Interim / Quarterly Report • Jul 31, 2019
Interim / Quarterly Report
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Half-yearly Report For the six months ended 31 July 2019
Company Registration No. 04138683
| Highlights | 1 |
|---|---|
| Chairman's Statement | 3 |
| Fund Manager's Review | 5 |
| Investment Portfolio | 9 |
| Principal Risks and Uncertainties | 12 |
| Statement of Directors' Responsibilities | 13 |
| Income Statement | 14 |
| Statement of Changes in Equity | 16 |
| Condensed Balance Sheet | 18 |
| Statement of Cash Flows | 19 |
| Notes to the Financial Statements | 20 |
| Shareholder Information | 25 |
| Corporate Information | 27 |
The investment objectives of Amati AIM VCT plc (the "Company") are to generate tax free capital gains and regular dividend income for its shareholders, primarily through Qualifying Investments in AIM-traded companies and through non-qualifying investments as allowed by the VCT legislation. The Company will manage its portfolio to comply with the requirements of the rules and regulations applicable to VCTs. The Company's policy is to hold a diversified portfolio across a broad range of sectors to mitigate risk.
The Board aims to pay an annual dividend equal to between 5% and 6% 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.
| 6 months ended 31/07/19 (unaudited) |
Year ended 31/01/19 (audited) |
6 months ended 31/07/18 (unaudited) |
|
|---|---|---|---|
| Net Asset Value ("NAV") | £137.6m | £125.0m | £141.5m |
| Shares in issue | 89,064,825 | 85,549,682 | 80,513,669 |
| NAV per share | 154.5p | 146.1p | 175.7p |
| Share price | 142.5p | 134.5p | 165.5p |
| Market capitalisation | £126.9 | £115.1m | £133.3m |
| Share price discount to NAV | 7.8% | 7.9% | 5.8% |
| NAV Total Return (assuming re-invested dividends) | 8.5% | -10.0% | 5.9% |
| Numis Alternative Markets Total Return Index | 3.5% | -13.6% | 2.3% |
| Ongoing charges* | 2.1% | 2.0% | 2.0% |
| Dividends in respect of the period | 3.5p | 7.5p | 3.5p |
* Ongoing charges calculated in accordance with the Association of Investment Companies' ("AIC's") guidance.
| Date | NAV Total Return with dividends re-invested |
Numis Alternative Markets Total Return Index |
|
|---|---|---|---|
| NAV following re-launch of the VCT under management of Amati Global Investors ("Amati") |
9 November 2011* | 132.2% | 36.1% |
| NAV following appointment of Amati as Manager of the VCT, which was known as ViCTory VCT at the time |
25 March 2010 | 143.6% | 39.8% |
* Date of the share capital reconstruction when the NAV was re-based to approximately 100p per share.
A table of historic returns is included on page 26.
After a sharp correction on AIM last year, the first half of the current year saw a reasonable bounce back in many of our holdings and this produced a positive performance in excess of that of the AIM market as a whole. The NAV total return for the six month period was +8.5% which compares to a rise of 3.5% for the Numis Alternative Markets Total Return Index.
The first half also saw a good rate of new qualifying investments being made, with a total of £9.8m being deployed over the period. Further details of these new investments are given in the Fund Manager's Review.
The Company's Top Up Offer, which was launched on 1 February 2019, closed for new applications on 27 February 2019, having raised £6.8m. The Board has since announced its intention to launch a further Offer for Subscription, with the Company seeking to raise £25m over a 12 month period from the date of the prospectus. The directors will also have discretion to utilise an additional overallotment facility of up to £20m, either in whole or in part. However, this facility will only be utilised if the directors are satisfied that there is a suitable pipeline of investments to deploy the extra funds and if there is sufficient demand from investors. In order to ensure the efficient deployment of funds and to provide the Company with greater flexibility, the amount to be raised under the Offer prior to the Company's year end on 31 January 2020 will be capped at £15m of the £25m fundraising. Full details of the Offer will be set out in a prospectus to be issued around the end of October this year.
The availability of new funds will ensure that the Manager has the ability to continue to make new investments in the portfolio when good opportunities present themselves and these new investments will, in turn, allow the portfolio to continue to evolve and renew itself over the longer term as they mature.
Amati AIM VCT has now passed its first anniversary since the merger of the two former Amati VCTs in May of last year and the benefits of the merger remain apparent with the ongoing charges ratio having fallen from 2.4%, where it stood two years ago, to 2.1% in the first half of this financial year.
In June, Mike Killingley, the longest serving director of Amati AIM VCT, retired at the AGM and both the Board and the Manager would like to express their gratitude to him for his astute guidance and advice and skillful chairing of the audit committee over many years.
The dividend policy of the Company continues to be to pay an annual dividend equal to between 5% and 6% 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. In line with this, the Board is declaring an interim dividend of 3.5p per share, to be paid on 22 November 2019 to shareholders on the register on 18 October 2019.
The new tests governing the level of qualifying investments held by the Company, which have been discussed in previous reports, come into force in two stages, with the first commencing in February of this year. Accordingly, for funds raised after 31 January 2019, we are now monitoring to ensure that at least 30% is invested in qualifying holdings prior to the second financial year end following the allotment date. In addition, from the Company's next financial year end onwards (beginning 1 February 2020), we will be required to ensure that all pools of money derived from funds raised prior to the second financial year end before the allotment date are at least 80% invested in qualifying holdings. Currently this requirement is set at 70%. The former Amati VCTs both had a history of maintaining the level of qualifying holdings according to this test well in excess of 80% in any case, thereby leaving a significant margin of safety relative to the requirements. Consequently this means that the merged entity, Amati AIM VCT, is in a similar position, so we do not currently anticipate any problems from the requirement moving to 80%, albeit that our margin of safety will be reduced.
The outlook seems remarkably similar to that of a year ago, still being dominated (at least in the UK) by the wait for clarification over both the timing and terms of Britain's departure from the European Union. The Board is confident that the Company's well diversified portfolio of growth oriented businesses and the policy of retaining the most successful investments over the longer term leaves the Company well positioned in these uncertain times. I endorse the opinion of the Manager on page 8, which gives its detailed outlook on the current situation.
8 October 2019
For any matters relating to your shareholding in the Company, dividend payments, or the Dividend Re-investment Scheme, please contact Share Registrars on 01252 821390, or by email at [email protected]. For any other matters please contact Amati Global Investors ("Amati") on 0131 503 9115 or by email at [email protected]. Amati maintains an informative website for the Company – www.amatiglobal.com – on which monthly investment updates, performance information, and past company reports can be found.
After sustained weakness in the final quarter of 2018, the UK stock market staged a strong recovery in the early months of 2019. The drivers behind this appeared to be more global than domestic, and influenced more by investor sentiment than fundamental data. A key component was the decision by the US Federal Reserve to step away from monetary policy tightening in late January, which represented a sharp reversal of its previous stance. Pointing to sluggish inflation and slowing growth in Europe and China, it said that the case for raising interest rates had weakened. Buoyed by this dovish tone, US investors shifted towards an expectation of rate cuts and further global stimulus. Despite a roller coaster of conflicting headlines, there was also faith that a trade deal would eventually be struck between the US and China. These sentiment tailwinds saw US indices achieve all time high levels by late April and, as global stock markets joined in with the momentum, the UK recorded strong gains across all segments. This was despite poor domestic news involving a fairly chaotic political environment and the failure to negotiate a Brexit agreement by the initial deadline of the end of March. In May, stock markets suffered their first weakness of the year. The most likely catalyst was profit-taking, as highly rated valuations contrasted with a backdrop of fairly mixed macroeconomic and earnings data, particularly in the UK. May also saw a turning point in currency markets where Sterling started to weaken after several months of surprising strength. With Brexit rhetoric hardening towards a possible "no-deal" outcome in the lead up to the Conservative leadership contest, Sterling continued to fall heavily into the end of July, even as the UK stock market rebounded to reach a high point for the period. Currency trends influenced the
pattern of the UK's recovery, as investors heavily favoured companies with international earnings likely to benefit from Sterling's weakness. As a result, larger capitalisation companies provided the strongest performance over the period, with smaller companies and AIM stocks lagging some way behind.
The VCT's NAV Total Return for the six month period was 8.5%. This outperformed the benchmark Numis Alternative Markets Total Return Index which gained 3.5% over the same period. The biggest contributor to performance was the VCT's largest holding, AB Dynamics ("ABD"), the specialist automotive engineering group which gained 65%. The shares made steady progress throughout the period, but were particularly strong following buoyant results in April and a placing in May to raise funds for working capital, investment in production capacity and future acquisitions. ABD continues to benefit from structural demand for its advanced testing systems and measurement products, used by global automotive manufacturers in driver assist technology and autonomous vehicle development. A number of other holdings registered strong gains, recovering most of the weakness they had experienced in the fourth quarter 2018 sell-off of AIM stocks. This included Learning Technologies Group, the digital learning and talent management specialist, which gained 50% after announcing that full year EBIT profitability to December 2019 is likely to be materially ahead of market expectations, combining organic growth with integrated acquisitions. Keywords Studios, the outsourced services provider to the global video gaming industry, gained 40% after similarly reporting strong results. The company is seeing
revenue growth across all of its seven service lines, and particularly its two largest areas, Functional Testing and Game Development. Its half year update indicated it had accelerated investment in recruitment, training and IT to cope with this growth and that this will dilute margins near term. GB Group, the identity management software and data specialist, gained 30% after its final results exceeded market expectations in terms of revenue and operating profit. The company also announced a US acquisition, IDology Inc, which focuses on identity verification and fraud prevention for financial services clients. This will materially enhance GB Group's global capability and scale. Other strong performers included Block Energy, the Georgian focused oil and gas exploration company which almost doubled in value as it raised funds to develop a major prospective field (detailed below); Premier Technical Services, the building maintenance specialist which was the subject of a cash bid from financial conglomerate Macquarie at around a 140% premium to the prevailing share price; the TB Amati UK Smaller Companies Fund, which gained 9.1% over the period against a rise in its benchmark of 4.2%; and Polarean Imaging ("Polarean"), the developer of enhanced medical imaging technology, which gained 47% following progress with its ongoing Phase III clinical trials and a further placing to finance this (detailed below).
The greatest detractor from performance was Craneware, the US hospital healthcare software provider which warned that current year growth had been impacted by the launch of three new products that had experienced slower than anticipated uptake. There were also exceptional costs incurred on an acquisition which did not complete. Management remain confident in the group's pipeline and renewal levels, but the highly rated shares suffered a sharp correction and fell 30%. LoopUp Group, the Software-as-a-Service (SaaS) provider of conference call technology also warned that it had experienced year-on-year revenue declines across its predominantly professional services client base. This was attributed to lower activity volumes caused by Brexit uncertainty and global macroeconomic conditions. The group had also invested in additional management and training resource to service an expanded sales team, causing a near term drag on profitability. The shares fell 56%. Creo Medical Group, the developer of minimally invasive surgical devices, gave back its previous strong gains, dropping 34% despite an absence of negative news. Accesso Technology Group, the ticketing, queuing and visitor experience software provider, fell sharply after a trading update stated that the executive chairman, Tom Burnet, was moving to a non-executive role, and that exceptional costs had been incurred relating to an aborted acquisition. Subsequent to this, it was announced that following a number of approaches, the group had initiated a formal sales process (which remains ongoing). The shares fell 28% across the period.
The Company made four new investments and three follow-on investments during the period. The new investments comprised one Initial Public Offering ("IPO") and three placings in companies already quoted on AIM.
The IPO involved Diaceutics, a company providing specialist data services and consultancy in the rapidly growing area of precision medicines. These medicines are targeted at patients with specific biomarkers that require diagnostic testing and Diaceutics collects data from laboratories on an anonymised basis and analyses it for drug company clients, implanting a plan of action to assist laboratories which are not reaching the expected level of testing to support the usage of the drug. Turnover has more than doubled in three years to over £10m. A new investment was also made in Evgen Pharma, a life sciences company with technology based on the active compound sulforaphane, which is made naturally in the body when broccoli (or any other brassica plant) is eaten. Sulforaphane has an excellent safety profile and Evgen is currently in Phase II trials for treatments relating to metatastic breast cancer and subarachnoid haemorrhages. Both applications offer significant value inflection points for the company, which also has a pipeline of other early stage developments. Another new investment was in Sosandar, a rapidly growing online retailer of women's fashion targeting an older demographic which has become poorly served by declining high street stores. Key metrics such as conversion rates (of website views to sales), basket sizes and repeat orders are all supportive, and funds were raised to improve upfront buying terms with suppliers and to build inventory levels. The final new investment was in Velocys, a company with a reactor technology which can convert waste into commercial fuels at around 80% efficiency. This technology has been demonstrated at commercial scale and is targeted at the sustainable production of jetfuel and clean diesel. The company has formed a consortium with BA (part of IAG) and Shell to build the first commercial plants using municipal waste and wood chip as feedstock. Currently there is no source of sustainable jet fuel, hence BA's strategic interest in Velocys' technology. Velocys' revenues will be from licences, the supply of reactors, the supply
of catalysts, and from royalties. The placing raised funds for ongoing engineering design work and working capital.
The first follow-on placing the Company took part in was for Maxcyte, which has a proprietary cell-engineering platform delivering medicines to patients with unmet medical needs. The underlying technology involves electroporation, a technique which allows genetic material to be passed into a cell as part of the development of innovative medicines. Maxcyte's clients currently include 20 of the top 25 global pharmaceutical companies. Funds were raised to cover working capital, drug trials and product development. The second followon investment was Block Energy, the Georgian based oil and gas explorer. The company drilled a horizontal well in its West Rustavi field, and initial flow tests showed an exceptional result, following which the company raised money for a further drilling campaign on this block. However, since bringing this well into production it has proven problematic, with a high rate of water getting into the well, with the result that the shares have fallen since the period end. It appears most likely that this is due, at least in part, to some problems with the way the well was completed, leaving a section open to a higher reservoir horizon. The result of the second well will be known shortly, after which the company will consider its options for rectifying the problem with the first. The third follow-on placing was in Polarean, the developer of technology which enables existing MRI scanners to achieve an improved level of lung imaging by using a highly polarised nonradioactive isotope of Xenon gas as an inhaled agent. This technique displays detail down to the smallest airways of the lung and the related vasculature. The funds raised will be used mainly for ongoing Phase III trials.
During the period, there were further partdisposals of the Company's holding in ABD, representing just under 20% of the position. Together with previous sales, a total of circa 35% of the investment of £620,885 made in 2013, split between Amati VCT plc and Amati VCT 2 plc, has now been realised for a total of £3.8m. This follows significant outperformance with share disposals made at successively higher levels. The company remains a core holding and the portfolio's largest position, but would have become too heavy a weighting without these trades. A sub-scale position in ADVFN, the private investor website, and appScatter Group, the apps distribution and management platform which had failed to live up to our expectations, were exited.
Uncertainty has become a persistent state of mind for investors as the year has progressed. Principal concerns involving Brexit and the US/China trade dispute have shown little sign of early resolution, but global equity markets have climbed this wall of worry nevertheless. One reason for this in the US has been the expectation of multiple interest rate cuts following the central bank's change of tone in January. This pushed US indices to further all time highs by late July. The first cut for more than a decade occurred right at the end of July, but the accompanying comments from the Federal Reserve Chairman suggested that it should be taken as a mid-cycle adjustment to policy with no guarantee of further moves. US equities reacted with disappointment and, alongside a further deterioration in Chinese relations, there was a sharp sell-off in August which quickly spread to global markets. September has seen a rebound, but this has
been led by value stocks with investor appetite for previously outperforming growth stocks noticeably weaker. This shift has had an impact on AIM, which has continued to lag the main market, although another contributory factor has been the significant underperformance of its largest constituent, Burford Capital, following a research report published by a short seller.
The final Brexit outcome, together with the political and economic environment created in its aftermath, is impossible to predict. There is the prospect, nonetheless, that a combination of the need for domestic stimulus to boost business activity and a heavily discounted valuation for UK equities, creates the conditions for renewed investor appetite. The Company's portfolio is, however, slow moving by necessity and investments are selected for their longer term potential rather than any alignment with the stock market's more immediate time horizons. We remain confident about the ultimate growth potential contained within the portfolio, across a range of diverse businesses and end markets.
Amati Global Investors
8 October 2019
Note:- July saw the fund management team at Amati augmented by the appointment of Dr Gareth Blades as an analyst. Prior to Amati, Gareth has worked for the University of Edinburgh building and spinning-out therapeutic, med-tech, diagnostic and e-health companies, and also for PharmaVentures in healthcare corporate finance.
as at 31 July 2019
| £'000 | Cost* Valuation £'000 |
Fair value movement in period £'000 |
Market Cap £m |
Sector | % Dividend YieldNTM |
Fund % of NAV |
|
|---|---|---|---|---|---|---|---|
| 1,3 AB Dynamics plc |
2,708 | 12,027 | 5,625 | 566.6 | Industrials | 0.2 | 8.7 |
| TB Amati UK Smaller Companies Fund |
9,373 | 11,929 | 936 | - | Financials | 1.6 | 8.7 |
| Learning Technologies Group plc 1,3 |
5,078 | 8,701 | 2,911 | 755.0 | Technology | 0.6 | 6.3 |
| 1,3 Keywords Studios plc |
5,174 | 8,452 | 2,394 | 1,075.6 | Industrials | 0.1 | 6.2 |
| Ideagen plc 2 |
3,303 | 6,948 | 286 | 320.9 | Technology | 0.2 | 5.1 |
| 2,3 GB Group plc |
3,203 | 6,761 | 1,583 | 1,160.2 | Technology | 0.6 | 4.9 |
| Frontier Developments plc 1 |
4,698 | 6,109 | 561 | 379.7 | Consumer goods | - | 4.4 |
| 2 Tristel plc |
3,290 | 5,256 | 92 | 127.0 | Health care | 1.9 | 3.8 |
| Quixant plc 2,3 |
4,196 | 5,054 | 261 | 192.7 | Technology | 1.2 | 3.7 |
| Craneware plc 2 |
3,899 | 4,189 | (1,762) | 520.6 | Technology | 1.5 | 3.0 |
| Top Ten | 44,922 | 75,426 | 54.8 | ||||
| 1,3 Block Energy plc |
3,000 | 3,989 | 1,064 | 30.7 | Oil & Gas | - | 2.9 |
| Polarean Imaging plc 1 |
1,900 | 3,115 | 958 | 28.6 | Health care | - | 2.3 |
| 2 Water Intelligence plc |
1,218 | 2,688 | (179) | 55.8 | Industrials | - | 2.0 |
| Angle plc 1 |
1,615 | 2,455 | 549 | 131.3 | Health care | - | 1.8 |
| 1 Hardide plc |
2,361 | 2,351 | (724) | 25.6 | Basic materials | - | 1.7 |
| Accesso Technology Group plc | 1 221 |
2,233 | (884) | 278.5 | Technology | - | 1.6 |
| Anpario plc 2 |
1,829 | 2,219 | - | 79.3 | Health care | 2.2 | 1.6 |
| 1 Velocys plc |
2,000 | 2,000 | - | 19.3 | Oil & Gas | - | 1.4 |
| Creo Medical Group plc 1 |
1,613 | 1,935 | (980) | 182.3 | Health care | - | 1.4 |
| 1 Ixico plc |
1,409 | 1,912 | 553 | 17.8 | Health care | - | 1.4 |
| Top Twenty | 62,088 100,323 | 72.9 |
| £'000 | Cost* Valuation £'000 |
Fair value movement in period £'000 |
Market Cap £m |
Sector | % Dividend YieldNTM |
Fund % of NAV |
|
|---|---|---|---|---|---|---|---|
| 1,3 Equals Group plc |
1,137 | 1,874 | 521 | 207.0 | Financials | - | 1.4 |
| Sosandar plc1 | 1,872 | 1,872 | - | 24.4 | Consumer services |
- | 1.4 |
| 1 Diaceutics plc |
1,557 | 1,865 | 307 | 63.3 | Health care | - | 1.4 |
| Science in Sport plc 2 |
1,956 | 1,859 | 270 | 76.1 | Consumer goods | - | 1.4 |
| 2 Brooks Macdonald Group plc |
1,154 | 1,731 | 212 | 267.9 | Financials | 2.7 | 1.3 |
| SRT Marine Systems plc 1 |
1,174 | 1,367 | 116 | 55.0 | Technology | - | 1.0 |
| 1,3 LoopUp Group plc |
2,577 | 1,267 | (1,613) | 72.9 | Technology | - | 0.9 |
| MaxCyte, Inc. 1 |
1,984 | 1,203 | (533) | 68.8 | Health care | - | 0.9 |
| Evgen Pharma plc1 | 1,000 | 1,183 | 183 | 23.5 | Health care | - | 0.8 |
| Rosslyn Data Technologies plc 1 |
947 | 1,104 | - | 13.5 | Technology | - | 0.8 |
| Amryt Pharma plc 1,3 |
1,563 | 1,041 | (319) | 33.7 | Health care | - | 0.8 |
| 2 Solid State plc |
520 | 951 | 83 | 39.1 | Industrials | 2.8 | 0.7 |
| Belvoir Lettings plc 1 |
783 | 900 | 143 | 39.5 | Financials | 6.4 | 0.6 |
| Fusion Antibodies plc1 | 1,444 | 872 | 268 | 14.4 | Health care | - | 0.6 |
| Falanx Group Limited 1 |
1,350 | 788 | (563) | 7.0 | Industrials | - | 0.6 |
| 1 Oncimmune Holdings plc |
1,013 | 767 | (25) | 58.2 | Health care | - | 0.5 |
| i-nexus Global plc 1 |
2,500 | 728 | (380) | 6.8 | Technology | - | 0.5 |
| 2 Bilby plc |
1,681 | 679 | (722) | 12.8 | Industrials | - | 0.5 |
| Byotrol plc 1 |
859 | 605 | (45) | 10.4 | Basic materials | - | 0.4 |
| Property Franchise 2 Group plc (The) |
352 | 516 | 168 | 45.2 | Financials | 5.1 | 0.4 |
| Bonhill Group plc 1,3 |
670 | 511 | (235) | 29.6 | Consumer services |
1.3 | 0.4 |
| Universe Group plc 1 |
488 | 502 | (24) | 10.8 | Industrials | - | 0.4 |
| 2 Brady plc |
395 | 363 | (32) | 46.7 | Technology | - | 0.3 |
| MyCelx Technologies Corporation 1 |
645 | 344 | (424) | 16.5 | Oil & Gas | - | 0.2 |
| 1 Diurnal Group plc |
1,440 | 323 | 83 | 36.4 | Health care | - | 0.2 |
| Escape Hunt plc 1 |
752 | 293 | (195) | 12.9 | Consumer services |
- | 0.2 |
| £'000 | Cost* Valuation £'000 |
Fair value movement in period £'000 |
Market Cap £m |
Sector | % Dividend YieldNTM |
Fund % of NAV |
|
|---|---|---|---|---|---|---|---|
| Synectics plc 2 |
342 | 268 | 15 | 34.9 | Industrials | 3.0 | 0.2 |
| Brighton Pier Group plc (The) | 1 489 |
227 | 57 | 22.4 | Consumer services |
- | 0.2 |
| 2 Netcall plc |
110 | 214 | 18 | 50.2 | Technology | 0.3 | 0.2 |
| Velocity Composites plc 1 |
803 | 207 | (21) | 6.5 | Industrials | - | 0.1 |
| 1 Mirriad Advertising plc |
834 | 191 | - | 32.0 | Consumer services |
- | 0.1 |
| FireAngel Safety 1 Technology Group plc |
690 | 182 | 13 | 22.0 | Industrials | - | 0.1 |
| Ilika plc 1 |
265 | 175 | (7) | 25.2 | Oil & Gas | - | 0.1 |
| 1 Dods (Group) plc |
596 | 140 | (4) | 38.9 | Consumer services - | 0.1 | |
| Antenova Limited Ordinary shares & A Preference Shares |
100 1 |
128 | - | 4.2 | Tele- communications |
- | 0.1 |
| 1 Genedrive plc |
442 | 125 | (55) | 5.4 | Health care | - | 0.1 |
| Allergy Therapeutics plc 1 |
29 | 31 | (6) | 73.2 | Health care | - | - |
| Sabien Technology Group plc | 1 408 |
8 | (5) | 0.6 | Industrials | - | - |
| Investments held at nil value | 2,000 | - | 253 | - | - | - | - |
| Total investments | 101,009 127,727 | 92.8 | |||||
| Net current assets | 9,854 | 7.2 | |||||
| Net assets | 101,009 137,581 | 100.0 |
1 Qualifying holdings.
2 Part of holding qualifying, part is non-qualifying.
3 These investments are also held by other funds managed by Amati.
NTM Next twelve months consensus estimate (Source: FactSet and Fidessa).
The Manager rebates the management fee of 0.75% on the TB Amati UK Smaller Companies Fund and this is included in the yield.
All holdings are in ordinary shares unless otherwise stated.
Investments held at nil value: Celoxica Holdings plc1, China Food Company plc, Leisurejobs.com Limited1 (previously The Sportsweb.com Limited), Polyhedra Group Limited1 (previously Polyhedra Group plc), Rated People Limited1, Sorbic International plc, TCOM Limited1, VITEC Global Limited1
As at the period end, the percentage of the Company's portfolio held in qualifying holdings for the purposes of Section 274 of the Income and Corporation Taxes Act 2007 was 88.76%.
* Cost is either the result of market trades or events or, for investments acquired from Amati VCT plc at the merger on 4 May 2018, is the value of the investments at that date.
The Company's assets consist of equity and fixed interest investments and cash. Its principal risks include market risk, interest rate risk, credit risk and liquidity risk. Other risks faced by the Company include economic, investment and strategic, regulatory, reputational, operational and financial risks as well as the potential for loss of approval as a VCT. These risks, and the ways in which they are managed, are described in more detail in Notes 19 to 22 to the Financial Statements in the Company's Report and Financial Statements for the year ended 31 January 2019. The Company's principal risks and uncertainties have not changed materially since the date of that report.
in respect of the Half-yearly financial report
We confirm that to the best of our knowledge:
For and on behalf of the Board
8 October 2019
for the six months ended 31 July 2019
| Six months ended 31 July 2019 |
|||||
|---|---|---|---|---|---|
| Note | Revenue £'000 |
Capital £'000 |
Total £'000 |
||
| Gain/(loss) on investments | - | 12,092 | 12,092 | ||
| Income | 7 | 412 | - | 412 | |
| Investment management fee | (295) | (885) | (1,180) | ||
| Other expenses | (216) | - | (216) | ||
| (Loss)/profit on ordinary activities before taxation |
(99) | 11,207 | 11,108 | ||
| Taxation on ordinary activities | - | - | - | ||
| (Loss)/profit and total comprehensive income attributable to shareholders |
(99) | 11,207 | 11,108 | ||
| Basic and diluted (loss)/earnings per Ordinary share |
5 | (0.11)p | 12.61p | 12.50p |
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. There is no other comprehensive income other than the results for the period discussed above. Accordingly a Statement of Total Comprehensive Income is not required.
All the items above derive from continuing operations of the Company.
The accompanying notes are an integral part of the statement.
| Six months ended 31 July 2018 |
Year ended 31 January 2019 |
||||
|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
| - | 6,682 | 6,682 | - | (14,939) | (14,939) |
| 268 | - | 268 | 596 | - | 596 |
| (218) | (654) | (872) | (488) | (1,464) | (1,952) |
| (182) | - | (182) | (376) | - | (376) |
| (132) | 6,028 | 5,896 | (268) | (16,403) | (16,671) |
| - | - | - | - | - | - |
| (132) | 6,028 | 5,896 | (268) | (16,403) | (16,671) |
| (0.23)p | 10.32p | 10.10p | (0.38)p | (22.90)p | (23.28)p |
| Share capital £'000 |
Share premium £'000 |
Merger reserve £'000 |
||
|---|---|---|---|---|
| For the six months ended 31 July 2019 | ||||
| Opening balance as at 1 February 2019 | 4,278 | 10,571 | 425 | |
| Profit/(loss) and total comprehensive income for the period |
- | - | - | |
| Share issues and buy backs* | 176 | 7,066 | - | |
| Dividends paid | - | - | - | |
| Closing balance as at 31 July 2019 | 4,454 | 17,637 | 425 | |
| For the six months ended 31 July 2018 | ||||
| Opening balance as at 1 February 2018 | 1,804 | 19,359 | 425 | |
| Profit/(loss) and total comprehensive income for the period |
- | - | - | |
| Share issues and buy backs*# | 2,223 | 77,701 | - | |
| Dividends paid | - | - | - | |
| Cancellation of share premium | - | (96,397) | - | |
| Closing balance as at 31 July 2018 | 4,027 | 663 | 425 | |
| For the year ended 31 January 2019 | ||||
| Opening balance as at 1 February 2018 | 1,804 | 19,359 | 425 | |
| Loss and total comprehensive income for the period |
- | - | - | |
| Share issues and buy backs*# | 2,474 | 87,609 | - | |
| Dividends paid | - | - | - | |
| Cancellation of share premium | - | (96,397) | - | |
| Closing balance as at 31 January 2019 | 4,278 | 10,571 | 425 |
* During the period to 31 July 2019, £7,401,000 was raised through share issues (31 July 2018: £7,471,000 31 January 2019: £17,781,000).
The accompanying notes are an integral part of the statement.
| Non-distributable reserves | Distributable reserves | ||||
|---|---|---|---|---|---|
| Capital redemption reserve £'000 |
Capital reserve (non-distributable) £'000 |
Special reserve £'000 |
Capital reserve (distributable) £'000 |
Revenue reserve £'000 |
Total reserves £'000 |
| 509 | 18,867 | 96,718 | (5,984) | (395) | 124,989 |
| - | 8,865 | 2,342 | (99) | 11,108 | |
| 81 | - | (2,276) | - | - | 5,047 |
| - | - | (3,563) | - | - | (3,563) |
| 590 | 27,732 | 90,879 | (3,642) | (494) | 137,581 |
| 418 | 33,359 | 10,386 | (4,073) | (127) | 61,551 |
| - | 7,265 | - | (1,237) | (132) | 5,896 |
| 54 | - | (1,749) | - | - | 78,229 |
| - | - | (4,223) | - | - | (4,223) |
| - | - | 96,397 | - | - | - |
| 472 | 40,624 | 100,811 | (5,310) | (259) | 141,453 |
| 418 | 33,359 | 10,386 | (4,073) | (127) | 61,551 |
| - | (14,492) | - | (1,911) | (268) | (16,671) |
| 91 | - | (2,847) | - | - | 87,327 |
| - | - | (7,218) | - | - | (7,218) |
| - | - | 96,397 | - | - | - |
| 509 | 18,867 | 96,718 | (5,984) | (395) | 124,989 |
| Note | 31 July 2019 £'000 |
31 July 2018 £'000 |
31 January 2019 £'000 |
|
|---|---|---|---|---|
| Fixed assets | ||||
| Investments held at fair value | 9 | 127,727 | 133,903 | 112,867 |
| Current assets | ||||
| Debtors | 3,594 | 105 | 38 | |
| Cash at bank | 9,222 | 9,744 | 12,756 | |
| Total current assets | 12,816 | 9,849 | 12,794 | |
| Current liabilities | ||||
| Creditors: amounts falling due within one year | (2,962) | (2,299) | (672) | |
| Net current assets | 9,854 | 7,550 | 12,122 | |
| Total assets less current liabilities | 137,581 | 141,453 | 124,989 | |
| Capital and reserves | ||||
| Called up share capital | 4,454 | 4,027 | 4,278 | |
| Share premium account | 17,637 | 663 | 10,571 | |
| Reserves | 115,490 | 136,763 | 110,140 | |
| Equity shareholders' funds | 137,581 | 141,453 | 124,989 | |
| Net asset value per share | 6 | 154.5p | 175.7p | 146.1p |
The accompanying notes are an integral part of the balance sheet.
for the six months ended 31 July 2019
| Six months ended 31 July 2019 £'000 |
Six months ended 31 July 2018 £'000 |
Year ended 31 January 2019 £'000 |
|
|---|---|---|---|
| Cash flows from operating activities | |||
| Investment income received | 390 | 197 | 585 |
| Investment management fees | (1,126) | (547) | (1,686) |
| Other operating costs | (207) | (207) | (398) |
| Net cash outflow from operating activities | (943) | (557) | (1,499) |
| Cash flows from investing activities | |||
| Purchases of investments | (7,850) | (7,957) | (12,832) |
| Disposals of investments | 3,544 | 4,014 | 6,692 |
| Net cash outflow from investing activities | (4,306) | (3,943) | (6,140) |
| Net cash outflow before financing | (5,249) | (4,500) | (7,639) |
| Cash flows from financing activities | |||
| Cash received as part of asset acquisition of Amati VCT | - | 9,462 | 9,462 |
| Net cash paid in respect of assets and liabilities of Amati VCT |
(4) | (88) | (101) |
| Net proceeds of share issues and buybacks | 5,282 | 6,270 | 15,429 |
| Equity dividends paid | (3,563) | (4,223) | (7,218) |
| Net cash inflow from financing activities | 1,715 | 11,421 | 17,572 |
| (Decrease)/ increase in cash | (3,534) | 6,921 | 9,933 |
| Reconciliation of net cash flow to movement in net cash | |||
| (Decrease)/increase in cash during the period | (3,534) | 6,921 | 9,933 |
| Net cash at start of period | 12,756 | 2,823 | 2,823 |
| Net cash at end of period | 9,222 | 9,744 | 12,756 |
| Reconciliation of profit/(loss) on ordinary activities before taxation to net cash outflow from operating activities |
|||
| Profit/(loss) on ordinary activities before taxation | 11,108 | 5,896 | (16,671) |
| Net (gain)/loss on investments | (12,092) | (6,682) | 14,939 |
| Increase in creditors | 59 | 315 | 257 |
| Increase in debtors | (18) | (86) | (24) |
| Net cash outflow from operating activities | (943) | (557) | (1,499) |
The accompanying notes are an integral part of the statement.
for the six months ended 31 July 2019
The Half-yearly financial Report covers the six months ended 31 July 2019. The condensed financial statements for this six month period have been prepared in accordance with FRS 104 "Interim financial reporting" and on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements for the year ended 31 January 2019.
The comparative figures for the financial year ended 31 January 2019 have been extracted from the latest published audited Annual Report and Financial Statements. Those accounts have been reported on by the Company's auditor and lodged with the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
The financial information set out in this report has not been audited and does not comprise full financial statements within the meaning of Section 434 of the Companies Act 2006. No statutory accounts in respect of any period after 31 January 2019 have been reported on by the Company's auditors.
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 business for the foreseeable future (being a period of 12 months from the date these financial statements were approved). In reaching this conclusion the directors took into account the nature of the Company's business and Investment Policy, its risk management policies, the diversification of its portfolio, the cash holdings and the liquidity of nonqualifying investments. Thus the directors believe it is appropriate to continue to apply the going concern basis in preparing the financial statements.
The directors are of the opinion that the Company is engaged in a single segment of business, being investment business.
4. Copies of the Half-yearly Report are being made available to all shareholders. Further copies are available free of charge from Amati Global Investors by telephoning 0131 503 9115 or by email to [email protected].
Earnings per share is based on the gain attributable to shareholders for the six months ended 31 July 2019 of £11,108,000 (six months ended 31 July 2018: £5,896,000, year ended 31 January 2019: £16,671,000) and the weighted average number of shares in issue during the period of 88,857,658 (31 July 2018: 58,395,967, 31 January 2019: 71,619,496). There is no difference between basic and diluted earnings per share.
The net asset value per share at 31 July 2019 is based on net assets of £137,581,000 (31 July 2018: £141,453,000, 31 January 2019: £124,989,000) and the number of shares in issue on 31 July 2019 of 89,064,825 (31 July 2018: 80,513,669, 31 January 2019: 85,549,682). There is no difference between basic and diluted net asset value per share.
| Six months ended 31 July 2019 (unaudited) £'000 |
Six months ended 31 July 2018 (unaudited) £'000 |
Year ended 31 January 2019 (audited) £'000 |
|
|---|---|---|---|
| Income: | |||
| Dividends from UK companies | 387 | 262 | 571 |
| Interest from deposits | 25 | 6 | 25 |
| 412 | 268 | 596 |
| Six months ended 31 July 2019 (unaudited) £'000 |
Six months ended 31 July 2018 (unaudited) £'000 |
Year ended 31 January 2019 (audited) £'000 |
|
|---|---|---|---|
| Final dividend for the year ended 31 January 2019 of 4.0p per share paid on 26 July 2019 |
3,563 | - | - |
| Interim dividend for the year ended 31 January 2019 of 3.5p per share paid on 23 November 2018 |
- | - | 2,995 |
| Second interim dividend for the year ended 31 January 2018 of 5.25p per share paid on 27 July 2018 |
- | 4,223 | 4,223 |
| 3,563 | 4,223 | 7,218 |
| Level 1 Traded on |
Level 3 Unquoted |
||
|---|---|---|---|
| AIM £'000 |
investments £'000 |
Total £'000 |
|
| Cost as at 1 February 2019 | 92,729 | 2,353 | 95,082 |
| Opening unrealised appreciation/(depreciation) | 20,306 | (1,439) | 18,867 |
| Opening unrealised loss recognised in realised reserve |
(296) | (786) | (1,082) |
| Opening valuation as at 1 February 2019 | 112,739 | 128 | 112,867 |
| Movements in the period: | |||
| Purchases | 9,850 | - | 9,850 |
| Sales – proceeds | (6,829) | (253)* | (7,082) |
| Realised gain on sales | 2,373 | - | 2,373 |
| Unrealised gain in the period | 9,466 | 253* | 9,719 |
| Valuation as at 31 July 2019 | 127,599 | 128 | 127,727 |
| Cost at 31 July 2019 | 98,909 | 2,100 | 101,009 |
| Unrealised gain/(loss) as at 31 July 2019 | 28,918 | (1,186) | 27,732 |
| Closing unrealised loss recognised in realised reserve |
(228) | (786) | (1,014) |
| Valuation as at 31 July 2019 | 127,599 | 128 | 127,727 |
| Equity shares | 127,599 | 81 | 127,680 |
| Preference shares | - | 47 | 47 |
| Loan stock | - | - | - |
| Valuation as at 31 July 2019 | 127,599 | 128 | 127,727 |
There have been no level 2 investments during the period.
* Partial repayment of China Food Company plc Loan Notes held at nil value.
In order to provide further information on the valuation techniques used to measure assets carried at fair value, the measurement basis has been categorised into a "fair value hierarchy" as follows:
Inputs to Level 1 fair values are quoted prices in active markets. An active market is one in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. The Company's investments classified within this category are AIM traded companies and fully listed companies.
Inputs to Level 2 fair values are inputs other than quoted prices included within Level 1 that are observable for the asset, either directly or indirectly.
Level 3 fair values are measured using a valuation technique that is based on data from an unobservable market.
The valuation techniques used by the Company are explained in the Annual Report and Financial Statements for the year ended 31 January 2019.
The Company retains Amati Global Investors as its Manager. The number of ordinary shares in the Company (all of which are held beneficially) by certain members of the management team are:
| 31 July 2019 shares held |
|
|---|---|
| Paul Jourdan | 543,778 |
| David Stevenson | 17,583 |
Save as disclosed in this paragraph there is no conflict of interest between the Company, the duties of the directors, the duties of the directors of the Manager and their private interests and other duties.
The Company's shares are listed on the London Stock Exchange. The bid price of the Company's shares can be found on Amati Global Investors' website: http://www.amatiglobal.com/amat.php
The Company normally announces its net asset value on a weekly basis. Net asset value per share information can be found on Amati Global Investors' website:
http://www.amatiglobal.com/amat.php
| 31 January 2020 Year end | |
|---|---|
| April 2020 | Announcement of final results for the year ended 31 January 2020 |
| June 2020 | Annual General Meeting |
Shareholders who wish to have future dividends re-invested in the Company's shares or wish to have dividends paid directly into their bank account rather than sent by cheque to their registered address should contact Share Registrars Limited on 01252 821390 or email [email protected]
| Launch date | Merger date | NAV Total Return with dividends re-invested |
NAV Total Return with dividends not re-invested |
Numis Alternative Markets Total Return Index |
|
|---|---|---|---|---|---|
| Singer & Friedlander AIM 3 VCT ('C' shares) |
4 April 2005 |
8 December 2005 |
34.8% | 15.3% | 14.2% |
| Amati VCT plc | 24 March 2005 |
4 May 2018 |
115.8% | 66.2% | 10.1% |
| Invesco Perpetual AIM VCT |
30 July 2004 |
8 November 2011 |
19.3% | -11.5% | 39.9% |
| Singer & Friedlander AIM 3 VCT* |
29 January 2001 |
n/a | 22.9% | 4.9% | -18.0% |
| Singer & Friedlander AIM 2 VCT |
29 February 2000 |
22 February 2006 |
-5.8% | -19.6% | -58.2% |
| Singer & Friedlander AIM VCT |
28 September 1998 |
22 February 2006 |
-35.8% | -23.3% | 27.3% |
* Singer & Friedlander AIM 3 VCT changed its name to ViCTory VCT on 22 February 2006, to Amati VCT 2 on 8 November 2011 and to Amati AIM VCT on 4 May 2018.
Peter Lawrence Julia Henderson Susannah Nicklin Brian Scouler
all of:
27/28 Eastcastle Street London W1W 8DH
The City Partnership (UK) Limited 110 George Street Edinburgh EH2 4LH
Amati Global Investors Limited 8 Coates Crescent Edinburgh
EH3 7AL
Suite C, First Floor 4-6 Staple Inn Holborn, London WC1V 7QH
The Courtyard 17 West Street Farnham GU9 7DR
BDO LLP 55 Baker Street London W1H 7EH
16 Charlotte Square Edinburgh EH2 4DF
EC4V 4LA
For enquiries relating to share certificates, share holdings, dividends or the Dividend Re-investment Scheme, please contact:
on +44 (0) 1252 821390 or email: [email protected]
For enquiries relating to subscriptions and for general enquiries, please contact:
on +44 (0) 131 503 9115 or email: [email protected]
8 Coates Crescent Edinburgh EH3 7AL Tel: 0131 503 9100
Amati Global Investors Limited is authorised and regulated by the Financial Conduct Authority
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