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Oxford Tech 3 VCT (OTT)


Thursday 03 May, 2018

Oxford Tech 3 VCT

Oxford Technology 3 VCT plc : Annual Financial Report

Oxford Technology 3 VCT plc : Annual Financial Report

2nd May 2018

Oxford Technology 3 VCT plc ("the Company" or "OT3") 
Annual Report and Accounts for the year ended 28 February 2018

The Directors are pleased to announce the audited results of the Company for the year ended 28 February 2018.  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 The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA on Thursday 12 July 2018, at 11am.

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

Financial Headlines

   Year Ended
  28 February 2018
Year Ended
  28 February 2017

Net Assets at Year End



Net Asset Value per Share



Cumulative Dividend per Share

NAV + Cumulative Dividend paid per Share from Incorporation122.2p114.5p

Final Dividend per Share



Share Price at Year End



Earnings per Share
(Basic & Diluted)

Chairman's Statement  

I am pleased to present my Annual Report for the year to 28 February 2018 to fellow shareholders.


Your company made a profit of 7.7p per share and in July 2017 a 4p per share final dividend (for the year ended 28 February 2017) was paid primarily from the proceeds of the Allinea exit received in 2016 and 2017.

The Company has adequate liquidity and wishes to retain some cash for near term potential follow-on investments to enhance investee values. Your Board is not recommending the payment of a final dividend for the year ending 28 February 2018. 

Portfolio Review

The net asset value (NAV) per share on 28 February 2018 was 86.2p compared to 82.5p on 28 February 2017.  This 3.7p increase in NAV per share consists of a 7.7p profit per share adjusted by the dividend of 4.0p per share that was paid on 21 July 2017.  Dividends paid to date are now 36.0p per share, giving a total return to date of 122.2p per share based on the NAV on 28 February 2018. The total return is still just below the performance fee threshold.

The main change in the portfolio was an increase in the valuation of Ixaris by £990k as both its trading subsidiaries continued to perform very well. Ixaris now represents 60% of our portfolio. In accordance with our loan agreement Ixaris paid back our loan of £108k along with accumulated interest in September 2017 out of cash flow. This was also our only disposal in the year.

Scancell Holdings Plc (Scancell), listed on the AIM market of the London Stock Exchange, is your Company's second largest holding.  Scancell has had some very positive news flow during the course of the reporting period, including reporting various partnerships with the likes of Cancer Research UK and BioNTech.  Cliff Holloway joined as the new CEO in January 2018; he has worked successfully with chairman John Chiplin in the past. We are particularly pleased to see non-dilutive forms of funding being brought to bear as Scancell takes its various exciting vaccine products forwards.  A £5 million placing was completed in May 2017, and your company invested £50k at a discount to market price. After our year end, on 19 April 2018, Scancell launched a further placing and open offer at 12p, a 31% discount to the market price on 17 April 2018. Scancell will use the proceeds of the placing and open offer to support clinical trials for SCIB1, SCIB2 and Modi-1 and pre-clinical work for Modi-2. OT3 was unable to participate in the placing at this price due to the 15% VCT rule. As a result, our holding will become further diluted.

The bid price of Scancell's shares used for the calculation of the Company's net asset value on 28 February 2018 was 14.0p, the same level as at the end of the previous reporting year. 

Arecor is a potentially world class pharmaceutical research company based in Cambridge and has a very advanced diabetes drug formulation technology. During the past year Arecor has announced significant progress, including a licence agreement with a major global healthcare company, as well as the successful pre-clinical development of stable rapid-acting, ultra-concentrated insulin for the significantly enhanced treatment of type 1 diabetes. The company is currently fundraising and the price is likely to be above our current valuation.

ImmBio is our fourth largest holding. We invested £31k in July which was made to support continued commercialisation of its PnuBioVax Vaccine.  The final results to come from their First-in-Human study were positive and was found to be safe and well tolerated, and capable of producing antibody responses against key S. pneumoniae antigens broadly conserved across strains.  Negotiations are progressing with first licensees for the vaccine. Post year end, we have made a commitment of a further £30k to fund ImmBio running costs through the negotiations.

On the negative side we invested £50k in Plasma Antennas. It had had interest from many of the major players in telecoms, but after long discussions no offers to invest have come forward, nor any immediate further sales opportunities.  There remains interest in their existing product range, but we have decided to take a provision against our equity holding, totalling nearly £300k, and at the time of writing, Plasma is in the process of being mothballed.

As reported in the previous annual report, Glide Pharmaceuticals raised money during 2016 on terms which were highly unattractive to existing shareholders, leading to a significant write down in valuation for our VCT.  Glide attempted to raise further money during 2017, but due to the terms of the previous funding round, was unable to attract new investors.  Glide therefore was placed into administration during September 2017.  We took a £766k write down last year following the unattractive fundraising and following administration we have taken a further write off of £48k.

As a result of the above events the portfolio has become highly concentrated with Ixaris and Scancell making up just over 72% of OT3's portfolio as at 28 February 2018.

Whilst the valuations of many companies within the portfolio have not shown growth, several have made significant commercial progress during the reporting period. We are hopeful that this progress will be reflected in improving valuations in the future.  Your VCT has access to sufficient funds to be able to support the portfolio companies as they raise money in the future at hopefully enhanced valuations, provided the VCT rules will allow OT3 to continue to invest.  The Directors currently do not envisage any early exits.

Further details are contained within the Investment Manager's Report, and on our website.

Dividends/Return of Capital

The Directors are not recommending a dividend for the year ending 28 February 2018.

The ongoing strategy is to seek to crystallise value from the portfolio and distribute cash to shareholders when exits allow.  

VCT Market Changes

In terms of the broader VCT market, the main event of the year was the Patient Capital Review (PCR) undertaken by HM Treasury (HMT).  Your Board engaged with the PCR on behalf of your VCT, seeking to ensure the continued viability of your Company. 

As mentioned in our third quarter update, your Board broadly welcomed the results of the PCR as announced in the Autumn Budget in November 2017.  In summary, HMT wishes to encourage investments into earlier stage businesses; and, if necessary, for these investments to be allowed to flourish over longer periods of time.  We believe that, appropriately resourced and supported, the VCT structure is well-suited to this patient approach to long term value creation. We also welcome the extension of the six month VCT rule to twelve months as providing a greater level of future re-investment flexibility.

One of the Autumn Budget's announcements was an increase in the level of VCT qualifying investments to 80% (up from 70%) that a VCT needs to hold; this legislation received Royal Assent on 15 March 2018.  For OT3, this change is effective from 1 March 2020, and may make it more challenging for small VCTs, such as your Company, to manage ongoing compliance with these qualifying tests, which is an unintended consequence of the new legislation.  Cash holdings are non-qualifying, but VCTs are obliged to demonstrate that they have adequate working capital over the medium term, which would not be possible if cash reserves must be distributed in order to fulfil the new legislation - corporate liquidity tests could thus become very tight.  We fully understand the rationale for introducing this change and believe that a simple amendment is possible that would mitigate this unintended consequence while ensuring that the legislative change retains HMT's desired effect.  We will continue to lobby for an appropriate amendment to be made.

A further change has seen the introduction of MiFID II & PRIIPS.  The most significant impact on VCTs has been the requirement to prepare a Key Information Document (KID).  Shareholders, who are interested, can find it on the Company's website.

Planning for the Future

In last year's report we highlighted some significant changes in the VCT market which might present opportunities for your VCT. Your Board continues to explore various options actively but are not yet able to bring forward proposals to shareholders. Should discussions prove successful we would present them to shareholders as soon as practicable. However, there can be no certainty that any of these discussions will lead to a concrete proposal, at this time or in the future.

Your Board therefore continues to look at methods of improving operational efficiency, reducing costs and, more generally, putting in place appropriate plans to ensure that your VCT's operational costs relative to its overall size remain within acceptable limits.  The current level of operating costs, directors' fees and total investment management fees are £111k (2017: £124k) and are just 1.9% of year end assets; one of the lowest ratios in the industry.


Shareholders should note that the AGM for the Company will be held on Thursday 12 July 2018 at the Magdalen Centre, Oxford Science Park, starting at 11am and will include presentations by Oxford Technology Management and some of the companies that the Oxford Technology VCTs have invested in.

A formal Notice of the AGM has been enclosed with these Financial Statements together with a Form of Proxy for those not attending. We appreciate the input of our shareholders and look forward to welcoming as many of you as possible on the day - thank you for your ongoing support. 


The Oxford Technology VCTs have operated and continue to operate very much in the spirit of the VCT legislation by investing in and subsequently supporting early stage technology companies.  Unfortunately, both the previous and current VCT rules limit the amount of follow on investment that we are sometimes able to make.

As a visible example of our frustration, post year end, we were unable to invest in the Scancell placing because of the 15% VCT rule despite having only ever invested 6% of OT3 shareholder raised funds in Scancell to date. We made our concerns known in the PCR and have followed it up with HMRC and the Chancellor without success. This was, and remains, a flawed element of legislation that goes against the Government's own stated patient capital policy. Why encourage VCTs to invest in risky early technology and then prevent them from following on with their investment as they become successful? Why penalise early investors in successful companies by forcing dilution of the VCT's shareholdings and the reduction of their influence? A simple cap on the investment into a single company of 15% of funds raised would suffice. Bizarrely the origin of the 15% rule dates back to the grandfathering of Investment Trust legislation into initial VCT legislation. Unfortunately, when some years ago the 15% rule was abolished for Investment Trusts, the change was not followed through to VCT legislation.

Looking ahead, though, the Board continues to believe your VCT is an appropriate structure to hold your Company's assets. The portfolio continues to mature, with several holdings showing potential to generate strong returns when the appropriate time comes to realise them.  As per our stated strategy, your Board continues to work to maximise value, reduce costs, and - when valuations and liquidity allow - crystallise this value and distribute the proceeds to shareholders.

Robin Goodfellow
2nd May 2018

Investment Portfolio Review

OT3 was formed in 2002 and invested in a total of 38 companies, all start-up or early stage technology companies.  Some of these companies failed with the loss of the investment.  Some have succeeded and have been sold.  Dividends paid to shareholders to date are 36p per share.  The table on page 17 shows the companies remaining in the portfolio.  A more detailed analysis is given of the most significant investments on the following pages.  The portfolio contains several investees which are showing promise and which have the potential to deliver significant returns.

OT3 first invested £110,000 in Ixaris Systems Ltd in 2002 when the company consisted of just three founders with an idea for a transaction-based financial solution, Entropay,  that would give anyone the ability to pay online. Sales were slightly over £13m in the year to December 2016.  During 2017, Ixaris was re-organised as a group of two companies with Entropay becoming a separate company, which might then be sold as a separate entity. Entropay is now a cash-generating profitable business with sales of £14m in the year to December 2017.  IxTec sales were just over £8m in the year to December 2017.  Overall, the group generated £3.2M of EBITDA in 2017.

Scancell, in which OT3 first invested in 2003 when the company was based in a University laboratory, is now AIM-listed.  Scancell is developing novel immunotherapies for cancer, based on two platform technologies known as Immunobody and Moditope.  Results from Scancell's first clinical trial for the treatment of melanoma 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.

Possibly the biggest news of the year for Scancell was the decision by Cancer Research UK (CRUK) to conduct a trial of SCIB2 in combination with checkpoint inhibitors. SCIB2 should provide the impetus to the immune system to attack the tumor and the checkpoint inhibitor will remove the barriers to its action. The study will focus on Non Small Lung Cell Cancer, but the results will have relevance for a range of tumors. The trial will be conducted in full by CRUK and Scancell will be able to purchase the results and commercialise them itself or leave them with CRUK and share in their commercial success.  Scancell has also started a development project with BioNtech, the largest privately-owned Biotech company in Europe. Scancell's focus is now on generating clinical data and two more trials should read out over the next two years. If Scancell is successful in its CRUK Grand Challenge application it will also be able to start a third trial on Moditope.  Scancell has now been granted the European patent for the use of citrullinated proteins in cancer treatment. Scancell raised £5m during the year with OT3 investing £50,000. Post the year end, there was a further investment round in April 2018, however, OT3 was unable to participate due to the constraints imposed by the VCT rules.  Scancell will use the proceeds of the placing and open offer to support clinical trials for SCIB1, SCIB2 and Modi-1 and pre-clinical work for Modi-2.

Arecor is making encouraging progress.  The company has progressed its insulin programme and has both the fastest acting and most concentrated formulations in the world. In preparation for the start of clinical trials it is raising money and there has been good interest, recognizing both the technical advantage and the very competitive nature of the insulin market. The term sheet for the fundraising is currently being negotiated.

£31,000 was invested in July 2017 into ImmBio to help support the commercialisation of the Pneumonia vaccine which had a successful phase 1 clinical trial in spring 2016.  A deal was arranged with the Liverpool School of Tropical Medicine to apply for joint grants to support additional clinical trials. The collaboration has not yet resulted in any successful grant applications. ImmBio has a new CEO, Enrique Tabares having taken over the role.  He is leading the discussions with potential licensees, which have been progressing since mid-2017. Negotiations are progressing with first licensees for the vaccine, and a further £30,000 was committed in April 2018 to allow time for these conversations to progress.  

Orthogem has had CE approval for its Tripore putty product and it has had a very good response from surgeons. There has also been a good response to the product from distributors: four  have already signed up and there is a long list still being processed. Unfortunately, during the year the FDA turned down Orthogem's application to sell the Tripore putty in the USA.  Despite originally approving the model used for the trials, on review they determined that the model being used was not appropriate.  This means that Orthogem will have to run new FDA trials. This delays access to the largest market, but the company has made good progress.

Select Technology specialises in software for photocopiers - now known as MFDs - Multi-Function Devices.  Over the last decade Select 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 and Drivve Image. Sales have increased from £210k in the year to July 2010 to over £5m in the year to January 2018, though Select lost one contract in 2017 that resulted in substantially reduced profits in the year to July 2017.  However, the core business has continued to grow and it is hoped that Select should again be able to pay a dividend in OT3's current financial year.  It has employees all over the world; everyone works remotely.

Plasma Antennas has developed a range of next generation smart selectable antenna technologies and has a prototype of a true plasma antenna, which it was hoped might be at the centre of tomorrow's communications systems.   However, although some of the largest global companies were very interested, with companies in the US, China and Japan all making special visits to meet Plasma in Winchester no partnership deal was done. Therefore, at the time of writing, Plasma is in the process of being mothballed.

Despite having a successful clinical trial in summer 2016, in December 2016 Glide raised capital on terms which were very unfavourable to the early shareholders.  The company took on a convertible loan against its assets and when the loan was not extended the investor who was providing the loan pushed the company into administration and agreed a pre-pack to take over the assets of the company. Unfortunately, this has resulted in a complete loss of the invested value in Glide.

New Investments

There were three follow on investments during the year of £50,000 into Scancell, £50,000 into Plasma and £31,000 into ImmBio. All new investments have complied with both EU State Aid rules and HMRC VCT rules. 

Disposals during the year

There were no disposals during the year, although Concurrent Thinking was liquidated.  Glide Pharmaceuticals went into administration. Ixaris paid back its loan of £108k with interest.

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 2018 and for the year then ended is summarised as follows:

Type of Investment
By HMRC Valuation Rules
VCT Qualifying Investments 80% Minimum obligation of:
Non-Qualifying Investments 20% Maximum allowed:
Total 100% 100%

At least 10% of each investment in a qualifying company is held in 'eligible shares' - Complied.

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

No investment constitutes more than 15% of the Company's portfolio (by value at time of investment 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 2018

CompanyDescriptionDate of initial investmentNet cost of investment £'000Carrying value at 28/02/18 £'000Change in value for the year £'000% equity held OT3% equity held by all OTVCTs% of Net Assets
Ixaris Internet payments Aug 2002 535 3,531 882 7.3 7.3 60.4
Scancell (AIM)
(Bid Price 14.0p )
Cancer therapeutics Dec 2003

409 718 70 1.6 3.6 12.3
Arecor Protein stabilisation Jul 2007 224 256 - 2.5 12.1 4.4
ImmBio Novel vaccines May 2003 431 236 (1) 4.8 15.9 4.0
Orthogem Bone graft material Dec 2004 234 142 - 7.6 20.2 2.4
Select Technology Photocopier Interfaces Nov 2004 47 135 5 2.8 58.6 2.3
Insense Wound healing May 2003 333 60 - 2.3 6.8 1.0
Abzena (AIM)
(Bid Price 25.0p )
Protein & peptide drugs Nov 2002 69 50 (23) 0.1 0.1 0.9
Invro Low power electronics Apr 2004 40 41 21 33.1 33.1 0.7
Inaplex Data integration Mar 2003 58 11 (11) 13.3 34.8 0.2
Metal Nanopowders Production of metal powders Nov 2002 153 5 (8) 20.0 36.7 0.1
Plasma Antennas Directional antennas Sep 2004 358 3 (248) 12.4 48.8 0.1
Superhard Materials Production of hard materials Feb 2012 11 2 (1) 21.8 40.0 -
Microarray Insense spinout Dec 2013 2 - - 0.2 0.2 -
Glide Technologies Needle free injector Nov 2003 225 - (48) 3.2 8.8 -
Total  3,1295,190638   
Other Net Assets       657       11.2
NET ASSETS       5,847       100

Number of shares in issue:  6,785,233
Net Asset Value per share at 28 February 2018: 86.2p
Dividends per share paid to date: 36.0p

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

Lucius Cary
OT3 Managers Ltd
Investment Manager
2nd May 2018

Directors' Report

The Directors present their report together with Financial Statements for the year ended 28 February 2018.

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 March 2002.  The Company invests in start-up and early stage technology companies in general located within 60 miles of Oxford.  The Company has maintained its approved status as a Venture Capital Trust by HMRC.


The Directors of the Company are required to notify their interests under Disclosure and Transparency Rule 3.12R.  The membership of the Board and their beneficial interests in the ordinary shares of the company at 28 February 2018 and at 28 February 2017 are set out below:

Name                                                                                   2018                                      2017
R Goodfellow                                                                      35,000                                    35,000
D Livesley                                                                           Nil                                          Nil
R Roth                                                                                 38,149                                    38,149 
A Starling                                                                            Nil                                          Nil

Under the Company's Articles of Association one third of the Directors are required to retire by rotation each year.  Richard Roth and David Livesley will be nominated for re-appointment at the forthcoming AGM.  The Board believes that both non-executive Directors continue to provide a valuable contribution to the Company and remain committed to their roles.  The Board recommends that Shareholders support the resolutions to re-elect Richard Roth and David Livesley at the forthcoming AGM. 

The Board is cognisant of shareholders' preference for Directors not to sit on the boards of too many larger companies ("overboarding").  Shareholders will be aware that in July 2015, the Company, along with the other VCTs that were managed by Oxford Technology Management, appointed directors such that the four VCTs each had a Common Board.  In addition, Richard Roth has subsequently also become a Director of Hygea vct plc, a VCT investing in the Med Tech sector which is also self-managed and has a number of investments in common with the Oxford Technology VCTs.  Whilst great care is taken to safeguard the interests of the shareholders of each separate company, there is an element of overlap in the workload of each Director across the four OT funds due to the way the VCTs are managed.  The Directors note that the workload related to the four OT funds is less than it would be for four totally separate and larger funds and are satisfied that Richard Roth has the time to focus on the requirements of each OT fund.

Investment Management Fees

OT3 Managers Ltd, the Company's wholly owned subsidiary, has an agreement to provide investment management services to the Company for a fee of 1% of net assets per annum.  David Livesley and Robin Goodfellow, together with Lucius Cary are Directors of OT3 Managers Ltd.

Directors' and Officers' Insurance

The Company has maintained insurance cover, on behalf of the Directors, indemnifying them against certain liabilities which may be incurred by them in relation to their duties as Directors of the Company.

Ongoing Review

The Board has reviewed and continues to review all aspects of internal governance to mitigate the risk of breaches of VCT rules or company law.   


The Board has been informed that the Investment Manager has arrangements in place in accordance with the UK Corporate Governance Code's recommendations by which staff of Oxford Technology Management or the Secretary of the Company may, in confidence, raise concerns within their respective organisations about possible improprieties in matters of financial reporting or other matters. 

Bribery Act 2010

The Company is committed to carrying out business fairly, honestly and openly.  The Investment Manager has established policies and procedures to prevent bribery within its organisation.  The Company has adopted a zero tolerance approach to bribery and will not tolerate bribery under any circumstance in any transaction the Company is involved in. The Company has instructed the Investment Manager to adopt the same approach with investee companies.

Relations with Shareholders

The Company values the views of its shareholders and recognises their interest in the Company.   The Company's website provides information on all of the Company's investments, as well as other information of relevance to shareholders (

Shareholders have the opportunity to meet the Board at the Annual General Meeting.  In addition to the formal business of the AGM the Board is available to answer any questions a shareholder may have.

The Board is also happy to respond to any written queries made by shareholders during the course of the year and can be contacted at the Company's registered office:  The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA.

Going Concern

After making enquiries, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason they have adopted the going concern basis in preparing the Financial Statements.

 Substantial Shareholders

At 28 February 2018, the Company has been notified of three investors whose interest exceeds three percent of the Company's issued share capital: State Street Nominees Limited, 8.7% (representing the beneficial interest of Oxfordshire County Council Pension Fund); Ms Shivani Palakpari Shree Parikh, 4.1%; and Mr Richard Vessey, 3.5%.


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

On behalf of the Board
Robin Goodfellow
2nd May 2018

Directors' Remuneration Report


This report has been prepared by the Directors in accordance with the requirements of the Companies Act 2006. The Company's independent auditor, James Cowper Kreston, is required to give its opinion on certain information included in this report. This report includes a statement regarding the Directors' Remuneration Policy. 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 26 August 2015. 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 on 12 July 2018.

Shareholders also need to approve the Directors' Remuneration Report every year. It was last approved at the AGM on 5 July 2017 on a unanimous show of hands and 99% of proxies voted in favour, and a Resolution to approve the Directors' Remuneration Report for the year ended 28 February 2018 will also be proposed at the Annual General Meeting on 12 July 2018.

Directors' Terms of Appointment

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

Directors' Remuneration Policy

The Board acts as the Remuneration Committee and meets annually to review Directors' pay to ensure it remains appropriate given the need to attract and retain candidates of sufficient calibre and ensure they are able to devote the time necessary to lead the Company in achieving its strategy.

The 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. 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 OT3 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 set) partly due to closer involvement with investment, accounting and administration procedures and partly due to compliance with additional government regulations. Typically VCT industry total directors' fees are in excess of £50k and individual fees in excess of £15k for equivalent levels of work.

However, given the relatively low funds under management, the Directors have determined that it is not appropriate to seek an increase from the previously agreed levels. It is therefore proposed that the fees remain at the levels that have been paid since 2015.

Robin Goodfellow chairs the Company. Richard Roth chairs the Audit Committee, with Robin Goodfellow as a member of the Committee.  As the VCT is self-managed, the Audit Committee carries out a particularly important role for the VCT and 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.

David Livesley and Robin Goodfellow receive no remuneration in respect of their directorships of OT3 Managers Ltd, the Company's Investment Manager.

The performance fee is detailed in note 3. Current Directors are entitled to benefit from any payment made, subject to a formula driven by relative lengths of service.  The performance fee becomes payable if a certain cash return threshold to shareholders is exceeded - the excess is then subject to a 20% carry that is distributed to Oxford Technology Management, past Directors and current Directors; the remaining 80% is returned to shareholders.  At 28 February 2018 no performance fee was due.

Should any performance fee be payable at the end of the year to 28 February 2019, Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.22% of any amount over the threshold and David Livesley 0.67%.  No performance fee will be payable for the year ending 28 February 2019 unless original shareholders have received back at least 133.4p in cash for each 100p (gross) invested.

Relative Spend on Directors' Fees

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

Loss of Office

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

Annual Remuneration Report

Directors' FeesYear End 28/02/19
Year End 28/02/18
Year End 28/02/17
Robin Goodfellow £7,000 £7,000 £7,000
Richard Roth £6,500 £6,500 £6,500
Alex Starling £3,500 £3,500 £3,500
David Livesley £3,500 £3,500 £3,500

Income Statement

    Year Ended
28 February 2018
Year Ended
28 February 2017
Gain on disposal of  fixed asset investments    






Unrealised gain/ (loss) on valuation of fixed asset investments    













Investment income 2 10 - 10 84 - 84
Performance fee accrual   - - - - 23 23
Investment management fees 3 (14) (42) (56) (17) (52) (69)
Other expenses 4 (55) - (55) (55) - (55)
Return on ordinary activities before tax  






Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax   (59) 582 523 12 (292) (280)
Return on ordinary activities after tax attributable to
equity shareholders












Earnings per share - basic and diluted6(0.9)p8.6p7.7p0.2p(4.3)p(4.1)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. 
The accompanying notes are an integral part of the Financial Statements.

Statement of Changes in Equity

 Share CapitalShare  PremiumUnrealised Capital ReserveProfit & Loss ReserveTotal
As at 1 March 2016

Revenue return on ordinary activities after tax - - - 12 12
Expenses charged to capital - - - (52) (52)

Performance fee release credited to capital

- - - 23 23
Current period gains on disposal

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

- - (417) - (417)
Dividends paid - - - (1,018) (1,018)
Prior years' unrealised gains now realised

- - (147) 147 -
Balance as at 28 February 20176797181,3492,8495,595

Revenue return on ordinary activities after tax






Expenses charged to capital - - - (42) (42)
Current period gains on disposal - - - 9 9

Current period gains on fair value of investments





Dividends paid - - - (271) (271)
Prior years' unrealised losses now realised - - 97 (97) -
Balance as at 28 February 2018



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

Balance Sheet

  Year Ended
28 February 2018
Year Ended
28 February 2017
 Note Ref.£'000£'000£'000£'000
Fixed Asset Investments At Fair Value 7   5,190   4,552
Current Assets          
Debtors 8 23   103  
Cash At Bank   644   995  
Creditors: Amounts Falling Due
Within 1 Year
9 (10)   (55)  
Net Current Assets     657   1,043
Net Assets      5,847 5,595
Called Up Equity Share Capital 10   679   679
Share Premium     718   718
Unrealised Capital Reserve 11   2,061   1,349
Profit and Loss Account Reserve 11   2,389   2,849
Total Equity Shareholders' Funds11 5,847 5,595
Net Asset Value Per Share    86.2p 82.5p

The accompanying notes are an integral part of the Financial Statements.
The statements were approved by the Directors and authorised for issue on 2nd May 2018 and are signed on their behalf by:

Robin Goodfellow
2nd May 2018

Statement of Cash Flows

 Year Ended
28 February 2018
Year Ended
28 February 2017
Cash flows from operating activities  
Return on ordinary activities before tax 523 (280)
Adjustments for:    
Gain on disposal of investments (9) (154)
(Gain)/loss on valuation of investments (615) 417
Decrease/(increase) in debtors 80 (101)
Decrease in creditors (45) (70)
Movement in investment debtors and creditors (10) 30
Outflow from operating activities(76)(158)
Cash flows from investing activities  
Purchase of investments (131) (1,009)
Disposal of investments 127 286
Dividends paid (271) (1,018)
Decrease in cash at bank(351)(1,899)
Opening cash and cash equivalents 995 2,894
Cash and cash equivalents at year end644995

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 2017 Annual Report and Financial Statements. A summary of the principal accounting policies is set out below.

FRS 102 sections 11 and 12 have been adopted with regard to the Company's financial instruments. The Company held all fixed asset investments at fair value through profit or loss. Accordingly, all interest income, fee income, expenses and gains and losses on investments are attributable to assets held at fair value through profit or loss.

The most important policies affecting the Company's financial position are those related to investment valuation and require the application of subjective and complex judgements, often as a result of the need to make estimates about the effects of matters that are inherently uncertain and may change in subsequent periods. These are discussed in more detail below.

Going Concern
After reviewing the Company's forecasts and expectations, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company therefore continues to adopt the going concern basis in preparing its Financial Statements.

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

Investments are regularly reviewed to ensure that the fair values are appropriately stated. Unquoted investments are valued in accordance with current IPEVC Valuation Guidelines, which can be found on their website, 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 holds 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 (2017: none). The change in fair value for the current and previous year is recognised in the income statement.

Investment income includes interest earned on bank balances and from unquoted loan note securities, and dividends.  Fixed returns on debt are recognised on a time apportionment basis so as to reflect the effective yield, provided it is probable that payment will be received in due course.  Dividend income from investments is recognised when the shareholders' rights to receive payment have been established, normally the ex dividend date.

All expenses are accounted for on an accruals basis.  Expenses are charged wholly to revenue with the exception of the investment management fee which has been charged 75% to capital and 25% to revenue.  Any applicable performance fee will be charged 100% to capital which was the case in 2016, but no performance fee is due this year (nor was it in 2017).

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 2018
Year Ended
28 February 2017
Dividends received - 13
Loan interest received 10 71

3.  Investment Management Fees

Expenses are charged wholly to revenue with the exception of the investment management fee which has been charged 75% to capital in line with industry practice.

  Year Ended
28 February 2018
Year Ended
28 February 2017
Investment management fee 56 69

In the year to 28 February 2018 the manager received a fee of 1% of the net asset value as at the previous year end (2017: 1%). Oxford Technology Management is also entitled to certain monitoring fees from investee companies and the Board reviews the amounts. OTM also received a further £47k in both years, the payment of 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.

A performance fee is payable to the Investment Manager once original shareholders have received a specified threshold in cash for each 100p (gross) invested.  The original threshold of 100p has been increased by compounding that portion that remains to be paid to shareholders by 6% per annum with effect from 1 March 2013, resulting in the remaining required threshold rising to 91.8p at 28 February 2018, corresponding to a total shareholder return of 127.8p after taking into account the 36.0p already paid out (36.0p + 91.8p = 127.8p).  After this amount has been distributed to shareholders, each extra 100p distributed goes 80p to the shareholders and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management receives 15p.

A performance fee of £nil (2017: £nil) has been accrued to date.  Any applicable performance fee accrual will be charged (or credited) 100% to capital.

Expenses are capped at 3%, including the management fee but excluding Directors' fees and any performance fee.

4. Other Expenses

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

  •       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 2018
Year Ended
28 February 2017
Directors' remuneration 21 21
Auditors' remuneration 6 6
Other expenses 28 28

5. Tax on Ordinary Activities

Corporation tax payable at 19.1% (2017: 20.0%) is applied to profits chargeable to corporation tax, if any.  The corporation tax charge for the period was £ nil (2017: £ nil).

 Year Ended
28 February 2018
Year Ended
28 February 2017
Return on ordinary activities before tax 523 (280)
Current tax at standard rate of taxation 100 (56)
UK dividends not taxable - (3)
Unrealised (gains)/losses not taxable (117) 84
Realised gains not taxable (2) (31)
Excess management expenses carried forward 19 6
Total current tax charge--

Unrelieved management expenses of £1,902,515 (2017: £1,801,400) 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 £523,000 (2017: loss of £280,000) attributable to shareholders divided by the weighted average number of shares 6,785,233 (2017: 6,785,233) in issue during the period.

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

7. Investments

 AIM quoted investments
Level 1
Unquoted investments
Level 3
Total investments £'000
Valuation and net book amount:      
Book cost as at 28 February 2017 428 2,775 3,203
Cumulative revaluation 292 1,057 1,349
Valuation at 28 February 20177203,8324,552
Movement in the year:      
Purchases at cost 50 81 131
Disposals - cost - (205) (205)
Disposals - revaluation - 97 97
Revaluation in year (2) 617 615
Valuation at 28 February 20187684,4225,190
Book cost at 28 February 2018 478 2,651 3,129
Cumulative revaluation to
28 February 2018
290 1,771 2,061
Valuation at 28 February 20187684,4225,190

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

Results of the subsidiary undertaking for the year ended 28 February 2018 are as follows:

 Country of RegistrationNature of BusinessTurnover

Retained profit/loss

Net Assets

OT3 Managers Ltd England and Wales Investment Manager  




Consolidated group Financial Statements have not been prepared as the subsidiary undertaking is not considered to be material for the purpose of giving a true and fair view.  The Financial Statements therefore present only the results of Oxford Technology 3 VCT plc, which the Directors also consider is the most useful presentation for Shareholders.

 8.  Debtors

 28 February 2018
28 February 2017
Prepayments, accrued income 2 2
Accrued loan interest - 71
Accrued sales proceeds 21 30

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

 28 February 2018
28 February 2017
Other creditors 10 8
Investment management fee accrual
(All deferred fees now fully paid at 28/2/18)
- 47

10. Share Capital


28 February 2018
28 February 2017
15,000,000 ordinary shares of 10p each 1,500 1,500
Total Authorised 1,500 1,500
Allotted, called up and fully paid:    
6,785,233 (2017: 6,785,233) ordinary shares of 10p each 679 679

11.   Reserves

When the Company revalues its investments during the period, any gains or losses arising are credited/charged to the Income Statement.  Changes in fair value of investments are then transferred to the Unrealised Capital Reserve.  When an investment is sold any balance held on the Unrealised Capital Reserve is transferred to the Profit and Loss Account Reserve as a movement in reserves.

Distributable reserves are £2,389,000 as at 28 February 2018 (2017: £2,849,000).

Reconciliation of Movement in Shareholders' Funds

 28 February 2018
28 February 2017
Shareholders' funds at start of year 5,595 6,893
Return on ordinary activities after tax 523 (280)
Dividends paid (271) (1,018)
Shareholders' funds at end of year5,8475,595

The Company paid a final capital dividend of 4.0p per ordinary share on 21 July 2017.

12.  Financial Instruments and Risk Management

The Company's financial instruments comprise equity and loan note investments, cash balances and debtors and creditors.  The Company holds financial assets in accordance with its investment policy of investing mainly in a portfolio of VCT - qualifying quoted and unquoted securities whilst holding a proportion of its assets in cash or near cash investments in order to provide a reserve of liquidity.  The risk faced by these instruments, such as interest rate risk or liquidity risk is considered to be minimal due to their nature.  All of these are carried in the accounts at fair value.

The Company's strategy for managing investment risk is determined with regard to the Company's investment objective.  The management of market risk is part of the investment management process and is a central feature of venture capital investment.  The Company's portfolio is managed with regard to the possible effects of adverse price movements and with the objective of maximising overall returns to shareholders.   Investments in unquoted companies, by their nature, usually involve a higher degree of risk than investments in companies quoted on a recognised stock exchange, though the risk can be mitigated to a certain extent by diversifying the portfolio across business sectors and asset classes, 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 2018 or 28 February 2017.

14.  Related Party Transactions

OT3 Managers Ltd, a wholly owned subsidiary, provides investment management services to the Company with effect from 1 July 2015 for a fee of 1% of net assets per annum.  During the year, £55,949 (2017: £68,941) was paid in respect of these fees.  No amounts were outstanding at the year end.

15.  Events after the Balance Sheet Date

During April 2018, a commitment of £30,000 was made into ImmBio.

Company Number: 4351474

Note to the announcement:

The financial information set out in this announcement does not constitute statutory accounts as defined in the Companies Act 2006 ("the Act").  The balance sheet as at 28 February 2018, income statement and cash flow statement for the period then ended have been extracted from the Company's 2018 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 2018 will be filed with the Registrar of Companies.
Copies of the documents will be submitted to the National Storage Mechanism and are available for inspection at:

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Oxford Technology 3 VCT plc via Globenewswire

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