OXFORD TECHNOLOGY 2 VENTURE CAPITAL TRUST PLC

Venture

Capital

Trust

Plc

Arecor

ImmBio

Inaplex

Insense

Oxis1Energy

Plasma

Antennas

Scancell

Select1

–

STL

Management

Company(Registered(Number:

3928569

Annual

Financial

Statement

s

Oxford'

Technology'2'

Venture

Capital

Trust

Plc

•

Arecor

•

ImmBio

•

Inaplex

•

Insense

•

Oxis1Energy

•

Plasma

Antennas

•

Scancell

•

Select1

–

STL

Management

•

Arecor

•

ImmBio

•

Inaplex

•

Insense

•

Plasma

Antennas

•

Scancell

Oxford

Technology 2

Venture Capital

Trust Plc

Annual

Financial

Statement

s

Annual

Financial

Statements

Annual

Financial

Statement

s

For the Year Ended 28

February 2022

For

the$Year

Ended$2

8$

February$202

2

• Arecor Therapeutics

• Imm

B

io

• Inaplex

• Insense

• Scancell Holdings

• Select – STL Management

Annual Financial Statements

Company Registered Number: 3928569

2

Table&of&Contents&

About&Oxford&Technology&2&Venture&Capital&Trust&Plc&

3

Investment&Strategy&

3

Financial&Headlines

&

3

Strategic&Report

&

4

Chairman’s*Statement

*

4

Business*Review

*

12

Investment*M

anager’s*Review

*

19

Investment&Manager&–&Oxford&Technology&Management&Ltd&

27

Board&of&Directors

&

28

Directors’&Report

&

31

Directors’

&Remuneration&Report&and&Policy&

37

Corporate&Governance&Report

&

40

Statement&of&Directors’&Responsibilities&

46

Report&of&the&Independent&Auditor&

47

Income&Statement&

54

Balance&Sheet

&

55

Statement&of&Changes&in&Equity&

56

Statement&of&Cash&Flows&

57

Notes&to&the&Financial&Statements&

58

Oxford&Technology&2&Venture&Capital&Trust&Plc&

-&Notice&of&Annual&General&Meeting&

70

Oxford&Technology&2&Venture&Capital&Trus

t&Plc&Proxy&Fo

rm

&

73

Shareholder&Information&

75

Company&Information&–&Directors&and&Advisers&

76

3

About&Oxfo

rd&Technology&2&Venture&Capital&Trust&Plc&

VCTs

were

introduced

by

the

UK

Government

in

199

5

to

encourage

individuals

to

invest

in

UK

smaller

companies.

This

was

achieved

by

offering

VCT

investors

a

series

of

tax

benefits

.

Oxford

Technology

2

Venture Ca

p

ital Trust

Plc (the

“Company”, “

OT2

”

)

was listed

on the

London Stock Exchange

in April

2000.

It raised £6m in 2000

-

01. Further top

-

up offers have raised an additional £468k.

The

Company

is

managed

by

OT2

Managers

Ltd

with

services

subcontracted

t

o

Oxford

Technology

Management Ltd (OTM)

.

Investment(Stra te gy((

(

The

Company

has

built

a

balanced

portfolio

of

inves

tments

with

the

following

characteristics

at

the

time

of

initial in

vestment:

●

Unlisted,

UK

based,

science,

technol

ogy

and

engineering

businesses;

the

Company

now

also

has

invest

ments

in AIM listed Scancell Holdings Plc and Areco

r Therapeutics Plc;

●

Investments typically in the range of £100k to £500k

;

●

Generally

located

within

approximately

60

miles

of

Oxford

so

that

the

Company

can

be

an

active

investor.

The

key

feature

of

OT2

is

that

it

has

focused

on

investing

in

early

stage

and

start

-

up

technology

companies.

Early

stage

companies

are

those

which

have

receive

d

some i

nitial s

ales.

Start

-

up

companies

are

those

which

are at an earlier s

tage; they will usually have

already developed their initial

product or service and

be close to

achieving their first sales.

The returns from

such investments, when

successful,

can

be highly

attractive but

the associated

risks are

high.

It

is

intended

that

most

of

this

risk

will

relate

more

to

technical

success

or

failure

than

to

fluctuations

in

the

major financial markets.

As a

result, the

fund can

act

as a

strong diversifier t

o a

shareholder’s

overall

portfolio

by providing exposure to a different risk/reward

profile from mainstream markets.

The full investment pol

icy is included in the

Business Review.

OT2

has

been

approved

as

a

VCT

by

HMRC

throughout

the

year

and

continue

s

to

comply

with

all

statutory

requirements.

Financial(Headlines

(

Year Ended

28 February 2022

Year Ended

28 February 2021

Net Assets at Year End

£

1.70

m

£1.32m

Net Asset Value (NAV) per

Share

32.0

p

24.8p

Cumulative Dividend per

Share

22.5p

NAV + Cumulative Dividend p

er

Share Paid from Incorporation

54.

5p

47.3p

Share Price at Year End (LSE)

2

6.5

p

20.0p

Earnings Per Share

(Basic & Diluted)

7.

2p

(3.0)p

4

Strategic(Report(

(

The

Strategic

Report

has

been

prepared

in

acco

rdance

with

the

requirements

of

Section

414C

of

the

Companie

s

Act

2006 and

the

Companies

Act

2006

(S

trategic

Report and

Directors’

Report) Regulations

2014.

Its

purpose

is

to

inform

shareholders

of

the

progres

s

of

the

Company,

to

look

at

the

current

business

model,

future

objectives, strategy and principal risks of

the Venture Capital Trust.

The

Strategic

Report

consists

of

the

Chairman’s

Statement

(page

4),

which

looks

at

future

prospects

for

the

Company,

a

Business

Review

(page

1

2

),

which

includes

an

alysis

of

the

principal

ris

ks,

an

d

the

Investment

Manager’s

Review

(page

1

9

),

wh

ich

looks

at

the

performance

o

f

the

Company’s

investments

over

the

past

year.

The

Company’s

objecti

ve

is

to

maximise

shareholder

value

and

s

o

we

continue

to

work

with

our

investee

companies

to

help

them

succeed

and

t

o

seek

exits

as

and

when

appropri

ate

.

The

aim

is

to

build

shareholder

value

and

distribute

one

-

off

payments

to

shareholders

as

and

when

exits

are

achieved

whils

t

retaining

sufficient

resources

to

continue

to

support

other

existing

investees.

These

distributions

will

be

made

via

dividend

pay

ments or,

if it is

considered to be

in shareholders’ interests, using

other mechanisms such

as buybacks (e.g.

a tender offer).

Chairman’s(Statement(

(

I

hope

this

is

the

last

report

I

need

to

write

explaining

the

challenges

of

being

such

a

small

VCT

in

terms

of

net

asset value

(

NAV

)

, ma

rket

capitalisation

and

number o

f

portfolio compa

nies.

As

I

have set

out

in previo

us

years, the

fact we

are the s

malles

t VCT results in

a difficult balancing act

to ensure we

have enough liquidity

to meet the g

oing concern require

ments and yet

also continue to

satisfy the very demanding VCT te

sts. It has

also presented difficulties should we have wished t

o continue to support our investees with further funds.

I

wrote

to

shareholders

on

17

March

2022

(and

as

announced

by

RNS

on

4

March

2022)

advising

that

OT2

had

entered

into

discussions

regarding

a

possible

merger

of

the

Oxford

Technology

VCTs

(“OT

VCTs”)

(“Merger”)

and

a

proposed

offer

for

subscripti

on

(“Fund

Raise”)

together

with

a

move

to

a

ne

w

investment

manager, Editi

on Capital

Investments Li

mited (

“

Edition

”

).

The structure of the proposed Merger is designed

to

preserve

the

economic

value

of

each

VCT’s

portfolio

for

the

benefit

of

each

company’s

existing

shareholders

.

T

he

existing

OT2

O

rdinary share

class

will

remain

exactly

as

is

,

and

OT2

will

issue

shares

in

new separate

share classes

to the current

shareholders of

the other OT

VC

Ts

.

Discussions

are progressing

an

d

the proposed transaction, with full details, is exp

ected to be formally announced in M

ay.

Shareholders w

ill

be

aware

that

as

inves

tments

are

r

ealised,

your

Company

reduces in

size

,

making

it

increasingly

unviable

on

a

standalone

basis.

The

Boards

of

a

ll

four

OT

VCTs

have

previously

stated

that

it

would

be

p

referable

to

have

a

larger

asset

base

to

share

their

operating

costs

d

ue

to

the

relentless

upward

trajectory

of

regulatory

costs

and

the

ongoing

challenges

of

maintaining

VCT

status.

The

structure

b

eing

proposed allows the shareholders of all four OT VCTs to benef

it from the economies of scale of the Merger.

S

hareholders will

be aware that

for a number

of years your

Directors have sought

to find partners

interest

ed in

using

the exis

ting VCT

structure

to

launch

their

own

share

offering,

and

hence enabl

ing one

(or

more)

of

the

OT VCTs to expand

its asset base.

In Edition I

believe we have

found an ideal p

artner, especially

in the light

of

our

succession

planning

requirements:

it

has

been

clear

for

some

years

that

Oxford

Technol

ogy

Management

Limited

(

OTM

)

do

not

consider

VCTs

a

suitable

vehicle

for

investing

small

sums

in

high

risk

/

reward

start

-

ups, their area of interest and expertise.

Having

Edition

as

the

new

investment

manage

r

and

raising

new

money

in

a

separate

share

class

focussed

on

the le

isure se

ctor

means longevity for

the OT VCT

portfoli

os such

that the risk

o

f ‘fire

sal

e’ exits

(due to these

individual

portfolios

become

sub

-

sca

le)

is

substantially

reduced.

Although

under

this

scenario

Editi

on

will

take

over

as

the

manager

of

OT2,

the

invest

ments

in

the

exist

ing

assets

will

co

ntinue

to

be

managed

by

the

Board with the support

of OTM

in an advisory capacity

as is currently the case.

5

It is important to emphasise the point mad

e above

:

the proposed Merger is designed to p

reserve the economic

value

of

OT2’s

portfolio

for

the

benefit

of

existing

shareholders

whilst

reducing

its

operating

costs

.

T

he

portfolios

of

each

of

the

other

OT

VCTs

will

also

b

e

ringfenced.

By

sharing

the

costs

of

the

Merger with

its

sister

VCTs

as

well

as

Edition,

it

has

been

possible

to

off

-

set

the

otherwise

and

hitherto

prohibitive

cost

of

combining the VCTs.

Whilst

the

Board

cannot

be

certain

the

proposals

th

ey

are discuss

ing will

be fi

nalised, good

progress

is being

made

wit

h

both

Edition

and

the

bo

ards

of

the

other

OT

VCTs

,

and

we

are

opt

imistic

a

merger

circular

(

Circular

)

will be available

n

ext month. I

would therefore encourage all Shareholders to

r

ead

any

such

Circular

carefully

and

to vote

to

support the

various

resolutions to

enable

the Merger

to

proceed. The

Fund

Raise

will also

launch

at

the

same

time,

giving

existing

shareholders

(and

new

investors)

the

chance

to

subscribe

for

new

shares

(“Leisure Sh

ares”)

in the current tax year.

Final

details

of

any

Merger

or

fund

raise

have

still

to

be

finalised

and

will

need

shareholder

approval.

However,

I

believe that

what

we

are hoping

to

present to

shareholders

provide

a compelling

case

for yo

u

to

provide

your

full

support.

Should

the

Merger

proceed

and/or

new

shares

be

issued

under

the

Fund

Raise

,

the Company will have much mo

re flexibility in how it operates going forward.

Turning now to the past,

I present the Annual Report

for the year to

28 February 2022 to fellow shareholders.

The

period

under

review

continued

to

be

impacted

by

the

implications

of

the

Cov

id

-

19

pandemic

and

the

subsequent

actions

of

the

UK

government,

as

well

as

post

-

Brexit

trading

implications.

Your

Investment

Adviser an

d the Directors have

continued to manage the VCT and

its portfolio effectively together via remote

working during lockdown

.

Performance

The

Company’s

NAV

per

share

increased

by

7.2p

per

share

(29%)

from

2

4

.8p

at

28

February

2021

to

32.0p

per

share

as

at

28

February

2022.

The

increase

is

primarily

due

to

an

increase

in

the

value

of

Arecor

Therapeutics

Plc (“Arecor

”)

,

offset

by

a

much smaller

decrease

in the

valuation attri

butable to

our holding

in

Scancell Holdin

gs Plc

(“

Scancell

”). Arecor

floated on 3

June 2021 at

a share price

of 226p per

share and was

350p per share

on 28 Febr

uary 2022.

Further

explanations are i

ncluded in the

portfolio review

section below.

Total Return since the

Company’s launch is

54.5p

per

share.

The

Company

paid

no

d

ividends

d

uring

the

year

ended

28

February

2022

(2021:

nil).

The

cumulative

dividends

per share paid since inception are 22.5p (2021: 22.5p)

.

Portfolio Review

At

28

February

2022,

the

Company

had

holdings

in

five

unlisted

companies

and

two

companies

which

are

quoted

on the

Alternative Investment

Market (AIM)

of

the London

Stock Exchange.

The

thr

ee

largest

companies

(representing

over

80%

of

the

NAV

in

total)

continue

to

progress.

The

VCT

rules

will

forbid

us

from making further investments in these

three companies (for example Areco

r did seek further funding from

us and

we wanted to support

it but were

unabl

e to

do so

due

t

o the

constraints

imposed

by these rules)

; we

can

technically

still

support

ImmBio,

Insense

and

Inaplex.

Y

our

Company

has

the

cash

resources

to

continue

to

invest to support the portfolio

were

these companies to require further inve

stment

.

Arecor

remains o

ur largest

holding, representing

nearly

over

55

% of the NAV

per share. Your Company first

invested

in

Arecor

in

July

2007.

Since

then,

it

has

become

a

leader

in

innovat

ive

formulation

technologies

allow

ing

pharmaceutical

formulations

to

be

stab

ilised

in

liquid

form.

The

company

has

developed

a

successful

fee

for

service

and licencing

business model

as

well

as

developing

its

own

formulations

for

rapid

action

and

highly concentrated insulin.

Arecor

floated

o

n

AI

M

on

3

June

2021

at

a

share

price

of

226p

per

share,

and

as

at

the

reporting

date

of

28

February 2022,

was valued at a

bid price of

350p per

share,

an

increase of just under

55% from the

fl

oat price.

Shares

are

currently

subject

to

a

lock

in

and

an

orderly

market

period,

but

t

he

Directors

continue

to

consider

when will be the most

appropriate time to reali

se the investment and r

eturn cash to sharehol

ders.

6

STL

Management Limited

(“Select

Technology”)

distributes high

quality document

management

software via

its

global

channel

partners.

Over

the

last

dec

ade

Select

Technology

has

built

up

a

global

network

of

distributors

and

dealers

through

which

it

sells

third

party

products

targeted

at

its

end

customers’

scanning,

copying

and

printing

infrastructure.

These

products

now

include

PaperCut

,

KPAX,

Foldr,

Drivve

Image,

EveryonePrint

and Square 9 Enterprise Content Management.

Our

valuation

methodology

for

this

investment

is

based

on

a

sales

multip

le,

and

we

have

cautiously

retain

ed

the

discount

that

we

have

applied

in

recent

years

until

we

c

an

fully

assess

the

impact

of

various

geopolit

ical

events

on

Select

Technology’s

markets.

However,

the

company

itself

is

now

seeing

a

recovery

in

tradi

ng

conditions

–

this is welcome news after the

turmoil of 2020 and the disruption in early 2021.

OT

2

re

ceived a

small dividend f

rom Select Tech

nology in Febru

ary 2022, possibl

y (and hopefully

) a sign that norm

al trading

is

in

the

process

of

being

resumed.

At

the

end

of

August

2021,

Alex

Starling

joined

the

board

of

Select

Technology to represent the

OT VCTs

’ interests

as we se

ek to

maximise shareholder

value. As at

28 February

2022, OT2’s stake in Select Technology constituted nearly 19

% of t

he Company’s NAV.

The

Company’s third

largest holding

is

now AIM

lis

ted

Scancell (just

under

9%

of

NAV

per

share). Sc

ancell’s

share price has seen significant volatility since

our original investment, which was mad

e primarily to help the

VCT

meet

HMRC’s

stringent

qualifying

tests,

whilst

also

ensuring

we

retained

sufficient

liquidity

for

the

future.

Scancell’s

share

pric

e

fluctuated

f

or

most

of

the

year

between

19p

and

2

3

p:

however,

from

mid

January,

in line with ma

ny biotech stocks,

its share price entered a period

of steady decline

to 11p

before

recoverin

g in

April to

1

6

.75

p

on

the

announcement of

the

start

of Modi

-

1

trials

(post

period end

Scancell has also

received

approval from

the

South Afr

ica authorities

to

extend

the scope

of

its Covidi

ty trial)

.

At 28

February 2022,

its

price was 12p per share, the price

o

f our original investment.

While

it

co

uld

be

arg

ued

that

S

cancell

has

had

a

quiet

year

in

terms

o

f

n

ews

flow

an

d

c

orporate

milestones,

the

substantial injections

of e

quity

funding during

2020

have

allowed Scancell

to

invest

heavily in

its

technology platforms.

Founder

Professor Lindy Durrant is

now back at

t

he helm as

CEO and Chief Scientific

Officer,

and

Dr

Richard

Goodfellow

is

back

as

Interim

Chi

ef

Business

Officer.

There

have

been

subtle

changes

in

the

way

Scancell

positions

itself

in

the

market,

the

company

now

d

escribing

itself

as

a

“

clinical

st

age

biopharmaceutical company

that

is leveragi

ng its

proprietary

research,

built up

over

many years

of

studying

the

human

adaptive

immune

system,

to

generate

novel

medicines

to

treat

significant

unmet

needs

in

cancer

and

infectious disease.

The company

is building

a pipeline

of innovative

products by

utili

sing

its

four

technology platforms: Moditope and Im

munoBody for vaccines and GlyMa

b and AvidiMab for antibodies

”.

I

remain

positive

about

Scancell’s

potential

for

treating

otherwise

untreatable

diseases.

Arguably

the

most

important

announcement

made

by

Scancell

during

the

course

of

the

last

12

months

was

the

news

that

the

redemption

date

of

the

c.

£19.7m

of

convertible

loan

notes

held

by

Scancell’s

major

funder,

US

-

based

Redmile

Group,

LLC,

w

as

extended

by

three

years

(from

2022

to 2025)

, reducing

the

risk

of

an

unfavourable

dilutive

event

in

2022

and

giving

Scancell’s

management

the

time

to

create

maximum

commercial

value

from

its

multiple ‘shots

on goal’

.

Following Arecor

’s

listing

on AIM,

the

combined value

of the

two

AIM quoted

companies represents

63.9

%

of the

Company’s

net

assets

at 28

February

2022.

Given

the volati

lity

in

the share

prices

of these

two

quoted

investments, shareholde

rs should n

ote that fo

r every 1

0p ch

ange Arecor’s bid

pr

ice, the NAV

moves by about

0.5p per

OT2 share, and

for every 1

.0

p

change in Scancell’s

bid price, the

NAV moves by

about 0.2p per

OT2

share

.

Adjusting

for

the

quoted

share

prices

at

19

April

2022

(Arecor

390p

and

Scancell

(16.75

p),

and

t

he

running

costs

since

28

February

2022,

the

unaudited

NAV

per

share

has

increased

to

34.

4p

.

The

valuations

of

the

unquoted investments remain unchanged.

No

other investments

are worth

more than

5% of

NAV.

As

was reported

in the

half year

ac

counts, the

decision

was made to move the core te

chnology of Immunobiology Ltd (

“ImmBio”) to Liverpool Universit

y to reduce

costs whilst the technology transfer to ImmBio’s

licensee China National Biotech Group continues.

7

Since the move, Liverpool

Univer

sity has won a grant to lay

the foundations for a challenge/carriage study to

determine

the

extent

to

which

pneumococcus

is

carried

in

the

nose

of

vaccinated

people.

The

first

grant

finishes in April 2022 and could lead to a se

cond grant to perform the st

udy.

Interest

in

whole

cell

vaccines

has

been

limited

during

the

Covid crisis,

with

the focus

on

synthetic vaccines

which

could

be

rapidly

developed,

tested

and

deploy

ed.

However,

in

recent

mont

hs

t

he

i

nterest

in

such

vaccines

has

waned,

as

can

be

seen

by

the

share

price

drops

of

companies

involved

in

their

development.

It

can

be

hoped

that

interest

will

now

switch

back

to

vaccines

with

the

potential

for

a

much

wider

immune

response,

and

therefore

ImmBio

may be

able

to re

-

engage

with

additional

potentia

l partners.

ImmBio

represents

3.5

% of NAV

.

Your

Compa

ny

also

has

holdings

in

t

hree

other

companies,

which

together

represent

about

3

%

of

the

NAV,

and

are

held

at

the

same

cost

as

at

2

8

February

202

1

.

We

hope

the

largest

of

thes

e,

Insense

Limited

(“Insense”),

still has

the potential for

future value

growth.

Regretfully,

Oxis is

in

administration,

and we

do

not expect

to

recover any value from this investment.

Overall,

as seen in

the Income St

atement, the net

impact of va

luation

changes ac

ross the portfolio during 202

1

/202

2

year was a gain of £425k.

The loan

in Plasma

An

tennas Limited (“Plasma”)

was repaid this year

bef

ore the

co

mpany was

diss

olved: this

investment

was

realised

for

a

small

profit

over

the

carrying

value

but

insufficient

to

offset

losses.

The Directors

, along

with th

e

Investment Adviser, continue

to take an

active interest

in the companies

within

the

portfolio,

supporting

management

teams

(where

possible)

to

achieve

company

development,

but

also

to

prepare

companies

for realisation

at the

appropriate time.

It should

however

be noted

that approaches

do occur

at other

times, and

the ability

of the D

irectors and

Investment Adviser

to be

able to provide

support when

such

approaches occur is essential for maximising value.

Further

details

are

contained

within

the

Investment

Manager’s

Review

,

and

on

our

web

site

at

http://www.oxfordtechnologyvct.com/vct2.html

.

Risk Factors

The geopolitical

situation is

distressin

g, and our thought

s go out to those

who are affected by

military actions

and other

violence. Whilst your

Company’s portfolio has

no major

direct contact

with defence spending,

there

remains

the

possibility

that

any

shift

of

government

focus

towards

additio

nal

defence

spending

may

have

a

long

term

impact

on

other

areas

of

spending.

The

long

term

impact

of

sanctions

is

unclear,

but

it

is

hoped

given the nature of the portfolio that they s

hould not have a major impact on performance.

For

much

of

the

post

200

8

era,

inflation

has

been

tamed

by

various

mechanisms

such

as

quantitative

easing.

Recent

developments

indicate

that

such

efforts

to

‘kick

the

c

an

down

the

road’

may

be

coming

to

an

e

nd.

Inflation

is

now

forecast

to

hit

high

single

figures

–

it

is

unclear

to

what

extent

the

UK

and

the

wider

world

economy is in a fit state to thrive in s

uch a challenging environment.

Thankfully OT2

’

s

portfolio

–

despite being

concentrated in

only having

six

active

companies in

it

–

is suitably

diverse

so

as

to

provide

a

degree

of

protection

from

some

of

these

global

headwinds

but

remains

exposed

to

cost inflation and reduction in availability

of cheap money.

VCT Qualifying Status, Liquidity, Dividends and Return of Capital

Due to its

small size

the Company

remains exposed to balancing solvency requirements and compliance with

VCT rules: there is no flexibility in the latter, and there is now much greater emphasis on Directors to explain

to

shareholders why

it

is

still

reasonable to

adopt

the

going

concern

basis

when

accounts

are

being

prepared.

To

that

end,

the

Directors

have

elected

to

retain

as

much

cash

as

is

allowed

by

t

he

VCT

rules,

to

ensure

the

Company

can

continu

e

to

operate

fo

r

the

foreseeable

future

and

no

divide

nd

was

paid

or

declared

during

the

fi

nancial year.

The

ongoin

g strategy

remai

ns to

seek to crystallise value

from the portfolio and

distribute cash

to shareholde

rs.

Our priority is

to maximise

shareholder

value and

liquidity over

the medium term

by seeking

exits for these holdings at the appropriate time.

8

In

the

meantime,

the

VCT

rules

do

provide

additional

challenges

for

very

small

VCTs,

where

there

is

very

little

flexibility

in

how

to

operate,

and

with

a

small

portfolio,

we

are

very

severely

hindered

from

continuing

to

support

our

own

in

vestee

companies.

This

was

once

again

evidenced

when

we

were

unable

to

support

Arecor’s fund raising. Our

VCT is not

currently in line

with much of the

ind

ustry, which is

continui

ng to

ra

ise

funds

and

making

new

investments,

and

where

small

scale

is

not

an

issue,

so

these

policies

impact

us

more

than

larger

VCTs.

Significant focus

is

required

to

ensure

we

retain

sufficient working

capital to

manage the

Company

whilst

meetin

g

all

the

cond

itions

laid

down

by

HMRC

for

maintaining

approval

as

a

VCT.

The

Board

continues

to monitor

all the

VCT requirements

very carefully and

has procedures

in place

to ensure

that

the

Company

continues

to

comply

with

these

conditions,

in

particular

the

minimum

80%

qualifying

holding

limit.

As

at

28

February

2022,

the

HMRC

value

of

qualifying

investments

of

our

portfolio

was

82

%

(2021:

82%).

For

operational

reasons,

OT2

provided

a

£50k

short

term

interest

free

loan

to

Oxford

Technology

VCT

Plc

(OT1)

during

the year under the

Common Payments and

Liquidity agreement held between

the

VCTs. Half

of

this loan is still outstanding.

The

issue

of

l

iquidity

of

unquoted

companies

within

investment

funds

has

remained

a

national

topic

of

discussion

this

year.

Shareholders

may be

interes

ted

to

know

that

at

the

year

-

end

nearly

three

quart

ers

of

the

Company’s

p

ortfolio

wa

s

held

in

cash

or

quoted

AIM

sha

re

s

,

thus

hopefully

providing

both

short

-

and

medium

-

term

liquidity

(though

shareholders

should

note

that

stocks

quoted

on

AIM

may

have

limited

liquidity

at

times).

Specifically,

t

her

e

are

restrictions

(lock

in

and

orderly

market

provisions)

on

OT2’s

ability

to

sell

its

Arecor

holding for a period of about another year, but our cash

is more than sufficient in the interim

).

As

mention

ed

in

my

introduction,

expanding

the

s

ize

of

the

Company

should

hel

p

improve

t

his

whole

situation.

VCT Market Changes

During

the

period

under

review,

there

have

been

no

further

amendments

to

the

rules

governing

VCTs.

The

Chancellor

of

t

he

Exchequer’s

Spring

S

tatement

was

also

subsequently

delivered

on

23

March

2022

and

did

not propose any changes to the legislation governing VCTs.

Cost Control

Your

Board

continues

to

look

at

methods

of

improving

operational

efficiency

,

reducing

costs

and,

more

generally, putting in place appropriate plans to ensure that your

VCT’s oper

ational costs relative to

its overall

size remain within acce

ptable limits. Over the

last 5 years we have

renegotiated almost ev

ery element of cost.

Our

investment

management

and

Directors

’

fees

and

auditors’

remuneration

are

amon

gst

the

lowest

in

the

VCT industry. The largest remaining elements of cost are

the LSE listing fee at

more than

£10k and the FCA

fee

of

£6k.

These

regulatory

fees

seem

to

have

relentless

increases

and

bear

disproportionally

on

a

small

company.

Filed

company

accounts

n

ow

also

need

to

be

produced

in

XHTML

format,

at

additional

cos

t,

to

comply

with

the

first

phase

of

mandatory

electronic

format

reporting

under

FCA’s

Disclosure

Guidance

and

Transparency Rules.

It

should be

noted that this

year OTM

have earned

no management

fees,

and indeed

have

had

to

make

a

n

£

8,358

subsidy

to

the

Company’s

costs

as

a

resul

t

of

the

cost

cap

(

3%

excluding

Directors’

fees).

As

mentioned

in

the

intr

oduction

(assuming

the

Bo

ard

puts

forward

the

Merg

er

recommendation

it

is

currently

envisaging,

and

shareholders

of

the

other

OT

VCTs approve

t

he

relevant

resolutions),

t

hese

annual

costs will be able to be shared more widely in the

future.

Keeping

a

close

control

on

costs

will

remain

an

importan

t

a

genda

item

for

the

Board

of

an

enlarged

VCT.

Whilst

some

costs will

necessarily increase

a

s

OT2

starts investing

in new

companies again,

it

is expected

th

at

the

agreement

with

Edition

will

ens

ure

that

this

fo

cus

on

cost

management

will

continue

and

the

costs

attributed to the OT2 share pool will decrease in absolute and percent

age terms.

Separately, i

n line

with a number

of other VCTs, the Directors

have decided that interim half year

reports will

no

longer

be

printed

but

will

only

be

available

as

a

PDF

on

our

website

in

a

continued

focus

of

minimising

cos

ts

and

acting

in

an

environmentally

conscious

manner

wh

e

n

ever

possible.

Shareholders

who

have

not

signed up to electronic communica

tions will still be sent a letter advising that this report is av

ailable to view.

9

We continue

to encourage all

of

our

investors to

s

witch

to

receiving updates

from the

Company via

e

-

mail and

documents

in

soft

copy,

which

also

ensures

you

receive

documents

more

quickly.

If

you

currently

receive

paperwork

from

us

but

are

willing

to

be

notified

by

email

that

documents

a

re

available

for

viewing

online,

please contact the registrars, whose details

are on page

76.

Change of Auditor

In

my

letter

of

17

March

2022

,

I

explained

that

our

UHY

Hacker

Young

LLP

(UHY)

had

chosen to resign as

the Company’s auditors

following

a strategic review of

the sectors they op

erate in.

As you

will be aware, UHY confirmed

that there

we

re

no matters connected w

ith it ceasing to hold

office that needed

to be brought

to the attention

of members or

creditors of the

Companies for th

e purposes of section 519 of the

Companies Act

2006.

We

would like

to thank

UHY for

their help

and support

as

external auditors

over

the last

three years.

Following

a

competitive

tender

process

,

we

were

pleased

to

announce

that

we

appointed

Hazlewoods

LL

P

(“Hazlewoods”) to

replace

UHY.

They

have

audited

these accounts,

and

shareholders

are

being

asked

at

this

AGM to reappoint them so

that they can audit t

he financial statements

in 2023 as well.

Environmental, Social and Governance (ESG)

Whilst

many

of

t

he

requirements

under

company law

to detai

l

ESG

matters

are

not

directly

applicable

to

the

Company, the Board

is conscious of its

poten

tial impact

o

n the

envi

ronment as

we

ll as

its social and corporate

governance

res

ponsibilities.

Furthermore,

the

Inves

tment

Adviser

takes

ESG

considerations

into

account

when investing.

The

future

FCA

reporting

requirements

consiste

nt

with

the

Task

Fo

rce

on

Climate

-

Disclosures th

at commenced

this year

do not

currently

apply to

the Company

. However,

it will

be kept

under

review in light of any recommended

changes.

Shareholder Interaction and AGM

Your

Company

held

both

vir

tual

and

physical

events

last

summer

to

give

shareholders

an

opportunity

to

discuss

the

Directors’

plans

f

or

the

VCT

and

returning

cash

to

investors.

We

are

very

grateful

to

those

shareholders

who

att

ended

these

meetings

(whether

in

pers

on

or

remote)

and

those

who

engaged

by

email.

This

year,

we

plan

to

once

again

hold

our

AGM

meeting

in

person,

preceded

by

a

n

earlier

webinar

to

allow

shareholders

to

hear

from

the

Board

before

casting

their

proxy

votes

.

It

is

hoped

that

the

General

Meeting

required

to

approve

the

Merger

and

Fund

Raise

will

be

held

on

the

same

day

as

the

AGM.

The

meeting

schedule is as follows:

•

Tues

day

7

June

202

2

at

10a

m

:

An

informal

shareholder

meeting

held

onl

ine.

The

agenda

will

include

presentation

s

from

OTM

and

the Board,

followed by

a shareholder

Q&A (using

chat/email facility)

to

include

a

full discussion

on

the

proposed Merge

r

and F

und

Raise

(assuming a

Circular

ha

s been

issued

before

this

date).

There

will

hopefully

be

a

presentation

from

investee

company

Select

Technology

though

thi

s

may

be

pr

e

-

recorded

.

Details

for

ho

w

to

register

for

this

even

t

are

on

www.oxfordtechnologyvct.

com

.

•

Mon

day

2

0

June

202

2

at

2p

m

:

The

AGM

will

be

an

opportunity

for

a

face

-

to

-

face

meeting

with

shareholders (the physical AGM will hopefully be followed by a

further in

-

person

General Meeting).

This

will

be

a

meeting

to

consider

the

fo

rmal

business

of

the

AGM

(and

GM

if

held),

although

the

OTM

and

Board

presentation

s

from

the

will

be

repeated.

There

will

also

be

an

opportunity

for

shareholders

to

ask

questions.

If

yo

u

are

unable

t

o

attend,

pl

ease

return

your

proxy

forms

by

2p

m

on

16

June

2022

(

and

/ or

register

your

votes

with

your

broker

if

your

shares

are

held

with nominees

) to ensure your vote is included

.

If

you

intend

to

attend

this

session,

please

notify

us

in

advance

by

email

to

vcts@oxfordtechnology.com

to

help

us

with

numbers

and

in

case

there

are

changes

to

arrangements that need to be communicated a

t short notice

.

We hope shar

eholders will

appreciate

the flexibi

lity being o

ffered.

10

Regarding the various

proposed resolutions:

•

Resolution 1 and 2

: These resolutions seek approv

al of the Company’s

Annual Report and A

ccounts

for

the

period en

ded

28

Febr

uar

y

2022

and the

Directors

’

Remuneration Report

contained therein.

The

Directors

are

obliged

to lay

t

he

Directors’

Annual

Report

and

Financial

Statements

and the

auditors’

report

thereon for

the

year ended

28

February 2022

before

shareholders at

a

general meetin

g.

The vote

on the Remuneration

R

eport is advisory

and the Di

rectors’ entitlement to remuneration is not

conditional on th

is

resolution being passed.

•

Resolutions

3

–

6

(inclusive):

These

resolut

ions

seek

the

re

-

election

of

the

existing

four

members

of

the

Board

as

non

-

executive

Directors

of

the

Company.

In

accordance

with

AIC

guidelines

all

four

directors

are

standing

for

annual

re

-

election.

All

have

played

a

very

full

part

in

the

VCT’s

activities

throughout the year.

•

Resolution

7

:

Seeks

the

approval

of

the

re

-

appointment

of

Hazlewoods

as

auditors

of

the

Company

and to authorise the Directors to determine their

remuneration. This is discussed above.

•

Resolution

8

:

We

are

putting

forward

a

resolution

to

vote

for

the

continuation

of

the

VCT,

as

in

Due

to

the

proposed

Merger

and

Fund

Raise,

the

Directors

do

not

cons

ider

this

to

be

an

appropriate

time

to

wind

up

the

VCT.

Shareholders

should

also

note

that

should

new

Leisur

e

Shares

be

issued

as

expected

under

the

Offer

for

Subscr

iption,

the

vote

will

not

be

until

5

years after the last allotment of

Leisure

S

hares

.

•

Resolutions 9 and

10

: These seek approval for the Company to generally be authorised to allot up to

533,189 shares

in

the

capital

of the

Company

on a

non

-

rights

issue basis.

Despite its

small

size, your

VCT remains

in reasonable

stru

ctural shape

but events

of the

last 2

years have

shown that

i

t

is prudent

to take

some

precautionary measures.

Every year

we

have a

resolution

for shareholders

to

enable the

Directors to issue

a small number shares

witho

ut pre

-

emption

rights and this

has a

lw

ays bee

n

approved.

This

year

(as

las

t)

we

would

like

–

with

our

shareholders’

approval

–

to

set

the

current

maximum

level

to

10%

to

provide

flexibility,

if

ever

requi

red,

to

raise

money

mo

re

ch

eaply

and

at

short

notice.

This

would

enable

to

us

to

supp

ort

inves

tee

companies

(within

the

VCT

rules)

and

exceptionally

take

advantage of

other opportunities

arising

from

other investees

in the

OT

VCT

stable.

Although

at

the

moment we

have

no

plans

to

raise

additiona

l cap

ital o

r to

conduc

t a

possib

le pla

cing

for the ordinary

shares, it seems

prudent in these

uncertain times to retain

this capability for

a further

year in case the

Board considers it opportune to

act quickly. Given the proposed Merger and

Offer, it

is

highly

unlikely

the

Board

will

need

to

avail

itself

of

this

facility,

but

at

this

time,

there

can

be

no

certainty these will proceed.

•

Resolution

11

:

This

seeks

the

approval

of

Shareholders

to

cancel

the

amounts

standing

to

the

credit

of

the

Company’s

share

premium

account

and

capital

redemption

reserve

as

at

the

date

an

order

is

made

confirming

such

cancellation

by

the

High

Court

(and,

as

such,

this

resolution

is

subject

to

the

approval

of

the

High

Court).

Cancelling

such

amounts

allows

a

company

to

create

a

special

reserve

that

can

be

used

to

fund

di

stributions,

assist

in

writing

off

losses

or

finance

market

purchases

of

the

Company’s shares.

The

Notice

convening

the

2022

AGM

of

the

Company

is

set

out

at

the

e

nd

of

this

document

together

with

a

Proxy

Form

.

The

Board

believes

that

the

passing

of

the

resolutions

above

are

in

the

best

interests

of

the

Company

and

its

shareholders

as

a

whole

and

unanimously

recommends

that

you

vote

in

favour

of

these

resolutions

as the

Directors intend

to

do in

respect of

their beneficial

shareholdings.

We

encourage you

to v

ote

on the AGM resolutions via your proxy forms and thank you all

for your ongoing support.

Share Capital –

Sub

-division and Reclassification, and Reduction of Capital

As

I

outli

ned

in

my

half

year

repor

t,

Shareholders

voted

unanimously

in

favour

of

the

relevant

resolution

at

the

Annual G

eneral

Meeting,

and as

a

result each

ordinary

share

of 10p

in

the capital

of

the C

ompany

was

sub

-

divided

to

an

ordinary

share

of

1p

and

a

deferred

share

of

9p.

The

Company

subsequently

repurchased

and

cancelled the deferred shares for the aggregate sum of 1p. A shareholder now

holds exactly the same number

of

shares

as

before,

but

the

nominal

value

of

each

share

has

reduced

fr

om

10p

to

1p.

The

NAV

of

each

ordinary

share

was unaffected by this

change.

11

This change has

no adverse conseque

nces for shareholde

rs and is merely

a precursor to

enable the creation

of

additional distributable reserves in the future, which may allow the Company to pay out more t

o shareholders

in

ti

me.

The

Company

now

has

5

,331,889

or

dinary

shar

es

of

1p

each

(an

d

no

deferred

shares

of

9p

each

).

Existing share certifi

cates remain valid.

Fraud Warnings

–

Boiler Room Fraud

We are

aware of

a number of

cases where

shareholders are

being fraudulently

contacted or

are being

subjected

to

attempts of

identity fraud.

Shareholders

should

remain

vigilant of

all

potential

financial

scams

or

attempts

for

them

to

disclose

personal

data

for

fraudulent

gains.

The

B

oard

strongly

recommends

shareholder

s

take

time

to

read

the

Company's

fraud

warning

section,

including

details

of

who

to

contact,

contained

within

the

Shareholder Information section of the Annual Report.

Outlook

Despite

the

buffeting

meted

out

by

Covid

-

19

and

the

associated

restrictions,

I

am

pleased

to

note

that

the

portfolio

has

been

resilient

through

this

tur

bulent

peri

od.

Your

Board

also

believes

that

the

portfolio

has

valuable

upside and

that the

VCT

structure is

an

effective

and tax

efficient mec

hanism to

hold

such

assets. The

Board

considers

that

the

portfolio

is

likely

to

reach

a

po

int

of

significant

inf

lection

in

the

ew

years

as

major investee co

mpany programmes reach

maturity.

I

do

still

need

to

caution

that

there

is

no

certainty

that

e

ither

strategic

route

(a

merger

or

increasing

the

asset

base

wit

h

a new

manager) will

proceed, as

these are

subject to

final negotiations

and shareholder

approval, but

the Directors will continue working to mak

e them happen.

Whatever

happen

s

with

the

Merg

er

and

Fund

Raise, your

Board

and

Investment

Adviser

continue

to

work to

best position

your VCT such

that, when

valuations and

liquidity allow,

holdings in

the existing

pool of ass

ets

can be exited and proceeds distributed to shareholders, whilst keeping a

keen eye on maintaining costs as low

as possible in the interim.

The

Board

belie

ves

the

propos

ed

plans

to

merge

the

4

OT

VCTs

and

t

he

raising

of

new

money

in

a

Leisure

S

hare class

as set

out above are

in the

best interests of

the Company

and its shareholders.

It will allow

time for

the

portfolio

to

reach

those

value

inflection

points

at

which

time

we

would

hope

to

be

able

to

realise

the

investments, whilst reducing the operating

costs in the meantime.

It

would

be

good

to

see

many

of

you

at

the

AGM,

where

I

hope

you

will

endorse

the

Board’s

unanimous

recommendation

to

approve

all

the

resolutions,

as

well

as

those

linked

to

the

Merger

and

Fund

Raise

which

we

expe

ct

to

put

to

shareholders

at

a

General

Meeting

immediately

following

AGM.

I

f

you

have

any

immedia

te

questions, please feel free to contact me via

vcts@oxfordtechnology.com

.

I look forward to a bright future under Edition

’s stewardship/management.

Richard Roth

Chairman

21

April 2022

12

Business(Review

(

Company Performance

The Board

is responsible for

the

Company’s

investment strategy and

per

formance.

The services regarding

the

creation,

management

and

monitoring

of

the

investment

portfolio

are

subcontracted

to

OTM

by

the

Company’s

Investment Manager, OT2 Manage

rs Ltd. OTM is the Company’s AIFM.

There

was

a

ne

t

profi

t

for

the

period

after

taxation

amounting

to

£

381

,000

(202

1

:

loss

of

£1

6

0,000).

The

income

statement

comprises income

of

£4,000

(202

1

:

nil

)

received from

investee

companies,

realised

gains

on

fair

value

of

investment

were

£12,000

(202

1

:

nil

),

unrealised

gains

on

fair

value

of

i

nvestments

of

£425,000

(202

1

: unrealised losses of £

95

,000) and managem

ent and other expenses of £6

0

,000 (2

02

1

: £6

5,

000).

The

re

view

of

the

investment

portfolio

on

page

1

9

includes

a

review

of

the

Company’s

activities

and

the

Chairman’s Statement comments

on future prospects.

The

graph

below

compares

the

NAV

return

of

the

Company

from

2000

with

the

total

retu

rn

from

the

FTSE

All

-

Share

Index

(which

excludes

dividends)

over

the

s

ame

period.

This

index

is

considered

to

be

the

most

appropriate broad equity market index for comparative purposes

.

However, the Directors

wish to

point out that

VCTs are not able

to make qu

alifying

investments in

companies

quoted

on

the

Main

Market

in

their

observance

of

VCT

rules

and

are

very

limited

in

the

types

of

investment

that can be made. All measures are reb

ased to 100 at the start date of the fund.

Key Performance Indicators

The

Board

uses

a

number

of

perfor

mance

measures

to

assess

the

Company’s

success

in

mee

ting

its

strategic

objectives. The KPIs it monitors include:

KPI

Objective

Total Return (Net Asset

Value

plus cumulative dividends

paid) per share

To

provide

sharehold

ers

with

tax

free

c

apital

gains

via

pr

ofitable

exits

by

investing

its

funds

in

a

portfolio

of

primarily

unquoted

UK

companies

which meet the relevant

criteria unde

r the VCT rules.

The total expenses of

the

Company as a proportion

of

shareholders’ funds

To maintain efficient o

peration of the VCT whilst

minimising running

costs.

13

The total

return for

the Ordinary shares

is included

in the

Financial Summary

on

page

3

and

the increase

i

n

t

he

total return

is

explained in

the

Chairman’s Statement

.

In

the

twelve months

to

28 February

202

2

there was

a

gain

in

total

return

of

7.

2

p

per

share

(202

1

:

negative

total

return

of

3.0p).

No

dividend

was

paid

or declar

ed

during the year

(2021: nil)

.

The

Company

was

able

to

maintain

an

efficient

operation

of

the

VCT

whilst

minimising

running

costs

as

a

proportion of

shareholder’s funds

. Expenses

o

f the Company are

capped at 3% of

the opening net

asset value

(but excluding Directors’ fees and any performance fee). The total actual expenses were

4.6

%

(but capped at

3%)

of opening

net

assets

(

6.2%

including Directors’

fees

(4.

5

%

after

cap)),

(202

1

:

4

.4

%

and

4.

9

%

respectively).

Viability Statement

In

accordance

with

provision

30

and

31

of

The

UK

Corporate

Governance

Code

2018

(“the

UK

Code”)

the

Directors have

assessed

t

he prospects

of the

Compan

y

over a

longer period

t

han the

12 months

require

d

by the

“Going

Concern”

provision.

The

Company

last ra

ised

funds in

2010,

and

so

the

minimum

five

year

holding

period required

to enabl

e subscribing

investors

to benefit

from the

associated

tax reliefs

has

now passed.

The

Board regularly

considers

the Company’s

strategy, incl

uding investor

demand for

the Comp

any’s shares,

and

a three year period is therefore considered to

be an appropriate and reasonable time horizon.

The

Board

has

carried

out

a

robust

assessment

of

the

principal

risks

facing

the

Company

and

its

current

position,

including

those

which

may

adversely

impact

its

business

model,

future

performance,

solvency

or

liquidity.

The principal risks

faced by the

Company and the

procedures

in place to

monitor and mitigate

them

are set out below.

The

Board

has

also

considered

the

Company’s

cash

flow

proj

ections

and

found

these

to

be

realistic

and

reasonable. Th

e assets

of the Company

consist

mainly of securities, two

of which are

AIM quoted

: Scancell is

relatively

liquid

and

readily accessible

wh

ilst

the share

s

in

Arecor are

locked in

until early

June

202

2, and

then

any trading is subject to orderly market provis

ions for another year

.

Based on the above assessment the Board confirms that it has a reason

able expectation that the Company will

be

able

to

continue

in

operation

and

meet

its

liabilities

as th

ey fall

due

over the

three

year period

to

2

8

February

202

5.

Principal Risks, Risk Management Objectives and Regulatory Environment

The

Board

carries

out

a

regular

revie

w

of

the

risk

environment

in

which

the

Company

oper

ates,

including

principal and emerging risks. The main areas of risk ident

ified by the Board are as follows:

Investment risk

–

The

majority

of

the

Company's

investments

are in

smaller

unquoted

companies

which

are

VCT qualifying holdings, which by their nature entail a higher level of risk and lower liquidity than

investments

in

large

quoted

companies.

The

Directors

and

the

Investm

ent

Adviser

aimed

to

limit

the

risk

initially attache

d to

the portfolio as

a whole

by careful selection,

by carrying

out due

diligence procedures

and

by maintaining a spread of holdings.

The Direct

ors also

consider

timely

realisation

of

investments.

The Board

reviews

the

investment

portfolio

on

a regular

basis.

As holdi

ngs are

realised,

and

investments

are

no

longer be

ing made

into

new

companies,

the

portfolio will become more concentrated over time.

VCT qualifying

status

risk

–

The

Company is

r

equired

at

all times

to observe the

conditions laid

down in

the

Income

Tax

Act

2007

for

the

maintenance

of

approved

VCT

status;

these

rules

have

subsequently

been

updated

on several occasions.

The

loss

of

such

approved

status

could

lead

to

the

Company

losing

its

exemption

from

corporation

tax

on

capital

gains,

to

investors

being

liable

to

pay

income

tax

on

dividends

received

from

the

Company

and,

in

certain

circumstances,

to inves

tors bei

ng requ

ired

to

repay the

initial

income tax

relief

on

their

investment as

well as

a

ny previously deferred

capi

tal gains

coming back

into charge.

The Board keeps the

Compa

ny’s VCT

qualifying status under regular review.

14

Qualifying investments can only be made in

small and medium sized trading

companies which fall within the

following limits:

●

Have

fewer than 250 full t

ime equivalent employees (

500 if a knowledge int

ensive company);

●

Have

no

more than

£15 million of

gross assets at

the time of

investment and no

mo

re th

an

£16

million

immediately post investment;

●

Its

first

commercial

sale

must

be

less

than

seven

years

old

(or

ten

years

if

a

knowledge

intensive

company) if raising State Aided funds for the fi

rst time subject to certain exceptions;

●

Have

raised

no

mor

e

than

£5

million of

State

Aided

funds

in

the previ

ous 12

months

(or

£10

million

if a knowledge intensive

company) and less than

the lifetime limit of

£12 million (or

£20 million if

a

knowledge intensive company);

●

Produce a

business plan to show that its

funds are being raised for growth and development;

●

Be

an unquoted company or l

isted on AIM;

●

Have

a permanent establishment

in the United Kingdom;

●

Not

be

under

the

control

of

any

other

company,

nor

control

any

company

which

is

not

a

qualifying

subsidiary of

the company; and

●

Are

operating a trade which

is not an “excluded

activity”.

The

Finance

Act

2018

introduced

a

new

“risk

-

to

-

capital”

condition

for

qualifying

investments,

designed

to

focus

investments

towards

earlier

stage,

growing

businesses,

and

away

fr

om

investments

which

could

be

regarded as lower risk.

VCTs

may

not

make

invest

ments

tha

t

do

not

meet

the

new

“risk

to

capital”

condition

(which

requires

a

company, at

the time of

investment, to

be an

entrepreneurial company with

the objective to

grow and

develop,

and where there is a genuine risk of a loss of

capital).

Non

-

Qualifying

investments:

In

itially,

an

active

approach

was

taken

to

managing

the

cash

prior

to

investing

in

qualifying

companies.

Now

the

Company

has

reached

its

qualifying

investment

target

to

meet

HMRC

requirements

and

the

Company

is

fully

invested,

any

remaining

funds

will

be

invested

in

accordance

with

HMRC rules for

Non

-

Qualifying invest

ments, which may

include money

market funds

and other i

nstruments

where the Board believ

e

s that the overall downside risk is lo

w.

Financial

risk

–

by

its

nature,

as

a

VCT,

the

Company

is

exposed

to

market

price

risk,

credit

risk,

liquidity

risk, fair

value

and

cash flow

risks.

All

of

the

Company’s income

and expenditure

is

denominated in

ster

ling

and

hence

the

Company

has

no

direct

foreign

currency

risk.

The

indirect

risk

results

from

investees

doing

business

overseas.

The

Company

is fi

nanced

through

equity.

The

Company

does

not

use

derivative

f

inancial

instruments.

Regulatory

risk

–

the

Comp

any

is

required

to

comply

with

the

Companies

Act,

the

rules

of

the

UK

Listing

Authority

and

United

Kingdom

Accoun

ting

Standards.

Breach

of

any

of

t

hese

might

le

ad

to

susp

ension

of

the

Company’s

Stock Exchange

listing, financial

penalties, a

qualified audit

report or

even loss

of VCT

status.

Cash

flow

risk

–

the

risk

that

the

Company’s

available

cash

will

not

be

sufficient

to

meet

its

financial

obligations is managed by frequent budgeting and close monitor

ing of available cash resources.

Liquidity

risk

–

the

Company’s

investments

may

be

difficult

to realise.

The

spread

between

the

buying

and

selling price of shares may be wide and th

us the price used for the valuation may n

ot be achievable.

Reputational risk

–

inadequate or failed

controls might result in

breaches

of regulation or

loss of shareholder

trust.

Internal

control

risk

–

the

Board

reviews

annually

the

system

of

internal

controls,

financial

and

non

-

financial,

operated

by

the

Company.

These

incl

ude

controls

designed

to

ensure

that

the

Company's

assets

are

safeguarded

and that proper accounting records are maintained.

15

Covid

-

19 risk

–

Covid

-

19 has had an i

mpact on economic conditions globally and

may continue to affect the

performance of some companies in which the Company has invested

.

Geo

-

political

and

economic

r

isks

–

t

he

military

invasi

on

of

Ukraine

by

Russian

forces

has

caused

various

countries

to

announce

the

imposition

of

sanctions

on

Russia.

Th

ese

sanc

tions

may

lead

to

unpredictabl

e

reactions

from

Russia,

particularly

in

relation

to

the

provision

of,

or

access

to,

energy

resources

which

may

have

a consequential

impact on

economic conditions

globally,

including

t

he

costs of

living and

the availability

(and

increased cost)

of

raw materials.

Such

increased

costs

of

living

and

the

availability

(and

increased

cost)

of

raw

materials

may

also

have

an

indirect

impact

on

busi

nesses

in

which

the

Company

has

invested

in,

hindering

growth

,

financing

or

operations.

Similarly,

the

threat

of

rising

inflat

ion

may

impact

on

the

performance

/

profitability

of

our

investees.

Consequently,

any

change

of

governmental,

economic,

fiscal,

monetary

or

political

policy,

and

in

particular

any

spending

cuts

or

material

increases

in

interest

rates

could

affect, directly or

indirectly,

the

performance of the Company

(as a result of

the performance of its

underlying

investments) and hence the value of, a

nd returns from, the Company’s shares.

The Board seeks to mitigate the internal risks by setting policies,

regular review of performance, enforcement

of con

tractual obligations and monitoring progress a

nd compliance.

In

the

mitigation

and

management

of

these

risks

the

Board

applies

rigorously

the

principles

detailed

in

the

Financial

Reporting

Council’s

Guidance

on

Risk

Management,

Internal

Controls

and

Rel

ated

Financial

and

Business

Reporting.

Details

of

the

Company’s

internal

controls

are

contained

in

the

Corporate

Governance

section starting

on page 40

.

Further details

of the Company’s

financial risk

management policies

are

provided in

N

ote 15 to

the

Fi

nancial

Statements.

Investment Policy

This is the stated inves

tment policy as per the orig

inal prospectus which has

been adhered to without mate

rial

change ever since.

The

investment

policy

of

Oxford

Technology

2

VCT

Plc

is

to

construct

a

portfolio

of

qualifyi

ng

investments

with the following cha

racteristics at the time

of initial investment:

●

technology

-

based businesses;

●

investments

typically in

the range

of

£100k to

£500k, although

a

few investments

outside this

range

will be contemplated;

●

generally located within approximately 60 miles of Oxford.

It

is

expected

that

approximately

two

-

thirds

of

the

funds

will

be

invested

in

early

stage

companies

and

the

balance in

start

-

up companies, depending

on the opportunities

available. The

Company defines these

companies as follows:

●

early stage companies are those which have achieved some initial

sales;

●

start

-

up

companies are

those which

are at

an

earlier stage;

they will

usually have

already

developed their initial product or service and be

close to achieving their first sales.

The

investee

companies

sought

will

usually

be

those

which,

within

their

market

sector,

can

be

developed

as

relatively

non

-

capital

intensive

knowledge

-

based

businesses;

a

very

important

element in

the

selection

process

will be an assessment

of the key people inv

olved in business.

Within

a

60

-

mile

radius

of

Oxford

(which

includes,

for

example,

North

and

West

Lon

don,

Birmingh

am,

Readin

g and

the Thames

Valley region as a

whole), there are

several centres

of technological

excellence both

within and

outside the

universities employing

individuals with

talent for

technology

-

based innovation

(such as

the

Oxford

and

Reading

Universities,

Imperial

College,

London

and

AEA

Technology

plc).

OT2

is

likely

to

be

inves

ting

both in

technologies being

transferr

ed

out of

centres of

excellence and

also in

existing technology

companies.

16

The

geographical

focus

described

above

is

considered

important

as

OT

2

intends

to

be

an

active

investor

assisting

investee

companies

to

develop

their

full

pot

ential.

The

Directors

consider

i

t

essential

that

direct

contact is maintained with investee companies regularly and

easily.

The investment

policy

of

OT2 wil

l be

to

a

chieve an

acceptable

risk

-

reward

ratio for

the portfolio

as

a whole,

by

virtue

of

the

number

of

inves

tments

which

will

be

made.

It

is

expected

that,

subj

ect

to

the

level

of

valid

subscriptions received under the offer, up to

20 investments will be made ov

er a three

-

year period.

A

portfolio

of

this

size

achieves

a

pr

actical

balance

between

laying

off

ri

sk

and

ensuring

that

investment

executives

of

Seed

Capital

(now

known

as

Oxford

Technology

Management)

are

able

to

devote

a

significant

amount of time to each portfolio company so as to help manage the bus

iness risk within portfolio companies.

In

general,

it

is

expected

that

investments

will

be

made

by

subscribing

for

ordinary

shares

and

preference

shares,

sometimes

combined

with

loans.

It

is

envisaged

th

at

successful

investee

companies

will

pay

interest

on loans or dividends on preference shares to OT2 befor

e it achieves an exit from such investee companies.

It

is

intended

that,

by

April

2003,

about

75

per

cent

of

the

net

funds

subscribed

will

have

been

invested

in

qualifying

investments

leaving

the

balance

available

for

follow

-

on

investment,

if

required.

Although

the

Directors

have

no

present

intention

of

utilising

the

Company’

s bor

rowing

powers

contained

in

its

Articles

of

Association, the Compan

y may

in appropriate circumstances borrow fu

nds.

When

appropriate, particularly when

the funding

requiremen

t

is

grea

ter

t

han

t

he

am

ount

t

he

Co

mpany

w

ishes

to

invest

and

where

it

is

desirable

to

broaden

the

investor

base,

investments

may

be

syndicated

with

other

venture

capital

funds,

private

individuals

(including

the

Directors

and/or

shareholders

in

the

company)

or

corporations.

The

investment

manager

(Larpent

Newton

&

Company

Limited)

and

the

Investment

Advisor

(Seed Capital Limited

–

now known as Oxford Technology Management)

together have close links with

other

venture capital insti

tutions and with

a wide range of

private investors

who have previously

made investments

or

shown

i

nterest in

investing in

early stage

and start

-

up

technol

ogy

companies.

The inves

tment

manager and

the

Investment

Advisor

have

undertaken

to

give

OT2

the

first

opportunity

to

invest

in

projects

identified

by

either of them for investments in companies

engaged in science or technology located w

ithin a 60

-

mile radius

of Oxford.

Key Information Document

New

EU

PRIIPs

regulat

ions

came

into

effect

in

January

2018.

The

intent

of

the

regula

tions

is

to

increas

e

customer

protection

by

improving

the

functioning

of

financial

markets

and

in

this

instance

through

the

Key

Information Docum

ent (KID)

to provide shareholders

with more

information about the

risks, potential returns

and charges

within

VCTs.

The regul

ation requires

the

Company

to publ

ish a

KID.

Retail

investors

must now

be directed to this before buying shares in t

he Company.

The

KID

is

published

on

the

Company

website

(

www.oxfordtechnologyvct.co

m/vct2.html

).

The

KID

has

been

prepared

using

the

methodology

prescribed

in

the

PRIIPS

regulation.

Although

well

intended,

there

are

widespread concerns about the applicati

on of some aspects of the prescribed methodologies to VCTs.

Specifically, there are concerns that:

1.

the risk score may be understating the level of risk; and

2.

investment performance

scenarios may indicate

future returns for shareholders that

are too optimistic.

The

Association

of

Investment

Companies

(AIC)

has

engage

d o

n th

is

matter

and

it

is

hoped

that

these

issues

will

be

resolved

in

the

future.

In

the

meant

ime,

the

Board

recommends

shareholders

continue

to

cla

ssify

our

VCT as a high

-

risk investment.

17

Section 172(1) Statement

The Dire

ctors dis

charge t

heir dut

ies under

section

172

of

the

Companies

Act 200

6 to

act

in

good

faith an

d to

promote

the

success

of

the

Company

for

the

benefit

of

shareholders

as

a

whole

as

set

out

in

the

Business

Review

from

page 1

2.

As an

investment

company,

Oxford Te

chnology 2

Venture

Capital

Trust Pl

c has

no

employees; ho

wever, the

Directors

also

ass

essed

the

impact

of

the

Company’s

acti

vities

on

other

stakeholders,

in

p

articular

sh

areholders

and our third

-

party advisers, as well as the portf

olio of companies.

The

Board’s

decisio

n

-

making

process

inc

orporates,

as

part

o

f

the

Company’s

investment

pol

icy

and

investment

objectives

as

set

out

on

page

4,

considerations

for

supporting the

Company’s

busines

s

relationships

with

the

Investment

Adviser

,

shareholders,

advisers

and

registrar,

independ

ent

financial

advisers

an

d

the

impact of

the Company’s

operations on the com

munity and

the environment, which by

nature of the business,

only extends to the holdings in portfolio companies.

Key Stakeholders

Investors

Outside of

general meetings, the

Company engages with shareholders

through regulatory news

servi

ce

announcements,

interim

and

annual

reports

as

well

as

regular

correspondence

with

shareholders

and

their

advisers to address any queries that arise.

The Com

pany

also

holds shareholder

presentations

at the

AGM i

n order

to engage

directly

with sharehol

ders

and

(under

normal

circumstances)

allow

them

to

hear

directly

from

the

companies

in

the

VCT.

In

2021,

we

held both a

physical shareholder meeting and two

web

inars via our

Zoom platform. W

e

were able to welcome

many

sharehol

ders

and shareholders

had

th

e

opportunit

y

to

s

ubmit

questi

ons.

We

welcome any

fe

edback

from

shareholders on how they would like to see communication improved. In June this

year, we currently plan to

hold

both

a

virtual

and

physical

meeting

once

again

Any

views

which

may

arise

are

discusse

d

by

the

Board

and fact

ored into

any

decision

-

making

and

disclos

ed i

n an

nual

and

interim

reports

as

appropri

ate.

The

Board

uses a

number of

measures to

assess the

Company’s

success in

meeting its

strategic

objectives with

regard to

shareholder interests as detailed in the Key P

erformance Indicators

on page 1

2.

Investment Adviser

The

Company’s

most

important

busi

ness

relationship

is

with

th

e

Investment

Advis

er,

OTM.

There

is

regular

contact

with

the

Investment

Adviser,

and

all

members

of

the

team

attend

the

Company’s

Board

meetings.

There is

also an

annual t

imetable agreed

with the

Investment

Adviser and

the Co

mpany for

matters related

to

the annual

timetable

which

are

discussed

at

each Board

Meeting.

The

Company

and I

nvestment Ad

viser als

o

work

t

ogether

to

maintain

efficient

oper

ation

o

f

the

VCT

as

detailed

in

the

Key

Performanc

e

Indica

tors

on

page 1

2.

Portfolio Companies

The Company

holds

minority

investmen

ts in

most

of its

portfolio companie

s an

d it

has appointed

the

Investment

Adviser

to

manage

the

relationships

with these

companies.

While

the

Board

has little

direct

contact

with

the

running

of

most

of

the

companies,

the

Investment

Adviser

provides

updates

on

the

portfoli

o

at

least

quarterly.

The

Company

made no

purchases

nor

sales

but

did receive

a

loan repayment

from

Plasma

Antennas

just

before

the

company

was

dissolved

.

Neither

the

Board

nor

the

Investment

Adviser

believed

it

was

in

the

best interests o

f all key stakeholders to do otherwise.

Environment and Community

The Company

se

eks to

ensure

that

its business is conducted

i

n a

manner that is

responsible to the

environment

as

far

as

is

practicable

given

the

nature

of

the

business

as

an

investment

company.

The

management

and

administration of

the Company

is undertaken by

the Investment

Advis

er, who

recognises the

importance of its

environmental responsibilities, monitors its

impact on the

environment and implements policies to

reduce any

damage that might be caused by its activities.

18

Initiatives of the Investment Adviser designed to

minimise its and the Company’s impact on the

environment

include re

cycling a

nd reduc

ing energ

y consu

mption. M

ore deta

ils of

the work

that the Investm

ent Advise

r has

done in

this area are set out on

page 3

4.

Internal Control

The

Direc

tors

are responsible

for the

Company’s system

of internal

control. The

Board has

adopted

a

n

interna

l

operating and strategy document for the Company. This includes procedures for the selection and approval of

investments, the functions of the Inve

stment Adviser and e

xit and dividend strategies.

Day

to

day

operations

are

del

egated

under

agreements

with

the

I

nvestment

Adviser

who

has

establi

shed

clearly

defined

policies

and

standards.

These

include

procedures

for

the

monitoring

and

s

afeguarding

of

the

Company’s investments and

regular reconciliation

of investment holdings.

This

syst

em

of

internal

control

,

which

includes

pr

ocedures

s

uch

as

physical

cont

rols,

seg

regation

of

duties,

authorisation

limits

and comprehensive

financial reporting

to

t

he

Board, is

designed

to provide

reasonable, but

not

absolut

e,

assurance

against

mater

ial

misstat

ement

or

loss.

The

Board

has

reviewed,

with

its

Investment

Adviser,

the

operation

and

ef

fectiveness

of

the

Company’s

syste

m o

f

internal

control

for

the

financ

ial

pe

riod

and the period up to the date of approval of the Fi

nancial Statements.

The

Board

has

continued

to

prepare

the

Financial

Statements

in

acco

rdance

with

UK

Financial

Reporting

Standards

rather

than

I

nternational

Financial

Reporting

Standards.

This

is

p

ermitted

as

the

Financial

Statements present the results of an individual

company rather than a group.

Independence, Gender and Diversity

Throughout

the

year

under

review,

the

Board

has

consisted

of

four

male

non

-

executive

Directors

of

widely

ranging

ages,

backgrounds

and

experience. The

gender

and

diversity

of

the

constitution

of

the

Board

will

be

reviewed

on an

annual basis.

The Board

considers diversity w

hen revie

wing Boa

rd com

position an

d has

made

a

commitment to

consider

diver

sity

when making

future

appointments. The

Board

will always

appoint

the best

person

for

the

job.

It

will

not

discriminate

on

the

grounds

of

gender,

race,

ethnicity,

religion,

sexual

orientation,

age or physical ability. However, the

Board fully supports the aims of the Hampton Al

exander Report and the

renewed

focus

and empha

sis

on div

ersity

in th

e

new

2019

AIC

Code of

Corporate

Governance

(“the

2019 AIC

Code”) and in due co

urse will, over time, s

trive to comply with the

se recommendations.

Environmental Policy, Greenhouse Gas Emissions and Human Rights Issues

The

Board

recognises

the

requirement

under

Section

414c

of

the

Companies

Act

2006

to

detail

information

about

environmental

matt

ers

(including

the impact

of

the

Company’s business

on the

environment), employ

ee,

human rights,

social and community

is

sues, including

information about any

pol

icies it

has in relation

to these

matters and effe

ctiveness of thes

e policies.

Given the size

and nature of the

Company’s activities

and the fact

that it has no

full

-

time em

ployees and only

four non

-

executive Directors, the

Board considers there

is limited scope

to develop and implement

social and

community policies. However, the Company recognises

the need to conduct its business in a

manner

responsible to the environment wh

ere possible.

T

he Company

has

consi

dered

the

Companies

(Directors’

Report)

and

Limited

Liability

Partnerships

(Energy

and

Carbon

Report)

Regulations

2018,

which

came

into

force

on

1

April

2019

(for

accounting

periods

beginning

after

this

date),

i

n

relati

on

to energy

consumption disclosure,

discussed in

this Business

Review and

also in the Directors’ Report.

Richard Roth

Chairman

21

April

202

2

19

Investment(

Manager’s

(

Review

(

OT2

was

formed

in

2000

and

inv

ested

in

a

t

otal

of

30

companies,

all

start

-

up

or

early

stage

technology

companies.

Some

of these

companies failed

with the

loss of

the investment.

Some have

succeeded and

have

been

sold.

The

table

on

page

2

1

shows

the

comp

anies

remaining

in

the

portfolio

,

which

is

followed

by

an

update on the

five investments

which still have any

significant residual value

.

The

ultimate

outcome

for

inv

estors

will

depend

on

how

th

e

remaining

investments

perfo

rm.

In

particular,

Select Tec

hnology, Scancell and Arecor still

have the potential to del

iver significant returns.

Arecor

provides

55.1%

of

the

NAV

for

OT2

VCT.

Arecor

Ltd

became

Arecor

Therapeutics

Plc

and

then

floated

on

the

Alternative

Investment

Market

on

3

June

2021,

raising

£20m

at

a

share

price

of

226p

–

OT2

was unable to invest further at the IPO due to the constraints of the VCT qualifying tests

. Since then its sh

are

price has

risen

to a

peak of

460p

and ended

the year

at

350p.

Thus

far

it has

been

v

ery

thinly

traded wit

h

the

highest

daily

volume

of

just

over

200,000

shares

achieved

when

Arecor

announced

positive

results

f

or

their

AT278

ultra concentrated

ultrarap

id

acting insulin.

They

have also

announced

that AT

247

has progressed

into

Phase 1.

Select

Technology

is

the

second

largest

hol

ding

makes

up

16.

8%

of

the

NAV.

It

specialises

in

s

oftware

for

photocopiers

–

now

known

as

MFDs

–

Multi

-

Function

Devices,

but

during

the

pandemic

increased

its

act

ivities

in document management softwa

re independently of the printing aspect.

Scancell

is

focused

on

developing

innovative

immunotherapies

for

cancer

that

stimulat

e

the

body’s

own

immune system

and now represents 8.8% of the portfolio.

ImmBio has had a mixed year

and the Insense and

Inaplex

are

the

rem

aining

two

companies

which

remain

in

t

he

portfoli

o

at

any

value,

al

beit

at

very

small

values.

New Investments in the year

There were no new inve

stments during the year.

Disposals during the year

Plasma

Antennas

was

diss

olved

during

the

year

but

not

before

the

outstandi

ng

loan

was

repaid

to

OT2

at

a

small

increase

to

its

value

.

Oxis

Energy

Ltd

which

was

developing

a

Lithium

Sulphur

rechargeable battery

went in to administration in

May 2021 and the inves

tment

is fully provided for

.

Valuation Methodology

Quoted

and unquoted

investments are

valued

in

accorda

nce

with current

industry guidelines

that

a

re

compliant

with

International

Private

Equity

and

Venture

Capital

(IPEVC)

Valuation

Guidelines

and

current

financial

reporting standards.

VCT Compliance

Compliance with the

main VCT regulations

as at

28 February 202

2

and for the

year then ended

is summarised

as follows:

Type of Investment

By HMRC Valuation Rules

Actual

Target

VCT Qualifying Investments

8

1.9

%

Minimum

obligation: 80%

Non

-

Qualifying Investments

18.

1%

Maximum allowed: 2

0%

Total

100%

20

The val

ue used

in

the

qualifying

tests

is

not nec

essarily

the orig

inal inv

estment cos

t due

to

the

complex

rules

required

by

HMRC,

therefore

the

all

ocation

of

Qualifying

investments

as

defined

by

the

legislation

can

be

different to the portfolio weighting as measured

by market value relative to the net assets of the VCT.

At least 70% of each

investment must be in elig

ible shares

–

Complied.

No more than 15% of the

income from shares and s

ecurities is retained

–

Complied.

No investment

const

itutes more

than 15% of

the Company’s portfolio

(by value at

time of investment

or

when

the holding is added to)

–

Complied.

The Company’s in

come in t

he period has been derived wholly or

mainly (70% plus) from shares

or securities

–

Complied.

No

investmen

t

made

by

the

VCT

has

caused

th

e

company

to

recei

ve

more

than

£5m

of

State

Aid

investment

(£10 m

illion for

Knowledge Intensive C

ompanies) in

any rolling 12

month period and £12

million

of

state

aid

investment

(£20

million

for

Knowledge

Intensive

Companies)

during

its

lifetime

–

Complied

as

no new investments were made.

21

Table of Invest

ments held by Compa

ny at 28 Februa

ry 202

2

Company

Description

Date of

initial

investment

Net cost of

investment

£’000

Carrying

value at

28/02/2

2

£’000

Change in

value for

the year

£’000

%

equity

held by

OT2

%

equity held

by all

OTVCTs

%

net assets

Arecor

(bid price

350p)

Protein

stabilisation

Jul 2007

252

939

520

1.

0

5.7

55.1

Select

Technology

–

STL Mgt.

Specialist

photocopier

interfaces

Nov 2001

132

28

5

36

7.4

58.6

16.8

Scancell

(bid price

12.0p)

Antibody

based cancer

therapeutics

Apr 2018

150

(131)

0.2

1.5

8.8

ImmBio

Novel

vaccines

Dec 2000

295

59

-

3.1

22.6

3.5

Insense

Wound

healing

dressings

Jun 2001

204

52

-

1.6

5.6

3.

0

Inaplex

Data

integration

software

Jan 2001

138

2

-

21.5

34.8

0.1

Oxis

Energy

Battery

technology

Jan 2000

540

0

-

0.1

0.3

-

Totals

1,71

2

1,488

425

87.3

Other Net

Assets

216

12.

7

NET ASSETS

1,704

100.0

Number of shares in is

sue: 5,331,889

Net Asset Value per sh

are at 28 February 202

2

:

32.0

p

Dividends per share p

aid to date: 22.5p

This

table above

shows the

current

portfo

lio

holdings.

The

investments

in Acumen,

Assertion, Astron

Clinica,

Ciphergrid,

CHR

Design

,

Co

raltech,

Im

-

Pak,

Freehand

Surgical,

I

nscentinel,

Jetmask,

M3

Networks,

OST,

Plasma

Antennas,

Promic and

SVA

have been

wr

itten

off.

The in

vestments

in

Hardide,

Commerce

Decisions,

MET,

Telegesis,

Equita

lk,

Duncan

Hynd

Associates,

OC

Robotics

and

Orthogem

have

been

sold

.

Some

shares

in Scancell have also been sold.

22

Arecor

Therapeutic

s Plc

www.arecor.com

!

First&

Investment

&

Net&Cost

&

Carrying&

Value

&

28/02/202

2&

Change&in&

Value&for&the&

Year

&

%&Equity&

Held

&

Arecor

*

July*2007

*

£251,642

*

£

939,288

*

£519,739

*

1.

0%*

Arecor

Ther

apeutics

Plc

is

a

leader

in

the

development

of

innovative

formulati

on

tech

nology

t

hat

ena

bles

differentiated

biopharmaceutical

products.

It

has

developed

a

proprietary,

patent

backed

formulation

technology

platform

that

has

been

proven

to

stabilize

a

broad

range

of

molecules

as

aqueous

compositions.

Many proteins,

peptides and

vaccines are

too unstable

in liquid fo

rm and/or at

high concentrat

ions to devel

op

stable

ready

-

to

-

use

drugs

and

Arecor

has

overcome

these

challenges

to

significantly

enhance

the

delivery

of

therapeutic medicines to

patients.

Arecor has

continued

the development of a portfolio

of differentiated

peptides through to clinical proof of concept, wit

h an initial focus on diabetes as a therapeutic area.

The Company’s

original investme

nt was

in Arecor

Ltd which

became Arecor

Therapeutics Plc

when

it floated

on AIM

on 3 June 2021,

raising £20m at

a share price of

226p. Since then its

share price has

risen to a peak

of

460p and ended the year

at 350p.

Thus far it has been very thinly tra

ded

with the highest daily volume of just

over

200,000

shares

achi

eved

when

Arecor

announced

positive

results

for

their

AT278

ultra

concentrated

ultrarapid acting insulin.

They have also

announced that AT247 ha

s progressed into Phas

e 1.

Since inception

in

2007,

Arecor

has built a

successf

ul revenue generating

business employing this technology

to

enable

and differentiate

biopharmaceuticals

for a

large

cross

section

of the

major pharmac

eutical

companies

on a fee for service plus licensing model.

Since fl

oating, Arecor

has announced 4 new collaborations.

The bid price as at

28 February 2022 used

for this Arecor valuat

ion was

350p

per share

.

23

Select

Technology

–

STL Management Ltd

www.selectec.co.uk

&

First&

Investment

&

Net&Cost

&

Carrying&

Value

&

28/02/202

2&

Change&in&

Value&for&the&

Year

&

%&

Equity&

Held

&

*

Select&

Technology

&

*

November*

2001

*

£132,436

*

£2

85,269

*

£36,307

*

7.4%

*

Select

Technology

(100%

owned

by

STL

Management

Ltd)

distributes

high

qual

ity

document

management

software

via

its

global

channel

partners

while

adding

significant

further

value

through

its

development

team

by providing integrations or bespoke solutions. Select Technology grew significantly between 2010 and 2018

by

focusing

on

print

management

software.

Realis

ing

that

this

type

of

software

was

becoming

increasingly

commoditised,

the

company

changed

its

focus

to

document

capture

and

sharing,

acquiring

distribution

rights

to additional software solutions and introduc

ing them to the market in an innovativ

e way.

Covid

-

19

caused

major

disruption

both

to

Select

and

to

everyone

in

the

indust

ry

global

ly.

The

biggest

and

most

obvious

change

was

that

a

lmost

everyone

was

work

ing

from

home

which

meant

that

all

the

lon

g

established procedures for

managing and printing documents w

ere disrupted. Another

effect is that there were

many consolidations/

mergers globally, with lar

ger companies acquiring smal

ler companies with t

he objective

of

reducing

costs

while

increasing

sales.

Although

print

management

remains

a

significant

part

of

Select

Technology’s

business,

it

has

made

a

conscious

effort

to

seek

out

and

acquire

regional

rights

to

innovative

document management systems which are appropriate to the new ‘work

-

at

-

home’ reality.

Among

these

products,

for

example

are

Foldr

and

Squ

are9.

Foldr

was

originally

developed

for

tea

chers

in

schools. It

enabled

teachers

to

store and

retrieve

materials

for their

lessons,

to

write

reports

for

their

students

and

email

these

securely

to

the

parents,

with

controls

to

ensure

that

the

right

report

went

to

the

right

parent,

but

which

also

enabled

all

the

reports

to

be

sent

to

the

school’s

central

administ

ration.

Documents

could

be

protected w

ith

various levels of

security with different

people being

given different levels

of access. Foldr

has

turned

out

to

be

very

useful

for

businesses

to

manage

their

documents

in

a

secure

manner

and

even

more

so

now

that working

from home

is the

norm. The

level of

securit

y

on a home

laptop is

generally less

than was

t

he

case for

the head

-

office

secur

ity systems.

Square9 is

an Enterprise Content

Management System.

It

is

appropriate

for

the

largest

companies

with

thousands

of

employees

and

enables

companies

to

s

tore,

find,

access

and

manage

documents

and

other

information

easily

and

securely

and

in

compliance

with

GDPR

and

other

security protocols.

Select

Technology’

s

sales grew

from £210k

in the

year to

31

July 2010

to £5m

in the

year

t

o

31 July

2021 and,

desp

ite

the

restrictions

caused

b

y

the

pandemic,

the

company

still

recorded

a

profit

of

£95k

for

the

year.

Subsequently,

in

t

he

first

half

of

the

current

financial

year,

the

period

August

2021

to

January

2022,

the

company

has

reported

turnover

of

£2.9m

with

a

profit

of

£145k,

the

latter

a

result

of

measures

to

increase gross margin.

Select Technology is valued at a multiple of sales

with

a discount.

24

Scancell

www.scancell.co.uk

&

First&

Investment

&

Net&Cost

&

Carrying&

Value

&

28/02/2022

&

Change&in&

Value&for&the&

Year

&

%&Equity&

Held

&

Scancell&

&

*

April*2018

*

£149,913

*

£149,914

*

(£131,174)

*

0.2%

*

Scancell

is

an

AIM

listed

biotechnology

company

in

which

OT

2

first

invested

in

April

2018.

Scancell

is

developing

novel

immunotherapies

for

cancer

based

on

four

platform

technologies

known

as

ImmunoBody,

Moditope,.Avidimab

and

GlyMab.

They

are

also

us

ing

their

TCell

stimulat

ing

vaccine

platform to make a COVID vaccine aimed at the N capsid.

GlyMab

i

s

the

most

recent

of

the

cancer

therapeutics:

these

are

antibodies

with

direct

killing

ability

and

are

targeted

at

glycans

produced

by

tumours.

SCIB1,

Scancell’s

first

ImmunoBody,

is

being

developed

for

the

treatment of

melanoma

and

is

in

Phase

2

clinical

trials.

In

theory,

these

Scancell

technologies

could

be

used

to treat m

any common

forms of cancer, includin

g lung, b

reast and

prostate cancer.

Data from the trials

to date

are

encouragi

ng

and demonstrate

that SCIB1,

when used

as

monother

apy,

has a

marked

ef

fect

on tumour

load,

produces a melanoma

-

specific imm

une response and

a highly encouraging survival trend

without serious side

effects.

During the year

Scancell started 2 major

cli

nical trials. Covidity,

th

eir family

o

f Covid

-

19 vaccines is

i

n phase

1

in

South

Africa

and

at

the

end

of

January

the

dosing

had

started

on

the

second

of

the

COVIDITY

variants

and

will

be

dosed

using

PharmaJet’s

needle

free

system.

It

is

the

only

needle

free

system

precleared

by

the

WHO. Re

sults

were e

xpected

during

H1

22, h

o

wever the

re has

been

a change

of

protocol

to make

the

results

more

r

elevant

and

also

to

make

it

ea

sier

t

o

recr

uit

pat

ients.

The

SCIB1

phase

2

trial

star

ted

dosing

in

November

and

is

looking

at

how

well

SCIB1

–

Scancell’s

melanoma

vaccine

works

with

existi

ng

checkpoint

inhibitor

pembrolizumab.

Scancell also received

approval for and started their Modi 1

phase 1/2 trial which is directed

at

a

wide

range

of

tumours

with

or

without

existing

Checkpoint

inhibitors.

The

trial

includes

22

centres

indicating wide

clinical interest in participating.

The first stage will just

look at safety, with efficacy

trials

intending

to

read

out

in

2023,

however

as

the

patients

in

the

phase

1

are

cancer

patients

there

is

the

possibility

of

early

results.

Furthermore

Scancell h

as

started

to

commercialise

their

GlyMab

platform which

targets

antibodies

at

sugars

rather

than

proteins

on

cell

surfaces.

They

have

announced

though

not

detailed

four partnerships in this area.

The

Scancell

share

price

has

fallen

over

the

year.

Possible

reasons

are

the

delays

due

to

C

ovid

-

19

and

a general

move

of

the market

away

from

Biotec

h,

but

in

early

April

had

begun

to

recover

following

the

offici

al

announcement

of the Modi

-

1 trials.

The bid price as a

t 28 February 2022 used for this Scancell valuation was

12.0p

per share

(2021:

22.5p).

25

ImmBio

www.immbio.net

&

First&

Investment

&

Net&Cost

&

Carrying&

Value

&

28/02/202

2&

Change&in&

Value&for

&

the&Year

&

%&

Equity&

Held

&

*

ImmBio

&

*

December*

2000

*

£295,353

*

£59,149

*

-*

*

3.1%

*

ImmBio

was

founded

in

1999

by

Camilo

Colaco

to

develop

vaccines

that

engage

dendritic

cells.

Dr.

Co

laco

identified the role that Heat Shock Prote

ins play in activating the immune syste

m. The company has

programmes

developing

vaccines

against

Tuberculosis,

Meningitis

and

Pneumonia.

The

TB

and

Meningitis

vaccines

have

been

partnered

for

development

in

Chin

a

and

India.

ImmBio

makes

up

3.

5

%

of

the

NAV

of

OT

2.

Whilst ImmBio has not managed to find a pharmac

eutical partner or acqui

rer during the year it has teamed up

with

Liverpool

School

of

Tropical

Medicine,

who

have

applied

for

a

grant

to

prog

ress

t

he

programme

t

o

a

challenge model

of the

protein based

vaccine. They

have won

a first

grant which is

to validate

the models

they

would

use

in

the

main

study.

A

successful

challenge

st

udy

would

address

many

of

the

questio

ns

potential

partners have raised. Whether that would then result in t

hem taking action is a separate question.

Progress

with China

National

Biotech

Group for

its

pneumococcal

vaccine

PnuBioVax has

been

slow

in part

due

to

the

pandemic.

Further

milestones

payments

will

be

made

when

the

transfe

r

of

certain

technology

is

complete.

The

company

is

valued

to

reflect

its

stage

of

techni

cal

and

commerc

ial

development

and

taking

into

account

the preference cascade, but the outco

me is likely to be quite binary.

26

Insense

www.insense.co.uk

*

First&

Investment

&

Net&Cost

&

Carrying&

Value

&

28/02/202

2&

Change&in&

Value&for&the&

Year

&

%&Equity&

Held

&

*

Insense

&

*

June*2001

*

£204,259

*

£52,149

*

-*

*

1.6

%*

OT2 first invested in

Insense in 2001.

The

co

mpany

was

founde

d

by

Dr

Paul

Davis

and

was

a

spin

-

out

from

Unilever.

Paul

is

very

creative

and

a

number

of

companies

have

spun

out

of

Insense,

companies

in

which

OT2

had an

initial shareholding

as a

result

of its shareholding in Insense (eg Arecor and Microarray).

Insense itself is

now focused

on developing a

treatment for

fungal nail disease.

The treatment works

well in

the laboratory.

Very

little

progr

ess

was

made

in

2020,

since

the

university

laboratorie

s whe

re

the

testing

was

due

to

t

ake

pl

ace

were

closed

but

work

restart

ed

in

2021.

During

the

year

,

Insense

completed

its

planned

fungal

nail product form

ulation work and has a number of c

andidate gels th

at entered 6 mon

th stability testi

ng in Q1

2022.

During

this

time,

data

will

be

gathered

at

months

0,

3

and

6

on

the

physical,

chemical

and

flow

characteristic

s

of the

gels.

Thi

s

information is

needed

to prove

that

the

gels will

remain

stabl

e

during a

clinical

trial.

During the

stability

testing,

fungal

kill

tests will

also

be

performed.

Insense

is also

finalising

the

design

for

the

hardware

components

of

the

p

roduct.

On

successful

completion

of

this

stability

testing

and

design

work,

Insense pla

ns to

submit an

application to

MHRA

to gain

approval to

run a first

-

in

-

man clinical trial

in

the

UK.

The plan is

to conduct this trial, and

then to sell the

package to

a pharma company

in exchange

for an up

-

front

payment and a royalty on sales.

Insense

is valued at the price of the last equity fu

ndraising round.

**

*

Lucius Cary

Director – OT2 Managers Ltd

Investment Manager

21

April

2022

27

Investment&Manager&

–&

Oxford&Technology&Management&Ltd

&

Lucius Cary

Lucius Ca

ry is

the

founder

and

managing di

rector of

Oxford

Technology

Management

Ltd

(“OTM”).

He has

a degree

in engineering

and economics

from Oxfor

d University,

an MBA

from Harvard

Business School

and

was an engineering ap

prentice at the Atomic Ene

rgy Research Establishment,

Harwell.

After

forming

and

raising

finance

for

his

first

busines

s

in

1972,

he

founde

d

"Venture Capital Re

port" in 1978

and was its managing director

for 17 years.

In March

1996, he be

came chairm

an and

reduced his d

ay

-

to

-

day involvement

in order to concentrate more fully on OTM’s investme

nt activities.

OTM

raised

its

first

fund

to

invest

in

star

t

-

up

and

early

-

stage

technology

companies in 1983.

OTM

ha

s

managed or advised

twelve

funds which,

between

them,

have

made

more

than

100

such

investments

.

In

2003,

he

was

awa

rded an OBE for services to business.

Lucius

is

a

shareholder

in

Oxford

Technology

2

VCT,

Scancell

and

Sele

ct

Technology.

He

is

als

o

a

Dir

ector

of

OT1

Manage

rs

Ltd,

OT2

Manager

s

Ltd,

OT3

Managers

Ltd

and

OT4

Managers Ltd.

Andrea Mica

Andrea

Mica

graduat

ed

fr

om

the

Delft

University

of

Te

chnology

with

an

MSc

in

Ind

ustrial

Design

Engineering,

and

went

on

for

a

further

graduate

study

in

Innovation

and

Creat

ivity

at

the

State

Univ

ersity

College of New York at

Buffalo.

He

has

a

strong

and

v

aried

background

in

technology

prior

to

joining

OTM

–

both

promoting

technologies

for

sale,

and

identifying

new

technologies

t

o

invest in.

He

also

ha

s

an

entrepr

eneurial

streak

–

he

co

-

founded

CleanSteel

Ltd,

a

company

that

developed

a new

technique

for

recycling

waste

products

fr

om

the tyre industry.

Within

the VCTs

he has

conc

entrated

on

the

life science

portfolio

c

ompanies.

Andrea is a sharehold

er in Scancell.

&

28

Board&of&Directors

&

The

Company

h

as

a

Board

of

four

non

-

executive

Directors.

They

meet

on

a

regular

basis

to

review

the

investment

performance and

monitor c

ompliance

with the

investment policy

laid d

own

by the

Board as

set out

in the Strategic Report

starting

on page

15.

The Board has a formal

schedule of matters spec

ifically reserved for

its decision which include:

●

the

consideration

and

approval

of

future

developments

or

changes

to

the

investment

policy,

including

risk and asset allocation;

●

the

consideration and

review of

the

Company’s

compliance with

HMRC

conditions for

maintenance

of approved VCT status;

●

consideration of corporate strategy;

●

approval of the appropriate dividend to be paid to s

hareholders;

●

the appointment, evaluation, remov

al and remuneration of the Investmen

t Manager;

●

the

performance

of

the

Company,

including

monitoring

the

discount

of

the

share

price

to

net

asset

value; and

●

monitoring shareh

older profiles an

d considering shar

eholder communicatio

ns.

The

Chair

man

leads the

Board in

the

determination of

its

stra

tegy

and in

the achievement

of its

objectives. The

Chairman

is

responsible

for

organi

sing

the

business

of

the

Board,

ensuri

ng

its

effectiveness

and

setting

it

s

agenda. He facilitates

the effective contribution

of the Directors and ensures that

they receive accurate, timely

and

clear

informati

on

and

that

the

Company

communicates

effectively

with

shareholders

in

accordance

with

the Board’s duty to promote the success o

f the Company.

The

Company

Se

cretary

is

responsible

for

advising

the

Board

through

the

Chairman

on

all

governance

matters.

All of

the Directors have

access to

th

e advice

and services of

the Company

Secre

tary.

Directors may

also take

independent

professional

advice at

the

Company's ex

pense

where necessary

in the

performance

of

their duties.

The Company’s

articles of

association

and the

schedule of

matters

reserved to

the Board

for decisi

on provide

that the appointment and removal o

f the Company Secretary is a matter for th

e full Board

.

29

Richard Roth

Richard

Roth (a

ged 5

8

)

is

the Chairman

of OT2

and

Chairman of

the Audit

Committee. He

was app

ointed in

July

2015. He

is a

Chartered

Management

Accountant.

Aft

er

14

years

at

two

blue

chip

companies

he

j

oined

easyJet,

where

he

was

one

of

the

key

executives

that

transformed

the

business

fr

om

private company to household name.

He

has

subsequen

tly

worked

for

a

number

of

airlines,

inc

luding

as

CFO

of

RoyalJet.

Richard

h

as

also had

a

number

of consulting

assign

ments,

in

particular

helping

companies

deter

mine

their

strategy,

and

implementing

business

improvements.

He

has

been

deeply

involved

in

growing

and/or

turning businesses around.

Richard

is a

wel

l

-

informed

VCT

investor

having

followed

the

industry

closely

since

inception

and

has

extensive understanding

of the sector

having observed good

and bad practice

for 20

years. He has

invested in

a

number

of

small

(mainly

unquoted)

companies

and

has

also

advised

several

potential

start

-

up

businesses

–

mainly travel

-

related.

Richard is

a s

hareholder in

Arecor

and

Scancell.

He is

also

a Director

of OT2 Managers

Ltd,

OT4 Managers

Ltd, Oxford Technol

ogy VCT Plc, Oxford

Technology 3 VCT

Plc and Oxford Tec

hnology 4 VCT Plc.

He is

also a director of Seneca Growth Capital VCT Plc.

This

combination

of

experience,

includin

g

his

director

ship

on

another

VCT

outside

the

Oxford

Technology

stable, provides the Company with valuable and detailed knowledge regarding the successful ongoing

operation of a VCT.

Alex Starl

ing

Alex Starling (aged

4

) is a Director of OT2 and was appointed in July 2015.

Alex

runs

his

own

corporate

advisor

y

firm,

ACS

Technical

Limited.

He

has

helped

a

number

of

technology

companies

raise

ventur

e

capital

and,

conversely,

shareholders

realise

their

investments

in

such

technology

companies.

He

is

a

Chartere

d

Engineer

and

Member

of

the

Institution

o

f

Mechanical

Engineers,

has

a

PhD

in

Engi

neering

fro

m

Cambridge

University

an

d

holds

the

ICAEW

Diploma

in

Corporate

Finance.

Alex

brings

current

corporate

finance & early sta

ge fundraising experience to the Board.

Alex

is

a

shareholder

in

Scancell.

He

is

also

a

Di

rector

of

OT1

Managers

Ltd,

OT2

Managers

Ltd,

Oxford

Technology

3

VCT

Plc

and

Oxford

Technology

4

VCT

Plc

and

he

is

the

Chairman

of

Oxford

Technology

VCT Plc.

30

Robin Goodfel

low

Robin

Goodfellow

(aged

7

4

)

is

a

Director

of

OT2

and

also

a

member

of

the

Audit

Committ

ee.

He

was

app

ointed

in

July

2015.

Robin

had

30

years

of

experience

in

senior

Accounting

Manager

and

Internal

Audit

Manager

roles

with

Exxon

Mobil

Interna

tional,

Es

so

Europe,

Esso

Petroleum

and

Esso

Norway.

He

has

particular

ex

pertise

in

advis

ing

on

and

implementing

cost

effective

controls

across

total

company

business

activities

and

their

accounting systems.

Robin

has

an

MA

in

Engineering

fr

om

Ca

mbridge

University

an

d

a

n

MBA

from the London Business School.

More

rec

ently

he

has

been

an

active

investor

and

shareholder

in

VCTs,

EISs

and

other

small

companies.

He

was previously a regu

lar commentator on VCT indust

ry performance and curre

nt VCT company issues.

Robin’s co

mbination of

experience

provides

the

Company with

valuabl

e and

detailed

knowledge of

the VCT

industry

which

contributes

to

the

successful

ongoing

operation

of

a

VCT.

He

also

undertakes

significant

research

about other companies within similar fields of activit

y as our investments.

Robin

is

a

shareholder

in

Ar

ecor

and

Scancell.

He

is

also

a

Director

of

OT1

Managers

Ltd,

OT3

Managers

Ltd, Oxford Technology

VCT Plc, Oxford Technology 4

VCT Plc and

is the Chairman of

Oxfor

d Technology

3 VCT Plc.

David Lives

ley

David

Livesley

(aged

6

1

)

is

a

Director

of

OT2

and

was

appointed

in

July

2015.

He

worked

in

the

life

science

a

nd

pharmaceut

ical

indus

tries

befo

re

joining

Cambridge

Consultants

Ltd

in

1987,

where

he

wa

s

invol

ved

in

product

and

process development across a range of industrial s

ectors.

Between

1999

and

2012

he

worked

for

the

YFM

Group,

where

he

invested

VCT m

oney into

early stage

technology companies.

Currently he

is an

independent

Non

-

Executive

directo

r

for

a

number

of

early

stage

technology

businesses.

David

brings

a

wealth

o

f

fund

management

and

venture

capital

investment

experience

to

the

Board,

as

well

as

direct

experience

of

VCT

fund

management.

He

has

been

involved

with

the

portfolio

for

over

15

years,

and

hence

has

extensive

historic

knowledge

of

the

Company’s

investmen

ts,

which remains highly re

levant to the ongoing

success of the Company.

David

is

also

a

Director

of

OT3

Managers

Ltd,

OT4

Managers

Ltd,

Oxford

Technology

VCT

Plc,

Oxfor

d

Technology 3 VCT Plc an

d is the Chairman of Oxfo

rd Technology 4 VCT Plc.

31

Directors’

&Report

&

The Directors present

their report together wi

th Financial Statements

for the year ended 28

February 202

2.

The

Directors

consider

that

the

Annual

Report

and

Financial

State

ments,

taken

as

a

whole,

are

fair,

b

alanced

and

understandable

and

provide

the

information

necessary

for

shareholders

to

assess

the

Company’s

performance, business model and strategy.

This report has been prepared by the Directors

in accordance with the requirements of s415 of the Companies

Act 2006. The Company’s in

dependent auditor is required by law to report on whether the information given

in the Directors’ Report is consistent with the Fina

ncial Statements.

Principal Activity

The

Company

commenced

business

in

200

0.

The

Company

invests

in

start

-

up

and

early

stage

technology

companies in general located within 60 miles of Oxford. The Company has maintained its approved status as

a Venture Capital Trust by HMRC.

Review of Business Activities

The

Directors

are

require

d

by

section

417

of

the

Compa

nies

Act

2006

to

include

a

Business

Review

to

shareholders.

This

is

set

out

on

page

1

2

and

forms

part

of

the

Strategi

c

Report.

The

purpose

of

the

Business

Review

is

to

inform

members

of

t

he

Company

and

help

them

assess

how

the

Directors

have

performed

their

duty

under

section

172

of

the

Companies

Act

2006

(duty

to

promote

the

success

of

the

Company).

The

Company’s section

172 Statement

on page 1

7, t

he

Chairman's Statement on page

s

4 to 1

1

and

the Investment

Manager’s

Review on

pages 1

9

to 2

6

also

form part of the Strategic Report.

Corporate Governance Statement

The Board

has considered the principles

and recommendations of the

2019 AIC Code

as applied to

companie

s

reporting as at 28 February 202

2

. The Compan

y’s Corporate Governance policy is se

t out on

pages

40

to 4

5.

The

2019

AIC

Code

is

availab

le

on

the

AI

C

website

(

www.theaic.co.uk

).

It

includes

an

explanation

of

how

the

2019

AIC

Code

adapts

the

Principles

and

Provisions

set

out

in

the

UK

Code

to

make

them

relevant

for

investment companies.

The

Company

has

complied

wit

h

the

recommendations

of

th

e

2019

AIC

Code

and

the

r

elevant

provisions

of

the UK Code, except as set out below:

●

The

Compa

ny

do

es

not

have

a

Chief

Executive

Officer

or

a

Senior

Independent

Director.

The

Board

does not consider this necessary as it does

not have any executive directors.

●

New

Directors

do

not

receive

a

fo

rmal

induction

on

join

ing

the

Board,

thou

gh

they

did

receive

one

tailored to them on an individual basis.

●

The

Company

conducts

a

formal

review

as

to

whethe

r

there

is

a

need

for

an

internal

audit

function.

However, the

Directors do

not consider

that an

internal audit

would be

an appropriate

control for

this

VCT at this time.

●

The Company does not have a Remuneration Committee as

thes

e matters are dealt

wi

th by the Board.

●

The

Company does not have a

Nomination Committee as these

matters are dealt with

by the Board.

For

the

reasons

set

out

in

the

AIC

Guide

,

and

as

explained

in

the

UK

Code,

the

Board

considers

the

above

provisions

are

not

relevant

to

the

position

of

the

Company,

being

an

investment

company

run

by

the

Board

and

managed by

the

Investment A

dviser.

In particular,

all

of

the Com

pany’s

day

-

to

-

day

administ

rative

functions

are

outsourced

to

third

parties.

As

a

result,

the

Company

has

no

executive

directors,

employees

or

internal operations.

32

Furthermore

, the Board acknowledges that it is not recommende

d practice that the

Chairman

of the Company

to

be

chairman

of

the

Audit

Committee;

however,

for

administ

rative

convenience,

Richard

Roth

is

chairman

of the Audit Committee as he fulfils this rol

e for all the OT VCTs.

Directors

The

Direct

ors

of

the

Compa

ny

are

required

to

notify

their

int

erests

und

er

Dis

closure

and

Transparency

Rule

3.12R.

The

membership

of

the

Board

and

their

beneficial

interests

in

the

ordinary

shares

of

the

company

at

28 February 202

2

and at 2

8

February 202

1

are set out below:

Name

2022

% Holding

2021

% Holding

R Roth

44,033

0.83

44,033

0.83

A Starling

Nil

-

Nil

-

R Goodfellow

14,000

0.26

14,000

0.26

D Livesley

Nil

-

Nil

-

There have been no c

hanges in the Directors’

interests since 28 F

ebruary 2022. No optio

ns over the share

capital of the Company have been granted to the Directors.

There is no minimum holdin

g requirement that the Di

rectors need to adhere

to.

Under

the

Company’s

Articles

of

Association

Directors

are

required

to

retire

by

rotation

every

third

year.

However,

bes

t

practice under

the

late

st

corporate governance

guidelines is

for

all directors

to

stand

for election

each

year

and

as

a

result,

Richard

Roth,

Alex

Starling,

Robin

Goodfellow

and

David

Livesley

will

all

be

nominated

for

r

e

-

election

at

the

forthcoming

AGM.

The

Board

believes

that

all

the

non

-

executive

Directors

continue

to provide

a

valuable

contribution

to

the

Company

and remain

committed

to

their

roles.

The Board

recommends that shareholders suppo

rt the resolutions to re

-

elect all four Directors at the for

thcoming AGM.

The

Board is

satisfied

that, following

individual

perf

ormance

appraisals

,

the

Directors

who are

retiring

continue

to

be

effective

and

demonstrat

e

commitment

to

their

roles

and

therefore

offer

themselves

for

re

-

election with the support of the Board.

The Board

d

id not

iden

tify any

co

nflicts of

interest between the

Chairman’s interest and those

of the

shareholders, especially with regard to the relationship

between the Chairman and the Inve

stment Adviser.

The

Board

is

cognisant

of

shar

eholders'

preference

for

Dire

ctors

not

to

sit

on

the

boards

o

f

too

many

larger

companies ("overboarding").

Shareholders will be aware t

hat in July 2015,

t

he Company, along with the

other VCTs that were managed

by

Oxford Technology

Management

, appointed

directors such that

the four

VCTs each had

a Common

Board.

I

n

addition,

Richard

Roth

is

a

director

of

Seneca

Growth

Capital

VCT

Plc,

a

VC

T

investing

in

the

MedTech

sector which has a number of investme

nts in common with the Oxford Techn

ology VCTs.

Whilst

great

care

is

taken

to

sa

feguard

the

interes

ts

of t

he

shareholders

of

eac

h s

eparate

company,

th

ere

is

an

element

of

overlap

in

the

work

load

of

each

Director

across

the

four

OT

funds

due

to

the

way

the

VCTs

are

managed.

The

Direc

tors

note

that

th

e

workload

four

OT

funds

is

less

than

it

wou

ld

be

for

four

totally separate and

larger funds,

and are satisfied

that Richard Roth

has

the time

to focus on

the requirements

of each OT fund.

Investment Management Fees

OT2

Mana

gers

Ltd

,

the

Company’

s

wholly

owned subsidiary,

has

an agreement

to provide

inve

stment

management

services

to

the

Comp

any

for

a

fee

of

1%

of

net

assets

per

annum.

OT2

Managers

Ltd

subcontr

acts

these se

rvices to

OTM

on

a pass

through basis.

Alex

Starling and

Ric

hard Roth

togethe

r with

Lucius Cary are

Directors of OT2 Managers

Ltd.

33

Directors’ and Officers’ Insurance

As permitted by legislation and the Company’s Art

icles of Association, the Company has tak

en out insurance

cover on behalf of the Directors, indemnifying them against certain liabilities which may be incurred by them

in relation to their duties as Directors of the Com

pany.

Ongoing Review

Th

e

Board

has

reviewed

and

continues

to

review

all

aspects

of

internal

governance

to

mitigate

the

risk

of

breaches of VCT rules or company law.

Whistleblowing

The

Boar

d

has

been

informed

that

the

Investment

Advis

er

has

arrangements

in

pla

ce

in

accordance

with

the

UK

Code’s

recommendati

ons

by

which

staff

of

Oxford

Te

chnology

Management

or

the

Secr

etary

of

the

Company

may,

in

co

nfidence,

raise

con

cerns

within

their respective

orga

nisations

about

pos

sible

improprieties

in matters of financial reporting or ot

her matters.

Bribery Act

The

Company

is

committed

to

carrying

ou

t

busines

s

fairly,

honestly

and

openly

and

makes

certain

that

the

highest standards

of

professional

and ethical conduct

are maintained. T

he Investment

Adviser has established

policies and procedures to prevent bribery within its organisation and seeks to ensure adequate safeguards are

in place

at

its

main thir

d party

supplier

s.

T

he

Company

has

adopted

a

zero tol

erance approach

to

bribery

and

corruption

and

will

not

tolerate

bribery

under

any

circumstance

in

any

transaction

the

Company

is

involved

in. The Company

has instructed the In

vestment Adviser to

adopt th

e same approach with investee companies.

Relations with Shareholders

The Company values

the views of

its shareholders and recognises their interest in

t

he Company. The

Company’s

website

provides

information

on

all

of

the

Company’s

investments

,

as

well

as

other

informati

on

of relevance to shareholders

(

www.oxfordtechnol

ogyvct.com/vct2.html

).

Shareholders

have

the

opportunity

to

meet

the

Board

at

an

annual

meeting,

and

we

are

now

also

planning

to

hold a

shareholder webinar

each year

. In addition to the formal busin

ess of the

meeting

the Board is available

to

answer

any

questions

a

shareholder

may

have.

Outside

of

general

meetings,

the

Company

engages

with

shareholders

through

regulatory

news

s

ervice

announcements,

interim

and

annual

report

s

as

well

as

regular

correspondence with

shareholders and

their advisers to

address any

queries that arise.

The Board

is also happy

to respond

to

any written

queries

made by

shareholders during

the

course of

t

he

year

and can

be

contacted

at

the

Company’s

registered

office:

Magdalen

Centre,

Oxford

Science

Park,

Oxford

OX4

4GA.

Alternatively,

your question can be emailed to:

vcts@oxfordtechnology.com

.

Relations with Investment Adviser

The Company’s most important business relationship is with the Investment Adviser. There is regular conta

ct

with

the

Investment

Adviser,

and

all

members

of

the

Investment

Adviser’s

t

eam

attend

all

of

the

Company’s

Board

me

etings.

There

is

also

an

annual

timetable

agreed

with

the

Invest

ment

Adviser

and

the

Company

for

matters

relat

ed

to

the

an

nual

timetable

which

are

dis

cussed

at

each

Board

Meeting.

The

Company

a

nd

Investment

Adviser

also

work

together

to

maintain

efficient

operation

of

the

VCT

as

detailed

in

the

Key

Performance Indicators.

Relations with Portfolio Companies

The

Company

primarily

holds

minority

investments

in

its

portfolio

companies

and

it

has

appointed

the

Investment

Adviser

to

manage

the

share

portfolio.

W

hile

the

Board

has

little

direct

cont

act

with

the

most

of

the

portfolio,

the

Investment

Adviser

provides

updates

on

the

investee companies

quarterly,

as

well

as

on

ad

hoc basis when applicable

.

Environmental, Social and Governance (“ESG”) Practices

The

B

oard

recognises

the

requirement

under

section

414c

of

the

Companies

Act

2006

to

detail

information

about environmental

matters (including the

impact of

t

he Com

pany’s business

on the environment),

employee

and human

rights,

social

and

community

issues,

including

information

about

any

policies

it

has

in

relation

to

these matters and effectiveness of these po

licies.

34

Given the size and nature

o

f the Company’s activities and

t

he fact that it

ha

s no employees and

o

nly four non

-

executive

Directors,

t

he

Board

con

siders

there

is

limited

scope

to

develop

and

implement

environmental,

social

and community policies, but recognises the importance of includi

ng consideration for such matters in

investment

decisions.

The

Board has

taken

into

account

the

requirement

of

sect

ion

172(1)

of

the

Companies

Act

2006

and

the

importanc

e

of

ESG

matters

when

mak

ing

decisions

which

could

impact

shareholders,

stakeholders and the wider commun

ity.

The

Co

mpany’s

S

ection

172(1)

statement

has

b

een

pr

ovided

in

the

Strategic

Report

on

page

1

7

,

where

the

Directors consider the

information to be of s

trategic importance to t

he Company.

The

Company

seeks to

ensure that

its business

is

c

onducted

in

a manner

that is

responsible to

the

environment.

The

manag

ement

and administration

o

f

the Company

i

s u

ndertaken

by th

e

Investment A

dviser

who recog

nises

the

importance of

its

environmental

responsibilities,

monitors

its

impact

on

the

environment and

implements

policies to

reduce any

negative environmental

impact and

which promote environmental sustainab

ility,

choosing

energy

efficient

equipment,

appliances

and

light

bulbs,

reducing

printing

to

a

minimum

and

recycling

where possible.

The

Inve

stment

Advis

er

recogni

ses

that

managing

investments

on

behalf

o

f

clients

involves

taking

into

account

a

wide

set

o

f

responsibilities

in

addition

to

seeking

to

maximise

financial

returns

for

investors.

Industry

practice

in this area has been

evolving rapidly and

the Company seeks to be an active pa

rticipant by working to

define

and

strengthen

its

principles

accordingly

.

This

involves

both

integrating

ESG

considerations

into

the

Investment

Adviser’s

investment

decision

-

making

process

as

a

matter

of

course.

The

fol

lowing

is

an

outline

of the kinds of

ESG considerations that the Investment Adviser is taking

into account as

part of its

inves

tment

process.

Environmental

OTM

as

part

of

its

commercial

due

diligenc

e

practices

and

o

ngoing

monitoring,

e

xamines

potential

iss

ues

which c

ould aris

e from

supply

chains,

climate

change

and

environmental

policy

compliance.

The

Investment

Adviser looks for manag

ement teams who are awar

e of the issues and ar

e proactive in responding to them.

Social

OTM see

ks to

avoid

uneq

uivocal

social

negatives,

such

as

profiting

from

forced

labour

within

its

investment

portfolio

and

to

s

upport

positive

impacts

which

will

more

likely

find

support

from

customers

and

see

rising

demand. OTM do

es not tolerate modern slavery or h

uman traffickin

g within its busin

ess operations an

d takes

a risk

-

based approach

in respect of

our portfolio

companies. OTM actively

engages with portf

olio companies

and

their

boards

to

discuss

material

risks,

ranging

from

business

and

operational

risks

to

environmental

and

social risks.

Governance

OTM examines and,

where appropriate, engages

with companies on board

membership, remuneration,

conflicts

of

interest

such

as

transactions,

and

business

leadership

and

culture.

In

addition

,

the

Company, as a matter of

course, exercises its

voting rights when po

ssible.

Greenhouse Gas

(“GHG”) Emissions and

Streamlined Energy &

Carbon Reporting (“SECR”)

Under the Companies

Act 2006 (Strategic

Report and Directors’ Report)

Reg

ulations 2013 (‘

the 2013

Regulations’)

and the

Companies (Di

rectors’ Report

) and

Limited Liabilit

y Partnerships

(Energy

and Carbon

Report)

Regulations

2018,

quoted

companies

of

any

size

are

required

under

Part

15

of

the

Companies

Act

2006 to disclose information relating

to their energy use and GHG emissions.

All of the

Company’s activities are outsourced to third

par

ties. The Company

theref

ore has no

greenhous

e gas

emissions

to

report

from

it

s

operations,

nor does

it

have

direct responsibility

for

any

other emissions

producing

sources

under

the

Companies

Act

2006

(Strategic

Report

and

Directors’

Reports)

Regulations

2013

and

the

Companies

(Directors’

Report

)

and

Limited

Liability

Partne

rships

(Energy

and

Carbon

Re

port)

Regulations

2018.

For

the

same

reasons

as set

out above,

the Company

consider

s

itself

to

be

a

l

ow

energy

user

under

the

35

SECR

regulations

and

therefore

is

not

required

to

disclose

energy

and

carbon

i

nformation.

A

low

energy

user

is

defined as an organisation that uses 40 MWh or less

during the reporting period.

Going Concern

The

ass

ets

of

the

Company

consist

mainly

of

securiti

es

as

is

required

by

the

VCT

regulations

,

two

of

which

are AIM quoted, as

well as cash.

After

making enquiries,

the Directors

have a reasonab

le expectation

that the

Company has adequat

e resources to conti

nue in operational existence for the foreseeable future

.

The company

had a

cash balance of

£

184

,000

at 28

February 202

2

with annual

running costs of

£6

0

,000 in

the

past

year

.

On

the

basis

that

the

Company

makes

no

further

investments,

the

cash

balance

alone

covers

costs

for

more than

the n

ext t

wo

years. In

addition,

were additional cash

required, Scancell is reasonably liquid (the

shares

were

initially

su

bscribed

for

specifically

to

help

with

liquidity)

with

the

sums

of

cash

required

for

operations

of

the

VCT

achievable

without

moving

the

market.

In

future

periods,

the

Directors

would

expect

there to

be some

liquidity for

Arecor as

well, although

this

is h

arder to assess as

Arecor is newer

to the market

and a number of shareholders (including the Company) are subject

to a lock in.

For this reason the Directors have adopted the going

concern basis in preparing the Financial Statements.

The

military

invasion

of

Ukraine

by

Russian

forces

has

caused

various

countries

to

announce

the

imposition

of

sanctions

on

Russia.

These

sanctions

may

lead

to

u

npredictable

r

eactions

from

Russia,

particu

larly

in

relation

to

the

provision

of,

or

access

to,

energy

resources

whic

h

may

have

a

consequential

impact

on

economic

conditions

globally,

including

the

costs

of

living

and

the

availability

(and

increased

cost)

of

raw

materials

.

Such

increased

costs

of

living

and

the

avail

ability

(and

increased

cost)

of

raw

materials

may

also

have

an

indirect

impact

on

businesses

in

which

the

Company

has

invested

in,

hindering

growth

,

financing

or

operations. Similarly, the threat of rising inflation may impact on the performance/profitabilit

y of our

investees.

Consequently,

any

change

of

gover

nmental,

economic,

fiscal,

monetar

y

or

political

policy,

and

in

particular

any

spending

cuts

or

material

increases

in

interest

rates

could

affect,

directly

or

indirectly,

the

performance

of

the

Company

(as

a

result

of

the

performance

of

its

underlying

inve

stments)

and

hence

the

value

of, and returns from, the Company’s shares.

Covid

-

19

has

had

an

impact

on economic

conditions

globally

and

may

continue

to affect

the

performance

of

some companies in which the Com

pany has invested

.

The

Board

will

keep

these

risks

under

regular

review

but

do

not

consider

them

to

have

any

impact

on

the

Company’s own ability to

continue as a going

concern.

Share Capital

At

the

AGM

on

25

August

2021,

S

hareholder

s

approve

d

the

resolutions

to

sub

-

divide

and

reclassify

each

ordinary share of

10p each in the c

apital of the Com

pany into (i) one ordinary share o

f 1p in the capital

of the

Company;

and

(ii)

one

deferred

share

of

9p

in

the

capital

of

the

Company.

This

resulted

in

the

issue

of

5,331,889

Deferred 2020

Shares

, which

were immediately rep

urchased by

the Company for

an

aggregate sum

of 1p in accordance with the provisions of the Articles

, following which

all of the Deferred 2020 Shares

were

c

ancelled.

Th

is

process

has

creat

ed

an

addit

ional

£480,000

of

Cap

ital

Red

emption

Reserve,

which

can

be

subsequently

cancelled,

subject

to

the

sanction

of

the

High

Court,

creating

further

distributable

reserves

to

assist in the payment of dividends or assis

t in the return of funds to shareholders

.

Following

the

su

b-

division

a

nd

reclassific

ation

as

describe

d

above,

the

Company

ha

d

5,331,889

Ordinary

Shares

of

1p

each

in

issue

,

and

this

has

remained

the

same

at

28

February

2022

(2021:

5,331,889

Ordinary

Shares of 10p each) with each share having one vote. There are

no other share

classes in issue.

As disclosed on

page 7

5

, the

Board does not hav

e authority to make market pu

rchases of the Company’s own

shares.

As

a result

of

some

shareholder re

presentations,

the

Company

has previously

withdrawn the

customary

buy

-

back

resolution

and

none

is

proposed

this

year.

This

position

is

being

recon

sidered

in

th

e

light

of

the

proposed

Merger

and

Offer

(as

described

in

the

Chairman’s

statement)

and

will

be

further

ref

erred

to

in

any

Circular that may subse

quently be issued. No shares

were bought

back by the Company during the year.

36

No shar

es were

allotted

by

the

Company

during

the yea

r. The

Board

’s

authority

to

allot

up to

533,189

shares

(representing approximately

1

0% of the ordinary share capital as at 29 June

202

1)

without pre

-

emption rights

expires at the forthcoming AGM

.

As discussed in the Chairman’s Statement, whilst the

VCT remains in good

structural

shape,

it seem

s

prudent

to take

some prec

autionary

measures

and

the Board

is proposing

a resolutio

n

for sharehold

ers to

renew this

authority

for a futher period

.

This

will

provide

additional

flexibility,

if

eve

r

required,

to

raise

money

more

cheaply

and

at

shorter

n

otice.

This

would

enable

the

Company

to

support

investee

companies

(within

the

VCT

rules)

and,

excepti

onally,

take

advantage

of

other

opportunities

arising

from

other

investees

in

the

OT

VCT

stable.

At

the

moment

we

have

no

plans

to

raise

additional

capi

tal

or

to

conduct

a

possible

placing,

but

it

seems

prudent

in

these

uncertai

n

times to have the capability in case the Board wishes to

act quickly.

In accordance with Schedule 7 of the

Large and Medium Size Compa

nies and Groups (Accounts and

Reports) Regulations 20

08, as amended, the Dir

ectors disclose the fo

llowing information:

●

The

Company’s

ca

pital

structure

and

voting

rights

are

summarised

above,

and

there

are

no

restrictions

on

voting

rights

nor

any

agreement

between

holders

of

securities

that

result

in

restrictions

on the transfer of securities or on voti

ng rights;

●

There ex

ist no securities carrying special rights with regard to the control of the Com

pany;

●

The

rules

concerning

the

appointment

and

rep

lacement

of

Di

rectors,

amendment

of

th

e

Articles

of

Association

and

powers

to

issue

or

buy

back the

Company’s

shares

are

conta

ined in

the

Articles

of

Association of the Compa

ny and the Companies Act

2006;

●

The Company does

not have any employee s

hare scheme;

●

There

exist

no

agreements

to

which

the

Company

is

party

that

may

affect

its

control

following

a

takeover bid; and

●

There

e

xist

no

agreements

bet

ween

the

Company

and

its

Dir

ectors

providi

ng

for

compensation

f

or

loss of office that may occur following a tak

eover bid or for any other reason.

Substantial Shareholders

At 28

Februa

ry 202

2

,

the

Company has

been notified

of

the following

investors whose

interest

exceeds three

percent

of

the

Company’s

issued

share

capit

al:

Redmayne

Nominees

Limited

5.98%

(includes

the

beneficia

l

interests

of

Ms

Shivani Palakpari

Shree

Parikh);

Barclays

Direct

Investing

Nominees Ltd,

5.13

%;

Mrs

Mary

Louisa

Perry,

3.84%;

Hargreaves

Lansdown

Nomine

es

Limite

d,

3

.24%;

Merrick

Sidney

Whitehouse

Feast,

3.19%.

Auditors

As

set

out

in

th

e

Chairman’s

Statement,

UHY

resigned

as

the

Company’s

auditor

during

the

year,

and

Hazlewoods

were

appointed

by

the

Board

to

fill

the

cas

ual

vacancy.

Hazlewoods

have

audited

the

fina

ncial

statements

for

the

year

to

28

February

2022,

and

offer

themselves

for

re

-

appointment

as

the

independent

auditors

for the year to 28 February 2023 in accordance with Section

489 of the Companies Act 2006.

On behalf of the Board

Richard Roth - Chairman

21

April

2022

37

Directors’

&Remuneration&

Report

&

and&Policy

&

Introduction

This

report

is

submitted

in

accordance

wi

th

the

requirements

of

s420

-

422

of

the

Companies

Act

2006

,

in

respect of

the

year

ended

28 February

2022.

The

Company’s

independent

auditor,

Hazlewoods

is

required

to

give

its

opinion

on

certain

information

included

in

this

report.

Their

report

on

these

an

d

other

matters

is

set

out

on

pages

47

to

53

.

This

report

set

s

out

the

Company’s

Directors’

Remuneratio

n

Policy

and

the

Annual

Remuneration Report, whic

h describes how this po

licy has been applied

during the year.

The

Directors'

Remuneration

Policy

was

last

approved

by

shareholders

at

the

AGM

on

25

August

202

1

on

a

poll

vote

where

100%

of

proxies

voted

in

favour

(a

total

of

1,083,248

votes

in

favour,

none

against,

none

at

Chairman’s

discretion

and

no

votes

withheld)

.

It

needs

to

be

put

to

a

shareholder

vote

every

three

years,

and

shareholders will b

e asked to approve it again at the AGM in 2024.

Shareholders

also

need

to

approve

the

Directors'

Remuneration

Report

every

year.

It

was

last

approved

by

a

poll vote at the

AGM on 25

August 2021 where 100%

of proxies voted in favour (details as per

the Di

rectors’

Remuneration

Policy

vote

above).

A

Resolution

to

approve

the

Directors’

Remuneration

Report

for

the

year

ended 28 February 2022 will be proposed at the AGM on

20

June 2022.

Statement

from

the

Chairman

of

the

Board

in

relation

to

Directors’

Remuneration

Matters

The

Board

i

s

min

dful

of

its

o

bligation

to

set

remune

ration

at

l

evels

which

wi

ll

attract

and

maintai

n

an

appropriate calibre of individuals whilst si

multaneously protecting the interests of shareholders.

During th

e year

to

28

February

2022, the

Board

reviewed its

existing

remuneration levels

, having

considered

the

remuneration

payable

to

non

-

executive

directors

of

comparable

VCTs,

the

demand

for

non

-

executive

directors

within

the

financial

sector

and

the

increasing

regulatory

requirements

with

which

the

sector

is

required

to

comply.

However

the

key

criteria

are

the

amount

the

VCT

can

afford

to

pay,

and

the

overlap

of

some of

the work

with the

other OT

VCTs. The

Board agreed

to leave

Directors’ fees

unchanged at

this time

from

the prior y

ear as shown in

the table on

page 39

.

An update on Director

s’ Remuneration will be proposed

in

any

Merger

Circular

that

may

be

produced.

As

wi

th

any

Board

comprising

solely

of

non

-

executive

directors

,

it

is

unlikely

that

a

Director

can

fully

a

bstain

from

any

discuss

ion

or

decisi

on

concerni

ng

thei

r

own

fees.

Director's remuneration consists of a base fee

f

or all Directors and each

Direc

tor participated in the process of

setting the

level of th

is fee. Add

itional fees

have been

set for the role o

f

Chairman of the Company, Chairman

of

the

Audit

Committee

and

Member

of

the

Audit

Committee

and

the

individual

Director

did

not

participate

in

setting

the

additional

fee

for

their

own

specific

role

s

.

The

Board

considers

that

this

process

is

consistent

with

the spirit of the AIC Code on the setting of Directors’ fe

es.

The Company’s Articles of Association

limit the aggregate amount that can be paid to th

e Directors in fees to

£75,000 per annum, unless otherwise approved by Ordinary Resolution of

the Company

.

Details

of

the

voting

from

the

last

AGM

on

25

August

2021

for

bot

h

the

Re

muneration

Report

and

the

Remuneration Policy are

set out in the Introd

uction above.

The Directors have considered the EU Shareholder Rights Directive II.

The Remuneration Report

appears on

the

Company

website

along

with

the

full

annual

report

and

accounts

for

10

years.

Any

chan

ge

in

Directors’

pay would be viewed against comparatives and fully documented.

Details of the Directo

rs’ remuneration are disc

losed below and in Note 4

.

Directors’ Terms of Appointment

The

Board

manages

the

Co

mpany

and

consists

entire

ly

of

non

-

executive

Directors,

who

meet

formally

as

a

Board

at

least

four

times

a

year

and

on

other

occasions

as

necessary,

to

deal

with

important

aspects

of

the

Comp

any’s

affair

s.

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

reti

re

at

the

f

irst

general

meeting af

ter elect

ion and

thereafte

r

every third

year.

In line with

best practice

as

recommended in

the 2019

AIC Code

, all Directors will offer themselves for re

-

election this year.

38

Re

-

election

is

recommended

by

the

Board,

but

is

dependent

upon

shareholder

vote.

There

are

no

service

cont

racts in place, but Directors have a letter of app

ointment.

Statement of the Company’s policy on Directors’ Remuneration

The

Board

as

a

whole

c

onsiders

Directors’

remuneration

and

has

not

appointed

a

separa

te

c

ommittee

in

this

respect

.

On

an

annual

basi

s,

the

Board

meets

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

following Directors’ fees are currently payable by

the Company:

per annum

Director Base Fee

£3,500

Chairman’s Supplement

£2,

000

Audit Committee Chairman

£3,000

Audit Committee Member

£1,500

The

OT2

Dir

ector

Fees are

amongst the

lowest

of

an

y

VCT.

Richard Roth

chairs

the

Company

and

also

chairs

the Audit Committee, with Robin Goodfellow as a member of the committee.

As the VCT is

effectively

self

managed

,

the

Audit

Committee

carries

out

a

particularly

important

role

for

the

VCT

and

plays

a

significant

part in

the sign off

of quarterly management

accounts, and

the production

of the half

year and

annual statutory

accounts.

Fees

are

curr

ently

paid

annuall

y.

The

fees

are

not

specifically

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

(as

below),

but

Directors

are

entitled

to

a

share

of

the

carried

interest

-

also

as

detailed

below.

The

Directors

may

at

their

discretion

pay

additional

sums

in

respect

of

specific

tasks

carried

out

by

individual Directors on behalf of the Com

pany.

Alex

Starl

ing

and

Richard

Roth

receive

no

remuner

ation

in

respect

of

their

directorships

of

OT2

Managers

Ltd, the Company’s Inve

stment Manager.

The

performance

fee

is

detailed

in

N

ote

3.

Current

Direct

ors

are

enti

tled

to

benef

it

from

any

payment

made,

subject

to

a

formula

driven

by

relative lengths

of

s

ervice.

The

performance

fee

becomes

payable

if

a certain

cash return threshold to

shareholders is exceeded

–

the excess is

then subject

to a 20% carry

that is distrib

uted

to

Oxford

Technology

Management,

past

Directors

and

current

Directors;

the

remaining

80%

is

returned

to

shareholders. At 28 February 2022 no p

erformance fee was due.

Should

any

performance

f

ee

be

payable

at

the

end

of

the

year

to

28

February

2023,

Alex

Star

ling,

Robin

Goodfellow,

and

Ri

chard

Rot

h

would

each

receive

0.43%

of

any

amount

o

ver

the

threshold

and

David

Livesley

0.91%.

No

performance fee

will

be payable

for the

year

ending 28

February 2023

unless

or

iginal

shareholders

have received back at least 183.9p in cash for each 100p (

gross) invested.

Pensions (Information Subject to Audit)

None of the Directors

receives, or is entit

led to receive, pensi

on benefits from the Compa

ny.

Share options and long-term incentive schemes (Information Subject to Audit)

The Company does not gr

ant any options over t

he share capital of t

he Company nor operate l

ong

-

term

incentive schemes.

Relative Spend on Directors’ Fees

The

Co

mpany

has

no

employees,

so

no

c

onsultation

with

employees

or

comparison

measurements

with

employee remuneration are appropriate.

39

The table below sets

out:

a) the remuneration paid to the Directors; and

b)

the

distributions

made

to shareholders

by way

of

divi

dends

paid

in

the financia

l

year

ended

28 Fe

bruary

2022 and the preceding financial year.

There were no share b

uy

-

backs

.

Year ended 28

February 2022

Year ended 28

February 202

1

Chang

e %

Total

R

emuneration

20,500

-

Dividends Paid

-

n/a

Loss of Office

In the

eve

nt of

anyone ce

asing

to b

e 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 (Information partly Subject to Audit)

The

total

emoluments

in

respect

of

qualifying

services

of

each

person

who

served

as

a

Director

during

the year are as set out in the table below

Directors’ Fees

Year End 28/02/23

(unaudited)

Year End 28/02/22

(audited)

Year End 28/02/21

(audited)

Richard Roth

£8,500

Alex Starling

£3,500

Robin Goodfellow

£5,000

David Livesley

£3,500

Total

£20,500

No change to

D

irector’s

remuneration is expected for

the year ending 28

February

2023 on the basis

that

OT2

continues to

remain a standalone entity (ie no Merger proc

eeding or Leisure

S

hares being issued).

By Order of the Board

James Gordon

-

Company

Secretary

21

April 2022

40

Corporate&Governance&Report&&&

&

The Board has consider

ed the principles and

recommendations of the 201

9 AIC Code.

The

2019

AIC

Code

addresses

the

Principles

and

Provisions

set

out

in

the

UK

Code

as

well

as

setting

out

additional

Provisions

on

issues

that

are

of

specific

relevance

to

Oxford

Technology

2

Ventur

e

Capital

Trust

Plc.

The

Board

considers

that

reporting

against

the

Principles

and

Provisions

of

the

2019

AIC

Code,

which

has

been

endorsed

by

the

Financial

Reporting

Council

(and

associ

ated

disclosure

requirements

under

paragraph

9.8.6 of the Listing Rules) provides more relevant

information to shareholders.

The

2019

AIC

Code

i

s

available

on

the

AIC

website

(

www.theaic.co.

uk

).

It

includes an

explanation of

how

the

2019

AIC

Code

adapts

the

Principles

and

Provisions

set

out

in

the

UK

Code

to

make

them

relevant

for

investment companies.

The

Company is

committed to

maintaining a

high standard

in

corporate govern

ance

and has

complied with

the

Principles

and

Provisions

of

the

2019

AIC

Code,

except

as

set

out

below.

For

t

he r

easons

set

out

in

the

AIC

Code

and

as envisaged

in the

Code, the

Board

con

siders

ce

rtain

pro

visions

as

not being

relevant to

the position

of the Com

pany as it

is an investment company.

The Company has no

executive directors or employees.

The

Company

has

therefo

re

not

reported

further

in

r

espect

of

these

matters.

The

Directors

strongl

y

believe

that

achieving the Company’s corporate governance objectives contributes to it

s long

-

term sustainable success.

Independence of Directors

The

Board

consi

sts

of

four

independent

non

-

executive

Directors.

The

Board

has

put

in

place

corporate

governance

arrangements

which

i

t

believes

are appropriate

for a

Venture Capital

Trust and

that will

enable the

Company to operate withi

n the spirit of the Co

de.

The

Boa

rd

reg

ularly

reviews

the

independence

of

its

members

and

is

satisfie

d

that

the

Company’s

Dir

ectors

are

independent

in

character

and

judgment

and

that

there

are

no

relationships

or

circumstances

which

could

affect their objectivity.

The Board has determined a policy of tenure for the Chairman and believe that this

–

together with

the annual

re

-

election

of

all

directors

–

is

an

essential

ingredient

to

balancing

the

requirements

of

effective

business

continuity,

whil

st

also providing

the opportunity

for

regular refreshment

and increasing

diversity of

the

Board.

In

line

with

best

practice

recommended

in

the

2019

AIC

Code,

all

Directors

will

offer

themselves

for

re

-

election this year.

It

is

the

Company’s

policy

of

tenure

to

review

individual

appointments

every

year,

with

increased

scrutiny

after nine years of service to consider whether

the Director is still independent and still f

ulfils the role.

However,

in

accordance

with

t

he

principles

of

the

2019

AIC

Code,

we

do

not

consider

it

necessary

to

mandatorily

replace

a

Direct

or,

inc

luding

th

e

Chairman

,

after

a

predetermined

period

of

tenu

re.

A

more

flexible

approach

to

Chairman

tenure

will

help

the

Company

manage

succession

planning

in

the

context

of

the

business

needs of the Company, whilst at the same time still addressing the need for regular

refreshment and diversity.

The Company’s report on

Independence,

Gender and

Diversity is

on page

18.

As

set

in

t

he

Directors

’

Remuneratio

n

Report

on

page

3

8,

Directors

are

entitle

d

to

a

propo

rtion

of

any

performance

fee

that

may

become

payable.

Having

regard

for

the

historic

nature

and

circumstances

under

which the pe

rformance incentive

fees were

ag

reed, the Board does not believe that the performance incentive

fees

in

any

way

impact

or

hinder

the

Directors’

independence

or

present

a

conflict

of

interest

which

could

compromise or override independent judgment of the Directors.

41

Board Committees

The

Board does

not have

a separate

Remuneration Committee,

as

the

Compan

y

has no

employees or

executive

directors.

Detailed

information

relating

to

t

he

remuneration

of

Directors

is

given

in

the

Directors’

Remuneration Report

on page 3

7.

The

Board

as

a

whole

c

onsiders

the

selection

and

appoi

ntment

of

Directors

and

reviews

Directors’

remuneration on an annual basis. The

Board considers the Company’s size to b

e such that it is unnecessary to

form a

separa

te com

mittee

for the purpose

s of

nomination. W

hen m

aking

an

appointment,

the Board draws

on

its

members’

extensive

business

experience

and

range

of

contacts

to

identify

suitable

candidates.

To

date

formal

advertisements

and

external

search

consultants

have

not

been

used.

However,

the

Board

would

consider

their use

as and when appropriate.

New

Direct

ors

are selected

as part

of a

rigorous

selection process

involving interviews

with the

existing board,

the

manager

and

shareholder

representatives.

The

Board

speaks

regularly

about

Board

composition

and

succession

pla

nning

in

order

to

identify

and

address

any

issues

that

may

arise.

The

Board’s

policy

is

to

promote

diversity (including, but not limited to,

gender diversity).

The Board has appointed an

Audit Committee to make recommendations to the

Bo

ard in line

with it

s

terms of

reference. The committee is chaired by

Richard Roth and Robin Goodfellow is

a fellow member of the

Audit

Committee. The Audit Committee believes Richard

Roth possesses appropriate and relevant financial

experience as per

the requirements of the

2019 AIC Code. T

he Board

considers that the

members of the Audit

Committee

have

collectively the

skills and

experience required

to

discha

rge

th

eir

dut

ies

ef

fectively.

Given the

size of the Company the Board consid

ers that an Audit Committee of two is sufficient.

Attendance at Board and Committee meetings

The

Board

meets

regularly

–

at

least

four

times

a

year

–

and

between

t

hese

meetings

maintains

very

regular

contact

with

the

Investment

Adviser.

The

fol

lowing

table

sets

out

the

Directors’

attendance

at

the

formal

Board

and Audit Committee meetings held during the year.

Director Name

Board Meetings

Attended

(6 Held in year)

Audit Committee Meetings

Attended

(2 Held in year)

Richard Roth

6

2

Robin Goodfellow

6

2

Alex Starling

David Livesley

6

N/A

In addition to

formal Board

meetings, the B

oard communicates

on a regular basis in ca

rrying out its

responsibilities in managing the Compa

ny.

The

Investment

Adviser

p

repares

a

written

report

on

the

performance

of

the

fund

in

advance

of

Board

meetings

and

this

is

circulated

to

all

members

of

the

Board.

In

addition,

the

Directors

are

free

to

seek

any

further

information

they

consider

necessary.

All

Directors

have

access

to

the

Company

Secretary

and

independent

professionals

at

the

Company’s

expense.

The

Code

states

that

the

Board

should

have

a

formal

schedule

of

matters specifically

res

erved

to

i

t

for

decis

ion

t

o

ens

ure

th

at

th

e

dire

ction

and

c

ontr

ol of

the

Company is

firmly

in its hands.

This

is

achieved

by

a

management

agreement

between

the

Company

and

its

Investment

Manager

which

sets

out the

matters

over which

the

Investment Manager

has

authority and

the

limits

above which

Board appr

oval

must

be sought. All other matters ar

e reserved for the approval of the Board.

The Audit

Committee ensures the

in

dependence and

ob

jectivity of

the external auditors. This

includes

reviewing

the

nature

and

extent

of

non

-

audit

services

supplied

by

the

external

auditors

to

the

Company,

seeki

ng

to

balance

objectivity

and

value

for

money.

None

of

the

Directors

has

a

service

contract

with

the

Company,

but they do have letters of appointment (copies of

which may be obtained by shareholders on request).

42

Conflicts of Interest

The

Board

has

always

considered

carefully

al

l

cases

of

possible

conflicts

of

interest

as

and

when

they

arise.

For

example,

every

time

one

of

the

Oxford

Technology

VCTs

(OT

VCTs)

makes

an

investment

in

which

another

OT

VCT

is

an

investor,

there

is

a

potenti

al

conflict

of

interest.

The

general

po

licy

is

that

there

is

complete

transparency

and

all

interests

in

every

situation

are

declared

and known

to

al

l,

so

that

practical

and

sensible decisions can be taken.

Internal Control

The

Directors

have

overall

responsibi

lity

for

keeping

under

review

the

effectiveness

of

the

Company’s

systems

of internal

controls. The

purpose of

these cont

rols is

to ensure

that proper

accounting records

are maint

ained,

the Company’s assets are safeguarded and the financial information used within the business and for

publication

is

accurate

and

reliable;

such

a

sys

tem

can

only

provide

reasonable

and

not

absolute

assurance

against material misstatement or loss.

The

syst

em

of

internal

controls

is

designed

to

manage

rather

than

eliminate

the

ri

sk

of

failure

to

achieve

the

bu

siness objectives.

The

Board

continua

lly

reviews

financia

l

results

and

investment

performance.

The

Board

also

monitors

and

evaluates external

service

providers

and maint

ains regular

discussions

with

the Investment

Adviser

about

the

services provided.

The Investment Adviser

r

eviews the service contracts on

an annual basis and discusses any

recommendations with the Board as re

levant.

The

Directors

confirm

that

they

have

estab

lished

a

continuing

process

through

out

the

year

and

up

to

the

date

of

this

report

for

identifying,

eva

luating

and

managing

the

significant

potential

risks

faced

by

the

Company

and

have

reviewed

the

effectiveness

of

the internal

control

systems.

As

part

of

this process

an annual

r

eview

of

the

internal

control

systems

is

carried

out

in

accordance

with

the

FR

C’s

Guidance

on

Risk

Management,

Internal Control and Related Financial a

nd Business Reporting.

The

risk

managemen

t

and

internal control

systems

include

the

production

and

r

eview

of

monthly

bank

statements and quarterly management accounts. All

outflows

mad

e from

the Compa

ny’s account

s require

the

authority

of

signatori

es

from

the

Board.

The

Company

is

subject

to

a

full

annual

audit.

Further

to

this,

the

Audit Partner has ope

n access to the Directo

rs of the Company.

Audit Committee

The

role

of

the

Audit

Committee is

discharged

by Richard

Roth

(chair

man)

and

Robin

Goodfellow.

The

Audit

Committee is responsible

for:

●

monitoring the Co

mpany’s financial r

eporting;

●

reviewing internal controls and risk mana

gement systems; and

●

matters regardin

g audit and exte

rnal auditors.

Financial Reporting

The Audit Committee

is responsible for revie

wing, and agreeing,

the half

-

yearly and annual accounts

(including

those

figures

presented

within)

before

they

are

presented

to

the

Board

for

final

approval.

In

particular, the Audit

Committee reviews, challenges (

where appropriate) and agrees

the basis for

the carrying

value

of

the

unquoted

investments,

as

prepared

by

the

Investment

Manager,

for

present

ation

within

the

half

-

yearly interim and full year annual accounts.

The Audit Committee also

tak

es into careful consideration comments on

matters regarding valuation, revenue

recognition

and

disclosures

arising

from

the

external

auditors’

report

to

the

Audit

Committee

as

part

of

the

finalisation

process for

the A

nnual

Accounts

. Specifically,

the

Audit Committee

advises

the Board

on

whether

the

Annual

Report

and

Financial

Statements,

taken

as

a

whole,

are

fair,

balanced

and

understandable,

and

whether

they

provide

the

neces

sary

inf

ormation

to

shareholders

to

asses

s

perfo

rmance,

business

model

and

strategy.

43

Audit and Control

The Audit Committee reviews and agrees

the audit strategy and plan in

advance of the audit, and

has assessed

the effectiveness of the audit after its conclusio

n.

During

the

year,

UHY

tendered

their

resignation

as

auditors

as

explained

in

t

he

Chairman’s

Statement

.

Hazlewoods

were

appointed

by

t

he

Board

to

fill

the

casual

vacancy

following

a

competitive

tender

process,

which

took

into

account

relevant

experience of

the

auditor

and

the

fees

charged

by

similar sized

audit

firms

.

The

Board

has

been

happy

with

the

quality

of

service

provided

by

Hazlewoods

this

year

and

is

happy

to

recommend them

for rea

ppointment at the AGM.

The

Board

have

also

sub

sequently

appointed

Hazle

woods

to

act

as

the

repo

rting

accountant

for

th

e

proposed

Merger. This

is a ser

vice that i

t is permis

sible to be

performed by

a Company’s

auditor, and

the fee

levels are

such that the

Board are

confident will

not compromise

the

independence or objectivity of the auditor. Indeed,

it

was

the

competitive

nature

of

the

fee

quote

that

was

the

determining

factor

in

their

appointment

for

this

supplementary role.

This additional work

is being c

arried out by

a separate team within Hazlewoods.

Hazlewoods will not

provide any other non

-

audit

services.

The

Company

does

not

have

an

independent

interna

l

audit

function

as

it

is not

d

eemed

appropriate

given

th

e

size

of

the

Company

and

the

nature

of

the

Company’s

business.

However,

the

Audit

Committee

considers

annually whether

there is

a need f

or such a

function and

if so

would recommend

this to

the Board.

The Audit

Committee seeks to satisfy i

tself that there is a prop

er system and allocat

ion of responsibilities for the day

-

to

-

day

monitoring

of

financial

controls

by

receiving

representations

and

i

nformation

either

upon

request

or

voluntarily from the Investment Adviser.

Significant Risks

The

Audit Committee

is responsible

for considering a

nd reporting

on any

significant risks

that arise

in relation

to

the

audit

of

the

Financial

Statements.

The

Audit

Committee

and

the

Auditors

have

identified

the

most

significant risks as:

●

Valuation and

verification of

the investment portfolio:

the Auditor

s

give special

audit

consideration to

the

valuation

of

investments

and

the

supporting

data

provided

by

the

Investment

Manager.

The

impact

of

this

risk

could

be

a

large

movement

in

t

he

Company’s

net

asset

value.

Guidelines,

discussions,

reviewing

and

challenging

the

basis

and

reasonableness

of

assumptions

made

in

conjunction

with

available

supporting

information

goes

into

the

valuation

process.

The

valuations

are

supported

by

investee company audited accounts

and/or third party

evidence where possible. Ot

herwise

valuations

are supported by t

he share price of

the most recent

fundraising and/or management i

nformation. The

holdings are also cross checked

to records held at Companies House. These give

comfort to the Audit

Committee.

●

Management

override

of

financial

controls:

the

Auditors

specificall

y

review

all

significant

accounting

estimates that form part of the

Financial Statements and consider any material judgements

applied by

management during t

he preparation of

the Financial Stat

ements.

●

Compliance with

HMRC conditions

an

d EU

State Aid rules

for maintenance of approved

VCT status:

the Auditors review this as part of their work.

●

Recognition

of

revenue

from

investments:

investment

income

is

the

Company’

s

main

source

of

revenue.

Revenue

is

recognised

when

the

Company’s

right

to

the return

is established

in

accordance

with the Statement of

Recommende

d Practice.

Th

e Company has

few revenue paying companies and

the Audit Committee pays close attentio

n to these.

These

issues

we

re

discussed

between

the Investment

Manager,

Inves

tment

Adviser,

the

Auditors and

the

Audit

Committee at the conclusi

on of the audit of th

e Financial Statements.

The

Audit

Committ

ee

is

also

responsible

for

considering

and

repor

ting

on

any

significant

issues

that

aris

e

in

relation to the audit of the Financial Statem

ents.

44

The Audit

Committee

can confi

rm that

there

were no

significant

issues

to report

to

shareholders

in respec

t of

the audit of the Financial Statements for th

e year ended 28 February 202

2.

The Company

is

exposed to risks

arising from its o

perational and

investment activities.

Further details can

be

found in

N

ote 15 to

the Financial Statements.

Performance Evaluation

In

accordance

with

the

AIC

Code

and

guidance

each

year

a

formal

performance

evaluation

is

undertaken

of

the

Board

as

a

whole,

the

Committees

and

the

Directors

in

the

form

of

one

-

to

-

one

meetings

between

the

Chairman and each Direct

or. The performance of

the Chairman was evaluate

d by the other Directo

rs.

The

Board

considers

the

si

ze

of

the

Company,

the

number

of

independent

non

-

executive

Directors

on

the

Board

and

the

ro

bustness

of

the

re

views

to

be

such

that a

n

external

Board

e

valuation

is

unnecess

ary.

Annual

evaluations

of

the

Board

consider

its

composition,

diversity,

succession

planning

and

how

effecti

vely

members

work together to achieve objectives as well as individual contributions. The Chairman provides a summary of

the findings to the Board, which are discusse

d at the next meeting and an action p

lan agreed.

The Board has

not

appointed a Senior Independent Director, as it

does not believe that such an

appointment is

necessary

when

the

Board

is

comprised

sol

ely

of

non

-

executive

Director

s.

The

duties

of

this

role

i

s

fulfil

led

by Robin Goodfellow, the other member of the Audit

Committee.

The

Bo

ard

is

satis

fied

wi

th

the

perfo

rmance

o

f

the

Chairman

a

nd

Dire

ctors

and

recommends

their

reappointment. The Board is also satisfied w

ith the performance and constitution of th

e Audit Committee.

The

Board

sets

out

the

assessment

of

its

m

embers

and

explains

why

its

members

are

and

continue

to

be

of

importance to the long

-

term sustainable success o

f the business on

pages 2

8

to

30

.

The Board revie

ws the performance

of the Inv

estment Manager and

Investment Adviser

on an ong

oing basis,

both formally and outside of Board

meetings with regard to its appointment, evaluation, removal

and

remuneration.

The

Board considers

the Company’s

siz

e to

be such

that it

would be

unnecessari

ly burdensome

to establish a separate management e

ngagement committee to perform

this role.

The

Board

is

satisfied

that

it

is

in

shareholders’

best

interests

t

hat

the

Investmen

t

Manager

and

Investment

Adviser cont

inue to be retained on the current remuneration terms.

International Financial Reporting Standards

As

the

Company

is

not

part

of

a

group

it

is

not

mandatory

for

it

to

comply

with

International

Financial

Reporting

Standards

(“

IFRS”).

The

Company

does

n

ot

a

nticipate

that

it

will

voluntarily

adopt

IFRS.

The

Company

has

adopted

Financial

Repo

rting

Standard

102

–

The

Financial

Reportin

g

Standard

Applicable

in

the United Kingdom and the Repub

lic of Ireland.

The Board

has considered the principles

and recommendations of the

2019 AIC Code

as applied to

companie

s

reporting as at 28 February 202

2.

The

2019

AIC

Code

addresses

the

Principles

and

Provisions

set

out

in

the

UK

Code,

as

well

a

s

setting

out

additional

Provisions

on

issues

that

are

of

specific

relevance

to

Oxford

Technology

2

Venture

Capital

Trust

Plc.

The

Board

considers

that

reporting

against

the

Principles

and

Provisions

of

the

2019

AIC

Code,

which

has

been

endorsed

by

the

Financial

Reporting

Counci

l

(and

associated

disclosure

requirements

under

paragraph

9.8.6 of the Listing Rules) provides more relevant

information to shareholders.

The Company is committed to maintaining high standards in

corporate governance and has complied with the

Principles a

nd Provisions of the 2019 AIC Code, except as s

et out below.

The

Company

strongl

y

believes

that

achieving

our

corporate

g

overnance

objectives

contributes

to

the

long

-

term sustainable success of the Compan

y.

45

Relations with Shareholders

There was no

reso

l

ution proposed at

the last AGM which

received 20% or more

of votes cast against

i

t for

the

purposes of disclosure under Provision 4 of t

he UK Code.

Compliance Statement

As previously indicated, the Board

co

nsiders that reporting against the

prin

ciples an

d

recommendations of the

2019 AIC Code will provide better information to shareholders

.

The Company

has complied

with the

recommendations

of the

2019 AIC

Code and

the

relevant provisi

ons of

the UK Code except as set out below:

●

The

Company

does

not

have

a

Chief

Executive

Officer

or

a

Senior

Independent

Director.

The

Board

does not consider this necessary as it does

not have any executive directors.

●

New

Directors

do

not

receive

a

formal

in

duction

on

joining

the

Board,

though

they

did

re

ceive

one

tailored to them on an individual basis.

●

The

Company

conducts

a

formal

review

as

to

whether

there

is

a

need

for

an

inter

nal

audit

function.

However, the

Dir

ectors do not

consider that an

internal audit would

be an appropriate

control for thi

s

VCT at this time.

●

The Company does not

have a Remuneration Committee as

t

hese matters are dealt with

by the Board.

●

The Company does not ha

ve a Nomination Committee as

these matters are dealt with by the Board.

For

the

reasons

set

out

in

the

AIC

Guide,

and

as

explai

ned

in

the

UK

Code,

the

Board

considers

the

above

provisions

are

not

relevant

to

the

position

of

the

Company,

being

an

investment

company

run

by

the

Board

a

nd

managed

by

the Investment

Adviser.

In particular,

all

of the

Company’s

day

-

to

-

day

adminis

trative

functions

are

outsourced

to

third

parties.

As

a

result,

the

Company

has

no

executive

directors,

employees

or

internal

operations.

Furthermore

, the

Board ack

nowledges

that it

is not

recommended practice

that the

Chairman

of the Company

to be chairman of

the Audit Committee;

however, for administrative

convenience,

Richard Roth is chairman

of the Audit Committee as

he fulfils this role

for all the OT VCTs.

By Order of the Board

James Gordon

-

Company Secretary

21

April

202

2

46

Statement(of(Directors’(Responsibilities

(

The

Directors

are

responsible

for

preparing

the

Annual

Report

and

the

Financial

Statements

in

accordance

with applicable laws a

nd regulations.

Company

law

r

equires

the

Directors

to

prepar

e

Financial

Statements

for

each

financial

year.

Under

that

law

the

Directors have elect

ed to prepare the

Financial Statements i

n accordance with Unit

ed Kingdom Generally

Accepted Accounting Pra

ctice (United Kingdom Accoun

ting Standards and app

licable laws).

Under

compan

y

law the

Directors m

ust

not approve

the Financial

Statements

unless they

are

satisfied that

they

give a true and fair view of the state of af

fairs and profit or loss of the Company for that

period.

In preparing these Financial Statemen

ts, the Directors are required to:

●

select suitable accounting policies and then apply them

consistently;

●

make judgemen

ts and estimates

that are reasonabl

e and prudent;

●

state

whether

applicable

UK

Accounting

Standards

have

been

followed,

subject

to

any

material

departures disclosed and expla

ined in the Financial Statements; and

●

prepare the

Financial Statements on

the going concern basis

unless it is

inappropriate to presume

that

the Company will continue in business.

The Directors are respons

ible for keeping adequate

accounting records that

are sufficient to show and expl

ain

the

Company’s

transactions

and

disclose

with

reasonable

accuracy

at

any

time

the

financial

position

of

the

Company

and enable

them

to

ens

ure

that the

Finan

cial

Statements comply

with

the

Co

mpanies

Act 2006.

The

y

are also

responsible for safeguarding

the assets

of the Company

and hence for

taking reasonable steps

for the

prevention and detection of fraud and other irregular

ities.

The

Directors

are

responsible

for

the

maintenance

and

integrit

y

of

the

corporate

and

fina

ncial

information

included

on

the

Company’s

website.

Legislation

in

the

United

Kingdom

governing

the

preparation

and

dissemination of Financial Statements may differ fr

om legislation in other jurisdictions.

Each of the Directors

confirms that, to the

best of t

heir knowledge:

●

there is no relevant audit information of wh

ich the Company’s auditor is unaware;

●

the

Directors

have

taken

all

steps

that

they

ought

to

have

taken

to

make

themselves

aware

of

any

relevant audit information and to establish

that the auditor

is aware of that information;

●

the

Financial

Statements, prepared

in accordance

with the

applicable set

of accoun

ting

standards,

give

a true and fair view of the assets, liabi

lities, financial position and profit or l

oss of the Company; and

●

the

Strategic Report

and Directors’ Report

include a fair

review of the

development and performance

of the business and

the position of the Company, together with

a description of the principal risks and

uncertainties that it faces.

On behalf of the Boar

d

R

ichard Roth

Chairman

21

April

202

2

47

Report(of(the(Independent(

Auditor(

(

Independent Auditor

’s Report

to the Members of Oxford Technology 2 Venture Capital Trust Plc

Opinion

We have

audite

d

the financial statements

of

Oxford Technology 2

Venture

Capital Trust

Plc

for

the

year

ended

28

February

2022,

wh

ich

comprise

the

Income

Statement,

Balance

Sheet,

Statement

of

Changes

in

Equity,

Statement of Cash Flows

and notes to the

f

inancial statements, including a summary

of significant accounting

policies

.

The

financial

reporting

framework

that

has

been

applied

in

their

preparation

is

applicable

law

and

United Kingdom Accounting Standards, including Financial Reporting Standard 102

The Financial Reporting

Standard

appli

cable

in

the

UK

and

Republic

of

Irela

nd

(United

Kingdom

Generally

Accepted

Accounting

Practice).

In our opinion the financial

statements:

•

give a tr

ue and fair vi

ew of the stat

e of the Company’s

affairs as at

28 February 2022

and of its net return for the year then ended;

•

have

been

properly prepared

in accordance

with

United Kingdom

Generally

Accepted

Accounting

Practice;

•

have

been

prepared

in

accordance

with

the

requirements

of

the Companies Act

2006.

Basis

for

opinion

We

cond

ucted

o

ur

aud

it

in

accordance

with

International

Standards

on

Aud

iting

(

UK)

((I

SAs

UK))

and

applicable

law.

Our

responsibilities

under

those

standards

are

further

described

in

the

Auditor’s

Responsibilities

for

the

audit

of

the

financial

statements

section

of

our

report.

We

are

independent

of

the

Company in accordance with the ethical requir

ements that are relevant to our audit of the financial sta

tements

in

the

UK,

including

the

FRC’s

Ethical

Standard

as

applied

to

listed

entities,

and

we

have

fulfilled

our

other

ethical

responsibilities

in

accordance

with

these

requirements.

We

believe

that

the

audit

evidence

we

have

obtained is sufficient and appropriate to provi

de a basis for our

opinion.

An

overview

of

the

scope

of

our

audit

Our

audit approach

was based on a

thorough understanding of

the Company’s

business

and

is

risk

-

based.

The

day

-

to

-

day

mana

gement

of the

Company’s investment

portfolio, the

custody

of

its investments

and the

maintenance

of

the

C

ompany’s

acco

unting

reco

rds

are

ou

tsourced

to

third

-

party

service

providers.

Accordingly,

our

audit

work

is

focused

on

obt

aining

an

understanding

of, and

evaluating,

internal

controls

at

the

Company

and

the

third

-

party

service

providers

and

inspecting

recor

ds

and

documents

held

by

the

thir

d-

party

service

providers.

We

undertook substantive

testing

on

significant

transactions,

balances

and

disclosures,

the

extent

of

which

was

based

on

various

factors

such

as

our

overall

assessment

of

the

control

environment,

the effectiveness of controls over individual systems and th

e management of specific risks.

The

audit

team

communicated

throughout

the

audit

wit

h

the

director

s

and

investment

managers

in

order

to

ensure

we

had

good

knowledge

of

the

business

of

the

Company.

During

the

audit,

we

reassessed

and

re

-

evaluated audit risks and tailored our approach accordi

ngly.

We

communi

cated

wit

h

those charged

with

governance regarding,

among

other matters,

the

p

lanned

s

cope

and

timing

of

the

audit

and

significant

findings,

including

significant

deficiencies

in

internal

control

that

we

identified during the audit, if any.

Conclusions relating to go

ing

concern

In

auditing

the

financial

statements,

we

have

concluded

that

the

directors

’

use

of

the

going

concern

basis

of

accounting in the preparation of the financial st

atements is appropriate.

In

making

this

assessment

we

have

considered

the

directors’

procedures

for

overseeing

the

activities

of

the

Company

and

revie

wing

its

results

and

forecasts.

The

application

of

those

procedures

has

been

supported

by

us

reviewing

Board

minutes

and

other

accessibl

e

documentation

which

confirm

that

the

directors

regularly

48

benchmark key

performance indicators which include

but is not

restr

icted to,

revi

ewing the net

asset value per

share

and net

asset value

total return

per share

and th

e frequent

monitoring of

available

funds, anticipated

cash

outflows and financial

headroom.

In

conjunction

with

the

evaluation

of

management’s

assessment

of

going

concern,

we

have

observed

that

resources

are

carefully

planned

and

managed

with

the

intention

of

ensuring

that

the

Company

has

sufficient

resources

available

and

accessible

to

ensure

that

the

Company’

commitments

and

obligations

are

capable

of

being met as they fa

ll

due.

In

relation

to

the

Company’s

reporting

on

how

it

has

applied

the

UK

Corporate

Governance

Code,

we

have

nothing

material

to

add

or

draw

attention

to

in

relation

to

the

D

irectors’

S

tatement

of

Respons

ibilities

in

the

financial statements

about whether

the directors

considered it

appropriate to

adopt the

going

concern basis

of

accounting.

Our responsibilities

and the respo

nsibilities of th

e directors with

respect to goin

g concern are

described in the

relevant sections of this

report.

Our

approach

to

the

audit

Key audit matters are

t

hose matters that, in

ou

r professional judgement, were of

mos

t significance in our

audit

of

the

financial

statements

of

the

current

period

and

include

the

most

significant

assessed

r

isks

of

mater

ial

misstatement (whether or

not due to fraud) we identified, including those which

had the greatest effect on:

the

overall

audit

strategy,

the

allocation

of

resources

in

the

audit; and directing the efforts of the engagement team.

These matters

were addressed in

the context

of our a

udi

t

of

t

he

f

inancial

statements as

a whole,

and in

forming

our opinion thereon, and we do not provide a separate opini

on on these

matters.

Key audit

matters identified were

valuation, ownership and

existence of investments,

and compliance

with

the

VCT

rul

es.

Revenue

recognition

and

the

risk

of management

override

of

controls

are

always

deemed

risks

in

any

audit.

This

is

not

a

complete list of all risks identified by our

audit.

Valuation,

ownership

and

existence

of

investments

The

Company’s

inv

estment

portfolio

is

one

of

the

key

driver

s

o

f

its

results,

o

f

wh

ich

73%

is

represented

by

quoted investments and 27% by unquoted investments.

Quoted

investments

are

not

conside

red

to

be

at

a

high

r

isk

of

materia

l

misstatement

in

terms

of

valuation

,

or

to

be subject

to a

significant

level of

judgement,

because

they com

prise

liquid inv

estments,

for wh

ich

evidence

of

the

market

price

is

readily

availabl

e.

Ho

wever,

due

to

the

ir

materiality

in

th

e

context

of

the

financial

statements

as

a

whole

,

they

are

considered

to

be

a

significant

risk

area.

Our audit work included, but

was not restricted to, consideration of the design and

implementation of controls

over

the

prici

ng

of

quoted

investments

and

agreeing

100%

of

investment

prices

to

independent

sources.

We

considered

the

appropriateness

of

the

use

of

the

quoted

bid

price

by

reviewing

the

liquidity

of

the

market

of

the quoted investments held.

The

valuation

of

unquoted

investments

invo

lves

significan

t

judgements

and

estimates.

In

particular,

we

look

at where the

directors made subjective judgement

s

in respect of sig

nificant accountin

g estimates

that involved

making assumptions

and considering f

uture events that

are inherently u

ncertain.

We

obtained

an

understanding

of

how

the

valuations

were

performed

and

considered

whe

ther

the

method

chosen

was

in

accordance

with

published

guidance

and

reviewed

and

challenged

the

assumptions

applied

to

the valuation inputs.

We

ve

rified and

benchmarke

d

ke

y

inp

uts

a

nd

e

stimates to

independe

nt

in

formation from

our own

research

and

against metrics from the investments.

Where approp

riate, we ha

ve performed

sensitivity

analysis on

the valuati

on calculatio

ns.

Alternative valuation

methods were considered

and discussed with

management to provide

alternative views

on the value of the investments.

49

Further, we also considered

the economic environment in which the investments operate in to identify factors

that could impact the investment valu

ation.

Ownership

and

existence

are

also

considered

significant

risks.

We

confirmed

inves

tment

holdings

on

quoted

investments to custodian report and on u

nquoted investments to share certificates a

nd Companies House.

The Company's accounting policy on fixed asse

t investments held

at fair valu

e through profit

or loss is shown

in the Financial Statements and related

disclosures are included in note 7.

Key observations

Our

testi

ng

did not

identify any

material m

isstatements in

the

valuatio

n

of the

Company’s investment

portfolio

as at the year end.

Compliance with VCT rules

Compliance with the VCT ru

les is necessary to main

tain the VCT status and

associated tax benefit

s.

Our audit work include

d, but was not restric

ted to:

•

Review

ing

of the

design and

implementation of controls around the

ongoing internal

assessment and monitoring of VCT compliance.

•

Obtaining

an

understanding of the

processes adopted and

evidenced the work

completed by

the Investment Manager

on documenting compliance with the key

VCT rules and directors’

review of this on a regular basis.

•

Testing the eleven conditions for

main

taining approval as a

VCT as set out

b

y HMRC.

Ea

ch

of

the

conditions

was

reviewed

in

turn

in

order

to

assess

whether

it

had

been

met

as

at

the

year

-

end.

Key observations

We

reviewed

the

documen

tation

maintaine

d,

that

confirmed

the

Company

was

in

compliance

with

the

VCT

rules

during

the

period

and

at

the

year

end.

Further

our

own

testing

of

compliance

with

the

individual

VCT

rules did

not identify any breaches.

Management override of financial controls

The

risk

of

mana

gement

override

is

always

considered

a

significant

audit

risk

but

is

particularly

relevant

for

the Company

due to the

size of the organisation struc

ture. Our audit

work included, but was n

ot restricted to

a

review of

all significant

management estimates

an

d judgements

applied during the preparation

of the financial

statements.

We

also

reviewed

material

journal

entries

processed

by

management

during

the

period.

The

Company’s principal acco

unting policies are inc

luded in note 1 to t

he financial statements.

K

ey observations

Our

test

ing

did

not

ident

ify

any

management

over

ride

o

f

finan

cial

co

ntrols

that

will

materially

misstate

the

financial statements.

Revenue recognition

There

is

always

a

presumed

risk

that

revenue

may

be

misstated

due

to

the

impro

per

and/or

inco

mplete

recognition

of

revenue.

In p

articular

we

identified

completeness

and occ

urrence

of

investment

income

as a

risk

that

requires

particular

audit

attention.

Our

audit

work

included,

but

was

not

restricted

t

o:

o

btaining

an

understanding of

management’s

process

to recognise

revenue in

accordance with

the stated

account

ing

policy;

checking

on

a

sample

basis

income

transactions

by

comparing

dividends

during

the

year

obtained

from

an

independent

source

with

those

recognised

by

the

Company;

checking

on

a

sample

basis

gains

and

losses

on

investments to

third party c

ontracts; and

checking transactions

close to the

financial year end

date

on

a

sample

basis,

to

ensure

that

th

ey

have

been

allocated

to

the correct accounting

period.

Key observations

Our testing did not

identify any material misst

atements in

revenue recognition.

50

Our

application

of

materiality

We

ap

ply

th

e

con

cept

of

materi

ality

in

plann

ing

a

nd

pe

rforming

our

a

udit,

in

eval

uating

the

eff

ect

o

f

any

identified

misstatements

and

in

forming

our

opinion.

For

the

purpose

of

determining

whether

the

financial

statements

are

free

from

material

misstateme

nt,

we

define

materiality

as

the

magnitude

of

a

misstatement

or

an

omission

from

the

financial

statements

or

that

would

make

it

probable

that

the

judgement

of

a

reasonable

person, relying

on the

information

would

have

been

changed or

in

fluenced

by

the

misstatement

or

omission.

We

also

determine

a

level

of

perfor

mance

materiality,

which

we

use

to

determine

the

extent

of

testing

needed,

to

reduce

to

an

appropriately

low

-

level

the

probability

that

the

aggregate

of

uncorrected

and

undetected

misstatements exc

eeds materiality

for the financial

statements as a

whole.

We

established

materiality

for

the

financial

statements

as

a

whole to

be £26,000,

which is 1.5% of the

value of

the

Company’s

net

assets.

For

income

and

expenditure

items

we

determined

that

misstatements

of

lesser

amounts than

materiality

for

the

financial

statements

as

a

whole

would

make

it

probable

that

the

judgement of

a

reasonable

person,

relying

on

the

information

would

have been

changed

or

influenced

by

the

misstatement

or

omiss

ion.

Accordingly,

we

established

mater

iality

f

or

revenue

items

within

the

income

statement

to

be

£11,000,

which

is

25%

of

the

Company’s

net

revenue

return

on

ordinary

activities

before

taxation

and

after

applying determined performance rate.

Other informati

on

The

d

irectors

are responsible

for the

other information

contained within the

annual report.

The other

information

comprises

the

information

included

in

the

annual

report,

other

than

the

financial

statements

and

our auditor’s

report thereon. Our

opini

on on

the financial statements

does not cover

the other information

and,

except

to

the

extent

otherwise

explicitly

s

tated

i

n

our

report,

we

do

not

express

any

form

of

assur

ance

conclusion

thereon.

In

connection with

our audit

of

the financial

statements, our

responsibility

is to

read the

other

information

and,

in doing

so, consider whether

the other

information is

materially inconsistent

with the financial

statements or

our

knowledge

obtained

in

the

audit

or

otherwise

appears

to

be

materially

misstated.

If

we

identify

such

material

inconsistencies

or

appar

ent

material

misstatements,

we

are

required

to

determi

ne

whether

there

is

a

material misstatement in

th

e financial

st

atements or

a material misstatement of

the other

inf

ormation. If, based

on

the

work

we

have

performed,

we

conclude

that

t

here

is

a

material

misstatement

of

this

other

inf

ormation,

we are requir

ed to report that

fact.

We have noth

ing to repor

t in this

regard.

In

this

context,

we

also

have

nothing

to

report

in

regard

to

our

responsibility

to

specifically

address

the

following

items

in

the

other

information

and

to

report

as

uncorrected

material

misstatements

of

the

other

information where we conclude that th

ose items meet the following

conditions:

•

Fair,

balanced

and

under

standable,

set

out

on

page

31

–

the

statement

given

by

the

Directors

that they consider th

e annual report an

d financial statements

taken as a whole

is fair, balanced

and

understandable

and

provides

the

information

necessary

for

shareholders

to

assess

the

Company’s

performance, bu

siness model an

d strategy, is mat

erially inconsist

ent with our

knowledge obtained

in the audit;

or

•

Audit

committee

reporting,

set

out

o

n

page

s

42

to

44

–

the

section

describing

the

work

of

the

audit

committee

does

not

appropriately

address

matters

communicated

by

us

to

the

audit

committee;

or

•

Directors’

stat

ement

of

compliance

with

the

UK

Corporate

Governan

ce

Code,

set

out

on

page

s 42

to 45

-

the

parts

of the

Directors’

statement required

under

the Listing

Rules relati

ng to

the Company’s complianc

e with the UK Corpo

rate Governance Code

containing provisions

specified

for

review

by

the

auditors

in

accordance

with

Listing

Rule

9.8.10R

(2)

do

not

properly

disclose

a depar

ture from a relevant provision of the UK Corporate Governance

Code.

*

51

Opinion

on

other

matters

prescribed

by

the Com

panies Act

2006

In our opinion, based on the work unde

rtaken in the course of

the

audit:

•

the

part

of

the

Directors’

Remuneration

Report

to

be

audi

ted

has

been properly

prepared

in

accordance with the Companies Act 2006;

•

the information given in

the Strategic Report and the

Directors

’

Report

for the financial

year for

which

the

financial

st

atements

are

prepared

is

consistent

with

the

financial

stat

ements

and

those

reports

have

been

prepared

in

accordance with applicabl

e legal

requ

irements;

•

the

information

about

internal

control

and

risk

manag

ement

systems

in

relation

to

financial

reporting processes and about share

capit

al

structures,

given

in

compliance

with

ru

les

7.2.5

and

7.2.6

in

the

Disclosure

Rules

and

Transparenc

y

Rules

sourcebook m

ade

by the

Finan

cial Co

nduct

Authority

(the

FCA

Rules),

is

consistent

with

the

financial

stat

ements

and

h

as

been

pre

pared

in

accordance with applicable legal requirements;

and

•

information

about

the

Company’s

corporate governance

code

and

practices

and

about

its

administrative,

management

and

supervisory

bodies

and

their

committees

complies

with

rules

7.2.2, 7.2.3 and 7.2.7 of the FCA

Rules.

Matters

on

which

we

are

required

to

report

by exception

In the light of the knowledge and unde

rstanding of the

Company and

its environment obtained

in the course

of the audit, we

have not

identified material misstatements

in:

•

the

S

trategic

R

eport or the Directors’ Report; or

•

the

information

about

internal

control

and

risk

management

systems

in

relation

to

financial

reporting

processes

and

about

share

capital

structures,

given in

compliance with

rules

7.2.5 and

7.2.6 of the FCA Rules.

We

h

ave

n

othing to

report in

respe

ct

o

f

the

fol

lowing matters

in relation to

which the

Companies Act

2006 requires us to repo

rt

to you if, in our

opinion:

•

adequate accounting

records have

not been

kept, or

returns adequate

for our

audit have

not been

received from branches not visited by u

s; or

•

the financial statements and the

part of the Directors’ Rem

uneration Report to be

audited are not

in agreement with the accounting rec

ords and returns; or

•

certain disclosures of

d

irectors’ remuneration specified by law are not made; or

•

we have not receiv

ed all the information a

nd explanations we requ

ire for our audit; or

•

a corporate governance statement has not been prepared by t

he

Company.

Corporate governance

statement

The Listing Rules require us to review the

D

irectors'

Report

in relation

to

going

concern,

longer

-

term

vi

ability

and

that

part

of

the Corporate Governance

Statement r

elating to the

entity's compliance with

the provisions of

the UK Corporate Governance Statem

ent specified for our

re

view.

Based on

the

work

undertaken

as part

of

our

audit, we

have

concluded

that

each o

f the

following

elements

of

the

Corporate

G

overnance

Statement

is

materially

consistent

with

the

financial

statements

or

our

knowledge

obtained during the

audit:

•

the disclosures in the

annual report set ou

t on pages

13

to

15

that

describe the principal

risks and

explain how they are being managed or mitigated;

•

the

d

irectors’

confirmation

set

out

on

page

13

in

the

annual

report

that

they

have

carried

out

a

robust assessment

of the principal risks

facing the Company, includ

ing t

hose that would

thr

eaten

its business model, future performance, solv

ency or liquidity;

52

•

the

d

irectors’ statem

ent

set ou

t

on page

35

in the

financial statemen

ts

about wh

ether

the

Directors

considered

it

appropriate

to adopt

the

going

concern basis

of

accoun

ting

in

preparing

the

financial

statements

and

the

Directors’

identification

of

any

material

uncertainties

to

the

Company’s

ability

to

continue

to

do

so

over

a

period

of

at

least

twelve

months

from

the

date

of

approval

of

the

financial statements;

•

whether

the

d

irectors’

statement

relating

to

going

concern

required

under

the

Listing

Rules

in

accordance

wit

h

Listi

ng

Rule

9.8.6R(3)

is

materiall

y

inconsi

stent

wit

h

our

knowledge

obtained

in the audit; or

•

the

d

irectors’

explanation

set

out

on

page

13

in

the

annual

report

as

to

how

they

have

assessed

the

prospects

of

the

Company,

over

what

period

they

have

done

so

and

why

they

consider

that

period

to

be

appropriate,

and

their

statement

as

to

whether

they

have

a

reasonable

expectation

that

the

Company

will be

able

to continue

in

operation

and

meet

its liabilitie

s

as

they fall

due

over

the period of their assessment, including any related disclosures drawing attention to any

necessary qualifications or assumptions.

Responsibilities of Direct

ors

As

explained

more

fully

in

the

Statement

of

Directors'

R

esponsibilities

(set

out

on

page

46

),

the

d

irectors

are

responsible for the preparation of the financial statements and for

being satisfied that they give a true

and fai

r

view,

and for

such

internal control

as

the

d

irectors

determine is

necessary

to

enable the

preparation

of

financial

statements that are free from material missta

tement, whether due to fraud or error.

In

preparing

the

financial

statements,

the

d

irectors

ar

e

responsible

for

assessing

the

Company's

ability

to

continue

as

a

going

concern,

disclosing,

as

applicable,

matters

going

concern

and

using

the

going

concern basis of accounting

unl

ess the

d

ire

ctors either

intend to

liquidate the

Company or to

cease operations,

or has no realistic alternative but to do

so.

Auditor’s Responsibilities f

or the audit of the financi

al statements

Our

obje

ctives

a

re

to

obtain

reasonable

assur

ance

abo

ut

whether

the

financial

statements

as

a

wh

ole

are

free

from

material

mi

sstatement,

whether

due

to

fraud

or

error,

and

to

issue

an

auditor’s

repor

t

that

includes

our

opinion.

Reasonable

assurance

is

a

high

level

of

assurance,

but

is

not

a

guarantee

that

an

audit

conducted

in

accordance with

ISAs (UK)

will always

detect a

material misstatement when

it exists.

Misstatements can

arise

from

fraud

or

error

and are

considered material

if,

individually

or

in

the

aggregate,

they could

reasonably be

expected to influence the economic decisions of users t

aken on the basis of these financial statements.

Irregularities,

including fraud,

are

instances

of

non

-

compliance

with

laws

and regul

ations.

We

design

procedures

in

line

with

our

respons

ibilities,

outlined

above,

to

detect

material

misstatements

in

res

pect

of

irregularities, including fraud.

The

audit

evidence

available

in

relation

to

the

investment

portfolio

and

associated

returns

are

publicly

available

and considered to

be strong sources of

audit evidence. Ow

nership has been

verified against custodian

documentation

, share certificates

and Companies House

.

The

natu

re

of

the

C

ompany’s

activities

means

that

overheads

are

generally

consistent

and

pr

edictable

and

where unexpected varia

nces occur, adequate e

vidence is available.

Our

audit

work,

which

util

ises

the

above

aud

it

evidence

along

wi

th

the

audit

procedures

outlined

in

our

description

of our

approach

to

the audit

above,

provides

us

with

a

reasonable

assurance

that

our

audit

procedures will detect irregularities, incl

uding fraud.

A further description of our

res

ponsibilities for the aud

it

of the financial

statements is located

on the Financial

Reporting

Council’s

website

at

www.frc.org.

uk/auditorsresposibiliti

es.

This

description

forms

part

of

our

auditor’s report.

53

Use of

our report

This

repo

rt

is

made

sole

ly

to

the

Compan

y's

members,

as

a

body,

in

a

ccordance

with

chapter

3

of

part

16

of

the

Companies

Act

2006.

Our

audit

work

has

been

undertaken

so

that

we

might

state

to

the

Company’s

members those matters we are re

quired t

o state to them in an auditor’s report and for no

other

purpose. To the

fullest extent

permitted by

law

,

w

e

do

not accept

or

assume

responsibility

to

anyone

other than

the

Company

and

the Company’s

members as

a body,

for

our

audit

work, for

this report,

or

for the

opinions

we

have formed.

Scott Lawrence FCA

(Senior Statutory

Auditor)

for and on behalf of

Hazlewoods LLP

Statutory Auditor

Staverton Court

Staverton

Cheltenham

GL51 0UX

21 April 2022

54

Income(Statem e nt

(

Year Ended

28 February 2022

Year Ended

28 February 2021

Note

Ref.

Revenue

£’000

Capital

£’000

Total

£’000

Revenue

£’000

Capital

£’000

Total

£’000

Gains on disposal of

fixed asset investments

-

12

-

Unrealised gain/(loss)

on

valuation of fixed asset

investments

-

425

-

(95)

Investment income

2

4

-

4

-

Investment management

fees

3

8

-

8

(8)

-

(8)

Other expenses

4

(68)

-

(68)

(57)

-

(57)

Return on ordinary

activities before tax

(56)

437

381

(65)

(95)

(160)

Taxation on return on

ordinary activities

5

-

Return on ordinary

activities after tax

(56)

437

381

(65)

(95)

(160)

Return on ordinary

activities after tax

attributable to equity

shareholders

(56)

437

381

(65)

(95)

(160)

Earnings per share

–

basic and diluted

6

(1.0)p

8.2p

7.2p

(1.2)p

(1.8)p

(3.0)p

There was no other Compr

ehensive Income recognised

during the year.

The

‘Total’

column

of

the

Income

Statement

is

the

Profit

and

Loss

Account

of

the

Company

,

the

supplementary

Revenue

and

Capital

re

turn

columns

have

been

p

repared

under

guidance

published

by

the

Association

of

Investment Companies.

All Revenue and Capital

items in the above sta

tement derive from continu

ing operations.

The

Company

has

only

one

class

of

business

and

derives

its

income

from

investments

made

in

shares

and

securities and from bank and money

market funds.

The accompanying notes

are an integral part o

f the Financial Statemen

ts.

55

Balance(Sheet

(

Year Ended

28 February 2022

Year Ended

28 February 2021

Note

Ref.

£’000

Fixed Asset Investments at Fair

Value

7

1,488

1,119

Debtors

8

56

8

Cash at Bank and Cash

Equivalents

184

211

Creditors

9

(24)

(15)

Net Current Assets

216

204

Net Assets

1,704

1,323

Called Up Share Capital

10

53

533

Capital Redemption Reserve

626

146

Share Premium Reserve

376

Unrealised Capital Reser

ve

11

316

(631)

Profit and Loss

Account

11

333

899

Total Equity Shareholde

rs’

Funds

11

1,704

1,323

Net Asset Value Per Sha

re

32.0p

24.8p

The accompanying notes

are an integral part o

f the Financial Statemen

ts.

The statements were appr

oved by the Directors a

nd authorised for issu

e on

21

April 2022

and

are signed on

their behalf by:

Richard Roth

Chairman

56

Statement(of(Changes(in(Equity

(

Called up

Share

Capital

£’000

Capital

Redemption

Reserve

£’000

Share

Premium

Reserve

£’000

Unrealised

Capital

Reserve

£’000

Profit &

Loss

Account

£’000

Total

£’000

As at 1 March 2020

533

146

376

(686)

1,114

1,483

Revenue return on

ordinary activities

after tax

-

(65)

Current

period losses

on fair value of

investments

-

(95)

-

(95)

Permanent diminution

in value now realised

-

150

(150)

-

Balance as at 28

February 2021

533

146

376

(631)

899

1,323

Revenue return on

ordinary activities

after tax

-

(56)

Current period gains

on disposal

-

12

Current period gains

on fair value of

investments

-

425

-

425

Permanent diminution

in value now realised

-

540

(540)

-

Prior year gains now

realised

-

(18)

18

-

Share capital

reclassification

(480)

480

-

Balance as at 28

February 2022

53

626

376

316

333

1,704

The accompanying notes are an integral part of the Financial Statements

.

58

Notes(to(the(

Financial(St

atements

(

Oxford Technology 2 Vent

ure Capital Trust Plc i

s a

public company and is limited by shares.

1. Principal Accounting Policies

Basis of Preparation

The

Financial

Statements have

been

prepared under

the

hist

orical

cost convention,

except for

t

he

measurement

at

fair

value

of

certain

financial

instruments,

and

in

accordance

with

UK

Generally

Accepted

Accounting

Practice

(“GAAP”),

including

Financial

Repo

rting

Standard 102

–

‘The

Financial Reporting

Standard

applicable

in the

United

Kingdom and

Republi

c

of Ireland’

(‘FRS

102’) and

with

the Com

panies

Act 2006

and

the

Statement

of

Recommende

d

Practice

(SORP)

‘Financial

Statements

of

Investment

Trust

Companie

s

and

Venture Capital Trusts (

revised 20

21

)’

issued by the AIC.

The

p

rincipal

accounting

policies

have

remained

materially

unchanged

f

rom

thos

e

set

out

in

the

Company’

s

2021 Annual Report and Financial Statements. A summary of the princi

pal accounting po

licies follows.

FRS

102

sections

11

and

12

have

been

adopted

with

regard

to

the

Company’s

financial

instruments.

The

Company held all

fixe

d asset investments

at fair value through profit or

loss. Accordingly, all interest income,

fee income,

expenses

and

gai

ns and

losses

on

investments

are

attributable

to

assets

held

at

fair value

through

profit or loss.

The

most

important

polici

es

affecting the

Company’s

financial position

are

those related

to

investment

valuation

and

require

the

application

of

subjective

and

complex

judgements,

often

as

a

result

of

the

need

to

make

estimates

about

the

effects

of

matters

that

are

inherently

uncertain

and

may

change

in

s

ubsequent

periods.

These are discussed i

n more detail below.

Going Concern

The

assets

of

the

Company

consis

t

mainly

of

securities

,

two

of

which

ar

e

AIM

quoted:

Scancell

is rel

atively

liquid

and

readily

accessible

whilst

the

share

in

Arecor

are

locked

in

until

early

June

2022,

and

then

any

trading

is

subject

to

orderly

market

provisions

for

another

year

.

A

s

at

28

February

2022,

10.8

%

of

net

ass

ets

were

cash.

After

reviewing

the Company

’s forecasts

and

expectations

, the

Directors have a

reasonable expectation

that

the

Company has

adequate

resources

to

continue

in

operational

existence

for

the

foreseeable

future.

The

Company therefore contin

ues to adopt the going

concern basis in pre

paring its Financial S

tatements.

Key Judgements and E

stimates

The

prepa

ration

of

the

Financial

Statements

requires

the

Board

to

make

judgements

and

e

stimates

reg

ard

ing

the

application

of

policies

and

affecting

the

reported

amounts

of

assets,

liabilities,

income

and

expenses.

Estimates

and

assumptions

mainly

relate

to

the

fai

r

valuation

of

the

fixed

asset

investments

particular

ly

unquoted investments. Estimates

are ba

sed

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.

Investments

are

regularly

reviewed

to

ensure

that

the

fair

values

are

appropriately

stated.

Unquoted

investments are valued in accordance with

current IPEVC Valuation Guidelines, which

can be found on

their

website

at

www.privateequityvaluation.com

,

although

this

does

rely

on

subjective

estimates

such

as

appropriate

sector

earnings

or

revenue

multiples,

forecast

results

of

investee

companies,

asset

values

of

investee companies and liquidity or m

arketability of the investments held.

Although

the

Dire

ctors

believe

that

the

assumptions

concerning

the

business

environment

and

esti

mate

of

future

cash

flows

are

appropriate,

changes

in

estimates

and

assumptions

could

result

in

changes

in the

stated

values. This could lead to additional changes in fai

r value in the future.

The

mater

ial

fac

tors

aff

ecting

t

he

retur

ns

and

net

assets

attrib

utable

t

o

shareh

olders

a

re

the

valuations

of

the

investments and ongoing gener

al expenses.

59

Functional and Presenta

tional Currency

The Financial Statements

are presented in Ster

ling (£). The function

al currency is also S

terling (£).

Cash and Cash Equivalen

ts

Cash

and

cash

e

quivalents

includes

cash

in

hand,

deposits

held

at

call

wi

th

banks,

other

short

-

term

highly

liquid investments with original maturities of th

ree months or less and also include bank

overdrafts.

Fixed Asset Investments

The Company’s principal financial assets are its investments and the policies in relation to t

hose assets are

set

out below.

Purchases

and

sales

of

investments

are

recogni

sed

in

the

Financial

Statements

at

the

date

of

the

transaction

(trade date).

These

investments

will

be

managed

and

their

performance

evaluated

on

a

fair

value

basis

and

information

about

t

hem

is

provided

internally

on

that

basis

to

the

Board.

Accordingly,

as

permitted

by

FRS

102,

the

investments are

measured as

being

fair value

through

profit and

loss

on

the basi

s

that they

qualify

as a

group

of

assets

managed, and

whose performance

is evaluated,

on

a

fair

value basis

in accordance

with a

documented

investment strategy. The Company's inv

estments are measured at subsequent re

porting dates at fair value.

In the c

ase of

i

nvestments quoted on a recognised

s

tock exchange, fair value is

es

tablished by reference to the

closing

bid

price

on

t

he

relevant

reporting

date

or

the

last

traded

price,

depending

upon

convention

of

the

exchange

on

which

the

investment

is

quoted.

In

the

case

of

AIM

quoted

investments

this

is

the

closing

bid

price.

In the

case

of

unquoted investments,

fair

value

is established

by

using

measures of

value

such as

the

price

of

recent transactions, earnings or revenue multiples, discounted cash

flows

and net assets.

These are consistent

with the IPEVC Valuation

Guidelines.

Gains and

losses

arising

from ch

anges in

fair

value o

f investments

are

recognised

as p

art of

the

capital re

turn

within the Income State

ment and allocated to th

e Unrealised Capital

Reserve.

In the preparatio

n of the

valuations of assets the Directors

are required to make ju

dgements and

estimates that

are reasonable and incorporate their knowledge of the perf

ormance of the investee companies.

A

key

judgement

made

in

applying

the

a

bove

accounting

poli

cy

relates

to

investments

that

are

permanently

impaired.

Where

the

value

of

an

investment

has

fallen

permanently,

the

loss

is

treated

as

a

permanent

impairment

and

as

a

realised

loss,

even

though

the

investment

is

still

held.

The

Board

assesses

the

portfolio

for

such investments

and,

after

agreement with

the

Investment Adviser,

will ag

ree

the values

that repre

sent

the

extent

to

which

an

investment

loss

has

become

realised.

This

is

based

upon

an

assessment

of

objective

evidence

of

that

investment’s

future

prospect

s,

to

determine

whether

there

is

potential for

the investment

to recover

in

value.

Fair Value Hierarchy

Paragraph

34.

22

of

FRS

102

regarding

f

inancial

ins

truments

that

are

measured

in

the

Balance

Sheet

at

fair

value

requires

disclosure

of

fair

value

measurements

dependent

on

whether

the

stock

is

quoted

and

t

he

level

of the accuracy in the ability to determine its

fair value. The fair value measurement hierarchy is as f

ollows:

For Quoted Investments:

Level 1:

quot

ed prices

in ac

tive m

arkets

for an

identical asset.

The fair

value of

financial instruments

traded in

active

market

s

is

based

on

quoted

market

prices

at

the

Balance

Sheet

date.

A

market

is

regarded

as

acti

ve

if

quoted

prices

are

readily

and

regularly

available,

and

those

prices

represent

actual

and

r

egularly

occurring

market transacti

ons on an arm’s le

ngth basis. The q

uoted market price

used for financia

l assets held i

s the bid

price at the Balance Sheet date.

Level

2:

where

quoted

prices

are

not

available

(or

where

a

st

ock

is

normally

quoted

on

a

recogni

sed

stock

exchange

that

no

quoted

price

is

available),

the

price

of

a

recent

tr

ansaction

for

an

ident

ical

asset,

providing

60

there

has

been

no

significant

change

in

economic

circumstances

or

a

significant

lapse

in

time

sinc

e

the

transaction took place. The Compan

y held no such investments in the curren

t or prior year.

For investments not quoted in an active market:

Level

3:

the

fair

valu

e

of

financial

instrument

s

that

are

not

traded

i

n

an

active

market

is

de

termined

by

usi

ng

valuation techniques.

These valuation techniques maximise the use

of observable data (e.g. the

price of recent transactions,

earnings/revenue

multiple,

discounted

cas

h

flows

and/or

net

assets)

where

it

is

available

and

rely

as

little

as

possible on en

tity specific estimates.

There

was

one

transfer

be

tween

these

classifications

in

the

year

with

the

IPO

of

Arecor

(202

1

:

none).

The

change in fair value for the current and previous

year is recognised in the Income Statement.

Income

Investment

income

includes

interest

earned

on

bank

balances

and

from

unquoted

loan

note

securities,

and

dividends.

Fixed

returns

on

debt

are

recognised

on

a

time

apportionment

basis

so

as

t

o

reflect

the

effective

yield, provided

it is probable that

payment will be

received in due

course. Dividend

income from investments

is

recognised

when

the

shareholders’

rights

to

receive

payment

have

been

established

,

normally

the

ex

dividend

date.

Expenses

All e

xpenses,

including

investment

management

fees,

are

accounted

for

on

an

accruals

basis

and

are

charged

wholly

to

revenue.

S

ome

years

ago,

investment

management

fees

were

charged

75%

to

capital

and

25%

to

reve

nue.

However,

the

Directors

have

determined that

a more

appropriate current

split was

to charge

these fees

100%

to

revenue

since

the

company

is

a

small

late

life

VCT

no

longer

raising

new

capital.

Any

applicable

performance fee will continue to be charged

100% to capital.

Revenue and Capital

The

r

evenue

column

of

th

e

Inco

me

Statemen

t

incl

udes

al

l

inco

me

and revenue

ex

penses

of

th

e

Company

.

The

capital column includes gains

and losses on dis

posal and holding gains

and losses on investments.

Gains and

losses arising

from changes in

fair value

of investments are

recognised as

part of

the capital

return within the

Income Statement and

allocated to the

appropriate capital reserve

on the

basis of whether

they are

realised or

unrealised at the Balance Sheet da

te.

Taxation

Current t

ax is

recognised

for

the amou

nt of

income

tax p

ayable in

respect

of

the ta

xable prof

it for

the

current

or

past

reporting

periods

using

the

applicable

tax

rate.

The

tax

effect

of

different

items

of

income/gain

and

expenditure/loss

is

allocated

between

capital

and

revenue

return

on

the

"marginal"

basis

as

recommended

in

the SORP.

Deferred

tax

is

recognised

on

an

und

iscounted

basis

in

respect

of

all

timin

g

differences

that

have

originated,

but

not

reversed,

at

the

balance

sheet

date,

except

as

otherwise

indicated.

Deferred

tax

assets

are

only

recognised

to

the

extent

that

it

is

probable

that

they

will

be

recovered

against

the

reversal

of

deferred

tax

liabilities or other future taxable profits.

Financial Instruments

The Company’s pr

incipal financial

assets are its investments and

the policies in relation to

those assets are set

out

above.

Financial

liabilities and

equity

instruments are

classified

according to

the

substance of

the

contractual arrangements entered into.

An

equity in

strum

ent

is any

contract that

evidences

a residual

interest

in the

assets of

the

entity

after deducting

all

of

its

financial

liabil

ities.

Where

the

contractual

terms

of

share

capital

do

not

have

any

terms

meeting

the

definition of a financial liability then this is

classed as an equity instrument.

The Company does not ha

ve any externally imposed

capital requirements.

61

Reserves

Called up Share Capita

l

–

represents the nominal valu

e of shares that have been issued.

Share

Premium

Reserve

–

includes

any

pr

emiums

received

on

issue

of

share

capital.

Any

transaction

costs

associated with the issuing of shares are deduct

ed from the Share Premium Reserve.

Unrealised Capital

Reserv

e

ar

ises when

the Company

revalues

the

investments

still held

during the

period and

any gains or losses arising are credited/char

ged to the Unrealised Capital Reserve.

When

an

inves

tment

is

sold,

any

balance

held

on

the

Un

realised

Capi

tal

Reserve

in

relation

to

that

particular

investment is

transferred to

the Profit

and Loss

Account as

a movement

in reserves.

Similarly, where

there is

considered

to

be

a

permanent

reduction

in

value

due

to

a

per

manent

diminution

in

value,

any

such

impaired

balance is also transferred to the Profit

and Loss

Account as a movement in reser

ves.

The

Profit

and

Loss

Account

represents

the

aggregate

of

accumulated

real

ised

profits,

less

losses,

permanent

diminutions in value

and dividends.

Dividends Payable

Dividends payable

are

recognised as

distrib

utions in

th

e Financial

Statements when

the Company’s

liabil

ity

to

make payment has been established. This liability is established for interim dividends when they are

dec

lared

by the Board, and for final dividends when they are approved

by shareholders.

2. Inves

tment Income

Year Ended

28 February 2022

£’000

Year Ended

28 February 2021

£’000

Dividends received

4

-

Total

4

-

All of

the

Company’s income

has

been

generated in

the Unite

d

Kingdom from

its investme

nt

portfolio.

Select

Technology paid a div

idend in 2022 but not

in 2021.

3. Investment Management Fees

All expenses are accou

nted for on an accrua

ls basis and are charg

ed wholly to revenue.

Year Ended

28 February 2022

£’000

Year Ended

28 February 2021

£’000

Investment management fee

13

15

Cost Cap refund from OTM

(21)

(7)

Total

(8)

8

62

In the

year to 28

February 2022

the manage

r received

a fee of

1% of the

net

asset value as

at the previous year

end

(2021:

1%).

Oxford

Technology

Management

is

also

entitled

to

certain

monitoring

fees

from

inves

tee

companies and the Board reviews the amounts.

A performance fee is payable to the Investment Manager once original sh

areholders have received a

specified

threshold in cash for each 100p (gross) inve

sted.

The

original

threshold

of

100p

has

been

i

ncreased

by

compounding

that

portion

that

remains

to

be

paid

to

shareholders by

6%

per

annum

with

effect

from

1

March

2010,

resulting

in

the

remaining

required

threshold

rising

to

145.9p

at

28

February

2022,

corresponding

to

a

total

shareholder

return

of

175.2p

after

taking

into

account

the

29.3p

alr

eady

paid

out

(29.3p +

145.9p

= 175.2p).

The 29.3p

already

paid out

includes

an

effecti

ve

6.8p (per original share) that was returned t

o shareholders as part of the Tender Offer.

After

this

amount

has

been

distributed

to

shareholders,

each

extra

100p

distribu

ted

goes

80p

to

th

e

sh

areholders

and

20p

to

the

beneficiaries

of

the

perfor

mance

incentiv

e

fee,

of

which

Oxfo

rd

Technology

Management

receives 14p.

No

performan

ce

fee

has

become

due

or

been

paid

to

date.

Any

applicable

performance

fee

will

be

charged

100% to

capital. Expenses are

capped at 3%,

including the management

fee, but

excludi

ng Directors’

fees and

any performance fee.

Oxford

Techno

logy

Management reduced

their m

anagement

fee in

the

curr

ent

year by

£

21,585

to

comply

with

the costs cap in place which is credited to th

e revenue account (2021: £7,025).

4. Other Expenses

All expenses are accou

nted for on an accrua

ls

basis. All expenses are charged through the income statement

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 2022

£’000

Year Ended

28 February 2021

£’000

Directors’ remuneration

21

Auditors’ remuneration

16

9

London Stock Exchange

Fees

10

FCA Fees

7

6

Other expenses

14

11

Total

68

57

Irrecoverable VAT included in these ex

penses is

£6,

900

(202

1 £

5,000).

63

5. Tax on Ordinary Activities

Corporation tax payable

at 19.0% (2021: 19.0

%) is applied to profits

chargeable to corpora

tion tax, if any.

The corporation tax c

harge for the period wa

s £ nil (2021: £ nil

).

Year Ended

28 February 2022

£’000

Year Ended

28 February 2021

£’000

Return on ordinary ac

tivities

before tax

381

(160)

Current tax at standa

rd rate of

taxation

72

(30)

UK dividends not taxab

le

(1)

-

Unrealised

(

gains

)/losses

not

taxable

(81)

18

Realised gains not ta

xable

(2)

-

Excess management expenses

carried

forward

12

Total current tax cha

rge

-

Unrelieved management expenses of

£

1,81

5,

589

(2021:

£1,755,410) remain

available for

offset against

future

taxable profits.

6. Earnings per Share

The

calculation

of

earnings

per

share

(basic

and

di

luted)

for

the

period

is

based

on

the

net

profit

of

£381,000

(2021:

loss

of

£160,000)

attributable

to

shareholders

divided

by

the

weighted

average

number

of

shares

5,331,889 (2021: 5,331,889) in issue during the period.

There

a

re

no potentially

dilu

tive

cap

ital

ins

truments

in

issue and,

therefor

e,

no diluted

returns

per share

figures

are relevant. The basic and diluted earnings per s

hare are therefore identical.

64

7.

Investments

AIM quoted

investments

Level 1

£’000

Unquoted

investments

Level 3

£’000

Total

investments

£’000

Valuation and net boo

k amount:

Book cost as at 28

February 2021

150

1,750

1,900

Cumulative revaluation t

o

28 February 2021

131

(912)

(781)

Valuation at 28 Februa

ry 2021

281

838

1,119

Movement in

the year:

Transfer

in the year

at cost

Transfer in year reva

luation

252

167

(

252

)

(167)

-

Disposals at cost

-

(188)

Disposals revaluation

-

13

2

13

2

Revaluation in year

38

9

36

42

5

Valuation at 28 Februa

ry 2022

1,089

399

1,488

Book cost at 28 Febr

uary 2022

40

2

1,31

0

1,712

Cumulative revaluation t

o

28 February 2022

68

7

(

91

1)

(

224

)

Valuation at 28 Februa

ry 2022

1,089

399

1,488

All

investments

are

initially

measured

at

the

ir

transaction

price

.

Subsequently,

a

t

each

reporting

date,

the

investments are

valued at

fair

value through

profit and

loss, and

all

capital gains

or

losses on

investments are

so

measured.

Unquoted

fixed asset

investments

are v

alued

at

fair

value

in

accordance

with the

IPEV

guidelines.

The

cha

nges

in

fair

value

of

such

inve

stments

rec

ognised

in

these

Financial

Statements

are

treated

as

unrealised

holding gains or losses; a

ny permanent

diminution in value

is treated as

a

realised loss.

The methods

of fair

valu

e

measurement are

classified into hierarchy

based on the

reliability of

the information

used to determine the valuation.

●

Level 1

–

Fair value is measured based on quote

d prices i

n an active market.

●

Level

2

–

Fair

value

is

measured

based

on

directly

observable

current

market

prices

or

indirectly

being

derived from market prices.

●

Level

3

–

Fair

value

is

measured

using

valuation

techniques

using

inputs

that

are

not

based

on

observable market data.

When using t

his

methodology for investments

not quoted on

an active

market, however,

a detailed assessment

of the

respective val

ue of

each portfolio

company i

s also

performed in

order

to gain

the necessary

comfort

as

to whether

a

fair value

reduction or

uplift

is

in f

act r

equired. This

process

involves

a

high

level

review of

the

progress made by each investee company, recent developments in the M&A

market and any relevant

comparisons to listed competitors across any key per

formance indicators.

65

Further,

all

of

these

ar

e

considered

in

the

context

of

any

exit

equity

waterfal

l

structure

as

detailed

in

each

investee

company’s articles

of association.

FRS

102 requires the

Directors to

consider the impact

of changing

one

or

more

of

the

assumptions

used

as

part

of

the

valuation

process

to

reasonable

possible

alternative

assumptions.

In

view

of

the

FRS

102

requirement,

the

Board

have

considered

the

impact

that

introducing

reasonable

alternative

assumptions

to

this

revenue mult

iple bas

ed valuation

methodology

could

have

on

the

value

of

the

Company’s investment pool

as at the year end.

As

a

res

ult

of

thi

s

analysis

the

Board

ha

s

concluded

that

such

reasonable

possible

alternative

assumptions

could result

in a NAV

reduction of £130,000

(2.

4p per

share) or a

NAV increase of

£122,000 (2.3p per

share).

In

coming

to

this

conclusion,

the

Directors

considered

the

valuation

of

all

the

unquoted

portfolio

companies

and

are

of

the

view

that

only

one

of

the

f

our

remaining

unquot

ed

investments

is

materi

al

to

t

he

range

of

outcomes that could

reasonably be expected.

•

Downside

analysis:

2.4p

decrease

in

NAV

per

share

.

The

identified

company

sees

a

reduction

in

valuation to the value of

its net assets. The

Directors therefore believe t

hat this establishes a

credible

lower bound to the range of po

ssible valuations for this portfolio

company.

•

Upside

analysis:

2.

3p

increase

in

NAV

per

share

.

The

identified

company is

valued

at

a multiple

of

sales

with

a

discount

applied

due

to

the

market

uncertainties

as

at

28

February

2022.

Removing

this

discount

would

be

an appropriate

reflection of

improved trading

as

a

consequence

an

improved

trading environment.

Throughout

this

exercise,

and

in

determining

the

value

of

the

Company’s

equity

investment

s

where

trad

ing

multiples are considered, a

selection of va

luation

methodologies are

used,

not limited to:

the review of trading

multiples

and

compar

ison

to

industry

p

eers,

based

on

size

,

stage

of

developmen

t,

revenue

generatio

n

and

growth

rate,

as

well

as

wider

str

ategy

and

market

position.

Where

applicable,

the

se multiples

are

calculated

in

the

traditional

manner,

by

dividing

the

enterprise

value

of

the

comparable

group

by

its

revenue,

EBITDA

or earnings

depending

on

what is

the

norm

in a

particular

sector

driven

by how

acquisitions

in

that sector

are

typically

valued. The

trading multiple is then adjusted

for considerations such as

illiquidit

y, marketability and

other

differences,

advantages

and

disadvantages

between

the

portf

olio

company

and

the

comparable

public

companies

based

on

company

specific

facts and

ci

rcumstances.

A

final

point

to note

is

that

company

valuation

is

art as

well

as

science

–

no

examination

of

numerous

data

points

today

can

guarantee

a

fail

-

safe forecast

of

future movements in valuation.

Subsidiary Company

The Company also holds

100% of

the issued share capital of OT2 Mana

gers Ltd at a cost of £1.

Results of the subsid

iary undertaking for th

e year ended 28 Febru

ary 2022 are as follo

ws:

Country of

Registration

Nature of

Business

Turnover

Retained

profit/loss

Net Assets

OT2

Managers

Ltd

England and

Wales

Investment

Manager

(£

8,

3

58)

£0

£1

Consolidated

group Financial

Statements have

not been

prepared as

the subsidiary

undertaking is

not

considered

to

be

material

for

the

purpose

of

giving

a

t

rue

and

fair

view.

The

Financial

Statements

t

herefore

present only

the results

of Oxford

Technology 2

Venture Capital

Trust Plc,

which the Direct

ors also

consider

is the most useful presentation for shareholde

rs.

66

8. Debtors

28 February 2022

£’000

28 February 2021

£’000

Prepayments, accrued income &

other debtors

10

1

Amount due from O

xford

Technology VCT Plc (OT1)

Common Liquidity Agreement

25

-

Amount due from OT

M

Cost cap refund

21

7

Total

56

8

9. Creditors

28 February 2022

£’000

28

February 2021

£’000

Creditors and accruals

24

15

Total

24

15

10. Share Capital

28 February 2022

£’000

28 February 2021

£’000

Allotted, called up

and fully

paid: 5

,

33

1

,88

9

ordinary shares

of 1p each

(2021: 5,331,889

ordinary shares of 10p each

)

53

533

Share Capital

–

Sub

-

division and Reclassification, and Reduction of Capital

During

th

e

year each

ordinary

share of

10p

in the

capital of

the Company

was

sub

-

divided and

reclassified

into

one

ordinary

share

of

1p

and

one

deferred

share

of

9p,

and

t

hen

all

of

the

deferred

shares

were

repurchased

and cancelled for the aggregate sum of 1p. The Company no

w has 5,331,889 ordinary shares of 1p each (and

no deferred shares of 9p each).

11. Reserves

When

th

e

Compan

y

reva

lues

it

s

inves

tments

during the

period, any

gains or

losses

a

rising

are

cr

edited/charg

ed

to

the Income

Statement.

Changes in

fair

value

of

inves

tments

are

then

transferred

to

the

Unrealised

Capital

Reserve.

When

an

investment

is

sold

or ther

e is

any

permanent

diminution

in

value,

any b

alance h

eld on

the

Unrealised Capital Reser

ve is transferred to t

he Profit and Loss Acco

unt as a movemen

t in reserves.

Distributable reserves

ar

e £333

,000 as at

28 February 2022 (2021: £268,000).

67

Reconciliation of Movement

in Shareholders’ Funds

28 February 2022

£’000

28 February 2021

£’000

Shareholders’ funds at start of

year

1,323

1,483

Return on ordinary ac

tivities

after tax

381

(160)

Shareholders’ funds at end of

year

1,704

1,323

No

dividends were paid nor declared

in the

year to 28

F

ebruary 2022

(2021: nil)

.

12. Capital Commitments

The Company had no capi

tal commitments at 28 Februa

ry 2022 or 28 Februar

y 2021.

13. Related Party Transactions

OT2

Managers

Ltd,

a

wholly

owned

subsidiary,

p

rovides

investment

manag

ement

services

to

the

Company

for

a

fee

of

1%

of

net

assets

per

annum.

D

uring

the

year,

£13,226

was

paid

in

respect

of

these

fees

(2021:

£14,837). Due

to the cost cap of

3% being breached, £21,585 was

due back from OTM at

the year end (2021:

£7,025).

Under the

terms of the

Common Liquidity

Agreement betwee

n the 4

Oxford Tech

nology VCTs, OT2 made

a

short

term

interest

free

loan

to

OT1

of

£50,000

in

May

2021.

£25,000

of

this

was

repaid

in

February

2022.

The remaining £25,000

remains outstanding.

14. Financial Instruments

The

Company’s

financial

instruments

comprise

equity

and

loan

note

investments,

cash

balances

and

debt

ors

and

creditors.

The

Company

holds

financial

assets

in

accordance

with

its

investment

policy

of

investing

mainly in a por

tfolio of VCT

–

qualifying

unquoted securities whilst holding a proportion

of its assets in cash

or

near

cash

investments

in

order

to

provide

a

reserve

of

liquidity.

The

ri

sk

faced

by

these

instruments,

such

as interest rate risk or liquidity risk is cons

idered to be minimal due to thei

r nature. All of these are carried in

the accounts at fair value.

The

Company’s strategy

for

managing investment

risk

is determined

with

regard to

the Company’s

investment

objective.

The

management

of

market

risk

is

part

of

the

investment

management

process

and

is

a

central

feature

of venture

capital investment.

The

Company’s portfolio

is managed

with regard

to the

possible effects

of adverse price movements and with the objective of maximising

overall returns to shareholders.

Investments in unquot

ed

companies,

by their

nature,

usually involve

a

higher degree

of

risk than

investments

in

companies

quoted

on

a

recognised stock

exchange, though

the

risk

can

be

mitigated

to

a

certain

extent

by

diversifying the

portfolio across business

sectors and

asset

classes,

though VCT

r

ules limit

the extent

to which

suitable Qualifying investments can be b

ought or sold.

The

Company’s

portfolio

is

concentrated

for

va

rious

reaso

ns,

includ

ing

the

age

of

the

VCT,

exits

wit

hin

the

portfolio

and

the

Company’s

policy

of

seeking

to

return

excess

capital

to

shareholders.

No

new

funds

have

been

raised

by

the

Company

since

2010.

No

investments

in

new

portfolio

companies

have

been

made

since

2018. The overall disposition of the Company’s assets

is regularly monitored by the Board.

Classification of fina

ncial instruments

The Company

held

the f

ollowing cat

egories of

financial

instruments,

all

of whic

h are

included

in the

balance

sheet at fair value, at 28 February 2022 a

nd 28 February 2021:

68

28 February 2022

£’000

28

February 2021

£’000

Financial assets at f

air value

through profit or loss

Fixed asset investments

1,488

1,119

Total

1,488

1,119

Financial assets

measured at amortis

ed cost

Cash at bank and cas

h

equivalents

184

211

Debtors

46

7

Total

230

218

Financial liabilities

measured

at amortised cost

Creditors

-

Accruals

24

15

Total

24

15

Fixed asset

investments (see

N

ote

7) are

valued at

fair value. Unquoted

investments are carried

at fair value

as

determined

by

the

Directors

in

accordance

with

the

IPEVC

guidelines

.

The

fair

value

of

all

other

financial

assets and

liabilities i

s represented

by their

carrying value

in the

balance sheet.

The Director

s believe

that the

fair value of the assets held at the year

-

end is equal to their book value.

The

Co

mpany’s

c

reditors

and

debtors

are

in

itially

recognised

at

fair

value,

which

is

usual

ly

the

transaction

price, and then thereafter at amortised cost.

15. Financial Risk Management

In

carrying

on

its

investment

activities,

the

Company

is

exposed

to

various

types

of

risk

associat

ed

with

the

financial

instruments

and

markets

in

which

it

invests.

The

most

significant

types

of

financial

risk

facing

the

Company

are

mark

et

risk,

cr

edit

risk

and

l

iquidity

risk.

The

Company'

s

approach

t

o

managing

these

risks

is

set

out

below

together

with

a

description

of

the

nature

and

amount

of

the

financial

instruments

held

at

the

Balance

Sheet

date.

In

addition,

the

Board

considers

that

the

impact

o

f

Covid

-

19

presents

an

additional

risk

that is worth flagging

separately.

Market risk

The

Company’s strategy

for

managing investment

risk

is determined

with

regard to

the Company’s

investment

objective,

as

outli

ned

on

page

4

.

The

management

of

market

risk

is

part

of

the

investment

man

agement

process.

The Company's portfolio

is managed with regard t

o the possible effects

of adverse price movemen

ts and with

the

objective

of

maximising

overall

returns

to

shareholders

in

the

medium

term.

Investments

in

unquoted

companies, by their

nat

ure, usually involve

a higher degree of risk than

investments in companies quoted on

a

recognised

stock

exchange,

though

the

risk

can

be

mitigated

to

a

certain

extent

by

diversifying

the

portfolio

across business sectors and

asset classes. The overall disposition

of the Company's

assets is regularly

monitored by the

Board.

Details of the Company’s

investment portfolio at

the Balance Sheet date

are set out on pages

19

to 2

6.

69

2

3.4

%

(2021: 63.3%)

by

value of

the Compan

y’s

net assets

comprise

investments in

unquoted

companies held

at

fair

value.

The

valuation

methods

used

by

the

Company

for

these

as

sets

include

the

price

of

r

ecent

transactions,

earnings

or

revenue

multiples,

discounted

cashflows

and

net

assets.

A

10%

overall

increase

in

the valuation

of the

unquoted

investments at

28 February

2022

(28 February

2021) would

have

increased net

assets and the

total return for the

year by £39,900

(2021: £83,700) disregarding

the impact of

the performance

fee;

an

eq

uivalent

change

in

the

opposite

dir

ection

would

have

reduced net

assets

and

the

total

return

for

the

year by the same amount.

63.9

%

(2021:

21.2%)

by

value

of

the

Company’s

net

assets

comprises

equity

securities

quoted

on

AIM.

A

10%

increase

in

the

bid

price

of

these

securities

as

at

28

February

2022

(28

February

2021)

would

have

increased

net

assets

and

the

total

return

for the

year b

y

£108,900

(2021:

£28,000)

disregarding

the

impact

of

the

performance fee;

a

corresponding

fall would

have

reduced net

assets

and

the total

return for

the

year by

the

same amount.

Credit risk

There

were

no

si

gnificant

c

oncentrations

of

credit

risk

to

coun

terparties

at

28

February

2022

or

28

February

2021.

Credit

risk

is

the

risk

that

a

counterparty

to

a

financial

instrument

will

fail

to

discharge

an

obligation

or

commitment that

it has

entered into

with the

Company. The

Board carries

out a regular

review

of

counterparty

risk. The

carrying values of

financial assets

represent the maximum

credit risk

exposure at the

Balance Sheet

date.

Liquidity risk

The

Compa

ny’s

f

inancial

assets

include

invest

ments

in

unquoted

equity

securities

whi

ch

are

not

traded

on

a

recognised

stock

exchange

and

which

generally

are

illiquid.

They

also

include

investments

in

AIM

-

quoted

companies, which,

by their

nature, involve

a higher degree

of ris

k than invest

ments on the

main market.

As a

result,

the

Company

may

not

be

able

to

realise

some

of

its

investments

in

these

instruments

quickly

at

an

amount close to their fair value in order to

meet its liquidity requirements.

The

Com

pany’s

liquidity

risk

is

managed

and

monit

ored

on

a

continuing

basis

by

the

Board

in

accordance

with policies and pro

cedures laid down by th

e Board.

Geo

-

political and economic

r

isks

The

military

invasion

of

Ukrain

e

by

Russian

forces

ha

s

caused

v

arious

cou

ntries

to

announce t

he

imposition

of

sanctions

on

Russia.

These

sanctions

may

lead

to

u

npredictable

r

eactions

from

Russia,

particu

larly

in

relation

to

the

provision

of,

or

access

to,

energy

resources

which

may

have

a

consequential

impact

on

economic

condi

tions

globally,

including

the

costs

of

living

and

the

availability

(and

increased

cost)

of

raw

materials.

Such

increased

costs

of

living

and

the

avail

ability

(and

increased

cost)

of

raw

materials

may

also

have

an

indirect

impact

on

businesses

in

which

the

Company

has

invested

in

,

hindering

growth

,

financing

or

operations

.

Similarly,

the

threat

of

r

ising

inflation

may

impact

on

the

performance/profitability

of

our

investees.

Consequently,

any

change

of

governmental,

economic,

fiscal,

monetary

or

political

po

licy,

and

in

particular

any spending cuts or material increases in interest rates

could affect, directly or indirectly, the performance of

the

Company (as

a result

of

the

performance of

its unde

rlying

investments) and

hence

the

value of,

and returns

from, the Company’s shares.

Covid

-

19 risk

The

Covid

-

19

pandemic

has

had

an

impact

on

economic

conditions

globally

and

may

continue

to

affect

the

performance of some companies in which the Company has invested

.

16. Control

Oxford Technology 2 Ven

ture Capital Trust Plc is not

under the control of

any one party or indi

vidual.

17. Events after the Balance Sheet Date

There are no events

to report after the ba

lance sheet date.

70

Oxford'Technology'2'Venture'Capital'Trust'

Plc'

-'

Notice'of'Annual'General'Mee

ting

'

Notice

is

hereby

given

that

the

Annual

General

Mee

ting

(“AGM”)

of

Oxfor

d

Technology

2

Venture

Capital

Trust Plc (company number:3928569) will be held

at

The Mag

dalen

Centre,

Oxford

Science Park, Oxford

OX4 4GA

at

2pm on

Monday 2

0

June 2022

for the purpose as set out below

:

To consider and, if

thought fit, pass the

following Resolutions:

Ordinary Resolutio

ns

1.

That the Annual

Report and Accounts for

the period to 28

February 2022 be approved.

2.

That the Direct

ors’ Remuneration Report be

approved.

3.

That Mr Richard Roth, who retires at the Annual General Meeting in accordance with the AIC 2019

Corporate Governance gu

idelines be re

-

appointed as a Director.

*

4.

That Mr Alex Starling, who retires at the Annual General Meeting in accordance with the AIC 2019

Corporate Governance gu

idelines be re

-

appointed as a Director.

5.

That Mr Robin

Goodfellow, who re

tires at the Annu

al General Meeting

in accordance with

the AIC

2019 Corporate Governance guidelines be re

-

appointed as a Director.

*

6.

That

Mr

David

Livesley,

who

retires

at

the

Annual

General

Meeting

in

accordance

with

the

AIC

2019 Corporate Governance guidelines be re

-

appointed as a Director.

7.

That

Hazlewoods

LLP,

Chartered

Ac

countants,

be

re

-

appointed

as

Auditors

and

that

the

Directors

be authorised to determine their remuneration.

*

8.

That the Company

continues

in being as a Venture Capital Trust.

9.

AUTHORITY TO ALLOT SHARES IN THE

COMPANY

That

the

Direct

ors

be

and

are

generally

and

uncond

itionally

authorised

in

accordance

with

section

551 of the Companies Act 2006 (“Act”) to exercise all the pow

ers of the Company to allot shares or

grant

rights

(“Rights”)

to

subscribe

for,

or

convert

any

s

ecurity

into,

shar

es

in

the

capital

of

the

Company

up

to

a

maximum

number

of

533

,1

89

(representing

approximately

10%

of

the

ordinary

share

capital

in

issue

at

today’s

date)

provided

that

such

authority

shall

expire

at

the

later

of

the

conclusion of

the Company’s next

Annual General Meeting

fol

lowing the

passing of this

Resoluti

on

and

the

expiry

of

15

months

from

the

passing

of

this

Resolution

(unless

previously

revoked,

varied

or extended by the

Company in a general meeting, but so that

such authority allows the Company to

make

of

fers

or

agre

ements

b

efore

the

expi

ry

ther

eof,

which

wou

ld

or

might

require

relevant

securities

to be allotted after the expiry of such autho

rity).

Special Resolutions

10.

AUTHORITY TO ALLOT SHARES ON A NON

-

RIGHTS ISSUE

BASIS

That

the

Di

rectors

be

empowered,

pursuant

t

o

section

5

70(1)

of

th

e

Act,

to

allot

or

make

off

ers

or

agreements

to

allot

equity

securiti

es

(as

defined

in

s560(1)

of

the said

Act)

for

cash

pursuant

to

the

authority referred

to in

Resolution

9

as if

s561(1) of the

Act did

not apply

to any

such allotments and

so that:

a.

reference to allotment in this

Resolution

shall be

construed

in accordance

with s56

0(2) of

the

Act; and

71

b.

the

power

conferred

by

this

Resolution

shall

enable

the

Company

to

make

any

offer

or

agreement before the expiry of the said power which would or might require equity securities

to b

e

allotted after

the expiry

of the

s

aid power

and the

Directors may allot

equity securities in

pursuance of such offer or agreement notwithstanding the

expiry of such power

and this power,

unless

previously varied,

r

evoked or

renewed, shall come

to an end at

the

conclusion

of

the

General

Meeting

of

the

Company

following

the

passing

of

this

Resolution or, if ea

rlier, on the expiry

of 15 months from the pa

ssing of this Resolutio

n.

11.

SHARE

CAPITAL:

CANCELLATION

OF

SHARE

PREMIUM

ACCOUNT

AND

CAPITAL

REDEMPTION RESERVE

Subject

to

the

co

nfirmation

of

the

High

Court,

(i)

the

amount

s

tanding

to

the

credit

of

the

share

premium account

of the

Company

as at

the date

an order

is made

confirming such

cancellation

by

the

Court

and

(ii)

the

amount

stand

ing

to

the

credit

of

the

capital

redemption

reserve

of

the

Company

as

at

the

date

an

order

is

made

confirming

s

uch

cancellation

by

the

Court,

in

each

case

be cancelled and the approp

riate amounts be credited to a distributable

reserve

.

By Order of the Bo

ard

James Gordon

Company Secretary

21

April

202

2

Registered Office: The Mag

dalen Centre, Oxford Scie

nce Park, Oxford OX4 4GA

Notes:

1.

Resolutions

1

to

9

will

be

proposed

as

Ordinary

Resolutions.

Resolutions

10

and

11

will

be

proposed

as

Special Resolutions.

2.

A

member entitled

to attend

an

d

vote at

the meeting

is entitled to

appoint a

proxy or

p

roxies to

attend, speak

and vote on his

or

her behalf. A

proxy need not also be a member

but must attend the meeting to represent the

appointer. Details

of how

to appoin

t

the

C

hairman

of the

meeting or another

person as

a proxy

using the

proxy

card

accompanying

this

notice

(“Proxy

Form”)

are

set

out

in

the

notes

on

the

Proxy

Form

.

If

the

member

wishes his or

her proxy to

speak on

their behalf at

the meeting then the

membe

r will

need to

appoint their

own

choice of

proxy (not

the Chairman)

and give

their instructions

direct

ly

to

the proxy.

To be

valid,

a

Proxy Form

must

be

lodged

with

the

Company’s

Regist

rar,

Neville

Registrars,

Nevi

lle

House,

Steelpark

Road,

Halesowen

B62

8HD,

at

least

48

hours

before

t

he

meeting

,

being

2p

m

on

16

June

202

2.

A

Proxy

Form

for

use

by

members

is

attached.

Completion

of

this

Proxy

Form

will

not

prevent

a

member

from

attending

the

meeting.

3.

Pursuant t

o regulat

ion 41

of

the

Uncertifica

ted

Securities

Regulations

2001,

entitl

ement

to

attend

and

vote

at

the

meeting

and

the

number

of

votes

which

may

be

cast

there

at

will

be

determined

by

reference

to

the

Register

of

Members

of

the

Company

at

6p

m

on

the

day

which

i

s

two

days

befor

e

the

day

of

the

meeti

ng

or

adjourned

meeting.

Changes

to

entries

on

the

Regist

er

of

Members

after

that

time

shall

be

disregarded

in

determining the rights of any person to attend and

vote at the meeting

.

4.

CREST

members who

wish to

appoint a

proxy or

pr

oxies through

the CREST

electronic proxy

appoint

ment

service

may

do

so

by

using

the

procedures

described

in

the

CREST

Manual.

CREST

Personal

Members

or

other

CREST

sponsored

members,

and

those

CREST

members

who

have

appointed

a

service

provider(s),

should

refer

to

their

CREST

sponsor

or

voting

service

provider(s),

who

will

be

able

to

take

the

appropriate

action on their behalf.

5.

In

order for

a

proxy appoi

ntment or

instruction

made us

ing the

CREST ser

vice to

be

valid, the

appropriate

CREST

message (a

“CREST Proxy

Instruction”) must

be properly authenticated

in accordance

with

Euroclear

UK

&

Ireland

Limited’s

spe

cifications,

and

must

contain

th

e

information

required

for

such

instruction,

as

72

described

in

t

he

CREST Manual.

The message,

regardless of

whether it

constitutes the

appointment of

a proxy

or

is

an

amendment

t

o

the

instruction

given

to

a

previously

appointed

proxy

must

in

order

to

be

vali

d,

be

transmitted so as to be received by the issue

r’s agent ID

7RA11

by 2p

m on

16

June

202

2.

*

For

this

purpose,

t

he

time

of

receipt

will

be

taken

to

be

the

time

(as

determined

by

the

timest

amp

applied

to

the message

by the CREST

Application Host) from

whi

ch the issuer’s

agent is able

to retrieve the message by

enquiry to CREST in the manner prescribed by CREST.

*

After

this

time

any

change

of

instru

ctions

to

proxies

appointed

through

CREST

should

be

communicated

to

the appointee

through other means

.

6

.

CREST

members and,

where

applicabl

e,

their CREST

spons

ors,

or voting

ser

vice

providers should

note

that

Euroclear

UK

&

I

reland

Limited

does

not

make

available

special

procedures

in

CREST

for

any

particul

ar

message. Normal

system timings

and limitations

w

ill, therefore,

apply in

relation

to

the

input

of

CREST

Proxy

Instructions.

It

is

the responsibility

of

the

CREST

member

concerned

to

take (or,

if

the

CREST

member

is

a

CREST

p

ersonal

member,

or

sponsored

member,

or

has

appointed

a

voting

serv

ice

p

rovider,

to

procure

that

his

CREST

sponsor

or

voting

service

provider(

s)

take(s))

such

action

as

shall

be

necessary

to

ensure

that

a

message

is

transmitted

by

means

of

the

CREST

system

by

any

particular

time.

In

this

con

nection,

CREST

members

and,

where

applicable

,

their CREST

sponsors or

voting system

providers are

referred, in

particular,

to those sections of the CREST Manual c

oncerning

practical limitations of the CREST system and timings

7

.

As

at

2

0

April

2022

(being

the

last

business

day

prior

to

the

publication

of

this

notice),

the

Company’s

issued

share

capital

comprised

5,331,889

ordinary

shares

of

1p

each,

all

of

which

carry

one

vote

each.

Therefore, the total

voting rights in the

Company as at 2

0

April

202

2

was 5,331,889.

8

.

Copies

of the

direct

ors’

let

ters

of

appointment, the

Register of

Directors’ Interests

i

n

shares of

the Company

and

copies

of

the

exist

ing

articles

of

association

of

the

Company

will

be

available

for

inspection

at

the

registered office of the Company

during usual business hours on any weekday (Sa

turday and Public Holidays

excluded)

from

the

date

of

this

noti

ce,

until

the

end

of

the

Annual

General

Meeting

and

at

the

place

of

the

Annual

General Meeting for

at least

15 minutes prior to and during the meeting

.

9

.

If

a

corpor

ate

shareholder

has

appointed

a

corporate

representative,

the

cor

porate

representative

will

have

the

same

powers

as

the

corporation

could

exercise

if

it

were

an

individual

member

of

the

Company.

If

more

than

one

corporate

representative

has

been

appointed,

on

a

vote

on

a

show

of

hands

on

a

res

olution,

each

representative

will

have

the

same

voting

rights

as

the

corporation

would

be

entitled

to.

If

more

than

one

authorised person

seeks to

exercise a

power in

respect of

the same

shares, if

they purport

to exercise

the power

in

the

same

way,

the

power

is

treated

as

exercised;

if

they

do

not

purport

to

exercise

the

power

in

the

same

way, the power is tr

eated as not exercised

.

10

.

At

the meeting,

S

hareholders have

the right

t

o ask

questions relating

to the business

of the

meeti

ng and

the

Company is obl

iged under sec

tion 319A of

the Act t

o answer such

questions, un

less; to do

so would i

nterfere

unduly with

the preparation

of the

meeting or

would invo

lve the disclosure of

confidential information, if

the

information

has

been

given

on

the

Company’s

website,

www.oxfordtechnologyvct.com

in

the

form

of

an

answer

to

a

question,

or

if

it

is

undesirable

in

the

interests

of

the

Company

or

the

good

order

of

the

meeting

that

the

question

be

answered

.

In

order

for

the

orderly

conduct

of

the

AGM,

the

Company

has

arranged

a

separate

meeting in

advance of

the AGM

during

which Shareholders

can ask

questions

relating

to the

business

of the AGM.

11

.

Further

information

,

including

the

information

required

by

section

311A

of

the

CA

2006,

regarding

the

meeting is

available on the Company’s websit

e,

www.oxfordtechnologyvct.com.

(

73

Oxford(Technol

ogy(2(Ventur

e(Capital(

Trust(Plc(

Proxy(Form

(

Annual Genera

l Meeting

– 20

June 2022

at 2p

m

I/We …………………………

……………………...…………

…………………………..…

………………..

Of (address)………………………………….……………………………………………….………………..

Being a member of Oxford

Technology 2 Venture Capi

tal Trust Plc, hereby

appoint the Chairman of

the

meeting, or,

Name of Proxy ………………………………………………………………………………….……………..

No of Shares ……………………………………………………………………………………….…….…….

As

my/our

proxy

and v

ote

for

me

/us

on

my/our

behalf

at

the

Annual

General

Meeting

of

the

Company

to

be

held

on

20

June

202

2

,

and

at

any

adjournment

thereof.

The proxy

will

vote

as

indicated

below

in

respect of

the resolutions set out in the notice of meetin

g.

Please indicate by tickin

g the box if this proxy appointment is one of multiple appoi

ntments being made. For

the appointment of one or more prox

y, please refer to explanatory note 4.

For

Against

Withheld

1. To approve the Annual Report and Accounts

2. To approve the

Directors’ Remunerat

ion Report

3

. To re

-

elect Richard Roth as a Director

4

. To re

-

elect Alex Starling as a Director

5

. To re

-

elect Robin Goodfellow as a Director

6

. To re

-

elect David Livesley as a Director

7

. To approve the re

-

appointment of

Hazlewoods

LLP as

auditors and authorisation of Directors to f

ix remuneration

8

. To approve that the Compan

y continues as a VCT

9

. To approve the Directors’ genera

l authority to allot shares

10

. To approve the allotment of sha

res on a non

-

rights issue basis

11. To approve the cancellation of the share premium account and

capital redemption reserve, subject to the approval

of the High Court

Signature:

Date:

74

Proxy Form

-

Notes

Annual Genera

l Meeting

– 20

June 202

2

at 2p

m

&

1.

To

be

valid,

the

Proxy

Form

must

be

received

by

the

Registrars

of

Oxford

Technology

2

Venture

Capita

l

Trust

Plc

at

Ne

ville

Registrar

s

Limited,

Neville

House,

Steelpark

Roa

d,

Halesowen, B62

8HD, no later

than 48

h

ours

(working

days)

before

the commencement

of the

meeting, being

2p

m

on

16

June 202

2.

Where

thi

s

form

of

proxy

is

execu

ted

by

a

corporation

it

must

be

either

under

its

sea

l

or

under

the

hand of an officer or attorney duly authorised.

3.

Ev

ery

holder

h

as

the

righ

t

to

appoin

t

some

other

person(

s)

of

their

choice,

who

need

not

be

a

Shareholder,

as

his

pr

oxy

to

exercise

all

or

any

of

his

rights,

to

attend,

speak

and

vote

on

thei

r

behalf

at

the

meeting.

If

you

wish

to

appoint

a

person

other

than

t

he

Chairman,

please

insert

the

name

of

your

chosen

proxy

holder

in

the

space

provided.

If

the

proxy

is

being

appointed

in

relation

to

less

than

your full

voting entitleme

nt,

please enter

next to

the

proxy

holder’s name

the nu

mber

of shares

in

relation

to which

they are

authorised

to

act as

your proxy

.

If

left

blank your

proxy will

be dee

med

to be authorised in respect of your full voting entitlement (or if this Proxy Form has been issued

in

respect

of

a

designated

account

for

a

Shareholder,

the

full

voting

entitlement

for

that

designated

account.)

4.

To

appoint

more

than

one

proxy,

you

may

photocopy

this

form.

Please

indicat

e

the

proxy

holder’s

name

the

number

of

shares

in

r

elation

t

o

which

they

are

authorised

to

act

as

your

proxy.

Please also indicate by

ti

cking the box

pr

ovided if the

proxy ins

truction is

one of multiple

instructions

being

given.

All

forms

must

be

signed

and

should

be

returned

together

in

the

same

envelope.

5.

The

‘Vote

Withheld’

option

is

provided

to

en

able

you

to

abstain

on

any

particular

resolutio

n.

However,

it

should

be no

te

d that

a

‘Vote Withhel

d’ is

not

a

vote in

law

and

will

not be

counted

in

the calculation of the proportion of the vo

tes ‘For’ and ‘Against’ a resolution.

6.

If the Proxy Form is signed and returned without any indication

as to how the proxy shall vote

, the

p

roxy will exercise his/her discretion as to wh

ether and how he/she votes.

7.

Th

e addres

s on

the

envelope

containing

this

notice

is

how

your

address

appears

on

the Regi

ster of

Members. If this

information is

incorrect please

ring the Registr

ar’s helpline on

0

121 585 1131.

8.

The completion and return of

t

his form will

not preclude a member from

atte

nding the meeting

a

nd

voting in person

.*

*

75

Shareholder(Information(

(

Financial Calendar

The Company’s financial

calendar is as follows:

20

June 2022

-

Annual General Meeting

November

202

2

-

Half

-

yearly results to 31 August 202

2

published

January 202

3

-

Quarterly Update

May

2021

May 202

3

-

Annual results for year

to 28 February 202

3

announced

Dividends

will be

paid

by the

Registrar

on b

ehalf of

the

Company.

Shareholders

who wish

to

have divi

dends

paid directly into their bank account rather than

by cheque to their registered address can complete a mandate

form for

this purpose. Queries

relating to

dividends, shareholdings a

nd requests

for

mandate forms

should

be

directed to the Company’s Registrar, Neville Registrars

Limited.

Share Price

The Company’s share pric

e is published daily o

n the London Stock Exch

ange’s website

(

www.londonstockexchange.c

om

) using code OXH.

Buying and selling shares

The

Company’s

Ordinary

shares,

which

are

li

sted

on

the

London

Stock

Exchange,

can

be

bou

ght

and

sold

in

the same way as any

other company quoted on a recognised

stock exchange via a s

tockbroker. The Company

does

not

have

a

buy back

policy

so

i

f

you

wish to

trade

in

t

he

secondary

market

and

do not

have

a

stockbroking

relationship, you may wish to contact:

Redmayne Bentley

–

York Office 0

800

-

5420055 / 01904

-

646362

Paul Lumley

paul.lumley@redmayne.co.uk

Chris Steward

chris.steward@redmayne.co.uk

If

you

do

contact

Redmayne

Bentley,

you

will

require

your

National

Insurance

Number

and

a

valid

share

certif

icate

if

selling.

There may

be

tax

implications

in

respect

of

all

or

part

of

your

holdings, so

shareholders

should contact their independent finan

cial adviser if they have any queries.

Shareholder Scams

We

are awar

e

that so

me

of our

sharehol

ders

are r

eceiving

unsolicited

phone

calls

or

correspondence

concerning inves

tment matters.

These

are

usually

from overseas

based

'brokers'

who

target

UK shareholders,

offering

t

o

buy VCT

shares

of

f

them at

an inflated

pr

ice

in return

for upfront

payment.

Alt

ernatively,

they may

offer

to sell

shares

that turn

out

to be

worthless

or non

-

existent.

Keep in

mind

that firms

authorised

by the

FCA

are

unlikely

to

contact

you

out

of

t

he

blue

with

an

offer

to

buy

or

sell

shares.

You

can

check

the

Financial

Services Register from

www.fca.or

g.uk

to

see if the

person and firm

contacting you

is authorised by

the FCA.

For

further

inf

ormation

on

share

fraud

and

boiler

room

scams

or

to

report

a

f

raudulent

call,

please

visit

the

FCA website at

www.fca.org.uk/sca

msmart/how

-

avoid

-

investment

-

scams

.

Notification of change of address

Communications with shareholders

are mailed

to

the

register

ed address

h

eld on

the share register. In

the

event

of

a

change

of

address

or

other

amendment

this

should

be

notified

to

the

Company’s

Registrar,

Neville

Registrars Limited, unde

r the signature of

the registered holder.

Other information for Shareholders

Previously

published

Annual

Reports

and

Half

-

yearly

Reports

are

available

for

viewing

on

the

Company’s

website at

www.oxfordtechn

olo

gyvct.com/vct2.html

as well as RNS histories and investee summaries.

76

Company(Information(

–(

Directors(and(Advi

sers

&

Board of Directors

Richard Roth (Chairman)

Robin Goodfellow

David Livesley

Alex Starling

Accountants

Wenn Townsend

30 St Giles

Oxford

OX1

3LE

Investment Manager & Registered Office

OT2 Managers Ltd

Magdalen Centre

Oxford Science Park

Oxford OX4 4GA

Tel: 01865 784466

Independent Auditor

Hazlewood

s LLP

Staverton Court

Staverton

Cheltenham

GL51 0UX

Investment Adviser

Oxford Technology Management

Tel: 01865 784466

Email :

vcts@oxfordtechnology.com

Registrars

Neville Registrars

Neville House

Steelpark Road

Halesowen B62 8HD

Tel: 0121 585 1131

Company Secretary

James Gordon

Gordons Partnership LLP

22 Great James Street

London WC1N 3ES

Bankers

Natwest Bank

121 High Street

Oxford

OX1 4DD

Company Registration Number

3928569

Legal Entity Identifier

2138002COY2EXJDHWB30

Financial Adviser & LSE Sponsor

B

DO LLP

55 Baker Street

London

W1U 7EU

Website

www.oxfordtechnologyvct.

com/vct2.html

Legal Adviser

Hill Dickinson

LLP

50 Fountain

Street

Manchester M2 2AS