REG - Unicorn AIM VCT PLC - Half-year Report
31/05/2023 07:00
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RNS Number : 0923B Unicorn AIM VCT PLC 31 May 2023
Unicorn AIM VCT plc ("The Company")
Half-Yearly Report Announcement for the six months ended 31 March 2023
Financial Highlights
For the six months ended 31 March 2023
· Net Asset Value ("NAV") total return per share for the six months ended 31 March 2023, after adding the back the dividends paid in the period, was -4.3%.
· £2.1 million of qualifying investments (£2.0 million new, £0.1 million follow-on) made in the period.
· Interim dividend of 3.0p per share declared for the six months ended 31 March 2023.
· The Offer for Subscription, launched on 24 January 2023, was oversubscribed by 6 February 2023, and raised £14.6 million (after costs of £0.4 million).
Fund Performance
Ordinary Shares Shareholders' Net asset value per share (NAV) Cumulative dividends paid per share** Net asset value plus cumulative dividends paid per share** Share price
Funds* (p) (p) (p) (p)
(£million)
31 March 2023 218.4 125.5 102.5 228.0 103.5
30 September 2022 221.1 134.8 99.0 233.8 126.5
31 March 2022 315.3 195.7 64.0 259.7 167.0
30 September 2021 370.8 248.6 53.5 302.1 219.0
* Shareholders' funds/net assets as shown in the Condensed Statement of Financial Position below.
** Total dividends (including special dividends) paid since 30 September 2013.
Percentage of Assets Held as at 31 March 2023
Description Total Qualifying Non- qualifying
% % %
AIM Traded 70.6 69.1 1.5
Unquoted 12.3 12.3 -
Other funds 8.1 - 8.1
Fully Listed 3.2 - 3.2
Cash and other assets 5.8 - 5.8
Valuation based on fair value
Chair's Statement
I am pleased to present the unaudited Half-Yearly Report of the Company for
the six-month period ended 31 March 2023.
As at 31 March 2023, the net assets of the Company were £218.4 million. This
figure is £2.7 million lower than at the start of the current financial year.
After accounting for the additional shares in issue following a successful
Offer for Subscription and after adding back dividends paid in the period, the
total return in the six-month period under review was -4.3%.
The decline in net asset value recorded in the first half of the Company's
financial year is both disappointing and represents a period of relative
underperformance. The FTSE AIM All-Share Index recorded a small positive total
return of 1.1%.
Investor appetite for equity risk continued to wane throughout the first half
of the financial year and this resulted in a significant derating of smaller,
less liquid AIM stocks and a widening divergence of returns across the market
capitalisation range. On average during the period, there were twenty-two
companies listed on the AIM Index with a market capitalisation in excess of
£1 billion. The value of these companies, represented 26% of the total value
of the AIM Index and they posted an average total return of +20.4% over the
six-month period under review. By contrast, there were 653 companies valued at
a market capitalisation of £150m or less, in aggregate accounting for only
23% of AIM Index value.
These smaller businesses posted an average total return of -9.8% over the same
period. Such statistics illustrate the divergence in performance between
smaller, earlier stage growth companies, where the majority of our investments
must be directed, and the larger, more established businesses listed on the
AIM Index.
Higher interest rates have weighed particularly heavily on early-stage growth
companies, where valuations are typically more dependent on longer term
expectations of profitability. This dynamic has placed significant pressure on
the share prices of many AIM-listed companies. Larger, more established
businesses, especially those listed on the FTSE 100 Index, again significantly
outperformed companies at the lower end of the market capitalisation range.
Inevitably, there were also a small number of discouraging trading updates in
the six months under review. Nonetheless, the period can best be characterised
by the resilience and adaptability shown by most investee companies despite
the extremely challenging operating conditions environment. The most notable
exception was The British Honey Company ("British Honey"), a UK based producer
of spirits, honey, and jams. A weak balance sheet, combined with poor
operational management, exacerbated the mounting challenges posed by order
delays, a difficult consumer environment and severe cost inflation. At the end
of March, the Board of British Honey announced its intention to place the
business into administration in order to avoid trading insolvently. Although
British Honey has been an extremely disappointing investment, the impact on
performance in the period was minimal due to declines in British Honey's
carrying value in previous periods. It is now highly unlikely that any
meaningful recovery in value will be achieved.
Your Investment Manager continues to manage the portfolio in a prudent fashion
with the aim of developing a diverse portfolio of high-quality companies
capable of generating significant Shareholder returns over the long term. The
team at Unicorn has extensive experience of investing in AIM listed businesses
across the full spectrum of market conditions and they are well placed to
successfully navigate the current challenging environment.
Investment Performance
A review of the ten most meaningful contributions to performance in absolute
terms (both positive and negative) follows.
Hasgrove (11.1% of net assets, +£5.4 million) is an unquoted company, whose
sole operating subsidiary, Interact, is a fast-growing Software as a Service
(SaaS) provider of corporate intranet solutions. Hasgrove reported strong
results for its financial year ended 31 December 2022, during which revenues
grew by 28% to £29.4 million and adjusted EBITDA increased by 22% to £10.1
million. Management also reported a strong start to trading in the current
financial year, underpinned by high levels of recurring revenue from its core
Interact software product. As a result, further growth is anticipated in the
current financial year ended 31 December 2023, and the Fair Value of the
Company's holding in Hasgrove has therefore been adjusted upwards to £24.3
million. This uplift represents an increase of £5.4 million compared to the
assessed Fair Value as at the VCT's previous financial year ended 30 September
2022.
Aurrigo International (3.7% of net assets, +£4.8 million) is a leading
international provider of transport technology solutions and is highly
regarded as a specialist in autonomous and semiautonomous solutions. Aurrigo
International has delivered strong operational and financial performance
following its IPO on AIM in September 2022. Since its IPO, Aurrigo has
invested in the further development of its Autonomous and Aviation division
and signed an agreement with Singapore's Changi Airport Group for the next
development phase of its 'Auto-Dolly' baggage transportation solution.
MaxCyte (4.3% of net assets, -£4.5 million) is a US-based life sciences
company that provides cell engineering and gene editing technologies to
support drug discovery and cell therapy applications. During the period,
MaxCyte released results for its financial year ended 31 December 2022, which
highlighted a 31% growth in revenues to $44.3 million. The aggregate potential
value of all milestone payments is now reported to have increased to over
$1.55 billion from eighteen strategic platform licence (SPL) agreements. The
management team expects further revenue growth of between 21% to 26% in its
current financial year. MaxCyte remains well-funded with total cash and cash
equivalents of circa $227 million as at 31 December 2022. However, sentiment
towards biotech companies has deteriorated markedly in the past two years and
MaxCyte has certainly not been immune from this process, despite encouraging
operational and financial performance.
Anpario (1.7% of net assets, -£4.0 million) is an international manufacturer
and distributor of natural animal feed additives for animal health and
nutrition, with a focus on sustainable and eco-friendly solutions. Anpario
reported a weaker operational and financial performance in recent months,
announcing a 25% decline in its gross profits due to supply chain disruption
and significant inflation in the cost of raw materials. Sales growth across
Asia, Middle East & Africa, and the Americas has been offset by a decrease
in European revenues. Despite this recent setback, the business, remains
profitable, maintains a strong balance sheet, offers a broad range of products
and is geographically diverse. Your Investment Manager believes that the share
price is likely to recover strongly once the current headwinds abate.
Abcam (5.8% of net assets, -£3.0 million) is a UK-based life sciences company
that produces and distributes research-grade antibodies and other biological
reagents for use in scientific research and diagnostics. In December 2022,
Abcam delisted from the AIM Index, and we consequently exchanged our UK listed
shares for an equivalent value of American Depository Shares. Abcam had been
dual listed on AIM and NASDAQ since October 2020. In March 2023, Abcam
released results for its financial year ended 31 December 2022, which
highlighted that profit growth had been constrained by two main factors; the
implementation of a new ERP system, which disrupted sales in September and
October, and sales performance in China that was disrupted by the regime's
zero-COVID policy.
Saietta (0.5% of net assets, -£1.9 million) is a designer and manufacturer of
axial flux motors for electric vehicles. Unfortunately, Saietta was forced to
issue a profit warning in March 2023, due to significantly weaker than
expected sales in its Comet (heavy-duty) and Propel (Marine) divisions.
Meanwhile, orders for Saietta's light-duty integrated eDrive product have been
expanding at pace, requiring significantly increased investment to ensure a
successful transition to volume manufacturing. The Board of Saietta has
confirmed its confidence that the business is in a position to fully finance
the current financial year (2023/24), without recourse to further external
fundraising. Saietta's cash balance as at 28 February 2023 was £11 million.
Surface Transforms (2.4% of net assets, -£1.8 million) designs and
manufactures high-performance carbon ceramic brake discs for use in the
automotive and aerospace industries. In January 2023, Surface Transforms
reported on technical problems, which included an issue with one of its key
furnaces. These problems have adversely affected output over the past six
months, which was already under pressure due to industry-wide supply chain
constraints. These issues negatively affected turnover, have increased
production costs, and have consequently resulted in a larger than expected
operating loss for the company's financial year ended 31 December 2022. The
management team has taken various steps to improve the manufacturing process,
including the use of more readily available raw materials. These changes have
been successfully implemented, and production issues therefore now appear to
have been resolved.
Engage XR (0.3% of net assets, -£1.6 million) is a technology business
focused on Virtual Reality. In December 2022, Engage XR issued a weaker than
expected trading update, which reported on slow conversion of the group's
sales pipeline. Engage XR had previously increased its cost base by expanding
its sales, marketing, and support teams, which led to sharply higher losses in
its financial year ended 31 December 2022. Management is now taking action to
reduce the cost base in light of the more challenging trading environment.
Animalcare (1.2% of net assets, -£1.5 million) is an international animal
health business. In March 2023, Animalcare announced results for its financial
year ended 31 December 2022, which highlighted a modest decline in annual
sales, primarily as a result of reduced antibiotic use in Spain. Animalcare
has, however, made good progress in increasing its gross margins through sales
of higher margin products and its Board expects to report on a return to
revenue growth in the current financial year.
Angle (0.3% of net assets, -£1.3 million) is a world-leading liquid biopsy
company. Angle has not been immune from the wider economic and market
headwinds and the management team has therefore taken swift action to control
the cost base, which has included the closure of its Canadian operations.
These measures are expected to deliver cost savings of £2.6 million in 2023
and £4.0 million per annum thereafter but have also resulted in one-off costs
of circa £2 million. Angle ended 2022 with net cash of circa £32 million.
In aggregate, the eight largest detractors from performance delivered an
unrealised capital loss of £19.6 million, while the two largest contributors
to performance contributed £10.2 million to positive performance.
Investment Activity
Investment activity is deliberately tightly controlled when the outlook for
equity markets looks unsettled. Consequently, there has been limited
investment activity during the period under review.
One new VCT qualifying investment into Oxford Biodynamics was completed in the
six-month period to the end of March,2023 at an investment cost of £2.0
million. In addition to this new investment, one secondary investment was made
in SulNOx at a cost of £0.1 million.
The Investment Manager continues to engage with the management teams of our
investee companies on a regular basis, in order to monitor their performance
and ensure that they are navigating the currently tough economic conditions as
effectively as possible.
It is also important to note that new opportunities to create long term value
are not being overlooked and, although the IPO market is currently subdued,
the near-term investment pipeline remains encouraging.
Offer for Subscription
The Company's latest Offer for Subscription was launched on 24 January 2023
and opened for applications on 6 February 2023. The Offer reached full
subscription of £15 million on 6 February 2023 and was closed shortly
thereafter. On behalf of the Board, I would like to welcome all new
Shareholders and to thank existing Shareholders for their continued support.
Dividends
The Board has declared an interim dividend of 3.0 pence per share, for the six
months ended 31 March 2023. This interim dividend will be paid on 11 August
2023 to Shareholders on the register on 14 July 2023. The shares will be
quoted ex-dividend on 13 July 2023.
Dividend decisions are taken by the VCT Board and are always subject to a
number of factors including; market conditions, satisfactory returns, and/or
availability of cash and distributable reserves.
Dividend Reinvestment Scheme ("DRIS")
On 14 February 2023, 560,504 Ordinary Shares were allotted at a price of 129.7
pence per share, being the latest published net asset value at 31 January
2023, to Shareholders who elected to receive Ordinary Shares under the DRIS as
an alternative to the final cash dividend for the year ended 30 September
2022.
Share Buybacks
During the period from 1 October 2022 to 31 March 2023, the Company bought
back 1,587,397 of its own Ordinary Shares for cancellation, at an average
price of 114.8 pence per share including costs.
As at 31 March 2023, there were 174,104,558 Ordinary Shares in issue.
Material Transactions
Other than the Offer for Subscription, Share Buybacks and the purchase of
investments described above, there were no material transactions in the
six-month period ended 31 March 2023.
VCT Status
The Company comfortably exceeded the VCT qualifying threshold required by HM
Revenue & Customs, with approximately 99.4% (excluding new capital) of
total assets by VCT value being invested in VCT qualifying companies at the
end of the period under review. The Company has complied with all other HM
Revenue & Customs' regulations, and your Board has been advised by PwC
that the Company has maintained its venture capital trust status.
Summary & Outlook
Small AIM-listed businesses continue to experience significant pressures.
Access to growth capital is difficult, debt funding costs are high and input
costs, such as wages and raw materials, have spiralled upwards. Against this
backdrop, it is unsurprising that investor enthusiasm for early-stage,
loss-making companies remains fragile.
However, there are reasons to believe that the outlook is improving. Inflation
appears to have peaked, which should negate the need for significant interest
rate increases. Pressures on the global supply chain have eased, which is
enabling businesses to fulfil vital orders. Despite the gloomy forecasts from
most economists, the UK economy has so far managed to avoid falling into
recession and, for the time being at least, stability also appears to have
been restored in Westminster. UK quoted companies generally remain in good
financial health and continue to demonstrate their operational and financial
resilience.
The FTSE AIM All-Share Index has suffered a significant contraction in value
over the past two years which, although understandable, has been
disproportionate to other equity markets. Encouragingly, in the early weeks of
the second half of the VCT's financial year, equity market conditions have
shown tentative signs of recovery, perhaps in response to an increased level
of interest from prospective acquirers of UK listed businesses. Merger &
Acquisition and IPO activity has certainly picked up noticeably in recent
weeks.
The Board believes that the Company's investment portfolio is well placed to
deliver a strong recovery in performance as and when these positive trends
gather momentum.
Tim Woodcock
Chair
30 May 2023
Investment Objective
The Company's objective is to provide Shareholders with an attractive return
from a diversified portfolio of investments, predominantly in the shares of
AIM quoted companies, by maintaining a steady flow of dividend distributions
to Shareholders from the income as well as capital gains generated by the
portfolio.
It is also the objective that the Company should continue to qualify as a
Venture Capital Trust, so that Shareholders benefit from the taxation
advantages that this brings. To achieve this at least 80% for accounting
periods commencing after 6 April 2019 (previously 70%) of the Company's total
assets are to be invested in qualifying investments of which 70% by VCT value
(30% 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, 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.
Venture Capital Trust Status
The Company has satisfied the requirements for approval as a Venture Capital
Trust ("VCT") under section 274 of the Income Tax Act 2007 (ITA). It is the
Directors' intention to continue to conduct the business of the Company so as
to maintain compliance with that section.
Unaudited Investment Portfolio Summary
as at 31 March 2023
Qualifying investments Book cost Valuation % of net assets by value *
£'000 £'000
AIM quoted investments:
Tracsis 1,500 14,520 6.7
Abcam 1,161 12,748 5.8
MaxCyte 2,926 9,445 4.3
Aurrigo International 3,000 8,125 3.7
Avingtrans 996 6,806 3.1
Keywords Studio 303 6,801 3.1
Cohort 1,278 5,520 2.5
Mattioli Woods 1,626 5,503 2.5
Tristel 878 5,233 2.4
Surface Transforms 3,164 5,164 2.4
Access Intelligence 3,159 5,152 2.4
Avacta Group 932 4,773 2.2
AB Dynamics 793 4,650 2.1
Directa Plus 4,610 4,522 2.1
Idox 1,242 4,010 1.8
Feedback 4,000 3,643 1.7
Anpario 1,422 3,637 1.7
Instem 985 3,462 1.6
Belvoir Group 1,883 3,381 1.5
Arecor Therapeutics 2,778 2,997 1.4
Animalcare Group 2,401 2,568 1.2
Futura Medical 2,300 2,556 1.2
City Pub Group 2,250 1,705 0.8
Oxford Biodynamics 2,000 1,355 0.6
Ilika 1,528 1,294 0.6
Lunglife AI 3,080 1,225 0.6
Verici DX 2,125 1,201 0.5
Smoove 1,500 1,181 0.5
Saietta Group 3,151 1,129 0.5
Destiny Pharma 2,500 1,121 0.5
47 investments, each valued at less than 0.5% of net assets 58,493 15,565 7.1
119,964 150,992 69.1
Qualifying investments
Unlisted investments:
Hasgrove 1,303 24,259 11.1
nkoda Limited 2,497 962 0.5
Heartstone Inns 1,112 687 0.3
Phynova Group 1,500 430 0.2
LightwaveRF 2,616 279 0.1
Osirium Technologies - Loan Stock 500 250 0.1
6 investments, each valued at less than 0.1% of net assets 4,904 - -
14,432 26,867 12.3
Total qualifying investments 134,396 177,859 81.4
Non-qualifying investments
Royal London Short Term Money Market Fund Y(OEIC) 7,002 7,013 3.2
Blackrock Cash Fund Class D (Unit Trust) 7,000 7,011 3.2
Fully listed UK equities 8,357 6,932 3.2
Unicorn Ethical Fund (OEIC) Income 4,483 3,645 1.7
AIM quoted investments 4,883 3,409 1.5
Other unlisted investments each valued at less than 0.1% of net assets 556 - -
Total non-qualifying investments 32,281 28,010 12.8
Total investments 166,677 205,869 94.2
Cash and cash equivalents 13,851 6.4
Current assets 174 0.1
Current liabilities (1,473) (0.7)
Net assets 218,421 100.0
* Based on fair value not VCT carrying value
Responsibility Statement
Directors' Statement of Principal Risks and Uncertainties
The important events that have occurred during the period under review and the
key factors influencing the financial statements are set out in the Chair's
Statement above.
In accordance with DTR 4.2.7, the Directors consider that with the exception
of those mentioned below, the principal risks and uncertainties facing the
Company have not materially changed since the publication of the Annual Report
and Accounts for the year ended 30 September 2022.
The principal risks faced by the Company include, but are not limited to:
• investment and strategic
• regulatory and tax
• operational
• fraud, dishonesty and cyber
• financial instruments
• economic and political
In addition, the Directors also assess the possibility of new and emerging
risks.
A more detailed explanation of these risks and the way in which they are
managed can be found in the Strategic Report on pages 31 and 32 and in the
Notes to the Financial Statements on pages 79 to 81 of the 2022 Annual Report
and Accounts - copies can be found via the Company's website,
www.unicornaimvct.co.uk (http://www.unicornaimvct.co.uk) .
Directors' Statement of Responsibilities in Respect of the Financial
Statements
In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Tim Woodcock
(Chair), Charlotta Ginman (Senior Independent Director), Jeremy Hamer (Chair
of the Audit Committee) and Josie Tubbs, the Directors, confirm that to the
best of their knowledge:
● the condensed set of financial statements, which have been prepared in
accordance with FRS 104 "Interim Financial Reporting" give a true and fair
view of the assets, liabilities, financial position and loss of the Company
for the period ended 31 March 2023, as required by DTR 4.2.4;
● this Half-Yearly Report includes a fair review of the information required
as follows:
the interim management report included within the Chair's
Statement and the Investment Portfolio Summary, includes a fair review of the
information required by DTR 4.2.7 being an indication of important events that
have occurred during the first six months of the financial year and their
impact on the condensed set of financial statements; and a description of the
principal risks and uncertainties facing the Company for the remaining six
months of the year; and
there were no other related party transactions in the first six
months of the current financial year that are required to be disclosed in
accordance with DTR 4.2.8.
Cautionary Statement
This report may contain forward looking statements with regards to the
financial condition and results of the Company, which are made in the light of
current economic and business circumstances. Nothing in this report should be
construed as a profit forecast.
The Half-Yearly Report was approved by the Board of Directors on 30 May 2023
and the above responsibility statement was signed on its behalf by:
Tim Woodcock
Chair
30 May 2023
Management of the Company
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, Unicorn Asset Management Limited, is responsible for
managing sector and stock specific risk and the Board does not impose formal
limits in respect of such exposures. However, in order to maintain compliance
with HMRC rules and to ensure that an appropriate spread of investment risk is
achieved, the Board receives and reviews comprehensive reports from the
Investment Manager on a monthly basis. When the Investment Manager proposes to
make any investment in an unquoted company, the prior approval of the Board is
required. The Board continues to take the need for transparency and
independence seriously. When a conflict arises involving a relationship
between any Director and an investee or proposed investee company, that
Director abstains from any discussion or consideration on any such investment
by the Company.
The Administrator, ISCA Administration Services Limited, provides Company
Secretarial and Accountancy services to the Company.
Unaudited Condensed Income Statement
for the six months ended 31 March 2023
Six months ended 31 March 2023 (unaudited) Six months ended 31 March 2022 (unaudited) Year ended 30 September 2022 (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Net unrealised - (8,773) (8,773) - (61,056) (61,056) - (113,641) (113,641)
losses on investments 7
Net gains on realisation of investments 7 - 7 7 - 921 921 - 12,771 12,771
Income 4 751 - 751 578 - 578 1,753 - 1,753
Investment management fees
2 (523) (1,567) (2,090) (742) (2,229) (2,971) (1,322) (3,965) (5,287)
Other expenses (382) - (382) (356) - (356) (771) - (771)
Loss on ordinary activities before taxation
(154) (10,333) (10,487) (520) (62,364) (62,884) (340) (104,835) (105,175)
Tax on loss on ordinary activities
3 - - - - - - - - -
Loss and total comprehensive income after taxation
(105,175)
(154) (10,333) (10,487) (520) (62,364) (62,884) (340) (104,835)
Basic and diluted earnings per share: Ordinary Shares
5 (0.09)p (6.23)p (6.32)p (0.35)p (41.38)p (41.73)p (0.22)p (67.10)p (67.32)p
All revenue and capital items in the above statement derive from continuing
operations of the Company.
The total column of this statement is the Statement of Total Comprehensive
Income of the Company prepared in accordance with 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 Account, there were no differences between the
(loss)/profit as stated above and at historical cost.
The notes form part of these Half-Yearly financial statements.
Unaudited Condensed Statement of Financial Position
as at 31 March 2023
As at As at As at
31 March 2023 31 March 2022 30 September 2022
Notes (unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non-current assets
Investments at fair value 1e, 7 205,869 291,075 198,541
Current assets
Debtors 174 156 515
Cash and cash equivalents 13,851 26,242 23,751
14,025 26,398 24,266
Creditors; amounts falling due within one year
(1,473) (2,181) (1,681)
12,552 24,217 22,585
Net current assets
Net assets 218,421 315,292 221,126
Share capital and reserves
Called up share capital 1,741 1,611 1,640
Capital redemption reserve 129 102 113
Share premium account 100,292 79,193 85,063
Capital reserve 46,267 147,402 55,038
Special reserve 59,207 66,176 68,338
Profit and loss account 10,785 20,808 10,934
Equity Shareholders' funds 218,421 315,292 221,126
Basic and diluted net asset value per share of 1p each
Ordinary Shares 8 125.45p 195.74p 134.81p
The financial information for the six months ended 31 March 2023 and the six
months ended 31 March 2022 have not been audited.
The notes form part of these Half-Yearly financial statements.
Unaudited Condensed Statement of Changes in Equity
for the six months ended 31 March 2023
Called up share capital
£'000 Capital redemption reserve Share premium account Unrealised capital reserve Profit and loss account*
£'000 £'000 £'000 Special reserve* £'000
£'000 Total
£'000
Six months ended 31 March 2023
As at 1 October 2022 1,640 113 85,063 55,038 68,338 10,934 221,126
Loss after taxation - - - (8,771) - (1,716) (10,487)
Transfer to special reserve - - - - (1,567) 1,567 -
Shares issued under Offer for Subscription, net of costs 111 - 14,508 - - - 14,619
Net proceeds from DRIS share issue 6 - 721 - - - 727
Shares purchased for cancellation and cancelled (16) 16 - - (1,823) - (1,823)
Dividends paid - - - - (5,741) - (5,741)
At 31 March 2023 1,741 129 100,292 46,267 59,207 10,785 218,421
Six months ended 31 March 2022
As at 1 October 2021 1,491 88 53,602 222,185 87,659 5,773 370,798
(Loss)/profit after taxation - - - (74,783) - 11,899 (62,884)
Transfer to special reserve - - - - (3,136) 3,136 -
Shares issued under Offer for Subscription, net of costs 127 - 24,258 - - - 24,385
Net proceeds from DRIS share issue 7 - 1,333 - - - 1,340
Shares purchased for cancellation and cancelled (14) 14 - - (2,747) - (2,747)
Dividends paid - - - - (15,600) - (15,600)
At 31 March 2022 1,611 102 79,193 147,402 66,176 20,808 315,292
Year ended 30 September 2022
As at 1 October 2021 1,491 88 53,602 222,185 87,659 5,773 370,798
(Loss)/profit after taxation - - - (167,147) - 61,972 (105,175)
Transfer to special reserve - - - - (4,872) 4,872 -
Shares issued under Offer for Subscription, net of costs 127 - 24,281 - - - 24,408
Net proceeds from DRIS share issues 47 - 7,180 - - - 7,227
Shares purchased for cancellation and cancelled (25) 25 - - (4,440) - (4,440)
Dividends paid - - - - (10,009) (61,683) (71,692)
At 30 September 2022 1,640 113 85,063 55,038 68,338 10,934 221,126
The financial information for the six months ended 31 March 2023 and the six
months ended 31 March 2022 have not been audited.
The profit and loss account comprises the revenue reserve of £(825,000) and
the realised capital reserve of £11,610,000.
*The special reserve and profit and loss account are distributable to
Shareholders. The special reserve is used to fund market purchases of the
Company's own shares, to make distributions and to write-off existing and
future losses.
The notes form part of these Half-Yearly financial statements.
Unaudited Condensed Statement of Cash Flows
for the six months ended 31 March 2023
Notes Six months ended 31 March 2023 Six months ended 31 March 2022 Year ended 30 September 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities
Investment income received 1,119 878 1,609
Investment management fees paid (2,133) (3,166) (5,831)
Other cash payments (440) (363) (778)
Net cash outflow from operating activities (1,454) (2,651) (5,000)
Investing activities
Purchase of investments 7 (16,100) (6,535) (9,813)
Sale of investments 7 8 23,938 79,022
Net cash (outflow)/inflow from investing activities (16,092) 17,403 69,029
Net cash (outflow)/inflow before financing (17,546) 14,752 64,209
Financing
Dividends paid 6 (5,014) (14,244) (64,433)
Shares issued under Offer for Subscription (net of transaction costs paid in 14,881 24,855 24,407
the period)
Expenses of DRIS share issues - (16) (32)
Shares repurchased for cancellation (2,221) (2,747) (4,042)
Net cash inflow/(outflow) from financing 7,646 7,848 (44,100)
Net (decrease)/increase in cash and cash equivalents (9,900) 22,600 20,109
Cash and cash equivalents at start of period 23,751 3,642 3,642
Cash and cash equivalents at end of period 13,851 26,242 23,751
Reconciliation of operating loss to net cash outflow from operating activities
Loss for the period (10,487) (62,884) (105,175)
Net unrealised losses on investments 8,773 61,056 113,641
Net gains on realisation of investments (7) (921) (12,771)
Transaction costs - (5) (5)
Decrease/(increase) in debtors and prepayments 341 298 (61)
Decrease in creditors and accruals (72) (186) (613)
Reconciling items - dividends reinvested (2) (9) (16)
Net cash outflow from operating activities (1,454) (2,651) (5,000)
The financial information for the six months ended 31 March 2023 and the six
months ended 31 March 2022 have not been audited.
The notes form part of these Half-Yearly financial statements.
Notes to the unaudited financial statements
for the six months ended 31 March 2023
1. Principal accounting policies
a) Statement of compliance
The Company's Financial Statements for the six months to 31 March 2023 have been prepared under UK Generally Accepted Accounting Practice ("UK GAAP") and the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued in July 2022 by the Association of Investment Companies.
The financial statements have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 30 September 2022.
b) Financial information
The financial information contained in this report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the periods ended 31 March 2023 and 31 March 2022 have not been audited or reviewed by the Company's Auditor pursuant to the Auditing Practices Board guidance on such reviews. The information for the year to 30 September 2022 has been extracted from the latest published Annual Report and Financial Statements, which have been lodged with the Registrar of Companies, contained an unqualified auditors' report and did not contain a statement required under Section 498 (2) or (3) of the Companies Act 2006.
c) Going concern
After due consideration, the Directors believe that the Company has adequate resources for the foreseeable future and that it is appropriate to apply the going concern basis in preparing the financial statements. As at 31 March 2023, the Company held cash balances of £13.9 million and a further £17.7 million is held in OEIC funds and a Unit Trust. A large proportion of the Company's investment portfolio remains invested in AIM and fully listed equities which may be realised, subject to the need for the Company to maintain its VCT status. Cash flow projections covering a period of twelve months from the date of approving the financial statements have been reviewed and show that the Company has sufficient funds to meet both contracted expenditure and any discretionary cash outflows from buybacks and dividends. The Company has no external loan finance in place and is therefore not exposed to any gearing covenants.
d) Presentation of the Income Statement
In order to better reflect the activities of a VCT and in accordance with the
SORP, supplementary information which analyses the Income Statement between
items of a revenue and capital nature has been presented alongside the
Statement of Comprehensive Income. The revenue column of loss attributable to
Shareholders is the measure the Directors believe appropriate in assessing the
Company's compliance with certain requirements set out in Section 274 Income
Tax Act 2007.
e) Investments
All investments held by the Company are classified as "fair value through
profit or loss", in accordance with FRS102. This classification is followed as
the Company's business is to invest in financial assets with a view profiting
from their total return in the form of capital growth and income and in
accordance with the Company's risk management and investment policy. In the
preparation of the valuation of assets, in accordance with current IPEV
guidelines, the Directors are required to make judgements and estimates that
are reasonable and incorporate their knowledge of the performance of the
investee companies.
· For investments actively traded on organised financial markets,
fair value is generally determined by reference to Stock Exchange market
quoted bid prices at the close of business on the balance sheet date.
Purchases and sales of quoted investments are recognised on the trade date
where a contract of sale exists whose terms require delivery within a time
frame determined by the relevant market.
· Unquoted investments are reviewed at least quarterly to ensure
that the fair values are appropriately stated and are valued in accordance
with current IPEV guidelines as updated in December 2018, which relies on
subjective estimates. Fair value is established by assessing different methods
of valuation, such as price of recent transaction, sales multiples, earnings
multiples, discounted cash flows and net assets. Purchases and sales of
unlisted investments are recognised when the contract for acquisition or sale
becomes unconditional.
· Where a company's underperformance against plan indicates a
diminution in the value of the investment, provision against cost is made, as
appropriate. Where it is considered the value of an investment has fallen
permanently below cost, the loss is treated as a permanent impairment and as a
realised loss, even though the investment is still held. The Board assesses
the portfolio for such investments and, after agreement with the Investment
Manager, will agree the values that represent the extent to which an
investment loss has become realised. This is based upon an assessment of
objective evidence of that investment's future prospects, to determine whether
there is potential for the investment to recover in value.
· Redemption premiums on loan stock investments are recognised at fair
value when the Company receives the right to the premium and when considered
recoverable.
f) Capital reserves
(i) Realised (included within the Profit and Loss Account reserve)
The following are accounted for in this reserve:
• Gains and losses on realisation of investments;
• Permanent diminution in value of investments; and
• Transaction costs incurred in the acquisition of investments.
(ii) Unrealised capital reserve (Revaluation reserve)
Increases and decreases in the valuation of investments held at the period end
are accounted for in this reserve, except to the extent that the diminution is
deemed permanent.
In accordance with stating all investments at fair value through profit or
loss, all such movements through both unrealised and realised capital reserves
are shown within the Income Statement for the period.
(iii) Special reserve
The costs of share buybacks are charged to this reserve. In addition, any
realised losses on the sale of investments, and 75% of the management fee
expense, and the related tax effect, are transferred from the Profit and Loss
Account reserve to this reserve. This reserve can also be used for
distributions made by the Company.
2. Investment Management Fees
Unicorn Asset Management Limited ("UAML") receives an annual management fee,
calculated and payable quarterly in arrears, of 2.0% of the net asset value of
the Company, excluding the value of the investments in the OEIC which is also
managed by UAML, up to net assets of £200 million, 1.5% of net assets in
excess of £200 million and 1.0% of net assets in excess of £450 million. If
the Company raises further funds during a quarter the net asset value for that
quarter shall be 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 Directors have charged £1,567,000, being 75% of the investment management
fees to the capital reserve and the balance of 25% being £523,000 to revenue.
At 31 March 2023, £1,024,000 payable to the Investment Manager is included in
creditors due within one year.
3. Taxation
The total allowable expenses exceed income hence there is no tax charge for
the period.
4. Income
Six months Six months Year ended
ended ended 30 September 2022
31 March 2023 31 March 2022 (audited)
(unaudited) (unaudited) £'000
£'000 £'000
Dividends 608 513 1,525
Unicorn managed OEICs (including reinvested dividends) 65 74 201
Other OEICs 2 - -
Bank deposit interest 76 - 27
Loan stock interest - (9) -
751 578 1,753
5. Basic and diluted earnings and return per share
` Six months Six months Year ended
ended ended 30 September
31 March 2023 31 March 2022 2022
(unaudited) (unaudited) (audited)
Total earnings after taxation (£'000) (10,487) (62,884) (105,175)
Basic and diluted earnings per share (6.32)p (41.73)p (67.32)p
Net revenue from ordinary activities after taxation (£'000) (154) (520) (340)
Basic and diluted revenue earnings per share (0.09)p (0.35)p (0.22)p
Total capital return after taxation (£'000) (10,333) (62,364) (104,835)
Basic and diluted capital earnings per share (6.23)p (41.38)p (67.10)p
Weighted average number of shares in issue in the period
165,899,485 150,691,628 156,227,923
There are no instruments in place that may increase the number of shares in
issue in the future. Accordingly, the above figures represent both basic and
diluted earnings per share.
6. Dividends
Six months ended Six months ended Year ended
31 March 2023 31 March 2022 30 September 2022
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Amounts recognised as distributions to equity holders in the period:
Interim capital dividend of nil pence (2022: 3.0 pence) per share for the year - - 4,809
ended 30 September 2022 paid on 11 August 2022
Special interim capital dividend of nil pence (2022: 32.0 pence) per share for - - 51,292
the year ended 30 September 2022 paid on 11 August 2022
Final capital dividend of 3.5 pence (2022: 3.5 pence) per share for the year 5,741 5,200 5,200
ended 30 September 2022 paid on 14 February 2023
Special interim capital dividend of nil pence (2022:7.0 pence per share for - 10,400 10,400
the year ended 30 September 2022 paid on 10 February 2022
Total dividends paid in the period* 5,741 15,600 71,701
Unclaimed dividends returned ‑ ‑ (9)
5,741 15,600 71,692
* The difference between total dividends paid and that shown in the Condensed
Cash Flow Statement is £727,000, which is the amount of dividends reinvested
under the Dividend Reinvestment Scheme ("DRIS").
7. Investments at fair value
Fully Traded on AIM Unlisted shares Unlisted loan stock Other Total
listed £'000 £'000 £'000 Funds** £'000
£'000 £'000
Book cost at 30 September 2022 8,357 122,935 14,303 500 4,483 150,578
Unrealised (losses)/ gains at 30 September 2022 (2,275) 47,514 11,392 (375) (1,218) 55,038
Permanent impairment in value of investments - (2,442) (4,633) - - (7,075)
Opening valuation at 30 September 2022 6,082 168,007 21,062 125 3,265 198,541
Shares delisted - (188) 188 - - -
Purchases at cost - 2,100 - - 14,002 16,102
Sale proceeds - - (8) - - (8)
Net realised gains* - - 7 - - 7
Movement in unrealised gains 850 (15,518) 5,368 125 402 (8,773)
Closing valuation at 31 March 2023 6,932 154,401 26,617 250 17,669 205,869
Book cost at 31 March 2023
8,357 124,847 14,488 500 18,485 166,677
Unrealised (losses)/gains at 31 March 2023 (1,425) 31,996 16,762 (250) (816) 46,267
Permanent impairment in value of investments - (2,442) (4,633) - - (7,075)
Closing valuation at 31 March 2023 6,932 154,401 26,617 250 17,669 205,869
*Transaction costs on the purchase and disposal of investments of £nil were
incurred in the period.
** Other funds include the Unicorn Ethical Fund and the Royal London Short
Term Money Market Fund which are both OEICs and the BlackRock Cash Fund which
is a Unit Trust.
Reconciliation of cash movements in investment transactions
The difference between the purchases in Note 7 above and that shown in the
Condensed Cash Flow Statement. is £2,000 which is the reinvested dividends in
the Royal London Short Term Money Market Fund Y.
Fair value hierarchy
The table below sets out fair value measurements using FRS 102 s11.27 fair
value hierarchy. The Company has one class of assets, being at fair value
through profit or loss.
Level 1 Level 2 Level 3 Total
£000 £'000 £'000 £'000
At 31 March 2023
Equity investments 161,333 - 26,617 187,950
Loan stock investments - - 250 250
Other funds* 17,669 - - 17,669
Total 179,002 - 26,867 205,869
At 31 March 2022
Equity investments 210,076 51,856 24,702 286,634
Loan stock investments - - 350 350
Open ended investment companies 4,091 - - 4,091
Total 214,167 51,856 25,052 291,075
At 30 September 2022
Equity investments 174,089 - 21,062 195,151
Loan stock investments - - 125 125
Open ended investment companies 3,265 - - 3,265
Total 177,354 - 21,187 198,541
* Other funds include the Unicorn Ethical Fund and the Royal London Short Term
Money Market Fund which are both OEICs and the BlackRock Cash Fund which is a
Unit Trust.
There are currently no financial liabilities at fair value through profit or
loss.
Categorisation within the hierarchy has been determined on the lowest level
input that is significant to the fair value measurement of the relevant asset
as follows:
Level 1 - valued using quoted prices in active markets for identical assets.
Level 2 - valuation by reference to valuation techniques using directly
observable inputs other than quoted prices included within Level 1.
Level 3 - valued by reference to valuation techniques using inputs that are
not based on observable market data.
The valuation techniques used by the Company are explained in the accounting
policies in Note 1.
The fair value of unquoted investments, categorised as Level 3, is established
by assessing different methods of valuation, such as price of recent
transaction, sales multiples, earnings multiples, discounted cash flows and
net assets, therefore no assumptions are disclosed, or sensitivity analysis
provided.
A reconciliation of fair value measurements in Level 3 is set out below:
Equity Loan stock
Investments Investments Total
£'000 £'000 £'000
Opening balance at 1 October 2022 21,062 125 21,187
Shares delisted 188 - 188
Sales (8) - (8)
Total gains included in (losses)/gains on investments in the Condensed Income
Statement
- on assets sold 7 - 7
- on assets held at the period end 5,368 125 5,493
Closing balance at 31 March 2023 26,617 250 26,867
8. Net asset values
At 31 March 2023 At 31 March 2022 At 30 September 2022
(unaudited) (unaudited) (audited)
Net assets £218,421,000 £315,292,000 £221,126,000
Number of shares in issue 174,104,558 161,074,952 164,023,203
Net asset value per share 125.45p 195.74p 134.81p
9. Post Balance Sheet Events
There are no post balance sheet events to report.
10. Related party transactions
During the first six months of the financial year, no transactions with
related parties have taken place which have materially affected the financial
position or the performance of the Company.
11. Copies of the Half Yearly Report
Copies of the Half Yearly Report will be available for download on the
Company's website: www.unicornaimvct.co.uk. (http://www.unicornaimvct.co.uk.)
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of this announcement.
A copy of the 2023 Half Yearly Report 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)
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