Octopus Titan VCT 4 Octopus Titan Vct 4 Plc : Half-yearly Report

 
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