New Cent.2 Regulatory News (NCA2)

30 Apr 2013 13:26

New Century AIM VCT2 plc
Audited Report and Accounts for the year to 31st December 2012

Financial Summary

		Year ended 31 December 2012		Year ended 31 December 2011
Revenue return per share (pence) for the year		0.07		-0.12
Total return per share (pence) for the year		5.25		-8.42
Proposed dividends per share (pence)		0.00		0.00
Net asset value per share (pence)		44.37		39.80
Cumulative value of shareholder investment (net asset value plus cumulative dividends per share) (pence)		46.13		40.76
Shareholders’ funds (£’000)		2,804		2,401

The 2011 comparative information has not been amended in respect of subsequent share issues.

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

I am delighted to report a further outperformance of your fund. During the year, the net asset value per share increased by 11.5% to 46.13p compared to a rise of just 2.8% in the FTSE Aim Index. Unfortunately, as many of you will be aware, this strong performance has not been reflected in the share price which has fallen due to the fund reaching it’s fifth anniversary when initial subscribers can sell without losing their tax relief. With a lack of buyers in the Market, the share price has declined in response to a few small sale orders and a wide discount to net asset value opened up. The Directors have taken action to remedy this situation by means of a buy-back scheme. This has necessitated us to go to Court to seek approval to reorganise the share capital but now that approval has been granted, we are in the process of buying back 10% of the share capital at a discount of just 5% to net asset value. This will enable shareholders that wish to do so, to sell at least some of their shares at a price that more truly reflects the value of their shares. Due to the fact that not every shareholder will wish to participate in the buy-back offer, shareholders participating in the offer will be able to apply to sell excess shares and thus they have the potential to sell a larger percentage of their holding than 10%. It is the intention of the directors to carry out further buy-backs in the future where it is considered to be in the best interest of the shareholders, though under existing regulations, the maximum we are allowed to buy back is 15% per annum.

This scheme should help to alleviate selling pressure on the shares. This together with the prospect of further buy-backs at a small discount to net asset value in the future should help to reduce the share price discount to net asset value.

A further benefit to shareholders with the new capital structure is that future earned capital profits will be able to be distributed to shareholders in the form of capital dividends. It is the Directors intention to pay larger dividends in future, where we are in a position to do so. This year we propose to pay a capital dividend of 1p per share. The higher level of dividend payments will make it more attractive for shareholders to retain their shares and make the shares more attractive to potential buyers. This in turn should help reduce the discount on the shares to net asset value.

During the year our qualifying holding in Boomerang was taken over and this reduced the size of our qualifying holdings. You may have noticed in the accounts that the figure for qualifying holdings is shown as 66.19%. However, this is based on investments at cost. Under VCT rules, we have to adjust our qualifying values to the price of any subsequent purchases we have made in existing qualifying stocks. After these adjustments, our qualifying holdings rise to 70.1%. We are aware that this level is uncomfortably low but this figure will rise when the cash for the buy-backs goes out to shareholders as cash forms part of the non-qualifying holdings.

Since the fund was started we have been disappointed with the performance which has reflected the weakness of the Aim market and also the banking crisis of a few years ago that impacted a heavy toll on many of the companies that we invested in. Since then, the Directors have been encouraged by the progress of the fund over the past two years and as at the 4th April 2013, the net asset value per share had risen further to 47.27p

We would like to thank Simon Like and John Beddoe for their efforts in turning the fund round. With continued financial problems in Europe, Cyprus being the latest to hit the news, we remain cautious. Nevertheless, fears over Europe appear to be receding and given our well spread portfolio of good quality Aim stocks, together with some non-qualifying high yielding leaders, we are hopeful of another good showing in the current year.

Geoffrey Gamble 29 April 2013

Details of Directors

Michael Barnard (Aged 62)

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. 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 53)

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

Peter William Riley (Aged 67)

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 63)

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		7th Floor, 52-54 Gracechurch Street London EC3V 0EH
Company Secretary		Graham Kenneth Urquhart FCIS 7th Floor, 52-54 Gracechurch Street London EC3V 0EH
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

Peter William Riley

Ian Cameron-Mowat

All directors are non-executive.

Audit Committee:

Geoffrey Gamble (Chairman)

Peter William Riley

Ian Cameron-Mowat

Investment Manager’s Review

Whilst we are pleased that the fund has outperformed the FTSE100 Index during the year, we still feel that there is much more hard work ahead to not only try and grow the capital value of your fund, but to also increase the income stream it generates through dividend payments.

We made four new VCT qualifying investments purchasing shares in Inspired Energy plc, Venn Life Sciences, DP Poland plc and Eco City Vehicles plc. We also purchased thirty three different companies shares where we felt that they were undervalued.

Boomerang Plus and General Medical Clinics were both sold as a result of cash take overs. We were disappointed that these companies were taken over as we continued to believe their prospects would improve and as they were both VCT qualifying holdings, we needed to find further suitable investments to replace them to maintain the 70% qualifying rule.

In the second half of the year we started to sell a lot of shares within the fund to ensure that we had sufficient cash resources to meet the buy back that the Directors were planning to undertake.

We are mindful of the need to maintain and increase the amount of qualifying holdings above 70% and continuously look to find such opportunities. We reject a considerable number of the Companies that present themselves at fund raisings as we do not deem them suitable for the fund. As confidence is slowly returning to the Stock Markets, we are noticing more Companies looking to raise funds through the issue of equity, either by listing on AIM as an initial public offering, or through existing quoted Companies seeking additional capital to make acquisitions or fund further expansion.

We are encouraged at the action of the Directors in restructuring the fund to allow share buy backs and to also target better dividend payments in the future. We feel that this will allow shareholders to sell their holdings should they wish to over a period of time, but also reward those that keep their shares with tax free dividends.

The Governments decision to withdraw Stamp Duty on the purchase of AIM shares from April 2014 will hopefully provide an additional boost to shares held within this index.

We remain cautiously optimistic for the future, and hope to report further progress in twelve months time.

Michael Barnard 29 April 2013

Investment Portfolio

Security		Cost		Valuation		%		%
				31/12/2012		Cost		Valuation
Qualifying Investments		2,591,187		1,677,786		66.19		59.66
Non-qualifying Investments		968,058		779,056		24.73		27.70
Uninvested funds		355,441		355,441		9.08		12.64
		3,914,686		2,812,283		100.00		100.00
Qualifying Investments
AIM Quoted
Marechale Capital plc		151,504		15,000		3.86		0.53
Sinclair Pharma plc		183,285		185,000		4.68		6.60
HML Holdings plc		271,350		150,000		6.93		5.33
Sport Media Group plc		125,625		0		3.21		0.00
Environ Group plc		334,125		0		8.53		0.00
Kurawood plc		150,750		0		3.85		0.00
Corac Group plc		160,062		93,493		4.09		3.32
Tristel plc		204,303		148,500		5.22		5.28
Advanced Computer Software		102,510		454,500		2.62		16.16
Cyan Holdngs plc		204,219		121,508		5.22		4.32
Savile Group		126,254		10,313		3.23		0.37
M.Winkworth plc		72,360		75,600		1.85		2.71
Green Compliance plc		33,668		1,340		0.86		0.05
Bango plc		28,090		120,900		0.72		4.30
Angel Biotech Holdings		119,443		24,625		3.05		0.88
Music Fesivals plc		45,731		0		1.17		0.00
Inspired Energy plc		76,895		44,625		1.96		1.59
Microsaic systems		15,079		14,250		0.39		0.51
Eco City Vehicles		34,676		46,000		0.89		1.64
Venn Life Sciences		125,628		133,332		3.21		4.74
DP Poland		25,630		37,400		0.65		1.33
Total qualifying investments		2,591,187		1,677,786		66.19		59.66

Investment Portfolio

Security		Cost		Valuation		%		%
				31/12/2012		Cost		Valuation
Non-qualifying Investments
AIM Quoted
DCD Media		60,300		1312		1.54		0.05
Eco City Vehicles		15,670		6,100		0.40		0.22
Sanderson Group		58,230		68,600		1.49		2.44
Rotala plc		47,884		51,600		1.22		1.84
Tristel plc		60		30		0.00		0.00
Advanced Computer Sofware		168		226		0.00		0.00
Green Compliance plc		2		0		0.00		0.00
Bango plc		299		372		0.01		0.01
China Food		31,546		15,400		0.81		0.55
2Ergo Group		17,932		3,688		0.46		0.13
In-Deed Online		66,906		52,305		1.71		1.86
May Gurney		13,229		13,695		0.34		0.49
Merchant House		19,448		8,000		0.50		0.28
Sportingbet		9,614		16,050		0.25		0.57
Motivcom		18,410		22,698		0.47		0.81
Hightex		18,922		24,083		0.48		0.86
Nature Group		26,637		9,500		0.68		0.34
Alliance Pharma		15,712		18,900		0.40		0.67
Avingtrans		10,185		15,360		0.26		0.55
32RED plc		16,380		18,400		0.42		0.65
Gable Holdings		12,081		21,500		0.31		0.76
M&C Saatchi		10,876		12,420		0.28		0.44
Netplay plc		10,199		9,563		0.26		0.34
Litebulb Group		10,737		11,250		0.27		0.40
Finsbury Food		9,551		9,375		0.24		0.33
		500,978		410,427		12.80		14.59
UK listed
Investec		169,415		58,575		4.33		2.09
4Imprint Group		20,024		45,500		0.51		1.62
British American Tobacco		22,104		31,210		0.56		1.11
Astrazeneca		21,440		20,363		0.55		0.72
Networkers Int		12,443		12,950		0.32		0.46
Microsaic Systems		24,951		36,100		0.64		1.28
Renew Holdings		11,379		17,200		0.29		0.61
Tullett Prebon		14,407		10,080		0.37		0.36
William Hill		11,350		17,400		0.29		0.62
Imperial Tobacco		23,759		23,730		0.61		0.84
Vodafone		25,249		23,100		0.64		0.82
		356,521		296,208		9.11		10.53
Security		Cost		Valuation		%		%
				31/12/2012		Cost		Valuation
Unlisted Investments
Merchant House 15%		45,228		33,750		1.16		1.21
Merchant House 6.5%		45,228		18,671		1.16		0.66
Merchant House 14%		20,103		20,000		0.50		0.71
		110,559		72,421		2.82		2.58
Total non-qualifying investments		968,058		779,056		24.73		27.70

Top Ten Investments

Security		Cost		Valuation		%
Advanced Computer Software		102,510		454,500		16.16
Sinclair Pharma		183,285		185,000		6.60
HML Holdings plc		271,350		150,000		5.33
Tristel plc		204,303		148,500		5.28
Venn Life Sciences		125,628		133,332		4.74
Cyan Holdings		204,219		121,508		4.32
Bango plc		28,090		120,900		4.30
Corac Group		160,062		93,493		3.32
M Winkworth plc		72,360		75,600		2.71
Sanderson Group		58,230		68,600		2.44

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

Directors’ Report

The directors present their report and the audited accounts for the year to 31 December 2012.

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 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.

Principal risks and uncertainties

The company invests its funds primarily in unlisted companies and companies traded on AIM, which entail a higher degree of risk than investments in large listed companies. The main risk, therefore, arising from the company’s activities is market price risk, representing the uncertain realisable values of the company’s investments. Please refer to note 20 to these accounts which gives a detailed review of the company’s risk management.

Results and dividend

		Year to 31 December 2012				Year to31 December 2011
		Revenue		Capital		Revenue		Capital
		£’000		£’000		£’000		£’000
Return on ordinary activities after taxation		5		325		(8)		(499)
Appropriated as follows:
Interim dividend paid
Revenue – nil p		-		-		-		-
Capital – nil p		-		-		-		-
Final dividend paid in respect of prior year
Revenue – 0.00p (0.00p) per share		-		-		-		-
Capital – nil p per share		-		-		-		-
Transfers to reserves		5		325		(8)		(499)

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 2012		Year ended 31 December 2011
Michael David Barnard Geoffrey Gamble Peter William Riley Ian Cameron-Mowat		606,854 175,000 3,000 100,000		606,854 175,000 3,000 100,000

All of the directors’ share interests shown above are held beneficially. There have been no changes in the directors’ share interests between 31 December 2012 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, Geoffrey Gamble, 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 Accounts.

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 2012 of 3 per cent shareholders and above:

MD Barnard		606,854
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
P Steyne		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.

Post balance sheet events

Details of the post balance sheet events are set out in note 24.

Annual general meeting

Notice of the annual general meeting is set out on page 34.

Auditors

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

Statement of disclosure to auditors

So far as the directors are aware:

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

2. the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

By Order of the Board

Michael Barnard 29 April 2013

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 26 June 2013.

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 2011 and 31 December 2012 is set out in the Financial Summary on page 1.

Corporate Governance

The directors support the relevant principles of the UK Corporate Governance Code issued in June 2010 by the Financial Reporting Council, being the principles of good governance and the code of best practice as set out in the Main Principles of the Code annexed to the Listing Rules of the Financial Conduct Authority.

Going Concern

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

The Board

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

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

During the year the following were held:

3 full board meetings		2 Audit Committee meetings
All directors attended all meetings.		All members attended all meetings

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 accounts 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.

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

Relations with shareholders

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

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

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

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

Financial Reporting

The directors’ statement of responsibilities for preparing the accounts is set out on page 18, and a statement by the auditors about their reporting responsibilities is set out in the Auditors’ Report on page 19.

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 accounts. This 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 fifty-two Governance Code provisions throughout the accounting year. The Comply or Explain directions of the Governance Code does however acknowledge that some provisions may have less relevance for investment companies. With the exception of the limited items outlined below, the Company has complied throughout the accounting year to 31 December 2012 with the provisions set out in Sections A to E of the Governance Code.

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

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

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

4. The company has three independent directors, as defined by the Governance Code issued in June 2010. The board consider that Messrs. Gamble, Riley and Cameron-Mowat are independent in character and judgement and there are no relationships or circumstances which are likely to affect, or could appear to affect the directors’ judgement. The Board considers that all directors have sufficient experience to be able to exercise proper judgement within the meaning of the Governance Code.

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

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

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

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

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

Statement of directors’ responsibilities

United Kingdom company law requires the directors to prepare accounts 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 accounts, 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 accounts 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 accounts 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 accounts, 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.

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

We have audited the accounts of New Century AIM VCT 2 plc for the year ended 31 December 2012 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 18, the directors are responsible for the preparation of the accounts and for being satisfied that they give a true and fair view. Our responsibility is to audit the accounts 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 accounts

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

Opinion on accounts

In our opinion:

the accounts give a true and fair view of the state of the company's affairs as at 31 December 2012 and of the company's profit for the year then ended; the accounts have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the accounts have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the company accounts, 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 accounts are prepared is consistent with the accounts.

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 accounts 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.

Under the Listing Rules we are required to review:

the directors' statement, set out on page 16, 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 UK Corporate Governance Code specified for our review; and certain elements of the report to the shareholders by the Board on directors' remuneration.

Colin Jones (Senior statutory auditor) for and on behalf of UHY Hacker Young

Chartered Accountants

Statutory Auditors

UHY Hacker Young

Quadrant House

4 Thomas More Square

London, E1W 1YW

30 April 2013

Income Statement (incorporating the revenue account)

for the year to 31 December 2012

				Year ended31 December 2012						Year ended31 December 2011
		Notes		Revenue£’000		Capital£’000		Total£’000		Revenue£’000		Capital£’000		Total£’000
Gains/(losses) on investments
- realised				-		128		128		-		110		110
- unrealised				-		218		218		-		(589)		(589)
Income		2		46		-		46		34		-		34
Investment management fee		3		(7)		(21)		(28)		(7)		(20)		(27)
Other expenses		4		(34)		-		(34)		(35)		-		(35)
				________		________		________		________		________		________
Return on ordinary activities before taxation				5		325		330		(8)		(499)		(507)
Tax charge on ordinary activities		6		-		-		-		-		-		-
				________		________		________		________		________		________
Return on ordinary activities after taxation				5		325		330		(8)		(499)		(507)
				=======		=======		=======		=======		=======		=======
Return per ordinary share (pence)		8		0.07		5.17		5.25		(0.12)		(8.30)		(8.42)
				=======		=======		=======		=======		=======		=======

The notes on pages 24 to 32 form an integral part of these accounts.

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 2012

		Note		As at31 December 2012 £’000				As at 31 December 2011 £’000
Fixed assets
Investments		9				2,457				2,251
Current assets
Debtors		12				355				158
Current liabilities
Creditors: amounts falling due within one year		13				(8)				(8)
						2,804				2,401
Capital and reserves
Called up share capital		14				632				615
Share premium		15				5,307				5,251
Capital reserve – realised		15				(1,946)				(586)
Capital reserve – unrealised		15				(1,167)				(2,852)
Revenue reserve		15				(22)				(27)
Total equity shareholders’ funds		16				2,804				2,401

Net asset value per ordinary share

17

44p

40p

The accounts on pages 21 to 32 were approved by the Board of directors on 29 April 2013 and were signed on its behalf by:

Michael Barnard

Director

The notes on pages 24 to 32 form an integral part of these accounts.

Cash Flow Statement for the year to 31 December 2012

		Note		Year ended31 December 2012 £’000								Year ended 31 December 2011 £’000
Net cash outflow from operating activities		19						(62)								(67)
Returns on investments
Interest received				10								4
Investment income				36								30
								46								34
UK Corporation Tax paid								-										-
Dividend paid								-										-
Capital expenditure & financial investment
Sale of investments				829								748
Purchase of investments				(689)								(830)
Net cash inflow/ (outflow) for capital expenditure & financial investment								140										(82)
Additional Share Capital net of expenses								73										192
Net cash inflow								197										77
Increase in uninvested funds with broker								197										77

The notes on pages 24 to 32 form an integral part of these accounts.

Notes to the Financial Statements for the year to 31 December 2012

1. Accounting policies

General

The accounts have been prepared in accordance with applicable United Kingdom law and accounting standards and the Statement of Recommended Practice “Accounts 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 accounts. 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 2012 £’000				Year ended 31 December 2011£’000
Interest receivable
- listed fixed interest securities				-				-
- unquoted investment portfolio				10				4
- bank deposits and liquid funds				-				-
				10				4
Other income
Dividends receivable				36				30
				46				34

3. Investment management fees

		Year ended 31 December 2012				Year ended 31 December 2011
		Revenue £’000		Capital£’000		Revenue £’000		Capital£’000
Investment management fees		7		21		7		20

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 2012, 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 2012 £’000								Year ended 31 December 2011£’000
Administrative and secretarial services												10		11
Auditors' remuneration												10		10
-for tax services												3		4
Regulatory fees												11		10
										34				35

5. Directors’ remuneration

No remuneration has been paid or is payable for year to 31 December 2012 or in respect of the prior year.

6. Tax charge on ordinary activities

		Year ended 31 December 2012				Year ended 31 December 2011
		Revenue £’000		Capital£’000		Revenue £’000		Capital£’000
United Kingdom tax based on the taxable profit for the year
- Current year		-		-		-		-
- Prior year		-		-		-		-
		-		-		-		-
Factors affecting tax charge for the year
Return on ordinary activities before taxation		5		325		(8)		(499)
Tax on above at the small company rate of 20% (2011: 20%)		1		65		(1)		(100)
UK dividends not subject to corporation tax		(7)		-		(6)		-
Non deductible losses on investment		-		(83)		-		95
Non allowable expenses		-		-		-		-
Unutilised/(utilised) losses		6		18		7		5
Current tax charge for the year		-		-		-		-

7. Dividends

		Year ended 31 December 2012 £’000				Year ended 31 December 2011£’000
Interim dividend paid				-				-
Final dividend paid in respect of previous year				-				-
				-				-

On 14 March 2013 the directors proposed a dividend in respect of the year ended 31 December 2012 of £63,196 representing 1p per ordinary share.

8. Return per ordinary share

The revenue return, per ordinary share, is based on the net revenue on ordinary activities after taxation of £4,650 (2011: loss £7,473) and on 6,282,554 (2011: 6,032,006) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

The total return per ordinary share is based on a net profit (loss) after taxation of £329,615 (2011: loss £507,654) and on 6,282,554 (2011: 6,032,006) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

9. Fixed asset investments

		As at 31 December 2012 £’000				As at 31 December 2011£’000
Gilts				-				-
UK listed				296				429
AIM				2,089				1,663
PLUS Markets				-				17
Unlisted				72				142
				2,457				2,251

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

										Year ended 31 December 2012
								Gilts		UK Listed		AIM		Plus Mkts		Un-listed		Total
								£’000		£’000		£’000		£’000		£’000		£’000
at 1 January 2012								-		429		1,663		17		142		2,251
Purchases								-		93		576		-		20		689
Transfers								-		(6)		6		-		-		-
								-		516		2,245		17		162		2,940
less: Sales								-		244		545		22		18		829
								-		272		1,700		(5)		144		2,111
Realised gains/(losses)								-		(8)		160		5		(29)		128
Unrealised gains/(losses)								-		32		229		-		(43)		218
								-		296		2,089		-		72		2,457
Cost at 31 December 2012								-		357		3,092		-		110		3,559

9. Fixed asset investments (continued)

														Year ended 31 December 2011
								Gilts				UK					AIM		Plus Mkts			Un-listed			Total
								£’000				£’000					£’000		£’000			£’000			£’000
at 1 January 2011								-				322					2,213		55			58			2,648
Purchases								-				304					437		-			90			831
Transfers								-				-					-		-			-			-
								-				626					2,650		55			148			3,479
less: Sales								-				142					576		30			1			749
								-				484					2,074		25			147			2,730
Realised gains								-				16					93		-			1			110
Unrealised losses								-				(71)					(504)		(8)			(6)			(589)
								-				429					1,663		17			142			2,251
Cost at 31 December 2011								-				722					3,751		404			161			5,038

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

		Year ended 31 December 2012 £’000				Year ended 31 December 2011£’000
Net realised gain on disposal				128				110
Increase/(decrease) in unrealised appreciation				218				(589)
				346				(479)

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 2012 £’000				As at 31 December 2011£’000
Uninvested funds with broker:
MD Barnard & Co Ltd				355				158

13. Creditors

		As at 31 December 2012 £’000				As at 31 December 2011£’000
Trade creditors and accruals				8				8
UK Corporation Tax				-				-
MD Barnard & Co Ltd				-				-
				8				8

14. Share capital

		As at 31 December 2012£’000				As at 31 December 2011£’000
Authorised
25,000,000 ordinary shares of 10p each				2,500				2,500
Allotted, called up and fully paid
6,319,550 (2011: 6,152,384) ordinary shares of 10p each				632				615

15. Reserves

			Share Premium account£’000				Capital realised £’000			Capital unrealised £’000				Revenue reserve£’000
As at 1 January 2012			5,251				(586)			(2,852)				(27)
Share Issue			56				-			-				-
Realised gains on disposals			-				128			-				-
Unrealised gains			-				-			218				-
Transfer of unrealised loss to realised on disposal of investment			-				(1,467)			1,467				-
Net revenue before tax			-				-			-				5
Investment management fee			-				(21)			-				-
Corporate taxation			-				-			-				-
Dividends paid			-				-			-				-
			________				________			________				________
At 31 December 2012			5,307				(1,946)			(1,167)				(22)

16. Reconciliation of movements in shareholders’ funds

						£’000
At 1 January 2012						2,401
Return on ordinary activities after tax Issue of ordinary shares						330 73
At 31 December 2012						2,804

17. Net asset value per share

Net asset value per share is based on net assets at 31 December 2012 of £2,804,284 (31 December 2011 of £2,400,798) and on 6,319,550 ordinary shares (6,152,384 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 2012 £’000				Year ended 31 December 2011 £’000
Operating activity
Operating profit/(loss)			330				(507)
Profit on sale of investments			(128)				(110)
Investment income			(46)				(34)
Unrealised (gains)/ losses on investments			(218)				589
Increase in creditors			-				(5)
			________				________
			(62)				(67)

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 2012£’000				Year ended 31 December 2011£’000
Fixed rate				72				141
Non-interest bearing				2,385				2,110
				2,457				2,251

20. Risk management and financial instruments (continued)

Fixed rate assets		Year ended 31 December 2012£’000				Year ended 31 December 2011£’000
Weighted average interest rate				13.4%				10.90%
Weighted average years to maturity				2.2				2.6

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.

24. Post balance sheet events

On 25 January the Company, having received approval from the Court cancelled £5,251,815 of the Share Premium account, recognising a distributable reserve of £5,271,815.

Shareholder Information for the year to 31 December 2012

The Company

New Century AIM VCT2 PLC2 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 26		June 2013
Interim report for six months to 30 June 2013 published		August 2013
Preliminary announcement of results for the year to 31 December 2013		April 2014
Annual General Meeting 2014		June 2014

The shares will go ex-dividend on 19 June 2013 and be paid to shareholders on the share registrar as at 21 June 2013. The dividend will be paid on 19 July 2013.

Share price

The mid-market price of shares in New Century AIM VCT PLC2 is available daily on the London Stock Exchange website (www.londonstockexchange.com).

Copyright Business Wire 2013