REG - Unicorn AIM VCT PLC - Final Results
14/12/2022 07:00
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RNS Number : 6112J Unicorn AIM VCT PLC 14 December 2022
Unicorn AIM VCT plc (the "Company" or the "VCT")
LEI: 21380057QDV7D34E9870
Annual Results Announcement for the year ended 30 September 2022
The full Annual Report and Accounts for the year ended 30 September 2022 can
be found on the Company's website www.unicornaimvct.co.uk
FINANCIAL HIGHLIGHTS
(for the year ended 30 September 2022)
· Special interim dividends of 7.0 pence per share and 32.0 pence per
share paid during the year.
· Net asset value ("NAV") total return for the year ended 30 September
2022, after adding back the dividends of 45.5 pence per share paid in the
year, fell by 27.5%.
· Offer for Subscription raised £24.4 million (after costs).
· Final dividend of 3.5 pence per share proposed for the financial year
ended 30 September 2022.
· New offer for Subscription announced to raise up to £15.0 million.
Fund Performance
Net asset value per share (NAV) (p) Cumulative dividends + paid per share (p) Net asset value plus cumulative dividends paid per share (p)
Shareholders' Funds*
(£ million) Share price (p)
Ordinary Shares
30 September 2022 221.1 134.8 104.0 238.8 126.5
31 March 2022 315.3 195.7 69.0 264.7 167.0
30 September 2021 370.8 248.6 58.5 307.1 219.0
31 March 2021 346.3 232.1 55.5 287.6 198.0
* 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 2022 bringing total dividends for the year to 45.5
pence per share. If approved by Shareholders, this payment will bring total
dividends paid in the last ten years from 30 September 2012 to 107.5 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 Annual Report and Audited Financial
Statements for the year ended 30 September 2022.
Introduction
The financial year ended 30 September 2022 has been a challenging period for
the Company. Mounting economic pressures and significant political upheaval
have combined to create a highly volatile investment environment. This has
resulted in poor performance from UK and global equity markets in general, and
from smaller, quoted companies in particular.
Many smaller, listed businesses have commanded a valuation premium in recent
years, which has largely been predicated upon the belief that they will, in
time, deliver materially stronger earnings growth than their larger quoted
peers. However, the global economic and political landscape has changed
dramatically during the past twelve months, and this has triggered a general
re-appraisal of investment risk. In the UK, this process has resulted in
investment being withdrawn from smaller, less liquid businesses and directed
instead towards larger, more liquid quoted companies. Inevitably, this shift
in focus has led to a significant decline in the overall valuation of the
Alternative Investment Market ("AIM"), which in turn, has also had a
materially negative impact on the value of the Company's portfolio.
Economic & Market Review
Economic growth in the UK has been weak for several years and we are now
entering a period of economic recession. The period under review was
problematic for many reasons, including the return of inflation, the outbreak
of a major conflict in Eastern Europe, a growing energy crisis, serious issues
in the global supply of key goods and materials and political instability in
the UK. Each of these factors in isolation would have a negative impact on
economic growth but, taken together, a painful downturn seems inevitable.
Consumer spending, upon which much of Britain's economic growth is based, has
already been badly affected as people struggle to cope with rapidly rising,
food, energy and mortgage costs. The challenges ahead remain significant and
will become even more serious than they are currently. Sadly, it is difficult
to identify any obvious and imminent solutions to the problems we all now
face.
Global equity markets have not been immune to the effects of global and
domestic upheaval and, as is often the case, it has been the smaller, earlier
stage listed businesses that have suffered the most. During the period under
review, the FTSE AIM All-Share Index fell by 34.3% after reaching a 20 year
high on 3 September 2021.
Although certain sectors of the equity market, notably biotechnology and life
sciences, had begun a process of derating during the first half of 2021, the
world's leading equity markets remained resilient until December last year.
However, as 2022 began, major events such as the Russian invasion of Ukraine,
disruption to supply chains around the world, the global energy crisis, and
political turmoil in the UK, all contributed to the rapid increase in the rate
of inflation, while simultaneously reducing the prospect of a sustained,
post-Covid economic recovery.
The re-emergence of inflation; after more than a decade of 'cheap' money, has
understandably led to a marked shift in investor attitudes. Investors have
become increasingly risk averse and, when this happens, capital tends to flow
toward areas of the equity market that appear to offer greater protection from
capital loss. Consequently, sectors such as Oil & Gas, Mining and
Commodities have all delivered strong relative outperformance during the year,
while the valuations of companies operating in higher growth areas such as
consumer retail, information technology, biotechnology and life sciences have
all been under severe pressure.
Net Assets
As at 30 September 2022, the audited net assets of the Company were £221.1
million. This represents a decline of £149.7 million over the course of the
financial year under review.
The major factors impacting net assets were as follows:
• Net losses of the investment portfolio of £100.9 million.
• A return of capital to Shareholders by way of ordinary and special
dividends of £71.7 million.
• Buybacks of £4.4 million.
• An increase in assets of £24.4 million following the capital raise in
March 2022.
After adding back all dividends paid, the total return per share in the period
was -27.5%.
Investment Performance Review
The decline in Net Asset Value experienced during the period under review has
been significant and is in stark contrast to the positive outcome delivered in
the previous financial year. Although this year's 27.5% decline in the Net
Asset Value is a disappointing outcome, it is less severe than the decline
registered by the FTSE AIM All-Share Index of -34.3%.
The companies held in the portfolio are largely well-funded. The portfolio
consists of 85 active VCT qualifying companies, of which 44 had a carrying
value in excess of £500,000 at the financial year end. The value of these 44
companies represents circa 82% of the VCT's total Net Asset Value as at 30
September 2022. The Investment Manager estimates that approximately 43% of
these 44 companies are profitable, a further 14% are funded through to
profitability based on broker cashflow forecasts, while 20% continue to
operate with a 'cash runway' of at least two years duration. Of the remaining
23%, the Investment Manager believes that they will require future external
funding.
The investment portfolio is highly diversified both by the number of holdings
and by sector exposure. Many of the Company's longer-standing investments are
in established, profitable and cash generative businesses that sell highly
specialised products and services for which there is continuing demand. These
businesses typically operate with strong balance sheets and are often free of
debt.
The long-established and consistently profitable businesses held within the
investment portfolio have been more resilient than our earlier-stage investee
companies, which tend to be loss-making and therefore often require to raise
more capital. This combination of mature, profitable, cash generative
businesses and younger companies in the early stages of their development
provides a good balance between risk and reward. In favourable market
conditions it is reasonable to anticipate strong returns from those businesses
that are in the scale-up phase of their development, while it is logical that
investment in profitable, established businesses offers a degree of defensive
protection in more volatile market conditions.
Portfolio Activity
Given the circumstances, the year under review was subdued in terms of
investment in new qualifying investments. During the period, two new VCT
qualifying investments were made, at a total cost of £4.9 million. In
addition, a further £4.9 million of VCT qualifying capital was invested in
six existing portfolio companies, to support their growth.
No non-qualifying investments were made during the financial year.
A number of full and partial disposals were also made during the course of the
financial year. Total proceeds from disposals of qualifying investments
amounted to £20.2 million, realising an overall capital profit over the
original cost of £18.5 million. There were also a number of full and partial
disposals of non-qualifying investments during the period. The amount realised
from these non-qualifying transactions was £58.8 million and the overall
capital profit over the original cost amounted in aggregate to £47.8 million.
A more detailed analysis of investment activity and performance can be found
in the Investment Manager's Review below.
Dividends
A special interim dividend of 7.0 pence per share was paid in February 2022 at
the same time as the final dividend of 3.50 pence per share for the year ended
30 September 2021.
An interim dividend of 3.0 pence per share, for the half year ended 31 March
2022, was paid to Shareholders on 11 August 2022 together with a special
interim dividend of 32.0 pence per share.
Details of the special interim dividends are given on pages 8 and 40 in the
Annual Report.
Despite the market difficulties and the resulting decline in the Company's net
assets, the Board is pleased to recommend to Shareholders a final dividend of
3.5 pence per share for the financial year ended 30 September 2022. This
dividend, if approved at the Company's forthcoming AGM, will be payable on 14
February 2023 to Shareholders on the register as at 6 January 2023.
Total dividends in respect of the financial year ended 30 September 2022, are
therefore expected to be 45.5 pence per share.
The Board is pleased to have delivered a significant return of cash, which is
tax-free to eligible UK Shareholders. However, it is important to note that
payments to Shareholders by way of special dividends are unusual,
unpredictable and dependent upon the realisation of significant capital gains
from the disposal of successful individual investments.
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.
Between 1 October 2021 and 30 September 2022, the Company bought back
2,515,309 of its own Ordinary Shares for cancellation, being 1.7% of the
opening share capital, at an average price of 176.5 pence per share (including
costs) and an average discount from net asset value of 13.4%.
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
have, to date, been cancelled.
An Offer for Subscription was launched on 24 January 2022. The Offer was again
strongly supported and closed, fully subscribed, on 8 February 2022. The total
raised, net of all costs, was £24.4 million and resulted in the issue of 12.6
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 2022, there were 164,023,203 Ordinary Shares in issue.
New Offer
On 8 December 2022, the Company announced its intention to launch an Offer for
Subscription to raise up to £15 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 2023.
VCT Status
There were no changes to VCT legislation during the year.
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%) of a Venture Capital
Trust's total assets 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 98.7% of
total assets as of 30 September 2022. The Board has been advised by its VCT
status adviser, 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.
Under existing legislation the tax benefits enjoyed by VCTs are due to expire
in April 2025. We are delighted that the Government has stated that it plans
to legislate to extend these benefits beyond that date.
ESG Policy
Whilst this is not a 'sustainable' fund, the Board expects the Investment
Manager to invest in line with its ESG principles. Further we support the
Investment Manager in developing a dialogue with our investee companies that
will increasingly result in transparent and comprehensive ESG reporting on the
one hand, and developing sound environmental, social and governance strategies
on the other. Considerable progress has been achieved by the Investment
Manager in this area during the last financial year.
The Board continues to take steps to reduce paper use (previously withdrawing
the dividend cheque service and the printing of the Half-Yearly Report) and
continues to encourage service providers to do the same. During the year our
Investment Manager has migrated to fully renewable energy suppliers and
initiated its own carbon offset programme through tree planting.
The Board continues to adopt best practice in good governance in line with AIC
guidelines.
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 2023. Full details
of the AGM including location, timing, and the business to be conducted, are
given in the Notice of the Meeting on page 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 page 91 of the Annual Report using the proxy form, or
electronically at www.unicornaimvct.com. The Board has carefully considered
the business to be submitted to Shareholders for approval at the AGM and
recommends that Shareholders vote in favour of all the resolutions being
proposed.
Board Changes
As reported on page 40 of the Annual Report, Jocelin Harris will not seek
re-election at the AGM and will therefore step down as a Director of the
Company. The Board wishes to thank Jocelin for his long and diligent service
over the last 17 years and wishes him well for the future. Josie Tubbs joined
the Board on 24 May 2022 and I would like to welcome her to the Board.
Outlook
The year under review has been a particularly challenging one for equity
markets and for the Company itself. In absolute return terms, this has been
both painful and disappointing for all concerned. However, the Company has
performed with greater resilience than the equity market with which it is most
closely aligned, the Alternative Investment Market.
At the time of writing, the short-term outlook remains weak. The considerable
turmoil experienced during the period under review has eroded market
confidence and weakened the prospects of a rapid and sustainable economic
recovery. It is therefore prudent to anticipate that, while high levels of
political instability and economic uncertainty persist, it is likely that the
Company's NAV performance will remain under pressure.
Financial markets continue to experience bouts of extreme volatility, and
consequently, the Company continues to hold higher than usual levels of
liquidity. At approximately £21.9 million, the amount of net cash currently
held is more than would be expected in more stable conditions. This provides a
measure of protection against the effects of a falling market and keeps
capital available for deployment by the Investment Manager when the economy
improves and confidence returns.
Our Investment Manager is confident that, once economic and political
stability return the FTSE AIM All-Share Index and the Company's carefully
selected portfolio of investments will recover in value. The Investment
Manager continues to nurture the promising portfolio of existing investments,
and the Board is confident that most of the investee companies can withstand
an extended period of economic hardship, and, in many cases, have the
potential to become valuable businesses within the next 5-10 years.
Tim Woodcock
Chair
13 December 2022
Investment Manager's Review
Introduction
The financial year ended 30 September 2022 was an extremely challenging period
for the Company.
In response to multiple threats to global economic growth, investor sentiment
weakened significantly throughout the year under review. This steady erosion
of confidence in the economic outlook, exacerbated by the emergence of serious
inflationary pressures, saw both Bond and Equity markets suffer significant
declines during the period.
In the US, the Dow Jones and the S&P 500 Indices both fell by over 13% in
the twelve months to 30 September 2022, while the technology and growth
focused Nasdaq Index declined by 26% over the same period. Stock market
indices in Japan, Europe and in emerging markets such as China and India, also
recorded heavy losses. Unusually, government bonds have simultaneously also
been under severe pressure, with most fixed income indices experiencing
significant declines during the period.
At first glance, it might appear that the UK stock market somehow managed to
escape the wider equity market sell-off, because the FTSE 100 Index recorded a
marginally positive total return of 0.9% in the year ended 30 September 2022.
However, the performance of the FTSE 100 Index is misleading, given its
significant weighting in sectors such as Oil & Gas, Mining and Banking,
all of which have been beneficiaries of inflation and/or rising interest rates
and the weak pound.
Unfortunately, it was a very different story for the many hundreds of smaller
listed businesses, whose valuations have, in many cases, been decimated as
investors increasingly sought the perceived safety of larger, more liquid
investments.
The FTSE AIM All-Share Index was particularly negatively impacted, with its
total return for the period being -34.3%.
In the context of a complex economic, financially challenging, and politically
turbulent landscape, it is unsurprising that the Company also endured a
significant decline in Net Asset Value per share during the period. Indeed,
the financial year under review represents one of the most difficult periods
the Company has faced in the 21 years since its launch in 2001.
Net Asset Performance
The decline in total Net Assets per share during the financial year was
disappointing and painful.
As noted in the Chair's Statement the total return per share in the period
under review was, after adding back all dividends paid, -27.5%.
It is disheartening to have to report on a negative year for the Company, and
there is only slim comfort to be derived from the fact that the returns
recorded by the FTSE AIM All-Share Index were somewhat worse.
As at 30 September 2022, the audited net assets of the Company amounted to
£221.1 million, which equates to a reduction in total assets of £149.7
million during the twelve months. Of this decline £71.7 million was due to
the dividend payments made during the period. A large portion of this dividend
return was in the form of one-off special interim dividends, made possible by
the realisation of our highly successful investments in Augean and Interactive
Investor ("ii") as stated below.
The weakness of equity markets during the year meant that most companies in
the portfolio lost considerable value which inevitably led to a big reduction
in the value of the Company's portfolio. This reduction in Net Assets was
partially offset by a limited number of positive returns from investee
companies and also thanks to the proceeds received from a fully subscribed
Offer for Subscription during the first quarter of 2022. In the circumstances,
it is particularly gratifying that this Offer for Subscription was strongly
supported, having closed in February 2022 after quickly reaching full
subscription. Given the difficult market conditions, we have been cautious in
deploying this new capital. Until such time as the investment environment
shows signs of improvement, this highly selective and cautious approach to
deploying your capital will be maintained.
Performance Review
The period under review witnessed a significant reversal of fortunes for many
sectors of the equity market. Listed businesses operating in high growth areas
such as Biotech, Life Sciences, Software and Technology all suffered dramatic
falls in value, as investors lost confidence in their ability to deliver the
high levels of forecasted growth required to sustain their previously lofty
valuations.
In recent years, the managers of VCT portfolios have been required by VCT
legislation to ensure that all new qualifying investments are directed toward
early-stage, scale-up businesses. Such businesses typically operate in the
sectors described above. Unfortunately, they have therefore been particularly
badly affected by the market falls experienced over the past 12 months.
The investment portfolio remains diversified both by number of holdings and by
sector exposure. At the financial year end, the Company held investments in 85
active VCT qualifying companies and 8 non-qualifying companies.
These investments are spread across 25 different sectors.
A review of the most meaningful contributors to performance from VCT
qualifying companies (both positive and negative) follows.
Largest Detractors
Hasgrove (8.6% of net assets, -£10.2 million) is an unquoted holding company,
whose only operating subsidiary, Interact, is a fast-growing Software as a
Service (SaaS) provider of corporate intranet solutions. In the first eight
months of its current financial year Hasgrove's revenues increased to £18.4
million which represents growth of 25% when compared to the prior year period.
Profitability also increased significantly, with EBITDA growing by £1.3m to
£6.5 million. New business wins in North America have continued to be the
primary driver of growth, with high profile customers increasingly attracted
by the numerous benefits offered by Interact's market leading internal
communications software. Perhaps most notably, Interact recently secured a
two-and-ahalf- year contract with the US House of Representatives, which acts
as a strong endorsement for the high levels of functionality and security
offered by the platform. Despite healthy operational and financial progress,
the carrying value of the Company's investment in Hasgrove was marked down in
the period under review. This decrease in value reflects the downward pressure
on valuation multiples experienced by comparable software companies that are
listed on the public markets. As at 30 September 2022, the Fair Value of the
Company's holding in Hasgrove was assessed as being £18.9 million, which
represents a decrease of £10.2 million when compared to the previous
financial year end.
MaxCyte (6.3% of net assets, -£8.2 million) is a leading cell engineering
company focused on providing a unique and patented cell engineering platform
to advance innovative research into the treatment of cancer. At the end of
August 2022, MaxCyte released half-year results for the period ended 30 June
2022, which reported on encouraging growth across all areas of its operations.
Revenues generated from new cell therapy customer licensing deals were
particularly notable. MaxCyte has now signed 17 Strategic Platform Licenses,
which includes two major new licences with LG Chem and Intima Biosciences.
Other areas of progress include a strengthening of the senior management team
and the completion of new headquarters, which has resulted in a threefold
increase in manufacturing capacity. From a financial perspective, MaxCyte
remains well-resourced with cash or cash equivalents of over $240 million on
the balance sheet as at 30 June 2022. For its financial year ending 31
December 2022, MaxCyte's revenues are expected to grow by more than 30% when
compared to the prior financial year. Despite achieving further significant
operational progress, while retaining a strong financial base, MaxCyte's share
price has nonetheless suffered badly during the period under review as the
Biotechnology and Life Sciences sectors experienced a savage derating.
Renalytix (0.3% of net assets, -£7.6 million) is a business focused on
harnessing the power of artificial intelligence to enable early detection of
kidney disease. To date, thirty-three State Medicaid programmes in the US have
contracted to use Renalytix's technology. The company's commercial focus for
the remainder of 2022 is to expand the availability of its core KidneyIntelX
software, into other health system partnerships across the United States.
However, despite strong progress in signing new contracts, translating this
into regular revenue generating orders for KidneyIntelX has proved elusive.
The reasons for the delay in generating meaningful revenues appear to be
procedural rather than structural and the company is working hard to reduce
bureaucratic hurdles between the signing of contracts and the implementation
of KidneyIntelX tests. There are several potential catalysts that could
materially increase the pace of testing including; adoption of the tests by
new Health Systems, full FDA approval, the release of further data confirming
clinical utility data and the signing of strategic partnerships.
In April 2022, Renalytix raised $26.8 million in further funding via a
convertible bond issue and the management team is now actively looking at the
cost base in order to reduce monthly cash burn. However, as a result of the
disappointing delay to the commercialisation of KidneyIntelX, the share price
has experienced a dramatic fall in the period under review.
Surface Transforms (3.1% of net assets, -£4.6 million) is a manufacturer of
carbon fibre ceramic brake discs for the automotive industry. Surface
Transforms has continued to achieve its objectives over the past twelve
months, growing revenues through multi-year contracts, delivering on plans to
secure new and high-profile customers and significantly expanding the total
order book to almost £200 million. Importantly, Surface Transforms has also
successfully raised a further £16 million of new capital, which will help
fund required capacity expansion. With significant contracts and necessary
funding now in place, the company's management team can focus on the
fulfilment of existing orders. Subject to the successful delivery of existing
contracts, the expectation is that the business becomes profitable and
self-sustaining from a cashflow perspective during 2023. The disappointing
share price decline therefore reflects the general decline in the value of
AIM-listed stocks, rather than being caused by any operational or financial
disappointments during the period.
Tristel (2.3% of net assets, -£4.7 million) is a manufacturer of
infection-prevention products, which help to prevent the transmission of
microbe infections using proprietary chemistry based on chlorine dioxide. With
hospitals gradually returning to normal levels of service post the COVID
crisis, Tristel is set to benefit from an increasing sales volume. It recorded
revenues of £31.1 million in its financial year ended 30 June 2022, while
profitability declined against the prior year by 16% to £4.5 million. The
decline in profitability was in line with management forecasts and is
accounted for by a period of destocking in the NHS following the COVID
pandemic, which had caused surgical procedures to be put on hold. Tristel
remains a highly cash generative business and held net cash balances of £8.9
million at its financial year end on 30 June 2022. Subject to receiving FDA
approval, Tristel intends to launch its growing range of infection prevention
products in the US market during 2023. If successful, this new area of
activity could transform the growth prospects of the business.
Access Intelligence (2.8% of net assets, -£3.5 million) operates a Software
as a Service (SaaS) business model focused on providing senior management
teams with the tools necessary to enable them to control and manage the
reputations of the businesses they lead. Throughout the financial year to the
end of November 2022, Access Intelligence has continued to accelerate the
development of its product offering and to extend its global footprint. Most
recently, the acquisition of Isentia has provided Access Intelligence with a
significant opportunity to expand in the Asia Pacific region. However, with an
increasingly difficult economic backdrop to contend with, the market has taken
a cautious view on the short-term growth prospects for the business and, as a
result, its share price has been weak.
Directa Plus (2.0% of net assets, -£3.3 million) is a leading producer and
supplier of graphene-based products for use in consumer and industrial
markets. In its most recent half-year period ended 30 June 2022, Directa Plus
delivered revenues of €5.5 million, which represents growth of 39% on the
equivalent half year period in 2021. The business continues to develop and
deliver market leading products in three key business verticals; Industrial,
Environmental Remediation and Textiles and its management remains confident of
delivering further growth in revenues in the second half of the financial
year, despite the uncertainty surrounding the macro-economic outlook.
Trackwise Designs (0.0% of net assets, -£3.4 million) is a manufacturer and
distributor of electronic components, designing printed circuit technology for
a range of telecommunications, aviation, automotive, and defence applications.
In September 2022, Trackwise Designs announced that it expected to deliver
significantly lower production volumes in its current financial year, compared
to previous estimates. It is also highly likely that the company will require
additional funding in order to complete the development of a new manufacturing
facility. The company's share price has suffered accordingly, and the
management team is now actively exploring possible strategic partnerships in
order to support the future development and growth of the business.
Trellus Health (0.2% of net assets, -£3.3 million) is a wellness and fitness
services company that provides a care platform for the management of complex
medical conditions. In early 2022, Trellus Health successfully launched its
Direct-to-Consumer offering in the New York tri-state area, which led to
accelerated commercial progress. During 2022, Trellus Health also advanced the
launch of its product to tackle irritable bowel syndrome, offering a
comprehensive gastrointestinal solution ahead of original expectations. The
business continues to receive increasing interest from pharmaceutical
companies, as well as prospective B2B2C insurance partners that would
potentially allow it to become part of their offered health plans. Despite
this positive progress, Trellus Health remains some way from achieving
sustainable profitability. As a result, the share price has remained under
pressure and the management team has begun to implement cost savings to reduce
the company's cash-burn rate.
Anpario (3.5% of net assets, -£3.2 million) is an international manufacturer
and distributor of natural feed additives for animal health, nutrition, and
biosecurity. Anpario reported a slight decline of -3% in adjusted earnings per
share during the first half of its financial year ended 30 June 2022. This
modest decline in profitability was due to a significant increase in the price
of raw materials, together with increased shipping costs for both raw
materials and finished goods. Management has put prices up across Anpario's
product range and customers have accepted these price increases, which has
helped to mitigate the impact of inflationary cost pressures. Anpario's
customers in the farming industry are also under strain given the current
economic environment but, given the key health and growth benefits offered by
Anpario's natural feed additives, an increased cost in this area should be
justifiable. Anpario's management team remains cautious in their outlook for
profitability for the full financial year due to the uncertain macro-economic
outlook, but the business itself remains in sound financial health with no
debt, significant levels of cash and with healthy profit margins that are
expected to improve further as recently introduced price rises work through
the order book.
The British Honey Company (British Honey) (0.0% of net assets, -£3.2 million)
is a UK based producer of spirits, honey and jams. The company began trading
in 2014, initially focused on honey production and subsequently expanding into
honey infused spirits. In February 2021, British Honey completed the
acquisition of Union Distillers Limited, which is a Leicestershire based
independent producer and distributor of spirits, for £10 million in an effort
to build scale in the craft spirit market. In June 2022 however, the business
was forced to suspend its shares, because its auditors required additional
time to complete and reconcile an inventory stock-take. A subsequent update in
August 2022 reported that the company was experiencing more difficult trading
conditions due to the challenging consumer environment, exacerbated by further
supply chain disruption and raw material cost inflation. As a result, the
Investment Manager took the decision to write down the holding in British
Honey to nil value. This cautious approach reflects our concern about the
business' ongoing viability. Following the end of the period under review, the
board of British Honey announced that it was undertaking a strategic review
and placing the business into a formal sale process. British Honey remains
debt free and while it has been a disappointing investment, we remain
cautiously optimistic that the board of British Honey can, and must, recover
some value for its long-suffering shareholders, albeit that the timing and
quantum of any value recovery remains uncertain.
Largest Contributors
Aurrigo International (1.5% of net assets, +£0.3 million) is a leading
international provider of transport technology solutions and is highly
regarded as a developer of specialised autonomous and semi-autonomous
vehicles. Aurrigo's patented products and services tackle the complex issues
that the global aviation industry faces. On 15 September 2022, Aurrigo
International listed on AIM and successfully raised gross proceeds of £8
million at a price of 48p per share and a market capitalisation of
approximately £20 million. The Company invested £3 million in the initial
public offering. The public listing and the injection of substantial new
capital will help Aurrigo to further develop and commercialise autonomous
vehicles for use in ground handling at airports around the world.
Gama Aviation (0.1% of net assets, +£0.1 million) offers fleet management
services to business jet owners, often managing all aspects of running and
maintaining an aircraft on behalf of its owner. Gama provides services to
multiple sectors such as, special mission, technology, outsourcing and
business aviation. In its interim results, which were announced during
September 2022, Gama Aviation reported strong revenue growth of 30% to $139.3
million and a return to profitability, despite the turbulent macro-economic
conditions. While business jet aviation activity is expected to continue to
recover, Gama Aviation's management team remains cautious about future growth,
given inflationary cost pressures and global economic instability.
Augean (+£0.1 million) is a leading UK provider of sustainable waste
recycling, recovery, treatment and disposal services. The group operates in
the hazardous waste management sector, oil and gas industry, and nuclear and
radioactive industry. At the beginning of 2022, long-term investors in the
waste management sector, Ancala Partners and Fiera Infrastructure,
successfully completed their acquisition of Augean for £390 million, which
realised a capital profit of more than £10 million on the Company's
investment. Following this, the Board declared a special interim dividend of
7.0 pence per share, which was paid on 10 February 2022.
Interactive Investor ("ii") (+£11.8 million) is an award-winning online
investment platform which, in recent years, has grown substantially through a
combination of organic and acquisitive growth. ii is now the largest
"flat-fee" investment platform in the UK with over £50 billion of assets
under administration and over 400,000 customers. ii was founded over
twenty-five years ago as a digital retail investing information service and
continued to evolve slowly until a new Chief Executive was appointed in 2017.
The Company first acquired shares in ii in November 2013, buying a stake in
what was then a small private company with a sub-scale customer base and a
little known brand name. However, the new CEO came with a clear vision to
create an innovative, user friendly investment platform that would be best in
class in terms of information and functionality, thereby properly meeting the
needs of its retail customers.
Between 2017 and 2021, ii delivered rapid and sustained organic growth, which
was augmented through the acquisition and successful integration of four
competitors in the mid-size, UK investment platform market. The largest of
these acquisitions were TD Waterhouse and Alliance Trust Savings, each of
which helped ii to achieve critical mass in terms of its active customer base.
As a result, ii rapidly achieved healthy and growing levels of profitability,
while also becoming highly cash generative. In December 2021, the Board of ii
agreed to a cash offer from abrdn plc, for a price approaching £1.5 billion,
Following approval from the Financial Conduct Authority and other regulatory
bodies, the sale to abrdn was completed in May 2022. Total cash proceeds of
approximately £55 million were received for the Company's shares in ii, which
represents a capital gain of more than £51 million on our total investment
cost and equates to a fifteen-fold return on investment. As a result of this
exceptionally successful outcome and, taking into consideration the cash
already held on the Company's Balance Sheet, your Board resolved to distribute
the entire realised gain of £51.6 million to Shareholders by way of a special
interim dividend of 32.0 pence per share. This was paid to Shareholders on 11
August 2022. We are delighted with this positive result as it further endorses
our long-term approach to investment, while also returning significant value
to Shareholders in the form of tax-free dividends. Such events, albeit rare,
also demonstrate that the Venture Capital Trust structure is an ideal one for
investing in small, early-stage, high growth businesses. With the benefit of
appropriate levels of funding, advice and encouragement a number of the
investee companies held in the portfolio already have the potential to follow
the same development path as ii, and over time, could create further
significant value for Shareholders.
Non-Qualifying Investments
The non-qualifying investments made by the Company 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,
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.
Offer for Subscription
The fully subscribed Offer for Subscription that closed in February 2022, was
a welcome endorsement, in challenging times, of the Company's long-term
strategy. The new funds raised will enable us to continue the established and
successful strategy of selectively growing the existing portfolio of
investments, while 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 and quality of available VCT
qualifying investment opportunities examined during the period was much lower
than in previous years. As a result, just two investments were completed in
new VCT Qualifying companies in the financial year.
In addition, six follow-on investments were completed in companies already
held in the portfolio. In total, just under £9.8 million of capital was
committed to these eight investments.
As highlighted in the table below, the investments made during the financial
year failed to deliver a positive contribution to overall performance.
Clearly, this is a disappointing outcome, but, with the exception of British
Honey as discussed above, it is more a function of equity market weakness than
because any of these investee companies under-achieved from an operational or
financial perspective.
Name Trade Date Cost Value as Profit/(loss)
at 30 September 2022
Return
New Investee Companies £ £ £ %
Gelion 30 November 2021 1,900,000 982,759 (917,241) (48.3)
Aurrigo International 14 September 2022 3,000,000 3,312,500 312,500 10.4
Total 4,900,000 4,295,259 (604,741) (12.3)
Follow On Investments
Feedback 30 November 2021 2,000,000 1,571,429 (428,571) (21.4)
Directa Plus 29 December 2021 810,000 405,000 (405,000) (50.0)
Verici DX 11 March 2022 1,225,000 490,000 (735,000) (60.0)
British Honey Company 28 March 2022 100,000 - (100,000) (100.0)
Destiny Pharma 29 March 2022 500,000 340,000 (160,000) (32.0)
Arecor Therapeutics 3 August 2022 277,899 222,319 (55,580) (20.0)
Total 4,912,899 3,028,748 (1,884,151) (38.4)
Although we remain confident that most of these new investments retain the
potential to generate significant capital growth in future years, it is
nonetheless disappointing that most of them have struggled to generate
positive returns in the period since capital support was initially provided.
However, because of the strict rules surrounding Venture Capital Trusts, we
are required to invest in businesses that are typically at a very early stage
in their development. The rules, which we believe are justified, do however
increase the risk of incurring capital losses, especially given that progress
towards sustainable and growing profitability is rarely straightforward. In
testing macroeconomic conditions, such as those currently being experienced,
it is unsurprising that the new investments made have struggled to perform in
share price terms.
We will continue to adopt a prudent approach to committing capital to new
investment opportunities during the current financial year.
Realisations
In aggregate, £79.0 million was raised from the full and partial disposal of
holdings during the period.
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.
Two notable exits were completed during the financial year; Augean and
Interactive Investor, each of which received recommended bids from trade
buyers. The net proceeds from these realisations amounted to £66.9 million,
realising an aggregate capital gain on investment cost of £61.9 million over
the life of the holdings. As a result, the Board was able to propose the
payment of two special interim dividends, which were distributed to
Shareholders in February and August 2022.
A number of full and partial disposals in qualifying and non-qualifying
investments were also made during the period. These transactions generated
total proceeds of £12.1 million and an aggregate capital profit of £4.4
million.
The total value of all disposals made during the period therefore amounted to
£79.0 million. Including partial disposals, the total realised capital gain
from the sale of investments over the life of the holdings amounted to £66.3
million.
Outlook
For almost 15 years, Central Banks have injected massive amounts of liquidity
into the market in an attempt to support their faltering economies. This
programme of 'liquidity easing' created a sea of cheap money which, in turn,
enabled interest rates to remain at historically and, perhaps artificially,
low levels.
The realisation, in early 2020, that the world's population was facing a
dangerous pandemic, caused most governments to introduce stringent lockdown
measures designed to protect their citizens and prevent health systems from
becoming overwhelmed. This policy, while it may well have saved many lives,
also resulted in an enormous additional burden of national debt, while placing
many economies into a form of hibernation.
As economies slowly emerged from this government-enforced hibernation during
2021, the pent-up consumer demand that lockdown had created, was unleashed.
This unusual phenomenon created an illusion that economic growth had been
restored and could be sustained without negative consequences. Unfortunately,
this 'relief rally' was short-lived and also firmly laid the foundations for
the subsequent return of inflation.
Most economies are now facing spiralling levels of inflation and Central Banks
are trying to raise interest rates sufficiently quickly to control the rate of
inflation, without killing off the prospects of a return to economic growth.
The issue of inflation is a huge and seemingly intractable problem, which may
well culminate in a global recession despite the best efforts of Governments
and Central Banks around the world.
The current financial year has therefore begun in the same difficult fashion
as the previous calendar year ended. Mr Putin's war in Eastern Europe grinds
on, causing misery to millions of Ukrainians; constrictions in the global
supply chain continue to create shortages of key goods and services, energy
costs remain at elevated levels, and the UK Government has lurched from one
political crisis to the next.
Against this backdrop it is unsurprising that equity markets remain volatile,
and that investor sentiment is fragile at best. Shareholders should therefore
be mindful that we see only a slim prospect of short-term recovery in equity
markets, which means that the Company's investment portfolio may well struggle
to deliver positive returns during the remainder of the current financial
year.
Despite all the obvious challenges however, most of the portfolio remains in
good health, with the majority of investee companies continuing to trade
reasonably well. More importantly, despite their market valuations having
fallen dramatically over the past year, many of these businesses remain
well-funded and are operating with balance sheets that are sufficiently robust
to ensure that they should successfully navigate the current turbulence.
In difficult circumstances, we remain focused on nurturing the established and
diverse portfolio of investee companies in order that they may continue to
generate healthy returns for Shareholders over the longer term, while also
selectively seeking to support emerging businesses through the provision of
much needed capital.
Finally, with the benefit of many decades of fund management experience, the
team at Unicorn recognises that there is little value in attempting to
second-guess the direction of equity markets, which often begin to recover
long before there are any tangible signs of economic recovery. As the proverb
states, 'the darkest hour is just before the dawn'. Shareholders should
therefore take comfort from the fact that equity markets should inevitably
regain their poise in due course. It is also worth noting that the capital
declines experienced by the Company's investment portfolio in recent months
are almost entirely represented by unrealised losses. As such, once investor
confidence returns, the recovery in asset value should be significant. More
importantly, we firmly believe that some of the investee companies held have
the potential to become world-leading businesses which, like Interactive
Investor, should help to create further significant value for Shareholders in
the coming years.
Chris Hutchinson
Unicorn Asset Management Limited
13 December 2022
Financial and Performance Review
Net Assets
As at 30 September 2022, the audited net assets of the Company were £221.1
million, compared to £370.8 million on 1 October 2021. 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 £24.4 million net of costs.
Performance during the year
As at 30 September 2022, the audited NAV of the Company was 134.8 pence per
share, having fallen by 113.8 pence from 248.6 pence per share at the start of
the financial year under review, compared with a rise of 70.0 pence per share
in the year ended 30 September 2021. After adding back dividends of 45.5 pence
per share paid in the year, the total return to Shareholders decreased by 68.3
pence or 27.5% compared with an increase of 76.5 pence or 42.8% in the
previous year. In comparison, the total return from the FTSE AIM All-Share
Total Return Index was a decline of 34.3% over the year to 30 September 2022
(2021: 30.8% increase).
At the financial year end, there were 85 active VCT qualifying and 8
non-qualifying companies held in the portfolio. These investments are spread
across 25 different sectors.
In the year to 30 September 2022, a total of £79.0 million was realised
through the sale of investments, approximately £9.8 million was deployed in
new investments and approximately £71.7 million was paid out as dividends to
Shareholders. A further £6.1 million was spent on the operating costs of the
Company and £4.4 million on share buybacks.
Share Issues and Buybacks
The Company raised £24.4 million (after costs) through an Offer for
Subscription and issued 12,647,039 shares, details of which are given in Note
13 on page 77 of the Annual Report.
In addition, the Company allotted 4,706,355 shares under the Dividend
Reinvestment Scheme ("DRIS") at an average price of 154.24 pence per share.
During the year a total of 2,515,309 (2021: 3,204,997) shares were bought back
for cancellation for a total cost of £4.4 million (2021: £6.3 million).
Total Return
The Company generates returns and losses from both capital growth and dividend
income. For the year ended 30 September 2022, the total loss was £105.2
million (2021: £111.1 million gain), of which there was a £104.8 million
loss (2021: £111.6 million gain) from capital and a £0.4 million loss (2021:
£0.5 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 pa69 of the Annual Report.
The total net losses per share were 67.3p (2021: 75.0p earnings). The total
net losses per share was made up of 67.1p from capital and 0.2p from revenue.
Revenue Return
The income of £1.7 million (2021: £1.7 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 £198.5 million (2021:
£368.6 million). The investment portfolio delivered a realised return on
disposals of £12.8 million (2021: £6.7 million) and unrealised valuation
losses on investment of £113.6 million (2021: £109.1 million gain). The
valuation basis of the Company's investments is described in Note 1 (d) on
pages 68 and 69 of the Annual Report.
Ongoing Charges and Running Costs
The Ongoing Charges of the Company for the financial year under review was
2.0% (2021: 2.0%) of average net assets, which remains below the cap of 2.75%.
The total expenses amounted to £6.1 million (2021: £6.8 million) and include
investment management fees of £5.3 million (2021: £6.1 million), Directors'
fees of £0.1 million (2021: £0.1 million), administrative service fees of
£0.2 million (2021: £0.2 million) and other third-party service providers
fees of £0.2 million (2021: £0.2 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 £200 million, 1.5% per annum of net assets in excess of £200 million and
1% in excess of £450 million (other than on investments in OEICs managed by
the Investment Manager). Other expenses are shown in Note 4 on page 72 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 partially offset by the
purchase of investments, the payment of running costs, share buybacks and
dividends and at the year end the cash balance had increased to £23.8 million
(2021: £3.6 million).
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 22 and 23 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 89 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
five 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 24 of the Annual Report. Further information
on the service providers is outlined in the Corporate Governance Statement on
page 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 24 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 86
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 what is typically 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 agrees 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 20 and 77
of the Annual Report. At the financial year end, the Company's shares were
quoted at a mid-price of 126.5 pence per share representing a discount to NAV
per share of 6.2%.
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 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 79 to 85 of the Annual
Report also provides information on the Company's financial risk management
objectives and exposure to risks. The Directors process for monitoring 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 and strategic risk Unsuitable investment strategy or investment selection could lead to poor Regular review of investment strategy by the Board.
returns to Shareholders.
Monitoring of the performance of the investment portfolio on a regular basis.
All purchases or sales of unquoted investments require prior investment
authorisation from the Board.
2. Regulatory and tax risk The Company is required to comply with the Companies Act 2006, ITA, AIFMD (as Regulatory and legislative developments are kept under close review by the
applicable to small registered UK AIFMs), FCA Listing Rules and UK Accounting Board, the Investment Manager, the Company Secretary and the Administrator.
Standards. Breaching these rules may result in a public censure, suspension
from the Official List and/or financial penalties. There is a risk that the The Company's VCT qualifying status is continually reviewed by the Investment
Company may lose its VCT status under the ITA. Should this occur, Shareholders Manager and the Administrator.
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. PricewaterhouseCoopers LLP has been retained by the Board to undertake a
bi-annual independent VCT status monitoring role.
3. Operational risk The Company has no employees and is therefore reliant on third party service Internal control reports are provided by service providers on an annual basis.
providers. Failure of the systems at third party service providers could lead
to inaccurate reporting or monitoring. Inadequate controls could lead to the The Board considers the performance of the service providers annually and
misappropriation of assets. monitors activity on a monthly basis.
The Board discusses succession planning with its key service providers.
4. Fraud, dishonesty and cyber risks Fraud involving Company assets may occur, perpetrated by a third party, the Internal control reports are provided by service providers on a regular basis.
Investment Manager or other service provider.
The Administrator is independent of the Investment Manager.
Cyber attacks on the Company could lead to financial loss and impact on the
Company's reputation. We minimise as far as practical the amount of personal data held by our
service providers and the Board.
All service providers use third party professionals to review cyber security
exposure and act on any material recommendations made.
5. Financial Instrument risks The main risks arising from the Company's financial instruments are due to The Board regularly reviews and agrees policies for managing these risks and
fluctuations in their market prices, interest rates, credit risk and liquidity full details can be found in Note 17 on pages 79 to 85 of the Annual Report.
risk.
6. Economic and political risks Events such as recession, inflation or deflation, movements in interest rates While no single policy can obviate such risks the Company invests in a
and technological change can affect trading conditions and consequently the diversified portfolio of companies, whilst seeking to maintain adequate
value of the Company's investments. liquidity.
The full long-term effects of the UK's withdrawal from the European Union are
still unknown which may create uncertainty in markets and regulatory
environments which may affect the value of the Company's investments.
Other geopolitical issues may affect the Company's performance at both macro
and micro economic level.
The possibility of labour and material shortages may affect the value of the
Company's investments.
7. Black Swan events Events such as the Covid-19 pandemic could adversely affect investee The Board liaises with the Investment Manager to obtain a full understanding
companies. of the impact on the investee companies.
Key service providers could experience high levels of staff illness and The Investment Manager reviews the impact of staff availability, raw materials
interruption to their operations. availability, energy supply and inflationary impact on portfolio companies.
Russia's invasion of Ukraine could adversely affect investee companies.
The Board is responsible for assessing the possibility of new and emerging
risks and, in addition to the principal risks, the Board has identified the
following emerging risks:
Emerging risks The physical impact of climate change on investee companies. Increasing the influence of ESG matters around investment decisions.
The changes to investee company business models brought about by the need to Investment Manager focus on these issues when reviewing portfolio.
reduce carbon footprints.
The increasing political tensions between China and Taiwan.
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 indicated his intention to step down from
the Board and will not seek re-election at the AGM. During the year the Board
engaged an outside recruitment company to assist in finding a suitable
candidate to join as a new Director. The process involved the identification
of key skills a candidate should possess, the recruitment agency then assisted
with the drawing up of a long-list of possible candidates which the Board
acting as a nomination committee reduced to a short-list of candidates who
were interviewed. Following this process the Board were pleased to announce
that Josephine Tubbs accepted the offer to join the Board on 24 May 2022.
Diversity
The Directors are aware of the need to have a Board which, as a whole,
comprises an appropriate balance of skills, experience and diversity. Upcoming
regulation applicable from April 2023 will require a Company to report on a
comply or explain basis against three key indicators. 40% of the Board should
be comprised of women. The Company meets this requirement at the year end and
the percentage of women will represent 50% of the Board once Jocelin Harris
retires at the AGM. When Charlotta Ginman is appointed as the Senior
Independent Director after the AGM, this will meet the requirement that one
senior board position is held by a woman. Although not currently meeting the
requirement that one Director should be from an ethnic minority background
this is something the Board will be mindful of in any future recruitment,
providing a suitable candidate possesses the key skills and experience
required for the position.
From the beginning of the year until May 2022 the Board consisted of three
males and one female. When Josephine Tubbs joined the Board, the Board
consisted of three male and two female Directors. All Directors identified
themselves as caucasian by ethnic background.
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 (mailto:unicornaimvct@iscaadmin.co.uk)
.
Environmental and social responsibility
Full details of the Company's ESG approach can be found on page 30 of the
Annual Report.
In relation to the Company's own practices the Company encourages electronic
communication to reduce paper usage, has withdrawn our 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 2022.
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 2022.
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: £6.1 million invested
in non-qualifying, fully listed shares which are readily realisable, a further
£3.3 million in a daily dealing open ended fund and £23.7 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 2.0% 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 successfully 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.
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, 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
2.0% 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
£200 million and 1.5% of net assets in excess of £200 million. In November
2021 the Company entered into an agreement with the Investment Manager to
reduce fees to 1% for any assets exceeding £450 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
13 December 2022
EXTRACT FROM DIRECTORS' REPORT
Share Capital
At the year-end there were 164,023,203 (2021: 149,185,118) 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 in Note 13 on page 77 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 164,023,203
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 2022, the
Company held cash balances of £23.7 million, £6.1 million in fully listed
stocks and £3.3 million in the Unicorn Ethical OEIC fund. 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; and
- prepare a Director's Report, a Strategic Report and Director's
Remuneration Report which comply with the requirements of the Companies Act
2006.
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 DTR4
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.
For and on behalf of the Board
Tim Woodcock
Chair
13 December 2022
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 30 September 2022 or 30
September 2021 but is derived from those accounts. Statutory accounts for the
year ended 30 September 2021 have been delivered to the Registrar of Companies
and statutory accounts for the year ended 30 September 2022 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 (http://www.unicornaimvct.co.uk) .
PRIMARY FINANCIAL STATEMENTS
Income Statement
for the year ended 30 September 2022
Year ended Year ended
30 September 2022 30 September 2021
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net unrealised (losses)/gains on investments 6 - (113,641) (113,641) - 109,078 109,078
Net gains on realisation of investments - 12,771 12,771 - 6,741 6,741
Income 2 1,753 - 1,753 1,717 317 2,034
Investment management fees 3 (1,322) (3,965) (5,287) (1,515) (4,544) (6,059)
Other expenses (771) (771) (733) (733)
- -
(Loss)/ profit on ordinary activities before taxation (340) (104,835) (105,175) (531) 111,592 111,061
Tax on (loss)/profit on ordinary activities - - - - - -
(Loss)/ profit on ordinary activities after taxation for the financial year (340) (104,835) (105,175) (531) 111,592 111,061
Basic and diluted earnings per share:
Ordinary Shares 5 (0.22)p (67.10)p (67.32)p (0.36)p 75.39p 75.03p
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 (loss)/profit as
stated above and at historical cost.
The notes below form part of these financial statements.
Statement of Financial Position
as at 30 September 2022
30 September 2022 30 September 2021
Notes £'000 £'000 £'000 £'000
Non-current assets
Investments at fair value 6 198,541 368,599
Current assets
Debtors 515 454
Cash at bank and in hand 23,751 3,642
24,266 4,096
Creditors: amounts falling due within one year (1,681) (1,897)
Net current assets 22,585 2,199
Net assets 221,126 370,798
Capital
Called up share capital 1,640 1,491
Capital redemption reserve 113 88
Share premium account 85,063 53,602
Capital reserve 55,038 222,185
Special reserve 68,338 87,659
Profit and loss account 10,934 5,773
Equity Shareholders' funds 221,126 370,798
Net asset value per Ordinary share:
Ordinary shares 7 134.81p 248.55p
The financial statements were approved and authorised for issue by the Board
of Directors on 13 December 2022 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 2022
Called up share capital Capital redemption reserve Share premium account Unrealised capital reserve Special reserve* Profit and loss account*
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'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 2022 1,640 113 85,063 55,038 68,338 10,934 221,126
Called up share capital Capital redemption reserve Share premium account Unrealised capital reserve Special reserve* Profit and loss account*
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2020
1,457 56 38,320 117,421 98,434 4,518 260,206
Shares repurchased and cancelled
(32) 32 - - (6,264) - (6,264)
Shares issued under Offer for Subscription 14,950
63 - 14,887 - - -
Expenses of shares issued under Offer for Subscription
- - (355) - - - (355)
Proceeds from DRIS share issues 3
- 782 - - - 785
Expenses of DRIS share issues - - (32) - - - (32)
Transfer to special reserve
- - - - (4,511) 4,511 -
Gains on disposal of investments (net of transaction costs)
- - - - - 6,741 6,741
Realisation of previously unrealised valuation movements 4,314
- - - (4,314) - -
Net increases in unrealised valuations in the year 109,078 109,078
- - - - -
Dividends paid
- - - - - (9,553) (9,553)
Investment Management fee charged to capital
- - - - -
(4,544) (4,544)
Capital dividend received - - - - - 317 317
Revenue return for the year
- - - - - (531) (531)
At 30 September 2021
1,491 88 53,602 222,185 87,659 5,773 370,798
* The special reserve and profit and loss account are distributable to
Shareholders. The cancellation of the Share premium account and Capital
redemption reserve was approved by the Court on 26 March 2019.
The notes form part of these financial statements.
Statement of Cash Flows
for the year ended 30 September 2022
30 September 2022 30 September 2021
Notes £'000 £'000 £'000 £'000
Operating activities
Investment income received 1,609 1,951
Investment management fees paid (5,831) (5,651)
Other cash payments (778) (742)
Net cash outflow from operating activities (5,000) (4,442)
Investing activities
Purchase of investments (9,813) (29,494)
Sale of investments 79,022 16,838
Net cash inflow/(outflow) from investing activities 69,209 (12,656)
Net cash inflow/(outflow) before financing 64,209 (17,098)
Financing
Dividends paid 4 (64,433) (8,768)
Shares issued under Offer for Subscription (net of transaction costs) 24,407 14,417
Expenses of DRIS share issues (32) (32)
Shares repurchased for cancellation (4,042) (6,264)
Net cash outflow from financing (44,100)
(647)
Net increase/(decrease) in cash and cash equivalents 20,109 (17,745)
Cash and cash equivalents at 30 September 2021 3,642 21,387
Cash and cash equivalents at 30 September 2022 23,751 3,642
The notes below form part of these financial statements.
Notes to the Financial Statements
for the year ended 30 September 2022
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 68 to 70 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. The Directors'
assessment of the Company as a going concern is given on page 41 of the Annual
Report.
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.
2 Income
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income from investments:
- equities 1,525 - 1,525 1,465 317 1,782
- loan stocks - - - 37 - 37
- bank interest 27 - 27 2 - 2
- Unicorn managed OEICs (including reinvested dividends) 201 - 201 213 - 213
Total income 1,753 - 1,753 1,717 317 2,034
Total income comprises:
Dividends 1,726 - 1,726 1,678 317 1,995
Interest 27 - 27 39 - 39
1,753 - 1,753 1,717 317 2,034
Income from investments comprises:
Listed UK securities 248 - 248 422 317 739
Unlisted UK securities (AIM and unquoted companies) 1,505 - 1,505 1,295 - 1,295
1,753 - 1,753 1,717 317 2,034
3 Investment Management fees
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Unicorn Asset Management Limited 1,322 3,965 5,287 1,515 4,544 6,059
The management fee is calculated as follows:
Net Assets Fee from 1 January 2022 Fee to 31 December 2021
Up to £200 million 2.0% per annum as at the relevant quarter date 2.0% per annum as at the relevant quarter date
In excess of £200 million and up to £450 million 1.5% per annum as at the relevant quarter date 1.5% per annum as at the relevant quarter date
In excess of £450 million 1.0% per annum as at the relevant quarter date 1.5% per annum as at the relevant quarter date
At 30 September 2022, officers and employees of the Investment Manager held
1,482,754 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 OEICs.
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 2022, UAML also
earned fees of £36,000 (2021: £52,000), being OEIC management fees
calculated on the value of the Company's holdings in each OEIC on a daily
basis. This management fee is 0.75% per annum of the OEIC value for each of
Unicorn UK Ethical Fund OEIC and, until sold, Unicorn UK Smaller Companies
OEIC, Unicorn UK Growth OEIC (formerly Unicorn Free Spirit 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 2021/22 or the prior year.
4 Dividends
2022 2021
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Interim capital dividend of 3.0 pence (2021: 3.0 pence) per share for the year 4,809 4,484
ended 30 September 2022 paid on 11 August 2022
Special interim capital dividend of 32.0 pence (2021: nil pence) per share for 51,292 -
the year ended 30 September 2022 paid on 11 August 2022
Final capital dividend of 3.5 pence (2021: 3.5 pence) per share for the year 5,200 5,073
ended 30 September 2021 paid on 10 February 2022
Special interim capital dividend of 7.0 pence (2021: nil pence) per share for 10,400 -
the year ended 30 September 2022 paid on 10 February 2022
Total dividends paid in the year* 71,701 9,557
Unclaimed dividends returned (9) (4)
Total dividends 71,692 9,553
* The difference between total dividends and that shown in the Cash Flow
Statement is £7,259,000 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 2021/22
financial year, which is the basis on which the requirements of Section 274 of
the Income Tax Act 2007 are considered.
2022 2021
£'000 £'000
Loss for the year (340) (531)
Proposed final income dividend of nil pence (2021: nil pence) for the year - -
ended 30 September 2022
5 Basic and diluted earnings and return per share
2022 2021
Total earnings after taxation: (£'000) (105,175) 111,061
Basic and diluted earnings per share (Note a) (pence) (67.32) 75.03
Net revenue from ordinary activities after taxation (£'000) (340) (531)
Revenue earnings per share (Note b) (pence) (0.22) (0.36)
Total capital return (£'000) (104,835) 111,592
Capital earnings per share (Note c) (pence) (67.10) 75.39
Weighted average number of shares in issue during the year 156,227,923 148,025,648
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 by 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
Fully Traded Unlisted Unlisted loan Unicorn OEIC
2022 2021
listed on AIM shares stock funds Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening book cost at 30 September 2021 13,709 117,283 16,199 500 5,798 153,489 129,332
Unrealised gains at 30 September 2021 374 156,708 63,324 - 1,779 222,185 117,420
Permanent impairment in value of investments - (3,980) (3,095) - - (7,075) (7,186)
Opening valuation at 30 September 2021 14,083 270,011 76,428 500 7,577 368,599 239,566
Shares delisted - (3) 3 - - - -
Purchases at cost - 9,813 - - 16 9,829 29,517
Sale proceeds (6,259) (13,496) (56,130) - (3,137) (79,022) (16,314)
Net realised gains/(losses) recognised in the year 6 (35) 12,903 - (98) 12,776
6,752
Decrease in unrealised gains (1,748) (98,283) (12,142) (375) (1,093) (113,641) 109,078
Closing valuation at 30 September 2022 6,082 168,007 21,062 125 3,265 198,541 368,599
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)
Closing valuation at 30 September 2022 6,082 168,007 21,062 125 3,265 198,541 368,599
Transaction costs on the purchase and disposal of investments of £5,000 were
incurred in the year. These have not been deducted from realised gains shown
above of £12,776,000 but have been deducted in arriving at gains on
realisation of investments disclosed in the Income Statement of £12,771,000.
The shares delisted during the year relate to Kellan Group.
Note: Permanent impairments of £7,075,000 held in respect of losses on
investments remain unchanged from the previous year end.
Reconciliation of cash movements in investment transactions
The difference between the purchases in Note 6 and that shown in the Cash
Flows is £16,000 which represents the reinvested dividends on the Unicorn
Ethical Fund.
7 Net asset value
2022 2021
Net Assets £221,126,000 £370,798,000
Number of shares in issue 164,023,203 149,185,118
Net asset value per share 134.81p 248.55p
8 Post balance sheet events
On 8 December 2022, the Company announced an Offer for Subscription as
detailed in the Chair's Statement above.
9 Capital commitments and contingent liabilities
There were no capital commitments or contingent liabilities at 30 September
2022 (2021: nil).
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 2023 to
Shareholders on the Register on 6 January 2023.
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 90 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 2022 will be sent to Shareholders shortly and will then be available for inspection at Suite 8, Bridge House, Courtenay Street, Newton Abbot TQ12 2QS, the registered office of the Company. Copies of the Annual Report will shortly be available on the Company's website,
www.unicornaimvct.co.uk (http://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 Tuesday, 7 February 2023 at The Great Chamber, The Charterhouse, Charterhouse Square, London EC1M 6AN. It is hoped that 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 91 to 95 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 3 February 2023. Please note that you can vote your shares electronically athttps://proxy-unicorn.cpip.io/.
13 National Storage Mechanism
A copy of the 2022 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
(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
(mailto:unicornaimvct@iscaadmin.co.uk)
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