TIDMOTV3
Octopus Titan VCT 3 plc
Half-Yearly Results
25 June 2013
Octopus Titan VCT 3 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 25 June 2013.
You may shortly view the Half-Yearly Report in full at:
http://www.octopusinvestments.com/vctarchive/titan3.html
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 GBP6.22 million in aggregate (GBP5.90 million net of expenses)
has been raised by way of top-ups in 2012 and 2013. 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 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 3 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.
-- 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) 25,083 20,154 25,034
Return on ordinary activities
after tax (GBP'000s) (232) 169 5,264
Net asset value per share (NAV) 95.5p 93.7p 116.4p
Cumulative dividends since 31.0p 1.0p 21.0p
launch - paid and proposed
Chairman's Statement
I am pleased to present the Company's half-yearly results for the six
month period ended 30 April 2013.
Results and Dividend
As at 30 April 2013 the total return (net asset value (NAV) plus
cumulative dividends) stood at 116.5p, compared to 117.4p at 31 October
2012. This represents a decrease of 0.8% over the six month period,
principally due to the normal operating costs of the Fund exceeding any
income generated. However, the operating loss was reduced by a small
uplift in the value of the portfolio. These movements are discussed in
further detail below.
It is your Board's policy to strive to maintain a regular dividend flow
where possible, especially given their tax free status. Following the
successful partial realisations of four portfolio companies through
Octopus Zenith (see further detail overleaf under 'Developments') your
Board has made the decision to distribute a proportion of the cash
inflow and is therefore declaring a dividend of 10.0 pence per share for
the half year. This dividend will be payable on 26 July 2013 to
shareholders on the register on 28 June 2013.
This takes the total cumulative dividends paid from the Company to 31.0
pence per share.
Investment Portfolio Review
The Fund has used the six month period to concentrate on developing the
established portfolio, making eight follow-on investments totalling
GBP1,907,000. These follow-on investments were made into the following
companies: e-Therapeutics, Amplience, Calastone, Metrasens, Applied
Superconductor, Bowman Power, Vega-Chi and Mi-Pay. In addition, on 30
November 2012, the Fund's holding in Nature Delivered was realised for
GBP5,884,000, consisting of GBP3,764,000 in cash and GBP2,120,000 which
was reinvested in shares and a loan in the acquiring company. The cost
of this investment was GBP798,000 and therefore the valuation at exit
provided a multiple of over seven times cost. The portfolio has
increased in value for another consecutive six month period giving rise
to an overall uplift of GBP29,000. Calastone, TouchType and Amplience
have performed particularly well during the period, and exceeded
expectations. However, there were eight portfolio companies which were
subjected to downward valuations: Semafone, Mi-Pay, Phase Vision,
PrismaStar, GetOptics, Vega-Chi, Metrasens and e-Therapeutics.
Subsequent to 30 April 2013, the Company has made the following
follow-on investments:
-- GBP1,100,000 into Calastone on 31 May 2013
-- GBP494,000 into UltraSoc on 31 May 2013
-- GBP800,000 in Certivox on 7 June 2013
Open Ended Investment Company (OEIC)
The holding in CF Octopus UK Micro Cap Growth Fund has continued its
strong performance and increased in fair value by GBP47,000 over the six
months to 30 April 2013. It was also part disposed during the period,
realising a profit of GBP886,000 on a cost of GBP1,001,000 which equates
to an 88.5% increase in value.
Fund Raising
In conjunction with all the other Titan funds, the Company offered the
opportunity to invest into all five Titan VCTs through a linked fund
raising. 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
is under consideration for the current tax year, and details will be
published in due course.
The majority of the new capital raised will be used to support existing
portfolio companies where the Investment Manager sees the opportunity
for business growth. The cash raised may also be used to invest into new
portfolio businesses as the Investment Manager continues to enjoy a
strong pipeline of attractive opportunities which are suitable for the
Fund.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides both the Board and Octopus with
advice regarding 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 2013, over 85% of the portfolio (as measured by HMRC
rules) was invested in VCT qualifying investments.
Developments - Octopus Zenith
Shareholders will have received a Circular dated 7 May 2013. This
outlined a transaction whereby the Fund's holdings in four portfolio
companies, namely Zoopla, Nature Delivered, Calastone and Secret Escapes,
are to be transferred to a new fund called Octopus Zenith, subject to
shareholders' approval. In the light of these companies growing rapidly,
it became clear that action was needed to ensure VCT qualifying status
was maintained by the Fund. By selling half of these holdings for cash
and retaining half through a holding in Octopus Zenith, the Fund
maintains its VCT qualifying status, receives cash of GBP5.9 million and
allows investors to participate in the future growth of these companies.
The cash received provides additional capital to make follow on
investments in existing portfolio companies, and potentially in to new
portfolio companies.
I am pleased to report that the enabling resolution was duly passed at
the General Meeting held on 3 June 2013 by an overwhelming number of
votes, following which HMRC approved the transaction. The transaction
subsequently completed on 21 June 2013.
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 2012.
The VCT's principal risks and uncertainties have not changed materially
since the date of that report.
Outlook
It is pleasing that the portfolio has had another period of overall
uplift in value, and the Octopus Zenith transaction has enabled the
payment of a significant interim dividend. We remain confident that the
value of the portfolio will continue to grow and that over the midterm
we will realise more successful investments. At the same time, however,
there are several companies which are clearly underperforming in terms
of expectations and which have been written down in value during the
half year. Your Board is working with the Investment Manager to support
those companies having growth potential, and capable of delivering good
investment returns and to help turn around the companies that have
fallen behind budget.
The UK economic outlook remains unchanged with low rates of economic
growth expected for a considerable period.
Mark Hawkesworth
Chairman
25 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 3 Octopus
Secret Escapes Consumer lifestyle
Limited & wellbeing 1,265 1,374 2,639 - 7.65% 16.83%
Zoopla Limited Media 459 2,044 2,503 - 0.80% 4.81%
Calastone
Limited Technology 1,510 780 2,290 260 4.46% 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 1,152 (139) 1,013 (260) 0.91% 4.20%
Amplience
Limited Technology 1,050 (41) 1,009 220 10.17% 47.62%
Certivox
Limited Technology 951 21 972 - 11.91% 29.44%
Metrasens Consumer lifestyle
Limited & wellbeing 668 94 762 (76) 4.51% 30.37%
Semafone
Limited Telecommunications 826 (124) 703 (196) 8.78% 38.53%
Executive
Channel Europe
Limited Media 641 60 701 - 5.82% 33.44%
Surrey
Nanosystems
Limited Technology 621 43 664 - 5.51% 21.88%
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%
Vega-Chi
Limited Technology 714 (332) 382 (37) 6.49% 19.00%
Bowman Power
Limited Environmental 421 (42) 379 - 2.30% 11.03%
Applied
Superconductor
Limited Environmental 615 (370) 246 - 7.96% 24.22%
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 50 (37) 12 - 0.76% 16.63%
Diverse Energy
Limited* Environmental 413 (413) - - 5.47% 29.76%
Elonics
Limited* Technology 305 (305) - - 3.11% 19.54%
Phase Vision
Limited* Technology 474 (474) - - 10.09% 42.96%
AQS Holdings
Limited* Environmental 660 (660) - (145) 14.2% 50.7%
Total qualifying investments 18,070 1,736 19,806 29
Money market securities 4,141 - 4,141
OEICs 266 192 458
Cash at bank 1481 - 1481
Total investments 23,958 1,928 25,886
Net current assets (803)
Total net assets 25,083
* 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 Conduct 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
25 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 - - - - 63 63 - 154 154
Realised (loss)/gain on disposal of current asset
investments - 176 176 - 245 245 - 81 81
Fixed asset investment holding gains/(losses) - 29 29 - 152 152 - 6,356 6,356
Current asset investment holding gains/(losses) - 47 47 31 31 - 178 178
Other income 92 - 92 4 - 4 99 - 99
Investment management fees (64) (193) (257) (47) (141) (188) (94) (282) (376)
Performance fee incentive - (145) (145) - - - - (937) (937)
Other expenses (174) - (174) (138) - (138) (291) - (291)
Return on ordinary activities before tax (146) (86) (232) (181) 350 169 (286) 5,550 5,264
Taxation on return on ordinary activities - - - - - - - - -
Return on ordinary activities after tax (146) (86) (232) (181) 350 169 (286) 5,550 5,264
Earnings per share - basic and diluted (0.6)p (0.4)p (1.0)p (0.9) 1.7 0.8 (1.4)p 26.5p 25.1p
-- 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 2013 April 2012 2012
GBP'000 GBP'000 GBP'000
Shareholders'
funds at start of
period 25,034 18,811 18,111
Return on ordinary
activities after
tax (232) 169 5,264
Issue of equity
(net of
expenses) 4,580 1,215 1,215
Purchase of own
shares - (41) (41)
Dividends paid (4,299) - (215)
Shareholders'
funds at end of
period 25,083 20,154 25,034
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* 19,806 15,402 21,634
Current assets:
Money market securities and other
deposits* 4,599 4,328 2,724
Debtors 331 258 1,629
Cash at bank 1,481 219 34
6,411 4,805 4,387
Creditors: amounts falling due
within one year (1,134) (53) (987)
Net current assets 5,277 4,752 3,400
Net assets 25,083 20,154 25,034
Called up equity share capital 2,627 2,150 2,150
Share Premium 5,188 1,085 1,085
Special distributable reserve 12,584 17,098 16,883
Capital redemption reserve 7 7 7
Capital reserve - losses on
disposal 3,992 (989) (1,642)
-
holding
gains 1,928 1,796 7,648
Revenue reserve (1,243) (993) (1,097)
Total equity shareholders' funds 25,083 20,154 25,034
Net asset value per share 95.5p 93.7p 116.4p
*Held at fair value through profit and loss
The statements were approved by the Directors and authorised for issue
on 25 June 2013 and are signed on their behalf by:
Mark Hawkesworth
Chairman
Company Number: 06523078
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 outflow
from operating
activities 961 (453) (2,073)
Financial
investment:
Purchase of fixed
asset investments (4,028) (1,439) (2,786)
Disposal of fixed
asset investments 7,772 879 1,791
Management of liquid
resources:
Purchase of current
asset investments (5,904) (1,272) (1,696)
Disposal of current
asset investments 2,365 1,215 3,724
Dividends paid (4,299) - (215)
Financing:
Issue of equity 4,580 1,215 1,215
Purchase of own
shares - (41) (41)
Increase/(decrease)
in cash resources
at bank 1,447 104 (81)
Reconciliation of net cash flow to movement in net
funds
Six months to Six months to
30 April 2013 30 April 2012 Year to 31 October 2012
GBP'000 GBP'000 GBP'000
Increase/(decrease)
in cash resources
at bank 1,447 104 (81)
Movement in cash
equivalents 1,875 (165) (1,769)
Opening net cash
resources 2,758 4,608 4,608
Net funds at period
end 6,080 4,547 2,758
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 (232) 169 5,264
Loss on disposal of
current asset
investments (176) (31) (81)
Loss on disposal of
fixed asset
investments - (152) (154)
Gain on valuation of
fixed asset
investments (29) (63) (6,356)
Loss/(gain) on
valuation of
current asset
investments (47) (245) (178)
Decrease/(increase)
in debtors 1,298 (135) (1,506)
Increase in
creditors 147 4 938
Inflow/(outflow)
from operating
activities 961 (453) (2,073)
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 22,268,597 (30 April 2012: 20,413,394
and 31 October 2012:20,960,151) 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 2013 is based on
22,266,713 (30 April 2012: 21,497,993 and 31 October 2012: 21,497,993)
ordinary shares in issue at that date.
5. Dividends
The interim dividend declared of 10.0 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 20.0 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 there were no buy backs (six
months ended 30 April 2012: 48,975 ordinary shares at a weighted average
price of 83.7 pence per share and year ended 31 October 2012: 48,975
ordinary shares at a weighted average price of 83.7 pence per share).
During the six months to 30 April 2013, 4,768,720 shares were issued at
a price of 102.1 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 GBP257,000 payable to Octopus (30 April 2012: GBP188,000 and 31
October 2012: GBP474,000). At the period end there were management fees
of GBPnil stated within prepayments (30 April 2012: GBPnil and 31
October 2012: GBP98,000). 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. 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 3 PLC via Thomson Reuters ONE
HUG#1711915
http://www.octopusinvestments.com
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