Annual Financial Report

RNS Number : 4999W
Amati AIM VCT PLC
18 April 2023
 


 Amati AIM VCT plc (the "Company")

 

Legal Entity Identifier: 213800HAEDBBK9RWCD25

 

Annual Report & Financial Statements

For the year ended 31 January 2023

 

The Directors are pleased to present the Annual Financial Results of the Company for the year ended 31 January 2023.

 

The information set out below does not constitute the Company's  full   statutory accounts for the year ended 31 January 2023   in terms of Section 434 of the Companies Act 2006   but is derived from those accounts. Statutory accounts for the year ended 31 January 2023 will be posted to Shareholders and delivered to the Registrar of Companies, in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors 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 Auditors' report can be found in the Company's full Annual Report and Accounts. Audited statutory accounts for the year to 31 January 2022, which were unqualified, have been lodged with the Registrars of Companies.

 

OUR STRATEGY

 

The investment objective of the Company is to generate tax free capital gains and income on investors' funds through investments primarily in AIM-traded companies.

 

DIVIDEND POLICY

 

The Board aims to pay annual dividends of around 5% of the Company's Net Asset Value at its immediately preceding financial year end, subject to distributable reserves and cash resources, and with the authority to increase or decrease this level at the Directors' discretion.

 

Highlights

For the year ended 31 January 2023

 

NAV Total return

for the year†

-22.2%

(2022: -7.5%)

 

£12.4m

invested in qualifying

holdings during the year

(2022: £31.3m)

 

1.9%

Ongoing charges**†

(2022: 1.9%)

 

Year end

Net Asset Value per share†

132.8p

(2022: 180.7p)

 

7.0%

Discount to NAV†

(2022: 7.9%)

 

5.3%

Dividend yield***

(2022: 5.0%)

 

Key data



31/01/23

31/01/22

Net Asset Value ("NAV")

£201.3m

£247.1m

Shares in issue

151,548,993

136,720,797

NAV per share†

132.8p

180.7p

Share price

123.5p

166.5p

Market capitalisation

£187.2m

£227.6m

Share price discount to NAV†

7.0%

7.9%

NAV Total Return for the year



(assuming re-invested dividends)†

-22.2%

-7.5%

Numis Alternative Markets



Total Return Index*

-20.7%

-3.5%

Ongoing charges**†

1.9%

1.9%

Dividends paid and declared



in respect of the year

7.0p

9.0p

 

*  Numis Alternative Markets Index is included as a comparator benchmark for performance as this index includes all companies listed on qualifying UK alternative markets.

**  Ongoing charges calculated in accordance with the Association of Investment Companies' ("AIC's") guidance.

***  Dividend yield based on year end NAV.

† See Alternative Performance Measures on pages 77 and 78 of the full Annual Report and Accounts.

 

Table of investor returns

to 31 January 2023

From

Date

NAV Total

Return with

dividends

re-invested

Numis

Alternative

Markets

Total

Return Index

NAV following re-launch of the VCT under management of Amati Global




Investors ("Amati")

9 November 2011*

139.6%

31.0%

NAV following appointment of Amati




as Manager of the VCT, which was known as ViCTory VCT at the time

 

25 March 2010

 

151.4%

 

34.6%

*Date of the share capital reconstruction when the NAV was rebased to approximately 100p per share.

A table of historic returns is included on page 76 of the full Annual Report and Accounts.

 

Dividends paid and declared

-22.2%

 

2023 total dividends per share

7.0p

5.3% of NAV

 

Cumulative dividends per share

92.74p

 

Dividend history

Since the re-launch of the VCT under the management of Amati Global Investors*

 

Year ended 31 January

Total

dividends

per share**

p

Cumulative

dividends

per share

p

2011

4.74

4.74

2012

5.50

10.24

2013

6.00

16.24

2014

6.75

22.99

2015

6.25

29.24

2016

6.25

35.49

2017

7.00

42.49

2018

8.50

50.99

2019

7.50

58.49

2020

7.75

66.24

2021

10.50

76.74

2022

9.00

85.74

2023

7.00

* On 25 March 2010 Amati Global Investors was appointed as Manager of ViCTory VCT. On 8 November 2011 Invesco Perpetual AIM VCT merged with ViCTory VCT and the name was changed to Amati VCT 2. On 4 May 2018 the Company merged with Amati VCT and the name was changed to Amati AIM VCT.

**Total dividends per share are the declared dividends of the financial year.

 

Fund performance

A graph depicting the Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from change of Manager on 19 March 2010 (first Net Asset Value calculated on 25 March 2010) to 31 January 2023 can be found on page 3 of the full Annual Report and Accounts.

 

Historic performance

A graph depicting the Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from inception of fund to 31 January 2023 can be found on page 3 of the full Annual Report and Accounts.

 

Extracts from Strategic Report

 

Chairman's Statement

 

This report has been prepared by the Directors in accordance with the requirements of Section 414A of the Companies Act 2006.

 

Overview and Investment Performance

The Russian invasion of Ukraine caused a steep fall in the valuations of businesses and many other different types of assets in 2022. This resulted in an inflation shock and a sharp rise in interest rates in all Western economies. The overall market environment was one of de-rating for profitable businesses, pressure on sales growth and margins and withdrawal of investor appetite for early-stage companies, especially where there is a risk of requiring more cash. The NAV Total Return for the period fell by 22.2%, which compares to a fall in the Numis Alternative Markets Total Return Index of 20.7%. The bright spots were mostly around bid targets and one or two of the top holdings, like Keywords, which saw good growth continuing through turbulent times.

 

It was a particularly difficult year for smaller companies and especially so for early-stage businesses still working their way through scale-up to profitability. Amati AIM VCT's portfolio has a combination of some long-standing holdings which have matured into profitable medium-sized enterprises, and those which are still in the scale-up stage. 2022 was also one of the leanest years for VCT qualifying investments on AIM that we have seen. Having had a positive start to the first half, investing £9.4m in qualifying investments, the number of fund raisings on AIM fell further following the disastrous mini-budget in September, and as a result only a further £3m was invested, making £12.4m for the year as a whole. Of this, £3m was in a pre-IPO investment, Chorus Intelligence. This was a difficult period for any company trying to commercialise innovative products and services, regardless of how significant they are. In the medical arena, problems also arose from a slowdown at the FDA (the US medicines regulator) resulting from the pandemic-imposed switch to working from home, which resulted in the delay of many crucial product and drug approvals, including those from companies in our portfolio, such as Amryt Pharma (now bid for) and Polarean. For others, like Creo Medical, the pandemic meant two years of expensive lost time, as they were unable to train doctors in using their approved devices. A number of our newer investments are involved in energy transition where the move away from fossil fuels required to avert climate change, necessitates an extra-ordinary scale of industrial change over the coming decades. Rarely is the journey to commercialisation smooth, and heightened stock market nerves have taken valuations down hard and made access to new capital expensive. However, those companies that can make it through this sifting period intact are likely to emerge much stronger. The negative market sentiment, which has been particularly acute in the second half of the year, reflects the widening gap between the kinds of companies which can raise VCT qualifying investment and those which have the scale and significance to afford the ever-increasing costs of going through an IPO process. A more detailed analysis is provided in the Fund Manager's Review.

 

Corporate Developments

In February, before the Russian invasion of Ukraine, the Company raised £25m under the Prospectus Offer which had opened on 30 July 2021. At the time the decision was made to raise the further funds it appeared that the availability of qualifying investment opportunities on AIM was likely to remain strong in 2022. However, the sharp falls in the valuations of growth companies and the heightened level of uncertainty resulting from Russia's war on Ukraine put many AIM fundraising plans on hold. The amount invested in the first half of the year was low compared to prior expectations, but fell further again in the second half as fund raising on AIM all but ground to a halt. Meanwhile, the bids that were received for three holdings during the year have also served to increase cash resources. For this reason, the Board took the decision not to raise any further funds in the 2022/23 tax year. The cash position at the end of the period was £59.6m.

 

The Manager will continue to invest primarily in companies on AIM. Where the Manager invests in an unquoted company this will still be with the expectation that the company is likely to list on AIM or Aquis. In reality however it is possible that the investment may be realised via a trade sale.

 

VCT Legislation

The current VCT legislation contains a "Sunset Clause" which effectively brings income tax relief to an end for new subscriptions after 5 April 2025. This was agreed in 2015 to secure ongoing EU approval of the VCT and EIS schemes, which have been a crucial source of funding for new and innovative businesses in the UK. It has always been the case that the extension of the scheme was bound up with resolving issues around the Northern Ireland Protocol and potentially achieving a further ratification of the schemes from the EU, so that they can also continue to operate in Northern Ireland after 2025. With the publication of the Windsor Framework on 27 February, removal of the Sunset Clause is now solely within the control of HM Treasury. As the Chancellor of the Exchequer has previously set out an intention to continue the scheme, we currently await further clarity on the details.

 

Dividend

The Board aims to pay annual dividends of around 5% of the Company's Net Asset Value at its immediately preceding financial year end, subject to the Company's distributable reserves and cash resources, and with the authority to increase or decrease this level at the Directors' discretion.

 

As at 31 January 2023 the net asset value per share was 132.8p. In line with this, the Board is proposing a final dividend of 3.5p per share, to be paid on 21 July 2023 to shareholders on the register on 16 June 2023. When added to the interim dividend of 3.5p per share, this would make total dividends for the year 7.0p per share, which is 5.3% of year end NAV.

 

The Board would like to remind shareholders that, as reported in the Interim Report, the company has moved to paying all cash dividends by bank transfer, rather than by cheque and details are provided in Shareholder Information on page 76 of the full Annual Report and Accounts.

 

The last day for the Dividend Re-investment Scheme ("DRIS") elections will be 30 June 2023. The Board would also like to remind shareholders that the DRIS allows shareholders to use their dividends to buy new shares issued by the Company on the dividend payment date priced at the most recently published NAV per share. Shares issued by the DRIS, being new shares, have the same tax reliefs as shares bought in our standard share offers. The only difference is that they do not have to meet the requirement to be bought more than six months before or after any share sales, so income tax relief can be claimed on them at 30% of the subscription value regardless of any share sales made, provided that the other standard tests are met, such as not investing more than £200,000 in VCT shares in any one tax year, whether through an Offer or on the market. If you wish to join the DRIS please contact the Company's registrar.

 

Annual General Meeting ("AGM")

The AGM this year will be held at Barber-Surgeons' Hall, Monkwell Square, Wood Street, London EC2Y 5BL starting at 2pm on Thursday 15 June 2023. This will be followed by presentations from the Manager and investee companies. Details are being sent to you with this report.

 

The Notice of AGM is set out on pages 79 to 84 of the full Annual Report and Accounts.

 

The Board recognises that the Company's AGM represents an important forum for shareholders to put questions to the Directors, to express their views on governance and to become fully informed about matters relating to the AGM resolutions. It understands that attending in person may not be possible for all shareholders who wish to attend. Therefore, the Company intends to also make available a live stream facility to allow shareholders to watch and listen to the AGM and the Investor Event which follows. If shareholders wish to use this facility, please register your interest by emailing info@amatiglobal.com and shortly ahead of the event the Company's Manager will post a link and instructions on how to join the event on its homepage at www.amatiglobal.com. Shareholders watching the AGM will not be counted towards the quorum of the meeting and will not be able to participate in the formal business of the meeting, including asking questions and voting on the day. The Board encourages shareholders to engage with the Board and the Company's Manager. In addition to asking questions at the AGM, shareholders can email any questions they may have either on the business of the AGM to info@amatiglobal.com by 9 June 2023. The Company's Manager will publish questions together with answers on the page dedicated to the AGM on the Manager's website prior to the AGM being held. The Company's Manager will reply to any individual shareholder questions submitted by the deadline of 9 June 2023, before the AGM.

 

Outlook

The portfolio contains a diverse range of well-resourced companies, mostly with high barriers to entry derived from intellectual property and specialist skills. The early-stage companies, even with good cash resources addressing potentially large markets, have not been immune to de-ratings. Some more mature investments have been held for long periods with low levels of debt. Most of these should be well placed to perform in continuing difficult economic conditions.

 

We have a strong incentive to be long term investors, as if we exit positions in more mature companies the VCT rules on investing do not allow us to buy them back again. Also, under the VCT rules, even during periods of market correction, VCTs are prohibited from buying more shares in their existing qualifying holdings, unless they are able to do so as a further qualifying investment at a point when new shares are being issued. It might be reasonable to expect that the more challenging market conditions allow us to make new investments at lower valuations but, as noted above, this has been one of the leanest years on record for AIM listings. That said there are some bright spots on the horizon with new and exciting potential AIM listings.

 

We are by no means resistant to market shocks, be they banking issues or valuation scares, but we remain optimistic that the portfolio is robust for the longer term with plenty of embedded value waiting to see the light of day.

 

Fiona Wollocombe

Chairman

 

17 April 2023

 

For any matters relating to your shareholding in the Company, dividend payments, or the Dividend Re-investment Scheme, please contact The City Partnership on 01484 240 910, or by email at registrars@city.uk.com. For any other matters please contact Amati Global Investors ("Amati") on 0131 503 9115 or by email at info@amatiglobal.com.

 

Amati maintains an informative website for the Company - www.amatiglobal.com - on which monthly investment updates, performance information, and past company reports can be found.

 

Fund Manager's Review

 

Market Review

It has been a painful twelve-month period, with investors having to deal with a number of seismic events including the Russian invasion of Ukraine, surging global inflation, rising interest rates and ongoing fears of recession. As if these weren't enough, we have also seen extreme volatility in many commodities, most notably in natural gas and agriculture.

 

This heady mix of concerns led to meaningful declines across many asset classes, with both equities and government bonds falling simultaneously in most key markets. In equity markets the key trends were large falls in highly valued growth sectors such as technology, offset by a return to form in deeper value sectors such as oil and banking. Smaller companies fared far worse than larger companies as fund redemptions and economic concerns badly impacted liquidity.

 

The defining event of 2022 was the Russian invasion of Ukraine in February with the subsequent devastation and economic upheaval having profound repercussions for investors. We now live in a world where ideological divisions have become a chasm and where decades of global economic integration are beginning to unravel, leading to insecurity of supply in numerous key commodities. However, despite initially sharp price increases post the invasion until late summer, we have seen some welcome respite in gas prices in Europe more recently, where a mild winter and adequate storage has led to year-on-year prices actually declining. A similar dynamic has impacted oil markets, with crude prices falling during the year under review. At this point there appears no obvious end in sight to hostilities in Ukraine and investors have had to attune to a world which may remain divided for some time. The ongoing Chinese rhetoric regarding Taiwan also suggests that the world has become a more dangerous place.

 

The economic adjustments have been rapid with inflation across the US, the EU and UK reaching multi-decade highs towards the end of 2022, leading to sharp spikes in interest rates across the developed world. There is considerable debate about how persistent this inflation will be, but it seems reasonable to assume that it will remain well above central bank targets for some time, leading to a period of more normalised interest rates too. In 2023 we have entered a phase of earnings downgrades, initially led by companies highly exposed to consumer spending but increasingly impacting other sectors. Recession appears likely now across most of the major economies. Again, the debate here is one of the depth and length of any downturn.

 

Closer to home, we have had specific problems to deal with in the UK. Political instability has risen dramatically as a result of the ongoing impact of Brexit and the chaos of having three prime ministers within a period of months. Whilst it is comforting to see some economic stability in recent months, the road ahead remains difficult regardless of political colour and growth is likely to remain elusive.

 

It was a disappointing year for smaller company investors with the Numis Smaller Companies plus AIM (excluding Investment Companies) Index falling by 12.4%. Things were even worse for the Numis Alternative Markets Total Return Index, which fell by 20.7%. This was materially below the Numis Large Cap index which rose by 7.4%, driven by big gains in oil, banking and consumer staples.

 

More recently, we have begun to see some signs of market recovery as sterling has stabilised and investors price in a peak in interest rates. UK company valuations remain modest by international standards and within this broad universe, smaller companies appear particularly undervalued. We would expect to see increased takeover activity in UK quoted companies which should begin to provide support for markets overall.

 

Performance Review

The VCT's NAV Total Return for the period was -22.2%. This slightly underperformed the benchmark Numis Alternative Markets Total Return Index, which fell by 20.7%. The negative trends in the overall market impacted the portfolio both through a de-rating of early-stage business risk, a heightened concern over any potential balance sheet issues, and a more difficult operating environment as recession fears and consumer retrenchment swept through many sectors.

 

The biggest gains were from companies that were acquired and those which managed to continue to grow earnings in the face of the turbulent economic backdrop or recovered from weaker trading during the pandemic.

 

Three companies received bids during the period. Ideagen, a leader in regulatory and compliance software, which received an all-cash bid from private equity investor HgCapital, was the first. This represented a 52% premium to the share price on the prior business day, and an overall investment return of just under 14x average in-cost in December 2012. The next was Diurnal, a rare endocrine disease specialist, which fell 49% as lower sales growth, due to an unexpected adverse opinion from the Scottish Medicines Consortium, pushed back forecasts for profitability. Ultimately the company was acquired in November by Neurocrine Inc, a US-based neurological and endocrine related disease biopharma. Neurocrine's all-cash offer of 27.5p per share was at a premium of 114% to prior trading day closing price, but 40% below our average in-cost. We supported this transaction for two reasons. Firstly, the path forward for Diurnal as an independent company looked uncertain due to sub-scale resources and thus commercial reach. Secondly Neurocrine's proposal indicated it would be a good steward of the assets in which we had invested as Diurnal would receive further investment in its infrastructure, pipeline and commercial products. The last was Amryt Pharma, a commercial stage rare disease specialty pharma. It rose 44% on the back of a bid in January 2023 from Italian family-owned peer, Chiesi Farmaceutici. Amryt Pharma management has recommended the takeover, which comes at a 107% premium to the prior closing price, and the transaction is due to close in the first half of this year. Having originally invested in 2017, our return will be just over 2x cost.

 

Two of the risers during the year were in the field of custom electronics. Ensilica, a new holding which we invested in through its IPO in May, rose 94%. The company specialises in Application Specific Integrated Circuits (ASICs), which are custom designed as compared to standardised off-the-shelf chips. The company issued positive news flow throughout the period regarding new customer wins. These were punctuated by a very large win ($30m over seven years) for the design and supply of an ASIC for industrial and factory automation to a leading European industrial original equipment manufacturer. Following maiden results, Ensilica upgraded expectations for its new financial year. Solid State, a custom electronics supplier to commercial, industrial and defence markets, rose 24%. Key events in the period included strong results which led to upgraded expectations plus a well-received acquisition of US based Custom Power, an expert in battery systems. Another recent IPO, Aurrigo, a provider of electronic control systems to the automotive industry, which has developed a range of autonomous vehicles specifically for airports, also performed strongly since float.

 

Other positive contributors included a number of long-established holdings. Keywords, the technical and creative services provider to the global video games and entertainment industry, rose 13% to become the largest holding in the portfolio. In the period, Keywords continued its track record of growing by taking market share and through acquisitions. Much debate has surrounded the strength of game developers in the wake of the waning trend of higher game play since the end of lock-down. So far, Keywords has not suffered the same impact. This is likely due to its diversified and broad client list, which includes 23 out of the top 25 gaming companies as well as the entire top 10 of mobile games companies. Furthermore, a slowing games market may be encouraging greater outsourcing. AB Dynamics, the designer and supplier of advanced testing and simulation products to the automotive industry, recovered to rise 23% in the period, having fallen in the prior year. Despite the impact of supply chain constraints and inflationary pressures, performance was strong in the period reflecting the ongoing pressure on car manufacturers to continue their development of electric vehicles. The company also saw the benefits of the integration of VadoTech, a provider of vehicle and subsystem testing. VadoTech boosts AB Dynamics' recurring revenue by increasing sales of software, service and support contracts. Velocity Composites, a supplier of composite material kits to the aerospace industry, rose 180% in the period after the announcement of a transformational contract from GKN Aerospace worth $100m over 5-years. The contract will see the company produce a range of high-performance composites across military, civil and business jet programmes from a new manufacturing site in the US.

 

On the negative side, one of last year's most positive performers, Saietta Group, which designs and manufactures electric-drive (e-drive) systems, fell by 77% during the period, reflecting the change in market sentiment to early-stage businesses. In many ways the company made remarkable operational progress during the year, laying the foundations for significant growth in 2023 and beyond. Saietta secured a manufacturing site in Sunderland and a co-development and commercialisation deal with ConMet, a major global manufacturer and supplier of truck components to Ford, Volvo and Daimler. In addition, the company signed a development deal with one of the largest original equipment manufacturers operating in India. The company is now focused on finalising designs and scaling up manufacturing to deliver revenues from these agreements.

 

Some other large holdings also suffered. Frontier Developments, a leading developer and publisher of videogames, fell by a similar amount. Interim results overing the key Christmas 2022 season revealed that several games titles had failed to meet expectations despite in-line performance earlier in the year. Lower growth is now projected into next year. Management is also reviewing the returns achieved by its Frontier Foundry" games publishing label. Polarean, a medical imaging company, fell 31% over the year. Polarean has been developing a clinically transformational lung imaging technology, however its regulatory submission fell foul of FDA delays caused by the pandemic which were still being felt in 2022. The FDA is majority funded by the US government and is assessed by the number of on-time decisions. Where they might miss a deadline, the FDA can either delay a decision or issue a complete response letter (CRL). Delays are the FDA's responsibility, but CRLs are the application sponsor's responsibility. It is no coincidence that in 2022 the number of CRLs reached new heights as a proportion of FDA approvals at more than 30%. Polarean received final approval in December 2022 more than a year after its original decision date, with the delay having a significant impact on its commercial plan and cash reserves. GB Group, a specialist in digital location, identity verification and fraud software, fell 46% in the period after a solid pandemic performance. There was continued fallout from the poorly received acquisition of Acuant, a specialist in biometric and document verification. In addition, activity in cryptocurrency identity verification fell away as sentiment soured, while the highly publicised bankruptcy of the FTX crypto exchange brought the risks in this area into sharp relief. In the period, private equity group GTCR announced it was considering an all-cash approach for the company. While the shares rallied at this point, GTCR then stepped away from the transaction. Water Intelligence, a multi-national leak detection and remediation company, fell 33% over the period despite solid financial and operational performance.

 

Fallers included two other healthcare companies. Aptamer, a developer of aptamer and optimer binders for the life sciences industry, fell 71% over the period. During 2022, market sentiment turned against loss making companies, and the company felt the effects of this despite trading continuing as expected. However, an update in early January has pointed to a deterioration in end-markets and customers either delaying project starts or extending decision making cycles. Whilst expectations have been re-set, no order or project has been cancelled and the company continues to add to its pipeline. Angle, a liquid biopsy company, finally received FDA approval in May for its Parsortix device. However, the pace of commercialisation has been slower than market expectations. A trading update in early January pointed to slower sales conversion than had been hoped for based on the depth of the pipeline and shares fell 74%.

 

There were three real disappointments amongst the newer holdings. Flylogix, which established a methane emissions detection service for North Sea oil and gas companies using drones, found good demand from customers, but proved unable to establish reliable and consistent operations, so had to be substantially written down. Glantus, a provider of accounts payable automation and analytics, had a disastrous start to life as a public company, with a badly handled company re-organisation to move back office functions to Costa Rica, albeit a move which will drive value in the longer run. The poor handling led to a sharp fall in revenues during the process, which is now complete. However, the losses, combined with gearing in the company led to a dramatic fall in the share price. Clean Power Hydrogen ("CPH2"), which is commercialising a membrane free electrolyser technology, has delayed the launch of its product due to design flaws emerging during the commissioning process of the first units.

 

Portfolio Activity

The Company made five new investments and four follow-on investments during the period. The new investments comprised four Initial Public Offerings ("IPOs"), and one pre-IPO investment.

 

The IPOs in the first part of the year were CPH2 and Strip Tinning ("ST"), which have so far been disappointing investments, and EnSilica, which has performed strongly. The CPH2 electrolyser design avoids the problem of thin membrane degradation in PEM (proton-electrolyte membrane) electrolysers, which limits useful life, but at the cost of needing to manage the mixed gasses through a cryogenic circuit for separation. Key advantages of the CPH2 system include long system life, 40% less water usage, high purity levels of the output gasses, and the avoidance of expensive process catalysts. These benefits should make CPH2's system cost competitive at low volumes. Unfortunately, during commissioning of the initial scaled up units, the company uncovered some design issues, which have required a period of further engineering and design work, delaying the company's progress.

 

ST is a market leader in the provision of high-performance electronic connector products and design services to the automotive industry. It manufactures flexible printed circuit, flat foil, cable and busbar connectors, which are used in car heating and lighting applications. This business dates back to the 1950s and ST has very long-term relationships with vehicle manufacturers and prime contractors, which positions it well for expansion into growth markets. The company floated to raise funding for two opportunities. Firstly, the growing demand for more sophisticated connectors driven by greater functionality being embedded into automotive glazing. This will involve invisible heating, rain and autonomous driving sensors, cameras, opacity controls, heads-up displays and virtual reality. Secondly, ST is at the forefront of next generation lightweight battery connectors to replace heavy wiring harnesses for both electric vehicles and fuel drivetrains. With both glazing and electric vehicle battery connectors, ST is exposed to the major future drivers of automotive development. However trading since flotation has been impacted by volume weakness within the industry caused by ongoing component shortages along with manufacturing cost inflation and some contract cancellations.

 

EnSilica is a company which specialises in the design of Application Specific Integrated Circuits (ASICs), which are chips built for a specific use in electronic equipment. EnSilica's customers range across the automotive, industrial, satellite and healthcare sectors, which offer faster growth than more saturated areas such as computing, mobiles and consumer electronics. Structural drivers include autonomous sensors, satellite connectivity, industrial Internet-of-Things and Artificial Intelligence, wearable healthcare and 5G telecoms. Over 20 years EnSilica has evolved from pure design consultancy services into Design and Outsourced Supply (D&S), so that it now captures extra margin. D&S is growing strongly, and EnSilica floated to scale up its capacity. Global investment in semiconductor fabrication is based on new wafer technology which requires ASIC redesign, and the experience of standardised chip shortages is encouraging an industry shift to customised ASICs which have more robust supply chains. Over the past year there has been a heightened recognition of the importance of the UK retaining its own silicon chip capabilities and expertise, and EnSilica's success plays an important part in this.

 

In the second half of the period the number of qualifying investment opportunities on AIM dropped sharply and we made only one new investment, which was in the IPO of Aurrigo. The company raised funds to further progress development and initial roll-out of its autonomous vehicle technology for airport baggage handling, Auto-Dolly. This vehicle is an autonomous electric sledge that carries a standard baggage container. This development is being piloted with Singapore's Changi Airport, a recognised global leader in airport technology. Aurrigo had also developed a sophisticated airport mapping tool (Auto-Sim) that functions as a digital twin of the airport. This is used to understand where time is being lost in current processes and how efficiencies could be realised through use of solutions like the Auto-Dolly. The comprehensive nature of Auto-Sim modelling has drawn customers to use it as a planning tool for future extensions to terminals. The company was founded in 1993 and for many years has profitably operated in automotive engineering design and supply logistics. This expertise and internal funding enabled the original pivot towards autonomous vehicles. Share price momentum has been sustained by good, early progress with the Changi pilot project.

 

The one pre-IPO investment in the period was in Chorus Intelligence. This company has developed software which enables customers to collect and interpret data for intelligence purposes and court evidence. The platform can connect to any source, analyse the data, and then store and share it in an encrypted workspace. It has been successfully used to prosecute cases brought by the British Transport Police involving criminals running county lines for drugs. Chorus's first recurring revenues are with North Wales, an early adopting police force, but they are involved with demonstrations and trials in the rest of the UK market and are making a first tender proposal to Virginia Beach in the US. The UK has almost 50 forces, but this is dwarfed by the US where there are nearly 18,000 departments, agencies and sheriff counties. The majority of the VCT's investment is by way of loan notes which convert at a 25% discount to the eventual IPO or sale price.

 

In July, we completed a small follow-on investment, by way of a convertible loan note in Byotrol, the antimicrobial health product provider, to fund future growth and reach breakeven in the next 24 months. In August, we added nominally to our holding in Arecor Therapeutics. The company successfully completed a fundraise in connection with the all-share acquisition of Tetris Pharma, a specialty pharma with a focus on niche injectable and hospital products in the UK and EU. The acquisition gives Arecor access to an experienced team that can handle sales and marketing and supply chain for approved products. We added to our position mainly to mark up its qualifying value to the new share price. We were supportive of the acquisition but decided our weighting was sufficient.

 

In November we added to our investment in Intelligent Ultrasound, a provider of ultrasound classroom training simulators and AI enabled clinical ultrasound software. This was the final VCT eligible fund raise, and the proceeds will be used to strengthen the company's financial position and continue research and development. The classroom side of the business generated the majority of revenue in 2022. The remainder came from the AI division, which has developed two FDA approved AI ultrasound products. The company has a long-term licence and co-development agreement with GE Healthcare, the largest global manufacturer of ultrasound machines, and GE is rolling out one of the AI modules across its range. This first module automatically detects key scanning views and audits whether they meet standardised criteria. This will improve ultrasound speed, accuracy and quality.

 

In the same month we also participated in a placing for Northcoders, adding to our investment from the IPO. The company is a training provider to IT novices and junior software engineers. These are usually people changing careers, or looking to up-skill or re-skill if they are already in the industry. There continues to be an acute shortage of coders and developers in the UK. Funds were raised to invest in new courses due to strong demand from employers. Original training in Software Development and Data Engineering will now be extended into Cyber Security, QA & Software Testing, Dev Ops & Cloud, and Project Management. Each course is projected to be profitable ten months after launch.

 

As detailed above, holdings in Ideagen and Diurnal were exited as a result of takeovers during the period. Concerned by the threat of new entrants, eroding market share and strategic direction, the VCT also sold its holding in Tristel, a manufacturer of infection prevention products, where a return of 3.2x the average in-cost was achieved. Also exited were positions in Ilika, the solid state battery developer, where an investment return of 4x average in-cost was achieved, and Synairgen, the respiratory drug developer, which generated a return of 1.4x. A very small holding in LoopUp, the conference call software platform provider, was sold at an overall loss as it had become a low conviction investment following a change to its business model due to competitive pressure. During the period, profits were taken in Polarean, our largest holding at the time. The weighting was reduced slightly in the lead up to the FDA approval decision for Xenoview in December.

 

Outlook

The first two months of the new financial year have been turbulent for stock markets, which were rattled by the prospect of a banking crisis. With the failure of three US banks in March and the dramatic weekend rescue of Credit Suisse in Switzerland, there was considerable fear of contagion putting significant pressure on stock markets. However, the issues with Credit Suisse had been well known for a long time, and the US banks that failed did so due to runs on deposits rather than because of bad loans caused by systemic problems. The response of the Federal Reserve was to lend unlimited amounts against bonds being held to maturity at par value. This might best be called Quantitative Lending, injecting liquidity into banks without forcing them to dispose of bonds at a loss. This added around $320bn to the Federal Reserve's balance sheet in March.

 

The banking stress has slowed down the rate of interest rate rises, in the expectation that slower bank lending would provide its own brake to inflation. In the UK we had been expecting rates to peak at around 4.5%, and continue to do so. Monetary conditions have tightened greatly over the past year in both Europe and the US, and this is likely to cause inflation to fall sharply later this year.

 

Whilst we don't expect the banking crisis to escalate from here, we are acutely aware that Russia's unconscionable war of aggression against Ukraine continues to represent a grave threat to the West as a whole. This is accelerating a trend towards the formation of an axis of totalitarian states in opposition to the democratic nations of the world. China, the world's largest exporter by far, is the key agent in determining how destructive this becomes, being of much greater importance to the global economy than Russia. The interdependence between China and the West is too deep to uproot without great harm. A rise in China's aggression over Taiwan and its closer alignment with Russia remain the principal global risks.

 

Rapidly rising interest rates and tightening liquidity create a difficult backdrop for early-stage companies on AIM, and it has been a tough period for the portfolio. Investors are far less trusting of future potential in companies and therefore less willing to attribute value to this. The sectors most impacted by this are healthcare and energy transition focused companies, both areas in which technical innovation is crucial and to which we have exposure. However, we know from the experience of previous crises that the de-rating goes across the board to start with, that weaker companies may fall by the wayside, but that the companies with good foundations and effective propositions will be able to emerge stronger on the other side. We also know the importance of being able and willing to continue to invest through troubled periods, as often the best investments can be made at times like this. The strong cash balance that the VCT has, in part because of a relative dearth of new investment opportunities on AIM during 2022, very much puts us in this position.

 

Dr Paul Jourdan, David Stevenson, Anna Macdonald and Scott McKenzie

Amati Global Investors

17 April 2023

 

Investment Portfolio

as at 31 January 2023

 



Company name

 Original

Amati VCT bookcost at 4 May 2018#

£'000

Cost*

£'000

Aggregate

Cost**

£'000

Fair value

£'000

Fair value

movement

in year***

£'000

Market

Cap

£m

Industry Sector

Yield

NTM

%

%

of net

assets

Keywords Studios plc1

  323

  4,851

 

5,174

 

14,434

 

1,626

 

2,217.8

Information Technology

 

0.1%

 

7.2

TB Amati UK Listed Smaller Companies Fund

  3,331

  6,482

 

9,813

 

12,558

 

(3,053)

 

-

 

Financials

 

2.8%

 

6.2

Polarean Imaging plc1

  - 

  5,081

 

5,081

 

9,781

 

(4,402)

 

85.2

 

Health Care

 

-

 

4.9

Learning Technologies Group plc1,3

 

  780

 

  3,771

 

 

4,551

 

 

9,674

 

 

(1,856)

 

 

1,106.8

 

Information Technology

 

 

0.9%

 

 

4.8

AB Dynamics plc1

  209

  2,370

 

2,579

 

8,174

 

1,549

 

416.6

 

Industrials

 

0.3%

 

4.1

Ensilica plc1

 

-

 

2,450

 

2,450

 

4,753

 

2,303

 

73.0

Information Technology

 

-

 

2.4

MaxCyte Inc.1

  449

  1,536

 

1,985

 

4,713

 

160

 

483.4

 

Health Care

 

-

 

2.3

Water Intelligence plc2

 

 

180

 

 

1,038

 

 

1,218

 

 

4,643

 

 

(2,281)

 

 

110.8

 

 

Industrials

 

 

-

 

 

2.3

GB Group plc2, 3

 

  236

 

  2,967

 

 

3,203

 

 

3,978

 

 

(3,426)

 

 

891.0

 

Information Technology

 

 

1.2%

 

 

2.0

Aurrigo International plc1

 

 

-

 

 

2,085

 

 

2,085

 

 

3,475

 

 

1,390

 

 

33.3

 

 

Industrials

 

 

-

 

 

1.7

Top Ten

 

 

38,139

76,183

(7.990)

 

 


37.9











Amryt Pharma plc Ordinary shares & ADRs1

 

 

 

-

 

 

 

1,573

 

 

 

1,573

 

 

 

3,366

 

 

 

1,265

 

 

 

1,517.2

 

 

 

Health Care

 

 

 

-

 

 

 

1.7

Northcoders Group plc1

 

-

 

2,111

 

2,111

 

3,305

 

(40)

 

23.1

Consumer Discretionary

 

1.0%

 

1.6

Sosandar plc1

 

-

 

1,872

 

1,872

 

3,182

 

(62)

 

56.5

Consumer Discretionary

 

-

 

1.6

Craneware plc2,3

 

298

 

3,601

 

3,899

 

3,051

 

(1,139)

 

504.7

 

Health Care

 

1.7%

 

1.5

Frontier Developments plc1

 

 

341

 

 

4,357

 

 

4,698

 

 

3,017

 

 

(5,611)

 

 

190.8

 

Communication Services

 

 

-

 

 

1.5

Chorus Intelligence Limited Ordinary Shares1

 

 

 

 

-

 

 

 

 

301

 

 

 

 

301

 

 

 

 

150

 

 

 

 

(151)

 

 

 

 

-

 

 

 

Information Technology

 

 

 

 

-

 

 

 

 

0.1

Chorus Intelligence Limited 10% Convertible loan notes1,4

 

 

 

 

-

 

 

 

 

2,699

 

 

 

 

2,699

 

 

 

 

2,699

 

 

 

 

-

 

 

 

 

-

 

 

 

Information Technology

 

 

 

 

10.0%

 

 

 

 

1.3

Quixant plc2

419

3,777

4,196

2,841

157

108.4

Consumer Discretionary

 

1.7%

 

1.4

Solid State plc2

 

259

 

261

 

520

 

2,709

 

517

 

148.0

 

Industrials

 

1.6%

 

1.3

Saietta Group plc1,3

 

-

 

5,100

 

5,100

 

2,575

 

(8,690)

 

49.4

Consumer Discretionary

 

-

 

1.3

Velocys plc1

-

2,248

2,248

2,483

(956)

64.3

Energy

-

1.2











Top Twenty

 

 

67,356

105,561

(22,700)

 

 


52.4











Intelligent Ultrasound plc1

-

2,194

2,194

2,158

(871)

32.0

Health Care

-

1.1

Anpario plc2

276

1,553

1,829

2,154

(1,632)

79.2

Health Care

3.0%

1.1

Diaceutics plc1

-

1,557

1,557

2,151

(20)

88.7

Health Care

-

1.1

Eneraqua plc1

-

1,955

1,955

2,047

226

96.3

Industrials

0.4%

1.0

Brooks Macdonald Group plc2

-

1,154

1,154

1,974

(315)

356.3

Financials  

3.5%

1.0

 

Arecor Therapeutics plc1 

-

1,910

1,910

1,857

(1,096)

67.4

Health Care

-

0.9

Accesso Technology Group plc1,3

-

221

221

1,809

150

338.6

Information Technology

-

0.9

SRT Marine Systems plc1

709

465

1,174

1,771

39

83.5

Information Technology

-

0.9

Belvoir Group plc1 

404

379

783

1,449

(581)

67.9

Real Estate 

5.1%

0.7

Clean Power Hydrogen plc1

-

2,500

2,500

1,333

(1,167)

64.4

Industrials

-

0.7

Equals Group plc1 

-

1,137

1,137

1,264

134

154.2

Information Technology

-

0.6

Aptamer Group plc1

  -

3,676

3,676

1,194

(2,891)

26.2

Health Care

-

0.6

Ixico plc1 

-

1,367

1,367

1,123

(1,220)

11.1

Health Care

-

0.6

Getech Group plc1  

-

1,700

1,700

1,082

(1,190)

9.4

Energy

-

0.5

One Media iP Group plc1

-

1,240

1,240

1,063

(89)

13.3

Financials

-

0.5

Fusion Antibodies plc1

565

1,779

2,344

1,054

(1,100)

11.7

Health Care

-

0.5

Angle plc1

-

1,615

1,615

937

(2,681)

75.6

Health Care

-

0.5

Elexsys Energy Ordinary Shares1 

-

200

200

-

(200)

-

Information Technology

-

-

Elexsys Energy 8% Convertible loan notes1,4

-

1,800

1,800

900

(900)

-

Information Technology

-

0.4

Byotrol plc Ordinary Shares1 

511

348

859

500

(425)

9.1

Materials

0.0%

0.2

Byotrol plc 9% Convertible loan notes1,4

-

350

350

353

3

-

Materials

8.9%

0.2

Kinovo plc2

-

1,681

1,681

711

(151)

20.5

Industrials  

-

0.4

Property Franchise Group plc (The)2 

155

197

352

708

(218)

76.9

Real Estate 

5.6%

0.4

Velocity Composites plc1 

496

307

803

644

414

20.4

Industrials  

-

0.3

Flylogix Limited Ordinary Shares1 

-

300

300

-

(300)

-

Information Technology

-

-

Flylogix Limited 10% Convertible loan notes1,4

-

2,700

2,700

625

(2,075)

-

Information

Technology

-

0.3

Hardide plc1

695

1,666

2,361

588

(904)

7.7

Materials

-

0.3

Netcall plc2

-

110

110

581

153

152.0

Information Technology

0.9%

0.3

Block Energy plc1 

-

3,000

3,000

563

(26)

7.5

Energy

-

0.3

Rua Life Sciences plc1

-

955

955

461

24

12.9

Health Care

-

0.2

Verici Dx Limited1 

-

800

800

440

(1,360)

18.7

Health Care

-

0.2

Zenova Group plc 

-

750

750

414

(178)

9.8

Materials

-

0.2

Science in Sport plc2

811

1,145

1,956

390

(1,589)

22.4

Consumer Staples 

-

0.2

Strip Tinning Holdings plc1

-

1,054

1,054

342

(712)

9.3

Industrials

-

0.2

Eden Research plc1

-

401

401

334

(83)

19.0

Materials

-

0.2

Brighton Pier Group plc (The)1 

314

175

489

269

(68)

26.5

Consumer

Discretionary

-

0.1

Glantus Holdings plc1

-

3,000

3,000

265

(2,235)

3.4

Information Technology

-

0.1

Creo Medical Group plc1,3

-

1,613

1,613

252

(1,271)

35.4

Health Care

-

0.1

Rosslyn Data Technologies plc1 

614

1,308

1,922

247

(952)

2.4

Information Technology

-

0.1

Synectics plc2

-

342

342

171

48

22.2

Information Technology

2.3%

0.1

Falanx Cyber Security Limited1 

-

686

686

153

(180)

2.4

Industrials

-

0.1

Trellus Health plc1 

-

700

700

140

(507)

12.9

Health Care

-

0.1

MyCelx Technologies Corporation1

440

205

645

121

(174)

6.9

Industrials

-

0.1

In The Style Group plc1

-

1,447

1,447

56

(595)

4.0

Consumer Discretionary

-

-

FireAngel Safety Technology Group plc1

-

690

690

55

(36)

15.8

Consumer Discretionary

-

-

Bonhill Group plc1 

-

670

670

54

(29)

7.8

Communication Services

-

-

Merit Group plc1 

-

596

596

21

(10)

6.9

Communication Services

-

-

Allergy Therapeutics plc1 

-

29

29

15

(52)

37.4

Health Care

-

-

Investments held at nil value



691

-

-


-


-











Total investments

 

129,664

142,354

(51,592)

 

 

 

70.7

Net current assets

 

 

58,927

 

 

 

 

29.3

Net assets

 

129,664

201,281

 

 

 

 

100.0

 

1 Qualifying holdings.

2 Part qualifying holdings.

3 These investments are also held by other funds managed by Amati.

4 The investment in Flylogix Limited ("Flylogix") consists of 392 ordinary shares in Flylogix at fair value of nil and 10% convertible loan notes at fair value of £625,000. The interest for the 18 months from the date of issue on the convertible loan notes is waived if Flylogix is admitted to AIM within that 18-month period, subject to a minimum equity raise of £10m. The convertible loan notes are convertible into ordinary shares after listing. If Flylogix is not listed on AIM, interest is payable at 10% per annum for a term of 5 years. Flylogix had not listed at the Balance Sheet date and interest of £334,000 has not been accrued.

The investment in Elexsys Energy plc ("Elexsys") consists of 202,737 ordinary shares in Elexsys at fair value of nil and 8% convertible loan notes at fair value of £900,000. The interest for the 12 months from the date of issue on the convertible loan notes is waived if Elexsys is admitted to AIM, subject to a minimum equity raise of £5m. The convertible loan notes are convertible into ordinary shares after listing. If Elexsys is not listed on AIM, interest is payable at 8% per annum for a term of 5 years. Elexsys has not listed, interest due has been paid and the interest receivable of £48,000 to the Balance Sheet date has been accrued.

The investment in Chorus Intelligence Limited ("Chorus") consists of 232 ordinary shares in Chorus at fair value of £150,000 and 10% convertible loan notes at fair value of £2,699,000. The interest for the 18 months from the date of issue on the convertible loan notes is waived if Chorus is admitted to AIM within that 18-month period, subject to a minimum equity raise of £10m. The convertible loan notes are convertible into ordinary shares after listing. If Chorus is not listed on AIM, interest is payable at 10% per annum for a term of 5 years. The Board is of the opinion that Chorus will not list within the 18-month period and the interest receivable of £238,000 to the Balance Sheet date has been accrued.

The investment in Byotrol plc ("Byotrol") consists of 25,000,001 ordinary shares in Byotrol at fair value of £500,000 and 9% Convertible Loan Notes at fair value of £353,000. The convertible loan notes are convertible into ordinary shares at a conversion price of 3.25p. Interest is being received and the amount receivable of £2,800 to the Balance Sheet date has been accrued.

# This column shows the original book cost of the investments acquired from Amati VCT plc on 4 May 2018.

* This column shows the bookcost to the Company as a result of market trades and events.

** This column shows the aggregate book cost to the Company either as a result of trades and events or asset acquisition from Amati VCT plc on 4 May 2018.

*** This column shows the movement in fair value, the unrealised gains/(losses) on investments during the year, see notes 1 and 8 below for further details.

NTM Next twelve months consensus estimate (Source: Refinitiv)

The Manager rebates the management fee of 0.75% on the TB Amati UK Listed Smaller Companies Fund and this is included in the yield.

All holdings are in ordinary shares unless otherwise stated.

Investments held at nil value: Celoxica Holdings plc1, Leisurejobs.com Limited1 (previously The Sportweb.com Limited), Rated People Limited1, Sorbic International plc, TCOM Limited1, VITEC Global Limited1.

As at the year end the percentage of the Company's portfolio held in qualifying holdings for the purposes of Section 274 of the Income and Corporation Taxes Act is 100%.

 

Analysis as at 31 January 2023

 

Qualifying portfolio

The portfolio of qualifying investments in the Company as at 31 January 2023 is analysed in the graph which can be found on page 17 of the full Annual Report and Accounts, by date of initial investment and market capitalisation. The size of the circles represents the relative size of the holdings in the portfolio by value.

 

The top ten qualifying portfolio companies are labelled. The dates of investments in securities held solely by Amati VCT plc prior to the merger with Amati VCT 2 plc in May 2018, are given as the dates those securities were originally acquired by Amati VCT plc.

 

Sector split

The portfolio of investments in the Company as at 31 January 2023 is analysed in the graph by sector which can be found on page 17 of the full Annual Report and Accounts. This includes a sector split of the investments within the TB Amati UK Listed Smaller Companies Fund which in the Investment Portfolio table above is classed as Financials.

 

Investment Policy, Investment Objectives and Investment Strategy

 

Investment Objectives

The investment objectives of the Company are to generate tax free capital gains and regular dividend income for its shareholders while complying with the requirements of the rules and regulations applicable to Venture Capital Trusts ("VCTs").

 

Investment Policy

The Company's investment policy is to hold a diversified portfolio across a broad range of sectors to mitigate risk. It makes Qualifying Investments (as defined in the Income Tax Act 2007 (as amended)) primarily in companies traded on AIM or on the Aquis stock exchange ("Aquis") and non-Qualifying Investments as allowed by the VCT legislation. The Company manages its portfolio to comply with the requirements of the rules and regulations applicable to VCTs.

 

Investment Parameters

Whilst the investment policy is to make Qualifying Investments primarily in companies traded on AIM or Aquis, the Company may also make Qualifying Investments in companies likely to seek a quotation on AIM or Aquis. With regard to the non-Qualifying portfolio the Company makes investments which are permitted under the VCT legislation, including shares or units in an Alternative Investment Fund (AIF) or an Undertaking for Collective Investment in Transferable Securities (UCITS) fund, and shares in other companies which are listed on a regulated market such as the Main Market of the London Stock Exchange. Any investments by the Company in shares or securities of another company must not represent more than 15% of the Company's net asset value at the time of purchase.

 

Borrowing

The Company has the flexibility to borrow money up to an amount equal to its adjusted capital and reserves but the Board's policy is not to enter into borrowings.

 

Investment Strategy for Achieving Objectives

The investment strategy for achieving the Company Objectives which follows is not part of the formal Investment Policy. Any material amendment to the formal Investment Policy may only be made with shareholder consent, but that consent applies only to the formal Investment Policy above and not to any part of the Strategy for Achieving Objectives or Key Performance Indicators below.

 

(a)  Qualifying Investments Strategy

The Company is likely to be a long-term investor in most Qualifying Investments, with sales generally only being made where an investment case has deteriorated or been found to be flawed, or to realise profits, adjust portfolio weightings, fund new investments or pay dividends. Construction of the portfolio of Qualifying Investments is driven by the historic investments made by the Company and by the availability of suitable new investment opportunities. The Manager may co-invest in companies in which other funds managed by Amati Global Investors invest.

 

(b)  Non-Qualifying Investments Strategy

The assets of the portfolio which are not in Qualifying Investments will be invested by the Manager on behalf of the Company in investments which are allowable under the rules applicable to VCTs. Currently, cash not needed in the short term is invested in a combination of the following (though ensuring that no more than 15% of the Company's funds are invested in any one entity at the time of purchase):

 

(i)       the TB Amati UK Listed Smaller Companies Fund (which is a UCITS fund), or other UCITS funds approved by the Board;

(ii)  direct equity investments in small and mid-sized companies and debt securities in each case listed on the Main Market of the London Stock Exchange; and

(iii)  cash or cash equivalents (including money market funds) which are redeemable within 7 days.

 

Environmental, Social and Governance ("ESG") Policies

The Investment Manager recognises that managing investments on behalf of clients involves taking into account a wide set of responsibilities in addition to seeking to maximise financial returns for investors. Industry practice in this area has been evolving rapidly and Amati has been an active participant in seeking to define and strengthen its principles accordingly. This involves both integrating ESG considerations into the Investment Manager's investment decision-making process as a matter of course, and also signing up to major external bodies who are leading influencers in the formation of industry best practice. The following is an outline of the kinds of ESG factors that the Investment Manager will consider and question as part of its investment process, reflecting the specific inputs and outputs of a business.

 

· Environmental - climate change; use of natural resources; pollution; waste and impact on bio-diversity; and taking into account any positive environmental impacts.

· Social - use of human capital; potential product or service liabilities; stakeholder opposition; and taking into account any positive social considerations.

· Governance - ownership and control; management structure and quality; pay and alignment; accounting issues; business ethics; and tax transparency.

· Human rights - weighing up the risks of activities in countries with Freedom House Scores below 33 and based on Clean Trade principles; not investing in companies extracting natural resources in countries which score below 15; risk of exposure to corruption and unreliable legal frameworks; risk of benefiting from slave labour; risk from adverse political developments impacting a business negatively.

 

Board Diversity of Investee Companies

The Board, through the Manager, considers board diversity to be an important consideration in its investment decision on investee companies.

 

Key Performance Indicators

The Board expects the Manager to deliver a performance which meets the objectives of the Company. A review of the Company's performance during the financial year, the position of the Company at the year end and the outlook for the coming year is contained in the Chairman's Statement and Fund Manager's Review. The Board monitors on a regular basis a number of key performance indicators which are typical for VCTs, the main ones being:

 

· Compliance with HMRC VCT regulations to maintain the Company's VCT Status. See below;

· Net asset value and total return to shareholders (the aggregate of net asset value and cumulative dividends paid to shareholders, assuming dividends re-invested at ex-dividend date). See graphs on page 3 of the full Annual Report and Accounts ;

· Comparison against the Numis Alternative Markets Total Return Index. See graph on page 46 of the full Annual Report and Accounts ;

· Dividend distributions. See table of investor returns above;

· Share price. See key data above; and

· Ongoing charges ratio. See key data above.

 

Fund Management and Key Contracts

 

Management Agreement

Amati Global Investors was appointed as Manager to the Company on 19 March 2010. Under an Investment Management and Administration Agreement dated 19 March 2010, and subsequently revised and updated in two separate agreements, an Investment Management Deed ("IMA") and a Fund Administration, Secretarial Services and Fund Accounting Agreement ("FASSFAA"), on 30 September 2019, the Manager agreed to manage the investments and other assets of the Company on a discretionary basis subject to the overall policy of the Directors. The Company will pay to the Manager under the terms of the IMA a fee of 1.75% of the net asset value of the Company quarterly in arrears. In November 2014, with shareholder consent, the Company amended its non-qualifying investment policy to permit investment in the TB Amati UK Listed Smaller Companies Fund, a small and mid-cap fund managed by the Manager. The Company receives a full rebate on the fees payable by the Company to the Manager within this fund either through a reduction of fees payable by the Company or a direct payment by the Manager.

 

Annual running costs are capped at 3.5% of the Company's net assets, any excess being met by the Manager by way of a reduction in future management fees. The annual running costs include the Directors' and Manager's fees, professional fees and the costs incurred by the Company in the ordinary course of its business (but excluding any commissions paid by the Company in relation to any offers for subscription, irrecoverable VAT and exceptional costs, including winding-up costs). No performance fee is payable as the Manager waived all performance fees from 31 July 2014 onwards.

 

Administration Arrangements

Under the terms of the FASSFAA, the Investment Manager also agreed to provide certain fund administration, company secretarial and accounting services to the Company. As disclosed in last year's annual report, the Manager and Board agreed that a new Company Secretary would be sought and that the Board would contract directly with the new Company Secretary. The Board appointed Law Debenture as Company Secretary of the Company with effect from 1 February 2022.

 

Under the FASSFAA, the Investment Manager has the right to appoint suitable representatives to provide fund accounting and administration services to the Company. The Manager engages Link Alternative Fund Administrators Limited to act as fund accountant and administrator.

 

For the year ending 31 January 2023 the Company agreed to pay to the Investment Manager a fee of £72,000 quarterly in arrears in respect of the provision of fund accounting and administration services. This fee is subject to an annual increase in line with the consumer prices index. The appointment of the Investment Manager as investment manager and/or fund accountant and administrator may be terminated with twelve months' notice.

 

Where the Investment Manager negotiates and structures an investment directly with a company, most commonly as a convertible loan, the Investment Manager retains the right to charge the investee company a fee. Any legal expenses incurred by the Investment Manager will be paid out of this fee.

 

Fund Manager's Engagement

The Board regularly appraises the performance and effectiveness of the managerial, administration and secretarial arrangements of the Company. As part of this process, the Board will consider the arrangements for the provision of investment management and other services to the Company on an ongoing basis and a formal review is conducted annually. In the opinion of the Board, the continuing appointment of the Manager, on the terms agreed, is in the interests of the shareholders. The Directors are satisfied that the Manager will continue to manage the Company in a way which will enable the Company to achieve its objectives.

 

VCT Status Adviser

Philip Hare & Associates LLP ("Philip Hare & Associates") is engaged to advise the Company on compliance with VCT requirements. Philip Hare & Associates review new investment opportunities, as appropriate, and review regularly the investment portfolio of the Company. Philip Hare & Associates work closely with the Manager but report directly to the Board.

 

Principal and Emerging Risks

The Audit Committee regularly reviews the Company's risk register, which assesses each risk and classifies the likelihood of the risk and the potential impact of each risk on the Company. The Board considers that the Company faces the following major risks and uncertainties:

 

Potential Risk

Potential Impact

Mitigation

Investment Risk

A substantial portion of the Company's investments is in small AIM traded companies as well as some unquoted companies. By their nature these investments involve a higher degree of risk than investments in larger fully listed companies. These companies tend to have limited product lines and niche markets. They can be reliant on a few key individuals. They can be dependent on securing further financing. With the changes to VCT regulations introduced in

the Finance Act 2018 focusing investment in knowledge based companies, newer investments may well be made at an earlier stage in the lifecycle and may result in a reduced exposure to asset based businesses leading to increased volatility in the value of an investee company's shares. Further, the majority of the new investments will be in companies which have invested in developing and commercialising intellectual property, which brings with it the risk that another company might develop superior technology, or that the commercialisation  strategy may fail. In addition, the liquidity of these shares can be low and the share prices volatile.

 

To reduce the risk, the Board places reliance upon the skills and expertise of the Manager and its strong track record for investing in this segment of the market. Investments are actively and regularly monitored by the Manager and the Board receives detailed reports on the portfolio in addition to the Manager's report at regular Board meetings. The Manager also seeks to limit these risks through building a diversified portfolio with companies in different areas within sectors and markets at different stages of development.

 

Investments in unquoted companies in particular are subject to strict controls and investment limits in recognition of the significant risks involved. In relation to investments of this nature there is an expectation that the investee company is likely to seek admission to AIM, in order to de- risk the investment, to the extent that this is possible, within an acceptable time frame. It may be that an investment is realised via a trade sale as this option is always a possibility. The Manager ensures Board representation or monitoring is a requirement of the investment agreement and, if a listing or trade sale do not occur, will continue to oversee board and operational management performance.

 

Venture Capital Trust Approval Risk

The current approval as a venture capital trust allows investors to take advantage of income tax reliefs on initial investment and ongoing tax-free capital gains and dividend income. Failure to meet the qualifying requirements could result in investors losing the income tax relief on initial investment and loss of tax relief on any tax-free income or capital gains received. In addition, failure to meet the qualifying requirements could result in a loss of listing of the shares.

 

The current VCT legislation contains a "Sunset Clause" which effectively brings income tax relief to an end for new subscriptions after 5 April 2025. This was agreed in 2015 to secure ongoing EU approval to the VCT and EIS schemes, which have been a crucial source of funding for new and innovative businesses in the UK.

To reduce this risk, the Board has appointed the Manager which has significant experience in venture capital trust management and is used to operating within the requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed Philip Hare & Associates as VCT Status Adviser to the Company. Philip Hare & Associates reports every six months to the Board to confirm compliance with the venture capital legislation, to highlight areas of risk and to inform on changes in legislation independently.

 

Other tax reliefs such as tax-free dividends and exemption from capital gains tax would remain unaffected by the sunset clause. With the publication of the Windsor Framework on 27 February, removal of the Sunset Clause is now solely within the control of HM Treasury. As the Chancellor has previously set out an intention to continue the scheme, we currently await further clarity on the details.

 

Compliance Risk

The Company has a premium listing on the London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Financial Reporting Standards and other legislation. Failure to  comply with these regulations could result in a delisting of the Company's shares, or

other penalties under the Companies Acts or from financial reporting oversight bodies.

 

The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 ("AIFMD") is a directive  affecting the regulation of VCTs. Amati AIM VCT has been entered in the register of small, registered UK AIFMs on the Financial Services register at the Financial Conduct Authority ("FCA"). As a registered firm there are a number of regulatory obligations and reporting requirements which must be met in order to maintain its status as an AIFM.

 

Board members and the Manager have considerable experience of operating at senior levels within quoted businesses. In addition, the Board and the Manager receive regular updates on new regulations from the auditor, lawyers, the Company Secretary and other professional bodies.

Internal Control Risk

Failures in key controls within the Board or within the Manager's business could put assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders.

 

Inadequate or failed controls might result in breaches of regulations or loss of shareholder trust. The Manager operates a robust risk management system which is reviewed regularly to ensure the controls in place are effective in reducing or eliminating risks to the Company. Details of the Company's internal controls are on page 41 of the full Annual Report and Accounts .

 

The Board seeks to mitigate the internal control risk by setting policy, regular reviews of performance, enforcement of contractual obligations and monitoring progress and compliance.

 

Financial Risk

By its nature, as a venture capital trust, the Company is exposed to market price risk, credit risk, liquidity risk, interest rate risk and currency risk.

 

 

The Company's policies for managing these risks are outlined in full in notes 15 to 18 to the financial statements below. The Company is financed wholly through equity.

Economic Risk

Events such as economic recession, not only in the UK, but also in the core markets relevant to our investee companies, together with a movement in interest rates, can affect investor sentiment towards liquidity risk, and hence have a negative impact on the valuation of smaller companies. The economic future for the UK and the wider world would appear to be as uncertain as it has ever been in the last few decades. Actual war in Europe and the possibility of war in the East combine to give grave concern for the future. This follows two years of the Covid-19 pandemic and the ensuing impacts on the UK and global economies where government debt has not been as high as it is now since World War 2. Government actions to deal with Covid-19 and to boost the economy during the pandemic now result in rising inflation and therefore interest rates, the impacts on the cost of living being exacerbated by rising energy prices caused by poor Government energy policy decision-making in the rush to go green, reliance for energy supplies on countries with corrupt regimes and the  impact of the Russian invasion into Ukraine. The Covid-19 pandemic and the measures taken to control the outbreak had already led to volatility in stock markets and other financial markets in the UK and a downturn in the UK economy. The future development and long-term impacts of the outbreak are unknown. Despite a permanent trade agreement between the UK and EU and the end of the transition period on 31 December 2020 there remains uncertainty and potential volatility in markets and for the economy while practicalities are addressed.

 

The Manager seeks to mitigate economic risk by seeking to adopt a suitable investment style for the current point in the business cycle, and to diversify the exposure to geographic end markets.

 

Operational Risk

Failure of the Manager's, or other contracted third parties', accounting systems or disruption to their businesses might lead to an inability to provide accurate reporting and monitoring or loss to shareholders.

 

The Manager regularly reviews the performance of third-party suppliers at monthly management meetings and the Board consider at quarterly board meetings.

 

Concentration Risk

Although the Company has a diversified  portfolio of investments, the twenty largest investments account for just over half of the total investments. A material fall in any one investment can have a significant impact on the overall net asset value.

Portfolio weighting limits apply to the portfolio's largest holdings such that no holding is allowed to approach a size of 10% of the portfolio, with action normally taken well before that level particularly where the shares have become overbought with no underlying earnings justification.

 

Section 172 Statement

Directors' Duty to Promote the Success of the Company

 

This section sets out the Company's Section 172 Statement and should be read in conjunction with the other contents of the Strategic Report. The Directors have a duty to promote the success of the Company for the benefit of its members as a whole and in doing so to have regard to a number of matters including:

 

· the likely consequences of any decision in the long term;

· the interests of the Company's employees;

· the need to foster business relationships with suppliers, customers and others;

· the impact of the company's operations on the community and the environment;

· the desirability of the Company maintaining a reputation for high standards of business conduct; and

· the need to act fairly between members of the Company.

 

As an externally managed investment company, the Company does not have employees. Its main stakeholders therefore comprise the shareholders, the Investment Manager, other service providers and investee companies.

 

To ensure that the Directors are aware of, and understand, their duties they are provided with a tailored induction, including details of all relevant regulatory and legal duties as a Director of a UK public limited company when they first join the Board, and continue to receive regular and ongoing updates and training on relevant legislative and regulatory developments.

 

They also have continued access to the advice and services of the Company Secretary, and when deemed necessary, the Directors can seek independent professional advice. The Terms of Reference of the Board's committees are reviewed annually and describe the Directors' responsibilities and obligations and include any statutory and regulatory duties.

 

Stakeholder

Importance

Board Engagement

Shareholders

 

Continued shareholder support and engagement are critical to the continuing existence of the business and its future growth.

The Board places great importance on c ommunication with its shareholders and encourages shareholders to attend the AGM and an annual investor event and welcomes communication from shareholders as described more fully on  page 39 of the full Annual Report and Accounts.

Investment Manager

 

The Manager's performance is  fundamental for the Company to  successfully deliver its investment  strategy, meet its investment objective and its long-term success.

The Board's decisions are intended to achieve the Company's objective to  generate tax free capital gains and income on investors' funds and  maintaining the Company's status as a VCT is a critical element of this.

 

The Board regularly monitors the Company's performance in relation to its investment objectives and seeks to maintain a constructive working relationship with the Manager. Representatives of the Manager attend each quarterly board meeting and provide an update on the investment portfolio along with presenting on macroeconomic issues.  The Board also expects good standards at the companies within which the Company is invested and, as described below, the manager remains a signatory to the UK Stewardship Code, and the Principles for Responsible Investment.

Other service providers, including:

the registrar, the receiving agent, the tax adviser, the auditor, the lawyers, the Company Secretary and the Fund Accountant

 

In order to function as an investment trust with a premium listing on the London Stock Exchange, the Company engages a diverse and experienced range of advisors for support with meeting all relevant obligations.

 

The Board maintains regular contact with its key external service providers, and the quality of the provision of these services is considered by the Board at Board meetings, as well as being subject to a more formal annual review of both performance and fees by the Remuneration Committee.

Investee companies

 

The Company's performance is directly linked to the performance of its underlying investee companies and accordingly communication with those entities is regarded as very important.

The Manager does not have board representation in any quoted investee company but does interact with Directors and senior management of quoted investee companies regularly. The Manager does ensure direct or indirect representation is achieved on the boards of unquoted companies.

 

The Board's primary focus in promoting the long-term success of the Company for the benefit of the members as a whole is to direct the Company with a view to achieving the investment objective in a manner consistent with its stated investment policy and strategy.

 

Key decision making

The mechanisms for engaging with stakeholders are kept under review by the Directors and discussed at Board meetings to ensure they remain effective. The Board has policies for dividends, share buybacks and the dividend re-investment scheme, all of which it is considered are for the benefit of shareholders.

 

During the year the Directors discussed these and reaffirmed their commitment to the policies. Examples of the Board's principal decisions during the year, and how the Board fulfilled its duties under Section 172, are set out below:

 

Principal Decision

Long-term impact

Stakeholder Engagement

To cancel the Company's

share premium

The share premium cancellation improved the Company's distributable reserves position. An improved distributable reserves position will provide the Company with flexibility to support dividend payments or other distributions to shareholders and support Company share buybacks.

The Board considered the direction and future aims of the Company, and at the June 2022 AGM put forward a special resolution to Shareholders to cancel the entire amount standing to the credit of the Company's share premium account.

 

Following overwhelming shareholder support for the proposal (97.9%), the Company commenced Court proceedings to cancel the share premium and sought the consent of its creditors as part of due process.

Board appointments

Continuing to develop and evolve the Board, so that it contains an appropriate mix of skills, diversity and experience is important to promote the long-term success of the Company.

During the year, the Board was pleased to appoint Fiona Wollocombe as Chairman of the Board with effect from the end of the AGM held on 16 June 2022. Fiona's appointment ensured an orderly succession for the previous Chairman, Peter Lawrence, who retired from the Board at the end of the 2022 AGM.

 

In addition, the Board was pleased to appoint Julia Henderson as Chair of the Remuneration Committee. Julia's appointment followed the resignation of Susannah Nicklin as a non-executive Director of the Company. Julia remains Chair of the Nomination Committee.

 

The Nomination Committee and the Board considered the Board composition and agreed that the current composition of the Board (being three directors) was fit for the current requirements of the Company for the time being, however will continue to review evolving the Board in line with the current and future needs of the Company.

 

During the financial year, the Company held a General meeting in March 2022 relating to the allotment of new shares, which was disclosed as a key decision in the Annual Report and Financial Statements for the year ended 31 January 2022.

 

Environmental, Social and Governance ("ESG") Policies, and Responsible Ownership

The Company has no employees and no premises and the Board has decided that the direct impact of its activities is minimal; therefore it has no policies relating to social, community and human rights issues. However, the Board does consider the impact of its operations on the environment and during the year the Board made the decision to no longer pay all cash dividends via cheque and to no longer provide printed copies of the Company's Half-Yearly report in order to reduce the use of paper. The Company engaged with its shareholders on the matter.

 

The Company's indirect impact occurs through the range of organisations in which it invests and for this it follows a policy of Responsible Ownership.

 

In terms of external validation and support, Amati Global Investors, the Manager, is signatory to the UK Stewardship Code which aims to enhance the quality of engagement between investors and companies to help improve long-term risk adjusted returns to shareholders. Amati's approach to Stewardship and Shareholder Engagement can be found at https://www.amatiglobal.com/storage/644/Stewardship _and_Shareholder_Engagement-v2.pdf.

 

Amati is also a signatory to the UN-supported Principles for Responsible Investment (PRI), which works to support its international network of signatories in incorporating ESG factors into their investment and ownership decisions. The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole.

 

Voting on portfolio investments

In 2022, the Manager voted in respect of 62 Amati AIM VCT holdings at 70 company meetings on a range of ESG issues.

 

Business Conduct

The Board takes its responsibility to prevent bribery very seriously and has a zero-tolerance policy towards bribery. It has committed to carry out all business in an honest and ethical manner and to act professionally, fairly and with integrity in all its business dealings and relationships. The Manager has its own anti-bribery and corruption policy.

 

Global Greenhouse Gas Emissions

The Company is a low energy user and is therefore exempt from the reporting obligations under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 or the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the UK Government's policy on Streamlined Energy and Carbon Reporting. The Company has no greenhouse gas emissions or energy consumption to report from the operations of the Company, nor does it have responsibility for any other emission producing sources. Under listing rule 15.4.29(R), the Company, as a closed ended investment fund, is currently exempt from complying with the Task Force on Climate related Financial Disclosures.

 

Other Matters

VCT Regulations

The Company's investment policy is designed to ensure that it meets the requirements of HM Revenue & Customs to qualify and to maintain approval as a VCT:

 

(i)        The Company must, within three years of raising funds, maintain at least 80% of its investments by VCT value (cost, or the last price paid per share, if there is an addition to the holding) in shares or securities comprised in qualifying holdings (this percentage rose from 70% to 80% for accounting periods beginning on or after 6 April 2019 which for the Company was from 1 February 2020). At least 70% by VCT value must be ordinary shares which carry no preferential rights. A further condition requires that 30% of new funds raised in accounting periods beginning after 5 April 2018 are to be invested in qualifying holdings within 12 months of the accounting period following the issuance of shares;

(ii)  The Company may not invest more than 15% of its investments in a single company and it must have at least 10% by VCT value of its total investments in any qualifying company in qualifying shares approved by HM Revenue & Customs;

(iii)  To be classed as a VCT qualifying holding, companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million after investment; they must be carrying on a qualifying trade and satisfy a number of other tests including those outlined below; the investment must also be made for the purpose of promoting growth or development;

(iv)  VCTs may not invest new capital in a company which has raised in excess of £5 million (£10 million from 6 April 2018 if the company is deemed to be a Knowledge Intensive Company) from all sources of state-aided capital within the 12 months prior to and including the date of investment;

(v)  No investment may be made by a VCT in a company that causes that company to receive more than £12 million (£20 million if the company is deemed to be a Knowledge Intensive Company) of state-aid investment (including from VCTs) over the company's lifetime. A subsequent acquisition by the investee company of another company that has previously received State-Aid Risk Finance can cause the lifetime limit to be exceeded;

(vi)  No investment can be made by a VCT in a company whose first commercial sale was more than 7 years prior to date of investment, except where previous State-Aid Risk Finance was received by the company within 7 years (10 years in each case for a Knowledge Intensive Company) or where both a turnover test is satisfied and the money is being used to enter a new product or geographical market;

(vii)  No funds received from an investment into a company can be used to acquire another existing business or trade;

(viii)  Since 6 April 2016 a VCT must not make "nonqualifying" investments except for certain specified investments held for liquidity purposes and redeemable within seven days. These include investments in UCITS (Undertakings for Collective Investments in Transferable Securities) funds, AIF (Alternative Investment Funds) and in shares and securities purchased on a Regulated Market. In each of these cases the restrictions in (iii) - (vii) above are not applied; and

(ix)  Non-qualifying investments in AIM-quoted shares are not permitted as AIM is not a Regulated Market.

 

During 2018, HMRC stopped issuing pre-clearance letters for VCT investments. They are encouraging VCTs not to use the advance assurance service for investments and have stated that where a VCT has taken reasonable steps to ensure an investment is qualifying, the VCT status will not be withdrawn where an investment is ultimately found to be non-qualifying.

 

The Manager and the Board rely on advice from Philip Hare & Associates regarding the qualifying status of new investments. The Manager monitors compliance with VCT qualifying rules on a day-to-day basis through a combination of automated and manual compliance checks in place within the business. Philip Hare & Associates also review the portfolio bi-annually to ensure the Manager has complied with regulations and has reported to the Board that the VCT has met the necessary requirements during the year.

 

PRIIPs Regulations

The Company is required to publish a Key Information Document (KID), which sets out the key features, risks, potential future performance and costs of PRIIPs (Packaged Retail and Insurance-based Investment Products). This document is available at the website of Amati Global Investors: www.amatiglobal.com.

 

Statement on Long-term Viability

In accordance with the UK Corporate Governance Code published in July 2018 (the "Code"), the Directors have carried out a robust assessment of the prospects of the Company for the period to January 2028, taking into account the Company's performance and emerging and principal risks, and are of the opinion that, at the time of approving the financial statements there is a reasonable expectation that the Company will be able to continue in operation and meet liabilities as they fall due over that period.

 

To come to this conclusion the Manager prepares and the Directors consider an income statement and cash flow forecast for the next five years, which is considered to be an appropriate time period due to its consistency with the UK Government's tax relief minimum holding period for an investment in a VCT. This time frame allows for forecasts to be made to allow the Board to provide shareholders with reasonable assurance over the viability of the Company. In making their assessment the Directors have taken into account the nature of the Company's business and Investment Policy, its risk management policies, the diversification of its portfolio, the cash holdings and the liquidity of non-qualifying investments.

 

The Directors have considered in particular the likely economic effects and the impacts on the Company's operations of the war taking place in Ukraine, rising inflation and interest rates.

 

The longer-term economic outlook is very difficult to predict but in considering preparing the long term viability of the Company the Directors noted the Company holds a portfolio of liquid investments and cash balances whose value is a multiple of liabilities.

 

Other Disclosures

The Company had no employees during the year and has three non-executive directors, two of whom are female and one is male.

 

On behalf of the Board

 

Fiona Wollocombe

Chairman

 

17 April 2023

 

Extracts from the Directors' Remuneration Report

 

Directors' fees for the year (Audited)

The fees payable to individual Directors in respect of the year ended 31 January 2023 are shown in the table below.

 


Year ended 31 January 2023

(audited)


Fees

 

Taxable benefits

 

Total

 

Total Fixed remuneration

 

Total variable remuneration


£

£

£

£

£

Peter Lawrence*

10,130

531

10,661

10,130

-

Julia Henderson

24,500

303

24,803

24,500

-

Susannah Nicklin**

15,333

363

15,696

15,333

-

Brian Scouler

26,000

-

26,000

26,000

-

Fiona Wollocombe

27,019

-

27,019

27,019

-


102,982

1,197

104,179

102,982

-

† Reimbursement of travel expenses

* retired at the end of the AGM on 16 June 2022

** resigned on 19 September 2022

 


Year ended 31 January 2022

(audited)


Fees

 

Taxable benefits

 

Total

 

Total Fixed remuneration

 

Total variable remuneration


£

£

£

£

£

Peter Lawrence

25,378

-

25,378

25,378

-

Julia Henderson

22,905

-

22,905

22,905

-

Susannah Nicklin

22,905

-

22,905

22,905

-

Brian Scouler

22,905

-

22,905

22,905

-

Fiona Wollocombe*

14,744

-

14,744

14,744

-


108,837

-

108,837

108,837

-

* appointed on 10 June 2021

 

Directors are remunerated exclusively by fixed fees and do not receive bonuses, share options, long-term incentives, pension or other benefits. There have been no payments to past Directors during the financial year ended 31 January 2023, whether for loss of office or otherwise.

 

Directors' shareholdings (Audited)

The Directors who held office at 31 January 2023 and their interests in the shares of the Company (including beneficial and family interests) were:

 


31 January 2023

31 January 2022


Shares held

% of issued

share capital

Shares held

% of issued

share capital

Peter Lawrence*

N/A

N/A

941,660

0.69

Julia Henderson

22,376

0.01

19,360

0.01

Susannah Nicklin**

N/A

N/A

25,777

0.02

Brian Scouler

63,806

0.04

60,381

0.04

Fiona Wollocombe

19,763

0.01

13,755

0.01

*retired at the 2022 AGM on 16 June 2022

** resigned on 19 September 2022

 

The Company confirms that it has not set out any formal requirements or guidelines for a Director to own shares in the Company.

 

 

On behalf of the Board

 

Julia Henderson

Chairman of the Remuneration Committee

 

17 April 2023

 

 Statement of Directors' Responsibilities

 

The Directors are responsible for preparing the annual report and the financial statements in accordance with UK Financial Reporting Standards and applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the company's financial statements and have elected to prepare the company financial statements in accordance with UK Financial Reporting Standards. 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 Financial Reporting Standards, subject to any material departures disclosed and explained in the financial statements;

 

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business;

 

· prepare a directors' report, a strategic report and directors' remuneration report which comply with the requirements of the Companies Act 2006.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. 

 

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provide the information necessary for shareholders to assess the group's performance, business model and strategy.

 

Website Publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

 

Directors' responsibilities pursuant to DTR4

 

The Directors confirm to the best of their knowledge:

 

· The financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit 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.

 

On behalf of the Board

 

 

Fiona Wollocombe

Chairman

 

17 April 2023

 

Income Statement

for the year ended 31 January 2023

 


Note

2023

Revenue

£'000

2023

Capital

£'000

2023

Total

£'000

2022

Revenue

£'000

2022

Capital

£'000

2022

Total

£'000

Loss on investments

8

-

(55,748)

(55,748)

-

(18,123)

(18,123)

Investment Income

2

1,810

-

1,810

701

-

701

Management fee

3

(930)

(2,788)

(3,718)

(1,115)

(3,345)

(4,460)

Other expenses

4

(588)

-

(588)

(514)

-

(514)

Profit/(loss) on ordinary activities before taxation


292

(58,536)

(58,244)

(928)

(21,468)

(22,396)

Taxation on ordinary activities

5

-

-

-

-

-

-

Profit/(loss)and total

comprehensive income attributable to shareholders


292

(58,536)

(58,244)

(928)

(21,468)

(22,396)

Basic and diluted earnings/(loss) per ordinary share

7

0.19p

(38.99)p

(38.80)p

(0.73)p

(16.93)p

(17.66)p

 

The total column of this Income Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with The Association of Investment Companies' Statement of Recommended Practice ('AIC SORP'). There is no other comprehensive income other than the results for the year discussed above. Accordingly a Statement of Total Comprehensive Income is not required.

 

All the items above derive from continuing operations of the Company.

 

The notes below form part of these financial statements.

 

Statement of Changes in Equity

for the year ended 31 January 2023

 


Non-distributable reserves

Distributable reserves


Share

capital

£'000

Share

premium

£'000

Merger

reserve

£'000

Capital

redemption

reserve

£'000

Capital

reserve

(non-

distributable)

£'000

Special

reserve

£'000

Capital

reserve

(distributable)

£'000

Revenue

reserve

£'000

Total

reserves

£'000

Opening balance as at 1 February 2022

6,836 

109,545

425

819

80,666

57,160

(6,104)

(2,273)

247,074

(Loss)/profit and total comprehensive income for the year

-

-

-

-

(67,748)

-

9,212

292

(58,244)

Total comprehensive income

for the period

6,836

109,545

425

819

12,918

57,160

3,108

(1,981)

188,830

Contributions by and distributions to shareholders:

Repurchase of shares

(89)

-

-

89

-

(2,451) 

-

-

(2,451)

Shares issued

831

26,351

-

-

-

-

-

-

27,182

Costs of share issues

-

(132)

-

-

-

-

-

-

(132)

Dividends paid

-

-

-

-

-

(12,110)

-

-

(12,110)

Cancellation of share premium*

-

(134,824)

-

-

-

134,824

-

-

-

Expenses in relation to cancellation

of share premium account

-

-

-

-

-

(38)

-

-

(38)


742

(108,605)

-

89

-

120,225

-

-

12,451

Closing balance as at 31 January 2023

7,578

940

425

908

12,918

177,385

3,108

(1,981)

201,281

*Following Court approval and the subsequent registration of the Court order with the Registrar of Companies on 14 September 2022, the cancellation of the Company's share premium account became effective and an amount of £134,824,000 was transferred from the Share Premium account to the Special Reserve. The Special Reserve is available for distribution as determined in accordance with the Companies Act 2006 and HMRC rules specific to venture capital trusts.

 

for the year ended 31 January 2022

 






Opening balance as at 1 February 2021

5,780

61,635

425

731

107,450

75,023

(11,420)

(1,345)

238,279

(Loss)/profit and total comprehensive income for the year

-

-

-

-

(26,784)

-

5,316

(928)

(22,396)

Contributions by and distributions to shareholders:

Repurchase of shares

(88)

-

-

88

-

(3,431)

-

-

(3,431)

Shares issued

1,144

48,216

-

-

-

-

-

-

49,360

Costs of share issues

-

(306)

-

-

-

-

-

-

(306)

Dividends paid

-

-

-

-

-

(14,432)

-

-

(14,432)

Total contributions by and distributions to shareholders

1,056

47,910

-

88

-

(17,863)

-

-

31,191

Closing balance as at 31 January 2022

6,836

109,545

425

819

80,666

57,160

(6,104)

(2,273)

247,074

 

The accompanying notes below are an integral part of these financial statements.

 

Balance Sheet

as at 31 January 2023


Note

2023

£'000

2022

£'000

Fixed assets


 


Investments held at fair value

8

142,354

214,737



 


Current assets


 


Debtors

9

329

1,972

Cash at bank


59,595

31,833



59,924

33,805



 


Current liabilities


 


Creditors: amounts falling due within one year

10

(997)

(1,468)



(997)

(1,468)



 


Net current assets


58,927

32,337

Total assets less current liabilities


201,281

247,074



 


Capital and reserves


 


Called-up share capital*

11

7,578

6,836

Share premium account*


940

109,545

Merger reserve*


425

425

Capital redemption reserve*


908

819

Capital reserve (non-distributable)*


12,918

80,666

Special reserve


177,385

57,160

Capital reserve (distributable)


3,108

(6,104)

Revenue reserve


(1,981)

(2,273)



 


Equity shareholders' funds


201,281

247,074



 


Net asset value per share

12

132.8p

180.7p

 

* These reserves are not distributable.

 

The financial statements above and below were approved and authorised for issue by the Board of Directors on 17 April 2023 and were signed on its behalf by

 

Fiona Wollocombe

Chairman

 

Company Number 04138683

 

The accompanying notes below are an integral part of these financial statements.

 

Statement of Cash Flows

for the year ended 31 January 2023

 



2023

2022



£'000

£'000

Cash flows from operating activities




Investment income received


1,299

626

Investment management fees paid


(3,910)

(4,427)

Other operating costs


(572)

(485)

Net cash outflow from operating activities


(3,183)

(4,286)





Cash flows from investing activities




Purchases of investments


(12,422)

(32,872)

Sale of investments


31,166

13,596

Net cash inflow/(outflow) from investing activities


18,744

(19,276)

Net cash inflow/(outflow) before financing


15,561

(23,562)





Cash flows from financing activities




Proceeds of share issues*


24,931

46,748

Issue costs


(132)

(306)

Share buy-backs


(2,701)

(4,194)

Equity dividends paid


(9,859)

(11,820)

Expenses in relation to cancellation of share premium account


(38)

-

Net cash inflow from financing activities


12,201

30,428



 


Increase in cash


27,762

6,866





Opening cash & cash equivalents


31,833

24,967





Closing cash & cash equivalents

 

59,595

31,833





Reconciliation of Loss on Ordinary Activities Before Taxation to Net Cash Outflow from Operating Activities




Loss on ordinary activities before taxation


(58,244)

(22,396)

Loss on investments


55,748

18,123

Less dividends reinvested


(223)

(71)

(Decrease)/increase in creditors


(188)

64

Increase in debtors


(276)

(6)





Net cash outflow from operating activities


(3,183)

(4,286)

 

*Adjusted to exclude non-cash dividends re-invested under the Dividend Re-investment Scheme.

 

The accompanying notes below are an integral part of these financial statements.

 

Notes to the Financial Statements

 

1  Accounting Policies

 

Basis of Accounting

The financial statements have been prepared under FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and in accordance with the AIC SORP.

 

Basis of Preparation

The functional currency of the Company is Pounds Sterling because this is the currency of the primary economic environment in which the Company operates. The financial statements are presented in Pounds Sterling rounded to the nearest thousand, except where otherwise indicated.

 

Going Concern

The financial statements have been prepared on a going concern basis and on the basis that the Company maintains its VCT Status.

 

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of 12 months from the date these financial statements were approved.

 

In making this assessment, the Directors have considered in particular the likely economic effects and the impacts of the war taking place in Ukraine, rising inflation and interest rates on the Company, operations and investment portfolio.

 

The Directors noted that the Company, with the current cash balance and holding a portfolio of liquid listed investments, is able to meet the obligations of the Company as they fall due. The cash available enables the Company to meet any funding requirements and finance future additional investments. The Company is a closed-end fund, where assets are not required to be liquidated to meet day-to-day redemptions.

 

The Board has reviewed stress testing and scenario analysis prepared by the Investment Manager to assist it in assessing the impact of changes in market value and income with associated cash flows. In making this assessment, the Investment Manager has considered plausible downside scenarios. These tests included the modelling of a reduction in income of 50%, increase in costs of 50% and a reduction in net asset value of 50%, any or all of which could apply to any set of circumstances in which asset value and income are significantly impaired. It was concluded that in a plausible downside scenario, the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company's ability to continue as a going concern.

 

The Directors, the Investment Manager and the Company's other service providers have put in place contingency plans to minimise disruption. The Board was satisfied that there has been minimal impact to the services provided during the year and is confident that this will continue. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

 

Segmental Reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in companies listed in the UK.

 

Judgements and Key Sources of Estimation Uncertainty

The preparation of the Financial Statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities and the allocation of income and expenses that are not apparent from other sources. The nature of estimation means that the actual outcomes could differ from those estimates, possibly significantly.

 

The most critical estimates and judgments relate to the determination of carrying value of unquoted investments at fair value through profit or loss. The policies for these are set out in the notes to the financial statements below. The Company values unquoted investments by following the International Private Equity Venture Capital Valuation ("IPEV") guidelines. Further areas requiring judgement and estimation are recognising and classifying unusual or special dividends received as either capital or revenue in nature. The estimates and underlying assumptions are reviewed on an ongoing basis. There are no further significant judgements or estimates in these financial statements.

 

Income

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis except where, in the opinion of the Directors, their nature indicates they should be recognised in the Capital Account. Where no ex-dividend date is quoted, dividends are brought into account when the Company's right to receive payment is established.

 

Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis, provided there is no reasonable doubt that payment will be received in due course.

 

Interest receivable is included in the accounts on an accruals basis. Where interest is rolled up or payable on redemption it is recognised as income unless there is reasonable doubt as to its receipt.

 

All other income is accounted for on a time-apportioned accrual basis and is recognised in the Income Statement.

 

Expenses

All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the income statement, all expenses have been prescribed as revenue items except as follows:

 

Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated, and accordingly the investment management fee is currently allocated 25% to revenue and 75% to capital, which reflects the Directors' expected long-term view of the nature of the investment returns of the Company.

 

Issue costs in respect of ordinary shares issued by the Company are deducted from the share premium account.

 

Taxation

Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. Deferred tax assets are only recognised when they arise from timing differences where recovery in the foreseeable future is regarded as more likely than not. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Deferred tax is not discounted.

 

Current tax is expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. The tax effect of different items of expenditure is allocated between revenue and capital on the same basis as a particular item to which it relates, using the Company's effective rate of tax, as applied to those items allocated to revenue, for the accounting year.

 

No tax liability arises on gains from sales of fixed asset investments by the Company by virtue of its VCT status.

 

Investments

In accordance with FRS 102, Sections 11 and 12, all investments held by the Company are designated as held at fair value upon initial recognition and are measured at fair value through profit or loss in subsequent accounting periods. Investments are initially recognised at cost, being the fair value of the consideration given. After initial recognition, investments are measured at fair value, with changes in the fair value of investments recognised in the Income Statement and allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost. Also included within this heading are transaction costs in relation to the purchase or sale of investments.

 

In respect of investments that are traded on AIM or are fully listed, these are valued at bid prices at close of business on the Balance Sheet date. Investments traded on SETS (London Stock Exchange's electronic trading service) are valued at the last traded price as this is considered to be a more accurate indication of fair value.

 

Fair values for unquoted investments, or for investments for which the market is inactive, are established by using various valuation techniques in accordance with IPEV guidelines. These are constantly monitored for value and impairment. The values and impairment, if any, are approved by the Board. The shares may be valued by using the most appropriate methodology recommended by the IPEV guidelines, including revenue multiples, net assets, discounted cashflows and industry valuation benchmarks.

 

Convertible loan stock instruments are valued using present value of future payments discounted at a market value of interest for a similar loan and valuing the option at fair value.

 

Contingent Value Rights (CVRs) pay out if certain hurdles are achieved and are valued at the amount payable per share on achievement of those hurdles, discounted for certain probabilities and the time to the value date to reflect the illiquidity of the holdings, and further discounted for payment, if it becomes due, being made either in the form of loan notes or shares issue at market value.

 

The valuation of the Company's investment in TB Amati UK Listed Smaller Companies Fund is based on the published share price. The valuation is provided by the Authorised Corporate Director of the fund, T Bailey Fund Managers Limited.

 

Financial Instruments

The Company classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Company becomes a party to the contractual provisions of the instrument. All financial instruments are designated upon initial recognition as held at fair value through profit or loss, and are measured at subsequent reporting dates at fair value, with changes in the fair value recognised in the Income Statement and allocated to capital.

 

Financial instruments are derecognised on the trade date when the Company is no longer a party to the contractual provisions of the instrument.

 

Cash and Cash Equivalents

For the purposes of the Balance Sheet, cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments and money market funds that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value.

 

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts when applicable.

 

Foreign Currency

Foreign currency assets and liabilities are translated into sterling at the exchange rates ruling at the balance sheet date. Transactions during the year are converted into sterling at the rates ruling at the time the transactions are executed. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is of a capital or revenue nature.

 

Short-term Debtors and Creditors

Debtors and creditors with no stated interest rate and receivable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement in other operating expenses upon notification.

 

Dividends Payable

Final dividends are included in the financial statements when they are approved by shareholders. Interim dividends payable are included in the financial statements on the date on which they are paid.

 

Share Premium

The share premium account is a non-distributable reserve which represents the accumulated premium paid on the issue of shares in previous periods over the nominal value, net of any expenses.

 

Merger Reserve

The merger reserve is a non-distributable reserve which originally represented the share premium on shares issued when the Company merged with Singer & Friedlander AIM VCT and Singer & Friedlander AIM 2 VCT in February 2006. The merger reserve is released to the realised capital reserve as the assets acquired as a consequence of the merger are subsequently disposed of or permanently impaired. There have been no disposals of these assets during the year.

 

Capital Redemption Reserve

The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares.

 

Special Reserve

The special reserve was created by the cancellation of the share premium account by order of the Court and forms part of the distributable reserves. Distributions may be restricted as determined in accordance with the Companies Act 2006 and HMRC rules specific to venture capital trusts. The following items are taken to this reserve:

• costs of share buybacks; and

• dividends payable to shareholders.

 

Capital Reserve

The following are taken to the capital reserve through the capital column in the Income Statement:

 

Capital reserve - other, forming part of the distributable reserves:

· gains and losses on the disposal of investments;

· realised exchange gains and losses of a capital nature; and

· expenses allocated to this reserve in accordance with the above policies.

 

Capital reserve - investment holding gains, not distributable:

· increase and decrease in the value of investments held at the year end; and

· unrealised exchange gains of a capital nature.

 

Revenue Reserve

The revenue reserve represents accumulated profits and losses and any surplus profit is distributable by way of dividends.

 

2   Income


Year to

31 January

2023

£'000

Year to

31 January

2022

£'000

Dividends from UK companies

843

701

UK loan stock interest

447

-

Interest from deposits

519

-

Other income

1

-


1,810

701

 

3  Management Fees

The Manager provides investment management and fund accounting and administration services to the Company under an Investment Management Agreement ("IMA") and a Fund Administration, Secretarial and Fund Accounting Agreement ("FASSFAA"). Details of these agreements are given above.

 

Under the IMA the Manager receives an investment management fee of 1.75% of the net asset value of the Company quarterly in arrears.

 

The Company received a rebate of its management fee for the investment in the TB Amati UK Listed Smaller Companies Fund.

 

The investment management fee for the year was as follows:


Year to

31 January

2023

£'000

Year to

31 January

2022

£'000

Due to the Manager by the Company at 1 February

1,049

1,016

Investment management fee charged to revenue and capital for the year

3,718

4,460

Fees paid to the Manager during the year

(3,910)

(4,427)

Due to the Manager by the Company at 31 January

1,049

 

In addition to the investment management fee the Manager also received a fund accounting and administration fee of £72,000 (2022: £96,000) paid quarterly in arrears. See note 4.

 

No performance fee is payable in respect of the year ended 31 January 2023, as the Manager has waived all performance fees from 31 July 2014 onwards.

 

Annual running costs are capped at 3.5% of the Company's net assets. If the annual running costs of the Company in any year are greater than 3.5% of the Company's net assets, the excess is met by the Manager by way of a reduction in future management fees. The annual running costs include the Directors' and Manager's fees, professional fees and the costs incurred by the Company in the ordinary course of its business (but excluding any commissions paid by the Company in relation to any offers for subscription, any performance fee payable to the Manager, irrecoverable VAT and exceptional costs, including winding-up costs).

 

4  Other Expenses


Year to

31 January

2023

£'000

Year to

31 January

2022

£'000

Directors' remuneration

103

109

Directors' employer's national insurance

9

4

Directors' expenses

2

2

Auditor's remuneration - audit of statutory financial statements

45

35

Administration fee

71

94

Company secretarial services

48

-

Other expenses

310

270


  588

514

 

The Company has no employees. The Directors are therefore the only key management personnel.

 

Details of Directors' remuneration are provided in the audited section of the directors' remuneration report on page 44 of the full Annual Report and Accounts.

 

5  Tax on Ordinary Activities

5a  Analysis of charge for the year


Year to

31 January

2023

£'000

Year to

31 January

2022

£'000

Charge for the year

-

-

 

5b  Factors affecting the tax charge for the year


Year to

31 January

2023

£'000

Year to

31 January

2022

£'000

Loss on ordinary activities before taxation

(58,244)

(22,396)

Corporation tax at standard rate of 19.00% (2022: 19.00%)

(11,066)

(4,255)

Effect of:

 


Non-taxable dividends

(160)

(133)

Non-taxable losses on investments

10,592

3,443

Movement in excess management expenses

634

945

Tax charge for the year (note 5a)

-

-

 

Due to the Company's tax status as an approved Venture Capital Trust, deferred tax has not been provided on any capital gains arising on the disposal or valuation of investments as such gains are not taxable. We remain of the view that the provisions of CTA 2009 sections 396 and 641 apply to treat any gains/losses on loan instruments as taxable under the chargeable gains provisions in TCGA 1992 and further exempt the VCT from tax under the provisions in s100.

 

No deferred tax asset has been recognised on surplus management expenses carried forward as it is not envisaged that future taxable profits will be available against which the Company can use the benefits. The amount of unrecognised deferred tax asset is £6,827,000 (31 January 2022: £5,992,000) based on a corporate tax rate of 25% substantively enacted at the balance sheet dates and due to come into effect on 1 April 2023.

 

6  Dividends

Amounts recognised as distributions to equity holders during the year:

 


2023

Revenue

£'000

2023

Capital

£'000

2022

Revenue

£'000

2022

Capital

£'000

Final dividend for the year ended 31 January 2022 of 4.50p per ordinary share paid on 22 July 2022

-

6,803

-

-

Interim dividend for the year ended 31 January 2023 of 3.50p per ordinary share paid on 25 November 2022

-

5,307

-

-

Final dividend for the year ended 31 January 2021 of 7.00p per ordinary share paid on 23 July 2021

-

-

-

8,278

Interim dividend for the year ended 31 January 2022 of 4.50p per ordinary share paid on 26 November 2021

-

-

-

6,154


-

12,110

-

14,432

 

Set out below are the interim and final dividends paid or proposed on ordinary shares in respect of the financial year:

 


2023

Revenue

£'000

2023

Capital

£'000

2022

Revenue

£'000

2022

Capital

£'000

Interim dividend for the year ended 31 January 2023 of 3.50p per ordinary share (2022: 4.50p)

-

5,307

-

6,154

Declared final dividend for the year ended 31 January 2023 of 3.50p per ordinary share (2022: 4.50p)*

-

5,287

-

6,698


-

10,594

-

12,852

 

* Based on shares in issue on 17 April 2023. The payment of a final dividend will, as always, be subject to ensuring that the Company has sufficient distributable reserves at the time

 

 

7   Earnings per Share


2023

2022


Net profit/ (loss)

£'000

Weighted

average

shares

Basic and

diluted

Earnings

per share

pence

Net profit/ (loss)

£'000

Weighted

average

shares

Basic and

diluted

Earnings

per share

pence

Revenue

292

 

0.19p

(928)


(0.73)p

Capital

(58,536)

 

(38.99)p

(21,468)


(16.93)p

Total

(58,244)

150,110,568

(38.80)p

(22,396)

126,840,235

(17.66)p

 

 

8  Investments


Level 1*

Level 2*

Level 3*

Total


£'000

£'000

£'000

£'000

Opening cost as at 1 February 2022

128,607

-

6,955

135,562

Opening investment holding gains

80,646

-

20

80,666

Opening unrealised loss recognised in realised reserve

(228)

-

(1,263)

(1,491)

Opening fair value as at 1 February 2022

209,025

-

5,712

214,737

Analysis of transactions during the year:





Reclassification in the year

(67)

-

67

-

Purchases at cost

9,262


3,350

12,612

Disposals- proceeds received

(29,128)

-

(119)

(29,247)

- realised loss on disposals

(3,564)

-

(592)

(4,156)

- unrealised losses during the year

(47,917)

-

(3,675)

(51,592)

Closing fair value as at 31 January 2023

137,611

-

4,743

142,354

Closing cost as at 31 January 2023

120,593

-

9,071

129,664

Closing investment holding gains/(losses) as at 31 January 2023

17,246

-

(4,328)

12,918

Closing unrealised loss recognised in realised reserve as at 31 January 2023

(228)

-

-

(228)

Closing fair value as at 31 January 2023

137,611

-

4,743

142,354

Equity shares

137,611

-

166

137,777

CVRs

-

-

-

-

Convertible loan notes

-

-

4,577

4,577

Closing fair value as at 31 January 2023

137,611

-

4,743

142,354

 

Holdings of ordinary shares in unquoted companies rank pari passu for voting purposes. Preference shares and CVRs have no voting rights.

 

The Company received £29,247,000 (2022: £15,515,000) from the sale of investments in the year. The book cost of these investments when they were purchased was £18,509,000 (2022: £6,855,000). These investments have been revalued over time and until they were sold any unrealised gains/(losses) were included in the fair value of the investments.

 


2023

£'000

2022

£'000

Realised (losses)/gains on disposal

(4,156)

65

Unrealised losses on investments during the year

(51,592)

(18,188)

Net losses on investments

(55,748)

(18,123)

 

Transaction Costs

During the year the Company incurred transaction costs of £nil (31 January 2022: £44,000) and £14,000 (31 January 2022: £8,000) on purchases and sales of investments respectively. These amounts are included in the gain on investments as disclosed in the income statement.

 

9  Debtors


2023

£'000

2022

£'000

Receivable for investments sold

-

1,919

Prepayments and accrued income

329

53


329

1,972

 

10   Creditors: Amounts Falling due within One Year


2023

£'000

2022

£'000

Payable for share buybacks

-

249

Payable for investments bought

-

34

Other creditors

997

1,185


997

1,468

 

11   Called Up Share Capital


2023

2023

2022

2022

Ordinary shares (5p shares)

Number

£'000*

Number

£'000*

Allotted, issued and fully paid at 1 February

136,720,797

6,836

115,589,550

5,780

Issued during the year

16,617,329

831

22,880,426

1,144

Repurchase of own shares for cancellation

(1,789,133)

(89)

(1,749,179)

(88)

At 31 January

151,548,993

7,578

136,720,797

6,836

* nominal value

 

During the year a total of 1,789,133 ordinary shares of 5p each were purchased by the Company at an average price of 136p per share.

 

Further details of the Company's share capital and associated rights are shown in the Directors' Report on page 33 of the full Annual Report and Accounts.

 

12  Net Asset Value per Ordinary Share


2023

2022


Net

assets

£'000

Ordinary

shares

NAV

per share

pence

Net assets

£'000

Ordinary

shares

NAV

per share

pence

Ordinary share

201,281

151,548,993

132.8

247,074

136,720,797

180.7

 

13  Significant Interests

The Company has the following significant interests (amounting to an investment of 3% or more of the equity capital of an undertaking):


% held

Northcoders Group plc

14.3

Getech Group plc

11.5

Polarean Imaging plc

11.5

Aurrigo International plc

10.4

Rosslyn Data Technologies plc

10.4

Ixico plc

10.1

Fusion Antibodies plc

9.0

One Media iP Group plc

8.0

Glantus Holdings plc

7.8

Hardide plc

7.7

Block Energy plc

7.5

Intelligent Ultrasound plc

6.7

Ensilica plc

6.5

Falanx Cyber Security Limited

6.3

Sosandar plc

5.6

Byotrol plc

5.5

Saietta Group plc

5.2

Aptamer Group plc

4.5

Zenova Group plc

4.2

Water Intelligence plc

4.2

Velocys plc

3.9

Strip Tinning Holdings plc

3.7

Rua Life Sciences plc

3.6

Kinovo plc

3.5

Velocity Composites plc

3.2

 

14  Financial Instruments

The Company's financial instruments comprise equity and fixed interest investments, cash balances and liquid resources including debtors and creditors. The Company holds financial assets in accordance with its investment policy to invest in qualifying investments predominantly in AIM traded companies or companies to be traded on AIM.

 

Classification of financial instruments

The Company held the following categories of financial instruments at 31 January:


2023

£'000

2022

£'000

Assets at fair value through profit or loss:

 


Investments

142,354

214,737

Assets measured at amortised cost:

 


Accrued income and other debtors

329

1,972

Cash at bank

59,595

31,833

Liabilities (amounts due within one year) measured at amortised cost:

 


Payable for investments bought

-

(282)

Accrued expenses

(997)

(1,186)

Total for financial instruments

201,281

247,074

 

The investments are measured at fair value through profit or loss. The Company's investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The most important types of financial risk to which the Company is exposed are market risk, credit risk, currency and liquidity risk. The nature and extent of the financial instruments outstanding at the balance sheet date and the risk management policies employed by the Company are discussed below.

 

The Company measures fair values using the following fair value hierarchy into which the fair value measurements are categorised. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset as follows:

 

Level 1 - the unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.

 

Level 2 - inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.

 

The Company's level 2 assets are valued using models with significant observable market parameters.

 

Level 3 - inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.

 

Level 3 fair values are measured using a valuation technique that is based on data from an unobservable market. Discussions are held with management, statutory accounts, management accounts and cashflow forecasts are obtained, and fair value is based on multiples of revenue.

 

The table below sets out the fair value measurement of financial instruments as at the year end, by the level in the fair value hierarchy into which the fair value measurement is categorised:

 

Financial assets at fair value


Year ended 31 January 2023

Year ended 31 January 2022


Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Equity shares

137,611

-

166

137,777

209,025

-

501

209,526

CVRs

-

-

-

-

-

-

711

711

Convertible loan notes

-

-

4,577

4,577

-

-

4,500

4,500


137,611

-

4,743

142,354

209,025

-

5,712

214,737

 

The fair value of investments are derived as follows:

 

For quoted securities this is the bid price or, in the case of SETS securities, the last traded price. The Company's Level 1 investments are AIM traded companies and fully listed companies. Investments in TB Amati UK Listed Smaller Companies Fund are based on the published fund mid-price NAV.

 

Unquoted investments are valued by the Directors using rules consistent with IPEV guidelines. Where there is no observable input the investments are designated as Level 3 and the fair values determined as follows:

 

Equity shares are valued by using revenue multiples, net assets, discounted cashflows and industry valuation benchmarks. These multiples are derived from a basket of comparable quoted companies, with appropriate discounts applied. These discounts are subjective, based on the Manager's experience and assessment of disclosures made by the underlying investee company.

 

Contingent Value Rights (CVRs) pay out if certain hurdles are achieved and are valued at the amount payable per share on achievement of those hurdles, discounted for certain probabilities and the time to the value date to reflect the illiquidity of the holdings, and further discounted for payment, if it becomes due, being made either in the form of loan notes or shares issued at market value.

 

Convertible Loan Notes (CLNs) are fair valued using the present value of future payments, benchmarking and assessing market transactions of a similar CLN's. Further to this the fair value and interest accrued of the CLN's will be referenced to the assessment of disclosures made by the underlying investee company, the terms of the agreement and referenced to the underlying assets held by the investee company. The inputs and information utilised in determining the fair value are subjective and based upon the Manager's experience. The fair values are reviewed by the Directors using rules consistent with IPEV guidelines. The details of the CLNs' fair value and interest are noted in the Investment Portfolio above.

 

Details of movements in Level 3 financial assets are set out below:

 

Level 3 financial assets at fair value


Year ended 31 January 2023

Year ended 31 January 2022


Equity

Preference


Loan


Equity

Preference


Loan



shares

shares

CVR

Stock

Total

shares

shares

CVR

Stock

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£000

£'000

Opening balance at 1 February

501

-

711

4,500

5,712

81

 

47

732

-

860

Transfer from

Level 1

67

-

-

-

67

-

-

-

-

-

Purchases at cost

301

-

-

3,049

3,350

500

-

-

4,500

5,000

Disposal proceeds

-

-

(119)

-

(119)

(353)

(207)


(311)

(871)

Total net gains/(losses) recognised in the income statement

(703)

-

(592)

(2,972)

(4,267)

273

160

(21)

311

723

 

Closing balance at 31 January

166

-

-

4,577

4,743

501

-

711

4,500

5,712

 

15  Risks

 

The identified risks arising from the financial instruments are market risk (which comprises market price risk and foreign currency risk), liquidity risk and credit and counterparty risk.

 

The Board and Investment Manager consider and review the risks inherent in managing the Company's assets which are detailed below.

 

16   Market Risk

Market risk arises from uncertainty about the future prices of financial instruments held in accordance with the Company's investment objectives. It represents the potential loss that the Company might suffer through holding positions by the way of price movements, interest rate movements, exchange rate movements and systematic risk (risk inherent to the market, reflecting economic and geopolitical factors).

 

The Company's strategy on the management of market risk is driven by the Company's investment objective as outlined above. The management of market risk is part of the investment management process. The Board seeks to mitigate the internal risks by setting policy, regular reviews of performance, enforcement of contractual obligations and monitoring progress and compliance with an awareness of the effects of adverse price movements through detailed and continuing analysis, with an objective of maximising overall returns to shareholders. Investments in unquoted stocks and AIM traded companies, by their nature, involve a higher degree of risk than investments in the Main Market. Some of that risk can be mitigated by diversifying the portfolio across business sectors and asset classes. The Company's overall market positions are regularly monitored by the Board and at quarterly Board meetings.

 

Market price risk

Market price risk arises from any fluctuations in the value of investments held by the Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. The portfolio is managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with the objective of maximising overall returns to shareholders.

 

The assessment of market risk is based on the Company's portfolio as held at the year end. The assessment uses the AIM All-Share Index as a proxy for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates, based on historical price movements, their potential change in value to the AIM All-Share Index.

 

The review has also examined the potential impact of a movement in the market on the CLN investments held by the Company, whose values will vary according to the value of the underlying security into which the loan note instrument has the option to convert.

 

As at 31 January 2023 96.68% (31 January 2022: 97.34%) of the Company's investments are traded. A 30% decrease in stock prices as at 31 January 2023 would have decreased the net assets attributable to the Company's shareholders and increased the loss for the year by £41,283,000 (31 January 2022: £62,708,000); an equal change in the opposite direction would have increased the net assets attributable to the Company's shareholders and turned the loss into a profit for the year by an equal amount.

 

As at 31 January 2023 3.32% (31 January 2022: 2.66%) of the Company's investments are in unquoted companies held at fair value. A change in market inputs that would result in a 30% decrease in the valuations of unquoted investments at 31 January 2023 would have decreased the net assets attributable to the Company's shareholders and increased the loss for the year by £1,418,000 (31 January 2022: £1,714,000); an equal change in the opposite direction would have increased the net assets attributable to the Company's shareholders and reduced the loss for the year by an equal amount.

 

Currency risk

The Company's performance is measured in sterling, a proportion of the Company's assets may be either denominated in other currencies or are in investments with currency exposure. Any income denominated in a foreign currency is converted into sterling upon receipt. At the Balance Sheet date, the Company exposure to the United States Dollar consisted of investments of £3,366,000 (31 January 2022: £2,846,000).

 

A 5% rise or decline of Sterling gains foreign currency (i.e. non Pounds Sterling) assets and liabilities held at the year end would have increased/decreased the net asset value by £168,000 (2022: £142,000).

 

Interest Rate Risk

Interest rate movements may affect the level of income receivable on cash deposits and any fixed interest securities. The Company held four fixed interest investments of £4,577,000 (2022: £4,500,000), the weighted average interest of the convertible loan interest is 3.87% (2022: Nil%). The details of the convertible loan notes' terms of agreement, fair value, interest chargeable and provisions are noted in the Investment Portfolio above.

 

Changes in interest rates will impact the fair value of the convertible loan notes due to the changes in inputs changing the present value of future payments and the benchmarking to similar convertible loan notes. A change in market inputs, through changes in interest rates, that would result in a 1% decrease in the fair value of convertible loan notes at 31 January 2023 would have decreased the net assets attributable to the Company's shareholders and increased the loss for the year by £46,000 (31 January 2022: £45,000); an equal change in the opposite direction would have increased the net assets attributable to the Company's shareholders and reduced the loss for the year by an equal amount. The convertible loan notes are fixed interest.

 

The Company held a cash balance at 31 January 2023 of £59,595,000 (2022: £31,833,000). If the level of cash was maintained for a year, a 1% increase in interest rates would increase the revenue return and net assets by £596,000 (2022: £318,000). Management proactively manages cash balances. If there were a fall of 1% in interest rates, it would potentially impact the Company by turning positive interest to negative interest. The total effect would be a revenue reduction/cost increase of £596,000 (2022: £318,000).

 

17  Credit Risk

Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amount of financial assets best represents the maximum credit risk exposure at the balance sheet date. At 31 January 2023, the financial assets exposed to credit risk, representing convertible loan stock instruments, amounts due from brokers, accrued income and cash amounted to £64,474,000 (31 January 2022: £38,267,000). The convertible loan in Sorbic International plc is secured over the buildings and land use rights of the companies.

 

Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved, the high credit quality of the brokers used and the fact that almost all transactions are on a 'delivery versus payment' basis. The Manager monitors the quality of service provided by the brokers used to further mitigate this risk.

 

All the assets of the Company which are tradeable on AIM are held by The Bank of New York Nominees, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed or limited.

 

At 31 January 2023, cash held by the Company was held by The Bank of New York Mellon. Bankruptcy or insolvency of the institutions may cause the Company's rights with respect to the cash held by it to be delayed or limited. Should the credit quality or the financial position of the institutions deteriorate significantly the Company has the ability to move the cash at short notice. The Board monitor the credit worthiness of BNYM, currently rated at Aa2 (Moody's).

 

There were no significant concentrations of credit risk to counterparties at 31 January 2023 or 31 January 2022.

 

18  Liquidity Risk

The Company's financial instruments include investments in unlisted equity investments which are not traded in an organised public market and which generally may be illiquid. As a result, the Company may not be able to quickly liquidate some of its investments in these instruments at an amount close to their fair value in order to meet its liquidity requirements, or to respond to specific events such as deterioration in the creditworthiness of any particular issuer. The proportion of the portfolio invested in unlisted equity investments is not considered significant given the amount of investments in readily realisable securities.

 

The Company's liquidity risk is managed on an ongoing basis by the Manager in accordance with policies and procedures in place as described in the Strategic Report above. The Company's overall liquidity risks are monitored on a quarterly basis by the Board.

 

The Company maintains sufficient investments in cash and readily realisable securities to pay accounts payable and accrued expenses. At 31 January 2023, these investments were valued at £123,326,000 (31 January 2022: £132,107,000). The Directors consider that frequently traded AIM investments with a market capitalisation of greater than £200m represent readily realisable securities. The Company is a closed-end fund, assets do not need to be liquidated to meet redemptions, and sufficient liquidity is maintained to meet obligations as they fall due.

 

19  Capital Management Policies and Procedures

The Company's capital management objectives are:

· to ensure that it will be able to continue as a going concern;

· to satisfy the relevant HMRC requirements; and

· to maximise the income and capital return to its shareholders.

 

As a VCT, the Company must have, within 3 years of raising its capital, at least 80% by value of its investments in VCT qualifying holdings, which are relatively high-risk UK smaller companies. In addition at least 30% of new money raised during an accounting period must be invested in qualifying holdings within 12 months of the end of the financial year in which the funds are raised. In satisfying these requirements, the Company's capital management scope is restricted. The Company does have the option of maintaining or adjusting its capital structure by varying dividends, returning capital to shareholders, issuing new shares or selling assets to maintain a certain level of liquidity. There has been no change in the objectives, policies or processes for managing capital from the previous year.

 

The structure of the Company's capital is described in note 11 and details of the Company's reserves are shown in the Statement of Changes in Equity above.

 

The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:

· the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (i.e. the premium or discount);

· the need for new issues of shares; and

· the extent to which revenue in excess of that which is to be distributed should be retained.

 

The Company is subject to externally imposed capital requirements:

a. as a public limited company, the Company is required to have a minimum share capital of £50,000; and

b. in accordance with the provisions of the Income Tax Act 2007, the Company as a Venture Capital Trust:

i) is required to make a distribution each year such that it does not retain more than 15% of income from shares and securities; and

ii) is required to derive 70% of its income from shares and securities.

 

These requirements are unchanged since last year and the Company has complied with them at all times.

 

20  Post Balance Sheet Events

The following transactions have taken place between 31 January 2023 and the date of this report:

498,817 shares bought back

 

On 2 March 2023 Flylogix Limited, an unquoted investment within the Company's portfolio, was placed into administration.

 

21  Related Parties

The Company retains Amati Global Investors as its Manager. Details of the agreement with the Manager are set out above. The number of ordinary shares in the Company (all of which are held beneficially) by certain members of the management team are:

 


31 January

2023

shares held

31 January

2023

% shares held

31 January

2022

shares held

31 January

2022

% shares held

Paul Jourdan*

596,806

0.39%

723,985

0.53%

David Stevenson

26,753

0.02%

26,753

0.02%

Anna Macdonald

15,930

0.01%

7,855

0.01%

 

* includes 24,781 shares held by a Person Closely Associated to Paul Jourdan

 

The remuneration of the Directors, who are key management personnel of the Company, is disclosed in the Directors' Remuneration Report on page 44 of the full Annual Report and Accounts , and in note 4 above.

 

Corporate Information

 

Directors 

Fiona Wollocombe

Julia Henderson

Brian Scouler

 

all of:

8th Floor

100 Bishopsgate

London

United Kingdom

EC2N 4AG

 

Secretary

LDC Nominee Secretary Limited

8th Floor, 100 Bishopsgate

London

EC2N 4AG

 

Fund Manager

Amati Global Investors Limited

8 Coates Crescent

Edinburgh

EH3 7AL

 

VCT Status Adviser

Philip Hare & Associates LLP

6 Snow Hill

London

EC1A 2AY

 

Registrar

The City Partnership (UK) Limited

The Mending Rooms

Park Valley Mills

Meltham Road

Huddersfield

HD4 7BH

 

Auditor

BDO LLP

55 Baker Street

London

W1U 7EU

 

Solicitors

Dickson Minto W.S.

16 Charlotte Square

Edinburgh

EH2 4DF

 

Custodian

The Bank of New York Mellon SA/NV

London Branch

160 Queen Victoria Street

London

EC4V 4LA

 

Annual General Meeting

 

Attendance at the meeting

The Annual General Meeting of Amati AIM VCT plc (the "Company") will be held at the Barber-Surgeons' Hall, Monkwell Square, Wood Street, Barbican, London EC2Y 5BL on Thursday 15 June 2023 starting at 2pm.

 

As is our normal practice, there will be live voting for those physically present at the AGM. Shareholders are advised that it will not be possible to vote or ask questions virtually during the live-stream and we therefore request that all shareholders, and particularly those who cannot attend physically, submit their votes by proxy, ahead of the deadline of 2.00 pm on Tuesday 13 June 2023 to ensure that their vote counts at the AGM. If you hold your shares in a nominee account, such as through a share dealing service or platform, you will need to contact your provider and ask them to submit the proxy votes on your behalf. For further instructions on proxy voting, please refer to the notes on pages 82 to 84 of the full Annual Report and Accounts.

 

Shortly ahead of the AGM, the Company's Manager will post a link and instructions on how to join the event on its homepage at www.amatiglobal.com.

 

Shareholders who are unable to join the Meeting physically can email any questions they may have either on the business of the AGM or the portfolio to info@amatiglobal.com by 9 June 2023. The Company's Manager will publish questions together with answers on the page dedicated to the AGM on the Manager's website prior to the AGM being held.

 

The full audited Annual Report and Accounts for the year ended 31 January 2023 will shortly be available on the Company's website  www.amatiglobal.com . It will also be submitted to the National Storage Mechanism ("NSM") and will be available for inspection there, situated at:

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

 

A copy of the Annual Report and Accounts, which includes the Notice of Annual General Meeting, will be posted to shareholders shortly.

 

For further information, please contact the investor line at Amati Global Investors on 0131 503 9115 or by email at  info@amatiglobal.com .

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

 

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