REG - Unicorn AIM VCT PLC - Final Results
06/12/2024 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241206:nRSF0573Pa&default-theme=true
RNS Number : 0573P Unicorn AIM VCT PLC 06 December 2024
Unicorn AIM VCT plc (the "Company" or the "VCT")
LEI: 21380057QDV7D34E9870
Annual Results Announcement for the year ended 30 September 2024
The full Annual Report and Accounts for the year ended 30 September 2024 can
be found on the Company's website www.unicornaimvct.co.uk
FINANCIAL HIGHLIGHTS
(for the year ended 30 September 2024)
· In addition to the 6.5 pence per share ordinary dividends, a special
interim dividend of 11.7 pence per share was also paid during the year.
· Net Asset Value ("NAV") total return for the financial year ended 30
September 2024, after adding back dividends of 18.2 pence per share paid in
the year, rose by 0.3%. By comparison the FTSE AIM All-Share Total Return
Index rose by 3.9%.
• Offer for Subscription raised £19.5 million (after costs).
• Final dividend of 3.5 pence per share proposed and a special
dividend declared of 6.0 pence per share for the financial year ended 30
September 2024.
• New Offer for Subscription announced to raise up to £25 million.
Fund Performance
10-year cumulative dividends + paid per share (p)
Net asset value per share (NAV) (p) Net asset value plus cumulative dividends paid per share (p)
Shareholders' Funds*
Ordinary Shares (£ m) Share price (p)
30 September 2024 199.4 104.7 117.7 222.4 93.5
31 March 2024 199.5 103.6 114.7 218.3 91.5
30 September 2023 211.9 122.6 99.5 222.1 103.5
31 March 2023 218.4 125.5 96.5 222.0 103.5
* 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 and
declared a special dividend of 6.0 pence per share for the year ended 30
September 2024 bringing total dividends for the year to 24.2 pence per share.
If the final dividend is approved by Shareholders, then these payments will
bring total dividends paid in the last ten years from 30 September 2014 to
127.2 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
for the year ended 30 September 2024
I am pleased to present the Company's Audited Annual Report for the year ended
30 September 2024.
Introduction
The economic and geopolitical environment in both the UK and globally has been
challenging. Following a sustained period of rising interest rates, aimed at
curbing inflation, the UK economy has shown some tentative signs of
stabilisation, albeit that productivity is still below par and economic growth
remains modest. Despite the rate of inflation having declined, the cost of
living remains high, which has placed a strain on household budgets and
dampened consumer confidence.
The faltering macroeconomic environment has been reflected in the behaviour of
the UK stock market, where investor sentiment remains fragile. Sectors
perceived as being less vulnerable to geopolitical or economic shocks have
benefited from their global exposure or have been rewarded for strong
operational performance. In contrast, the FTSE AIM All-Share Index ("AIM
Index"), which is composed of smaller, growth-oriented businesses, has
continued to face significant headwinds. Despite this, the AIM Index delivered
a total return of +3.9% for the year ended 30 September 2024. Increased
borrowing costs, a reduced appetite for risk and a continued reluctance to
invest in smaller early-stage businesses meant however that your Company
underperformed the AIM Index, producing a positive total return of 0.3%.
Economic & Market Review
The Bank of England's monetary tightening measures have brought down the rate
of inflation. Despite struggling to generate meaningful and sustained growth,
the economy managed to avoid falling into a prolonged recession. Rising costs
of energy, raw materials, and labour continued to pose challenges, while the
housing market softened as mortgage rates remained elevated, further
constraining consumer spending.
The FTSE All-Share Index delivered a total return of +13.4% during the period
under review, primarily due to its focus on larger, more liquid, and often
globally diversified firms. This significant divergence in performance
relative to the AIM Index emphasises the continued and prevailing preference
among the investor community for stable, liquid assets over higher-risk
investments.
Despite these challenges, certain AIM sectors including technology,
healthcare, and renewable energy, demonstrated resilience. Companies in these
areas continued to benefit from structural trends towards digital
transformation and sustainability, which remain attractive to investors.
Additionally, the relative weakness of the pound continued to support M&A
activity, as undervalued UK assets appealed to foreign buyers.
A good example of this was the acquisition of Abcam by Danaher Corporation in
January 2024. The Investment Manager initially backed Abcam at its Initial
Public Offering ("IPO") in November 2005, reflecting a long-term commitment to
a high-growth, innovative business. The successful sale of Abcam delivered an
overall return on investment of 821.9% and led to a special dividend of 11.7
pence per share being paid to Unicorn AIM VCT Shareholders in February 2024,
underscoring the value generated by the Investment Manager's early and
sustained investment. The strong returns generated through such Mergers and
Acquisitions ("M&A") activity over the past 2 years have provided
significant benefits to Shareholders and resulted in the payment of special
dividends totalling 50.7 pence per share since 1 October 2022.
Net Assets
As at 30 September 2024, the audited net assets of the Company were £199.4
million, a decline of £12.5 million over the course of the financial year.
There were a number of moving parts behind this fall, with a decrease in the
value of the investment portfolio of £3.3 million, £32.0 million of
dividends paid and a further £4.9 million returned to Shareholders through
share buybacks all contributing to the reduction in net assets. This was
partially offset by the fully subscribed Offer for Subscription, which raised
net proceeds of £19.5 million and £4.4 million from Shareholders who
invested in the Dividend Reinvestment Scheme (DRIS). After adding back all
dividends paid, the total return in the period was +0.3%.
Investment Performance Review
The Company's total return of +0.3% underperformed the AIM Index, which
delivered a total return of +3.9% over the period. Whilst disappointing, it is
worth noting that the average total return of the other constituents within
the AIC VCT AIM-Quoted Peer Group was -5%.
The investment portfolio remains well-diversified, comprising holdings
that range from early-stage, cash- consuming companies, to more
well-established holdings that are both profitable and cash-generative. At the
close of the financial year, the Company held 79 active VCT qualifying
investments, with 39 of these valued in excess of £500,000. More than 70% of
the qualifying businesses in the Company continue to maintain a net cash
position on their balance sheets.
Despite resilience in the broader UK stock market, the smaller companies
listed on AIM underperformed relative to other, more established, UK-listed
smaller companies during the period. This underperformance can largely be
attributed to risk aversion among investors, who continue to favour larger,
more liquid assets during a period of elevated interest rates and persistent
inflation. AIM-listed companies, especially those outside of the FTSE AIM 100
Index, are typically early-stage, cash-consuming businesses with high growth
aspirations. It is unsurprising therefore that many of them have encountered
difficulties in attracting further, much needed capital under these tighter
financial conditions. The small size and limited liquidity of these companies
continues to deter investors and, for the time being, the focus remains on
more established companies offering stronger cash flow stability.
The specific and rather unusual sector composition of the AIM Index further
heightened its vulnerability to economic headwinds throughout the year.
Sectors that are well represented within the AIM Index, such as technology,
consumer discretionary, and biotechnology, were negatively affected by rising
borrowing costs and weakening consumer confidence. These conditions proved
particularly challenging for companies with longer paths to profitability, as
they depend heavily on external funding to sustain their growth. Consequently,
the AIM Index experienced disproportionately weak returns due to its greater
weighting in sectors that are traditionally vulnerable in a rising interest
rate environment. This was in stark contrast to the main UK Indices, which
continued to see capital allocations being directed towards more stable
sectors including energy, commodities, and financials.
The Company's performance reflects these broader market dynamics. While the
portfolio's diversification strategy reduced risk to some extent, certain
holdings within high-growth sectors faced considerable pressure and, as is
normal in Venture Capital investing, some of our investee companies failed
during the year under review. Nonetheless, we believe that the Company's
strategic positioning within high growth sectors will ultimately enable the
portfolio to generate Shareholder value over the long term. As the
macroeconomic environment begins to stabilise, and with expectations of
improved investor sentiment towards smaller, growth-oriented companies, both
the Board and the Investment Manager are optimistic that the Company is well
positioned to deliver positive capital returns.
Portfolio Activity
During the period, there were several opportunities to deploy capital into
both new investments and follow-on opportunities within existing holdings.
Encouragingly, the Investment Manager continues to identify new and
potentially highly attractive investment prospects, some of which are
currently under active consideration. This pipeline of opportunities reflects
a gradual yet steady recovery in both the quantity and quality of potential
investments available to the Company.
Five new VCT qualifying investments were made during the period, at a total
cost of £7.5 million. In addition, £5.9 million of capital was allocated
across nine of the existing VCT qualifying investee companies, to support
their future growth.
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 £39.2 million, realising an overall capital gain of £28.8
million over the lifetime of the investments.
The Investment Manager continued to utilise two money market funds, and an
investment in the Unicorn UK Ethical Income Fund, alongside holdings in some
large, highly liquid UK equities during the period. These were non-qualifying
investments, which continued to enable Shareholders to benefit from the
current higher interest rate environment, while maintaining a strong liquidity
position to fund new qualifying investment opportunities.
A more detailed analysis of investment activity and performance can be found
in the Investment Manager's Review below.
Dividends
A special dividend of 11.7 pence per share, was paid to Shareholders on 14
February 2024 following the successful acquisition of Abcam by Danaher
Corporation.
An interim dividend of 3.0 pence per share, for the half year ended 31 March
2024, was paid to Shareholders on 13 August 2024.
The Board is also pleased to recommend a further final dividend of 3.5 pence
per share for the financial year ended 30 September 2024. This dividend, if
approved by Shareholders at the Company's forthcoming AGM, will be payable on
21 February 2025 to Shareholders on the register as at 3 January 2025. In
addition, the Board has declared a special dividend of 6.0 pence per share as
a result of the M&A activity that led to the disposal of our shareholdings
in Mattioli Woods and Keywords Studios during, and shortly after, the period
end. This interim dividend will be payable alongside the final dividend on 21
February 2025.
Total dividends in respect of the financial year ended 30 September 2024,
including these significant special dividends are therefore expected to be
24.2 pence per share.
Share Buybacks & Share Issues
The Board continues to believe that it is in the best interests of the Company
and its Shareholders to make market purchases of its shares from time to time.
During the period from 1 October 2023 to 30 September 2024, the Company bought
back 5,205,225 of its own Ordinary Shares for cancellation, at an average
price of 93.4 pence per share including costs.
Future repurchases of shares will continue to be made in accordance with
guidelines established by the Board and will be subject to the Company having
the appropriate authorities from Shareholders and sufficient funds available
for this purpose. Share buybacks will also be subject to the Listing Rules and
any applicable law at the relevant time. Shares bought back in the market are
normally cancelled.
An Offer for Subscription was launched on 26 January 2024. The Offer was again
strongly supported and closed, fully subscribed, on 15 February 2024. The
total raised, net of all costs, was £19.5 million and resulted in the issue
of 18.7 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 2024, there were 190,437,026 Ordinary Shares in
issue.
New Offer
On 27 November 2024, the Company announced the intention to launch an Offer
for Subscription to raise up to £25 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 2025.
VCT Status
There were no changes to VCT legislation during the period under review.
The Government last introduced new legislation pertaining to Venture Capital
Trusts in November 2017. The most important of these new rules came into
effect in the 2019/2020 tax year and are designed to ensure that capital is
directed at young, developing businesses, which might otherwise find it
difficult to secure funding to finance their planned growth.
One of the key tests is the requirement for at least 80% 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 100% of
total assets as of 30 September 2024. All other HM Revenue & Customs tests
have also been complied with during the period, and the Board has been advised
by its VCT status advisor, PricewaterhouseCoopers ("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. We welcome the new government's swift action to extend the State Aid
rules for venture capital trusts until 2035.
Board changes
Jeremy Hamer will not be seeking re-election at the forthcoming AGM. We would
like to take this opportunity to thank Jeremy for his invaluable service as a
Non-Executive Director and Audit Committee Chair of the Company.
We also take this opportunity to welcome Julian Bartlett, who was appointed to
the Board as a new Non-Executive Director on 2 October 2024. Jeremy's wealth
of experience and wise counsel will be difficult to replace; however, we are
pleased to have secured such a highly experienced director in Julian,
following an extensive and open executive search process.
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 12 February 2025. Full details
of the AGM including; location, timing, and the business to be conducted, are
given in the Notice of the Meeting on pages 92 and 93 of the Annual Report.
Shareholders' views are important, and the Board therefore encourages all
Shareholders to vote on the resolutions within the Notice of Annual General
Meeting on pages 92 and 93 of the Annual Report using the proxy form, or
electronically at https://unicorn.city-proxyvoting.uk. The Board has carefully
considered the business to be approved at the AGM and recommends that
Shareholders vote in favour of all the resolutions being proposed.
Outlook
The current financial year is expected to reflect many of the same themes that
have shaped recent performance, with investor sentiment toward smaller quoted
companies likely to remain fragile. The Company is, however, well-positioned
to navigate this environment, benefiting, as it does, from a diversified
portfolio that has consistently demonstrated resilience.
The Investment Manager is seeing early indications of renewed investor
interest in the AIM, driven by attractive valuations. The IPO market has also
shown modest signs of recovery, with several new companies preparing to list.
The Investment Manager remains highly selective, ensuring that new investments
align with the Company's long-term growth strategy. This disciplined approach,
coupled with an improved deal pipeline, suggests promising opportunities for
capital deployment in the coming year.
The Budget on 30 October 2024 brought in a number of measures that will impact
UK businesses in general, and AIM- listed Companies in particular. The 1.2%
increase in Employers' NI, coupled with the reduction in earnings thresholds
on which it is paid, will have a negative effect on all businesses that employ
more than a handful of people. The increase in CGT to 24% and the increase in
rates for Business Asset Disposal Relief, and Entrepreneurs/Investors Relief
to 14% next year and 18% the year after, may well discourage current and
potential entrepreneurs from taking on risk to grow existing businesses or
start new ones. Finally, AIM-listed shares will be partially brought inside
the net for Inheritance Tax purposes with Business Relief applying to only 50%
of their value. This may well reduce the attractiveness of AIM shares to
potential investors and have a detrimental effect on the AIM in general.
Meanwhile, making assets held in pension schemes subject to Inheritance Tax
from April 2027 may also alter attitudes to long-term saving and investor
behaviour. It is possible that the prospect of paying 40% Inheritance Tax on
pension assets, may encourage the wealthy to mitigate tax liabilities by
increasing their exposure to AIM-listed stocks, where partial relief will at
least remain available. Nonetheless, it is currently hard to see how any of
these measures are going to stimulate much needed economic growth.
Nevertheless, the Board shares the Investment Manager's confidence that the
investment portfolio is well-positioned to deliver capital gains as and when
market conditions improve.
Although near-term headwinds persist, the Board remains cautiously optimistic
about the outlook. The Company's strategic positioning within high-growth
sectors, combined with an expanding pipeline of investment opportunities,
places it in a strong position to capture any recovery in market value and
deliver meaningful capital growth for Shareholders.
Tim Woodcock
Chair
5 December 2024
Investment Manager's Review
Introduction
The twelve-month period ended 30 September 2024 was a challenging period for
the Company in both absolute and relative performance terms. The Company's net
asset value total return of +0.3% in the financial year, compares to a total
return of +3.9% for the AIM Index over the same period.
While this is a slightly disappointing relative performance, it was largely
the result of a clear gulf in performance between the largest and smallest
companies listed on AIM. The FTSE AIM 50 Index, which represents the fifty
largest companies on AIM, registered a total return of +9.2% over the
twelve-month period. Meanwhile, the Company's performance remains governed by
its requirement to invest in early-stage, scale-up companies. Unfortunately,
the conditions for these smaller companies remained challenging, making it
harder for our portfolio of investee companies to outperform the larger more
established companies on AIM.
The financial year commenced with high levels of economic and geopolitical
uncertainty. The UK economy entered a mild technical recession in the second
half of 2023, reporting a small decline in quarterly gross domestic product
("GDP") for two consecutive quarters. Also, in September 2023, the UK consumer
price index ("CPI") was running at an annual inflation rate of 6.7%, more than
triple the 2% level set by the Government as a target for the Bank of England
("BoE") to reach and maintain. As inflation continued to pose a serious threat
to economic growth, the BoE initiated the sharpest rate hiking cycle for many
decades, which saw the Bank Rate peak at 5.25% in September 2023. Politically,
the UK has also now experienced five Prime Ministers in just seven years,
reflecting persistent instability in the post-Brexit era.
Globally, geopolitical risks remained at elevated levels throughout the period
under review including: the war of attrition being waged by Russia against
Ukraine in Europe, the resurgence of conflict in the Middle East between
Israel and a number of Iranian backed militant groups, and growing tensions
between China and Taiwan in the Far East.
Set against this volatile and unpredictable macro-economic backdrop, it was
somewhat surprising to see global stock market indices rally so strongly
during the financial year, from a low point reached in October 2023. US equity
indices registered notably strong returns over the twelve-month period, as
investors bet that the US Federal Reserve would successfully navigate macro-
economic challenges and guide the American economy to a so- called
'soft-landing', thereby reducing inflation without putting the economy into
recession. The S&P 500 Index registered a total return of +36.3% over the
twelve months ended 30 September 2024. Meanwhile, the NASDAQ Composite Index
posted a total return of +38.7% over the same period. Most notably, Nvidia's
stock price surged by over +179%, as investors concluded that demand for its
computer chips would continue to strengthen significantly in an effort to
satisfy the phenomenal growth in generative AI computing power.
In the UK, over the same twelve-month period, equity market performance was
led by the FTSE 250 (excluding Investment Trusts) Index, which recorded a
total return of +21.4%, followed by the FTSE 100 Index, which delivered a
total return of +12.4%. The strong performance of the mid-cap index reflected
positive contributions from sectors most sensitive to a reduction in interest
rates including: Non-Banking Financial Services, Real Estate and House
Builders. Meanwhile, the UK's large-cap index also benefited from its large
weighting in Banks and Defence sectors, which both performed strongly. Banks
have benefited from the higher interest rate environment, which enabled them
to earn a greater net interest margin on their loans. Ongoing geopolitical
tensions fuelled a significant increase in defence spending by NATO countries,
driving strong order intake at BAE Systems, among others.
However, investor appetite for backing UK smaller companies, particularly AIM
listed shares, remained muted, and was clearly reflected in the much lower
+3.9% total return registered by the AIM Index over the same twelve-month
period. This divergence in performance underscores the persistent
re-allocation of capital by investors away from smaller, higher risk, higher
growth companies listed on AIM and towards large, more liquid, and globally
diversified businesses in the UK and US equity markets. The AIM Index as at 30
September 2024 was almost 44% below its previous peak level reached in
September 2021. Clearly, a sharp improvement in investor appetite for
AIM-listed shares is necessary for this situation to change for the better.
Headwinds to equity performance subsided during the second half of the
Company's financial year ended 30 September 2024. Inflation fell steadily to
reach 2.2% in August 2024 and the BoE implemented its first interest rate cut
since 2016, signalling the start of a new phase of easing monetary policy.
This scenario should ultimately help support the performance of smaller AIM
listed companies via lower borrowing costs and a more benign inflationary cost
environment. M&A activity also grew during the year, as private equity
investors and larger corporations were increasingly attracted by the generally
depressed valuations of AIM listed companies.
The Labour Party's victory in July's General Election ought to bring about a
more stable political outlook for the UK. One of the new Government's key
pledges is to increase levels of investment in areas that will drive economic
growth. The Chancellor, Rachel Reeves has however repeatedly stated that the
new Government inherited a 'black hole' in the public purse and is now
implementing plans to progressively increase taxation to help fund further
increases in public sector expenditure. Investor concern surrounding the
possible removal of tax reliefs also led to weaker sentiment towards AIM
stocks in particular.
Net Asset Performance
As at 30 September 2024, the audited net assets of the Company amounted to
£199.4 million, which equates to a decline of £12.5 million during the
twelve-month period under review.
The audited Net Asset Value per Share was 104.7 pence as at 30 September 2024,
which represents a capital decline (excluding dividends paid) of -14.6% on the
closing NAV per share of 122.6 pence as at 30 September 2023. After adding
back dividends paid during the financial year, the Net Asset Value ("NAV")
Total Return of the Company was +0.3%.
Despite the substantial net proceeds received from a fully subscribed Offer
for Subscription together with a positive return generated by the Company's
investment portfolio, net assets registered a decline overall during the
period under review. This decline was largely due to the £32.0 million in
dividends that were paid to Shareholders in the period. A further £4.9
million was also returned to Shareholders by way of share buybacks during the
financial year.
The Investment Manager has always adopted a cautious approach to deploying new
capital. While total investment in AIM IPOs and AIM-listed companies reduced
in 2024 in comparison to previous years, it is nonetheless pleasing to report
that several new VCT qualifying investments were concluded during the period.
In addition, a number of follow-on investment opportunities have also been
completed since the proceeds from the Offer for Subscription were received.
While the short-term performance of these new VCT qualifying investments has
been volatile, the Investment Manager believes the current portfolio of
investments is particularly well-positioned to deliver meaningful long-term
growth in net assets.
Performance Review
The financial year under review has been another challenging period for the
Company.
A number of investee companies suffered further declines in their market
values, which is particularly disappointing since it follows on from the
significant share price declines experienced in the prior financial year. The
Company's holdings in early-stage, scale-up businesses, including those in the
Life Sciences, Technology and Pharmaceutical sectors, came under particular
pressure since they typically require multiple funding rounds, and were
therefore disproportionately affected by the difficult market conditions.
By contrast, the more established, profitable and cash generative businesses
in the portfolio generally delivered positive total returns. Several of these
more mature investee companies received take-over approaches during the year.
Notably, the Company's long-standing holdings in Mattioli Woods, Keywords
Studios, City Pub Group and Belvoir Group all received recommended takeover
offers at healthy premia to their underlying share prices. Given the current
circumstances, it seems likely that the Company will continue to experience
elevated levels of takeover activity amongst its portfolio of investments.
As a reminder, the Investment Manager is required by prevailing VCT
legislation to ensure that capital is deployed in early- stage, scale-up
businesses. Clearly, investment in immature businesses carries a high degree
of risk. We therefore anticipate further divergence of returns from within the
portfolio of investee companies.
Over the past two decades however, many of the Company's longer-standing
investments have developed into established, sustainably profitable,
cash-generative businesses and, in the course of this development, have also
generated substantial capital gains. We remain confident that this trend will
continue.
The investment portfolio remains diversified, both by number of holdings and
by sector exposure. At the financial year end, the Company held investments in
79 active VCT qualifying companies and 10 non-qualifying investments. These
investments are spread across 27 different sectors.
A review of the ten most meaningful contributors to performance from VCT
qualifying investments (both positive and negative) follows:-
Largest Contributors
Hasgrove (20.2% of net assets, +£17.4 million) is an unquoted holding
company, which wholly-owns an operating subsidiary called Interact. Interact
is a fast-growing global provider of corporate intranet solutions that
operates a Software-as-a-Service (SaaS) business model.
In its most recent results for the financial year ended 31 December 2023,
Hasgrove reported revenue growth of over 26% to £37.0 million and operating
profit growth of 19% to £9.6 million, when compared to its prior financial
year. Hasgrove continues to perform strongly, with profits growth continuing
to exceed expectations, a growing customer base, and an accelerating stream of
highly predictable recurring revenues. As a consequence of this continued
strong financial and operational performance, the carrying Fair Value of the
Company's investment in Hasgrove was raised to £40.3 million, representing an
increase of +70.8% on the closing Fair Value of £23.6 million as at 30
September 2023.
Cohort (5.7% of net assets, +£5.5 million) is a defence technology group,
focused on providing advanced solutions in defence, security, and related
markets. Through its subsidiaries, it delivers innovative services such as
electronic warfare systems, cyber security, and surveillance technologies.
These capabilities support critical operations for defence organisations
worldwide, ensuring enhanced safety and security across complex and high-risk
environments.
In its most recent annual results for the financial year ended 30 April 2024,
Cohort reported record revenues, operating profits, and order intake levels.
Its current order book underpins over 90% of forecast revenues for its current
financial year and management expect another year of good growth. Cohort also
announced five substantial contract wins during the year totalling over £45
million in additional revenues.
Mattioli Woods (sold in year, +£2.3 million) is a specialist provider of
wealth management and employee benefits services. Mattioli Woods offers
tailored financial planning, asset management, and advisory solutions for
individuals and corporate clients. Through its expertise in pension
consultancy and investment strategies, Mattioli Woods ensures long-term
financial security and growth, addressing the diverse needs of its clients
across the UK.
In March 2024, Mattioli Woods announced the terms of a recommended takeover
offer from Pollen Street Capital, a UK listed private equity firm,
specialising in investments within the financial services sector. The offer
valued Mattioli Woods at approximately £432 million, or 804 pence per share,
which represented a 34% premium over Mattioli's closing price prior to the
announcement. The transaction completed on 2 September 2024, generating
proceeds of £7.8 million and realised a capital profit on book cost of £6.1
million.
Belvoir Group ("Belvoir")/The Property Franchise Group ("TPFG") (3.2% of net
assets, +£2.3 million) is a UK based franchised property services company
that specialises in residential lettings and sales through a network of
franchisees. In January 2024, Belvoir announced a recommended all-share merger
with TPFG to form one of the UK's largest multi-brand lettings and estate
agency groups, integrating both companies' networks and services. Under the
merger terms, Belvoir shareholders were entitled to approximately 48.25% of
the combined entity, valuing Belvoir at around £110 million pre-merger. The
transaction completed in March 2024, and we received new shares in TPFG in
exchange for our shares in Belvoir. Following receipt of these shares, we
disposed of the portion of shares which were non-qualifying and retained the
qualifying element.
Keywords Studios ("Keywords") (3.0% of net assets, +£2.2 million) is a
leading provider of creative and technological solutions for the video games
and entertainment sectors. Keywords' offerings include: game development, art
creation, audio production, quality assurance testing, localisation, and
marketing services. Its comprehensive solutions ensure the smooth production
and global distribution of engaging content, significantly enhancing player
experience, and contributing to the success of top gaming titles worldwide.
Following a number of unsolicited and rejected bids from EQT, a global private
equity firm, Keywords announced in July 2024 a final, recommended takeover
offer, which valued Keywords at approximately £2.1 billion, or 2,450 pence
per share, reflecting a premium of 66.7% over the closing price prior to the
initial announcement. This offer completed on 23 October 2024, generating
proceeds of £6.0 million and a realised gain of £5.7 million.
City Pub Group (sold in year, +£1.7 million) is a UK-based pub company that
owns and manages a portfolio of over fifty pubs located in the southern
regions of England and Wales.
In November 2023, Young & Co's Brewery ("Young's") announced a recommended
takeover offer for City Pub Group valuing the company at approximately £162
million, or about 1,110 pence per share, reflecting a 46% premium over the
company's closing share price prior to the announcement. The offer was
satisfied through a combination of cash and new Young's shares. The
transaction completed on 4 March 2024 and resulted in cash proceeds of £4.2
million and realised a profit on the Company's book cost of the holding in
City Pub Group of £0.6 million. Following receipt of the new Young's shares,
the Investment Manager disposed of the portion of shares that were non-
qualifying and retained the qualifying portion of shares.
Anpario (3.1% of net assets, +£1.4 million) is a leading provider of natural
animal health products. Anpario develops and manufactures innovative solutions
for poultry, livestock, and aquaculture, focusing on nutritional additives and
biosecurity measures. Anpario's range of products aim to enhance the health
and welfare of farm animals, while promoting sustainable farming practices.
Anpario recently released positive interim results, which covered the period
ended 30 June 2024. These results highlighted a recovery in global
agricultural markets, leading to an improvement in sales volumes and a
stabilisation of raw material costs. As a result, Anpario experienced strong
growth in revenue (+11% to £17.0 million) and pre-tax profits (+53% to £2.1
million) year-on-year. Management also indicated a robust start to the second
half of the year, with a sustained recovery in volumes across all product
lines.
SulNOx Group (1.2% of net assets, +£1.0 million) specialises in providing
responsible solutions for decarbonising liquid hydrocarbon fuels. SulNOx's
natural, biodegradable fuel additives effectively reduce harmful greenhouse
gas emissions.
SulNOx's results for the year to 31 March 2024 reported record turnover of
£0.5 million as the business won its first sales of product to marine
customers. Despite operational losses, SulNOx's now has positive business
momentum, is expanding its operations globally and has added new board members
with expertise in the marine sector. SulNOx has identified potential growth
opportunities in the African, Asian, US, and European markets. In a recently
released, independent report, the results of a generator-based study,
unequivocally demonstrate commercially meaningful fuel savings and emissions
reductions, which should assist SulNOx to achieve further commercial traction.
Animalcare Group (1.9% of net assets, +£0.9 million) is an international
veterinary sales and marketing organisation which is headquartered in York. In
April 2024, Animalcare released results for the financial year ending 31
December 2023, which reported an improved trading performance driven by
management's focus on growing sales of its more popular and more profitable
products in the group's portfolio. This approach facilitated an improvement in
gross margins and improved cash generation. The group also disposed of its
stake in Identicare, which is a UK-based pet microchipping business, for a
cash consideration of circa £25 million. Management intends to prioritise
growth in the animal pharmaceuticals business, via a combination of organic
and acquisitive investment opportunities. In September 2024, Animalcare
announced interim results for the six months ended 30 June 2024, which
reported a continued positive trading performance and outlook.
Incanthera (1.4% of net assets, +£0.9 million) is a UK-based dermatology
company currently wholly focused on commercialising a range of luxury skincare
targeted solutions. A recently announced partnership agreement with Marionnaud
has resulted in an exclusive Europe-wide product launch and underscores the
growth potential of their proprietary Skin + CELL brand. Incanthera's
specialist expertise in formulation and delivery, coupled with a significant
market opportunity, positions the business well for rapid revenue growth. In
order to fund the short-term increase in working capital, the business has
strengthened the balance sheet by way of a further funding round of £1.1
million, in which we were pleased to participate.
Largest Detractors
Oxford Biodynamics ("OBD") (0.4% of net assets, -£5.8 million) is a
biotechnology company dedicated to advancing healthcare by creating and
distributing precision tests for life-changing diseases. OBD's pioneering
EpiSwitch technology is acknowledged for its ability to assist in a more
accurate diagnosis of prostate cancer. OBD's Prostate Screening Test (PSE) was
launched ahead of schedule earlier this year and has received approval codes
for reimbursement in the US by health insurers. However, a laboratory
expansion and an increased investment in sales & marketing capacity,
resulted in high levels of cash outflows during the financial year. In March
2024, OBD raised a further £10 million despite the difficult market
conditions. In October 2024, OBD's management team announced a strategic
review of the business, including a material reduction in costs in an effort
to maximise the cash runway. Nonetheless, it is likely that OBD will require
additional funding by early 2025. OBD's management team will be providing an
update on the progress of the strategic review in due course.
Surface Transforms (0.0% of net assets, -£4.7 million) is a manufacturer of
carbon fibre ceramic brake discs for the automotive industry. Surface
Transforms has faced extreme challenges over the past year and slowly
improving levels of manufacturing output have been insufficient to meet the
forecast, and necessary levels of revenue growth. The implementation of
capacity upgrade projects has taken longer, and cost more than originally
anticipated. This has resulted in increased operational and working capital
costs, which have led to a material decline in the company's cash balance.
Revenues for the financial year ending 31 December 2024 are likely to fall
significantly short of prior expectations and management have since enacted
measures to carefully manage working capital, while also reviewing all
available future funding options.
Tracsis (4.5% of net assets, -£4.3 million) is a leading provider of
software, hardware, data analytics and services for the rail, traffic data,
and wider transport industries. Products and services provided by Tracsis help
their customers improve the efficiency and safety of their operations, reduce
costs, make better decisions, and improve customer service. During the summer,
Tracsis warned that its business had been negatively affected by a period of
pre-election inactivity, which imposed restrictions on spending across central
government, local authorities, and train operating companies. Current fiscal
year revenue forecasts were trimmed by circa 5%, however, earnings forecasts
were cut by a more substantial 30%, reflecting Tracsis's relatively high fixed
cost base. In counterbalance to this setback, the management team emphasised
that overall momentum in the group remained strong and that the market
opportunity for its rail enterprise software continues to grow.
Avacta Group (1.0% of net assets, -£3.1 million) is a biopharmaceutical
company focused on developing innovative cancer therapies and diagnostics
using its proprietary Affimer® technology. In its recent interim results,
Avacta reported strong progress with its Phase 1a clinical trial for AVA6000,
supported by a successful fundraise of £30 million earlier this year.
Management emphasised that both preclinical studies and ongoing clinical data
support confidence in the broader potential of its pre|CISION™ platform.
Additionally, a process is underway to divest its diagnostics division to
sharpen focus on the therapeutics division.
Aurrigo International ("Aurrigo") (2.9% of net assets, -£2.8 million), is a
leading global provider of innovative transport technology, specialising in
autonomous and semi-autonomous solutions. Aurrigo's patented products and
services tackle the ongoing transport issues that the aviation industry around
the world is still facing due to labour shortages caused by the COVID
pandemic. In November 2023, Aurrigo secured an additional £3.84 million,
including £1.5 million from the Company, to support its development plans.
This important funding round was completed at a significant discount to the
underlying share price, immediately prior to the announcement of the latest
investment round. Since then, Aurrigo has released half- year financial
results, which confirmed significant growth in revenues in both its Autonomous
and Automotive divisions. Total revenues increased by 26% (£3.9 million),
gross profit was up 100% (£1.4 million). Cash reserves were £1.8 million.
Aurrigo's management team anticipates delivering significant growth in
revenues during the 2025 financial year. Meanwhile, by exerting a tight
control of overheads, management is confident that margins will improve during
the remainder of the current financial year.
Directa Plus (0.5% of net assets, -£2.4 million) is a leading supplier of
graphene, an innovative material with a wide range of applications across a
variety of industries including consumer, energy, automotive, and aerospace.
Directa Plus reported lower sales and profitability in its most recent interim
results, reflecting a variety of challenges, including a delayed start to a
key contract, the cessation of lower-margin contracts and a temporary slowdown
in orders from a major workwear client. Despite these short- term setbacks,
Directa Plus remains focused on strengthening its commercial capabilities,
driving growth through production efficiencies, cost restructuring, and
converting contracts from its growing pipeline of opportunities.
Destiny Pharma (0.0% of net assets, -£2.0 million) is a biotechnology firm
focused on creating innovative anti-infection solutions. Its lead product,
XF-73 Nasal, is an antimicrobial gel designed to prevent post-surgical
infections and currently remains in late-stage development.
In July 2024, Destiny Pharma's Board came to the conclusion that staying on
public markets hindered their ability to secure adequate funding for the Phase
3 clinical trials of this product. Despite the strong market potential of
XF-73 Nasal, the company has faced challenges in raising further capital and
delays in securing a commercially viable licensing deal. Given limited funding
opportunities in public markets and significant cash constraints, the Board
concluded that transitioning to private ownership would enhance access to the
necessary capital.
Unfortunately, this initiative was unsuccessful and, on 22 August 2024,
Destiny Pharma entered administration, having failed to secure the necessary
capital from alternative sources. At this point, the value of our investment
in Destiny Pharma was written down to zero.
Lunglife AI (0.2% of net assets, -£1.7 million) is a biotechnology company
focused on using artificial intelligence to improve the early detection and
diagnosis of lung cancer. By analysing lung samples using its proprietary
algorithms, Lunglife aims to enhance diagnostic accuracy and ultimately
improve patient outcomes. Despite past delays in the clinical development of
its diagnostic tests, LungLife AI is now laying the groundwork for commercial
progress. The company has secured a reimbursement code and favourable Medicare
pricing for its test, coupled with initial orders generated from its early
access program, indicating increasing interest from physicians. LungLife AI is
actively seeking to secure funding from a strategic partner, while also
implementing effective cost-control measures to extend its current cash
runway.
Arecor Therapeutics ("Arecor") (0.4% of net assets, -£1.5 million) is a
clinical-stage biopharmaceutical company focused on developing novel therapies
through its proprietary Arestat™ technology. Arecor's portfolio includes
next-generation insulin therapies and other advanced biologics, which target
unmet medical needs across a range of therapeutic areas.
During the period under review, Arecor achieved notable pipeline advancements
and secured a further £6 million in funding. Although the fundraise led to a
decline in the company's share price, Arecor has since reported encouraging
Phase I clinical results for AT278, showcasing its potential to significantly
improve outcomes for diabetic patients. Discussions are currently underway to
secure a development partner for this key asset.
Tribe Technology ("Tribe Tech") (0.4% of net assets, -£1.0 million)
specialises in the development and manufacture of autonomous mining equipment.
Tribe Tech has made significant progress in developing its autonomous drill
rig and sample system products. The company has successfully manufactured its
first drill rig for Master Drilling, a mining contractor, and is currently
manufacturing a second drill rig for Anglo American, a global mining
corporation. However, delays in delivering the first drill rig to Master
Drilling have resulted in much needed revenue generation slipping into 2025.
Tribe Tech raised a further £1.41 million in June 2024 via the issue of new
shares and a Convertible Loan Note. The company's management team has also
enacted cost reductions to preserve working capital where possible.
Non-Qualifying Investments
The non-qualifying investments in the portfolio are typically made 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,
allowing us to generate additional dividend income for future distribution to
Shareholders while awaiting suitable VCT qualifying investment opportunities.
In the main, these investments performed satisfactorily during the period
under review.
During the twelve-month period ended 30 September 2024, the Investment Manager
continued to take advantage of the attractive yields available on short-term
money market funds to generate additional income. While short-term bond yields
remain high, we expect this to remain an attractive means of generating
additional income at minimal risk, while awaiting suitable VCT qualifying
opportunities.
Offer for Subscription
The fully subscribed Offer for Subscription that closed in February 2024, was
a very pleasing outcome and is a humbling endorsement, in particularly
challenging times, of the Investment Manager's proven and successful long-term
approach. The new funds raised will enable the Investment Manager to continue
the established and successful strategy of selectively growing the existing
portfolio of investments by providing much needed capital to emerging
'scale-up' businesses. The deployment of capital into new investment
opportunities will continue to be rigorously controlled, especially in view of
the difficult investment landscape.
Investment Activity
In terms of investment activity, the number of companies raising money on AIM
remained at historically low levels due to the difficult market conditions.
IPOs were largely absent during the twelve-month period. By number, the
majority of the fund-raises in which we participated were in companies in
which we already held an equity stake and were designed to provide additional
capital to enable them to accelerate their development plans. A total of £5.9
million was invested in these follow-on funding rounds, across nine qualifying
companies already held in the portfolio.
In addition, five VCT qualifying investments were made in businesses already
listed on AIM or the Aquis Exchange, but which were new introductions to the
Company's portfolio. In total, £7.5 million was invested in these VCT
qualifying companies.
As highlighted in the table below, the VCT qualifying investments made during
the financial year have delivered disappointing initial returns, which starkly
illustrates the difficult market conditions for small, early-stage AIM- listed
businesses. The standout performer in a positive sense, was our investment in
Incanthera, which has generated strong short-term gains.
Value at
30 September 2024
Cost £ Profit/(loss) Return
Trade Date £ £ %
NEW INVESTEE COMPANIES
Eden Research 6 October 2023 1,500,000 900,000 (600,000) (40.0)
SkinBioTherapeutics 22 November 2023 1,500,000 848,684 (651,316) (43.4)
Equipmake Holdings 15 February 2024 1,500,000 625,000 (875,000) (58.3)
EDX Medical Group 4 March 2024 1,000,000 791,667 (208,333) (20.8)
Incanthera* 21 June 2024 2,000,000 2,933,333† 933,333† 46.7
Total 7,500,000 6,098,684 (1,401,316) (18.7)
FOLLOW ON INVESTMENTS
Aurrigo International 20 November 2023 1,500,000 1,125,000 (375,000) (25.0)
Verici DX 20 February 2024 1,000,000 722,222 (277,778) (27.8)
PCI-PAL 18 March 2024 123,064 102,846 (20,218) (16.4)
LungLife Al 22 March 2024 755,000 215,714 (539,286) (71.4)
Oxford Biodynamics 5 April 2024 748,201 267,690 (480,511) (64.2)
Polarean Imaging 17 June 2024 350,000 507,500 157,500 45.0
Tribe Technology Conv LN 7.5% 26 June 2024 600,000 600,000 - -
Directa Plus 1 July 2024 640,000 391,111 (248,889) (38.9)
Oberon Investments Group 9 August 2024 224,400 192,343 (32,057) (14.3)
Total 5,940,665 4,124,426 (1,816,239) (30.6)
* During the period, sales were made realising a gain of £40,774.
† Based on original investment.
While initial performance has been disappointing, the Investment Manager
believes that each of these has the potential to generate a significant
contribution to long-term capital growth.
As a reminder, the Investment Manager is required, by virtue of the strict
investment rules surrounding Venture Capital Trusts, to invest in businesses
that are typically at an early stage in their development. These rules, which
the Investment Manager fully supports, do however increase the risk of
incurring capital losses, especially given that progress toward sustainable
profitability is rarely straightforward. In testing macro-economic conditions,
such as those currently being experienced, it is therefore unsurprising that
some of the investments made in recent years, have struggled to perform in
share price terms.
Realisations
In aggregate, £0.9 million was raised from the partial disposal of VCT
qualifying shares during the period. A further £37.8 million was received in
net proceeds from VCT qualifying investments, which were fully disposed as a
consequence of M&A activity. These corporate exits realised an aggregate
gain on book cost of £29.1 million.
The largest corporate exit was Abcam, which was acquired by Danaher
Corporation. This transaction completed in December 2023, generating net
proceeds of £20.3 million and a realised capital gain on remaining book cost
of £19.2 million. As a reminder, the Investment Manager has also realised
very substantial capital profits throughout the 18 year investment holding
period, by making a series of regular partial disposals of shares in Abcam.
The Company's initial investment in Abcam was made in November 2005.
Other corporate takeovers of VCT qualifying investments, which completed
during the twelve-month period, included: Mattioli Woods, Instem, Smoove and
City Pub Group. In aggregate, these four additional exits generated net
proceeds of £17.4 million and realised capital gains of £11.1 million on
book cost.
Corporate actions also resulted in the full exit of non-qualifying
investments. These included the takeover of non-qualifying shares in City Pub
Group, which generated net proceeds of £1.2 million and a realised loss on
book cost of £0.1 million. The Company also tendered its non-qualifying
shares in Gama Aviation, ahead of Gama's delisting from AIM, which generated
proceeds of £0.3 million and a realised loss of £0.5 million. A qualifying
stake in Gama Aviation was retained in the portfolio as an unlisted
investment.
Outlook
The headwinds faced by the UK economy over recent years finally appear to be
abating. Inflation is moderating and the 'core' Consumer Price Index (CPI) is
expected to soften further to 2.2% in 2025 and 2.1% in 2026. Core CPI is an
important indicator of economic health, which is closely monitored by the Bank
of England since it excludes the highly volatile costs of energy and food.
Provided that the downward trend in inflation continues, the Bank of England
is expected to continue to reduce interest rates beyond the initial 25 basis
point reduction made in August 2024. Market forecasts currently indicate the
potential for an additional 50 basis point reduction to 4.5% by the end of
2024. Declining interest rates should help to support listed company
valuations, particularly those at the smaller end of the market capitalisation
range.
Following years of political disruption and uncertainty, the election of a
government with a large majority should provide stability and boost levels of
confidence among retail and institutional investors. It is to be hoped that
the UK becomes more widely perceived as being an attractive place in which to
invest. However, near-term optimism has recently been tempered in the
aftermath of the new Chancellor's first Budget. While anticipated reductions
in the tax reliefs enjoyed by certain AIM businesses did not fully
materialise, other aspects of the Budget were clearly designed to rapidly
increase HMRC's overall tax take. This is disappointing, especially given the
Labour Party's pro-growth and pro-business rhetoric prior to the General
Election.
Globally, geopolitical risks remain significant. Conflict between Russia and
Ukraine is likely to grind on. Elsewhere, dramatic escalation of military
conflict in the Middle East, poses a threat to stability throughout the Middle
East region. In Asia, increasing military tension between China and Taiwan may
lead to global economic and supply chain disruption or, in the worst-case
scenario, military conflict. The outcome of these risks, and the effects they
may have on equity markets, is highly unpredictable. However, the Investment
Manager takes comfort from the diversified nature of the portfolio, which has
always demonstrated resilience in previous periods of extreme market
dislocation.
In the meantime, the portfolio of investee companies remains in reasonably
good health. Importantly, most of these businesses remain well-funded and are
operating with balance sheets that are sufficiently robust to enable them to
successfully navigate a further period of economic and equity market
uncertainty.
Overall, IPO activity on AIM is likely to take longer to recover than
previously expected. However, VCT qualifying pipeline opportunities remain
satisfactory in terms of both quantity and quality. As a reminder, the
Investment Manager's approach to raising new capital through Offers for
Subscription has always been prudent. This cautious approach will remain in
place, thereby allowing us to maintain a selective approach when considering
new VCT qualifying investment opportunities.
We remain confident in the potential for significant capital growth from the
existing investment portfolio over the longer term and are cautiously
optimistic about prospects for an improvement in investor sentiment during the
current financial year.
Chris Hutchinson
Unicorn Asset Management Limited
5 December 2024
Financial and Performance Review
Net Assets
As at 30 September 2024, the audited net assets of the Company were £199.4
million, compared to £211.9 million on 1 October 2023. The decline in total
net assets was primarily due to the distribution of dividends to Shareholders.
This was partially offset by the support received from new and existing
Shareholders under the Offer for Subscription, which raised £19.5 million net
of costs and the reinvestment in the DRIS.
Performance during the year
As at 30 September 2024, the audited NAV of the Company was 104.7 pence per
share, having fallen by 17.9 pence from 122.6 pence per share at the start of
the financial year under review, compared with a fall of 12.2 pence per share
in the year ended 30 September 2023. After adding back dividends of 18.2 pence
per share paid in the year, the total return to Shareholders increased by 0.4
pence or 0.3% compared with a decrease of 5.7 pence or 4.3% in the previous
year. In comparison, the total return from the FTSE AIM All-Share Total Return
Index was an increase of 3.9% over the year to 30 September 2024 (2023: 8.3%
decline).
At the financial year end, there were 79 active VCT qualifying and 10
non-qualifying investments held in the portfolio. These investments are spread
across 27 different sectors.
In the year to 30 September 2024, a total of £85.3 million was realised
through the sale of investments (including transfers from money market funds
of £39.5 million), approximately £66.9 million was deployed in new
investments (including transfers into money market funds of £37.5 million)
and approximately £32.0 million was paid out as dividends to Shareholders. A
further £4.7 million was spent on the operating costs of the Company and
£4.9 million on share buybacks.
Share Issues and Buybacks
The Company raised £19.5 million (after costs) through an Offer for
Subscription and issued 18,692,025 shares at prices ranging from 106.97 pence
to 110.38 pence per share depending on initial commissions paid by investors
to their advisers. Full details are given in Note 13 on page 78 of the Annual
Report.
In addition, the Company allotted 4,074,070 shares under the Dividend
Reinvestment Scheme ("DRIS") at an average price of 107.16 pence per share.
During the year a total of 5,205,225 (2023: 3,398,754) shares representing 3%
of the opening share capital, were bought back for cancellation, at an average
price of 93.86 pence per share (including costs), for a total cost of £4.9
million (2023: £3.8 million).
Total Return
The Company generates returns and losses from both capital growth and dividend
income. For the year ended 30 September 2024, the total gain was £0.6 million
(2023: loss £10.6 million), of which there was a £0.5 million loss (2023:
£11.1 million loss) from capital and a £1.1 million gain (2023: £0.5
million gain) from revenue. Full details of the total return can be found in
the Income Statement on page 65 of the Annual Report. The Company's allocation
of expenses is described in Note 1 (g) on page 71 of the Annual Report.
The total net gains per share were 0.3p (2023: losses 6.2p). The total net
gains per share were made up of 0.3p loss from capital and 0.6p gain from
revenue.
Revenue Return
The income of £2.9 million (2023: £2.3 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 £191.6 million (2023:
£207.5 million). The investment portfolio delivered realised gains on
disposals of £5.7 million (2023: £1.0 million) and unrealised valuation
losses on investment of £3.3 million (2023: £9.0 million). The valuation
basis of the Company's investments is described in Note 1 (d) on pages 69 and
70 of the Annual Report.
Ongoing Charges and Running Costs
The Ongoing Charges of the Company for the financial year under review was
2.3% (2023: 2.2%) of average net assets, which remains below the cap of 2.75%.
The total expenses amounted to £4.7 million (2023: £4.9 million) and include
investment management fees of £3.9 million (2023: £4.2 million), Directors'
fees of £0.1 million (2023: £0.1 million), administrative service fees of
£0.2 million (2023: £0.2 million) and other third-party service providers'
fees of £0.2 million (2023: £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 73 of the
Annual Report.
Further information in respect of the Company's performance can be found in
the Financial Highlights above.
Cash and Cash Equivalents
During the year the Company increased its cash balances through the Offer for
Subscription and the sale of investments. This was offset by the purchase of
investments, the payment of running costs, share buybacks and dividends and at
the year end the cash balance had decreased to £4.4 million (2023: £5.4
million). In addition, £10.1 million (2023: £12.1 million) was held in money
market funds.
Key Performance Indicators
The Board uses the key indicators below as Alternative Performance Measures
("APM's") to measure the Investment Manager's performance, thereby helping
Shareholders to assess how the Company is performing against its objective.
- NAV per share, cumulative dividends paid and cumulative total
Shareholder return
- Earnings per share
- 10 year annual and cumulative total return
- 5 year NAV and share price comparison
- Running costs
Further details can be found on pages 24 and 25 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 90 of the Annual Report.
The Company's shares are listed on the London Stock Exchange main market under
the code UAV and ISIN GB00B1RTFN43.
The Company is an externally managed fund with a Board currently comprising
four non-executive Directors (five from 2 October 2024). 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 26 of the Annual Report. Further
information on the service providers is outlined in the Corporate Governance
Statement on pages 51 and 52 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 unlisted
securities, 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 26 of the Annual
Report.
The Board's Strategy
Investment Objective
The Company's investment 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 43 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 payment of ongoing fees and expenses.
Details of the Company's Dividend Reinvestment Scheme are outlined on page 87
of the Annual Report.
Share buybacks and discount policy
The Board believes that it is in the best interests of the Company and its
Shareholders to make market purchases of its shares from time to time.
There are three main advantages to be gained from maintaining a flexible
approach to share buybacks; namely:
1. Regular share buybacks provide a reliable mechanism through which
Shareholders can realise their investment in the Company, rather than being
reliant on a very limited secondary market.
2. Share buybacks, when carried out at a discount to underlying net
assets, help modestly to enhance NAV per share for continuing Shareholders.
3. Implementing share buybacks on a regular basis helps to control the
discount to NAV.
The Board decides the level of discount to NAV at which shares will be bought
back and keeps this under regular review. The Board seeks to maintain a
balance between the interests of those wishing to sell their shares and
continuing Shareholders.
The Company has continued to buy back shares for cancellation at various
points throughout the financial year in accordance with the above policy.
Details of the shares purchased for cancellation are shown on pages 22 and 78
of the Annual Report. At the financial year end, the Company's shares were
quoted at a mid-price of 93.5 pence per share representing a discount to NAV
per share of 10.7%.
The Board intends to continue with the above buyback policy. Any future
repurchases will be made in accordance with guidelines established by the
Board from time to time and will be subject to the Company having the
appropriate authorities from Shareholders and sufficient funds available for
this purpose. Share buybacks will also be subject to prevailing market
conditions, Market Abuse Rules and any other applicable law at the relevant
time. Shares bought back are cancelled.
Principal and Emerging Risks
The Directors have carried out a robust review of the principal and emerging
risks faced by the Company as part of its internal controls process, as
outlined below. Note 17 to the Financial Statements on page 80 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 these risks is shown below.
During the year the Board has reviewed in detail its approach to risk. It has
sought to identify new and 'emerging risks' alongside the principal risks
faced by the Company and the mitigating steps being taken by both the Board
and the Company's service providers to reduce the impact of each risk. The
results have been summarised in a heat map and are reviewed for sensitivity
quarterly.
During the review with the key service providers evidence was requested of the
mitigating actions being taken and on which the Board is relying. Balance
sheet reconciliations, asset valuations and VCT qualification being examples
of such reviews.
Two additional initiatives have been worked on this year in relation to risk.
• Firstly, the Audit Committee has further developed its scenario
planning in order to greater understand our vulnerability to a combination of
adverse events and the necessity for further mitigating actions.
• Secondly, we have been documenting for the first time our 'risk
appetite' in relation to each of our 7 key risks in order to guide both our
service providers and our own actions. We have categorised our appetite as
either Low, Medium or High and the current position is detailed below.
Risk Appetite Risk Possible consequence How the Board monitors and mitigates risk Movement in risk during the year
Investment - High 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.
Strategy All purchases or sales of unquoted investments require prior investment
authorisation from the Board.
- Low but rising
No change
Low 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 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 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.
No change
Low 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.
No change
Low 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 the
Company's reputation. The Company minimises 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.
No change
Low 5. Financial Instrument risks The main risks arising from the Company's financial instruments are from The Board regularly reviews and agrees policies for managing these risks and
fluctuations in their market prices, interest rates, credit risk and liquidity further details can be found in Note 17 on pages 80 to 85 of the Annual
risk. Report.
No change
High 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.
Other geopolitical issues may affect the Company's performance at both macro The Board liaises with the Investment Manager to obtain an understanding of
and micro economic level. the impact on the investee companies.
No change
Labour and material shortages may affect the value of the Company's The Investment Manager reviews the impact of staff availability, raw materials
investments. availability, energy supply and inflationary impact on portfolio companies.
Russia's invasion of Ukraine and the current situation in the Middle East
could adversely affect investee companies.
High 7. Black Swan events Events such as pandemics could adversely affect investee companies and /or The Board liaises with the Investment Manager to obtain an understanding of
other service providers. the impact on the investee companies.
Environmental disasters may adversely affect investee companies and/or service The Investment Manager reviews the impact of staff availability, raw materials
providers. availability, energy supply and inflationary impact on portfolio companies.
No change
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 use of Artificial Intelligence ("AI") and its effect on the
investee companies although AI will also have positive effects on some
investee companies.
No change
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.
Social and community issues, employees and human rights
The Board recognises the requirement under section 14C of the Companies Act
2006 (the "Act") to provide information about social and community issues,
employees and human rights; including any policies it has in relation to these
matters and the effectiveness of these policies. As the Company has no
employees, and all Directors are non-executive, the Company has no formal
policies in respect of these matters. 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 Jeremy Hamer indicated his intention to step down at the
AGM in 2025. The Board engaged an external recruitment agency with a view to
making an appointment. During this process the Board undertook an assessment
of key skills the suitable candidate should possess, furthermore, it was
agreed the process would also take account of Board diversity. On 2 October
2024, Julian Bartlett was appointed to the Board. The Company will continue to
look to refresh its Board and will take into account regulatory guidance on
diversity when making future appointments.
Diversity
The Board is aware of the requirement of Listing Rule 9.8.6R and the
composition of the Board. As disclosed on page 51 of the Annual Report the
Board does not meet the requirement to have at least one director from an
ethnic minority. Being externally managed and comprising of only four (five
from 2 October 2024) non-executive directors there is reduced scope to fully
comply with the requirements. However, the Board will continue to consider
these requirements in any recruitment process.
Anti-bribery, corruption and tax evasion policy
The Company has a zero-tolerance approach to bribery and tax evasion. 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.
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 and Investment Manager's approach can be found
on page 32 of the Annual Report.
In relation to the Company's own practices the Company encourages electronic
communication to reduce paper usage, has withdrawn its dividend by cheque
service and the printing of the Half-Yearly Report, and has taken advantage at
times of electronic meetings. Where we are required to print Annual Reports,
we will use recycled paper and offset our carbon footprint.
Viability Statement
The Board' assessment of the ability of the Company to meet all liabilities
when due and that it can continue to operate for a period of at least twelve
months from the date of signing the Annual Report is shown in the Going
Concern Statement on page 43 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
include 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 2024.
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 under the Offer for Subscription took place in March 2024
and under the DRIS in August 2024.
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: £19.1 million
invested in non- qualifying, fully listed shares which are readily realisable,
a further £14.1 million in daily dealing open ended funds, and £4.4 million
in cash. The Company therefore has sufficient immediate liquidity in the
portfolio for any near-term requirements.
• The Company has undertaken a stress-testing exercise on the
portfolio and operating environment and the outcome supports the assessment of
viability.
• The Ongoing Charges ratio of the Company as calculated using the AIC
recommended methodology equates to 2.3% of net assets.
• The Board anticipates that there will continue to be suitable
qualifying investments available that will enable the Company to maintain its
operations over the five-year time horizon.
• The Company has no debt or other external funding apart from its
ordinary shares.
• The payment of dividends and buybacks are at the discretion of the
Board.
• The continuation of the State Aid regulations to 2035.
In order to maintain viability, the Company has a risk control framework as
shown on pages 33 and 34 of the Annual Report which has the objective of
reducing the likelihood and impact of: poor judgement in decision-making,
risk-taking that exceeds the levels agreed by the Board, human error, or
control processes being deliberately circumvented. These controls are reviewed
by the Board on a regular basis to ensure that controls are working as
prescribed. In addition, formal reviews of all service providers are
undertaken annually and activity is monitored at least monthly.
In its assessment of the viability of the Company, the Board has recognised
factors such as the continuation of the current State Aid regulations to 2035,
the ability of the Company to raise money from future Offers for Subscription
and there being sufficient VCT qualifying investment opportunities available.
The Directors have also considered the viability of the Company should there
be a slowdown in the economy or a correction of the markets leading to lower
dividend receipts and asset values. As stated above, Ongoing Charges equate to
2.3% 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 on behalf of the Board
Tim Woodcock
Chair
5 December 2024
EXTRACT FROM DIRECTORS' REPORT
Share Capital
At the year-end there were 190,437,026 (2023: 172,876,156) Ordinary shares of
1p each in issue, none of which are held in Treasury. The issues and buybacks
of the Company's shares during the year are shown on page 22 and in Note 13 on
page 78 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
190,437,026 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 2024, the
Company held cash balances of £4.4 million, £19.1 million in fully listed
stocks and £14.1 million in open-ended investment funds. The majority of the
Company's investment portfolio remains invested in qualifying and
non-qualifying AIM traded equities which may be realised, subject to the need
for the Company to maintain its VCT status. The cash flow projections,
covering a period of at least twelve months from the date of approving the
Financial Statements, have been reviewed and show that the Company has access
to sufficient liquidity to meet both contracted expenditure and any
discretionary cash outflows from buybacks and dividends. The Company has no
borrowings and is therefore not exposed to any gearing covenants.
The full Annual Report and Accounts contains the following statement regarding
responsibility for the Financial Statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors have elected to prepare the
Company's Financial Statements in accordance with United Kingdom Generally
Accepted Accounting Practice ("UK GAAP') (United Kingdom Accounting Standards
and applicable law). Under company law the Directors must not approve the
Financial Statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or loss for the
Company for that period.
In preparing these Financial Statements the Directors are required to:
- select suitable accounting policies and then apply them
consistently;
- make judgements and accounting estimates that are reasonable and
prudent;
- state whether they have been prepared in accordance with UK GAAP
subject to any material departures disclosed and explained in the Financial
Statements;
- prepare a Directors' Report, a Strategic Report and Directors'
Remuneration Report which comply with the requirements of the Companies Act
2006; and
- prepare the Financial Statements on the going concern basis unless
it is inappropriate to presume the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities. The Directors are responsible for ensuring
that the Annual Report and accounts, taken as a whole, are fair, balanced and
understandable and provides the information necessary for Shareholders to
assess the Company's position and performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and the Financial
Statements are made available on a website. Financial Statements are published
on the Company's website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of Financial Statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the Financial
Statements contained therein.
Directors' responsibilities pursuant to the Disclosure Guidance and
Transparency Rule 4 of the UK Listing Authority
The Directors confirm to the best of their knowledge:
• The Financial Statements have been prepared in accordance with UK GAAP and
give a true and fair view of the assets, liabilities, financial position and
profit of the Company.
• The Annual Report includes a fair review of the development and
performance of the business and the financial position of the Company,
together with a description of the principal risks and uncertainties that it
faces.
• The Annual Report and Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
Shareholders to assess the position and performance, business model and
strategy of the Company.
For and on behalf of the Board
Tim Woodcock
Chair
5 December 2024
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 30 September 2024 or 30 September 2023
but is derived from those accounts. Statutory accounts for the year ended 30
September 2023 have been delivered to the Registrar of Companies and statutory
accounts for the year ended 30 September 2024 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 2024
Year ended Year ended
30 September 2024 30 September 2023
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net unrealised losses on investments 6 - (3,267) (3,267) - (8,975) (8,975)
Net gains on realisation of investments 6 - 5,689 5,689 - 994 994
Income 2 2,910 - 2,910 2,312 - 2,312
Investment management fees 3 (980) (2,940) (3,920) (1,048) (3,144) (4,192)
Other expenses (787) (787) (725) (725)
- -
Profit /(loss) on ordinary activities before taxation 1,143 (518) 625 539 (11,125) (10,586)
Tax on profit/(loss) on ordinary activities - - - - - -
Profit/(loss) on ordinary activities after taxation for the financial year 1,143 (518) 625 539 (11,125) (10,586)
Basic and diluted earnings per share:
Ordinary Shares 5 0.62p (0.28)p 0.34p 0.32p (6.55)p (6.23)p
All revenue and capital items in the above statement derive from continuing
operations of the Company.
The total column of this statement is the Statement of Total Comprehensive
Income of the Company prepared in accordance with applicable Financial
Reporting Standards ("FRS"). The supplementary revenue return and capital
return columns are prepared in accordance with the Statement of Recommended
Practice ("AIC SORP") issued in July 2022 by the Association of Investment
Companies.
Other than revaluation movements arising on investments held at fair value
through profit or loss, there were no differences between the profit/ (loss)
as stated above and at historical cost.
The notes form part of these financial statements.
Statement of Financial Position
as at 30 September 2024
30 September 2024 30 September 2023
Notes £'000 £'000 £'000 £'000
Non-current assets
Investments at fair value 6 191,643 207,531
Current assets
Debtors 5,388 675
Cash and cash equivalents 4,420 5,357
9,808 6,032
Creditors: amounts falling due within one year (2,029) (1,707)
Net current assets 7,779 4,325
Net assets 199,422 211,856
Capital
Called up share capital 1,904 1,729
Capital redemption reserve 199 147
Share premium account 124,570 100,974
Capital reserve 26,582 56,883
Special reserve 24,027 39,040
Profit and loss account 22,140 13,083
Equity Shareholders' funds 199,422 211,856
Net asset value per Ordinary share:
Ordinary shares 7 104.72p 122.55p
The financial statements were approved and authorised for issue by the Board
of Directors on 5 December 2024 and were signed on their behalf by:
Tim Woodcock
Chair
The notes form part of these financial statements.
Statement of Changes in Equity
for the year ended 30 September 2024
Called up share capital Capital redemption reserve Share premium account Unrealised capital reserve Profit and loss account**
Special reserve*
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2023
1,729 147 100,974 56,883 39,040 13,083 211,856
Shares repurchased and cancelled (52) 52 (4,885) (4,885)
- - -
Shares issued under Offer for Subscription 187 19,812 19,999
- - - -
Expenses of shares issued under Offer for Subscription (503) (503)
- - - - -
Proceeds from DRIS share issues 40 4,325 4,365
- - - -
Expenses of DRIS share issues - - (38) - - - (38)
Transfer from special reserve *** (4,077) 4,077
- - - - -
Gains on disposal of investments (net of transaction costs) 5,689 5,689
- - - - -
Realisation of previously unrealised valuation movements**** (27,034) 27,034
- - - - -
Net decreases in unrealised valuations in the year (3,267) (3,267)
- - - - -
Dividends paid - - - - (6,051) (25,946) (31,997)
Investment Management fee charged to capital - - - - - (2,940) (2,940)
Revenue return for the year 1,143 1,143
- - - - -
At 30 September 2024 1,904 199 124,570 26,582 24,027 22,140 199,422
Called up share capital Capital redemption reserve Share premium account Unrealised capital reserve Profit and loss account**
Special reserve*
Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2022
1,640 113 85,063 55,038 68,338 10,934 221,126
Shares repurchased and cancelled (34) 34 (3,785) (3,785)
- - -
Shares issued under Offer for Subscription 111 14,885 14,996
- - - -
Expenses of shares issued under Offer for Subscription (377) (377)
- - - - -
Proceeds from DRIS share issues 12 1,438 1,450
- - - -
Expenses of DRIS share issues - - (35) - - - (35)
Transfer from special reserve *** (14,568) 14,568
- - - - -
Gains on disposal of investments (net of transaction costs) 994 994
- - - - -
Realisation of previously unrealised valuation movements**** 10,820 (10,820)
- - - - -
Net decreases in unrealised valuations in the year (8,975) (8,975)
- - - - -
Dividends paid - - - - (10,945) 12 (10,933)
Investment Management fee charged to capital - - - - - (3,144) (3,144)
Revenue return for the year 539 539
- - - - -
At 30 September 2023 1,729 147 100,974 56,883 39,040 13,083 211,856
* The special reserve and profit and loss account are distributable to
Shareholders. The special reserve was created by the cancellation of the Share
premium account and Capital redemption reserve in March 2019.
** The profit and loss account consists of the Revenue reserve of £1.0
million and the realised capital reserve of £21.1 million.
*** Transfer of realised losses in accordance with accounting policy f(iii) on
page 70 of the Annual Report.
**** Transfer of previously unrealised valuation movements on investments sold
in the year
The notes form part of these financial statements.
Statement of Cash Flows
for the year ended 30 September 2024
30 September 2024 30 September 2023
Notes £'000 £'000 £'000 £'000
Operating activities
Investment income received 3,188 2,145
Investment management fees paid (3,974) (4,227)
Other cash payments (883) (766)
Net cash outflow from operating activities (1,669) (2,848)
Investing activities
Purchase of investments (65,905) (26,604)
Sale of investments 79,305 9,636
Net cash inflow/(outflow) from investing activities 13,400 (16,968)
Net cash inflow/(outflow)/inflow before financing 11,731 (19,816)
Financing
Dividends paid 4 (27,641) (9,483)
Unclaimed dividends returned 400 504
Shares issued under Offer for Subscription (net of transaction costs) 19,496 14,619
Expenses of DRIS share issues (38) (35)
Shares repurchased for cancellation (4,885) (4,183)
Net cash (outflow)/inflow from financing (12,668) 1,422
Net decrease in cash and cash equivalents (937) (18,394)
Cash and cash equivalents at 30 September 2023 5,357 23,751
Cash and cash equivalents at 30 September 2024 4,420 5,357
The notes form part of these financial statements.
Notes to the Financial Statements
for the year ended 30 September 2024
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 69 to 71 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, 14.4B, those undertakings in
which the Company holds more than 20% of the equity as part of an investment
portfolio are not accounted for using the equity method. In these
circumstances the investment is measured at "fair value through profit or
loss". The Company is exempt from preparing consolidated accounts under the
investment entities exemption as permitted by FRS 102.
The Financial Statements have been prepared on a going concern basis under the
historical cost convention, except for the measurement at fair value of
investments designated as fair value through profit or loss.
As a result of the Directors' decision to distribute capital profits by way of
a dividend, the Company revoked its investment company status as defined under
section 266(3) of the Companies Act 1985, on 17 August 2004.
The Directors' assessment of the Company as a going concern is given on page
43 of the Annual Report.
2 Income
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income from investments:
- equities 1,830 - 1,830 1,590 - 1,590
- loan stocks 6 - 6 148 - 148
- bank interest 81 - 81 115 - 115
- Unicorn managed OEIC (including reinvested dividends) 189 - 189 193 - 193
- Other OEIC and Unit Trust 804 - 804 266 - 266
Total income 2,910 - 2,910 2,312 - 2,312
Total income comprises:
Dividends 2,823 - 2,823 2,049 - 2,049
Loan stock 6 - 6 148 - 148
Interest 81 - 81 115 - 115
2,910 - 2,910 2,312 - 2,312
Income from investments comprises:
Listed UK securities 470 - 470 210 - 210
OEIC and Unit Trust 804 - 804 266 266
AIM and unquoted companies 1,555 - 1,555 1,721 - 1,721
2,829 - 2,829 2,197 - 2,197
3 Investment Management fees
2024 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Unicorn Asset Management Limited 980 2,940 3,920 1,048 3,144 4,192
The management fee is calculated as follows:
Net Assets Fee from 1 January 2022
Up to £200 million 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
In excess of £450 million 1.0% per annum as at the relevant quarter date
At 30 September 2024, officers and employees of the Investment Manager held
1,557,866 shares in the Company.
During the year, Unicorn Asset Management Limited ("UAML") received an annual
management fee, as detailed above, of the net asset value of the Company,
excluding the value of the investments in the Unicorn OEIC.
If the Company raises further funds during a quarter the net asset value for
that quarter is reduced by an amount equal to the amount raised, net of costs,
multiplied by the percentage of days in that quarter prior to the funds being
raised. The annual management fee charged to the Company is calculated and
payable quarterly in arrears. In the year ended 30 September 2024, UAML also
earned fees of £25,000 (2023: £27,000), being OEIC management fees
calculated on the value of the Company's holdings in the OEIC on a daily
basis. This management fee is 0.75% per annum of the net asset value of the
Unicorn UK Ethical Fund OEIC.
The management fee will be subject to repayment to the extent that the annual
costs of the Company incurred in the ordinary course of business have exceeded
2.75% of the closing net assets of the Company at each year end. There was no
excess of expenses for year 2023/24 or the prior year.
4 Dividends
2024 2023
£'000 £'000
Amounts recognised as distributions to equity holders in the year:
Interim capital dividend of 3.0 pence (2023: 3.0 pence) per share for the year 5,728 5,204
ended 30 September 2024 paid on 13 August 2024
Final capital dividend of 3.5 pence (2023: 3.5 pence) per share for the year 6,051 5,741
ended 30 September 2023 paid on 14 February 2024
Special interim capital dividend of 11.7 pence (2023: nil pence) per share for 20,226 -
the year ended 30 September 2024 paid on 14 February 2024
Total dividends paid in the year 32,005 10,945
Unclaimed dividends returned (8) (12)
Total dividends * 31,997 10,933
* The difference between total dividends and that shown in the Cash Flow
Statement is £4,356,000 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. The final dividend will consist of a 3.1 pence capital
dividend and 0.4 pence revenue dividend in order to ensure the Company does
not retain more than 15% of its income from shares and securities.
As stated in the Chair's Statement above the Board has also declared a special
dividend of 6.0 pence per share as a result of the M&A activity that led
to the disposal of our shareholdings in Mattioli Woods and Keywords Studios
during, and shortly after, the period end. This special dividend will be
payable alongside the final dividend on 21 February 2025.
Set out below are the total income dividends payable in respect of the 2023/24
financial year, which is the basis on which the requirements of Section 274 of
the Income Tax Act 2007 are considered.
2024 2023
£'000 £'000
Profit for the year 1,143 539
Proposed final income dividend of 0.4 pence (2023: nil pence) for the year 762 - *
ended 30 September 2024 †
*In the previous year, despite the revenue profit for the year, no revenue
dividend could be made due to the deficit on the revenue reserve.
5 Basic and diluted earnings and return per share
2024 2023
Total earnings after taxation: (£'000) 625 (10,586)
Basic and diluted earnings per share (Note a) (pence) 0.34 (6.23)
Net revenue from ordinary activities after taxation (£'000) 1,143 539
Revenue earnings per share (Note b) (pence) 0.62 0.32
Total capital return (£'000) (518) (11,125)
Capital earnings per share (Note c) (pence) (0.28) (6.55)
Weighted average number of shares in issue during the year 183,590,913 169,795,766
Notes
a) Basic and diluted earnings per share is total earnings after taxation
divided by the weighted average number of shares in issue during the year.
b) Revenue earnings per share is net revenue after taxation divided revenue
off that the weighted average number of shares in issue during the year.
c) Capital earnings per share is total capital return divided by the weighted
average number of shares in issue during the year.
There are no instruments in place that will increase the number of shares in
issue in future. Accordingly, the above figures currently represent both basic
and diluted returns.
6 Investments at fair value
Fully Traded Unlisted Unlisted loan Other
2024 2023
listed on AIM shares stock funds Total Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Opening book cost at 30 September 2023 8,357 126,473 14,488 500 16,496 166,314 150,578
Unrealised (losses)/gains at 30 September 2023 (1,055) 42,352 16,524 - (938) 56,883 55,038
Permanent impairment in value of investments - (11,020) (4,646) - - (15,666) (7,075)
Opening valuation at 30 September 2023 7,302 157,805 26,366 500 15,558 207,531 198,541
Shares delisted - (3,377) 3,377 - - - -
Purchases at cost 14,965 13,883 - 600 37,500 66,948 26,606
Sale proceeds (4,325) (39,989) (1,034) (500) (39,500) (85,348) (9,636)
Net realised gains 357 4,939 601 - (118) 5,779 995
Movement in unrealised gains 810 (18,545) 13,856 - 612 (3,267) (8,975)
Closing valuation at 30 September 2024 19,109 114,716 43,166 600 14,052 191,643 207,531
Book cost at 30 September 2024 20,980 115,078 27,184 600 14,563 178,405 166,314
Unrealised (losses)/gains at 30 September 2024 (1,871) 1,837 27,128 - (511) 26,583 56,883
Permanent impairment in value of investments - (2,199) (11,146) - - (13,345) (15,666)
Closing valuation at 30 September 2024 19,109 114,716 43,166 600 14,052 191,643 207,531
Transaction costs on the purchase and disposal of investments of £90,000 were
incurred in the year. These have not been deducted from realised gains shown
above of £5,779,000 but have been deducted in arriving at gains on
realisation of investments disclosed in the Income Statement of £5,689,000.
The shares delisted during the year relate to Destiny Pharma (£2,038,000),
Gama Aviation (£368,000) and Saietta (£971,000).
* Other funds include the Unicorn Ethical Fund, the BlackRock Cash Fund and
the Royal London Short-Term Money Market Fund.
Note: Permanent impairments of £15,666,000 were held in respect of losses on
investments held at the previous year end. No impairments have been provided
for in the year. The reduction in impairments of £2,321,000 relate to the
sale of Osirium Technologies (£1,971,000) and companies dissolved, Individual
Restaurant Company (£163,000) and Le Chameau Group (£187,000).
Reconciliation of cash movements in investment transactions
The difference between the purchases above and that shown in the Cash Flows is
£1,043,000 which relates to the takeover of City Pub Group by Young & Co.
The difference between the sale proceeds in Note 6 above and that shown in the
Cash Flows is £6,043,000 which relates to the takeover of City Pub Group
(£1,043,000) and trades for future settlement (£5,000,000).
7 Net asset value
2024 2023
Net Assets £199,422,000 £211,856,000
Number of shares in issue 190,437,026 172,876,156
Net asset value per share 104.72p 122.55p
8 Post balance sheet events
On 23 October 2024, EQT completed its acquisition of Keyword Studios plc at a
price of 2,450 pence per share. The Company received proceeds of £6.0 million
on 6 November 2024.
On 27 November 2024, the Company announced an Offer for Subscription as
detailed in the Chair's Statement above.
On 29 November 2024, the Company announced that, following the completion of
the acquisition of Mattioli Woods and Keywords Studios and the receipt by the
Company of its share of the proceeds, a special dividend of 6.0 pence per
share will be paid to Shareholders on 21 February 2025.
9 Capital commitments and contingent liabilities
There were no capital commitments (2023: £1,500,000) or contingent
liabilities (2023: £nil) at 30 September 2024.
10 Shareholder information
Dividend
The Directors have proposed a final dividend of 3.5 pence per share. Subject
to Shareholder approval, the dividend will be paid on 21 February 2025 to
Shareholders on the Register on 3 January 2025. In addition, the Board has
declared a special dividend of 6.0 pence per share as a result of the M&A
activity that led to the disposal of our shareholdings of Mattioli Woods and
Keywords Studios during, and shortly after, the period end. This interim
dividend will be payable alongside the final dividend on 21 February 2025.
The Board has previously decided the Company will in future pay all cash
dividends by bank transfer rather than by cheque.
Shareholders 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 Registrar, City Partnership at the address shown on page
91 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 2024 will be sent to Shareholders shortly and will then be available for inspection at ISCA Administration Services Limited, The Office Suite, Den House, Den Promenade, Teignmouth, TQ14 8SY the registered office of the Company. Copies of the Annual Report will shortly be available on the Company's website,
www.unicornaimvct.co.uk (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 Wednesday, 12 February 2025 at The Great Chamber, The Charterhouse, Charterhouse Square, London EC1M 6AN. Shareholders will be able to attend this meeting in person, arrangements for the meeting are detailed on pages 43 and 44 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 92 to 96 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 Monday 10 February 2025. Please note that you can vote your shares electronically at https://unicorn.city-proxyvoting.uk.
13 National Storage Mechanism
A copy of the 2024 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)
DISCLAIMER
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR QKPBKNBDBPBKRecent news on Unicorn AIM VCT
See all newsREG - Unicorn AIM VCT PLC - Net Asset Value(s)
AnnouncementREG - Unicorn AIM VCT PLC - Net Asset Value(s)
AnnouncementREG - Unicorn AIM VCT PLC - Total Voting Rights
AnnouncementREG - Unicorn AIM VCT PLC - Transaction in Own Shares
AnnouncementREG - Stock Exch Notice - Admission to Trading - 13/08/2025
Announcement