TIDMOTV2
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
HY2023 HY2022 FY2022
Net assets (GBP'000) GBP1,055,683 GBP1,180,101 GBP1,051,760
Loss after tax (GBP'000) GBP(87,609) GBP(148,242) GBP(319,215)
NAV per share 68.2p 91.3p 76.9p
Total value(1) 168.2p 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
GBP1.1 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 GBP237 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 GBP232.4 million (GBP179.0 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 GBP130.7 million
of our cash resources, comprising GBP65.0 million in new and
follow-on investments, GBP34.4 million in dividends (net of the
Dividend Reinvestment Scheme), GBP18.2 million in share buybacks
and GBP13.1 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 GBP65.0
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 GBP0.2 million of cash at bank,
GBP127.0 million of money market funds and GBP105.2 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 Period(1) Year Year Period
ended ended Year ended ended ended ended
31 31 31 31 31 30
October December December December December June
2018 2019 2020 2021 2022 2023
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) 164.1 171.2 178.0 197.7 173.9 168.2
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 GBP97.4 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 GBP24.8
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 GBP1.4 million
in the six months to 30 June 2023 (31 December 2022: loss of
GBP12.6 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 GBP65.0
million (made up of GBP22.7 million invested in the existing
portfolio and GBP42.3 million in new companies). The total value of
the portfolio is GBP819.9 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 Total valuation Investment focus
cost including cost
1 ManyPets GBP10.0m GBP97.8m Fintech
2 Skin+Me GBP11.5m GBP43.3m Health
3 Amplience GBP13.6m GBP38.3m B2B software
4 Permutive GBP19.0m GBP36.8m B2B software
5 Orbex GBP10.3m GBP25.2m Deep tech
6 Pelago(1) GBP15.9m GBP24.6m Health
7 Token GBP12.6m GBP18.5m Fintech
8 Vitesse GBP10.1m GBP18.1m Fintech
9 vHive GBP8.0m GBP17.6m Deep tech
10 IOVOX GBP7.2m GBP16.6m B2B software
11 Sofar GBP11.5m GBP16.1m Consumer
12 Legl GBP7.3m GBP15.8m B2B software
13 Elliptic GBP7.7m GBP15.7m Fintech
14 XYZ GBP15.3m GBP15.5m Consumer
15 Big Health GBP12.9m GBP15.1m Health
16 Ometria GBP11.5m GBP12.7m B2B software
17 Elvie GBP6.4m GBP11.2m Health
18 Uniplaces GBP9.5m GBP10.6m Consumer
19 Automata GBP10.5m GBP10.5m Health
20 Oribiotech GBP9.1m GBP10.5m 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
GBP16.2 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:
Period ended
Year ended Period(1) ended 30
31 31 Year ended Year ended Year ended June
October 2018 December 2019 31 December 2020 31 December 2021 31 December 2022 2023 Total
Dividends
(GBP'000) 24,178 33,187 46,037 101,976 49,596 34,378 289,352
------------ ------------- --------------- ----------------- ----------------- ----------------- ------------ -------
Disposal
proceeds(2)
(GBP'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 Six months to 30 Year to 31 December
June 2023 June 2022 2022
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
(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 after 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 31 December
As at 30 June 2023 As at 30 June 2022 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- -------- ---------- -------- ---------
Fixed asset
investments 819,886 922,316 827,449
Current
assets:
Money market
funds 127,037 88,297 58,701
Corporate
bonds 105,196 104,775 104,244
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 235,797 257,785 224,311
-------------- -------- --------- -------- ---------- -------- ---------
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
Capital Special Capital Capital
Share Share redemption distributable reserve reserve Revenue
capital premium reserve reserve(1) realised(1) unrealised reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January
2023 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 2023 1,548 248,511 52 823,000 (65,269) 88,667 (40,826) 1,055,683
1. Reserves available for distribution.
Capital Special Capital Capital
Share Share redemption distributable reserve reserve Revenue
capital premium reserve reserve(1) realised(1) unrealised reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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.
Capital Special Capital Capital
Share Share redemption distributable reserve reserve Revenue
capital premium reserve reserve(1) realised(1) unrealised reserve(1) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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
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 2022 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 Six months
to to Year to
31
30 June 30 June December
2023 2022 2022
GBP'000 GBP'000 GBP'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 (13,691) (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/(outflow) from financing activities 68,571 (46,921) 18,603
------------------------------------------------------ ---------- ---------- ---------
Increase/(decrease) 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
2023 2022 2022
Net assets (GBP'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 68.2p 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 GBP10,439,000
payable to Octopus (30 June 2022: GBP11,339,000; 31 December 2022:
GBP22,508,000), 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 GBP1,046,000 payable to Octopus (30 June 2022:
GBP921,600; 31 December 2022: GBP1,893,000), 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: GBPnil; 31 December 2022:
GBPnil).
Octopus received GBP0.02 million in the six months to 30 June
2023 (six months ended 30 June 2022: GBP0.03 million; year ended 31
December 2022: GBPnil) 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 GBP1,372,000 (30
June 2022: GBP288,000; 31 December 2022: GBP678,000) and sold
1,602,591 shares (30 June 2022: 286,135; 31 December 2022: 737,002
shares) for proceeds of GBP1,171,000 (30 June 2022: GBP291,000; 31
December 2022: GBP672,000). 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 Period
to to Year to
30 June 30 June 31 December
2023 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
held by
Investments 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 GBP4.1 million;
-- three follow-on investments completed totalling GBP9.8 million; and
-- a final order to cancel share premium amounting to GBP248.5 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
(END) Dow Jones Newswires
September 21, 2023 12:30 ET (16:30 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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