Half Yearly Report

RNS Number : 5722O

Unicorn AIM VCT PLC

29 May 2015

 



Unicorn AIM VCT plc ("The Company")

Half-Yearly Report Announcement for the six months ended 31 March 2015

Investment Objective

The Company's objective is to provide Shareholders with an attractive return from a diversified portfolio of investments, predominantly in the shares of AIM quoted companies, by maintaining a steady flow of dividend distributions to Shareholders from the income as well as capital gains generated by the portfolio.

It is also an objective that the Company should continue to qualify as a Venture Capital Trust, so that Shareholders benefit from the taxation advantages that this brings. To achieve this at least 70% of the Company's total assets are to be invested in qualifying investments of which 30% by VCT value (70% for funds raised after 6 April 2011) must be in ordinary shares carrying no preferential rights (save as permitted under VCT rules) to dividends or return of capital and no rights to redemption.

Venture Capital Trust Status

The Company has satisfied the requirements for approval as a Venture Capital Trust (VCT) under section 274 of the Income Tax Act 2007 (ITA). It is the Directors' intention to continue to conduct the business of the Company so as to maintain compliance with that section.

Financial Highlights

For the six months ended 31 March 2015

-      Continued outperformance against FTSE AIM All-Share Index.

-      Strongly supported Offer for Subscription.

 

-      Significant increase in dividend income received from investee companies.

 

Recent Fund Performance

Ordinary shares	Net assets (£million)	Net asset value per share (NAV) (p)	Cumulative dividends paid per share (p) *	NAV total return to Shareholders since merger * per share (p)	Share price (p)
31 March 2015	99.1	137.0	26.0	163.0	123.0
30 September 2014	92.2	143.7	20.0	163.7	130.0
31 March 2014	86.3	142.8	20.0	162.8	123.5
30 September 2013	73.7	129.8	14.0	143.8	111.0

* Since the merger of the Company with Unicorn AIM VCT II plc on 9 March 2010.

 

Portfolio Summary Allocation of qualifying investments by market sector
	As at 31 March 2015 %		As at 30 September 2014 %
Pharmaceutical & biotechnology	25.7		22.0
Software & computer services	24.4		23.5
Financial services	9.4		6.7
Food & drug retailers	5.7		7.0
Travel & leisure	5.4		4.4
Aerospace & defence	5.1		4.0
Media	4.8		6.1
Industrial engineering	3.9		8.3
Support services	3.1		4.0
Retail	3.0		3.1
Healthcare equipment & services	2.9		3.5
Real estate investment & services	2.0		2.1
Industrial transportation	1.9		2.2
Chemicals	1.3		1.8
Electronic & electrical equipment	1.0		0.6
Technology hardware & equipment	0.2		0.2
Household goods & home construction	0.2		0.5
Total	100.0		100.0

 Chairman's Statement

I am pleased to present the Half-Yearly Report of the Company for the six months ended 31 March 2015.

As at 31 March 2015, the net assets of the Company were £99.1 million, which represents an increase of £6.9 million during the period under review. This growth in total net assets has arisen largely as a consequence of a well-supported Offer for Subscription (the "Offer").

The £15 million Offer (with a £10 million over-allotment option) opened in September 2014 and has attracted a very encouraging level of support from both new and existing investors. By the end of the 2014/15 tax year, valid applications had been received for £22.0 million of new capital and the allotments were made. In the tax year 2015/16, the Offer became fully subscribed and has now closed. I would like to take this opportunity to welcome all new Shareholders and to thank existing Shareholders for their continued support.

During the period under review, the Company's unaudited net asset value (NAV) per share decreased from 143.7 pence to 137.0 pence. After taking into account the 2013/2014 final dividend of six pence per share, which was paid in February 2015, this represents a small reduction of 0.5% during the period.

This performance compares favourably to a negative total return of 3.9% from the FTSE AIM All-Share Index over the same period. Fully listed, larger, companies fared better, with the FTSE All-Share Index delivering a positive total return of 5.3% in the six months to 31 March 2015.

This year marks the 20th anniversary of Venture Capital Trusts (VCTs) and of the Alternative Investment Market (AIM). Recent figures from the Association of Investment Companies (AIC) show that the level of aggregate dividends paid to VCT shareholders is at its highest annual level since VCTs were established in 1995. In the twelve months to 31 March 2015, the VCT sector paid out aggregate dividends of £240.3 million, compared to £231.1 million over the year to 31 March 2014. The amount of dividends paid specifically by the AIM focused VCT sector in the year to 31 March 2015 was £21.7 million. Dividends paid to Shareholders in Unicorn AIM VCT during this same period  amounted to £4.2 million, which represents almost 20% of the total amount paid by the AIM focused VCT sub-sector. Over the Company's fifteen year life, approximately £37.8 million has been returned to Shareholders in the form of dividend payments.

It is encouraging to note that the total dividend income received from investee companies was markedly higher in the period when compared with the equivalent six month period to 31 March 2014. Approximately two thirds of the companies held in the portfolio are now paying dividends on a regular and seemingly sustainable basis. The aggregate level of these dividend income receipts is expected to continue to increase over time. As far as capital gains are concerned; during the six month period under review, the following investments represented the main contributions to performance (both positive and negative):-

Qualifying Investments

Abcam (+22%) is a global leader in the supply of innovative protein research tools. In March 2015, Abcam released its financial results for the six month period ended 31 December 2014. The reported revenues of £66.7 million (H1 2014: £61.9 million) represent year on year growth of 7.7%. After accounting for adverse currency movements in the period, underlying revenues increased by 13.8%. Adjusted earnings per share also grew healthily, rising to 9.4 pence per share (H1 2014: 8.7 pence). Abcam continues to generate significant free cash flows and, as a result, net cash balances at the period end increased to £62.5 million (H1 2014: £56.9 million). The management team at Abcam remains confident in the prospect of delivering further growth.

Anpario (+22%) is a specialist producer of natural feed additives that promote animal health, hygiene and good nutrition. For the financial year ended 31 December 2014, Anpario recorded an 18% increase in underlying earnings per share to 15.6 pence (2013: 13.2 pence). This growth in earnings was achieved despite a relatively modest 2.4% growth in sales. Anpario's net cash balances also grew strongly and, as at the financial year end, amounted to £6.6 million (2013: £4.8 million).

Animalcare Group (+34%) is a leading supplier of veterinary medicines. Animalcare's share price recovered strongly during the period under review, following a disappointing performance in the previous six month period. The first half of the company's current financial year saw Group revenues increase by 7.2% to £6.9 million, while earnings per share rose by 23.6% to 6.8 pence per share. As a consequence of the strong trading in the period, the business was particularly cash generative and, as at 31 December 2014, the Group held net cash balances in excess of £5 million. Given the solid trading performance and strong financial position of the Group, the Board recommended a 20% increase in the interim dividend to 1.8 pence per share, which has subsequently been paid to shareholders.

Avingtrans (-27%) designs, manufactures and supplies critical components to the global aerospace, energy and medical sectors. In February 2015, Avingtrans announced disappointing interim results for the six month period ended 30 November 2014, reporting a particularly challenging trading period for the Group. Revenues fell by 14% to £27.5 million (H1 2014: £32.2 million), although profits before tax improved somewhat to £259,000 from a loss of £50,000 in the six months to 30 November 2013, after adjusting for an exceptional profit recorded in that period. The decline in revenues was caused by lower customer orders in the Aerospace division and the cancellation of projects in the Energy division due to the sudden and significant decline in the price of oil. A restructuring programme has been commenced to align costs with reduced levels of revenue over the short term, but the Avingtrans Board's confidence in meeting expectations for the full financial year has been underlined by a continuation of the established progressive dividend policy.

Castleton Technology (+62%) is a software and managed services provider to the public and not-for-profit sectors.  In the unaudited interim results for the six months ended 30 September 2014, the Board of Castleton highlighted good trading momentum following the acquisition during the period of Montal Holdings Limited, a provider of IT managed services to the public sector. In addition, after its period end, Castleton secured new equity funding of £5.65 million in an oversubscribed placing to help fund the acquisition of Documotive Limited, a document management software and scanning business focused on the social housing sector. These acquisitions mark the first steps in positioning Castleton as a leading supplier of specialised software and services to the public and not-for-profit sector and the Group is now well placed to deliver strong organic growth alongside further acquisitions over the medium term.

Cohort (+32%) is an independent technology Group primarily operating in defence and related markets.  Unaudited results for the six months ended 31 October 2014 highlighted strong growth in both revenues (up 13% to £37.6 million) and profit before tax (up 34% to £2.5 million). Order intake was also strong in the period, with £64.5 million of new orders won, together with £38 million of orders from the acquisition of two smaller specialist competitors in the period. This successful period of growth left the Group with a total order book as at 31 October 2014 of £146.6 million. Prospects for further order intake in the second half across the Group were reported to be encouraging.

Crawshaw Group (-19%) is a chain of butchers shops based in Yorkshire. Following an extended period of exceptionally strong performance, Crawshaw Group shares lost some ground in the six months under review. In a trading update released at the end of February however, it was confirmed that like for like sales continue to improve, with revenues up by 5% on the comparable period 12 months ago. In addition, it was reported that cash margins had increased. As a consequence, management have stated that results for the financial year to 31 January 2015 will be materially higher than the current market forecast. Investment in planned shop openings is expected to accelerate further in the current financial year.

Driver Group (-44%) is a global consultancy firm focused on the construction and engineering industries. In an AGM statement released to the market in February 2015, the Chairman of Driver stated that the coming year would be one in which investment in both the structure of the Group and the recruitment of key fee earning staff would be a priority. The result of this investment will inevitably mean that, revenue, profits and cash inflow will be weighted towards the second half. In order to facilitate a plan to drive growth, central overheads have also been increased. In the short term, given a combination of these increased costs and the delay in the commencement in certain projects, the results for the current financial year will be below previous expectations. The share price of Driver Group has been under pressure as a consequence, but the investment is being retained in anticipation of significant recovery in value once the benefits of the planned investment become visible.

Eclectic Bars Group (-44%) is an operator of premium bars located in major towns and cities across the UK. Interim results released in April confirmed that trading for the first half was in line with updates given to the market on 25 November 2014 and 30 January 2015. While sales on continuing operations were up 11% at £12.3 million (2013: £11.0 million), profits were significantly below earlier expectations. Reduced trading levels experienced towards the end of the first half and over recent weeks are expected to continue during the remainder of the Group's financial year.  The Company's investment in Eclectic is modest in size, but given poor recent trading, share price performance has been weak.

Mattioli Woods (+18%) is a specialist pension consultancy and wealth management business. Interim results for the period ended 30 November 2014 were once again very positive. Revenues were up 23.4% to £16.6 million (H1 2014:  £13.4 million), while basic earnings per share were up 5.9% to 10.3 pence (H1 2014: 9.7 pence). Encouragingly, recurring revenues increased and now represent over 82% of total revenues. Discretionary assets under management also grew strongly in the period with total assets under management increasing to £0.87 billion at the period end. Organic revenue growth of 19.8% over the prior period was particularly encouraging as it demonstrates the positive impact of focusing on developing an expert consultancy team which is able to deliver real value through the provision of advice to a growing number of clients. The interim dividend was increased by 7.7% to 3.3 pence per ordinary share. The Board of Mattioli Woods confirmed that it is committed to a progressive dividend policy while maintaining an appropriate level of dividend cover. Current trading is reported to be in line with the Mattioli Board's expectations.

Pressure Technologies (-65%) is a designer and manufacturer of high pressure  stainless  steel  cylinders,  which  are  used  in a variety of  specialised  applications.  The Group has pursued a strategy of diversification in recent years, but despite this, revenues remain weighted towards the oil and gas sector. Due to recent and significant weakness in the global oil price, oil exploration companies have materially reduced capital spending on new projects. Unsurprisingly, this has had a negative impact on the Group's order book. As a result, expectations for the current financial year have been revised downwards. Pressure Technologies' share price fell sharply during the period under review; however the holding is being retained by the Company's Investment Manager in anticipation of a strong recovery in value when the price of oil rises.

Tangent (-52%) is a digital marketing and printing specialist. In a recent trading update related to the financial year ended 28 February 2015, the Board of Tangent referred to lower than expected sales during their key Christmas trading period. This slowdown, meant that overheads, particularly in their Newcastle digital printing facility were excessive. Restructuring at this site has now been carried out, but operating margins have been negatively impacted and profits will therefore be lower than previously anticipated. Share price performance has been weak as a result, but the Company's Investment Manager has concluded that the business is fundamentally sound and that value will be recovered in due course.

Non-Qualifying Investments

Non-qualifying investments performed satisfactorily in the period, with the most notable contributions to performance coming from Arbuthnot Banking Group (+37%) and Sagentia Group (+17%). The only material disappointment came from Alkane Energy (-47%), whose share price fell sharply during the period. Alkane Energy is one of the UK's fastest growing independent power generators. The company operates mid- sized 'gas to power' electricity plants providing both predictable and fast response capacity to the grid. Unfortunately, due to a relatively mild winter, Alkane's final results for the financial year ended 31 December 2014 were 20% below forecasts. In absolute terms, the impact on overall performance was small, since our total investment in Alkane Energy is modest in size. The holding has been retained in anticipation of a full recovery in value over time.

Investment Activity

During the period, £6.8 million was allocated to new and follow-on investments, while £2.1 million was raised through the partial disposal of a number of holdings. The capital profits realised from disposals amounted to £82,000. Seven follow-on VCT qualifying investments were made. The largest of these was a £1.25 million commitment to support an acquisition proposed by Interactive Investor, a leading online investment platform for retail investors. A further £625,000 was invested in each of City Pubs East and City Pubs West; £500,000 was committed to APC Technology Group, £300,000 each to Castleton Technology and EG Solutions and £250,000 to Dillistone Group. All of these were follow-on investments in established companies within the portfolio and were made to assist these companies in achieving their growth plans.

A new £2 million non-qualifying investment was made in BCA Marketplace, the UK's largest car auction business.

Additional follow-on investments were made in Gama Aviation (£750,000) and Macfarlane (£201,000). Due to their large size, neither of these companies met HMRC's VCT qualifying rules.

Full and partial disposals were made in a number of holdings. These disposals were predominantly made in non-qualifying holdings, thereby improving the percentage of total assets invested in VCT qualifying companies.

Following the period end,  Accumuli (+10%), a leading UK-based IT security specialist, announced that it had reached agreement with NCC Group, an independent provider of Escrow, Assurance and Domain Services, on the terms of a recommended offer pursuant to which NCC Group will acquire the entire issued ordinary share capital of Accumuli.  This acquisition completed on 30 April 2015. The shares offered by NCC Group as consideration for the acquisition will be retained in the portfolio for the time being since they remain qualifying for VCT qualifying purposes for a period of up to two years by virtue of the fact that NCC Group is a fully listed UK company. The investment in Accumuli, made in November 2010, has been another meaningful success for the Company's portfolio, with the carrying value of the holding, at the period end date, being some 4.5 times book cost.

VCT Status

In aggregate, the percentage of the Company's total assets remains above that required by HMRC in order to retain VCT status. As at 31 March 2015, approximately 72.6% of our Company's total assets (valued in accordance with VCT rules) were invested in VCT qualifying companies. Excluding new capital raised in Offers for Subscription within the last three years, our VCT qualifying percentage rises to 83.2% of total assets. The Board continues to monitor this figure closely. All other HM Revenue & Customs tests have been complied with and the Board has also been advised by PWC that the Company continues to maintain its Venture Capital Trust status.

Dividends

The final dividend of six pence per share, for the financial year ended 30 September 2014, was paid to Shareholders on 20 February 2015. This is tax free to entitled UK Shareholders and represents a yield of 4.4% based on the period end Net Asset Value of 137.0 pence per share.

The Board's current policy is to pay dividends on an annual basis and the next dividend will therefore be proposed following a review of the Annual Report and Accounts after the end of the current financial year on 30 September 2015.

Outlook

Economic recovery in the UK has continued to gather strength. According to figures released by the Office for National Statistics (ONS), the UK's economy grew by 2.8% in 2014, the fastest pace since 2007 and a marked improvement on the 1.7% growth in Gross Domestic Product recorded in 2013.

While a healthy consumer sector is clearly vital to the UK economy, it is also clear that the UK continues to need a greater contribution from exports and business investment. In the longer term, a sustained recovery in business investment is vital if the UK is to lift productivity significantly and generate sustainable balanced growth. Based on further figures produced by the ONS and from evidence provided by portfolio companies, there are some clear signs that confidence is slowly returning to the corporate sector. According to the ONS, business investment is estimated to have reached £45 billion in Q4 2014, which is £2.2 billion higher than the pre-downturn peak in Q2 2008. Additionally, in 2014, gross fixed capital formation increased by an estimated 7.8% over 2013, to £292.8 billion, while business investment increased by an estimated 7.5% since 2013, to an estimated £179.7 billion, the highest level since the published time series began in 1997. It is therefore possible that economic growth may be slowly becoming less reliant on increases in overall consumer spending.

Many of the companies in our portfolio continue to see strong growth opportunities, but continued recovery in the wider UK economy remains fragile and, as ever, prone to volatility caused by significant external factors. Our Investment Manager therefore continues to focus investment activity on sensibly valued, well managed, profitable, cash generative businesses with strong leadership positions in niche, growing markets. It is encouraging to note that there currently appears to be no shortage of investment opportunities that meet these investment criteria.

Conclusion

Although total returns were essentially flat during the period, this masks a period of considerable development for the Company.

The Board and our Investment Manager have always sought to maintain a strong capital base while focusing on maintaining a steady flow of attractive yet sustainable dividend income. As a consequence of the well supported Offer for Subscription, at the time of writing this report the Net Assets of the Company have passed £100 million for the first time.

The existing portfolio of investments is maturing. The businesses held in the portfolio today survived the financial crisis and subsequent recession, and many of them appear to have become stronger as a result of this experience. We are therefore optimistic that these investments, many of which have been carefully nurtured over the last decade or more, can continue to grow and may well deliver significant further value. At the same time, the positive support for the Offer for Subscription means that there is a healthy pool of fresh capital available to support future investment opportunities. We have three years to deploy this new capital through further investment in profitable, dynamic and growing companies that meet HMRC's rules for VCT qualification.

Given the outcome of the recent General Election, it is considered unlikely that there will be any material changes to the VCT sector in the forseeable future. VCTs have proved their worth by providing much needed capital to smaller businesses as well as making a successful and significant contribution to creating permanent and meaningful employment. These two achievements appear to have been generally well accepted. The enduring appeal of the VCT sector is illustrated by the fact that the industry raised a total of £429 million in the 2014/15 tax year; the fourth highest level recorded in the last 20 years.

Our Investment Manager continues to manage the portfolio prudently and the three key objectives remain unchanged; capital preservation, the payment of an attractive and sustainable stream of dividends and finally, the delivery of capital growth over the longer term.

The Board is delighted that it has been possible to establish an attractive, consistent and, we trust, sustainable dividend income stream. This, combined with the continued development of the portfolio, puts our Company on a sound footing. The prospects for continuing improvement in total returns appear bright. In large part, this is down to the long term investment approach adopted by our Investment Manager and a carefully constructed portfolio of investments.

I look forward to being able to report on further progress after the end of the current financial year.

Peter Dicks

Chairman

28 May 2015

Investment Policy

In order to achieve the Company's Investment Objective, the Board has agreed an Investment Policy which requires the Investment Manager to identify and invest in a diversified portfolio, predominantly of VCT qualifying companies quoted on AIM that display a majority of the following characteristics:

➢ experienced and well-motivated management;

➢ products and services supplying growing markets;

➢ sound operational and financial controls; and

➢ good cash generation to finance ongoing development allied with a progressive dividend policy.

Asset allocation and risk diversification policies, including maximum exposures, are to an extent governed by prevailing VCT legislation. Specific conditions for HM Revenue & Customs ("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.

VCT regulation

The investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC.

Amongst other conditions, the Company may not invest more than 15% (by VCT value) at the time of the investment in a single company and throughout the period must have at least 70% by VCT value of its investments in shares or securities in VCT qualifying holdings, of which a minimum overall of 30% by VCT value (70% for funds raised after 6 April 2011) must be in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules). In addition, the Company must have at least 10% by value of its investment in each VCT qualifying company in ordinary shares which carry no preferential rights (save as may be permitted under VCT rules).

The £1 million limit on the amount of investment a VCT may make into a particular company within a tax year has been abolished, except where that company trades in partnership or has a joint venture. It is now a requirement that an investee company should not receive more than £5 million from State Aid sources, including VCTs, within any twelve month rolling period.

Asset mix

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 in smaller listed UK companies. Cash and liquid resources are held in bank accounts and money-market funds.

Borrowing

To date the Company has operated without recourse to borrowing. The Board may however consider the possibility of introducing modest levels of gearing up to a maximum of 10% of the adjusted capital and reserves, should circumstances suggest that such action is in the interests of Shareholders.

Alternative Investment Funds Manager's Directive ("AIFMD")

In July 2014, the Company registered as a small Alternative Investment Manager with the Financial Conduct Authority ("FCA") and is subject to the reduced level of requirements under the Alternative Investment Fund Manager's Regulations 2013 (SI2013/1773).

As a Company with net assets over €100 million, if   the   Company   becomes   "leveraged"   as   defined in the Regulations, it will become subject to the full requirements under the Regulations including the requirement to appoint a Depositary which may have material cost implications for the Company. The Company has no plans to become leveraged.

Management of the Company

The Board has overall responsibility for the Company's affairs including the determination of its investment policy. Risk is spread by investing in a number of different businesses across different industry sectors. The Investment Manager 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 monthly basis. When the Investment Manager proposes to make any investment in an unquoted company, the prior approval of the Board is required. The Board continues to take the need for transparency and independence seriously. When a conflict arises involving a relationship between any Director and an investee or proposed investee company that Director abstains from any discussion or consideration on any such investment by the Company.

The Board conducts an annual review of its performance, that of its committees as well as individual Director performance. In the past year, this review was externally facilitated, using an independent reviewer who met with all Directors individually, as well as the Manager and key service providers. Both these groups were questioned on a range of topics, including Investment performance and strategy, Shareholder relations, Director independence, Board effectiveness and relationship with the Investment Manager. Some improvements were considered and implemented, but overall the review concluded that the Board was working effectively and efficiently.

The Administrator, ISCA Administration Services Limited, also provides Company Secretarial and Accountancy services to the Company.

Investment Portfolio Summary

as at 31 March 2015

Qualifying investments	Book cost £'000	Valuation £'000	% of net assets by value *
AIM/ISDX quoted investments:
Abcam plc	1,768	8,658	8.7%
Anpario plc	1,585	6,407	6.5%
Tracsis plc	769	6,290	6.4%
Mattioli Woods plc	1,681	5,084	5.1%
Cohort plc	1,414	3,406	3.4%
Crawshaw Group plc	1,538	3,274	3.3%
Animalcare Group plc	1,476	2,276	2.3%
Idox plc	500	1,975	2.0%
ULS Technology plc	1,500	1,763	1.8%
Accumuli plc	400	1,723	1.7%
Avingtrans plc	996	1,627	1.6%
HML Holdings plc	431	1,322	1.4%
Gama Aviation plc	760	1,260	1.3%
Tristel plc	878	1,161	1.2%
Sanderson Group plc	895	1,140	1.2%
Instem plc	985	1,058	1.1%
Pressure Technologies plc	980	1,027	1.0%
Redcentric plc	393	878	0.9%
Hardide plc	1,000	875	0.9%
eg solutions plc	706	735	0.7%
Castleton Technology plc	344	706	0.7%
APC Technology plc	3,100	668	0.7%
Driver Group plc	552	616	0.6%
Omega Diagnostics Group plc	500	562	0.6%
Access Intelligence plc	1,467	535	0.5%
Dillistone Group plc	356	518	0.5%
Keywords Studio plc	369	435	0.4%
Tangent Communications plc	963	415	0.4%
Vianet plc	584	399	0.4%
PHSC plc	253	337	0.3%
Twelve investments, each valued at less than 0.3% of net assets	6,024	1,508	1.5%
	35,167	58,638	59.1%
Unlisted investments:
Blue Inc	2,000	2,000	2.0%
Interactive Investor	1,250	1,250	1.3%
The City Pub Company (West) plc	1,125	1,213	1.2%
The City Pub Company (East) plc	1,125	1,213	1.2%
Heartstone Inns	1,113	1,113	1.1%
Access Intelligence plc - loan stock	750	750	0.8%
Hasgrove	975	688	0.7%
SnackTime plc - loan stock	850	500	0.5%
Three investments, each valued at less than 0.2% of net assets	1,575	141	0.2%
	10,763	8,868	9.0%
Total qualifying investments	45,930	67,506	68.1%
Non-qualifying investments
AIM quoted investments	13,709	14,845	15.0%
Fully listed UK equities	3,483	4,955	5.0%
Interactive Investor - unlisted	1,750	2,100	2.1%
Unicorn Mastertrust Fund (OEIC)	1,031	2,148	2.2%
Unicorn UK Smaller Companies Fund (OEIC)	839	1,921	1.9%
Unicorn UK Growth Fund (OEIC)	828	1,805	1.8%
APC Technology plc Loan stock	250	250	0.2%
Other unlisted investments	5	-	-
Money Market Fund **	1	1	-
Total non- qualifying investments	21,896	28,025	28.2%
Total investments	67,826	95,531	96.3%
Cash & other assets		6,017	6.1%
Current liabilities		(2,416)	(2.4)%
Net assets		99,132	100.0%

 *based on fair value not VCT value

**disclosed within "Current investments" under Current assets in the Balance Sheet.

Responsibility Statement

In accordance with Disclosure and Transparency Rule (DTR) 4.2.10, Peter Dicks (Chairman), James Grossman, Jeremy Hamer (Chairman of the Audit Committee) and Jocelin Harris (Senior Independent Director), the Directors, confirm that to the best of their knowledge:

(a) the condensed set of financial statements, which have been prepared in accordance with the statement "Half-Yearly Reports" issued by the Accounting Standards Board, give a true and fair view of the assets, liabilities, financial position and loss of the Company for the period ended 31 March 2015, 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 below, in accordance with DTR 4.2.7; and

(d) there were no related party transactions in the first six months of the current financial year that are required to be disclosed in accordance with DTR 4.2.8.

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 30 September 2014.

The principal risks faced by the Company include:

•    investment and strategic

•    regulatory and tax

•    operational

•    fraud and dishonesty

•    financial instruments

•    economic

A more detailed explanation of these risks can be found in the Strategic Report on page 9 of the 2014 Annual Report and Accounts - copies can be found via the Company's website, www.unicornaimvct.co.uk.

Going concern

After due consideration, the Directors believe that the Company has adequate resources for the foreseeable future and that it is appropriate to apply the going concern basis in preparing the financial statements. As at 31 March 2015, the Company held cash balances of £5,721,000. The majority of the Company's investment portfolio also remains principally invested in AIM and fully listed equities which may be realised, subject to the need for the Company to maintain its VCT status. Cash flow projections covering a period of twelve months from the date of approving the financial statements have been reviewed and show that the Company has sufficient funds to meet both contracted expenditure and any discretionary cash outflows from buybacks and dividends. The Company has no external loan finance in place and is therefore not exposed to any gearing covenants.

Cautionary Statement

This report may contain forward looking statements with regards to the financial condition and results of the Company, which are made in the light of current economic and business circumstances. Nothing in this report should be construed as a profit forecast.

For and on behalf of the Board:

Peter Dicks

Chairman

28 May 2015

Unaudited Income Statement

for the six months ended 31 March 2015

		Six months ended 31 March 2015 (unaudited)			Six months ended 31 March 2014 (unaudited)			Year ended 30 September 2014 (audited)
	Notes	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Unrealised (losses)/gains on investments	7	-	(322)	(322)	-	10,387	10,387	-	8,048	8,048
Realised gains on investments	7	-	75	75	-	777	777	-	3,855	3,855
Income	4	830	-	830	508	-	508	1,232	-	1,232
Investment management fees	2	(221)	(664)	(885)	(177)	(532)	(709)	(382)	(1,145)	(1,527)
Other expenses		(263)	-	(263)	(230)	-	(230)	(500)	-	(500)
Profit/(loss) on ordinary activities before taxation		346	(911)	(565)	101	10,632	10,733	350	10,758	11,108
Tax on profit/(loss) on ordinary activities	3	-	-	-	-	-	-	-	-	-
Profit/(loss) on ordinary activities after taxation		346	(911)	(565)	101	10,632	10,733	350	10,758	11,108
Basic and diluted earnings per share: Ordinary Shares	5	0.51p	(1.34)p	(0.83)p	0.17p	18.23p	18.40p	0.57p	17.60p	18.17p

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 Sheet

as at 31 March 2015

	Notes	As at 31 March 2015 (unaudited) £'000	As at 31 March 2014 (unaudited) £'000	As at 30 September 2014 (audited) £'000
Non current assets
Investments at fair value	1c & 7	95,530	83,295	91,105
Current assets
Debtors and prepayments		296	254	190
Current investments	8	1	1	1
Cash at bank		5,721	3,024	1,170
		6,018	3,279	1,361
Creditors; amounts falling due within one year		(2,416)	(277)	(254)
Net current assets		3,602	3,002	1,107
Net assets		99,132	86,297	92,212
Share capital and reserves
Called up share capital	9	724	604	642
Capital redemption reserve	9	31	15	24
Share premium account	9	25,864	6,650	13,372
Revaluation reserve	9	31,394	33,805	32,320
Special distributable reserve	9	32,662	36,237	34,402
Profit and loss account	9	8,457	8,986	11,452
Equity Shareholders' funds		99,132	86,297	92,212
Basic and diluted net asset value per share of 1p each
Ordinary Shares	10	137.00p	142.80p	143.70p

The financial information for the six months ended 31 March 2015 and the six months ended 31 March 2014 has not been audited.

Unaudited Reconciliation of Movements in Shareholders' Funds

for the six months ended 31 March 2015

	Notes	Six months ended 31 March 2015 (unaudited) £'000	Six months ended 31 March 2014 (unaudited) £'000	Year ended  30 September 2014 (audited) £'000
Opening Shareholders' funds		92,212	73,673	73,673
Share capital bought back in the period	9	(890)	(1,233)	(2,462)
Share capital subscribed in the period	9	12,823	6,900	13,893
Expenses of Offer for subscription/buyback facility	9	(242)	(221)	(445)
(Loss)/profit for the period		(565)	10,733	11,108
Dividends paid in period		(4,206)	(3,555)	(3,555)
Closing Shareholders' funds		99,132	86,297	92,212

The financial information for the six months ended 31 March 2015 and the six months ended 31 March 2014 has not been audited

Unaudited Cash Flow Statement

for the six months ended 31 March 2015

	Notes	Six months ended 31 March 2015 (unaudited) £'000	Six months ended 31 March 2014 (unaudited) £'000	Year ended 30 September 2014 (audited) £'000
Operating activities
Investment income received		863	506	1,209
Investment management fees paid		(886)	(709)	(1,527)
Other cash payments		(212)	(305)	(578)
Net cash outflow from operating activities		(235)	(508)	(896)
Investing activities
Purchase of investments	7	(4,903)	(6,794)	(17,380)
Sale of  investments	7	2,155	5,849	9,456
Net cash outflow from investing activities		(2,748)	(945)	(7,924)
Equity dividends
Dividends paid	6	(4,206)	(3,555)	(3,555)
Net cash outflow before liquid resource management and financing		(7,189)	(5,008)	(12,375)
Financing
Shares issued as part of Offer for Subscription (net of transaction costs)		12,630	6,706	13,448
Shares bought back		(890)	(1,233)	(2,462)
Net cash inflow from financing		11,740	5,473	10,986
Management of liquid resources
Decrease in current investments		-	153	153
Increase/(decrease) in cash		4,551	618	(1,236)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash for the period		4,551	618	(1,236)
Net funds at start of period		1,170	2,406	2,406
Net funds at end of period		5,721	3,024	1,170
Reconciliation of operating (loss)/profit to net cash outflow from operating activities
(Loss)/profit on ordinary activities before taxation		(565)	10,733	11,108
Net unrealised losses/(gains) on investments		322	(10,387)	(8,048)
Net gains on realisations of investments		(75)	(777)	(3,855)
Transaction costs		(7)	(40)	(47)
Decrease/(increase) in debtors		36	(81)	11
Increase/(decrease) in creditors		54	44	(65)
Net cash outflow from operating activities		(235)	(508)	(896)

Notes to the unaudited financial statements

for the six months ended 31 March 2015

1.  Principal accounting policies

The following accounting policies have been applied consistently throughout the period. Full details of principal accounting policies are disclosed in the Annual Report.

a)      Basis of accounting

The unaudited results cover the six months to 31 March 2015 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 30 September 2014 and the 2009 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued by the Association of Investment Trust Companies.

The financial statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value of investments designated at fair value through profit and loss.

The Half-Yearly report has not been audited nor has it been reviewed by the auditor pursuant to the Financial Reporting Council (FRC) guidance on Review of Interim Financial Information.

b)      Presentation of the Income Statement

In order to better reflect the activities of a VCT and in accordance with the SORP, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. The revenue column of profit attributable to Shareholders is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 274 Income Tax Act 2007.

c)      Investments

All investments held by the Company are classified as "fair value through profit and loss", in accordance with the International Private Equity and Venture Capital Valuation ("IPEVCV") guidelines, as updated in September 2009. This classification is followed 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 on organised financial markets, fair value is generally determined by reference to Stock Exchange market quoted bid prices at the close of business on the balance sheet date. Purchases and sales of quoted investments are recognised on the trade date where a contract of sale exists whose terms require delivery within a time frame determined by the relevant market. Purchases and sales of unlisted investments are recognised when the contract for acquisition or sale becomes unconditional.

Unquoted investments are stated at fair value by the Directors in accordance with the following rules, which are consistent with the IPEVCV guidelines and in accordance with FRS 26:

All unquoted investments are held at the price of a recent investment for an appropriate period where there is considered to have been no change 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 applying a suitable price-earnings ratio to that company's historic, current or forecast post-tax earnings before interest and amortisation (the ratio used being based on a comparable sector but the resulting value being adjusted to reflect points of difference identified by the Investment Manager compared to the sector including, inter alia, a lack of marketability).

or:

b)  where a company's underperformance against plan indicates a diminution in the value of the investment, provision against cost is made, as appropriate. Where the value of an investment has fallen permanently below cost, the loss is treated as a permanent impairment and as a realised loss, even though the investment is still held. The Board assesses the portfolio for such investments and, after agreement with the Investment Manager, will agree the values that represent the extent to which an investment loss has become realised. This is based upon an assessment of objective evidence of that investment's future prospects, to determine whether there is potential for the investment to recover in value.

(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.  Investment Management Fees

The Directors have charged 75% of the investment management fees 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.  Income

	Six months ended 31 March 2015 (unaudited) £'000	Six months ended 31 March 2014 (unaudited) £'000	Year ended 30 September 2014 (audited) £'000
Dividends	737	417	1,016
Money market funds and Unicorn Managed OEICs	12	9	48
Bank deposits	2	1	-
Loan stock interest	79	81	168
	830	508	1,232

5.  Basic and diluted earnings and return per share

`	Six months ended 31 March 2015 (unaudited) £'000	Six months ended 31 March 2014 (unaudited) £'000	Year ended 30 September 2014 (audited) £'000
Total earnings after taxation	(565)	10,733	11,108
Basic and diluted earnings per share	(0.83)p	18.40p	18.17p
Net revenue from ordinary activities after taxation	346	101	350
Revenue earnings per share	0.51p	0.17p	0.57p
Net unrealised capital (losses)/gains	(322)	10,387	8,048
Net realised gains	75	777	3,855
Capital expenses (net of taxation)	(664)	(532)	(1,145)
Total capital return	(911)	10,632	10,758
Capital earnings per share	(1.34)p	18.23p	17.60p
Weighted average number of shares in issue in the period	68,089,001	58,340,155	61,135,718

6.  Dividends

	Six months ended 31 March 2015 (unaudited) £'000	Six months ended 31 March 2014 (unaudited) £'000	Year ended 30 September 2014 (audited) £'000
Final capital dividend of 5.25 pence per share and final income dividend of 0.75 pence per share for the year ended 30 September 2013 paid on 31 January 2014	-	3,555	3,555
Final capital dividend of 5.50 pence per share and final income dividend of 0.50 pence per share for the year ended 30 September 2014 paid on 20 February 2015	4,206	-	-
	4,206	3,555	3,555

7.  Investments at fair value

	Fully Listed £'000	Traded on AIM/ISDX Market £'000	Unlisted ordinary shares £'000	Unlisted Loan stock £'000	Unicorn OEIC funds £'000	Total £'000
Book cost at 30 September 2014	4,693	44,815	8,418	1,850	2,698	62,474
Unrealised gains/(losses) at 30 September 2014	2,214	27,248	1	(350)	3,206	32,319
Permanent impairment in value of investments	(207)	(1,930)	(1,551)	-	-	(3,688)
Valuation at 30 September 2014	6,700	70,133	6,868	1,500	5,904	91,105
Purchases at cost	367	4,101	2,500	-	-	6,968
Sale proceeds	(1,875)	(428)	-	-	-	(2,303)
Realised gains	11	71	-	-	-	82
Unrealised (losses)/gains in the period	(248)	(394)	350	-	(30)	(322)
Closing valuation at 31 March 2015	4,955	73,483	9,718	1,500	5,874	95,530
Book cost at 31 March 2015	3,483	48,876	10,918	1,850	2,698	67,825
Unrealised gains/(losses) at 31 March 2015	1,679	26,537	351	(350)	3,176	31,393
Permanent impairment in value of investments	(207)	(1,930)	(1,551)	-	-	(3,688)
Valuation at 31 March 2015	4,955	73,483	9,718	1,500	5,874	95,530

Transaction costs on the purchase and disposal of investments of £7,000 were incurred in the period. These are excluded from realised gains shown above of £82,000, but were included in arriving at gains on realisations of investments disclosed in the Income Statement of £75,000.

 

   Reconciliation of cash movements in investment transactions

The difference between the purchases in Note 7 and that shown in the Cash Flow Statement, is £2,065,000. This is the result of a purchase in the previous year of £100,000 settled during this period, a purchase of £2,000,000 outstanding at the period end and a corporate action involving a share for share exchange on Microgen for £165,000. The difference between disposals per Note 7 above and that shown in the Cash Flow Statement, is £148,000. This is due to the disposal of an investment for £17,000 in the previous year, the proceeds of which were not received until the current period and the corporate action referred to above on Microgen of £165,000.

8.  Current Investments

These comprise an investment in one (31 March 2014: one; 30 September 2014: one) Dublin based OEIC money market fund, managed by Blackrock Investment Management UK Ltd and amounts to £1,000 (31 March 2014: £1,000; 30 September 2014: £1,000). This sum is subject to same day access. This sum is regarded as monies held pending investment.

9.  Share capital and reserves

	Called up share capital £'000	Capital redemption reserve £'000	Share premium account £'000	Revaluation reserve £'000	Special distributable reserve £'000	Profit and loss account £'000	Total £'000
At 1 October 2014	642	24	13,372	32,320	34,402	11,452	92,212
Shares repurchased for cancellation	(7)	7	-	-	(890)	-	(890)
Shares issued under Offer for Subscription	89	-	12,734	-	-	-	12,823
Expenses of shares issued under Offer for Subscription	-	-	(242)	-	-	-	(242)
Transfer to special reserve	-	-	-	-	(850)	850	-
Gains on disposal of investments (net of transaction costs)	-	-	-	-	-	75	75
Realisation of previously unrealised valuation movements	-	-	-	(604)	-	604	-
Net decreases in unrealised valuations in the period	-	-	-	(322)	-	-	(322)
Dividends paid	-	-	-	-	-	(4,206)	(4,206)
Loss for the period	-	-	-	-	-	(318)	(318)
At 31 March 2015	724	31	25,864	31,394	32,662	8,457	99,132

10.  Net asset values

	At 31 March 2015 (unaudited) £'000	At 31 March 2014 (unaudited) £'000	At 30 September 2014 (audited) £'000
Net assets	99,132	86,297	92,212
Number of shares in issue	72,360,980	60,432,437	64,168,112
Net asset value per share	137.00p	142.80p	143.70p

11.  Post Balance Sheet Events

On 2 April 2015, as part of the Company's Offer for Subscription 6,545,821 shares were allotted at prices ranging from 138.39 pence and 145.03 pence raising net funds amounting to £8.97 million.

On 13 April 2015, as part of the Company's Offer for Subscription 843,065 shares were allotted at prices ranging from 138.38 pence and 141.97 pence raising net funds amounting to £1.16 million.

On 11 May 2015, the Company repurchased 174,000 shares representing 0.2% of the share capital in issue, for cancellation at a total cost of £217,000 equivalent to 124.6 pence per share.

On 13 May 2015, as part of the Company's Offer for Subscription 909,365 shares were allotted at prices ranging from 144.55 pence and 146.87 pence raising net funds amounting to £1.30 million and the Offer for Subscription is now closed.

12.  The financial information for the six months ended 31 March 2015 and the six months ended 31 March 2014 has not been audited.

The financial information contained in this Half-Yearly report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial statements for the year ended 30 September 2014 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 either section 498(2) or 498(3) of the Companies Act 2006.

Copies of this statement are being sent to Shareholders. Further copies are available free of charge from the Company Secretary, ISCA Administration Services Limited on 01392 487056, email: [e-mail], or from the Company's website: www.unicornaimvct.co.uk.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of this announcement. 

 

END

 

 

IR MMGZKNRKGKZM