10 Jun 2009 12:38
Annual Financial Report - Amendment
Announcement for
Oxford Technology 4 Venture Capital Trust plc for the year ended 28 February 2009
Chairman's Statement
These accounts are a restatement of the accounts released on the 29th May 2009 and subsequently recalled on the 9th June 2009. This is because the original accounts contained an incorrect valuation of one investment (Historic Futures Limited). As a consequence, the net asset value per share should have been 99.4p per share rather than 102.0p as originally stated, the unrealised loss on investments should have been £687,000 rather than £417,000, and the net loss per share should have been 6.64 pence per share rather than 4.02 pence per share. Revenue loss per share is unaffected.
Investment Portfolio
The Board of Oxford Technology 4 VCT (OT4) is pleased with the development of the portfolio as a whole. Ultimately, success for OT4, meaning a good return to OT4 shareholders, is likely to come about because one or more of the investees become stars, and therefore very valuable. In other words, good returns are more likely to come from one or more 'stars' than from the fact that every company delivers good returns.It is good to be able to report that many companies in the OT4 portfolio continue to have the potential to become stars. Included among these are the following:
Arecor has developed novel ways of stabilising proteins. Although still early stage, it is making encouraging progress. One of its collaborations is with Glide Pharma which continues to make excellent progress with its needle-free drug-delivery technology. In November 2008, Glide began trials of a drug in man for the first time, an important milestone. A second non-clinical vaccine study confirmed improved efficacy for the Glide technology as compared to a conventional needle and syringe. One of the world's largest vaccine companies is currently undertaking a feasibility study with two of its blockbuster vaccines. At February 2009, Glide had collaborations with six pharma companies, including some of the world's largest.
Diamond Hard Surfaces is making good progress. It is able to produce thick coatings of diamond on a variety of substrates, and this coating is extremely hard, and also tough and has a very low coefficient of friction. During the last year DHS has continued to supply small quantities of coatings to commercial customers from its small scale experimental vacuum furnace. In early 2009, DHS completed a fundraising of £550,000, which included investment from Element 6, who specialise in carbon in all its forms. The capital will be used to establish a production facility in Northampton which will be able to supply coatings for larger commercial contracts. OT4 owns 38.5%.
Impact Applications (in which OT4 owns 44%) has suffered from static sales as several large customers have delayed placing significant contracts in the light of the credit crunch. OT4 owns 17.7% of Inscentinel, which is based at Rothamsted Research and which is developing instruments for detecting trace vapours using the exquisitely sensitive olfactory sense of bees. Inscentinel has made good progress on the engineering front during the last year. In particular, Inscentinel now has a plastic injection moulded bee holder which also incorporates the electronics which detects the proboscis extension reflex and memory to store results and which can communicate with the controlling PDA or computer. In summer 2009, Inscentinel will conduct the first field trial of its VASOR, a hand-held device which holds 6 cassettes of six bees each, and which will be capable of detecting five different explosives. The hope is that Inscentinel will then transition from an R&D company to a commercial company with a product/service to sell.
Since the first investment in Insense in 2001, the company has come a long way. Its active wound healing dressings, Oxyzyme and Iodozyme, which promote wound healing by producing low level iodine and also oxygen at the wound surface, have now been approved for sale in Europe, but still not yet in the US. Sales in Europe are growing steadily, although more slowly than initially hoped. Sales exceeded £40,000 in a month for the first time in March 2009. Very heartening stories continue to come from patients, many of whom have had wounds of many years standing completely healed in a few weeks after using Oxyzyme and/or Iodozyme. In one case a patient was about to have a leg amputated since wounds, sustained in 1982, were not responding to any treatment. Fortunately he was put on Insense dressings, and so saved his leg. Insense hopes to reach breakeven by the end of 2009. Insense is also developing a range of products for dermatology applications.
OT4 owns 22% of Meciria, whose new directional drilling tool for use in oil wells has been subjected to a number of tests in 2008 and 2009. Subject to satisfactory completion of the final test, the plan is that this tool will enter service in the US in 2009.
OT4 owns 10.6% of Mirriad, whose software enables products to be 'placed' in a video clip. A can of Coca Cola, for example may be inserted on a desk, when it was not there in the original, and will then appear, with the correct lighting, and casting a shadow appropriate to the lighting etc, throughout the clip. During the last year, the company has signed agreements with some large broadcasting and TV production companies, who are now beginning to use the service. OT4 owns 7.9% of Novacta, which is making good progress with its programme to produce an antibiotic for C.diff. It recently received a commitment to invest up to £3.5m from the Wellcome Trust.
Plasma Antennas of which OT4 owns 20.6%, is making encouraging progress. The company designs specialist antennas for transmitting and receiving radio signals. Since the original investment by OT2 in 2001, the company has lived mainly on R&D contracts from Government and European bodies. In 2007, it achieved its first sales of antennas, priced at c£10,000 each for use in trials by military and security applications. In early 2009 the company was asked to quote for the supply of several hundred such antennas for a military application. The contract details are being negotiated. In late 2008, Plasma Antennas employed a business development manager to find commercial and govt/military/security customers for its products.
OT4 owns 13% of Telegesis. Telegesis specialises in designing and manufacturing Zigbee modules. Zigbee is a relatively new communications protocol (like Bluetooth) but is for sending small amounts of data over distances of 300 metres, using very low power so that a battery may last for up to 5 years. Zigbee chips automatically make self-healing mesh networks, so that the data hops from chip to chip. Telegesis has grown as Zigbee has grown. Sales in the year to June 2007 were just over £250,000. Sales to June 2008 were £1.5m. Sales since then have been lower as one large customer has delayed its roll-out of automatic meter reading, but Telegesis is in negotiation with a growing number of potential customers some of whom have large potential orders.
There are some of these companies that have the potential to deliver significant returns.
A few companies have had problems and their value has been written down, partly in response to generally lower valuations post credit crunch. Net Assets per Share at 28 February 2009 were 99p. This compares to £1.08p at 29 February 2008.
Fundraising
On 3 April 2009 OT4 completed a rights issue which raised £327,190 which has resulted in an additional 314,146 shares being allotted. This is a post balance sheet event and is not reflected in the Net Asset Value figures. We will now be in a better position to be able to support our investee companies in their additional fundraising rounds.
Results for the year
Interest on bank deposits and investee loans together with dividend income produced gross revenue of £91,000 (2008: £139,000) in the year. Net revenue after taxation and management expenses was a loss of £174,000 (2008: loss of £150,000) and revenue return for the year was a loss of 1.68p (2008: loss of 1.45p) per share. Capital return was a loss of 6.64p per share (2008: gain of 18.58p).
AGM
Shareholders should note that the AGM for Oxford Technology 4 VCT will be held on Friday 3rd July 2009, at the Magdalen Centre, Oxford Science Park, starting at 12.00 noon and will include presentations by some of the companies in which the Oxford Technology VCTs have invested. A formal Notice of AGM has been included at the back of these Accounts together with a Form of Proxy for those not attending.
John Jackson
Chairman
9 June 2009
Statement of total return (incorporating the revenue account) for the year ended 28 February 2009
* The revenue column of this statement is the profit and loss account of the company. All revenue and capital items in the above statement derive from continuing operations. There were no recognised gains or losses for the period other than those shown above. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance sheet at 28 February 2009
|
| 28 February 2009 Audited | 29 February 2008 Audited | |||||||
|
| £000 | £000 | £000 | £000 | |||||
| Fixed assets |
|
|
|
| |||||
| Investments at fair value |
| 8,933 |
| 8,640 | |||||
| Current assets |
|
|
|
| |||||
| Debtors & prepayments | 377 |
| 385 |
| |||||
| Cash at bank | 975 |
| 2,121 |
| |||||
|
| _____ |
| _____ |
| |||||
|
| 1,352 |
| 2,506 |
| |||||
| Creditors: amounts falling due within one year | (10) |
| (10) |
| |||||
|
| _____ |
| _____ |
| |||||
| Net current assets |
| 1,342 |
| 2,496 | |||||
|
|
| _____ |
| _____ | |||||
| Net assets |
| 10,275 |
| 11,136 | |||||
|
|
| ===== |
| ===== | |||||
| Capital and reserves |
|
|
|
| |||||
| Called up share capital |
| 1,034 |
| 1,034 | |||||
| Share premium account |
| 9,061 |
| 9,061 | |||||
| Other reserves: |
|
|
| ||||||
| Capital reserve - realised |
| 357 | 318 | ||||||
| Capital reserve - unrealised | 491 | 1,217 | |||||||
| Revenue reserve | (668) | (494) | |||||||
| Shareholders' funds |
| 10,275 |
| 11,136 | |||||
|
|
| ===== |
| ===== | |||||
| Net asset value per share |
| 99.4p |
| 107.7p | |||||
|
|
| ===== |
| ===== | |||||
Cash flow statement for the year ended 28 February 2009
|
| 2009 Audited | 2008 Audited | |||
|
| £000 | £000 | |||
| Net cash outflow from operating activities | (166) | (130) | |||
| Capital expenditure and financial investment |
|
| |||
| Purchase of investments | (1,042) | (1,710) | |||
| Disposal/redemption of investments | 62 | 168 | |||
|
| ______ | ______ | |||
| Net cash outflow from capital expenditure and financial investment | (980) | (1,672) | |||
| Net cash outflow before financing | (1,146) | (1,672) | |||
| Financing | |||||
| Issue of shares | - | - | |||
| Expenses paid in connection with share issue | - | - | |||
| ______ | ______ | ||||
| Net cash inflow from financing | - | - | |||
|
| ______ | ______ | |||
| Increase/Decrease in cash | (1,146) | (1,672) | |||
|
| ====== | ====== |
Notes:
1. Basis of preparation
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of investments. The financial statements have been prepared in accordance with applicable accounting standards and with the Statement of Recommended Practice 'Financial statements of investment trust companies' issued in December 2005.
2. Earnings per Ordinary Share
The calculation of earnings per share for the period is based on the profit attributable to shareholders divided by the weighted average number of shares in issue during the period.
3. 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 six months. The Directors' may then apply an appropriate methodology which, as far as possible, draws on external, objective market data such as where fair value is indicated by:
• a material arms length transaction by a third party in the shares of the company; 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.
4. General
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The balance sheet at 28 February 2009 and the profit and loss account, cash flow statement and associated notes for the year then ended have been extracted from the company's 2008 statutory financial statements on which the auditors' opinion is unqualified and does not include any statement under section 237 of the Companies Act 1985.