Half-Yearly Results
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 (£’000) |
£1,055,683 |
£1,180,101 |
£1,051,760 |
Loss after tax (£’000) |
£(87,609) |
£(148,242) |
£(319,215) |
NAV per share |
68.2p |
91.3p |
76.9p |
Total value1 |
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 |
- Total value is an alternative performance measure, calculated
as NAV plus cumulative dividends paid since launch.
- Total return is an alternative performance measure, calculated
as movement in NAV per share in the period plus dividends paid in
the period.
- Total return % is an alternative performance measure,
calculated as total return/opening NAV.
- 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 £1.1 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 £237 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 reserves1 of £232.4 million (£179.0 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
£130.7 million of our cash resources, comprising £65.0 million in
new and follow-on investments, £34.4 million in dividends (net of
the Dividend Reinvestment Scheme), £18.2 million in share buybacks
and £13.1 million in investment management fees and other running
costs. Together, this utilised 73% of our cash and cash equivalents
at 31 December 2022.
DividendsAs 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
uncertaintiesThe 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 DirectorsFollowing
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.
OutlookOver 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 £65.0 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 £0.2 million of cash at bank, £127.0
million of money market funds and £105.2 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 ended 31 October 2018 |
Period1 ended 31 December 2019 |
Year ended 31 December 2020 |
Year ended 31 December 2021 |
Year ended 31 December 2022 |
Period ended 30
June 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 |
- 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 £97.4
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 £24.8 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
£1.4 million in the six months to 30 June 2023 (31 December 2022:
loss of £12.6 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.
ValuationsBelow 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
investmentsTitan completed follow-on investments into 12
companies and made 14 new investments in the period. Together,
these totalled £65.0 million (made up of £22.7 million invested in
the existing portfolio and £42.3 million in new companies). The
total value of the portfolio is £819.9 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
investmentsHere 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 cost |
Total
valuation including
cost |
Investment focus |
1 |
ManyPets |
£10.0m |
£97.8m |
Fintech |
2 |
Skin+Me |
£11.5m |
£43.3m |
Health |
3 |
Amplience |
£13.6m |
£38.3m |
B2B software |
4 |
Permutive |
£19.0m |
£36.8m |
B2B software |
5 |
Orbex |
£10.3m |
£25.2m |
Deep tech |
6 |
Pelago1 |
£15.9m |
£24.6m |
Health |
7 |
Token |
£12.6m |
£18.5m |
Fintech |
8 |
Vitesse |
£10.1m |
£18.1m |
Fintech |
9 |
vHive |
£8.0m |
£17.6m |
Deep tech |
10 |
IOVOX |
£7.2m |
£16.6m |
B2B software |
11 |
Sofar |
£11.5m |
£16.1m |
Consumer |
12 |
Legl |
£7.3m |
£15.8m |
B2B software |
13 |
Elliptic |
£7.7m |
£15.7m |
Fintech |
14 |
XYZ |
£15.3m |
£15.5m |
Consumer |
15 |
Big Health |
£12.9m |
£15.1m |
Health |
16 |
Ometria |
£11.5m |
£12.7m |
B2B software |
17 |
Elvie |
£6.4m |
£11.2m |
Health |
18 |
Uniplaces |
£9.5m |
£10.6m |
Consumer |
19 |
Automata |
£10.5m |
£10.5m |
Health |
20 |
Oribiotech |
£9.1m |
£10.5m |
Bio |
- Digital Therapeutics, Inc., formerly Quit Genius, has rebranded
as Pelago.
DisposalsIn 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 £16.2 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:
|
Year ended 31 October 2018 |
Period1 ended 31December 2019 |
Year ended 31 December 2020 |
Year ended 31 December 2021 |
Year ended 31 December 2022 |
Period ended 30 June 2023 |
Total |
Dividends (£'000) |
24,178 |
33,187 |
46,037 |
101,976 |
49,596 |
34,378 |
289,352 |
Disposal proceeds2 (£'000) |
22,367 |
26,334 |
23,915 |
221,504 |
62,213 |
39,960 |
396,293 |
- The period to 31 December 2019 was 14 months.
- 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.
OutlookThe 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 FergusonPartner 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 June 2023 |
Six months to 30 June 2022 |
Year to 31 December 2022 |
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’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 30 June
2023 |
As at 30 June 2022 |
As at 31 December 2022 |
|
£’000 |
£’000 |
£’000 |
£’000 |
£’000 |
£’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 cash1 |
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 |
- 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 ChairCompany Number 06397765
Statement of changes in equity
|
Share capital £’000 |
Share premium £’000 |
Capital redemption
reserve£’000 |
Special distributable
reserve1£’000 |
Capital reserve realised1
£’000 |
Capital reserve unrealised
£’000 |
Revenue reserve1
£’000 |
Total £’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 |
- Reserves available for distribution.
|
Share capital £’000 |
Share premium £’000 |
Capital redemption
reserve£’000 |
Special distributable
reserve1£’000 |
Capital reserve realised1
£’000 |
Capital reserve unrealised £’000 |
Revenue reserve1
£’000 |
Total £’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 |
- Reserves available for distribution.
|
Share capital £’000 |
Share premium £’000 |
Capital redemption
reserve£’000 |
Special distributable
reserve1£’000 |
Capital reserve realised1
£’000 |
Capital reserve unrealised £’000 |
Revenue reserve1
£’000 |
Total £’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 |
- Reserves are available for distribution.
The accompanying notes form an integral part of the financial
statements.
Cash flow statement
|
Unaudited |
Unaudited |
Audited |
|
Six months to |
Six months to |
Year to |
|
30 June |
30 June |
31 December |
|
2023 |
2022 |
2022 |
|
£’000 |
£’000 |
£’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 (£’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
£10,439,000 payable to Octopus (30 June 2022: £11,339,000; 31
December 2022: £22,508,000), 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 £1,046,000 payable to Octopus (30
June 2022: £921,600; 31 December 2022: £1,893,000), 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:
£nil; 31 December 2022: £nil).
Octopus received £0.02 million in the six months
to 30 June 2023 (six months ended 30 June 2022: £0.03 million; year
ended 31 December 2022: £nil) 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
£1,372,000 (30 June 2022: £288,000; 31 December 2022: £678,000) and
sold 1,602,591 shares (30 June 2022: 286,135; 31 December 2022:
737,002 shares) for proceeds of £1,171,000 (30 June 2022: £291,000;
31 December 2022: £672,000). 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 to |
Period to |
Year to |
|
30 June |
30 June |
31 December |
|
2023 |
2022 |
2022 |
Tom Leader (Chair) |
1,625 |
692 |
1,640 |
Matt Cooper1 |
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 |
- 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 |
Investments |
held by 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 eventsThe following
events occurred between the balance sheet date and the signing of
this half‑yearly report:
- four new investments completed totalling £4.1 million;
- three follow-on investments completed totalling £9.8 million;
and
- a final order to cancel share premium amounting to £248.5
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
LimitedTel: +44 (0)80 0316 2067
LEI: 213800A67IKGG6PVYW75
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