TIDMOTV3
Octopus Titan VCT 3 plc
Half-Yearly Results
21 June 2012
Octopus Titan VCT 3 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 21 June 2012.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com/vctachive/titan3.html. All other statutory
information will also be found there.
About Octopus Titan VCT 3 PLC
Octopus Titan VCT 3 plc ('Titan 3', '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
predominantly unquoted companies. The Company is managed by Octopus Investments
Limited ('Octopus' or 'Investment Manager').
Titan 3 was incorporated on 4 March 2008 and raised over GBP20.0 million ( GBP19.2
million net of expenses) through an Offer for Subscription. A further GBP1.40
million in aggregate ( GBP1.32 million net of expenses) has been raised by way of a
top-up. Titan 3 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 3 has been provisionally 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 2012 30 April 2011 October 2011
=------------------------------------------------------------------------------
Net assets ( GBP'000s) 20,154 19,309 18,811
Return on ordinary activities after
tax ( GBP'000s) 169 (282) (780)
Net asset value per share (NAV) 93.7p 95.3p 92.9p
Cumulative dividends since launch -
paid and proposed 1.0p - -
=------------------------------------------------------------------------------
Chairman's Statement
I am pleased to present the half-yearly results for the six month period ended
30 April 2012.
Results and Dividend
As at 30 April 2012 the net asset value (NAV) stood at 93.7p, compared to 92.9p
at 31 October 2011 which represents an increase of 0.9% in the six month period.
The small increase in the NAV is as a result of the increase in fair value of
both the OEIC and the portfolio exceeding the running costs of the company.
These are discussed in further detail below.
We believe that our shareholders place considerable importance on dividends,
particularly given their tax-free status in a period when the top rate of tax
for individuals is 50%. To that end, we have decided following a partial
realisation of the holding in Zoopla to include a dividend for the half year.
This interim dividend of 1p per share will be payable on 27 July 2012 to
shareholders on the register on 29 June 2012.
Investment Portfolio Review
Having reached the required 70% qualifying investment threshold last October,
the VCT has used the six month period to 30 April 2012 to concentrate on
developing the established portfolio. The VCT therefore made ten follow-on
investments amounting to a total of GBP1.4 million. These follow-on investments
were made into the following companies: Semafone, Surrey Nanosytems, Mi-Pay,
Vega-Chi, 10 CMS (renamed Amplience), Bowman Power, GetOptics, Phase Vision,
PrismaStar and Diverse Energy.
It is encouraging that the portfolio has seen an overall increase in fair value
of GBP63,000 despite write downs 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 of GBP234,000 and GBP204,000
respectively. I am pleased to report that during the period the company
disposed of 31.4% of its holding in Zoopla, realising a gain of GBP150,000 on an
investment cost of GBP210,500.
Open Ended Investment Company (OEIC)
The CF Octopus UK Micro Cap Growth Fund has continued its strong performance and
increased in fair value by GBP245,000 over the six months to 30 April 2012. This
contributed 1.1p to the NAV. As at the period end, the investment has had a
cumulative increase in fair value of GBP1,300,000 which equates to a 72% increase
on cost.
Top-up
The Company, together with the other Titan funds, offered its shareholders the
opportunity to invest further into the Titan VCTs through a 'Top-up' offer. It
is pleasing to report that this offer was fully subscribed ahead of the closing
date, and raised GBP1,403,000 into the Fund.
The majority of the funds raised will be used to support existing portfolio
companies where the Investment Manager sees the opportunity for potential gains.
The Budget
The 2012 Budget has permitted an increase in the gross asset limit for portfolio
companies rising from GBP7 million to GBP15 million, and in the number of employees
rising from 50 to 250. These changes are effective from 6 April 2012, and
coupled with the raising of the annual investment limit from GBP2 million to GBP5
million, give additional scope in terms of considering new qualifying investment
opportunities.
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 3 is in compliance with the conditions
laid down by HMRC for maintaining provisional approval as a VCT.
As at 30 April 2012, over 86.3% of the portfolio (as measured by HMRC rules) was
invested in VCT qualifying investments.
Principal Risks and Uncertainties
The VCT'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 Titan 3 include economic, loss of approval
as a VCT, investment and strategic, regulatory, reputational, operational and
financial risks. These risks, and the ways in which they are managed, are
described in more detail in Titan 3's Annual Report and Accounts for the year
ended 31 October 2011. The VCT's principal risks and uncertainties have not
changed materially since the date of that report.
Outlook
The VCT has used the six month period to focus its resources into its current
portfolio of 26 companies. Although the VCT is continually seeking new
opportunities, it has concentrated on a number of follow-on investments during
the period in order to support companies who have met or exceeded expectations.
The VCT will continue to support these investments building capital growth in
the Fund and striving to make further successful realisations.
In the current economic climate, some portfolio companies will struggle to
survive the adverse trading conditions. However, others continue to grow and
develop, and overall we continue to have the confidence that the portfolio
should realise a satisfactory return for shareholders.
I shall be writing to you again at the year end to provide a more detailed
review of the portfolio.
Mark Hawkesworth
Chairman
21 June 2012
Investment Portfolio
%
Carrying Change in equity %
Investment value at valuation held equity
cost at 30 Unrealised 30 April in the by managed
Qualifying April 2012 profit/ (loss) 2012 period Titan by
investments Sector ( GBP'000) ( GBP'000) ( GBP'000) ( GBP'000) 3 Octopus
=-----------------------------------------------------------------------------------------------
Nature
Delivered Consumer lifestyle
Limited & wellbeing 798 907 1,705 - 7.63% 29.98%
Calastone
Limited Technology 1,265 261 1,526 - 4.95% 34.10%
True Knowledge
Limited Media 1,426 (17) 1,409 - 8.64% 54.01%
Zoopla Limited Media 460 942 1,402 234 3.17% 19.12%
Semafone
Limited Telecommunications 710 72 782 72 11.62% 51.03%
Secret Escapes Consumer lifestyle
Limited & wellbeing 646 86 732 - 7.93% 17.13%
Executive
Channel
Limited Media 641 60 701 - 7.42% 36.76%
Vega-Chi
Limited Technology 641 50 691 50 5.54% 16.69%
Surrey
Nanosystems
Limited Technology 621 - 621 - 6.18% 24.55%
e-Therapeutics Consumer lifestyle
plc & wellbeing 401 212 613 204 1.10% 8.24%
Certivox
Limited Technology 584 15 599 - 7.30% 30.01%
Mi-Pay Limited Telecommunications 849 (260) 589 - 9.64% 32.12%
TouchType
Limited Telecommunications 385 164 549 - 4.20% 20.07%
Metrasens Consumer lifestyle
Limited & wellbeing 466 43 509 - 6.68% 28.01%
Applied
Superconductor
Limited Environmental 493 - 493 - 6.76% 20.59%
Michelson
Diagnostics Consumer lifestyle
Limited & wellbeing 442 - 442 - 4.87% 37.53%
Amplience
Limited Technology 700 (261) 439 - 19.56% 63.13%
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 660 (565) 95 (271) 11.68% 43.63%
Phasor
Solutions
Limited Technology 50 (25) 25 - 0.87% 32.14%
Diverse Energy
Limited Environmental 382 (367) 15 - 5.46% 29.76%
Elonics
Limited Technology 305 (305) - (76) 3.11% 19.54%
=-----------------------------------------------------------------------------------------------
Total qualifying investments 14,918 484 15,402 63
=-----------------------------------------------------------------------------------------------
Money market securities 1,189 - 1,189
OEICs 1,827 1,312 3,139
Cash at bank 219 - 219
=-----------------------------------------------------------------------------------------------
Total investments 18,153 1,796 19,949
=-----------------------------------------------------------------------------------------------
Net current assets 205
=-----------------------------------------------------------------------------------------------
Total net assets 20,154
=-----------------------------------------------------------------------------------------------
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
21 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 | - 63 63| - - - - - -
| |
Realised | |
(loss)/gain on| |
disposal of | |
current asset | |
investments | - 245 245| - - - - (2) (2)
| |
| |
| |
Fixed asset | |
investment | |
holding | |
gains/(losses)| - 152 152| - (474) (474) - (597) (597)
| |
Current asset | |
investment | |
holding | |
gains/(losses)| 31 31| - 457 457 - 373 373
| |
| |
| |
Other income | 4 - 4| 55 - 55 101 - 101
| |
| |
| |
Investment | |
management | |
fees | (47) (141) (188)| (49) (146) (195) (98) (294) (392)
| |
| |
| |
Other expenses| (138) - (138)| (125) - (125) (263) - (263)
| |
| |
=--------------+---------------------+---------------------------------------------
Return on | |
ordinary | |
activities | |
before tax | (181) 350 169| (119) (163) (282) (260) (520) (780)
| |
| |
| |
Taxation on | |
return on | |
ordinary | |
activities | - - -| - - - - - -
| |
| |
=--------------+---------------------+---------------------------------------------
Return on | |
ordinary | |
activities | |
after tax | (181) 350 169| (119) (163) (282) (260) (520) (780)
=--------------+---------------------+---------------------------------------------
Earnings per | |
share - basic | |
and diluted | (0.9) 1.7 0.8| (0.6)p (0.8)p (1.4)p (1.3)p (2.6)p (3.9)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 | 18,811| 19,607 19,607
| |
| |
| |
Return on ordinary | |
activities after tax | 169| (282) (780)
| |
Issue of equity (net of | |
expenses) | 1,215| - -
| |
Purchase of own shares | (41)| (16) (16)
=------------------------+-----------------+-----------------------------------
Shareholders' funds at | |
end of period | 20,154| 19,309 18,811
+-----------------+
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* | 15,402| 10,267 14,129
| |
Current assets: | |
| |
Money market securities and | |
other deposits* | 4,328 | 8,978 4,493
| |
Debtors | 258 | 8 123
| |
Cash at bank | 219 | 110 115
=-----------------------------+----------------+-------------------------------
| 4,805 | 9,096 4,731
| |
Creditors: amounts falling | |
due within one year | (53) | (54) (49)
=-----------------------------+----------------+-------------------------------
Net current assets | 4,752| 9,042 4,682
=-----------------------------+----------------+-------------------------------
| |
=-----------------------------+----------------+-------------------------------
Net assets | 20,154| 19,309 18,811
=-----------------------------+----------------+-------------------------------
| |
| |
Called up equity share | |
capital | 2,150 | 2,025 2,025
| |
Share Premium | 1,085 | - -
| |
Special distributable reserve|17,098 |17,139 17,139
| |
Capital redemption reserve | 7 | 2 2
| |
Capital reserve - losses on | |
disposal | (989) | (652) (534)
| |
- | |
holding gains | 1,796 | 1,465 990
| |
Revenue reserve | (993) | (670) (811)
=-----------------------------+----------------+-------------------------------
Total equity shareholders' | |
funds | 20,154| 19,309 18,811
=-----------------------------+----------------+-------------------------------
Net asset value per share | 93.7p| 95.3p 92.9p
+----------------+
*Held at fair value through profit and loss
The statements were approved by the Directors and authorised for issue on 21
June 2012 and are signed on their behalf by:
Mark Hawkesworth
Chairman
Company Number: 06523078
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 outflow from | |
operating activities | (453)| (241) (650)
| |
| |
| |
Financial investment: | |
| |
Purchase of fixed asset | |
investments | (1,439)| (3,006) (6,990)
| |
Disposal of fixed asset | |
investments | 879| 224 225
| |
| |
| |
Management of liquid | |
resources: | |
| |
Purchase of current asset | |
investments | (1,272)| (2,960) (4,965)
| |
Disposal of current asset | |
investments | 1,215| 5,950 12,352
| |
| |
| |
Financing: | |
| |
Issue of equity | 1,215| - -
| |
Purchase of own shares | (41)| (16) (16)
=----------------------------+----------------+--------------------------------
Increase/(decrease) in cash | |
resources at bank | 104| (49) (44)
+----------------+
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 | 104| (49) (44)
| |
Movement in cash equivalents| (165)| (2,531) (7,016)
| |
Opening net cash resources | 4,608| 11,668 11,668
=----------------------------+---------------+---------------------------------
Net funds at period end | 4,547| 9,088 4,608
+---------------+
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 | 169| (282) (780)
| |
(Gain)/loss on disposal of | |
current asset investments | (31)| - 2
| |
Loss on disposal of fixed | |
asset investments | (152)| - -
| |
(Gain)/loss on valuation of | |
fixed asset investments | (63)| 474 597
| |
(Gain)/loss on valuation of | |
current asset investments | (245)| (457) (373)
| |
(Increase)/decrease in | |
debtors | (135)| 51 (64)
| |
Increase/(decrease) in | |
creditors | 4| (27) (32)
=-----------------------------+---------------+--------------------------------
Outflow from operating | |
activities | (453)| (241) (650)
+---------------+
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 20,413,394 (30 April 2011: 20,261,304 and 31
October 2011: 20,255,857) shares, being the weighted average number of 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 21,497,993 (30
April 2011: 20,250,554 and 31 October 2011: 20,250,554) ordinary shares in issue
at that date.
5. Dividends
The interim dividend declared of 1 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.
6. Buy Backs
During the six months ended 30 April 2012 the Company bought back 48,975
ordinary shares at a weighted average price of 83.7pence per share (six months
ended 30 April 2010: 17,595 ordinary shares at a weighted average price of 88.5
pence per share and year ended 31 October 2011: 17,595 ordinary shares at a
weighted average price of 88.5 pence per share). 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 GBP188,000 payable to Octopus (30
April 2011: GBP196,000 and 31 October 2011: GBP392,000). 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 GBP10,000 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 3 PLC via Thomson Reuters ONE
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