TIDMUAV
RNS Number : 3266W
Unicorn AIM VCT PLC
31 July 2018
Unicorn AIM VCT PLC (UAV) - Voluntary Interim Management
Statement
Unicorn AIM VCT plc ("the Company")
LEI: 21380057QDV7D34E9870
Interim Management Statement
For the period from 1 April 2018 to 30 June 2018
Introduction
This voluntary Interim Management Statement (IMS) covers the
three month period ended 30 June 2018, together with relevant
information up to the date of publication.
Investment Objective
The Company's objective is to provide Shareholders with an
attractive return from a diversified portfolio of investments,
predominantly in the shares of AIM quoted companies, by maintaining
a steady flow of dividend distributions to Shareholders from the
income as well as capital gains generated by the portfolio.
It is also the objective that the Company should continue to
qualify as a Venture Capital Trust, so that Shareholders benefit
from the taxation advantages that this brings. To achieve this at
least 70% of the Company's total assets are to be invested in
qualifying investments of which 30% by VCT value (70% for funds
raised after 6 April 2011) must be in ordinary shares carrying no
preferential rights (save as permitted under VCT rules) to
dividends or return of capital and no rights to redemption.
Performance
Following a difficult first quarter of 2018, UK equity markets
recovered strongly during the three month period to the end of
June.
The FTSE All Share Index recorded a total return of +9.2% during
the second quarter of 2018, while the FTSE AIM All Share Index
ended the quarter up by +7.2%, on the same total return basis.
The performance of UK equity indices was surprisingly resilient
during the quarter under review, despite an increasingly weak and
unstable political backdrop. The negotiations with Brussels
regarding Britain's exit from the European Union rumble on, while
members of the UK's governing Conservative Party appear content to
continue fighting amongst themselves. This lack of unity inevitably
means it will be more difficult for the government to act
decisively to resolve key issues such as immigration and trade
between the UK and the remaining EU Member States. As a
consequence, it is now generally accepted that the outlook for
continued UK economic growth has become less positive, which may
well impact on the performance of the UK equity market in due
course. In the meantime, after a sustained rally during 2017, the
value of Sterling has again started to weaken when compared to the
US Dollar, which should have a beneficial effect on those British
businesses that export the majority of their goods and services.
This currency tailwind is almost certainly helping to support the
valuation of the UK equity market and this is most evident in the
FTSE 100 Index, which is mainly composed of large UK businesses
that are typically global in scope.
The Company's performance was also positive during the period
under review, with Net Asset Value per share increasing by 5.9%.
Having started the period at 156.4 pence per share, the unaudited
NAV per share as at 30 June 2018 was 165.7 pence per share.
VCT Qualifying Investments
Forty of the VCT qualifying investments held in the portfolio
recorded share price gains during the period under review. Of
these, nineteen investments generated capital gains in excess of
GBP200,000 each.
Of particular note, were the four largest contributors to
performance, which between them generated a combined total of
almost GBP5.5 million in unrealised capital gains during the
period.
These were:-
Abcam (+7.7%), a global leader in the supply of life science
research tools, is the largest individual holding in the portfolio,
representing 10% of total assets at the period end. Abcam continues
to trade strongly in multiple international markets and has
recently also been benefitting from favourable exchange rates. In a
recent trading update, Abcam confirmed that revenues for the
financial year ended 30 June 2018 had grown by over 10% and that
EBITDA margins were in line with expectations. Abcam will release
its full year results in September.
City Pub Group (+32.8%) owns and operates an estate of premium
pubs across the southern half of England and Wales. The Group's pub
estate comprises over 40 free houses located largely in London,
cathedral cities and market towns, each of which is focused on
appealing specifically to its local market. In May, City Pub Group
released a trading update which confirmed that the business had
traded strongly during the first eighteen weeks of its current
financial year.
Tracsis (+14.1%), a leading provider of software and technology
led products and services for the traffic data and transportation
industry, released interim results shortly before the period under
review commenced. Revenues and profits grew strongly in the first
half of Tracsis' financial year and the business remains well
positioned to deliver further growth during its second half.
VR Education (+62.8%) is a leading virtual reality technology
company focused on the education space. The business floated on AIM
in February 2018 and its shares have performed strongly since then,
despite an absence of tangible newsflow.
Eight VCT qualifying holdings delivered negative contributions
of more than GBP200,000 each, of which only two cost the VCT more
than 0.5% in performance terms.
The two most meaningful detractors from performance were:-
Animalcare (-40.7%), is a pan-European animal health business.
During the period, Animalcare released its first financial results
since the transformational acquisition of Ecuphar, a Belgian
competitor. Although the new management team are confident that the
enlarged business will deliver double digit revenue and profit
growth during its current financial year, investors remain nervous
about the financial implications of a 'bad' Brexit and Animalcare's
share price has been under pressure as a result.
ULS Technology (-17.4%), a provider of online technology
platforms for the UK conveyancing market, released its full year
financial results toward the end of the period under review. During
the 12 month period ended 31 March 2018, ULS once again increased
its share of the UK conveyancing market and delivered strong growth
in revenues, underlying profits and an increased dividend. Current
trading is challenging however, given reduced instruction levels in
the residential housing market. Despite this current issue, the
Board of ULS remains positive about the outlook for the
business.
Non-Qualifying Investments
The performance of the non-qualifying investments was stable
during the period under review. With the exception of Royal Dutch
Shell, there were no significant share price movements to report
on. The investment in Shell was short term in nature and was made
in order to maintain liquidity and in preference to holding
excessive levels of cash following the successful Offer for
Subscription which closed in November 2017. Shell's share price
performed strongly during the period and the VCT's holding was sold
in its entirety in June 2018, crystallising a total return on
investment of GBP529k.
Other Material Transactions
One new VCT qualifying investment was made during the period
with GBP1.5 million being allocated to Microsaic Systems, a
developer of mass spectrometry instruments that are designed to
improve the efficiency of pharmaceutical research and
manufacturing.
Additional VCT qualifying shares, to the value of GBP0.5
million, were acquired in Access Intelligence, as part of a placing
of new shares.
Shares were acquired in Lloyds Banking Group and Legal &
General, which are both non-qualifying, short term investments and
are being held for liquidity purposes.
Top Ten Holdings at 30 June 2018
Stock % of fund
Abcam 10.0
Tracsis 4.8
Anpario 4.7
Mattioli Woods 3.9
City Pub Group 3.7
Maxcyte 3.4
Tristel 2.6
ULS Technology 2.5
Victrex 2.5
Keywords Studios 2.2
Total 40.3
Share Buy-Backs
During the period from 1 April 2018 to 30 June 2018, the Company
bought back 741,000 of its own Ordinary Shares for cancellation, at
an average price, including costs of 141.7 pence per share. The
average discount to underlying Net Asset Value at which these
shares were purchased was 12.3%.
There were 117,833,174 Ordinary Shares in issue as at 30 June
2018.
Dividends
As previously advised, the Board has declared an interim
dividend of 3.0 pence per share in respect of the Company's
half-year ended 31 March 2018. This interim dividend will be paid
on 10 August 2018 to Shareholders on the register at the close of
business on 20 July 2018.
Material Events
There were no material events during the period from 1 April
2018 to 30 June 2018.
Chris Hutchinson
Unicorn Asset Management
Investment Manager
31 July 2018
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END
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