Oxford Tech 2 VCT Oxford Technology 2 Venture Capital Trust Plc : Half-year Report
19 Settembre 2019 - 08:00AM
UK Regulatory
TIDMOXH
Oxford Technology 2 Venture Capital Trust Plc
Unaudited Half-Yearly Report
For the period
1 March 2019 to 31 August 2019
Financial Headlines
6 Months Ended Year Ended
31 August 2019 28 February 2019
Net Assets at Period End GBP1.75m GBP1.67m
Net Asset Value per Share 32.8p 31.4p
Cumulative Dividend per Share 21.0p 21.0p
Total NAV Return per Share 53.8p 52.4p
Share Price at Period End
(Mid-Market) 25.5p 40.0p
Earnings per Share 1.4p (0.3)p
------------------------------ ---------------- -----------------
Company Number: 3928569
Registered Address: Magdalen Centre, Oxford Science Park, Oxford OX4 4GA
Statement on behalf of the Board
I am pleased to present the unaudited results for the six month period
ended 31 August 2019.
Results and Dividend
The Company's net asset value (NAV) per share has increased from 31.4p
at 28 February 2019 by 1.4p to 32.8p at 31 August 2019. The NAV
increased by nearly 3p per share as a result of further proceeds from
the sale of OC Robotics (OCR). It is good to report that there were no
warranty claims made by the acquiror following the Company's sale of OCR
two years ago, and OT2's share of the outstanding amount was received in
full in the period. Previously only 50% of the amount originally held in
escrow had been accrued. Operating costs reduced the NAV per share by
0.6p during the period, with a further 1.0p reduction due to movements
in the portfolio.
The Directors are actively reviewing the financing needs of the Company
and its investee companies, and also the need for the Company to meet
the more stringent 80% qualifying level to maintain VCT status that has
to be satisfied by 29 February 2020. We will then consider the ability
for OT2 to pay a small dividend before the end of February 2020.
Portfolio Review
As I indicated in my statement in the 2019 Annual Report, the 8 unlisted
companies within the portfolio continue to develop, and where required
and permitted under VCT rules your Company continues to invest to
support that development.
Select Technology represents a third of the value of the portfolio. It
distributes high quality document management software via its global
channel partners while adding significant value through its development
team by providing integrations or bespoke solutions. Select's sales
grew to just over GBP7m in the year to July 2019 and the company
recorded a small profit. Their industry has been undergoing
considerable changes as various mergers, acquisitions and consolidations
have been taking place, introducing a degree of uncertainty regarding
the immediate near term. Nevertheless, Select is optimistic about its
prospects.
Arecor and ImmBio are both about 20% of the portfolio. Arecor have
started dosing in their Phase 1 clinical trial of rapid action insulin.
They have also signed multiple development agreements to develop room
temperature liquid formulations with global pharma companies.
In March, OT2 invested GBP8,230 in ImmBio. This investment enables
ImmBio to go through the process of technology transfer of PnuBioVax
vaccine strains to the Chinese National Biotech Company as required by
the license agreement. Discussions are also ongoing with pharma
companies in other regions of the world.
Orthogem is the only other investment to be worth more than GBP100k in
OT2. It has agreed terms with a new UK distributor, TRB Chemica.
However, the valuation of Orthogem has been reduced to reflect that
sales of the putty product have been slow to arrive. Overseas
regulatory approval has been much slower than anticipated, significantly
in Australia which has been a leading market for Orthogem.
The Company's quoted investment, Scancell, continues to make progress.
It has announced approval to start the UK Phase 2 melanoma combination
trial of SCIB1 and has begun screening potential patients in Nottingham.
It has also started the first joint programme on its new AvidiMab
anti-glycan antibody technology, having partnered with a large unnamed
pharma. AvidiMab antibodies target sugars rather than proteins on the
cell surface. Scancell raised GBP3.9 million through the issue of new
shares at 5p per share to Vulpes Life Science Fund in June (a
significant discount to previous placings). The money will support the
transition of Modi-1 to the clinic. Vulpes now owns 16.67% of Scancell:
Martin Diggle from Vulpes was appointed to the board which we believe
increases the chance of a successful outcome for this investment. The
Scancell share price has risen following the Vulpes investment, and our
investment has been valued at 6.8p, the AIM share at 31 August 2019.
Overall, as seen in the Income Statement, the net impact of valuation
changes across the portfolio during the first half of the 2019/2020 year,
including the uplift due to the full OCR final distribution, has been a
gain of GBP106k.
The Directors along with the Investment Adviser continue to take an
active interest in the remaining companies within the portfolio, both to
support their management teams to achieve company development, but also
to prepare companies for realisation at the appropriate time. It should
however be noted that approaches do occur at other times, and the
ability of the Directors and Investment Adviser to be able to provide
support when such approaches occur is essential for maximising value.
VCT qualifying status
The Board has procedures in place to ensure that the Company continues
to comply with the conditions laid down by HMRC for maintaining approval
as a VCT. As already flagged, the Directors are closely assessing the
implications of meeting the new 80% qualifying holding limit, required
to be in place by 29 February 2020. OT2's small size makes balancing the
needs of prudent management of the Company and meeting the various VCT
qualifying tests all the more challenging.
Presentation of half-yearly report
In order to reduce the length of this report, we have omitted details of
the Company's objectives and investment strategy, its Advisers and
Registrar and how to buy and sell shares in the Company. These details
are all included in the Annual Reports, which together with previous
half-yearly reports, are available for viewing on the Oxford Technology
website.
Outlook
Your Directors continue to monitor changes to VCT legislation, and their
potential impact on both the VCT and its investee companies. Recent rule
changes to tax efficient investment schemes are not expected to have any
material impact on the current portfolios or on current investors as the
VCT is fully invested. Likewise, whilst the impact of Brexit remains
unclear, your Directors do not expect its eventual outcome to have a
material impact on portfolio valuations.
In recent communications with shareholders, the Board has set out its
preference to expand the asset base of the Company by raising funds with
a new manager. 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'. We continue 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.
Whilst we got very close to launching an offer for subscription with
Chelverton Asset Management Limited earlier in the year, this did not
come to fruition in the end. We have had detailed conversations with
many other potential parties, but to date, the costs of such a launch
present too high a risk for other parties to make a move into the VCT
industry. We have always made clear that there is no certainty such an
opportunity can be found but the Directors will continue seeking such
opportunities.
In any event, your Board and Investment Manager continue to work
together so as to best position your VCT such that -- when valuations
and liquidity allow -- holdings can be exited and proceeds distributed
to shareholders, whilst keeping a keen eye on keeping costs as low as
possible in the interim.
Finally, I would like to take this opportunity to thank shareholders,
many of whom we were able to welcome to our AGM in July, for their
continued support.
Richard Roth
Chairman
18 September 2019
Investment Portfolio as at 31 August 2019
Net Cost
of % Equity % Equity
investment Carrying value at 31/08/19 Change in value for the held held All % Net
Company Description GBP'000 GBP'000 6 month period GBP'000 OT2 OTVCTs Assets
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Select -- STL Photocopier
Management Ltd interfaces 132 454 24 7.4 58.6 26.0
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Protein
Arecor stabilisation 252 295 - 1.8 10.5 16.9
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
ImmBio Novel vaccines 275 276 2 2.7 22.2 15.8
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Bone graft
Orthogem material 401 119 (51) 8.0 29.8 6.8
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Scancell (bid Cancer
price 6.8p) therapeutics 150 85 (3) 0.3 2.7 4.9
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Active wound
healing
Insense dressings 204 52 - 2.0 6.8 2.9
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Directional
Plasma Antennas antennas 188 38 - 5.6 48.8 2.2
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Rechargeable
Oxis Energy batteries 540 25 (10) 0.1 0.3 1.5
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Data
Inaplex Integration 138 2 (7) 21.5 34.8 0.1
----------------- -------------- ---------- -------------------------- ----------------------- -------- -------- ------
Total Investments 2,281 1,346 (45) 77.1
--------------------------------- ---------- -------------------------- ----------------------- -------- -------- ------
Other Net Assets 400 22.9
--------------------------------- ---------- -------------------------- ----------------------- -------- -------- ------
Net Assets 1,746 100
--------------------------------- ---------- -------------------------- ----------------------- -------- -------- ------
Responsibility Statement of the Directors in respect of the half-yearly
report
We confirm that to the best of our knowledge:
-- the half-yearly financial statements have been prepared in accordance
with the statement "Interim Financial Reporting" issued by the Financial
Reporting Council;
-- the half-yearly report includes a fair review of the information required
by the Financial Services Authority Disclosure and Transparency Rules,
being:
-- an indication of the important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
financial statements.
-- a description of the principal risks and uncertainties for the remaining
six months of the year.
-- a description of related party transactions that have taken place in the
first six months of the current financial year that may have materially
affected the financial position or performance of the Company during that
period and any changes in the related party transactions described in the
last annual report that could do so.
On behalf of the Board:
Richard Roth
Chairman
18 September 2019
Income Statement
Six months to 31 Aug 2019 Six months to 31 Aug 2018 Year to 28 February 2019
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Gain on disposal of fixed asset investments - 159 159 - - - - - -
Unrealised (loss)/gain on valuation of fixed asset
investments - (53) (53) - (33) (33) - 59 59
Investment income - - - - - - 4 - 4
Investment management fees (2) (6) (8) (2) (6) (8) (1) (13) (14)
Other expenses (25) - (25) (27) - (27) (67) - (67)
Return on ordinary activities before tax (27) 100 73 (29) (39) (68) (64) 46 (18)
Taxation on ordinary activities - - - - - - - - -
--------------------------------------------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Return on ordinary activities after tax (27) 100 73 (29) (39) (68) (64) 46 (18)
--------------------------------------------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Earnings per share -- basic and diluted (0.5)p 1.9p 1.4p (0.6)p (0.7)p (1.3)p (1.2)p 0.9p (0.3)p
--------------------------------------------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
There was no other Comprehensive Income recognised during the year.
The 'Total' column of the Income Statement is the Profit and Loss
Account of the Company, the supplementary Revenue and Capital return
columns have been prepared under guidance published by the Association
of Investment Companies.
All Revenue and Capital items in the above statement derive from
continuing operations.
The Company has only one class of business and derives its income from
investments made in shares and securities and from bank and money market
funds.
Balance Sheet
As at 31 Aug As at 31 Aug As at 28 Feb
2019 2018 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------- ------- ------- ------- ------- --------
Fixed asset investments
(At fair value through profit and loss) 1,346 1,278 1,391
Current assets:
Debtors 18 184 168
Creditors: Amounts falling due within one
year (6) (19) (12)
Cash at Bank 388 180 126
----------------------------------------- ------- ------- ------- ------- ------- --------
Net current assets 400 345 282
----------------------------------------- ------- ------- ------- ------- ------- --------
Net assets 1,746 1,623 1,673
----------------------------------------- ------- ------- ------- ------- ------- --------
Called up equity share capital 533 533 533
Capital redemption reserve 146 146 146
Share premium 376 376 376
Unrealised capital reserve (934) (973) (881)
Profit and Loss account reserve 1,625 1,541 1,499
Total equity shareholders' funds 1,746 1,623 1,673
----------------------------------------- ------- ------- ------- ------- ------- --------
Net asset value per share 32.8p 30.4p 31.4p
----------------------------------------- ------- ------- ------- ------- ------- --------
Statement of Changes in Equity
Share Share Profit & Loss
Capital Capital Redemption Reserve Premium Unrealised Capital Reserve Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------ ------- -------------------------- ------- -------------------------- ------------- --------
As at 1
March 2018 533 146 376 (940) 1,576 1,691
Revenue
return on
ordinary
activities
after tax - - - - (29) (29)
Expenses
charged to
capital - - - - (6) (6)
Current
period
losses on
fair value
of
investments - - - (33) - (33)
------------ ------- -------------------------- ------- -------------------------- ------------- --------
Balance as
at 31
August
2018 533 146 376 (973) 1,541 1,623
------------ ------- -------------------------- ------- -------------------------- ------------- --------
As at 1
March 2018 533 146 376 (940) 1,576 1,691
Revenue
return on
ordinary
activities
after tax - - - - (64) (64)
Expenses
charged to
capital - - - - (13) (13)
Current
period
gains on
fair value
of
investments - - - 59 - 59
Balance as
at 28
February
2019 533 146 376 (881) 1,499 1,673
------------ ------- -------------------------- ------- -------------------------- ------------- --------
As at 1
March 2019 533 146 376 (881) 1,499 1,673
Revenue
return on
ordinary
activities
after tax - - - - (27) (27)
Expenses
charged to
capital - - - - (6) (6)
Current
period
gains on
disposal 159 159
Current
period
losses on
fair value
of
investment (53) - (53)
Balance as
at 31
August
2019 533 146 376 (934) 1,625 1,746
------------ ------- -------------------------- ------- -------------------------- ------------- --------
Statement of Cash Flows
Six months to Six months to 31 Aug Year to 28
31 Aug 2019 2018 Feb 2019
GBP'000 GBP'000 GBP'000
-------------------------- ------------- -------------------- -------------
Cash flows from
operating
activities
Return on ordinary
activities before
tax 72 (68) (18)
Adjustments for:
Decrease/(Increase)
in debtors 150 (18) (2)
(Decrease)/increase
in creditors (5) 9 2
Gain on disposal of
fixed asset
investments (159) - -
Losses/(Gains) on
valuation of fixed
asset investments 53 33 (59)
Movement in
investment debtors
and creditors (164) - -
-------------------------- ------------- -------------------- -------------
Outflow from
operating
activities (53) (44) (77)
-------------------------- ------------- -------------------- -------------
Cash flows from investing
activities
Purchase of fixed asset
investments (8) (162) (183)
Sale of fixed asset
investments 323 - -
-------------------------- ------------- -------------------- -------------
Inflow/(outflow) from
investing activities 315 (162) (183)
-------------------------- ------------- -------------------- -------------
Cash flows from financing
activities
Dividends paid - - -
Total cash flows from
financing activities - - -
-------------------------- ------------- -------------------- -------------
Increase/(decrease) in
cash and cash
equivalents 262 (206) (260)
-------------------------- ------------- -------------------- -------------
Opening cash and cash
equivalents 126 386 386
Closing cash and cash
equivalents 388 180 126
-------------------------- ------------- -------------------- -------------
Notes to the Half-Yearly Report
1. Basis of preparation
The unaudited half-yearly results which cover the six months to 31
August 2019 have been prepared in accordance with the Financial
Reporting Council's (FRC) Financial Reporting Standard 104 Interim
Financial Reporting ('FRS 104') and the Statement of Recommended
Practice (SORP) for Investment Companies re-issued by the Association of
Investment Companies in November 2014. Details of the accounting
policies and valuation methodologies are included in the Annual Report.
2. Publication of non-statutory accounts
The unaudited half-yearly results for the six months ended 31 August
2019 do not constitute statutory accounts within the meaning of Section
415 of the Companies Act 2006. The comparative figures for the year
ended 28 February 2019 have been extracted from the audited financial
statements for that year, which have been delivered to the Registrar of
Companies. The independent auditor's report on those financial
statements, in accordance with chapter 3, part 16 of the Companies Act
2006, was unqualified. This half-yearly report has not been reviewed by
the Company's auditor.
3. Earnings per share
The calculation of earnings per share for the period is based on the
return attributable to shareholders divided by the weighted average
number of shares in issue during the period. There are no potentially
dilutive capital instruments in issue and, therefore, no diluted returns
per share figures are relevant.
4. Net asset value per share
The net asset value per share is based on the net assets at the period
end divided by the number of shares in issue at that date (5,331,889 in
each case).
5. Principal risks and uncertainties
The Company's assets consist of equity and fixed interest investments,
cash and liquid resources. Its principal risks are therefore market risk,
credit risk and liquidity risk. Other risks faced by the Company include
economic, loss of approval as a Venture Capital Trust, investment and
strategic, regulatory, reputational, operational and financial risks.
These risks, and the way in which they are managed, are described in
more detail in the Company's Annual Report and Accounts for the year
ended 28 February 2019. The Company's principal risks and uncertainties
have not changed materially since the date of that report.
6. Related party transactions
OT2 Managers Ltd, a wholly owned subsidiary, provides investment
management services to the Company for a fee of 1% of net assets per
annum.
7. Copies of this statement are available from Oxford Technology
Management, Magdalen Centre, Oxford Science Park, Oxford OX4 4GA and on
the Company's website.
Board Directors: Richard Roth, Alex Starling, Robin Goodfellow, and
David Livesley
Investment Manager: OT2 Managers Ltd with services contracted to Oxford
Technology Management Ltd
Website: www.oxfordtechnologyvct.com/vct2.html
(END) Dow Jones Newswires
September 19, 2019 02:00 ET (06:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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