Unicorn Asset Management Regulatory News (UAV)

Unicorn AIM VCT plc ("the Company")

LEI: 21380057QDV7D34E9870

Interim Management Statement 

For the period from 1 April 2020 to 30 June 2020

Introduction

This voluntary Interim Management Statement (IMS) covers the three month period ended 30 June 2020, 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

Net asset value per share recovered strongly in the period under review, as equity markets rallied following the steep declines triggered by the spread of the COVID-19 pandemic.

As at 30 June 2020, the unaudited net asset value was 159.2 pence per share, which represents an increase of 24.0% on the unaudited closing net asset value of 128.4 pence per share as at 31 March 2020. By comparison, the FTSE AIM All-Share Index generated a total return of +29.7%, while the FTSE All-Share Index delivered a total return of 10.2% over the same period.

The performance of the Company's diverse portfolio of investments, has been largely resilient throughout the rapidly evolving Covid-19 crisis. It is encouraging to report that a number of our investee companies have been actively engaged in helping to combat the worst impacts of the pandemic. Businesses such as Abcam, Avacta, Genedrive, Omega Diagnostics and Tristel are all currently working to help ease the negative effects of the virus; either by helping to find a cure, developing testing kits or by providing disinfectant solutions to the healthcare sector. The Company has limited exposure to businesses dependent upon consumer spending, which has insulated Shareholders from the worst of the equity market falls experienced during the earlier part of 2020.

The portfolio remains predominantly composed of investments in businesses listed on the Alternative Investment Market (AIM). Many of these investee companies are relatively mature and, typically have remained profitable throughout the difficulties experienced since the start of 2020.

Deal flow has begun to improve as the period of strict lockdown appears to be reaching an end. Importantly, the rate of new investment required to meet all key HMRC tests has also been maintained. Following the recent closure of the fully subscribed Offer for Subscription, we have substantial cash available to deploy in the investment opportunities that pass the thorough due diligence process. It is important however, to remind Shareholders and potential new investors in the Company, that the new capital raised will, by regulatory necessity, be targeted at younger, less well-established businesses. Early stage, scale-up businesses tend to be loss-making and therefore more risky in investment terms. Our focus on providing scale-up capital has become even more important and relevant to early-stage businesses during the current crisis, however it should be noted that, despite the improved availability of State-aided capital, not all of them will be successful.

Despite the increased risks associated with early stage investment and the uncertainty created by the unexpected onset of a worldwide pandemic, the Investment Manager is confident that the portfolio, as a whole, offers the prospect of delivering attractive total returns over the longer term.

At the period end, an estimated 88% of total assets (by VCT value and excluding new capital) were invested in VCT qualifying companies.

Material Transactions

During the period under review, 2 follow-on VCT qualifying investments were made at a total cost of £0.5 million. In addition, subsequent to the period end, one new VCT qualifying investment, amounting to £2.0 million, was completed.

In aggregate, approximately £2.6 million was raised from the partial disposal of 4 holdings during the period. The usual purpose of such disposals is threefold; to ensure stock specific risk is contained, to lock in capital profits for future distribution to Shareholders via dividend payments and to help manage liquidity requirements. In addition, one holding was sold in its entirety as a result of M&A activity, realising proceeds of £1.9 million and crystallising a capital profit on disposal of £1.4 million.

Top Ten Holdings as at 30 June 2020

Share Buy-Backs

During the period from 1 April 2020 to 30 June 2020, the Company bought back 447,110 of its own Ordinary Shares for cancellation, at an average price of 110.0 pence per share. As at 30 June 2020, there were 147,391,486 Ordinary Shares in issue. After the period end, a further 631,281 Ordinary Shares were purchased for cancellation at a price of 129.5 pence per share.

Dividends

As previously advised, the Board declared an interim dividend of 3.0 pence per share in respect of the Company's half-year ended 31 March 2020. This interim dividend will be paid on 12 August 2020 to Shareholders who were on the register on 17 July 2020.

Material Events

The Offer for Subscription was fully subscribed and closed on 11 June 2020, having raised £24.2 million net of expenses. There were no other material events during the period from 1 April 2020 to 30 June 2020.

Chris Hutchinson

Unicorn Asset Management

Investment Manager

23 July 2020