Interim Management Statement
November 13 2008 - 4:49AM
UK Regulatory
Unicorn AIM VCT II plc
Interim Management Statement
For the period from 1 July 2008 to 31 October 2008
Introduction
The Company has prepared this Interim Management Statement (IMS) in accordance
with the Disclosure and Transparency Rules of the UK Listing Authority. The IMS
covers the four month period ended 31 October 2008, together with relevant
information up to the date of publication.
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, by maximising the stream of dividend distributions to
Shareholders from the income and 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 value
must be in ordinary shares carrying no preferential rights to dividends or
return of capital and no rights to redemption.
Performance
The period under review has been an extremely challenging one for UK equity
markets. The crisis in the banking sector intensified, the economic outlook
continued to deteriorate and the rate of job losses, home repossessions and
corporate insolvencies accelerated. Understandably, equity investors have
become increasingly risk averse and this has had a direct impact on the
valuations of smaller, more illiquid quoted companies. Since the start of July
2008, the FTSE AIM AllShare Index has fallen by 53.7% whilst the Hoare Govett
Smaller Companies Index has declined by 30.9%
The Company has not been able to avoid the wider market turmoil. Performance in
both Funds has been affected by profit warnings and funding issues reported by
a number of investee companies, reflecting the increasingly difficult trading
environment in which they now operate. Despite these setbacks, the decline in
NAV experienced by each Fund has been substantially smaller than that produced
by the FTSE AIM AllShare Index.
In the four months to the end of October 2008, the Net Asset Value of the
Ordinary Share Fund fell by 23.7%, whilst the Net Asset Value of the C Share
Fund declined by 25.8%.
Material Transactions
During the period under review, the Ordinary Share Fund made two new VCT
qualifying investments at a total cost of �348,000. The new investments were
Optare, a bus & coach manufacturer and Praesepe, an operator of adult gaming
centres.
In aggregate, over �1.5m was raised from disposal of units in the Unicorn
Mastertrust Fund and the Unicorn UK Income Fund, whilst a further �46,000 was
realised following the partial disposal of shares held in Abcam.
The C Share Fund participated in the investments in Optare and Praesepe, whilst
also making a follow-on investment in Tracsis, a supplier of crew scheduling
software to bus and train operators. The book cost of these three investments
was �350,000. A total of �750,000 was raised from the disposal of units in the
Unicorn Mastertrust Fund.
Top 10 Equity Holdings at 31 October 2008
Ordinary Share Fund Percentage of Fund
Abcam 7.6%
Unicorn UK Smaller Companies Fund 7.0%
Cohort 6.6%
Pressure Technologies 5.6%
Mattioli Woods 5.6%
Concateno 5.0%
Brulines 4.0%
Crawshaw Group 3.8%
Vindon Healthcare 3.7%
Hasgrove 3.2%
C Share Fund Percentage of Fund
Unicorn UK Smaller Companies Fund 12.6%
Unicorn Free Spirit Fund 12.5%
Unicorn UK Income Fund 11.2%
Cohort 5.2%
Unicorn Mastertrust Fund 4.0%
Animalcare Group 3.8%
Concateno 3.6%
Hasgrove 3.3%
Pressure Technologies 3.2%
Tracsis 3.2%
Material Events
Management fees for Venture Capital Trusts became exempt from VAT from 1
October 2008. HM Revenue & Customs (HMRC) has confirmed that it will accept
claims for VAT incurred on management fees up to this date. The Investment
Manager has submitted a claim to HMRC which has been acknowledged. Although the
precise amount and timing of any repayment remains uncertain, Net Asset Values
have been upwardly adjusted by 0.8 pence per Ordinary Share and by 0.4 pence
per C Share to reflect the likely impact of the anticipated repayments.
Other than described above, there were no material events during the period
from 1 July 2008 to 31 October 2008.
END
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