20 May 2008 11:22
Preliminary Announcement for
Oxford Technology 2 Venture Capital Trust plc for the year ended
29 February 2008
Chairman's Statement
Investment Portfolio
The Board of Oxford Technology 2 VCT is pleased with the development of the portfolio as a whole. However, the overall result is a mixture, with some companies making good progress while others have experienced problems of one sort or another.
Ultimately, success for OT2 as a whole, meaning a good return to OT2 shareholders, is likely to come about because one or more of the investees become stars, and therefore very valuable and not from the fact that every company delivers good returns.
It is good to be able to report that several companies in the OT2 portfolio continue to have the potential to become stars. Included among these are the following:
OT2 owns 5.4% of Commerce Decisions which is making good progress. Sales have grown strongly and the company is profitable and cash generative. It paid a dividend for the first time in March 2008.
OT2 owns 12.3% of Inscentinel. Inscentinel has yet to achieve its first commercial sales, but received a visit before Christmas from one of the world's largest defence companies which has expressed a desire to partner with Inscentinel, on developing bee-based systems for various security applications.
The regulatory process is notoriously slow, but Insense has at last received approval for the sale of the first of its range of active wound-healing dressings, Oxyzyme, which actively transports oxygen to the wound surface. The first sales of Oxyzyme were achieved in the UK and Europe in autumn 2007, and are now growing month by month. The results from the clinical trials, where Oxyzyme is being used on hard-to-heal wounds, continue to be very encouraging, with some persistent wounds which have remained raw for several years, being healed with dry skin forming in a matter of weeks. Sales of the second dressing in the range, Iodozyme which produces slow release iodine to deal with infected wounds, as well as producing oxygen, are expected to start in the spring, hopefully in the US as well as in Europe. But OT2 owns only a small shareholding (3.9%).
OT2 owns 22.3% of Orthogem which is making good progress. Its artificial bone graft, Tripore, is now being sold mainly for use in spinal surgery both in the Europe and the US. A white paper giving the one year results of the first ten spinal patients has now been published.
OT2 owns 2.9% of Telegesis. Telegesis has achieved the first sales of its Zigbee modules and sales have been growing fast. Sales in the quarter to June 2007 were £49k. Sales in the quarter to September were £165k. Sales in the quarter to December 2007 were £618k. At the time of writing it seems likely that sales in the quarter to March 2008 will be slightly below those in the December quarter, but there is also the possibility of some much larger orders.
OT2 owns 18% of OC Robotics. Since the initial investment in 2001, when the company consisted of the two founders working from home with an idea on paper, OC Robotics has made excellent progress. Today the company occupies a modern factory unit in Bristol where it manufactures snake arm robots for customers around the world, mainly in the US. It has never needed additional investment and has managed to fund its growth entirely from payments from customers, plus some grants in the early years. In the year to December 2007, it recorded a profit after tax of over £300k on sales of £1.1m. In March the compnay declared a dividend for the first time. Projections for 2008 show a significant increase in sales, but some quotations are quite large (the largest so far is £8m), so that it is difficult to make a precise projection since much will depend on which quotations are accepted and become orders.
Six years after the first investment, Plasma Antennas has achieved its first sales (as distinct from R&D contracts of which it has had many). These were for directional steerable antennas for use in trials. If the trials are successful then larger contracts may be expected. Work on producing a plasma antenna continues, but this is a highly challenging technical task. OT2 owns 7.6% of Plasma Antennas.
OT2 owns 7.9% of Select Technology. During the last two years, Select has been working very closely with Ricoh, the world's largest manufacturer of MFDs (modern photocopiers, which as well as photocopying, scan, fax, email and print). Select has developed a piece of software for Ricoh, known as MyUI (My User Interface) which enables anyone to control an MFD wirelessly using the screen on their own laptop, mobile phone or PDA. The key point is that this enables people to use an interface which is tailored to their particular needs. So a completely blind person can now use an MFD using voice commands spoken into their PDA. The PDA receives a signal from the MFD, saying "About to print ten copies A4 black and white, please say Go to confirm." The visually impaired can have very large type. Ricoh are excited by this and in September 2007, awarded Select its "innovator of the year" award. The frustration for Select has been the very slow process of getting to first sales. Ricoh decided to launch the product globally, and went through very thorough testing using MyUI on every one of the hundreds of different models and in combination with hundreds of other software packages. This testing showed up various problems with software/hardware clashes in some situations, none of which were anything to do with Select or its software, but they caused delays. But all these problems have now been solved and the product has been launched.A sale is effected by a dealer anywhere in the world accessing a website and ordering a launch key which is then downloaded. Select receives $375 per sale. Ricoh is the largest manufacturer of MFDs in Europe and the US. What is as yet unknown is what percentage will be sold with MyUI. Select is also working with other manufacturers and its existing business of supplying various specialist products for use with photocopiers, such as payment systems, continues steadily.
All these companies have the potential to deliver very significant returns. Other companies have had problems and their value has been written down. Net Assets per share at 29 February 2008 were £0.68. Together with dividends of 6p per share paid to date, the total return to date is £0.76. This compares to £0.68 at 31 August 2007, and £0.75 at 28 February 2007.
Fundraising
On 4 April 2008 OT2 completed a rights issue which raised £265,362.82 and has resulted in an additional 374,602 shares being allotted. This is a post balance sheet event and is not reflected in the Net Asset Value figures. We will now be able to offer some support to our investee companies in their additional fundraising rounds.
Results for the year
Realised profit on disposal of investments, interest on bank deposits and investee loans produced gross income of £14,000 (2007: £19,000) in the year.
Retained losses were £55,000 (2007: profit of £133,000) and earnings per share for the year were (0.92)p, (2007: 2.22p) per share.
AGM
Shareholders should note that the AGM for Oxford Technology 2 VCT will be held on Monday 23rd June 2008, 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 May 2008
Profit and Loss Account for the year ended 29 February 2008
|
| Year ended 29/02/08 |
| Year ended 28/02/07 |
|
|
| £000 |
| £000 |
|
| Gain/(loss) on disposal of investments held at fair value | - |
| - |
|
| Unrealised gain on fair value of investments | 82 |
| 275 |
|
| Other income | 14 |
| 19 |
|
| Investment management fees | (95) |
| (91) |
|
| Other expenses | (56) |
| (70)
|
|
|
| ________ |
| _______ |
|
|
|
|
|
|
|
| Profit/(loss) on ordinary activities after taxation | (55) |
| 133 |
|
| Taxation on profit/(loss) on ordinary activities | - |
| - |
|
|
| ====== |
| ====== |
|
| Profit/(loss) on ordinary activities after tax | (55) |
| 133 |
|
|
| ====== |
| ====== |
|
|
|
|
|
|
|
| Earnings per share (basic and diluted) | (0.92)p |
| 2.22p |
|
|
|
|
|
|
|
|
| ====== |
| ====== |
|
|
|
|
|
|
|
Historic cost profits and losses note
|
| Year ended 29/02/08 |
| Year ended 28/02/07 |
|
| £000 |
| £000 |
| (Loss)/Profit for the year: | (55) |
| 133 |
| Unrealised loss on fair value of investments | (82) |
| (275) |
| Realisation of prior year's net gains | - |
| - |
| Historical cost loss before tax | (137) |
| (142) |
| Historical cost loss after tax | (137) |
| (142)
|
Balance sheet at 29 February 2008
|
| 29 February 2008 Audited | 28 February 2007 Audited | ||
|
| £000 | £000 | £000 | £000 |
| Fixed assets |
|
|
|
|
| Investments at fair value |
| 4,137 |
| 4,042 |
| Current assets |
|
|
|
|
| Debtors & prepayments | 2 |
| 3 |
|
| Cash at bank | 80 |
| 118 |
|
|
| _____ |
| _____ |
|
|
| 82 |
| 121 |
|
| Creditors: amounts falling due within one year | (116) |
| (5) |
|
|
| _____ |
| _____ |
|
| Net current assets |
| (34) |
| 116 |
|
|
| _____ |
| _____ |
| Net assets |
| 4,103 |
| 4,158 |
|
|
| ===== |
| ===== |
| Capital and reserves |
|
|
|
|
| Called up share capital |
| 600 |
| 600 |
| Profit and loss account |
| 2,300 |
| 2,437 |
|
|
|
|
|
|
| Revaluation reserve |
| 1,203 |
| 1,121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders' funds |
| 4,103 |
| 4,158 |
|
|
| ===== |
| ===== |
| Net asset value per share |
| 68p |
| 69p |
|
|
|
|
|
|
|
|
| ===== |
| ===== |
|
|
|
|
|
|
Cash flow statement for the year ended 29 February 2008
|
| 2008 Audited | 2007 Audited |
|
| £000 | £000 |
| Net cash (outflow) from operating activities | (25) | (141) |
| Capital expenditure and financial investment |
|
|
| Purchase of investments | (13) | (101) |
| Disposal of investments | - | - |
|
| ______ | ______ |
| Net cash outflow from capital expenditure and financial investment | (13) | (101) |
| Dividends paid | - | (300) |
|
| ______ | ______ |
| Decrease in cash | (38) | (542) |
|
| ===== | ===== |
Notes:
1. Basis of preparation
The preliminary announcement has 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. The principal accounting policies are set out in the company's financial statements for the year ended 29 Februrary 2008.
2. Earnings per Ordinary
The calculation of earnings per share (basic and diluted) is based on the net loss for the financial period of £55,000 (2007: profit of £133,000) divided by the weighted average number of ordinary shares of 6,000,000 (2007: 6,000,000) in issue during the year.
3. 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 29 February 2008 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.
Oxford Technology 2 VCT (OXH)