REG-New Century AIM VCT Plc Annual Financial Report <Origin Href="QuoteRef">NECE.L</Origin> - Part 2
30/06/2016 12:30
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Net asset value per ordinary share 18 74p 73p
The financial statements on pages 24 to 38 were approved by the Board of
directors on 29 June 2016 and were signed on its behalf by:
Michael Barnard
Director
The notes on pages 28 to 38 form an integral part of these financial statements.
Company`s registered number: 05352611
Statement of Changes in Equity
at 29 February 2016
Share capital Share premium account Capital redemption reserve Capital realised Capital unrealised Revenue reserve Total
£ £ £ £ £ £ £
As at 1 March 2014 1,002 198 111 1,335 633 3,998 7,277
Cancellation of shares (106) - 106 - - (729) (729)
Realised gains on disposals - - - 118 - - 118
Share issue 54 351 - - - - 405
Transfer of unrealised loss to realised on disposal of investment - - - (1,203) 1,203 - -
Net revenue before tax - - - - - 18 18
Capital element of investment management fee - - - (57) - - (57)
Dividends paid - - - - - (317) (317)
Unrealised gains - - - - 187 - 187
At 28 February 2015 950 549 217 193 2,023 2,970 6,902
As at 1 March 2015 950 549 217 193 2,023 2,970 6,902
Cancellation of shares (96) - 96 - - (748) (748)
Realised gains on disposals - - - 282 - - 282
Share issue 9 63 - - - - 72
Transfer of unrealised gain to realised on disposal of investment - - - 722 (722) - -
Net revenue before tax - - - - - 51 51
Capital element of investment management fee - - - (57) - - (57)
Dividends paid - - - - - (297) (297)
Unrealised gains - - - - 182 - 182
At 29 February 2016 863 612 313 1,140 1,483 1,976 6,387
Cash Flow Statement
at 29 February 2016
Note Year ended Year ended
29 February 2016 28 February 2015
£`000 £`000
Cash flow from operating activities
Cash generated from operations 21 (125) (123)
Net cash generated from operating activities (125) (123)
Cash flows from investing activities
Interest received 7 3
Investment income 111 81
Net cash from investing activities 118 84
Cash flows from financing activities
Sale of investments 2,496 1,518
Purchase of investments (1,734) (1,059)
Share issue 72 405
Dividends paid (297) (317)
Share cancellation (748) (729)
Net cash used in financing activities (211) (182)
Net decrease in cash and cash equivalents (218) (221)
Cash and cash equivalents at the beginning of the year 661 882
Cash and cash equivalents at the end of year 443 661
1.Company information
New Century AIM VCT PLC is a UK incorporated company whose registered office is:
4th Floor
50 Mark Lane
London EC3R 7QR
New Century AIM VCT PLC is a Venture Capital Trust established under the
legislation introduced in the Finance Act 1995. The company`s principal
objective is to achieve long term capital growth through investment in a
diversified portfolio of qualifying companies primarily quoted on AIM.
Investments
2. Basis of preparation
The financial statements have been prepared in accordance with applicable United
Kingdom law and accounting standards and with the Financial Reporting Council`s
Financial Reporting Standard FRS 102 and with the Statement of Recommended
Practice for Investment Companies re-issued by the Association of Investment
Companies in November 2014.
Notes to the Financial Statements
for the year to 29 February 2016
This is the first year in which the financial statements have been prepared
under FRS 102. No adjustment or re-statement of prior years has been required as
a result of this transition.
Going Concern basis - on the basis that the assets of the company consist mainly
of marketable securities, the directors are of the opinion that at the time of
approving the accounts, the company has adequate resources to continue in
operational existence for the foreseeable future. For this reason, they continue
to adopt the going concern basis in preparing the accounts.
The financial statements are presented in Sterling.
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.
3. Significant estimates and judgements
As the company`s investment holdings, which comprise almost 94% of its total
assets, are stated at market value based on the closing prices of the London
Stock Exchange, the directors do not believe that there is any inherent
uncertainty in their presentation of these amounts, and that in their judgement,
market value and fair value may be regarded as identical for the purpose of
these accounts.
4. Accounting policies
Investments
Listed or AIM traded investments are stated at market value, which is based upon
market bid prices at the balance sheet date. In the event that the shares held
by the company are subject to certain restrictions, or the holding is
significant in relation to the traded issued share capital of the investee
company then the directors may apply a discount to the relevant market price.
Investments in unquoted companies are valued by the directors in accordance with
British Venture Capital Association ("BVCA") guidelines.
4.Accounting policies (continued)
Investments (continued)
Realised surpluses or deficits on the disposal of investments and permanent
impairments in the value of investments are taken to realised capital reserves.
Unrealised surpluses and deficits on the revaluation of investments are taken to
unrealised capital reserves. Costs incurred relating to acquisitions and
disposals are charged to capital reserves as a deduction from proceeds or an
addition to costs.
It is not the company`s policy to exercise controlling or significant influence
over investee companies, although it may hold a significant interest in some
companies. Accordingly, the results of these companies are not incorporated into
the revenue account except to the extent of any income earned or received.
Income
Dividend income receivable from quoted securities is recognised on the
ex-dividend date. Income from unquoted equity and non-equity securities is
recognised on an accruals basis except that a full provision is made until the
receipt of the income is certain.
Interest from cash and deposits and fixed returns on debt securities are
recognised on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis. One quarter of the
investment management fee is charged to the revenue account and the remaining
three quarters is charged to capital reserves, net of corporation tax relief,
and inclusive of any irrecoverable value added tax. The allocation of the
management fee reflects the directors` estimate of the source of the long-term
returns in the portfolio from revenue and capital.
Taxation
Deferred taxation is provided in full on timing differences that result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in the accounts. Deferred tax assets are
recognised to the extent that it is regarded as more likely than not that they
will be recovered. Deferred tax assets and liabilities are not discounted.
5.Income
Year ended Year ended
29 February 28 February
2016 2015
£`000 £`000
Interest receivable
- bank deposits and liquid funds 7 3
Dividends receivable 111 81
Investment income 118 84
6.Investment management fees
Year ended Year ended
29 February 29 February
2016 2015
Revenue Capital Revenue Capital
£`000 £`000 £`000 £`000
Investment management fees 19 57 19 57
M D Barnard & Co. Limited ("MDB") provides investment management services to the
company in respect of the company`s portfolio of venture capital investments
under an investment management agreement dated 10 March 2005. Michael Barnard
who is a non-executive director of the company is managing director and
proprietor of MDB.
Under the terms of the investment management agreement, MDB is entitled to a fee
(exclusive of VAT) equal to 1% per annum of the net assets of the company. The
fee is calculated quarterly in arrears based on the net assets at 29 February,
31 May, 31 August and 30 November. No performance fee is payable.
The investment management agreement is for a minimum period of three years from
24 March 2005 terminable by either party at any time thereafter by one year`s
prior written notice.
7.Other expenses
Year ended Year ended
29 February 28 February
2016 2015
£`000 £`000
Administrative and secretarial services 11 19
Auditors` remuneration
- for audit services 10 10
- for tax services 2 1
Regulatory fees 19 11
Miscellaneous 6 6
48 47
8.Directors` remuneration
No remuneration has been paid or is payable for year to 29 February 2016, this
is also true for the prior year.
9.Tax charge/(credit) on ordinary activities
Year ended Year ended
29 February 28 February
2016 2015
Revenue Capital Revenue Capital
£`000 £`000 £`000 £`000
United Kingdom tax based on the taxable return for the year - - - -
Factors affecting tax charge/(credit) for the year
Return on ordinary activities before taxation 51 407 18 248
Tax on above at the small company rate of 20% (2015: 20%) 10 81 4 50
UK dividends not subject to corporation tax (22) - (16) -
Capital loss on investment - (101) - (70)
Non allowable expenses 1 - 1 -
Unutilised losses 11 20 11 20
Current tax charge/(credit) for the year - - - -
At the balance sheet date, the company has unused tax losses available for
offset against suitable future gains. A deferred tax asset of £260,000 (2015:
£250,000) has not been recognised in respect of such losses due to the
unpredictability of suitable future taxable profits.
10.Dividends
Year ended Year ended
29 February 2016 28 February 2015
£`000 £`000
Interim dividend paid - -
Final dividend paid in respect of previous year 297 317
297 317
The directors propose a final revenue dividend of 0.525p per share and a final
capital dividend of 2.675p per share for the year ended 29 February 2016 to be
paid on 9 September 2016 to shareholders on the register at 12 August 2016.
11.Return per ordinary share
The revenue return, per ordinary share, is based on the net revenue on ordinary
activities after taxation of £50,806 (2015: £18,346) and on 9,376,947 (2015:
10,240,327) ordinary shares, being the weighted average number of ordinary
shares in issue during the year.
The capital return per ordinary share is based on a net realised and unrealised
capital return of £407,621 (2015: £247,684) and on 9,376,947 (2015: 10,240,327)
ordinary shares, being the weighted average number of ordinary shares in issue
during the year.
12.Fixed asset investments
Year ended Year ended
29 February 2016 28 February 2015
£`000 £`000
UK Listed 290 346
AIM 5,670 5,869
Unlisted 11 54
5,971 6,269
Movements in investments, including realised and unrealised gains and losses,
during the year are summarised as follows:
Year ended 29 February 2016
Unlisted UK listed AIM ISDX Mkts Total
£'000 £'000 £'000 £'000 £'000
Valuation at 1 March 2015 54 346 5,869 - 6,269
Purchases at cost - 89 1,645 - 1,734
Sales proceeds - (149) (2,347) - (2,496)
Realised gains/(losses) - 8 274 - 282
Unrealised gains/(losses) (43) (4) 229 - 182
Valuation at 29 February 2016 11 290 5,670 - 5,971
Cost at 1 March 2015 76 410 7,910 - 8,396
Purchases - 89 1,645 - 1,734
Sales proceeds - (149) (2,348) - (2,497)
Realised gains/(losses) - 25 980 - 1,005
Cost at 29 February 2016 76 375 8,187 - 8,638
12.Fixed asset investments (continued)
Year ended 28 February 2015
Unlisted UK listed AIM ISDX Mkts Total
£'000 £'000 £'000 £'000 £'000
Valuation at 1 March 2014 5 406 6,012 - 6,423
Purchases at cost 50 40 969 - 1,059
Sales proceeds - (118) (1,400) - (1,518)
Realised gains/(losses) - 5 113 - 118
Unrealised gains/(losses) (2) 13 176 - 187
Valuation at 28 February 2015 53 346 5,870 - 6,269
Cost at 1 March 2014 367 448 8,924 201 9,940
Purchases 50 40 969 - 1,059
Sales proceeds - (118) (1,400) - (1,518)
Realised gains/(losses) (341) 40 (583) (201) (1,085)
Cost at 28 February 2015 76 410 7,910 - 8,396
The overall gain on investments for the years shown are in the Income Statement
is analysed as follows:
Year ended Year ended
29 February 28 February
2016 2015
£`000 £`000
Net realised gain on disposal 282 118
Increase in unrealised appreciation 182 187
464 305
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
Year ended Year ended
29 February 28 February
2016 2015
£`000 £`000
Uninvested funds with broker:
M D Barnard & Co. Limited 443 661
16.Creditors: amounts falling due within one year
Year ended Year ended
29 February 28 February
2016
2015
£`000 £`000
Trade creditors and accruals 27 28
27 28
17.Share capital
Year ended Year ended
29 February 2016 28 February 2015
£`000 £`000
Authorised
15,000,000 ordinary shares of 10p each 1,500 1,500
Allotted, called up and fully paid
8,634,374 (2015: 9,497,479) ordinary shares of 10p 863 950
On 27 March 2015 the company issued 96,269 ordinary shares at a price of 74.84
pence per share.
On 11 December 2015 the company completed a share buy-back of 959,374 ordinary
shares at a price of 78.02 pence per share. Those ordinary shares that were
bought back were cancelled and in accordance with Section 733 of the Companies
Act 2006 a capital redemption reserve was established in respect of the nominal
value of the ordinary share capital being cancelled.
18.Net asset value per share
Net asset value per share is based on net assets at 29 February 2016 of
£6,387,636 (28 February 2015 of £6,903,068) and on 8,634,374 ordinary shares
(2015: 9,497,479 ordinary shares) in issue at those dates.
19.Performance incentive arrangements
The Investment Manager is not entitled to any performance incentive
arrangements.
20.Reserves
Called up share capital represents the nominal value of shares that have been
issued.
Share premium account includes any premiums received on issue of share capital.
Any transaction costs associated with the issuing of shares are deducted from
share premium.
Capital redemption reserve relates to capital repurchased.
Capital reserve - realised represents surpluses or deficits on the disposal of
investments and permanent impairment in the value of investments.
Capital reserve - unrealised represents surpluses and deficits on the
revaluation of investments
Revenue reserve includes all current and prior period retained profits and
losses.
21.Notes to the cash flow statement
Year ended Year ended
29 February 28 February
2016 2015
£`000 £`000
Operating activity
Operating return 458 266
Gain on sale of investments (282) (118)
Investment income (note 5) (118) (84)
Unrealised profits on investments (182) (187)
Decrease in creditors (note 16) (1) -
(125) (123)
Cash and cash equivalents
Cash and cash equivalents comprise £442,528 (2015: £661,134) of uninvested
funds, held in a bank account with the investment manager.
22.Risk management and financial instruments
A statement of the company`s principal objectives is given within the Strategic
Report on page 6. In order to achieve these objectives the company invests its
funds primarily in qualifying holdings in unlisted companies and companies
traded on AIM, which by their nature may entail a higher degree of risk than
investments in large listed companies. The company has not entered into any
derivative transactions, and does not expect to do so in the foreseeable future.
As a Venture Capital Trust, the company invests in securities for the long term,
and it is the company`s policy that no trading in investments or other financial
instruments shall be undertaken.
Market price risk
The main risks arising from the company`s investing activities are market price
risk, representing the uncertain realisable values of the company`s investments.
The directors aim to limit the risk attaching to the portfolio as a whole by
careful selection of investments and by maintaining a wide spread of investments
in terms of financing stage, industry sector and geographical location.
22.Risk management and financial instruments (continued)
Market price risk (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. The company`s investment portfolio includes
investments in interest bearing securities in investee companies and in other
fixed interest securities. Details of interest bearing assets are given below
under Financial assets.
Liquidity risk
There is liquidity risk associated with unquoted investments, which are not
readily realisable.
Credit risk
Credit risk is the risk of a borrower defaulting on either an interest payment
or the capital sum of a loan. The exposure is limited to uninvested funds held
with the investment manager and the fixed interest loan notes.
Currency risk
The company`s assets and liabilities are denominated in sterling.
Capital
The company`s capital is provided in its entirety by its shareholders in the
form of ordinary shares.
The company`s purpose and objective is the investment of its capital funds in
listed investments, primarily those quoted on the Alternative Investment Market
with a view to securing capital appreciation over the long term.
There were no externally imposed capital requirements with which the company had
to comply during the year to 29 February 2016.
22.Risk management and financial instruments (continued)
Financial assets
The interest rate profile of the company`s financial assets is set out below:
Year ended Year ended
29 February 28 February
2016 2015
£`000 £`000
Floating rate 443 661
Fixed rate 6 49
Non-interest bearing 5 5
454 715
Year ended Year ended
29 February 28 February
2016 2015
Fixed rate assets
Weighted average interest rate 10% 10%
Weighted average years to maturity 1.75 2.75
Floating rate financial assets comprise cash held on deposit and investments in
liquidity funds. The benchmark rate for these investments is the UK bank base
rate.
Non-interest bearing financial assets comprises equity share and non-equity
share investments in investee companies, cash held on non-interest bearing
deposit and debtors.
Fair values
The investments of the company are valued by the directors in accordance with
the guidelines issued by the British Venture Capital Association, and the
carrying values are considered to approximate the fair value of the investments.
The fair values have also been determined in line with the fair value hierarchy
as set out in FRS 102 11.27.
23.Financial assets and liabilities
Year ended Year ended
29 February 2016 28 February 2015
£`000
£`000
Financial assets measured at fair value 5,971 6,269
Financial liabilities measured at amortised cost (27) (28)
24.Related party transactions
New Century AIM VCT plc is managed by M D Barnard & Co. Limited. Details of the
relationship and transactions with the related party are included in note 6.
No amounts were payable to key management personnel during the year (2015:
£nil).
25.Capital commitments
There were no investments which were approved at the year-end but which had not
completed.
26.Control
New Century AIM VCT plc is not under the control of any one party or individual.
27.Post balance sheet events
On 29 June 2016 the directors proposed a dividend in respect of the year ended
29 February 2016 of £276,300 representing 3.20p per ordinary share.
Shareholder Information
for the year to 29 February 2016
The Company
New Century AIM VCT PLC was incorporated on 4 February 2005 in England & Wales.
In March 2005, the company obtained a listing on the London Stock Exchange. A
total of £8.465 million was raised (before expenses) through an offer for
subscription of new ordinary shares at 100p.
The Investment Manager
New Century AIM VCT PLC is managed by M D Barnard & Co. Limited, an independent
fund management company based in Laindon, Essex. M D Barnard & Co. Limited
currently manages or advises investment trust, unit trust and venture capital
funds totalling approximately £40 million including New Century AIM VCT PLC.
Venture Capital Trusts
Venture Capital Trusts (VCTs) were introduced in the Finance Act 1995 and are
intended to provide a means whereby individual investors can invest in small
unquoted trading companies in the UK, with incentives in the form of a number of
tax benefits. Investors subscribing for new shares in a VCT are currently
entitled to claim Income Tax relief of 30% on their investment, irrespective of
their marginal rate (up to a maximum 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. Conversely, losses on VCT shares
are not allowable to offset against taxable gains.
The company has reached the end of its provisionally approved period and now
complies with the full requirements for approval. In order to maintain its
approval the company must comply with certain requirements on a continuing
basis; in particular, within three years from the date of provisional approval
at least 70% by value of the company`s investments must comprise "qualifying
holdings", of which at least 30% by value must be in eligible ordinary shares.
As with investment trusts, capital gains accruing to VCTs are not chargeable
gains for UK Corporation Tax purposes.
Financial calendar
Annual General Meeting 2016 24 August 2016
Interim report for six months to 31 August 2016 published October 2016
Preliminary announcement of results for the year to 28 February 2017 June 2017
Annual General Meeting 2017 August 2017
Share price
The mid-market price of shares in New Century AIM VCT PLC is available daily on
the London Stock Exchange website (www.londonstockexchange.com).
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