TIDMNCA2 
 
 
New Century AIM                   31st December 
VCT2 plc                          2018 
Audited Report and Accounts for 
the year to 31st December 2018 
 
 

Company number: 06054576

 
Financial Summary                   1 
Chairman's Statement                2 
Details of Directors                3 
Management and Administration       4 
Directors                           5 
Strategic Report                    6 
Investment Portfolio                8 
Top Ten Investments                 11 
Directors' Report                   12 
Directors' Remuneration Report      14 
Corporate Governance                16 
Independent Auditors' Report        19 
Statement of Comprehensive Income   23 
Balance Sheet                       24 
Statement of Changes in Equity      25 
Cash Flow Statement                 26 
Notes to the Financial Statements   27 - 36 
Shareholder Information             37 
 
 

Financial Summary

 
                                                Year ended   Year ended 
                                                31 December  31 December 
                                                2018         2017 
Revenue return per share (pence) for the year   (0.31)       (0.50) 
Total return per share (pence) for the year     (16.61)      10.38 
Proposed dividends per share (pence)            3.40         3.30 
Net asset value per share (pence)               48.38        68.29 
Cumulative value of shareholder                 61.94        78.55 
investment (net asset 
value plus  cumulative dividends 
per share) (pence) 
Shareholders' funds (GBP'000)                     2,229        3,146 
 
 

Details of Directors

 

Chairman's Statement

 

It has proved to be a difficult year for your fund where we have seen the net asset value per share fall from 68.29p to 48.38p, a fall of 29%, and the net asset value plus cumulative dividends fell from 78.55p to 61.94p per share being a decline of 21.15%. This is compared to a fall in the FTSE AllShare AIM index of 18.27%.

 

Although the decline in net asset value is disappointing, we still realise the importance of income for our shareholders, and have therefore agreed subject to shareholder approval, to increase the dividend to 3.4p, and at the current offer price of 67p, the yield is 5.1%

 

The level of qualifying investments at 88.36% is still comfortably above the 70% required level for the accounting year end, and above the 80% level that is required from April 2019.

 

The Markets certainly proved to be turbulent from September 2018 through to the end of the year where the AllShare AIM index fell by 23.9% from its high in September to its low in December. Although political events such as the trade war tensions between the USA and China, and the ongoing negotiations of BREXIT were prevalent before this time, the Market became more unsettled from the summer and we witnessed widespread declines in share prices irrespective of the size of the Company. We continue to monitor and meet our investments, and we are generally happy that the Companies continue to trade well, although this has not necessarily been reflected in their current share price.

 

We are continuing to see new opportunities for investment which bodes well for the fund and although we expect volatility to continue in the months ahead, we are cautiously optimistic for the year ahead.

 

The markets appear to be stabilising to some degree as the net asset value at the end of February 2019 had recovered slightly to 52.81p

 

Geoffrey Gamble 25 April 2019

 

Michael Barnard (Aged 68)

 

Michael has been employed in stockbroking since 1971. In 1974 he became a Member of the Stock Exchange. During his career his duties have spanned investment advising, investment research, dealing and company management. In 1988 he started his own stockbroking company, MD Barnard & Company Limited. Based in Basildon, Essex, it has offices in London and Wells. Since 1995, he has been either managing or advising unit trust, private client and pension company portfolios. Michael sold MD Barnard & Company Limited on 30 November 2017, however he is still a director of New Century AIM VCT 2 plc.

 

Geoffrey Gamble (Aged 60)

 

Geoffrey started his career with National Westminster Bank plc. He joined Publishing Holdings plc in 1984 and became a director in 1986. He took part in an MBO in 1988, backed by Schroder Ventures (now Permira) to form Charterhouse Communications Group Ltd and was instrumental in the satisfactory venture capital exit from that company and its flotation on AIM in 1996. He became managing director of Charterhouse Communications plc in 1999.

 

Peter William Riley (Aged 74)

 

Peter qualified as a solicitor in 1969. He retired from practice in 2018.

 

Ian Cameron-Mowat (Aged 68)

 

Ian has a BSc 1st degree in electronics and was involved in the early development of computers at Burroughs Machines. He is currently a consultant radiologist to a NHS Trust.

 

Management and Administration

 
Registered Office               4thFloor, 
                                50 Mark Lane 
                                London EC3R 7QR 
Company Secretary               Tricor Secretaries Limited 
                                4th Floor, 
                                50 Mark Lane 
                                London EC3R 7QR 
Registrar                       Neville Registrars Limited 
                                Neville House 
                                18 Laurel Lane 
                                Halesowen 
                                West Midlands B63 3DA 
Solicitors                      Dundas & Wilson 
                                5th Floor, Northwest Wing 
                                Bush House 
                                Aldwych 
                                London WC2B 4EZ 
Investment Manager and Broker   MD Barnard & Company Ltd 
                                1st Floor 
                                12, Hornsby Square 
                                Southfields Business Park 
                                Basildon SS15 6AD 
Auditor                         UHY Hacker Young LLP 
                                Quadrant House 
                                4 Thomas More Square 
                                London E1W 1YW 
 
 

Directors

 

Geoffrey Gamble (Chairman)

 

Michael David Barnard

 

Peter William Riley

 

Ian Cameron-Mowat

 

All directors are non-executive.

 

Audit Committee:

 

Geoffrey Gamble (Chairman)

 

Peter William Riley

 

Ian Cameron-Mowat

 

Strategic Report

 

Activities and status

 

The principal activity of the company during the year was the making of long-term equity and loan investments in UK Listed, AIM traded and unquoted companies in the United Kingdom. The company has been listed on the London Stock Exchange since 4 April 2007 and has been granted approval by Her Majesty's Customs & Revenue as a Venture Capital Trust. The Chairman's Statement on page 2 and the Investment Manager's Review below give a review of developments during the year and of future prospects.

 

The directors have managed the affairs of the company with the intention that it will qualify for approval by Her Majesty's Customs & Revenue as a Venture Capital Trust for the purposes of Section 842AA of the Income and Corporation Taxes Act 1988 ('the Act'). The directors consider that the company was not at any time up to the date of this report a close company within the meaning of Section 414 of the Act.

 

Investment Manager's Review

 

It proved to be a tough year for the fund as its net asset value per share declined by 29% compared to a fall on the AIM index of 18.27%. The value of the fund held up reasonably well until the summer, but as Markets started to become volatile and started to head lower, the net asset value of the fund declined throughout the second half of the year.

 

We made 10 qualifying investments, purchasing Access Intelligence, Audioboom, Falanx, Forbidden Technologies, Immotion, I-nexus Global, Location Sciences, Microsaic Systems, Polarean and Scancell.

 

We sold or top sliced 7 shares.

 

Although the performance in the period has been disappointing, we remain cautiously optimistic in the current year even though there will probably be more volatility in the months ahead due to political events at home and abroad. We remain in touch with our investments and we are happy that the fund has a well diversified portfolio of businesses from many different industry sectors to help spread the risk. We witnessed some large falls across certain shares in the period but we do not believe these falls were as a result of the underlying performance of the Companies, but more of a case of a nervous Stock Market in the period.

 

We are currently seeing a good mix of new investment opportunities which is encouraging and the markets appear to be stabilising to some degree as the net asset value at the end of February 2019 had recovered slightly to 52.81p.

 

Investment Objective

 

New Century AIM VCT 2 PLC is a Venture Capital Trust ("VCT") established under the legislation introduced in the Finance Act 1995. The company's principal objectives as set out in its prospectus are to achieve long term capital growth through investment in a diversified portfolio of Qualifying Companies primarily quoted on AIM.

 

Principal risks and uncertainties

 

The company invests its funds primarily in unlisted companies and companies traded on AIM, which entail a higher degree of risk than investments in large listed companies. The main risk, therefore, arising from the company's activities is market price risk, representing the uncertain realisable values of the company's investments. Please refer to note 22 to these accounts which gives a detailed review of the company's risk management.

 

Environmental matters

 

Discussion in respect of environmental matters is not considered relevant or material to an understanding of the performance of the company. The company does not consider that Greenhouse Gas Emissions disclosure is relevant to the company on the grounds of immateriality due to it not having its own premises or employees.

 

Key performance indicators

 

The financial key performance indicators are set out in the financial summary on page 1.

 

Geoffrey Gamble 25 April 2019

 

Investment Portfolio

 
Security                          Cost       Valuation   %       % 
                                             31/12/2018  Cost    Valuation 
Qualifying Investments            2,735,146  2,038,630   88.36   90.82 
Non-qualifying Investments        329,032    175,338     10.64   7.81 
Uninvested funds                  30,833     30,833      1.00    1.37 
                                  3,095,011  2,244,801   100.00  100.00 
Qualifying Investments 
AIM Quoted 
Marechale Capital plc             75,752     9,750       2.45    0.43 
HML Holdings plc                  94,973     105,000     3.07    4.68 
TP Group plc                      160,062    43,381      5.17    1.93 
Tristel plc                       8,461      49,815      0.27    2.22 
Cyanconnode Holdngs plc           204,219    7,882       6.60    0.35 
M.Winkworth plc                   56,280     77,000      1.82    3.43 
Inspired Energy plc               33,641     163,800     1.09    7.30 
Microsaic Systems plc             142,261    26,852      4.60    1.20 
Venn Life Sciences Holdings plc   155,184    9,657       5.01    0.43 
DP Poland plc                     25,631     21,352      0.83    0.95 
Modern Water plc                  75,385     25,855      2.44    1.15 
Quixant plc                       8,091      63,438      0.26    2.83 
Maistro plc                       6,785      59          0.22    0.00 
Keywords Studios plc              15,085     130,540     0.49    5.82 
Sanderson Group plc               15,204     24,200      0.49    1.08 
Cloudbuy plc                      41,896     1,952       1.36    0.09 
PHSC plc                          50,256     20,000      1.63    0.89 
EU Supply plc                     19,422     9,405       0.63    0.42 
Synnovia plc                      33,168     36,300      1.07    1.62 
Sysgroup plc                      45,232     28,500      1.46    1.27 
Brighton Pier Group plc           35,379     15,400      1.14    0.69 
Property Franchise Group plc      50,253     56,000      1.62    2.49 
Solid State plc                   35,248     42,835      1.14    1.91 
Audioboom Group plc               148,252    58,200      4.79    2.59 
Scholium Group plc                40,203     17,200      1.30    0.77 
Rosslyn Data Technologies plc     23,219     4,900       0.75    0.22 
Coral Products plc                25,104     20,350      0.81    0.91 
SRT Marine Systems plc            18,093     31,000      0.58    1.38 
ULS Technology plc                18,091     33,030      0.58    1.47 
Premier Technical Services        26,288     67,905      0.85    3.02 
Group plc 
Angle plc                         75,128     43,700      2.43    1.95 
Bilby plc                         52,465     54,900      1.70    2.45 
Hunters Property plc              50,253     38,000      1.62    1.69 
Bigblu Broadband plc              55,027     81,111      1.78    3.61 
Tekcapital plc                    82,292     20,844      2.66    0.93 
Falanx Group Ltd                  45,031     26,100      1.46    1.16 
Yourgene Health plc               40,204     17,400      1.30    0.78 
Photonstar LED Group plc          15,079     60          0.49    0.00 
Yu Group plc                      20,504     8,159       0.66    0.36 
Security                          Cost       Valuation   %       % 
                                             31/12/2018  Cost    Valuation 
Qualifying Investments 
AIM Quoted 
Scancell Holdings plc             45,233     29,250      1.46    1.30 
Intelligent Ultrasound            50,251     26,916      1.62    1.20 
Group plc 
Loopup Group plc                  20,104     57,200      0.65    2.55 
Faron Pharmaceuticals Ltd         20,103     4,320       0.65    0.19 
Cloudcall Group plc               20,230     24,850      0.65    1.11 
Creo Medical Group plc            30,053     77,504      0.97    3.45 
Anglo African Oil & Gas plc       65,329     35,750      2.11    1.59 
Escape Hunt plc                   31,006     20,565      1.00    0.92 
Velocity Composites plc           9,425      2,537       0.30    0.11 
Location Sciences Group plc       57,564     44,847      1.86    2.00 
Fusion Antibodies plc             22,113     14,488      0.71    0.65 
Pelatro plc                       25,128     28,000      0.81    1.25 
Polarean Imaging plc              20,104     20,000      0.65    0.89 
Access Intelligence plc           10,053     14,250      0.32    0.63 
Forbidden Technologies plc        50,254     83,000      1.62    3.70 
I-Nexus Global plc                30,153     14,431      0.97    0.64 
Immotion Group plc                50,253     42,500      1.62    1.89 
                                  2,680,457  2,032,240   86.59   90.54 
Unlisted Investments 
Outsourcery plc                   28,143     -           0.91    0.00 
Syqic plc                         26,546     6,390       0.86    0.28 
                                  54,689     6,390       1.77    0.28 
Total qualifying investments      2,735,146  2,038,630   88.36   90.82 
                                  10,398     22,000      0.34    0.98 
 
Non-qualifying Investments 
AIM Quoted 
 
 
Sanderson Group plc 
Rotala plc                        27,683     31,500      0.89    1.40 
Tristel plc                       60         243         0.00    0.01 
TLA Worldwide plc                 26,975     2,400       0.87    0.11 
Audioboom Group plc               1,163      97          0.04    0.00 
Be Heard Group plc                10,040     3,180       0.33    0.14 
Yolo Leisure & Technology plc     12,799     3,375       0.41    0.15 
                                  89,118     62,795      2.88    2.79 
 
 

Investment Portfolio

 
Security                           Cost     Valuation   %      % 
                                            31/12/2018  Cost   Valuation 
UK listed 
Investec plc                       169,416  93,543      5.47   4.17 
British American Tobacco plc       8,841    10,000      0.29   0.45 
Twentyfour Income Fund Ltd         9,852    9,000       0.32   0.40 
                                   188,109  112,543     6.08   5.02 
Unlisted Investments 
China Food Co plc                  31,547   -           1.02   - 
Sorbic International plc           10,205   -           0.33   - 
Mar City plc                       10,053   -           0.33   - 
                                   51,805   -           1.68   - 
Total non-qualifying investments   329,032  175,338     10.64  7.81 
 
 

Top Ten Investments

 
Security                               Cost     Valuation  % 
Inspired Energy plc                    33,641   163,800    7.30 
Keywords Studios plc                   15,085   130,540    5.82 
HML Holdings plc                       94,973   105,000    4.68 
Investec plc                           169,416  93,543     4.17 
Forbidden Technologies plc             50,254   83,000     3.70 
Bigblu Broadband plc                   55,027   81,111     3.61 
Creo Medical Group plc                 30,053   77,504     3.45 
M Winkworth plc                        56,280   77,000     3.43 
Premier Technical Services Group plc   26,288   67,905     3.02 
Quixant plc                            8,091    63,438     2.83 
 
 

The investments tabulated above are expressed as a percentage by valuation of the company's investment portfolio including uninvested cash.

 

Directors' Report

 

The directors present their report and the audited accounts for the year to 31 December 2018.

 

Results and dividend

 
                                    Year to             Year to 
                                    31 December 2018    31 December 2017 
                                    Revenue  Capital    Revenue  Capital 
                                    GBP'000    GBP'000      GBP'000    GBP'000 
Return on ordinary activities       (14)     (751)      (23)     502 
after taxation 
Appropriated as follows: 
Final dividend paid in 
respect of prior year 
Revenue - 0.00p (0.00p) per share   -        -          -        - 
Capital - 3.3p (3.00) per share     -        (152)      -        (138) 
Transfers to reserves               (14)     (903)      (23)     364 
 
 

Directors

 

The directors of the company who served throughout the year and their interests in the issued ordinary shares of 10p of the company are as follows:

 
                        Year ended        Year ended 
                        31 December 2018  31 December 2017 
Michael David Barnard   454,598           396,611 
Geoffrey Gamble         106,550           106,550 
Peter William Riley     3,000             3,000 
Ian Cameron-Mowat       67,065            67,065 
 
 

All of the directors' share interests shown above are held beneficially. Michael Barnard purchased an additional 15,500 shares on 26th February 2019. There have been no other changes in the directors' share interests between 31 December 2018 and the date of this report.

 

Brief biographical notes on the directors are given on page 3. The director, retiring in accordance with the Company's Articles of Association, is Peter Riley, who being eligible will offer himself for re-election at the forthcoming annual general meeting. The directors believe his experience in small companies is a great benefit to the Board and recommend his re-election.

 

Management

 

MD Barnard & Company Limited has acted as investment manager to the company since inception. The principal terms of the Investment Management Agreement are set out in Note 6 to the Accounts.

 

Substantial shareholdings

 

The company has been notified, in accordance with Chapter 5 of FCA's Disclosure and Transparency Rules, of the under noted interests as at 31 December 2018 of 3 per cent shareholders and above:

 
MD Barnard                         454,598 
N Shanks                           405,057 
Rathbone Nominees Ltd              217,476 
IA Houston                         200,000 
DM Trotman                         180,000 
Platform Securities Nominees Ltd   172,065 
Smith & Williamson Nominees Ltd    166,311 
JR Atkinson                        152,365 
RS Like                            145,800 
 
 

Acquisition of own shares

 

During the year the company did not make any acquisition of its own shares.

 

Structure of the company's capital

 

The company has only one class of ordinary share and each share has attached to it full voting rights, dividends and capital distribution rights (including on a winding up) and do not confer any rights of redemption.

 

Appointment of Directors

 

The Directors are subject to re-election with one third of the Directors being re-elected annually at the AGM.

 

Creditor payment policy

 

The company's payment policy is to agree terms of payment before business is transacted and to settle accounts in accordance with those terms. The company's principal expenses such as investment management fees and administration fees are paid quarterly in arrears in accordance with the respective agreements. Accordingly the company had no material trade creditors at the year-end.

 

Post balance sheet events

 

Details of the post balance sheet events are set out in note 27.

 

Auditors

 

In accordance with Section 485 of the Companies Act 2006, a resolution proposing that UHY Hacker Young LLP be reappointed as auditors of the Company and that the Directors be authorised to determine their remuneration will be put to the next Annual General Meeting.

 

Statement of disclosure to auditors

 

So far as the directors are aware:

 

1. there is no relevant audit information of which the Company's auditors are unaware; and

 

2. 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 auditors are aware of that information.

 

By Order of the Board

 

Geoffrey Gamble 25 April 2019

 

Directors' Remuneration Report

 

The Board has prepared this report in accordance with the requirements of the Companies Act 2006. A resolution to approve this report will be put to the members at the Annual General Meeting to be held on Tuesday 11 June 2019.

 

Directors' remuneration policy

 

The company does not have any executive directors and, as permitted under the Listing Rules, has not, therefore, established a remuneration committee. Directors, with the exception of the chairman, do not receive any remuneration or fees.

 

The directors shall be paid by the company all travel, hotel and other expenses they may incur in attending meetings of the directors or general meetings or otherwise in connection with the discharge of their duties. Any director who, by request of the directors, performs special services may be paid such extra remuneration as the directors may determine.

 

Directors' remuneration (audited)

 

None of the Directors received any remuneration from the company during the year under review, with the exception of the chairman, who received a fee of GBP5,000 (2017: GBP5,000). No other emoluments or pension contributions were paid by the company to, or on behalf of, any director. None of the directors has a service contract with the company. It is expected that, with the exception of the chairman, the directors will continue not to receive any remuneration for their services in the forthcoming years.

 

Performance

 

The directors consider that the most appropriate measure of the company's performance is its Cumulative Value of Shareholder Investment (net asset value plus cumulative dividends). The company's Cumulative Value of Shareholder Investment at 31 December 2017 and 31 December 2018 is set out in the Financial Summary on page 1.

 

Total shareholder return

 

[Graph omitted ]

 

The above graph shows the company's total shareholder return compared to that of the FTSE AIM All Share Index total return for the period since listing on the London Stock Exchange.

 

By Order of the Board

 

Geoffrey Gamble 25 April 2019

 

Corporate Governance

 

The directors support the relevant principles of the UK Corporate Governance Code issued in April 2016 by the Financial Reporting Council, being the principles of good governance and the code of best practice as set out in the Main Principles of the Code annexed to the Listing Rules of the Financial Conduct Authority.

 

The UK Corporate Governance Code is available at the following location:

 

www.frc.org.uk/corporate/ukcgcode.cfm

 

Going Concern

 

Bearing in mind that the assets of the company consist mainly of marketable securities, the directors are of the opinion that at the time of approving the accounts, the company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

 

The Board

 

The company is led and controlled by a Board of directors who are all non-executives and who have had relevant experience with quoted companies prior to their appointment. The Chairman is Geoffrey Gamble. Biographical details of all Board members are shown on page 3.

 

One third of the Directors are subject to re-election at each AGM by rotation.

 

During the year the following were held:

 
2 full board meeting                 3 Audit Committee meeting 
All members attended the meetings.   All members attended the meetings 
                                     with the exception 
                                     of  Mr.Cameron-Mowat on one occasion. 
 
 

All directors had relevant experience with quoted companies prior to their appointment and it was therefore not thought necessary to provide further training in respect of their obligations and duties.

 

The Board has also established procedures whereby directors wishing to do so in the furtherance of their duties may take independent professional advice at the company's expense.

 

All directors have access to the advice and services of the Company Secretary. The Company Secretary provides the Board with full information on the company's assets and liabilities and other relevant information requested by the Chairman, in advance of each Board meeting.

 

The Board believes that it presents a balanced and understandable assessment of the company's position and prospects. The Audit Committee meets at least once a year. Under the chairmanship of a non-executive director, its membership comprises all the non-executive directors. During the year the Audit Committee was chaired by Mr Gamble. The Audit Committee reviews the accounts and is reported to by the external auditors. The audit committee did not identify or consider any significant issues relating to the financial statements as substantially all the investments are valued by reference to publicly quoted prices. Further, the Audit Committee keeps under review the cost effectiveness, independence and objectivity of the auditors. Following a formal tender for the external auditors in 2018, Messrs.UHY Hacker Young were reappointed as auditors. A formal statement of independence is received from the external auditors each year.The terms of reference of the audit committee are available for inspection at the company's registered office.

 

The investment manager is authorised and regulated by the Financial Conduct Authority and the directors have an opportunity to review their own auditors' review of their financial controls.

 

Relations with shareholders

 

The Chairman is the company's principal spokesman with investors, fund managers, the press and other interested parties.

 

Shareholders will have the opportunity to meet the Board at the AGM. The Board is also happy to respond to any written queries made by shareholders during the course of the year, or to meet with major shareholders if so requested.

 

In addition to the formal business of the AGM, representatives of the management team and the Board are available to answer any shareholder queries.

 

Separate resolutions are proposed at the AGM on each substantially separate issue. The Registrars collate proxy votes and the results (together with the proxy forms) are forwarded to the Company Secretary immediately prior to the AGM. In order to comply with the Governance Code, proxy votes will be announced at the AGM, following each vote on a show of hands, except in the event of a poll being called. The notice of the next AGM and proxy form can be found at the end of these accounts.

 

Financial Reporting

 

The directors' statement of responsibilities for preparing the financial statements is set out on page 18, and a statement by the auditors about their reporting responsibilities is set out in the Auditors' Report on page 22.

 

Internal control

 

The directors are responsible for the company's system of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the company's systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.

 

The directors have conducted a review of the effectiveness of the system of internal control for the year covered by the financial statements. This accords with the FRC's guidance on Risk Management, Internal Control and Related Financial and Business Reporting.

 

Although the Board is ultimately responsible for safeguarding the assets of the company, the Board has delegated, through written agreements, the day-to-day operation of the company to M D Barnard & Co. Limited.

 

Compliance statement

 

The Listing Rules require the Board to report on compliance with the Governance Code provisions throughout the accounting year. The Comply or Explain directions of the Governance Code does however acknowledge that some provisions may have less relevance for investment companies. With the exception of the limited items outlined below, the Company has complied throughout the accounting year to 31 December 2018 with the provisions set out in Sections A to E of the Governance Code.

 

1. The Board has not appointed a nominations committee as they consider the Board to be small and it comprises wholly non-executive directors. Appointments of new directors are dealt with by the full Board.

 

2. New directors do not receive a full, formal and tailored induction on joining the Board. Such matters are addressed on an individual basis as they arise.

 

3. Due to the size of the Board and the nature of the company's business, a formal performance evaluation of the Board, its committees, the individual directors and the Chairman has not been undertaken. Specific performance issues are dealt with as they arise.

 

4. The company has three independent directors, as defined by the Governance Code issued in April 2016. The board consider that Messrs. Gamble, Riley and Cameron-Mowat are independent in character and judgement and there are no relationships or circumstances which are likely to affect, or could appear to affect the directors' judgement. The Board considers that all directors have sufficient experience to be able to exercise proper judgement within the meaning of the Governance Code.

 

5. The company does not have a chief executive officer or senior independent director. The Board does not consider this to be necessary for the size of the company.

 

6. The company does not conduct a formal review as to whether there is a need for an internal audit function. The directors do not consider that an internal audit would be an appropriate control for a venture capital trust.

 

7. The Audit Committee is chaired by Geoffrey Gamble, Chairman of the Board of directors, whom the board regard as independent despite recommendations to the contrary in the Governance Code due to his being Chairman of the Board of directors.

 

8. The non-executive directors do not have service contracts, whereas the recommendation is for fixed term renewable contracts.

 

9. The company has no major shareholders so shareholders are not given the opportunity to meet any new non-executive directors at a specific meeting other than the annual general meeting.

 

Statement of directors' responsibilities

 

United Kingdom company law requires the directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the company as at the end of the financial year and of the revenue of the company for that period. In preparing those financial statements, the directors are required to:

 

-select suitable accounting policies and apply them consistently;

 

-make judgements and estimates that are reasonable and prudent;

 

-state whether applicable accounting standards have been followed; 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 ensuring that proper accounting records are kept, which disclose with reasonable accuracy at any time the financial position of the company, enabling them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for the company's system of internal control, for safeguarding the assets of the company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Responsibility statement

 

The directors confirm that to the best of their knowledge:

 

1. the financial statements, prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), give a true and fair view of the assets, liabilities, financial position and profit or loss of the company;

 

2. the Directors' report includes a fair review of the development and performance and position of the company, together with a description of the principal risks and uncertainties that it faces;

 

3. the Directors consider that the annual report and financial statements are fair, balanced and understandable, providing appropriate information to shareholders to assess the performance, business model and strategy of the company.

 

By Order of the Board

 

Geoffrey Gamble25 April 2019

 

Independent Auditors' Report to the members ofNew Century AIM VCT 2 plc

 

Opinion

 

We have audited the financial statements of New Century AIM VCT 2 plc for the year ended 31 December 2018 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow Statement and the related notes, 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 (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 

31 December 2018 and of the company's return for the year then ended;

 
    -- have been properly prepared in accordance with United Kingdom 

Generally Accepted Accounting Practice; and

 
    -- 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 described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical 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.

 

Conclusions relating to principal risks, going concern and viability statement

 

We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you whether we have anything material to add or draw attention to:

 
 
    -- the disclosures in the annual report set out on page 6 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 directors' statement set out on page 18 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 ability to continue to do so over a

period of at least twelve months from the date of approval of the

financial statements;

 
    -- whether the 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;

 
    -- the directors' explanation 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.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgment, 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.

 
Key risks                                                   Our approach taken to assess risks 
The carrying value of the investments and the               We tested the value of the year-end investments byreference 
recognitionof  realised and unrealised                      to market price information at the year-end. 
gains and losses. Theinvestment  portfolio                  Thepurchase and  sale of investments were agreed 
and associated realised andunrealised                       to contractnotes and cash  movements 
gains and  losses is the key driver to thefinancial         on a sample basis. Therealised gains and losses 
performance of the  company                                 on  the sale of investments werere-calculated 
and has thegreatest impact on both the                      for both the  individual transactions on asample 
income  statement andbalance sheet.                         basis and for the total  portfolio. 
 
                                                            The movement in unrealised gains was checked 
                                                            forarithmetical  accuracy and validated by 
                                                            reviewing theopening costs to  prior year 
                                                            balances and purchases on asample basis. 
 
                                                            The portfolio is maintained by the 
                                                            investment manager inaccordance 
                                                            with the investment management agreement.We 
                                                            agreed the  investment 
                                                            portfolio to a signedconfirmation provided 
                                                            by the  investment advisor 
                                                            detailingeach investment, the cost and  market price. 
Compliance with the VCT rules is necessary to maintainthe   Our work in respect of the compliance with the VCT rulesinvolved 
VCT status and associated tax benefits.                     testing the eleven conditions for maintainingapproval as a  VCT 
                                                            as set out by HMRC. Each of theconditions was tested in  turn in 
                                                            order to assess whether ithad been met as at the  year-end. 
 
 

Our application of materiality

 

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on our audit and on the financial statements. We define financial statement materiality as the magnitude by which misstatements, including omissions, could influence the economic decisions taken on the basis of the financial statements by reasonable users.

 

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 determined materiality for the financial statements as a whole to be GBP45,000. In determining this we based our assessment on an average of three key indicators, being the return before tax, the net assets and gross assets of the company. On the basis of our risk assessment, together with our assessment of the company's control environment, our judgement is that performance materiality for the financial statements should be 75% of materiality, being GBP33,750.

 

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of GBP2,250 which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

 

An overview of the scope of our audit

 

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain.

 

We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taken into account an understanding of the structure of the company, its activities, the accounting processes and controls, and the industry in which they operate. Our planned audit testing was directed accordingly and was focused on areas where we assessed there to be the highest risk of material misstatement. During the audit we reassessed and re-evaluated audit risks and tailored our approach accordingly.

 

The audit testing included 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 and the management of specific risks.

 

We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant findings, including any significant deficiencies in internal control that we identify during the audit.

 

Other information

 

The directors are responsible for the other information. 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 of 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 18 - the 

statement 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, business model and strategy, is

materially inconsistent with our knowledge obtained in the audit; or

 
    -- Audit committee reporting set out on page 16 - 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 17 and 18 - the parts of the directors'

statement required under the Listing Rules relating to the company's

compliance with the UK Corporate Governance Code containing provisions

specified for review by the auditor 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:

 
 
    -- 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 and the Directors' 

Report for the financial year for which the accounts are prepared is

consistent with the financial statements.

 
    -- the Strategic Report in the Directors' Report has been prepared in 

accordance with applicable legal requirements.

 

Matters on which we are required to report by exception

 

In the 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.

 

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 reviewed 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.

 

Responsibilities of directors

 

As explained more fully in the statement of directors' responsibilities on page 18, 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 statements

 

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.

 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at https://www.frc.org.uk/auditors/audit-assurance.This description forms part of our auditor's report.

 

Other matters which we are required to address

 

We were appointed by New Century Aim VCT2 Plc in 2008 and subsequently re-appointed following a tender process on 27 March 2018. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 12 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.

 

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 opinions we have formed.

 

Daniel Hutson (Senior statutory auditor)

 

for and on behalf of

 

UHY Hacker Young

 

Chartered Accountants

 

Statutory Auditors

 

Quadrant House

 

4 Thomas More Square

 

London, E1W 1YW

 

25 April 2019

 

Statement of Comprehensive Income

 

(incorporating the revenue account)

 

for the year to 31 December 2018

 
                        Year ended                    Year ended 
                        31 December 2018              31 December 2017 
                 Notes  Revenue   Capital   Total     Revenue   Capital   Total 
                        GBP'000     GBP'000     GBP'000     GBP'000     GBP'000     GBP'000 
Gains/(losses) 
on 
investments 
-                       -         121       121       -         122       122 
realised 
-                       -         (850)     (850)     -         403       403 
unrealised 
Income           5      46        -         46        37        -         37 
Investment       6      (8)       (22)      (30)      (8)       (23)      (31) 
management 
fee 
Other            7      (52)      -         (52)      (52)      -         (52) 
expenses 
                        ________  ________  ________  ________  ________  ________ 
Return/(loss)           (14)      (751)     (765)     (23)      502       479 
on 
ordinary 
activities 
before 
taxation 
Tax                     -         -         -         -         -         - 
charge           9 
on 
ordinary 
activities 
                        ________  ________  ________  ________  ________  ________ 
Return/(loss)           (14)      (751)     (765)     (23)      502       479 
on 
ordinary 
activities 
after 
taxation 
                        =======   =======   =======   =======   =======   ======= 
Return           11     (0.31)    (16.30)   (16.61)   (0.50)    10.88     10.38 
per 
ordinary 
share 
(pence) 
                        =======   =======   =======   =======   =======   ======= 
 
 

The notes on pages 27 to 36 form an integral part of these financial statements.

 

All revenue and capital items in the above statement are from continuing operations in the current year. No operations were acquired or discontinued in the current year. Other than that shown above, the company had no recognised gains or losses. Accordingly, the above represents the total comprehensive income for the year.

 

Balance Sheet

 

at 31 December 2018

 
                                As at               As at 
                          Note  31 December 2018    31 December 2017 
                                GBP'000               GBP'000 
Fixed assets 
Investments               12      2,214               3,127 
Current assets 
Debtors                   15      31                  37 
Current liabilities 
Creditors: amounts        16      (16)                (18) 
falling 
due within one year 
                                  2,229               3,146 
Capital and reserves 
Called up share capital   17      461                 461 
Share premium                     57                  57 
Capital Redemption                171                 171 
Reserve 
Capital                           3,440               3,440 
reserve-distributable 
Capital reserve                   (1,185)             (1,537) 
- realised 
Capital reserve                   (916)               187 
- unrealised 
Revenue reserve                   201                 367 
Total                             2,229               3,146 
equity shareholders' 
funds 
Net asset value per       18      48p                 68p 
ordinary share 
 
 

The financial statements on pages 23 to 36 were approved by the Board of directors on 25 April 2019 and were signed on its behalf by:

 

Geoffrey Gamble

 

Chairman

 

The notes on pages 27 to 36 form an integral part of these financial statements.

 

Company's registered number: 06054576

 

Statement of Changes in Equity

 

at 31 December 2018

 
               Called-up  Share    Capital     Capital        Capital   Capital     Revenue   Total 
               share      premium  redemption  distributable  realised  unrealised  reserve 
               capital    account  reserve 
               GBP'000      GBP'000    GBP'000       GBP'000          GBP'000     GBP'000       GBP'000     GBP'000 
As             461        57       171         3,440          (1,725)   (127)       528       2,805 
at 1 January 
2017 
Realised       -          -        -           -              122       -           -         122 
gains 
on 
disposals 
Unrealised     -          -        -           -              -         403         -         403 
gains 
Transfer of    -          -        -                          89        (89)        -         - 
unrealised 
gain 
to realised 
on disposal 
of 
investment 
Net revenue    -          -        -           -              -         -           (23)      (23) 
before tax 
Capital        -          -        -           -              (23)      -           -         (23) 
element 
of 
investment 
management 
fee 
Dividends      -          -        -           -              -         -           (138)     (138) 
paid 
               _______    _______  _______     _______        ________  ________    ________  _______ 
At             461        57       171         3,440          (1,537)   187         367       3,146 
31 December 
2017 
As             461        57       171         3,440          (1,537)   187         367       3,146 
at 1 January 
2018 
Realised       -          -        -           -              121       -           -         121 
gains 
on 
disposals 
Unrealised     -          -        -           -              -         (850)       -         (850) 
gains 
Transfer of    -          -        -           -              253       (253)       -         - 
unrealised 
loss 
to realised 
on disposal 
of 
investment 
Net revenue    -          -        -           -              -         -           (14)      (14) 
before tax 
Capital        -          -        -           -              (22)      -           -         (22) 
element 
of 
investment 
management 
fee 
Dividends      -          -        -           -              -         -           (152)     (152) 
paid 
               _______    _______  _______     _______        ________  ________    ________  _______ 
At             461        57       171         3,440          (1,185)   (916)       201       2,229 
31 December 
2018 
 
 

The notes on pages 27 to 36 form an integral part of these financial statements.

 

Cash Flow Statement

 

for the year to 31 December 2018

 
                                As at               As at 
                          Note  31 December 2018    31 December 2017 
                                GBP'000               GBP'000 
Cash flow from 
operating 
activities 
Cash outflow from         21      (84)                (82) 
operations 
Net cash outflow from             (84)                (82) 
operating activities 
Cash flows from 
investing 
activities 
Investment income                 46                  37 
Net cash from investing           46                  37 
activities 
Cash flows from 
financing 
activities 
Sale of investments               572                 426 
Purchase of investments           (388)               (303) 
Dividend paid                     (152)               (138) 
Net cash from/(used in)           32                  (15) 
financing activities 
Net decrease in cash              (6)                 (60) 
and cash equivalents 
                                  37                  97 
Cash and cash 
equivalents 
at the beginning 
of year 
Cash and cash                     31                  37 
equivalents 
at the end of 
year (held by 
Investment 
Manager) 
 
 

The notes on pages 27 to 36 form an integral part of these financial statements.

 

All cash is held on behalf of the VCT by MD Barnard & Company Limited as our Investment Manager, see note 21.

 

Notes to the Financial Statements

 

for the year to 31 December 2018

 

1.Company information

 

New Century AIM VCT 2 PLC is a UK incorporated company whose registered office is:

 

4th Floor

 

50 Mark Lane

 

London EC3R 7QR

 

New Century AIM VCT2 PLC is a Venture Capital Trust established under the legislation introduced in the Finance Act 1995. The company's principal objective is to achieve long term capital growth through investment in a diversified portfolio of qualifying companies primarily quoted on AIM.

 

2.Basis of preparation

 

The financial statements have been prepared in accordance with applicable United Kingdom law and accounting standards and with the Financial Reporting Council's Financial Reporting Standard FRS 102 and with the Statement of Recommended Practice for Investment Companies re-issued by the Association of Investment Companies in November 2014 and updated in January 2017.

 

Going Concern basis - on the basis that the assets of the company consist mainly of marketable securities, the directors are of the opinion that at the time of approving the accounts, the company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

 

The financial statements are presented in Sterling.

 

3.Significant estimates and judgements

 

As the company's investment holdings, which comprise approximately 99% of its total assets, are stated at market value based on the closing prices of the London Stock Exchange, the directors do not believe that there is any inherent uncertainty in their presentation of these amounts, and that in their judgement, market value and fair value may be regarded as identical for the purpose of these accounts.

 

4.Accounting policies

 

Investments

 

Listed or AIM traded investments are stated at market value, which is based upon market bid prices at the balance sheet date. In the event that the shares held by the company are subject to certain restrictions, or the holding is significant in relation to the traded issued share capital of the investee company then the directors may apply a discount to the relevant market price.

 

Investments in unquoted companies are valued by the directors in accordance with British Venture Capital Association ("BVCA") guidelines.

 

4.Accounting policies (continued)

 

Investments (continued)

 

Realised surpluses or deficits on the disposal of investments and permanent impairments in the value of investments are taken to realised capital reserves. Unrealised surpluses and deficits on the revaluation of investments are taken to unrealised capital reserves. Costs incurred relating to acquisitions and disposals are charged to capital reserves as a deduction from proceeds or an addition to costs.

 

It is not the company's policy to exercise controlling or significant influence over investee companies, although it may hold a significant interest in some companies. Accordingly, the results of these companies are not incorporated into the revenue account except to the extent of any income earned or received.

 

Income

 

Dividend income receivable from quoted securities is recognised on the ex-dividend date. Income from unquoted equity and non-equity securities is recognised on an accruals basis.

 

Interest from cash and deposits and fixed returns on debt securities are recognised on an accruals basis.

 

Expenses

 

All expenses are accounted for on an accruals basis. One quarter of the investment management fee is charged to the revenue account and the remaining three quarters is charged to capital reserves, and inclusive of any irrecoverable value added tax. The allocation of the management fee reflects the directors' estimate of the source of the long-term returns in the portfolio from revenue and capital.

 

Taxation

 

Any tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

 

5.Income

 
                       Year ended          Year ended 
                       31 December 2018    31 December 2017GBP'000 
                       GBP'000 
Other income 
Dividends receivable     46                  37 
 
 

6.Investment management fees

 
                             Year ended          Year ended 
                             31 December 2018    31 December 2017 
                             Revenue  Capital    Revenue  Capital 
                             GBP'000    GBP'000      GBP'000    GBP'000 
Investment management fees   8        22         8        23 
 
 

MD Barnard & Company Limited ("MDB") provides investment management services to the company in respect of the company's portfolio of venture capital investments under an investment management agreement dated 12 March 2007, supported by a deed of amendment dated 4 September 2017.

 

Under the terms of the investment management agreement, MDB is entitled to a fee (exclusive of VAT) equal to 1% per annum of the net assets of the company. The fee is calculated quarterly in arrears based on the net assets at 31 March, 30 June, 30 September and 31 December. During the year ended 31 December 2018, the fee payable to MD Barnard & Company Limited equated to 1% per annum of net assets. No performance fee is payable.

 

The investment management agreement is for a minimum period of three years from 1 September 2017, subject to a trade-off clause that if Simon Like ceases to manage the company's investments, the company may terminate the agreement with MDB in a mirror time frame of 12 months' notice period.

 

7.Other expenses

 
                       Year ended          Year ended 
                       31 December 2018    31 December 2017GBP'000 
                       GBP'000 
Administrative and       27                23 
secretarial 
services 
Auditors'                10                11 
remuneration 
-for tax services        -                 4 
Regulatory fees          15                14 
                         52                  52 
 
 

8.Directors' remuneration

 

The chairman received GBP5,000 remuneration in the year (2017: GBP5,000). No other remuneration has been paid or is payable for the year to 31 December 2018 or in respect of the prior year.

 

9.Tax charge on ordinary activities

 
                                  Year ended          Year ended 
                                  31 December 2018    31 December 2017 
                                  Revenue  Capital    Revenue  Capital 
                                  GBP'000    GBP'000      GBP'000    GBP'000 
United Kingdom tax based on the 
taxable profitfor the year 
- Current year                    -        -          -        - 
- Prior year                      -        -          -        - 
                                  -        -          -        - 
Factors affecting tax 
charge for the year 
Return on ordinary activities     (14)     (751)      (23)     502 
before taxation 
Tax on above at the               (3)      (142)      (4)      (96) 
standard company 
rate of19% (2017:  19.25%) 
UK dividends not subject          (9)      -          (7)      - 
to corporation tax 
Non-deductible losses             -        138        -        101 
on investment 
Non allowable expenses            -        -          -        - 
Unutilised/(utilised) losses      12       4          11       (5) 
Current tax charge for the year   -        -          -        - 
 
 

The company has unrelieved losses amounting to approximately GBP809,000 (2017: GBP728,000) which are available to carry forward for tax purposes which it can set off against future profits. No deferred tax asset has been recognised in respect of these losses in view of the company's history of losses.

 

10.Dividends

 
                        Year ended          Year ended 
                        31 December 2018    31 December 2017GBP'000 
                        GBP'000 
Capital dividend paid     152                 138 
                          152                 138 
 
 

On 22 March 2019 the directors proposed a dividend in respect of the year ended 31 December 2018 of GBP156,636 representing 3.40p per ordinary share.

 

11.Loss per ordinary share

 

The revenue loss, per ordinary share, is based on the net loss on ordinary activities after taxation of GBP14,197 (2017: GBP23,016) and on 4,606,953 (2017: 4,606,953) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

 

The total return per ordinary share is based on a net loss after taxation of GBP764,966 (2017: profit of GBP478,357) and on 4,606,953 (2017: 4,606,953) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

 

12.Fixed asset investments

 
            As at               As at 
            31 December 2018    31 December 2017GBP'000 
            GBP'000 
UK listed     113                 125 
AIM           2,095               2,989 
Unlisted      6                   13 
              2,214               3,127 
 
 

Movements in investments, including realised and unrealised gains and losses, during the year are summarised as follows:

 
                                      Year ended 31 December 2018 
                                        UKListed  AIM    Un-listed  Total 
                                        GBP'000     GBP'000  GBP'000      GBP'000 
At 1 January 2018                       125       2,989  13         3,127 
Purchases                               -         388    -          388 
Transfers                               -         -      -          - 
                                        125       3,377  13         3,515 
less: Sales                             -         (572)  -          (572) 
                                        125       2,805  13         2,943 
Realised period gains and losses        -         121    -          121 
Unrealised holding losses               (12)      (831)  (7)        (850) 
                                        113       2,095  6          2,214 
Cost at 31 December 2018                188       2,770  106        3,064 
 
 

12.Fixed asset investments (continued)

 
                              Year ended 31 December 2017 
                                UKListed  AIM    Un-listed  Total 
                                GBP'000     GBP'000  GBP'000      GBP'000 
At 1 January 2017               115       2,606  4          2,725 
Purchases                       -         303    -          303 
Transfers                       -         (12)   12         - 
                                115       2,897  16         3,028 
less: Sales                     -         (426)  -          (426) 
                                115       2,471  16         2,602 
Realised period gains           -         125    (3)        122 
Unrealised holding gains        10        393    -          403 
                                125       2,989  13         3,127 
Cost at 31 December 2017        188       2,507  180        2,875 
 
 

The overall gain (loss) on investments for the years shown in the Income Statement is as follows:

 
                                Year ended         Year ended 
                                31 December 2018   31 December 2017GBP'000 
                                GBP'000 
Net realised gain on disposal    121                122 
Net unrealised (losses)/gains    (850)              403 
                                 (729)              525 
 
 

13.Venture capital investments

 

A full list of investments held is disclosed under Investment Portfolio.

 

14.Significant interests

 

The Company did not hold more than 10% of the allotted equity share capital of any class of any investee company.

 

15.Debtors

 
                       As at               As at 
                       31 December 2018    31 December 2017GBP'000 
                       GBP'000 
Uninvested funds 
with broker: 
MD Barnard & Company     31                  37 
Limited 
 
 

16.Creditors

 
                               As at              As at 
                               31 December 2018   31 December 2017GBP'000 
                               GBP'000 
Trade creditors and accruals    16                 18 
                                16                 18 
 
 

17.Share capital

 
                      As at                    As at 
                      31 December 2018GBP'000    31 December 2017GBP'000 
Authorised 
25,000,000 ordinary     2,500                    2,500 
shares of 10p each 
Allotted, called up 
and fully paid 
4,606,953 (2017:        461                      461 
4,606,953) 
ordinary shares 
of10p each 
 
 

18.Net asset value per share

 

Net asset value per share is based on net assets at 31 December 2018 of GBP2,228,886 (31 December 2017 of GBP3,145,881) and on 4,606,953 ordinary shares in issue at both those dates.

 

19.Performance incentive arrangements

 

The Investment Manager is not entitled to any performance incentive arrangements.

 

20.Reserves

 

Called up share capital represents the nominal value of shares that have been issued.

 

Share premium account includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.

 

Capital redemption reserve relates to capital repurchased.

 

Capital reserve-distributable represents items of a capital nature legally available for distribution.

 

Capital reserve-realised represents surpluses or deficits on the disposal of investments and permanent impairment in the value of investments.

 

Capital reserve-unrealised represents surpluses and deficits on the revaluation of investments.

 

Revenue reserve includes all current and prior period retained profits and losses.

 

21.Notes to the cash flow statement

 

Net cash outflow from operating activities

 
                             Year ended          Year ended 
                             31 December 2018    31 December 2017 
                             GBP'000               GBP'000 
Operating 
activity 
(Loss)/return on ordinary    (765)               479 
activities 
Gains on sale of             (121)               (122) 
investments 
Investment                   (46)                (37) 
income 
Unrealised losses/(gains)    850                 (403) 
on investments 
(Decrease)/increase          (2)                 1 
in creditors 
                             ________            ________ 
                             (84)                (82) 
 
 

Cash and cash equivalents

 

Cash and cash equivalents comprise GBP30,833 (2017: GBP36,958) of uninvested funds, held in a bank account with the investment manager.

 

22.Risk management and financial instruments

 

A statement of the company's principal objectives is given within the Strategic Report on page 6. In order to achieve these objectives the company invests its funds primarily in qualifying holdings in unlisted companies and companies traded on AIM, which by their nature may entail a higher degree of risk than investments in large listed companies. The company has not entered into any derivative transactions, and does not expect to do so in the foreseeable future. As a venture capital trust, the company invests in securities for the long term, and it is the company's policy that no trading in investments or other financial instruments shall be undertaken.

 

Market price risk

 

The main risks arising from the company's investing activities are market price risk, representing the uncertain realisable values of the company's investments. The directors aim to limit the risk attaching to the portfolio as a whole by careful selection of investments and by maintaining a wide spread of investments in terms of financing stage, industry sector and geographical location.

 

The assets of the company are held for the most part as listed investments which carry market risk in the form of a single risk variable - market price movement. The directors do not consider that a risk analysis of that single risk variable will produce any useful information beyond the obvious that downward movement in share prices will result in a downward movement in the share values and vice versa. For this reason, the directors do not consider it appropriate to prepare a sensitivity analysis to market price movement.

 

Interest rate risk

 

The company finances its activities through retained profits including realisable capital profits, and through the issue of equity shares. It has not entered into any borrowings.

 

Liquidity risk

 

There is liquidity risk associated with unquoted investments, which are not readily realisable.

 

22.Risk management and financial instruments (continued)

 

Credit risk

 

Credit risk is the risk of a borrower defaulting on either an interest payment or the capital sum of a loan. The company has not made any loans to investee companies.

 

Currency risk

 

The company's assets and liabilities are denominated in Sterling. As such, there is little currency risk. Any transactions in currencies other than Sterling are recorded at the rates of exchange prevailing at the date of the transaction. At each reporting date, the monetary assets and liabilities denominated in foreign currencies are re-translated at the rates prevailing on the reporting date.

 

Capital

 

The company's capital is provided in its entirety by its shareholders in the form of ordinary shares.

 

The company's purpose and objective is the investment of its capital funds in listed investments, primarily those quoted on the Alternative Investment Market with a view to securing capital appreciation over the long term.

 

There were no externally imposed capital requirements with which the company had to comply during the year to 31 December 2018.

 

Financial assets

 

The interest rate profile of the company's financial assets is set out below:

 
                       Year ended               Year ended 
                       31 December 2018GBP'000    31 December 2017GBP'000 
Fixed rate               -                        - 
Non-interest bearing     2,214                    3,127 
                         2,214                    3,127 
 
 
Fixed rate assets        Year ended               Year ended 
                         31 December 2018GBP'000    31 December 2017GBP'000 
Weighted average           n/a                      n/a 
interest rate 
Weighted average years     n/a                      n/a 
to maturity 
 
 

Non-interest bearing financial assets comprise equity share and non-equity share investments in investee companies, cash held on non-interest bearing deposit and debtors.

 

22.Risk management and financial instruments (continued)

 

Fair values

 

The investments of the company are valued by the directors in accordance with the guidelines issued by the British Venture Capital Association, and the carrying values are considered to approximate the fair value of the investments. The fair values have also been determined in line with the fair value hierarchy as set out in FRS 102 11.27.

 

23.Financial assets and liabilities

 
                                 Year ended        Year ended 
                                 31 December 2018  31 December 2017 
                                 GBP'000             GBP'000 
Financial assets measured        2,214             3,127 
at fair value 
Financial assets measured        31                37 
at amortised cost 
Financial liabilities measured   (16)              (18) 
at amortised cost 
 
 

24.Related party transactions

 

New Century AIM VCT 2 plc is managed by M D Barnard & Company Limited.

 

One amount was payable to key management personnel during the year for GBP5,000 (2017: GBP5,000).

 

25.Capital commitments

 

There were no investments which were approved at the year-end but which had not completed.

 

26.Control

 

New Century AIM VCT 2 plc is not under the control of any one party or individual.

 

27.Post balance sheet events

 

On 22 March 2019 the directors proposed a dividend in respect of the year ended 31 December 2018 of GBP156,636 representing 3.40p per ordinary share.

 

Shareholder information

 

For the year to 31 December 2018

 

The Company

 

New Century AIM VCT 2 PLC was incorporated on 16 January 2007. On 4 April 2007, the company obtained a listing on the London Stock Exchange. A total of GBP5.745 million was raised (before expenses) through an offer for subscription of new ordinary shares at 100p. The company has been approved as a Venture Capital Trust by the Inland Revenue.

 

The Investment Manager

 

New Century AIM VCT 2 PLC is managed by M D Barnard & Company Limited, an independent fund management company based in Laindon, Essex. M D Barnard & Company currently manages or advises private client funds and venture capital funds totalling approximately GBP25 million including New Century AIM VCT 2 PLC.

 

Venture Capital Trusts

 

Venture Capital Trusts (VCTs) were introduced in the Finance Act 1995 and are intended to provide a means whereby individual investors can invest in small unquoted trading companies in the UK, with incentives in the form of a number of tax benefits. From 6 April 2005, investors subscribing for new shares in a VCT have been entitled to claim income tax relief of 30% on their investment, irrespective of their marginal tax rate (up to a maximum investment of GBP200,000 per tax year). The tax relief cannot exceed the amount which reduces an investor's income tax liability to nil. In addition all dividends paid by VCTs are tax free and disposals of VCT shares are not subject to capital gains tax.

 

New Century AIM VCT 2 has been approved as a VCT by HM Revenue and Customs. In order to maintain its approval the company must comply with certain requirements on a continuing basis; in particular, within three years from the date of provisional approval at least 70% by value of the company's investments must comprise "qualifying holdings", of which at least 30% by value must be in eligible ordinary shares. A "qualifying holding" consists of up to GBP1 million invested in any one year in new shares or securities in an unquoted company which is carrying on a qualifying trade and whose gross assets do not exceed GBP15 million at the time of investment. For the purposes of these criteria, unquoted companies include companies whose shares are traded on the Alternative Investment Market ("AIM").

 

As with investment trusts, capital gains accruing to VCTs are not chargeable gains for UK Corporation Tax purposes.

 

Financial calendar

 
Annual General Meeting                          11 June 2019 
Interim report for six months to 30 June 2019   August 2019 
Preliminary announcement of results             April 2020 
for the year to 31 December 2019 
Annual General Meeting 2020                     June 2020 
 
 

The shares will go ex-dividend on 13 June 2019; the proposed dividend will be paid to shareholders on the share registrar as at 14 June 2019. The dividend will be paid on 12 July 2019.

 

Share price

 

The mid-market price of shares in New Century AIM VCT 2 PLC is available daily on the London Stock Exchange website (www.londonstockexchange.com).

 
 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190426005177/en/

 
This information is provided by Business Wire 
 
 

(END) Dow Jones Newswires

April 26, 2019 05:20 ET (09:20 GMT)

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