Preliminary Statement

6 May 2005 16:21

Oxford Technology Vent Cap Tst PLC06 May 2005 Preliminary Announcement for Oxford Technology Venture Capital Trust plc for the year ended 28 February 2005 Chairman's Statement Investment Portfolio There have been mixed results for the investee companies of Oxford TechnologyVCT, with some - particularly biotech companies - experiencing fundingdifficulties, whilst others have had a very successful year. There has been much comment in the press about the increasing difficulties forpre-revenue biotech companies in the UK to raise capital, and that thevaluations of these companies have fallen. Oxford Technology VCT (OTVCT)invested £100,000 (as part of a £200,000 seed round) at £6 per share in AvidexLtd when it was founded in 1997. Since 1997, Avidex has, raised a further £30m,to which OTVCT contributed a further £200,000. These further fundraisings weredone at share prices of £9, £12, and then £40 (OTVCT valued its shares at themost recent share price, as per British Venture Capital Association guidelines).However, in the recent rounds the investment terms have become more complicatedwith preference and anti-dilution provisions being introduced for latershareholders. For instance, in 2004/05, Avidex raised £10m by means of a loan at2% per month interest, with the option to convert to shares at the price of thenext round. But during all of this, the science has been going extremely well.The first product, RhuDex, a potential treatment for rheumatoid arthritis entersclinical trials in April 2005. In February 2005, Avidex announced the successfuloutcome of a collaboration with the US biotech firm, Anosys. In March, Avidexpublished data demonstrating for the first time that soluble, high affinity,human monoclonal T cell receptors (mTCRs) can be selected using phage displaytechnology. Also in March, Avidex announced an agreement with Active Biotech ABto use Avidex's mTCR technology to help Active develop a novel cancerimmunotherapeutic. Also in March, Avidex announced a research collaboration withthe Ludwig Institute for Cancer Research. The collaboration is based on one ofAvidex's mTCRs which targets the tumour associated antigen NYESO-1. This wasoriginally discovered by researchers at the LICR and is one of the mostimmunogenic tumour antigens known. In summary, Avidex is making excellentprogress with its business development. However, in the light of the fact thatit is has become increasingly difficult to value the ordinary shares, OTVCTannounced on 22 February 2005 that it would revalue its holding in Avidex atcost, rather than at the most recent share price. This had the effect ofreducing the holding from £1.435m to £300,000, equivalent to a reduction of 23pper share. Naturally we hope that this will transpire to be a conservativevaluation; only time will tell. At the same time, Scancell, the Nottingham based company that developsanti-cancer therapeutics has found it similarly difficult to raise capital,despite the strength of its science. Again, the decision was taken to write downthe value of the holding to reflect the difficulty in funding. Armstrong Healthcare's medical robots were used for the first time in heartsurgery, to enable bypass operations in the US, and mitral valve replacement/repair at St Mary's hospital, to be undertaken endoscopically, thereby avoidingthe need for open heart surgery, with huge benefits to the patient. However,Armstrong failed to achieve its sales projections in 2004, and, as a result,needed to raise additional capital. At the time of writing, this is being raisedby means of a rights issue at £1.50 per share, as opposed to the former shareprice of £4 per share. The falls in the value of OTVCT's holdings in Avidex, Scancell and Armstrongthus contributed to a fall in the Net Asset Value per Share of OTVCT from £1.12in the accounts to 29 February 2004 to 86p in these accounts. Against this, there were gains in the value of Im-Pak, and, in September 2004,OTVCT received £278,000, the first earn-out payment from the sale of Valid,bringing the total received from this investment to £1.753m (against an originalcost of £270,000). At the time of writing, Valid is ontrack to achieve the finalearn-out payment in August 2005, which (for OTVCT) should amount to £780,000(although this is not certain). Along with the other shareholders in Valid,OTVCT signed various standard warranties associated with the sale so that, intheory, it could be required to repay some or all of the sale proceeds. Due towarranties which were signed on the sale of Valid, the Board has not yet paid adividend with the proceeds of the sale, but will continue to review thesituation and will pay a dividend as soon as it considers it prudent to do so. Getmapping is making better progress, and although OTVCT is still showing asubstantial loss on its investment overall, the share price has improved from1.75p to 9p per share during 2005. Getmapping is now traded on Sharemark.co.ukwhere buyers and sellers may enter anonymous bids in a monthly auction. Results for the year Interest on bank deposits and investee loans together with dividend incomeproduced gross revenue of £60,000 (2004: £43,000) in the year. Net revenueafter taxation and management expenses was a loss of £96,000 (2004: loss of£127,000) and revenue return for the year was a loss of 1.98p (2004: loss of2.61p) per share. Capital return was a loss of 23.86p (2004: loss of 0.31p) pershare. AGM Shareholders should note that the AGM for OTVCT will be held on Friday 10 June2005, at the Magdalen Centre, Oxford Science Park, starting at 12.00 noon andwill include presentations by some of the companies in which the OxfordTechnology VCTs have invested. A formal Notice of AGM has been included at theback of these Accounts together with a Form of Proxy for those not attending. Fuller information on each of the investee companies is given in the April 2005newsletter. John Jackson Chairman 6 May 2005 Statement of total return (incorporating the revenue account)* for the year ended 28 February 2005 2005 2004 Audited Audited Revenue £000 Capital Total Revenue Capital Total £000 £000 £000 £000 £000Loss on investments - (1,158) (1,158) - (15) (15)Income 60 - 60 43 - 43Investment management fee (74) - (74) (95) - (95)Other expenses (82) - (82) (75) - (75) _____ _____ _____ _____ _____ _____Net loss on ordinary activities (96) (1,158) (1,254) (127) (15) (142)before taxationTax on net loss on ordinary - - - - - -activities _____ _____ _____ _____ _____ _____Loss attributable to equity (96) (1,158) (1,254) (127) (15) (142)shareholders and transfers fromreserves ====== ====== ====== ====== ====== ======Loss per ordinary share (1.98p) (23.86)p (25.84)p (2.61p) (0.31)p (2.92)p ====== ====== ====== ====== ====== ====== * The revenue column of this statement is the profit and loss account of thecompany. All revenue and capital items in the above statement derive from continuingoperations. There were no recognised gains or losses for the year other thanthose shown above. Balance sheet at 28 February 2005 28 February 2005 Audited 29 February 2004 Audited £000 £000 £000 £000Fixed assetsInvestments 2,927 5,460Current assetsDebtors 10 25Cash at bank 1,257 153 _____ _____ 1,267 178 Creditors: amounts falling due (5) (195)within one year _____ _____Net current assets/ (1,262) (17)(liabilities) _____ _____Net assets 4,189 5,443 ===== =====Capital and reservesCalled up share capital 485 485Share premium account 4,107 4,107Other reserves:Capital reserve - realised 527 248Capital reserve - unrealised (304) 1,133Revenue reserve (626) (530) _____ _____Shareholders' funds 4,189 5,443 ===== =====Net asset value per share 86p 112p ===== ===== Cash flow statement for the year ended 28 February 2005 2005 2004 Audited Audited £000 £000Net cash outflow from operating (271) (60)activitiesCapital expenditure and financialinvestment Purchase of investments (127) (1,241) Disposal / redemption of investments 1,502 1,414 ______ ______Net cash inflow from capital 1,375 173expenditure and financialinvestment ______ ______Increase in cash 1,104 113 ====== ====== Notes: 1. Basis of preparation The preliminary announcement has been prepared in accordance with applicableaccounting standards up to and including FRS 19 and with the Statement ofRecommended Practice 'Financial statements of investment trust companies' issuedin January 2003. The principal accounting policies have remained unchanged fromthose set out in the company's 2003 financial statements. 2. Return per Ordinary Share The calculation of revenue return per share is based on the net deficit for thefinancial period of £96,000 (2004: £127,000) divided by the weighted averagenumber of ordinary shares of 4,852,900 (2004: 4,852,900) in issue during theyear. The calculation of capital return per share is based on the net capital loss forthe financial period of £1,158,000 (2004: loss of £15,000) divided by theweighted average number of ordinary shares of 4,852,900 (2004: 4,852,900) inissue during the period. 3. General The financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in section 240 of the Companies Act1985. The balance sheet at 28 February 2005 and the statement of total return,cash flow statement and associated notes for the year then ended have beenextracted from the company's 2005 statutory financial statements on which theauditors' opinion is unqualified and does not include any statement undersection 237 of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange