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Oxford Technology (OXT)


Tuesday 30 June, 2015

Oxford Technology

Oxford Technology VCT plc : Annual Financial Report

Oxford Technology VCT plc : Annual Financial Report

For RNS Release
30th June 2015

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

Headlines for the Year

·       NAV of £3.5m (65p per share) at 28 February 2015 (unchanged from 28 February 2014)

·      Good growth, cash generation and technological progress within portfolio companies

·      VCT status retained after resolution with HMRC

·      Common Board structure announced across the Oxford Technology VCTs

·      Management fees reduced from 1.5% to 1%

·      Performance fee escalating threshold introduced (backdated to 1 March 2008) to increase potential returns to shareholders

Financial Headlines

                     Year Ended
        28 February 2015
Year Ended
28 February 2014

Net Assets at Year End



Net Asset Value per Share




Cumulative Dividend52.7p52.7p
NAV + Cumulative Dividend Paid from Incorporation 


Share Price at Year End53p75p
Earnings Per Share
(Basic & Diluted)



Chairman's Statement

Following my appointment at the end of July 2014, I am pleased to present to shareholders the 2015 annual report.

Ongoing VCT Status

Though thankfully now fully resolved, the first half of the Company's year was dominated by a period of uncertainty while the Directors and Investment Manager addressed an issue that had come to light in the first days of the financial year: shareholders will be aware from an RNS on 13 March 2014 that HMRC had considered a previous purchase of shares in Scancell Holdings Plc ("Scancell") to be in breach of the VCT rules. 

On 12 September 2014, following the completion of certain corrective actions, we were able to announce a satisfactory conclusion to this episode with the confirmation that HMRC had decided that the matter would be closed subject to Oxford Technology VCT Plc's ("OT1") continued compliance with VCT rules.  This means that the tax reliefs previously given to the VCT and its shareholders were not and will not be disturbed, and the entitlement to benefit from future reliefs available to VCTs will likewise continue. 

Following the corrective action, the Company's holding in Scancell is now as it was prior to July 2013.  The corrective action undertaken resulted in no financial gain or loss to the Company.

I wish to reiterate my appreciation for the constructive way in which HMRC engaged with us during this period and worked with us to reach a satisfactory conclusion.  I would like to place on record my thanks to the Manager, his staff and all the Oxford Technology VCT directors for their collective, vigorous and ultimately successful efforts in this endeavour.  I also wish to thank the Company's advisors, Joseph Hage Aaronson LLP and Jonathan Bremner of Counsel for their pro-active and professional work that helped ensure a satisfactory outcome at no cost to your VCT.

Ongoing Review

The Board has reviewed and continues to review all aspects of internal governance to avoid the possibility of breaches of VCT rules or company law.   Since taking up our appointment, the new Directors of the Company, Richard Roth and I, have been putting in place more robust procedures and are actively working with Oxford Technology Management and other stakeholders to ensure that its procedures comply with best practice commensurate for a VCT of the Company's size and type.

Portfolio Review

The net asset value per share on 28 February 2015 was 65p compared to 65p on 28 February 2014.  Dividends paid to date are 52.7p, giving a total return to date of 117.7p.  The earnings per share in the year to 28 February 2015 were nil.

The Company has a relatively concentrated portfolio dominated by its holding in Scancell, listed on the AIM market of the London Stock Exchange, which continues to make good progress with the development of novel immunotherapies for the treatment of cancer.  There is evidence to believe that Scancell  has an attractive combination of technologies in this newly developing field, but as ever the commercial and scientific risks are high.

The bid price of Scancell's shares used for the calculation of the Company's net asset value on 28 February 2015 was 30.5p.  Since that date, the Scancell share price has fluctuated, briefly dropping below 23p in early April 2015 before recovering, then reaching 45p before falling back, encompassing a £1.5 million swing on our net assets, i.e. 27p per share.  At close of business on 26 June 2015 the Scancell share price was 29.5p. 

The second-largest holding in the Company's portfolio is a 30% stake in Select Technology Limited, a photocopier software company that has been growing revenues at a compound annual 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. 

Together with the Company's cash balance, Scancell and Select Technology make up more than 90% of Oxford Technology VCT Plc's portfolio.  Only three other companies remain in the portfolio - they are performing adequately and we are continuing to collect dividends and capital returns from these companies as and when appropriate. 

Further details on our investments are contained within the Investment Portfolio Review.

We are also continuing to assess the opportunity for divestments so as to crystallise shareholder value as and when appropriate - at least two such opportunities arose during the financial year but it was decided that the cash offers on the table, though comparable to book value, were unattractive given the potential for near-term growth and cash generation from the relevant assets.


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.

Director Resignations

I would like to take this opportunity to thank Lucius Cary and John Jackson, both of whom retired as Directors of the Company in the Summer of 2014.  Lucius and John have been instrumental in the founding and running of the Company, and I would like to extend my thanks and that of all of those involved for their efforts since the Company's inception.  Both Lucius and John remain as shareholders, and of course Lucius remains actively involved as managing director of the Investment Manager, Oxford Technology Management.

Management Fees

In the light of the stage of OT1, which is now in its 19th year, your Directors have considered the ongoing management fees payable to the Manager of the fund.  The existing fee arrangement of 1.5% per annum 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 fee cap of 3% (excluding Directors' fees) covers all of the running costs incurred by the VCT.   This is in 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 125p; taking into account dividends paid to date of 52.7p, a further 72.3p would need to be paid out as at 28 February 2015. As this net target is above NAV, no performance fee has yet been accrued nor paid as at 28 February 2015. For clarity, the Company's total return was 117.7p per share at that date, over 7p below the performance fee hurdle of 125p. 

As I have outlined elsewhere in this statement, the Board is satisfied with progress within its portfolio and cautiously optimistic about the potential for increasing shareholder value.  However, given the age of the VCT, it is clear that shareholder value has not risen by as much as one might 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 125p performance threshold from 1 March 2008.  The escalation is therefore applied after ten years of full trading following the year of the first major allotment under the original prospectus.  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 is to increase the net target for the performance threshold for the financial year ending 28 February 2015 from 72.3p to 116p, (i.e. a total return of 168.7p if dividends paid to date are taken into account) incrementing quarterly thereafter as described above.

This will maintain the purpose of the performance fee as an appropriate - and achievable - incentive for Oxford Technology Management (who would receive approximately three quarters of any performance fee payable) 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 significantly 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 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 (the "Common Board"), 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, OT1 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.

Two new directors, Robin Goodfellow and David Livesley, the chairmen of OT3 and OT4 respectively, will be appointed to the board of OT1 in early July 2015. Shareholders will be asked to ratify these appointments at the forthcoming AGM. 

As shareholders will be aware, since taking up their Directors' responsibilities in the Summer of 2014, your Board has been reviewing all internal governance procedures. We have worked with Oxford Technology Management to upgrade policies and procedures in this area and have closely reviewed the outcomes. HMRC were satisfied with this work and with the revised governance procedures that include more clarity on the roles of your Board and the Manager.  I believe that these proposed changes to the structure provide a further improvement to the structure of OT1, namely:

  • Further formalising the roles of the Directors and Oxford Technology Management;
  • Four independent Directors (with the chairman holding a casting vote) to ensure the Board cannot be controlled by a single person;
  • Providing a framework for OT1 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 should also note that the remuneration committee has proposed a different structure to Directors' fees.  Fees are much lower than those earned by directors of almost all other VCTs but represent an increase from those 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 many other VCTs and is more than offset by the reduction in management fees discussed above. 

Reducing the 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 top-up share issues since that date. Once the process has been completed the reserves ultimately available for distribution to shareholders will increase, though reserves will remain negative until further returns have been generated by the portfolio.

Share Buy Backs

The Company has the ability to buy back shares.  To date this authority has never been exercised and the Directors have no current intention to do so, preferring instead to preserve resources to support our investees and pay dividends to all shareholders.  It is, however, a useful facility to have available should circumstances change and the Company therefore wishes to maintain this capability.

Shareholder Approvals

Shareholders will be asked to approve the appointment of the new Directors, the revised remuneration structure, the reduction in the share premium account and the continuing ability for the Company to buy back its own shares at the AGM. The Board encourages you to vote in favour of all the resolutions.


Shareholders should note that the AGM for the Company will be held on Wednesday 26 August 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. 


Looking ahead, I believe the portfolio - though concentrated - is well positioned for growth.  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. 

Alex Starling - Chairman
29 June 2015

Table of Investments held by Company at 28 February 2015




Date of initial investment

Net cost of
investment £'000
Carrying value at 28/02/15 £'000Change in value for the year £'000% equity held by
Quoted on AIM
Antibody based
cancer therapeutics
Aug 1999

344 2,099 (172) 3.1
Select Technology Photocopier Interfaces Sep 1999 488 958 210 30.0
Getmapping Aerial photography Mar 1999


213 49 3.9

Bactericidal powder coating Dec 1997


66 - 6.6

Sep 1999


10 - 26.9
Accountancy software Mar 1998 7 7 4 -
Totals     1,592 3,353 91  
Other Net Assets



Number of shares in issue:  5,431,656
Net Asset Value per share at 28 February 2015: 65p
Dividends paid to date: 52.7p

This table shows the current portfolio holdings.  The investments in Avidex, Concept Broadcast, Coraltech, Eurogen, Im-Pak, Freehand Surgical, IMPT, Nexus, OST, Rapier, Sirius and Synaptica have been written off.   The investments in Valid, Dataflow, MET and Equitalk have been sold.

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. 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 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 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 of 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

Alex Starling will continue to chair the Company. Richard Roth will 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 was a Director of the Company up until 27 August 2014.

The Directors may at their discretion pay additional sums in respect of specific tasks carried out by individual Directors on behalf of the Company. In this context, an additional one off payment has been made to Richard Roth of £2,000 as compensation for executive work undertaken in relation to the setting up of the Common Board structure.

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 168.7p (compared to a total return at that date of 117.7p) 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 0.11% of any amount over the hurdle, whilst David Livesley would be entitled to 0.68%. No performance fee will be payable for the year ending 29 February 2016 unless original shareholders have received back at least £1.75 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 Robin Goodfellow and David Livesley to the Board of OT1 on 1 July 2015, and the Directors consider it helpful to shareholders to therefore set out the full expected cost for Directors' 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' FeesYear End 28/02/17
Year End 29/02/16
Year End 28/02/15
Year end
Alex Starling £5,500 £6,167 £4,375 -
Richard Roth £6,500 £8,833 £4,375 -
John Jackson - - £3,750 £7,500
Lucius Cary - - £1,041 £2,500
Robin Goodfellow £5,000 £3,333 - -
David Livesley £3,500 £2,333 - -

Income Statement

  Year Ended

28 February 2015
Year Ended

28 February 2014







(Loss)/Gain on disposal of investments  

- - - - (59) (59)
Unrealised (loss)/gain on fair value   - 104 104 - 198 198
Other income 2 - - - - - -
Investment management fees 3 - (53) (53) - (61) (61)
Other expenses 4 (52) - (52) (42) - (42)
Return on ordinary activities before tax   (52) 51 (1) (42) 78 36
Taxation on return on ordinary activities 5 - - - - - -
Return on ordinary activities after tax   (52) 51 (1) (42) 78 36
Earnings per share - basic and diluted 6   (0.9)p 0.9p 0.0p (0.7)p 1.4p 0.7p

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.

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

Reconciliation of Movement in Shareholders' Funds

 Year Ended
28 February 2015
Year Ended
28 February 2014
Shareholders' funds at start of year 3,534 4,041
Return on ordinary activities after tax (1) 36
Dividends paid - (543)
Shareholders' funds at end of year 3,5333,534

Balance Sheet

 Year Ended
28 February 2015
Year Ended
28 February 2014
Fixed Asset Investments at fair value
(Note 7)
  3,353   3,271
Current Assets        
Debtors 2   112  
Cash at Bank 186   162  
Creditors: amounts falling due within 1 year (8)   (11)  
Net Current Assets   180   263
Net Assets                 3,533 3,534
Called up equity share capital   543   543
Share Premium   176   176
Unrealised Capital Reserve   3,104   2,940
Profit and Loss Account Reserve   (290)   (125)
Total Equity Shareholders' Funds 3,533 3,534
Net Asset Value Per Share 65p 65p

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:

Richard Roth

Cash Flow Statement

 Year Ended
28 February 2015
Year Ended
28 February 2014
Net cash outflow from operating activities (33) (156)
Financial investment    
Purchase of investments - -
Disposal of investments 57 83
Dividends paid - (543)
Increase/(Decrease) in cash at bank 24(616)

Reconciliation of Net Cash Flow
to Movement in Net Funds

 Year Ended
28 February 2015
Year Ended
28 February 2014
Increase/(Decrease) in cash resources
at bank
24 (616)
Opening net funds 162                                       778
Net funds at year end 186162

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

 Year Ended
28 February 2015
Year Ended
28 February 2014
Return on ordinary activities before tax (1) 36
Gain on disposal of investments - 59
(Gain) on valuation of investments (139) (198)
(Increase)/decrease in debtors 110 (23)
(Decrease)/increase in creditors (3) 5
Outflow from operating activities (33)(156)

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).


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 arm's 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 1998. 

2. Income

Income represents realised gains on the disposal of investments along with dividends, 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
Year Ended
28 February 2014
Bank 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 any performance fee) which has been charged 100% to the capital return.

 Year Ended
28 February 2015
Year Ended
28 February 2014
Investment management fee 53 61
Total 53 61

In the year to 28 February 2015 (and previous financial years), the manager received a fee of 1.5% 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.

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 £1.25 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. No performance fee has been paid to date. As reported in the Chairman's statement, the hurdle of £1.25 has now been increased by compounding that portion that remains to be paid to shareholders by 6% per annum with effect from 1 March 2008. This has the effect of increasing the hurdle to just over £1.68p as at 28 February 2015.

Expenses are, and remain, 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 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
Year Ended
28 February 2014
Directors' remuneration 14 10
Auditors' remuneration 6 5
Legal and professional expenses 10 9
Accounting and administration services 6 3
Other expenses 16 15
Total 52 42

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 (1) 36
Current tax at standard rate of taxation - 7
Unrecognised tax losses - (7)
Total current tax charge - -

Unrelieved management expenses of £1,123,276 (2014: £1,018,059) remain available for offset against future taxable profits. 

6. Earnings per Share

The calculation of earnings per share (basic and diluted) for the period is based on the net loss of £1,000 (2014: profit of £36,000) attributable to shareholders divided by the weighted average number of shares 5,431,656 (5,431,656) 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. 

 AIM quoted investments
(Level 1)
Unquoted investments
(Level 3)
Total investments £'000
Valuation and net book amount:      
Book cost as at 28 February 2014 344 1,516 1,860
Cumulative revaluation 1,927 (516) 1,411
Valuation at 28 February 2014 2,271 1,000 3,271
Movement in the year:      
Purchases at cost - - -
Redeemed/Disposed - (117) (57)
Revaluation in year (172) 371 139
Valuation at 28 February 20152,0991,2543,353
Book cost at 28 February 2015 344 1,399 1,743
Revaluation to 28 February 2015 1,755 (145) 1,610
Valuation at 28 February 20152,0991,2543,353

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  Shareholders will be notified of this by email or post or sent a hard copy in the post in accordance with their instructions.

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 VCT plc via Globenewswire


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