Final Results

Final Results

New Cent. Aim Vct 2

Details of Directors

New Century AIM VCT2 plc   31st December

2009

Audited Report and Accounts for the year to 31st December 2009

Financial Summary

         

1

Investment Objective

1

Chairman's Statement

2

Details of Directors

3

Management and Administration

4

Directors

5

Investment Manager’s Review

6

Investment Portfolio

7

Top Ten Investments

9

Directors' Report

10

Directors’ Remuneration Report

14

Corporate Governance

15

Independent Auditors' Report

18

Income Statement

20

Balance Sheet

21

Cash Flow Statement

22

Notes to the Financial Statements

23

Shareholder Information

32

Notice of Annual General Meeting

33

Form of Proxy

Financial Summary

 

  Year ended

31 December

2009

  Year ended

31 December

2008

Revenue return per share (pence) for the year

0.14

0.98

Total return per share (pence) for the year

6.05

(47.09)

Proposed dividends per share (pence)

0.22

0.74

Net asset value per share (pence)

50.04

45.00

Cumulative value of shareholder investment (net
asset value plus cumulative dividends per share) (pence) asset value plus cumulative dividends per share) (pence)

 

51.58

 

45.80

Shareholders’ funds (£’000)

2,881

2,581

Investment Objective

New Century AIM VCT2 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 the prospectus are to achieve long term capital growth through investment in a diversified portfolio of Qualifying Companies primarily quoted on AIM.

Chairman’s Statement

In the year to 31st December, 2009, the net asset value of your fund climbed by 11.2%. This was disappointing compared to the FTSE AIM Index which rose by 66.9% over the period. The strength of the AIM Index was primarily due to a rapid surge in the shares of natural resource stocks which are generally not VCT qualifying investments.

We are pleased to announce that qualifying investments now total 74.49% of the fund by cost. This is in excess of the 70% minimum requirement by April this year.

We propose to pay out all our revenue reserves by way of dividend, which equates to 0.22p per share compared to 0.74p last year.

I would like to thank the management for their continued efforts over the past year.

Annual General Meeting

The AGM will be held at 11.30 am on Monday 14 June 2010 at 17-21 New Century Road, Laindon, Essex SS15 6AG. I look forward to meeting those shareholders who are able to attend.

Geoffrey Charles Gamble

Chairman

28 April, 2010

Details of Directors

Michael Barnard (Aged 58)

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, M D Barnard, which now has a staff (including self employed registered representatives) of 21. Based in Laindon, Essex, it has offices in London, Wells, Exeter and Colchester. Since 1995, he has been either managing or advising unit trust, private client and pension company portfolios with a total value of approximately £115 million.

Geoffrey Gamble (Aged 49)

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.

Robin Kirby (Aged 66) (resigned 22 May 2009)

Robin joined the Bank of England where he remained until he retired in 1998 in a senior management position. During his time in the Bank, Robin specialised in foreign exchange and was seconded to the International Monetary Fund for three years, working in the Central Bank of Botswana. He also undertook many missions throughout the world for the World Bank and other international agencies, particularly in the Far East and Africa. He currently runs his own consultancy business, Robin Kirby & Associates Limited, which specialises in advising developing countries on foreign exchange and foreign direct investment issues.

Peter William Riley (Aged 63)

Peter qualified as a solicitor in 1969 and in that year became partner of Mitchells, Solicitors. In 1977, he became a partner in his present solicitor practice, Daybells, where he specialises in property law with an emphasis on large commercial properties.

Ian Cameron-Mowat (Aged 59) (appointed 22 May 2009)

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   4th Floor,

150-152 Fenchurch Street

London EC3M 6BB

 

Company Secretary

Graham Kenneth Urquhart FCIS

4th Floor,

150-152 Fenchurch Street

London EC3M 6BB

 

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 M D Barnard & Company Limited

17-21 New Century Road

Laindon, Essex SS15 6AG

 

Auditor & VCT Status Adviser

UHY Hacker Young LLP

Quadrant House

4 Thomas More Square

London E1W 1YW

 
Bankers Bank of Scotland

New Uberior House

11 Earl Grey Street

Edinburgh EH3 9BN

Directors

Geoffrey Gamble (Chairman)
Michael David Barnard
Robin Kirby (resigned 22 May 2009)
Peter William Riley
Ian Cameron-Mowat (appointed 22 May 2009)

All directors are non-executive.

Audit Committee:

Geoffrey Gamble (Chairman)
Robin Kirby
Peter William Riley

Investment Manager’s Review

2009 was a very difficult year for smaller companies, particularly for those that were going through the development phase. Banks were unwilling to finance such companies through this difficult period while there was generally a lack of appetite from venture capitalists to finance these early stage companies. Both Cantono and EBTM went into receivership during the period. In the case of Cantono, we did join a syndicate to finance the company while it sold off its properties. The properties were successfully realised, giving a £20,148 profit or 40% return on the refinancing outlay over a nine month period. Against this we had to write off a further £7,500 loss arising from the equity during the year. Unfortunately, the fund lost a further £150,000 as a result of the EBTM receivership.

Coolabi, despite achieving everything that they promised saw their share price suffer due to a large seller. The fall in its share price resulted in a decline in value of £113,500 during the year. Since the year end, the seller has been cleared out and the share price has recovered by 50% or £94,000. The only other significant disappointing investment was Boomerang which fell in value by £90,000 following disappointing results.

On a positive front, Tristel's share price moved up by 68% and Corac by 40%.

Since the year end the fund has seen a further 6.5% increase in net asset value and as at the 28th January, was standing at 53.3p per share.

We do not expect 2010 to be easy, with spending cuts and higher taxation both likely to suppress demand. Nevertheless, shares of smaller companies outside the natural resources sector are still very low. There has been some loosening of bank lending and confidence is returning. As a result, we believe that the fund will show further recovery this year.

Michael Barnard

28 April 2010

Investment Portfolio

                 
Security   Cost   Valuation   %   %
        31/12/2009   Cost   Valuation
 
Qualifying Investments 4,062,975 2,160,887 74.49 74.82
Non-qualifying Investments 1,440,389 776,268 26.41 26.88
Uninvested Funds (48,901)   (48,901)   -0.90   -1.69
5,454,463   2,888,253   100.00   100.00
 
Qualifying Investments
AIM Quoted
St Helens Capital plc 151,504 27,000 2.78 0.93
Coolabi plc 394,694 187,500 7.24 6.49
IS Pharma plc 301,500 321,428 5.53 11.13
EBTM plc 471,420 - 8.64 0.00
Cantono plc 301,500 - 5.53 0.00
HML Holdings plc 271,350 127,500 4.97 4.41
Sport Media Group plc 125,625 8,333 2.30 0.29
Southern Bear 301,500 112,500 5.53 3.90
Kurawood plc 150,750 525 2.76 0.02
Boomerang Plus plc 238,185 124,500 4.37 4.31
Corac Group plc 73,868 47,250 1.35 1.64
Tristel plc 247,640 348,000 4.54 12.05
Advanced Computer Software 102,510 216,000 1.88 7.48
Cyan Holdings plc 157,862 185,000 2.89 6.41
Lipoxen plc 72,973 85,000 1.34 2.94
Savile Group 126,254 108,750 2.31 3.77
Winkworth plc 72,360 72,000 1.33 2.49
Green Compliance plc 50,250 100,000 0.92 3.46
Bango plc 47,537   61,600   0.87   2.13
3,659,282   2,132,886   67.09   73.85
Plus Markets Quoted
General Medical Clinics plc 37,371 28,000 0.69 0.97
CKS Group plc 366,323   -   6.72   0.00
403,694   28,000   7.40   0.97
 
Total Qualifying Investments 4,062,975 2,160,887 74.49 74.82
 
 
 
 

 

                 
Security Cost Valuation % %
        31/12/2009   Cost   Valuation
 
Non-qualifying Investments
AIM Quoted
K3 Business Technology 34,972 20,000 0.64 0.69
NetDimensions Ltd 31,155 7,125 0.57 0.25
Ashley House plc 96,176 81,000 1.76 2.80
Microemissive Displays 49,046 - 0.90 0.00
DCD Media 60,300 6,375 1.11 0.22
Neutrahealth plc 30,459 11,875 0.56 0.41
Eco City Vehicles 15,530 18,000 0.28 0.62
ILX Group 30,099 13,500 0.55 0.47
Sanderson Group 58,231 22,400 1.07 0.78
Pactolus Hungarian Prop 10,616 6,813 0.19 0.24
Fishworks plc 30,150 - 0.55 0.00
AT Communications Group 41,815 - 0.77 0.00
Shed Media plc 16,463 21,500 0.30 0.74
China Eastsea Business Software 12,564 3,250 0.23 0.11
Clerkenwell Ventures - 5,600 0.00 0.19
Norcon plc 19,695 19,200 0.36 0.66
STM Group 35,855 25,000 0.66 0.87
Alliance Pharma plc 25,251 53,000 0.46 1.84
Burford Capital Ltd 25,250 25,750 0.46 0.89
Colliers CRE plc 20,200 19,000 0.37 0.66
Rotala plc 35,351   42,000   0.65   1.45
679,176   401,387   12   14
UK Listed
Superglass Hldgs plc 45,225 6,375 0.83 0.22
Investec 458,138 168,480 8.40 5.83
Record plc 30,150 14,438 0.55 0.50
Primary Health Properties 51,106 64,240 0.94 2.22
Chime Communications plc 145,726   90,989   2.67   3.15
730,345   344,521   13.39   11.93
 
Unlisted Investments
DCD Media loan notes 2012 30,868   30,360   0.57   1.05
30,868   30,360   0.57   1.05
 
Total Non-qualifying Investments 1,440,389 776,268 26.41 26.88

Top Ten Investments

 

Security

  Cost   Valuation   %
 
Tristel plc 247,640 348,000 12.05
 
IS Pharma plc 301,500 321,428 11.13
 
Advanced Computer Software 102,510 216,000 7.48
 
Coolabi plc 394,694 187,500 6.49
 
Cyan Holdings plc 157,862 185,000 6.41
 
Investec 458,138 168,480 5.83
 
HML Holdings plc 271,350 127,500 4.41
 
Boomerang Plus plc 238,185 124,500 4.31
 
Savile Group 126,254 108,750 3.77
 
Green Compliance plc 50,250 100,000 3.46

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

Directors’ Report

The directors present their report and the audited financial statements for the year to 31 December 2009.

Activities and status

The principal activity of the company during the year was the making of long-term equity and loan investments in unquoted and AIM traded companies in the United Kingdom. The company has been listed on the London Stock Exchange since 4 April 2007 and has been granted provisional approval by the Inland Revenue as a Venture Capital Trust. The Chairman’s Statement on page 2 and the Investment Manager’s Review on page 6 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 the Inland 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.

Results and dividend

  Year to

31 December 2009

  Year to
31 December 2008
Revenue   Capital Revenue   Capital
£’000 £’000 £’000 £’000

Return on ordinary activities after taxation

8 339

56

(2,761)

       
Appropriated as follows:
 
Interim dividend paid
 
Revenue – nil p - - - -
 
Capital – nil p - - - -
 
Final dividend paid in respect of prior year
Revenue – 0.74p (0.70p) per share (48) - (46) -
Capital – nil p per share - - - -
 
       
Transfers to reserves (40) 339 10 (2,761)

The directors propose a final dividend of 0.22p per share for the year ended 31 December 2009 to be paid on 16 July 2010 to shareholders on the register at 9 July 2010.

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

31 December 2009

  Year ended

31 December 2008

 
Michael David Barnard 200,000 200,000
Geoffrey Gamble 176,000 176,000
Robin Kirby (resigned 22 May 2009) - -
Peter William Riley 3,000 3,000
Ian Cameron-Mowat (appointed 22 May 2009) 100,000 100,000

All of the directors’ share interests shown above are held beneficially. There have been no changes in the directors’ share interests between 31 December 2009 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 Mr Barnard, 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.

None of the directors have a contract of service with the company and, except as mentioned below under the heading “Management”, there were no contracts that subsisted during the year in which a director was materially interested and which was significant in relation to the company’s business.

Management

M D Barnard & Co. Limited has acted as investment manager to the company since inception. The principal terms of the Investment Management Agreement are set out in Note 3 to the Financial Statements.

VCT status monitoring

The company has engaged UHY Hacker Young LLP to advise it on compliance with the VCT legislation. UHY Hacker Young LLP reviews the company’s investment portfolio to monitor ongoing VCT compliance. UHY Hacker Young LLP works closely with the investment manager, but reports directly to the Board of the company.

Substantial shareholdings

The company has been notified, in accordance with Chapter 5 of FSA’s Disclosure and Transparency Rules, of the under noted interests as at 31 December 2009 of 3 per cent shareholders and above:

MD Barnard             200,000
DM Trotman 200,000
RS Like 200,000
JR Atkinson 200,000
J Beddoe 200,000
T Phanos 200,000
IA Houston 200,000
A Lanza 200,000
G Gamble 176,000

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.

Annual general meeting

Notice of the annual general meeting is set out on pages 33 and 24.

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.

By Order of the Board

Michael Barnard        

28th April 2010

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 14 June 2010.

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 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.

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 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 2009 and 31 December 2008 is set out in the Financial Summary on page 1.

By Order of the Board

Michael Barnard

Corporate Governance

The directors support the relevant principles of the Combined Code issued in June 2008 by the Financial Reporting Council, being the principles of good governance and the code of best practice as set out in Section 1 of the Combined Code annexed to the Listing Rules of the Financial Services Authority.

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 financial statements, 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 financial statements.

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:

4 full board meetings   2 Audit Committee meetings

All directors attended all meetings with the
exception of Mr Riley on one occasion exception of Mr Riley on one occasion

All members attended with the exception
of Mr Rileyof Mr Riley

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 with the exception of the representative of the investment manager. During the year the Audit Committee was chaired by Mr Gamble. The Audit Committee reviews the financial statements and is reported to by the external auditors. Further, the Audit Committee keeps under review the cost effectiveness, independence and objectivity of the 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.

During the year Messrs UHY Hacker Young LLP continued to act as auditors, and reviewed the internal financial controls including those of the investment manager in the course of which a risk assessment was considered. The investment manager is authorised and regulated by the Financial Services 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 Combined 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 financial statements.

Financial Reporting

The directors’ statement of responsibilities for preparing the accounts is set out on page 17, and a statement by the auditors about their reporting responsibilities is set out in the Auditors’ Report on page 18.

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. These accords with the Turnbull guidance.

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 forty-eight Combined Code provisions throughout the accounting year. The preamble to the Combined 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 2009 with the provisions set out in Section 1 of the Combined 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 Combined Code issued in June 2008. The board consider that Messrs. Gamble, Kirby, 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 Combined 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 John Geoffrey Gamble, Chairman of the Board of directors, whom the board regard as independent despite recommendations to the contrary in the Combined 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 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; and

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.

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.

Independent Auditors’ Report to the members of New Century AIM VCT2 plc

We have audited the financial statements of New Century AIM VCT 2 plc for the year ended 31 December 2009 which comprise the Income Statement, the Balance Sheet, the Cash Flow Statement and the related notes. 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).

This report is made solely to the company’s members, as a body, in accordance 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.

Respective responsibilities of directors and auditors

As explained more fully in the Statement of Directors’ Responsibilities set out on page 17, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's web-site at www.frc.org.uk/apb/scope/UKP.

Opinion on financial statements

In our opinion:

  • the financial statements give a true and fair view of the state of the company's affairs as at 31 December 2009 and of the company's profit for the year then ended;
  • the financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
  • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the company financial statements, Article 4 of the IAS Regulation.

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 Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements;
  • the information given in the Corporate Governance Statement, set out on pages 15 to 16, with respect to internal control and risk management systems in relation to financial reporting processes and about share capital is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

  • adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or
  • the company 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.

Under the Listing Rules we are required to review:

  • the directors' statement, set out on page 15, in relation to going concern; and
  • the part of the Corporate Governance Statement relating to the company's compliance with the nine provisions of the June 2008 Combined Code specified for our review.

Michael Egan (Senior statutory auditor)
for and on behalf of UHY Hacker Young, statutory auditor for and on behalf of UHY Hacker Young, statutory auditor

UHY Hacker Young          

28th April 2010

Chartered Accountants
Quadrant House
4 Thomas More Square
London, E1W 1YW

Income Statement (incorporating the revenue account)
for the year to 31 December 2009

    Year ended
31 December 2009 		  Year ended
31 December 2008
Notes Revenue
£’000 		  Capital
£’000 		  Total
£’000 		Revenue
£’000 		  Capital
£’000 		  Total
£’000
 
Gains/(losses) on investments
- realised - 108 108 - 77 77
- unrealised - 244 244 - (2,800) (2,800)
Income 2 50 - 50 95 - 95
Investment management fee 3 (7) (22) (29) (10) (29) (39)
Other expenses 4 (33) - (33) (31) - (31)
________ ________ ________ ________ ________ ________

Return on ordinary
activities before taxation

10

330

340

54

(2,752)

(2,698)

Tax (charge)/credit on
ordinary activitiesordinary activities

6

(2)

9

7

2

(9)

(7)

________ ________ ________ ________ ________ ________

Return on ordinary
activities after taxation

 

8

339

347

56

(2,761)

(2,705)

======= ======= ======= ======= ======= =======
 

Return per ordinary share
(pence)(pence)

8

0.14

5.91

6.05

0.98

(48.07)

(47.09)

======= ======= ======= ======= ======= =======

The notes on pages 23 to 31 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 no statement of total recognised gains and losses has been prepared.

Balance Sheet
at 31 December 2009

    As at   As at
31 December 2009 31 December 2008
Note £’000 £’000
       
Fixed assets
Investments 9 2,937 2,555
 
Current assets
Debtors 12 6 39
 
Current liabilities

Creditors: amounts falling due
within one yearwithin one year

 13

(62)

(13)

 
   
2,881 2,581
   
Capital and reserves
Called up share capital 14 574 574
Share premium 15 5,100 5,100
Capital reserve – realised 15 (173) 48
Capital reserve – unrealised 15 (2,623) (3,191)
Revenue reserve 15 3 50
 
 
   
Total equity shareholders’ funds 16 2,881 2,581
 

Net asset value per ordinary share

17

50p

45p

The financial statements on pages 20 to 31 were approved by the Board of directors on 28th April 2010 and were signed on its behalf by:

Michael Barnard
DirectorDirector

The notes on pages 23 to 31 form an integral part of these financial statements.

Cash Flow Statement
for the year to 31 December 2009

 

 

  Year ended   Year ended

Note

31 December 2009 31 December 2008
£’000 £’000
   
Net cash outflow from operating activities 19 (54) (62)
 
Returns on investments
Interest received 6 22
Investment income 45 66
51 88
 
UK Corporation Tax paid (6) (10)
 
Dividend paid (48) (46)
 
Capital expenditure & financial investment
Sale of investments 1,071 1.159
Purchase of investments (1,102) (1,114)

Net cash (outflow)/inflow for capital
expenditure

(31) 45
& financial investment
   
Net cash (outflow)/inflow (88) 15
 

(Decrease)/Increase in uninvested
funds with broker

(88) 15

The notes on pages 23 to 31 form an integral part of these financial statements.

Notes to the Financial
Statements
for the year to 31 December 2009

1. Accounting policies

General

The financial statements have been prepared in accordance with applicable United Kingdom law and accounting policies and the Statement of Recommended Practice “Financial Statements of Investment Trust Companies”. The accounts have been prepared under the historical cost convention, as modified to include the revaluation of fixed asset investments.

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.

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 except that a full provision is made until the receipt of the income is certain.

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, net of corporation tax relief, 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.

1. Accounting policies (continued)

Taxation

Deferred taxation is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.

2. Income

  Year ended

31 December 2009

£’000

  Year ended

31 December 2008
£’000

   
Interest receivable
-

listed fixed interest securities

5 5
- unquoted investment portfolio - -
- bank deposits and liquid funds 1 17
   
6 22
Other income - 7
Dividends receivable 44 66
   
50 95

3. Investment management fees

  Year ended

31 December 2009

  Year ended

31 December 2008

Revenue   Capital Revenue   Capital
£’000 £’000 £’000 £’000
 
Investment management fees 7

22

10 29

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. Michael Barnard who is a non-executive director of the company is the owner and managing director of MDB.

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 2009, the fee payable to MD Barnard & Company 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 12 March 2007 terminable by either party at any time thereafter by one year’s prior written notice.

4. Other expenses

  Year ended

31 December 2009

£’000

  Year ended

31 December 2008
£’000

Administrative and secretarial services     10 10
Auditors' remuneration 7 6
-for tax services 7 6
Regulatory fees 9 4
Other expenses 1 5
   
   
34 31

5. Directors’ remuneration

No remuneration has been paid or is payable for year to 31 December 2009 or in respect of the prior year.

6. Tax charge/(credit) on ordinary activities

  Year ended

31 December 2009

  Year ended

31 December 2008

Revenue

£’000

  Capital
£’000 		Revenue

£’000

  Capital
£’000
 
United Kingdom tax based on the taxable profit for the year
- Current year - - (2) 9
- Prior year 2 (9) - -
       
2 (9) (2) 9
       
Factors affecting tax charge for the year
 
Return on ordinary activities before taxation 10 669 54 (2,752)
       
Tax on above at the small company rate of 21% (2008: 21%) 2 140 11 (571)
UK dividends not subject to corporation tax (10) - (13) -
Non taxable gains on investment - (140) - 580
Non allowable expenses - - - -
Unutilised losses 8 - - -
Prior year adjustments 2 (9) - -
       
Current tax charge/(credit) for the year 2 (9) (2) 9

7. Dividends

  Year ended

31 December 2009

£’000

  Year ended

31 December 2008
£’000

Interim dividend paid   -   -
Final dividend paid in respect of previous year 48 46
   
48 46

The directors propose a final dividend of 0.22p per share for the year ended 31 December 2009 to be paid on 16 July 2010 to shareholders on the register at 9 July 2010.

8. Return per ordinary share

The revenue return, per ordinary share, is based on the net revenue on ordinary activities after taxation of £8,006 (2008: £56,754) and on 5,745,550 (2008: 5,745,550) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

The capital return per ordinary share is based on a net realised and unrealised capital gain of £677,727 (2008: loss £2,762,353) and on 5,745,550 (2008: 5,745,550) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

9. Fixed asset investments

  As at

31 December 2009

£’000

  As at

31 December 2008
£’000

Gilts   -   390
UK listed 345 313
AIM 2,534 1,824
PLUS Markets 28 28
Unlisted 30 -
   
2,937 2,555

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

          Year ended 31 December 2008
    Gilts   UK   AIM   Plus Mkts   Un-listed   Total
£’000 £’000 £’000 £’000 £’000 £’000
at 1 January 2008 814 818 3,468 571 - 5,671
Purchases 405 35 674 - - 1,114
Transfers -   -   167   (167)   -   -
1,219 853 4,309 404 - 6,785
less: Sales 903   -   256   -   -   1,159
316 853 4,053 404 - 5,626
Realised gains/losses 62 - 15 - - 77
Unrealised gains/losses 12   (540)   (2,244)   (376)   -   (3,148)
390   313   1,824   28   -   2,555
 
Cost at 31 December 2008 378   853   4,068   404   -   5,703

9. Fixed asset investments (continued)

          Year ended 31 December 2009
    Gilts   UK   AIM   Plus Mkts   Un-listed   Total
£’000 £’000 £’000 £’000 £’000 £’000
at 1 January 2009 378 853 4,068 404 - 5,703
Purchases - 51 1,010 - 41 1,102
Transfers -   146   (186)   -   40   -
378 1,050 4,892 404 81 6,805
less: Sales 389   166   446   -   70   1,071
(11) 884 4,446 404 11 5,734
Realised gains/losses 11 (153) (108) - 20 (230)
Unrealised gains/losses -   (386)   (1,804)   (376)   (1)   (2,567)
-   345   2,534   28   30   2,937
 
Cost at 31 December 2009 -   731   4,338   404   31   5,504

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

  Year ended

31 December 2009

£’000

  Year ended

31 December 2008
£’000

Net realised gain on disposal   108   77
Increase/(Decrease) in unrealised appreciation 244 (2,800)
   
352 (2,723)

10. Venture capital investments

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

11. Significant interests

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

12. Debtors

  As at

31 December 2009

£’000

  As at

31 December 2008
£’000

UK Corporation Tax   6   -
Uninvested funds with broker:
MD Barnard & Co Ltd - 39

13. Creditors

  As at

31 December 2009

£’000

  As at

31 December 2008
£’000

Trade creditors and accruals   13   6
UK Corporation Tax - 7
MD Barnard & Co Ltd 49 -
   
62 13

14. Share capital

  As at

31 December 2009
£’000

  As at

31 December 2008
£’000

   
Authorised
25,000,000 ordinary shares of 10p each 2,500 2,500
   

Allotted, called up and fully paid

5,745,550 ordinary shares of 10p each 574 574

15. Reserves

  Share Premium account
£’000 		  Capital realised
£’000 		  Capital unrealised
£’000 		  Revenue reserve
£’000
As at 1 January 2009 5,100 48 (3,191) 50
Realised gains/(losses) on disposals - 108 - -
Unrealised gains/(losses) - - 244 -

Transfer of unrealised loss to realised
on disposal of investment on disposal of investment

- (338) 338 -
Net revenue before tax - - - 10
Investment management fee - - (22) -
Corporate taxation - 9 8 (9)
Dividends paid - - - (48)
________ ________ ________ ________
At 31 December 2009 5,100 (173) (2,623) 3
======= ======= ======= =======

16. Reconciliation of movements in shareholders’ funds

      £’000
At 1 January 2009 2,581
Return on ordinary activities after tax 347
Dividend paid (48)
At 31 December 2008

2,881

17. Net asset value per share

Net asset value per share is based on net assets at 31 December 2009 of £2,881,243 (31 December 2008 of £2,581,240) and on 5,745,550 ordinary shares in issue at those dates.

18. Performance incentive arrangements

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

19. Net cash outflow from operating activities

  Year ended

31 December 2009

£’000

  Year ended

31 December 2008

£’000

Operating activity
Operating profit 340 (2,698)
(Profit) on sale of investments (108) (77)
Investment income (50) (88)
Unrealised (gains)/losses on investments (244) 2,800
Increase in creditors 8 1
________ ________
(54) (62)
======= =======

20. Risk management and financial instruments

A statement of the company’s principal objectives is given on page 1. 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.

20. Risk management and financial instruments (continued)

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.

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. The company’s investment portfolio includes investments in interest bearing securities in investee companies and in other fixed interest securities. Details of interest bearing assets are given below under Financial assets.

Liquidity risk

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

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.

Financial assets

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

  Year ended

31 December 2009
£’000

  Year ended

31 December 2008
£’000

   
Floating rate - 39
Fixed rate - 389
Non-interest bearing 2,937 2,166
   
2,937 2,594

20. Risk management and financial instruments (continued)

Fixed rate assets   Year ended

31 December 2009
£’000

  Year ended

31 December 2008
£’000

   
Weighted average interest rate - 2.5%
Weighted average years to maturity - 1

Floating rate financial assets comprise cash held on deposit and investments in liquidity funds. The benchmark rate for these investments is the UK bank base rate.

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.

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.

21. Related party transactions

New Century AIM VCT2 plc is managed by M D Barnard & Co. Limited.

22. Capital commitments

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

23. Control

New Century AIM VCT2 plc is not under the control of any one party or individual.

Shareholder Information
for the year to 31 December 2009

The Company

New Century AIM VCT2 PLC was incorporated on 16 January 2007. On 4 April 2007, the company obtained a listing on the London Stock Exchange. A total of £5.745 million was raised (before expenses) through an offer for subscription of new ordinary shares at 100p. The company has been provisionally approved as a Venture Capital Trust by the Inland Revenue.

The Investment Manager

New Century AIM VCT2 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 £25 million including New Century AIM VCT2 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 £200,000 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 VCT2 has been provisionally approved as a VCT by the Inland Revenue. 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 £1 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 £15 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         14 June 2010
Interim report for six months to 30 June 2010 published August 2010
Preliminary announcement of results for the year to 31 December 2010 April 2011
Annual General Meeting 2010 May 2011

Share price

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

Companies

New Century AIM VCT 2 (NCA2)
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