as a
deduction from the proceeds.
2.10 Share-based payments
The fair value of options granted to employees is recognized as
an employee expense, with a corresponding increase in equity, over
the period that the employees become unconditionally entitled to
the options. The amount recognized as an expense is adjusted to
reflect the actual number of share options that vest. For equity
settled share-based payment transactions other than transactions
with employees the Company measures the goods or services received
at their fair value, unless that fair value cannot be estimated
reliably. If this is the case the Company measures their fair
values and the corresponding increase in equity, indirectly, by
reference to the fair value of equity instruments granted.
The Company enters into arrangements that are equity-settled
share-based payments with certain employees. These are measured at
fair value at the date of grant, which is then recognized in the
statement of comprehensive income on a straight-line basis over the
vesting period, based on the Company's estimate of shares that will
eventually vest. Fair value is measured by use of an appropriate
model. In valuing equity-settled transactions, no account is taken
of any vesting conditions, other than conditions linked to the
price of the shares of TMT Investments. The charge is adjusted at
each year end date to reflect the actual number of forfeitures,
cancellations and leavers during the period. The movement in
cumulative charges since the previous year end is recognized in the
statement of comprehensive income, with a corresponding entry in
equity.
2.11 New IFRSs and interpretations not applied
The IASB has issued the following standards and interpretations
which have been endorsed by the European Union to be applied to
financial statements with periods commencing on or after the
following dates:
Effective for period beginning on or after
IFRS 9 Financial Instruments 1 January 2015
======= ================================================================= ==========================================
IFRS 10 Consolidated Financial Statements 1 January 2014
======= ================================================================= ==========================================
IFRS 11 Joint Arrangements 1 January 2014
======= ================================================================= ==========================================
IFRS 12 Disclosure of Interests in Other Entities 1 January 2014
======= ================================================================= ==========================================
IFRS 13 Fair Value Measurement 1 January 2014
======= ================================================================= ==========================================
IAS 27 Separate Financial Statements (2011) 1 January 2014
======= ================================================================= ==========================================
IAS 28 Investments in Associates and Joint Ventures (2011) 1 January 2014
======= ================================================================= ==========================================
IAS 32 Amendments to IAS 32 Disclosures - Offsetting Financial Assets 1 January 2014
and Financial Liabilities
======= ================================================================= ==========================================
The Directors do not anticipate that the adoption of these
standards and interpretations will have a material impact on the
financial statements in the period of initial application and have
decided not to adopt any of them early.
2.12 Accounting estimates and judgements
Estimates and judgements need to be regularly evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The Company makes estimates and
assumptions concerning the future. The resulting accounting
estimates will, by definition, rarely equal the related actual
results.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
The estimates significant to the financial statements during the
year and at the year end is the consideration of the fair value of
available-for-sale assets, the impairment of available-for-sale
assets and share-based payment calculations, as set out in the
relevant accounting policies shown above. A number of the
available-for-sale financial assets held by the Company are at an
early stage of their development. The Company cannot yet carry out
regular reliable fair value estimates of some of these investments.
Future events or transactions involving the companies invested in
may result in more accurate valuations of their fair values (either
upwards or downwards) which may affect the Company's overall net
asset value.
3 (Losses)/gains on investments
For the year ended 31/12/2013 For the year ended 31/12/2012
USD USD
Gross interest income from convertible notes
receivable 136,970 163,902
Amortized costs of convertible notes receivable (28,263) (48,853)
Net interest income from convertible notes receivable 108,707 115,049
Profit on disposal of equity investments - 200,000
Profit on disposal of convertible notes 320,563 -
Impairment of available-for-sale assets (390,683) -
Impairment of interest accrued (68,180) -
------------------------------------------------------ ------------------------------ ------------------------------
Total net (losses)/gains on investments (29,593) 315,049
------------------------------------------------------ ------------------------------ ------------------------------
4 Segmental analysis
Geographic information
The Company has investments in four principal geographical areas
- USA, Israel, BVI, Estonia and Cyprus.
Non-current financial assets
As at 31/12/2013
USA Israel BVI Cyprus Estonia Total
USD USD USD USD USD USD
-------------------- ----------- ------------------ -------- ---------- -------- -----------
Equity investments 21,781,129 2,982,471 305,050 1,863,685 - 26,932,335
Convertible notes 2,051,605 - - - 141,699 2,193,304
-------------------- ----------- ------------------ -------- ---------- -------- -----------
Total 23,832,734 2,982,471 305,050 1,863,685 141,699 29,125,639
-------------------- ----------- ------------------ -------- ---------- -------- -----------
As at 31/12/2012
USA Israel BVI Cyprus Estonia Total
USD USD USD USD USD USD
-------------------- ----------- ---------- -------- ---------- -------- -----------
Equity investments 10,283,334 2,982,471 305,050 1,863,685 - 15,434,540
Convertible notes 3,691,691 - - - - 3,691,691
-------------------- ----------- ---------- -------- ---------- -------- -----------
13,975,025 2,982,471 305,050 1,863,685 - 19,126,231
-------------------- ----------- ---------- -------- ---------- -------- -----------
5 Administrative expenses
Administrative expenses include the following amounts:
For the year ended 31/12/2013 For the year ended 31/12/2012
USD USD
------------------------------- ------------------------------ ------------------------------
Staff expenses (note 6) 718,030 629,988
Professional fees 177,365 239,265
Legal fees 56,341 46,770
Bank and LSE charges 26,118 25,533
Audit and accounting fees 43,281 47,538
Rent 172,608 43,152
Other expenses 106,709 158,212
Currency exchange (gain)/loss (6,914) (1,190)
------------------------------- ------------------------------ ------------------------------
1,293,538 1,189,268
------------------------------- ------------------------------ ------------------------------
6 Staff expenses
For the year ended 31/12/2013 For the year ended 31/12/2012
USD USD
-------------------- ------------------------------ ------------------------------
Directors' fees 268,283 284,765
Wages and salaries 449,747 345,223
718,030 629,988
-------------------- ------------------------------ ------------------------------
Wages and salaries shown above include salaries and bonuses
relating to 2013. These costs are included in administrative
expenses. As discussed in note 14, wages and salaries include
US$300,000 of employee salaries that were settled by the issue of
shares in lieu of cash payments. In addition to the above, there
are employment expenses for share-based payments of US$576,207 (for
the year ended 31 December 2012: US$128,183).
The average number of staff employed (excluding Directors) by
the Company during the year was 5 (2012: 4).
The Directors' fees for 2013 were as follows:
For the year ended 31/12/2013 For the year ended 31/12/2012
USD USD
---------------------- ------------------------------ ------------------------------
Alexander Selegenev 110,852 126,205
Yuri Mostovoy 100,000 100,000
James Joseph Mullins 31,161 31,922
Petr Lanin 26,270 26,638
---------------------- ------------------------------ ------------------------------
268,283 284,765
---------------------- ------------------------------ ------------------------------
The Directors' fees shown above are all classified as "short
term employment benefits" under International Accounting Standard
24. The Directors do not receive any pension contributions or other
benefits.
Key management personnel of the Company are defined as those
persons having authority and responsibility for the planning,
directing and controlling the activities of the Company, directly
or indirectly. Key management of the Company are therefore
considered to be the Directors of the Company. There were no
transactions with the key management, other than their Directors
fees and share options.
7 Net finance income
For the year ended 31/12/2013 For the year ended 31/12/2012
USD USD
----------------- ------------------------------ ------------------------------
Interest income 50,035 127,251
50,035 127,251
----------------- ------------------------------ ------------------------------
8 Income tax expense
For the year ended 31/12/2013 For the year ended 31/12/2012
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%.
9 Loss per share
The calculation of basic loss per share is based upon the net
loss for the year ended 31 December 2013 attributable to the
ordinary shareholders of US$1,849,303 (2012: net loss of
US$875,151) and the weighted average number of ordinary shares
outstanding calculated as follows:
Loss per share For the year ended 31/12/2013 For the year ended 31/12/2012
--------------------------------------------------- ------------------------------ ------------------------------
Basic loss per share (cents per share) (7.42) (3.62)
Loss attributable to equity holders of the entity (1,849,303) (875,151)
--------------------------------------------------- ------------------------------ ------------------------------
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 year For the year ended 31/12/2013 For the year ended 31/12/2012
outstanding)
------------------------------------------------------ ------------------------------ ------------------------------
Weighted average number of shares in issue
Ordinary shares 24,914,735 24,186,185
24,914,735 24,186,185
------------------------------------------------------ ------------------------------ ------------------------------
Effect of dilutive potential ordinary shares
Share options 1,042,733 146,735
------------------------------------------------------ ------------------------------ ------------------------------
Weighted average of shares for the year (fully
diluted) 25,957,468 24,332,920
------------------------------------------------------ ------------------------------ ------------------------------
The diluted loss per share for both 2013 and 2012 is kept the
same as the basic loss per share because the conversion of the
share options decreases the basic loss per share and is therefore
anti-dilutive.
10 Non-current financial assets
At 31 December 2013 At 31 December 2012
Available-for-sale financial assets, USD:
Investments in equity shares (i)
- unlisted shares 26,932,335 15,434,540
Convertible notes receivable (ii)
- promissory notes 2,193,304 3,691,691
------------------------------------------- -------------------- --------------------
29,125,639 19,126,231
------------------------------------------- -------------------- --------------------
Reconciliation of fair value measurements of non-current
financial assets:
Available-for-sale Total
----------------------------------------------- ---------------------------------- ------------
Unlisted Convertible
shares notes
USD USD USD
----------------------------------------------- ---------------- ---------------- ------------
Balance as at 1 January 2012 5,944,459 1,392,252 7,336,711
----------------------------------------------- ---------------- ---------------- ------------
Total gains or losses in 2012:
- in profit or loss 197,993 (46,846) 151,147
- in other comprehensive income 2,005,228 - 2,005,228
Purchases (including consulting & legal fees) 8,486,860 2,346,285 10,833,145
Disposal of investment (1,200,000) - (1,200,000)
----------------------------------------------- ---------------- ---------------- ------------
Balance as at 31 December 2012 15,434,540 3,691,691 19,126,231
----------------------------------------------- ---------------- ---------------- ------------
Total gains or losses in 2013:
- in profit or loss - impairment - (390,683) (390,683)
- in other comprehensive income 5,932,139 - 5,932,139
Purchases (including consulting & legal fees) 3,582,550 1,830,170 5,412,720
Disposal of investment (carrying value) - (1,047,609) (1,047,609)
Conversion of notes to equity and net gain 1,983,106 (1,890,265) 92,841
----------------------------------------------- ---------------- ---------------- ------------
Balance as at 31 December 2013 26,932,335 2,193,304 29,125,639
----------------------------------------------- ---------------- ---------------- ------------
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.
(i) Equity investments as at 31 December 2013:
Invested Date of Value at 1 Additions Capitalized Gain/loss Additional Disposals, Value at Equity
company initial Jan 2013, to equity consulting from changes equity USD 31 Dec stake
investment USD investments and legal in fair investments 2013, USD owned
during the fees, USD value of resulting
period, USD equity from
investments, conversion
USD of
convertible
notes, USD
--------------- ------------ ----------- ------------ ------------ ------------- ------------ ----------- ----------- -------
Unicell 15/09/2011 2,982,471 - - - - - 2,982,471 10.00%
Depositphotos 26/07/2011 5,063,023 - - (65,738) - - 4,997,285 27.75%
RollApp 19/08/2011 360,000 50,000 3,080 136,920 - - 550,000 10.00%
Wanelo 21/11/2011 355,000 - - 5,014,400 - - 5,369,400 4.71%
Gild 05/12/2011 156,910 - - 13,128 - - 170,038 1.57%
1-Page 06/02/2012 305,367 - - - - - 305,367 6.09%
ThusFresh 26/03/2012 510,000 - - - - - 510,000 6.99%
Backblaze* 24/07/2012 2,510,759 2,503,625 20,055 - - - 5,034,439 18.03%
UsingMiles 23/08/2012 260,000 - - - - - 260,000 3.00%
Gentoo 17/09/2012 260,000 - - - - - 260,000 6.25%
Favim 24/10/2012 305,050 - - - - - 305,050 20.00%
Appsindep 12/11/2012 1,863,685 - - - - - 1,863,685 19.24%
Virool 29/08/2012 502,275 - - - - - 502,275 1.69%
Adinch 19/02/2013 - 1,000,000 4,000 - - - 1,004,000 20.00%
Tracks 24/11/2011 - - - (195,150) 536,500 - 341,350 6.83%
Wrike 12/06/2012 - - 1,790 903,509 1,085,851 - 1,991,150 4.50%
Graphicly 03/04/2013 - - - 125,070 360,755 - 485,825 8.47%
Total 15,434,540 3,553,625 28,925 5,932,139 1,983,106 - 26,932,335
----------------------------- ----------- ------------ ------------ ------------- ------------ ----------- -----------
(ii) Convertible loan notes as at 31 December 2013:
Invested Date of Value at Additions Capitalized Amortized Reductions Profit on Disposals, Value at Term, Int
company initial 1 Jan to consulting costs, due to disposal/ USD 31 Dec years rate,
investment 2013, USD convertible and legal USD conversions Impairment 2013, USD %
note fees, USD to equity, charge,
investments USD USD
during the
period, USD
------------- ------------ ---------- ------------ ------------ ---------- ------------ ----------- ------------ ---------- ------ ------
Socialize 19/12/2011 494,644 - - (2,329) - 81,121 (573,436) - 2 6%
Tracks 24/11/2011 444,787 100,000 720 (6,324) (536,500) (2,683) - - 2 5%
Ninua 08/06/2011 504,544 - - (4,544) - - - 500,000 1.5 5%
PeekYou 03/11/2011 122,378 - - 1,293 - 2,689 (126,360) - 1 5%
Todoroo 12/04/2012 400,000 - 3,360 - - 236,753 (640,113) - 1 8%
Hotlist 18/04/2012 393,030 - - (5,030) - (388,000) - - 1 6%
Wrike 12/06/2012 1,003,363 - 1,255 (3,151) (1,001,467) - - - 1 8%
Pipedrive 30/07/2012 328, 945 450,000 955 (2,634) - - - 777,266 2 2%
Sharethis 26/03/2013 - 570,030 2,000 (307) - - - 571,723 5 1%
Graphicly 03/04/2013 - 350,000 5,000 (2,702) (352,298) - - - 0.7 6%
KitApps 10/07/2013 - 200,000 5,000 (2,384) - - - 202,616 1 2%
VitalFields 20/12/2013 - 136,850 5,000 (151) - - - 141,699 1 15%
------------- ------------ ---------- ------------ ------------ ---------- ------------ ----------- ------------ ---------- ------ ------
Total 3,691,691 1,806,880 23,290 (28,263) (1,890,265) (70,120) (1,339,909) 2,193,304
--------------------------- ---------- ------------ ------------ ---------- ------------ ----------- ------------ ---------- ------ ------
11 Trade and other receivables
At 31 December 2013 At 31 December 2012
USD USD
----------------------------------------- -------------------- --------------------
Prepayments 9,767 25,029
Interest receivable on promissory notes 68,151 171,910
Interest receivable on deposits 1,614 7,049
79,532 203,988
----------------------------------------- -------------------- --------------------
12 Cash and cash equivalents
The cash and cash equivalents as at 31 December 2013 include
cash on hand and in banks, deposits, net of outstanding bank
overdrafts. The effective interest rate at 31 December 2013 was
1.33%.
Cash and cash equivalents comprises the following:
At 31 December 2013 At 31 December 2012
USD USD
--------------- -------------------- --------------------
Deposits 1,500,000 5,000,000
Bank balances 1,742,269 2,717,554
--------------- -------------------- --------------------
3,242,269 7,717,554
--------------- -------------------- --------------------
The following table represents an analysis of cash and
equivalents by rating agency designation based on Fitch rating or
their equivalent:
At 31 December 2013 At 31 December 2012
USD USD
----------------------------------- -------------------- --------------------
Bank balances
A rating 1,742,269 2,717,554
----------------------------------- -------------------- --------------------
1,742,269 2,717,554
----------------------------------- -------------------- --------------------
Deposits
A rating 1,500,000 5,000,000
----------------------------------- -------------------- --------------------
1,500,000 5,000,000
----------------------------------- -------------------- --------------------
3,242,269 7,717,554
----------------------------------- -------------------- --------------------
13 Trade and other payables
At 31 December 2013 At 31 December 2012
USD USD
--------------------------- -------------------- --------------------
Directors' fees payable 40,540 40,475
Trade payables 30,682 53,625
Other current liabilities 44 25
Accrued expenses 24,742 20,190
--------------------------- -------------------- --------------------
96,008 114,315
--------------------------- -------------------- --------------------
14 Share capital
On 31 December 2013 the Company had an authorised share capital
of unlimited shares of no par value and had issued share capital
of:
At 31 December 2013 At 31 December 2012
USD USD
---------------------------- -------------------- --------------------
Share capital 26,895,179 26,136,248
Issued capital comprises: Number Number
Fully paid ordinary shares 24,977,728 24,642,860
---------------------------- -------------------- --------------------
Number of shares Share capital,
USD
--------------------------------- ----------------- ---------------
Balance at 31 December 2012 24,642,860 26,136,248
Issue of shares 971,231 1,458,930
Share buy-back and cancellation (636,363) (699,999)
Balance at 31 December 2013 24,977,728 26,895,179
--------------------------------- ----------------- ---------------
On 7 March 2013, the Company allotted 750,398 new ordinary
shares of no par value each in the Company to new investors at a
price of US$1.50 per share, being a discount of 12% over the
closing price of the Company's shares on 6 March 2013 and raising
US$1,125,000.
On 30 April 2013, as a result of Alexander Selegenev's
exercising his option, the Company allotted 33,333 new ordinary
shares of no par value each in the Company to Alexander Selegenev
at a price of US$1.00 per share, raising US$33,333.
On 4 June 2013 the Company purchased 636,363 ordinary shares of
no par value each in the Company at a price of US$1.10 per ordinary
share, being a discount of 37% to the closing price of the
Company's shares on 3 June 2013, at a cost of US$699,999.
In December 2012, German Kaplun, Alexander Morgulchik and Artyom
Inyutin entered into agreements with the Company to receive all of
their 2013 salaries, amounting to US$300,000, in TMT shares on 31
December 2013 rather than monthly in cash. Accordingly, on 31
December 2013, the Company allotted 187,500 ordinary shares of no
par value each in the Company at a price of US$1.60 per share.
There have been no changes to share capital between the year end
date and the date of approval of these financial statements.
15 Share-based payments
For the year ended 31/12/2013 For the year ended 31/12/2012
USD USD
------------------------------------- ------------------------------ ------------------------------
Share option (compensation expense) 576,207 128,183
------------------------------------- ------------------------------ ------------------------------
Total share-based payment charge 576,207 128,183
------------------------------------- ------------------------------ ------------------------------
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
Option life, years 1-3
Exercise price US$1.00
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.
33,333 options that vested to Mr. Selegenev in the year ended 31
December 2012 were exercised. The exercise price was US$1.00 per
ordinary share. The share price on the date of exercise was
USD1.7925.
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
---------------------------------------------------- ---------------------
Fair value at the date of grant $0.25
Share price at grant date $1.03
Exercise price $1.00
Expected volatility, per cent 7.56%
Option life, years 1-3
Risk free interest rate, per cent 3.14%
---------------------------------------------------- ---------------------
Expected volatility is estimated by considering the Company's
data on AIM.
On 24 October 2012, Board of Directors approved a share option
plan (the "Plan") for directors, officers, employees of or
consultants to the Company and/or any company directly or
indirectly controlled by the Company.
Under the Plan, options for a total of 7,500,000 ordinary shares
in the Company, representing approximately 30% of the then issued
share capital (or 23% of the enlarged share capital at the time,
assuming full exercise of the options), can be made available at an
exercise price determined by the Board or its remuneration
committee, which will not be less than the closing middle market
price for the Company's share on AIM on the date of grant as
published by or on behalf of the London Stock Exchange plc.
Options will vest on a daily basis over a period of 3 years
whilst the option holder remains eligible, and vested options can
be exercised on each anniversary of the grant, but if not exercised
within 1 year from the allowable date of exercise, will lapse.
The following options, without performance conditions, have been
granted under the Plan on 25 October 2012:
Option
Price Year Option Price Option Price
Name Option Shares 1 Year 2 Year 3
----------------------------- -------------- ------------ ------------- -------------
German Kaplun (Employee) 1,125,000 US$1.40 US$1.55 US$1.70
Alexander Morgulchik
(Employee) 1,125,000 US$1.40 US$1.55 US$1.70
Alexander Selegenev
(Director) 1,125,000 US$1.40 US$1.55 US$1.70
Artyom Inyutin (Employee) 1,125,000 US$1.40 US$1.55 US$1.70
Yuri Mostovoy (Director) 562,500 US$1.40 US$1.55 US$1.70
Alexander Pak (Employee) 300,000 US$1.40 US$1.55 US$1.70
Levan Kavtaradze (Employee) 150,000 US$1.40 US$1.55 US$1.70
TOTAL 5,512,500
----------------------------- -------------- ------------ ------------- -------------
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 Option Price Option Price Option Price
percent) Year 1 Year 2 Year 3
-------------------------- ------------- ------------- -------------
Number of share options
granted 1,837,500 1,837,500 1,837,500
Fair value of share
option at date of grant 0.25 0.15 0.09
Share price at date
of grant 1.65 1.65 1.65
Exercise price 1.40 1.55 1.70
Expected volatility,
per cent 9.39% 9.39% 9.39%
Contractual option life,
years 0-1 0-2 0-3
Expected dividends,
percent 0 0 0
Risk free interest rate,
percent 0.41% 0.41% 0.41%
-------------------------- ------------- ------------- -------------
Expected volatility is estimated from the Company's share price
performance on AIM.
Number of Weighted average exercise
share options price of share options
--------------------------- --------------- --------------------------
Outstanding share options
at 31 December 2012 and
2013 5,512,500 1.55
--------------------------- --------------- --------------------------
Exercisable share options
at 31 December 2013 1,837,500 1.42
--------------------------- --------------- --------------------------
None of these options were exercised in the year ended 31
December 2013.
16 Reserves
Share based payment reserve Fair value reserve Retained losses Total
USD USD USD USD
----------------------------------- ---------------------------- ------------------- ---------------- ------------
Balance as at 1 January 2012 8,420 - (469,470) (461,050)
----------------------------------- ---------------------------- ------------------- ---------------- ------------
Loss for the year - - (875,151) (875,151)
Gain from changes in fair value - 2,005,228 - 2,205,228
Share based payment charge 128,183 - - 128,183
Transfer on lapse of share options (8,420) - 8,420 -
Balance as at 31 December 2012 128,183 2,005,228 (1,336,201) 797,210
-----------------------------------
Loss for the year - - (1,849,303) (1,849,303)
Gain from changes in fair value - 5,932,139 - 5,932,139
Share based payment charge 576,207 - - 576,207
Transfer on exercise of share
options (8,420) - 8,420 -
----------------------------------- ---------------------------- ------------------- ---------------- ------------
Balance as at 31 December 2013 695,970 7,937,367 (3,177,084) 5,456,253
----------------------------------- ---------------------------- ------------------- ---------------- ------------
17 Capital management
The capital structure of the Company consists of equity share
capital, reserves, and retained losses.
The Board's policy is to maintain a strong capital base so as to
maintain investor and market confidence and to enable the
successful future development of the business.
The Company is not subject to externally imposed capital
requirements.
No changes were made to the objectives, policies and process for
managing capital during the year.
18 Financial risk management and financial instruments
The Company has identified the following risks arising from its
activities and has established policies and procedures to manage
these risks. The Company's principal financial assets are cash and
cash equivalents, investments in equity shares, and convertible
notes receivable.
Credit risk
As at 31 December 2013 the largest exposure to credit risk
related to cash and cash equivalents, which was US$3,242,269. The
exposure risk is reduced because the counterparties are banks with
high credit ratings ("A" Liquidity banks) assigned by international
credit rating agencies. The Directors intend to continue to spread
the risk by holding the CompanyÕs cash reserves in more than one
financial institution.
(i) Exposure to credit risk
The carrying amount of the following assets represents the
maximum credit exposure. The maximum exposure to credit risk asat
31 December is as follows:
At 31 December 2013 At 31 December 2012
USD USD
------------------------------ -------------------- --------------------
Convertible notes receivable 2,193,304 3,691,691
Trade and other receivables 69,765 203,988
Cash and cash equivalents 3,242,269 7,717,554
------------------------------ -------------------- --------------------
5,505,338 11,613,233
------------------------------ -------------------- --------------------
Market risk
The Company's financial assets areclassified as
available-for-sale and are measured at fair value. The measurement
of the Company's investments in equity shares and convertible notes
is largely dependent on the underlying trading performance of the
investee companies, but the valuation and other items in the
financial statements can also be affected by the interest rate and
fluctuations in the exchange rate.
Interest rate risk
Changes in interest rates impact primarily cash and cash
equivalents by changing either their fair value (fixed rate
deposits) or their future cash flows (variable rate deposits).
Management does not have a formal policy of determining how much of
the Company's exposure should be to fixed or variable rates.
At 31 December 2013 the Company had a cash deposit of
US$1,500,000, earning a variable rate of interest. The Board of
Directors monitors the interest rates available in the market to
ensure that returns are maximized.
Foreign currency risk management
The Company is exposed to foreign currency risks on investments
and salary and director remuneration payments that are denominated
in a currency other than the functional currency of the Company.
The currency giving rise to this risk is primarily GBP, EUR. The
exposure to foreign currency risk as at 31 December 2013 was as
follows:
For the year ended For the year ended For the year ended For the year ended
31/12/2013 31/12/2013 31/12/2012 31/12/2012
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
GBP EUR GBP EUR
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Current assets
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Cash and cash
equivalents 123,891 13,760 141,333 -
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Trade and other - - 2,344 -
receivables
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Current liabilities
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Trade and other
payables (40,756) - (61,296) -
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Net (short) long
position 83,135 13,760 82,381 -
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Net exposure currency 50,400 9,964 50,969 -
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Net exposure currency
(assuming a 10%
movement in exchange
rates) 74,821 12,384 74,143 -
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Impact on exchange
movements in the
statement of
comprehensive income 8,313 1,376 8,238 -
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
The foreign exchange rates of the USD at 31 December were as
follows:
31/12/2013 31/12/2012
--------------------- ----------- -----------
Currency
British pounds, GBP 1.6495 1.6163
Euro 1.381 1.3228
--------------------- ----------- -----------
This analysis assumes that all other variables, in particular
interest rates, remain constant.
Liquidity risk management
The Company's approach to managing liquidity is to ensure that
it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company.
The Company has low liquidity risk due to maintaining adequate
banking facilities, by continuously monitoring actual cash flows
and by matching the maturity profiles of financial assets and
current liabilities.
As at 31 December 2013, the cash and equivalents of the Company
were US$3,242,269
The following are the maturities of current liabilities as at 31
December 2013:
Carrying amount Within one year 2-5 years More than 5 years
USD USD USD USD
--------------------------- ---------------- ---------------- ---------- -------------------
Directors' fees payable 40,540 40,540 - -
Trade payables 55,424 50,424 - -
Other current liabilities 44 44 - -
--------------------------- ---------------- ---------------- ---------- -------------------
96,008 96,008 - -
--------------------------- ---------------- ---------------- ---------- -------------------
19 Related party transactions
Since May 2012, TMT's Moscow-based staff have been located in an
office that belongs to a company ("Orgtekhnika") controlled by Mr.
Alexander Morgulchik and Mr. German Kaplun, who collectively own
18.93% of the issued share capital of TMT and are thus considered
related parties. There are currently 5 TMT staff involved working
substantially full time on TMT's business. TMT started paying rent
from 1 October 2012. Rent was being paid to Orgtekhnika at the rate
of US$700 per sq meter per year of space utilised. The board
believes this represents a discount from the prevailing market rate
for similar office space in Moscow. Together with other related
expenses (support personnel, company car, security services, etc.),
the total costs to TMT were US$14,384 per month (US$172,608 per
year).
In December 2012, Alexander Morgulchik, German Kaplun and Artyom
Inyutin agreed to receive all of their 2013 salaries in TMT shares
on 31 December 2013 rather than monthly in cash. The number of
shares receivable in each case is fixed at a price of US$1.60 per
share. Also in December 2013, Alexander Morgulchik, German Kaplun
and Artyom Inyutin agreed to receive all of their 2014 salaries in
TMT shares on 31 December 2014 rather than monthly in cash. The
number of shares receivable in each case is fixed at a price of
US$1.70 per share.
20 Subsequent events
Since 31 December 2013, the Company has invested US$200,000 in
technology developer for visually impaired people
PROvision/Oriense, and smartphone solution provider for senior
citizens E2C, as well as US$250,000 in existing portfolio companies
KitApps/Attendify and rollApp.
21 Control
The Company is not controlled by any one party. Details of
significant shareholders are shown in the Directors' Report.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PGUAUCUPCGRR
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