REG-Octopus Titan VCT plc : Half-Yearly Report and Compliance with Market Abuse Regulations <Origin Href="QuoteRef">OTV2.L</Origin>
15/06/2017 13:40
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Octopus Titan VCT plc
Unaudited Half-Yearly Report for the Six Months Ended 30 April 2017
Octopus Titan VCT plc, managed by Octopus Investments Limited, today announces
the Half-Yearly results for the six months ended 30 April 2017.
These results were approved by the Board of Directors on 14 June 2017.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com . All other statutory information will also be
found there.
Octopus Titan VCT plc ('Titan' or 'the Company') 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..
Financial Headlines
95.2p Net asset value per share ('NAV') as at 30 April
2017
64.0p Cumulative dividends paid per share since launch
159.2p NAV plus cumulative dividends paid per share since
launch ('Total Value') as at 30 April 2017
2.0p* Interim dividend declared for the half-year to 30
April 2017
* This will be paid on 25 August 2017 to shareholders on the register as at 4
August 2017.
Financial Summary
Six months to 30 April 2017 Six months to 30 April 2016 Year to 31 October 2016
Net assets (£'000s) 425,402 309,060 315,976
Profit after tax (£'000s) 1,876 621 14,227
NAV 95.2p 95.7p 97.9p
Cumulative dividends paid since launch 64.0p 59.0p 61.0p
Total Value 159.2p 154.7p 158.9p
Total Return * 0.3p 0.0p 4.2p
Total return % ** 0.3% 0.0% 4.1%
Dividends paid in the period 3.0p 7.0p 9.0p
Dividends declared 2.0p 2.0p 3.0p
*Calculated as the change in NAV in the year plus dividends paid in the year.
**Calculated as total return / opening NAV.
Chairman's Statement
I am pleased to present the unaudited half-yearly report for Octopus Titan VCT
for the six months ended 30 April 2017.
As shareholders will be aware, we have successfully raised £119.3 million
before expenses in our fund raising which closed on 6 March 2017 following
which we have raised a further £7.5 million from a small top-up and the
shares allotted through the dividend reinvestment scheme associated with the
recent dividend. With net assets of £425 million, we are proud that Titan is,
by some margin, the largest VCT and that we are firmly committed to the
overall objectives to which the VCT scheme is intended, namely investing in
young and early stage technology companies.
Following the fund raising, we have liquid resources of over £172 million. In
the six month period to 30 April 2017 we have deployed a total of £52 million
through £32 million in new and follow-on investments, £13 million in
dividends, £2 million in share buybacks and £5 million in running costs.
Whilst our cash resources are therefore significant I would point out that
they only equate to around 18 months cash outflow and we regard this as
entirely necessary given the fast growing portfolio, with most companies still
loss making and requiring additional future investment to achieve
profitability.
The increase in NAV in the period was 0.3p per share and the Total Value (NAV
plus cumulative dividends paid per share since launch) at the end of the
period is 159.2p, following the payment of a dividend in April of 3.0p per
share. This return brings the average tax-free annual compound return to
original shareholders to 5.9% on their original investment of £1. I believe
these returns justify the support shown by our existing and new shareholders
in the recent fund raisings and I would like to express the Board's thanks to
all those who participated.
Details of transactions within the portfolio are set out below in the
Investment Portfolio Review but I would particularly like to highlight the
flotation of Eve Sleep, where we first invested in May 2015, and which has
seen our investment multiple increase to almost 17x between then and flotation
last month. In addition we have also sold the last remaining shares in ZPG plc
(previously Zoopla Property Group plc) which were held by Zenith LP, the
partnership into which Zenith Holding Company is invested. ZPG was the first
VCT backed company to achieve a £1 billion market valuation and the sale
price of the last remaining shares represented a multiple of over 33x the
price we paid originally. We are proud to have contributed to these successes.
Results
The Net Asset Value at 30 April 2017 was 95.2p, an increase of 0.3p per share
from 31 October 2016 after accounting for the dividend of 3.0p per share which
was paid in April. This represented a capital profit of 0.8p per share
principally accounted for by the uplift in the value of our venture capital
portfolio and the OEIC portfolio, offset by investment management fees charged
to capital, and a revenue loss for the period of 0.5p per share.
Investment Portfolio Review
I am pleased to report a net uplift in the value of the portfolio of £3.9
million during the period, excluding additions and disposals. This comprised
an uplift of £17.9 million and a decrease of £14.0 million in revaluations.
We set out below the cost and valuation of the top ten holdings which account
for over 60% of the value of the unquoted portfolio.
Investments Investment cost at 30 April 2017 * (£'000) Valuation at 30 April 2017 (£'000)
Zenith Holding Company Limited 14,701 32,361
Secret Escapes Limited 4,256 25,739
Amplience Limited 10,236 19,096
Sourceable Limited (trades as Swoon Editions) 6,957 18,018
Uniplaces Limited 4,657 10,628
Eve Sleep Limited (now Eve Sleep plc) 2,394 9,871
London House Exchange Limited (trades as Property Partner) 6,909 9,832
Semafone Limited 3,594 9,220
Sofar Sounds Limited 7,705 8,927
Conversocial Limited 4,165 7,683
Other 118,298 100,640
Total 183,872 252,015
* Investment cost reflects the amount invested into each investee
company from Titan's 1 - 5 before the 2014 merger and from Titan after the
merger. This is different to the book cost which includes the holding gains
and losses on assets which transferred from Titan's 1, 3, 4 & 5 to Titan 2
(now Titan) during the merger, as Titan purchased these assets at fair value.
During the six months to 30 April 2017, almost £32 million was invested into
five new companies (Appear Here Limited, Token, Inc, Chiaro Technology
Limited, Medisafe Project Limited and Impatients N.V.) and 16 follow-on
investments. Since 30 April 2017, four more follow-on investments have been
made into Adbrain, Chronext, Ultrasoc and MIRACL, amounting to £6.1 million.
As mentioned above, the final ZPG shares held in Zenith LP were sold and a £9
million dividend was paid by Zenith Holding Company to Titan.
Dividends
As shareholders will know, our ambition at the time of the merger in 2014 was
to pay an annual dividend of 5.0p per share with effect from the 2017
financial year. I am delighted that we have achieved this ambition a year
early and your Board has now decided to declare an interim dividend of 2.0p
(2016 2.0p) per share in respect of the current financial year, which will be
paid on 25 August 2017 to shareholders on the register as at 4 August 2017.
VCT Qualifying Status
PricewaterhouseCoopers LLP (PwC) 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 continues to be in
compliance with the conditions laid down by HMRC for maintaining approval as a
VCT.
As at 30 April 2017, over 95% of the portfolio (as measured by HMRC rules) was
invested in VCT-qualifying investments as reviewed and confirmed by PwC,
significantly above the 70% VCT-qualifying threshold.
Principal Risks and Uncertainties
The Board continues to regularly review the risk environment in which Titan
operates. There have been no significant changes to the key risks which were
fully described on pages 9 and 10 of the Annual Report for the year ended 31
October 2016 and the Board does not anticipate there will be significant
changes to these risks for the remaining six months of the financial year.
Outlook
As shareholders will discern from my report, the last six months have been a
particularly busy period for our Investment Manager.
We are delighted with the response to Titan's recent fundraising which will
allow us to continue our mission to seek out and invest in tomorrow's emerging
technology companies and support the existing portfolio of companies with
further investment where appropriate. Our Investment Manager continues to see
a vibrant deal flow which it will seek to take advantage of through new
investments and is also positive about the prospects of the existing
portfolio, albeit mindful of the macro uncertainty that is likely to prevail
for the next year or so.
Your Board also views the future for Titan with confidence and it is our
intention to seek further funds to support our investee portfolio later in the
year.
As noted earlier in my report, Titan is now paying regular annual dividends of
5p, and will aim to pay special dividends following significant profitable
realisations, bearing in mind that the typical period from investment until
realisation for early stage technology businesses is normally at least 7
years.
I would like to conclude by thanking our Investment Manager, on behalf of all
shareholders, for their hard work, without which our investment strategy would
not achieve the success we now see.
John Hustler
Chairman
14 June 2017
Investment Portfolio
Investments Sector Investment cost at 30 April 2017 * (£'000) Amount invested in the six months ending 30 April 2017 (£'000)
Zenith Holding Company Limited ** Other 14,701 -
Amplience Limited Business Software 10,236 4,250
MIRACL Limited Security 10,098 2,777
UltraSoC Technologies Limited Hardware 7,754 -
Sofar Sounds Limited Travel & Leisure 7,705 -
Sourceable Limited Ecommerce 6,957 -
London House Exchange Limited Property 6,909 1,734
CurrencyFair Limited Financial Services 6,746 1,198
Zynstra Limited Business Software 6,083 242
Oxcis Aviation Limited Travel & Leisure 5,614 -
Artesian Solutions Limited Business Software 5,481 642
Adbrain Limited Advertising 4,662 -
Uniplaces Limited Property 4,657 -
Michelson Diagnostics Limited Health and Medicinal 4,541 -
Token, Inc Financial Services 4,398 4,398
Secret Escapes Limited Travel & Leisure 4,256 -
Conversocial Limited Business Software 4,165 -
Appear Here Limited Financial Services 3,814 3,814
Semafone Limited Business Software 3,594 -
Big Health Limited Health and Medicinal 3,276 -
Iovox Limited Business Software 3,272 384
Mi-Pay Group plc Business Software 3,011 -
The Faction Collective SA Travel & Leisure 2,967 538
Ecrebo Limited Business Software 2,857 706
Bought By Many Limited Financial Services 2,780 -
Chiaro Technology Limited Health and Medicinal 2,770 2,770
Smartkem Limited Hardware 2,714 -
Medisafe Project Limited Health and Medicinal 2,713 2,713
Metrasens Limited Hardware 2,688 -
Affectv Limited Advertising 2,627 -
e-Therapeutics plc Health and Medicinal 2,415 -
Eve Sleep Limited (now Eve Sleep plc) Ecommerce 2,394 -
Bowman Power Limited Hardware 2,305 -
Trafi Limited Travel & Leisure 2,288 1,488
Impatients N.V. Health and Medicinal 2,090 2,090
Origami Energy Limited Hardware 2,033 -
Surrey NanoSystems Limited Hardware 1,993 -
Elliptic Enterprise Limited Business Software 1,662 -
Tailsco Limited Food 1,506 -
Segura Systems Limited Business Software 1,470 385
TrialReach Limited Health and Medicinal 1,438 -
BridgeU Inc. Business Software 1,264 285
Chronext AG Ecommerce 1,253 456
Hubbub Deliveries Limited Food 1,133 -
Streethub Limited Ecommerce 997 147
Streetbees.com Limited Business Software 890 750
Behaviometrics AB Security 602 100
Time Out Group plc Travel & Leisure 555 -
Permutive Inc. Business Software 391 -
Wave Optics Limited Hardware 362 -
Mailcloud Limited Business Software 327 -
Phasor Inc. Hardware 250 -
Excession Technologies Limited Business Software 208 -
Total 183,872 31,867
* Investment cost reflects the amount invested into each investee
company from Titan's 1 - 5 before the 2014 merger and from Titan after the
merger. This is different to the book cost which includes the holding gains
and losses on assets which transferred from Titan's 1, 3, 4 & 5 to Titan 2
(now Titan) during the merger, as Titan purchased these assets at fair value.
** Owns stakes in Nature Delivered Limited (trades as graze), Secret Escapes
Limited and Calastone Limited.
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;
* 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
John Hustler
Chairman
14 June 2017
Income Statement
Unaudited Six months to 30 April 2017 Unaudited Six months to 30 April 2016
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on disposal of fixed asset investments - 511 511 - (2,521) (2,521)
Fixed asset investment holding gains - 3,906 3,906 - 6,855 6,855
OEIC investment holding gains - 2,861 2,861 - 25 25
Investment income 107 - 107 (160) - (160)
Investment management fees (870) (2,609) (3,479) (611) (1,834) (2,445)
Performance fee - (259) (259) - - -
Other expenses (1,268) - (1,268) (1,136) 3 (1,133)
FX Translation - (503) (503) - - -
Profit/(loss) before tax (2,031) 3,907 1,876 (1,907) 2,528 621
Taxation - - - - - -
Profit/(loss) after tax (2,031) 3,907 1,876 (1,907) 2,528 621
Earnings per share - basic and diluted (0.5)p 1.0p 0.5p (0.8)p 1.0p 0.2p
* 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.
Balance Sheet
Unaudited Six months to 30 April 2017 Audited Year to 31 October 2016
£'000 £'000 £'000 £'000
Fixed assets - portfolio investments 252,015 225,536
Current assets:
OEICs 135,656 62,795
Cash at bank* 33,922 30,355
Debtors 3,793 12,637
Money market securities 2,452 7,494
175,823 113,281
Current liabilities (2,436) (22,841)
Net current assets 173,387 90,440
Net assets 425,402 315,976
Called up equity share capital 44,697 32,262
Share premium 111,571 1,619
Special distributable reserve 224,892 240,172
Capital redemption reserve 933 749
Capital reserve - gains on disposals 6,863 1,777
Capital reserve - holding gains 45,618 46,035
Revenue reserve (9,406) (7,375)
Translation reserve 234 737
Total equity shareholders' funds 425,402 315,976
Net asset value per share 95.2p 97.9p
* Includes cash held but not yet allotted
The statements were approved by the Directors and authorised for issue on 14
June 2017 and are signed on their behalf by:
John Hustler
Chairman
Statement of Changes in Equity
Unaudited Six months to 30 April 2017 Audited Year ended 31 October 2016 Unaudited Six months to 30 April 2016
£'000 £'000 £'000
Shareholders' funds at start of year 315,976 228,461 228,461
Profit after tax 1,876 14,227 621
Issue of equity (net of expenses) 122,571 105,947 104,134
Purchase of own shares (1,694) (3,922) (1,868)
Dividends paid (13,327) (28,737) (22,288)
Shareholders' funds at end of period 425,402 315,976 309,060
Cash Flow Statement
Unaudited Six months to 30 April 2017 Unaudited Six months to 30 April 2016
£'000 £'000
Reconciliation of profit to cash flows from operating activities
Profit before tax 1,876 621
Decrease/(increase) in debtors 8,844 (7,772)
Decrease in creditors (20,405) (9,669)
(Gains)/losses on disposal of fixed asset investments (511 ) 2,521
Gains on valuation of fixed asset investments (3,906) (6,855)
Surplus funds received from fixed asset investments 513 -
Outflow from operating activities (13,589) (21,154)
Cash flows from investing activities
Purchase of fixed asset investments (31,867) (19,569)
Sale of fixed asset investments 110 47,219
Zenith distribution 9,182 -
(Outflow)/inflow from investing activities (22,575) 27,650
Cash flows from financing activities
Dividends paid (13,327) (22,288)
Purchase of own shares (1,694) (1,868)
Issue of equity (net of expenses) 122,571 104,134
Inflow from financing activities 107,550 79,978
Increase in cash and cash equivalents 71,386 86,474
Opening cash and cash equivalents 100,644 26,991
Closing cash and cash equivalents 172,030 113,465
Titan is satisfied that all inside information which the Directors and Titan
may have leading up to the announcement of the half year end results for the
period ended 30 April 2017, has been notified to a Regulated Information
Service and, therefore, Titan is not prohibited from dealing in its own
securities.
For further information please contact:
Nicola Board
Company Secretary
0207 776 8663
This announcement is distributed by Nasdaq Corporate Solutions on behalf of
Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
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