TIDMOTV4
Octopus Titan VCT 4 plc
Half-Yearly Results
20 June 2013
Octopus Titan VCT 4 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 20 June 2013.
You may shortly view the Half-Yearly Report in full at
www.octopusinvestments.com/vctarchive/titan4.html. All other statutory
information will also be found there.
About Octopus Titan VCT 4 PLC
Octopus Titan VCT 4 plc ('Titan 4', '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 predominately unquoted companies. The Company is
managed by Octopus Investments Limited ('Octopus' or 'Investment
Manager').
Titan 4 was incorporated on 30 September 2009 and raised a total of
GBP22.5 million (GBP21.4 million net of expenses) through an Offer for
Subscription. A further GBP6.12 million in aggregate (GBP5.81 million
net of expenses) has been raised by way of top-ups in 2012 and 2013.
Titan 4 invests primarily in unquoted UK smaller companies and aims to
deliver a substantial level of returns on its investments over the
medium to long term.
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 4 has been provisionally approved as a VCT by HM Revenue & Customs
(HMRC). In order to maintain its approval the Company must comply with
certain requirements on a continuing basis including;
-- 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) 26,248 20,919 21,023
Return on ordinary activities
after tax (GBP'000s) 663 (400) (296)
Net asset value per share (NAV) 90.4p 87.2p 87.7p
Dividends declared 1.0p - -
Chairman's Statement
I am pleased to present the results for the six month period ended 30
April 2013.
Performance and dividend
During the six month period to 30 April 2013, the net asset value per
share (NAV) has increased from 87.7p to 90.4p representing a gain of
3.1%. This is largely due to the strong performance of the portfolio and
OEIC's during the period which exceeded the standard running costs of
the fund, as explained in more detail below.
We believe that our shareholders place considerable importance on
dividends, particularly given their tax-free status in a period when the
top rate of tax for individuals is 45%. In view of the increase in the
value of our investments we have decided to include a dividend of 1.0
pence per share for the half year which will be payable on 26 July 2013
to shareholders on the register on 28 June 2013.
Investment Portfolio Review
Having completed the initial investment phase the capital value of your
portfolio has grown during the six month period by GBP754,000. This
uplift has been achieved largely due to the strong performances in
TouchType, Amplience and Leanworks.
It is not uncommon in this economic climate for a few of the companies
to fall behind initial expectations and the valuations of Lifebook,
PrismaStar, Semafone and Vega-Chi have been marked down to reflect
performance.
During the period, Titan 4 invested GBP350,000 in TrialReach, a company
which helps pharmaceutical companies and clinical research organisations
reach, engage and enrol patients in clinical trials through its online
market place. This takes the total number of companies in the portfolio
to 22. Titan 4 also made six follow-on investments into Aframe, Applied
Superconductor, Bowman Power, Faction Collective, Vega-Chi and
Amplience.
Since 30 April, the following new and follow-on investments were made by
your Company:
-- GBP175,000 into a social technology company in the user driven marketing
space, further details of which shall be announced in due course.
-- GBP500,000 in Conversocial, a software service company which helps
customer service teams inside businesses manage customers who contact
them via social media.
-- GBP149,000 in Decoholic, an online retailer of home furniture that offers
handmade furniture at discount prices.
-- GBP1,610,000 in aggregate in follow on investments into UltraSoc
Technologies, Leanworks, Certivox and The Faction Collective.
We will continue to maintain a balanced investment portfolio spanning
multiple industries and business sectors which conforms to the
regulations governing VCTs.
Open Ended Investment Companies (OEICs)
Titan 4 continues to hold investments in two OEICs which increased in
value by GBP287,000 in the six months to 30 April 2013. The best
performance continued to be in the CF Octopus UK Micro Cap Growth Fund
which rose by 11.4% during the period. It has an overall unrealised gain
of GBP842,000 on an investment of GBP1,581,000 which equates to a 53%
increase.
Fund Raising
The Company, together with the other Titan funds, issued a combined
prospectus earlier this year to raise additional capital. The issue
proved popular with investors and it is pleasing to report that
GBP4,580,000 net of costs was raised for Titan 4. A further offer of
shares in the Titan VCTs in the current tax year is under consideration.
The funds raised will be used to invest further in existing portfolio
companies to aid their development and in new investments as existing
holdings are realised.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides both the Board and Investment
Manager with advice on the ongoing compliance with HMRC rules and
regulations concerning VCTs. The Board has been advised that Titan 4
continues to be in compliance with the conditions laid down by HMRC for
qualifying as a VCT.
As at 30 April 2013, over 79% of the portfolio (as measured by HMRC
rules) was invested in VCT qualifying investments.
Matters for shareholders
In my Chairman's statement for the annual accounts to 31 October 2012, I
expressed concern that the FSA (now FCA), in their consultation paper
CP12/19, were seeking to treat all VCTs as Unregulated Collective
Investment Schemes. This would have resulted in only "sophisticated
investors" as defined by the FSA being able to subscribe shares into
VCTs and therefore excluding many current investors. I am delighted to
say that following representation by the venture capital industry,
including the AIC and your Manager, VCTs have been excluded from these
restrictions.
Principal Risks and Uncertainties
The Company's assets consist of equity and fixed-rate interest
investments, cash and liquid resources. The principal risks, and the
ways they are managed, are stated within the Company's Annual Reports.
The Company's principal risks and uncertainties have not changed
materially since the date of the last Annual Report.
Outlook
It is clear that there still remain challenges for small companies in
this economic climate with banks continuing to be very cautious and many
businesses experiencing a squeeze on their working capital. However,
this creates opportunities for well-funded VCTs and we are confident
that we will continue to build a strong and diverse portfolio of
companies which have the ability to establish a sound position in their
markets and grow. As noted above, this is already being reflected in
your portfolio.
Gregor Michie
Chairman
20 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 4 Octopus
Secret Escapes Consumer lifestyle
Limited and well being 1,467 1,374 2,841 - 8.24% 16.83%
Certivox
Limited Technology 1,613 21 1,634 - 15.86% 29.44%
TouchType
Limited Telecommunications 385 1,100 1,484 557 3.71% 17.73%
Amplience
Limited Technology 1,175 (16) 1,159 245 11.69% 47.62%
Rangespan Consumer lifestyle
Limited and well being 1,125 - 1,125 - 6.43% 25.71%
Ultrasoc
Technologies
Limited Technology 954 87 1,041 87 17.34% 54.54%
Iovox Limited Telecommunications 750 - 750 - 9.35% 24.94%
Executive
Channel Europe
Limited Media 641 60 701 - 5.82% 33.44%
Semafone
Limited Telecommunications 756 (60) 696 (60) 2.69% 38.53%
Aframe Limited Media 892 (250) 642 - 6.88% 20.65%
Artesian
Solutions
Limited Technology 500 - 500 - 6.04% 24.17%
Lifebook Consumer lifestyle
Limited and well being 556 (139) 416 (139) 11.34% 32.64%
Vega-Chi
Limited Technology 714 (332) 382 (37) 6.49% 19.0%
Bowman Power
Limited Environmental 421 (42) 379 - 2.69% 15.55%
TrialReach
Limited Healthcare 350 - 350 - 5.00% 21.43%
Leanworks
Limited Consumer lifestyle
(YPlan) and well being 150 183 333 183 5.16% 14.63%
Michelson
Diagnostics Consumer lifestyle
Limited and well being 650 (325) 325 - 8.26% 42.87%
The Faction Consumer lifestyle
Collective SA and well being 251 12 263 12 5.6% 11.50%
Applied
Superconductor
Limited Environmental 615 (370) 246 - 7.96% 24.22%
PrismaStar Inc. Media 424 (393) 31 (93) 4.95% 33.02%
Diverse Energy
Limited* Environmental 414 (414) - - 5.47% 29.76%
Elonics
Limited* Technology 305 (305) - - 3.11% 19.54%
Total qualifying investments 15,107 190 15,298 754
Money market securities 5,424 - 5,424
OEICs 2,790 900 3,690
Cash at bank 1764 - 1764
Total investments 25,085 1,090 26,176
Net current assets 72
Total net assets 26,248
* 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
Gregor Michie
Chairman
20 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/(loss) on
disposal of
fixed asset
investments - - - - - - - (1) (1)
Realised gain
on disposal of
current asset
investments - - - - 22 22 - 110 110
Fixed asset
investment
holding
gains/(losses) - 754 754 - (177) (177) - 91 91
Current asset
investment
holding gains - 287 287 - 79 79 - 172 172
Other income 7 - 7 23 - 23 40 - 40
Investment
management
fees (54) (162) (216) (51) (152) (203) (101) (303) (404)
Other expenses (169) - (169) (144) - (144) (304) - (304)
Return on
ordinary
activities
before tax (216) 879 663 (172) (228) (400) (365) 69 (296)
Taxation on
return on
ordinary
activities - - - - - - - - -
Return on
ordinary
activities
after tax (216) 879 663 (172) (228) (400) (365) 69 (296)
Earnings per
share (0.9)p 3.6p 2.7p (0.8)p (1.0)p (1.8)p (1.6)p 0.3p (1.3)p
-- The 'Total' columns of this statement represent 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 21,023 20,086 20,086
Return on ordinary
activities after
tax 663 (400) (296)
Issue of equity
(net of expense) 4,580 1,242 (9)
Redemption of
shares (18) (9) 1,242
Shareholders'
funds at end of
period 26,248 20,919 21,023
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* 15,298 8,154 13,412
Current assets:
Money market securities and other
deposits* 9,115 12,104 6,800
Debtors 138 494 780
Cash at bank 1,764 210 91
11,017 12,808 7,671
Creditors: amounts falling due
within one year (67) (43) (60)
Net current assets 10,950 12,765 7,611
Net assets 26,248 20,919 21,023
Called up equity share capital 2,904 2,398 2,398
Share premium 5,173 1,100 1,101
Special distributable reserve 19,065 19,083 19,083
Capital redemption reserve 11 10 9
Capital reserve - losses on
disposal (834) (643) (672)
-
holding
gains 1,092 (275) 51
Revenue reserve (1,163) (754) (947)
Total equity shareholders' funds 26,248 20,919 21,023
Net asset value per share 90.4p 87.2p 87.7p
*at fair value through profit and loss
The statements were approved by the Directors and authorised for issue
on 20 June 2013 and are signed on their behalf by:
Gregor Michie
Chairman
Company Number: 07035434
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 271 (830) (1,443)
Financial
investment:
Purchase of fixed (1,132) (2,660) (8,298)
asset investments - - 647
Sale of fixed asset
investment
Management of liquid
resources:
Purchase of current
asset investments (3,846) (1,554) (3,750)
Disposal of current
asset investments 1,818 3,914 11,595
Taxation - - -
Financing:
Issue of equity 4,580 1,242 1,242
Redemption of shares (18) (9) (9)
Increase/(decrease)
in cash resources
at bank 1,673 103 (16)
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 1,673 103 (16)
Movement in cash
equivalents 2,315 (2,259) (7,563)
Opening net cash
resources 6,891 14,470 14,470
Net funds at period
end 10,879 12,314 6,891
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 663 (400) (296)
Gain on disposal of
current asset
investments - (22) (110)
Loss on disposal of
fixed assets - - 1
(Gain)/loss on
valuation of fixed
asset investments (754) 177 (91)
Gain on valuation of
current asset
investments (287) (79) (172)
Decrease/(increase)
in debtors 642 (481) (767)
Increase/(decrease)
in creditors 7 (25) (8)
Inflow/outflow from
operating
activities 271 (830) (1,443)
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 period 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 period 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 24,662,894 (30 April 2012: 22,762,574
and 31 October 2012: 23,377,457) 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
29,038,954 (30 April 2012: 28,982,316 and 31 October 2012: 23,982,316)
ordinary shares in issue at that date.
5. Dividends
The interim dividend declared of 1.0 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.
1. Buy Backs
During the six months ended 30 April 2013 the Company bought back 20,453
Ordinary shares at a weighted average price of 86.0 pence per share (six
months ended 30 April 2012: 11,125 Ordinary shares at a weighted average
price of 79.5 pence per share and year ended 31 October 2012: 11,125
Ordinary shares at a weighted average price of 79.5 pence per share).
During the six months to 30 April 2013, 5,077,091 shares were issued at
a price of 95.9p 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 GBP216,000 payable to Octopus (30 April 2012: GBP203,000 and 31
October 2012: GBP508,000). At the period end there were management fees
of GBPnil stated within prepayments (30 April 2012: GBPnil and 31
October 2012: GBP104,000). 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 GBP15,000 per annum for company secretarial
services.
1. 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 4 PLC via Thomson Reuters ONE
HUG#1710837
http://www.octopusinvestments.com
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