OXFORD TECHNOLOGY 2 VENTURE CAPITAL TRUST PLC

Company Registered Number: 3928569

Annual Financial Statements

For the Year Ended 28 February 2021

OXFORD TECHNOLOGY

VENTURE CAPITAL TRUST PLC

Annual Financial Statements

For the Year Ended 28 February 2023

Company Registered Number

3928569

Table of Contents

About Oxford Technology 2 Venture Capital Trust Plc

Investment Strategy

Financial Headlines

Strategic Report

Chairman’s Statement

Business Review

Investment Manager’s Review

Investment Advisor – Oxford Technology Management Ltd

Board of Directors

Directors’ Report

Directors’ Remuneration Report and Policy

Corporate Governance Report

Statement of Directors’ Responsibilities

Report of the Independent Auditor

Income Statement - Combined

Balance Sheet - Combined

Statement of Changes in Equity – Combined

Statement of Cash Flows - Combined

Notes to the Financial Statements

Oxford Technology 2 Venture Capital Trust Plc - Notice of Annual General Meeting

Oxford Technology 2 Venture Capital Trust Plc Proxy Form

Shareholder Information

Company Information – Directors and Advisers

About Oxford Technology 2 Venture Capital Trust Plc

VCTs were introduced by the UK Government in 1995 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 Capital Trust Plc (

the “Company”, “

OT2VCT

”

) 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. On 30 June 2022, the

other three Oxford Technology VCTs (Oxford Technology Venture Capital Trust Plc (“OT1VCT”), Oxford

Technology 3 Venture Capital Trust Plc (“OT3VCT”) and Oxford Technology 4 Venture Capital Trust Plc

(“OT4VCT”) (and collectively the “Target VCTs”) merged with the Company (“the Merger”). Immediately

following the Merger, the Company had total net assets of more than £10m. The Company sought to raise new

funds for investment in the leisure sector though an offer for subscription (“Offer”

) during the financial year

promoted by Edition Capital Investments Limited (“Edition”), but it was not possible to raise

enough

investment to provide the Leisure Share Class with sufficient scale, and the Offer was therefore withdrawn.

The Company is managed by OT2 Managers Ltd with services subcontracted to Oxford Technology

Management Ltd (OTM).

Investment Strategy

The Company has built a balanced portfolio of investments with the following characteristics at the time of

initial investment (in the case of the OT2 Share Class, or at the time OT1VCT, OT3VCT and OT4VCT made

their original investments):

●

Unlisted, UK based, science, technology and engineering businesses; the Company now also has

investments in AIM listed Scancell Holdings Plc, Arecor Therapeutics Plc and Mirriad Advertising

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 OT2VCT is that it has focused on investing in early stage and start-up technology

companies.

Early stage companies are those which have received 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 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 to a shareholder’s overall portfolio

by providing exposure to a different risk/reward profile from mainstream markets.

The full investment policy is included in the Business Review.

OT2VCT has been approved as a VCT by HMRC throughout the year and continues to comply with all

statutory requirements.

Financial Headlines

OT1 Share Class

figures extracted from the unaudited Interim Report issued by Oxford Technology VCT Plc dated 21 April 2022

** The EPS pre merger figure here covers the 4 months of trading by Oxford Technology VCT Plc to 30 June 2022

*** Both Basic and Diluted

OT2 Share Class

12 Months Ended

28 February 2023

12 Months Ended

28 February 2022 *

Net Assets At Period End

£2.46m

£2.32m

Net Asset Value (NAV) Per Share

45.3p

42.7p

Cumulative Dividend Per Share

(including 55.0p pre the merger

with OT2 VCT)

55.0p

Total NAV Return Per Share

(including pre merger dividends)

100.3p

97.7p

Share Price At Period End

(Mid-Market LSE)

25.0p

27.5p

Earnings Per Share ***

- pre merger

- post merger

1.5p **

1.1p

(7.0)p

n/a

Year Ended

28 February 2023

Year Ended

28 February 2022

Net Assets At Period End

£1.34m

£1.70m

Net Asset Value (NAV) Per Share

25.1p

32.0p

Cumulative Dividend Per Share

22.5p

Total NAV Return Per Share

47.6p

54.5p

Share Price At Period End

(Mid-Market LSE)

25.0p

26.5p

Earnings Per Share

(Basic and Diluted)

(6.9)p

7.2p

OT3 Share Class

figures extracted from the unaudited Interim Report issued by Oxford Technology 3 VCT Plc dated 21 April 2022

** The EPS pre merger figure here covers the 4 months of trading by Oxford Technology 3 VCT Plc to 30 June 2022

*** Both Basic and Diluted

OT4 Share Class

figures extracted from the unaudited Interim Report issued by Oxford Technology 4 VCT Plc dated 21 April 2022

** The EPS pre merger figure here covers the 4 months of trading by Oxford Technology 4 VCT Plc to 30 June 2022

*** Both Basic and Diluted

12 Months Ended

28 February 2023

12 Months Ended

28 February 2022 *

Net Assets At Period End

£2.11m

£2.57m

Net Asset Value (NAV) Per Share

33.7p

41.1p

Cumulative Dividend Per Share

(including 42.0p pre the merger with

OT2 VCT of which 6.0p was paid in

the 12 months ended 28 February

2022)

42.0p

Total NAV Return Per Share

(including pre merger dividends)

75.7p

83.1p

Share Price At Period End

(Mid-Market LSE)

26.0p

41.3p

Earnings Per Share ***

- pre merger

- post merger

0.6p **

(8.0)p

5.3p

n/a

12 Months Ended

28 February 2023

12 Months Ended

28 February 2022 *

Net Assets At Period End

£3.22m

£4.58m

Net Asset Value (NAV) Per Share

29.7p

39.8p

Cumulative Dividend Per Share

(including 48.0p pre the merger with

OT2 VCT)

48.0p

Total NAV Return Per Share

(including pre merger dividends)

77.7p

87.8p

Share Price At Period End

(Mid-Market LSE)

24.0p

25.0p

Earnings Per Share ***

- pre merger

- post merger

(0.4)p

(10.0)p

13.4p

n/a

Strategic Report

The Strategic Report has been prepared in accordance with the requirements of Section 414C of the Companies

Act 2006 and the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2014.

Its purpose

is to inform shareholders of the progress 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

6), which looks at future prospects for the

Company, a Business Review (page 16), which includes analysis of the principal risks, and the Investment

Manager’s

Review (page 24

), which looks at the performance of the Company’s investments over the past

year.

The Company’s objective is to maximise shareholder value and so we continue to work with our investee

companies to help them succeed and to seek exits as and when appropriate.

The aim is to build shareholder

value and distribute one-off payments to shareholders as and when exits are achieved whilst retaining sufficient

resources to continue to support other existing investees. These distributions will be made via dividend

payments or, if it is considered to be in shareholders’ interests, using other mechan

isms such as buybacks (e.g.

a tender offer).

Chairman’s Statement

This is my first annual report since the merger of your Company with the other three Oxford Technology

VCTs. I would like to welcome new shareholders to Oxford Technology 2 VCT Plc. You will see the results

of your former companies shown as separate ring-fenced and quoted classes.

The last year has been a transformational period for your Company:

•

The merger has been successfully completed, creating future savings for shareholders, and helping to

provide some greater longevity for shareholders in each Share Class. This reduces the risk of a fire

sale in the future should individual Share Classes make an exit and pay significant dividends. It also

provides an important benefit for those shareholders who have deferred gains associated with their

holdings of OT1, OT2 and/or OT3 shares.

•

The launch of an offer for subscription in a new class of Leisure Shares under a new Manager, Edition,

was approved by shareholders and a prospectus issued at the expense of Edition. Unfortunately the

economic climate proved difficult to raise sufficient funds in a timely manner and so the offer was

withdrawn.

•

During the year, the Company (with court approval) cancelled certain reserves which substantially

increased distributable reserves (from which dividends can be paid in the future), as approved by

shareholders at the general meeting in June 2022.

The world is a much-changed place compared to 12 months ago. Not only have we lost a greatly loved Queen

but we have had three Prime Ministers with substantially different economic agendas.

As a Board we are

encouraged that government growth plans still appear to include a focus on small businesses, which sit well

with VCT investments. We are very pleased that the government gave an early announcement that it remains

supportive of VCTs and sees the value of extending them in the future beyond the current 2025 VCT sunset

clause expiry date. We now await final details of the legislation, although the new agreement between the UK

and EU known as the Windsor Framework, published on 27 February 2023, is considered to remove any

potential barriers in the government progressing this.

The period under review has included some extraordinary economic shocks. An economy struggling to recover

after the response to Covid-19 has been dealt a body blow by rampant inflation arising from multiple factors,

including unprecedented increases in energy prices. This will likely continue to be exacerbated by knock-on

effects impacting the cost of food, fertilizers, raw materials and labour. Supply chains also have not fully

recovered from the upheavals of the last few years. It is also unclear how geopolitical events including the war

in Ukraine will unfold from here. All this has led to both increasing interest rates and market volatility and

–

post period end

–

a banking crisis.

Your Company’s investments, both quoted and unquoted, have not been immu

ne to this economic climate.

Further details on our results and investee companies follow in later sections. It is against this background that

I am pleased to present the audited results for both your Company and each Share Class as at 28 February

2023.

Merger

As we have reported previously, the Merger completed on 30 June 2022, when OT2VCT took on the assets

from its sister companies OT1VCT, OT3VCT and OT4VCT, following a resounding endorsement of the

merger plans by shareholders of all four companies.

The Company’s asset base has increased from £1.7m at the start of the period to £9.1m at

28 February 2023.

It now has 4 distinct share pools - one representing the original ordinary share class now renamed OT2, and

three additional ones to segregate the assets taken on from the Target VCTs (the OT1, OT3 and OT4 share

pools). Most of the reporting for these new share pools will need to be compared with the values as taken on

by OT2VCT, rather than the costs when the investment was made in the original Target VCT, but we are also

providing information incorporating some historic data as well as we believe this will help better

understanding.

The Merger was designed to preserve the economic value of each

of the original VCT’s assets

for the benefit

each company’s

existing shareholders whilst reducing operating costs, by ring fencing each of the four

portfolios. By sharing the costs of the Merger between all four of the Oxford Technology VCTs (OTVCTs),

as well as Edition, it has been possible to off-set the otherwise and hitherto prohibitive cost of combining the

VCTs. Not only does the Company now have greater critical mass, the operating costs for each share class

have reduced and the Company can continue to meet all the VCT Qualifying Test requirements, which were

becoming increasingly difficult with the reducing size of the separate VCTs.

The Company now has 27,844,888 shares in total, following the issue of 5,431,655 new OT1 ordinary shares

of 1p each, 6,254,596 new OT3 ordinary shares of 1p each and 10,826,748 new OT4 ordinary shares of 1p

each (including the existing 5,331,889 OT2 ordinary shares).

The costs of the Merger were in line with expectations. The costs attributed to the Target VCTs were charged

before the assets were merged with OT2; those related to the OT2 share class are included in these figures and

were less than 1p per OT2 Share.

Proposed Offer with Edition Capital Investments Limited

Shareholders will also be aware that Edition were seeking to raise funds for a fifth share pool, focussed on the

leisure sector under an offer for subscription launched on 18 May 2022

(“Offer”)

. The Board was disappointed

to have to announce on 16 February 2023 that it had withdrawn the Offer before any Leisure Shares could be

issued.

The Board had been in regular contact with Edition,

the Offer’s promoter, since the Offer was

first launched.

Edition had been confident that sufficient funds could be raised in the tax year to launch the new Leisure Share

Class. However, as the tax year end approached, it became less certain that sufficient funds could be raised in

a timely manner (and in particular before 5 April) for Edition to be able deliver its investment strategy for the

VCT, especially given the large amount of capacity that remained in the wider VCT marketplace, particularly

from established players. In order to ensure investors were not unfairly impacted by this uncertainty, the

Directors decided to withdraw the Offer.

The Board is disappointed that it has not been able to further expand the asset base of the Company at this

time, which has long been one of its stated objectives. The Merger has left the Company in a much stronger

position to successfully allot additional shares in due course. Had the new Leisure Share Class been issued,

there would have been a further step reduction in costs payable by the existing Share Classes, which will no

longer happen in the short term.

As a result of the withdrawal of the Offer there has been no change of manager, nor name change of the VCT

and Oxford Technology Management Limited (OTM) will continue to advise the Board under the current

agreements. The Company did not incur any costs related to the Offer

–

these were all paid for by Edition.

Last year, I set out in detail the further rationale for seeking to find partners interested in using the existing

VCT structure to launch their own share offering. It would provide longevity for the individual portfolios such

that the risk of ‘fire sale’ exits (due to these individual portfolios become sub

-scale) is substantially reduced.

Furthermore, it has been clear for some years that OTM do not consider VCTs to be the most suitable vehicle

for them to invest small sums in high risk/reward start-ups, their area of interest and expertise, and hence we

would like to find a manager capable of and interested in both raising new funds in a VCT structure and also

taking over the operating management of the existing portfolio.

The Board still believes that a future offer (i.e. raising new VCT funds in a new share class) with either Edition

or another manager remains the way forward, and have restarted discussions. This could allow the further cost

savings previously outlined for existing shareholders whilst the portfolios continue to mature before ultimate

asset realisations and distributions to shareholders. Any potential future offer would require the advance

appr

oval of the Company’s shareholders

, and it is far from certain that such a partner can be found.

Results and Dividend

Across the whole portfolio, three investments (Arecor Therapeutics plc ("Arecor"), Scancell Holdings Plc

(“Scancell”) and STL Management Limited (“Select Technology”)) represent

over 90% of the overall portfolio

value. Our two quoted biotech companies, Scancell and Arecor, both have quite volatile share prices, as the

sector has been out of favour with investors with market antipathy to small healthcare firms in recent months.

Scancell’s share price

at 28 February 2023 was above both its February 2022 valuation and that at the time of

the merger, in part due progress in its clinical trials. Despite also making significant commercial progress,

Arecor’s share price is lower than both February 2022, and the Merger value. I believe this is largely due a

lack of liquidity. Given their volatility and their significance on the respective portfolios, the impact of changes

in their share prices is illustrated below.

It is not our policy to update the market following each of these fluctuations unless there are considered to be

abnormal events (e.g. the sale of a significant holding). Your Board therefore recommends that shareholders

or prospective shareholders keep both the Scancell and Arecor share prices under review and consider their

impact on the Share Class NAV per share before taking any action in relation to an existing or prospective

holding in that Share Class.

Select Technology continues to make progress with its new suite of products, and sales are up year on year.

However, due to the current macro-economic environment, particularly in terms of the cost of living and its

potential impact on trading and profitability, your Board has deemed it prudent to apply a (hopefully) short

term 20% reduction to some of the revenue multiples it has used historically when valuing the unquoted trading

companies (to recognise that trading conditions and margins are likely to suffer significant short term negative

pressures).

This discount will be reviewed regularly.

The net asset value (NAV) per

OT1

share at 28 February 2023 was 45.3p, which compares to the merger value

of 44.2p per OT1 share, and the unaudited NAV per share in Oxford Technology VCT of 42.7p at 28 February

2022. The portfolio is dominated by Select Technology and Scancell (representing more than 86% of the

NAV), with three other holdings. For every 1.0p change in Scancell’s bid price, the NAV moves by about 1.0p

per OT1 share.

The NAV per

OT2

share has decreased from 32.0p at 28 February 2022 to 25.1p as at 28 February 2023. The

portfolio is dominated by Arecor, Select Technology and Scancell (representing nearly 86% of the NAV), with

four other holdings. For every 10p change in Arecor’s bid price, the NAV moves by about 0.5p per OT2 share,

and for every 1.0p change in Scancell’s bid price, the NAV move

s by about 0.2p per OT2 share.

The NAV per

OT3

share was 33.7p at 28 February 2023, which compares to the merger value of 41.7p per

OT3 share, and the unaudited NAV per share in Oxford Technology 3 VCT of 41.1p at 28 February 2022. The

portfolio is dominated by Arecor and Scancell (representing 89% of the NAV), with six other holdings. For

every 10p change in Arecor’s bid price, the NAV moves by about 0.73p per OT3 s

hare, and for every 1.0p

change in Scancell’s bid price, the NAV also moves by about 0.73p per OT3 share.

The NAV per

OT4

share was 29.7p at 28 February 2023, which compares to the merger value of 39.7p per

OT4 share, and the unaudited NAV per share in Oxford Technology 4 VCT of 39.8p at 28 February 2022. The

portfolio is dominated by Arecor and Select (representing 83% of the NAV), with eight other holdings. For

every 10p change in Arecor’s bid price, the NAV moves by about 0.75p per OT4 share.

No dividends were paid during the period on any of the share classes, although 685,198 shares were bought

back by Oxford Technology 4 VCT before the merger took place, costing £232k and one shareholder (holding

5,000 shares) exercised his right to dissent at the time of the merger and received a cash payment from the

liquidator (based on an estimated break value which was significantly below the prevailing NAV per share)

rather than shares in the new share class.

Portfolio Review

The portfolios across all 4 share classes continue to develop.

No investments have been made in any of the

share classes since 28 February 2022, although the Company did take on the investments from the Target

VCTs as a result of the Merger. The OT1 Share Class sold 219,048 Scancell shares during the period for

liquidity purposes.

Arecor

is the largest holding in each of the OT2, OT3 and OT4 Share Classes. It is a leader in the development

of innovative formulation technology that enables 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. It continues to make good commercial and technical progress and has

announced new partnerships with as yet unnamed Top 5 Pharma companies. Its various partnered programmes

are progressing well.

A Phase 1 clinical trial for AT278, an ultra-concentrated (500U/mL) novel formulation of insulin demonstrated

faster insulin absorption with an accelerated pharmacokinetic (PK) and pharmacodynamic (PD) profile

compared to gold-standard insulin NovoRapid® despite a 5-fold increase in concentration. Since the year end,

a second Phase 1 trial has commenced. A Phase I clinical trial of AT247, an ultra-rapid insulin to be delivered

by continuous subcutaneous infusion via insulin pump over a period of three days, has also begun.

This is

expected to provide insulin users with a closed loop process requiring no need for user input before or after

meals.

The commercial relationship with Hikma has developed well.

Arecor developed a formulation AT307, a

ready-to-

use (“RTU”) injectable medicine based on an existing Hikma therapeutic

: Hikma have adopted the

product and triggered a stage payment to Arecor.

A second product AT282 has been returned to Arecor, who

are now free to seek an alternative licencing partner.

Tetris Pharma Ltd, a subsidiary of Arecor acquired in August 2022, has launched Ogluo® (a glucagon prefilled

autoinjector pen) in Germany and Austria as a treatment for severe hypoglycaemia in children and adults living

with diabetes, both significant diabetes markets and representing the first launch of Ogluo® in the European

Union.

Arecor

’

s share price however has not reflected all this progress, sitting at just 240p at 28 February 2023

(although still up from its float price in June 2021 of 226p). It was at 350p at both 28 February 2022, and at

the time of the Merger. The Board believes one of the issues is a lack of liquidity in the stock, but currently

life science stocks are relatively unfavoured since the end of the Covid bounce.

Select Technology

is the largest holding in the OT1 Share Class.

Founded in 1981, it has gone through various

reinventions. Its early hardware markets

–

such as specialist archiving photocopying technology

–

are a thing

of the past.

Now in its fifth decade, Select Techno

logy’s business model has proven to be resilient: it distributes

high quality document management software via a carefully nurtured network of global channel partners.

Trading has returned to somewhat approaching normality after the significant impact of various disruptions in

recent years.

The most recently completed full year of trading (to 31 July 2022) was up 25% on the previous

12 month period, and the company has subsequently also improved both its top- and bottom-line H1

performance compared to the

previous period.

Select Technology’s core trio of third

-party products (PaperCut,

Foldr and Square9) help end customers operate more efficiently, so it is not unreasonable to expect a degree

of trading resilience, but

–

like all businesses

–

Select Techn

ology’s industry is not free of risk.

Our valuation methodology for this investment is based on a sales multiple.

The return to more normal trading

conditions is welcome.

OT2VCT received an increased dividend from Select Technology in February 2023

compared to the aggregate amount received in February 2022 by the four Share Classes. Alex Starling has

been a director of Select Technology since August 2021 and represents the

Company’s

interests as we seek to

maximise shareholder value. As at 28 February 2023, the various Share Classes own 30.0% (OT1), 7.4%

(OT2), 2.8% (OT3) and 18.4% (OT4) of the Select Technology.

VCTs are not allowed to control investments

they hold

–

following the Merger, the Company now owns 58.6% of Select Technology, and has a year to

reduce the level of control to 50% or less. The Articles of Association of Select Technology are in the process

of being changed (and will be completed before 30 June 2023, the anniversary of the Merger) such that

OT2VCT and any concert party shareholders’ (such as those with a connection to Oxford Technology

Management) nominal value, voting rights, rights to dividends and rights on a return of capital will have been

reduced to no more than 50% to ensure ongoing compliance with VCT Rules.

Scancell

is an AIM listed clinical stage biopharmaceutical company that is leveraging 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 utilising its four technology platforms: Moditope® and ImmunoBody® for vaccines and

GlyMab® and AvidiMab® for antibodies.

Scancell is currently your Company's third largest single investment. Significant clinical progress has been

made. Modi-1 entered Phase I/II trials in four different types of cancer and is showing early signs of efficacy;

further data will become available this year. Sc

ancell’s Covidity trial completed successfully but will not be

taken further by the company itself. The phase II SCIB1 trial in combination with checkpoint inhibitors

continues with completion scheduled next year. In October 2022, Genmab effectively validated the GlyMab

platform when it secured the rights to develop one of the preclinical mAbs. Genmab paid $6m up front. There

are potential future milestones of up to $208m for each product, up to a maximum of $624m plus royalties.

Scancell's management team was refreshed by the appointment of a new non-executive chairman Jean-Michel

Cossery who has extensive large pharma senior management experience. A new Business Development

Officer is awaited.

Scancell’s share price has seen significant vo

latility fluctuating for most of the year between 11p and 29p

before closing at 17.5p. Clinical results and fundraising are likely to influence the share price in the near term.

I remain positive about Scancell’s potential for treating otherwise untreatab

le diseases.

ImmunoBiology Limited (“

ImmBio

”) was founded to develop vaccines that engage dendritic cells based on

the discovery of the role that Heat Shock Proteins play in activating the immune system, in particular T cells.

The company has programmes developing vaccines against Tuberculosis, Meningitis and Pneumonia. The core

technology of ImmBio has been moved to Liverpool University to reduce costs whilst the technology transfer

to ImmBio’s licensee China National Biotech Group continues. Since the move, Liverpool University 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 finished in April 2022 and a second grant has been

received for a clinical trial in Malawi to investigate whether its vaccine could prevent or reduce carriage of

pneumococcus in the nose. Preventing carriage is key to restricting the spread of the disease. PneumoVax

should be able to block the activity of most if not all strains of Pneumococcus, whilst the current vaccines only

deal with a more restricted number of strains and are not effective in stopping carriage.

Interest in whole cell vaccines was limited during the Covid crisis, with the focus on synthetic vaccines which

could be rapidly developed, tested and deployed.

However, in recent months the interest 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 potential partners.

ImmBio

’

s work and experience

with T cells and their importance in immune responses had previously garnered little attention from larger

pharmaceutical companies: it is hoped that the realisation of the importance of T cells during the Covid

pandemic might mean they can attract more attention in the future. The Directors considered there was no

rationale to change

ImmBio’

s valuation from that at 28 February 2022 (which was the same as at the time of

the Merger).

Diamond Hard Surfaces

Limited (“DHS”) has developed an ultra

-hard diamond-like coating which provides

unusual properties to coated objects, including very high wear resistance and the ability to spread heat more

evenly.

The coating has attracted interest from a wide variety of companies with numerous small but repeat

orders being placed, but none have grown to significant volumes.

Ongoing development on the production

facilities is driving down costs and ensuring margins are strong. The use of the coating for heat sink

applications is also attracting attention, and DHS is hopeful that this will provide it with the opportunity to

shift some of its activity from custom coating to proprietary products. DHS is only held by the OT4 Share

Class.

The OT1VCT was one of the original investors in

BioCote

Limited (“BioCote”) when it was established in

1997. Since then, it has grown from a supplier of patented antimicrobial powder coatings to a market leading

antimicrobial technology partner. Trusted by leading brands, manufacturers and product innovators worldwide,

BioCote’s technology is proven to reduce bacteria, mould and fungi that can cause material degradation, odours

and staining by up to 99.99%. BioCote has continued to make steady progress in its markets. BioCote has

been paying regular dividends and this is expected to continue. BioCote is only held by the OT1 Share Class.

Dynamic Extractions

Limited (“DE”) is the owner of a unique technology

, high performance counter current

chromatography (HPCCC) which enables individual chemicals in a mixture to be separated more efficiently

than is possible by other methods. DE equipment can isolate and extract target compounds from gram to

kilogram quantities. DE supplies equipment to amongst others BioExtractions (Wales) Ltd. which has a 10,000

sq/ft facility operating DE HPCCC systems. They develop isolation and separation strategies for natural

products, peptides and large synthetic molecules.

Separating multiple target compounds in a single pass makes

the whole process both cost and time effective. DE is only held by the OT4 Share Class.

After having had a difficult time during Covid-19,

Getmapping

Ltd (having changed its name from

Getmapping plc in early 2023, “Getmapping”) has made reasonable progress, continuing to execute some key

large-scale contracts, as well as signing up more early adopters of GSaaS, its new Geospatial-as-a-Service high

resolution city content program. The business has appointed a new part-time CFO who has been instrumental

in streamlining the cost base and positioning the business for a shareholder-led funding round: Getmapping

has set out to raise up to £1m in equity and expects some of this to be raised from shareholders, board members

and certain external parties as an Advanced Subscription Agreement (ASA, an equity instrument at an as-yet-

to-be-determined share price).

This will enable Getmapping to accelerate the retirement of some expensive

legacy debt taken on during the disrupted trading years between 2020 and 2022.

With a combination of accelerated debt retirement, the successful execution of existing contracts both in the

UK and Africa (Rabobank being a notable customer) and growth of its high margin recurring revenue GSaaS

product, the prospects for Getmapping are looking more promising than in recent years. Getmapping is only

held by the OT1 Share Class.

OT2VCT cannot participate in the funding round due to VCT Qualifying Rules

–

the ASA is not eligible for

EIS or VCT relief due to the age of the company.

Getmapping may offer this ASA (or a subsequent tranche

of a funding round) to external investors, which may be of interest to individual OT2VCT shareholders, in

which case they should get in touch with Getmapping directly.

Alex Starling joined the board of Getmapping

in November 2022 and

–

with the permission of the OT2VCT board

–

intends to participate in this Getmapping

ASA.

Insense

imited (“Insense”) has been developing a treatment for fungal nail disease which could be sold in

pharmacies and which could potentially capture a large share of this large market.

The treatment involves

mixing two gels on the toes which then effect the treatment.

Whilst stability trials seemed to show promising

results, the company’s primary backer has advised he is unable to continue to support Insense, and the business

has been put up for sale. Some interest is being shown in some of the intellectual property, but at this time no

deal has been finalised.

Given the current challenging market conditions, we have decided to make a full

provision against our investment.

The first instalment of deferred consideration following the sale of

Ixaris

last year was received in line with

expectations (of £69k) by the OT3 Share Class. However, HMRC have challenged the basis of the R&D tax

credits that were expected to be received, and as a result we have reversed the remaining accrual of £38,000

for any further expected deferred income until this situation becomes clearer. The Investment Adviser will

continue to liaise with the other selling shareholders of Ixaris to seek the recovery of further funds.

The three management companies that had been required previously (OT1 Managers Ltd, OT3 Managers Ltd

and OT4 Managers Ltd) (and which had transferred across to Oxford Technology 2 VCT Plc as part of the

Merger) were placed into members voluntary liquidation during the period, as they were no longer required.

The companies were dissolved in 24 January 2023. For administrative simplicity, the self-managed structure

including OT2 Managers Ltd is being retained for the time being.

The Directors, along with the Investment Adviser, Oxford Technology Management (OTM), continue to take

an active interest in the companies within the portfolios, both to support their management teams 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 Directors 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 website at

http://www.oxfordtechnologyvct.com

Risk Factors

The

Company continues to face material market volatility. Inflation has recently hit double figures

–

it is

unclear to what extent the UK and the wider world economy is in a fit state to thrive in such a challenging

environment. Many Western countries have incurred substantial levels of debt related to their response to

Covid-19.

The overall cost

–

in terms of economic impact and public health

–

may well still be being

underestimated. The overall geopolitical situation remains tense and confusing

–

there is much uncertainty

around outcomes and the subsequent impact on strategic relationships between the world’s superpow

ers. More

details on the some of the risks the Company faces are on pages 18-19.

Thankfully OT2

VCT’s combined

portfolio

–

despite being concentrated

–

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 and Market Changes

As I outlined in our half year report, the Merger has relieved some of the challenges of managing a very small

company as regards meeting all the conditions laid down by HMRC for maintaining approval as a VCT, as all

VCT tests are measured on a company wide basis.

However, we will still be restricted from making follow on

investments in most of the existing portfolio, should the opportunity and/or need apply. There have been no

recent changes to VCT legislation which could have potential impact on either the VCT or its investee

companies. In 2015, a sunset clause for VCT income tax relief was introduced which meant that income tax

relief would no longer be given to subscriptions made on or after 6 April 2025, unless the legislation was

renewed by HM Treasury. In the Autumn Statement on 23 September 2022, the government announced its

intention to extend the legislation, safeguarding venture capital schemes beyond 2025. The Directors are

encouraged by this development but await fuller details, and the Board continues to monitor this risk and the

potential impact on the Company.

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 2023, the HMRC value of qualifying investments of our portfolio was 90%.

Cost Control

Your Board have done everything possible to keep costs to a minimum. Our investment management and

Directors’ fees and auditors’ remuneration are amongst the lowest in the VCT industr

y. The Merger has

allowed the elimination of certain fees (mainly regulatory) that were charged to each VCT historically. Now

there is just one invoice from each of the LSE and FCA, and for the same amount as they charge for single

entities. These fees continue to increase, so it is at least comforting we only need to pay once, and not four

times! There is now only one tax return needed, one set of filings and the audit arrangements are simplified.

Similarly, as outlined below, we now only issue RNS for one company, rather than four. There are also smaller

economies on other cost items, such as registrar fees, now there is just one AGM rather than four, for example.

Clearly, some further savings may be possible, should we successfully manage to fund raise in the future, and

there is another share class to share part of the overhead base, or a new manager agrees to some concessions

in return for accessing the VCT market.

We continue to encourage all of our investors to switch to receiving updates from the Company via e-mail and

documents in soft copy, which also ensures you receive documents more quickly. This both saves the Company

money, and is more environmentally friendly. If you currently receive paperwork from us but are willing to

be notified by email that documents are available for viewing online, please contact the registrars, whose

details are on page 96.

Share prices and RNS

As a result of the M

erger, the old stock exchange “tickers” are no longer valid for the Target VCTs. Instead,

shareholders can see market prices for the new Share Classes using OT1, OT3 and OT4 respectively. The OT2

Share Class will continue to use OXH, so that historic data can still be accessed. All RNSs will only be issued

under the OXH banner, irrespective of which Share Class is referred to.

Environmental, Social and Governance (ESG)

Whilst many of the requirements under company law to detail ESG matters are not directly applicable to the

Company, the Board is conscious of its potential impact on the environment as well as its social and corporate

governance responsibilities.

Furthermore, the Investment Adviser takes ESG considerations into account

when investing.

The future FCA reporting requirements consistent with the Task Force on Climate-related Financial

Disclosures that commenced last 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 virtual and physical events last summer to give shareholders an opportunity to

discuss the Directors’ plans for the VCT and returning cash to investors.

We are very grateful to t

hose

shareholders who attended these meetings (whether in person or remote) and those who engaged by email.

This year, we plan to revert to holding a more extensive face-to-face meeting at 2pm on Wednesday 19 July

2023, including the formal business of the AGM. There will also be a chance for shareholders to ask questions,

and an opportunity for informal discussion with the Board and OTM. Light refreshments will also be offered

at the end of the formal session. If you are unable to attend,

please return your proxy forms by 2pm on 17 July

2023 (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

[email protected]

to help us with numbers and in case there are changes to

arrangements that need to be communicated at short notice

Regarding the various proposed resolutions:

•

Resolution 1 and 2

: These resolutions seek approval of the Company’s Annual Report and Accounts

for the period ended 28 February 2023

and the Directors’ Remuneration Report contained therein. The

Directors are obliged to lay the Directors’ Annual Report and Financial Statements and the auditors’

report thereon for the year ended 28 February 2023 before shareholders at a general meeting. The vote

on the Remuneration Report is advisory and the Directors’ entitlement to remuneration is not

conditional on this resolution being passed.

•

Resolutions 3

–

(inclusive): These resolutions 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

LLP (“

Hazle

woods”)

auditors of the Company and to authorise the Directors to determine their remuneration. We have been

pleased with the support provided by Hazlewoods since their appointment last year.

•

Resolution 8

: We are putting forward a resolution to vote for the continuation of the VCT, as in

previous years. The Directors do not consider this to be an appropriate time to wind up the VCT. As

we have set out, we believe the VCT is an effective and tax efficient structure to hold your assets and

following the Merger, the unit holding costs have also been reduced.

•

Resolutions 9 and 12

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

2,784,486 shares in the capital of the Company on a non-rights issue basis. Despite its small size, your

VCT remains in reasonable structural shape but events of the last few years have shown that it 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 without pre-emption rights and this has always

been approved.

This year, we would like

–

with our shareholders’ approval –

to set the current

maximum level to 10% of each Share Class to provide flexibility, if ever required, to raise money

more cheaply and at short notice.

This would enable to us to support investee companies (within the

VCT rules). Although at the moment we have no plans to raise additional capital or to conduct a

possible placing 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.

•

Resolution 10

: We are putting this standard resolution forward to give Directors the permission to

buy back shares in any Class of

the Company should this be in Shareholders’ best interests –

there is

no current intention or plan in place to use the powers granted by this resolution. There is more detail

about this resolution on page 44.

•

Resolution 11

This resolution is merely to formalise the naming convention we have adopted for the

OT2 Share Class (currently these shares are officially known as Ordinary Shares).

The Notice convening the 2023 AGM of the Company is set out at the end 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 vote

on the AGM resolutions via your proxy forms and thank you all for your ongoing support.

New Articles, Investment Policy, Investment Management Agreement and Reduction of Capital

At the general meeting on 20 June 2022, shareholders voted overwhelmingly in favour of the various

resolutions that were pre-cursors for the Merger and to have enabled the issue of Leisure Shares. Full details

were in the circular dated 18 May 2022. As a result, the new Articles now apply (the key difference from the

old Articles being the clauses relating to the extra share classes that have been created).

The new Investment Policy was also approved by shareholders at the same meeting, and the revised policy is

re-produced verbatim on pages 19 and 20. The changes have provided for a more generic policy of investing

in unquoted companies, which was necessary both to enable the investments to be acquired from the Target

VCTs as part of the Merger, and to cover the new Leisure Share Class that was planned to exist going forwards.

A new investment management agreement, again approved by shareholders, also came into force at the time

of the Merger. Additional clauses were added to the OT2VCT agreements, which replicated the three separate

contracts that existed with OTM, linked to the Target VCTs. More details are shown on page 40.

Shareholders also approved at the same meeting the cancellation of certain reserves of the Company, which

was a pre-cursor to creating additional distributable reserves, which can be used amongst other things to pay

dividends and/or buy back shares in the Company. The reduction in capital became effective on 22 November

2022, following the confirmation by the

High Court of Justice of the cancellation of the sum standing to the

credit of the Company's share premium account and capital redemption reserve, which totalled £10,078,248.27,

and the subsequent registration of the Court Order at Companies House.

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 Board strongly recommends shareholders 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 (on page 95).

Outlook

Following the successful Merger with the other OT VCTs, our Company now has the critical mass we have

been seeking for a long time. We continue to believe your VCT is an appropriate structure to hold your

Company’s investments and we now have a larger asset base

over which to share the operating costs. We were

disappointed not to have achieved a further step change in the asset base with the issue of Leisure Shares, as

this would have enabled additional incremental savings to the costs incurred by the existing share classes. We

will continue to discuss the possibility of a future share offering with Edition, but will also re-engage with the

several partners that have approached us historically and recently, keen to establish a VCT offering. For the

moment, we continue as we are with OTM retained in an advisory role for the current investments.

Despite the buffeting caused by the knock on impacts of Covid, inflation and the war in Ukraine, I am pleased

to note that the portfolio has been resilient through this turbulent period.

The Board also believes that the

portfolio has valuable upside, but that time is still needed for it to reach those significant value inflection points,

whilst major investee company programmes reach maturity.

Your Board and Investment Adviser continue to work to best position the existing portfolio such that, when

valuations and liquidity allow, holdings can be exited and proceeds distributed to shareholders, whilst keeping

a keen eye on maintaining costs as low as possible in the interim.

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. If you have any immediate questions, please feel free to contact

me via

[email protected]

I look forward to updating shareholders further with our half-year results in November.

Richard Roth

Chairman

20 April 2023

Business Review

Company Performance

The Board is responsible for the Company’s investment strategy and performance.

The services regarding the

creation, management and monitoring of the investment

portfolio are subcontracted to OTM by the Company’s

Investment Manager, OT2 Managers Ltd. OTM is the Company’s AIFM.

There was a net loss for the period after taxation amounting to £1,876,000 (2022: profit of £381,000). The

income statement comprises income of £85,000 (2022: £4,000) received from investee companies, realised

losses on fair value of investment were £17,000 (2022: gains of £12,000), unrealised losses on fair value of

investments of £1,699,000 (2022: unrealised gains of £425,000) and management and other expenses of

£245,000 (2022: £60,000). Whilst not including a full year for the OT1, OT3 and OT4 share classes, the

management and other expenses did include £44,867

which was the Company’s share

of one-off costs related

to the Merger.

The review of the investment portfolio (page 24) includes a summary

of the Company’s activities and the

Chairman’s Statement comments on future prospects.

The graphs below compare the NAV return of the OT2 Share Class from launch in 2000, and for the

OT1/OT3/OT4 Share Classes since the take on of the assets by the Company on 30 June 2022, with the total

return from the FTSE All-Share Index (which excludes dividends) over the same 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 qualifying 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 rebased to 100 at the start date of the Share Class.

Key Performance Indicators

The Board uses a number of

performance measures to assess the Company’s success in meeting its strategic

objectives.

The KPIs it monitors include:

KPI

Objective

Total Return (Net Asset Value

plus cumulative dividends

paid) per share (per Share

Class)

To provide shareholders with tax free capital gains via profitable exits

by investing its funds in a portfolio of primarily unquoted UK companies

which meet the relevant criteria under the VCT rules.

The total expenses of the

Company as a proportion of

shareholders’ funds

To maintain efficient operation of the VCT whilst minimising running

costs.

The total return for the each Share Class, as well as the earnings in the period, is included in the Financial

Summary on pages 4 and 5, and the change

in the total return is explained in the Chairman’s Statement

. No

dividend was paid or declared during the year by any of the Share Classes, although OT4VCT bought back

685,198 shares, for a cash outlay of £232k on 14 June 2022 immediately before the Merger (2022: there were

no dividends paid by OT1VCT, OT2VCT nor OT4VCT but OT3VCT paid a dividend of 6p per share, and

also bought back shares for £237k).

The Company was able to maintain an efficient operation of the VCT whilst minimising running costs as a

proportion of shareholder’s funds. Expenses of the

Company are capped by OTM at 3% of the opening net

asset value (but excluding Directors’ fees and any performance fee, and the cap also excludes corporate

expenses such as the costs of the Merger).

As part of the Merger discussions, it was agreed the opening NAV

for cost cap purposes for 2023 should include those NAVs of the Target VCTs at 1 March 2022 as well. The

total actual expenses (excluding Merger costs) for the 2023 year were 1.2% of opening net assets (1.8%

including Directors’ fees), (2022: pre

-merger 4.6%, 3.0% after cap and 6.2%, 4.5% after cap respectively).

The figures for the 2023 year need to be treated with caution, as they do not include costs for the first 4 months

of the year for the OT1, OT3 and OT4 Share Classes, but the Directors can confirm that the cost cap would

not have been breached in the current year, even if those figures had been included.

Viability Statement

In accordance with provision 30 and 31 of The UK Corporate Governance Code 2018 (“the UK Code”) the

Directors have assessed the prospects of the Company over a longer period than the 12 months required by the

“Going Concern” provision.

The Company

(and the Target VCTs) last raised funds in 2010, and so the

minimum five year holding period required to enable subscribing investors to benefit from the associated tax

reliefs has now passed. The Board regularly considers the Company’s strategy, including investor demand for

the Company’s shares, and a three year period is therefore considered to be an appropriate and reasonab

le 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 projections and found these to be realistic and

reasonable. The assets of the Company consist mainly of securities, three of which are AIM quoted: Scancell

is relatively liquid and readily accessible, as is the very small holding in Mirriad Advertising Plc

(“Mirriad”)

The shares in Arecor are still subject to orderly market provisions until early June 2023: whilst there is a market

in these shares, it is not overly liquid, and there is likely to be a significant spread should the Company wish

to realise to realise a sizeable portion of its holding.

Based on the above assessment the Board confirms that it has a reasonable expectation that the Company will

be able to continue in operation and meet its liabilities as they fall due over the three year period to 28 February

2026.

Principal Risks, Risk Management Objectives and Regulatory Environment

The Board carries out a regular review of the risk environment in which the Company operates, including

principal and emerging risks. The main areas of risk identified 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 Investment Adviser aimed to limit the risk

initially attached to the portfolio as a whole by careful selection, by carrying out due diligence procedures and

by maintaining a spread of holdings.

The Directors also consider timely realisation of investments. The Board reviews the investment portfolio on

a regular basis. As holdings are realised, and investments are no longer being made into new companies, the

portfolio will become more concentrated over time.

VCT qualifying status risk

–

The Company is required 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 investors being required to repay the initial income tax relief on their investment as

well as any previously deferred capital gains coming back into charge.

The Board keeps the Company’s VCT

qualifying status under regular review.

Qualifying investments can only be made in trading companies which fall within the following limits:

●

Have fewer than 250 full time equivalent employees (500 if a knowledge intensive company);

●

Have no more than £15 million of gross assets at the time of investment and no more than £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 first time subject to certain exceptions;

●

Have raised no more than £5 million of State Aided funds in the previous 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;

●

Not be in financial difficulty;

●

Be an unquoted company or listed 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 no

t 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 from investments which could be

regarded as lower risk.

The Board is satisfied that the Company’s investment policy is in line with this “risk

to-

capital” condition.

VCTs may not make investments that 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: Initially, 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 investments, which may include money market funds and other instruments

where the Board believes that the overall downside risk is low.

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 Compa

ny’s income and expenditure is denominated in sterling

and hence the Company has no direct foreign currency risk. The indirect risk results from investees doing

business overseas. The Company is financed through equity. The Company does not use derivative financial

instruments.

Regulatory risk

–

the Company is required to comply with the Companies Act, the rules of the UK Listing

Authority and United Kingdom Accounting Standards.

Breach of any of these might lead to suspension of

the Company’s Stock Exch

ange 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 monitoring 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 thus the price used for the valuation may not 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 include controls designed to ensure that the Company's assets are safeguarded

and that proper accounting records are maintained.

Geo-political and economic risks

–

the war in Ukraine, inflation and UK political and economic turmoil

continue to impact our investees. Post period end the initial stages of a banking crisis were nipped in the bud

but further rumblings continue. 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, and returns from, the Company’s shares.

Covid-19 risk

–

the knock on impacts of interventions are still being felt, and may continue to affect the

performance of some companies in which the Company has invested.

The Board seeks to mitigate the internal risks by setting policies, regular review of performance, enforcement

of contractual obligations and monitoring progress and 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 Managem

ent, Internal Controls and Related Financial and

Business Reporting.

Details of the Company’s internal controls are contained in the Corporate Governance

section starting on page 49.

Further details of the Company’s financial risk management policies are provided in

Note 15 of the Financial

Statements (page 86).

Investment Policy

Shareholders approved a change to the Company’s investment policy at the general meeting on 20 June 2022.

The change provides for a more generic policy of investing in unquoted companies and also better encompasses

the investments which were acquired from the Target VCTs as part of the Merger.

It also covers the various

different share class funds is exist (and

in the case of the Leisure Share class, what was envisaged to exist)

going forwards (each of which will be managed in accordance with the revised investment policy).

This is the

agreed Investment Policy in full:

The Company will target unquoted companies which meet the relevant criteria under the VCT Rules and which

it believes will achieve the objective of producing attractive income and capital return for Shareholders.

Qualifying Investments

At least the minimum required percentage of the Company’s assets will be invested in Qualifying Investments

as required by the VCT Rules.

Compliance with required rules and regulations is to be considered with all

investment decisions made. The Company is further monitored on a continual basis to ensure such compliance.

Permitted Non-Qualifying Investments

The funds not employed in VCT Qualifying Investments will be invested in Permitted Non-Qualifying

Investments as allowed by the VCT Rules. These will typically be cash deposits and investments in quoted

securities, investment trusts or OEICs.

Asset Mix

Specific share pools of the Company may have a focus on certain sectors according to the strategy of that

specific share pool.

The share pool for the Ordinary (or OT2) Shares and the new share pools for the OT1, OT3 and OT4 Ordinary

Shares will be significantly invested in established technology sector companies.

These share pools are in a

period of investment realisation but with no specified timing, therefore there may be the opportunity to make

additional investments.

In addition, the Company will establish a further new share pool that intends to invest in early stage, UK

leisure companies seeking an injection of growth capital to support their continued development. The funds

raised for this new share pool will be invested as required by the VCT Rules.

Any uninvested funds in any of the share pools will be held in cash and a range of permitted liquidity

investments.

Risk Diversification

Risk in the share pools for the Ordinary (or OT2) Shares and the OT1, OT3 and OT4 Ordinary Shares will be

spread by their investment in a number of different established companies.

Concentration risk fluctuates and

at times can be fairly high given investment realisations and the change to the value of individual companies

within each such share pool.

Risk in the new share pool for the Leisure Shares will be spread by investing in a number of different companies

focused on the leisure sector.

These companies will be at different stages of development and have different

target markets.

The Directors seek to control the overall risk of the share pools by ensuring that the Company has exposure

to a range of unquoted companies.

In order to limit concentration risk in the share pools that is derived from any particular investment, at the

point of investment no more than 15% of the Company by VCT value will be in any one company, as limited

by the VCT Rules.

The merger with Oxford Technology VCT Plc, Oxford Technology 3 VCT Plc and Oxford

Technology 4 VCT Plc will not be restricted by this requirement.

Borrowing

Whilst the Board does not intend that the Company will borrow funds (other than to manage short term cash

requirements), the Company is entitled to do so subject to the aggregate principal amount at the time of

borrowing not exceeding 25% of the asset value of the Company.

Changes to the Investment Policy

The Company will not make any material changes to its Investment Policy without Shareholder approval.

Key Information Document

The EU PRIIPs regulations came into effect in January 2018. The intent of the regulations is to increase

customer protection by improving the functioning of financial markets and in this instance through the Key

Information Document (“KID”) which provides shareholders with more information about the risks, potential

returns and charges within VCTs. Although well intended, there were widespread concerns about the

application of some aspects of the prescribed methodologies to VCTs. Specifically, there were concerns that:

the risk indicator in the KID (a number on a scal

e of 1 to 7, with 1 being “lower risk” and 7 being

“higher risk”) may have understated the level of risk; and

investment performance scenarios included in the KID may have indicated future returns for

shareholders that were too optimistic.

In what is o

ne of the first examples of the Financial Conduct Authority (“FCA”) confirming UK divergence

from EU rules following Brexit, revised requirements for what information should be included in a KID were

published in March 2022 and these came into full effect on 31 December 2022. Amongst other changes, these

revised requirements addressed both of the concerns highlighted above by:

stating that a VCT must have a risk indicator of 6 or 7 (on the same scale of 1 to 7);

replacing the investment performance scenarios included with text describing:

what the investment risks are and what an investor could get in return.

what could affect an investor’s return positively.

what could affect an investor’s return negatively.

As before, the Company is required to publish a KID and retail investors must be directed to this before buying

shares in the Company. The KID is published on the Company’s website

www.oxfordtechnologyvct.com

. The

KID has been prepared using the methodology prescribed in the FCA’s guidance.

The Board has produced a revised KID in line with the new Regulations. The Board recommends that

shareholders continue to classify VCTs as a high-risk investment.

Section 172(1) Statement

The Directors discharge their duties under section 172 of the Companies Act 2006 to act in good faith and to

promote the success of the Company for the benefit of shareholders as a whole as set out in the Business

Review from page 16.

As an investment company, Oxford Technology 2 Venture Capital Trust Plc has no

employees; however, the Directors also assessed the impact of th

e Company’s activities on other stakeholders,

in particular shareholders and our third-party advisers, as well as the portfolio of companies.

The Board’s decision

making process incorporates, as part of the Company’s investment policy and

investment objectives as set out on page 6

, considerations for supporting the Company’s business relationships

with the Investment Adviser, shareholders, advisers and registrar, independent financial advisers and the

impact of the Company’s operations on the community 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 service

announcements, interim and annual reports as well as regular correspondence with shareholders and their

advisers to address any queries that arise.

The Company also holds shareholder presentations at the AGM in order to engage directly with shareholders.

In 2022, we held both a physical shareholder meeting and a webinar via our Zoom platform. We were able to

welcome many shareholders and shareholders had the opportunity to submit questions.

We welcome any

feedback from shareholders on how they would like to see communication improved.

This year, we plan to

revert to holding a normal physical AGM in July, where we hope shareholders will have a better opportunity

to meet the Board and Manager. Any views which may arise are discussed by the Board and factored into any

decision-making and disclosed in annual and interim reports as appropriate. In addition, shareholders can

contact the Board and Investment Manager at any time via

[email protected]

. 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 Performance Indicators on page 16.

Investment Adviser

The Company’s most important business relationship is with the Investment

Adviser, 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 timetable agreed with the Investment Adviser which is discussed at each Board

Meeting. The Company and Investment Adviser also work together to maintain efficient operation of the VCT

as detailed in the Key Performance Indicators on page 16.

Portfolio Companies

The Company holds minority investments in all but one of its portfolio companies (the Company holds a

majority stake in Select Technology, but as described on page 10 the holding remains VCT Qualifying) and it

has appointed the Investment Adviser to manage the relationships with most of its investees. Alex Starling

sits on the boards of two investee companies (STL Management Ltd and Getmapping Ltd). While the Board

has little direct contact with the running of rest of the companies, the Investment Adviser provides updates on

the portfolio at least quarterly.

The Company made no purchases during the year and sold less than 2% of its

holding in Scancell for liquidity purposes. Neither the Board nor the Investment Adviser believed it was in the

best interests of all key stakeholders to do otherwise.

Environment and Community

The Company seeks to ensure that its business is conducted in 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 Adviser, 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.

Initiatives of the Investment Adviser designed t

o minimise its and the Company’s impact on the environment

include recycling and reducing energy consumption. More details of the work that the Investment Adviser has

done in this area are set out on page 41.

The Company utilises video conferencing facilities for the majority of Board meetings to avoid unnecessary

travel where possible to reduce our carbon imprint. The Board met virtually for all but one Board meeting

during the period. The Company also encourages shareholders to receive communications from the Company

electronically to reduce the impact of production and delivery of additional paper products.

Internal Control

The Directors are responsible for the Company’s system of

internal control. The Board has adopted an internal

operating and strategy document for the Company, which was updated during the year. This includes

procedures for the selection and approval of investments, the functions of the Investment Adviser and exit and

dividend strategies.

Day to day operations are delegated under agreements with the Investment Adviser who has established clearly

defined policies and standards. These include procedures for the monitoring and safeguarding of the

Company’s investme

nts and regular reconciliation of investment holdings.

This system of internal control, which includes procedures such as physical controls, segregation of duties,

authorisation limits and comprehensive financial reporting to the Board, is designed to provide reasonable, but

not absolute, assurance against material misstatement or loss. The Board has reviewed, with its Investment

Adviser, the operation and effectiveness of the Company’s system of internal control for the financial period

and the period up to the date of approval of the Financial Statements.

The Board has continued to prepare the Financial Statements in accordance with UK Financial Reporting

Standards rather than International Financial Reporting Standards. This is permitted 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 UK born 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. Upcoming regulation applicable from April 2023 will require a company

to report on a comply or explain basis against three key indicators: 40% of the board should be comprised of

women; one senior board position is held by a woman; and one director should be from an ethnic minority

background. Whilst not currently complying, the Board notes these proposals and the focus and emphasis on

diversity. The Board considers diversity when reviewing Board composition and has made a commitment to

consider diversity 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. The Board also supports the aims of the Hampton Alexander Report and the renewed focus

and emphasis on diversity in the AIC Code of Corporate Governance (the “2019 AIC Code”

) and in due course

will strive to comply with these 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 matters (including the impact of the Company’s business on the environment), employee,

human rights, social and community issues, including information about any policies it has in relation to these

matters and effectiveness of these policies.

Given the size and nature of the Company’s activities and the fact that it has no full

-time employees 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 where possible.

he Company has considered the Companies (Directors’ Report) and Limited Liability Partnerships (Energy

and Carbon Report) Regulations 2018, in relation to energy consumption disclosure, discussed in this Business

Review and also in the Directors’ Report.

Consumer Duty

The Directors have reviewed requirements in respect of Consumer Duty which come into effect on 31 July

2023 with the Investment Manager, and believe the Company is currently compliant. The Board will continue

to keep the new regulation under review.

Richard Roth

Chairman

–

20 April 2023

Investment Manager’s Review

OT2VCT was formed in 2000 and invested in start-up or early stage technology companies. During the last

financial year, the Company merged with the 3 other Oxford Technology VCTs and now has four different

Share Classes.

The remaining investments in the portfolio are shown in the tables in this report.

The ultimate outcome for investors will depend on how the remaining investments perform. In particular,

Select Technology, Scancell and Arecor still have the potential to deliver significant returns.

These three

investments make up more than 90% of the value of the combined investment portfolio.

Select has had growth

in sales, and both Arecor and Scancell are engaged in phase 2 clinical trials for the lead assets. The investments

with a residual value of over £100k are reported on in further detail here, and also in the Portfolio Review

section in the Chairman’s Statement, starting on page

On page 8 t

he Chairman’s Statement sets out the performance of each Share

Class and the respective

concentration of investments.

New Investments in the year

There were no new investments during the year, although following the merger, OT2VCT now has a number

of new investee companies in the OT1, OT3 and OT4 Share Classes.

Disposals during the year

The OT1 Share Class sold shares in Scancell during the year to repay intercompany loans and for liquidity it

had received to enable it to buy Arecor shares in 2021. There were no disposals by any other Share Class,

although the OT3 Share Class received further proceeds following the disposal of Ixaris in the previous year.

Valuation Methodology

Quoted and unquoted investments are valued in accordance with current industry guidelines that are 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 2023 and for the year then ended is summarised

as follows:

Type of Investment

By HMRC Valuation Rules

Actual

Target

VCT Qualifying Investments

90.0%

Minimum obligation:

80%

Non-Qualifying Investments

10.0%

Maximum allowed:

20%

Total

100%

The value used in the qualifying tests is not necessarily the original investment cost due to the complex rules

required by HMRC, therefore the allocation 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 eligible shares

–

Complied.

No more than 15% of the income from shares and securities is retained

–

Complied.

No investment constitutes 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 inco

me in the period has been derived wholly or mainly (70% plus) from shares or securities

–

Complied.

No investment made by the VCT has caused the company to receive more than £5m of State Aid

investment (£10 million for Knowledge Intensive Companies) 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 (the take on of investments as a result of the Merger does not count as new

investments).

Tables of Investments held by Company at 28 February 2023

Investment Portfolio

–

OT1 Share Class

* This is the original cost of investments extracted from the unaudited Interim Report issued by Oxford Technology VCT Plc dated

21 April 2022. This is to help shareholders understand how an investment has performed since it was originally acquired.

** This is the cost of investment at the time of the merger, and against which all future financial reporting by OT2 VCT is required to

be assessed.

*** £31k decrease in value for the period relates to share disposals and £179k to the increase in the AIM share price on the shares

still held at 28 February 2023 (relative to the comparative price at the time of the Merger).

Company

Description

Original

Net Cost

investmen

t in

OT1VCT

£’000 *

Cost of

investmen

t to OT2

£’000 **

Carrying

value at

28/02/23

£’000

Change in

value in 8

months

since

merger

£’000

% Equity

held OT1

Equity

held All

OT2 VCT

Classes

Net assets

of OT1

Class

Select

STL

Management

Specialist

Photocopier

interfaces

488

1,160

1,162

30.0

58.6

47.2

Scancell

(bid price

17.5p)

Antibody

based cancer

therapeutics

275

785

964

148 ***

0.7

1.5

39.2

BioCote

Bactericidal

additives

242

162

(80)

6.6

Arecor

(bid price

240p)

Protein

stabilisation

139

(43)

0.1

5.2

3.9

Getmapping

Aerial

photography

518

(20)

3.8

2.7

Total

Investments

1,456

2,412

2,450

99.6

Other Net

Assets

0.4

Net Assets

2,461

100.0

Investment Portfolio

–

OT2 Share Class

Company

Description

Net cost of

investment

£’000

Carrying

value at

28/02/23

£’000

Change in

value for the

12 month

period £’000

equity

held by

OT2

Equity held

All OT2

VCT Share

Classes

net assets of

OT2 Share

Class

Arecor

(bid price 240p)

Protein

stabilisation

252

644

(295)

0.9

5.2

48.1

Select

Technology

–

STL Mgt.

Specialist

photocopier

interfaces

132

288

7.4

58.6

21.5

Scancell

(bid price

17.50p)

Antibody

based cancer

therapeutics

150

219

0.2

1.5

16.4

ImmBio

Novel

vaccines

295

3.1

22.6

4.4

Inaplex

Data

integration

software

138

21.5

34.8

0.1

Insense

Wound

healing

dressings

204

(52)

1.6

5.6

Oxis Energy

Battery

technology

540

0.1

0.3

Total

Investments

1,712

1,212

(276)

90.5

Other Net

Assets

127

9.5

Net Assets

1,339

100.0

Investment Portfolio

–

OT3 Share Class

Company

Description

Original Net

Cost of

investment

in OT3VCT

£’000 *

Cost of

investment

to OT2

£’000 **

Carrying

value at

28/02/23

£’000

Change in

value in 8

months

since

merger

£’000

% Equity

held OT3

Equity

held All

OT2

VCT

Classes

% Net

assets

OT3

Class

Arecor

(bid price

240p)

Protein

stabilisation

443

1,593

1,092

(501)

1.5

5.2

51.7

Scancell

(bid price

17.5p)

Antibody

based cancer

therapeutics

362

647

794

147

0.6

1.5

37.6

Select

–

STL

Management

Specialist

Photocopier

interfaces

109

2.8

58.6

5.2

ImmBio

Novel

vaccines

483

6.5

22.6

3.8

Invro

Low power

electronics

33.1

0.5

Inaplex

Data

integration

software

13.3

34.8

0.0

Insense

Wound

healing

dressings

333

(60)

1.9

5.6

Microarray

Insense

spinout

0.2

Total

Investments

1,768

2,500

2,086

(414)

98.8

Other Net

Assets

1.2

Net Assets

2,111

100.0

* This is the original cost of investments extracted from the unaudited Interim Report issued by Oxford Technology 3 VCT Plc dated

21 April 2022. This is to help shareholders understand how an investment has performed since it was originally acquired.

** This is the cost of investment at the time of the merger, and against which all future financial reporting by OT2 VCT is required to

be assessed.

Investment Portfolio

–

OT4 Share Class

Company

Description

Original

Net Cost of

investment

in OT4VCT

£’000 *

Cost of

investment

to OT2

£’000 **

Carrying

value at

28/02/23

£’000

Change in

value in 8

months

since

merger

£’000

Equity

held

OT4

Equity

held All

OT2 VCT

Classes

% Net

Assets of

OT4

Class

Arecor

(bid price

240p)

Protein

stabilisation

590

2,885

1,979

(906)

2.7

5.2

61.5

Select

STL

Management

Specialist

photocopier

interfaces

237

710

712

18.4

58.6

22.1

ImmBio

Novel vaccines

857

178

13.0

22.6

5.5

Diamond Hard

Surfaces

Diamond

coatings

640

176

163

(13)

49.9

5.1

Dynamic

Extractions

Separation

technology

377

122

(56)

30.4

2.0

Novacta

Antibiotics

Development

347

2.3

1.8

Mirriad

Advertising

(bid price 4.0p)

Virtual product

placement

(7)

0.0

0.1

Insense

Active wound

healing

dressings

476

(67)

2.1

5.6

Dynamic

Discovery

E-mail

archiving

5.6

Oxis Energy

Battery

technology

305

0.2

0.3

Total

Investments

3,828

4,206

3,159

(1,047)

98.1

Other Net

Assets

1.9

Net Assets

3,219

100.0

* This is the original cost of investments extracted from the unaudited Interim Report issued by Oxford Technology 4 VCT Plc dated

21 April 2022. This is to help shareholders understand how an investment has performed since it was originally acquired.

** This is the cost of investment at the time of the merger, and against which all future financial reporting by OT2 VCT is required to

be assessed.

Arecor Therapeutics Plc

www.arecor.com

Class

Date of First

Investment

Original Net

Cost of

Investment

£’000

Cost of

Investment to

OT2VCT

£’000

Carrying

Value

28/02/2023

£’000

Change in

Value for the

Year to

OT2VCT £’000

Equity

Held

OT1

OT2

OT3

OT4

May 2021

July 2007

252

443

590

139

252

1,593

2,885

644

1,092

1,979

(43)

(295)

(501)

(906)

0.1%

0.9%

1.5%

2.7%

Arecor Therapeutics Plc is a leader in the development of innovative formulation technology that enables

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 form and/or at high concentrations to develop

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, with an initial focus on diabetes as a therapeutic area. In August 2022, Arecor completed a £6 million

placing to support both the strategic acquisition of global pharma company Tetris Pharma Ltd and the further

development of the company’s key commercial diabetes products

. Tetris Pharma sells a glucagon autoinjector

pen, adding a key proprietary

diabetes specialty product aligned to Arecor’s visio

n. Tetris Pharma also has a

sales and distribution platform providing Arecor with potential routes to market for its specialty hospital

products.

Arecor’s lead products are

AT247 and AT278, which both had successful phase 1 studies. In particular the

ultra-concentrated AT278 demonstrated accelerated insulin absorption despite a 5-fold increase in

concentration.

The Company’s original investment 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. The share price started the year at 350p and

ended the year at 240p with a high of 420p and a low of 210p. Trading has remained very thin with only a

couple of days going over 10,000 shares in volume and most days having volumes below 1,000 shares.

Since inception in 2007, Arecor has built a successful revenue generating business employing this technology

to enable and differentiate biopharmaceuticals for a large cross section of the major pharmaceutical companies

fee

for

service

plus licensing model. During the

year, Arecor

has

announced

new or

extended collaborations with a top pharma group and in the specialty hospital sector

and had a milestone

payment triggered as it transferred AT307 to Hikma Pharmaceuticals, a FTSE 250 company.

The bid price as at 28 February 2023 used for this Arecor valuation was 240p per share.

Select Technology

–

STL Management Ltd

www.selectec.co.uk

Class

Date of First

Investment

Original Net

Cost of

Investment

£’000

Cost of

Investment to

OT2VCT

£’000

Carrying

Value

28/02/2023

£’000

Change in

Value for the

Year to

OT2VCT £’000

Equity

Held

OT1

OT2

OT3

OT4

Sep 1999

Nov 2001

Nov 2004

Aug 2006

488

132

237

1,160

132

109

710

1,162

288

109

712

30.0%

7.4%

2.8%

18.4%

Select Technology (100% owned by STL Management Ltd) distributes high quality 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. Realising 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 introducing them to the market in an innovative way.

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 Square9.

Foldr was originally developed for teachers 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 administration.

Documents could be protected with 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 security

on a home laptop is generally less than is the case for the head-office security systems. Square9 is an Enterprise

Content Management System. It is appropriate for the largest companies with thousands of employees and

enables companies to store, find, access and manage documents and other information easily and securely and

in compliance with GDPR and other security protocols.

Trading has returned to somewhat approaching normality after the significant impact of various disruptions in

recent years.

The most recently completed full year of trading (to 31 July 2022) was up 25% on the previous

12 month period, and it has subsequently also improved both its top- and bottom-line H1 performance

compared to the previous period. The company is profitable and dividend payments have continued. Select

Techno

logy’s core trio of third

-party products (PaperCut, Foldr and Square9) help end customers operate more

efficiently, so it is not unreasonable to expect a degree of trading resilience, but

–

like all businesses

–

Select

Technology’s industry is not free of

risk.

As disclosed on page 10, the Articles of Association of Select Technology are in the process of being changed

to ensure OT2VCT will continue to comply with VCT Rules.

Select Technology is valued at a multiple of sales.

Scancell

www.scancell.co.uk

Class

Date of First

Investment

Original Net

Cost of

Investment

£’000

Cost of

Investment to

OT2VCT

£’000

Carrying

Value

28/02/2023

£’000

Change in

Value for the

Year to

OT2VCT £’000

Equity

Held

OT1

OT2

OT3

Aug 1999

Apr 2018

Dec 2003

275

150

362

785

150

647

964

219

794

148

147

0.7%

0.2%

0.6%

Scancell is an AIM listed biotechnology company in which OT2VCT first invested in April 2018, although

the OTVCTs were the earliest investors in the company in 1999. Scancell is developing novel

immunotherapies

for

cancer

based

four

platform

technologies

known

ImmunoBody, Moditope, Avidimab and GlyMab. They have also used their TCell stimulating vaccine

platform to make a Covid-19 vaccine aimed at the N capsid.

The Moditope trial (ModiFY) has started and some promising early results have been shared. After producing

good safety and immunogenicity data, the trial progressed to dose escalation and efficacy. It produced good

immune response and had resulted in stable disease (where it had been progressive beforehand) in half of the

14 patients who had reached the first imaging evaluation, with one patient showing a partial response. Stable

disease can be anything ranging from a 30% shrinkage to a 20% growth.

GlyMab is the most recent of the cancer therapeutics: these are antibodies with direct killing ability and are

targeted at glycans produced by tumours. One of the Glymab antibodies has been licensed to Genmab for

potential milestones of $208m for each product developed up to a maximum of $624m. There was also an

upfront payment of $6m and there will be low single digit royalties on net sales. The antibody they licensed is

one of 5 monoclonal antibodi

es in Scancell’s portfolio.

SCIB1, Scancell’s first ImmunoBody, is being developed for the treatment of melanoma and is in Phase 2

clinical trials. The scope of the trial was expanded and the delivery will now include the needle free system.

The Covidity trial of their family of Covid-19 vaccines concluded its phase 1 in South Africa Results:

it showed that both neutralising antibody and T-Cell responses were elicited.

The Scancell share price has risen over the year to a high of 29p and then has fallen again.

The bid price as at 28 February 2023 used for this Scancell valuation was 17.5p per share.

ImmBio

www.immbio.net

Class

Date of First

Investment

Original Net

Cost of

Investment

£’000

Cost of

Investment to

OT2VCT

£’000

Carrying

Value

28/02/2023

£’000

Change in

Value for the

Year to

OT2VCT £’000

Equity

Held

OT2

OT3

OT4

Dec 2000

May 2003

Oct 2005

295

483

857

295

178

3.1%

6.5%

13.0%

ImmBio was founded in 1999 by Camilo Colaco to develop vaccines that engage dendritic cells. Dr. Colaco

identified the role that Heat Shock Proteins play in activating the immune system. The company has

programmes developing vaccines against Tuberculosis, Meningitis and Pneumonia. The TB and Meningitis

vaccines have been partnered for development in China and India.

A successful challenge study would address many of the questions potential partners have raised. A grant with

the Liverpool School of Tropical Medicine (LSTM) showed that their approach would successfully

demonstrate the usefulness of the vaccine. We understand the Wellcome has agreed to fund the clinical trial

that LSTM would carry out in Malawi to show how well the vaccine prevents carriage and spread of

pneumonia. However it is not yet clear how many of ImmBio’s costs would be covered.

Progress with China

National Biotech Group for its pneumococcal vaccine PnuBioVax has been slow. Further milestones

payments should be made when the transfer of certain technology is complete.

The company has a complicated share structure, with multiple share classes, each with its own preference level

in any distribution of value. Overall, it is valued to reflect its stage of technical and commercial development

and

then the values for each of the Company’s Share Class

take into account the preference cascade, but the

outcome is likely to be quite binary.

Diamond Hard Surfaces

www.diamondhardsurfaces.com

Class

Date of First

Investment

Original Net

Cost of

Investment

£’000

Cost of

Investment to

OT2VCT

£’000

Carrying

Value

28/02/2023

£’000

Change in

Value for the

Year to

OT2VCT £’000

Equity

Held

OT4

Jan 2005

640

176

163

(13)

49.9%

Diamond Hard Surfaces Ltd (DHS)

has developed an ultra-hard diamond-like coating which provides unusual

properties to coated objects, including very high wear resistance and the ability to spread heat more evenly.

Whilst the coating has attracted interest from a wide variety of companies, DHS has traditionally been unable

to convert sampling activity into volume orders.

The business is currently quite busy with heat sinks and

mechanical seals still being the main products. Almost all the mechanical seals companies now use DHS to

supply coatings except for the largest, John Crane who developed a special coating with DHS over several

years but who then bought a coating company to produce it. The hope remains that coating mechanical seal

rings becomes standard rather than occasional

DHS is valued using a sales multiple.

Biocote

www.biocote.com

Class

Date of First

Investment

Original Net

Cost of

Investment

£’000

Cost of

Investment to

OT2VCT

£’000

Carrying

Value

28/02/2023

£’000

Change in

Value for the

Year to

OT2VCT £’000

Equity

Held

OT1

Dec 1997

242

162

(80)

6.6%

Established in 1997 with OT1VCT as one of the original investors, BioCote has grown from a supplier of

patented antimicrobial powder coatings to a market leading antimicrobial technology partner. Trusted by

leading brands, manufacturers and product innovators worldwide, BioCote’s technology is proven to reduce

bacteria, mould a

nd fungi that can cause material degradation, odours and staining by up to 99.99%. BioCote’s

premium additives can be integrated into a wide range of materials, including polymers, silicones, powder

coatings, liquid paints, ceramics and textiles.

Sustained business growth has led to further expansion of the company, which now comprises a strong team

of commercial, operational and technical professionals. With increased warehouse space and a state-of the art

laboratory under the same roof, client orders can be processed efficiently to ensure not only quick turnaround

times but also sustain the high customer satisfaction clients have come to expect from BioCote.

Experienced sales agents extend the reach for BioCote into Italy, Pakistan and China. In 2022, BioCote

expanded the team further by introducing an agent in Mexico due to seeing increased demand for lower cost

manufactured antimicrobial goods into the U.S.A and South America. Sales have slowed this year, but the

company continues to be profitable and dividend payments have continued.

BioCote is valued using a sales multiple.

Lucius Cary

Director

–

OT2 Managers Ltd

Investment Manager

20 April 2023

Investment Advisor – Oxford Technology Management Ltd

Since 2012, the primary focus of

OTM has been on their SEIS and EIS portfolio companies. OTM also acts

as the Investment Advisor to the Company. There are two investment managers within OTM, Lucius Cary and

Andrea Mica.

Lucius Cary

Lucius Cary is the founder and managing director of OTM. He has a degree in engineering and economics

from Oxford University, an MBA from Harvard Business School and was an engineering apprentice at the

Atomic Energy Research Establishment, Harwell.

After forming and raising finance for his first business in 1972, he founded

"Venture Capital Report" in 1978 and was its managing director for 17 years.

In March 1996, he became chairman and reduced his day-to-day involvement

order to concentrate more fully on OTM’s investment activities.

OTM raised its first fund to invest in start-up and early-stage technology

companies in 1983. OTM has managed or advised twelve funds which,

between them, have made more than 100 such investments

In 2003, he was

awarded an OBE for services to business.

Lucius owns shares in the OT1, OT2 and OT4 Share Classes, as well as in

Scancell and Select Technology.

He is also a director of OT2 Managers Ltd.

Andrea Mica

Andrea Mica graduated from the Delft University of Technology with an MSc in Industrial Design

Engineering, and went on for a further graduate study in Innovation and Creativity at the State University

College of New York at Buffalo.

He has a strong and varied background in technology prior to joining OTM

–

both promoting technologies for sale, and identifying new technologies to

invest in.

He also has an entrepreneurial streak

–

he co-founded CleanSteel Ltd, a

company that developed a new technique for recycling waste products from

the tyre industry.

Within the VCTs he has concentrated on the life science portfolio companies.

Andrea is a shareholder in Scancell.

Board of Directors

The Company has a Board of four non-executive Directors.

All are independent of the Investment Adviser.

They meet on a regular basis to review the investment performance and monitor compliance with the

investment policy laid down by the Board as set out in the Strategic Report starting on page 19.

The Board has a formal schedule of matters specifically 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 shareholders;

●

the appointment, evaluation, removal and remuneration of the Investment Manager;

●

the performance of the Company, including monitoring the discount of the share price to net asset

value; and

●

monitoring shareholder profiles and considering shareholder communications.

The Chairman leads the Board in the determination of its strategy and in the achievement of its objectives. The

Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its

agenda. He facilitates the effective contribution of the Directors and ensures that they receive accurate, timely

and clear information and that the Company communicates effectively with shareholders in accordance with

the Board’s duty to promote the success of the Company.

The Company Secretary is responsible for advising the Board through the Chairman on all governance matters.

All of the Directors have access to the advice and services of the Company Secretary.

Directors may also take

independent professional advice at the Company's expense where necessary in the performance of their duties.

The Company’s articles of association and the schedule of matters reserved to the Board for decision provide

that the appointment and removal of the Company Secretary is a matter for the full Board.

Richard Roth

Richard Roth (aged 59) is the Chairman of the Company and Chairman of

the Audit Committee. He was appointed in July 2015. He is a Chartered

Management Accountant.

After 14 years at two blue chip companies he

joined easyJet, where he was one of the key executives that transformed the

business from private company to household name.

He has subsequently worked for a number of airlines, including as CFO of

RoyalJet. Richard has also had a number of consulting assignments, in

particular helping companies determine their strategy, and implementing

business improvements.

He has been deeply involved in growing and/or

turning businesses around.

Richard is a well-informed VCT investor having followed the industry closely since inception and has

extensive understanding of the sector having observed good and bad practice for over 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 shareholder in Arecor and Scancell.

He is also a Director of OT2 Managers Ltd, Oxford

Technology VCT Plc, Oxford Technology 3 VCT Plc and Oxford Technology 4 VCT Plc (the last three are in

Members’ Voluntary Liquidation

following the Merger).

He is also a director of Seneca Growth Capital VCT

Plc.

This combination of experience, including his directorship 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 Starling

Alex Starling (aged 45) is a Director of the Company and was appointed in

July 2015. Alex runs his own corporate advisory firm, ACS Technical

Limited. He has helped a number of technology companies raise venture

capital and, conversely, shareholders realise their investments in such

technology companies.

He is a Chartered Engineer and Member of the Institution of Mechanical

Engineers, has a PhD in Engineering from Cambridge University and holds

the ICAEW Diploma in Corporate Finance.

Alex brings current corporate

finance & early stage fundraising experience to the Board.

Alex is a shareholder in Scancell.

He is also a Director of OT2 Managers Ltd, Oxford Technology VCT Plc,

Oxford Technology 3 VCT Plc and Oxford Technology 4 VCT Plc (the last three are in Members’ Volunta

Liquidation following the Merger).

He is also a director of STL Management Limited and Getmapping Ltd.

Robin Goodfellow

Robin Goodfellow (aged 75) is a Director of the Company and also a member

of the Audit Committee. He was appointed in July 2015. Robin had 30 years

of experience in senior Accounting Manager and Internal Audit Manager roles

with ExxonMobil International, Esso Europe, Esso Petroleum and Esso

Norway. He has particular expertise in advising on and implementing cost

effective controls across total company business activities and their

accounting systems.

Robin has an MA in Engineering from Cambridge University and an MBA

from the London Business School.

More recently he has been an active investor and shareholder in VCTs, EISs and other small companies. He

was previously a regular commentator on VCT industry performance and current VCT company issues.

Robin’s combination of experience provides the Company with valuable 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 activity as our investments.

Robin is a shareholder in Arecor and Scancell.

He is also a Director of Oxford Technology VCT Plc, Oxford

Technology 3 VCT Plc and Oxford Technology 4 VCT Plc (all in Members’ Voluntary Liquidation

following

the Merger).

David Livesley

David Livesley (aged 62) is a Director of the Company and was appointed in

July 2015.

He worked in the life science and pharmaceutical industries before

joining Cambridge Consultants Ltd in 1987, where he was involved in product

and process development across a range of industrial sectors.

Between 1999 and 2012 he worked for the YFM Group, where he invested

VCT money into early stage technology companies.

Currently he is an

independent Non-Executive director for a number of early stage technology

businesses.

David brings a wealth of 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 investments,

which remains highly relevant to the ongoing success of the Company.

David is also a Director of Oxford Technology VCT Plc, Oxford Technology 3 VCT Plc and Oxford

Technology 4 VCT Plc (all in Members’ Voluntary Liquidation

following the Merger).

Directors’ Report

The Directors present their report together with the Financial Statements for the year ended 28 February 2023.

The Directors consider that the Annual Report and Financial Statements, taken as a whole, are fair, balanced

and understandable and pr

ovide 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 indepe

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

in the Directors’ Report is consistent with the Financial Statements.

Principal Activity

The Company commenced business in 2000.

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 required by section 417 of the Companies Act 2006 to include a Business Review to

shareholders. This is set out on page 16 and forms part of the Strategic Report. The purpose of the Business

Review is to inform members of the 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 21, the Chairman's Statement on pages 6 to 15 and the Investment

Manager’s

Review on pages 24 to 34 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 companies

reporting as at 28 February 2023

The Company’s Corporate Governance policy is set out on pages

49 to 54.

The 2019 AIC Code is 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 has complied with the recommendations of the 2019 AIC Code and the relevant provisions 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 induction on joining the Board, though they did receive one

tailored to them on an individual basis.

●

The Company conducts a formal review as to whether 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 these matters are dealt with 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 Adviser. In particular, all of the Company’s day

-to-day administrative

functions are outsourced to third parties. As a result, the Company has no executive directors, employees or

internal operations.

Furthermore, the Board acknowledges that it is not recommended practice that the Chairman of the Company

to be chairman of the Audit Committee; however Richard Roth is chairman of the Audit Committee as he has

fulfilled this role for all the OT VCTs for a number of years, and the Board consider he remains the best placed

to carry on this role.

Directors

The Directors of the Company are required to notify their interests under Disclosure and Transparency Rule

3.1.2R.

The membership of the Board and their beneficial interests in the ordinary shares of the company by

Share Class at 28 February 2023 are set out below:

Name

OT1

OT2

OT3

OT4

Total shares

in the

Company

% Total

Holding in

Company

R Roth

10,000

44,033

38,149

64,310

156,492

0.56

A Starling

12,249

Nil

12,249

0.04

R Goodfellow

90,932

14,000

35,000

20,000

159,932

0.57

D Livesley

Nil

3,499

0.01

There have been no changes in the Directors’ interests since 28 February 202

The Directors’ interests at 28

February 2022 were equivalent to the above numbers, but the OT1, OT3 and OT4 shares were held in the

Target VCTs, and not in the Company.

No options over the share capital of the Company have been granted to the Directors.

There is no minimum holding requirement that the Directors need to adhere to.

Under the Company’s Articles of Association Directors are required to retire by rotation every third year.

However, best practice under the latest 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 re-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 support the resolutions to re-elect all four Directors at the forthcoming AGM.

The Board is satisfied that, following individual performance appraisals, the Directors who are retiring

continue to be effective and demonstrate commitment to their roles and therefore offer themselves for re-

election with the support of the Board.

The Board did not identify any con

flicts of interest between the Chairman’s interest and those of the

shareholders, especially with regard to the relationship between the Chairman and the Investment Adviser.

Investment Management Fees

OT2 Managers Ltd, the Company’s wholly owned subsidiar

y, has had an agreement to provide investment

management services to the Company since 1 July 2015. An amended agreement came into effect, immediately

following the Merger so that it covered all four Share Classes. The fee is 1% of net assets per annum for the

OT2, OT3 and OT4 Share Classes and 0.5% of net assets per annum for the OT1 Share Class: these are the

same levels that applied prior to the Merger for each pool of assets. It was planned that this fee would halve

following the first issue of Leisure Shares, but given the Offer was closed without any Leisure Shares being

issued, the original fee levels remain in force. OT2 Managers Ltd subcontracts these services to OTM on a

pass through basis.

Alex Starling and Richard Roth together with Lucius Cary are Directors of OT2 Managers

Ltd.

Directors’ and Officers’ Insurance

As permitted by legislation and the Company’s Articles of Association, the Company has taken 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 Company.

Ongoing Review

The 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 Board has been informed that the Investment Adviser has arrangements in place in accordance with the

UK Code’s recommendations by which staff of Oxford Technology Management or the Secretary of the

Company may, in confidence, raise concerns within their respective organisations about possible improprieties

in matters of financial reporting or other matters.

Bribery Act

The Company is committed to carrying out business fairly, honestly and openly and makes certain that the

highest standards of professional and ethical conduct are maintained.

The 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 third party suppliers. The Company has adopted a zero tolerance 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 Investment Adviser to adopt the same approach with investee companies.

Relations with Shareholders

The Company values the views of its shareholders and recognises their interest in the Company. The

Company’s website provides information on all of the Company’s investments, as well as other informat

ion

of relevance to shareholders (

www.oxfordtechnologyvct.com

Shareholders have the opportunity to meet the Board at an annual meeting. In addition to the formal business

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 service announcements, interim

and annual reports 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 the 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:

[email protected]

Relations with Investment Adviser

The Company’s most important business relationship is with the Investment Adviser, 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 timetable agreed with the Investment Adviser which is discussed at each Board

meeting. The Company and Investment Adviser also work together to maintain efficient operation of the VCT

as detailed in the Key Performance Indicators on page 16.

Relations with Portfolio Companies

The Company holds minority investments in all but one of its portfolio companies (it holds a majority stake in

Select Technology) and it has appointed the Investment Adviser to manage the relationships with most of its

investees.

While the Board has little direct contact with the smaller unquoted investments, the Investment

Adviser provides updates on these quarterly, as well as on ad hoc basis when applicable. In addition, Alex

Starling has joined the board of Getmapping, and also sits on the board of STL Management Limited, the

Company’s largest unquoted investment.

Environmental, Social and Governance (“ESG”) Practices

The Board recognises the requirement under section 414c of the Companies Act 2006 to detail information

about environmental matters (inc

luding the impact of the Company’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 policies.

Given the size and

nature of the Company’s activities and the fact that it has no employees and only four non

executive Directors, the Board considers there is limited scope to develop and implement environmental, social

and community policies, but recognises the importance of including consideration for such matters in

investment decisions. The Board has taken into account the requirement of section 172(1) of the Companies

Act 2006 and the importance of ESG matters when making decisions which could impact shareholders,

stakeholders and the wider community.

The Company’s

section 172(1) statement has been provided in the Strategic Report on page 21, where the

Directors consider the information to be of strategic importance to the Company.

The Company seeks to ensure that its business is conducted in a manner that is responsible to the environment.

The management and administration of the Company is undertaken by the Investment Adviser who recognises

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 sustainability,

choosing energy efficient equipment, appliances and light bulbs, reducing printing to a minimum and recycling

where possible.

The Investment Adviser recognises that managing investments on behalf of clients involves taking into account

a wide set of 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 participant by working to define

and strengthen its principles accordingly. This involves both integrating ESG considerations into the

Investment Adviser’s investment de

cision-making process as a matter of course. The following is an outline

of the kinds of ESG considerations that the Investment Adviser is taking into account as part of its investment

process.

Environmental

OTM as part of its commercial due diligence practices and ongoing monitoring, examines potential issues

which could arise from supply chains, climate change and environmental policy compliance. The Investment

Adviser looks for management teams who are aware of the issues and are proactive in responding to them.

Social

OTM seeks to avoid unequivocal social negatives, such as profiting from forced labour within its investment

portfolio and to support positive impacts which will more likely find support from customers and see rising

demand. OTM does not tolerate modern slavery or human trafficking within its business operations and takes

a risk-based approach in respect of its portfolio companies. OTM actively engages with portfolio 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 related party transactions, and business leadership and culture. In addition, the

Company, as a matter of course, exercises its voting rights when possible.

Greenhouse Gas (“GHG”) Emissions and Streamlined Energy & Carbon Reporting (“SECR”)

Under the Companies Act 2006 (Strategic Report and

Directors’ Report) Regulations 2013 (‘the 2013

Regulations’) and the Companies (Directors’ Report) and Limited Liability 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 parties. The Company therefore has no greenhouse gas

emissions to report from its 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 Partnerships (Energy and Carbon Report) Regulations

2018. For the same reasons as set out above, the Company considers itself to be a low energy user under the

SECR regulations and therefore is not required to disclose energy and carbon information.

A low energy user is

defined as an organisation that uses 40 MWh or less during the reporting period.

Going Concern

The assets of the Company consist mainly of securities as is required by the VCT regulations, three of which

are AIM quoted, as well as cash. After making enquiries, the Directors have a reasonable expectation that the

Company has adequate resources to continue in operational existence for the foreseeable future.

The Company had a cash balance of £292,000 at 28 February 2023 with estimated annual running costs of just

below this value for the forthcoming year. On the basis that the Company makes no further investments, the

cash balance alone covers costs for at least a year. In addition, two of the Compa

ny’s investments are dividend

paying, and were additional cash required, Scancell is reasonably liquid 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 harder 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

Company continues to face material market volatility as a result of the response to Covid and

macroeconomic pressures. In addition the disruption in global supply chains and increased costs from

inflationary pressures have been exacerbated by military action

–

and possible subsequent unforeseen

consequences

–

in Eastern Europe.

Such increased costs of living and the availability (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 further inflation may impact on the performance and

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, and returns from, the Company’s shares. Post period end the initial stages of a banking

crisis were nipped in the bud but further rumblings continue.

As noted above the post pandemic effects of Covid-19 have had an impact on economic conditions globally

and may continue to affect the performance of some companies in which the Company has invested.

The Board will keep these risks under regular review but does not consider the current macro-economic

pressures to have a material impact on the Compan

y’s own ability to continue as a going concern.

Share Capital

As a result of the Merger, 5,431,655 OT1 shares,

6,254,596 OT3 shares and 10,826,748 OT4 shares were

allotted on 30 June 2022. No OT2 shares were allotted during the year. Following these allotments, the

Company had 27,844,888 ordinary shares of 1p each in issue, and this has remained the same at 28 February

2023 (2022: 5,331,889 OT2 shares of 1p each) with each share having one vote. There are no other share

classes in issue.

The Board

’s

authority to allot up to a further 533,189 shares (representing approximately 10% of the OT2

share capital as at 20 April 2022) 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 seems prudent to take some

precautionary measures and the Board is proposing a resolution for shareholders to renew the authority for a

further period

, again based on 10% of the Company’s share capital

for each Share Class. This will provide

additional flexibility, if ever required, to raise money more cheaply and at shorter notice. This would enable

the Company to support existing investee companies. At the moment we have no plans to raise additional

capital or to conduct a possible placing, but it seems prudent in these uncertain times to have the capability in

case the Board wishes to act quickly.

The Board also had authority to allot up to 20,000,000 shares in connection with offers for subscription of

Leisure Shares: the Offer has now been withdrawn.

No shares were bought back by the Company during the year. As disclosed on page 95, the Board does have

the authority to make

market purchases of the Company’s own shares.

To date, the Company has only bought

its shares back once, as part of a tender offer available to all shareholders. OT3VCT and OT4VCT each also

bought back shares once, and in each case, the transaction was widely communicated to ensure all shareholders

who wished to, could participate. The Board are proposing a resolution at the forthcoming AGM to buy back

up to 10% of its own share capital in each share class. The Board have no current plans to use this authority in

the course of the next year, but it is good practice for the Company to retain the flexibility to be able to buy

back shares, should the Directors think it is in shareholders’ best interests.

The Directors are also proposing a resolution at the forthcoming AGM which will formally change the name

of the existing Ordinary Shares to OT2 Shares, in line with the naming of the other Share Classes. This share

class represents the equity associated with the original pool of assets in the Company before the Merger.

In accordance with Schedule 7 of the Large and Medium Size Companies and Groups (Accounts and Reports)

Regulations 2008, as amended, the Directors disclose the following information:

●

The Comp

any’s capital 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 voting rights;

●

There exist no securities carrying special rights with regard to the control of the Company;

●

The rules concerning the appointment and replacement of Directors, amendment of the Articles of

Association and powers to issue or buy back the Company’s shares are contained in

the Articles of

Association of the Company and the Companies Act 2006;

●

The Company does not have any employee share scheme;

●

There exist no agreements to which the Company is party that may affect its control following a

takeover bid; and

●

There exist no agreements between the Company and its Directors providing for compensation for

loss of office that may occur following a takeover bid or for any other reason.

As reported in the Chairman’s Statement on page

14, and in Note 10 (page 84), the Company completed a

capital reduction during the year, creating additional distributable reserves of more than £10m.

Substantial Shareholders

At 28 February 2023, the Company has been notified of the following investors whose interest exceeds three

percent of the Company’s issued share capital:

Ms Shivani Palakpari Shree Parikh 6.63% (shares held via

Redmayne Nominees Limited and Hargreaves Lansdown Nominees Limited), and State Street Nominees

Limited, 5.8% (representing the beneficial interest of Oxfordshire County Council Pension Fund).

Auditors

Hazlewoods LLP offer themselves for re-appointment as the independent auditors in accordance with Section

489 of the Companies Act 2006.

On behalf of the Board

Richard Roth - Chairman

20 April 2023

Directors’ Remuneration Report and Policy

Introduction

This report is submitted in accordance with the requirements of s420-422 of the Companies Act 2006, in

respect of the year ended 28 February 2023

. The Company’s independent auditor, Hazlewoods is required to

give its opinion on certain information included in this report. Their report on these and other matters is set

out on pages 56 to 62

. This report sets out the Company’s Directors’ Remuneration Policy and the Annual

Remuneration Report, which describes how this policy has been applied during the year.

The Directors' Remuneration Policy was last approved by shareholders at the AGM on 25 August 2021 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 be 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 at the

AGM on 20 June 2022

on a unanimous show of hands; 99.9% of proxies had also voted favour (a total of

1,720,218 votes in favour, 1,000 against, 28,932 at Chairman’s discretion and no votes withheld

Resolution to approve the Directors’ Remuneration Report for the year ended 28 February 202

3 will be

proposed at the AGM on 19 July 2023.

Statement from the Chairman of the Board in relation to Directors’ Remuneration Matters

The Board is mindful of its obligation to set remuneration at levels which will attract and maintain an

appropriate calibre of individuals whilst simultaneously protecting the interests of shareholders.

During the year to 28 February 2023, 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. Particular focus was placed on the impact of the proposed Merger. A key criteria has

always been the amount the VCT can afford to pay. Historically, due to the overlap of much of the work with

the other OT VCTs, the aggregate fees paid to each Director could be split among each VCT. Following the

Merger, this is no longer possible. The Board agreed that the total aggregate cost for the Directors should

remain unchanged, but as the fees would only be paid by OT2VCT in the future, fees to Directors payable by

OT2VCT would need to be increased as shown in the table on page 46. These fees were disclosed in the

Circular to shareholders dated 18 May 2022.

Shareholders should note the total amount payable to Directors

will be less than they received from the four VCTs previously, as OT2VCT now has a National Insurance

liability which also needed to be covered.

As with any Board comprising solely of non-executive directors, it is unlikely that a Director can fully abstain

from any discussion or decision concerning their own fees. Director's remuneration consists of a base fee for

all Directors and each Director participated in the process of setting the level of this fee. Additional fees have

been set for the role of 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

roles. The Board considers that this process is consistent with the spirit of the AIC Code on the setting of

Directors’ fees.

The Company’s Articles of Association limit the aggregate amount that can be paid to the Directors in fees to

£125,000 per annum, unless otherwise approved by Ordinary Resolution of the Company. The level was

increased from £75,000 following shareholder approval at the general meeting on 20 June 2022, as one of the

enabling requirements for the Merger to be able to proceed.

Details of the voting from the last time each of the Remuneration Report and the Remuneration Policy were

approved, are set out in the Introduction 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 change in Directors’

pay would be viewed against comparatives and fully documented.

Details of the Directors’ remuneration are disclosed below and in Note 4.

Directo

rs’

Interests

The

Directors’ interests, including those of connected persons in the issued share capital of the Company are

shown on page 40. There is no minimum holding requirement that the Directors need to adhere to.

Directors’ Terms of Appointment

The Board manages the Company and consists entirely 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

Company’s affairs. 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 retire at the first general

meeting after election and thereafter every third year.

In line with best practice

recommended in the 2019

AIC Code, all Directors will offer themselves for re-election this year.

Re-election is recommended by the Board, but is dependent upon shareholder vote. There are no service

contracts in place, but Directors have a letter of appointment.

Statement of the Company’s policy on Directors’ Rem

uneration

The Board as a whole considers Directors’ remuneration and has not appointed a separate committee in this

respect. On an annual basis, 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 payable by the Company

with effect from 1 March 2023:

per annum

Director Base Fee

£14,000

Chairman’s Supplement

£5,000

Audit Committee Chairman

£8,000

Audit Committee Member

£4,000

The OT2VCT Director Fees are amongst the lowest of any VCT, particularly given the workload the Directors

undertake.

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 currently paid annually. The fees are not specifically related to 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 Company. As set out in the Circular to shareholders dated 18 May

2022, in recognition of the additional work which has been undertaken by certain of the Directors in connection

with the Merger and the Offer, the non-participating

Directors agreed to make an additional one-off payment

in the sum of £30,000. The Company

’

s sponsor, BDO LLP, agreed that it was fair and reasonable to make this

additional payment. Of this sum, Richard Roth received £27,000 and David Livesley received £3,000.

Alex Starling and Richard Roth receive no remuneration in respect of their directorships of OT2 Managers

Ltd, the Company’s Investment Manager.

Alex Starling also receives fees from the two portfolio companies where he now sits on the boards.

He receives

£9,000 per annum from Getmapping Ltd.

He receives no personal remuneration from STL Management

Limited but ACS Technical Limited, a company wholly owned and controlled by Alex Starling, provides

advisory services and charges Select Technology Limited, the trading subsidiary of STL Management Limited,

£15,000 per annum.

The performance fee is detailed in Note 3. Current Directors are entitled to benefit from any payment made,

subject to a formula driven by relative lengths of service.

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 distributed

to Oxford Technology Management, past Directors and current Directors; the remaining 80% is returned to

shareholders.

At 28 February 2023 no performance fee was due.

Should any performance fee be payable at the end of the year to 28 February 2024 on the OT1 Share Class,

Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.43% of any amount over the

threshold and David Livesley 0.87%.

No performance fee will be payable for the year ending 28 February

2024 unless original shareholders have received back at least 247.5p in cash for each 100p (gross) invested.

Should any performance fee be payable at the end of the year to 28 February 2024 on the OT2 Share Class,

Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.47% of any amount over the

threshold and David Livesley 0.93%.

No performance fee will be payable for the year ending 28 February

2024 unless original shareholders have received back at least 193.2p in cash for each 100p (gross) invested.

Should any performance fee be payable at the end of the year to 28 February 2024 on the OT3 Share Class,

Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.38% of any amount over the

threshold and David Livesley 0.77%.

No performance fee will be payable for the year ending 28 February

2024 unless original shareholders have received back at least 165.0p in cash for each 100p (gross) invested.

Should any performance fee be payable at the end of the year to 28 February 2024 on the OT4 Share Class,

Alex Starling, Robin Goodfellow, and Richard Roth would each receive 0.39% of any amount over the

threshold and David Livesley 1.18%.

No performance fee will be payable for the year ending 28 February

2024 unless original shareholders have received back at least 141.5p in cash for each 100p (gross) invested.

Pensions (Information Subject to Audit)

None of the Directors receives, or is entitled to receive, pension benefits from the Company.

options

and

long-term

incentive

schemes

(Information

Subject

Audit)

The Company does not grant any options over the share capital of the Company nor operate long-term

incentive schemes.

Relative Spend on Directors’ Fees

The Company has no employees, so no consultation with employees or comparison measurements with

employee remuneration are appropriate.

The table below sets out:

the remuneration paid to the Directors; and

the distributions made to shareholders by way of dividends paid in the financial year ended 28 February

2023 and the preceding financial year.

There were no share buy-backs by OT2VCT. Prior to the Merger, OT4VCT bought back shares for a total cost

of £230,700.

Year ended 28

February 2023 **

Year ended 28

February 2022 ***

Change %

Total Remuneration

91,500

20,500

346%

Dividends Paid

n/a

Loss of Office

In the event of anyone ceasing to be 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 28/02/24

(unaudited) *

Year End 28/02/23

(audited)

Year End 28/02/22

(audited) ***

Richard Roth

£27,000

£48,500

£8,500

Alex Starling

£14,000

£11,333

£3,500

Robin Goodfellow

£18,000

£16,333

£5,000

David Livesley

£14,000

£14,333

£3,500

Total

£73,000

£91,500

£20,500

The figures for the year ended 28 February 2024 represent the expected ongoing costs for the Company in

a full year.

** The figures for the year ended 28 February 2023 include the one off payments referred to on page 46, the

fees paid directly by OT2VCT (in line with those paid for the year to 28 February 2022), and the fees that had

been paid by OT1VCT, OT3VCT and OT4VCT which covered the 8 month period following the Merger.

*** The figures for the year ended 28 February 2022 only included one share class (the OT2 ordinary shares,

now renamed OT2 Share Class)

No change to D

irector’s remuneration is

currently expected for the year ending 28 February 2024.

Total Shareholder Return Performance Graph

The graphs on page 16 compare the NAV return of the OT2 Share Class from launch in 2000, and for the

OT1/OT3/OT4 Share Classes since the take on of the assets by the Company on 30 June 2022, with the total

return from the FTSE All-Share Index (which excludes dividends) over the same 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 qualifying 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 rebased to 100 at the start date of the Share Class.

By Order of the Board

James Gordon - Company Secretary

20 April 2023

Corporate Governance Report

The Board has considered the principles and recommendations of the 2019 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 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 Council (and associated disclosure requirements under paragraph

9.8.6 of the Listing Rules) provides more relevant information to shareholders.

The 2019 AIC Code is 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 governance and has complied with the

Principles and Provisions of the 2019 AIC Code, except as set out below.

For the reasons set out in the AIC

Code and as envisaged in the Code, the Board considers certain provisions as not being relevant to the position

of the Company as it is an investment company.

The Company has no executive directors or employees.

The

Company has therefore not reported further in respect of these matters. The Directors strongly believe that

achieving the

Company’s corporate governance objectives contributes to its long

-term sustainable success.

Independence of Directors

The Board consists of four independent non-executive Directors.

The Board has put in place corporate

governance arrangements which it believes are appropriate for a Venture Capital Trust and that will enable the

Company to operate within the spirit of the Code.

The Board regularly reviews the independence of its members and is satisfied that the Company’s Directors

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, whilst 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 fulfils the role.

However, in accordance with the principles of the 2019 AIC Code, we do not consider it necessary to

mandatorily replace a Director, including the Chairman, after a predetermined period of tenure. 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 23.

As set in the Directors’ Remuneration Report on page

45, Directors are entitled to a proportion of any

performance fee that may become payable.

Having regard for the historic nature and circumstances under

which the performance incentive fees were agreed, 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.

Board Committees

The Board does not have a separate Remuneration Committee, as the Company has no employees or executive

directors. Detailed information relating to the remuneration of Directors is given in the Directors’

Remuneration Report on page 45.

The Board as a whole considers the selection and appointment of Directors and reviews Directors’

remuneration on an annual basis. The Board considers the Company’s size to be such

that it is unnecessary to

form a separate committee for the purposes of nomination. When making 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 Directors 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 planning 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 Board in line with its 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. The Board considers that the members of the Audit

Committee have collectively the skills and experience required to discharge their duties effectively.

Given the

size of the Company the Board considers 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 these meetings maintains very regular

contact with the Investment Adviser. The following table sets out the Directors’ attendance at the formal Board

and Audit Committee meetings held during the year.

Director Name

Board Meetings

Attended

(9 Held in year)

Audit Committee Meetings

Attended

(2 Held in year)

Richard Roth

Robin Goodfellow

Alex Starling

David Livesley

N/A

In addition to formal Board meetings, the Board communicates on a regular basis in carrying out its

responsibilities in managing the Company.

The Investment Adviser prepares written periodic updates on each

investment, and other reports are circulated to all members of the Board in advance of Board meetings. 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 reserved to it for decision to ensure that

the direction and control 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 approval

must be sought.

All other matters are reserved for the approval of the Board.

The Audit Committee ensures the independence and objectivity of the external auditors. This includes

reviewing the nature and extent of non-audit services supplied by the external auditors to the Company, seeking

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 which were updated at the time of the Merger (copies of which may

be obtained by shareholders on request).

Conflicts of Interest

The Board has always considered carefully all cases of possible conflicts of interest as and when they arise.

For example, historically every time one of the OT VCTs makes an investment in which another OT VCT is

an investor, there is a potential conflict of interest. The general policy is that there is complete transparency

and all interests in every situation are declared and known to all, so that practical and sensible decisions can

be taken. The same principle will apply within OT2VCT with the separate Share Classes.

Internal Control

The Directors have overall responsibility for keeping under review the effectiveness of the Company’s systems

of internal controls. The purpose of these controls is to ensure that proper accounting records are maintained,

the Company’s assets are safeguard

ed and the financial information used within the business and for

publication is accurate and reliable; such a system can only provide reasonable and not absolute assurance

against material misstatement or loss.

The system of internal controls is designed to manage rather than eliminate the risk of failure to achieve the

business objectives.

The Board continually reviews financial results and investment performance. The Board also monitors and

evaluates external service providers and maintains regular discussions with the Investment Adviser about the

services provided. The Investment Adviser reviews the service contracts on an annual basis and discusses any

recommendations with the Board as relevant.

The Directors confirm that they have established a continuing process throughout the year and up to the date

of this report for identifying, evaluating 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 review

of the internal control systems is carried out in accordance with the FRC’s Guidance on Risk Management,

Internal Control and Related Financial and Business Reporting.

The risk management and internal control systems include the production and review of monthly bank

statements and quarterly management accounts. All outflows made from the Company’s accounts require the

authority of signatories from the Board. The Company is subject to a full annual audit. Further to this, the

Audit Partner has open access to the Directors of the Company.

Audit Committee

The role of the Audit Committee is discharged by Richard Roth (chairman) and Robin Goodfellow.

The Audit

Committee is responsible for:

●

monitoring the Company’s financial

reporting;

●

reviewing internal controls and risk management systems; and

●

matters regarding audit and external auditors.

In addition, in the current financial year, the Audit Committee liaised extensively with both sets of accountants

who were hired as advisers as part of the Merger, to confirm the existence of the assets taken on by the

Company from OT1VCT, OT3VCT and OT4VCT, and to ensure their valuation was consistent with the

Company’s valuation policy/methodology.

Financial Reporting

The Audit Committee is responsible for reviewing, and agreeing, the half-yearly and annual accounts

(including those figures presented within) before they are presented to the Board for final approval.

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 presentation within the half-

yearly interim and full year annual accounts.

The Audit Committee also takes 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 Annual 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 necessary information to shareholders to assess performance, business model and

strategy.

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 conclusion.

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 conclusion. The Board appointed Hazlewoods in 2022 and is happy to

recommend them for reappointment at the AGM. When considering whether to recommend the reappointment

of the external auditor, the Audit Committee takes into account the quality of service received.

Subsequent to their appointment as the Company’s auditor, t

he Board also appointed Hazlewoods to act as the

reporting accountant for the Merger. This is a service that it is permissible to be performed by a Company’s

auditor, and the fee levels were such that the Board were confident that it would 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 was carried out by a

separate team within Hazlewoods; Hazlewoods will not provide any other non-audit services.

The Company does not have an independent internal audit function as it is not deemed appropriate given the

size of the Company and the nature of the Company’s business.

However, the Audit Committee considers

annually whether there is a need for such a function and if so would recommend this to the Board. The Audit

Committee seeks to satisfy itself that there is a proper system and allocation of responsibilities for the day-to-

day monitoring of financial controls by receiving representations and information either upon request or

voluntarily from the Investment Adviser.

Significant Risks

The Audit Committee is responsible for considering and 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 Auditors 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 the 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. Otherwise valuations

are supported by the share price of the most recent fundraising and/or management information.

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 specifically review all significant accounting

estimates that form part of the Financial Statements and consider any material judgements applied by

management during the preparation of the Financial Statements.

●

Compliance with HMRC conditions and 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 Recommended Practice.

The Company has few revenue paying companies and

the Audit Committee pays close attention to these.

These issues were discussed between the Investment Manager, Investment Adviser, the Auditors and the Audit

Committee at the conclusion of the audit of the Financial Statements.

The Audit Committee is also responsible for considering and reporting on any significant issues that arise in

relation to the audit of the Financial Statements.

The Audit Committee can confirm that there were no significant issues to report to shareholders in respect of

the audit of the Financial Statements for the year ended 28 February 2023.

The Company is exposed to risks arising from its operational and investment activities.

Further details can be

found in Note 15 to the Financial Statements (see page 86).

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 Director.

The performance of the Chairman was evaluated by the other Directors.

The Board considers the size of the Company, the number of independent non-executive Directors on the

Board and the robustness of the reviews to be such that an external Board evaluation is unnecessary. Annual

evaluations of the Board consider its composition, diversity, succession planning and how effectively members

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

the findings to the Board, which are discussed at the next meeting and an action plan 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 solely of non-executive Directors. The duties of this role is fulfilled

by Robin Goodfellow, the other member of the Audit Committee.

The Board is satisfied with the performance of the Chairman and Directors and recommends their

reappointment. The Board is also satisfied with the performance and constitution of the Audit Committee.

The Board sets out the assessment of its members and explains why its members are and continue to be of

importance to the long-term sustainable success of the business on pages 36 to 38.

The Board reviews the performance of the Investment Manager and Investment Adviser on an ongoing 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 unnecessarily burdensome

to establish a separate management engagement committee to perform this role.

The Board is satisfied that it is in shareholders’ best interests that the Investment Manager and Investment

Adviser continue 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 not a

nticipate that it will voluntarily adopt IFRS. The

Company has adopted Financial Reporting Standard 102

–

The Financial Reporting Standard Applicable in

the United Kingdom and the Republic of Ireland.

The Board has considered the principles and recommendations of the 2019 AIC Code as applied to companies

reporting as at 28 February 2023.

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 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 Council (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 and Provisions of the 2019 AIC Code, except as set out below.

The Company strongly believes that achieving our corporate governance objectives contributes to the long-

term sustainable success of the Company.

Relations with Shareholders

There was no resolution proposed at the last AGM (nor the general meeting held on the same day) which

received 20% or more of votes cast against it for the purposes of disclosure under Provision 4 of the UK Code.

Compliance Statement

As previously indicated, the Board considers that reporting against the principles and 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 provisions 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 induction on joining the Board, though they did receive one

tailored to them on an individual basis.

●

The Company conducts a formal review as to whether 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 these matters are dealt with 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 Adviser. In particular, all of the Company’s day

-to-day administrative

functions are outsourced to third parties. As a result, the Company has no executive directors, employees or

internal operations. Furthermore, the Board acknowledges 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.

By Order of the Board

James Gordon - Company Secretary

20 April 2023

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance

with applicable laws and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law

the Directors have elected to prepare the Financial Statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws).

Under company law the Directors must not approve the Financial Statements unless they are satisfied that they

give a true and fair view of the state of affairs and profit or loss of the Company for that period.

In preparing these Financial Statements, the Directors are required to:

●

select suitable accounting policies and then apply them consistently;

●

make judgements and estimates that are reasonable and prudent;

●

state whether applicable UK Accounting Standards have been followed, subject to any material

departures disclosed and explained 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 responsible for keeping adequate accounting records that are sufficient to show and explain

the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the

Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They

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 irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information

included on the Company’s website. Legislation in the United Kingdom governing the preparation and

dissemination of Financial Statements may differ from legislation in other jurisdictions.

Each of the Directors confirms that, to the best of their knowledge:

●

there is no relevant audit information of which 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 accounting standards, give

a true and fair view of the assets, liabilities, financial position and profit or loss 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 Board

Richard Roth

Chairman

20 April 2023

Report of the Independent Auditor

Independent Auditor

’s Report

to the Members of Oxford Technology 2 Venture Capital Trust Plc

Opinion

We have audited the financial statements of Oxford Technology 2 Venture Capital Trust Plc (the ‘Company’)

for the year ended 28 February 2023, which comprise the Combined Income Statement, Combined Balance

Sheet, Combined Statement of Changes in Equity, Combined Statement of Cash Flows and the related notes

to the financial 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 applicable in the

UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•

give a true and fair view of the state of the Company’s affairs as at 28 February 2023 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 conducted our audit in accordance with International Standards on Auditing (UK) ((ISAs UK)) and

applicable law. Our responsibilities under those standards are further d

escribed 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 requirements that are relevant to our audit of the financial statements

in the UK,

including the FRC’s Ethical Standard as applied to listed public interest 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 provide a basis for our opinion.

Our approach to the audit

Our audit approach was based on a thorough understanding of the Company’s business and is risk

-based. The

day-to-

day management of the Company’s investment portfolio, the custody of its

investments and the

maintenance of the Company’s accounting records are outsourced to third

-party service providers.

Accordingly, our audit work is focused on obtaining an understanding of, and evaluating, internal controls at

the Company and inspecting records and documents held by the third-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 the management of specific risks.

The audit team communicated throughout the audit with the directors 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 accordingly.

We communicated with those charged with governance regarding, among other matters, the planned scope 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 going 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 statements is appropriate.

In making this assessment

we have considered the directors’ procedures for overseeing the activities of the

Company and reviewing its results and forecasts.

The application of those procedures has been supported by

us reviewing Board minutes and other accessible documentation which confirm that the directors regularly

benchmark key performance indicators which include but is not restricted to, reviewing the net asset value per

share and net asset value total return per share and the 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

resou

rces available and accessible to ensure that the Company’ commitments and obligations are capable of

being met as they fall due.

Our procedures also included an assessment of whether the going concern disclosure in note 1 to the financial

statements giv

es a complete and accurate description of the directors’ assessment of going concern.

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast sign

ificant doubt on the Company’s ability to continue

as a going concern for a period of at least twelve months from when the financial statements are authorised for

issue. However, as we cannot predict all future events or conditions and as subsequent events may result in

outcomes that are inconsistent with judgements that were reasonable at the time they were made, the above

conclusions are not a guarantee that the Company will continue in operation.

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 Directors’ Statement of Responsibilities in the

financial statements about whether the directors considered it appropriate to adopt the going concern basis of

accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the

relevant sections of this report.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit

of the financial statements of the current period and include the most significant assessed risks of material

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 audit of the financial statements as a whole, and in forming

our opinion thereon, and we do not provide a separate opinion on these matters. In arriving at our audit opinion

above, key audit matters identified were valuation, ownership and existence of investments, and compliance

with the VCT rules. This is not a complete list of all risks identified by our audit.

Valuation, ownership and existence of investments

The Company’s investment portfolio is one of the key drivers of its results, of which 65% is represented by

quoted investments and 35% by unquoted investments.

Quoted investments are not considered to be at a high risk of material misstatement in terms of valuation, or

to be subject to a significant level of judgement, because they comprise liquid investments, for which evidence

of the market price is readily available. However, due to their materiality in the 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 pricing 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 involves significant judgements and estimates. In particular, we look

at where the directors made subjective judgements in respect of significant accounting estimates that involved

making assumptions and considering future events that are inherently uncertain.

We obtained an understanding of how the valuations were performed and considered whether the method

chosen was in accordance with published guidance and reviewed and challenged the assumptions applied to

the valuation inputs. We verified and benchmarked key inputs and estimates to independent information from

our own research and against metrics from the investments and where appropriate, we performed sensitivity

analysis on the valuation calculations and alternative valuation methods were considered and discussed with

management to provide alternative views on the value of the investments.

Further, we also considered the economic environment in which the investments operate in to identify factors

that could impact the investment valuation.

Ownership and existence are also considered significant risks. We confirmed investment holdings to custodian

report, share certificates and Companies House.

Key observations

Our testing did not identify any material

misstatements in the valuation of the Company’s investment portfolio

as at the year end.

Compliance with VCT rules

Compliance with the VCT rules is necessary to maintain the VCT status and associated tax benefits. Our audit

work included, but was not restricted to:

•

Reviewing 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 conditions for maintaining approval as a VCT as set out by HMRC. Each 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 documentation maintained, 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.

Our application of materiality

We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any

identified misstatements and in forming our opinion. For the purpose of determining whether the financial

statements are free from material misstatement, we define materiality as the magnitude of a misstatement or

an omission from the financial statements or related disclosures that 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 omission. We also determine a level of performance 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 exceeds materiality for the financial statements as a whole.

We established materiality for the financial statements as a whole to be £139,000, which is 1.5% of the value

of the Company’s total assets at planning. This is the amount representing the total magnitude of misstatements

that we expect to influence the economic decisions of the users of these financial statements.

A key judgement in determining materiality (and performance materiality) is the appropriate benchmark to

select. We considered which benchmarks and key performance indicators have the greatest bearing on

shareholder decisions. We determined that the total assets is the key benchmark to use in setting materiality

given the Company's objective is for capital appreciation (increase value of investments). When using total

assets to determine overall materiality, our approach is to apply a percentage between 0.5% and 2% to the

amount. In setting overall materiality, we applied a rate of 1.5 % being a listed and regulated entity.

We have considered performance materiality at a level of 75% of materiality for the Company’s financial

statements as a whole, which equates to £104,000. We applied this percentage in our determination of

performance materiality because the valuation of unquoted investments is subject to a significant level of

judgement and is considered to be at a high risk of material misstatement.

Audit misstatement posting threshold is determined to be £7,000, which is 5% of materiality. This is the

amount below which identified misstatements are considered to be clearly trivial from a quantitative point of

view. We may become aware of differences below this threshold which could alter the nature, timing and

scope of our audit procedures, for example if we identify smaller differences which are indicators of fraud.

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 omission. Accordingly, we

established materiality for revenue items within the income statement to be £38,000, which is 25% of the

Company’s net revenue return on ordinary activities before taxation at planning. Net revenue return excludes

realised gain or loss on sale of investments and unrealised gain or loss on valuation of investments as these

were considered in testing of investments using balance sheet materiality of £139,000.

Other information

The directors 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 opinion on the financial statements does not cover the other information and,

except to the extent otherwise explicitly stated in our report, we do not express any form of assurance

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 apparent material misstatements, we are required to determine whether there is a

material misstatement in the financial statements or a material misstatement of the other information. If, based

on the work we have performed, we conclude that there is a material misstatement of this other information,

we are required to report that fact.

We have nothing to report 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 those items meet the following conditions:

•

Fair, balanced and understandable, set out on page 39

–

the statement given by the directors that they

consider the annual report and financial statements taken as a whole is fair, balanced and understandable

and provides the information necessary for shareholders to assess the Company’s performance, busines

model and strategy, is materially inconsistent with our knowledge obtained in the audit; or

•

Audit committee reporting, set out on pages 51 to 53

–

the section describing the work of the audit

committee does not appropriately address matters communicated by us to the audit committee; or

•

Directors’ statement of compliance with the UK Corporate Governance Code, set out

on page 49

–

the parts of the Directors’ Report required under the Listing Rules relating to the Company’s compliance

with the UK Corporate Governance Code containing provisions specified for review by the auditors in

accordance with Listing Rule 9.8.10R (2) do not properly disclose a departure from a relevant provision of

the UK Corporate Governance Code.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

•

the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with

the Companies Act 2006;

•

the information given in the Strategic Report a

nd the Directors’ Report for the financial year for which the

financial statements are prepared is consistent with the financial statements and those reports have been

prepared in accordance with applicable legal requirements;

•

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 in the Disclosure

Rules and Transparency Rules sourcebook made by the Financial Conduct Authority (the FCA Rules), is

consistent with the financial statements and has been prepared 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 light of the knowledge and understanding of the Company and its environment obtained in the course of the

audit, we have not identified material misstatements in:

•

the Strategic Report 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 have nothing to report in respect of the following matters in relation to which the Companies Act 2006

requires us to report 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 us; or

•

the financial statements and the part of the Directors’ Remuneration Report to be audited are not in

agreement with the accounting records and returns; or

•

certain disclosures of directors’ remuneration specified by law are not made; or

•

we have not received all the information and explanations we require for our audit; or

•

a corporate governance statement has not been prepared by the Company.

Corporate governance statement

The Listing Rules require us to review the directors’ statem

ent in relation to going concern, longer-term

viability and that part of the Corporate Governance Statement relating to the Company's compliance with the

provisions of the UK Corporate Governance Statement specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of

the Corporate Governance Statement is materially consistent with the financial statements or our knowledge

obtained during the audit:

•

the disclosures in the annual report set out on pages 18 to 19 that describe the principal risks and explain

how they are being managed or mitigated;

•

the directors’ confirmation set out on page

18 in the annual report that they have carried out a robust

assessment of the principal risks facing the Company, including those that would threaten its business

model, future performance, solvency or liquidity;

•

the section in the annual report set out on page 51 that describes the review of the effectiveness of

Company's risk management and internal control systems, covering all material controls, including

financial, operational and compliance controls;

•

the section in the annual report set out on pages 51 to 53 that describes the work of the audit committee,

including the significant issues that the audit committee considered relating to the financial statements, if

any, and how these issues were addressed;

•

the directors’ statement set out on page

43 in the financial statements about whether the directors considered

it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the

directors’ identification of any material uncertainties to the Company’s abilit

y to continue to do so over a

period of at least twelve months from the date of approval of the financial statements;

•

whether the directors’ statement relating to going concern required under the Listing Rules in accordance

with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; or

•

the directors’ explanation set out on page

17 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 liabilities as they fall due over the period of their assessment, including

any related disclosures drawing attention to any necessary qualifications or assumptions.

Responsibilities of Directors

As explained more fully in the Directors’ Responsibilities Statement (set out on page

55, the directors are

responsible for the preparation of the financial statements and for being satisfied that they give a true and fair

view, and for such internal control as the directors determine is necessary to enable the preparation of financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company's ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations,

or have no realistic alternative but to do so.

Auditor’s Responsibilities for the audit of the financial statem

ents

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report 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 taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of

irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,

including fraud is detailed below:

We considered the nature of the Company’s industry and its control environment and reviewed the Company’s

documentation of its policies and procedures relating to fraud and compliance with laws and regulations. We

also enquired of management about their own identification and assessment of the risks of irregularities.

We obtained an understanding of the legal and regulatory framework that the Company operates in and

identified the key laws and regulations that had a direct effect on the determination of material amounts and

disclosures in the financial statements, including the UK Companies Act and tax legislation, and, those that do

not have a direct effect on the financial statements but compliance with which may be fundamental to the

Company’s ability to operate or to avoid a material penalty.

We discussed among the audit engagement team regarding the opportunities and incentives that may exist

within the organisation for fraud and how and where fraud might occur in the financial statements.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond

to the risk of management override. In addressing the risk of fraud through management override of controls,

we tested the appropriateness of journal entries and other adjustments; assessed whether the judgments made

in accounting estimates are indicative of a potential bias; and evaluated the business rationale of any significant

transactions that are unusual or outside the normal course of business.

In addition to the above, our procedures to respond to the risks identified included the following:

•

reviewing financial statement disclosures by testing to supporting documentation to assess compliance

with provisions of relevant laws and regulations described as having a direct effect on the financial

statements;

•

performing analytical procedures to identify any unusual or unexpected relationships that may indicate

risks of material misstatements due to fraud;

•

enquiring of management concerning actual and potential litigation and claims and instances of non-

compliance with laws and regulations; and

•

reading minutes of meetings of those charged with governance.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements,

recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not

detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,

misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and

the further removed non-compliance with laws and regulations is from the events and transactions reflected in

the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities for the audit of the financial statements is located on the Financial

Reporting Council’s website at www.frc.org.uk/auditorsresponsibili

ties. This description forms part of our

auditor’s report.

Other matters which we are required to address

We were appointed by the Audit Committee on 15 February 2022. The period of total uninterrupted

engagement including previous renewals and reappointments of the firm is two years.

The non-

audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we

remain independent of the Company in conducting our audit.

Other than those disclosed in the corporate governance report, we have provided no non-audit services to the

Company in the period from 1 March 2022 to 28 February 2023.

Our audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the Company's members, as a body, in accordance 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 required to state to

them in an auditors’ report and for no other purpose. To the

fullest extent permitted by law, we 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 op

inions we have formed.

Scott Lawrence FCA

(Senior Statutory Auditor)

for and on behalf of

Hazlewoods LLP

Statutory Auditor

Staverton Court

Staverton

Cheltenham

GL51 0UX

20 April 2023

Income Statement - Combined

Combined *

Year to 28 February 2023

Combined **

Year to 28 February 2022

Revenue

Capital

Total

Revenue

Capital

Total

Note Ref

£'000

£’000

(Loss)/gain on disposal of fixed asset

investments

(17)

(Loss)/gain on valuation of fixed asset

investments

(1,699)

425

Investment Income

Investment management fee net of cost

cap

(72)

Other expenses

(173)

(68)

Return on ordinary activities before

tax

(160)

(1,716)

(1,876)

(56)

437

381

Taxation on return on ordinary

activities

Return on ordinary activities after

tax

(160)

(1,716)

(1,876)

(56)

437

381

* As the OT1, OT3 and OT4 Share Classes of OT2 VCT did not exist prior to 30 June 2022, these figures only incorporate data for the

8 month period to 28 February 2023 for the OT1, OT3 and OT4 Share Classes, but the full 12

months’ data for the OT2 Share Class

** As the OT1, OT3 and OT4 Share Classes of OT2 VCT did not exist prior to 30 June 2022, these figures are only for the OT2 Share

Class

There was no other Comprehensive Income recognised during the period.

The ‘Total’ column of the Income Statement is the profit and loss account of the Company; the supplementary

revenue return and capital return columns have been prepared under guidance published by the Association of

Investment Companies.

All revenue and capital items in the above statement derive from continuing 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 Company has no recognised gains or losses other than the results for the period as set out above.

The accompanying notes are an integral part of the Financial Statements.

Income Statement

–

OT2 Share Class * (non-statutory analysis)

OT2 Share Class

Year to 28 February

2023

OT2 Share Class

Year to 28 February

2022

Revenue

Capital

Total

Revenue

Capital

Total

£'000

£’000

Gain on disposal of fixed asset

investments

(Loss)/gain on valuation of fixed

asset investments

(276)

425

Investment Income

Investment management fee net of

cost cap

(17)

Other expenses

(82)

(68)

Return on ordinary activities

before tax

(89)

(276)

(365)

(56)

437

381

Taxation on return on ordinary

activities

Return on ordinary activities after

tax

(89)

(276)

(365)

(56)

437

381

Earnings per share

–

basic and

diluted

(1.7)p

(5.2)p

(6.9)p

(1.0)p

8.2p

7.2p

* The figures for the year to 28 February 2022 also represent the figures for the whole Company for that year

Income Statement

–

OT1, OT3 and OT4 Share Classes (non-statutory analysis)

OT1 Share Class

Eight months to 28 February

2023

OT3 Share Class

Eight months to 28 February

2023

OT4 Share Class

Eight months to 28 February

2023

Revenue

Capital

Total

Revenue

Capital

Total

Revenue

Capital

Total

£'000

£’000

Gain/(loss) on disposal of fixed asset

investments

(38)

Gain/(loss) on valuation of fixed

asset investments

(413)

(1,047)

Investment Income

Investment management fee

(8)

(17)

(30)

Other expenses

(31)

(30)

Return on ordinary activities

before tax

(43)

(451)

(494)

(34)

(1,047)

(1,081)

Taxation on return on ordinary

activities

Return on ordinary activities after

tax

(43)

(451)

(494)

(34)

(1,047)

(1,081)

Earnings per share

–

basic and

diluted

0.1p

1.0p

1.1p

(0.7)p

(7.3)p

(8.0)p

(0.3)p

(9.7)p

(10.0)p

Balance Sheet - Combined

*At fair value through profit and loss

** As the OT1, OT3 and OT4 Share Classes of OT2 VCT did not exist prior to 30 June 2022, these figures are only for the OT2

Share Class

The accompanying notes are an integral part of the Financial Statements.

The statements were approved by the Directors and authorised for issue on 20 April 2023 and are signed on

their behalf by:

Richard Roth

Chairman

Note

reference

Combined

As at 28 February 2023

Combined **

As at 28 February 2022

£’000

£'000

Fixed asset investments*

8,907

1,488

Current assets:

Cash at bank and cash equivalents

292

184

Debtors

Creditors:

Amounts falling due within one year

(83)

(24)

Net current assets

223

216

Net assets

9,130

1,704

Called up share capital

278

Capital redemption reserve

626

Share premium reserve

376

Special distributable reserve

10,078

Unrealised Capital reserve

(1,383)

316

Profit and Loss Account

156

333

Total equity shareholders' funds

9,130

1,704

Balance Sheet

–

OT2 Share Class * (non-statutory analysis)

* The figures as at 28 February 2022 also represent the figures for the whole Company for that year

Balance Sheet

–

OT1, OT3 and OT4 Share Classes (non-statutory analysis)

**At fair value through profit and loss

OT2 Share Class

As at 28 February 2023

OT2 Share Class

As at 28 February 2022

£’000

Fixed asset investments**

1,212

1,488

Current assets:

Cash at bank and cash equivalents

164

184

Debtors

Creditors:

Amounts falling due within one year

(50)

(24)

Net current assets

127

216

Net assets

1,339

1,704

Called up share capital

Capital redemption reserve

626

Share premium reserve

376

Special distributable reserve

1,001

Unrealised Capital reserve

316

Profit and Loss Account

245

333

Total equity shareholders’ funds

1,339

1,704

Net asset value per share

25.1p

32.0p

OT1 Share Class

As at 28 February 2023

OT3 Share Class

As at 28 February 2023

OT4 Share Class

As at 28 February 2023

£’000

Fixed asset investments**

2,450

2,086

3,159

Current assets:

Cash at bank and cash equivalents

Debtors

Creditors:

Amounts falling due within one year

(7)

(14)

(11)

Net current (liabilities)/assets

Net assets

2,461

2,111

3,219

Called up share capital

108

Share premium reserve

Special distributable reserve

2,343

2,542

4,192

Unrealised capital reserve

(413)

(1,047)

Profit and Loss Account

(81)

(34)

Total equity shareholders’ funds

2,461

2,111

3,219

Net asset value per share

45.3p

33.7p

29.7p

Statement of Changes in Equity – Combined

Called up

Capital

£’000

Capital

Redemption

Reserve

£’000

Premium

Reserve

£’000

Special

Distributable

Reserve

£’000

Unrealised

Capital

Reserve

£’000

Profit &

Loss

Account

£’000

Total

£’000

As at 1 March 2021

533

146

376

(631)

899

1,323

Revenue return on

ordinary activities after

tax

(56)

Current period gains on

disposal

Current period gains on

fair value of investments

425

Permanent diminution in

value now realised

540

(540)

Prior year gains now

realised

(18)

Share capital

reclassification

(480)

480

Balance as at 28

February 2022

626

376

316

333

1,704

As at 1 March 2022

626

376

316

333

1,704

Issue of Consideration

225

9,077

9,302

Capital Reduction

(626)

(9,453)

10,078

Revenue return on

ordinary activities after

tax

(160)

Current period losses on

disposal

(17)

Current period losses on

fair value of investments

(1,699)

Balance as at 28

February 2023

278

10,078

(1,383)

156

9,130

* As the OT1, OT3 and OT4 Share Classes of OT2 VCT did not exist prior to 30 June 2022, all these figures prior to this date are for

the OT2 Share Class only. For the final 8 month period to 28 February 2023, the numbers include data on all 4 Share Classes

The accompanying notes are an integral part of the Financial Statements.

Statement of Changes in Equity

–

OT2 Share Class * (non-statutory analysis)

Called up

Capital

£’000

Capital

Redemption

Reserve

£’000

Premium

Reserve

£’000

Special

Distributable

Reserve

£’000

Unrealised

Capital

Reserve

£’000

Profit &

Loss

Account

£’000

Total

£’000

As at 1 March 2021

533

146

376

(631)

899

1,323

Revenue return on

ordinary activities after

tax

(56)

Current period gains

on disposal

Current period gains

on fair value of

investments

425

Permanent diminution

in value now realised

540

(540)

Prior year gains now

realised

(18)

Share capital

reclassification

(480)

480

Balance as at 28

February 2022

626

376

316

333

1,704

As at 1 March 2022

626

376

316

333

1,704

Revenue return on

ordinary activities after

tax

(89)

Capital Reduction

(626)

(376)

1,001

Current period losses

on fair value of

investments

(276)

Balance as at 28

February 2023

1,001

245

1,339

* The figures for the year to 28 February 2022 also represent the figures for the whole Company for that year

Statement of Changes in Equity

–

OT1 Share Class (non-statutory analysis)

Capital

Premium

Reserve

Special

Distributable

Reserve

Unrealised

Capital

Reserve

Profit and Loss

Account

Total

£’000

As at 1 March 2022

Issue of Consideration Shares

2,343

2,397

Capital Reduction

(2,343)

2,343

Revenue return on ordinary activities

after tax

Current period gains on disposal

Current period gains on fair value of

investments

Balance as at 28 February 2023

2,343

2,461

Statement of Changes in Equity

–

OT3 Share Class (non-statutory analysis)

Share Capital

Premium

Reserve

Special

Distributable

Reserve

Unrealised

Capital

Reserve

Profit and

Loss

Account

Total

£’000

As at 1 March 2022

Issue of Consideration Shares

2,542

2,605

Capital Reduction

(2,542)

2,542

Revenue return on ordinary activities

after tax

(43)

Current period losses on disposal

(38)

Current period losses on fair value of

investments

(413)

Balance as at 28 February 2023

2,542

(413)

(81)

2,111

Statement of Changes in Equity

–

OT4 Share Class (non-statutory analysis)

Share Capital

Share Premium

Reserve

Special

Distributable

Reserve

Unrealised

Capital

Reserve

Profit and

Loss

Account

Total

£’000

As at 1 March 2022

Issue of Consideration Shares

108

4,192

4,300

Capital Reduction

(4,192)

4,192

Revenue return on ordinary activities

after tax

(34)

Current period losses on fair value of

investments

(1,047)

Balance as at 28 February 2023

108

4,192

(1,047)

(34)

3,219

Statement of Cash Flows - Combined

Combined *

Year to

28 February 2023

£’000

Combined **

Year to

28 February 2022

£’000

Cash flows from operating activities

Return on ordinary activities before tax

(1,876)

381

Adjustments for:

Decrease/(increase) in debtors ***

191

(23)

(Decrease)/increase in creditors ***

(203)

Loss/(gain) on disposal of fixed asset investments

(12)

Loss/(gain) on valuation of fixed asset investments

1,699

(425)

Movement in investment debtors

(38)

Outflow from operating activities

(210)

(70)

Cash flows from investing activities

Purchase of investments

Disposal of investments

Total cash outflow from investing activities

Cash flows from financing activities

Cash brought in from merger

266

Short term interest free loan ****

(25)

Dividends paid

Total cash inflow/(outflow) from financing activities

266

(25)

Increase/(decrease) in cash and cash equivalents

108

(27)

Opening cash and cash equivalents

184

211

Closing cash and cash equivalents

292

184

As the OT1, OT3 and OT4 Share Classes of OT2 VCT did not exist prior to 30 June 2022, these figures only incorporate data for the

8 month period to 28 February 2023 for the OT1, OT3 and OT4 Share Classes, but the full 12

months’ data for the OT2 Share Clas

** As the OT1, OT3 and OT4 Share Classes of OT2 VCT did not exist prior to 30 June 2022, these figures are only for the OT2 Share

Class

***

The individual share classes include balances between each other for operational reasons; the combined cash flow removes these

on consolidation

**** Pre Merger, there was a loan between Oxford Technology 2 VCT Plc and Oxford Technology VCT Plc for operational reasons.

This has been repaid following the Merger. The combined cash flow removes this on consolidation post-Merger.

The accompanying notes are an integral part of the Financial Statements

Statement of Cash Flows

–

OT2 Share Class * (non-statutory analysis)

OT2 Share Class

Year

28 February 2023

OT2 Share Class

Year to

28 February 2022

£'000

Cash flows from operating activities

Return on ordinary activities before tax

(365)

381

Adjustments for:

Decrease/(increase) in debtors

(23)

(Decrease)/increase in creditors

Gain on disposal of fixed asset investments

(12)

Loss/(gain) on valuation of fixed asset investments

276

(425)

Outflow from operating activities

(45)

(70)

Cash flows from investing activities

Purchase of investments

Disposal of investments

Total cash inflow from investing activities

Cash flows from financing activities

Short term interest free loan ***

(25)

Dividends paid

Total cash in/(outflow) from financing activities

(25)

Decrease in cash and cash equivalents

(20)

(27)

Opening cash and cash equivalents

184

211

Closing cash and cash equivalents

164

184

* The figures for the year to 28 February 2022 also represent the figures for the whole Company for that year

** Pre Merger, there was a loan between Oxford Technology 2 VCT Plc and Oxford Technology VCT Plc for operational

reasons. This has been repaid following the Merger.

Statement of Cash Flows

–

OT1, OT3 and OT4 Share Classes (non-statutory analysis)

OT1 Share Class

Eight months to

28 February 2023

OT3 Share Class

Eight months to

28 February 2023

OT4 Share Class

Eight months to

28 February 2023

£'000

Cash flows from operating activities

Return on ordinary activities before tax

(494)

(1,081)

Adjustments for:

Decrease/(increase) in debtors *

121

(Decrease)/increase in creditors *

(66)

(69)

(Gain)/loss on disposal of fixed asset investments

(21)

(Gain)/loss on valuation of fixed asset investments

(38)

413

1,047

Movement in investment debtors

(38)

Outflow from operating activities

(47)

(29)

(89)

Cash flows from investing activities

Purchase of investments

Disposal of investments

Total cash inflow from investing activities

Cash flows from financing activities

Cash brought in from merger

160

Dividends paid

Intra-class short term loan **

(25)

Total cash inflow from financing activities

160

Increase in cash and cash equivalents

Opening cash and cash equivalents

Closing cash and cash equivalents

The individual share classes include balances between each other for operational reasons; the combined cash flow removes these

on consolidation.

* * Pre Merger, there was a loan between Oxford Technology 2 VCT Plc and Oxford Technology 2 VCT for operational reasons.

This has been repaid following the Merger. The combined cash flow removes these on consolidation

Notes to the Financial Statements

Oxford Technology 2 Venture Capital Trust Plc is a public company and is limited by shares.

1. Principal Accounting Policies

Basis of Preparation

The Financial Statements have been prepared under the historical cost convention, except for the measurement

at fair value of certain financial instruments, and in accordance with UK Generally Accepted Accounting

Practice (“GAAP”), including Financial Reporting Standard 102 –

‘The Financial Reporting Standard

applicable in the United Kingdom and R

epublic of Ireland’ (‘FRS 102’) and with the Companies Act 2006 and

the Statement of Recommended Practice (

“

SORP

”) ‘Financial Statements of Investment Trust Companies and

Venture Capital Trusts (revised 202

1)’ issued by the AIC.

The principal accounting p

olicies have remained materially unchanged from those set out in the Company’s

2022 Annual Report and Financial Statements.

A summary of the principal accounting policies follows.

FRS 102 sections 11 and 12 have been adopted with regard to the Company’s

financial instruments. The

Company held all fixed asset investments at fair value through profit or loss. Accordingly, all interest income,

fee income, expenses and gains and losses on investments are attributable to assets held at fair value through

profit or loss.

The most important policies 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 subsequent periods.

These are discussed in more detail below.

During the year, the assets and liabilities of each Target VCT were transferred to the Company in return for

the issue of shares to the Target VCT Shareholders corresponding to the class of Target VCT Share they held

in the Target VCT, pursuant to a scheme of reconstruction under section 110 of IA 1986. The combination has

been accounted for using the purchase method. The consideration for each acquisition was measured at the

aggregate of the fair values at acquisition date of the assets given and liabilities assumed.

As a result of the Merger

, the Company’s interest in Select Technology

has exceeded 50%. Per the SORP

“

Financial Statements of Investment Trust Companies and Venture Capital Trusts

”

issued by the AIC in April

2021 (

“

AIC SORP

”

), subsidiary undertakings are excluded from consolidation by virtue of the requirements

of the Companies Act 2006 or FRS 102 where investments are held as part of an investment portfolio. Under

FRS 102, a subsidiary shall be excluded from consolidation where it is held as part of an investment portfolio.

Where presentational guidance set out in the AIC SORP is consistent with the requirements of FRS 102, the

Directors have sought to prepare the financial statements on a basis compliant with the recommendations of

that SORP.

Going Concern

The assets of the Company consist mainly of securities, three of which are AIM quoted: Scancell and Mirriad

are relatively liquid and readily accessible whilst any trading in Arecor shares then is subject to orderly market

provisions until early June 2023. As at 28 February 2023, 3.2% of net assets were cash. After reviewing the

Company’s fo

recasts 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

continues to adopt the going concern basis in preparing its Financial Statements.

Key Judgements and Estimates

The preparation of the Financial Statements requires the Board to make judgements and estimates regarding

the application of policies and affecting the reported amounts of assets, liabilities, income and expenses.

Estimates and assumptions mainly relate to the fair valuation of the fixed asset investments particularly

unquoted investments. Estimates are based 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 marketability of the investments held.

Although the Directors believe that the assumptions concerning the business environment and estimate 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 fair value in the future.

The material factors affecting the returns and net assets attributable to shareholders are the valuations of the

investments and ongoing general expenses.

Functional and Presentational Currency

The Financial Statements are presented in Sterling (£). The functional currency is also Sterling (£).

Cash and Cash Equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly

liquid investments with original maturities of three 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 thos

e assets are set

out below.

Purchases and sales of investments are recognised 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 them 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 basis 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 investments are measured at subsequent reporting dates at fair value.

In the case of investments quoted on a recognised stock exchange, fair value is established by reference to the

closing bid price on the 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 changes in fair value of investments are recognised as part of the capital return

within the Income Statement and allocated to the Unrealised Capital Reserve.

In the preparation of the valuations of assets the Directors are required to make judgements and estimates that

are reasonable and incorporate their knowledge of the performance of the investee companies.

A key judgement made in applying the above accounting policy 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 agree the values that represent the

extent to which an investment loss has become realised. This is based upon an assessment of objective evidence

of that investment’s future prospects, to determine whether there

is potential for the investment to recover in

value.

Fair Value Hierarchy

Paragraph 34.22 of FRS 102 regarding financial instruments that are measured in the Balance Sheet at fair

value requires disclosure of fair value measurements dependent on whether the stock is quoted and the level

of the accuracy in the ability to determine its fair value. The fair value measurement hierarchy is as follows:

For Quoted Investments:

Level 1: quoted prices in active markets for an identical asset. The fair value of financial instruments traded in

active markets is based on quoted market prices at the Balance Sheet date. A market is regarded as active if

quoted prices are readily and regularly available, and those prices represent actual and regularly occurring

market

transactions on an arm’s length basis. The quoted market price used for financial assets held is the bid

price at the Balance Sheet date.

Level 2: where quoted prices are not available (or where a stock is normally quoted on a recognised stock

exchange that no quoted price is available), the price of a recent transaction for an identical asset, providing

there has been no significant change in economic circumstances or a significant lapse in time since the

transaction took place. The Company held no such investments in the current or prior year.

For investments not quoted in an active market:

Level 3: the fair value of financial instruments that are not traded in an active market is determined by using

valuation techniques.

These valuation techniques maximise the use of observable data (e.g. the price of recent transactions,

earnings/revenue multiple, discounted cash flows and/or net assets) where it is available and rely as little as

possible on entity specific estimates.

There was no transfers between these classifications in the year (2022: one with the IPO of Arecor). 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 to 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 expenses, including investment management fees, are accounted for on an accruals basis and are charged

wholly to revenue. Some years ago, investment management fees were charged 75% to capital and 25% to

revenue. 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 not currently raising new capital.

Any applicable

performance fee will continue to be charged 100% to capital.

Revenue and Capital

The revenue column of the Income Statement includes all income and revenue expenses of the Company.

The

capital column includes gains and losses on disposal 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 date.

Taxation

Current tax is recognised for the amount of income tax payable in respect of the taxable profit 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 undiscounted basis in respect of all timing 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 principal 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 instrument is any contract that evidences a residual interest in the assets of the entity after deducting

all of its financial liabilities. 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 have any externally imposed capital requirements.

Reserves

Called up Share Capital represents the nominal value of shares that have been issued.

Share Premium Reserve includes any premiums received on issue of share capital. Any transaction costs

associated with the issuing of shares are deducted from the Share Premium Reserve.

Capital Redemption Reserve accounts for amounts by which the issued share capital is diminished through the

repurchase and cancellation of the Company’s own shares.

Special Distributable Reserve includes cancelled share premium and capital redemption reserves available for

distribution and may be used amongst other things to cover dividend payments and share buy backs.

Unrealised Capital Reserve

arises when the Company revalues the investments still held during the period and

any gains or losses arising are credited/charged to the Unrealised Capital Reserve. It should be noted that where

investments were taken on as part of the Merger, it was their value at that time that became the take on cost to

the Company, and hence all gains and losses (whether realised or unrealised) are now assessed against these

values.

When an investment is sold, any balance held on the Unrealised Capital 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

permanent diminution in value, any such impaired

balance is also transferred to the Profit and Loss Account as a movement in reserves.

The Profit and Loss Account represents the aggregate of accumulated realised profits, less losses,

permanent diminutions in value, and dividends and buy backs.

Dividends Payable

Dividends payable

are recognised as distributions in the Financial Statements when the Company’s liability to

make payment has been established.

This liability is established for interim dividends when they are declared

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

Investment Income

Year Ended

28 February 2023

£’000

Year Ended

28 February 2022

£’000

Dividends received

Total

All of the Company’s income has been generated in the United Kingdom from its

investment portfolio.

Dividends on the OT1, OT3 and OT4 Share Classes are included from 1 July 2022.

Investment Management Fees

All expenses are accounted for on an accruals basis and are charged wholly to revenue.

Year Ended

28 February 2023

£’000

Year Ended

28 February 2022

£’000

Investment management fee

Cost Cap refund from OTM

(21)

Total

(8)

In the year to 28 February 2023 the manager received a fee of 1% of the net asset value of the OT2 Share Class

as at the previous year end. With effect from 1 July 2022, the manager also received a fee of 1% of the net

asset value of the OT3 and OT4 Share Classes as at their respective previous year ends, and 0.5% of the net

asset value of the OT1 Share Classes. In 2022, as far as these financial statements are concerned, the manager

received a fee of 1% of the net asset value of the OT2 Share Class as at the previous year end. OTM is also

entitled to certain monitoring fees from investee companies and the Board reviews the amounts.

Expenses are capped at 3%, including the management fee, but excluding Directors’ fees and any performance

fee. Oxford Technology Management reduced their management fee in the prior year by £21,585 to comply

with this cost cap which was credited to the revenue account. As a result of the material increase in net assets

following the Merger, costs did not exceed the cost cap in the current year (note, any costs to implement the

Merger are excluded from the cost cap calculation), and so there was no corresponding reduction in the fee

due to OTM this year.

A performance fee is payable to the Investment Manager once original shareholders have received a specified

threshold in cash for each 100p (gross) invested, and is different by share class:

OT1 Share Class

The original threshold of 125p has been increased by compounding that portion that remains to be paid to

shareholders by 6% per annum with effect from 1 March 2008, resulting in the remaining required threshold

rising to 181.6p at 28 February 2023, corresponding to a total shareholder return of 236.6p after taking into

account the 55p already paid out (55p + 181.6p = 236.6p).

After this amount has been distributed to shareholders, each extra 100p distributed goes 80p to the shareholders

and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management

receives 14p.

OT2 Share Class

The original threshold of 100p has been increased 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 154.6p at 28 February 2023, corresponding to a total shareholder return of 183.9p after taking into

account the 29.3p already paid out (29.3p + 154.6p = 183.9p).

The 29.3p already paid out includes an effective

6.8p (per original OT2 share) that was returned to shareholders as part of the tender offer in 2017.

After this amount has been distributed to shareholders, each extra 100p distributed goes 80p to the shareholders

and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management

receives 14p.

OT3 Share Class

The original threshold of 100p has been increased 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 112.7p at 28 February 2023, corresponding to a total shareholder return of 158.2p after taking into

account the 45.5p already paid out (45.5p + 112.7p = 158.2p).

The 45.5p already paid out includes an effective

3.5p (per original OT3 share) that was returned to shareholders of OT3VCT as part of a share buyback

undertaken by OT3VCT in 2021.

After this amount has been distributed to shareholders, each extra 100p distributed goes 80p to the shareholders

and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management

receives 15p.

OT4 Share Class

The original threshold of 100p has been increased by compounding that portion that remains to be paid to

shareholders by 6% per annum with effect from 1 March 2015, resulting in the remaining required threshold

rising to 86.3p at 28 February 2023, corresponding to a total shareholder return of 136.3p after taking into

account the 50.0p already paid out (50.0p + 88.3p = 136.3p).

The 50.0p already paid out includes an effective

2.0p (per original OT4 share) that was returned to shareholders of OT4VCT as part of a share buyback

undertaken by OT4VCT in 2022.

After this amount has been distributed to shareholders, each extra 100p distributed goes 80p to the shareholders

and 20p to the beneficiaries of the performance incentive fee, of which Oxford Technology Management

receives 15p.

No performance fee has become due or been paid to date. Any applicable performance fee will be charged

100% to capital.

4. Other Expenses

All expenses are accounted for on an accruals 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 2023

£’000

Year Ended

28 February 2022

£’000

Directors’ remuneration

Auditors’

remuneration

London Stock Exchange Fees

FCA Fees

Other expenses

Total

173

Details of directors' remuneration (excluding employer’s NIC) are given in the audited part of the Directors’

Remuneration Report (see pages 45 to 48).

The figures above include £44,867 of costs related to the Merger that were chargeable to the OT2 Share Class.

The balance of the Merger costs relating to OT1VCT, OT3VCT and OT4VCT were charged to those entities

before the Merger took place. Edition incurred all the costs linked to the Offer.

Irrecoverable VAT included in these expenses is £13,500 (2022: £6,900).

5. Tax on Ordinary Activities

Corporation tax payable at 19.0% (2022: 19.0%) is applied to profits chargeable to corporation tax, if any.

The corporation tax charge for the period was £ nil (2022: £ nil).

Year Ended

28 February 2023

£’000

Year Ended

28 February 2022

£’000

Return on ordinary activities

before tax

(1,876)

381

Current tax at standard rate of

taxation

(356)

UK dividends not taxable

Merger costs not allowable

(16)

(1)

Unrealised losses/(gains) not

taxable

323

(81)

Realised losses/(gains) not

taxable

(2)

Excess management expenses

carried forward

Total current tax charge

The Company has excess management expenses of £2,015,554 (2022: £1,815,589) to carry forward to offset

against future taxable profits.

Approved VCTs are exempt from tax on capital gains within the company. Since the Directors intend that the

Company will continue to conduct its affairs so as to maintain its approval as a VCT, no current deferred tax

has been provided in respect of any capital gains or losses arising on the revaluation or disposal of investments.

6. Earnings per Share

The calculation of earnings per share (basic and diluted) for the period is based on the net profit/loss of each

Share Class attributable to those shareholders divided by the weighted average number of shares in issue during

the period.

OT1 Share Class: profit of £64,000, (2022: n/a) divided by 5,431,655 shares (2022: n/a)

OT2 Share Class: loss of £365,000, (2022: £381,000) divided by 5,331,889 shares (2022: 5,331,889)

OT3 Share Class: loss of £494,000, (2022: n/a) divided by 6,254,596 shares (2022: n/a)

OT4 Share Class: loss of £1,081,000, (2022: n/a) divided by 10,826,748 shares (2022: n/a)

There are no potentially dilutive capital instruments in issue and, therefore, no diluted returns per share figures

are relevant.

The basic and diluted earnings per share are therefore identical.

7. Investments

AIM quoted

investments

Level 1

£’000

Unquoted

investments

Level 3

£’000

Total

investments

£’000

Valuation and net book amount:

Book cost as at 28 February 2022

402

1,310

1,712

Cumulative revaluation to

28 February 2022

687

(911)

(224)

Valuation at 28 February 2022

1,089

399

1,488

Movements in the year:

Investments taken on from the

Merger

transferred in the year at cost

6,088

3,061

9,149

Disposals at cost

(31)

Disposals revaluation

Revaluation in year

(1,357)

(342)

(1,699)

Valuation at 28 February 2023

5,789

3,118

8,907

Book cost at 28 February 2023

6,459

4,371

10,830

Cumulative revaluation to

28 February 2023

(670)

(1,253)

(1,923)

Valuation at 28 February 2023

5,789

3,118

8,907

All investments are initially measured at their transaction price (in the case of the investments taken on as part

of the Merger, their value at that time). Subsequently, at 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 valued at fair value in accordance with the IPEV guidelines.

The changes in fair value of such investments recognised 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 value 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 quoted prices in 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 this methodology for investments not quoted on an active market, however, a detailed assessment

of the respective value of each portfolio company is also performed in order to gain the necessary comfort as

to whether a fair value reduction or uplift is in fact required. 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 performance indicators.

Further, all of these are considered in the context of any exit equity waterfall 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 multiple based valuation methodology could have on the value of the

Company’s investment pool as at the year end

for each Share Class.

Throughout this exercise, and in determining the value of the Company’s equity investments where trading

multiples are considered, a selection of valuation methodologies are considered, not limited to: the review of

trading multiples and comparison to industry peers, based on size, stage of development, revenue generation

and growth rate, as well as wider strategy and market position. Appropriate valuation methodologies are then

used and, where applicable, 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 illiquidity, marketability and other differences, advantages and disadvantages between

the portfolio company and the comparable public companies based on company specific facts and

circumstances.

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.

OT1 Share Class

As a result of this analysis the Board has concluded that such reasonable possible alternative assumptions

could result in a NAV reduction of £460,000 (8.5p per share) or a NAV increase of £913,000 (16.8p 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 three remaining unquoted investments is material to the range of

outcomes that could reasonably be expected.

•

Downside analysis: 8.5p decrease in NAV per share

. The identified company sees a reduction in

valuation to the value of its net assets. The Directors therefore believe that this establishes a credible

lower bound to the range of possible valuations for this portfolio company.

•

Upside analysis: 16.8p increase in NAV per share

. The identified company is valued at a multiple

of sales with a discount applied due market uncertainties within the company’s markets as at 28

February 2023.

Removing this discount would be an appropriate reflection of improved trading.

OT2 Share Class

As a result of this analysis the Board has concluded that such reasonable possible alternative assumptions

could result in a NAV reduction of £114,000 (2.1p per share) or a NAV increase of £226,000 (4.2p 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 five remaining unquoted investments is material to the range of

outcomes that could reasonably be expected.

•

Downside analysis: 2.1p decrease in NAV per share

. The identified company sees a reduction in

valuation to the value of its net assets. The Directors therefore believe that this establishes a credible

lower bound to the range of possible valuations for this portfolio company.

•

Upside analysis: 4.2p increase in NAV per share

. The identified company is valued at a multiple

of sales with a discount applied due market uncertainties within the company’s markets as at 28

February 2023.

Removing this discount would be an appropriate reflection of improved trading.

OT3 Share Class

As a result of this analysis the Board has concluded that such reasonable possible alternative assumptions

could result in a NAV reduction of £43,000 (0.7p per share) or a NAV increase of £86,000 (1.4p 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 six remaining unquoted investments is material to the range of outcomes

that could reasonably be expected.

•

Downside analysis: 0.7p decrease in NAV per share

. The identified company sees a reduction in

valuation to the value of its net assets. The Directors therefore believe that this establishes a credible

lower bound to the range of possible valuations for this portfolio company.

•

Upside analysis: 1.4p increase in NAV per share

. The identified company is valued at a multiple

of sales with a discount applied due market uncertainties w

ithin the company’s markets as at 28

February 2023.

Removing this discount would be an appropriate reflection of improved trading.

OT4 Share Class

As a result of this analysis the Board has concluded that such reasonable possible alternative assumptions

could result in a NAV reduction of £282,000 (2.6p per share) or a NAV increase of £560,000 (5.2p 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 eight remaining unquoted investments is material to the range of

outcomes that could reasonably be expected.

•

Downside analysis: 2.6p decrease in NAV per share

. The identified company sees a reduction in

valuation to the value of its net assets. The Directors therefore believe that this establishes a credible

lower bound to the range of possible valuations for this portfolio company.

•

Upside analysis: 5.2p increase in NAV per share

. The identified company is valued at a multiple

of sales with a disco

unt applied due market uncertainties within the company’s markets as at 28

February 2023.

Removing this discount would be an appropriate reflection of improved trading.

Subsidiary Companies

The Company also holds 100% of the issued share capital of OT2 Managers Ltd at a cost of £1.

Results of the subsidiary undertaking for the year ended 28 February 2023 are as follows:

Country of

Registration

Nature of

Business

Turnover

Retained

profit/loss

Net Assets

OT2 Managers

Ltd

England and

Wales

Investment

Manager

£72,400

£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 true and fair view.

The Financial Statements therefore

present only the results of Oxford Technology 2 Venture Capital Trust Plc, which the Directors also consider

is the most useful presentation for shareholders.

As explained in the Basis of Preparation in Note 1, our shareholding in Select Technology is not consolidated

despite the Company holding more than 50% of its equity, as the investment is held as part of an investment

portfolio.

Each of the Target VCTs also had their own subsidiary management company (OT1 Managers Ltd, OT3

Managers Ltd

and OT4 Managers Ltd). These three companies were transferred to OT2VCT as part of the

Merger. None of these companies traded following the Merger, and were placed into Members’ Voluntary

Liquidation: they were dissolved on 24 January 2023.

Debtors

28 February 2023

£’000

28 February 2022

£’000

Prepayments, accrued income &

other debtors

Amount due from Oxford

Technology VCT Plc (OT1)

Common Liquidity Agreement

Amount due from OTM

Cost cap refund

Total

9. Creditors

28 February 2023

£’000

28 February 2022

£’000

Creditors and accruals

Total

10. Share Capital

28 February 2023

£’000

28 February 2022

£’000

Issued, allotted, called up and

fully paid:

5,431,655 (2022: nil)

OT1 shares of 1p each

5,331,889 (2022: 5,331,889)

OT2 shares of 1p each

6,254,596 (2022: nil)

OT3 shares of 1p each

10,826,748 (2022: nil)

OT4 shares of 1p each

108

Total

278

Share Capital

–

Issue of Shares, and Reduction of Capital

During the year, as a result of the Merger, the above OT1, OT3 and OT4 shares were issued to the shareholders

of OT1VCT, OT3VCT and OT4VCT respectively.

The Company now has 27,844,888 ordinary shares of 1p each.

Shareholders also approved the cancellation of certain reserves of the Company at the general meeting held on

20 June 2022, which was a pre-cursor to creating additional distributable reserves, which can be used amongst

other things to pay dividends and/or buy back shares in the Company. The reduction in capital became effective

on 22 November 2022, following the confirmation by the High Court of Justice of the cancellation of the sum

standing to the credit of the Company's share premium account and capital redemption reserve, which totalled

£10,078,248.27, and the subsequent registration of the Court Order at Companies House.

11.

Reserves

When the Company revalues its investments during the period, any gains or losses arising are credited/charged

to the Income Statement.

Changes in fair value of investments are then transferred to the Unrealised Capital

Reserve.

When an investment is sold or there is any permanent diminution in value, any balance held on the

Unrealised Capital Reserve is transferred to the Profit and Loss Account as a movement in reserves.

As indicated in the above Note 10, following Court Approval of the reduction in capital, the amounts available

for distribution increased by £10,078,248.27.

Distributable reserves are £8,851,000 as at 28 February 2023 (2022: £333,000).

Reconciliation of Movement in Shareholders’ Funds

28 February 2023

£’000

28 February 2022

£’000

Shareholders’ funds at start of

year

1,704

1,323

Return on ordinary activities

after tax

Total Assets taken on from the

Merger

(1,876)

9,302

381

Shareholders’ funds at end of

year

9,130

1,704

No dividends were paid nor declared in the year to 28 February 2023 (2022: nil).

12. Capital Commitments

The Company had no capital commitments at 28 February 2023 or 28 February 2022.

13.

Related Party Transactions

OT2 Managers Ltd, a wholly owned subsidiary, provides investment management services to the Company

for a fee of either 0.5% or 1% of net assets per annum, depending on the Share Class as set out on page 40.

During the year, £50,815 was paid in respect of these fees (2022: £13,226).

Due to the cost cap of 3% being

breached, £21,585 was due back from OTM at the year end last year, and was settled this year: with the

additional assets following the Merger, the cost cap was not breached in 2023.

Under the terms of the Common Liquidity Agreement between the 4 Oxford Technology VCTs, OT2VCT had

made a short term interest free loan to OT1VCT. £25,000 of this was outstanding at 1 March 2022, and also

at the time of the Merger. This balance was repaid prior to the year end.

The £30,000 paid to certain directors (£27,000 to Richard Roth and £3,000 to David Livesley) referred to in

the Directors’ Remuneration Report constitute

d a smaller related party transaction for the purposes of Chapter

11 of the Listing Rules.

14.

Financial Instruments

The Company’s financial instruments comprise equity and loan note investments, cash balances and debtors

and creditors.

The Company holds financial assets in accordance with its investment policy of investing

mainly in a portfolio 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 risk faced by these instruments, such

as interest rate risk or liquidity risk is considered to be minimal due to their 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 unquoted 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 rules limit the extent to which

suitable Qualifying investments can be bought or sold.

The Company’s portfolio

in each Share Class is concentrated for various reasons, including the age of the VCT

(and the legacy VCTs from which 3 of the portfolios were derived), exits within the portfolio and the

Company’s policy of seeking to return excess capital to shareholders.

No new funds have been raised by the

Company (or any of the Target VCTs) since 2010. No investments in new portfolio companies have been made

for at least 8 years, apart from one by OT2VCT in Scancell in 2018 and by OT1VCT in Arecor in 2021. These

were both into portfolio companies well known to the Board and Investment Adviser, where the other OT

VCTs were not able to invest for VCT Qualifying Test reasons, and were primarily for liquidity management

purposes

. The overall disposition of the Company’s assets is regularly monitored by the Board.

Classification of financial instruments

The Company held the following categories of financial instruments, all of which are included in the balance

sheet at fair value, at 28 February 2023 and 28 February 2022:

28 February 2023

£’000

28 February 2022

£’000

Financial assets at fair value

through profit or loss

Fixed asset investments

8,907

1,488

Total

8,907

1,488

Financial assets

measured at amortised cost

Cash at bank and cash

equivalents

292

184

Debtors

Total

292

230

Financial liabilities measured

at amortised cost

Creditors

Accruals

Total

Fixed asset investments (see Note 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 is represented by their carrying value in the balance sheet. The Directors believe that the

fair value of the assets held at the year-end is equal to their book value.

The Comp

any’s creditors and debtors are initially recognised at fair value, which is usually 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 associated with the

financial instruments and markets in which it invests. The most significant types of financial risk facing the

Company are market risk, credit risk and liquidity risk. The Company's approach to 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.

Market risk

The Company’s strategy for managing investment risk is determined with regard to the Company’s investment

objective, as outlined on page 19. The management of market risk is part of the investment management

process. 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 in the medium term. Investments in

unquoted 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. The overall disposition of the Company's assets is regularly

monitored by the Board.

Details o

f the Company’s investment portfolio at the Balance Sheet date are set out

on pages 24 to 34.

34.2% (2022: 23.4

%) by value of the Company’s net assets comprise investments in unquoted companies held

at fair value. The valuation methods used by the Company for these assets include the price of recent

transactions, earnings or revenue multiples, discounted cashflows and net assets. A 10% overall increase in

the valuation of the unquoted investments at 28 February 2023 (28 February 2022) would have increased net

assets and the total return for the year by £311,800 (2022: £39,900) disregarding the impact of the performance

fee; an equivalent change in the opposite direction would have reduced net assets and the total return for the

year by the same amount.

63.4% (2022: 63.9%) 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 2023 (28 February 2022) would have

increased net assets and the total return for the year by £578,900 (2022: £108,900) 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 significant concentrations of credit risk to counterparties at 28 February 2023 or 28 February

2022.

Cash is mainly held by Natwest plc which is an A‐rated financial institution. Consequently, the Directors

consider that the credit risk associated with cash deposits is low.

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 Company’s financial assets include investments in unquoted equity securities which 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 risk than investments 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 Company’s liquidity risk is managed and monitored on a continuing basis by the Board in accordance

with policies and procedures laid down by the Board.

Geo-political and economic risks

The Company continues to face material market volatility as a result of the response to Covid and

macroeconomic pressures. In addition the disruption in global supply chains and increased costs from

inflationary pressures have been exacerbated by military action

–

and possible subsequent unforeseen

consequences

–

in Eastern Europe.

Such increased costs of living and the availability (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 further inflation may impact on the performance and

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, and returns from, the Company’s shares.

Post period end the initial stages of a banking

crisis were nipped in the bud but further rumblings continue.

As noted above the post pandemic effects of Covid-19 have 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 Venture Capital Trust Plc is not under the control of any one party or individual.

17.

Events after the Balance Sheet Date

There are no events to report after the balance sheet date.

Oxford Technology 2 Venture Capital Trust Plc - Notice of Annual General Meeting

Notice is hereby given that the Annual General Meeting (“AGM”) of Oxford Technology 2 Venture Capital

Trust Plc (company number:3928569) will be held at

The Magdalen Centre, Oxford Science Park, Oxford

OX4 4GA at 2pm on Wednesday 19 July 2023

for the purpose as set out below:

To consider and, if thought fit, pass the following Resolutions:

Ordinary Resolutions

That the Annual Report and Accounts for the period to 28 February 2023 be approved.

That the Directors’ Remuneration Report be approved.

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

Corporate Governance guidelines be re-appointed as a Director.

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

Corporate Governance guidelines be re-appointed as a Director.

That Mr Robin Goodfellow, who retires at the Annual General Meeting in accordance with the AIC

2019 Corporate Governance guidelines be re-appointed as a Director.

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.

That Hazlewoods LLP, Chartered Accountants, be re-appointed as Auditors and that the Directors

be authorised to determine their remuneration.

That the Company continues in being as a Venture Capital Trust.

AUTHORITY TO ALLOT SHARES IN THE COMPANY

That the Directors be and are generally and unconditionally authorised in accordance with section

551 of the Companies Act 2006 (“Act”) to exercise all the powers of the Company to allot shares or

grant rights (“Rights”) to subscribe for, or conv

ert any security into, shares in the capital of the

Company up to a maximum number of 543,165 OT1 shares, 533,188 OT2 shares, 625,459 OT3

shares and 1,082,674 OT4 shares (representing approximately 10% of the ordinary share capital of

each share class

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 following the passing of this

Resolution

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 offers or agreements before the expiry thereof, which would or might require relevant securities

to be allotted after the expiry of such authority).

10.

AUTHORITY TO BUY BACK SHARES IN THE COMPANY

That the Company be and hereby is empowered to make one or more market purchases within the

meaning of Section 693(4) of CA 2006 of its own shares (either for cancellation or for the retention as

treasury shares for future re-issue or transfer) provided that:

10.1

The aggregate number of shares which may be purchased shall not exceed 543,165

OT1 shares, 533,188 OT2 shares, 625,459 OT3 shares and 1,082,674 OT4 shares;

10.2

the minimum price which may be paid per share is their nominal value (being 1p);

10.3

the maximum price which may be paid per share is an amount equal to the higher of (i) 105%

of the average of the middle market quotation per share (of the relevant class) taken from the London

Stock Exchange daily official list for the five business days immediately preceding the day on which

such share is to be purchased; and (ii) the amount stipulated by Article 5(1) of the Buy Back and

Stabilisation Regulation 2003;

10.4

the authority conferred by this resolution 10 shall expire (unless renewed, varied or revoked

by the Company in general meeting) 15 months following the date of the passing of this resolution;

and

10.5

the Company may make a contract to purchase shares under the authority conferred by this

resolution 10 prior to the expiry of such authority which will or may be executed wholly or partly

after the expiration of such authority and may make a purchase of such shares.

11.

That the Ordinary Shares be called OT2 Shares.

Special Resolution

12.

AUTHORITY TO ALLOT SHARES ON A NON-RIGHTS ISSUE BASIS

That the Directors be empowered, pursuant to section 570(1) of the Act, to allot or make offers or

agreements to allot equity securities (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:

reference to allotment in this Resolution shall be construed in accordance with s560(2) of the

Act; and

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 be allotted after the expiry of the said 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, revoked or renewed, shall come to an end at the

conclusion of the next Annual General Meeting of the Company following the passing of this

Resolution or, if earlier, on the expiry of 15 months from the passing of this Resolution.

By Order of the Board

James Gordon

Company Secretary

20 April 2023

Registered Office: The Magdalen Centre, Oxford Science Park, Oxford OX4 4GA

Notes:

Resolutions 1 to 11 will be proposed as Ordinary Resolutions.

Resolutions 12 will be proposed as a Special

Resolution.

2. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies 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 appoint the Chairman 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 member will need to appoint their own

choice of proxy (not the Chairman) and give their instructions directly to the proxy. To be valid, a Proxy Form

must be lodged with the Company’s Registrar,

Neville Registrars, Neville House, Steelpark Road,

Halesowen B62 8HD,

at least 48 hours before the meeting, being 2pm on 17 July 2023.

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 to regulation 41 of the Uncertificated Securities Regulations 2001, entitlement 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

adjourned meeting. Changes to entries on the Register 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 proxies through the CREST electronic proxy appointment

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 appointment or instruction made using the CREST service to be valid, the appropriate

CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear

UK & Ireland Limited’s specifications, and must contain the information required for such instruction, as

described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy

or is an amendment to the instruction given to a previously appointed proxy must in order to be valid, be

transmitted so as to be received by the issuer’s agent ID

7RA11 by 2pm on 17 July 2023.

For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to

the message by the CREST Application Host) from which 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 instructions to proxies appointed through CREST should be communicated to

the appointee through other means.

6. CREST members and, where applicable, their CREST sponsors, or voting service providers should note that

Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular

message. Normal system timings and limitations will, 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 personal member, or sponsored member, or has appointed a voting service provider, 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 connection, CREST

members and, where applicable, their CREST sponsors or voting system providers are referred, in particular,

to those sections of the CREST Manual concerning practical limitations of the CREST system and timings

7. As at 19 April 2023

(being the last business day prior to the publication of this notice), the Company’s

issued share capital comprised 27,844,888

ordinary shares of 1p each, all of which carry one vote each.

Therefore, the total voting rights in the Company as at 19 April 2023 was 27,844,888.

Copies of the directors’ letters of appointment, the Register of Directors’ Interests in shares of the Company

and copies of the existing 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 (Saturday and Public Holidays

excluded) from the date of this notice, 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 corporate shareholder has appointed a corporate representative, the corporate 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 resolution, 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 treated as not exercised.

10. At the meeting, Shareholders have the right to ask questions relating to the business of the meeting and the

Company is obliged under section 319A of the Act to answer such questions, unless; to do so would interfere

unduly with the preparation of the meeting or would involve 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.

11. Further information, including the information required by section 311A of the CA 2006, regarding the

meeting is available on the Company’s website,

www.oxfordtechnologyvct.com

Oxford Technology 2 Venture Capital Trust Plc Proxy Form

Annual General Meeting

–

19 July 2023 at 2pm

I/We ………………………………………………...……………………………………..…………………..

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

Being a member of Oxford Technology 2 Venture Capital Trust Plc, hereby appoint the Chairman of the

meeting, or,

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

No of Shares (All Share Classes added together)

…………………………………..…………….…….…….

As my/our proxy and vote for me/us on my/our behalf at the Annual General Meeting of the Company to be

held on 19 July 2023, and at any adjournment thereof.

The proxy will vote as indicated below in respect of

the resolutions set out in the notice of meeting.

Please indicate by ticking the box if this proxy appointment is one of multiple appointments being made.

For

the appointment of one or more proxy, please refer to explanatory note 4.

For

Against

Withheld

To approve the Annual Report and Accounts

To approve the Directors’ Remuneration Report

To re-elect Richard Roth as a Director

To re-elect Alex Starling as a Director

5. To re-elect Robin Goodfellow as a Director

To re-elect David Livesley as a Director

7. To approve the re-appointment of Hazlewoods LLP as auditors and

authorisation of Directors to fix remuneration

8. To approve that the Company continues as a VCT

To approve the Directors’ general authority to allot

10. To approve the Company’s authority to make market purchases of

its own shares

11. To rename the Ordinary Shares OT2 Shares

12. To approve the allotment of shares on a non-rights issue basis

Signature:

Date:

Proxy Form - Notes

Annual General Meeting

–

19 July 2023 at 2pm

To be valid, the Proxy Form must be received by the Registrars of Oxford Technology 2

Venture Capital Trust Plc at Neville Registrars Limited, Neville House, Steelpark Road,

Halesowen, B62 8HD, no later than 48 hours (working days) before the commencement of the

meeting, being 2pm on 17 July 2023.

Where this form of proxy is executed by a corporation it must be either under its seal or under the

hand of an officer or attorney duly authorised.

Every holder has the right to appoint some other person(s) of their choice, who need not be a

Shareholder, as his proxy to exercise all or any of his rights, to attend, speak and vote on their behalf

at the meeting. If you wish to appoint a person other than the 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 entitlement, please enter next to the proxy holder’s name the number of shares

in relation to which they are authorised to act as your proxy. If left blank your proxy will be deemed

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.)

To appoint more than one proxy, you may photocopy this form. Please indicate next to the proxy

holder’s name the number of shares in relation to which they are authorised to act as your proxy.

Please also indicate by ticking the box provided if the proxy instruction is one of multiple

instructions being given. All forms must be signed and should be returned together in the same

envelope.

The ‘Vote Withheld’ option is provided to enable you to abstain on any particular resolution.

However, it should be note

d that a ‘Vote Withheld’ is not a vote in law and will not be counted in

the calculation of the proportion of the votes ‘For’ and ‘Against’ a resolution.

If the Proxy Form is signed and returned without any indication as to how the proxy shall vote, the

proxy will exercise his/her discretion as to whether and how he/she votes.

The address on the envelope containing this notice is how your address appears on the Register of

Members. If this information is incorrect please ring the Registrar’s helpline

on 0121 585 1131.

The completion and return of this form will not preclude a member from attending the meeting and

voting in person

Shareholder Information

Financial Calendar

The Company’s financial calendar is as follows:

19 July 2023

- Annual General Meeting

November 2023

- Half-yearly results to 31 August 2023 published

January 2024

- Quarterly Update

May 2024

- Annual results for year to 28 February 2024 announced

Dividends

Dividends will be paid by the Registrar on behalf of the Company. Shareholders who wish to have dividends

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 and requests for mandate forms should be

directed to the Company’s Registrar, Neville Registrars Limited.

Share Price

The Company’s share price is published daily on the London Stock Exchange’s website

(

www.londonstockexchange.com

) using codes OT1 for the OT1 Share Class, OXH for the OT2 Share Class,

OT3 for the OT3 Share Class and OT4 for the OT4 Share Class.

Buying and selling shares

The shares in the Company’s four

Share Classes, which are listed on the London Stock Exchange, can be

bought and sold in the same way as any other company quoted on a recognised stock exchange via a

stockbroker. Whilst the Company has a buy back policy, it is not actively used, and so if you wish to trade in

the secondary market and do not have a stockbroking relationship, you may wish to contact:

Redmayne Bentley

–

York Office

0800-5420055 / 01904-646362

Paul Lumley

[email protected]

Chris Steward

[email protected]

If you do contact Redmayne Bentley, you will require your National Insurance Number and a valid share

certificate if selling. There may be tax implications in respect of all or part of your holdings, so shareholders

should contact their independent financial adviser if they have any queries.

Shareholder Scams

We are aware that some of our shareholders are receiving unsolicited phone calls or correspondence

concerning investment matters. These are usually from overseas based 'brokers' who target UK shareholders,

offering to buy VCT shares off them at an inflated price in return for upfront payment. Alternatively, 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 the blue with an offer to buy or sell shares. You can check the Financial

Services Register from

www.fca.org.uk

to see if the person and firm contacting you is authorised by the FCA.

For further information on share fraud and boiler room scams or to report a fraudulent call, please visit the

FCA website at

www.fca.org.uk/scamsmart/how-avoid-investment-scams.

Notification of change of address

Communications with shareholders are mailed to the registered address held 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, under 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.oxfordtechnologyvct.com

as well as RNS histories and investee summaries.

Company Information – Directors and Advisers

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

Hazlewoods LLP

Staverton Court

Staverton

Cheltenham

GL51 0UX

Investment Adviser

Oxford Technology Management

Tel: 01865 784466

Email :

[email protected]

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

BDO LLP

55 Baker Street

London

W1U 7EU

Website

www.oxfordtechnologyvct.com

Legal Adviser

Hill Dickinson LLP

50 Fountain Street

Manchester M2 2AS