REG-New Cent. Aim Vct 2 Annual Financial Report
28/03/2024 07:00
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Annual Financial Report
Company number: 06054576
New Century AIM VCT 2 plc
31 December 2023
Shareholder Information
Audited Report and Accounts for the year to 31 December 2023
Financial Summary 1
Chairman's Statement 2
Details of Directors 3
Management and Administration 4
Directors 5
Strategic Report 6
Investment Portfolio 9
Top Ten Investments 12
Directors' Report 15
Directors’ Remuneration Report 19
Corporate Governance 21
Independent Auditor's Report 25
Statement of Comprehensive Income 33
Balance Sheet 34
Statement of Changes in Equity 35
Notes to the Financial Statements 36 - 45
Shareholder Information 46
Financial Summary
Year ended Year ended
31 December
31 December
2023
2022
(1.72) (1.80)
Revenue return per share (pence) for the year
(5.27) (32.01)
Total return per share (pence) for the year
2.50 2.50
Proposed dividends per share (pence)
39.60 47.62
Net asset value per share (pence)
70.06 75.58
Cumulative value of shareholder investment (net asset value plus cumulative
dividends per share) (pence)
2,207 2,413
Shareholders’ funds (£’000)
Chairman’s Statement
The Net Asset Value (NAV) of New Century AIM VCT2 plc (‘your fund’ or
‘the Company’) for the year decreased by 8.5% to £2.2m, (2022: £2.4m)
representing an NAV per share of 39.6p (2022: 47.62p), compared to the FTSE
AIM All-Share index which declined by 8.2% over the same period.
We recognise the importance of tax-free income to our shareholders and the
Board is therefore proposing that we pay a dividend of 2.5p per share (2022:
2.5p per share) in respect of the year ended 31 December 2023. A 2.5p dividend
represents a yield of 5.3% based on the fund’s mid-price of 47p on 31
December 2023.
The fund has made nine further qualifying investments in the period and we are
pleased with their operational progress. We made thirty-four sales (relating
to eighteen companies) where we either exited or top-sliced a holding.
2023 turned out to be another difficult year for the Alternative Investment
Market (‘AIM market’), particularly those in smaller companies. The
invasion of Ukraine by Russia continues and has lasted far longer than we
originally anticipated. We also had the regional banking crisis in the United
States in March 2022 which saw Silicon Valley Bank (SVB) fail and several
other US regional banks start to experience outflows of deposits as confidence
waned. We also had our own problems in Europe with Credit Suisse experiencing
difficulties resulting in the Swiss Regulator stepping in and UBS Bank taking
over Credit Suisse. In October 2023 we had the conflict in the Middle East
between Israel and Hamas, which is still continuing. The economy also remained
stronger than expected with inflation staying stubbornly high which was met by
Central Banks across the world raising interest rates which tightened the
availability of capital.
We have also witnessed many institutions experience redemptions which have put
pressure on many companies’ share prices as some companies’ shares have
been sold to meet such redemptions. This can be frustrating as a company may
indeed be performing strongly from an operational perspective but may still
nevertheless see downward pressure on its share price in the short term as,
due to a lack of liquidity in the Market, the selling of its shares causes a
disproportionate decline in its share price.
We hope that the effects that have caused some of the difficulties in 2023
will start to abate in 2024 as inflation has started to decline and we appear
to be near the top of the interest rate cycle, as some commentators are now
expecting interest rates to start declining from the middle of 2024. This
should prove to be positive for equity markets and therefore gives us some
optimism moving forwards.
We continue to invest in a wide spread of established companies across a
variety of sectors within the fund which should help us navigate the portfolio
through an uncertain economic and geopolitical outlook. Once we see a change
in sentiment towards smaller UK companies, we believe we will be poised to
benefit.
Geoffrey Gamble 27 March 2024
Details of Directors
Chairman - Geoffrey Gamble (Aged 65)
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
a Management Buy Out 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.
Michael Barnard (Aged 73)
Michael has been employed in stockbroking since 1971. In 1974 he became a
Member of the London 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
which he subsequently sold on 30 November 2017. Michael ceased to be a
director of the Company on 30 January 2024.
Ian Cameron-Mowat (Aged 73)
Ian has a BSc 1st degree in electronics and was involved in the early
development of computers at Burroughs Machines. He is currently a consultant
radiologist to a NHS Trust.
Simon Like (Aged 54)
Simon started his career working for Midland Bank, which later became HSBC
plc, and has been employed in stockbroking since 2001. Since then, Simon has
been managing client money and is one of the senior fund managers at Oberon
Investments Limited (Oberon).
John Beaumont (Aged 60)
After qualifying as a Chartered Accountant, John started his broking career in
1988. Since then he has worked for a variety of brokerage firms, ranging from
large to small. With extensive experience as a research analyst, he has also
been offering accounting services for some of these broking firms for the past
12 years. In particular, he has held positions as either a director or an
employee of Oberon since 2018. Additionally, on behalf of Oberon, has provided
accounting services to the Company since 2019. John was appointed as a
director of the Company on 29 January 2024.
Management and Administration
Registered Office Suite 5
7(th) Floor
50 Broadway
London
SW1H 0DB
Company Secretary Tricor Secretaries Limited
Suite 5
7(th) Floor
50 Broadway
London
SW1H 0DB
Registrar Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Solicitors Wedlake Bell LLP
71 Queen Victoria Street
London
EC4V 4AY
Investment Manager and Broker Oberon Investments Limited
1(st) Floor
12, Hornsby Square
Southfields Business Park
Basildon
SS15 6AD
Moore Kingston Smith LLP
6(th) Floor
Auditor
9 Appold Street
London
EC2A 2AP
Directors
Geoffrey Gamble (Chairman)
Michael David Barnard (ceased on 30/01/24)
Ian Cameron-Mowat
Simon Like
John Beaumont (appointed on 29/01/24)
All directors are non-executive.
Audit Committee:
Geoffrey Gamble (Chairman)
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 His
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 of
continuing to meet the qualifications for approval by His 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. The Company is
premium listed.
Investment Manager’s Review
Your fund’s NAV declined by 8.5% to £2.2m (2022: £2.4m), compared to the
FTSE AIM All Share index which declined by 8.2% over the same period. The net
asset value of the fund plus cumulative dividends per share declined by 7.3%
to 70.06p (2022: 75.58).
The fund has made nine further qualifying investments in the period, investing
in Aurrigo International plc, Cordel Group plc, Eden Research plc, Lifesafe
Holdings plc, Light Science Technologies plc, Rosslyn Data Technologies plc,
Skinbiotherapeutics plc and Tan Delta Systems plc.
The fund made thirty-four sales (relating to eighteen companies) where we
either exited or top-sliced a holding.
The war in the Ukraine, that impacted the economic environment throughout
2022, has continued for far longer than we had anticipated. That said, the
disruption with supply chains and the rise in energy costs started to ease as
the year progressed. The failure of Silicon Valley Bank followed by several US
regional banks and Credit Suisse spooked stock markets in March 2023 and since
then markets have had to contend with the ongoing issues in the Middle East
with the troubles in Israel and Gaza. Inflation also remained stubbornly high,
for longer than initially anticipated, resulting in US interest rates
remaining higher for longer. This had implications for risk assets globally.
In the UK, although the economy proved to be stronger during 2023 than
forecast, inflation was disappointingly high, leading the Bank of England to
make a series of interest rate hikes and then keeping rates pegged at these
higher levels. The UK stock market, especially in smaller and micro-cap
companies, witnessed many institutions experience redemptions which adversely
affected many companies’ share prices. Looking forward, as inflationary
pressures have eventually eased, the expectation is for interest rates to
start being reduced from the middle of 2024 which we believe will be
beneficial for equities in general and growth stocks in particular.
That said, your fund has a diverse spread of investments across many different
sectors to give it good diversification, although the fund (like all VCT
funds) is restricted from investing in most energy and mining companies which
have been strong performing sectors in the period.
We are cautiously optimistic for the year ahead as inflationary pressures
continue to ease. This coupled with expectations that interest rates will
start to decline later in 2024 should be beneficial for equities. Liquidity in
many small companies remains fragile, as is usual following a bear market, but
should micro-cap stocks start to become more attractive to investors,
liquidity will return and the depressed valuations of many companies can turn
around very quickly.
The fund is comfortably through the HMRC defined investment test and ended the
period at 91.6% invested as measured by the HMRC investment test.
Investment Objective
The Company’s principal objective is to invest in a broad range of
Alternative Investment Market (AIM) or Aquis Stock Exchange (AQSE) traded
companies in order to provide shareholders with attractive tax-free dividends
and long-term capital growth. Investments are selected by our Investment
Manager across a range of sectors in companies that have the potential to grow
and increase in value.
Principal risks and uncertainties
The Company invests its funds primarily in companies traded on AIM, which
entail a higher degree of risk than investments in large listed companies. The
main risk, therefore, arising from the Company’s activities is market price
risk, representing the uncertain realisable values of the Company’s
investments. Please refer to the Directors’ report on page 18 and also note
21, which provide evidence of the process undertaken to assess and manage
these risks.
Environmental Social and Governance (ESG) and Considerations
The Board seeks to maintain high standards of conduct with respect to
environmental, social and governance issues and to conduct the Company’s
affairs responsibly. The Company does not have any employees or offices and so
the Board does not maintain any specific policies regarding employee, human
rights, social and community issues but does expect the Investment Manager to
consider them when fulfilling its role. As the Company used less than 40MWh of
energy during the period, it is exempt from the Streamlined Energy and Carbon
Reporting requirements. In addition, the Company, although exempt because of
its small size, continues to monitor and develop its approach to the
recommendations of the Task Force on Climate related Financial Disclosures
(TCFD). The management of the Company’s investment portfolio has been
delegated to its Investment Manager Oberon Investments Limited. The Company
has not instructed the Investment Manager to include or exclude any specific
types of investment on ESG grounds. However, it expects the Investment Manager
to take account of ESG considerations in its investment process for the
selection and ongoing monitoring of underlying investments. Exposure to
climate related risks is considered on a deal-by-deal basis by the Investment
Manager. This includes the physical risks and impacts of climate change where
this has been identified as a material issue. The Investment Manager also
looks for investment opportunities in companies that are well positioned to
benefit from the transition to a lower carbon economy.
The Board has also given the Investment Manager discretion to exercise voting
rights on resolutions proposed by investee companies.
Viability Statement
In accordance with provision 1 of The UK Corporate Governance Code 2018 the
directors have assessed the prospects of the Company over a longer period than
the 12 months required by the “Going Concern” provision.
The Board regularly considers the Company’s strategy, including investor
demand for the Company’s shares, and a three-year period is therefore
considered to be an appropriate and reasonable time horizon.
The Board has carried out a robust assessment of the principal risks facing
the Company and its current position, including those which may adversely
impact its business model, future performance, solvency or liquidity. The
principal risks faced by the Company and the procedures in place to monitor
and mitigate them are set out in note 21.
The Board has also considered the Company’s cash flow projections and found
these to be realistic and reasonable.
Based on the above assessment the Board confirms that it has a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the three-year period to 31 December
2026.
Key performance indicators
The financial key performance indicators are set out in the financial summary
on page 1.
Geoffrey Gamble 27 March 2024
Investment Portfolio
Security Cost Valuation % %
31/12/2023 Cost Valuation
Qualifying Investments 3,272,220 1,985,719 92.26 88.76
Non-qualifying Investments 31,273 8,202 0.88 0.37
3,303,493 1,993,921 93.14 89.13
Uninvested funds 243,247 243,247 6.86 10.87
3,546,740 2,237,168 100.00 100.00
Qualifying Investments
AIM Quoted
Abingdon Health plc 35,218 3,997 0.99 0.18
Access Intelligence plc 10,053 13,250 0.28 0.59
Actual Experience plc 63,174 0 1.78 0.00
AFC Energy plc 50,254 63,906 1.42 2.86
Arecor Therapeutic plc 12,818 10,156 0.36 0.45
Audioboom Group plc 39,287 48,018 1.11 2.15
Aurrigo International plc 75,387 67,125 2.13 3.00
Belluscura plc 52,263 26,462 1.47 1.18
Blackbird plc 18,845 20,625 0.53 0.92
Brighton Pier Group plc 35,379 11,770 1.00 0.53
C4X Discovery Holdings plc 35,179 20,953 0.99 0.94
Clean Power Hydrogen plc 50,253 13,333 1.42 0.60
Cloudbuy plc 41,896 0 1.18 0.00
Cloudified Holdings Ltd 85,234 0 2.40 0.00
Coral Products plc 25,104 26,825 0.71 1.20
Cordel Group plc 30,656 24,908 0.86 1.11
Creo Medical Group plc 20,504 12,320 0.58 0.55
CyanConnode Holdngs plc 204,219 6,568 5.76 0.29
Deepverge plc 93,203 235 2.63 0.01
Destiny Pharma plc 175,882 227,211 4.96 10.16
Diaceutics plc 10,314 11,610 0.29 0.52
DP Poland plc 25,631 18,105 0.72 0.81
Eden Research plc 29,852 26,044 0.84 1.16
Feedback plc 100,511 39,561 2.83 1.77
Fusion Antibodies plc 7,540 333 0.21 0.01
Gfinity plc 33,229 780 0.94 0.03
Haydale Graphine Industries plc 75,387 67,500 2.13 3.02
Huddled Group plc 33,420 12,175 0.94 0.54
I-Nexus Global plc 30,153 847 0.85 0.04
Inspired Energy plc 33,641 76,650 0.95 3.43
Intelligent Ultrasound Group plc 124,786 103,098 3.52 4.61
Kinovo plc 52,465 50,400 1.48 2.25
Libertine Holdings plc 125,628 15,625 3.54 0.70
Lifesafe Holdings plc 75,387 74,531 2.13 3.33
Light Science Technologies plc 25,127 60,750 0.71 2.72
Security Cost Valuation % %
31/12/2023 Cost Valuation
Qualifying Investments
AIM Quoted
Location Sciences Group plc 72,643 4,073 2.05 0.18
Lunglife AI Inc 20,104 5,205 0.57 0.23
M.Winkworth plc 56,280 98,000 1.59 4.38
Marechale Capital plc 75,752 10,500 2.14 0.47
Microsaic Systems plc 142,261 221 4.01 0.01
Mirriad Advertising plc 30,154 1,680 0.85 0.08
MyHealthChecked plc 103,202 51,170 2.91 2.29
N4 Pharma plc 40,204 3,392 1.13 0.15
Nexteq plc 8,091 17,378 0.23 0.78
PHSC plc 40,205 34,080 1.13 1.52
Polarean Imaging plc 7,539 3,000 0.21 0.13
Property Franchise Group plc 25,114 76,500 0.71 3.42
Rosslyn Data Technologies plc 98,606 37,675 2.78 1.68
Scancell Holdings plc 20,877 15,675 0.59 0.70
SEEEN plc 100,511 56,667 2.83 2.53
Skinbiotherapeutics plc 75,383 57,237 2.13 2.56
Solid State plc 35,248 199,976 0.99 8.94
SRT Marine Systems plc 4,523 10,350 0.13 0.46
Strip Tinning plc 15,890 3,418 0.45 0.15
Sysgroup plc 45,232 24,750 1.28 1.11
Tan Delta Systems plc 11,239 9,804 0.32 0.44
Trellus Health plc 25,128 1,875 0.71 0.08
Verici Dx plc 101,505 35,265 2.86 1.58
XP Factory plc 31,006 3,885 0.87 0.17
3,124,574 1,917,447 88.10 85.71
AQSE Quoted
Sulnox Grp plc 17,204 31,875 0.49 1.43
Truspine Technology plc 100,283 18,750 2.82 0.84
117,487 50,625 3.31 2.27
Unlisted Investments
LightwaveRF Ltd 30,159 17,647 0.85 0.79
30,159 17,647 0.85 0.79
Total qualifying investments 3,272,220 1,985,719 92.26 88.76
Security Cost Valuation % %
31/12/2023 Cost Valuation
Non-qualifying Investments 1,163 302 0.03 0.02
AIM Quoted
Audioboom Group plc
1,163 302 0.03 0.02
UK listed
Twentyfour Income Fund Ltd 9,852 7,900 0.28 0.35
9,852 7,900 0.28 0.35
Unlisted Investments
Mar City plc 10,053 0 0.28 0.00
Sorbic International plc 10,205 0 0.29 0.00
20,258 0 0.57 0.00
Total non-qualifying investments 31,273 8,202 0.88 0.37
Top Ten Investments
Security Cost Valuation %
Destiny Pharma plc 175,882 227,211 10.16
Solid State plc 35,248 199,976 8.94
Intelligent Ultrasound Group plc 124,786 103,098 4.61
M.Winkworth plc 56,280 98,000 4.38
Inspired Energy plc 33,641 76,650 3.43
Property Franchise Group plc 25,114 76,500 3.42
Lifesafe Holdings plc 75,387 74,531 3.33
Haydale Graphine Industries plc 75,387 67,500 3.02
Aurrigo International plc 75,387 67,125 3.00
AFC Energy plc 50,254 63,906 2.86
727,366 1,054,497 47.15
The investments tabulated above are expressed as a percentage by valuation of
the Company’s investment portfolio including uninvested cash.
Profile of top 10 holdings
1. Destiny Pharma plc
Destiny Pharma plc is an innovative, clinical-stage biotechnology company
focused on the development and commercialisation of novel medicines that can
prevent life-threatening infections. The company's drug development pipeline
includes two late stage assets NTCD-M3, a microbiome-based biotherapeutic for
the prevention of C. difficile infection (CDI) recurrence which is the leading
cause of hospital acquired infection in the US, and XF-73 nasal gel, a
proprietary drug targeting the prevention of post-surgical staphylococcal
hospital infections including MRSA.
2. Solid State plc
Solid State plc is a value added electronics group supplying commercial,
industrial and defence markets with durable components, assemblies,
manufactured units and power units for use in specialist and harsh
environments.
Operating through two main divisions: Systems (Steatite, Active Silicon &
Custom Power) and Components (Solid State Supplies, Pacer, Willow Technologies
& AEC); the Group specialises in complex engineering challenges often
requiring design-in support and component sourcing for computing, power,
communications, electronic, electro-mechanical and opto-electronic products.
3. Intelligent Ultrasound plc
Intelligent Ultrasound plc is one of the world's leading 'classroom to clinic'
ultrasound companies, specialising in real-time hi-fidelity virtual reality
simulation for the ultrasound training market ('classroom') and artificial
intelligence-based clinical image analysis software tools for the diagnostic
medical ultrasound market ('clinic'). Based in Cardiff in the UK and Atlanta
in the US, the Group has two revenue streams:
Simulation
Real-time hi-fidelity ultrasound education and training through simulation.
Its main products are the ScanTrainer obstetrics and gynaecology training
simulator, the HeartWorks echocardiography training simulator, the BodyWorks
Eve Point of Care and Emergency Medicine training simulator with Covid-19
module and the new BabyWorks Neonate and Paediatric training simulator. To
date over 1,500 simulators have been sold to over 750 medical institutions
around the world.
Clinical AI software
Deep learning-based algorithms to make ultrasound machines smarter and more
accessible using its proprietary ScanNav ultrasound image analysis technology.
Current products on the market utilising this technology are GE Healthcare's
SonoLyst software that is incorporated in their Voluson Expert 22 and SWIFT
ultrasound machines; ScanNav Anatomy PNB that simplifies ultrasound-guided
needling by providing the user with real-time AI-based anatomy highlighting
for a range of medical procedures; and NeedleTrainer that teaches real-time
ultrasound-guided needling and incorporates ScanNav Anatomy PNB.
4. M.Winkworth plc
M.Winkworth plc is a leading London franchisor of residential real estate
agencies with a pre-eminent position in the mid to upper segments of the sales
and lettings markets. The franchise model allows entrepreneurial real estate
professionals to provide the highest standards of service under the banner of
a long-established brand name and to benefit from the support and promotion
that Winkworth offers.
5. Inspired Energy plc
Inspired Energy plc (Inspired) is a leading B2B technology enabled service
provider delivering solutions that enable corporate businesses to transition
to net-zero carbon and manage their response to climate change in the UK and
Ireland.
Inspired operates four divisions: Assurance Services, Optimisation Services,
ESG Services and Software Services, providing expert energy advisory and
sustainability services to over 3,500 businesses who typically spend more than
£100,000 on energy and water per year. The Group's four divisions work
together to help corporate businesses manage all aspects of their energy and
sustainability programme through the lens of what the Group refers to as the
4Cs of Cost, Consumption, Compliance and Carbon.
6. Property Franchise Group plc
The Property Franchise Group PLC is the largest property franchisor in the UK
and manages the second largest estate agency network and portfolio of lettings
properties in the UK.
The company has since grown to a diverse portfolio of nine brands operating
throughout the UK, comprising longstanding high-street focused brands and a
hybrid, no sale no fee agency.
The Property Franchise Group's brands are Martin & Co, EweMove, Hunters,
CJ Hole, Ellis & Co, Parkers, Whitegates, Mullucks & Country
Properties.
7. Lifesafe Holdings plc
LifeSafe Holdings plc (LifeSafe) is a fire safety technology business that
develops eco-friendly, novel and innovative fire extinguishing fluids and
life-saving fire safety products. LifeSafe has developed a market disrupting
range of eco-friendly fire safety protection products; a new patent-pending
Thermal Runaway Fluid to combat lithium battery fires by permanently
extinguishing and preventing re-ignition, and the StaySafe All-in-1, a
handheld eco-friendly and fully recyclable extinguisher which is verified to
extinguish ten different types of fire and the number one selling fire
extinguisher on Amazon UK. LifeSafe is successfully creating new markets for
the Group in fire safety through its innovative technologies, products,
digital marketing and multi-channel sales; and is continuing to develop new
fluid derivations for applications in various industrial market sectors.
8. Haydale Graphine Industries plc
Haydale Graphine Industries plc (Haydale) is a global technologies group and
service provider that facilitates the integration of graphene and other
nanomaterials into the next generation of industrial materials and commercial
technologies. With expertise in graphene, other nanomaterials and Silicon
Carbide, Haydale is able to deliver improvements in electrical, thermal and
mechanical properties. Haydale has been granted patents for its technologies
in Europe, USA, Australia, Japan and China and operates from five sites in the
UK, USA and the Far East.
9. Aurrigo International plc
Aurrigo International plc (Aurrigo) is a leading international provider of
transport technology solutions. Headquartered in Coventry, UK, it designs,
engineers, manufactures, and supplies autonomous vehicles and OEM products to
the automotive and transport industries, particularly focusing on aviation. It
is highly regarded as a specialist in autonomous and semi-autonomous
technology solutions for the aviation, ground handling and cargo industries.
Aurrigo has developed six types of autonomous vehicle to date, which can be
utilised to reduce costs, resolve operational issues, and tackle labour
shortages, whilst also improving sustainability. Aurrigo has three divisions,
Automotive Technology, Autonomous Technology and Aviation Technology.
10. AFC Energy plc
AFC Energy plc is a leading provider of hydrogen energy solutions, to provide
clean electricity for on and off grid power applications. The company's fuel
cell technology is now deployable as electric vehicle chargers, off-grid
decentralised power systems for construction and temporary power with emerging
opportunities across maritime, data centres and rail as part of a portfolio
approach to the decarbonisation of society's growing electrification needs.
Directors’ Report
The directors present their report and the audited accounts for the year to 31
December 2023.
Corporate Governance
The Corporate Governance report on pages 21 to 24 forms part of the
directors’ report.
Results and dividend
Year to Year to
31 December 2023
31 December 2022
Revenue Capital Revenue Capital
£’000 £’000 £’000 £’000
(92) (190) (90) (1,505)
Return on ordinary activities after taxation
Appropriated as follows:
Final dividend paid in respect of prior year
Revenue – 2.50p (4.00p) per share (139) - (203) -
Capital – 0.00p (0.00p) per share - - - -
Transfers to reserves (231) (190) (293) (1,505)
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 Year ended
31 December 2023
31 December 2022
Michael David Barnard (ceased as a director 30 Jan’24) 312,656 517,498
Geoffrey Gamble
197,030
111,550
Ian Cameron-Mowat
92,590
67,065
Simon Like
145,800
145,800
John Beaumont (appointed 29 Jan’24)
23,501
-
All of the directors’ share interests shown above are held beneficially.
There have been no changes in the share holdings shown in the table above
between 31 December 2023 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
Geoffrey Gamble, who being eligible will offer himself for re-election at the
forthcoming annual general meeting. In addition, John Beaumont, who was
appointed by the Board to become a director of the Company on 29 January 2024
will, in accordance with the Company’s Articles of Association, offer
himself for election at the forthcoming Annual General Meeting (AGM). The
directors believe that John’s experience, having worked in the broking
industry for over 20 years and from providing accountancy services to this
Company for the last 5 years, is very useful and a big advantage to have on
the Company’s Board.
Management
Oberon Investments 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 2023, of the shareholders who own 3.0% or more of the Company’s
shares.
Clarmond Wealth Limited (non-beneficial) 784,618 14.1%
MD Barnard 312,656 5.6%
Oberon Investments Limited (beneficial) 293,130 5.3%
Oberon Investments Limited (non-beneficial) 456,460 8.2%
D Poutney 317,731 5.7%
N Shanks 243,184 4.4%
Platform Securities 197,590 3.5%
Note: Included in the total above, within the ‘Oberon Investments
(non-beneficial)’ holding, is the holding of the Chairman, Mr Geoffrey
Gamble, of 197,030 shares (as shown in the Directors shareholdings table on
page 15).
Acquisition of own shares
During the year the Company did not make any acquisition of its own shares.
Structure, rights and restrictions concerning the Company’s share capital
At the start of the Company’s financial year there were 5,067,643 ordinary
shares in issue. On 13 June 2023 the Company issued 506,760 new shares,
leaving a total of 5,574,403 shares in issue at the end of the financial year.
The rights and obligations attached to the Company’s ordinary shares are set
out in the Company’s Articles of Association, copies of which can be
obtained from Companies House. The Company has only one class of ordinary
share and each share has attached to it full voting rights, dividends and
capital distribution rights (including on a winding up) and do not confer any
rights of redemption.
Ordinary shareholders also have the right to receive copies of the Company’s
report and accounts, to attend and speak at general meetings and to appoint
proxies.
There are no shareholders who have a significant direct or indirect
shareholding in the Company.
In accordance with Schedule 7 of the Large and Medium Size Companies and
Groups (Accounts and Reports) Regulations 2008, as amended, the directors
disclose the following information:
* The Company’s capital structure and voting rights are summarised above, and
there are no restrictions on voting rights nor any agreement between holders
of securities that result in restrictions on the transfer of securities or on
voting rights;
* There exist no securities carrying special rights with regard to the control
of the Company;
* The rules concerning the appointment and replacement of directors, amendment
of the Articles of Association and powers to issue or buy back of the
Company’s shares are contained in the Articles of Association of the Company
and the Companies Act 2006;
* The Company does not have an employee share scheme;
* There are no agreements to which the Company is party that may affect its
control following a takeover bid; and
* There are no agreements between the Company and its directors providing for
compensation for loss of office that may occur following a takeover bid or for
any other reason.
Appointment of Directors
The directors are subject to re-election by rotation, with one director 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.
Streamlined Energy and Carbon Reporting
There are reporting requirements which make it mandatory for companies to
report the amount of energy they use during their financial year. The
Company’s energy usage is below the de minimis level of 40,000kWh.
Post balance sheet events
Details of the post balance sheet events are set out in note 26.
Section 172 (1) of the Companies Act 2006
The Board notes the disclosure regulations contained within ‘The Companies
(Miscellaneous Reporting) Regulations 2018 and confirms that when making
decisions it acts in a way which promotes the success of the Company for the
benefit of its members as a whole, and in doing so has regard (amongst other
matters) to the following:
1. the likely consequences of any decision over the long term;
2. the need to foster the Company’s business relationships with its suppliers;
3. the desirability of the Company maintaining a reputation for high standards of
business conduct; and
4. the need to act fairly as between members of the Company;
The Board also recognises the requirement under Section 414c of the Companies
Act 2006 to detail information about environmental matters (including the
impact of the Company’s business on the environment), employee, human
rights, social and community issues, including information about any policies
it has in relation to these matters and effectiveness of these policies.
Given the size and nature of the Company’s activities and the fact that it
has no full-time employees and only four non-executive directors, the Board
considers there is limited scope to develop and implement social and community
policies. However, the Company recognises the need to conduct its business in
a manner responsible to the environment where possible.
The Board believes that the key stakeholders in the business are the
Company’s shareholders (i.e. the investors in the Company). The Board
communicates with these key stakeholders as explained in the ‘Relations with
shareholders’ section in the Corporate Governance chapter on page 22 in
these Financial Statements.
The Board regularly disseminates information to shareholders, including
monthly NAV calculations and, where necessary, directorate changes, through
RNS releases on the London Stock Exchange. Shareholders receive the Annual
Report and Accounts which aims to give shareholders a full understanding of
the Company’s operations and investments. This information, together with
the interim accounts and other shareholder information is also released to the
market via the London Stock Exchange RNS process.
The Board has delegated the monitoring of its portfolio companies to the
Investment Manager, which engages with investee companies through regular
company meetings as part of its investment process. The Board has also given
the Investment Manager discretionary authority to vote on investee company
resolutions on its behalf as part of its approach to corporate governance.
During the period the Board received sufficient information to enable it to
understand the interests and views of the Company’s key stakeholders,
investors and service providers to the Company, including from the auditor,
lawyers and its registrar.
Some of the key decisions made by the Company during the year that required
the Board to take into consideration section 172 factors include:
* On 13 June 2023 the Company issued an offer for subscription of shares, and
allowed new and existing shareholders to invest in the Company.
* The Board looks to create shareholder value and during the year dividends
totalling 2.5p were paid to shareholders.
Going Concern
In accordance with FRC Guidance for directors on going concern and liquidity
risk the directors have assessed the prospects of the Company having adequate
resources to continue in operational existence for at least 12 months from the
date of approval of these financial statements. The directors took into
account the nature of the Company’s business and Investment Policy, its risk
management policies, the diversification of its portfolio, the cash holdings
and the liquidity of non-qualifying investments. The Company’s business
activities, together with factors likely to affect its future development,
performance and position including the financial risks the Company is exposed
to are set out in the Strategic Report on page 6 and in note 21 to the
accounts.
As a consequence, the directors have a reasonable expectation that the Company
has sufficient cash and liquid investments to continue to operate and that the
Company will be able to manage its business risks successfully and meet its
liabilities as they fall due. Thus, the directors believe it is appropriate to
continue to adopt the going concern basis, as also disclosed in the Corporate
Governance report on page 21, in preparing the financial statements.
Auditor
In accordance with Section 485 of the Companies Act 2006, a resolution
proposing that Moore Kingston Smith 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 auditor
So far as the directors are aware:
1. there is no relevant audit information of which the Company’s auditor is
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
auditor is aware of that information.
By Order of the Board
Geoffrey Gamble 27 March 2024
The Board has prepared this report in accordance with the requirements of the
Companies Act 2006. A resolution to approve this report will be included in
the AGM Notice.
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 (2022: £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, and while the Company’s size remains around its
current level, the directors will continue not to receive any remuneration for
their services.
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 2023 and 31 December 2022 is set out in the
Financial Summary on page 1.
By Order of the Board
Geoffrey Gamble 27 March 2024
Corporate Governance
The directors support the relevant principles of the UK Corporate Governance
Code issued in July 2018 by the Financial Reporting Council, being the
principles of good governance and the code of best practice as set out in the
Main Principles of the Code annexed to the Listing Rules of the Financial
Conduct Authority.
The UK Corporate Governance Code is available at the following location:
www.frc.org.uk/corporate/ukcgcode.cfm
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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. In coming to this
conclusion the directors have concluded that the Company’s going concern
status would only be at threat if (i) the value of its portfolio declined by
more than 94% from its value as at 29 February 2024 (being the latest month
end valuation) of £1.9m (excluding cash of £137.0k), and (ii) that it could
not dispose of any of its portfolio during or after such a decline in value,
and (iii) that it could not reduce its current cost base. Such a set of
circumstances would, in the Board’s opinion, be very unlikely.
The Board
The Company is led and controlled by a Board of directors who are all
non-executives and who have had relevant experience with quoted companies
prior to their appointment. The Chairman is Geoffrey Gamble. Biographical
details of all Board members are shown on page 3.
The directors are subject to re-election at each AGM by rotation, except in
the AGM following the appointment of a new director when that new director’s
appointment will also be subject to shareholder approval.
During the year there were 6 full board meetings and 2 Audit Committee
meetings.
The attendance at each meeting is shown below:
Full Board No. of Audit Audit Committee
meetings
meetings
Committee
meetings
held
attended
meetings held
attended
Geoffrey Gamble 6 6 2 2
Ian Cameron-Mowat 6 6 2 2
Simon Like 6 5 n/a n/a
Michael Barnard 6 1 n/a n/a
All directors either had relevant experience with quoted companies prior to
their appointment or had a good knowledge base of the rules and regulations
concerning a director’s responsibilities with listed companies and it was
therefore not thought necessary to provide further training in respect of
their obligations and duties.
The Board has also established procedures whereby directors wishing to do so
in the furtherance of their duties may take independent professional advice at
the Company’s expense.
All directors have access to the advice and services of the Company Secretary.
The Company Secretary provides the Board with full information on the
Company’s assets and liabilities and other relevant information requested by
the Chairman, in advance of each Board meeting.
The Board believes that it presents a balanced and understandable assessment
of the Company’s position and prospects. The Audit Committee meets twice a
year. Under the chairmanship of a non-executive director, its membership
comprises some of the other non-executive directors. During the year the Audit
Committee was chaired by Mr Gamble. The Audit Committee reviews the accounts
and is reported to by the external auditors. The audit committee did not
identify or consider any significant issues relating to the financial
statements as substantially all the investments are valued by reference to
publicly quoted prices. Further, the Audit Committee keeps under review the
cost effectiveness, independence and objectivity of the auditors. A formal
statement of independence is received from the external auditors each year.
The terms of reference of the audit committee are available for inspection at
the Company’s registered office.
The Audit Committee is satisfied with the performance of Moore Kingston Smith
LLP and the Company will be recommending their reappointment at the AGM.
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.
Separate resolutions are proposed at the AGM on each substantially separate
issue. The Registrars collate proxy votes and the results (together with the
proxy forms) are forwarded to the Company Secretary immediately prior to the
AGM. In order to comply with the Governance Code, proxy votes will be
announced at the AGM, following each vote on a show of hands, except in the
event of a poll being called.
Financial Reporting
The directors’ statement of responsibilities for preparing the financial
statements is set out on page 23, and a statement by the auditors about their
reporting responsibilities is set out in the Auditor’s Report on pages 31
and 32.
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 Oberon Investments 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 2023 with the requirements 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 had three independent directors during the financial year ended 31
December 2023, as defined by the Governance Code issued in July 2018. Since
then, following the departure of Michael Barnard on 30 January 2024, the
Company now has two independent directors. The board consider that Messrs.
Gamble and Cameron-Mowat are independent in character and judgement and there
are no relationships or circumstances which are likely to, 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. Under that law the directors have elected
to prepare the financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (“GAAP”), including Financial
Reporting Standard 102 – “The Financial Reporting Standard Applicable in
the United Kingdom and Republic of Ireland” (“FRS 102”), (United Kingdom
accounting standards and applicable law). Under company law the directors are
required to prepare financial statements 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;
* prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the company will continue in business; and
The directors are responsible for ensuring that adequate 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.
The directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions. The Company also releases information to
Companies House and also to the London Stock Exchange via its Regulated News
Service.
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
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;
2. The Directors’ Report includes a fair review of the development and
performance and position of the Company, together with a description of the
principal risks and uncertainties that it faces;
3. The directors consider that the annual report and financial statements are
fair, balanced and understandable, providing appropriate information to
shareholders to assess the performance, business model and strategy of the
Company and therefore the Board recommends the approval of the financial
statements at the forthcoming AGM.
Corporate Governance
By Order of the Board
Geoffrey Gamble 27 March 2024
Opinion
We have audited the financial statements of New Century AIM VCT 2 plc (the
“Company”) for the year ended 31 December 2023 which comprise the
Statement of Comprehensive Income, the Balance Sheet and the Statement of
Changes in Equity and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom Accounting
Standards, including Financial Reporting Standard 102 ‘The Financial
Reporting Standard Applicable in the UK and Republic of Ireland’ (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 2023 and of the Company’s loss for the
year then ended;
* the financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
* the financial statements 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.
Our approach to the 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 enough work to
be able to give an opinion on the financial statements as a whole, taking into
account an understanding of the structure of the Company, its activities, the
accounting processes and controls, and the industry in which it operates. Our
planned audit testing was directed accordingly and was focused on areas where
we assessed there to be the highest risk of material misstatement.
The audit team met and communicated regularly throughout the audit with the
Audit Committee and the Investment Manager in order to ensure we had a good
knowledge of the business of the Company. 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 design
effectiveness of controls and the management of specific risk. All work was
carried out by the audit team. We conducted our audit using information
maintained and provided by Oberon Investments Limited (the “Investment
Manager”) to whom the Company has delegated the provision of services.
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 identified
during the audit.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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. This is not a complete list of
all risks identified during our audit.
We have determined the matters described below to be the key audit matters to
be communicated in our audit report.
Key Audit Matters How our scope addressed this matter
Valuation of Investments and recognition of gains and losses and ownership of Our audit work included, but was not restricted to:
investments (note 12)
There is a risk that unrealised gains and losses in the year have been *Testing the value of the year-end investments by reference to third-party
incorrectly recorded. Additionally, there is a risk that the carrying value of market price information.
the investments is incorrect or may not be owned by the Company. There is an
additional risk that the number of shares held in those investments is
misstated. Furthermore, there is a risk that recorded investments may not be
owned by the Company.
*Agreeing the purchase and sale of investments to contract notes and cash
movements on a sample basis.
The investment portfolio at the year-end had a carrying value of £1,994,000
(2022: £2,190,000) comprising predominately quoted investments.
*Recalculating the realised gains and losses on the sale of investments for
both the individual transactions on a sample basis and for the total
The realised gains/(losses) for the year were £145,000 (2002: (£2,000)) and portfolio.
unrealised losses of £318,000 (2022: £1,481,000).
*Recalculating the movement in unrealised gains and losses for arithmetical
accuracy and validating 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 the total
portfolio market price.
*Agreeing ownership of investee shares to share certificates, Crest (third
party database) or other third-party sources such as Fame.
*Confirming that the accounting policy and the disclosures in the financial
statements on fixed asset investments held at fair value through profit or
loss have been correctly presented.
Key observations:
Based on the procedures performed we did not identify any unadjusted material
misstatements in the valuation of the Company’s investment portfolio as at
the year end. The identified audit adjustment amounted to £96,876 and has
been reflected in the financial statements.
Non-compliance with laws and regulations Our audit work included, but was not restricted to:
As the entity is both listed on the London Stock Exchange and a VCT, there are
additional laws and regulations which it must follow. A potential breach of *Reviewing of the design and implementation of controls around the ongoing
the listing rules and VCT regulations may lead to the entity losing its VCT internal assessment and monitoring of VCT compliance of the VCT.
status and
its associated tax benefits.
*Obtaining an understanding of the processes adopted and evidence the work
completed by the Investment Manager on documenting compliance with the key VCT
rules and management’s review of this on a regular basis.
*Testing the twelve conditions for maintaining approval as a VCT as set out by
HMRC. We reviewed each of the conditions in order to assess whether it had
been met as at the year end. Confirming that there were no breaches in
relation to listing rules.
*Confirming that there were no breaches in relation to listing rules.
Key observations:
Based on our review of the documentation maintained, we confirmed the Company
was in compliance with the listing and VCT rules during the period and at the
year end. Additionally, our own testing of compliance with the individual VCT
rules did not identify any breaches.
Our application of materiality
The scope and focus of our audit were influenced by our assessment and
application of materiality. We define materiality as the magnitude of
misstatement that could reasonably be expected to influence the readers and
the economic decisions of the users of the financial statements. We use
materiality to determine the scope of our audit and the nature, timing, and
extent of our audit procedures and to evaluate the effect of misstatements,
both individually and on the financial statements as a whole. We apply the
concept of materiality both in planning and performing our audit, and in
evaluating the effect of misstatements.
Based on our professional judgement we determined materiality for the 2023
financial statements as a whole and performance materiality as follows:
Financial statements
Materiality £23,370
Basis for determining materiality 1% of Gross Assets prior to audit adjustments
Rational for the benchmark applied Due to the nature of the VCT’s purpose being to invest to obtain capital
growth and dividend income, gross assets have been used to calculate
materiality. We have chosen gross assets as the Company’s investment
portfolio, which we considered to be the key driver of the Company’s total
return performance and forms part of the net asset value calculation.
We have chosen this benchmark, a generally accepted auditing practice for
Venture Capital Trust audits, as we believe this provides an appropriate
year-on-year basis for our audit.
Performance materiality £11,185
Basis for determining performance materiality 50% of Overall materiality
Rational for the benchmark applied We considered several factors – the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls. We
concluded that this amount was appropriate.
Trivial:
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £1,119. We also agreed to report differences
below this threshold that, in our view, warranted reporting on qualitative
grounds.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’
assessment of the Company’s ability to continue to adopt the going concern
basis of accounting included the following procedures:
* We critically reviewed the Company's cash flow forecasts, which were prepared
based on current financial performance expectations, including sensitivity
analysis.
* We assessed the Company's ability to meet its liabilities as they fall due,
considering both internal factors such as cash flow projections and external
factors.
* We paid particular attention to any events or conditions identified in the
viability statement, as these might have significantly impacted the Company's
ability to continue as a going concern.
* We evaluated the assumptions and scenarios outlined in the viability statement
and assessed their alignment with the Company's financial position and
prospects.
* We performed sensitivity analysis on the key assumptions and scenarios
outlined in the viability statement to assess their impact on the Company's
ability to meet its liabilities as they fall due.
* We investigated the rationale behind the directors' selection of the viability
period and assessed its adequacy based on the Company's specific
circumstances, industry dynamics, and market conditions.
* We documented the results of the review and assessment of the viability period
chosen by the directors, including any concerns or discrepancies identified
during the process.
* We ensured that the rationale for selecting the viability period is adequately
disclosed within the company's financial statements, including the viability
statement and accompanying notes.
* We compared the prior year forecast against current year actual performance to
assess management’s ability to forecast accurately.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
In relation the Company’s reporting on how it has applied the UK Corporate
Governance Code, we have nothing material to add or draw attention to in
relation to the Directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor’s report thereon. The
directors are responsible for the other information contained within the
annual report. 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 course of 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 in the financial statements themselves. 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.
Opinions 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.
In our opinion, based on the work undertaken in the course of the audit:
* the information given in the Strategic Report and the Directors’ Report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
* the Strategic Report and the Directors’ Report have 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 where 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 received 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; or
* a corporate governance statement has not been prepared.
Corporate Governance statement
We have reviewed the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the Company’s compliance with the provisions of the UK Corporate
Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements and our knowledge obtained during the
audit:
* Directors’ statement with regards the appropriateness of adopting the going
concern basis of accounting and any material uncertainties identified set out
on pages 18, 21 and 36;
* Directors’ explanation as to its assessment of the Company’s prospects,
the period this assessment covers and why the period is appropriate set out on
page 7;
* Directors’ statement on whether it has a reasonable expectation that the
Company will be able to continue in operation and meets its liabilities set
out on pages 18 and 21;
* Directors' statement on fair, balanced and understandable set out on page 24;
* Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 7;
* Section of the annual report that describes the review of effectiveness of
risk management and internal systems set out on page 22; and
* Section describing the work of the audit committee set out on pages 21 and 22.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities set
out on page 23, 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 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 is available on the FRC’s
website at
https://wwww.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor's-responsibilities-for
(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fwww.frc.org.uk%2Fauditors%2Faudit-assurance%2Fauditor-s-responsibilities-for-the-audit-of-the-fi%2Fdescription-of-the-auditor%25E2%2580%2599s-responsibilities-for&esheet=53916425&newsitemid=20240328813778&lan=en-US&anchor=https%3A%2F%2Fwwww.frc.org.uk%2Fauditors%2Fauditor-assurance%2Fauditor-s-responsibilities-for-the-audit-of-the-fi%2Fdescription-of-the-auditor%27s-responsibilities-for&index=3&md5=c93208c0d7eae176696b862d8db83744)
This description forms part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below.
The objectives of our audit in respect of fraud, are; to identify and assess
the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks
of material misstatement due to fraud, through designing and implementing
appropriate responses to those assessed risks; and to respond appropriately to
instances of fraud or suspected fraud identified during the audit. However,
the primary responsibility for the prevention and detection of fraud rests
with both management and those charged with governance of the Company.
Our approach was as follows:
* We obtained an understanding of the legal and regulatory requirements
applicable to the Company and considered that the most significant are the
Companies Act 2006, FRS 102, the Listing Rules, the Disclosure and
Transparency Rules, Compliance with HMRC conditions for approved VCT Status
and UK taxation legislation
* We obtained an understanding of how the company complies with these
requirements by discussions with management and those charged with governance.
* We assessed the risk of material misstatement of the financial statements,
including the risk of material misstatement due to fraud and how it might
occur, by holding discussions with management and those charged with
governance.
* We inquired of management and those charged with governance as to any known
instances of non-compliance or suspected non-compliance with laws and
regulations.
* Based on this understanding, we designed specific appropriate audit procedures
to identify instances of non-compliance with laws and regulations. This
included making enquiries of management and those charged with governance and
obtaining additional corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are
less likely to become aware of instances of non-compliance with laws and
regulations that are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through collusion.
Other matters which we are required to address
We were appointed by the Audit Committee of New Century AIM VCT 2 plc on 6
July 2022 to audit the financial statements for the year ended 31 December
2022 and our re-appointment was approved at the Company’s Annual General
Meeting in June 2023. Our total uninterrupted period of engagement is 2years,
covering the years ended 31 December 2022 to 31 December 2023.
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 for no purpose other than to draw to the attention of the
Company’s members those matters which we are required to include in an
auditor’s report addressed to them. To the fullest extent permitted by law,
we do not accept or assume responsibility to any party other than the Company
and Company’s members as a body, for our work, for this report, or for the
opinions we have formed.
Mital Shah (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
Statement of Comprehensive Income
(incorporating the revenue account)
for the year to 31 December 2023
Year ended Year ended
31 December 2023
31 December 2022
Notes Revenue Capital Total Revenue Capital Total
£’000
£’000
£’000
£’000
£’000
£’000
Gains/(losses) on investments
- realised 12 - 145 145 - (2) (2)
- unrealised 12 - (318) (318) - (1,481) (1,481)
Income 5 29 - 29 27 - 27
Investment management fee 6 (6) (17) (23) (7) (22) (29)
Other expenses 7 (115) - (115) (110) - (110)
______ ______ ______ ______ ______ ______
(Loss) on ordinary activities before taxation (92) (190) (282) (90) (1,505) (1,595)
- - - - - -
Tax charge on ordinary activities
9
______ ______ ______ ______ ______ ______
(Loss) on ordinary activities after taxation (92) (190) (282) (90) (1,505) (1,595)
======= ======= ======= ======= ======= ======
(Loss) per ordinary share (pence) (1.72) (3.55) (5.27) (1.80) (30.21) (32.01)
11
======= ======= ======= ======= ====== ======
The notes on pages 36 to 45 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 2023
As at As at
31 December 2023
31 December 2022
Note
£’000
£’000
Fixed assets
Investments 12 1,994 2,190
Current assets
Debtors 15 & 20 243 354
Current liabilities
Creditors: amounts falling due within one year 16 (30) (131)
2,207 2,413
Capital and reserves
Called up share capital 17 557 507
Share premium 547 382
Capital redemption reserve 171 171
Special distributable reserve 2,775 2,915
Capital reserve – realised (287) (62)
Capital reserve – unrealised (1,309) (1,345)
Revenue reserve (247) (155)
Total equity shareholders’ funds 2,207 2,413
The financial statements on pages 33 to 45 were approved by the Board of
Directors on 27 March 2024 and were signed on its behalf by:
Geoffrey Gamble
Chairman
Company’s registered number: 06054576
Statement of Changes in Equity
for the year to 31 December 2023
Called-up Share Capital Special Capital Capital Revenue Total
share
premium
redemption
distributable
reserve
reserve
reserve
capital
account
reserve
reserve
realised
unrealised
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 01/01/23
507
382
171
2,915
(62)
(1,345)
(155)
2,413
Share issue 50 165 - - - - - 215
Realised gain on disposals - - - - 145 - - 145
Unrealised (losses)/gains - - - - - (318) - (318)
Transfer of unrealised gain to realised - - - - (354) 354 - -
Net revenue before tax - - - - - - (92) (92)
Capital element of investment management fee - - - - (17) - - (17)
Dividends paid - - - (139) - - - (139)
_______ _______ _______ _______ ________ ________ ________ _______
As at 31/12/23 557 547 171 2,775 (287) (1,309) (247) 2,207
As at 01/01/22
461
57
171
3,118
(236)
334
(65)
3,840
Share issue 46 325 - - - - - 371
Realised loss on disposals - - - - (2) - - (2)
Unrealised (losses)/gains - - - - - (1,481) - (1,481)
Transfer of unrealised gain to realised - - - - 199 (199) - -
Net revenue before tax - - - - - - (90) (90)
Capital element of investment management fee - - - - (22) - - (22)
Dividends paid - - - (203) - - - (203)
_______ _______ _______ _______ ________ ________ ________ _______
As at 31/12/22 507 382 171 2,915 (62) (1,345) (155) 2,413
Some columns and rows might not cast because of rounding errors.
The notes on pages 36 to 45 form an integral part of these financial
statements.
Notes to the Financial Statements
for the year to 31 December 2023
1. Company information
New Century AIM VCT 2 PLC is a UK incorporated public limited company whose
registered office is:
4th Floor
50 Mark Lane
London EC3R 7QR
New Century AIM VCT 2 PLC is a Venture Capital Trust established under the
legislation introduced in the Finance Act 1995. The Company’s principal
objective is to achieve long term capital growth and to pay tax free dividends
when appropriate through investment in a diversified portfolio of qualifying
companies primarily quoted on AIM.
2. Basis of preparation
The Financial Statements have been prepared under the historical cost
convention, except for the measurement at fair value of certain financial
instruments, and in accordance with UK Generally Accepted Accounting Practice
(“GAAP”), including FRS 102 and with the Companies Act 2006 and the
Statement of Recommended Practice (SORP) ‘Financial Statements of Investment
Trust Companies and Venture Capital Trusts (revised July 2022)’.
A summary of the principal accounting policies is set out below.
The Company is a public company and is limited by shares. The Company held all
fixed asset investments at fair value through profit or loss. Accordingly, all
interest income, fee income, expenses and gains and losses on investments are
attributable to assets held at fair value through profit or loss.
Going Concern basis – on the basis that the assets of the Company consist
mainly of marketable securities, the directors are of the opinion that at the
time of approving the accounts, the Company has adequate resources to continue
in operational existence for the foreseeable future. This is because the
directors have a reasonable expectation that the Company has sufficient cash
and liquid investments to continue to operate and that the Company will be
able to manage its business risks successfully and meet its liabilities as
they fall due. Thus, the directors believe it is appropriate to continue to
adopt the going concern basis, as also disclosed in the Corporate Governance
report on page 21, in preparing the financial statements.
The financial statements are presented in Sterling.
3. Significant estimates and judgements
As the Company’s investment holdings, which comprise approximately 99% of
its total assets, are stated at market value based on either the closing bid
prices of the London Stock Exchange or using recent placing values where not
quoted, 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
Accounting policies have been applied consistently throughout the year and in
the prior year.
Cash and cash equivalents
Cash and cash equivalents comprise uninvested funds, held in a client account
by the Investment Manager and the balance is included within debtors.
Investments
The Company’s principal financial assets are its investments and the
policies in relation to those assets are set out below.
Purchases and sales of investments are recognised in the Financial Statements
at the date of the transaction (trade date).
These investments are managed and their performance evaluated on a fair value
basis and information about them is provided internally on that basis to the
Board. Accordingly, as permitted by FRS 102, the investments are measured as
being fair value through profit or loss on the basis that they qualify as a
group of assets managed, and whose performance is evaluated, on a fair value
basis in accordance with a documented investment strategy. The Company's
investments are measured at subsequent reporting dates at fair value.
In the case of investments quoted on a recognised stock exchange, fair value
is established by reference to the closing bid price on the relevant date or
the last traded price, depending upon convention of the exchange on which the
investment is quoted. In the case of AIM quoted investments this is the
closing bid price. In the case of unquoted investments, fair value is
established by using measures of value such as the price of recent
transactions, earnings or revenue multiples, discounted cash flows and net
assets. These are consistent with the IPEV guidelines.
Realised surpluses or deficits on the disposal of investments and permanent
impairments in the value of investments are taken to realised capital
reserves. Unrealised surpluses and deficits on the revaluation of investments
are taken to unrealised capital reserves. Costs incurred relating to
acquisitions and disposals are charged to capital reserves as a deduction from
proceeds or an addition to costs.
In the preparation of the valuations of assets the directors are required to
make judgements and estimates that are reasonable and incorporate their
knowledge of the performance of the investee companies. In the event that the
shares held by the Company are subject to certain restrictions, or the holding
is significant in relation to the traded issued share capital of the investee
company then the directors may apply a discount to the relevant market price.
Fair value hierarchy
Paragraph 34.22 of FRS 102 regarding financial instruments that are measured
in the balance sheet at fair value requires disclosure of fair value
measurements dependent on whether the stock is quoted and the level of the
accuracy in the ability to determine its fair value. The fair value
measurement hierarchy is as follows:
For quoted investments:
Level 1: quoted prices in active markets for an identical asset. The fair
value of financial instruments traded in active markets is based on quoted
market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available, and those prices represent
actual and regularly occurring market transactions on an arm’s length basis.
The quoted market price used for financial assets held is the bid price at the
balance sheet date.
Level 2: where quoted prices are not available (or where a stock is normally
quoted on a recognised stock exchange that no quoted price is available), the
price of a recent transaction for an identical asset, providing there has been
no significant change in economic circumstances or a significant lapse in time
since the transaction took place. The Company held no such investments in the
current or prior year.
4. Accounting policies (continued)
Investments (continued)
For investments not quoted in an active market:
Level 3: the fair value of financial instruments that are not traded in an
active market is determined by either looking at recent share transactions
(e.g. placings) or by using valuation techniques.
There have been no transfers between these classifications in the year (2022:
one - which related to LightwaveRF Ltd, which was moved from Level 1 (quoted
investment) to Level 3 (an unquoted investment)). The change in fair value for
the current and previous year is recognised through the profit or loss
account.
Current asset investments
No current asset investments were held at 31 December 2023 or 31 December
2022. Should current assets be held, gains and losses arising from changes in
fair value of investments are recognised as part of the capital return within
the Income Statement and allocated to the capital reserve - gains/(losses) on
disposal.
It is not the Company’s policy to exercise controlling or significant
influence over investee companies, although it may hold a significant interest
in some companies. Accordingly, the results of these companies are not
incorporated into the revenue account except to the extent of any income
earned or received.
Investment 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.
Financial Instruments
The Company’s principal financial assets are its investments and its cash
and the policies in relation to those assets are set out above. Financial
liabilities and equity instruments are classified according to the substance
of the contractual arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets of the entity after
deducting all of its financial liabilities. Where the contractual terms of
share capital do not have any terms meeting the definition of a financial
liability then this is classed as an equity instrument. The nominal value of
new equity issued during the year is credited to share capital reserve and any
premium is credited to the share premium account.
4. Accounting policies (continued)
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 share capital repurchased and is equal
to the nominal value of the shares repurchased.
Special distributable reserve includes cancelled share premium account and is
available for distribution and may be used to cover dividend payments or share
buy backs.
Capital reserve-realised represents surpluses or deficits on the disposal of
investments and permanent impairment in the value of investments.
Capital reserve-unrealised represents unrealised surpluses and deficits on the
revaluation of investments.
Revenue reserve includes all current and prior period retained profits and
losses and other distributable reserves.
5. Investment income
Year ended Year ended
31 December 2023
31 December 2022
£’000
£’000
Income
Interest income 3 -
Dividends from UK companies 26 27
Total income 29 27
All of the Company’s income has been generated in the United Kingdom from
dividend income from its investment portfolio.
6. Investment management fees
Year ended Year ended
31 December 2023
31 December 2022
Revenue Capital Revenue Capital
£’000
£’000
£’000
£’000
Investment management fees 6 17 7 22
Oberon Investments Limited 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, Oberon Investments
Limited 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 2023, the fee payable to Oberon Investments Limited
equated to 1% per annum of net assets. No performance fee is payable.
The investment management agreement was 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 Oberon Investments Limited in a mirror time frame of 12 months’ notice
period.
7. Other expenses
Year ended Year ended
31 December 2023
31 December 2022
£’000
£’000
Administrative and secretarial services 46 49
Auditor’s fees – for audit work 29 24
Auditor’s fees – for non-audit related work 3 3
Regulatory fees 37 34
115 110
8. Directors’ remuneration
The chairman received £5,000 remuneration in the year (2022: £5,000). No
other remuneration has been paid or is payable for the year to 31 December
2023 or in respect of the prior year.
9. Tax charge on ordinary activities
Year ended Year ended
31 December 2023
31 December 2022
Revenue Capital Revenue Capital
£’000
£’000
£’000
£’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 (92) (190) (90) (1,505)
Tax on above at the standard company rate of 23.5% (2022: 19%) (22) (45) (17) (286)
UK investment income not subject to corporation tax (7) - (5) -
Realised (gains)/losses not taxable - (34) - -
Unrealised (gains)/losses not taxable - 75 - 281
Non allowable expenses - - - -
Unutilised/(utilised) losses 29 4 22 5
Current tax charge for the year - - - -
The Company has unrelieved losses amounting to approximately £1,334,000
(2022: £1,200,000) which are available to carry forward for tax purposes
which it can set off against future profits. No deferred tax asset has been
recognised in respect of these losses in view of the Company’s history of
losses recoverability is not sufficiently certain.
10. Dividends paid
Year ended Year ended
31 December 2023
31 December 2022
£’000
£’000
Final dividend paid in respect of previous year 139 203
139 203
The directors declared a final dividend of 2.5p per share (amounting to
£139k) in respect of the year ended 31 December 2022 and this was paid during
2023. The directors declared a final dividend of 4.0p per share (amounting to
£203k) in respect of the year ended 31 December 2021 and this was paid during
2022.
11. Return per ordinary share
The revenue loss, per ordinary share, of 1.72p (2022: 1.80p), is based on the
net loss on ordinary activities after taxation of £91,710 (2022: loss of
£89,843) and on 5,346,708 (2022: 4,981,816) ordinary shares, being the
weighted average number of ordinary shares in issue during the year.
The total loss per ordinary share of 5.27p (2022: loss of 32.01p per share) is
based on a net loss after taxation of £281,763 (2022: loss of £1,594,628)
and on 5,346,708 (2022: 4,981,816) ordinary shares, being the weighted average
number of ordinary shares in issue during the year.
12. Fixed asset investments at valuation
As at As at
31 December 2023
31 December 2022
£’000
£’000
UK listed 8 8
AIM 1,918 1,999
AQSE 50 165
Unlisted 18 18
1,994 2,190
Movements (castings affected by roundings) in investments, including realised
and unrealised gains and losses, during the year are summarised as follows:
Year ended 31 December 2023
UK Listed AIM AQSE Un-listed Total
£’000 £’000 £’000 £’000 £’000
Value at 1 January 2023 8 1,999 165 18 2,190
Purchases - 499 - - 499
Transfers - - - - -
8 2,498 165 18 2,689
less: Sales proceeds - (367) (155) - (522)
8 2,131 10 18 2,167
Realised period gains/(losses) - 94 51 - 145
Unrealised holding gains/(losses) - (307) (11) - (318)
Value at 31 December 2023 8 1,918 50 18 1,994
Cost at 31 December 2023 10 3,126 117 50 3,303
12. Fixed asset investments (continued)
Year ended 31 December 2022
UK Listed AIM AQSE Un-listed Total
£’000 £’000 £’000 £’000 £’000
Value at 1 January 2022 95 3,600 76 - 3,771
Purchases - 348 150 - 498
Transfers - (3) - 3 -
95 3,945 226 3 4,269
less: Sales proceeds (101) (495) - - (596)
(6) 3,450 226 3 3,673
Realised period gains/(losses) 16 (18) - - (2)
Unrealised holding gains/(losses) (2) (1,432) (61) 15 (1,481)
Value at 31 December 2022 8 1,999 165 18 2,190
Cost at 31 December 2022 10 3,142 236 147 3,535
The overall (loss)/gain on investments for the years shown in the Income
Statement is as follows:
Year ended Year ended
31 December 2023
31 December 2022
£’000
£’000
Net realised gains on disposal 145 (2)
Net unrealised gains (318) (1,481)
(173) (1,483)
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 As at
31 December 2023
31 December 2022
£’000
£’000
Uninvested funds with broker:
Oberon Investments Limited 243 354
16. Creditors
As at As at
31 December 2023
31 December 2022
£’000
£’000
30 131
Trade creditors and accruals
30 131
17. Share capital
As at As at
31 December
31 December
2023
2022
£’000
£’000
Authorised
25,000,000 ordinary shares of 10p each 2,500 2,500
Allotted, called up and fully paid
5,574,403 (2022: 5,067,643) ordinary shares of 10p each 557 507
On 13 June 2023 the Company issued 506,760 new ordinary shares of 10 pence
each by way of a share subscription at a price of 42.55 pence per share (being
the net asset value per ordinary share in the Company at the close of business
as at 8 June 2023) to raise approximately £215,626 before expenses.
18. Net asset value per share
Net asset value per share of 39.6p (2022: 47.6p) is based on net assets at 31
December 2023 of £2,207,493 (31 December 2022 of £2,413,989) and on
5,574,403 ordinary shares in issue on 31 December 2023 and 5,067,643 ordinary
shares in issue on 31 December 2022.
19. Performance incentive arrangements
The Investment Manager is not entitled to any performance incentive
arrangements.
20. Cash and cash equivalents
Cash and cash equivalents comprise £243,249 (2022: £353,864) of uninvested
funds, held in a client account by the Investment Manager (see note 15).
21. Risk management and financial instruments
A statement of the Company’s principal objectives is given within the
Strategic Report on page 6. In order to achieve these objectives the Company
invests its funds primarily in qualifying holdings in companies traded on AIM,
which by their nature may entail a higher degree of risk than investments in
large listed companies. The Company has not entered into any derivative
transactions, and does not expect to do so in the foreseeable future. As a
venture capital trust, the Company invests in securities for the long term,
and it is the Company’s policy that no trading in investments or other
financial instruments shall be undertaken.
Market price risk
The main risks arising from the Company’s investing activities are market
price risk, representing the uncertain realisable values of the Company’s
investments. The directors aim to limit the risk attaching to the portfolio as
a whole by careful selection of investments and by maintaining a wide spread
of investments in terms of financing stage, industry sector and geographical
location.
21. Risk management and financial instruments (continued)
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.
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. The Company also has some credit risk associated with its
Investment Manager which holds cash on behalf of the Company, as explained in
note 20.
Currency risk
The Company’s assets and liabilities are denominated in Sterling. As such,
there is little currency risk. Any transactions in currencies other than
Sterling are recorded at the rates of exchange prevailing at the date of the
transaction. At each reporting date, the monetary assets and liabilities
denominated in foreign currencies are re-translated at the rates prevailing on
the reporting date.
Capital
The Company’s capital is provided in its entirety by its shareholders in the
form of ordinary shares.
The Company’s purpose and objective is the investment of its capital funds
in listed investments, primarily those quoted on AIM with a view to securing
capital appreciation over the long term.
There were no externally imposed capital requirements with which the Company
had to comply during the year to 31 December 2023.
Financial assets
The interest rate profile of the Company’s financial assets is set out
below:
Year ended Year ended
31 December 2023
31 December 2022
£’000
£’000
Fixed rate - -
Interest bearing 243 -
Non-interest bearing 1,994 2,544
2,237 2,544
21. Risk management and financial instruments (continued)
Fixed rate assets Year ended Year ended
31 December
31 December
2023
2022
£’000
£’000
Weighted average interest rate n/a n/a
Weighted average years to maturity n/a n/a
Non-interest bearing financial assets comprise equity share and non-equity
share investments in investee companies, cash held on non-interest bearing
deposit and debtors.
Fair values
The investments of the Company are valued by the directors at their bid prices
(in accordance with the guidelines issued by the British Venture Capital
Association), and these carrying values are considered to approximate the fair
value of the investments. The fair values have also been determined in line
with the fair value hierarchy as set out in FRS 102 11.27.
22. Financial assets and liabilities
Year ended Year ended
31 December 2023
31 December 2022
£’000
£’000
Financial assets measured at fair value through profit & loss 1,994 2,190
Financial assets measured at amortised cost 243 354
Financial liabilities measured at amortised cost (30) (131)
23. Related party transactions
As disclosed in note 6, New Century AIM VCT 2 plc is managed by Oberon
Investments Limited and is paid a management fee, which is also disclosed in
note 6.
One amount was payable to key management personnel, being the Chairman, during
the year for £5,000 (2022: £5,000).
24. Capital commitments
There were no investments which were approved at the year-end but which had
not completed.
25. Control
New Century AIM VCT 2 plc is not under the control of any one party or
individual.
26. Post balance sheet events
The Company’s directors intends to propose a final dividend of 2.5p per
share for the year ended 31 December 2023, amounting to £139,360 which will
be payable, subject to shareholder approval, later in 2024.
On 29 January 2024 John Beaumont was appointed as a director of the Company.
On 30 January 2024 Michael Barnard ceased to be a director of the Company.
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 Oberon Investments Limited, an
independent fund management company based in Laindon, Essex.
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 plc has been approved as a VCT by HM Revenue and
Customs. In order to maintain its approval the Company must comply with
certain requirements on a continuing basis; in particular, at least 80% by
value of the Company’s investments must comprise “qualifying holdings”.
A “qualifying holding” consists of up to £1 million invested in any one
year in new shares or securities in an unquoted company which is carrying on a
qualifying trade and whose gross assets do not exceed £15 million at the time
of investment. For the purposes of these criteria, unquoted companies include
companies whose shares are traded on the Alternative Investment Market
(“AIM”).
As with investment trusts, capital gains accruing to VCTs are not chargeable
gains for UK Corporation Tax purposes.
Financial calendar
Annual General Meeting 28 June 2024
Interim report for six months to 30 June 2024 August 2024
Preliminary announcement of results for the year to 31 December 2024 March 2025
Annual General Meeting 2024 June 2025
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
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.londonstockexchange.com&esheet=53916425&newsitemid=20240328813778&lan=en-US&anchor=www.londonstockexchange.com&index=4&md5=d9cde0e78da93bd1686762f981c247e8)
).
View source version on businesswire.com:
https://www.businesswire.com/news/home/20240328813778/en/
(https://www.businesswire.com/news/home/20240328813778/en/)
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