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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oxford Technology Venture Capital Trust Plc | LSE:OXT | London | Ordinary Share | GB0006640204 | 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% | 27.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMOXT
26 May 2016
Oxford Technology VCT plc ("the Company" or "OT1")
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 GBP3.33m GBP3.53m
Net Asset Value per Share 61.2p 65.0p
Cumulative Dividend 52.7p 52.7p
NAV + Cumulative Dividend Paid from
Incorporation 113.9p 117.7p
Proposed Final Dividend 1.3p -
Share Price at Year End 40.5p 53.0p
Earnings Per Share
(Basic & Diluted) (3.8)p 0.0p
Chairman's Statement
I am pleased to present my Annual Report to Shareholders.
Overview
While there was a modest reduction in our net assets over the course of
the financial year, I am delighted to report on further progress within
our relatively mature portfolio of investee companies. Two of our
portfolio companies paid dividends this year, representing income of
just under 5% of the total equity value of the portfolio, and the Board
of OT1 is recommending a final dividend of 1.3p per ordinary share.
Subject to shareholder approval, the dividend will be paid on 20 July
2016 to ordinary shareholders on the register on 1 July 2016.
Portfolio Review
The net asset value (NAV) per share on 29 February 2016 was 61.2p
compared to 65.0p on 28 February 2015. Dividends paid to date are now
52.7p per ordinary share, giving a total return to date of 113.9p based
on the NAV on 29 February 2016. The loss per share in the year to 29
February 2016 was 3.8p.
Following a period of sustained and profitable growth at photocopier
software company Select Technology, it is now the largest holding in the
Company's portfolio. In February 2016 Select Technology paid out its
first dividend following the cessation of its printer manufacturing
activities (a strategic withdrawal from a difficult market that took
place around the time of the recent economic downturn). Select
Technology is now solely an international master distributor of its own
and third party software. The management team at Select Technology is
busy implementing a growth strategy with a view to further establishing
itself as a key player in its markets.
Scancell Plc (Scancell), listed on the AIM market of the London Stock
Exchange, is the Company's second largest holding. Scancell continues to
make progress with the development of novel immunotherapies for the
treatment of cancer. There is evidence - albeit from a small sample of
patients - that Scancell has an attractive combination of technologies
in this newly developing field, but as ever the commercial, scientific
and funding risks remain high.
Progress at Scancell in the 12 months to 29 February 2016 was
constrained by a lack of funds. Scancell appointed a new chairman, John
Chiplin, in January 2016. John has considerable experience in the
sector and we are pleased to see him at the helm. Following the year
end, Scancell announced a placing and open offer which was successfully
completed in early April 2016 - GBP6.2 million was raised. Scancell now
has a much improved balance sheet which will enable it to continue to
push ahead with its commercial activities.
The bid price of Scancell's shares used for the calculation of the
Company's net asset value on 29 February 2016 was 17.5p, a substantial
reduction from 30.5p on 28 February 2015. In fact, during the course of
the year the share price dipped down to 12p in December 2015. The April
2016 open offer and placing was executed at 17p, and the share price has
remained stable around that level since then.
Together with the Company's cash balance, Select Technology and Scancell
make up just under 90% of OT1's portfolio. The 'best of the rest'
includes Getmapping, which continues to make headway in international
markets, and BioCote, which has seen quite rapid (if volatile) growth in
the reporting period and joined Select Technology in paying a dividend.
Further details on our investments can be found in the Investment
Portfolio Review.
We continue to assess the opportunity for divestments so as to
crystallise shareholder value as and when appropriate. It should be
noted that the cash income derived from our portfolio in the year
exceeded the Company's costs for the year - overall, the Company's
portfolio provides a blend of growth potential and cash generation. All
the main portfolio companies have the potential for a valuation uplift
in the near to medium term, therefore the Directors currently do not
envisage exiting these companies in the short term.
Dividends
The ongoing strategy is to seek to crystallise value from the portfolio
and distribute cash to shareholders via dividend payments. Following
dividends from Select Technology and Biocote, the Directors are
recommending a final dividend of 1.3p per ordinary share for the year
ended 29 February 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. In addition, the
threshold at which a performance fee would become payable is now subject
to a 6% per annum escalation from the 10(th) anniversary of the
formation of the VCT. On 29 February 2016 this threshold was raised to
175.6p. No payment has been made to date under this scheme, nor will be
until cash returns to shareholders exceed this threshold.
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
Shareholders will also be aware of the changes to the Board and
Management arrangements that were implemented during the Summer,
implementing a Common Board across the four Oxford Technology VCTs
commensurate with the companies becoming 'self-managed'.
Lucius Cary and his team continue to be involved with the portfolio as
OT1 Managers Ltd (the Company's Investment Manager) sub-contracts
services from Oxford Technology Management. The new Common Board
structure has worked well since implementation, providing the following
corporate governance improvements:
-- Further formalising the roles of the directors and Oxford Technology
Management;
-- Four independent directors (with the Chairman holding a casting vote) to
ensure the Board cannot be controlled by a single person;
-- Providing a framework for OT1 to benefit from the differing expertise of
its newly enlarged board of directors, with those directors having a
specific mandate to contribute as best they can;
-- Retention of the option of pursuing a merger (or other combination) at a
later date as and when portfolio developments permit; and
-- Minimising costs by not pursuing a major restructuring at this time
whilst leaving options open to maximise shareholder value should other
corporate actions become attractive.
As part of implementation of the Common Board, I was delighted to
welcome Robin Goodfellow and David Livesley as Directors of the Company
following their appointment on 3 July 2015.
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 OT1 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 OT1 may make. We are studying the recently issued HMRC
guidelines.
Change of Registrars
As part of our ongoing focus on costs, we appointed Neville Registrars
in place of Capita as our Registrars. Their details can be found on
page 51. We would also remind you that Annual Reports, notices of
shareholder meetings and other documents that are required to be sent to
Shareholders are also published on our website at
www.oxfordtechnology.com/vct1, as well as any other announcements made
by the Company.
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 appreciate the input of our shareholders and look forward
to welcoming as many of you as possible on the day.
Outlook
Looking ahead, I believe the portfolio - though concentrated - is well
positioned for growth and continued cash generation. We continue to
work to maximise value for shareholders and will, as per our stated
strategy, continue to seek to crystallise this value and distribute to
shareholders via dividend payments when valuations and liquidity allow.
Alex Starling
Chairman
25 May 2016
Investment Portfolio Review
OT1 was formed in 1997 and invested in a total of 21 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 52.7p per share.
The table on page 13 shows the companies remaining in the portfolio.
The ultimate outcome for investors will depend on how the remaining
investments perform. In particular, Scancell and Select Technology have
the potential to deliver significant returns.
In summary, 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.
Select Technology has been making excellent progress in recent years,
consistently growing its sales and profits. Select paid a maiden
dividend of GBP500,000, of which OT1's share was nearly GBP150,000 in
February 2016.
Getmapping has made solid progress, having come close to failing
completely when Ordnance Survey (OS) terminated the reseller agreement
12 years ago. But Getmapping has survived and had sales of almost GBP6m
in the year to December 2015. To diversify and become less dependent on
the UK where life can be difficult with a market dominated by OS who
receive a government subsidy of over GBP75m per year, Getmapping has
increased its operation in Africa. However, increasing corruption in
Africa (much reported in the press) creates its own problems.
Nevertheless, Getmapping has survived and made good progress, but it
faces some challenges ahead.
After a difficult period, BioCote has made good progress in recent
years. Its antimicrobial surfaces based on silver are being
increasingly widely used throughout the world. The treatment can be
applied to almost any type of surface from metals and floors to carpets
and curtains. BioCote's sales increased from GBP1m to GBP1.6m in the
most recent financial year and BioCote paid OT1 a dividend of GBP6,600
in February 2016.
New Investments in the year
There were no new investments during the year.
Disposals during the year
No new disposals were made during the year. A payment of GBP7,457 was
received as the third and final tranche for the disposal of Dataflow.
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 78.0% 70.0%
Maximum allowed:
Non-Qualifying Investments 22.0% 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 as no new
investments made.
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 held by
Company Description Date of initial investment investment GBP'000 GBP'000 GBP'000 OT1
Photocopier
Select Technology Interfaces Sep 1999 488 1,536 578 30.0
Scancell Antibody based
Quoted on AIM cancer therapeutics Aug 1999 344 1,205 (895) 3.1
Getmapping Aerial photography Mar 1999 518 224 12 3.9
Bactericidal powder
BioCote coating Dec 1997 85 106 40 6.6
Radiotherapy
DHA products Sep 1999 150 10 - 26.9
Industrial ceramic
IMPT coatings Mar 2000 150 - - 4.2
Totals 1,735 3,081 (265)
Other Net Assets 246
NET ASSETS 3,327
Number of shares in issue: 5,431,656
Net Asset Value per share at 29 February 2016: 61.2p
Dividends paid to date: 52.7p
This table shows the current portfolio holdings. The investments in
Avidex, Concept Broadcast, Coraltech, Eurogen, Im-Pak, Freehand Surgical,
Nexus, OST, Rapier, Sirius and Synaptica have been written off. The
investments in Valid, Dataflow, MET and Equitalk 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 1997. 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 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
A Starling 2,512 2,512
R Goodfellow* 90,932 N/A
D Livesley** Nil N/A
R Roth 10,000 10,000
* At 3 July 2015, the date of Robin Goodfellow's appointment he held
22,000 shares in OT1.
** Appointed 3 July 2015
Under the Company's Articles of Association one third of the Directors
are required to retire by rotation each year. Richard Roth and Alex
Starling 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 Alex Starling 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
OT1 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 Robin Goodfellow,
together with Lucius Cary are Directors of OT1 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/vct1).
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 (Richard Vessey, 4.3%; Vidacos Nominees Ltd, 4.2%;
and Redmayne Nominees Ltd 3.7%). On 18 April 2016, Redmayne Nominees
Ltd advised that their holding had increased to 4.2%. The Directors'
shareholdings are listed above.
Auditors
James Cowper Kreston offer themselves for reappointment in accordance
with Section 489 of the Companies Act 2006.
On behalf of the Board
Alex Starling
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 directors, Michael O'Regan
and Richard Vessey of the other Oxford Technology VCT funds 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
Alex Starling 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.
Alex Starling and Robin Goodfellow receive no remuneration in respect of
their directorships of OT1 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 no performance fee was due.
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 0.16% of any amount over the threshold and David Livesley
0.71%. No performance fee will be payable for the year ending 28
February 2017 unless original shareholders have received back at least
183p 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 GBP5,500 GBP6,167 GBP4,375
Richard Roth GBP6,500 GBP8,833 GBP4,375
John Jackson - - GBP3,750
Lucius Cary - - GBP1,041
Robin Goodfellow GBP5,000 GBP3,333 -
David Livesley GBP3,500 GBP2,333 -
Total GBP20,500 GBP20,666 GBP13,541
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
(Loss)/Gain on disposal of fixed asset investments - - - - - -
Unrealised (loss)/gain on valuation of fixed asset
investments - (265) (265) - 104 104
Other income 2 154 - 154 - - -
Investment management fees 3 (9) (26) (35) - (53) (53)
Other expenses 4 (60) - (60) (52) - (52)
Return on ordinary activities before tax 85 (291) (206) (52) 51 (1)
Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax 85 (291) (206) (52) 51 (1)
Return on ordinary activities after tax attributable
to
equity shareholders 85 (291) (206) (52) 51 (1)
Earnings per share - basic and diluted 6 1.5p (5.3)p (3.8)p (0.9)p 0.9p 0.0p
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 543 176 2,940 (125) 3,534
Revenue return on ordinary activities after tax - - - (52) (52)
Expenses charged to capital (53) (53)
Current period gains on fair value of investments - - 104 - 104
Prior years' unrealised gains/losses now realised - - 60 (60) -
Balance as at 28 February 2015 543 176 3,104 (290) 3,533
-
Revenue return on ordinary activities after tax - - - 85 85
Expenses charged to capital (26) (26)
Current period losses on fair value of investments - - (265) - (265)
Reserves transfer (note 11) - - (1,493) 1,493 -
Balance as at 29 February 2016 543 176 1,346 1,262 3,327
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 3,081 3,353
Current Assets
Debtors 8 2 2
Cash At Bank 253 186
Creditors: Amounts Falling Due
Within 1 Year 9 (9) (8)
Net Current Assets 246 180
Net Assets 3,327 3,533
Called Up Equity Share Capital 10 543 543
Share Premium 176 176
Unrealised Capital Reserve 11 1,346 3,104
Profit and Loss Account Reserve 11 1,262 (290)
Total Equity Shareholders'
Funds 11 3,327 3,533
Net Asset Value Per Share 61.2p 65.0p
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:
Alex Starling
Chairman
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 (206) (1)
Adjustments for:
Gain on disposal of investments - -
Loss/(gain) on valuation of investments 265 (139)
(Increase)/decrease in debtors - 110
Increase/(decrease) in creditors 1 (3)
Inflow/(Outflow) from operating
activities 60 (33)
Cash flows from investing activities
Purchase of investments - -
Disposal of investments 7 57
Dividends paid - -
Increase in cash at bank 67 24
Opening cash and cash equivalents 186 162
Cash and cash equivalents at year end 253 186
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: 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. (In 2015, the investment management fees were all charged to capital.) 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 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 154 -
Total 154 -
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 35 53
Total 35 53
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: 1.5%). Oxford
Technology Management is also entitled to certain monitoring fees from
investee companies and the board monitors the amounts.
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 125p has now been increased by compounding that portion
that remains to be paid to shareholders by 6% per annum with effect from
1 March 2008, resulting in the remaining required threshold rising to
122.9p at 29 February 2016, corresponding to a total shareholder return
of 175.6p after taking into account the 52.7p already paid out (52.7p +
122.9p = 175.6p). 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 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
29 February 2016 28 February 2015
GBP'000 GBP'000
Directors' remuneration 21 14
Auditors' remuneration 5 6
Legal and professional expenses 14 10
Accounting and administration services 6 6
Other expenses 14 16
Total 60 52
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 GBPnil (2015: GBPnil).
Year Ended Year Ended
29 February 2016 28 February 2015
GBP'000 GBP'000
Return on ordinary activities before tax (206) (1)
Current tax at standard rate of taxation (41) -
Unrecognised tax losses 41 -
Total current tax charge - -
Unrelieved management expenses of GBP1,218,727 (2015: GBP1,123,276)
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 loss of GBP206,000 (2015: loss of GBP1,000)
attributable to shareholders divided by the weighted average number of
shares 5,431,656 (5,431,656) 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 344 1,399 1,743
Cumulative
revaluation 1,755 (145) 1,610
Valuation at 28
February 2015 2,099 1,254 3,353
Movement in the
year:
Purchases at cost - - -
Redeemed/Disposed - (7) (7)
Revaluation in
year (895) 630 (265)
Valuation at 29
February 2016 1,205 1,876 3,081
Book cost at 29
February 2016 344 1,391 1,735
Cumulative
revaluation to 29
February 2016 861 485 1,346
Valuation at 29
February 2016 1,205 1,876 3,081
Subsidiary Company
The Company also holds 100% of the issued share capital of OT1 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
OT1 England and Investment
Managers Wales Manager GBP23,533 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 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 2
Total 2 2
9. Creditors
29 February 2016 28 February 2015
GBP'000 GBP'000
Other creditors and accruals 9 8
Total 9 8
10. Share Capital
29 February 2016 28 February 2015
GBP'000 GBP'000
Authorised:
10,000,000 ordinary shares of 10p each 1,000 1,000
500,000 redeemable preference shares of 10p each 50 50
Total Authorised 1,050 1,050
Allotted, called up and fully paid:
5,431,656 (2015: 5,431,656) ordinary shares of 10p
each 543 543
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 GBP1,262,000 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 3,533 3,534
Return on ordinary activities after tax (206) (1)
Shareholders' funds at end of year 3,327 3,533
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
OT1 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, GBP23,533 was paid
in respect of these fees. No amounts were outstanding at the year end.
15. Events after the Balance Sheet Date
On 31 March 2016, after the financial year end, an agreement was reached
under which Imaging Equipment Holdings Ltd has bought OT1's shareholding
in DHA for GBP9,715.
The Directors have declared a final revenue dividend of 1.3p which,
subject to shareholder approval at the AGM, will be paid to ordinary
shareholders on 20 July 2016.
Company Number: 3276063
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 VCT plc via Globenewswire
HUG#2015592
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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