Half-Yearly Results
21/09/2023 17:30
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Octopus Titan VCT plc
Half-Yearly Results
Octopus Titan VCT plc (‘Titan’ or the ‘Company’) announces the
half-yearly results for the six months ended 30 June 2023.
Titan’s mission is to invest in the people, ideas and industries
that will change the world.
Highlights
HY202 3 HY2022 FY2022
Net assets (£’000) £1, 055,683 £1,180,101 £1,051,760
Loss after tax (£’000) £( 87 , 609 ) £(148,242) £(319,215)
NAV per share 68.2 p 91.3p 76.9p
Total value (1) 168.2 p 186.3p 173.9p
Total return (p) (2) ( 5.7)p (11.4)p (23.8)p
Total return % (3) ( 7.4)% (10.8)% (22.5)%
Dividends paid in the year 3.0p 3.0p 5.0p
Dividend yield % (4) 3.9 % 2.8% 4.7%
Dividend declared 2.0p 2.0p 3.0p
1. Total value is an alternative performance measure, calculated as NAV plus
cumulative dividends paid since launch.
2. Total return is an alternative performance measure, calculated as movement
in NAV per share in the period plus dividends paid in the period.
3. Total return % is an alternative performance measure, calculated as total
return/opening NAV.
4. Dividend yield is an alternative performance measure, calculated as
dividends paid/opening NAV.
Interim Management Report
Chair’s statement
Titan’s total return for the six months to 30 June 2023 was minus 7.4% with
net assets at the end of the period totalling £1.1 billion.
The Net Asset Value (NAV) per share at 30 June 2023 was 68.2p which, adjusting
for dividends paid of 3.0p per share in May 2023, represents a net decrease of
5.7p per share from 31 December 2022. The total return (NAV plus cumulative
dividends paid per share since launch) at the end of the period was 168.2p (31
December 2022: 173.9p). This further decline is, of course, disappointing but
reflects the combination of a continuation of the difficult global macro
environment and the ongoing readjustment of valuation multiples and funding
availability in the early‑stage ventures space since 2021. The Octopus
Ventures team are supporting Titan’s portfolio companies through these more
challenging times, offering additional resource, expertise or network contacts
where relevant. Despite the decrease in NAV, the tax-free annual compound
return for the original shareholders since Titan’s launch in October 2007 is
3.9%.
We were pleased to raise over £237 million in our most recent fundraise which
closed on 5 April 2023 and, on 26 June 2023, we announced our intention to
launch a new offer for subscription later this calendar year. As of 30 June
2023, we had uninvested cash reserves(1) of £232.4 million (£179.0 million
as at 31 December 2022) to allow us to support our existing portfolio of 140
companies, as well as make new investments in early‑stage, high-growth
businesses which we believe embody the objectives of the VCT scheme.
In the six months to 30 June 2023, we utilised £130.7 million of our cash
resources, comprising £65.0 million in new and follow-on investments, £34.4
million in dividends (net of the Dividend Reinvestment Scheme), £18.2 million
in share buybacks and £13.1 million in investment management fees and other
running costs. Together, this utilised 73% of our cash and cash equivalents at
31 December 2022.
Dividends
As shareholders will know, our target to date has been to pay an annual
dividend of 5p per share, supplemented by special dividends when appropriate.
I am pleased to confirm that the Titan Board has now decided to declare an
interim dividend of 2p per share (2022: 2p per share), which will be paid on
21 December 2023 to shareholders on the register as at 1 December 2023.
If you are one of the 26% of shareholders who take advantage of the Dividend
Reinvestment Scheme (DRIS), your dividend will be receivable in Titan shares.
This is an excellent way to achieve your investment objectives if you prefer
the capital value of your investment to grow.
Since inception, we have now paid 100p in tax-free dividends per share,
excluding the recently declared dividend.
Following careful consideration of Titan’s dividend policy, the Board are
proposing to move from an annual target dividend of 5p per share to an annual
target dividend of 5% of NAV, supplemented by special dividends when
appropriate.
Principal risks and uncertainties
The Board continues to review the risk environment in which Titan operates on
a regular basis. There have been no significant changes to the key risks which
were described on pages 51 to 54 of the annual report for the year ended 31
December 2022. Given the volatility of the current environment, the Board will
continue to evaluate whether there are any significant changes to these risks.
Board of Directors
Following Matt Cooper’s retirement at the Annual General Meeting (AGM) in
June 2023, I am pleased to welcome Julie Nahid Rahman who was appointed as a
Non‑Executive Director on 1 August 2023. Julie brings to the Board a wealth
of experience drawn from her long career in private equity, executive search
and strategy consulting.
Outlook
Over the period, we have continued to see a readjustment of the early-stage
ventures space in which Titan operates. Valuation multiples have continued to
reduce from the levels we were seeing in 2022 and there has been a decline in
funding availability and exit opportunities.
Companies have been looking to raise smaller amounts at lower company
valuations; there has been an intense focus on extending cash runway leading
to cost reductions, largely through redundancies; and a significant scale-back
of activity by market incumbents, especially growth-stage companies, which has
reduced exit opportunities.
The impact of these factors on Titan’s underlying portfolio companies has
led to a decline in Titan’s NAV. We recognise this is disappointing,
however, we believe the Company is well placed to navigate this turbulent
period with the support of shareholders and given the diversity of the
underlying portfolio in terms of sector, vintage and stage.
While these conditions are a challenge for existing portfolio companies, they
also present opportunities to invest in, and build, new early-stage companies
at attractive valuations. Titan can take advantage of this, and our long-term
view of early-stage venture capital remains extremely positive.
We also believe that innovation will continue at pace, thanks to the powerful
combination of exceptional entrepreneurs, experienced talent and the
opportunities created by pain points in many sectors not being appropriately
addressed by the status quo. We will continue to strive to back the people,
ideas and industries that will change the world.
In the six months to 30 June 2023, Titan invested £65.0 million in new and
follow-on opportunities, which brings the total number of companies in the
portfolio to 140 at 30 June 2023. The range of both exciting new investments
and the upcoming pipeline of opportunities is testament to the work the
investment team continue to put into sourcing, securing and working with
businesses across all its areas of investment focus. VCTs have long provided a
compelling opportunity for UK investors to provide funding for such businesses
in a tax‑efficient way, and we look forward to Titan continuing to do so in
the future.
I would like to conclude by thanking both the Board and the Octopus team on
behalf of all shareholders for their hard work.
Tom Leader
Chair
(1) The cash reserves include £0.2 million of cash at bank, £127.0 million
of money market funds and £105.2 million of corporate bonds as set out in the
balance sheet.
Portfolio Manager’s review
Focus on performance
The NAV of 68.2p per share at 30 June 2023 represents a decrease of 5.7p in
NAV per share versus a NAV of 76.9p per share as at 31 December 2022 (when
adjusted for dividends paid in the period). This decline in NAV is
disappointing, however, as shown in the graphs, the long-term opportunity
offered by early-stage ventures is still extremely compelling.
The performance over the five years to 30 June 2023 is shown below:
Year ended 31 October 2018 Period (1)ended 31 December 2019 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2022 Period ended 30 June 202 3
NAV (p) 93.1 95.2 97.0 105.7 76.9 68.2
Cumulative dividends paid (p) 71.0 76.0 81.0 92.0 97.0 100.0
Total value (p) 164.1 171.2 178.0 197.7 173.9 1 68.2
Total return (%) 1.8 7.6 7.1 20.3 (22.5) ( 7.4)
Dividend yield (%) 5.2 5.4 5.3 11.3 4.7 3.9
Equivalent dividend yield for a higher rate tax payer (%) 7.7 8.0 7.8 16.8 7.0 5.9
1. The period to December 2019 was 14 months.
The decrease in NAV over the six-month period has largely been driven by the
downward valuation movement of £97.4 million across 76 companies in the now
140-strong portfolio. The drivers of the movement are a combination of
factors, including: further market comparable valuation multiple compression;
some externally led funding rounds into portfolio companies, which have had
dilutive effects on Titan’s shareholding; downward foreign exchange (FX)
adjustments in our USD-denominated holdings; and a slowing of growth across
the portfolio as companies optimise for efficiency and profitability (where
possible). Slowing growth means the typical uplifts in value have been
insufficient in this period to offset some of the headwinds mentioned
previously.
The most significant portfolio movements have been Big Health, Secret Escapes
and ManyPets. Big Health, despite strong underlying performance, has seen its
valuation multiple reduced further to reflect the continued softening of
comparable digital health company valuations. Secret Escapes has raised
further capital at dilutive terms in the context of low availability of
capital for growth stage companies. Finally, ManyPets saw a small decline in
gross written premium as it took steps to drive higher efficiency and target
profitability in the short term, which, given the relative size of the
holding, drove a meaningful downward movement in value.
Conversely, 31 companies saw an increase in valuation in the period,
delivering a collective increase in valuation of £24.8 million. These
valuation increases reflect businesses which have successfully concluded
further funding rounds, grown revenues or met certain important milestones.
Notable strong performers in the portfolio include Vitesse and Skin+Me, which
are both growing strongly and have successfully raised further capital in the
period. This further evidences that, even in times of economic decline, there
are opportunities available for companies to thrive, and Titan’s diverse
portfolio allows multiple avenues to be explored.
The gain on Titan’s uninvested cash reserves was £1.4 million in the six
months to 30 June 2023 (31 December 2022: loss of £12.6 million), primarily
driven by fair value movements in the corporate bond portfolio and returns on
money market funds. The Board’s objective for these investments is to
generate sufficient returns through the cycle to cover costs, at limited risk
to capital.
Valuations
Below illustrates the split of valuation methodology (shown as a percentage of
portfolio value and number of companies). ‘External price’ includes
valuations based on funding rounds that typically completed in the last 12
months to the period end or shortly after the period end, and exits of
companies where terms have been issued with an acquirer. ‘External price’
also includes quoted holdings, which are held at their quoted price as at the
valuation date. ‘Multiples’ is predominantly used for valuations that are
based on a multiple of revenues for portfolio companies. Where there is
uncertainty around the potential outcomes available to a company, a
probability weighted ‘scenario analysis’ is considered.
Valuation methodology – by value:
* Multiples 57%
* External price 26%
* Scenario analysis 17%
Valuation methodology – by number of companies:
* Multiples 24%
* External price 37%
* Scenario analysis 30%
* Write off 9%
New and follow-on investments
Titan completed follow-on investments into 12 companies and made 14 new
investments in the period. Together, these totalled £65.0 million (made up of
£22.7 million invested in the existing portfolio and £42.3 million in new
companies). The total value of the portfolio is £819.9 million, as at 30 June
2023.
Below are some examples of new investments made across our seven areas of
investment focus during the period. For a full list, please refer to the
investment portfolio.
Fintech
* Flock is an insurtech managing general agent (MGA) providing connected
insurance for commercial motor fleets.
Health
* Little Journey has created a digital eSupport platform that prepares,
informs and provides support for families, healthcare procedures and clinical
trials.
* Tympa has developed a novel device and software platform to improve ear and
hearing health screening and diagnostics.
B2B software
* Pivotal Future automates and improves the measurement and prediction of
biodiversity.
* Secfix automates the preparation for, and the ongoing maintenance of, IT
compliance certifications.
Deep tech
* Puraffinity is a smart materials company which has developed a design
platform to create materials which can capture the family of ‘forever
chemicals’ PFAS (per- and polyfluoroalkyl substances).
* TitanML has created a solution which enables businesses to reduce the
processing requirements of high spec artificial intelligence (AI) models
quickly and cheaply.
Consumer
* Haiper is developing ground-breaking AI to advance the field of computer
graphics.
* Correcto is an AI writing and grammar tool for the Spanish language.
Bio
* Pear Bio is a precision medicine diagnostics and therapeutics discovery
company which can recreate a tumour’s microenvironment and assess and
monitor the effects of different therapies.
Climate
* Kita is a carbon credit insurance company.
Top 20 investments
Here we set out the cost and valuation of the top 20 holdings, which account
for approximately 57% of the value of the portfolio.
Company Investment c ost Total v aluation i ncluding cost Investment focus
1 ManyPets £10.0m £97.8m Fintech
2 Skin+Me £11.5m £43.3m Health
3 Amplience £13.6m £38.3m B2B software
4 Permutive £19.0m £36.8m B2B software
5 Orbex £10.3m £25.2m Deep tech
6 Pelago (1) £15.9m £24.6m Health
7 T oken £12.6m £18.5m Fintech
8 Vitesse £10.1m £18.1m Fintech
9 vHive £8.0m £17.6m Deep tech
10 IOVOX £7.2m £16.6m B2B software
11 Sofar £11.5m £16.1m Consumer
12 Legl £7.3m £15.8m B2B software
13 Elliptic £7.7m £15.7m Fintech
14 XYZ £15.3m £15.5m Consumer
15 Big Health £12.9m £15.1m Health
16 Ometria £11.5m £12.7m B2B software
17 Elvie £6.4m £11.2m Health
18 Uniplaces £9.5m £10.6m Consumer
19 Automata £10.5m £10.5m Health
20 Oribiotech £9.1m £10.5m Bio
1. Digital Therapeutics, Inc., formerly Quit Genius, has rebranded as Pelago.
Disposals
In the period, Arena Flowers (the UK’s number one rated ethical flower
delivery company) acquired and merged with portfolio company Patch. As a
result, Titan now holds shares in the combined business. The businesses are
highly complementary, and the growth potential and synergies create
opportunities to deliver value to the stakeholders of the enlarged group.
There have been three disposals made at a loss: Commazero was acquired by
Weavr (Paystratus Group Limited); Chronext sold to a Swiss investment group;
and By Miles was acquired by private motor insurance Direct Line Group. In
aggregate, these disposals generated negligible proceeds compared to an
investment cost of £16.2 million.
Unfortunately, having been unsuccessful in securing further funding and having
explored and exhausted all available options, ThirdEye was liquidated. The
underperformance of a portfolio company is always disappointing for Octopus
and shareholders alike, but it is a key characteristic of a venture capital
portfolio, and we believe the successful disposals will continue to
significantly outweigh the losses over the medium term.
As Titan’s current portfolio continues to mature, we believe that when
conditions improve in the future, there should be opportunities for many
portfolio companies to take the next step on their growth journey. Successful
exits enable Titan to realise the growth a portfolio company has achieved over
its investment lifespan.
In the period, Titan also received deferred proceeds from the sale of
WaveOptics (to SNAP Inc in 2021) and Conversocial (to Verint Systems Inc in
2021).
The following table shows dividends paid and disposal proceeds over the last
five financial years and the current period of 30 June 2023:
Year ended 31 October 2018 Period (1)ended 31 December 2019 Year ended 31 December 2020 Year ended 31 December 2021 Year ended 31 December 2022 Period ended 30 June 2023 Total
Dividends (£'000) 24,178 33,187 46,037 101,976 49,596 34,378 2 89,352
Disposal proceeds (2 )(£'000) 22,367 26,334 23,915 221,504 62,213 39,960 396,293
1. The period to 31 December 2019 was 14 months.
2. This table includes proceeds received in the period.
VCT qualifying status
Shoosmiths LLP provides both the Board and Octopus with advice concerning
ongoing compliance with HMRC rules and regulations concerning VCTs and has
advised that Titan continues to be in compliance with the conditions set by
HMRC for maintaining approval as a VCT.
As at 30 June 2023, over 92% of the portfolio (as measured by HMRC rules) was
invested in VCT-qualifying investments, significantly above the 80% current
VCT‑qualifying threshold.
Outlook
The decline in Titan’s NAV is disappointing and is reflective of the
rebasing of valuation multiples and funding availability which we have seen
over the last year, overlaid with global macroeconomic headwinds. Titan’s
unquoted portfolio companies are valued in accordance with UK GAAP accounting
standards and the International Private Equity and Venture Capital (IPEV)
valuation guidelines. This means we value the portfolio at fair value, which
is the price we expect people would be willing to buy or sell an asset for,
assuming they had all the information available we do; are knowledgeable
parties with no pre-existing relationship; and that the transaction is carried
out under the normal course of business. Several of Titan’s portfolio
companies have been affected by the challenges the economic backdrop has
created, with costs increasing and consumer confidence and spending declining,
and valuations have been reappraised in line with all these factors.
More challenging periods, such as these, often bring opportunity and great
businesses can be built in times of economic downturn as barriers to adopting
new technologies lessen, talent availability improves and there is increased
openness to new ways of working. As we continue to meet with extraordinary
entrepreneurs and invest in truly disruptive innovation with the support of
shareholders, Titan is well placed to take advantage of and navigate these
difficult times. Having analysed the portfolio’s projected revenue growth
for 2023, we are also forecasting strong collective growth and over 75% of
Titan’s portfolio companies have more than 12 months cash runway available
to them.
We have seen demand across our areas of focus for the support and expertise
offered by our in-house people and talent team as they lean in to help scale
and grow the portfolio companies. The team have recently launched new
initiatives such as management training and a larger suite of policy documents
being made available for portfolio companies to easily adopt, which have been
well received. Members of the investment team continue to be thought leaders
within their areas of focus too – for example, the health team recently
launched their ‘Resilience of Early-stage European Healthtech’ report.
This offers a deep dive into the landscape and an analysis of emerging trends
set to change the face of healthcare, as well as a guide to regulatory
challenges.
The past 18 months have been a period of immense geopolitical and economic
change, and Titan has not been immune to the impact of this, with the NAV
declining and opportunities to successfully exit companies being less
frequent. However, we are reassured by the extraordinary entrepreneurs we
continue to meet and invest in, and the drive and passion of our team. We
believe this combination will provide Titan with the opportunities it needs
for continued success in the future.
Malcolm Ferguson
Partner and Titan Lead Fund Manager
Directors’ responsibilities statement
The Directors confirm that to the best of their knowledge:
* the half-yearly financial statements have been prepared in accordance with
‘Financial Reporting Standard 104: Interim Financial Reporting’ issued by
the Financial Reporting Council;
* the half-yearly financial statements give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company; and
* the half-yearly report includes a fair review of the information required by
the Financial Services Authority Disclosure and Transparency Rules, being: *
we have disclosed 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;
* we have disclosed a description of the principal risks and uncertainties for
the remaining six months of the year; and
* we have disclosed 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
Tom Leader
Chair
Income statement
Unaudited Unaudited Audited
Six months to 30 June 202 3 Six months to 30 June 2022 Year to 31 December 2022
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
(Loss)/gain on disposal of fixed asset investments — ( 1,922 ) ( 1,922 ) — (472) (472) — 66 66
Loss on valuation of fixed asset investments — ( 72,556 ) ( 72,556 ) — (127,603) (127,603) — (284,465) (284,465)
Gain/(loss) on valuation of current asset investments — 589 589 — (11,724) (11,724) — (12,682) (12,682)
Investment income 1,543 — 1,543 438 — 438 864 — 864
Investment management fees ( 522 ) ( 9,917 ) ( 10,439 ) (567) (10,772) (11,339) (1,125) (21,383) (22,508)
Other expenses (3, 168 ) — (3, 168 ) (3,527) — (3,527) (7,060) — (7,060)
Foreign exchange translation — (1,656) (1,656) — 5,985 5,985 — 6,570 6,570
Loss before tax ( 2,147 ) ( 85,462 ) ( 87,609 ) (3,656) (144,586) (148,242) (7,321) (311,894) (319,215)
Tax — — — — — — — — —
Loss a fter tax ( 2,147 ) ( 85,462 ) ( 87,609 ) (3,656) (144,586) (148,242) (7,321) (311,894) (319,215)
Loss per share – basic and diluted (p) (0. 1 ) ( 5.9 ) ( 6.0 ) (0.3) (11.2) (11.5) (0.6) (24.0) (24.6)
* 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.
Titan has no other comprehensive income for the period.
The accompanying notes form an integral part of the financial statements.
Balance sheet
Unaudited Unaudited Audited
As at 30 June 202 3 As at 30 June 2022 As at 31 December 2022
£’000 £’000 £’000 £’000 £’000 £’000
Fixed asset investments 819,886 922,316 827,449
Current assets:
Money market funds 127,037 88,297 58,701
Corporate bonds 10 5,196 104,775 104,244
Applications cash (1) 338 407 23,299
Cash at bank 228 10,588 16,120
Debtors 4,246 55,310 47,374
237,045 259,377 249,738
Current liabilities (1, 248 ) (1,592) (25,427)
Net current assets 2 35,797 257,785 224,311
Net assets 1, 055,683 1,180,101 1,051,760
Share capital 1,548 129,209 1,368
Share premium 248,511 212,313 92,896
Capital redemption reserve 52 11,597 27
Special distributable reserve 823,000 585,828 887,288
Capital reserve realised ( 65,269 ) (21,711) (53,430)
Capital reserve unrealised 88,667 296,808 160,634
Revenue reserve ( 40,826 ) (33,943) (37,023)
Total equity shareholders’ funds 1, 055,683 1,180,101 1,051,760
NAV per share (p) 68.2 91.3 76.9
1. Cash held but not yet allotted.
The accompanying notes form an integral part of the financial statements.
The statements were approved by the Directors and authorised for issue on 21
September 2023 and are signed on their behalf by:
Tom Leader
Chair
Company Number 06397765
Statement of changes in equity
Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Special distributable reserve (1) £ ’000 Capital reserve realised (1 )£’000 Capital reserve unrealised £’000 Revenue reserve (1 )£’000 Total £’000
As at 1 January 202 3 1 ,368 92,896 27 887,288 (53,430) 160,634 (37,023) 1,051,760
Comprehensive income for the period:
Management fees allocated as capital expenditure — — — — (9,917) — — (9,917)
Current year loss on disposal of fixed asset investments — — — — (1,922) — — (1,922)
Loss on fair value of fixed asset investments — — — — — (72,556) — (72,556)
Gain on fair value of current asset investments — — — — — 589 — 589
Loss after tax — — — — — — (2,147) (2,147)
Foreign exchange translation — — — — — — (1,656) (1,656)
Total comprehensive income for the period — — — — (11,839) (71,967) (3,803) (87,609)
Contributions by and distributions to owners:
Share issue (includes DRIS) 205 160,895 — — — — — 161,100
Share issue costs — (5,280) — — — — — (5,280)
Repurchase of own shares (25) — 25 (18,161) — — — (18,161)
Dividends paid (includes DRIS) — — — (46,127) — — — (46,127)
Total contributions by and distributions to owners 180 155,615 25 (64,288) — — — 91,532
Balance as at 30 June 202 3 1,548 248,511 52 823,000 (65,269) 88,667 (40,826) 1,055,683
1. Reserves available for distribution.
Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Special distributable reserve (1) £’000 Capital reserve realised (1 )£’000 Capital reserve unrealised £’000 Revenue reserve (1 )£’000 Total £’000
As at 1 January 2022 129,850 201,163 9,759 642,873 (14,122) 439,790 (36,272) 1,373,041
Comprehensive income for the period:
Management fees allocated as capital expenditure — — — — (10,772) — — (10,772)
Current year loss on disposal of fixed asset investments — — — — (472) — — (472)
Loss on fair value of fixed asset investments — — — — — (127,603) — (127,603)
Loss on fair value of current asset investments — — — — — (11,724) — (11,724)
Loss after tax — — — — — — (3,656) (3,656)
Foreign exchange translation — — — — — — 5,985 5,985
Total comprehensive income for the year — — — — (11,244) (139,327) 2,329 (148,242)
Contributions by and distributions to owners:
Share issue (includes DRIS) 1,197 11,204 — — — — — 12,401
Share issue costs — (54) — — — — — (54)
Repurchase of own shares (1,838) — 1,838 (18,345) — — — (18,345)
Dividends paid (includes DRIS) — — — (38,700) — — — (38,700)
Total contributions by and distributions to owners (641) 11,150 1,838 (57,045) — — — (44,698)
Other movements:
Prior year fixed asset gains now realised — — — — 3,655 (3,655) — —
Total other movements — — — — 3,655 (3,655) — —
Balance as at 30 June 2022 129,209 212,313 11,597 585,828 (21,711) 296,808 (33,943) 1,180,101
1. Reserves available for distribution.
Share capital £’000 Share premium £’000 Capital redemption reserve £’000 Special distributable reserve (1) £’000 Capital reserve realised (1 )£’000 Capital reserve unrealised £’000 Revenue reserve (1 )£’000 Total £’000
As at 1 January 202 2 129,850 201,163 9,759 642,873 (14,122) 439,790 (36,272) 1,373,041
Comprehensive income for the year:
Management fees allocated as capital expenditure — — — — (21,383) — — (21,383)
Current year gain on disposal of fixed asset investments — — — — 66 — — 66
Loss on fair value of fixed asset investments — — — — — (284,465) — (284,465)
Loss on fair value of current asset investments — — — — — (12,682) — (12,682)
Loss after tax — — — — — — (7,321) (7,321)
Foreign exchange translation — — — — — — 6,570 6,570
Total comprehensive income for the year — — — — (21,317) (297,147) (751) (319,215)
Contributions by and distributions to owners:
Share issue (includes DRIS) 1,299 106,307 — — — — — 107,606
Share issue costs — (2,260) — — — — — (2,260)
Repurchase of own shares (1,864) — 1,864 (41,192) — — — (41,192)
Dividends paid (includes DRIS) — — — (66,220) — — — (66,220)
Total contributions by and distributions to owners (565) 104,047 1,864 (107,412) — — — (2,066)
Other movements:
Share premium cancellation — (212,314) (11,596) 223,910 — — — —
Reduction in the nominal value of share capital (127,917) — — 127,917 — — — —
Prior year fixed asset gains now realised — — — — 9,575 (9,575) — —
Transfer between reserves — — — — (27,566) 27,566 — —
Total other movements (127,917) (212,314) (11,596) 351,827 (17,991) 17,991 — —
Balance as at 31 December 202 2 1,368 92,896 27 887,288 (53,430) 160,634 (37,023) 1,051,760
1. Reserves are available for distribution.
The accompanying notes form an integral part of the financial statements.
Cash flow statement
Unaudited Unaudited Audited
Six months to Six months to Year to
30 June 30 June 31 December
202 3 2022 2022
£’000 £’000 £’000
Reconciliation of profit to cash flows from operating activities
Loss before tax ( 87,609 ) (148,242) (319,215)
Decrease/(increase) in debtors 1,246 (1,867) (5,666)
Decrease in creditors (1,217) (65,457) (64,514)
(Gain)/loss on valuation of current asset investments (589) 11,724 12,682
Loss/(gain) on disposal of fixed asset investments 1,922 472 (66)
Loss on valuation of fixed asset investments 72,556 127,603 284,465
Outflow from operating activities (1 3 ,691) (75,767) (92,314)
Cash flows from investing activities
Purchase of current asset investments (364) (6,252) (6,679)
Purchase of fixed asset investments (64,993) (77,548) (156,973)
Sale of fixed asset investments 39,960 32,510 62,213
Outflow from investing activities (25,397) (51,290) (101,439)
Cash flows from financing activities
Application inflows allotted (22,961) (2,223) 20,669
Dividends paid (net of DRIS) (34,378) (28,945) (49,596)
Purchase of own shares (18,161) (18,345) (41,192)
Share issues (net of DRIS) 149,351 2,593 90,982
Share issues costs (5,280) (1) (2,260)
Inflow/ ( o utflow) from financing activities 68,571 (46,921) 18,603
Increase/ ( d ecrease) in cash and cash equivalents 29,483 (173,978) (175,150)
Opening cash and cash equivalents 98,120 273,270 273,270
Closing cash and cash equivalents 127,603 99,292 98,120
Cash and cash equivalents comprise of:
Cash at bank 228 10,588 16,120
Applications cash 338 407 23,299
Money market funds 127,037 88,297 58,701
Closing cash and cash equivalents 127,603 99,292 98,120
Condensed notes to the half-yearly report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 30 June 2023
have been prepared in accordance with the Financial Reporting Council’s
(FRC) Financial Reporting Standard 104 Interim Financial Reporting (March
2018) and the Statement of Recommended Practice (SORP) for Investment
Companies re-issued by the Association of Investment Companies in July 2022.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 30 June 2023 do not
constitute statutory accounts within the meaning of Section 415 of the
Companies Act 2006 and have not been delivered to the Registrar of Companies.
The comparative figures for the year ended 31 December 2022 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 loss per share is based on 1,458,917,593 Ordinary shares (30 June 2022:
1,293,940,509 and 31 December 2022: 1,297,081,006), being the weighted average
number of shares in issue during the period. There are no potentially dilutive
capital instruments in issue and so no diluted returns per share figures are
relevant. The basic and diluted earnings per share are therefore identical.
4. Net asset value per share
30 June 30 June 31 December
202 3 2022 2022
Net assets (£’000) 1, 055,683 1,180,101 1,051,760
Ordinary shares in issue 1, 547,797,287 1,292,086,596 1,367,949,929
Net asset value per share 68.2 p 91.3p 76.9p
5. Dividends
The interim dividend declared of 2.0p per share for the six months ending 30
June 2023 will be paid on 21 December 2023 to those shareholders on the
register as at 1 December 2023.
On 24 May 2023, a 3.0p second interim dividend relating to the 2022 financial
year was paid.
6. Buybacks and allotments
During the six months to 30 June 2023, the Company bought back 24,948,066
Ordinary shares at a weighted average price of 72.8p per share (six months
ended 30 June 2022: 18,378,101 Ordinary shares at a weighted average price of
99.8p per share; year ended 31 December 2022: 45,009,970 Ordinary shares at a
weighted average price of 92.9p per share).
During the six months to 30 June 2023, 204,539,959 shares were issued at a
weighted average price of 81.0p per share (six months ended 30 June 2022:
11,966,301 shares at a weighted average price of 104.6p per share; year ended
31 December 2022: 114,461,503 shares at a weighted average price of 96.9p per
share).
7. Related party transactions
Octopus acts as the Portfolio Manager of the Company. Under the management
agreement, Octopus receives a fee of 2.0% per annum of the net assets of the
Company for the investment management services, but in respect of funds raised
by the Company under the 2018 Offer and thereafter (and subject to the Company
having a cash reserve of 10% of its NAV), the annual management charge on
uninvested cash will be the lower of either (i) the actual return that the
Company receives on its cash and funds that are the equivalent of cash subject
to a 0% floor and (ii) 2%. During the period, the Company incurred management
fees of £10,439,000 payable to Octopus (30 June 2022: £11,339,000; 31
December 2022: £22,508,000), which were fully settled by 30 June 2023.
Octopus provides non-investment services to the Company and receives a fee for
these services which is capped at the lower of (i) 0.3% per annum of the
Company’s NAV or (ii) the administration and accounting costs of the Company
for the year ended 31 December 2020 with inflation increases in line with the
Consumer Price Index. During the period, the Company incurred non-investment
services fees of £1,046,000 payable to Octopus (30 June 2022: £921,600; 31
December 2022: £1,893,000), which were fully settled by 30 June 2023.
In addition, Octopus is entitled to performance-related incentive fees. The
incentive fee arrangements were designed to make sure that there were
significant tax-free dividend payments made to shareholders as well as strong
performance in terms of capital and income growth, before any
performance-related fee payment was made. There were no performance fees
accrued for the six months to 30 June 2023 (30 June 2022: £nil; 31 December
2022: £nil).
Octopus received £0.02 million in the six months to 30 June 2023 (six months
ended 30 June 2022: £0.03 million; year ended 31 December 2022: £nil) in
regard to arrangement and monitoring fees in relation to investments made by
the Company.
Titan owns Zenith Holding Company Limited, which owns a share in Zenith LP, a
fund managed by Octopus.
In the period, Octopus Investments Nominees Limited (OINL) purchased Titan
shares from shareholders to correct administrative issues, with the intention
that the shares will be sold back to Titan in subsequent share buybacks. As at
30 June 2023, no Titan shares were held by OINL (30 June 2022: 570 shares; 31
December 2022: nil shares) as beneficial owner. Throughout the period to 30
June 2023, OINL purchased 1,602,591 shares (30 June 2022: 283,737; 31 December
2022: 729,365 shares) at a cost of £1,372,000 (30 June 2022: £288,000; 31
December 2022: £678,000) and sold 1,602,591 shares (30 June 2022: 286,135; 31
December 2022: 737,002 shares) for proceeds of £1,171,000 (30 June 2022:
£291,000; 31 December 2022: £672,000). This is classed as a related party
transaction as Octopus, the Portfolio Manager, and OINL are part of the same
group of companies. Any such future transactions, where OINL takes over the
legal and beneficial ownership of Company shares, will be announced to the
market and disclosed in annual and half-yearly reports.
Several members of the Octopus investment team hold non-executive
directorships as part of their monitoring roles in Titan’s portfolio
companies, but they have no controlling interests in those companies.
The Directors received the following dividends from Titan:
Period to Period to Year to
30 June 30 June 31 December
202 3 2022 2022
Tom Leader (Chair) 1,625 692 1,640
Matt Cooper (1) 70,597 63,103 117,661
Jane O'Riordan 4,428 3,408 6,530
Lord Rockley 2,126 575 2,145
Gaenor Bagley 733 267 740
1. Matt Cooper stepped down as a Director on 14 June 2023.
8. Voting rights and equity management
The following table shows the percentage voting rights held by Titan of each
of the top ten investments held in Titan, on a fully diluted basis.
% voting rights
Investments held by Titan
Many Group Limited (trading as ManyPets) 7.5%
Mr & Mrs Oliver Ltd (trading as Skin+Me) 20.6%
Amplience Limited 21.0%
Permutive Inc. 17.9%
Orbital Express Launch Limited (trading as Orbex) 10.8%
Digital Therapeutics (trading as Pelago, formerly Quit Genius) 16.6%
Token.IO Ltd 13.5%
Vitesse PSP Ltd 15.4%
vHive Tech Ltd 19.0%
Iovox Limited 29.4%
9. Post balance sheet events
The following events occurred between the balance sheet date and the signing
of this half‑yearly report:
* four new investments completed totalling £4.1 million;
* three follow-on investments completed totalling £9.8 million; and
* a final order to cancel share premium amounting to £248.5 million was
granted on 1 August 2023.
10. Half-Yearly Report
The unaudited half-yearly report for the six months ended 30 June 2023 will
shortly be available to view at octopustitanvct.com.
For further information please contact:
Rachel Peat
Octopus Company Secretarial Services Limited
Tel: +44 (0)80 0316 2067
LEI: 213800A67IKGG6PVYW75