Unicorn AIM VCT II plc ("the Company")
Half-Yearly Report
for the six months ended 30 June 2008
Investment Objective
The objective of the Company is to provide Shareholders with an attractive
return from a diversified portfolio of investments predominantly in the shares
of AIM-quoted companies. This will be achieved by maximising the stream of
dividend distributions to Shareholders from the income and capital gains
generated by the portfolio.
To achieve Venture Capital Trust qualifying status, 70% of the Company's total
investments must be invested in qualifying investments within three years of
each share issue.
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 displays 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 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. Specific
conditions for HMRC approval of VCTs include the requirement that at no time
must any single holding represent more than 15% (by value) of the Company's
investments.
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 and the Administrator
on a regular basis. When the Investment Manager proposes to make an investment
in an unquoted company the prior approval of the Board is required.
Where capital is available for investment while awaiting suitable VCT
qualifying opportunities, or in excess of the 70% VCT qualification threshold,
it may be invested in collective investment funds or in non-qualifying shares
and securities of smaller listed UK companies.
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 20% of net assets, should circumstances suggest that such action
is in the interests of Shareholders.
Chairman's Statement
I am pleased to present to Shareholders the Half-Yearly Report of the Company
for the six months ended 30 June 2008.
Review of performance
In the period under review, equity markets worldwide have been particularly
weak as the impact of the banking crisis continues to undermine both investor
and consumer confidence. The increasingly uncertain economic outlook in the
United Kingdom has made life exceptionally difficult for smaller quoted
companies as banks have tightened the terms on which they are prepared to lend
and investors have concentrated their efforts on raising cash or in looking for
the perceived safety of larger, more liquid quoted companies. These
uncertainties have in turn adversely affected the performance of both the
Ordinary Share Fund and the C Share Fund.
Set out below is a summary of performance for each Fund over the six months
ended 30 June 2008:-
Ordinary Fund C Fund
Launch date Jan 2005 Jan 2006
Net asset value ("NAV") at 30 94.0 81.1
June 2008 (pence per share)
Change in NAV per Share since 31 (11.7)% (11.7)%
December 2007
Cumulative dividends paid to date 6.0 2.0
(pence per share)
Change in total NAV return since 5.5 (11.4)
launch (pence per share)*
Return against NAV at launch of 5.8% (12.1)%
94.5 pence per share
* NAV per share at 30 June 2008 plus cumulative dividends paid, minus NAV at
launch of 94.5p.
It should be noted that the above returns are stated before income tax relief
of up to 40% that Shareholders will have received in the tax year of their
initial investments, and that any dividends paid are also tax free.
Ordinary Share Fund
Over the six months there was a net loss on investments of �1,476,627 (�
1,635,625 net gain for the six months ended 30 June 2007). The deficit on the
revenue account for the Ordinary Share Fund was �49,491 (�32,615 surplus for
the six months ended 30 June 2007). Thus, the total loss on ordinary activities
after taxation was �1,692,750, the equivalent of 7.30 pence per share.
C Share Fund
Over the six months there was a net loss on investments of �1,191,663 (�519,013
net gain for the six months ended 30 June 2007). The surplus on the revenue
account for the C Share Fund was �25,623 (�83,193 surplus for the six months
ended 30 June 2007). Thus, the total loss on ordinary activities after taxation
was �1,216,552, the equivalent of 9.70 pence per share.
Top-up offers
During the period the Company issued 276,628 Ordinary Shares at a price of 98
pence per share and 79,246 C Shares at a price of 89 pence per share under the
Top-up Offers launched on 25 February 2008. May I take this opportunity to
welcome new shareholders as members of the Company.
Share buybacks
The Company has operated a share buyback facility for its shareholders. This
facility has enabled selling shareholders to realise their investment despite
very limited liquidity in the secondary market. The Board has now completed a
thorough evaluation of the buyback policy taking into account a number of
factors, namely; current equity market conditions, the average discount to Net
Assets of the AIM quoted VCT sector, the availability of capital to fund share
purchases, the long term investment objectives of the Fund and the interests of
all shareholders.
The Board believes that it is important to maintain a share buyback facility,
but after consideration of the above factors is increasing the discount to the
last published NAV at which the Company buys back shares for cancellation from
10% to a range of between 15%-20%. The Board will continue to review the
appropriateness of the buyback policy paying particular regard to possible
changes in market conditions, sector discounts and availability of capital.
No Ordinary or C Shares were bought back during the period under review.
Dividends
The Board's policy remains to maximise the stream of dividend distributions to
Shareholders from the income and capital gains generated by the portfolio.
However, in view of continuing weakness in equity markets and the consequent
decline in the respective NAV, the Board will not be proposing dividends for
either Fund for the period under review.
Qualifying Investments
From September 2007 onwards, investors in UK equity markets, unsettled by the
emergence of a serious banking crisis, have progressively abandoned small, AIM
quoted companies. As a result, liquidity in smaller companies has evaporated.
This phenomenon, combined with instances of forced selling and a rising number
of profit warnings has driven already illiquid markets further down. In the six
months to 30 June 2008, the FTSE AIM All Share Index has fallen by 8.4% despite
its significant exposure to the more buoyant mining and resource sectors whilst
the FTSE SmallCap and Fledgling Indices have fared even worse, declining by
16.1% and 14.0% respectively.
The performance of the Ordinary Share Fund and the C Share Fund has also been
affected by a number of company specific setbacks. Profit warnings issued by
Claimar Care, Discover Leisure, Maxima Holdings, Optimisa and Shieldtech each
resulted in share price declines of between 40% and 87%. In the Ordinary Share
Fund the falls produced by these five companies accounted for over 70% of the
net decline generated by the qualifying portfolio overall. The Investment
Manager is confident that most, if not all, of the companies which suffered
recent setbacks have the potential to recover substantially in due course. On
the plus side, there is a healthy level of diversification in both Funds and a
majority of investee companies appear to be weathering the storm well. The
performances of Abcam (+40%), Crawshaw Group (+37%), IDOX (+22%), and Pressure
Technologies (+33%) are all worthy of special mention.
Mindful of deteriorating equity market conditions, no new investments were made
for the Ordinary Share Fund in the period under review and only four new VCT
qualifying investments were undertaken for the C Share Fund. Each of these new
investments has performed well relative to the market which bodes well for
their prospects when investor sentiment improves.
A partial disposal of units held in the Unicorn Mastertrust Fund was made by
the Ordinary Share Fund generating cash proceeds in excess of �500,000.
The Ordinary Share Fund portfolio now comprises 41 VCT qualifying investments,
whilst the C Share Fund holds 26 qualifying stocks.
At the end of June 2008, the value of the portfolios (for the Ordinary and C
Share Funds) which was invested in VCT qualifying investments represented
approximately 73% of the total assets of the Company.
All other HM Revenue & Customs tests have also been complied with and your
Board has been advised that the Company has maintained its venture capital
trust status.
A full list of all of the qualifying investments held in each Fund at the
period end is included below.
Summary
In the past six months smaller quoted companies have suffered significant share
price declines. Investor confidence remains at a low ebb and the fall-out from
the collapse of the sub-prime mortgage market continues. There are growing
concerns about the prospects of economic recession in both the United States
and in the UK.
As the current crisis deepened following the collapse of Northern Rock, prudent
managers of conventional funds might well have been expected to reposition
their portfolios toward investment in larger and more liquid stocks, whilst
also carrying higher than usual levels of cash. The technical requirements of
AIM based VCTs are such that the flexibility to implement such changes is
severely constrained. In these circumstances, AIM-based VCTs have suffered
disproportionately large falls as investors continue to sell shares of smaller,
less liquid companies.
On a positive note, significant value is starting to emerge in many of the
smaller quoted companies held in the portfolios. However, until the wider
equity market stabilises and the economic picture improves, it is unlikely that
this value will be reflected in strong share price performance.
Peter Andrews
Chairman
5 August 2008
Principal risks and uncertainties
In accordance with DTR 4.2.7, the Board confirms that 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 31 December
2007. The Board acknowledges that there is regulatory risk and continues to
manage the Company's affairs in such a manner as to comply with section 274
Income Tax Act 2007. Other risks relate to credit risk, market price risk,
interest rate risk and currency risk. A more detailed explanation of these can
be found in Note 19 on pages 44 - 46 of the 2007 Annual Report and Accounts -
copies are available on the Investment Manager's website, www.unicornam.com.
Related Party Transactions
Details of related party transactions in accordance with Disclosure and
Transparency Rule 4.2.8 can be found in Note 8 to the Accounts below.
Responsibility Statement
The Directors confirm that to the best of their knowledge:
a. the condensed set of financial statements have been prepared in accordance
with UK Generally Accepted Accounting Practice (UK GAAP) and the 2003
Statement of Recommended Practice "Financial Statements of Investment Trust
Companies", revised December 2005, and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company,
as required by Disclosure & Transparency Rule 4.2.4; and
b. the interim management report includes a fair review of the information
required by Disclosure & Transparency Rules 4.2.7 - 8 in accordance with
Disclosure & Transparency Rule 4.2.10.
Investment Portfolio Summary
Ordinary Share Fund
Date of Book cost Valuation % of net
first assets by
investment value
Qualifying investments �'000 �'000
AIM quoted investments
Abcam plc Oct 2005 467 1,257 5.7%
Online distributor of
antibodies for research
purposes
Cohort plc Feb 2006 831 1,207 5.5%
Provision of a wide range of
technical services to
clients in the defence and
security sectors
Concateno plc Oct 2006 745 1,183 5.4%
Drug and alcohol abuse
testing services
Crawshaw Group plc Apr 2007 811 1,112 5.1%
A chain of meat focused
retail food stores
Pressure Technologies plc May 2007 550 953 4.3%
Manufacturer of high
pressure steel gas cylinders
Mattioli Woods plc Nov 2005 483 923 4.2%
Consultants in the provision
of pension and wealth
management services
IDOX plc May 2007 397 729 3.3%
Information management
software
Brulines (Holdings) plc Oct 2006 584 679 3.1%
Dispense monitoring
equipment for use in pubs
and clubs
Vindon Healthcare plc May 2007 750 675 3.1%
Medical storage facilities
Hasgrove plc Nov 2006 600 585 2.7%
Pan-European marketing and
communications services
SnackTime plc Dec 2007 583 575 2.6%
Operator of vending machines
Hexagon Human Capital plc Feb 2007 710 499 2.3%
Interim Recruitment
specialist
Driver Group plc Apr 2006 425 495 2.3%
Provision of commercial
project planning and dispute
resolution services to the
construction industry
Clerkenwell Ventures plc Sep 2007 703 468 2.1%
Restaurant acquisition
vehicle
Animalcare Group plc Jan 2008 425 425 1.9%
Manufacturer and supplier
worldwide of livestock,
healthcare and management
products
Kiotech International plc Nov 2006 300 400 1.8%
Manufacturer of animal feed
supplements
Shieldtech plc Jun 2007 750 390 1.8%
Manufacturer & supplier of
body armour to police &
defence forces
Maxima Holdings plc Sep 2005 500 382 1.7%
Implementation and support
of enterprise software
solutions
Individual Restaurant Dec 2006 538 364 1.6%
Company plc
High Street restaurant chain
PHSC plc Mar 2007 450 323 1.5%
Health, safety &
environmental consultants
Melorio plc Oct 2007 400 320 1.5%
Vocational training
Mount Engineering plc Jun 2007 300 317 1.4%
Manufacturer & distributor
of precision engineered
products
Surgical Innovations Group May 2007 500 300 1.4%
plc
Medical equipment
manufacturer
Tangent Communications plc Dec 2007 500 279 1.3%
Digital marketing &
communication services
HML Holdings plc Jul 2007 480 267 1.2%
Provision of property
management and related
services in the South East
of England
Datong Electronics plc Sep 2005 333 255 1.2%
Development of a range of
advanced covert tracking and
location systems
Vitesse Media plc Nov 2007 250 220 1.0%
Online, print publishing &
events company specialising
in growing businesses
Universe Group plc Mar 2007 294 199 0.9%
Retail & information systems
software and hardware
INVU plc May 2007 200 197 0.9%
Document management services
Tracsis plc Nov 2007 120 165 0.8%
Provides resource
optimisation software to
transport companies
Cantono plc Jul 2007 350 158 0.7%
Managed IT services
ACM Shipping Group plc Dec 2006 68 102 0.5%
Shipbroker
Discover Leisure plc Sep 2006 235 96 0.4%
UK retailer of Caravans and
Motor homes
Optimisa plc Oct 2007 273 95 0.4%
Marketing services group
providing marketing
consultancy and research
eg solutions plc May 2005 250 88 0.4%
Provision of proprietary
workflow management tools
designed to improve
operational efficiencies
Access Intelligence plc Sep 2006 176 73 0.3%
Software and computer
services
Belgravium Technologies plc Sep 2005 117 40 0.2%
Development and supply of
rugged, hand-held, battery
powered, real time data
capture devices
Greatfleet plc Feb 2007 249 39 0.2%
Recruitment consultant
specialising in legal and
financial search and
selection
Claimar Care Group plc Sep 2007 411 39 0.2%
Provision of care services
to the public sector and
private individuals
The Debt Advisor Group plc Feb 2006 1,000 - 0.0%
(in administration)
Consumer financial solutions
through mortgages, secured
and unsecured loans and IVAs
Unquoted investments
Amber Taverns Limited Apr 2005 500 500 2.3%
Development of a chain of
unbranded, managed,
freehold, public houses in
the North of England
----------- ----------- -----------
Total qualifying investments 18,608 17,373 79.2%
Non-qualifying investments
(also the five largest)
Unicorn Mastertrust Fund Apr 2005 1,510 1,854 8.5%
(OEIC)
Unicorn UK Smaller Companies May 2005 1,269 1,429 6.5%
Fund (OEIC)
Unicorn UK Income (OEIC) May 2005 764 736 3.4%
Money Market Funds* Jan 2005 375 375 1.7%
Non qualifying stocks quoted 7 7 0.0%
on AIM
----------- ----------- -----------
Total non-qualifying 3,925 4,401 20.1%
investments
----------- ----------- -----------
Total investments 22,533 21,774 99.3%
====== ====== ======
Other assets 270 1.1%
Current liabilities (111) (0.4)%
----------- -----------
Net assets 21,933 100.0%
====== ======
* Disclosed within 'Current investments' in the Balance Sheet
C Share Fund
Date of Book cost Valuation % of net
first assets by
investment value
Qualifying investments �'000 �'000
AIM quoted investments
Cohort plc Jul 2006 350 453 4.4%
Provision of a wide range of
technical services to
clients in the defence and
security sectors
Concateno plc Oct 2006 255 405 4.0%
Drug and alcohol abuse
testing services
Hasgrove plc Nov 2006 300 293 2.9%
Pan-European marketing and
communications services
Animalcare Group plc Jan 2008 275 275 2.7%
Manufacturer and supplier
worldwide of livestock,
healthcare and management
products
Pressure Technologies plc May 2007 150 260 2.5%
Manufacturer of high
pressure steel gas cylinders
SnackTime plc Dec 2007 288 260 2.5%
Operator of vending machines
Crawshaw Group plc Apr 2007 189 257 2.5%
A chain of meat focused
retail food stores
Fishworks plc Nov 2007 285 238 2.3%
High Street restaurant chain
Kiotech International plc Nov 2006 154 205 2.0%
Manufacturer of animal feed
supplements
Hexagon Human Capital plc Feb 2007 289 203 2.0%
Interim Recruitment
specialist
Clerkenwell Ventures plc Sep 2007 300 200 2.0%
Restaurant acquisition
vehicle
Vindon Healthcare plc May 2007 200 180 1.8%
Medical storage facilities
Tracsis plc Nov 2007 120 165 1.6%
Provides resource
optimisation software to
transport companies
Melorio plc Oct 2007 200 160 1.6%
Vocational training
Maelor plc Mar 2008 154 152 1.5%
Specialist hospital
medicines group
HML Holdings plc Jul 2007 270 150 1.5%
Provision of property
management and related
services in the South East
of England
Vitesse Media plc Nov 2007 150 132 1.3%
Online, print publishing &
events company specialising
in growing businesses
Shieldtech plc Jun 2007 250 130 1.3%
Manufacturer & supplier of
body armour to police &
defence forces
Essentially plc Apr 2008 136 127 1.2%
Leading independent sports
marketing, media, management
and services agency
Surgical Innovations Group Mar 2007 143 86 0.8%
plc
Medical equipment
manufacturer
Cantono plc Jul 2007 150 68 0.7%
Managed IT services
Discover Leisure plc Sep 2006 115 47 0.5%
UK retailer of Caravans and
Motor homes
Greatfleet plc Mar 2008 50 44 0.4%
Recruitment consultant
specialising in legal and
financial search and
selection
Optimisa plc Oct 2007 130 45 0.4%
Marketing services group
providing marketing
consultancy and research
Access Intelligence plc Sep 2006 88 37 0.4%
Software and computer
services
Claimar Care Group plc Sep 2007 343 33 0.3%
Provision of care services
to the public sector and
private individuals
----------- ----------- -----------
Total qualifying investments 5,334 4,605 45.1%
Non-qualifying investments
(also the five largest)
Unicorn Free Spirit Fund 1,432 1,325 13.0%
(OEIC)
Unicorn Mastertrust Fund 1,305 1,238 12.1%
(OEIC)
Unicorn UK Smaller Companies 1,472 1,233 12.1%
Fund (OEIC)
Unicorn UK Income (OEIC) 1,444 1,108 10.9%
Money Market Funds* 620 620 6.0%
----------- ----------- -----------
Total non-qualifying 6,273 5,524 54.1%
investments
----------- ----------- -----------
Total investments 11,607 10,129 99.2%
====== ====== ======
Other assets 134 1.3%
Current liabilities (63) (0.5)%
----------- -----------
Net assets 10,200 100.0%
====== ======
* Disclosed within 'Current investments' in the Balance Sheet
Non-statutory analysis between the Ordinary Share and C Share Funds
Profit and Loss Accounts for the six months ended 30 June 2008
Ordinary Share Fund C Share Fund
Notes Revenue Capital Total Revenue Capital Total
� � � � � �
Unrealised - (1,451,368) (1,451,368) - (1,185,663) (1,185,663)
losses on
investments
Losses on - (25,259) (25,259) - (6,000) (6,000)
realisations of
investments
Income 138,945 - 138,945 104,941 - 104,941
Investment 2 (55,544) (166,632) (222,176) (16,837) (50,512) (67,349)
management fees
Other expenses (132,892) - (132,892) (62,481) - (62,481)
------------- ------------- ------------- ------------- ------------- -------------
(Loss)/profit on (49,491) (1,643,259) (1,692,750) 25,623 (1,242,175) (1,216,552)
ordinary
activities
before taxation
Tax on (loss)/ - - - - - -
profit on
ordinary
activities
------------- ------------- ------------- ------------- ------------- -------------
(Loss)/profit (49,491) (1,643,259) (1,692,750) 25,623 (1,242,175) (1,216,552)
attributable to
equity
shareholders
======== ======== ======== ======== ======== ========
Basic and 4 (0.21)p (7.09)p (7.30)p 0.20 p (9.90)p (9.70)p
diluted earnings
per 1p share
Total of both Funds
(per Statutory Profit and Loss Account)
Revenue Capital Total
� � �
Unrealised - (2,637,031) (2,637,031)
losses on
investments
Losses on - (31,259) (31,259)
realisations of
investments
Income 243,886 - 243,886
Investment (72,381) (217,144) (289,525)
management fees
Other expenses (195,373) - (195,373)
------------- ------------- -------------
(Loss)/profit (23,868) (2,885,434) (2,909,302)
on ordinary
activities
before taxation
Tax on (loss)/ - - -
profit on
ordinary
activities
------------- ------------- -------------
(Loss)/profit (23,868) (2,885,434) (2,909,302)
attributable to
equity
shareholders
======== ======== ========
Balance Sheets as at 30 June 2008
Ordinary Share Fund C Share Fund
Notes � � � �
Non current assets
Investments 21,399,462 9,508,561
Current assets
Debtors and 137,955 92,495
prepayments
Current investments 374,627 620,269
Cash at bank 132,027 41,345
------------- ------------- ------------- -------------
644,609 754,109
Creditors: amounts (111,073) (62,759)
falling due within
one year
------------- ------------- ------------- -------------
Net current assets/ 533,536 691,350
(liabilities)
------------- -------------
Net assets 21,932,998 10,199,911
======== ========
Capital
Called up share 233,272 125,791
capital
Capital redemption 400 -
reserve
Share premium 253,561 65,947
Revaluation reserve 450,381 (1,472,506)
Special 19,639,487 11,436,365
distributable
reserve
Profit and Loss 1,355,897 44,314
account
------------- -------------
Equity shareholders' 21,932,998 10,199,911
funds
======== ========
Number of Shares in 23,327,209 12,579,053
Issue:
Net Asset Value per 6 94.0p 81.1p
1p share:
Adjustments Total of both Funds
(see note (per Statutory Balance
below) Sheet)
� � �
Non current assets
Investments 30,908,023
Current assets
Debtors and (37,299) 193,151
prepayments
Current investments 994,896
Cash at bank 173,372
------------- ------------- -------------
(37,299) 1,361,419
Creditors: amounts 37,299 (136,533)
falling due within one
year
------------- ------------- -------------
Net current assets/ 1,224,886
(liabilities)
-------------
Net assets - 32,132,909
========
Capital
Called up share 359,063
capital
Capital redemption 400
reserve
Share premium 319,508
Revaluation reserve (1,022,125)
Special distributable 31,075,852
reserve
Profit and Loss 1,400,211
account
-------------
Equity shareholders' 32,132,909
funds
========
Note: The adjustment above nets off the inter-fund debtor and creditor
balances, so that the "Total of both Funds" balance sheet agrees to the
Statutory Balance Sheet below.
Unaudited Profit and Loss Account
For the six months ended 30 June 2008
Six months ended 30 June 2008 Six months ended 30 June 2007
(restated)
Notes Revenue Capital Total Revenue Capital Total
� � � � � �
Unrealised - (2,637,031) (2,637,031) - 1,954,029 1,954,029
(losses)/gains
on investments
Realised - (31,259) (31,259) - 200,609 200,609
(losses)/gains
on investments
Income 243,886 - 243,886 393,442 - 393,442
Investment 2 (72,381) (217,144) (289,525) (61,871) (185,611) (247,482)
management fees
Other expenses (195,373) - (195,373) (208,415) - (208,415)
------------ ------------ ------------ ------------ ------------ ------------
(Loss)/profit (23,868) (2,885,434) (2,909,302) 123,156 1,969,027 2,092,183
on ordinary
activities
before taxation
Tax on (loss)/ - - - (7,348) 7,348 -
profit on
ordinary
activities
------------ ------------ ------------ ------------ ------------ ------------
(Loss)/profit (23,868) (2,885,434) (2,909,302) 115,808 1,976,375 2,092,183
on ordinary
activities
after taxation
======= ======= ======= ======= ======= =======
Basic and
diluted
earnings per 1p
share
Ordinary shares 4 (0.21)p (7.09)p (7.30)p 0.14 p 6.54 p 6.68 p
C Shares 4 0.20 p (9.90)p (9.70)p 0.67 p 3.75 p 4.42 p
Year ended 31 December 2007
(audited)
Revenue Capital Total
� � �
Unrealised - (2,959,092) (2,959,092)
(losses)/gains
on investments
Realised - (759,338) (759,338)
(losses)/gains
on investments
Income 639,775 - 639,775
Investment (137,523) (412,569) (550,092)
management
fees
Other expenses (380,103) - (380,103)
------------ ------------ ------------
(Loss)/profit 122,149 (4,130,999) (4,008,850)
on ordinary
activities
before
taxation
Tax on (loss)/ (13,418) 13,418 -
profit on
ordinary
activities
------------ ------------ ------------
(Loss)/profit 108,731 (4,117,581) (4,008,850)
on ordinary
activities
after taxation
======= ======= =======
Basic and
diluted
earnings per
1p share
Ordinary (0.10)p (12.88)p (12.98)p
shares
C Shares 1.06 p (9.18)p (8.12)p
Unaudited Note of Historical Cost Profits and Losses
For the six months ended 30 June 2008
Six months Six months Year ended
ended ended 31 December 2007
30 June 2008 30 June 2007
(restated) (audited)
Total Total Total
� � �
(Loss)/ profit on (2,909,302) 2,092,183 (4,008,850)
ordinary activities
before taxation
Less: Unrealised 2,637,031 (1,954,029) 2,959,092
losses /(gains) on
investments.
Realisation of (142,284) 2,065,024 2,465,519
revaluation gains of
previous years
Historical cost (loss) (414,555) 2,203,178 1,415,761
/profit on ordinary
activities before
taxation
Historical cost (loss) (1,692,072) 1,962,928 1,175,511
/profit on ordinary
activities after
taxation and dividends
The notes below form part of these half-yearly financial statements.
Unaudited Balance Sheet
As at 30 June 2008
As at As at As at
30 June 2008 30 June 2007 31 December
2007
(restated) (audited)
Notes � � �
Non current assets
Investments 1b 30,908,023 35,937,478 33,035,473
Current assets
Debtors and 193,151 2,196,245 479,171
prepayments
Current investments 7 994,896 5,093,692 2,594,553
Cash at bank 173,372 175,959 68,952
------------ ------------ ------------
1,361,419 7,465,896 3,142,676
Creditors: amounts (136,533) (1,305,677) (181,485)
falling due within
one year
------------ ------------ ------------
Net current assets 1,224,886 6,160,219 2,961,191
------------ ------------ ------------
Net assets 32,132,909 42,097,697 35,996,664
======= ======= =======
Share capital and
reserves
Called up share 359,063 355,504 355,504
capital
Capital redemption 400 400 400
reserve
Share premium 319,508 - -
Revaluation reserve (1,022,125) 6,786,241 1,472,625
Special distributable 31,075,852 33,260,111 31,295,511
reserve
Profit and loss 1,400,211 1,695,441 2,872,624
account
------------ ------------ ------------
Total shareholders' 32,132,909 42,097,697 35,996,664
funds
======= ======= =======
Net asset value per
ordinary share
Ordinary Share 6 94.0p 126.1p 106.4p
C Share 6 81.1p 104.3p 91.8p
Unaudited Reconciliation of Movements in Shareholders' Funds
for the six months ended 30 June 2008
Six months Six months Year ended
ended ended 31 December
30 June 2008 30 June 2007 2007
Notes (restated) (audited)
� � �
At 1 January 2008 35,996,664 40,290,790 40,290,790
Net share capital 323,065 - -
subscribed for in the
period
Net share capital - (45,026) (45,026)
bought back in the
period
(Loss)/profit for the (2,909,302) 2,092,183 (4,008,850)
period
Dividends paid in 5 (1,277,517) (240,250) (240,250)
period
--------------- --------------- ---------------
Closing shareholders' 32,132,910 42,097,697 35,996,664
funds at 30 June 2008
======== ======== ========
Unaudited Summarised Cash Flow Statement
for the six months ended 30 June 2008
Six months Six months Year ended
ended ended 31 December 2007
30 June 2008 30 June 2007
(restated) (audited)
� � �
Operating activities
Investment income 542,625 223,370 651,014
received
Investment management (114,524) (121,575) (550,092)
fees paid
Other cash payments (439,883) (224,283) (417,975)
------------- ------------- -------------
Net cash outflow from (11,782) (122,488) (317,053)
operating activities
Investing activities
Acquisitions of (1,040,892) (6,919,348) (13,685,134)
investments
Disposals of investments 502,569 4,401,400 8,755,605
------------- ------------- -------------
Net cash outflow from (538,323) (2,517,948) (4,929,529)
investing activities
Dividends
Equity dividends paid (1,277,517) (240,250) (240,250)
------------- ------------- -------------
Cash outflow before (1,827,622) (2,880,686) (5,486,832)
financing and liquid
resource management
Management of liquid
resources
Decrease in current 1,599,657 3,022,740 5,521,879
investments
Financing
Share capital raised/ 332,385 (45,026) (45,026)
(bought back)
------------- ------------- -------------
332,385 (45,026) (45,026)
------------- ------------- -------------
Increase/(decrease) in 104,420 97,028 (9,979)
cash for the period
======= ======= =======
Reconciliation of loss on ordinary activities before taxation to net cash
outflow from operating activities
for the six months ended 30 June 2008
Six months Six months Year ended
ended ended 31 December
30 June 2008 30 June 2007 2007
� � �
(Loss)/profit on ordinary (2,909,302) 2,092,183 (4,008,850)
activities before taxation
Net unrealised losses/(gains) 2,637,031 (1,954,029) 2,959,092
on investments
Net losses/(gains) on 31,259 (200,609) 759,338
realisations of investments
Transaction costs (2,515) (30) (23,900)
Decrease/(increase) in debtors 256,909 (191,492) 15,681
(Decrease)/increase in (25,164) 131,489 (18,414)
creditors
------------- ------------- -------------
Net cash outflow from (11,782) (122,488) (317,053)
operating activities
======= ======= =======
Notes to the unaudited financial statements
1. Principal accounting policies
The following accounting policies have been applied consistently throughout the
period. Full details of principal accounting policies will be disclosed in the
Annual Report.
a. Basis of accounting
The unaudited results cover the six months to 30 June 2008 and have been
prepared under UK Generally Accepted Accounting Practice (UK GAAP), consistent
with the accounting policies set out in the statutory accounts for the year
ended 31 December 2007 and, to the extent that it does not conflict with the
Companies Act 1985, the 2003 Statement of Recommended Practice, `Financial
Statements of Investment Trust Companies', revised December 2005.
The Half-Yearly report has not been audited, nor has it been reviewed by the
auditors pursuant to the Auditing Practices Board (APB)'s guidance on Review of
Interim Financial Information.
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 31 October 2007.
Consequently, the financial statements have been drawn up to include a
statutory profit and loss account in accordance with Schedule 4 of the
Companies Act 1985 and Financial Reporting Standard 3 "Reporting Financial
Performance" and the comparatives have been re-stated on a consistent basis.
This has no effect on total returns or net assets per share.
b. Investments
All investments held by the Company are classified as "fair value through
profit and loss" as the Company's business is to invest in financial assets
with a view to profiting from their total return in the form of capital growth
and income. For investments actively traded in 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.
Unquoted investments are valued by the Directors in accordance with the
following rules, which are consistent with the International Private Equity
Venture Capital Valuation (IPEVCV) guidelines:
i. Investments which have been made in the last 12 months are at fair value
which, unless another methodology gives a better indication of fair value,
will be at cost;
ii. Investments in companies at an early stage of their development are also
valued at fair value which, unless another methodology gives a better
indication of fair value, will be at cost;
iii. Where investments have gone beyond the stage of their development in (ii)
above, the shares may be valued by applying a suitable price-earnings ratio
to that company's post-tax earnings (the ratio used being based on a
comparable listed company or sector but discounted to reflect lack of
marketability);
iv. Where a value is indicated by a material arms-length transaction by a third
party in the shares of a company, this value will be used.
Unquoted investments will not normally be re-valued upwards for a period of at
least twelve months from the date of acquisition for early stage investments.
Where a company's underperformance against plan indicates a diminution in the
value of the investment, provision against cost is made, as appropriate.
2. The Directors have charged 75% of the investment management fee to the
capital reserve.
3. Taxation
There is no tax charge for the period, as the Company has incurred taxable
losses in the period.
4. Basic and diluted earnings and return per share
Six months ended 30 June 2008 Six months ended 30 June 2007
Ordinary C Share Fund Total Ordinary C Share Fund Total
Share Fund Share Fund
(restated) (restated) (restated)
� � � � � �
Total earnings (1,692,750) (1,216,552) (2,909,302) 1,540,437 551,746 2,092,183
after taxation:
Basic and (7.30)p (9.70)p 6.68p 4.42p
diluted earnings
per share
------------- ------------- ------------- -------------
Net revenue from (49,491) 25,623 32,615 83,193
ordinary
activities after
taxation
Revenue return (0.21)p 0.20p 0.14p 0.67p
per share
Net unrealised (1,451,368) (1,185,663) 1,435,016 519,013
capital (losses)
/gains
Net realised (25,259) (6,000) 200,609 -
capital losses)/
gains
Capital expenses (166,632) (50,512) (127,803) (50,460)
------------- ------------- ------------- -------------
Total capital (1,643,259) (1,242,175) 1,507,822 468,553
return
Capital return (7.09)p (9.90)p 6.54p 3.75p
per share
Weighted average 23,176,345 12,537,207 23,064,724 12,499,807
number of shares
in issue in the
period
Year ended 31 December 2007
Ordinary Share C Share Fund Total
Fund
(audited) (audited) (audited)
� � �
Total earnings (2,993,046) (1,015,804) (4,008,850)
after taxation:
Basic and diluted (12.98)p (8.12)p
earnings per
share
------------- -------------
Net revenue from (23,489) 132,220
ordinary
activities after
taxation
Revenue return (0.10)p 1.06p
per share
Net unrealised (1,912,923) (1,046,169)
capital (losses)/
gains
Net realised (759,338) -
capital losses)/
gains
Capital expenses (297,296) (101,855)
------------- -------------
Total capital (2,969,557) (1,148,024)
return
Capital return (12.88)p (9.18)p
per share
Weighted average 23,057,594 12,499,807
number of shares
in issue in the
period
5. Dividends
Six months ended 30 June 2008 Six months ended 30 June 2007
Ordinary C Share Fund Total Ordinary C Share Fund Total
Share Fund Share Fund
(restated) (restated) (restated)
� � � � � �
Ordinary Share
Fund
Final paid re 1,152,519 - 1,152,519 115,252 - 115,252
prior year
C Share Fund
Final paid re - 124,998 124,998 - 124,998 124,998
prior year
------------- ------------- ------------- ------------- ------------- -------------
1,152,519 124,998 1,277,517 115,252 124,998 240,250
Year ended 31 December 2007
Ordinary C Share Fund Total
Share Fund
(audited) (audited) (audited)
� � �
Ordinary Share
Fund
Final paid re 115,252 - 115,252
prior year
C Share Fund
Final paid re - 124,998 124,998
prior year
------------- ------------- -------------
115,252 124,998 240,250
6. Net asset value
Six months ended Six months ended
30 June 2008 30 June 2007
Ordinary C Share Fund Ordinary C Share
Share Fund Share Fund Fund
(restated) (restated)
� � � �
Net assets 21,932,998 10,199,911 29,055,426 13,042,271
Number of shares in 23,327,209 12,579,053 23,050,581 12,499,807
issue
Net asset value per 94.0p 81.1p 126.1p 104.3p
share
Year ended
31 December 2007
Ordinary C Share Fund
Share Fund
(audited) (audited)
� �
Net assets 24,521,943 11,474,721
Number of shares in 23,050,581 12,499,807
issue
Net asset value per 106.4p 91.8p
share
7. Current investments
These comprise investments in seven Dublin based OEIC money market funds
managed by Royal Bank of Scotland, Blackrock Investment Management, Goldman
Sachs, Insight Investment Management, Barclays Global Investors, Scottish
Widows Investments Partners and Fidelity Investment Management. �993,857 (30
June 2007: �4,179,095; 31 December 2007: �2,477,371) of this sum is subject to
same day access, whilst �1,039 (30 June 2007: �914,597; 31 December 2007: �
117,182) is subject to two day access.
8. Related Party Transactions
Kenneth Vere Nicoll is a director of, and owns 2.98% of the shares in Matrix
Group Limited. One of its subsidiaries is Matrix-Securities Limited, which
provides administration services to the Company for a fee of �57,612 (30 June
2007: �55,372; 31 December 2007: �110,745). Jeremy Hamer is non-executive
chairman of, and owns 2.7% of the shares in, Access Intelligence plc, in which
the Ordinary Share Fund has invested �176,000 and the C Share Fund has invested
�88,000. Both holdings are carried at fair value. Malcolm Diamond is a
shareholder in the Company's Investment Manager, who earned �289,525 (30 June
2007: �247,482; 31 December 2007: �550,092) in investment management fees.
9. The financial information for the six months ended 30 June 2008 and the six
months ended 30 June 2007 has not been audited. The information for the
year ended 31 December 2007 does not comprise full financial statements
within the meaning of Section 240 of the Companies Act 1985. The financial
statements for the year ended 31 December 2007 have been filed with the
Registrar of Companies. The auditors have reported on these financial
statements and that report was unqualified and did not contain a statement
under Section 237(2) of the Companies Act 1985. The accounting policies
used by Unicorn AIM VCT II plc in preparing the Half-Yearly Report are
consistent with those used in preparing the statutory accounts for the year
ended 31 December 2007.
10. Copies of this statement are being sent to all shareholders. Further copies
are available free of charge from the Company's registered office, One Vine
Street, London, W1J OAH or can be downloaded via the Company Secretary's
web site at www.matrixgroup.co.uk/investment_services/vct_services/
unicorn_vcts.
Shareholder Information
The Company's Ordinary Shares and C Shares are listed on the London Stock
Exchange. Shareholders wishing to keep in touch with the progress of both Funds
can visit the TrustNet website at www.trustnet.com. This contains publicly
available information about our largest investments, the latest NAVs and the
share prices. The share prices are also quoted in the Financial Times.
Shareholder enquires:
For general Shareholder enquiries, please contact Robert Brittain of
Matrix-Securities Limited (the Company Secretary) on 020 3206 7000 or by e-mail
on unicornII@matrixgroup.co.uk.
For enquiries concerning the performance of the Company, please contact the
Investment Manager, at Unicorn Asset Management Limited, on 020 7253 0889 or by
e-mail on info@unicornam.com.
Change of Address
To notify the Company of a change of address or to request a dividend mandate
form (should you wish to have future dividends paid directly into your bank
account) please contact the Company's Registrars, Computershare Investor
Services Plc on 0870 702 0010, or write to them at PO Box 82, The Pavilions,
Bridgewater Road, Bristol BS99 7NH or should you prefer visit their website at
www-uk.computershare.com/investor.
Corporate information
Directors
Peter Andrews (Chairman)
Malcolm Diamond
Jeremy Hamer (Senior Independent Director)
Kenneth Vere Nicoll
All of whom are non-executive and of:
One Vine Street
London W1J 0AH
Secretary & Administrator
Matrix-Securities Limited
One Vine Street
London W1J 0AH
Company Registration Number : 5239433
Investment Manager Solicitors Registrar
Unicorn Asset Management CMS Cameron McKenna LLP Computershare Investor
Limited Services plc
Preacher's Court Mitre House PO Box 82
The Charterhouse The Pavilions
160 Aldersgate Street
Charterhouse Square Bridgwater Road
London
London Bristol
EC1A 4DD
EC1M 6AU BS99 7NH
Auditors Custodian VCT Tax Adviser
PKF (UK) LLP The Bank of New York PricewaterhouseCoopers LLP
Farringdon Place One Canada Square 1 Embankment Place
20 Farringdon Road London London
London E14 5AL WC2N 6RH
EC1M 3AP
Stockbroker and Sponsor Bankers
Landsbanki Securities National Westminster Bank
(UK) Limited plc
Beaufort House City of London Office
15 St Botolph Street PO Box 12264
London 1 Princes Street
EC3A 7QR London
EC2R 8PB
END
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