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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oxford Technology Venture Capital Trust Plc | LSE:OXT | London | Ordinary Share | GB0006640204 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 27.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMOXT
2nd May 2018
Oxford Technology VCT plc ("the Company" or "OT1")
Annual Report and Accounts for the year ended 28 February 2018
The Directors are pleased to announce the audited results of the Company
for the year ended 28 February 2018. A copy of the Annual Report and
Accounts (together the "Accounts") will be made available to
Shareholders shortly. Set out below are extracts from the audited
Accounts. References to page numbers below are to those Accounts.
The AGM will be held at The Magdalen Centre, Oxford Science Park, Oxford
OX4 4GA on Thursday 12 July 2018, at 11am.
A copy of the Accounts will be available from the registered office of
the Company at The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA,
as well as on the Company's website: www.oxfordtechnology.com/vct1
Financial Headlines
Year Ended Year Ended
28 February 2018 28 February 2017
Net Assets at Year End GBP2.84m GBP2.89m
Net Asset Value per Share 52.4p 53.2p
Cumulative Dividend per Share 55.0p 54.0p
NAV + Cumulative Dividend per 107.4p 107.2p
Share Paid from Incorporation
Final Dividend per Share - 1.0p
Share Price at Year End 40.0p 35.0p
Earnings Per Share 0.2p (6.7)p
(Basic & Diluted)
Chairman's Statement
I am pleased to present my Annual Report for the year to 28 February
2018 to fellow shareholders.
Overview
Despite making a profit in the year to 28 February 2018, the outcome for
this period was essentially flat. With your VCT now in the third decade
of its existence, I would have hoped to report on more progress, a
sentiment that I am sure is shared by many shareholders who have
patiently supported the Company for over twenty years.
Overall, however, the companies representing the majority of our
portfolio holdings have continued to lay the groundwork for medium-term
value creation, though this has not resulted in a material change in
valuation over the course of the 12 month financial period. The Company
has adequate liquidity, but in the absence of an excess level of cash,
the Board of OT1 is not recommending the payment of a dividend for the
year ending 28 February 2018 (2017: 1.0p per share).
Portfolio Review
The net asset value (NAV) per share on 28 February 2018 was 52.4p
compared to 53.2p on 28 February 2017. This 0.8p drop in NAV consists
of a 0.2p profit per share offset by a dividend of 1.0p per share that
was paid on 21 July 2017. Dividends paid to date are now 55.0p per
share, giving a total return to date of 107.4p per share based on the
NAV on 28 February 2018.
Select Technology, a photocopier (or more generally Multi Function
Device, or MFD) software company, is the largest holding in your
Company's portfolio. Despite seeing core sales grow, it has experienced
reduced profitability and cash generation this year after simplifying
its business model. As reported last year, this should reduce the
dependency on one particular supplier, increase business resilience and,
ultimately, enable more rapid growth by enabling Select Technology to
take on a more balanced portfolio of software products for worldwide
distribution. It is too early to be able to report fully on the outcome
of this change in the business model, but early indications are not
negative.
As reported in the half year statement on 23 October 2017, having taken
these developments into account, we have reverted to a valuation
methodology based on a sales multiple to more appropriately reflect the
prospects of the business. Our 30% stake in this business has increased
slightly in value over the course of the reporting period and as at 28
February 2018 made up just over half of your Company's overall NAV.
Scancell Holdings Plc (Scancell), listed on the AIM market of the London
Stock Exchange, is your Company's second largest holding. Scancell has
had some very positive news flow during the course of the reporting
period, including reporting various partnerships with the likes of
Cancer Research UK and BioNTech. Cliff Holloway joined as the new CEO
in January 2018; he has worked successfully with chairman John Chiplin
in the past. We are particularly pleased to see non-dilutive forms of
funding being brought to bear as Scancell takes its various exciting
products forward. A GBP5 million placing was completed in May 2017,
though OT1 could not participate in this placing due to restrictions
imposed by VCT rules. Post the year end, there was a further investment
round in April 2018. OT1 was subject to the same VCT constraints and
therefore was again unable to participate in the round. Scancell will
use the proceeds of the placing and open offer to support clinical
trials for SCIB1, SCIB2 and Modi-1 and pre-clinical work for Modi-2.
The bid price of Scancell's shares used for the calculation of the
Company's net asset value on 28 February 2018 was 14.0p, the same level
as at the end of the previous reporting year.
Together with the Company's net current assets, Select Technology and
Scancell make up just over 87% of OT1's portfolio as at 28 February
2018, a similar proportion as at the same date in 2017.
Getmapping is exposed to challenging commercial and political conditions
in South Africa; BioCote continues to grow its business, reflected in a
31% increase in valuation, and paid a small dividend to OT1 in the
financial year ending 28 February 2018.
The Directors continue to take an active interest in the remaining
companies within the portfolio, both to support their management teams
to achieve company development, but also to prepare companies for
realisation at the appropriate time. It should, however, be noted that
approaches do occur at other times, and the ability of the Directors and
Investment Advisor to be able to provide support when such approaches
occur is essential for maximising value. The main portfolio companies
have the potential for a valuation uplift in the near to medium term,
therefore the Directors currently do not envisage exiting these
companies in the short term.
Further details are contained within the Investment Advisor's Report,
and on our website.
Dividends/Return of Capital
The Directors are not recommending a dividend for the year ending 28
February 2018.
The ongoing strategy is to seek to crystallise value from the portfolio
and distribute cash to shareholders. As a small VCT with a concentrated
portfolio, our options for reinvestment are limited due to VCT rules and
we expect to continue to distribute excess income to shareholders in the
form of dividends. There is a reasonable expectation of continued
income from Select Technology and BioCote, though our priority for these
companies is to maximise shareholder value and liquidity over the medium
term by seeking exits for these holdings at the appropriate time.
VCT Market Changes
In terms of the broader VCT market, the main event of the year was the
Patient Capital Review (PCR) undertaken by HM Treasury (HMT). Your
Board engaged with the PCR on behalf of your VCT, seeking to ensure the
continued viability of your Company.
As mentioned in our third quarter update, your Board broadly welcomed
the results of the PCR as announced in the Autumn Budget in November
2017. In summary, HMT wishes to encourage investments into earlier
stage businesses and, if necessary, for these investments to be allowed
to flourish over longer periods of time. We believe that, appropriately
resourced and supported, the VCT structure is well-suited to this
patient approach to long term value creation. We also welcome the
extension of the six month VCT rule to twelve months as it provides a
greater level of future re-investment flexibility.
One of the Autumn Budget's announcements was an increase in the level of
VCT qualifying investments to 80% (up from 70%) that a VCT needs to
hold; this legislation received Royal Assent on 15 March 2018. For OT1,
this change is effective 1 March 2020, and may make it more challenging
for small VCTs, such as your Company, to manage ongoing compliance with
these qualifying tests, which is an unintended consequence of the new
legislation. Cash holdings are non-qualifying, but VCTs are obliged to
demonstrate that they have adequate working capital over the medium term,
which would not be possible if cash reserves must be distributed in
order to fulfil the new legislation - corporate liquidity tests could
thus become very tight.
We fully understand the rationale for introducing this change and
believe that a simple amendment is possible that would mitigate this
unintended consequence while ensuring that the legislative change
retains HMT's desired effect. We will continue to lobby for an
appropriate amendment to be made.
A further change has seen the introduction of MiFID II & PRIIPS. The
most significant impact on VCTs has been the requirement to prepare a
Key Information Document (KID). Shareholders who are interested can
find it on the Company's website.
Planning for the Future
In July 2017 the Board of OT1 announced that, as it is not intending to
increase the size of OT1's portfolio in terms of the number of
investments, it wishes to have in place appropriate plans to ensure any
further realisations do not result in your VCT becoming sub-economic.
At the time, there was an expectation of ongoing cash generation from
the portfolio, mainly from Select Technology that in recent years has
been paying regular dividends to its shareholders, OT1 included. While
this expectation remains unchanged, the simplification of Select
Technology's business plan outlined above has had the effect of reducing
the income that OT1 received in the year to 28 February 2018, so the
Board considers it prudent to be cautious in terms of outlook
vis-à-vis future income projections.
Your Board therefore 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.
Additionally, shareholders may be aware of some significant changes to
the VCT market in recent years. Changes to pension tax reliefs are
driving investors to look for alternatives and, coupled with a reduced
supply of tax efficient investment opportunities, have resulted in
exceptional demand from investors wishing to subscribe for VCTs. This
new environment may present an opportunity for your VCT.
Despite not being able to bring forward proposals on these matters to
date, we continue to explore various options and look forward to
presenting these to shareholders in due course. However, there can be
no certainty that any of these discussions will lead to a concrete
proposal, at this time or in the future.
AGM
Shareholders should note that the AGM for the Company will be held on
Thursday 12 July 2018 at the Magdalen Centre, Oxford Science Park,
starting at 11am and will include presentations by Oxford Technology
Management and some of the companies that the Oxford Technology VCTs
have invested in.
A formal Notice of the AGM has been enclosed with these Financial
Statements together with a Form of Proxy for those not attending. We
appreciate the input of our shareholders and look forward to welcoming
as many of you as possible on the day - thank you for your ongoing
support.
Outlook
The Oxford Technology VCTs have operated and continue to operate very
much in the spirit of the VCT legislation by investing in and
subsequently supporting early stage technology companies. Unfortunately,
the current VCT rules sometimes limit the amount of follow on investment
that we are able to make.
Now in the third decade of its existence, your Company's portfolio has
attained a degree of maturity and concentration. Looking ahead, though,
the Board continues to believe your VCT is an appropriate structure to
hold your Company's assets. The major elements of the portfolio have a
plausible route to creating high value liquidity events in the medium
term. As per our stated strategy, your Board continues to work to
maximise value, reduce costs, and - when valuations and liquidity allow
- crystallise this value and distribute the proceeds to shareholders.
Alex Starling
Chairman
2nd May 2018
Investment Portfolio Review
OT1 was formed in 1997 and invested in a total of 21 companies, all
start-up or early stage technology companies. Some of these companies
failed with the loss of the investment. Some have succeeded and have
been sold. Dividends paid to shareholders to date are 55p per share.
The table on page 16 shows the companies remaining in the portfolio.
The ultimate outcome for investors will depend on how the remaining
investments perform. In particular, Select Technology and Scancell have
the potential to deliver significant returns.
Select Technology specialises in software for photocopiers - now known
as MFDs - Multi-Function Devices. Over the last decade Select has built
up a global network of distributors and dealers through which it sells
both its own and third party products. These products now include
PaperCut, Kpax, Foldr and Drivve Image. Sales have increased from
GBP210k in the year to July 2010 to over GBP5m in the year to January
2018, though Select lost one contract in 2017 that resulted in
substantially reduced profits in the year to July 2017. However, the
core business has continued to grow and it is hoped that Select should
again be able to pay a dividend in OT1's current financial year. It has
employees all over the world; everyone works remotely.
Scancell, in which OT1 first invested in 1999 when the company was based
in a University laboratory, is now AIM-listed. Scancell is developing
novel immunotherapies for cancer based on two platform technologies
known as Immunobody and Moditope. Results from Scancell's first
clinical trial for the treatment of melanoma continue to be excellent
with recurrence free survival at 69% at 5 years - surpassing results in
other trials of ipilimumab (leading immunotherapy for cancer) which
showed 46.5% at 3 years.
Possibly the biggest news of the year for Scancell was the decision by
Cancer Research UK (CRUK) to conduct a trial of SCIB2 in combination
with checkpoint inhibitors. SCIB2 should provide the impetus to the
immune system to attack the tumor and the checkpoint inhibitor will
remove the barriers to its action. The study will focus on Non Small
Lung Cell Cancer, but the results will have relevance for a range of
tumors. The trial will be conducted in full by CRUK and Scancell will be
able to purchase the results and commercialise them itself, or leave
them with CRUK and share in their commercial success. Scancell has also
started a development project with BioNtech, the largest privately-owned
Biotech company in Europe. Scancell's focus is now on generating
clinical data and two more trials should read out over the next two
years. If Scancell is successful in its CRUK Grand Challenge
application it will also be able to start a third trial on Moditope.
Scancell has now been granted the European patent for the use of
citrullinated proteins in cancer treatment. Scancell raised GBP5m during
the year, although OT1 was unable to participate due to the constraints
imposed by the VCT rules. Post the year end, there was a further
investment round in April 2018, however, OT1 was subject to the same VCT
constraints and therefore was again unable to participate in the round.
Scancell will use the proceeds of the placing and open offer to support
clinical trials for SCIB1, SCIB2 and Modi-1 and pre-clinical work for
Modi-2.
OT1 was the first investor in Getmapping when the company was founded in
1999. Having floated on AIM and grown to 65 people, Getmapping suffered
badly when Ordnance Survey terminated a reseller agreement. Employees
reduced to 12 and the share price fell to 1p. But Getmapping survived
and sales were GBP6m in the year to Dec 2015 and GBP6.4m in 2016. Sales
have decreased slightly to GBP6.0m in the year to Dec 2017. Getmapping's
business is now split between the UK and Africa. Getmapping provides
aerial photography and products that enhance the value and usefulness of
this data.
OT1 was the first investor in BioCote in 1997, before the company had
any sales. Today, BioCote has sales of GBP2.1m and supplies its
antimicrobial coatings to companies all over the world.
New Investments in the year
There were no new investments during the year.
Disposals during the year
There were no disposals during the year.
Valuation Methodology
Quoted and unquoted investments are valued in accordance with current
industry guidelines that are compliant with International Private Equity
and Venture Capital (IPEVC) Valuation Guidelines and current financial
reporting standards.
VCT Compliance
Compliance with the main VCT regulations as at 28 February 2018 and for
the year then ended is summarised as follows:
Type of Investment
By HMRC Valuation Rules Actual Target
Minimum obligation of:
VCT Qualifying Investments 82% 70%
Maximum allowed:
Non-Qualifying Investments 18% 30%
Total 100% 100%
At least 10% of each investment in a qualifying company is held in
'eligible shares' - Complied.
No more than 15% of the income from shares and securities is retained -
Complied.
No investment constitutes more than 15% of the Company's portfolio (by
value at time of investment or when the holding is added to) - Complied.
The Company's income in the period has been derived wholly or mainly
(70% plus) from shares or securities - Complied.
No investment made by the VCT has caused the company to receive more
than GBP5m of State Aid investment in the year, nor more than the
lifetime limit of GBP12m - Complied as no new investments made.
Table of Investments held by Company at 28 February 2018
Change
in
Carrying value
value at for the %
Net cost of 28/02/18 year equity held by % %
Company Description Date of initial investment investment GBP'000 GBP'000 GBP'000 OT1 equity held by all OTVCTs net assets
Photocopier
Select Technology Interfaces Sep 1999 488 1,438 58 30.0 58.6 50.6
Scancell Antibody based
(Bid Price 14.0p) cancer therapeutics Aug 1999 344 964 - 2.1 3.6 33.9
Getmapping Aerial photography Mar 1999 518 223 (5) 3.7 3.7 7.8
Bactericidal
BioCote additives Dec 1997 85 139 33 6.6 6.6 4.9
Totals 1,435 2,763 86
Other Net Assets 81 2.8
NET ASSETS 2,844 100
Number of shares in issue: 5,431,655
Net Asset Value per share at 28 February 2018: 52.4p
Dividends paid to date: 55.0p
This table shows the current portfolio holdings. The investments in
Avidex, Concept Broadcast, Coraltech, Eurogen, Im-Pak, Freehand Surgical,
Nexus, OST, Rapier, Sirius, Synaptica and IMPT have been written off.
The investments in Valid, Dataflow, MET, Equitalk and Duncan Hynd
Associates have been sold. Some shares in Scancell have also been sold.
Lucius Cary
Director
OT1 Managers Ltd
Investment Manager
2nd May 2018
Directors' Report
The Directors present their report together with Financial Statements
for the year ended 28 February 2018.
The Directors consider that the Annual Report and Financial Statements,
taken as a whole are fair, balanced and understandable and provide the
information necessary for shareholders to assess the Company's
performance, business model and strategy.
This report has been prepared by the Directors in accordance with the
requirements of s415 of the Companies Act 2006. The Company's
independent auditor is required by law to report on whether the
information given in the Directors' Report is consistent with the
Financial Statements.
Principal Activity
The Company commenced business in March 1997. The Company invests in
start-up and early stage technology companies in general located within
60 miles of Oxford. The Company has maintained its approved status as a
Venture Capital Trust by HMRC.
Directors
The Directors of the Company are required to notify their interests
under Disclosure and Transparency Rule 3.12R. The membership of the
Board and their beneficial interests in the ordinary shares of the
company at 28 February 2018 and at 28 February 2017 are set out below:
Name 2018
2017
A Starling 6,749
6,749
R Goodfellow 90,932 90,932
D Livesley Nil
Nil
R Roth 10,000
10,000
Under the Company's Articles of Association one third of the Directors
are required to retire by rotation each year. Alex Starling and Richard
Roth will be nominated for re-appointment at the forthcoming AGM. The
Board believes that both non-executive Directors continue to provide a
valuable contribution to the Company and remain committed to their
roles. The Board recommends that Shareholders support the resolutions
to re-elect Alex Starling and Richard Roth at the forthcoming AGM.
The Board is cognisant of shareholders' preference for Directors not to
sit on the boards of too many larger companies ("overboarding").
Shareholders will be aware that in July 2015, the Company, along with
the other VCTs that were managed by Oxford Technology Management,
appointed directors such that the four VCTs each had a Common Board. In
addition, Richard Roth has subsequently also become a Director of Hygea
vct plc, a VCT investing in the 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
OT1 Managers Ltd, the Company's wholly owned subsidiary, has an
agreement to provide investment management services to the Company for a
fee of 1% of net assets per annum. Alex Starling and Robin Goodfellow
together with Lucius Cary are Directors of OT1 Managers Ltd.
Directors' and Officers' Insurance
The Company has maintained insurance cover on behalf of the Directors,
indemnifying them against certain liabilities which may be incurred by
them in relation to their duties as Directors of the Company.
Ongoing Review
The Board has reviewed and continues to review all aspects of internal
governance to mitigate the risk of breaches of VCT rules or company law.
Whistleblowing
The Board has been informed that the Investment Manager has arrangements
in place in accordance with the UK Corporate Governance Code's
recommendations by which staff of Oxford Technology Management or the
Secretary of the Company may, in confidence, raise concerns within their
respective organisations about possible improprieties in matters of
financial reporting or other matters.
Bribery Act 2010
The Company is committed to carrying out business fairly, honestly and
openly. The Investment Manager has established policies and procedures
to prevent bribery within its organisation. The Company has adopted a
zero tolerance approach to bribery and will not tolerate bribery under
any circumstance in any transaction the Company is involved in. The
Company has instructed the Investment Manager to adopt the same approach
with investee companies.
Relations with Shareholders
The Company values the views of its shareholders and recognises their
interest in the Company. The Company's website provides information on
all of the Company's investments, as well as other information of
relevance to shareholders (www.oxfordtechnology.com/vct1).
Shareholders have the opportunity to meet the Board at the Annual
General Meeting. In addition to the formal business of the AGM the
Board is available to answer any questions a shareholder may have.
The Board is also happy to respond to any written queries made by
shareholders during the course of the year and can be contacted at the
Company's registered office: The Magdalen Centre, Oxford Science Park,
Oxford OX4 4GA.
Going Concern
After making enquiries, the Directors have a reasonable expectation that
the Company has adequate resources to continue in operational existence
for the foreseeable future. For this reason they have adopted the going
concern basis in preparing the Financial Statements.
Substantial Shareholders
At 28 February 2018, the Company has been notified of three investors
whose interest exceeds three percent of the Company's issued share
capital: Ms Shivani Palakpari Shree Parikh 5.2%; Mr Richard Vessey,
4.4%; and Vidacos Nominees Ltd, 4.2%
Auditors
James Cowper Kreston offer themselves for re-appointment in accordance
with Section 489 of the Companies Act 2006.
On behalf of the Board
Alex Starling
Chairman
2nd May 2018
Directors' Remuneration Report
Introduction
This report has been prepared by the Directors in accordance with the
requirements of the Companies Act 2006. The Company's independent
auditor, James Cowper Kreston, is required to give its opinion on
certain information included in this report. This report includes a
statement regarding the Directors' Remuneration Policy. This report sets
out the Company's Directors' Remuneration Policy and the Annual
Remuneration Report which describes how this policy has been applied
during the year.
The Directors' Remuneration Policy was last approved by shareholders at
the AGM on 26 August 2015. It needs to be put to a shareholder vote
every three years, and shareholders will be asked to approve it again at
the Annual General Meeting on 12 July 2018.
Shareholders also need to approve the Directors' Remuneration Report
every year. It was last approved at the AGM on 5 July 2017 on a
unanimous show of hands and 99% of proxies voted in favour, and a
Resolution to approve the Directors' Remuneration Report for the year
ended 28 February 2018 will also be proposed at the Annual General
Meeting on 12 July 2018.
Directors' Terms of Appointment
The Board consists entirely of non-executive Directors who meet at least
four times a year and on other occasions as necessary to deal with
important aspects of the Company's affairs. Directors are appointed with
the expectation that they will serve for at least three years and are
expected to devote the time necessary to perform their duties. All
Directors retire at the first general meeting after election and
thereafter every third year, with at least one Director standing for
election or re-election each year. Re-election will be recommended by
the Board but is dependent upon shareholder vote. Directors who have
been in office for more than nine years will stand for annual
re-election in line with the AIC Code. There are no service contracts in
place, but Directors have a letter of appointment.
Directors' Remuneration Policy
The Board acts as the Remuneration Committee and meets annually to
review Directors' pay to ensure it remains appropriate given the need to
attract and retain candidates of sufficient calibre and ensure they are
able to devote the time necessary to lead the Company in achieving its
strategy.
The Articles of Association of the company state that the aggregate of
the remuneration (by way of fee) of all the Directors shall not exceed
GBP50,000 per annum unless otherwise approved by Ordinary Resolution of
the Company. The following Directors' fees are payable by the Company:
per annum
Director Base Fee GBP3,500
Chairman's Supplement GBP2,000
Audit Committee Chairman GBP3,000
Audit Committee Member GBP1,500
The OT1 Director Fees are amongst the lowest of any VCT (apart from the
other OT VCTs). However the Board has spent and continues to spend more
time on Company activities than was initially envisaged in Summer 2015
(when the fees were last set) partly due to closer involvement with
investment, accounting and administration procedures and partly due to
compliance with additional government regulations. Typically VCT
industry total directors' fees are in excess of GBP50k and individual
fees in excess of GBP15k for equivalent levels of work.
However, given the relatively low funds under management, the Directors
have determined that it is not appropriate to seek an increase from the
previously agreed levels. It is therefore proposed that the fees remain
at the levels that have been paid since 2015.
Alex Starling chairs the Company. Richard Roth chairs the Audit
Committee, with Robin Goodfellow as a member of the Committee. As the
VCT is self-managed, the Audit Committee carries out a particularly
important role for the VCT and plays a significant part in the sign off
of quarterly management accounts, and the production of the half year
and annual statutory accounts.
Fees are currently paid annually. The fees are not specifically related
to the Directors' performance, either individually or collectively. No
expenses are paid to the Directors. There are no share option schemes
or pension schemes in place but Directors are entitled to a share of the
carried interest as detailed below.
Alex Starling and Robin Goodfellow receive no remuneration in respect of
their directorships of OT1 Managers Ltd, the Company's Investment
Manager.
The performance fee is detailed in note 3. Current Directors are
entitled to benefit from any payment made, subject to a formula driven
by relative lengths of service. The performance fee becomes payable if
a certain cash return threshold to shareholders is exceeded - the excess
is then subject to a 20% carry that is distributed to Oxford Technology
Management, past Directors and current Directors; the remaining 80% is
returned to shareholders. At 28 February 2018 no performance fee was
due.
Should any performance fee be payable at the end of the year to 28
February 2019, Alex Starling, Robin Goodfellow, and Richard Roth would
each receive 0.25% of any amount over the threshold and David Livesley
0.76%. No performance fee will be payable for the year ending 28
February 2019 unless original shareholders have received back at least
198.8p in cash for each 100p (gross) invested.
Relative Spend on Directors' Fees
The Company has no employees, so no consultation with employees or
comparison measurements with employee remuneration are appropriate.
Loss of Office
In the event of anyone ceasing to be a Director, for any reason, no loss
of office payments will be made. There are no contractual arrangements
entitling any Director to any such payment.
Annual Remuneration Report
Directors' Fees Year End 28/02/19 Year End 28/02/18 Year End 28/02/17
(unaudited) (audited) (audited)
Alex Starling GBP5,500 GBP5,500 GBP5,500
Richard Roth GBP6,500 GBP6,500 GBP6,500
Robin Goodfellow GBP5,000 GBP5,000 GBP5,000
David Livesley GBP3,500 GBP3,500 GBP3,500
Total GBP20,500 GBP20,500 GBP20,500
Income Statement
Year Ended Year Ended
28 February 2018 28 February 2017
Note Revenue Capital Total Revenue Capital Total
Ref. GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gain on disposal of fixed asset investments - - - - - -
Unrealised gain/(loss) on valuation of fixed asset
investments - 86 86 - (393) (393)
Investment income 2 7 - 7 110 - 110
Investment management fees 3 (7) (22) (29) (8) (25) (33)
Other expenses 4 (55) - (55) (51) - (51)
Return on ordinary activities before tax (55) 64 9 51 (418) (367)
Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax (55) 64 9 51 (418) (367)
Return on ordinary activities after tax attributable
to equity shareholders (55) 64 9 51 (418) (367)
Earnings per share - basic and diluted 6 (1.0)p 1.2p 0.2p 1.0p (7.7)p (6.7)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.
Statement of Changes in Equity
Share Capital Share Premium Unrealised Capital Reserve Profit & Loss Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 March 2016 543 176 1,346 1,262 3,327
Dividends paid - - - (71) (71)
Revenue return on ordinary activities after tax - - - 51 51
Expenses charged to capital - - - (25) (25)
Current period losses on fair value of investments - - (393) - (393)
Prior years' unrealised losses now realised 289 (289) -
Balance as at 28 February 2017 543 176 1,242 928 2,889
Dividends paid - - - (54) (54)
Revenue return on ordinary activities after tax - - - (55) (55)
Expenses charged to capital - - - (22) (22)
Current period gains on fair value of investments - - 86 - 86
Balance as at 28 February 2018 543 176 1,328 797 2,844
The accompanying notes are an integral part of the Financial Statements.
Balance Sheet
Year Ended Year Ended
28 February 2018 28 February 2017
Note Ref. GBP'000 GBP'000 GBP'000 GBP'000
Fixed Asset Investments
At Fair Value 7 2,763 2,678
Current Assets
Debtors 8 2 2
Cash At Bank 91 217
Creditors: Amounts
Falling Due Within 1
Year 9 (12) (8)
Net Current Assets 81 211
Net Assets 2,844 2,889
Called Up Equity Share
Capital 10 543 543
Share Premium 176 176
Unrealised Capital
Reserve 11 1,328 1,242
Profit and Loss Account
Reserve 11 797 928
Total Equity
Shareholders' Funds 11 2,844 2,889
Net Asset Value Per 52.4p 53.2p
Share
The accompanying notes are an integral part of the Financial Statements.
The statements were approved by the Directors and authorised for issue
on 2nd May 2018 and are signed on their behalf by:
Alex Starling
Chairman
Statement of Cash Flows
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Cash flows from operating activities
Return on ordinary activities before tax 9 (367)
Adjustments for:
(Gain)/loss on valuation of investments (86) 393
Increase/(decrease) in creditors 5 (1)
(Outflow)/inflow from operating
activities (72) 25
Cash flows from investing activities
Disposal of investments - 10
Dividends paid (54) (71)
Decrease in cash at bank (126) (36)
Opening cash and cash equivalents 217 253
Cash and cash equivalents at year end 91 217
The accompanying notes are an integral part of the Financial Statements.
Notes to the Financial Statements
The Financial Statements have been prepared under Financial Reporting
Standard 102 - 'The Financial Reporting Standard applicable in the
United Kingdom and Republic of Ireland' ('FRS 102'). The accounting
policies have not materially changed from last year.
1. Principal Accounting Policies
Basis of Preparation
The Financial Statements have been prepared under the historical cost
convention, except for the measurement at fair value of certain
financial instruments, and in accordance with UK Generally Accepted
Accounting Practice ("GAAP"), including FRS 102 and with the Companies
Act 2006 and the Statement of Recommended Practice (SORP) 'Financial
Statements of Investment Trust Companies and Venture Capital Trusts
(revised 2014)' issued by the AIC.
The principal accounting policies have remained materially unchanged
from those set out in the Company's 2017 Annual Report and Financial
Statements. A summary of the principal accounting policies is set out
below.
FRS 102 sections 11 and 12 have been adopted with regard to the
Company's financial instruments. The Company held all fixed asset
investments at fair value through profit or loss. Accordingly, all
interest income, fee income, expenses and gains and losses on
investments are attributable to assets held at fair value through profit
or loss.
The most important policies affecting the Company's financial position
are those related to investment valuation and require the application of
subjective and complex judgements, often as a result of the need to make
estimates about the effects of matters that are inherently uncertain and
may change in subsequent periods. These are discussed in more detail
below.
Going Concern
After reviewing the Company's forecasts and expectations, the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. The
Company therefore continues to adopt the going concern basis in
preparing its Financial Statements.
Key Judgements and Estimates
The preparation of the Financial Statements requires the Board to make
judgements and estimates regarding the application of policies and
affecting the reported amounts of assets, liabilities, income and
expenses. Estimates and assumptions mainly relate to the fair valuation
of the fixed asset investments particularly unquoted investments.
Estimates are based on historical experience and other assumptions that
are considered reasonable under the circumstances. The estimates and the
assumptions are under continuous review with particular attention paid
to the carrying value of the investments.
Investments are regularly reviewed to ensure that the fair values are
appropriately stated. Unquoted investments are valued in accordance with
current IPEVC Valuation Guidelines, which can be found on their website
atwww.privateequityvaluation.com, although this does rely on subjective
estimates such as appropriate sector earnings multiples, forecast
results of investee companies, asset values of investee companies and
liquidity or marketability of the investments held.
Although the Directors believe that the assumptions concerning the
business environment and estimate of future cash flows are appropriate,
changes in estimates and assumptions could result in changes in the
stated values. This could lead to additional changes in fair value in
the future.
Functional and Presentational Currency
The Financial Statements are presented in Sterling (GBP). The functional
currency is also Sterling (GBP).
Cash and Cash Equivalents
Cash and cash equivalents includes cash in hand, deposits held at call
with banks, other short-term highly liquid investments with original
maturities of three months or less and also include bank overdrafts.
Fixed Asset Investments
The Company's principal financial assets are its investments and the
policies in relation to those assets are set out below.
Purchases and sales of investments are recognised in the Financial
Statements at the date of the transaction (trade date).
These investments will be managed and their performance evaluated on a
fair value basis and information about them is provided internally on
that basis to the Board. Accordingly, as permitted by FRS 102, the
investments are measured as being fair value through profit or loss on
the basis that they qualify as a group of assets managed, and whose
performance is evaluated, on a fair value basis in accordance with a
documented investment strategy. The Company's investments are measured
at subsequent reporting dates at fair value.
In the case of investments quoted on a recognised stock exchange, fair
value is established by reference to the closing bid price on the
relevant date or the last traded price, depending upon convention of the
exchange on which the investment is quoted. In the case of AIM quoted
investments this is the closing bid price.
In the case of unquoted investments, fair value is established by using
measures of value such as the price of recent transactions, earnings
multiple, revenue multiple, discounted cash flows and net assets. These
are consistent with the IPEVC Valuation Guidelines.
Gains and losses arising from changes in fair value of investments are
recognised as part of the capital return within the Income Statement and
allocated to the unrealised capital reserve.
In the preparation of the valuations of assets the Directors are
required to make judgements and estimates that are reasonable and
incorporate their knowledge of the performance of the investee
companies.
Fair Value Hierarchy
Paragraph 34.22 of FRS 102 regarding financial instruments that are
measured in the balance sheet at fair value requires disclosure of fair
value measurements dependent on whether the stock is quoted and the
level of the accuracy in the ability to determine its fair value. The
fair value measurement hierarchy is as follows:
For Quoted Investments:
Level 1: quoted prices in active markets for an identical asset. The
fair value of financial instruments traded in active markets is based on
quoted market prices at the balance sheet date. A market is regarded as
active if quoted prices are readily and regularly available, and those
prices represent actual and regularly occurring market transactions on
an arm's length basis. The quoted market price used for financial assets
held is the bid price at the Balance Sheet date.
Level 2: where quoted prices are not available (or where a stock is
normally quoted on a recognised stock exchange that no quoted price is
available), the price of a recent transaction for an identical asset,
providing there has been no significant change in economic circumstances
or a significant lapse in time since the transaction took place. The
Company holds no such investments in the current or prior year.
For investments not quoted in an active market:
Level 3: the fair value of financial instruments that are not traded in
an active market is determined by using valuation techniques. These
valuation techniques maximise the use of observable data (e.g. the price
of recent transactions, earnings multiple, discounted cash flows and/or
net assets) where it is available and rely as little as possible on
entity specific estimates.
There have been no transfers between these classifications in the year
(2017: none). The change in fair value for the current and previous year
is recognised in the income statement.
Income
Investment income includes interest earned on bank balances and from
unquoted loan note securities, and dividends. Fixed returns on debt are
recognised on a time apportionment basis so as to reflect the effective
yield, provided it is probable that payment will be received in due
course. Dividend income from investments is recognised when the
shareholders' rights to receive payment have been established, normally
the ex dividend date.
Expenses
All expenses are accounted for on an accruals basis. Expenses are
charged wholly to revenue with the exception of the investment
management fee which has been charged 75% to capital and 25% to revenue.
Any applicable performance fee will be charged 100% to capital.
Revenue and Capital
The revenue column of the Income Statement includes all income and
revenue expenses of the Company. The capital column includes gains and
losses on disposal and holding gains and losses on investments. Gains
and losses arising from changes in fair value of investments are
recognised as part of the capital return within the Income Statement and
allocated to the appropriate capital reserve on the basis of whether
they are realised or unrealised at the balance sheet date.
Taxation
Current tax is recognised for the amount of income tax payable in
respect of the taxable profit for the current or past reporting periods
using the current tax rate. The tax effect of different items of
income/gain and expenditure/loss is allocated between capital and
revenue return on the "marginal" basis as recommended in the SORP.
Deferred tax is recognised on an undiscounted basis in respect of all
timing differences that have originated but not reversed at the balance
sheet date, except as otherwise indicated.
Deferred tax assets are only recognised to the extent that it is
probable that they will be recovered against the reversal of deferred
tax liabilities or other future taxable profits.
Financial Instruments
The Company's principal financial assets are its investments and the
policies in relation to those assets are set out above. Financial
liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into.
An equity instrument is any contract that evidences a residual interest
in the assets of the entity after deducting all of its financial
liabilities. Where the contractual terms of share capital do not have
any terms meeting the definition of a financial liability then this is
classed as an equity instrument.
The Company does not have any externally imposed capital requirements.
Reserves
Called up Equity Share Capital - represents the nominal value of shares
that have been issued.
Share Premium Account - includes any premiums received on issue of share
capital. Any transaction costs associated with the issuing of shares are
deducted from the Share Premium Account.
Unrealised Capital Reserve arises when the Company revalues the
investments still held during the period and any gains or losses arising
are credited/charged to the Unrealised Capital Reserve. When an
investment is sold, any balance held on the Unrealised Capital Reserve
is transferred to the Profit and Loss Reserve as a movement in reserves.
The Profit and Loss Reserve represents the aggregate of accumulated
realised profits, less losses and dividends.
Dividends Payable
Dividends payable are recognised as distributions in the Financial
Statements when the Company's liability to make payment has been
established. This liability is established for interim dividends when
they are declared by the Board, and for final dividends when they are
approved by the Shareholders.
2. Investment Income
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Dividends received 7 110
Total 7 110
3. Investment Management Fees
Expenses are charged wholly to revenue with the exception of the
investment management fee which has been charged 75% to capital in line
with industry practice.
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Investment management fee 29 33
Total 29 33
In the year to 28 February 2018 the manager received a fee of 1% of the
net asset value as at the previous year end (2017: 1%). Oxford
Technology Management is also entitled to certain monitoring fees from
investee companies and the Board reviews the amounts.
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 125p has been increased by
compounding that portion that remains to be paid to shareholders by 6%
per annum with effect from 1 March 2008, resulting in the remaining
required threshold rising to 135.7p at 28 February 2018, corresponding
to a total shareholder return of 190.7p after taking into account the
55p already paid out (55p + 135.7p = 190.7). After this amount has been
distributed to shareholders, each extra 100p distributed goes 80p to the
shareholders and 20p to the beneficiaries of the performance incentive
fee, of which Oxford Technology Management receives 14p.
No performance fee has become due or been paid to date. Any applicable
performance fee will be charged 100% to capital. Expenses are capped at
3%, including the management fee but excluding Directors' fees and any
performance fee.
4. Other Expenses
All expenses are accounted for on an accruals basis. All expenses are
charged through the income statement except as follows:
-- those expenses which are incidental to the acquisition of an
investment are included within the cost of the investment;
-- expenses which are incidental to the disposal of an investment
are deducted from the disposal proceeds of the investment.
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Directors' remuneration 21 21
Auditors' remuneration 6 6
Other expenses 28 24
Total 55 51
5. Tax on Ordinary Activities
Corporation tax payable at 19.1% (2017: 20.0%) is applied to profits
chargeable to corporation tax, if any. The corporation tax charge for
the period was GBPnil (2017: GBPnil).
Year Ended Year Ended
28 February 2018 28 February 2017
GBP'000 GBP'000
Return on ordinary activities before tax 9 (367)
Current tax at standard rate of taxation 2 (73)
UK dividends not taxable (1) (22)
Unrealised (gains)/losses not taxable (16) 79
Excess management expenses carried
forward 15 16
Total current tax charge - -
Unrelieved management expenses of GBP1,385,626 (2017: GBP1,302,574)
remain available for offset against future taxable profits.
6. Earnings per Share
The calculation of earnings per share (basic and diluted) for the period
is based on the net profit of GBP9,000 (2017: loss of GBP367,000)
attributable to shareholders divided by the weighted average number of
shares 5,431,655 (2017: 5,431,655) 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
2017 344 1,091 1,435
Cumulative
revaluation 620 623 1,243
Valuation at 28
February 2017 964 1,714 2,678
Movement in the
year:
Revaluation in
year - 86 86
Valuation at 28
February 2018 964 1,799 2,763
Book cost at 28
February 2018 344 1,091 1,435
Cumulative
revaluation to
28 February
2018 620 708 1,328
Valuation at 28
February 2018 964 1,799 2,763
Subsidiary Company
The Company also holds 100% of the issued share capital of OT1 Managers
Ltd at a cost of GBP1.
Results of the subsidiary undertaking for the year ended 28 February
2018 are as follows:
Country of Nature of Turnover Retained profit/loss Net Assets
Registration Business
OT1 England and Investment
Managers Wales Manager GBP28,893 GBP0 GBP1
Ltd
Consolidated group Financial Statements have not been prepared as the
subsidiary undertaking is not considered to be material for the purpose
of giving a true and fair view. The Financial Statements therefore
present only the results of Oxford Technology VCT plc, which the
Directors also consider is the most useful presentation for
Shareholders.
8. Debtors
28 February 2018 28 February 2017
GBP'000 GBP'000
Prepayments, accrued income & other
debtors 2 2
Total 2 2
9. Creditors
28 February 2018 28 February 2017
GBP'000 GBP'000
Other creditors and accruals 12 8
Total 12 8
10. Share Capital
28 February 2018 28 February 2017
GBP'000 GBP'000
Authorised:
10,000,000 ordinary shares of 10p each 1,000 1,000
500,000 redeemable preference shares of 10p each 50 50
Total Authorised 1,050 1,050
Allotted, called up and fully paid:
5,431,655 (2017: 5,431,655) ordinary shares of 10p
each 543 543
11. Reserves
When the Company revalues its investments during the period, any gains
or losses arising are credited/charged to the Income Statement. Changes
in fair value of investments are then transferred to the Unrealised
Capital Reserve. When an investment is sold any balance held on the
Unrealised Capital Reserve is transferred to the Profit and Loss Account
Reserve as a movement in reserves.
Distributable reserves are GBP797,000 as at 28 February 2018 (2017:
GBP928,000).
Reconciliation of Movement in Shareholders' Funds
28 February 2018 28 February 2017
GBP'000 GBP'000
Shareholders' funds at start of year 2,889 3,327
Return on ordinary activities after tax 9 (367)
Dividends paid (54) (71)
Shareholders' funds at end of year 2,844 2,889
The Company paid a final revenue dividend for 2017 of 1.0p per ordinary
share on 21 July 2017.
12. Financial Instruments and Risk Management
The Company's financial instruments comprise equity and loan note
investments, cash balances and debtors and creditors. The Company holds
financial assets in accordance with its investment policy of investing
mainly in a portfolio of VCT - qualifying quoted and unquoted securities
whilst holding a proportion of its assets in cash or near cash
investments in order to provide a reserve of liquidity. The risk faced
by these instruments, such as interest rate risk or liquidity risk is
considered to be minimal due to their nature. All of these are carried
in the accounts at fair value.
The Company's strategy for managing investment risk is determined with
regard to the Company's investment objective. The management of market
risk is part of the investment management process and is a central
feature of venture capital investment. The Company's portfolio is
managed with regard to the possible effects of adverse price movements
and with the objective of maximising overall returns to shareholders.
Investments in unquoted companies, by their nature, usually involve a
higher degree of risk than investments in companies quoted on a
recognised stock exchange, though the risk can be mitigated to a certain
extent by diversifying the portfolio across business sectors and asset
classes, 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. The overall disposition of the
Company's assets is regularly monitored by the Board.
13. Capital Commitments
The Company had no commitments at 28 February 2018 or 28 February 2017.
14. Related Party Transactions
OT1 Managers Ltd, a wholly owned subsidiary, provides investment
management services to the Company with effect from 1 July 2015 for a
fee of 1% of net assets per annum. During the year, GBP28,893 was paid
in respect of these fees (2017: GBP33,262). No amounts were outstanding
at the year end.
15. Events after the Balance Sheet Date
There are no reportable events after the Balance Sheet date.
Company Number: 3276063
Note to the announcement:
The financial information set out in this announcement does not
constitute statutory accounts as defined in the Companies Act 2006 ("the
Act"). The balance sheet as at 28 February 2018, income statement and
cash flow statement for the period then ended have been extracted from
the Company's 2018 statutory financial statements upon which the
auditor's opinion is unqualified and does not include any statement
under the section 495 of the Act.
The Annual Report and Accounts for the year ended 28 February 2018 will
be filed with the Registrar of Companies.
Copies of the documents will be submitted to the National Storage
Mechanism and are available for inspection at:
http://www.mornningstar.co.uk/uk/NSM
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Oxford Technology VCT plc via Globenewswire
http://www.oxfordtechnology.com/
(END) Dow Jones Newswires
May 03, 2018 02:00 ET (06:00 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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