CORRECTION: Oxford Technology 2 VCT plc : Annua...

This is a correction of the announcement from 20:31 29.06.2015 BST. Reason for the correction:
There was an error in the Chairman's Statement. This RNS replaces the previous one.
 

For RNS Release
30^th June 2015

Oxford Technology 2 Venture Capital Trust Plc
Announcement for the year ended 28 February 2015

Headlines for the Year

• Net asset value per share at the year end was 27.8p (compared to 26.4p at 28 February 2014)
• The net assets at 28 February 2015 were £1.89m (1.79m)
• New Common Board Structure announced
• Manager's fee reduced to 1%
• New hurdle rate added to performance fee

 

Financial Headlines

	Year Ended   28 February 2015		Year Ended 28 February 2014
Net Assets at Year End	£1.89m	£1.79m
Net Asset Value per Share	27.8p	26.4p
Cumulative Dividend	10.5p	10.5p
NAV + Cumulative Dividend Paid from Incorporation	38.3p	36.9p
Share Price at Year End	11p	14p
Earnings Per Share (Basic & Diluted)	1.4p	(0.7)p

Chairman's Statement

I am pleased to present to shareholders the 2015 annual report.

Overview

There has been no significant change in our portfolio of 11 unlisted companies.  An opportunity arose to purchase shares in OC Robotics from a departing co-founder and the Board was delighted to take up the opportunity for a follow-on investment.  OC Robotics continues to progress very well with several large contracts being signed and rising sales. 

Portfolio Review

The net asset value per share on 28 February 2015 was 27.8p compared to 26.4p on 28 February 2014.  Dividends paid to date are 10.5p.  The earnings per share in the year to 28 February 2015 were 1.4p.

The Company's portfolio is dominated by its holding in OC Robotics but the Board believes this company still has growth potential and is actively monitoring this investment.

The second-largest holding in the Company's portfolio is in photocopier software company Select Technology which has been growing revenues at a compound annual growth rate of over 75% since the Summer of 2010, is generating regular monthly profits and has built up a substantial cash reserve as it addresses some particularly interesting market opportunities with key partners. 

Insense has been reduced in value as the company has very few sales but continues to innovate and develop new products which have been spun out into separate companies such as Arecor in which Oxford Technology 2 VCT Plc ("OT2") has small stake.

Further details on the other major investments are contained within the Investment Manager's Report.

We are also continuing to assess the opportunity for divestments so as to crystallise shareholder value as and when appropriate.

Dividends

The ongoing strategy is to seek to crystallise value from the portfolio and distribute cash to shareholders via dividend payments.  The directors are not in a position to recommend a dividend at this time, but cash generation within the portfolio should enable the directors to recommend a distribution in the medium term.

Management Fees

In the light of the stage of OT2, which is now in its 16th year, your Directors have considered the ongoing management fees payable to the Manager of the fund. The existing fee arrangement of 2% per annum (albeit with 0.5% being voluntarily deferred by the fund manager) covered a range of responsibilities, some of which are no longer applicable, such as regularly considering and reviewing new investment opportunities. In conjunction with further changes outlined below that optimise the board structure and improve the Company's corporate governance, the Board has renegotiated the ongoing management fees to a reduced rate of 1.0% per annum and confirmed that the overall annual cost cap of 3% (excluding directors' fees) covers all of the costs incurred by the VCT.  This will take effect from 1 March 2015.

Performance Fees

The existing performance fee structure sees Oxford Technology Management, past directors and current directors sharing in 20% of the returns paid out beyond 100p; taking into account dividends paid to date of 10.5p, this is a net remaining target as at 28 February 2015 of 89.5p.  As this net target is above NAV, no performance fee has yet been accrued nor paid.  As at 28 February 2015 the Company's total return was 38.3p per share. 

The Board is disappointed with the past overall performance of its investments, but remains cautiously optimistic about the potential for increasing the value of its current portfolio.  Particularly given the age of the VCT, it is clear that shareholder value has not risen as we would have hoped since the inception of the VCT.  In part this can be explained by the high risk nature of the early stage venture capital space that the VCT has concentrated on.  Directors are of the view that it would, however, be inappropriate for the existing performance fee structure to remain, as it would reward performance that, in terms of annual return on investment, is actually relatively low.  The Board has therefore negotiated with relevant parties and agreed that a compound annual 6% increase shall be applied retrospectively to the 100p performance threshold from the 10 year anniversary of the VCT, namely 1 March 2011.  Prior to 1 March 2015 the compound increase shall be applied annually; post this date it will be applied quarterly.  In recognition of dividends paid, actual returns to shareholders will be subtracted from the compounding threshold in the year these are paid.  The effect of this change will be to increase the net target for the financial year ending 28 February 2015 from 89.5p to 113p, incrementing quarterly thereafter as described above.

This will maintain the purpose of the performance fee as an appropriate incentive for Oxford Technology Management to maximise shareholder value, yet also ensure that the performance threshold cannot be 'inflated away' over time.  Note also that your company will only pay out a performance fee after cash returns to shareholders have achieved the performance threshold - many other VCTs pay out performance fees based on growth in asset values before actual cash returns have been made to shareholders.

Your directors believe that the lower level of management fees, together with a performance fee incorporating a challenging hurdle and payable only once shareholders have received back more than their original investment prior to any additional tax reliefs, makes this management arrangement market-leading and continues the principle always adopted by the VCT to keep its costs as low as possible.

Board Structure and Remuneration

Shareholders will be aware that the Company was considering the possibility of a merger with some, or all, of the other Oxford Technology VCTs. Such a potential merger was driven by a desire to keep costs low, provide a more robust board structure and provide a mechanism to manage the rump issue that may eventually ensue once the portfolio reduces to an unviable size, which has particular consequences for those shareholders who deferred capital gains on their original subscriptions.

Following clear feedback from shareholders the directors realised that should they decide to merge the four companies they would still need to maintain four separate share pools as enough shareholders did not wish their holdings in certain specific assets to be diluted by consolidation with the other funds. Further examination has therefore led us to believe that any savings would be modest and not justify the costs of carrying out the merger until further exits have been achieved such that the remaining VCT portfolios are more similar and there would be no requirement for separate share classes. 

The directors of each fund, separately and collectively, have therefore resolved that a merger of the four companies is not in shareholders' best interest at this time.  This decision is in keeping with the historical view of Oxford Technology Management and the directors of all four Oxford Technology VCTs to be cost conscious - this approach has not changed.  The directors will, however, keep this decision under review and will consider it again as the portfolios of each of the VCTs develop. They have therefore considered other methods by which each company can benefit from a more robust board structure. At the moment, your company has a board of just two directors; given that the chairman has a casting vote, this in effect means that your company could currently be controlled by just one individual.  A similar situation applies to the other three VCTs in the Oxford Technology stable. Whilst directors from the other three VCTs provide ad hoc support, the board believes it is better to formalise this relationship.

It is therefore proposed to form a common board across each Company, each with its own chairman. To achieve this whilst retaining the independence that is required by generally accepted corporate governance (specifically AIC guidelines), the directors have resolved that the Company should be self-managed by its own subsidiary company, OT2 Managers Limited. In turn, this subsidiary will contract in services from Oxford Technology Management following the template of the Company's initial prospectus, ensuring continuity of service by the team led by Lucius Cary. This type of self-managed format has been adopted very successfully by a number of other VCTs that are keen to maintain good and cost-effective corporate governance.

Having been directors since the company's formation, neither I nor Lucius Cary will be seeking re-election to the Board at the AGM.  Four new directors will therefore be appointed to the board of OT2 in July, Robin Goodfellow, Alex Starling, David Livesley and Richard Roth, all existing directors within the Oxford Technology VCT stable. It is the intention that Richard Roth will be appointed Chairman as from July.  Shareholders will be asked to ratify these appointments at the forthcoming AGM. 

Changes to the structure of the Board will provide an improvement in the governance of OT2, namely:

- Further formalising the roles of the directors and Oxford Technology Management;

- Four independent directors (with chairman holding a casting vote) to ensure the Board cannot be controlled by a single person;

- Providing a framework for OT2 to benefit from the differing expertise of its newly enlarged board of directors, with those directors having a specific mandate to contribute as best they can (rather than concerning themselves with possible shadow directorship considerations);

- Retention of the option of pursuing a merger (or other combination) at a later date as and when portfolio developments permit; and

- Minimising costs by not pursuing a major restructuring at this moment in time whilst leaving options open to maximise shareholder value should other corporate actions become attractive.

Shareholders will also note that the remuneration committee has proposed a different structure to directors' fees. Fees are still much lower than those earned by directors of many other VCTs but represent an increase from that paid in recent years by any of the Oxford Technology funds. This is to recognise a greater proportion of work performed by your directors, as part of the proposed self-managed structure, than for most other VCTs and is offset by the reduction in management fees discussed above. 

Reducing Share Premium Account

In line with normal market practice, the company is planning to clear the remaining balance on its share premium account. This has been approved by shareholders in the past, but the Board wishes to clear the amount that accrued from the share issues since that date. Once the process has been completed, this will increase the reserves ultimately available for distribution to shareholders.

Shareholder Approvals

Shareholders need to approve the appointment of the new directors, the revised remuneration structure and the reduction in the share premium account at the AGM on 26 August 2015, and the Board encourages you to vote in favour of all the resolutions.

AGM

Shareholders should note that the AGM for the Company will be held on Wednesday 26^thAugust 2015, at the Magdalen Centre, Oxford Science Park, starting at 11am and will include presentations by some of the companies in which the Oxford Technology VCTs have invested. A formal Notice of the AGM has been enclosed with these Financial Statements together with a Form of Proxy for those not attending. We appreciate the input of our shareholders and look forward to welcoming as many of you as possible on the day. 

Outlook

Looking ahead, I believe the value of the portfolio will grow.  We continue to work to maximise value for shareholders and will, as per our stated strategy, seek to crystallise this value and distribute to shareholders via dividend payments when valuations and liquidity allow.

Mike O'Regan
Chairman
29 June 2015

Table of Investments held by Company at 28 February 2015
         
                                                                                                          

Company	Description	Date of initial investment	Net cost of investment £'000	Carrying value at 28/02/15 £'000	Change in value for the year £'000	% equity held by OT2
OC Robotics	Snake arm robots	Jan 2001	311	859	184	36.9
Select Technology	Photocopier Interfaces	Nov 2001	132	237	52	7.4
Telegesis	Zigbee technology	Oct 2003	8	214	46	2.9
Plasma Antennas	Solid state directional antennas	Nov 2001	188	189	-	8.3
Orthogem	Bone graft material	Dec 2000	304	62	15	7.3
Inaplex	Data transformation software	Sep 2001	138	48	(16)	21.5%
Arecor	Protein stabilization	Jul 2007	14	38	-	0.5%
Insense	Active wound healing dressings	Jun 2001	204	38	(38)	3.5%
Oxis Energy	Rechargeable batteries	Jan 2000	540	22	-	0.3%
Immunobiology	Novel vaccines	Dec 2000	175	12	-	0.3%
DHA	Radiotherapy products	Nov 2001	-	1	-	1.2%
Totals			2,014	1,720	243
Other Net Assets				170
NET ASSETS				1,890

Number of shares in issue:  6,792,923
Net Asset Value per share at 28 February 2015: 27.8p
Dividends paid to date: 10.5p

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 and Equitalk have been sold.

Directors' Remuneration Report

Introduction

This report has been prepared by the Directors in accordance with the requirements of the Companies Act 2006. The Company's independent auditor, James Cowper Kreston, is required to give its opinion on certain information included in this report. This report includes a statement regarding the Directors' remuneration policy. Resolutions to approve the Directors' remuneration report and policy will be proposed at the Annual General Meeting on 26 August 2015.

A policy was approved at the AGM on 27 August 2014, together with the resolution regarding the directors' remuneration report for the year ended 28 February 2014 on a unanimous show of hands, which reflected overwhelming support amongst proxies submitted.

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

Directors' Terms of Appointment

The Board consists entirely of non-executive Directors who meet at least 4 times a year and on other occasions as necessary to deal with important aspects of the Company's affairs. Directors are appointed with the expectation that they will serve for at least three years, and are expected to devote the time necessary to perform their duties.  All Directors retire at the first general meeting after election and thereafter every third year, with at least one director standing for election or re-election each year.  Re-election will be recommended by the Board but is dependent upon shareholder vote. Directors who have been in office for more than 9 years will stand for annual re-election in line with the AIC Code. There are no service contracts in place, but Directors have a letter of appointment.

Directors' Fees

The Board acts as the Remuneration Committee and meets annually to review Directors' pay to ensure it remains appropriate given the need to attract and retain candidates of sufficient calibre and ensure they are able to devote the time necessary to lead the Company in achieving its strategy.  The Board has not engaged any third party consultancy services but carefully considers the opinions of other Oxford Technology VCT fund directors.

Given the proposed introduction of a common board across the four Oxford Technology VCTs, the additional focus on effective corporate governance (as outlined in the Chairman's statement) and the greater involvement of the Directors in the day-to-day running of the VCT, the Remuneration Committee has proposed a revised fee structure. This new fee structure also takes into account the additional responsibilities and workload for the Company Chairman and responsibilities within the Audit Committee. 

In proposing the revised levels to the Board, the Remuneration Committee took note of an internal report providing an extensive analysis of fees paid by the rest of the VCT industry, with particular focus on other VCTs managed in a similar manner to the Company, and other relevant information. They were also mindful of the low cost philosophy of the Oxford Technology VCTs and fund affordability. Fees continue to be amongst the lowest in the industry.  During the process a range of stakeholders including retiring board members from several of the Oxford Technology VCTs were consulted to provide expertise and input to reach a balanced recommendation.

As the levels and structure of remuneration have been modified, the Directors consider that this once again requires shareholder approval, as Shareholders must now vote on the remuneration policy every three years, or sooner if the Company wants to make changes to it.
               
The Articles of Association of the company state that the aggregate of the remuneration (by way of fee) of all the Directors shall not exceed £50,000 per annum unless otherwise approved by ordinary resolution of the Company. Following the changes outlined above, the following Directors' fees will be payable by the Company with effect from 1 July 2015, the date of the proposed implementation of the Common Board:

                                                                per annum
Director Base Fee                            £3,500
Chairman's Supplement               £2,000
Audit Committee Chairman       £3,000
Audit Committee Member          £1,500

Mike O'Regan will remain as a Director until his retirement at the AGM, but it is proposed that Richard Roth will take the chair on his appointment.  Richard Roth will also chair the Audit Committee, with Robin Goodfellow as a member of the Committee.  As the VCT will be self-managed after implementation of the new structure, the Audit Committee will be carrying out a particularly important role for the VCT and will play a greater part in the production of the annual accounts compared to recent years. 

These figures compare to the previous individual fee of £7,500 per annum for each director independent of the manager and £2,500 per annum for Lucius Cary, who remains a director of the Company up until 26 August 2015 when he is due to retire.  Mike O'Regan has waived his fee of £7,500 throughout the reporting period.  Each of the new directors have agreed to waive £1,500 of their fee until the fund performance improves.

The directors may at their discretion pay additional sums in respect of specific tasks carried out by individual Directors on behalf of the Company.  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 performance incentive fee is described in the Chairman's Statement. As mentioned there, 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 hurdle 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 2015 the cash return to shareholders would have had to have been in excess of 123.5p for a performance fee to have been payable.  If a performance fee is not triggered (as it was not in this financial year) the hurdle, net of dividends paid, increments by a compound annual growth rate of 6%, applied quarterly.

Should the new director appointments as outlined in the Chairman's Statement go ahead as planned and any fee be payable at the end of the year to 29 February 2016, Alex Starling, Richard Roth and Robin Goodfellow would each receive 0.12% of any amount over the hurdle, whilst David Livesley would be entitled to 0.74%. No performance fee is payable for the year ending 29 February 2016 unless original shareholders have received back at least £1.30 in cash for each £1 (gross) invested; no forecast is implied that the hurdle will be reached in the year to 29 February 2016.

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.

Directors' Emoluments

As outlined in the Chairman's statement, it is proposed to appoint Alex Starling, Richard Roth, Robin Goodfellow and David Livesley to the Board of OT2 on 1 July 2015.  The current Directors are not expecting to stand for re-election in this year's AGM.  The Directors consider it helpful to shareholders to therefore set out the full expected cost for Director's emoluments for the year to 29/2/16. Given the partial year timing for the creation of the Common Board, they have also set out the expected remuneration for each director for the year ended 28/2/17, all other things being equal.

Directors' Fees	Year End 28/02/17 (unaudited)	Year End 29/02/16 (unaudited)	Year End 28/02/15 (audited)	Year End 28/02/14 (audited)
Alex Starling	£2,000	£1,333	-	-
Richard Roth	£7,000	£4,667	-	-
Mike O'Regan	-	£0	£0	£0
Lucius Cary	-	£1,250	£2,500	£2,500
Robin Goodfellow	£3,500	£2,333	-	-
David Livesley	£2,000	£1,333	-	-
Total	£14,500	£10,916	£2,500	£2,500

Prior to his appointment as a director of OT2, Richard Roth received an additional one off payment of £2,000 in the year to 29 February 2016 as compensation for executive work undertaken in relation to the setting up of the Common Board structure.

Income Statement

                                                             Year to 28 February 2015       Year to 28 February 2014

	Note Ref.	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
(Loss) on disposal of investments		-	-	-	-	(26)	(26)
Unrealised gain on fair value		-	157	157	-	35	35
Other income	2	-	-	-	-	-	-
Investment management fees	3	-	(36)	(36)		(36)	(36)
Other expenses	4	(22)	-	(22)	(24)	-	(24)
Return on ordinary activities before tax		(22)	121	99	(24)	(27)	(51)
Taxation on return on ordinary activities	5	-	-	-	-	-	-
Return on ordinary activities after tax		(22)	121	99	(24)	(27)	(51)
Earnings per share - basic and diluted	6	(0.3)p	1.7p	1.4p	(0.3)p	(0.4)p	(0.7)p

The 'Total' column of this statement is the profit and loss account of the Company, the supplementary revenue and capital 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.

Reconciliation of Movement in Shareholders' Funds

	Year Ended 28 February 2015 £'000	Year Ended 28 February 2014 £'000
Shareholders' funds at start of year	1,791	1,842
Return on ordinary activities after tax	99	(51)
Dividends paid	-	-
Shareholders' funds at end of year	1,890	1,791

Balance Sheet

  Year to 28 February 2015          Year to 28 February 2014

			£'000	£'000		£'000		£'000
Fixed Asset Investments at fair value (Note 7)				1,720				1,477
Current Assets
Debtors	19				13		-
Cash at Bank	213				352
Creditors: amounts falling due in less than 1 year	(27)				(51)
Net Current Assets		205					314
Creditors: amounts falling due in more than 1 year		(35)					-
Net Assets		1,890					1,791
Called up equity share capital		679					679
Share Premium		376					376
Unrealised Capital Reserve		803					646
Profit and Loss Account Reserve		32					90
Total Equity Shareholders' Funds		1,890					1,791
Net Asset Value Per Share		27.8p					26.4p

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

The statements were approved by the Directors and authorised for issue on 29 June 2015 and are signed on their behalf by:

Michael O'Regan
Director

Cash Flow Statement

	Year Ended 28 February 2015 £'000	Year Ended 28 February 2014 £'000
Net cash outflow from operating activities	(53)	(46)
Financial investment
Purchase of investments	(86)	(20)
Disposal of investments	-	109
Dividends paid	-	-
(Decrease)/Increase in cash at bank	(139)	43

Reconciliation of Net Cash Flow
to Movement in Net Funds

	Year Ended 28 February 2015 £'000	Year Ended 28 February 2014 £'000
(Decrease)/increase in cash at bank	(139)	43
Opening net funds	352	309
Net funds at 28 February 2015	213	352

Reconciliation of Operating Profit/(Loss) before Taxation to Cash Flow from Operating Activities

	Year Ended 28 February 2015 £'000	Year Ended 28 February 2014 £'000
Return on ordinary activities before tax	99	(51)
Gain/(loss) on disposal of investments	-	26
Loss/(gain) on valuation of investments	(157)	(35)
(Increase)/decrease in debtors	(6)	5
Increase in creditors	11	9
Outflow from operating activities	(53)	(46)

Notes to the Financial Statements

These schedules and notes have been extracted from the Financial Statements prepared to Year End 28 February 2015.

1. Principal Accounting Policies

Basis of Accounting

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 (UK GAAP) and the Statement of Recommended Practice (SORP) 'Financial Statements of Investment Trust Companies' (revised 2009).

Investments

The company invests in financial assets with a view to profiting from their total return through income and capital growth. These investments are managed and their performance is evaluated on a fair value basis. Accordingly as permitted by Financial Reporting Standard 26 (FRS 26) the investments are designated as fair value through profit and loss. Unrealised gains or losses on valuation are recognised through the income statement.

Valuation of Investments

Quoted investments are stated at the bid price. Unquoted investments are stated at fair value, where fair value is estimated after following the guidelines laid down by the International Private Equity and Venture Capital Guidelines. The Directors' policy is to initially state investments at cost and then to review the valuation every three months. The Directors may then apply an appropriate methodology which, as far as possible, draws on external, objective market data such as where fair value is indicated by:

·   a material arms length transaction by a third party in the shares of the company, with discounting for more junior asset classes, and reviewed for impairment; or

·   a suitable revenue or earnings multiple where the company is well established and generating maintainable profits. The multiple will be based on comparable listed companies but may be discounted to reflect a lack of marketability; or

·     the net assets of the business.

Where such objective data is not available the Directors may choose to maintain the value of the company as previously stated or to discount this where indicated by underperformance against plan.

The Directors consider that this basis of valuation of unquoted investments is consistent with the International Private Equity and Venture Capital Guidelines.

The preparation of the financial statements requires the Board to make judgments and estimates that affect the application of policies and 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.

Deferred Tax

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the company was approved as a Venture Capital Trust during the current year. HMRC has approved the company as a Venture Capital Trust for the purpose of Section 259 of the Income Tax Act 2007. The approval was given in the financial period ended 28 February 2001 and the company has subsequently directed its affairs so as to enable it to continue to be approved. 

2. Income

Income represents realised gains on the disposal of investments along with dividends and interest receivable on cash deposits and loans.  Dividends receivable on unquoted equity shares are brought into account when the company's right to receive payment is established and there is no significant doubt that payment will be received. Dividends receivable on quoted equity shares are brought into account on the ex-dividend date. 

Fixed returns on debt securities and non-equity shares are recognised on a time apportionment basis so as to reflect the effective yield on the debt securities and shares, provided there is no significant doubt that payment will be received in due course. Interest receivable from cash and short term deposits are accrued to the end of the year.

	Year Ended 28 February 2015 £'000	Year Ended 28 February 2014 £'000
Interest receivable	-	-
Loan note interest receivable	-	-
Total	-	-

3.  Investment Management Fees

Expenses are charged wholly to revenue with the exception of the investment management (including performance fee) which has been charged 100% to the capital return.

	Year Ended 28 February 2015 £'000	Year Ended 28 February 2014 £'000
Investment management fee	36	28
Total	36	28

Related Party disclosure - Lucius Cary is a director of Oxford Technology Management Ltd and Oxford Technology Venture Capital Trust Plc.  OTM is the Investment Manager to the company.
During the year OTM charged management fees of £26,873 (2014: £27,630).

In the year to 28 February 2015 (and previous financial years), the manager received a fee of 2% of the net asset value as at the previous year end.  As indicated in the Chairman's statement, the Board have agreed with Oxford Technology Management that as from 1 March 2015, this will be reduced to 1.0% of net asset value as at the previous year end.

The Manager had agreed to defer 25% of the management fee to which he was contractually entitled (ie 0.5% of net assets) until such a time, if so, when the finances of the Company made this payment more affordable.  As part of the revised agreement with effect from 1 March 2015 the Board have agreed to pay over the deferred balance over a 36 month period.

In all previous years to 28 February 2015, a performance incentive has been payable to the Investment Manager once the original shareholders have received back £1.00 in cash for each £1 (gross) invested.  Each extra £1 distributed goes 80p to the shareholder and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management receives 14p.  As reported in the Chairman's statement, the hurdle of £1.00 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.

Expenses are, and remain, capped at 3%, including the management fee but excluding Directors' fees and any performance fee. Accordingly Oxford Technology Management reduced their management fee by £17,000 (2014: 11,000), and this rebate is included in Other Expenses (see note 4).

4. Other Expenses

All expenses are accounted for on an accruals basis.  All expenses are charged through the profit and loss account 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 2015 £'000	Year Ended 28 February 2014 £'000
Directors' remuneration	3	3
Auditors' remuneration	6	5
Legal and professional expenses	10	6
Cost Cap refund from OTM	(17)	(11)
Other expenses	20	21
Total	22	24

5. Tax on Ordinary Activities

Corporation tax payable is applied to profits chargeable to corporation tax, if any, at the current rate.  The corporation tax charge for the period was £nil (2014: nil) 

	Year Ended 28 February 2015	Year Ended 28 February 2014
Return on ordinary activities before tax	99	(51)
Current tax at standard rate of taxation	21	(10)
Unrecognised tax losses	(21)	10
Total current tax charge	-	-

Unrelieved management expenses of £1,331,801 (2014: £1,273,811) remain available for offset against future taxable profits. 

6. Earnings per Share

The calculation of earnings per share (basic and diluted) for the period is based on the net profit of £99,000 (2014: loss of £51,000) attributable to shareholders divided by the weighted average number of shares 6,792,923 (2014: 6,792,923) in issue during the period.

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

7. Investments

Fixed asset investments are valued at fair value.  Unquoted investments are carried at fair value as determined by the Directors in accordance with current venture capital industry guidelines.  Purchases and sales of investments are recognised in the financial statements at the date of the transaction.

Where financial instruments are measured in the balance sheet at fair value, FRS 29 requires disclosure of the fair value measurements by level based on the following fair value investment hierarchy:

Level 1: quoted prices in active markets for identical assets and liabilities.  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 current bid price.  These instruments are included in level 1 and comprise AIM quoted investments classified as held at fair value through profit or loss.

Level 2: 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 where it is available and rely as little as possible on entity-specific estimates. 

Level 3: the fair value of financial instruments that are not traded in an active market (for example investments in unquoted companies) is determined by using valuation techniques such as earnings or sales multiples.  Level 3 valuations include assumptions based on non-observable market data, such as discounts applied either to reflect fair value of financial assets held at the price of recent investment, or, in the case of unquoted investments to adjust earnings or sales multiples. 

	Unquoted investments (Level 3) £'000	Total investments £'000
Valuation and net book amount:
Book cost as at 28 February 2014	1,929	1,929
Cumulative revaluation	(452)	(452)
Valuation at 28 February 2014	1,477	1,477
Movement in the year:
Purchases at cost	86	86
Redeemed/Disposed	-	-
Revaluation in year	157	157
Valuation at 28 February 2015	1,720	1,720
Book cost at 28 February 2015	2,014	2,014
Revaluation to 28 February 2015	(294)	(294)
Valuation at 28 February 2015	1,720	1,720

8.  Notes

The financial information set out in these statements does not constitute the Company's statutory accounts for the year ended 28 February 2015 in terms of section 434 of the Companies Act 2006 but is derived from those accounts. 

Statutory accounts for the year ended 28 February 2015 will be delivered to Companies House following the Company's Annual General Meeting.  The auditors have reported on those accounts: their report was unqualified and did not contain a statement under Section 489 of the Companies Act 2006.

The Annual Report for the year ended 28 February 2015 will shortly be made available on the Company's website www.oxfordtechnology.com.  Shareholders will be notified of this by email or post or sent a hard copy in the post in accordance with their instructions.

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

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