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Octopus Titan VCT 5 PLC : Octopus Titan VCT 5 PLC : Final Results

      Octopus Titan VCT 5 PLC : Octopus Titan VCT 5 PLC : Final Results

Octopus Titan VCT 5 plc

Final Results

25 January 2013

Octopus Titan VCT 5 plc, managed by Octopus Investments Limited ("Octopus"),
today announces the final results for the year ended 31 October 2012.

These results were approved by the Board of Directors on 25 January 2013.

You may, in due course, view the Annual Report in full at
www.octopusinvestments.com

Octopus Titan VCT 5 plc

Registered Number: 07406399

                              Financial Summary

                                                         As at           As at
                                               31 October 2012 31 October 2011
Net assets (£'000s)                                     13,142          12,660
Return on ordinary activities after tax                  (643)           (267)
(£'000s)
Net asset value (NAV) per share                          88.2p           92.6p

                             Chairman's Statement

Introduction
I am pleased to present the Annual Report of Octopus Titan VCT 5 plc (the
Company) for the year ended 31 October 2012.

Performance
During the period, the Net Asset Value (NAV) of the Company has declined from
92.6 pence per share at inception to 88.2 pence per share, a negative return
of 4.8%. This decline is due to the small decrease in fair value of the
portfolio together with the standard running costs that outweigh any income or
capital gains.

As is highlighted in the Investment Manager's review, it is not uncommon when
building a portfolio of early stage investments that a number of businesses
will suffer decreases in fair value, and these will typically occur prior to
increases in valuations from other members of the portfolio. Over the longer
term, as the underlying portfolio of investments is created, the Company's NAV
will be linked increasingly to the value of the investments in the portfolio
companies.

  Investment Portfolio

The Company made 10 new investments in the year to 31 October 2012 totalling
£3,634,000, and made one realisation. The new investments are discussed in
more detail in the Investment Manager's Review on pages X to X. The portfolio
made an overall unrealised loss in fair value of £353,000 during the year,
attributable to Michelson Diagnostics and Aframe. The other investments were
all held at cost.

Evi Technologies (formally True knowledge) was invested into and fully
disposed during the year which resulted in a small realised loss of £4,000.

By value, 22.5% of the Company's net assets are in unquoted investments, 28.7%
in Octopus Open Ended Investment Companies (OEICs) and 48.8% is currently in
cash or cash equivalents and debtors and creditors. The current surplus cash
of the Company is invested in a range of Money Market Funds and bank deposits
to fit with the Board's policy of preserving the capital of the Company before
its deployment into Qualifying Investments.

  

The focus for the Company is to continue to invest in a broad range of
unquoted smaller UK companies with the potential for high growth in order to
generate capital growth over the long-term, and to achieve the VCT requirement
of having a 70% qualifying investment level prior to 31 October 2013. The
Investment Manager is seeing a good level of deal flow that will allow the
portfolio to continue to grow into a diverse range of sectors.

  Open Ended Investment Companies (OEICs)

The Company has held its investments in the three OEICs during the year which
cumulatively saw an uplift in fair value of £164,000. The best performance was
seen by the Octopus UK Micro Cap Growth Fund which increased in value by 9.2%
in the year.

The Board believes it is in the best interests to continue to hold investments
in OEICs for the foreseeable future, as set out in the original prospectus.
Further details of the OEICs may be found at www.octopusinvestments.com where
monthly factsheets are available.

  Investment Strategy

The investment policy of the Company is designed to provide investors with
exposure to a range of UK smaller companies with the aim of generating a
substantial level of returns over the medium to long term. In order to achieve
this, the Company will focus on providing early stage, development and
expansion funding to unquoted companies with the Company making a typical deal
size of £0.1 million to £0.5 million.

We intend that the remainder of our cash reserves will continue to be invested
in Octopus managed OEICs and Money Market Funds that are readily realisable
investments, with a focus on capital preservation.

Top-up and buybacks
As mentioned in the interim report, the Company successfully raised £1,190,000
net of costs during the year which saw the Top-up offer fully subscribed. The
majority of these funds raised are being used to support existing portfolio
companies where the Investment Manager sees the opportunity for business
growth.

Following the success of the 2012 'top-up', the Board has announced its
intention to launch a further offer for new shares in conjunction with the
four other Octopus Titan VCTs. For further details, including a copy of the
full brochure when it is available, please contact Octopus using the details
provided on page X of this report.

During the period, the company repurchased 70,330 shares which represents 0.5%
of the shares at the prior period end. Further details can be found in Note 13
of the accounts.

  

  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 compliant
with the conditions laid down by HMRC for maintaining provisional approval as
a VCT.

A key requirement is to achieve a 70% qualifying investment level prior to 31
October 2013. As at 31 October 2012, 32.8% of the portfolio, as measured by
HMRC rules, was invested in VCT qualifying investments. In view of the current
investment activity, the Board continues to be confident that the 70% target
will be met by the required date.

  Annual General Meeting

I look forward to meeting as many shareholders as possible at our Annual
General Meeting on 14 March 2013 to be held at the offices of Octopus
Investments Limited, 20 Old Bailey, London, EC4M 7AN. The AGM will start at
11.00 a.m.

Outlook
The timing of the economic recovery remains uncertain with continued turmoil
for many businesses. This results in tough trading conditions especially for
small companies with increased pressure on working capital requirements. The
Board and Investment Manager conduct the investment activities with these
factors in mind and are confident that the Company will see a rise in value
over the mid-term.

Despite this, there are opportunities for small companies who are quick to
respond to the market conditions. We strive to invest in a range of early
stage businesses whose primary interests are in growth and profitability which
have the potential to make significant returns for shareholders over the
medium term. We endeavour to establish a well balanced diverse portfolio in
the coming year.

Jane O'Riordan
Chairman
25 January 2013

                         Investment Manager's Review

Personal Service
At Octopus Investments Limited ("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. During this time of economic uncertainty, we consider it
particularly important to be in regular contact with our investors and are
working hard to manage your money in the current climate.

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 £340 million in the VCT sector. Octopus has over 200 employees and
was voted 'Best VCT Provider of the Year' by the financial adviser community
in 2006 to 2010.

  

  Investment Policy

The investment approach of the Company is not designed to deliver a return
that is measured against a stock market index. Instead, the focus of the
Company is on generating absolute returns over the medium-term. In order to
achieve this, the Company focuses on providing early stage, development and
expansion funding to unquoted companies with a typical initial deal size of
£0.1 million to £0.5 million and aims to comprise of 15-20 unquoted companies,
predominantly focussed within the following sectors:

  oEnvironment
  oTechnology
  oMedia
  oTelecoms
  oConsumer lifestyle and well-being

  

  Investment Strategy

The investee companies 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.

It is envisaged that, at the end of the three year initial investment period,
75-85% of the proceeds of the Offer will be invested in a range of qualifying
investments with 15-25% invested in a combination of cash, Open Ended
Investment Companies (OEICs) and non qualifying assets managed by Octopus and
money market funds managed by third party specialists.

As Investment Manager, we typically purchase a significant minority equity
stake in qualifying companies, providing financial capital to a business to
build and grow its operations and then to exit at some point in the future,
usually by selling to an acquirer. 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
will usually need further funding to do this. In these cases, businesses will
typically be reduced in value prior to our making a further investment to
allow them to prove their business model and the market opportunity. 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

As at 31 October 2012, the NAV stood at 88.2p, compared to the NAV of 92.6p at
1 November 2011. This decline in NAV is due to the standard running costs of
the Company and a small decrease in the fair value of the portfolio. The OEIC
holdings, however, went some way in offsetting this fall with an appreciation
in value of £164,000 in the year.

There have been 10 new investments during the year into a range of different
sectors. These additions are explained in more detail in the top 10
investments on pages X to X. The portfolio suffered an overall decrease in
fair value of £353,000 attributable to Aframe and Michelson Diagnostics which
have struggled to meet expectations during the year. The other companies
remained at their cost value. Evi (formally True Knowledge) was invested into
and fully disposed during the year realising a small loss of £4,000.

It is not uncommon to see a downward valuation at this stage of maturity in
the Company. Over the longer term, the NAV will be increasingly linked to the
value of the investments in the portfolio companies and we are confident with
the current portfolio that the NAV will rise over the medium term.

Since the period end, no new investments or follow-on investments were made.
The Company now holds 32.8% of its assets in qualifying holdings from an HMRC
perspective. With the current level of deal flow we are seeing, we are
confident that we will be able to add to the current portfolio of companies,
investing into a diverse range of sectors as per the investment strategy of
the Company. The focus of the Fund over the next year is to develop the
portfolio, by making a mixture of approximately 7 new and follow-on
investments, in order to meet the 70% qualifying investment requirement level
by 31 October 2013.

  Outlook

The continued uncertainty in the current economy remains a concern for small
companies. There are still fierce challenges for these companies, with many
being subjected to the pressure of tough trading conditions and tight working
capital. It remains unclear when the economic downturn will revert and until
it does, cash requirements will remain a concern for small companies.

Despite this, there remain opportunities for entrepreneurs and small companies
as shown in this portfolio. They can execute business plans quickly to meet
and enhance customer experiences and needs in comparison to slower moving
large corporate businesses. A number of businesses in this portfolio have
already shown these characteristics and continue to grow aggressively, despite
the volatile economic environment.

If you have any questions on any aspect of your investment, please call one of
the team on 0800 316 2349.

Alex Macpherson
Octopus Investments Limited
25 January 2013

Investment Portfolio

                                                                             Movement               %
                                                                        Fair  in fair          equity
                                                                       value value in       % held by
                               Investment                              as at   period  voting     all
                               cost as at                                 31    to 31  rights   funds
                               31 October                            October  October held by managed
Qualifying                           2012  Movement in fair value to    2012     2012     the      by
investments Sector                (£'000)    31 October 2012 (£'000) (£'000)  (£'000) Company Octopus
Rangespan   Consumer lifestyle
Limited     and well being            736                          -     736        -   5.14   25.71
Iovox
Limited     Telecommunications        500                          -     500        -   6.23   24.94
Semafone
Limited     Telecommunications        397                          -     397        -   2.84   46.64
Amplience
Limited     Technology                383                          -     383        -   10.56   63.13
Lifebook    Consumer lifestyle
Limited     and well being            370                          -     370        -    7.56   32.64
Artesian
Solutions
Limited     Technology                350                          -     350        -    4.23   24.17
Aframe
Media Group
Limited     Media                     400                      (200)     200    (200)    5.51   20.65
Michelson
Diagnostics Consumer lifestyle
Limited     and well being            306                      (153)     153    (153)    3.88   42.87
The Faction
Collective  Consumer lifestyle
SA          and well being            139                          -     139        -    4.40   11.00
Leanworks
Limited     Consumer lifestyle
(Yplan)     and well being            125                          -     125        -    4.30   14.63
Total qualifying investments        3,706                      (353)   3,353    (353)
Money
market                                    
funds                               4,275                          -   4,275       -
Open ended investment
companies                           3,600                        171   3,771      164
Cash at                                   
bank                                1,459                          -   1,459       -
Total
investments                        13,040                      (182)  12,858    (189)
Net current
assets                                                                   284
Total net
assets                                                                13,142

  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
relevant reporting dates, 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 quoted multiples of equivalent companies to reflect the lack of
liquidity in the investment, there being no ready market for our holding.
Typically the discount is between 20 -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 International Private Equity and Venture Capital
(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 period, the Company made 10 new investments amounting to
£3,634,000. 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.

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: 
 £736,000
Valuation:  
 £736,000
Equity held: 
 5.14%
Equity held by all funds managed by Octopus: 25.71%
Last submitted audited accounts: 31 March
2012
Turnover
£558,232
Loss before tax: 
 (£863,025)
Net assets: 
 £1,617,100

Iovox Limited
The Iovox platform gives real-time visibility into all aspects of telephone
traffic, enabling customers to clearly identify the source and result of each
call, creating a proven record of all leads generated through real-time
reports. Offline lead tracking is complimented by other functionality such as
call whispers (automated pre-connection notifications, notifying both the
caller and receiver of the lead-generator in each case), recording and
time-based calling.

Initial investment date:
 August 2012
Cost: 
 £500,000
Valuation:  
 £500,000
Equity held: 
 6.23%
Equity held by all funds managed by Octopus: 24.94%
Last submitted audited accounts: 31
December 2011 (abbreviated)
Turnover
Not disclosed
Profit before tax: 
 Not disclosed
Net
liabilities:
(£237,727)

Semafone Limtied
Based in London, Semafone was founded in 2009 by a consortium of call centre
professionals, who were instrumental in the development of its fraud
prevention software for use in call centres. It aims to secure sensitive data
passed over the phone, including bank details, personal identification data
and credit/debit card transactions. Without interrupting caller and agent
dialogue, customers input their card details via the telephone keypad,
eliminating the need to read out the card number and three digit security
number to the phone operator therefore removing the risk of operator fraud.
Semafone has secured valued customers such as BSkyB, the John Lewis
Partnership, Argos, Specsavers and the Manchester Airports Group.

Initial investment date:
 March 2012
Cost: 
 £397,000
Valuation:  
 £397,000
Equity held: 
 2.84%
Equity held by all funds managed by Octopus: 46.64%
Last submitted group accounts: 31
December 2011
Turnover
£2,025,528
Loss before
tax:
(£1,114,892)
Net
liabilities:
(£312,180)

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:
 January 2012
Cost: 
 £383,000
Valuation:  
 £383,000
Equity held: 
 10.56%
Equity held by all funds managed by Octopus: 63.13%
Last submitted audited accounts: 31
December 2011
Turnover
£405,602
Loss before tax: 
 (£1,580,674)
Net liabilities: 
 (£682,547)

Lifebook Limited
LifeBook offers an opportunity to share the life experiences of an individual
with their loved ones in the form of an autobiography. Though the content is
that of the Author, LifeBook provides many professional human touch points
during the process. It is not just about the book, but the whole experience of
telling their story. With an ageing population in many parts of the developed
world, the number of potential authors aged 50 and above is substantial. For
example, in the UK, there are over 20m people aged 50 or more, nearly a third
of the entire population, and many have a high level of disposable income.

Initial investment date:
 September 2012
Cost: 
 £370,000
Valuation:  
 £370,000
Equity held: 
 7.56%
Equity held by all funds managed by Octopus: 32.64%
Last submitted audited accounts: NA

Artesian Solutions Limited
Artesian helps its business to business customers accelerate revenue by
building stronger and deeper customerrelationships. 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:    
£350,000
Valuation:  
 £350,000
Equity held: 
 4.23%
Equity held by all funds managed by Octopus: 24.17%
Last submitted audited accounts: 29
February 2012
Turnover
£2,131,354
Loss before tax: 
 (£556,780)
Net assets: 
 £1,797,495

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: 
 £400,000
Valuation:  
 £200,000
Equity held: 
 5.51%
Equity held by all funds managed by Octopus: 20.65%
Last submitted audited accounts: NA

Michelson Diagnostics Limited
Michelson Diagnostics is the medical equipment and scanner specialist, whose
unique laser scanning technology can image skin and other surface tissue at a
much higher resolution than ever before. The Company's first product based on
its patented technology, the VivoSight scanner, may revolutionise the market
for the non-invasive diagnosis and treatment of non-melanoma skin cancer
(NMSC). The VivoSight scanner is certified by the CE & Food and Drug
Administration (FDA) regulatory clearance for clinical use in Europe and the
USA. The VivoSight scanner will, for the first time, enable clinicians to
'see' under the skin surface in real time, to help them decide whether to
treat a lesion, what treatment to use, and to show them how far a tumour has
spread, so that surgery is required only once and conserves healthy tissue.
The company has gained acceptance with several leading Key Opinion Leaders and
has now placed its first machines with dermatologists in order to prove the
business model.

Initial investment date:
 October
2011
Cost: 
 £306,000
Valuation: 
 £153,000
Voting rights held by Fund: 
 3.88%
Equity held by all funds managed by Octopus: 42.87%
Last submitted audited group accounts: 31 March 2012
Turnover
£400,972
Loss before tax: 
 (£1,621,689)
Net assets: 
 £3,164,514

The Faction Collective SA
The Faction Collective is a product-driven winter sports brand focusing on the
fast-growing freeride, freestyle and ski touring markets which are not well
served by the major brands, but which now account for 40% of skis sold. The
company designs and sells innovative, high performance, award-winning skis and
equipment, which are made in the EU and endorsed by recognised athletes.
Faction is based in London and Switzerland and is present in all the major
winter sports markets through a network of distributors and direct sales
representatives.

Initial investment date:
 September 2012
Cost: 
 £139,000
Valuation:   
 £139,000
Equity held: 
 4.40%
Equity held by all funds managed by Octopus: 11.0%
Last submitted audited accounts: 30 June
2011
Turnover
£384, 736
Loss before tax: 
 Not disclosed
Net
liabilities:
(£831,805)

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: 
 £125,000
Valuation:  
 £125,000
Equity held: 
 4.30%
Equity held by all funds managed by Octopus: 14.63%
Last submitted audited accounts: NA

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 £0.5
million to £2.0 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

The key differentiator, and competitive advantage, of the Company is the
Octopus Investor Group. This is made up of more than 100 highly successful
entrepreneurs and business people, including ex-FTSE Chairmen and Chief
Executives, who provide support and guidance to the portfolio companies and
co-invest their own money alongside the Octopus Titan VCTs.

                    Directors' Responsibilities Statement

The Directors are responsible for preparing the Directors' Report, the
Remuneration report and the financial statements in accordance with applicable
law and regulations.

Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable laws).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs and profit or loss of the company for that period. In preparing these
financial statements, the Directors are required to:

· select suitable accounting policies and then apply them
consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.

In so far as each of the Directors is aware:

· there is no relevant audit information of which the Company's
auditor is unaware; and
· the Directors have taken all steps that they ought to have taken
to make themselves aware of any relevant audit information and to establish
that the auditor is aware of that information.

The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.

To the best of my knowledge:

· the financial statements, prepared in accordance with United
Kingdom Generally Accepted Accounting Practice (United Kingdom Standards and
applicable laws), give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
· the Investment managers and Directors' reports include fair
reviews of the development and performance of the business and the position of
the Company, together with a description of the principal risks and
uncertainties that it faces.

On behalf of the Board

Jane O'Riordan
Chairman
25 January 2013

                               Income Statement

                                                  Year to 31 October 2012
                                                   Revenue Capital  Total
                                            Notes    £'000   £'000  £'000
Loss on disposal of fixed asset investments   9          -     (4)    (4)
Fixed asset investment holding losses         9          -   (353)  (353)
Current asset investment holding gains                   -     164    164
Other income                                  2         43       -     43
Investment management fees                    3       (61)   (184)  (245)
Other expenses                                4      (248)       -  (248)
Return on ordinary activities before tax             (266)   (377)  (643)
Taxation on return on ordinary activities     6          -       -      -
Return on ordinary activities after tax              (266)   (377)  (643)
Loss per share - basic and diluted            7     (1.9)p  (2.6)p (4.5)p

  oThe '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
  oAll revenue and capital items in the above statement derive from
    continuing operations
  oThe 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
year as set out above.

The accompanying notes form an integral part of the financial statements.

                               Income Statement

                                Period from 13 October 2010 to 31 October 2011
                                        Revenue         Capital          Total
                          Notes           £'000           £'000          £'000
Current asset investment
holding gains                                 -               7              7
Other income                2                26               -             26
Investment management
fees                        3              (32)            (97)          (129)
Other expenses              4             (171)               -          (171)
Return on ordinary
activities before tax                     (177)            (90)          (267)
Taxation on return on
ordinary activities         6                 -               -              -
Return on ordinary
activities after tax                      (177)            (90)          (267)
Loss per share - basic
and diluted                 7            (2.7)p          (1.4)p         (4.1)p

  oThe 'Total' column of this statement is the profit or 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
  oAll revenue and capital items in the above statement derive from
    continuing operations
  oThe 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
period 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        Period from
                                                       2012     13 October2010
                                                            to 31 October 2011
                                                      £'000              £'000
Shareholders' funds at start of year                 12,660                  -
Return on ordinary activities after                   (643)
tax                                                                      (267)
Issue of equity (net of expenses)                     1,190             12,977
Purchase of own shares                                 (65)               (50)
Shareholders' funds at end of year                   13,142             12,660

The accompanying notes form an integral part of the financial statements.

                                Balance Sheet
                                             As at 31 October As at 31 October
                                                         2012             2011
                                       Notes    £'000   £'000    £'000   £'000
Fixed asset investments*                 9              3,353              305
Current assets:
Debtors                                 10        326               35
Money market funds and other deposits*  11      8,046            9,514
Cash at bank                                    1,459            2,936
                                                9,831           12,485
Creditors: amounts falling due within
one year                                12       (42)            (130)
Net current assets                                      9,789           12,355
Net assets                                             13,142           12,660
Called up equity share capital          13      1,490            1,368
Share premium                           14      1,062           11,559
Special distributable reserve           14     11,493                -
Capital redemption reserve              14          7                -
Capital reserve - losses on disposals   14      (285)             (97)
 - holding
gains                                   14      (182)                7
Revenue reserve                         14      (443)            (177)
Total shareholders' funds                              13,142           12,660
Net asset value per share                8              88.2p            92.6p

*Held at fair value through profit or loss

The statements were approved by the Directors and authorised for issue on 25
January 2013 and are signed on their behalf by:

Jane O'Riordan
Chairman
Company No: 07406399

The accompanying notes form an integral part of the financial statements.

                             Cash Flow Statement
                              Year to 31 October   Period from 13 October 2010
                                            2012            to 31 October 2011
                                           £'000                         £'000
Net cash outflow from
operating activities                       (600)                         (179)
Financial investment:
Purchase of fixed asset
investments                9             (3,634)                         (305)
Sale of fixed asset
investments                                    -                             -
Management of liquid
resources:
Purchase of current asset
investments                              (2,632)                      (12,012)
Sale of current asset
investments                                4,264                         2,505
Taxation                                       -                             -
Dividends paid                                 -                             -
Financing:
Issue of shares            13              1,190                        12,977
Purchase of own shares     13               (65)                          (50)
Increase in cash resources
at bank                                  (1,477)                         2,936

The accompanying notes form an integral part of the financial statements.

Reconciliation of Return before Taxation to Cash Flow from Operating
Activities
                                                       Period from 13 October
                                    Year to 31 October     2010 to 31 October
                                                  2012                   2011
                                                 £'000                  £'000
Return on ordinary activities
before tax                                       (643)                  (267)
Loss on disposal of fixed asset
investments                                          4                      -
Loss on valuation of fixed asset
investments                                        353                      -
Gain on valuation of current asset
investments                                      (164)                    (7)
Increase in debtors                               (62)                   (35)
(Decrease)/increase in creditors                  (88)                    130
Outflow from operating activities                (600)                  (179)

Reconciliation of Net Cash Flow to Movement in Net Funds
                              Year to 31 October   Period from 13 October 2010
                                            2012            to 31 October 2011
                                           £'000                         £'000
(Decrease)/increase in cash
resources at bank                        (1,477)                         2,936
Movement in cash equivalents             (1,468)                         9,514
Opening net funds                         12,450                             -
Net funds at 31 October                    9,505                        12,450

Net Funds at 31 October comprised:

                                                Period from 13 October 2010 to
                        Year to 31 October 2012                31 October 2011
                                          £'000                          £'000
Cash at bank                              1,459                          2,936
Money market funds                        4,275                          3,607
OEIC's                                    3,771                          5,907
Net Funds at 31 October                   9,505                         12,450

The accompanying notes form an integral part of the financial statements.

                      Notes to the Financial Statements

1. Principal accounting policies

Basis of accounting
The  financial  statements  have  been  prepared  under  the  historical  cost 
convention, except  for the  measurement at  fair value  of certain  financial 
instruments, and in accordance with UK Generally Accepted Accounting  Practice 
(UK GAAP),  and  the  Statement  of  Recommended  Practice  (SORP)  'Financial 
Statements of Investment Trust Companies and Venture Capital Trusts'  (revised 
2009). A summary of the principal accounting policies is set out below.

The Company's business activities and the factors likely to affect its future
development, performance and position are set out in the Chairman's Statement
and Investment Manager's Review on pages X to X. Further details on the
management of financial risk may be found in note 15 to the Financial
Statements.

The Board receives regular reports from the Investment Manager and the
Directors have a reasonable expectation that the Company has adequate
resources to continue in operational existence for the foreseeable future. The
assets of the company consist of cash, Money Market Funds and OEIC
Investments, which are readily realisable (72.3% of net assets) and
accordingly, the company has adequate financial resources to continue in
operational existence for the foreseeable future. Thus, as no material
uncertainties leading to significant doubt about going concern have been
identified, it is appropriate to continue to adopt the going concern basis in
preparing the financial statements.

The Company presents its income statement in a three column format to give
shareholders additional detail of the performance of the Company, split
between items of a revenue or capital nature.

The preparation of the financial statements requires management to make
judgements and estimates that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. Estimates and assumptions
mainly relate to the fair valuation of the fixed asset investments
particularly those that are unquoted investments. Estimates are based on
historical experience and other assumptions that are considered reasonable
under the circumstances. The estimates and the assumptions are under
continuous review with particular attention paid to the carrying value of the
investments.

Capital valuation policies are those that are most important to the depiction
of the Company's financial position and that require the application of
subjective and complex judgements, often as a result of the need to make
estimates about the effects of matters that are inherently uncertain and may
change in subsequent periods. The critical accounting policies that are
declared will not necessarily result in material changes to the financial
statements in any given period but rather contain a potential for material
change. The main accounting and valuation policies used by the Company are
disclosed below. Whilst not all of the significant accounting policies
require subjective or complex judgements; the Company considers that the
following accounting policies should be considered critical.

The Company has designated all fixed asset investments as being held at fair
value through profit or loss; therefore all gains and losses arising from
investments held are attributable to financial assets held at fair value
through profit or loss. Accordingly, all interest income, fee income,
expenses and investment gains and losses are attributable to assets designated
as being at fair value through profit or loss.

Current asset investments comprising money market funds and OEICs are held at
fair value through profit or loss. Cash and short term deposits are held at
amortised cost.

Investments are regularly reviewed to ensure that the fair values are
appropriately stated. Quoted investments are valued in accordance with the
bid-price on the relevant date, unquoted investments are valued in accordance
with current International Private Equity and Venture Capital (IPEVC)
valuation guidelines, although this does rely on subjective estimates such as
appropriate sector earnings multiples, forecast results of investee companies,
asset values of subsidiary companies and liquidity or marketability of the
investments held.

Although the Company believes that the assumptions concerning the business
environment and estimate of future cash flows are appropriate, changes in
estimates and assumptions could require changes in the stated values. This
could lead to additional changes in fair value in the future.

Fixed Asset Investments
Purchases and sales of investments are recognised in the financial  statements 
at the date of the transaction (trade date) at cost.

These investments will be managed and their performance evaluated on a fair
value basis in accordance with a documented investment strategy and
information about them is provided internally on that basis to the Board.
Accordingly, as permitted by FRS 26, the investments are designated as fair
value through profit or loss (FVTPL) on the basis that they qualify as a group
of assets managed, and whose performance is evaluated, on a fair value basis
in accordance with a documented investment strategy. The Company's investments
are measured at subsequent reporting dates at fair value, with the holding
gains and losses recorded in the income statement each year. In accordance
with the investment strategy, the investments are held with a view to
long-term capital growth and it is therefore possible that individual holdings
may increase in value to a point where they represent a significantly higher
proportion of total assets than the original cost.

In the case of investments quoted on a recognised stock exchange, fair value
is established by reference to the closing bid price on the relevant date or
the last traded price, depending upon the convention of the exchange on which
the investment is quoted. This is consistent with the IPEVC valuation
guidelines.

In the case of unquoted investments, fair value is established by using
measures of value such as the price of recent transactions, earnings multiple
and net assets. This is consistent with IPEVC valuation guidelines.

Gains or losses arising from the changes in fair value of investments at the
period end are recognised as part of the capital return within the income
statement and allocated to the capital reserve - investment holding
gains/(losses).

In the preparation of the valuations of assets the Directors are required to
make judgements and estimates that are reasonable and incorporate their
knowledge of the performance of the investee companies.

Current asset investments
Current asset investments comprise money market funds and OEICs are classified
as held for trading carried at FVTPL. Gains and losses arising from changes in
fair value of investments are recognised as part of the capital return within
the Income Statement and allocated to the capital reserve - investment
gains/(losses) on disposal.

The current asset investments are all invested with the Company's cash manager
and are readily convertible into cash at the choice of the Company. The
current asset investments are actively managed and the performance is
evaluated on a fair value basis in accordance with a documented investment
strategy. Information about them has to be provided internally on that basis
to the Board.

Other income
Investment income includes interest earned on bank balances and money market
funds and includes income tax withheld at source.

Fixed returns on debt and money market funds are recognised on a time
apportionment basis so as to reflect the effective yield; provided there is no
reasonable doubt that payment will be received in due course.

Expenses
All expenses are accounted for on an accruals basis. Expenses are charged
wholly to revenue with the exception of the investment management fee, which
is charged 25% to the revenue account and 75% to the capital reserve to
reflect, in the Directors' opinion, the expected long-term split of returns in
the form of income and capital gains respectively from the investment
portfolio.

The transaction costs incurred when purchasing or selling assets are written
off to the income statement in the period that they occur.

Revenue and capital
The revenue column of the income statement includes all income and revenue
expenses of the Company. The capital column includes gains and losses on
disposal of investments and on holding investments. Gains and losses arising
from changes in fair value of investments are recognised as part of the
capital return within the income statement.

Taxation
Corporation tax payable is applied to profits chargeable to corporation tax,
if any, at the current rate. The tax effect of different items of income/gain
and expenditure/loss is allocated between capital and revenue return on the
'marginal' basis as recommended in the SORP.

Deferred tax is recognised on an undiscounted basis in respect of all timing
differences that have originated but not reversed at the balance sheet date or
where transactions or events have occurred at that date that will result in an
obligation to pay more, or a right to pay less tax. This is with the exception
that deferred tax assets are recognised only to the extent that the Directors
consider that it is more likely than not that there will be suitable taxable
profits from which the future reversal of the underlying timing differences
can be deducted.

Cash and liquid resources
Cash, for the purposes of the cash flow statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand. Liquid
resources are current asset investments which are disposable without
curtailing or disrupting the business and are either readily convertible into
known amounts of cash at or close to their carrying values or traded in an
active market. Liquid resources comprise term deposits of less than one year
(other than cash), government securities, investment grade bonds and
investments in money market managed funds, as well as OEICs.

Loans and receivables
The Company's loans and receivables are initially recognised at fair value and
subsequently measured at amortised cost using the effective interest method.

Financing strategy and capital structure
We define capital as shareholders' funds and our financial strategy in the
medium term is to manage a level of cash that balances the risks of the
business with optimising the return on equity. The Company currently has no
borrowings nor does it anticipate that it will drawdown any borrowing
facilities in the future to fund the acquisition of investments.

The company does not have any externally imposed capital requirements.

The value of the managed capital is indicated in note 13. The Board considers
the distributable reserves and the total return for the year when recommending
a dividend. In addition, the Board is authorised to make market purchases up
to a maximum of 5% of the issued Ordinary share capital of the Company in
accordance with Special Resolution 8 in order to maintain sufficient liquidity
in the Company.

Capital management is monitored and controlled using the internal control
procedures set out on page X of this report. The capital being managed
includes equity and fixed-interest investments, cash balances and liquid
resources including debtors and creditors.

Financial instruments
The Company's principal financial assets are its investments and the policies
in relation to those assets are set out above. Financial liabilities and
equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract
that evidences a residual interest in the assets of the entity after deducting
all of its financial liabilities. Where the contractual terms of share capital
do not have any terms meeting the definition of a financial liability then
this is classed as an equity instrument. Dividends and distributions relating
to equity instruments are debited direct to equity.

Dividends
Dividends payable are recognised as distributions in the financial statements
when the Company's liability to make payment has been established. This
liability is established for interim dividends when they are paid, and for
final dividends when they are approved by the shareholders.

2. Other income

                                         Year ended 31 October    Period ended
                                                          2012 31 October 2011
                                                        £'000           £'000
Interest on bank balances and dividends                     43
receivable on money market funds                                            26

3. Investment Management Fees

                       Year ended 31 October 2012 Period ended 31 October 2011
                         Revenue   Capital  Total    Revenue   Capital   Total
                           £'000     £'000  £'000      £'000     £'000   £'000
Investment management
fee                           61       184    245         32        97     129

For the purposes of the revenue and capital columns in the income statement,
the management fee has been allocated 25% to revenue and 75% to capital, in
line with the Board's expected long term return in the form of income and
capital gains respectively from the Company's investment portfolio.

Octopus provides investment management and accounting and administration
services to the Company under a management agreement which runs for a period
of five accounting periods with effect from 1 November 2010 and may be
terminated at any time thereafter by not less than 12 months' notice given by
either party. No compensation is payable in the event of terminating the
agreement by either party, if the required notice period is given. The fee
payable, should insufficient notice be given, will be equal to the fee that
would have been paid should continuous service be provided, or the required
notice period was given. The basis upon which the management fee is
calculated is disclosed within note 18 to the financial statements.

4. Other expenses

                                            Year to 31 October    Period ended
                                                          2012 31 October 2011
                                                         £'000           £'000
Directors' remuneration                                     50              33
Fees payable to the Company's auditor for                   12
the audit of the financial statements                                        6
Fees payable to the Company's auditor for                    2
other services - tax compliance                                              1
Accounting and administration services                      38              19
UK Listing Fees                                             19              36
Trail commission                                            60              24
Other expenses                                              67              52
                                                           248             171

Total annual  running  costs are  capped  at  3.2% of  net  assets  (excluding 
irrecoverable VAT). For the period to  31 October 2012 the running costs,  as 
defined in  the  prospectus,  were  3.27% (2011:  2.2%)  of  net  assets.  The 
overspend was reimbursed by Octopus Investments Limited post year end.

5. Directors' remuneration

                                       Year to    Period ended
                               31 October 2012 31 October 2011
                                         £'000           £'000
Directors' emoluments
Jane O'Riordan (Chairman)                   20              13
Stefan Cassar                               15              10
Jo Oliver (paid to Octopus)                 12               -
Chris Hulatt (paid to Octopus)               3              10
                                            50              33

None of the Directors received any other remuneration or benefit from the
Company during the period. The Company has no employees other than
non-executive Directors. The average number of non-executive Directors in the
period was three (2011: three).

6. Tax on ordinary activities
The corporation tax charge for the period was £nil (2011: £nil).

The current tax charge for the period differs from the standard rate of
corporation tax in the UK of 24.83% (2011: 26.83%). The differences are
explained below.

Current tax reconciliation:                    31 October 2012 31 October 2011
                                                         £'000           £'000
Loss on ordinary activities before tax                   (643)           (267)
Capital losses/(gains)                                     193             (7)
                                                         (450)           (274)
Current tax at 24.83% (2011: 26.83%)                     (112)            (74)
Unrelieved tax losses                                        -              78
Expenses not deductible/income not taxable for             112             (4)
tax purposes
Total current tax charge                                     -               -

The company has excess management charges of approximately £750,000 (2011:
£300,000) to carry forward to offset against future taxable profits subject to
agreement with HMRC. The Company has not recognised the deferred tax asset of
£185,000 (2011: £81,000) in respect of these excess management charges.

Approved VCTs are exempt from tax on capital gains within the Company. Since
the Directors intend that the Company will continue to conduct its affairs so
as to achieve approval as a VCT, no current deferred tax has been provided in
respect of any capital gains or losses arising on the revaluation or disposal
of investments.

7. Earnings per Share
The total earnings per share is based on total loss after tax of £643,000
(2011: 267,000) and 14,368,376 ordinary shares (2011: 6,507,511), being the
weighted average number of ordinary shares in issue during the period.

The revenue earnings per share is based on the revenue loss after tax of
£266,000 (2011: 177,000) and 14,368,376 ordinary shares (2011: 6,507,511),
being the weighted average number of ordinary shares in issue during the
period.

The capital earnings per share is based on the capital loss after tax of
£377,000 (2011: 90,000) and 14,368,376 ordinary shares (2011: 6,507,511),
being the weighted average number of ordinary shares in issue during the
period.

There are no potentially dilutive capital instruments in issue and, therefore
no diluted return per share figures are relevant. The basic and diluted
earnings per share are therefore identical.

8. Net asset value per share
The calculation of net asset value per share as at 31 October 2012 is based on
net assets of £13,142,000 and 14,899,391 ordinary shares (2011: £12,660,000
and 13,678,528) in issue at that date.

9. Fixed asset investments
Where financial instruments are measured in  the balance sheet at fair  value; 
FRS 29 requires disclosure  of the fair value  measurements by level based  on 
the following fair vale investment hierarchy:

Level 1: quoted prices in active markets for identical assets and liabilities.
The fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date. A market is regarded as active
if quoted prices are readily and regularly available, and those prices
represent actual and regularly occurring market transactions on an arm's
length basis. The quoted market price used for financial assets held is the
current bid price. These instruments are included in level 1 and comprise
AIM-quoted investments classified as held at fair value through profit or
loss. The Company held no such investments in the current period.

Level 2: the fair value of financial instruments that are not traded in an
active market is determined by using valuation techniques. These valuation
techniques maximise the use of observable data where it is available and rely
as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is
included in level 2. The Company held no such investments in the current
period.

Level 3: the fair value of financial instruments that are not traded in an
active market (for example investments in unquoted companies) is determined by
using valuation techniques such as earnings multiples. If one or more of the
significant inputs is not based on observable market data, the instrument is
included in level 3.

There have been no transfers between these classifications in the period
(2011: none). The change in fair value for the current period is recognised
through the income statement.

All items held at fair value through profit or loss were designated as such
upon initial recognition. Movements in investments at fair value through
profit or loss during the period to 31 October 2012 are summarised below and
in note 11.

                                                Level 3:
                                    Unquoted investments Total investments
                                         31 October 2012   31 October 2012
                                                   £'000             £'000
Valuation and net book amount:
Book cost as at 1 November 2011                      305               305
Cumulative revaluation                                 -                 -
Valuation at 1 November 2011                         305               305
Movement in the year:
Purchases at cost                                  3,634             3,634
Disposal proceeds (net of expenses)                (229)             (229)
Loss on realisation of investments                   (4)               (4)
Revaluation in year                                (353)             (353)
Valuation at 31 October 2012                       3,353             3,353
Book cost at 31 October 2012:                      3,706             3,706
Revaluation to 31 October 2012:                    (353)             (353)
Valuation at 31 October 2012                       3,353             3,353

The investment portfolio is managed with capital growth as the primary focus.

Further details in respect of the methods and assumptions applied in
determining the fair value of the investments are disclosed in the Investment
Manager's Review and within the principal accounting policies in note 1. The
costs incurred in the disposals amount to £4,000.

At 31 October 2012, there were no commitments in respect of investments not
yet completed.

10. Debtors

                  31 October 2012 31 October 2011
                            £'000           £'000
 Other debtors                 9              15
Prepayments                    88               6
Accrued income                  -              14
Disposal proceeds             229               -
                              326              35

Disposal proceeds of £47,000 are due in more than one year.

11. Current Asset Investments
Current asset investments at 31 October 2012 comprised money market funds  and 
OEIC's.

                   31 October 2012 31 October 2011
                             £'000           £'000
Money Market funds           4,275           5,907
OEIC's                       3,771           3,607
                             8,046           9,514

All current asset investments held at the period end sit with the level 1
hierarchy for the purposes of FRS 29.

Level 1 money market funds and OEICs: Level 1 valuations are based on quoted
prices (unadjusted) in active markets for identical assets or liabilities. The
valuation of money market funds and OEIC's at 31 October 2012 was £8,046,000
(31 October 2011: £9,514,000).

12. Creditors: amounts falling due within one year

                31 October 2012 31 October 2011
                          £'000           £'000
Accruals                     42             116
Other creditors               -              14
                             42             130

13. Share capital

                                               31 October 2012 31 October 2011
                                                         £'000           £'000
Authorised:
50,000,000 ordinary shares of 10p                        5,000           5,000
Allotted and fully paid up:
14,899,391 (2011: 13,678,528) ordinary  shares           1,490           1,368
of 10p

The capital of the Company is managed in accordance with its investment policy
with a view to the achievement of its investment objective as set on page X.
The Company is not subject to any externally imposed capital requirements.

We define capital as shareholders' funds and our financial strategy in the
medium term is to manage a level of cash that balances the risks of the
business with optimising the return on equity. The Company currently has no
borrowings nor does it anticipate that it will drawdown any borrowing
facilities in the future to fund the acquisition of investments.

The Board considers the distributable reserves and the total return for the
year when recommending a dividend. In addition, the Board is authorised to
make market purchases up to a maximum of 5% of the issued Ordinary share
capital of the Company in accordance with Special Resolution 8 in order to
maintain sufficient liquidity in the Company.

Capital management is monitored and controlled using the internal control
procedures set out on page X of this report. The capital being managed
includes equity and fixed-interest investments, cash balances and liquid
resources including debtors and creditors.

The Company issued 1,291,193 ordinary shares during the period at a price of
97.6p per share (2011: 13,678,528 at a price of 100p per share). The share
premium arising on these shares totalled £1,061,085, and the company incurred
total share issue costs of £70,000.

The Company repurchased the following Ordinary shares for cancellation (2011:
nil shares):

                                                70,330 at a price of 92.5p per
· 2 March 2012: share

14. Reserves

                 Share                     Capital  Capital
               Premium                     reserve  reserve
                 £'000       Special        gains/  holding    Capital
                       distributable   (losses) on   gains/ redemption Revenue
                             reserve      disposal (losses)    reserve reserve
                              £'000         £'000    £'000      £'000   £'000
Balance as      11,559             -         (97)*                   -
at 1
November
2011                                                      7             (177)*
Return on            -             -             -        -          -   (266)
ordinary
activities
after tax
Purchase of          -          (65)             -        -          7       -
own shares
Issue of         1,061
Equity
Management           -             -         (184)        -          -       -
fees
allocated as
capital
expenditure
Current year         -             -           (4)        -          -       -
loss on
disposal -
Fixed assets
Current              -             -             -    (353)          -       -
period
holding
losses -
Fixed assets
Current              -             -             -      164          -       -
period
holding
gains -
Current
assets
Prior year           -             -             -        -          -       -
gains on
disposal
Transfer      (11,558)        11,558             -        -          -       -
between
reserves
Balance as       1,062       11,493*        (285)*                   7
at 31
October 2012                                          (182)             (443)*

*Reserves considered  when  calculating potential  distribution  by way  of  a 
dividend.

When the Company revalues its investments during the period, any gains or
losses arising are credited/ charged to the income statement. Holding
gains/losses are then transferred to the 'capital reserve - holding
gains/(losses)'. When an investment is sold, any balance held on the 'capital
reserve - holding gains/(losses)' is transferred to the 'capital reserve -
gains/(losses) on disposal' as a movement in reserves.

Due to the loss for the period, and the absence of capital gains on disposal
at the balance sheet date, the company has no reserves which can be
distributed by way of a dividend.

Reserves available for potential distribution by way of a dividend are:

                      £'000
As at 1 November 2011      -
Movement in year      10,765
As at 31 October 2012 10,765

This is the minimum value of reserves available for potential distribution,
which will be impacted by the future realisibility, into cash, of gains and
losses included in the Capital Holding reserve.

The purpose of the special distributable reserve is to create a reserve which
will be capable of being used by the Company to pay dividends and for the
purpose of making repurchases of its own shares in the market with a view to
narrowing the discount to net asset value at which the Company's ordinary
shares trade. In the event that the revenue reserve and capital reserve
gains/(losses) on disposal do not have sufficient funds to pay dividends,
these will be paid from the special distributable reserve.

The transfer between reserves relates to the court approved cancellation of
share premium account on 23 November 2011.

15.  Financial instruments and risk management
The  Company's  financial  instruments  comprise  equity  and  fixed  interest 
investments and  cash  balances and  liquid  resources including  debtors  and 
creditors. The Company intends to hold financial assets in accordance with its
investment policy  of  investing  mainly  in a  portfolio  of  VCT  qualifying 
unquoted securities  whilst holding  a proportion  of its  assets in  cash  or 
near-cash investments in order to provide a reserve of liquidity.

  Classification of financial instruments

The company held the following categories of financial instruments, all of
which are included in the balance sheet at fair value, at 31 October 2012.

                                            31 October 2012 31 October 2011
                                                      £'000           £'000
Assets at fair value through profit or loss
Fixed asset investments                               3,353             305
Current asset investments                             8,046           9,514
Total                                                11,399           9,819
Cash and receivables
Cash at bank                                          1,459           2,936
Other debtors                                             9              15
Disposal proceeds                                       229              14
Total                                                 1,697           2,965
Liabilities at amortised cost
Accruals                                                 42             130
Total                                                    42             130

Fixed asset investments (see note 9) are carried at fair value. Unquoted
investments are carried at fair value as determined by the directors in
accordance with current venture capital industry guidelines. The fair value of
all other financial assets and liabilities is represented by their carrying
value in the balance sheet. The Directors believe that the fair value of the
assets held at the period end is equal to their book value.

In carrying on its investment activities, the Company is exposed to various
types of risk associated with the financial instruments and markets in which
it invests. The most significant types of financial risk facing the Company
are price risk, interest rate risk, credit risk and liquidity risk. The
Company's approach to managing these risks is set out below together with a
description of the nature and amount of the financial instruments held at the
balance sheet date.

Market risk
The Company's strategy for managing investment risk is determined with regard
to the Company's investment objective, as outlined on page X. The management
of market risk is part of the investment management process and is a central
feature of venture capital investment. The Company's portfolio is managed with
regard to the possible effects of adverse price movements and, with the
objective of maximising overall returns to shareholders. Investments in
unquoted companies, by their nature, usually involve a higher degree of risk
than investments in companies quoted on a recognised stock exchange, though
the risk can be mitigated to a certain extent by diversifying the portfolio
across business sectors and asset classes. The overall disposition of the
Company's assets is regularly monitored by the Board.

Details of the Company's investment portfolio at the balance sheet date are
set out on pages X and X. An analysis of investments is given in note 9.

25.5% (2011: 2.4%) by value of the Company's net assets comprises investments
in unquoted companies held at fair value. The valuation methods used by the
Company include the application of a price/earnings ratio derived from listed
companies with similar characteristics, and consequently the value of the
unquoted element of the portfolio can be indirectly affected by price
movements on the London Stock Exchange. A 5% overall increase in the valuation
of the unquoted investments at 31 October 2012 would have increased net assets
and the total return for the period by £168,000 (2011: £15,000). An equivalent
change in the opposite direction would have reduced net assets and the total
return for the period by the same amount. 

61.2% (2011: 75.2%) by value of the Company's net assets comprises of OEICs
and money market funds held at fair value. A 5% overall increase in the
valuation of the OEICs and money market funds at 31 October 2012 would have
increased net assets and the total return for the period by £402,000 (2011:
£476,000). An equivalent change in the opposite direction would have reduced
net assets and the total return for the period by the same amount.

The Investment Manager considers that the majority of the investment
valuations are based on earnings multiples which are ascertained with
reference to the individual sector multiple or similarly listed entities. It
is considered that due to the diversity of the sectors, the 5% sensitivity
discussed above provides the most meaningful potential impact of average
multiple changes across the portfolio.

Interest rate risk
Some of the Company's financial assets are interest-bearing, some of which are
at variable rates. As a result, the Company is exposed to fair value interest
rate risk due to fluctuations in the prevailing levels of market interest
rates.

Fixed rate
The table below summarises weighted average effective interest rates for the
fixed interest-bearing financial instruments:

                   As at 31 October 2012            As at 31 October 2011
                                                                      Weighted
            Total fixed                Weighted      Total             average
                   rate Weighted   average time fixed rate Weighted   time for
              portfolio  average for which rate  portfolio  average which rate
               by value interest    is fixed in   by value interest   is fixed
                  £'000   rate %          years      £'000   rate %   in years
Fixed-rate
investments
in unquoted
companies           542       0%            3.0          -        -          -

Due to the relatively short period to maturity of the fixed rate investments
held within the portfolio, it is considered that an increase or decrease of 1%
in the base rate as at the reporting date would not have had a significant
effect on the Company's net assets or total return for the year.

Floating rate
The Company's floating rate investments comprise cash held on interest-bearing
deposit accounts and, where appropriate, within interest bearing money market
funds. The benchmark rate which determines the rate of interest receivable on
such investments is the bank base rate, which was 0.5% at 31 October 2010. The
amounts held in floating rate investments at the balance sheet date were as
follows:

                                     31 October 2012 31 October 2011
                                               £'000           £'000
Cash on deposit & money market funds           5,734           8,843

A 1% increase in the base rate would increase income receivable from these
investments and the total return for the period by £57,340.

Credit risk
There were no significant concentrations of credit risk to counterparties at
31 October 2012. By cost, no individual investment exceeded 5.6% of the
Company's net assets at 31 October 2012 (2011: 2.4%).

Credit risk is the risk that counterparty to a financial instrument will fail
to discharge an obligation or commitment that it has entered into with the
Company. The Investment Manager and the Board carry out a regular review of
counterparty risk. The carrying values of financial assets represent the
maximum credit risk exposure at the balance sheet date.

At 31 October 2012 the Company's financial assets exposed to credit risk
comprised the following:

                                     31 October 2012 31 October 2011
                                               £'000           £'000
Cash on deposit & money market funds           5,734           8,843

Credit risk relating to listed money market funds is mitigated by investing in
a portfolio of investment instruments of high credit quality, comprising
securities issued by the UK Government and major UK companies and
institutions. Credit risk relating to loans to and preference shares in
unquoted companies is considered to be part of market risk.

The investments in money market funds and OEICs are uncertified.

Credit risk arising on the sale of investments is considered to be small due
to the short settlement and the contracted agreements in place with the
settlement lawyers.

The Company's interest-bearing deposit and current accounts are maintained
with HSBC Bank plc. The Investment Manager has in place a monitoring procedure
in respect of counterparty risk which is reviewed on an ongoing basis. Should
the credit quality or the financial position of HSBC deteriorate
significantly, the Investment Manager will move the cash holdings to another
bank.

Liquidity risk
The Company's financial assets include investments in unquoted equity
securities which are not traded on a recognised stock exchange and which
generally may be illiquid. As a result, the Company may not be able to realise
some of its investments in these instruments quickly at an amount close to
their fair value in order to meet its liquidity requirements, or to respond to
specific events such as deterioration in the creditworthiness of any
particular issuer.

The Company's listed money market funds are considered to be readily
realisable as they are of high credit quality as outlined above.

The Company's liquidity risk is managed on a continuing basis by the
Investment Manager in accordance with policies and procedures laid down by the
Board. The Company's overall liquidity risks are monitored on a quarterly
basis by the Board.

The Company maintains sufficient investments in cash and readily realisable
securities to pay accounts payable and accrued expenses. At 31 October 2012
these investments were valued at £9,505,000 (2011: £9,514,000).

16.  Post balance sheet events
There have been no material events between the balance sheet date and the
signing of these financial statements.

17.  Contingencies, guarantees and financial commitments
Provided that an intermediary continues to act for a shareholder and the
shareholder continues to be the beneficial owner of the shares, intermediaries
will be paid an annual trail commission of 0.5% of the initial net asset
value. Trail commission of £60,000 (2011: £nil) was paid during the period and
there was £15,000 (2011: £24,000) outstanding at the period end.

There were no contingencies, guarantees or financial commitments as at 31
October 2012 or 31 October 2011.

18. Transactions with Manager
The Company has employed Octopus throughout the period as Investment Manager.
The Company has paid Octopus £310,000 (2011: £129,000) in the period as a
management fee and there is £68,000 (2011: £nil) in prepayments at the balance
sheet date. The management fee is payable quarterly in advance and is based on
2.0% of the net asset value calculated at annual intervals as at 31 October.


Octopus also provides accounting and administrative services to the Company,
payable quarterly in advance for a fee of 0.3% of the net asset value
calculated at annual intervals as at 31 October. During the period £48,000
(2011: £19,000) was paid to Octopus and there is £10,000 (2011: £nil) in
prepayments at the balance sheet date for the accounting and administrative
services. In addition, Octopus also provides secretarial services for a fee of
£10,000 per annum. During the year there was £4,000 (2011: £nil) in
prepayments at the balance sheet date.

Octopus is entitled to performance related incentive fees. The incentive fees
are designed to ensure that there are significant tax-free dividend payments
made to Shareholders as well as strong performance in terms of capital and
income growth, before any performance related incentive fee payment is made.
Therefore, only if by the end of a financial year (commencing no earlier than
close of the 2014 financial year), declared distributions per Share have
reached 40p in aggregate and if the Performance Value at that date exceeds
130p per Share, a performance incentive fee equal to 20% of the excess of such
Performance Value over 100p per Share will be payable to Octopus.

If, on a subsequent financial year end, the Performance Value of the Company
falls short of the Performance Value on the previous financial year end, no
incentive fee will arise. If, on a subsequent financial year end, the
performance exceeds the previous best Performance Value of the Company, the
Investment Manager will be entitled to 20% of such excess in aggregate.

No performance fee has been recognised for the period ended 31 October 2012 on
the basis that the directors consider that the liability becomes due at the
point that the performance criteria are met; this has not been achieved and
therefore no liability has been recognised.

19.  Related Party Transactions
Chris Hulatt, a non-executive director of Octopus Titan VCT 5 plc during the
period ended 31 October 2012 until his resignation on 9 January 2012 was also
a Director of Octopus Investments Limited. Jo Oliver, a Director of Octopus
Investments Limited, was appointed as a non-executive director of Octopus
Titan VCT 5 plc on 9 January 2012.

Stefan Cassar, a Director of the Company is also the Chairman of Amplience
Limited, a company in which Titan 5 has invested.

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(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.

Source: Octopus Titan VCT 5 PLC via Thomson Reuters ONE
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