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)

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