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Unicorn AIM VCT plc
January 2015
Introduction to AIM
The Alternative Investment Market (AIM) is the world’s leading market for smaller, growing companies from across the globe. It offers companies from any sector the chance to go public at an earlier stage in their development
Since AIM’s inception in 1995, over 3,524 admissions have been completed and more than £87.77 billion raised, helping companies to fund future growth and expansion
AIM market (as at end June 2014):
Total number of companies: 1,104
UK companies: 882
Non-UK companies: 222 (57 countries)
What does an AIM quotation offer?
A flexible regulatory regime; access to a unique, globally respected market; access to a wide pool of capital; increased status and credibility; easier rules on acquisition
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Introduction to AIM
A large number of the +1,100 companies listed on AIM will be at an early development stage. However, there are also many mature, profitable and dividend paying companies
It is therefore important to be highly selective when picking AIM companies, conducting thorough and detailed analysis
Smaller dividend paying companies are attracting attention from institutional investors, as dividend growth from the UK’s largest companies becomes harder to find
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139 145
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0
50
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Over1,000
500 -1,000
250 -500
100 -250
50 -100
25 -50
10 -25
5 - 102 - 50 - 2
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Market value range £m
Distribution of companies by equity market value
Why AIM Companies?
Smaller quoted companies offer the potential for high growth and can often deliver that growth regardless of economic conditions
Following the financial crisis and subsequent recession, many smaller companies now operate with no debt and often hold substantial cash balances, increasing their ability to grow dividends
Smaller companies are often under-researched which creates opportunities for experienced and specialised investment managers like Unicorn
AIM stocks are listed on an official exchange – valuations are therefore transparent, since share prices are marked to market on a daily basis
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Unicorn AIM VCT
Unicorn Asset Management
Independently owned and managed company established in 2000
Specialists in UK equity small cap and AIM markets
Experienced, committed, and well-resourced investment team with >100 years combined experience
Assets under management c.£850m*
Aims to generate consistent long term outperformance – be the “best” rather than the “biggest”
Market leading managers of Unicorn AIM VCT since 2001
* Source: Unicorn Asset Management, 31 December 2014
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Unicorn Investment Team
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Chris Hutchinson
Director Senior Fund Manager
Peter Walls
Fund Manager Paul Harwood
Non-Executive Director, Investment Committee
Chairman
Fraser Mackersie
Fund Manager Simon Moon
Fund Manager
Philip John
Director Finance & Operations
Max Ormiston Junior Fund Manager
Alex Game Junior Fund Manager
Unicorn Investment Philosophy
Team based, systematic investment process
Bottom-up fundamental stock selection - rigorously analysed in-house
UK only, equity only, long only
Small Cap, Mid Cap & AIM specialists
High conviction approach - benchmark agnostic
Investment style – long term, conservative, low risk approach
Private Equity approach - owner / managed business model
Investment Managers invest in the funds they manage
Consistent application of investment philosophy across all funds
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Unicorn AIM VCT – Investee Criteria
Profitability
Cash generation
Balance sheet strength
Leading positions in specialist but growing markets
International exposure
Track record of achieving market expectations
High levels of recurring revenue
Low levels of customer concentration
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Unicorn AIM VCT - Investment Objectives
Our objectives are simple & clear:
Short term – Capital Preservation
Medium term – Attractive & Sustainable Dividend Income
Long term – Capital Growth & Superior Total Returns
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VCT Performance – Dividend History
The VCT has declared dividends amounting to 26 pence per share over the last five financial years*
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* Source: Unicorn Asset Management, 30 Sep 2009 to 31 Dec 2014. Past performance is not a guide to future performance.
Financial Year Dividend Declared
Ending 30 Sep 2010 4p per share
Ending 30 Sep 2011 5p per share
Ending 30 Sep 2012 5p per share
Ending 30 Sep 2013 6p per share
Ending 30 Sep 2014 6p per share
The dividend distribution policy is designed to allow for gentle progressive, annual dividend payments, while ensuring the dividends remain sustainable over the longer term
VCT Performance – One Year to 31 December 2014
• Net assets c. £100m
• Net Asset Value as at 31 Dec 2014 = 144.6p (145.7p as at 31 Dec 2013)
• Positive NAV total return (+3.4% after adding back dividends paid*)
• Strong relative performance (FTSE AIM Index -16.5%, FTSE All Share Index +1.0% over same period*)
• Portfolio of investee companies performing robustly - few material disappointments - operating performance generally strong and trading conditions improving
• Revenue growth opportunities are emerging, which translates into improved confidence in earnings forecasts
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* Source: Financial Express / Unicorn Asset Management, Financial Express, 1 Jan 2014 to 31 Dec 2014. Past performance is not a guide to future performance
Unicorn AIM VCT - Current Portfolio
50 VCT qualifying investments representing c.75% of total assets
c.80% of these companies generate positive free cash flows
c.65% have net cash on balance sheet
c.90% are operating with net gearing of less than 25%
c.85% are forecast to deliver profit growth in their current financial year
c.60% have paid a dividend within the past 12 months
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Source: Unicorn Asset Management, 31 December 2014
VCT Top Ten Holdings
Source: Unicorn Asset Management, 31 December 2014
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Abcam Leading supplier of protein research tools to the life sciences research market 8.5%
Tracsis A provider of hardware, operational planning software & data capture services to the transportation sector
7.5%
Anpario Manufacturer of high performance natural feed additives 6.1%
Mattioli Woods One of the UK’s leading providers of pension consultancy & wealth management services 4.6%
Crawshaw Group Chain of Yorkshire based retail butchers 4.0%
Cohort A group of companies applying advanced technology in defence, security & related markets 3.1%
Animalcare Group A leading supplier of veterinary medicines 2.1%
WYG WYG, the global programme, project management and technical consultancy 2.1%
Unicorn Mastertrust Fund Fund of investment trusts 2.1%
IDOX A supplier of software solutions and services to the UK public and corporate sectors 2.0%
Total 42.1%
Investee Company Profiles - Abcam
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Company Profile:
Global supplier of protein research tools
Highly cash generative, debt free, dividend paying
Net cash of £56.9m
Significant overseas earnings (91%)
Leading position in niche market
Strong record of organic growth
Highly focused management team Latest Results (30 Jun 2014)
Forecast Results FY 2015
Sales (£m) 128.0 122.3
PBT (£m) 44.8 48.2
EPS (p) 18.2 19.5
P/E ratio 25.6x 23.9x
Share price 467p Market Cap £938m
Forecast Yield 8.3p (1.8%)
Source: Unicorn Asset Management and Alpha Terminal 5 January 2015
Anpario
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Company Profile:
Manufacture and marketing of natural feed additives for global agricultural markets
Cash generative and debt free
£4.8m net cash
Significant overseas earnings (76%)
Strengthening position in growing market
Strong & consistent organic growth
Latest Results (31 Dec 2013)
Forecast Results FY 2014
Sales (£m) 26.3 28.0
PBT (£m) 2.9 3.4
EPS (p) 13.3 13.6
P/E ratio 21.8x 21.3x
Share price 290p
Market Cap £58m
Forecast Yield 4p (1.4%)
Source: Unicorn Asset Management and Alpha Terminal 5 January 2015
Crawshaw Group
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Company Profile:
Established retail butcher with a strong reputation
Cash generative, debt free, dividend paying
£10.1m net cash
Long standing, trusted relationships with suppliers
Varied product range with competitive pricing and loyal customer base
Growing number of consumers buying meat from local community butchers
Latest Results (31 Jan 2014)
Forecast Results FY 2015
Sales (£m) 21.0 25.2
PBT (£m) 1.0 1.4
EPS (p) 1.3 1.4
P/E ratio 41.5x 38.5x
Share price 54p
Market Cap £43m Forecast Yield 0.3p (0.5%)
Source: Unicorn Asset Management and Alpha Terminal 5 January 2015
Tracsis
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Company Profile:
Resource optimisation software & hardware for the transport industry
Develops software, hardware and services that replace existing cumbersome, manual processes delivering cost savings in excess of 10%
Cash generative, debt free, dividend paying
Following success in UK Rail, Tracsis is moving into new geographies and sectors
Latest Results (31 Jun 2014)
Forecast Results FY 2015
Sales (£m) 22.4 23.6
PBT (£m) 5.0 5.5
EPS (p) 15.5 16.5
P/E ratio 28.8x 27.1x
Share price 447p
Market Cap £118m
Forecast Yield 1p (0.2%)
Source: Unicorn Asset Management and Alpha Terminal 5 January 2015
Summary and Outlook
• Positive total return performance continues (+3.4% in year to 31 Dec 2014)
• Further growth potential as economic recovery gathers pace
• Management teams of investee companies increasingly optimistic
• Investee companies’ free cash-flows are improving & balance sheets strengthening
• Improved flow of attractive investment opportunities – c.£7.5m of capital committed to 7 new VCT qualifying investments in last calendar year
• Proven & selective approach to new investments to be maintained
• Substantial capital reserves to support future dividend payments
Unicorn AIM VCT named ‘Best VCT 2014’ by What Investment Magazine
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Highly rated by Independent Reviewers
Highest rated AIM focused VCT in Martin Churchill’s Tax Efficient Review (87 out of 100):
“With an established and diversified portfolio and a flexible structure, the Company now displays many of the characteristics of a smaller companies investment trust… The Unicorn AIM VCT benefits from scale, a mature well diversified portfolio and results lately have been good…. Our top rated AIM based VCT this tax year”
“Performance to date of the management team has been good, as is their record of making tax free dividends...the Company already has the potential to deliver capital growth and a tax free dividend stream from a developed portfolio of existing investments”
Highest 5* rating from Tilney Bestinvest
Strong rating from Allenbridge Tax Shelter Report
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Unicorn AIM VCT – Offer Details
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Offer Size £15m
Investment Objective To provide capital preservation together with attractive, sustainable dividend income and potential for long term capital growth
Minimum Investment £2,000
Maximum Investment None, but maximum amount for which an investor can claim tax relief is £200,000 per tax year
Initial Charge 2.5% (plus up to 3% IFA commission / facilitation fee)
AMC 2%
TER c. 2.3%
Offer Opened 17 September 2014
Offers Closes 1 April 2015 (for investment in 2014/15 tax year)
30 June 2015 (for investment in 2015/16 tax year if not fully subscribed beforehand)
Regulatory Notice
This document is an advertisement and not a prospectus. It has been issued by Unicorn Asset Management Limited and constitutes a financial promotion under Section 21 of the Financial Services and Markets Act 2000.
Any decision to invest in the Unicorn AIM VCT plc should be made solely by reference to the information, terms and conditions contained in the prospectus and application form.
This document should not be regarded as constituting advice in respect of legal, taxation, investment or any other matters. Prospective investors are advised to consult their bank manager, stockbroker, solicitor, accountant or independent financial adviser before considering any investment.
Please remember that the value of shares and the income derived from them can go down as well as up and you may not get back the full amount invested.
Issued by Unicorn Asset Management Limited, First Floor Office, Preacher’s Court, The Charterhouse, Charterhouse Square, London, EC1M 6AU.
Authorised and Regulated by the Financial Conduct Authority.
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