Half-yearly report
June 29 2009 - 10:07AM
UK Regulatory
TIDMOTV3
Octopus Titan VCT 3 PLC
Half-Yearly Results
29 June 2009
Octopus Titan VCT 3 PLC, managed by Octopus Investments Limited,
today announces the Half-Yearly results for the six months ended 30
April 2009.
These results were approved by the Board of Directors on 29 June
2009.
You may view the Half-Yearly Report in full at
www.octopusinvestments.com by navigating to the VCT Meetings &
Reports under the 'Services' section.
About Octopus Titan VCT 3 PLC
Octopus Titan VCT 3 plc ("Titan 3," "Company" or "Fund") 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 Ventures Limited
("Octopus" or "Manager").
Titan 3 was incorporated on 4 March 2008 with the first allotment of
equity being 21 July 2008. The total amount raised by 15 May 2009
when the Offer closed was GBP18.9 million. The Company will invest
primarily in unquoted UK smaller companies and aims to deliver
absolute returns on its investments.
Financial Summary
Six months to Period to
30 April 2009 31 October 2008
Net assets ('000s) GBP17,141 GBP3,844
Net profit/(loss) after tax ('000s) GBP288 GBP(96)
Net asset value per share ("NAV") 95.6p 92.2p
Chairman's Statement
I am pleased to present the half-yearly report covering the six month
period to 30 April 2009 for Octopus Titan VCT 3 plc.
By the end of the period to 30 April 2009, the Company had raised
gross proceeds of over GBP17.9 million, and a further GBP964,000 was
raised in May 2009. This brought the total amount raised for Titan 3
to GBP18.9 million. The Offer period for new subscriptions of shares
has now closed.
Performance
The NAV of the Fund rose 3.5p or 3.8% since the Fund's year end at 31
October 2008. This is particularly pleasing given the period under
review has seen considerable volatility in the stock market and
interest rates at an historic low.
The increase in NAV has been principally due to the portfolio of
non-qualifying investments in Open Ended Investments Companies
("OEICs") managed by Octopus which has shown significant gains since
the year end. The building of the qualifying investment portfolio
has continued with three new investments completed in the period. In
addition, a further investment has been made since the period end .
The qualifying portfolio now comprises five investments; an
investment in Calastone was completed prior to the period.
Further details of both the non-qualifying and qualifying investment
portfolios are set out below.
Investment Portfolio
Non-qualifying investments
Our investment in the CF Octopus Partner Fund (Absolute Return) and
the CF Octopus Partner Fund (UK Smaller Companies) have both
performed particularly well to date. During the period, Titan 3
invested a further GBP2.9 million in to these funds and at 30 April
2009 had invested in aggregate GBP2.0 million in the Absolute Return
fund and GBP1.4 million in the UK Smaller Companies fund.
More information on the recent performance of these funds can be
found on the Investment Manager's website at
www.octopusinvestments.com under the "Products" section.
Qualifying investments
Calastone continues to trade satisfactorily and is held at cost
within these financial statements.
New qualifying investments
As I mentioned above, there have been three new qualifying
investments completed in the period with a fourth investment after
the period end. These are all detailed below:
Zoopla Limited
In January, Titan 3 made an investment of GBP280,000 into Zoopla
Limited, an award-winning online property information service and
community website, presenting information on house pricing, free
valuation estimates, for sale listings, and local community
information. Zoopla has become one of the UK's leading website for
house prices and value data, as it provides the most comprehensive
source of residential property market information.
Phasor Solutions Limited
In March Titan 3 invested GBP50,000 into Phasor Solutions Limited.
Phasor is a research and development company in the process of
producing flat panel phased array antennae, which will be a fraction
of the cost associated with traditional phased array technology.
They are used across many industries including travel and engineering
and can facilitate communication signals. Phasor has the potential to
transform the 'communication on the move' market through its phased
array product offering. Additionally, Phasor's product range, which
will be expanded to include radars, has numerous other applications
in the aerospace and military sectors
e-Therapeutics plc
Also in March, Titan 3 invested GBP284,000 into e-Therapeutics plc, a
business listed on the Alternative Investment Market. e-Therapeutics
focuses on three core areas: the discovery of new drugs; discovering
novel uses for existing drugs; and analysis of the interactions
between different drugs. The company has developed a unique drug
discovery technology that enables it to assess drug candidates for
high efficacy and safety ahead of clinical trials. The use of this
technology dramatically reduces the time between drug discovery and
market applicability, and reduces the risks associated with clinical
trials.
Phase Vision Limited
After the end of the period in June, Titan 3 completed an investment
into Phase Vision Limited. Phase Vision is a manufacturer of optical
inspection solutions for high-speed, three dimensional shape
measurement with micro-scale accuracy. The company has developed (and
patented) a unique optical approach to the measurement of very large
industrial items with free-form or curved surfaces, such as ship
propellers and aircraft wings, to tighten manufacturing tolerances,
increase throughput and reduce waste.
Top-ups
Due to a demand for further subscriptions of new shares in the
Company, the Board has launched a "top-up" scheme which will be
available to existing and new shareholders. It is hoped that this
will allow the Company to raise a further GBP1.8 million. The final
allotment under this top-up will be on 14 August 2009. The NAV used
in the allotment of shares will be calculated at the latest
practicable date before each allotment.
Principal Risks and Uncertainties
The principal risks and uncertainties are set out in note 7 of the
Notes to the Half-Yearly Report on page 11.
Outlook
Our Manager is currently seeing a strong deal flow and they are in
active negotiations with several companies in which they hope to
invest. The economic downturn has lead to a more realistic pricing of
investments, and our Manager hopes that this will improve overall
returns in the portfolio. However, it is important that we are
realistic about the prospects for our portfolio of qualifying
companies which are all targeting high growth rates. Some of their
businesses may encounter difficulties in obtaining sales or achieving
their business plan within their original timescale. Others may be
affected by changing economic conditions and their markets may
develop in a manner that has not been anticipated. Your Board will
expect to see early problems in the portfolio, and these will occur
before successful company returns are achieved. There is a common
saying that "Lemons ripen before pearls are cultured" and we are
fully prepared for this. We shall also be cautious about investing
further monies in to existing portfolio companies where there has
been underachievement of their original targets, and any new money
invested can only be justified on the basis of the return on the new
money being balanced against commensurate risk.
If you have any questions on any aspect of your investment, please
call one of the team at Octopus on 0800 316 2347.
Mark Hawkesworth
Chairman
29 June 2009
Investment Portfolio
%
equity
Carrying % held by
value at equity all
Investment Unrealised 30 held funds
Unquoted at profit/ April by managed
qualifying cost (loss) 2009 Titan by
investments Sector (GBP'000) (GBP'000) (GBP'000) 3 Octopus
e-Therapeutics Consumer
plc lifestyle
&
wellbeing 284 - 284 0.2% 5.1%
Zoopla Limited Media 280 - 280 2.5% 17.8%
Calastone
Limited Technology 200 - 200 2.4% 17.3%
Phasor
Solutions
Limited Technology 50 - 50 1.0% 33.1%
Total unquoted qualifying
investments 814 - 814
Money market securities 12,559 - 12,559
OIECs 3,410 412 3,822
Cash at bank 115 - 115
Total
investments 16,898 412 17,310
Net current
assets (169)
Total net
assets 17,141
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
Mark Hawkesworth
Chairman
29 June 2009
Income Statement
Six months to 30 April
2009 Year to 31 October 2008
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Loss on disposal of
current asset
investments - - - - (24) (24)
Gain on valuation of
current asset
investments - 435 435 - - -
Income 30 - 30 17 - 17
Investment management
fees (18) (54) (72) (5) (14) (19)
Other expenses (105) - (106) (70) - (70)
(Loss)/profit on
ordinary activities
before tax (93) 381 288 (58) (38) (96)
Taxation on
profit/(loss) on
ordinary activities - - - - - -
(Loss)/profit on
ordinary activities
after tax (93) 381 288 (58) (38) (96)
Return per share -
basic and diluted (1.5)p 6.3p 4.8p (3.7)p (2.5)p (6.2)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 accompanying notes are an integral part of the half-yearly
report
* The Company has no recognised gains or losses other than those
disclosed in the income statement.
Reconciliation of Movements in Shareholders' Funds
Six months ended Year to
30 April 2009 31 October 2008
GBP'000 GBP'000
Shareholders' funds at start of
period 3,844 -
Profit/(loss) on ordinary activities
after tax 288 (96)
Issue of equity (net of expenses) 13,009 3,940
Shareholders' funds at end of period 17,141 3,844
Balance Sheet
As at 30 April 2009 As at 31 October 2008
GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments 814 200
Current assets:
Investments - money market
securities 16,381 480
Debtors 12 40
Cash at bank 115 3,218
16,508 3,738
Creditors: amounts falling
due within one year (181) (94)
Net current assets 16,327 3,644
Net assets 17,141 3,844
Called up equity share
capital 1,793 417
Share premium 15,156 3,523
Capital reserve - realised 342 (38)
Revenue reserve (150) (58)
Total equity shareholders'
funds 17,141 3,844
Net asset value per share 95.6p 92.2p
Cash Flow Statement
Six months to Year to
30 April 2009 31 October 2008
GBP'000 GBP'000
Net cash outflow from operating
activities (32) (18)
Capital expenditure and financial
investment:
Purchase of investments (614) (200)
Management of liquid resources:
Purchase of cash equivalent investments (15,716) (504)
Sale of cash equivalent investments 250 -
Financing:
Issue of equity (net of expenses) 13,660 4,079
Share issue expenses (651) (139)
(Decrease)/increase in cash at bank (3,103) 3,218
Reconciliation of net cash flow to movement in net cash resources
Six months to Year to 31 October
30 April 2009 2008
GBP'000 GBP'000
(Decrease)/increase in cash at bank (3,103) 3,218
Movement in liquid resources 15,901 480
Opening net cash resources 3,698 -
Net cash resources at period end 16,496 3,698
Reconciliation of profit before taxation to cash flow from operating
activities
Six months to Year to 31 October
30 April 2009 2008
GBP'000 GBP'000
Gain/(loss) on ordinary activities
before tax 288 (96)
(Gain)/loss on valuation of current
asset investments (435) 24
Decrease/(increase) in debtors 28 (40)
Increase in creditors 87 94
Net cash outflow from operating
activities (32) (18)
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30
April 2009 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 2008,
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 July 2003, revised in
December 2005.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 30 April
2009 do not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985 and have not been delivered to
the Registrar of Companies. The comparative figures for the year
ended 31 October 2008 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 under Section 235 of the Companies Act 1985 was
unqualified. This half-yearly report has not been reviewed by the
Company's auditor.
3. Earnings per share
The earnings per share at 30 April 2009 and 31 October 2008 are
calculated on the basis of 6,001,529 and 1,542,461 being the weighted
average number of shares, in issue during the respective periods.
There are no potentially dilutive capital instruments in issue and,
therefore, no diluted returns per share figures are relevant.
4. Net asset value per share
The net asset value per share is based on net assets as at 30 April
2009 and 31 October 2008 divided by the 17,934,821 and 4,168,564
Ordinary Shares in issue at those dates respectively.
5. Issue of equity
Under the Offer for subscription, 13,766,257 Ordinary Shares were
issued during the period at the Offer price of 100p per share.
6. Related Party Transactions
Octopus 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
GBP72,000 (31 October 2008: GBP19,000) payable to Octopus. At the period
end there was GBPnil (31 October 2008: nil) outstanding to Octopus.
Furthermore, Octopus Investments Limited provides administration and
company secretarial services to the Company. Octopus Investments
Limited receives a fee of 0.3 per cent per annum of net assets of the
Company for administration services and GBP10,000 per annum for company
secretarial services.
7. Principal Risks and Uncertainties
The Company's assets consist of equity and fixed-rate interest
investments, cash and liquid resources. Its principal risks are
therefore market risk, credit risk and liquidity risk. Other risks
faced by the Company include economic, loss of approval as a VCT,
investment and strategic, regulatory, reputational, operational and
financial risks. These risks, and the way in which they are managed,
are described in more detail in the Company's Annual Report and
Accounts for the year ended 31 October 2008. The Company's principal
risks and uncertainties have not changed materially since the date of
that report.
8. Copies of this statement are being sent to all shareholders.
Copies are also available from the registered office of the Company
at 8 Angel Court, London, EC2R 7HP, and will also be available to
view on the Investment Manager's website at
www.octopusinvestments.com.
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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