TIDMOTV1
rdsOctopus Titan VCT 1 plc
Half-Yearly Results
13 June 2013
Octopus Titan VCT 1 plc, managed by Octopus Investments Limited, today
announces the Half-Yearly results for the six months ended 30 April
2013.
These results were approved by the Board of Directors on 13 June 2013.
You may shortly view the Half-Yearly Report in full at:
http://www.octopusinvestments.com/vctarchive/titan1.html.
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 GBP7.53 million in aggregate (GBP7.14
million net of expenses) has been raised by way of top-ups in 2010, 2012
and 2013. 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 unlisted 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, including:
-- at least 70% of the Company's investments must comprise 'qualifying
holdings'*(as defined in the legislation);
-- for cash raised pre 6 April 2011 at least 30% of the 70% of qualifying
holdings must be in eligible ordinary shares with no preferential rights;
-- for cash raised post 5 April 2011 at least 70% of the 70% of qualifying
holdings must be in eligible ordinary shares with no preferential rights;
-- no single investment can exceed 15% of the total Company value; and
-- a minimum of 10% of each Qualifying Investment must be in Ordinary shares
with no preferential rights.
*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 GBP15 million 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 2013 30 April 2012 October 2012
Net assets (GBP'000s) 19,795 16,323 21,382
Return on ordinary activities
after tax (GBP'000s) 137 381 5,737
Net asset value per share (NAV) 88.7p 92.8p 121.9p
Cumulative dividends since 42.5p 6.0p 40.0p
launch - paid and proposed
NAV plus cumulative dividends 128.7p 97.3p 127.9p
paid
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 2013.
Results
During this six month period, the total return of the Company has
increased 0.6% to 128.7 pence per share (being the net asset value per
share (NAV) plus cumulative dividends paid). This continued uplift in
total return is due largely to an increase in the value of the
investment portfolio which along with the income received exceeded the
standard running costs of the Company.
Developments
Early in the period, due to the success of several of our investee
companies, it became clear that action was needed to ensure VCT
qualifying status was maintained. I am pleased to report that our
Managers have worked hard with the Board and an innovative solution has
now been implemented. By "selling half and retaining half" of these
successful companies, this solution ensures that the VCT maintains its
qualifying status, returns cash to the company and that investors
participate in future growth of these companies. The cash will also
allow us to invest in excellent new opportunities that arise from the
strong flow of new deals generated by our Investment Managers at Octopus,
to make follow on investments in existing investee companies to help
them grow, and to help us maintain our dividend policy.
These proposals relating to the disposals to a new Octopus managed fund
were set out in the circular dated 7 May 2013. We are pleased to say
that the enabling resolution was duly passed at the General Meeting held
on 3June by an overwhelming number of votes, following which HMRC have
approved the transaction. These arrangements are now expected to be
completed in the near future.
Investment Portfolio Review
During the six months to 30 April 2013, four follow-on investments
totalling GBP560,000 were made. These investments were made into
Calastone, Metrasens, Mi-Pay and Bowman Power. Additionally, on 30
November 2012, Nature Delivered was fully disposed in exchange for
GBP5,884,000, consisting of GBP3,764,000 in cash and GBP2,120,000 was
reinvested into shares and a loan. It is the Board's strategy to
continue to support portfolio businesses which have met or exceeded
performance expectations and where it makes economic sense.
I am pleased that we had another period of growth in the portfolio which
saw an overall increase in fair value of GBP306,000 despite valuation
reductions in seven companies. This increase in fair value is largely
attributable to the significant uplifts in Calastone and TouchType,
which both performed well during the period.
As mentioned above and as expected in this market, seven companies have
seen decreases in fair value during the period. These included
reductions in valuation to Phase Vision, Mi-Pay, Semafone and PrismaStar
as well as e-Therapeutics (listed on the AIM market of the London Stock
Exchange), which saw a fall in share price.
Your Board considers that, despite the downward valuations discussed
above, the current stage of development of the portfolio as a whole is
encouraging.
The fund has investments in 21 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.
After 30 April 2013, the company made the following follow-on
investments:
-- GBP800,000 into Calastone on 31 May 2013
-- GBP333,000 into UltraSoc on 31 May 2013
Open Ended Investment Companies (OEICs)
Titan 1 disposed of both of its investments in the OEICs during the
period to 30 April 2013 realising overall gains of GBP251,000. The best
performance continued to be in the CF Octopus UK Micro Cap Growth Fund
which had an overall realised gain of GBP231,000 on an original
investment of GBP621,224.
Fund Raising
The Company, together with the other Titan funds, offered the
opportunity to invest into the VCTs through a linked new share offer.
It is pleasing to report that this offer raised GBP4,581,000 net of
costs into the Fund. A further offer of shares in the Titan VCTs in the
current tax year is under consideration.
The majority of funds raised will also be used to support existing
portfolio companies where the Investment Manager sees the opportunity
for business growth, and some of the cash raised may be used to invest
into new businesses as the Investment Manager continues to maintain a
strong pipeline of prospective investments.
Dividends
We were pleased to be able to pay a special interim dividend of 34.0p
per share on 28 March 2013 and offer the opportunity to reinvest this
dividend in shares under the fundraising. This opportunity was taken up
by over 2,000 shareholders in respect of 17,538,326 shares.
It is your Board's policy to strive to maintain a regular dividend flow
especially given their tax free status, supplemented by special
dividends following significant realisations. The dividend payable,
however, primarily relies on the level of profitable realisations and
available cash reserves. In light of this, we have decided to declare an
interim dividend of 2.5p (2012: 1.5p) per share which will be payable on
26 July 2013 to shareholders on the register on 28 June 2013.
Your Board intends to offer the opportunity to shareholders to receive
future dividends (in respect of the 2013 final dividend and thereafter)
in the form of new shares which will qualify for tax relief.
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 2013, over 97% 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 23 of the annual report for the year ended 31
October 2012.
Outlook
It is again encouraging to have seen another consecutive period where
there has been a positive uplift in the valuation of Titan 1's
portfolio. A number of our companies are delivering strong growth and
positioning themselves well in the market.
We do, however, recognise that there are continued pressures on small
companies and some of the investments within the portfolio are falling
behind expectations. Our Manager continues to work hard alongside these
companies to help to turn them around. Despite these pressures, we
remain confident that the portfolio as a whole will continue to develop
capital growth in the coming years going whilst seeking future exits.
Lewis Jarrett
Chairman
13 June 2013
Investment Portfolio
Carrying Change in
Investment value at valuation % equity
cost at 30 Unrealised 30 April in the % equity managed
Qualifying April 2013 profit/(loss) 2013 period held by by
investments Sector (GBP'000) (GBP'000) (GBP'000) (GBP'000) Titan 1 Octopus
Zoopla Limited Media 742 3,744 4,486 - 1.43% 4.81%
Calastone
Limited Technology 1,379 1,702 3,081 567 9.73% 30.71%
Nature
Delivered Consumer lifestyle
Limited & wellbeing 2,120 - 2,120 - 2.88% 10.86%
TouchType
Limited Telecommunications 385 1,100 1,484 557 3.71% 17.73%
e-Therapeutics Consumer lifestyle
plc & wellbeing 632 (3) 629 (198) 0.91% 4.20%
Executive
Europe Channel
Limited Media 529 76 605 - 5.82% 33.44%
Metrasens Consumer lifestyle
Limited & wellbeing 490 81 571 (57) 4.51% 30.37%
Mi-Pay Limited Telecommunications 904 (299) 605 (200) 6.77% 22.38%
UltraSoc
Technologies
Limited Technology 492 45 536 45 8.94% 54.54%
GetOptics Consumer lifestyle
Limited & wellbeing 508 26 534 (46) 4.80% 18.40%
Surrey
Nanosystems
Limited Technology 485 43 528 - 4.38% 21.88%
Semafone
Limited Telecommunications 496 (52) 444 (124) 5.55% 38.53%
Bowman Power
Limited Environmental 421 (42) 379 - 2.30% 11.03%
Michelson
Diagnostics Consumer lifestyle
Limited & wellbeing 442 (221) 221 - 5.62% 42.87%
PrismaStar Inc. Media 424 (393) 31 (93) 4.95% 33.02%
Phasor
Solutions
Limited Technology 100 (75) 25 - 0.76% 16.63%
Diverse Energy
Limited* Environmental 414 (414) - - 5.47% 29.76%
Elonics
Limited* Technology 305 (305) - - 3.11% 19.54%
Phase Vision
Limited* Technology 474 (474) - (145) 10.09% 42.96%
AQS Holdings
Limited* Environmental 655 (655) - - 14.20% 50.70%
The Key
Revolution
Limited * Technology 641 (641) - - 12.36% 35.88%
Total qualifying investments 13,035 3,243 16,279 306
Money market securities 2,734 - 2,734
OEICs - - -
Cash at bank 563 - 563
Total investments 16,332 3,243 19,576
Net current assets 219
Total net assets 19,795
* in administration at 30 April 2013
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 2013
Income Statement
Six months to 30 April Six months to 30 April
2013 2012 Year to 31 October 2012
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 - 259 259
Realised (loss)/gain on disposal of current asset
investments - 91 91 - (15) (15) - (15) (15)
Fixed asset investment holding gains/(losses) - 306 306 - 318 318 - 7,120 7,120
Current asset investment holding gains/(losses) - - - - 63 63 - 78 78
Other income 158 - 158 3 - 3 66 - 66
Investment management fees (55) (167) (222) (36) (109) (145) (74) (223) (297)
Performance fee incentive - (43) (43) - - - - (1,225) (1,225)
Other expenses (153) - (153) (114) - (114) (249) - (249)
Return on ordinary activities before tax (50) 187 137 (147) 528 381 (257) 5,994 5,737
Taxation on return on ordinary activities - - - - - - - - -
Return on ordinary activities after tax (50) 187 137 (147) 528 381 (257) 5,994 5,737
Earnings per share - basic and diluted (0.3)p 1.0p 0.7p (0.9)p 3.2p 2.3p (1.5)p 35.3p 33.8p
-- 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 2013 April 2012 2012
GBP'000 GBP'000 GBP'000
Shareholders'
funds at start of
period 21,382 14,842 14,842
Return on ordinary
activities after
tax 137 381 5,737
Issue of equity
(net of
expenses) 4,581 1,322 1,323
Purchase of own
shares (344) (60) (95)
Dividends paid (5,961) (162) (425)
Shareholders'
funds at end of
period 19,795 16,323 21,382
Balance Sheet
As at 30 April As at 30 April As at 31 October
2013 2012 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments* 16,279 13,467 19,176
Current assets:
Money market securities and other
deposits* 2,734 2,007 1,737
Debtors 365 55 1,562
Cash at bank 563 839 175
3,662 2,901 3,474
Creditors: amounts falling due
within one year (146) (45) (1,268)
Net current assets 3,516 2,856 2,206
Net assets 19,795 16,323 21,382
Called up equity share capital 2,232 1,758 1,754
Share premium 5,816 1,753 1,754
Special distributable reserve 11,822 12,626 12,166
Capital redemption reserve 65 20 24
Capital reserve - losses on
disposal (2,832) (802) (2,001)
-
holding
gains 3,243 1,363 8,186
Revenue reserve (551) (395) (501)
Total equity shareholders' funds 19,795 16,323 21,382
Net asset value per share 88.7p 92.8p 121.9p
*held at fair value through profit and loss
The statements were approved by the Directors and authorised for issue
on 13 June 2013 and are signed on their behalf by:
Lewis Jarrett
Chairman
Company Number: 06397764
Cash flow statement
Six months to 30 Six months to 30 Year to 31 October
April 2013 April 2012 2012
GBP'000 GBP'000 GBP'000
Net cash
inflow/(outflow)
from operating
activities (185) (304) (2,037)
Financial
investment:
Purchase of fixed
asset
investments (2,680) (742) (1,061)
Disposal of fixed
asset
investments 5,884 666 2,067
Management of
liquid
resources:
Purchase of
current asset
investments (5,505) (1,050) (1,754)
Disposal of
current asset
investments 4,598 1,077 2,065
Taxation - - -
Dividends paid (5,961) (162) (425)
Financing:
Issue of equity 4,581 1,322 1,323
Purchase of own
shares (344) (60) (95)
Increase in cash
resources at
bank 388 747 83
Reconciliation of net cash flow to movement in net
funds
Six months to 30 Six months to 30
April 2013 April 2012 Year to 31 October 2012
GBP'000 GBP'000 GBP'000
Increase in cash
resources at
bank 388 747 83
Movement in cash
equivalents 997 22 (248)
Opening net cash
resources 1,912 2,077 2,077
Net funds at
period end 3,297 2,846 1,912
Reconciliation of return before taxation to cash flow
from operating activities
Six months to Six months to
30 April 2013 30 April 2012 Year to 31 October 2012
GBP'000 GBP'000 GBP'000
Return on ordinary
activities before
tax 137 381 5,737
(Gain)/loss on
disposal of current
asset investments (91) 15 (259)
Gain on disposal of
fixed asset
investments - (271) 15
Gain on valuation of
fixed asset
investments (306) (318) (7,120)
Gain on valuation of
current asset
investments - (63) (78)
Decrease/(increase)
in debtors 1,197 (44) (1,551)
(Decrease)/increase
in creditors (1,122) (4) 1,219
Outflow from
operating
activities (185) (304) (2,037)
Notes to the half-yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30 April
2013 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 2012, 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 2013
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 2012 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 18,351,213 (30 April 2012: 16,407,499
and 31 October 2012: 16,983,984) 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 2013 is based on
22,315,551 (30 April 2012: 17,581,252 and 31 October 2012: 17,538,326)
ordinary shares in issue at that date.
5. Dividends
The interim dividend declared of 2.5 pence per share for the six months
ending 30 April 2013 will be paid on 26 July 2013, to those shareholders
on the register on 28 June 2013.
The final special dividend of 34 pence per share for the year ending 31
October 2012 was paid on 28 March 2013 to those shareholders on the
register on 11 January 2013.
6. Buy Backs
During the six months ended 30 April 2013 the Company bought back
407,562 Ordinary shares at a weighted average price of 84.25 pence per
share (six months ended 30 April 2012: 73,083 Ordinary shares at a
weighted average price of 82.3 pence per share and year ended 31 October
2012: 116,009 Ordinary shares at a weighted average price of 82.3 pence
per share). During the six months to 30 April 2013, 5,184,787 shares
were issued at a price of 93.9 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 GBP222,000 payable to Octopus (30 April 2012: GBP145,000 and 31
October 2012: GBP376,000). At the period end there was GBPnil
outstanding to Octopus (30 April 2012: GBPnil and 31 October 2012:
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. Additional information
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
HUG#1709412
http://www.octopusinvestments.com
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