TIDMOTV4
Octopus Titan VCT 4 plc
Final Results
28 January 2014
Octopus Titan VCT 4 plc ("Titan"), managed by Octopus Investments
Limited ("Octopus"), today announces the final results for the year
ended 31 October 2013.
These results were approved by the Board of Directors on 28 January
2014.
You may, in due course, view the Annual Report in full at
www.octopusinvestments.com.
Octopus Titan VCT 4 plc
Annual Report & Accounts for the year ended 31 October 2013
Octopus Titan VCT 4 plc is a venture capital trust 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 and is managed by Octopus Investments Limited.
Financial Summary
As at As at
31 October 2013 31 October 2012
Net assets (GBP'000s) 29,231 21,023
Return on ordinary activities after tax
(GBP'000s) 3,935 (296)
Net asset value (NAV) per share 100.7 87.7p
Dividends paid 1.0p -
Total Return (NAV plus Dividends paid) 101.7p 87.7p
Dividends declared 2.0p -
Key Dates
Final dividend payment date 4 April 2014
Annual General Meeting
1 April 2014 (2.15 pm at 20 Old Bailey, London EC4M 7AN)
Half-yearly results to 30 April 2014 published June
2014
Annual results to 31 October 2014 announced February 2015
Annual Report and financial statements published February/March
2015
Chairman's Statement
Introduction
I am pleased to present the Annual Report of Octopus Titan VCT 4 plc for
the year ended 31 October 2013. The Company, which commenced investment
in 2010, has seen a significant uplift in value of 16.0% during the year
due to the strong performance of the portfolio. I am delighted that the
Company is following its predecessors in the Titan family of VCTs of
achieving a significant uplift in value as the portfolio matures, within
a relatively short period
Performance
During the year the Total Return, being the Net Asset Value (NAV) of the
Company plus cumulative dividends, has increased from 87.7 pence per
share to 101.7 pence per share as shown in the below table. This
increase is attributable to the unquoted company portfolio which has
performed strongly.
Pence per Ordinary share
NAV as at 1 November 2012 87.7
16.0% uplift in NAV 14.0
Total Return as at 31 October 101.7
Less dividends paid (1.0)
NAV as at 31 October 2013 100.7
During the year the Company continued to invest in a broad range of
unquoted smaller UK companies with the potential to generate significant
capital growth and to strengthen the current portfolio.
Dividend and Dividend Policy
It is your Board's objective to maintain a regular dividend whilst
retaining the appropriate level of liquidity in the Company. In light of
this, your Board recommends a final dividend of 2 pence per share
bringing total dividends declared in respect of the year to 3 pence per
share.
The final dividend will be paid on 4 April 2014 to those shareholders
who are on the register on 7 March 2014.
Investment Portfolio
The portfolio had a net uplift in fair value of GBP4,031,000, largely
attributable to Secret Escapes and TouchType with significant increases
in fair value of GBP5,239,000 and GBP464,000 respectively.
The Company made eleven follow-on investments in existing portfolio
companies during the year totalling GBP4,340,000 and six new investments
amounting to GBP1,880,000enhancing further a diverse portfolio which now
has twenty-eight investment companies across a range of sectors. The
Investment Manager's Review describes the portfolio in greater detail on
pages X to X.
Given the nature and vulnerability of small companies, there were a
number in the portfolio which did not meet their targets and resulted in
decreases in fair value in keeping with our prudent approach to
valuation. However, as the portfolio matures an increasing number of
companies are expected to strengthen and grow.
At 31 October 2013, the net assets of the Company comprised 81.0% in
unquoted investments, 9.6% in Octopus Open Ended Investment Companies
(OEICs) and 9.4% in cash or cash equivalents. Cash is invested in a
range of conservatively run money market funds that conform with the
Board's policy of preserving capital pending its deployment in
Qualifying Investments.
Funds Raised and Buy-backs
As mentioned in my interim report, the Company successfully raised
GBP4,580,000, net of costs, in February 2013. The majority of these
funds are being used to support existing portfolio companies where the
Investment Manager sees the opportunity for building further value. Your
Investment Manager also continues to see and analyse many new investment
opportunities.
Following the success of the February 2013 fundraising, your Board
announced in September a further opportunity to invest in the Titan VCTs
through a linked share offer. The first allotment of GBP3,137,000 net of
costs, was made in December.
For further details of the Offer and a copy of the Prospectus please
contact Octopus using the details provided on page X of this report or
visit the Octopus website at www.octopusinvestments.com.
During the year to 31(st) October, the Company repurchased 20,453 shares
at a price of 86.0p per share a 5% discount to the then NAV. Further
details can be found in Note 14 of the accounts.
Open Ended Investment Companies ("OEICs")
The Octopus UK Micro Cap Growth Fund performed well during the year with
an uplift in fair value of GBP627,000 which represents an uplift of
28.9%. The mandate of the Foundation Fund, as amended last year, was not
in line with the Company's strategy and the Fund was therefore sold,
realising an overall gain of GBP45,000.
The Board believes it remains a sensible strategy to maintain part of
our non-qualifying portfolio in OEICs due to their liquid status and
potential to achieve greater returns compared with cash deposits.
Further details of these investments, including monthly factsheets, may
be found at www.octopusinvestments.com.
Investment Strategy
Your Board will continue to review its investment strategy on a regular
basis, including the purchase of cash funds and non-qualifying
investments pending investment in qualifying holdings. As envisaged in
the Company's prospectus, between 15% and 25% of the assets of the
Company will be retained for liquidity and follow-on investments. As our
existing portfolio of unquoted companies matures, many will require
further rounds of investment for growth and development. A minority of
these investments may be non-qualifying for VCT purposes as there will
continue to be circumstances in which it will be in our shareholders'
interests to hold them, subject always to maintenance of the qualifying
level of 70%.
VCT Qualifying Status
PricewaterhouseCoopers LLP provides the Board and Investment Manager
with advice concerning ongoing compliance with HMRC rules and
regulations concerning VCTs. The Board has been advised that the
Company is fully compliant with the conditions laid down by HMRC for
maintaining VCT status.
A key requirement now is to maintain the 70% qualifying investment
level. As at 31 October 2013, over 97% of the portfolio, as measured by
HMRC rules, was invested in VCT qualifying investments.
Alternative Investment Fund Managers Directive (AIFMD)
AIFMD was introduced under EU Legislation to bring consistency of
reporting across all fund types. In accordance with this legislation,
the Company has applied to the Financial Conduct Authority to register
as its own Alternative Investment Fund Manager (AIFM). I expect this
authority to be granted by 22 July 2014 after which the Company will be
required to make an annual report, which will include investments made,
principal exposures, liquidity and risk management.
Annual General Meeting
I look forward to meeting shareholders at the Annual General Meeting
("AGM") on 1 April 2014 to be held at the offices of Octopus Investments
Limited, 20 Old Bailey, London, EC4M 7AN. The AGM will start at 10.45
am.
Outlook
There is a sense of improving business confidence in the UK with
broadly-based evidence that the economy has resumed growth at an
acceptable level after the strictures of the past few years. There
remain challenges, however, for small companies, so it is pleasing to
see the value of our portfolio grow significantly during the year.
During the past three years the Company has successfully built its
investment portfolio and your Board looks forward with confidence to its
further development and expansion in 2014 and beyond. The growing
maturity of our portfolio and the cash-resources available to us provide
a sound platform for your Manager to continue the investment process
that has successfully generated growth for this and other Titan VCTs.
Gregor Michie
Chairman
28 January 2014
Investment Manager's Review
Personal Service
At Octopus, we focus on both managing your investments and keeping you
informed throughout the investment process. We are committed to
providing our investors with regular and open communication. Our updates
are designed to keep you informed about the progress of your investment.
Octopus was established in 2000 and has a strong commitment to both
smaller companies and to VCTs. We currently manage 13 VCTs, including
this VCT, and manage over GBP340 million in the VCT sector. Octopus has
over 250 employees and was voted 'Best VCT Provider of the Year' by the
financial adviser community in 2006 to 2010.
Investment Strategy Implementation
The companies we look to invest in are those that we believe have great
potential but need some financial support to realise it. Each company
that we target will have the potential to create a large business by
taking a relatively modest market share. We are particularly interested
in businesses that address current market trends and aim to create a
balanced investment portfolio spanning multiple industries and business
sectors.
Having now reached the level of invested funds required by HMRC, our
focus will shift to managing the portfolio and developing capital
growth. The current portfolio of holdings built by the Company now
encompasses investments in 28 unquoted companies in a range of sectors.
As Investment Manager, we typically purchase a significant minority
equity stake in qualifying companies, providing financial capital to
each business to build and grow its operations with the objective to
sell to an acquirer at some point in the future. These entrepreneurial
early stage businesses frequently face challenges as they seek to
establish themselves in their markets. The amount of capital we
initially deploy is intended to be only the first investment that we
will make into a business, prior to seeing if the company meets or
exceeds its initial objectives.
If the business is unsuccessful in meeting these first objectives we
strive to minimise the financial exposure the Company faces without
committing further money to the investment. Other businesses which meet
some of their objectives, but not necessarily all, will require more
time to prove their concept and these businesses will typically be
reduced in value prior to our making an additional investment to fund
their further progress. Finally, there are those that meet and exceed
the expectations originally set. It is these businesses in which we wish
to increase our investment exposure as they remain on course to create a
large business.
Liquidity in the Company is maintained to ensure adequate resources are
available to support further portfolio funding needs as they arise. This
will be assisted by the Top-up as described in the Chairman's Statement
and is an important feature of our model in delivering returns to
shareholders.
Portfolio Review
The Total Return (being Net Asset Value plus dividends paid) rose by
16.0% during the year to 101.7p per share as at 31 October 2013 from
87.7p as at 31 October 2012. This increase was largely due to the strong
performance of the portfolio and in particular, Secret Escapes.
Investment highlights
The top three performing portfolio companies are detailed below:
Fixed asset Original Investment cost as at 31 Fair value as at 31 October Total uplift in % uplift
investments investment October 2013 (GBP'000) 2013 (GBP'000) value (GBP'000) on cost
Secret
Escapes
Limited April 2011 1,467 8,080 6,613 450.8%
TouchType
Limited August 2010 1,226 2,233 1,007 82.1%
Leanworks
Limited
(YPlan) July 2012 715 1,066 351 49.1%
The above three companies are the main contributors to the uplift in
value in the portfolio with Secret Escapes in particular seeing
significant growth with an uplift on cost of 450.8% since original
investment.
A number of companies, however, struggled to meet expectations and as a
result experienced downward revaluations in fair value.
Follow-on investments
As Investment Manager, it is our continued intention to take those
businesses in which we have invested a small amount of money as a first
investment, and invest further as they meet or exceed the initial
milestone objectives we agreed with them. This approach can be
demonstrated through 11 follow on investments being made, totalling
GBP4,340,000 as shown below:
Fixed asset investments Sector Cost, GBP'000
TouchType Limited Telecommunications 841
Aframe Media Group Limited Media 762
Consumer lifestyle and well
The Faction Collective SA being 618
Consumer lifestyle and well
Leanworks Limited (YPlan) being 565
Artesian Solutions Limited Technology 436
UltraSoC Technologies Limited Technology 323
Applied Superconductor Limited Environmental 273
Vega-Chi Limited Technology 224
Certivox Limited Technology 188
Bowman Power Limited Environmental 109
Amplience Limited Technology 1
Total follow-on investments 4,340
New investments
There were seven new investments during the year in order to diversify
the portfolio amounting to GBP1,880,000.
Fixed asset investments Sector Cost, GBP'000
Conversocial Limited Technology 500
Affectv Limited Media 500
TrialReach Limited Consumer lifestyle and well being 350
Shopa Limited Media 175
Sourceable Limited Consumer lifestyle and well being 149
Uniplaces Limited Consumer lifestyle and well being 106
Zynstra Limited Technology 100
Total new Investments 1,880
Post year end
Since the balance sheet date a number of new and follow-on investments
have been made. For more information please see Note 17.
Outlook
The Fund has continued the pattern shown by earlier Titan VCTs by seeing
a significant rise in NAV at this stage of maturity. We are confident
that Titan 4 is building a strong and diverse portfolio which is well
positioned to take advantage of the improving economic climate. As the
fund continues to mature we believe there is further capital growth
potential.
We continue to see a large number of potential businesses, and with the
successful fund raise during the year and post year end, we will deploy
finance into companies where we believe there is potential for strong
capital growth. We are also working hard alongside those companies that
have fallen behind expectations to stabilise them.
If you have any questions on any aspect of your investment, please call
one of the team on 0800 316 2295.
Alex Macpherson
Octopus Investments Limited
28 January 2014
Investment Portfolio
Movement % equity
in fair Fair held by
Investment value to value as all
cost as at 31 at 31 % voting funds
31 October October October rights managed
Fixed asset 2013 2013 2013 Movement in fair value in year to 31 October 2013 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 6,613 8,080 5,239 10.98% 18.00%
TouchType
Limited Telecommunications 1,226 1,007 2,233 464 5.53% 18.52%
UltraSoC
Technologies
Limited Technology 1,277 87 1,364 87 21.38% 55.11%
Amplience
Limited Technology 1,175 (15) 1,160 245 12.75% 30.74%
Aframe Media
Group Limited Media 1,262 (185) 1,077 64 13.72% 33.19%
Leanworks
Limited Consumer lifestyle
(Yplan) and well being 715 351 1,066 352 6.02% 9.78%
Certivox
Limited Technology 1,801 (820) 981 (841) 22.44% 38.90%
Artesian
Solutions
Limited Technology 936 - 936 - 9.91% 20.02%
Vega-Chi
Limited Technology 864 50 914 345 8.70% 14.10%
Rangespan Consumer lifestyle
Limited and well being 1,125 (250) 875 (250) 6.27% 10.59%
The Faction Consumer lifestyle
Collective SA and well being 785 33 818 33 14.22% 23.99%
Iovox Limited Telecommunications 750 - 750 - 9.35% 13.62%
Semafone
Limited Telecommunications 756 (180) 576 (180) 3.56% 24.70%
Conversocial
Limited Technology 500 - 500 - 4.39% 8.11%
Affectv Limited Media 500 - 500 - 7.62% 15.29%
Bowman Power
Limited Environmental 421 (42) 379 - 2.70% 10.70%
TrialReach Consumer lifestyle
Limited and well being 350 - 350 - 5.44% 10.00%
Executive
Channel Europe
Limited Media 641 (326) 315 (385) 7.12% 25.14%
Michelson
Diagnostics Consumer lifestyle
Limited and well being 650 (391) 259 (66) 7.62% 20.50%
Shopa Limited Media 175 - 175 - 5.29% 9.85%
Sourceable Consumer lifestyle
Limited and well being 149 - 149 - 7.26% 11.95%
Uniplaces Consumer lifestyle
Limited and well being 106 - 106 - 3.47% 16.47%
Zynstra Limited Technology 100 - 100 - 1.23% 8.12%
Applied
Superconductor
Limited Environmental 765 (765) - (396) 8.30% 13.82%
Lifebook Consumer lifestyle
Limited and well being 556 (556) - (556) 11.34% 18.23%
PrismaStar Inc. Media 424 (424) - (124) 2.58% 10.30%
Diverse Energy
Limited Environmental 414 (414) - - 5.47% 29.76%
Elonics Limited Technology 305 (305) - - 3.11% 19.54%
Total fixed asset investments 20,195 3,468 23,663 4,031
Money market securities 2,279 2,279 -
Open ended investment companies 1,581 1,222 2,803 627
Cash at bank 281 281 -
Total investments 24,336 4,690 29,026 4,658
Debtors less creditors 205
Total net assets 29,231
Valuation Methodology
Initial measurement
Financial assets are measured at fair value. The initial best estimate
of fair value of a financial asset that is either quoted or not quoted
in an active market is the transaction price (i.e. cost).
Subsequent measurement
Further funding rounds are a good indicator of fair value and this
measure is used where appropriate. Subsequent adjustment to the fair
value of unquoted investments can be made using sector multiples based
on information as at 31 October 2013, where applicable. In some cases
the multiples can be compared to equivalent companies, especially where
a particular sector multiple does not appear appropriate. It is
currently industry norm to discount the quoted earnings multiple to
reflect the lack of liquidity in the investment. Typically the discount
is between 20 and 30% but this can be increased where the relevant
multiple appears too high. A lower discount would also be possible if an
investment was close to an exit event.
In accordance with the IPEVC valuation guidelines investments made
within 12 months are usually kept at cost unless performance indicates
that fair value has changed.
If you would like to find out more regarding the IPEVC valuation
guidelines, please visit their website at:
www.privateequityvaluation.com.
Review of Investments
During the year, the Company made seven new investments and eleven
follow on investments amounting to GBP8,298,000. The unquoted
investments are in Ordinary shares with full voting rights as well as
loan note securities.
Unquoted investments are valued in accordance with the accounting policy
set out in accounting note 1, which takes account of current industry
guidelines for the valuation of venture capital portfolios and is
compliant with IPEVC valuation guidelines and current financial
reporting standards.
Listed below are details of the Company's 10 largest investments by
value.
Secret Escapes Limited
Launched in February 2011, Secret Escapes is an online travel club that
offers its members exclusive discounts of up to 70 per cent on luxury
hotels and holidays. Offers are usually available for between three and
seven days. The founders are aiming for Secret Escapes to become the
leading luxury holiday deal provider in the UK.
Initial investment date: April 2011
Cost: GBP1,467,000
Valuation: GBP8,080,000
Voting rights held by Fund: 10.98%
Equity held by all funds managed by Octopus: 18.00%
Last submitted audited accounts: 31
December 2012 (abbreviated)
Turnover : not disclosed
Loss before tax: not disclosed
Net assets: GBP2,725,025
TouchType Limited
TouchType is a leader in the development of artificial intelligence and
machine learning technologies, encapsulated in its Fluency prediction
engine, a patent pending set of software algorithms. Its first product,
SwiftKey(TM), a text prediction technology designed to significantly
boost the accuracy, fluency and speed of text entry on mobile and
computing devices, resulting in users having to make less than half the
number of keystrokes compared to a standard QWERTY keyboard.
SwiftKey(TM) has enjoyed tremendous success as both an Android App, with
over 10 million downloads to date, and as the installed text prediction
technology on a increasing range of smartphones and tablets. It has won
several high profile industry awards, including a prestigious Global
Mobile Award for the "Most Innovative App" and the Guardian Digital
Innovation Award for the "Best Startup Business".
Initial investment date: August 2010
Cost: GBP1,226,000
Valuation: GBP2,233,000
Voting rights held by Fund: 5.53%
Equity held by all funds managed by Octopus: 18.52%
Last submitted group accounts: 31
December 2012 (abbreviated)
Turnover not disclosed
Loss before tax: not disclosed
Net assets: (GBP635,793)
UltraSoC Technologies Limited
UltraSoC Technologies Ltd develops advanced debugging technology for the
embedded electronic systems used in products, from cars to mobile
phones. UltraSoC Technologies is developing next-generation, silicon
Intellectual Property (IP) that addresses the challenges of debugging
the application software which provides the functionality and
performance in modern electronic products.
Initial investment date: September 2011
Cost: GBP1,277,000
Valuation: GBP1,364,000
Voting rights held by Fund: 21.38%
Equity held by all funds managed by Octopus: 55.11%
Last submitted audited group accounts: 31
December 2012 (abbreviated)
Turnover not disclosed
Loss before tax: not disclosed
Net assets: GBP605,100
Amplience Limited
Amplience is a leading Commerce Content Management platform for global
brands and retailers. The platform enables retailers to deliver engaging
retail experiences across multi-digital channels, including smartphones
and tablets. It makes it quicker and cheaper for retailers to update
content on websites, while also demonstrably increasing the amount their
customers spend.
Initial investment date: December 2010
Cost: GBP1,175,000
Valuation: GBP1,160,000
Voting rights held by Fund: 12.75%
Equity held by all funds managed by Octopus: 30.74%
Last submitted audited accounts: 31
December 2012
Turnover GBP1,009,048
Loss before tax: (GBP2,161,394)
Net assets: GBP325,141
Aframe Media Group Limited
Aframe Media Services Limited is the first Software as a Service (SaaS)
offering that eliminates many of the issues associated with traditional
video production methods. Aframe is a video storage and end-to-end
production platform that allows its users to collaborate on productions
with colleagues based anywhere in the world. It enables them to organise
and share footage, edit that footage in a professional system of their
choice and then use Aframe for delivering it. It offers its service on a
monthly basis, with a range of packages to suit different user types.
Its customers include the BBC, BT and CPL.
Initial investment date: March 2012
Cost: GBP1,262,000
Valuation: GBP1,077,000
Voting rights held by Fund: 13.72%
Equity held by all funds managed by Octopus: 33.19%
Last submitted audited group accounts: 31
December 2012 (abbreviated)
Turnover not disclosed
Loss before tax: not disclosed
Net assets: GBP3,975,719
Leanworks Limited (YPlan)
Leanworks is an early-stage business that develops YPlan, a mobile and
online ticketing platform. It allows users to discover and purchase
tickets for events that are taking place in the vicinity, from the
convenience of their smartphone.
Initial investment date: July 2012
Cost: GBP715,000
Valuation: GBP1,066,000
Voting rights held by Fund: 6.02%
Equity held by all funds managed by Octopus: 9.78%
Last submitted audited group accounts: 31
December 2012 (abbreviated)
Turnover not disclosed
Loss before tax: not disclosed
Net assets: GBP567,330
CertiVox Limited
CertiVox was founded in 2009 based on the simple belief that everyone
deserves the right to secure their online information exchanges simply
and easily. Its leading-edge technology enables industries around the
world - including defence, government, legal and financial services - to
protect and control their information exchanges, whether through PCs,
smart devices or the cloud. By combining state-of-the-art crypto
technology with its unique on-demand encryption key management service,
CertiVox is the only company in the global market today that can arm
businesses and individuals with frictionless end-to-end encryption, key
management and identity management services for the web 2.0 world.
Initial investment date: March 2011
Cost: GBP1,801,000
Valuation: GBP981,000
Voting rights held by Fund: 22.44%
Equity held by all funds managed by Octopus: 38.90%
Last submitted audited accounts: 30
June 2012
Turnover : nil
Loss before Tax: (GBP23,035)
Net assets: GBP5,006,610
Artesian Solutions Limited
Artesian helps its business to business customers accelerate revenue by
building stronger and deeper customer relationships. It provides a sales
productivity application that automates the process of looking for sales
and market intelligence from the web and in social media. The service is
100% cloud-based and helps sales and marketing teams achieve better
results by acting on key insights from customer-based information.
The company has developed technology that allows it to interpret and
analyse millions of web pages. Through a combination of
natural-language-processing and a unique heuristic ranking approach, the
company is able to deliver accurate contextual insight about its
clients' customers and the relevant things they are doing, enabling its
clients to drive better customer engagement.
Initial investment date: December 2011
Cost: GBP936,000
Valuation: GBP936,000
Voting rights held by Fund: 9.91%
Equity held by all funds managed by Octopus: 20.02%
Last submitted audited accounts: 29
February 2013
Turnover GBP2,756,672
Loss before tax: (GBP1,537,335)
Net assets: GBP563,528
Vega-Chi Limited
Vega-Chi Limited is the leading operator of electronic trading exchanges
dedicated to high yield bonds and convertible bonds, operating three
electronic trading platforms, two in Europe (convertible bonds, high
yield bonds) and one in the US for high-yield bonds, launched on 24
October 2012. Outside Vega-Chi, such securities are predominantly traded
on telephone-based broker crossing networks in the over-the-counter
(OTC) market. Vega-Chi is challenging the OTC structures by allowing
institutional investors to bypass the middlemen (brokers, dealers) and
trade directly with each other on an electronic exchange setting
achieving better prices, anonymity, flexibility and trading efficiency.
Initial investment date:
Cost: GBP864,000
Valuation: GBP914,000
Voting rights held by Fund: 8.70%
Equity held by all funds managed by Octopus: 14.10%
Last submitted audited accounts: 28
February 2013
Turnover GBP124,000
Loss before tax: (GBP1,565,000)
Net assets: GBP925,000
Rangespan Limited
Launched in 2011 by a team of ex-Amazon.com senior executives and
engineers, Rangespan is a technology company with an automated supply
chain service. The team has extensive experience in e-commerce best
practice and scalable software development, as well as a fanatical focus
on customer experience. The Rangespan service enables retailers to list
tens of thousands of new products online without a lengthy technology
integration project, ongoing product data management, upfront costs, or
assuming additional inventory risk.
Initial investment date: November 2011
Cost: GBP1,125,000
Valuation: GBP875,000
Voting rights held by Fund: 6.27%
Equity held by all funds managed by Octopus: 10.59%
Last submitted audited accounts: 31
March 2013
Turnover GBP2,529,144
Loss before tax: (GBP1,749,029)
Net assets: GBP369,886
How Octopus creates and delivers value for the shareholders of the
Company
The Company focuses on providing early stage, development and expansion
funding to predominantly unquoted companies with a typical deal size of
GBP0.2 million to GBP2 million, in aggregate from the five Titan VCTs
managed by Octopus. The focus is on establishing a portfolio of
qualifying investments in companies that have the potential to achieve a
high level of profitability through the combination of:-
-- Scalability: The potential to deliver services to significant numbers
of new customers at very low incremental cost and to generate repeat
sales from customers.
-- Scope: The ability to expand into complimentary areas by leveraging
customer and/or distributor relationships, new product development or
brand positioning.
-- Pricing power: An ability to charge high and defensible prices for
its products or services as a result of having intellectual property
rights, a strong brand and/or a dominant position in a market niche.
The Investment Manager looks to identify opportunities where the people
involved - the entrepreneur, management team, investors, advisers and
any other significant stakeholders - have a proven record of success.
Although the Fund has the ability to invest across a wide range of
industries, the focus will be on several principal sectors:-
-- environment
-- technology
-- media
-- telecoms
-- consumer lifestyle and wellbeing
Investment Process
The Investment Manager follows a multi-stage process prior to making
Qualifying Investments in unquoted companies.
Initial Screening
If the initial review of the business plan is positive, a meeting is
held with the management team of the business in order to assess the
team in terms of its ability to achieve the objectives set out in the
business plan. The proposition is then discussed and reviewed with the
other members of the Octopus team and a decision is taken as to whether
to continue discussions with the company with a view to making an
investment.
Due Diligence
Prior to making an investment, due diligence is carried out on the
potential investee company. The due diligence process includes a review
of the investee company's technology, discussions with customers and
suppliers, competitive analysis, assessment of the capabilities of the
management team and financial analysis. In addition,
the Octopus investment team is supported by the Octopus Venture Partners
- a group of over 100 entrepreneurs and business experts including a
number of ex-FTSE chairmen and chief executives. The Octopus Venture
Partners may be involved at an early stage in the investment decision
making process, involving members with relevant industry experience as
part of the initial due diligence and they may go on to invest alongside
Octopus in investee companies.
Additionally, Octopus also draws on professional input from lawyers,
accountants and other specialists as required in order to conduct the
due diligence and draw up the required legal documentation in order to
complete an investment.
Post-Investment Monitoring
Octopus usually appoints at least one representative to the board of
each investee company. The majority of the investments are expected to
be held for approximately five years. There may, however, be
opportunities to exit profitably on shorter timescales. The Investment
Manager conducts a regular review of the portfolio, during which each
investee company is assessed in terms of its commercial and financial
progress, its strategic positioning, requirement for further capital,
progress towards an eventual exit and its current and prospective
valuation. As each company matures, the exit considerations become more
specific, with a view to establishing a definitive action plan in order
to achieve a successful sale of the investment. Throughout the cycle of
an investment the Investment Manager will remain proactive in
determining the appropriate time and route to exit. It is expected that
the majority of exits will be by means of a trade sale.
Income Statement
Year to 31 October 2013
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
Gain on disposal of current asset
investments - 45 45
Fixed asset investment holding gains 9 - 4,031 4,031
Current asset investment holding gains - 627 627
Other income 2 15 - 15
Investment management fees 3 (105) (315) (420)
Other expenses 4 (363) - (363)
Return on ordinary activities before tax (453) 4,388 3,935
Taxation on return on ordinary activities 6 - - -
Return on ordinary activities after tax (453) 4,388 3,935
(Loss)/earnings per share - basic and
diluted 7 (1.7)p 16.3p 14.6p
-- The 'Total' column of this statement is the profit and loss account of
the Company; the supplementary revenue return and capital return columns
have been prepared under guidance published by the Association of
Investment Companies
-- All revenue and capital items in the above statement derive from
continuing operations
-- The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds
The Company has no recognised gains or losses other than the results for
the period as set out above.
The accompanying notes form an integral part of the financial
statements.
Income Statement
Year to 31 October 2012
Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000
Loss on disposal of fixed asset
investments - (1) (1)
Gain on disposal of current asset
investments - 110 110
Fixed asset investment holding losses - 91 91
Current asset investment holding gains - 172 172
Other income 2 40 - 40
Investment management fees 3 (101) (303) (404)
Other expenses 4 (304) - (304)
Return on ordinary activities before tax (365) 69 (296)
Taxation on return on ordinary activities 6 - - -
Return on ordinary activities after tax (365) 69 (296)
Earnings/(loss) per share - basic and
diluted 7 (1.6)p 0.3p (1.3)p
-- The 'Total' column of this statement is the profit and loss account of
the Company; the supplementary revenue return and capital return columns
have been prepared under guidance published by the Association of
Investment Companies
-- All revenue and capital items in the above statement derive from
continuing operations
-- The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds
The Company had no recognised gains or losses other than the results for
the year as set out above.
The accompanying notes form an integral part of the financial
statements.
Reconciliation of Movements in Shareholders' Funds
Year to 31 October 2013 Year to 31 October 2012
GBP'000 GBP'000
Shareholders' funds at start
of year 21,023 20,086
Return on ordinary
activities after tax 3,935 (296)
Purchase of own shares (17) (9)
Issue of equity (net of
expenses) 4,580 1,242
Shareholders' funds at end
of year 29,231 21,023
Balance Sheet
As at 31 October As at 31 October
2013 2012
Notes GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments* 9 23,663 13,412
Current assets:
Debtors 10 250 780
Money market funds and other
deposits* 11 5,082 6,800
Cash at bank 281 91
5,613 7,671
Creditors: amounts falling due
within one year 12 (45) (60)
Net current assets 5,568 7,611
Net assets 29,231 21,023
Called up equity share capital 13 2,904 2,398
Share premium 14 5,172 1,101
Special distributable reserve 14 18,776 19,083
Capital redemption reserve 14 12 9
Capital reserve - losses on
disposals 14 (922) (672)
-
holding
gains 14 4,689 51
Revenue reserve 14 (1,400) (947)
Total shareholders' funds 29,231 21,023
Net asset value per share 8 100.7p 87.7p
*Held at fair value through profit or loss
The statements were approved by the Directors and authorised for issue
on 28 January 2014 and are signed on their behalf by:
Gregor Michie
Chairman
Company No: 07035434
The accompanying notes form an integral part of the financial
statements.
Cash Flow Statement
Year to 31 October 2013 Year to 31 October 2012
GBP'000 GBP'000
Net cash
inflow/(outflow) from
operating activities (253) (796)
Financial investment:
Purchase of fixed asset
investments 9 (6,220) (8,298)
Sale of fixed asset
investment 9 - -
Management of liquid
resources:
Purchase of current
asset investments (4,852) (3,750)
Sale of current asset
investments 7,242 11,595
Taxation 6 - -
Dividends paid (290) -
Financing:
Issue of shares 13 4,580 1,242
Purchase of own shares 13 (17) (9)
Increase/(decrease) in
cash resources at bank 190 (16)
The accompanying notes form an integral part of the financial
statements.
Reconciliation of Return before Taxation to Cash Flow
from Operating Activities
Year to 31 October 2013 Year to 31 October 2012
GBP'000 GBP'000
Return on ordinary
activities before tax 3,935 (296)
Loss on disposal of fixed
assets - 1
Gain on disposal of current
assets (45) (110)
Gain on valuation of fixed
asset investments (4,031) (91)
Gain on valuation of current
asset investments (627) (172)
Decrease/(increase) in
debtors 530 (120)
Decrease in creditors (15) (8)
Outflow from operating
activities (253) (796)
Reconciliation of Net Cash Flow to Movement in Net
Funds
Year to 31 October 2013 Year to 31 October 2012
GBP'000 GBP'000
Increase/(decrease) in cash
resources at bank 190 (16)
Movement in cash equivalents (1,718) (7,563)
Opening net funds 6,891 14,470
Net funds at 31 October 5,363 6,891
Net Funds at 31 October comprised:
Year to 31 October 2013 Year to 31 October 2012
GBP'000 GBP'000
Cash at bank 281 91
Money market funds 2,279 3,396
OEICs 2,803 3,404
Net Funds at 31 October 5,363 6,891
The accompanying notes form an integral part of the financial
statements.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Octopus Titan VCT 4 PLC via Globenewswire
HUG#1757648
http://www.octopusinvestments.com
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