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

LEI: 21380057QDV7D34E9870

Annual Results Announcement for the year ended 30 September 2023

The full Annual Report and Accounts for the year ended 30 September 2023 can be found on the Company's website www.unicornaimvct.co.uk

FINANCIAL HIGHLIGHTS

(for the year ended 30 September 2023)

·    Net asset value ("NAV") total return for the year ended 30 September 2023, after adding back the dividends of 6.5 pence per share paid in the year, fell by 4.3%. By comparison the FTSE AIM All-Share Total Return Index fell by 8.3%.

·    Offer for Subscription raised £14.6 million (after costs).

·    Final dividend of 3.5 pence per share proposed for the financial year ended 30 September 2023.

·    New offer for Subscription announced to raise up to £20.0 million.

Fund Performance

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

+ The Board has recommended a final dividend of 3.5 pence per share for the year ended 30 September 2023 bringing total dividends for the year to 6.5 pence per share. If approved by Shareholders, this payment will bring total dividends paid in the last ten years from 30 September 2013 to 109.0 pence per share.

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 a comprehensive analysis of the development of the business during the financial year and the position of the Company's main investments at the end of the year.

Chair's Statement

I am pleased to present the Company's Audited Annual Report for the year ended 30 September 2023.

Introduction

The financial year ended 30 September 2023 has been another challenging period for the Alternative Investment Market ("AIM"). In developed economies interest rates were increased repeatedly throughout the period under review, as central banks attempted to control mounting inflationary pressures. These actions are finally having an impact, with the rate of inflation now softening and currently well below the peak reached in the final quarter of 2022. The challenge facing investors in equity markets lies in trying to understand how long it will take for the interest rate cycle to unwind and, should rates remain at elevated levels, what impact that might have on prospects for global economic growth. Longer dated bond yields currently indicate that markets expect rates to remain higher for longer, with investors remaining understandably cautious about the near-term economic outlook.

The current uncertain environment is challenging for smaller quoted companies; investment decisions are more likely to be delayed and valuations of higher growth companies have suffered considerable downward pressure. This dynamic is particularly relevant for the AIM where a key component of current equity valuations is driven by the discounted value of future cash flows.

Economic & Market Review

Against a backdrop of heightened inflation and rising interest rates, economic activity in the UK has remained surprisingly resilient. The recession that many predicted is yet to materialise and it appears that prospects for modest economic growth are improving. It is encouraging that consumer spending has so far held up, although the significant overall increase in mortgage service costs has yet to be fully incorporated into discretionary spending patterns.

The period under review was a tough one for the junior end of the UK equity market. The FTSE AIM All-Share Total Return Index fell by 8.3% in the twelve months to 30 September 2023, whilst the FTSE 100 Total Return Index delivered a positive total return of 14.7%. This wide divergence in performance reflects an aversion to risk that continues to prevail among both institutional and retail investors, with interest rate sensitive sectors (banks) and beneficiaries of the higher inflationary environment (commodities) performing strongly.

Following a particularly difficult prior period, the further declines on AIM have been disappointing and we have seen the FTSE AIM All-Share Total Return Index end the period over 40% below the 20 year high reached in September 2021.

Net Assets

As at 30 September 2023, the audited net assets of the Company were £211.9 million, representing a decline of £9.2 million over the course of the financial year. There were a number of components that contributed to this fall, notably; an £8.0 million loss on the investment portfolio, £10.9 million of dividends paid and £3.8 million of share buybacks. The decline in assets was partially offset by the fully subscribed Offer for Subscription, which raised net proceeds of £14.6 million. After adding back all dividends paid, the total return in the period was -4.3%.

Investment Performance Review

The Company's total return of -4.3% meaningfully outperformed the FTSE AIM All-Share Total Return Index, which delivered a total return of -8.3% over the same period.

The investment portfolio remains well diversified, with holdings ranging from early-stage companies incurring losses and consuming cash, to well-established businesses that are profitable, cash generative and dividend paying.

At the financial year end, the portfolio comprised of 81 active VCT qualifying companies. Most investee companies within the portfolio remain well capitalised, with over three quarters currently reporting healthily positive levels of net cash on their balance sheets.

The adverse macroeconomic and geopolitical environment has inevitably taken a heavy toll on smaller quoted companies in general. It is therefore encouraging to again be able to report on another year of relative outperformance, especially given a difficult start to the financial year under review. The largely specialised nature of the products and services offered by the investee companies in the portfolio has undoubtedly helped to insulate your Company from the wider losses suffered by the AIM during the period.

One other notable trend during the financial year has been an increase in M&A activity, with six completed and/or potential acquisitions having been announced in the period. Depressed valuations and a weak currency have combined to make UK quoted companies increasingly attractive to overseas buyers.

Portfolio Activity

Following the significant decline in the valuations of AIM quoted companies in the previous financial year, deal flow remained muted in the early months of the period under review. Encouragingly, fundraising activity picked up in the second half of the year with a growing number of interesting and potentially high growth companies choosing to list on AIM. As the Initial Public Offering (IPO) market continues to improve, it is encouraging to report that the Investment Manager has a growing number of new and attractive-looking opportunities in the pipeline.

Four new VCT qualifying investments were made during the period, at a total cost of £6.5 million. In addition, £1.1 million of VCT qualifying capital was allocated across three of the existing investee companies, to support their future growth.

A number of full and partial disposals were also made during the financial year. Total proceeds from disposals of qualifying investments amounted to £2.6 million, realising an overall capital loss of £1.2 million.

The Investment Manager also invested in two money market funds during the period. This enabled Shareholders to benefit from the higher interest rate environment, while also maintaining the strong liquidity position needed to fund new qualifying investment opportunities. The initial combined investment was £19.0 million, which had been reduced to £12.1 million by the end of the period, as capital has been deployed into qualifying investments.

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

Dividends

An interim dividend of 3.0 pence per share, for the half year ended 31 March 2023, was paid to Shareholders on 11 August 2023.

Despite the market difficulties and the resulting decline in the Company's net assets, the Board is also pleased to recommend a final dividend of 3.5 pence per share for the financial year ended 30 September 2023. This dividend, if approved by Shareholders at the Company's forthcoming AGM, will be payable on 14 February 2024 to Shareholders on the register as at 5 January 2024.

Total dividends in respect of the financial year ended 30 September 2023 are therefore expected to be 6.5 pence per share.

Share Buybacks & Share 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 2022 to 30 September 2023, the Company bought back 3,398,754 of its own Ordinary Shares for cancellation, at an average price of 110.8 pence per share excluding costs.

Future repurchases of shares will continue to 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 soft launched on 24 January 2023. The Offer was again strongly supported, having formally opened and closed, fully subscribed, on 6 February 2023. The total raised, net of all costs, was £14.6 million and resulted in the issue of 11.1 million new shares. On behalf of the Board, I would like to welcome all new Shareholders and to thank existing Shareholders for their continued support. As at 30 September 2023, there were 172,876,156 Ordinary Shares in issue.

New Offer

On 28 November 2023, the Company announced the intention to launch an Offer for Subscription to raise up to £20 million through the issue of new ordinary shares. The prospectus, which will contain the full details and terms and conditions of the Offer, is expected to be available in January 2024.

Board Refresh

Jeremy Hamer has served on the Board for thirteen years and has indicated his intention to stand down in 2025. He has agreed to stand for re-election at the AGM in February 2024 but intends to stand down at the 2025 AGM.

The Board will engage an outside recruitment agency to identify a suitable candidate to replace Jeremy and will announce any appointment in the normal way. Board diversity will be considered as part of the recruitment process.

VCT Status

There were no changes to VCT legislation during the period under review.

The Government last introduced new legislation pertaining to Venture Capital Trusts in November 2017. The most important of these new rules came 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 to finance their planned growth.

One of the key tests, from accounting periods commencing after 5 April 2019, is the requirement for at least 80% (previously 70%) by VCT tax value of a Venture Capital Trust's total investments to be invested in VCT qualifying companies. I am pleased to report that, excluding new capital raised in Offers for Subscription within the last three years, Unicorn AIM VCT's qualifying percentage was 91.2% of total assets as of 30 September 2023. All other HM Revenue & Customs tests have also been complied with during the period, and the Board has been advised by its VCT status advisor, PwC, 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.

Annual General Meeting

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, which is to be held on 7 February 2024. Full details of the AGM including location, timing, and the business to be conducted, are given in the Notice of the Meeting on pages 90 and 91 of the Annual Report. Shareholders' views are important, and the Board therefore encourages all Shareholders to vote on the resolutions within the Notice of Annual General Meeting on pages 90 and 91 of the Annual Report using the proxy form, or electronically at www.unicornaimvct.com. The Board has carefully considered the business to be approved at the AGM and recommends that Shareholders vote in favour of all the resolutions being proposed.

Outlook

The year under review saw a continuation of trends outlined in prior reports, with smaller quoted companies again out of favour as investors prioritise investment opportunities that are perceived to carry lower levels of risk. Your Company was not immune to this trend but nonetheless continues to demonstrate resilience by again delivering a total return meaningfully ahead of that delivered by the FTSE AIM All-Share Total Return Index.

The Initial Public Offering (IPO) market has been showing early signs of recovery. In recent months, the Investment Manager has developed a promising pipeline of potential new VCT qualifying investments. The manager remains highly selective in the approach to new investments, but this expanding pipeline is an encouraging sign.

The existing portfolio also continues to perform creditably, both at a financial and operational level, with an attractive combination of established, profitable, well capitalised, cash-generative companies held, alongside an interesting and potentially exciting selection of earlier stage high growth businesses. Many of these investments are aligned with highly attractive structural growth themes and continue to successfully execute their long-term strategies. The balance sheet strength of many of the Company's investment holdings provides reassurance that they will be able to weather this extended period of uncertainty and should thrive when the economic backdrop becomes more constructive.

Your Board continues to share the Investment Manager's confidence that, when market sentiment and economic conditions improve, the portfolio should deliver significant Shareholder value and go on to provide continued long term capital growth. Encouragingly, there now appears to be an emerging political realisation that action needs to be taken to improve the relative appeal of UK equities, with a particular focus on smaller companies. Any supportive legislative developments would clearly be well received. On the other hand, the persistent threat of inflation, high interest rates and recession could delay an improvement in the performance of smaller quoted companies and the Board therefore remains cautious about prospects in the near term.

Tim Woodcock

Chair

7 December 2023

Investment Manager's Review

Introduction

Global equity markets experienced diverging performance during the twelve-month period ended 30 September 2023. In the US, the S&P 500 Index and NASDAQ Composite Index delivered strong positive total returns of +21.6% and +26.1% respectively. While both of these indices remain below the all-time highs that they reached in late 2021, the strong returns recorded during the period under review are striking, particularly when considered against the backdrop of sharply rising US interest rates.

However, much of this performance can be attributed to the so called "Magnificent Seven" stocks (Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia and Tesla). These mega-cap companies account for large weightings in US equity indices and all of them, except Tesla, posted strong, double-digit returns. In particular, Nvidia was a notable beneficiary of the recent excitement surrounding Artificial Intelligence (AI) and its share price gained over 250% during the year ended 30 September 2023.

In the UK, equity market performance was led by the FTSE 100 Total Return Index, which recorded a total return of +14.7% over the twelve months ended 30 September 2023. The positive performance of the FTSE 100 Index was largely due to its large weighting in the Banking and Oil & Gas sectors, which were the two largest contributors to the Index's total return, and which were direct beneficiaries of the higher inflationary and interest rate environment during the period. Investors also sought the perceived safe haven of large, internationally diversified businesses, at the expense of smaller, higher growth companies whose present value is principally based on the successful delivery of less predictable future cash flows.

Unfortunately, a direct consequence of investor preference for large cap companies, especially those which generate a large proportion of overseas earnings, has meant that the hundreds of smaller companies listed on AIM have remained firmly out of favour and, in many cases, have experienced prolonged and significant share price declines.

Over the twelve-month period ended 30 September 2023, the FTSE AIM All-Share Total Return Index registered a total return of -8.3%, as a brief period of recovery for the AIM Index during the final calendar quarter of 2022 was more than outweighed by the three consecutive quarters of negative returns that followed.

Higher UK interest rates continue to weigh particularly heavily on early-stage growth companies, in which the majority of the Company's assets must be invested. The Bank of England's decision to raise interest rates on seven successive occasions from 2.25% in September 2022 to 5.25% by August 2023, in an attempt to tackle persistently high inflation, was the sharpest monetary 'tightening' cycle experienced for several decades. Against this economic backdrop, it is unsurprising that the Company's portfolio of early-stage companies has continued to experience challenging market conditions.

Net Asset Performance

As at 30 September 2023, the audited net assets of the Company amounted to £211.9 million, which equates to a decline of £9.2 million during the twelve-month period under review.

The audited Net Asset Value per Share was 122.6 pence as at 30 September 2023, which represents a capital decline (excluding dividends paid) of -9.1% on the closing NAV per share of 134.8 pence as at 30 September 2022. After adding back dividends paid during the financial year, the Net Asset Value ("NAV") Total Return of the Company was -4.3%.

The total reduction in net assets was partly due to the negative return generated by the Company's investment portfolio but was also due to the £10.9 million in dividends that were paid to Shareholders in the period. A further £3.8 million was returned to Shareholders by way of share buybacks during the financial year.

While it is disappointing to report a loss during any financial year, the Investment Manager takes some heart from the relative outperformance of the Company's NAV total return compared to that of the FTSE AIM All-Share Total Return Index, which registered a significantly greater loss, in total return terms, of -8.3% over the same twelve-month period.

The reduction in the Company's net assets during the financial year was offset by the proceeds received from a fully subscribed Offer for Subscription which opened, and closed, on 6 February 2023, having been soft launched on 24 January 2023. It is highly encouraging that both new and existing Shareholders chose to participate in the Offer for Subscription which raised net proceeds after expenses of £14.6 million.

The Investment Manager always adopts a cautious approach to deploying new capital. Whilst the total amount of new funds raised by companies on AIM is generally much reduced in 2023 in comparison to previous years, it is pleasing to report that several VCT qualifying investments in both new and follow-on investment opportunities have been made since the proceeds were received from the Offer for Subscription. In the main, these investments have performed well over a short-term holding period and are well-positioned to deliver meaningful positive contributions to future long-term growth in net assets.

Performance Review

The financial year under review has been another challenging period for the Company.

A significant number of investee companies suffered further declines in their share price, which is particularly disappointing since it follows on from the steep falls in value that were experienced in the prior financial year. In particular, the Company's investments in early-stage, scale-up businesses, including those in Life Sciences, Technology and Pharmaceutical sectors, which typically require multiple funding rounds, were notably affected by the difficult market conditions. In addition, the inflationary environment and volatile geo-political situation have also created more difficult trading conditions for some of the larger, more mature companies in the portfolio. Unsurprisingly, the overall effect of this set of circumstances has been to negatively impact the net assets of the Company in the period under review.

As a reminder, the Investment Manager is required by VCT legislation to ensure that all new qualifying investments are directed toward early-stage, scale-up businesses. Clearly, investment in less mature businesses carries with it a higher degree of risk. The Investment Manager therefore fully expects to see a wide divergence of returns between successful investments in early-stage businesses and those which fail. Importantly however, many of the Company's longer-standing investments are in established, sustainably profitable, and cash-generative businesses. Such businesses typically operate with strong balance sheets where there is often no further requirement for equity or debt funding and are therefore less sensitive to higher interest rates.

The investment portfolio remains diversified both by number of holdings and by sector exposure. At the financial year end, the Company held investments in 81 active VCT qualifying companies and 10 non-qualifying investments. These investments are spread across 26 different sectors.

Despite the difficult market conditions, several investee companies delivered positive returns during the period under review. A review of the ten most meaningful contributors to performance from VCT qualifying investments (both positive and negative) follows:-

Largest Contributors

Abcam* (9.4% of net assets, +£5.9 million) is a global life science company that supplies researchers with the tools needed to study proteins. Researchers in laboratories worldwide have come to rely on Abcam's products in order to facilitate their studies and experiments aimed at understanding the most prevalent of human diseases and thereby helping to develop new and innovative treatment therapies.

Following a period of active shareholder engagement with its founder, Dr. Jonathan Milner, Abcam announced that it was undertaking a strategic review in order to maximise shareholder value. Abcam subsequently announced that it had agreed the terms of a recommended takeover offer from Danaher Corporation, which is a global science and technology company. Danaher has now entered into a definitive agreement to acquire Abcam for a price of $24 per share, reflecting a premium of approximately 26% to the level at which the share price traded in the days before bid rumours began to circulate. In the absence of a counterbid at a meaningfully higher valuation, this transaction is expected to complete shortly.

Hasgrove (11.2% of net assets, +£4.7 million) is the unquoted holding company, which wholly-owns an operating subsidiary called Interact. Interact is a fast-growing global provider of corporate intranet solutions that operates a Software-as-a-Service (SaaS) business model. In its most recent annual results statement, Hasgrove reported revenue growth of 28% to £29.4 million and operating profit growth of 31% to £8.1 million when compared to its prior financial year. The performance for the current financial year remains in line with management's expectations, marked by a growing stream of highly predictable recurring revenues. As a consequence of this continued strong growth, the carrying Fair Value of the Company's investment in Hasgrove was raised to £23.6 million, representing an increase of +24.9% on the closing Fair Value of £18.9 million as at 30 September 2022.

Aurrigo International ("Aurrigo") (3.4% of net assets, +£3.8 million) is a leading provider of highly specialised autonomous transport solutions which are predominately for use in the aviation ground handling industry. Aurrigo's autonomous vehicles have the potential to significantly improve ground handling performance, including; more efficient baggage transportation to and from the aircraft, reducing reliance on labour and reducing the frequency and severity of accidents.

In its first year as an AIM listed company, Aurrigo International achieved a noteworthy milestone by securing a multi-year partnership agreement with Changi Airport Group in Singapore, for the continued collaborative development and testing of Aurrigo's autonomous vehicles, Auto-Dolly and Auto-DollyTug, as well as its airport simulation software platform Auto-Sim. Furthermore, Aurrigo continues to receive substantial interest from other airport groups and expects to see an accelerated level of interest in its innovative aviation solutions for future deployments within Europe and North America.

Oxford Biodynamics ("OBD") (2.8% of net assets, +£3.1 million) is a biotechnology company which is developing precision medicine tests based on the EpiSwitch™ 3D genomics platform. OBD has developed biomarkers using its technology for applications in drug discovery, diagnostics, and personalised medicine, with a focus on various diseases, including cancer and neurodegenerative disorders.

Towards the end of the financial year, OBD announced the successful validation of its EpiSwitch Prostate Screening blood test (PSE) in its US clinical laboratory, which is now available to men at risk of prostate cancer in the US and UK. Given the recognised limitations of the current widely used prostate-specific antigen (PSA) test, with over 25 million such tests taking place per year, this provides OBD with a significant market opportunity.

Tristel (3.4% of net assets, +£2.1 million) is a specialised company at the forefront of infection prevention and control within healthcare. Tristel's product range includes high-level disinfectants essential for the effective sanitisation of medical instruments and devices, which thereby reduces the risk of healthcare-associated infections in hospitals and clinics.

In June 2023, Tristel announced that the U.S. Food and Drug Administration (FDA) had approved the immediate sale of Tristel ULT, classifying it as a high-level disinfectant for use on ultrasound probes. In addition, Tristel DUO, which is an intermediate level disinfectant for cleaning surfaces, is now also authorised for sale in all US states. A large number of ultrasound scans are performed in the US each year. An estimated 215 million are performed annually and about 20% of these scans require high level disinfection, which can now be addressed more efficiently and effectively through the use of Tristel ULT. The approval of these two products gives Tristel a unique advantage in the market, offering comprehensive solutions for all levels of disinfection associated with use of ultrasound equipment.

Instem* (2.2% of net assets, +£1.4 million) is a leading provider of IT solutions to the global life sciences market. Instem's software and services help life sciences organisations efficiently access, capture, analyse, report, and submit high-quality regulatory data. Instem also helps life sciences companies bring new drugs and therapies to market faster and more efficiently.

In August 2023, Instem announced that its Board had agreed the terms of a recommended takeover offer from Archimed, which is a French healthcare-focused private equity firm. The offer values Instem at approximately £203 million and represents a 41% premium to the company's closing price on the day prior to the announcement. Instem subsequently received additional approaches from other parties, but no competing offers were made. Instem's Board therefore continue to believe that the offer from Archimed represents attractive value for shareholders.

The City Pub Group (1.1% of net assets, +£0.9 million) is a UK based pub company that owns and manages a portfolio of over fifty pubs located in the southern regions of England and Wales.

Over the past couple of years, City Pub Group has faced numerous operational challenges, largely due to the sudden re-emergence of inflationary pressures, particularly in energy, food and labour costs. In addition, the poor summer weather in the UK and numerous train strikes, have also had a negative impact on key trading periods. Despite all these problems, the business has displayed remarkable resilience.

Overall, trading results for the first half of City Pub Group's financial year were strong, with revenues increasing by 21% to £31.7 million, while profitability was maintained despite the many and varied inflationary pressures. The Group also expanded its pub portfolio in the period under review by announcing that it acquired a majority stake in Mosaic Pubs which owns nine pubs across London and Birmingham. City Pub Group continues to operate with one of the lowest levels of debt in the hospitality sector, which enables management to take advantage of increasingly attractive opportunities to pursue further bolt-on acquisitions.

AB Dynamics (2.0% of net assets, +£0.8 million) specialises in providing testing and measurement solutions for the automotive industry. Its offerings encompass vehicle dynamics testing, autonomous and Advanced Driver Assistance Systems (ADAS) testing, track testing, and driving simulation. These solutions are essential for assessing vehicle performance, safety, and autonomous driving technologies. Despite the obvious challenges, the company has continued to thrive, achieving record results, which included strong growth in revenues and profitability. AB Dynamics continues to enhance its strategic position through selective investment in new products and services and remains well-placed to take advantage of the growing opportunities in core markets.

Destiny Pharma (1.0% of net assets, +£0.7 million) is a biotechnology firm focused on creating innovative anti-infection solutions. Destiny Pharma's interim results for the first half of 2023 focused on the company's strong robust financial position, with net cash balances of £9.8 million at period end. A further highlight in the period was the announcement of successful Phase 2b trials of XF-73 Nasal, a specially formulated nasal spray designed to combat post-operative infections caused by staphylococcal bacteria. Destiny Pharma also agreed a deal with Sebela Pharmaceuticals in North America covering its other lead product, which has a potential lifetime value of up to $570 million, plus royalty payments.

* under offer

Avacta (2.5% of net assets, +£0.6 million) is a clinical-stage biotechnology company developing novel cancer therapies and powerful diagnostics based on its proprietary Affimer® and pre|CISION™ platforms. In its recently published interim results, Avacta's management focused on the progress made in the Therapeutics Division, where the company's AVA6000 Phase 1 study continues to display a strong safety profile, while delivering highly promising indications of therapeutic effectiveness. In the Diagnostics Division, management highlighted numerous growth opportunities, including; geographic expansion, cross selling opportunities and a rapid expansion to the division's range of products.

Largest Detractors

MaxCyte (2.9% of net assets, -£7.7 million) is a leading cell engineering company, which provides a technology platform to enable the precision engineering of cells for a wide range of therapeutic applications. Leading drug developers and academic institutions are using the company's technology to develop new cell therapies for the treatment of cancer, central nervous system disorders, and rare genetic diseases. The period under review has been challenging for most early-stage life biotechnology companies and MaxCyte was no exception. The onset of an extremely difficult funding environment in the sector has forced MaxCyte's customers to focus on getting later stage pharmaceutical drugs to market in order to accelerate revenue generation. The impact of this switch in priorities has therefore lengthened the timelines for the research and development of early-stage clinical development projects, of the type with which MaxCyte is most typically involved. Despite these short-term challenges, management remain optimistic about MaxCyte's long-term prospects as innovative cell therapies gain traction.

Anpario (2.3% of net assets, -£2.8 million) is a manufacturer and distributor of natural feed additives for animal health, nutrition, and biosecurity. Anpario's products are used by livestock producers in over 80 countries around the world. The past twelve months has been a challenging period for the global agricultural industry and this has had a profound impact on Anpario's revenues. In its most recent financial half year sales of £15.3 million were down 7% when compared to the prior first half financial period. Demand for natural feed additives declined as farmers struggled to cope with mounting costs of production. In addition, an outbreak of swine fever decimated pig herds in China, thereby badly affecting Anpario's sales in the region. Despite these obstacles, the Group continues to maintain a strong balance sheet, including a healthy cash balance of over £7 million and no debt. In due course, Anpario's management team fully expects to report an improvement in profitability driven by a reduction in the cost of raw materials and a recovery in sales volumes.

Access Intelligence (1.8% of net assets, -£2.5 million) operates a Software as a Service (SaaS) business model focused on providing management teams with the tools necessary to enable them to control and manage the reputations of the businesses which they lead. An extended sales cycle, an increasingly uncertain outlook for US corporates and the execution risk associated with a recent acquisition of Isentia, have all weighed heavily on investor sentiment and the company's share price has suffered as a result. However, the management team is now starting to see a recovery in contract wins in Asia and a general improvement in demand, which are encouraging indicators for future growth.

Surface Transforms (2.3% of net assets, -£2.1 million) is a manufacturer of carbon fibre ceramic brake discs for theautomotive industry. Despite announcing new contracts of substantial value, the share price declined during the period, which reflects investor concerns surrounding production issues announced in early 2023. In response, the company's management team was strengthened and production volumes are now steadily improving. A new furnace has also been installed in order to generate the capacity required to satisfy the significantly larger order book. As at the period end the value of existing contracts had risen to £290 million, while the prospective pipeline now stands at circa £420 million.

Saietta Group (0.5% of net assets, -£2.0 million) is a global engineering business specialising in the design, development, and supply of powertrains for electric vehicles, including; scooters, buses, and marine applications. Despite making significant progress toward becoming a key provider of electric drivetrain solutions, Saietta's share price came under severe pressure as a result of a series of operational miss-steps, which included a poorly executed move into the US heavy-duty vehicle market. However, a new Chief Executive Officer has now been recruited and the business is re-focusing on maximising the commercial opportunity in its key lightweight electric vehicle market. Encouragingly, Saietta has also recently received a purchase order from a global Original Equipment Manufacturer (OEM) that is one of the largest manufacturers of light commercial vehicles in India.

Keywords Studios (1.8% of net assets, -£1.9 million) is a leading provider of technical and creative services to the global video games industry. Keywords offers a wide range of services, including art and animation, audio, game development, localisation, quality assurance, and testing. The period under review was difficult in terms of share price performance, as industry consolidation, strikes in the US entertainment industry, a slowdown in sales of video games and project delays by some key customers began to negatively affect investor sentiment. However, Keywords Studios has a strong track record of delivering growth and has the potential to leverage its healthy balance sheet and established industry connections to exploit emerging opportunities to develop new revenue streams, particularly through the use of innovative technologies like Artificial Intelligence.

Tracsis (6.2% of net assets, -£1.8 million) is a leading provider of software, hardware, data analytics and services for the rail, traffic data, and wider transport industries. Products and services provided by Tracsis help their customers improve the efficiency and safety of their operations, reduce costs, make better decisions, and improve customer service. In a recent trading update, the company's management team confirmed that trading performance for the current financial year remains in line with expectations, despite some delays to customer orders, which are likely to result in a higher proportion of full year revenues being generated in the second half. From an operational perspective, Tracsis continues to perform strongly and is well-positioned to benefit from the digital transformation of the rail industry, both in the UK and North American markets.

Engage XR (0.3% of net assets, -£1.7 million) is a professional metaverse platform that provides a virtual workspace where users can meet, collaborate, and learn in a more immersive and engaging way than traditional online conferencing tools. Engage XR experienced a significant fall in its share price during the period as investors faced up to the reality of a sharp decline in technology spending worldwide.

Directa Plus (1.3% of net assets, -£1.6 million) is a leading supplier of graphene, an innovative material with a wide range of applications across a variety of industries, including; consumer, energy, automotive, and aerospace. Directa Plus continues to develop the impressive technology that has enabled the company to become a world leader in graphene production, but, like many other industrial firms, the business is experiencing delays to expected contract awards due to supply chain issues and general macro and geopolitical uncertainty. However, Directa Plus is finally beginning to see increased adoption of graphene technology and, as the market grows, the company remains in prime position to capitalise on these opportunities.

Angle (0.2% of net assets, -£1.4 million) is a medical technology company that develops and manufactures products and technologies for the early detection of cancer. Angle's flagship product is an FDA authorised system called Parsortix, which is a blood-based liquid biopsy platform that can capture and analyse circulating tumour cells from blood samples.

Early in its financial year, the management of Angle released a trading update, which focused on the problems being faced by the life sciences sector as a whole. An ongoing, industry-wide squeeze on the availability of the capital required to fund research projects, has negatively impacted Angle in a variety of ways. As a result, Angle's management team have acted swiftly to control costs and preserve cash. As at 30 June 2023, Angle remained well funded with a net cash balance of £22.2 million.

Non-Qualifying Investments

The non-qualifying investments made by the Investment Manager are typically in larger, more liquid quoted companies that are listed on the FTSE 350 Index. Non-qualifying investments are normally held in the portfolio in lieu of cash, in order to generate additional dividend income for future distribution to Shareholders, while awaiting suitable VCT qualifying investment opportunities. In the main, these investments performed satisfactorily during the period under review.

During the twelve-month period ended 30 September 2023, the Company also took advantage of the attractive yields available on short-term money market funds to generate additional income for the Company. While short-term bond yields remain high, the Investment Manager expects this to remain an attractive means of generating additional, low-risk income, while awaiting suitable VCT qualifying opportunities.

Offer for Subscription

The fully subscribed Offer for Subscription that closed in February 2023, was a very pleasing outcome and a humbling endorsement, in particularly challenging times, of the Investment Manager's proven and successful long-term approach. The new funds raised will enable the Investment Manager to continue the established and successful strategy of selectively growing the existing portfolio of investments by continuing to provide much needed capital to emerging 'scale-up' businesses. The deployment of capital into new investment opportunities will continue to be rigorously controlled, especially in view of the difficult investment landscape.

Investment Activity

In terms of investment activity, the number of companies raising money on AIM was much reduced in 2023 due to the difficult market conditions. This was particularly evident in the first six months of the Company's financial year in which the market for Initial Public Offerings (IPOs) on AIM was quiet.

Although the pipeline of VCT qualifying investment opportunities improved in the final quarter of the financial year, only four new investments in VCT qualifying companies were made during the twelve-month period under review. Three of these investments were in AIM IPOs, while Oxford Biodynamics was already listed on AIM, but was a new investment for the Company. In total, £6.5 million was invested in new VCT qualifying companies.

In addition, three follow-on investments were completed in companies already held in the portfolio, in order to support their future growth plans. In total, £1.1 million was invested in these follow-on opportunities.

As highlighted in the table below, the VCT qualifying investments made during the financial year have delivered mixed returns thus far. The standout performer has been the investment made in Oxford Biodynamics which has generated very strong short-term gains, which have more than offset the small, initial and unrealised capital losses recorded by the other new investments.

Although the performance of the new investments has been variable, the returns generated by these new investments as a whole have significantly outperformed the returns generated by the FTSE AIM All-Share Index over this short-term, initial holding period. The Investment Manager believes that each of these companies has the potential to generate significant long term capital growth.

As a reminder, the Investment Manager is required, by virtue of the strict investment rules surrounding Venture Capital Trusts, to invest in businesses that are typically at an early stage in their development. These rules, which the Investment Manager fully supports, do however increase the risk of incurring capital losses, especially given that progress toward sustainable and growing profitability is rarely straightforward. In testing macroeconomic conditions, such as those currently being experienced, it is therefore unsurprising that some of the investments made in recent years, have struggled to perform in share price terms.

The Investment Manager will continue to adopt a prudent approach to committing capital to new investment opportunities during the current financial year.

Realisations

In aggregate, £2.6 million was raised from the full and partial disposal of VCT qualifying investments during the period. A further £7.0 million was redeemed from non-qualifying investments and from Short-Term Money Market Funds during the financial year.

As a reminder, the normal purpose of disposals is threefold; to ensure stock specific risk is contained, to lock in capital profits for future distribution to Shareholders via dividend payments, and to help manage liquidity requirements.

During the period, corporate activity resulted in two realisations. In July 2023, ECSC Group was acquired by Daisy Group Holdings, resulting in net proceeds of £0.8 million and realised a loss on investment of £1.6 million. In August, the Company's shares in Bonhill Group were tendered, resulting in net proceeds of £0.1 million and crystallising a capital loss of £1.2 million. Both of these investments were ultimately very disappointing but, in each case, the Unicorn investment team worked hard to secure an outcome that mitigated losses, thereby recovering as much value as possible for Shareholders.

Partial disposals of three VCT qualifying investments were made throughout the year which in aggregate generated total proceeds of £1.7 million and realised an aggregate capital gain of £1.6 million.

The total value of all disposals made during the period therefore amounted to £9.6 million. Including partial disposals, the total realised capital loss from the sale of investments amounted to £1.2 million.

Outlook

The financial year began in challenging fashion and, as a consequence, the total return delivered in the first half was disappointing. Although the current period began in cautiously optimistic fashion, market conditions remained volatile and confidence was further undermined by financial events around the world. These included a serious property crisis in China, the collapse of Silicon Valley Bank in America and the forced financial rescue of Credit Suisse in Europe.

Economic headwinds remain substantial with elevated levels of inflation and rising interest rates hampering business investment and squeezing consumer discretionary spending. While the increases to Bank of England base rates have been well documented, what is arguably more relevant to stability in equity markets is the level of the long-term government bond yields. In this regard, the Ten-Year Gilt yield has risen from circa 3.5% at the start of year to almost 5% at the time of writing this review. This has clearly had a negative impact on the valuations applied to growth stocks, which are often based on the present value of their expected future cash flows.

In addition, the re-emergence of a worrying and significant conflict between Israel and Palestine since October has further heightened the already volatile geo-political situation. Consequently, investor sentiment towards faster growing, higher risk companies remain fragile and the near-term economic outlook is also unpredictable. The current financial year has therefore begun in much the same fashion as the prior financial year ended.

Despite this backdrop, there are some early signs which indicate that a recovery in value for the UK equity market in general, and for the Alternative Investment Market in particular, may not be too far away. Inflation appears to be on a downward trend, and this has resulted in an expectation that interest rates will now be cut earlier than previously expected. Company management teams are reporting that supply chain bottlenecks are easing and input costs such as energy and materials are stabilising or, in some cases, declining. Should some or all of these catalysts materialise, then, in the opinion of the Investment Manager, it is likely that there will be a significant recovery in the overall value of the Company's portfolio.

In the meantime, the portfolio of investee companies broadly remains in good health, with the majority of investee companies continuing to trade well. Importantly, most of these businesses remain well-funded and are operating with balance sheets that are sufficiently robust to enable them to successfully navigate an extended period of economic and equity market uncertainty.

The appetite for Initial Public Offerings on AIM is slowly improving and, in recent months, the Investment Manager has seen a welcome increase in the number and quality of VCT qualifying investment opportunities.

Unicorn's approach to raising new capital for investments through Offers for Subscription has always been prudent and will remain so. As a result, the Investment Manager is able to adopt a selective approach to making new VCT qualifying investments, while also focusing on nurturing the established and diverse portfolio of existing investee companies in order that they have the best opportunity to generate healthy returns for Shareholders over the longer term.

Finally, the Investment Manager is encouraged by the initial proposals set out in the Chancellor's Mansion House speech in July, which aim to improve growth across the economy by directing significantly greater levels of capital towards early-stage UK companies. Future legislation to support this proposal has the potential to enhance the appeal of investing in early-stage growth companies, including those listed on AIM.

Chris Hutchinson

Unicorn Asset Management Limited

7 December 2023

Financial and Performance Review

Net Assets

As at 30 September 2023, the audited net assets of the Company were £211.9 million, compared to £221.1 million on 1 October 2022. The decline in total net assets was due mainly to the fall in value of the portfolio and the distribution of dividends to Shareholders. These were partially offset by the support received from new and existing Shareholders under the Offer for Subscription, which raised £14.6 million net of costs.

Performance during the year

As at 30 September 2023, the audited NAV of the Company was 122.6 pence per share, having fallen by 12.2 pence from 134.8 pence per share at the start of the financial year under review, compared with a fall of 113.8 pence per share in the year ended 30 September 2022. After adding back dividends of 6.5 pence per share paid in the year, the total return to Shareholders decreased by 5.7 pence or 4.3% compared with an decrease of 68.3 pence or 27.5% in the previous year. In comparison, the total return from the FTSE AIM All-Share Total Return Index was a decline of 8.3% over the year to 30 September 2023 (2022: 34.3% decline).

At the financial year end, there were 81 active VCT qualifying and 10 non-qualifying investments held in the portfolio. These investments are spread across 26 different sectors.

In the year to 30 September 2023, a total of £9.6 million was realised through the sale of investments, (including money market funds) approximately £26.6 million was deployed in new investments (including money market funds) and approximately £10.9 million was paid out as dividends to Shareholders. A further £4.9 million was spent on the operating costs of the Company and £3.8 million on share buybacks.

Share Issues and Buybacks

The Company raised £14.6 million (after costs) through an Offer for Subscription and issued 11,108,248 shares, at prices ranging from 134.97 pence to 139.26 pence. Full details are given in Note 13 on page 76 of the Annual Report.

In addition, the Company allotted 1,143,459 shares under the Dividend Reinvestment Scheme ("DRIS") at an average price of 123.69 pence per share.

During the year a total of 3,398,754 (2022: 2,515,309) shares were bought back for cancellation at an average price of 111.35 pence per share (including costs), for a total cost of £3.8 million (2022: £4.4 million).

Total Return

The Company generates returns and losses from both capital growth and dividend income. For the year ended 30 September 2023, the total loss was £ 10.6 million (2022: £105.2 million), of which there was a £11.1 million loss (2022: £104.8 million loss) from capital and a £0.5 million gain (2022: £0.4 million loss) from revenue. Full details of the total return can be found in the Income Statement below. The Company's allocation of expenses is described in Note 1 (g) on page 69 of the Annual Report.

The total net losses per share were 6.2p (2022: 67.3p). The total net losses per share were made up of 6.5p loss from capital and 0.3p gain from revenue.

Revenue Return

The income of £2.3 million (2022: £1.7 million) represents dividend income derived from the Company's investments and interest on cash balances.

Capital Return

At the year end the investment portfolio was valued at £207.5 million (2022: £198.5 million). The investment portfolio delivered a realised profit on disposals of £1.0 million (2022: £12.8 million) and unrealised valuation losses on investment of £9.0 million (2022: £113.6 million). The valuation basis of the Company's investments is described in Note 1 (d) on pages 67 and 68 of the Annual Report.

Ongoing Charges and Running Costs

The Ongoing Charges of the Company for the financial year under review was 2.2% (2022: 2.0%) of average net assets, which remains below the cap of 2.75%.

The total expenses amounted to £4.9 million (2022: £6.1 million) and include investment management fees of £4.2 million (2022: £5.3 million), Directors' fees of £0.1 million (2022: £0.1 million), administrative service fees of £0.2 million (2022: £0.2 million) and other third-party service providers fees of £0.2 million (2022: £0.2 million).

Under the revised management agreement effective from 1 October 2018 and the side letter effective from 1 January 2022 and as shown in Note 3, the Investment Manager receives a management fee of 2% per annum of net assets up to £200 million, 1.5% per annum of net assets in excess of £200 million and 1% in excess of £450 million (other than on investments in OEICs managed by the Investment Manager). Other expenses are shown in Note 4 on page 71 of the Annual Report.

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

Cash and Cash Equivalents

During the year the Company increased its cash balances through the Offer for Subscription and the sale of investments. This was offset by the purchase of investments, the payment of running costs, share buybacks and dividends and at the year end the cash balance had decreased to £5.4 million (2022: £23.8 million). In addition, £12.1 million was held in money market funds.

Key Performance Indicators

The Board uses the key indicators below as Alternative Performance Measures ("APM's") to measure the Investment Manager's performance, thereby helping 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

-      5 year NAV and share price comparison

-      Running costs

Further details can be found on pages 23 and 24 of the Annual Report.

The Company and its Business Model

The Company is registered in England and Wales as a Public Limited Company (registration number 04266437) and is approved as a Venture Capital Trust ("VCT") under section 274 of the Income Tax Act 2007 (the "ITA"). In common with many other VCTs, the Company revoked its status as an investment company as defined in section 266 of the Companies Act 1985 on 17 August 2004, to make it possible to pay dividends from capital. A summary of the VCT regulations is shown on page 88 of the Annual Report.

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 currently 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 25 of the Annual Report. Further information on the service providers is outlined in the Corporate Governance Statement on pages 49 and 50 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.

A summary of the relationship between the Board, the Company's Shareholders and the external service providers is depicted on page 25 of the Annual Report.

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 80% for accounting periods commencing after 6 April 2019 (previously 70%) 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, in due course, 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 80% VCT qualification threshold for accounting periods commencing after 6 April 2019 (previously 70%), 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 41 of the Annual Report under "AIFMD".

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.

The ability to pay dividends and the amount of such dividends is at the Board's discretion and is 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.

Details of the Company's Dividend Reinvestment Scheme are outlined on page 85 of the Annual Report.

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:

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

2.   Share buybacks, when carried out at a discount to underlying net assets, help modestly to enhance NAV per share for continuing Shareholders.

3.    Implementing share buybacks on a regular basis helps to control the discount to NAV.

The Board decides 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. Details of the shares purchased for cancellation are shown on pages 21 and 76 of the Annual Report. At the financial year end, the Company's shares were quoted at a mid-price of 103.5 pence per share representing a discount to NAV per share of 15.5%.

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

Principal and Emerging Risks

The Directors have carried out a robust review of the principal and emerging risks faced by the Company as part of the internal controls process, as outlined below. Note 17 to the Financial Statements on page 78 to 84 of the Annual Report also provides information on the Company's financial risk management objectives and exposure to risks. The Directors process for monitoring these risks is shown below.

During the year the Board has reviewed in detail its approach to risk. It has sought to identify new and 'Emerging Risks' alongside the principal risks faced by the Company and the mitigating steps being taken by both the Board and the Company's service providers to reduce the impact of each risk. The results have been summarised in a heat map and are reviewed for sensitivity quarterly.

During the review with the key service providers evidence was requested of the mitigating actions being taken and on which the Board is relying. Balance sheet reconciliations, asset valuations and VCT qualification being examples of such reviews.

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 when making investment decisions.

Recruitment and succession planning

As reported last year Jocelin Harris stood down as a Director at the AGM on 7 February 2023. The Board have an ongoing process to review and refresh the Board taking into account the needs of the Company and regulation. Jeremy Hamer has indicated his intention to step down at the AGM in 2025. The Board will engage an external recruitment agency with a view to making a new appointment in the next calendar year. This process will include the assessment of key skills the suitable candidate should possess and will also take account of Board diversity.

Diversity

The Board is aware of the requirement of Listing Rule 9.8.6R and the composition of the Board. As disclosed on page 49 of the Annual Report the Board does not meet the requirement to have at least one director from an ethnic minority. Being externally managed and comprising of only four non-executive directors there is reduced scope to fully comply with the requirements. However, the Board will continue to consider these requirements in any recruitment process.

Anti-bribery, corruption and tax evasion policy

The Company has a zero tolerance approach to bribery. It is the Company's policy to conduct all of its business in an honest and ethical manner and it is committed to acting professionally, fairly and with integrity in all its business dealings and relationships where it operates.

Directors and service providers must not promise, offer, give, request, agree to receive or accept a financial or other advantage in return for favourable treatment, to influence a business outcome or to gain any other business advantage on behalf of themselves or of the Company or encourage others to do so.

The Company has communicated its anti-bribery policy to each of its service providers. It requires each of its service providers to have policies in place which reflect the key principles of this policy and procedures and which demonstrate that they have adopted procedures of an equivalent standard to those instituted by the Company.

Further information relating to the Company's anti-bribery policy can be found on its website: www.unicornaimvct.co.uk. A full copy of the VCT's anti-bribery policy and procedures can be obtained from the Company Secretary by sending an email to: unicornaimvct@iscaadmin.co.uk.

Environmental and social responsibility

Full details of the Company's ESG approach can be found on page 31 of the Annual Report.

In relation to the Company's own practices the Company encourages electronic communication to reduce paper usage, has withdrawn its dividend by cheque service and the printing of the Half-Yearly Report and has taken advantage at times of electronic meetings. Where we are required to print Annual Reports we will use recycled paper and offset our carbon footprint.

Viability Statement

The Board' assessment of the ability of the Company 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 is shown in the Corporate Governance Statement on page 41 of the Annual Report.

Under the UK Corporate Governance Code there is a requirement that the Board performs a robust assessment of the Company's principal and emerging risks and the disclosures in the Annual Report that describe the principal risks and the procedures in place to identify emerging risks and explain how they are being managed or mitigated. The last review was performed in November 2023.

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. The last allotment of shares took place in March 2023.

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

■ At the year end the Company had a diversified investment portfolio in addition to its VCT qualifying investments comprising: £7.3 million invested in non-qualifying, fully listed shares which are readily realisable, a further £15.6 million in daily dealing open ended funds and £5.4 million in cash. The Company therefore has sufficient immediate liquidity in the portfolio for any near-term requirements.

■   The ongoing charges ratio of the Company as calculated using the AIC recommended methodology equates to 2.2% of net assets.

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

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

■   The payment of dividends and buybacks are at the discretion of the Board.

■   The continuation of the State Aid regulations to 2035.

In order to maintain viability, the Company has a 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, formal reviews of all service providers are undertaken annually and activity is monitored at least monthly.

In its assessment of the viability of the Company, the Board has recognised factors such as the continuation of the current State Aid regulations to 2035, the ability of the Company to raise money from future Offers for Subscription and there being sufficient VCT qualifying investment opportunities available.

The Directors have also considered the viability of the Company should there be a slowdown in the economy or a correction 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 investment in Unicorn funds) equates to 2.0% of net assets up to £200 million and 1.5% of net assets in excess of £200 million. In November 2021 the Company entered into an agreement with the Investment Manager to reduce fees to 1% for any assets exceeding £450 million. As these fees are based on a percentage of assets any fall in the value of net assets will result in a corresponding fall in the major expense of the Company.

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 Chair's Statement above.

For and behalf of the Board

Tim Woodcock

Chair

7 December 2023

EXTRACT FROM DIRECTORS' REPORT

Share Capital

At the year-end there were 172,876,156 (2022: 164,023,203) 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 on page 21 and in Note 13 on page 76 of the Annual Report. No shares have been bought back subsequent to the year end, therefore, at the date of this announcement, the Company had 172,876,156 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 2023, the Company held cash balances of £5.4 million, £7.3 million in fully listed stocks and £15.6 million in open ended investment funds. The majority of the Company's investment portfolio remains invested in qualifying and non-qualifying AIM traded equities which may be realised, subject to the need for the Company to maintain its VCT status. The 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;

-    prepare a Directors' Report, a Strategic Report and Directors' Remuneration Report which comply with the requirements of the Companies Act 2006; and

-   prepare the Financial Statements on the going concern basis unless it is inappropriate to presume the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions 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 the Disclosure Guidance and Transparency Rule 4 of the UK Listing Authority

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 loss 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.

• The Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the position and performance, business model and strategy of the Company.

For and on behalf of the Board

Tim Woodcock

Chair

7 December 2023

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the years ended 30 September 2023 or 30 September 2022 but is derived from those accounts. Statutory accounts for the year ended 30 September 2022 have been delivered to the Registrar of Companies and statutory accounts for the year ended 30 September 2023 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 2023

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 July 2022 by the Association of Investment Companies.

Other than revaluation movements arising on investments held at fair value through profit or loss, there were no differences between the profit/ (loss) as stated above and at historical cost.

The notes below form part of these financial statements.

Statement of Financial Position

as at 30 September 2023

The financial statements were approved and authorised for issue by the Board of Directors on 7 December 2023 and were signed on their behalf by:

Tim Woodcock

Chair

The notes below form part of these financial statements.

Statement of Changes in Equity

for the year ended 30 September 2023

* The special reserve and profit and loss account are distributable to Shareholders. The special reserve was created by the cancellation of the Share premium account and Capital redemption reserve in March 2019.

** The profit and loss account consists of the Revenue reserve of £(0.132) million and the realised capital reserve of £13.215 million.

*** Transfer of realised losses in accordance with accounting policy f(iii) on page 68 of the Annual Report.

**** Transfer of previously unrealised valuation movements on investments sold in the year

The notes form part of these financial statements.

Statement of Cash Flows

for the year ended 30 September 2023

The notes below form part of these financial statements.

Notes to the Financial Statements

for the year ended 30 September 2023

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 67 to 69 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 July 2022.

In accordance with the requirements of FRS 102, those undertakings in which the Company holds more than 20% of the equity as part of an investment portfolio are not accounted for using the equity method. In these circumstances the investment is measured at "fair value through profit or loss". The Company is exempt from preparing consolidated accounts under the investment entities exemption as permitted by FRS 102.

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 or 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.

The Directors' assessment of the Company as a going concern is given on page 41 of the Annual Report.

2        Income

The loan stock interest was reinstated during the year and received subsequent to the year end.

3        Investment Management fees

The management fee is calculated as follows:

At 30 September 2023, officers and employees of the Investment Manager held 1,513,695 shares in the Company.

During the year, Unicorn Asset Management Limited ("UAML") received an annual management fee, as detailed above, of the net asset value of the Company, excluding the value of the investments in the Unicorn OEIC.

If the Company raises further funds during a quarter the net asset value for that quarter is 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 annual management fee charged to the Company is calculated and payable quarterly in arrears. In the year ended 30 September 2023, UAML also earned fees of £27,000 (2022: £36,000), being OEIC management fees calculated on the value of the Company's holdings in the OEIC on a daily basis. This management fee is 0.75% per annum of the net asset value of the Unicorn UK Ethical Fund OEIC.

The management fee will be subject to repayment to the extent that the annual costs of the Company incurred in the ordinary course of business have exceeded 2.75% of the closing net assets of the Company at each year end. There was no excess of expenses for year 2022/23 or the prior year.

4        Dividends

* The difference between total dividends and that shown in the Cash Flow Statement is £1,450,000 which is the amount of dividends reinvested under the DRIS.

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.

Set out below are the total income dividends payable in respect of the 2022/23 financial year, which is the basis on which the requirements of Section 274 of the Income Tax Act 2007 are considered.

* Despite the revenue profit for the year, no revenue dividend can be made due to the deficit on the revenue reserve as shown in the footnote to the Statement of Changes in Equity above.

5        Basic and diluted earnings and return per share

Notes

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

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

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

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        Investments at fair value

Transaction costs on the purchase and disposal of investments of £1,000 were incurred in the year. These have not been deducted from realised gains shown above of £995,000 but have been deducted in arriving at gains on realisation of investments disclosed in the Income Statement of £994,000.

The shares delisted during the year relate to La Chemeau Group.

* Other funds include the Unicorn Ethical Fund, the BlackRock Cash Fund and the Royal London Short-Term Money Market Fund.

Note: Permanent impairments of £7,075,000 were held in respect of losses on investments held at the previous year end. Additional impairments of £8,591,000 provided for in the year relate to Bonhill Group, £1,755,000, British Honey Company, £3,101,000, Kellan Group, £13,000, Miroma Holdings, £1,000, Osirium Technologies, £1,971,000 and Trackwise Designs, £1,750,000.

Reconciliation of cash movements in investment transactions

The difference between the purchases in Note 6 and that shown in the Cash Flows is £2,000 which represents the reinvested dividends on the Unicorn Ethical Fund.

7        Net asset value

8        Post balance sheet events

On 28 November 2023, the Company announced an Offer for Subscription as detailed in the Chair's Statement above.

On 6 December 2023, the Court sanctioned the transaction on Abcam and proceeds amounting to $25.9 million are expected to be received shortly.

9        Capital commitments and contingent liabilities

On 27 July 2023, the Company made a capital commitment to invest £1,500,000 in Eden Research. This transaction was completed on 6 October 2023.

10     Shareholder information

Dividend

The Directors have proposed a final dividend of 3.5 pence per share. Subject to Shareholder approval, the dividend will also be paid on 14 February 2024 to Shareholders on the Register on 5 January 2024.

The Board has previously decided the Company will in future pay all cash dividends by bank transfer rather than by cheque.

Shareholders will have the following options available for future dividends:

 • Complete a bank mandate form and receive dividends via direct credit to a UK domiciled bank account.

 • Reinvest the dividends for additional shares in the Company through the Dividend Reinvestment Scheme (DRIS).

For those Shareholders who previously received their dividend by cheque and who have not provided their bank details to the Registrar, a bank mandate form will be available on the Company's website. Once completed the form should be sent to the Company's Registrars, City Partnership at the address shown on page 89 of the Annual Report. If Shareholders have any questions regarding the completion of the form, they are advised to contact the City Partnership on 01484 240910 or by email: registrars@city.uk.com.

Dividend Reinvestment Scheme

Shareholders may elect to reinvest their dividends by subscribing for new shares in the Company. Shares will be issued at the latest published Net Asset Value prior to the allotment. For details of the scheme see the Company's website www.unicornaimvct.co.uk/dividend-reinvestment-scheme or contact the scheme administrators, The City Partnership, on 01484 240910.

11     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 2023 will be sent to Shareholders shortly and will then be available for inspection at ISCA Administration Services Limited, The Office Suite, Den House, Den Promenade, Teignmouth, TQ14 8SY 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.

12     Annual General Meeting

The Annual General Meeting of the Company will be held at 11.30 am on Wednesday, 7 February 2024 at The Great Chamber, The Charterhouse, Charterhouse Square, London EC1M 6AN. Shareholders will be able to attend this meeting in person, arrangements for the meeting are detailed on pages 41 and 42 of the Annual Report. Voting on all Resolutions will be conducted on a poll including all proxy votes submitted. The Notice of the Meeting is included on pages 90 to 94 of the Annual Report and a separate proxy form has been included with Shareholders' copies of the Annual Report. Proxy forms should be completed in accordance with the instructions printed thereon and sent to the Company's Registrars, The City Partnership (UK) Limited, at the address given on the form, to arrive no later than 11.30am on 5 February 2024. Please note that you can vote your shares electronically athttps://proxy-unicorn.cpip.io/.

13     National Storage Mechanism

A copy of the 2023 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:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Contact details for further enquiries:

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

ISCA Administration Services Limited (the Company Secretary) on 01392 487056 or by e-mail on unicornaimvct@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.