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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oxford Technology 3 Venture Capital Trust Plc | LSE:OTT | London | Ordinary Share | GB0031420390 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 34.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMOTT
26 May 2016
Oxford Technology 3 VCT plc ("the Company" or "OT3")
Annual Report and Accounts for the year ended 29 February 2016
The Directors are pleased to announce the audited results of the Company
for the year ended 29 February 2016 and a copy of the Annual Report and
Accounts ("Accounts") will be made available to Shareholders shortly.
Set out below are extracts of 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 Friday 8 July 2016, at 11am.
A copy of the Annual Report and 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
Financial Headlines
Year Ended Year Ended
29 February 2016 28 February 2015
Net Assets at Year End GBP6.89m GBP6.48m
Net Asset Value per Share 101.6p 95.6p
Cumulative Dividend per Share 17.0p 10.0p
NAV + Cumulative Dividend Paid per Share from
Incorporation 118.6p 105.6p
Dividend per Share paid post year end in May 2016 15.0p -
Share Price at Year End 62.5p 72.5p
Earnings per Share
(Basic & Diluted) 13.0p (2.7)p
Chairman's Statement
I am pleased to present my annual report for the year to fellow
shareholders.
Overview
There have been significant movements within the portfolio during the
year. Telegesis was sold for GBP3.3m, a GBP1.2m (65%) uplift over last
year's carrying value. The weakness in Scancell's share price, after the
company failed to find a buyer or complete a licensing deal, was driven
by the market's anticipation of a placing and led to a reduction of
GBP0.6m (42%) from last year's carrying value.
Two follow on investments were made into ImmBio (GBP100k) and Orthogem
(GBP20k). Some profits were taken on AIM listed Abzena and one company,
Concurrent Thinking, failed. Several other companies have achieved
significant milestones which should enhance value. Net asset value rose
by 6.0p during the year, while total return rose by 13.0p.
Portfolio Review
The net asset value per share on 29 February 2016 was 101.6p compared to
95.6p on 28 February 2015 after paying a dividend of 7.0p on 19 February
2016. Total dividends paid are now 17.0p per share. Earnings per share
in the year to 29 February 2016 were 13.0p and total return now stands
at 118.6p.
The Company's portfolio still contains 16 holdings, which continue to
develop at different rates. Whilst not all may ultimately be successful,
some are reaching significant value inflection points which will allow
realisations to occur.
One portfolio company was realised in the year. In November 2015
Telegesis was sold to Silicon Laboratories UK Ltd at a multiple of 23
times historic investment. This provided a high degree of liquidity
for dividends and follow-on investments.
Your company continues to invest in support of its portfolio as
companies develop. In addition to the two investments mentioned above, a
further four investments have been made post year end.
GBP34k was invested in the Scancell placing; the maximum we could make
under VCT rules. Thus our equity stake has been diluted a little. An
opportunity arose to convert our Ixaris warrants on attractive terms and
we invested GBP425k.
A further GBP50k has been invested into ImmBio to support the first in
human trial for its novel Pneumococcal Vaccine, PnuBioVax. The trial
began in December 2015, and read out is expected in Q2 2016. If
successful, this will be an extremely important milestone for the
company.
We chose to support our investment in Plasma Antennas with GBP200k at a
lower price than previous rounds to enable the new CEO to continue the
development work and prepare for a major funding round to commercialise
its products.
Also of note, is the pleasing uplift in Select Technology as its
profitability increased leading to it paying its maiden dividend.
Further details on the other major investments are contained within the
Investment Portfolio Review, and on our website.
Last year, we flagged that we were pressing the Manager to find
profitable exits for as many as possible by the end of 2017. Hence we
were delighted to announce the sale of Telegesis and to take some
profits on our holding in Abzena. Whilst we continue to seek opportune
moments to maximise value from our portfolio, we do not currently
foresee any further major liquidity events in the near future.
Dividends
The ongoing strategy is to seek to crystallise value from the portfolio
and distribute cash to shareholders via dividend payments subject to
retaining sufficient funds to pay ongoing running costs of the VCT and
to support existing investee companies. As already stated, a dividend of
7p per share was paid during the year. After year-end we announced a
further dividend of 15p which was paid on 13 May 2016.
Management and Performance Fees
Shareholders will recall the changes announced during the year at the
time of the announcement of the 2015 results. Management fees were
reduced to 1% per annum with effect from the start of this financial
year, with an annual cost cap of 3% (excluding directors' fees) to cover
all of the running costs incurred by the VCT. The threshold at which a
performance fee would also become payable escalates at 6% per annum from
the 10th anniversary of the formation of the VCT. The threshold
therefore now stands at a return to shareholders in cash of 117.2p per
share. As the NAV is currently above this level a small accrual of
GBP23k has been made to reflect the potential liability but no payment
has been triggered under this scheme to date.
Your directors continue to believe that this lower level of management
fees, together with a performance fee incorporating a challenging hurdle
and payable only once shareholders have received back more than their
original investment prior to any additional tax reliefs, makes this
management arrangement market-leading and continues the principle always
adopted by the VCT to keep its costs as low as possible.
Board Structure and VCT Management
Richard Vessey, my predecessor as Chairman, did not stand for
re-election as a Director at the AGM in 2015. I would like to thank
Richard for his long service to your VCT and for his support to me
during the transition. I am pleased to see that he remains involved as
an active private shareholder in some of our investee companies.
Shareholders will also be aware of the changes to the Board and
Management arrangements that were implemented during the year,
implementing a Common Board across the four Oxford Technology VCTs to
coincide with the companies becoming 'self-managed'. I welcome David
Livesley, Richard Roth and Alex Starling to the Board.
Lucius Cary and his team continue to be involved with the portfolio as
OT3 Managers Ltd (the Company's investment manager) sub-contracts
services from Oxford Technology Management. The new Common Board
structure has worked well since implementation.
VCT Regulation Changes
Shareholders may be aware of some significant changes to the VCT rules
that have been introduced during the year. These changes have been
introduced by the UK Government, but were directed by the EU to make
VCTs conform to "State Aid" rules.
The rules introduce new restrictions on the type of investments which
can be made by VCTs, specifically prohibiting VCT funds from being used
to finance management buy-outs or for the acquisition of existing
businesses. The rules also impose a maximum lifetime amount a company
can receive from VCTs, as well as imposing a maximum age for companies
which receive VCT funding.
The new restrictions, which apply to non-qualifying holdings as well as
VCT qualifying holdings, took effect for investments made on or after 18
November 2015. The potential penalty for breach of these regulations is
withdrawal of VCT status.
The new legislation is designed to target more VCT money towards the
sorts of companies that OT3 has always invested in, and is not expected
to have a significant impact on your Company. However the changes have
impacted on HMRC response times. The Directors will remain alert to the
additional requirements of these latest rules with any further
investments OT3 may make. We are studying the recently issued HMRC
guidelines.
Change of Registrar
As part of our ongoing focus on costs, we appointed Neville Registrars
in place of Capita as our Registrars. Details of the new contact details
are set out on the back page of this report. We would also remind you
that Annual Reports, notices of shareholder meetings and other documents
that are also required to be sent to Shareholders are published on our
website at www.oxfordtechnology.com as well as any other announcements
the Company makes.
Share Buy Backs
The Company has the ability to buy back shares. To date this authority
has never been exercised and the Directors have no current intention to
do so, preferring instead to preserve resources to support our investees
and pay dividends to all shareholders. It is, however, a useful
facility to have available should circumstances change and the Company
therefore wishes to maintain this capability. At the AGM, Shareholders
will be asked to confirm their ongoing approval for the Company to be
able to buy back its own shares.
AGM
Shareholders should note that the AGM for the Company will be held on
Friday 8 July 2016 at the Magdalen Centre, Oxford Science Park, starting
at 11am and will include presentations by Oxford Technology Management
and some of the companies in which the Oxford Technology VCTs have
invested. A formal Notice of the AGM has been enclosed with these
Financial Statements together with a Form of Proxy for those not
attending. We really appreciate the input of our shareholders and look
forward to welcoming as many of you as possible on the day.
Outlook
The Board's outlook has not changed from a year ago. Last year we
realised one investment and took some profits on another with what
appears to have been excellent timing. This has provided us with the
ability to continue supporting the remaining portfolio and to pay
significant dividends. Following the sale of Telegesis and the payment
of two recent dividends the size of the fund has decreased. The
portfolio is still very concentrated with three large holdings and
thirteen smaller ones. Overall they continue to mature and individual
investments will be realised at appropriate times. We continue to work
to maximise value for shareholders and will, as per our stated strategy,
seek to crystallise this value and distribute to shareholders via
dividend payments when valuations and liquidity allow.
Robin Goodfellow
Chairman
25 May 2016
Investment Portfolio Review
OT3 was formed in 2002 and invested in a total of 38 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. Dividends paid to shareholders to date are 17p per share.
The table on page 13 shows the companies remaining in the portfolio. A
more detailed analysis is given on the top 5 investments.
One of the investees was Telegesis in which OT3 first invested in 2003,
when the company was founded. Telegesis specialised exclusively in
Zigbee, a strategy which proved to be very successful. When large
companies wish to incorporate Zigbee communications (for example to
enable smart electricity meters to send and receive data wirelessly)
they frequently turned to Telegesis to do the detailed design and then
to supply the Zigbee modules, which were manufactured in China. In
November 2015, Telegesis was sold for GBP13m to Silicon Laboratories UK.
OT3 received cash proceeds of GBP3.33m for its shares. OT3 paid a
dividend of 7p per share on 19 February 2016, and announced a further
dividend of 15p per share with payment on 13 May 2016 ie after the year
end. This brings the cumulative dividends paid to date to 32p.
The portfolio contains several other investees which are showing promise
and which have the potential to deliver significant returns. However,
in some cases some significant technical risks remain. Scancell has a
vaccine for Melanoma (skin cancer) which is in clinical trials. Almost
four years ago, the vaccine was given to 16 patients with stage 4
melanoma, meaning they had a life expectancy of only a few months. All
16 patients with resected Stage 3/4 melanoma (in other words the
adjuvant melanoma setting) are still alive a median of 43 months from
starting the trial and only 5 have had a recurrence of the disease.
New Investments in the year
There were two follow on investments during the year of GBP100,000 into
ImmBio and GBP20,000 into Orthogem. All new investments have complied
with both EU State Aid rules and HMRC VCT rules.
Disposals during the year
Telegesis was sold during the year and OT3 received GBP3,328k from its
original investment of GBP147k. Some Abzena shares were sold yielding
GBP106k and the final tranche payment from Dataflow was received of
GBP4k.
Valuation Methodology
Quoted and unquoted investments are valued in accordance with current
industry guidelines that are compliant with International Private Equity
and Venture Capital Valuation Guidelines and current financial reporting
standards.
VCT Compliance
Compliance with the main VCT regulations as at 29 February 2016 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 96.7% 70.0%
Maximum allowed:
Non-Qualifying Investments 3.3% 30.0%
Total 100.0% 100.0%
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) - Complied.
No investment made by the VCT has caused the company to receive more
than GBP5m of State Aid investment in the year - Complied.
Table of Investments held by Company at 29 February 2016
Change
in
Carrying value
value at for the
Net cost of 29/02/16 year % equity
Company Description Date of initial investment investment GBP'000 GBP'000 GBP'000 held
Internet
Ixaris payments Aug 2002 218 1,672 211 7.1
Glide Needle free
Technologies injector Nov 2003 225 814 - 3.3
Scancell Cancer
Quoted on AIM therapeutics Dec 2003 325 775 (575) 2.0
ImmBio Novel vaccines May 2003 350 187 100 4.1
Parallel
Allinea Software computing May 2009 15 162 31 2.3
Photocopier
Select Technology Interfaces Nov 2004 47 144 54 2.8
Protein &
Abzena peptide based
Quoted on AIM drugs Nov 2002 69 98 (170) 0.2
Directional
Plasma Antennas antennas Sep 2004 108 77 (32) 5.3
Protein
Arecor stabilisation Jul 2007 24 46 - 0.7
Insense Wound healing May 2003 333 44 - 4.1
Bone graft
Orthogem material Dec 2004 134 42 20 4.0
Data
transformation
Inaplex software Mar 2003 58 22 (8) 13.3
Low power
Invro electronics Apr 2004 40 20 - 33.1
Production of
Metal Nanopowders metal powders Nov 2002 153 13 - 20.0
Production of
Superhard hard
Materials materials Feb 2012 11 5 (6) 21.8
Microarray Insense spinout Dec 2013 2 2 - 0.3
Concurrent Cluster
Thinking computing Nov 2009 97 - (24) 2.5
Total 2,209 4,123 (399)
Other Net Assets 2,770
NET ASSETS 6,893
Number of shares in issue: 6,785,233
Net Asset Value per share at 29 February 2016: 101.6p
Dividends per share paid to date: 17.0p
An additional 15.0p dividend was paid on 13 May 2016.
The table shows the current portfolio holdings. The investments in
Ciphergrid, Concurrent Thinking, Coraltech, Datasoft Medical, Freehand
Surgical, IFM, Im-Pak, Inscentinel, Novarc, OST, Promic, ReviveR, and
Streamline Computing have been written off. The investments in Avidex,
Archimed, BioAnaLab, Commerce Decisions, Dataflow, MET, Telegesis and
Equitalk have been sold. Some shares in Abzena have been sold.
Directors' Report
The Directors present their report together with financial statements
for the year ended 29 February 2016.
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 March 2002. 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 present and previous
membership of the board and their beneficial interests in the ordinary
shares of the company at 29 February 2016 and at 28 February 2015 are
set out below:
Name 2016 2015
R Goodfellow 35,000 35,000
D Livesley* Nil N/A
R Roth* 38,149 N/A
A Starling * Nil N/A
R Vessey** N/A 226,050
* Appointed 3 July 2015
At 3 July 2015, the date of Richard Roth's appointment, he held 38,149
shares in OT3.
** Resigned 26 August 2015
Under the Company's Articles of Association one third of the Directors
are required to retire by rotation each year. Richard Roth 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 Richard Roth 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
OT3 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. David Livesley and Robin Goodfellow,
together with Lucius Cary are Directors in OT3 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/vct3).
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 29 February 2016, the Company has been notified by Neville Registrars
of three investors whose interest exceeds three percent of the Company's
issued share capital (Oxfordshire County Council Pension Fund 8.75%;
Richard Vessey, 3.48%; and Hargreaves Lansdown Nominees Ltd, 3.19%).
Auditors
James Cowper Kreston offer themselves for reappointment in accordance
with Section 489 of the Companies Act 2006.
On behalf of the Board
Robin Goodfellow
Chairman
25 May 2016
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. Resolutions to
approve the Directors' Remuneration Report will be proposed at the
Annual General Meeting on 8 July 2016.
The Remuneration Policy was approved at the AGM on 26 August 2015,
together with the resolution regarding the Directors' Remuneration
Report for the year ended 28 February 2015, on a unanimous show of hands,
which reflected overwhelming support amongst proxies submitted.
This report sets out the Company's forward-looking Directors'
Remuneration Policy and the Annual Remuneration Report which describes
how this policy has been applied during the year.
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 Board has not engaged any third party consultancy
services, but did consult with the previous Chairman, Richard Vessey and
Michael O'Regan the previous Chairman of Oxford Technology 2 VCT when
the current levels were determined before the last AGM.
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. Based on the Company sharing a Common Board with the other
Oxford Technology VCT funds 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
Robin Goodfellow chairs the Company. Richard Roth 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 has played a greater part in the
production of the annual accounts compared to recent years.
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.
David Livesley and Robin Goodfellow receive no remuneration in respect
of their directorships of OT3 Managers Ltd, the Company's Investment
Manager.
The performance incentive fee is described in the Chairman's Statement.
As mentioned there, 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 29 February 2016 a performance fee liability of
GBP23,069 in total was accrued for.
Should any performance fee be payable at the end of the year to 28
February 2017, Alex Starling, Robin Goodfellow, and Richard Roth would
each receive 0.14% of any amount over the threshold and David Livesley
0.63%. No performance fee will be payable for the year ending 28
February 2017 unless original shareholders have received back at least
122.5p 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.
Directors' Emoluments
Directors' Fees Year End 28/02/17 Year End 29/02/16 Year End 28/02/15
(unaudited) (audited) (audited)
Alex Starling GBP3,500 GBP2,333 -
Richard Roth GBP6,500 GBP4,333 -
Richard Vessey - GBP3,750 GBP7,500
Lucius Cary - - GBP1,041
Robin Goodfellow GBP7,000 GBP7,167 GBP4,375
David Livesley GBP3,500 GBP2,333 -
Total GBP20,500 GBP19,916 GBP12,916
Prior to his appointment as a director of OT3, Richard Roth received an
additional one off payment of GBP2,000 in the year to 29 February 2016
as compensation for executive work undertaken in relation to the setting
up of the Common Board structure.
Income Statement
Year Ended Year Ended
29 February 2016 28 February 2015
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 - 1,333 1,333 - 2 2
Unrealised (loss)/gain on valuation of fixed asset
investments - (414) (414) - 94 94
Other income 2 19 - 19 - - -
Performance fees - 72 72 - (95) (95)
Investment management fees 3 (16) (49) (65) - (133) (133)
Other expenses 4 (62) - (62) (53) - (53)
Return on ordinary activities before tax (59) 942 883 (53) (132) (185)
Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax (59) 942 883 (53) (132) (185)
Return on ordinary activities after tax attributable
to
equity shareholders (59) 942 883 (53) (132) (185)
Earnings per share - basic and diluted 6 (0.9)p 13.9p 13.0p (0.8)p (1.9)p (2.7)p
There was no other Comprehensive Income recognised during the year.
The 'Total' column of the income statement and statement of
comprehensive income 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 accompanying notes are an integral part of the financial statements.
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.
Statement of Changes in Equity
Unrealised Profit
Share Share Capital & Loss
Capital Premium Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 March 2014 679 718 4,223 1,049 6,669
Revenue return on ordinary activities after tax - - - (53) (53)
Expenses charged to capital (228) (228)
Current period gains on disposal - - 3 3
Current period gains on fair value of investments - - 94 - 94
Prior years' unrealised gains/losses now realised - - (2) 2 -
Balance as at 28 February 2015 679 718 4,315 773 6,485
Revenue return on ordinary activities after tax - - - (59) (59)
Expenses credited to capital 23 23
Current period gains on disposal - - - 1,333 1,333
Current period losses on fair value of investments - - (414) - (414)
Dividends paid (475) (475)
Prior years' unrealised gains now realised - - (1,913) 1,913 -
Movement in reserves (Note 11) - - (75) 75 -
Balance as at 29 February 2016 679 718 1,913 3,583 6,893
The accompanying notes are an integral part of the financial statements.
Balance Sheet
Year Ended Year Ended
29 February 2016 28 February 2015
Note
Ref. GBP'000 GBP'000 GBP'000 GBP'000
Fixed Asset Investments At Fair
Value 7 4,123 6,525
Current Assets
Debtors 8 2 1
Cash At Bank 2,894 203
Creditors: Amounts Falling Due
Within 1 Year 9 (55) (55)
Net Current Assets 2,841 149
Creditors: Amounts Falling Due
After 1 Year 9 (47) (94)
Provisions - Performance Fee 9 (23) (95)
Net Assets 6,893 6,485
Called Up Equity Share Capital 10 679 679
Share Premium 718 718
Unrealised Capital Reserve 11 1,913 4,315
Profit and Loss Account Reserve 11 3,583 773
Total Equity Shareholders'
Funds 11 6,893 6,485
Net Asset Value Per Share 101.6p 95.6p
The accompanying notes are an integral part of the financial statements.
The statements were approved by the Directors and authorised for issue
on 25 May 2016 and are signed on their behalf by:
Robin Goodfellow
Chairman
25 May 2016
Statement of Cash Flows
Year Ended Year Ended
29 February 2016 28 February 2015
GBP'000 GBP'000
Cash flows from operating activities
Return on ordinary activities before tax 883 (185)
Adjustments for:
Gain on disposal of investments (1,333) (2)
Loss/(gain) on valuation of investments 414 (94)
(Increase)/decrease in debtors (1) 75
(Decrease)/increase in creditors (119) 130
Outflow from operating activities (156) (76)
Cash flows from investing activities
Purchase of investments (120) -
Disposal of investments 3,442 12
Dividends paid (475) -
Increase/(decrease) in cash at bank 2,691 (64)
Opening cash and cash equivalents 203 267
Cash and cash equivalents at year end 2,894 203
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements
This is the first year in which 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 main changes are primarily presentational and
related to the fixed asset investments' fair value hierarchy and the
primary statements and associated reconciliations. The accounting
policies have not materially changed from last year.
A review of any required changes to comparative figures has taken place
and it has been deemed that no such restatements are necessary.
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 2015 Annual Report and financial
statements. There have been no changes to the measurement of the assets
and liabilities as a result of the transition to FRS 102. 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; 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 International Private Equity and Venture Capital
(IPEVC) guidelines which can be found on their website at
www.privateequityvaluation.com.
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 a: 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 b: 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 c: 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 (eg 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. If all significant inputs required to fair
value an instrument are observable, the instrument is included in level
c (i). If one or more of the significant inputs is not based on
observable market data, the instrument is included in level c (ii).
There have been no transfers between these classifications in the year
(2015: Abzena did an IPO on AIM). 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.
(In 2015, the investment management fees were all charged to capital.)
Any applicable performance fee accrual has been 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 share premium.
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. Income
Year Ended Year Ended
29 February 2016 28 February 2015
GBP'000 GBP'000
Dividends received 19 -
Total 19 -
3. Investment Management Fees
Expenses are charged wholly to revenue with the exception of the
investment management fee which has been charged 75% to capital in line
with industry practice. In 2015, these fees were allocated all to
capital.
Year Ended Year Ended
29 February 2016 28 February 2015
GBP'000 GBP'000
Investment management fee 65 133
Total 65 133
In the year to 29 February 2016 the manager received a fee of 1% of the
net asset value as at the previous year end (2015: 2%). Oxford
Technology Management is also entitled to certain monitoring fees from
investee companies and the Board monitors the amounts.
Oxford Technology Management had previously agreed to defer 25% of the
2% management fee to which it was contractually entitled (ie 0.5% of net
assets) until such a time when the finances of the Company made this
payment more affordable. As part of the revised agreement with effect
from 1 March 2015 the Board have agreed to pay the deferred balance over
a 36 month period.
A performance fee is payable to the Investment Manager once original
shareholders have received a specified threshold in cash for each 100p
(gross) invested. As reported in last year's accounts, 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 2013, resulting in the remaining required threshold rising to
100.2p at 29 February 2016, corresponding to a total shareholder return
of 117.2p after taking into account the 17p already paid out (17p +
100.2p = 117.2p). After this amount has been distributed to
shareholders, each extra 100p distributed goes 80p to the shareholder
and 20p to the beneficiaries of the performance incentive fee, of which
Oxford Technology Management receives 15p. A performance fee of GBP23k
has been accrued to date. Any applicable performance fee accrual has
been 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
29 February 2016 28 February 2015
GBP'000 GBP'000
Directors' remuneration 20 13
Auditors' remuneration 6 6
Legal and professional expenses 16 10
Accounting and administration services 3 4
Other expenses 17 20
Total 62 53
5. Tax on Ordinary Activities
Corporation tax payable at 20% (2015: 21%) is applied to profits
chargeable to corporation tax, if any. The corporation tax charge for
the period was GBP nil (2015: GBP nil).
Year Ended Year Ended
29 February 2016 28 February 2015
GBP'000 GBP'000
Return on ordinary activities before tax 883 (185)
Current tax at standard rate of taxation 177 (39)
Unrecognised tax losses (177) 39
Total current tax charge - -
Unrelieved management expenses of GBP1,771.1k (2015: GBP1,716.1k) 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 GBP883,000 (2015: loss of GBP185,000)
attributable to shareholders divided by the weighted average number of
shares 6,785,233 (6,785,233) 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
AIM quoted investments Unquoted investments Total
Level a Level c(ii) investments
GBP'000 GBP'000 GBP'000
Valuation and
net book
amount:
Book cost as at
28 February
2015 440 1,846 2,286
Cumulative
revaluation 1,178 3,061 4,239
Valuation at 28
February 2015 1,618 4,907 6,525
Movement in the
year:
Purchases at
cost - 120 120
Disposals -
cost (46) (151) (197)
Disposals -
revaluation (61) (1,851) (1,912)
Revaluation in
year (639) 226 (413)
Valuation at 29
February 2016 872 3,251 4,123
Book cost at 29
February 2016 394 1,815 2,209
Cumulative
revaluation to
29 February
2016 478 1,436 1,914
Valuation at 29
February 2016 872 3,251 4,123
Subsidiary Company
The Company also holds 100% of the issued share capital of OT3 Managers
Ltd at a cost of GBP1.
Results of the subsidiary undertaking for the year ended 29 February
2016 are as follows:
Country of Nature of Turnover Retained profit/loss Net Assets
Registration Business
OT3 England and Investment
Managers Wales Manager GBP43,239 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 3 VCT plc, which the
Directors also consider is the most useful presentation for
Shareholders.
8. Debtors
29 February 2016 28 February 2015
GBP'000 GBP'000
Prepayments, accrued income & other
debtors 2 1
Total 2 1
9. Creditors - amounts falling due in less than 1 year
29 February 2016 28 February 2015
GBP'000 GBP'000
Other creditors 8 8
Investment management fee accrual 47 47
Total 55 55
Creditors - amounts falling due in more than 1 year
29 February 2016 28 February 2015
GBP'000 GBP'000
Investment management fee accrual 47 94
Provision - performance fee 23 95
Total 70 189
The Investment Manager had previously deferred 25% of fees, as detailed
in Note 3. These are now being paid between March 2015 and February
2018.
Based on the net asset value per share and cumulative dividends paid to
date it is more likely that the performance incentive fee will become
due. The Directors assessed that the costs should be included in the
accounts. The value of the liability arising to date can be estimated;
however the timing of the future payment is uncertain.
10. Share Capital
29 February 2016 28 February 2015
GBP'000 GBP'000
Authorised:
15,000,000 ordinary shares of 10p each 1,500 1,500
Total Authorised 1,500 1,500
Allotted, called up and fully paid:
6,785,233 (2015: 6,785,233) ordinary shares of 10p
each 679 679
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.
The transfer between the unrealised capital reserve and the profit and
loss reserve is the result of the correction of historic
misclassifications between the two reserves. The historic
misclassifications are immaterial as they had no impact on reported
returns or net assets and had no bearing on any distributions.
Distributable reserves are GBP3,583,000 as at 29 February 2016.
Reconciliation of Movement in Shareholders' Funds
29 February 2016 28 February 2015
GBP'000 GBP'000
Shareholders' funds at start of year 6,485 6,670
Return on ordinary activities after tax 883 (185)
Dividends paid (475) -
Shareholders' funds at end of year 6,893 6,485
The Company paid a dividend of 7p per ordinary share on 19 February
2016. The Company has also paid an interim dividend for 2017 of 15p per
ordinary share on 13 May 2016.
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 quoted and 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. The overall disposition of the Company's assets is regularly
monitored by the Board.
13. Capital Commitments
The company had no commitments at 29 February 2016 or 28 February 2015.
14. Related Party Transactions
OT3 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, GBP43,239 was paid
in respect of these fees. No amounts were outstanding at the year end.
15. Events after the Balance Sheet Date
An agreement was reached under which Imaging Equipment Holdings Ltd has
bought OT3's shareholding in DHA for book value - March 2016.
An additional investment of GBP34,000 has been made into Scancell -
March 2016.
An additional investment of GBP50,000 has been made into ImmBio - March
2016.
An additional investment of GBP200,000 has also been made into Plasma
Antennas - April 2016.
Warrants have been exercised in Ixaris and an additional investment of
GBP425,000 has been made - May 2016.
The Directors have declared an interim dividend for 2017 of 15p per
share which was paid on 13 May 2016.
Company Number: 4351474
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 29 February 2016, income statement and
cash flow statement for the period then ended have been extracted from
the Company's 2016 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 29 February 2016 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/NNSM
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Oxford Technology 3 VCT plc via Globenewswire
HUG#2015606
http://www.oxfordtechnology.com
(END) Dow Jones Newswires
May 26, 2016 03:00 ET (07:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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