Half-yearly Report
Baronsmead VCT 2 plc
Half Yearly Financial Report
31 March 2012
The Directors announce the unaudited half-yearly financial report for the six
months to 31 March 2012 as follows:-
Copies of the half yearly report can be obtained from the following website:
www.baronsmeadvct2.co.uk .
Investment Objective Baronsmead VCT 2 plc is a tax efficient listed company
which aims to achieve long-term investment returns for private investors,
including tax-free dividends.
Investment policy
â— To invest primarily in a diverse portfolio of UK growth businesses, whether
unquoted or traded on AIM.
â— Investments are made selectively across a range of sectors in companies that
have the potential to grow and enhance their value.
Dividend policy
The Board of Baronsmead VCT 2 aims to sustain a minimum annual dividend level
at an average of 5.5p per Ordinary Share, mindful of the need to maintain net
asset value. The ability to meet these twin objectives depends significantly on
the level and timing of profitable realisations and it cannot be guaranteed.
There will be variations in the amount of dividends paid year on year.
Since launch the average annual tax-free dividend paid to ordinary
shareholders, including the 2.5p interim dividend, has been 6.3p per share
(equivalent to a pre-tax return of 8.4p per share for a higher rate taxpayer).
For shareholders who claimed tax reliefs on initial subscription of 20 per
cent, 30 per cent or 40 per cent, their returns would have been higher.
Share price discount policy
The Company buys back its shares if, in the opinion of the Board, a repurchase
would be in the best interests of the Company's shareholders as a whole. Shares
are bought back through the market rather than directly from shareholders. This
minimises the number of shares bought back by the Company while maximising the
opportunity for investors to invest in the Company's existing shares.
Through the operation of the Company's share buy back policy the mid share
price averaged was at an average discount to NAV of approximately 10 per cent
in the two years to 31 March 2012. The difference between the buy and sell
price for the Company's shares averaged 1.1p over the same two year period.
Shareholder choice
The Board provides shareholders with a number of choices that enable them to
utilise their investment in Baronsmead VCT 2 in ways that best suit their personal
investment and tax planning, in a way that treats all shareholders equally.
• Fund raising | From time to time the Company seeks to raise additional funds
by issuing new shares. In January/February 2012, the Company's offer for subscription
to raise £4.135 million (£3.939 million after costs) was fully subscribed.
• Dividend Reinvestment Plan | The Company offers a Dividend Reinvestment Plan
which enables shareholders to purchase additional shares through the market in
lieu of cash dividends. Although no shares were acquired by participants in
this scheme during the six months to 31 March 2012, approximately 650,000
shares were bought in this way between January and September 2011.
• Buy back of shares | From time to time the Company buys its own shares
through the market in order to maintain a mid share price discount of
approximately 10 per cent to net asset value. In the six months to 31 March
2012, 224,913 shares were bought back representing 0.3 per cent of the shares
in issue at 31 March 2012 at a price which represented a 10.1 per cent discount
to the latest published net asset value (360,000 shares or 0.5 per cent of
shares in issue at 31 March 2011).
• Secondary market | The Company's shares are listed on the London Stock
Exchange and can be bought using a stockbroker or authorised share dealing
service in the same way as shares of any other listed company.
Approximately 70,000 shares were bought by third party purchasers in the six
months to 31 March 2012 (approximately 54,000 shares in 2011).
FINANCIAL HEADLINES
• +5.1% - Net asset value ("NAV") per share increased 5.1 per cent to 100.0p
before deduction of the interim dividend.
•2.5p - Interim dividend of 2.5p payable on 15 June 2012, for the six month
period to 31 March 2012.
•76.50p - Cumulative tax free dividends total 76.5p per share paid to
shareholders in the last 10 years, including the declared 2.5p dividend.
• 202.3p - NAV total return to shareholders over the last 10 years for every
100p invested. The Share price total return over the same period is 200.8p.
• £3.9m - Net proceeds raised in January/February 2012.
Performance Summary to 31 March 2012
Since
Total return * 6 month % 1 year % 3 years % 5 Years % 10 years % launch %
Net Asset Value†5.1 8.7 38.3 18.5 102.3 143.1
Share Price†1.3 8.8 40.5 20.3 100.8 137.7
FTSE All-Share 15.0 1.4 67.9 9.5 65.5 67.0
* Source: ISIS EP LLP and AIC.
†These returns for Baronsmead VCT 2 ignore upfront tax relief and the impact
of receiving dividends tax free.
Cash Returned to Shareholders
The table below shows the cash returned to shareholders dependent on their
subscription cost, including their income tax reclaimed on subscription.
Income Net Cumulative Gross
Subscription tax cash dividends Net equivalent
annual
price reclaim invested paid* yield± yieldâ€
Year subscribed p p p p % %
1998 (April) - 100.0 20.0 80.0 88.4 7.9 10.5
Ordinary
1999 (May) - 102.0 20.4 81.6 84.9 8.1 10.8
Ordinary
2000 (February)-
Ordinary 137.0 27.4 109.6 81.7 6.2 8.2
2000 (March) -
Ordinary 130.0 26.0 104.0 81.7 6.5 8.7
2004 (October) - C 100.0 40.0 60.0 39.7 8.8 11.7
2009 (April) 91.6 27.5 64.1 20.5 10.7 14.2
C Share dividend calculated using conversion ratio of 0.9657 which is the rate
the c shares were converted into Ordinary Shares.
* Includes interim dividend of 2.5p to be paid 15 June 2012.
± Represents the cumulative dividends paid expressed as an annualised
percentage of the net cash invested.
†The gross equivalent yield had the dividends been subject to higher rate tax
(32.5 per cent. on dividend income).The new additional rate of tax on dividend
income of 42.5 per cent which came into force from the 2010/11 tax year for those
shareholders who earn more than £150,000 has not been included. For those shareholders
who would otherwise pay this additional rate of tax on dividends, the future gross
equivalent yield will be higher than the figures shown.
CHAIRMAN'S STATEMENT
I am delighted to report growth of 5.1 per cent in Net Asset Value per share to
100p a share. The increase was attributable principally to a strong recovery in
the valuation of the AIM portfolio following a decline in the latter half of 2011.
We are paying an interim dividend of 2.5p which is well covered by profitable
realisations in recent years.
£3.9 million (net of costs) was raised by the Company in January and February
2012.
Results
Before taking account of dividends the Net Asset Value increased to 100p a
share, up 5.1 per cent from 95.15p. The interim dividend of 2.5p per share is
being paid largely from the profits realised from the sale of investments.
With the proposed tax free interim dividend of 2.5p, the current dividend yield
based on a mid share price of 87.38p is 7.2 per cent after tax (equivalent to
9.6 per cent for a higher rate taxpayer). This compares very favourably with
the low rates of interest generally available in the marketplace.
Pence
per
ordinary
share
NAV as at 1 October 2011
(after second interim dividend of 4.50p deducted) 95.15
Valuation uplift (5.1 per cent) 4.85
NAV as at 31 March 2012 100.0
Less Interim dividend payable on 15 June 2012 (2.50)
97.50
All areas of the portfolio have improved during the six months. The gains have
been led by the quoted and Wood Street portfolios which increased by 13.4 per
cent and 8.1 per cent respectively, as the UK Small Cap sector was rerated from
January 2012, following the dip which occurred last autumn. The unquoted portfolio
increased in value by 4.4 per cent.
The most significant changes in the portfolio were the increases in the value
of Independent Living Services, a domiciliary care business in Scotland (£1.12 million),
and in IDOX, an AIM-traded software company (£0.86 million), offset by a provision of
£0.72 million against the investment in Empire World Trade, which supplies fruit to UK
supermarkets.
Long Term performance Based on previous shareholder surveys indicating that
most shareholders have "no intention to sell in the foreseeable future" the
Board has based its policies on long term sustainable performance. For that
reason we have set out the full performance record since the launch in April
1998. However we also recognise that whencomparisons are made with other investment
companies and investment products, the normal approach is to use ten year financial
summaries. For that reason the ten year record is set out under the Financial
Headlines above. However as our policy has always been to offer full disclosure
and transparency, the full 14 year record is set out on page 13 of the Half-yearly
Report as well as on our website www.baronsmeadvct2.co.uk.
Over the last ten years the cumulative tax free dividends paid to shareholders,
including proposed interim dividend of 2.5p, amount to 76.5p (88.4p since
inception). The NAV total return over ten years has been 202.3p for each 100p
invested (243.1p since inception) compared with 165.5p for the FTSE All-share
index (167.0p since launch). Based on the ten year average annual dividends
(7.7p) and the mid share price 87.38p the annual dividend yield is 8.8 per cent
(equivalent to 11.7 per cent for a higher rate taxpayer).
Portfolio review
Following the realisation of three investments, the total portfolio now
comprises seventy companies. The direction of travel showing trading and
profitability of these companies is recorded quarterly so that the Board can
monitor the health of the portfolio. At 31 March 2012, 80 per cent of companies
in the portfolio were progressing steadily or better.
The net assets of £72.2 million were invested as follows:
• Unquoted companies 42 per cent
• AIM-traded and other listed companies 29 per cent
• Wood Street Microcap Investment Fund 4 per cent
• Liquid assets or government securities 25 per cent
The largest unquoted investment, Nexus Vehicle Holdings and the largest AIM
investment, IDOX, represented 7.1 and 4.6 per cent of net asset value
respectively.
New Investment
During the six months to 31 March 2012 a total of £2.6 million was invested in
five new companies as well as in other small additions to the AIM portfolio.
The unquoted investment was into Independent Community Care Management ("ICCM")
based in Kettering. ICCM is a leading homecare provider to individuals with
complex long term health conditions.
The four new AIM-traded investments were in GB Group, Inspired Energy, Paragon
Entertainment and TLA Worldwide. The early gains in the value of these stocks are
encouraging, up 43 per cent on their subscription price by 31 March 2012.
Since the period end, £5 million has been invested into four unquoted companies
and three AIM-traded companies. 'Happy Days' is an established West Country chain
of children's nurseries based in Newquay, Cornwall. The three other unquoted investments
were into "acquisition" companies chaired by experienced operating partners with whom
ISIS has successfully worked in the recent past. These companies have been formed to
enable investment into established trading entities over the next two
years. The new AIM investments were in Dods, Inspired Energy and Zattikka.
Investment realisations
Three investments were realised.
• Unquoted - TVC Group for an undisclosed but profitable multiple (see below)
• AIM-traded
• Clarity Commerce Solutions continued to underperform and was sold for 60
per cent of its original cost of £0.05 million
• Colliers International UK (cost £0.5 million) was written off once its
trading activities had been sold for a relatively nominal amount.
TVC Group is a marketing communications agency, based in London, which
specialises in a content-driven approach to public relations and creative
services serving clients including Coca Cola, British Gas and Jaguar Landrover.
The investment in TVC Group was made in July 2008 and initially encountered
difficult trading conditions. By March 2010, the directors' valuation was at
25 per cent of cost as operating profits had fallen. The recovery since then
has been significant and credit goes to the management, supported by our Investment
Manager ISIS, for driving higher profitability. The final sale to the Economist
Group in February 2012 represents a fivefold gain in value from the earlier low
point less than three years previously.
The operating history and subsequent successful realisation of this investment
in TVC Group was not dissimilar to our experience with Hawksmere which
recovered from a significant deterioration in value to sell successfully in
2007. Hawksmere's CEO was Dominic Riley who presented at our 14th AGM in
January 2012. He is now an operating partner at ISIS and currently is Chairman
of two of our unquoted portfolio companies Kafévend Holdings and Valldata
Group.
VCT legislation
The 21 March 2012 Budget and subsequent Finance Bill confirmed a number of
changes to VCT legislation. Those which might affect the Company are below.
Annual £1 million limit
With effect from 6 April 2012, the annual limit of £1 million that a VCT can
invest in a qualifying investment in any tax year has been removed.
Investment limits
EU State Aid approval is still awaited for the following proposed changes to
the size limits for investments made after 5 April 2012:
• An increase in the employee limit to fewer than 250 employees;
• An increase in the size threshold of gross assets to no more than £15 million
before investment and £16 million immediately after; and
• An increase in the maximum annual amount that an individual company can
receive from all State Aid investment sources (including VCTs) in any 12 month
period to £5 million (not unfortunately £10 million as previously proposed).
Acquisition of shares
There is to be exclusion on the use of VCT and EIS funds for the acquisition of
shares in another company. The change is designed to help achieve continuing EU
State Aid approval, which prohibits State Aid from funding buyouts. This change
will apply only to VCT funds raised after 5 April 2012, and to EIS investments made
after that date.
The Manager remains in close contact with both its tax advisers and the AIC as
they discuss the VCT tax legislative changes with HM Revenue and Customs. In this
way, once the implications of any changes are known, ISIS can plan positive action
to fulfil the stated investment policy and sustain the quality of the investment
portfolio.
Website
The Company's website has recently been updated and is designed to provide
easier access to information about the Company. Please do visit the website at
the following location and your feedback will be most appreciated:
www.baronsmeadvct2.co.uk
Outlook
The outlook for the UK economy as a whole remains uncertain and many
commentators are anticipating relatively slow growth. However Baronsmead VCT 2
is well placed to tackle the current economic volatility and uncertainty with a
well diversified portfolio that is lowly geared. The pipeline of target
investment opportunities is strong and the Manager continues to find ambitious
UK Management teams with whom to invest.
Some relaxation of VCT regulation is welcome. However the Manager and the Board
believe that some aspects of the recent changes to legislation make investment
into faster growth SME companies more difficult and this is to the detriment of
job creation within the UK.
Clive Parritt
Chairman
18 May 2012
Table of Investments and Realisations
Investments in the six months to 31 March 2012
Book
cost
Company Location Sector Activity £'000
Unquoted investments
New
Independent Community Kettering Healthcare High acuity care for
Care Management & home based care users
Limited Education 1,346
Total unquoted investments 1,346
AIM-traded & listed investments
New
TLA Worldwide plc London Business Baseball sports 620
Services management and
marketing business
Inspired Energy plc Kirkham Business Energy Consultancy 200
Services focussed on corporate
customers
Paragon Entertainment London Healthcare Visitor attraction 200
Limited & business
Education
GB Group plc Chester TMT* ID verification and 150
data solutions
Follow on
FFastFill plc London TMT* Trading platform 62
software provider
Driver Group plc Rossendale Business Dispute resolution 61
Services
Accumuli plc Salford TMT* Managed IT security 6
Total AIM-traded & listed
investments 1,299
Total investments in the period 2,645
* Technology, Media and Telecommunications ("TMT").
Realisations in the six months to 31 March 2012
30
September Realised
profit/
First 2011 (loss) Overall
this
investment valuation period multiple
Company date £'000 £'000 return
Unquoted realisations
Full trade
TVC Group Limited sale Jul 08 766 509 ^
MLS Limited Loan repayment Jul 06 120 - 1.0
Total unquoted
realisations 886 509
AIM-traded & listed realisations
Clarity Commerce Full trade Oct 99 26 6 0.6
Solutions plc sale
Real Good Food Company Partial market
(The) plc sale Dec 03 110 28 0.4
Colliers International Written off Jul 01 27 (27) N/A
UK plc
Total AIM-traded & listed realisations 163 7
Total realisations in the period 1,049 516â€
^ Not disclosed.
†Proceeds of £8,000 were also received in respect of Getting Personal Limited,
which had been sold in the year ended 30 September 2011.
Summary Investment Portfolio
Investment Classification at 31 March 2012
By Sector* Per centage
Business Services 35%
Consumer Markets 17%
Financial Services 2%
Healthcare & Education 14%
Technology, Media & Telecommunications ("TMT") 32%
Total Assets* Per centage
Unquoted - loan stock 30%
Unquoted - ordinary and preference shares 12%
AIM, listed & collective investment vehicle 33%
Listed interest bearing securities & net current
liabilities 25%
Time Investments Held* Per centage
Less than 1 year 16%
Between 1 and 3 years 13%
Between 3 and 5 years 26%
Greater than 5 years 45%
* at 31 March 2012 valuation.
Summary Investment Portfolio
30 31 March % of
September Equity % of
2011 2012 held by Equity
held
Book valuation Valuation % of Baronsmead by
cost net all
Company Sector £'000 £'000†£'000 Assets VCT 2 plc funds*
Unquoted
Nexus Vehicle Business
Holdings Limited Services 2,367 5,627 5,124 7.1 12.6 57.4
CableCom TMT 1,381 3,686 3,883 5.4 10.6 48.0
Networking
Holdings Limited
Crew Clothing Consumer
Company Limited Markets 984 2,714 2,677 3.7 5.4 22.8
CSC (World) TMT 1,606 2,148 2,220 3.1 8.8 40.0
Limited
Fisher Outdoor Consumer 1,423 1,777 2,178 3.0 10.5 44.0
Leisure Holdings Markets
Limited
Kafévend Consumer
Holdings Limited Markets 1,252 2,039 2,148 3.0 15.8 66.5
Independent Healthcare 1,599 980 2,097 2.9 16.2 65.7
Living Services &
Limited Education
Valldata Group Business 1,616 1,616 1,745 2.4 8.9 40.6
Limited Services
Inspired Business 796 1,275 1,413 1.9 5.0 22.5
Thinking Group Services
Limited
Independent Healthcare 1,346 - 1,346 1.9 10.9 55.0
Community Care &
Management Education
Limited
MLS Limited TMT 411 1,011 1,041 1.4 5.3 22.5
Arcas Business 1,000 1,000 1,000 1.4 9.6 48.6
Investments Services
Limited
HealthTech Healthcare 1,000 1,000 1,000 1.4 9.6 48.6
Innovation &
Partners Limited Education
Quest Venture Business 1,000 1,000 1,000 1.4 9.6 48.6
Partners Limited Services
Playforce Business 1,033 512 512 0.7 9.7 44.0
Holdings Limited Services
Other 4,169 1,854 840 1.2
Investments
Total unquoted 22,983 28,239 30,224 41.9
AIM
IDOX plc TMT 1,038 2,440 3,300 4.6 3.2 9.6
Staffline Group Business 249 2,013 2,301 3.2 4.2 8.4
plc Services
Netcall plc TMT 869 854 1,176 1.6 4.1 20.4
Murgitroyd Group Business 319 777 948 1.3 3.1 6.2
plc Services
Escher Group TMT 614 614 921 1.3 2.1 10.6
Holdings plc
TLA Worldwide Business 620 - 775 1.1 4.9 24.3
plc Services
Jelf Group plc Financial 761 792 756 1.0 1.4 6.3
Services
Tasty plc Consumer 469 607 717 1.0 2.5 17.1
Markets
Accumuli plc TMT 339 384 569 0.8 3.7 20.9
Vianet Group plc Business 646 482 549 0.8 1.8 9.6
Services
FFastFill plc TMT 313 427 525 0.7 0.9 6.2
Sinclair IS Healthcare 524 446 450 0.6 0.4 2.4
Pharma plc &
Education
Driver Group plc Business 564 194 415 0.6 4.1 19.4
Services
Paragon Healthcare 200 - 413 0.6 3.1 17.6
Entertainment &
Limited Education
PROACTIS TMT 619 341 392 0.5 5.4 26.4
Holdings plc
Other 9,543 5,024 5,142 7.1
Investments
Total AIM 17,687 15,395 19,349 26.8
Listed
Vectura Group Healthcare 578 1,031 651 0.9 0.4 1.3
plc &
Education
Chime TMT 369 323 378 0.5 0.2 1.3
Communications
plc
Marwyn Financial 525 117 95 0.1 0.3 1.8
Management Services
Partners plc
Marwyn Value Financial 64 45 40 0.1 1.3 6.0
Investors Services
Limited
Total Listed 1,536 1,516 1,164 1.6
Listed interest
bearing
securities
UK T-Bill 02/04/ 9,297 - 9,297 12.8
12
UK T-Bill 30/04/ 8,298 - 8,298 11.5
12
BlackRock ICS 4,520 3,000 4,520 6.3
plc -
Institutional
Sterling
Liquidity Fund
JP Morgan 4,520 3,000 4,520 6.3
Liquidity Funds
-
Sterling
Liquidity Fund
Total listed 26,635 6,000 26,635 36.9
interest bearing
securities
Collective
investment
vehicle
Wood Street
Microcap
Investment Fund 2,525 2,863 3,095 4.3
Total collective
investment
vehicle 2,525 2,863 3,095 4.3
Total 71,366 54,013 80,467 111.5
investments
Net current
liabilities (8,302) (11.5)
Net assets 72,165 100.0
†The total investment valuation at 30 September 2011 per the table above does
not agree to the audited accounts due to the purchases and sales since that
date.
* All VCT funds managed by the same investment manager, ISIS EP LLP including
Baronsmead VCT 2.
Unquoted, AIM & Listed Portfolio Concentration Analysis as at 31 March
2012
Investment ranking Book cost Valuation % of
by valuation £'000 £'000 portfolio
Top Ten 13,515 27,673 54.5
11-20 7,975 10,620 20.9
21-30 5,427 5,557 11.0
31+ 15,289 6,887 13.6
Total 42,206 50,737 100.0
Independent Review Report to Baronsmead VCT 2 plc
Induction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
March 2012 which comprises the Income Statement, Reconciliation of Movement in
Shareholders' Funds, Balance Sheet and Statement of Cash Flows and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and Transparency Rules (''the DTR'') of the UK's Financial Services Authority
(''the UK FSA''). Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this 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 for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FSA. As
disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with UK Accounting Standards and applicable law (UK
Generally Accepted Accounting Practice). The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with the Statement Half-Yearly Financial Reports as issued by the UK
Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK and Ireland) and consequently does
not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 March 2012 is not prepared, in all
material respects, in accordance with the Statement Half-Yearly Financial
Reports as issued by the UK Accounting Standards Board and the DTR of the UK
FSA.
Catherine Burnet
for and on behalf of
KPMG Audit Plc
Chartered Accountants
Edinburgh
18 May 2012
Responsibility statement of the Directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance
with the Statement 'Half-yearly financial reports' issued by the UK Accounting
Standards Board;
• the Chairman's Statement (constituting the interim management report)
includes a fair review of the information required by DTR 4.2.7R of the
Disclosure and Transparency Rules, being an indication of important events that
have occurred during the first six months of the financial year and their
impact on the condensed set of financial statements;
• the Statement of Principal Risks and Uncertainties set out below is a fair
review of the information required by DTR 4.2.7R; and
• the financial statements include a fair review of the information required by
DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
By Order of the Board,
Clive Parritt
Chairman
18 May 2012
Unaudited Income Statement
For the six months to 31 March 2012
Six months to 31 March Six months to 31 March Year to 30 September
2012 2011 2011*
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Unrealised - 3,402 3,402 - 4,055 4,055 - 3,346 3,346
gains on
investments
Realised - 524 524 - 395 395 - 2,865 2,865
gains on
investments
Income 362 - 362 1,096 - 1,096 2,425 - 2,425
Investment (164) (492) (656) (163) (490) (653) (323) (970) (1,293)
management
fee
Other (203) - (203) (189) - (189) (368) - (368)
expenses
(Loss)/ (5) 3,434 3,429 744 3,960 4,704 1,734 5,241 6,975
profit on
ordinary
activities
before
taxation
Taxation on - - - (166) 166 - (379) 379 -
ordinary
activities
(Loss)/ (5) 3,434 3,429 578 4,126 4,704 1,355 5,620 6,975
profit on
ordinary
activities
after
taxation
Return per
share:
Basic (0.01p) 4.97p 4.96p 0.84p 6.04p 6.88p 1.98p 8.21p 10.19p
* These figures are audited.
Unaudited Reconciliation of Movement in Shareholders' Funds
For the six months to 31 March 2012
Six Six
months to months to Year to
31 March 31 March 30 September
2012 2011 2011*
£'000 £'000 £'000
Opening shareholders' funds 64,999 63,673 63,673
Profit for the period 3,429 4,704 6,975
Gross proceeds of share issues 4,135 2,121 2,111
Purchase of shares for treasury (191) (314) (813)
Expenses of share issues and buybacks (197) (97) (78)
Other costs charged to capital (10) - -
Dividends paid - (2,077) (6,869)
Closing shareholders' funds 72,165 68,010 64,999
* These figures are audited.
Notes
1. The unaudited interim results which cover the six months to 31 March 2012
have been prepared in accordance with applicable accounting standards and
adopting the accounting policies set out in the statutory accounts of the
Company for the year to 30 September 2011.
2. Return per share is based on a weighted average of 69,096,100 ordinary
shares in issue (30 September 2011 - 68,443,702 ordinary shares, 31 March 2011
- 68,331,711 ordinary shares).
3. Earnings for the six months to 31 March 2012 should not be taken as a guide
to the results of the full financial year to 30 September 2012.
4. During the six months to 31 March 2012 the Company purchased 224,913
ordinary shares to be held in treasury at a cost of £191,000. At 31 March 2012
the Company holds 8,698,819 ordinary shares in treasury. These shares may be
re-issued below Net Asset Value as long as the discount at issue is narrower
than the average discount at which the shares were bought back.
Excluding treasury shares, there were 72,167,952 ordinary shares in issue at 31
March 2012 (30 September 2011 - 68,315,278 ordinary shares, 31 March 2011 -
68,885,034 ordinary shares).
5. The interim dividend of 2.5p per share (2.5p capital) will be paid on 15
June 2012 to shareholders on the register on 1 June 2012. The ex-dividend date
is 30 May 2012.
6. On 2 November 2011, the Share premium account and Capital redemption reserve
were cancelled by an Order of Court following the passing of a Special
Resolution. The credit arising has been applied in crediting a Special reserve,
within the Capital reserve, which shall be able to be applied in any manner in
which the Company's profits available for distribution (as determined in
accordance with section 649 of the Companies Act, 2006) are able to be applied.
7. The financial information contained in this half-yearly report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The information for the year to 30 September 2011 has been extracted from
the latest published audited financial statements. The audited financial
statements for the year to 30 September 2011, which were unqualified, have been
filed with the Registrar of Companies. No statutory accounts in respect of any
period after 30 September 2011 have been reported on by the Company's auditors
or delivered to the Registrar of Companies.
8. In accordance with the Companies (Shareholder Rights) Regulations 2009
copies of the half-yearly report have been made available to shareholders and
are available from the Registered Office of the Company at 100 Wood Street,
London EC2V 7AN.
Unaudited Balance Sheet
As at to 31 March 2012
As at As at As at
31 31 30
March March September
2012 2011 2011
£'000 £'000 £'000*
Fixed assets
Unquoted investments 30,224 33,710 29,005
Traded on AIM 19,349 14,367 15,448
Listed on LSE 1,164 1,244 1,516
Traded on NYSE - 187 -
Collective investment vehicle - Wood Street 3,095 3,079 2,863
Microcap Investment Fund
Listed interest bearing securities 26,635 12,800 15,498
Investments 80,467 65,387 64,330
Current assets
Debtors 227 550 586
Cash at bank and on deposit 1,232 2,516 542
1,459 3,066 1,128
Creditors (amounts falling due within one year) (9,761) (443) (459)
Net current (liabilities)/assets (8,302) 2,623 669
Net assets 72,165 68,010 64,999
Capital and reserves
Called-up share capital 8,087 7,680 7,679
Share premium account 3,531 14,391 14,404
Capital redemption reserve - 9,254 9,254
Capital reserve 51,198 26,307 28,849
Revaluation reserve 9,100 9,087 4,559
Revenue reserve 249 1,291 254
Equity shareholders' funds 72,165 68,010 64,999
* These figures are audited
As at As at As at
31 March 31 March 30
September
2012 2011 2011*
Net asset value per share 100.00p 98.73p 95.15p
Number of shares in issue 72,167,952 68,885,034 68,315,278
Treasury net asset value per share 98.64p 97.51p 94.16p
Number of ordinary shares in issue 72,167,952 68,885,034 68,315,278
Number of ordinary shares held in 8,698,819 7,913,906 8,473,906
treasury
Number of listed ordinary shares 80,866,771 76,798,940 76,789,184
* These figures are audited.
Unaudited Statement of Cash Flows
For the six months to 31 March 2012
Six Six
months months Year
to to to
31 March 31 March 30
September
2012 2011 2011*
£'000 £'000 £'000
Net cash (outflow)/inflow from operating (90) 43 488
activities
Capital expenditure and financial investment (2,914) 951 3,792
Equity dividends paid - (2,077) (6,869)
Net cash outflow before financing (3,004) (1,083) (2,589)
Net cash inflow from financing 3,694 1,731 1,263
Increase/(decrease) in cash 690 648 (1,326)
Reconciliation of net cash flow to movement in
net cash
Increase/(decrease) in cash 690 648 (1,326)
Opening cash position 542 1,868 1,868
Closing cash position 1,232 2,516 542
Reconciliation of profit on ordinary activities before taxation to net cash
flow (outflow)/inflow from
operating activities
Profit on operating activities before taxation 3,429 4,704 6,975
Gains on investments (3,926) (4,450) (6,211)
Changes in working capital and other non-cash 407 (211) (276)
items
Net cash (outflow)/inflow from operating (90) 43 488
activities
*These figures are audited.
Principal Risks and Uncertainties
The Company's assets consist of equity and fixed interest investments, cash and
liquid resources. Its principal risks are therefore market risk, credit risk
and liquidity risk. Other risks faced by the Company include economic, loss of
approval as a Venture Capital Trust, investment and strategic, regulatory,
reputational, operational and financial risks. These risks, and the way in which
they are managed, are described in more detail under the heading Principal risks,
risk management and regulatory environment within the Business Review in the Company's
Annual Report and Accounts for the year to 30 September 2011. The Company's
principal risks and uncertainties have not changed materially since the date of
that report.
Related Parties
ISIS EP LLP ('the Manager') manages the investments of the Company. The Manager
also provides or procures the provision of secretarial, administrative and
custodian services to the Company. Under the management agreement, the Manager
receives a fee of 2.0 per cent per annum of the net assets of the Company. This
is described in more detail under the heading Management within the Report of
the Directors in the Company's Annual Report and Accounts for the year to 30
September 2011. During the period the Company has incurred management fees of
£656,000 and secretarial fees of £61,000 payable to the Manager.
Going Concern
After making enquires, and bearing in mind the nature of the Company's business
and assets, the Directors consider that the Company has adequate resources to
continue in operational existence for the foreseeable future. In arriving at
this conclusion the Directors have considered the liquidity of the Company and
its ability to meet obligations as they fall due for a period of at least
twelve months from the date that these financial statements were approved. As
at 31 March 2012 the Company held cash balances, investments in UK Gilts and
Money Market Funds with a combined value of £27,867,000. Cash flow projections
have been reviewed and show that the Company has sufficient funds to meet both
its contracted expenditure and its discretionary cash outflows in the form of
the share buyback programme and dividend policy. The Company has no external
loan finance in place and therefore is not exposed to any gearing covenants.
Shareholder Information and Contact Details
Shareholder Communication
Baronsmead
Baronsmead VCT 2's website is www.baronsmeadvct2.co.uk.
The Board has a policy of regular and open communication with shareholders
based around quarterly statutory reporting.
ISIS Equity Partners
The Manager for Baronsmead VCT 2 plc is ISIS EP LLP.
For information on asset allocations, dividend policies, investment process,
DRIP mechanism, share price movements, the share price discount and selling
shares please contact:
By email: michael.probin@isisep.com:margaret.barff@isisep.com
By telephone: Michael Probin 020 7506 5796; Margaret Barff 020 7506 5630.
Internet: www.isisep.com
For comparative performance data of Baronsmead VCT 2 and other generalist VCTs
please visit the AIC performance statistics page at: www.theaic.co.uk/
statistics-publications
Computershare
The Registrar for Baronsmead VCT 2 is Computershare Investors Services PLC. To
change the details held by Computershare in respect of your shareholding,
including change of address, bank account details and joining the DRIP, please
contact them as follows:
Baronsmeadshareholder helpline: 0870 703 0137
(calls charged at geographical and national rates)
The Baronsmead shareholder helpline is available on UK business days between
Monday and Friday, 8.30a.m. to 5p.m. If you wish to speak to someone please
press '0'. The automated self-service system is available 24 hours a day, 7
days a week. You will need your Shareholder Reference Number (SRN), which for
security reasons you should always keep confidential and is available on your
share certificate and dividend tax voucher, in order to:
• confirm the latest share price
• confirm your current share holding balance
• confirm payment history
• order a Change of Address, Dividend Bank Mandate or Stock Transfer Form
Managing online your own shareholding via the Investor Centre:
www.investorcentre.co.uk
Computershare's secure website, Investor Centre, enables shareholders to manage
their shareholding online. Using your SRN you will be able to do the following:
• Holding Enquiry - view balances, values, history, payments and reinvestments
• Payments Enquiry - view your dividends and other payment types
• Address Change - change your registered address
• Bank Details Update - choose to receive your dividend payments directly into
your bank account instead of by cheque
• e-Comms sign-up - choose to receive email notification when your shareholder
communications become available instead of paper communications
• Outstanding Payments - reissue payments using our online replacement service
• Downloadable Forms - including dividend mandates, stock transfer, dividend
reinvestment and change of address forms
• By email - web.queries@computershare.co.uk
Share Price
The Company's shares are listed on the London Stock Exchange. The mid-price of
the Company's shares is given daily in the Financial Times in the Investment
Companies section of the London Share Service. Share price information can also
be obtained from many financial websites.
Trading Shares
The Company's shares can be bought and sold in the same way as any other quoted
company on the London Stock Exchange via a stockbroker. As buying and selling
existing shares in VCTs is complex, Shareholders should seek to trade shares on
a "best execution" basis if appropriate.
The marketmakers in the shares of Baronsmead VCT 2 plc are:
Matrix Corporate Capital LLP 020 3206 7000 (the Company's broker)
Singer Capital Markets Limited 020 3205 7500
Winterflood Securities Limited 020 3400 0251
Financial Calendar
August Quarterly Fact Sheet to 30 June 2012
2012
November Results for the year to 30 September 2012 announced and annual report
2012 and accounts sent to shareholders
January Fifteenth Annual General Meeting
2013
Additional Information
The information provided in this report has been produced in order for
shareholders to be informed of the activities of the Company during the period
it covers. ISIS EP LLP does not give investment advice and the naming of
companies in this report is not a recommendation to deal in them.
Baronsmead VCT 2 plc is managed by ISIS EP LLP which is Authorised and
regulated by the FSA. Past performance is not necessarily a guide to future
performance. Stockmarkets and currency movements may cause the value of
investments and the income from them to fall as well as rise and investors may
not get back the amount they originally invested. Where investments are made in
unquoted securities and smaller companies, their potential volatility may
increase the risk to the value of, and the income from, the investment.
Corporate Information
Directors Registrar and Transfer
Office
Clive Parritt (Chairman) Computershare Investor
Services PLC
Howard Goldring* PO Box 82
Gillian Nott OBE‡ The Pavilions
Christina McComb Bridgwater Road
Bristol BS99 6ZZ
Secretary Tel: 0870 703 0137
ISIS EP LLP
Brokers
Registered Office Matrix Corporate Capital
LLP
100 Wood Street One Vine Street
London EC2V 7AN London W1J 0AM
Investment Manager Auditors
ISIS EP LLP KPMG Audit Plc
100 Wood Street Saltire Court
London EC2V 7AN 20 Castle Terrace
Edinburgh EH1 2EG
FPPE LLP (listed interest bearing securities only)
100 Wood Street Solicitors
London EC2V 7AN Martineau
No 1 Colmore Square
Investor Relations Birmingham B4 6AA
Michael Probin
020 7506 5796 VCT Status Adviser
PricewaterhouseCoopers
LLP
Registered Number 1 Embankment Place
03504214 London WC2N 6RH
* Chairman of the Audit Committee
‡ Chairman of the Management Engagement and
Remuneration Committee, the Nomination Committee
and is Senior Independent Director.
Website
www.baronsmeadvct2.co.uk
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