TIDMOTV1
Octopus Titan VCT 1 plc
Half-Yearly Results
20 June 2012
Octopus Titan VCT 1 plc, managed by Octopus Investments Limited, today announces
the Half-Yearly results for the six months ended 30 April 2012.
These results were approved by the Board of Directors on 20 June 2012.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com.
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 GBP2.71
million in aggregate ( GBP2.56 million net of expenses) has been raised by way of
top-ups in 2010 and 2012. 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 GBP5 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 2011 October 2011
=------------------------------------------------------------------------------
Net assets ( GBP'000s) 16,323 14,963 14,842
Return on ordinary activities after
tax ( GBP'000s) 381 (341) (327)
Net asset value per share (NAV) 92.8p 92.1p 91.5p
Cumulative dividends since launch -
paid and proposed 6.0p 3.5p 4.5p
=------------------------------------------------------------------------------
Chairman's Statement
I am pleased to present the half-yearly results for Octopus Titan VCT 1 plc (
the 'Company' ) for the six month period ended 30 April 2012.
Results
During this six month period, the Total Return of the Company has increased
2.4% to 97.3 pence per share (being the net asset value per share (NAV) plus
cumulative dividends paid). This improvement is due largely to a net increase in
the value of the investment portfolio exceeding the running costs of the
Company. This is encouraging progress.
Investment Portfolio Review
During the six months to 30 April 2012, we made nine follow-on investments
totalling GBP742,000 to the portfolio. These included investments in: Mi-Pay,
Semafone, Surrey Nanosystems, Bowman Power, GetOptics, Phase Vision, PrismaStar,
Soil Exchange and Diverse Energy. It is the Board's strategy to continue to
support portfolio businesses where it makes economic sense and to invest further
into companies which have met or exceeded performance expectations.
The portfolio saw an encouraging overall net increase in fair value of GBP318,000
during the period despite valuation reductions in AQS, Bowman, Elonics and
PrismaStar. This increase in fair value is largely attributable to the
significant uplifts in fair value in both Zoopla and e-therapeutics. Zoopla
alone increased in fair value by GBP419,000. Your Board believes strongly that the
current stage of development of the portfolio as a whole is encouraging as it
has at least ten companies with real potential that should continue to drive
further increases in the Company's fund value.
All of our investments are discussed in more detail in the Investment Manager's
Review on pages 8 and 9. The fund has investments in 22 companies operating in a
variety of different market sectors and the Board believes the majority of these
are capable of developing capital growth in the coming years.
Open Ended Investment Companies (OEICs)
Titan 1 continues to hold investments in two OEICs which continued to see an
overall uplift in fair value in the six months to 30 April 2012. There was an
encouraging GBP63,000 uplift in value in this reporting period. The best
performance continued to be in the CF Octopus UK Micro Cap Growth Fund which
increased in value by 8.5%.
Top-up
The Company, together with the other Titan funds, offered the opportunity to
invest into the VCTs through a Top-up fund raising. It is pleasing to report
that this offer was fully subscribed ahead of the closing date, raising
GBP1,338,000 net of costs into the Fund.
The majority of funds raised will be used to support existing portfolio
companies where the Investment Manager sees the opportunity for business growth.
Dividends
The 2012 interim dividend is being raised from 0.75p to 1.5p per share and will
be payable on 27 July 2012 to shareholders on the register on 29 June 2012. The
substantial increase in the interim dividend reflects both the realisation for
cash during April 2012 of part of our holding in Zoopla and the improved
performance of the Company and the current prospects for continuing growth in
the fund's valuation.
Shareholders will remember the final dividend for 2011 was also increased by
33% to 1.0p per share.
Your Board's policy is to try and maintain a regular dividend flow where
possible, particularly given their tax free status.
The 2012 Budget
The 2012 budget, which has now received State Aid approval from Brussels,
provided with effect from 6 April 2012 for the increase in the gross asset limit
for investee companies from GBP7 million to GBP15 million and for the number of
employees to be raised from 50 to 250. Both this lessening of investment
restriction and the increase in the 2012 Budget, from GBP2 million to GBP5 million,
in the annual investment limit, are to be welcomed due to providing increased
flexibility in investing.
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 2012, over 95.5% 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. Save for the steadily worsening economic environment in the U.K and
most of the Eurozone markets, there has been no significant change to the key
risks which were set out on page 23 of the annual report for the year ended 31
October 2011.
Outlook
It is encouraging to have seen a positive uplift in the valuation of Titan 1's
portfolio. Nine of our ten larger companies in our fund have delivered strong
revenue and profit growth and one of has delivered a very impressive new and
unique product which has received deserved, worldwide plaudits. With the sale of
part of our holdings in Zoopla, your Board hopes this be the start of making
some further realisations of our holdings in some of our most successful
companies.
The Board believes the majority of the businesses in the portfolio are capable
of developing good capital growth in the coming years. In spite of the poor
economic conditions, many of our portfolio businesses are still expanding. Your
Company's progress is encouraging.
Lewis Jarrett
Chairman
20 June 2012
Investment Portfolio
%
Investment Carrying Change in equity %
cost at value at valuation held equity
30 April Unrealised 30 April in the by managed
Qualifying 2012 profit/(loss) 2012 period Titan by
investments Sector ( GBP'000) ( GBP'000) ( GBP'000) ( GBP'000) 1 Octopus
=-------------------------------------------------------------------------------------------
Zoopla
Limited Media 741 1,771 2,512 419 5.68% 19.12%
Nature
Delivered Consumer lifestyle
Limited & wellbeing 798 907 1,705 - 7.63% 29.98%
Calastone
Limited Technology 1,135 567 1,702 - 10.81% 34.10%
True
Knowledge
Limited Media 1,420 (7) 1,413 - 9.70% 54.01%
e-
Therapeutics Consumer lifestyle
plc & wellbeing 632 338 970 323 1.73% 8.24%
Executive
Channel
Limited Media 529 76 605 - 6.40% 36.76%
Mi-Pay
Limited Telecommunications 849 (260) 589 - 9.64% 32.12%
TouchType
Limited Telecommunications 385 164 549 - 4.20% 20.07%
Semafone
Limited Telecommunications 422 72 494 72 7.34% 51.03%
Surrey
Nanosystems
Limited Technology 485 - 485 - 4.91% 24.55%
Michelson
Diagnostics Consumer lifestyle
Limited & wellbeing 442 - 442 - 4.87% 37.53%
Metrasens Consumer lifestyle
Limited & wellbeing 338 43 381 - 5.00% 28.01%
UltraSoc
Technologies
Limited Technology 361 - 361 - 10.04% 55.55%
Bowman Power
Limited Environmental 312 27 339 - 2.43% 15.56%
GetOptics Consumer lifestyle
Limited & wellbeing 422 (90) 332 - 7.52% 34.79%
Phase Vision
Limited Technology 474 (165) 309 - 10.10% 42.96%
PrismaStar
Inc. Media 424 (300) 124 (150) 4.00% 26.65%
AQS Holdings
Limited Environmental 655 (565) 90 (269) 11.68% 43.63%
Phasor
Solutions
Limited Technology 100 (50) 50 - 1.74% 32.14%
Diverse
Energy
Limited Environmental 382 (367) 15 - 5.47% 29.76%
Elonics
Limited Technology 305 (305) - (76) 3.11% 19.54%
The Key
Revolution
Limited * Technology 641 (641) - - 12.36% 35.88%
=-------------------------------------------------------------------------------------------
Total qualifying investments 12,252 1,215 13,467 318
=-------------------------------------------------------------------------------------------
Money market securities 1,137 - 1,137
OEICs 807 63 870
Cash at bank 839 - 839
=-------------------------------------------------------------------------------------------
Total investments 15,035 1,278 16,313
=-------------------------------------------------------------------------------------------
Net current assets 10
=-------------------------------------------------------------------------------------------
Total net assets 16,323
=-------------------------------------------------------------------------------------------
* in administration at 30 April
2012
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
20 June 2012
Income Statement
+---------------------+
| Six months to 30 |Six months to 30 April Year to 31 October
| April 2012 | 2011 2011
| |
|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 | |
on disposal of| |
fixed asset | |
investments | - 271 271| - - - - - -
| |
Realised | |
(loss)/gain on| |
disposal of | |
current asset | |
investments | - (15) (15)| - 24 24 - 156 156
| |
| |
| |
Fixed asset | |
investment | |
holding | |
gains/(losses)| - 318 318| - (395) (395) - (98) (98)
| |
Current asset | |
investment | |
holding | |
gains/(losses)| - 63 63| - 254 254 - 89 89
| |
| |
| |
Other income | 3 - 3| 40 - 40 65 - 65
| |
| |
| |
Investment | |
management | |
fees | (36) (109) (145)| (39) (116) (155) (78) (233) (311)
| |
| |
| |
Other expenses| (114) - (114)| (109) - (109) (288) - (288)
| |
| |
=--------------+---------------------+---------------------------------------------
Return on | |
ordinary | |
activities | |
before tax | (147) 528 381| (108) (233) (341) (241) (86) (327)
| |
| |
| |
Taxation on | |
return on | |
ordinary | |
activities | - - -| - - - - - -
| |
| |
=--------------+---------------------+---------------------------------------------
Return on | |
ordinary | |
activities | |
after tax | (147) 528 381| (108) (233) (341) (241) (86) (327)
=--------------+---------------------+---------------------------------------------
Earnings per | |
share - basic | |
and diluted | (0.9) 3.2 2.3| (0.7)p (1.4)p (2.1)p (1.5)p (0.5)p (2.0)p
+---------------------+
* 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
| April 2012| April 2011 October 2011
| |
| GBP'000| GBP'000 GBP'000
=------------------------+-----------------+-----------------------------------
Shareholders' funds at | |
start of period | 14,842| 15,523 15,523
| |
Return on ordinary | |
activities after tax | 381| (341) (327)
| |
Issue of equity (net of | |
expenses) | 1,322| - -
| |
Purchase of own shares | (60)| (97) (111)
| |
Dividends paid | (162)| (122) (243)
=------------------------+-----------------+-----------------------------------
Shareholders' funds at | |
end of period | 16,323| 14,963 14,842
+-----------------+
Balance Sheet
+----------------+
| As at 30 April |As at 30 April As at 31
| 2012 | 2011 October 2011
| |
| GBP'000 GBP'000| GBP'000 GBP'000 GBP'000 GBP'000
=-----------------------------+----------------+-------------------------------
| |
| |
Fixed asset investments* | 13,467| 11,401 12,803
| |
Current assets: | |
| |
Money market securities and | |
other deposits* | 2,007 | 2,946 1,985
| |
Debtors | 55 | 7 11
| |
Cash at bank | 839 | 660 92
=-----------------------------+----------------+-------------------------------
| 2,901 | 3,613 2,088
| |
Creditors: amounts falling | |
due within one year | (45) | (51) (49)
=-----------------------------+----------------+-------------------------------
Net current assets | 2,856| 3,562 2,039
=-----------------------------+----------------+-------------------------------
| |
=-----------------------------+----------------+-------------------------------
Net assets | 16,323| 14,963 14,842
=-----------------------------+----------------+-------------------------------
| |
| |
Called up equity share | |
capital | 1,758 | 1,624 1,622
| |
Share premium | 1,753 | 574 574
| |
Special distributable reserve|12,626 |12,943 12,686
| |
Capital redemption reserve | 20 | 11 13
| |
Capital reserve - losses on | |
disposal | (802) | (589) (210)
| |
- | |
holding gains | 1,363 | 511 401
| |
Revenue reserve | (395) | (111) (244)
=-----------------------------+----------------+-------------------------------
Total equity shareholders' | |
funds | 16,323| 14,963 14,842
=-----------------------------+----------------+-------------------------------
Net asset value per share | 92.8p| 92.1p 91.5p
+----------------+
*Held at fair value through profit and loss
The statements were approved by the Directors and authorised for issue on 20
June 2012 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 2012| 30 April 2011 October 2011
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+----------------+--------------------------------
| |
| |
Net cash inflow/(outflow) | |
from operating activities | (304)| 350 94
| |
| |
| |
Financial investment: | |
| |
Purchase of fixed asset | |
investments | (742)| (1,714) (2,818)
| |
Disposal of fixed asset | |
investments | 666| 383 382
| |
| |
| |
Management of liquid | |
resources: | |
| |
Purchase of current asset | |
investments | (1,050)| (2,742) (2,201)
| |
Disposal of current asset | |
investments | 1,077| 4,531 4,918
| |
| |
| |
Taxation | -| - -
| |
| |
| |
Dividends paid | (162)| (122) (243)
| |
| |
| |
Financing: | |
| |
Issue of equity | 1,322| - -
| |
Purchase of own shares | (60)| (97) (111)
=----------------------------+----------------+--------------------------------
Increase/(decrease) in cash | |
resources at bank | 747| 589 21
+----------------+
Reconciliation of net cash flow to movement in net funds
+---------------+
| Six months to| Six months to Year to 31
| 30 April 2012| 30 April 2011 October 2011
| |
| GBP'000| GBP'000 GBP'000
=----------------------------+---------------+---------------------------------
Increase/(decrease) in cash | |
resources at bank | 747| 589 21
| |
Movement in cash equivalents| 22| (1,511) (2,472)
| |
Opening net cash resources | 2,077| 4,528 4,528
=----------------------------+---------------+---------------------------------
Net funds at period end | 2,846| 3,606 2,077
+---------------+
Reconciliation of return before taxation to cash flow from operating
activities
+----------------+
| Six months to| Six months to Year to 31
| 30 April 2012| 30 April 2011 October 2011
| |
| GBP'000| GBP'000 GBP'000
=--------------------------+----------------+----------------------------------
Return on ordinary | |
activities before tax | 381| (341) (327)
| |
Loss/(gain) on disposal of| |
current asset investments | 15| (24) (156)
| |
Gain on disposal of fixed | |
asset investments | (271)| - -
| |
(Gain)/ Loss on valuation | |
of fixed asset investments| (318)| 395 98
| |
(Gain)/loss on valuation | |
of current asset | |
investments | (63)| (254) (89)
| |
(Increase)/ decrease in | |
debtors | (44)| 581 577
| |
Decrease in creditors | (4)| (7) (9)
=--------------------------+----------------+----------------------------------
(Outflow)/inflow from | |
operating activities | (304)| 350 94
+----------------+
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30 April 2012
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 2011, 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 2012 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 2011 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 16,407,499 (30 April 2011: 16,312,396 and 31
October 2011: 16,270,784) 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 2012 is based on 17,581,252 (30
April 2011: 16,241,498 and 31 October 2011: 16,225,740) ordinary shares in issue
at that date.
5. Dividends
The interim dividend declared of 1.5 pence per share for the six months ending
30 April 2012 will be paid on 27 July 2012, to those shareholders on the
register on 29 June 2012.
The final dividend of 1.0 pence per share for the year ending 31 October 2011
was paid on 13 April 2012 to those shareholders on the register on 9 March 2012.
6. Buy Backs
During the six months ended 30 April 2012 the Company bought back 73,083
Ordinary shares at a weighted average price of 82.3 pence per share (six months
ended 30 April 2011: 113,004 Ordinary shares at a weighted average price of
86.2 pence per share and year ended 31 October 2011: 128,762 Ordinary shares at
a weighted average price of 85.8 pence per share). During the six months to 30
April 2012, 1,428,595 shares were issued at a price of 97.8 pence per share.
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 GBP145,000 payable to Octopus (30
April 2011: GBP155,000 and 31 October 2011: GBP311,000). At the period end there was
GBPnil outstanding to Octopus (30 April 2011: GBPnil and 31 October 2011: 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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