Interim Results
Unicorn AIM VCT PLC
28 April 2004
Unicorn AIM VCT plc (the 'Company')
28 April 2004
Interim Statement for the six months ended 31 March 2004
Chairman's Statement
Series 2 Share Issue
The Series 2 (S2) share issue was launched in January 2004 to provide existing
and new Shareholders an opportunity to invest in a new portfolio of assets. In
the period to 31 March 2004 £5.6 million was raised under the Offer. Following
the Chancellor's decision to increase the initial income tax relief from 20% to
40% with effect from 6 April 2004 the Offer was extended until 14 May 2004. To
date over £11 million has been raised. This is an excellent outcome and I would
like to thank both existing and new Shareholders for their support.
Qualifying Investments
In the six months to 31 March 2004 the Ordinary Share Fund made six new
qualifying investments and two follow-on investments at a total cost of £4.3
million. Three of the new qualifying investments were in existing AIM listed
companies and three were new admissions to AIM. The S2 Fund did not make any
qualifying investments in the short period from launch to the interim period
end.
Your Investment Manager continues to adopt a highly selective investment
approach focusing upon established, profitable, cash generative businesses with
sound financial controls and proven management teams.
Your Board is confident that the Company can capitalise upon the resurgence in
the IPO market in order to meet the Inland Revenue's 70% qualifying target
required for the Ordinary Share Fund by September 2004 and for the S2 Fund by
September 2006.
Results
Net revenue attributable to Ordinary Fund Shareholders for the period was
£33,000 (£273,000 for the six months ended 31 March 2003). The decline reflects
a reduction in interest received from cash on deposit as these funds have been
invested in qualifying investments which in their early stage of development
typically pay a nominal level of dividends. The Company has now reached a stage
in its development where future dividend payments are likely to be substantially
dependent on capital profits generated from investment realisations. For this
reason the Board is not declaring an interim dividend for this period. The
total return after tax attributable to Ordinary Fund Shareholders was £3,393,000
(£116,000 for the six months ended 31 March 2003) the equivalent of 9.7 pence
per Ordinary Share. During the period 132,000 Ordinary Shares were bought back
for cancellation at an average price of 97 pence per share.
There was no gain or loss generated on the revenue account for the S2 Fund
whilst the loss on the capital account reflected a small investment management
fee for the period. The net return on ordinary activities from the S2 Fund is
not reflective of normal ongoing activities due to the fact that cash raised in
the short period from the initial allotment on 5 February 2004 until 31 March
2004 has been invested in OEIC money market funds. Of the initial proceeds
approximately 45% will shortly be invested equally in the three funds of the
Unicorn Investment Funds ICVC (comprising the Unicorn Free Spirit Fund, Unicorn
Mastertrust Fund and Unicorn UK Smaller Companies Fund) with the balance held in
cash in order to fund qualifying investments as indicated in the prospectus.
Net Asset Value
The net asset value (NAV) of the Ordinary Share Fund at 31 March 2004 was 117.2
pence per share. The 9.1% increase in the NAV since the September 2003 year-end
is particularly pleasing as the performance was broadly based. Since the launch
of the Ordinary Share Fund in October 2001 the initial NAV has increased by
24.0%, the FTSE All Share Index has declined by 4.0% and the FTSE AIM Index has
increased by 10.8%.
The NAV of the S2 Fund at 31 March 2004 was 94.5 pence per share, broadly
representing net funds raised after issue costs of 5.5 pence per share.
Outlook
The recent flow of new issues is an encouraging sign of market health. Equities
have again become the asset class of choice and investors appear willing to pay
a premium for growth. Whilst the cyclical recovery has gathered momentum a
rising interest rate environment is likely to signal the end of the consumer
boom leading to a more discriminate market performance. House prices, consumer
spending and household borrowing have all proved resilient so far, but
consumption has to slow if the Bank of England is to resist getting tougher. The
Company's position, almost exclusively focussed on the industrial and business
service sectors of the economy, appears to be the correct one in this
environment.
Peter Dicks
Chairman
27 April 2004
Investment Portfolio Summary - Ordinary Share Fund
as at 31 March 2004
Book cost Valuation % of net assets by
value
£'000 £'000
Qualifying investments
AIM listed investments:
Glisten plc 650 2,259 5.53%
Huveaux plc 1,000 2,100 5.15%
Tellings Golden Miller Group plc 1,000 2,071 5.07%
Centurion Electronics plc 650 1,883 4.61%
Supporta plc (formerly Staffing Ventures plc) 1,550 1,753 4.29%
The Real Good Food Company plc 997 1,176 2.88%
Ingenta plc 870 906 2.22%
AttentiV Systems Group plc 770 840 2.06%
Xpertise Group plc 400 600 1.47%
Asfare Group plc 470 588 1.44%
Lloyds British Testing plc 1,000 537 1.32%
Polaron plc 350 350 0.86%
Longbridge International plc 260 265 0.65%
Cobra Bio-Manufacturing plc 310 263 0.64%
AFA Systems plc 180 245 0.60%
Eckoh Technologies plc (Intelliplus Group plc) 400 243 0.60%
Screen plc 430 225 0.55%
Spring Grove Property Maintenance plc 250 222 0.54%
------------------- ------------------- -------------------
11,537 16,526 40.48%
Unlisted investments:
Nectar Taverns plc 1,000 1,000 2.45%
Aludel Limited 750 0 0.00%
------------------- ------------------- -------------------
1,750 1,000 2.45%
------------------- ------------------- -------------------
Total qualifying investments 13,287 17,526 42.93%
------------------- ------------------- -------------------
Non-qualifying investments
AIM listed investments 1,974 2,981 7.30%
Listed UK equities 9,284 12,245 30.00%
Unicorn Free Spirit Fund (OEIC) 3,933 6,563 16.08%
OEIC money-market funds 1,535 1,535 3.76%
------------------- ------------------- -------------------
Total non-qualifying investments 16,726 23,324 57.14%
------------------- ------------------- -------------------
------------------- ------------------- -------------------
Total investments 30,013 40,850 100.07%
------------------- ------------------- -------------------
Other assets 581 1.42%
Current liabilities (610) (1.49%)
------------------- ------------------- -------------------
Net assets 40,821 100.00%
------------------- ------------------- -------------------
Qualifying investments by activity
AIM listed investments:
AFA Systems plc
Development, installation and support of software for financial institutions.
Asfare Group plc
Ladders and ancillary equipment for the emergency services.
AttentiV Systems Group plc
Software solutions for the retail banking and asset finance sectors.
Centurion Electronics plc
Design and distribution of in car audio-visual entertainment systems.
Cobra Bio-Manufacturing plc
Niche contract manufacturer of DNA and protein for phase I and II clinical
trials.
Eckoh Technologies plc (Intelliplus Group)
Specialist provider of telecom solutions and web-based services.
Glisten plc
Manufacturer of chocolate confectionery, sugar based sweets and edible
decorations.
Huveaux plc
Media and related services group.
Ingenta plc
Creation and operation of websites for professional publishers.
Lloyds British Testing plc
Engineering services including testing and certification, training and
maintenance and repair.
Longbridge International plc
Recruitment consultant specialising in law and finance.
Polaron plc
Engineering technology group.
Real Good Food Company plc
Manufacturer of sandwiches, cakes and chilled deserts.
Screen plc
Development and maintenance of advanced security systems and related services.
Spring Grove Property Maintenance plc
Repair and maintenance of social housing on behalf of Registered Social
Landlords and local authorities.
Supporta plc (Staffing Ventures)
Payroll services and the management of a number of recruitment businesses.
Tellings Golden Miller Group plc
Local bus services in South West London and Surrey and luxury coach hire in
Great Britain and Europe.
Xpertise Group plc
Provision of accredited technical IT training courses.
Unlisted investments:
Aludel Limited
National branded chain of ladies-only fitness clubs.
Nectar Taverns plc
Chain of unbranded, managed, freehold, public houses in the North West of
England.
Unaudited Statement of Total Return
(incorporating the revenue account of the Company)
For the 6 months to 31 March 2004
Six months to 31 March 2004 Six months to 31 March 2004
Ordinary Shares Fund S2 Shares Fund
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Unrealised gains on
investments - 3,680 3,680 - - -
Realised losses on
investments - (25) (25) - - -
Income 331 - 331 13 - 13
Investment
management fee 3 (98) (295) (393) (2) (7) (9)
Other expenses (200) - (200) (11) - (11)
------------ ------------ ------------ ------------ ------------ ------------
Net return on
ordinary activities
before taxation 33 3,360 3,393 - (7) (7)
Tax on ordinary
activities - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
Return on ordinary
activities after
taxation 33 3,360 3,393 - (7) (7)
Dividends - - - - - -
------------ ------------ ------------ ------------ ------------ ------------
33 3,360 3,393 - (7) (7)
Return per share 4 0.1p 9.6p 9.7p 0.0p (0.2)p (0.2)p
Six months to 31 March 2004
Total
Notes Revenue Capital Total
£'000 £'000 £'000
Unrealised gains on
investments
- 3,680 3,680
Realised losses on
investments
- (25) (25)
Income 344 - 344
Investment
management fee 3 (100) (302) (402)
Other expenses (211) - (211)
------------ ------------ ------------
Net return on
ordinary activities
before taxation 33 3,353 3,386
Tax on ordinary
activities - - -
------------ ------------ ------------
Return on ordinary
activities after
taxation 33 3,353 3,386
Dividends - - -
------------ ------------ ------------
33 3,353 3,386
Return per share 4 0.1p 9.4p 9.5p
Six months to 31 March 2003 Year to 30 September 2003
Ordinary Shares Fund Ordinary Shares Fund
Notes Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Unrealised gains on
investments - 172 172 - 9,091 9,091
Realised losses on
investments - (79) (79) - (183) (183)
Income 501 - 501 835 - 835
Investment
management fee 3 (85) (255) (340) (164) (493) (657)
Other expenses (138) - (138) (344) - (344)
------------ ------------ ------------ ------------ ------------ ------------
Net return on
ordinary activities
before taxation 278 (162) 116 327 8,415 8,742
Tax on ordinary
activities (5) 5 - - - -
------------ ------------ ------------ ------------ ------------ ------------
Return on ordinary
activities after
taxation 273 (157) 116 327 8,415 8,742
Dividends (174) - (174) (332) - (332)
------------ ------------ ------------ ------------ ------------ ------------
99 (157) (58) (5) 8,415 8,410
Return per share 4 0.8p (0.5) 0.3p 0.9p 24.1p 25.0p
Unaudited Balance Sheet
As at 31 March 2004
As at 31 March 2004 As at As at
31 March 2003 30 September
2003
Ordinary S2 Shares Total Ordinary Ordinary Shares
Shares Shares
Notes
£'000 £'000 £'000 £'000 £'000
Fixed assets
Investments 1b 39,315 - 39,315 18,554 31,130
Current assets
Debtors and prepayments 100 13 113 167 109
Current investments 1,535 5,245 6,780 10,203 6,612
Cash at bank 481 4 485 470 57
-------------- -------------- -------------- ------------- --------------
2,116 5,262 7,378 10,840 6,778
Creditors: amounts
falling due within one
year
Other creditors (358) - (358) (181) (164)
Accruals (252) (19) (271) (110) (186)
-------------- -------------- -------------- ------------- --------------
(610) (19) (629) (291) (350)
-------------- -------------- -------------- ------------- --------------
Net current assets 1,506 5,243 6,749 10,549 6,428
-------------- -------------- -------------- ------------- --------------
Net assets 40,821 5,243 46,064 29,103 37,558
-------------- -------------- -------------- ------------- --------------
Share capital and
reserves
Share capital 348 56 404 350 350
Capital redemption
reserve 2 - 2 - -
Share premium - 5,194 5,194 - -
Special reserve 32,581 - 32,581 32,724 32,711
Capital reserve -
realised (2,990) (7) (2,997) (2,187) (2,689)
Capital reserve -
unrealised 10,837 - 10,837 (1,898) 7,176
Revenue reserve 43 - 43 114 10
-------------- -------------- -------------- ------------- --------------
Total shareholders'
funds 40,821 5,243 46,064 29,103 37,558
-------------- -------------- -------------- ------------- --------------
Net asset value per
share 5 117.2p 94.5p 83.20p 107.4p
Unaudited Statement of Cash Flows
for the 6 months to 31 March 2004
Six months to 31 March 2004 Six months Year to 30
to 31 March September 2003
2003
(unaudited) (unaudited)d) (audited)
Ordinary S2 Total Ordinary Ordinary
Shares Shares Shares Shares
£'000 £'000 £'000 £'000 £'000
Operating activities
Investment income received 341 2 343 395 780
Investment management fees paid (393) - (393) (340) (657)
Other cash payments (134) (3) (137) (198) (320)
------------- ------------- ------------- --------------- ---------------
Net cash outflow from operating
activities (186) (1) (187) (143) (197)
------------- ------------- ------------- --------------- ---------------
Investing activities
Purchases of investments (5,276) - (5,276) (5,277) (9,577)
Sales of investments 1,096 - 1,096 3,153 3,692
------------- ------------- ------------- --------------- ---------------
Net cash outflow from investing
activities (4,180) - (4,180) (2,124) (5,885)
Dividends
Dividends paid (157) - (157) (175) (350)
--------- ------- ------- ----------- ---------
Cash outflow before financing
and liquid resource management (4,523) (1) (4,524) (2,442) (6,432)
Financing
Share capital raised - 5,250 5,250 - -
Share capital re-purchased (130) - (130) (15) (28)
------------- ------------- ------------- --------------- ---------------
(130) 5,250 5,120 (15) (28)
Management of liquid resources
Decrease/increase) in monies
held pending investment 5,077 (5,245) (168) (10,203) 6,423
------------- ------------- ------------- --------------- ---------------
Increase/(decrease) in cash 424 4 428 (12,660) (37)
------------- ------------- ------------- --------------- ---------------
Notes to the unaudited financial statements
1. Principal accounting policies
The following accounting policies have been applied consistently throughout the
period. Full details of principal accounting policies will be disclosed in the
Annual Report.
a) Basis of accounting
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of fixed asset investments and
in accordance with applicable Accounting Standards in the United Kingdom and
with the Statement of Recommended Practice regarding the Financial Statements of
Investment Trust Companies.
b) Investments
In respect of quoted investments the British Venture Capital Association (BVCA)
has stated that VCTs should have regard to generally accepted accounting and
marketing practice in the valuation of the investments and accordingly these are
valued at mid market price, in accordance with the Investment Trust Companies
SORP 2003. The Directors consider the need for discounts as appropriate.
Unquoted investments are valued by the directors in accordance with the
following rules, which are consistent with the BVCA guidelines:
(i) Investments which have been made in the last 12 months are valued
at cost in the absence of overriding factors.
(ii) Investments in companies at an early stage of their development are
also valued at cost in the absence of overriding factors.
(iii) Where investments which have gone beyond the stage of their development
in 2 above, the shares may be valued by applying a suitable price-earnings ratio
to that company's historic post-tax earnings (the ratio used being based on a
comparable listed company or sector but discounted to reflect lack of
marketability);
(iv) Where a value is indicated by a material arms-length transaction by a
third party in the shares of a company, this value will be used.
Unquoted investments will not normally be re-valued upwards for a period of at
least twelve months from the date of acquisition for early stage investments.
Where a company's underperformance against plan indicates a diminution in the
value of the investment, provision against cost is made, as appropriate.
Capital gains and losses on investments, whether realised or unrealised, are
dealt with in the capital reserve.
2. Basic revenue and capital items in the Statement of Total Return derive
from continuing operations, and the new funds raised under the offer of S2
Shares.
3. In line with the expected long-term split of returns from the investment
portfolio of the Company, the Directors have charged 75% of the investment
management fee to the capital reserve.
4. Basic revenue return per Ordinary Share is based on the net revenue
on ordinary activities after taxation, and is based on 34,900,393 (6 months
ended 31 March 2003: 34,995,990; year ended 30 September 2003: 34,981,287)
Ordinary Shares, being the weighted average number of Ordinary Shares in issue
during the period.
Basic revenue return per S2 Share is based on the net revenue on ordinary
activities after taxation, and is based on 3,228,240 S2 Shares, being the
weighted average number of S2 Shares in issue during the period.
5. Net asset value per Ordinary Share is based on net assets at 31 March 2004,
and on 34,827,234 (at 31 March 2003: 34,979,234; at 30 September 2003:
34,959,234) Ordinary Shares, being the number of Ordinary Shares in issue on
that date.
Net asset value per S2 Share is based on net assets at 31 March 2004, and on
5,550,893 S2 Shares, being the number of S2 Shares in issue on that date.
6. Financial information for the six months ended 31 March 2004 and the six
months ended 31 March 2003 has not been audited. The accounting policies used by
Unicorn AIM VCT plc in preparing the Interim Report are consistent with those
used in preparing the statutory accounts for the year ended 30 September 2003.
The information for the year ended 30 September 2003 does not comprise full
financial statements within the meaning of Section 240 of the Companies Act
1985. The financial statements for the year ended 30 September 2003 have been
filed with the Registrar of Companies. The auditors have reported on these
financial statements and that report was unqualified and did not contain a
statement under Section 237(2) of the Companies Act 1985.
7. Copies of this statement are being sent to all Shareholders. Further
copies are available free of charge from the Company's registered office,
Gossard House, 7-8 Savile Row, London W1S 3PE.
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