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Thursday, 15 June 2017

Octopus Titan VCT plc : Half-Yearly Report and Compliance with Market Abuse Regulations

     

Published: 14:36 CEST 15-06-2017 /GlobeNewswire /Source: Octopus Titan VCT plc / : OTV2 /ISIN: GB00B28V9347

Octopus Titan VCT plc : Half-Yearly Report and Compliance with Market Abuse Regulations

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 (One Liberty Plaza, 165 Broadway, New York, NY 10006. Tel: +1 212 401 8700. www.nasdaqomx.com) on behalf of NASDAQ OMX Corporate Solutions clients. Source: Octopus Titan VCT plc, 33 Holborn, London EC1N 2HT, United Kingdom
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