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 2022.

Titan’s mission is to invest in the people, ideas and industries that will change the world.

Highlights

	HY2022	HY2021	FY2021
Net assets (£’000)	£1,180, 101	£1,275,105	£1,373,041
(Loss)/profit after tax (£’000)	£(148,2 42 )	£218,580	£216,557
NAV/share	91.3p	113.9p	105.7p
NAV + cumulative dividends	186.3p	197.9p	197.7p
Total return (p)¹	(11.4)p	19.9p	19.7p
Total return %²	(10.8)%	20.5%	20.3%
Dividends paid in the year	3.0p	3.0p	11.0p
Dividend yield %³	2.8%	3.0%	11.3%
Dividend declared	2.0p	8.0p	3.0p

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
I am pleased to present the unaudited half-yearly report for Titan for the six months ended 30 June 2022, in my first letter to you as Chair, having taken over from John Hustler in June 2022.

The net asset value (NAV) per share at 30 June 2022 was 91.3p which, adjusting for dividends paid of 3.0p per share in May 2022, represents a net decrease of 11.4p per share from 31 December 2021. The Total Value (NAV plus cumulative dividends paid per share since launch) at the end of the period was 186.3p (31 December 2021: 197.7p). This decline is, of course, disappointing but reflects the difficult global macro environment we are now facing and follows a record year in 2021 in terms of both exit proceeds and total return. The Octopus team is closely monitoring the portfolio to help support the companies we invest in through these more challenging times. Despite the recent decrease in NAV, the tax-free annual compound return for the original shareholders since Titan’s launch in October 2007 is 4.9%.

We were pleased to raise over £200 million in our most recent fundraise which closed in November 2021 and, on 17 June 2022, we announced our intention to launch a new offer for subscription later this calendar year.

As at 30 June 2022, we had uninvested cash reserves of almost £204 million¹ (£381 million as at 31 December 2021) to allow us to support our existing portfolio of 117 companies, as well as make new investments into early-stage, high growth businesses which we believe embody the objectives of the VCT scheme.

In the six months to 30 June 2022, we utilised £212.2 million of our cash resources, comprising £77.5 million in new and follow-on investments, £28.9 million in dividends, £18.3 million in share buybacks and £87.5 million in investment manager fees and other running costs (of which £63.9 million was the 2021 performance incentive fee). Together, this utilised 56% of our cash and cash equivalents at 31 December 2021.

Dividends
As shareholders will know, our target is to pay an annual dividend of 5.0p per share, supplemented by special dividends when appropriate. Following careful consideration, I am pleased to confirm that the Titan Board has now decided to declare an interim dividend of 2.0p per share (2021: 2.0p per share supplemented by a special dividend of 6.0p per share), which will be paid on 22 December 2022 to shareholders on the register as at 9 December 2022.

If you are one of the 27% 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 for those of you who prefer the capital value of your investment to grow.

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 46 to 49 of the annual report for the year ended 31 December 2021. Directionally, however, risks are seen to be increasing rather than reducing, in the categories of investment performance, economic and valuation.

Outlook
The economic backdrop of 2022 is very different to that which we have experienced over the last three years, even when considering the Covid-19 pandemic. The realities of the conflict in Ukraine, cost of living crisis, high inflation rates and central banks raising interest rates will continue to have a significant impact across all markets, including that for early-stage venture investments. However, thanks to the support from our shareholders through the most recent fundraises and the diversity of the portfolio in terms of sector, stage and vintage, Titan is well placed and we are reassured that over 85% of the portfolio companies have more than 12 months cash runway available to them to support them through this more turbulent period. The Board believes Titan is in a position of strength to navigate the current situation, and in fact take advantage of opportunities as they present themselves.

We continue to believe that change can also create opportunities, especially for early-stage, agile businesses offering new technologies. We also know from experience that many of the most successful companies in history were founded in recessionary environments. In the short term, some portfolio companies will face increased headwinds which will require more dedicated support to navigate: the Octopus team is well placed to offer this with its Talent team and 39 strong investment team to offer direct guidance and support. The long-term view of early-stage venture capital remains extremely positive. We believe that innovation will continue at pace, thanks to the powerful combination of exceptional entrepreneurs, experienced talent and pain points 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.

Even during these turbulent times, I am pleased to report that Titan has completed four profitable disposals in the year to date: one partial and two full disposals in the six months to June 2022, and a full disposal post the reporting period. Each are covered in more detail in the Portfolio Manager’s report. Titan invested £77.5 million in new and follow-on opportunities in the six months to 30 June 2022, which brings the total number of companies in the portfolio to 117 at 30 June 2022.

The diversity and volume of exciting new investments completed, and the upcoming pipeline of opportunities, is testament to the work the investment team continues to put into sourcing, securing and working with such businesses successfully. VCTs have long provided a compelling opportunity for UK investors to provide funding for businesses in a tax-efficient way, and we look forward to Titan continuing to do so in the coming year.

On behalf of shareholders and other Board members, I would like to take this opportunity to thank John for his insightful contributions and commitment to the Board throughout his fifteen year tenure as Chair. I would also like to thank the Board and the Octopus team on behalf of all shareholders for their hard work.

Tom Leader
Chair

20 September 2022

The cash reserves include £10.6 million of cash at bank, £88.3 million of money market funds and £104.8 million of corporate bonds as set out in the balance sheet.

Portfolio Manager’s review

Focus on performance

The NAV of 91.3p per share at 30 June 2022 represents a decrease in NAV of 11.4p per share versus a NAV of 105.7p per share as at 31 December 2021 (when adjusted for dividends paid in the period). This decline in NAV is disappointing, especially after such strong performance in 2021, however, the long-term opportunity offered by early-stage venture is still extremely compelling.

The performance over the five years to 30 June 2022 is shown below:

	Year ended 31 October 2017	Year ended 31 October 2018	Period¹ ended 31 December 2019	Year ended 31 December 2020	Year ended 31 December 2021	Period ended 30 June 2022
NAV, p	96.4	93.1	95.2	97.0	105.7	91.3
Cumulative dividends paid, p	66.0	71.0	76.0	81.0	92.0	95.0
Total value, p	162.4	164.1	171.2	178.0	197.7	186.3
Total return	3.6%	1.8%	7.6%	7.1%	20.3%	(10.8)%
Dividend yield	5.1%	5.2%	5.4%	5.3%	11.3%	2.8%
Equivalent dividend yield for a higher rate tax payer	7.6%	7.7%	8.0%	7.8%	16.8%	4.2%

Note, 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 £196 million, across 36 companies in the now 117-strong portfolio. Four companies, however, account for a collective decrease in valuation of £124 million. The business that contributed most significantly to this downward movement was Cazoo, which listed on the New York Stock Exchange in August 2021 and whose share price has declined by almost 90% since the start of the year. That being said, from a trading point of view, Cazoo has performed well, delivering revenues of £668 million in 2021 (representing over 300% year-on-year growth), and forecasting revenues of almost £1.5 billion for 2022 (representing almost 125% year-on-year growth). The company announced a Business Realignment Plan in June 2022, which will see them prioritise capital efficiency while working towards profitability in the UK market by late 2023, without requiring any further equity funding.

Other significant negative valuation movements have been recognised at Chronext and The Plum Guide, which have been affected by a more challenging fundraising market for companies with business-to-consumer business models. Finally, ManyPets, Titan’s single largest investment, has seen its value drop in the period despite very strong underlying performance, with this decline being driven by a softening of the valuation multiples of comparable companies, which has been reflected in the holding value of the company.

Conversely, 36 companies saw an increase in valuation in the period, delivering a collective increase in valuation of £69 million. These valuation increases reflect businesses which have successfully concluded further funding rounds, grown revenues or met certain important milestones. 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. We set out on the next page the cost and valuation of the top 15 holdings, which account for approximately 51% of the value of the portfolio.

The loss on Titan’s cash and cash equivalent investments was £11.7 million in the six months to 30 June 2022 (2021: loss of £1.5 million), primarily driven by fair value movements in the corporate bond portfolio. The Board’s objective for these investments is to generate sufficient returns through the cycle to cover costs, at limited risk to capital.

Top 15 investments

	Company	Cost	Valuation at 30 June 2022	Investment focus
1	ManyPets	£10.0m	£130.7m	Fintech
2	Permutive	£19.0m	£55.1m	Business-to-business software
3	Amplience	£12.4m	£39.8m	Business-to-business software
4	Quit Genius	£12.9m	£33.3m	Health
5	Big Health	£12.9m	£29.4m	Health
6	Token	£13.2m	£20.0m	Fintech
7	vHive	£8.0m	£19.6m	Deep tech
8	Skin + Me	£4.0m	£19.0m	Health
9	Orbex	£4.5m	£18.7m	Deep tech
10	Ometria	£11.5m	£18.0m	Business-to-business software
11	Sofar Sounds	£11.5m	£17.2m	Consumer
12	Zenith Hold co	£9.0m	£17.1m	Consumer
13	Elliptic	£7.7m	£16.8m	Fintech
14	Olio	£6.0m	£16.7m	Consumer
15	Glofox ¹	£1.8m	£16.1m	Health

Glofox has since been disposed as at the date of this report.

Focus on disposals

We are pleased to report that in the period Titan completed two full profitable disposals (Digital Shadows and BehavioSec), one partial profitable realisation (Amplience) and an additional full disposal (Glofox) completed after the period end in August 2022. In total, these disposals will return £48 million to Titan in cash, shares and/or deferred amounts, with £44 million of this having been received already.

There have also been two disposals made at a loss (Fluidly sold to OakNorth and Trouva was acquired by Made.com). In aggregate, these losses generated negligible proceeds compared to an investment cost of £13 million. Unfortunately, having been unsuccessful in securing further funding and having explored and exhausted all available options, Whirli was placed into administration. 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.

The following table shows dividends paid and disposal proceeds over the last five financial years and the current period of 30 June 2022:

	Year ended 31 October 2017	Year ended 31 October 2018	Period¹ ended 31 December 2019	Year ended 31 December 2020	Year ended 31 December 2021	Period ended 30 June 2022	Total
Dividends (£'000)	22,272	24,178	33,187	46,037	101,976	28,945	256,595
Disposal proceeds²(£'000)	9,362	22,367	26,334	23,915	221,504	32,510	335,992

Note, the period to 30 December 2019 was 14 months.
Note, this table includes proceeds received in the period.

Focus on investments

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 laid down by HMRC for maintaining approval as a VCT.

As at 30 June 2022, 100% of the portfolio (as measured by HMRC rules) was invested in VCT-qualifying investments, significantly above the current VCT-qualifying threshold of 80%.

VCT sunset clause

We continue to work with MPs, government and key stakeholders to either extend the sunset clause beyond the current date of April 2025 or to place the scheme on a more permanent footing by removing the clause. We articulate that it is important to give an early signal before the sunset clause deadline to give certainty to investors, fund managers and VCT boards given VCT funding is critical to the portfolio companies the VCTs support and the success of the VCTs themselves.

VCTs are vital to the vibrant entrepreneurial economy in the UK and when the government last reviewed the scheme in 2017 as part of the Patient Capital Review, they were clear on how valuable VCTs are.

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. ‘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 :

External price 56%
Multiples 39%
Scenario analysis 3%
Quoted 1%
Exit proceeds 1%

Valuation methodology – by number of companies :

External price 56%
Multiples 27%
Scenario analysis 10%
Quoted 2%
Exit proceeds 5%

New and follow-on investments

Titan completed follow-on investments into 14 companies and made 14 new investments. Together, these totalled £77.5 million (made up of £22.2 million invested into the existing portfolio and £55.3 million into new companies). The total value of the invested portfolio was £922.3 million, as at 30 June 2022.

Focus on outlook

The decline in Titan’s NAV is disappointing, especially having enjoyed consistent growth over the last ten years, and particularly strong growth over the past three years. However, it is reflective of new headwinds and a valuation environment associated with the global macro-economic situation. 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. However, as Titan invests in early-stage businesses with high growth potential, history has proven that many of these types of companies thrive in challenging periods as barriers to adopting new technologies lessen, there is a greater acceptance of change and talent availability improves. Although we have entered what is widely believed to be a more challenging funding and exit environment, we have been reassured by the continued fundraising success of our portfolio companies, as well as the profitable realisations which have taken place so far in 2022, which we discuss further in this report.

We continue to meet with, and invest in, extraordinary businesses led by ambitious entrepreneurs across all our five investment themes at different stages of their growth journey.

To be able to support the deployment rate and number of companies in the portfolio, the team has scaled during 2022 with 15 new investment professionals joining the team and ten additional operational staff, meaning the Ventures team now totals 86 permanent employees. Included in this number is our in-house Talent team which continues to offer their expertise to portfolio companies looking for support to scale and develop. This is especially relevant during the turbulent and competitive market conditions in which they are all operating.

The team is committed to backing diverse teams and truly believes diversity is a key driving factor for a business to succeed. As such, we have recently published our intention to make sure 30% of all new founder pitches will be by businesses led or co-led by a woman by 2025, increasing to 50% by 2027. We are pleased that in line with this commitment, the Ventures team currently has equal representation between male and female members of staff. We also wish to empower our portfolio companies to better understand their environmental impact, specifically around carbon emissions. As such, we have offered them complimentary access to a carbon accounting and management tool to enable reporting around key metrics and to feed into carbon reduction plans.

The past six months have been a period of immense change on a global scale, and Titan has understandably been affected by this. However, we are reassured by the profitable realisations that have completed this year, 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.

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;
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

20 September 2022

Income statement

	Unaudited			Unaudited			Audited
	Six months to 30 June 2022			Six months to 30 June 2021			Year to 31 December 2021
	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	—	(472)	(472)	—	34,475	34,475	—	76,520	76,520
(Loss)/gain on valuation of fixed asset investments	—	(127,603)	(127,603)	—	251,697	251,697	—	232,864	232,864
(Loss) on valuation of current asset investments	—	(11,724)	(11,724)	—	(57)	(57)	—	(1,475)	(1,475)
Investment income	438	—	438	504	—	504	500	—	500
Investment management fee	(567)	(10,772)	(11,339)	(474)	(9,007)	(9,481)	(1,033)	(19,635)	(20,668)
Performance fee	—	—	—	—	(55,632)	(55,632)	—	(63,943)	(63,943)
Other expenses	(3,527)	—	(3,527)	(2,991)	—	(2,991)	(7,295)	—	(7,295)
Foreign exchange translation	—	5,985	5,985	—	65	65	—	54	54
(Loss)/profit before tax	(3,656)	(144,586)	(148,242)	(2,961)	221,541	218,580	(7,828)	224,385	216,557
Tax	—	—	—	—	—	—	—	—	—
(Loss)/profit after tax	(3,656)	(144,586)	(148,242)	(2,961)	221,541	218,580	(7,828)	224,385	216,557
(Loss)/earnings per share – basic and diluted	(0.3)p	(11.2)p	(11.5)p	(0.3)p	20.2p	19.9p	(0.7)p	20.0p	19.3p

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 half-yearly report.

Balance sheet

	Unaudited		Unaudited		Audited
	As at 30 June 2022		As at 30 June 2021		As at 31 December 2021
	£’000	£’000	£’000	£’000	£’000	£’000
Fixed asset investments		922,316		1,024,358		1,005,353
Current assets:
Corporate bonds	104,775		91,385		110,247
Cash at bank	10,588		40,822		182,514
Applications cash¹	407		363		2,630
Debtors	55,310		87,129		53,443
Money market funds	88,297		88,125		88,126
		259,377		307,824		436,960
Current liabilities	(1,592)		(57,077)		(69,272)
Net current assets		257,785		250,747		367,688
Net assets		1,180,101		1,275,105		1,373,041
Share capital		129,209		111,925		129,850
Share premium		212,313		621,152		201,163
Special distributable reserve		585,828		100,392		642,873
Capital redemption reserve		11,597		8,015		9,759
Capital reserve realised		(21,711)		(44,689)		(14,122)
Capital reserve unrealised		296,808		509,704		439,790
Revenue reserve		(33,943)		(31,394)		(36,272)
Total equity shareholders’ funds		1,180,101		1,275,105		1,373,041
Net asset value per share		91.3p		113.9p		105.7p

Cash held but not yet allotted.

The statements were approved by the Directors and authorised for issue on 20 September 2022 and are signed on their behalf by:

Tom Leader
Chair

Statement of changes in equity

	Share capital £’000	Share premium £’000	Special distributable reserve ¹ £’000	Capital redemption reserve £ ’000	Capital reserve realised ¹ £’000	Capital reserve unrealised £’000	Revenue reserve ¹ £’000	Total £’000
As at 1 January 2022	129,850	201,163	642,873	9,759	(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)
Performance fee	—	—	—	—	—	—	—	—
Total comprehensive income for the period	—	—	—	—	(11,244)	(139,327)	(3,656)	(154,227)

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)	—	(18,345)	1,838	—	—	—	(18,345)
Dividends paid (includes DRIS)	—	—	(38,700)	—	—	—	—	(38,700)
Total contributions by and distributions to owners	(641)	11,150	(57,045)	1,838	—	—	—	(44,698)

Other movements:
Prior year fixed asset gains now realised	—	—	—	—	3,655	(3,655)	—	—
Foreign exchange translation	—	—	—	—	—	—	5,985	5,985
Total other movements	—	—	—	—	3,655	(3,655)	5,985	5,985
Balance as at 30 June 2022	129,209	212,313	585,828	11,597	(21,711)	296,808	(33,943)	1,180,101

Reserves available for distribution.

	Share capital £’000	Share premium £’000	Special distributable reserve ¹ £’000	Capital redemption reserve £’000	Capital reserve realised ¹ £’000	Capital reserve unrealised £’000	Revenue reserve ¹ £’000	Total £’000
As at 1 January 2021	107,502	564,308	150,007	6,377	(66,167)	309,706	(28,498)	1,043,235
Comprehensive income for the period:
Management fees allocated as capital expenditure	—	—	—	—	(9,007)	—	—	(9,007)
Current year gain on disposal of fixed asset investments	—	—	—	—	34,475	—	—	34,475
Current year gains on disposal of current asset investments	—	—	—	—	—	—	—	—
Gains on fair value of fixed asset investments	—	—	—	—	—	251,697	—	251,697
Losses on fair value of current asset investments	—	—	—	—	—	(57)	—	(57)
Loss after tax	—	—	—	—	—	—	(2,961)	(2,961)
Performance fee	—	—	—	—	(55,632)	—	—	(55,632)
Total comprehensive income for the period	—	—	—	—	(30,164)	251,640	(2,961)	218,515

Contributions by and distributions to owners:
Share issue (includes DRIS)	6,061	56,844	—	—	—	—	—	64,612
Share issue costs	—	(1,707)	—	—	—	—	—	(1,707)
Repurchase of own shares	(1,638)	—	(15,986)	1,638	—	—	—	(15,986)
Dividends paid (includes DRIS)	—	—	(33,629)	—	—	—	—	(33,629)
Total contributions by and distributions to owners	4,423	56,844	(49,615)	1,638	—	—	—	13,290

Other movements:
Prior year fixed asset gains now realised	—	—	—	—	51,642	(51,642)	—	—
Foreign exchange translation	—	—	—	—	—	—	65	65
Total other movements	—	—	—	—	51,642	(51,642)	65	65
Balance as at 30 June 2021	111,925	621,152	100,392	8,015	(44,689)	509,704	(31,394)	1,275,105

Reserves available for distribution.

	Share capital £’000	Share premium £’000	Special distributable reserve ¹ £’000	Capital redemption reserve £’000	Capital reserve realised ¹ £’000	Capital reserve unrealised £’000	Revenue reserve ¹ £’000	Total £’000
As at 1 January 2021	107,502	564,308	150,007	6,377	(66,167)	309,706	(28,498)	1,043,235
Comprehensive income for the year:
Management fees allocated as capital expenditure	—	—	—	—	(19,635)	—	—	(19,635)
Current year gain on disposal of fixed asset investments	—	—	—	—	76,520	—	—	76,520
Gain on fair value of fixed asset investments	—	—	—	—	—	232,864	—	232,864
Loss on fair value of current asset investments	—	—	—	—	—	(1,475)	—	(1,475)
Loss after tax	—	—	—	—	—	—	(7,828)	(7,828)
Performance fee	—	—	—	—	(63,943)	—	—	(63,943)
Total comprehensive income for the year	—	—	—	—	(7,058)	231,389	(7,828)	216,503

Contributions by and distributions to owners:
Share issue (includes DRIS)	25,730	264,963	—	—	—	—	—	290,693
Share issue costs	—	(6,956)	—	—	—	—	—	(6,956)
Repurchase of own shares	(3,382)	—	(34,519)	3,382	—	—	—	(34,519)
Dividends paid (includes DRIS)	—	—	(93,767)	—	(42,202)	—	—	(135,969)
Total contributions by and distributions to owners	22,348	258,007	(128,286)	3,382	(42,202)	—	—	113,249

Other movements:
Share premium cancellation	—	(621,152)	621,152	—	—	—	—	—
Transfer between reserves	—	—	—	—	—	—	—	—
Prior year fixed asset gains now realised	—	—	—	—	101,305	(101,305)	—	—
Foreign exchange translation	—	—	—	—	—	—	54	54
Total other movements	—	(621,152)	621,152	—	101,305	(101,305)	54	54
Balance as at 31 December 2021	129,850	201,163	642,873	9,759	(14,122)	439,790	(36,272)	1,373,041

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
	2022	2021	2021
	£’000	£’000	£’000
Reconciliation of profit to cash flows from operating activities
(Loss)/profit before tax	(148,242)	218,580	216,557
Increase in debtors	(1,867)	(786)	(28)
Increase/(decrease) in creditors	(65,457)	36,672	46,600
Loss on valuation of current asset investments	11,724	57	1,475
Loss/(gain) on disposal of fixed asset investments	472	(34,475)	(76,520)
Loss/(gain) on valuation of fixed asset investments	127,603	(251,697)	(232,864)
Outflow from operating activities	(75,767)	(31,649)	(44,780)
Cash flows from investing activities
Purchase of current asset investments	(6,252)	(1,560)	(21,840)
Purchase of fixed asset investments	(77,548)	(52,434)	(142,831)
Sale of fixed asset investments	32,510	54,782	220,324
(Outflow)/inflow from investing activities	(51,290)	788	55,653
Cash flows from financing activities
Application inflows allotted	(2,223)	(3,250)	(983)
Purchase of own shares	(18,345)	(15,986)	(34,519)
Net proceeds from share issues	2,592	54,365	249,744
Dividends paid (net of DRIS)	(28,945)	(25,089)	(101,976)
(Outflow)/inflow from financing activities	(46,921)	10,040	112,266
(Decrease)/increase in cash and cash equivalents	(173,978)	(20,821)	123,139
Opening cash and cash equivalents	273,270	150,131	150,131
Closing cash and cash equivalents	99,292	129,310	273,270
Cash and cash equivalents comprise
Cash at bank	10,588	40,822	182,514
Applications cash	407	363	2,630
Money market funds	88,297	88,125	88,126
	99,292	129,310	273,270

Condensed notes to the half-yearly report

1. Basis of preparation

The unaudited half-yearly results which cover the six months to 30 June 2022 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 2022 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 2021 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)/earnings per share is based on 1,293,940,509 Ordinary shares (30 June 2021: 1,097,460,102 and 31 December 2021: 1,122,053,322), 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
	2022	2021	2021
	£’000	£’000	£’000
Net assets (£)	1,180, 101	1,275,105	1,373,041
Shares in issue	1,292,086,596	1,119,250,514	1,298,498,396
Net asset value per share	91.3p	113.9p	105.7p

5. Dividends

The interim dividend declared of 2.0p per share for the six months ending 30 June 2022 will be paid on 22 December 2022 to those shareholders on the register as at 9 December 2022.

On 17 May 2022, a 3.0p second interim dividend relating to the 2021 financial year was paid.

6. Buybacks and allotments

During the six months ended 30 June 2022, the Company bought back 18,378,101 Ordinary shares at a weighted average price of 99.8p per share (six months ended 30 June 2021: 16,386,650 Ordinary shares at a weighted average price of 97.6p per share; year ended 31 December 2021: 33,816,980 Ordinary shares at a weighted average price of 102.1p per share).

During the six months to 30 June 2022, 11,966,301 shares were issued at a weighted average price of 104.6p per share (six months ended 30 June 2021: 60,613,066 shares at a weighted average price of 109.5p per share; year ended 31 December 2021: 257,291,278 shares at a weighted average price of 116.6p per share).

7. Related party transactions

Octopus act as the Portfolio Manager of the Company. Under the management agreement, Octopus receive 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 £11,339,000 payable to Octopus (30 June 2021: £9,481,000; 31 December 2021: £20,668,000), which were fully settled by 30 June 2022.

Octopus provide 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 £921,600 payable to Octopus (30 June 2021: £845,000; 31 December 2021: £1,723,000), which were fully settled by 30 June 2022.

In addition, Octopus are entitled to performance-related incentive fees. The incentive fees 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 2022 (30 June 2021: £55.6 million; 31 December 2021: £63.9 million).

Octopus received £0.03 million in the six months to 30 June 2022 (six months ended 30 June 2021: £0.06 million; year ended 31 December 2021: £0.1 million) 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.

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.

Mr Cooper, a Non-Executive Director of Titan, is also Chair of Octopus Capital Ltd and owns shares in Octopus Capital Ltd, which is the parent company of Octopus Investments Limited. The directors received the following dividends from Titan:

	Period to	Period to	Year to
	30 June	30 June	31 December
	2022	2021	2021
Tom Leader (Chair)	692	431	2,148
Matt Cooper	63,103	56,660	207,754
Jane O'Riordan	3,408	2,675	11,347
Lord Rockley	575	—	1,427
Gaenor Bagley	267	—	713
John Hustler¹	3,542	3,074	11,983

John Hustler stepped down as a Director on 14 June 2022.

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
Bought By Many Limited (trading as ManyPets)	7.5%
Permutive Inc.	17.8%
Amplience Limited	21.0%
Digital Therapeutics (trading as Quit Genius)	16.5%
Big Health Limited	11.7%
Token.IO Ltd	13.4%
vHive Tech Ltd	19.0%
Mr & Mrs Oliver Ltd (trading as Skin+Me)	17.0%
Orbital Express Launch Limited (trading as Orbex)	10.9%
Ometria Limited	12.9%

9. Post balance sheet events
The following events occurred between the balance sheet date and the signing of this half-yearly report:

Six new investments completed totalling £14.9 million.
Six follow-on investments completed totalling £6.7 million.
Full disposal of Zappy Limited (trading as Glofox) in August 2022.
A final order to cancel Share Premium amounting to £212.3 million and Capital Redemption Reserve amounting to £11.6 million was granted on 5 July 2022.
Following approval at the AGM on 14 June 2022, a final order as granted on 5 July 2022 confirming the reduction in the nominal value of the Company’s issued share capital from 10p per ordinary share to 0.1p per ordinary share.

10. Half-Yearly Report

The unaudited half-yearly report for the six months ended 30 June 2022 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