Source - RNS
RNS Number : 3266L
Amati VCT 2 plc
30 September 2016
 

Amati VCT 2 plc

HALF-YEARLY REPORT

For the six months ended 31 July 2016

 

Amati VCT 2 plc announces that its 2016 Half-Yearly Report has been published. The full report will be made available on the National Storage Mechanism website: http://www.morningstar.co.uk/uk/NSM and can be accessed via the Company's website at www.amatiglobal.com/avct2_literature.php.  It will be circulated to shareholders shortly.

 

OVERVIEW

 

Table of investor returns to 31 July 2016


 

 

 

 

Date

 

NAV Total Return with dividends reinvested

FTSE AIM All-Share Total

Return

Index

Re-launch as Amati VCT 2 (the "Company") following merger

 

9 November 2011*

 

48.4%

 

8.9%

Appointment of Amati Global Investors ("Amati") as Manager of Amati VCT 2, which was known as ViCTory VCT at the time

 

 

25 March 2010

 

 

55.7%

 

 

13.3%

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

 

 

Key data (Unaudited)

 

6 months ended

31/07/16

Year

ended

31/01/16

6 months ended

31/07/15

Net Asset Value ("NAV")

£36.7m

£32.4m

£33.3m

Shares in issue

32,004,570

30,259,489

30,230,851

NAV per share

114.7p

107.1p

110.0p

Bid price

109.0p

102.5p

103.0p

Mid price

109.3p

102.8p

103.3p

Market capitalisation

£35.0m

£31.1m

£31.2m

Share price discount to NAV

4.7%

4.0%

6.1%

NAV Total Return (assuming re-invested dividends)

10.6%

6.1%

6.3%

FTSE AIM All-Share Total Return Index

9.8%

1.8%

9.5%

Ongoing charges*

2.7%

 

2.6%

2.7%

Dividends declared during the period

2.75p

6.25p

2.75p

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

 

 

Table of Historic Returns from launch to 31 July 2016 attributable to shares issued by VCTs which have been merged into Amati VCT 2





NAV Total





 

NAV Total

Return with

FTSE AIM

All-Share




Return with

dividends

Total




dividends

not

Return


Launch date

Merger date

re-invested

re-invested

Index

Singer & Friedlander AIM 3 VCT ('C' shares)

 

 

4 April 2005

 

 

8 December 2005

 

 

-13.9%

 

 

-16.4%

 

 

-21.4%

Invesco Perpetual AiM VCT

 

30 July 2004

 

8 November 2011

 

-23.8%

 

-28.9%

 

-1.1%

Amati VCT 2 (originally Singer & Friedlander AIM 3 VCT*)

 

 

 

29 January 2001

 

 

 

n/a

 

 

 

-21.5%

 

 

 

-23.0%

 

 

 

-39.0%

Singer & Friedlander AIM 2 VCT

 

29 February 2000

 

22 February 2006

 

-39.8%

 

-40.2%

 

-67.7%

Singer & Friedlander AIM VCT

 

28 September 1998

 

22 February 2006

 

-58.9%

 

-35.0%

 

4.7%

*Singer & Friedlander AIM 3 VCT changed its name to ViCTory VCT on 22 February 2006 and to Amati VCT 2 on 8 November 2011.

 

 

Chairman's Statement

 

Overview

The first half has seen strong performance in the Company's portfolio following the market falls at the end of the prior year, notwithstanding the sharp setback in the immediate aftermath of the referendum on EU membership. As indicated at the year end, during 2015 the Manager, encouraged by the Board, adopted an approach of making fewer, but larger, new qualifying investments, targeting companies at the more mature end of spectrum allowed for by the VCT regulations. In conjunction with this, the Manager is tending to hold, rather than sell, shares in the successful companies, based on the recognition that the portfolio concentration that this produces as the portfolio matures is likely to be beneficial for performance. It is also a real strength which we can offer to investee companies. As a result of these factors the weighted average market capitalisation of the qualifying portfolio stood at £138m at the period end, which is a good indication of its relative maturity, and the top 10 qualifying holdings now represent 47% of the Company's Net Asset Value. 

 

The year end report also predicted a hiatus in terms of new qualifying investment opportunities of sufficiently good quality following the introduction of the new VCT legislation last November.  HMRC's draft guidance on this legislation was published in May, and is expected to be finalised later this year. Views on the draft guidance were sought, and the AIC made a substantial submission of recommendations on the guidance, which was supported by a submission from Amati Global Investors.

 

Against this backdrop, one new qualifying investment was made during the period, and we expect the pace of new investment to pick up somewhat in the second half, albeit below levels seen in the last few years.  The reduced number of opportunities, combined with the £5m limit on any single fund raising from all VCTs and EIS investors, means that new investments of good quality are likely to be highly sought after, and hence significantly over-subscribed in respect of the qualifying shares.  This means that the Manager's ambition to take larger initial positions may be hard to realise whilst this situation persists.

 

Investment Performance and Dividend 

The NAV Total Return for the six month period was 10.6%, which compares to a rise of 9.8% for the FTSE AIM All-Share Total Return Index.  Performance was significantly boosted by a sharp rise in the value of the Company's largest single investment, Accesso, which continues its impressive progress.  Overall performance remained ahead of the wider AIM market, despite the disappointment of having to write down the value of two loan note holdings.   Full details are given in the Manager's review.

 

The dividend policy of the Company is to pay between five and six percent of year-end net asset value, subject to the availability of liquidity and sufficient distributable reserves. In line with this the Board is declaring an interim dividend of 2.75p per share, to be paid on 25 November 2016 to shareholders on the register on 14 October 2016.

 

Other Corporate Developments

A joint top up offer with Amati VCT was launched in October 2015, raising a total of £5.6m when the offer closed on 15 July 2016, of which £2.7m was subscribed for shares in Amati VCT 2.

 

Outlook

There have been a number of positive developments in the portfolio companies over the past six months, and this creates a healthy backdrop for future performance, notwithstanding the uncertainties that will arise from political developments in both Europe and the US over the coming year.  The Board is also confident that there will be further opportunities to make attractive qualifying investments on AIM.  Given the high weighting of qualifying holdings held by the Company, the Manager is under no pressure to make investments which do not meet the demanding quality criteria sought.

 

Julian Avery

Chairman

30 September 2016


For any matters relating to your shareholding in the Company, dividend payments, or the Dividend Reinvestment Scheme, please contact Share Registrars on 01252 821390, or by email at
[email protected]. For any other matters please contact Amati Global Investors ("Amati") on 0131 503 9115 or by email at [email protected].  Amati maintains an informative website for the Company - www.amatiglobal.com - on which monthly investment updates, performance information, and past company reports can be found. 

 

 

Fund Manager's Review

 

Market Review

After significant market weakness in early January 2016, driven by fears of slowing global growth and mirrored in a slumping oil price, UK stocks reached a turning point around the middle of the month. The catalysts for this can be traced to comments from both the Bank of England and the European Central Bank ("ECB"), to the effect that, in response to the economic outlook, a rise in UK interest rates would be delayed and further EU monetary stimulus was likely. In March the ECB duly cut interest rates and announced further quantitative easing. A continued environment of ultra-accommodative policy boosted all capital markets, and the UK enjoyed a strong rebound, reaching a high point for the period immediately before the EU referendum in late June. The unexpected result initially created a high degree of investor uncertainty, causing UK equities and sterling to sell off dramatically, but a rapid transition to a new government stabilised concerns and saw the stock market return to its previous high by the end of the period, amidst the realisation that the Brexit process wasn't going to begin any time soon.

 

Index leadership came from large, FTSE 100 companies, influenced by a renewed appetite for resources stocks, but also from an upgrading of international earnings following the weakness of sterling late in the period. Smaller companies, including AIM stocks, also performed well, but mid-sized, FTSE 250 companies lagged due to a heavier dependency on UK based earnings within a more uncertain economic outlook. Sector patterns were polarised, with international mining, technology and industrials dominating amongst gainers, whilst domestically exposed construction and housebuilding suffered heavy losses.

 

Performance

The NAV Total Return for the six month period was 10.6%.  This compares to the FTSE AIM All Share Total Return over the same period of 9.8%.  Mirroring the broader market, the period began with a fall in the Company's NAV before a significant rebound between the months of March and May. The surprise Brexit vote sent the Company's NAV Total Return down 8.3% in June before rebounding by 8.7% in July.

 

The best performer over the period was Accesso Technology Group ("Accesso"), a business with which long-standing shareholders will be familiar.  The shares ended the period 70% higher following a strong start to 2016 with good organic growth across all divisions and eighteen new contract wins, including deals for Accesso Passport, the group's hosted ticketing ecommerce solution, with the Henry Ford Museum in Michigan and the Pacific Science Centre in Seattle.  In addition to these new client wins, Passport continues to be rolled-out across Merlin Entertainment's global estate.  With over 90% of revenues billed in US Dollars from North American customers, the attractions of Accesso have been enhanced by the post-Brexit sterling weakness.  As this is a very significant position in the portfolio (10.7%), movements in the share price will tend to dwarf the impact of other stocks.  However, we are reluctant to reduce our exposure yet, as we still see good opportunities ahead for the business, and it would be hard to find a new investment in something as attractive.  The second most important contributor to performance was SRT Marine Systems ("SRT", formerly Software Radio Technology), which was awarded a contract to supply the Panama Canal with its GeoVS maritime display and data management system.  This order is part of the canal's investment to increase its shipping capacity and the recognition that more shipping traffic will require technologies, such as those developed by SRT, to enhance the situational awareness and control of the operators.  This contract followed another significant deal with Indonesia for the development and implementation of a national integrated maritime system, which is expected to generate revenues of $100 million to SRT over a three year period.  To put this into context, SRT reported revenues of £10.8 million for the full year to March 2016.  The impact of the positive news sent the shares 186% higher over the period.  Quixant, the Cambridge-based designer and developer of hardware and software for the gaming industry, was another strong performer, its shares rising 48% as it bedded in its acquisition of Densitron Technologies, an AIM-listed screen manufacturing business.  The combination of the two businesses allows Quixant to augment its computing units with gaming monitors, gaining a greater share of the cost of each gaming machine unit sold.  Over the course of 2016, Densitron should double the size of the group and expand the offering into other verticals besides gaming.  AB Dynamics gained 64% over the period, bucking the trend of disappointing trading and share price performance in the engineering sector.  AB Dynamics' focus on providing critical safety testing equipment to automotive manufacturers with big investment plans for next generation cars has, thus far, stood the business in good stead.  Sales to North American and Far Eastern customers were particularly strong and the continued advance towards autonomous cars is expected to drive continued demand for AB Dynamics' products.  A share price rise of 59% for Keywords Studios ("Keywords") followed a very busy period, during which five acquisitions were completed.  Keywords, whose CEO gave a memorable presentation to investors following Amati VCT 2's AGM in June, has delivered a sequence of positive earnings surprises as it continues to make well-priced acquisitions of service providers to the global video games industry.  The industry is consolidating as games publishing customers seek fewer suppliers with a broad suite of capabilities in multiple geographies and Keywords has established itself as a key player in this process.  Their strategy has driven revenues from £4.8 million in 2010 to £49.5 million in 2015. 

 

The most significant negative performers during the period were both convertible loan note holdings in businesses with overseas operations.  We took the decision to write-off the value of the Company's holding in RAME Energy ("RAME"), a specialist in developing wind-farms in Chile.  RAME was unable to complete a fundraising in time over the summer, for a variety of reasons.  The shares were delisted from AIM and administrators were subsequently appointed.  RAME's Chilean subsidiary has now been sold for $1.2m, and a distribution should be made to the unsecured creditors of the company over the next couple of months, possibly in the range of 15-25% of the amounts outstanding, althought there is no certainty of that yet.  Polyhedra, an unquoted holding with operations in Italy, continued to disappoint.  Polyhedra relies on key contracts with the Italian state for the disposal of pharmaceutical products and these are subject to periodic review.  As it became increasingly likely that its most significant contract would not renew, we wrote-down the remaining value of the Company's convertible loan note instrument to nil.  Solid State was one of the Company's best performing holdings in 2015 but disappointed in the period under review.  The shares fell sharply following confirmation that its contract with the Ministry of Justice for electronic tagging hardware had been terminated due to the government abandoning the project.  Whilst disappointing, we have maintained the Company's position in Solid State as it is sufficiently diverse to cope with this loss and we are confident that it will return to solid levels of growth.  Frontier Developments also fell during the period, having seen a delay to the release of a major update to its game Elite Dangerous: Horizons.  The company is due to release the first version of a new game franchise, Coaster Park Tycoon, by the end of 2016.

 

Transactions

 

Qualifying Portfolio

 

The Company made only one new qualifying investment during the period, alongside one small 'follow-on' investment in an existing holding.  This represents a quiet period for qualifying activity and it is important to put this into context.  The most recent changes to the VCT legislation became effective in November 2015.  The widespread nature of these changes were reported in the most recent annual report and the result has been a slow-down in the absolute number of available investment opportunities and in those that meet our strict selection criteria.  The sources of our deals are broking firms that advise AIM listed companies and these firms are inevitably going through a process of understanding the rules and the implications for their clients' capital raising plans.  We maintain an active dialogue with the brokers on the characteristics that we are looking for under the new rules.  We expected a much reduced level of new investment for a period, but are now seeing progress, which is translating into signs of an improved number of new investment opportunities.

 

The new qualifying investment was in Genedrive (formerly Epistem), a molecular diagnostics company.  The value of Genedrive lies in a point of care diagnostic tool of the same name, which has been developed to provide a low cost, versatile and simple to use diagnostics platform for the diagnosis of infectious disease and for use in patient stratification (personalised medicine), pathogen detection and other indications.  The first market for the Genedrive platform is in India, where a tuberculosis (TB) test has been developed for sale.  TB is an epidemic in India and the device is being targeted at 5,000 private laboratories that conduct tests for the disease.  A Hepatitis C test is due for launch in 2017 and Genedrive is working with the US Department of Defence to develop a test which can identify pathogens for the purposes of protection against biological warfare.  The Company invested £0.3 million in the fundraising.  We sought to invest more, but the issue was heavily over-subscribed. 

 

The small follow-on investment (less than £0.1 million) referred to was made in Fox Marble, as part of a fund raise to finance the completion of its factory for the cutting and polishing of marble extracted from the company's quarries in Kosovo and Macedonia.  The factory is expected to be commissioned in autumn 2016 and should provide the catalyst for both revenues and margins to increase.

 

The level of selling activity in the qualifying portfolio was also muted.  The only sale during the period consisted of a partial reduction in the Company's holding of TLA Worldwide ("TLA"), the sports player representation and marketing business.  TLA was the subject of a takeover bid by a US listed cash shell, led by the management team.  The consideration was structured as a mixture of cash and shares in the new shell. The anticipated demand for the new vehicle amongst US institutions was not as strong as originally anticipated and the board of TLA withdrew its recommendation for the offer. Our decision to reduce the Company's position reflected our view on the likelihood of completion. A total of £0.3 million was realised.

 

Non-Qualifying Portfolio

 

Activity in the non-qualifying portfolio was restricted to a further investment in the TB Amati UK Smaller Companies Fund (the "Fund"), which totalled £0.7 million.  For the six month period, the Fund performed in line with with its benchmark, gaining 7.4% against the Numis Smaller Companies (inc AIM ex Investment Trusts) Index Total Return of 7.6%.

 

Outlook

 

The immediate aftermath of the EU referendum has been an environment in which every item of macroeconomic and market sentiment data published for the UK has been heavily scrutinised. So far the interpretation is that whilst there was a degree of slowdown in domestic economic activity before the vote, there has been no marked change in direction thereafter, perhaps in no small part due to the massive new injection of liquidity announced by the Bank of England. The stock market has responded positively to this, with all indices now well above the levels of late June. The UK is, however, barely at the beginning of a long and complex Brexit process, which is likely to extend for several years. The stock market will not only have to address the final negotiated outcomes for major issues, such as access to the single market with or without labour mobility, but also the intervening impact of structurally weak sterling, lower interest rates, higher inflation, and a likely worsening spending deficit alongside fiscal stimulus. The portfolio remains focused on dynamic smaller companies, many of which are achieving durable growth from a combination of technology, intellectual property or strong market position. These types of company were amongst the first to bounce following the referendum, and should be less affected by an unpredictable outlook for the UK economy, particularly where they have significant overseas earnings.

 

Dr Paul Jourdan, Douglas Lawson and David Stevenson

Amati Global Investors

30 September 2016

 

 

Investment Portfolio

as at 31 July 2016

 


 

Cost

£'000

 

Valuation

£'000

Market Cap

£m

 

 

Sector

 

 

Status

Dividend Yield#

%

 

Fund

%

Accesso Technology Group plc†@

274

3,934

320.0

Technology

AIM

-

10.7

TB Amati UK Smaller Companies Fund@

2,801

3,403

-

Financials

OEIC

1.5

9.3

IDOX plc*@

239

2,012

228.3

Technology

AIM

1.6

5.5

Quixant plc†@

386

1,921

150.1

Technology

AIM

0.8

5.2

Brooks Macdonald Group plc†@

1,154

1,626

247.3

Financials

AIM

1.9

4.4

GB Group plc†@

224

1,602

396.6

Technology

AIM

0.8

4.4

AB Dynamics plc†@

259

1,443

85.3

Industrials

AIM

0.6

3.9

Universe Group plc†@

267

1,186

23.7

Industrials

AIM

-

3.2

Ideagen plc†@

496

1,182

95.0

Technology

AIM

0.4

3.2

Keywords Studios plc†@

437

1,125

170.8

Industrials

AIM

0.4

3.1

Top Ten

6,537

19,434





52.9

Bilby plc†@

574

1,089

43.3

Industrials

AIM

2.3

3.0

Learning Technologies Group plc*@

746

1,066

125.6

Industrials

AIM

0.6

2.9

Tristel plc†@

439

1,054

50.6

Health care

AIM

3.8

2.9

SRT Marine Systems plc*@

579

1,007

67.6

Technology

AIM

-

2.7

TLA Worldwide plc†@

343

918

76.7

Consumer services

AIM

-

2.5

Frontier Developments plc†@

549

902

59.7

Consumer goods

AIM

-

2.5

Fox Marble Holdings plc Ordinary shares & 8% Convertible Loan Note*@

1,205

867

16.7

Basic Materials

AIM/Unquoted

-

2.4

Science in Sport plc†@

710

757

23.3

Consumer goods

AIM

-

2.1

Anpario plc†@

272

740

52.8

Health care

AIM

2.2

2.0

Tasty plc†

320

738

85.4

Consumer services

AIM

-

2.0

Top Twenty

12,274

28,572





77.9









Crawshaw Group plc†@

369

702

63.1

Consumer services

AIM

0.7

1.9

Hiscox Limited@

490

610

3,025.7

Financials

AIM

2.5

1.7

Premier Technical Services Group plc†@

403

580

66.1

Industrials

AIM

1.8

1.6

Belvoir Lettings plc*@

339

479

44.1

Financials

AIM

5.1

1.3

Netcall plc†

110

318

72.1

Technology

AIM

5.7

0.9

Venn Life Sciences Holdings plc*@

274

318

15.4

Health care

AIM

-

0.9

Sportsweb.com*

352

317

2.8

Industrials

Unquoted

-

0.9

Solid State plc†@

243

315

26.4

Industrials

AIM

3.9

0.9

FairFX Group plc*@

463

305

29.9

Financials

AIM

-

0.8

Kalibrate Technologies plc*@

350

301

23.0

Technology

AIM

-

0.8

Genedrive plc*@

299

299

15.0

Health care

AIM

-

0.8

Water Intelligence plc†@

170

269

7.2

Industrials

AIM

-

0.7

Synectics plc†

342

267

34.7

Industrials

AIM

1.5

0.7

Dods (Group) plc*

596

260

44.3

Consumer services

AIM

-

0.7

MartinCo plc†@

141

186

29.0

Financials

AIM

4.9

0.5

Mirada plc*@

416

176

6.3

Consumer services

AIM

-

0.5

Brighton Pier Group plc (The) *@

292

164

28.5

Consumer services

AIM

-

0.4

MirriAd Advertising Limited*@

486

137

4.2

Technology

AIM

-

0.4

Ilika plc*@

144

127

34.9

Oil & Gas

AIM

-

0.3

Sabien Technology Group plc†@

452

106

1.8

Industrials

AIM

-

0.3

Rosslyn Data Technologies plc*@

365

99

6.8

Technology

AIM

-

0.3

EU Supply plc*@

330

88

4.1

Technology

AIM

-

0.2

Antenova Limited Ordinary shares & A Preference Shares*

100

80

2.6

Telecommunications

Unquoted

-

0.2

Microsaic Systems plc*@

370

55

4.0

Industrials

AIM

-

0.1

Allergy Therapeutics plc*

29

49

109.0

Health care

AIM

-

0.1

MyCelx Technologies Corporation*@

425

35

1.5

Oil & Gas

AIM

-

0.1

Nujira Limited*@

117

5

1.1

Technology

Unquoted

-

-

Investments held at nil value

3,094

-

-



-

-

Total investments

23,835

35,219





95.9

Net current assets


1,500





4.1

Net assets

23,835

36,719





100.0

 

* Qualifying holdings.

† Part qualifying holdings.

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

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

# Next twelve months consensus estimate (Source: Capital IQ).

All holdings are in ordinary shares unless otherwise stated.

Investments held at nil value: Polyhedra Group plc, China Food Company plc, Sorbic International plc, RAME Energy plc, Conexion Media Group plc, Rated People Limited, Celoxia Holdings plc, TCOM Limited.

As at the period 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 2007 is 85.69%.

 

 

Principal Risks and Uncertainties

 

The Company's assets consist of equity and fixed interest investments and cash.  Its principal risks include market risk, interest rate risk, credit risk and liquidity risk.  Other risks faced by the Company include economic, investment and strategic, regulatory, reputational, operational and financial risks as well as the potential for loss of approval as a VCT.  These risks, and the way in which they are managed, are described in more detail in Notes 19 to 22 to the Financial Statements in the Company's Report and Financial Statements for the year ended 31 January 2016.  The Company's principal risks and uncertainties have not changed materially since the date of that report.

 

 

Statement of Directors' Responsibilities

in respect of the half-yearly financial report

 

We confirm that to the best of our knowledge:

·     the condensed set of financial statements which has been prepared in accordance with FRS 104 "Interim Financial Reporting" gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

·     the Chairman's Statement and Fund Manager's Review (constituting the interim management report) includes a true and fair review of the information required by DTR4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;

·     the Statement of Principal Risks and Uncertainties on page 12 is a fair review of the information required by DTR4.2.7R, being a description of the principal risks and uncertainties for the remaining six months of the year; and

·     the financial statements include a fair review of the information required by DTR4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

For and on behalf of the Board

 

Julian Avery

Chairman

30 September 2016

 

 


Unaudited Income Statement

for the six months ended 31 July 2016



Six months ended

Six months ended

Year ended



31 July 2016

31 July 2015

31 January 2016



Revenue

Capital

 Total

Revenue

Capital

 Total

Revenue

Capital

Total


Note

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Gain on investments


-

3,712

3,712

-

2,034

2,034

-

2,098

2,098

Income

8

254

-

254

372

-

372

654

-

654

Investment management fee


(78)

(233)

(311)

(70)

(209)

(279)

(139)

(416)

(555)

Other expenses


(156)

-

(156)

(148)

-

(148)

(294)

-

(294)

 

Profit on ordinary activities before taxation


20

3,479

3,499

154

1,825

1,979

 

221

 

1,682

 

1,903

Taxation on ordinary activities

10

-

-

-

-

-

-

-

-

-

Profit and total comprehensive income attributable to shareholders


20

3,479

3,499

 

154

 

1,825

 

1,979

 

221

 

1,682

 

1,903

Basic and diluted earnings per Ordinary share

 

6

 

0.06p

 

11.04p

 

11.10p

 

0.52p

 

6.17p

 

6.69p

 

0.74p

 

5.63p

 

6.37p

 

The total column of this Income Statement represents the profit and loss account of the Company in accordance with Financial Reporting Standards (FRS).  The supplementary revenue and capital columns have been prepared in accordance with The Association of Investment Companies' Statement of Recommended Practice.  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 accompanying notes are an integral part of the statement.

 

 

 


Unaudited Statement of Changes in Equity

 

For the six months ended 31 July 2016


Non-distributable reserves

Distributable reserves



Called up

share

capital

£'000

 

Share premium £'000

 

Merger reserve

£'000

Capital redemption reserve

£'000

 

Special reserve

£'000

 

Capital reserve#

£'000

 

Revenue reserve

£'000

 

Total

reserves

£'000

Opening balance as at 1 February 2016

1,513

9,771

425

332

17,150

3,181

28

32,400

Shares issued

103

2,192

-

-

-

-

-

2,295

Share issue expenses

-

(21)

-

-

-

-

-

(21)

Repurchase of shares

(16)

-

-

16

(338)

-

-

(338)

Dividends paid

-

-

-

-

(1,088)

-

(28)

(1,116)

Transfer of merger investment disposals

-

-

-

-

-

-

-

-

Profit for the period

-

-

-

-

-

3,479

20

3,499

Closing balance as at 31 July 2016

1,600

11,942

425

348

15,724

6,660

20

36,719

 

 

For the six months ended 31 July 2015


Non-distributable reserves

Distributable reserves



Called up

share

capital

£'000

 

Share premium £'000

 

Merger reserve

£'000

Capital redemption reserve

£'000

 

Special reserve

£'000

 

Capital reserve#

£'000

 

Revenue reserve

£'000

 

Total

reserves

£'000

Opening balance as at 1 February 2015

1,434

7,205

1,088

287

19,969

836

(193)

30,626

Shares issued

100

2,072

-

-

-

-

-

2,172

Share issue expenses

-

(15)

-

-

-

-

-

(15)

Repurchase of shares

(22)

-

-

22

(461)

-

-

(461)

Dividends paid

-

-

-

-

(1,051)

-

-

(1,051)

Transfer of merger investment disposals

-

-

(663)

-

-

663

-

-

Profit for the period

-

-

-

-

-

1,825

154

1,979

Closing balance as at 31 July 2015

1,512

9,262

425

309

18,457

3,324

(39)

33,250

 

 

 

For the year ended 31 January 2016


Non-distributable reserves

Distributable reserves


Audited

Called up

share

capital

£'000

 

Share premium £'000

 

Merger reserve

£'000

Capital redemption reserve

£'000

 

Special reserve

£'000

 

Capital reserve#

£'000

 

Revenue reserve

£'000

 

Total

reserves

£'000

Opening balance as at 1 February 2015

1,434

7,205

1,088

287

19,969

836

(193)

30,626

Shares issued

124

2,588

-

-

-

-

-

2,712

Share issue expenses

-

(22)

-

-

-

-

-

(22)

Repurchase of shares

(45)

-

-

45

(940)

-

-

(940)

Dividends paid

-

-

-

-

(1,879)

-

-

(1,879)

Transfer of merger investment disposals

-

-

(663)

-

-

663

-

-

Profit and total comprehensive income for the period

 

-

 

-

 

-

 

-

 

-

 

1,682

 

221

 

1,903

Closing balance as at 31 January 2016

1,513

9,771

425

332

17,150

3,181

28

32,400

 

#these reserves are not wholly distributable.

 

The accompanying notes are an integral part of the statement.              

                               


Unaudited Condensed Balance Sheet

as at 31 July 2016



31 July

31 July

31 January



2016

2015

2016 (audited)


Note

£'000

£'000

 £'000

Fixed assets





Investments held at fair value

11

35,219

31,167

30,826






Current assets





Debtors


99

128

99

Cash at bank


1,689

2,997

1,692

Total current assets


1,788

3,125

1,791






Current liabilities





Creditors: amounts falling due within one year


(288)

(1,042)

(217)






Net current assets


1,500

2,083

1,574

Total assets less current liabilities          


36,719

33,250

32,400






Capital and reserves





Called up share capital


1,600

1,512

1,513

Share premium account


11,942

9,262

9,771

Reserves


23,177

22,476

21,116

Equity shareholders' funds


36,719

33,250

32,400

Net asset value per share

7

114.73p

109.99p

107.07p

The accompanying notes are an integral part of the balance sheet.

 

 

Unaudited Statement of Cash Flows

for the six months ended 31 July 2016



Six months

Six months

Year



ended

ended

ended



31 July

31 July

31 January



2016

2015

2016

(audited)



£'000

£'000

£'000

Operating activities





Investment income received


274

308

613

Investment management fees


(292)

(271)

(551)

Other operating costs


(172)

(161)

(291)

Net cash outflow from operating activities


(190)

(124)

(229)






Investing activities





Purchases of investments


(1,028)

(2,487)

(4,126)

Disposals of investments


334

2,305

3,526

Net cash outflow from investing activities


(694)

(182)

(600)






Net cash outflow before financing


(884)

(306)

(829)






Financing activities





Net proceeds of share issues and buybacks


1,998

1,695

1,741

Equity dividends paid


(1,117)

(1,051)

(1,879)

Net cash inflow/(outflow) from financing activities


881

644

(138)

 

(Decrease)/increase in cash


 

(3)

 

338

 

(967)






Reconciliation of net cash flow to movement in net cash



Net cash at start of period


1,692

2,659

2,659

Net cash at end of period


1,689

2,997

1,692

(Decrease)/increase in cash during the period


(3)

338

(967)

The accompanying notes are an integral part of the statement.

 

 

Notes to the Financial Statements

for the six months ended 31 July 2016

 

1.         The Half-yearly financial report covers the six months ended 31 July 2016. The Company applies FRS 102 and the AIC's Statement of Recommended Practice issued in November 2014 as adopted for its financial year ended 31 January 2016. The financial statements for this six month period have been prepared in accordance with FRS 104 and on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements for the year ended 31 January 2016.

 

The comparative figures for the financial year ended 31 January 2016 have been extracted from the latest published audited Annual Report and Financial Statements. Those accounts have been reported on by the Company's auditor and lodged with the Registrar of Companies. The report of the auditor 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.

 

2.         The financial information set out in this report has not been audited and does not comprise full financial statements within the meaning of Section 434 of the Companies Act 2006. No statutory accounts in respect of any period after 31 January 2016 have been reported on by the Company's auditors or delivered to the Registrar of Companies.

 

3.         Going concern

In accordance with FRC Guidance for directors on going concern and liquidity risk the directors are of the opinion that, at the time of approving the Half-yearly Report, the Company has adequate resources to continue in business for the foreseeable future. In reaching this conclusion the directors took 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. Thus the directors believe it is appropriate to continue to apply the going concern basis in preparing the financial statements.

 

4.         Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business.

 

5.         Copies of the Half-yearly report are being sent to all shareholders.  Further copies are available free of charge from Amati Global Investors by telephoning 0131 503 9115 or email [email protected]

 

6.         The earnings per share is based on the gain attributable to shareholders for the six months ended 31 July 2016 of £3,499,000 (six months ended 31 July 2015: £1,979,000, year ended 31 January 2016: £1,903,000) and the weighted average number of shares in issue during the period of 31,506,740 (31 July 2015: 29,559,281, 31 January 2016: 29,854,090).  There is no difference between basic and diluted earnings per share. 

 

7.         The net asset value per share at 31 July 2016 is based on net assets of £36,719,000 (31 July 2015: £33,250,000, 31 January 2016: £32,400,000) and the number of shares in issue of 32,004,570 (31 July 2015: 30,230,851, 31 January 2016: 30,259,489).  There is no difference between basic and diluted net asset value per share. 

 

8.         Income


Six months ended

Six months ended

Year ended


31 July 2016

31 July 2015

31 January 2016


£'000

£'000

£'000

Income:




Dividends from UK companies*

184

170

308

Dividends from overseas companies

27

6

20

UK loan stock interest

38

191

317

Interest from deposits

5

5

9


254

372

654

 * includes dividends received from Antenova Limited deemed to be capital in nature.


 

9.         Dividends paid

 

Six months

Six months

Year

 

ended

ended

 

31 July 2015

31 January 2016

 

£'000

£'000

£'000

Final dividend for the year ended 31 January 2016 of 3.5p per share paid on 22 July 2016

1,116

-

-

Interim dividend for the year ended 31 January 2016 of 2.75p per ordinary share paid on 13 November 2015

-

-

828

Final dividend for the year ended 31 January 2015 of 3.5p per ordinary share paid on 24 July 2015

-

1,051

1,051


1,116

1,051

1,879

 

10.        The effective rate of tax for the six months ended 31 July 2016 is 0% (31 July 2015: 0%, 31 January 2016: 0%).

 

11.        Investments


Level a

Level ci

Level cii

 


Traded on

Unquoted

Unquoted



AIM

investments

investments

Total


£'000

£'000

£'000

£'000

Cost as at 1 February 2016

18,411

787

4,110

23,308

Opening unrealised appreciation/(depreciation)

11,145

(355)

(2,314)

8,476

Opening unrealised loss recognised in realised reserve

(296)

(110)

(552)

(958)

Opening valuation as at 1 February 2016

29,260

322

1,244

30,826

Movements in the period:





Reclassification in period

-

-

-

-

Purchases

1,028

-

-

1,028

Sales - proceeds

(341)

(7)

-

(348)

Realised gain on sales

77

-

-

77

Unrealised gain/(loss) in the period

4,154

7

(525)

3,636

Valuation as at 31 July 2016

34,178

322

719

35,219

Cost at 31 July 2016

19,317

780

3,738

23,835

Unrealised appreciation/ (depreciation) as at 31 January 2016

15,157

(348)

(2,839)

11,970

Closing unrealised loss recognised in realised reserve

(296)

(110)

(180)

(586)

Valuation as at 31 July 2016

34,178

322

719

35,219






Equity shares

34,178

322

187

34,687

Preference shares

-

-

30

30

Loan stock

-

-

502

502

Valuation as at 31 July 2016

34,178

322

719

35,219

 

In order to provide further information on the valuation techniques used to measure assets carried at fair value, the measurement basis has been categorised into a "fair value hierarchy" as follows:

 

- Quoted market prices in active markets - "Level a"

Inputs to Level a fair values are quoted prices in active markets. An active market is one in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company's investments classified within this category are AIM traded companies, fully listed companies and ISDX traded companies.

 

- Valued using models with significant observable market parameters - "Level b"

Inputs to Level b fair values are inputs other than quoted prices included within Level a that are observable for the asset, either directly or indirectly.

 

- A valuation technique; - "Level c i) & ii)" 

i)          Using observable market data; or

ii)         Using non-observable market data.

 

There has been no significant change in analysis as disclosed in the Company's annual accounts.

 

 

12.        Related parties

The Company holds 90,130 shares in Brooks Macdonald Group plc, an AIM traded company, of which Christopher Macdonald is chief executive officer.

           

The Company holds 3,943,034 shares and 508,300 convertible loan notes in Fox Marble Holdings plc, an AIM traded company of which Paul Jourdan was a non-executive director until 20 September 2016.

 

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


31 July 2016 shares held

Paul Jourdan

205,875

Douglas Lawson

14,953

David Stevenson

9,120

 

Related party transaction

Save as disclosed in this paragraph there is no conflict of interest between the Company, the duties of the directors, the duties of the directors of the Manager and their private interests and other duties.

 

 

Shareholder Information

 

Share price

The Company's shares are listed on the London Stock Exchange.  The bid-price of the Company's shares can be found on Amati Global Investors' website: http://www.amatiglobal.com/avct2.php.

 

 

Net Asset Value per Share

The Company's net asset value per share as at 31 July 2016 was 114.73p.  The Company normally announces its net asset value on a weekly basis.  Net asset value per share information can be found on Amati Global Investor's website: http://www.amatiglobal.com/avct2.php.

 

 

Financial calendar

 

September 2016                        Half-yearly report for the six months to 31 July 2016 published

 

31 January 2017                        Year end

 

May 2017                                 Announcement of final results for the year ended 31 January 2017

 

June 2017                                 Annual General Meeting

 

 

Dividends

Shareholders who wish to have future dividends reinvested in the Company's shares or wish to have dividends paid directly into their bank account rather than sent by cheque to their registered address should contact Share Registrars Limited on 01252 821 390 or email [email protected].

 

 

Corporate Information

 

Directors

Registrar

Julian Ralph Avery

Share Registrars Limited

Mike Sedley Killingley

The Courtyard

Christopher Antony James Macdonald

17 West Street

Susannah Nicklin

Farnham, Surrey


GU9 7DR

all of:


27/28 Eastcastle Street

Auditor

London

BDO LLP

W1W 8DH

55 Baker Street


London

Secretary

W1H 7EH

The City Partnership (UK) Limited


Thistle House

Solicitors

21 Thistle Street

Nimmo W.S.

Edinburgh 

8 Walker Street

EH2 1DF

Edinburgh


EH3 7LH



Fund Manager

Bankers

Amati Global Investors Limited

The Bank of New York Mellon SA/NV

18 Charlotte Square

London Branch

Edinburgh

160 Queen Victoria Street

EH2 4DF

London


EC4V 4LA

VCT Tax Adviser


Philip Hare & Associates LLP


Suite C, First Floor


4-6 Staple Inn 


Holborn, London


WC1V 7QH




 

For enquiries relating to share certificates, share holdings, dividends or the DRIS, please contact:

Share Registrars Limited

on +44 (0) 1252 821390

or email: [email protected]

 

For enquiries relating to subscriptions and for general enquiries, please contact:

Amati Global Investors

on +44 (0) 131 503 9115

or email: [email protected]

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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