TMT Investments: Solid Set of Interims

TMT Investments has announced an unchanged NAV per share of $1.30 as a number of its portfolio companies experience rapid growth, but lack recent corporate finance transactions to record increased valuations. We expect the venture capitalist to complete a number of new and follow-on investment by the end of the current financial year and, with a number of its portfolio companies experiencing rapid growth, we anticipate a number of positive revaluations of its investee companies. Accordingly, for those looking for exposure to high-growth companies within the internet space, we continue to recommend TMT as one to watch. 

Interims

A number of portfolio companies have had their values increased, including Gild (223% or $379k), 1-page (66% or $204k) and Adinch (79% or $796k). At the same time, Graphicly has incurred an impairment charge equal to 100% of its value or $486k, following its decision to wind-up its operations, while UsingMiles Inc has had its value reduced by 89% or $230k, on the back of its disposal. Total operating expenses decreased by 24% to $747k, due to the lower share-based option charge of $95k (H1 FY13: $328k). Including the loss on investments of $561k (H1 FY13: $174k) and the change in fair value of available-for-sale financials assets of $1.25m (H1 FY13: $5.16m), the company posted a total comprehensive loss of $46.5k (H1 FY13: $4.05m). And following the raising of $2.65m at the end of the reporting period (July), the net cash position was $3.1m.

Additional Investments

The period saw the company invest a total of $860k in five new companies (PROvision/Oriense, E2C, Drippler, Whale Path and Weaved) as well as an additional $350k in three existing companies (Gentoo/Contact+, rollApp and KitApps/Attendify). Since period-end, the company has invested $2.2m in six new companies (Quote Roller, Le Tote, Anews, Twtrland, Drupe and Taxify) as well as $600k in existing portfolio company Adinch. In addition, The One-Page company was sold for a total consideration of $510k, representing an IRR of 32%.

Conclusion

The main risk for TMT Investment is the high failure rate of early-stage businesses, but we feel that this risk is reduced by the large number of investments it has made. Furthermore, we note that the success of just one of these companies could result in a significant increase in its valuation.