Final Results

Final Results

New Cent. Aim Vct 2

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

Company number: 06054576

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

Financial Summary

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

Details of Directors

Chairman’s Statement

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

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

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

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

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

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

Geoffrey Gamble 25 April 2019

Michael Barnard (Aged 68)

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

Geoffrey Gamble (Aged 60)

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

Peter William Riley (Aged 74)

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

Ian Cameron-Mowat (Aged 68)

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

Management and Administration

Registered Office		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 Barnard

Peter William Riley

Ian Cameron-Mowat

All directors are non-executive.

Audit Committee:

Geoffrey Gamble (Chairman)

Peter William Riley

Ian Cameron-Mowat

Strategic Report

Activities and status

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

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

Investment Manager’s Review

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

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

We sold or top sliced 7 shares.

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

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

Investment Objective

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

Principal risks and uncertainties

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

Environmental matters

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

Key performance indicators

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

Geoffrey Gamble 25 April 2019

Investment Portfolio

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

Investment Portfolio

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

Top Ten Investments

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

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

Directors’ Report

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

Results and dividend

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

Directors

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

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

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

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

Management

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

Substantial shareholdings

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

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

Acquisition of own shares

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

Structure of the company’s capital

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

Appointment of Directors

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

Creditor payment policy

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

Post balance sheet events

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

Auditors

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

Statement of disclosure to auditors

So far as the directors are aware:

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

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

By Order of the Board

Geoffrey Gamble 25 April 2019

Directors’ Remuneration Report

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

Directors’ remuneration policy

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

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

Directors’ remuneration (audited)

None of the Directors received any remuneration from the company during the year under review, with the exception of the chairman, who received a fee of £5,000 (2017: £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 2017 and 31 December 2018 is set out in the Financial Summary on page 1.

Total shareholder return

[Graph omitted ]

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

By Order of the Board

Geoffrey Gamble 25 April 2019

Corporate Governance

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

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

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

Going Concern

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

The Board

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

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

During the year the following were held:

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

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

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

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

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

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

Relations with shareholders

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

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

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

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

Financial Reporting

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

Internal control

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

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

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

Compliance statement

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

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

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

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

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

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

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

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

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

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

Statement of directors’ responsibilities

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

-select suitable accounting policies and apply them consistently;

-make judgements and estimates that are reasonable and prudent;

-state whether applicable accounting standards have been followed; and

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

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

Responsibility statement

The directors confirm that to the best of their knowledge:

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

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

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

By Order of the Board

Geoffrey Gamble 25 April 2019

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 2018 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity, the Cash Flow Statement and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the company's affairs as at 31 December 2018 and of the company's return for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

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

Conclusions relating to principal risks, going concern and viability statement

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

• the disclosures in the annual report set out on page 6 that describe the principal risks and explain how they are being managed or mitigated;
• the directors’ confirmation set out on page 18 in the annual report that they have carried out a robust assessment of the principal risks facing the company, including those that would threaten its business model, future performance, solvency or liquidity;
• the directors’ statement set out on page 18 in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements and the directors’ identification of any material uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
• whether the directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit;
• the directors’ explanation in the annual report as to how they have assessed the prospects of the company, over what period they have done so and why they consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.

Key audit matters

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

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

Key risks		Our approach taken to assess risks
The carrying value of the investments and the recognition of realised and unrealised 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 and has the greatest impact on both the income statement and balance sheet.		We tested the value of the year-end investments by reference to market price information at the year-end. The purchase and sale of investments were agreed to contract notes and cash movements on a sample basis. The realised gains and losses on the sale of investments were re-calculated for both the individual transactions on a sample basis and for the total portfolio. The movement in unrealised gains was checked 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.
Compliance with the VCT rules is necessary to maintain the VCT status and associated tax benefits.		Our work in respect of the compliance with the VCT rules involved testing the eleven conditions for maintaining approval as a VCT as set out by HMRC. Each of the conditions was tested in turn in order to assess whether it had been met as at the year-end.

Our application of materiality

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

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

We determined materiality for the financial statements as a whole to be £45,000. In determining this we based our assessment on an average of three key indicators, being the return before tax, the net assets and gross assets of the company. On the basis of our risk assessment, together with our assessment of the company’s control environment, our judgement is that performance materiality for the financial statements should be 75% of materiality, being £33,750.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £2,250 which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

An overview of the scope of our audit

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

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

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

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

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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

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

• Fair, balanced and understandable set out on page 18 – the statement by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the company’s performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
• Audit committee reporting set out on page 16 – the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee; or
• Directors’ statement of compliance with the UK Corporate Governance Code set out on page 17 and 18 – the parts of the directors’ statement required under the Listing Rules relating to the company’s compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

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

Matters on which we are required to report by exception

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

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

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

Responsibilities of directors

As explained more fully in the statement of directors’ responsibilities on page 18, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Auditor’s responsibilities for the audit of the financial statements

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

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

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

Other matters which we are required to address

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

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

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

Use of our report

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

Daniel Hutson (Senior statutory auditor)

for and on behalf of

UHY Hacker Young

Chartered Accountants

Statutory Auditors

Quadrant House

4 Thomas More Square

London, E1W 1YW

25 April 2019

Statement of Comprehensive Income

(incorporating the revenue account)

for the year to 31 December 2018

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

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

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

Balance Sheet

at 31 December 2018

		Note		As at 31 December 2018 £’000				As at 31 December 2017 £’000
Fixed assets
Investments		12				2,214				3,127
Current assets
Debtors		15				31				37
Current liabilities
Creditors: amounts falling due within one year		16				(16)				(18)
						2,229				3,146
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						(1,185)				(1,537)
Capital reserve – unrealised						(916)				187
Revenue reserve						201				367
Total equity shareholders’ funds						2,229				3,146
Net asset value per ordinary share		18				48p				68p

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

Geoffrey Gamble

Chairman

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

Company’s registered number: 06054576

Statement of Changes in Equity

at 31 December 2018

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

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

Cash Flow Statement

for the year to 31 December 2018

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

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

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

Notes to the Financial Statements

for the year to 31 December 2018

1. Company information

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

4th Floor

50 Mark Lane

London EC3R 7QR

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

2. Basis of preparation

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

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

The financial statements are presented in Sterling.

3. Significant estimates and judgements

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

4. Accounting policies

Investments

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

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

4. Accounting policies (continued)

Investments (continued)

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

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

Income

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

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

Expenses

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

Taxation

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

5. Income

		Year ended 31 December 2018 £’000				Year ended 31 December 2017 £’000
Other income
Dividends receivable				46				37

6. Investment management fees

		Year ended 31 December 2018				Year ended 31 December 2017
		Revenue £’000		Capital £’000		Revenue £’000		Capital £’000
Investment management fees		8		22		8		23

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

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

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

7. Other expenses

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

8. Directors’ remuneration

The chairman received £5,000 remuneration in the year (2017: £5,000). No other remuneration has been paid or is payable for the year to 31 December 2018 or in respect of the prior year.

9. Tax charge on ordinary activities

		Year ended 31 December 2018				Year ended 31 December 2017
		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		(14)		(751)		(23)		502
Tax on above at the standard company rate of 19% (2017: 19.25%)		(3)		(142)		(4)		(96)
UK dividends not subject to corporation tax		(9)		-		(7)		-
Non-deductible losses on investment		-		138		-		101
Non allowable expenses		-		-		-		-
Unutilised/(utilised) losses		12		4		11		(5)
Current tax charge for the year		-		-		-		-

The company has unrelieved losses amounting to approximately £809,000 (2017: £728,000) which are available to carry forward for tax purposes which it can set off against future profits. No deferred tax asset has been recognised in respect of these losses in view of the company’s history of losses.

10. Dividends

		Year ended 31 December 2018 £’000				Year ended 31 December 2017 £’000
Capital dividend paid				152				138
				152				138

On 22 March 2019 the directors proposed a dividend in respect of the year ended 31 December 2018 of £156,636 representing 3.40p per ordinary share.

11. Loss per ordinary share

The revenue loss, per ordinary share, is based on the net loss on ordinary activities after taxation of £14,197 (2017: £23,016) and on 4,606,953 (2017: 4,606,953) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

The total return per ordinary share is based on a net loss after taxation of £764,966 (2017: profit of £478,357) and on 4,606,953 (2017: 4,606,953) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

12. Fixed asset investments

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

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

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

12. Fixed asset investments (continued)

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

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

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

13. Venture capital investments

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

14. Significant interests

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

15. Debtors

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

16. Creditors

		As at 31 December 2018 £’000			As at 31 December 2017 £’000
Trade creditors and accruals			16			18
			16			18

17. Share capital

		As at 31 December 2018 £’000				As at 31 December 2017 £’000
Authorised
25,000,000 ordinary shares of 10p each				2,500				2,500
Allotted, called up and fully paid
4,606,953 (2017: 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 2018 of £2,228,886 (31 December 2017 of £3,145,881) and on 4,606,953 ordinary shares in issue at both those dates.

19. Performance incentive arrangements

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

20. Reserves

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

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

Capital redemption reserve relates to capital repurchased.

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

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

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

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

21. Notes to the cash flow statement

Net cash outflow from operating activities

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

Cash and cash equivalents

Cash and cash equivalents comprise £30,833 (2017: £36,958) of uninvested funds, held in a bank account with the investment manager.

22. Risk management and financial instruments

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

Market price risk

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

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

Interest rate risk

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

Liquidity risk

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

22. Risk management and financial instruments (continued)

Credit risk

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

Currency risk

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

Capital

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

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

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

Financial assets

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

		Year ended 31 December 2018 £’000				Year ended 31 December 2017 £’000
Fixed rate				-				-
Non-interest bearing				2,214				3,127
				2,214				3,127

Fixed rate assets		Year ended 31 December 2018 £’000				Year ended 31 December 2017 £’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.

22. Risk management and financial instruments (continued)

Fair values

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

23. Financial assets and liabilities

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

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 (2017: £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

On 22 March 2019 the directors proposed a dividend in respect of the year ended 31 December 2018 of £156,636 representing 3.40p per ordinary share.

Shareholder information

For the year to 31 December 2018

The Company

New Century AIM VCT 2 PLC was incorporated on 16 January 2007. On 4 April 2007, the company obtained a listing on the London Stock Exchange. A total of £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, 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		11 June 2019
Interim report for six months to 30 June 2019		August 2019
Preliminary announcement of results for the year to 31 December 2019		April 2020
Annual General Meeting 2020		June 2020

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

Share price

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

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