Annual Financial Report 30 September 2014

RNS Number : 5755Z

Unicorn AIM VCT PLC

12 December 2014

Unicorn AIM VCT plc (the "Company" or the "VCT")

Annual Results Announcement for the year ended 30 September 2014

The full Annual Report and Accounts for the year ended 30 September 2014 can be found on the Company's website www.unicornaimvct.co.uk

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, 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.

FINANCIAL HIGHLIGHTS

(for the year ended 30 September 2014)

- Net asset value total return for the year ended 30 September 2014 was 15.3%

- Dividend of 6p proposed.

- Offer for subscription to raise £15 million launched on 17 September 2014 with an over-allotment facility for a further£10 million. At the date of this announcement the Company had raised £6.2 million.

Ordinary Shares	Total assets (£ million)	Net asset value per share (NAV) (p)	Cumulative dividends* paid per share (p)**	Net asset value plus cumulative dividends paid per share (p)**	Share price (p)
30^th September 2014	92.2	143.7	20.0	163.7	130.0
31^st March 2014	86.3	142.8	20.0	162.8	123.5
30^th September 2013	73.7	129.8	14.0	143.8	111.0
31^st March 2013	61.9	108.5	14.0	122.5	89.3

* The Board has recommended a dividend of 6 pence per share for the year ended 30 September 2014. If approved by Shareholders, this payment will bring total dividends paid since the merger of with Unicorn AIM VCT II plc on 9 March 2010 to 26p.

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

CHAIRMAN'S STATEMENT

This is the thirteenth Annual Report of the Company for the financial year ended 30 September 2014.

Investment Performance Review

I am pleased to report on another period of strong absolute and relative performance for the Company. The capital returns from the portfolio have again been positive, reflecting the improving financial and operational health of many of the Company's investments. The total returns recorded in the financial year under review, include a dividend payment of 6 pence per share and have been achieved despite a weak performance from the FTSE AIM All-Share Index as a whole.

As at 30 September 2014, the audited Net Asset Value ("NAV") of the Company was 143.7 pence per share having risen from 129.8 pence per share at the start of the financial year under review. After adding back the dividend of 6 pence per share paid in the period, this represents a total return to Shareholders of 15.3%. Although it is not a representative benchmark due to its weighting in mining and oil exploration stocks, the total return from the FTSE AIM All- Share Index over the same period recorded a decline of 4.5%.

The audited net assets of the Company were £92.2 million at the financial year end.

Following an active twelve months for new investment, the total book cost of qualifying and non-qualifying investments rose by £13 2 million from £49.3 million to £62.5.million. Unrealised capital gains on investments increased by a further £8.0 million due largely to the underlying performance of the VCT qualifying portfolio. This strong performance was achieved despite the fact that the largest holding, Abcam, fell in value by 20% in the period. Twelve of the investments currently held in the portfolio, have at least doubled in value from original investment cost. The growth of many of our investee companies in recent years has resulted in a more balanced portfolio, whereby contributions to performance have become more widely spread.

The economic outlook for the UK has, by and large, continued to improve despite increasing problems for the rest of Europe. According to the Office for National Statistics, employment growth accelerated in 2013, with over 430,000 new jobs being created. This trend appears to have continued during 2014, despite ongoing pressure on public sector employment. Job creation tends to rise alongside increased economic activity, leading to more business investment and increased levels of consumer spending and this has started to benefit many of the companies in the portfolio.

As commented on in last year's Annual Report, many smaller companies endured an extended period of low growth, during which it was important for management teams to focus on cost control and on maintaining balance sheet strength in order to ensure survival. It is therefore encouraging to note that improving economic conditions have now begun to be reflected in a return to growth for many of the companies held in the portfolio.

At the financial year end, there were 50 active VCT qualifying companies in the portfolio. The Investment Manager continues to focus on a select number of key metrics in order to monitor and assess the financial health of these businesses. These metrics continue to improve for most of the companies held in the portfolio. As a starting point, investment in new companies is typically only made if that company is profitable at the time of investment. At the financial year end, approximately 85% of all the companies held were profitable. Most of these businesses are cash generative and operate with strong balance sheets. As evidence of this statement, 90% operate with net gearing of less than 25%, while over 60% have no debt on their balance sheets. Approximately 80% of investee companies were cash flow positive in their last reported financial year, while profit growth is anticipated from an estimated two thirds of the portfolio in the current financial year. Another key indicator of good corporate financial and operating health is the ability to pay dividends. It is therefore particularly encouraging to note that over 60% of the companies held in the portfolio have paid a dividend within the past twelve months.

Portfolio Activity

The twelve months to 30 September 2014 was an active period for companies seeking a listing on the AIM. Although often having some of the criteria required, many of these businesses failed to meet the Investment Manager's overall fundamental investment criteria and were therefore rejected. This selective approach to new investment has been a longstanding, proven and effective policy. In the financial year ended 30 September 2014, a total of eight new VCT qualifying investments were made at an aggregate investment cost of £7.5 million. Although it is clearly too early to make a definitive judgement, the performance, to date, of these new investments has been encouraging.

In addition to these new VCT qualifying investments, there were two follow-on, qualifying investments in businesses in which the Company already held a stake. Partial disposals were made in a number of both qualifying and non-qualifying investments, while weightings were increased in four non-qualifying holdings. There were also five new investments made in new non-qualifying companies during the course of the year. One qualifying investment was sold in full as a result of merger and acquisition activity.

A detailed report on the performance of both the qualifying and the non-qualifying investments is contained in the Investment Manager's Review below. In addition, I refer you to the Board's Strategic Report which can be found below.

Outlook

The improvement in the UK employment market over the last two years, combined with recent falls in the prices of many key consumer items has begun to lift living standards and has generated meaningful GDP growth in the domestic economy.

Continued recovery in the UK economy remains uncertain, however, and to a large extent is dependent on the outcome of broader issues. Concerns are developing arising from; hostilities in Eastern Europe, conflict in the Middle East, sustainability of economic growth in China and other emerging economies and perhaps most importantly, from the point of view of our investee companies, the persistently weak Eurozone economies. Each of these issues is capable of undermining confidence and derailing the UK's economic revival. The performance of the UK equity market has been reflecting this uncertainty, particularly in more recent months.

Notwithstanding such uncertainties, the outlook for the Company appears sound. The management teams of the investee companies are generally expressing cautious optimism about the prospects for delivering growth. When compared with the challenges faced in the aftermath of the 2008 financial crisis, it is also evident that many of these businesses are in a much stronger position both operationally and financially than they were six years ago.

Careful stock selection and prudent portfolio management has delivered strong returns to Shareholders in recent years. The cautious, disciplined and selective approach to investing and managing the Company's assets has proven successful and will be maintained. As a consequence, I am optimistic that the Investment Manager can continue to deliver market leading performance in the future.

I would like to take this opportunity to thank all Shareholders for their support of the Company and to invite you to attend the Company's Annual General Meeting on 12 February 2015.

In closing I especially wish to thank our former administrator, Mobeus Equity Partners and its predecessor Matrix for the exceptional work they did over thirteen years providing this essential service. In particular I would like to single out Rob Brittain who headed that effort for so many years. I also welcome our new administrator, ISCA Administration Services Limited and look forward to a productive working relationship with them.

Peter Dicks

Chairman

11 December 2014

STRATEGIC REPORT

The purpose of this Strategic Report is to inform Shareholders of the Company on several key matters and assist them in assessing the extent to which the Directors have performed their legal duty to promote the success of the Company in accordance with section 172 of the Companies Act 2006. This Report summarises:

i) the Company's business model and objective;

ii) the Board's strategy for achieving those objectives;

iii) performance during the year;

iv) key performance indicators;

v) key events during the year;

vi) the principal risks and uncertainties faced by the Company;

vii) the regulatory environment within which it operates; and

viii) the Company's prospects.

The Investment Manager's Review below also includes what it believes to be a balanced and comprehensive analysis of the development of the business during the financial year and the position of the Company's investments at the end of the year.

The Company's Independent Auditor is required to report by exception on whether the information given in the Strategic Report is consistent with the financial statements. The Auditor's Report is set out on pages 41 and 42 of the full Annual Report.

The Company and its Business Model

The Company is registered in England and Wales as a Public Limited Company (registration number 04266437) and is approved as a Venture Capital Trust (VCT) under section 274 of the Income Tax Act 2007 (the "ITA"). In common with many other VCTs, the Company revoked its status as an investment company as defined in section 266 of the Companies Act 1985 on 17 August 2004, to facilitate the ability to pay dividends from capital.

The Company's shares are listed on the London Stock Exchange main market under the code UAV.

The Company is an externally managed fund with a Board comprising non-executive Directors. Investment management and operational support are outsourced to external service providers, with the strategic and operational framework and key policies set and monitored by the Board. Further information on each of the service providers is outlined in the Corporate Governance Statement on page 36 of the full Annual Report.

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. With effect from 1 September 2014 ISCA Administration Services Limited took over from Mobeus Equity Partners the provision of company secretarial and accountancy services to the Company.

The Board's Strategy

Investment objective and policy

To achieve this objective, the Company's strategy is to invest in companies which meet the criteria referred to in the investment policy, which requires the Investment Manager to identify and invest in a diversified portfolio, predominantly of VCT qualifying companies quoted on AIM. Further details can be found on page 11 of the full Annual Report.

Performance during the year

As at 30 September 2014, the audited NAV of the Company was 143.7 pence per share, having risen by 13.9 pence from 129.8 pence per share at the start of the financial year under review. After adding the dividend of 6 pence per share paid in the year, this is a total return to Shareholders of 19.9 pence for the year or 15.3% of the opening NAV for the year. In comparison, the total return from the FTSE AIM All-Share Index, although not a representative benchmark due to its weighting in mining and oil exploration stocks, over the same period was -4.5%. The audited net assets of the Company were £92.2 million at the financial year end.

As evidence of this statement, 90% operate with net gearing of less than 25%, while over 60% have no debt on their balance sheets. Approximately 80% of investee companies were cash flow positive in their last reported financial year, while profit growth is anticipated from an estimated two thirds of the portfolio in the current financial year. Another key indicator of good financial and operating health is the ability to pay dividends. It is therefore particularly encouraging to note that over 60% of the companies held in the portfolio have paid a dividend within the past twelve months.

In the year to 30 September 2014, a total of £9.5 million was realised through the sale of investments and a total of £13.4 million raised from the offer for subscription. £17.4 million was deployed in new investments and approximately £3.6 million paid out as dividends to Shareholders. A further £1.9 million was used to help fund share buybacks and to meet the operating costs of the Company.

Over the 12 months to 30 September 2014 there was a net gain on investments of £11.9 million and the total profit on ordinary activities was £11.1 million, equivalent to earnings of 18.2 pence per share. The profit on the revenue account was £350,000. At the financial year end, the portfolio consisted of 50 qualifying and 23 non-qualifying investments in active businesses.

The longer term performance of the Company remains robust. Since the merger with Unicorn AIM VCT II plc, which was completed in March 2010, the total return to Shareholders has been 78.3%, including the payment of 20 pence per share in tax free dividends.

Key Performance Indicators

The Board uses the following key indicators to measure the Investment Manager's performance, thereby allowing Shareholders to assess how the Company is performing against its objective:

- Net asset value ("NAV") per share, cumulative dividends paid & cumulative total Shareholder return

- Earnings per share

- Running costs

Further details can be found on pages 6 and 7 of the full Annual Report.

Running Costs

The Ongoing Charges of the Company for the financial year under review represented 2.5% (2013: 2.5%) of average net assets, which remains competitive when compared with other AIM focused VCTs.

Shareholders should note that this ratio has been calculated in accordance with the Association of Investment Companies' ("AIC") recommended methodology, published in May 2012. This figure indicates the annual percentage reduction in shareholder returns as a result of recurring operational expenses. Although the Ongoing Charges figure is based on historic information, it does provide Shareholders with a guide to the level of costs that may be incurred by the Company in the future.

Further information in respect of the Company's performance can be found in the financial highlights page above.

Key Events during the Year

Offer for Subscription

The Board recently launched a £15 million Offer for Subscription, with the facility to extend by a further £10 million through the subscription of up to 22.5 million Ordinary Shares.

The Investment Manager is seeing attractive investment opportunities in companies seeking finance in a broad spectrum of sectors offering good growth and income prospects. In order to take advantage of these opportunities the Board is therefore seeking to raise further funds through the Offer.

The Offer opened on 17 September 2014 and will close at 12.00 noon on 30 June 2015 (unless fully subscribed by an earlier date or otherwise extended or closed at the Directors' discretion). Subscribers who wish to apply under the Offer for the 2014/2015 tax year should note that the deadline for such applications is 12.00 noon on Wednesday 1 April 2015. At the date of this report, the Company had raised £6.2 million under this offer.

A prospectus relating to this Offer has been issued and mailed to all existing Shareholders. Also, a copy of the prospectus can be downloaded from the Company's website:www.unicornaimvct.co.uk

Key Policies

The Board sets the Company's policies and objectives and ensures that its obligations to the Shareholders are met. Besides the Investment policy already referred to, the other key policies set by the Board are outlined below.

Dividend policy

The Board remains committed to a policy of maintaining a steady flow of dividend distributions to Shareholders from the income and capital gains generated by the portfolio. Dividend payments paid to Shareholders during the period amounted to £3.6 million, being 6 pence per share. Since the original launch of Unicorn AIM VCT in 2001, qualifying Shareholders have, in aggregate, received approximately£33.6 million in tax free dividend distributions including those paid to former shareholders in Unicorn AIM VCT II plc.

The Board has considered the payment of a final dividend for the financial year ended 30 September 2014 and, is recommending a final dividend of 6 pence per share (income: 0.50 pence; capital: 5.50 pence) to Shareholders, payable on 20 February 2015 to Shareholders on the register on 16 January 2015.

The ability to pay dividends and the amount of such dividends are influenced by the performance of the Company's investments, available distributable reserves and cash, as well as the need to retain funds for further investment and ongoing expenses.

Share buybacks and discount policy

The Board believes that it is in the best interests of the Company and its Shareholders to make market purchases of its shares from time to time, given the limited secondary market for VCT shares generally, and to seek both to enhance NAV and to reduce to a degree any prevailing discount to NAV in the current market price that might otherwise prevail. The Board agrees the discount to NAV at which shares will be bought back and keeps this under regular review. The Board seeks to maintain a balance between the interests of those wishing to sell their shares and continuing Shareholders.

The Company has continued to buy back shares for cancellation at various points throughout the financial year in accordance with the above policy. A total of 2,024,729 shares with a nominal value of £20,247 were purchased for cancellation during the course of the year at an average price of 121.6 pence per share for a total consideration of £2.5 million. At the financial year end, the Company's shares were quoted at a price of 130 pence representing a discount to Net Asset Value per share of 9.5%.

The Board intends to continue with the above buyback policy. Any future repurchases will be made in accordance with guidelines established by the Board from time to time and will be subject to the Company having the appropriate authorities from Shareholders and sufficient funds available for this purpose. Share buybacks will also be subject to the Listing Rules and any applicable law at the relevant time. Shares bought back in the market are normally cancelled.

Principal risks and uncertainties

The Directors also review the principal risks faced by the Company as part of the internal controls process, as outlined below. Note 19 to the financial statements on pages 56 to 61 of the full Annual Report also provides information on the Company's financial risk management objectives and exposures to risks.

Risk	Possible consequence	How the Board guards against risk
Investment and strategic risk	Unsuitable investment strategy or stock selection could lead to poor returns to shareholders.	- Regular review of investment strategy by the Board. - Careful consideration of the performance of the investment portfolio on a regular basis. - All unquoted investments require pre-investment authorisation from the Board.
Regulatory and tax risk	The Company is required to comply with the Companies Act 2006, ITA, AIFMD (as applicable to small registered UK AIFMs), UKLA Rules and UK Accounting Standards. Breaching these rules may result in a public censure, suspension from the Official List and/or financial penalties. There is a risk that the Company may lose its VCT status under the ITA. Should this occur, Shareholders may lose any upfront income tax relief they received and be taxed on any future dividends paid and capital gains received if they dispose of their shares.	- Regulatory and legislative developments are kept under review by the Board. - The Company's VCT qualifying status is continually reviewed by the Investment Manager and Administrator. - PricewaterhouseCoopers LLP has been retained by the Board to undertake an independent VCT status ongoing monitoring role.
Operational risk	The Company has no employees and is therefore reliant on third party service providers. Failure of the systems at third party service providers could lead to inaccurate reporting or monitoring. Inadequate controls could lead to the misappropriation of assets.	- Internal control reports are provided by service providers on a regular basis. - The Board considers the performance of the service providers annually.
Fraud and dishonesty risks	Fraud may occur involving company assets perpetrated by a third party, the Investment Manager or other service provider.	- Internal control reports are provided by service providers on a regular basis. - The Administrator is independent of the Investment Manager.
Financial Instrument risks	The main risks arising from the Company's financial instruments are due to fluctuations in their market prices, interest rates, credit risk and liquidity risk.	- The Board regularly reviews and agrees policies for managing these risks and full details can be found in Note 19 of the full Annual Report.
Economic risk	Events such as recession, inflation or deflation and movements in interest rates could affect trading conditions for smaller companies and consequently the value of the Company's investments.	While no single policy can obviate such risks the Company invests in a diversified portfolio of companies, whilst maintaining adequate liquidity.

The Regulatory Environment

The Board and Investment Manager are required to consider the regulatory environment when setting the Company's strategy and making investment decisions. A summary of the key considerations are outlined below.

· Human rights

The Board seeks to conduct the Company's affairs responsibly and expects the Investment Manager to consider the human rights implications of its decisions, as far as possible, particularly with regard to investment decisions.

· Diversity

The Directors are aware of the need to have a Board which, as a whole, comprises an appropriate balance of skills, experience and diversity. The Board currently comprises four male non-executive Directors and the Board has confirmed that it is content with its current composition. The Board will, however, consider gender diversity in making future appointments.

· Anti-bribery policy

The Company has adopted a zero tolerance approach to bribery and will not tolerate bribery under any circumstances in any transaction in which it is involved. The Company values its reputation for ethical behaviour and for financial probity and reliability and the Directors are committed to working to the highest ethical standards.

The Company expects and requires each of its service providers to work to the same standard and has obtained confirmation from them that this is the case.

· Environmental and social responsibility

The Board seeks to conduct the Company's affairs responsibly and expects the Investment Manager to consider relevant social and environmental matters when appropriate, particularly with regard to investment decisions. The Company has offered electronic communications where possible, to reduce the volume of paper it uses in sending communications to Shareholders. In addition, Board and Committee meetings are held by conference call where it is appropriate to do so. The Company's Annual and Half-Yearly reports are printed on paper sourced from forests certified by the Forestry Stewardship Council ("FSC") that meet its environmental, social and economic standards.

Prospects

Notwithstanding political and economic uncertainties, the outlook for the Company appears sound. The management teams of the investee companies are generally expressing cautious optimism about the prospects for delivering growth. When compared with the challenges faced in the aftermath of the 2008 financial crisis, it is also evident that many of these businesses are in a stronger position both operationally and financially than they were six years ago.

Careful stock selection and prudent portfolio management has delivered strong returns to Shareholders in recent years. The cautious, disciplined and selective approach to investing and managing the Company's assets has proven successful and will be maintained. As a consequence, there is reason to be optimistic the Investment Manager can continue to deliver market leading performance in the future.

For and behalf of the Board

Peter Dicks

Chairman

11 December 2014

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 and 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 investment 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")

During the year 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).

If the Company becomes "leveraged" as defined in the Regulations, it may 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 present plans to become a full scope Alternative Investment Fund.

INVESTMENT MANAGER'S REVIEW

Performance and summary

The audited net assets of the Company as at 30 September 2014 totalled £92.2 million, equivalent to 143.7 pence per share. This compares with an audited Net Asset Value per share of 129.8 pence as at 30 September 2013. After adding back dividends paid of 6 pence per share in the period, the total return amounted to 19.9 pence for the year or 15.3% upon opening net asset value of 129.8 pence.

Alternative Investment Market ("AIM") review

Although not a representative benchmark due to its weighting in mining and oil exploration stocks, in the year ended 30 September 2014, the FTSE AIM All-Share Index delivered a disappointing total return, including dividends of -4.5%.

Having recorded a strongly positive total return in the first six months of the financial year, the Alternative Investment Market went into reverse during the second half of the financial period under review. In capital terms, all the gains made in the first half were relinquished in the second half.

Sentiment toward investing in AIM quoted companies has generally improved following recent changes in legislation. In 2013, the Government removed a restriction preventing private investors from holding AIM listed companies in their ISAs. This was followed, in 2014, by the abolition of Stamp Duty on the purchase of AIM stocks. These changes were helpful in the short term but, more importantly, are supportive for the long term success of the AIM. The most noticeable and immediate consequence of the changes was a general increase in trading volumes on AIM Indices. Greater investor interest, combined with more flexible and cost effective ownership rules led to improved liquidity, which in turn resulted in a strong period of performance for AIM quoted companies.

Unfortunately, this initial increase in trading volumes was not sustained, as political and economic concerns increased and the AIM market drifted lower in the final six months of the financial year.

The total return of the FTSE All-Share Index was +6.1%, which was significantly better than that produced by the FTSE AIM All- Share Index over the same period.

Performance Review

The financial year ended 30 September 2014, was another strong period of performance for Unicorn AIM VCT. Net Asset Value per share increased by 10.7% during the year, after payments to Shareholders of dividends totalling more than £3.5 million and payment of the annual running costs of the Company. The cost of share buybacks during the year amounted to almost £2.5 million

The progress made during the year is in part due to the steady improvement in trading conditions experienced by many of the investee companies held in the portfolio. As economic conditions improve, so businesses tend to see increased demand for their products and services. For well-managed, cost efficient businesses, an increase in total sales typically translates into a disproportionately large increase in underlying earnings. In turn, this growth in earnings is usually rewarded by the market in the form of positive share price development. In the year under review, this has been the environment in which our investee companies have been operating. As a consequence, a large number of them have enjoyed a significant increase in their share prices. It is important to remember, however, that in order to maximise the benefit from any improvement in trading conditions, a business needs to be flexible enough to respond quickly to emerging opportunities and financially robust enough to avoid the perils of over trading, which can easily result in insolvency. In your Manager's opinion, careful stock selection and prudent portfolio management are therefore vital components if a fund focused on investing in smaller companies is to achieve long-term and sustainable growth. In no small measure, it is this cautious, selective and disciplined approach to asset management, consistently applied over many years, that has enabled the Company to grow successfully to its current size of over £92 million in net assets.

The investment portfolio continues to be diversified both by number of holdings and by sector exposure. At the financial year end, the Company held 50 active VCT qualifying companies together with 23 non-qualifying investments. These investments are spread across a variety of sectors.

Activity within the portfolio was greater than usual. There were four outright disposals, seven partial disposals and thirteen new investments made during the year under review. In addition, further VCT qualifying investments were made in two of our existing holdings. Merger and acquisition activity resulted in three VCT qualifying companies being acquired by quoted competitors. In two of these, we accepted shares in the acquiring company and these investments have therefore been retained. Finally, weightings were increased in a number of non-qualifying holdings.

The total book cost of purchases amounted to approximately £17.4 million, while the total value of disposals amounted to £9.5 million. The capital profits realised on disposal were £3.9 million.

A review of the main positive and negative contributors to performance in the portfolio and a summary of the main purchases and disposals made during the year follows.

Qualifying investments (bracketed figures represent the share price movement for the year under review or since the date of investment on a mid-price basis):-

Accumuli (+69%) is a provider of advanced IT security services. The management team are continuing to grow the range of services offered, acquiring Eqalis, which has significantly enhanced the group's capability in Big Data monitoring and analytics. The group also announced new contract wins with two pan European financial services organisations for technology solutions and services associated with Accumuli's Big Data monitoring and analytics capabilities. The company reported a £0.9 million pre-tax loss for the financial year ended March 2014, reflecting the costs associated with a "buy and build strategy". Nevertheless, revenues increased by 18% over the year and cash generated from operations increased by 50%.

Anpario (+84%) is an international supplier of natural, high performance feed additives to enhance health, growth and sustainability in agriculture and aquaculture. In the past twelve months, the company continued to develop sales in its target geographic regions, further increasing its international presence in major markets in Brazil, US and China. The group's financial position is healthy, with £5.7 million net cash on the balance sheet at the end of June 2014, providing a strong platform to fund investment in organic growth and to make earnings enhancing acquisitions, should opportunities arise.

Augean (+21%) is a provider of hazardous waste management services, including landfill and specialist treatment services. In March 2014, the CEO of Augean communicated the group's new strategic vision, with a clear focus on growing shareholder value by building market share and developing sustainable market positions, through delivery of highly specialised client-focused services. Progress in the delivery of the new strategy can be seen in a return to growth for the business. Highlights for Augean's most recently published interim results for the period ended 30 June 2014, include revenue growth of 7% to £24.9 million (2013: £23.4 million) and adjusted profit before tax up by 121% to £2.2 million (2013: £1.0 million).

Crawshaw (+600%) is a chain of value-orientated retail butchers. The company performed particularly well over the year, more than doubling pre-tax profits during the first half of its financial year, due to increasingly strong trading across its portfolio of stores. During the period, Crawshaw also acquired East Yorkshire Beef Ltd in May 2014, which operates a premium sector butcher's shop in Pocklingon, Yorkshire. The purchase gives Crawshaw a foothold in a different sector of the market and provides a new supply chain with potential for expansion. Crawshaw continues to benefit from the supermarket horse meat scandal as increasing numbers of consumers seek to buy their meat from trusted specialists.

Dods (Group) (+77%) is focused on the provision of political information, events and publishing. Following an extended period of challenging trading, there have been a number of changes to the board and management over the past twelve months. These changes include the appointment of a new Chairman and Chief Executive and the resignation of the Chief Financial Officer. From an operational perspective, Dods continues to invest in technology, which it is hoped will be instrumental in enabling the business to increase reliable, high retention, higher margin subscription based revenue streams. The publishing and events operations are also being restructured which is expected to improve profitability. Highlights for the financial year ended 31 March 2014, included a 17% increase in like for like revenues and a significant narrowing of pre-tax losses.

Hangar 8 (+69%) manages and operates a fleet of privately owned passenger jet aircraft. The business has continued to grow throughout the year, driven not only by growth in Hangar8's fleet of private jets under management but also by developing other value added services such as an in-house aircraft maintenance facility. This has contributed to strong growth in revenues and profitability over the past twelve months. The management team remain focused on developing a strong platform from which they can build scalable growth. The group appears well positioned to take advantage of the forecast growth in the global business aviation market.

Hayward Tyler Group (+48%) is a specialist engineering group manufacturing a range of fluid filled electric motors and pumps that are designed to operate in the harshest environments. It is pleasing to note that significant progress was made in Hayward Tyler's financial year ended 31 March 2014. On a pro- rata basis, group revenues increased by 33% to £43.2 million, while earnings grew by 121% to over 6.5 pence per share, when compared with the 15 month period ended 31 March 2013. Since reporting full year results, the group has announced a series of contract wins and has confirmed that it is to receive £1 million of grant funding from the 'Civil Nuclear Sharing in Growth' programme, which will be used for ongoing shop-floor improvements, training and business development activity over a three year period.

HML Holdings (+59%), is a property management services group based predominantly in London and the South-East. In June 2014, HML reported results for its financial year ended 31 March 2014. Highlights included revenue growth of 15% and an increase in EPS of over 27% to 2.3 pence per share. The business continues to make strong progress both through organic growth and selective acquisitions. In keeping with this strategy, the business has expanded and strengthened its geographic footprint, by acquiring competitors in Bath (Chilton Estates Management), Guildford (Alan Foster & Associates), Bolton (PR Gibbs) and Kensington (LHH Block Management). The infrastructure that the HML management team has built in recent years improves their ability to leverage market opportunities while enabling them to maintain core values of transparency and professionalism that have helped establish their reputation as a trusted provider of services in a highly competitive market.

Keywords Studios (+21%) is a provider of technical services to the video game industry. Despite a disappointing start to trading following its IPO in July 2013, Keywords has since showed good progress in growing the business organically and through acquisition. In September 2014, the business released results for its half year to the end of June 2014. These results revealed a 14% growth in revenues from existing operations and total revenue growth of 99%, reflecting the impact of acquisitions. The Group continues to invest heavily in the people and facilities required to support further organic expansion with the establishment of a new office in Singapore to support the outsourcing requirements of Electronic Arts for South East Asia. The company's financial position remains strong, with net cash of £9.6 million on the balance sheet at the end of June 2014.

Mattioli Woods (+22%) is a specialist pension consultancy and wealth management business. In its financial year ended May 2014 assets under management, administration and advice increased by 27% to £4.6 billion. Financial highlights included an increase in revenue of more than 25%, EPS growth of almost 17% and a 30% increase in the proposed total dividend. The business continues to invest in people and systems, providing a strong platform for future growth.

Pressure Technologies (+84%) is a designer and manufacturer of high pressure stainless steel cylinders, which are used in a variety of specialised applications. The group reported on a period of strong trading across all three of its divisions, in its half yearly report released in June 2014. In this period, the group achieved a 38% increase in earnings to 12.7 pence per share on revenues up by 21% to almost £20 million. Pressure Technologies' financial position remains very strong with £10.5 million of net cash on the balance sheet, supported by healthy conversion of operating profits to cash flow and a £6 million oversubscribed placing of new shares. The businesses also reported order book growth of 59%, which augurs well for the future.

Redcentric (+44%) is a leading IT managed services provider. The business offers a range of IT and Cloud services designed to support organisations as they migrate from traditional IT infrastructure to the Cloud. In December 2013, Redcentric completed the acquisition of 'InTechnology Managed Services', which should prove to be a transformational acquisition that will significantly increase recurring revenues and create one of the largest independent managed services businesses in the UK. Since the acquisition, Redcentric has continued to trade well with increased order intake driving strong organic revenue growth. The integration of InTechnology is reported to be proceeding according to plan. Redcentric paid a maiden dividend in September 2014, reflecting high levels of cash generation in the business and confirming management's positive outlook for continued growth.

Tangent Communications (+17%) is a digital marketing and printing specialist with a blue chip corporate client base, a rapidly expanding online print division and a growing reputation for service excellence. Although Tangent reported a strong set of financial results for its financial year ended 28 February 2014, management have since released a trading update which points to a slowdown in trading at their digital marketing agency, Tangent Snowball. This slowdown has been attributed to budget cuts at two key clients. As a result, Tangent Snowball has been downsized and resources have been re-channelled into Tangent's online print business, printed.com. Management expect to generate strong sales growth from printed.com, which is an online 'business to consumer' print specialist that competes directly with companies such as Vistaprint.

Tracsis (+83%) is a provider of hardware, operational planning software and consultancy services to the transportation sector. The Group announced a strong set of interim results in March 2014, which demonstrated that Tracsis is benefitting from increased demand across all areas of the business driven by record levels of investment into UK rail. In May 2014, the data collection division was awarded a £1 million contract to deliver traffic data collection for an unnamed UK transport agency. An extension on a North American pilot project with a major North American Class 1 Railroad Company has also been agreed. This pilot project is for the potential adoption of its remote condition monitoring technology.

Tristel (+163%) is a developer and manufacturer of infection control, contamination control and hygiene products. The results for the financial year ended 30 June 2014 were released in October 2014 and revealed that turnover had increased by 27.7% to £13.5 million, while pre-tax profits grew by 279% to £1.8 million. Tristel experienced a particularly strong second half period, with revenues up by 9.3% half on half, resulting in a fifth consecutive profit upgrade. The management team at Tristel believe that the business is well placed to take advantage of current trends in the global disinfection market, although it is clear from their comments that they recognise the need to invest in new products in order to fully exploit the commercial opportunities that are emerging.

A small number of qualifying companies encountered operational or trading challenges during the year:-

Abcam (-20%) is a global leader in the manufacture and supply of therapeutic antibodies and protein research tools to the worldwide life science research market. After many years of strongly positive contributions to the Company's overall performance, the holding in Abcam delivered a negative return in the period under review. Despite reporting a healthy increase in revenues and profits in their interim results for the period ended 31 March 2014, Abcam's shares were marked down as analysts worried about a slowdown in organic growth and the negative impacts of potential cuts to publicly funded, global pharmaceutical research budgets. The share price recovered somewhat following the release of results for the financial year ended 30 June 2014 which showed total revenue growth of 4.7% to £128 million. Abcam remains a highly cash generative business and at the financial year end, net cash had grown to £56.9 million (2012/13: £38.3 million). Board changes were made during the year to support the business in its next phase of growth including the appointment of Alan Hirzel as Chief Executive, to succeed Jonathan Milner who has taken the role of Deputy Chairman. In addition, Murray Hennessy, a non-executive at Abcam for the past 3 years, was appointed Chairman.

Animalcare (-23%) is a leading supplier of veterinary medicines focused on three main product groups: licensed veterinary medicines, companion identification and animal welfare products. Animalcare's results for the financial year ended 30 June 2014, showed a 6.3% increase in revenues to £12.9 million. Underlying operating profit increased by 4.4% to £2.7 million, reflecting a period of increased investment in people and infrastructure. The proposed dividend was increased to 5.5p per share, which was in line with the increase in earnings. The business maintains a strong, debt free balance sheet with net cash of £3.8 million at the financial year end.

Hasgrove (-33%) is a digital and communications services group. In May 2013, the management team concluded that that the business was of insufficient scale to support the costs associated with being publicly listed. As a result, the Board of Hasgrove announced a tender offer and subsequently de- listed the company from the AIM. We did not participate in this offer and instead chose to retain the stake in Hasgrove as an investment in a privately owned, unquoted business.

Instem (-17%) is a software developer focused on the life sciences and biotechnology markets. The group has developed world leading software enabling pharmaceutical companies to collect, analyse and report large volumes of complex scientific data in an accurate and efficient manner. Instem reported a pre-tax loss of £672,000 for its six month period to 30 June 2014 as the level of new business won was lower than expected. Furthermore, management noted that whilst there were a sufficient number of potential new contracts in Q4 to meet expectations for 2014, some uncertainty existed around the receipt of a small number of high value contracts. Despite this setback, Instem has successfully integrated two recent acquisitions that are now contributing meaningfully to revenues and management believe the company remains well positioned to benefit from improving market dynamics as pharmaceutical organisations allocate more investment to early stage development work.

Sagentia (-18%) is a science and technology consultancy services and product development business focused on the consumer, energy, industrial and medical markets. Sagentia reported a satisfactory set of interim results for the six month period ended 30 June 2014, despite being significantly affected by the strength of Sterling. Approximately 79% of the group revenues are generated overseas, particularly in the United States. As a result, financial results were affected by this material external factor and revenues, operating profits and operating margin all declined.

SnackTime (-45%) is the UK's third largest vending operator and the largest snack vending machine company in the UK and Ireland. Shares were suspended from trading on AIM on 30 September 2014 as SnackTime failed to publish its annual financial results within six months of its financial year end as required under AIM listing rules. Although the financial performance of the business has improved modestly due largely to a reduction in costs, it became apparent that a further refinancing of the group would be necessary. As a result of the suspension from trading on AIM, the value of the SnackTime shares held by the VCT was written down to zero. After the VCT's financial year end, SnackTime announced it had secured £1.8 million in new funding from a strategic investor. As a result, in November 2014, shares in SnackTime recommenced trading on AIM. This has therefore been treated as a post balance sheet event.

Surgical Innovations (-60%) is a designer and manufacturer of innovative medical devices for use in minimally invasive surgery. In the six month period ended 30 June 2014, the group reported a pre-tax loss of £3.2 million as revenue declined by 54% when compared with its previous financial half year. Following a strategic review, a number of Board changes have been announced, including the departure of the Chief Executive, Graham Bowland with immediate effect. The Board has also taken the decision to make a significant impairment of intangible assets of £1.7 million and has made an additional inventory provision of £450,000 to cover potential product obsolescence. Despite these significant setbacks, the Board remains optimistic that a renewed focus on cash generation will enhance long-term shareholder value and deliver a stronger business to exploit growth in the medical devices market.

New VCT qualifying investments

At the financial year end the Company held over 70% of its total assets in VCT qualifying businesses as calculated in accordance with HMRC tax valuation rules. New VCT qualifying investments are only made if the companies concerned meet the Manager's clearly defined investment criteria. During the period eight new VCT qualifying companies were introduced to the portfolio. The new VCT qualifying investments made were as follows:-

Blue Inc is an established, profitable and fast growing UK based retailer. The group offers affordable fashion and targets a market niche, which has few direct market competitors. The Blue Inc brand vision is "Style and Value for the under 25s"and is predominantly aimed at young urban males. The group currently operates from 240 stores in the UK. In September 2014, the Company invested £2 million in Blue Inc. The shares acquired were newly issued and received HMRC approval for VCT qualifying purposes.

City Pub Company (East and West) is an unquoted, predominantly freehold, pub business founded in December 2011. It is comprised of two operating businesses; City Pub Company East and City Pub Company West, and was established under Enterprise Investment Scheme rules to ensure tax efficient returns to private investors. The business has expanded rapidly in the last three years, such that it is now of a suitable size to support investment from institutional investors. To date, the Company has invested £2.3 million split equally between the two City Pub companies. Unicorn's most recent VCT qualifying investment of £1.3 million was made shortly after your Company's financial year end. Both City Pub companies reported encouraging interim results to the end of June 2014, with City Pub Company East reporting revenue growth of 63% and EBITDA growth of 33% and City Pub Company West reporting revenue growth of 192% and EBITDA up significantly from £0.029 million to £0.29 million. In total, across the two companies, there are now 17 pubs in operation. Over the medium term, the management team's aim is to build the estate to around 30 high quality, predominantly freehold pubs, which will probably necessitate another fundraising round in 2015.

Eclectic Bar Group (+18%) is a leading operator of premium bars in the UK. Eclectic's portfolio comprises 23 venues located in major towns and cities, predominantly targeting a customer base of students during the working week and young professionals at weekends. Eclectic trades under a variety of formats including; Embargo, Lola Lo, Sakura, Dirty Blonde, Lowlander, Coalition, Po Na Na and Fez Club. The group floated on AIM in November 2013, raising £15 million at a price of 160 pence per share. The Company participated in this flotation, making a VCT qualifying investment of £426,000. In September 2014, Eclectic announced maiden results for their financial year ended 29 June 2014, reporting a 10.1% growth in revenues to £23.3 million and a profit, before tax and exceptionals associated with the listing, of £1 million.

Hardide (+7%) is a provider of advanced surface-coating technology to a wide range of applications. In July 2014, Hardide raised £2.7 million at a price of 1.6 pence per share. The fundraising has largely been used to invest in additional capacity in the UK and a new facility in the US. The business has demonstrated good progress during the past twelve months, with performance underpinned by a new major supply contract with General Electric Company. Hardide is also currently in the latter stages of an extensive test programme with Airbus to provide an alternative coating to the hard chrome plating which is widely used in the aerospace industry but is soon to be banned under new legislation.

Heartstone Inns is a group of individual free houses in locations across Southern England. The management team of Heartstone aims to continue acquiring high quality, freehold pubs in the South West of England. To date the business has acquired, refurbished and now operates nine freehold, managed pubs. Once the freehold estate has grown to around 20 pubs, it is likely that management will seek to list the business on AIM. This process is expected to take between two to three years. All the pubs currently trading are reported to be profitable and, in the financial year ended 31 December 2013, Heartstone recorded a pre-tax profit of £117,000 on £6.4 million of sales.

ULS Technology (+25%) provides conveyancing software and services to the property, legal and financial services market. ULS floated on AIM in July 2014, raising £12.1 million in total, of which £4.6 million was in the form of new ordinary shares. The Company invested £1.5 million in VCT qualifying shares at flotation. The fund raise has enabled capital to be available to not only develop ULS's existing and new product portfolio, but has also diluted the equity stake of its largest shareholder.

PhotonStar LED Group (-19%) is engaged in the design and manufacture of smart LED lighting solutions. The group's proprietary technology HalcyonTM is a connected lighting platform that includes hardware and software for wireless, microprocessor controlled retrofit LED lighting. In short, the business is at the forefront of the emerging 'intelligent lighting' sector. The VCT made a £497,000 investment in the company in July 2014 at a share price of 7 pence. Although this investment has been made at an early stage in the development of the market for intelligent and energy efficient lighting, it has been based on the premise that PhotonSar has a range of patent protected, technology leading products, which should enable the business to capture significant share of what is expect to be a rapidly growing market. The majority of PhotonStar's revenues are expected to be concentrated in the second half of its financial year due to the seasonal nature of the housing construction market, where its main customers operate. A current expansion of the group's wholesale network is also expected to further boost sales.

Realisations

Realisations totalling £9.5 million were made in the financial year to 30 September 2014.

Two holdings from the non-qualifying portfolio were sold in the open market generating a total capital profit of £0.5 million.

Merger and acquisition activity resulted in the outright disposal of one VCT qualifying investment; Pilat Media Global.

In addition, two VCT qualifying companies were acquired by quoted competitors:-

Green Compliance, a water management business, was sold to APC Technology Group. Following an extended period of challenging trading, which necessitated a financial restructuring, the Board of Green Compliance ultimately concluded that it was in shareholders' best interests to seek a trade buyer for the business. APC, one of the UK's leading distributors of specialist electronic components and a provider of technologies developed to reduce energy consumption, acquired Green Compliance in an all share transaction, which completed in September 2014. The Company therefore received new shares in APC Technology Group in exchange for its holding in Green Compliance.

ACM Shipping Group, a ship-broking business was acquired by a quoted competitor, Braemar Shipping Services. Braemar offers specialised broking and support services for ship owners, shipbuilders, and oil companies. Braemar acquired the entire ordinary share capital of ACM Shipping for £55 million in July 2014. Unicorn AIM VCT, accepted shares in Braemar in exchange for its ACM Shipping shares and the holding is being retained in the portfolio.

Partial disposals were made in seven holdings in the portfolio, in order to lock in capital gains for potential future dividend distributions.

Including partial disposals, the total realised capital gain from the sale of investments amounted to £3.9 million.

Non-qualifying portfolio(bracketed figures represent the share price movement for the year under review or since the date of investment on a mid-price basis):-

The investments held in the non-qualifying portfolio have generally performed well in the year under review. The key contributors to performance were; DX Group (+30%), Epwin Group (+6.5%), Portmeirion Group (+32%), Renold (+49%), and the Unicorn UK Smaller Companies Fund (+11%). The holding in DX Group was acquired when the company listed on the main market in February 2014 and was subsequently sold, crystallising a capital gain of 30%.

Prospects

At the time of writing this review, the wider economic and political outlook appears increasingly uncertain both for the UK and globally. This uncertainty has been reflected in the UK equity markets, where volatility has increased markedly in recent times.

Despite this uncertainty, it has been another solid year in terms of performance and the Investment Manager is pleased with the continued development and growth of the majority of the investee companies held. The investment portfolio contains a diverse range of established and predominantly profitable businesses with good long-term growth potential. The majority of these businesses have been held in the portfolio for many years and have successfully weathered various periods during which trading conditions have been extremely challenging. Your Manager has a thorough understanding of the operating models of these businesses and knows the management teams well. As a result, we remain optimistic that many of these investment holdings can continue to prosper and grow over time despite the current macro-economic and geo-political uncertainty.

The percentage of total assets held in VCT qualifying companies remains comfortably above the threshold required by HMRC and the selective approach to new investment will be maintained.

The Investment Manager remains confident that the established strategy can continue to deliver attractive returns for Shareholders over the longer term.

Chris Hutchinson

Unicorn Asset Management Limited

11 December 2014

EXTRACT FROM DIRECTORS' REPORT

Share Capital

At the year-end there were 64,168,112 (2013: 56,767,691) Ordinary shares of 1p each in issue none of which are held in Treasury. Subsequent to the year end the Company has bought back 495,000 shares and issued 4,312,888 shares. At the date of this report the Company had 67,986,000 shares in issue. All shares are listed on the main market of the London Stock Exchange.

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 30 September 2014, the Company held cash balances and investments in money market funds with a combined value of £1.2 million. The majority of the Company's investment portfolio remains invested in fully listed and AIM quoted equities which may be realised, subject to the need for the Company to maintain its VCT status. Cash flow projections have been reviewed covering a period of at least twelve months from the date of approving the financial statements 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.

The full Annual Report and Accounts contain the following statement regarding responsibility for the financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual Report, Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required and have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions, to disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations.

The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

The Directors confirm, to the best of their knowledge:

(a) that the financial statements, which have been prepared in accordance with UK Generally Accepted Accounting Practice and the 2009 Statement of Recommended Practice, 'Financial Statements of Investment Companies and Venture Capital Trusts' give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) that the management report, comprising the Chairman's Statement, the Strategic Report, the Investment Manager's Review, the Investment Portfolio Summary and the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

Having taken advice from the Audit Committee, the Board considers the report and accounts, taken as a whole, as fair, balanced and understandable and that it provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.

Neither the Company nor the Directors accept any liability to any person in relation to the Annual Report except to the extent that such liability could arise under English law. Accordingly, any liability to a person who has demonstrated reliance on any untrue or misleading statement or omission shall be determined in accordance with section 90A and schedule 10A of the Financial Services and Markets Act 2000.

For and on behalf of the Board

Peter Dicks

Chairman

11 December 2014

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2014 or 30 September 2013 but is derived from those accounts. Statutory accounts for the year ended 30 September 2013 have been delivered to the Registrar of Companies and statutory accounts for the year ended 30 September 2014 will be delivered to the Registrar of Companies in due course. The Auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's reports can be found in the Company's full Annual Report and Accounts at www.unicornaimvct.co.uk.

PRIMARY FINANCIAL STATEMENTS

Income Statement

for the year ended 30 September 2014

		Year ended			Year ended
		30 September 2014			30 September 2013

	Notes	Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Net unrealised gains on investments		-	8,048	8,048	-	17,167	17,167
Net gains on realisation of investments		-	3,855	3,855	-	1,191	1,191
Income	2	1,232	-	1,232	1,174	-	1,174
Investment management fees	3	(382)	(1,145)	(1,527)	(265)	(795)	(1,060)
Other expenses		(500)	-	(500)	(469)	-	(469)
Profit on ordinary activities before taxation		350	10,758	11,108	440	17,563	18,003

Tax on profit on ordinary activities		-	-	-	-	-	-
Profit on ordinary activities after taxation for the financial year		350	10,758	11,108	440	17,563	18,003

Basic and diluted earnings per share:
Ordinary Shares	5	0.57p	17.60p	18.17p	0.77p	30.71p	31.48p

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 year.

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 the Profit and Loss Account, there were no differences between the profit as stated above and at historical cost.

The notes below form part of these financial statements.

Balance Sheet

As at 30 September 2014

		30 September 2014		30 September 2013
	Notes	£'000	£'000	£'000	£'000
Non-current assets
Investments at fair value			91,105		70,596

Current assets
Debtors		190		836
Current investments		1		154
Cash at bank		1,170		2,406
		1,361		3,396

Creditors: amounts falling due within one year		(254)		(319)
Net current assets			1,107		3,077

Net assets			92,212		73,673

Capital
Called up share capital			642		568
Capital redemption reserve			24		4
Share premium account			13,372		18
Revaluation reserve			32,320		24,979
Special reserve			34,402		38,104
Profit and loss account			11,452		10,000

Equity Shareholders' funds			92,212		73,673

Net asset value per share of 1 pence each:
Ordinary shares	6		143.70p		129.78p

The financial statements were approved and authorised for issue by the Board of Directors on 11 December 2014 and were signed on their behalf by:

Peter Dicks

Chairman

The notes below form part of these financial statements.

Reconciliation of Movements in Shareholders' Funds

For the year ended 30 September 2014

		30 September 2014	30 September 2013
	Notes	£'000	£'000
Opening Shareholders' funds at 1 October 2013		73,673	58,997
Share capital bought back in the year - including expenses		(2,462)	(9,858)
Share capital raised - net of expenses		13,448	9,392
Profit for the year		11,108	18,003
Dividends paid	4	(3,555)	(2,861)
Closing Shareholders' funds at 30 September 2014		92,212	73,673

Cash Flow Statement

For the year ended 30 September 2014

		30 September 2014		30 September 2013
	Notes	£'000	£'000	£'000	£'000
Operating activities
Investment income received		1,209		1,203
Investment management fees paid		(1,527)		(1,060)
Other cash payments		(578)		(502)
Net cash outflow from operating activities			(896)		(359)

Investing activities
Purchase of investments		(17,380)		(3,491)
Sale of investments		9,456		8,529
			(7,924)		5,038

Equity dividends
Dividends paid	4		(3,555)		(2,861)
Net cash (outflow)/inflow before liquid resource management and financing			(12,375)		1,818

Management of liquid resources
Decrease in current investments			153		566

Financing
Shares issued as part of Offer for Subscription (net of transaction costs)		13,448		1,400
Shares issued as part of Enhanced Buyback Facility		-		250
Shares bought back as part of Enhanced Buyback Facility (including expenses)		-		(391)
Shares bought back (including expenses)		(2,462)		(1,769)
			10,986		(510)
Net (decrease)/increase in cash			(1,236)		1,874

The notes below form part of these financial statements.

NOTES TO THE ACCOUNTS

1 Basis of accounting

The accounts have been prepared under UK Generally Accepted Accounting Practice (UK GAAP) and the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ("the SORP") issued by the Association of Investment Companies in January 2009.

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.

As a result of the Directors' decision to distribute capital profits by way of a dividend, the Company revoked its investment company status as defined under section 266(3) of the Companies Act 1985, on 17 August 2004.

2 Income

	2014	2013
	£'000	£'000
Income from investments:
- from equities	1,016	984
- from loan stocks	168	147
- from money-market funds and Unicorn managed OEICs	48	43
Total income	1,232	1,174

Total income comprises:
Dividends	1,064	1,027
Interest	168	147
	1,232	1,174
Income from investments comprises:
Listed UK securities	83	178
Listed Overseas securities	-	1
Unlisted UK securities	1,149	995
	1,232	1,174

3 Investment Manager's fees

	2014	2014	2014	2013	2013	2013
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Unicorn Asset Management Limited	382	1,145	1,527	265	795	1,060

Unicorn Asset Management Limited ("UAML") receives an annual management fee of 2% of the net asset value of the Company, excluding the value of the investments in the OEICs, which are also managed by UAML. The annual management fee charged to the Company is calculated and payable quarterly in advance. In the year ended 30 September 2014, UAML also earned fees of £69,000 (2013: £115,000), being OEIC management fees calculated on the value of the VCT's holdings in each OEIC on a daily basis. This management fee is 0.75% per annum of the OEIC value for each of Unicorn Smaller Companies OEIC, Unicorn UK Growth OEIC (formerly Unicorn Free Spirit OEIC) and Unicorn Mastertrust OEIC.

The management fee will be subject to repayment to the extent that there is an excess of the annual costs of the Company incurred in the ordinary course of business over 3.6% (currently 2.5%) of the closing net assets of the Company at the year end. Any amount repayable will be paid by the Manager within 5 business days of the approval of the annual accounts for the relevant year-end, or set off against the next quarterly fee instalment payable to the Manager following such approval. There was no excess of expenses for this year or the prior year.

Under an Amended Incentive Agreement with UAML dated 12 April 2010 (which replaces all previous incentive agreements), the Investment Manager is entitled to a performance incentive fee of 20% of any cash distributions (by dividend or otherwise) paid to Shareholders in excess of 6 pence per Ordinary Share paid in any accounting period - "the target return" and subject to the maintenance of a net asset value (NAV) per share of 125 pence or more, as calculated in the annual report and accounts for the year relating to such payments. The target return applies for accounting periods starting after 1 October 2010. In the event that the target return of 6 pence per share is not paid in a particular accounting period, the shortfall of such distributions will be carried forward to subsequent accounting periods and any incentive fee will not be payable until this shortfall is met. No incentive fee is payable for the year ended 30 September 2014 and none was paid for the year ended 30 September 2013.

4 Dividends

	2014	2013
	£'000	£'000
Amounts recognised as distributions to equity holders in the year:
Final capital dividend of 5.25 pence (2013: 4.50 pence) per share for the year ended 30 September 2013 paid on 31 January 2014	3,110	2,576
Final income dividend of 0.75 pence (2013: 0.50 pence) per share for the year ended 30 September 2013 paid on 31 January 2014	445**	285

	3,555	2,861

Any proposed final dividend is subject to approval by Shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

Set out below are the total income dividends payable in respect of the financial year, which is the basis on which the requirements of Section 274 of the Income Tax Act 2007 are considered.

	2014	2013
	£'000	£'000

Revenue available for distribution by way of dividends for the year	350	440
Proposed final income dividend of 0.50 pence (2013: 0.75 pence) for the year ended 30 September 2014	340*	426**

*based on 67,986,000 shares in issue at the date of this announcement.

**The amount actually paid in dividends for 30 September 2013 differs to that shown in last year's Annual Report as 2,475,153 shares were issued between 1 October 2013 and the record date of 27 December 2013.

5 Basic and diluted earnings and return per share

	2014	2013
	£'000	£'000
Total earnings after taxation:	11,108	18,003
Basic and diluted earnings per share (Note a)	18.17p	31.48p
Net revenue from ordinary activities after taxation	350	440
Revenue earnings per share (Note b)	0.57p	0.77p
Net unrealised capital gains	8,048	17,167
Net realised capital gains	3,855	1,191
Capital expenses	(1,145)	(795)
Total capital return	10,758	17,563
Capital earnings per share (Note c)	17.60p	30.71p

Weighted average number of shares in issue in the year	61,135,718	57,190,640

Notes

a) Basic and diluted earnings per share is total earnings after taxation divided by the weighted average number of shares in issue.

b) Revenue earnings per share is net revenue after taxation divided by the weighted average number of shares in issue.

c) Capital earnings per share is total capital return divided by the weighted average number of shares in issue.

There are no instruments in place that will increase the number of shares in issue in future. Accordingly, the above figures currently represent both basic and diluted returns.

6 Net asset values

	2014	2013
	£'000	£'000

Net Assets	92,212	73,673
Number of shares in issue	64,168,112	56,767,691
Net asset value per share	143.70p	129.78p

7 Dividends

The Directors have proposed a final dividend of 6 pence per share. The dividend will be paid on 20 February 2015 to Shareholders on the Register on 16 January 2015. Shareholders who wish to have dividends paid directly into their bank account rather than sent by cheque to their registered address can complete a mandate for this purpose. Mandates can be obtained by telephoning the Company's Registrars, Capita Asset Services on 0871 664 0324, (lines are open 8.30 am - 5.30 pm Mon - Fri, calls cost 10p per minute plus network extras - if calling from overseas please ring +44 208 639 2157) or by writing to them at Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU or emailing them at VCTS@capitaregistrars.com.

8 Post balance sheet events

On 9 October 2014, £625,000 was invested in each of The City Pub Company (East) plc and The City Pub Company (West) plc, both of which are unquoted investments.

On 10 October 2014, the Company repurchased 205,000 Ordinary Shares, representing 0.3% of the share capital in issue, for cancellation at a total cost of £266,000 equivalent to 129.9 pence per share.

On 15 October 2014, 796,024 Ordinary shares were allotted at prices ranging from 145.2 to 148.9 pence per share, raising net funds of £1.1 million.

On 6 November 2014, the Company repurchased 150,000 Ordinary Shares representing 0.2% of the share capital in issue, for cancellation at a total cost of £191,000 equivalent to 127.3 pence per share.

On 7 November 2014, 953,147 Ordinary Shares were allotted at prices ranging from 141.9 to 147.1 pence per share raising net funds of £1.4 million.

On 8 December 2014, the Company repurchased 140,000 Ordinary Shares representing 0.2% of the share capital in issue, for cancellation at a total cost of £179,000 equivalent to 127.6 pence per share.

On 9 December 2014, 2,563,717 Ordinary Shares were allotted at prices ranging from 143.9 to 149.9 pence per share raising net funds of £3.7 million.

The ordinary shares of SnackTime plc which had been suspended and therefore valued at nil at the balance sheet date recommenced trading on 14 November 2014.

9 Statutory information

These are not full accounts in terms of section 434 of the Companies Act 2006. The Annual Report for the year to 30 September 2014 will be sent to Shareholders shortly and will then be available for inspection at 2 Barnfield Crescent, Exeter EX1 1QT, the registered office of the Company. Copies of the Annual Report will shortly be available on the Investment Manager's website, details of which can be found at www.unicornaimvct.co.uk. Statutory accounts will be delivered to the Registrar of Companies after the Annual General Meeting. The audited accounts for the year ended 30 September 2014 contain an unqualified audit report.

10 Annual General Meeting

The Annual General Meeting of the Company will be held at 11.30 am on Thursday, 12 February 2015 at The Great Chamber, The Charterhouse, Suttons Hospital, Charterhouse Square, London EC1M 6AN.

11 National Storage Mechanism

A copy of the 2014 Annual Report and Accounts will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/NSM.

Contact details for further enquiries:

Chris Hutchinson of Unicorn Asset Management Limited (the Investment Manager), on 020 7253 0889.

Jon Carslake at ISCA Administration Services Limited (the Company Secretary) on 01392 487056 or by e-mail on unicornaim vct@iscaadmin.co.uk

DISCLAIMER

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

This information is provided by RNS

The company news service from the London Stock Exchange

END

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