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27 Nov 2007 15:02
Unicorn AIM VCT plc
26 November 2007
Preliminary results for the year ended 30 September 2007
Chairman's Statement
The Company has had a busy and largely successful twelve monthsdespite encountering particularly difficult market conditions in the finalquarter of the financial year. The Offer for Subscription for Series 3Ordinary Shares closed on 31 May 2007 raising ‚£4.7m net of expenses. Theexisting portfolios continued their positive development with a number of newinvestments made to replace successful realisations. In addition the flow oftax free dividend distributions remained healthy and the regular programme ofshare buybacks was maintained.
As at 30 September 2007 the Net Asset Values (NAV) for the Ordinary Share Fund, the Series 2 (S2) Share Fund and the Series 3 (S3) Share Fund were 89.55 pence per share, 113.84 pence per share and 92.28 pence per share respectively.
It gives me pleasure to report that during the course of thefinancial year under review interim dividends totalling 12.55 pence per sharewere paid to Ordinary Fund Shareholders and an interim dividend of 5 pence pershare was paid to S2 Fund Shareholders (in addition to the final dividend of 5pence per share declared and paid in respect of the year ended 30 September2006). In both cases, dividends were paid from net realised capital profits.In respect of the year ended 30 September 2007 a final dividend of 5 pence pershare is proposed for holders of S2 Shares. Given the stated aim ofmaintaining NAV at around 100 pence per share, the Board does not intendproposing a final dividend for Ordinary Shareholders or S3 Shareholders.During the period 1,389,015 Ordinary Shares and 886,724 S2 Shareswere bought back for cancellation at an average price of 93 pence per shareand 113 pence per share respectively. The Company continues to hold cashreserves in order to finance further dividend payments and a continuing sharebuyback programme. To date, shareholders in the Company have received a totalof ‚£14.7m in dividends and ‚£5.3m through share buy-backs.It has been a relatively active period for the establishedportfolios with three realisations and six new VCT qualifying investments madefor both the Ordinary Share Fund and the S2 Share Fund. In addition, Careforcewhich was held in both portfolios was acquired by Mears Group. Theconsideration for the acquisition was received in new Mears Group ordinaryshares which have been retained in each portfolio and which continue toqualify under current VCT legislation for a period of up to three years. Totalproceeds from realisations amounted to just under ‚£7.5m in the Ordinary ShareFund whilst the total cost of purchases was ‚£3.4m. In the S2 Share Fund,proceeds from the disposal of VCT qualifying investments totalled ‚£4m of which‚£2m was re-invested in new qualifying investments. At the financial year endthe portfolio of the Ordinary Share Fund consisted of thirty-eight VCTqualifying investments whilst the S2 Share Fund portfolio comprised thirtyqualifying investments. The S3 Share Fund had yet to make any VCT qualifyinginvestments by the year-end. Approximately 52% of the total assets of the S3Fund have been invested equally in the five sub-funds of the Unicorn OpenEnded Investment Company (OEIC), with the balance held in cash or near cashinstruments.The performance of the AIM over the past twelve months highlightsthe greater volatility and risk associated with investment in this area of themarket. For the first nine months of the Company's financial year the FTSE AIMAll-Share Index rose steadily only for much of the gain to reverse in thefinal quarter, with the Index ending the period up by 11.0%. Frustratingly,both the Ordinary Share Fund and the S2 Share Fund were unable to keep pacewith the overall market gain. There are number of factors behind this relativeunder-performance:-
Firstly, the mining sector, which currently accounts for 32% of the FTSE AIM All-Share Index, recorded very strong gains, posting a rise of 26% in the first six months of 2007.
Secondly, international companies now account for 19% of AIMconstituents and have also delivered strong returns in the past 12 months.Your Company does not invest in businesses operating in either of these areasof the market since they tend to be early stage and unprofitable. In addition,under existing HMRC legislation they typically fail to achieve VCT qualifyingstatus.Finally, a small number of our investee companies experiencedtrading setbacks. The ability to successfully manage the transition fromprivate to public ownership represents a significant challenge and is one thatcan often result in temporary setbacks. Despite positive contributions fromthe majority of holdings in the Ordinary Share Fund, a number of companies didnot achieve expected levels of profitability and their share prices fell as aresult. In the S2 Share Fund, exposure to the debt management sector provedcostly and overall performance was particularly impacted by the collapse ofThe Debt Advisor Group Plc. Unfortunately, this investment has had to bewritten down to nil value and is currently in administrative receivership. Ona positive note, a significant majority of the investee companies within theS2 Share Fund generated share price gains, with particularly strongperformances from some of the larger holdings in the portfolio. A detailedreport on the performance of the portfolios within each Fund is contained inthe Investment Manager's Review below.The Investment Manager's focus on profitable, cash generativecompanies combined with the diversified nature of the portfolios acts as aneffective counterbalance to stock specific risk. Given the risk associatedwith investing in smaller, growth orientated companies it is almost inevitablethat individual holdings will occasionally disappoint. However, your Board isconfident that the Investment Manager's proven approach offers good prospectsfor delivering positive and sustainable returns over the medium to long term.For this reason the Board is of the opinion that the continued appointment ofthe Investment Manager remains in the interests of shareholders.Peter DicksChairmanInvestment Manager's ReviewInvestment Policy
It is the aim of the Investment Manager to identify and invest in a diversified portfolio of companies 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.
Performance
The NAV of the Ordinary Share Fund as at 30 September 2007 was89.55 pence per share, representing an increase of 2.3% over the previous yearafter adding back dividends paid. Since shares were first allotted in November2001, the initial NAV of the Ordinary Share Fund has increased by 36.0% on atotal return basis.
The NAV of the S2 Share Fund was 113.84 pence per share, which represents an increase in total return for the year of 2.9% after adding back dividends paid. The total return on initial NAV is 32.9%.
The NAV of the S3 Share Fund was 92.28 pence per share. Approximately 50% of the net proceeds of the share issue have been invested equally in the five sub-funds of the Unicorn Investment Funds OEIC. The remaining assets are being held in cash or near cash instruments awaiting investment in VCT qualifying companies.
Investment strategy
The policy of investing in companies which have a demonstrable record ofprofitability and positive cash generation remains unchanged. The OrdinaryFund and the S2 Fund portfolios are now well diversified both by sector and bynumber of investments held. These Funds remain comfortably above the thresholdrequired to retain VCT qualifying status (whereby a minimum of 70% of combinedassets must be invested in VCT qualifying holdings). The Investment Managerwill continue to adopt a highly selective approach to new investmentopportunities for all three Funds.
Alternative Investment Market (AIM) review
In the twelve month period to 30 September 2007, the AIM performedwell despite experiencing a sell-off in the final quarter. One of the moreimmediate consequences of the recent crisis in the US sub-prime mortgagemarket has been a `flight to quality', whereby equity investors seem to havesought safety in larger capitalized companies. Liquidity at the `junior' endof the market has temporarily deteriorated and as a result many otherwiserobust businesses have experienced a de-rating in recent times. In positivecontrast, the new issue market has remained healthy and the quality of UKbusinesses seeking an initial listing on AIM appears to have improved.The FTSE AIM All-Share Index remains dominated by mining andresource stocks which accounted for 32% of the Index by value as at 30September 2007. With a `light touch' approach to regulation, the attractionsof an AIM listing are also becoming more widely recognised by entrepreneursrunning international companies. In the three months to the end of June 2007over 30% of all new issues were non-UK and international companies now accountfor 19% of all AIM quoted companies. International companies, including miningand resource businesses, contributed strongly to an overall rise in the Indexof 11% during the past 12 months. However, very few of these companies qualifyfor investment by Venture Capital Trusts under existing HMRC legislation andas a result Unicorn AIM VCT Funds have no exposure to this area of the AIM.
Qualifying investments
The majority of the holdings in both the Ordinary Share Fund andthe S2 Share Fund performed well. The net positive contribution produced byeach of the qualifying portfolios was ‚£1,440,000 and ‚£177,000 respectively.However, overall performance in both portfolios was held back by a higher thanaverage incidence of stock specific issues. At the smaller end of the quotedmarket, companies which fail to meet profit expectations invariably get hithard.
The Ordinary Share Fund made new investments in six VCT qualifying companies during the year under review.
Cantono recently raised ‚£10m via a placing of new shares in orderto finance the development of state of the art data centre facilities. Thesupply of operational data centre sites in the UK has declined significantlyover the past five years whilst demand for facilities with appropriateavailability of power and cooling continues to grow sharply. Current tradingin Cantono's core IT managed services operations is in line with managementexpectations.Clerkenwell Ventures is a cash shell headed by David Page of PizzaExpress fame. The intention is to use funds raised to acquire established,successful but privately owned restaurant brands. Possible targets have beenidentified and the due diligence process is underway, but to date noannouncement has been released regarding specific acquisitions. The shares hadrisen to a 10% premium by the end of September 2007.Hasgrove is a pan-European marketing and communication servicesgroup. The strategy is to grow and develop key "best of breed" brands with aspecific focus on public relations, public affairs and digital communication.Through a series of acquisitions, the group has established the leading marketposition in European Union public affairs consultancy together with a growingpresence in the fast emerging digital marketing sector. Recently releasedInterim Results confirmed that the integration of acquisitions is progressingto plan. Turnover rose in the six month period by 115%, with fully dilutedearnings per share growing by more than 25%. As is the case in businesses thatpredominantly revolve around investment in human capital, the key risk is thatthe group overpays for acquisitions only to see the `talent' walk away at alater stage. To date, the principal vendors have all stayed with the enlargedgroup and are heavily incentivised by long term earn-outs to help ensuresuccess.Hexagon Human Capital is a recruitment company specialising inSenior Interim Management and Executive Search. In a recent trading update,the Board of Hexagon confirmed that trading conditions in all market sectors,in which the Group operates, were strong and expressed confidence that tradingperformance will be in line with current market expectations for the full yearto March 2008.Kiotech manufactures and supplies high performance natural feedadditives to global agriculture and aquaculture markets. The Board andmanagement of the company were changed in June 2006. This change in managementprompted a shift in strategic direction. A fundraising was arranged to financethe acquisition of an established, profitable and cash generative business inNovember 2006. This acquisition stabilized the business and allowed therequired development work to enable commercialisation of the aquacultureproduct to continue on a self-funding basis. This product has significantpotential but is still some way from being approved for commercial sale. Theenlarged group was recently able to report maiden profits since becoming apublic company 10 years ago.
Shieldtech is a specialist manufacturer of body armour systems which it sells to the Armed Forces and Emergency Services in the UK and internationally. The business has acquired a reputation for delivering high quality, high technology solutions for safety critical applications. The business operates in areas that offer high barriers to entry driven by regulatory requirements, technical expertise and the need for total product integrity. Shieldtech is profitable, cash generative and has significant opportunities to develop both organic and acquisitive growth.
A number of existing holdings delivered strong gains during the period under review.
Abcam has successfully exploited web based technology to build a business specialising in the distribution of therapeutic antibodies to the worldwide life science research market. The company has grown rapidly from humble beginnings in 1998 and now generates annual sales of ‚£25m from an online catalogue of over 36,000 products. The business is inherently high margin and cash generative and prospects for continued growth remain excellent. In the past year, the Board has taken the decision to invest significantly in expanding their own manufacturing capability. The new facilities are now largely complete and production of commercial scale antibodies should commence in early 2008. In time, this initiative should significantly enhance margins and give Abcam much greater control over the antibody market as a whole. Abcam is a significant holding in both the Ordinary Share Fund and the S2 Share Fund.
Maxima Holdings is an IT managed services and systems integrationcompany, which continues to expand through both organic and acquisitivegrowth. Maxima Holdings floated on AIM in November 2004 and has sincecompleted ten acquisitions. In that time turnover has grown from approximately‚£10m to over ‚£30m per annum, whilst profits before tax have risen from ‚£1m to‚£4.2m by the year ended 31 May 2007. Importantly, the business has been ableto fund a significant portion of acquisition costs through its inherent,strong cash generation. Net debt at the year end stood at ‚£6.6m representing agearing ratio of 21%. The Ordinary Share Fund and the S2 Share Fund investedin the business at flotation and at subsequent VCT qualifying fundraisingrounds. The shares have risen in value by over 90% in the past twelve monthsdelivering ‚£1.4m and ‚£850,000 in positive contribution to each Fundrespectively. Maxima Holdings now constitutes the largest holding in bothportfolios and yet remains modestly rated on most commonly used valuationmeasures.Mattioli Woods is one of the UK's fastest growing pension andwealth management consultancies. The company specialises in advising andacting as Trustee of Self Invested Pension Plans and Small Self-AdministeredPension Schemes. Founded in 1991, the company has built long termrelationships with its customers and now acts for over 2,000 pension fundclients. Revenue generation is predominantly fee-based and the business isenjoying strong growth partly driven by new government legislation relating topension simplification. Mattioli Woods remains one of the largest holdings inboth the Ordinary and the S2 Share Fund and the shares rose in value by 34% inthe year under review.Zetar the fast growing confectionery and healthy snacking group ofbusinesses continued to trade strongly, with healthy cashflow and an equityfundraising helping to finance three further acquisitions in the pastfinancial year. Net debt also rose slightly but gearing remains modest at 31%of net assets. A recent trading update confirmed that the Board remainsconfident about the Group's prospects and that operations have continued totrade in line with expectations. Zetar increased in value by 25% in the yearunder review and is held in both the Ordinary Share Fund and the S2 ShareFund.The Ordinary Share Fund is now well diversified consisting ofthirty-eight qualifying holdings, the majority of which performed at least inline with expectations. However, there were five companies which disappointedand which between them accounted for over 85% of the total negativecontribution produced during the year.Supporta provides back office support services and domiciliary careto the public and private sectors and is one of the Ordinary Share Fund'searliest investments having been introduced to the portfolio in January 2002.Profits have been realised in this investment at various points during thepast five years such that the current carrying value of the investment islittle over half the original book cost. The market value of this holding was27% higher than book cost at the balance sheet date and the core activity ofdomiciliary care provision remains fundamentally sound. However, the companyhas experienced a difficult year operationally. In the financial year to 31March 2007, Supporta reported a loss before tax of ‚£4.2m after incurringexceptional charges of ‚£4.8m mainly related to goodwill impairment followingdisposal of the payroll services division. In May 2007, the Board initiated astrategic review in an attempt to ensure that shareholders benefit fully fromthe underlying and potential value of the company. This review is currentlyongoing, but a recent trading statement indicated that trading was in linewith expectations. It is reasonable to expect a recovery in the market valueof Supporta in the current financial year.Huveaux is a business to business media publishing group focused onpolitical, education, learning and healthcare publishing. The company hasgrown rapidly through acquisition in recent years and is now experiencing aperiod of slowing earnings. The Learning Division is currently suffering fromUK government cutbacks in training budgets, whilst the Healthcare Division hasbeen impacted by very weak French pharmaceutical advertising spend. The recentrelease of Interim Results revealed a loss before tax of ‚£1.5m and highlightedplans to increase shareholder value through the implementation of anoperational and profit improvement programme. As a sign of confidence in thefuture prospects of the business the executive management team have recentlyincreased their shareholdings through market purchases.Avingtrans is an engineering technology group with activities inthe design, manufacture and supply of critical components to the medical,industrial and aerospace sectors. In the financial year to 31 May 2007, thebusiness experienced a decline in orders from a major customer in its MedicalProducts Division and post tax profits fell by almost 15% as a result. Theshare price has suffered disproportionately, falling by almost 50% from itspeak. The indications are that this setback has now been resolved and that areturn to earnings growth can be expected in the current financial year.Pilat Media specialises in the development and supply of airtimesales and programme management software to the global media broadcastindustry. As a consequence of rapid growth in recent years, the Company hasfound it necessary to invest significantly in its operating resource. Thisincrease in overhead has coincided with delays to the signing of expected newcontracts. Profit forecasts have been significantly downgraded for the currentfinancial year and the share price has suffered. The business operates in aspecialist niche, has developed market leading software and has a healthypipeline of opportunities. However, management will need to start convertingsome of these opportunities into revenue generating contracts in the near termif they are to meet profit forecasts for financial year 2008 and beyond.Access Intelligence is a group of companies delivering a range ofbusiness critical support services, such as Compliance and Data Management, toprivate and public sector organisations. The group has grown by acquisitionbut remains sub-scale in terms of market value and profile. For the six monthsto the 31 May 2007, Access Intelligence reported a loss before tax of ‚£323,000citing contract delays and a drop in storage solutions sales. The productoffering has been strengthened in the past six months, recurring revenues aregrowing at a rate of 10% per annum and pipeline activity is reported to be athigh levels. The challenge during the remainder of the current financial yearis for the group's sales teams to convert prospects into strong salesdelivery. Directors have bought stock in the market on several occasions sincethe release of Interim Results in July 2007 and there has been a modestrecovery in the share price.
All five of these businesses have realistic prospects of delivering share price recovery through operational improvements in the current financial year. In each case we have retained our investment whilst continuing to closely monitor progress.
It was a relatively active year for realisations in both theOrdinary and the S2 Share Fund. Talarius the UK's largest high street chain ofcoin operated gaming centres was acquired by Tattersalls of Australiacrystallising a gain in excess of ‚£1m for each of the Funds representing athree fold return on initial investment. Careforce which was also held in bothFunds was acquired by Mears Group at a 37% premium to book cost andconsideration was received in the form of Mears Group shares which are beingretained in the portfolios as they continue to qualify for VCT purposes for aperiod of up to three years post completion of the transaction.
The Funds' holdings in Clarity Commerce were disposed of entirely through a market sale, generating an 18% capital gain. In the period since disposal the share price of Clarity Commerce has more than halved. The loan note relating to the holding in TRL Electronics (acquired by L3 Communications in June 2006), was redeemed in full in March 2007.
The S2 Share Fund produced a solid if unspectacular outcome for theyear as a whole. In common with the Ordinary Share Fund, the companies held inthe portfolio experienced mixed fortunes. Many of the holdings registeredstrong gains, but exposure to the debt management sector exerted a significantdrag on overall performance.In recent years there has been an explosion in the number ofover-indebted consumers who have sought help in the management of their debt.The number of people seeking advice on debt issues continues to rise at analarming rate. New figures released in September 2007 from the Citizens AdviceBureaux show that debt enquiries have hit a record high, increasing by 20% inthe last year and bringing the total to 1.7 million in 2006/07. Many consumersentered into Individual Voluntary Arrangements with the quoted debt managementcompanies as a means of solving their personal debt problems and for a whilethis appeared to be an elegant solution. In theory the lenders were happy toreceive repayment of up to 50% of their otherwise uncertain loans Consumersentering into IVAs would have their debt written off over a five year periodand the debt management companies would develop into thriving and cashgenerative businesses from which investors would also benefit.
Whilst the underlying problem remains larger than ever, the business model for the sector has now effectively imploded due to over-aggressive marketing by the IVA providers. Banks and credit card companies became embarrassed by the growing evidence of their slack lending criteria and by the increasing success of the IVA companies. The rate at which lenders were prepared to sign off on new IVAs slowed dramatically and the terms on which IVAs were accepted worsened significantly. The IVA companies started to rapidly burn through their cash reserves as advertising costs to acquire new cases spiraled whilst upfront fees from the lenders dried up.
As a result, investor confidence in the sector collapsed;liquidity in the shares of the IVA providers evaporated and the value of theFund's holdings in Debts.co.uk, Invocas Group and The Debt Adviser Group allsuffered a rapid decline. Unfortunately, in the case of The Debt AdvisorGroup, the Fund's investment has had to be written down to nil after thebusiness was forced into administration. This has clearly been a mostdisappointing outcome for the S2 Fund. The losses incurred are all the moregalling because the underlying issue of consumer debt, which made the debtmanagement sector so attractive in the first place, remains like a lurkingiceberg; huge, still barely visible and potentially extremely damaging ifignored.The S2 Fund co-invested in all six of the new VCT qualifyinginvestments made by the Ordinary Fund during the course of the year. The S2Fund also made three outright disposals and the portfolio now consists ofthirty qualifying investments. In common with the Ordinary Fund, the strongestcontributors to performance during the year included Maxima Holdings, MattioliWoods, Zetar and Abcam. Details relating to new investments, furtherdescription of stock specific performance and information relating to three ofthe disposals can be found earlier in this report. The Fund's holding in Ovumwas sold to Datamonitor for cash, realising a gain on disposal of almost‚£250,000.
Non-qualifying portfolios
In the established Funds, the contribution to performance from theinvestment in sub-funds of the Unicorn Investment Funds OEIC was positive overthe full twelve month period under review. However, in the second half of thefinancial year, equity market conditions deteriorated and each of the sub-fundinvestments lost ground during this period. As a result, the S3 Fund, whichclosed for subscription on 31 May 2007, saw Net Asset Value decline by 3%.In the Ordinary Share Fund the holding in Lorien was sold and aloss on disposal of ‚£254,000 was recorded. With the exception of Lorien, allnon-qualifying investments have crystallised capital gains on disposal. Thecapital gains on these disposals can be distributed to shareholders in theform of tax free dividends whilst the initial amount invested will be recycledinto new and exciting growth opportunities in VCT qualifying companies. Thisgradual process of distribution and recycling of capital will continue and itis certain that the contribution from the non-qualifying holdings in bothFunds will be a smaller component of total returns in future.
Prospects
It has been a mixed year for the Funds. The majority of holdingshave performed well whilst a small number of investee companies haveencountered problems. The Investment Manager is confident that most, but notall, of the companies which suffered setbacks over the past year will recoverin due course and remains convinced of the merits of a policy which focuses oninvesting in a diverse range of profitable businesses with good long termgrowth potential. The established and selective approach to new investmentwill continue and the Manager is confident that this successful strategy willcontinue to deliver attractive returns for Shareholders over the longer term.
Non-Statutory analysis between the Ordinary Share, S2 Share and S3 Share Funds
1. Income Statement for the year ended 30 September 2007
Ordinary Share Fund S2 Share Fund Notes Revenue Capital
Total Revenue Capital Total
‚£'000
‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000
Net unrealised gains/(losses) on investments - 124 124 - 740 740Net gains/(losses) on realisation of investments - 1,330
1,330 - 40 40Income 436 - 436 228 - 228Investment management fees 3 (171) (512) (683) (83) (248) (331)Other expenses (317) - (317) (165) - (165) ----------- ----------- ----------- ----------- ----------- (Loss)/profit on ordinary activities before taxation (52) 942
890 (20) 532 512 Tax on ordinary activities - - - - - - ----------- ----------- ----------- ----------- ----------- (Loss)/profit attributable to equity shareholders 4 (52) 942
890 (20) 532 512
======= ======= ======= ======= ======= =======(Loss)/profit per ordinary share (pence per share) (0.17)p 3.02 p
2.85 p (0.13)p 3.45 p 3.32 p
Average number of shares in issue 31,171,332 15,425,839 S3 Share Fund Total of all Funds Notes Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Net unrealisedgains/(losses) oninvestments - (116) (116) - 748 748Net gains/(losses)on realisation ofinvestments - (12) (12) - 1,358 1,358Income 82 - 82 746 - 746Investmentmanagement fees 3 (9) (28) (37) (263) (788) (1,051)Other expenses (34) - (34) (516) - (516) ----------- ----------- ----------- ----------- ----------- -----------(Loss)/profit onordinary activities beforetaxation 39 (156) (117) (33) 1,318 1,285 Tax on ordinaryactivities - - - - - - ----------- ----------- ----------- ----------- ----------- -----------(Loss)/profitattributable toequity shareholders 4 39 (156) (117) (33) 1,318 1,285 ======= ======= ======= ======= ======= =======(Loss)/profit per 1.00 p (4.02)p (3.02)pordinary share(pence per share) Average numberof shares in issue 3,879,970
2. Balance Sheets as at 30 September 2007
Ordinary Share Fund S2 Share Fund ‚£'000 ‚£'000 ‚£'000 ‚£'000Non-current assetsInvestments at fair value 26,174 16,112 Current assetsDebtors and prepayments 1,226 35Current investments 5 726Cash at bank 36 67 ---------- ---------- 1,267 828Creditors: amounts falling due within one year (171) (115) ---------- ----------Net current assets 1,096 713 ---------- ----------Net assets 27,270 16,825 ====== ======CapitalCalled up share capital 304 148Capital redemption reserve 46 10Share premium account - 10Revaluation reserve 6,264 3,687
Special distributable reserve 18,383
11,748Profit and Loss account 2,273 1,222 ---------- ----------Equity shareholders' funds 27,270 16,825 ====== ======Number of shares in issue: 30,453,157 14,778,800
Net asset value per 1p share: 89.55p 113.84p S3 Share Fund Adjustments Total of all Funds (see note (per Statutory Balance below) Sheet) ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000Non-current assetsInvestments at fair value 2,351
44,637 Current assetsDebtors and prepayments 38 (1) 1,298Current investments 2,208 2,939Cash at bank 5 108 ---------- ---------- ---------- 2,251 (1) 4,345
Creditors: amounts falling due within one year (27) 1 (312) ---------- ---------- ----------Net current assets 2,224 4,033 ---------- ----------Net assets 4,575 - 48,670 ====== ======CapitalCalled up share capital 50 502Capital redemption reserve - 56Share premium account 4,642 4,652Revaluation reserve (116) 9,835
Special distributable reserve - 30,131Profit and Loss account (1) 3,494 ---------- ----------Equity shareholders' funds 4,575 48,670 ====== ======Number of shares in issue: 4,958,036 Net asset value per 1p share: 92.28p
Note: The adjustment above nets off the inter-fund debtor and creditor balances, so that the "Total of both funds" balance sheet agrees to the Statutory Balance Sheet below.
3. Reconciliation of movements in Shareholders' Funds for the year ended 30 September 2007
Ordinary Total of all Funds Notes Share Fund S2 Share Fund S3 Share Fund (per Statutory Balance Sheet) ‚£'000 ‚£'000 ‚£'000 ‚£'000As at 1 October 2006 31,581 18,841 - 50,422 Net share capital bought back in the year (1,290) (1,000) - (2,290)Net share capital issued in the year -
- 4,692 4,692Profit for the year 890 512 (117) 1,285Dividends paid 5,6 (3,911) (1,528) - (5,439) ---------- ---------- ---------- ----------
Closing shareholders' funds at 30 September 2007 27,270
16,825 4,575 48,670 ====== ====== ====== ======Profit and Loss AccountFor the year ended 30 September 2007 30
September 2007 30 September 2006
Notes Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000
Net unrealised gains on investments - 748 748 - 1,829 1,829Net gains on realisation of investments - 1,358 1,358 - 2,319 2,319Income 746 - 746 502 - 502Investment management fees 3 (263) (788) (1,051) (245) (735) (980)Other expenses (516) - (516) (479) - (479) ---------- --------- ---------- ---------- ------
(Loss)/profit on ordinary activities before taxation (33) 1,318
1,285 (222) 3,413 3,191
Tax on ordinary activities - - - - - - ----------
--------- ---------- ---------- ------ (Loss)/profit on ordinary activities after taxation for the financial year
4 (33) 1,318
1,285 (222) 3,413 3,191
====== ====== ====== ====== ====== ======Basic and diluted earnings per share:Ordinary Shares 2.85p 3.91pS2 Shares 3.32p 12.20pS3 Shares (3.02)p -
The total column of this statement is the profit and loss account of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. There were no other recognised gains or losses in the year.
Note of Historical Cost Profits and Lossesfor the year ended 30 September 2007 30 September
2007 30 September 2006
‚£'000 ‚£'000Profit on ordinary activities before taxation 1,285 3,191Less: unrealised gains on investments (748) (1,829)Realisation of revaluation gains of previous years 1,167 985 ---------- ----------Historical cost profit on ordinary activities before taxation 1,704 2,347 ---------- ----------Historical cost loss for the year after taxation and dividends (3,735) (1,123) ====== ======Balance Sheetas at 30 September 2007 30 September 2007 30 September 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000Non-current assets
Investments at fair value 44,637
46,025 Current assetsDebtors and prepayments 1,298 101Current investments 2,939 2,938Cash at bank 108 1,650 ---------- ---------- 4,345 4,689 Creditors: amounts falling due within one year (312) (292) ---------- --------- ---------- --------Net current assets 4,033 4,397 --------- --------Net assets 48,670 50,422 ====== ======CapitalCalled up share capital 502 475Capital redemption reserve 56 33Share premium account 4,652 10Revaluation reserve 9,835 10,254
Special distributable reserve 30,131
35,140Profit and loss account 3,494 4,510 ---------- --------Equity shareholders' funds 48,670 50,422 ====== ======Net asset value per share of 1 pence each:Ordinary Shares 89.55p 99.18pS2 Shares 113.84p 120.27pS3 Shares 92.28p -
Reconciliation of Movements in Shareholders' Funds For the year ended 30 September 2007
30 September 2007 30 September 2006 Notes ‚£'000 ‚£'000As at 1 October 2006 50,422 52,136
Net share capital bought back in the year (2,290)
(1,434)
Net share capital subscribed in the year 4,692
-Profit for the year 1,285 3,191Dividends paid 5,6 (5,439) (3,471) ---------- ----------
Closing Shareholders' funds at 30 September 2007 48,670
50,422 ====== ======Cash Flow Statementfor the year ended 30 September 2007 30 September 2007 30 September 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000Operating activitiesDividends received 764 697Deposit and similar interest 24 7
Investment management fees paid (1,063)
(980)Other cash payments (599) (513) ---------- ----------
Net cash outflow from operating activities
(874) (789) Investing activitiesPurchase of investments (6,797) (6,915)Sale of investments 9,167 11,410 ---------- ---------- 2,370 4,495 Equity dividendsPayment of dividends (5,439) (3,492) ---------- ----------Net cash (outflow)/inflow before financing and liquid resource management (3,943) 214
Financing
Issue of S3 shares (net of expenses) 4,692 -Purchase of own shares (2,290) (1,470) ---------- ---------- 2,402 (1,470)Management of liquid resources(Increase)/decrease in current investments (1) 2,827 ---------- ----------Net (decrease)/increase in cash (1,542) 1,571 ====== ======
Reconciliation of profit on ordinary activities before taxation to net cash outflow from operating activities
2007 2006 ‚£'000 ‚£'000
Profit on ordinary activities before taxation 1,285 3,192 Net gains on realisation of investments (1,379) (2,331) Net unrealised gains on investments
(748) (1,829)(Increase)/decrease in debtors (94) 201
Increase/(decrease)/ in creditors and accruals 62 (22) Net cash outflow from operating activities (874) (789)
Analysis of changes in net funds
Liquid resources Cash Total 2007 2007 2007 ‚£'000s ‚£'000s ‚£'000sAt 30 September 1,650 2,938 4,5882006Cash flows (1,542) 1 (1,541)At 30 September 108 2,939 3,0472007The financial statements from which this preliminary announcement was preparedwere approved and authorised for issue for issue by the Board of Directors
on26th November 2007.Notes1. The audited results for the year ended 30 September 2007 havebeen prepared under UK Generally Accepted Accounting Practice (UK GAAP) on abasis consistent with the accounting policies followed for the year ended 30September 2006 and, to the extent that it does not conflict with the CompaniesAct 1985, the 2003 Statement of Recommended Practice, `Financial Statements ofInvestment Trust Companies', revised December 2005.2. These are not full accounts in terms of section 240 of theCompanies Act 1985. The Annual Report for the year to 30 September 2007 willbe sent to shareholders shortly and will then be available for inspection atOne Jermyn Street, London SW1Y 4UH, the registered office of the Company.Statutory accounts will be delivered to the Registrar of Companies after theAnnual General Meeting. The audited accounts for the year ended 30 September2007 contain an unqualified audit report.
3. In accordance with the policy statement published under "Management, Fees and Administration" in the Company's prospectus dated 2 October 2001, the Directors have charged 75% of the investment management expenses to the capital reserve.
4. Total earnings after taxation for the year were ‚£1,285,000(2006: ‚£3,191,000), comprising a profit on the Ordinary Shares Fund aftertaxation of ‚£890,000 (2006: ‚£1,273,000), a profit after taxation on the S2Shares Fund of ‚£512,000 (2006: ‚£1,918,000) and a loss after taxation on the S3Shares Fund of ‚£(117,000). The basic earnings per Ordinary Share is based onthe net profit from ordinary activities and on 31,171,332 (2006: 32,643,425)Ordinary Shares, being the weighted average number of Ordinary Shares in issueduring the year. The basic earnings per S2 Share is based on the net profitfrom ordinary activities and on 15,425,839 (2006: 15,715,395) S2 Shares, beingthe weighted average number of S2 Shares in issue during the year. The basicearnings per S3 Share is based on the net loss from ordinary activities and on3,879,970 S3 Shares, being the weighted average number of S3 Shares in issueduring the year.The revenue return per Ordinary Share is based on the net lossfrom ordinary activities after taxation of ‚£52,000 (2006: ‚£113,000) and on31,171,332 (2006: 32,643,425) Ordinary Shares, being the weighted averagenumber of Ordinary Shares in issue during the year. The revenue return per S2Share is based on the net loss from ordinary activities after taxation of‚£20,000 (2006: ‚£109,000) and on 15,425,839 (2006: 15,715,395) S2 Shares, beingthe weighted average number of S2 Shares in issue during the year. The revenuereturn per S3 Share is based on the net profit from ordinary activities aftertaxation of ‚£39,000 and on 3,879,970 S3 Shares, being the weighted averagenumber of S3 Shares in issue during the year.The capital return per Ordinary Share is based on net realisedcapital gains of ‚£1,330,000 (2006: ‚£1,970,000), on net unrealised capitalgains of ‚£124,000 (2006: losses ‚£38,000), capital expenses of ‚£512,000 (2006:‚£545,000) and on 31,171,332 (2006: 32,643,425) Ordinary Shares, being theweighted average number of Ordinary Shares in issue during the year. Thecapital return per S2 Share is based on net realised capital gains of ‚£40,000(2006: ‚£349,000), on net unrealised capital gains of ‚£740,000 (2006:‚£1,868,000), capital expenses of ‚£248,000 (2006: ‚£190,000) and on 15,425,839(2006: 15,715,395) S2 Shares, being the weighted average number of S2 Sharesin issue during the year. The capital return per S3 Share is based on netrealised capital losses of ‚£12,000, on net unrealised capital losses of‚£116,000, capital expenses of ‚£28,000 and on 3,879,970 S3 Shares, being theweighted average number of S3 Shares in issue during the year.
5. The Ordinary Share Fund has paid two dividends of 7.5 and 5.05 pence per Ordinary Share each during the year, totalling ‚£3,911,000.
6. The S2 Share Fund has paid two dividends of 5 pence per S2 Share each during the year, totalling ‚£1,528,000.
7. A final dividend for the year ended 30 September 2007 of 5 pence per S2 Share will be paid from capital to S2 Shareholders on 31 January 2008 to Shareholders on the register on 11 January 2008.
8. The Annual General Meeting of the Company will be held at 11.00 am on 25 January 2008 at One Jermyn Street, London SW1Y 4UH.
For further information please contact: Chris Hutchinson, Unicorn Asset Management Limited, Tel: 020 7253 0889 Robert Brittain, Matrix-Securities Limited, Tel: 020 7925 3300
UNICORN AIM VCT PLC