TIDMOXH
2nd May 2018
Oxford Technology 2 VCT plc ("the Company" or "OT2")
Annual Report and Accounts for the year ended 28 February 2018
The Directors are pleased to announce the audited results of the Company
for the year ended 28 February 2018. A copy of the Annual Report and
Accounts (together the "Accounts") will be made available to
Shareholders shortly. Set out below are extracts from the audited
Accounts. References to page numbers below are to those Accounts.
The AGM will be held at The Magdalen Centre, Oxford Science Park, Oxford
OX4 4GA on Thursday 12 July 2018, at 11am.
A copy of the Accounts will be available from the registered office of
the Company at The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA,
as well as on the Company's website: www.oxfordtechnology.com/vct2
Financial Headlines
Year Ended Year Ended
28 February 2018 28 February 2017
Net Assets at Year End GBP1.69m GBP2.53m
Net Asset Value per Share 31.7p 37.2p
Dividend per Share paid in Year 8.0p -
Cumulative Dividend per Share 21.0p 13.0p
NAV + Cumulative Dividend per Share 52.7p 50.2p
paid from Incorporation
Share Price at Year End 27.5p 20.0p
Earnings Per Share
(Basic & Diluted) 1.0p 9.0p
Chairman's Statement
I am pleased to present to fellow shareholders my Annual Report for the
year to 28 February 2018, which has been a comparatively busy time for
your Company.
Overview and Results
The most significant impact on the Company was the disposal of our
largest investment, OC Robotics (OCR), and the return of nearly GBP900k
to shareholders, more of which is detailed below.
The net asset value per share on 28 February 2018 was 31.7p compared to
37.2p on 28 February 2017, following a dividend payment of 8p per share.
The earnings per share in the year to 28 February 2018 were 1.0p, with
the balance of the increase in net asset per share as a result of the
Tender Offer. This is the fourth consecutive year of increased valuation
per share. At 28 February 2018 the Total Return was 52.7p per share.
With the sale of OCR, our assets are less concentrated. The Company's
eight remaining portfolio company holdings are at different stages of
development. The Directors continue to monitor all companies, looking
for the optimum time to realise your Company's investment in them. We
were able to provide follow-on funding to two of these during the year:
Arecor (GBP200k) and ImmBio (GBP30k).
Sale of OC Robotics and resultant Return of Funds to shareholders
As previously reported, OCR (which represented 60% of our net assets at
the start of the year) was sold to GE Aircraft Engine Services Ltd on 8
June 2017. OT2 received a payment of GBP1,457k with a further GBP327k
being held in escrow for 24 months against normal business warranties.
In line with OT2's normal practice, 50% of the amount in escrow has been
recognised in the NAV. OT2 originally invested GBP125k in 2001 when the
company was a start-up, and then made additional investments over the
years taking the total investment to GBP311k. So far, the investment
has therefore returned a five-fold uplift vs cost.
With significant cash proceeds available, the Board offered shareholders
the opportunity to sell 30% of their holding back to the Company via a
Tender Offer, allowing allotments over this level should other
shareholders not take up their Basic Entitlement.
In September we concluded the Tender Offer. The Company purchased all
the shares tendered by shareholders, which represented over 20% of our
share capital, returning GBP460k to them. As a result, the Company
cancelled 1,461,034 Ordinary Shares, reducing its total issued share
capital from 6,792,923 to 5,331,889 Ordinary Shares. The 15% level of
discount was set to ensure a fair balance between those shareholders who
chose to participate in the Tender Offer, and those wishing to retain
their shareholding in the Company. This resulted in a 1.4p per share
increase in net asset value, which is in part to compensate remaining
shareholders who are liable to incur a greater proportion of running
costs per share going forward given the fixed nature of these expenses.
On 5 December 2017 we paid a further dividend of 8p per share to all
those shareholders remaining on the register - a total of GBP427k. This
was slightly higher than the amount envisaged in the Circular as not all
the funds earmarked for the Tender Offer were required for that purpose.
Portfolio Review
The Directors continue to take an active interest in the remaining
companies within the portfolio, both to support their management teams
to achieve company development, but also to prepare companies for
realisation at the appropriate time. It should however be noted that
approaches do occur at other times, and the ability of the Directors and
Investment Advisor to be able to provide support when such approaches
occur is essential for maximising value. This was demonstrated in the
recent realisation of OCR.
Select Technology, a photocopier (or more generally Multi Function
Device, or MFD) software company, is the largest holding in your
Company's portfolio, although it only represents just over 20% of our
net assets. Despite seeing core sales grow, it has experienced reduced
profitability and cash generation this year after simplifying its
business model. As reported last year, this should reduce the dependency
on one particular supplier, increase business resilience and, ultimately,
enable more rapid growth by enabling Select Technology to take on a more
balanced portfolio of software products for worldwide distribution. It
is too early to be able to report fully on the outcome of this change in
the business model, but early indications are not negative. As reported
in the half year statement, having taken these developments into account,
we have reverted to a valuation methodology based on a sales multiple to
more appropriately reflect the prospects of the business. Our stake in
this business has increased slightly in value over the course of the
reporting period.
At the end of November 2017, we made a GBP200k follow-on investment into
Arecor, making it the second largest holding in the Company's portfolio.
Arecor is a potentially world class pharmaceutical research company
based in Cambridge and has a very advanced diabetes drug formulation
technology. During the past year Arecor has announced significant
progress, including a licence agreement with a major global healthcare
company, as well as the successful pre-clinical development of stable
rapid-acting, ultra-concentrated insulin for the significantly enhanced
treatment of type 1 diabetes. It has had other good news flow and won
an Innovate grant. The company is still trying to finalise the
investment terms for the full GBP6m round it is seeking, and there is a
risk that the terms may be at a lower price than that at which we
invested in November; we have therefore taken a prudent view with our
valuation and hence there is a small reduction in the value of our
investment in the year.
The recent investment of GBP30k in ImmBio was in a new class of share
with a significant preference. This has resulted in an uplift in its
valuation of GBP83k. The investment was made to support continued
commercialisation of its PnuBioVax Vaccine. The final results to come
from their First-in-Human study were positive and was found to be safe
and well tolerated, and capable of producing antibody responses against
key S. pneumoniae antigens broadly conserved across strains.
Negotiations are progressing with first licensees for the vaccine, and a
further GBP12,000 was committed in April 2018 to allow time for these
conversations to progress.
Oxis Energy is also raising funds at an increased valuation, and again
taking into account the preferences linked to our previous investment,
we have been able to increase its value.
Plasma Antennas has had interest from many of the major players in
telecoms for their Plasma Antenna, but after long discussions no offers
to invest have come forward, nor any immediate further sales
opportunities. In these accounts, we have taken a provision against our
equity holding, totalling GBP92k. The company is now in the process of
being mothballed, putting at risk the remaining GBP38k valuation as at
28 February 2018.
Further details on these investments are contained within the Investment
Portfolio Review. The full list of the Company's investments is shown on
page 18, with details of all investees on our website.
After the year end, the Company invested GBP150,000 into Scancell
Holdings Plc (Scancell). Scancell is a company well known to the
Directors and Investment Adviser (and also to shareholders who have
attended our recent AGMs). It is developing a number of exciting new
potential breakthrough cancer treatments and has had some very positive
news flow during the last 12 months. The company is quoted on AIM, and
in April, closed a GBP7.5m placing, and OT2 now owns 1,250,000 shares.
The qualifying investment will also help OT2 manage any future liquidity
needs (see VCT Market Changes below).
Dividends/Return of Capital
The Directors are not recommending any further dividends at this time.
The timing and quantum of the 8p per share dividend payment in December
was to ensure the maximum possible investment could be made into Arecor,
whilst ensuring all VCT tests were met. It was also important to balance
the desire to return as much cash to shareholders as possible with the
need to retain adequate cash to be able to continue to support our
remaining investees, and also to cover operating costs for the
foreseeable future.
The ongoing strategy is to continue to seek to crystallise value from
the portfolio and distribute cash to shareholders.
VCT Market Changes
In terms of the broader VCT market, the main event of the year was the
Patient Capital Review (PCR) undertaken by HM Treasury (HMT). Your
Board engaged with the PCR on behalf of your VCT, seeking to ensure the
continued viability of your Company.
As mentioned in our third quarter update, your Board broadly welcomed
the results of the PCR as announced in the Autumn Budget in November
2017. In summary, HMT wishes to encourage investments into earlier
stage businesses; and, if necessary, for these investments to be allowed
to flourish over longer periods of time. We believe that, appropriately
resourced and supported, the VCT structure is well-suited to this
patient approach to long term value creation. We also welcome the
extension of the six month VCT rule to twelve months as it provides a
greater level of future re-investment flexibility.
One of the Autumn Budget's announcements was an increase in the level of
VCT qualifying investments to 80% (up from 70%) that a VCT needs to
hold; this legislation received Royal Assent on 15 March 2018. For OT2,
this change is effective from 1 March 2020, and may make it more
challenging for small VCTs, such as your Company, to manage ongoing
compliance with the qualifying tests, which is an unintended consequence
of the new legislation. Cash holdings are non-qualifying, but VCTs are
obliged to demonstrate that they have adequate working capital over the
medium term, which would not be possible if cash reserves must be
distributed in order to fulfil the new legislation - corporate liquidity
tests could thus become very tight.
Furthermore, in the case of OT2, all our investments have been in
unquoted companies with limited short term methods of realisation at a
fair value. We fully understand the rationale for introducing this
change and believe that a simple amendment is possible that would
mitigate this unintended consequence while ensuring that the legislative
change retains HMT's desired effect.
We will continue to lobby for an appropriate amendment to be made.
However, to mitigate the challenges that such an issue might cause, the
Board have chosen to make the qualifying investment in Scancell as
detailed above, so as to provide additional liquidity should it be
required.
A further change has seen the introduction of MiFID II & PRIIPS. The
most significant impact on VCTs has been the requirement to prepare a
Key Information Document (KID). Shareholders who are interested can
find it on the Company's website.
Planning for the Future
Your Board continues to look at methods of improving operational
efficiency, reducing costs and, more generally, putting in place
appropriate plans to ensure that your VCT's operational costs relative
to its overall size remain within acceptable limits. Shareholders may be
aware of some significant changes to the VCT market in recent years.
Changes to pension tax reliefs are driving investors to look for
alternatives and, coupled with a reduced supply of tax efficient
investment opportunities, have resulted in exceptional demand from
investors wishing to subscribe for VCTs. VCT legislation has been
modified to target more VCT money towards the types of earlier stage
companies that OT2 has historically invested in. Given the types of
investments OT2 makes, and the fact that all are existing investees that
have previously received financing from VCTs, your Company has not been
affected by most of the recent changes in VCT legislation. However, the
new environment may present an opportunity for your VCT.
In July, the Board announced that it was aware that due to recent
realisations, the VCT is becoming sub economic with unavoidable
overheads on a small asset base. The VCT has limited ability to increase
the asset base on its own, and a number of options to deal with this are
under consideration. I can confirm that discussions continue regarding
these options and am hopeful that we can make a further announcement in
the not too distant future. Once a proposal that the Board considers to
be in the best interests of existing shareholders is sufficiently
advanced, shareholders will be invited to approve any new arrangements.
However, there can be no certainty that any of these discussions will
lead to a concrete proposal, either at this time or in the future.
AGM
Shareholders should note that the AGM for the Company will be held on
Thursday 12 July 2018 at the Magdalen Centre, Oxford Science Park,
starting at 11am and will include presentations by Oxford Technology
Management and some of the companies that the Oxford Technology VCTs
have invested in.
A formal Notice of the AGM has been enclosed with these Financial
Statements together with a Form of Proxy for those not attending. We
appreciate the input of our shareholders and look forward to welcoming
as many of you as possible on the day - thank you for your ongoing
support.
Outlook
The Oxford Technology VCTs have operated and continue to operate very
much in the spirit of the VCT legislation by investing in and
subsequently supporting early stage technology companies. Unfortunately,
the current VCT rules sometimes limit the amount of follow on investment
that we are able to make.
Looking ahead, though, the Board continues to believe your VCT is an
appropriate structure to hold your Company's assets. The Directors'
view remains that the portfolio still holds significant potential over
the medium term but is not without risk. As per our stated strategy,
your Board continues to work to maximise value, reduce costs, and - when
valuations and liquidity allow - crystallise this value and distribute
the proceeds to shareholders.
Should any of the discussions to increase the asset base referred to
above lead to a concrete proposal, we look forward to presenting these
to shareholders in due course.
Richard Roth
Chairman
2nd May 2018
Investment Portfolio Review
OT2 was formed in 2000 and invested in a total of 30 companies, all
start-up or early stage technology companies. Some of these companies
failed with the loss of the investment. Some have succeeded and have
been sold. The table on page 18 shows the companies remaining in the
portfolio. The investment in Scancell made after the year end added a
further company to the portfolio. A more detailed analysis is given of
the top five investments.
OC Robotics, previously the Company's largest investment, was sold to GE
Aircraft Engine Services in June 2017 for an immediate payment of
GBP1,356k with GBP101k following 4 months later. There is still GBP328k
being held in escrow from the deal, half of which has been accrued in
the NAV at 28 February 2018. Overall, this represented a 5 fold uplift
on the cost of the investment. A dividend of 8p per share was paid
following this sale, as well as a Tender Offer returning a further
GBP460k to shareholders.
Select Technology specialises in software for photocopiers - now known
as MFDs - Multi-Function Devices. Over the last decade Select has built
up a global network of distributors and dealers through which it sells
both its own and third party products. These products now include
PaperCut, Kpax, Foldr and Drivve Image. Sales have increased from
GBP210k in the year to July 2010 to over GBP5m in the year to January
2018, though Select lost one contract in 2017 that resulted in
substantially reduced profits in the year to July 2017. However, the
core business has continued to grow and it is hoped that Select should
be able to pay a dividend in OT2's current financial year. It has
employees all over the world; everyone works remotely.
Arecor is making encouraging progress. The company has progressed its
insulin programme and has both the fastest acting and most concentrated
formulations in the world. In preparation for the start of clinical
trials it is raising money and there has been good interest, recognizing
both the technical advantage and the very competitive nature of the
insulin market. During the year, OT2 invested GBP200,000 in Arecor. The
term sheet for the next fundraising is currently being negotiated.
GBP30,000 was invested in July 2017 into ImmBio to help support the
commercialisation of the Pneumonia vaccine which had a successful phase
1 clinical trial in spring 2016. A deal was arranged with the Liverpool
School of Tropical Medicine to apply for joint grants to support
additional clinical trials. The collaboration has not yet resulted in
any successful grant applications. ImmBio has a new CEO, Enrique Tabares
having taken over the role. He is leading the discussions with
potential licensees, which have been progressing since mid-2017.
Negotiations are progressing with first licensees for the vaccine, and a
further GBP12,000 was committed in April 2018 to allow time for these
conversations to progress.
Oxis Energy is developing a Lithium Sulphur rechargeable battery with a
significantly higher specific energy (energy storage per unit weight)
than the currently available Lithium Ion batteries. OT2 was the first
investor in Oxis Energy (then known as Intellikraft) in January 2000.
This battery is now planned to be tested in electric vehicles, with
electric buses being the main focus, as every kilogramme of weight saved
in the battery translates to increased payload/ number of passengers
that can ride the bus. The other area of focus is aerospace, where
weight reduction is also clearly of interest.
Orthogem has had CE approval for its Tripore putty product and it has
had a very good response from surgeons. There has also been a good
response to the product from distributors: four have already signed up
and there is a long list still being processed. Unfortunately, during
the year the FDA turned down Orthogem's application to sell the Tripore
putty in the USA. Despite originally approving the model used for the
trials, on review the FDA determined that the model being used was not
appropriate. This means that Orthogem will have to run new FDA trials.
This delays access to the largest market, but the company has made good
progress.
Plasma Antennas has developed a range of next generation smart
selectable antenna technologies and has a prototype of a true plasma
antenna, which it was hoped might be at the centre of tomorrow's
communications systems. However, although some of the largest global
companies were very interested, with companies in the US, China and
Japan all making special visits to meet Plasma in Winchester, no
partnership deal was done. Therefore, at the time of writing, Plasma is
in the process of being mothballed.
After the year end, OT2 invested GBP150,000 into Scancell Holdings Plc
(Scancell) an AIM-listed stock well known to the Directors and
Investment Adviser. Scancell is developing novel immunotherapies for
cancer based on two platform technologies known as Immunobody and
Moditope. Results from Scancell's first clinical trial for the
treatment of melanoma continue to be excellent with recurrence free
survival at 69% at 5 years, surpassing results in other trials of
ipilimumab (leading immunotherapy for cancer) which showed 46.5% at 3
years.
Possibly the biggest news of the year for Scancell was the decision by
Cancer Research UK (CRUK) to conduct a trial of SCIB2 in combination
with checkpoint inhibitors. SCIB2 should provide the impetus to the
immune system to attack the tumor, and the checkpoint inhibitor will
remove the barriers to its action. The study will focus on Non Small
Lung Cell Cancer, but the results will have relevance for a range of
tumors. The trial will be conducted in full by CRUK and Scancell will be
able to purchase the results and commercialise them itself, or leave
them with CRUK and share in their commercial success. Scancell has also
started a development project with BioNtech, the largest privately owned
Biotech company in Europe. Scancell's focus is now on generating
clinical data and two more trials should read out over the next two
years. If Scancell is successful in its CRUK Grand Challenge application
it will also be able to start a third trial on Moditope. Scancell has
now been granted the European patent for use of citrullinated proteins
in cancer treatment. Scancell will use the proceeds of the placing and
open offer to support clinical trials for SCIB1, SCIB2 and Modi-1 and
pre-clinical work for Modi-2.
New Investments in the year
There were two follow-on investments during the year of GBP200,000 into
Arecor and GBP30,000 into ImmBio. All new investments have complied with
both EU State Aid rules and HMRC VCT rules.
Disposals during the year
OC Robotics was sold during the year and OT2 received GBP1,457k from its
original investment of GBP311k.
Valuation Methodology
Quoted and unquoted investments are valued in accordance with current
industry guidelines that are compliant with International Private Equity
and Venture Capital (IPEVC) Valuation Guidelines and current financial
reporting standards.
VCT Compliance
Compliance with the main VCT regulations as at 28 February 2018 and for
the year then ended is summarised as follows:
Type of Investment
By HMRC Valuation Rules Actual Target
Minimum obligation of:
VCT Qualifying Investments 72% 70%
Maximum allowed:
Non-Qualifying Investments 28% 30%
Total 100% 100%
At least 10% of each investment in a qualifying company is held in
'eligible shares' - Complied.
No more than 15% of the income from shares and securities is retained -
Complied.
No investment constitutes more than 15% of the Company's portfolio (by
value at time of investment or when the holding is added to) - Complied.
The Company's income in the period has been derived wholly or mainly
(70% plus) from shares or securities - Complied.
No investment made by the VCT has caused the company to receive more
than GBP5m of State Aid investment in the year, nor more than the
lifetime limit of GBP12m - Complied.
Table of Investments held by Company at 28 February 2018
Change
in
value % equity
Date of for the held by
initial Net cost of Carrying value at 28/02/18 year % equity held by all % Net
Company Description investment investment GBP'000 GBP'000 GBP'000 OT2 OTVCTs Assets
Select Photocopier
Technology Interfaces Nov 2001 132 356 14 7.4 58.6 21.1
Protein
Arecor stabilization Jul 2007 289 268 148 2.6 12.1 15.8
ImmBio Novel vaccines Dec 2000 255 176 113 2.0 15.9 10.4
Rechargeable
Oxis Energy batteries Jan 2000 540 140 113 0.2 0.5 8.3
Bone graft
Orthogem material Dec 2000 342 100 - 5.4 20.2 5.9
Active wound
healing
Insense dressings Jun 2001 204 52 - 2.0 6.8 3.1
Solid state
Plasma directional
Antennas antennas Nov 2001 188 38 (91) 5.6 48.8 2.2
Data
Inaplex integration Sep 2001 138 19 (18) 21.5 34.8 1.1
Totals 2,089 1,149 279
Other Net
Assets 542 32.1
NET ASSETS 1,691 100
Number of shares in issue: 5,331,889
Net Asset Value per share at 28 February 2018: 31.7p
Dividends paid to date per share: 21p per share
This table shows the current portfolio holdings. The investments in
Acumen, Assertion, Astron Clinica, Ciphergrid, CHR Design, Coraltech,
Im-Pak, Freehand Surgical, Inscentinel, Jetmask, M3 Networks, OST,
Promic and SVA have been written off. The investments in Hardide,
Commerce Decisions, MET, Telegesis, Equitalk, Duncan Hynd Associates and
OC Robotics have been sold.
Lucius Cary - Director
OT2 Managers Ltd
Investment Manager
2nd May 2018
Directors' Report
The Directors present their report together with Financial Statements
for the year ended 28 February 2018.
The Directors consider that the Annual Report and Financial Statements,
taken as a whole are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
performance, business model and strategy.
This report has been prepared by the Directors in accordance with the
requirements of s415 of the Companies Act 2006. The Company's
independent auditor is required by law to report on whether the
information given in the Directors' Report is consistent with the
Financial Statements.
Principal Activity
The Company commenced business in 2000. The Company invests in start-up
and early stage technology companies in general located within 60 miles
of Oxford. The Company has maintained its approved status as a Venture
Capital Trust by HMRC.
Directors
The Directors of the Company are required to notify their interests
under Disclosure and Transparency Rule 3.12R. The membership of the
Board and their beneficial interests in the ordinary shares of the
company at 28 February 2018 and at 28 February 2017 are set out below:
Name 2018 2017
R Roth 44,033 62,902
R Goodfellow 14,000 19,700
D Livesley Nil Nil
A Starling Nil Nil
Under the Company's Articles of Association one third of the Directors
are required to retire by rotation each year. Robin Goodfellow and
David Livesley will be nominated for re-appointment at the forthcoming
AGM. The Board believes that both non-executive Directors continue to
provide a valuable contribution to the Company and remain committed to
their roles. The Board recommends that Shareholders support the
resolutions to re-elect Robin Goodfellow and David Livesley at the
forthcoming AGM.
The Board is cognisant of shareholders' preference for Directors not to
sit on the boards of too many larger companies ("overboarding").
Shareholders will be aware that in July 2015, the Company, along with
the other VCTs that were managed by Oxford Technology Management,
appointed directors such that the four VCTs each had a Common Board. In
addition, Richard Roth has subsequently also become a Director of Hygea
vct plc, a VCT investing in the Med Tech sector which is also
self-managed and has a number of investments in common with the Oxford
Technology VCTs. Whilst great care is taken to safeguard the interests
of the shareholders of each separate company, there is an element of
overlap in the workload of each Director across the four OT funds due to
the way the VCTs are managed. The Directors note that the workload
related to the four OT funds is less than it would be for four totally
separate and larger funds, and are satisfied that Richard Roth has the
time to focus on the requirements of each OT fund.
Investment Management Fees
OT2 Managers Ltd, the Company's wholly owned subsidiary, has an
agreement to provide investment management services to the Company for a
fee of 1% of net assets per annum. Alex Starling and Richard Roth,
together with Lucius Cary are Directors of OT2 Managers Ltd.
Directors' and Officers' Insurance
The Company has maintained insurance cover on behalf of the Directors,
indemnifying them against certain liabilities which may be incurred by
them in relation to their duties as Directors of the Company.
Ongoing Review
The Board has reviewed and continues to review all aspects of internal
governance to mitigate the risk of breaches of VCT rules or company law.
Whistleblowing
The Board has been informed that the Investment Manager has arrangements
in place in accordance with the UK Corporate Governance Code's
recommendations by which staff of Oxford Technology Management or the
Secretary of the Company may, in confidence, raise concerns within their
respective organisations about possible improprieties in matters of
financial reporting or other matters.
Bribery Act 2010
The Company is committed to carrying out business fairly, honestly and
openly. The Investment Manager has established policies and procedures
to prevent bribery within its organisation. The Company has adopted a
zero tolerance approach to bribery and will not tolerate bribery under
any circumstance in any transaction the Company is involved in. The
Company has instructed the Investment Manager to adopt the same approach
with investee companies.
Relations with Shareholders
The Company values the views of its shareholders and recognises their
interest in the Company. The Company's website provides information on
all of the Company's investments, as well as other information of
relevance to shareholders (www.oxfordtechnology.com/vct2).
Shareholders have the opportunity to meet the Board at the Annual
General Meeting. In addition to the formal business of the AGM the
Board is available to answer any questions a shareholder may have.
The Board is also happy to respond to any written queries made by
shareholders during the course of the year and can be contacted at the
Company's registered office: The Magdalen Centre, Oxford Science Park,
Oxford OX4 4GA.
Going Concern
After making enquiries, the Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence
for the foreseeable future. For this reason they have adopted the going
concern basis in preparing the Financial Statements.
Substantial Shareholders
At 28 February 2018, the Company has been notified of five investors
whose interest exceeds three percent of the Company's issued share
capital: Ms Shivani Palakpari Shree Parikh, 6.4%; Barclays Direct
Investing Nominees Ltd, 4.8%; Mr Richard Vessey, 4.4%; Mrs Mary Louisa
Perry, 3.8% and Mr Merrick Sidney Whitehouse Feast, 3.2% .
Auditors
James Cowper Kreston offer themselves for re-appointment in accordance
with Section 489 of the Companies Act 2006.
On behalf of the Board
Richard Roth
Chairman
2nd May 2018
Directors' Remuneration Report
Introduction
This report has been prepared by the Directors in accordance with the
requirements of the Companies Act 2006. The Company's independent
auditor, James Cowper Kreston, is required to give its opinion on
certain information included in this report. This report includes a
statement regarding the Directors' Remuneration Policy. This report sets
out the Company's Directors' Remuneration Policy and the Annual
Remuneration Report which describes how this policy has been applied
during the year.
The Directors' Remuneration Policy was last approved by shareholders at
the AGM on 26 August 2015. It needs to be put to a shareholder vote
every three years, and shareholders will be asked to approve it again at
the Annual General Meeting on 12 July 2018.
Shareholders also need to approve the Directors' Remuneration Report
every year. It was last approved at the AGM on 5 July 2017 on a
unanimous show of hands and 100% of proxies voted in favour, and a
Resolution to approve the Directors' Remuneration Report for the year
ended 28 February 2018 will also be proposed at the Annual General
Meeting on 12 July 2018.
Directors' Terms of Appointment
The Board consists entirely of non-executive Directors who meet at least
four times a year and on other occasions as necessary to deal with
important aspects of the Company's affairs. Directors are appointed with
the expectation that they will serve for at least three years and are
expected to devote the time necessary to perform their duties. All
Directors retire at the first general meeting after election and
thereafter every third year, with at least one Director standing for
election or re-election each year. Re-election will be recommended by
the Board but is dependent upon shareholder vote. Directors who have
been in office for more than nine years will stand for annual
re-election in line with the AIC Code. There are no service contracts in
place, but Directors have a letter of appointment.
Directors' Remuneration Policy
The Board acts as the Remuneration Committee and meets annually to
review Directors' pay to ensure it remains appropriate given the need to
attract and retain candidates of sufficient calibre and ensure they are
able to devote the time necessary to lead the Company in achieving its
strategy.
The Articles of Association of the company state that the aggregate of
the remuneration (by way of fee) of all the Directors shall not exceed
GBP50,000 per annum unless otherwise approved by Ordinary Resolution of
the Company. The following Directors' fees are payable by the Company:
per annum
Director Base Fee GBP3,500
Chairman's Supplement GBP2,000
Audit Committee Chairman GBP3,000
Audit Committee Member GBP1,500
The OT2 Director Fees are amongst the lowest of any VCT (apart from the
other OT VCTs). However the Board has spent and continues to spend more
time on Company activities than was initially envisaged in Summer 2015
(when the fees were last set) partly due to closer involvement with
investment, accounting and administration procedures and partly due to
compliance with additional government regulations. Typically VCT
industry total directors' fees are in excess of GBP50k and individual
fees in excess of GBP15k for equivalent levels of work.
In the summer of 2015 the finances of OT2 had been in poor shape for
some years. To alleviate financial problems the fund manager had (over
the previous 4 years) helped out by deferring some management fee.
However this had built up a liability of GBP53k payable out of potential
future profits. The then Chairman had also previously waived his fee
(GBP7,500) for 4 years. The new Board determined to put the finances on
a more sustainable basis and renegotiated the management fee from 2%
down to 1% and agreed to pay off the deferred fee liability over 3
years. This has now been completed. Additionally all 4 new Directors
voluntarily agreed to waive GBP1,500 (43%) of their base director fee of
GBP3,500 until the fund performance improved.
Since the new Board assumed office in 2015, nearly 55% of the opening
NAV of GBP1.95m has been returned to shareholders in tax free dividends
and via the tender offer, and the remaining assets are still valued at
GBP1.69m. In addition to its ongoing responsibilities, the Board managed
and drafted a significant amount of the Tender process and associated
documentation without further remuneration thereby saving shareholders
additional costs. In the view of the Board, this substantial increase of
shareholder assets and distributions from 39.1p per share to 59.5p per
share (distributions plus remaining assets) represents a significant
performance improvement, and therefore the Board has now determined to
end its voluntary partial fee waiver. However, given the relatively low
funds under management, the Directors do not propose any other change
from the previously agreed levels.
Richard Roth chairs the Company. He also chairs the Audit Committee,
with Robin Goodfellow as a member of the Committee. As the VCT is
self-managed, the Audit Committee carries out a particularly important
role for the VCT and plays a significant part in the sign off of
quarterly management accounts, and the production of the half year and
annual statutory accounts.
Fees are currently paid annually. The fees are not specifically related
to the Directors' performance, either individually or collectively. No
expenses are paid to the Directors. There are no share option schemes
or pension schemes in place but Directors are entitled to a share of the
carried interest as detailed below.
Alex Starling and Richard Roth receive no remuneration in respect of
their directorships of OT2 Managers Ltd, the Company's Investment
Manager.
The performance fee is detailed in note 3. Current Directors are
entitled to benefit from any payment made, subject to a formula driven
by relative lengths of service. The performance fee becomes payable if
a certain cash return threshold to shareholders is exceeded - the excess
is then subject to a 20% carry that is distributed to Oxford Technology
Management, past Directors and current Directors; the remaining 80% is
returned to shareholders. At 28 February 2018 no performance fee was
due.
Should any performance fee be payable at the end of the year to 28
February 2019, Alex Starling, Robin Goodfellow, and Richard Roth would
each receive 0.28% of any amount over the threshold and David Livesley
0.83%. No performance fee will be payable for the year ending 28
February 2019 unless original shareholders have received back at least
151.7p in cash for each 100p (gross) invested.
Relative Spend on Directors' Fees
The Company has no employees, so no consultation with employees or
comparison measurements with employee remuneration are appropriate.
Loss of Office
In the event of anyone ceasing to be a Director, for any reason, no loss
of office payments will be made. There are no contractual arrangements
entitling any Director to any such payment.
Annual Remuneration Report
Directors' Fees Year End 28/02/19 Year End 28/02/18 Year End 28/02/17
(unaudited) (audited) (audited)
Richard Roth GBP8,500 GBP7,000 GBP7,000
Alex Starling GBP3,500 GBP2,000 GBP2,000
Robin Goodfellow GBP5,000 GBP3,500 GBP3,500
David Livesley GBP3,500 GBP2,000 GBP2,000
Total GBP20,500 GBP14,500 GBP14,500
Income Statement
Year Ended Year Ended
28 February 2018 28 February 2017
Note Revenue Capital Total Revenue Capital Total
Ref. GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal of fixed asset investments - 86 86 - - -
Unrealised gain on valuation of fixed asset
investments - 49 49 - 653 653
Investment income 2 - - - 27 - 27
Investment management fees 3 (6) (19) (25) (5) (14) (19)
Other expenses 4 (50) - (50) (45) - (45)
Return on ordinary activities before tax (56) 116 60 (23) 639 616
Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax (56) 116 60 (23) 639 616
Return on ordinary activities after tax attributable
to
equity shareholders (56) 116 60 (23) 639 616
Earnings per share - basic and diluted 6 (0.9)p 1.9p 1.0p (0.4)p 9.4p 9.0p
There was no other Comprehensive Income recognised during the year.
The 'Total' column of the Income Statement is the Profit and Loss
Account of the Company, the supplementary Revenue and Capital return
columns have been prepared under guidance published by the Association
of Investment Companies.
All Revenue and Capital items in the above statement derive from
continuing operations.
The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
The accompanying notes are an integral part of the Financial Statements.
Statement of Changes in Equity
Share Capital Capital Redemption Reserve Share Premium Unrealised Capital Reserve Profit & Loss Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 March 2016 679 - 376 (418) 1,275 1,912
Revenue return on ordinary activities after tax - - - - (23) (23)
Expenses charged to capital - - - - (14) (14)
Current period gains on fair value of investments - - - 653 - 653
Balance as at 28 February 2017 679 - 376 235 1,238 2,528
Revenue return on ordinary activities after tax - - - - (56) (56)
Expenses charged to capital - - - - (19) (19)
Current period gains on disposal - - - - 86 86
Current period gains on fair value of investments - - - 49 - 49
Purchase of own shares (146) 146 - - (470) (470)
Prior years gains now realised - - - (1,224) 1,224 -
Dividends paid - - - - (427) (427)
Balance as at 28 February 2018 533 146 376 (940) 1,576 1,691
The accompanying notes are an integral part of the Financial Statements.
Balance Sheet
Year Ended Year Ended
28 February 2018 28 February 2017
Note Ref. GBP'000 GBP'000 GBP'000 GBP'000
Fixed asset investments
at fair value 7 1,149 2,405
Current assets
Debtors 8 166 2
Cash at bank 386 146
Creditors: amounts
falling due within 1
year 9 (10) (25)
Net Current Assets 542 123
Net Assets 1,691 2,528
Called up equity share
capital 10 533 679
Capital redemption
reserve 146 -
Share premium 376 376
Unrealised capital
reserve 11 (940) 235
Profit and loss account
reserve 11 1,576 1,238
Total Equity
Shareholders' Funds 11 1,691 2,528
Net Asset Value Per 31.7p 37.2p
Share
The accompanying notes are an integral part of the Financial Statements.
The statements were approved by the Directors and authorised for issue
on 2nd May 2018 and are signed on their behalf by:
Richard Roth
Chairman
Statement of Cash Flows
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Cash flows from operating activities
Return on ordinary activities before tax 60 616
Adjustments for:
Gain on disposal of investments (86) -
Gain on valuation of investments (49) (653)
(Increase)/decrease in debtors (164) 19
Decrease in creditors (15) (19)
Movement in investment debtors and
creditors 164 -
Outflow from operating activities (90) (37)
Cash flows from investing activities
Purchase of investments (230) (150)
Disposal of investments 1,457 -
Dividends paid (427) -
Total cash flows from investing
activities 800 (150)
Cash flows from financing activities
(Tender Offer) (470) -
Increase/(decrease) in cash at bank 240 (187)
Opening cash and cash equivalents 146 333
Cash and cash equivalents at year end 386 146
The accompanying notes are an integral part of the Financial Statements.
Notes to the Financial Statements
The Financial Statements have been prepared under Financial Reporting
Standard 102 - 'The Financial Reporting Standard applicable in the
United Kingdom and Republic of Ireland' ('FRS 102'). The accounting
policies have not materially changed from last year.
1. Principal Accounting Policies
Basis of Preparation
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 ("GAAP"), including FRS 102 and with the Companies
Act 2006 and the Statement of Recommended Practice (SORP) 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts
(revised 2014)' issued by the AIC.
The principal accounting policies have remained materially unchanged
from those set out in the Company's 2017 Annual Report and Financial
Statements. A summary of the principal accounting policies is set out
below.
FRS 102 sections 11 and 12 have been adopted with regard to the
Company's financial instruments. The Company held all fixed asset
investments at fair value through profit or loss. Accordingly, all
interest income, fee income, expenses and gains and losses on
investments are attributable to assets held at fair value through profit
or loss.
The most important policies affecting the Company's financial position
are those related to investment valuation and 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. These are discussed in more detail
below.
Going Concern
After reviewing the Company's forecasts and expectations, the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. The
Company therefore continues to adopt the going concern basis in
preparing its Financial Statements.
Key Judgements and Estimates
The preparation of the Financial Statements requires the Board to make
judgements and estimates regarding the application of policies and
affecting the reported amounts of assets, liabilities, income and
expenses. Estimates and assumptions mainly relate to the fair valuation
of the fixed asset investments particularly 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.
Investments are regularly reviewed to ensure that the fair values are
appropriately stated. Unquoted investments are valued in accordance with
current IPEVC Valuation Guidelines, which can be found on their website
at www.privateequityvaluation.com, although this does rely on subjective
estimates such as appropriate sector earnings multiples, forecast
results of investee companies, asset values of investee companies and
liquidity or marketability of the investments held.
Although the Directors believe that the assumptions concerning the
business environment and estimate of future cash flows are appropriate,
changes in estimates and assumptions could result in changes in the
stated values. This could lead to additional changes in fair value in
the future.
Functional and Presentational Currency
The Financial Statements are presented in Sterling (GBP). The functional
currency is also Sterling (GBP).
Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held at call
with banks, other short-term highly liquid investments with original
maturities of three months or less and also include bank overdrafts.
Fixed Asset Investments
The Company's principal financial assets are its investments and the
policies in relation to those assets are set out below.
Purchases and sales of investments are recognised in the Financial
Statements at the date of the transaction (trade date).
These investments will be managed and their performance evaluated on a
fair value basis and information about them is provided internally on
that basis to the Board. Accordingly, as permitted by FRS 102, the
investments are measured as being fair value through profit or loss 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.
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 convention of the
exchange on which the investment is quoted. In the case of AIM quoted
investments this is the closing bid price.
In the case of unquoted investments, fair value is established by using
measures of value such as the price of recent transactions, earnings
multiple, revenue multiple, discounted cash flows and net assets. These
are consistent with the IPEVC Valuation Guidelines.
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 unrealised capital reserve.
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.
Fair Value Hierarchy
Paragraph 34.22 of FRS 102 regarding financial instruments that are
measured in the balance sheet at fair value requires disclosure of fair
value measurements dependent on whether the stock is quoted and the
level of the accuracy in the ability to determine its fair value. The
fair value measurement hierarchy is as follows:
For Quoted Investments:
Level 1: quoted prices in active markets for an identical asset. 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 bid price at the Balance Sheet date.
Level 2: where quoted prices are not available (or where a stock is
normally quoted on a recognised stock exchange that no quoted price is
available), the price of a recent transaction for an identical asset,
providing there has been no significant change in economic circumstances
or a significant lapse in time since the transaction took place. The
Company holds no such investments in the current or prior year.
For investments not quoted in an active market:
Level 3: 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 (e.g. the price
of recent transactions, earnings multiple, discounted cash flows and/or
net assets) where it is available and rely as little as possible on
entity specific estimates.
There have been no transfers between these classifications in the year
(2017: none). The change in fair value for the current and previous year
is recognised in the income statement.
Income
Investment income includes interest earned on bank balances and from
unquoted loan note securities, and dividends. Fixed returns on debt are
recognised on a time apportionment basis so as to reflect the effective
yield, provided it is probable that payment will be received in due
course. Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established, normally
the ex dividend date.
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 has been charged 75% to capital and 25% to revenue.
Any applicable performance fee will be charged 100% to capital.
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 and holding gains and losses on investments. 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 appropriate capital reserve on the basis of whether
they are realised or unrealised at the balance sheet date.
Taxation
Current tax is recognised for the amount of income tax payable in
respect of the taxable profit for the current or past reporting periods
using the current tax 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, except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is
probable that they will be recovered against the reversal of deferred
tax liabilities or other future taxable profits.
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.
The Company does not have any externally imposed capital requirements.
Reserves
Called up Equity Share Capital - represents the nominal value of shares
that have been issued.
Share Premium Account - includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of shares are
deducted from the Share Premium Account.
Unrealised Capital Reserve arises when the Company revalues the
investments still held during the period and any gains or losses arising
are credited/charged to the Unrealised Capital Reserve. When an
investment is sold, any balance held on the Unrealised Capital Reserve
is transferred to the Profit and Loss Reserve as a movement in reserves.
The Profit and Loss Reserve represents the aggregate of accumulated
realised profits, less losses and dividends.
Dividends Payable
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 declared by the Board, and for final dividends when they are
approved by the Shareholders.
2. Investment Income
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Dividends received - 27
Total - 27
3. Investment Management Fees
Expenses are charged wholly to revenue with the exception of the
investment management fee which has been charged 75% to the capital
reserve in line with industry practice.
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Investment management fee 25 19
Total 25 19
In the year to 28 February 2018 the manager received a fee of 1% of the
net asset value as at the previous year end (2017: 1%). Oxford
Technology Management is also entitled to certain monitoring fees from
investee companies and the Board reviews the amounts. OTM also received
a further GBP18k in both years, the payment of which had been deferred
from previous years. This was part of the revised agreement, with effect
from 1 March 2015. No further liability is payable as at 28 February
2018.
A performance fee is payable to the Investment Manager once original
shareholders have received a specified threshold in cash for each 100p
(gross) invested. The original threshold of 100p has now been increased
by compounding that portion that remains to be paid to shareholders by
6% per annum with effect from 1 March 2010, resulting in the remaining
required threshold rising to 116.9p at 28 February 2018, corresponding
to a total shareholder return of 144.7p after taking into account the
27.8p already paid out (27.8p + 116.9 = 144.7p). The 27.8p already paid
out includes an effective 6.8p (per original share) that was returned to
shareholders as part of the Tender Offer. After this amount has been
distributed to shareholders, each extra 100p distributed goes 80p to the
shareholders and 20p to the beneficiaries of the performance incentive
fee, of which Oxford Technology Management receives 14p.
No performance fee has become due or been paid to date. Any applicable
performance fee will be charged 100% to capital.
Expenses are capped at 3%, including the management fee but excluding
Directors' fees and any performance fee.
4. Other Expenses
All expenses are accounted for on an accruals basis. All expenses are
charged through the income statement except as follows:
-- those expenses which are incidental to the acquisition of an
investment are
included within the cost of the investment;
-- expenses which are incidental to the disposal of an
investment are deducted from
the disposal proceeds of the investment.
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Directors' remuneration 15 15
Auditors' remuneration 6 6
Other expenses 29 24
Total 50 45
5. Tax on Ordinary Activities
Corporation tax payable at 19.1% (2017: 20.0%) is applied to profits
chargeable to corporation tax, if any. The corporation tax charge for
the period was GBPnil (2017: GBPnil)
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Return on ordinary activities before tax 60 616
Current tax at standard rate of taxation 11 123
UK dividends not taxable - (5)
Unrealised gains not taxable (9) (131)
Realised gains not taxable (16) -
Excess management expenses carried
forward 14 13
Total current tax charge - -
Unrelieved management expenses of GBP1,539,772 (2017: GBP1,465,200)
remain available for offset against future taxable profits.
6. Earnings per Share
The calculation of earnings per share (basic and diluted) for the period
is based on the net profit of GBP60,000 (2017: GBP616,000) attributable
to shareholders divided by the daily weighted average number of shares
6,080,419 (2017: 6,792,923) in issue during the period.
There are no potentially dilutive capital instruments in issue and,
therefore, no diluted returns per share figures are relevant. The basic
and diluted earnings per share are therefore identical.
7. Investments
Unquoted investments Level 3 Total investments
GBP'000 GBP'000
Valuation and net book
amount:
Book cost as at 28 February
2017 2,170 2,170
Cumulative revaluation 235 235
Valuation at 28 February 2017 2,405 2,405
Movement in the year:
Purchases at cost 230 230
Disposals - costs (311) (311)
Disposals - revaluation (1,224) (1,224)
Revaluation in year 49 49
Valuation at 28 February 2018 1,149 1,149
Book cost at 28 February 2018 2,089 2,089
Cumulative revaluation to 28
February 2018 (940) (940)
Valuation at 28 February 2018 1,149 1,149
Subsidiary Company
The Company also holds 100% of the issued share capital of OT2 Managers
Ltd at a cost of GBP1.
Results of the subsidiary undertaking for the year ended 28 February
2018 are as follows:
Country of Nature of Turnover Retained profit/loss Net Assets
Registration Business
OT2 England and Investment
Managers Wales Manager GBP25,283 GBP0 GBP1
Ltd
Consolidated group Financial Statements have not been prepared as the
subsidiary undertaking is not considered to be material for the purpose
of giving a true and fair view. The Financial Statements therefore
present only the results of Oxford Technology 2 VCT plc, which the
Directors also consider is the most useful presentation for
Shareholders.
8. Debtors
28 February 2018 28 February 2017
GBP'000 GBP'000
Prepayments, accrued income & other
debtors 2 2
Deferred consideration from sale of
investments 164 -
Total 166 2
9. Creditors - amounts falling due in less than 1 year
28 February 2018 28 February 2017
GBP'000 GBP'000
Investment management fee accrual
(All deferred fees now fully paid at 28/2/18) - 18
Other creditors and accruals 10 7
Total 10 25
10. Share Capital
28 February 2018 28 February 2017
GBP'000 GBP'000
Authorised:
10,000,000 ordinary shares of 10p each 1,000 1,000
Total Authorised 1,000 1,000
Allotted, called up and fully paid:
5,331,889 (2017: 6,792,923) ordinary shares of 10p
each 533 679
On 4 September 2017, the Company bought back 1,461,034 Ordinary Shares
as per the Tender Offer.
11. Reserves
When the Company revalues its investments during the period, any gains
or losses arising are credited/charged to the Income Statement. Changes
in fair value of investments are then transferred to the Unrealised
Capital Reserve. When an investment is sold any balance held on the
Unrealised Capital Reserve is transferred to the Profit and Loss Account
Reserve as a movement in reserves.
Distributable reserves are GBP636,000 as at 28 February 2018 (2017:
GBP1,238,000).
Reconciliation of Movement in Shareholders' Funds
28 February 2018 28 February 2017
GBP'000 GBP'000
Shareholders' funds at start of year 2,528 1,912
Return on ordinary activities after tax 60 616
Purchase of own shares (470)
Dividends paid (427) -
Shareholders' funds at end of year 1,691 2,528
The Company paid a dividend of 8.0p per share on 5 December 2017.
12. Financial Instruments and Risk Management
The Company's financial instruments comprise equity and loan note
investments, cash balances and debtors and creditors. The Company holds
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. The risk faced by these
instruments, such as interest rate risk or liquidity risk is considered
to be minimal due to their nature. All of these are carried in the
accounts at fair value.
The Company's strategy for managing investment risk is determined with
regard to the Company's investment objective. 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, though VCT rules limit the extent to which suitable Qualifying
Investments can be bought or sold. The overall disposition of the
Company's assets is regularly monitored by the Board.
13. Capital Commitments
The Company had no commitments at 28 February 2018 or 29 February 2017.
14. Related Party Transactions
OT2 Managers Ltd, a wholly owned subsidiary, provides investment
management services to the Company with effect from 1 July 2015 for a
fee of 1% of net assets per annum. During the year, GBP25,283 was paid
in respect of these fees (2017: GBP19,122). No amounts were outstanding
at the year end.
15. Events after the Balance Sheet Date
During April 2018, an investment of GBP150,000 was made into Scancell
and GBP12,000 was committed to ImmBio.
Company Number: 3928569
Note to the announcement:
The financial information set out in this announcement does not
constitute statutory accounts as defined in the Companies Act 2006 ("the
Act"). The balance sheet as at 28 February 2018, income statement and
cash flow statement for the period then ended have been extracted from
the Company's 2018 statutory financial statements upon which the
auditor's opinion is unqualified and does not include any statement
under the section 495 of the Act.
The Annual Report and Accounts for the year ended 28 February 2018 will
be filed with the Registrar of Companies.
Copies of the documents will be submitted to the National Storage
Mechanism and are available for inspection at:
http://www.mornningstar.co.uk/uk/NSM
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Oxford Technology 2 VCT plc via Globenewswire
http://www.oxfordtechnology.com
(END) Dow Jones Newswires
May 03, 2018 02:01 ET (06:01 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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