Source - RNS
RNS Number : 5496T
Amati VCT PLC
13 October 2017
 

Amati VCT plc

HALF-YEARLY REPORT

For the six months ended 31 August 2017

 

Amati VCT plc announces that its 2017 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/avct_literature.php.  It will be circulated to shareholders shortly.

 

Page numbers and cross-references in this announcement below refer to page numbers and cross-references in the PDF of the Half-yearly Report.

 

 

CONTENTS

Overview

1


Chairman's Statement

4


Fund Manager's Review

7


Investment Portfolio

12


Principal Risks and Uncertainties

15


Statement of Directors' Responsibilities

15


Income Statement

16


Statement of Changes in Equity

18


Condensed Balance Sheet

22


Statement of Cash Flows

23


Notes to the Financial Statements

24


Shareholder Information

29


Corporate Information

30


Contact Details

32


 

OVERVIEW

Corporate objective

The investment objectives of Amati VCT plc (the "Company") are to generate tax free capital gains and regular dividend income for its shareholders, primarily through Qualifying Investments in AIM-traded companies and through non-qualifying investments as allowed by the VCT legislation. The Company will manage its portfolio to comply with the requirements of the rules and regulations applicable to VCTs from time to time. The Company's policy is to hold a diversified portfolio across a broad range of sectors to mitigate risk.

 

Key data

 


6 months ended

31/08/17

6 months ended

31/08/16

 

Year ended

28/02/17


(unaudited)

(unaudited)

(audited)

Net Asset Value ("NAV")  

£57.3m

£39.9m

£44.7m

NAV per share

94.6p

69.6p

75.4p

Share price

86.3p

66.3p

70.8p

Market capitalisation

£52.2m

£38.0m

£42.0m

Share price discount to NAV

8.8%

4.7%

6.1%

NAV Total Return (assuming re-invested dividends)

29.3%

10.7%

22.6%

Numis Alternative Markets Total Return Index

13.2%

14.9%

31.8%

Ongoing charges*

2.4%

2.5%

2.5%

Dividends in respect of the period

2.0p

1.5p

4.0p

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

 

Table of investor returns to 31 August 2017 from a sample of share issues











NAV

Total Return

NAV

Total Return





excluding

including full


Price



subscription

subscription


gross of

Price net of

Price gross after

costs and

costs and

Date

costs

costs

tax rebate#

tax rebate

tax rebate#

Initial Offer

100.0p

94.8p

60.0p

100.4%

216.5%

4 January 2006

111.2p

105.4p

66.7p

81.8%

187.1%

4 April 2006

123.5p

117.0p

74.1p

62.3%

156.3%

21 March 2007

133.0p

130.3p

93.1p

42.9%

100.1%

4 April 2008

96.5p

91.7p

67.6p

83.4%

148.9%

6 October 2008

79.6p

75.7p

55.7p

122.4%

201.9%

17 October 2008**

67.4p

67.4p

67.4p

149.3%

149.3%

3 April 2009

54.5p

51.8p

38.2p

217.7%

331.2%

3 April 2010

79.2p

75.2p

55.4p

106.9%

180.9%

5 April 2011

93.2p

88.1p

65.2p

66.9%

125.3%

5 April 2012

81.8p

77.7p

57.3p

77.5%

140.9%

5 April 2013

72.6p

69.0p

50.8p

86.3%

152.8%

4 April 2014

85.8p

81.5p

60.0p

47.1%

99.6%

2 April 2015

71.6p

70.8p

50.1p

58.5%

124.1%

5 April 2016

68.3p

67.6p

47.8p

54.5%

118.5%

5 April 2017

77.8p

77.0p

54.5p

26.6%

79.0%

# assumes full recovery of tax relief (y/e 5 April 2006 - 40%; subsequent years - 30%).

**shares issued to Noble Income & Growth VCT plc shareholders as a result of the asset acquisition.

 

Table of returns

to 31 August 2017 from shares issued under the Dividend Reinvestment Scheme









NAV

Total Return

NAV

Total Return




excluding

including full




subscription

subscription



Price gross after

costs and

costs and

Date

Price*

tax rebate#

tax rebate

tax rebate#

4 July 2007

135.1p

94.6p

32.3%

89.0%

7 December 2007

111.3p

77.9p

57.8%

125.4%

15 February 2008

94.3p

66.0p

78.4%

154.9%

5 December 2008

58.0p

40.6p

183.8%

305.5%

17 August 2009

61.1p

42.7p

160.5%

272.2%

11 December 2009

68.6p

48.0p

127.0%

224.3%

13 August 2010

73.3p

51.3p

105.1%

193.1%

10 December 2010

85.1p

59.6p

72.5%

146.4%

12 August 2011

74.3p

52.0p

90.8%

172.6%

13 February 2012

74.4p

52.1p

85.4%

164.9%

14 August 2012

67.9p

47.5p

94.9%

178.4%

7 December 2012

66.9p

46.8p

92.1%

174.5%

12 August 2013

69.5p

48.7p

77.1%

152.9%

6 December 2013

71.6p

50.2p

67.3%

138.9%

15 August 2014

75.9p

53.1p

52.0%

117.1%

5 December 2014

71.0p

49.7p

58.0%

125.7%

14 August 2015

70.6p

49.4p

52.4%

117.7%

11 December 2015

69.9p

48.6p

49.4%

113.5%

12 August 2016

68.2p

47.8p

46.1%

108.7%

16 December 2016

68.7p

48.1p

41.8%

102.5%

*shares allotted under the Dividend Reinvestment Scheme are issued without cost.

#assumes full recovery of tax relief at 30%.

 

                                               

 

CHAIRMAN'S STATEMENT

Overview

 

The first six months of the year saw a return of more than 29% and was the strongest in the history of Amati VCT, with the exception of the first half of 2009 when the market was bouncing very strongly off its post-crisis lows.  On this occasion the performance reflects the fact that a significant number of the largest holdings in the portfolio have reported good results and reached new highs during the period. 

 

The investment strategy of the Company has been simplified and focused over recent years and this has underpinned these strong results.  The Manager seeks to identify the best of the next generation of AIM companies, to provide those companies with valuable early stage capital and to support them as long-term shareholders.  It takes time to build up a portfolio of successful and dynamic businesses which have grown out of the seeds which the Amati VCTs have helped to nurture.  As companies' earnings grow and this is mirrored in their stock market valuations, the portfolio evolves and becomes more biased towards the most successful companies, as those which have grown the fastest in value become the largest holdings.  Over the last few years the concentration of the portfolio in the top ten qualifying holdings has been increasing, and this process has accelerated over the last six months. A good way of illustrating this is by the following chart which has been included for the first time in this report.

 

Amati VCT Qualifying Portfolio

 

 

The bubble chart is created based on the market capitalisation of the individual security (the Y axis), the year purchased by Amati VCT plc (the X axis) and the weight held in the portfolio, shown by the size of the bubble.  This allows a three dimensional view of the portfolio, its largest holdings and best performers.   

 

 

The ten largest Qualifying Investments are now all capitalised at more than £100m, with three capitalised at over £400m.  The unweighted average term of these investments is now around six years, and the unweighted average returns from these ten investments, based on our investment price (blended across more than one round where we made follow-on investments), is 678% as at the period end.  These companies represent over 50% of the value of the portfolio and provide an exceptionally strong set of core holdings.

 

The Manager is seeing a number of new opportunities for Qualifying Investments and expects to be able to make a steady stream of further investments.  During the period under review a total of £3.2m was invested in Qualifying Investments, five of which were in new holdings, details of which are given in the Manager's Review which follows.

 

 

Investment Performance and Dividend

 

The NAV Total Return for the six month period was 29.3%, which compares to a rise of 13.2% for the Numis Alternative Markets Total Return Index.  Detailed comments on the performance 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 2.0p per share, to be paid on 8 December 2017 to shareholders on the register on 3 November 2017.

 

Other Corporate Developments

 

A series of joint top up Share Issues with Amati VCT 2 was launched in October 2016, and was fully subscribed before the closing date, raising a total of £8.3m of which £4.1m was subscribed for shares in Amati VCT. 

 

The Company was 84% invested in qualifying holdings at the period end, according to the tests required by the VCT legislation. At the time of the AGM, the Board announced that it intends to launch a larger fund raising this year in the form of a Joint Prospectus Offer with Amati VCT 2, raising up to £10m for each company.  At the same time, the boards of both companies also announced that they consider a merger of the two companies would be in the best interests of shareholders.  The merger process has been held up by a particular aspect of the VCT legislation which could have proven detrimental to some of our shareholders.  We have received assurances from HMRC that this was not an intended consequence of the legislation and both boards expect to be able to proceed with a merger once this area of the legislation has been satisfactorily clarified, with the issue of a Supplementary Prospectus and Shareholder Circulars.   Assuming the merger can proceed as planned, it will create a combined VCT capitalised at over £100m (at the time of writing) and the ongoing expenses ratio will be less than the two VCTs have as separate entities.

 

The External Environment

 

AIM, which began in 1995, has been coming of age over recent years, supported as it is by a number of tax incentivised elements, of which VCTs are but one.  There is debate about whether these and other tax incentives to support early stage businesses are good value for money for the tax payer.  Recently, a broad range of questions have been posed by the consultation paper "Financing Growth in Innovative Firms" published by HM Treasury in August.  We believe that AIM-focused VCTs play an important role in providing capital to some of the most innovative firms in the UK at a time when other sources of finance are limited, and that the Company's portfolio bears this out.

 

Outlook

 

It is always important to remain realistic about expectations following periods of very strong performance. Markets have a tendency to retrace after periods of above average returns. However, the tangible progress being made by many of our portfolio companies has been impressive and creates a strong platform for continued growth, even in tougher times. The Manager expects to see a healthy level of attractive new investment opportunities and a successful fund raising will enable the Company to take full advantage of these as and when they arise. After the Budget next month, we may have a clearer picture of the future landscape for VCTs following our Offer, which I hope will be fully subscribed.

Peter Lawrence

Chairman

13 October 2017

 

 

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

 

As is almost becoming the norm, a volatile political backdrop dominated the six months under review.  Whether it was the US administration's apparent floundering over policy objectives and chronic instability, combined with an increased military assertiveness overseas, or the astonishing scale of the potential for bad debts in the Chinese banking system or an ill-judged snap UK General Election causing UK market jitters, there was no shortage of talking points for those seeking to form a top down view. The tragic conflicts in Syria and the Yemen rumble on with no apparent end in sight, reminders of the dysfunction which has grown up in international relations with the return of proxy wars and battle for spheres of influence.  It would be reasonable to expect that such a backdrop would translate into elevated risk and volatility.  However, the market's main volatility gauge, the CBOE Volatility Index (the "VIX"), remained stubbornly low, only breaching the 15% level on four occasions.  For reference, the VIX surpassed 40% in January 2009, shortly before the global financial crisis reached its nadir, and again in January 2011 when the Eurozone debt crisis reached a peak and long-term interest rates spiked in Greece and other peripheral states.  There are various explanations for this benign volatility, the most plausible in our view being that continued accommodative monetary policies by the Federal Reserve and European Central Bank have thus far been more important for the direction of markets than the political dislocations which dominate the headlines. 

 

In the UK, AIM, small and mid-cap indices all outperformed the top 100 index.  AIM was especially strong, with its fortunes dominated by superstar stocks such as Fever-Tree and Boohoo but increasingly by the next generation of AIM stars, of which a number are also held by the Company.

 

Performance

 

The VCT's NAV Total Return for the six month period was 29.3%.  This compares to the Numis Alternative Markets Total Return over the same period of 13.2%.  The only losing month during the period was June, when the surprise loss of the Conservative party's parliamentary majority spooked markets.  These losses were swiftly reversed in July.

 

The greatest contributor to performance over the six months under review was Frontier Developments ("Frontier"), gaining 285% over the period.  Frontier is attracting a wider investor audience as it launches its own new video games franchises.  The period under review witnessed the release of Frontier's original title, Elite: Dangerous, on PlayStation 4; the news that Planet Coaster, its second title, had surpassed the sale of one million units; and the announcement that its third franchise will be Jurassic World Evolution, based on Universal Pictures' Jurassic World, one of the biggest blockbusters in cinema history.  The latter announcement is a major endorsement for a UK video games publisher and Frontier's appeal was recently recognised by Tencent, a leading Chinese internet and interactive entertainment company, which has acquired a 9.9% stake in the business through an investment of £17.7m in the company.  Another player in the video games industry, Keywords Studios ("Keywords"), was the second most significant contributor to performance, its shares rising 129%.  Keywords provides technical services to the video games industry and continued its acquisition strategy, acquiring four businesses, which all fit the template of expanding the group's geographical coverage and service lines.  The most eye-catching of these recent acquisitions were a software development business and a video games content management software provider, both giving Keywords entirely new services to offer their customer base.  Keywords finds itself in an enviable position: its market remains highly fragmented yet customers wish to deal with fewer vendors.  By continuing to consolidate its industry it can present itself to video games publishers as a one-stop solution for all video games support services.  The market for outsourced video games services continues to demonstrate healthy levels of growth which, when combined with earnings enhancing acquisitions, provide a powerful catalyst for shareholder returns.  Tristel, the manufacturer of infection control and contamination control products, gained 79%.  There were two principal catalysts for this movement: the first was its move into the US and the submission for regulatory clearance by the Environmental Protection Agency of its Duo chlorine dioxide disinfectant foam; the second was a trading update announcing that revenues and profits for the year to June 2017 would be ahead of expectations.  The TB Amati UK Smaller Companies Fund generated a return of 16% over the six months under review after another period of strong performance, both relative to its benchmark index (the Numis Smaller Companies Index) and its peer group (IA UK Smaller Companies).  Quixant, the designer of computer systems for casino gaming machines, continued its progress and this was rewarded by a 20% rise in its share price.  Quixant experienced stronger than anticipated trading in the first half of 2017 in both its core gaming division and Densitron, the acquisition that completed in 2015.  Premier Technical Services Group, the provider of access and safety services, gained 68% as the market responded positively to new contract wins across all of its disciplines, including a number of framework agreements with new and existing customers and a high level of existing contract renewals.  Other notable contributors included Faron Pharmaceuticals ("Faron"), a pharmaceutical company focused on the treatment of Acute Respiratory Distress Syndrome, which gained 97% over the period ahead of the announcement of Phase III trial data which is expected over the next few months; GB Group, the supplier of identity verification software; and Hardide, the industrial surface coatings company.

 

The most significant detractor from performance was Idox, the provider of document management software applications to local authorities and the engineering sector, which fell 16% over the period.  Idox released figures that were in-line with expectations but this did not stop 'profit taking' by investors after a strong share price performance in the lead-up to the results.  Science in Sport ("SiS") also succumbed to share price weakness with a fall of 14% over the six months.  SiS announced a continuation of impressive organic growth through sales of their sports nutrition products to professional athletes and the burgeoning number of 'weekend warriors' participating in endurance events.  FreeAgent Holdings ("FreeAgent"), the provider of accounting software to small businesses and freelancers, fell 26% over the period.  Like Idox and SiS, FreeAgent had enjoyed a period of strong performance prior to this and we believe the company will continue to benefit from the structural growth in the UK 'micro-business' market as well as HMRC's Making Tax Digital agenda, which will encourage more small businesses to adopt software for the management of their accounting.

 

Portfolio activity

 

Qualifying portfolio

 

The Company made eight significant Qualifying Investments during the period.

 

Faron, a company that we initially funded in September 2016, returned for follow-on finance in March.  The original fundraise was to continue the development of its lead product, Traumakine, which treats Acute Respiratory Distress Syndrome; the more recent raise allows the expansion of pre-clinical and early-stage clinical development of Clevegen, Faron's second product, as well as strengthening the balance sheet in advance of negotiations with potential partners for Traumakine.  We were encouraged to follow our investment in Faron by Traumakine's successful progress through its data monitoring stages as well as the potential of Clevegen which, although some way behind Traumakine in its development pipeline, is showing potential in an important area of cancer therapy (the prevention of inflammation and cancer spread).  Towards the end of the period we also took some profits from our holding, following a dramatic rise in the share price which had increased the position size significantly.  We also made a follow-on investment in Rosslyn Data Technologies ("Rosslyn").  The Company's initial position in Rosslyn was acquired shortly before its IPO in 2014.  Rosslyn has a technology platform that gives businesses the ability to ingest structured data from a wide variety of systems and sources then present this data in software where it can be used to inform management decisions.  Rosslyn failed to meet the expectations that were set at its IPO and could not capitalise on partnerships with key systems integrators, including two of the 'Big 4' global professional services firms.  The original investment performed poorly but we were persuaded to revisit the investment case due to the acquisition of a business called Integritie, which improves Rosslyn's technology proposition by enabling the analysis of unstructured, as well as structured, customer data.  The combined business should benefit from cross-selling opportunities across the enlarged customer base.  The final follow-on investment was completed in FairFX Group ("FairFX"), as part of a target funding round to acquire the holding company of CardOneBanking, one of three agency banks in the UK, as well as for further investment into developing FairFX's corporate card business.  The combination of the two businesses will allow FairFX to expand the range of services it offers to its customers by integrating CardOneBanking's agency banking tools into its core proposition and should facilitate improved buying terms with MasterCard, their payment processor. 

 

The Company acquired a new position in MaxCyte, a medical devices company with a proprietary technology known as 'flow electroporation', as well as its own pipeline of early stage drugs.  Flow electroporation is a technique which uses electrical charges to allow particular molecules to cross a cell membrane without causing damage.  MaxCyte owns the intellectual property to the only pharmaceutical grade machine for performing this technique, and it is becoming widely used in the burgeoning field of cell therapy.  A new position was also acquired in Byotrol, a developer of antimicrobial technologies and products.  Byotrol has been listed on AIM since 2005 and has been a perennial underperformer against expectations, a legacy that is reflected in its share price chart.  However, a new management team has been turning the business around and recently secured FDA (the US Food and Drug Administration) approval for an important claim over the efficacy of their chemistry, which provides an exciting growth opportunity in the US.  Alongside this opportunity, Byotrol recently acquired a business that gives them direct access to supply the NHS with its alcohol free hand sanitizers, which reduce the skin irritation which occurs following the use of competitor, alcohol-based products. 

 

Escape Hunt was the first of three IPOs in which the Company participated during the period.  Escape Hunt specialises in 'escape games', a leisure concept that is growing rapidly in popularity.  The concept involves a group of friends, family or work colleagues participating in a problem solving game in order to escape from a themed room.  The game is controlled remotely by a 'games master' who influences the cadence of the event by revealing clues.  Escape Hunt came to AIM to raise capital to evolve from a franchise only model to a site ownership model, building out its own locations to capture the attractive returns that are generated on these sites.  The incoming CEO has excellent 'roll-out' experience having been Global Head of Strategy at Pret A Manger and Managing Director at Harris + Hoole, the chain of upmarket coffee shops.  The Company also acquired a position in Velocity Composites ("Velocity") as part of its AIM IPO.  Velocity produces kits of composite materials for supply to aerospace component manufacturers such as BAE, Meggitt and GKN.  This is an element of the supply chain that the manufacturers are keen to outsource to reduce their capital spend and increase floor space at their facilities as well as to drive improved productivity, quality control and materials traceability.  Composite materials now account for over 50% of widebody (twin aisle) and 20% of narrow body (single aisle) aircraft and composite usage is expected to increase alongside a predicted doubling of aircraft numbers over the next twenty years.  The third IPO in which the Company participated was the listing of appScatter Group ("appScatter"), which provides businesses with a software platform for managing their mobile apps across multiple app stores.  The platform allows app developers and publishers the ability to manage and track compliance of their own apps and competing apps.  appScatter charges customers a flexible monthly fee based on the numbers of users and the number of apps managed on the platform and has already built up an impressive list of clients.

 

Kalibrate Technologies, the provider of software, data and support services to the fuel retail industry, was sold during the period, having been the subject of a successful takeover approach by a private equity buyer.  We also used the strength of Frontier and Keywords during the period to take some profits and maintain the Company's exposure at sensible levels; however, both holdings remain significant positions in the portfolio. 

 

 

Non-qualifying portfolio

 

Hiscox, the FTSE 250 listed commercial and personal insurance business, was sold in order to raise cash to fund the Qualifying Investment activity described above. 

 

Outlook

The strategy that has been adopted of concentrating the portfolio in our more mature, cash generative businesses by 'running our winners' has played out to the extent that, at the half year end date, the top ten positions in the Company (including the TB Amati UK Smaller Companies Fund) accounted for 58.9% of the total net asset value.  Far from causing us any anxiety, we are reassured by the fact that we consider these businesses amongst the highest quality investments in the portfolio and we are optimistic about the future prospects for these companies.  Whilst some of these names have experienced extraordinary share price gains lately, our belief is that these are companies that can continue to deliver exceptional levels of revenue and profit growth.  This strong core to the portfolio also gives us the flexibility to invest in attractive new qualifying opportunities and we have been pleased to see a return of good quality 'dealflow', reflected in the accelerated rate of investments completed relative to the prior period.  Whilst we cannot predict the direction of the markets, and are aware that the UK in particular faces many challenges over the next few years particularly arising from Brexit, we remain optimistic about the underlying prospects of the businesses in your Company's portfolio.

 

 

Dr Paul Jourdan, Douglas Lawson and David Stevenson

Amati Global Investors Limited

13 October 2017

 

INVESTMENT PORTFOLIO

as at 31 August 2017

 


 

Cost

 

Valuation

Market Cap



Dividend Yield 4

 

Fund


£'000

£'000

£m

Sector

Status

%

%

TB Amati UK Smaller Companies Fund3

3,310

5,538

 -

Financials

 OEIC

1.5

9.7

Frontier Developments plc2,3

488

4,965

407.8

Consumer Goods

 AIM

-

8.7

Keywords Studios plc2,3

406

4,696

796.1

Industrials

 AIM

0.1

8.2

Quixant plc2,3

418

3,872

281.4

Technology

 AIM

0.7

6.8

Tristel plc2,3

543

2,993

132.7

Health care

 AIM

1.4

5.2

Craneware plc2

298

2,758

346.2

Technology

 AIM

1.4

4.8

Ideagen plc2,3

565

2,294

179.9

Technology

 AIM

0.3

4.0

Idox plc1,3

299

2,287

247.5

Technology

 AIM

2.0

4.0

GB Group plc2,3

237

2,261

586.5

Technology

 AIM

0.7

3.9

AB Dynamics plc2,3

304

2,054

111.2

Industrials

 AIM

1.3

3.6

Top Ten

6,868

33,718





58.9

Learning Technologies Group plc1,3

871

1,969

270.2

Industrials

 AIM

0.6

3.4

Premier Technical Services Group plc2,3

473

1,531

175.0

Industrials

 AIM

1.0

2.7

Sprue Aegis plc1,3

106

1,299

95.0

Industrials

 AIM

4.7

2.3

Hardide plc1,3

373

1,287

24.2

Basic Materials

 AIM

-

2.2

Science in Sport plc2,3

811

1,281

36.6

Consumer Goods

 AIM

-

2.2

Anpario plc2,3

277

1,227

81.9

Health care

 AIM

1.8

2.1

Faron Pharmaceuticals Oy1,3

342

911

195.3

Health care

 AIM

-

1.6

LoopUp Group plc1,3

490

888

74.3

Technology

 AIM

-

1.6

Universe Group plc1,3

215

877

21.8

Industrials

 AIM

-

1.5

Bilby plc2,3

676

685

23.4

Industrials

 AIM

4.6

1.2

Top Twenty

11,502

45,673





79.7

SRT Marine Systems plc1,3

709

673

44.1

Technology

 AIM

-

1.2

Rosslyn Data Technologies plc1,3

818

632

11.0

Technology

 AIM

-

1.1

Fox Marble Holdings plc Ordinary shares & 8% Convertible Loan Note1,3

719

622

15.4

Basic Materials

 AIM/Unquoted

-

1.1

appScatter Group plc1,3

617

617

46.1 

Technology

 AIM

-

1.1

FairFX Group plc1,3

408

572

114.6

Financials

 AIM

-

1.0

Water Intelligence plc2,3

181

544

15.6

Industrials

 AIM

-

0.9

Velocity Composites plc1,3

507

527

31.6

Industrials

 AIM

1.2

0.9

Solid State plc2,3

258

520

41.2

Industrials

 AIM

2.6

0.9

Byotrol plc1,3

511

512

     11.2

Basic Materials

 AIM

-

0.9

Belvoir Lettings plc1,3

404

460

37.3

Financials

 AIM

6.5

0.8

Escape Hunt plc1,3

422

455

29.5

Consumer Services

 AIM

-

0.8

Brady plc2

331

445

57.3

Technology

 AIM

-

0.8

FreeAgent Holdings plc1,3

389

422

37.2

Technology

 AIM

-

0.7

MaxCyte Inc1,3

449

404

18.0

Health care

 AIM

-

0.7

MirriAd Advertising Limited1,3

524

306

       35.9

Technology

 Unquoted

-

0.5

EU Supply plc1,3

351

299

13.0

Technology

 AIM

-

0.5

Property Franchise Group plc (The)2,3

155

212

35.4

Financials

 AIM

5.1

0.4

Crawshaw Group plc2,3

432

211

23.2

Consumer Services

 AIM

-

0.4

Brighton Pier Group plc (The) 1,3

314

211

34.1

Consumer Services

 AIM

-

0.4

MyCelx Technologies Corporation1,3

440

209

8.4

Oil & Gas

 AIM

-

0.4

Venn Life Sciences Holdings plc1,3

311

209

8.9

Health care

 AIM

-

0.4

Genedrive plc1,3

326

140

6.4

Health care

 AIM

-

0.2

Ilika plc1,3

208

118

25.4

Oil & Gas

 AIM

-

0.2

Sabien Technology Group plc2,3

729

112

1.7

Industrials

 AIM

-

0.2

Mirada plc13

483

50

1.5

Consumer Services

 AIM

-

0.1

Microsaic Systems plc1,3

423

37

3.2

Industrials

 AIM

-

0.1

Nujira Limited1,3

127

8

-

Technology

Unquoted

-

-

Investments held at nil value

5,192

-

 -

-

 -


-









Total investments

28,240

55,200





96.4

Net current assets


2,082





3.6

Net assets

28,240

57,282





100.0

 

1

Qualifying holdings.

2

Part qualifying holdings.

3

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

4

Next Twelve Months Consensus Estimates (Source: FactSet and Fidessa).

 

 

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

All holdings are in ordinary shares unless otherwise stated.

appScatter plc not listed as at 31 August 2017. Market capitalisation is as at 5 September 2017 (date of market listing).

Byotrol plc market capitalisation excludes placing shares pending listing on 5 September 2017.

Investments held at nil value: China Food Company plc3; Invocas Group plc1; Polyhedra Group plc1,3, Rame Energy plc1,3, Rated People Limited1,3 Rivington Street Holdings plc, Sorbic International plc3, TCOM Limited1,3, TMO Renewables Limited2, Vicorp Group plc, Vitec Global Limited1.

As at the period end, the percentage of the Company's assets raised from all share issues held in qualifying holdings for the purposes of Section 274 of the Income and Corporation Taxes Act 2007 is 84.39%.

 

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

The Company's assets consist of equity and fixed interest investments, cash and liquid resources.  Its principal risks include market risk, credit risk and liquidity risk.  Other risks faced by the Company include compliance and internal controls, 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 under the heading Other Matters within the Strategic Report in the Company's Annual Report and Accounts for the year ended 28 February 2017.  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) include a true and fair review of the information required by DTR4.2.7R of the Disclosure Guidance 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 above 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 Guidance 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

 

 

Peter Lawrence

Chairman

13 October 2017

 


INCOME STATEMENT

for the six months ended 31 August 2017



Six months ended

Six months ended

Year ended



31 August 2017

31 August 2016

28 February 2017



(unaudited)

(unaudited)

(audited)



Revenue

Capital

 Total

Revenue

Capital

 Total

Revenue

Capital

Total


Note

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Gain on investments

11

-

13,434

13,434

-

3,939

3,939

-

8,370

8,370

Income

8

265

-

265

316

-

316

540

-

540

Investment management fees


(115)

(346)

(461)

(84)

(251)

(335)

(170)

(510)

(680)

Other expenses


(146)

-

(146)

(151)

(2)

(153)

(306)

(2)

(308)

Profit on ordinary activities before taxation


4

13,088

13,092

 

81

 

3,686

 

3,767

 

64

 

7,858

 

7,922

Taxation on ordinary activities

10

-

-

-

-

-

-

-

-

-

Profit and total comprehensive income attributable to shareholders


4

13,088

13,092

 

81

 

3,686

 

3,767

 

64

 

7,858

 

7,922

 

Basic and diluted earnings per Ordinary share

 

6

0.01p

21.72p

21.73p

 

0.14p

 

6.49p

 

6.63p

 

0.11p

 

13.76p

 

13.87p

 

The total column represents the profit and loss account of the Company in accordance with the 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: Financial Statements of Investment Trust Companies and Venture Capital Trusts ("AIC SORP"). There is no other comprehensive income other than the results for the period discussed above.  Accordingly a statement of comprehensive income is not required.

The accompanying notes are an integral part of the statement.

All the items above derive from continuing operations.

 

STATEMENT OF CHANGES IN EQUITY

 

For the six months ended 31 August 2017 (unaudited)

                               


Non-distributable reserves


Distributable reserves



Called up share

capital

£'000

 

Share premium £'000

Capital redemption reserve

£'000

Capital reserve

(non-distributable)

£'000


 

Special reserve

£'000

Capital

reserve (distributable)

£'000

 

Revenue reserve

£'000

 

Total

reserves

£'000

Opening balance as at 1 March 2017

5,930

16,717

1,108

15,780


13,480

(8,377)

64

44,702

Shares issued

273

1,927

-

-


-

-

-

2,200

Share issue expenses

-

(28)

-

-


-

-

-

(28)

Repurchase of shares

(147)

-

147

-


(1,129)

-

-

(1,129)

Cancellation of share premium and capital redemption reserves

-

(17,930)

(1,156)

-


19,086

-

-

-

Legal fees paid

-

-

-

-


(46)

-

-

(46)

Dividends paid

-

-

-

-


(1,445)

-

(64)

(1,509)

Profit and total comprehensive income for the period

-

-

-

11,195


-

1,893

4

13,092

Closing balance as at 31 August 2017

6,056

686

99

26,975


29,946

(6,484)

4

57,282

 

 

For the six months ended 31 August 2016 (unaudited)

                               


Non-distributable reserves


Distributable reserves



Called up share

capital

£'000

 

Share premium £'000

Capital redemption reserve

£'000

Capital reserve

(non-distributable)

£'000


 

Special reserve

£'000

Capital reserve (distributable)

£'000

 

Revenue reserve

£'000

 

Total

reserves

£'000

Opening balance as at 1 March 2016

5,580

12,884

816

7,047


17,564

(7,502)

405

36,794

Shares issued

306

1,778

-

-


-

-

-

2,084

Share issue expenses

-

(25)

-

-


-

-

-

(25)

Repurchase of shares

(155)

-

155

-


(1,007)

-

-

(1,007)

Dividends paid

-

-

-

-


(1,302)

-

(405)

(1,707)

Profit and total comprehensive income for the period

-

-

-

4,529


-

(843)

81

3,767

Closing balance as at 31 August 2016

5,731

14,637

971

11,576


15,255

(8,345)

81

39,906



 

STATEMENT OF CHANGES IN EQUITY

 

For the year ended 28 February 2017 (audited)

                               


Non-distributable reserves


Distributable reserves



Called up share

capital

£'000

 

Share premium £'000

Capital redemption reserve

£'000

 

Capital reserve

(non-distributable)

£'000


 

Special reserve

£'000

Capital reserve (distributable)

£'000

 

Revenue reserve

£'000

 

Total

reserves

£'000

 

Opening balance as at 1 March 2016

5,580

12,884

816

7,047


17,564

(7,502)

405

36,794

 

Shares issued

642

3,889

-

-


-

-

-

4,531

 

Share issue expenses

-

(56)

-

-


-

-

-

(56)

 

Repurchase of shares

(292)

-

292

-


(1,914)

-

-

(1,914)

 

Other capital expenses

-

-

-

-


(11)

-

-

(11)

 

Dividends paid

-

-

-

-


(2,159)

-

(405)

(2,564)

 

Profit/(loss) and total comprehensive income for the year

 

-

 

-

 

-

 

8,733


 

-

 

(875)

 

64

 

7,922

 

Closing balance as at 28 February 2017

5,930

16,717

1,108

15,780


13,480

(8,377)

64

44,702

 

 

The accompanying notes are an integral part of the statement.                              


CONDENSED BALANCE SHEET

as at 31 August 2017



31 August

31 August

28 February



2017

2016

2017



(unaudited)

(unaudited)

(audited)


Note

£'000

£'000

 £'000

Fixed assets





Investments held at fair value

11

55,200

38,468

42,502






Current assets





Debtors


34

73

990

Cash at bank


3,684

1,663

1,658

Total current assets


3,718

1,736

2,648






Current liabilities





Creditors: amounts falling due within one year


(1,636)

(298)

(448)






Net current assets


2,082

1,438

2,200

Total assets less current liabilities          


57,282

39,906

44,702






Capital and reserves





Called up share capital*


6,056

5,731

5,930

 

Share premium account*


686

14,637

16,717

 

Capital redemption reserve*


99

971

1,108

 

Capital reserve (non-distributable)*


26,975

11,576

15,780

 

Special reserve


29,946

15,255

13,480

 

Capital reserve (distributable)


(6,484)

(8,345)

(8,377)

 

Revenue reserve


4

81

64

 

Equity shareholders' funds


57,282

39,906

44,702

 

Net asset value per share

7

94.6p

69.6p

75.4p

* These reserves are not distributable.

 

The accompanying notes are an integral part of the statement.

 

For and on behalf of the Board

 

 

Peter Lawrence

Chairman

13 October 2017

 

STATEMENT OF CASH FLOWS

for the six months ended 31 August 2017



Six months

Six months

Year

 



ended

ended

ended

 



31 August

31 August

28 February

 



2017

2016

2017

 



(unaudited)

(unaudited)

(audited)

 



£'000

£'000

£'000

 

Cash flows from operating activities





 

Investment income received


266

366

634

 

Deposit interest received


2

6

10

 

Investment management fees


(407)

(323)

(648)

 

Other operating costs


(154)

(169)

(311)

 

Net cash outflow from operating activities


(293)

(120)

(315)

 






 

Cash flows from investing activities





 

Purchase of investments


(2,215)

(1,617)

(2,610)

 

Net sale of liquidity funds


-

54

54

 

Disposals of investments


3,998

644

2,065

 

Net cash inflow/(outflow) from financial investment


1,783

(919)

(491)

 






 

Net cash inflow/(outflow)  before financing activities


1,490

(1,039)

(806)

 






 

Cash flows from financing activities





 

Net proceeds of share issues


3,140

2,067

3,517

 

Net cost of share buybacks


(1,041)

(1,007)

(1,822)

 

Legal costs in respect of share reconstruction


(42)

-

(11)

 

Equity dividends paid


(1,521)

(1,707)

(2,564)

 

Net cash inflow/(outflow) from financing


536

(647)

(880)

 






 

Increase/(decrease) in cash


2,026

(1,686)

(1,686)

 




 

Reconciliation of net cash flow to movement in net cash




Increase/(decrease) in cash during the period

2,026

(1,686)

(1,686)

Net cash at start of the period

1,658

3,351

3,351

Currency losses

-

(2)

(7)

Net cash at end of the period

3,684

1,663

1,658

 




 

The accompanying notes are an integral part of the statement.

 

 

NOTES TO THE FINANCIAL STATEMENTS

for the six months ended 31 August 2017

 

1.         The Half-yearly Report covers the six months ended 31 August 2017. The Company applies FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the AIC SORP as adopted for its financial year ended 28 February 2017. The financial statements for the six months to 31 August 2017 have been prepared in accordance with FRS 104 'Interim Financial Reporting' 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 28 February 2017.

 

The comparative figures for the financial year ended 28 February 2017 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 28 February 2017 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 made available to all shareholders.  Copies can be obtained free of charge from Amati Global Investors by telephoning 0131 503 9115 or emailing [email protected].

 

6.         The earnings per share is based on the profit on ordinary activities after taxation for the six months ended 31 August 2017 of £13,092,000 (six months ended 31 August 2016: £3,767,000, year ended 28 February 2017: £7,922,000) and the weighted average number of shares in issue during the period of 60,255,160 (31 August 2016: 56,786,006; 28 February 2017: 57,123,199).

 

7.         The calculation of net asset value per share at 31 August 2017 is based on net assets of £57,282,000 (31 August 2016: £39,906,000; 28 February 2017: £44,702,000) divided by 60,562,435 (31 August 2016: 57,308,334; 28 February 2017: 59,297,428) shares in issue at the period end.

 

8.       Income

           

Six months

Six months

Year


ended

ended


31 August

28 February 


2016

2017


(unaudited)

(audited)


£'000

£'000

£'000

Income:




Dividends from UK companies

256

413

Dividends from overseas companies

27

27

UK loan stock interest

25

90

Interest from deposits

8

10


265

316

540

 

9.         Dividends Paid


Six months ended

31 August 2017 (unaudited)

Six months ended

31 August 2016 (unaudited)

Year

ended

28 February 2017 (audited)


£'000

£'000

£'000

Final dividend for the year ended 29 February 2016 of 3.0p per Ordinary share - paid on 12 August 2016

 

-

 

1,707

 

1,707

Interim dividend for the year ended 28 February 2017 of 1.5p per Ordinary share - paid on 16 December 2016

 

-

 

-

 

857

Final dividend for the year ended 28 February 2017 of 2.5p per Ordinary share - paid on 11 August 2017

 

1,509

 

-

 

-


1,509

1,707

2,564

 

10.      Tax

The effective rate of tax for the six months ended 31 August 2017 is nil (2016: nil).

 

11.      Investments

 

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 1"

Inputs to Level 1 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 and fully listed companies.

 

- Valued using models with significant observable market parameters - "Level 2"

Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.

 

- A valuation technique; - "Level 3" 

Fair value is measured using a valuation technique that is based on data which are not observable.

 

Following the update to FRS 102, for periods starting after 1 January 2017 the Company will disclose the fair value hierarchy based upon Levels 1, 2 and 3 rather than a, b, c i) and c ii).  Levels c i) and c ii) as disclosed in prior periods are now shown within Level 3.

 

 


Level 1

Level 3

 


Traded on

Unquoted



AIM

investments

Total


£'000

£'000

£'000

Cost as at 1 March 2017

20,290

6,447

26,737

Movements in the period:




Purchases

3,263

-

3,263

Disposals - proceeds received

(3,946)

(53)

(3,999)

-     realised gain on disposal

1,633

-

1,633

-     realisation of revaluation movements from previous years

 

606

 

-

606

Cost at 31 August 2017

21,846

6,394

28,240

 

 




Unrealised gains/(losses) as at 1 March 2017

21,308

(5,543)

15,765

Unrealised gains on investments during the period

11,796

5

11,801

Realisation of revaluation movements from previous years

(606)

-

(606)

Unrealised gains/(losses) as at 31 August 2017

32,498

(5,538)

26,960

Valuation as at 31 August 2017

54,344

856

55,200





Equity shares

54,344

315

54,659

Loan stock

-

541

541

Total investments at valuation

54,344

856

55,200

 

 

 

12.      Related Parties

The Company holds 344,509 shares in Anpario plc, an AIM traded company of which Peter Lawrence is non-executive chairman.  Mr Lawrence and family hold 35,400 shares and his charitable trust holds 27,950 shares in Anpario plc. 

 

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


31 August 2017 shares held

Paul Jourdan

290,466

Douglas Lawson

20,320

David Stevenson

14,134

 

 

 

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

 

Registrars account log in

You will now also be able to see details of your shareholding on Share Registrars' website (www.shareregistrars.uk.com). To set up a secure login for this you will need your Investor ID, which can be found on your share certificate. In addition, once set up, you can amend your address and bank mandate details and input a proxy vote for a Company meeting using this online service.

 

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 821390 or email [email protected].

 

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/avct.php

           

Net Asset Value per Share

The Company's net asset value per share as at 31 August 2017 was 94.6p. The Company normally announces its net asset value on a weekly basis. Net asset value per share information can be found on Amati Global Investors' website: http://www.amatiglobal.com/avct.php. 

 

Financial Calendar

October 2017                Half-yearly Report for the six months ending 31 August 2017 to be circulated to shareholders

December 2017             Payment of interim dividend

28 February 2018          Year end

May 2018                     Announcement of final results for the year ending 28 February 2018

June 2018                     Annual General Meeting

 

CORPORATE INFORMATION

 

Directors

Peter Lawrence

Julia Henderson

Charles Pinney

Brian Scouler

 

Registrar

Share Registrars Limited

The Courtyard

17 West Street

Farnham, Surrey

GU9 7DR

 

all of:

110 George Street

Edinburgh

EH2 4LH

 

Auditor

KPMG LLP

Saltire Court

20 Castle Terrace

Edinburgh

EH1 2EG

 

Secretary

The City Partnership (UK) Limited

110 George Street

Edinburgh

EH2 4LH

Custodian

Jarvis Investment Management Ltd

78 Mount Ephraim

Tunbridge Wells

Kent

TN4 8BS

 

Fund Manager

Amati Global Investors Limited

18 Charlotte Square

Edinburgh

EH2 4DF

 

Solicitors

Rooney Nimmo

8 Walker Street

Edinburgh

EH3 7LA

VCT Tax Adviser

Philip Hare & Associates LLP

Suite C, First Floor

4-6 Staple Inn

Holborn  London

WC1V 7QH




 

Contact Details

 

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
 
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