Final Results

RNS Number : 5454I

Unicorn AIM VCT PLC

27 November 2018

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

LEI: 21380057QDV7D34E9870

Annual Results Announcement for the year ended 30 September 2018

The full Annual Report and Accounts for the year ended 30 September 2018 can be found on the Company's website www.unicornaimvct.co.uk

FINANCIAL HIGHLIGHTS

(for the year ended 30 September 2018)

· Net asset value ("NAV") total return for the year ended 30 September 2018, after adding back the dividends of 6.5p paid in the year, was 9.3%

· Final dividend of 3.5p proposed for the financial year ended 30 September 2018

· Offer for Subscription raised £19.4 million (after costs)

Fund performance

Ordinary Shares	Shareholders' Funds* (£ 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 September 2018	201.4	171.8	48.0	219.8	144.0
31 March 2018	185.5	156.4	45.0	201.4	133.0
30 September 2017	175.5	163.1	41.5	204.6	141.5
31 March 2017	163.3	162.4	38.5	200.9	137.0

* Shareholders funds/net assets as shown on the Statement of Financial Position below.

** The Board has recommended a dividend of 3.5 pence per share for the year ended 30 September 2018. If approved by Shareholders, this payment will bring total dividends paid since the merger with Unicorn AIM VCT II plc on 9 March 2010 to 51.5p.

***Since the merger of the Company with Unicorn AIM VCT II plc on 9 March 2010 and merger of all former share classes.

STRATEGIC REPORT

The purpose of this Strategic Report is to inform Shareholders of the Company's progress on 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.

The Investment Manager's Review also includes what is believed 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.

CHAIRMAN'S STATEMENT

I am pleased to present the Company's Audited Annual Report for the year ended 30 September 2018.

Economic and Market Review

The period under review was generally positive for UK equity markets, despite growing concerns surrounding the prospect of a global economic slowdown. During the twelve month period ended 30 September 2018, the FTSE 100 Index delivered a total return of 5.9%, while the FTSE AIM All-Share Index generated a stronger total return of 10.8%, largely driven by exceptionally strong performances from the three largest companies listed on AIM, none of which are held in the Company's portfolio.

After a difficult start to 2018, UK economic growth rebounded somewhat during the summer months, thanks mainly to a sustained period of favourable weather. Figures released by the Office for National Statistics record that the UK economy grew by 0.7% in the three month period to the end of August. The long, dry, warm summer appears to have triggered a recovery in consumer spending and has also been helpful for the construction and housebuilding sectors.

This recent improvement in the rate of economic growth may, however, prove to be a temporary phenomenon. In October, the International Monetary Fund issued a warning that the global economy was likely to be weaker than previously expected due to rising international trade tensions, higher oil prices and the negative impact of protracted and potentially unsatisfactory outcome to Brexit negotiations.

In the UK, steady inflation in the cost of basic goods and services is already becoming a problem, in particular since it has not yet been fully offset by a meaningful increase in real wages. The Bank of England has responded to the re-emergence of inflation by raising interest rates for only the second time in a decade and, although rates remain historically low at 0.75%, the increased cost of borrowing is now having a negative impact on the disposable incomes of the 3.5 million UK homeowners who hold variable rate mortgages. In such circumstances, it is clear that discretionary spending is likely to come under further pressure. A possible failure of Brexit negotiations combined with further political instability would only serve to undermine an already fragile UK economy.

On a positive note, however, the competitive value of Sterling has boosted export activity and has also resulted in an increase in the number of tourists visiting the UK. The relative weakness of Sterling offers some support to the services sector, upon which UK GDP growth is heavily dependent. This currency effect should continue to be helpful to the UK economy during 2019.

Investment Performance Review

I am pleased to report that the performance of the investment portfolio during the twelve month period ended 30 September 2018, resulted in another year of positive total returns. Net Asset Value per share increased from 163.1 pence to 171.8 pence during the period, making this the ninth consecutive financial year in which total returns to Shareholders have been positive. The increase in Net Asset Value was, in part, due to highly encouraging progress from two of the privately owned businesses held in the portfolio, both of which were subject to meaningful valuation uplifts at the financial year end. More detail on these two businesses can be found in the Investment Manager's Review below. After adding back the dividends paid in the period, the total return to Shareholders was +9.3%.

At the financial year end, the investment portfolio consisted of 77 active VCT qualifying companies and 24 non-qualifying companies.

As previously explained, new investment is now required to be targeted toward younger, less well-established businesses, which means they tend to be loss-making. Despite this change in focus, the majority of the Company's assets remain invested in operationally strong and financially robust businesses, which have matured sufficiently to allow them to be consistently profitable. As a consequence, many of the companies held in the portfolio are profitable and the majority are sufficiently cash generative to allow for the payment of dividends.

During the period under review, dividends were paid, or proposed, by approximately half of the 101 active companies held in the portfolio and dividend income received was just under £3 million.

Net Assets

As at 30 September 2018, the audited net assets of the Company were £201.4 million, as compared to £175.5 million on 1 October 2017. This growth in total net assets was due to the support received from new and existing Shareholders under the Offer for Subscription which raised £19.4 million and the continued strong performance from the investment portfolio.

Portfolio Activity

It is pleasing to report on an active year for new investment, with the Investment Manager completing thirteen new VCT qualifying investments, while also making four VCT qualifying investments in businesses in which the Company already held an equity stake. In total, almost £19 million was invested in new VCT qualifying investments, while a further £5.1 million was allocated to companies already held in the portfolio.

A number of full and partial disposals were also made during the course of the financial year. Total proceeds from disposals of qualifying investments amounted to £2.3 million, resulting in an overall realised capital profit of £1.5 million. The Investment Manager also made a number of full and partial disposals in non- qualifying investments during the period. The total amount realised from these was £22.4 million and the overall realised capital gain amounted to £2.9 million.

A more detailed analysis of investment activity and performance can be found in the Investment Manager's Review below.

VCT Status

The Government introduced new legislation in November 2017 governing Venture Capital Trusts. The most important of these new rules come into effect in the 2019/2020 tax year and are designed to ensure that capital is directed at young, developing businesses, which might otherwise find it difficult to secure funding with which to finance their plans for growth.

One of the key tests, which will apply from the start of the 2019/2020 tax year, is the requirement for at least 80% (from 70% previously) of a Venture Capital Trust's total assets to be invested in VCT qualifying companies. It is therefore gratifying to note that, in aggregate, the Company closed the financial year under review with 80.3% of its total assets (valued in accordance with VCT rules) already invested in VCT qualifying companies. All other HM Revenue & Customs tests have been complied with and the Board has been advised by PwC, the Company's adviser, that the Company continues to maintain its Venture Capital Trust status. It will, of course, remain a key priority of the Board to ensure that the Company retains this VCT status.

Shareholders should note that the Investment Manager's ability to make portfolio changes is at all times constrained by the need to remain compliant with VCT legislation, by the uncertain availability of suitable new VCT qualifying investments and by the limited liquidity in many AIM quoted shares. Shareholders therefore need to take a longer-term view of their investment.

At the same time, it is also important that the Investment Manager remains in a position to assess new investments on their individual merits, rather than because of any pressure to meet new rules. For this reason, the Board will continue to control the amount of new capital available and carefully monitor the rate, scale and success of new VCT-qualifying investment activity.

Dividends

An interim dividend of 3.0 pence per share, for the half year ended 31 March 2018, was paid to Shareholders on 11 August 2018.

The Board is recommending a final dividend for the financial year ended 30 September 2018 of 3.5 pence per share (income: 1.0 pence; capital: 2.5 pence) to Shareholders, payable on 1 February 2019 to Shareholders on the register as at 11 January 2019.

Subject to receiving Shareholder approval for payment of the proposed final dividend, total dividends in respect of the financial year ended 30 September 2018, will be 6.5 pence per share, which is the same as the previous financial year. This represents a tax free yield to eligible UK Shareholders of 3.8% based on the year end Net Asset Value of 171.8 pence per share as at 30 September 2018 and 4.5% based on the year end share price of 144 pence per share.

Share Buybacks and Issues

The Board continues to believe that it is in the best interests of the Company and its Shareholders to make market purchases of its shares from time to time. During the period from 1 October 2017 to 30 September 2018, the Company bought back 2,182,389 of its own Ordinary Shares for cancellation, at an average price of 142.1 pence per share including costs.

Future repurchases of shares will be made in accordance with guidelines established by the Board 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.

An Offer for Subscription was launched on 25 July 2017. The Offer was strongly supported and closed on 17 November 2017 having raised a total of £33.6 million net of costs. Of this £14.2 million was received in the year to 30 September 2017 and £19.4 million received in the year to 30 September 2018.

As at 30 September 2018, there were 117,226,048 Ordinary Shares in issue.

Investment Management Agreement

During the year under review, the Board negotiated certain amendments to the Investment Management Agreement. The amendments include the reduction of fees on assets over £200 million to 1.5% of net assets and a reduction in the annual expenses cap to 2.75%. The amended Investment Management Agreement became effective on 1 October 2018. Further details can be found in note 3.

Corporate Governance

The Board has noted the process undertaken by the Financial Reporting Council ("FRC") to review and update the UK Corporate Governance Code which will be incorporated into the amended Association of Investment Companies ("AIC") code which the Company follows. These changes will be applicable to the Company from 1 October 2019 and the Board will be considering its response to the changes that will be required including the implications on its succession planning.

Registrars

Shareholders should note that, following a review of service providers by the Board during the year, it was decided to change our Registrar. We are grateful to Link Asset Services for their valuable service over many years but we believe that moving to a smaller provider should better serve the interest of the Company and its Shareholders. The changeover is scheduled to take place during February 2019.

Outlook

UK equity markets performed well in the period under review. The performance of the Company's investments has also been pleasing, not only because of the healthy total return generated in the period, but also because the Investment Manager has successfully deployed the majority of new capital raised in recent years. As a result, the portfolio now contains a meaningful number of investments in earlier stage businesses, which offer the potential for substantial returns as they develop over the coming years.

It should be remembered, however, that there is likely to be a higher failure rate among these more recent investments, since they are less well established and often still loss-making. As previously explained, this shift in emphasis toward investing in early stage, scale-up businesses is driven by the requirement to meet new rules introduced by the Government in November 2017.

Although most of the companies held in the portfolio remain in good operational and financial health and their management teams remain optimistic of being able to maintain growth, the outlook for equity markets has become less favourable. The new financial year has witnessed the emergence of significant volatility in global equity markets, with sharp falls being recorded in all major equity markets during October.

In the past few years, the threat of a 'bubble' developing in certain sectors has steadily increased, and this risk has become particularly evident in the heightened valuations of US and Chinese stocks. In recent weeks, valuations have fallen, with some technology stocks experiencing particularly sharp falls. Many AIM listed stocks have also been badly affected and this has resulted in a difficult start to the Company's current financial year.

During October, the FTSE AIM All-Share Index fell by approximately 11% and this was reflected in a decline of similar magnitude in the Company's Net Asset Value.

In the absence of panic selling, however, stock markets often stabilise relatively quickly and a short-term correction could therefore be regarded as being welcome in that it provides an overdue and timely reminder of the risks involved in equity investing.

The Investment Manager has always adopted a long-term approach to investment and the portfolio has proven its resilience in the past by successfully weathering periods of extreme market turbulence. The Board is therefore confident that the Company remains well-placed to withstand short-term challenges.

Finally, I would like to take this opportunity to thank all Shareholders for their continued support of the Company and to invite you to attend the Company's Annual General Meeting. This is to be held on 10 January 2019 at The Great Chamber, The Charterhouse, Sutton's Hospital, Charterhouse Square, London EC1M 6AN.

Peter Dicks

Chairman

26 November 2018

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 make it possible to pay dividends from capital.

The Company's shares are listed on the London Stock Exchange main market under the code UAV and ISIN GB00B1RTFN43.

The Company is an externally managed fund with a Board comprising four 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 as described in the diagram on page 5 of the Annual Report. Further information on the service providers is outlined in the Corporate Governance Statement on page 37 of the 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 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.

The Board's Strategy

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% (80% for accounting periods commencing after 5 April 2019) of the Company's total assets are to be invested in qualifying investments of which 70% by VCT value (30% made 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.

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

· potential for good cash generation to finance ongoing development and support for a progressive dividend policy.

Asset allocation and risk diversification policies, including maximum exposures, are to an extent governed by prevailing VCT legislation. No single holding may represent more than 15% (by VCT value) of the Company's total investments and cash, at the date of investment.

There are a number of VCT conditions which need to be met by the Company which may change from time to time. The Investment Manager will seek to make qualifying investments in accordance with such requirements.

Asset mix

Where capital is available for investment while awaiting suitable VCT qualifying opportunities or is in excess of the 70% VCT qualification threshold (80% from 6 April 2019), it may be held in cash or invested in money market funds, collective investment vehicles or non-qualifying shares and securities of fully listed companies registered in the UK.

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.

The effect of any borrowing is discussed further on page 30 of the Annual Report under "AIFMD".

Performance during the year

As at 30 September 2018, the audited NAV of the Company was 171.8 pence per share, having risen by 8.7 pence (2017: 2.6 pence) from 163.1 pence per share at the start of the financial year under review. After adding back dividends of 6.5 pence per share paid in the year, the total return to Shareholders was 15.2 pence (2017: 11.85 pence) or 9.3% (2017: 7.4%) of the NAV at the start of the financial year. In comparison, the total return from the FTSE AIM All-Share Total Return Index was 10.8% over the same period. The audited net assets of the Company were £201.4 million (2017: £175.5 million) at the financial year end.

At the financial year end, there were 77 active VCT qualifying companies and 24 non-qualifying companies held in the portfolio. These investments are spread across 23 different sectors. Many of the businesses invested in are cash generative and operate with strong balance sheets. 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. Historically, investment has normally been committed to new companies if they are profitable at the time of first investment, although in light of the new State Aid funding rules, VCT qualifying investments are now being made in earlier stage businesses.

In the year to 30 September 2018, a total of £24.7 million was realised through the sale of investments while £19.4 million (after costs) was raised from an Offer for Subscription. An amount of £48.6 million was deployed in new investments and approximately £7.6 million was paid out as dividends to Shareholders. A further £4.4 million was spent on the operating costs of the Company and £3.1 million on share buybacks.

Over the 12 months to 30 September 2018 there was a net gain on investments of £18.6 million and the total profit on ordinary activities was £17.3 million, equivalent to earnings of 14.8 pence per share. The profit on the revenue account was £1.4 million.

Since the merger with Unicorn AIM VCT II plc, which was completed in March 2010 when all previous share classes merged, the total return to Shareholders has been 139%, including the payment of 48.0 pence per share in dividends, which have been tax free to qualifying Shareholders.

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:

- NAV per share, cumulative dividends paid and cumulative total Shareholder return

- Earnings per share

- Annual and cumulative total return

- Running costs

Further details can be found on pages 7 and 8 of the Annual Report.

Running Costs

The Ongoing Charges of the Company for the financial year under review represented 2.2% (2017: 2.2%) of average net assets, which is well below the agreed cap of 3.6% and remains competitive against other VCTs.

As shown in note 3, the Investment Manager receives a management fee of 2% per annum of net assets (excluding OEICs managed by the Investment Manager). Other expenses are shown in note 4 on page 53 of the Annual Report. From 1 October 2018 the Investment Manager will receive a management fee of 2% per annum of net assets up to £200 million and 1.5% per annum of net assets in excess of £200 million (excluding OEICs managed by the Investment Manager). In addition, the Ongoing Charges cap will reduce to 2.75% per annum.

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. The costs of trail commission paid to intermediaries of £158,000 is not included in this calculation.

Further information in respect of the Company's performance can be found in the Financial Highlights above.

Key Events during the Year

The Company raised £19.4 million (after costs) through the Offer for Subscription and issued 11,827,331 shares, details of which are given in note 13 on page 58 of the Annual Report.

Key Policies

The Board sets the Company's policies and objectives and ensures that its obligations to 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. Total dividends of 6.5 pence per share were paid during the year which amounted to £7.6 million. Since the original launch of Unicorn AIM VCT in 2001, Shareholders have, in aggregate, received approximately £59.5 million in dividend distributions, including those paid to former shareholders in Unicorn AIM VCT II plc.

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.

The Company paid an interim dividend during the year of 3.0 pence per share on 10 August 2018.

The Directors are recommending a final dividend of 3.5 pence for approval at the Annual General Meeting to be held on 10 January 2019. This would bring total dividends to 6.5 pence for the year under review.

• 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.

There are three main advantages to be gained from maintaining a flexible approach to share buybacks; namely:

· Regular share buybacks provide a reliable mechanism through which Shareholders can realise their investment in the Company, rather than being reliant on what is typically a limited secondary market.

· Share buybacks, when carried out at a reasonable discount to underlying net assets, help modestly to enhance NAV per share.

· Implementing share buybacks on a regular basis may help to control the discount to NAV.

The Board agrees the level of 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 2,182,389 shares with a nominal value of £21,824 were purchased for cancellation during the course of the year, at an average price of 142.1 pence per share, for a total consideration of £3.1 million. At the financial year end, the Company's shares were quoted at a mid price of 144.0 pence per share representing a discount to NAV per share of 16.2%. This was before the announcement of the upward revaluation in unquoted investments following the year end.

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 prevailing market conditions, Market Abuse Rules and any other applicable law at the relevant time. Shares bought back are normally cancelled.

• Principal risks and uncertainties

The Directors have carried out a review of the principal risks faced by the Company as part of the internal controls process, as outlined below. Note 17 to the Financial Statements on pages 59 to 65 of the Annual Report also provides information on the Company's financial risk management objectives and exposure to risks.

Risk	Possible consequence	How the Board guards against risk
Investment and strategic risk	Unsuitable investment strategy or share or investment selection could lead to poor returns to Shareholders.	Regular review of investment strategy by the Board. Monitoring of the performance of the investment portfolio on a regular basis. All unquoted investments require prior 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 close review by the Board. The Company's VCT qualifying status is continually reviewed by the Investment Manager and the Administrator. PricewaterhouseCoopers LLP has been retained by the Board to undertake an independent VCT status 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 an annual basis. The Board considers the performance of the service providers annually and monitors activity on a monthly basis.
Fraud and dishonesty risks	Fraud involving Company assets may occur, perpetrated by a third party, the Investment Manager or other service provider. Cyber-attacks on the Company could lead to financial loss and impact on the Company's reputation. Cyber-attacks on the Company's investee companies could affect the value of the Company's investments.	Internal control reports are provided by service providers on a regular basis. The Administrator is independent of the Investment Manager. The Board engaged a cyber-security firm to review the Company's systems and those of its suppliers.
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 17 on pages 59 to 65 of the Annual Report.
Economic risk	Events such as recession, inflation or deflation, movements in interest rates and technological change can affect trading conditions and consequently the value of the Company's investments. The withdrawal of the UK from the European Union creates significant uncertainty in markets and regulatory environments which may affect the value of the Company's investments. Other geographical issues may affect the Company's performance at both macro and micro economic level.	While no single policy can obviate such risks the Company invests in a diversified portfolio of companies, whilst seeking to maintain 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 is outlined below.

Human rights

The Board seeks to conduct the Company's affairs responsibly and expects the Investment Manager to consider human rights implications 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. Appointments to the Board are made according to expertise and knowledge. The Board comprises three male and one female non-executive Directors and the Board has confirmed that it is content with its current composition although in the light of the new code being introduced this will be reviewed in the current year. The Board will consider gender diversity in making future appointments.

Anti-bribery, corruption and tax evasion policy

The Company has adopted a zero tolerance approach to bribery, corruption and the facilitation of tax evasion in its business activities and will not tolerate these 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 offers electronic communications where acceptable, 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.

Viability Statement

The Board has considered the requirement to confirm that the Company is able to meet all liabilities when due and that it can continue to operate for a period of at least twelve months from the date of signing the Annual Report. The Directors state on page 30 of the Annual Report that they consider the Company is a going concern over this timeframe.

Under the UK Corporate Governance code there is a requirement that the Board performs a robust assessment of the principle risks relating to the Company. The last review was performed in July 2018.

The Directors have considered the viability of the Company as part of their continuing programme of monitoring risk and conclude that five years is a reasonable time horizon to consider the continuing viability of the Company. This is also in line with the requirement for the Company to continue in operation so investors subscribing for new shares issued by the Company can hold their shares for the minimum five year period to allow them to benefit from the tax incentives offered when those shares were issued.

In order to maintain viability, the Company has a detailed risk control framework which has the objective of reducing the likelihood and impact of: poor judgement in decision-making; risk-taking that exceeds the levels agreed by the Board; human error; or control processes being deliberately circumvented. These controls are reviewed by the Board on a regular basis to ensure that controls are working as prescribed. In addition, reviews of all service providers are undertaken regularly.

The Directors consider that the Company is viable for the five year time horizon for the following reasons:

■ At the year end the Company has a diversified investment portfolio including approximately £178 million invested in readily realisable listed shares and a further £6 million in open ended funds and cash. The Company therefore has sufficient liquidity in the portfolio.

■ The ongoing charges ratio of the Company as calculated using the AIC recommended methodology equates to 2.2% of net assets, which is competitive for the VCT sector.

■ The Board anticipates that there will continue to be suitable qualifying investments available that will enable the Company to maintain its operations successfully over the five year time horizon.

■ The Company has no debt or other external funding apart from its Ordinary shares.

The Directors have also considered the viability of the Company should there be a slowdown in the economy or a collapse of the markets leading to lower dividend receipts and asset values. As stated above Ongoing Charges equate to 2.2% of net assets of which the Investment Management fee (as reduced by the Company's investments in Unicorn funds) equates to 2.0% of net assets. Therefore, any fall in the value of net assets will result in a corresponding fall in the major expense of the Company.

As a result of these factors, the Directors have concluded that there is a reasonable expectation that the Company can continue in operation over the five year period.

Prospects

The prospects for the Company are discussed in detail in the Outlook section of the Chairman's Statement above.

For and behalf of the Board

Peter Dicks

Chairman

26 November 2018

Investment Manager's Review

Introduction

The audited net assets of the Company totalled £201.4 million as at 30 September 2018, and the audited Net Asset Value per share was 171.8 pence. New capital received from the Offer for Subscription, combined with another year of positive investment performance, resulted in net assets increasing by £25.9 million during the financial year under review. The net proceeds from new shares issued and allotted in the period from the Offer for Subscription, totalled £19.4 million, while the capital gain from the portfolio amounted to 13.6 pence per share. After adding back the £7.6 million in dividends paid in the period, the total return amounted to 15.2 pence per share ; representing an increase of 9.3% upon the opening net asset value of 163.1 pence.

Market Review

The recovery in UK equity markets since March 2009 has been described as being one of the most reluctant bull markets in history. Despite a few notable bumps along the way, such as the re-emergence of a potential Eurozone crisis in 2011, and the Government's decision in 2015 to introduce the European Union Referendum Bill, UK equity markets have continued to rise.

In an environment dominated by quantitative easing and ultra-low interest rates, asset allocators have had few realistic alternatives to investment in equities. The limited appeal offered by bond and property investment has resulted in an increasing weight of money flowing into developed equity markets around the world. In the US in particular, this equity bias has been heightened by an explosion in the popularity of low cost, Exchange Traded Funds (ETFs) and by the seemingly unstoppable progress of a handful of high growth, mega-cap technology stocks. Inevitably, these factors have combined to increase the risk of a correction, as individual company valuations have in many cases reached record highs, despite obvious and mounting economic and political risks.

In the weeks following the end of the Company's financial year, the direction of global stock markets finally went into reverse, as risk aversion increased and a sell-off in equities gathered momentum. At the time of writing it remains to be seen whether recent falls in global stock markets are a temporary phenomenon or a precursor to a more serious correction in equity valuations

Performance Review

The investment portfolio made good progress overall during the period under review.

It has also been a productive period for new investments as the number of interesting investment opportunities increased.

As in previous years however, there have been a few disappointing performances from investee companies. In aggregate, these setbacks have been more than offset by strong performances from the majority of holdings in the portfolio.

The investment portfolio remains diversified both by number of holdings and by sector exposure. At the financial year end, the Company held investments in 77 active VCT qualifying companies and 24 non-qualifying investments. These investments are spread across 23 different sectors.

Qualifying Investments

A review of the ten most meaningful contributors to performance from VCT qualifying investments (both positive and negative) follows: (bracketed figures represent the share price movement for the year under review or since the date of investment on a mid-price basis)

Abcam (+40.6%) is a global leader in the supply of research tools to the life sciences sector. Despite a somewhat volatile share price performance, Abcam again delivered strongly positive total returns in the year under review. In early September, Abcam released preliminary results for its financial year ended 30 June 2018, reporting another year of strong operational and financial performance. Total revenues increased by 10.7% on a constant currency basis to £233.2 million, while adjusted earnings per share gained by 27.1% to 32.4p. Abcam remains a highly cash generative business, reporting a net operating cash inflow for its financial year to the end of June 2018 of £63.3 million. Strong free cashflow is enabling management to significantly increase investment in infrastructure, systems and processes in order to support future growth. In the period following the release of final results, Abcam's share price has been under pressure. This share price weakness appears to have been caused by profit taking, combined with some concern surrounding the possible impact on profit margins as a result of increased levels of investment.

AB Dynamics (+113.2%) is a designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry. Interim results for the six month period to 28 February 2018 were announced in April 2018 and reported on a positive period of trading. Key highlights of the results included a 39% growth in revenues to £15.3 million and a 34% increase in adjusted pre-tax profit to £3.3 million. AB Dynamics continues to experience strong demand for its specialised products and services, including 'Guided Soft Targets', which are used to test Advanced Driver Assistance Systems (ADAS). Such systems are currently being rapidly developed by all of the major global car manufacturers and AB Dynamics is well positioned to exploit this demand. In order to take full advantage of all current opportunities and to avert any possible Brexit disruption, AB Dynamics has established a new operating entity in Germany, which provides improved customer service and local engineering resource. In addition, the Group continues to commit substantial investment to expanding staff numbers and improving facilities in order to support its ambitious growth plans.

Animalcare Group (-48.0%) is a leading developer and supplier of veterinary pharmaceutical products across the UK and Europe. Animalcare's results for the financial year ended 31 December 2017, which were reported in May 2018, covered a challenging period for the group, with underlying earnings per share declining by 24.6% to 12.6p. This fall in profitability was partly a result of a substantial increase in shares in issue following the acquisition of Ecuphar, a pan-European veterinary pharmaceuticals business. Gross margins were impacted by a higher proportion of sales coming from lower margin animal products, together with unexpected pressure on pricing in their important range of antibiotic products. Encouragingly, interim results covering the six month period to 30 June 2018 recorded growth in revenues of 4.8% to £47.8 million, and a 5.1% improvement in adjusted EBITDA to £6.3 million. The improvement in profitability has been achieved through tighter control of costs. Although the interim results represented an overall improvement in trading and financial health, investors remain concerned about the possible impact of an unsatisfactory Brexit deal and are still sceptical about the timing and benefits of the Ecuphar acquisition. In order to help reassure the market and strengthen the balance sheet, Animalcare has disposed of its low margin wholesale business. The proceeds from this disposal will be used to pay down borrowings and to help fund future product development. Animalcare's share price has more than halved since the transaction with Ecuphar was announced in June 2017 and in light of this disappointing performance, a new Chief Executive Officer was appointed to the company with effect from 1 October 2018.

Anpario (+23.2%) is a specialist manufacturer and distributor of natural feed additives for animal health, nutrition and biosecurity. Interim results for the six month period to 30 June 2018 were announced in September 2018. Anpario continues to deliver steady growth, with diluted earnings per share for the half-year period increasing by 14% to 8.7p. This growth has been achieved despite sales being impacted by foreign currency headwinds. Economic problems in Latin American markets also led to reduced demand from this region, but this was largely offset by positive performances from UK, European and US markets. Anpario retains a very strong balance sheet with net cash balances of £12.6 million at the half-year end. As a consequence, the Board announced an increase of 10% in the interim dividend to 2.2p, reflecting the management team's confidence in the outlook.

City Pub Group (+33.1%) owns and operates an estate of premium pubs across the southern half of England and Wales. The group was formed through the merger of The City Pub Company (East) and The City Pub Company (West) in which the Company had held qualifying investments since October 2013. In November 2017, City Pub Group successfully completed an Initial Public Offering by listing its shares on AIM. As part of this exercise, City Pub Group raised £35 million of new equity in order to help fund further expansion of its pub estate. Interim results for the six month period ended 1 July 2018, which were released in September, reported on a particularly strong period of growth driven by the opening of nine new pubs. Overall trading was also assisted by a prolonged period of good summer weather and the impact of a reasonably successful England campaign at the football World Cup. Strong trading momentum has continued in the second half of fiscal year 2018 and management confidently expect to deliver further growth from continued strong trading combined with scale benefits derived from a rapidly growing estate of pubs.

Crawshaw Group (-82.1%) is a retailer of fresh meat and food-to-go with stores across the Midlands and the North of England. In September, Crawshaw reported interim results for the six months ended 29 July 2018, during which period trading remained extremely challenging. Ongoing weakness in sales from its high street shops resulted in a 13.2% decline in group like-for-like revenues. Gross margins softened from 42.9% in the prior year half-year period to 39.6%, resulting in pre-tax losses widening to £1.7 million from £1.2 million in the first-half of 2017. The extremely challenging trading conditions being experienced by its high street shops has placed the group under significant financial strain and there now appears to be no realistic prospect of engineering a palatable solution for existing shareholders. On 26 October 2018, the Board of Crawshaw announced that it was considering a number of remedial actions including raising additional funding through an equity capital raising. Unfortunately, discussions with existing and prospective investors have been unsuccessful and, in the absence of further funding, the business does not have sufficient cash resources to effect the required restructuring. The Board of Crawshaw has therefore taken the decision to place the company into administration with the purpose of seeking buyers for the group's business and assets on a going concern basis. As a consequence of these recent developments, Unicorn AIM VCT's holding in Crawshaw has now been written down to nil value.

Idox (-45.7%) is a supplier of specialist software and services predominately to the UK public sector. Final results for the year ended 31 October 2017 were reported in March 2018 and covered a challenging period for the company. Despite revenues increasing by 16% to £88.9 million, adjusted pre-tax profit declined by 27.5% to £12.1 million. Profitability was lower due to contract delays in 6PM, a recently acquired company that provides software services principally to the NHS. Accounting issues were also uncovered by an internal audit, which resulted in an impairment charge of £2.7 million to the value of 6PM. Interim results covering the subsequent six months reflect the ongoing challenges faced by Idox. In the half year to 30 April 2018, adjusted EBITDA declined by 72% to £2.7 million due mainly to lower levels of revenue and higher costs. A new Chief Executive has now been appointed with a clear brief to restructure the company, reduce costs and review contract terms and pricing. The Board is optimistic that restructuring will result in an improved financial performance in the second half of the company's financial year and that undertaking remedial action now will also help improve the quality of Idox's longer term earnings.

Stride Gaming (-59.5%) is a leading online gaming operator that utilises a combination of proprietary technology and licensed software to offer gaming products direct to the consumer. Interim results for the six month period to 28 February 2018 were reported in May 2018. Net Gaming Revenues increased by 14% to £44.9 million, driven by a 25% growth in Real Money Gaming on the group's proprietary platform to £29.7 million. However, profitability was negatively impacted by changes in gaming duty, which reduced EBITDA by £1.7m, together with higher administrative costs following a period of investment in the business. Despite these increased costs, the business remains cash generative, reporting net operating cash flow of £9.0 million for the six month period and ending the half-year period with net cash of £22.4 million. Stride Gaming's share price came under further pressure following an announcement that the Gambling Commission of Great Britain ("UKGC") intends to levy a significant financial penalty in relation to the manner in which the company has historically carried out its licenced gaming activities. A subsequent update, released in September 2018, confirmed that a decision by UKGC is expected by the end of 2018. A provision of £4 million is to be taken in the company's financial year ended 31 August 2018. Trading during the second-half of the financial year was reported to be in line with expectations, notwithstanding this challenging backdrop.

Totally (-51.0%) is a provider of out-of-hospital services to the healthcare market in the UK. Final results, covering a 15 month accounting period ended 31 March 2018, were announced in July 2018. This extended financial period included the transformational acquisition of Vocare in October 2017. Vocare is a leading specialist provider of urgent and out-of-hours care services across the UK. The management team is now focused on integrating the two businesses in order to generate cost synergies. Totally's existing operations continue to perform well. Several new contracts and extensions to various existing contracts have been announced in recent months. Financial highlights for the 15 month period included total revenue of £42.5 million (FY16: £4.0 million) and pre-tax profit of £2.1 million (FY16: £1.5 million loss). Totally's balance sheet remains strong, with net cash of £10.2 million as at 31 March 2018. The Group should now be well placed to grow both organically and through complementary acquisition.

Tracsis (+64.0%) is a leading provider of specialist software and services, mainly to the transportation industry. Tracsis reported robust interim results in March 2018, which demonstrated strong organic revenue growth in the company's Rail Technology & Services and Traffic & Data Services divisions. A subsequent update, covering the company's financial year to 31 July 2018, confirmed that trading remained strong during the second-half. As a result, adjusted profit is now expected to be ahead of analysts' forecasts. Management successfully completed two acquisitions in the period; Travel Compensation Services and Delay Repay Sniper. Both of these businesses are highly complementary to the group's rail software division and provide compelling cross-selling opportunities to the division's train operating customers.

Material Contributions

In absolute terms, the top five positive contributors, described above generated a combined realised and unrealised capital gain of £17.8 million. The next five largest contributors were; Keywords Studios (+40.8%), Access Intelligence (+45.5%), Augean (+109.9%), Creo Medical (+41.1%) and Instem (+83.9%). In aggregate, these five investments generated an unrealised capital gain of almost £5 million.

In absolute terms, the five largest detractors from performance, described above generated a combined, unrealised capital loss of £8.3 million. In absolute terms, the next five largest negative contributions came from; ECSC Group (-25.0%), Escape Hunt (-24.8%), Falanx Group (-16.6%), PCI-PAL (-51.4%) and Wey Education (-57.8%). The aggregate unrealised capital loss in the period from these five investments amounted to £2.6 million.

One other disappointing investment that requires comment is Uvenco, a vendor of drinks and snacks through vending machines. It is disappointing to report that the value of the holding in Uvenco, fell to zero during the year under review. Uvenco operated in extremely competitive markets and was unable to continue trading without securing significant further funding support, which ultimately was not forthcoming. As a result, Uvenco sold its remaining assets in order to pay down outstanding debt and is now in a process of voluntary liquidation. The impact on portfolio performance in the period under review was negligible, since the investment in Uvenco had fallen to a nominal value in previous years.

Finally, on a very positive note, it is pleasing to note that two VCT qualifying investments in unquoted companies have been the subject of meaningful uplifts to their respective carrying values as a consequence of successful trading and significant growth over the past twelve months. The two companies concerned are Hasgrove and Interactive Investor.

Hasgrove is the name of the holding company under which lies an operating company called Interact. Interact is a software as a service business offering state of the art corporate intranets to businesses around the world. The scale and rate of growth in winning new, high value contracts has been impressive for some time. Momentum in the business is being maintained such that Interact has become a highly profitable and cash generative business with rapidly increasing monthly, recurring revenues. As a consequence, the carrying value of the Hasgrove shares in the portfolio has been increased from 125 pence per share to 384 pence per share; an increase of 207%, equating to an unrealised capital gain for the financial year under review of £4.3 million.

Interactive Investor is an online investment platform that provides retail investors with unbiased financial information, together with a trading and portfolio management platform which enables them to self-manage their investments. In the past twelve months, Interactive has raised significant new capital, completed two major acquisitions and successfully disposed of a non-core asset. The business now has significantly greater scale, is more profitable and is continuing to demonstrate strong growth. Until the end of the financial year under review, the stake in Interactive was held in the portfolio at a carrying value of £39.00 per share. As a consequence of a recent transaction in the shares of Interactive at a price of £78.40 per share, the carrying value of this investment has now been adjusted upwards to this level. This represents an uplift in value of slightly over 100% and equates to an unrealised capital gain during the financial year of £3.1 million.

Non-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):

The non-qualifying investments held by the Company, are typically in larger, more liquid quoted companies that are listed on the FTSE 350 Index. In the main, these investments performed satisfactorily in the period under review. The strongest contributors to performance were; Macfarlane (+50.8%), Royal Dutch Shell (+7.7%), and Victrex (+25.4%), each of which delivered (realised and unrealised) capital gains of over £0.5 million.

In contrast, the biggest, and only meaningful detractor, from overall performance was Renold (-24.5%), which registered an unrealised capital loss of just under £0.4 million in the period under review. Renold is an international engineering business, specialising in the manufacture of industrial chain and torque transmission systems. Demand for Renold's products has been subdued in the period, while trading has also been affected by uncertainty among its customers about Brexit.

Investment Activity

It has been a busy period for the Company in terms of new investment activity, as the number and quality of investment opportunities improved during the year. This enhanced level of deal flow has enabled the Investment Manager to remain selective, while at the same time allowing the deployment of the majority of the new capital raised in recent years. During the period under review, seventeen VCT qualifying investments were made at a total cost of just over £24 million. Most of the new, VCT qualifying investments have performed satisfactorily, however, given the early stage nature of many of these businesses, it is not altogether surprising that short-term share price performance has been disappointing in a number of cases.

Of the total amount invested, almost £19 million was committed to thirteen new VCT qualifying opportunities, while just over £5 million was allocated to investments in four VCT qualifying companies in which the Company already held a stake.

The VCT qualifying investments in companies new to the portfolio were as follows:

Angle - a medical diagnostics company focused on the development of a non-invasive liquid biopsy platform to separate Circulating Tumour Cells (CTCs) and other rare cell types from whole blood samples.

Avacta Group - a biopharmaceutical company engaged in the development of protein-based reagents, which are an emerging alternative to antibodies and which can be used in a range of life science applications.

Creo Medical - a medical device company focused on the emerging field of surgical endoscopy, a recent development in minimally invasive surgery.

Falanx Group -a provider of security products and services to clients to enable them to prevent cyber-attacks.

Fusion Antibodies - a business offering a range of antibody engineering services for the development of antibodies for both therapeutic drug and diagnostic companies.

Immotion Group - a provider of immersive 'out-of-home' virtual reality experiences by combining state-of-the-art 'motion platform' technology and proprietary content.

LightwaveRF - a specialist radio frequency (RF) technology company enabling households and businesses to remotely operate and control household applications through smartphones and other web-based applications.

Microsaic Systems - a designer and manufacturer of bench- top mass spectrometry (MS) technology, focused on early drug development and life science markets.

nkoda - a private company that has developed an online platform containing the world's largest library of digital sheet music with over 30 million licensed pages of music from the world's leading classical music publishers.

PCI-PAL - a provider of secure cloud payments solutions, enabling call centres to process sensitive customer data securely.

Trackwise Designs - a manufacturer of specialist products using printed circuit technology, across a wide range of applications including telecommunications, aviation, automotive and defence.

VR Education - a software firm specialising in the use of virtual/ augmented reality in the social and education sectors.

Wey Education - an education group, which provides online education services using state of the art digital technology.

Follow-on VCT qualifying investments were made in Access Intelligence, Bonhill Group (previously Vitesse Media), Hardide and Osirium Technologies.

The pipeline of possible future VCT qualifying investments continues to look promising. The number of businesses that are seeking an AIM listing for the first time has improved despite the introduction in November 2015 of new and more restrictive rules surrounding eligibility for State Aid funding. Inevitably, the risk profile of new investments has increased somewhat. HM Treasury and HMRC are rightly focused on ensuring that new capital raised under tax efficient schemes, such as Venture Capital Trusts, is directed toward earlier stage businesses that are looking to scale-up their operations, but where alternative forms of funding, such as bank debt, are harder to come by and typically too expensive. We are fully supportive of this policy and have a long established track record of successfully supporting early stage businesses.

Encouragingly, the Company remains in a strong position with regard to one of the key tests imposed by HMRC in which a VCT has to invest 70% (80% from 6 April 2019) of its total assets in VCT qualifying companies. As at the year end date, 80.3% of the Company's assets were invested in VCT qualifying companies, thereby enabling the Investment Manager to focus on the merits of potential new investments, rather than being under pressure to invest simply in order to meet technical rules.

Realisations

One AIM-listed company, EG Solutions, was acquired by a competitor in the period, realising net proceeds of approximately £1.2 million and a capital gain of £0.5 million. A number of other partial disposals in qualifying holdings together with full and partial disposals in non-qualifying investments were also made. These transactions generated total proceeds of £23.5 million and an aggregate capital profit of £3.9 million. The total value of all disposals made during the period therefore amounted to £24.7 million. Including partial disposals, the total realised capital gain from the sale of investments amounted to £4.4 million.

Prospects

The financial year to 30 September 2018 proved to be another period of steady progress for your Company. The portfolio has limited exposure to businesses dependent on UK consumer spending, while an increasing number of our investee companies have reasonably significant and expanding international operations.

Importantly, the level of exposure to business activity in the European Union member states remains low, with approximately 11% of total revenues generated by our investee companies coming from Europe. This low level of dependence on Europe should help insulate our investee companies from the worst impacts of a "no deal" Brexit.

In the period since the Company's financial year-end, stock markets have experienced significant downward pressure. Sharp share price falls have occurred in most major equity markets worldwide. The portfolio has not been immune from this pressure, with Net Asset Value declining by 12% in October.

Clearly, after a near ten year bull run for equities, a market correction should not come as a huge surprise. There are multiple reasons behind the emergence of a more negative outlook for equities including; increased trade tensions, rising inflation, higher interest rates and the possibility of a failed or unsatisfactory Brexit deal.

Regardless of political beliefs or particular economic viewpoints, the next few years are unlikely to be straightforward for equity markets, as the UK adjusts to historic changes in its relationship with key European trading partners. To date, Brexit negotiations have been protracted and extremely challenging. As a consequence, it is still unclear whether the current UK Government will be able to secure a satisfactory exit from the European Union. In addition, the next scheduled General Election is now less than three and a half years away. Given the seemingly irreconcilable divisions within the current minority Government, it would not be at all surprising if a battle for the leadership of the Conservative Party erupts. In this case, it is possible that an early General Election could be called, leading to further uncertainty and the possibility of significant disruption to economic prospects. Political instability can lead to weak decision making and inevitably creates considerable uncertainty, which in turn has negative implications for UK economic growth as well as the stock market.

Despite the difficult equity market conditions experienced in the early weeks of the Company's current financial year, we remain confident that the investment portfolio retains the potential to deliver significant total returns over the longer term.

Chris Hutchinson

Unicorn Asset Management Limited

26 November 2018

EXTRACT FROM DIRECTORS' REPORT

Share Capital

At the year-end there were 117,226,048 (2017: 107,581,106) Ordinary shares of 1p each in issue, none of which are held in Treasury. The issues and buybacks of the Company's shares during the year are shown in note 13 on page 58 of the Annual Report. No shares have been issued or bought back subsequent to the year end, therefore, at the date of this announcement the Company had 117,226,048 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 a period of at least 12 months from the date of the approval of the financial statements and that it is appropriate to apply the going concern basis in preparing the financial statements. As at 30 September 2018, the Company held cash balances of £1.3 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 covering a period of at least twelve months from the date of approving the financial statements have been reviewed and show that the Company has access to sufficient liquidity to meet both contracted expenditure and any discretionary cash outflows from buybacks and dividends. The Company has no borrowings in place and is therefore not exposed to any gearing covenants.

The full Annual Report and Accounts contains the following statement regarding responsibility for the Financial Statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors are responsible for preparing the Annual 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 have elected to prepare the Company's Financial Statements in accordance with United Kingdom Generally Accepted Accounting Practice ("UK GAAP') (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 for 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 they have been prepared in accordance with UK GAAP subject to any material departures disclosed and explained in the Financial Statements; and

- prepare a Director's Report, a Strategic Report and Director's Remuneration Report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and 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. The Directors are responsible for ensuring that the Annual Report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy.

Website publication

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.

Directors' responsibilities pursuant to DTR4

The Directors confirm to the best of their knowledge:

• The Financial Statements have been prepared in accordance with UK GAAP and give a true and fair view of the assets, liabilities, financial position and profit of the Company.

• The Annual Report includes a fair review of the development and performance of the business and the financial position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

Peter Dicks

Chairman

26 November 2018

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2018 or 30 September 2017 but is derived from those accounts. Statutory accounts for the year ended 30 September 2017 have been delivered to the Registrar of Companies and statutory accounts for the year ended 30 September 2018 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 2018

		Year ended			Year ended
		30 September 2018			30 September 2017
	Notes	Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Net unrealised gains on investments		-	16,992	16,992	-	9,823	9,823
Net gains on realisation of investments		-	1,628	1,628	-	1,653	1,653
Income	2	3,004	-	3,004	3,115	-	3,115
Investment management fees	3	(908)	(2,724)	(3,632)	(750)	(2,252)	(3,002)
Other expenses		(691)	-	(691)	(655)	-	(655)
Profit on ordinary activities before taxation		1,405	15,896	17,301	1,710	9,224	10,934
Tax on profit on ordinary activities		-	-	-	-	-	-
Profit on ordinary activities after taxation for the financial year		1,405	15,896	17,301	1,710	9,224	10,934

Basic and diluted earnings per share:
Ordinary Shares	5	1.20p	13.56p	14.76p	1.75p	9.44p	11.19p

All revenue and capital items in the above statement derive from continuing operations of the Company.

The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance with applicable Financial Reporting Standards ("FRS"). The supplementary revenue return and capital return columns are prepared in accordance with the Statement of Recommended Practice ("AIC SORP") issued in November 2014 and updated in February 2018 with consequential amendments by the Association of Investment Companies.

Other than revaluation movements arising on investments held at fair value through the Income Statement, there were no differences between the profit as stated above and at historical cost.

The notes below form part of these financial statements.

Statement of Financial Position

as at 30 September 2018

		30 September 2018		30 September 2017
	Notes	£'000	£'000	£'000	£'000
Non-current assets
Investments at fair value			200,052		157,471

Current assets
Debtors		387		416
Cash at bank and in hand		1,279		18,093
		1,666		18,509
Creditors: amounts falling due within one year		(290)		(474)
Net current assets			1,376		18,035
Net assets			201,428		175,506

Capital
Called up share capital			1,172		1,076
Capital redemption reserve			99		77
Share premium account			106,325		87,090
Capital reserve			80,152		65,784
Special reserve			7,401		13,736
Profit and loss account			6,279		7,743
Equity Shareholders' funds			201,428		175,506

Net asset value per share:
Ordinary shares	6		171.83p		163.14p

The financial statements were approved and authorised for issue by the Board of Directors on 26 November 2018 and were signed on their behalf by:

Peter Dicks

Chairman

The notes below form part of these financial statements.

Statement of Changes in Equity

for the year ended 30 September 2018

Called up share capital

Capital redemption reserve

Share premium account

Unrealised capital reserve

Special reserve*

Profit and loss account*

Total

£'000

At 1 October 2017

1,076

87,090

65,784

13,736

7,743

175,506

Shares repurchased for cancellation and cancelled

(22)

(3,102)

Shares issued under Offer for Subscription

118

19,714

19,832

Expenses of shares issued under Offer for Subscription

(479)

Transfer to special reserve

(3,233)

3,233

Gains on disposal of investments (net of transaction costs)

1,628

Realisation of previously unrealised valuation movements

(2,624)

2,624

Unclaimed dividends and other income released by Rensburg

Net increases in unrealised valuations in the year

16,992

Dividends paid

(7,645)

Investment Management fee charged to capital

(2,724)

Revenue return for the year

1,405

At 30 September 2018

1,172

106,325

80,152

7,401

6,279

201,428

Called up share capital

Capital redemption reserve

Share premium account

Unrealised capital reserve

Special reserve*

Profit and loss account*

Total

£'000

At 1 October 2016

921

58,394

58,323

21,756

8,296

147,743

Shares repurchased for cancellation and cancelled

(24)

(3,309)

Shares issued under Offers for Subscription

179

29,386

29,565

Expenses of shares issued under Offers for Subscription

(690)

Transfer to special reserve

(4,711)

4,711

Gains on disposal of investments (net of transaction costs)

1,653

Realisation of previously unrealised valuation movements

(4,742)

4,742

Permanent diminution realised

2,380

(2,380)

Net increases in unrealised valuations in the year

9,823

Dividends paid

(8,737)

Investment Management fee charged to capital

(2,252)

Revenue return for the year

1,710

At 30 September 2017

1,076

87,090

65,784

13,736

7,743

175,506

* The special reserve and profit and loss account are distributable to Shareholders.

The notes form part of these financial statements.

Statement of Cash Flows

for the year ended 30 September 2018

		30 September 2018		30 September 2017
	Notes	£'000	£'000	£'000	£'000
Operating activities
Investment income received		3,011		3,091
Investment management fees paid		(3,648)		(2,987)
Other cash payments		(787)		(729)
Net cash outflow from operating activities			(1,424)		(625)

Investing activities
Rensburg unclaimed dividends and other income		15		-
Rensburg liquidation costs		-		(8)
Purchase of investments		(48,526)		(21,090)
Sale of investments		24,709		19,496

Net cash outflow from investing activities			(23,802)		(1,602)

Net cash outflow before financing			(25,226)		(2,227)

Financing
Dividends paid	4	(7,645)		(8,737)
Shares issued under Offers for Subscription (net of transaction costs)		19,159		29,068
Shares repurchased for cancellation		(3,102)		(3,309)
Net cash inflow from financing			8,412		17,022
Net (decrease)/increase in cash and cash equivalents			(16,814)		14,795
Cash and cash equivalents at 30 September 2017			18,093		3,298
Cash and cash equivalents at 30 September 2018			1,279		18,093

The notes below form part of these financial statements.

Notes to the Financial Statements

for the year ended 30 September 2018

1 Accounting policies

A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out on pages 50 and 51 of the Annual Report.

a) Basis of accounting

The Financial Statements have been prepared under FRS 102 and the SORP issued by the Association of Investment Companies in November 2014 and updated in February 2018 with consequential amendments.

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 as 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

	2018	2017
	£'000	£'000
Income from investments:
- from equities	2,739	2,727
- from loan stocks	101	242
- from money-market funds and Unicorn managed OEICs (including reinvested dividends)	164	146
Total income	3,004	3,115

Total income comprises:
Dividends	2,903	2,873
Interest	101	242
	3,004	3,115
Income from investments comprises:
Listed UK securities	1,152	817
Unlisted UK securities (AIM and unquoted companies)	1,852	2,298
	3,004	3,115

3 Investment Manager's fees

	2018			2017
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Unicorn Asset Management Limited	908	2,724	3,632	750	2,252	3,002

Unicorn Asset Management Limited ("UAML") received 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 was calculated and payable quarterly in advance. In the year ended 30 September 2018, UAML also earned fees of £69,000 (2017: £54,000), being OEIC management fees calculated on the value of the Company'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 UK Smaller Companies OEIC, Unicorn UK Growth OEIC (formerly Unicorn Free Spirit OEIC), Unicorn Mastertrust OEIC and Unicorn UK Ethical Fund OEIC.

A revised investment management agreement was entered into on 1 October 2018 which provides that from that date the annual management fee, calculated and payable quarterly in arrears, will be 2% of the net asset value of the Company, excluding the value of the investments in the OEICs, up to net assets of £200 million and 1.5% of net assets in excess of £200 million. If the Company raises further funds during a quarter the net asset value for the quarter shall be reduced by an amount equal to the amount raised, net of costs, multiplied by the percentage of days in that quarter prior to the funds being raised.

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% (2.75% from 1 October 2018) of the closing net assets of the Company at the year end. There was no excess of expenses for year 2017/18 or the prior year.

4 Dividends

	2018	2017
	£'000	£'000
Amounts recognised as distributions to equity holders in the year:
Interim capital dividend of 2.8 pence (2017: 2.5 pence) per share for the year ended 30 September 2018 paid on 10 August 2018	3,293	2,499
Interim income dividend of 0.2 pence (2017: 0.5 pence) per share for the year ended 30 September 2018 paid on 10 August 2018	235	500
Final capital dividend of 2.5 pence (2017: 5.25 pence) per share for the year ended 30 September 2017 paid on 2 February 2018	2,972	4,820
Final income dividend of 1.0 pence (2017: 1.0 pence) per share for the year ended 30 September 2017 paid on 2 February 2018	1,189*	918
Total dividends paid in the year	7,689	8,737
Unclaimed dividends returned	(44)	-
	7,645	8,737

The 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.

* The amount actually paid in dividends for 2017 differs from that shown in last year's Annual Report as 345,000 shares were bought back between 24 November 2017 and the record date of 12 January 2018.

Set out below are the total income dividends payable in respect of the 2017/18 financial year, which is the basis on which the requirements of Section 274 of the Income Tax Act 2007 are considered.

	2018	2017
	£'000	£'000
Revenue available for distribution by way of dividends for the year	1,405	1,710
Interim income dividend paid of 0.2 pence (2017: 0.5 pence)	235	500
Proposed final income dividend of 1.0 pence (2017: 1.0 pence) for the year ended 30 September 2018	1,172+	1,192

+Based on 117,226,048 shares in issue at the date of this announcement.

5 Basic and diluted earnings and return per share

	2018	2017
	£'000	£'000
Total earnings after taxation:	17,301	10,934
Basic and diluted earnings per share (Note a)	14.76p	11.19p
Net revenue from ordinary activities after taxation	1,405	1,710
Revenue earnings per share (Note b)	1.20p	1.75p
Total capital return	15,896	9,224
Capital earnings per share (Note c)	13.56p	9.44p

Weighted average number of shares in issue in the year	117,250,279	97,674,986

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 value

	2018	2017
Net Assets	£201,428,000	£175,506,000
Number of shares in issue	117,226,048	107,581,106
Net asset value per share	171.83p	163.14p

7 Post balance sheet events

On 26 October 2018, Crawshaw Group was placed into administration and as a result the holding was written down to nil value. Further details are given in the Investment Manager's Review above.

8 Shareholder information

Dividend

The Directors have proposed a final dividend of 3.5 pence per share. Subject to Shareholder approval the dividend will be paid on 1 February 2019 to Shareholders on the Register on 11 January 2019.

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, Link Asset Services on +44 (0)371 664 0324, or by writing to them at Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU or register on the Portal at https://www.signalshares.com or e-mailing them at VCTS@linkgroup.co.uk.

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 2018 will be sent to Shareholders shortly and will then be available for inspection at Suite 8, Bridge House, Courtenay Street, Newton Abbot TQ12 2QS, the registered office of the Company. Copies of the Annual Report will shortly be available on the Company's website, 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 2017 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, 10 January 2019 at The Great Chamber, The Charterhouse, Suttons Hospital, Charterhouse Square, London EC1M 6AN.

11 National Storage Mechanism

A copy of the 2018 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR FKADQOBDDPDB

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