Share Name Share Symbol Market Type Share ISIN Share Description
Oxford Technology 2 Venture Capital Trust Plc LSE:OXH London Ordinary Share GB0003105052 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 20.00 10.00 30.00 20.00 20.00 20.00 0.00 00:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 0.0 -0.1 -1.2 - 1

Oxford Tech 2 VCT Half-year Report

09/10/2020 7:00am

UK Regulatory (RNS & others)

   Oxford Technology 2 VCT Plc 
   Unaudited Half-Yearly Report 
   For the period 1 March 2020 to 31 August 2020 
                                  6 Months Ended      Year Ended 
                                   31 August 2020   29 February 2020 
--------------------------------  ---------------  ----------------- 
Net Assets At Period End             GBP1.29m          GBP1.48m 
--------------------------------  ---------------  ----------------- 
Net Asset Value (NAV) Per Share        24.3p             27.8p 
--------------------------------  ---------------  ----------------- 
Cumulative Dividend Per Share          22.5p             22.5p 
--------------------------------  ---------------  ----------------- 
Total Nav Return Per Share             46.8p             50.3p 
--------------------------------  ---------------  ----------------- 
Share Price At Period End (Mid)        20.0p             22.5p 
--------------------------------  ---------------  ----------------- 
Earnings Per Share                         (3.5)p             (2.1)p 
--------------------------------  ---------------  ----------------- 
   Statement on behalf of the Board 
   I am pleased to present the unaudited results for the six month period 
ended 31 August 2020.  The period under review continues to be dominated 
by the implications of the Covid-19 pandemic and the subsequent actions 
of the UK government. Your Investment Adviser and the Directors have 
continued to manage the VCT and its portfolio effectively together via 
remote working during lockdown. 
   The six months to 31 August 2020 have been a volatile and uncertain 
period for the economy and for businesses operating within this 
environment. During this period, your Board has kept the impact of the 
pandemic on your Company's investments closely under review as part of 
our regular Board agenda. 
   On 19 May 2020, when we issued our annual report, we reviewed the 
portfolio valuation since the year ended 29 February 2020 and this led 
to us announce a reduction in the NAV per share from 27.8p to an 
unaudited 25.0p. Since then, the pandemic along with the lockdown has 
continued to impose great uncertainty for UK companies. However our 
overall portfolio has remained relatively stable as the technology 
sector has been less severely impacted than others. 
   Results and Dividend 
   The Company's net asset value (NAV) per share has decreased by 3.5p per 
share from 27.8p at 29 February 2020 to 24.3p per share as at 31 August 
2020.  Compared to 29 February 2020, operating costs reduced the NAV per 
share by 0.7p during the period, with the remaining 2.8p reduction being 
due to movements in the portfolio, the most significant of which relate 
to Select Technology and ImmBio,and are explained in the Portfolio 
Review section below. 
   As noted above, the NAV as at 31 August 2020 of 24.3p per share is a 
reduction 0.7p since the mid-May update of 25.0p per share. 
   The Directors are not recommending the payment of a dividend at this 
   Portfolio Review 
   The majority of the portfolio which contains 8 investments in total (one 
of which is quoted on AIM) continues to develop. None have sought 
funding from the VCT during this period, although Scancell Holdings Plc 
("Scancell") did raise GBP15m in a round that was not VCT qualifying. 
   Arecor now represents nearly 40% of the portfolio. It has published 
excellent phase 1 clinical data for its ultra-rapid insulin.  The trial 
was only sized to demonstrate equivalence, which it did, and on average 
the Arecor insulin delivered twice the early glucose lowering effect of 
the next fastest insulin on the market. The hope is that this will prove 
to be fast enough to respond to glucose levels as they occur, instead of 
a patient having to predict their insulin requirement.  Arecor will be 
continuing its clinical insulin programme and is expected to raise 
further funds soon to progress this. 
   Select Technology represents just over a quarter of the value of the 
portfolio investments. Select distributes high quality document 
management software via its global channel partners while adding 
significant further value through its development team by providing 
integrations and bespoke solutions.  Sales have been significantly 
affected by Covid-19 with sales from February to July, being about 50% 
down on the previous six months. However, the greatest impact was in 
April and May: sales have revived somewhat in the most recent months and 
the hope is that this continues. 
   ImmBio - formally known as ImmunoBiology Ltd has licensed its 
pneumococcal vaccine to China National Biotech Group. It has completed 
parts of its technology transfer and is now seeking to start a phase 2 
study of the same vaccine. To do this it has been applying for grants. 
It was rejected for several grants but has two more applications 
pending. Coronavirus has again highlighted the importance of vaccines to 
the world and in recent years pneumococcal disease has claimed a similar 
number of deaths as Covid-19 in 2020. An existing vaccine has reduced 
the death rate, but the existing vaccines only protect against fewer 
than 20 of the 90 or so existing strains. As ImmBio's ImmBioVax 
technology utilises heat shock proteins to activate T-cell responses, it 
is hoped that it can be used to create vaccines for a wide range of 
currently poorly served infectious diseases. 
   Scancell continues to develop its multiple technologies. The SCIB1 Phase 
2 clinical trial programme will continue with further sites later this 
year and the Modi-1 Phase1/2 trial is progressing for regulatory 
submission with a planned study start in the UK in 1H21. In August, 
Scancell announced it had been awarded a grant to develop its COVIDITY 
Covid-19 vaccine based on its Immunobody platform into a Phase1 clinical 
trial. In August, it also completed a fundraising to raise GBP15 million 
at a price of 5.5p per share, and which included a significant new US 
institutional investor (Redmile Group LLC). This funding will allow 
planned trials to continue while partnering discussions are pursued. As 
a result of all this news, the Scancell share price has seen much 
volatility, both during the period to 31 August 2020 and later. It's 
share price was 8p as at 31 August 2020 (on which these valuations are 
based), and has subsequently doubled to 16p in early October. 
   The other two investments still with potential (both valued at GBP52k) 
are Oxis Energy and Insense. Oxis continues with the development of its 
battery manufacturing capabilities. In May, it signed a lease on a 
manufacturing plant in Brazil which is scheduled to come online in 2023. 
The factory will require an investment of $50m and be capable of 
producing 5 million Lithium Sulphur cells a year. Whilst our holding has 
been significantly diluted, Oxis still offers upside potential, although 
it may still be several years before it is realised. Insense is 
developing a treatment for fungal nail disease. Work is continuing with 
formulation and stability testing, in preparation for a clinical trial 
in late 2022, or possibly in 2023.  Ultimate realisation is therefore 
likely to be protracted. 
   Overall, as seen in the Income Statement, the net impact of valuation 
changes across the portfolio during the first half of the 2020/2021 year 
was a loss of GBP152k. 
   The Directors, along with the Investment Adviser, continue to take an 
active interest in the companies within the portfolio, supporting 
management teams to achieve company development, but also to prepare 
companies for realisation at the appropriate time. It should however be 
noted that approaches do occur at other times, and the ability of the 
Directors and Investment Adviser to be able to provide support when such 
approaches occur is essential for maximising value. 
   VCT qualifying status 
   As I have previously flagged, the small size of the VCT means 
significant focus is required to ensure we retain sufficient working 
capital to manage the Company whilst meeting all the conditions laid 
down by HMRC for maintaining approval as a VCT. The Board has procedures 
in place to ensure that the Company continues to comply with these 
conditions, in particular the new 80% qualifying holding limit which has 
been in place since 1 March 2020. 
   Presentation of half-yearly report 
   In order to reduce the length of this report, we have omitted details of 
the Company's objectives and investment strategy, its Advisers and 
Registrar and how to buy and sell shares in the Company. These details 
are all included in the Annual Reports, which together with previous 
half-yearly reports, are available for viewing on the Oxford Technology 
   Cost Control 
   As we have previously reported, 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.  Our 
investment management fees, 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 per annum.  The LSE has just proposed a 60% increase in its 
fees for the coming year, which your Directors believe is unacceptable. 
We have reopened our dialogue with the LSE and will continue to fight 
for appropriate fees to be levied. 
   Nothing has changed in our plans for your Company. We continue to 
believe your VCT is an appropriate structure to hold your Company's 
investments, but as we have indicated for some time, it would be 
preferable to have a larger asset base to share the operating costs. I 
have reported previously of our efforts to seek prospective parties who 
are potentially interested in entering the VCT industry. This initiative 
is currently on hold whilst any such possible organisations are entirely 
focussed on more immediate actions within their own businesses as a 
result of the Covid-19 pandemic. We have always made clear that there is 
no certainty such a route can be achieved, but the Directors will 
continue seeking such opportunities when the future outlook has become 
clearer. Furthermore, whatever the outcome of the discussions with the 
LSE, the seemingly relentless upward trajectory of these regulatory 
costs has resulted in your Directors revisiting the economics of a 
merger with some or all the other Oxford Technology VCTs; such a 
transaction is not without risk and it is by no means clear that it 
would be in your Company's best interests to participate in such a 
transaction. We will update shareholders if and when these discussions 
reach a conclusion, and in any event, shareholder approval would then be 
required before any transaction could proceed. 
   Apart from the change to investment qualifying levels, there have been 
no recent changes to VCT legislation, or their potential impact on both 
the VCT and its investee companies. It is still too early to fully 
assess the impact of Covid-19, and the resulting government 
interventions. Whilst the impact of Brexit remains unclear, your 
Directors do not expect its eventual outcome to have a material impact 
on portfolio valuations. 
   Your Board and Investment Adviser continue to work so as to best 
position your VCT such that, when valuations and liquidity allow, 
holdings can be exited and proceeds distributed to shareholders, whilst 
keeping a keen eye on maintaining costs as low as possible in the 
   Finally, I would like to take this opportunity to thank shareholders for 
their continued support. We were delighted a significant number of you 
managed to attend our zoom AGM, and we will consider the merits of 
future online forums which allow a greater number of shareholders to 
attend. We hope our shareholders have not been too personally affected 
by the difficulties this year and look forward to a return to an 'old 
normal' as soon as possible. 
   Richard Roth 
   8 October 2020 
   Investment Portfolio as at 31 August 2020 
                                               Net Cost      value at  Change in value              % Equity 
                                             of investment   31/08/20   for the 6 month  % Equity    held All       % 
Company           Description                   GBP'000      GBP'000    period GBP'000    held OT2    OTVCTs    Net Assets 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Arecor            Protein stabilisation                252        420                 -        1.8       10.5         32.4 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Select --         Specialist 
 STL Management    photocopier interfaces              132        286             (126)        7.4       58.6         22.1 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
ImmBio            Novel vaccines                       295        110              (75)        3.1       22.6          8.5 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Scancell (bid     Antibody based 
 price 8.0p)       cancer therapeutics                 150        100                20        0.2        2.1          7.7 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
                  Wound healing 
Insense            dressings                           204         52                 -        2.0        6.8          4.0 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Oxis Energy       Battery technology                   540         52                27        0.1        0.3          4.0 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
                  Solid state directional 
Plasma Antennas    antennas                            188         40                 2        5.6       48.8          3.1 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
                  Data integration 
Inaplex            software                            138          2                 -       21.5       34.8          0.2 
----------------  ------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Total Investments                                    1,899      1,062             (152)                               82.0 
------------------------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Other Net 
 Assets                                                           233                                                 18.0 
------------------------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
Net Assets                                                      1,295                                                100.0 
------------------------------------------  --------------  ---------  ----------------  ---------  ---------  ----------- 
   Responsibility Statement of the Directors in respect of the half-yearly 
   We confirm that to the best of our knowledge: 
   -- the half-yearly financial statements have been prepared in accordance 
      with the statement "Interim Financial Reporting" issued by the Financial 
      Reporting Council; 
   -- the half-yearly report includes a fair review of the information required 
      by the Financial Services Authority Disclosure and Transparency Rules, 
   -- an indication of the important events that have occurred during the first 
      six months of the financial year and their impact on the condensed set of 
      financial statements. 
   -- a description of the principal risks and uncertainties for the remaining 
      six months of the year. 
   -- a description of related party transactions that have taken place in the 
      first six months of the current financial year that may have materially 
      affected the financial position or performance of the Company during that 
      period and any changes in the related party transactions described in the 
      last annual report that could do so. 
   -- The assets of the Company include cash and shares in an AIM quoted which 
      is quite liquid and readily accessible. After reviewing the forecast for 
      the Company, 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 the half year accounts. 
   On behalf of the Board: 
   Richard Roth 
   8 October 2020 
   Income Statement 
                       Six months to 31 Aug 2020                    Six months to 31 Aug 2019                    Year to 29 February 2020 
                 Revenue        Capital         Total         Revenue        Capital         Total         Revenue        Capital         Total 
                    GBP'000        GBP'000        GBP'000        GBP'000        GBP'000        GBP'000        GBP'000        GBP'000        GBP'000 
------------  -------------  -------------  -------------  -------------  -------------  -------------  -------------  -------------  ------------- 
 on disposal 
 of fixed 
 investments              -              -              -              -            159            159              -           (10)           (10) 
 loss on 
 of fixed 
 investments              -          (152)          (152)              -           (53)           (53)              -           (36)           (36) 
 income                   -              -              -              -              -              -              4              -              4 
 fees                   (8)              -            (8)            (2)            (6)            (8)           (17)              -           (17) 
 expenses              (28)              -           (28)           (25)              -           (25)           (51)              -           (51) 
Return on 
 before tax            (36)          (152)          (188)           (27)            100             73           (64)             46          (110) 
Taxation on 
activities                -              -              -              -              -              -              -              -              - 
------------  -------------  -------------  -------------  -------------  -------------  -------------  -------------  -------------  ------------- 
Return on 
 after tax             (36)          (152)          (188)           (27)            100             73           (64)             46          (110) 
------------                                -------------                                -------------  -------------  -------------  ------------- 
Earnings per 
 share -- 
 basic and 
 diluted             (0.6)p         (2.9)p         (3.5)p         (0.5)p           1.9p           1.4p         (1.2)p         (0.9)p         (2.1)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 
   Balance Sheet 
                                      As at 31 Aug 2020       As at 31 Aug 2019       As at 29 Feb 2020 
                                     GBP'000     GBP'000     GBP'000     GBP'000     GBP'000     GBP'000 
--------------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
     Fixed asset investments at 
     fair value                                    1,062                   1,346                   1,214 
   Debtors                                20                      18                      10 
   Cash at Bank                          222                     388                     270 
   Creditors: amounts falling 
    due within one year                  (9)                     (6)                    (11) 
   Net current assets                                233                     400                     269 
--------------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
   Net assets                                      1,295                   1,746                   1,483 
--------------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
   Called up share capital                           533                     533                     533 
   Capital redemption reserve                        146                     146                     146 
   Share premium reserve                             376                     376                     376 
   Unrealised capital reserve                      (838)                   (934)                   (686) 
   Profit and Loss account                         1,078                   1,625                   1,114 
   Total equity shareholders' 
    funds                                          1,295                   1,746                   1,483 
--------------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
   Net asset value per share                       24.3p                   32.8p                   27.8p 
--------------------------------  ----------  ----------  ----------  ----------  ----------  ---------- 
   Statement of Changes in Equity 
                                                         Capital              Unrealised   Profit 
                                                        Redemption   Share      Capital    & Loss 
                                        Share Capital    Reserve     Premium    Reserve    Reserve   Total 
                                           GBP'000       GBP'000     GBP'000    GBP'000    GBP'000   GBP'000 
--------------------------------------  -------------  -----------  --------  ----------  --------  -------- 
As at 1 March 2019                                533          146       376       (881)     1,499     1,673 
Revenue return on ordinary activities 
 after tax                                          -            -         -           -      (33)      (33) 
Current period gains on disposal                    -            -         -           -       159       159 
Current period losses on fair 
 value of investments                               -            -         -        (53)         -      (53) 
--------------------------------------                                                              -------- 
Balance as at 31 August 2019                      533          146       376       (934)     1,625     1,746 
--------------------------------------                                                              -------- 
As at 1 March 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 
--------------------------------------  -------------  -----------  --------  ----------  --------  -------- 
As at 1 March 2020                                533          146       376       (686)     1,114     1,483 
Revenue return on ordinary activities 
 after tax                                          -            -         -           -      (36)      (36) 
Current period losses on fair 
 value of investment                                -            -         -       (152)         -     (152) 
Balance as at 31 August 2020                      533          146       376       (838)     1,078     1,295 
--------------------------------------  -------------  -----------  --------  ----------  --------  -------- 
   Statement of Cash Flows 
                                                          Six months to 
                                           Six months to      31 Aug                        Year to 29 Feb 
                                            31 Aug 2020        2019                              2020 
                                              GBP'000        GBP'000                           GBP'000 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
      Cash flows from operating 
      Return on ordinary activities 
       before tax                                  (188)             72                                                 (110) 
      Adjustments for: 
      (Gain)/Loss on disposal of fixed 
       asset investments                               -          (159)                                                    10 
      Losses on valuation of fixed asset 
       investments                                   152             53                                                    36 
      Decrease in creditors                          (2)            (5)                                                   (1) 
      (Increase)/Decrease in debtors                (10)            150                                                   158 
      Movement in investment debtors 
       and creditors                                   -          (164)                                                 (164) 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
      Outflow from operating activities             (48)           (53)                                                  (71) 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
Cash flows from investing activities 
Purchase of fixed asset investments                    -            (8)                                                  (28) 
Sale of fixed asset investments                        -            323                                                   323 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
Inflow from investing activities                       -            315                                                   295 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
Cash flows from financing activities 
Dividends paid                                         -              -                                                  (80) 
Total cash flows from financing 
 activities                                            -              -                                                  (80) 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
(Decrease)/increase in cash and 
 cash equivalents                                   (48)            262                                                   144 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
Opening cash and cash equivalents                    270            126                                                   126 
Closing cash and cash equivalents                    222            388                                                   270 
-----------------------------------------  -------------  -------------  ---------------------------------------------------- 
   Notes to the Half-Yearly Report 
   1.         Basis of preparation 
   The unaudited half-yearly results which cover the six months to 31 
August 2020 have been prepared in accordance with the Financial 
Reporting Council's (FRC) Financial Reporting Standard 104 Interim 
Financial Reporting ('FRS 104') and the Statement of Recommended 
Practice (SORP) for Investment Companies re-issued by the Association of 
Investment Companies in November 2014. Details of the accounting 
policies and valuation methodologies are included in the Annual Report. 
   2.         Publication of non-statutory accounts 
   The unaudited half-yearly results for the six months ended 31 August 
2020 do not constitute statutory accounts within the meaning of Section 
415 of the Companies Act 2006. The comparative figures for the year 
ended 29 February 2020 have been extracted from the audited financial 
statements for that year, which have been delivered to the Registrar of 
Companies. The independent auditor's report on those financial 
statements, in accordance with chapter 3, part 16 of the Companies Act 
2006, was unqualified. This half-yearly report has not been reviewed by 
the Company's auditor. 
   3.         Earnings per share 
   The calculation of earnings per share for the period is based on the 
return attributable to shareholders divided by the weighted average 
number of shares in issue during the period. There are no potentially 
dilutive capital instruments in issue and, therefore, no diluted returns 
per share figures are relevant. 
   4.         Net asset value per share 
   The net asset value per share is based on the net assets at the period 
end divided by the number of shares in issue at that date (5,331,889 in 
each case). 
   5.         Principal risks and uncertainties 
   The Company's assets consist of equity and fixed interest investments, 
cash and liquid resources. Its principal risks are therefore market risk, 
credit risk and liquidity risk. Other risks faced by the Company include 
economic, loss of approval as a Venture Capital Trust, investment and 
strategic, regulatory, reputational, operational and financial risks. 
These risks, and the way in which they are managed, are described in 
more detail in the Company's Annual Report and Accounts for the year 
ended 29 February 2020. The Company's principal risks and uncertainties 
have not changed materially since the date of that report. 
   6.         Related party transactions 
   OT2 Managers Ltd, a wholly owned subsidiary, provides investment 
management services to the Company for a fee of 1% of net assets per 
   7.         Copies of this statement are available from Oxford Technology 
Management, Magdalen Centre, Oxford Science Park, Oxford OX4 4GA and on 
the Company's website. 
   Board Directors: Richard Roth, Alex Starling, Robin Goodfellow and David 
   Investment Manager: OT2 Managers Ltd with services contracted to Oxford 
Technology Management Ltd 
   The information above is deemed by the Company to constitute inside 
information as stipulated under the Market Abuse Regulations (EU No. 
596/2014). Upon the publication of this announcement via a Regulatory 
Information Service this inside information is now considered to be in 
the public domain. 
   Enquiries -- Lucius Cary 
   Oxford Technology Management 
   01865 784466 

(END) Dow Jones Newswires

October 09, 2020 02:00 ET (06:00 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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