Unicorn Asset Management Regulatory News (UAV)

Unicorn AIM VCT plc ("the Company")

Interim Management Statement

For the period from 1 October 2023 to 31 December 2023

Introduction

This voluntary Interim Management Statement ("IMS") covers the three-month period ended 31 December 2023, together with relevant information up to the date of publication. 

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 the objective that the Company should continue to qualify as a Venture Capital Trust ("VCT"), so that Shareholders benefit from the taxation advantages that this brings. To achieve this, at least 80% of the Company's total assets are to be invested in qualifying investments of which 70% by VCT value (30% in respect of investments made before 6 April 2018 from funds raised before 6 April 2011) must be in ordinary shares, which carry no preferential rights (save as permitted under VCT rules) to dividends or return of capital and no rights to redemption.

Performance

The performance of the portfolio was modestly positive in the three-month period under review, as the Company's Net Asset Value increased by 1.3% from 122.6p per Share to 124.2p per Share (unaudited).

In comparison, the FTSE AIM All-Share Index posted a total return of +5.7% during the same period.

The recovery enjoyed by the AIM market during the quarter came in response to improving trends in inflation reported across most major economies. Interestingly, this was the first period in which the AIM market had outperformed the FTSE 100 Index (+2.3%) since the final quarter of 2020.

The largest contributions to portfolio performance in the period came from; Hasgrove (+23.3%), Maxcyte (+38.0%) and Tracsis (+15.0%). Hasgrove, a privately held enterprise-grade intranet software company is the largest holding in the portfolio. Hasgrove continues to grow strongly, with forecast revenues and profits for its financial year ended 31 December 2023, being comfortably exceeded before the end of November 2023.  Surface Transforms (-60.2%), Directa Plus (-48.9%) and Aurrigo International (-29.1%) were the largest detractors.

We are optimistic that the relative underperformance vs. the AIM Index recorded during the first quarter can be reversed during the remainder of the Company's current financial year.

Outlook

While the outlook for 2024 remains uncertain, we believe there are promising signs that 2024 can be a better year for UK equity markets. Inflation appears to have peaked and while the short-term direction of government bond yields remains difficult to predict, it seems reasonable to believe that the period of rapidly rising bond yields has passed. Gilt yields broadly declined during the final quarter of 2023 which supported a recovery in equity valuations. A possible further decline in Gilt yields would likely drive an upward re-rating in equity valuations.

Higher interest rates have so far had the desired effect of reducing inflation and, to date, economies have performed resiliently, though it is widely expected that interest rate cuts will be required in the current calendar year to avoid recession. The timing and magnitude of cuts will pose a considerable challenge for central banks, set against political tensions in Ukraine and the Middle East, and with more people around the world set to vote in 2024 than any other year in history.

Our approach to backing new companies remains selective, however, we are confident that we will continue to identify new and interesting investment opportunities that, over time, will deliver a combination of tax-free dividend income and capital growth. We also continue to nurture the promising portfolio of early-stage, existing investments, many of which are now demonstrating a clear pathway to sustainable profitability. Whilst earnings growth for many, smaller UK listed businesses may remain a challenge, trading updates from investee companies have largely been reassuring.

As at 31 December 2023, an estimated 91.0% of total assets (by VCT value and excluding new capital) were invested in VCT qualifying companies. This figure is significantly above the 80% threshold that the Company is required, by HMRC, to maintain.

Material Transactions

Capital was committed to three qualifying investments in the three-month period ended 31 December 2023. These investments were: -

· Two new investments of £1.5 million in Eden Research in October 2023 and £1.5m in SkinBio Therapeutics in November 2023;

· A follow-on investment of £1.5 million in Aurrigo International, which completed in November 2023

Top Ten VCT Qualifying Holdings by value as at 31 December 2023

Share Buy-Backs

No share buybacks were undertaken in the period under review.

Offer for Subscription

A new Offer for Subscription to raise up to £15 million, with an over-allotment facility to raise up to a further £5 million was launched on 26 January 2024. Details of this offer are set out in a Prospectus issued by the Company on 26 January 2024, which is available online at https://www.unicornaimvct.co.uk. The Offer will open for applications at 9.00 a.m. on 8 February 2024 and will close for applications at 5.30 p.m. on 28 March 2024 (or, if earlier, once the Offer is fully subscribed, or otherwise at the Board's discretion). Applications can only be made for the 2023/2024 tax year.

Dividends

The Company announced on 11 January 2024 that following the acquisition of Abcam by Danaher Corporation and payment of the consideration to Abcam's shareholders, including the Company, the Directors of the Company have decided to distribute the proceeds received to Shareholders. As a result, the Directors have declared a Special Dividend of 11.7p per share.

The dividend will be paid on 14 February 2024 to Shareholders on the register on 19 January 2024, the shares were quoted ex-dividend* on 18 January 2024. This dividend will be paid in addition to the 3.5p final dividend per share which, if approved by Shareholders at the Annual General Meeting on 7 February 2024, will also be paid on 14 February 2024.

*Shares bought or allotted on or after the ex-dividend date will not qualify for payment of the Special Dividend. Shares sold before the ex-dividend date will not receive the dividend, shares sold after the ex-dividend date will still receive the dividend.

Material Events

Other than those described above, there were no other material events during the period from 1 October 2023 to 31 December 2023.

Unicorn Asset Management Limited

1 February 2024