TIDMOTV1
Octopus Titan VCT 1 plc
Half-Yearly Results
14 June 2011
Octopus Titan VCT 1 plc, managed by Octopus Investments Limited, today announces
the Half-Yearly results for the six months ended 30 April 2011.
These results were approved by the Board of Directors on 13 June 2011.
You may shortly view the Half-Yearly Report in full atwww.octopusinvestments.com
by navigating to Services, Investor Services, Venture Capital Trusts, Octopus
Titan VCT 1. All other statutory information will also be found there.
About Octopus Titan VCT 1 plc
Octopus Titan VCT 1 plc ('Titan 1', 'Company' or 'VCT') is a venture capital
trust ('VCT') which aims to provide shareholders with attractive tax-free
dividends and long-term capital growth, by investing in a diverse portfolio of
predominately unquoted companies. The Company is managed by Octopus Investments
Limited ('Octopus' or 'Investment Manager').
Titan 1 was incorporated on 12 October 2007. In collaboration with Octopus Titan
VCT 2 plc ('Titan 2'), the VCTs raised over GBP30.8 million in aggregate ( GBP29.5
million net of expenses) through an Offer for Subscription. A further GBP1.37
million in aggregate ( GBP1.29 million net of expenses) has been raised by way of a
top-up. Titan 1 invests primarily in unquoted UK smaller companies and aims to
deliver absolute returns on its investments.
Venture Capital Trusts (VCTs)
VCTs were introduced in the Finance Act 1995 to provide a means for private
individuals to invest in unquoted companies in the UK. Subsequent Finance Acts
have introduced changes to VCT legislation. The tax benefits currently available
to eligible new investors in VCTs include:
* up to 30% up-front income tax relief;
* exemption from income tax on dividends paid; and
* exemption from capital gains tax on disposals of shares in VCTs.
Titan 1 has been approved as a VCT by HM Revenue & Customs (HMRC). In order to
maintain its approval the Company must comply with certain requirements on a
continuing basis. By the end of the Company's third accounting period at least
70% of the Company's investments must comprise 'qualifying holdings' of which at
least 30% must be in eligible ordinary shares. A 'qualifying holding' consists
of up to GBP1 million invested in any one year in new shares or securities in an
unquoted company (or companies quoted on AIM) which is carrying on a qualifying
trade and whose gross assets do not exceed a prescribed limit at the time of
investment. The definition of a 'qualifying trade' excludes certain activities
such as property investment and development, financial services and asset
leasing. The Company will continue to ensure its compliance with these
qualification requirements.
Financial Summary
Six months to Six months to Year to 31
30 April 2011 30 April 2010 October 2010
=-------------------------------------------------------------------------------
Net assets ( GBP'000s) 14,963 14,372 15,523
Return on ordinary activities after tax
( GBP'000s) (341) (563) 18
Net asset value per share (NAV) 92.1p 92.0p 94.9p
Cumulative dividends since launch -
paid and proposed 3.5p 2.0p 2.75p
=-------------------------------------------------------------------------------
Chairman's Statement
I am pleased to present the half-yearly results for the six month period ended
30 April 2011.
Results and Dividend
During the six month period to 30 April 2011, the total return has declined
2.1% to 94.85 pence (being the net asset value per share (NAV) plus cumulative
dividends paid). This is largely due to a net reduction in the value of the
investment portfolio. However, several of the portfolio companies are trading
well and have the potential to deliver above average returns to our shareholders
over the medium term.
We believe that our shareholders place considerable importance on the
maintenance of regular dividends, particularly given their tax-free status in a
period when the top rate of tax for individuals has increased to 50%. As
shareholders will remember, we increased our final dividend for 2010 to 0.75p
per share and we have decided, notwithstanding the modest negative return for
the period, to maintain this level of dividend for the half year. This interim
dividend of 0.75p per share will be payable on 29 July 2011 to shareholders on
the register on 1 July 2011.
It is your Board's intention to introduce a Dividend Reinvestment Scheme to
allow shareholders to reinvest their dividends into new shares and take
advantage of the 30% initial tax relief. This should be available for the final
dividend for the current year. I will be writing to you with further details in
due course.
Investment Portfolio Review
During the six month period our Investment Manager, Octopus, has made one new
investment on behalf of the VCT into Diverse Energy, a company focusing on low
carbon infrastructure to power global mobile telecommunications. They also made
several follow-on investments totalling GBP1.35 million into 7 companies in the
portfolio: True Knowledge, Zoopla, Mi-Pay, Skills Market, e-Therapeutics, Money
Workout and Michelson Diagnostics.
The majority of our investments have continued to report good trading results
and some particularly noteworthy news over the period is that Touchtype won the
'mobile app of the year' award at the Mobile World Congress in March. Several
businesses continue to perform well and exceed their targets.
Our investment in the AIM listed company e-Therapeutics repaid its loan during
the period and we are pleased to report that the company has seen an uplift in
value of GBP214,000 as the bid price reached 35p per share at 30 April 2011. This
was after a further round of funding into the company as part of a significant
Private Placing in March. In the broader portfolio, there are also further
positive signs, with Semafone, Executive Channel and TouchType all showing good
progress in their respective markets.
We believe that it is still appropriate to carry most of these investments at
the previous valuations. However, it is not surprising that, in the current
economic environment, there are a number of companies in the portfolio which are
not trading in line with expectations. Following a write down of our investment
in Skills Market in October 2010, this company's sales levels continued to be
disappointing. As a result, we made the decision to write the valuation of this
company down further to nil and since the period end, the company has gone into
administration. Unfortunately, in addition to this, Money Workout also went into
administration in April despite receiving further funding in January from Titan
1, 2 and 3 to explore additional sources of revenue. With regard to the
investment in Diverse Energy prompt action has been taken by Octopus to address
some disappointing performance issues but for the time being its valuation in
the portfolio has been reduced.
Cash, Liquid Resources and OEICS
Following the achievement of the required 70% level of qualifying investments
ahead of the October 2010 deadline, our cash resources have decreased. As
mentioned in my last Chairman's Statement, your Board has reviewed our policy
towards the non-qualifying section of our portfolio. We believe that it is
important to retain resources to continue to invest in those companies in the
portfolio which have good potential and to gradually reduce the risk profile of
our non-qualifying portfolio. To this end we will realise the remainder of our
holding in the CF Octopus Absolute UK Equity Fund and gradually reduce our
holding in the CF Octopus UK Micro Cap Growth Fund. The resulting proceeds will
be held in readily realisable investments including the IFDS Omnis Cautious Fund
managed by Octopus.
VCT Legislation
The Chancellor announced some modest changes to VCT rules in his Budget on 23
March which will have little impact on our investments save that we will be able
to continue to invest in some companies (e.g. Zoopla) as they increase their
employee numbers. However, the changes signal that the Government continues to
be supportive of our sector.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides both the Board and Octopus with advice
concerning ongoing compliance with HMRC rules and regulations concerning VCTs.
The Board has been advised that Titan 1 continues to be in compliance with the
conditions laid down by HMRC for maintaining approval as a VCT.
As at 30 April 2011, over 86% of the portfolio (as measured by HMRC rules) was
invested in VCT qualifying investments.
Principal Risks and Uncertainties
The Board continues to regularly review the risk environment in which Titan 1
operates. There has been no significant change to the key risks which were set
out on page 24 of the annual report for the year ended 31 October 2010.
Octopus Titan VCT 5 plc
In the Annual Report to 31 October 2010, I reported that Octopus launched a
further VCT called Octopus Titan VCT 5 plc with the aim of investing alongside
the existing Titan VCTs. This gives the Titan VCT family additional investment
capacity which we believe will be an advantage to our existing VCT funds. This
VCT has so far raised GBP10.4 million (net of expenses) and will remain open until
the end of the summer.
Outlook
Titan 1's portfolio is still at an early stage in its development, and whilst
there are some companies which are showing strong growth, it is inevitable that
there will be challenges for a number of others at this stage of development.
Octopus continues to work closely with these businesses to help them overcome
such challenges.
It is our view that it is largely inappropriate for early stage companies such
as those in our portfolio to seek debt to finance their business. We will
continue to support and invest in the portfolio companies with equity in the
main and thus reduce their exposure to bank debt and the difficulties currently
being experienced in raising bank finance in the UK.
Overall, your Board considers that the portfolio is showing some evidence of
significant potential over the medium term to realise an above average return
for our shareholders. Where portfolio businesses have the opportunity to take
advantage of the economic environment and they are performing to or above
expectations, Titan 1 will look to invest further. It is this feeling of
confidence that has allowed your Board to set out on our path of modestly
increasing our dividends in future years.
Lewis Jarrett
Chairman
13 June 2011
Investment Portfolio
%
Investment Carrying Change in equity %
cost at value at valuation held equity
30 April Unrealised 30 April in the by managed
Qualifying 2011 profit/(loss) 2011 period Titan by
investments Sector ( GBP'000) ( GBP'000) ( GBP'000) ( GBP'000) 1 Octopus
=-----------------------------------------------------------------------------------------
Zoopla Media 1,399 4.2% 14.9%
Limited 1,071 2,470 -
True
Knowledge Media 1,336 - 1,336 - 8.5% 46.0%
Limited
Calastone Technology 9.8% 31.0%
Limited 1,135 - 1,135 -
Nature Consumer lifestyle
Delivered & wellbeing 798 55 853 - 6.5% 25.6%
Limited
e- Consumer lifestyle
Therapeutics & wellbeing 632 207 839 214 0.3% 8.8%
plc
Mi-Pay Telecommunications 4.9% 21.2%
Limited 549 - 549 -
Executive
Channel Media 379 - 379 - 5.8% 30.5%
Limited
UltraSoc
Technologies Technology 361 - 361 - 8.0% 44.4%
Limited
AQS Holdings Environmental 5.5% 26.0%
Limited 421 - 421 -
Semafone Telecommunications 7.4% 35.2%
Limited 360 - 360 -
Phase Vision Technology (50) 11.0% 47.5%
Limited 400 350 -
Michelson Consumer lifestyle
Diagnostics & wellbeing 323 - 323 - 4.0% 25.6%
Limited
Surrey
Nanosystems Technology 320 - 320 - 5.4% 29.3%
Limited
Elonics Technology - - 2.7% 16.7%
Limited 305 305
PrismaStar Media 4.5% 30.0%
Inc. 300 - 300 -
Bowman Power Environmental 2.4% 16.1%
Limited 275 - 275 -
GetOptics Consumer lifestyle (90) 7.5% 34.8%
Limited & wellbeing 361 271 -
Metrasens Consumer lifestyle 4.3% 24.0%
Limited & wellbeing 268 - 268 -
Diverse
Energy Environmental 367 (184) 183 (184) 5.1% 27.8%
Limited
TouchType Telecommunications 1.4% 7.2%
Limited 53 - 53 -
Phasor
Solutions Technology 100 (50) 50 - 1.7% 31.0%
Limited
Skills
Market Technology 186 (186) - (136) 3.0% 12.2%
Limited
Money
Workout Technology 445 (445) - (289) 6.7% 32.6%
Limited *
The Key
Revolution Technology 641 (641) - - 11.4% 33.2%
Limited *
=-----------------------------------------------------------------------------------------
Total qualifying investments 15 11,401 (395)
11,386
=-----------------------------------------------------------------------------------------
Money market securities
12 - 12
OEICs
2,437 497 2,934
Cash at bank
660 - 660
=-----------------------------------------------------------------------------------------
Total investments 512
14,495 15,007
=-----------------------------------------------------------------------------------------
Net current assets (44)
=-----------------------------------------------------------------------------------------
Total net assets
14,963
=-----------------------------------------------------------------------------------------
* in administration at 30 April
2011
Responsibility Statement of the Directors' in respect of the half-yearly report
We confirm that to the best of our knowledge:
* the half-yearly financial statements have been prepared in accordance with
the statement 'Half-Yearly Financial Reports' issued by the UK Accounting
Standards Board;
* the half-yearly report includes a fair review of the information required by
the Financial Services Authority Disclosure and Transparency Rules, being:
* an indication of the important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements;
* a description of the principal risks and uncertainties for the remaining six
months of the year; and
* a description of related party transactions that have taken place in the
first six months of the current financial year, that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the
last annual report that could do so.
On behalf of the Board
Lewis Jarrett
Chairman
13 June 2011
Income Statement
+----------------------+
|Six months to 30 April|Six months to 30 April Year to 31 October
| 2011 | 2010 2010
| |
|Revenue Capital Total|Revenue Capital Total Revenue Capital Total
| |
| GBP'000 GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=-------------+----------------------+--------------------------------------------
| |
| |
Realised | |
gain/(loss) on| |
disposal of | |
current asset | |
investments | - 24 24| - (15) (15) - (101) (101)
| |
| |
| |
Fixed asset | |
investment | |
holding | |
(losses)/gains| - (395) (395)| - (100) (100) - 822 822
| |
Current asset | |
investment | |
holding | |
gains/(losses)| - 254 254| - (331) (331) (408) (408)
| |
| |
| |
Other income | 40 - 40| 111 - 111 180 - 180
| |
| |
| |
Investment | |
management | |
fees | (39) (116) (155)| (38) (113) (151) (70) (212) (282)
| |
| |
| |
Other expenses| (109) - (109)| (77) - (77) (193) - (193)
| |
| |
=-------------+----------------------+--------------------------------------------
Return on | |
ordinary | |
activities | |
before tax | (108) (233) (341)| (4) (559) (563) (83) 101 18
| |
| |
| |
Taxation on | |
return on | |
ordinary | |
activities | - - -| - - - - - -
| |
| |
=-------------+----------------------+--------------------------------------------
Return on | |
ordinary | |
activities | |
after tax | (108) (233) (341)| (4) (559) (563) (83) 101 18
=-------------+----------------------+--------------------------------------------
Earnings per | |
share - basic | |
and diluted | (0.7)p (1.4)p (2.1)p| (0.1)p (3.5)p (3.6)p (0.5)p 0.6p 0.1p
+----------------------+
* The 'Total' column of this statement is the profit and loss account of the
Company; the supplementary revenue return and capital return columns have
been prepared under guidance published by the Association of Investment
Companies.
* All revenue and capital items in the above statement derive from continuing
operations.
* The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
* The Company has no recognised gains or losses other than the results for the
period as set out above.
* The accompanying notes are an integral part of the half-yearly report.
Reconciliation of Movements in Shareholders' Funds
+-----------------+
|Six months to 30 |Six months to 30 Year to 31 October
| April 2011| April 2010 2010
| |
| GBP'000| GBP'000 GBP'000
=------------------------+-----------------+------------------------------------
Shareholders' funds at | |
start of period | 15,523| 15,014 15,014
| |
Return on ordinary | |
activities after tax | (341)| (563) 18
| |
Issue of equity (net of | |
expenses) | -| - 647
| |
Purchase of own shares | (97)| - -
| |
Dividends paid | (122)| (79) (156)
=------------------------+-----------------+------------------------------------
Shareholders' funds at | |
end of period | 14,963| 14,372 15,523
+-----------------+
Balance Sheet
+-----------------+
| As at 30 April | As at 30 April As at 31 October
| 2011 | 2010 2010
| |
| GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000
=-----------------------+-----------------+-------------------------------------
| |
| |
Fixed asset investments*| 11,401| 6,220 10,465
| |
Current assets: | |
| |
Money market securities | |
and other deposits* | 2,946 | 8,088 4,457
| |
Debtors | 7 | 36 588
| |
Cash at bank | 660 | 76 71
=-----------------------+-----------------+-------------------------------------
| 3,613 | 8,200 5,116
| |
Creditors: amounts | |
falling due within one | |
year | (51) | (48) (58)
=-----------------------+-----------------+-------------------------------------
Net current assets | 3,562| 8,152 5,058
=-----------------------+-----------------+-------------------------------------
| |
=-----------------------+-----------------+-------------------------------------
Net assets | 14,963| 14,372 15,523
=-----------------------+-----------------+-------------------------------------
| |
| |
Called up equity share | |
capital | 1,624 | 1,562 1,635
| |
Share premium | 574 | - 574
| |
Special distributable | |
reserve |12,943 |13,196 13,040
| |
Capital redemption | |
reserve | 11 | - -
| |
Capital reserve - losses| |
on disposal | (589) | (832) (773)
| |
| |
- holding gains | 511 | 410 1,050
| |
Revenue reserve | (111) | 36 (3)
=-----------------------+-----------------+-------------------------------------
Total equity | |
shareholders' funds | 14,963| 14,372 15,523
=-----------------------+-----------------+-------------------------------------
Net asset value per | |
share | 92.1p| 92.0p 94.9p
+-----------------+
*Held at fair value through profit and loss
The statements were approved by the Directors and authorised for issue on 13
June 2011 and are signed on their behalf by:
Lewis Jarrett
Chairman
Company Number: 06397764
Cash flow statement
+----------------+
| Six months to| Six months to Year to 31
| 30 April 2011| 30 April 2010 October 2010
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
| |
| |
Net cash inflow/(outflow) | |
from operating activities | 350| (108) (828)
| |
| |
| |
Financial investment: | |
| |
Purchase of fixed asset | |
investments | (1,714)| (1,950) (5,273)
| |
Disposal of fixed asset | |
investments | 383| - -
| |
| |
| |
Management of liquid | |
resources: | |
| |
Purchase of current asset | |
investments | (2,742)| (3,098) (4,791)
| |
Disposal of current asset | |
investments | 4,531| 4,732 9,894
| |
| |
| |
Taxation | -| - -
| |
| |
| |
Dividends paid | (122)| (78) (156)
| |
| |
| |
Financing: | |
| |
Issue of equity | -| - 647
| |
Purchase of own shares | (97)| - -
=----------------------------+----------------+---------------------------------
Increase/(decrease) in cash | |
resources at bank | 589| (502) (507)
+----------------+
Reconciliation of net cash flow to movement in net funds
+----------------+
| Six months to| Six months to Year to 31
| 30 April 2011| 30 April 2010 October 2010
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
Increase/(decrease) in cash | |
resources at bank | 589| (502) (507)
| |
Movement in cash equivalents | (1,511)| (1,982) (5,612)
| |
Opening net cash resources | 4,528| 10,647 10,647
=----------------------------+----------------+---------------------------------
Net funds at period end | 3,606| 8,163 4,528
+----------------+
Reconciliation of return before taxation to cash flow from operating activities
+----------------+
| Six months to| Six months to Year to 31
| 30 April 2011| 30 April 2010 October 2010
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+---------------------------------
Return on ordinary activities| |
before tax | (341)| (563) 18
| |
(Gain)/loss on disposal of| |
current asset investments | (24)| 15 101
| |
Loss/(gain) on valuation of | |
fixed asset investments | 395| 100 (822)
| |
(Gain)/loss on valuation of | |
current asset investments | (254)| 331 408
| |
Decrease/(increase) in | |
debtors | 581| 61 (491)
| |
Decrease in creditors | (7)| (52) (42)
=----------------------------+----------------+---------------------------------
Inflow/(outflow) from | |
operating activities | 350| (108) (828)
+----------------+
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30 April 2011
have been prepared in accordance with the Accounting Standard Board's (ASB)
statement on half-yearly financial reports (July 2007) and adopting the
accounting policies set out in the statutory accounts of the Company for the
year ended 31 October 2010, which were prepared under UK GAAP and in accordance
with the Statement of Recommended Practice for Investment Companies issued by
the Association of Investment Companies in January 2009.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 30 April 2011 do not
constitute statutory accounts within the meaning of Section 415 of the Companies
Act 2006. The comparative figures for the year ended 31 October 2010 have been
extracted from the audited financial statements for that year, which have been
delivered to the Registrar of Companies. The independent auditor's report on
those financial statements, in accordance with chapter 3, part 16 of the
Companies Act 2006, was unqualified. This half-yearly report has not been
reviewed by the Company's auditor.
3. Earnings per share
The earnings per share is based on 16,312,396 (30 April 2010: 15,616,879 and 31
October 2010: 15,790,677) ordinary shares, being the weighted average number of
ordinary shares in issue during the period.
There are no potentially dilutive capital instruments in issue and therefore no
diluted returns per share figures are relevant. The basic and diluted earnings
per share are therefore identical.
4. Net asset value per share
The calculation of NAV per share as at 30 April 2011 is based on 16,241,498 (30
April 2010: 15,616,879 and 31 October 2010: 16,354,502) ordinary shares in issue
at that date.
5. Dividends
The interim dividend declared of 0.75 pence per share for the six months ending
30 April 2011 will be paid on 29 July 2011, to those shareholders on the
register on 1 July 2011.
The final dividend of 0.75 pence per share for the year ending 31 October 2010
was paid on 8 April 2011 to those shareholders on the register on 11 March 2011.
6. Buy Backs
During the six months ended 30 April 2011 the Company bought back 113,004
ordinary shares at a weighted average price of 86.2 pence per share (six months
ended 30 April 2010: nil and year ended 31 October 2010: nil). No shares were
issued during the period.
7. Related Party Transactions
Octopus Investments Limited acts as the Investment Manager of the Company. Under
the management agreement, Octopus receives a fee of 2.0 per cent per annum of
the net assets of the Company for the investment management services. During the
period, the Company incurred management fees of GBP155,000 payable to Octopus (30
April 2010: GBP151,000 and 31 October 2010: GBP282,000). At the period end there was
GBPnil outstanding to Octopus (30 April 2010: GBPnil and 31 October 2010: GBPnil).
Furthermore, Octopus provides administration and company secretarial services to
the Company. Octopus receives a fee of 0.3 per cent per annum of net assets of
the Company for administration services and GBP7,500 per annum for company
secretarial services.
8.Copies of this report are available from the registered office of the Company
at 20 Old Bailey, London, EC4M 7AN.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Octopus Titan VCT 1 PLC via Thomson Reuters ONE
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