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Oxford Technology 3 VCT PLC  -  OTT   

Oxford Technology 3 VCT plc : Annual Financial Report

Released 17:01 10-May-2017

Oxford Technology 3 VCT plc : Annual Financial Report

10 May 2017
Oxford Technology 3 VCT plc ("the Company" or "OT3")
Annual Report and Accounts for the year ended 28 February 2017

The Directors are pleased to announce the audited results of the Company for the year ended 28 February 2017 and a copy of the Annual Report and Accounts ("Accounts") will be made available to Shareholders shortly.  Set out below are extracts of 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 Wednesday 5 July 2017, at 11am.
A copy of the Annual Report and 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:

Financial Headlines

    Year Ended
  28 February 2017
Year Ended
  29 February 2016

Net Assets at Year End



Net Asset Value per Share




Dividend per Share paid in Year


Cumulative Dividend per Share






NAV + Cumulative Dividend paid per Share from Incorporation 114.5p 118.6p

Proposed Final Dividend per Share



Share Price at Year End



Earnings per Share
(Basic & Diluted)
(4.1)p 13.0p

Chairman's Statement  

I am pleased to present my annual report for the year to 28 February 2017 to fellow shareholders.


Last year, it was pleasing to report that there had been some positive progress within our portfolio with the sale of Telegesis for £3.3m, which enabled the payment of a 7.0p per share dividend and followed this year by a 15.0p per share interim dividend on 13 May 2016.  Following the sale of Allinea the Board is now recommending a final capital dividend of 4.0p per ordinary share. Subject to shareholder approval, the dividend will be paid on 21 July 2017 to ordinary shareholders on the register on 30 June 2017.

This year, we have invested over £1m in 6 follow-on fundings to support our portfolio: Ixaris (£425k), Arecor (£200k), Plasma Antennas (£200k), Orthogem (£100k), Immbio (£50k) and Scancell (£34k). Glide Pharmaceutical Technologies ("Glide") also raised money during the year but on such unattractive terms that OT3 chose not to participate. Whilst your company only holds two AIM stocks both Scancell and Abzena showed significant falls in share price during the year.

Portfolio Review

The net asset value per share on 28 February 2017 was 82.5p after payment of a 15p interim dividend compared to 101.6p on 29 February 2016. The earnings per share in the year to 28 February 2017 were a loss of 4.1p. Thus at 28 February 2017, the Total Return is 114.5p. The 4% decrease in net asset value after the dividend has been primarily driven by a reduction in the value of Glide.

The Company still contains 14 holdings at different stages of development.  The Directors continue to monitor all investee companies, looking for the optimum time to realise your Company's investment in them.

OT3 continues to invest in support of its portfolio as companies develop.  It has not been affected by the recent changes in VCT legislation, given the types of investments OT3 makes, and the fact that all are existing investees who have previously received financing from OT3.

£425k was invested in Ixaris when an opportunity arose to convert our warrants on attractive terms. Ixaris continues to make good progress. As a result of our warrant conversions and improved Ixaris sales the valuation has increased and now represents 47% of the OT3 NAV.

£200k was invested in Arecor to support its transition from a research-led company to a product-led company including an initiative with the US Juvenile Diabetes Research Foundation for the delivery of ultra-concentrated rapid acting insulin. In February 2017, Arecor was awarded a £1m grant from Innovate UK towards clinical trials.

£200k was invested in Plasma Antennas. The company continues to be in discussion with several large players particularly around 4G and 5G telecommunications.

£100k was invested in Orthogem to enable it to register its new product TriPore Putty.  The synthetic bone market has moved significantly towards putties, and the commercial launch of their new product in 2017 is expected to have a significant impact on sales.

£50k was invested into ImmBio to support the completion of their First-in-Human study of their novel vaccine, PnuBioVax(TM), against the bacterial pathogen Streptococcus pneumoniae.  PnuBioVax was found to be safe and well tolerated, and capable of producing antibody responses against key S. pneumoniae antigens broadly conserved across strains.  The company is now in detailed discussions with larger organisations regarding commercialisation.

£34k was invested in Scancell in last year's Placing and Open Offer. Although we invested to the maximum level permitted by VCT rules, our equity stake was diluted a little as a result.  The Scancell share price has declined since the placing. However the company is making good progress with the development of novel immunotherapies for the treatment of cancer. Scancell now has a much improved balance sheet, enabling it to continue to push ahead with its commercial activities: Scancell is now active in the USA, has hired additional commercial staff and has announced several new initiatives relating to its ImmunoBody platform, inter alia a planned multicentre clinical trial that aims to demonstrate an increase in response rates when SCIB1 is added to checkpoint inhibitor monotherapy and a partnership with the Addario Lung Cancer Medical Institute to advance SCIB2 to treat non-small cell lung cancer.  Scancell is also developing its Moditope platform with first-in-man clinical studies for breast cancer, ovarian cancer and osteosarcoma anticipated to commence in 2018.

Glide was anticipating an AIM flotation, but needed to raise pre-IPO funding. Despite considerable interest, the eventual offer that the company accepted was at an extremely high discount to previous rounds and has a significant preference ahead of ordinary shareholders. Combined with existing preferences from earlier funding rounds, this has resulted in a significant write down in valuation. This is highly disappointing for OT3 as the initial investor in the company. OT3 chose not to invest as the advantageous terms were not available to OT3.

Further details on these investments are contained within the Investment Portfolio Review. Allinea was sold in December 2016 for an initial payment of £286k for an 18x increase over investment cost with some further small conditional payments due in 2017.  The full list of the Company's investments is shown on Page 13, with details of all investees on our website.

We continue to seek opportune moments to maximise value from our portfolio, but we do not currently foresee any further major liquidity events soon.

Dividends/Return of Capital

The ongoing strategy is to seek to crystallise value from the portfolio and distribute cash to shareholders via dividend payments when the opportunity arises. Following the sale of Allinea the Directors are recommending a final dividend of 4.0p per ordinary share for the year ended 28 February 2017. Subject to shareholder approval, the dividend will be paid on 21 July to ordinary shareholders on the register on 30 June 2017.

Continued Improvements to Cost Effectiveness and VCT Market Changes.

Following the reduction of fees implemented at the start of the previous financial year, your Board continues to look at methods of reducing running costs as well as improving liquidity for shareholders who wish to realise their holdings.

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 - coupled with a reduced supply of tax efficient investment opportunities, this has resulted in exceptional demand from investors wishing to subscribe for VCTs.  Changes to VCT legislation have been made to target more VCT money towards the types of earlier stage companies that OT3 has invested in. This may present an opportunity for your VCT.

Several options are being explored, and your Board is hoping to bring forward proposals later in the year which may increase options for shareholders.

In the interim the Board would like to have the flexibility to buy back shares and is therefore proposing a buyback resolution at the AGM. This will be proposed as an Ordinary Resolution in accordance with the Companies Act 2006 (Amendment of Part 18) Regulations 2013.

Audit Tender

New legislation has been introduced in the UK on audit firm rotation, resulting from the new European Audit Regulation Directive, making it mandatory for listed companies to undergo a tender process for the audit of their company at least every ten years. An audit firm can, however, be appointed for up to twenty years provided a public tender process has been carried out after ten years. The Company has therefore recently conducted an audit tender process. The Board, on the recommendation of the Audit Committee, has decided to recommend the re-appointment of James Cowper Kreston as the Company's external auditor. For further information on the audit tender, please see the Audit Committee section of the Corporate Governance Statement on pages 31 and 32 of this Annual Report.


Shareholders should note that the AGM for the Company will be held on Wednesday 5 July 2017 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.


The year under review was dominated by two major political events, the UK's vote to leave the European Union and the election of Donald Trump to the office of US President. In the case of the EU referendum, the leave result triggered a significant fall in the value of sterling, and it has so far remained weak. This in turn led to the increase in valuation of UK larger companies, which have a bias towards overseas earnings.

The more immediate impact on our own UK smaller investees has been to improve those with overseas revenues in sterling terms while increasing the costs for those with foreign activities or imports. These impacts are not yet material. The longer term UK/EU trading issues will take time to emerge but clearly one impact is that our investee company sterling valuations now look more attractive to overseas buyers.

Post referendum the new Theresa May government has retained the VCT model although we anticipate it will continue to be kept under review to ensure that it delivers value to the taxpayer. 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.

Whilst this year has contained some disappointing news, the Board's outlook has not changed from a year ago. The portfolio is now dominated by our Ixaris and Scancell holdings but the remainder is quite diversified. Your Board monitors each investee, with clear views as to the value milestones which will allow investments to be realised.   We continue to work to maximise value for shareholders and will, as per our stated strategy, seek to crystallise this value and return value to shareholders when liquidity allows.

Robin Goodfellow
10 May 2017

Investment Portfolio Review

OT3 was formed in 2002 and invested in a total of 38 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 32p per share.  The table on page 13 shows the companies remaining in the portfolio.  A more detailed analysis is given of the most significant investments on the following pages.

During the year Allinea, provider of software for parallel computing companies was sold to ARM Holdings, the world's leading semiconductor IP Company, for a total cash consideration of up to £18.1million. The software Allinea sells is used in high performance computing software development, debugging and performance optimisation in roughly 70% of the world's largest supercomputers. It was a good fit with ARM's increased activities in multi-core computing. OT3 VCT had invested £15k and has received £286k to date.
The portfolio contains several other investees which are showing promise and which have the potential to deliver significant returns. 
OT3 first invested £110,000 in Ixaris Systems Ltd in 2002 when the company consisted of just three founders with an idea for a transaction-based financial solution that would give anyone the ability to pay online. Ixaris sales increased from just under £11m in the year to December 2015 to slightly over £13m in the year to December 2016. Currently, Ixaris is undertaking a reorganisation in which Entropay, IxTec and IxSol will become subsidiaries of the Ixaris Group.

Scancell, in which OT3 first invested in 2003 when the company was based in a University Lab, 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 have been excellent.  At the start of the trial, the patients had life expectancies measured in months.   Five years later 15 of the 16 patients are still alive.   Unfortunately Scancell has not yet found a pharma partner to take this forward. However, the company is now planning a new study in the US which, if successful, is expected to create a great deal more interest. The study which will evaluate SCIB1 in combination with pembrolizumab, a checkpoint inhibitor drug, will be run by leading melanoma specialist Dr Keith Flaherty and several other top investigators. Scancell is now starting work on a second Immunobody product (SCIB2) for the treatment of lung cancer in collaboration with the Addario Lung Cancer Medical Institute.    The first patients are expected to enter the trial in 2018 and the trial should complete in c 18 months. Scancell raised £6.2m during the year.

Arecor is making encouraging progress.  In particular it is developing its own products for the better treatment of diabetes.  In February 2017, Arecor won a grant of just over £1m to help with this progamme.  Arecor has signed a £45m license deal regarding insulin glargine with India's largest privately held pharmaceutical company, Cadila.  Details of the deal have not been disclosed.

Plasma Antennas has developed a range of next generation smart selectable antenna technologies and has a prototype of a true plasma antenna, which it is hoped may be at the centre of tomorrow's communications systems.  Plasma Antennas is currently in discussions with three large electronics companies.  It is hoped that a partnership deal can be concluded with one or more of them or with another.

£50,000 was invested in March 2016 into ImmBio to help support the commercialisation of the Pneumonia vaccine which had a successful phase 1 clinical trial in spring 2016.  Discussions with potential licensees are progressing satisfactorily, but of course nothing will be certain until deals are actually signed.

Despite having a successful clinical trial in summer 2016, in December Glide raised capital on terms which were very unfavourable to the early shareholders, resulting in a significant reduction in the valuation of OT3's shareholding.

New Investments

There were six follow on investments during the year of £100,000 into Orthogem, £200,000 into Arecor, £425,000 into Ixaris, £200,000 into Plasma, £50,000 into ImmBio, and £34,000 into Scancell. All new investments have complied with both EU State Aid rules and HMRC VCT rules.  

Disposals during the year

Allinea was sold during the year and OT3 received £286k from its original investment of £15k.  Concurrent Thinking, previously written down to zero, went into liquidation.

Valuation Methodology

Quoted and unquoted investments are valued in accordance with current industry guidelines that are compliant with International Private Equity and Venture Capital Valuation Guidelines and current financial reporting standards.

VCT Compliance

Compliance with the main VCT regulations as at 28 February 2017 and for the year then ended is summarised as follows:

Type of Investment
By HMRC Valuation Rules
Actual Target
VCT Qualifying Investments 80% Minimum obligation of:
Non-Qualifying Investments 20% Maximum allowed:
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) - Complied.

No investment made by the VCT has caused the company to receive more than £5m of State Aid investment in the year - Complied.

Table of Investments held by Company at 28 February 2017

Company Description Date of initial investment Net cost of investment £'000 Carrying value at 28/02/17 £'000 Change in value for the year £'000 % equity held OT3 % equity held by all OTVCTs %Net Assets
Ixaris Internet payments Aug 2002 643 2,650 977 7.6 7.6 47.3
Scancell Quoted on AIM (Bid Price 14.0p ) Cancer therapeutics Dec 2003

359 648 (127) 1.8 4.4 11.6
Arecor Protein stabilisation Jul 2007 224 256 209 2.6 11.4 4.6
Plasma Antennas Directional antennas Sep 2004 308 251 174 12.4 45.3 4.5
ImmBio Novel vaccines May 2003 400 237 50 4.4 13.9 4.2
Orthogem Bone graft material Dec 2004 234 142 100 10.9 29.5 2.5
Select Technology Photocopier Interfaces Nov 2004 47 129 (15) 2.8 58.6 2.3
Abzena Quoted on AIM (Bid Price 36.5p ) Protein & peptide drugs Nov 2002 69 73 (25) 0.1 0.2 1.3
Insense Wound healing May 2003 333 60 16 2.3 6.8 1.1
Glide Technologies Needle free injector Nov 2003 225 48 (766) 3.2 8.8 0.9
Inaplex Data transformation software Mar 2003 58 22 - 13.3 34.8 0.4
Invro Low power electronics Apr  2004 40 20 - 33.1 33.1 0.4
Metal Nanopowders Production of metal powders Nov 2002 153 13 - 20.0 36.7 0.2
Superhard Materials Production of hard materials Feb 2012 11 3 (3) 21.8 40.0 0.1
Microarray Insense spinout Dec 2013 2 - - 0.2 0.2 -
Concurrent Thinking Cluster computing Nov 2009 97 - - 2.0 2.0 -
Total     3,203 4,552 590      
Other Net Assets       1,043       18.6
NET ASSETS       5,595       100

Number of shares in issue:  6,785,233
Net Asset Value per share at 28 February 2017: 82.5p
Dividends per share paid to date: 32.0p

The table shows the current portfolio holdings.  The investments in Ciphergrid, Concurrent Thinking, Coraltech, Datasoft Medical, Freehand Surgical, IFM, Im-Pak, Inscentinel, Novarc, OST, Promic, ReviveR, and Streamline Computing have been written off.   The investments in Avidex, Archimed, BioAnaLab, Commerce Decisions, Dataflow, MET, Telegesis, Equitalk and Allinea have been sold.  Some shares in Abzena have been sold.

Directors' Report

The Directors present their report together with financial statements for the year ended 28 February 2017.

The Directors consider that the Annual Report and Financial Statements, taken as a whole is fair, balanced and understandable and provides 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 2002.  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.


The Directors of the Company are required to notify their interests under Disclosure and Transparency Rule 3.12R.  The present and previous membership of the Board and their beneficial interests in the ordinary shares of the company at 28 February 2017 and at 29 February 2016 are set out below:

Name                            2017                                 2016                                         
R Goodfellow                35,000                               35,000
D Livesley                     Nil                                    Nil
R Roth                          38,149                               38,149 
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 Alex Starling 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 Alex Starling 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

OT3 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.  David Livesley and Robin Goodfellow, together with Lucius Cary are Directors in OT3 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.   


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 (

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 2017, the Company has been notified by Neville Registrars of three investors whose interest exceeds three percent of the Company's issued share capital (Harewood Nominees Ltd, 8.7% (representing the beneficial interest of Oxfordshire County Council Pension Fund); Hargreaves Lansdown Nominees Ltd, 4.5%; and Richard Vessey, 3.5%.  


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

On behalf of the Board
Robin Goodfellow
10 May 2017

Directors' Remuneration Report


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. Resolutions to approve the Directors' Remuneration Report will be proposed at the Annual General Meeting on 5 July 2017.

The Directors' Remuneration Policy was approved by shareholders at the AGM on 26 August 2015. The Directors' Remuneration Report for the year ended 29 February 2016 was approved by shareholders at the AGM on 8 July 2016 on a unanimous show of hands and 84% of proxies voted in favour.

This report sets out the Company's forward-looking Directors' Remuneration Policy and the Annual Remuneration Report which describes how this policy has been applied during the year.

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 Board has not engaged any third party consultancy services, but did consult with the previous Chairman, Richard Vessey and Michael O'Regan the previous Chairman of Oxford Technology 2 VCT when the current levels were determined in 2015.

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. Based on the Company sharing a Common Board with the other Oxford Technology VCT funds 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

Robin Goodfellow 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 has played a greater part in the production of the annual accounts compared to earlier years. 

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. 

David Livesley and Robin Goodfellow receive no remuneration in respect of their directorships of OT3 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 2017 no performance fee was due (2016: £23,069 in total was accrued for).

Should any performance fee be payable at the end of the year to 28 February 2018, Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.19% of any amount over the threshold and David Livesley 0.65%.  No performance fee will be payable for the year ending 28 February 2018 unless original shareholders have received back at least 128.0p 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 28/02/18
Year End 28/02/17
Year End 29/02/16
Alex Starling £3,500 £3,500 £2,333
Richard Roth £6,500 £6,500 £4,333
Richard Vessey - - £3,750
Robin Goodfellow £7,000 £7,000 £7,167
David Livesley £3,500 £3,500 £2,333
Total £20,500 £20,500 £19,916

Prior to his appointment as a director of OT3, Richard Roth received an additional one off payment of £2,000 in the year to 29 February 2016 as compensation for executive work undertaken in relation to the setting up of the Common Board structure.

Income Statement


    Year Ended
28 February 2017
Year Ended
29 February 2016
Gain on disposal of  fixed asset investments    






Unrealised (loss) on valuation of fixed asset investments      








Investment income 2 84 - 84 19 - 19
Performance fee accrual   - 23 23 - 72 72
Investment management fees 3 (17) (52) (69) (16) (49) (65)
Other expenses 4 (55) - (55) (62) - (62)
Return on ordinary activities before tax    






Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax   12 (292) (280) (59) 942 883
Return on ordinary activities after tax attributable to
equity shareholders












Earnings per share - basic and diluted 6 0.2p (4.3)p (4.1)p (0.9)p 13.9p 13.0p

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

As at 1 March 2015

679 718 4,315 773 6,485

Revenue return on ordinary activities after tax

- - - (59) (59)
Expenses charged to capital - - - (49) (49)

Performance fee release credited to capital
- - - 72 72

Current period gains on disposal
- - - 1,333 1,333

Current period losses on fair value of investments

- - (414) - (414)
Dividends paid - - - (475) (475)

Prior years' unrealised losses now realised

- - (1,913) 1,913 -
Movement in reserves (Note 11)

- - (75) 75 -

Balance as at 29 February 2016

679 718 1,913 3,583 6,893

Revenue return on ordinary activities after tax

- - - 12 12
Expenses charged to capital - - - (52) (52)

Performance fee release credited to capital
      23 23

Current period gains on disposal

- - - 154 154
Current period losses on fair value of investments

- - (417) - (417)
Dividends paid - - - (1,018) (1,018)

Prior years' unrealised gains now realised

- - (147) 147 -

Balance as at 28 February 2017

679 718 1,349 2,849 5,595

The accompanying notes are an integral part of the financial statements.

Balance Sheet

    Year Ended
28 February 2017
Year Ended
29 February 2016
  Note Ref. £'000 £'000 £'000 £'000
Fixed Asset Investments At Fair Value 7   4,552   4,123
Current Assets          
Debtors 8 103   2  
Cash At Bank   995   2,894  
Creditors: Amounts Falling Due
Within 1 Year
9 (55)   (55)  
Net Current Assets     1,043   2,841
Creditors: Amounts Falling Due
After 1 Year
9   -   (47)

Provisions - Performance Fee 9   -   (23)
Net Assets      5,595   6,893
Called Up Equity Share Capital 10   679   679
Share Premium     718   718
Unrealised Capital Reserve 11   1,349   1,913
Profit and Loss Account Reserve 11   2,849   3,583
Total Equity Shareholders' Funds 11   5,595   6,893
Net Asset Value Per Share     82.5p   101.6p

The accompanying notes are an integral part of the financial statements.

The statements were approved by the Directors and authorised for issue on 10 May 2017 and are signed on their behalf by:

Robin Goodfellow
10 May 2017

Statement of Cash Flows

  Year Ended
28 February 2017
Year Ended
29 February 2016
Cash flows from operating activities    
Return on ordinary activities before tax (280) 883
Adjustments for:    
Gain on disposal of investments (154) (1,333)
Loss on valuation of investments 417 414
(Increase) in debtors (101) (1)
(Decrease) in creditors (70) (119)
Movement in investment debtors and creditors 30 -
Outflow from operating activities (158) (156)
Cash flows from investing activities    
Purchase of investments (1,009) (120)
Disposal of investments 286 3,442
Dividends paid (1,018) (475)
(Decrease)/increase in cash at bank (1,899) 2,691
Opening cash and cash equivalents 2,894 203
Cash and cash equivalents at year end 995 2,894

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 2016 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 International Private Equity and Venture Capital Valuation (IPEV) guidelines, which can be found on their website at, 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 IPEV 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 a: 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 b: 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 c: 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.  If all significant inputs required to fair value an instrument are observable, the instrument is included in level c (i). If one or more of the significant inputs is not based on observable market data, the instrument is included in level c (ii).

There have been no transfers between these classifications in the year (2016: none). The change in fair value for the current and previous year is recognised in the income statement.

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.

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 which was the case in 2016, but no performance fee is due this year.

Revenue and Capital
The revenue column of the Income Statement includes all income and revenue expenses of the Company.  The capital column includes gains and losses on disposal and holding gains and losses on investments.  Gains and losses arising from changes in fair value of investments are recognised as part of the capital return within the Income Statement and allocated to the appropriate capital reserve on the basis of whether they are realised or unrealised at the balance sheet date.

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.

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 2017
Year Ended
29 February 2016
Dividends received 13 19
Loan interest received 71 -
Total 84 19

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
28 February 2017
Year Ended
29 February 2016
Investment management fee 69 65
Total 69 65

In the year to 28 February 2017 the manager received a fee of 1% of the net asset value as at the previous year end (2016: 1%). Oxford Technology Management is also entitled to certain monitoring fees from investee companies and the Board reviews the amounts.

Oxford Technology Management had previously agreed to defer 25% of the 2% management fee to which it was contractually entitled (i.e. 0.5% of net assets) until such a time when the finances of the Company made this payment more affordable.  As part of the revised agreement with effect from 1 March 2015 the Board have agreed to pay the deferred balance over a 36 month period. 

A performance fee is payable to the Investment Manager once original shareholders have received a specified threshold in cash for each 100p (gross) invested.  The original threshold of 100p has been increased by compounding that portion that remains to be paid to shareholders by 6% per annum with effect from 1 March 2013, resulting in the remaining required threshold rising to 90.5p at 28 February 2017, corresponding to a total shareholder return of 122.5p after taking into account the 32.0p already paid out (32.0p + 90.5p = 122.5p).  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 15p. 

A performance fee of £nil (2016: £23k) has been accrued to date.  Any applicable performance fee accrual has been charged (or credited) 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:

  Year Ended
28 February 2017
Year Ended
29 February 2016
Directors' remuneration 21 20
Auditors' remuneration 6 6
Other expenses 28 36
Total 55 62

5. Tax on Ordinary Activities

Corporation tax payable at 20% (2016: 20%) is applied to profits chargeable to corporation tax, if any.  The corporation tax charge for the period was £ nil (2016: £ nil).

  Year Ended
28 February 2017
Year Ended
29 February 2016
Return on ordinary activities before tax (280) 883
Current tax at standard rate of taxation (56) 177
UK dividends not taxable (3) (4)
Unrealised losses not taxable 84 83
Realised gains not taxable (31) (267)
Excess management expenses carried forward 6 11
Total current tax charge - -

Unrelieved management expenses of £1,801.4k (2016: £1,771.1k) remain available for offset against future taxable profits. 

6. Earnings per Share

The calculation of earnings per share (basic and diluted) for the period is based on the net loss of £280,000 (2016: profit of £883,000) attributable to shareholders divided by the weighted average number of shares 6,785,233 (2016: 6,785,233) 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
Level a
Unquoted investments
Level c(ii)
Total investments £'000
Valuation and net book amount:      
Book cost as at 29 February 2016 394 1,815 2,209
Cumulative revaluation 478 1,436 1,914
Valuation at 29 February 2016 872 3,251 4,123
Movement in the year:      
Purchases at cost 34 975 1,009
Disposals - cost - (15) (15)
Disposals - revaluation - (147) (147)
Revaluation in year (186) (232) (418)
Valuation at 28 February 2017 720 3,832 4,552
Book cost at 28 February 2017 428 2,775 3,203
Cumulative revaluation to
28 February 2017
292 1,057 1,349
Valuation at 28 February 2017 720 3,832 4,552

Subsidiary Company
The Company also holds 100% of the issued share capital of OT3 Managers Ltd at a cost of £1.

Results of the subsidiary undertaking for the year ended 28 February 2017 are as follows:

  Country of Registration Nature of Business Turnover

Retained profit/loss

Net Assets

OT3 Managers Ltd England and Wales Investment Manager  




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 3 VCT plc, which the Directors also consider is the most useful presentation for Shareholders.

8.  Debtors

  28 February 2017
29 February 2016
Prepayments, accrued income 2 2
Accrued loan interest 71 -
Accrued sales proceeds 30 -
Total 103 2

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

  28 February 2017
29 February 2016
Other creditors 8 8
Investment management fee accrual 47 47
Total 55 55

Creditors - amounts falling due in more than 1 year

  28 February 2017
29 February 2016
Investment management fee accrual - 47
Provision - performance fee - 23
Total - 70

The Investment Manager had previously deferred 25% of fees, as detailed in Note 3.  These are now being paid between March 2015 and February 2018.

If the net asset value per share and cumulative dividends per share paid to date are greater than the threshold outlined in note 3, a performance incentive fee may become payable.  The Directors assessed that at 29 February 2016, the costs should be included in the accounts.  The value of the liability arising to date could be estimated; however the timing of the future payment is uncertain. Following a reduction in total return in 2017, the accrued fee has been reversed.

10. Share Capital


28 February 2017
29 February 2016
15,000,000 ordinary shares of 10p each 1,500 1,500
Total Authorised 1,500 1,500
Allotted, called up and fully paid:    
6,785,233 (2016: 6,785,233) ordinary shares of 10p each 679 679

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.

The transfer between the Unrealised Capital Reserve and the Profit and Loss Reserve in 2016 was the result of the correction of historic misclassifications between the two reserves.  The historic misclassifications were immaterial as they had no impact on reported returns or net assets and had no bearing on any distributions.

Distributable reserves are £2,849,000 as at 28 February 2017 (2016: £3,583,000).

Reconciliation of Movement in Shareholders' Funds

  28 February 2017
29 February 2016
Shareholders' funds at start of year 6,893 6,485
Return on ordinary activities after tax (280) 883
Dividends paid (1,018) (475)
Shareholders' funds at end of year 5,595 6,893

The Company paid an interim capital dividend of 7.0p per share on 19 February 2016 and a final capital dividend for 2016 of 15.0p per ordinary share on 13 May 2016.  Subject to shareholder approval, the Company will pay a final capital dividend for 2017 of 4.0p 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.  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 2017 or 29 February 2016.

14.  Related Party Transactions

OT3 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, £68,941 (2016: £43,239) was paid in respect of these fees.  No amounts were outstanding at the year end.

15.  Events after the Balance Sheet Date

During April 2017, a further investment of £50,000 was made into Plasma Antennas.    

The Directors have declared a final capital dividend of 4.0p per share which, subject to shareholder approval at the AGM, will be paid on 21 July 2017 to ordinary shareholders on the register on 30 June 2017.

Company Number: 4351474
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 2017, income statement and cash flow statement for the period then ended have been extracted from the Company's 2017 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 2017 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:

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 3 VCT plc via Globenewswire


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Oxford Technology 3 VCT plc : Annual Financial Report - RNS