Oxford Tech 2 VCT Annual Financial Report

 
TIDMOXH 
 
 
   19 May 2020 
 
   Oxford Technology 2 VCT plc ("the Company" or "OT2") 
 
   Annual Report and Accounts for the year ended 29 February 2020 
 
   The Directors are pleased to announce the audited results of the Company 
for the year ended 29 February 2020.  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 Magdalen Centre, Oxford Science Park, Oxford OX4 
4GA on Thursday 9 July 2020, at 2pm.  We believe the meeting is likely 
to be a virtual meeting with limited physical attendance and no investee 
or Investment Adviser presentations. We will provide further updates on 
this by the end of June via our website: 
https://www.oxfordtechnologyvct.com.  In this eventuality, shareholders 
will not be allowed to attend in person. 
 
   A copy of the Annual Report and Accounts will be available from the 
registered office of the Company at Magdalen Centre, Oxford Science Park, 
Oxford OX4 4GA, as well as on the Company's website. 
 
   Financial Headlines 
 
 
 
 
                                             Year Ended         Year Ended 
                                           29 February 2020   28 February 2019 
---------------------------------------  ------------------  ----------------- 
Net Assets at Year End                        GBP1.48m           GBP1.67m 
---------------------------------------  ------------------  ----------------- 
Net Asset Value (NAV) per Share                27.8p               31.4p 
---------------------------------------  ------------------  ----------------- 
Dividend paid in Year                           1.5p               0.0p 
---------------------------------------  ------------------  ----------------- 
Cumulative Dividend per Share                  22.5p               21.0p 
---------------------------------------  ------------------  ----------------- 
NAV + Cumulative Dividend per Share 
Paid from Incorporation                        50.3p               52.4p 
---------------------------------------  ------------------  ----------------- 
Share Price at Year End                        22.5p               40.0p 
---------------------------------------  ------------------  ----------------- 
Earnings Per Share 
 (Basic & Diluted)                                   (2.1)p             (0.3)p 
---------------------------------------  ------------------  ----------------- 
 
 
 
   Chairman's Statement 
 
   I present the Annual Report for the year to 29 February 2020 to fellow 
shareholders. 
 
   In these unprecedented and uncertain times our thoughts are with 
everyone affected by the recent market and social turmoil, specifically 
our shareholders, the staff of our Investment Adviser and the employees 
of our investee companies.  We hope that by the time of our AGM in July 
there will be some light at the end of the tunnel and greater visibility 
going forward. 
 
   Shareholders will appreciate that an annual report is a snapshot in 
time. Our year end was 29 February and shareholders will be aware that 
the FTSE100 had been above 7000 for the whole year up to 26 February and 
fell to 6700 at 29 February. It subsequently dropped to a low of 5000 on 
23 March 2020 before recovering to 5750 as of mid-May, a drop of 14% 
since 29 February 2020.  Whilst the FTSE index is not a direct 
determinant of the valuation of small unquoted early stage technology 
companies, it represents a guide to market sentiment which is likely to 
influence general company value assessments. 
 
   Under the valuation rules we are required to produce valuations based on 
all the information that was known or should have been known to the 
Directors at 29 February 2020. Clearly the full scale of the impact of 
the Covid-19 virus and the extraordinary measures that the government 
took in March to protect the country, combined with the oil price shock 
were unexpected at that time, to say the least. 
 
   We have been continuously assessing the effect of this double impact. 
With the passage of another two months to the time of signing off this 
report we are beginning to get greater clarity of what it means to the 
investee companies and your VCT. Industry-wide the worst hit sectors 
have been airlines, travel, hospitality, oil and non-essential retail 
while on the upside some biotech companies have found new opportunities 
and there has been an occasional takeover of an undervalued company. For 
OT2, Scancell Holdings Plc (Scancell) had a 30% uplift after announcing 
the start of its research programme to develop a Covid-19 vaccine but 
has subsequently settled back to near (but modestly above) the bid share 
price at our year end; the rest of the portfolio has not materially 
changed since 29 February 2020 as a direct result of the Covid-19 
pandemic. 
 
   We should also not forget that calendar 2019 also had its fair share of 
challenges, however benign they may seem in hindsight.  Last year our 
biggest Brexit concern was the uncertainty itself, and this year,  I had 
expected to comment on the ongoing uncertainty about the terms on which 
the UK would "fully leave" the EU at the end of this calendar year. The 
result of the General Election, the signing of the EU Withdrawal 
Agreement, Covid-19 and its ensuing turmoil have now returned Brexit and 
trade discussions to the business pages. The pandemic has highlighted a 
national need for a higher degree of self-sufficiency and the economic 
downturns across Europe will hopefully work against the introduction of 
extreme trade barriers and tariffs. Last year we stated that our 
portfolio was not overly exposed to trade with EU companies and that 
remains our view. 
 
   There has been significant other market turmoil over the last 12 months, 
including the closing of the Woodford Equity Income Fund and the 
suspension of several property funds driven by investors wishing to 
withdraw their money faster than assets could be realised. 
 
   Despite all of the above, it is worth reminding ourselves that the VCT 
structure is an appropriate holding vehicle for unquoted companies 
through difficult times.  Unlike unit trusts, we are under no pressure 
to make fire sales to meet the demand from unit holders to withdraw 
their cash. 
 
   Your VCT has GBP270k in the bank, as of mid-May, which covers nearly 
four years of expenses, at the current running rate, and if we do not 
invest further in the portfolio. Furthermore the portfolio contains one 
liquid AIM quoted company worth GBP85k as of mid-May which, in extremis, 
could also provide liquidity,  although that is not our preference at 
this time. 
 
   Overview 
 
   The year started off much better than it ended, when we were pleased to 
receive the full amount that had been retained to cover potential 
warranty claims following our sale of OC Robotics Limited (OCR) two 
years earlier, providing a cash boost of GBP323k after costs, and an 
uplift in net asset value of some 3p per share. This uplift was due to 
the fact that previously only 50% of the amount originally held in 
escrow had been accrued.  However, some of our remaining investments 
have not fared so well, and the total return for the period was a loss 
of 2.1p per share. 
 
   Further explanations are included in the portfolio review section below. 
Net asset value (NAV) per share was 27.8p at 29 February 2020, after 
taking account of the 1.5p per share dividend paid on 21 February 2020. 
Total Return since the Company's launch is 50.3p per share. 
 
   Whilst we anticipate the majority of our investees will be less impacted 
by the recent turmoil than many entities, they are by no means immune 
from it. All companies have now needed to react to the change in 
circumstances, revising their cash flow forecasts and adjusting for 
significantly reduced sales revenues.  The Investment Adviser will help 
companies through this process, and if desired support them to raise 
additional funding where possible. The Board and Investment Adviser have 
sought to assess the immediate impact on valuations. Using latest bid 
prices, and the Directors' normal determinants of fair value, we 
estimate that the NAV per share has reduced to an unaudited 25.0p (a 
drop of 10%) as of mid-May. Given we are in no immediate hurry to 
liquidate any of our holdings, we would hope some form of market 
normality will return before asset sales occur. 
 
   Portfolio Review 
 
   The Company currently has holdings in 7 unlisted companies and one AIM 
quoted company. They continue to develop, and where we want to (and they 
need it) and permitted under VCT rules your Company continues to invest 
to support that development. 
 
   Arecor Limited (Arecor) has become our largest holding representing 28% 
of NAV, following a valuation increase as a result of its excellent 
progress. It recently announced that it has achieved an important second 
contractual milestone with one of its pharmaceutical partners. The first 
milestone was triggered in October 2017 following the signature of a 
license agreement between the parties. It has also announced a 
multi-product collaboration with a US-based clinical stage biotechnology 
company. Under the collaboration, Arecor will leverage its proprietary 
technology to develop liquid formulations of two proprietary novel 
products, one in oncology and one in a rare genetic orphan condition. It 
is well placed to expand and remains a bright spot in the portfolio. 
 
   Select Technology (STL Management Ltd) is still a significant holding, 
at more than a quarter of our NAV. It has been at the forefront of 
remote working both as a practitioner of the art and a provider of 
relevant software for others, and as a result, has seamlessly embraced 
lockdown working practices. Clearly, it has suffered interruption to its 
normal course of business as customers have grappled with the effects of 
the economic shock of the last two months. 
 

   However, looking beyond the short-term disruption, there is an immediate 
opportunity to provision its end customers with the required software 
tools that ensure business resilience and effective remote working. A 
recent sales webinar was attended by 125 people, up nearly fivefold on 
normal attendee levels. 
 
   This could just because buyers are lacking things to do, but there is at 
least circumstantial evidence showing that companies are using the 
lockdown hiatus to spend time on 'housekeeping matters', which includes 
replacing out-of-date software systems.  If this is the case, then 
Select Technology may be well-positioned for any upcoming return to 
normality. Select Technology paid a dividend in February 2020. 
 
   ImmBio (more formally known as ImmunoBiology Ltd) has signed a 
commercial licence with the China National Biotech Group for its 
pneumococcal vaccine PnuBioVax and the first milestone payment has been 
received. Further milestones payments will be made when the transfer of 
certain technology is complete. This has been delayed partly by Covid-19 
related events. The company is seeking to licence its vaccine in other 
countries and is pursuing grant applications. We have continued to 
support the working capital of the company with 2 small share placings 
during the year totalling GBP28k. However the continuing delays have led 
us to reduce the valuation during in the current year. 
 
   Scancell had a disappointing year of regulatory and clinical delays in 
its flagship melanoma trial and its share price fell over the course of 
the year. Its planned Phase 2 combination trial with their initial 
product SCIB1 ran into difficulties with the US Food and Drug 
Administration (FDA) due to the delayed approval by the FDA of the 
upgraded delivery device from 3(rd) party Ichor. In the event, the 
trials started in the UK later than expected. Subsequently the required 
US approvals were received but a year has been lost and results will now 
be correspondingly delayed. Post period end the UK trial went on hold as 
a result of Covid-19 risks. Nevertheless good data from these trials 
could represent a significant value inflection point for Scancell and 
are eagerly awaited. 
 
   Preparations for trials with their other 2 lead products (SCIB2 and 
MODI-1) are continuing to make progress but both are at too early a 
stage to influence valuations yet.  The new AvidiMab platform has also 
generated significant interest and three agreements have been signed 
with different partners to evaluate its potential, which if successful, 
could translate into important commercial deals. During the year, and 
after conducting in-depth scientific and commercial due diligence, 
Vulpes Life Science Fund subscribed GBP4m in Scancell, through a share 
placing at 5.0p/share, to become a significant (17%) shareholder. The 
investment by Vulpes has extended the Scancell's cash runway, but it is 
anticipated that there will be a need to raise further funds or form 
commercial partnerships to realise the potential of all the technologies 
under development. Scancell's share price started the year at 7.0p and 
ended at 6.4p but swung during the year between a high of 9.2p and a low 
of 3.0p when a distressed hedge fund unhelpfully exited all its large 
position in an emergency fire sale.  In the latter part of April, the 
Scancell share price spiked temporarily following an announcement that 
the company had initiated a research project to use its clinical 
expertise in cancer to produce a simple, safe, cost effective and 
scalable vaccine which could induce a durable response against the virus 
that causes Covid-19. 
 
   Orthogem Ltd (Orthogem) was sold in January 2020 to one of its 
distributors TRB Chemedica (UK) Ltd for a nominal amount. Although 
Orthogem had made significant technical progress with the launch of its 
putty product and appointment of international distributors, it was 
unable to raise sufficient funding to be able to continue to trade. 
 
   The Oxford Technology VCTs (OT VCTs) were willing to continue supporting 
the company, especially given we believed the company was very close to 
commercial success, but the VCT rules governing the age of companies and 
the use to which any new funds raised can be applied prevented us from 
doing so.  Similar restrictions applied to potential EIS investors. 
Whilst some other investors were also willing to support Orthogem, it 
was at an insufficient level. The only way to avoid the company being 
placed into liquidation was to put itself up for sale - with original 
investors retaining the right to a potential royalty income should 
product sales follow. The Investment Adviser is working with HMRC to see 
how the VCTs may be able to benefit from this income stream without 
breaching any VCT rules, should royalties become receivable in the 
future. 
 
   Your Company also has holdings in four other companies, which together 
represent less than 10% of the NAV. We still hope some of these have 
potential for future value growth, although we had to reduce the value 
of two of them: in the case of Oxis, the current valuation is in line 
with their latest funding round and at Inaplex, where progress is slower 
than hoped. 
 
   Overall, as seen in the Income Statement, the impact of valuation 
changes across the portfolio during 2019/2020 year was a loss of GBP46k, 
once the benefit from uplift due to the full OCR final distribution of 
GBP159k had been netted off. 
 
   The Board and your Investment Adviser continue to monitor and mentor 
investee companies towards points of value inflection at which we can 
profitably exit and return funds to shareholders. This is the nature of 
our technology fund with a longer than expected life. 
 
   The Directors continue to take an active interest in the 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 be noted, however, that approaches do 
occur at other times, and the ability of the Directors and Investment 
Adviser to be able to provide support when such approaches occur is 
essential for maximising value. 
 
   Further details are contained within the Investment Adviser's Report, 
and on our website. 
 
   First Quarter Results Announcement 
 
   As mentioned in the overview section above, the Directors estimate that 
the NAV per share is 25.0p (unaudited) as of mid-May. At this time, and 
unless there are reasons to suggest conditions are not similar at the 
end of May 2020, we do not currently intend to issue a NAV as at 31 May 
2020, and will update the market further with our half year results to 
the end of August 2020. We do not currently consider that publishing 
this quarterly result will add any value to shareholders, and not doing 
so will save some costs. 
 
   Dividends/Return of Capital 
 
   Due to its small size the Company remains exposed to balancing solvency 
requirements and compliance with VCT rules To that end, the Directors 
have elected to retain as much cash as is allowed by the VCT rules, to 
ensure it can continue to operate for the foreseeable future. However, 
part of the proceeds from the OCR sale needed to be paid out before the 
year end, to ensure the VCT met the more stringent 80% level of 
qualifying assets required by 1 March 2020 (up from 70%). As a result a 
dividend of 1.5p per share (the highest possible dividend whilst still 
retaining liquidity) was paid to shareholders on 21 February 2020. 
 
   The ongoing strategy remains to seek to crystallise value from the 
portfolio and distribute cash to shareholders.  Our priority is to 
maximise shareholder value and liquidity over the medium term by seeking 
exits for these holdings at the appropriate time, but remaining mindful 
of the need to meet both VCT and going concern tests. 
 
   VCT Market Changes 
 
   After some big changes in recent years, this has been another period of 
allowing the new regulatory landscape to bed in. The types of investment 
now allowed are of the sort in which the OT VCTs have always specialised 
and we continue to believe the VCT structure is well-suited to this 
patient approach to long term value creation. However, the VCT rules do 
provide additional challenges for very small VCTs, where there is very 
little flexibility in how to operate, and with a small portfolio, we are 
very severely hindered from continuing to support our own investee 
companies. Our VCT is not in line with the majority of the industry, 
which is continuing to raise funds and making new investments, and where 
scale is not an issue, so these policies impact us more than larger 
VCTs.  As mentioned above, from March 2020 we are required to have more 
than 80% of assets in qualifying assets compared to 70% in prior years. 
On 29 February 2020, we were at this level, and remain so at the time of 
writing. 
 
   Cost Control 
 
   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. Over the last 5 
years we have renegotiated almost every element of cost. 
 
   Our investment management and Directors' fees and auditors' remuneration 
are amongst the lowest in the VCT industry. The largest remaining 
elements of cost are the LSE listing fee at almost GBP10k and the FCA 
fee of GBP6k.  These regulatory fees seem to have relentless increases 
and bear disproportionally on a small company. We have written to both 
organisations to request a one-off 50% rebate in this difficult year and 
asked them to reconsider their overall fee structures and, in particular, 
relook at their charges to the lower end of the market. 
 
   Covid-19 Response 
 
   The Investment Adviser has proved to be operationally resilient and 
financially sound during the turmoil of Covid-19. Your Board is used to 
working in a virtual environment and the VCT has continued to operate 

effectively, as evidenced by the publication of this Annual Report and 
Financial Statements to our normal timetable. 
 
   Whilst your VCT remains in reasonable structural shape, it seems prudent 
to take some precautionary measures. Every year we have a resolution for 
the shareholders to enable the Directors to raise a further 5% of shares 
without pre-emption rights and this has always been approved. This year, 
following guidance from the FRC Pre-emption Group we would like, with 
our shareholders' approval, to raise the current level to 20% to provide 
flexibility, if ever required, to raise money more cheaply and at 
shorter notice. This would enable to us to support investee companies 
(within the VCT rules) and exceptionally take advantage of other 
opportunities arising from other investees in the OT VCT stable. 
 
   At the moment we have no plans to raise additional capital or to conduct 
a possible placing, but it seems prudent in these uncertain times to 
have the capability in case the Board considers it opportune to act 
quickly.  Shareholders who might be interested in buying shares via such 
a placing are invited to register their potential interest at 
[e-mail]. 
 
   AGM 
 
   We believe the meeting is likely to be a virtual meeting with limited 
physical attendance and no investee or Investment Adviser presentations. 
We will provide further updates on this by the end of June via our 
website. Covid-19 permitting, the Board and Investment Adviser hope to 
be able to host a physical event in October/November following the half 
year results so that shareholders can be updated and  for them to hear 
how some of our investees have coped with this year's disruption. 
 
   In the meantime, may I encourage you to return your proxies for the AGM 
as early as possible. Please send in any questions you might have and we 
will put up a Q&A section on the website. 
 
   Please note that in accordance with new AIC guidelines all four 
directors are standing for annual re-election. I have no hesitation in 
recommending shareholders to vote for all my co-directors. All have 
played a very full part in the VCT's activities throughout the year. 
 
   We also recommend the re-election of UHY Hacker Young who have done a 
very good job this year under difficult conditions, not least of which 
was one of their key staff contracting Coronavirus during the period of 
the audit. 
 
   As in previous years, we are putting forward a resolution to vote for 
the continuation of the VCT. The Directors do not consider this to be an 
appropriate time to wind up the VCT and would not be in shareholders' 
best interests. 
 
   Finally, we have taken the opportunity to further update our articles of 
association; we already did this 2 years ago, but we have taken the 
opportunity whilst the other Oxford Technology VCTs are updating theirs 
to make some additional improvements.  More details are shown on page 37 
and on our website www.oxfordtechnologyvct.com/vct2.html. 
 
   A formal Notice of the AGM has been enclosed with these Financial 
Statements together with a Proxy Form.  We encourage you to vote on the 
AGM resolutions via your proxy forms and thank you all for your ongoing 
support. 
 
   Outlook/Planning for the Future 
 
   Our company remains the smallest VCT (by both net assets and market cap, 
and reducing in size as we realise investments and return proceeds to 
shareholders), and we continue to operate on a shoestring budget. 
Efforts have continued throughout the year to seek a partner interested 
in using the existing VCT structure to launch its own share offering, 
and hence enabling us to expand our asset base. As I reported at the 
half year, we have had detailed conversations with many other 
prospective parties who are potentially interested in entering the VCT 
industry, but to date, the costs of such a launch present too high a 
risk for other parties to make such a  move. We have always made clear 
that there is no certainty such a possibility can be successful but the 
Directors will continue seeking such opportunities when the future 
outlook has become clearer. 
 
   We continue to believe your VCT is an appropriate structure to hold your 
Company's investments, albeit it would be preferable to have a larger 
asset base to share the operating costs. 
 
   In the meantime, your Board continues to work to best position the 
Company such that -- when conditions and liquidity permit -- holdings 
can be exited and proceeds distributed to shareholders. 
 
   In normal years I would conclude by expressing my thanks to all 
shareholders for their continuing support and looking forward to 
welcoming as many of you as possible to the AGM. This year I will just 
express a wish that you keep safe and healthy and that together we may 
ultimately arise stronger and more united for a future in what will 
undoubtedly be a different world. 
 
   Richard Roth 
 
   Chairman 
 
   19 May 2020 
 
   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 24 shows the companies remaining in the 
portfolio. A more detailed analysis is given for some of the larger 
investments. 
 
   The ultimate outcome for investors will depend on how the remaining 
investments perform.  In particular, Select Technology, Scancell and 
Arecor have the potential to deliver significant returns.   However, all 
the companies in the portfolio will now be adjusting their business 
plans in response to the Covid-19 pandemic and OTM are helping and 
advising these companies through these difficult and unprecedented 
times. 
 
   Select Technology specialises in software for photocopiers -- now known 
as MFDs -- Multi-Function Devices. Over the last decade Select 
Technology has built up a global network of distributors and dealers 
through which it sells third party products.  These products now include 
PaperCut, KPAX, Foldr, Drivve Image, EveryonePrint and Square 9 
Enterprise Content Management. Sales have increased from GBP210k in the 
year to July 2010 to just over  GBP6.5m in the year to January 2020. 
Select paid a dividend in February 2020. 
 
   Arecor conducted its phase 1 trial for Ultra-Rapid Acting Insulin. The 
results were very good with all the desired outcomes being met. Arecor 
also has other insulin and non-insulin internal development programmes. 
Arecor also announced a new collaboration agreement with a pharma 
company and it has received a milestone payment for a partnered 
programme. 
 
   In February 2019 ImmBio signed a license deal for PnuBioVax in the 
Chinese market with a subsidiary of CNBG, the leading Chinese biologics 
company. PnuBioVax is a vaccine that targets pneumococcal disease in 
children and the elderly.  Throughout the year it has been working to 
transfer the technology to its partner. An investment of GBP150k (of 
which OT2 contributed GBP20k) was made in February  2020 to extend the 
company runway. In March 2019 OT2 also invested GBP8k as part of an 
earlier GBP150k round. 
 
   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. 
Oxis announced that it had received GBP3.2m of funding to establish a 
factory in Port Talbot, to provide components for batteries. It started 
a collaborative deal with US aviation company Bye Aerospace aiming to 
double the flight times of their electric aeroplanes.  During the year 
it raised a further GBP7.8m at a 30p share price. 
 
   Orthogem received a CE mark for its putty product in early 2018. 
Approvals for other countries were very slow to follow. Although a deal 
was made with a new and much larger UK distributor, the sales did not 
pick up quickly enough for the company to remain solvent going forward. 
The OT VCTs were willing to continue supporting the company, especially 
given we believed the company was very close to commercial success, but 
the VCT rules governing the age of companies and the use to which any 
new funds raised could be applied prevented us from doing so.  The 
company was sold for GBP1 and a 10% share of gross profits going 
forward.  We are currently working with HMRC to see how OT2 may be able 
to benefit from any future income stream in the form of possible 
royalties without breaching any VCT rules. 
 
 
 
   Scancell is developing novel immunotherapies for cancer based on three 
platform technologies known as Immunobody, Moditope and Avidimab. 
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.  The Avidimabs 
-- which are antibodies directed at targets expressed on cancer cells -- 
are the latest addition to the business of Scancell and have already 
generated three development agreements. 
 
   Scancell had a fall in its share price in the first half of the year. An 
investment of GBP3.87m from Vulpes Life Sciences Fund supported the 
company and the share price rose again to 6.4p at  29 February 2020. 
Scancell has received authorisation to proceed with its SCIB1 trial in 
combination with Keytruda both in the UK and the US. Post period end 
Scancell has announced its plans to initiate research work to develop a 
vaccine against the Covid-19 virus causing a moderate increase in its 
share price. 
 
   New Investments in the year 
 
   Follow on investments were made into ImmBio of GBP8,230 in March 2019 
and GBP20,000 in February 2020.  These have complied with both EU State 
Aid rules and HMRC rules. 
 
   Disposals during the year 
 
   We received GBP322,889 held in escrow in respect of the final earn-out 

from the sale of OC Robotics. Orthogem was disposed of during the year 
but only for a nominal sum of GBP1. 
 
   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 29 February 2020 and for 
the year then ended is summarised as follows: 
 
 
 
 
 
 
Type of Investment 
 By HMRC Valuation Rules     Actual            Target 
---------------------------  ------  -------------------------- 
                                     Minimum obligation of: 70% 
VCT Qualifying Investments   81.0%     (80% from 1 March 2020) 
                                        Maximum allowed: 30% 
Non-Qualifying Investments   19.0%     (20% from 1 March 2020) 
---------------------------  ------  -------------------------- 
Total                          100%                        100% 
 
 
   The value used in the qualifying tests is not necessarily the original 
investment cost due to the complex rules required by HMRC, therefore the 
allocation of Qualifying investments as defined by the legislation can 
be different to the portfolio weighting as measured by market value 
relative to the net assets of the VCT. 
 
   At least 70% of each investment must be 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 29 February 2020 
 
 
 
 
                                                                                                            Change 
                                                                                                              in 
                                                                                       Net cost   Carrying   value 
                                                                                          of      value at  for the   % equity 
                                                                                      investment  29/02/20   year     held by                %                    % 
Company             Description                          Date of initial investment    GBP'000    GBP'000   GBP'000     OT2       equity held by all OTVCTs   net assets 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Arecor              Protein stabilisation                Jul 2007                            252       420      124        1.8                         10.5         28.3 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Select Technology 
 -- STL Mgt.        Speciaist photocopier interfaces     Nov 2001                            132       412     (17)        7.4                         58.6         27.8 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
ImmBio              Novel vaccines                       Dec 2000                            295       185     (90)        3.1                         22.6         12.5 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Scancell 
 (bid price 6.4p)   Antibody based cancer therapeutics   Apr 2018                            150        80      (8)        0.3                          2.7          5.4 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Insense             Wound healing dressings              Jun 2001                            204        52        -        2.0                          6.8          3.5 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Plasma Antennas     Solid state directional antennas     Nov 2001                            188        38        -        5.6                         48.8          2.6 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Oxis Energy         Battery technology                   Jan 2000                            540        25     (10)        0.1                          0.3          1.7 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Inaplex             Data integration software            Jan 2001                            138         2      (7)       21.5                         34.8          0.1 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
 
  Totals                                                                                   1,900     1,214      (8)                                                 81.9 
------------------  -----------------------------------  ---------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
Other Net 
 Assets                                                                                                269                                                          18.1 
------------------------------------------------------------------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
NET ASSETS                                                                                           1,483                                                         100.0 
------------------------------------------------------------------------------------  ----------  --------  -------  ---------  ---------------------------  ----------- 
 
 
 
   Number of shares in issue:  5,331,889 
 
   Net Asset Value per share at 29 February 2020: 27.8p 
 
   Dividends per share paid to date: 22.5p 
 
   This table above 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, OC 
Robotics and Orthogem have been sold. 
 
   Lucius Cary 
 
   Director -- OT2 Managers Ltd 
 
   Investment Manager 
 
   19 May 2020 
 
   Directors' Report 
 
   The Directors present their report together with Financial Statements 
for the year ended 29 February 2020. 
 
   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. 
 
   Review of Business Activities 
 
   The Directors are required by section 417 of the Companies Act 2006 to 
include a Business Review to shareholders. This is set out on page 13 
and forms part of the Strategic Report. The purpose of the Business 
Review is to inform members of the Company and help them assess how the 
Directors have performed their duty under section 172 of the Companies 
Act 2006 (duty to promote the success of the Company). The Company's 
section 172 Statement on page 19, the Chairman's Statement on page 6 to 
12, and the Investment Portfolio Review on pages 21 to 29 also form part 
of the Strategic Report. 
 
   Corporate Governance Statement 
 
   The Board has considered the principles and recommendations of the 2019 
AIC Code as applied to companies reporting as at 29 February 2020.  The 
Company's Corporate Governance policy is set out on pages 41 to 47. 
 
   The 2019 AIC Code is available on the AIC website (www.theaic.co.uk). It 
includes an explanation of how the 2019 AIC Code adapts the Principles 
and Provisions set out in the UK Code to make them relevant for 
investment companies. 
 
   The Company has complied with the recommendations of the 2019 AIC Code 
and the relevant provisions of the UK Code, except as set out below: 
 
 
   -- The Company does not have a Chief Executive Officer or a Senior 
      Independent Director. The Board does not consider this necessary as it 
      does not have any executive directors. 
 
   -- New Directors do not receive a formal induction on joining the Board, 
      though they did receive one tailored to them on an individual basis. 
 
   -- The Company conducts a formal review as to whether there is a need for an 

      internal audit function. However, the Directors do not consider that an 
      internal audit would be an appropriate control for this VCT at this 
      time. 
 
 
   -- The Company does not have a Remuneration Committee as these matters are 
      dealt with by the Board. 
 
   -- The Company does not have a Nomination Committee as these matters are 
      dealt with by the Board. 
 
 
   For the reasons set out in the AIC Guide, and as explained in the UK 
Code, the Board considers the above provisions are not relevant to the 
position of the Company, being an investment company run by the Board 
and managed by the Investment Adviser. In particular, all of the 
Company's day-to-day administrative functions are outsourced to third 
parties. As a result, the Company has no executive directors, employees 
or internal operations. 
 
   Furthmore, the Board acknowledges that it is not recommended practice 
that the Chariman of the Company to be chairman of the Audit Committee; 
however, for administrative convenience, Richard Roth is chairman of the 
Audit Committee as he fulfils this role for all the OT VCTs. 
 
   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 29 February 2020 and at 28 February 2019 are set out below: 
 
   Name                                    2020                                  2019 
 
 
   R Roth                                44,033                                44,033 
 
 
   A Starling                                 Nil                                      Nil 
 
 
   R Goodfellow                       14,000                               14,000 
 
 
   D Livesley                                Nil                                     Nil 
 
 
   Under the Company's articles of association Directors are required to 
retire by rotation every third year.  However, best practice under the 
latest corporate governance guidelines is for all directors to stand for 
election each year and as a result, Richard Roth, Alex Starling, Robin 
Goodfellow and David Livesley will all be nominated for re-election at 
the forthcoming AGM.  The Board believes that all the 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 all four Directors at the 
forthcoming AGM. 
 
   The Board is satisfied that, following individual performance appraisals, 
the Directors who are retiring continue to be effective and demonstrate 
commitment to their roles and therefore offer themselves for re-election 
with the support of the Board. 
 
   The Board did not identify any conflicts of interest between the 
Chairman's interest and those of the shareholders, especially with 
regard to the relationship between the Chairman and the Investment 
Adviser. 
 
   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 Seneca 
Growth Capital VCT Plc, a VCT investing in the MedTech 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.  OT2 Managers Ltd subcontracts these 
services to OTM on a pass through basis.  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 Adviser has arrangements 
in place in accordance with the UK 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 Adviser 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 Adviser 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 ( 
https://www.globenewswire.com/Tracker?data=Rz0vMPQDaeuJLgKDbUqxUUfI4ZDoLqGv7V6pTawTwfOyfCS0VjfRg4p6Mdv9cO1pezoQ9Ucb3HRtI0dkW1olE2_ArplrwwN4tPJgezJfjstJeR_NZdDhJFMlyjSJxfB-WZ7ykiMtzu6ClajzAuW2Uw== 
www.oxfordtechnologyvct.com/vct2.html). 
 
   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: Magdalen Centre, Oxford Science Park, 
Oxford OX4 4GA. Alternatively your question can be emailed to: 
[e-mail]. 
 
   Going Concern 
 
   The assets of the Company consist mainly of securities, one of which is 
AIM quoted, quite liquid and readily accessible, as well as cash. 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. 
 
   Share Capital 
 
   As disclosed on page 80, the Board does not have authority to make 
market purchases of the Company's own shares. As a result of some 
shareholder representations, the Company has previously withdrawn the 
customary buy-back resolution and none is proposed this year.  No shares 
were bought back by the Company during the year. 
 
   The Board has authority to allot up to 266,950 shares (representing 
approximately 5% of the ordinary share capital as at 21 May 2019). No 
shares were allotted by the Company during the year. 
 
   The total number of Ordinary Shares of 10p each in issue at 29 February 
2020 was 5,331,889 (2019: 5,331,889) with each share having one vote. 
There are no other share classes in issue. 
 
   As discussed in the Chairman's Statement, whilst the VCT remains in good 
structural shape, it seems prudent to take some precautionary measures 
and the Board is proposing a resolution for the shareholders to enable 
the Directors to raise a further 20% of shares without pre-emption 
rights this year, following guidance from the FRC Pre-emption Group. 
 
   This will provide additional flexibility, if ever required, to raise 
money more cheaply and at shorter notice. This would enable the Company 
to support investee companies (within the VCT rules) and, exceptionally, 
take advantage of other opportunities arising from other investees in 
the OT VCT stable. At the moment we have no plans to raise additional 
capital or to conduct a possible placing, but it seems prudent in these 
uncertain times to have the capability in case the Board wishes to act 
quickly. 
 
   In accordance with Schedule 7 of the Large and Medium Size Companies and 
Groups (Accounts and Reports) Regulations 2008, as amended, the 
Directors disclose the following information: 
 
 
   -- The Company's capital structure and voting rights are summarised above, 
      and there are no restrictions on voting rights nor any agreement between 
      holders of securities that result in restrictions on the transfer of 
      securities or on voting rights; 
 
   -- There exist no securities carrying special rights with regard to the 
      control of the Company; 
 
   -- The rules concerning the appointment and replacement of Directors, 
      amendment of the articles of association and powers to issue or buy back 
      the Company's shares are contained in the articles of association of the 
      Company and the Companies Act 2006; 
 
   -- The Company does not have any employee share scheme; 
 
   -- There exist no agreements to which the Company is party that may affect 
      its control following a takeover bid; and 
 
   -- There exist no agreements between the Company and its Directors providing 
      for compensation for loss of office that may occur following a takeover 
      bid or for any other reason 
 
 
   Substantial Shareholders 
 

   At 29 February 2020, the Company has been notified of the following 
investors whose interest exceeds three percent of the Company's issued 
share capital: Redmayne Nominees Limited 5.98% (includes the beneficial 
interests of Ms Shivani Palakpari Shree Parikh); Barclays Direct 
Investing Nominees Ltd, 4.86%; The Estate of Mr Richard Vessey, 4.38%; 
Mrs Mary Louisa Perry, 3.84%; Hargreaves Lansdown Nominees Limited, 
3.24%; Merrick Sidney Whitehouse Feast, 3.19%. 
 
   Auditors 
 
   UHY Hacker Young LLP offer themselves for re-appointment as the 
independent auditors in accordance with Section 489 of the Companies Act 
2006. 
 
   Adoption of New Articles of Association 
 
   At the AGM, we are also seeking to adopt new articles ("New Articles") 
in substitution for the current articles.  The New Articles have tidied 
up a number of provisions in the current articles and make some of 
clauses less specific to the transaction that was previously being 
planned with Chelverton Asset Management Limited, and will provide the 
Directors more flexibility to negotiate with a new third party. Another 
change proposed which reduces the nominal value of each share from 10p 
per share to 1p per share is a pre-cursor to enable the creation of 
additional distributable reserves in the future, which may allow the 
Company to pay out more to shareholders in time.  A more detailed 
summary of the key differences between the current articles of the 
Company and the New Articles which, in the opinion of the Directors, are 
relevant for shareholders, is set on the Company's website ( 
https://www.globenewswire.com/Tracker?data=Rz0vMPQDaeuJLgKDbUqxUUfI4ZDoLqGv7V6pTawTwfOyfCS0VjfRg4p6Mdv9cO1pViQhGEP0ahJOXKfE_AYEBDboxJqZDC6IOoLKfibPf0Xqxb9hMhpQiztOgrA4Eux4grgEEHBgPa3UoWXW4bYExA== 
www.oxfordtechnologyvct.com/vct2.html), as are the New Articles 
themselves. 
 
   A copy of the proposed New Articles is also available for inspection 
from the date of this Annual Report at the registered office of the 
Company and for at least 15 minutes prior to and during the Annual 
General Meeting at the place of the Annual General Meeting, Magdalen 
Centre, Oxford Science Park, Oxford OX4 4GA. 
 
   On behalf of the Board 
 
   Richard Roth 
 
   Chairman 
 
   19 May 2020 
 
   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, UHY Hacker Young LLP, 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 12 July 2018. 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 in 2021. 
 
   Shareholders also need to approve the Directors' Remuneration Report 
every year. It was last approved at the AGM on 3 July 2019 on a 
unanimous show of hands and 100% of proxies voted in favour.  A 
Resolution to approve the Directors' Remuneration Report for the year 
ended 29 February 2020 will be proposed at the Annual General Meeting on 
9 July 2020. 
 
   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.  In line with best practice, all Directors 
will offer themselves for re-election this year. Re-election will be 
recommended by the Board, but is dependent upon shareholder vote. 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 
GBP75,000 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. 
 
   Richard Roth chairs the Company and 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. The Directors may at their 
discretion pay additional sums in respect of specific tasks carried out 
by individual Directors on behalf of the Company. 
 
   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 29 February 2020 no 
performance fee was due. 
 
   Should any performance fee be payable at the end of the year to 28 
February 2021, Alex Starling, Robin Goodfellow, and Richard Roth would 
each receive 0.36% of any amount over the threshold and David Livesley 
0.87%.  No performance fee will be payable for the year ending 28 
February 2021 unless original shareholders have received back at least 
166.9p 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 
 
   No change to Director's remuneration is expected for the year ending 28 
February 2021. 
 
 
 
 
Directors' Fees   Year End 28/02/21  Year End 29/02/20  Year End 28/02/19* 
                     (unaudited)         (audited)           (audited) 
----------------  -----------------  -----------------  ------------------ 
Richard Roth          GBP8,500           GBP8,500           GBP16,500 
----------------  -----------------  -----------------  ------------------ 
Alex Starling         GBP3,500           GBP3,500            GBP5,500 
----------------  -----------------  -----------------  ------------------ 
Robin Goodfellow      GBP5,000           GBP5,000            GBP5,000 
----------------  -----------------  -----------------  ------------------ 
David Livesley        GBP3,500           GBP3,500            GBP3,500 
----------------  -----------------  -----------------  ------------------ 
Total                 GBP20,500          GBP20,500          GBP30,500 
----------------  -----------------  -----------------  ------------------ 
 
   *In 2019 an additional one off payment was made to Richard Roth of 
GBP8,000 and GBP2,000 to Alex Starling as compensation for work 
undertaken in relation to setting up of the new B share structure as 
well as the preparation of the circular and draft prospectus associated 
with the planned offer for subscription by Chelverton. 
 
   Income Statement 
 
 
 
 
                                                                       Year Ended                             Year Ended 
                                                                    29 February 2020                    28 February 2019 
                                                       Note   Revenue   Capital    Total    Revenue   Capital    Total 
                                                        Ref.   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000   GBP'000 
-----------------------------------------------------  -----  --------  --------  --------  --------  --------  -------- 
Loss on disposal of fixed asset investments                          -      (10)      (10)         -         -         - 
Unrealised (loss)/gain on valuation of fixed asset 
 investments                                                         -      (36)      (36)         -        59        59 
Investment income                                          2         4         -         4         4         -         4 
Investment management fees                                 3      (17)         -      (17)       (1)      (13)      (14) 

Other expenses                                             4      (51)         -      (51)      (67)         -      (67) 
-----------------------------------------------------  -----  --------  --------  --------  --------  --------  -------- 
 
Return on ordinary activities before tax                          (64)      (46)     (110)      (64)        46      (18) 
Taxation on return on ordinary activities                  5         -         -         -         -         -         - 
-----------------------------------------------------  -----  --------  --------  --------  --------  --------  -------- 
Return on ordinary activities after tax                           (64)      (46)     (110)      (64)        46      (18) 
-----------------------------------------------------  -----  --------  --------  --------  --------  --------  -------- 
Return on ordinary activities after tax attributable 
 to equity shareholders                                           (64)      (46)     (110)      (64)        46      (18) 
-----------------------------------------------------  -----  --------  --------  --------  --------  --------  -------- 
Earnings per share -- basic and diluted                    6    (1.2)p    (0.9)p    (2.1)p    (1.2)p      0.9p    (0.3)p 
 
   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. 
 
   Balance Sheet 
 
 
 
 
                                          Year Ended                Year Ended 
                                        29 February 2020      28 February 2019 
                           Note Ref.   GBP'000   GBP'000    GBP'000   GBP'000 
-------------------------  ---------  ---------  --------  ---------  -------- 
Fixed Asset Investments 
 at Fair Value                     7                1,214                1,391 
Debtors                            8         10                  168 
Cash at Bank                                270                  126 
Creditors                          9       (11)                 (12) 
-------------------------  ---------  ---------  --------  ---------  -------- 
Net Current Assets                                    269                  282 
-------------------------  ---------  ---------  --------  ---------  -------- 
Net Assets                                          1,483                1,673 
-------------------------  ---------  ---------  --------  ---------  -------- 
Called Up Share Capital           10                  533                  533 
Capital Redemption 
 Reserve                                              146                  146 
Share Premium Reserve                                 376                  376 
Unrealised Capital 
 Reserve                          11                (686)                (881) 
Profit and Loss Account           11                1,114                1,499 
-------------------------  ---------  ---------  --------  ---------  -------- 
Total Equity 
 Shareholders' Funds              11                1,483                1,673 
-------------------------  ---------  ---------  --------  ---------  -------- 
Net Asset Value Per Share                           27.8p                31.4p 
 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
   The statements were approved by the Directors and authorised for issue 
on 19 May 2020 and are signed on their behalf by: 
 
   Richard Roth 
 
   Chairman 
 
 
 
 
 
   Statement of Changes in Equity 
 
 
 
 
                                                    Called up Share Capital  Captial Redemption Reserve  Share Premium Reserve  Unrealised Capital Reserve  Profit & Loss   Total 
                                                            GBP'000                    GBP'000                  GBP'000                   GBP'000              GBP'000      GBP'000 
--------------------------------------------------  -----------------------  --------------------------  ---------------------  --------------------------  -------------  -------- 
 
  As at 1 March 2018                                           533                       146                       376                     (940)                 1,576       1,691 
 
Revenue return on ordinary activities after tax                 -                         -                         -                        -                   (64)         (64) 
 
Expenses charged to capital                                     -                         -                         -                        -                   (13)         (13) 
 
Current period gains on fair value of investments               -                         -                         -                        59                    -           59 
--------------------------------------------------  -----------------------  --------------------------  ---------------------  --------------------------  -------------  -------- 
 
  Balance as at 28 February 2019                               533                       146                       376                     (881)                 1,499       1,673 
 
Revenue return on ordinary activities after tax                 -                         -                         -                        -                   (64)         (64) 
Current period losses on disposal                                         -                           -                      -                           -           (10)      (10) 
 
Current period losses on fair value of investments                        -                           -                      -                        (36)              -      (36) 
 
Prior years losses now realised                                           -                           -                      -                         231          (231)         - 
Dividends paid                                                            -                           -                      -                           -           (80)      (80) 
--------------------------------------------------  -----------------------  --------------------------  ---------------------  --------------------------  -------------  -------- 
Balance as at 29 February 2020 
                                                                        533                         146                    376                       (686)          1,114     1,483 
 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
   Statement of Cash Flows 
 
 
 
 
                                             Year Ended         Year Ended 
                                           29 February 2020   28 February 2019 
                                               GBP'000            GBP'000 
----------------------------------------  -----------------  ----------------- 
Cash flows from operating activities 
Return on ordinary activities before tax              (110)               (18) 
Adjustments for: 
Loss on disposal of investments                          10                  - 
Loss/(gain) on valuation of investments                  36               (59) 
(Decrease)/increase in creditors                        (1)                  2 
Decrease/(increase) in debtors                          158                (2) 
Movement in investment debtors and 
creditors                                             (164)                  - 
----------------------------------------  -----------------  ----------------- 
Cash outflow from operating activities                 (71)               (77) 
----------------------------------------  -----------------  ----------------- 
Cash flows from investing activities 
Purchase of investments                                (28)              (183) 
Disposal of investments                                 323                  - 
----------------------------------------  -----------------  ----------------- 
Cash inflows/(outflows) from investing 
 activities                                             295              (183) 
----------------------------------------  -----------------  ----------------- 
Cash flows from financing activities 
Dividends paid                                         (80)                  - 
----------------------------------------  -----------------  ----------------- 
Increase/(decrease) in cash at bank                     144              (260) 
----------------------------------------  -----------------  ----------------- 
Opening cash and cash equivalents                       126                386 
----------------------------------------  -----------------  ----------------- 
Cash and cash equivalents at year end                   270                126 
 
   The accompanying notes are an integral part of the Financial Statements. 
 
 
 
   Notes to the Financial Statements 
 
   Oxford Technology 2 Venture Capital Trust Plc is a public company and is 
limited by shares. 
 
   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 Financial Reporting Standard 102 
-- 'The Financial Reporting Standard applicable in the United Kingdom 
and Republic of Ireland' ('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 2018)' 
issued by the AIC. 
 

   The principal accounting policies have remained materially unchanged 
from those set out in the Company's 2019 Annual Report and Financial 
Statements (the only change relating to investment management fees no 
longer being partially allocated to capital, as explained below). A 
summary of the principal accounting policies follows. 
 
   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 
 
   The assets of the Company consist mainly of securities, one of which is 
AIM quoted, quite liquid and readily accessible, as well as cash. 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 or revenue 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, and in particular this could be the case in the short term 
if the Covid-19 lockdown is extended. 
 
   The material factors affecting the returns and net assets attributable 
to shareholders are the valuations of the investments and ongoing 
general expenses. 
 
   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 and 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 or 
revenue multiples, 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 held 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/revenue 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 
(2019: 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 and are charged 
wholly to revenue. Historically investment management fees were charged 
75% to capital and 25% to revenue. However, the Directors have 
determined that a more appropriate current split is to charge these fees 
100% to revenue since the company is a small late life VCT no longer 
raising new capital. This modification to the policy has been applied 
this year. There is no change to the total return, nor to distributable 
reserves. Any applicable performance fee will continue to be charged 
100% to capital. Due to the small amounts involved we have not restated 
the previous year. 
 
   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 applicable 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 Share Capital -- represents the nominal value of shares that 
have been issued. 
 
   Share Premium Reserve -- includes any premiums received on issue of 
share capital. Any transaction costs associated with the issuing of 
shares are deducted from the Share Premium Reserve. 
 
   Capital Redemption Reserve -- represents the nominal value of the shares 
repurchased in the tender offer in September 2017. 
 
   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 Account as a movement in 
reserves. 
 
   The Profit and Loss Account 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 shareholders. 
 
   2.  Investment Income 
 
 
 
 
                        Year Ended         Year Ended 
                      29 February 2020   28 February 2019 
                          GBP'000            GBP'000 
-------------------  -----------------  ----------------- 
Dividends received                   4                  4 
-------------------  -----------------  ----------------- 
Total                                4                  4 
 
 
   All of the Company's income has been generated in the United Kingdom 
from its investment portfolio. 
 
   3.  Investment Management Fees 
 
   Investment Management Fees are accounted for on an accruals basis and 
are charged wholly to revenue.  In the previous year, the investment 
management fee was charged 75% to capital. 
 
 
 
 
                               Year Ended         Year Ended 
                             29 February 2020   28 February 2019 
                                 GBP'000            GBP'000 
--------------------------  -----------------  ----------------- 
Investment management fee                  17                 16 
Cost Cap refund from OTM                    -                (2) 
--------------------------  -----------------  ----------------- 
Total                                      17                 14 
 
 
   In the year to 29 February 2020 the manager received a fee of 1% of the 
net asset value as at the previous year end (2019: 1%). Oxford 
Technology Management is also entitled to certain monitoring fees from 
investee companies and the Board reviews 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. 
 
   The original threshold of 100p has 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 129.8p at 29 February 2020, corresponding to a total 
shareholder return of 159.1p after taking into account the 29.3p already 
paid out (29.3p + 129.8p = 159.1p).  The 29.3p 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.  Oxford Technology Management did not need to reduce 
their management fee in the current year (2019: GBP2,000 with the amount 
credited to the revenue account). 
 
   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 2020   28 February 2019 
                                  GBP'000            GBP'000 
---------------------------  -----------------  ----------------- 
Directors' remuneration                     21                 31 
Auditors' remuneration                       8                  7 
London Stock Exchange Fees                  10                  9 
FCA Fees                                     6                  6 
Other expenses                               6                 14 
---------------------------  -----------------  ----------------- 
Total                                       51                 67 
 
 
 
 
   5. Tax on Ordinary Activities 
 
   Corporation tax payable at 19.0% (2019: 19.0%) is applied to profits 
chargeable to corporation tax, if any. The corporation tax charge for 
the period was GBP nil (2019: GBP nil). 
 
 
 
 
                                             Year Ended         Year Ended 
                                           29 February 2020   28 February 2019 
                                               GBP'000            GBP'000 
----------------------------------------  -----------------  ----------------- 
Return on ordinary activities before tax              (110)               (18) 
----------------------------------------  -----------------  ----------------- 
Current tax at standard rate of taxation               (21)                (3) 
UK dividends not taxable                                (1)                (1) 
Unrealised losses/(gains) not taxable                     7               (11) 
Realised losses not taxable                               2                  - 
Excess management expenses carried 
 forward                                                 13                 15 
----------------------------------------  -----------------  ----------------- 
Total current tax charge                                  -                  - 
 
 
   Unrelieved management expenses of GBP1,690,416 (2019: GBP1,621,167) 
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 GBP110,000 (2019: loss of GBP18,000) 
attributable to shareholders divided by the daily weighted average 
number of shares 5,331,889 (2019: 5,331,889) 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 1                Level 3        investments 
                                            GBP'000                GBP'000          GBP'000 
----------------------------------  ----------------------  --------------------  ----------- 
Valuation and net book amount: 
 Book cost as at 28 February 2019             150                   2,123             2,273 
Cumulative revaluation to 28 
February 2019                                 (62)                  (819)             (881) 
----------------------------------  ----------------------  --------------------  ----------- 
Valuation at 28 February 2019                           88                 1,303        1,391 
----------------------------------  ----------------------  --------------------  ----------- 
Movement in the year: 
Purchases at cost                                        -                    28           28 
Disposals at cost                                        -                 (401)        (401) 
Disposals revaluation                                    -                   232          232 
Revaluation in year                                    (8)                  (28)         (36) 
----------------------------------  ----------------------  --------------------  ----------- 
Valuation at 29 February 2020                           80                 1,134        1,214 
----------------------------------  ----------------------  --------------------  ----------- 
Book cost at 29 February 2020                          150                 1,750        1,900 
Cumulative revaluation to 29 
 February 2020                                        (70)                 (616)        (686) 
----------------------------------  ----------------------  --------------------  ----------- 
Valuation at 29 February 2020                           80                 1,134        1,214 
----------------------------------  ----------------------  --------------------  ----------- 
 
 
   All investments are initially measured at their transaction price. 
Subsequently, at each reporting date, the investments are valued at fair 
value through profit and loss, and all capital gains or losses on 
investments are so measured. 
 
   The changes in fair value of such investments recognised in these 

Financial Statements are treated as unrealised holding gains or losses. 
 
   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 29 February 
2020 are as follows: 
 
 
 
 
              Country of    Nature of     Turnover     Retained     Net Assets 
              Registration  Business                   profit/loss 
OT2 Managers  England and   Investment 
Ltd           Wales         Manager         GBP16,736      GBP0         GBP1 
 
 
   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 Venture Capital Trust 
Plc, which the Directors also consider is the most useful presentation 
for shareholders. 
 
   8.  Debtors 
 
 
 
 
                                            29 February 2020  28 February 2019 
                                                 GBP'000           GBP'000 
------------------------------------------  ----------------  ---------------- 
Prepayments, accrued income & other 
 debtors                                                  10                 4 
Deferred consideration from sale of 
 investments                                               -               164 
------------------------------------------  ----------------  ---------------- 
Total                                                     10               168 
 
 
   9. Creditors 
 
 
 
 
                         29 February 2020  28 February 2019 
                              GBP'000           GBP'000 
-----------------------  ----------------  ---------------- 
Creditors and accruals                 11                12 
-----------------------  ----------------  ---------------- 
Total                                  11                12 
 
 
   10. Share Capital 
 
 
 
 
                                                      29 February 2020  28 February 2019 
                                                               GBP'000           GBP'000 
----------------------------------------------------  ----------------  ---------------- 
Allotted, called up and fully paid: 5,331,889 (2019: 
 5,331,889) ordinary shares of 10p each                            533               533 
 
 
   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 
as a movement in reserves. 
 
   Distributable reserves are GBP428,000 as at 29 February 2020 (2019: 
GBP618,000). 
 
   Reconciliation of Movement in Shareholders' Funds 
 
 
 
 
                                          29 February 2020  28 February 2019 
                                               GBP'000           GBP'000 
----------------------------------------  ----------------  ---------------- 
Shareholders' funds at start of year                 1,673             1,691 
Return on ordinary activities after tax              (110)              (18) 
Dividends paid                                        (80)                 - 
----------------------------------------  ----------------  ---------------- 
Shareholders' funds at end of year                   1,483             1,673 
 
 
   12. Capital Commitments 
 
   The Company had no commitments at 29 February 2020 or 28 February 2019. 
 
   13.  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, GBP16,736 was paid 
in respect of these fees (2019: GBP14,569).  No amounts were outstanding 
at the year end. 
 
   14.  Financial Instruments 
 
   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 Company's portfolio is concentrated for various reasons, including 
the age of the VCT, exits within the portfolio and the Company's policy 
of seeking to return excess capital to shareholders.  No new funds have 
been raised by the Company since 2010. No investments in new portfolio 
companies have been made since 2018. The overall disposition of the 
Company's assets is regularly monitored by the Board. 
 
   Classification of financial instruments 
 
   The Company held the following categories of financial instruments, all 
of which are included in the balance sheet at fair value, at 29 February 
2020 and 28 February 2019: 
 
 
 
 
                                            29 February 2020  28 February 2019 
                                                 GBP'000           GBP'000 
------------------------------------------  ----------------  ---------------- 
Financial assets at fair value through 
profit or loss 
Fixed asset investments                                1,214             1,391 
------------------------------------------  ----------------  ---------------- 
Total                                                  1,214             1,391 
------------------------------------------  ----------------  ---------------- 
Financial assets 
 measured at amortised cost 
Cash at bank and in hand                                 270               126 
Debtors                                                   10               168 
------------------------------------------  ----------------  ---------------- 
Total                                                    280               294 
------------------------------------------  ----------------  ---------------- 
Financial liabilities measured at 
amortised cost 
Creditors                                                  -                 - 
Accruals                                                  11                12 
------------------------------------------  ----------------  ---------------- 
Total                                                     11                12 
 
 
   Fixed asset investments (see note 7) are valued at fair value. Unquoted 
investments are carried at fair value as determined by the Directors in 
accordance with current venture capital industry guidelines. The fair 
value of all other financial assets and liabilities is represented by 
their carrying value in the balance sheet. The Directors believe that 
the fair value of the assets held at the year-end is equal to their book 
value. 
 
   The Company's creditors and debtors are initially recognised at fair 
value, which is usually the transaction price, and then thereafter at 
amortised cost. 
 
   15. Financial Risk Management 
 
   In carrying on its investment activities, the Company is exposed to 
various types of risk associated with the financial instruments and 
markets in which it invests. The most significant types of financial 
risk facing the Company are market risk, credit risk and liquidity risk. 
The Company's approach to managing these risks is set out below together 
with a description of the nature and amount of the financial instruments 
held at the Balance Sheet date. In addition, the Board considers that 
the impact of Covid-19 presents an additional risk that is worth 
flagging separately. 
 
   Market risk 
 
   The Company's strategy for managing investment risk is determined with 
regard to the Company's investment objective, as outlined on page 5. The 
management of market risk is part of the investment management process. 
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 in the medium term. Investments in unquoted 
companies, by their nature, usually involve a higher degree of risk than 
investments in companies quoted on a recognised stock exchange, though 
the risk can be mitigated to a certain extent by diversifying the 
portfolio across business sectors and asset classes. The overall 
disposition of the Company's assets is regularly monitored by the Board. 
 
   Details of the Company's investment portfolio at the Balance Sheet date 
are set out on pages 21 to 29. 
 
   76.5% (2019: 77.9%) by value of the Company's net assets comprise 
investments in unquoted companies held at fair value. The valuation 
methods used by the Company include the price of recent transactions, 
earnings or revenue multiples, discounted cashflows and net assets. A 
10% overall increase in the valuation of the unquoted investments at 29 

February 2020 (28 February 2019) would have increased net assets and the 
total return for the year by GBP113,000 (2019: GBP130,000) disregarding 
the impact of the performance fee; an equivalent change in the opposite 
direction would have reduced net assets and the total return for the 
year by the same amount. 
 
   5.4% (2019: 5.3%) by value of the Company's net assets comprises equity 
securities quoted on AIM. A 10% increase in the bid price of these 
securities as at 29 February 2020 (28 February 2019) would have 
increased net assets and the total return for the year by GBP8,000 
(2019: GBP9,000) disregarding the impact of the performance fee; a 
corresponding fall would have reduced net assets and the total return 
for the year by the same amount. 
 
   Credit risk 
 
   There were no significant concentrations of credit risk to 
counterparties at 29 February 2020 or 28 February 2019. 
 
   Credit risk is the risk that a counterparty to a financial instrument 
will fail to discharge an obligation or commitment that it has entered 
into with the Company. The Board carries out a regular review of 
counterparty risk. The carrying values of financial assets represent the 
maximum credit risk exposure at the Balance Sheet date. 
 
   Liquidity risk 
 
   The Company's financial assets include investments in unquoted equity 
securities which are not traded on a recognised stock exchange and which 
generally are illiquid. They also include investments in AIM-quoted 
companies, which, by their nature, involve a higher degree of risk than 
investments on the main market. As a result, the Company may not be able 
to realise some of its investments in these instruments quickly at an 
amount close to their fair value in order to meet its liquidity 
requirements. 
 
   The Company's liquidity risk is managed and monitored on a continuing 
basis by the Board in accordance with policies and procedures laid down 
by the Board. 
 
   Covid-19 risk 
 
   At the time of writing there remains significant uncertainty with regard 
to the lasting effects on the world economy of Covid-19 although it is 
clear that UK economic growth will fall this year. The worst hit sectors 
have been airlines, travel, hospitality, oil and non- essential retail, 
while on the upside some biotech companies have found new opportunities. 
Investee companies have been creative in finding short term solutions 
but delays in restarting the economy will be very hard to accommodate 
without major pain. 
 
   16.  Control 
 
   Oxford Technology 2 Venture Capital Trust Plc is not under the control 
of any one party or individual. 
 
   17.  Events after the Balance Sheet Date 
 
   As referred to in the Chairman's Statement, the financial implications 
of the Covid 19 pandemic only really started to become apparent post the 
Balance Sheet date. Under the valuation rules we are required to produce 
valuations based on all the information that was known or should have 
been known to the Directors at 29 February 2020. Hence the valuations 
used to assess the Company's NAV at 29 February 2020 did not take into 
account the implications of any possible lock down, nor the global oil 
market collapse that again only manifested itself in March. 
 
   The Board and Investment Adviser have sought to assess the immediate 
impact on valuations. Using latest bid prices, and the Directors' normal 
determinants of fair value, we estimate that the NAV per share has 
reduced to an unaudited 25.0p (a drop of 10%) as of mid-May, mainly due 
to falls in the valuation of Select Technology and ImmBio.  This change 
has been treated as an unadjusting event after the Balance Sheet date, 
since the major impacts of Covid-19 on UK lockdown happened after period 
end. 
 
   As highlighted on page 27, ImmBio had made 3 vaccine grant applications 
at the end of 2019: in two of them, active discussions with the grant 
award bodies have continued post year end. Unfortunately, in May 2020, 
ImmBio were advised that they had been unsuccessful in accessing one of 
the remaining two grants. Dialogue continues regarding the third 
application. Separately, they have also decided to launch the 
development of a vaccine against Covid-19. Both of these have been 
treated as a non-adjusting post Balance Sheet events. 
 
   This announcement contains inside information for the purposes of 
Article 7 of Regulation (EU) 596/2014 
 
   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 29 February 2020, Income Statement and 
Statement of Cash Flows for the period then ended have been extracted 
from the Company's 2020 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 2020 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: 
https://www.globenewswire.com/Tracker?data=4i5mxYg12LW2TxHGUiLpDrugCrsYAT1AWkhyXBk-J6ThGz_0hfywgRgr2B5u3_Tv6qQtVCCm7fyHhLyrUE8w1hNX_1YE-oNk2-FEK3c7h7j4LXFAbhhaaK36DNmwhA0pmugMijBtiUwQRO9eGAN6Yb8ozME4zYsJAWkwxUdyPwDttun0BWXNNaEAHVDy6uzcDscyOsO8UhqNAMh3IuZzdtn1evlG6HOg3d0j8ICx80NH0TOJkC1dwr-sS9kRtGXr6YfjQYd0P0lIKyV-r0ray33Z47uojnbhixmcHh_BLk6AzocKcOUYSymSWR7ouw6Gmo-2cnZZRWXVZ6Ix23NYRp8s9s0P_nAu62D7Xssx8CM= 
http://www.mornningstar.co.uk/uk/NSM 
 
 
 
 

(END) Dow Jones Newswires

May 20, 2020 02:00 ET (06:00 GMT)

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