REG - Amati AIM VCT PLC - Annual Financial Report
16/04/2025 07:02
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RNS Number : 1776F Amati AIM VCT PLC 16 April 2025
Amati AIM VCT plc (the "Company")
Legal Entity Identifier: 213800HAEDBBK9RWCD25
Annual Report & Financial Statements
For the year ended 31 January 2025
The Directors are pleased to present the Annual Financial Results of the
Company for the year ended 31 January 2025.
The information set out below does not constitute the
Company's full statutory accounts for the year ended 31 January 2025 in
terms of Section 434 of the Companies Act 2006 but is derived from those
accounts. Statutory accounts for the year ended 31 January 2025 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 2024, 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 2025
NAV Total return
for the year†
-2.4%
(2024: -22.6%)
£10.0m
invested in qualifying
holdings during the year
(2024: £13.3m)
2.1%
Ongoing charges**†
(2024: 2.0%)
Year end
Net Asset Value per share†
76.4p
(2024: 94.7p)
6.4%
Discount to NAV†
(2024: 6.6%)
22.0%
Dividend yield***†
(2024: 5.3%)
Key data
31/01/25 31/01/24
Net Asset Value ("NAV") £111.5m £143.1m
Shares in issue 146,009,780 151,069,824
NAV per share† 76.4p 94.7p
Share price 71.5p 88.5p
Market capitalisation £104.4m £133.7m
Share price discount to NAV† 6.4% 6.6%
NAV Total Return for the year
(assuming re-invested dividends) -2.4% -22.6%
Deutsche Numis Alternative Markets
Total Return Index* -2.7% -12.1%
Ongoing charges**† 2.1% 2.0%
Dividends paid and declared
in respect of the year 16.5p 5.0p
* Deutsche 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 and includes special
dividends.
† See Alternative Performance Measures on pages 81 and 82 of the
full Annual Report and Accounts.
Table of investor returns
to 31 January 2025
From Date NAV Total Deutsche Numis
Return with Alternative
dividends Markets
re-invested Total
Return Index
NAV following re-launch of the VCT under management of Amati Global
Investors ("Amati") 9 November 2011* 81.1% 12.0%
NAV following appointment of Amati
as Manager of the VCT, which was known as ViCTory VCT at the time
25 March 2010 90.0% 15.1%
*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 80 of the full Annual Report
and Accounts.
Dividends paid and declared 2025
230.0%
Dividends paid and declared 2024
-28.6%
2025 total dividends per share
16.50p
22.0% of NAV
Cumulative dividends per share
114.24p
Dividend history
Since the re-launch of the VCT under the management of Amati Global Investors*
Year ended 31 January Total Cumulative
dividends dividends
per share** per share
p 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 92.74
2024 5.00 97.74
2025 16.50 114.24
*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 Deutsche 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 2025 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 Deutsche Numis
Alternative Markets Total Return Index from inception of fund to 31 January
2025 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.
Strategic Review and Change of Manager
The Board announced in March 2024 that it was considering the Company's
strategic options in the light of the ongoing challenges in the AIM market and
the continuing fall in the company's net asset value. As part of a full
strategic review, now into its second year, the Board and the Manager began
working on a proposal to address the ability of the Company to widen its
investment strategy to facilitate investments in a broader investment market,
before evolving into a wider strategic review exploring all options available
to the Company and taking into account the wider market outlook, noting in
particular the impact of the change of UK government on the UK's fiscal and
monetary policies, and on the UK economy (including the AIM market) more
generally.
In May 2024, the Board announced that while it was continuing to review the
strategic direction of the Company, it had decided to declare a special
dividend of 10p per share in view of the high cash levels, limited new
investment opportunities on AIM and ongoing realisations within the portfolio.
There were still high expectations at this point in the year that if a new
government were to be elected any agenda for growth might include a spark of
hope for the AIM market. This was sadly not to be borne out.
In September 2024, the Board announced that it was continuing to discuss its
strategic options with its Manager but had also received a number of credible
indications of interest from third parties, including proposals for a change
of manager and proposals to combine its investment portfolio with an existing
VCT. These were all carefully reviewed in great detail alongside proposals
from the Company's current manager and selected candidates were invited to
submit detailed proposals which addressed various criteria, including without
limitation the importance of scale and costs for the Company's shareholders,
the medium to long term investment performance prospects of any revised
investment policy or strategy, the performance track record of the relevant
manager/strategy, the investment opportunities that the Company could benefit
from and the depth of resources that would be dedicated to the management of
the Company.
In December 2024, following a very poor Budget for growth and which, in
particular, further disadvantaged the AIM market, the Board announced the
conclusion of its strategic review.
The review concluded that an investment policy relying almost entirely on the
AIM new issues market would have very poor prospects and a decision was made
by the Board to extend the investment policy to one of "AIM Plus" whereby
investments could be made in a wider market of private company opportunities
alongside the existing AIM portfolio. I would like to reiterate that this
still means shareholders will have exposure to the AIM market through the
existing portfolio and if the AIM market is ever resuscitated future
investment in AIM will be continued.
The review also considered the skills, experience and resources that would be
required by the investment manager to best deliver this strategy. After
presentations were received from a number of VCT managers, including the
current manager, a decision was taken by the Board to appoint Maven Capital
Partners LLP as the new manager of the fund.
The Company has agreed terms for the early termination of the appointment of
the current investment manager and entered into a new investment management
agreement with Maven under which Maven will be appointed as the Company's
investment manager with effect from 1 May 2025. Details of the terms of the
new investment management agreement between the Company and Maven will be set
out in a separate announcement to be released by the Company on or around 16
April 2025.
Further details around the change of Manager and the selection process will be
included in a circular to be issued to shareholders alongside the Company's
Notice of AGM.
Given that the increasing trend towards companies opting for a private sale or
fundraising rather than an AIM listing shows no sign of slowing, shareholders
will be asked to vote on extending the Investment policy at the AGM this year.
Further details will be set out in the circular to be issued to shareholders
alongside the Company's Notice of AGM .
I would like to thank my Board colleagues for their extraordinary dedication
to a long and complex strategic review over many months and also the tireless
work of our Company Secretary, Law Debenture, for bringing all the
administrative side together so effectively. This decision to change manager
was not taken lightly and took many aspects into consideration as well as
complex legal and due diligence processes. The Board is also extremely
grateful to have received such comprehensive advice from Dickson Minto
throughout the strategic review process.
I would like to thank the many shareholders who have written to me with very
detailed questions and suggestions throughout the strategic review.
I would also like to pay tribute to Paul Jourdan and his team at Amati for
their collaboration in this, sometimes, difficult process. The AIM market has
been a particularly tortuous environment for many years. The Board would also
like to wish David Stevenson, who recently retired, a happy time in the
outside world.
Dividends
The Board has historically aimed 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.
A proposal to increase this to 6% will be presented to shareholders at the
forthcoming AGM and further details will be set out in the circular
accompanying the Notice of AGM.
In view of the high cash levels, realisations in the portfolios and the
scarcity of AIM investment opportunities, the Board declared a special
dividend of 10p per share in May 2024. This represented a yield of 10.9% on
the NAV of 92.16p per share as of 30 April 2024. An interim dividend of 2.5p
per share was announced in September 2024 and in December the Board took the
decision to pay a second interim dividend of 1.5p in January 2025. This was
around six months earlier than would have been the case had this been a final
dividend. The Board felt it prudent to accelerate the timing of the dividend
payment so as to have a greater margin of comfort against the VCT qualifying
tests. After a number of disposals of qualifying holdings and as challenging
conditions on AIM continued, the Board also took the decision to pay a further
special dividend of 2.5p at the same time.
As at 31 January 2025 the net asset value was 76.39p. The total dividends paid
for the year then ending were 16.5p per share which represents a dividend
yield per share of 22%.
The Company's cash balances have remained high in recent months and are
forecast to remain so in the light of impending realisations and the
continuing low volume of new investment opportunities on AIM.
The Board has therefore decided that it would be appropriate to pay another
special dividend to shareholders and has announced a special dividend of 10
pence per share, representing a yield of 12.9% on the year end NAV based on
shares in issue at 10 April 2025. The dividend will be paid on 30 May 2025 to
shareholders on the register on 2 May 2025. The ex-dividend date will be 1 May
2025. This dividend will be paid in cash as the Dividend Reinvestment Scheme
remains suspended.
The Board would like to remind shareholders that 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 80. Please check that you have
received your dividends and contact the registrar if you have not. Unpaid
dividends are kept by the registrar for a period of 12 years after the payment
date and we make every effort to ensure that dividends are received correctly
by shareholders.
Annual General Meeting ("AGM")
The AGM this year will be held at Ironmongers' Hall, Shaftesbury Place,
Barbican, London EC2Y 8AA starting at 12pm on 19 June 2025 and all
shareholders are invited to attend.
The details of the business to be put to the meeting, as well as information
on how to register, will be included in the Notice of AGM, which this year
will be sent to shareholders separately and will also be available on the
Company's website.
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. In addition to asking questions at the AGM, shareholders can
email any questions they may have on the business of the AGM to
AmatiAIMVCTChair@amatiglobal.com by 12 June 2025.
The Board is of the opinion that the passing of all resolutions being put to
the AGM would be in the best interests of the Company and its shareholders.
The Directors recommend that shareholders vote in favour of all resolutions
which will be set out in the Notice of Meeting, as they intend to do in
respect of their own shareholdings.
Outlook
With all global markets now in turmoil after the Trump "Liberation Day"
announcements on tariffs, it is impossible to predict at this stage how long
lasting and what effects these may have on our portfolio companies and new
investment opportunities. There is no certainty as yet as to when stability
will reappear. The companies capitalised at the smaller end of the markets,
less than £100m and particularly pre-profit stage, are feeling very
vulnerable right now.
The predicted "sugar rush" from the USA for acquiring small UK businesses was
already showing some signs of stalling even though there is perceived value in
hunting grounds, such as the AIM market. Any further M&A activity which
could affect this portfolio might realistically now be delayed. The complex
rules for VCTs in their ability to follow on and further fund their portfolio
companies shows no sign of change There is however a continuing industry lobby
to attempt to get this new government to make some, even minor changes, which
could be very beneficial to small UK companies. We remain ever hopeful.
The existing portfolio is a solid base to build on performance for the future
and the Board is optimistic that the broadened investment market for the VCT
will pay dividends for many years to come.
Fiona Wollocombe
Chairman
15 April 2025
For any matters relating to your shareholding in the Company or dividend
payments, please contact The City Partnership on 01484 240 910, or by email at
registrars@city.uk.com
For any other matters please contact the Chairman by email at
AmatiAIMVCTChair@amatiglobal.com (mailto:AmatiAIMVCTChair@amatiglobal.com)
Amati currently 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
Against a positive period for global stock markets, led principally by the
"Magnificent 7" in the US, on AIM glimmers of optimism in the first half gave
way to anxiety over threatened changes to Inheritance Tax ("IHT") legislation
and tax rises more generally in the Budget, leading to significant market
disruption in the Autumn. In the event, the Chancellor of the Exchequer
decided to cut the IHT benefits available to AIM investors by half. The
positive element here was that it showed that AIM is an intentional
beneficiary of the legislation. Managed AIM portfolio services, offering
clients direct exposure to the AIM market, account for around 10% of AIM
investment, and had created a strong positive current of liquidity in the
market over many years, playing a valuable role in helping AIM to become an
internationally successful smaller company stock market in a world where these
are few and far between. However, the Government has left a situation where
so-called "Private IHT services", which offer to invest clients' money into
asset-owning private companies focused solely on quasi fixed-income generation
and which meet the definitions required to qualify for 100% IHT relief, are
set to draw a significant amount of money away from AIM over the coming year.
From a public policy point of view, this is a nonsensical situation, which we
can only presume won't survive much scrutiny. It is not apparent that any
public interest is being served through the subsidising of these private
IHT-engineered service companies.
We entered 2024 hoping to see meaningful interest rate cuts across the G7
economies but these were slow to materialise. It was only in June that the ECB
started to ease policy, followed by the Bank of England in August and the US
Federal Reserve in September. Subsequently all three central banks have eased
policy gradually. It was a poor year for investors in government bonds, with
yields rising in most major markets. In the UK, 10-year gilt yields rose from
3.8% to 4.5% whilst US Treasury 10-year bond yields increased from 4.0% to
4.6%. In early January there was a mini-bond crisis, triggered by the prospect
of threatened US tariff increases stoking inflation. It became apparent then
that the fortunes of the US bond market have a direct bearing on those of
global bond markets, and UK yields will become caught up in the gyrations.
The macro-economic outlook in both the US and the UK was heavily influenced by
elections in 2024. The UK election concluded in early July with a decisive win
for Labour as expected, but the honeymoon period was brief and the strong
signalling of impending tax rises over the summer, followed by a Budget in
late October which primarily raised taxes on employers, appears to have dented
business and consumer confidence since. The "tax and spend" tone to the Budget
has led to reduced growth expectations as we enter 2025. Gilt markets have
been nervous since then, with the Chancellor now having limited fiscal
flexibility and inflation remaining higher than hoped.
The start of President Trump's second term in the US has been seismic and
chaotic for markets, bringing with it a dramatic change in tone and policy
across a wide range of economic and geopolitical factors, destabilising the
transatlantic alliance on which the peace and prosperity of the Post-World War
II era has been based. In January alone the new administration has introduced
radical changes to the terms of global trade via increased use of tariffs,
souring former alliances and virtually ending all foreign aid wholesale, while
seeking to leverage military strength as a way to extort economic benefits
from former allies. Within a few weeks of Trump coming to power, this had
already caused major departures in foreign policy covering locations such as
Ukraine, the Middle East and Europe.
Performance Review
The VCT's NAV Total Return for the period was -2.4%. This was slightly ahead
of the return from the Deutsche Numis Alternative Markets Total Return Index,
which was -2.7%. The gains from the first half of the period of 3.7% for the
VCT and 5.3% for the Index were more than reversed in the second.
Takeover activity was a feature of the year, with Keywords Studios,
Intelligent Ultrasound, Learning Technologies and Equals all receiving bids
and each contributing positively to performance in the period. Of these, only
Keywords Studios completed during the period, with the other three, now all
approved by shareholders, due to complete in the first half of the current
financial year. The Keywords sale made the biggest contribution to
performance, given it was the largest qualifying investment in the portfolio.
It went through at 2,450p in October, which compared to the IPO price of 123p
back in July 2013 when the VCT originally invested. Cash generated from the
disposal was £9.8m. Given the scale of Keywords' success, becoming the
largest outsourced support services provider to the video games industry
worldwide, it should be regarded as a genuine UK success story, which needed
only a small amount of backing by AIM VCTs at the start of its journey on AIM.
However, it should be noted that it would not be repeatable after the changes
to the VCT legislation in 2016-17, which prohibited VCT funding to be used for
acquisitions.
The investment in Intelligent Ultrasound was made over three years from
2019-2022. When this deal completes our return will have been just over 30%,
realising £2.9m. The £1.6m investment in Learning Technologies was made in
2015 at 21p per share. We took £1m of profits in 2019 at around 125p, and the
final exit price for the remainder will be £6.9m, or 100p per share. Equals
was a £1.5m investment, made in four instalments from 2014 to 2017 at an
average price of around 48p, with around £1m taken in profits during 2017 at
around 60.5p. The remaining holding will realise £2.1m, with the shares being
sold under the offer for 135p each and a 5p dividend being paid. The
completion of these takeovers will see cash levels rise once again during the
first half of the current financial year.
Two of the holdings in the portfolio merged into one during the period.
Belvoir and The Property Franchise Group undertook a nil-premium merger,
something we had been encouraging them to do for several years. As well as
creating a combined group with significant sales and cost synergy potential,
together with an ability to drive national market share amongst UK lettings
agencies, it has also resulted in a combined market capitalisation of more
than £250m, which brings the company to the attention of a much wider
investor audience, with the shares rising around 22% over the period.
There were a number of other notable positive contributors during the period.
SRT Marine (SRT), a global marine electronics business, which specialises in
Maritime Domain Awareness (MDA) systems, as well as Automatic Identification
System (AIS) products for the leisure market. Our investment in SRT dates back
to 2007 at a share price of 42p and follow-on round in 2012 at 27p. SRT is a
good example of the determination and grit required to build a global business
based on technology leadership in a particular field. It has taken 17 years
since our first investment to see the real fruits of success begin to shine
through. What began as technology leadership in making AIS products at low
cost, taking significant market share amongst small and medium sized boats,
expanded via the acquisition of a real-time visualisation software company for
shipping and development of command and control software, to become one of the
leading systems providers for complete shore-based infrastructure, combining
all the latest electronic means to provide MDA for coastguards and national
security purposes. Some of the large contracts in the pipeline have been years
in the making, and recent contract wins have seen the order book expand
rapidly to £320m, from a validated sales pipeline of over £1bn. A trade
investor has been able to acquire a significant stake in SRT at a low price,
due to the inability of AIM investors to meet its ongoing financing
requirements, especially those required for posting performance bonds at the
start of large contracts. Nonetheless, we think SRT is now in the best
position it's ever been in to deliver some strong returns for investors, as it
finally becomes sustainably cash generative as one of the fastest growing
companies in the UK. The shares rose by 62% in the period.
Amongst other long-held positions, and as at the period end the third largest
qualifying investment in the portfolio, GB Group, a global provider of
identity and location verification software, reported stronger trading over
the period, with new product development opening the way to a coherent
strategy for growth over the medium term, allowing the company to make the
most of its advantages of scale. It rose 24% during the period.
Three newer holdings are worth mentioning both for their positive
contributions during the period and their potential. Diaceutics, a diagnostic
data and technology business supporting pharma companies launching new
precision medicines which require diagnostics to select relevant patients,
reported revenue growth of 36% to £32m and Annual Recurring Revenue (ARR)
growth of 23% to £17m in 2024, setting the company up to become profitable
during 2025. This has attracted a good deal of new investor interest, seeing
the shares rise by 31% in the period. Cordel, an earlier stage company which
provides sensors and software to the rail industry, allowing maintenance
inspections to be done in real time from high-speed trains, continues to
expand its customer range and geographic reach. Having raised a further £1m
during the period, it was able to launch a significant development programme
to add further intelligence to its software. The shares rose by 73% over the
period. Windar Photonics, which has developed a Light Detection and Ranging
(LiDAR) assisted monitoring and optimisation solution for wind turbines giving
a 1-4% improvement in energy output as a retrofit solution, is seeing a
significant scaling up of orders. However, at the same time it also saw a
couple of large contracts delayed. It raised a further £5.9m in order to
better resource the business for significant growth and to fund working
capital expansion. Since initial investment in April the shares have risen by
54%.
On the negative side, it was still the case during the period, that the market
responded very harshly to negative developments or any requirement for further
funding. Aurrigo needed to raise a further £5m in December, and given the
weak state of the market, this caused the shares to fall 51% over the period.
Aurrigo is an automotive electronics business, which is developing a range of
autonomous vehicles for airports, supported by its "Auto-SIM" airport
logistics management software and "Auto-Connect" fleet management and data
visualisation software. Changi Airport in Singapore is its lead adopter, but
the company also has a scale-up agreement at a European Hub, and a trial
agreed at Heathrow. Most of the money raised will go into the manufacture of
an additional 10 "Auto-DollyTug" vehicles, with the aim of having 12 in
operation by the end of 2025. Beyond this, the company is in early-stage
discussions with 34 airports and 18 airlines, with 8 customers now having
agreed to use Auto-SIM to map out potential efficiency gains. It looks set to
become the global leader in this emerging niche, if it can negotiate the next
couple of years of commercialisation effectively.
Fadel Partners, a software company focused on brand compliance, rights
management and royalty billing software, experienced some contract slippage
during the year, seeing its reported annual revenue fall from $14.5m to
$13.0m, despite the underlying ARR rising from $9.0m to $9.9m. This prompted a
round of cost-cutting in the business to manage the budget for future
development from current cash resources. The company also announced that it
has appointed a US investment bank to explore strategic options for the
business following a 57% share price fall. Paul Jourdan is a Board Observer
for Fadel. Solid State, an electronics business which specialises in
ruggedised computing, battery power solutions, antennas, and secure radio
systems, fell after announcing that a contract it had won to supply secure
radio systems to the British Army via NATO, had been delayed pending the
Government's review of defence spending. This led to the shares falling by 49%
during the period, although the company believes that this contract will be
re-instated later in 2025.
Sosandar, founded by Ali Hall and Julie Lavington in 2015 has established
itself as a fast-growing UK womenswear fashion brand. Having turned profitable
as an online retailer in the year to March 2023 with £43m of sales, the
founders took the decision to move towards a multi-channel strategy, planning
to open the company's own stores. The preparation for this move meant a period
of reduced price incentives in the online business, which meant lower sales,
but higher margins. This was taken as a disappointment by some investors, as
the company swung back into making modest losses, causing the shares to fall
by 55% over the year. Sosandar has now opened stores in Chelmsford, Marlowe,
Newcastle and Cardiff, and will shortly be opening in Harrogate and Bath. If
they can find the sites they could open around 10 per year. Having stores
allows them to build a stronger relationship with customers, reduces the need
for price promotions and allows for easy returns. The strategic target is to
reach £100m sales with £10m in pre-tax profits. Nexteq, owner of Quixant, a
leading provider of computing hardware to the gaming industry, and Densitron,
a specialist provider of touchscreen displayers and controls, saw a 41%
sell-off over the period, after a profit warning in the first half and change
of management team was followed by another negative trading update talking
about de-stocking and project delays in the second half. However, with new
management now in place and an anticipated $30m of cash on the balance sheet
(57% of the market cap) at the end of 2024, the company has plans to increase
investment in product development in 2025, which should rejuvenate sales and
profits growth from 2026.
Arecor, a biopharmaceutical company, whose lead product is an ultra-rapid
acting insulin based on proprietary drug delivery technology, where progress
has been slower than hoped, fell on concerns over future financing. This was a
holding we reduced during the year. Verici DX had delays on the
commercialisation of its two kidney transplant diagnostic tests, one because
Thermo Fisher, the licensee, has taken longer than expected to develop their
version of the test, and the other due to a delay in obtaining a Local
Coverage Determination after more information was requested by the regulator
causing the shares to fall sharply. We sold around a fifth of our holding on a
bounce in January. Polarean Imaging fell heavily at the start of the period as
it raised $12.6m at a heavily discounted price. Having halved our holding, we
participated in the placing in a small way. As noted in the Interim Report,
Saietta, an automotive supplier bringing a highly efficient electric motor to
market, went into administration early in 2024 after it failed to raise
sufficient funds having overstretched itself with ambitious global operations
and projects.
Portfolio Activity
A total of £10.0m was invested in qualifying holdings during the period. Of
this, £6.6m was invested in seven new holdings, and the balance was invested
in six follow-on investments to existing holdings. Apart from one new unquoted
investment, all of these qualifying investments were made in existing AIM
quoted companies. Given how distressed valuations are at the junior end of
AIM, where the VCT qualifying deals are done, we were keen to explore all
these secondary offerings as actively as we could. In a number of these
investments, like the placings in PCI-Pal, Xeros, LifeSafe, Feedback and
Rosslyn Data Technologies, we played an important role in helping to bring the
placings about. Moreover, now more than ever, the small group of AIM VCTs in
general are completely essential for companies such as these to meet their
funding requirements on AIM. The investments below were mostly small in
monetary terms, but because valuations were so low, it meant that these
investments often result in substantial equity stakes being taken, creating
the possibility of significant returns where these companies achieve their
business plans. Where companies were still at an early stage, we adopted a
strategy of seeking some kind of board representation, in order to help them
navigate what can be difficult waters for companies at this stage in public
markets.
The new investments were as follows:
PCI-Pal (£0.65m investment), a leading provider of secure Payment Card
Industry (PCI) compliant solutions for payments to be taken across a range of
media in contact centres. PCI led the way in the industry in the switch to a
pure SaaS (software as a service) business model, selling principally via
channel partners. PCI-Pal was the subject of some vexatious litigation, which
cost them over £3m to fight over a number of years, but which they won
comprehensively in the end. The fundraise helped to restore scope in the
balance sheet to accelerate growth plans and also acted as a deterrent against
further litigation being brought. In the six months to end December 2024 the
company delivered a record level of new business wins and looks well placed
for growth in the coming years.
Windar Photonics (£1.5m investment across two fund raises), a provider of
innovative LiDAR optimisation systems for use on wind turbines. The company's
LiDAR sensors remotely measure wind speed and direction in lightweight modules
which are easy to install. These are used in conjunction with Windar's
optimisation software to adjust the angle at which the wind turbine faces into
the wind, creating proven gains of 1-4% in annual energy production, as well
as enhancing asset life. This places them ahead of competitor products which
the company claims are not only harder and more expensive to install but also
less well evidenced. With the growing importance of wind power in achieving
net zero ambitions, and the leading nature of its product suite, the company
has experienced significant growth in its order book and sales. It raised
funds twice during the period in order to scale up the business to handle this
growth.
Cambridge Cognition (£0.4m investment), which develops and deploys digital
solutions to assess brain health in clinical trials conducted by biotechnology
and pharmaceutical clients. It has a suite of five clinical assessment
products, some internally developed, others acquired. Since 2020 management
has doubled sales and shown that the business is capable of profitable growth.
Cambridge Cognition is targeting a new phase of growth that will add to its
commercial scale as it hires highly experienced operational and commercial
managers to help capitalise on its relationships with large pharmaceutical
companies and its industry leading technologies.
LifeSafe Holdings (£0.8m investment), a fire safety technology business with
innovative fire extinguishing and prevention fluids. Since listing in 2022 the
company has spent time building a consumer brand with the StaySafe All-in-1
fire extinguisher, a highly effective extinguisher which puts out all types of
fire, including lithium battery fires. We helped finance the company to
develop its wholesale business, with major industrial partners in the UK,
Europe and the US becoming its channel to market. Gregor Paterson has become a
shareholder Director of LifeSafe.
Xeros Technology (£1.0m investment), whose innovative technologies reduce the
environmental impact of washing textiles and at the same time, by causing less
wear and tear through washing, prolong the lifespan of clothes. Xeros' key
innovation involves the addition of its nylon beads to a washing cycle. This
reduces water and therefore power consumption by around 50%, with the added
benefit of making clothes look newer for longer. Xeros has made many missteps
since floating in 2014, however, a new management team overhauled the business
model comprehensively two years ago. More recently, large washing machine
Original Equipment Manufacturers ("OEMs"), in both commercial and retail
channels, have started to partner with the company, and we anticipate that
these will start to show commercial traction over the coming year. Paul
Jourdan has become a Board Observer for Xeros.
Feedback (£1.0m investment), a provider of a communication and collaboration
software platform to the NHS called Bleepa, which connects care settings with
diagnostic and other relevant data to drive better, faster, and safer clinical
decisions. Bleepa provides one of very few routes to allow GP patient records
to be brought together with hospital patient records in a seamless fashion,
allowing each medical practitioner involved with a patient to collaborate.
From its current user base, Bleepa has demonstrated that 90% of referrals of
patients from GPs to specialists do not require an outpatient appointment, but
rather in most cases the specialist only needs to see all of the clinical
information already gathered to give an opinion in 5-6 minutes, whereas a
typical outpatient appointment takes 30 minutes, much of which is taken up
gathering information already in the clinical records. As collaboration
between doctors is so poorly provided for currently, it is estimated that over
90% of doctors use WhatsApp as a messaging platform to do so, in contravention
of data protection regulations. We are acutely aware that the NHS is a poor
buyer of technology, even when the benefits that a new product promises to
bring to them are huge. However, we saw in Bleepa the potential to provide
such a key piece of technology to assist with the Government's stated ambition
to bring down patient waiting lists through efficiency gains, that we chose to
support the company with the next phase of its development, during which we
expect to see some significant adoption of Bleepa. Because of the depressed
state of AIM, we were able to buy an 11.9% stake in the business fully funded
for scale up, for our £1m investment. Gareth Blades has become a Board
Observer for Feedback.
Zelim (£1.2m investment), a provider of novel marine safety systems. Zelim is
an Edinburgh based private company with an ambition to float on AIM, which we
have followed for two years prior to this investment. The founder's ambition
was initially to create an autonomous rescue vessel, having been a
professional sailor who wanted to reduce the length of time rescue boats take
to reach persons lost at sea. To create these vessels required a number of
inventions. The first was a conveyor device to move people out of the water
into a boat safely without human intervention, even if they are unconscious.
The second was software designed to detect people floating in water. It was
this software, called ZOE, which attracted us to the business. This has turned
into a leading automated Person Overboard (POB) detection system designed for
large vessels, using cameras and image recognition software based on extensive
machine learning from trials and now commercial usage. In addition to sounding
an alarm if someone falls into the sea, ZOE can track their location in the
water over many miles. The first customer was Valaris, a multi-national
provider of drill ships. Zelim hopes that ZOE will become the first system to
meet the new ISO 21195 standard for automated POB recognition. This is a
pre-requisite for adoption by the global cruise ship owners. ZOE is also in
the early stages of testing by the US Navy, having won a competition under the
Small Business Innovation Research (SBIR) programme, to provide an automated
POB system which doesn't require the wearing of a device. Alison Clark, Chief
Financial Officer of Amati Global Investors, has become an investor Director
of Zelim.
The most significant follow-on investment was in Rosslyn Data Technologies
(Rosslyn) (£0.8m) via a convertible loan. Rosslyn provides spend analytics
software to large corporates. It had a major management change in 2020, but
the new team struggled to hold the customer base together during the required
re-writing of the software. We declined to fund Rosslyn in 2023 when it last
raised money to bridge the gap to profitability, believing it would take
longer and cost more than hoped. However, in 2024 the company announced that
it had won a £2m contract from one of the world's largest technology
companies. This was on the back of building a set of clever automated invoice
classification technologies, using both machine learning and large language
models, and optimised to minimise cost. Gregor Paterson is a board observer
for Rosslyn.
Other follow-on investments included small investments in: Polarean Imaging
(£0.4m), the novel lung imaging technology provider; Cordel (0.1m), which
provides monitoring systems for trains which allow automated inspections for
maintenance to be carried out using cloud based software, without the need to
run slow maintenance trains for visual inspections, as described above; Ixico
(£0.4m) the provider of medical image analysis for clinical trials of drugs
for central nervous system conditions; 2 Degrees (£0.7m in two tranches), an
unquoted company in which we co-invested with Maven Capital Partners, which
provides software for large corporates to enable their suppliers to manage and
reduce carbon emissions; and Fusion Antibodies (£0.1m), a provider of
end-to-end services for the development of clinical antibodies.
Excluding the sale of Keywords which generated cash of £9.8m, reported on
above, we made sales of qualifying holdings totalling £5.9m during the
period. £4.0m of this cash was from taking profits in AB Dynamics, a
designer, manufacturer and supplier of advanced testing, simulation and
measurement products to global automotive OEMs, reflecting some nervousness on
our part about how much disruption there has been in the global car industry.
Notwithstanding this backdrop, AB Dynamics has continued to see strong order
intake, particularly from China and North America. Elsewhere we sold out of
Clean Power Hydrogen, which had failed to deliver on any of its business
objectives set out at IPO, and made some small reductions elsewhere in the
portfolio. Cash generated from disposals of qualifying holdings during the
year, including Keywords, amounted to £15.7m.
Cash Management
We continued to invest cash in three different money market funds and in
overnight and 7-day interest bearing bank deposits, generating an income of
£1.7m during the period, having achieved annualised interest rates of around
5.12%. The cash and money market funds total at the end of January 2025 was
£22.1m.
Outlook
The UK market is in a depressed state, after nearly four years of outflows
from UK equity funds. We see this as primarily a cyclical phenomenon. However,
most commentators agree that the UK stock market needs urgent attention from
policy makers if it is to be rejuvenated. This is not going to be easy to do
with the machinations of Trump dominating the political space to such a
degree. The best way to understand why public stock markets matter is to
imagine a world without them. If there were no stock markets at all, then the
only people who would be able to invest in the success of businesses would be
those with the contacts and expertise to invest in private companies. Even
within this restricted group, small private investors would get a much worse
deal than institutions. Investor protections would be entirely dependent on
negotiations, and small investors would fare badly. Most people would only be
able to invest in bonds and cash deposits, causing the wealth gap to widen
rapidly. Stock markets allow the successes of public businesses to be spread
amongst the general public of savers, while also allowing large scale
participation in the capital allocation process.
Now imagine a world where public markets are merely diminished, rather than
non-existent. There is a tipping point where wealth creation begins to sit
mainly outside of public markets, where the same effects begin to happen. The
amazing success of the top US monopolistic corporations has provided a safety
valve for global investors in public markets to participate in high growth
enterprises, sucking in capital from all over the world. But the extraordinary
concentration of wealth in the US amongst the business elite, and in the hands
of sovereign wealth funds, successful pension funds and other institutions,
has meant that capital is increasingly being directed away from public markets
worldwide, as these types of investor have no real need for them. They gain
more by controlling businesses directly and structuring them to minimise any
corporation tax being paid. They do not need the daily liquidity. They do not
desire public accountability. In certain cases, they want to own businesses
for non-financial reasons, because of the political influence this can bring.
In this world, falling liquidity favours the most liquid and successful
markets internationally, principally the US, which enters a phase of draining
domestic capital away from other markets, aided by low-cost online broking
platforms and low-cost index tracking funds, making it easy for capital to
flow across borders. Stock markets seeing reducing liquidity then shrink as
companies are either taken private, acquired by larger rivals, or deploy their
own capital to buy back shares. These are now the key features of the current
UK stock market, both AIM and Full List, and we expect all three to continue
apace during 2025, helping investors realise decent returns from depressed
market prices.
Policy makers in the UK have not had to give much thought to these issues over
the past 40 years, although there have been some important reforms brought
into de-regulate aspects of the main market rules. To get serious about
addressing the underlying issues, policy will need to go further towards
removing burdensome and unproductive regulations which impact public
companies, and also to find ways of creating incentives for UK savers to
invest in UK stock markets. We fully expect these changes to happen, but it is
impossible to say when, as there is little comprehension in official circles
of the urgency yet.
Setting aside broader policy matters, there are actions that AIM could take to
improve its fortunes and reduce the barriers to listing. It could make fund
raising less damaging for companies in difficult circumstances allowing share
dealing to be suspended during the process. It could establish safe mechanisms
for shareholder collaboration in relation to concert party formation and
competition law. It could give companies more discretion about how to handle
negative news in ways that do not damage their commercial interests.
From a VCT point of view, we believe that a new market practice for floating
of early-stage businesses needs to evolve, where shareholders investing in
IPOs are given the equivalent protections of either a participating or
non-participating liquidation preference. This is something we have explored
with both brokers and officials at AIM and Aquis. We have not yet found the
right company to bring this into being. This would improve the returns profile
of AIM IPOs fundamentally, and over time should create a much healthier level
of interest in funding AIM IPOs.
We are excited about the prospects for the companies in the portfolio, in
general seeing good prospects for continued growth amongst the mature
businesses and the potential for many of the earlier stage investments to make
substantial progress. We are aware that we need to see more and bigger
"winners" from investments made under the post-2017 VCT rules and are
optimistic that some will emerge during the coming year.
A final word on US President Trump's tariffs
Given this report was largely written in February, it is hard to end it
without making some reference to the extraordinary events in early April of
Trump's announcements of sweeping and massive tariffs on almost every country
in the world. These so-called "reciprocal" tariffs, based on the absurd idea
that trade deficits are a tax on the US, have intervened in the global economy
and caused a level of disarray in stock markets not seen since the pandemic.
With such wild and fake cards being played, it is not possible to predict how
this unfolds. But it does severely cloud the outlook for the global economy
and in turn, it will make life more difficult for some companies in the
portfolio. More importantly, perhaps, it also marks a point at which America
apparently gave up on the idea of being the ultimate defender of liberal
democracy, free trade and the rule of law. In this equation Trump has forsaken
the trust which America's trading partners have placed in it over decades and
is instead espousing a set of relationships based on fear and servitude. This
is a perilous journey. However, given how much capital has flowed into the US
economy from the UK and other large economies from around the world over the
last few years, there is now the first glimmer of the prospect that these
capital flows may begin to reverse, and if the UK can position itself as a
natural home for these reverse flows, there is a prospect for some real
benefits to emerge from the crisis.
We were given notice of termination of our investment management contract on 2
December 2024 by the Board and more recently have been asked to accept early
termination to allow the Board to move the management of the VCT to Maven
Capital Partners. We have agreed to this request. Having managed the VCT for
such a long time, we hand it on with sadness. We would like to thank all the
shareholders who have supported us over the years, it has been a huge
privilege to act on your behalf and to have got to know many of you. We wish
the Board and the new manager well in the future.
Dr Paul Jourdan, David Stevenson, Gregor Paterson and Gareth Blades
Amati Global Investors
15 April 2025
Investment Portfolio
as at 31 January 2025
Original Costs* Aggregate Fair value Fair value Market Industry Sector Yield %
Company name Amati VCT bookcost at 4 May 2018# £'000 Cost** £'000 movement Cap (NTM) of net
£'000 £'000 in year*** £m % assets
£'000
Waystone Amati UK Listed Smaller Companies Fund 3,331 6,977 10,308 11,356 (410) - Financials 2.64 10.2
Learning Technologies Group plc(1) 780 3,771 4,551 6,307 711 724.3 Industrials 1.82 5.7
Craneware plc(2) 298 3,601 3,899 4,146 (473) 683.3 Health Care 1.50 3.7
GB Group plc(2,3) 236 2,967 3,203 3,931 755 881.1 Information Technology 1.20 3.5
Property Franchise Group plc(1,3) 559 576 1,135 3,841 783 261.4 Real Estate 3.40 3.4
MaxCyte Inc.(1) 449 1,536 1,985 3,650 (261) 384.4 Health Care - 3.3
Water Intelligence plc(2) 180 1,038 1,218 3,218 204 68.6 Industrials - 2.9
Chorus Intelligence Limited - 301 301 151 - - Information Technology - 0.1
Ordinary Shares(1,4)
Chorus Intelligence Limited 10% Convertible Loan Notes(1,4) - 2,699 2,699 2,699 - - Information Technology - 2.4
Intelligent Ultrasound plc(1) - 2,195 2,195 2,808 1,156 42.2 Health Care - 2.5
Diaceutics plc(1) - 1,557 1,557 2,766 656 114.5 Health Care - 2.5
Top Ten 33,051 44,873 3,121 40.2
2 Degrees Limited Ordinary shares(1) - 2,522 2,522 2,522 - - Information Technology - 2.3
2 Degrees Limited 12% Unsecured Loan notes(1,4) - 180 180 180 - - Information Technology - 0.2
SRT Marine Systems plc(1) 709 465 1,174 2,310 886 149.9 Information Technology - 2.1
Windar Photonics plc(1) - 1,530 1,530 2,210 680 51.9 Information Technology - 2.0
Equals Group plc(1) - 1,137 1,137 2,038 283 260.8 Financials 1.46 1.8
EnSilica plc(1) - 2,450 2,450 2,009 - 39.6 Information Technology - 1.8
Aurrigo International plc(1) - 2,280 2,280 1,944 (2,032) 25.5 Consumer Discretionary - 1.7
AB Dynamics plc(1) 151 480 631 1,880 (44) 392.5 Consumer Discretionary 0.45 1.7
Velocity Composites plc(1) 496 2,106 2,602 1,695 (226) 16.2 Industrials - 1.5
Northcoders Group plc(1) - 2,111 2,111 1,686 88 12.3 Consumer Discretionary - 1.5
Tan Delta Systems plc(1) - 1,875 1,875 1,370 72 13.9 Energy - 1.2
Top Twenty 51,543 64,717 2,828 58.0
Solid State plc(2,3) 259 261 520 1,344 (1,282) 73.7 Information Technology 1.2
3.30
Kinovo plc(2) - 1,681 1,681 1,336 (65) 39.3 Industrials - 1.2
Brooks Macdonald Group plc(2,3) - 1,154 1,154 1,334 (324) 244.4 Financials 5.27 1.2
Fadel Partners, Inc(1) - 3,000 3,000 1,250 (1,688) 12.1 Information Technology - 1.1
Nexteq plc(2) 419 3,777 4,196 1,202 (837) 41.7 Consumer Discretionary 4.78 1.1
Zelim Limited(1) - 1,200 1,200 1,200 - - Information Technology - 1.1
Cordel Group plc(1) - 992 992 1,191 474 15.7 Information Technology - 1.1
Itaconix plc(1) - 2,000 2,000 1,137 196 19.6 Materials - 1.0
Accesso Technology Group plc(1,3) - 221 221 1,095 (119) 203.0 Information Technology - 1.0
Ixico plc(1) - 1,670 1,670 990 149 10.7 Health Care - 0.9
Feedback plc(1) - 1,000 1,000 935 (65) 8.2 Health Care - 0.8
Rosslyn Data Technologies plc Ordinary shares(1) 614 1,308 1,922 35 (85) 3.7 Information Technology - -
Rosslyn Data Technologies plc 10% Loan Notes(1,4) - 800 800 808 8 - Information Technology - 0.8
PCI-Pal plc(1) - 650 650 824 174 51.4 Financials - 0.7
Sosander plc(1) - 1,872 1,872 811 (998) 16.1 Consumer Discretionary - 0.7
Frontier Developments plc(1) 197 2,509 2,706 795 277 87.4 Communication Services - 0.7
Science in Sport plc(1) 804 1,136 1,940 773 342 60.4 Consumer Staples - 0.7
One Media iP Group plc(1) - 1,240 1,240 709 - 8.9 Communication Services 1.38 0.6
Strip Tinning Holdings plc Ordinary shares(1) - 1,054 1,054 171 (57) 5.5 Consumer Discretionary - 0.2
Strip Tinning Holdings plc 10% Unsecured Convertible Loan Notes(1) - 500 500 485 (15) - Consumer Discretionary - 0.4
Netcall plc(2,3) - 110 110 655 80 176.7 Information Technology 0.83 0.6
Eden Research plc(1) - 1,057 1,057 653 (268) 20.8 Materials - 0.6
LifeSafe Holdings plc(1) - 800 800 560 (240) 3.4 Industrials - 0.5
Cambridge Cognition Holdings plc(1) - 420 420 473 53 18.9 Health Care - 0.4
Synectics plc(2) - 342 342 465 253 60.5 Information Technology 0.88 0.4
Verici DX plc(1) - 1,449 1,449 426 (907) 8.5 Health Care - 0.4
Polarean Imaging plc(1) - 1,055 1,055 426 (630) 14.5 Health Care - 0.4
Arecor Therapeutics plc(1) - 1,650 1,650 416 (787) 21.5 Health Care - 0.4
Fusion Antibodies plc(1) 565 1,884 2,449 363 158 7.4 Health Care - 0.3
Byotrol plc Ordinary shares(1,4) 511 348 859 27 (110) 0.5 Materials - -
Byotrol plc 9% Convertible loan notes(1,4) - 350 350 335 (15) - Materials - 0.3
Xeros Technology Group plc(1) - 1,000 1,000 333 (667) 2.6 Industrials - 0.3
Block Energy plc(1) - 3,000 3,000 332 (179) 4.8 Energy - 0.3
Eneraqua Technologies plc(1) - 1,955 1,955 275 (7) 13.0 Industrials 3.08 0.3
Hardide plc(1) 695 1,666 2,361 249 (181) 4.3 Materials - 0.2
Creo Medical Group plc(1,3) - 1,612 1,612 232 (303) 74.2 Health Care - 0.2
MyCelx Technologies Corporation(1) 440 205 645 125 (81) 7.6 Industrials - 0.1
Rua Life Sciences plc(1) - 931 931 93 5 7.5 Health Care - 0.1
Getech Group plc(1) - 1,040 1,040 85 (269) 2.7 Information Technology - 0.1
Brighton Pier Group plc (The)(1) 314 175 489 83 (125) 8.2 Consumer Discretionary - 0.1
Trellus Health plc(1) - 700 700 44 (35) 4.0 Health Care - 0.1
Zenova Group plc(1) - 900 900 38 (169) 0.7 Materials - -
Aptamer Group plc(1) - 3,671 3,671 13 (19) 8.2 Health Care - -
Merit Group plc(1) - 596 596 13 (35) 4.3 Communication Services - -
Investments held at nil value† - - - - - - - - -
Total non-money market investments 111,302 89,856 (5,565)
80.6
Money market funds
Goldman Sachs Sterling Liquid - - 4,398 4,398 -
Reserves Fund 3.9
Northern Trust Global The Sterling Fund - - 4,398 4,398 -
3.9
Royal London Short Term - - 4,414 4,380 (55)
Money Market Fund
4.0
Total money market funds 13,210 13,176 (55) 11.8
Total investments 124,512 103,032 (5,620) 92.4
Other net current assets 8,506 7.6
Net assets 111,538 100.0
1 Qualifying holdings.
2 Part qualifying holdings.
3 These investments are also held by other funds managed by Amati.
4 Chorus Intelligence Limited ("Chorus") consists of 232 Ordinary Shares in
Chorus at fair value of £151,000 and 10% Convertible Loan Notes at
£2,699,000. Interest is being received half yearly on the Chorus CLNs.
Byotrol plc ("Byotrol") consists of 25,000,001 Ordinary Shares in Byotrol at
fair value of £28,000 and 9% Convertible Loan Notes at £335,000. Interest is
being received quarterly on the Byotrol CLNs.
Strip Tinning consists of 569,699 ordinary shares at fair value of £171,000
and 10% Convertible Loan Notes at £485,000. Interest is payable upon
redemption of the CLNs.
# 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 on pages 66
and 71 for further details.
† These investments are held at nil value and with nil book cost with the
related losses realised.
NTM Next twelve months consensus estimate (Source: Refinitiv, Fidessa and
Amati Global Investors)
The Manager rebates the management fee of 0.75% on the WS Amati UK Listed
Smaller Companies Fund and this is included in the yield.
All holdings are in ordinary shares unless otherwise stated.
The book cost of the following investments has been written off, but holdings
continue to be held for qualifying purposes: Flylogix Limited(1), Saeitta
Group(1), Elexsys Energy plc, Leisurejobs.com Limited(1) (previously The
Sportweb.com Limited), Rated People Limited(1), TCOM Limited(1), VITEC Global
Limited(1).
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 2025
Qualifying portfolio
The portfolio of qualifying investments in the Company as at 31 January 2025
is analysed in the graph which can be found on page 20 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 twelve 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 2025 is analysed
in the graph by sector which can be found on page 20 of the full Annual Report
and Accounts. This includes a sector split of the investments within the WS
Amati UK Listed Smaller Companies Fund which in the Investment Portfolio table
above is classed as Financials.
Investment Objectives, Investment Policy and Investment Strategy
Following the outcome of the Strategic Review, and as announced to
shareholders on 2 December 2024, the Board intends to seek shareholder
approval to amend the Company's investment objectives and policy in order to
enable a greater degree of investment in unquoted UK companies with strong
growth potential, alongside continued investment in companies quoted on AIM
and AQSE (an "AIM Plus" strategy). Details of the proposed changes to the
investment objectives and policy, which have been approved by the FCA, will be
set out in the notice relating to the Company's Annual General Meeting and
shareholders will be asked to approve the changes at the Company's Annual
General Meeting.
Details of the Company's current investment objectives, investment policy and
investment parameters, which applied throughout the financial year ending 31
January 2025, are set out below.
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 WS 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.
The Board is conscious of the potential impact of its investments on the
environment as well as its social and governance responsibilities. The Board
and the Manager believe that sustainable investment involves the integration
of ESG factors within the investment appraisal process and that these factors
should be considered alongside strategic, commercial and financial issues.
Further details can be found on page 31 of the full Annual Report.
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 Deutsche Numis Alternative Markets Total
Return Index. See graph on page 3 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
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 considers 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. As detailed below and in the
Chairman's Statement, following completion of the Strategic Review, the Board
has served notice to terminate the appointment of Amati Global Investors
("AGI") as the Company's investment manager, and to appoint Maven Capital
Partners UK LLP ("Maven") as the new manager. Maven will also be appointed as
administrator and company secretary.
While notice to terminate AGI's appointment was served on 2 December 2024, AGI
remained appointed as the Company's investment manager throughout the
financial year ending 31 January 2025. Details of the terms of AGI's
appointment are therefore set out below. Details of the terms upon which Maven
will be appointed as the Company's investment manager, administrator and
company secretary were announced by the Company on 28 February 2025 and will
be set out in the Company's annual report from the financial year ending 31
January 2026 onwards.
AGI Management Agreement
AGI was first appointed as investment 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, AGI
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 pays to AGI 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 WS Amati UK Listed Smaller Companies Fund, a small
and mid-cap fund managed by AGI. The Company receives a full rebate on the
fees payable by the Company to AGI within this fund either through a reduction
of fees payable by the Company or a direct payment by AGI.
Annual running costs are capped at 3.5% of the Company's net assets, any
excess being met by AGI by way of a reduction in future management fees. The
annual running costs include the Directors' and AGI'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).
Where AGI negotiates and structures an investment directly with a company,
most commonly as a convertible loan, AGI retains the right to charge the
investee company a fee. Any legal expenses incurred by AGI will be paid out of
this fee.
AGI Administration Arrangements
Under the terms of the FASSFAA, AGI also agreed to provide certain fund
administration, company secretarial and accounting services to the Company. As
disclosed previously, AGI and the 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 LDC Nominee Secretary Limited as
Company Secretary of the Company with effect from 1 February 2022. Under the
FASSFAA, AGI has the right to appoint suitable representatives to provide fund
accounting and administration services to the Company. AGI engaged Waystone
Administration Solutions (UK) Limited to act as fund accountant and
administrator.
For the year ending 31 January 2025, the Company paid to AGI a fee of £81,626
per annum (2024: £78,336) paid quarterly in arrears in respect of the
provision of fund accounting and administration services. This fee was subject
to an annual increase in line with the consumer prices index.
AGI's appointment as investment manager and/or fund accountant and
administrator was terminable with twelve months' notice. As announced on 2
December 2024, the Board served notice to terminate the appointment of AGI.
This termination will also result in a change of fund accountant,
administrator and company secretary.
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 The Board places reliance upon the skills and expertise of the Manager,
companies as well as some unquoted companies. By their nature these including its strong track record for investing in this segment of the market.
investments involve a higher degree of risk than investments in larger fully Investments are actively and regularly monitored by the Manager and the Board
listed companies. These companies tend to have limited product lines and niche receives detailed reports on the portfolio in addition to the Manager's report
markets. They can be reliant on a few key individuals. They can be dependent at regular Board meetings. The Manager also seeks to limit these risks through
on securing further financing. With the changes to VCT regulations introduced building a diversified portfolio with companies in different areas within
in the Finance Act 2018 focusing investment in knowledge based companies, sectors and markets at different stages of development.
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 Investments in unquoted companies in particular are subject to strict controls
in developing and commercialising intellectual property, which brings with it and investment limits in recognition of the significant risks involved. In
the risk that another company might develop superior technology, or that the relation to investments of this nature there is an expectation that the
commercialisation strategy may fail. In addition, the liquidity of these investee company is likely to seek admission to AIM, in order to de-risk the
shares can be low and the share prices volatile. 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 does 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 To reduce this risk, the Board has appointed the Manager which has significant
advantage of income tax reliefs on initial investment and ongoing tax-free experience in venture capital trust management and is used to operating within
capital gains and dividend income. Failure to meet the qualifying requirements the requirements of the venture capital trust legislation. In addition, to
could result in investors losing the income tax relief on initial investment provide further formal reassurance, the Board has appointed Philip Hare &
and loss of tax relief on any tax-free income or capital gains received. In Associates as VCT Status Adviser to the Company. Philip Hare & Associates
addition, failure to meet the qualifying requirements could result in a loss reports every six months to the Board to confirm compliance with the venture
of listing of the shares. capital legislation, to highlight areas of risk and to inform on changes in
legislation independently.
The VCT legislation contains a "sunset clause" which would have brought income
tax relief to an end on 5 April 2025. The UK Government addressed this matter Other tax reliefs such as tax-free dividends and exemption from capital gains
and passed the Finance Act 2024 which included the extension to the sunset tax would remain unaffected by the sunset clause.
clause to 5 April 2035. The EU were required to give approval and this has
been given.
Compliance Risk The Company has a premium listing on the London Stock Exchange and is required Board members and the Manager have considerable experience of operating at
to comply with the rules of the UK Listing Authority, as well as with the senior levels within quoted businesses. In addition, the Board and the Manager
Companies Act, Financial Reporting Standards and other legislation. Failure to receive regular updates on new regulations from the auditor, lawyers, the
Company Secretary and other professional bodies.
comply with these regulations could result
in a delisting of the Company's shares, or
other penalties under the Companies Act 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.
Internal Control Risk Failures in key controls within the Board or within the Manager's business The Board seeks to mitigate the internal control risk by setting policy,
could put assets of the Company at risk or result in reduced or inaccurate regular reviews of performance by the Manager and service providers,
information being passed to the Board or to shareholders or to other enforcement of contractual obligations and monitoring progress and compliance.
stakeholders.
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 44 of the full Annual
Report and Accounts.
Financial Risk By its nature, as a venture capital trust, the Company is exposed to market The Company's policies for managing these risks are outlined in full in notes
price risk, credit risk, liquidity risk and interest rate risk. 16 to 19 to the financial statements below. The Company is financed wholly
through equity.
The Company has from time to time been exposed to currency risk.
Economic Risk Events such as economic recession, not only in the UK, but also in the core The Manager seeks to mitigate economic risk by seeking to adopt a suitable
markets relevant to our investee companies, together with a movement in investment style for the current point in the business cycle, and to diversify
interest rates, can affect investor sentiment towards liquidity risk, and the exposure to geographic end markets.
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. US President Trump's aggression
and unpredictability leaves other countries wrong footed and unsure of the
future. Wars in Europe and the Middle East combine to give grave concern. This
happens at the same time as countries are seeing levels of government debt
that have not been this high since World War II, and the UK is no exception.
Government actions to deal with Covid-19 and to boost the economy during the
pandemic resulted in rising inflation and therefore interest rates, the
impacts on the cost of living being exacerbated by high energy prices caused
by poor Government energy policy decision-making in the rush to go green,
reliance for energy supplies on Russia and the impact of that country's
invasion of Ukraine. UK financial markets and the UK economy have still not
recovered from the measures taken by the government during the Covid-19
pandemic, and the country continues to suffer from a lack of growth and the
threat of recession. Money invested in UK stock markets has flowed out of the
country with the main beneficiaries being US stock markets.
Operational Risk Failure of the Manager's, or other contracted third parties', accounting The Manager regularly reviews the performance of third-party suppliers at
systems or disruption to their businesses might lead to an inability to monthly management meetings and the Nomination Committee of the Company
provide accurate reporting and monitoring or loss to shareholders. considers third-party suppliers' performance annually. The Board considers the
Manager's performance at every quarterly meeting.
Concentration Risk Although the Company has a diversified portfolio of investments, the twenty Portfolio weighting limits apply to the portfolio's largest holdings such that
largest investments (excluding money market funds) account for 58% of the no investee company holding is allowed to approach a size of 10% of the
total investments. A material fall in any one non-money market investment can portfolio, with action normally taken well before that level particularly
have a significant impact on the overall net asset value. 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 The Board places great importance on communication with its shareholders and
existence of the business and its future growth. encourages shareholders to attend the AGM and an annual investor event and
welcomes communication from shareholders as described more fully on page 42 of
the full Annual Report and Accounts.
During the year, the Board has had regular engagement with a large number of
shareholders, both directly and through a survey conducted by the Manager, as
part of the Strategic Review.
Investment Manager The Manager's performance is fundamental for the Company to successfully The Board's decisions are intended to achieve the Company's objective to
deliver its investment strategy, meet its investment objective and its generate tax free capital gains and income on investors' funds and maintaining
long-term success. 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. Monthly updates on performance are also circulated to
the Board between board meetings. The Board also expects good standards at the
companies within which the Company is invested and, as described on page 31,
the Manager remains a signatory to the UK Stewardship Code, and the Principles
for Responsible Investment.
In March 2024, the Board announced that, in conjunction with the Manager, it
had launched a Strategic Review to consider the Company's strategic options in
light of the ongoing challenges in the AIM market and the resultant
performance issues faced by the Company. Following the conclusion of this
review, the Board announced the planned change of investment manager on 2
December 2024.
Other service providers, including: In order to function as an investment trust with a premium listing on the The Board maintains regular contact with its key external service providers,
London Stock Exchange, the Company engages a diverse and experienced range of and the quality of the provision of these services is considered by the Board
the registrar, the receiving agent, the tax adviser, the auditor, the lawyers, advisors for support with meeting all relevant obligations. at Board meetings, as well as being subject to a more formal annual review of
the Company Secretary and the Fund Accountant
both performance and fees by the Remuneration Committee.
Investee companies The Company's performance is directly linked to the performance of its Where the Company takes a significant stake in an early stage quoted company,
underlying investee companies and accordingly communication with those the Manager aims where possible to secure direct or indirect board
entities is regarded as very important. representation. The Manager ensures this is achieved on 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. An example of a principal decision made during the year, and
how the Board fulfilled its duties under Section 172, is set out below:
Principal Decision Long-term impact Stakeholder Engagement
Change of Investment Notice was served to terminate the appointment of Amati Global Investors The Board announced in March 2024 that it had launched a Strategic Review, in
Limited (AGI) as the Company's investment manager on 2 December 2024 and the conjunction with the Manager, to consider the available strategic options in
Manager, Investment Board agreed to appoint Maven Capital Partners UK LLP ("Maven") as the new light of the ongoing challenges faced in the AIM market and the resultant
investment manager, administrator and Company Secretary. The terms on which performance issues faced by the Company. The Board worked closely with the
Objectives and Policy Maven will be appointed were announced on 28 February 2025. Having agreed Manager to consider a number of options, and as part of this review, the
terms for the early termination of the current manager, a new investment Manager undertook a shareholder survey to better understand shareholders'
management agreement has been entered into with Maven under which Maven's views. The results of this survey were shared in full with the Board and
appointment is expected to take effect from 1 May 2025. Further details will carefully considered prior to the decision to change manager being made.
be set out in a separate announcement to be released by the Company on or Further announcements were made on the progress of this review in May 2024,
around 16 April 2025. with the outcome announced on the stock exchange on 2 December 2024.
This change of manager will provide the Company with access to an increased The Chairman has also corresponded with a number of shareholders who contacted
pipeline of investment opportunities and greater resources to support the her directly at AmatiAIMVCTChair@amatiglobal.com during, and following, the
management of the Company's portfolio. Strategic Review process.
The Board is proposing changes to the Company's investment objectives and Shareholders will be asked to approve the changes to the Company's investment
policy that would enable a greater degree of investment in unquoted UK objectives and policy at the upcoming AGM, before they are adopted.
companies with strong growth potential, alongside continued investment in
companies quoted on AIM and AQSE (an AIM Plus strategy). FCA approval of the
proposed changes to the investment objectives and policy was obtained on 25
March 2025.
Payment of a Special Due to a combination of the Company's cash levels remaining high, ongoing The Board carefully considered the impact of a special dividend to
realisations in the portfolio and quality AIM investment opportunities shareholders, including on its cash levels, and it determined that whilst cash
Dividend remaining scarce, the Board considered that payment of a special dividend best and current asset investments had the benefit of liquidity, they do not
utilised the Company's current cash levels. generate exposure to the investment opportunities shareholders have entrusted
the Company to find and therefore a special dividend was in the
best interests of shareholders, to return excess cash. In light of the lack of
current qualifying investment opportunities, the Board also decided it was in
the best interests of shareholder to temporarily suspend the dividend
reinvestment scheme.
Payment of Second Following a number of disposals of qualifying holdings, one of which was the The Board decided it was appropriate to return excess cash to shareholders.
largest qualifying investment in the Company's portfolio, along with some This approach is in line with the Company's dividend policy.
Interim Dividend and partial disposals of other holdings, this had resulted in realisations of
around £16m during the Company's financial year with new qualifying
a further Special investments amounting to £9m.
Dividend
Given the continued high level of cash and current asset investments, the
decision was made to accelerate the timings of dividend payments with the
declaration of a second interim dividend, as well as a special dividend. At
the time of the announcement, this still left cash and current asset
investments representing around 19% of the Company's Net Asset Value. The
Board considered that the payment of a second interim dividend and also a
special dividend best utilises the Company's current cash levels.
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 over the past
couple of years the Board made the decision to no longer pay 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/wp-content/uploads/2024/05/Stewardship-Report-2023.pdf.
Amati is also a signatory to the UN-supported Principles for Responsible
Investment (PRI), which works to understand the investment implications of ESG
and 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 2024, the Manager voted in respect of 59 Amati AIM VCT holdings at 80
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 UK listing rule 11.4.22(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 Company's website, currently:
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 2030, 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 global geopolitical events, energy
prices, sticky levels of 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.
Since the year end, the Company has announced the proposed appointment of a
new female Director, Neeta Patel CBE, to the Board.
On behalf of the Board
Fiona Wollocombe
Chairman
15 April 2025
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 2025 are shown in the table below.
Year ended 31 January 2025
(audited)
Fees Taxable benefits(†) Total Total Fixed remuneration Total variable remuneration
£ £ £ £ £
Julia Henderson 27,556 820 28,376 27,556 -
Brian Scouler 29,761 166 29,927 29,761 -
Fiona Wollocombe 31,965 - 31,965 31,965 -
89,282 986 90,268 89,282 -
Year ended 31 January 2024
(audited)
Fees Taxable benefits(†) Total Total Fixed remuneration Total variable remuneration
£ £ £ £ £
Julia Henderson 26,462 525 26,987 26,462 -
Brian Scouler 28,579 - 28,579 28,579 -
Fiona Wollocombe 30,697 - 30,697 30,697 -
85,738 525 86,263 85,738 -
† Reimbursement of travel expenses
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 2025, whether for loss of office or otherwise.
Directors' shareholdings (Audited)
The Directors who held office at 31 January 2025 and their interests in the
shares of the Company (including beneficial and family interests) were:
31 January 2025 31 January 2024
Shares held % of issued Shares held % of issued
share capital share capital
Julia Henderson 22,376 0.02 22,376 0.01
Brian Scouler 69,341 0.05 69,341 0.04
Fiona Wollocombe 19,763 0.01 19,763 0.01
The Company confirms that it has not set out any formal requirements or
guidelines for a Director to own shares in the Company. There have been no
changes to the Directors' holdings between the year end and the date of this
report.
On behalf of the Board
Julia Henderson
Chairman of the Remuneration Committee
15 April 2025
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
15 April 2025
Income Statement
for the year ended 31 January 2025
Notes 2025 2025 2025 2024 2024 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Loss on investments 8 - (2,889) (2,889) - (44,781) (44,781)
Investment income 2 2,910 - 2,910 3,196 - 3,196
(Loss)/gain on current asset investments - (162) (162) - 55 55
Foreign exchange losses - - - - (32) (32)
Management fee 3 (524) (1,570) (2,094) (676) (2,029) (2,705)
Other expenses 4 (693) (14) (707) (537) (13) (550)
Profit/(loss) on ordinary activities before taxation 1,693 (4,635) (2,942) 1,983 (46,800) (44,817)
Taxation on ordinary activities 5 - - - - - -
Profit/(loss) and total 1,693 (4,635) (2,942) 1,983 (46,800) (44,817)
comprehensive income attributable to shareholders
Basic and diluted earnings/(loss) per ordinary share 7 1.14p (3.12)p (1.98)p 1.31p (31.02)p (29.71)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 2025
Non-distributable reserves Distributable reserves
Share Share Merger Capital Capital Special Capital Revenue Total
capital premium reserve redemption reserve reserve reserve reserve reserves
£'000 £'000 £'000 reserve (non- £'000 (distributable) £'000 £'000
£'000 distributable) £'000
£'000
Opening balance as at 1 February 2024 7,553 3,137 425 1,050 (24,643) 161,685 (6,131) 2 143,078
(Loss)/profit and total comprehensive income for the year - - - - 3,392 - (8,027) 1,693 (2,942)
Contributions by and distributions to shareholders:
Repurchase of shares (253) - - 253 - (4,115) - - (4,115)
Shares issued - - - - - - - - -
Costs of share issues - - - - - - - - -
Dividends paid - - - - - (22,791) - (1,692) (24,483)
Closing balance as at 31 January 2025 7,300 3,137 425 1,303 (21,251) 134,779 (14,158) 3 111,538
for the year ended 31 January 2024
Opening balance as at 1 February 2023 7,578 940 425 908 12,918 177,385 3,108 (1,981) 201,281
(Loss)/profit and total comprehensive income for the year - - - - (37,561) - (9,239) 1,983 (44,817)
Contributions by and distributions to shareholders:
Repurchase of shares (142) - - 142 - (2,896) - - (2,896)
Shares issued 117 2,251 - - - - - - 2,368
Costs of share issues - (54) - - - - - - (54)
Dividends paid - - - - - (12,804) - - (12,804)
Closing balance as at 31 January 2024 7,553 3,137 425 1,050 (24,643) 161,685 (6,131) 2 143,078
The accompanying notes below are an integral part of these financial
statements.
Balance Sheet
as at 31 January 2025
Notes 2025 2024
£'000 £'000
Fixed assets
Investments held at fair value 8 89,856 98,220
Current assets
Debtors 9 228 261
Money market funds 9 13,176 30,547
Cash at bank 10 8,963 15,003
22,367 45,811
Current liabilities
Creditors: amounts falling due within one year 11 (685) (953)
(685) (953)
Net current assets 21,682 44,858
Total assets less current liabilities 111,538 143,078
Capital and reserves
Called-up share capital* 12 7,300 7,553
Share premium account* 3,137 3,137
Merger reserve* 425 425
Capital redemption reserve* 1,303 1,050
Capital reserve (non-distributable)* (21,251) (24,643)
Special reserve 134,779 161,685
Capital reserve (distributable) (14,158) (6,131)
Revenue reserve 3 2
Equity shareholders' funds 111,538 143,078
Net asset value per share 13 76.4p 94.7p
* These reserves are not distributable.
The financial statements above and below were approved and authorised for
issue by the Board of Directors on 15 April 2025 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 2025
2025 2024
£'000 £'000
Cash flows from operating activities
Investment income received 2,118 2,204
Investment management fees paid (2,233) (2,957)
Transaction costs (14) (13)
Other operating costs (613) (559)
Net cash outflow from operating activities (742) (1,325)
Cash flows from investing activities
Purchase of investments (10,013) (13,276)
Sale of investments 15,708 12,887
Purchase of current assets (23,297) (69,952)
Disposal of current assets 41,132 40,229
Net cash (outflow)/inflow from investing activities 23,530 (30,112)
Net cash (outflow)/inflow before financing activities 22,788 (31,437)
Cash flows from financing activities
Issue costs (19) (35)
Share buy-backs (4,326) (2,684)
Equity dividends paid (24,483) (10,436)
Net cash (outflow)/inflow from financing activities (28,828) (13,155)
(Decrease)/increase in cash (6,040) (44,592)
Opening cash & cash equivalents 15,003 59,595
Closing cash & cash equivalents 8,963 15,003
Reconciliation of Loss on Ordinary Activities Before Taxation to Net Cash
Outflow from Operating Activities
Loss on ordinary activities before taxation (2,942) (44,817)
Loss on investments 2,889 44,781
Loss/(gain) on current assets 162 (55)
Foreign exchange loss on currency balances - 32
Less dividends reinvested (846) (1,059)
Decrease in creditors (37) (275)
Decrease in debtors 32 68
Net cash outflow from operating activities (742) (1,325)
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 the likely impacts of
international and economic uncertainties on the Company, operations and
investment portfolio. The Directors also regularly assess the resilience of
key third-party service providers, most notably this will include the new
Investment Manager and Fund Administrator.
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 Directors have reviewed stress testing and scenario analysis prepared by
the Investment Manager to assist them 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 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 and money market funds 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.
Costs in relation to the purchase or sale of investments are recognised as a
capital expense.
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.
Transaction costs in relation to the purchase and sale of investments are
allocated to capital.
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. Transaction costs in relation to the purchase or sale of investments
have been recognised as a capital expense.
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 fair values 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 by determining the present value
of future payments, discounted at a market interest rate for a similar loan.
This method considers the specific details of each debt, including the coupon
rate, time to expected repayment, changes in credit risk, and other market
conditions. The option is valued using the Black-Scholes model.
The valuation of the Company's investment in WS 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, Waystone Fund
Managers Limited.
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.
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 at Bank
For the purposes of the Balance Sheet, cash comprises cash at bank and demand
deposits.
Demand deposits are short term deposits with deposit taking banks readily
realisable at the Company's discretion.
For the purposes of the Statement of Cash Flows, cash consist of cash at bank
and demand deposits as defined above, net of outstanding bank overdrafts when
applicable.
Current Asset Investments
Current asset investments comprise investments in money market funds and are
designated as Fair Value through Profit or Loss. Gains and losses arising from
changes in fair value of current investments are recognised as part of the
capital return within the income statement and allocated to the capital
reserve.
The current asset investments are readily convertible into cash at the choice
of the Company within seven days. The money market funds are used to enhance
returns on surplus cash awaiting investment. These are actively managed and
the performance evaluated by the Investment Manager.
Debtors
Trade receivables, prepayments and other debtors are measured at amortised
cost or estimated fair value, with balances revalued for exchange rate
movements. Any losses arising from impairment are recognised in the income
statement in other operating expenses upon notification.
Creditors
Trade payables and accruals are measured at amortised cost and revalued for
exchange rate movements.
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 and current assets;
· realised exchange gains and losses of a capital nature;
· expenses allocated to this reserve in accordance with the above
policies; and
· capital expenses.
Capital Reserve - investment holding gains, not distributable:
· increase and decrease in the value of investments and current assets
held at the year end; and
· unrealised exchange gains or losses 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 Year to
31 January 31 January
2025 2024
£'000 £'000
Dividends from UK companies 819 835
Dividends from money market funds 1,293 1,372
UK loan stock interest 376 253
Interest from deposits 422 736
2,910 3,196
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
WS Amati UK Listed Smaller Companies Fund.
The investment management fee for the year was as follows:
Year to Year to
31 January 31 January
2025 2024
£'000 £'000
Due to the Manager by the Company at 1 February 605 857
Investment management fee charged to revenue and capital for the year 2,094 2,705
Fees paid to the Manager during the year (2,233) (2,957)
Due to the Manager by the Company at 31 January 466 605
In addition to the investment management fee the Manager also received a fund
accounting and administration fee of £82,000 (2024: £78,000) paid quarterly
in arrears. See note 4.
No performance fee is payable in respect of the year ended 31 January 2025, 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 average net assets over the period, 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). Annual running costs as a
percentage of net assets are 2.0%.
There was no excess of expenses for the year ended 31 January 2025 nor for the
prior year.
4 Other Expenses
Year to Year to
31 January 31 January
2025 2024
£'000 £'000
Income:
Directors' remuneration 89 86
Directors' employer's national insurance 9 3
Directors' expenses 3 1
Auditor's remuneration - audit of statutory financial statements 50 50
Administration fee 82 78
Company secretarial services 56 55
Other expenses 404 264
Total income expenses 693 537
Capital:
Transaction costs on investment transactions charged to capital 14 13
Total 707 550
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 47 of the full Annual Report and
Accounts.
5 Tax on Ordinary Activities
5a Analysis of charge for the year
Year to Year to
31 January 31 January
2025 2024
£'000 £'000
Charge for the year - -
5b Factors affecting the tax charge for the year
Year to Year to
31 January 31 January
2025 2024
£'000 £'000
Loss on ordinary activities before taxation (2,942) (44,817)
Corporation tax at standard rate of 25.00% (2024: 24.03%) (736) (10,770)
Effect of:
Non-taxable dividends (205) (201)
Non-taxable losses on investments 722 10,748
Movement in excess management expenses 215 212
Non-deductible expenses 4 11
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 £7,252,000 (31 January 2024: £7,047,000)
based on a corporate tax rate of 25%.
6 Dividends
Amounts recognised as distributions to equity holders during the year:
2025 2025 2024 2024
Revenue Capital Revenue Capital
£'000 £'000 £'000 £'000
Special dividend for the year ended 31 January 2025 of 10.00p per ordinary - 14,918 - -
share paid on 10 June 2024
Interim dividend for the year ended 31 January 2025 of 2.50p per ordinary 1,692 2,003 - -
share paid on 25 October 2024
Second interim dividend for the year ended 31 January 2025 of 1.50p per - 2,201 - -
ordinary share paid on 17 January 2025
Second special dividend for the year ended 31 January 2025 of 2.50p per - 3,669 - -
ordinary share paid on 17 January 2025
Final dividend for the year ended 31 January 2023 of 3.50p per ordinary share - - - 5,275
paid on 21 July 2023
Interim dividend for the year ended 31 January 2024 of 2.50p per ordinary - - - 3,761
share paid on 24 November 2023
Second interim dividend for the year ended 31 January 2024 of 2.50p per - - - 3,768
ordinary share paid on12 January 2024
1,692 22,791 - 12,804
Set out below are the interim and final dividends paid or proposed on ordinary
shares in respect of the financial year:
2025 2025 2024 2024
Revenue Capital Revenue Capital
£'000 £'000 £'000 £'000
Special dividend for the year ended 31 January 2025 of 10.00p per ordinary - 14,918 - -
share (2024: 0.00p)
Interim dividend for the year ended 31 January 2025 of 2.50p per ordinary 1,692 2,003 - 3,761
share (2024: 2.50p)
Second interim dividend for the year ended 31 January 2025 of 1.50p per - 2,201 - 3,768
ordinary share (2024: 2.50p)
Second special dividend for the year ended 31 January 2025 of 2.50p per - 3,669 - -
ordinary share (2024: 0.00p)
1,692 22,791 - 7,529
7 Earnings per Share
2025 2024
Net profit/ (loss) Weighted Basic and Net profit/ (loss) Weighted Basic and
£'000 average diluted £'000 average diluted
shares Earnings shares Earnings
per share per share
pence pence
Revenue 1,693 - 1.14 1,983 - 1.31
Capital (4,635) - (3.12) (46,800) - (31.02)
Total (2,942) 148,415,333 (1.98) (44,817) 150,837,712 (29.71)
8 Investments
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Opening cost as at 1 February 2024 111,689 - 11,542 123,231
Opening investment holding losses (19,551) - (5,232) (24,783)
Opening unrealised loss recognised in realised reserve (228) - - (228)
Opening fair value as at 1 February 2024 91,910 - 6,310 98,220
Analysis of transactions during the year:
Purchases at cost* 7,531 - 2,702 10,233
Transfer to Level 3 (5,959) - 5,959 -
Disposals- proceeds received (15,151) - (557) (15,708)
- realised gain/(loss) on disposals 3,781 - (10,235) (6,454)
-unrealised gains/(losses) during the year (663) - 4,228 3,565
Closing fair value as at 31 January 2025 81,449 - 8,407 89,856
Closing cost as at 31 January 2025 101,891 - 9,411 111,302
Closing investment holding losses as at 31 January 2025 (20,214) - (1,004) (21,218)
Closing unrealised loss recognised in realised reserve at 31 January 2025 (228) - - (228)
Closing fair value as at 31 January 2025 81,449 - 8,407 89,856
Equity shares 81,449 - 3,900 85,349
Convertible loan notes - - 4,507 4,507
Closing fair value as at 31 January 2025 81,449 - 8,407 89,856
* Includes £10.0m invested in qualifying holdings.
Holdings of ordinary shares in unquoted companies rank pari passu for voting
purposes.
The Company received £15,708,000 (2024: £12,904,000) from the sale of
investments in the year. The book cost of these investments when they were
purchased was £22,162,000 (2024: £21,831,000). 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.
2025 2024
£'000 £'000
Realised gains/(losses) on disposal 2,676 (8,927)
Unrealised losses on investments during the year (5,565) (35,854)
Net losses on investments (2,889) (44,781)
Transaction Costs
During the year the Company incurred transaction costs of £nil (31 January
2024: £nil) on purchases and £14,000 (31 January 2024: £13,000) on disposal
of investments. These amounts are included in capital expenses as disclosed in
the Income Statement.
9 Current assets: Debtors and money market funds
2025 2024
£'000 £'000
Prepayments and accrued income 228 261
Money market funds 13,176 30,547
13,404 30,808
10 Cash at bank
2025 2024
£'000 £'000
Cash at bank 2,963 3,003
Cash on deposit 6,000 12,000
8,963 15,003
11 Creditors: Amounts Falling due within One Year
2025 2024
£'000 £'000
Payable for share buybacks - 212
Fundraising costs - 19
Accruals and other payables 685 722
685 953
The Company at 31 January 2025 had no commitments to invest in qualifying
holdings (2024: £1,000,000).
12 Share Capital
2025 2025 2024 2024
Ordinary shares (5p shares) Number £'000* Number £'000*
Allotted, issued and fully paid at 1 February 151,069,824 7,553 151,548,993 7,578
Issued during the year - - 2,351,086 117
Repurchase of own shares for cancellation (5,060,044) (253) (2,830,255) (142)
At 31 January 146,009,780 7,300 151,069,824 7,553
* Nominal value
During the year a total of 5,060,044 ordinary shares of 5p each were purchased
by the Company at an average price of 80.9p per share.
Further details of the Company's share capital and associated rights are shown
in the Directors' Report on page 36 of the full Annual Report and Accounts.
13 Net Asset Value per Ordinary Share
2025 2024
Net Ordinary NAV Net assets Ordinary NAV
assets shares per share £'000 shares per share
£'000 pence pence
Ordinary share 111,538 146,009,780 76.4 143,078 151,069,824 94.7
14 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
Lifesafe Holdings plc 16.7
Northcoders Group plc 13.8
Xeros Technology Group plc 12.8
Feedback plc 11.4
Velocity Composites plc 10.5
Fadel Partners, Inc 10.3
Tan Delta Systems plc 9.9
Ixico plc 9.3
One Media iP Group plc 8.0
Aurrigo International plc 7.6
Cordel Group plc 7.6
Block Energy plc 7.0
Intelligent Ultrasound plc 6.7
Itaconix plc 5.8
Hardide plc 5.7
Zenova Group plc 5.5
Ensilica plc 5.1
Verici DX plc 5.0
Sosander plc 5.0
Fusion Antibodies plc 4.9
Water Intelligence plc 4.7
Windar Photonics plc 4.3
Kinovo plc 3.4
Getech Group plc 3.1
Eden Research plc 3.1
Strip Tinning Holdings plc 3.1
15 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, money market funds, or companies to be traded on AIM.
Classification of financial instruments
The Company held the following categories of financial instruments at 31
January:
2025 2024
£'000 £'000
Assets at fair value through profit or loss:
Investments 89,856 98,220
Money market funds 13,176 30,547
Cash at bank and demand deposits 8,963 15,003
Creditors (amounts due within one year) measured at amortised cost:
Payable for share repurchases outstanding - (212)
Accrued expenses and other payables (685) (741)
Total for financial instruments 111,310 142,817
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 2025 Year ended 31 January 2024
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Equity shares 81,449 - 3,900 85,349 91,910 - 2,151 94,061
Convertible loan notes - - 4,507 4,507 - - 4,159 4,159
Money market funds 13,176 - - 13,176 30,547 - - 30,547
94,625 - 8,407 103,032 122,457 - 6,310 128,767
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 and fully listed companies. Investments in WS 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.
Convertible Loan Notes (CLNs) are fair valued using the present value of
future cashflows using appropriate discount rates, benchmarking and assessing
market transactions of similar CLNs. Further to this the fair value and
interest accrued of the CLNs will be referenced to the assessment of
disclosures made by the underlying investee company, (for example management
accounts and forecasts), 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.
Money market funds are fair valued at the latest published price.
Details of movements in Level 3 financial assets are set out below:
Level 3 financial assets at fair value
Year ended 31 January
2025 Year ended 31
January 2024
Equity Convertible Equity Convertible
shares loan notes Total shares loan notes Total
£'000 £'000 £'000 £'000 £000 £'000
Opening balance at 1 February 2,151 4,159 6,310 166 4,577 4,743
Transfer from/(to) 5,959 - 5,959 (4) - (4)
Level 1
Purchases at cost 1,722 980 2,702 2,000 500 2,500
Disposal proceeds (10) (547) (557) - - -
Total net losses recognised in the income statement (5,922) (85) (6,007) (11) (918) (929)
Closing balance at 31 January 3,900 4,507 8,407 2,151 4,159 6,310
16 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.
17 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 valuation 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.
Investments of £81,449,000 as at 31 January 2025 are traded (31 January 2024:
£ 91,910,000). A 30% decrease in stock prices as at 31 January 2025 would
have decreased the net assets attributable to the Company's shareholders and
increased the loss for the year by £24,435,000 (31 January 2024:
£27,573,000); 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 money market funds as at 31 January 2025 £13,176,000 (31 January 2024:
£30,547,000) are not subject to significant market volatility through
predominantly holding cash with regulated institutions.
As at 31 January 2025 8.2% (31 January 2024: 4.9%) of the Company's
investments are in unquoted companies held at fair value. A change in market
and company specific inputs that would result in a 30% decrease in the fair
value of unquoted investments at 31 January 2025 would have decreased the net
assets attributable to the Company's shareholders and increased the loss for
the year by £2,522,000 (31 January 2024: £1,893,000); 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 had no exposure to any foreign currency (31 January 2024: £nil).
The Company may have exposure through investee companies.
This exposure is representative at the Balance Sheet date and may not be
representative of the year as a whole.
Interest Rate Risk
Interest rate movements may affect the level of income receivable on cash
deposits, any fixed interest securities and money market funds. The Company
held seven fixed interest investments of £4,507,000 (2024: £4,159,000), the
weighted average interest of the convertible loan interest is 8.34% (2024:
6.08%). 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 2025 would have decreased the net assets attributable to the Company's
shareholders and increased the loss for the year by £45,000 (31 January 2024:
£41,000); 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, if the level of holdings was maintained for a
year. The convertible loan notes are fixed interest.
The Company held a cash balance at 31 January 2025 of £8,963,000 (2024:
£15,003,000). 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 £89,000
(2024: £150,000). Management proactively manages cash balances. If there were
a fall of 1% in interest rates, it would potentially reduce revenue of the
Company by £89,000 (2024: £150,000).
The Company held £13,176,000 at 31 January 2025 (2024: £30,547,000) in three
money market funds. If the level of holdings was maintained for a year, a rise
in interest rates of 1% would increase revenue by £132,000 (2024: £305,000)
or a fall reduce revenue by £132,000 (2024: £305,000).
18 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 2025,
the financial assets exposed to credit risk, representing convertible loan
stock instruments, amounts due from brokers, accrued income, money market
funds and cash amounted to £26,874,000 (31 January 2024: £49,970,000).
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 2025, cash is held at The Bank of New York Mellon (BNYM), in a
deposit account at an A+ rated bank, and in three money market funds for the
purposes of diversification and risk management. 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 monitors the credit
worthiness of BNYM, currently rated at Aa1 (Moody's), and the banks in which
deposits are held.
There were no significant concentrations of credit risk to counterparties at
31 January 2025 or 31 January 2024.
19 Liquidity Risk
Liquidity risk is mitigated by the fact the Company has, at 31 January 2025,
£22,139,000 (2024: £45,550,000) in cash and money markets funds, with
further readily realisable investments which can be sold to meet funding
commitments. The available cash enables the Company to meet any obligations of
the Company as they fall due, and finance future additional investments.
The holding of cash is diversified through the holding of a deposit with an A+
rated bank, and money market funds that are readily convertible to known
amounts of cash and subject to insignificant risk of changes in value.
The Company is a close-ended fund, assets do not need to be liquidated to meet
redemptions, and sufficient liquidity is maintained to meet obligations as
they fall due.
The Company's investments in unlisted equity investments, which are not traded
on an organised public market 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, or to respond to specific events such
as deterioration in the creditworthiness of any particular issuer. The
proportion of the portfolio invested in unlisted investments at 31 January
2025, £8,407,000 (2024: £6,310,000) is not considered significant given the
amount of cash, money market funds and readily realisable securities.
The Company's liquidity 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 maturity profile of the financial liabilities, at 31 January 2025, of
£685,000 (2024: £953,000) is that all are due in one year or less.
20 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 12 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.
21 Post Balance Sheet Events
The Board has announced a special dividend of 10 pence per share. Full details
of the dividend are included in the Chairman's Statement above.
The Company has agreed terms for the early termination of the appointment of
the current investment manager and entered into a new investment management
agreement with Maven Capital Partners UK LLP. Further details are set out in
the Chairman's Statement above.
Since the year end, the Company has announced the proposed appointment of
Neeta Patel CBE. Further details on the timing of her appointment will be
announced in due course.
The following transactions have taken place between 31 January 2025 and the
date of this report: 1,623,155 shares bought back.
22 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 31 January 31 January 31 January
2025 2025 2024 2024
shares held % shares held shares held % shares held
Paul Jourdan* 632,805 0.43% 632,805 0.42%
David Stevenson 26,753 0.02% 26,753 0.02%
* includes 26,931 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 47 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
8(th) 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 Ironmongers' Hall, Shaftesbury Place, Barbican, London EC2Y 8AA on
Thursday 19 June 2025 starting at 12pm. The Notice of AGM will be posted to
shareholders separately in due course.
The full audited Annual Report and Accounts for the year ended 31 January 2025
will shortly be available on the Company's website www.amatiglobal.com
(http://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
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
A copy of the Annual Report and Accounts will be posted to shareholders
shortly. The Notice of Annual General Meeting will also be posted to
shareholders shortly.
Enquiries:
Fiona Wollocombe, Chair
Amati AIM VCT plc
Email: AmatiAIMVCTChair@amatiglobal.com
(mailto:AmatiAIMVCTChair@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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