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18 May 2012 14:39
Baronsmead VCT 2 plcHalf Yearly Financial Report31 March 2012
The Directors announce the unaudited half-yearly financial report for the six months to 31 March 2012 as follows:-
Copies of the half yearly report can be obtained from the following website: www.baronsmeadvct2.co.uk .
Investment Objective Baronsmead VCT 2 plc is a tax efficient listed company which aims to achieve long-term investment returns for private investors, including tax-free dividends.
Investment policy â— To invest primarily in a diverse portfolio of UK growth businesses, whether unquoted or traded on AIM.
â— Investments are made selectively across a range of sectors in companies that have the potential to grow and enhance their value.
Dividend policyThe Board of Baronsmead VCT 2 aims to sustain a minimum annual dividend levelat an average of 5.5p per Ordinary Share, mindful of the need to maintain netasset value. The ability to meet these twin objectives depends significantly onthe level and timing of profitable realisations and it cannot be guaranteed.There will be variations in the amount of dividends paid year on year.
Since launch the average annual tax-free dividend paid to ordinary shareholders, including the 2.5p interim dividend, has been 6.3p per share (equivalent to a pre-tax return of 8.4p per share for a higher rate taxpayer). For shareholders who claimed tax reliefs on initial subscription of 20 per cent, 30 per cent or 40 per cent, their returns would have been higher.
Share price discount policy
The Company buys back its shares if, in the opinion of the Board, a repurchasewould be in the best interests of the Company's shareholders as a whole. Sharesare bought back through the market rather than directly from shareholders. Thisminimises the number of shares bought back by the Company while maximising theopportunity for investors to invest in the Company's existing shares.
Through the operation of the Company's share buy back policy the mid share price averaged was at an average discount to NAV of approximately 10 per cent in the two years to 31 March 2012. The difference between the buy and sell price for the Company's shares averaged 1.1p over the same two year period.
Shareholder choice
The Board provides shareholders with a number of choices that enable them toutilise their investment in Baronsmead VCT 2 in ways that best suit their personal investment and tax planning, in a way that treats all shareholders equally. • Fund raising | From time to time the Company seeks to raise additional fundsby issuing new shares. In January/February 2012, the Company's offer for subscription to raise £4.135 million (£3.939 million after costs) was fully subscribed. • Dividend Reinvestment Plan | The Company offers a Dividend Reinvestment Planwhich enables shareholders to purchase additional shares through the market inlieu of cash dividends. Although no shares were acquired by participants inthis scheme during the six months to 31 March 2012, approximately 650,000shares were bought in this way between January and September 2011. • Buy back of shares | From time to time the Company buys its own sharesthrough the market in order to maintain a mid share price discount ofapproximately 10 per cent to net asset value. In the six months to 31 March2012, 224,913 shares were bought back representing 0.3 per cent of the sharesin issue at 31 March 2012 at a price which represented a 10.1 per cent discountto the latest published net asset value (360,000 shares or 0.5 per cent ofshares in issue at 31 March 2011).
• Secondary market | The Company's shares are listed on the London Stock Exchange and can be bought using a stockbroker or authorised share dealing service in the same way as shares of any other listed company.
Approximately 70,000 shares were bought by third party purchasers in the six months to 31 March 2012 (approximately 54,000 shares in 2011).
FINANCIAL HEADLINES
• +5.1% - Net asset value ("NAV") per share increased 5.1 per cent to 100.0p before deduction of the interim dividend.
•2.5p - Interim dividend of 2.5p payable on 15 June 2012, for the six month period to 31 March 2012.
•76.50p - Cumulative tax free dividends total 76.5p per share paid to shareholders in the last 10 years, including the declared 2.5p dividend.
• 202.3p - NAV total return to shareholders over the last 10 years for every 100p invested. The Share price total return over the same period is 200.8p.
• £3.9m - Net proceeds raised in January/February 2012.
Performance Summary to 31 March 2012
Since Total return * 6 month % 1 year % 3 years % 5 Years % 10 years % launch % Net Asset Value†5.1 8.7 38.3 18.5 102.3 143.1 Share Price†1.3 8.8 40.5 20.3 100.8 137.7 FTSE All-Share 15.0 1.4 67.9 9.5 65.5 67.0
* Source: ISIS EP LLP and AIC.
†These returns for Baronsmead VCT 2 ignore upfront tax relief and the impact of receiving dividends tax free.
Cash Returned to Shareholders
The table below shows the cash returned to shareholders dependent on their subscription cost, including their income tax reclaimed on subscription.
Income Net Cumulative Gross Subscription tax cash dividends Net equivalent annual price reclaim invested paid* yield± yield†Year subscribed p p p p % % 1998 (April) - 100.0 20.0 80.0 88.4 7.9 10.5Ordinary 1999 (May) - 102.0 20.4 81.6 84.9 8.1 10.8Ordinary 2000 (February)- Ordinary 137.0 27.4 109.6 81.7 6.2 8.2 2000 (March) - Ordinary 130.0 26.0 104.0 81.7 6.5 8.7 2004 (October) - C 100.0 40.0 60.0 39.7 8.8 11.7 2009 (April) 91.6 27.5 64.1 20.5 10.7 14.2
C Share dividend calculated using conversion ratio of 0.9657 which is the rate the c shares were converted into Ordinary Shares.
* Includes interim dividend of 2.5p to be paid 15 June 2012.
± Represents the cumulative dividends paid expressed as an annualised percentage of the net cash invested.
†The gross equivalent yield had the dividends been subject to higher rate tax(32.5 per cent. on dividend income).The new additional rate of tax on dividend income of 42.5 per cent which came into force from the 2010/11 tax year for those shareholders who earn more than £150,000 has not been included. For those shareholders who would otherwise pay this additional rate of tax on dividends, the future grossequivalent yield will be higher than the figures shown. CHAIRMAN'S STATEMENT I am delighted to report growth of 5.1 per cent in Net Asset Value per share to100p a share. The increase was attributable principally to a strong recovery in the valuation of the AIM portfolio following a decline in the latter half of 2011.
We are paying an interim dividend of 2.5p which is well covered by profitable realisations in recent years.
£3.9 million (net of costs) was raised by the Company in January and February 2012.
Results
Before taking account of dividends the Net Asset Value increased to 100p a share, up 5.1 per cent from 95.15p. The interim dividend of 2.5p per share is being paid largely from the profits realised from the sale of investments.
With the proposed tax free interim dividend of 2.5p, the current dividend yieldbased on a mid share price of 87.38p is 7.2 per cent after tax (equivalent to9.6 per cent for a higher rate taxpayer). This compares very favourably withthe low rates of interest generally available in the marketplace. Pence per ordinary share NAV as at 1 October 2011
(after second interim dividend of 4.50p deducted) 95.15
Valuation uplift (5.1 per cent) 4.85 NAV as at 31 March 2012 100.0
Less Interim dividend payable on 15 June 2012 (2.50)
97.50 All areas of the portfolio have improved during the six months. The gains havebeen led by the quoted and Wood Street portfolios which increased by 13.4 per cent and 8.1 per cent respectively, as the UK Small Cap sector was rerated from January 2012, following the dip which occurred last autumn. The unquoted portfolio increased in value by 4.4 per cent. The most significant changes in the portfolio were the increases in the valueof Independent Living Services, a domiciliary care business in Scotland (£1.12 million), and in IDOX, an AIM-traded software company (£0.86 million), offset by a provision of £0.72 million against the investment in Empire World Trade, which supplies
fruit to UK supermarkets.
Long Term performance Based on previous shareholder surveys indicating thatmost shareholders have "no intention to sell in the foreseeable future" theBoard has based its policies on long term sustainable performance. For thatreason we have set out the full performance record since the launch in April1998. However we also recognise that whencomparisons are made with other investment companies and investment products, the normal approach is to use ten year financial summaries. For that reason the ten year record is set out under the Financial Headlines above. However as our policy has always been to offer full disclosure and transparency, the full 14 year record is set out on page 13 of the Half-yearly Report as well as on our website www.baronsmeadvct2.co.uk. Over the last ten years the cumulative tax free dividends paid to shareholders,including proposed interim dividend of 2.5p, amount to 76.5p (88.4p sinceinception). The NAV total return over ten years has been 202.3p for each 100pinvested (243.1p since inception) compared with 165.5p for the FTSE All-shareindex (167.0p since launch). Based on the ten year average annual dividends(7.7p) and the mid share price 87.38p the annual dividend yield is 8.8 per cent(equivalent to 11.7 per cent for a higher rate taxpayer).
Portfolio review
Following the realisation of three investments, the total portfolio nowcomprises seventy companies. The direction of travel showing trading andprofitability of these companies is recorded quarterly so that the Board canmonitor the health of the portfolio. At 31 March 2012, 80 per cent of companiesin the portfolio were progressing steadily or better.
The net assets of £72.2 million were invested as follows:
• Unquoted companies 42 per cent
• AIM-traded and other listed companies 29 per cent
• Wood Street Microcap Investment Fund 4 per cent
• Liquid assets or government securities 25 per cent
The largest unquoted investment, Nexus Vehicle Holdings and the largest AIM investment, IDOX, represented 7.1 and 4.6 per cent of net asset value respectively.
New Investment
During the six months to 31 March 2012 a total of £2.6 million was invested in five new companies as well as in other small additions to the AIM portfolio.
The unquoted investment was into Independent Community Care Management ("ICCM") based in Kettering. ICCM is a leading homecare provider to individuals with complex long term health conditions.
The four new AIM-traded investments were in GB Group, Inspired Energy, ParagonEntertainment and TLA Worldwide. The early gains in the value of these stocks are encouraging, up 43 per cent on their subscription price by 31 March 2012. Since the period end, £5 million has been invested into four unquoted companiesand three AIM-traded companies. 'Happy Days' is an established West Country chain of children's nurseries based in Newquay, Cornwall. The three other unquoted investments were into "acquisition" companies chaired by experienced operating partners with whomISIS has successfully worked in the recent past. These companies have been formed to enable investment into established trading entities over the next twoyears. The new AIM investments were in Dods, Inspired Energy and Zattikka.
Investment realisations
Three investments were realised.
• Unquoted - TVC Group for an undisclosed but profitable multiple (see below)
• AIM-traded
• Clarity Commerce Solutions continued to underperform and was sold for 60
per cent of its original cost of £0.05 million
• Colliers International UK (cost £0.5 million) was written off once its
trading activities had been sold for a relatively nominal amount.
TVC Group is a marketing communications agency, based in London, which specialises in a content-driven approach to public relations and creative services serving clients including Coca Cola, British Gas and Jaguar Landrover. The investment in TVC Group was made in July 2008 and initially encountered
difficult trading conditions. By March 2010, the directors' valuation was at 25 per cent of cost as operating profits had fallen. The recovery since then has been significant and credit goes to the management, supported by our InvestmentManager ISIS, for driving higher profitability. The final sale to the EconomistGroup in February 2012 represents a fivefold gain in value from the earlier lowpoint less than three years previously. The operating history and subsequent successful realisation of this investmentin TVC Group was not dissimilar to our experience with Hawksmere whichrecovered from a significant deterioration in value to sell successfully in2007. Hawksmere's CEO was Dominic Riley who presented at our 14th AGM inJanuary 2012. He is now an operating partner at ISIS and currently is Chairmanof two of our unquoted portfolio companies Kaf©vend Holdings and Valldata
Group. VCT legislation
The 21 March 2012 Budget and subsequent Finance Bill confirmed a number of changes to VCT legislation. Those which might affect the Company are below.
Annual £1 million limit
With effect from 6 April 2012, the annual limit of £1 million that a VCT can invest in a qualifying investment in any tax year has been removed.
Investment limits
EU State Aid approval is still awaited for the following proposed changes to the size limits for investments made after 5 April 2012:
• An increase in the employee limit to fewer than 250 employees;
• An increase in the size threshold of gross assets to no more than £15 million before investment and £16 million immediately after; and
• An increase in the maximum annual amount that an individual company can receive from all State Aid investment sources (including VCTs) in any 12 month period to £5 million (not unfortunately £10 million as previously proposed).
Acquisition of sharesThere is to be exclusion on the use of VCT and EIS funds for the acquisition ofshares in another company. The change is designed to help achieve continuing EUState Aid approval, which prohibits State Aid from funding buyouts. This change will apply only to VCT funds raised after 5 April 2012, and to EIS investments made after that date.
The Manager remains in close contact with both its tax advisers and the AIC asthey discuss the VCT tax legislative changes with HM Revenue and Customs. In this way, once the implications of any changes are known, ISIS can plan positive action to fulfil the stated investment policy and sustain the quality of the investmentportfolio. Website
The Company's website has recently been updated and is designed to provide easier access to information about the Company. Please do visit the website at the following location and your feedback will be most appreciated:
www.baronsmeadvct2.co.uk OutlookThe outlook for the UK economy as a whole remains uncertain and manycommentators are anticipating relatively slow growth. However Baronsmead VCT 2is well placed to tackle the current economic volatility and uncertainty with awell diversified portfolio that is lowly geared. The pipeline of targetinvestment opportunities is strong and the Manager continues to find ambitiousUK Management teams with whom to invest. Some relaxation of VCT regulation is welcome. However the Manager and the Boardbelieve that some aspects of the recent changes to legislation make investmentinto faster growth SME companies more difficult and this is to the detriment ofjob creation within the UK. Clive ParrittChairman18 May 2012
Table of Investments and Realisations
Investments in the six months to 31 March 2012
Book costCompany Location Sector Activity £'000 Unquoted investments New
Independent Community Kettering Healthcare High acuity care for
Care Management & home based care users Limited Education 1,346 Total unquoted investments 1,346
AIM-traded & listed investments
New TLA Worldwide plc London Business Baseball sports 620 Services management and marketing business Inspired Energy plc Kirkham Business Energy Consultancy 200 Services focussed on corporate customers Paragon Entertainment London Healthcare Visitor attraction 200Limited & business Education GB Group plc Chester TMT* ID verification and 150 data solutions Follow on FFastFill plc London TMT* Trading platform 62 software provider
Driver Group plc Rossendale Business Dispute resolution 61
Services Accumuli plc Salford TMT* Managed IT security 6 Total AIM-traded & listed investments 1,299
Total investments in the period 2,645
* Technology, Media and Telecommunications ("TMT").
Realisations in the six months to 31 March 2012
30 September Realised profit/ First 2011 (loss) Overall this investment valuation period multiple Company date £'000 £'000 return Unquoted realisations Full trade TVC Group Limited sale Jul 08 766 509 ^ MLS Limited Loan repayment Jul 06 120 - 1.0 Total unquoted realisations 886 509
AIM-traded & listed realisations
Clarity Commerce Full trade Oct 99 26 6 0.6Solutions plc sale Real Good Food Company Partial market (The) plc sale Dec 03 110 28 0.4 Colliers International Written off Jul 01 27 (27) N/AUK plc
Total AIM-traded & listed realisations 163 7 Total realisations in the period 1,049 516â€
^ Not disclosed.
†Proceeds of £8,000 were also received in respect of Getting Personal Limited, which had been sold in the year ended 30 September 2011.
Summary Investment Portfolio
Investment Classification at 31 March 2012
By Sector* Per centage Business Services 35% Consumer Markets 17% Financial Services 2% Healthcare & Education 14%
Technology, Media & Telecommunications ("TMT") 32%
Total Assets* Per centage Unquoted - loan stock 30% Unquoted - ordinary and preference shares 12% AIM, listed & collective investment vehicle 33% Listed interest bearing securities & net current liabilities 25%
Time Investments Held* Per centage
Less than 1 year 16% Between 1 and 3 years 13% Between 3 and 5 years 26% Greater than 5 years 45%
* at 31 March 2012 valuation.
Summary Investment Portfolio
30 31 March % of September Equity % of 2011 2012 held by Equity held Book valuation Valuation % of Baronsmead by cost net allCompany Sector £'000 £'000†£'000 Assets VCT 2 plc funds* Unquoted Nexus Vehicle Business Holdings Limited Services 2,367 5,627 5,124 7.1 12.6 57.4 CableCom TMT 1,381 3,686 3,883 5.4 10.6 48.0Networking Holdings Limited Crew Clothing Consumer Company Limited Markets 984 2,714 2,677 3.7 5.4 22.8
CSC (World) TMT 1,606 2,148 2,220 3.1 8.8
40.0Limited Fisher Outdoor Consumer 1,423 1,777 2,178 3.0 10.5 44.0Leisure Holdings Markets Limited Kaf©vend Consumer
Holdings Limited Markets 1,252 2,039 2,148 3.0 15.8
66.5 Independent Healthcare 1,599 980 2,097 2.9 16.2 65.7Living Services & Limited Education Valldata Group Business 1,616 1,616 1,745 2.4 8.9 40.6Limited Services Inspired Business 796 1,275 1,413 1.9 5.0 22.5Thinking Group Services Limited Independent Healthcare 1,346 - 1,346 1.9 10.9 55.0Community Care & Management Education Limited MLS Limited TMT 411 1,011 1,041 1.4 5.3 22.5 Arcas Business 1,000 1,000 1,000 1.4 9.6 48.6Investments Services Limited HealthTech Healthcare 1,000 1,000 1,000 1.4 9.6 48.6Innovation & Partners Limited Education
Quest Venture Business 1,000 1,000 1,000 1.4 9.6 48.6Partners Limited Services Playforce Business 1,033 512 512 0.7 9.7 44.0Holdings Limited Services Other 4,169 1,854 840 1.2 Investments Total unquoted 22,983 28,239 30,224 41.9 AIM IDOX plc TMT 1,038 2,440 3,300 4.6 3.2 9.6 Staffline Group Business 249 2,013 2,301 3.2 4.2 8.4plc Services Netcall plc TMT 869 854 1,176 1.6 4.1 20.4 Murgitroyd Group Business 319 777 948 1.3 3.1 6.2plc Services Escher Group TMT 614 614 921 1.3 2.1 10.6Holdings plc TLA Worldwide Business 620 - 775 1.1 4.9 24.3plc Services Jelf Group plc Financial 761 792 756 1.0 1.4 6.3 Services Tasty plc Consumer 469 607 717 1.0 2.5 17.1 Markets Accumuli plc TMT 339 384 569 0.8 3.7 20.9 Vianet Group plc Business 646 482 549 0.8 1.8 9.6 Services FFastFill plc TMT 313 427 525 0.7 0.9 6.2 Sinclair IS Healthcare 524 446 450 0.6 0.4 2.4Pharma plc & Education Driver Group plc Business 564 194 415 0.6 4.1 19.4 Services Paragon Healthcare 200 - 413 0.6 3.1 17.6Entertainment & Limited Education PROACTIS TMT 619 341 392 0.5 5.4 26.4Holdings plc Other 9,543 5,024 5,142 7.1 Investments Total AIM 17,687 15,395 19,349 26.8 Listed Vectura Group Healthcare 578 1,031 651 0.9 0.4 1.3plc & Education Chime TMT 369 323 378 0.5 0.2 1.3Communications plc Marwyn Financial 525 117 95 0.1 0.3 1.8Management Services Partners plc Marwyn Value Financial 64 45 40 0.1 1.3 6.0Investors Services Limited Total Listed 1,536 1,516 1,164 1.6 Listed interest bearing securities UK T-Bill 02/04/ 9,297 - 9,297 12.8 12 UK T-Bill 30/04/ 8,298 - 8,298 11.5 12 BlackRock ICS 4,520 3,000 4,520 6.3 plc - Institutional Sterling Liquidity Fund JP Morgan 4,520 3,000 4,520 6.3 Liquidity Funds - Sterling Liquidity Fund Total listed 26,635 6,000 26,635 36.9 interest bearing securities Collective investment vehicle Wood Street Microcap Investment Fund 2,525 2,863 3,095 4.3 Total collective investment vehicle 2,525 2,863 3,095 4.3 Total 71,366 54,013 80,467 111.5 investments Net current liabilities (8,302) (11.5) Net assets 72,165 100.0
†The total investment valuation at 30 September 2011 per the table above does not agree to the audited accounts due to the purchases and sales since that date.
* All VCT funds managed by the same investment manager, ISIS EP LLP including Baronsmead VCT 2.
Unquoted, AIM & Listed Portfolio Concentration Analysis as at 31 March 2012 Investment ranking Book cost Valuation % of by valuation £'000 £'000 portfolio Top Ten 13,515 27,673 54.5 11-20 7,975 10,620 20.9 21-30 5,427 5,557 11.0 31+ 15,289 6,887 13.6 Total 42,206 50,737 100.0
Independent Review Report to Baronsmead VCT 2 plc
Induction
We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 31March 2012 which comprises the Income Statement, Reconciliation of Movement inShareholders' Funds, Balance Sheet and Statement of Cash Flows and the relatedexplanatory notes. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the Disclosureand Transparency Rules (''the DTR'') of the UK's Financial Services Authority(''the UK FSA''). Our review has been undertaken so that we might state to theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has beenapproved by, the Directors. The Directors are responsible for preparing thehalf-yearly financial report in accordance with the DTR of the UK FSA. Asdisclosed in note 1, the annual financial statements of the Company areprepared in accordance with UK Accounting Standards and applicable law (UKGenerally Accepted Accounting Practice). The condensed set of financialstatements included in this half-yearly financial report has been prepared inaccordance with the Statement Half-Yearly Financial Reports as issued by the UKAccounting Standards Board. Our responsibilityOur responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financialand accounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordancewith International Standards on Auditing (UK and Ireland) and consequently doesnot enable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. ConclusionBased on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 31 March 2012 is not prepared, in allmaterial respects, in accordance with the Statement Half-Yearly FinancialReports as issued by the UK Accounting Standards Board and the DTR of the UKFSA. Catherine Burnetfor and on behalf ofKPMG Audit PlcChartered AccountantsEdinburgh18 May 2012
Responsibility statement of the Directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordancewith the Statement 'Half-yearly financial reports' issued by the UK Accounting Standards Board;
• the Chairman's Statement (constituting the interim management report) includes a fair review of the information required by DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;
• the Statement of Principal Risks and Uncertainties set out below is a fair review of the information required by DTR 4.2.7R; and
• the financial statements include a fair review of the information required byDTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the last annual report that could do so. By Order of the Board,Clive ParrittChairman18 May 2012 Unaudited Income Statement
For the six months to 31 March 2012
Six months to 31 March Six months to 31 March Year to 30 September 2012 2011 2011* Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Unrealised - 3,402 3,402 - 4,055 4,055 - 3,346 3,346 gains on investments Realised - 524 524 - 395 395 - 2,865 2,865 gains on investments Income 362 - 362 1,096 - 1,096 2,425 - 2,425 Investment (164) (492) (656) (163) (490) (653) (323) (970) (1,293)management fee Other (203) - (203) (189) - (189) (368) - (368)expenses (Loss)/ (5) 3,434 3,429 744 3,960 4,704 1,734 5,241 6,975profit on ordinary activities before taxation Taxation on - - - (166) 166 - (379) 379 -ordinary activities (Loss)/ (5) 3,434 3,429 578 4,126 4,704 1,355 5,620 6,975profit on ordinary activities after taxation Return per share: Basic (0.01p) 4.97p 4.96p 0.84p 6.04p 6.88p 1.98p 8.21p 10.19p
* These figures are audited.
Unaudited Reconciliation of Movement in Shareholders' Funds
For the six months to 31 March 2012
Six Six months to months to Year to 31 March 31 March 30 September 2012 2011 2011* £'000 £'000 £'000 Opening shareholders' funds 64,999 63,673 63,673 Profit for the period 3,429 4,704 6,975 Gross proceeds of share issues 4,135 2,121 2,111 Purchase of shares for treasury (191) (314) (813)
Expenses of share issues and buybacks (197) (97) (78)
Other costs charged to capital (10) - - Dividends paid - (2,077) (6,869) Closing shareholders' funds 72,165 68,010 64,999 * These figures are audited. Notes
1. The unaudited interim results which cover the six months to 31 March 2012 have been prepared in accordance with applicable accounting standards and adopting the accounting policies set out in the statutory accounts of the Company for the year to 30 September 2011.
2. Return per share is based on a weighted average of 69,096,100 ordinary shares in issue (30 September 2011 - 68,443,702 ordinary shares, 31 March 2011 - 68,331,711 ordinary shares).
3. Earnings for the six months to 31 March 2012 should not be taken as a guide to the results of the full financial year to 30 September 2012.
4. During the six months to 31 March 2012 the Company purchased 224,913ordinary shares to be held in treasury at a cost of £191,000. At 31 March 2012the Company holds 8,698,819 ordinary shares in treasury. These shares may bere-issued below Net Asset Value as long as the discount at issue is narrowerthan the average discount at which the shares were bought back.
Excluding treasury shares, there were 72,167,952 ordinary shares in issue at 31 March 2012 (30 September 2011 - 68,315,278 ordinary shares, 31 March 2011 - 68,885,034 ordinary shares).
5. The interim dividend of 2.5p per share (2.5p capital) will be paid on 15 June 2012 to shareholders on the register on 1 June 2012. The ex-dividend date is 30 May 2012.
6. On 2 November 2011, the Share premium account and Capital redemption reservewere cancelled by an Order of Court following the passing of a SpecialResolution. The credit arising has been applied in crediting a Special reserve,within the Capital reserve, which shall be able to be applied in any manner inwhich the Company's profits available for distribution (as determined inaccordance with section 649 of the Companies Act, 2006) are able to be applied. 7. The financial information contained in this half-yearly report does notconstitute statutory accounts as defined in section 434 of the Companies Act2006. The information for the year to 30 September 2011 has been extracted fromthe latest published audited financial statements. The audited financialstatements for the year to 30 September 2011, which were unqualified, have beenfiled with the Registrar of Companies. No statutory accounts in respect of anyperiod after 30 September 2011 have been reported on by the Company's auditorsor delivered to the Registrar of Companies. 8. In accordance with the Companies (Shareholder Rights) Regulations 2009copies of the half-yearly report have been made available to shareholders andare available from the Registered Office of the Company at 100 Wood Street,London EC2V 7AN. Unaudited Balance SheetAs at to 31 March 2012 As at As at As at 31 31 30 March March September 2012 2011 2011 £'000 £'000 £'000* Fixed assets Unquoted investments 30,224 33,710 29,005 Traded on AIM 19,349 14,367 15,448 Listed on LSE 1,164 1,244 1,516 Traded on NYSE - 187 - Collective investment vehicle - Wood Street 3,095 3,079 2,863Microcap Investment Fund Listed interest bearing securities 26,635 12,800 15,498 Investments 80,467 65,387 64,330 Current assets Debtors 227 550 586 Cash at bank and on deposit 1,232 2,516 542 1,459 3,066 1,128 Creditors (amounts falling due within one year) (9,761) (443) (459)
Net current (liabilities)/assets (8,302) 2,623
669 Net assets 72,165 68,010 64,999 Capital and reserves Called-up share capital 8,087 7,680 7,679 Share premium account 3,531 14,391 14,404 Capital redemption reserve - 9,254 9,254 Capital reserve 51,198 26,307 28,849 Revaluation reserve 9,100 9,087 4,559 Revenue reserve 249 1,291 254 Equity shareholders' funds 72,165 68,010 64,999 * These figures are audited As at As at As at 31 March 31 March 30 September 2012 2011 2011* Net asset value per share 100.00p 98.73p 95.15p Number of shares in issue 72,167,952 68,885,034 68,315,278 Treasury net asset value per share 98.64p 97.51p
94.16p
Number of ordinary shares in issue 72,167,952 68,885,034 68,315,278
Number of ordinary shares held in 8,698,819 7,913,906 8,473,906treasury Number of listed ordinary shares 80,866,771 76,798,940 76,789,184 * These figures are audited.
Unaudited Statement of Cash Flows
For the six months to 31 March 2012
Six Six months months Year to to to 31 March 31 March 30 September 2012 2011 2011* £'000 £'000 £'000
Net cash (outflow)/inflow from operating (90) 43
488activities Capital expenditure and financial investment (2,914) 951 3,792 Equity dividends paid - (2,077) (6,869) Net cash outflow before financing (3,004) (1,083)
(2,589)
Net cash inflow from financing 3,694 1,731 1,263 Increase/(decrease) in cash 690 648 (1,326)
Reconciliation of net cash flow to movement in
net cash Increase/(decrease) in cash 690 648 (1,326) Opening cash position 542 1,868 1,868 Closing cash position 1,232 2,516 542
Reconciliation of profit on ordinary activities before taxation to net cash
flow (outflow)/inflow from operating activities Profit on operating activities before taxation 3,429 4,704 6,975 Gains on investments (3,926) (4,450) (6,211) Changes in working capital and other non-cash 407 (211) (276)items
Net cash (outflow)/inflow from operating (90) 43
488activities \* These figures are audited.
Principal Risks and Uncertainties
The Company's assets consist of equity and fixed interest investments, cash andliquid resources. Its principal risks are therefore market risk, credit riskand liquidity risk. Other risks faced by the Company include economic, loss ofapproval as a Venture Capital Trust, investment and strategic, regulatory,reputational, operational and financial risks. These risks, and the way in which they are managed, are described in more detail under the heading Principal risks,risk management and regulatory environment within the Business Review in the Company'sAnnual Report and Accounts for the year to 30 September 2011. The Company'sprincipal risks and uncertainties have not changed materially since the date ofthat report. Related PartiesISIS EP LLP ('the Manager') manages the investments of the Company. The Manageralso provides or procures the provision of secretarial, administrative andcustodian services to the Company. Under the management agreement, the Managerreceives a fee of 2.0 per cent per annum of the net assets of the Company. Thisis described in more detail under the heading Management within the Report ofthe Directors in the Company's Annual Report and Accounts for the year to 30September 2011. During the period the Company has incurred management fees of£656,000 and secretarial fees of £61,000 payable to the Manager.
Going Concern
After making enquires, and bearing in mind the nature of the Company's businessand assets, the Directors consider that the Company has adequate resources tocontinue in operational existence for the foreseeable future. In arriving atthis conclusion the Directors have considered the liquidity of the Company andits ability to meet obligations as they fall due for a period of at leasttwelve months from the date that these financial statements were approved. Asat 31 March 2012 the Company held cash balances, investments in UK Gilts andMoney Market Funds with a combined value of £27,867,000. Cash flow projectionshave been reviewed and show that the Company has sufficient funds to meet bothits contracted expenditure and its discretionary cash outflows in the form ofthe share buyback programme and dividend policy. The Company has no externalloan finance in place and therefore is not exposed to any gearing covenants.
Shareholder Information and Contact Details
Shareholder Communication
Baronsmead
Baronsmead VCT 2's website is www.baronsmeadvct2.co.uk.
The Board has a policy of regular and open communication with shareholders based around quarterly statutory reporting.
ISIS Equity Partners
The Manager for Baronsmead VCT 2 plc is ISIS EP LLP.
For information on asset allocations, dividend policies, investment process, DRIP mechanism, share price movements, the share price discount and selling shares please contact:
By email: michael.probin@isisep.com:margaret.barff@isisep.com
By telephone: Michael Probin 020 7506 5796; Margaret Barff 020 7506 5630.
Internet: www.isisep.com
For comparative performance data of Baronsmead VCT 2 and other generalist VCTs please visit the AIC performance statistics page at: www.theaic.co.uk/ statistics-publications
ComputershareThe Registrar for Baronsmead VCT 2 is Computershare Investors Services PLC. Tochange the details held by Computershare in respect of your shareholding,including change of address, bank account details and joining the DRIP, pleasecontact them as follows: Baronsmeadshareholder helpline: 0870 703 0137 (calls charged at geographical and national rates) The Baronsmead shareholder helpline is available on UK business days betweenMonday and Friday, 8.30a.m. to 5p.m. If you wish to speak to someone pleasepress '0'. The automated self-service system is available 24 hours a day, 7days a week. You will need your Shareholder Reference Number (SRN), which forsecurity reasons you should always keep confidential and is available on yourshare certificate and dividend tax voucher, in order to:
• confirm the latest share price
• confirm your current share holding balance
• confirm payment history
• order a Change of Address, Dividend Bank Mandate or Stock Transfer Form
Managing online your own shareholding via the Investor Centre: www.investorcentre.co.uk
Computershare's secure website, Investor Centre, enables shareholders to manage their shareholding online. Using your SRN you will be able to do the following:
• Holding Enquiry - view balances, values, history, payments and reinvestments
• Payments Enquiry - view your dividends and other payment types
• Address Change - change your registered address
• Bank Details Update - choose to receive your dividend payments directly into your bank account instead of by cheque
• e-Comms sign-up - choose to receive email notification when your shareholder communications become available instead of paper communications
• Outstanding Payments - reissue payments using our online replacement service
• Downloadable Forms - including dividend mandates, stock transfer, dividend reinvestment and change of address forms
• By email - web.queries@computershare.co.uk
Share Price
The Company's shares are listed on the London Stock Exchange. The mid-price ofthe Company's shares is given daily in the Financial Times in the InvestmentCompanies section of the London Share Service. Share price information can alsobe obtained from many financial websites.
Trading Shares
The Company's shares can be bought and sold in the same way as any other quotedcompany on the London Stock Exchange via a stockbroker. As buying and sellingexisting shares in VCTs is complex, Shareholders should seek to trade shares ona "best execution" basis if appropriate.
The marketmakers in the shares of Baronsmead VCT 2 plc are:
Matrix Corporate Capital LLP 020 3206 7000 (the Company's broker)
Singer Capital Markets Limited 020 3205 7500 Winterflood Securities Limited 020 3400 0251 Financial CalendarAugust Quarterly Fact Sheet to 30 June 2012 2012
November Results for the year to 30 September 2012 announced and annual report 2012 and accounts sent to shareholders
January Fifteenth Annual General Meeting
2013 Additional Information
The information provided in this report has been produced in order for shareholders to be informed of the activities of the Company during the period it covers. ISIS EP LLP does not give investment advice and the naming of companies in this report is not a recommendation to deal in them.
Baronsmead VCT 2 plc is managed by ISIS EP LLP which is Authorised andregulated by the FSA. Past performance is not necessarily a guide to futureperformance. Stockmarkets and currency movements may cause the value ofinvestments and the income from them to fall as well as rise and investors maynot get back the amount they originally invested. Where investments are made inunquoted securities and smaller companies, their potential volatility mayincrease the risk to the value of, and the income from, the investment. Corporate Information Directors Registrar and Transfer Office Clive Parritt (Chairman) Computershare Investor Services PLC Howard Goldring* PO Box 82 Gillian Nott OBE‡ The Pavilions Christina McComb Bridgwater Road Bristol BS99 6ZZ Secretary Tel: 0870 703 0137 ISIS EP LLP Brokers Registered Office Matrix Corporate Capital LLP 100 Wood Street One Vine Street London EC2V 7AN London W1J 0AM Investment Manager Auditors ISIS EP LLP KPMG Audit Plc 100 Wood Street Saltire Court London EC2V 7AN 20 Castle Terrace Edinburgh EH1 2EG
FPPE LLP (listed interest bearing securities only)
100 Wood Street Solicitors London EC2V 7AN Martineau No 1 Colmore Square Investor Relations Birmingham B4 6AA Michael Probin 020 7506 5796 VCT Status Adviser PricewaterhouseCoopers LLP Registered Number 1 Embankment Place 03504214 London WC2N 6RH
* Chairman of the Audit Committee ‡ Chairman of the Management Engagement and Remuneration Committee, the Nomination Committee and is Senior Independent Director.
Website www.baronsmeadvct2.co.uk END
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.
XLON