TIDMUAV
RNS Number : 9970P
Unicorn AIM VCT PLC
24 November 2016
Unicorn AIM VCT plc (the "Company" or the "VCT")
Annual Results Announcement for the year ended 30 September
2016
The full Annual Report and Accounts for the year ended 30
September 2016 can be found on the Company's website
www.unicornaimvct.co.uk
FINANCIAL HIGHLIGHTS
(for the year ended 30 September 2016)
-- Offer for Subscription raised GBP9.8 million (after costs)
-- Net asset value ("NAV") total return for the year ended 30
September 2016, after adding back the dividend of 6.25p paid in the
year, was 7.2%
-- Final dividend of 6.25p proposed for the financial year ended 30 September 2016
Fund performance
Ordinary Shares Shareholders' Net asset Cumulative Net asset Share price
Funds* value dividends** value plus (p)
(GBP million) per share paid per cumulative
(NAV) share (p)*** dividends
(p) paid per share
(p)***
30 September
2016 147.7 160.5 32.25 192.75 139.0
31 March 2016 139.5 150.9 32.25 183.15 130.5
30 September
2015 124.6 155.6 26.0 181.6 137.0
31 March 2015 99.1 137.0 26.0 163.0 123.0
* Shareholders funds/net assets as shown on the Statement of
Financial Position below.
** The Board has recommended a dividend of 6.25 pence per share
for the year ended 30 September 2016. If approved by Shareholders,
this payment will bring total dividends paid since the merger of
with Unicorn AIM VCT II plc on 9 March 2010 to 38.5p.
***Since the merger of the Company with Unicorn AIM VCT II plc
on 9 March 2010 and merger of all former share classes.
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 what is believed
to be a balanced and comprehensive analysis of the development of
the business during the financial year and the position of the
Company's investments at the end of the year.
CHAIRMAN'S STATEMENT
I am pleased to present the fifteenth Annual Report of the
Company.
Economic Review
The key economic and political event of the past twelve months
was undoubtedly the UK electorate's majority decision to leave the
European Union. Regardless of the rights and wrongs of the debate,
the outcome of the Referendum appears to have been a surprise to
both the Government and the main opposition parties. As a
consequence, there appears to have been no plan for extricating the
UK from the EU efficiently, nor any apparent thought given to
minimising the possible negative economic effects of BREXIT.
Despite the uncertainty, the Prime Minister has stated that she
will invoke Article 50 of the Lisbon Treaty during 2017 which, in
turn, will formally trigger the process required for the UK to
leave the EU.
It remains to be seen whether this inevitably protracted process
will have a significantly negative impact on the UK economy which,
so far, appears to have been largely unaffected by the Referendum
vote. To date, the biggest and most obvious initial impact has been
on the value of Sterling which, at the time of writing, had fallen
considerably against the US Dollar. The continued weakness of
Sterling relative to both the US Dollar and the Euro is good news
for UK businesses that export their goods and services overseas,
and has been reflected in the recent strong performance of the FTSE
100 Index, which is composed mainly of truly international British
businesses. Opinion remains sharply divided however, over the
long-term economic effects of leaving the EU. Major UK firms such
as Easyjet and John Lewis have already highlighted that the slump
in Sterling is going to increase their costs significantly.
Inflation in the UK economy is likely to increase markedly in the
coming months.
The UK has also seen its creditworthiness downgraded by the
international ratings agencies, which have all indicated that the
referendum result will lead to deterioration in the performance of
the UK economy. The cost of Government borrowing is therefore set
to rise. The Government is hoping that the Bank of England's
decision to cut interest rates to a record low of 0.25%, will help
mitigate the impact of inflation on consumer spending and business
investment, thereby potentially averting another recession.
Since the financial year end, economic and equity market
uncertainty has increased following the unexpected outcome of the
US Presidential election. Equity markets dislike uncertainty and
further volatility is therefore to be expected during the current
financial year.
Investment Performance Review
Despite the economic and political turmoil, your Company remains
in sound health.
It is particularly pleasing to report that the twelve month
period ended 30 September 2016, has again delivered positive total
returns to Shareholders. Performance has been strong, with Net
Asset Value per share increasing from 155.6 pence to 160.5 pence
during the year, marking the seventh consecutive financial year of
positive total returns. After adding back the dividend of 6.25
pence per share paid in the period, the total return to
Shareholders was 7.2%.
At the financial year end, the investment portfolio consisted of
70 active VCT qualifying companies and 23 non-qualifying companies.
Approximately 75% of the companies held in the portfolio are
profitable and the majority of these businesses are now
sufficiently cash generative to allow for the payment of dividends.
During the period under review, dividends were paid, or proposed,
by over two-thirds of the companies in the portfolio. Income
received from underlying investments grew in the period under
review from GBP1.9 million in the financial year ended 30 September
2015 to GBP2.4 million in the financial year ended 30 September
2016. This should be regarded as tangible evidence of the
increasing financial strength of companies in the portfolio and a
positive indicator for the future.
Net Assets & Acquisition
By the end of the financial year under review, the audited net
assets of the Company increased significantly, rising to GBP147.7
million, which compares favourably with the GBP124.6 million of net
assets recorded at the end of the previous financial year. This
growth in total net assets was helped by a fully subscribed, GBP10
million Share Offer.
In addition, as previously reported in our Half-Yearly Report,
the Company completed the acquisition of the assets and liabilities
of Rensburg AIM VCT (Rensburg) during the period. The net assets
acquired amounted to just over GBP11.5 million. In order to
facilitate the acquisition, Unicorn Asset Management Limited paid
the majority of the costs incurred by both the Company and Rensburg
in relation to this transaction.
Rensburg was an AIM focused VCT with the majority of its assets
invested in qualifying, AIM-listed companies. Unicorn AIM VCT
already held investments in many of these companies. The
acquisition has therefore resulted in your Company acquiring
additional qualifying investments to support VCT qualification,
while also increasing total net assets over which the fixed costs
are spread, thereby benefitting all Shareholders.
I would like to take this opportunity to welcome all former
Rensburg AIM VCT shareholders.
Portfolio Activity
In addition to the successful acquisition of the Rensburg
assets, the twelve months ended 30 September 2016 was a busy and
productive period for investment activity. In total, almost GBP8.2
million of capital was invested in six new VCT qualifying
investments. Although still early days, it is pleasing to report
that, in aggregate, these new holdings have made a healthy initial
contribution to overall performance, generating an unrealised
aggregate capital gain on investment cost of 47.2% in the
period.
In addition to investing in new VCT qualifying companies, the
Manager also committed further VCT qualifying capital, totalling
GBP3.2 million, to three companies already held in the portfolio,
as well as making a number of full and partial disposals during the
period.
Total proceeds from disposals amounted to GBP13.5 million,
resulting in an overall realised capital profit of GBP0.8
million.
A detailed report on the performance of both the qualifying and
the non-qualifying investments is contained in the Investment
Manager's Review below.
VCT Status
In aggregate, the percentage of the Company's total assets
remains above that required by HMRC in order to retain VCT status.
As at 30 September 2016, approximately 77% of our Company's total
assets (valued in accordance with VCT rules) were invested in VCT
qualifying companies. Excluding new capital raised in Offers for
Subscription within the last three years, our VCT qualifying
percentage rises to 87% of total assets. The Board and its advisers
continue to monitor this figure closely. All other HMRC tests have
been complied with and the Board has been advised by PwC that the
Company continues to maintain its Venture Capital Trust status.
New VCT Regulations
The Venture Capital Trust sector is subject to a complex set of
regulations. During the course of 2015, the UK government, working
with the European Union, formulated a number of new rules, which
were passed into law in November 2015. These new rules focus on
restrictions surrounding a company's eligibility to benefit from
State Aid funding (which also applies to VCTs because of the
favourable tax treatment). The main changes are summarised
below:
-- An age restriction of seven years (twelve years for knowledge
intensive companies) from first commercial sales, after which
companies no longer qualify for State Aid funding, although
follow-on investment is allowed if they have received such funding
within the seven years.
-- A lifetime restriction on total State Aid funding of GBP12
million per company (GBP20 million for knowledge intensive
companies).
-- A stricter definition of what VCT funding may be used for.
-- Further restrictions on 'non-qualifying' investments.
It remains difficult to accurately assess the long term impact
that these new regulations will have on your Company. As a result
of the new legislation, there are fewer AIM listed companies that
remain eligible to apply for State Aid funding, but your Investment
Manager also believes that there may be a decline in the number of
VCT qualifying companies seeking an initial listing on the
Alternative Investment Market. For these reasons, both the Board
and the Manager intend to maintain a prudent approach when it comes
to the size of future fund raisings.
While the new legislation presents a number of challenges to the
VCT sector as a whole, the Investment Manager remains confident of
being able to operate within the confines of the new rules, having
established a long track record of successfully adapting to
previous rule changes.
Board Changes
Following the announcement in December last year of James
Grossman's intention to retire from the Board at the AGM early next
year, we were pleased to announce the appointment of Charlotta
Ginman as a Director of the Company with effect from 14 July
2016.
Following qualification as a chartered accountant with Ernst
& Young, Charlotta spent several years in investment banking,
followed by executive roles at Nokia Corporation and Vertu
Corporation. She was a non-executive director at Wolfson
Microelectronics and Kromek plc and is currently on the boards of
Polar Capital Technology Trust plc, Pacific Assets Trust plc and
Motif Bio plc, where she chairs the audit committees. Charlotta is
also a non-executive director of Consort Medical plc.
I would like to take this opportunity to welcome Charlotta to
the Board and to thank James for his wise counsel and valuable
contribution over the past eight years.
On behalf of the Board, I would also like to wish James a long
and happy retirement.
Dividends
The final dividend of 6.25 pence per share, for the financial
year ended 30 September 2015, was paid to Shareholders on 19
February 2016. Dividends are tax free to qualifying UK Shareholders
and this dividend represented a yield of 4.0% based on the Net
Asset Value of 155.6 pence per share as at 30 September 2015.
The Board has considered the payment of a dividend for the
financial year ended 30 September 2016, and is recommending a final
dividend of 6.25 pence per share (income: 1.00 pence; capital: 5.25
pence) to Shareholders, payable on 3 February 2017 to Shareholders
on the register on 13 January 2017.
After careful consideration, and after taking into account the
views of the Company's Shareholders, it is the Board's intention to
move to twice yearly dividend payments. An interim dividend payment
is therefore expected to be proposed in relation to the six month
period ended 31 March 2017. It is anticipated that the Half-Yearly
Report covering this period will be released in May 2017 and will
contain details as to the quantum of the interim dividend.
As ever, all future decisions regarding dividend payments will
remain subject to a number of factors including; market conditions,
satisfactory performance and availability of cash and distributable
reserves.
Outlook
The outlook for the majority of companies held in the portfolio
appears to be positive, albeit the economic outlook remains clouded
by the uncertainty created by BREXIT. The current portfolio
consists mainly of profitable, cash generative businesses, many of
which carry little or no debt on their balance sheets. The
management teams of these businesses are, however, alert to the
possible negative impacts of higher input prices that may soon
emerge following the recent weakening of Sterling against other
major currencies. It is to be hoped that through a combination of
efficiency or productivity improvements, and modest customer price
increases, much of this expected increase in input costs can be
absorbed, or passed on, without impacting profit margins or
triggering a noticeable decline in demand. In theory, this should
be achievable for many of our investee companies, given the
specialist nature of the products and services they provide.
Untangling the UK from the European Union will be a complex and
lengthy process, however, and will almost certainly present
unforeseen challenges for both the domestic economy and for the
businesses in which your Company invests. It remains to be seen
whether this process will have a lasting impact on the valuation of
UK quoted companies. Regardless of the eventual outcome of BREXIT,
be it positive or negative, your Board will continue to work
closely with the Investment Manager to help ensure the best
possible outcome for Shareholders.
Finally, 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. This is
scheduled for 12 January 2017 and is to be held at The Great
Chamber, The Charterhouse, Sutton's Hospital, Charterhouse Square,
London EC1M 6AN.
Peter Dicks
Chairman
23 November 2016
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.
The Company's shares are listed on the London Stock Exchange
main market under the code UAV.
The Company is an externally managed fund with a Board
comprising five non-executive Directors. Investment management and
operational support are outsourced to external service providers,
with the strategic and operational framework and key policies set
and monitored by the Board as described in the diagram on page 6 of
the Annual Report. Further information on each of the service
providers is outlined in the Corporate Governance Statement on page
36 of the Annual Report.
The Board has overall responsibility for the Company's affairs
including the determination of its investment policy. Risk is
spread by investing in a number of different businesses across
different industry sectors. The Investment Manager is responsible
for managing sector and stock specific risk and the Board does not
impose formal limits in respect of such exposures. However, in
order to maintain compliance with HMRC rules and to ensure that an
appropriate spread of investment risk is achieved, the Board
receives and reviews comprehensive reports from the Investment
Manager on a monthly basis. When the Investment Manager proposes to
make any investment in an unquoted company, the prior approval of
the Board is required.
The Board's Strategy
Investment Objective
The Company's objective is to provide Shareholders with an
attractive return from a diversified portfolio of investments,
predominantly in the shares of AIM quoted companies, by maintaining
a steady flow of dividend distributions to Shareholders from the
income as well as capital gains generated by the portfolio.
It is also the objective that the Company should continue to
qualify as a Venture Capital Trust, so that Shareholders benefit
from the taxation advantages that this brings. To achieve this at
least 70% of the Company's total assets are to be invested in
qualifying investments of which 30% by VCT value (70% for funds
raised after 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
-- good cash generation to finance ongoing development allied
with 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 70%
VCT qualification threshold, 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.
Performance during the year
As at 30 September 2016, the audited NAV of the Company was
160.5 pence per share, having risen by 4.9 pence (2015:11.9 pence)
from 155.6 pence per share at the start of the financial year under
review. After adding back the dividend of 6.25 pence per share paid
in the year, this is a total return to Shareholders of 11.15 pence
(2015: 17.9 pence) or 7.2% (2015: 12.5%) of the opening NAV for the
year. In comparison, the total return from the FTSE AIM All-Share
Index, although not a representative benchmark due its weighting in
mining and oil exploration stocks, was 14.7% over the same period.
The audited net assets of the Company were GBP147.7 million (2015:
GBP124.6 million) at the financial year end.
At the financial year end, there were 70 active VCT qualifying
companies held in the portfolio. Most of these businesses are cash
generative and operate with strong balance sheets. The Investment
Manager continues to focus on a select number of key metrics in
order to monitor and assess the financial health of these
businesses. These metrics continue to improve for most of the
companies held in the portfolio. Historically, investment has
typically been committed to a new company if it is profitable at
the time of first investment, although given the new State Aid
funding rules, future VCT qualifying investments are likely to be
made in earlier stage businesses.
In the year to 30 September 2016, a total of GBP13.5 million was
realised through the sale of investments while GBP9.8 million
(after costs) was raised from an Offer for Subscription. Capital
amounting to GBP13.4 million was deployed in new investments and
approximately GBP5.4 million was paid out as dividends to
Shareholders. A further GBP3.2 million was spent on share buybacks
and in meeting the operating costs of the Company.
Over the 12 months to 30 September 2016 there was a net gain on
investments of GBP10.2 million and the total profit on ordinary
activities was GBP9.3 million, equivalent to earnings of 10.6 pence
per share. The profit on the revenue account was GBP1.1 million. At
the financial year end, the portfolio consisted of 70 qualifying
and 23 non-qualifying investments in active businesses.
Since the merger with Unicorn AIM VCT II plc, which was
completed in March 2010 when all share classes merged, the total
return to Shareholders has been 110.0%, including the payment of
32.25 pence per share in dividends, which have been tax free to
qualifying Shareholders.
Key Performance Indicators
The Board uses the following key indicators to measure the
Investment Manager's performance, thereby allowing 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
- Running costs
Further details can be found on pages 8 and 9 of the Annual
Report.
Running Costs
The Ongoing Charges of the Company for the financial year under
review represented 2.2% (2015: 2.2%) of average net assets, which
is well below the agreed cap of 3.6% and remains competitive when
compared with other AIM focused VCTs.
As shown in note 3, the Investment Manager receives a management
fee of 2% of net assets per annum. Other expenses are shown in note
4 on page 51 of the Annual Report.
Shareholders should note that this ratio has been calculated in
accordance with the Association of Investment Companies' ("AIC")
recommended methodology, published in May 2012. This figure
indicates the annual percentage reduction in shareholder returns as
a result of recurring operational expenses. Although the Ongoing
Charges figure is based on historic information, it does provide
Shareholders with a guide to the level of costs that may be
incurred by the Company in the future.
Further information in respect of the Company's performance can
be found in the financial highlights above.
Key Events during the Year
The Company raised GBP9.8 million (after costs) through the
Offer for Subscription and issued 6,561,716 shares, details of
which are given in note 14 on page 56 of the Annual Report.
The Company announced on 17 July 2015 that, subject to HMRC and
regulatory approval, a scheme of reconstruction would be put to the
shareholders of Rensburg. This was approved by Rensburg
shareholders on 27 November 2015 and on 12 January 2016 the Company
acquired the assets of Rensburg, in consideration for the issue of
7,075,352 new Ordinary Shares in the Company to Rensburg
shareholders.
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. Dividends of 6.25 pence
per share were paid during the period which amounted to GBP5.4
million. Since the original launch of Unicorn AIM VCT in 2001,
Shareholders have, in aggregate, received approximately GBP43.2
million in dividend distributions, including those paid to former
shareholders in Unicorn AIM VCT II plc.
The ability to pay dividends and the amount of such dividends
are influenced by the performance of the Company's investments,
available distributable reserves and cash, as well as the need to
retain funds for further investment and ongoing expenses.
With effect from the year ending 30 September 2017 the Company
proposes to change to an interim and final dividend as detailed in
the Chairman's Statement.
-- 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:
-- Regular share buybacks provide a reliable mechanism through
which Shareholders can realise their investment in the Company,
rather than being reliant on what is typically a limited secondary
market.
-- Share buybacks, when carried out at a sensible discount to
underlying net assets, help modestly to enhance NAV per share.
-- Implementing share buybacks on a regular basis can assist in
controlling the discount to NAV that might otherwise prevail during
periods of market stress.
The Board agrees the level of discount to NAV at which shares
will be bought back and keeps this under regular review. The Board
seeks to maintain a balance between the interests of those wishing
to sell their shares and continuing Shareholders.
The Company has continued to buy back shares for cancellation at
various points throughout the financial year in accordance with the
above policy. A total of 1,641,988 shares with a nominal value of
GBP16,420 were purchased for cancellation during the course of the
year, at an average price of 134.4 pence per share, for a total
consideration of GBP2.2 million. At the financial year end, the
Company's shares were quoted at a price of 139.0 pence per share
representing a discount to NAV per share of 13.4%.
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, Listing Rules
and any other applicable law at the relevant time. Shares bought
back are normally cancelled.
-- Principal risks and uncertainties
The Directors have carried out a review of the principal risks
faced by the Company as part of the internal controls process, as
outlined below. Note 18 to the Financial Statements on pages 57 to
63 of the Annual Report also provides information on the Company's
financial risk management objectives and exposure to risks.
Risk Possible consequence How the Board guards against
risk
Investment and Unsuitable investment Regular review of investment
strategic risk strategy or stock selection strategy by the Board.
could lead to poor returns Monitoring of the performance
to shareholders. of the investment portfolio
on a regular basis.
All unquoted investments
require prior investment
authorisation from the
Board.
Regulatory and The Company is required Regulatory and legislative
tax risk to comply with the Companies developments are kept
Act 2006, ITA, The Alternative under review by the Board.
Investment Fund Managers The Company's VCT qualifying
Directive ("AIFMD") (as status is continually
applicable to small registered reviewed by the Investment
UK AIFMs), UKLA Rules Manager and Administrator.
and UK Accounting Standards. PricewaterhouseCoopers
Breaching these rules LLP has been retained
may result in a public by the Board to undertake
censure, suspension from an independent VCT status
the Official List and/or ongoing monitoring role.
financial penalties.
There is a risk that
the Company may lose
its VCT status under
the ITA. Should this
occur, Shareholders may
lose any upfront income
tax relief they received
and be taxed on any future
dividends paid and capital
gains received if they
dispose of their shares.
Operational risk The Company has no employees Internal control reports
and is therefore reliant are provided by service
on third party service providers on an annual
providers. Failure of basis.
the systems at third The Board considers the
party service providers performance of the service
could lead to inaccurate providers annually and
reporting or monitoring. monitors activity on a
Inadequate controls could monthly basis.
lead to the misappropriation
of assets.
Fraud and dishonesty Fraud may occur involving Internal control reports
risks company assets perpetrated are provided by service
by a third party, the providers on a regular
Investment Manager or basis.
other service provider. The Administrator is independent
of the Investment Manager.
Financial Instrument The main risks arising The Board regularly reviews
risks from the Company's financial and agrees policies for
instruments are due to managing these risks and
fluctuations in their full details can be found
market prices, interest in Note 18 of the Annual
rates, credit risk and Report.
liquidity risk.
Economic risk Events such as recession, While no single policy
inflation or deflation, can obviate such risks
movements in interest the Company invests in
rates and technological a diversified portfolio
change can affect trading of companies, whilst seeking
conditions and consequently to maintain adequate liquidity.
the value of the Company's
investments.
The Regulatory Environment
The Board and Investment Manager are required to consider the
regulatory environment when setting the Company's strategy and
making investment decisions. A summary of the key considerations is
outlined below.
Human rights
The Board seeks to conduct the Company's affairs responsibly and
expects the Investment Manager to consider human rights
implications as far as possible, particularly with regard to
investment decisions.
Diversity
The Directors are aware of the need to have a Board which, as a
whole, comprises an appropriate balance of skills, experience and
diversity. Appointments to the Board are made according to
expertise and knowledge. Following the appointment of Charlotta
Ginman on 14 July 2016, the Board currently comprises four male and
one female non-executive Directors and the Board has confirmed that
it is content with its current composition. The Board will consider
gender diversity in making future appointments
Anti-bribery policy
The Company has adopted a zero tolerance approach to bribery and
will not tolerate bribery under any circumstances in any
transaction in which it is involved. The Company values its
reputation for ethical behaviour and for financial probity and
reliability and the Directors are committed to working to the
highest ethical standards.
The Company expects and requires each of its service providers
to work to the same standard and has obtained confirmation from
them that this is the case.
Environmental and social responsibility
The Board seeks to conduct the Company's affairs responsibly and
expects the Investment Manager to consider relevant social and
environmental matters when appropriate, particularly with regard to
investment decisions. The Company offers electronic communications
where acceptable, to reduce the volume of paper it uses in sending
communications to Shareholders. In addition, Board and Committee
meetings are held by conference call where it is appropriate to do
so. The Company's Annual and Half-Yearly reports are printed on
paper sourced from forests certified by the Forestry Stewardship
Council ("FSC") that meet its environmental, social and economic
standards.
Viability Statement
The Board has considered the need to confirm that the Company is
able 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. The Directors state on page 29 of the
Annual Report that they consider the Company is a going concern
over this timeframe.
Under the UK Corporate Governance code there is a requirement
that the Board performs a robust assessment of the principle risks
relating to the Company.
The Directors consider 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.
In order to maintain viability, the Company has a detailed risk
control framework which has the objective of reducing the
likelihood and impact of: poor judgement in decision-making;
risk-taking that exceeds the levels agreed by the Board; human
error; or control processes being deliberately circumvented. These
controls are reviewed by the Board on a quarterly basis to ensure
that controls are working as prescribed. In addition, reviews of
all service providers are undertaken regularly.
The Directors consider that the Company is viable for the five
year time horizon for the following reasons:
-- The Company has a diversified investment portfolio including
over approximately GBP9.4 million invested in readily realisable
listed shares and a further GBP11.1 million in open ended funds and
cash. The Company therefore has sufficient liquidity in the
portfolio.
-- The ongoing charges ratio of the Company as calculated using
the AIC recommended methodology equates to 2.2% of net assets,
which is competitive for the VCT sector.
-- The Board anticipates that there will continue to be suitable
qualifying investments available that will enable the Company to
maintain its operations successfully over the five year time
horizon.
-- The Company has no debt or other external funding apart from its ordinary shares.
The Directors have also considered the viability of the Company
should there be a slowdown in the economy or a collapse of the
markets leading to lower dividend receipts and asset values. As
stated above ongoing charges equate to 2.2% of net assets of which
the Investment Management fee is 2.0% of net assets. Therefore, any
fall in the value of net assets will result in a corresponding fall
in the major expense of the Company.
As a result of these factors, 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 Chairman's Statement above.
For and behalf of the Board
Peter Dicks
Chairman
23 November 2016
Investment Manager's Review
Introduction
The financial year to 30 September 2016 proved to be another
period of solid progress for your Company.
The audited net assets of the Company as at 30 September 2016
totalled GBP147.7 million, while audited NAV per share was 160.5
pence. This represents an increase in net assets of GBP23.1 million
and a capital gain equivalent to 4.9 pence per share during the
year. After adding back dividends paid of 6.25 pence per share in
the period, the total return amounted to 11.15 pence per share;
representing an increase of 7.2% on the opening NAV of 155.6
pence.
Performance Review
Although the total return performance of the Company was healthy
in the period under review, it did not match the particularly
strong returns generated by UK equity indices. The total return
from the FTSE All-Share Index amounted to 16.8% in the year, while
the total return from the FTSE AIM All-Share Index was also strong
at 14.7%.
In both cases, this positive performance has largely been
delivered in the three month period following the BREXIT referendum
at the end of June 2016. The sharp decline in the value of Sterling
helps explain the share price improvement of many large,
international companies, which typically export their goods and
services and are therefore beneficiaries of a weaker pound. At the
other end of the spectrum, the FTSE AIM All-Share Index responded
positively to a recovery in oil and commodity prices, due to its
meaningful weighting in junior mining and oil exploration
stocks.
To put these performances in context however, the FTSE AIM-All
Share Index has still not reached its previous peak in March 2014,
while the FTSE All-Share Index is only marginally higher than it
was two and a half years ago. By contrast, the Company has
delivered a total return to Shareholders of 21% over the same 30
month period. Over the longer term, relative performance also
remains strong. In the period since the merger of Unicorn's two AIM
focused VCTs on 9 March 2010, NAV per share has increased from 91.8
pence to 160.5 pence as at 30 September 2016. In addition, a total
of 32.25 pence has been distributed to Shareholders by way of
dividends, tax free to qualifying Shareholders. After adding back
these dividends the total return to Shareholders during this period
is 110%. This compares to a total return of 65% from the FTSE
All-Share Index and 27% from the FTSE AIM All-Share Index. Total
returns are, of course, calculated after absorbing the ongoing
charges of the Company which, for a Venture Capital Trust, has
continued to run at a competitive 2.2% of total assets on an
annualised basis.
The Company maintained an active approach to share buybacks in
the period under review. The total number of shares purchased was
1,641,988 at a total cost of GBP2.2 million. These shares were
bought back at an average discount to underlying net assets of
13.1% and were all subsequently cancelled.
The established, selective and disciplined approach to managing
the Company's assets has enabled the Company to continue its
successful growth, while at the same time delivering an attractive
and, hopefully sustainable, tax free dividend stream to
Shareholders. The Board has proposed a final dividend of 6.25 pence
per share in respect of the financial year ended 30 September 2016,
which, if approved by Shareholders will be paid on 3 February
2017.
The investment portfolio remains diversified both by number of
holdings and by sector exposure. At the financial year end, the
Company held 70 active VCT qualifying companies together with 23
non-qualifying investments. These investments are spread across 19
different sectors.
Qualifying Investments
(bracketed figures represent the share price movement for the
year under review or since the date of investment on a mid-price
basis):
The percentage of total assets invested in VCT qualifying
companies amounted to 77% as at 30 September 2016.
A review of the ten most meaningful contributors to performance
(both positive and negative) follows:
Abcam (+45%) is a global leader in the supply of life science
research tools. The business continues to grow at a healthy rate.
In its financial year to 30 June 2016, Abcam increased sales on a
reported basis by 19.2% to GBP171.7 million (FY 2015: GBP144.0
million). Reported diluted earnings per share were flat at 18.5
pence (FY 2015: 18.5 pence), reflecting a previously announced
investment in systems and processes together with meaningful
acquisition and integration costs. The business remains highly cash
generative, with the closing net cash position increasing to
GBP70.7 million (30 June 2015: GBP58.7 million). As a consequence
of continued strong trading, the proposed full year dividend was
increased by 8.5% to 8.9 pence per share (FY 2015: 8.2 pence).
Animalcare Group (+34%) is a leading supplier of veterinary
medicines. In October, the Board of Animalcare announced results
for the year ended 30 June 2016, which demonstrate that the
business continues to perform. In recent years, the management team
has built a strong and scalable platform, which should allow the
business to continue its consistent growth, while also enabling a
progressive dividend policy to be maintained. Overall, revenues for
the year were up 8.6% to GBP14.7 million (2015: GBP13.5 million),
while underlying basic earnings per share increased 3.2% to 13.0p
(2015: 12.6p). As a consequence of continued strong cash
generation, the balance sheet also strengthened during the year,
with net cash increasing to GBP7.1 million (2015: GBP5.8 million)
as at 30 June 2016. The total recommended dividend was increased by
6.6% to 6.5p (2015: 6.1p). The management team intends using the
strong balance sheet to invest in a wider range of products and new
opportunities to help ensure the long-term success of the
business.
Anpario (-21%) is a specialist producer of natural feed
additives that promote animal health, hygiene and good nutrition.
Interim results for the six month period ended 30 June 2016 were
released in September, revealing that Anpario had delivered a
modest increase in adjusted profit before tax from continuing
operations to GBP1.7 million (2015: GBP1.6 million), together with
a significantly improved net cash balance of GBP10.9 million (2015:
GBP7.9 million). Although share price performance has been weak of
late, as growth has been slower and taken longer than originally
anticipated, the financial strength and established investment
strategy has placed the business in a good position to build
commercial relationships in new international territories, from
which long term organic growth should be secured.
Avingtrans (+71%) is a designer, manufacturer and supplier of
critical components to the global energy and medical sectors.
During an exceptionally busy period, Avingtrans successfully
expanded and then sold its Aerospace Division for an enterprise
value of GBP65.0 million, announced a GBP28 million tender offer to
return cash to shareholders and lastly, reported on major contract
wins for its Energy and Medical divisions. Although revenue from
continuing operations decreased by 6% to GBP21.2 million (2015:
GBP22.6 million), adjusted profit before tax improved to GBP0.1
million (loss 2015: GBP0.7 million), while cash generated from
operating activities improved dramatically to GBP7.8 million (2015:
GBP1.6 million). As a result of strong underlying cash generation
combined with the proceeds from the disposal of the Aerospace
division, net cash increased to GBP51.0 million (2015: net debt
GBP5.9 million) at 31 May 2016, Avingtrans' financial year end. The
Energy and Medical divisions performed in line with expectations in
the period and with attractive structural growth markets and
durable customer relationships, the business is well placed to
deliver further value over the longer term.
Crawshaw Group (-56%) is a retailer of fresh meat and
food-to-go, which recently delivered disappointing Interim Results.
As a consequence, Crawshaw's share price has been very weak,
falling by 63% from a peak reached in November 2015. Despite
recording a 29% increase in group turnover to GBP21.6 million
(2015: GBP16.7 million) and a 31% increase in gross profit to
GBP9.8 million (2015: GBP7.5 million), like-for-like sales declined
4.4% (2015: increased 1.0%) and losses before tax increased to
GBP0.4m (2015: GBP0.1m). As a result, net cash was GBP4.0 million
at 31 July 2016 (31 July 2015: GBP6.0 million) and the interim
dividend has been dropped (2015: 0.10 pence per share). Although
the business has continued to grow, with the store expansion
programme making considerable progress, the recent like-for-like
sales performance has been very disappointing. The management team
is acting quickly to restore sales momentum by focusing on a local
value-led proposition that has proved successful in the past.
Re-introducing a locally driven, value-led promotion strategy is
reported to be increasing customer numbers, although this
initiative will inevitably have an impact on margins and has
therefore resulted in a significant downward revision to profit
expectations.
Gama Aviation (-55%) is one of the world's largest business
aviation service providers. Despite continued strong growth in
revenues, the business continues to record losses after currency
adjustments. The weakening of Sterling combined with a material
investment in international expansion, has resulted in Gama's
market capitalisation remaining under significant pressure, with
the share price declining by over 50% in the period under review.
The fundamental strength of the Gama business model is that
revenues are underpinned by long term renewable contracts, which,
when combined with geographical diversity and proven industry
expertise, should enable the business to deliver improving
financial results, despite challenging trading conditions in the UK
and Europe.
IDOX (+68%) is a leading supplier of specialist information
management solutions and services. In its most recently announced
half year results for the six months ended 30 April 2016, IDOX's
revenues grew by 26% to GBP37.2 million (H1 2015: GBP29.6 million),
which included modest organic growth of 5%. As a result, adjusted
profit before tax was 36% higher at GBP7.9 million (H1 2015: GBP5.8
million). Net debt as at 30 April 2016 stood at GBP13.9 million (H1
2015 GBP9.7 million), following payment of GBP9.3 million in
respect of two acquisitions made during the second half of
2015.
Following a strong first half performance, the business retains
a healthy pipeline and order book. Together with a full year
contribution from recent acquisitions, the Board has been able to
re-confirm its confidence in meeting market expectations for the
financial year as a whole.
Mattioli Woods (+19%) is a specialist wealth management and
employee benefits business. In its financial year ended 31 May
2016, the Group reported revenue growth of 24% to GBP43 0 million
(2015: GBP34.6million) and an increase in adjusted earnings per
share of 14.0% to 31.0p (2015: 27.2p). As a result, the proposed
total dividend was increased by 19.0% to 12.5p (2015: 10.5p). At
the Group's financial year end, the financial position remained
very strong with the net cash position standing at GBP29.8 million
(2015: GBP10.6 million). Mattioli Woods continues to expand through
a combination of organic growth and selective acquisitions, while
maintaining its core focus on delivering quality advice, services
and products, thereby helping to grow the value of its clients'
assets and enhancing their financial outcomes.
Tracsis (+19%) is a leading provider of software and services
for the traffic data and transportation industry. The Group
recently released its annual results which confirmed another strong
year of trading. The financial year ended 31 July 2016 has been one
of significant progress for Tracsis. Core operations continued to
perform well, while the Group completed the acquisitions of Ontrac
Limited and SEP Limited. These acquisitions are reported to be
performing well, with Ontrac having secured several major orders
for its software products, while SEP has experienced a record year
of trading. Both these newly acquired businesses are trading
profitably and performing to expectations. Revenues for the Group
as whole were GBP32.6 million in the financial year, a rise of 29%
(2015: GBP25.4 million). Adjusted profits before tax for the year
ended 31 July 2016 were up 18% to GBP6.9 million (2015: GBP5.8
million). As at 31 July 2016, Group cash balances remained strong
at GBP11.4 million (2015: GBP13.3 million), the modest decline
reflecting the cash utilised on acquisitions and investments during
the year. The Group continues to be debt free and highly cash
generative.
Tristel (+61%) is a developer and manufacturer of infection
control, contamination control and hygiene products. The Group's
results for the financial year ended 30 June 2016 were released in
October 2016 and revealed that turnover increased to more than
GBP17 million (2015: GBP15.3 million) with adjusted pre-tax profits
of GBP3.3 million (2015: GBP2.6 million). Both turnover and pre-tax
profits were ahead of market expectations. Tristel also continues
to generate significant levels of cash and at 30 June 2016 net cash
balances were GBP5.7 million compared to GBP4.0 million at 30 June
2015. Accordingly, the Board has announced a special dividend of 3
pence per share in order that it returns to shareholders the cash
that is considered surplus to investment and operational
requirements.
After the payment of this special dividend and payment of the
consideration associated with a recent acquisition, the Group's
ongoing intention is to retain cash reserves of at least GBP3
million. The previous special dividend of 3 pence per share was
paid in August 2015.
The management team at Tristel continue to believe that the
business will be able to take advantage of current trends in the
global disinfection market and the outlook for the Group therefore
remains very promising.
Review of Non-Qualifying Investments
(bracketed figures represent the share price movement for the
year under review or since the date of investment on a mid-price
basis):
With one notable exception, the non-qualifying investments
performed well in the period under review. The strongest
contributors to performance included; Macfarlane Group (+19%),
Mears Group (+18%), Pinewood Group (+32%) and the Unicorn
Mastertrust Fund (+19.2%). The one meaningful disappointment was
Renold (-43%), a manufacturer of industrial chain and torque
transmission products, which suffered from uncertainty and
volatility in its key markets. There were no other material
movements among the non-qualifying investments.
Investment Activity
Aside from the important acquisition of the VCT qualifying and
non-qualifying assets of Rensburg AIM VCT, which is covered in
greater detail in the Chairman's Statement, the financial year
under review also saw meaningful levels of new investment activity.
In aggregate, over GBP13.4 million was invested in qualifying and
non-qualifying investments during the year.
Having made one new VCT qualifying investment and three further
qualifying investments into existing holdings during the first half
of the year, the rate of investment activity accelerated in the
second half. Five new qualifying investments were made during the
second half, at a total cost of just under GBP6.7 million. In
aggregate, the performance of the new investments has been very
pleasing. The total unrealised capital gain on all new qualifying
investments made during the course of the year was GBP3.8 million,
which is equivalent to a return on investment of 47.2% as at the
financial year end.
The six VCT qualifying investments in companies new to the
portfolio were as follows:
Directa Plus (+74%), is a rapidly expanding producer and
supplier of graphene-based products for use in consumer and
industrial markets. Directa Plus was admitted to AIM on 27 May
2016, successfully raising GBP12.8 million at 75 pence per share,
of which Unicorn AIM VCT committed GBP3 million to VCT qualifying
shares. The business operates in the fast developing, but still
early stage field of graphene technology and, as such, Directa
remains loss- making. In its maiden interim results, for the six
month period ended 30 June 2016, revenues from product sales
increased significantly to EUR0.40 million (H1 2015: EUR0.11
million), which resulted in a loss after tax for the period of
EUR2.3 million (H1 2015: EUR1.3 million loss). As a consequence of
the successful fund raise, however, the business is now
well-capitalised with cash and cash equivalents at 30 June 2016 of
EUR13.1 million (31 December 2015: EUR2.0 million; 30 June 2015:
EUR3.0 million). The interim results provide encouraging evidence
that Directa Plus is engaging with a growing number of customers
and working with them to ensure that the incorporation of
graphene-based materials enables them to add significant value to
their products. Directa's production process is low cost, scalable
and flexible, creating an opportunity for the business to establish
a market-leading position in what is expected to be a major new
segment of the industrial materials sector.
Genedrive (-15%) is a molecular diagnostics company that
recently changed its name from Epistem Holdings. In 2015/16, the
Company achieved significant growth in revenue driven by
development income related to Genedrive, a novel diagnostics
management platform, which offers attractive and potentially high
growth market opportunities. An example of this is the recent
launch of Genedrive's tuberculosis resistance test in India. In
addition, David Budd was appointed as CEO during the period,
bringing strong diagnostics management experience to the business.
In July 2016, your Company contributed GBP0.2 million to an
oversubscribed GBP6.0 million placing.
MaxCyte (+21%) is an established and revenue generating
developer and supplier of cell engineering products and services to
biopharmaceutical firms engaged in cell therapy and drug discovery.
The business successfully completed its IPO on AIM in March 2016
raising gross proceeds of GBP10 million. Unicorn AIM VCT subscribed
GBP1.5 million in this fundraising, receiving VCT qualifying shares
in exchange. With consistently increasing revenue performance and
strong revenue visibility, combined with careful investment in
sales, marketing and operations to drive further growth, the
business is expected to make further progress toward profitability
over the next 24 months.
Osirium Technologies (+26%) is a UK based cyber-security
software provider that was admitted to AIM in April 2016 raising
GBP5.1 million net of expenses via a placing of new ordinary
shares. Unicorn AIM VCT invested GBP1.0 million in new VCT
qualifying shares as part of this placing, enabling the business to
appoint additional staff members, fund an increase in sales and
marketing activity and invest in the continued research and
development of new and enhanced software modules. Although still at
an early stage in its development, the business is already reported
to be benefiting from its admission to AIM with a strengthened
balance sheet and a raised profile in the marketplace. This is
manifesting itself through a strong and growing pipeline of
commercial prospects offering the business a significant
opportunity to establish itself as a leading operator in the
thriving and fast growing cyber-security market.
Surface Transforms (+74%) is an established AIM-listed company
focused on the development and manufacture of next-generation,
carbon ceramic brake discs for the automotive and aircraft
industries. In April 2016, Surface Transforms completed a
GBP6million placing and open offer. Unicorn committed GBP1.5
million to this VCT qualifying fundraising. As a result of this
funding round, the balance sheet has been considerably strengthened
and the business now has the capital it requires to invest in
essential factory expansion. This investment in new plant and
equipment is required because of the significant recent progress
Surface Transforms has made with its key automotive customers,
which includes the signing of a pre-production contract with a
major German automotive manufacturer. Although the business remains
loss-making, it now has the foundations in place to enable it to
grow its revenues substantially over the next two years.
Syndicate Room (n/a) is an early stage, unquoted business that
has built an online equity investing platform that allows the
private investor to participate in investment opportunities ranging
from Seed Enterprise Investment Schemes all the way through to
initial public offerings. Syndicate Room's philosophy is based
around the belief that everyone should have equal access to
sophisticated investment opportunities, and that private investors
should be able to invest on the same terms as professional
investors. This philosophy manifests itself in an 'investor-led'
equity investing model. Since pioneering this investor-led model
the business has collaborated with leading industry players and
become the first crowd-funding platform to give its members access
to public markets. Unicorn AIM VCT has taken a 4.2% stake in the
business, having subscribed for GBP1 million in VCT qualifying
shares in a recently completed fund-raising round. Although the
business remains at an early stage in its development, it has
already established a significant reputation for innovation and is
rapidly expanding its range of services all designed to make
investing fairer, more sustainable and more transparent.
Other Investment Activity
Apart from the assets acquired from Rensburg AIM VCT, no other
new investments in qualifying or non-qualifying companies were made
during the year.
Realisations
Realisations totalling GBP13.5 million were made in the
financial year to 30 September 2016 resulting in an overall capital
profit of GBP0.8 million. Two AIM-listed companies were sold to
trade buyers in the period realising net proceeds of GBP1.4
million. Seventeen non-qualifying holdings were sold in their
entirety in the open market and a number of other partial disposals
in qualifying and non-qualifying investments were also made. These
transactions generated total proceeds of GBP12.1 million.
Prospects
The investment portfolio contains a diverse range of
established, successful and growing businesses, the majority of
which appear to be sustainably profitable. As a result, despite
considerable uncertainty surrounding the prospects for the UK
economy, we remain optimistic that the established strategy will
deliver further attractive returns for Shareholders over time.
Chris Hutchinson
Unicorn Asset Management Limited
23 November 2016
EXTRACT FROM DIRECTORS' REPORT
Share Capital
At the year-end there were 92,075,311 (2015: 80,080,231)
Ordinary shares of 1p each in issue, none of which are held in
Treasury. The issues and buybacks of the Company's shares during
the year are shown in note 14 of the Annual Report. Subsequent to
the year end, the Company bought back 190,981 shares. At the date
of this announcement the Company therefore had 91,884,330 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 the foreseeable future and that it is
appropriate to apply the going concern basis in preparing the
financial statements. As at 30 September 2016, the Company held
cash balances with a value of GBP3.3 million. The majority of the
Company's investment portfolio remains invested in fully listed and
AIM quoted equities which may be realised, subject to the need for
the Company to maintain its VCT status. 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 sufficient funds to meet both contracted
expenditure and any discretionary cash outflows from buybacks and
dividends. The Company has no borrowings in place and is therefore
not exposed to any gearing covenants.
The full Annual Report and Accounts contains the following
statement regarding responsibility for the financial
statements.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the Directors
have elected to prepare the Company's Financial Statements in
accordance with United Kingdom Generally Accepted Accounting
Practice ("UK GAAP') (United Kingdom Accounting Standards and
applicable law). Under company law the Directors must not approve
the Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss for the Company for that period.
In preparing these financial statements the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with UK
GAAP subject to any material departures disclosed and explained in
the Financial Statements; and
- prepare a Director's Report, a Strategic Report and Director's
Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and
hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities. The Directors are responsible
for ensuring that the Annual Report and accounts, taken as a whole,
are fair, balanced, and understandable and provides the information
necessary for Shareholders to assess the Company's position and
performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and
the Financial Statements are made available on a website. Financial
Statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the Financial Statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
-- The Financial Statements have been prepared in accordance
with UK GAAP and give a true and fair view of the assets,
liabilities, financial position and 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.
For and on behalf of the Board
Peter Dicks
Chairman
23 November 2016
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 30 September 2016
or 30 September 2015 but is derived from those accounts. Statutory
accounts for the year ended 30 September 2015 have been delivered
to the Registrar of Companies and statutory accounts for the year
ended 30 September 2016 will be delivered to the Registrar of
Companies in due course. The Auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include
a reference to any matters to which the Auditor drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under Section 498 (2) or (3) of the Companies
Act 2006. The text of the Auditor's reports can be found in the
Company's full Annual Report and Accounts at
www.unicornaimvct.co.uk.
PRIMARY FINANCIAL STATEMENTS
Income Statement
for the year ended 30 September 2016
Year ended Year ended
30 September 2016 30 September 2015
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net unrealised
gains on
investments - 9,365 9,365 - 14,384 14,384
Net gains
on realisation
of investments - 819 819 - 470 470
Income 2 2,360 - 2,360 1,885 - 1,885
Investment
management
fees 3 (651) (1,953) (2,604) (477) (1,430) (1,907)
Other expenses (631) - (631) (585) - (585)
-------- -------- -------- -------- -------- --------
Profit on
ordinary
activities
before taxation 1,078 8,231 9,309 823 13,424 14,247
-------- -------- -------- -------- -------- --------
Tax on profit
on ordinary
activities - - - - - -
Profit on
ordinary
activities
after taxation
for the
financial
year 1,078 8,231 9,309 823 13,424 14,247
-------- -------- -------- -------- -------- --------
Basic and
diluted
earnings
per share:
Ordinary
Shares 5 1.22p 9.34p 10.56p 1.11p 18.12p 19.23p
-------- -------- -------- -------- -------- --------
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 issued in
November 2014 by the Association of Investment Companies ("AIC
SORP").
Other than revaluation movements arising on investments held at
fair value through the Profit and Loss Account, there were no
differences between the profit as stated above and at historical
cost.
The notes below form part of these financial statements.
Statement of Financial Position
as at 30 September 2016
30 September
2016 30 September 2015
Notes GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments at fair
value 144,282 122,582
Current assets
Debtors 422 367
Current investments - 1
Cash at bank 3,298 1,952
-------- -------- --------- ---------
3,720 2,320
Creditors: amounts
falling due within
one year (259) (286)
-------- -------- --------- ---------
Net current assets 3,461 2,034
Net assets 147,743 124,616
-------- -------- --------- ---------
Capital
Called up share capital 921 801
Capital redemption
reserve 53 37
Share premium account 58,394 37,206
Capital reserve 58,323 49,322
Special reserve 21,756 27,927
Profit and loss account 8,296 9,323
Equity Shareholders'
funds 147,743 124,616
-------- -------- --------- ---------
Net asset value per
share of 1 pence
each:
Ordinary shares 6 160.46p 155.61p
-------- -------- --------- ---------
The financial statements were approved and authorised for issue
by the Board of Directors on 23 November 2016 and were signed on
their behalf by:
Peter Dicks
Chairman
The notes below form part of these financial statements.
Statement of Changes in Equity
for the year ended 30 September 2016
Called Capital Share Unrealised Special Profit Total
up share redemption premium capital reserve* and loss
capital reserve account reserve account*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2015 801 37 37,206 49,322 27,927 9,323 124,616
Shares repurchased
for cancellation
and cancelled (16) 16 - - (2,206) - (2,206)
Shares issued
under Offer
for Subscription 65 - 9,934 - - - 9,999
Expenses of
shares issued
under Offer
for Subscription - - (181) - - - (181)
Shares issued
as part of
the Rensburg
Merger 71 - 11,435 - - - 11,506
Unclaimed
dividends
released by
Rensburg - - - - - 131 131
Transfer to
special reserve - - - - (3,965) 3,965 -
Gains on disposal
of investments
(net of transaction
costs) - - - - - 819 819
Realisation
of previously
unrealised
valuation
movements - - - (364) - 364 -
Net increases
in unrealised
valuations
in the year - - - 9,365 - - 9,365
Dividends
paid - - - - - (5,431) (5,431)
Investment
Management
fee charged
to capital - - - - - (1,953) (1,953)
Profit for
the year - - - - - 1,078 1,078
---------- ------------ --------- ----------- ---------- ---------- ----------
At 30 September
2016 921 53 58,394 58,323 21,756 8,296 147,743
---------- ------------ --------- ----------- ---------- ---------- ----------
Called Capital Share Unrealised Special Profit Total
up share redemption premium capital reserve* and loss
capital reserve account reserve account*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2014 642 24 13,372 32,320 34,402 11,452 92,212
Shares repurchased
for cancellation
and cancelled (13) 13 - - (1,643) - (1,643)
Shares issued
under Offer
for Subscription 172 - 24,400 - - - 24,572
Expenses of
shares issued
under Offer
for Subscription - - (566) - - - (566)
Transfer to
special reserve - - - - (4,832) 4,832 -
Gains on disposal
of investments
(net of transaction
costs) - - - - - 470 470
Realisation
of previously
unrealised
valuation
movements - - - 2,618 - (2,618) -
Net increases
in unrealised
valuations
in the year - - - 14,384 - - 14,384
Dividends
paid - - - - - (4,206) (4,206)
Investment
Management
fee charged
to capital - - - - - (1,430) (1,430)
Profit for
the year - - - - - 823 823
---------- ------------ --------- ----------- ---------- ---------- ----------
At 30 September
2015 801 37 37,206 49,322 27,927 9,323 124,616
---------- ------------ --------- ----------- ---------- ---------- ----------
* The special reserve and profit and loss account are
distributable to Shareholders.
The notes form part of these financial statements.
Statement of Cash Flows
for the year ended 30 September 2016
30 September
2016 30 September 2015
Notes GBP'000 GBP'000 GBP'000 GBP'000
Operating activities
Investment income
received 2,226 1,699
Investment management
fees paid (2,604) (1,907)
Other cash payments (686) (474)
--------- -------- --------- ---------
Net cash outflow
from operating
activities (1,064) (682)
Investing activities
Rensburg unclaimed
dividends and
other income 147 -
Purchase of investments (13,370) (19,542)
Sale of investments 13,450 2,855
Decrease in current
investments 1 -
--------- -------- --------- ---------
228 (16,687)
Net cash outflow before
financing (836) (17,369)
Financing
Dividends paid 4 (5,431) (4,206)
Shares issued
under Offer for
Subscription
(net of transaction
costs) 9,818 24,000
Shares repurchased
for cancellation (2,206) (1,643)
2,181 18,151
--------- -------- --------- ---------
Net increase
in cash and cash
equivalents 1,345 782
--------- -------- --------- ---------
Cash and cash
equivalents at
30 September
2015 1,953 1,171
--------- -------- --------- ---------
Cash and cash
equivalents at
30 September
2016 3,298 1,953
--------- -------- --------- ---------
The notes below form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
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 48 and 49 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
November 2014.
The Company has adopted FRS 102 for the first time which applies
to accounting periods commencing after 1 January 2015. The
transition to FRS 102 has had no impact on the previously reported
financial position and financial performance.
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 and 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.
2 Income
2016 2015
GBP'000 GBP'000
Income from investments:
- from equities 2,007 1,610
- from loan stocks 226 196
- from money-market funds and Unicorn managed OEICs 127 79
-------- --------
Total income 2,360 1,885
-------- --------
Total income comprises:
Dividends 2,134 1,689
Interest 226 196
-------- --------
2,360 1,885
-------- --------
Income from investments comprises:
Listed UK securities 315 339
Unlisted UK securities (AIM and unquoted companies) 2,045 1,546
-------- --------
2,360 1,885
-------- --------
3 Investment Management fees
2016 2015
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unicorn Asset
Management
Limited 651 1,953 2,604 477 1,430 1,907
-------- -------- -------- -------- -------- --------
Unicorn Asset Management Limited ("UAML") receives an annual
management fee of 2% of the net asset value of the Company,
excluding the value of the investments in the OEICs, which are also
managed by UAML. The annual management fee charged to the Company
is calculated and payable quarterly in advance. In the year ended
30 September 2016, UAML also earned fees of GBP56,000 (2015:
GBP52,000), being OEIC management fees calculated on the value of
the Company's holdings in each OEIC on a daily basis. This
management fee is 0.75% per annum of the OEIC value for each of
Unicorn UK Smaller Companies OEIC, Unicorn UK Growth OEIC (formerly
Unicorn Free Spirit OEIC), Unicorn Mastertrust OEIC and Unicorn UK
Ethical Income OEIC.
The management fee will be subject to repayment to the extent
that there is an excess of the annual costs of the Company incurred
in the ordinary course of business over 3.6% of the closing net
assets of the Company at the year end. There was no excess of
expenses for 2015/16 or the prior year.
Under an Amended Incentive Agreement with UAML dated 12 April
2010, the Investment Manager is entitled to a performance incentive
fee of 20% of any cash distributions (by dividend or otherwise)
paid to Shareholders in excess of 6 pence per Ordinary share paid
in any accounting period - "the target return" and subject to the
maintenance of a net asset value (NAV) per share of 125 pence or
more, as calculated in the Annual Report and accounts for the year
relating to such payments. The target return applies for accounting
periods starting after 1 October 2010. In the event that the target
return of 6 pence per share is not paid in a particular accounting
period, the shortfall of such distributions will be carried forward
to subsequent accounting periods and any incentive fee will not be
payable until this shortfall is met. No incentive fee is payable
for the year ended 30 September 2016 and none was due for the year
ended 30 September 2015.
4 Dividends
2016 2015
GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the year:
Final capital dividend of 5.25 pence (2015: 5.50 pence) per share for the year ended 30 September
2015 paid on 19 February 2016 4,562 3,856
Final income dividend of 1.00 pence (2015: 0.50 pence) per share for the year ended 30 September
2015 paid on 19 February 2016 869* 350
-------- --------
5,431 4,206
-------- --------
Any 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 amount actually paid in dividends for 2015 differs from
that shown in last year's Annual Report as 7,075,352 shares were
issued and 257,426 bought back between 1 October 2015 and the
record date of 29 January 2016.
Set out below are the total income dividends payable in respect
of the 2015/16 financial year, which is the basis on which the
requirements of Section 274 of the Income Tax Act 2007 are
considered.
2016 2015
GBP'000 GBP'000
Revenue available for distribution by way of dividends for the year 1,078 823
Proposed final income dividend of 1.00 pence (2015: 1.00 pence) for the year ended 30 September
2016 919+ 800
-------- --------
+based on 91,844,330 shares in issue at the date of this
announcement.
5 Basic and diluted earnings and return per share
2016 2015
GBP'000 GBP'000
Total earnings after taxation: 9,309 14,247
Basic and diluted earnings per share (Note a) 10.56p 19.23p
----------- -----------
Net revenue from ordinary activities after taxation 1,078 823
Revenue earnings per share (Note b) 1.22p 1.11p
----------- -----------
Total capital return 8,231 13,424
Capital earnings per share (Note c) 9.34p 18.12p
----------- -----------
Weighted average number of shares in issue in the year 88,133,530 74,087,534
----------- -----------
Notes
a) Basic and diluted earnings per share is total earnings after
taxation divided by the weighted average number of shares in
issue.
b) Revenue earnings per share is net revenue after taxation
divided by the weighted average number of shares in issue.
c) Capital earnings per share is total capital return divided by
the weighted average number of shares in issue.
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 Net asset value
2016 2015
GBP'000 GBP'000
Net Assets 147,743 124,616
Number of shares in issue 92,075,311 80,080,231
----------- -----------
Net asset value per share 160.46p 155.61p
----------- -----------
7 Post balance sheet events
On 13 October 2016, the Company repurchased 74,245 Ordinary
Shares, representing 0.08% of the share capital in issue, for
cancellation at a total cost of GBP104,000 equivalent to 140.2
pence per share.
On 9 November 2016, the Company repurchased 116,736 Ordinary
Shares, representing 0.13% of the share capital in issue, for
cancellation at a total cost of GBP160,000 equivalent to 137.1
pence per share.
8 Shareholder information
Dividend
The Directors have proposed a final dividend of 6.25 pence per
share. The dividend will be paid on 3 February 2017 to Shareholders
on the Register on 13 January 2017.
Shareholders who wish to have dividends paid directly into their
bank account rather than sent by cheque to their registered address
can complete a mandate for this purpose. Mandates can be obtained
by telephoning the Company's Registrars, Capita Asset Services on
+44 (0)371 664 0324, or by writing to them at Capita Asset
Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU
or register on the Portal at https://www.capitashareportal.com or
e-mailing them at VCTS@capita.co.uk.
9 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
2016 will be sent to Shareholders shortly and will then be
available for inspection at Suite 8, Bridge House, Courtenay
Street, Newton Abbot TQ12 2QS, the registered office of the
Company. Copies of the Annual Report will shortly be available on
the Company's website, www.unicornaimvct.co.uk. Statutory accounts
will be delivered to the Registrar of Companies after the Annual
General Meeting. The audited accounts for the year ended 30
September 2016 contain an unqualified audit report.
10 Annual General Meeting
The Annual General Meeting of the Company will be held at 11.30
am on Thursday, 12 January 2017 at The Great Chamber, The
Charterhouse, Suttons Hospital, Charterhouse Square, London EC1M
6AN.
11 National Storage Mechanism
A copy of the 2016 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:
www.morningstar.co.uk/uk/NSM.
Contact details for further enquiries:
Chris Hutchinson of Unicorn Asset Management Limited (the
Investment Manager), on 020 7253 0889.
Jon Carslake at ISCA Administration Services Limited (the
Company Secretary) on 01392 487056 or by e-mail on unicornaim
vct@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 company news service from the London Stock Exchange
END
FR AKNDPOBDDKDB
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