18th May 2012 16:43
UNICORN AIM VCT plc ("the Company")
Half-Yearly Report for the six months ended 31 March 2012
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 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.
INVESTMENT POLICY
In order to achieve the Company's Investment Objective, the Board has agreedan Investment Policy which requires the Investment Manager to identify andinvest in a diversified portfolio, predominantly of VCT qualifying companiesquoted 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. Specific conditions for HMRC approval of VCTs include the requirement that no single holding may represent more than 15% (by value) of the Company's total investments and cash, at the date of investment.
The Investment Manager is responsible for managing sector and stock specificrisk 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 anappropriate spread of investment risk is achieved, the Board receives andreviews comprehensive reports from the Investment Manager and theAdministrator on a monthly basis. When the Investment Manager proposes to makean investment in an unquoted company, the prior approval of the Board isrequired.Where capital is available for investment while awaiting suitable VCTqualifying opportunities, or in excess of the 70% VCT qualification threshold,it may be invested in collective investment funds or in non-qualifying sharesand securities in smaller listed UK companies.To date the Company has operated without recourse to borrowing. The Board mayhowever consider the possibility of introducing modest levels of gearing up toa maximum of 10% of the adjusted capital and reserves, should circumstancessuggest that such action is in the interests of shareholders.
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.
KEY DATA
As at 31 March 2012
As at 31 March 2012 Net assets Net asset Cumulative NAV total Share price value per dividends return to (p) (£ million) share (NAV) paid per shareholders (p) share (p) since launch per share (p)Ordinary Shares31st March 2012 56.6 97.4 10.0 107.4 70.030th September 2011 60.4 103.3 5.0 108.3 86.331st March 2011 64.6 109.5 5.0 114.5 97.530th September 2010 62.3 104.2 1.0 105.2 85.531st March 2010 58.0 94.6 1.0 95.6 73.0Most shareholders in the Company originally invested in one of the five formershare classes of either the Company and/or Unicorn AIM VCT II plc. As a resultof the merger of all five former share classes in March 2010, all shareholdersnow only hold Ordinary shares, These were formerly called S3 shares. To enablesuch shareholders in each former share class to monitor the performance oftheir original investment, the table below shows the NAV total return at 31March 2012 for a shareholder that invested £10,000 at £1 per share at the dateof launch of a particular fundraising, excluding any initial income tax reliefreceived:Unicorn AIM VCT plc FundsShare class and year of No. of NAV at 31 Dividends Dividends NAV totalfundraising shares March paid paid return held post 2012 pre-merger post-merger merger (£) (£) (£) (£)Ordinary Shares (raised in 2011, 8,620 8,397 n/a 431 8,828issued at average price of 116p)Ordinary Shares (formerly S3 10,000 9,742 100 900 10,742Shares raised in 2006/07)Original Ordinary Shares (raised 6,078 5,921 4,550 547 11,018in 2001)Original Ordinary Shares 2007/08 8,442 8,224 903 759 9,886top-up (13,890 shares issued for£10,000 investment at 72p pershare)Series 2 Shares (raised in 2004) 7,750 7,550 2,125 697 10,372Series 2 Shares 2007/08 top-up 8,424 8,206 489 758 9,453(10,870 shares issued for £10,000investment at 92p per share)
Former Unicorn AIM VCT II plc Funds
Share class and year of No. NAV at 31 Dividends Dividends NAV totalfundraising shares March paid paid return (£) held post 2012 pre-merger post-merger merger (£) (£) (£)Ordinary Shares (raised in 2005) 8,283 8,069 1,300 745 10,114Ordinary Shares 2007/08 top-up 8,452 8,234 1,225 760 10,219(10,205 shares issued for £10,000investment at 98p per share)C Shares (raised in 2006) 7,267 7,079 245 654 7,978C Shares 2007/08 top-up (11,235 8,165 7,954 169 734 8,857shares issued for £10,000investment at 89p per share)
Initial income tax relief of up to 20% was available for shareholders that invested in tax years 2001/2002 or 2003/2004, 40% for shareholders that invested in 2004/2005 and 2005/2006 and 30% for shareholders that invested in tax years since 2006/2007. Additional capital gains tax deferral relief was also available for shareholders that invested in 2001/2002 and 2003/2004.
Dividend history
Graph can be found in the Half- Yearly Report.
Unicorn Ordinary Original VCT II (formerly S3) Ordinary Ordinary Unicorn
VCT
Calendar year paid Shares Shares S2 Shares Shares II C Shares pence pence pence pence pence2012* 5.00 3.04* 3.88* 4.14* 3.63*2011* 4.00 2.43* 3.10* 3.31* 2.91*2010 - 3.50 2.50 6.00 0.452009 1.00 3.00 2.00 1.00 -2008 - - 5.00 5.00 1.002007 - 12.55 10.00 0.50 1.002006 - 10.00 1.00 0.50 -2005 - 5.00 0.75 - -2004 - 10.45 - - -2003 - 1.00 - - - 10.00 50.97 28.23 20.45 8.99
* the dividends from 2011 onwards on the Ordinary (formerly S3) shares, are also shown for each of the former share classes, which have been calculated in proportion to the merger conversion ratios.
CHAIRMAN'S STATEMENT
I am pleased to present the Half-Yearly Report of the Company for the six month period ended 31 March 2012.
The net assets of the Company as at 31 March 2012 were £56.62m, which, afteradding back dividends paid, share buybacks and share issues in the period, is1% lower than the audited net asset figure of £60.4m as at 30 September 2011.During this six month period, a total of £2.92m was paid to shareholders byway of dividends, whilst a further £252,000 was applied to funding normalshare buybacks. Net asset value was 97.4 pence per share at period endcompared to 103.3 pence per share at the start of the period, a fall of 5.7%.However, a dividend of 5 pence per share was paid in the period, so total netasset value return per share to shareholders fell by 0.9%.An Enhanced Buyback Facility and Top Up Offer was also introduced and completed during the period. Over four million shares were tendered under the Enhanced Buyback Facility and the maximum permitted number of shares were bought back at 93.95 pence per share with the net proceeds of £3,866,249 immediately being applied to the allotment and issue of 3,984,260 new shares to participating shareholders. A further £106,222 (including reinvested commission) was subscribed for 105,767 new ordinary shares, which were issued to investors applying for shares directly under the Top Up Offer.
The introduction of an Enhanced Buyback Facility was swiftly and enthusiastically supported by existing shareholders resulting in the Top Up Offer being significantly oversubscribed. In light of this successful uptake, the Board
intends to implement such schemes in the future, subject to prevailing legislation and circumstances permitting. In the meantime, I would like to take this opportunity to welcome all new shareholders and to thank existing shareholders for their continued support.In relative performance terms, the period under review has been a challengingone for the Company's investment portfolio. Net Asset Value per share (afteradjusting for the dividend of 5 pence per share paid in the period) remainedbroadly static over the six month period, whilst the FTSE All-Share and theFTSE AIM All-Share Indices delivered total returns of 15.0% and 13.9%respectively. Encouragingly, net asset value (after adding back dividendspaid) increased by 5.5% in the final three months of the period, almost fullyrecovering the negative total return delivered in the three months to the endof December 2011.Economic fragility, concern over the debt levels of Eurozone Member States andmounting fears that Greece will be forced to exit the Euro entirely, remaindominant and recurring themes. Unsurprisingly, investor confidence remains ata low ebb and this nervousness is being reflected in the continued volatilityof UK equity markets as a whole. An apparent improvement in the outlook foreconomic growth and agreement on the terms of a financial bailout package forGreece triggered a sustained market rally between the middle of December 2011and the end of March 2012. The performance of the FTSE AIM All-Share Index wasparticularly strong during this period, rising by over 15%. However, since theend of the period under review, there has been a rapid worsening in sentimentas Eurozone fears resurfaced and equity markets have fallen sharply as aresult.The performance of the Company's investment portfolio reflected the widermarket volatility, but was also further held back by disappointing share pricedeclines from a small number of VCT qualifying holdings. A review of the maincontributors to performance follows (bracketed figures represent thepercentage share price movement over the half-year period on a bid pricebasis):-
Qualifying Investments
Abcam (-3.3%) is a global leader in the supply of therapeuticantibodies and protein research tools. By value, Abcam remains the largestsingle holding in the portfolio. During the period under review, Abcam's shareprice fell slightly resulting in significant underperformance relative to thewider market. This underperformance occurred despite the release of yetanother strong set of financial results. In the six month period ended 31December 2011, Abcam's revenues grew by 13.5% to £44.7m, whilst profit beforetax, increased 15.9% to £17.6m. Abcam remains a highly cash generativebusiness and net cash balances as at the period end increased by £9.1m to£56m.Access Intelligence (+41%) comprises a group of Software as a Service (Saas)businesses that deliver compliance solutions to the public and privatesectors. This company's strategy has been to acquire growth businesses intargeted sectors and then build value through driving organic growth andincreasing cross-selling opportunities. Following a disappointing performancefrom an acquired compliance training business, significant management changeswere implemented and the Group's prospects appear to have stabilised. In theyear ended 30 November 2011, turnover was flat at £7.2m, whilst losses aftertax on continuing operations were £92,000; a figure much improved from theloss before tax of £1.6m recorded in the previous financial year. Followingcompletion of the disposal of a subsidiary, the Group entered the newfinancial year with net cash balances of almost £3m. Access Intelligenceretains a loyal and sizeable customer base from which it derives predictablerecurring revenues, which currently represent 66% of annual turnover. Inaddition, the group has returned to the dividend list, reflecting management'sincreased confidence in its prospects.Accumuli (+31%) is a provider of advanced IT security services. Ina pre-close period statement issued in April 2012, the Board reported that thebusiness had achieved a strong set of results for the financial year ended 31March 2012. Group revenues are expected to be in excess of £12.5m, whilstearnings before interest, tax, depreciation and amortisation are reported tobe around £2m. The business remains highly cash generative and cash balancesat the financial year end were expected to be around £2m, despite a cashpayment of £2.7m to the vendors of an acquired business.Avingtrans (+24%) designs, manufactures and supplies critical components to the medical, energy, industrial and global aerospace sectors. In February, Avingtrans announced interim results for the six months to 30 November 2011, which revealed revenue growth of 20% to £20.2m and fully diluted earnings up by 67% to 3p per share. Encouragingly, the order book was reported as being close to record levels.
Driver Group (+77%) is a global construction consultancy, which has undergone significant restructuring over the past 18 months in an effort to counter a prolonged decline in its traditional construction markets. The benefits of this restructuring are reported as being better than management had originally anticipated. Given the continued strength of trading and secured workload, the Board of Driver Group now believes that results for the current financial year will exceed management's previous expectations.
Green Compliance (-64%) provides compliance services across thewater hygiene, pest control and fire protection segments to a wide range ofclients in both the UK public and private sectors. Following the release of adisappointing half yearly report in December, this company's share pricesuffered a significant decline. The Group has clearly not been immune from thedifficulties encountered in the wider UK economy, but encouragingly it hasrecently been successful in winning new contracts at acceptable margins. Thebid pipeline is also reported as being robust with a number of furthersignificant opportunities currently at advanced stages of negotiation. GreenCompliance recently announced that it expects to report a solid tradingoutcome for the year ended 31 March 2012 in line with management expectations.HML Holdings (+84%) is a property management services group. In October, HML announced interim results for the six months to 30 September 2011, which confirmed another period of solid growth with revenues up 6% and operating profit ahead by 20%. In November 2011, HML completed a placing of new VCT qualifying shares in order to help fund the acquisition of a complementary, privately owned, property management business based in West London. Unicorn AIM VCT originally invested in HML in July 2007 and a further £83,000 of capital was committed in this secondary fundraising round.Idox (+36%) is a leading independent supplier of software andservices to the UK public sector and other markets. In the financial yearended 31 October 2011, Idox reported revenues up 23% to £38.6m, whilstadjusted pre-tax profit rose by 36% to £10.9m. A series of successfullyintegrated acquisitions has enabled the Group to extend their core technologyskills into a number of new and highly regulated, asset intensive industries.In particular, Idox is now positioned as a key vendor in the engineeringdocument management market, with a global presence and the capability to offerboth enterprise wide and Software as a Service (SaaS) to a growing customerbase. This strategy of diversifying revenue streams both operationally andgeographically ought to enhance the Group's growth prospects whilst offeringfurther resilience in the currently challenging economic environment.Instem Life Science Systems (-25%) is a software company focused onthe life sciences and biotechnology markets. Following a mildly negativetrading update released in January 2012, Instem's share price fell by morethan 25%. Preliminary results for the year ended 31 December 2011 weresubsequently announced at the end of March 2012 and revealed that adjustedoperating profit had fallen by 13% to £2m on sales up 7.9% to £10.8m. Revenuegrowth was lower than anticipated and this had a disproportionate impact onprofitability because it followed a period of significant investment in bothpeople and product development. Despite this temporary setback, Instem remainsa robust, profitable and cash generative business that has performed well indifficult market conditions. Recurring revenues account for over 70% of totalturnover, which provides a high level of visibility, whilst management haveconfirmed that they are also pursuing a strong pipeline of new businessopportunities in the current financial year.Mattioli Woods (-25%) is a specialist pensions consultancy andwealth management business. Interim results for the period ended 30 November2011 showed revenues up by 17% to £8.7m, whilst adjusted profit before taxfell by 17.4% to £2m. The contraction in margin occurred as a result ofincreased investment in the business to secure continued growth. At the sametime, the Group experienced a slowdown in investment activity amongst itsclient base, as uncertainty surrounding the Eurozone crisis persisted. TheBoard remains confident that the Group can maintain its unbroken record ofrevenue and profit growth for the full year and has increased the dividend atthe interim stage by 12.1% to reflect this positive outlook.Snacktime (-25%) is the third largest vending company in the UK. Asit entered the final quarter of 2011, Snacktime reported a promising salesoutlook. Unfortunately, it subsequently proved difficult to convert expectedorders into firm contracts. As a result, machine sales and coinage revenue forthe year ended 31 March 2012 were below market expectations. The impact ofthese factors, combined with some unplanned rises in costs, will mean resultsfor the year ended 31 March 2012 are likely to be materially below marketexpectations. The Board remains confident that the financial year to 31 March2013 will show an improvement in performance and profitability, despite thecurrent economic climate. Snacktime remains within its banking covenants andis reported to have in excess of £2m of unused facilities.
Non-Qualifying Investments
The non-qualifying portfolio continued to perform satisfactorily. Among the more notable share price gains recorded in the period were:-
Brady (+25%), a leading global provider of trading, risk management andsettlement solutions to the energy, metals and soft commodities sectors. Inthe financial year ended 31 December 2011, Brady increased turnover by 72% toover £19m, whilst operating profit increased by 56% to £2.3m. During theperiod, operational highlights included the successful integration of anenergy related risk management business, 14 significant new licence contractsand successful completion of 25 new installations and customer upgrades. Bradycontinues to enjoy high visibility with over 50% of annual revenues beinggenerated on a recurring basis. Portmeirion Group (+17%) is a major force in the `homewares' industry and oneof the last remaining manufacturers of fine china and porcelain in the UK.Portmeirion owns iconic brands such as Royal Worcester and Spode and controlsan extensive archive of designs stretching back over 250 years. In thefinancial year ended 31 December 2011, Portmeirion delivered record revenuesof £53.6m, an increase of 5% on the previous year, whilst profit beforeexceptional items and tax increased by 16% to £6.3m. The Group also continuesto generate attractive free cash flow with cash balances increasing up to£6.8m at the period end. Total dividends for the year were increased by 12.6%to a record 19.6 pence per share. Renold (+32%) is a manufacturer of industrial chains and related powertransmission products. Its products are sold worldwide and are installedacross a wide variety of industrial applications. A trading update issued inFebruary 2012 highlighted that both the Torque Transmission and Chaindivisions are delivering sales growth and that in the third quarter ofRenold's financial year, operational gearing and the conversion of incrementalrevenue into additional profitability was continuing the encouraging trend ofthe first half. Scapa Group (+44%) is a leading manufacturer of technical adhesive tapes. Thebusiness was severely impacted by a steep decline in demand during therecession, in particular from the automotive market, resulting in significantlosses and a growing level of net debt. Following a change in managementeighteen months ago, the business has stabilised and as a result there hasbeen continued improvement in financial performance. The positive momentumachieved in the first half of the year has been maintained and the Boardremains confident of reporting on further profit progress for the financialyear ended 31 March 2012.
There were two investments in the non-qualifying portfolio which performed particularly poorly:-
ATH Resources (-58%), is one of the UK's last remaining coal producers. Despite coming out of a number of unattractive fixed-price, legacy coal supply contracts, ATH continues to encounter significant challenges. In particular, demand remains low following an unusually mild winter, whilst rapidly rising fuel costs and falling coal prices are impacting negatively on margins.Specialist Energy Group (-38%) is a niche manufacturer of boiler circulationpumps for use primarily in the energy sector. Delays in manufacturing andproblems surrounding the quality of certain third-party supplied castingsimpacted the half year numbers to 30 June 2011. Since this time, manufacturingissues have been resolved, new order intake has improved and a £5m placing ata significant premium to the underlying share price has been announced.
The Investment Manager has retained these holdings in the belief that they can recover value in due course although progress on this front continues to be closely monitored.
Investment Activity
During the period, no new investments were made.
Partial disposals of a number of holdings were made across both the qualifyingand non-qualifying portfolios in order to crystallise capital gains whilstalso raising sufficient cash to meet the dividend payment to shareholders madein February 2012. In the non-qualifying portfolio, holdings in AdvancedMedical Solutions, Murgitroyd, Parseq, SSE and Unicorn UK Income Fund weredisposed of in their entirety, whilst weightings in Augean, HML Holdings andRenold were increased to reflect their improving prospects.
VCT Status
In aggregate, the Company remains well above the VCT qualifying thresholdrequired by HM Revenue & Customs, with approximately 77.5% of total assets, ascalculated in accordance with VCT rules, being invested in VCT qualifyingcompanies. All other HM Revenue & Customs tests have been complied with andyour Board has been advised by PWC that the Company has maintained its venturecapital trust status.Dividends
The Board is not proposing an interim dividend, but will consider the payment of a final dividend when reviewing the results for the full year.
Outlook
Equity markets were generally buoyant in the first three months of 2012. Sincethe period end however, this recovery has stalled as confidence in the futureof the Eurozone reached new lows and the UK officially returned to economicrecession. There will doubtless be further twists and turns on the slow andpainful road to recovery and it is therefore likely that volatility in equitymarkets will remain a feature. However, the attractions of alternative assetclasses remain limited. The continuing low interest rate environment meansthat inflation-adjusted returns from cash and bonds are still likely to be innegative territory, whilst speculative investment in precious metals, such asgold, appears to have run its course. In addition, UK equity indices remainattractively valued, especially at the smaller end of the market. For example,the FTSE SmallCap Index entered the new year trading on around 7.5xprospective earnings for calendar 2012 (Source:- MSCI, Bloomberg).Economic conditions in the UK continue to be difficult, but the InvestmentManager's focus on well managed, profitable and cash generative businesseswith strong leadership positions in niche, growing markets has served theCompany well through previous challenging periods. Smaller businesses alsooften have surprisingly significant international exposure and can thereforeavoid being overly dependent on either domestic consumer or public sectorspending. The positive effects of reduced competition and precautionary costreduction measures are starting to be reflected in improved profitabilityamong many smaller quoted companies. There is also some evidence of increasingappetite for specialist products and services that have the capability todeliver a rapid return on investment. Finally, a number of favourable changesto the types of qualifying companies in which a VCT can invest are alsoexpected to be introduced in the coming tax year, which should furtherincrease the attractions of VCT investment. If passed into law, these changeswill be helpful and are to be welcomed. In time, they may also act as asignificant catalyst for further renewed interest in the VCT market as awhole. These changes, combined with attractive valuations for smallercompanies and an improvement in the economic climate, would all make anattractive case for investing in an established AIM focused VCT.
Conclusion
Unicorn AIM VCT remains the largest AIM focused VCT in the market with netassets of £56.6m at the period end. Although the six month period under reviewhas been a challenging one in relative performance terms, the longer termtrack record is strong. The portfolio contains a diverse range of companies,the majority of which are profitable and debt free, trading conditions incertain sectors have begun to show signs of improvement, whilst the managementteams of our investee companies are generally expressing cautious optimismregarding prospects. The recent inconclusive elections in Greece have,however, re-ignited fears of a disorderly exit from the Euro, which could inturn trigger a domino effect amongst weaker European Member States. Thisscenario would clearly be unhelpful for economic recovery and equity marketswould almost certainly react negatively. It is therefore to be hoped that thepolitical leaders in Europe can swiftly reach agreement on a controlled andworkable solution. In this scenario, the Investment Manager would be confidentof delivering growth in net assets in the second half of your Company'sfinancial year. However, given the current and significant uncertainties, themain focus will remain on capital preservation. The Investment Manager willtherefore maintain a conservative, selective and risk-averse approach whenassessing new investment opportunities. In addition, the diversified nature ofthe existing portfolio should provide meaningful protection against bothsector and stock specific risk. The longer term aim remains to continuebuilding the capital and revenue reserves available for tax free distributionto shareholders.Peter DicksChairman17 May 2012
PRINCIPAL RISKS AND UNCERTAINITIES
In accordance with DTR 4.2.7, the Board confirms that the principal risks anduncertainties facing the Company have not materially changed since thepublication of the Annual Report and Accounts for the year ended 30 September2011.
The principal risks faced by the Company are:
- investment and strategic risk
- regulatory and tax risk- operational risk- fraud and dishonesty risks- financial instruments risk- economic risk
A more detailed explanation of these can be found in the Directors' Report on page 25 and 26 of the 2011 Annual Report and Accounts - copies can be found via the Company's website, www.unicornaimvct.com.
RELATED PARTY TRANSACTIONS
There were no related party transactions during the period under review.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
(a) the condensed set of financial statements, which have beenprepared in accordance with the statement "Half-Yearly Reports" issued by theAccounting Standards Board, give a true and fair view of the assets,liabilities, financial position and profit of the Company as at 31 March 2012,as required by DTR 4.2.4;
(b) the interim management report included within the Chairman's Statement and Investment Portfolio Summary includes a fair review of the information required by DTR 4.2.7 being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;
(c) a description of the principal risks and uncertainties facing the Company for the remaining six months is set out above, in accordance with DTR 4.2.7; and
(d) the financial statements include a description of the relatedparty transactions in the first six months of the current financial year thathave materially affected the financial position or performance of the Companyduring the period, and any material changes to the related party transactionssince the last Annual Report, in accordance with DTR 4.2.8.For and on behalf of the Board:Peter DicksChairman17 May 2012
INVESTMENT PORTFOLIO SUMMARY
As at 31 March 2012 Book cost Valuation % of net assets by value £'000 £'000Qualifying investmentsAIM/PLUS quoted investments:Abcam plc 2,225 7,820 13.8%Animalcare Group plc 1,620 2,483 4.4%Surgical Innovations plc 331 2,114 3.7%Anpario plc 1,766 1,890 3.3%Mattioli Woods plc 1,680 1,832 3.2%Idox plc 500 1,500 2.6%Tracsis plc 838 1,312 2.3%Cohort plc 1,414 1,297 2.3%Avingtrans plc 996 996 1.8%Instem plc 985 933 1.6%Access Intelligence plc 1,467 802 1.4%Pressure Technologies plc 980 747 1.3%Green Compliance plc 2,100 742 1.3%HML Holdings plc 431 715 1.3%Zetar plc 772 703 1.2%Accumuli plc 400 677 1.2%Sinclair Pharma plc (formerly IS 704 630 1.1%Pharma)SnackTime plc 2,102 627 1.1%Tristel plc 878 572 1.0%Sanderson Group plc 770 539 1.0%Vindon Healthcare plc 475 523 0.9%Vianet plc 584 504 0.9%Maxima Holdings plc 2,251 491 0.9%Omega Diagnostics plc 500 417 0.7%Hasgrove plc 975 413 0.7%Driver Group plc 552 390 0.7%eg solutions plc 406 359 0.6%Prologic plc 806 344 0.6%Lees Foods plc 260 286 0.5%Printing.com plc 231 208 0.4%Datong Electronics plc 784 195 0.3%Belgravium Technologies plc 263 194 0.3%Dillistone Group plc 106 178 0.3%Hangar 8 plc 250 175 0.3%Tangent Communication plc 163 173 0.3%Brady plc 112 167 0.3%PHSC plc 153 144 0.3%
Twelve investments, each valued 3,184 859 1.5% at less than 0.3% of net assets
35,014 34,951 61.4% Unlisted investmentsAccess Intelligence plc - loan 1.3%stock 750 750SnackTime plc - loan stock 550 550 1.0%Optimisa plc - 112 0.2%Five investments, each valued at 0.1%
less than 0.2% of net assets 3,157 29
4,457 1,441 2.6%
Total qualifying investments 39,471 36,392 64.0%
Non-qualifying investmentsListed UK equities 6,433 6,260 11.2%AIM quoted investments 5,644 5,621 9.9%
Unicorn UK Smaller Companies 3,430 4,879 8.6% Fund (OEIC) Unicorn Mastertrust Fund (OEIC) 1,228 1,800 3.2% Unicorn Free Spirit Fund (OEIC) 827 1,328 2.3% Money market funds 1
147 147 0.3%Invu plc - loan stock 200 100 0.2%Unlisted investments 5 - 0.0%
Total non-qualifying investments 17,914 20,135 35.7%
Total investments 57,385 56,527 99.7% Other assets 809 1.5%Current liabilities (721) (1.2%)Net assets 56,615 100.0%
1 Disclosed within 'Current investments' under Current assets in the Balance Sheet
UNAUDITED INCOME STATEMENT
For the six months ended 31 March 2012
Six months ended 31 March 2012 Six months ended 31 March 2011 (unaudited) (unaudited) Notes Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Unrealised(losses)/gains oninvestments 6 - (583) (583) - 5,116 5,116Realisedgains oninvestments - 173 173 - 584 584Income 528 - 528 465 - 465Investmentmanagementfees 2 (125) (376) (501) (137) (410) (547)Otherexpenses (283) - (283) (274) - (274) Profit/ (loss) onordinaryactivitiesbeforetaxation 120 (786) (666) 54 5,290 5,344Tax onprofit/ (loss) onordinaryactivities 3 - - - - - - Profit/ (loss) onordinaryactivitiesaftertaxation 120 (786) (666) 54 5,290 5,344Basic anddilutedearnings/ (loss) pershare:Ordinaryshares 4 0.21p (1.35)p (1.14)p 0.09p 8.92p 9.01p Year ended 30 September 2011 (audited) Notes Revenue Capital Total £'000 £'000 £'000 Unrealised (losses)/gains oninvestments - 781 781Realised gains on investments - 1,170 1,170Income 1,103 - 1,103Investment management fees 2 (276) (829) (1,105)Other expenses (539) - (539) Profit/(loss) on ordinaryactivities before taxation 288 1,122 1,410Tax on profit/(loss) on ordinaryactivities 3 - - - Profit/(loss) on ordinaryactivities after taxation 288 1,122 1,410 Basic and dilutedearnings/(loss) per share:Ordinary shares 4 0.48p 1.89p 2.37p
All revenue and capital items in the above statement derive from continuing operations of the Company.
There were no other recognised gains or losses in the period.
The total column of this statement is the profit and loss account of the Company.
Other than revaluation movements arising on investments held at fair value through Profit and Loss Account, there were no differences between the profit/ (loss) as stated above and at historical cost.
UNAUDITED BALANCE SHEETAs at 31 March 2012 As at As at As at 31 March 2012 31
March 2011 30 September 2011
(unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Non current assetsInvestments at fair value 1c,6 56,380 62,578 59,563 Current assetsDebtors and prepayments 159 718 177Current investments 7 147 448 779Cash at bank 650 1,164 650 956 2,330 1,606
Creditors: amounts falling due within one year (721)
(290) (722) Net current assets 235 2,040 884 Net assets 56,615 64,618 60,447 Share capital and reservesShare capital 8 581 590 585Capital redemption reserve 8 328 263 283Share premium account 8 32,330 26,748 28,422Revaluation reserve 8 1,319 7,184 2,685
Special distributable reserve 8 14,250
21,605 18,838Profit and Loss account 8 7,807 8,228 9,634 Equity shareholders' funds 56,615 64,618 60,447 Net asset value per share of 1p eachOrdinary shares 9 97.41p 109.50p 103.34p
The financial information for the six months ended 31 March 2012 and the six months ended 31 March 2011 has not been audited.
UNAUDITED RECONCILATIONS OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the six months ended 31 March 2012
Six months ended Six months ended Year ended 31 March 2012 31 March 2011 30 September 2011 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000Openingshareholders' funds 60,447 62,279 62,279Net share capitalbought back in theperiod 8 (4,139) (2,233) (4,173)Net share capitalsubscribed in theperiod 8 3,898 1,620 3,309(Loss)/profit forthe period (666) 5,344 1,410Dividends paid inperiod 5 (2,925) (2,392) (2,378)ClosingShareholders' funds 56,615 64,618 60,447
The financial information for the six months ended 31 March 2012 and the six months ended 31 March 2011 has not been audited.
UNAUDITED STATEMENT OF CASH FLOWS
For the six months ended 31 March 2012
Six months ended Six months ended Year ended 31 March 2012 31 March 2011 30 September 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000Operating activities Investment income received 529 722 1,306Other income received - - 50Investment management feespaid (501) (546) (1,106)Other cash payments (181) (545) (781)Net cash outflow fromoperating activities (153) (369) (531) Investing activitiesPurchase of investments (409) (4,904) (7,834)Sale of investments 3,547 9,599 11,817Net cash inflow frominvesting activities 3,138 4,695 3,983 DividendsEquity dividends paid toUnicorn AIM VCT plcshareholders (2,925) (2,392) (2,378) Cash inflow before financingand liquid resourcemanagement 60 1,934 1,074 FinancingShare capital raised 3,942 1,080 3,309Share capital bought back (4,634) (2,126) (3,678) (692) (1,046) (369)Management of liquidresourcesDecrease/(increase) inmonies held pendinginvestment 632 (73) (404) No change/Increase in cash - 815 301 Reconciliation of net cashflow to movement in netfunds No change/increase in cashfor the period - 815 301Net funds at start of period 650 349 349 Net funds at end of period 650 1,164 650 Reconciliation of operating(loss)/profit to net cashoutflow from operatingactivities (Loss)/profit on ordinaryactivities before taxation (666) 5,344 1,410Net gains on realisations ofinvestments (173) (584) (1,170)Net unrealisedlosses/(gains) oninvestments 583 (5,116) (781)Transaction costs (10) (141) (167)Decrease in debtors 514 309 297Decrease in creditors (401) (181) (120) Net cash outflow fromoperating activities (153) (369) (531)
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 31 March 2012 andhave been prepared under UK Generally Accepted Accounting Practice (UK GAAP),consistent with the accounting policies set out in the statutory accounts forthe year ended 30 September 2011 and the Statement of Recommended Practice,'Financial Statements of Investment Trust Companies and Venture CapitalTrusts' ('the SORP') issued by the Association of Investment Trust Companiesin January 2009.
As a result of the Directors' decision to distribute capital profits by way of a dividend, the Company revoked its investment company status as defined under section 266 (3) of the Companies Act 1985, on 17 August 2004.
The half-yearly report has not been audited nor has it been reviewed by the auditor pursuant to the Auditing Practices Board (APB) guidance on Review of Interim Financial Information.
b) Presentation of the Income Statement
In order to better reflect the activities of a VCT and inaccordance with the SORP, supplementary information which analyses the IncomeStatement between items of a revenue and capital nature has been presentedalongside the Income Statement. The revenue column of profit attributable toequity shareholders is the measure the Directors believe appropriate inassessing the Company's compliance with certain requirements set out inSection 274 Income Tax Act 2007.
c) Investments
Investments are accounted for on a trade date basis.
All investments held by the Company are classified as "fair valuethrough profit and loss" as the Company's business is to invest in financialassets with a view to profiting from their total return in the form of capitalgrowth and income. For investments actively traded in organised financialmarkets, recognition and fair value is determined by reference to StockExchange market trading rules and quoted bid prices at the close of businesson the balance sheet date.
Unquoted investments are valued by the Directors at `fair value through profit and loss'. Accordingly, in the absence of a market price, the Directors have valued unquoted investments in accordance with International Private Equity Venture Capital Valuation (IPEVCV) guidelines as updated in September 2009.
All unquoted investments are held at the price of a recentinvestment for an appropriate period where there is considered to have been nochange in fair value. Where such a basis is no longer considered appropriate,the following factors will be considered:
(i) Where a value is indicated by a material arms-length transaction by an independent third party in the shares of a company, this value will be used.
(ii) In the absence of i), and depending upon both the subsequent trading performance and investment structure of an investee company, the valuation basis will usually move to either:-
a) an earnings multiple basis. The shares may be valued by applyinga suitable price-earnings ratio to that company's historic, current orforecast post-tax earnings before interest and amortisation (the ratio usedbeing based on a comparable sector but the resulting value being adjusted toreflect points of difference identified by the Investment Manager compared tothe sector including, inter alia, a lack of marketability).
or:-
b) where a company's underperformance against plan indicates adiminution in the value of the investment, provision against cost is made, asappropriate. Where the value of an investment has fallen permanently belowcost, the loss is treated as a permanent impairment and as a realised loss,even though the investment is still held. The Board assesses the portfolio forsuch investments and, after agreement with the Investment Manager, will agreethe values that represent the extent to which an investment loss has becomerealised. This is based upon an assessment of objective evidence of thatinvestment's future prospects, to determine whether there is potential for theinvestment to recover in value.
(iii) Premiums on loan stock investments are accrued at fair value when the Company receives the right to the premium and when considered recoverable.
(iv) Where an earnings multiple or cost less impairment basis is not appropriate and overriding factors apply, discounted cash flow or net asset valuation bases may be applied.
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
Year ended Six months Six months 30 ended 31 ended 31 September March 2012 March 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000
Total earnings after taxation: (666) 5,344 1,410Basic and diluted (loss)/earnings per share (1.14)p 9.01p 2.37pNet revenue from ordinary activities after taxation 120 54 288Revenue return per share 0.21p 0.09p 0.48pNet unrealised capital (losses)/gains (583) 5,116 781Net realised capital gains 173 584 1,170Capital expenses (net of taxation) (376) (410) (829)Total capital (loss)/return (786) 5,290 1,122Capital (loss)/return per share (1.35)p
8.92p 1.89p
Weighted average number of shares in issue in the period 58,445,366 59,317,309 59,414,9825. Dividends Year Six months Six months ended 30 ended 31 ended 31 September March 2012 March 2011 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Final capital dividend of 4p pershare for the year ended 30 September2010 paid on 14 January 2011 - 2,392
2,378
Final capital dividend of 4.25p andfinal income dividend of 0.75p pershare for the year ended 30 September2011 paid on 10 February 2012 2,925 -
- 2,925 2,392 2,3786. Investments Traded on Unlisted Fully AIM/PLUS ordinary Unlisted Unicorn Listed Market shares Loan stock OEIC funds Total £'000 £'000 £'000 £'000 £'000 £'000s Book cost at 30September 2011 6,656 40,974 3,162 1,500 6,763 59,055Unrealised gainsat 30 September2011 (217) 1,427 (896) (100) 2,471 2,685Permanentimpairment invalue ofinvestments - (15) (2,162) - - (2,177)Valuation at 30September 2011 6,439 42,386 104 1,400 9,234 59,563 Purchases at cost 315 440 - - 9 764Sale proceeds (568) (1,350) - - (1,629) (3,547)Realised gains 20 125 - - 38 183Unrealisedgains/(losses) inthe period 54 (1,029) 37 - 355 (583)Closing valuationat 31 March 2012 6,260 40,572 141 1,400 8,007 56,380 - - - - - -Book cost at 31March 2012 6,432 40,658 3,162 1,500 5,486 57,238Unrealised(losses)/gains at31 March 2012 (172) (86) (844) (100) 2,521 1,319Permanentimpairment invalue ofinvestments - - (2,177) - - (2,177)Valuation at 31March 2012 6,260 40,572 141 1,400 8,007 56,380Investment purchases above of £764,000 differs to that shown in theCashflow Statement by £355,000. This difference is due to £8,000 ofcapitalised dividend from Unicorn Outstanding British Companies OEIC and a£347,000 addition in Augean plc which settled shortly after the period end.Realised gains above of £183,000 differ from net realised gains per the IncomeStatement of £173,000 due to transaction costs of £10,000.
7. Current Investments
These comprise investments in two Dublin based OEIC money marketfunds, managed by Royal Bank of Scotland and Blackrock Investment ManagementUK Ltd and amount to £147,000 (31 March 2011: £448,000; 30 September 2011:£779,000). All of this sum is subject to same day access. These sums areregarded as monies held pending investment.8. Reserves Profit Called up Capital Share Special and share redemption premium Revaluation distributable loss capital reserve account reserve reserve account Total £'000 £'000 £'000 £'000 £'000 £'000 £'000At 1 October2011 585 283 28,422 2,685 18,838 9,634 60,447Shares issued 41 - 4,066 - - - 4,107Shares boughtback (45) 45 - - (4,139) - (4,139)Expenses ofEnhancedBuyback Schemeand Top UpOffer (seenote below) - - (158) - (51) - (209)Transfer tospecialdistributablereserve - - - - (398) 398 -Gains ondisposal ofinvestments(net oftransactioncosts) - - - - - 173 173Realisation ofpreviouslyunrealisedgains - - - (783) - 783 -Unrealisedlosses in theperiod - - - (583) - - (583)Loss for theperiod - - - - - (256) (256)Dividends paid (2,925) (2,925)At 31 March2012 581 328 32,330 1,319 14,250 7,807 56,615Note:The expenses of the Enhanced Buyback ("EBB") Scheme and Top UpOffer of £209,000 are firstly, the commission rebate of 3.5% upon the sumsubscribed by shareholders under the EBB Scheme of £135,000 and secondly,third party costs of the Scheme and Top Up Offer of £74,000. All of thesecosts were charged to the VCT but borne by those shareholders who participatedin the EBB scheme and the Top Up Offer. No fees were charged by the Manager.The amount relating to shares issued (net of expenses) above, of £3,898,000,differs from that shown in the cash flow statement of £3,942,000. Thedifference of £44,000 relates to amounts payable to reimburse the Manager forOffer costs funded by the Manager, which, as explained above, were whollyborne by those shareholders who participated in the EBB scheme.9. Net asset value At 31 March 2012 At 31 March 2011 At 30 September 2011 (unaudited) (unaudited) (audited) £'000 £'000 £'000Net assets 56,615 64,618 60,447 Number of shares in issue 58,117,481 59,014,330 58,492,674 Net asset value per share 97.41p 109.50p 103.34p
10. The financial information for the six months ended 31 March 2012 and the six months ended 31 March 2011 has not been audited.
The financial information contained in this half-yearly report doesnot constitute statutory accounts as defined in Section 434 of the CompaniesAct 2006. The financial statements for the year ended 30 September 2011 havebeen filed with the Registrar of Companies. The auditors have reported onthese financial statements and that report was unqualified and did not containa statement under either section 498(2) or 498(3) of the Companies Act 2006.
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 0AH, or from www.unicornam.com or www.unicornaimvct.com
Shareholder Information
The Company's Ordinary Shares (Code: UAV) are listed on the London Stock Exchange. Shareholders can visit the London Stock Exchange website, www.londonstockexchange.com, for the latest news and share prices of the Company. The share price is also quoted in the Financial Times.
Shareholder enquiries:
For general Shareholder enquiries, please contact Robert Brittain of Matrix-Securities Limited (the Company Secretary) on 020 3206 7000 or by e-mail on [email protected].
For enquiries concerning the performance of the Company, please contact the Investment Manager, Unicorn Asset Management Limited, on 020 7253 0889 or by e-mail on [email protected].
Electronic copies of this report and other published information can be found via the Company's website, www.unicornaimvct.com.
To notify the Company of a change of address or to request a dividend mandateform (should you wish to have future dividends paid directly into your bankaccount) please contact the Company's Registrars, Capita Registrars on 0871664 0300, (lines are open 8.30 am - 5.30 pm on Monday to Friday, calls cost10p per minute plus network extras - if calling from overseas please ring +44208 639 2157) or by writing to them at Capita Registrars, The Registry, 34Beckenham Road, Beckenham, Kent, BR3 4TU. Alternatively you may visit theirwebsite, www.capitaregistrars.com/shareholders.
Information rights for beneficial owners of shares
Please note that beneficial owners of shares who have been nominated by theregistered holder of those shares to receive information rights under section146 of the Companies Act 2006 are required to direct all communications to theregistered holder of their shares, rather than to the Company's registrar,Capita Registrars, or to the Company directly.
Corporate Information
Directors Peter Dicks (Chairman) Malcolm Diamond James Grossman Jeremy Hamer Jocelin Harris 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 : 04266437 Investment Manager Auditor RegistrarUnicorn Asset Management PKF (UK) LLP Capita RegistrarsLimitedFirst Floor Office Farringdon Place The RegistryPreacher's Court 20 Farringdon Road 34 Beckenham RoadThe Charterhouse London BeckenhamCharterhouse Square EC1M 3AP KentLondon BR3 4TUEC1M 6AU VCT Tax Adviser Custodian SolicitorsPricewaterhouseCoopers LLP BNY Mellon Martineau1 Embankment Place One Canada Square No 1 Colmore SquareLondon London BirminghamWC2N 6RH E14 5AL B4 6AA Stockbroker BankersMatrix Corporate Capital LLP National Westminster Bank plcOne Vine Street City of London OfficeLondon PO Box 12264W1J 0AH 1 Princes Street London EC2R 8PB
XLONRelated Shares:
Unicorn Asset Management