Unicorn Asset Management Regulatory News (UAV)

Unicorn AIM VCT plc ("the Company")

Interim Management Statement 

For the period from 1 October 2021 to 31 January 2022

Introduction

This voluntary Interim Management Statement (IMS) covers the four month period ended 31 January 2022, 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% for accounting periods commencing on or after 6 April 2019 (previously 70%) 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 four month period under review was challenging for both equity markets and for the Company. As at 31 January 2022, the Company's unaudited net asset value was 205.3 pence per share. After adjusting for the previously declared Final and Special Interim dividends, which amounted to 10.5 pence per share in aggregate, and resulted in the share price being quoted on an ex-dividend basis, this represents a total return decline of 13.2% on the audited closing net asset value of 248.6 pence per share as at 30 September 2021. The FTSE AIM All-Share Index also declined, albeit to a slightly lesser extent, registering a negative total return of 11.7% over the same period.

Equity markets came under increasing pressure during the final quarter of 2021, which continued into January, as investors reassessed the likelihood of rising interest rates to combat persistently high levels of inflation worldwide. The Bank of England and the US Federal Reserve have also both signalled that interest rates are likely to continue rising at a faster rate than previously anticipated. As a result, many highly valued growth companies, particularly US listed technology stocks, experienced sharp share price corrections during the period.

Given their higher risk nature, early-stage businesses, including those listed on AIM in which the Company is predominantly invested, also came under significant share price pressure. Despite the overwhelming majority of our investee companies reporting good operational and financial progress, their share prices were marked down to reflect the increasing economic and geo-political risks, which, more recently includes the threat of war between Russia and Ukraine in Eastern Europe.

Encouragingly, the pipeline of investment opportunities has remained sufficiently healthy to enable us to maintain a selective approach to new investment, while also ensuring that all key HMRC tests continue to be met. At the period end, an estimated 86.4% of the Company's total assets (assessed in accordance with VCT rules) were invested in VCT qualifying companies.

Despite the increased risks associated with early-stage investment and the uncertainty created by the wider macro-economic headwinds, we are confident that the portfolio, as a whole, offers the prospect of delivering attractive total returns over the longer term.

Material Transactions

During the period under review, one new VCT qualifying investment, costing £1.9 million, was completed. Two follow-on VCT qualifying investments were also made, at a total cost of £2.8 million.

The sale of Augean completed in November, for which the Company received net proceeds of £11.8 million, and realised a capital profit £10.2 million on total investment cost. Twelve non-qualifying holdings and one qualifying investment were also disposed of in full during the period under review, realising total proceeds of approximately £12.1 million. 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.

Top Ten VCT Qualifying Holdings as at 31 January 2022

Share Buy-Backs

During the period under review, the Company bought back 845,156 of its own Ordinary Shares for cancellation, at an average price of 205 pence per share. As at 31 January 2022, there were 148,339,962 Ordinary Shares in issue. After the period end, a further 345,000 Ordinary Shares were purchased for cancellation at a price of 179 pence per share.

Dividends & Annual General Meeting

As previously advised, the Board proposed a Final dividend of 3.5 pence per share in respect of the Company's financial year ended 30 September 2021. In addition, following receipt of the cash proceeds due from the sale of the Company's stake in Augean, the Board also approved the payment of a Special Interim dividend of 7.0 pence per share, which represents all of the capital profits realised on the disposal of this investment.

The Annual General Meeting (AGM) of the Company was held on 3 February 2022, after the end of the period under review. All of the resolutions put to Shareholders were approved following a Poll undertaken during the course of the AGM. The Final dividend and the Special Interim dividend were paid to Shareholders on 10 February 2022. In addition, an allotment of 660,718 new shares was made, on the same day, to Shareholders who elected to participate in the Dividend Reinvestment Scheme.

Material Events

An Offer for Subscription, to raise up to £25 million of new capital, opened on 24 January 2022 and became over-subscribed on 8 February 2022. Subscribers whose applications have not been successful will have their subscription monies returned in accordance with the terms and conditions of the Offer.

The intended date for the allotment and issue of all new shares related to the Offer is 4 March 2022 and will be based on the published Net Asset Value as at 28 February 2022.

Chris Hutchinson

Director, Unicorn Asset Management

18 February 2022