TIDMUAV
RNS Number : 1046W
Unicorn AIM VCT PLC
08 December 2023
Unicorn AIM VCT plc (the "Company" or the "VCT")
LEI: 21380057QDV7D34E9870
Annual Results Announcement for the year ended 30 September
2023
The full Annual Report and Accounts for the year ended 30
September 2023 can be found on the Company's website
www.unicornaimvct.co.uk
FINANCIAL HIGHLIGHTS
(for the year ended 30 September 2023)
-- Net asset value ("NAV") total return for the year ended 30
September 2023, after adding back the dividends of 6.5 pence per
share paid in the year, fell by 4.3%. By comparison the FTSE AIM
All-Share Total Return Index fell by 8.3%.
-- Offer for Subscription raised GBP14.6 million (after costs).
-- Final dividend of 3.5 pence per share proposed for the
financial year ended 30 September 2023.
-- New offer for Subscription announced to raise up to GBP20.0 million.
Fund Performance
Net asset Cumulative Net asset
Shareholders' value dividends value plus
Funds* per share + paid cumulative Share
Ordinary Shares (GBP million) (NAV) per share dividends price (p)
(p) (p) paid per share
(p)
30 September
2023 211.9 122.6 105.5 228.1 103.5
31 March 2023 218.4 125.5 102.5 228.0 103.5
30 September
2022 221.1 134.8 99.0 233.8 126.5
31 March 2022 315.3 195.7 64.0 259.7 167.0
* Shareholders funds/net assets as shown on the Statement of
Financial Position below.
+ The Board has recommended a final dividend of 3.5 pence per
share for the year ended 30 September 2023 bringing total dividends
for the year to 6.5 pence per share. If approved by Shareholders,
this payment will bring total dividends paid in the last ten years
from 30 September 2013 to 109.0 pence per share.
STRATEGIC REPORT
The purpose of this Strategic Report is to inform Shareholders
of the Company's progress on key matters and assist them in
assessing the extent to which the Directors have performed their
legal duty to promote the success of the Company in accordance with
section 172 of the Companies Act 2006.
The Investment Manager's Review also includes a comprehensive
analysis of the development of the business during the financial
year and the position of the Company's main investments at the end
of the year.
Chair's Statement
I am pleased to present the Company's Audited Annual Report for
the year ended 30 September 2023.
Introduction
The financial year ended 30 September 2023 has been another
challenging period for the Alternative Investment Market ("AIM").
In developed economies interest rates were increased repeatedly
throughout the period under review, as central banks attempted to
control mounting inflationary pressures. These actions are finally
having an impact, with the rate of inflation now softening and
currently well below the peak reached in the final quarter of 2022.
The challenge facing investors in equity markets lies in trying to
understand how long it will take for the interest rate cycle to
unwind and, should rates remain at elevated levels, what impact
that might have on prospects for global economic growth. Longer
dated bond yields currently indicate that markets expect rates to
remain higher for longer, with investors remaining understandably
cautious about the near-term economic outlook.
The current uncertain environment is challenging for smaller
quoted companies; investment decisions are more likely to be
delayed and valuations of higher growth companies have suffered
considerable downward pressure. This dynamic is particularly
relevant for the AIM where a key component of current equity
valuations is driven by the discounted value of future cash
flows.
Economic & Market Review
Against a backdrop of heightened inflation and rising interest
rates, economic activity in the UK has remained surprisingly
resilient. The recession that many predicted is yet to materialise
and it appears that prospects for modest economic growth are
improving. It is encouraging that consumer spending has so far held
up, although the significant overall increase in mortgage service
costs has yet to be fully incorporated into discretionary spending
patterns.
The period under review was a tough one for the junior end of
the UK equity market. The FTSE AIM All-Share Total Return Index
fell by 8.3% in the twelve months to 30 September 2023, whilst the
FTSE 100 Total Return Index delivered a positive total return of
14.7%. This wide divergence in performance reflects an aversion to
risk that continues to prevail among both institutional and retail
investors, with interest rate sensitive sectors (banks) and
beneficiaries of the higher inflationary environment (commodities)
performing strongly.
Following a particularly difficult prior period, the further
declines on AIM have been disappointing and we have seen the FTSE
AIM All-Share Total Return Index end the period over 40% below the
20 year high reached in September 2021.
Net Assets
As at 30 September 2023, the audited net assets of the Company
were GBP211.9 million, representing a decline of GBP9.2 million
over the course of the financial year. There were a number of
components that contributed to this fall, notably; an GBP8.0
million loss on the investment portfolio, GBP10.9 million of
dividends paid and GBP3.8 million of share buybacks. The decline in
assets was partially offset by the fully subscribed Offer for
Subscription, which raised net proceeds of GBP14.6 million. After
adding back all dividends paid, the total return in the period was
-4.3%.
Investment Performance Review
The Company's total return of -4.3% meaningfully outperformed
the FTSE AIM All-Share Total Return Index, which delivered a total
return of -8.3% over the same period.
The investment portfolio remains well diversified, with holdings
ranging from early-stage companies incurring losses and consuming
cash, to well-established businesses that are profitable, cash
generative and dividend paying.
At the financial year end, the portfolio comprised of 81 active
VCT qualifying companies. Most investee companies within the
portfolio remain well capitalised, with over three quarters
currently reporting healthily positive levels of net cash on their
balance sheets.
The adverse macroeconomic and geopolitical environment has
inevitably taken a heavy toll on smaller quoted companies in
general. It is therefore encouraging to again be able to report on
another year of relative outperformance, especially given a
difficult start to the financial year under review. The largely
specialised nature of the products and services offered by the
investee companies in the portfolio has undoubtedly helped to
insulate your Company from the wider losses suffered by the AIM
during the period.
One other notable trend during the financial year has been an
increase in M&A activity, with six completed and/or potential
acquisitions having been announced in the period. Depressed
valuations and a weak currency have combined to make UK quoted
companies increasingly attractive to overseas buyers.
Portfolio Activity
Following the significant decline in the valuations of AIM
quoted companies in the previous financial year, deal flow remained
muted in the early months of the period under review.
Encouragingly, fundraising activity picked up in the second half of
the year with a growing number of interesting and potentially high
growth companies choosing to list on AIM. As the Initial Public
Offering (IPO) market continues to improve, it is encouraging to
report that the Investment Manager has a growing number of new and
attractive-looking opportunities in the pipeline.
Four new VCT qualifying investments were made during the period,
at a total cost of GBP6.5 million. In addition, GBP1.1 million of
VCT qualifying capital was allocated across three of the existing
investee companies, to support their future growth.
A number of full and partial disposals were also made during the
financial year. Total proceeds from disposals of qualifying
investments amounted to GBP2.6 million, realising an overall
capital loss of GBP1.2 million.
The Investment Manager also invested in two money market funds
during the period. This enabled Shareholders to benefit from the
higher interest rate environment, while also maintaining the strong
liquidity position needed to fund new qualifying investment
opportunities. The initial combined investment was GBP19.0 million,
which had been reduced to GBP12.1 million by the end of the period,
as capital has been deployed into qualifying investments.
A more detailed analysis of investment activity and performance
can be found in the Investment Manager's Review below.
Dividends
An interim dividend of 3.0 pence per share, for the half year
ended 31 March 2023, was paid to Shareholders on 11 August
2023.
Despite the market difficulties and the resulting decline in the
Company's net assets, the Board is also pleased to recommend a
final dividend of 3.5 pence per share for the financial year ended
30 September 2023. This dividend, if approved by Shareholders at
the Company's forthcoming AGM, will be payable on 14 February 2024
to Shareholders on the register as at 5 January 2024.
Total dividends in respect of the financial year ended 30
September 2023 are therefore expected to be 6.5 pence per
share.
Share Buybacks & Share Issues
The Board continues to believe that it is in the best interests
of the Company and its Shareholders to make market purchases of its
shares from time to time. During the period from 1 October 2022 to
30 September 2023, the Company bought back 3,398,754 of its own
Ordinary Shares for cancellation, at an average price of 110.8
pence per share excluding costs.
Future repurchases of shares will continue to be made in
accordance with guidelines established by the Board and will be
subject to the Company having the appropriate authorities from
Shareholders and sufficient funds available for this purpose. Share
buybacks will also be subject to the Listing Rules and any
applicable law at the relevant time. Shares bought back in the
market are normally cancelled.
An Offer for Subscription was soft launched on 24 January 2023.
The Offer was again strongly supported, having formally opened and
closed, fully subscribed, on 6 February 2023. The total raised, net
of all costs, was GBP14.6 million and resulted in the issue of 11.1
million new shares. On behalf of the Board, I would like to welcome
all new Shareholders and to thank existing Shareholders for their
continued support. As at 30 September 2023, there were 172,876,156
Ordinary Shares in issue.
New Offer
On 28 November 2023, the Company announced the intention to
launch an Offer for Subscription to raise up to GBP20 million
through the issue of new ordinary shares. The prospectus, which
will contain the full details and terms and conditions of the
Offer, is expected to be available in January 2024.
Board Refresh
Jeremy Hamer has served on the Board for thirteen years and has
indicated his intention to stand down in 2025. He has agreed to
stand for re-election at the AGM in February 2024 but intends to
stand down at the 2025 AGM.
The Board will engage an outside recruitment agency to identify
a suitable candidate to replace Jeremy and will announce any
appointment in the normal way. Board diversity will be considered
as part of the recruitment process.
VCT Status
There were no changes to VCT legislation during the period under
review.
The Government last introduced new legislation pertaining to
Venture Capital Trusts in November 2017. The most important of
these new rules came into effect in the 2019/2020 tax year and are
designed to ensure that capital is directed at young, developing
businesses, which might otherwise find it difficult to secure
funding to finance their planned growth.
One of the key tests, from accounting periods commencing after 5
April 2019, is the requirement for at least 80% (previously 70%) by
VCT tax value of a Venture Capital Trust's total investments to be
invested in VCT qualifying companies. I am pleased to report that,
excluding new capital raised in Offers for Subscription within the
last three years, Unicorn AIM VCT's qualifying percentage was 91.2%
of total assets as of 30 September 2023. All other HM Revenue &
Customs tests have also been complied with during the period, and
the Board has been advised by its VCT status advisor, PwC, that the
Company continues to maintain its Venture Capital Trust status. It
will, of course, remain a key priority of the Board to ensure that
the Company retains this VCT status.
Annual General Meeting
I would like to take this opportunity to thank all Shareholders
for their continued support of the Company and to invite you to
attend the Company's Annual General Meeting, which is to be held on
7 February 2024. Full details of the AGM including location,
timing, and the business to be conducted, are given in the Notice
of the Meeting on pages 90 and 91 of the Annual Report.
Shareholders' views are important, and the Board therefore
encourages all Shareholders to vote on the resolutions within the
Notice of Annual General Meeting on pages 90 and 91 of the Annual
Report using the proxy form, or electronically at
www.unicornaimvct.com. The Board has carefully considered the
business to be approved at the AGM and recommends that Shareholders
vote in favour of all the resolutions being proposed.
Outlook
The year under review saw a continuation of trends outlined in
prior reports, with smaller quoted companies again out of favour as
investors prioritise investment opportunities that are perceived to
carry lower levels of risk. Your Company was not immune to this
trend but nonetheless continues to demonstrate resilience by again
delivering a total return meaningfully ahead of that delivered by
the FTSE AIM All-Share Total Return Index.
The Initial Public Offering (IPO) market has been showing early
signs of recovery. In recent months, the Investment Manager has
developed a promising pipeline of potential new VCT qualifying
investments. The manager remains highly selective in the approach
to new investments, but this expanding pipeline is an encouraging
sign.
The existing portfolio also continues to perform creditably,
both at a financial and operational level, with an attractive
combination of established, profitable, well capitalised,
cash-generative companies held, alongside an interesting and
potentially exciting selection of earlier stage high growth
businesses. Many of these investments are aligned with highly
attractive structural growth themes and continue to successfully
execute their long-term strategies. The balance sheet strength of
many of the Company's investment holdings provides reassurance that
they will be able to weather this extended period of uncertainty
and should thrive when the economic backdrop becomes more
constructive.
Your Board continues to share the Investment Manager's
confidence that, when market sentiment and economic conditions
improve, the portfolio should deliver significant Shareholder value
and go on to provide continued long term capital growth.
Encouragingly, there now appears to be an emerging political
realisation that action needs to be taken to improve the relative
appeal of UK equities, with a particular focus on smaller
companies. Any supportive legislative developments would clearly be
well received. On the other hand, the persistent threat of
inflation, high interest rates and recession could delay an
improvement in the performance of smaller quoted companies and the
Board therefore remains cautious about prospects in the near
term.
Tim Woodcock
Chair
7 December 2023
Investment Manager's Review
Introduction
Global equity markets experienced diverging performance during
the twelve-month period ended 30 September 2023. In the US, the
S&P 500 Index and NASDAQ Composite Index delivered strong
positive total returns of +21.6% and +26.1% respectively. While
both of these indices remain below the all-time highs that they
reached in late 2021, the strong returns recorded during the period
under review are striking, particularly when considered against the
backdrop of sharply rising US interest rates.
However, much of this performance can be attributed to the so
called "Magnificent Seven" stocks (Amazon, Apple, Alphabet, Meta,
Microsoft, Nvidia and Tesla). These mega-cap companies account for
large weightings in US equity indices and all of them, except
Tesla, posted strong, double-digit returns. In particular, Nvidia
was a notable beneficiary of the recent excitement surrounding
Artificial Intelligence (AI) and its share price gained over 250%
during the year ended 30 September 2023.
In the UK, equity market performance was led by the FTSE 100
Total Return Index, which recorded a total return of +14.7% over
the twelve months ended 30 September 2023. The positive performance
of the FTSE 100 Index was largely due to its large weighting in the
Banking and Oil & Gas sectors, which were the two largest
contributors to the Index's total return, and which were direct
beneficiaries of the higher inflationary and interest rate
environment during the period. Investors also sought the perceived
safe haven of large, internationally diversified businesses, at the
expense of smaller, higher growth companies whose present value is
principally based on the successful delivery of less predictable
future cash flows.
Unfortunately, a direct consequence of investor preference for
large cap companies, especially those which generate a large
proportion of overseas earnings, has meant that the hundreds of
smaller companies listed on AIM have remained firmly out of favour
and, in many cases, have experienced prolonged and significant
share price declines.
Over the twelve-month period ended 30 September 2023, the FTSE
AIM All-Share Total Return Index registered a total return of
-8.3%, as a brief period of recovery for the AIM Index during the
final calendar quarter of 2022 was more than outweighed by the
three consecutive quarters of negative returns that followed.
Higher UK interest rates continue to weigh particularly heavily
on early-stage growth companies, in which the majority of the
Company's assets must be invested. The Bank of England's decision
to raise interest rates on seven successive occasions from 2.25% in
September 2022 to 5.25% by August 2023, in an attempt to tackle
persistently high inflation, was the sharpest monetary 'tightening'
cycle experienced for several decades. Against this economic
backdrop, it is unsurprising that the Company's portfolio of
early-stage companies has continued to experience challenging
market conditions.
Net Asset Performance
As at 30 September 2023, the audited net assets of the Company
amounted to GBP211.9 million, which equates to a decline of GBP9.2
million during the twelve-month period under review.
The audited Net Asset Value per Share was 122.6 pence as at 30
September 2023, which represents a capital decline (excluding
dividends paid) of -9.1% on the closing NAV per share of 134.8
pence as at 30 September 2022. After adding back dividends paid
during the financial year, the Net Asset Value ("NAV") Total Return
of the Company was -4.3%.
The total reduction in net assets was partly due to the negative
return generated by the Company's investment portfolio but was also
due to the GBP10.9 million in dividends that were paid to
Shareholders in the period. A further GBP3.8 million was returned
to Shareholders by way of share buybacks during the financial
year.
While it is disappointing to report a loss during any financial
year, the Investment Manager takes some heart from the relative
outperformance of the Company's NAV total return compared to that
of the FTSE AIM All-Share Total Return Index, which registered a
significantly greater loss, in total return terms, of -8.3% over
the same twelve-month period.
The reduction in the Company's net assets during the financial
year was offset by the proceeds received from a fully subscribed
Offer for Subscription which opened, and closed, on 6 February
2023, having been soft launched on 24 January 2023. It is highly
encouraging that both new and existing Shareholders chose to
participate in the Offer for Subscription which raised net proceeds
after expenses of GBP14.6 million.
The Investment Manager always adopts a cautious approach to
deploying new capital. Whilst the total amount of new funds raised
by companies on AIM is generally much reduced in 2023 in comparison
to previous years, it is pleasing to report that several VCT
qualifying investments in both new and follow-on investment
opportunities have been made since the proceeds were received from
the Offer for Subscription. In the main, these investments have
performed well over a short-term holding period and are
well-positioned to deliver meaningful positive contributions to
future long-term growth in net assets.
Performance Review
The financial year under review has been another challenging
period for the Company.
A significant number of investee companies suffered further
declines in their share price, which is particularly disappointing
since it follows on from the steep falls in value that were
experienced in the prior financial year. In particular, the
Company's investments in early-stage, scale-up businesses,
including those in Life Sciences, Technology and Pharmaceutical
sectors, which typically require multiple funding rounds, were
notably affected by the difficult market conditions. In addition,
the inflationary environment and volatile geo-political situation
have also created more difficult trading conditions for some of the
larger, more mature companies in the portfolio. Unsurprisingly, the
overall effect of this set of circumstances has been to negatively
impact the net assets of the Company in the period under
review.
As a reminder, the Investment Manager is required by VCT
legislation to ensure that all new qualifying investments are
directed toward early-stage, scale-up businesses. Clearly,
investment in less mature businesses carries with it a higher
degree of risk. The Investment Manager therefore fully expects to
see a wide divergence of returns between successful investments in
early-stage businesses and those which fail. Importantly however,
many of the Company's longer-standing investments are in
established, sustainably profitable, and cash-generative
businesses. Such businesses typically operate with strong balance
sheets where there is often no further requirement for equity or
debt funding and are therefore less sensitive to higher interest
rates.
The investment portfolio remains diversified both by number of
holdings and by sector exposure. At the financial year end, the
Company held investments in 81 active VCT qualifying companies and
10 non-qualifying investments. These investments are spread across
26 different sectors.
Despite the difficult market conditions, several investee
companies delivered positive returns during the period under
review. A review of the ten most meaningful contributors to
performance from VCT qualifying investments (both positive and
negative) follows:-
Largest Contributors
Abcam* (9.4% of net assets, +GBP5.9 million) is a global life
science company that supplies researchers with the tools needed to
study proteins. Researchers in laboratories worldwide have come to
rely on Abcam's products in order to facilitate their studies and
experiments aimed at understanding the most prevalent of human
diseases and thereby helping to develop new and innovative
treatment therapies.
Following a period of active shareholder engagement with its
founder, Dr. Jonathan Milner, Abcam announced that it was
undertaking a strategic review in order to maximise shareholder
value. Abcam subsequently announced that it had agreed the terms of
a recommended takeover offer from Danaher Corporation, which is a
global science and technology company. Danaher has now entered into
a definitive agreement to acquire Abcam for a price of $24 per
share, reflecting a premium of approximately 26% to the level at
which the share price traded in the days before bid rumours began
to circulate. In the absence of a counterbid at a meaningfully
higher valuation, this transaction is expected to complete
shortly.
Hasgrove (11.2% of net assets, +GBP4.7 million) is the unquoted
holding company, which wholly-owns an operating subsidiary called
Interact. Interact is a fast-growing global provider of corporate
intranet solutions that operates a Software-as-a-Service (SaaS)
business model. In its most recent annual results statement,
Hasgrove reported revenue growth of 28% to GBP29.4 million and
operating profit growth of 31% to GBP8.1 million when compared to
its prior financial year. The performance for the current financial
year remains in line with management's expectations, marked by a
growing stream of highly predictable recurring revenues. As a
consequence of this continued strong growth, the carrying Fair
Value of the Company's investment in Hasgrove was raised to GBP23.6
million, representing an increase of +24.9% on the closing Fair
Value of GBP18.9 million as at 30 September 2022.
Aurrigo International ("Aurrigo") (3.4% of net assets, +GBP3.8
million) is a leading provider of highly specialised autonomous
transport solutions which are predominately for use in the aviation
ground handling industry. Aurrigo's autonomous vehicles have the
potential to significantly improve ground handling performance,
including; more efficient baggage transportation to and from the
aircraft, reducing reliance on labour and reducing the frequency
and severity of accidents.
In its first year as an AIM listed company, Aurrigo
International achieved a noteworthy milestone by securing a
multi-year partnership agreement with Changi Airport Group in
Singapore, for the continued collaborative development and testing
of Aurrigo's autonomous vehicles, Auto-Dolly and Auto-DollyTug, as
well as its airport simulation software platform Auto-Sim.
Furthermore, Aurrigo continues to receive substantial interest from
other airport groups and expects to see an accelerated level of
interest in its innovative aviation solutions for future
deployments within Europe and North America.
Oxford Biodynamics ("OBD") (2.8% of net assets, +GBP3.1 million)
is a biotechnology company which is developing precision medicine
tests based on the EpiSwitch(TM) 3D genomics platform. OBD has
developed biomarkers using its technology for applications in drug
discovery, diagnostics, and personalised medicine, with a focus on
various diseases, including cancer and neurodegenerative
disorders.
Towards the end of the financial year, OBD announced the
successful validation of its EpiSwitch Prostate Screening blood
test (PSE) in its US clinical laboratory, which is now available to
men at risk of prostate cancer in the US and UK. Given the
recognised limitations of the current widely used prostate-specific
antigen (PSA) test, with over 25 million such tests taking place
per year, this provides OBD with a significant market
opportunity.
Tristel (3.4% of net assets, +GBP2.1 million) is a specialised
company at the forefront of infection prevention and control within
healthcare. Tristel's product range includes high-level
disinfectants essential for the effective sanitisation of medical
instruments and devices, which thereby reduces the risk of
healthcare-associated infections in hospitals and clinics.
In June 2023, Tristel announced that the U.S. Food and Drug
Administration (FDA) had approved the immediate sale of Tristel
ULT, classifying it as a high-level disinfectant for use on
ultrasound probes. In addition, Tristel DUO, which is an
intermediate level disinfectant for cleaning surfaces, is now also
authorised for sale in all US states. A large number of ultrasound
scans are performed in the US each year. An estimated 215 million
are performed annually and about 20% of these scans require high
level disinfection, which can now be addressed more efficiently and
effectively through the use of Tristel ULT. The approval of these
two products gives Tristel a unique advantage in the market,
offering comprehensive solutions for all levels of disinfection
associated with use of ultrasound equipment.
Instem* (2.2% of net assets, +GBP1.4 million) is a leading
provider of IT solutions to the global life sciences market.
Instem's software and services help life sciences organisations
efficiently access, capture, analyse, report, and submit
high-quality regulatory data. Instem also helps life sciences
companies bring new drugs and therapies to market faster and more
efficiently.
In August 2023, Instem announced that its Board had agreed the
terms of a recommended takeover offer from Archimed, which is a
French healthcare-focused private equity firm. The offer values
Instem at approximately GBP203 million and represents a 41% premium
to the company's closing price on the day prior to the
announcement. Instem subsequently received additional approaches
from other parties, but no competing offers were made. Instem's
Board therefore continue to believe that the offer from Archimed
represents attractive value for shareholders.
The City Pub Group (1.1% of net assets, +GBP0.9 million) is a UK
based pub company that owns and manages a portfolio of over fifty
pubs located in the southern regions of England and Wales.
Over the past couple of years, City Pub Group has faced numerous
operational challenges, largely due to the sudden re-emergence of
inflationary pressures, particularly in energy, food and labour
costs. In addition, the poor summer weather in the UK and numerous
train strikes, have also had a negative impact on key trading
periods. Despite all these problems, the business has displayed
remarkable resilience.
Overall, trading results for the first half of City Pub Group's
financial year were strong, with revenues increasing by 21% to
GBP31.7 million, while profitability was maintained despite the
many and varied inflationary pressures. The Group also expanded its
pub portfolio in the period under review by announcing that it
acquired a majority stake in Mosaic Pubs which owns nine pubs
across London and Birmingham. City Pub Group continues to operate
with one of the lowest levels of debt in the hospitality sector,
which enables management to take advantage of increasingly
attractive opportunities to pursue further bolt-on
acquisitions.
AB Dynamics (2.0% of net assets, +GBP0.8 million) specialises in
providing testing and measurement solutions for the automotive
industry. Its offerings encompass vehicle dynamics testing,
autonomous and Advanced Driver Assistance Systems (ADAS) testing,
track testing, and driving simulation. These solutions are
essential for assessing vehicle performance, safety, and autonomous
driving technologies. Despite the obvious challenges, the company
has continued to thrive, achieving record results, which included
strong growth in revenues and profitability. AB Dynamics continues
to enhance its strategic position through selective investment in
new products and services and remains well-placed to take advantage
of the growing opportunities in core markets.
Destiny Pharma (1.0% of net assets, +GBP0.7 million) is a
biotechnology firm focused on creating innovative anti-infection
solutions. Destiny Pharma's interim results for the first half of
2023 focused on the company's strong robust financial position,
with net cash balances of GBP9.8 million at period end. A further
highlight in the period was the announcement of successful Phase 2b
trials of XF-73 Nasal, a specially formulated nasal spray designed
to combat post-operative infections caused by staphylococcal
bacteria. Destiny Pharma also agreed a deal with Sebela
Pharmaceuticals in North America covering its other lead product,
which has a potential lifetime value of up to $570 million, plus
royalty payments.
* under offer
Avacta (2.5% of net assets, +GBP0.6 million) is a clinical-stage
biotechnology company developing novel cancer therapies and
powerful diagnostics based on its proprietary Affimer(R) and
pre|CISION(TM) platforms. In its recently published interim
results, Avacta's management focused on the progress made in the
Therapeutics Division, where the company's AVA6000 Phase 1 study
continues to display a strong safety profile, while delivering
highly promising indications of therapeutic effectiveness. In the
Diagnostics Division, management highlighted numerous growth
opportunities, including; geographic expansion, cross selling
opportunities and a rapid expansion to the division's range of
products.
Largest Detractors
MaxCyte (2.9% of net assets, -GBP7.7 million) is a leading cell
engineering company, which provides a technology platform to enable
the precision engineering of cells for a wide range of therapeutic
applications. Leading drug developers and academic institutions are
using the company's technology to develop new cell therapies for
the treatment of cancer, central nervous system disorders, and rare
genetic diseases. The period under review has been challenging for
most early-stage life biotechnology companies and MaxCyte was no
exception. The onset of an extremely difficult funding environment
in the sector has forced MaxCyte's customers to focus on getting
later stage pharmaceutical drugs to market in order to accelerate
revenue generation. The impact of this switch in priorities has
therefore lengthened the timelines for the research and development
of early-stage clinical development projects, of the type with
which MaxCyte is most typically involved. Despite these short-term
challenges, management remain optimistic about MaxCyte's long-term
prospects as innovative cell therapies gain traction.
Anpario (2.3% of net assets, -GBP2.8 million) is a manufacturer
and distributor of natural feed additives for animal health,
nutrition, and biosecurity. Anpario's products are used by
livestock producers in over 80 countries around the world. The past
twelve months has been a challenging period for the global
agricultural industry and this has had a profound impact on
Anpario's revenues. In its most recent financial half year sales of
GBP15.3 million were down 7% when compared to the prior first half
financial period. Demand for natural feed additives declined as
farmers struggled to cope with mounting costs of production. In
addition, an outbreak of swine fever decimated pig herds in China,
thereby badly affecting Anpario's sales in the region. Despite
these obstacles, the Group continues to maintain a strong balance
sheet, including a healthy cash balance of over GBP7 million and no
debt. In due course, Anpario's management team fully expects to
report an improvement in profitability driven by a reduction in the
cost of raw materials and a recovery in sales volumes.
Access Intelligence (1.8% of net assets, -GBP2.5 million)
operates a Software as a Service (SaaS) business model focused on
providing management teams with the tools necessary to enable them
to control and manage the reputations of the businesses which they
lead. An extended sales cycle, an increasingly uncertain outlook
for US corporates and the execution risk associated with a recent
acquisition of Isentia, have all weighed heavily on investor
sentiment and the company's share price has suffered as a result.
However, the management team is now starting to see a recovery in
contract wins in Asia and a general improvement in demand, which
are encouraging indicators for future growth.
Surface Transforms (2.3% of net assets, -GBP2.1 million) is a
manufacturer of carbon fibre ceramic brake discs for theautomotive
industry. Despite announcing new contracts of substantial value,
the share price declined during the period, which reflects investor
concerns surrounding production issues announced in early 2023. In
response, the company's management team was strengthened and
production volumes are now steadily improving. A new furnace has
also been installed in order to generate the capacity required to
satisfy the significantly larger order book. As at the period end
the value of existing contracts had risen to GBP290 million, while
the prospective pipeline now stands at circa GBP420 million.
Saietta Group (0.5% of net assets, -GBP2.0 million) is a global
engineering business specialising in the design, development, and
supply of powertrains for electric vehicles, including; scooters,
buses, and marine applications. Despite making significant progress
toward becoming a key provider of electric drivetrain solutions,
Saietta's share price came under severe pressure as a result of a
series of operational miss-steps, which included a poorly executed
move into the US heavy-duty vehicle market. However, a new Chief
Executive Officer has now been recruited and the business is
re-focusing on maximising the commercial opportunity in its key
lightweight electric vehicle market. Encouragingly, Saietta has
also recently received a purchase order from a global Original
Equipment Manufacturer (OEM) that is one of the largest
manufacturers of light commercial vehicles in India.
Keywords Studios (1.8% of net assets, -GBP1.9 million) is a
leading provider of technical and creative services to the global
video games industry. Keywords offers a wide range of services,
including art and animation, audio, game development, localisation,
quality assurance, and testing. The period under review was
difficult in terms of share price performance, as industry
consolidation, strikes in the US entertainment industry, a slowdown
in sales of video games and project delays by some key customers
began to negatively affect investor sentiment. However, Keywords
Studios has a strong track record of delivering growth and has the
potential to leverage its healthy balance sheet and established
industry connections to exploit emerging opportunities to develop
new revenue streams, particularly through the use of innovative
technologies like Artificial Intelligence.
Tracsis (6.2% of net assets, -GBP1.8 million) is a leading
provider of software, hardware, data analytics and services for the
rail, traffic data, and wider transport industries. Products and
services provided by Tracsis help their customers improve the
efficiency and safety of their operations, reduce costs, make
better decisions, and improve customer service. In a recent trading
update, the company's management team confirmed that trading
performance for the current financial year remains in line with
expectations, despite some delays to customer orders, which are
likely to result in a higher proportion of full year revenues being
generated in the second half. From an operational perspective,
Tracsis continues to perform strongly and is well-positioned to
benefit from the digital transformation of the rail industry, both
in the UK and North American markets.
Engage XR (0.3% of net assets, -GBP1.7 million) is a
professional metaverse platform that provides a virtual workspace
where users can meet, collaborate, and learn in a more immersive
and engaging way than traditional online conferencing tools. Engage
XR experienced a significant fall in its share price during the
period as investors faced up to the reality of a sharp decline in
technology spending worldwide.
Directa Plus (1.3% of net assets, -GBP1.6 million) is a leading
supplier of graphene, an innovative material with a wide range of
applications across a variety of industries, including; consumer,
energy, automotive, and aerospace. Directa Plus continues to
develop the impressive technology that has enabled the company to
become a world leader in graphene production, but, like many other
industrial firms, the business is experiencing delays to expected
contract awards due to supply chain issues and general macro and
geopolitical uncertainty. However, Directa Plus is finally
beginning to see increased adoption of graphene technology and, as
the market grows, the company remains in prime position to
capitalise on these opportunities.
Angle (0.2% of net assets, -GBP1.4 million) is a medical
technology company that develops and manufactures products and
technologies for the early detection of cancer. Angle's flagship
product is an FDA authorised system called Parsortix, which is a
blood-based liquid biopsy platform that can capture and analyse
circulating tumour cells from blood samples.
Early in its financial year, the management of Angle released a
trading update, which focused on the problems being faced by the
life sciences sector as a whole. An ongoing, industry-wide squeeze
on the availability of the capital required to fund research
projects, has negatively impacted Angle in a variety of ways. As a
result, Angle's management team have acted swiftly to control costs
and preserve cash. As at 30 June 2023, Angle remained well funded
with a net cash balance of GBP22.2 million.
Non-Qualifying Investments
The non-qualifying investments made by the Investment Manager
are typically in larger, more liquid quoted companies that are
listed on the FTSE 350 Index. Non-qualifying investments are
normally held in the portfolio in lieu of cash, in order to
generate additional dividend income for future distribution to
Shareholders, while awaiting suitable VCT qualifying investment
opportunities. In the main, these investments performed
satisfactorily during the period under review.
During the twelve-month period ended 30 September 2023, the
Company also took advantage of the attractive yields available on
short-term money market funds to generate additional income for the
Company. While short-term bond yields remain high, the Investment
Manager expects this to remain an attractive means of generating
additional, low-risk income, while awaiting suitable VCT qualifying
opportunities.
Offer for Subscription
The fully subscribed Offer for Subscription that closed in
February 2023, was a very pleasing outcome and a humbling
endorsement, in particularly challenging times, of the Investment
Manager's proven and successful long-term approach. The new funds
raised will enable the Investment Manager to continue the
established and successful strategy of selectively growing the
existing portfolio of investments by continuing to provide much
needed capital to emerging 'scale-up' businesses. The deployment of
capital into new investment opportunities will continue to be
rigorously controlled, especially in view of the difficult
investment landscape.
Investment Activity
In terms of investment activity, the number of companies raising
money on AIM was much reduced in 2023 due to the difficult market
conditions. This was particularly evident in the first six months
of the Company's financial year in which the market for Initial
Public Offerings (IPOs) on AIM was quiet.
Although the pipeline of VCT qualifying investment opportunities
improved in the final quarter of the financial year, only four new
investments in VCT qualifying companies were made during the
twelve-month period under review. Three of these investments were
in AIM IPOs, while Oxford Biodynamics was already listed on AIM,
but was a new investment for the Company. In total, GBP6.5 million
was invested in new VCT qualifying companies.
In addition, three follow-on investments were completed in
companies already held in the portfolio, in order to support their
future growth plans. In total, GBP1.1 million was invested in these
follow-on opportunities.
As highlighted in the table below, the VCT qualifying
investments made during the financial year have delivered mixed
returns thus far. The standout performer has been the investment
made in Oxford Biodynamics which has generated very strong
short-term gains, which have more than offset the small, initial
and unrealised capital losses recorded by the other new
investments.
Value at
30 September
VCT Cost 2023 Profit/(loss) Return
Trade Date Q/N GBP GBP GBP %
NEW INVESTEE COMPANIES
------- ---------- -------------- ---------------- ---------
Oxford Biodynamics 28 October 2022 Q 2,000,000 3,480,000 1,480,000 74.0
----------------- ------- ---------- -------------- ---------------- ---------
Tan Delta 7 August 2023 Q 503,620 464,880 (38,740) (7.7)
----------------- ------- ---------- -------------- ---------------- ---------
5 September
Tribe Technology 2023 Q 2,000,000 1,900,000 (100,000) (5.0)
----------------- ------- ---------- -------------- ---------------- ---------
21 September
Oberon Investments 2023 Q 2,000,000 1,666,667 (333,333) (16.7)
----------------- -------
Total 6,503,620 7,511,547 1,007,927 15.5
FOLLOW ON INVESTMENTS
------- ---------- -------------- ---------------- ---------
SulNOx 06 January 2023 Q 100,000 173,913 73,913 73.9
----------------- ------- ---------- -------------- ---------------- ---------
Fusion Antibodies 08 June 2023 Q 250,000 275,000 25,000 10.0
----------------- ------- ---------- -------------- ---------------- ---------
Oxford Biodynamics 18 August 2023 Q 750,000 2,372,727 1,622,727 216.4
----------------- -------
Total 1,100,000 2,821,640 1,721,640 156.5
Although the performance of the new investments has been
variable, the returns generated by these new investments as a whole
have significantly outperformed the returns generated by the FTSE
AIM All-Share Index over this short-term, initial holding period.
The Investment Manager believes that each of these companies has
the potential to generate significant long term capital growth.
As a reminder, the Investment Manager is required, by virtue of
the strict investment rules surrounding Venture Capital Trusts, to
invest in businesses that are typically at an early stage in their
development. These rules, which the Investment Manager fully
supports, do however increase the risk of incurring capital losses,
especially given that progress toward sustainable and growing
profitability is rarely straightforward. In testing macroeconomic
conditions, such as those currently being experienced, it is
therefore unsurprising that some of the investments made in recent
years, have struggled to perform in share price terms.
The Investment Manager will continue to adopt a prudent approach
to committing capital to new investment opportunities during the
current financial year.
Realisations
In aggregate, GBP2.6 million was raised from the full and
partial disposal of VCT qualifying investments during the period. A
further GBP7.0 million was redeemed from non-qualifying investments
and from Short-Term Money Market Funds during the financial
year.
As a reminder, the normal purpose of disposals is threefold; to
ensure stock specific risk is contained, to lock in capital profits
for future distribution to Shareholders via dividend payments, and
to help manage liquidity requirements.
During the period, corporate activity resulted in two
realisations. In July 2023, ECSC Group was acquired by Daisy Group
Holdings, resulting in net proceeds of GBP0.8 million and realised
a loss on investment of GBP1.6 million. In August, the Company's
shares in Bonhill Group were tendered, resulting in net proceeds of
GBP0.1 million and crystallising a capital loss of GBP1.2 million.
Both of these investments were ultimately very disappointing but,
in each case, the Unicorn investment team worked hard to secure an
outcome that mitigated losses, thereby recovering as much value as
possible for Shareholders.
Partial disposals of three VCT qualifying investments were made
throughout the year which in aggregate generated total proceeds of
GBP1.7 million and realised an aggregate capital gain of GBP1.6
million.
The total value of all disposals made during the period
therefore amounted to GBP9.6 million. Including partial disposals,
the total realised capital loss from the sale of investments
amounted to GBP1.2 million.
Outlook
The financial year began in challenging fashion and, as a
consequence, the total return delivered in the first half was
disappointing. Although the current period began in cautiously
optimistic fashion, market conditions remained volatile and
confidence was further undermined by financial events around the
world. These included a serious property crisis in China, the
collapse of Silicon Valley Bank in America and the forced financial
rescue of Credit Suisse in Europe.
Economic headwinds remain substantial with elevated levels of
inflation and rising interest rates hampering business investment
and squeezing consumer discretionary spending. While the increases
to Bank of England base rates have been well documented, what is
arguably more relevant to stability in equity markets is the level
of the long-term government bond yields. In this regard, the
Ten-Year Gilt yield has risen from circa 3.5% at the start of year
to almost 5% at the time of writing this review. This has clearly
had a negative impact on the valuations applied to growth stocks,
which are often based on the present value of their expected future
cash flows.
In addition, the re-emergence of a worrying and significant
conflict between Israel and Palestine since October has further
heightened the already volatile geo-political situation.
Consequently, investor sentiment towards faster growing, higher
risk companies remain fragile and the near-term economic outlook is
also unpredictable. The current financial year has therefore begun
in much the same fashion as the prior financial year ended.
Despite this backdrop, there are some early signs which indicate
that a recovery in value for the UK equity market in general, and
for the Alternative Investment Market in particular, may not be too
far away. Inflation appears to be on a downward trend, and this has
resulted in an expectation that interest rates will now be cut
earlier than previously expected. Company management teams are
reporting that supply chain bottlenecks are easing and input costs
such as energy and materials are stabilising or, in some cases,
declining. Should some or all of these catalysts materialise, then,
in the opinion of the Investment Manager, it is likely that there
will be a significant recovery in the overall value of the
Company's portfolio.
In the meantime, the portfolio of investee companies broadly
remains in good health, with the majority of investee companies
continuing to trade well. Importantly, most of these businesses
remain well-funded and are operating with balance sheets that are
sufficiently robust to enable them to successfully navigate an
extended period of economic and equity market uncertainty.
The appetite for Initial Public Offerings on AIM is slowly
improving and, in recent months, the Investment Manager has seen a
welcome increase in the number and quality of VCT qualifying
investment opportunities.
Unicorn's approach to raising new capital for investments
through Offers for Subscription has always been prudent and will
remain so. As a result, the Investment Manager is able to adopt a
selective approach to making new VCT qualifying investments, while
also focusing on nurturing the established and diverse portfolio of
existing investee companies in order that they have the best
opportunity to generate healthy returns for Shareholders over the
longer term.
Finally, the Investment Manager is encouraged by the initial
proposals set out in the Chancellor's Mansion House speech in July,
which aim to improve growth across the economy by directing
significantly greater levels of capital towards early-stage UK
companies. Future legislation to support this proposal has the
potential to enhance the appeal of investing in early-stage growth
companies, including those listed on AIM.
Chris Hutchinson
Unicorn Asset Management Limited
7 December 2023
Financial and Performance Review
Net Assets
As at 30 September 2023, the audited net assets of the Company
were GBP211.9 million, compared to GBP221.1 million on 1 October
2022. The decline in total net assets was due mainly to the fall in
value of the portfolio and the distribution of dividends to
Shareholders. These were partially offset by the support received
from new and existing Shareholders under the Offer for
Subscription, which raised GBP14.6 million net of costs.
Performance during the year
As at 30 September 2023, the audited NAV of the Company was
122.6 pence per share, having fallen by 12.2 pence from 134.8 pence
per share at the start of the financial year under review, compared
with a fall of 113.8 pence per share in the year ended 30 September
2022. After adding back dividends of 6.5 pence per share paid in
the year, the total return to Shareholders decreased by 5.7 pence
or 4.3% compared with an decrease of 68.3 pence or 27.5% in the
previous year. In comparison, the total return from the FTSE AIM
All-Share Total Return Index was a decline of 8.3% over the year to
30 September 2023 (2022: 34.3% decline).
At the financial year end, there were 81 active VCT qualifying
and 10 non-qualifying investments held in the portfolio. These
investments are spread across 26 different sectors.
In the year to 30 September 2023, a total of GBP9.6 million was
realised through the sale of investments, (including money market
funds) approximately GBP26.6 million was deployed in new
investments (including money market funds) and approximately
GBP10.9 million was paid out as dividends to Shareholders. A
further GBP4.9 million was spent on the operating costs of the
Company and GBP3.8 million on share buybacks.
Share Issues and Buybacks
The Company raised GBP14.6 million (after costs) through an
Offer for Subscription and issued 11,108,248 shares, at prices
ranging from 134.97 pence to 139.26 pence. Full details are given
in Note 13 on page 76 of the Annual Report.
In addition, the Company allotted 1,143,459 shares under the
Dividend Reinvestment Scheme ("DRIS") at an average price of 123.69
pence per share.
During the year a total of 3,398,754 (2022: 2,515,309) shares
were bought back for cancellation at an average price of 111.35
pence per share (including costs), for a total cost of GBP3.8
million (2022: GBP4.4 million).
Total Return
The Company generates returns and losses from both capital
growth and dividend income. For the year ended 30 September 2023,
the total loss was GBP 10.6 million (2022: GBP105.2 million), of
which there was a GBP11.1 million loss (2022: GBP104.8 million
loss) from capital and a GBP0.5 million gain (2022: GBP0.4 million
loss) from revenue. Full details of the total return can be found
in the Income Statement below. The Company's allocation of expenses
is described in Note 1 (g) on page 69 of the Annual Report.
The total net losses per share were 6.2p (2022: 67.3p). The
total net losses per share were made up of 6.5p loss from capital
and 0.3p gain from revenue.
Revenue Return
The income of GBP2.3 million (2022: GBP1.7 million) represents
dividend income derived from the Company's investments and interest
on cash balances.
Capital Return
At the year end the investment portfolio was valued at GBP207.5
million (2022: GBP198.5 million). The investment portfolio
delivered a realised profit on disposals of GBP1.0 million (2022:
GBP12.8 million) and unrealised valuation losses on investment of
GBP9.0 million (2022: GBP113.6 million). The valuation basis of the
Company's investments is described in Note 1 (d) on pages 67 and 68
of the Annual Report.
Ongoing Charges and Running Costs
The Ongoing Charges of the Company for the financial year under
review was 2.2% (2022: 2.0%) of average net assets, which remains
below the cap of 2.75%.
The total expenses amounted to GBP4.9 million (2022: GBP6.1
million) and include investment management fees of GBP4.2 million
(2022: GBP5.3 million), Directors' fees of GBP0.1 million (2022:
GBP0.1 million), administrative service fees of GBP0.2 million
(2022: GBP0.2 million) and other third-party service providers fees
of GBP0.2 million (2022: GBP0.2 million).
Under the revised management agreement effective from 1 October
2018 and the side letter effective from 1 January 2022 and as shown
in Note 3, the Investment Manager receives a management fee of 2%
per annum of net assets up to GBP200 million, 1.5% per annum of net
assets in excess of GBP200 million and 1% in excess of GBP450
million (other than on investments in OEICs managed by the
Investment Manager). Other expenses are shown in Note 4 on page 71
of the Annual Report.
Further information in respect of the Company's performance can
be found in the Financial Highlights above.
Cash and Cash Equivalents
During the year the Company increased its cash balances through
the Offer for Subscription and the sale of investments. This was
offset by the purchase of investments, the payment of running
costs, share buybacks and dividends and at the year end the cash
balance had decreased to GBP5.4 million (2022: GBP23.8 million). In
addition, GBP12.1 million was held in money market funds.
Key Performance Indicators
The Board uses the key indicators below as Alternative
Performance Measures ("APM's") to measure the Investment Manager's
performance, thereby helping Shareholders to assess how the Company
is performing against its objective.
- NAV per share, cumulative dividends paid and cumulative total Shareholder return
- Earnings per share
- Annual and cumulative total return
- 5 year NAV and share price comparison
- Running costs
Further details can be found on pages 23 and 24 of the Annual
Report.
The Company and its Business Model
The Company is registered in England and Wales as a Public
Limited Company (registration number 04266437) and is approved as a
Venture Capital Trust ("VCT") under section 274 of the Income Tax
Act 2007 (the "ITA"). In common with many other VCTs, the Company
revoked its status as an investment company as defined in section
266 of the Companies Act 1985 on 17 August 2004, to make it
possible to pay dividends from capital. A summary of the VCT
regulations is shown on page 88 of the Annual Report.
The Company's shares are listed on the London Stock Exchange
main market under the code UAV and ISIN GB00B1RTFN43.
The Company is an externally managed fund with a Board currently
comprising four non-executive Directors. Investment management and
operational support are outsourced to external service providers,
with the strategic and operational framework and key policies set
and monitored by the Board as described in the diagram on page 25
of the Annual Report. Further information on the service providers
is outlined in the Corporate Governance Statement on pages 49 and
50 of the Annual Report.
The Board has overall responsibility for the Company's affairs
including the determination of its investment policy. Risk is
spread by investing in a number of different businesses across
different industry sectors. The Investment Manager is responsible
for managing sector and stock specific risk and the Board does not
impose formal limits in respect of such exposures. However, in
order to maintain compliance with HMRC rules and to ensure that an
appropriate spread of investment risk is achieved, the Board
receives and reviews comprehensive reports from the Investment
Manager on a monthly basis. When the Investment Manager proposes to
make any investment in an unquoted company, the prior approval of
the Board is required.
A summary of the relationship between the Board, the Company's
Shareholders and the external service providers is depicted on page
25 of the Annual Report.
The Board's Strategy
Investment Objective
The Company's objective is to provide Shareholders with an
attractive return from a diversified portfolio of investments,
predominantly in the shares of AIM quoted companies, by maintaining
a steady flow of dividend distributions to Shareholders from the
income as well as capital gains generated by the portfolio.
It is also the objective that the Company should continue to
qualify as a Venture Capital Trust, so that Shareholders benefit
from the taxation advantages that this brings. To achieve this at
least 80% for accounting periods commencing after 6 April 2019
(previously 70%) of the Company's total assets are to be invested
in qualifying investments of which 70% by VCT value (30% made in
respect of investments made before 6 April 2018 from funds raised
before 6 April 2011) must be in ordinary shares which carry no
preferential rights (save as permitted under VCT rules) to
dividends or return of capital and no rights to redemption.
Investment Policy
In order to achieve the Company's investment objective, the
Board has agreed an investment policy which requires the Investment
Manager to identify and invest in a diversified portfolio,
predominantly of VCT qualifying companies quoted on AIM that
display a majority of the following characteristics:
-- experienced and well-motivated management;
-- products and services supplying growing markets;
-- sound operational and financial controls; and
-- potential for good cash generation, in due course, to finance
ongoing development and support for a progressive dividend
policy.
Asset allocation and risk diversification policies, including
maximum exposures, are to an extent governed by prevailing VCT
legislation. No single holding may represent more than 15% (by VCT
value) of the Company's total investments and cash, at the date of
investment.
There are a number of VCT conditions which need to be met by the
Company which may change from time to time. The Investment Manager
will seek to make qualifying investments in accordance with such
requirements.
Asset mix
Where capital is available for investment while awaiting
suitable VCT qualifying opportunities or is in excess of the 80%
VCT qualification threshold for accounting periods commencing after
6 April 2019 (previously 70%), it may be held in cash or invested
in money market funds, collective investment vehicles or
non-qualifying shares and securities of fully listed companies
registered in the UK.
Borrowing
To date the Company has operated without recourse to borrowing.
The Board may, however, consider the possibility of introducing
modest levels of gearing up to a maximum of 10% of the adjusted
capital and reserves, should circumstances suggest that such action
is in the interests of Shareholders.
The effect of any borrowing is discussed further on page 41 of
the Annual Report under "AIFMD".
Key Policies
The Board sets the Company's policies and objectives and ensures
that its obligations to Shareholders are met. Besides the
Investment Policy already referred to, the other key policies set
by the Board are outlined below.
Dividend policy
The Board remains committed to a policy of maintaining a steady
flow of dividend distributions to Shareholders from the income and
capital gains generated by the portfolio.
The ability to pay dividends and the amount of such dividends is
at the Board's discretion and is influenced by the performance of
the Company's investments, available distributable reserves and
cash, as well as the need to retain funds for further investment
and ongoing expenses.
Details of the Company's Dividend Reinvestment Scheme are
outlined on page 85 of the Annual Report.
Share buybacks and discount policy
The Board believes that it is in the best interests of the
Company and its Shareholders to make market purchases of its shares
from time to time.
There are three main advantages to be gained from maintaining a
flexible approach to share buybacks; namely:
1. Regular share buybacks provide a reliable mechanism through
which Shareholders can realise their investment in the Company,
rather than being reliant on a very limited secondary market.
2. Share buybacks, when carried out at a discount to underlying
net assets, help modestly to enhance NAV per share for continuing
Shareholders.
3. Implementing share buybacks on a regular basis helps to control the discount to NAV.
The Board decides the level of discount to NAV at which shares
will be bought back and keeps this under regular review. The Board
seeks to maintain a balance between the interests of those wishing
to sell their shares and continuing Shareholders.
The Company has continued to buy back shares for cancellation at
various points throughout the financial year in accordance with the
above policy. Details of the shares purchased for cancellation are
shown on pages 21 and 76 of the Annual Report. At the financial
year end, the Company's shares were quoted at a mid-price of 103.5
pence per share representing a discount to NAV per share of
15.5%.
The Board intends to continue with the above buyback policy. Any
future repurchases will be made in accordance with guidelines
established by the Board from time to time and will be subject to
the Company having the appropriate authorities from Shareholders
and sufficient funds available for this purpose. Share buybacks
will also be subject to prevailing market conditions, Market Abuse
Rules and any other applicable law at the relevant time. Shares
bought back are cancelled.
Principal and Emerging Risks
The Directors have carried out a robust review of the principal
and emerging risks faced by the Company as part of the internal
controls process, as outlined below. Note 17 to the Financial
Statements on page 78 to 84 of the Annual Report also provides
information on the Company's financial risk management objectives
and exposure to risks. The Directors process for monitoring these
risks is shown below.
During the year the Board has reviewed in detail its approach to
risk. It has sought to identify new and 'Emerging Risks' alongside
the principal risks faced by the Company and the mitigating steps
being taken by both the Board and the Company's service providers
to reduce the impact of each risk. The results have been summarised
in a heat map and are reviewed for sensitivity quarterly.
During the review with the key service providers evidence was
requested of the mitigating actions being taken and on which the
Board is relying. Balance sheet reconciliations, asset valuations
and VCT qualification being examples of such reviews.
Risk Possible consequence How the Board monitors and
mitigates risk
1. Investment Unsuitable investment Regular review of investment
and strategic strategy or investment strategy by the Board.
risk selection could lead Monitoring of the performance
to poor returns to Shareholders. of the investment portfolio
on a regular basis.
All purchases or sales of unquoted
investments require prior investment
authorisation from the Board.
2. Regulatory The Company is required Regulatory and legislative developments
and tax risk to comply with the Companies are kept under close review
Act 2006, ITA, AIFMD by the Board, the Investment
(as applicable to small Manager, the Company Secretary
registered UK AIFMs), and the Administrator.
FCA Listing Rules and The Company's VCT qualifying
UK Accounting Standards. status is continually reviewed
Breaching these rules by the Investment Manager and
may result in a public the Administrator.
censure, suspension from PricewaterhouseCoopers LLP has
the Official List and/or been retained by the Board to
financial penalties. undertake a bi-annual independent
There is a risk that VCT status monitoring role.
the Company may lose
its VCT status under
the ITA. Should this
occur, Shareholders may
lose any upfront income
tax relief they received
and be taxed on any future
dividends paid and capital
gains if they dispose
of their shares.
3. Operational The Company has no employees Internal control reports are
risk and is therefore reliant provided by service providers
on third party service on an annual basis.
providers. Failure of The Board considers the performance
the systems at third of the service providers annually
party service providers and monitors activity on a monthly
could lead to inaccurate basis.
reporting or monitoring. The Board discusses succession
Inadequate controls could planning with its key service
lead to the misappropriation providers.
of assets.
4. Fraud, dishonesty Fraud involving Company Internal control reports are
and cyber risks assets may occur, perpetrated provided by service providers
by a third party, the on a regular basis.
Investment Manager or The Administrator is independent
other service provider. of the Investment Manager.
Cyber-attacks on the The Company minimises as far
Company could lead to as practical the amount of personal
financial loss and impact data held by our service providers
on the Company's reputation. and the Board.
All service providers use third
party professionals to review
cyber security exposure and
act on any material recommendations
made.
5. Financial The main risks arising The Board regularly reviews
Instrument risks from the Company's financial and agrees policies for managing
instruments are from these risks and further details
fluctuations in their can be found in Note 17 on pages
market prices, interest 78 to 84 of the Annual Report.
rates, credit risk and
liquidity risk.
6. Economic and Events such as recession, While no single policy can obviate
political risks inflation or deflation, such risks the Company invests
movements in interest in a diversified portfolio of
rates and technological companies, whilst seeking to
change can affect trading maintain adequate liquidity.
conditions and consequently
the value of the Company's
investments.
Other geo-political issues
may affect the Company's
performance at both macro
and micro economic level.
Labour and material shortages
may affect the value
of the Company's investments.
Russia's invasion of
Ukraine and the current
situation in the Middle
East could adversely
affect investee companies.
7. Black Swan Events such as pandemics The Board liaises with the Investment
events could adversely affect Manager to obtain an understanding
investee companies and of the impact on the investee
/or other service providers. companies.
Environmental disasters The Investment Manager reviews
may adversely affect the impact of staff availability,
investee companies and/or raw materials availability,
service providers. energy supply and inflationary
impact on portfolio companies.
The Board is responsible for assessing the possibility of new and emerging
risks and, i n addition to the principal risks, the Board has identified
the following emerging risks:
Emerging risks The physical impact of Increasing the influence of
climate change on investee ESG matters around investment
companies. decisions.
The changes to investee Investment Manager focus on
company business models these issues when reviewing
brought about by the portfolio.
need to reduce carbon
footprints.
The increasing use of
Artificial Intelligence
("AI") and its effect
on the investee companies
although AI will also
have positive effects
on some investee companies.
The Regulatory Environment
The Board and Investment Manager are required to consider the
regulatory environment when setting the Company's strategy and
making investment decisions. A summary of the key considerations is
outlined below.
Human rights
The Board seeks to conduct the Company's affairs responsibly and
expects the Investment Manager to consider human rights
implications when making investment decisions.
Recruitment and succession planning
As reported last year Jocelin Harris stood down as a Director at
the AGM on 7 February 2023. The Board have an ongoing process to
review and refresh the Board taking into account the needs of the
Company and regulation. Jeremy Hamer has indicated his intention to
step down at the AGM in 2025. The Board will engage an external
recruitment agency with a view to making a new appointment in the
next calendar year. This process will include the assessment of key
skills the suitable candidate should possess and will also take
account of Board diversity.
Diversity
The Board is aware of the requirement of Listing Rule 9.8.6R and
the composition of the Board. As disclosed on page 49 of the Annual
Report the Board does not meet the requirement to have at least one
director from an ethnic minority. Being externally managed and
comprising of only four non-executive directors there is reduced
scope to fully comply with the requirements. However, the Board
will continue to consider these requirements in any recruitment
process.
Anti-bribery, corruption and tax evasion policy
The Company has a zero tolerance approach to bribery. It is the
Company's policy to conduct all of its business in an honest and
ethical manner and it is committed to acting professionally, fairly
and with integrity in all its business dealings and relationships
where it operates.
Directors and service providers must not promise, offer, give,
request, agree to receive or accept a financial or other advantage
in return for favourable treatment, to influence a business outcome
or to gain any other business advantage on behalf of themselves or
of the Company or encourage others to do so.
The Company has communicated its anti-bribery policy to each of
its service providers. It requires each of its service providers to
have policies in place which reflect the key principles of this
policy and procedures and which demonstrate that they have adopted
procedures of an equivalent standard to those instituted by the
Company.
Further information relating to the Company's anti-bribery
policy can be found on its website: www.unicornaimvct.co.uk. A full
copy of the VCT's anti-bribery policy and procedures can be
obtained from the Company Secretary by sending an email to:
unicornaimvct@iscaadmin.co.uk .
Environmental and social responsibility
Full details of the Company's ESG approach can be found on page
31 of the Annual Report.
In relation to the Company's own practices the Company
encourages electronic communication to reduce paper usage, has
withdrawn its dividend by cheque service and the printing of the
Half-Yearly Report and has taken advantage at times of electronic
meetings. Where we are required to print Annual Reports we will use
recycled paper and offset our carbon footprint.
Viability Statement
The Board' assessment of the ability of the Company to meet all
liabilities when due and that it can continue to operate for a
period of at least twelve months from the date of signing the
Annual Report is shown in the Corporate Governance Statement on
page 41 of the Annual Report.
Under the UK Corporate Governance Code there is a requirement
that the Board performs a robust assessment of the Company's
principal and emerging risks and the disclosures in the Annual
Report that describe the principal risks and the procedures in
place to identify emerging risks and explain how they are being
managed or mitigated. The last review was performed in November
2023.
The Directors have considered the viability of the Company as
part of their continuing programme of monitoring risk and conclude
that five years is a reasonable time horizon to consider the
continuing viability of the Company. This is also in line with the
requirement for the Company to continue in operation so investors
subscribing for new shares issued by the Company can hold their
shares for the minimum five-year period to allow them to benefit
from the tax incentives offered when those shares were issued. The
last allotment of shares took place in March 2023.
The Directors consider that the Company is viable for the
five-year time horizon for the following reasons:
-- At the year end the Company had a diversified investment
portfolio in addition to its VCT qualifying investments comprising:
GBP7.3 million invested in non-qualifying, fully listed shares
which are readily realisable, a further GBP15.6 million in daily
dealing open ended funds and GBP5.4 million in cash. The Company
therefore has sufficient immediate liquidity in the portfolio for
any near-term requirements.
-- The ongoing charges ratio of the Company as calculated using
the AIC recommended methodology equates to 2.2% of net assets.
-- The Board anticipates that there will continue to be suitable
qualifying investments available that will enable the Company to
maintain its operations over the five-year time horizon.
-- The Company has no debt or other external funding apart from its ordinary shares.
-- The payment of dividends and buybacks are at the discretion of the Board.
-- The continuation of the State Aid regulations to 2035.
In order to maintain viability, the Company has a risk control
framework which has the objective of reducing the likelihood and
impact of: poor judgement in decision-making, risk-taking that
exceeds the levels agreed by the Board, human error, or control
processes being deliberately circumvented. These controls are
reviewed by the Board on a regular basis to ensure that controls
are working as prescribed. In addition, formal reviews of all
service providers are undertaken annually and activity is monitored
at least monthly.
In its assessment of the viability of the Company, the Board has
recognised factors such as the continuation of the current State
Aid regulations to 2035, the ability of the Company to raise money
from future Offers for Subscription and there being sufficient VCT
qualifying investment opportunities available.
The Directors have also considered the viability of the Company
should there be a slowdown in the economy or a correction of the
markets leading to lower dividend receipts and asset values. As
stated above, Ongoing Charges equate to 2.2% of net assets of which
the Investment Management fee (as reduced by the Company's
investment in Unicorn funds) equates to 2.0% of net assets up to
GBP200 million and 1.5% of net assets in excess of GBP200 million.
In November 2021 the Company entered into an agreement with the
Investment Manager to reduce fees to 1% for any assets exceeding
GBP450 million. As these fees are based on a percentage of assets
any fall in the value of net assets will result in a corresponding
fall in the major expense of the Company.
The Directors have concluded that there is a reasonable
expectation that the Company can continue in operation over the
five-year period.
Prospects
The prospects for the Company are discussed in detail in the
Outlook section of the Chair's Statement above.
For and behalf of the Board
Tim Woodcock
Chair
7 December 2023
EXTRACT FROM DIRECTORS' REPORT
Share Capital
At the year-end there were 172,876,156 (2022: 164,023,203)
Ordinary shares of 1p each in issue, none of which are held in
Treasury. The issues and buybacks of the Company's shares during
the year are shown on page 21 and in Note 13 on page 76 of the
Annual Report. No shares have been bought back subsequent to the
year end, therefore, at the date of this announcement, the Company
had 172,876,156 shares in issue. All shares are listed on the main
market of the London Stock Exchange.
Going concern
After due consideration, the Directors believe that the Company
has adequate resources for a period of at least 12 months from the
date of the approval of the Financial Statements and that it is
appropriate to apply the going concern basis in preparing the
Financial Statements. As at 30 September 2023, the Company held
cash balances of GBP5.4 million, GBP7.3 million in fully listed
stocks and GBP15.6 million in open ended investment funds. The
majority of the Company's investment portfolio remains invested in
qualifying and non-qualifying AIM traded equities which may be
realised, subject to the need for the Company to maintain its VCT
status. The cash flow projections, covering a period of at least
twelve months from the date of approving the Financial Statements
have been reviewed and show that the Company has access to
sufficient liquidity to meet both contracted expenditure and any
discretionary cash outflows from buybacks and dividends. The
Company has no borrowings in place and is therefore not exposed to
any gearing covenants.
The full Annual Report and Accounts contains the following
statement regarding responsibility for the Financial
Statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have elected to prepare the Company's Financial Statements in
accordance with United Kingdom Generally Accepted Accounting
Practice ("UK GAAP') (United Kingdom Accounting Standards and
applicable law). Under company law the Directors must not approve
the Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss for the Company for that period.
In preparing these Financial Statements the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with UK
GAAP subject to any material departures disclosed and explained in
the Financial Statements;
- prepare a Directors' Report, a Strategic Report and Directors'
Remuneration Report which comply with the requirements of the
Companies Act 2006; and
- prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume the Company will continue in
business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are responsible
for ensuring that the Annual Report and accounts, taken as a whole,
are fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company's position and
performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and
the Financial Statements are made available on a website. Financial
Statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the Financial Statements contained therein.
Directors' responsibilities pursuant to the Disclosure Guidance
and Transparency Rule 4 of the UK Listing Authority
The Directors confirm to the best of their knowledge:
-- The Financial Statements have been prepared in accordance
with UK GAAP and give a true and fair view of the assets,
liabilities, financial position and loss of the Company.
-- The Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
-- The Annual Report and Financial Statements, taken as a whole,
are fair, balanced and understandable and provide the information
necessary for Shareholders to assess the position and performance,
business model and strategy of the Company.
For and on behalf of the Board
Tim Woodcock
Chair
7 December 2023
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 30 September 2023
or 30 September 2022 but is derived from those accounts. Statutory
accounts for the year ended 30 September 2022 have been delivered
to the Registrar of Companies and statutory accounts for the year
ended 30 September 2023 will be delivered to the Registrar of
Companies in due course. The Auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the Auditor drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Auditor's reports can be found in the
Company's full Annual Report and Accounts at
www.unicornaimvct.co.uk .
PRIMARY FINANCIAL STATEMENTS
Income Statement
for the year ended 30 September 2023
Year ended Year ended
30 September 2023 30 September 2022
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net unrealised
losses on
investments 6 - (8,975) (8,975) - (113,641) (113,641)
Net gains
on realisation
of investments 6 - 994 994 - 12,771 12,771
Income 2 2,312 - 2,312 1,753 - 1,753
Investment
management
fees 3 (1,048) (3,144) (4,192) (1,322) (3,965) (5,287)
Other expenses (725) - (725) (771) - (771)
-------- --------- --------- -------- ---------- ----------
Profit
/(loss)
on ordinary
activities
before taxation 539 (11,125) (10,586) (340) (104,835) (105,175)
-------- --------- --------- -------- ---------- ----------
Tax on profit/(loss)
on ordinary
activities - - - - - -
Profit/(loss)
on ordinary
activities
after taxation
for the
financial
year 539 (11,125) (10,586) (340) (104,835) (105,175)
-------- --------- --------- -------- ---------- ----------
Basic and
diluted
earnings
per share:
Ordinary
Shares 5 0.32p (6.55)p (6.23)p (0.22)p (67.10)p (67.32)p
-------- --------- --------- -------- ---------- ----------
All revenue and capital items in the above statement derive from
continuing operations of the Company.
The total column of this statement is the Statement of Total
Comprehensive Income of the Company prepared in accordance with
applicable Financial Reporting Standards ("FRS"). The supplementary
revenue return and capital return columns are prepared in
accordance with the Statement of Recommended Practice ("AIC SORP")
issued in July 2022 by the Association of Investment Companies.
Other than revaluation movements arising on investments held at
fair value through profit or loss, there were no differences
between the profit/ (loss) as stated above and at historical
cost.
The notes below form part of these financial statements.
Statement of Financial Position
as at 30 September 2023
30 September 2023 30 September 2022
Notes GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments at fair
value 6 207,531 198,541
Current assets
Debtors 675 515
Cash and cash equivalents 5,357 23,751
--------- ---------
6,032 24,266
Creditors: amounts
falling due within
one year (1,707) (1,681)
--------- ---------
Net current assets 4,325 22,585
Net assets 211,856 221,126
--------- ---------
Capital
Called up share capital 1,729 1,640
Capital redemption
reserve 147 113
Share premium account 100,974 85,063
Capital reserve 56,883 55,038
Special reserve 39,040 68,338
Profit and loss account 13,083 10,934
Equity Shareholders'
funds 211,856 221,126
--------- ---------
Net asset value
per Ordinary share:
Ordinary shares 7 122.55p 134.81p
--------- ---------
The financial statements were approved and authorised for issue
by the Board of Directors on 7 December 2023 and were signed on
their behalf by:
Tim Woodcock
Chair
The notes below form part of these financial statements.
Statement of Changes in Equity
for the year ended 30 September 2023
Called Capital Share Unrealised Profit
up share redemption premium capital Special and loss
capital reserve account reserve reserve* account** Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------- ------------ --------- ----------- ----------- ----------- ----------
At 1 October
2022 1,640 113 85,063 55,038 68,338 10,934 221,126
Shares repurchased
and cancelled (34) 34 - - (3,785) - (3,785)
Shares issued
under Offer
for Subscription 111 - 14,885 - - - 14,996
Expenses of
shares issued
under Offer
for Subscription - - (377) - - - (377)
Proceeds from
DRIS share
issues 12 - 1,438 - - - 1,450
Expenses of
DRIS share
issues - - (35) - - - (35)
Transfer to
special reserve
*** - - - - (14,568) 14,568 -
Gains on disposal
of investments
(net of transaction
costs) - - - - - 994 994
Realisation
of previously
unrealised
valuation
movements**** - - - 10,820 - (10,820) -
Net decreases
in unrealised
valuations
in the year - - - (8,975) - - (8,975)
Dividends
paid - - - - (10,945) 12 (10,933)
Investment
Management
fee charged
to capital - - - - - (3,144) (3,144)
Revenue return
for the year - - - - - 539 539
---------- ------------ --------- ----------- ----------- ----------- ----------
At 30 September
2023 1,729 147 100,974 56,883 39,040 13,083 211,856
---------- ------------ --------- ----------- ----------- ----------- ----------
Called Capital Share Unrealised Profit
up share redemption premium capital Special and loss
capital reserve account reserve reserve* account** Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2021 1,491 88 53,602 222,185 87,659 5,773 370,798
Shares repurchased
and cancelled (25) 25 - - (4,440) - (4,440)
Shares issued
under Offer
for Subscription 127 - 24,868 - - - 24,995
Expenses of
shares issued
under Offer
for Subscription - - (587) - - - (587)
Proceeds from
DRIS share
issues 47 - 7,212 - - - 7,259
Expenses of
DRIS share
issues - - (32) - - - (32)
Transfer to
special reserve - - - - (4,872) 4,872 -
Gains on disposal
of investments
(net of transaction
costs) - - - - - 12,771 12,771
Realisation
of previously
unrealised
valuation movements - - - (53,506) - 53,506 -
Net decreases
in unrealised
valuations
in the year - - - (113,641) - - (113,641)
Dividends paid - - - - (10,009) (61,683) (71,692)
Investment
Management
fee charged
to capital - - - - - (3,965) (3,965)
Revenue return
for the year - - - - - (340) (340)
---------- ------------ --------- ------------ ----------- ----------- ------------
At 30 September
2023 1,640 113 85,063 55,038 68,338 10,934 221,126
---------- ------------ --------- ------------ ----------- ----------- ------------
* The special reserve and profit and loss account are
distributable to Shareholders. The special reserve was created by
the cancellation of the Share premium account and Capital
redemption reserve in March 2019.
** The profit and loss account consists of the Revenue reserve
of GBP(0.132) million and the realised capital reserve of GBP13.215
million.
*** Transfer of realised losses in accordance with accounting
policy f(iii) on page 68 of the Annual Report.
**** Transfer of previously unrealised valuation movements on
investments sold in the year
The notes form part of these financial statements.
Statement of Cash Flows
for the year ended 30 September 2023
30 September 30 September
2023 2022
Notes GBP'000 GBP'000 GBP'000 GBP'000
Operating activities
Investment income received 2,145 1,609
Investment management fees paid (4,227) (5,831)
Other cash payments (766) (778)
--------- --------- --------- ---------
Net cash outflow from operating
activities (2,848) (5,000)
Investing activities
Purchase of investments (26,604) (9,813)
Sale of investments 9,636 79,022
--------- --------- --------- ---------
Net cash (outflow)/inflow from
investing activities (16,968) 69,209
Net cash (outflow)/inflow before financing (19,816) 64,209
Financing
Dividends paid 4 (9,483) (64,433)
Unclaimed dividends returned 504 -
Shares issued under Offer for Subscription
(net of transaction costs) 14,619 24,407
Expenses of DRIS share issues (35) (32)
Shares repurchased for cancellation (4,183) (4,042)
--------- ---------
Net cash inflow/(outflow) from
financing 1,422 (44,100)
--------- ---------
Net(decrease)/ increase in cash
and cash equivalents (18,394) 20,109
--------- ---------
Cash and cash equivalents at 30
September 2022 23,751 3,642
--------- ---------
Cash and cash equivalents at 30
September 2023 5,357 23,751
--------- ---------
The notes below form part of these financial statements.
Notes to the Financial Statements
for the year ended 30 September 2023
1 Accounting policies
A summary of the principal accounting policies, all of which
have been applied consistently throughout the year, is set out on
pages 67 to 69 of the Annual Report.
a) Basis of accounting
The Financial Statements have been prepared under FRS 102 and
the SORP issued by the Association of Investment Companies in July
2022 .
In accordance with the requirements of FRS 102, those
undertakings in which the Company holds more than 20% of the equity
as part of an investment portfolio are not accounted for using the
equity method. In these circumstances the investment is measured at
"fair value through profit or loss". The Company is exempt from
preparing consolidated accounts under the investment entities
exemption as permitted by FRS 102.
The Financial Statements have been prepared on a going concern
basis under the historical cost convention, except for the
measurement at fair value of investments designated as fair value
through profit or loss.
As a result of the Directors' decision to distribute capital
profits by way of a dividend, the Company revoked its investment
company status as defined under section 266(3) of the Companies Act
1985, on 17 August 2004.
The Directors' assessment of the Company as a going concern is
given on page 41 of the Annual Report.
2 Income
2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income from investments:
- equities 1,590 - 1,590 1,525 - 1,525
- loan stocks 148 - 148 - - -
- bank interest 115 - 115 27 - 27
- Unicorn managed
OEICs (including reinvested
dividends) 193 - 193 201 - 201
- Other OEICs and
Unit Trusts 266 - 266 - - -
-------- -------- -------- -------- -------- --------
Total income 2,312 - 2,312 1,753 - 1,753
-------- -------- -------- -------- -------- --------
Total income comprises:
Dividends 2,049 - 2,049 1,726 - 1,726
Loan stocks 148 - 148 - - -
Interest 115 - 115 27 - 27
-------- -------- -------- -------- -------- --------
2,312 - 2,312 1,753 - 1,753
-------- -------- -------- -------- -------- --------
Income from investments
comprises:
Listed UK securities 210 - 210 248 - 248
AIM and unquoted companies 1,987 - 1,987 1,478 - 1,478
-------- -------- -------- -------- -------- --------
2,197 - 2,197 1,726 - 1,726
-------- -------- -------- -------- -------- --------
The loan stock interest was reinstated during the year and
received subsequent to the year end.
3 Investment Management fees
2023 2022
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unicorn Asset Management
Limited 1,048 3,144 4,192 1,322 3,965 5,287
-------- -------- -------- -------- -------- --------
The management fee is calculated as follows:
Net Assets Fee from 1 January 2022
Up to GBP200 million 2.0% per annum as at the relevant quarter
date
In excess of GBP200
million and up to 1.5% per annum as at the relevant quarter
GBP450 million date
In excess of GBP450 1.0% per annum as at the relevant quarter
million date
At 30 September 2023, officers and employees of the Investment
Manager held 1,513,695 shares in the Company.
During the year, Unicorn Asset Management Limited ("UAML")
received an annual management fee, as detailed above, of the net
asset value of the Company, excluding the value of the investments
in the Unicorn OEIC.
If the Company raises further funds during a quarter the net
asset value for that quarter is reduced by an amount equal to the
amount raised, net of costs, multiplied by the percentage of days
in that quarter prior to the funds being raised. The annual
management fee charged to the Company is calculated and payable
quarterly in arrears. In the year ended 30 September 2023, UAML
also earned fees of GBP27,000 (2022: GBP36,000), being OEIC
management fees calculated on the value of the Company's holdings
in the OEIC on a daily basis. This management fee is 0.75% per
annum of the net asset value of the Unicorn UK Ethical Fund
OEIC.
The management fee will be subject to repayment to the extent
that the annual costs of the Company incurred in the ordinary
course of business have exceeded 2.75% of the closing net assets of
the Company at each year end. There was no excess of expenses for
year 2022/23 or the prior year.
4 Dividends
2023 2022
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the year:
Interim capital dividend of 3.0 pence (2022: 3.0 pence) per share for the year ended 30 September
2023 paid on 11 August 2023 5,204 4,809
Special interim capital dividend of nil pence (2022: 32.0 pence) per share - 51,292
Final capital dividend of 3.5 pence (2022: 3.5 pence) per share for the year ended 30 September
2022 paid on 14 February 2023 5,741 5,200
Special interim capital dividend of nil pence (2022: 7.0 pence) per share - 10,400
-------- --------
Total dividends paid in the year 10,945 71,701
Unclaimed dividends returned (12) (9)
-------- --------
Total dividends * 10,933 71,692
-------- --------
* The difference between total dividends and that shown in the
Cash Flow Statement is GBP1,450,000 which is the amount of
dividends reinvested under the DRIS.
The proposed final dividend is subject to approval by
Shareholders at the Annual General Meeting and has not been
included as a liability in these Financial Statements.
Set out below are the total income dividends payable in respect
of the 2022/23 financial year, which is the basis on which the
requirements of Section 274 of the Income Tax Act 2007 are
considered.
2023 2022
GBP'000 GBP'000
Profit/ (loss) for the year 539 (340)
Proposed final income dividend of nil pence (2022: nil pence) for the year ended 30 September
2023 * - -
-------- --------
* Despite the revenue profit for the year, no revenue dividend
can be made due to the deficit on the revenue reserve as shown in
the footnote to the Statement of Changes in Equity above.
5 Basic and diluted earnings and return per share
2023 2022
Total earnings after taxation: (GBP'000) (10,586) (105,175)
Basic and diluted earnings per share (Note a) (pence) (6.23) (67.32)
------------ ------------
Net revenue from ordinary activities after taxation (GBP'000) 539 (340)
Revenue earnings per share (Note b) (pence) 0.32 (0.22)
------------ ------------
Total capital return (GBP'000) (11,125) (104,835)
Capital earnings per share (Note c) (pence) (6.55) (67.10)
------------ ------------
Weighted average number of shares in issue during the year 169,795,766 156,227,923
------------ ------------
Notes
a) Basic and diluted earnings per share is total earnings after
taxation divided by the weighted average number of shares in issue
during the year.
b) Revenue earnings per share is net revenue after taxation
divided revenue off that the weighted average number of shares in
issue during the year.
c) Capital earnings per share is total capital return divided by
the weighted average number of shares in issue during the year.
There are no instruments in place that will increase the number
of shares in issue in future. Accordingly, the above figures
currently represent both basic and diluted returns.
6 Investments at fair value
Unlisted
Fully Traded Unlisted loan Other 2023 2022
listed on AIM shares stock funds Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening book cost
at 30 September 2022 8,357 122,935 14,303 500 4,483 150,578 153,489
Unrealised (losses)/gains
at 30 September 2022 (2,275) 47,514 11,392 (375) (1,218) 55,038 222,185
Permanent impairment
in value of investments - (2,442) (4,633) - - (7,075) (7,075)
-------- ---------- ---------- --------- -------- ---------- ----------
Opening valuation
at 30 September 2022 6,082 168,007 21,062 125 3,265 198,541 368,599
-------- ---------- ---------- --------- -------- ---------- ----------
Shares delisted - (188) 188 - - - -
Purchases at cost - 7,604 - - 19,002 26,606 9,829
Sale proceeds - (2,627) (9) - (7,000) (9,636) (79,022)
Net realised gains - 977 7 - 11 995 12,776
Movement in unrealised
gains 1,220 (15,968) 5,118 375 280 (8,975) (113,641)
Closing valuation
at 30 September 2023 7,302 157,805 26,366 500 15,558 207,531 198,541
-------- ---------- ---------- --------- -------- ---------- ----------
Book cost at 30 September
2023 8,357 126,473 14,488 500 16,496 166,314 150,578
Unrealised (losses)/gains
at 30 September 2023 (1,055) 42,352 16,524 - (938) 56,883 55,038
Permanent impairment
in value of investments - (11,020) (4,646) - - (15,666) (7,075)
-------- ---------- ---------- --------- -------- ---------- ----------
Closing valuation
at 30 September 2023 7,302 157,805 26,366 500 15,558 207,531 198,541
-------- ---------- ---------- --------- -------- ---------- ----------
Transaction costs on the purchase and disposal of investments of
GBP1,000 were incurred in the year. These have not been deducted
from realised gains shown above of GBP995,000 but have been
deducted in arriving at gains on realisation of investments
disclosed in the Income Statement of GBP994,000.
The shares delisted during the year relate to La Chemeau
Group.
* Other funds include the Unicorn Ethical Fund, the BlackRock
Cash Fund and the Royal London Short-Term Money Market Fund.
Note: Permanent impairments of GBP7,075,000 were held in respect
of losses on investments held at the previous year end. Additional
impairments of GBP8,591,000 provided for in the year relate to
Bonhill Group, GBP1,755,000, British Honey Company, GBP3,101,000,
Kellan Group, GBP13,000, Miroma Holdings, GBP1,000, Osirium
Technologies, GBP1,971,000 and Trackwise Designs, GBP1,750,000.
Reconciliation of cash movements in investment transactions
The difference between the purchases in Note 6 and that shown in
the Cash Flows is GBP2,000 which represents the reinvested
dividends on the Unicorn Ethical Fund.
7 Net asset value
2023 2022
Net Assets GBP211,856,000 GBP221,126,000
Number of shares in issue 172,876,156 164,023,203
--------------- ---------------
Net asset value per share 122.55p 134.81p
--------------- ---------------
8 Post balance sheet events
On 28 November 2023, the Company announced an Offer for
Subscription as detailed in the Chair's Statement above.
On 6 December 2023, the Court sanctioned the transaction on
Abcam and proceeds amounting to $25.9 million are expected to be
received shortly.
9 Capital commitments and contingent liabilities
On 27 July 2023, the Company made a capital commitment to invest
GBP1,500,000 in Eden Research. This transaction was completed on 6
October 2023.
10 Shareholder information
Dividend
The Directors have proposed a final dividend of 3.5 pence per
share. Subject to Shareholder approval, the dividend will also be
paid on 14 February 2024 to Shareholders on the Register on 5
January 2024.
The Board has previously decided the Company will in future pay
all cash dividends by bank transfer rather than by cheque.
Shareholders will have the following options available for
future dividends:
-- Complete a bank mandate form and receive dividends via direct
credit to a UK domiciled bank account.
-- Reinvest the dividends for additional shares in the Company
through the Dividend Reinvestment Scheme (DRIS).
For those Shareholders who previously received their dividend by
cheque and who have not provided their bank details to the
Registrar, a bank mandate form will be available on the Company's
website. Once completed the form should be sent to the Company's
Registrars, City Partnership at the address shown on page 89 of the
Annual Report. If Shareholders have any questions regarding the
completion of the form, they are advised to contact the City
Partnership on 01484 240910 or by email:
registrars@city.uk.com.
Dividend Reinvestment Scheme
Shareholders may elect to reinvest their dividends by
subscribing for new shares in the Company. Shares will be issued at
the latest published Net Asset Value prior to the allotment. For
details of the scheme see the Company's website
www.unicornaimvct.co.uk/dividend-reinvestment-scheme or contact the
scheme administrators, The City Partnership, on 01484 240910.
11 Statutory information
These are not full accounts in terms of section 434 of the
Companies Act 2006. The Annual Report for the year to 30 September
2023 will be sent to Shareholders shortly and will then be
available for inspection at ISCA Administration Services Limited,
The Office Suite, Den House, Den Promenade, Teignmouth, TQ14 8SY
the registered office of the Company. Copies of the Annual Report
will shortly be available on the Company's website,
www.unicornaimvct.co.uk . Statutory accounts will be delivered to
the Registrar of Companies after the Annual General Meeting.
12 Annual General Meeting
The Annual General Meeting of the Company will be held at 11.30
am on Wednesday, 7 February 2024 at The Great Chamber, The
Charterhouse, Charterhouse Square, London EC1M 6AN. Shareholders
will be able to attend this meeting in person, arrangements for the
meeting are detailed on pages 41 and 42 of the Annual Report.
Voting on all Resolutions will be conducted on a poll including all
proxy votes submitted. The Notice of the Meeting is included on
pages 90 to 94 of the Annual Report and a separate proxy form has
been included with Shareholders' copies of the Annual Report. Proxy
forms should be completed in accordance with the instructions
printed thereon and sent to the Company's Registrars, The City
Partnership (UK) Limited, at the address given on the form, to
arrive no later than 11.30am on 5 February 2024. Please note that
you can vote your shares electronically
athttps://proxy-unicorn.cpip.io/.
13 National Storage Mechanism
A copy of the 2023 Annual Report and Accounts will be submitted
shortly to the National Storage Mechanism ("NSM") and will be
available for inspection at the NSM, which is situated at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Contact details for further enquiries:
Chris Hutchinson of Unicorn Asset Management Limited (the
Investment Manager), on 020 7253 0889.
ISCA Administration Services Limited (the Company Secretary) on
01392 487056 or by e-mail on unicornaimvct@iscaadmin.co.uk
DISCLAIMER
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR NKOBDDBDBOBK
(END) Dow Jones Newswires
December 08, 2023 02:00 ET (07:00 GMT)
Unicorn Aim Vct (LSE:UAV)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Unicorn Aim Vct (LSE:UAV)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024