New Cent.2 Regulatory News (NCA2)

30 Apr 2020 07:00

 

Company number: 06054576

New Century AIM VCT2 plc	31st December 2019
Audited Report and Accounts for the year to 31st December 2019

Financial Summary	1
Chairman's Statement	2
Details of Directors	3
Management and Administration	4
Directors	5
Strategic Report	6
Investment Portfolio	8
Top Ten Investments	11
Directors' Report	12
Directors’ Remuneration Report	16
Corporate Governance	18
Independent Auditors' Report	22
Statement of Comprehensive Income	29
Balance Sheet	30
Statement of Changes in Equity	31
Cash Flow Statement	32
Notes to the Financial Statements	33 - 44
Shareholder Information	45

	Year ended 31 December 2019	Year ended 31 December 2018
Revenue return per share (pence) for the year	(0.51)	(0.31)
Total return per share (pence) for the year	4.55	(16.61)
Proposed dividends per share (pence)	0.00	3.40
Net asset value per share (pence)	49.53	48.38
Cumulative value of shareholder investment (net asset value plus cumulative dividends per share) (pence)	66.49	61.94
Shareholders’ funds (£’000)	2,282	2,229

Chairman’s Statement

It is pleasing to report that following a mixed year when the Markets had a good start to the year, followed by a weaker period from May through to October, they then had a positive end to 2019. The news throughout the year was dominated by talks of when and if BREXIT would occur, the trade tensions between the US and China and finally a General election. The General election win by the Conservatives was received well by the Market as it finished the year strongly. The net asset value (NAV) of your fund increased by 2.38% to 49.53p, whereas the FSTE AIM All Share index gained 11.7% over the same period. The net asset value plus cumulative dividends per share increased by 7.35%.

The current year started off positively as there was a general feeling of positivity from the general election win and businesses viewed their future with optimism and increasing confidence. This was abruptly halted in March as the uncertainty with regards to coronavirus and its effect upon the economy led to dramatic declines across Global Stock Markets. Our thoughts are with those who are currently battling with the illness and for those who have lost loved ones. These are difficult times for many people and for businesses that have had to close through Government advice. Governments from around the World are injecting huge fiscal stimuli to try and ease the effect and help Companies steer their ways through this period of uncertainty.

Your fund has not been immune to this. At close of business on 3 April 2020 the NAV of your fund was 36.7p a drop of 25.9% from the year end. We as a Board are mindful that we have in recent years paid a dividend but in the current market with the levels of volatility being experienced, your Board feels that it would not make sense to sell shares which seem to be at historically very low prices to fund a dividend. We feel it is more prudent to keep that money invested so as to be able to take advantage of any possible future upturn. However, realising the importance of tax-free income to our shareholders we will review the situation before we announce out Interim results in August.

We have a wide spread of established companies across a variety of sectors within the fund that we hope can weather any of the volatility that may occur in the period ahead. We are in unprecedented times with all households in lockdown which almost certainly result in not only the UK entering a recession but it will likely result in a worldwide one. Companies are withdrawing their forecasts to the Market and either suspending or cancelling their dividends as they baton down the hatches. Once the spread of this awful virus has been controlled, we believe new opportunities will present themselves as companies reopen for business, they look to seek further funding to grow, and existing businesses within the portfolio possibly become attractive to predators as we experienced at the start of 2019.

Geoffrey Gamble 29 April 2020

Details of Directors

Michael Barnard (Aged 69)

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

Geoffrey Gamble (Aged 61)

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 75)

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

Ian Cameron-Mowat (Aged 69)

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.

Simon Like (Aged 50)

Simon has been employed in stockbroking since 2001. He started his career working for Midland Bank which later became HSBC plc. After 10 years of Banking, he left to briefly work within the Motor Industry for 2 years before returning to financial services in 2001. Simon initially started at MD Barnard & Company Limited as an analyst working alongside Michael Barnard before moving into the position of Fund Manager in 2010.

Management and Administration

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

Directors

Geoffrey Gamble (Chairman)Michael David BarnardPeter William RileyIan Cameron-MowatSimon Like (Appointed on 18 September 2019)

All directors are non-executive.

Audit Committee:

Geoffrey Gamble (Chairman)Peter William RileyIan Cameron-Mowat

Strategic Report

Activities and status

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

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

Investment Manager’s Review

The FTSE AIM All Share index had a mixed performance throughout the year. It started well with the index rising through to the beginning of May but then subsequently drifted lower through the autumn before finishing the year positively from October through to December. Politics seemed to dominate the headlines with the continuous talks of if and when BREXIT would occur, the trade tensions between the US and China and finally the general election. The large general election victory for the Conservative Party was received well by the Stock Market, as it provided some clarity that the UK was actually going to leave the EU on 31 January 2020 and the UK Stock Market finished the year strongly.

During 2019 the net asset value (NAV) of your fund increased by 2.38% to 49.53p, whereas the FSTE AIM All Share index gained 11.7% over the same period. The net asset value plus cumulative dividends per share increased by 7.35%.

We made 13 further investments in the period, investing in Entertainment AI plc, Gfinity plc, C4X Discovery Holdings plc, Concepta plc, Diaceutics plc, Feedback plc, Immotion Group plc, Intelligent Ultrasound Group plc, Integumen plc, LightwaveRF plc, Location Sciences Group plc, N4 Pharma plc and Velocys plc.

We made 15 sales where we either exited or top-sliced a holding. In addition, we received bids for Synnovia plc and Premier Technical Services Group at premiums of 25% and 301% to our purchase prices respectively.

The current year also started well, with the NAV of the fund climbing to 51.94p by the end of February as there was a more optimistic view by many investors and companies for the year ahead. However, this positivity changed quickly in March as the news of the coronavirus spreading from China to Europe quickly caused fear and uncertainty with investors over what the impact could be on both the health of the population as well as the impact on the economy. To try and contain the spread of the virus many countries have closed their borders to non-residents as well as imposing internal ‘lockdowns’. These are difficult times for both individuals and for the many businesses which have had to close on Government advice. Governments around the world are trying to strike a balance between the actions which will help maintain a healthy population whilst at the same time not causing lasting economic damage. Not surprisingly, the Stock Market’s initial reaction was severe and in particular companies which have a large exposure to consumer sectors have been hit hard and their share prices decimated, although towards the end of March / early April, some share prices have begun to recover.

Your fund has a wide spread of investments across a variety of many sectors and we believe that this diversification will help the Company weather a lot of the volatility that may occur in the period ahead. These are unprecedented times and with so many countries trying to contain the virus it is almost certain that the UK will enter a recession alongside many other countries around the world. In the first half of this year we are already seeing many companies either cutting or cancelling their dividends which will result in lower incomes for many investors, including this Company, until companies can be certain of their cash flows. We are also starting to see many companies using the public markets to raise cash to support their balance sheets and provide growth capital. This in itself can create new opportunities for your fund as it will give us the chance to invest in businesses at historically low prices.

We are therefore cautious in our view for the year ahead whilst the uncertainty of this pandemic is continuing to make daily headlines. However, hopefully, the news flow regarding coronavirus will start to improve as the medical research for testing, curing and vaccinating against this dreadful virus makes progress.

As the number of people infected by this disease and the subsequent number of deaths begin to decline, we believe the general lockdowns will slowly be released. This will enable companies to start trading again and revive the economy – leading to an improvement in share prices which would be positive for the fund.

Investment Objective

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

Principal risks and uncertainties

The Company invests its funds primarily in unlisted companies and companies traded on AIM, which entail a higher degree of risk than investments in large listed companies. The main risk, therefore, arising from the Company’s activities is market price risk, representing the uncertain realisable values of the Company’s investments. Please refer to the Corporate Governance report on page 18 which provides evidence of the robust review the directors have performed to assess these risks, and also note 22 to these accounts which gives a detailed review of the Company’s risk management.

Environmental matters

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

Viability Statement

In accordance with provision 1 of The UK Corporate Governance Code 2018 the directors have assessed the prospects of the Company over a longer period than the 12 months required by the “Going Concern” provision.

The Board regularly considers the Company’s strategy, including investor demand for the Company’s shares, and a three year period is therefore considered to be an appropriate and reasonable time horizon.

The Board has carried out a robust assessment of the principal risks facing the Company and its current position, including those which may adversely impact its business model, future performance, solvency or liquidity. The principal risks faced by the Company and the procedures in place to monitor and mitigate them are set out in note 22.

The Board has also considered the Company’s cash flow projections and found these to be realistic and reasonable.

Based on the above assessment the Board confirms that it has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to 31 December 2022.

Key performance indicators

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

Geoffrey Gamble 29 April 2020

Investment Portfolio

	Security	Cost	Valuation	%	%
			31/12/2019	Cost	Valuation
	Qualifying Investments	2,919,264	2,118,210	90.24	92.17
	Non-qualifying Investments	270,018	134,333	8.35	5.85
		3,189,282	2,252,543	98.59	98.02
	Uninvested funds	45,554	45,554	1.41	1.98
		3,234,836	2,298,097	100.00	100.00
	Qualifying Investments
	AIM Quoted
	Access Intelligence plc	10,053	12,750	0.31	0.55
	Anglo African Oil & Gas plc	65,329	2,431	2.02	0.11
	Audioboom Group plc	148,252	116,700	4.58	5.08
	Bigblu Broadband plc	29,247	40,955	0.90	1.78
	Bilby plc	52,465	25,110	1.62	1.09
	Blackbird plc	41,460	139,425	1.28	6.07
	Brighton Pier Group plc	35,379	11,330	1.09	0.49
	C4X Discovery Holdings plc	35,179	36,167	1.09	1.57
	Cloudbuy plc	41,896	2,055	1.30	0.09
	Cloudcall Group plc	20,230	34,300	0.63	1.49
	Concepta plc	75,383	40,000	2.33	1.74
	Coral Products plc	25,104	17,575	0.78	0.76
	Creo Medical Group plc	20,504	47,779	0.63	2.08
	Cyanconnode Holdngs plc	204,219	2,640	6.31	0.11
	Diaceutics plc	10,314	13,703	0.32	0.60
	DP Poland plc	25,631	7,310	0.79	0.32
	Entertainment AI plc	50,257	47,000	1.55	2.05
	Escape Hunt plc	31,006	3,428	0.96	0.15
	Falanx Group Ltd	45,031	10,962	1.39	0.48
	Faron Pharmaceuticals Ltd	20,103	20,920	0.62	0.91
	Feedback plc	20,104	16,583	0.62	0.72
	Fusion Antibodies plc	22,113	20,122	0.68	0.88
	Gfinity plc	40,207	28,889	1.24	1.26
	HML Holdings plc	58,340	68,800	1.80	2.99
	Hunters Property plc	50,253	65,500	1.55	2.85
	Immotion Group plc	95,486	76,796	2.95	3.34
	I-Nexus Global plc	30,153	5,696	0.93	0.25
	Inspired Energy plc	33,641	189,000	1.04	8.22
	Integumen plc	75,383	86,690	2.33	3.77
	Intelligent Ultrasound Group plc	70,355	49,460	2.17	2.15
	Keywords Studios plc	2,473	29,940	0.08	1.30
	Lightwaverf plc	30,158	15,882	0.93	0.69
	Location Sciences Group plc	72,643	37,817	2.25	1.65
	Loopup Group plc	15,078	10,200	0.47	0.44
	M.Winkworth plc	56,280	87,500	1.74	3.81
	Marechale Capital plc	75,752	6,000	2.34	0.26
	Microsaic Systems plc	142,261	31,590	4.40	1.37
	Modern Water plc	75,385	3,927	2.33	0.17
	Security	Cost	Valuation	%	%
			31/12/2019	Cost	Valuation
	Qualifying Investments
	AIM Quoted
	N4 Pharma plc	40,204	10,960	1.26	0.48
	Open Orphan plc	155,184	27,172	4.80	1.18
	Pelatro plc	25,128	28,000	0.78	1.22
	PHSC plc	50,256	29,800	1.55	1.30
	Polarean Imaging plc	20,104	28,000	0.62	1.22
	Property Franchise Group plc	50,253	98,000	1.55	4.26
	Quixant plc	8,091	38,500	0.25	1.68
	Rosslyn Data Technologies plc	23,219	3,290	0.72	0.14
	Scancell Holdings plc	45,233	23,498	1.40	1.02
	Scholium Group plc	40,203	14,800	1.24	0.64
	Solid State plc	35,248	91,293	1.09	3.97
	SRT Marine Systems plc	18,093	54,000	0.56	2.35
	Sysgroup plc	45,232	24,000	1.40	1.04
	Tekcapital plc	82,292	18,125	2.54	0.79
	TP Group plc	160,062	47,868	4.95	2.08
	Tristel plc	3,715	34,560	0.11	1.50
	ULS Technology plc	18,091	30,240	0.56	1.32
	Velocys plc	30,154	17,800	0.93	0.77
	Yourgene Health plc	40,204	26,000	1.24	1.13
	Yu Group plc	20,504	9,372	0.63	0.41
		2,864,575	2,118,210	88.55	92.17
	Unlisted Investments
	Outsourcery plc	28,143	-	0.87	0.00
	Syqic plc	26,546	-	0.82	0.00
		54,689	-	1.69	0.00
	Total qualifying investments	2,919,264	2,118,210	90.24	92.17
	Non-qualifying Investments AIM Quoted     Audioboom Group plc	1,163	195	0.04	0.01
	Be Heard Group plc	10,040	1,325	0.31	0.06
	Rotala plc	27,682	37,800	0.85	1.64
	Tristel plc	60	384	0.00	0.02
		38,945	39,704	1.20	1.73

	Security	Cost	Valuation	%	%
			31/12/2019	Cost	Valuation
	UK listed
	Investec plc	169,416	85,200	5.25	3.71
	Twentyfour Income Fund Ltd	9,852	9,429	0.30	0.41
		179,268	94,629	5.55	4.12
	Unlisted Investments
	China Food Co plc	31,547	-	0.97	-
	Mar City plc	10,053	-	0.31	-
	Sorbic International plc	10,205	-	0.32	-
		51,805	-	1.60	-
	Total non-qualifying investments	270,018	134,333	8.35	5.85

Top Ten Investments

Security	Cost	Valuation	%
Inspired Energy plc	33,641	189,000	8.22
Blackbird plc	41,460	139,425	6.07
Audioboom Group plc	148,252	116,700	5.08
Property Franchise Group plc	50,253	98,000	4.26
Solid State plc	35,248	91,293	3.97
M.Winkworth plc	56,280	87,500	3.81
Integumen plc	75,383	86,690	3.77
Investec plc	169,416	85,200	3.71
Immotion Group plc	95,486	76,796	3.34
HML Holdings plc	58,340	68,800	2.99
	763,758	1,039,404	45.22

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 2019.

Corporate Governance

The Corporate Governance report on pages 18 to 21 forms part of the directors’ report.

Results and dividend

	Year to 31 December 2019		Year to31 December 2018
	Revenue	Capital	Revenue	Capital
	£’000	£’000	£’000	£’000
Return on ordinary activities after taxation	(23)	233	(14)	(751)
Appropriated as follows:
Final dividend paid in respect of prior year
Revenue – 0.00p (0.00p) per share	-	-	-	-
Capital – 3.4p (3.3p) per share	-	(157)	-	(152)
Transfers to reserves	(23)	76	(14)	(903)

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 2019	Year ended 31 December 2018
Michael David Barnard Geoffrey Gamble Peter William Riley Ian Cameron-Mowat Simon Like	470,098 106,550 3,000 67,065 145,800	454,598 106,550 3,000 67,065 145,800

All of the directors’ share interests shown above are held beneficially. There have been no changes in the directors’ share interests between 31 December 2019 and the date of this report, other than for MD Barnard who has increased his holding by a further 47,400 shares, taking his holding up to 517,498 shares, representing 11.23% of the Company’s shares

Brief biographical notes on the directors are given on page 3. The director, retiring in accordance with the Company’s Articles of Association, is 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. In addition, Simon Like, who was appointed by the Board to become a director of the Company on 18 September 2019 will, in accordance with the Company’s Articles of Association, offer himself for election at the forthcoming Annual General Meeting (AGM). The directors believe that Simon’s experience in fund management in general and his role as Investment Manager for the Company in particular, is very useful and a big advantage to have on the Company’s Board.

Management

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

Substantial shareholdings

The Company has been notified, in accordance with Chapter 5 of FCA’s Disclosure and Transparency Rules, of the under noted interests as at 31 December 2019 of 3 per cent shareholders and above:

MD Barnard	470,098
N Shanks	405,057
Rathbone Nominees Ltd	217,476
IA Houston	200,000
DM Trotman	180,000
Platform Securities Nominees Ltd	172,065
Smith & Williamson Nominees Ltd	165,964
JR Atkinson	152,365
RS Like	145,800

Since the year end, MD Barnard has acquired a further 47,400 shares, taking his holding up to 517,498 shares, representing 11.23% of the Company’s shares.

Acquisition of own shares

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

Structure, rights and restrictions concerning the Company’s share capital

Throughout the Company’s financial year there were 4,606,953 ordinary shares in issue. No shares were issued or bought back during the year. The rights and obligations attached to the Company’s ordinary shares are set out in the Company’s Articles of Association, copies of which can be obtained from Companies House. The Company has only one class of ordinary share and each share has attached to it full voting rights, dividends and capital distribution rights (including on a winding up) and do not confer any rights of redemption.

Ordinary shareholders also have the right to receive copies of the Company’s report and accounts, to attend and speak at general meetings and to appoint proxies. This year the right to attend and speak at the Company’s AGM, due to be held on the 18 June 2020, has been suspended due to the coronavirus pandemic and the consequent Government restrictions relating to groups of two or more individuals gathering.

There are no shareholders who have a significant direct or indirect shareholding in the Company.

In accordance with Schedule 7 of the Large and Medium Size Companies and Groups (Accounts and Reports) Regulations 2008, as amended, the directors disclose the following information:

The Company’s capital structure and voting rights are summarised above, and there are no restrictions on voting rights nor any agreement between holders of securities that result in restrictions on the transfer of securities or on voting rights;There exist no securities carrying special rights with regard to the control of the Company;The rules concerning the appointment and replacement of directors, amendment of the Articles of Association and powers to issue or buy back of the Company’s shares are contained in the Articles of Association of the Company and the Companies Act 2006;The Company does not have an employee share scheme;There are no agreements to which the Company is party that may affect its control following a takeover bid; andThere are no agreements between the Company and its Directors providing for compensation for loss of office that may occur following a takeover bid or for any other reason.

Appointment of Directors

The directors are subject to re-election by rotation, with one quarter of the directors being re-elected annually at the AGM.

Creditor payment policy

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

Post balance sheet events

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

Section 172 (1) of the Companies Act 2006

The Board notes the new disclosure regulations contained within ‘The Companies (Miscellaneous Reporting) Regulations 2018 and confirms that when making decisions it acts in a way which promotes the success of the Company for the benefit of its members as a whole, and in doing so has regard (amongst other matters) to the following:

the likely consequences of any decision over the long term;the need to foster the Company’s business relationships with its suppliers;the desirability of the Company maintaining a reputation for high standards of business conduct; andthe need to act fairly as between members of the Company.

The Board also recognises the requirement under Section 414c of the Companies Act 2006 to detail information about environmental matters (including the impact of the Company’s business on the environment), employee, human rights, social and community issues, including information about any policies it has in relation to these matters and effectiveness of these policies.

Given the size and nature of the Company’s activities and the fact that it has no full-time employees and only four non-executive directors, the Board considers there is limited scope to develop and implement social and community policies. However, the Company recognises the need to conduct its business in a manner responsible to the environment where possible.

Going Concern

In accordance with FRC Guidance for directors on going concern and liquidity risk the directors have assessed the prospects of the Company having adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements. The directors took into account the nature of the Company’s business and Investment Policy, its risk management policies, the diversification of its portfolio, the cash holdings and the liquidity of non-qualifying investments. The Company’s business activities, together with factors likely to affect its future development, performance and position including the financial risks the Company is exposed to are set out in the Strategic Report on page 6 and in note 22 to the accounts.

As a consequence, the directors have a reasonable expectation that the Company has sufficient cash and liquid investments to continue to operate and that the Company will be able to manage its business risks successfully and meet its liabilities as they fall due. Thus, the directors believe it is appropriate to continue to adopt the going concern basis, as also disclosed in the Corporate Governance report on page 18, in preparing the financial statements.

Auditors

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

Statement of disclosure to auditors

So far as the directors are aware:

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

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

By Order of the Board

Geoffrey Gamble 29 April 2020

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 included in the AGM Notice, but as mentioned in the letter accompanying that Notice, shareholders may not attend the AGM this year because of the social distancing measures required by the Government because of the coronavirus crisis, and therefore shareholders can only vote on this measure by using the Proxy forms at the end of this Report & Accounts.

Directors’ remuneration policy

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

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

Directors’ remuneration (audited)

None of the directors received any remuneration from the Company during the year under review, with the exception of the chairman, who received a fee of £5,000 (2018: £5,000). No other emoluments or pension contributions were paid by the Company to, or on behalf of, any director. None of the directors has a service contract with the Company. It is expected that, with the exception of the chairman, the directors will continue not to receive any remuneration for their services in the forthcoming years.

Performance

The directors consider that the most appropriate measure of the Company’s performance is its Cumulative Value of Shareholder Investment (net asset value plus cumulative dividends). The Company’s Cumulative Value of Shareholder Investment at 31 December 2018 and 31 December 2019 is set out in the Financial Summary on page 1.

Total shareholder return

[Graph omitted ]

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

By Order of the Board

Geoffrey Gamble 29 April 2020

Corporate Governance

The directors support the relevant principles of the UK Corporate Governance Code issued in July 2018 by the Financial Reporting Council, being the principles of good governance and the code of best practice as set out in the Main Principles of the Code annexed to the Listing Rules of the Financial Conduct Authority.

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

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

Going Concern

Bearing in mind that the assets of the Company consist mainly of marketable securities, the directors are of the opinion that at the time of approving the accounts, the Company has adequate resources to continue in operational existence for the foreseeable future. In addition the Company has no employees and therefore its operations are not impacted by the recent/ongoing Covid-19 pandemic. For this reason, they continue to adopt the going concern basis in preparing the accounts. In coming to this conclusion the directors have concluded that the Company’s going concern status would only be at threat if (i) the value of its portfolio declined by more than 95% from its value (whether from Covid-19 or any other reason) as at 31 March 2020 of £1.6m (excluding cash of £35k), and (ii) that it could not dispose of any of its portfolio during or after such a decline in value, and (iii) that it could not reduce its current cost base. Such a set of circumstances would, in the Board’s opinion, be very unlikely.

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 quarter of the directors are subject to re-election at each AGM by rotation, except in the AGM following the appointment of a new director when that new director’s appointment will also be subject to shareholder approval.

During the year the following were held:

2 full board meeting	1 Audit Committee meeting
All members attended the meetings.	All members attended the meeting.

All directors either had relevant experience with quoted companies prior to their appointment or had a good knowledge base of the rules and regulations concerning a director’s responsibilities with listed companies and it was therefore not thought necessary to provide further training in respect of their obligations and duties.

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

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

The Board believes that it presents a balanced and understandable assessment of the Company’s position and prospects. The Audit Committee meets at least once a year. Under the chairmanship of a non-executive director, its membership comprises all the non-executive directors. During the year the Audit Committee was chaired by Mr Gamble. The Audit Committee reviews the accounts and is reported to by the external auditors. The audit committee did not identify or consider any significant issues relating to the financial statements as substantially all the investments are valued by reference to publicly quoted prices. Further, the Audit Committee keeps under review the cost effectiveness, independence and objectivity of the auditors. 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 Audit Committee is satisfied with the performance of UHY Hacker Young and recommends the services of UHY Hacker Young to the shareholders.

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.

Due to the current coronavirus pandemic and the consequent Government’s guidelines, shareholders may not attend the forthcoming AGM. Shareholders may this year submit any questions regarding the Company to the email address provided in the Notice of the AGM and the Proxy forms at the end of this Report & Accounts.

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.

Financial Reporting

The directors’ statement of responsibilities for preparing the financial statements is set out on page 20, and a statement by the auditors about their reporting responsibilities is set out in the Auditors’ Report on page 27.

Internal control

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

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

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

Compliance statement

The Listing Rules require the Board to report on compliance with the Governance Code provisions throughout the accounting year. The Comply or Explain directions of the Governance Code does however acknowledge that some provisions may have less relevance for investment companies. With the exception of the limited items outlined below, the Company has complied throughout the accounting year to 31 December 2019 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 four independent directors, as defined by the Governance Code issued in July 2018. The board consider that Messrs. Gamble, Riley, Barnard and Cameron-Mowat are independent in character and judgement and there are no relationships or circumstances which are likely to affect, or could appear to affect the directors’ judgement. The Board considers that all directors have sufficient experience to be able to exercise proper judgement within the meaning of the Governance Code.

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

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

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

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

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

Statement of directors’ responsibilities

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

-select suitable accounting policies and apply them consistently;

-make judgements and estimates that are reasonable and prudent;

-state whether applicable accounting standards have been followed; and

-prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for ensuring that proper accounting records are kept, which disclose with reasonable accuracy at any time the financial position of the company, enabling them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for the company’s system of internal control, for safeguarding the assets of the company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Responsibility statement

The directors confirm that to the best of their knowledge:

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

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

3. the directors consider that the annual report and financial statements are fair, balanced and understandable, providing appropriate information to shareholders to assess the performance, business model and strategy of the Company and therefore the Board recommends the approval (by proxy) of the financial statements at the forthcoming AGM.

By Order of the Board

Geoffrey Gamble 29 April 2020

Independent Auditors’ Report to the members of New Century AIM VCT 2 plc

Opinion

We have audited the Financial Statements of New Century AIM VCT 2 Plc for the year ended 31 December 2019, which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow Statement and the related notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting standard applicable in the UK and Republic of Ireland”.

In our opinion the financial statements:

give a true and fair view of the state of the Company's affairs as at 31 December 2019 and of the Company's return for the year then ended;have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; andhave been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to principal risks, going concern and viability statement

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

the disclosures in the Annual Report set out on pages 41 to 42 that describe the principal risks and explain how they are being managed or mitigated;the directors’ confirmation set out on page 7 in the Annual Report that they have carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity;the directors’ statement set out on page 14 of the Directors’ Report and on page 18 in the Corporate Governance Report about whether the directors considered it appropriate to adopt the going concern basis of accounting in preparing the Financial Statements and the Directors’ identification of any material uncertainties to the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the Financial Statements;whether the directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit; orthe directors’ explanation set out on page 7 in the Strategic Report as to how they have assessed the prospects of the Company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters	How the matter was addressed in the audit
Valuation of Investments and recognition of realised gains and losses   The investment portfolio and associated realised and unrealised gains and losses is the key driver to the financial performance of the Company. Due to the nature of the Company’s business there is an inherent risk that if incorrectly valued this will have the greatest impact on both the income statement and balance sheet.   The investment portfolio at the year-end had a carrying value of £2,252,544.	Our audit work included, but was not restricted to:   Testing the value of the year-end investments by reference to market price information at the year-end.   Agreeing the purchase and sale of investments to contract notes and cash movements on a sample basis.   Recalculating the realised gains and losses on the sale of investments for both the individual transactions on a sample basis and for the total portfolio.   Checking the movement in unrealised gains for arithmetical accuracy and validated by reviewing the opening costs to prior year balances and purchases on a sample basis.   The portfolio is maintained by the investment manager in accordance with the investment management agreement. We agreed the investment portfolio to a signed confirmation provided by the investment advisor detailing each investment, the cost and market price.   The Company's accounting policy on fixed asset investments held at fair value through profit or loss is shown in note 4 to the financial statements and related disclosures are included in note 12.     Key observations Our testing did not identify any material misstatements in the valuation of the Company’s investment portfolio as at the year end.
Compliance with the VCT rules   Compliance with the VCT rules is necessary to maintain the VCT status and associated tax benefits.	Our audit work included, but was not restricted to:   Testing the twelve conditions for maintaining approval as a VCT as set out by HMRC. Each of the conditions was reviewed in turn in order to assess whether it had been met as at the year-end.   Key observations Our testing did not identify any breaches of the VCT rules. We also reviewed the correspondence from the external VCT Adviser and did not identify any instances of non-compliance to the VCT rules.

Our application of materiality

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

We also determine a level of performance materiality which we use to determine the nature, timing and extent of testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole.

We determined materiality for the Financial Statements as a whole to be £45,500. In determining this we based our assessment on a key indicator, being 2% of gross assets of the Company. This benchmark is considered the most appropriate because, gross asset, which primary comprise the Company’s investment portfolio, are considered to be the key driver of the Company’s total return performance and form part of the net asset value calculation being the performance measure investors use to assess the Company’s performance.

On the basis of our risk assessment, together with our assessment of the Company’s control environment, our judgement is that performance materiality for the Financial Statements should be 75% of materiality, being £34,125.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £2,275, which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

An overview of the scope of our audit

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

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

The audit testing included substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls and the management of specific risks.

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

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

The objectives of our audit are to identify and assess the risks of material misstatement of the financial statements due to fraud or error; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud or error; and to respond appropriately to those risks. Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK).

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

We obtained an understanding of the legal and regulatory frameworks applicable to the Company and industry in which it operates. We determined that the following laws and regulations were most significant: FRS102, Companies Act 2006, UK Corporate governance code, taxation laws and VCT Rules.We understood how the Company is complying with those legal and regulatory frameworks by, making inquiries to the investment manager, administrators and audit committee. We corroborated our inquiries through our review of board minutes and papers provided to the Audit Committee.We assessed the susceptibility of the Company financial statements to material misstatement, including how fraud might occur. Audit procedures performed by the engagement team included:

- identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud;

- understanding how those charged with governance considered and addressed the potential for override of controls or other inappropriate influence over the financial reporting process;

- identifying and testing journal entries, in particular any journal entries posted with unusual account combinations;

- assessing the extent of compliance with the relevant laws and regulations as part of our procedures on the related financial statement item.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, set out on pages 6 to 21, including the Strategic Report, the Directors’ Report, the Directors’ Remuneration Report and the Corporate Governance Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:

Fair, balanced and understandable set out on pages 20 and 21 – the statement by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; orAudit committee reporting set out on page 18 – the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee is materially inconsistent with our knowledge obtain in the audit; orDirectors’ statement of compliance with the UK Corporate Governance Code set out on pages 19 and 20 – the parts of the directors’ statement required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006;the information given in the Strategic Report and the Directors' Report for the financial year for which the accounts are prepared is consistent with the financial statements.the Strategic Report in the Directors’ Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept, or returns adequate for our audit have not been reviewed from branches not visited by us; orthe financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; orcertain disclosures of directors’ remuneration specified by law are not made; orwe have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the statement of directors’ responsibilities on page 20, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

Other matters which we are required to address

We were appointed by New Century Aim VCT2 Plc in 2008 and subsequently re-appointed following a tender process on 27 March 2018. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 13 years.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Daniel Hutson (Senior statutory auditor)for and on behalf ofUHY Hacker YoungChartered AccountantsStatutory Auditors

Quadrant House4 Thomas More SquareLondon, E1W 1YW29 April 2020

Statement of Comprehensive Income(incorporating the revenue account) for the year to 31 December 2019

			Year ended31 December 2019						Year ended31 December 2018
	Notes		Revenue£’000		Capital£’000		Total£’000		Revenue£’000		Capital£’000		Total£’000
Gains/(losses) on investments
- realised			-		209		209		-		121		121
- unrealised			-		42		42		-		(850)		(850)
Income	5		35		-		35		46		-		46
Investment management fee	6		(6)		(18)		(24)		(8)		(22)		(30)
Other expenses	7		(52)		-		(52)		(52)		-		(52)
Return/(loss) on ordinary activities before taxation			(23)		233		210		(14)		(751)		(765)
Tax charge on ordinary activities	9		-		-		-		-		-		-
Return/(loss) on ordinary activities after taxation			(23)		233		210		(14)		(751)		(765)
Return per ordinary share (pence)	11		(0.51)		5.06		4.55		(0.31)		(16.30)		(16.61)

The notes on pages 33 to 44 form an integral part of these financial statements.

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

Balance Sheetat 31 December 2019

	Note	As at31 December 2019 £’000		As at 31 December 2018 £’000
Fixed assets
Investments	12		2,253		2,214
Current assets
Debtors	15		45		31
Current liabilities
Creditors: amounts falling due within one year	16		(16)		(16)
			2,282		2,229
Capital and reserves
Called up share capital	17		461		461
Share premium			57		57
Capital Redemption Reserve			171		171
Capital reserve-distributable			3,440		3,440
Capital reserve – realised			(866)		(1,185)
Capital reserve – unrealised			(1,002)		(916)
Revenue reserve			21		201
Total equity shareholders’ funds			2,282		2,229
Net asset value per ordinary share	18		49.5p		48.4p

The financial statements on pages 29 to 44 were approved by the Board of Directors on 29 April 2020 and were signed on its behalf by:

Geoffrey Gamble

Chairman

The notes on pages 33 to 44 form an integral part of these financial statements.

Company’s registered number: 06054576

Statement of Changes in Equityat 31 December 2019

		Called-up sharecapital		Sharepremiumaccount		Capitalredemptionreserve		Capitaldistributable		Capitalrealised		Capitalunrealised		Revenuereserve		Total
		£’000		£’000		£’000		£’000		£’000		£’000		£’000		£’000
As at 01/01/19		461		57		171		3,440		(1,185)		(916)		201		2,229
Realised gains ondisposals		-		-		-		-		209		-		-		209
Unrealised(losses)/gains		-		-		-		-		-		42		-		42
Transfer ofunrealised gain torealised on disposalof investment		-		-		-		-		128		(128)		-		-
Net revenue beforetax		-		-		-		-		-		-		(23)		(23)
Capital element ofinvestmentmanagement fee		-		-		-		-		(18)		-		-		(18)
Dividends paid		-		-		-		-		-		-		(157)		(157)
As at 31/12/19		461		57		171		3,440		(866)		(1,002)		21		2,282
As at 01/01/18		461		57		171		3,440		(1,537)		187		367		3,146
Realised gains ondisposals		-		-		-		-		121		-		-		121
Unrealised(losses)/gains		-		-		-		-		-		(850)		-		(850)
Transfer ofunrealised gain torealised on disposalof investment		-		-		-		-		253		(253)		-		-
Net revenue beforetax		-		-		-		-		-		-		(14)		(14)
Capital element ofinvestmentmanagement fee		-		-		-		-		(22)		-		-		(22)
Dividends paid		-		-		-		-		-		-		(152)		(152)
As at 31/12/18		461		57		171		3,440		(1,185)		(916)		201		2,229

The notes on pages 33 to 44 form an integral part of these financial statements.

Cash Flow Statementfor the year to 31 December 2019

	Note	As at31 December 2019 £’000		As at 31 December 2018 £’000
Cash flow from operating activities
Cash outflow from operations	21		(76)		(84)
Net cash outflow from operating activities			(76)		(84)
Cash flows from investing activities
Investment income			35		46
Net cash from investing activities			35		46
Cash flows from financing activities
Sale of investments			700		572
Purchase of investments			(488)		(388)
Dividend paid			(157)		(152)
Net cash from financing activities			55		32
Net increase/(decrease) in cash and cash equivalents			14		(6)
Cash and cash equivalents at thebeginning of year			31		37
Cash and cash equivalents at the end ofyear (held by Investment Manager)			45		31

The notes on pages 33 to 44 form an integral part of these financial statements.

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

Notes to the Financial Statementsfor the year to 31 December 2019

1. Company information

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

4th Floor50 Mark LaneLondon EC3R 7QR

New Century AIM VCT2 PLC is a Venture Capital Trust established under the legislation introduced in the Finance Act 1995. The Company’s principal objective is to achieve long term capital growth and to pay tax free dividends when appropriate through investment in a diversified portfolio of qualifying companies primarily quoted on AIM.

2. Basis of preparation

The financial statements have been prepared in accordance with applicable United Kingdom law and accounting standards and with the Financial Reporting Council’s Financial Reporting Standard FRS 102 and with the Statement of Recommended Practice for Investment Companies re-issued by the Association of Investment Companies in October 2018.

Going Concern basis – on the basis that the assets of the Company consist mainly of marketable securities, the directors are of the opinion that at the time of approving the accounts, the Company has adequate resources to continue in operational existence for the foreseeable future. This is because the directors have a reasonable expectation that the Company has sufficient cash and liquid investments to continue to operate and that the Company will be able to manage its business risks successfully and meet its liabilities as they fall due. Thus, the directors believe it is appropriate to continue to adopt the going concern basis, as also disclosed in the Corporate Governance report on page 18, in preparing the financial statements.

The financial statements are presented in Sterling.

3. Significant estimates and judgements

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

4. Accounting policies

Investments

The Company’s principal financial assets are its investments and the policies in relation to those assets are set out below.

Purchases and sales of investments are recognised in the Financial Statements at the date of the transaction (trade date).

These investments will be managed and their performance evaluated on a fair value basis and information about them is provided internally on that basis to the Board. Accordingly, as permitted by FRS 102, the investments are measured as being fair value through profit or loss on the basis that they qualify as a group of assets managed, and whose performance is evaluated, on a fair value basis in accordance with a documented investment strategy. The Company's investments are measured at subsequent reporting dates at fair value.

4. Accounting policies (continued)

Investments (continued)

In the case of investments quoted on a recognised stock exchange, fair value is established by reference to the closing bid price on the relevant date or the last traded price, depending upon convention of the exchange on which the investment is quoted. In the case of AIM quoted investments this is the closing bid price. In the case of unquoted investments, fair value is established by using measures of value such as the price of recent transactions, earnings or revenue multiples, discounted cash flows and net assets. These are consistent with the IPEV 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.

In the preparation of the valuations of assets the Directors are required to make judgements and estimates that are reasonable and incorporate their knowledge of the performance of the investee companies. 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.

Fair value hierarchyParagraph 34.22 of FRS 102 regarding financial instruments that are measured in the balance sheet at fair value requires disclosure of fair value measurements dependent on whether the stock is quoted and the level of the accuracy in the ability to determine its fair value. The fair value measurement hierarchy is as follows:

For quoted investments:Level 1: quoted prices in active markets for an identical asset. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held is the bid price at the Balance Sheet date.

Level 2: where quoted prices are not available (or where a stock is normally quoted on a recognised stock exchange that no quoted price is available), the price of a recent transaction for an identical asset, providing there has been no significant change in economic circumstances or a significant lapse in time since the transaction took place. The Company held no such investments in the current or prior year.

For investments not quoted in an active market:Level 3: the fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. Although the Company held some unquoted investments during the year, their values have been written down and they have no value in the portfolio as at 31 March 2020.

There have been no transfers between these classifications in the year (2018: none). The change in fair value for the current and previous year is recognised through the profit and loss account.

4. Accounting policies (continued)

Investments (continued)

Current asset investmentsNo current asset investments were held at 31 December 2019 or 31 December 2018. Should current assets be held, gains and losses arising from changes in fair value of investments are recognised as part of the capital return within the Income Statement and allocated to the capital reserve - gains/(losses) on disposal.

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

Income

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

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

Expenses

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

Taxation

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

5. Income

	Year ended 31 December 2019 £’000		Year ended 31 December 2018£’000
Income
Dividends from UK companies		35		46
Bank interest		-		-
Total income		35		46

All of the Company’s income has been generated in the United Kingdom from dividend income from its investment portfolio

6. Investment management fees

		Year ended 31 December 2019			Year ended 31 December 2018
		Revenue £’000	Capital£’000		Revenue £’000	Capital£’000
Investment management fees		6	18		8	22

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

Under the terms of the investment management agreement, MDB is entitled to a fee (exclusive of VAT) equal to 1% per annum of the net assets of the Company. The fee is calculated quarterly in arrears based on the net assets at 31 March, 30 June, 30 September and 31 December. During the year ended 31 December 2019, the fee payable to MD Barnard & Company Limited equated to 1% per annum of net assets. No performance fee is payable.

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

7. Other expenses

				Year ended31 December2019£’000		Year ended 31 December2018£’000
Administrative and secretarial services					27	27
Auditors' remuneration					12	10
Regulatory fees					13	15
					52		52

8. Directors’ remuneration

The chairman received £5,000 remuneration in the year (2018: £5,000). No other remuneration has been paid or is payable for the year to 31 December 2019 or in respect of the prior year.

9. Tax charge on ordinary activities

			Year ended31 December 2019				Year ended31 December 2018
		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		(23)			233		(14)		(751)
Tax on above at the standard company rate of19% (2018: 19%)		(4)			44		(3)		(142)
UK dividends not subject to corporation tax		(7)			-		(9)		-
Realised (gains)/losses not taxable		-			(40)		-		(23)
Unrealised (gains)/losses not taxable		-			(8)		-		161
Non allowable expenses		-			-		-		-
Unutilised/(utilised) losses		11			4		12		4
Current tax charge for the year		-			-		-		-

The Company has unrelieved losses amounting to approximately £885,000 (2018: £809,000) which are available to carry forward for tax purposes which it can set off against future profits. No deferred tax asset has been recognised in respect of these losses in view of the Company’s history of losses recoverability is not sufficiently certain.

10. Dividends paid

	Year ended31 December 2019£’000		Year ended31 December 2018£’000
Final dividend paid in respect of previous year		157		152
		157		152

The directors do not propose a dividend in respect of the year ended 31 December 2019.

11. Return per ordinary share

The revenue loss, per ordinary share, is based on the net loss on ordinary activities after taxation of £23,277 (2018: loss of £14,197) and on 4,606,953 (2018: 4,606,953) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

The total return per ordinary share is based on a net profit after taxation of £209,780 (2018: loss of £764,966) and on 4,606,953 (2018: 4,606,953) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

12. Fixed asset investments at valuation

	As at 31 December 2019 £’000		As at 31 December 2018£’000
UK listed		95		113
AIM		2,158		2,095
Unlisted		-		6
		2,253		2,214

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

						Year ended 31 December 2019
							UKListed	AIM	Un-listed	Total
							£’000	£’000	£’000	£’000
Value at 1 January 2019							113	2,095	6	2,214
Purchases							-	488	-	488
Transfers							-	-	-	-
							113	2,583	6	2,702
less: Sales proceeds							(12)	(688)	-	(700)
							101	1,895	6	2,002
Realised period gains/(losses)							2	207	-	209
Unrealised holding gains/(losses)							(8)	56	(6)	42
Value at 31 December 2019							95	2,158	-	2,253
Cost at 31 December 2019							179	2,904	106	3,189

12. Fixed asset investments (continued)

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

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

	Year ended 31 December 2019 £’000		Year ended 31 December 2018£’000
Net realised gain on disposal		209		121
Net unrealised gains/(losses)		42		(850)
		251		(729)

13. Venture capital investments

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

14. Significant interests

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

15. Debtors

	As at 31 December 2019 £’000		As at 31 December 2018£’000
Uninvested funds with broker:
MD Barnard & Company Limited		45		31

16. Creditors

	As at31 December 2019£’000		As at 31 December 2018£’000
Trade creditors and accruals		16		16
		16		16

17. Share capital

	As at 31 December 2019£’000		As at 31 December 2018£’000
Authorised
25,000,000 ordinary shares of 10p each		2,500		2,500
Allotted, called up and fully paid
4,606,953 (2018: 4,606,953) ordinary shares of 10p each		461		461

18. Net asset value per share

Net asset value per share is based on net assets at 31 December 2019 of £2,282,030 (31 December 2018 of £2,228,886) and on 4,606,953 ordinary shares in issue at both those dates.

19. Performance incentive arrangements

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

20. Reserves

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

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

Capital redemption reserve relates to capital repurchased.

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

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

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

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

21. Notes to the cash flow statement

Net cash outflow from operating activities

			Year ended 31 December 2019 £’000				Year ended 31 December 2018 £’000
Operating activity
Profit/(loss) return on ordinary activities			210				(765)
Gains on sale of investments			(209)				(121)
Investment income			(35)				(46)
Unrealised (gains)/losses on investments			(42)				850
Increase/(decrease) in creditors			-				(2)
			(76)				(84)

Cash and cash equivalents

Cash and cash equivalents comprise £45,554 (2018: £30,833) of uninvested funds, held in a bank account with the investment manager.

22. Risk management and financial instruments

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

Market price risk

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

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

As an example of market price risk see note 27, the COVID-19 pandemic, which has caused a significant decline in the value of the Company’s investments during February and March of this year.

22. Risk management and financial instruments (continued)

Interest rate risk

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

Liquidity risk

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

Credit risk

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

Currency risk

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

Capital

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

The Company’s purpose and objective is the investment of its capital funds in listed investments, primarily those quoted on AIM with a view to securing capital appreciation over the long term.

There were no externally imposed capital requirements with which the Company had to comply during the year to 31 December 2019.

Financial assets

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

	Year ended 31 December 2019£’000		Year ended 31 December 2018£’000
Fixed rate		-		-
Non-interest bearing		2,253		2,214
		2,253		2,214

22. Risk management and financial instruments (continued)

Fixed rate assets	Year ended 31 December 2019£’000		Year ended 31 December 2018£’000
Weighted average interest rate		n/a		n/a
Weighted average years to maturity		n/a		n/a

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 at their bid prices (in accordance with the guidelines issued by the British Venture Capital Association), and these carrying values are considered to approximate the fair value of the investments. The fair values have also been determined in line with the fair value hierarchy as set out in FRS 102 11.27.

23. Financial assets and liabilities

	Year ended 31 December 2019 £’000	Year ended 31 December 2018 £’000
Financial assets measured at fair value through profit & loss	2,253	2,214
Financial assets measured at amortised cost	45	31
Financial liabilities measured at amortised cost	(16)	(16)

24. Related party transactions

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

One amount was payable to key management personnel during the year for £5,000 (2018: £5,000).

25. Capital commitments

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

26. Control

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

27. Post balance sheet events

COVID-19

The impact of COVID-19 on the UK stock market has been severe, and like most shocks it has had a disproportionate impact on the share prices of the smaller, less liquid, companies on AIM – which is the main market in which the Company invests. However, as explained in both the ‘Going Concern’ section of the Director’s Report on page 14 and the ‘Going Concern’ section of the Corporate Governance Report on page 18, this is manageable, both in terms of stock selection and in terms of available resources to meet the anticipated costs of the business for the foreseeable future.

As indicated in the Chairman’s Statement, the impact of COVID-19 has caused the value of the Company’s portfolio to decline by 25.9% between the value on the 31 December 2019 to the 3 April 2020 – with most of this decline occurring during the month of March 2020. This has led to the director’s deciding not to recommend a dividend for the Y/E December 2019, because to do so by selling shares at their current depressed levels does not make financial sense. However, realising the importance of tax-free income to the Company’s shareholders, this situation will be reviewed before the Interim results are announced in August 2020.

Shareholder information

For the year to 31 December 2019

The CompanyNew Century AIM VCT 2 PLC was incorporated on 16 January 2007. On 4 April 2007, the Company obtained a listing on the London Stock Exchange. A total of £5.745 million was raised (before expenses) through an offer for subscription of new ordinary shares at 100p. The Company has been approved as a Venture Capital Trust by the Inland Revenue.

The Investment Manager

New Century AIM VCT 2 PLC is managed by M D Barnard & Company Limited, an independent fund management company based in Laindon, Essex. M D Barnard & Company currently manages or advises private client funds and venture capital funds totalling approximately £25 million including New Century AIM VCT 2 PLC.

Venture Capital Trusts

Venture Capital Trusts (VCTs) were introduced in the Finance Act 1995 and are intended to provide a means whereby individual investors can invest in small unquoted trading companies in the UK, with incentives in the form of a number of tax benefits. From 6 April 2005, investors subscribing for new shares in a VCT have been entitled to claim income tax relief of 30% on their investment, irrespective of their marginal tax rate (up to a maximum investment of £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 VCT 2 has been approved as a VCT by HM Revenue and Customs. In order to maintain its approval the Company must comply with certain requirements on a continuing basis; in particular, at least 80% by value of the Company’s investments must comprise “qualifying holdings”. 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 Interim report for six months to 30 June 2020 Preliminary announcement of results for the year to 31 December 2020 Annual General Meeting 2021

18 June 2020 August 2020 April 2021 June 2021

Share price

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

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