AAM.L Regulatory News (AAM)

Artemis VCT plc (the 'Company')

Annual Financial Report for the year ended 30 September 2015

This announcement contains regulated information

Financial Highlights

- Net asset value total return of 12.7 per cent and share price total return of 14.0 per cent.

- Proposed special dividend of 10.00 pence per share and a final dividend of 2.00 pence per share.

- Total dividends paid and proposed for the year of 19.00 pence per share.

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

† 24 March 2005.

‡ Includes proposed special dividend of 10.00 pence per share and a final dividend of 2.00 pence per share in respect of the year ended 30 September 2015 which are subject to shareholder approval at the Annual General Meeting.

Strategic Report

Chairman's Statement

Performance

For the year ended 30 September 2015, the Company's net asset value total return was 12.7 per cent. The share price total return for the year was 14.0 per cent. The Investment Manager's Review provides more details on this return and how it was achieved.

Results and dividends

The return for the year was 8.42 pence per share: this comprised a capital gain of 8.35 pence and a revenue gain of 0.07 pence. The Board is proposing a final dividend of 2.00 pence per share and a further special dividend of 10.00 pence per share. Shareholders will be asked to vote on this proposal at the Annual General Meeting ('AGM'). If approved, the dividends will be paid on 8 February 2016 to those shareholders on the register on 11 December 2015. This will bring the total dividends for the year ended 30 September 2015 to 19.00 pence per share, comprised of special dividends of 15.00 pence per share and ordinary dividends of 4.00 pence per share.

The Board recognises that a large proportion of net assets are proposed to be paid to shareholders by way of dividends this year. The second special dividend reflects the continuation of the market conditions, experienced during the first six months, into the second half of the financial year. Smaller companies have re-rated and while this has provided opportunities to sell positions in existing investments, which has been beneficial in terms of profitable realisations, it has also resulted in new investments being offered at higher valuations which, the Investment Manager believes, often do not appropriately reflect the risk, thereby making re-investment more challenging.

At this point, it is worth reiterating what we said about special dividends in the interim report: where one has been paid, it has been in response to market conditions at that time and the Board continues to be of the view that new investments, at appropriate valuations, should take priority. If such opportunities are not available, the Board believes shareholders' interests are best served by returning any excess cash to them.

VCT regulations

Recent changes to the VCT regulations could represent a significant change for the industry and will potentially make it more challenging for both companies seeking VCT money and VCTs themselves. The new rules include a limit on the amount a company can receive in its lifetime from state-aided vehicles (which include VCTs). There is also a restriction on the length of time that can elapse between the company's first commercial sale and when it receives its first state-aided funding. Finally, money raised from VCTs cannot be used to fund the acquisition of another business (either in full or by purchasing its assets). As well as applying at the point of investment, the new regulations introduce a compliance test for the following five years.

In summary, our operating environment will become more complex; but how this will affect the flow of deals in future remains to be seen. What is certain is that the new rules will increase the monitoring requirements. To assist with the Company's management of this regulatory change, the Board has appointed Philip Hare & Associates LLP, a specialist in VCT monitoring, as VCT tax advisor to the Company to provide guidance and assurance on the continuing compliance with the VCT rules.

Share buybacks

Subject to having both the necessary shareholder authorities and sufficient funds available, the Company will continue to buy back shares at a discount of up to 10 per cent to the last published net asset value. Further details regarding the shares purchased during the year are provided in the share capital section of the Strategic Report.

Re-election of Directors

At the annual review of the Board, held on 25 November 2015, it was agreed that each of the Directors of the Company should now stand for re-election on an annual basis. Accordingly resolutions for this are being proposed at the AGM. The Board has reviewed its composition and independence of its membership and is satisfied that each of the Directors remains independent of the Investment Manager and that the Board has the appropriate balance of skills and experience to undertake its role.

AGM

The AGM, which alternates between Edinburgh and London, will be held on Wednesday, 3 February 2016 at the offices of Artemis Fund Managers Limited, Cassini House, 57 St James's Street, London SW1A 1LD at 11.00am.

At the AGM, the fund manager, Andy Gray, will make a short presentation. Afterwards, shareholders will have the opportunity to meet both him and the Directors. The Board would welcome your attendance as it allows shareholders to ask questions of us and the fund manager. For those shareholders who are unable to attend, I would encourage you to make use of your proxy votes.

Outlook

Whatever economic and social issues fill the headlines, the fund manager remains focused on investing in well-financed, profitable and growing companies. As we have said before, weakness in the market will inevitably affect the Company's assets from time to time, but the Board believes the Investment Manager's view on the portfolio will produce positive returns for shareholders over the longer term.

The impact of the changes to the VCT regulations is yet to emerge but it is something to which the Board will be paying close attention in the short-term.

Contact us

The Board is always keen to hear from shareholders. Should you wish to, you can contact me at fiona.wollocombe@artemisfunds.com. There are dedicated pages on the Company's website (artemisvct.co.uk), where you will find regularly updated information, including a factsheet and performance data.

Fiona Wollocombe

Chairman

2 December 2015

Investment Manager's Review

Performance

After a quiet first six months, in which the Company's net asset value returned 2.7 per cent, we expressed in the interim report our confidence in the outlook for the portfolio. Performance did indeed pick up in the second six months, such that the net asset value delivered a total return of 12.7 per cent for the year. This compares favourably with an average of 4.0 per cent by our peer group, defined as those VCTs in the AIC's VCT AIM Quoted sector.

This year builds on the strong performance of the previous two years and over three and five years the net asset value total return of the Company has been 73.0 per cent and 82.8 per cent, respectively, comfortably ahead of the peer group's averages of 45.4 per cent and 56.6 per cent.

Review

The most pleasing aspect of the last 12 months has been the breadth of performance: eight companies each contributed more than 1 per cent to the return. Over recent years we have made a conscious effort to construct a focused portfolio so that each holding has the potential to be a material contributor. Obviously this relies on good stock selection, but we feel the merits of this approach are reflected in the figures above.

During the period under review, many stock markets struggled as investors came to terms with the prospect of muted economic growth, particularly with the slowdown in China. In aggregate we share these concerns. But there are still many individual companies able to generate impressive organic growth and this is evident in the portfolio, as detailed below.

Despite a moribund market for defence, Cohort was our largest contributor. It has enjoyed a record year, delivering 22 per cent organic growth in revenue. Profits have followed a similar trajectory, complemented by acquisitions, such that the company delivered adjusted operating profit of £10.2 million in the year ending April 2015. A year ago we were expecting £7.8 million. Further acquisitions and significant contract wins in its current financial year make us optimistic for further progress.

Vision Direct, an online retailer of contact lenses, has similarly increased revenue. A round of financing in January 2014 enabled GetLenses to purchase its competitor, Vision Direct - and adopt the name for branding throughout Europe. High levels of service have kept customers loyal and repeat (coupled with new) purchases have fuelled this growth, which looks set to accelerate.

Our investment in Abcam dates back much further - to October 2005. In that year (to June 2006) sales grew 60 per cent to £19.4 million. Nine years on and the company is still delivering double-digit growth in sales, with 14 per cent growth to £144.0 million. Investments made over the last 12 months give us confidence this can continue for some time.

Growth is also on the agenda for Fulcrum Utility Services. Over the last couple of years the new management team has concentrated on establishing a strong operating platform; rather than outsourcing, an in-house team now handles gas connections. Having delivered its first profit, the focus for the coming year is on increasing sales over a largely fixed cost base. The share price has more than doubled in the last 12 months but the shares remain good value, in our view, if these ambitions can be met.

Of course, a concentrated portfolio can work both ways and two companies were particularly costly to performance.

As we entered this financial year the oil price had dipped to just below US$100 per barrel; we finished with it having more than halved, at US$48 per barrel. As one might expect, oil companies are reacting to this new environment with a reassessment of planned developments and initiatives to reduce costs throughout their supply chains.

Pressure Technologies is heavily dependent on customers in oil and gas: about 70 per cent of revenue derives from this end market. Acquisitions in recent years have been similarly focused - hindsight is a wonderful thing. The resulting downturn has been sharp; and management is doing its best to mitigate the heavy fall in orders by reducing costs.

MyCelx Technologies had been commercialising its polymer-based system for treating water with some success - oil companies were increasingly adopting it. This has since ground to a halt as customers defer spending plans. Again, management is addressing costs in order to preserve cash. A fundraising in December 2014, in which we participated, has given the company the headroom required at this time.

Five largest stock contributors

Five largest stock detractors

Investment activity

The portfolio itself has been very stable over the last 12 months. While there has been a steady flow of new VCT-qualifying deals, we remain selective and have only added two new holdings (Ideagen and Gear4music Holdings). We disposed of three others (Advanced Computer Software Group, EKF Diagnostics Holdings and iQur), leaving us with a similarly concentrated portfolio.

Besides the investment in MyCelx Technologies, we also made top-up purchases earlier in the year of Gama Aviation and Anpario. In aggregate, disposals have far outweighed purchases. The strong performance of a number of our stocks has meant activity has centred on profit-taking as we continue to balance the desire for material weightings with the risks of holding each stock.

Our partial sale of the unquoted Oxford Nanopore Technologies illustrates this point. The company is developing and commercialising next-generation systems for sequencing DNA. Progress has been impressive with its MinIon product, which is now in the hands of scientists worldwide. That said, the level of risk inherent in an investment of this nature remains high. So we took the opportunity to reduce the weighting materially in May, realising a gain of more than £1.1 million.

Other material sales included Abcam, Advanced Medical Solutions Group, Amino Technologies and Cohort.

These sales have generated significant amounts of cash. Shareholders will be aware that to be a VCT, 70 per cent of the Company's assets must be invested in qualifying investments, therefore we have to reinvest such proceeds in new qualifying holdings - or return them to shareholders as dividends. We were therefore disappointed that we only managed to invest a modest amount, just £250,000, in Ideagen as part of a VCT-qualifying fundraising in January. As a profitable and cash-generative software company, with significant potential for growth, it is no surprise there was significant demand and the placing was well over-subscribed. Indeed, with around £520 million of assets managed collectively by AIM VCTs, and a maximum annual investment each investee may receive of £5 million, this may be an ongoing challenge - particularly as the qualifying rules tighten further. More on this below.

We did manage to establish a more meaningful holding in Gear4music. An IPO in June raised money to enable the online retailer of musical equipment and instruments to fund its continued growth in the UK and Europe. Although at an early stage of profitability, Gear4music has established a strong platform and we would expect this to grow markedly as the company gains scale.

These two new qualifying investments (which cost £1.6 million in aggregate) along with some smaller follow-on investments (amounting to £0.7 million) compare with proceeds from disposals of £9.5 million, so we supported the Board's decision to pay a special dividend in June alongside the interim dividend which saw £2.7 million returned to shareholders. Since the year end, we have made further material disposals in our two largest holdings, Proactis Holdings and Cohort. As a result 10.00 pence per share is proposed to be returned to shareholders along with the final dividend of 2.00 pence per share in February 2016.

As we alluded to above, and referenced in the Chairman's Statement, new rules governing VCTs have recently come into effect. By narrowing further the criteria for investment, our sense is that these may make the job of finding suitable opportunities to reinvest even more challenging. The change likely to be most relevant for us is the new restriction on investee companies using VCT-qualifying funds to make acquisitions to further grow their businesses.

Companies adopting successful buy-and-build strategies have been a recurring theme for us - and major contributors to performance over the years. There have been few better examples than Advanced Computer Software Group: chief executive Vin Murria has created significant value for shareholders, culminating in the takeover by private equity firm Vista in March 2015. This brought the realised gain to £3.5 million since our initial investment in 2008.

Outlook

We must stress that any note of uncertainty surrounding the new rules should not be confused with a lack of optimism about the Company's prospects. The portfolio is maturing nicely and does not rely on new investments to generate performance. Despite strong returns in recent years, we still feel most of the companies are well positioned to deliver from here. Provided they do as we expect, then the question is whether we reinvest or the Board chooses to return the proceeds to shareholders through tax-free dividends. That is a good question to be facing.

Andy Gray

Fund manager

2 December 2015

Strategy and Business Review

Corporate strategy and operating environment

The Company is incorporated in Scotland and its business as a VCT is to buy and sell investments with the aim of achieving the corporate policy outlined below. The Company operates as a VCT and has to satisfy the requirements of Section 274 of the Income Tax Act 2007 ('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 2015 the Company had 80.2 per cent of its funds in VCT qualifying holdings. Compliance is monitored through regular reports from the Investment Manager and Administrator. In addition, the Board has appointed a taxation 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, details of which are set out later in the report.

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 S274 that, inter alia, requires at least 70 per cent of the investments to be qualifying holdings. Subject to maintaining a prudent margin of safety over the 70 per cent 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.

Current and future developments

A summary of the Company's developments during the year ended 30 September 2015, 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 AIC's VCT AIM Quoted sector. These returns are provided below for the periods ended 30 September 2015.

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 per cent (2014: 2.2 per cent). 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 2015.

Other matters

Viability statement

In accordance with the AIC Code of Corporate Governance, the Board has considered the prospects for the Company for the three years to 30 September 2018. The Directors believe this period is appropriate for the Company, recognising that it is an AIM focussed VCT, the current size of the Company and its ongoing recurring costs. This period allows for reasonable forecasts to be made in order that the Board can provide shareholders with reasonable assurance over the viability of the Company.

Within the period of review, the Board is required to put forward an ordinary resolution for the continuation of the Company as a VCT for a further five years. This will be considered by shareholders at the beginning of 2017. At this point the Board has no reason to believe that shareholders will not approve the continuation of the Company.

As part of its assessment of the viability of the Company, the Board has considered each of the principal risks below 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. It has also considered the potential impact on the Company that may arise from the changes to the VCT regulations, referred to in the Chairman's Statement and the Investment Manager's Review.

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 2018.

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, typically younger and growth oriented, 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 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.

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 try 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 buyback shares at up to a 10 per cent discount to the last published net asset value.

During the year the Company bought and cancelled 1,484,536 (2014: 1,794,912) ordinary shares at a cost of £966,000 (2014: £1,149,000). This added 0.19 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 3 February 2016. 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 at a discount of up to 10 per cent to the last published net asset value (which is published on a daily basis). Share buybacks 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.

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 of Association (the 'Articles') to borrow up to 15 per cent of its net assets (determined as 115 per cent under the Commitment and Gross ratios). The Company is permitted to have additional leverage of up to 100 per cent of its net assets, which results in permitted total leverage of 215 per cent under both ratios. The Alternative Investment Fund Manager (the 'AIFM') 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 2015. At 30 September 2015, the Commitment ratio was 100.0 per cent and the Gross ratio was 89.5 per cent.

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 2017.

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

2 December 2015

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

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Financial Report and the Company's 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 and applicable law (UK Generally Accepted Accounting Practice).

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.

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 as at 30 September 2015 and for the year then ended;

(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; and

(c) the Annual Report and Financial Statements, 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

2 December 2015

Income Statement

The total column of this statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the AIC. All items in the above statement derive from continuing operations.

No separate Statement of Recognised Gains and Losses is presented as all gains and losses are included in the Income Statement.

The Company has only one business and derives its income from investments made in shares, securities, loans and bank deposits.

Balance Sheet

These financial statements were approved by the Board of Directors and signed on its behalf on 2 December 2015.

Fiona Wollocombe

Chairman

Registered in Scotland Number: SC270952

Reconciliation of Movements in Shareholders' Funds

* The aggregate of these reserves, being £21,527,000, represents the distributable reserves of the Company at 30 September 2015 (30 September 2014: £23,230,000).

Cash Flow Statement

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') and the Statement of Recommended Practice: Financial Statements for Investment Trust Companies and Venture Capital Trusts (the 'SORP') issued by the AIC in January 2009.

The Company is no longer 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.

2. Return per ordinary share (pence)

Revenue return per ordinary share is based on the net revenue gain attributable to ordinary shareholders of £40,000 and on 54,602,633 shares, being the weighted average number of ordinary shares in issue during the year (2014: £21,000 and on 56,374,727 ordinary shares).

Capital return per ordinary share is based on net capital returns attributable to ordinary shareholders of £4,560,000 and on 54,602,633 ordinary shares, being the weighted average number of ordinary shares in issue during the year (2014: £8,037,000 and on 56,374,727 ordinary shares).

Total return per ordinary share is based on the total return attributable to ordinary shareholders of £4,600,000 and on 54,602,633 shares, being the weighted average number of shares in issue during the year (2014: £8,058,000 and on 56,374,727 ordinary shares).

3. Dividend

The Directors are recommending the payment of a final dividend of 2.00 pence per share and a further special dividend of 10.00 pence per share. If approved at the AGM the dividends will be paid on 8 February 2016, to shareholders on the register on 11 December 2015.

4. Net asset value per ordinary share (pence)

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

The net asset value per ordinary share is based on net assets of £39,002,000 and 53,974,337 ordinary shares, being the number of ordinary shares in issue at 30 September 2015 (2014: net assets of £40,268,000 and 55,458,873 ordinary shares in issue).

5. 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 8 "Related Party Disclosures" the Investment Manager is not considered to be a related party.

6. Annual Financial Report

This Annual Financial Report announcement does not constitute the Company's statutory accounts for the years ended 30 September 2015 and 30 September 2014 but is derived from those accounts. Statutory accounts for the year ended 30 September 2014 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 September 2014 and the year ended 30 September 2015 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 Companies Act 2006 respectively. The statutory accounts for the year ended 30 September 2015 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 2015, 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, 3 February 2016.

 For further information, please contact:

Company Secretary

Tel: 0131 225 7300

Artemis Fund Managers Limited

2 December 2015