Oxford Tech 2 VCT Oxford Technology 2 Vct Plc : Annual Financial Report

 
TIDMOXH 
 
 
   2nd May 2018 
 
   Oxford Technology 2 VCT plc ("the Company" or "OT2") 
 
   Annual Report and Accounts for the year ended 28 February 2018 
 
   The Directors are pleased to announce the audited results of the Company 
for the year ended 28 February 2018.  A copy of the Annual Report and 
Accounts (together the "Accounts") will be made available to 
Shareholders shortly.  Set out below are extracts from the audited 
Accounts. References to page numbers below are to those Accounts. 
 
 
 
 
 
   The AGM will be held at The Magdalen Centre, Oxford Science Park, Oxford 
OX4 4GA on Thursday 12 July 2018, at 11am. 
 
   A copy of the Accounts will be available from the registered office of 
the Company at The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA, 
as well as on the Company's website: www.oxfordtechnology.com/vct2 
 
   Financial Headlines 
 
 
 
 
                                                Year Ended          Year Ended 
                                          28 February 2018    28 February 2017 
 
  Net Assets at Year End                  GBP1.69m            GBP2.53m 
Net Asset Value per Share                            31.7p               37.2p 
 Dividend per Share paid in Year                      8.0p                   - 
Cumulative Dividend per Share                        21.0p               13.0p 
 
NAV + Cumulative Dividend per Share                  52.7p               50.2p 
paid from Incorporation 
 
Share Price at Year End                              27.5p               20.0p 
 
Earnings Per Share 
 (Basic & Diluted)                        1.0p                9.0p 
 
 
   Chairman's Statement 
 
   I am pleased to present to fellow shareholders my Annual Report for the 
year to 28 February 2018, which has been a comparatively busy time for 
your Company. 
 
   Overview and Results 
 
   The most significant impact on the Company was the disposal of our 
largest investment, OC Robotics (OCR), and the return of nearly GBP900k 
to shareholders, more of which is detailed below. 
 
   The net asset value per share on 28 February 2018 was 31.7p compared to 
37.2p on 28 February 2017, following a dividend payment of 8p per share. 
The earnings per share in the year to 28 February 2018 were 1.0p, with 
the balance of the increase in net asset per share as a result of the 
Tender Offer. This is the fourth consecutive year of increased valuation 
per share. At 28 February 2018 the Total Return was 52.7p per share. 
 
 
 
   With the sale of OCR, our assets are less concentrated.  The Company's 
eight remaining portfolio company holdings are at different stages of 
development.  The Directors continue to monitor all companies, looking 
for the optimum time to realise your Company's investment in them. We 
were able to provide follow-on funding to two of these during the year: 
Arecor (GBP200k) and ImmBio (GBP30k). 
 
   Sale of OC Robotics and resultant Return of Funds to shareholders 
 
   As previously reported, OCR (which represented 60% of our net assets at 
the start of the year) was sold to GE Aircraft Engine Services Ltd on 8 
June 2017.  OT2 received a payment of GBP1,457k with a further GBP327k 
being held in escrow for 24 months against normal business warranties. 
In line with OT2's normal practice, 50% of the amount in escrow has been 
recognised in the NAV.  OT2 originally invested GBP125k in 2001 when the 
company was a start-up, and then made additional investments over the 
years taking the total investment to GBP311k.  So far, the investment 
has therefore returned a five-fold uplift vs cost. 
 
   With significant cash proceeds available, the Board offered shareholders 
the opportunity to sell 30% of their holding back to the Company via a 
Tender Offer, allowing allotments over this level should other 
shareholders not take up their Basic Entitlement. 
 
   In September we concluded the Tender Offer. The Company purchased all 
the shares tendered by shareholders, which represented over 20% of our 
share capital, returning GBP460k to them. As a result, the Company 
cancelled 1,461,034 Ordinary Shares, reducing its total issued share 
capital from 6,792,923 to 5,331,889 Ordinary Shares. The 15% level of 
discount was set to ensure a fair balance between those shareholders who 
chose to participate in the Tender Offer, and those wishing to retain 
their shareholding in the Company. This resulted in a 1.4p per share 
increase in net asset value, which is in part to compensate remaining 
shareholders who are liable to incur a greater proportion of running 
costs per share going forward given the fixed nature of these expenses. 
 
   On 5 December 2017 we paid a further dividend of 8p per share to all 
those shareholders remaining on the register - a total of GBP427k. This 
was slightly higher than the amount envisaged in the Circular as not all 
the funds earmarked for the Tender Offer were required for that purpose. 
 
   Portfolio Review 
 
   The Directors continue to take an active interest in the remaining 
companies within the portfolio, both to support their management teams 
to achieve company development, but also to prepare companies for 
realisation at the appropriate time.  It should however be noted that 
approaches do occur at other times, and the ability of the Directors and 
Investment Advisor to be able to provide support when such approaches 
occur is essential for maximising value. This was demonstrated in the 
recent realisation of OCR. 
 
   Select Technology, a photocopier (or more generally Multi Function 
Device, or MFD) software company, is the largest holding in your 
Company's portfolio, although it only represents just over 20% of our 
net assets.  Despite seeing core sales grow, it has experienced reduced 
profitability and cash generation this year after simplifying its 
business model. As reported last year, this should reduce the dependency 
on one particular supplier, increase business resilience and, ultimately, 
enable more rapid growth by enabling Select Technology to take on a more 
balanced portfolio of software products for worldwide distribution.  It 
is too early to be able to report fully on the outcome of this change in 
the business model, but early indications are not negative.  As reported 
in the half year statement, having taken these developments into account, 
we have reverted to a valuation methodology based on a sales multiple to 
more appropriately reflect the prospects of the business.  Our stake in 
this business has increased slightly in value over the course of the 
reporting period. 
 
   At the end of November 2017, we made a GBP200k follow-on investment into 
Arecor, making it the second largest holding in the Company's portfolio. 
Arecor is a potentially world class pharmaceutical research company 
based in Cambridge and has a very advanced diabetes drug formulation 
technology. During the past year Arecor has announced significant 
progress, including a licence agreement with a major global healthcare 
company, as well as the successful pre-clinical development of stable 
rapid-acting, ultra-concentrated insulin for the significantly enhanced 
treatment of type 1 diabetes.  It has had other good news flow and won 
an Innovate grant. The company is still trying to finalise the 
investment terms for the full GBP6m round it is seeking, and there is a 
risk that the terms may be at a lower price than that at which we 
invested in November; we have therefore taken a prudent view with our 
valuation and hence there is a small reduction in the value of our 
investment in the year. 
 
   The recent investment of GBP30k in ImmBio was in a new class of share 
with a significant preference. This has resulted in an uplift in its 
valuation of GBP83k. The investment was made to support continued 
commercialisation of its PnuBioVax Vaccine.  The final results to come 
from their First-in-Human study were positive and was found to be safe 
and well tolerated, and capable of producing antibody responses against 
key S. pneumoniae antigens broadly conserved across strains. 
Negotiations are progressing with first licensees for the vaccine, and a 
further GBP12,000 was committed in  April 2018 to allow time for these 
conversations to progress. 
 
   Oxis Energy is also raising funds at an increased valuation, and again 
taking into account the preferences linked to our previous investment, 
we have been able to increase its value. 
 
 
 
   Plasma Antennas has had interest from many of the major players in 
telecoms for their Plasma Antenna, but after long discussions no offers 
to invest have come forward, nor any immediate further sales 
opportunities. In these accounts, we have taken a provision against our 
equity holding, totalling GBP92k. The company is now in the process of 
being mothballed, putting at risk the remaining GBP38k valuation as at 
28 February 2018. 
 
   Further details on these investments are contained within the Investment 
Portfolio Review. The full list of the Company's investments is shown on 
page 18, with details of all investees on our website. 
 
   After the year end, the Company invested GBP150,000 into Scancell 
Holdings Plc (Scancell). Scancell is a company well known to the 
Directors and Investment Adviser (and also to shareholders who have 
attended our recent AGMs). It is developing a number of exciting new 
potential breakthrough cancer treatments and has had some very positive 
news flow during the last 12 months. The company is quoted on AIM, and 
in April, closed a GBP7.5m placing, and OT2 now owns 1,250,000 shares. 
The qualifying investment will also help OT2 manage any future liquidity 
needs (see VCT Market Changes below). 
 
   Dividends/Return of Capital 
 
   The Directors are not recommending any further dividends at this time. 
The timing and quantum of the 8p per share dividend payment in December 
was to ensure the maximum possible investment could be made into Arecor, 
whilst ensuring all VCT tests were met. It was also important to balance 
the desire to return as much cash to shareholders as possible with the 

need to retain adequate cash to be able to continue to support our 
remaining investees, and also to cover operating costs for the 
foreseeable future. 
 
   The ongoing strategy is to continue to seek to crystallise value from 
the portfolio and distribute cash to shareholders. 
 
 
 
   VCT Market Changes 
 
   In terms of the broader VCT market, the main event of the year was the 
Patient Capital Review (PCR) undertaken by HM Treasury (HMT).  Your 
Board engaged with the PCR on behalf of your VCT, seeking to ensure the 
continued viability of your Company. 
 
 
 
   As mentioned in our third quarter update, your Board broadly welcomed 
the results of the PCR as announced in the Autumn Budget in November 
2017.  In summary, HMT wishes to encourage investments into earlier 
stage businesses; and, if necessary, for these investments to be allowed 
to flourish over longer periods of time.  We believe that, appropriately 
resourced and supported, the VCT structure is well-suited to this 
patient approach to long term value creation. We also welcome the 
extension of the six month VCT rule to twelve months as it provides a 
greater level of future re-investment flexibility. 
 
 
 
   One of the Autumn Budget's announcements was an increase in the level of 
VCT qualifying investments to 80% (up from 70%) that a VCT needs to 
hold; this legislation received Royal Assent on 15 March 2018.  For OT2, 
this change is effective from 1 March 2020, and may make it more 
challenging for small VCTs, such as your Company, to manage ongoing 
compliance with the qualifying tests, which is an unintended consequence 
of the new legislation.  Cash holdings are non-qualifying, but VCTs are 
obliged to demonstrate that they have adequate working capital over the 
medium term, which would not be possible if cash reserves must be 
distributed in order to fulfil the new legislation - corporate liquidity 
tests could thus become very tight. 
 
   Furthermore, in the case of OT2, all our investments have been in 
unquoted companies with limited short term methods of realisation at a 
fair value. We fully understand the rationale for introducing this 
change and believe that a simple amendment is possible that would 
mitigate this unintended consequence while ensuring that the legislative 
change retains HMT's desired effect. 
 
   We will continue to lobby for an appropriate amendment to be made. 
However, to mitigate the challenges that such an issue might cause, the 
Board have chosen to make the qualifying investment in Scancell as 
detailed above, so as to provide additional liquidity should it be 
required. 
 
   A further change has seen the introduction of MiFID II & PRIIPS. The 
most significant impact on VCTs has been the requirement to prepare a 
Key Information Document (KID).  Shareholders who are interested can 
find it on the Company's website. 
 
   Planning for the Future 
 
 
 
   Your Board continues to look at methods of improving operational 
efficiency, reducing costs and, more generally, putting in place 
appropriate plans to ensure that your VCT's operational costs relative 
to its overall size remain within acceptable limits. Shareholders may be 
aware of some significant changes to the VCT market in recent years. 
Changes to pension tax reliefs are driving investors to look for 
alternatives and, coupled with a reduced supply of tax efficient 
investment opportunities, have resulted in exceptional demand from 
investors wishing to subscribe for VCTs.  VCT legislation has been 
modified to target more VCT money towards the types of earlier stage 
companies that OT2 has historically invested in.  Given the types of 
investments OT2 makes, and the fact that all are existing investees that 
have previously received financing from VCTs, your Company has not been 
affected by most of the recent changes in VCT legislation.  However, the 
new environment may present an opportunity for your VCT. 
 
   In July, the Board announced that it was aware that due to recent 
realisations, the VCT is becoming sub economic with unavoidable 
overheads on a small asset base. The VCT has limited ability to increase 
the asset base on its own, and a number of options to deal with this are 
under consideration. I can confirm that discussions continue regarding 
these options and am hopeful that we can make a further announcement in 
the not too distant future. Once a proposal that the Board considers to 
be in the best interests of existing shareholders is sufficiently 
advanced, shareholders will be invited to approve any new arrangements. 
However, there can be no certainty that any of these discussions will 
lead to a concrete proposal, either at this time or in the future. 
 
 
 
   AGM 
 
   Shareholders should note that the AGM for the Company will be held on 
Thursday 12 July 2018 at the Magdalen Centre, Oxford Science Park, 
starting at 11am and will include presentations by Oxford Technology 
Management and some of the companies that the Oxford Technology VCTs 
have invested in. 
 
   A formal Notice of the AGM has been enclosed with these Financial 
Statements together with a Form of Proxy for those not attending. We 
appreciate the input of our shareholders and look forward to welcoming 
as many of you as possible on the day - thank you for your ongoing 
support. 
 
   Outlook 
 
   The Oxford Technology VCTs have operated and continue to operate very 
much in the spirit of the VCT legislation by investing in and 
subsequently supporting early stage technology companies. Unfortunately, 
the current VCT rules sometimes limit the amount of follow on investment 
that we are able to make. 
 
   Looking ahead, though, the Board continues to believe your VCT is an 
appropriate structure to hold your Company's assets.  The Directors' 
view remains that the portfolio still holds significant potential over 
the medium term but is not without risk.  As per our stated strategy, 
your Board continues to work to maximise value, reduce costs, and - when 
valuations and liquidity allow - crystallise this value and distribute 
the proceeds to shareholders. 
 
   Should any of the discussions to increase the asset base referred to 
above lead to a concrete proposal, we look forward to presenting these 
to shareholders in due course. 
 
 
 
 
 
 
 
   Richard Roth 
 
   Chairman 
 
   2nd May 2018 
 
   Investment Portfolio Review 
 
   OT2 was formed in 2000 and invested in a total of 30 companies, all 
start-up or early stage technology companies.  Some of these companies 
failed with the loss of the investment.  Some have succeeded and have 
been sold.  The table on page 18 shows the companies remaining in the 
portfolio. The investment in Scancell made after the year end added a 
further company to the portfolio. A more detailed analysis is given of 
the top five investments. 
 
   OC Robotics, previously the Company's largest investment, was sold to GE 
Aircraft Engine Services in June 2017 for an immediate payment of 
GBP1,356k with GBP101k following 4 months later. There is still GBP328k 
being held in escrow from the deal, half of which has been accrued in 
the NAV at 28 February 2018. Overall,  this represented a 5 fold uplift 
on the cost of the investment.   A dividend of 8p per share was paid 
following this sale, as well as a Tender Offer returning a further 
GBP460k to shareholders. 
 
   Select Technology specialises in software for photocopiers - now known 
as MFDs - Multi-Function Devices.  Over the last decade Select has built 
up a global network of distributors and dealers through which it sells 
both its own and third party products.  These products now include 
PaperCut, Kpax, Foldr and Drivve Image. Sales have increased from 
GBP210k in the year to July 2010 to over GBP5m in the year to January 
2018, though Select lost one contract in 2017 that resulted in 
substantially reduced profits in the year to July 2017. However, the 
core business has continued to grow and it is hoped that Select should 
be able to pay a dividend in OT2's current financial year.   It has 
employees all over the world; everyone works remotely. 
 
   Arecor is making encouraging progress.  The company has progressed its 
insulin programme and has both the fastest acting and most concentrated 
formulations in the world. In preparation for the start of clinical 
trials it is raising money and there has been good interest, recognizing 
both the technical advantage and the very competitive nature of the 
insulin market. During the year, OT2 invested GBP200,000 in Arecor. The 
term sheet for the next fundraising is currently being negotiated. 
 
   GBP30,000 was invested in July 2017 into ImmBio to help support the 
commercialisation of the Pneumonia vaccine which had a successful phase 
1 clinical trial in spring 2016.  A deal was arranged with the Liverpool 
School of Tropical Medicine to apply for joint grants to support 
additional clinical trials.  The collaboration has not yet resulted in 
any successful grant applications. ImmBio has a new CEO, Enrique Tabares 
having taken over the role.  He is leading the discussions with 
potential licensees, which have been progressing since mid-2017. 
Negotiations are progressing with first licensees for the vaccine, and a 
further GBP12,000 was committed in  April 2018 to allow time for these 
conversations to progress. 
 
   Oxis Energy is developing a Lithium Sulphur rechargeable battery with a 
significantly higher specific energy (energy storage per unit weight) 
than the currently available Lithium Ion batteries. OT2 was the first 
investor in Oxis Energy (then known as Intellikraft) in January 2000. 
This battery is now planned to be tested in electric vehicles, with 
electric buses being the main focus, as every kilogramme of weight saved 
in the battery translates to increased payload/ number of passengers 
that can ride the bus. The other area of focus is aerospace, where 
weight reduction is also clearly of interest. 
 
   Orthogem has had CE approval for its Tripore putty product and it has 
had a very good response from surgeons. There has also been a good 

response to the product from distributors: four have already signed up 
and there is a long list still being processed. Unfortunately, during 
the year the FDA turned down Orthogem's application to sell the Tripore 
putty in the USA.  Despite originally approving the model used for the 
trials, on review the FDA determined that the model being used was not 
appropriate.  This means that Orthogem will have to run new FDA trials. 
This delays access to the largest market, but the company has made good 
progress. 
 
   Plasma Antennas has developed a range of next generation smart 
selectable antenna technologies and has a prototype of a true plasma 
antenna, which it was hoped might be at the centre of tomorrow's 
communications systems.   However, although some of the largest global 
companies were very interested, with companies in the US, China and 
Japan all making special visits to meet Plasma in Winchester, no 
partnership deal was done. Therefore, at the time of writing, Plasma is 
in the process of being mothballed. 
 
   After the year end, OT2 invested GBP150,000 into Scancell Holdings Plc 
(Scancell) an AIM-listed stock well known to the Directors and 
Investment Adviser. Scancell is developing novel immunotherapies for 
cancer based on two platform technologies known as Immunobody and 
Moditope.  Results from Scancell's first clinical trial for the 
treatment of melanoma continue to be excellent with recurrence free 
survival at 69% at 5 years, surpassing results in other trials of 
ipilimumab (leading immunotherapy for cancer) which showed 46.5% at 3 
years. 
 
   Possibly the biggest news of the year for Scancell was the decision by 
Cancer Research UK (CRUK) to conduct a trial of SCIB2 in combination 
with checkpoint inhibitors. SCIB2 should provide the impetus to the 
immune system to attack the tumor, and the checkpoint inhibitor will 
remove the barriers to its action. The study will focus on Non Small 
Lung Cell Cancer, but the results will have relevance for a range of 
tumors. The trial will be conducted in full by CRUK and Scancell will be 
able to purchase the results and commercialise them itself, or leave 
them with CRUK and share in their commercial success.  Scancell has also 
started a development project with BioNtech, the largest privately owned 
Biotech company in Europe. Scancell's focus is now on generating 
clinical data and two more trials should read out over the next two 
years. If Scancell is successful in its CRUK Grand Challenge application 
it will also be able to start a third trial on Moditope.  Scancell has 
now been granted the European patent for use of citrullinated proteins 
in cancer treatment.  Scancell will use the proceeds of the placing and 
open offer to support clinical trials for SCIB1, SCIB2 and Modi-1 and 
pre-clinical work for Modi-2. 
 
   New Investments in the year 
 
   There were two follow-on investments during the year of GBP200,000 into 
Arecor and GBP30,000 into ImmBio. All new investments have complied with 
both EU State Aid rules and HMRC VCT rules. 
 
   Disposals during the year 
 
   OC Robotics was sold during the year and OT2 received GBP1,457k from its 
original investment of GBP311k. 
 
   Valuation Methodology 
 
   Quoted and unquoted investments are valued in accordance with current 
industry guidelines that are compliant with International Private Equity 
and Venture Capital (IPEVC) Valuation Guidelines and current financial 
reporting standards. 
 
   VCT Compliance 
 
   Compliance with the main VCT regulations as at 28 February 2018 and for 
the year then ended is summarised as follows: 
 
 
 
 
Type of Investment 
 By HMRC Valuation Rules     Actual          Target 
                                     Minimum obligation of: 
VCT Qualifying Investments    72%              70% 
                                        Maximum allowed: 
Non-Qualifying Investments    28%              30% 
Total                          100%                    100% 
 
 
   At least 10% of each investment in a qualifying company is held in 
'eligible shares' - Complied. 
 
   No more than 15% of the income from shares and securities is retained - 
Complied. 
 
   No investment constitutes more than 15% of the Company's portfolio (by 
value at time of investment or when the holding is added to) - Complied. 
 
   The Company's income in the period has been derived wholly or mainly 
(70% plus) from shares or securities - Complied. 
 
   No investment made by the VCT has caused the company to receive more 
than GBP5m of State Aid investment in the year, nor more than the 
lifetime limit of GBP12m - Complied. 
 
   Table of Investments held by Company at 28 February 2018 
 
 
 
 
 
 
 
 
                                                                                           Change 
                                                                                             in 
                                                                                            value                     % equity 
                             Date of                                                       for the                    held by 
                             initial          Net cost of      Carrying value at 28/02/18   year    % equity held by    all     % Net 
Company      Description     investment    investment GBP'000            GBP'000           GBP'000         OT2         OTVCTs   Assets 
Select       Photocopier 
 Technology   Interfaces      Nov 2001                    132                         356       14               7.4      58.6    21.1 
             Protein 
Arecor        stabilization   Jul 2007                    289                         268      148               2.6      12.1    15.8 
ImmBio       Novel vaccines   Dec 2000                    255                         176      113               2.0      15.9    10.4 
             Rechargeable 
Oxis Energy   batteries       Jan 2000                    540                         140      113               0.2       0.5     8.3 
             Bone graft 
Orthogem      material         Dec 2000                   342                         100        -               5.4      20.2     5.9 
             Active wound 
              healing 
Insense       dressings       Jun 2001                    204                          52        -               2.0       6.8     3.1 
             Solid state 
Plasma        directional 
 Antennas     antennas         Nov 2001                   188                          38     (91)               5.6      48.8     2.2 
             Data 
Inaplex       integration     Sep 2001                    138                          19     (18)              21.5      34.8     1.1 
Totals                                                  2,089                       1,149      279 
 
Other Net 
Assets                                                                                542                                         32.1 
NET ASSETS                                                                          1,691                                          100 
 
   Number of shares in issue:  5,331,889 
 
   Net Asset Value per share at 28 February 2018: 31.7p 
 
   Dividends paid to date per share: 21p per share 
 
   This table shows the current portfolio holdings.  The investments in 
Acumen, Assertion, Astron Clinica, Ciphergrid, CHR Design, Coraltech, 
Im-Pak, Freehand Surgical, Inscentinel, Jetmask, M3 Networks, OST, 
Promic and SVA have been written off.   The investments in Hardide, 
Commerce Decisions, MET, Telegesis, Equitalk, Duncan Hynd Associates and 
OC Robotics have been sold. 
 
   Lucius Cary - Director 
 
   OT2 Managers Ltd 
 
   Investment Manager 
 
   2nd May 2018 
 
   Directors' Report 
 
   The Directors present their report together with Financial Statements 
for the year ended 28 February 2018. 
 
   The Directors consider that the Annual Report and Financial Statements, 
taken as a whole are fair, balanced and understandable and provide the 
information necessary for shareholders to assess the Company's 
performance, business model and strategy. 
 
   This report has been prepared by the Directors in accordance with the 
requirements of s415 of the Companies Act 2006.  The Company's 
independent auditor is required by law to report on whether the 
information given in the Directors' Report is consistent with the 
Financial Statements. 
 
   Principal Activity 
 
   The Company commenced business in 2000.  The Company invests in start-up 
and early stage technology companies in general located within 60 miles 
of Oxford.  The Company has maintained its approved status as a Venture 
Capital Trust by HMRC. 
 
   Directors 
 
   The Directors of the Company are required to notify their interests 
under Disclosure and Transparency Rule 3.12R.  The membership of the 
Board and their beneficial interests in the ordinary shares of the 
company at 28 February 2018 and at 28 February 2017 are set out below: 
 
   Name                     2018        2017 
 
   R Roth                   44,033     62,902 
 
   R Goodfellow       14,000      19,700 
 
   D Livesley             Nil           Nil 
 
   A Starling              Nil           Nil 
 
   Under the Company's Articles of Association one third of the Directors 
are required to retire by rotation each year.  Robin Goodfellow and 
David Livesley will be nominated for re-appointment at the forthcoming 
AGM.  The Board believes that both non-executive Directors continue to 
provide a valuable contribution to the Company and remain committed to 
their roles.  The Board recommends that Shareholders support the 
resolutions to re-elect Robin Goodfellow and David Livesley at the 
forthcoming AGM. 
 
   The Board is cognisant of shareholders' preference for Directors not to 
sit on the boards of too many larger companies ("overboarding"). 
Shareholders will be aware that in July 2015, the Company, along with 
the other VCTs that were managed by Oxford Technology Management, 
appointed directors such that the four VCTs each had a Common Board.  In 

addition, Richard Roth has subsequently also become a Director of Hygea 
vct plc, a VCT investing in the Med Tech sector which is also 
self-managed and has a number of investments in common with the Oxford 
Technology VCTs.  Whilst great care is taken to safeguard the interests 
of the shareholders of each separate company, there is an element of 
overlap in the workload of each Director across the four OT funds due to 
the way the VCTs are managed.  The Directors note that the workload 
related to the four OT funds is less than it would be for four totally 
separate and larger funds, and are satisfied that Richard Roth has the 
time to focus on the requirements of each OT fund. 
 
   Investment Management Fees 
 
   OT2 Managers Ltd, the Company's wholly owned subsidiary, has an 
agreement to provide investment management services to the Company for a 
fee of 1% of net assets per annum.  Alex Starling and Richard Roth, 
together with Lucius Cary are Directors of OT2 Managers Ltd. 
 
   Directors' and Officers' Insurance 
 
   The Company has maintained insurance cover on behalf of the Directors, 
indemnifying them against certain liabilities which may be incurred by 
them in relation to their duties as Directors of the Company. 
 
   Ongoing Review 
 
   The Board has reviewed and continues to review all aspects of internal 
governance to mitigate the risk of breaches of VCT rules or company law. 
 
 
   Whistleblowing 
 
   The Board has been informed that the Investment Manager has arrangements 
in place in accordance with the UK Corporate Governance Code's 
recommendations by which staff of Oxford Technology Management or the 
Secretary of the Company may, in confidence, raise concerns within their 
respective organisations about possible improprieties in matters of 
financial reporting or other matters. 
 
   Bribery Act 2010 
 
   The Company is committed to carrying out business fairly, honestly and 
openly.  The Investment Manager has established policies and procedures 
to prevent bribery within its organisation.  The Company has adopted a 
zero tolerance approach to bribery and will not tolerate bribery under 
any circumstance in any transaction the Company is involved in. The 
Company has instructed the Investment Manager to adopt the same approach 
with investee companies. 
 
   Relations with Shareholders 
 
   The Company values the views of its shareholders and recognises their 
interest in the Company.   The Company's website provides information on 
all of the Company's investments, as well as other information of 
relevance to shareholders (www.oxfordtechnology.com/vct2). 
 
   Shareholders have the opportunity to meet the Board at the Annual 
General Meeting.  In addition to the formal business of the AGM the 
Board is available to answer any questions a shareholder may have. 
 
   The Board is also happy to respond to any written queries made by 
shareholders during the course of the year and can be contacted at the 
Company's registered office:  The Magdalen Centre, Oxford Science Park, 
Oxford OX4 4GA. 
 
   Going Concern 
 
   After making enquiries, the Directors have a reasonable expectation that 
the Company has adequate resources to continue in operational existence 
for the foreseeable future. For this reason they have adopted the going 
concern basis in preparing the Financial Statements. 
 
   Substantial Shareholders 
 
   At 28 February 2018, the Company has been notified of five investors 
whose interest exceeds three percent of the Company's issued share 
capital: Ms Shivani Palakpari Shree Parikh, 6.4%; Barclays Direct 
Investing Nominees Ltd, 4.8%; Mr Richard Vessey, 4.4%; Mrs Mary Louisa 
Perry, 3.8% and Mr Merrick Sidney Whitehouse Feast, 3.2% . 
 
   Auditors 
 
   James Cowper Kreston offer themselves for re-appointment in accordance 
with Section 489 of the Companies Act 2006. 
 
   On behalf of the Board 
 
   Richard Roth 
 
   Chairman 
 
   2nd  May 2018 
 
   Directors' Remuneration Report 
 
   Introduction 
 
   This report has been prepared by the Directors in accordance with the 
requirements of the Companies Act 2006. The Company's independent 
auditor, James Cowper Kreston, is required to give its opinion on 
certain information included in this report. This report includes a 
statement regarding the Directors' Remuneration Policy. This report sets 
out the Company's Directors' Remuneration Policy and the Annual 
Remuneration Report which describes how this policy has been applied 
during the year. 
 
   The Directors' Remuneration Policy was last approved by shareholders at 
the AGM on 26 August 2015. It needs to be put to a shareholder vote 
every three years, and shareholders will be asked to approve it again at 
the Annual General Meeting on 12 July 2018. 
 
   Shareholders also need to approve the Directors' Remuneration Report 
every year. It was last approved at the AGM on 5 July 2017 on a 
unanimous show of hands and 100% of proxies voted in favour, and a 
Resolution to approve the Directors' Remuneration Report for the year 
ended 28 February 2018 will also be proposed at the Annual General 
Meeting on 12 July 2018. 
 
 
 
   Directors' Terms of Appointment 
 
   The Board consists entirely of non-executive Directors who meet at least 
four times a year and on other occasions as necessary to deal with 
important aspects of the Company's affairs. Directors are appointed with 
the expectation that they will serve for at least three years and are 
expected to devote the time necessary to perform their duties.  All 
Directors retire at the first general meeting after election and 
thereafter every third year, with at least one Director standing for 
election or re-election each year.  Re-election will be recommended by 
the Board but is dependent upon shareholder vote. Directors who have 
been in office for more than nine years will stand for annual 
re-election in line with the AIC Code. There are no service contracts in 
place, but Directors have a letter of appointment. 
 
   Directors' Remuneration Policy 
 
   The Board acts as the Remuneration Committee and meets annually to 
review Directors' pay to ensure it remains appropriate given the need to 
attract and retain candidates of sufficient calibre and ensure they are 
able to devote the time necessary to lead the Company in achieving its 
strategy. 
 
   The Articles of Association of the company state that the aggregate of 
the remuneration (by way of fee) of all the Directors shall not exceed 
GBP50,000 per annum unless otherwise approved by Ordinary Resolution of 
the Company. The following Directors' fees are payable by the Company: 
 
   per annum 
 
   Director Base Fee                               GBP3,500 
 
   Chairman's Supplement                      GBP2,000 
 
   Audit Committee Chairman               GBP3,000 
 
   Audit Committee Member                 GBP1,500 
 
   The OT2 Director Fees are amongst the lowest of any VCT (apart from the 
other OT VCTs). However the Board has spent and continues to spend more 
time on Company activities than was initially envisaged in Summer 2015 
(when the fees were last set) partly due to closer involvement with 
investment, accounting and administration procedures and partly due to 
compliance with additional government regulations. Typically VCT 
industry total directors' fees are in excess of GBP50k and individual 
fees in excess of GBP15k for equivalent levels of work. 
 
   In the summer of 2015 the finances of OT2 had been in poor shape for 
some years. To alleviate financial problems the fund manager had (over 
the previous 4 years) helped out by deferring some management fee. 
However this had built up a liability of GBP53k payable out of potential 
future profits. The then Chairman had also previously waived his fee 
(GBP7,500) for 4 years. The new Board determined to put the finances on 
a more sustainable basis and renegotiated the management fee from 2% 
down to 1% and agreed to pay off the deferred fee liability over 3 
years. This has now been completed. Additionally all 4 new Directors 
voluntarily agreed to waive GBP1,500 (43%) of their base director fee of 
GBP3,500 until the fund performance improved. 
 
   Since the new Board assumed office in 2015, nearly 55% of the opening 
NAV of GBP1.95m has been returned to shareholders in tax free dividends 
and via the tender offer, and the remaining assets are still valued at 
GBP1.69m. In addition to its ongoing responsibilities, the Board managed 
and drafted a significant amount of the Tender process and associated 
documentation without further remuneration thereby saving shareholders 
additional costs. In the view of the Board, this substantial increase of 
shareholder assets and distributions from 39.1p per share to 59.5p per 
share (distributions plus remaining assets) represents a significant 
performance improvement, and therefore the Board has now determined to 
end its voluntary partial fee waiver. However, given the relatively low 
funds under management, the Directors do not propose any other change 
from the previously agreed levels. 
 
   Richard Roth chairs the Company. He also chairs the Audit Committee, 
with Robin Goodfellow as a member of the Committee. As the VCT is 
self-managed, the Audit Committee carries out a particularly important 
role for the VCT and plays a significant part in the sign off of 
quarterly management accounts, and the production of the half year and 
annual statutory accounts. 
 
   Fees are currently paid annually. The fees are not specifically related 
to the Directors' performance, either individually or collectively.  No 
expenses are paid to the Directors.  There are no share option schemes 
or pension schemes in place but Directors are entitled to a share of the 
carried interest as detailed below. 
 
   Alex Starling and Richard Roth receive no remuneration in respect of 
their directorships of OT2 Managers Ltd, the Company's Investment 
Manager. 
 
   The performance fee is detailed in note 3. Current Directors are 
entitled to benefit from any payment made, subject to a formula driven 

by relative lengths of service.  The performance fee becomes payable if 
a certain cash return threshold to shareholders is exceeded - the excess 
is then subject to a 20% carry that is distributed to Oxford Technology 
Management, past Directors and current Directors; the remaining 80% is 
returned to shareholders.  At 28 February 2018 no performance fee was 
due. 
 
   Should any performance fee be payable at the end of the year to 28 
February 2019, Alex Starling, Robin Goodfellow, and Richard Roth would 
each receive 0.28% of any amount over the threshold and David Livesley 
0.83%.  No performance fee will be payable for the year ending 28 
February 2019 unless original shareholders have received back at least 
151.7p in cash for each 100p (gross) invested. 
 
   Relative Spend on Directors' Fees 
 
   The Company has no employees, so no consultation with employees or 
comparison measurements with employee remuneration are appropriate. 
 
   Loss of Office 
 
   In the event of anyone ceasing to be a Director, for any reason, no loss 
of office payments will be made. There are no contractual arrangements 
entitling any Director to any such payment. 
 
   Annual Remuneration Report 
 
 
 
 
Directors' Fees   Year End 28/02/19  Year End 28/02/18  Year End 28/02/17 
                     (unaudited)         (audited)          (audited) 
Richard Roth          GBP8,500           GBP7,000           GBP7,000 
Alex Starling         GBP3,500           GBP2,000           GBP2,000 
Robin Goodfellow      GBP5,000           GBP3,500           GBP3,500 
David Livesley        GBP3,500           GBP2,000           GBP2,000 
Total                 GBP20,500          GBP14,500          GBP14,500 
 
 
   Income Statement 
 
 
 
 
                                                                       Year Ended                             Year Ended 
                                                                    28 February 2018                    28 February 2017 
                                                       Note   Revenue   Capital    Total    Revenue   Capital    Total 
                                                        Ref.   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
 
Gain on disposal of fixed asset investments                       -         86        86        -         -         - 
Unrealised gain on valuation of fixed asset 
investments                                                       -         49        49        -        653       653 
Investment income                                          2         -         -         -        27         -        27 
Investment management fees                                 3       (6)      (19)      (25)       (5)      (14)      (19) 
Other expenses                                             4      (50)         -      (50)      (45)         -      (45) 
 
Return on ordinary activities before tax                          (56)       116        60      (23)       639       616 
Taxation on return on ordinary activities                  5         -         -         -         -         -         - 
Return on ordinary activities after tax                           (56)       116        60      (23)       639       616 
Return on ordinary activities after tax attributable 
 to 
 equity shareholders                                              (56)       116        60      (23)       639       616 
Earnings per share - basic and diluted                     6    (0.9)p      1.9p      1.0p    (0.4)p      9.4p      9.0p 
 
   There was no other Comprehensive Income recognised during the year. 
 
   The 'Total' column of the Income Statement is the Profit and Loss 
Account of the Company, the supplementary Revenue and Capital return 
columns have been prepared under guidance published by the Association 
of Investment Companies. 
 
   All Revenue and Capital items in the above statement derive from 
continuing operations. 
 
   The Company has only one class of business and derives its income from 
investments made in shares and securities and from bank and money market 
funds. 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
   Statement of Changes in Equity 
 
 
 
 
                                                    Share Capital  Capital Redemption Reserve  Share Premium  Unrealised Capital Reserve  Profit & Loss Reserve   Total 
                                                       GBP'000               GBP'000              GBP'000               GBP'000                  GBP'000          GBP'000 
 
 
  As at 1 March 2016                                          679                           -            376                       (418)                  1,275     1,912 
 
Revenue return on ordinary activities after tax                 -                           -              -                           -                   (23)      (23) 
Expenses charged to capital                                     -                           -              -                           -                   (14)      (14) 
Current period gains on fair value of investments               -                           -              -                         653                      -       653 
 
  Balance as at 28 February 2017                              679                           -            376                         235                  1,238     2,528 
 
  Revenue return on ordinary activities after tax               -                           -              -                           -                   (56)      (56) 
Expenses charged to capital                                     -                           -              -                           -                   (19)      (19) 
 
  Current period gains on disposal                              -                           -              -                           -                     86        86 
Current period gains on fair value of investments               -                           -              -                          49                      -        49 
Purchase of own shares                                      (146)                         146              -                           -                  (470)     (470) 
Prior years gains now realised                                  -                           -              -                     (1,224)                  1,224         - 
Dividends paid                                                  -                           -              -                           -                  (427)     (427) 
 
  Balance as at 28 February 2018                              533                         146            376                       (940)                  1,576     1,691 
 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
 
   Balance Sheet 
 
 
 
 
                                        Year Ended                Year Ended 
                                      28 February 2018      28 February 2017 
                         Note Ref.   GBP'000   GBP'000    GBP'000    GBP'000 
Fixed asset investments 
 at fair value                   7                1,149                2,405 
Current assets 
Debtors                          8        166                     2 
Cash at bank                              386                   146 
Creditors: amounts 
 falling due within 1 
 year                            9       (10)                  (25) 
Net Current Assets                                  542                  123 
Net Assets                                        1,691                2,528 
Called up equity share 
 capital                        10                  533                  679 
Capital redemption 
 reserve                                            146                    - 
Share premium                                       376                  376 
Unrealised capital 
 reserve                        11                (940)                  235 
Profit and loss account 
 reserve                        11                1,576                1,238 
Total Equity 
 Shareholders' Funds            11                1,691                2,528 
Net Asset Value Per                               31.7p                37.2p 
 Share 
 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
   The statements were approved by the Directors and authorised for issue 
on 2nd May 2018 and are signed on their behalf by: 
 
 
 
   Richard Roth 
 
   Chairman 
 
   Statement of Cash Flows 
 
 
 
 
                                             Year Ended         Year Ended 
                                           28 February 2018   28 February 2017 
                                               GBP'000            GBP'000 
Cash flows from operating activities 
Return on ordinary activities before tax                 60                616 
Adjustments for: 
Gain on disposal of investments                        (86)                  - 
Gain on valuation of investments                       (49)              (653) 
(Increase)/decrease in debtors                        (164)                 19 
Decrease in creditors                                  (15)               (19) 
Movement in investment debtors and 
 creditors                                              164                  - 
Outflow from operating activities                      (90)               (37) 
Cash flows from investing activities 
Purchase of investments                               (230)              (150) 
Disposal of investments                               1,457                  - 
Dividends paid                                        (427)                  - 
Total cash flows from investing 
 activities                                             800              (150) 
Cash flows from financing activities 
 (Tender Offer)                                       (470)                  - 
Increase/(decrease) in cash at bank                     240              (187) 
Opening cash and cash equivalents                       146                333 

Cash and cash equivalents at year end                   386                146 
 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
   Notes to the Financial Statements 
 
   The Financial Statements have been prepared under Financial Reporting 
Standard 102 - 'The Financial Reporting Standard applicable in the 
United Kingdom and Republic of Ireland' ('FRS 102').  The accounting 
policies have not materially changed from last year. 
 
   1. Principal Accounting Policies 
 
   Basis of Preparation 
 
   The Financial Statements have been prepared under the historical cost 
convention, except for the measurement at fair value of certain 
financial instruments, and in accordance with UK Generally Accepted 
Accounting Practice ("GAAP"), including FRS 102 and with the Companies 
Act 2006 and the Statement of Recommended Practice (SORP) 'Financial 
Statements of Investment Trust Companies and Venture Capital Trusts 
(revised 2014)' issued by the AIC. 
 
   The principal accounting policies have remained materially unchanged 
from those set out in the Company's 2017 Annual Report and Financial 
Statements. A summary of the principal accounting policies is set out 
below. 
 
   FRS 102 sections 11 and 12 have been adopted with regard to the 
Company's financial instruments. The Company held all fixed asset 
investments at fair value through profit or loss. Accordingly, all 
interest income, fee income, expenses and gains and losses on 
investments are attributable to assets held at fair value through profit 
or loss. 
 
   The most important policies affecting the Company's financial position 
are those related to investment valuation and require the application of 
subjective and complex judgements, often as a result of the need to make 
estimates about the effects of matters that are inherently uncertain and 
may change in subsequent periods. These are discussed in more detail 
below. 
 
   Going Concern 
 
   After reviewing the Company's forecasts and expectations, the Directors 
have a reasonable expectation that the Company has adequate resources to 
continue in operational existence for the foreseeable future. The 
Company therefore continues to adopt the going concern basis in 
preparing its Financial Statements. 
 
   Key Judgements and Estimates 
 
   The preparation of the Financial Statements requires the Board to make 
judgements and estimates regarding the application of policies and 
affecting the reported amounts of assets, liabilities, income and 
expenses. Estimates and assumptions mainly relate to the fair valuation 
of the fixed asset investments particularly unquoted investments. 
Estimates are based on historical experience and other assumptions that 
are considered reasonable under the circumstances. The estimates and the 
assumptions are under continuous review with particular attention paid 
to the carrying value of the investments. 
 
   Investments are regularly reviewed to ensure that the fair values are 
appropriately stated. Unquoted investments are valued in accordance with 
current IPEVC Valuation Guidelines, which can be found on their website 
at www.privateequityvaluation.com, although this does rely on subjective 
estimates such as appropriate sector earnings multiples, forecast 
results of investee companies, asset values of investee companies and 
liquidity or marketability of the investments held. 
 
   Although the Directors believe that the assumptions concerning the 
business environment and estimate of future cash flows are appropriate, 
changes in estimates and assumptions could result in changes in the 
stated values. This could lead to additional changes in fair value in 
the future. 
 
   Functional and Presentational Currency 
 
   The Financial Statements are presented in Sterling (GBP). The functional 
currency is also Sterling (GBP). 
 
   Cash and Cash Equivalents 
 
   Cash and cash equivalents includes cash in hand, deposits held at call 
with banks, other short-term highly liquid investments with original 
maturities of three months or less and also include bank overdrafts. 
 
   Fixed Asset Investments 
 
   The Company's principal financial assets are its investments and the 
policies in relation to those assets are set out below. 
 
   Purchases and sales of investments are recognised in the Financial 
Statements at the date of the transaction (trade date). 
 
   These investments will be managed and their performance evaluated on a 
fair value basis and information about them is provided internally on 
that basis to the Board.  Accordingly, as permitted by FRS 102, the 
investments are measured as being fair value through profit or loss on 
the basis that they qualify as a group of assets managed, and whose 
performance is evaluated, on a fair value basis in accordance with a 
documented investment strategy.  The Company's investments are measured 
at subsequent reporting dates at fair value. 
 
   In the case of investments quoted on a recognised stock exchange, fair 
value is established by reference to the closing bid price on the 
relevant date or the last traded price, depending upon convention of the 
exchange on which the investment is quoted. In the case of AIM quoted 
investments this is the closing bid price. 
 
   In the case of unquoted investments, fair value is established by using 
measures of value such as the price of recent transactions, earnings 
multiple, revenue multiple, discounted cash flows and net assets.  These 
are consistent with the IPEVC Valuation Guidelines. 
 
   Gains and losses arising from changes in fair value of investments are 
recognised as part of the capital return within the Income Statement and 
allocated to the unrealised capital reserve. 
 
   In the preparation of the valuations of assets the Directors are 
required to make judgements and estimates that are reasonable and 
incorporate their knowledge of the performance of the investee 
companies. 
 
   Fair Value Hierarchy 
 
   Paragraph 34.22 of FRS 102 regarding financial instruments that are 
measured in the balance sheet at fair value requires disclosure of fair 
value measurements dependent on whether the stock is quoted and the 
level of the accuracy in the ability to determine its fair value. The 
fair value measurement hierarchy is as follows: 
 
   For Quoted Investments: 
 
   Level 1: quoted prices in active markets for an identical asset. The 
fair value of financial instruments traded in active markets is based on 
quoted market prices at the balance sheet date. A market is regarded as 
active if quoted prices are readily and regularly available, and those 
prices represent actual and regularly occurring market transactions on 
an arm's length basis. The quoted market price used for financial assets 
held is the bid price at the Balance Sheet date. 
 
   Level 2: where quoted prices are not available (or where a stock is 
normally quoted on a recognised stock exchange that no quoted price is 
available), the price of a recent transaction for an identical asset, 
providing there has been no significant change in economic circumstances 
or a significant lapse in time since the transaction took place. The 
Company holds no such investments in the current or prior year. 
 
   For investments not quoted in an active market: 
 
   Level 3: the fair value of financial instruments that are not traded in 
an active market is determined by using valuation techniques. These 
valuation techniques maximise the use of observable data (e.g. the price 
of recent transactions, earnings multiple, discounted cash flows and/or 
net assets) where it is available and rely as little as possible on 
entity specific estimates. 
 
   There have been no transfers between these classifications in the year 
(2017: none). The change in fair value for the current and previous year 
is recognised in the income statement. 
 
   Income 
 
   Investment income includes interest earned on bank balances and from 
unquoted loan note securities, and dividends.  Fixed returns on debt are 
recognised on a time apportionment basis so as to reflect the effective 
yield, provided it is probable that payment will be received in due 
course.  Dividend income from investments is recognised when the 
shareholders' rights to receive payment have been established, normally 
the ex dividend date. 
 
   Expenses 
 
   All expenses are accounted for on an accruals basis.  Expenses are 
charged wholly to revenue with the exception of the investment 
management fee which has been charged 75% to capital and 25% to revenue. 
Any applicable performance fee will be charged 100% to capital. 
 
   Revenue and Capital 
 
   The revenue column of the Income Statement includes all income and 
revenue expenses of the Company.  The capital column includes gains and 
losses on disposal and holding gains and losses on investments.  Gains 
and losses arising from changes in fair value of investments are 
recognised as part of the capital return within the Income Statement and 
allocated to the appropriate capital reserve on the basis of whether 
they are realised or unrealised at the balance sheet date. 
 
   Taxation 
 
   Current tax is recognised for the amount of income tax payable in 
respect of the taxable profit for the current or past reporting periods 
using the current tax rate. The tax effect of different items of 
income/gain and expenditure/loss is allocated between capital and 
revenue return on the "marginal" basis as recommended in the SORP. 
 
   Deferred tax is recognised on an undiscounted basis in respect of all 
timing differences that have originated but not reversed at the balance 
sheet date, except as otherwise indicated. 
 
   Deferred tax assets are only recognised to the extent that it is 
probable that they will be recovered against the reversal of deferred 
tax liabilities or other future taxable profits. 
 
   Financial Instruments 
 
   The Company's principal financial assets are its investments and the 
policies in relation to those assets are set out above.  Financial 
liabilities and equity instruments are classified according to the 

substance of the contractual arrangements entered into. 
 
   An equity instrument is any contract that evidences a residual interest 
in the assets of the entity after deducting all of its financial 
liabilities. Where the contractual terms of share capital do not have 
any terms meeting the definition of a financial liability then this is 
classed as an equity instrument. 
 
   The Company does not have any externally imposed capital requirements. 
 
   Reserves 
 
   Called up Equity Share Capital - represents the nominal value of shares 
that have been issued. 
 
   Share Premium Account - includes any premiums received on issue of share 
capital. Any transaction costs associated with the issuing of shares are 
deducted from the Share Premium Account. 
 
   Unrealised Capital Reserve arises when the Company revalues the 
investments still held during the period and any gains or losses arising 
are credited/charged to the Unrealised Capital Reserve.  When an 
investment is sold, any balance held on the Unrealised Capital Reserve 
is transferred to the Profit and Loss Reserve as a movement in reserves. 
 
   The Profit and Loss Reserve represents the aggregate of accumulated 
realised profits, less losses and dividends. 
 
   Dividends Payable 
 
   Dividends payable are recognised as distributions in the Financial 
Statements when the Company's liability to make payment has been 
established.  This liability is established for interim dividends when 
they are declared by the Board, and for final dividends when they are 
approved by the Shareholders. 
 
   2.  Investment Income 
 
 
 
 
                        Year Ended         Year Ended 
                      28 February 2018   28 February 2017 
                          GBP'000            GBP'000 
Dividends received                   -                 27 
Total                                -                 27 
 
 
 
   3.  Investment Management Fees 
 
   Expenses are charged wholly to revenue with the exception of the 
investment management fee which has been charged 75% to the capital 
reserve in line with industry practice. 
 
 
 
 
                               Year Ended         Year Ended 
                             28 February 2018   28 February 2017 
                                 GBP'000            GBP'000 
Investment management fee                  25                 19 
Total                                      25                 19 
 
 
   In the year to 28 February 2018 the manager received a fee of 1% of the 
net asset value as at the previous year end (2017: 1%). Oxford 
Technology Management is also entitled to certain monitoring fees from 
investee companies and the Board reviews the amounts. OTM also received 
a further GBP18k in both years, the payment of which had been deferred 
from previous years. This was part of the revised agreement, with effect 
from 1 March 2015. No further liability is payable as at 28 February 
2018. 
 
   A performance fee is payable to the Investment Manager once original 
shareholders have received a specified threshold in cash for each 100p 
(gross) invested.  The original threshold of 100p has now been increased 
by compounding that portion that remains to be paid to shareholders by 
6% per annum with effect from 1 March 2010, resulting in the remaining 
required threshold rising to 116.9p at 28 February 2018, corresponding 
to a total shareholder return of 144.7p after taking into account the 
27.8p already paid out (27.8p + 116.9 = 144.7p). The 27.8p already paid 
out includes an effective 6.8p (per original share) that was returned to 
shareholders as part of the Tender Offer. After this amount has been 
distributed to shareholders, each extra 100p distributed goes 80p to the 
shareholders and 20p to the beneficiaries of the performance incentive 
fee, of which Oxford Technology Management receives 14p. 
 
   No performance fee has become due or been paid to date.  Any applicable 
performance fee will be charged 100% to capital. 
 
   Expenses are capped at 3%, including the management fee but excluding 
Directors' fees and any performance fee. 
 
   4. Other Expenses 
 
   All expenses are accounted for on an accruals basis.  All expenses are 
charged through the income statement except as follows: 
 
   --         those expenses which are incidental to the acquisition of an 
investment are 
 
   included within the cost of the investment; 
 
   --         expenses which are incidental to the disposal of an 
investment are deducted from 
 
   the disposal proceeds of the investment. 
 
 
 
 
                             Year Ended         Year Ended 
                           28 February 2018   28 February 2017 
                               GBP'000            GBP'000 
Directors' remuneration                  15                 15 
Auditors' remuneration                    6                  6 
Other expenses                           29                 24 
Total                                    50                 45 
 
 
   5. Tax on Ordinary Activities 
 
   Corporation tax payable at 19.1% (2017: 20.0%) is applied to profits 
chargeable to corporation tax, if any.  The corporation tax charge for 
the period was GBPnil (2017: GBPnil) 
 
 
 
 
                                             Year Ended         Year Ended 
                                           28 February 2018   28 February 2017 
                                               GBP'000            GBP'000 
Return on ordinary activities before tax                 60                616 
Current tax at standard rate of taxation                 11                123 
UK dividends not taxable                                  -                (5) 
Unrealised gains not taxable                            (9)              (131) 
Realised gains not taxable                             (16)                  - 
Excess management expenses carried 
 forward                                                 14                 13 
Total current tax charge                                  -                  - 
 
 
   Unrelieved management expenses of GBP1,539,772 (2017: GBP1,465,200) 
remain available for offset against future taxable profits. 
 
   6. Earnings per Share 
 
   The calculation of earnings per share (basic and diluted) for the period 
is based on the net profit of GBP60,000 (2017: GBP616,000) attributable 
to shareholders divided by the daily weighted average number of shares 
6,080,419 (2017: 6,792,923) in issue during the period. 
 
   There are no potentially dilutive capital instruments in issue and, 
therefore, no diluted returns per share figures are relevant.  The basic 
and diluted earnings per share are therefore identical. 
 
 
 
   7. Investments 
 
 
 
 
                               Unquoted investments Level 3  Total investments 
                                          GBP'000                 GBP'000 
Valuation and net book 
amount: 
Book cost as at 28 February 
 2017                                                 2,170              2,170 
Cumulative revaluation                                  235                235 
Valuation at 28 February 2017                         2,405              2,405 
Movement in the year: 
Purchases at cost                                       230                230 
Disposals - costs                                     (311)              (311) 
Disposals - revaluation                             (1,224)            (1,224) 
Revaluation in year                                      49                 49 
Valuation at 28 February 2018                         1,149              1,149 
Book cost at 28 February 2018                         2,089              2,089 
Cumulative revaluation to 28 
 February 2018                                        (940)              (940) 
Valuation at 28 February 2018                         1,149              1,149 
 
 
 
 
   Subsidiary Company 
 
   The Company also holds 100% of the issued share capital of OT2 Managers 
Ltd at a cost of GBP1. 
 
   Results of the subsidiary undertaking for the year ended 28 February 
2018 are as follows: 
 
 
 
 
          Country of    Nature of   Turnover     Retained profit/loss  Net Assets 
          Registration  Business 
OT2       England and   Investment 
Managers  Wales         Manager       GBP25,283           GBP0             GBP1 
Ltd 
 
 
 
   Consolidated group Financial Statements have not been prepared as the 
subsidiary undertaking is not considered to be material for the purpose 
of giving a true and fair view.  The Financial Statements therefore 
present only the results of Oxford Technology 2 VCT plc, which the 
Directors also consider is the most useful presentation for 
Shareholders. 
 
 
 
   8.  Debtors 
 
 
 
 
                                            28 February 2018  28 February 2017 
                                                 GBP'000           GBP'000 
Prepayments, accrued income & other 
 debtors                                                   2                 2 
Deferred consideration from sale of 
 investments                                             164                 - 
Total                                                    166                 2 
 
 
   9. Creditors - amounts falling due in less than 1 year 
 
 
 
 
                                                 28 February 2018  28 February 2017 
                                                      GBP'000           GBP'000 
Investment management fee accrual 
 (All deferred fees now fully paid at 28/2/18)                  -                18 
Other creditors and accruals                                   10                 7 
Total                                                          10                25 
 
 
   10. Share Capital 
 
 
 
 
                                                     28 February 2018  28 February 2017 
                                                          GBP'000           GBP'000 
Authorised: 
10,000,000 ordinary shares of 10p each                          1,000             1,000 
Total Authorised                                                1,000             1,000 

Allotted, called up and fully paid: 
5,331,889 (2017: 6,792,923) ordinary shares of 10p 
 each                                                             533               679 
 
 
   On 4 September 2017, the Company bought back 1,461,034 Ordinary Shares 
as per the Tender Offer. 
 
   11.   Reserves 
 
   When the Company revalues its investments during the period, any gains 
or losses arising are credited/charged to the Income Statement.  Changes 
in fair value of investments are then transferred to the Unrealised 
Capital Reserve.  When an investment is sold any balance held on the 
Unrealised Capital Reserve is transferred to the Profit and Loss Account 
Reserve as a movement in reserves. 
 
   Distributable reserves are GBP636,000 as at 28 February 2018 (2017: 
GBP1,238,000). 
 
 
 
   Reconciliation of Movement in Shareholders' Funds 
 
 
 
 
 
 
                                          28 February 2018  28 February 2017 
                                               GBP'000           GBP'000 
Shareholders' funds at start of year                 2,528             1,912 
Return on ordinary activities after tax                 60               616 
Purchase of own shares                               (470) 
Dividends paid                                       (427)                 - 
Shareholders' funds at end of year                   1,691             2,528 
 
 
   The Company paid a dividend of 8.0p per share on 5 December 2017. 
 
   12.  Financial Instruments and Risk Management 
 
   The Company's financial instruments comprise equity and loan note 
investments, cash balances and debtors and creditors.  The Company holds 
financial assets in accordance with its investment policy of investing 
mainly in a portfolio of VCT - qualifying unquoted securities whilst 
holding a proportion of its assets in cash or near cash investments in 
order to provide a reserve of liquidity.  The risk faced by these 
instruments, such as interest rate risk or liquidity risk is considered 
to be minimal due to their nature.  All of these are carried in the 
accounts at fair value. 
 
   The Company's strategy for managing investment risk is determined with 
regard to the Company's investment objective.  The management of market 
risk is part of the investment management process and is a central 
feature of venture capital investment.  The Company's portfolio is 
managed with regard to the possible effects of adverse price movements 
and with the objective of maximising overall returns to shareholders. 
Investments in unquoted companies, by their nature, usually involve a 
higher degree of risk than investments in companies quoted on a 
recognised stock exchange, though the risk can be mitigated to a certain 
extent by diversifying the portfolio across business sectors and asset 
classes,  though VCT rules limit the extent to which suitable Qualifying 
Investments can be bought or sold.  The overall disposition of the 
Company's assets is regularly monitored by the Board. 
 
   13. Capital Commitments 
 
   The Company had no commitments at 28 February 2018 or 29 February 2017. 
 
   14.  Related Party Transactions 
 
   OT2 Managers Ltd, a wholly owned subsidiary, provides investment 
management services to the Company with effect from 1 July 2015 for a 
fee of 1% of net assets per annum.  During the year, GBP25,283 was paid 
in respect of these fees (2017: GBP19,122).  No amounts were outstanding 
at the year end. 
 
   15.  Events after the Balance Sheet Date 
 
   During April 2018, an investment of GBP150,000 was made into Scancell 
and GBP12,000 was committed to ImmBio. 
 
   Company Number: 3928569 
 
   Note to the announcement: 
 
   The financial information set out in this announcement does not 
constitute statutory accounts as defined in the Companies Act 2006 ("the 
Act").  The balance sheet as at 28 February 2018, income statement and 
cash flow statement for the period then ended have been extracted from 
the Company's 2018 statutory financial statements upon which the 
auditor's opinion is unqualified and does not include any statement 
under the section 495 of the Act. 
 
   The Annual Report and Accounts for the year ended 28 February 2018 will 
be filed with the Registrar of Companies. 
 
   Copies of the documents will be submitted to the National Storage 
Mechanism and are available for inspection at: 
http://www.mornningstar.co.uk/uk/NSM 
 
   This announcement is distributed by Nasdaq Corporate Solutions on behalf 
of Nasdaq Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: Oxford Technology 2 VCT plc via Globenewswire 
 
 
  http://www.oxfordtechnology.com 
 

(END) Dow Jones Newswires

May 03, 2018 02:01 ET (06:01 GMT)

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