Amati Aim Vct Regulatory News (AMAT)

Amati AIM VCT plc (the "Company")

Legal Entity Identifier: 213800HAEDBBK9RWCD25

Annual Report & Financial Statements

For the year ended 31 January 2023

The Directors are pleased to present the Annual Financial Results of the Company for the year ended 31 January 2023.

The information set out below does not constitute the Company's full statutory accounts for the year ended 31 January 2023 in terms of Section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 31 January 2023 will be posted to Shareholders and delivered to the Registrar of Companies, in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts. Audited statutory accounts for the year to 31 January 2022, which were unqualified, have been lodged with the Registrars of Companies.

OUR STRATEGY

The investment objective of the Company is to generate tax free capital gains and income on investors' funds through investments primarily in AIM-traded companies.

DIVIDEND POLICY

The Board aims to pay annual dividends of around 5% of the Company's Net Asset Value at its immediately preceding financial year end, subject to distributable reserves and cash resources, and with the authority to increase or decrease this level at the Directors' discretion.

Highlights

For the year ended 31 January 2023

NAV Total return

for the year†

-22.2%

(2022: -7.5%)

£12.4m

invested in qualifying

holdings during the year

(2022: £31.3m)

1.9%

Ongoing charges**†

(2022: 1.9%)

Year end

Net Asset Value per share†

132.8p

(2022: 180.7p)

7.0%

Discount to NAV†

(2022: 7.9%)

5.3%

Dividend yield***

(2022: 5.0%)

Key data

* Numis Alternative Markets Index is included as a comparator benchmark for performance as this index includes all companies listed on qualifying UK alternative markets.

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

*** Dividend yield based on year end NAV.

† See Alternative Performance Measures on pages 77 and 78 of the full Annual Report and Accounts.

Table of investor returns

to 31 January 2023

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

A table of historic returns is included on page 76 of the full Annual Report and Accounts.

Dividends paid and declared

-22.2%

2023 total dividends per share

7.0p

5.3% of NAV

Cumulative dividends per share

92.74p

Dividend history

Since the re-launch of the VCT under the management of Amati Global Investors*

*On 25 March 2010 Amati Global Investors was appointed as Manager of ViCTory VCT. On 8 November 2011 Invesco Perpetual AIM VCT merged with ViCTory VCT and the name was changed to Amati VCT 2. On 4 May 2018 the Company merged with Amati VCT and the name was changed to Amati AIM VCT.

*\* Total dividends per share are the declared dividends of the financial year.

Fund performance

A graph depicting the Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from change of Manager on 19 March 2010 (first Net Asset Value calculated on 25 March 2010) to 31 January 2023 can be found on page 3 of the full Annual Report and Accounts.

Historic performance

A graph depicting the Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from inception of fund to 31 January 2023 can be found on page 3 of the full Annual Report and Accounts.

Extracts from Strategic Report

Chairman's Statement

This report has been prepared by the Directors in accordance with the requirements of Section 414A of the Companies Act 2006.

Overview and Investment Performance

The Russian invasion of Ukraine caused a steep fall in the valuations of businesses and many other different types of assets in 2022. This resulted in an inflation shock and a sharp rise in interest rates in all Western economies. The overall market environment was one of de-rating for profitable businesses, pressure on sales growth and margins and withdrawal of investor appetite for early-stage companies, especially where there is a risk of requiring more cash. The NAV Total Return for the period fell by 22.2%, which compares to a fall in the Numis Alternative Markets Total Return Index of 20.7%. The bright spots were mostly around bid targets and one or two of the top holdings, like Keywords, which saw good growth continuing through turbulent times.

It was a particularly difficult year for smaller companies and especially so for early-stage businesses still working their way through scale-up to profitability. Amati AIM VCT's portfolio has a combination of some long-standing holdings which have matured into profitable medium-sized enterprises, and those which are still in the scale-up stage. 2022 was also one of the leanest years for VCT qualifying investments on AIM that we have seen. Having had a positive start to the first half, investing £9.4m in qualifying investments, the number of fund raisings on AIM fell further following the disastrous mini-budget in September, and as a result only a further £3m was invested, making £12.4m for the year as a whole. Of this, £3m was in a pre-IPO investment, Chorus Intelligence. This was a difficult period for any company trying to commercialise innovative products and services, regardless of how significant they are. In the medical arena, problems also arose from a slowdown at the FDA (the US medicines regulator) resulting from the pandemic-imposed switch to working from home, which resulted in the delay of many crucial product and drug approvals, including those from companies in our portfolio, such as Amryt Pharma (now bid for) and Polarean. For others, like Creo Medical, the pandemic meant two years of expensive lost time, as they were unable to train doctors in using their approved devices. A number of our newer investments are involved in energy transition where the move away from fossil fuels required to avert climate change, necessitates an extra-ordinary scale of industrial change over the coming decades. Rarely is the journey to commercialisation smooth, and heightened stock market nerves have taken valuations down hard and made access to new capital expensive. However, those companies that can make it through this sifting period intact are likely to emerge much stronger. The negative market sentiment, which has been particularly acute in the second half of the year, reflects the widening gap between the kinds of companies which can raise VCT qualifying investment and those which have the scale and significance to afford the ever-increasing costs of going through an IPO process. A more detailed analysis is providedin the Fund Manager's Review.

Corporate Developments

In February, before the Russian invasion of Ukraine, the Company raised £25m under the Prospectus Offer which had opened on 30 July 2021. At the time the decision was made to raise the further funds it appeared that the availability of qualifying investment opportunities on AIM was likely to remain strong in 2022. However, the sharp falls in the valuations of growth companies and the heightened level of uncertainty resulting from Russia's war on Ukraine put many AIM fundraising plans on hold. The amount invested in the first half of the year was low compared to prior expectations, but fell further again in the second half as fund raising on AIM all but ground to a halt. Meanwhile, the bids that were received for three holdings during the year have also served to increase cash resources. For this reason, the Board took the decision not to raise any further funds in the 2022/23 tax year. The cash position at the end of the period was £59.6m.

The Manager will continue to invest primarily in companies on AIM. Where the Manager invests in an unquoted company this will still be with the expectation that the company is likely to list on AIM or Aquis. In reality however it is possible that the investment may be realised via a trade sale.

VCT Legislation

The current VCT legislation contains a "Sunset Clause" which effectively brings income tax relief to an end for new subscriptions after 5 April 2025. This was agreed in 2015 to secure ongoing EU approval of the VCT and EIS schemes, which have been a crucial source of funding for new and innovative businesses in the UK. It has always been the case that the extension of the scheme was bound up with resolving issues around the Northern Ireland Protocol and potentially achieving a further ratification of the schemes from the EU, so that they can also continue to operate in Northern Ireland after 2025. With the publication of the Windsor Framework on 27 February, removal of the Sunset Clause is now solely within the control of HM Treasury. As the Chancellor of the Exchequer has previously set out an intention to continue the scheme, we currently await further clarity on the details.

Dividend

The Board aims to pay annual dividends of around 5% of the Company's Net Asset Value at its immediately preceding financial year end, subject to the Company's distributable reserves and cash resources, and with the authority to increase or decrease this level at the Directors' discretion.

As at 31 January 2023 the net asset value per share was 132.8p. In line with this, the Board is proposing a final dividend of 3.5p per share, to be paid on 21 July 2023 to shareholders on the register on 16 June 2023. When added to the interim dividend of 3.5p per share, this would make total dividends for the year 7.0p per share, which is 5.3% of year end NAV.

The Board would like to remind shareholders that, as reported in the Interim Report, the company has moved to paying all cash dividends by bank transfer, rather than by cheque and details are provided in Shareholder Information on page 76 of the full Annual Report and Accounts.

The last day for the Dividend Re-investment Scheme ("DRIS") elections will be 30 June 2023. The Board would also like to remind shareholders that the DRIS allows shareholders to use their dividends to buy new shares issued by the Company on the dividend payment date priced at the most recently published NAV per share. Shares issued by the DRIS, being new shares, have the same tax reliefs as shares bought in our standard share offers. The only difference is that they do not have to meet the requirement to be bought more than six months before or after any share sales, so income tax relief can be claimed on them at 30% of the subscription value regardless of any share sales made, provided that the other standard tests are met, such as not investing more than £200,000 in VCT shares in any one tax year, whether through an Offer or on the market. If you wish to join the DRIS please contact the Company's registrar.

Annual General Meeting ("AGM")

The AGM this year will be held at Barber-Surgeons' Hall, Monkwell Square, Wood Street, London EC2Y 5BL starting at 2pm on Thursday 15 June 2023. This will be followed by presentations from the Manager and investee companies. Details are being sent to you with this report.

The Notice of AGM is set out on pages 79 to 84 of the full Annual Report and Accounts.

The Board recognises that the Company's AGM represents an important forum for shareholders to put questions to the Directors, to express their views on governance and to become fully informed about matters relating to the AGM resolutions. It understands that attending in person may not be possible for all shareholders who wish to attend. Therefore, the Company intends to also make available a live stream facility to allow shareholders to watch and listen to the AGM and the Investor Event which follows. If shareholders wish to use this facility, please register your interest by emailing info@amatiglobal.com and shortly ahead of the event the Company's Manager will post a link and instructions on how to join the event on its homepage at www.amatiglobal.com. Shareholders watching the AGM will not be counted towards the quorum of the meeting and will not be able to participate in the formal business of the meeting, including asking questions and voting on the day. The Board encourages shareholders to engage with the Board and the Company's Manager. In addition to asking questions at the AGM, shareholders can email any questions they may have either on the business of the AGM to info@amatiglobal.com by 9 June 2023. The Company's Manager will publish questions together with answers on the page dedicated to the AGM on the Manager's website prior to the AGM being held. The Company's Manager will reply to any individual shareholder questions submitted by the deadline of 9 June 2023, before the AGM.

Outlook

The portfolio contains a diverse range of well-resourced companies, mostly with high barriers to entry derived from intellectual property and specialist skills. The early-stage companies, even with good cash resources addressing potentially large markets, have not been immune to de-ratings. Some more mature investments have been held for long periods with low levels of debt. Most of these should be well placed to perform in continuing difficult economic conditions.

We have a strong incentive to be long term investors, as if we exit positions in more mature companies the VCT rules on investing do not allow us to buy them back again. Also, under the VCT rules, even during periods of market correction, VCTs are prohibited from buying more shares in their existing qualifying holdings, unless they are able to do so as a further qualifying investment at a point when new shares are being issued. It might be reasonable to expect that the more challenging market conditions allow us to make new investments at lower valuations but, as noted above, this has been one of the leanest years on record for AIM listings. That said there are some bright spots on the horizon with new and exciting potential AIM listings.

We are by no means resistant to market shocks, be they banking issues or valuation scares, but we remain optimistic that the portfolio is robust for the longer term with plenty of embedded value waiting to see the light of day.

Fiona Wollocombe

Chairman

17 April 2023

For any matters relating to your shareholding in the Company, dividend payments, or the Dividend Re-investment Scheme, please contact The City Partnership on 01484 240 910, or by email at registrars@city.uk.com. For any other matters please contact Amati Global Investors ("Amati") on 0131 503 9115 or by email at info@amatiglobal.com.

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

It has been a painful twelve-month period, with investors having to deal with a number of seismic events including the Russian invasion of Ukraine, surging global inflation, rising interest rates and ongoing fears of recession. As if these weren't enough, we have also seen extreme volatility in many commodities, most notably in natural gas and agriculture.

This heady mix of concerns led to meaningful declines across many asset classes, with both equities and government bonds falling simultaneously in most key markets. In equity markets the key trends were large falls in highly valued growth sectors such as technology, offset by a return to form in deeper value sectors such as oil and banking. Smaller companies fared far worse than larger companies as fund redemptions and economic concerns badly impacted liquidity.

The defining event of 2022 was the Russian invasion of Ukraine in February with the subsequent devastation and economic upheaval having profound repercussions for investors. We now live in a world where ideological divisions have become a chasm and where decades of global economic integration are beginning to unravel, leading to insecurity of supply in numerous key commodities. However, despite initially sharp price increases post the invasion until late summer, we have seen some welcome respite in gas prices in Europe more recently, where a mild winter and adequate storage has led to year-on-year prices actually declining. A similar dynamic has impacted oil markets, with crude prices falling during the year under review. At this point there appears no obvious end in sight to hostilities in Ukraine and investors have had to attune to a world which may remain divided for some time. The ongoing Chinese rhetoric regarding Taiwan also suggests that the world has become a more dangerous place.

The economic adjustments have been rapid with inflation across the US, the EU and UK reaching multi-decade highs towards the end of 2022, leading to sharp spikes in interest rates across the developed world. There is considerable debate about how persistent this inflation will be, but it seems reasonable to assume that it will remain well above central bank targets for some time, leading to a period of more normalised interest rates too. In 2023 we have entered a phase of earnings downgrades, initially led by companies highly exposed to consumer spending but increasingly impacting other sectors. Recession appears likely now across most of the major economies. Again, the debate here is one of the depth and length of any downturn.

Closer to home, we have had specific problems to deal with in the UK. Political instability has risen dramatically as a result of the ongoing impact of Brexit and the chaos of having three prime ministers within a period of months. Whilst it is comforting to see some economic stability in recent months, the road ahead remains difficult regardless of political colour and growth is likely to remain elusive.

It was a disappointing year for smaller company investors with the Numis Smaller Companies plus AIM (excluding Investment Companies) Index falling by 12.4%. Things were even worse for the Numis Alternative Markets Total Return Index, which fell by 20.7%. This was materially below the Numis Large Cap index which rose by 7.4%, driven by big gains in oil, banking and consumer staples.

More recently, we have begun to see some signs of market recovery as sterling has stabilised and investors price in a peak in interest rates. UK company valuations remain modest by international standards and within this broad universe, smaller companies appear particularly undervalued. We would expect to see increased takeover activity in UK quoted companies which should begin to provide support for markets overall.

Performance Review

The VCT's NAV Total Return for the period was -22.2%. This slightly underperformed the benchmark Numis Alternative Markets Total Return Index, which fell by 20.7%. The negative trends in the overall market impacted the portfolio both through a de-rating of early-stage business risk, a heightened concern over any potential balance sheet issues, and a more difficult operating environment as recession fears and consumer retrenchment swept through many sectors.

The biggest gains were from companies that were acquired and those which managed to continue to grow earnings in the face of the turbulent economic backdrop or recovered from weaker trading during the pandemic.

Three companies received bids during the period. Ideagen, a leader in regulatory and compliance software, which received an all-cash bid from private equity investor HgCapital, was the first. This represented a 52% premium to the share price on the prior business day, and an overall investment return of just under 14x average in-cost in December 2012. The next was Diurnal, a rare endocrine disease specialist, which fell 49% as lower sales growth, due to an unexpected adverse opinion from the Scottish Medicines Consortium, pushed back forecasts for profitability. Ultimately the company was acquired in November by Neurocrine Inc, a US-based neurological and endocrine related disease biopharma. Neurocrine's all-cash offer of 27.5p per share was at a premium of 114% to prior trading day closing price, but 40% below our average in-cost. We supported this transaction for two reasons. Firstly, the path forward for Diurnal as an independent company looked uncertain due to sub-scale resources and thus commercial reach. Secondly Neurocrine's proposal indicated it would be a good steward of the assets in which we had invested as Diurnal would receive further investment in its infrastructure, pipeline and commercial products. The last was Amryt Pharma, a commercial stage rare disease specialty pharma. It rose 44% on the back of a bid in January 2023 from Italian family-owned peer, Chiesi Farmaceutici. Amryt Pharma management has recommended the takeover, which comes at a 107% premium to the prior closing price, and the transaction is due to close in the first half of this year. Having originally invested in 2017, our return will be just over 2x cost.

Two of the risers during the year were in the field of custom electronics. Ensilica, a new holding which we invested in through its IPO in May, rose 94%. The company specialises in Application Specific Integrated Circuits (ASICs), which are custom designed as compared to standardised off-the-shelf chips. The company issued positive news flow throughout the period regarding new customer wins. These were punctuated by a very large win ($30m over seven years) for the design and supply of an ASIC for industrial and factory automation to a leading European industrial original equipment manufacturer. Following maiden results, Ensilica upgraded expectations for its new financial year. Solid State, a custom electronics supplier to commercial, industrial and defence markets, rose 24%. Key events in the period included strong results which led to upgraded expectations plus a well-received acquisition of US based Custom Power, an expert in battery systems. Another recent IPO, Aurrigo, a provider of electronic control systems to the automotive industry, which has developed a range of autonomous vehicles specifically for airports, also performed strongly since float.

Other positive contributors included a number of long-established holdings. Keywords, the technical and creative services provider to the global video games and entertainment industry, rose 13% to become the largest holding in the portfolio. In the period, Keywords continued its track record of growing by taking market share and through acquisitions. Much debate has surrounded the strength of game developers in the wake of the waning trend of higher game play since the end of lock-down. So far, Keywords has not suffered the same impact. This is likely due to its diversified and broad client list, which includes 23 out of the top 25 gaming companies as well as the entire top 10 of mobile games companies. Furthermore, a slowing games market may be encouraging greater outsourcing. AB Dynamics, the designer and supplier of advanced testing and simulation products to the automotive industry, recovered to rise 23% in the period, having fallen in the prior year. Despite the impact of supply chain constraints and inflationary pressures, performance was strong in the period reflecting the ongoing pressure on car manufacturers to continue their development of electric vehicles. The company also saw the benefits of the integration of VadoTech, a provider of vehicle and subsystem testing. VadoTech boosts AB Dynamics' recurring revenue by increasing sales of software, service and support contracts. Velocity Composites, a supplier of composite material kits to the aerospace industry, rose 180% in the period after the announcement of a transformational contract from GKN Aerospace worth $100m over 5-years. The contract will see the company produce a range of high-performance composites across military, civil and business jet programmes from a new manufacturing site in the US.

On the negative side, one of last year's most positive performers, Saietta Group, which designs and manufactures electric-drive (e-drive) systems, fell by 77% during the period, reflecting the change in market sentiment to early-stage businesses. In many ways the company made remarkable operational progress during the year, laying the foundations for significant growth in 2023 and beyond. Saietta secured a manufacturing site in Sunderland and a co-development and commercialisation deal with ConMet, a major global manufacturer and supplier of truck components to Ford, Volvo and Daimler. In addition, the company signed a development deal with one of the largest original equipment manufacturers operating in India. The company is now focused on finalising designs and scaling up manufacturing to deliver revenues from these agreements.

Some other large holdings also suffered. Frontier Developments, a leading developer and publisher of videogames, fell by a similar amount. Interim results overing the key Christmas 2022 season revealed that several games titles had failed to meet expectations despite in-line performance earlier in the year. Lower growth is now projected into next year. Management is also reviewing the returns achieved by its Frontier Foundry" games publishing label. Polarean, a medical imaging company, fell 31% over the year. Polarean has been developing a clinically transformational lung imaging technology, however its regulatory submission fell foul of FDA delays caused by the pandemic which were still being felt in 2022. The FDA is majority funded by the US government and is assessed by the number of on-time decisions. Where they might miss a deadline, the FDA can either delay a decision or issue a complete response letter (CRL). Delays are the FDA's responsibility, but CRLs are the application sponsor's responsibility. It is no coincidence that in 2022 the number of CRLs reached new heights as a proportion of FDA approvals at more than 30%. Polarean received final approval in December 2022 more than a year after its original decision date, with the delay having a significant impact on its commercial plan and cash reserves. GB Group, a specialist in digital location, identity verification and fraud software, fell 46% in the period after a solid pandemic performance. There was continued fallout from the poorly received acquisition of Acuant, a specialist in biometric and document verification. In addition, activity in cryptocurrency identity verification fell away as sentiment soured, while the highly publicised bankruptcy of the FTX crypto exchange brought the risks in this area into sharp relief. In the period, private equity group GTCR announced it was considering an all-cash approach for the company. While the shares rallied at this point, GTCR then stepped away from the transaction. Water Intelligence, a multi-national leak detection and remediation company, fell 33% over the period despite solid financial and operational performance.

Fallers included two other healthcare companies. Aptamer, a developer of aptamer and optimer binders for the life sciences industry, fell 71% over the period. During 2022, market sentiment turned against loss making companies, and the company felt the effects of this despite trading continuing as expected. However, an update in early January has pointed to a deterioration in end-markets and customers either delaying project starts or extending decision making cycles. Whilst expectations have been re-set, no order or project has been cancelled and the company continues to add to its pipeline. Angle, a liquid biopsy company, finally received FDA approval in May for its Parsortix device. However, the pace of commercialisation has been slower than market expectations. A trading update in early January pointed to slower sales conversion than had been hoped for based on the depth of the pipeline and shares fell 74%.

There were three real disappointments amongst the newer holdings. Flylogix, which established a methane emissions detection service for North Sea oil and gas companies using drones, found good demand from customers, but proved unable to establish reliable and consistent operations, so had to be substantially written down. Glantus, a provider of accounts payable automation and analytics, had a disastrous start to life as a public company, with a badly handled company re-organisation to move back office functions to Costa Rica, albeit a move which will drive value in the longer run. The poor handling led to a sharp fall in revenues during the process, which is now complete. However, the losses, combined with gearing in the company led to a dramatic fall in the share price. Clean Power Hydrogen ("CPH2"), which is commercialising a membrane free electrolyser technology, has delayed the launch of its product due to design flaws emerging during the commissioning process of the first units.

Portfolio Activity

The Company made five new investments and four follow-on investments during the period. The new investments comprised four Initial Public Offerings ("IPOs"), and one pre-IPO investment.

The IPOs in the first part of the year were CPH2 and Strip Tinning ("ST"), which have so far been disappointing investments, and EnSilica, which has performed strongly. The CPH2 electrolyser design avoids the problem of thin membrane degradation in PEM (proton-electrolyte membrane) electrolysers, which limits useful life, but at the cost of needing to manage the mixed gasses through a cryogenic circuit for separation. Key advantages of the CPH2 system include long system life, 40% less water usage, high purity levels of the output gasses, and the avoidance of expensive process catalysts. These benefits should make CPH2's system cost competitive at low volumes. Unfortunately, during commissioning of the initial scaled up units, the company uncovered some design issues, which have required a period of further engineering and design work, delaying the company's progress.

ST is a market leader in the provision of high-performance electronic connector products and design services to the automotive industry. It manufactures flexible printed circuit, flat foil, cable and busbar connectors, which are used in car heating and lighting applications. This business dates back to the 1950s and ST has very long-term relationships with vehicle manufacturers and prime contractors, which positions it well for expansion into growth markets. The company floated to raise funding for two opportunities. Firstly, the growing demand for more sophisticated connectors driven by greater functionality being embedded into automotive glazing. This will involve invisible heating, rain and autonomous driving sensors, cameras, opacity controls, heads-up displays and virtual reality. Secondly, ST is at the forefront of next generation lightweight battery connectors to replace heavy wiring harnesses for both electric vehicles and fuel drivetrains. With both glazing and electric vehicle battery connectors, ST is exposed to the major future drivers of automotive development. However trading since flotation has been impacted by volume weakness within the industry caused by ongoing component shortages along with manufacturing cost inflation and some contract cancellations.

EnSilica is a company which specialises in the design of Application Specific Integrated Circuits (ASICs), which are chips built for a specific use in electronic equipment. EnSilica's customers range across the automotive, industrial, satellite and healthcare sectors, which offer faster growth than more saturated areas such as computing, mobiles and consumer electronics. Structural drivers include autonomous sensors, satellite connectivity, industrial Internet-of-Things and Artificial Intelligence, wearable healthcare and 5G telecoms. Over 20 years EnSilica has evolved from pure design consultancy services into Design and Outsourced Supply (D&S), so that it now captures extra margin. D&S is growing strongly, and EnSilica floated to scale up its capacity. Global investment in semiconductor fabrication is based on new wafer technology which requires ASIC redesign, and the experience of standardised chip shortages is encouraging an industry shift to customised ASICs which have more robust supply chains. Over the past year there has been a heightened recognition of the importance of the UK retaining its own silicon chip capabilities and expertise, and EnSilica's success plays an important part in this.

In the second half of the period the number of qualifying investment opportunities on AIM dropped sharply and we made only one new investment, which was in the IPO of Aurrigo. The company raised funds to further progress development and initial roll-out of its autonomous vehicle technology for airport baggage handling, Auto-Dolly. This vehicle is an autonomous electric sledge that carries a standard baggage container. This development is being piloted with Singapore's Changi Airport, a recognised global leader in airport technology. Aurrigo had also developed a sophisticated airport mapping tool (Auto-Sim) that functions as a digital twin of the airport. This is used to understand where time is being lost in current processes and how efficiencies could be realised through use of solutions like the Auto-Dolly. The comprehensive nature of Auto-Sim modelling has drawn customers to use it as a planning tool for future extensions to terminals. The company was founded in 1993 and for many years has profitably operated in automotive engineering design and supply logistics. This expertise and internal funding enabled the original pivot towards autonomous vehicles. Share price momentum has been sustained by good, early progress with the Changi pilot project.

The one pre-IPO investment in the period was in Chorus Intelligence. This company has developed software which enables customers to collect and interpret data for intelligence purposes and court evidence. The platform can connect to any source, analyse the data, and then store and share it in an encrypted workspace. It has been successfully used to prosecute cases brought by the British Transport Police involving criminals running county lines for drugs. Chorus's first recurring revenues are with North Wales, an early adopting police force, but they are involved with demonstrations and trials in the rest of the UK market and are making a first tender proposal to Virginia Beach in the US. The UK has almost 50 forces, but this is dwarfed by the US where there are nearly 18,000 departments, agencies and sheriff counties. The majority of the VCT's investment is by way of loan notes which convert at a 25% discount to the eventual IPO or sale price.

In July, we completed a small follow-on investment, by way of a convertible loan note in Byotrol, the antimicrobial health product provider, to fund future growth and reach breakeven in the next 24 months. In August, we added nominally to our holding in Arecor Therapeutics. The company successfully completed a fundraise in connection with the all-share acquisition of Tetris Pharma, a specialty pharma with a focus on niche injectable and hospital products in the UK and EU. The acquisition gives Arecor access to an experienced team that can handle sales and marketing and supply chain for approved products. We added to our position mainly to mark up its qualifying value to the new share price. We were supportive of the acquisition but decided our weighting was sufficient.

In November we added to our investment in Intelligent Ultrasound, a provider of ultrasound classroom training simulators and AI enabled clinical ultrasound software. This was the final VCT eligible fund raise, and the proceeds will be used to strengthen the company's financial position and continue research and development. The classroom side of the business generated the majority of revenue in 2022. The remainder came from the AI division, which has developed two FDA approved AI ultrasound products. The company has a long-term licence and co-development agreement with GE Healthcare, the largest global manufacturer of ultrasound machines, and GE is rolling out one of the AI modules across its range. This first module automatically detects key scanning views and audits whether they meet standardised criteria. This will improve ultrasound speed, accuracy and quality.

In the same month we also participated in a placing for Northcoders, adding to our investment from the IPO. The company is a training provider to IT novices and junior software engineers. These are usually people changing careers, or looking to up-skill or re-skill if they are already in the industry. There continues to be an acute shortage of coders and developers in the UK. Funds were raised to invest in new courses due to strong demand from employers. Original training in Software Development and Data Engineering will now be extended into Cyber Security, QA & Software Testing, Dev Ops & Cloud, and Project Management. Each course is projected to be profitable ten months after launch.

As detailed above, holdings in Ideagen and Diurnal were exited as a result of takeovers during the period. Concerned by the threat of new entrants, eroding market share and strategic direction, the VCT also sold its holding in Tristel, a manufacturer of infection prevention products, where a return of 3.2x the average in-cost was achieved. Also exited were positions in Ilika, the solid state battery developer, where an investment return of 4x average in-cost was achieved, and Synairgen, the respiratory drug developer, which generated a return of 1.4x. A very small holding in LoopUp, the conference call software platform provider, was sold at an overall loss as it had become a low conviction investment following a change to its business model due to competitive pressure. During the period, profits were taken in Polarean, our largest holding at the time. The weighting was reduced slightly in the lead up to the FDA approval decision for Xenoview in December.

Outlook

The first two months of the new financial year have been turbulent for stock markets, which were rattled by the prospect of a banking crisis. With the failure of three US banks in March and the dramatic weekend rescue of Credit Suisse in Switzerland, there was considerable fear of contagion putting significant pressure on stock markets. However, the issues with Credit Suisse had been well known for a long time, and the US banks that failed did so due to runs on deposits rather than because of bad loans caused by systemic problems. The response of the Federal Reserve was to lend unlimited amounts against bonds being held to maturity at par value. This might best be called Quantitative Lending, injecting liquidity into banks without forcing them to dispose of bonds at a loss. This added around $320bn to the Federal Reserve's balance sheet in March.

The banking stress has slowed down the rate of interest rate rises, in the expectation that slower bank lending would provide its own brake to inflation. In the UK we had been expecting rates to peak at around 4.5%, and continue to do so. Monetary conditions have tightened greatly over the past year in both Europe and the US, and this is likely to cause inflation to fall sharply later this year.

Whilst we don't expect the banking crisis to escalate from here, we are acutely aware that Russia's unconscionable war of aggression against Ukraine continues to represent a grave threat to the West as a whole. This is accelerating a trend towards the formation of an axis of totalitarian states in opposition to the democratic nations of the world. China, the world's largest exporter by far, is the key agent in determining how destructive this becomes, being of much greater importance to the global economy than Russia. The interdependence between China and the West is too deep to uproot without great harm. A rise in China's aggression over Taiwan and its closer alignment with Russia remain the principal global risks.

Rapidly rising interest rates and tightening liquidity create a difficult backdrop for early-stage companies on AIM, and it has been a tough period for the portfolio. Investors are far less trusting of future potential in companies and therefore less willing to attribute value to this. The sectors most impacted by this are healthcare and energy transition focused companies, both areas in which technical innovation is crucial and to which we have exposure. However, we know from the experience of previous crises that the de-rating goes across the board to start with, that weaker companies may fall by the wayside, but that the companies with good foundations and effective propositions will be able to emerge stronger on the other side. We also know the importance of being able and willing to continue to invest through troubled periods, as often the best investments can be made at times like this. The strong cash balance that the VCT has, in part because of a relative dearth of new investment opportunities on AIM during 2022, very much puts us in this position.

Dr Paul Jourdan, David Stevenson, Anna Macdonald and Scott McKenzie

Amati Global Investors

17 April 2023

Investment Portfolio

as at 31 January 2023

1 Qualifying holdings.

2 Part qualifying holdings.

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

4 The investment in Flylogix Limited ("Flylogix") consists of 392 ordinary shares in Flylogix at fair value of nil and 10% convertible loan notes at fair value of £625,000. The interest for the 18 months from the date of issue on the convertible loan notes is waived if Flylogix is admitted to AIM within that 18-month period, subject to a minimum equity raise of £10m. The convertible loan notes are convertible into ordinary shares after listing. If Flylogix is not listed on AIM, interest is payable at 10% per annum for a term of 5 years. Flylogix had not listed at the Balance Sheet date and interest of £334,000 has not been accrued.

The investment in Elexsys Energy plc ("Elexsys") consists of 202,737 ordinary shares in Elexsys at fair value of nil and 8% convertible loan notes at fair value of £900,000. The interest for the 12 months from the date of issue on the convertible loan notes is waived if Elexsys is admitted to AIM, subject to a minimum equity raise of £5m. The convertible loan notes are convertible into ordinary shares after listing. If Elexsys is not listed on AIM, interest is payable at 8% per annum for a term of 5 years. Elexsys has not listed, interest due has been paid and the interest receivable of £48,000 to the Balance Sheet date has been accrued.

The investment in Chorus Intelligence Limited ("Chorus") consists of 232 ordinary shares in Chorus at fair value of £150,000 and 10% convertible loan notes at fair value of £2,699,000. The interest for the 18 months from the date of issue on the convertible loan notes is waived if Chorus is admitted to AIM within that 18-month period, subject to a minimum equity raise of £10m. The convertible loan notes are convertible into ordinary shares after listing. If Chorus is not listed on AIM, interest is payable at 10% per annum for a term of 5 years. The Board is of the opinion that Chorus will not list within the 18-month period and the interest receivable of £238,000 to the Balance Sheet date has been accrued.

The investment in Byotrol plc ("Byotrol") consists of 25,000,001 ordinary shares in Byotrol at fair value of £500,000 and 9% Convertible Loan Notes at fair value of £353,000. The convertible loan notes are convertible into ordinary shares at a conversion price of 3.25p. Interest is being received and the amount receivable of £2,800 to the Balance Sheet date has been accrued.

# This column shows the original book cost of the investments acquired from Amati VCT plc on 4 May 2018.

* This column shows the bookcost to the Company as a result of market trades and events.

** This column shows the aggregate book cost to the Company either as a result of trades and events or asset acquisition from Amati VCT plc on 4 May 2018.

*** This column shows the movement in fair value, the unrealised gains/(losses) on investments during the year, see notes 1 and 8 below for further details.

NTM Next twelve months consensus estimate (Source: Refinitiv)

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

All holdings are in ordinary shares unless otherwise stated.

Investments held at nil value: Celoxica Holdings plc1, Leisurejobs.com Limited1 (previously The Sportweb.com Limited), Rated People Limited1, Sorbic International plc, TCOM Limited1, VITEC Global Limited1.

As at the year end the percentage of the Company's portfolio held in qualifying holdings for the purposes of Section 274 of the Income and Corporation Taxes Act is 100%.

Analysis as at 31 January 2023

Qualifying portfolio

The portfolio of qualifying investments in the Company as at 31 January 2023 is analysed in the graph which can be found on page 17 of the full Annual Report and Accounts, by date of initial investment and market capitalisation. The size of the circles represents the relative size of the holdings in the portfolio by value.

The top ten qualifying portfolio companies are labelled. The dates of investments in securities held solely by Amati VCT plc prior to the merger with Amati VCT 2 plc in May 2018, are given as the dates those securities were originally acquired by Amati VCT plc.

Sector split

The portfolio of investments in the Company as at 31 January 2023 is analysed in the graph by sector which can be found on page 17 of the full Annual Report and Accounts. This includes a sector split of the investments within the TB Amati UK Listed Smaller Companies Fund which in the Investment Portfolio table above is classed as Financials.

Investment Policy, Investment Objectives and Investment Strategy

Investment Objectives

The investment objectives of the Company are to generate tax free capital gains and regular dividend income for its shareholders while complying with the requirements of the rules and regulations applicable to Venture Capital Trusts ("VCTs").

Investment Policy

The Company's investment policy is to hold a diversified portfolio across a broad range of sectors to mitigate risk. It makes Qualifying Investments (as defined in the Income Tax Act 2007 (as amended)) primarily in companies traded on AIM or on the Aquis stock exchange ("Aquis") and non-Qualifying Investments as allowed by the VCT legislation. The Company manages its portfolio to comply with the requirements of the rules and regulations applicable to VCTs.

Investment Parameters

Whilst the investment policy is to make Qualifying Investments primarily in companies traded on AIM or Aquis, the Company may also make Qualifying Investments in companies likely to seek a quotation on AIM or Aquis. With regard to the non-Qualifying portfolio the Company makes investments which are permitted under the VCT legislation, including shares or units in an Alternative Investment Fund (AIF) or an Undertaking for Collective Investment in Transferable Securities (UCITS) fund, and shares in other companies which are listed on a regulated market such as the Main Market of the London Stock Exchange. Any investments by the Company in shares or securities of another company must not represent more than 15% of the Company's net asset value at the time of purchase.

Borrowing

The Company has the flexibility to borrow money up to an amount equal to its adjusted capital and reserves but the Board's policy is not to enter into borrowings.

Investment Strategy for Achieving Objectives

The investment strategy for achieving the Company Objectives which follows is not part of the formal Investment Policy. Any material amendment to the formal Investment Policy may only be made with shareholder consent, but that consent applies only to the formal Investment Policy above and not to any part of the Strategy for Achieving Objectives or Key Performance Indicators below.

(a) Qualifying Investments Strategy

The Company is likely to be a long-term investor in most Qualifying Investments, with sales generally only being made where an investment case has deteriorated or been found to be flawed, or to realise profits, adjust portfolio weightings, fund new investments or pay dividends. Construction of the portfolio of Qualifying Investments is driven by the historic investments made by the Company and by the availability of suitable new investment opportunities. The Manager may co-invest in companies in which other funds managed by Amati Global Investors invest.

(b) Non-Qualifying Investments Strategy

The assets of the portfolio which are not in Qualifying Investments will be invested by the Manager on behalf of the Company in investments which are allowable under the rules applicable to VCTs. Currently, cash not needed in the short term is invested in a combination of the following (though ensuring that no more than 15% of the Company's funds are invested in any one entity at the time of purchase):

(i) the TB Amati UK Listed Smaller Companies Fund (which is a UCITS fund), or other UCITS funds approved by the Board;

(ii) direct equity investments in small and mid-sized companies and debt securities in each case listed on the Main Market of the London Stock Exchange; and

(iii) cash or cash equivalents (including money market funds) which are redeemable within 7 days.

Environmental, Social and Governance ("ESG") Policies

The Investment Manager recognises that managing investments on behalf of clients involves taking into account a wide set of responsibilities in addition to seeking to maximise financial returns for investors. Industry practice in this area has been evolving rapidly and Amati has been an active participant in seeking to define and strengthen its principles accordingly. This involves both integrating ESG considerations into the Investment Manager's investment decision-making process as a matter of course, and also signing up to major external bodies who are leading influencers in the formation of industry best practice. The following is an outline of the kinds of ESG factors that the Investment Manager will consider and question as part of its investment process, reflecting the specific inputs and outputs of a business.

· Environmental - climate change; use of natural resources; pollution; waste and impact on bio-diversity; and taking into account any positive environmental impacts.

· Social - use of human capital; potential product or service liabilities; stakeholder opposition; and taking into account any positive social considerations.

· Governance - ownership and control; management structure and quality; pay and alignment; accounting issues; business ethics; and tax transparency.

· Human rights - weighing up the risks of activities in countries with Freedom House Scores below 33 and based on Clean Trade principles; not investing in companies extracting natural resources in countries which score below 15; risk of exposure to corruption and unreliable legal frameworks; risk of benefiting from slave labour; risk from adverse political developments impacting a business negatively.

Board Diversity of Investee Companies

The Board, through the Manager, considers board diversity to be an important consideration in its investment decision on investee companies.

Key Performance Indicators

The Board expects the Manager to deliver a performance which meets the objectives of the Company. A review of the Company's performance during the financial year, the position of the Company at the year end and the outlook for the coming year is contained in the Chairman's Statement and Fund Manager's Review. The Board monitors on a regular basis a number of key performance indicators which are typical for VCTs, the main ones being:

· Compliance with HMRC VCT regulations to maintain the Company's VCT Status. See below;

· Net asset value and total return to shareholders (the aggregate of net asset value and cumulative dividends paid to shareholders, assuming dividends re-invested at ex-dividend date). See graphs on page 3 of the full Annual Report and Accounts;

· Comparison against the Numis Alternative Markets Total Return Index. See graph on page 46 of the full Annual Report and Accounts;

· Dividend distributions. See table of investor returns above;

· Share price. See key data above; and

· Ongoing charges ratio. See key data above.

Fund Management and Key Contracts

Management Agreement

Amati Global Investors was appointed as Manager to the Company on 19 March 2010. Under an Investment Management and Administration Agreement dated 19 March 2010, and subsequently revised and updated in two separate agreements, an Investment Management Deed ("IMA") and a Fund Administration, Secretarial Services and Fund Accounting Agreement ("FASSFAA"), on 30 September 2019, the Manager agreed to manage the investments and other assets of the Company on a discretionary basis subject to the overall policy of the Directors. The Company will pay to the Manager under the terms of the IMA a fee of 1.75% of the net asset value of the Company quarterly in arrears. In November 2014, with shareholder consent, the Company amended its non-qualifying investment policy to permit investment in the TB Amati UK Listed Smaller Companies Fund, a small and mid-cap fund managed by the Manager. The Company receives a full rebate on the fees payable by the Company to the Manager within this fund either through a reduction of fees payable by the Company or a direct payment by the Manager.

Annual running costs are capped at 3.5% of the Company's net assets, any excess being met by the Manager by way of a reduction in future management fees. The annual running costs include the Directors' and Manager's fees, professional fees and the costs incurred by the Company in the ordinary course of its business (but excluding any commissions paid by the Company in relation to any offers for subscription, irrecoverable VAT and exceptional costs, including winding-up costs). No performance fee is payable as the Manager waived all performance fees from 31 July 2014 onwards.

Administration Arrangements

Under the terms of the FASSFAA, the Investment Manager also agreed to provide certain fund administration, company secretarial and accounting services to the Company. As disclosed in last year's annual report, the Manager and Board agreed that a new Company Secretary would be sought and that the Board would contract directly with the new Company Secretary. The Board appointed Law Debenture as Company Secretary of the Company with effect from 1 February 2022.

Under the FASSFAA, the Investment Manager has the right to appoint suitable representatives to provide fund accounting and administration services to the Company. The Manager engages Link Alternative Fund Administrators Limited to act as fund accountant and administrator.

For the year ending 31 January 2023 the Company agreed to pay to the Investment Manager a fee of £72,000 quarterly in arrears in respect of the provision of fund accounting and administration services. This fee is subject to an annual increase in line with the consumer prices index. The appointment of the Investment Manager as investment manager and/or fund accountant and administrator may be terminated with twelve months' notice.

Where the Investment Manager negotiates and structures an investment directly with a company, most commonly as a convertible loan, the Investment Manager retains the right to charge the investee company a fee. Any legal expenses incurred by the Investment Manager will be paid out of this fee.

Fund Manager's Engagement

The Board regularly appraises the performance and effectiveness of the managerial, administration and secretarial arrangements of the Company. As part of this process, the Board will consider the arrangements for the provision of investment management and other services to the Company on an ongoing basis and a formal review is conducted annually. In the opinion of the Board, the continuing appointment of the Manager, on the terms agreed, is in the interests of the shareholders. The Directors are satisfied that the Manager will continue to manage the Company in a way which will enable the Company to achieve its objectives.

VCT Status Adviser

Philip Hare & Associates LLP ("Philip Hare & Associates") is engaged to advise the Company on compliance with VCT requirements. Philip Hare & Associates review new investment opportunities, as appropriate, and review regularly the investment portfolio of the Company. Philip Hare & Associates work closely with the Manager but report directly to the Board.

Principal and Emerging Risks

The Audit Committee regularly reviews the Company's risk register, which assesses each risk and classifies the likelihood of the risk and the potential impact of each risk on the Company. The Board considers that the Company faces the following major risks and uncertainties:

Section 172 Statement

Directors' Duty to Promote the Success of the Company

This section sets out the Company's Section 172 Statement and should be read in conjunction with the other contents of the Strategic Report. The Directors have a duty to promote the success of the Company for the benefit of its members as a whole and in doing so to have regard to a number of matters including:

· the likely consequences of any decision in the long term;

· the interests of the Company's employees;

· the need to foster business relationships with suppliers, customers and others;

· the impact of the company's operations on the community and the environment;

· the desirability of the Company maintaining a reputation for high standards of business conduct; and

· the need to act fairly between members of the Company.

As an externally managed investment company, the Company does not have employees. Its main stakeholders therefore comprise the shareholders, the Investment Manager, other service providers and investee companies.

To ensure that the Directors are aware of, and understand, their duties they are provided with a tailored induction, including details of all relevant regulatory and legal duties as a Director of a UK public limited company when they first join the Board, and continue to receive regular and ongoing updates and training on relevant legislative and regulatory developments.

They also have continued access to the advice and services of the Company Secretary, and when deemed necessary, the Directors can seek independent professional advice. The Terms of Reference of the Board's committees are reviewed annually and describe the Directors' responsibilities and obligations and include any statutory and regulatory duties.

Key decision making

The mechanisms for engaging with stakeholders are kept under review by the Directors and discussed at Board meetings to ensure they remain effective. The Board has policies for dividends, share buybacks and the dividend re-investment scheme, all of which it is considered are for the benefit of shareholders.

During the year the Directors discussed these and reaffirmed their commitment to the policies. Examples of the Board's principal decisions during the year, and how the Board fulfilled its duties under Section 172, are set out below:

During the financial year, the Company held a General meeting in March 2022 relating to the allotment of new shares, which was disclosed as a key decision in the Annual Report and Financial Statements for the year ended 31 January 2022.

Environmental, Social and Governance ("ESG") Policies, and Responsible Ownership

The Company has no employees and no premises and the Board has decided that the direct impact of its activities is minimal; therefore it has no policies relating to social, community and human rights issues. However, the Board does consider the impact of its operations on the environment and during the year the Board made the decision to no longer pay all cash dividends via cheque and to no longer provide printed copies of the Company's Half-Yearly report in order to reduce the use of paper. The Company engaged with its shareholders on the matter.

The Company's indirect impact occurs through the range of organisations in which it invests and for this it follows a policy of Responsible Ownership.

In terms of external validation and support, Amati Global Investors, the Manager, is signatory to the UK Stewardship Code which aims to enhance the quality of engagement between investors and companies to help improve long-term risk adjusted returns to shareholders. Amati's approach to Stewardship and Shareholder Engagement can be found at https://www.amatiglobal.com/storage/644/Stewardship _and_Shareholder_Engagement-v2.pdf.

Amati is also a signatory to the UN-supported Principles for Responsible Investment (PRI), which works to support its international network of signatories in incorporating ESG factors into their investment and ownership decisions. The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole.

Voting on portfolio investments

In 2022, the Manager voted in respect of 62 Amati AIM VCT holdings at 70 company meetings on a range of ESG issues.

Business Conduct

The Board takes its responsibility to prevent bribery very seriously and has a zero-tolerance policy towards bribery. It has committed to carry out all business in an honest and ethical manner and to act professionally, fairly and with integrity in all its business dealings and relationships. The Manager has its own anti-bribery and corruption policy.

Global Greenhouse Gas Emissions

The Company is a low energy user and is therefore exempt from the reporting obligations under the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 or the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, implementing the UK Government's policy on Streamlined Energy and Carbon Reporting. The Company has no greenhouse gas emissions or energy consumption to report from the operations of the Company, nor does it have responsibility for any other emission producing sources. Under listing rule 15.4.29(R), the Company, as a closed ended investment fund, is currently exempt from complying with the Task Force on Climate related Financial Disclosures.

Other Matters

VCT Regulations

The Company's investment policy is designed to ensure that it meets the requirements of HM Revenue & Customs to qualify and to maintain approval as a VCT:

(i) The Company must, within three years of raising funds, maintain at least 80% of its investments by VCT value (cost, or the last price paid per share, if there is an addition to the holding) in shares or securities comprised in qualifying holdings (this percentage rose from 70% to 80% for accounting periods beginning on or after 6 April 2019 which for the Company was from 1 February 2020). At least 70% by VCT value must be ordinary shares which carry no preferential rights. A further condition requires that 30% of new funds raised in accounting periods beginning after 5 April 2018 are to be invested in qualifying holdings within 12 months of the accounting period following the issuance of shares;

(ii) The Company may not invest more than 15% of its investments in a single company and it must have at least 10% by VCT value of its total investments in any qualifying company in qualifying shares approved by HM Revenue & Customs;

(iii) To be classed as a VCT qualifying holding, companies in which investments are made must have no more than £15 million of gross assets at the time of investment and £16 million after investment; they must be carrying on a qualifying trade and satisfy a number of other tests including those outlined below; the investment must also be made for the purpose of promoting growth or development;

(iv) VCTs may not invest new capital in a company which has raised in excess of £5 million (£10 million from 6 April 2018 if the company is deemed to be a Knowledge Intensive Company) from all sources of state-aided capital within the 12 months prior to and including the date of investment;

(v) No investment may be made by a VCT in a company that causes that company to receive more than £12 million (£20 million if the company is deemed to be a Knowledge Intensive Company) of state-aid investment (including from VCTs) over the company's lifetime. A subsequent acquisition by the investee company of another company that has previously received State-Aid Risk Finance can cause the lifetime limit to be exceeded;

(vi) No investment can be made by a VCT in a company whose first commercial sale was more than 7 years prior to date of investment, except where previous State-Aid Risk Finance was received by the company within 7 years (10 years in each case for a Knowledge Intensive Company) or where both a turnover test is satisfied and the money is being used to enter a new product or geographical market;

(vii) No funds received from an investment into a company can be used to acquire another existing business or trade;

(viii) Since 6 April 2016 a VCT must not make "nonqualifying" investments except for certain specified investments held for liquidity purposes and redeemable within seven days. These include investments in UCITS (Undertakings for Collective Investments in Transferable Securities) funds, AIF (Alternative Investment Funds) and in shares and securities purchased on a Regulated Market. In each of these cases the restrictions in (iii) - (vii) above are not applied; and

(ix) Non-qualifying investments in AIM-quoted shares are not permitted as AIM is not a Regulated Market.

During 2018, HMRC stopped issuing pre-clearance letters for VCT investments. They are encouraging VCTs not to use the advance assurance service for investments and have stated that where a VCT has taken reasonable steps to ensure an investment is qualifying, the VCT status will not be withdrawn where an investment is ultimately found to be non-qualifying.

The Manager and the Board rely on advice from Philip Hare & Associates regarding the qualifying status of new investments. The Manager monitors compliance with VCT qualifying rules on a day-to-day basis through a combination of automated and manual compliance checks in place within the business. Philip Hare & Associates also review the portfolio bi-annually to ensure the Manager has complied with regulations and has reported to the Board that the VCT has met the necessary requirements during the year.

PRIIPs Regulations

The Company is required to publish a Key Information Document (KID), which sets out the key features, risks, potential future performance and costs of PRIIPs (Packaged Retail and Insurance-based Investment Products). This document is available at the website of Amati Global Investors: www.amatiglobal.com.

Statement on Long-term Viability

In accordance with the UK Corporate Governance Code published in July 2018 (the "Code"), the Directors have carried out a robust assessment of the prospects of the Company for the period to January 2028, taking into account the Company's performance and emerging and principal risks, and are of the opinion that, at the time of approving the financial statements there is a reasonable expectation that the Company will be able to continue in operation and meet liabilities as they fall due over that period.

To come to this conclusion the Manager prepares and the Directors consider an income statement and cash flow forecast for the next five years, which is considered to be an appropriate time period due to its consistency with the UK Government's tax relief minimum holding period for an investment in a VCT. This time frame allows for forecasts to be made to allow the Board to provide shareholders with reasonable assurance over the viability of the Company. In making their assessment the Directors have taken into account the nature of the Company's business and Investment Policy, its risk management policies, the diversification of its portfolio, the cash holdings and the liquidity of non-qualifying investments.

The Directors have considered in particular the likely economic effects and the impacts on the Company's operations of the war taking place in Ukraine, rising inflation and interest rates.

The longer-term economic outlook is very difficult to predict but in considering preparing the long term viability of the Company the Directors noted the Company holds a portfolio of liquid investments and cash balances whose value is a multiple of liabilities.

Other Disclosures

The Company had no employees during the year and has three non-executive directors, two of whom are female and one is male.

On behalf of the Board

Fiona Wollocombe

Chairman

17 April 2023

Extracts from the Directors' Remuneration Report

Directors' fees for the year (Audited)

The fees payable to individual Directors in respect of the year ended 31 January 2023 are shown in the table below.

† Reimbursement of travel expenses

* retired at the end of the AGM on 16 June 2022

** resigned on 19 September 2022

* appointed on 10 June 2021

Directors are remunerated exclusively by fixed fees and do not receive bonuses, share options, long-term incentives, pension or other benefits. There have been no payments to past Directors during the financial year ended 31 January 2023, whether for loss of office or otherwise.

Directors' shareholdings (Audited)

The Directors who held office at 31 January 2023 and their interests in the shares of the Company (including beneficial and family interests) were:

*retired at the 2022 AGM on 16 June 2022

** resigned on 19 September 2022

The Company confirms that it has not set out any formal requirements or guidelines for a Director to own shares in the Company.

On behalf of the Board

Julia Henderson

Chairman of the Remuneration Committee

17 April 2023

Statement of Directors' Responsibilities

The Directors are responsible for preparing the annual report and the financial statements in accordance with UK Financial Reporting Standards and applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the company's financial statements and have elected to prepare the company financial statements in accordance with UK Financial Reporting Standards. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss for the company for that period.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they have been prepared in accordance with UK Financial Reporting Standards, subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the company will continue in business;

· prepare a directors' report, a strategic report and directors' remuneration report which comply with the requirements of the Companies Act 2006.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. 

They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provide the information necessary for shareholders to assess the group's performance, business model and strategy.

Website Publication

The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

Directors' responsibilities pursuant to DTR4

The Directors confirm to the best of their knowledge:

· The financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the company.

· The annual report includes a fair review of the development and performance of the business and the financial position of the company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Fiona Wollocombe

Chairman

17 April 2023

Income Statement

for the year ended 31 January 2023

The total column of this Income Statement represents the profit and loss account of the Company. The supplementary revenue and capital columns have been prepared in accordance with The Association of Investment Companies' Statement of Recommended Practice ('AIC SORP'). There is no other comprehensive income other than the results for the year discussed above. Accordingly a Statement of Total Comprehensive Income is not required.

All the items above derive from continuing operations of the Company.

The notes below form part of these financial statements.

Statement of Changes in Equity

for the year ended 31 January 2023

The accompanying notes below are an integral part of these financial statements.

Balance Sheet

as at 31 January 2023

* These reserves are not distributable.

The financial statements above and below were approved and authorised for issue by the Board of Directors on 17 April 2023 and were signed on its behalf by

Fiona Wollocombe

Chairman

Company Number 04138683

The accompanying notes below are an integral part of these financial statements.

Statement of Cash Flows

for the year ended 31 January 2023

*Adjusted to exclude non-cash dividends re-invested under the Dividend Re-investment Scheme.

The accompanying notes below are an integral part of these financial statements.

Notes to the Financial Statements

1 Accounting Policies

Basis of Accounting

The financial statements have been prepared under FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and in accordance with the AIC SORP.

Basis of Preparation

The functional currency of the Company is Pounds Sterling because this is the currency of the primary economic environment in which the Company operates. The financial statements are presented in Pounds Sterling rounded to the nearest thousand, except where otherwise indicated.

Going Concern

The financial statements have been prepared on a going concern basis and on the basis that the Company maintains its VCT Status.

The Directors have made an assessment of the Company's ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of 12 months from the date these financial statements were approved.

In making this assessment, the Directors have considered in particular the likely economic effects and the impacts of the war taking place in Ukraine, rising inflation and interest rates on the Company, operations and investment portfolio.

The Directors noted that the Company, with the current cash balance and holding a portfolio of liquid listed investments, is able to meet the obligations of the Company as they fall due. The cash available enables the Company to meet any funding requirements and finance future additional investments. The Company is a closed-end fund, where assets are not required to be liquidated to meet day-to-day redemptions.

The Board has reviewed stress testing and scenario analysis prepared by the Investment Manager to assist it in assessing the impact of changes in market value and income with associated cash flows. In making this assessment, the Investment Manager has considered plausible downside scenarios. These tests included the modelling of a reduction in income of 50%, increase in costs of 50% and a reduction in net asset value of 50%, any or all of which could apply to any set of circumstances in which asset value and income are significantly impaired. It was concluded that in a plausible downside scenario, the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company's ability to continue as a going concern.

The Directors, the Investment Manager and the Company's other service providers have put in place contingency plans to minimise disruption. The Board was satisfied that there has been minimal impact to the services provided during the year and is confident that this will continue. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the going concern basis.

Segmental Reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in companies listed in the UK.

Judgements and Key Sources of Estimation Uncertainty

The preparation of the Financial Statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts in the financial statements. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities and the allocation of income and expenses that are not apparent from other sources. The nature of estimation means that the actual outcomes could differ from those estimates, possibly significantly.

The most critical estimates and judgments relate to the determination of carrying value of unquoted investments at fair value through profit or loss. The policies for these are set out in the notes to the financial statements below. The Company values unquoted investments by following the International Private Equity Venture Capital Valuation ("IPEV") guidelines. Further areas requiring judgement and estimation are recognising and classifying unusual or special dividends received as either capital or revenue in nature. The estimates and underlying assumptions are reviewed on an ongoing basis. There are no further significant judgements or estimates in these financial statements.

Income

Dividends receivable on quoted equity shares are taken to revenue on an ex-dividend basis except where, in the opinion of the Directors, their nature indicates they should be recognised in the Capital Account. Where no ex-dividend date is quoted, dividends are brought into account when the Company's right to receive payment is established.

Fixed returns on non-equity shares and debt securities are recognised on a time apportionment basis, provided there is no reasonable doubt that payment will be received in due course.

Interest receivable is included in the accounts on an accruals basis. Where interest is rolled up or payable on redemption it is recognised as income unless there is reasonable doubt as to its receipt.

All other income is accounted for on a time-apportioned accrual basis and is recognised in the Income Statement.