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Oxford Technology AGMs 2020

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timbo003
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Oxford Technology AGMs 2020

#325916

Postby timbo003 » July 13th, 2020, 11:42 pm

The 2020 Oxford VCT AGMs were held via a Zoom video conference on Thursday 9th July. Links to all four Annual Reports (year ending Feb 2020) can be found on the Oxford Technology VT home page: https://www.oxfordtechnologyvct.com/
At this year’s AGM there were 30 (plus) attendees so the number of ordinary shareholders who logged in was probably around 25 (only slightly higher than the attendance last year). The meeting commenced at 14:00 with a brief welcome and some housekeeping rules from the OT1 Chairman, we then had a presentation by the Manager (OTM) who gave an update on the VCTs portfolios, this was followed by the formal business and to finish off we had 20 minutes on Q&As.


Manager’s presentation:

The slides used for the Managers presentation (and the other slides used for the AGM) can be found here:
https://www.oxfordtechnologyvct.com/adm ... M%2020.pdf
The Managers slides summarise just about everything which was said during the presentation, so I will not reproduce the info here, but Lucius did give us a bit more detail on the Ixaris situation which is certainly worth recording: Last December shareholders were 24 hours away from selling the company (for £130m) which would have enabled OT3 to pay the largest dividend in the history of VCTs. Unfortunately however, some charge back issues emerged concerning the administration of Thomas Cook which caused the buyer to get cold feet at the last minute, then in March the Covid virus struck and sales fell 95%. OTM remain hopeful that the company can get through this difficult period and become as profitable as before.


Formal Business

The Formal business proceeded uneventfully with all resolutions passed for all four VCTs. The results from the proxy voting are at the end of the slide pack used for the AGM (see previous link)


Q&As

For the Q&As, a number of questions had been submitted by shareholders prior to the AGM and shareholders were informed that the questions and the BOD’s responses to these questions were now posted on the OT VCT Web site (see link)
https://www.oxfordtechnologyvct.com/agmfaqs.html
However the BOD did take the opportunity to further address a couple of these questions during the Q&A session along with additional questions which had been submitted (via email) during the meeting, details are as follows:

Q: Did the BOD consider a buyback (tender offer) for OT4 following the Castleton disposal (similar to the buyback conducted by OT2 after the OC Robotics disposal)?
A: We did look at the possibility of a buyback, we looked at cash available and how many shareholders would want to exit their shareholding. We concluded there were not sufficient resources to make a buyback feasible, so instead we went for a dividend. We have declared an interim dividend and we will be reviewing whether a further (smaller) dividend is practical later in the year.

Q: The Scancell share price spiked up this year on the news that they would be looking at developing a COVID vaccine. Did any of the OT VCTs take the opportunity to top slice?
A: Scancell price spiked up from about 5-6p to 8-9p on the COVID vaccine news and the BOD did look at the opportunity to sell some shares. In the case of OT3 and OT2 we decided to wait until the trials are completed and a value inflection point before considering a sale. However, for OT1, we did top slice to gain some liquidity in the fund, which was low on liquidity at the time.

Q: For OT1, OT3 and OT4, this year you changed the articles (you did this for OT2 last year). Why are you spending more money doing this? It seems like a lot of effort to make the changes.
A: The articles were old (written to comply with legislation in the Companies Act 1996), since then there has been a new companies act (2006). To have a listed company based on articles which are 24 years old is not the norm and we were not compliant in a number of respects, so it was good practice to move to the updated legislation. Also as we have signalled a number of times, we are constantly looking at the possibility of bringing in a new manager to issue a B share class to increase the net assets of the VCTs and making them more economic to run. One problem we come up with every time, is the overall costs involved for a new manager to issue a new share class, so we took the decision to change the articles to enable the issue of new types of share (B shares). Therefore for a small amount of cash (£3K for all three VCTs) we have updated the articles to bring them up to date, they now include a provision to issue a new share class under the new articles. This was a lot more cost efficient than a new manager with their own legal team coming in to do the same job.

Q: Has the BOD looked a moving off the main market to reduce costs?
A: One of the key conditions for being a VCT is that you need to be on the Main market. We have reduced fees to the bone, no VCT has lower costs and shareholders continue to benefit from VCT status. Regarding listing fees, we have written to FCA and the LSE explaining how the listing fees are a relatively high portion of overall costs along with a few ideas on how this may be addressed. Both FCA and LSE have been receptive and we have a meeting arranged with LSE to discuss this in more detail, although we consider it unlikely that they will offer much.

Q: Wouldn’t it be easier to merge the VCTs and save money that way?
A: We are constantly looking at ways to reduce costs. Doing a merger is not as straight forward as some may think and there are significant costs involved (professional fees and stamp duty). The payback period would be quite long (2 – 3 years) compared to other VCT mergers. Also one of the big cost savings seen for other VCT mergers is that you go from two separate BODs to one (saving £100K in costs). There would be no such saving for the OT VCTs, as all four OT VCT BODs are the same and the BOD costs are already light compared to other VCTs.

Q: I note in the Chairman’s statements you mention that you might raise additional capital by issuing additional shares and you have asked shareholders who might be interested in buying new shares to register their potential interest, Could you please elaborate?
A: We are always trying to keep options open and to consider what is in shareholder’s best interest. When COVID appeared it was apparent that some of the investee companies would need more cash, so we wanted to explore the possibility of raising funds. If additional funds were going to be required to invest, would they would be available? This is why we opted for AGM resolutions to offer 20% additional equity (rather than 5% in previous years). There are costs involved with any fund raise, so there would be no point in attempting a fund raise if there was no interest, hence why we asked shareholders to indicate if they may be interested.

Q: Arecor appear to be doing well (OT2, OT3 and OT4) and they have recently started doing regular updates and interviews on Proactive Investor, this is unusual for an unquoted company and a possible motive could be that they are intending to do an IPO (on AIM or Nasdaq). Are you aware of any activity towards an IPO?
A: There was a discussion within Arecor before the current fund raising round on whether to do another private round, or whether to go down the IPO route. The decision was to raise privately, but to use WG as advisors, who are typically involved with companies which are public, or intending to go public. This was done with a view to attract investors who could Cornerstone an IPO if deemed appropriate. The current fund raising round is for £20m which should be sufficient to take company forward 2-3 years, by which time there should be a number of products ready for licencing. The thought of an IPO is never very far away, but it is not currently being pursued.

Q: Will Ixaris (OT3) require further funding in the next 12 months? If it were to raise more cash from shareholders based on its current (reduced) valuation, would OT3 (or any of the other Oxford VCTs) participate, or would you sit on the side lines and accept significant dilution?
A: VCTs have various rules on what they can and cannot invest in (for example the 15% rule) and it would be hard for OT3 in its current form to do an investment. OTM are on the BOD at Ixaris and we have fortnightly BOD meetings. We are following the cash very closely and have very detailed forecasts, although there is a lot of uncertainty in those forecasts. Ixaris’s sales fell 95% due to Covid, but they are recovering slowly and our conservative forecasts suggest there should be enough cash to get through to profitability. If Ixaris does need to raise more capital, then price is a key point. We are aligned with the founder and neither of us currently have the ability to put in significantly more cash. There are other shareholders who do have the capacity to put in more money and we have to try to guard against a further fund raise at a low valuation. The best way to do that is to try to ensure Ixaris does not require further capital.


Overall impression of the Virtual AGM

I think the Virtual AGM worked quite well considering the circumstances; there were no technical problems no hanging or buffering and good quality sound throughout. I think publishing the AGM questions with detailed responses on the web site was an excellent idea and it promotes open communication. I would still much prefer a real live AGM where you can be there in person (with lunch of course), but that is unsuitable for anyone who lives a distance away. I was slightly surprised that there were not significantly more shareholders logging in, given that Zoom is such a user friendly platform and shareholders didn’t have to leave the comfort of home to attend. Assuming that this time next year real meetings are possible once more, perhaps it would be possible to combine the best of both worlds and have a facility where remote shareholders could view proceedings via Zoom and submit questions (via Zoom or email).

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Re: Oxford Technology AGMs 2020

#325997

Postby UncleEbenezer » July 14th, 2020, 10:30 am

As ever, an interesting read, despite not being a shareholder.

timbo003 wrote:I was slightly surprised that there were not significantly more shareholders logging in, given that Zoom is such a user friendly platform and shareholders didn’t have to leave the comfort of home to attend.


Are not the OT VCTs very much on the niche end of the spectrum? I wonder what numbers someone more mainstream might attract? For example, if Beringea use a technology platform as mainstream and accessible as Zoom for their event?

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Re: Oxford Technology AGMs 2020

#347307

Postby timbo003 » October 13th, 2020, 10:52 am

The four Oxford Tech VCTs reported interims last week:

https://www.investegate.co.uk/oxford-te ... 0000H1322/
https://www.investegate.co.uk/oxford-te ... 0000H1324/
https://www.investegate.co.uk/oxford-te ... 0000H1327/
https://www.investegate.co.uk/oxford-te ... 0000H1332/

No big surprises in the reported NAVs, or portfolio composition although post period end OT1 and OT3 have top sliced a few Scancell to assist liquidity, so that presumably negates any requirement for a small fund raise (as alluded to in the OT1 annual report).

The outlook statement (common to all four reports) is worth highlighting as it suggests that a new Manager (plus fund raise) for any of the VCTs is off the table for now and that merger options between the four VCTs are once more under consideration.

Outlook
Nothing has changed in our plans for your Company. We continue to believe your VCT is an appropriate structure to hold your Company’s investments, but it would be preferable to have a larger asset base to share the operating costs. I have reported previously of our efforts to seek prospective parties who are potentially interested in entering the VCT industry. This initiative is currently on hold whilst any such possible organisations are entirely focussed on more immediate actions within their own businesses as a result of the Covid-19 pandemic. We have always made clear that there is no certainty such a route can be achieved, but the Directors will continue seeking such opportunities when the future outlook has become clearer. Directors are also revisiting the economics of a merger with some or all of the other Oxford Technology VCTs. Such a transaction is not without risk and it is by no means clear that it would be in your Company’s best interests to participate. We will update shareholders if and when these discussions reach a conclusion, and in any event, shareholder approval will be required before any transaction could proceed.

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Re: Oxford Technology AGMs 2020

#413251

Postby baronspill » May 19th, 2021, 3:19 pm

Nice pop yesterday following news of Arecor seeking to list on AIM...

timbo003
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Re: Oxford Technology AGMs 2020

#414647

Postby timbo003 » May 24th, 2021, 3:06 pm

Yes, excellent news on Arecor, I have applied for a few (EIS qualifying) shares in the IPO which is tentatively scheduled for June, but I havent heard back on my allocation yet.

Last week I was offered the opportunity to take one of the charity pledge slots at tomorrow night's Mello Healthcare Webinar, so I thought I would go for Arecor as it will be new to most investors (so hopefully of interest) . I intend to mention (if I can fit it in) that investors can take a position in Arecor before the IPO by investing in one of the Oxford Tech VCTs or Hygea VCT

My charitable pledge is for £200 should Arecor increase to 325p/share by December 31st 2021 (a 30% increase from the IPO price). I feel reasonably confident that I will need to get the cheque book out to fulfil the pledge

I am sandwiched between the presentations by Angle and Polarien, I hold both of those two, so I am looking forward to it.

The link to the agenda is below for anyone interested and there is a 70% off discount code ( TGDisc ) for anyone who wishes to attend

https://melloevents.com/investingoodhealth/


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