AAM.L Regulatory News (AAM)

Artemis VCT plc (the 'Company')

Annual Financial Report for the year ended 30 September 2017

This announcement contains regulated information

Financial Highlights

- Net asset value total return of 32.9% and share price total return of 47.5%.

- Total dividends paid and proposed for the year of 20.00 pence per share.

Returns for the year

* Source: Artemis Fund Managers Limited ('Artemis').

‡ Includes special dividend of 6.00 pence per share and special interim dividend of 2.00 pence per share in respect of the year ended 30 September 2017 which were declared on 26 October 2017, in lieu of final dividend.

Total return for the periods ended 30 September 2017

Strategic Report

Chairman's Statement

Performance

I am pleased to report another year of strong returns for shareholders. The Company's net asset value at 30 September 2017 was 73.60 pence, having started the year at 71.92 pence. This increase, coupled with 22.00 pence of dividends paid in the year, means that a total 23.68 pence per share of value has been generated for shareholders over the year. This is equivalent to 32.9% of the starting net asset value.

This year's performance is a continuation of returns shareholders have had over a number of years. Shareholders' returns over three and five years have been 68.8% and 130.1% respectively. Over the five years to 30 September 2017 total dividends paid to shareholders amount to 64.00 pence per share. Over the life of the company total dividends paid now stands at 92.20 pence per share.

Results and dividends

The total return for the year was a gain of 23.68 pence per share. In October the Board declared a further special dividend of 6.00 pence per share. The declaration of this second special dividend at this time was as a result of the Investment Manager realising further profits from the investment portfolio and generating cash from these sales. It remains the case that there are limited suitable opportunities to reinvest these funds and, as there are technical constraints for VCT companies holding cash, the Board decided to return a portion of these funds to shareholders at the earliest opportunity. In view of the decision to pay a further special dividend, and taking into account the cost and process for paying dividends, the Board decided to also declare a second interim dividend of 2.00 pence per share which is in lieu of a final dividend. These dividends were paid to shareholders on 22 November 2017.

Earlier in the year the Board declared an interim dividend of 2.00 pence and a special dividend of 10.00 pence per share, both paid to shareholders on 30 June 2017. Total dividends declared for the financial year to 30 September 2017 were therefore 20.00 pence per share (2016: 16.00 pence per share).

Shareholders will be aware that the Company has now paid special dividends for a number of years. These dividends have arisen as a result of the Investment Manager realising profits from the portfolio as companies have been re-rated and thereby having large amounts of cash. Changes to the VCT regulations have reduced both the types of companies VCTs can invest in and the making of further investments in existing holdings. This has resulted in the Company distributing excess cash as special dividends to maintain its VCT qualifying percentage above the required level, particularly when there are no new suitable investment opportunities in which to re-invest this excess cash.

It is the Board's view that should suitable investment opportunities arise then new investments will continue to take priority over special dividends. However, should the Company be in a similar position in the future, having generated significant cash balances, the Board will again consider whether these funds should be returned to shareholders through special dividends.

Deal flow

The flow of deals that are compliant with the new VCT rules, as reported last year, has continued to be limited. For us, valuations continue to be an obstacle to investment. This has resulted in only two new qualifying investments being made during the year, ECSC and Velocity Composites. More information on these companies can be found in the Investment Manager's Review. It is hoped deal flow will improve and further new investments can be added to the portfolio in the year to come.

Share buy backs

The Board has a policy for purchasing the Company's shares to ensure it continues to be fair to existing shareholders and, subject to having both the necessary shareholder authorities and sufficient funds available, it will continue to purchase shares at a 10% discount to net asset value.

Further details regarding the shares purchased during the year are provided in the Share capital section of the Strategic Report.

Annual General Meeting (AGM)

The AGM, which alternates between Edinburgh and London, will be held on 7 February 2018, at Cassini House, 57 St James's Street, London SW1A 1LD at 11.00 a.m.

The fund manager, Andy Gray, will make a short presentation at the meeting and shareholders will then have an opportunity to meet both him and the Directors. The Board would welcome your attendance at the AGM as it provides shareholders with an opportunity to ask questions of the Board and the fund manager. For those shareholders who are unable to attend, I would encourage you to make use of your proxy votes by completing and returning the form of proxy.

Re-election of Directors

The Board has agreed that each of the Directors should stand for re-election on an annual basis. Accordingly resolutions for this are being proposed at the AGM.

Outlook

The Budget statement, delivered by Philip Hammond in November, had been awaited with great interest by the VCT sector as it was expected that there would be legislative changes. While there are a number of areas to consider for the sector as a whole, these are generally positive and we do not envisage any material difference to the way the Company is managed going forward. The most significant and relevant changes for the Company are the increase in the minimum percentage of total investments in qualifying holdings and the time period to re-invest sales proceeds. The minimum percentage is currently 70% and this will increase to 80% for accounting periods beginning on or after 6 April 2019. For the Company, this will be effective for the financial year ending 30 September 2020. To date, the Company has been managed so that the level of qualifying holdings is generally in excess of 80%. The time period to re-invest sales proceeds will be extended from six months to twelve months, effective from 6 April 2019. This welcome change will provide greater flexibility in retaining cash for investment.

In the UK, the process of negotiating the exit from the EU is underway although there is, as yet, little clarity on what the post-Brexit environment will be. The Board is monitoring developments and considering implications on our individual investee companies as well as the Investment Manager. While the changes that Brexit will bring are likely to have some impact on our investee companies, these are now well-established, profitable companies which, in the main, are reporting growing revenues and which, we believe, are in a strong position to cope with the political and economic uncertainty.

Contact us

The Board is always keen to hear from shareholders. Should you wish to, you can contact me at vctchairman@artemisfunds.com. You can also find regularly updated information on the Company, including a factsheet and performance data, on the Company's website at artemisvct.co.uk.

Fiona Wollocombe

Chairman

6 December 2017

Investment Manager's Review

Performance

We are pleased to report a continuation of the strong performance of the year. The return for the year of 32.9% marks the fifth consecutive year of double digit returns thereby delivering a 5 year return, including dividends, of 130.1%. In fact the 64.00 pence in tax-free dividends paid over this 5 year period is greater than the starting net asset value which stood at 59.79 pence on 30 September 2012.

Five largest stock contributors

Five largest stock detractors

* Holdings sold in the period

Review

Whilst the table above shows the top five contributors to performance, as pleasing for us has been the number of stocks that have contributed to performance. From the portfolio of thirty five stocks held during the year twenty one saw their share prices rise by more than 20% and of those, twelve rose by more than 50%.

The broad spread of performance is welcome but it is fair to say some companies have captured the imagination of investors more than others. In the low growth environment that exists today those companies that can demonstrate strong levels of growth are highly sought after. Add to that a large market opportunity that gives the potential for this growth to be sustained for years to come and investors are increasingly willing to ascribe significant valuation premiums. Although we would argue that many companies within the portfolio fit these criteria, two companies in particular have come to the fore with share prices more than trebling in the last twelve months, Gear4music and Keywords Studios - two of our top three companies as we started the year.

The structural shift in consumer spending from physical stores to online retailers is well documented and the purchase of musical instruments is no different - a trend on which Gear4music is capitalising.

In the company's AIM admission document the directors estimated the top ten European retail markets to be worth approximately £4.3 billion in 2012. Set in that context £56 million of revenues is still just scratching the surface. Revenue growth in this financial year is forecast to be in the region of 45% which goes some way to explaining the p/e ratio of 82x at which the company was valued at the period end. We don't doubt the growth opportunity but with a market value of £176 million, the risk/ reward has shifted markedly from the IPO valuation of just £28 million a little over two years ago. Having invested £1.3 million at IPO we have realised gains of over £3 million in the last twelve months and retain a holding valued at £0.7 million at the period end.

Keywords Studios is pursuing a strategy of organic and acquisition led growth in building a business serving video games companies globally. In a hugely fragmented market the company is positioning itself as the market leader allowing its customers to deal with a single provider for a full range of services from local language translation to artwork.

The strategy is working. In its most recent interim results the company reported a 17% growth in like-for-like revenues, increasing to 50% when the contribution from acquisitions is included. Revenue for the year ending December 2018 is forecast to be over €200m but with an addressable market estimated at $2bn and growing there is much to go for and with growth dynamics such as these investors are willing to look further into the future to justify valuations. That said, a 2018 p/e ratio of 38x at the period end is more than double the 18x multiple of earnings we paid at IPO in 2013. For us, this valuation discounts a fair amount of the prospective growth so we have again been reducing the holding into this share price strength. The realised gains to date matches that of Gear4music at a little over £3 million and we retain a holding valued at over £1.2 million.

Whilst the attributes of these two companies in particular have attracted investors' attention there are a number of companies in the portfolio that we feel offer the same potential but are not yet widely recognised. Energy supplier Yu Group is one such company. Although the shares have performed well over the last year we have only trimmed the holding modestly such that it is our biggest holding at the year end. The potential benefits to households of switching energy supplier are widely known and for small and medium sized business it is no different. Yu Group has quickly established itself as a credible alternative to the 'Big Six'. At the time of its IPO eighteen months ago the company had booked sales of a little over £10 million. The interim results announced last month revealed contracted and recognised revenue for 2017 of almost £40 million with order intake momentum if anything, accelerating further.

Seeing the success of Keywords Studios in the past year it is easy to forget how the company got off to an inauspicious start on AIM, with a profit warning just a few months after its IPO. ECSC Group recently suffered the same fate. Much like our more successful investments described above we were attracted to ECSC due its potential to grow quickly into the £3 billion cyber security market with the IPO proceeds providing the investment required to scale the business to meet demand. The results so far have been disappointing. Early signs were encouraging so we were surprised to read a cautious trading update from the company at the end of June - we were, quite honestly, expecting the opposite. The interim results announced in September showed little improvement.

The company is currently trading below its IPO price of 167p but our profit taking in May, at the height of the publicity surrounding the NHS ransomware attack, means we are still showing a profit on our initial investment.

Instem plc too has had a rocky twelve months. The Food and Drug Administration ("FDA") in the US has in recent years mandated the adoption of electronic regulatory submissions and Instem, as experts in the field, look well placed to benefit. The market however is still embryonic and in the meantime the more established early stage clinical business has seen trading deteriorate. We are confident that in time trading will improve but patience will be required.

Investment activity

Transactions over the last twelve months have, once again, been weighted towards disposals. We have made two new qualifying investments, one in each half of the year. With our interim results we highlighted our £0.85 million investment in ECSC Group plc and in the second half of the year we invested £0.46 million in Velocity Composites plc.

Velocity Composites plc is a specialist aerospace composite materials kit supplier. The company has positioned itself between the chemical manufacturers of composite raw materials and the aerospace structural component makers by providing all materials, from any supplier, kitted and engineered to pre-agreed shapes, effectively ready to use. These are then delivered in time to the customer's assembly line providing essential logistics and supply chain efficiencies. As well as reducing the aircraft manufacturer's costs, the use of kits speeds up the production process allowing customers to more readily meet the significant increases in build rates. The aerospace market is highly regulated and approvals are also required from the airframe manufacturers such as Boeing and Airbus which all translates into high barriers to entry. We would have liked to invest more than we did but the IPO was significantly oversubscribed.

In contrast to the limited acquisitions, we made over £14 million of disposals in the year, the vast majority focused around profit taking, as described earlier. The table below shows our five largest disposals in the period.

Although we rarely sell out of a holding completely due to valuation, provided of course the fundamentals remain strong, we do think it is prudent to manage portfolio weightings and realise gains for shareholders on an ongoing basis.

We have also continued to focus on reducing the tail of stocks in the portfolio and we exited our small holdings in Sphere Medical and Vitesse Media in the second half of the year, as we did with Photonstar and Imaginatik in the first six months. The portfolio now comprises just thirty companies, down from thirty five a year ago.

The absence of new qualifying investments that meet our criteria does, however, mean that we, once again, had surplus cash. We firmly support the Board's decision to return excess cash to shareholders in the form of special dividends.

Outlook

Whilst our portfolio is diversified in terms of business activity, the Company's investments largely share the common characteristics of being small, high growth companies. They are also relatively illiquid. As such although the businesses continue to perform well we suspect their share prices are more closely correlated than a scan of their respective end markets might suggest.

As we highlighted earlier investors are increasingly willing to ascribe high valuations for small growth companies and with the portfolio comprising many such stocks we expect to benefit for as long as this continues. That said we do remain disciplined on what we are willing to pay for new investments and will continue to capitalise on investor's enthusiasm, and the liquidity that comes with it, to realise gains for our shareholders.

The good news is that with more and more of our portfolio companies continuing to perform well they are increasingly appearing on the radar screens of investors for whom that growth is a feature worth paying handsomely for.

Andy Gray

Fund manager

6 December 2017

Strategy and Business Review

Corporate strategy and operating environment

The Company is incorporated in Scotland and its business as a venture capital trust ('VCT') is to buy and sell investments with the aim of achieving the objective and investment policy outlined below.

Objective and investment policy

The objective of the Company is to achieve long-term capital and income growth and to generate tax free capital and income distributions. The Company's investment policy is to invest in a diversified portfolio of growth orientated companies across a broad range of industries, with a particular emphasis on companies whose shares will be traded on AIM. Investments will also be in companies whose shares are traded on ISDX and unquoted companies. The Company's portfolio is managed in order to meet the investment requirements of Section 274 of the Income Tax Act 2007 ('s274') that, inter alia, requires at least 70% of the investments to be qualifying holdings. Subject to maintaining a prudent margin of safety over the 70% level, the Company's remaining assets may be invested in cash or money market deposits, fixed interest securities, unit trusts or UK listed securities without regard to the market capitalisation of such companies.

Operating environment

The Company operates as a VCT and has to satisfy the requirements of s274 (as outlined in the objective and investment policy) on an ongoing basis. The Directors have managed, and continue to manage, the business in order to comply with the legislation applicable to VCTs so as to continue to meet these conditions. As at 30 September 2017 the Company had 93.5% of its assets in VCT qualifying holdings. Compliance is monitored through regular reports from the Investment Manager and Administrator. In addition, the Board has appointed a tax advisor to provide further independent assurance of compliance with venture capital tax legislation and to provide guidance on changes in tax legislation affecting the Company.

The Company has no employees and delegates most of its operational functions to a number of service providers.

Current and future developments

A summary of the Company's developments during the year ended 30 September 2017, together with its prospects for the future, is set out in the Chairman's Statement and the Investment Manager's Review. The Board's principal focus is the delivery of positive long-term returns for shareholders. This will be dependent on the success of the investment strategy, in the context of both economic and stock market conditions. The investment strategy, and factors that may have an influence on it, are discussed regularly by the Board and the Investment Manager. The Board regularly considers the ongoing development and strategic direction of the Company, including the effectiveness of communication with shareholders.

Key Performance Indicators ('KPIs')

The performance of the Company is reviewed regularly by the Board and it uses a number of KPIs to assess the Company's success in meeting its objective. The KPIs which have been established for this purpose are set out below.

· Net asset value performance. The Board monitors the performance of the net asset value of the Company through regular updates from the Investment Manager on the performance of the companies in the portfolio.

· Share price performance. The Board monitors the performance of the share price of the Company to ensure that it reflects the performance of the net asset value. The Board believes this can best be achieved by establishing a discount policy at which the Company will buyback shares.

· Dividends. The Board is aware of the attractiveness of tax-free dividends for shareholders. The Board monitors the gains realised by the Company and against this determines the dividends to be paid by the Company to shareholders, while also being mindful of retaining cash within the Company for potential future investment opportunities.

· Performance against the peer group. The Board monitors the performance of the Company against the net asset value and share price total returns from the Association of Investment Companies ('AIC') VCT AIM Quoted sector. These returns are provided below for the periods ended 30 September 2017.

Net asset value total return

Share price total return

Source: Artemis/AIC.

· Ongoing charges. The Board is mindful of the ongoing costs to shareholders of running the Company and monitors operating expenses on a regular basis. The Company's current ongoing charges figure is 2.2% (2016: 2.2%). The Company continues to have one of the lowest ongoing charges in the AIC's VCT AIM Quoted sector†.

† Source: Latest published annual financial reports of VCTs in the AIC's VCT AIM Quoted sector as at 30 September 2017.

Principal risks and risk management

The Board, in conjunction with the Investment Manager, has developed a risk map which sets out the principal risks faced by the Company. It is used to monitor these risks and to review the effectiveness of the controls established to mitigate them. As a VCT, the principal risks faced by the Company relate to the nature of the individual investments and the investment activities generally.

A summary of the other key areas of risk and uncertainties are set out below, along with the controls in place to manage these which are highlighted for each risk.

· Strategic: investment objective and policy not appropriate in the current market and not favoured by investors.

The investment objective and policy of the Company is set by the Board and is subject to ongoing review and monitoring in conjunction with the Investment Manager.

· Investment: as the Company has a focus on AIM traded companies, as well as general market price risk, market liquidity in such companies can be limited and it may not always be possible to realise investment positions in their entirety at prices which the Investment Manager considers to be representative of their fair value.

The nature of the investment universe of companies can carry a higher degree of risk than investment in companies that are larger and have more established businesses. Changes in economic conditions and changes in interest rates can impact these businesses and their valuation.

Investment risk is addressed through having a diversified portfolio across a number of industrial sectors. The Board discusses the investment portfolio and performance with the Investment Manager at each Board meeting.

· Regulatory: failure to comply with the requirements of a framework of regulation and legislation, within which the Company operates.

The Company relies on the services of the Company Secretary and Investment Manager, and its VCT tax adviser, to monitor ongoing compliance with relevant regulations and legislation.

The Company, and consequently its shareholders, can benefit from certain tax reliefs extended to VCTs. The tax regulatory environment is complex and, as noted earlier, the requirements that need to be met to ensure compliance have become more restrictive. Any breaches of these regulations could result in a loss of tax benefits. Failure by the Company to meet the requirements of s274 could result in the Company becoming liable for tax on the net capital gains it generates from the sale of investments and shareholders would not be able to receive tax-free dividends.

The Board receives regular updates from the Company Secretary and Investment Manager and its VCT tax adviser in order to monitor compliance with applicable tax regulations.

Failure to comply with appropriate accounting standards could result in a reporting error or breach of regulations or legislation.

The Company relies on the services of the Company Secretary and Investment Manager to monitor and report on any changes in accounting standards. The Company's Independent Auditor also provides an annual update on any accounting changes that affect the Company.

· Operational: disruption to, or failure of, the Investment Manager's and/or any third party service providers' systems which could result in an inability to accurately report and monitor the Company's financial position.

The Investment Manager and other third party service providers have established business continuity plans to facilitate continued operation in the event of a major service disruption or disaster.

In addition to these risks, the Board has also discussed the UK's exit from the EU, which is referred to in the Chairman's Statement.

Viability statement

In accordance with the AIC's Code of Corporate Governance (the 'AIC Code'), the Board has considered the longer term prospects for the Company. Accordingly, the period assessed is the five years to 30 September 2022.

As part of its assessment of the viability of the Company, the Board has considered each of the principal risks above and the impact on the Company's portfolio of a significant fall in UK markets. The Board has also considered the liquidity of the Company's portfolio to ensure that it will be able to meet its liabilities as they fall due.

The conclusion of this review is that the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to 30 September 2022.

Life of the Company

In accordance with the Company's Articles, the Directors are required to put forward an ordinary resolution for the continuation of the Company as a VCT every five years. The next continuation vote will be held in 2022 and thereafter at five year intervals.

Share capital

The Board monitors the activity in the Company's shares and the discount to net asset value at which they may trade. The secondary market for VCT shares remains limited and any significant sales may have an adverse effect on the Company's share price and therefore the discount. In order to address and mitigate this, the Company makes periodic purchases of its own shares within guidelines established by the Board from time to time for this purpose. The current policy is to buy back shares at approximately a 10% discount to the last published net asset value.

During the year the Company bought and cancelled 209,301 (2016: 614,520) shares at a cost of £142,000 (2016: £381,000). This added 0.03 pence per share to the net asset value for continuing shareholders.

A resolution for the Company to continue to be authorised to buy back shares will be put to shareholders at the AGM on 7 February 2018. Approval of this resolution by shareholders will allow the Directors to continue to manage the liquidity of the Company's shares by buying back shares. Share buy backs will remain subject to the Company having the necessary shareholder authorities in place and having sufficient funds available for this purpose, taking into account the ongoing cash requirements for investment activities, the payment of dividends and operating expenses.

Directors

Each of the Directors held office throughout the year under review.

No Director has a contract of service with the Company.

Appointments to the Board will be made on merit with due regard to the benefits of diversity, including gender, skills and experience. The priority in appointing a new director is to identify the candidate with the best range of skills and experience to complement existing directors.

The Board is currently comprised of one female and two male Directors.

Modern Slavery Act 2016

The Company does not fall within the scope of the Modern Slavery Act 2015 as its turnover is less than £36 million. Therefore no slavery and human trafficking statement is included in the Annual Financial Report.

Social and environmental matters

The Company has delegated the management of the Company's investments to Artemis which, in its capacity as Investment Manager, has a Corporate Governance and Shareholder Engagement policy which sets out a number of principles that are intended to be considered in the context of its responsibility to manage investments in the financial interests of shareholders. Artemis undertakes extensive evaluation and engagement with company managements on a variety of matters such as strategy, performance, risk, dividend policy, governance and remuneration. All risks and opportunities are considered as part of the investment process in the context of enhancing the long-term value of shareholders' investments. This will include matters relating to material environmental, human rights and social considerations that may, ultimately, impact the profitability of a company or its stock market rating and hence these matters are an integral part of Artemis' thinking as institutional investors.

As the Company has delegated the investment management and administration of the Company to third party service providers, and has no fixed premises, there are no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions-producing sources under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013, including those within the underlying investment portfolio.

Leverage

Leverage is defined in the Alternative Investment Fund Managers Directive ('AIFMD') as any method by which the Company can increase its exposure by borrowing cash or securities, or from leverage that is embedded in derivative positions, neither of which the Company currently uses. The Company is permitted by its Articles to borrow up to 15% of its net assets (115% under the Commitment and Gross ratios used in the AIFMD). The Company is permitted to have additional leverage of up to 100% of its net assets, which results in permitted total leverage of 215% under both ratios. The Alternative Investment Fund Manager (the 'AIFM'), Artemis, monitors leverage values on a daily basis and reviews the limits annually. No changes were made to these limits during the year ended 30 September 2017. At 30 September 2017, the Commitment ratio was 100.0% and the Gross ratio was 82.8%.

This Strategic Report has been prepared in accordance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.

For and on behalf of the Board

Fiona Wollocombe

Chairman

6 December 2017

Statement of Directors' Responsibilities in respect of the Annual Financial Report

Management Report

Listed companies are required by the Financial Conduct Authority's ('FCA') Disclosure Guidance and Transparency Rules (the 'Rules') to include a management report on their financial statements. The information required to be in the management report for the purpose of the Rules is included in the Strategic Report. Therefore a separate management report has not been included.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Financial Report and the Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare Financial Statements for each financial year. Under that law they have elected to prepare the Financial Statements in accordance with UK Accounting Standards, including Financial Reporting Standard ('FRS') 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland'.

Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing the Financial Statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and estimates that are reasonable and prudent;

· state whether applicable UK Accounting Standards have been followed, subject to any material departures being disclosed and explained in the Financial Statements; and

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

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Financial Statements are published on a website, artemisvct.co.uk, maintained by the Company's Investment Manager, Artemis. The maintenance and integrity of the corporate and financial information relating to the Company is the responsibility of the Investment Manager. Visitors to the website should note that legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in respect of the Annual Financial Report

We confirm that, to the best of our knowledge:

(a) the Financial Statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company taken as a whole; and

(b) the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

We consider the Annual Financial Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy.

For and on behalf of the Board

Fiona Wollocombe

Chairman

6 December 2017

Financial Statements

Statement of Comprehensive Income

Year ended 30 September

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued during the year.

The net (loss)/return for the year disclosed above represents the Company's total comprehensive income.

Statement of Financial Position

As at 30 September

These financial statements were approved by the Board of Directors and signed on its behalf on 6 December 2017.

Fiona Wollocombe

Chairman

Registered in Scotland Number: SC270952

Statement of Changes in Equity

Year ended 30 September 2017

Year ended 30 September 2016

* The aggregate of these reserves, being £10,975,000, represents the distributable reserves of the Company at 30 September 2017 (30 September 2016: £17,422,000).

Statement of Cash Flows

Year ended 30 September

Notes to the Financial Statements

1. Accounting policies

The financial statements have been prepared on a going concern basis and in accordance with UK Generally Accepted Accounting Practice ('UK GAAP'), including Financial Reporting Standard ('FRS') 102, and the Statement of Recommended Practice: Financial Statements for Investment Trust Companies and Venture Capital Trusts (the 'SORP') issued in November 2014 and updated in January 2017 by the Association of Investment Companies (the 'AIC').

The Company is not an investment company within the meaning of Section 833 of the Companies Act 2006 (the 'Act'), having revoked investment company status on 5 March 2008 in order to permit the distribution of realised capital gains. The financial statements are presented in accordance with Part 15 of the Act, and the requirements of the SORP, where the requirements of the SORP are consistent with the Act.

No significant estimates or judgements have been made in the preparation of the financial statements.

2. Return per share (pence)

Revenue loss per share is based on the net revenue loss attributable to shareholders of £40,000 and on 53,202,246 shares, being the weighted average number of shares in issue during the year (2016: gain £113,000 and on 53,694,808 shares).

Capital return per share is based on net capital returns attributable to shareholders of £12,626,000 and on 53,202,246 shares, being the weighted average number of shares in issue during the year (2016: £9,321,000 and on 53,694,808 shares).

Total return per share is based on the total return attributable to shareholders of £12,586,000 and on 53,202,246 shares, being the weighted average number of shares in issue during the year (2016: £9,434,000 and on 53,694,808 shares).

3. Net asset value per share (pence)

The net asset value per share at the year end is calculated in accordance with the Company's Articles and is as follows:

The net asset value per share is based on net assets of £39,118,000 and 53,150,516 shares, being the number of shares in issue at 30 September 2017 (2016: net assets of £38,377,000 and 53,359,817 shares in issue).

4. Transactions with the Investment Manager and related parties

The existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore, under FRS 102, the Investment Manager is not considered to be a related party.

5. Annual Financial Report

This Annual Financial Report announcement does not constitute the Company's statutory accounts for the years ended 30 September 2017 and 30 September 2016 but is derived from those accounts. Statutory accounts for the year ended 30 September 2016 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 September 2016 and the year ended 30 September 2017 both received an audit report which was unqualified and did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not include statements under Section 498 of the Act respectively. The statutory accounts for the year ended 30 September 2017 have not yet been delivered to the Registrar of Companies and will be delivered following the AGM.

The audited Annual Financial Report for the year ended 30 September 2017, will be posted to shareholders shortly. Copies may be obtained from the Company's registered office at 42 Melville Street, Edinburgh EH3 7HA or at the Company's website, artemisvct.co.uk.

The Annual General Meeting of the Company will be held on Wednesday, 7 February 2018.

For further information, please contact:

Company Secretary

Tel: 0131 225 7300

Artemis Fund Managers Limited

6 December 2017