Octopus Titan VCT 4 PLC : Octopus Titan VCT 4 PLC : Final Results

      Octopus Titan VCT 4 PLC : Octopus Titan VCT 4 PLC : Final Results

Octopus Titan VCT 4 plc

Final Results

25 January 2013

Octopus Titan VCT 4 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 4 plc

Registered Number: 07035434

                              Financial Summary

                                                         As at           As at
                                               31 October 2012 31 October 2011
Net assets (£'000s)                                     21,023          20,086
Return on ordinary activities after tax                  (296)         (1,085)
(£'000s)
Net asset value (NAV) per share                          87.7p           89.0p

                             Chairman's Statement

Introduction
I am pleased to present the Annual Report of Octopus Titan VCT 4 plc (the
"Company") for the year ended 31 October 2012.

Performance
During the year the Net Asset Value (NAV) of the Company has declined from
89.0 pence per share to 87.7 pence per share, a reduction of 1.5%. This
decline is partly attributable to the unquoted investee company portfolio,
where we have adopted a prudent approach to valuations, and also to the
standard running costs of the Company that exceeded the income generated.

The focus during the year was for the Company to continue to invest in a broad
range of unquoted smaller UK companies with the potential to generate
significant capital growth. This is discussed in the portfolio review.

The requirement under the VCT rules to have 70% of the Company's assets
represented by qualifying holdings by 31 October 2012 was achieved in good
time. Such qualifying investments amounted to over 75.64%, as measured by
HMRC rules, at the year end. Having now achieved this important milestone, the
focus of the Company will be to develop the existing portfolio by making
follow-on investments where investment companies have met their targets and
exceeded expectations. The Company, however, has sufficient liquidity to
invest into new companies should the right opportunity arise.

  Investment Portfolio

The VCT made eight new investments during the year totalling £4.5 million in
addition to making nine follow on investments amounting to £3.8 million in
existing portfolio companies. The Investment Manager's Review on pages X to X
discusses this activity in more detail.

At 31 October 2012, the net assets of the Company were 63.8% in unquoted
investments, 16.2% in Octopus Open Ended Investment Companies (OEICs) and
20.0% in cash or cash equivalents and debtors and creditors. Cash is invested
in a range of money market funds that focus on capital preservation to fit
with the Board's policy of preserving capital pending its deployment in
Qualifying Investments.

Secret Escapes and TouchType have seen significant increases in fair value of
£1,288,000 and £379,000 respectively. There were, however, a number of
companies which did not meet their targets or budgets and suffered decreases
in fair value in keeping with our prudent approach to valuations. The overall
uplifts in fair value exceeded the write downs resulting in a gain of £91,000
in the portfolio.

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. However, as the
portfolio is developed and investments mature, a number of strong companies
are expected to come through that will allow the NAV to grow in years to come.
The earlier funds raised in the Titan portfolio have followed this pattern.

Top-up and buybacks
As mentioned in the interim report, the Company successfully raised £1,242,000
net of costs during the year which saw the Top-up offer fully subscribed.
Following the success of the 2012 Top-up, the Board are in discussions to make
a further offer of new shares alongside the other four Octopus Titan VCT's. We
expect to write to you with further details in the near future.

During the period, the company repurchased 11,125 shares. Further details can
be found in Note 13 of the accounts. In common with many other VCTs, and as
recently announced, your Board has decided to reduce the discount to NAV at
which it will repurchase shares from 10% to 5%.

  Open Ended Investment Companies (OEICs)

The Company fully disposed of both the Absolute Return Fund and the Absolute
European Fund during the year, realising gains of £129,000 and £6,000
respectively. Our remaining holdings are in Octopus UK Micro Cap Growth Fund,
which saw an uplift in fair value of £183,000, and in the Foundation Fund
which experienced an £11,000 decrease in fair value.

The Board continues to monitor these funds and believes it remains a sensible
strategy to maintain part of our non-qualifying portfolio in these OEICs due
to their liquid status and potential to achieve greater returns compared with
cash deposits. Further details of these OEICs may be found at
www.octopusinvestments.com where monthly factsheets are available.

  Investment Strategy

Your Board will continue to review the investment strategy in respect of the
non-qualifying portfolio and investment of our cash resources). As envisaged
in the Company's prospectus, between 15% and 25% of the assets of the Company
will be retained for liquidity and follow-on investments. As our existing
portfolio of unquoted companies starts to mature, many are likely to require
further rounds of investment and, although some of these investments may be
non-qualifying for VCT purposes, there will be circumstances in which it will
be in our shareholders' interests to continue to invest, subject always to
maintenance of the qualifying level of 70%.

  VCT Qualifying Status

PricewaterhouseCoopers LLP provides the Board and Investment Manager with
advice concerning ongoing compliance with HMRC rules and regulations
concerning VCTs. The Board has been advised that the Company is compliant
with the conditions laid down by HMRC for maintaining approval as a VCT.

  Annual General Meeting

I look forward to meeting shareholders at the 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 10.00 p.m.

Regulation Proposal
The Manager, on behalf of the Board, has been consulting with the Association
of Investment Companies ('AIC') which has been leading discussions with the
FSA on issues arising from their Consultation Paper CP12/19, which seeks to
treat all VCTs as Unregulated Collective Investment Schemes (UCIS). It is
widely understood that the FSA's current proposal wouldincludeVCTs under the
promotion restrictions to ordinary retail investors. The VCT industry believes
that VCTs should remain a viable source of funding for UK small businesses
supported by ordinary retail investors. We believe they should be treated in
the same way as Investment Trusts, which are excluded from the proposal, on
the grounds that VCTs are also independent, listed companies governed by
independent boards of directors. The Manager is working alongside the AIC to
urge the FSA to ensure VCTs are excluded from the policy statement, which is
expected in the second quarter 2013.

  Outlook

There remains uncertainty surrounding the economic climate. As a result of the
flat economy, there are ongoing challenges for small companies especially in
relation to pressure on working capital. Having said this, many of our
portfolio companies have continued to grow and have demonstrated an ability to
adapt to a difficult economic environment.

We continue to align our interests with those of the entrepreneurs in whose
companies we have invested, with potential for revenue growth and
profitability being our primary focus. We are confident that your Company has
invested in the equity of a diverse range of early stage companies which have
the potential of making significant returns for shareholders over the medium
term.

Gregor Michie
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 Summary

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 the company making a typical
initial deal size of £0.5 million to £1 million and will continue to comprise
20-30 unquoted companies, predominantly focussed within the following sectors:

  oEnvironment
  oTechnology
  oMedia
  oTelecoms
  oConsumer lifestyle and well-being sectors.

  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.

Having now reached the level of invested funds required by HMRC, our focus
will now shift to managing the portfolio and developing capital growth. The
current portfolio of holdings built by the Company now encompasses investments
in 21 unquoted companies in a range of sectors.

As Investment Manager, we typically purchase a significant minority equity
stake in qualifying companies, providing financial capital to each business to
build and grow its operations and then to sell to an acquirer at some point in
the future. These entrepreneurial early stage businesses frequently face
challenges as they seek to establish themselves in their markets. The amount
of capital we initially deploy is intended to be only the first investment
that we will make into a business, prior to seeing if the company meets or
exceeds its initial objectives.

If the business is unsuccessful in meeting these first objectives we strive to
minimise the financial exposure the Company faces without committing further
money to the investment. Other businesses which meet some of their objectives,
but not necessarily all, will require more time to prove their concept and
these businesses will typically be reduced in value prior to our making an
additional investment to fund their further progress. Finally, there are those
that meet and exceed the expectations originally set. It is these businesses
in which we wish to increase our investment exposure as they remain on course
to create a large business.

Liquidity in the Company is maintained to ensure adequate resources are
available to support further portfolio funding needs as they arise. This will
be assisted by the Top-up as described in the Chairman's Statement and is an
important feature of our model in delivering returns to shareholders.

  Portfolio Review

As at 31 October 2012, the NAV of the Company was 87.7p per share compared to
89.0p per share at 31 October 2011, a reduction of 1.5%. This reduction was
due to the standard running costs of the fund exceeding the uplift in fair
values of the current portfolio and the OEICs.

The Company now holds 75.6% of its assets in qualifying holdings from an HMRC
perspective and we continue to work with each portfolio business as they
develop their proposition in their respective markets.

As Investment Manager, it is our continued intention to take those businesses
in which we have invested a small amount of money as a first investment, and
invest further as they meet or exceed the initial milestone objectives we
agreed with them. This approach can be demonstrated through eight follow on
investments being made, totalling £4,500,000. There were nine new investments
during the year in order to diversify the portfolio amounting to £3,800,000.

Investment highlights
As mentioned above, the portfolio has experienced an overall uplift of £91,000
in the year. This is largely due to increases in valuation for Secret Escapes
and Touchtype which have performed particularly well.

                                                    Uplift in
                                              Cost,  value in Effect of uplift
Company        Industry                       £'000   year, p         on NAV,p
                                                  
Secret Escapes Consumer lifestyle and well                      
Limited        being                          1,467     1,288             5.37
TouchType                                                       
Limited        Telecommunications               384       379             1.58
                                                                
                                              1,851     1,667             6.95

A number of companies, however, struggled to meet expectations and as a result
experienced downward revaluations in fair value. Vega-Chi, Michelson
Diagnostics, Applied Superconductor and Aframe endured the largest write
downs, with a combined decrease in fair value of £1,239,000 during the year.

Realisations in the year
The Company fully disposed of Evi Technologies during the year recognising a
small loss of £11,000.

Post year end
Since the balance sheet date, although no new investments have been made, the
Company has continued to support investee companies by investing a further
£109,000 into Bowman Power and £74,000 into Vega-Chi.

    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 pressures 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 2347.

Alex Macpherson
Octopus Investments Limited
25 January 2013

                             Investment Portfolio

                                                              Movement              %
                                             Movement    Fair  in fair      %  equity
                                              in fair   value value in voting held by
                                  Investment value to   as at  year to rights     all
                                  cost as at       31      31       31   held   funds
                                  31 October  October October  October     by managed
Fixed asset                             2012     2012    2012     2012  Titan      by
investments    Sector                (£'000)  (£'000) (£'000)  (£'000)      4 Octopus
Secret Escapes Consumer lifestyle
Limited        and well being          1,467    1,373   2,840    1,288   8.54   17.44
Certivox
Limited        Technology              1,613       21   1,634        6 16.34   33.08
Rangespan      Consumer lifestyle
Limited        and well being          1,125        -   1,125        -  6.43   25.71
Ultrasoc
Technologies
Limited        Technology                954        -     954        -  20.73   65.21
TouchType
Limited        Telecommunications        384      544     928      379   4.20   20.07
Amplience
Limited        Technology              1,174    (259)     915        -  13.50   63.13
Semafone
Limited        Telecommunications        755        -     755        -  3.56   46.64
Iovox Limited  Telecommunications        750        -     750        -   9.35   24.94
Executive
Channel Europe
Limited        Media                     640       61     701        -  7.29   36.12
Lifebook       Consumer lifestyle
Limited        and well being            555        -     555        - 11.34   32.64
Artesian
Solutions
Limited        Technology                500        -     500        -  6.04   24.17
Vega-Chi
Limited        Technology                640    (294)     346    (295)   6.94   20.92
Michelson
Diagnostics    Consumer lifestyle
Limited        and well being            650    (326)     324    (324)   8.26   42.87
Bowman Power
Limited        Environmental             312     (42)     270     (69)   2.69   15.55
Aframe Limited Media                     500    (251)     249    (250)  6.88   20.65
The Faction    Consumer lifestyle
Collective SA  and well being            167        -     167        -  5.53      11
Y-Plan
(Leanworks)    Consumer lifestyle
Limited        and well being            151        -     151        -  5.16   14.63
PrismaStar
Inc.           Media                     425    (300)     125    (151)  4.95   33.02
Applied
Superconductor
Limited        Environmental             493    (370)     123    (370)   7.96   24.22
Diverse Energy
Limited        Environmental             414    (414)       -     (46)   5.47   29.76
Elonics
Limited        Technology                306    (306)       -     (77)   3.11   19.54
Total fixed asset investments         13,975    (563)  13,412       91
Money market
funds                                  3,396       -   3,396        -
Open ended investment companies        2,790      614   3,404      172
Cash at bank                              91       -      91        -
Total
investments                           20,252       51  20,303      263
Debtors less
creditors                                                 720
Total net
assets                                                 21,023

  Valuation Methodology

Initial measurement
Financial assets are measured at fair value. The initial best estimate of fair
value of a financial asset that is either quoted or not quoted in an active
market is the transaction price (i.e. cost).

Subsequent measurement
Further funding rounds are a good indicator of fair value and this measure is
used where appropriate. Subsequent adjustment to the fair value of unquoted
investments can be made using sector multiples based on information as at 31
October 2012, where applicable. In some cases the multiples can be compared to
equivalent companies, especially where a particular sector multiple does not
appear appropriate. It is currently industry norm to discount the quoted
earnings multiple to reflect the lack of liquidity in the investment.
Typically the discount is 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 year, the Company made eight new investments and nine follow on
investments amounting to £8,298,000. The unquoted investments are in ordinary
shares with full voting rights as well as loan note securities.

Unquoted investments are valued in accordance with the accounting policy set
out in accounting note 1, which takes account of current industry guidelines
for the valuation of venture capital portfolios and is compliant with IPEVC
valuation guidelines and current financial reporting standards.

Listed below are details of the Company's 10 largest investments by value.

Secret Escapes Limited
Launched in February 2011, Secret Escapes is an online travel club that offers
its members exclusive discounts of up to 70 per cent on luxury hotels and
holidays. Offers are usually available for between three and seven days. The
founders are aiming for Secret Escapes to become the leading luxury holiday
deal provider in the UK.

Initial investment date:
 April 2011
Cost: 
 £1,467,000
Valuation: 
 £2,840,000
Equity held: 
 8.54%
Equity held by all funds managed by Octopus: 17.44%
Last submitted audited accounts:   31
December 2011
Turnover
:
£2,035,803
Loss before tax: 
 (£1,235,508)
Net assets: 
 £2,126,845

CertiVox Limited
CertiVox was founded in 2009 based on the simple belief that everyone deserves
the right to secure their online information exchanges simply and easily. Its
leading-edge technology enables industries around the world - including
defence, government, legal and financial services - to protect and control
their information exchanges, whether through PCs, smart devices or the cloud.
By combining state-of-the-art crypto technology with its unique on-demand
encryption key management service, CertiVox is the only company in the global
market today that can arm businesses and individuals with frictionless
end-to-end encryption, key management and identity management services for the
web 2.0 world.

Initial investment date:
 March
2011
Cost: 
 £1,613,000
Valuation: 
 £1,634,000
Equity held: 
 16.34%
Equity held by all funds managed by Octopus: 33.08%
Last submitted audited accounts:  30 June
2011
Turnover
:
n/a
Net assets: 
 £1,720,269

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: 
 £1,125,000
Valuation:  
 £1,125,000
Equity held: 
 6.43%
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

UltraSoC Technologies Limited
UltraSoC Technologies Ltd develops advanced debugging technology for the
embedded electronic systems used in products, from cars to mobile phones.
UltraSoC Technologies is developing next-generation, silicon Intellectual
Property (IP) that addresses the challenges of debugging the application
software which provides the functionality and performance in modern electronic
products.

Initial investment date:
 September 2011
Cost: 
 £954,000
Valuation:  
 £954,000
Equity held: 
 20.73%
Equity held by all funds managed by Octopus: 65.21%
Last submitted audited accounts: 31
December 2011
Turnover
n/a
Loss before tax: 
 (£956,662)
Net assets: 
 £856,760

TouchType Limited
TouchType is a leader in the development of artificial intelligence and
machine learning technologies, encapsulated in its Fluency prediction engine,
a patent pending set of software algorithms. Its first product, SwiftKey(TM),
a text prediction technology designed to significantly boost the accuracy,
fluency and speed of text entry on mobile and computing devices, resulting in
users having to make less than half the number of keystrokes compared to a
standard QWERTY keyboard. SwiftKey(TM) has enjoyed tremendous success as both
an Android App, with over 10 million downloads to date, and as the installed
text prediction technology on a increasing range of smartphones and tablets.
It has won several high profile industry awards, including a prestigious
Global Mobile Award for the "Most Innovative App" and the Guardian Digital
Innovation Award for the "Best Startup Business".

Initial investment date:
 August
2010
Cost: 
 £384,000
Valuation: 
 £928,000
Voting rights held by Fund: 
 4.20%
Equity held by all funds managed by Octopus: 20.07%
Last submitted group accounts: 31
December 2011
Turnover
:
£654,623
Loss before tax: 
 (£1,285,798)
Net assets: 
 £1,005,210

Amplience Limited
Amplience is a leading Commerce Content Management platform for global brands
and retailers. The platform enables retailers to deliver engaging retail
experiences across multi-digital channels, including smartphones and tablets.
It makes it quicker and cheaper for retailers to update content on websites,
while also demonstrably increasing the amount their customers spend.

Initial investment date:
 December 2010
Cost: 
 £1,174,000
Valuation:  
 £915,000
Equity held: 
 13.50%
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)

Semafone Limited
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:
 June
2010
Cost: 
 £755,000
Valuation: 
 £755,000
Voting rights held by Fund: 
 3.56%
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)

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: 
 £750,000
Valuation:  
 £750,000
Equity held: 
 9.35%
Equity held by all funds managed by Octopus: 24.94%
Last submitted audited accounts: 31
December 2011 (abbreviated)
Turnover
Not disclosed
Loss before tax: 
 Not disclosed
Net liabilities: 
 (£237,727)

Executive Channel Europe Limited
Executive Channel installs digital display screens in office buildings which
it uses to display advertising, up-to-date news and information, via the
internet. These screens are usually located in the elevator lobby to engage an
exclusive audience with high spending power in an uncluttered environment.
Executive Channel is leveraging the industry move in the media market from
static billboards, to interactive digital formats.

Initial investment date:
 September
2010
Cost: 
 £640,000
Valuation: 
 £701,000
Voting rights held by Fund: 
 7.29%
Equity held by all funds managed by Octopus: 36.12%
Last submitted group accounts: 30 June
2011
Turnover
293,292
Loss before tax: 
 (£900,612)
Net assets: 
 £1,746,998

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: 
 £555,000
Valuation:  
 £555,000
Equity held: 
 11.34%
Equity held by all funds managed by Octopus: 32.64%
Last submitted audited accounts: n/a

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 £0.2
million to £2 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

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 Standard 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

Gregor Michie
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          -     (1)    (1)
Gain on disposal of current asset investments              -     110    110
Fixed asset investment holding gains            9          -      91     91
Current asset investment holding gains                     -     172    172
Other income                                    2         40       -     40
Investment management fees                      3      (101)   (303)  (404)
Other expenses                                  4      (304)       -  (304)
Return on ordinary activities before tax               (365)      69  (296)
Taxation on return on ordinary activities       6          -       -      -
Return on ordinary activities after tax                (365)      69  (296)
(Loss)/earnings per share - basic and diluted   7     (1.6)p    0.3p (1.3)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
period as set out above.

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

                               Income Statement

                                                    Year to 31 October 2011
                                                    Revenue Capital   Total
                                              Notes   £'000   £'000   £'000
Fixed asset investment holding losses                     -   (663)   (663)
Current asset investment holding gains                    -     228     228
Other income                                    2        60       -      60
Investment management fees                      3     (106)   (318)   (424)
Other expenses                                  4     (286)       -   (286)
Return on ordinary activities before tax              (332)   (753) (1,085)
Taxation on return on ordinary activities       6         -       -       -
Return on ordinary activities after tax               (332)   (753) (1,085)
Earnings/(loss) per share - basic and diluted   7    (1.5)p  (3.3)p  (4.8)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 had no recognised gains or losses other than the results for the
year as set out above.

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

Reconciliation of Movements in Shareholders' Funds

                                      Year to 31 October    Year to 31 October
                                                    2012                  2011
                                                   £'000                 £'000
Shareholders' funds at start of                   20,086                21,171
year
Return on ordinary activities                      (296)               (1,085)
after tax
Purchase of own shares                               (9)                     -
Issue of equity (net of expenses)                  1,242                     -
Shareholders' funds at end of year                21,023                20,086

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             13,412            5,671
Current assets:
Debtors                                 10        780               13
Money market funds and other deposits*  11      6,800           14,363
Cash at bank                                       91              107
                                                7,671           14,483
Creditors: amounts falling due within
one year                                12       (60)             (68)
Net current assets                                      7,611           14,415
Net assets                                             21,023           20,086
Called up equity share capital          13      2,398            2,258
Share premium                           14      1,101                -
Special distributable reserve           14     19,083           19,092
Capital redemption reserve              14          9                8
Capital reserve - losses on disposals   14      (672)            (494)
 - holding
gains/(losses)                          14         51            (196)
Revenue reserve                         14      (947)            (582)
Total shareholders' funds                              21,023           20,086
Net asset value per share                8              87.7p            89.0p

*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:

Gregor Michie
Chairman
Company No: 07035434

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

                             Cash Flow Statement
                                         Year to 31 October Year to 31 October
                                                       2012               2011
                                                      £'000              £'000
Net cash inflow/(outflow) from
operating activities                                  (796)              (675)
Financial investment:
Purchase of fixed asset investments   9             (8,298)            (4,492)
Sale of fixed asset investment        9                   -                  -
Management of liquid resources:
Purchase of current asset investments               (3,750)           (13,264)
Sale of current asset investments                    11,595             18,426
Taxation                              6                   -                  -
Dividends paid                                            -                  -
Financing:
Issue of shares                       13              1,242                  -
Purchase of own shares                13                (9)                  -
Decrease in cash resources at bank                     (16)                (5)

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

Reconciliation  of  Return  before  Taxation  to  Cash  Flow  from   Operating 
Activities
                                         Year to 31 October Year to 31 October
                                                       2012               2011
                                                      £'000              £'000
Return on ordinary activities before tax              (296)            (1,085)
Loss on disposal of fixed assets                          1                  -
Gain on disposal of current assets                    (110)                  -
(Gain)/loss on valuation of fixed asset
investments                                            (91)                663
Gain on valuation of current asset
investments                                           (172)              (228)
(Increase)/decrease in debtors                        (120)                  2
Decrease in creditors                                   (8)               (27)
Outflow from operating activities                     (796)              (675)

Reconciliation of Net Cash Flow to Movement in Net Funds
                                     Year to 31 October     Year to 31 October
                                                   2012                   2011
                                                  £'000                  £'000
Decrease in cash resources at
bank                                               (16)                    (5)
Movement in cash equivalents                    (7,563)                (4,934)
Opening net funds                                14,470                 19,409
Net funds at 31 October                           6,891                 14,470

Net Funds at 31 October comprised:

                        Year to 31 October 2012 Year to 31 October 2011
                                          £'000                   £'000
Cash at bank                                 91                     107
Money market funds                        3,396                   8,316
OEICs                                     3,404                   6,047
Net Funds at 31 October                   6,891                  14,470

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).

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 (32.8% 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 and loss. Accordingly, all interest income, fee income,
expenses and impairment 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 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 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 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 (open ended
investment companies) and 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. Dividend income is shown net
of any related tax credit.

Dividends receivable are brought into account when the Company's right to
receive payment is established and there is no reasonable doubt that payment
will be received. Fixed returns on debt and money market funds are recognised
so as to reflect the effective interest rate; 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 VCT.

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      Year ended
                                                          2012 31 October 2011
                                                         £'000           £'000
Interest on bank balances and dividends                     40
receivable on money market funds                                            60

3. Investment Management Fees

                         Year ended 31 October 2012 Year ended 31 October 2011
                           Revenue   Capital  Total   Revenue   Capital  Total
                             £'000     £'000  £'000     £'000     £'000  £'000
Investment management
fee                            101       303    404       106       318    424

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 Investments 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 February 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 ended 31 October      Year ended
                                                          2012 31 October 2011
                                                         £'000           £'000
Directors' remuneration                                     50              50
Fees payable to the Company's auditor                       12               8
for the audit of the financial
statements
Fees payable to the Company's auditor                        2               2
for other services - tax compliance
Accounting and administration services                      61              79
UK Listing Fees                                             19               6
Trail commission                                            98              89
Other expenses                                              62              52
                                                           304             286

Total annual  running  costs are  capped  at  3.2% of  net  assets  (excluding 
irrecoverable VAT). For  the year to  31 October 2012  the running costs,  as 
defined in the prospectus, were 2.9% of net assets (2011: 2.9%).

5. Directors' remuneration

                                       Year to 31 October 2012      Year ended
                                                               31 October 2011
                                                         £'000           £'000
Directors' emoluments
Gregor Michie (Chairman)                                    20              20
Lars McBride                                                15              15
Alex Macpherson                                             13               -
Chris Hulatt (paid to Octopus                                2              15
Investments Limited)
                                                            50              50

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).

      Factors affecting the tax charge for the current year:

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


Current tax reconciliation:                    31 October 2012 31 October 2011
                                                         £'000           £'000
Loss on ordinary activities before tax                   (296)         (1,085)
Capital (gains)/losses not taxable                       (372)             435
                                                         (668)           (650)
Current tax at 24.83% (2011: 26.83%)                     (166)           (174)
Unrelieved tax losses                                        -              65
Expenses not deductible/income not taxable for             166             109
tax purposes
Total current tax charge                                     -               -

The Company has losses arising from management charges of approximately
£1,840,000 (2011: £1,130,000) to carry forward to offset against future
taxable profits subject to agreement with HMRC. The Company has not recognised
the deferred tax asset of £431,000 (2011: £300,000) 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 maintain its 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 a total loss of £296,000 (2011:
£1,085,000) and 23,377,457 (2011: 22,578,706) ordinary shares, being the
weighted average number of ordinary shares in issue during the period.

The revenue earnings per share is based on a revenue loss of £365,000 (2011:
£332,000) and 23,377,457 (2011: 22,578,706) ordinary shares, being the
weighted average number of ordinary shares in issue during the period

The capital earnings per share is based on a capital gain of £69,000 (2011:
loss of £753,000) and 23,377,457 (2011: 22,578,706) ordinary shares, 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 £21,023,000 (2011: £20,086,000) and 23,982,316 (2011:
22,578,706) ordinary shares 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 or prior year.

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 or
prior year.

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 year (2011:
none). The change in fair value for the current and previous year 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 year to 31 October 2012 are summarised below.

                                               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                   6,334             6,334
Cumulative revaluation                            (663)             (663)
Valuation at 1 November 2011                      5,671             5,671
Movement in the year:
Purchases at cost                                 8,298             8,298
Disposal proceeds                                 (647)             (647)
Loss on realisation of investments                  (1)               (1)
Revaluation in year                                  91                91
Valuation at 31 October 2012                     13,412            13,412
Book cost at 31 October 2012:                    13,975            13,975
Revaluation to 31 October 2012:                   (563)             (563)
Valuation at 31 October 2012                     13,412            13,412

The investment portfolio is managed with capital growth as the primary focus.
The loan and equity investments are considered as one instrument for valuation
purposes and therefore they are combined in the table shown above. The costs
incurred in the disposals amount to £11,000.

Level 3 valuations include assumptions based on non-observable market data,
such as discounts applied either to reflect fair value of financial assets
held at the price of recent investment, or, in the case of unquoted
investments, to adjust earnings multiples. 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.

At 31 October 2012 and 31 October 2011, there were no commitments in respect
of investments not yet completed.

10. Debtors

                  31 October 2012 31 October 2011
                            £'000           £'000
Prepayments                   133              11
Disposal proceeds             647               2
                              780              13

Disposal proceeds of £132,000 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           3,396           8,316
OEIC's                       3,404           6,047
                             6,800          14,363

All current asset investments held at the year 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 £6,800,000
(2011: £14,363,000).

12. Creditors: amounts falling due within one year

                31 October 2012 31 October 2011
                          £'000           £'000
Accruals                     60              58
Other creditors               -              10
                             60              68

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:
23,982,316 (2011: 22,578,706) ordinary  shares           2,398           2,258
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 VCT.

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 1,414,735 shares at a price of 92.6p during the year (2011:
No shares were issued during the year).

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

                                                11,125 at a price of 83.2p per
· 2 March 2012: share

14. Reserves

                Share                               Capital
              Premium                      Capital  reserve
                £'000       Special        reserve  holding    Capital
                      distributable gains/(losses)   gains/ redemption Revenue
                            reserve    on disposal (losses)    reserve reserve
                              £'000          £'000    £'000      £'000   £'000
Balance as at       -        19,092          (494)                   8
1 November
2011                                                  (196)              (582)
Return on           -             -              -        -          -   (365)
ordinary
activities
after tax
Purchase of         -           (9)              -        -          1       -
own shares
Issue of        1,101             -              -        -          -       -
Equity
Management          -             -          (303)        -          -       -
fees
allocated as
capital
expenditure
Current year        -             -            109        -
gains on
disposal
Current             -             -              -      263          -       -
period gains
on
revaluation
Prior year          -             -             16     (16)
gains on
disposal
Balance as at   1,101       19,083*         (672)*                   9
31 October
2012                                                     51             (947)*

*Reserve 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.

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

                       £'000
As at 1 November 2011 18,016
Movement in year       (552)
As at 31 October 2012 17,464

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.

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                              13,412           5,671
Current asset investments                             6,800          14,363
Total                                                20,212          20,034
Loans and receivables
Cash at bank                                             91             107
Accrued Income                                            -               2
Disposal proceeds                                       647               -
Total                                                   738             109
Liabilities at amortised cost
Accruals                                                 60              68
Total                                                    60              68

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 to X. An analysis of investments is given in note 9.

63.8% (2011: 28.2%) 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 £671,000 (2011: £284,000). An
equivalent change in the opposite direction would have reduced net assets and
the total return for the period by the same amount. 

32.3% (2011: 71.5%) 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 year by £340,000 (2011:
£716,000). An equivalent change in the opposite direction would have reduced
net assets and the total return for the year 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         2,150      11%            5.0        124      12%        5.0

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 2012. 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           3,487           8,423

A 1% increase in the base rate would increase income receivable from these
investments and the total return for the period by £34,870 (2011: £84,230).

Credit risk
There were no significant concentrations of credit risk to counterparties at
31 October 2012. By cost, no individual investment exceeded 7.7% of the
Company's net assets at 31 October 2012.

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           3,487           8,423

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.

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 and BlackRock Inc. 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 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 £6,800,000.

16.  Post balance sheet events
The following events occurred between the balance sheet date and the signing
of these financial statements:

  oOn 15 November 2012 a further £109,000 was invested into Bowman Power
    Limited.
  oOn 9 January 2013 a further £74,000 was invested into Vega-Chi Limited.

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 £104,000 (2011: £90,000) was paid during the year
and there was £25,000 (2011: £nil) outstanding at the year end.

There were no contingencies, guarantees or financial commitments as at 31
October 2012 (2011: none).

18. Transactions with manager
Octopus Titan VCT 4 plc has employed Octopus Investments Limited throughout
the year as the Investment Manager.

Octopus Titan VCT 4 plc has paid Octopus £508,000 (2011: £424,000) in the year
as a management fee which includes a prepayment of £104,000 (2011: £nil) as 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 Investments Limited 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 £77,000 (2011: £64,000) was paid to Octopus Investments and there was
£16,000 (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 £15,000 per annum. During the year there
was £4,000 (2011: £nil) in prepayments at the balance sheet date.

In addition, Octopus Investments 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 2013 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 Octopus the
Company falls short of the Performance Value on the previous financial year
end, no incentive fee will arise. If, on a subsequent financial period end,
the performance exceeds the previous best Performance Value of Octopus the
Company, the Investment Manager will be entitled to 20% of such excess in
aggregate.

No performance fee has been recognised for the year 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 4 plc during the
year to 31 October 2012 until his resignation on 12 December 2011, is a
Director of Octopus Investments Limited. Alex Macpherson, an investment
manager at Octopus Investments Limited was appointed as a non-executive
director of Octopus Titan VCT 4 plc on 12 December 2011.

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Source: Octopus Titan VCT 4 PLC via Thomson Reuters ONE
HUG#1673326