20th May 2008 11:34
Preliminary Announcement for
Oxford Technology 4 Venture Capital Trust plc for the year ended
29 February 2008
Chairman's Statement
Investment Portfolio
The Board of Oxford Technology 4 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 OT4 as a whole, 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, which is still at a very early stage, but which has made an encouraging start. OT4 owns 8.2%.
Diamond Hard Surfaces has achieved a significant milestone in its development in that it has received the first orders for components coated with its unique thick ultra-hard diamond coating, for use in an industrial application. It has also received the first repeat orders for this application. It continues to receive orders for samples for testing in new applications. OT4 owns 44.6%.
Glide Pharma continues to make good progress, and the first trials with the use of Glide for vaccines have showed significantly better results than when the same vaccines are injected using a conventional needle and syringe. Some of the world's largest pharmaceutical companies are now in active talks with Glide. At least two have asked for exclusivity over various products and product areas. Glide Pharma also won the Medical Futures Award in summer 2007. OT4 owns 13.5%.
Impact Applications (in which OT4 now owns 33.6%), after a period of rapid growth in the autumn, has had a few months of low sales, but the quotations outstanding total more than £3m at the time of writing, and the company is optimistic about its future.
OT4 owns 19.4% 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 OT4 owns only a small shareholding.
OT4 owns 23.7% of Meciria, whose new directional drilling tool for use in oil wells has now been produced. Drilling tests aer planned for June 2008.
OT4 owns 8% 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. The film studios are very interested in this, since it enables product placement advertising to be sold globally. Trial contracts have been placed by the big film studios.
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.
OT4 owns only 3.4% of Orthogem (OT2 owns a much larger shareholding), but Orthogem is making excellent progress. Its artificial bone graft, Tripore, is now being sold mainly for use in spinal surgery both in Europe and the US. A white paper giving the one year results of the first ten spinal patients has now been published. Orthogem has had expressions of interest to acquire the company.
OT4 owns 45.9% of Pharma Engineering. Pharma Engineering has achieved its first sales, and its equipment is in use in production environments. At the time of writing it has several orders and has a growing pipeline of potential customers.
Plasma Antennas has now 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. OT4 owns 21.9% of Plasma Antennas.
OT4 owns 16.3% of Telegesis. Telegesis has achieved the first sales of its Zigbee modules and sales have been growing fast. Sales in the quarter to June 07 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 08 will be slightly below those in the December quarter, but there is also the possibility of some much larger orders in the future.
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 £1.08. This compares to £1.11 at 31 August 2007, and 91p at 28 February 2007.
Results for the year
Interest on bank deposits and investee loans together with dividend income produced gross revenue of £139,000 (2007: £192,000) in the year.
Net revenue after taxation and management expenses was a loss of £150,000 (2007: loss of £176,000) and revenue return for the year was a loss of 1.45p (2007: loss of 1.81p) per share.
Capital return was a gain of 18.58p per share (2007: loss of 3.09p).
AGM
Shareholders should note that the AGM for Oxford Technology 4 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
Statement of total return (incorporating the revenue account) for the year ended 29 February 2008
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* 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.
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Balance sheet at 29 February 2008
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29 February 2008 Audited |
28 February 2007 Audited |
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£000 |
£000 |
£000 |
£000 |
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Fixed assets |
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Investments at fair value |
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8,640 |
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5,552 |
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Current assets |
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Debtors & prepayments |
385 |
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25 |
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Cash at bank |
2,121 |
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3,793 |
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_____ |
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_____ |
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2,506 |
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3,818 |
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Creditors: amounts falling due within one year |
(10) |
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(5) |
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_____ |
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_____ |
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Net current assets/liabilities |
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2,496 |
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3,813 |
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_____ |
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_____ |
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Net assets |
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11,136 |
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9,365 |
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===== |
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===== |
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Capital and reserves |
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Called up share capital |
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1,034 |
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1,034 |
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Share premium account |
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9,061 |
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9,061 |
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Other reserves: |
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Capital reserve - realised |
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318 |
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- |
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Capital reserve - unrealised |
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1,217 |
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(386) |
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Revenue reserve |
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(494) |
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(344) |
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Shareholders' funds |
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11,136 |
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9,365 |
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Net asset value per share |
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107.7p |
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90.6p |
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===== |
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Cash flow statement for the year ended 29 February 2008
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2008 Audited |
2007 Audited |
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£000 |
£000 |
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Net cash (outflow) from operating activities |
(130) |
(69) |
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Capital expenditure and financial investment |
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Purchase of investments |
(1,710) |
(2,303) |
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Disposal/redemption of investments |
168 |
- |
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______ |
______ |
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Net cash outflow from capital expenditure and financial investment |
(1,672) |
(2,303) |
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Net cash outflow before financing |
(1,672) |
(2,372)
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Financing |
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Issue of shares |
- |
3,196 |
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Expenses paid in connection with share issue |
- |
(42)
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______ |
______ |
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Net cash inflow from financing |
- |
3,154 |
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______ |
______ |
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Increase/Decrease in cash |
(1,672) |
782 |
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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. Return per Ordinary Share
The calculation of revenue return per share is based on the loss of £150,000 (2007: loss of £176,000) for the financial period divided by the weighted average number of ordinary shares of 10,339,702 (2007: 9,755,566) in issue during the period.
The calculation of capital return per share is based on the net capital return for the financial period of £1,921,000 (2007: loss of £301,000) divided by the weighted average number of ordinary shares of 10,339,702 (2007: 9,755,566) in issue during the period.
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.
Related Shares:
OXF.L