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Oxford Technology 2 VCT PLC   -  OXH   

Annual Financial Report

Released 07:00 22-May-2019

Annual Financial Report

21 May 2019

Oxford Technology 2 VCT plc ("the Company" or "OT2") 
Annual Report and Accounts for the year ended 28 February 2019

The Directors are pleased to announce the audited results of the Company for the year ended 28 February 2019.  A copy of the Annual Report and Accounts (together the "Accounts") will be made available to Shareholders shortly.  Set out below are extracts from the audited Accounts. References to page numbers below are to those Accounts.

The AGM will be held at Magdalen Centre, Oxford Science Park, Oxford OX4 4GA on Wednesday 3 July 2019, at 2pm.

A copy of the Annual Report and Accounts will be available from the registered office of the Company at Magdalen Centre, Oxford Science Park, Oxford OX4 4GA, as well as on the Company's website:


Financial Headlines

   Year Ended
  28 February 2019
  Year Ended
  28 February 2018

Net Assets at Year End


Net Asset Value per Share


Dividend per Share paid in Year





Cumulative Dividend per Share 21.0p21.0p
NAV + Cumulative Dividend per Share paid from Incorporation52.4p52.7p
Share Price at Year End40.0p27.5p
Earnings Per Share
(Basic & Diluted)

Chairman’s Statement

I am pleased to present my Annual Report for the year to 28 February 2019 to fellow shareholders.


After three years of significant increases in Total Return (which was recognised by the Company being short listed in the category of VCT of the Year in the “Investment Week Investment Company of the Year Awards 2018”), the 2018/9 year has been a period of minimal overall value change, with the net asset value (NAV) per share dropping 0.3p to 31.4p. Total Return since the Company’s launch is 52.4p.

Shareholders will recall that in June 2017, the Company largest investment, OC Robotics,  was sold. Part of the terms of that sale included a retention to cover potential warranty claims – OT2's share of this outstanding amount is £327,500. Provided no claims are made by the acquirer, this is due to be paid to us in June this year. To date we are not aware of any claims that may be made, but given this is entirely out of our control, we have maintained the principle of accruing only half of this benefit in the accounts with £163,750 included within the debtor’s balance (just over 3p per share).

Termination of discussions with Chelverton

The Board was disappointed to announce the termination of discussions with Chelverton Asset Management Limited (“Chelverton”) in January 2019. The circular issued on 22 October 2018 gave detailed reasons for the offer and the jointly agreed changes that would be forthcoming. At the general meeting held in November 2018, shareholders had overwhelmingly voted to approve all the resolutions that would have enabled the Company to launch an offer for a new class of B shares and appoint Chelverton to manage this class of shares. The key benefits for OT2’s shareholders included a reduction in fixed annual running costs to be incurred by the ordinary share portfolio, as well as ensuring ongoing longevity of the fund, which is especially important to those shareholders who deferred capital gains on their original subscription of shares. In addition, it would have allowed Shareholders the opportunity to invest in a generalist VCT qualifying pool with ongoing oversight from two of the existing Directors, allowing existing shareholders to benefit from 30% income tax relief and tax-free distributions, and with a reduced cost of entry. The Board also hoped that they may have been able to release some cash currently held as working capital, and hence pay an additional small special dividend to existing shareholders.

The proposed offer was also subject to the issue of a prospectus and it raising a minimum level of new subscriptions: the documentation was in the process of being finalised by both Chelverton and OT2 and HM Revenue & Customs had given the Company conditional assurance that the B shares would constitute eligible shares for the purposes of section 273 ITA, and that the Company would maintain its approval as a VCT. It was therefore with some surprise that your Board received notification from Chelverton that they had unilaterally decided not to proceed with the offer. The proposed offer for subscription for a new class of B shares is therefore not proceeding at this time, and Chelverton will not be appointed as investment manager of OT2.

Your Board had taken care to ensure that any circular and prospectus costs were borne by Chelverton alone and there are no termination costs.  The Company did incur some minor costs in taking advice on, negotiating and preparing for the proposed transaction.  These costs amount to less than £15,000 (less than 0.3p per share) and included an aggregate amount of £10,000 to be paid to two of the directors for work substantially above that envisaged under the existing letters of appointment. I received a sum of £8,000 and Alex Starling £2,000.

For the reasons explained in the circular, your Board remains convinced that expanding the asset base of the Company by raising funds with a new manager remains an attractive course of action for OT2’s shareholders, and therefore will continue to pursue other such opportunities to achieve this goal, although there is no certainty that such an opportunity will be found. This is referenced further in the section “Planning for the Future” below.

Portfolio Review

Select Technology, a photocopier (or more generally Multi Function Device, or MFD) software company, is the largest holding in your Company’s portfolio.  It has been positioning itself for growth, and has made a welcome return to profitability (and indeed paid a small dividend to OT2 in February 2019). Select Technology now sells a more balanced portfolio of software products worldwide, and in fact some of the recent progress has been from export markets.  In 2017 we reverted to a valuation methodology based on a sales multiple to more appropriately reflect the prospects of the business.  Our 7.4% stake in this business (OT2 holds Select Technology via holding company STL Management Limited) has increased in value by just over a fifth over the course of the 12 months ending 28 February 2019, and the investment now makes up just over a quarter of the Company’s overall NAV. 

Arecor raised £6 million in 2018 for the clinical development of its diabetes speciality pharmaceutical portfolio.  Your Company had contributed £200k at the end of the prior year to the pre-cursor to this funding round, whilst it still had sufficient capability within the limitations imposed by the VCT rules.  Arecor has used the investment to strengthen its management team with the appointment of a Chief Financial Officer as well as to progress its portfolio into the clinic.  A Phase 1 Clinical Trial Application has been approved by the Austrian Federal Office for Safety in Health Care.  The double-blind, randomised, three-way cross over study will compare Arecor’s product to current best in class insulin treatments. The trial is being conducted in Austria at an internationally recognised centre of excellence in the field of diabetes research.

ImmBio (more formally known as Immunobiology) has continued to progress its vaccine programmes, and following its first successful trial on humans, has now signed its first commercial licence with China National Biotech Group for its pneumonia vaccine PnuBioVax. This is significant not only as a commercial milestone, but also a third party validation of the heat shock protein mediated vaccine approach pioneered by ImmBio.  Your Company invested £12k to support the company during the negotiation of this licence and has recently provided a further £8k to provide working capital until the first milestone payments are received from the Chinese licensee.

These three companies represent nearly 60% of OT2’s NAV. A further 10% is covered by Orthogem which has developed and is selling synthetic bone graft materials. Orthogem originally developed TriPore as a granular formulation, but have recently launched a new putty formulation, which fits better with modern orthopaedic surgery techniques.  Your Company invested £59k during the year to support the registration and launch of the TriPore Putty product.

Last year, I advised that we had made a new investment in April 2018 of £150k into Scancell Holdings Plc (“Scancell”). The prime driver of this was to provide a holding that should provide liquidity in the future, given the illiquid nature of the Company’s other investments, the inability to hold very much cash given the need to be 80% invested in qualifying holdings, and yet also the necessity to be able to continue to have enough cash to pay operating costs as they become due – potentially over a number of years into the future. Obviously, it was also hoped to prove a profitable investment in its own right. Scancell is a company well known to the Board and investment adviser, and operates in the exciting – if difficult – area of cancer immunotherapy. Importantly it is listed on AIM, and the opportunity arose to participate in the £8.7m (gross) placing last year at 12p. 

Scancell is using the proceeds to support clinical trials for SCIB1, SCIB2 and Modi-1 and pre-clinical work for Modi-2. Unfortunately, the share price of Scancell has performed badly subsequently, dropping to 7p by 28 February 2019, and falling further since, and is currently just above 4p.  Scancell has had some mixed news flow during the course of the reporting period. Approval of the SCIB1 phase 2 melanoma combination trial in the US was delayed due to FDA questions over the mark 2 third party delivery device, but at the end of April 2019 the company announced that this phase 2 trial had received regulatory approval in the UK. 

The partnerships with the likes of Cancer Research UK (CRUK) and BioNTech continue. Scancell were shortlisted, but not a winner of the CRUK Grand Challenge: however, the relationships with larger players who supported Lindy Durrant’s technical leadership will hopefully bear fruit in the future. The first clinical trial of Moditope will start in 2020, addressing 3 different types of cancer. The management team has been strengthened with 2 new senior appointments. In May 2019, Scancell announced encouraging progress in the Cancer Research UK SCIB2 pre-clinical studies enabling liposomal nanoparticles to be used as a delivery system as an alternative to the SCIB1 electroporation method. CRUK is now planning a clinical trial to test efficacy and safety of SCIB-2.

Your Company also has holdings in four other companies, which together represent less than 10% of the NAV.  We still hope some of these have potential for future value growth, although we had to reduce the value of Oxis in line with their latest funding round, when the previously expected price level was not achieved.

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

Further details are contained within the Investment Advisor’s Report, and on our website.

Dividends/Return of Capital

Following the significant return of funds to shareholders in the prior year, the Directors are not recommending a final dividend for the year ending 28 February 2019.

The ongoing strategy is to seek to crystallise value from the portfolio and distribute cash to shareholders.  Our priority is to maximise shareholder value and liquidity over the medium term by seeking exits for these holdings at the appropriate time. 

VCT Market Changes

After some bigger changes in previous years, the regulatory landscape remained broadly unchanged during the period following the Patient Capital Review (PCR) in the autumn of 2017.  Post PCR, we have noticed an increase in VCT activity in the venture and growth sectors, which we believe to be a good development.  In fact, the move away from secondary capital and asset backed investment by the VCT industry seems to be going well – and this is no bad thing for UK Plc.  We believe that, appropriately resourced and supported, the VCT structure is well-suited to this patient approach to long term value creation.

Shareholders should be aware that as from 1 March 2020 there is an increase in the level of VCT qualifying investments to 80% (up from 70%) that a VCT needs to hold. OT2 already comfortably exceeds this threshold, although some care will be needed by the end of this year if the retentions held back from the OCR sale (referred to above) are received in full.

Planning for the Future

I have referred above to the previous announcements relating to our plans for the future. We have continued to look at methods of improving operational efficiency, reducing costs and, more generally, putting in place appropriate plans to ensure your VCT’s operational costs relative to its overall size remain within acceptable limits.  The uptick in interest in ‘business as usual’ VCT venture and growth investing has resulted in these listed retail investment vehicles becoming of more interest to mainstream fund managers who do not already have a VCT as part of their ‘waterfront’.  The previous transaction has sparked significant interest from a number of other fund managers, who have also seen the success of a similar arrangement where an existing VCT has managed to expand its asset base via the appointment of a new fund manager, who themselves are raising capital under a new B share class. The Board is in active discussions with these parties, and whilst there can be no certainty than any of these discussions will lead to a tangible proposal that can be put to shareholders, the Board is hopeful that a similar transaction to that previously proposed to be with Chelverton can be replicated with another partner. Should this be the case, we will present any such plans to you in due course.

Change of Auditor

As we announced in our half year results, James Cowper Kreston, our previous auditor, decided to withdraw from auditing Public Interest Entities (which include VCTs) for the time being due to the increasing regulatory landscape and associated costs, and hence resigned as our auditor in October 2018. During a previous tender process, the Audit Committee was also impressed by one of the other firms who responded, and on its recommendation, the Board has appointed UHY Hacker Young LLP ("UHY") to fill the casual vacancy that had arisen. UHY have audited this year’s results, and shareholders are being asked to reappoint them at the AGM for the year ending 29 February 2020.


Shareholders should note that the AGM for the Company will be held on Wednesday 3 July 2019 at the Magdalen Centre, Oxford Science Park, starting at the later time of 2pm 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 all the input we get from our shareholders and very much look forward to welcoming as many of you as possible on the day – thank you for your ongoing support. 


The Oxford Technology VCTs have operated and continue to operate very much in the spirit of the old and new VCT legislation by investing in and subsequently supporting early stage technology companies.  After pursuing apparently lower risk strategies such as solar subsidies, management buyouts, managed exit portfolios and the like, following the publication of the Patient Capital Review it seems that the VCT market is returning to the area that we have always occupied. While this is welcome, current VCT rules sometimes limit the amount of follow on investment that we are able to make.

Brexit is an uncertainty that is – to an extent – unquantifiable.  Your Board does not consider OT2 to be at an unusual level of risk, as the companies in the portfolio are not overly exposed to trade with EU companies, though of course knock-on effects cannot be ruled out.

Looking ahead, the Board continues to believe your VCT is an appropriate structure to hold your Company’s investments, albeit it would be preferable to have a larger asset base to share the operating costs. Your Board continues to work so as to best provision your VCT such that – when valuations and liquidity allow – holdings can be exited and proceeds distributed to shareholders, whilst at the same time, finding a new manager to partner with, enabling a growth in the Company’s net assets.

Richard Roth
21 May 2019

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 16 shows the companies remaining in the portfolio. A more detailed analysis is given for some of the larger investments.

STL Management Ltd (Select Technology) specialises in software for photocopiers – now known as MFDs – Multi-Function Devices.  Over the last decade Select Technology has built up a global network of distributors and dealers through which it sells both its own and third party products.  These products now include PaperCut, KPAX, Foldr, Drivve Image, EveryonePrint and Square 9 Enterprise Content Management. Sales have increased from £210k in the year to July 2010 to over £6.8m in the year to January 2019, up from £5.6m in the year before. Select Technology paid a dividend in February 2019.

Arecor raised £6m to start clinical trials for its insulin products.  In March 2019, following the year end, Arecor obtained approval to start its clinical trial for the Ultra-Rapid Acting Insulin. It has also received funding from Innovate for its Superfast post-prandial insulin.

In February 2019 ImmBio signed a license deal for PnuBioVax with a subsidiary of CNBG, the leading Chinese biologics company.  The deal grants a license to CNBG for the Chinese market. PnuBioVax is a vaccine that targets pneumococcal disease in children and the elderly. £12k was invested in April 2018 and a further £8k invested after the year end, in March 2019, following the signature of the Chinese licence deal.

Oxis Energy is developing a Lithium Sulphur rechargeable battery with a significantly higher specific energy (energy storage per unit weight) than the currently available Lithium Ion batteries. OT2 was the first investor in Oxis Energy (then known as Intellikraft) in January 2000. Oxis has signed a $60m contract and has started work on the development of a factory to produce 2m Lithium Sulphur batteries per year. It also started work on a £7m automotive battery project supported by a grant from Innovate UK. The value of the holding fell due to the repricing of an investment received in 2018.

Orthogem received a CE mark for its putty product in early 2018. Sales have started, but in many countries approval based on the CE mark is still going through the procedures. First sales have been registered for the putty in India. Steve Lane, the former CEO has moved on to another company and has been replaced by new Executive Chairman Bruce Venning.

In April 2018, OT2 invested £150k 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.

Unfortunately, Scancell has had a steady decline in share price over the year. In October 2018, there was an announcement of a delay to the planned start of the clinical trial as the FDA had yet to approve the  Trichor device/SCIB1 combination as an Investigational New Device (IND). Post year end, in April 2019, Scancell received all of the regulatory, ethical and legal approvals for the UK arm of this trial. Scancell has been granted patents for the Modi platform which will give it a very strong position going into the future.

New Investments in the year

In April 2018 £150k was invested into Scancell.  There were two follow-on investments during the year of £12k into ImmBio and £59k into Orthogem. All new investments have complied with both EU State Aid rules and HMRC VCT rules.

Disposals during the year

No disposals were made during the year.

Valuation Methodology

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

VCT Compliance

Compliance with the main VCT regulations as at 28 February 2019 and for the year then ended is summarised as follows:

Type of Investment
By HMRC Valuation Rules
VCT Qualifying Investments88%Minimum obligation of:
Non-Qualifying Investments12%Maximum allowed:

At least 70% of each investment must be in eligible shares - Complied.

No more than 15% of the income from shares and securities is retained - Complied.

No investment constitutes more than 15% of the Company’s portfolio (by value at time of investment or when the holding is added to) - Complied.

The Company’s income in the period has been derived wholly or mainly (70% plus) from shares or securities - Complied.

No investment made by the VCT has caused the company to receive more than £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 2019                                                                                                             



Date of initial investment

Net cost of
investment £’000
Carrying value at 28/02/19
Change in value for the year £’000% equity held by
% equity held by all OTVCTs% Net Assets
Select - STL Management LtdPhotocopier InterfacesNov 2001132429747.458.625.6
ArecorProtein stabilizationJul 2007252295271.810.517.6
ImmBioNovel vaccinesDec 2000267275992.620.916.4
OrthogemBone graft material 

Dec 2000



Scancell (Bid Price 7p)Cancer therapeutics 

April 2018
InsenseActive wound healing dressingsJun 200120452-
Plasma AntennasSolid state directional antennas 

Nov 2001



Oxis EnergyRechargeable batteriesJan 200054035(105)
InaplexData integrationSep  20011389(10)21.534.80.6
Totals  2,2731,391242   
Other Net Assets   282    

NET ASSETS   1,673   100.0

Number of shares in issue:  5,331,889
Net Asset Value per share at 28 February 2019: 31.4p
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
OT2 Managers Ltd
Investment Manager
21 May 2019

Directors’ Report

The Directors present their report together with Financial Statements for the year ended 28 February 2019.

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.


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 2019 and at 28 February 2018 are set out below:

Name                                                      2019                             2018

R Roth                                                   44,033                           44,033

R Goodfellow                                         14,000                           14,000

D Livesley                                                   Nil                                  Nil

A Starling                                                   Nil                                  Nil

Under the Company’s new Articles of Association approved by Shareholders in November 2018,  Directors are required to retire by rotation every third year.  However, in line with previous years, the Directors have elected that one third of their number should still be subject to re-election procedures at this year’s Annual General Meeting: Richard Roth and Alex Starling will therefore 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 Richard Roth 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 Seneca Growth Capital 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.   


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: Magdalen Centre, Oxford Science Park, Oxford OX4 4GA.

Going Concern

The assets of the Company consist mainly of securities, one of which is AIM quoted, quite liquid and readily accessible, as well as cash. After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing the Financial Statements.

Share Capital

As disclosed on page 57 the Board has does not have authority to make market purchases of the Company’s own shares. No shares were purchased by the Company during the year.

The Board has authority to allot up to 266,590 shares (representing approximately 5% of the ordinary share capital as at 2 May 2018). No shares were allotted by the Company during the year.

The total number of Ordinary Shares of 10p each in issue at 28 February 2019 was 5,331,889 (2018: 5,331,889) with each share having one vote. There are no other share classes in issue.

Companies Act 2006 disclosures

In accordance with Schedule 7 of the Large and Medium Size Companies and Groups (Accounts and Reports) Regulations 2008, as amended, the Directors disclose the following information:

Substantial Shareholders

At 28 February 2019, the Company has been notified of the following investors whose interest exceeds three percent of the Company’s issued share capital: Redmayne Nominees Limited 6.9% (includes the beneficial interests of Ms Shivani Palakpari Shree Parikh, who has a declared holding of 6.4%); Barclays Direct Investing Nominees Ltd, 4.9%; Mr Richard Vessey, 4.4%; Mrs Mary Louisa Perry, 3.8%; Merrick Sidney Whitehouse Feast, 3.2%.


As discussed in the Chairman’s statement on page 8, UHY Hacker Young LLP have been appointed as the independent auditors in accordance with Section 489 of the Companies Act 2006, and will offer themselves for reappointment at the AGM.

On behalf of the Board
Richard Roth
21  May 2019

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, UHY Hacker Young LLP, is required to give its opinion on certain information included in this report. This report includes a statement regarding the Directors’ Remuneration Policy. This report sets out the Company’s Directors’ Remuneration Policy and the Annual Remuneration Report which describes how this policy has been applied during the year.

The Directors' Remuneration Policy was last approved by shareholders at the AGM on 12 July 2018. It needs to be put to a shareholder vote every three years, and shareholders will be asked to approve it again at the Annual General Meeting in 2021.

Shareholders also need to approve the Directors' Remuneration Report every year. It was last approved at the AGM on 12 July 2018 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 2019 will also be proposed at the Annual General Meeting on 3 July 2019.

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.  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 and the Company’s Articles of Association. 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 £75,000 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 changed) partly due to closer involvement with investment, accounting and administration procedures and partly due to compliance with additional government regulations. Fees remain at levels approved last year.

Typically, VCT industry total directors’ fees are in excess of £50k and individual fees in excess of £15k for equivalent levels of work.

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.   The Directors may at their discretion pay additional sums in respect of specific tasks carried out by individual Directors on behalf of the Company.

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

The performance fee is detailed in note 3. Current Directors are entitled to benefit from any payment made, subject to a formula driven by relative lengths of service.  The performance fee becomes payable if a certain cash return threshold to shareholders is exceeded – the excess is then subject to a 20% carry that is distributed to Oxford Technology Management, past Directors and current Directors; the remaining 80% is returned to shareholders.  At 28 February 2019 no performance fee was due.

Should any performance fee be payable at the end of the year to 29 February 2020, Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.32% of any amount over the threshold and David Livesley 0.85%.  No performance fee will be payable for the year ending 29 February 2020 unless original shareholders have received back at least 159.1p in cash for each 100p (gross) invested.

Relative Spend on Directors’ Fees

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

Loss of Office

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

Annual Remuneration Report

No change to director’s remuneration is expected for the year ending 29 February 2020.

Directors’ FeesYear End 29/02/20
Year End 28/02/19
Year End 28/02/18*
Richard Roth£8,500£16,500£7,000
Alex Starling£3,500£5,500£2,000
Robin Goodfellow£5,000£5,000£3,500
David Livesley£3,500£3,500£2,000

*In the year to 28 February 2018, each Director had agreed to waive £1,500 of their fee

In line with the policy set out above, an additional one off payment has been made to Richard Roth of £8,000 and £2,000 to Alex Starling as compensation for work undertaken in relation to setting up of the new B share structure as well as the preparation of the circular and draft prospectus associated with the planned offer for subscription by Chelverton.

Income Statement

  Year Ended

28 February 2019
Year Ended

28 February 2018







Gain on disposal of fixed asset investments  






Unrealised gain on valuation of fixed asset investments  






Investment income24-4---
Investment management fees3(1)(13)(14)(6)(19)(25)
Other expenses4(67)-(67)(50)-(50)
Return on ordinary activities before tax  






Taxation on return on ordinary activities5------
Return on ordinary activities after tax (64)46(18)(56)11660
Return on ordinary activities after tax attributable to

equity shareholders












Earnings per share – basic and diluted6(1.2)p0.9p(0.3)p(0.9)p1.9p1.0p

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
Capital Redemption Reserve
Share  Premium
Unrealised Capital Reserve
Profit & Loss Reserve

As at 1 March 2017

Revenue return on ordinary activities after tax--- 

Expenses charged to capital


Current period gains on disposal






Current period gains on fair value of investments---49-49
Purchase of own shares 






Prior years gains now realised 






Dividends paid 







Balance as at 28 February 2018


Revenue return on ordinary activities after tax
Expenses charged to capital----(13)(13)
Current period gains on fair value of investments---59-59

Balance as at 28 February 2019


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

Balance Sheet

  Year Ended
28 February 2019
Year Ended
28 February 2018
 Note Ref.£’000£’000£’000£’000
Fixed asset investments at fair value7 1,391 1,149
Current assets     
Debtors8168 166 
Cash at bank 126 386 
Creditors: amounts falling due within 1 year9(12) (10) 
Net Current Assets  282 542
Net Assets      1,673 1,691
Called up equity share capital10 533 533
Capital redemption reserve  146 146
Share premium  376 376
Unrealised capital reserve11 (881) (940)
Profit and loss account reserve11 1,499 1,576
Total Equity Shareholders’ Funds11 1,673 1,691
Net Asset Value Per Share  31.4p 31.7p

The accompanying notes are an integral part of the Financial Statements.
The statements were approved by the Directors and authorised for issue on 21 May 2019 and are signed on their behalf by:
Richard Roth

Statement of Cash Flows

 Year Ended
28 February 2019
Year Ended
28 February 2018
Cash flows from operating activities  
Return on ordinary activities before tax(18)60
Adjustments for:  
Gain on disposal of investments-(86)
Gain on valuation of investments(59)(49)
Increase in debtors(2)(164)
Increase/(decrease) in creditors  2(15)
Movement in investment debtors and creditors-164
Outflow from operating activities(77)(90)
Cash flows from investing activities  
Purchase of investments(183)(230)
Disposal of investments-1,457
(Outflows)/inflows from investing activities(183)1,227
Cash flows from financing activities   
Tender Offer-(470)
Dividends paid-(427)
Outflow from financing activities-(897)
(Decrease)/increase in cash at bank(260)240
Opening cash and cash equivalents386146
Cash and cash equivalents at year end126386

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 2018 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
The assets of the Company consist mainly of securities, one of which is AIM quoted, quite liquid and readily accessible, as well as cash. After reviewing the Company’s forecasts and expectations, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its Financial Statements.

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

Investments are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted investments are valued in accordance with current IPEVC Valuation Guidelines, which can be found on their website at, 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 held no such investments in the current or prior year.

For investments not quoted in an active market:

Level 3: the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximise the use of observable data (e.g. the price of recent transactions, earnings 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 (2018: 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.

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 2019
Year Ended
28 February 2018
Dividends received4-

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 2019
Year Ended
28 February 2018
Investment management fee1625
Cost Cap refund from OTM(2)-

In the year to 28 February 2019 the manager received a fee of 1% of the net asset value as at the previous year end (2018: 1%). Oxford Technology Management (OTM) is also entitled to certain monitoring fees from investee companies and the Board reviews the amounts. OTM also received a further £18k in 2018, the final tranche of a payment 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 or 28 February 2019.

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 123.9p at 28 February 2019, corresponding to a total shareholder return of 151.7p after taking into account the 27.8p already paid out (27.8p + 123.9 = 151.7p). 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. Accordingly, Oxford Technology Management reduced their Management fee by £2,000 (2018: £nil), with the amount credited to the revenue account.

4. Other Expenses

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

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

 Year Ended
28 February 2019
Year Ended
28 February 2018
Directors’ remuneration3115
Auditors’ remuneration76
Other expenses2929

5. Tax on Ordinary Activities

Corporation tax payable at 19.0% (2018: 19.1%) is applied to profits chargeable to corporation tax, if any.  The corporation tax charge for the period was £nil (2018: £nil)

 Year Ended
28 February 2019
Year Ended
28 February 2018
Return on ordinary activities before tax(18)60
Current tax at standard rate of taxation(3)11
UK dividends not taxable(1)-
Unrealised gains not taxable(11)(9)
Realised gains not taxable-(16)
Excess management expenses carried forward1514
Total current tax charge--

Unrelieved management expenses of £1,621,167 (2018: £1,539,772) 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 £18,000 (2018: profit of £60,000) attributable to shareholders divided by the daily weighted average number of shares 5,331,889 (2018: 6,080,419) 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
Level 1
Level 3
Total investments
Valuation and net book amount:-- -
Book cost as at 28 February 2018-2,0892,089
Cumulative revaluation to 28 February 2018-(940)(940)
Valuation at 28 February 2018-1,1491,149
Movement in the year:   
Purchases at cost15071221
Adjustment to cost-(38)(38)
Revaluation in year(62)12159
Valuation at 28 February 2019881,3031,391
Book cost at 28 February 20191502,1232,273
Cumulative revaluation to 28 February 2019(62)(819)(881)
Valuation at 28 February 2019881,3031,391

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 2019 are as follows:

 Country of RegistrationNature of BusinessTurnover

Retained profit/loss

Net Assets

OT2 Managers LtdEngland and WalesInvestment Manager £14,569 £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 2019
28 February 2018
Prepayments, accrued income & other debtors42
Deferred consideration from sale of investments164164

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

 28 February 2019
28 February 2018
Creditors and accruals1210

10. Share Capital

 28 February 2019
28 February 2018
Allotted, called up and fully paid:  
5,331,889 (2018: 5,331,889) ordinary shares of 10p each533533

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 £618,000 as at 28 February 2019 (2018: £636,000). 

Reconciliation of Movement in Shareholders’ Funds

 28 February 2019
28 February 2018
Shareholders’ funds at start of year1,6912,528
Return on ordinary activities after tax(18)60
Purchase of own shares-(470)
Dividends paid-(427)
Shareholders’ funds at end of year1,6731,691

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 2019 or 28 February 2018.

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, £14,569 was paid in respect of these fees (2018: £25,283).  No amounts were outstanding at the year end.

The payment of £8,000 to Richard Roth referred to in the Directors’ Remuneration Report constitutes a smaller related party transaction under Listing Rule 11.1.10R. Alex Starling also received a one off payment of £2,000 at the same time.

15.  Events after the Balance Sheet Date

During March 2019, OT2 subscribed for further shares in ImmBio, at a cost of £8k.

16.  Control

Oxford Technology 2 VCT Plc is not under the control of any one party or individual.

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 2019, income statement and cash flow statement for the period then ended have been extracted from the Company's 2019 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 2019 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:


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Annual Financial Report - RNS