Oxford Technology 2 VCT plc : Annual Financial ...

Oxford Technology 2 VCT plc : Annual Financial Report

2nd May 2018

Oxford Technology 2 VCT plc ("the Company" or "OT2") 
Annual Report and Accounts for the year ended 28 February 2018

The Directors are pleased to announce the audited results of the Company for the year ended 28 February 2018.  A copy of the Annual Report and Accounts (together the "Accounts") will be made available to Shareholders shortly.  Set out below are extracts from the audited Accounts. References to page numbers below are to those Accounts.

The AGM will be held at The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA on Thursday 12 July 2018, at 11am.

A copy of the Accounts will be available from the registered office of the Company at The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA, as well as on the Company's website: www.oxfordtechnology.com/vct2

Financial Headlines

  Year Ended
 28 February 2018
 Year Ended
 28 February 2017
 

Net Assets at Year End
 

£1.69m
 

£2.53m
Net Asset Value per Share

 

Dividend per Share paid in Year
31.7p

 

8.0p
37.2p

 

-
Cumulative Dividend per Share 21.0p13.0p
   
NAV + Cumulative Dividend per Share paid from Incorporation52.7p50.2p
   
Share Price at Year End27.5p20.0p
   
Earnings Per Share
(Basic & Diluted)
 

1.0p
 

9.0p

Chairman's Statement

I am pleased to present to fellow shareholders my Annual Report for the year to 28 February 2018, which has been a comparatively busy time for your Company.

Overview and Results

The most significant impact on the Company was the disposal of our largest investment, OC Robotics (OCR), and the return of nearly £900k to shareholders, more of which is detailed below.

The net asset value per share on 28 February 2018 was 31.7p compared to 37.2p on 28 February 2017, following a dividend payment of 8p per share. The earnings per share in the year to 28 February 2018 were 1.0p, with the balance of the increase in net asset per share as a result of the Tender Offer. This is the fourth consecutive year of increased valuation per share. At 28 February 2018 the Total Return was 52.7p per share.  

With the sale of OCR, our assets are less concentrated.  The Company's eight remaining portfolio company holdings are at different stages of development.  The Directors continue to monitor all companies, looking for the optimum time to realise your Company's investment in them. We were able to provide follow-on funding to two of these during the year: Arecor (£200k) and ImmBio (£30k).

Sale of OC Robotics and resultant Return of Funds to shareholders

As previously reported, OCR (which represented 60% of our net assets at the start of the year) was sold to GE Aircraft Engine Services Ltd on 8 June 2017.  OT2 received a payment of £1,457k with a further £327k being held in escrow for 24 months against normal business warranties.  In line with OT2's normal practice, 50% of the amount in escrow has been recognised in the NAV.  OT2 originally invested £125k in 2001 when the company was a start-up, and then made additional investments over the years taking the total investment to £311k.  So far, the investment has therefore returned a five-fold uplift vs cost.

With significant cash proceeds available, the Board offered shareholders the opportunity to sell 30% of their holding back to the Company via a Tender Offer, allowing allotments over this level should other shareholders not take up their Basic Entitlement.

In September we concluded the Tender Offer. The Company purchased all the shares tendered by shareholders, which represented over 20% of our share capital, returning £460k to them. As a result, the Company cancelled 1,461,034 Ordinary Shares, reducing its total issued share capital from 6,792,923 to 5,331,889 Ordinary Shares. The 15% level of discount was set to ensure a fair balance between those shareholders who chose to participate in the Tender Offer, and those wishing to retain their shareholding in the Company. This resulted in a 1.4p per share increase in net asset value, which is in part to compensate remaining shareholders who are liable to incur a greater proportion of running costs per share going forward given the fixed nature of these expenses.

On 5 December 2017 we paid a further dividend of 8p per share to all those shareholders remaining on the register - a total of £427k. This was slightly higher than the amount envisaged in the Circular as not all the funds earmarked for the Tender Offer were required for that purpose.

Portfolio Review

The Directors continue to take an active interest in the remaining companies within the portfolio, both to support their management teams to achieve company development, but also to prepare companies for realisation at the appropriate time.  It should however be noted that approaches do occur at other times, and the ability of the Directors and Investment Advisor to be able to provide support when such approaches occur is essential for maximising value. This was demonstrated in the recent realisation of OCR.

Select Technology, a photocopier (or more generally Multi Function Device, or MFD) software company, is the largest holding in your Company's portfolio, although it only represents just over 20% of our net assets.  Despite seeing core sales grow, it has experienced reduced profitability and cash generation this year after simplifying its business model. As reported last year, this should reduce the dependency on one particular supplier, increase business resilience and, ultimately, enable more rapid growth by enabling Select Technology to take on a more balanced portfolio of software products for worldwide distribution.  It is too early to be able to report fully on the outcome of this change in the business model, but early indications are not negative.  As reported in the half year statement, having taken these developments into account, we have reverted to a valuation methodology based on a sales multiple to more appropriately reflect the prospects of the business.  Our stake in this business has increased slightly in value over the course of the reporting period.

At the end of November 2017, we made a £200k follow-on investment into Arecor, making it the second largest holding in the Company's portfolio.  Arecor is a potentially world class pharmaceutical research company based in Cambridge and has a very advanced diabetes drug formulation technology. During the past year Arecor has announced significant progress, including a licence agreement with a major global healthcare company, as well as the successful pre-clinical development of stable rapid-acting, ultra-concentrated insulin for the significantly enhanced treatment of type 1 diabetes.  It has had other good news flow and won an Innovate grant. The company is still trying to finalise the investment terms for the full £6m round it is seeking, and there is a risk that the terms may be at a lower price than that at which we invested in November; we have therefore taken a prudent view with our valuation and hence there is a small reduction in the value of our investment in the year.

The recent investment of £30k in ImmBio was in a new class of share with a significant preference. This has resulted in an uplift in its valuation of £83k. The investment was made to support continued commercialisation of its PnuBioVax Vaccine.  The final results to come from their First-in-Human study were positive and was found to be safe and well tolerated, and capable of producing antibody responses against key S. pneumoniae antigens broadly conserved across strains.  Negotiations are progressing with first licensees for the vaccine, and a further £12,000 was committed in  April 2018 to allow time for these conversations to progress.  

Oxis Energy is also raising funds at an increased valuation, and again taking into account the preferences linked to our previous investment, we have been able to increase its value.
 
Plasma Antennas has had interest from many of the major players in telecoms for their Plasma Antenna, but after long discussions no offers to invest have come forward, nor any immediate further sales opportunities. In these accounts, we have taken a provision against our equity holding, totalling £92k. The company is now in the process of being mothballed, putting at risk the remaining £38k valuation as at 28 February 2018.

Further details on these investments are contained within the Investment Portfolio Review. The full list of the Company's investments is shown on page 18, with details of all investees on our website.

After the year end, the Company invested £150,000 into Scancell Holdings Plc (Scancell). Scancell is a company well known to the Directors and Investment Adviser (and also to shareholders who have attended our recent AGMs). It is developing a number of exciting new potential breakthrough cancer treatments and has had some very positive news flow during the last 12 months. The company is quoted on AIM, and in April, closed a £7.5m placing, and OT2 now owns 1,250,000 shares. The qualifying investment will also help OT2 manage any future liquidity needs (see VCT Market Changes below).

Dividends/Return of Capital

The Directors are not recommending any further dividends at this time. The timing and quantum of the 8p per share dividend payment in December was to ensure the maximum possible investment could be made into Arecor, whilst ensuring all VCT tests were met. It was also important to balance the desire to return as much cash to shareholders as possible with the need to retain adequate cash to be able to continue to support our remaining investees, and also to cover operating costs for the foreseeable future.

The ongoing strategy is to continue to seek to crystallise value from the portfolio and distribute cash to shareholders.


VCT Market Changes

In terms of the broader VCT market, the main event of the year was the Patient Capital Review (PCR) undertaken by HM Treasury (HMT).  Your Board engaged with the PCR on behalf of your VCT, seeking to ensure the continued viability of your Company. 

As mentioned in our third quarter update, your Board broadly welcomed the results of the PCR as announced in the Autumn Budget in November 2017.  In summary, HMT wishes to encourage investments into earlier stage businesses; and, if necessary, for these investments to be allowed to flourish over longer periods of time.  We believe that, appropriately resourced and supported, the VCT structure is well-suited to this patient approach to long term value creation. We also welcome the extension of the six month VCT rule to twelve months as it provides a greater level of future re-investment flexibility.

One of the Autumn Budget's announcements was an increase in the level of VCT qualifying investments to 80% (up from 70%) that a VCT needs to hold; this legislation received Royal Assent on 15 March 2018.  For OT2, this change is effective from 1 March 2020, and may make it more challenging for small VCTs, such as your Company, to manage ongoing compliance with the qualifying tests, which is an unintended consequence of the new legislation.  Cash holdings are non-qualifying, but VCTs are obliged to demonstrate that they have adequate working capital over the medium term, which would not be possible if cash reserves must be distributed in order to fulfil the new legislation - corporate liquidity tests could thus become very tight.

Furthermore, in the case of OT2, all our investments have been in unquoted companies with limited short term methods of realisation at a fair value. We fully understand the rationale for introducing this change and believe that a simple amendment is possible that would mitigate this unintended consequence while ensuring that the legislative change retains HMT's desired effect.  

We will continue to lobby for an appropriate amendment to be made.  However, to mitigate the challenges that such an issue might cause, the Board have chosen to make the qualifying investment in Scancell as detailed above, so as to provide additional liquidity should it be required.

A further change has seen the introduction of MiFID II & PRIIPS. The most significant impact on VCTs has been the requirement to prepare a Key Information Document (KID).  Shareholders who are interested can find it on the Company's website.

Planning for the Future


Your Board continues to look at methods of improving operational efficiency, reducing costs and, more generally, putting in place appropriate plans to ensure that your VCT's operational costs relative to its overall size remain within acceptable limits. Shareholders may be aware of some significant changes to the VCT market in recent years.  Changes to pension tax reliefs are driving investors to look for alternatives and, coupled with a reduced supply of tax efficient investment opportunities, have resulted in exceptional demand from investors wishing to subscribe for VCTs.  VCT legislation has been modified to target more VCT money towards the types of earlier stage companies that OT2 has historically invested in.  Given the types of investments OT2 makes, and the fact that all are existing investees that have previously received financing from VCTs, your Company has not been affected by most of the recent changes in VCT legislation.  However, the new environment may present an opportunity for your VCT.

In July, the Board announced that it was aware that due to recent realisations, the VCT is becoming sub economic with unavoidable overheads on a small asset base. The VCT has limited ability to increase the asset base on its own, and a number of options to deal with this are under consideration. I can confirm that discussions continue regarding these options and am hopeful that we can make a further announcement in the not too distant future. Once a proposal that the Board considers to be in the best interests of existing shareholders is sufficiently advanced, shareholders will be invited to approve any new arrangements. However, there can be no certainty that any of these discussions will lead to a concrete proposal, either at this time or in the future.
  
AGM

Shareholders should note that the AGM for the Company will be held on Thursday 12 July 2018 at the Magdalen Centre, Oxford Science Park, starting at 11am and will include presentations by Oxford Technology Management and some of the companies that the Oxford Technology VCTs have invested in.

A formal Notice of the AGM has been enclosed with these Financial Statements together with a Form of Proxy for those not attending. We appreciate the input of our shareholders and look forward to welcoming as many of you as possible on the day - thank you for your ongoing support.

Outlook

The Oxford Technology VCTs have operated and continue to operate very much in the spirit of the VCT legislation by investing in and subsequently supporting early stage technology companies. Unfortunately, the current VCT rules sometimes limit the amount of follow on investment that we are able to make.

Looking ahead, though, the Board continues to believe your VCT is an appropriate structure to hold your Company's assets.  The Directors' view remains that the portfolio still holds significant potential over the medium term but is not without risk.  As per our stated strategy, your Board continues to work to maximise value, reduce costs, and - when valuations and liquidity allow - crystallise this value and distribute the proceeds to shareholders.

Should any of the discussions to increase the asset base referred to above lead to a concrete proposal, we look forward to presenting these to shareholders in due course.



Richard Roth
Chairman
2nd May 2018

Investment Portfolio Review

OT2 was formed in 2000 and invested in a total of 30 companies, all start-up or early stage technology companies.  Some of these companies failed with the loss of the investment.  Some have succeeded and have been sold.  The table on page 18 shows the companies remaining in the portfolio. The investment in Scancell made after the year end added a further company to the portfolio. A more detailed analysis is given of the top five investments.

OC Robotics, previously the Company's largest investment, was sold to GE Aircraft Engine Services in June 2017 for an immediate payment of £1,356k with £101k following 4 months later. There is still £328k being held in escrow from the deal, half of which has been accrued in the NAV at 28 February 2018. Overall,  this represented a 5 fold uplift on the cost of the investment.   A dividend of 8p per share was paid following this sale, as well as a Tender Offer returning a further £460k to shareholders.

Select Technology specialises in software for photocopiers - now known as MFDs - Multi-Function Devices.  Over the last decade Select has built up a global network of distributors and dealers through which it sells both its own and third party products.  These products now include PaperCut, Kpax, Foldr and Drivve Image. Sales have increased from £210k in the year to July 2010 to over £5m in the year to January 2018, though Select lost one contract in 2017 that resulted in substantially reduced profits in the year to July 2017. However, the core business has continued to grow and it is hoped that Select should be able to pay a dividend in OT2's current financial year.   It has employees all over the world; everyone works remotely.

Arecor is making encouraging progress.  The company has progressed its insulin programme and has both the fastest acting and most concentrated formulations in the world. In preparation for the start of clinical trials it is raising money and there has been good interest, recognizing both the technical advantage and the very competitive nature of the insulin market. During the year, OT2 invested £200,000 in Arecor. The term sheet for the next fundraising is currently being negotiated.

£30,000 was invested in July 2017 into ImmBio to help support the commercialisation of the Pneumonia vaccine which had a successful phase 1 clinical trial in spring 2016.  A deal was arranged with the Liverpool School of Tropical Medicine to apply for joint grants to support additional clinical trials.  The collaboration has not yet resulted in any successful grant applications. ImmBio has a new CEO, Enrique Tabares having taken over the role.  He is leading the discussions with potential licensees, which have been progressing since mid-2017. Negotiations are progressing with first licensees for the vaccine, and a further £12,000 was committed in  April 2018 to allow time for these conversations to progress.  

Oxis Energy is developing a Lithium Sulphur rechargeable battery with a significantly higher specific energy (energy storage per unit weight) than the currently available Lithium Ion batteries. OT2 was the first investor in Oxis Energy (then known as Intellikraft) in January 2000. This battery is now planned to be tested in electric vehicles, with electric buses being the main focus, as every kilogramme of weight saved in the battery translates to increased payload/ number of passengers that can ride the bus. The other area of focus is aerospace, where weight reduction is also clearly of interest.

Orthogem has had CE approval for its Tripore putty product and it has had a very good response from surgeons. There has also been a good response to the product from distributors: four have already signed up and there is a long list still being processed. Unfortunately, during the year the FDA turned down Orthogem's application to sell the Tripore putty in the USA.  Despite originally approving the model used for the trials, on review the FDA determined that the model being used was not appropriate.  This means that Orthogem will have to run new FDA trials. This delays access to the largest market, but the company has made good progress.

Plasma Antennas has developed a range of next generation smart selectable antenna technologies and has a prototype of a true plasma antenna, which it was hoped might be at the centre of tomorrow's communications systems.   However, although some of the largest global companies were very interested, with companies in the US, China and Japan all making special visits to meet Plasma in Winchester, no partnership deal was done. Therefore, at the time of writing, Plasma is in the process of being mothballed.

After the year end, OT2 invested £150,000 into Scancell Holdings Plc (Scancell) an AIM-listed stock well known to the Directors and Investment Adviser. Scancell is developing novel immunotherapies for cancer based on two platform technologies known as Immunobody and Moditope.  Results from Scancell's first clinical trial for the treatment of melanoma continue to be excellent with recurrence free survival at 69% at 5 years, surpassing results in other trials of ipilimumab (leading immunotherapy for cancer) which showed 46.5% at 3 years.

Possibly the biggest news of the year for Scancell was the decision by Cancer Research UK (CRUK) to conduct a trial of SCIB2 in combination with checkpoint inhibitors. SCIB2 should provide the impetus to the immune system to attack the tumor, and the checkpoint inhibitor will remove the barriers to its action. The study will focus on Non Small Lung Cell Cancer, but the results will have relevance for a range of tumors. The trial will be conducted in full by CRUK and Scancell will be able to purchase the results and commercialise them itself, or leave them with CRUK and share in their commercial success.  Scancell has also started a development project with BioNtech, the largest privately owned Biotech company in Europe. Scancell's focus is now on generating clinical data and two more trials should read out over the next two years. If Scancell is successful in its CRUK Grand Challenge application it will also be able to start a third trial on Moditope.  Scancell has now been granted the European patent for use of citrullinated proteins in cancer treatment.  Scancell will use the proceeds of the placing and open offer to support clinical trials for SCIB1, SCIB2 and Modi-1 and pre-clinical work for Modi-2.

New Investments in the year

There were two follow-on investments during the year of £200,000 into Arecor and £30,000 into ImmBio. All new investments have complied with both EU State Aid rules and HMRC VCT rules.  

Disposals during the year

OC Robotics was sold during the year and OT2 received £1,457k from its original investment of £311k.

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
ActualTarget
VCT Qualifying Investments 72% Minimum obligation of:
70%
Non-Qualifying Investments 28% Maximum allowed:
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 £5m of State Aid investment in the year, nor more than the lifetime limit of £12m - Complied.

Table of Investments held by Company at 28 February 2018
   
       

CompanyDescriptionDate of initial investmentNet cost of
investment £'000
Carrying value at 28/02/18
£'000
Change in value for the year £'000% equity held by
OT2
% equity held by all OTVCTs% Net Assets
Select Technology Photocopier Interfaces Nov 2001 132 356 14 7.4 58.6 21.1
Arecor Protein stabilization Jul 2007 289 268 148 2.6 12.1 15.8
ImmBio Novel vaccines Dec 2000 255 176 113 2.0 15.9 10.4
Oxis Energy Rechargeable batteries Jan 2000 540 140 113 0.2 0.5 8.3
Orthogem Bone graft material  

Dec 2000
 

342
100 - 5.4 20.2 5.9
Insense Active wound healing dressings Jun 2001 204 52 - 2.0 6.8 3.1
Plasma Antennas Solid state directional antennas  

Nov 2001
 

188
38 (91) 5.6 48.8 2.2
Inaplex Data integration Sep  2001 138 19 (18) 21.5 34.8 1.1
Totals  2,0891,149 279    
         
Other Net Assets    542     

32.1
NET ASSETS   1,691   100

Number of shares in issue:  5,331,889
Net Asset Value per share at 28 February 2018: 31.7p
Dividends paid to date per share: 21p per share

This table shows the current portfolio holdings.  The investments in Acumen, Assertion, Astron Clinica, Ciphergrid, CHR Design, Coraltech, Im-Pak, Freehand Surgical, Inscentinel, Jetmask, M3 Networks, OST, Promic and SVA have been written off.   The investments in Hardide, Commerce Decisions, MET, Telegesis, Equitalk, Duncan Hynd Associates and OC Robotics have been sold.

Lucius Cary - Director
OT2 Managers Ltd
Investment Manager
2nd May 2018

Directors' Report

The Directors present their report together with Financial Statements for the year ended 28 February 2018.

The Directors consider that the Annual Report and Financial Statements, taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

This report has been prepared by the Directors in accordance with the requirements of s415 of the Companies Act 2006.  The Company's independent auditor is required by law to report on whether the information given in the Directors' Report is consistent with the Financial Statements.  

Principal Activity

The Company commenced business in 2000.  The Company invests in start-up and early stage technology companies in general located within 60 miles of Oxford.  The Company has maintained its approved status as a Venture Capital Trust by HMRC.

Directors

The Directors of the Company are required to notify their interests under Disclosure and Transparency Rule 3.12R.  The membership of the Board and their beneficial interests in the ordinary shares of the company at 28 February 2018 and at 28 February 2017 are set out below:

Name                     2018        2017
R Roth                   44,033     62,902
R Goodfellow       14,000      19,700
D Livesley             Nil           Nil
A Starling              Nil           Nil

Under the Company's Articles of Association one third of the Directors are required to retire by rotation each year.  Robin Goodfellow and David Livesley will be nominated for re-appointment at the forthcoming AGM.  The Board believes that both non-executive Directors continue to provide a valuable contribution to the Company and remain committed to their roles.  The Board recommends that Shareholders support the resolutions to re-elect Robin Goodfellow and David Livesley at the forthcoming AGM. 

The Board is cognisant of shareholders' preference for Directors not to sit on the boards of too many larger companies ("overboarding").  Shareholders will be aware that in July 2015, the Company, along with the other VCTs that were managed by Oxford Technology Management, appointed directors such that the four VCTs each had a Common Board.  In addition, Richard Roth has subsequently also become a Director of Hygea vct plc, a VCT investing in the Med Tech sector which is also self-managed and has a number of investments in common with the Oxford Technology VCTs.  Whilst great care is taken to safeguard the interests of the shareholders of each separate company, there is an element of overlap in the workload of each Director across the four OT funds due to the way the VCTs are managed.  The Directors note that the workload related to the four OT funds is less than it would be for four totally separate and larger funds, and are satisfied that Richard Roth has the time to focus on the requirements of each OT fund.

Investment Management Fees

OT2 Managers Ltd, the Company's wholly owned subsidiary, has an agreement to provide investment management services to the Company for a fee of 1% of net assets per annum.  Alex Starling and Richard Roth, together with Lucius Cary are Directors of OT2 Managers Ltd.

Directors' and Officers' Insurance

The Company has maintained insurance cover on behalf of the Directors, indemnifying them against certain liabilities which may be incurred by them in relation to their duties as Directors of the Company.

Ongoing Review

The Board has reviewed and continues to review all aspects of internal governance to mitigate the risk of breaches of VCT rules or company law.   

Whistleblowing

The Board has been informed that the Investment Manager has arrangements in place in accordance with the UK Corporate Governance Code's recommendations by which staff of Oxford Technology Management or the Secretary of the Company may, in confidence, raise concerns within their respective organisations about possible improprieties in matters of financial reporting or other matters.  

Bribery Act 2010

The Company is committed to carrying out business fairly, honestly and openly.  The Investment Manager has established policies and procedures to prevent bribery within its organisation.  The Company has adopted a zero tolerance approach to bribery and will not tolerate bribery under any circumstance in any transaction the Company is involved in. The Company has instructed the Investment Manager to adopt the same approach with investee companies.

Relations with Shareholders

The Company values the views of its shareholders and recognises their interest in the Company.   The Company's website provides information on all of the Company's investments, as well as other information of relevance to shareholders (www.oxfordtechnology.com/vct2).

Shareholders have the opportunity to meet the Board at the Annual General Meeting.  In addition to the formal business of the AGM the Board is available to answer any questions a shareholder may have.

The Board is also happy to respond to any written queries made by shareholders during the course of the year and can be contacted at the Company's registered office:  The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA.

Going Concern

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing the Financial Statements.

Substantial Shareholders

At 28 February 2018, the Company has been notified of five investors whose interest exceeds three percent of the Company's issued share capital: Ms Shivani Palakpari Shree Parikh, 6.4%; Barclays Direct Investing Nominees Ltd, 4.8%; Mr Richard Vessey, 4.4%; Mrs Mary Louisa Perry, 3.8% and Mr Merrick Sidney Whitehouse Feast, 3.2% .

Auditors

James Cowper Kreston offer themselves for re-appointment in accordance with Section 489 of the Companies Act 2006.

On behalf of the Board
Richard Roth
Chairman
2nd  May 2018

Directors' Remuneration Report

Introduction

This report has been prepared by the Directors in accordance with the requirements of the Companies Act 2006. The Company's independent auditor, James Cowper Kreston, is required to give its opinion on certain information included in this report. This report includes a statement regarding the Directors' Remuneration Policy. This report sets out the Company's Directors' Remuneration Policy and the Annual Remuneration Report which describes how this policy has been applied during the year.

The Directors' Remuneration Policy was last approved by shareholders at the AGM on 26 August 2015. It needs to be put to a shareholder vote every three years, and shareholders will be asked to approve it again at the Annual General Meeting on 12 July 2018.

Shareholders also need to approve the Directors' Remuneration Report every year. It was last approved at the AGM on 5 July 2017 on a unanimous show of hands and 100% of proxies voted in favour, and a Resolution to approve the Directors' Remuneration Report for the year ended 28 February 2018 will also be proposed at the Annual General Meeting on 12 July 2018.
  
Directors' Terms of Appointment

The Board consists entirely of non-executive Directors who meet at least four times a year and on other occasions as necessary to deal with important aspects of the Company's affairs. Directors are appointed with the expectation that they will serve for at least three years and are expected to devote the time necessary to perform their duties.  All Directors retire at the first general meeting after election and thereafter every third year, with at least one Director standing for election or re-election each year.  Re-election will be recommended by the Board but is dependent upon shareholder vote. Directors who have been in office for more than nine years will stand for annual re-election in line with the AIC Code. There are no service contracts in place, but Directors have a letter of appointment.

Directors' Remuneration Policy

The Board acts as the Remuneration Committee and meets annually to review Directors' pay to ensure it remains appropriate given the need to attract and retain candidates of sufficient calibre and ensure they are able to devote the time necessary to lead the Company in achieving its strategy.

The Articles of Association of the company state that the aggregate of the remuneration (by way of fee) of all the Directors shall not exceed £50,000 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                               £3,500
Chairman's Supplement                      £2,000
Audit Committee Chairman               £3,000
Audit Committee Member                 £1,500

The OT2 Director Fees are amongst the lowest of any VCT (apart from the other OT VCTs). However the Board has spent and continues to spend more time on Company activities than was initially envisaged in Summer 2015 (when the fees were last set) partly due to closer involvement with investment, accounting and administration procedures and partly due to compliance with additional government regulations. Typically VCT industry total directors' fees are in excess of £50k and individual fees in excess of £15k for equivalent levels of work.

In the summer of 2015 the finances of OT2 had been in poor shape for some years. To alleviate financial problems the fund manager had (over the previous 4 years) helped out by deferring some management fee. However this had built up a liability of £53k payable out of potential future profits. The then Chairman had also previously waived his fee (£7,500) for 4 years. The new Board determined to put the finances on a more sustainable basis and renegotiated the management fee from 2% down to 1% and agreed to pay off the deferred fee liability over 3 years. This has now been completed. Additionally all 4 new Directors voluntarily agreed to waive £1,500 (43%) of their base director fee of £3,500 until the fund performance improved.

Since the new Board assumed office in 2015, nearly 55% of the opening NAV of £1.95m has been returned to shareholders in tax free dividends and via the tender offer, and the remaining assets are still valued at £1.69m. In addition to its ongoing responsibilities, the Board managed and drafted a significant amount of the Tender process and associated documentation without further remuneration thereby saving shareholders additional costs. In the view of the Board, this substantial increase of shareholder assets and distributions from 39.1p per share to 59.5p per share (distributions plus remaining assets) represents a significant performance improvement, and therefore the Board has now determined to end its voluntary partial fee waiver. However, given the relatively low funds under management, the Directors do not propose any other change from the previously agreed levels.

Richard Roth chairs the Company. He also chairs the Audit Committee, with Robin Goodfellow as a member of the Committee. As the VCT is self-managed, the Audit Committee carries out a particularly important role for the VCT and plays a significant part in the sign off of quarterly management accounts, and the production of the half year and annual statutory accounts.

Fees are currently paid annually. The fees are not specifically related to the Directors' performance, either individually or collectively.  No expenses are paid to the Directors.  There are no share option schemes or pension schemes in place but Directors are entitled to a share of the carried interest as detailed below.

Alex Starling and Richard Roth receive no remuneration in respect of their directorships of OT2 Managers Ltd, the Company's Investment Manager.

The performance fee is detailed in note 3. Current Directors are entitled to benefit from any payment made, subject to a formula driven by relative lengths of service.  The performance fee becomes payable if a certain cash return threshold to shareholders is exceeded - the excess is then subject to a 20% carry that is distributed to Oxford Technology Management, past Directors and current Directors; the remaining 80% is returned to shareholders.  At 28 February 2018 no performance fee was due.

Should any performance fee be payable at the end of the year to 28 February 2019, Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.28% of any amount over the threshold and David Livesley 0.83%.  No performance fee will be payable for the year ending 28 February 2019 unless original shareholders have received back at least 151.7p in cash for each 100p (gross) invested.

Relative Spend on Directors' Fees

The Company has no employees, so no consultation with employees or comparison measurements with employee remuneration are appropriate.

Loss of Office

In the event of anyone ceasing to be a Director, for any reason, no loss of office payments will be made. There are no contractual arrangements entitling any Director to any such payment.

Annual Remuneration Report

Directors' FeesYear End 28/02/19
(unaudited)
Year End 28/02/18
(audited)
Year End 28/02/17
(audited)
Richard Roth £8,500 £7,000 £7,000
Alex Starling £3,500 £2,000 £2,000
Robin Goodfellow £5,000 £3,500 £3,500
David Livesley £3,500 £2,000 £2,000
Total£20,500£14,500£14,500

Income Statement

    Year Ended
28 February 2018
Year Ended
28 February 2017
  Note
Ref.
Revenue
£'000
Capital
£'000
Total
£'000
Revenue
£'000
Capital
£'000
Total
£'000
Gain on disposal of fixed asset investments    

-
 

86
 

86
 

-
 

-
 

-
Unrealised gain on valuation of fixed asset investments    

-
 

49
 

49
 

-
 

653
 

653
Investment income 2 - - - 27 - 27
Investment management fees 3 (6) (19) (25) (5) (14) (19)
Other expenses 4 (50) - (50) (45) - (45)
Return on ordinary activities before tax   

(56)
 

116
 

60
 

(23)
 

639
 

616
Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax   (56) 116 60 (23) 639 616
Return on ordinary activities after tax attributable to
equity shareholders
  

 

(56)
 

 

116
 

 

60
 

 

(23)
 

 

639
 

 

616
Earnings per share - basic and diluted6(0.9)p1.9p1.0p(0.4)p9.4p9.0p

There was no other Comprehensive Income recognised during the year.
The 'Total' column of the Income Statement is the Profit and Loss Account of the Company, the supplementary Revenue and Capital return columns have been prepared under guidance published by the Association of Investment Companies.
All Revenue and Capital items in the above statement derive from continuing operations.
The Company has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds.

The accompanying notes are an integral part of the Financial Statements.

Statement of Changes in Equity

 Share Capital
£'000
Capital Redemption Reserve
£'000
Share  Premium
£'000
Unrealised Capital Reserve
£'000
Profit & Loss Reserve
£'000
Total
£'000
       
 

As at 1 March 2016

 
679-376(418)1,2751,912
Revenue return on ordinary activities after tax - - -  

-
(23) (23)
Expenses charged to capital

 
- - - - (14) (14)
Current period gains on fair value of investments - - - 653 - 653
 

Balance as at 28 February 2017

 
679-3762351,2382,528
 

Revenue return on ordinary activities after tax
- - - - (56) (56)
Expenses charged to capital - - - - (19) (19)
 

Current period gains on disposal
- - - - 86 86
Current period gains on fair value of investments - - - 49 - 49
Purchase of own shares (146) 146 - - (470) (470)
Prior years gains now realised - - - (1,224) 1,224 -
Dividends paid - - - - (427) (427)
 

Balance as at 28 February 2018

 
533146376(940)1,5761,691

The accompanying notes are an integral part of the Financial Statements.

Balance Sheet

    Year Ended
28 February 2018
Year Ended
28 February 2017
  Note Ref. £'000£'000£'000£'000
Fixed asset investments at fair value 7   1,149   2,405
Current assets          
Debtors 8 166   2  
Cash at bank   386   146  
Creditors: amounts falling due within 1 year 9 (10)   (25)  
Net Current Assets     542   123
Net Assets     1,691 2,528
Called up equity share capital 10   533   679
Capital redemption reserve     146   -
Share premium     376   376
Unrealised capital reserve 11   (940)   235
Profit and loss account reserve 11   1,576   1,238
Total Equity Shareholders' Funds11 1,691 2,528
Net Asset Value Per Share  31.7p 37.2p
       

The accompanying notes are an integral part of the Financial Statements.
The statements were approved by the Directors and authorised for issue on 2nd May 2018 and are signed on their behalf by:
  
Richard Roth
Chairman

Statement of Cash Flows

  Year Ended
28 February 2018
£'000
Year Ended
28 February 2017
£'000
Cash flows from operating activities    
Return on ordinary activities before tax 60 616
Adjustments for:    
Gain on disposal of investments (86) -
Gain on valuation of investments (49) (653)
(Increase)/decrease in debtors (164) 19
Decrease in creditors (15) (19)
Movement in investment debtors and creditors 164 -
Outflow from operating activities(90)(37)
Cash flows from investing activities  
Purchase of investments (230) (150)
Disposal of investments 1,457 -
Dividends paid (427) -
Total cash flows from investing activities800(150)
Cash flows from financing activities (Tender Offer)(470)-
Increase/(decrease) in cash at bank240(187)
Opening cash and cash equivalents 146  333   
Cash and cash equivalents at year end386146

 The accompanying notes are an integral part of the Financial Statements.

Notes to the Financial Statements

The Financial Statements have been prepared under Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland' ('FRS 102').  The accounting policies have not materially changed from last year.

1. Principal Accounting Policies

Basis of Preparation
The Financial Statements have been prepared under the historical cost convention, except for the measurement at fair value of certain financial instruments, and in accordance with UK Generally Accepted Accounting Practice ("GAAP"), including FRS 102 and with the Companies Act 2006 and the Statement of Recommended Practice (SORP) 'Financial Statements of Investment Trust Companies and Venture Capital Trusts (revised 2014)' issued by the AIC.

The principal accounting policies have remained materially unchanged from those set out in the Company's 2017 Annual Report and Financial Statements. A summary of the principal accounting policies is set out below.

FRS 102 sections 11 and 12 have been adopted with regard to the Company's financial instruments. The Company held all fixed asset investments at fair value through profit or loss. Accordingly, all interest income, fee income, expenses and gains and losses on investments are attributable to assets held at fair value through profit or loss.

The most important policies affecting the Company's financial position are those related to investment valuation and require the application of subjective and complex judgements, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. These are discussed in more detail below.

Going Concern
After reviewing the Company's forecasts and expectations, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its Financial Statements.

Key Judgements and Estimates
The preparation of the Financial Statements requires the Board to make judgements and estimates regarding the application of policies and affecting the reported amounts of assets, liabilities, income and expenses. Estimates and assumptions mainly relate to the fair valuation of the fixed asset investments particularly unquoted investments. Estimates are based on historical experience and other assumptions that are considered reasonable under the circumstances. The estimates and the assumptions are under continuous review with particular attention paid to the carrying value of the investments.

Investments are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted investments are valued in accordance with current IPEVC Valuation Guidelines, which can be found on their website at www.privateequityvaluation.com, although this does rely on subjective estimates such as appropriate sector earnings multiples, forecast results of investee companies, asset values of investee companies and liquidity or marketability of the investments held.

Although the Directors believe that the assumptions concerning the business environment and estimate of future cash flows are appropriate, changes in estimates and assumptions could result in changes in the stated values. This could lead to additional changes in fair value in the future.

Functional and Presentational Currency
The Financial Statements are presented in Sterling (£). The functional currency is also Sterling (£).

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
28 February 2018
£'000
Year Ended
28 February 2017
£'000
Dividends received - 27
Total-27


3.  Investment Management Fees

Expenses are charged wholly to revenue with the exception of the investment management fee which has been charged 75% to the capital reserve in line with industry practice.

  Year Ended
28 February 2018
£'000
Year Ended
28 February 2017
£'000
Investment management fee 25 19
Total2519

In the year to 28 February 2018 the manager received a fee of 1% of the net asset value as at the previous year end (2017: 1%). Oxford Technology Management is also entitled to certain monitoring fees from investee companies and the Board reviews the amounts. OTM also received a further £18k in both years, the payment of which had been deferred from previous years. This was part of the revised agreement, with effect from 1 March 2015. No further liability is payable as at 28 February 2018.

A performance fee is payable to the Investment Manager once original shareholders have received a specified threshold in cash for each 100p (gross) invested.  The original threshold of 100p has now been increased by compounding that portion that remains to be paid to shareholders by 6% per annum with effect from 1 March 2010, resulting in the remaining required threshold rising to 116.9p at 28 February 2018, corresponding to a total shareholder return of 144.7p after taking into account the 27.8p already paid out (27.8p + 116.9 = 144.7p). The 27.8p already paid out includes an effective 6.8p (per original share) that was returned to shareholders as part of the Tender Offer. After this amount has been distributed to shareholders, each extra 100p distributed goes 80p to the shareholders and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management receives 14p.  

No performance fee has become due or been paid to date.  Any applicable performance fee will be charged 100% to capital.

Expenses are capped at 3%, including the management fee but excluding Directors' fees and any performance fee.   

4. Other Expenses

All expenses are accounted for on an accruals basis.  All expenses are charged through the income statement except as follows:

·         those expenses which are incidental to the acquisition of an investment are  
           included within the cost of the investment;
·         expenses which are incidental to the disposal of an investment are deducted from
           the disposal proceeds of the investment.

  Year Ended
28 February 2018
£'000
Year Ended
28 February 2017
£'000
Directors' remuneration 15 15
Auditors' remuneration 6 6
Other expenses 29 24
Total5045

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 £nil (2017: £nil)

  Year Ended
28 February 2018
£'000
Year Ended
28 February 2017
£'000
Return on ordinary activities before tax 60 616
Current tax at standard rate of taxation 11 123
UK dividends not taxable - (5)
Unrealised gains not taxable (9) (131)
Realised gains not taxable (16) -
Excess management expenses carried forward 14 13
Total current tax charge--

Unrelieved management expenses of £1,539,772 (2017: £1,465,200) remain available for offset against future taxable profits.

6. Earnings per Share

The calculation of earnings per share (basic and diluted) for the period is based on the net profit of £60,000 (2017: £616,000) attributable to shareholders divided by the daily weighted average number of shares 6,080,419 (2017: 6,792,923) in issue during the period.

There are no potentially dilutive capital instruments in issue and, therefore, no diluted returns per share figures are relevant.  The basic and diluted earnings per share are therefore identical.
  

7. Investments

  Unquoted investments Level 3
£'000
Total investments
£'000
Valuation and net book amount:    
Book cost as at 28 February 2017 2,170 2,170
Cumulative revaluation 235 235
Valuation at 28 February 20172,4052,405
Movement in the year:    
Purchases at cost 230 230
Disposals - costs (311) (311)
Disposals - revaluation (1,224) (1,224)
Revaluation in year 49 49
Valuation at 28 February 20181,1491,149
Book cost at 28 February 2018 2,089 2,089
Cumulative revaluation to 28 February 2018 (940) (940)
Valuation at 28 February 20181,1491,149

  

Subsidiary Company
The Company also holds 100% of the issued share capital of OT2 Managers Ltd at a cost of £1.

Results of the subsidiary undertaking for the year ended 28 February 2018 are as follows:

  Country of RegistrationNature of BusinessTurnover

 
Retained profit/loss

 
Net Assets

 
OT2 Managers Ltd England and Wales Investment Manager  

£25,283
 

£0
 

£1
           

Consolidated group Financial Statements have not been prepared as the subsidiary undertaking is not considered to be material for the purpose of giving a true and fair view.  The Financial Statements therefore present only the results of Oxford Technology 2 VCT plc, which the Directors also consider is the most useful presentation for Shareholders.

  
8.  Debtors

  28 February 2018
£'000
28 February 2017
£'000
Prepayments, accrued income & other debtors 2 2
Deferred consideration from sale of investments 164 -
Total1662

9. Creditors - amounts falling due in less than 1 year

  28 February 2018
£'000
28 February 2017
£'000
Investment management fee accrual
(All deferred fees now fully paid at 28/2/18)
- 18
Other creditors and accruals 10 7
Total1025

10. Share Capital

  28 February 2018
£'000
28 February 2017
£'000
Authorised:    
10,000,000 ordinary shares of 10p each 1,000 1,000
Total Authorised1,0001,000
Allotted, called up and fully paid:    
5,331,889 (2017: 6,792,923) ordinary shares of 10p each 533 679

On 4 September 2017, the Company bought back 1,461,034 Ordinary Shares as per the Tender Offer.

11.   Reserves

When the Company revalues its investments during the period, any gains or losses arising are credited/charged to the Income Statement.  Changes in fair value of investments are then transferred to the Unrealised Capital Reserve.  When an investment is sold any balance held on the Unrealised Capital Reserve is transferred to the Profit and Loss Account Reserve as a movement in reserves.

Distributable reserves are £636,000 as at 28 February 2018 (2017: £1,238,000).
   

Reconciliation of Movement in Shareholders' Funds

  

  28 February 2018
£'000
28 February 2017
£'000
Shareholders' funds at start of year 2,528 1,912
Return on ordinary activities after tax 60 616
Purchase of own shares (470)  
Dividends paid (427) -
Shareholders' funds at end of year1,6912,528

The Company paid a dividend of 8.0p per share on 5 December 2017.

12.  Financial Instruments and Risk Management

The Company's financial instruments comprise equity and loan note investments, cash balances and debtors and creditors.  The Company holds financial assets in accordance with its investment policy of investing mainly in a portfolio of VCT - qualifying unquoted securities whilst holding a proportion of its assets in cash or near cash investments in order to provide a reserve of liquidity.  The risk faced by these instruments, such as interest rate risk or liquidity risk is considered to be minimal due to their nature.  All of these are carried in the accounts at fair value.

The Company's strategy for managing investment risk is determined with regard to the Company's investment objective.  The management of market risk is part of the investment management process and is a central feature of venture capital investment.  The Company's portfolio is managed with regard to the possible effects of adverse price movements and with the objective of maximising overall returns to shareholders.   Investments in unquoted companies, by their nature, usually involve a higher degree of risk than investments in companies quoted on a recognised stock exchange, though the risk can be mitigated to a certain extent by diversifying the portfolio across business sectors and asset classes,  though VCT rules limit the extent to which suitable Qualifying Investments can be bought or sold.  The overall disposition of the Company's assets is regularly monitored by the Board.

13. Capital Commitments

The Company had no commitments at 28 February 2018 or 29 February 2017.

14.  Related Party Transactions

OT2 Managers Ltd, a wholly owned subsidiary, provides investment management services to the Company with effect from 1 July 2015 for a fee of 1% of net assets per annum.  During the year, £25,283 was paid in respect of these fees (2017: £19,122).  No amounts were outstanding at the year end.

15.  Events after the Balance Sheet Date

During April 2018, an investment of £150,000 was made into Scancell and £12,000 was committed to ImmBio.

Company Number: 3928569

Note to the announcement:

The financial information set out in this announcement does not constitute statutory accounts as defined in the Companies Act 2006 ("the Act").  The balance sheet as at 28 February 2018, income statement and cash flow statement for the period then ended have been extracted from the Company's 2018 statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under the section 495 of the Act.
The Annual Report and Accounts for the year ended 28 February 2018 will be filed with the Registrar of Companies.
Copies of the documents will be submitted to the National Storage Mechanism and are available for inspection at: http://www.mornningstar.co.uk/uk/NSM




This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Oxford Technology 2 VCT plc via Globenewswire

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