AMATI AIM VCT PLC

Finely crafted investments Amati AIM VCT plc Annual Report & Financial Statements For the year ended 31 January 2023 Company Registration No. 04138683 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. Company Registration No. 04138683 This document is important. Shareholders who are in any doubt as to what action to take should consult an appropriate independent adviser. If you have sold or transferred all your shares in the Company, this document should be passed to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee. Amati AIM VCT plc Highlights Key data For the year ended 31 January 2023 Highlights 1 Strategic Report Chairman’s Statement 4 Fund Manager’s Review 7 Fund Manager Biographies 12 Investment Portfolio 14 Investment Policy, Investment Objectives and Investment Strategy 18 Fund Management and Key Contracts 20 Principal and Emerging Risks 21 Section 172 Statement 25 Other Matters 29 Reports from the Directors Board of Directors 31 Directors’ Report 32 Statement of Corporate Governance 36 Report of the Audit Committee 40 Directors’ Remuneration Report 43 Statement of Directors’ Responsibilities 47 Independent Auditor’s Report to the Members of Amati AIM VCT plc 48 Financial Statements Income Statement 55 Statement of Changes in Equity 56 Balance Sheet 58 Statement of Cash Flows 59 Notes to the Financial Statements 60 Information for Shareholders Shareholder Information 76 Alternative Performance Measures 77 Notice of Annual General Meeting 79 Corporate Information 85 31/01/23 31/01/22 Net Asset Value (“NAV”) £201.3m £247.1m Shares in issue 151,548,993 136,720,797 NAV per share† 132.8p 180.7p Share price 123.5p 166.5p Market capitalisation £187.2m £227.6m Share price discount to NAV† 7.0% 7.9% NAV Total Return for the year (assuming re-invested dividends)† -22.2% -7.5% Numis Alternative Markets Total Return Index -20.7% -3.5% Ongoing charges† 1.9% 1.9% Dividends paid and declared in respect of the year 7.0p 9.0p NAV Total return for the year† -22.2% £12.4m invested in qualifying holdings during the year 7.0% Discount to NAV† Year end Net Asset Value per share† 132.8p * 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. Amati AIM VCT plc Annual Report & Financial Statements 2023 1 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights 1.9% Ongoing charges† 5.3% Dividend yield Amati AIM VCT plc Annual Report & Financial Statements 2023 2 Table of investor returns to 31 January 2023 Numis NAV Total Alternative Return with Markets dividends Total From Date re-invested Return Index NAV following re-launch of the VCT under management of Amati Global Investors (“Amati”) 9 November 2011 139.6% 31.0% NAV following appointment of Amati as Manager of the VCT, which was known as ViCTory VCT at the time 25 March 2010 151.4% 34.6% * 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. Highlights Dividends paid and declared Dividend history Since the re-launch of the VCT under the management of Amati Global Investors Total Cumulative dividends dividends per share per share Year ended 31 January pp 2011 4.74 4.74 2012 5.50 10.24 2013 6.00 16.24 2014 6.75 22.99 2015 6.25 29.24 2016 6.25 35.49 2017 7.00 42.49 2018 8.50 50.99 2019 7.50 58.49 2020 7.75 66.24 2021 10.50 76.74 2022 9.00 85.74 2023 7.00 92.74 * 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. 2023 total dividends per share 7.0p 5.3% of NAV Cumulative dividends per share 92.74p h 22.2% 25/03/10 25/03/11 25/03/12 25/03/13 25/03/14 25/03/15 25/03/16 25/03/17 25/03/18 25/03/19 25/03/20 25/03/21 31/03/22 400 350 300 250 200 150 100 50 Since Invesco Perpetual Merger into Amati VCT 2 Since Amati VCT Merger into Amati AIM VCT Amati AIM VCT NAV Total Return (rebased to 100) Numis Alternative Markets Total Return Index (rebased to 100) Amati AIM VCT plc Annual Report & Financial Statements 2023 3 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights 31/1/01 31/1/02 31/1/03 31/1/04 31/1/05 31/1/06 31/1/07 31/1/08 31/1/09 31/1/10 31/1/11 31/1/12 31/1/13 31/1/14 31/1/15 31/1/16 31/1/17 31/1/18 31/1/19 31/1/20 31/1/21 31/1/22 31/1/23 210 190 170 150 130 110 90 70 50 30 Amati AIM VCT NAV Total Return (rebased to 100) Numis Alternative Markets Total Return Index (rebased to 100) Historic performance Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from inception of fund to 31 January 2023 Fund performance 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 Amati AIM VCT plc Annual Report & Financial Statements 2023 4 Fiona Wollocombe Chairman 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 s 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 provided in the Fund Manager’s Review. Strategic Report Chairman’s Statement Amati AIM VCT plc Annual Report & Financial Statements 2023 5 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights 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. 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 this report. Amati AIM VCT plc Annual Report & Financial Statements 2023 6 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 [email protected] 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 [email protected] 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 [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. Chairman’s Statement (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 7 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights 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, Fund Manager’s Review Amati AIM VCT plc Annual Report & Financial Statements 2023 8 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 covering 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 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 Fund Manager’s Review (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 9 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights 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, Amati AIM VCT plc Annual Report & Financial Statements 2023 10 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 Fund Manager’s Review (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 11 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 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Amati AIM VCT plc Annual Report & Financial Statements 2023 12 Fund Manager Biographies Amati Global Investors Amati Global Investors is a specialist fund management business based in Edinburgh. It is largely, though not exclusively, focused on UK small and mid-sized companies, with a universe ranging from fully listed constituents of the FTSE Mid 250 and FTSE Small Cap indices, to stocks quoted on the Alternative Investment Market. It is the manager of Amati AIM VCT (for which it won the 2022 Investment Week VCT AIM Investment Company of the year award). It is also the manager of the TB Amati UK Listed Smaller Companies Fund, the TB Amati Strategic Metals Fund, the TB Amati Strategic Innovation Fund and it also offers an AIM IHT portfolio service. It is incorporated in Scotland and 51% owned by its staff, and 49% owned by Mattioli Woods plc, which invested in the company in February 2017. Amati Global Investors is a 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 is also a signatory to the UN-supported Principles for Responsible Investment (PRI). Paul Jourdan Founder and CEO Dr Paul Jourdan is an award winning fund manager, with a strong track record in small cap investment. He co-founded Amati Global Investors following the management buyout of Noble Fund Managers from Noble Group in 2010, having joined Noble in 2007 as Head of Equities. His fund management career began in 1998 with Stewart Ivory where he gained experience in UK, emerging market and global equities. In 2000, Stewart Ivory was taken over by First State and Paul became manager of what is now the TB Amati UK Listed Smaller Companies Fund. In early 2005, he launched Amati VCT and then also became manager of Amati VCT 2 plc after the investment management contract moved to Amati Global Investors in 2010. In September 2014 Amati launched the Amati AIM IHT Portfolio Service, which Paul co- manages with David Stevenson, Anna Macdonald and Scott McKenzie. Prior to 1998 Paul worked as a professional violinist, including a four year period with the City of Birmingham Symphony Orchestra. He is a CFA Charterholder, CEO, a director of Amati and a trustee of Clean Trade, a charity registered in England and Wales. Amati AIM VCT plc Annual Report & Financial Statements 2023 13 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights David Stevenson Fund Manager David Stevenson joined Amati in 2012. In 2005 he was a co- founding partner of investment boutique Cartesian Capital, which managed a range of retail and institutional UK equity funds in long only and long/short strategies. Prior to that he was Assistant Director at SVM, where he also managed equity products including the UK Opportunities small/midcap fund which was ranked top decile for the 5 year period from inception to 2005. David started his career at KPMG where he qualiﬁed as a Chartered Accountant. He latterly specialised in corporate ﬁnance, before moving into private equity with Dunedin Fund Managers. David has co-managed both the TB Amati UK Listed Smaller Companies Fund and Amati AIM VCT since 2012 and the Amati AIM IHT Portfolio Service since 2014. Anna Macdonald Fund Manager Anna Macdonald is an experienced fund manager specialising in UK equities. Anna began her career as an analyst and fund manager at Henderson Global Investors in London, where she co-managed the core enhanced UK equity product, and the UK Equity Market Neutral hedge fund. At Henderson she was an analyst on the media sector. After some time living in Kenya, as head of research for Old Mutual Asset Management, she returned to the UK and worked at Threadneedle Investors in London before moving to Edinburgh. Anna joined the Amati team in 2018 from Adam and Company, where she led research for the PAM-award winning wealth manager. She brought her expertise running the successful AIM-listed portfolio service to Amati as well as a breadth of experience in managing substantial OEICs, private client and charity portfolios. She has been a CFA Charterholder since 2003. Scott McKenzie Fund Manager Scott McKenzie joined Amati in April 2021 and has over 25 years of experience managing UK equity portfolios. His career began in Glasgow at Britannia IM in the early 90s before moving to London with Aviva Investors in 1999. He returned to Scotland in 2005, joining Martin Currie where he remained until 2009. After a period running his own private businesses, he joined Saracen Fund Managers in 2014 where he launched the TB Saracen UK Income fund and also became manager of the TB Saracen UK Alpha fund. He left Saracen in March 2021 having led both funds to top quartile rankings in their sector. Amati AIM VCT plc Annual Report & Financial Statements 2023 14 Investment Portfolio as at 31 January 2023 Original Amati VCT Fair value bookcost at Aggregate Fair movement Market % 4 May 2018 # Cost Cost** value in year Cap Industry Yield NTM of net Company name £'000 £'000 £'000 £'000 £'000 £m Sector % assets Keywords Studios plc 1 323 4,851 5,174 14,434 1,626 2,217.8 Information 0.1% 7.2 Technology TB Amati UK Listed Smaller 3,331 6,482 9,813 12,558 (3,053) - Financials 2.8% 6.2 Companies Fund Polarean Imaging plc 1 - 5,081 5,081 9,781 (4,402) 85.2 Health Care - 4.9 Learning Technologies Group plc 1,3 780 3,771 4,551 9,674 (1,856) 1,106.8 Information 0.9% 4.8 Technology AB Dynamics plc 1 209 2,370 2,579 8,174 1,549 416.6 Industrials 0.3% 4.1 Ensilica plc 1 - 2,450 2,450 4,753 2,303 73.0 Information - 2.4 Technology MaxCyte Inc. 1 449 1,536 1,985 4,713 160 483.4 Health Care - 2.3 Water Intelligence plc 2 180 1,038 1,218 4,643 (2,281) 110.8 Industrials - 2.3 GB Group plc 2,3 236 2,967 3,203 3,978 (3,426) 891.0 Information 1.2% 2.0 Technology Aurrigo International plc 1 - 2,085 2,085 3,475 1,390 33.3 Industrials - 1.7 Top Ten 38,139 76,183 (7,990) 37.9 Amryt Pharma plc - 1,573 1,573 3,366 1,265 1,517.2 Health Care - 1.7 Ordinary shares & ADRs 1 Northcoders Group plc 1 - 2,111 2,111 3,305 (40) 23.1 Consumer 1.0% 1.6 Discretionary Sosandar plc 1 - 1,872 1,872 3,182 (62) 56.5 Consumer - 1.6 Discretionary Craneware plc 2,3 298 3,601 3,899 3,051 (1,139) 504.7 Health Care 1.7% 1.5 Frontier Developments plc 1 341 4,357 4,698 3,017 (5,611) 190.8 Communication - 1.5 Services Chorus Intelligence Limited - 301 301 150 (151) - Information - 0.1 Ordinary Shares 1 Technology Chorus Intelligence Limited - 2,699 2,699 2,699 - - Information 10.0% 1.3 10% Convertible loan notes 1,4 Technology Quixant plc 2 419 3,777 4,196 2,841 157 108.4 Consumer 1.7% 1.4 Discretionary Solid State plc 2 259 261 520 2,709 517 148.0 Industrials 1.6% 1.3 Saietta Group plc 1,3 - 5,100 5,100 2,575 (8,690) 49.4 Consumer - 1.3 Discretionary Velocys plc 1 - 2,248 2,248 2,483 (956) 64.3 Energy - 1.2 Top Twenty 67,356 105,561 (22,700) 52.4 Intelligent Ultrasound plc 1 - 2,194 2,194 2,158 (871) 32.0 Health Care - 1.1 Anpario plc 2 276 1,553 1,829 2,154 (1,632) 79.2 Health Care 3.0% 1.1 Diaceutics plc 1 - 1,557 1,557 2,151 (20) 88.7 Health Care - 1.1 Amati AIM VCT plc Annual Report & Financial Statements 2023 15 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Original Amati VCT Fair value bookcost at Aggregate Fair movement Market % 4 May 2018 # Cost Cost value in year Cap Industry Yield NTM of net Company name £'000 £'000 £'000 £'000 £'000 £m Sector % assets Eneraqua plc 1 - 1,955 1,955 2,047 226 96.3 Industrials 0.4% 1.0 Brooks Macdonald Group plc 2 - 1,154 1,154 1,974 (315) 356.3 Financials 3.5% 1.0 Arecor Therapeutics plc 1 - 1,910 1,910 1,857 (1,096) 67.4 Health Care - 0.9 Accesso Technology Group plc 1,3 - 221 221 1,809 150 338.6 Information - 0.9 Technology SRT Marine Systems plc 1 709 465 1,174 1,771 39 83.5 Information - 0.9 Technology Belvoir Group plc 1 404 379 783 1,449 (581) 67.9 Real Estate 5.1% 0.7 Clean Power Hydrogen plc 1 - 2,500 2,500 1,333 (1,167) 64.4 Industrials - 0.7 Equals Group plc 1 - 1,137 1,137 1,264 134 154.2 Information - 0.6 Technology Aptamer Group plc 1 - 3,676 3,676 1,194 (2,891) 26.2 Health Care - 0.6 Ixico plc 1 - 1,367 1,367 1,123 (1,220) 11.1 Health Care - 0.6 Getech Group plc 1 - 1,700 1,700 1,082 (1,190) 9.4 Energy - 0.5 One Media iP Group plc 1 - 1,240 1,240 1,063 (89) 13.3 Financials - 0.5 Fusion Antibodies plc 1 565 1,779 2,344 1,054 (1,100) 11.7 Health Care - 0.5 Angle plc 1 - 1,615 1,615 937 (2,681) 75.6 Health Care - 0.5 Elexsys Energy Ordinary Shares 1 - 200 200 - (200) - Information - - Technology Elexsys Energy 8% Convertible - 1,800 1,800 900 (900) - Information - 0.4 loan notes 1,4 Technology Byotrol plc Ordinary Shares 1 511 348 859 500 (425) 9.1 Materials 0.0% 0.2 Byotrol plc 9% Convertible loan notes 1,4 - 350 350 353 3 - Materials 8.9% 0.2 Kinovo plc 2 - 1,681 1,681 711 (151) 20.5 Industrials - 0.4 Property Franchise Group plc (The) 2 155 197 352 708 (218) 76.9 Real Estate 5.6% 0.4 Velocity Composites plc 1 496 307 803 644 414 20.4 Industrials - 0.3 Flylogix Limited Ordinary Shares 1 - 300 300 - (300) - Information - - Technology Flylogix Limited - 2,700 2,700 625 (2,075) - Information - 0.3 10% Convertible loan notes 1,4 Technology Hardide plc 1 695 1,666 2,361 588 (904) 7.7 Materials - 0.3 Netcall plc 2 - 110 110 581 153 152.0 Information 0.9% 0.3 Technology Block Energy plc 1 - 3,000 3,000 563 (26) 7.5 Energy - 0.3 Rua Life Sciences plc 1 - 955 955 461 24 12.9 Health Care - 0.2 Verici Dx Limited 1 - 800 800 440 (1,360) 18.7 Health Care - 0.2 Zenova Group plc - 750 750 414 (178) 9.8 Materials - 0.2 Science in Sport plc 2 811 1,145 1,956 390 (1,589) 22.4 Consumer Staples - 0.2 Strip Tinning Holdings plc 1 - 1,054 1,054 342 (712) 9.3 Industrials - 0.2 Eden Research plc 1 - 401 401 334 (83) 19.0 Materials - 0.2 Brighton Pier Group plc (The) 1 314 175 489 269 (68) 26.5 Consumer - 0.1 Discretionary Amati AIM VCT plc Annual Report & Financial Statements 2023 16 Original Amati VCT Fair value bookcost at Aggregate Fair movement Market % 4 May 2018 # Cost Cost** value in year Cap Industry Yield NTM of net Company name £'000 £'000 £'000 £'000 £'000 £m Sector % assets Glantus Holdings plc 1 - 3,000 3,000 265 (2,235) 3.4 Information - 0.1 Technology Creo Medical Group plc 1,3 - 1,613 1,613 252 (1,271) 35.4 Health Care - 0.1 Rosslyn Data Technologies plc 1 614 1,308 1,922 247 (952) 2.4 Information - 0.1 Technology Synectics plc 2 - 342 342 171 48 22.2 Information 2.3% 0.1 Technology Falanx Cyber Security Limited 1 - 686 686 153 (180) 2.4 Industrials - 0.1 Trellus Health plc 1 - 700 700 140 (507) 12.9 Health Care - 0.1 MyCelx Technologies Corporation 1 440 205 645 121 (174) 6.9 Industrials - 0.1 In The Style Group plc 1 - 1,447 1,447 56 (595) 4.0 Consumer - - Discretionary FireAngel Safety Technology Group plc 1 - 690 690 55 (36) 15.8 Consumer - - Discretionary Bonhill Group plc 1 - 670 670 54 (29) 7.8 Communication - - Services Merit Group plc 1 - 596 596 21 (10) 6.9 Communication - - Services Allergy Therapeutics plc 1 - 29 29 15 (52) 37.4 Health Care - - Investments held at nil value 691 - - - - Total investments 129,664 142,354 (51,592) 70.7 Net current assets 58,927 29.3 Net assets 129,664 201,281 100.0 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 on pages 60 and 67 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 plc 1 , Leisurejobs.com Limited 1 (previously The Sportweb.com Limited), Rated People Limited 1 , Sorbic International plc, TCOM Limited 1 , VITEC Global Limited 1 . 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%. Investment Portfolio (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 17 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Strategic Report Highlights Information Technology Health care Consumer Discretionary Financials Industrials Comm- unication Services Energy Materials Real Estate Consumer Staples Cash 2000 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 3,000 2,500 2,000 1,500 1,000 500 0 Market Capitalisation (£m) % 0 5 10 15 20 25 30 Keywords GP Group Learning Technologies AB Dynamics Water Intelligence Maxcyte Amryt Polarean Imaging Aurrigo Ensilica Qualifying portfolio The portfolio of qualifying investments in the Company as at 31 January 2023 is analysed in the graph below 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 below by sector. This includes a sector split of the investments Source: Amati Global Investors as at 31 January 2023 within the TB Amati UK Listed Smaller Companies Fund which in the Investment Portfolio table on pages 14 to 16 is classed as Financials. Analysis as at 31 January 2023 Amati AIM VCT plc Annual Report & Financial Statements 2023 18 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 on 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. Investment Policy, Investment Objectives and Investment Strategy Amati AIM VCT plc Annual Report & Financial Statements 2023 19 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Strategic Report Highlights 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 page 29; • 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; • Comparison against the Numis Alternative Markets Total Return Index. See graph on page 46; • Dividend distributions. See table of investor returns on page 2; • Share price. See key data on page 1; and • Ongoing charges ratio. See key data on page 1. Amati AIM VCT plc Annual Report & Financial Statements 2023 20 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. Fund Management and Key Contracts Amati AIM VCT plc Annual Report & Financial Statements 2023 21 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Strategic Report Highlights Principal and Emerging Risks Potential Risk Potential Impact Mitigation Investment Risk A substantial portion of the Company’s investments is in small AIM traded companies as well as some unquoted companies. By their nature these investments involve a higher degree of risk than investments in larger fully listed companies. These companies tend to have limited product lines and niche markets. They can be reliant on a few key individuals. They can be dependent on securing further ﬁnancing. With the changes to VCT regulations introduced in the Finance Act 2018 focusing investment in knowledge based companies, newer investments may well be made at an earlier stage in the lifecycle and may result in a reduced exposure to asset based businesses leading to increased volatility in the value of an investee company’s shares. Further, the majority of the new investments will be in companies which have invested in developing and commercialising intellectual property, which brings with it the risk that another company might develop superior technology, or that the commercialisation strategy may fail. In addition, the liquidity of these shares can be low and the share prices volatile. To reduce the risk, the Board places reliance upon the skills and expertise of the Manager and its strong track record for investing in this segment of the market. Investments are actively and regularly monitored by the Manager and the Board receives detailed reports on the portfolio in addition to the Manager’s report at regular Board meetings. The Manager also seeks to limit these risks through building a diversiﬁed portfolio with companies in different areas within sectors and markets at different stages of development. Investments in unquoted companies in particular are subject to strict controls and investment limits in recognition of the signiﬁcant risks involved. In relation to investments of this nature there is an expectation that the investee company is likely to seek admission to AIM, in order to de-risk the investment, to the extent that this is possible, within an acceptable time frame. It may be that an investment is realised via a trade sale as this option is always a possibility. The Manager ensures Board representation or monitoring is a requirement of the investment agreement and, if a listing or trade sale do not occur, will continue to oversee board and operational management performance. 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: Amati AIM VCT plc Annual Report & Financial Statements 2023 22 Potential Risk Potential Impact Mitigation Compliance Risk The Company has a premium listing on the London Stock Exchange and is required to comply with the rules of the UK Listing Authority, as well as with the Companies Act, Financial Reporting Standards and other legislation. Failure to comply with these regulations could result in a delisting of the Company’s shares, or other penalties under the Companies Acts or from ﬁnancial reporting oversight bodies. The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019 (“AIFMD”) is a directive affecting the regulation of VCTs. Amati AIM VCT has been entered in the register of small, registered UK AIFMs on the Financial Services register at the Financial Conduct Authority (“FCA”). As a registered ﬁrm there are a number of regulatory obligations and reporting requirements which must be met in order to maintain its status as an AIFM. Board members and the Manager have considerable experience of operating at senior levels within quoted businesses. In addition, the Board and the Manager receive regular updates on new regulations from the auditor, lawyers, the Company Secretary and other professional bodies. Venture Capital Trust Approval Risk The current approval as a venture capital trust allows investors to take advantage of income tax reliefs on initial investment and ongoing tax-free capital gains and dividend income. Failure to meet the qualifying requirements could result in investors losing the income tax relief on initial investment and loss of tax relief on any tax-free income or capital gains received. In addition, failure to meet the qualifying requirements could result in a loss of listing of the shares. 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 to the VCT and EIS schemes, which have been a crucial source of funding for new and innovative businesses in the UK. To reduce this risk, the Board has appointed the Manager which has signiﬁcant experience in venture capital trust management and is used to operating within the requirements of the venture capital trust legislation. In addition, to provide further formal reassurance, the Board has appointed Philip Hare & Associates as VCT Status Adviser to the Company. Philip Hare & Associates reports every six months to the Board to conﬁrm compliance with the venture capital legislation, to highlight areas of risk and to inform on changes in legislation independently. Other tax reliefs such as tax-free dividends and exemption from capital gains tax would remain unaffected by the sunset clause. 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 has previously set out an intention to continue the scheme, we currently await further clarity on the details. Principal and Emerging Risks (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 23 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Strategic Report Highlights Economic Risk Events such as economic recession, not only in the UK, but also in the core markets relevant to our investee companies, together with a movement in interest rates, can affect investor sentiment towards liquidity risk, and hence have a negative impact on the valuation of smaller companies. The economic future for the UK and the wider world would appear to be as uncertain as it has ever been in the last few decades. Actual war in Europe and the possibility of war in the East combine to give grave concern for the future. This follows two years of the Covid-19 pandemic and the ensuing impacts on the UK and global economies where government debt has not been as high as it is now since World War 2. Government actions to deal with Covid-19 and to boost the economy during the pandemic now result in rising inﬂation and therefore interest rates, the impacts on the The Manager seeks to mitigate economic risk by seeking to adopt a suitable investment style for the current point in the business cycle, and to diversify the exposure to geographic end markets. Potential Risk Potential Impact Mitigation Internal Control Risk Failures in key controls within the Board or within the Manager’s business could put assets of the Company at risk or result in reduced or inaccurate information being passed to the Board or to shareholders. Inadequate or failed controls might result in breaches of regulations or loss of shareholder trust. The Manager operates a robust risk management system which is reviewed regularly to ensure the controls in place are effective in reducing or eliminating risks to the Company. Details of the Company’s internal controls are on page 41. The Board seeks to mitigate the internal control risk by setting policy, regular reviews of performance, enforcement of contractual obligations and monitoring progress and compliance. Financial Risk By its nature, as a venture capital trust, the Company is exposed to market price risk, credit risk, liquidity risk, interest rate risk and currency risk. The Company’s policies for managing these risks are outlined in full in notes 15 to 18 to the ﬁnancial statements on pages 72 to 74. The Company is ﬁnanced wholly through equity. Amati AIM VCT plc Annual Report & Financial Statements 2023 24 Potential Risk Potential Impact Mitigation Principal and Emerging Risks (continued) Economic Risk (continued) cost of living being exacerbated by rising energy prices caused by poor Government energy policy decision-making in the rush to go green, reliance for energy supplies on countries with corrupt regimes and the impact of the Russian invasion into Ukraine. The Covid-19 pandemic and the measures taken to control the outbreak had already led to volatility in stock markets and other ﬁnancial markets in the UK and a downturn in the UK economy. The future development and long-term impacts of the outbreak are unknown. Despite a permanent trade agreement between the UK and EU and the end of the transition period on 31 December 2020 there remains uncertainty and potential volatility in markets and for the economy while practicalities are addressed. Operational Risk Failure of the Manager’s, or other contracted third parties’, accounting systems or disruption to their businesses might lead to an inability to provide accurate reporting and monitoring or loss to shareholders. The Manager regularly reviews the performance of third-party suppliers at monthly management meetings and the Board consider at quarterly board meetings. Concentration Risk Although the Company has a diversiﬁed portfolio of investments, the twenty largest investments account for just over half of the total investments. A material fall in any one investment can have a signiﬁcant impact on the overall net asset value. Portfolio weighting limits apply to the portfolio’s largest holdings such that no holding is allowed to approach a size of 10% of the portfolio, with action normally taken well before that level particularly where the shares have become overbought with no underlying earnings justiﬁcation. Amati AIM VCT plc Annual Report & Financial Statements 2023 25 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Strategic Report Highlights 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. 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. Section 172 Statement Directors’ Duty to Promote the Success of the Company Stakeholder Importance Board Engagement Shareholders Continued shareholder support and engagement are critical to the continuing existence of the business and its future growth. The Board places great importance on communication with its shareholders and encourages shareholders to attend the AGM and an annual investor event and welcomes communication from shareholders as described more fully on page 39 in the Statement of Corporate Governance. Amati AIM VCT plc Annual Report & Financial Statements 2023 26 Stakeholder Importance Board Engagement Investment Manager The Manager’s performance is fundamental for the Company to successfully deliver its investment strategy, meet its investment objective and its long-term success. The Board’s decisions are intended to achieve the Company’s objective to generate tax free capital gains and income on investors’ funds and maintaining the Company’s status as a VCT is a critical element of this. The Board regularly monitors the Company’s performance in relation to its investment objectives and seeks to maintain a constructive working relationship with the Manager. Representatives of the Manager attend each quarterly board meeting and provide an update on the investment portfolio along with presenting on macro- economic issues. The Board also expects good standards at the companies within which the Company is invested and, as described on page 28, the manager remains a signatory to the UK Stewardship Code, and the Principles for Responsible Investment. Other service providers including: the registrar, the receiving agent, the tax adviser, the auditor, the lawyers, the Company Secretary and the Fund Accountant In order to function as an investment trust with a premium listing on the London Stock Exchange, the Company engages a diverse and experienced range of advisors for support with meeting all relevant obligations. The Board maintains regular contact with its key external service providers, and the quality of the provision of these services is considered by the Board at Board meetings, as well as being subject to a more formal annual review of both performance and fees by the Remuneration Committee. Investee companies The Company’s performance is directly linked to the performance of its underlying investee companies and accordingly communication with those entities is regarded as very important. The Manager does not have board representation in any quoted investee company but does interact with Directors and senior management of quoted investee companies regularly. The Manager does ensure direct or indirect representation is achieved on the boards of unquoted companies. The Board’s primary focus in promoting the long-term success of the Company for the beneﬁt of the members as a whole is to direct the Company with a view to achieving the investment objective in a manner consistent with its stated investment policy and strategy. Section 172 Statement Directors’ Duty to Promote the Success of the Company (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 27 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Board appointments Continuing to develop and evolve the Board, so that it contains an appropriate mix of skills, diversity and experience is important to promote the long-term success of the Company. During the year, the Board was pleased to appoint Fiona Wollocombe as Chairman of the Board with effect from the end of the AGM held on 16 June 2022. Fiona’s appointment ensured an orderly succession for the previous Chairman, Peter Lawrence, who retired from the Board at the end of the 2022 AGM. In addition, the Board was pleased to appoint Julia Henderson as Chair of the Remuneration Committee. Julia’s appointment followed the resignation of Susannah Nicklin as a non-executive Director of the Company. Julia remains Chair of the Nomination Committee. The Nomination Committee and the Board considered the Board composition and agreed that the current composition of the Board (being three directors) was ﬁt for the current requirements of the Company for the time being, however will continue to review evolving the Board in line with the current and future needs of the Company. During the year the Directors discussed these and re- afﬁrmed 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: 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. Principal Decision Long-term impact Stakeholder Engagement To cancel the Company’s share premium The share premium cancellation improved the Company’s distributable reserves position. An improved distributable reserves position will provide the Company with ﬂexibility to support dividend payments or other distributions to shareholders and support Company share buybacks. The Board considered the direction and future aims of the Company, and at the June 2022 AGM put forward a special resolution to Shareholders to cancel the entire amount standing to the credit of the Company’s share premium account. Following overwhelming shareholder support for the proposal (97.9%), the Company commenced Court proceedings to cancel the share premium and sought the consent of its creditors as part of due process. Amati AIM VCT plc Annual Report & Financial Statements 2023 28 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. Section 172 Statement Directors’ Duty to Promote the Success of the Company (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 29 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights 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. Other Matters Amati AIM VCT plc Annual Report & Financial Statements 2023 30 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 Other Matters (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 31 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Fiona Wollocombe Chairman of the Board Fiona Wollocombe was appointed to the Board in June 2021 and was appointed Chairman at the end of the AGM in June 2022. She is also chairman of Kings Arms Yard VCT plc and chair of the Trustees of the Scottish Ballet Endowment Fund. Her previous career was in equity capital markets at NatWest Markets and Deutsche Bank. She has previously held non-executive director roles for a number of other companies in the VCT sector including being chairman of Artemis VCT Plc and of Maven Income and Growth VCT PLC. Relevant skills and experience and reasons for re-election: Fiona brings strong banking, ﬁnancial and investment trust skills to the Board. Her extensive knowledge and experience within the VCT industry help facilitate open conversation, constructive challenge of the Manager, and contribute to strategic discussions in her role as Chairman of the Board. Following a comprehensive board evaluation process, the board agreed that Fiona continues to be an effective Chairman and member of the Board. Board of Directors Brian Scouler Non-Executive Director and Chairman of the Audit Committee Brian Scouler joined the Board in May 2018. Prior to this he was a non executive director of Amati VCT plc which merged with the Company in May 2018. He spent 25 years in Private Equity in senior roles with Charterhouse, Royal Bank of Scotland and Dunedin. He has wide experience of buying and selling private companies and investment portfolio management, sitting on numerous investee company boards. He was formerly manager of a quoted investment trust and a member of the steering committee of LPEQ, the listed private equity group. He is a Chartered Accountant. Relevant skills and experience and reasons for re-election: Brian’s experience in company and investment portfolio management brings valuable business and ﬁnancial skills to the Board. This enables him to assess the ﬁnancial position of the Company and its projections, and to lead discussions regarding the Company’s risk management framework and risk appetite. Brian’s experience of managing audit relationships helps inform his role as Chairman of the Audit Committee. Following a comprehensive board evaluation process, the board agreed that Brian continues to be an effective member of the Board. Julia Henderson Non-Executive Director and Chairman of the Remuneration and Nominations Committees Julia Henderson joined the Board in May 2018. Prior to this she was a non executive director of Amati VCT plc which merged with the Company in May 2018. She has specialised in advising quoted and unquoted companies for over thirty years. Her corporate ﬁnance career began at ANZ Merchant Bank after which she became a cofounder and a director of Beeson Gregory Limited, a mid-market investment bank. Since 2004 she has been an independent consultant, chairman and non-executive director to companies across a broad range of sectors. Previous non-executive directorships include Alkane Energy plc, ECO Animal Health Group plc, GTL Resources plc and TP Group plc. Relevant skills and experience and reasons for re-election: Julia’s extensive experience in investment banking and as a non- executive director provides valuable insight to the board. Her experience aids constructive challenge in the boardroom. Following a comprehensive board evaluation process, the board agreed that Julia continues to be an effective member of the Board. Amati AIM VCT plc Annual Report & Financial Statements 2023 32 The Statement of Corporate Governance on pages 36 to 39 forms part of the Directors’ Report. Principal Activity and Status The Company is registered as a public limited company under the Companies Act 2006 (Registration number 04138683). The address of the registered ofﬁce is 8th ﬂoor, 100 Bishopsgate, London, EC2N 4AG. The principal activity of the Company is to invest in a portfolio of companies whose shares are primarily traded on AIM. The Directors have managed, and intend to continue to manage, the Company’s affairs in such a manner as to comply with section 274 of the Income Tax Act 2007. A review of the Company’s business during the year is contained in the Chairman’s Statement and Fund Manager’s Review. Directors The Directors of the Company during the year under review were Fiona Wollocombe, who was appointed as Chairman of the Board in June 2022, Julia Henderson, Brian Scouler, Peter Lawrence, who resigned as Director of the Company on 16 June 2022 and Susannah Nicklin, who also resigned as Director of the Company on 19 September 2022. The Company indemniﬁes its Directors and ofﬁcers and has purchased insurance to cover its Directors. The rules concerning the appointment and replacement of Directors are contained within the Company’s Articles of Association and the Companies Act 2006. The Articles of Association can be amended by shareholders at a General Meeting. Conflicts of Interest Each Director has a statutory duty to avoid a situation where they have, or could have, a direct or indirect interest which conﬂicts, or may conﬂict with the interests of the Company. A Director will not be in breach of that duty if the relevant matter has been authorised in accordance with the Articles. The Board has approved a protocol for identifying and dealing with conﬂicts and has resolved to conduct a regular review of actual or possible conﬂicts and any authorised conﬂicts at every Board meeting. No conﬂicts or potential conﬂicts were identiﬁed during the year. Management The Company’s investments are managed by Amati Global Investors Limited, subject to an Investment Management Agreement dated 30 September 2019 (the “Agreement”) which was an update from the original agreement dated 19 March 2010. Pursuant to the Agreement, Amati is entitled to an investment management fee of 1.75% per annum charged on the net asset value of the Company at the quarter end, payable quarterly in arrears. The Manager rebates the fee it receives for the management of the Company’s investment in the TB Amati UK Listed Smaller Companies Fund. The Manager waived the right granted in the original Agreement to receive a performance fee. The Agreement may be terminated by either party with twelve months’ notice. There are several events that could allow immediate termination by the Company, including insolvency, material breach, loss of FCA authorisation, a change of control of the Manager, and Paul Jourdan, CEO of the Manager, ceasing to have an active role in the management of the portfolio, unless a replacement acceptable to the Company is appointed within twenty business days. Manager Evaluation During the year, the Board reviewed the appropriateness of the Manager’s appointment. In carrying out its review, the Board considered the skills, experience, resources and commitment of the Manager together with the investment performance, management processes, risk controls and the quality of support provided to the Board during the year and since its appointment. It also considered the length of the notice period of the investment management agreement and the fees payable to the Manager. Following this review, it is the Directors’ opinion that the continuing appointment of Amati Global Investors Limited as Manager is in the interests of shareholders as a whole. Among the reasons for this view in particular are the Company’s long-term investment performance relative to that of the markets in which the Company invests, as well as the depth and experience of the research capability of the Manager. The Directors approved the continued appointment of the Manager in line with existing terms. Directors’ Report Amati AIM VCT plc Annual Report & Financial Statements 2023 33 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Dividend The Company paid an interim dividend of 3.5p per share on 25 November 2022. As stated in the Chairman’s Statement on page 5, the Board has declared payment of a ﬁnal dividend of 3.5 pence per share for the ﬁnancial year ending 31 January 2023. The dividend will be paid on 21 July 2023 to shareholders on the register on 16 June 2023. The ex-dividend date will be 15 June 2023. The last day for DRIS elections is 30 June 2023. Share Capital There were 151,548,993 ordinary shares in issue at the year end. During the year 15,042,328 shares in the Company were allotted as a result of offers at an average price of 166p per share raising £24.9m net of issue costs. 1,575,001 shares in the Company were allotted as a result of the Dividend Re-investment Scheme. During the year 1,789,133 shares in the Company with a nominal value of 5p per share were bought back for an aggregate consideration of £2.4m at an average price of 136p per share (representing 1.2% of the shares in issue at 31 January 2023). Since the year end, 498,817 shares have been bought back for an aggregate consideration of £0.6m at an average price of 119p per share. All of the shares were cancelled after purchase. The purpose of the share buybacks was to satisfy demand from those shareholders who sought to sell their shares during the period, given that there is a very limited secondary market for shares in Venture Capital Trusts generally. It remains the Board’s policy to buy back shares in the market, subject to the overall constraint that such purchases are in the Company’s interest including the maintenance of sufﬁcient resources for investment in new and existing investee companies and the continued payment of dividends to shareholders. At the Company’s year-end, authority remained for the Company to buy back 21,111,486 shares. The rights and obligations attached to the Company’s ordinary shares are set out in the Company’s Articles of Association, copies of which can be obtained from Companies House. The Company has one class of share, ordinary shares, which carry no right to ﬁxed income. The holders of ordinary shares are entitled to receive dividends when declared, to receive the Company’s report and accounts, to attend and speak at general meetings, to appoint proxies and to exercise voting rights. There are no restrictions on voting rights and no restrictions concerning the transfer of shares in the Company except that certain restrictions may from time to time be imposed by laws and regulations (for example, insider trading laws). There are no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; and no agreements to which the Company is a party that might change or fall away on a change of control or trigger any compensatory payments for Directors, following a successful takeover bid. Annual General Meeting The notice of the Annual General Meeting to be held on 15 June 2023 is set out on pages 79 to 84. The Company intends for the meeting to be in person at the Barber-Surgeons’ Hall and it will be live-streamed for those who wish to view it. An investor event will be held in the usual format after the formal business of the AGM, which is proposed to be live-streamed. Please note that live-streaming will only allow participants to view the meeting and presentation, they will not have the ability to vote, or ask questions. Shareholders wishing to ask questions may do so by emailing the Manager at [email protected]. Instructions on how to watch the meeting live, as well as further information on the AGM and investor event, can be found on page 6. Resolution 9 – Authority to allot shares (ordinary resolution) Section 551 of the Companies Act 2006 provides that the Directors may not allot new shares without shareholder approval. Resolution 9 seeks to renew the Directors’ authority to allot shares up to a maximum nominal amount of £2,266,000, representing approximately 30 per cent. of the Company’s total issued ordinary share capital as at 17 April 2023 (being the latest practicable date prior to publication of this document). As at 17 April 2023, the Company did not hold any ordinary shares in treasury. The authority will expire at the end of the Annual General Meeting of the Company to be held in 2024, unless previously renewed, varied or revoked by the Company in general meeting. The Directors intend to use this authority for the purposes described below under Resolution 10. The Directors will only issue new shares at a price at, or at a premium to, the NAV per share at the time of issuance. Amati AIM VCT plc Annual Report & Financial Statements 2023 34 Directors’ Report (continued) Resolution 10 – Disapplication of pre-emption rights (special resolution) Resolution 10 seeks to renew the Directors’ authority to allot equity securities for cash without ﬁrst having to offer such securities to existing shareholders pro rata to their existing holdings. This will include the sale on a non pre-emptive basis of any shares the Company holds in treasury for cash. The Directors will only issue new shares at a price at, or at a premium to, the NAV per share at the time of issuance. The authority is limited to: (i) an aggregate nominal amount of £1,964,000 (representing approximately 26 per cent. of the issued share capital of the Company (excluding treasury shares) as at the date of this document) pursuant to one or more offers for subscription of the Company; and (ii) an aggregate nominal amount of £302,000 (representing approximately 4 per cent. of the issued share capital of the Company (excluding treasury shares) as at the date of this document) pursuant to the dividend reinvestment scheme operated by the Company. The authority will expire at the end of the Annual General Meeting of the Company to be held in 2024, unless previously renewed, varied or revoked by the Company in general meeting. This power will be exercised only if, in the opinion of the Directors, it would be in the best interests of shareholders as a whole. Resolution 11 – Authority for the Company to purchase its own shares (special resolution) Resolution 11 authorises the Company to purchase up to 14.99 per cent. of the issued ordinary share capital of the Company as at the date of the passing of Resolution 11. As at 17 April 2023 this would equate to 22,642,421 ordinary shares. Purchases will be made on the open market and Resolution 11 speciﬁes the minimum and maximum prices which may be paid for any ordinary shares purchased under this authority and all purchases would be made in accordance with the provisions of the Companies Act 2006 and the Listing Rules. The Board currently intends to cancel those shares purchased. Such authority will expire at the end of the Annual General Meeting of the Company to be held in 2024, unless previously cancelled or varied by the Company in general meeting. Resolution 12 – Notice period for general meetings (special resolution) Under the Companies Act 2006, the notice period required for all general meetings of the Company is 21 clear days. AGMs will always be held on at least 21 clear days’ notice, but shareholders can approve a shorter notice period for other general meetings. The Board believes that it is in the best interests of shareholders of the Company to have the ability to call meetings on no less than 14 clear days’ notice should a matter require urgency. The Board is therefore proposing Resolution 12 to approve the reduction in the minimum notice period from 21 clear days to 14 clear days for all general meetings other than AGMs. The Directors do not intend to use less than 21 clear days’ notice unless immediate action is required. Independent Auditor Following an evaluation of the auditor, the Board proposes that BDO LLP be reappointed as independent auditor to the Company at the AGM. Accordingly resolutions will be proposed at the AGM for the reappointment of BDO LLP and to authorise the Directors to agree the independent auditor's remuneration. Further details regarding the audit assessment can be found in the Audit Committee report on page 42. Substantial Shareholdings 31 January As at the date 2023 of this report No of % of No of % of ordinary shares ordinary shares shares held in issue shares held in issue Hargreaves Lansdown (Nominees) Limited 6,609,475 4% 6,557,166 4% Re-election of Directors In accordance with the AIC Code of Corporate Governance, all Directors are proposed for re-election at the upcoming AGM. Biographical details of all Directors and their reasons for re-election are set out on page 31. Going Concern In accordance with FRC Guidance for Directors on going concern and liquidity risk 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. Amati AIM VCT plc Annual Report & Financial Statements 2023 35 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights In making this assessment, 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 investments. The Company’s business activities, together with the factors likely to affect its future development, performance and position including the ﬁnancial risks the Company is exposed to are set out in the Strategic Report on pages 4 to 30. 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 and the continued increasing in inﬂation and interest rates. The longer term economic outlook is difﬁcult to predict but in considering preparing the accounts on a going concern basis the Directors noted the Company holds a portfolio of liquid investments and cash balances whose value is a multiple of liabilities. The Directors are of the view that the Company can meet its obligations as and when 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 Investment Manager and the Company’s third party service providers have contingency plans to ensure the continued operation of their business in the event of disruption. The Board is satisﬁed that there has been no impact to the services provided during the year and are 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 continue to be prepared on the going concern basis. Accountability and Audit The independent auditor’s report is set out on pages 48 to 54 of this annual report. The Directors who were in ofﬁce on the date of approval of these Annual Report and Financial Statements have conﬁrmed that, as far as they are aware, there is no relevant audit information (as deﬁned by Section 418(3) of the Companies Act 2006) of which the auditor is unaware. Each of the Directors has taken all the steps they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor. Listing Rule Disclosure The Company conﬁrms that there are no items which require disclosure in relation to Listing Rule 9.8.4 in respect of the year ended 31 January 2023. Financial Instruments The Company’s ﬁnancial instruments comprise equity and ﬁxed interest investments, cash balances and liquid resources including debtors and creditors. Further details, including details about risk management, are set out in the Strategic Report and in notes 14 to 18 on pages 70 to 74. Future Developments Signiﬁcant events which have occurred after the year end are detailed in note 20 on page 75. Future developments which could affect the Company are discussed in the outlook sections of the Chairman’s Statement and Fund Manager’s Review. On behalf of the Board Fiona Wollocombe Chairman 17 April 2023 Background The Board of Amati AIM VCT plc has considered the Principles and Provisions of the AIC Code of Corporate Governance (“AIC Code”). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the “UK Code”), as well as setting out additional Provisions on issues that are of speciﬁc relevance to the Company as a venture capital trust. The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information to shareholders. The Company has complied with the Principles and Provisions of the AIC Code except as set out below: • Provision 14: the Board has determined that the size of the Board does not warrant the appointment of a senior independent director. • Provision 17: given the size of the Board, the Directors feel it is unnecessarily burdensome to set up a separate management engagement committee, and the Remuneration Committee therefore reviews the performance of the Manager, as well as other service providers, annually. The AIC Code is available on the AIC website (www.theaic.co.uk). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies. The UK Code is available from the Financial Reporting Council’s website at www.frc.org.uk. For the reasons set out in the AIC Code, the Board considers that the provisions relating to the role of chief executive, executive directors’ remuneration and the need for an internal audit function are not relevant to the position of the Company, due to the size and specialised nature of the Company, the fact that all Directors are independent and non-executive, and the costs involved. Board of Directors The Company has a Board of three Directors, all of whom are considered independent non-executive directors under the AIC Code. As all Directors have acted in the interests of the Company throughout the period of their appointment and demonstrated commitment to their roles, the Board recommends they be re-elected at the AGM. Statement of Corporate Governance The Company may by ordinary resolution appoint any person who is willing to act as a Director, either to ﬁll a vacancy or as an additional Director. No Director has a service contract with the Company. All of the Directors have been provided with letters of appointment, which are available for inspection by shareholders immediately before and after the Company’s annual general meeting. Directors are provided with key information on the Company’s activities including regulatory and statutory requirements and internal controls by the Manager. The Manager, in the absence of explicit instructions from the Board, is empowered to exercise discretion in the use of the Company’s voting rights. All shareholdings are voted, where practical, in accordance with the Manager’s own corporate governance policy, which is to seek to maximise shareholder value by constructive use of votes at company meetings and by endeavouring to use its inﬂuence as an investor with a principled approach to corporate governance. The AIC Code states that the Board should have a formal schedule of matters speciﬁcally reserved to it for decision, to ensure that it has ﬁrm direction and control of the Company. This is achieved by an investment management agreement between the Company and the Manager, which sets out the matters over which the Manager has authority and the limits above which Board approval must be sought. All other matters including strategy, investment and dividend policies, gearing and corporate governance proceedings are reserved for the approval of the Board of Directors. During the year, the Board reviewed and approved the schedule of matters reserved for the Board. All of the Directors are equally responsible for the proper conduct of the Company’s affairs. In addition, the Directors are responsible for ensuring that the policies and operations are in the best interests of all the Company’s shareholders and that the best interests of creditors and suppliers to the Company are properly considered. The Chairman and the Company Secretary establish the agenda for each Board meeting. The necessary papers for each meeting are distributed well in advance of each meeting ensuring all Directors receive accurate, timely and clear information. The Directors communicate regularly with each other, and with the Manager, on ongoing business between Board meetings. Amati AIM VCT plc Annual Report & Financial Statements 2023 36 Amati AIM VCT plc Annual Report & Financial Statements 2023 37 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Independence of Directors and Tenure The Board regularly reviews the independence of each Director and of the Board as a whole in accordance with the guidelines in the AIC Code, and during the reporting period, reviewed and approved the Board Tenure Policy. Directors’ interests are noted at the start of each Board meeting and any Director would not participate in the discussion concerning any investment in which he or she had an interest. The Board does not consider that length of service will necessarily compromise the independence or effectiveness of Directors and no limit has been placed on the overall length of service, although the Board does bear in mind the nine year provision relating to independence and length of service included in the AIC Code when looking at Board succession. The Board considers that such continuity and experience can be of signiﬁcant beneﬁt to the Company and its shareholders. The Board believes that each Director has demonstrated that they are independent in character and judgment and there are no relationships or circumstances which could affect their objectivity. Board Performance The Board carries out a performance evaluation of the Board, committees and individual Directors each year. In 2022 the evaluation was undertaken by the Company Secretary in the format of a board evaluation questionnaire covering a range of topics. Key outcomes of the evaluation were: • that the balance of skills is appropriate, and all Directors contribute fully to discussion in an open, constructive and objective way. • the composition of the Board and its committees is considered appropriate for the effective governance of the Company. The biographies of the Directors, set out on page 31, demonstrate the wide range of investment, commercial and professional experience and diversity of experience and background that they contribute. • each of the board committees are performing effectively. • the discussion at Board meetings is considered to be of a good quality. • succession planning has continued to be a focus for the Board. The Nomination Committee has carefully considered the size of the Board following the changes to its composition during the year, and has agreed that a Board of three is ﬁt for the current requirements of the Company for the time being. The Nomination Committee further agreed that it will continue to monitor and review the composition of the Board during 2023. Board Committees The Board has established three committees to assist with its operations, namely the Audit Committee, the Remuneration Committee and the Nomination Committee. Each of the committees’ delegated responsibilities are clearly deﬁned in formal terms of reference which are available on request from the Company Secretary and can be found on Amati’s website: https://www.amatiglobal.com/fund/amati- aimvct/the-board-1. Audit Committee The Report of the Audit Committee is included on pages 40 to 42 and forms part of this statement. Remuneration Committee The Directors’ Remuneration Report can be found on pages 43 to 46 of this report. Nomination Committee The Nomination Committee, chaired by Julia Henderson, comprises the full Board. Given the small size of the Board, this is felt to be appropriate as permitted by the AIC Code. It meets at least once annually to make recommendations to the Board on board structure, size and composition (including the knowledge, experience, skills and diversity of the Board). The Committee considers succession planning at each meeting, particularly in relation to the positions of the Chairman and the chair of the Audit Committee. In considering appointments to the Board, the Nomination Committee takes into account the ongoing requirements of the Company and the need to have a balance of skills and experience within the Board. Amati AIM VCT plc Annual Report & Financial Statements 2023 38 Peter Lawrence resigned as Chairman on 16 June 2022 and was replaced by Fiona Wollocombe and Susannah Nicklin resigned as Director on 19 September 2022. As a result, Julia Henderson was appointed as Chair of the Remuneration Committee. As disclosed above, the Committee will continue to review the composition of the Board and succession planning during 2023. Diversity The Board has considered the recommendations of the AIC Code on Corporate Governance concerning gender diversity and welcomes initiatives aimed at increasing diversity generally. The Board is clear that maintaining an appropriate balance around the board table through a diverse mix of skills, experience, knowledge, length of service and background is of paramount importance and gender diversity is a signiﬁcant element of this. Any search for new board candidates is conducted, and appointments made, on merit, against objective selection criteria having due regard, among other things, to the beneﬁts of diversity on the board. The Board therefore continues to consider that it would be inappropriate to set a target and will always appoint the best person for the job based on merit, and will not discriminate on the grounds of gender, race, ethnicity, religion, sexual orientation, age, physical ability or social background. The Directors are aware of the need to have a Board which, as a whole, comprises an appropriate balance of skills, experience and diversity. New regulations on diversity and inclusion will apply to the Company for its next ﬁnancial year ending 31 January 2024 and will require the company to report on a comply or explain basis against the following three key indicators: • 40% of the Board should be comprised of women. The Board meets this requirement and is composed solely of non-executive Directors and has 66% female representation. • At least one senior board position held by a woman. The Board meets this requirement with Fiona Wollocombe being Chairman of the Board. • Although not currently meeting the requirement that one Director should be from an ethnic minority background, this is something the Board will be mindful of in any future recruitment, providing a suitable candidate possesses the key skills and experience required for the position. The Company will include the prescribed disclosure tables in its next annual report. Board and Committee Meetings The following table sets out the Directors’ attendance at scheduled Board and committee meetings held during the year ended 31 January 2023. Board Audit Remuneration Nomination meetings committee committee committee meetings meetings meetings Director held attended held attended held attended held attended Peter Lawrence 2 2111111 Julia Henderson 4 4331122 Susannah Nicklin 3 3221111 Brian Scouler 4 4331122 Fiona Wollocombe 4 4331122 * resigned 16 June 2022 ** resigned 19 September 2022 The Board is in regular contact with the Manager between Board meetings. In addition to the above meetings, the Board met a number of times on an ad- hoc basis during the year to allot ordinary shares under the offer for subscription and to approve the application to the Court to execute the share premium cancellation as authorised by the shareholders at the 2022 AGM. Internal Control Details of the principal risks and internal controls applied by the Board are set out on pages 21 to 24. The disclosures on internal control and risk management procedures in the Report of the Audit Committee on page 41 form part of this Corporate Governance Statement. Statement of Corporate Governance (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 39 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Relations with Shareholders The Company welcomes the views of shareholders and places great importance on communication with its shareholders. Shareholders have the opportunity to meet the Board at the Annual General Meeting. All shareholders are welcome to attend the meeting and to ask questions of the Directors. The Board is also happy to respond to any written queries made by shareholders during the course of the year. All communication from shareholders is recorded and reviewed by the Board at every Board meeting to ensure that shareholder enquiries are promptly and adequately resolved. Amati also regularly engages with shareholders and updates on shareholder communication are provided at every Board meeting. The notice of the AGM accompanies this annual report, which is sent to shareholders via post and email, depending on their preferences. A separate resolution is proposed for each substantive issue. The Board and representatives of the Manager are available to answer any questions shareholders may have. The Company also communicates with shareholders through annual and half-yearly reports, which appear on the Manager’s website: www.amatiglobal.com. The Directors consider the annual report and ﬁnancial statements taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. Share Capital and Companies Act Disclosures Details of the Company’s share capital structure and other Companies Act 2006 Disclosures and details of substantial interests are set out on pages 33 and 34. On behalf of the Board Fiona Wollocombe Chairman 17 April 2023 Amati AIM VCT plc Annual Report & Financial Statements 2023 40 Composition of the Committee The audit committee is chaired by Brian Scouler, a chartered accountant, who has recent and relevant ﬁnancial experience. The Committee comprises all of the Directors and the Board is satisﬁed that they have a combination of ﬁnancial, investment and business experience, speciﬁcally with respect to the venture capital trust sector. Given the size of the Board, and Fiona Wollocombe’s experience, it is felt appropriate for her to sit on the Audit Committee as permitted by the AIC Code. Role of the Committee During the year ended 31 January 2023 the audit committee met three times and: • reviewed all ﬁnancial statements released by the Company (including the annual and half-yearly report); • reviewed the Company’s accounting policies, including the expense allocation policy which is discussed with the Manager; • monitored the effectiveness of the system of internal controls and risk management, including a detailed review of the Company’s risk register; • approved the independent auditor’s plan and fees; • received a report from the independent auditor following their detailed audit work, and discussed key issues arising from that work; and • reviewed and updated its own terms of reference in accordance with the AIC Code. Significant Issues considered by the Committee during the year The Directors carried out a robust assessment of the principal risks facing the Company and concluded that the key areas of risk which threaten the business model, future performance, solvency or liquidity of the Company are: Report of the Audit Committee Key risk area Conclusion Compliance with HM Revenue & Customs to maintain the Company’s VCT status The Manager conﬁrmed to the audit committee that the conditions for maintaining the Company’s status had been complied with throughout the year. The Company’s VCT status is also reviewed by the Company’s tax adviser, Philip Hare & Associates, as described on page 29. Market decline sparked by national or global events Black swan events such as wars cannot be predicted but can have an effect on markets. The Manager’s approach to dealing with any market adjustment is to be as diversiﬁed as possible so as to not overly suffer from a decline in a particular sector. As the sector graph on page 17 shows, the VCT’s investments are spread across ten sectors. The audit committee is satisﬁed that the Manager considers risk appropriately in its investment decision making process. Valuation of investments The Manager conﬁrmed to the audit committee that the basis of valuation for quoted and unquoted companies was consistent with the prior year and in accordance with published industry guidelines. The valuation of quoted companies on AIM or those with a full listing is generally based on bid prices, and for investments traded on SETS (London Stock Exchange's electronic trading services) is based on the last traded price. The valuation of unquoted companies takes account of the latest available information about investee companies and current market data. Independent third party valuations are used to corroborate the Manager’s valuations. A comprehensive report on the valuation of unquoted investments is presented and discussed at every Board meeting; Directors are also consulted about material changes to those valuations between Board meetings. Amati AIM VCT plc Annual Report & Financial Statements 2023 41 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights These matters are monitored regularly by the Manager and are reviewed by the Board at every Board meeting. They were also discussed with the Manager and the auditor at the audit committee meeting held to discuss the annual ﬁnancial statements. The Manager and auditor conﬁrmed to the audit committee that they were not aware of any material unadjusted misstatements. Having reviewed the reports received from the Manager, the audit committee is satisﬁed that the key areas of risk and judgement have been properly addressed in the ﬁnancial statements and that the signiﬁcant assumptions used in determining the value of assets and liabilities have been properly appraised and are sufﬁciently robust. Internal Control The Board acknowledges that it is responsible for the Company’s internal control systems and for reviewing their effectiveness. In accordance with the AIC Code and the Guidance on Risk Management published by the Financial Reporting Council in 2014, the audit committee has established an ongoing process for identifying, evaluating and managing the signiﬁcant risks faced by the Company. Internal controls are designed to manage the particular needs of the Company and the risks to which it is exposed. The internal control systems aim to ensure the maintenance of proper accounting records, the reliability of the ﬁnancial information upon which business decisions are made and which is used for publication, and that the assets of the Company are safeguarded. They can by their nature only provide reasonable and not absolute assurance against material misstatement or loss. The ﬁnancial controls operated by the Board include the authorisation of the investment strategy and regular reviews of the results and investment performance. The Board has delegated contractually to third parties, as set out on page 20, the management of the investment portfolio, the custodial services including the safeguarding of the assets, the day-to-day fund accounting and administration, the company secretarial services and registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered. The Board receives and considers regular reports from the Manager. Ad hoc reports and information are supplied to the Board as required. It remains the role of the Board to keep under review the terms of the investment management agreement with the Manager. A bi-annual review of the control systems is carried out which covers consideration of the key risks in three major areas: corporate strategy and compliance with laws and regulations; ﬁnancial management and company reporting and relationships with service providers. Each risk is considered with regard to the controls exercised at Board level, reporting by service providers and controls relied upon by the Board. The company secretary reviews the annual statutory accounts to ensure compliance with Companies Act and the AIC Code and the audit committee reviews ﬁnancial information prior to its publication. The principal features of the internal control systems which the Company has in place in respect of ﬁnancial reporting include segregation of duties between the review and approval of unquoted investment valuations and the recording of these valuations in the accounting records. Bank reconciliations, cash forecasts and investment valuations are produced on a weekly basis for review by the Manager. Quarterly management accounts are produced for review and approval by the Manager and the Board. As an externally managed investment trust, the Committee has decided that the systems and procedures employed by the Manager and the Administrator, including their risk management and internal audit functions, provide assurance that a sound system of internal control, which safeguards shareholders’ investments and the Company’s assets, is maintained. Reports on internal controls from both the Custodian and the Administrator, which are reported on by independent external accountants, are received and reviewed annually. An internal audit function, speciﬁc to the Company, is therefore considered unnecessary. Non-Audit Services The audit committee regards the continued independence of the auditor to be a matter of the highest priority. The Company’s policy with regard to the provision of non-audit services by the auditor ensures that no engagement will be permitted if: • the provision of the services would contravene any regulation or ethical standard; • the auditor is not considered to be an expert provider of the non-audit services; Amati AIM VCT plc Annual Report & Financial Statements 2023 42 • the provision of such services by the auditor creates a conﬂict of interest for either the Board or the Manager; and • the services are considered to be likely to inhibit the auditor’s independence or objectivity as auditor. As the Company is a Public Interest Entity listed on the London Stock Exchange, with effect from 1 April 2017, under EU legislation, a cap on the level of fees incurred for permissible non-audit services now applies and should not exceed 70% of the average audit fee for the previous three years. No non-audit services were provided to the Company by BDO LLP in the year under review (2022: nil). Auditor Assessment, Independence and Audit Tender The audit committee has managed the relationship with the independent auditor and assessed the effectiveness of the audit process. When assessing the effectiveness of the process for the year under review the Committee considered the auditor’s technical knowledge and that it has a clear understanding of the business of the Company; that the audit team is appropriately resourced; that the auditor provided a clear explanation of the scope and strategy of the audit and that the auditor maintained independence and objectivity. As part of the review of auditor effectiveness and independence, BDO LLP has conﬁrmed that it is independent of the Company and has complied with applicable auditing standards. BDO LLP’s fee in respect of the audit for the year ended 31 January 2023 is £44,500 (2022: £35,000). Following professional guidelines, the audit partner rotates after ﬁve years. The year ended 31 January 2023 is Peter Smith’s third year as audit partner. Under mandatory rotation rules, the Company is required to put the external audit out to tender at least every ten years. The Company took advantage of the Financial Reporting Council, Financial Conduct Authority and Prudential Regulation Authority COVID- 19 Joint Statement that allowed future postponement of the mandatory auditor tenders and postponed the tender due to take place in 2020 to 2021. Following the 2021 tender and evaluation process, the decision was made for the audit to remain with BDO LLP. The Committee expects to repeat a tender process no later than 2030 in respect of the audit for the following 31 January year end, in line with the current audit regulations. The Committee has recommended to the Board that, subject to Shareholder approval at the AGM due to be held on 15 June 2023, BDO LLP be re-appointed as the auditor of the Company for the forthcoming year. By order of the Board Brian Scouler Chairman of the Audit Committee 17 April 2023 Report of the Audit Committee (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 43 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Introduction This report has been prepared in accordance with the requirements of the Companies Act 2006 and The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 (the “Regulations”). The Directors’ Annual Report on remuneration will be put to members at the upcoming AGM. The Company’s auditor, BDO LLP, is required to give its opinion on certain information included in this report. The disclosures which have been audited are indicated as such. The auditor’s opinion on these and other matters is included in the Independent Auditor’s Report on pages 48 to 54. The Remuneration Committee, chaired by Julia Henderson, effective 1 December 2022, comprises the full Board. Given the small size of the Board, this is felt to be appropriate as permitted by the AIC Code. Annual Statement from the Chairman of the Company Directors’ fees are reviewed annually and are set by the Board to attract individuals with the appropriate range of skills and experience. In determining the level of fees their duties and responsibilities are considered, together with the level of time commitment required in preparing for and attending meetings. The aggregate remuneration which may be be paid to all Directors shall not exceed £150,000 per annum. The remit of the remuneration committee is to discuss fees payable to advisers (other than the Company’s auditor), the terms of appointment and remuneration of the Directors and make recommendations accordingly to the Board. The Board, on the recommendation of the remuneration committee, agreed to increase annual fees during the year under review, with effect from 1 May 2022, in line with the Consumer Prices Index including owner occupiers’ housing costs (“CPIH”) as the Directors felt this indicator represented a more comprehensive measure of inﬂation. A small additional increase was paid to the Chairman and Audit Committee Chair to reﬂect the increased work required by the role within the year. Directors’ Remuneration Report The remuneration committee receives a report on peer group remuneration annually and benchmarks the remuneration of the Directors against this report. Directors’ Remuneration Policy In accordance with the requirements of Schedule 8 of the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended (the Regulations), an ordinary resolution to approve the Directors’ Remuneration Policy was approved at the Company’s AGM in 2021. It is proposed that the approved policy remains in force until the AGM in 2024, at which time a further resolution will be proposed. The approved policy is available for inspection by shareholders in the 2021 Annual Report on the Company’s website: https://www.amatiglobal.com/storage/116/AIMVCT_An nualReport_31January2021.pdf Directors’ Annual Report on Remuneration Terms of appointment No Director has a contract of service with the Company. All of the Directors have been provided with letters of appointment which include details of fees payable. The letters of appointment provide that Directors are subject to re-election by shareholders at the ﬁrst annual general meeting after their appointment. In accordance with corporate governance best practice, the Board has resolved that all Directors will stand for annual re-election. Their re-election is subject to shareholder approval. The letters of appointment are available for inspection on request from the company secretary. There is no period of notice to be given to terminate the letters of appointment and no provision for compensation upon early termination of appointment. Amati AIM VCT plc Annual Report & Financial Statements 2023 44 The following table shows, for each Director, the original appointment date and the annual general meeting at which they may stand for re-election. Date of original Due date Director appointment for re-election Julia Henderson 4 May 2018 2023 AGM Brian Scouler 4 May 2018 2023 AGM Fiona Wollocombe 10 June 2021 2023 AGM 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. Year ended 31 January 2023 (audited) Total Total Taxable Fixed variable Fees beneﬁts† Total remuneration remuneration £ £ £ £ £ Peter Lawrence 10,130 531 10,661 10,130 - Julia Henderson 24,500 303 24,803 24,500 - Susannah Nicklin 15,333 363 15,696 15,333 - Brian Scouler 26,000 - 26,000 26,000 - Fiona Wollocombe 27,019 - 27,019 27,019 - 102,982 1,197 104,179 102,982 - † Reimbursement of travel expenses * retired at the end of the AGM on 16 June 2022 ** resigned on 19 September 2022 Year ended 31 January 2022 (audited) Total Total Taxable Fixed variable Fees beneﬁts Total remuneration remuneration £ £ £ £ £ Peter Lawrence 25,378 - 25,378 25,378 - Julia Henderson 22,905 - 22,905 22,905 - Susannah Nicklin 22,905 - 22,905 22,905 - Brian Scouler 22,905 - 22,905 22,905 - Fiona Wollocombe 14,744 - 14,744 14,744 - 108,837 - 108,837 108,837 - * 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’ Remuneration Report (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 45 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Reports from the Directors Highlights Annual percentage change in remuneration of Directors Directors’ pay has increased over the last three years, as set out in the table below: 2023 2022 2021 2020 2022-2023 2021-2022 2020-2021 ££££ % %% Peter Lawrence** 10,130 25,378 24,960 24,651 n/a 1.67 1.26 Julia Henderson 24,500 22,905 22,575 22,295 6.96 1.46 1.26 Susannah Nicklin 15,333 22,905 22,575 22,295 n/a 1.46 1.26 Brian Scouler 26,000 22,905 22,575 22,295 13.51 1.46 1.26 Fiona Wollocombe 27,019 23,000 - - 17.47 n/a n/a * appointed on 10 June 2021 therefore fee for 2022 is calculated on a pro-rata basis in order to provide a meaningful percentage change. ** resigned on 16 June 2022 *** resigned on 19 September 2022 The requirements to disclose this information came into force for companies with ﬁnancial years starting on or after 10 June 2019. The comparison will be expanded in future annual reports until such time as it covers a ﬁve year period. The Company does not have any employees and therefore no comparisons are given in respect of employees’ pay increases. Statement of implementation of Remuneration Policy in respect of the financial year ending 31 January 2024 The Committee will, as usual, review Directors’ fees during 2023, taking account of the time required to be committed to the business of the Company, CPIH increases and benchmarking information for its peer group, and will consider whether any changes to remuneration are required. Relative importance of spend on pay The table below shows the remuneration paid to Directors and shareholder distributions in the year to 31 January 2023 and the prior year: Percentage 2023 2022 increase/ £ £ (decrease) Total dividend paid to shareholders 12,110,420 14,431,940 (16.09%) Total repurchase of own shares 2,438,875 3,431,253 (28.92%) Total Directors’ fees 102,983 108,837 (5.38%) 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: 31 January 2023 31 January 2022 % of issued % of issued Shares held share capital Shares held share capital Peter Lawrence N/A N/A 941,660 0.69 Julia Henderson 22,376 0.01 19,360 0.01 Susannah Nicklin N/A N/A 25,777 0.02 Brian Scouler 63,806 0.04 60,381 0.04 Fiona Wollocombe 19,763 0.01 13,755 0.01 * retired at the 2022 AGM on 16 June 2022 ** resigned on 19 September 2022 Amati AIM VCT plc Annual Report & Financial Statements 2023 46 Directors’ Remuneration Report (continued) The Company conﬁrms that it has not set out any formal requirements or guidelines for a Director to own shares in the Company. Company Performance The Board is responsible for the Company’s investment strategy and performance, although the management of the Company’s investment portfolio is delegated to the Manager through the investment management agreement. The graph below compares the Company’s share price with dividends added back at the ex-dividend date to the Numis Alternative Markets Total Return Index for the period from the launch of the Company. This index was chosen for comparison purposes, as it is the benchmark used for investment performance measurement purposes. Shareholder Voting At the AGM held on 16 June 2022 93.99% of shareholders voted for, 6.01% voted against and 202,157 shares were withheld in respect of the resolution approving the Directors’ Remuneration Report. At the AGM held on 9 June 2021 98.42% of shareholders voted for the Remuneration Policy with 1.58% voting against and 86,746 shares withheld. On behalf of the Board Julia Henderson Chairman of the Remuneration Committee 17 April 2023 01/01/01 01/01/02 01/01/03 01/01/04 01/01/05 01/01/06 01/01/07 01/01/08 01/01/09 01/01/10 01/01/11 01/01/12 01/01/13 01/01/14 01/01/15 01/01/16 01/01/17 01/01/18 01/01/19 01/01/20 01/01/21 01/01/22 01/01/23 180 150 120 90 60 30 0 Amati AIM VCT share price with dividends added back at ex-dividend date (rebased to 100) Numis Alternative Markets Total Return Index (rebased to 100) Amati AIM VCT plc Annual Report & Financial Statements 2023 47 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights 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 Statement of Directors’ Responsibilities Amati AIM VCT plc Annual Report & Financial Statements 2023 48 Opinion on the financial statements In our opinion the ﬁnancial statements: • give a true and fair view of the state of the Company’s affairs as at 31 January 2023 and of its loss for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice. • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the ﬁnancial statements of Amati AIM VCT PLC (the ‘Company’) for the year ended 31 January 2023 which comprise the Income Statement, the Statement of Changes in Equity, the Balance Sheet, the Statement of Cash Flows and notes to the ﬁnancial statements, including a summary of signiﬁcant accounting policies. The ﬁnancial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the ﬁnancial statements section of our report. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the audit committee. Independence Following the conclusion of a formal tender process in 2021, we were re-appointed by shareholders at the AGM on 9 June 2021, subsequent to our original appointment by shareholders at the AGM on 14 June 2011 to audit the ﬁnancial statements for the year ended 31 January 2011 and subsequent ﬁnancial periods. The period of total uninterrupted engagement including retenders and reappointments is 13 years, covering the years ended 31 January 2011 to 31 January 2023. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the ﬁnancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulﬁlled our other ethical responsibilities in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. Conclusions relating to going concern In auditing the ﬁnancial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the ﬁnancial statements is appropriate. Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: • Obtaining the VCT compliance reports during the year and as at year end and reviewing the calculations therein to check that the Company was meeting its requirements to retain VCT status; • Consideration of the Company’s expected future compliance with VCT legislation, the absence of bank debt, contingencies and commitments and any market or reputational risks; • Reviewing the forecasted cash ﬂows that support the Directors’ assessment of going concern, challenging assumptions and judgements made in the forecasts, and assessing them for reasonableness. In particular, we considered the available cash resources relative to the forecast expenditure which was assessed against the prior year for reasonableness; and • Evaluating the Directors’ method of assessing the going concern in light of market volatility and the present uncertainties in economic recovery created by rising inﬂation and interest rates and the impact of the war in Ukraine; Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or conditions that, individually or collectively, may cast signiﬁcant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the ﬁnancial statements are authorised for issue. In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the ﬁnancial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Independent Auditor’s Report to the Members of Amati AIM VCT plc Amati AIM VCT plc Annual Report & Financial Statements 2023 49 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Overview 2023 2022 Key audit matters Valuation and ownership of investments 33 Materiality Company ﬁnancial statements as a whole £1.7m (2022: £1.9m) based on 1% of total adjusted net assets (2022: 1% of total adjusted net assets) An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the ﬁnancial Key audit matter How the scope of our audit addressed the key audit matter Valuation and ownership of investments (Note 1,8 and 14) We considered the valuation and ownership of investments to be the most signiﬁcant audit area as investments represent the most signiﬁcant balance in the ﬁnancial statements and underpin the principal activity of the entity. Incorrect bid prices could be used in in the valuation of quoted investments. Incorrect assumptions could be used in the valuation of unquoted investments. Investments could be included in the valuation where the Company does not have title to those investments. There is also an inherent risk of management override arising from the unquoted investment valuations being prepared by the Investment Manager, who is remunerated based on management fees. For these reasons, we considered the valuation and ownership of investments to be a key audit matter. We responded to this matter by testing the valuation and ownership of 100% of the portfolio of investments. We performed the following procedures. In respect of quoted investment valuations (97% of the total portfolio by value) we have: • Conﬁrmed the year end bid price was used by agreeing to externally quoted prices and for all of the investments, assessed if there were contra indicators, such as liquidity considerations, to suggest bid price is not the most appropriate indication of fair value. • Obtained direct conﬁrmation of ownership from the custodian regarding all investments held at the balance sheet date. • Recomputed the total valuation and compared it to the valuations used by management In respect of unquoted investment valuations (remaining 3% of the total portfolio by value) we have: • Obtained direct conﬁrmation of ownership from the custodian / investee entity at the balance sheet date. • Conﬁrmed and challenged the assumptions and underlying evidence supporting the year end valuations are in line with UK Generally Accepted Accounting Practice and the International Private Equity and Venture Capital Valuation (“IPEV”) Guidelines. • Considered the economic environment in which the company operates to identify factors that could impact the investment valuation. Key observations: Based on our procedures performed we did not identify any material exceptions with regards to valuation or ownership of investments. statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most signiﬁcance in our audit of the ﬁnancial statements of the current period and include the most signiﬁcant assessed risks of material misstatement (whether or not due to fraud) that we identiﬁed, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. This matter was addressed in the context of our audit of the ﬁnancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter. Amati AIM VCT plc Annual Report & Financial Statements 2023 50 Independent Auditor’s Report (continued) Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could inﬂuence the economic decisions of reasonable users that are taken on the basis of the ﬁnancial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identiﬁed misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the ﬁnancial statements as a whole. Based on our professional judgement, we determined materiality for the ﬁnancial statements as a whole and performance materiality as follows: Company ﬁnancial statements 2023 2022 £m £m Materiality 1.7 1.9 Basis for determining materiality 1% of net assets adjusted to 1% of net assets adjusted to exclude fund raising during exclude fund raising during the year the year Rationale for the benchmark applied Performance materiality 1.2 1.4 Basis for determining 75% of Materiality 75% of Materiality performance materiality Rationale for the percentage applied for performance materiality The VCT’s portfolio is mainly comprised of quoted investments, which are considered low risk. For a low risk portfolio where fair values are highly visible, a base line percentage of 1% invested assets would be a typical benchmark. We have applied a percentage of 1% of adjusted net asset value. The benchmark used is lower than the net asset value to take into account cash that has been recently raised from disposals of investments. The VCT’s portfolio is mainly comprised of quoted investments, which are considered low risk. For a low risk portfolio where fair values are highly visible, a base line percentage of 1% invested assets would be a typical benchmark. We have applied a percentage of 1% of adjusted net asset value. The benchmark used is lower than the net asset value to take into account cash that has been recently raised from disposals of investments. The level of performance materiality applied was set after having considered a number of factors including the expected total value of known and likely misstatements and the level of transactions in the year. The level of performance materiality applied was set after having considered a number of factors including the expected total value of known and likely mistatements and the level of rttransactions in the year. Amati AIM VCT plc Annual Report & Financial Statements 2023 51 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Lower testing threshold We determined that for Revenue return before tax, a misstatement of less than materiality for the ﬁnancial statements as a whole, could inﬂuence users of the ﬁnancial statements as it is a measure of the Company’s performance of income generated from its investments after expenses. As a result, we determined a lower testing threshold for those items impacting revenue return of £430,000 (2022: £497,000) based on 10% of Gross Expenditure (2022: 10% of Gross Expenditure). Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £34,000 (2022: £38,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and ﬁnancial statements, other than the ﬁnancial statements and our auditor’s report thereon. Our opinion on the ﬁnancial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the ﬁnancial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the ﬁnancial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code speciﬁed for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the ﬁnancial statements or our knowledge obtained during the audit. Going concern and longer-term viability • The Directors' statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identiﬁed; and • The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate. Other Code provisions • Directors' statement on fair, balanced and understandable; • Board’s conﬁrmation that it has carried out a robust assessment of the emerging and principal risks; • The section of the annual report that describes the review of effectiveness of risk management and internal control systems; and • The section describing the work of the audit committee. Amati AIM VCT plc Annual Report & Financial Statements 2023 52 Independent Auditor’s Report (continued) Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic report and the Directors’ report for the ﬁnancial year for which the ﬁnancial statements are prepared is consistent with the ﬁnancial statements; and • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identiﬁed material misstatements in the strategic report or the Directors’ report. Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the ﬁnancial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration speciﬁed by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the ﬁnancial statements and for being satisﬁed that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of ﬁnancial statements that are free from material misstatement, whether due to fraud or error. In preparing the ﬁnancial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inﬂuence the economic decisions of users taken on the basis of these ﬁnancial statements. Amati AIM VCT plc Annual Report & Financial Statements 2023 53 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non- compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Non-compliance with laws and regulations Based on: • Our understanding of the Company and the industry in which it operates; • Discussion with management and those charged with governance; and • Obtaining and understanding of the Company’s policies and procedures regarding compliance with laws and regulations. We considered the signiﬁcant laws and regulations to be the Companies Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate Governance Code, industry practice represented by the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“the SORP”) and updated in 2022 with consequential amendments and the applicable ﬁnancial reporting framework. We also considered the Company’s qualiﬁcation as a VCT under UK tax legislation. Our procedures in respect of the above included: • Agreement of the ﬁnancial statement disclosures to underlying supporting documentation; • Enquiries of management and those charged with governance relating to the existence of any non-compliance with laws and regulations; • Obtaining the VCT compliance reports during the year and as at year end and reviewing their calculations to check that the Company was meeting its requirements to retain VCT status; and • Reviewing minutes of meeting of those charged with governance and legal correspondence and invoices throughout the period for instances of non-compliance with laws and regulations. Fraud We assessed the susceptibility of the ﬁnancial statement to material misstatement including fraud. Our risk assessment procedures included: • Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; • Obtaining an understanding of the company’s policies and procedures relating to: - Detecting and responding to the risks of fraud; and - Internal controls established to mitigate risks related to fraud. • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; • Discussion amongst the engagement team as to how and where fraud might occur in the ﬁnancial statements; • Considering performance incentive schemes and performance targets and the related ﬁnancial statement areas impacted by these; and Based on our risk assessment, we considered the areas most susceptible to fraud to be the valuation of unquoted investments and management override of controls. Our procedures in respect of the above included: • The procedures set out in the Key Audit Matters section above; • Obtaining independent evidence to support the ownership of investments; • Recalculating investment management fees in total; • Obtaining independent conﬁrmation of bank balances; and • Testing journals which met a deﬁned risk criteria by agreeing to supporting documentation and evaluating whether there was evidence of bias by the Investment Manager and Directors that represented a risk of material misstatement due to fraud. Amati AIM VCT plc Annual Report & Financial Statements 2023 54 Independent Auditor’s Report (continued) We also communicated relevant identiﬁed laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the ﬁnancial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reﬂected in the ﬁnancial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Peter Smith (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, UK 17 April 2023 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Amati AIM VCT plc Annual Report & Financial Statements 2023 55 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights 2023 2023 2023 2022 2022 2022 Revenue Capital Total Revenue Capital Total Note £’000 £’000 £’000 £’000 £’000 £’000 Loss on investments 8 - (55,748) (55,748) - (18,123) (18,123) Investment income 2 1,810 - 1,810 701 - 701 Management fee 3 (930) (2,788) (3,718) (1,115) (3,345) (4,460) Other expenses 4 (588) - (588) (514) - (514) Proﬁt/(loss) on ordinary activities before taxation 292 (58,536) (58,244) (928) (21,468) (22,396) Taxation on ordinary activities 5 --- - - - Profit/(loss) and total comprehensive income attributable to shareholders 292 (58,536) (58,244) (928) (21,468) (22,396) Basic and diluted earnings/(loss) per ordinary share 7 0.19p (38.99)p (38.80)p (0.73)p (16.93)p (17.66)p 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 on pages 60 to 75 form part of these ﬁnancial statements. Income Statement for the year ended 31 January 2023 Amati AIM VCT plc Annual Report & Financial Statements 2023 56 for the year ended 31 January 2023 Non-distributable reserves Capital Capital reserve Share Share Merger redemption (non- capital premium reserve reserve distributable) £’000 £’000 £’000 £’000 £’000 Opening balance as at 1 February 2022 6,836 109,545 425 819 80,666 (Loss)/proﬁt and total comprehensive income for the year - - - - (67,748) Total comprehensive income for the period 6,836 109,545 425 819 12,918 Contributions by and distributions to shareholders: Repurchase of shares (89) - - 89 - Shares issued 831 26,351 - - - Costs of share issues - (132) - - - Dividends paid - - - - - Cancellation of share premium - (134,824) - - - Expenses in relation to cancellation of share premium account - - - - - 742 (108,605) - 89 - Closing balance as at 31 January 2023 7,578 940 425 908 12,918 * Following Court approval and the subsequent registration of the Court order with the Registrar of Companies on 14 September 2022, the cancellation of the Company’s share premium account became effective and an amount of £134,824,000 was transferred from the Share Premium account to the Special Reserve. The Special Reserve is available for distribution as determined in accordance with the Companies Act 2006 and HMRC rules speciﬁc to venture capital trusts. for the year ended 31 January 2022 Non-distributable reserves Capital Capital reserve Share Share Merger redemption (non- capital premium reserve reserve distributable) £’000 £’000 £’000 £’000 £’000 Opening balance as at 1 February 2021 5,780 61,635 425 731 107,450 (Loss)/proﬁt and total comprehensive income for the year - - - - (26,784) Contributions by and distributions to shareholders: Repurchase of shares (88) - - 88 - Shares issued 1,144 48,216 - - - Costs of share issues - (306) - - - Dividends paid - - - - - Total contributions by and distributions to shareholders 1,056 47,910 - 88 - Closing balance as at 31 January 2022 6,836 109,545 425 819 80,666 The accompanying notes on pages 60 to 75 are an integral part of these ﬁnancial statements. Statement of Changes in Equity Amati AIM VCT plc Annual Report & Financial Statements 2023 57 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights Distributable reserves Capital Special reserve Revenue Total reserve (distributable) reserve reserves £’000 £’000 £’000 £’000 57,160 (6,104) (2,273) 247,074 - 9,212 292 (58,244) 57,160 3,108 (1,981) 188,830 (2,451) - - (2,451) - - - 27,182 - - - (132) (12,110) - - (12,110) 134,824 - - - (38) - - (38) 120,225 - - 12,451 177,385 3,108 (1,981) 201,281 Distributable reserves Capital Special reserve Revenue Total reserve (distributable) reserve reserves £’000 £’000 £’000 £’000 75,023 (11,420) (1,345) 238,279 - 5,316 (928) (22,396) (3,431) - - (3,431) - - - 49,360 - - - (306) (14,432) - - (14,432) (17,863) - - 31,191 57,160 (6,104) (2,273) 247,074 Amati AIM VCT plc Annual Report & Financial Statements 2023 58 2023 2022 Note £’000 £’000 Fixed assets Investments held at fair value 8 142,354 214,737 Current assets Debtors 9 329 1,972 Cash at bank 17 59,595 31,833 59,924 33,805 Current liabilities Creditors: amounts falling due within one year 10 (997) (1,468) (997) (1,468) Net current assets 58,927 32,337 Total assets less current liabilities 201,281 247,074 Capital and reserves Called-up share capital 11 7,578 6,836 Share premium account 940 109,545 Merger reserve 425 425 Capital redemption reserve 908 819 Capital reserve (non distributable) 12,918 80,666 Special reserve 177,385 57,160 Capital reserve (distributable) 3,108 (6,104) Revenue reserve (1,981) (2,273) Equity shareholders' funds 201,281 247,074 Net asset value per share 12 132.8p 180.7p * These reserves are not distributable. The ﬁnancial statements on pages 55 to 59 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 on pages 60 to 75 are an integral part of these ﬁnancial statements. Balance Sheet as at 31 January 2023 Amati AIM VCT plc Annual Report & Financial Statements 2023 59 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights 2023 2022 £’000 £’000 Cash flows from operating activities Investment income received 1,299 626 Investment management fees paid (3,910) (4,427) Other operating costs (572) (485) Net cash outflow from operating activities (3,183) (4,286) Cash flows from investing activities Purchase of investments (12,422) (32,872) Sale of investments 31,166 13,596 Net cash inﬂow/(outﬂow) from investing activities 18,744 (19,276) Net cash inflow/(outflow) before financing 15,561 (23,562) Cash flows from financing activities Proceeds of share issues 24,931 46,748 Issue costs (132) (306) Share buy-backs (2,701) (4,194) Equity dividends paid (9,859) (11,820) Expenses in relation to cancellation of share premium account (38) - Net cash inflow from financing activities 12,201 30,428 Increase in cash 27,762 6,866 Opening cash & cash equivalents 31,833 24,967 Closing cash & cash equivalents 59,595 31,833 Reconciliation of Loss on Ordinary Activities Before Taxation to Net Cash Outflow from Operating Activities Loss on ordinary activities before taxation (58,244) (22,396) Loss on investments 55,748 18,123 Less dividends reinvested (223) (71) (Decrease)/increase in creditors (188) 64 Increase in debtors (276) (6) Net cash outflow from operating activities (3,183) (4,286) * Adjusted to exclude non-cash dividends re-invested under the Dividend Re-investment Scheme. The accompanying notes on pages 60 to 75 are an integral part of these ﬁnancial statements. Statement of Cash Flows for the year ended 31 January 2023 Amati AIM VCT plc Annual Report & Financial Statements 2023 60 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. Notes to the Financial Statements Amati AIM VCT plc Annual Report & Financial Statements 2023 61 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights 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. Expenses All expenses are accounted for on an accruals basis. In respect of the analysis between revenue and capital items presented within the income statement, all expenses have been prescribed as revenue items except as follows: Expenses are split and presented partly as capital items where a connection with the maintenance or enhancement of the value of the investments held can be demonstrated, and accordingly the investment management fee is currently allocated 25% to revenue and 75% to capital, which reﬂects the Directors’ expected long-term view of the nature of the investment returns of the Company. Issue costs in respect of ordinary shares issued by the Company are deducted from the share premium account. Taxation Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. Deferred tax assets are only recognised when they arise from timing differences where recovery in the foreseeable future is regarded as more likely than not. Timing differences are differences arising between the Company’s taxable proﬁts and its results as stated in the ﬁnancial statements which are capable of reversal in one or more subsequent periods. Deferred tax is not discounted. Amati AIM VCT plc Annual Report & Financial Statements 2023 62 1 Accounting Policies (continued) Current tax is expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. The tax effect of different items of expenditure is allocated between revenue and capital on the same basis as a particular item to which it relates, using the Company’s effective rate of tax, as applied to those items allocated to revenue, for the accounting year. No tax liability arises on gains from sales of ﬁxed asset investments by the Company by virtue of its VCT status. Investments In accordance with FRS 102, Sections 11 and 12, all investments held by the Company are designated as held at fair value upon initial recognition and are measured at fair value through proﬁt or loss in subsequent accounting periods. Investments are initially recognised at cost, being the fair value of the consideration given. After initial recognition, investments are measured at fair value, with changes in the fair value of investments recognised in the Income Statement and allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost. Also included within this heading are transaction costs in relation to the purchase or sale of investments. In respect of investments that are traded on AIM or are fully listed, these are valued at bid prices at close of business on the Balance Sheet date. Investments traded on SETS (London Stock Exchange’s electronic trading service) are valued at the last traded price as this is considered to be a more accurate indication of fair value. Fair values for unquoted investments, or for investments for which the market is inactive, are established by using various valuation techniques in accordance with IPEV guidelines. These are constantly monitored for value and impairment. The values and impairment, if any, are approved by the Board. The shares may be valued by using the most appropriate methodology recommended by the IPEV guidelines, including revenue multiples, net assets, discounted cashﬂows and industry valuation benchmarks. Convertible loan stock instruments are valued using present value of future payments discounted at a market value of interest for a similar loan and valuing the option at fair value. Contingent Value Rights (CVRs) pay out if certain hurdles are achieved and are valued at the amount payable per share on achievement of those hurdles, discounted for certain probabilities and the time to the value date to reﬂect the illiquidity of the holdings, and further discounted for payment, if it becomes due, being made either in the form of loan notes or shares issue at market value. The valuation of the Company’s investment in TB Amati UK Listed Smaller Companies Fund is based on the published share price. The valuation is provided by the Authorised Corporate Director of the fund, T Bailey Fund Managers Limited. Financial Instruments The Company classiﬁes ﬁnancial instruments, or their component parts, on initial recognition as a ﬁnancial asset, a ﬁnancial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are recognised on trade date when the Company becomes a party to the contractual provisions of the instrument. All ﬁnancial instruments are designated upon initial recognition as held at fair value through proﬁt or loss, and are measured at subsequent reporting dates at fair value, with changes in the fair value recognised in the Income Statement and allocated to capital. Financial instruments are derecognised on the trade date when the Company is no longer a party to the contractual provisions of the instrument. Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 63 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights Cash and Cash Equivalents For the purposes of the Balance Sheet, cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments and money market funds that are readily convertible to known amounts of cash and which are subject to insigniﬁcant risk of changes in value. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as deﬁned above, net of outstanding bank overdrafts when applicable. Foreign Currency Foreign currency assets and liabilities are translated into sterling at the exchange rates ruling at the balance sheet date. Transactions during the year are converted into sterling at the rates ruling at the time the transactions are executed. Any gain or loss arising from a change in exchange rate subsequent to the date of the transaction is included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is of a capital or revenue nature. Short-term Debtors and Creditors Debtors and creditors with no stated interest rate and receivable within one year are recorded at transaction price. Any losses arising from impairment are recognised in the income statement in other operating expenses upon notiﬁcation. Dividends Payable Final dividends are included in the ﬁnancial statements when they are approved by shareholders. Interim dividends payable are included in the ﬁnancial statements on the date on which they are paid. Share Premium The share premium account is a non-distributable reserve which represents the accumulated premium paid on the issue of shares in previous periods over the nominal value, net of any expenses. Merger Reserve The merger reserve is a non-distributable reserve which originally represented the share premium on shares issued when the Company merged with Singer & Friedlander AIM VCT and Singer & Friedlander AIM 2 VCT in February 2006. The merger reserve is released to the realised capital reserve as the assets acquired as a consequence of the merger are subsequently disposed of or permanently impaired. There have been no disposals of these assets during the year. Capital Redemption Reserve The capital redemption reserve represents non-distributable reserves that arise from the purchase and cancellation of shares. Special Reserve The special reserve was created by the cancellation of the share premium account by order of the Court and forms part of the distributable reserves. Distributions may be restricted as determined in accordance with the Companies Act 2006 and HMRC rules speciﬁc to venture capital trusts. The following items are taken to this reserve: • costs of share buybacks; and • dividends payable to shareholders. Amati AIM VCT plc Annual Report & Financial Statements 2023 64 1 Accounting Policies (continued) Capital Reserve The following are taken to the capital reserve through the capital column in the Income Statement: Capital reserve – other, forming part of the distributable reserves: • gains and losses on the disposal of investments; • realised exchange gains and losses of a capital nature; and • expenses allocated to this reserve in accordance with the above policies Capital reserve – investment holding gains, not distributable: • increase and decrease in the value of investments held at the year end; and • unrealised exchange gains of a capital nature. Revenue Reserve The revenue reserve represents accumulated proﬁts and losses and any surplus proﬁt is distributable by way of dividends. 2 Income Year to Year to 31 January 31 January 2023 2022 £’000 £’000 Dividends from UK companies 843 701 UK loan stock interest 447 - Interest from deposits 519 - Other income 1 - 1,810 701 3 Management Fees The Manager provides investment management and fund accounting and administration services to the Company under an Investment Management Agreement (“IMA”) and a Fund Administration, Secretarial and Fund Accounting Agreement (“FASSFAA”). Details of these agreements are given on page 20. Under the IMA the Manager receives an investment management fee of 1.75% of the net asset value of the Company quarterly in arrears. The Company received a rebate of its management fee for the investment in the TB Amati UK Listed Smaller Companies Fund. The investment management fee for the year was as follows: Year to Year to 31 January 31 January 2023 2022 £’000 £’000 Due to the Manager by the Company at 1 February 1,049 1,016 Investment management fee charged to revenue and capital for the year 3,718 4,460 Fees paid to the Manager during the year (3,910) (4,427) Due to the Manager by the Company at 31 January 857 1,049 Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 65 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights In addition to the investment management fee the Manager also received a fund accounting and administration fee of £72,000 (2022: £96,000) paid quarterly in arrears. See note 4. No performance fee is payable in respect of the year ended 31 January 2023, as the Manager has waived all performance fees from 31 July 2014 onwards. Annual running costs are capped at 3.5% of the Company’s net assets. If the annual running costs of the Company in any year are greater than 3.5% of the Company’s net assets, the excess is 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, any performance fee payable to the Manager, irrecoverable VAT and exceptional costs, including winding-up costs). 4 Other Expenses Year to Year to 31 January 31 January 2023 2022 £’000 £’000 Directors' remuneration 103 109 Directors' employer's national insurance 9 4 Directors' expenses 2 2 Auditor's remuneration - audit of statutory ﬁnancial statements 45 35 Administration fee 71 94 Company secretarial services 48 - Other expenses 310 270 588 514 The Company has no employees. The Directors are therefore the only key management personnel. Details of Directors’ remuneration are provided in the audited section of the directors’ remuneration report on page 44. 5 Tax on Ordinary Activities 5a Analysis of charge for the year Year to Year to 31 January 31 January 2023 2022 £’000 £’000 Charge for the year - - Amati AIM VCT plc Annual Report & Financial Statements 2023 66 5 Tax on Ordinary Activities (continued) 5b Factors affecting the tax charge for the year Year to Year to 31 January 31 January 2023 2022 £’000 £’000 Loss on ordinary activities before taxation (58,244) (22,396) Corporation tax at standard rate of 19.00% (2022: 19.00%) (11,066) (4,255) Effect of: Non-taxable dividends (160) (133) Non-taxable losses on investments 10,592 3,443 Movement in excess management expenses 634 945 Tax charge for the year ( note 5a) - - Due to the Company’s tax status as an approved Venture Capital Trust, deferred tax has not been provided on any capital gains arising on the disposal or valuation of investments as such gains are not taxable. We remain of the view that the provisions of CTA 2009 sections 396 and 641 apply to treat any gains/losses on loan instruments as taxable under the chargeable gains provisions in TCGA 1992 and further exempt the VCT from tax under the provisions in s100. No deferred tax asset has been recognised on surplus management expenses carried forward as it is not envisaged that future taxable proﬁts will be available against which the Company can use the beneﬁts. The amount of unrecognised deferred tax asset is £6,827,000 (31 January 2022: £5,992,000) based on a corporate tax rate of 25% substantively enacted at the balance sheet dates and due to come into effect on 1 April 2023. 6 Dividends Amounts recognised as distributions to equity holders during the year: 2023 2023 2022 2022 Revenue Capital Revenue Capital £’000 £’000 £’000 £’000 Final dividend for the year ended 31 January 2022 of 4.50p per ordinary share paid on 22 July 2022 - 6,803 - - Interim dividend for the year ended 31 January 2023 of 3.50p per ordinary share paid on 25 November 2022 - 5,307 - - Final dividend for the year ended 31 January 2021 of 7.00p per ordinary share paid on 23 July 2021 - - - 8,278 Interim dividend for the year ended 31 January 2022 of 4.50p per ordinary share paid on 26 November 2021 - - - 6,154 - 12,110 - 14,432 Set out below are the interim and ﬁnal dividends paid or proposed on ordinary shares in respect of the ﬁnancial year: 2023 2023 2022 2022 Revenue Capital Revenue Capital £’000 £’000 £’000 £’000 Interim dividend for the year ended 31 January 2023 of 3.50p per ordinary share (2022: 4.50p) - 5,307 - 6,154 Declared ﬁnal dividend for the year ended 31 January 2023 of 3.50p per ordinary share (2022: 4.50p) - 5,287 - 6,698 - 10,594 - 12,852 * Based on shares in issue on 17 April 2023. The payment of a ﬁnal dividend will, as always, be subject to ensuring that the Company has sufﬁcient distributable reserves at the time Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 67 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights 7 Earnings per Share 2023 2022 Basic and Basic and diluted diluted Net proﬁt/ Weighted Earnings Net proﬁt/ Weighted Earnings (loss) average per share (loss) average per share £’000 shares pence £’000 shares pence Revenue 292 0.19p (928) (0.73)p Capital (58,536) (38.99)p (21,468) (16.93)p Total (58,244) 150,110,568 (38.80)p (22,396) 126,840,235 (17.66)p 8 Investments Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 Opening cost as at 1 February 2022 128,607 - 6,955 135,562 Opening investment holding gains 80,646 - 20 80,666 Opening unrealised loss recognised in realised reserve (228) - (1,263) (1,491) Opening fair value as at 1 February 2022 209,025 - 5,712 214,737 Analysis of transactions during the year: Reclassiﬁcation in the year (67) - 67 - Purchases at cost 9,262 3,350 12,612 Disposals - proceeds received (29,128) - (119) (29,247) - realised loss on disposals (3,564) - (592) (4,156) - unrealised losses during the year (47,917) - (3,675) (51,592) Closing fair value as at 31 January 2023 137,611 - 4,743 142,354 Closing cost as at 31 January 2023 120,593 - 9,071 129,664 Closing investment holding gains/(losses) as at 31 January 2023 17,246 - (4,328) 12,918 Closing unrealised loss recognised in realised reserve at 31 January 2023 (228) - - (228) Closing fair value as at 31 January 2023 137,611 - 4,743 142,354 Equity shares 137,611 - 166 137,777 CVRs - - - - Convertible loan notes - - 4,577 4,577 Closing fair value as at 31 January 2023 137,611 - 4,743 142,354 Amati AIM VCT plc Annual Report & Financial Statements 2023 68 8 Investments (continued) Holdings of ordinary shares in unquoted companies rank pari passu for voting purposes. Preference shares and CVRs have no voting rights. The Company received £29,247,000 (2022: £15,515,000) from the sale of investments in the year. The book cost of these investments when they were purchased was £18,509,000 (2022: £6,855,000). These investments have been revalued over time and until they were sold any unrealised gains/(losses) were included in the fair value of the investments. 2023 2022 £’000 £’000 Realised (losses)/gains on disposal (4,156) 65 Unrealised losses on investments during the year (51,592) (18,188) Net losses on investments (55,748) (18,123) Transaction Costs During the year the Company incurred transaction costs of £nil (31 January 2022: £44,000) and £14,000 (31 January 2022: £8,000) on purchases and sales of investments respectively. These amounts are included in the gain on investments as disclosed in the income statement. 9 Debtors 2023 2022 £’000 £’000 Receivable for investments sold - 1,919 Prepayments and accrued income 329 53 329 1,972 10 Creditors: Amounts Falling due within One Year 2023 2022 £’000 £’000 Payable for share buybacks - 249 Payable for investments bought - 34 Other creditors 997 1,185 997 1,468 11 Called Up Share Capital 2023 2023 2022 2022 Ordinary shares (5p shares) Number £’000 Number £’000 Allotted, issued and fully paid at 1 February 136,720,797 6,836 115,589,550 5,780 Issued during the year 16,617,329 831 22,880,426 1,144 Repurchase of own shares for cancellation (1,789,133) (89) (1,749,179) (88) At 31 January 151,548,993 7,578 136,720,797 6,836 * Nominal value During the year a total of 1,789,133 ordinary shares of 5p each were purchased by the Company at an average price of 136p per share. Further details of the Company’s share capital and associated rights are shown in the Directors’ Report on page 33. Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 69 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights 12 Net Asset Value per Ordinary Share 2023 2022 Net NAV NAV assets Ordinary per share Net assets Ordinary per share £’000 shares pence £’000 shares pence Ordinary share 201,281 151,548,993 132.8 247,074 136,720,797 180.7 13 Significant Interests The Company has the following signiﬁcant interests (amounting to an investment of 3% or more of the equity capital of an undertaking): % held Northcoders Group plc 14.3 Getech Group plc 11.5 Polarean Imaging plc 11.5 Aurrigo International plc 10.4 Rosslyn Data Technologies plc 10.4 Ixico plc 10.1 Fusion Antibodies plc 9.0 One Media iP Group plc 8.0 Glantus Holdings plc 7.8 Hardide plc 7.7 Block Energy plc 7.5 Intelligent Ultrasound plc 6.7 Ensilica plc 6.5 Falanx Cyber Security Limited 6.3 Sosandar plc 5.6 Byotrol plc 5.5 Saietta Group plc 5.2 Aptamer Group plc 4.5 Zenova Group plc 4.2 Water Intelligence plc 4.2 Velocys plc 3.9 Strip Tinning Holdings plc 3.7 Rua Life Sciences plc 3.6 Kinovo plc 3.5 Velocity Composites plc 3.2 Amati AIM VCT plc Annual Report & Financial Statements 2023 70 14 Financial Instruments The Company’s ﬁnancial instruments comprise equity and ﬁxed interest investments, cash balances and liquid resources including debtors and creditors. The Company holds ﬁnancial assets in accordance with its investment policy to invest in qualifying investments predominantly in AIM traded companies or companies to be traded on AIM. Classification of financial instruments The Company held the following categories of ﬁnancial instruments at 31 January: 2023 2022 £’000 £’000 Assets at fair value through proﬁt or loss: Investments 142,354 214,737 Assets measured at amortised cost: Accrued income and other debtors 329 1,972 Cash at bank 59,595 31,833 Liabilities (amounts due within one year) measured at amortised cost: Payable for investments bought - (282) Accrued expenses (997) (1,186) Total for ﬁnancial instruments 201,281 247,074 The investments are measured at fair value through proﬁt or loss. The Company’s investing activities expose it to various types of risk that are associated with the ﬁnancial instruments and markets in which it invests. The most important types of ﬁnancial risk to which the Company is exposed are market risk, credit risk, currency and liquidity risk. The nature and extent of the ﬁnancial instruments outstanding at the balance sheet date and the risk management policies employed by the Company are discussed below. The Company measures fair values using the following fair value hierarchy into which the fair value measurements are categorised. A fair value measurement is categorised in its entirety on the basis of the lowest level input that is signiﬁcant to the fair value measurement of the relevant asset as follows: Level 1 – the unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date. Level 2 – inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. The Company’s level 2 assets are valued using models with signiﬁcant observable market parameters. Level 3 – inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. Level 3 fair values are measured using a valuation technique that is based on data from an unobservable market. Discussions are held with management, statutory accounts, management accounts and cashﬂow forecasts are obtained, and fair value is based on multiples of revenue. The table below sets out the fair value measurement of ﬁnancial instruments as at the year end, by the level in the fair value hierarchy into which the fair value measurement is categorised: Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 71 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights Financial assets at fair value Year ended 31 January 2023 Year ended 31 January 2022 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Equity shares 137,611 - 166 137,777 209,025 - 501 209,526 CVRs ----- - 711 711 Convertible loan notes - - 4,577 4,577 - - 4,500 4,500 137,611 - 4,743 142,354 209,025 - 5,712 214,737 The fair value of investments are derived as follows: For quoted securities this is the bid price or, in the case of SETS securities, the last traded price. The Company’s Level 1 investments are AIM traded companies and fully listed companies. Investments in TB Amati UK Listed Smaller Companies Fund are based on the published fund mid-price NAV. Unquoted investments are valued by the Directors using rules consistent with IPEV guidelines. Where there is no observable input the investments are designated as Level 3 and the fair values determined as follows: Equity shares are valued by using revenue multiples, net assets, discounted cashﬂows and industry valuation benchmarks. These multiples are derived from a basket of comparable quoted companies, with appropriate discounts applied. These discounts are subjective, based on the Manager’s experience and assessment of disclosures made by the underlying investee company. Contingent Value Rights (CVRs) pay out if certain hurdles are achieved and are valued at the amount payable per share on achievement of those hurdles, discounted for certain probabilities and the time to the value date to reﬂect the illiquidity of the holdings, and further discounted for payment, if it becomes due, being made either in the form of loan notes or shares issued at market value. Convertible Loan Notes (CLNs) are fair valued using the present value of future payments, benchmarking and assessing market transactions of a similar CLN’s. Further to this the fair value and interest accrued of the CLN’s will be referenced to the assessment of disclosures made by the underlying investee company, the terms of the agreement and referenced to the underlying assets held by the investee company. The inputs and information utilised in determining the fair value are subjective and based upon the Manager’s experience. The fair values are reviewed by the Directors using rules consistent with IPEV guidelines. The details of the CLNs’ fair value and interest are noted in the Investment Portfolio on pages 14 to 16. Details of movements in Level 3 ﬁnancial assets are set out below: Level 3 financial assets at fair value Year ended 31 January 2023 Year ended 31 January 2022 Equity Preference Loan Equity Preference Loan shares shares CVR stock Total shares shares CVR stock Total £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Opening balance at 1 February 501 - 711 4,500 5,712 81 47 732 - 860 Transfer from Level 1 67 - - - 67 - - - - - Purchases at cost 301 - - 3,049 3,350 500 - 4,500 5,000 Disposal proceeds - - (119) - (119) (353) (207) - (311) (871) Total net gains/(losses) recognised in the income statement (703) - (592) (2,972) (4,267) 273 160 (21) 311 723 Closing balance at 31 January 166 - - 4,577 4,743 501 - 711 4,500 5,712 Amati AIM VCT plc Annual Report & Financial Statements 2023 72 15 Risks The identified risks arising from the financial instruments are market risk (which comprises market price risk and foreign currency risk), liquidity risk and credit and counterparty risk. The Board and Investment Manager consider and review the risks inherent in managing the Company’s assets which are detailed below. 16 Market Risk Market risk arises from uncertainty about the future prices of ﬁnancial instruments held in accordance with the Company’s investment objectives. It represents the potential loss that the Company might suffer through holding positions by the way of price movements, interest rate movements, exchange rate movements and systematic risk (risk inherent to the market, reﬂecting economic and geopolitical factors). The Company’s strategy on the management of market risk is driven by the Company’s investment objective as outlined on page 18. The management of market risk is part of the investment management process. The Board seeks to mitigate the internal risks by setting policy, regular reviews of performance, enforcement of contractual obligations and monitoring progress and compliance with an awareness of the effects of adverse price movements through detailed and continuing analysis, with an objective of maximising overall returns to shareholders. Investments in unquoted stocks and AIM traded companies, by their nature, involve a higher degree of risk than investments in the Main Market. Some of that risk can be mitigated by diversifying the portfolio across business sectors and asset classes. The Company’s overall market positions are regularly monitored by the Board and at quarterly Board meetings. Market price risk Market price risk arises from any ﬂuctuations in the value of investments held by the Company. Adherence to investment policies mitigates the risk of excessive exposure to any particular type of security or issuer. The portfolio is managed with an awareness of the effects of adverse price movements through detailed and continuing analysis with the objective of maximising overall returns to shareholders. The assessment of market risk is based on the Company’s portfolio as held at the year end. The assessment uses the AIM All-Share Index as a proxy for the AIM Qualifying Investments and quoted Non-Qualifying Investments and illustrates, based on historical price movements, their potential change in value to the AIM All-Share Index. The review has also examined the potential impact of a movement in the market on the CLN investments held by the Company, whose values will vary according to the value of the underlying security into which the loan note instrument has the option to convert. As at 31 January 2023 96.68% (31 January 2022: 97.34%) of the Company’s investments are traded. A 30% decrease in stock prices as at 31 January 2023 would have decreased the net assets attributable to the Company’s shareholders and increased the loss for the year by £41,283,000 (31 January 2022: £62,708,000); an equal change in the opposite direction would have increased the net assets attributable to the Company’s shareholders and turned the loss into a proﬁt for the year by an equal amount. As at 31 January 2023 3.32% (31 January 2022: 2.66%) of the Company’s investments are in unquoted companies held at fair value. A change in market inputs that would result in a 30% decrease in the valuations of unquoted investments at 31 January 2023 would have decreased the net assets attributable to the Company’s shareholders and increased the loss for the year by £1,418,000 (31 January 2022: £1,714,000); an equal change in the opposite direction would have increased the net assets attributable to the Company’s shareholders and reduced the loss for the year by an equal amount. Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 73 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights Currency risk The Company’s performance is measured in sterling, a proportion of the Company’s assets may be either denominated in other currencies or are in investments with currency exposure. Any income denominated in a foreign currency is converted into sterling upon receipt. At the Balance Sheet date, the Company exposure to the United States Dollar consisted of investments of £3,366,000 (31 January 2022: £2,846,000). A 5% rise or decline of Sterling gains foreign currency (i.e. non Pounds Sterling) assets and liabilities held at the year end would have increased/decreased the net asset value by £168,000 (2022: £142,000). Interest Rate Risk Interest rate movements may affect the level of income receivable on cash deposits and any ﬁxed interest securities. The Company held four ﬁxed interest investments of £4,577,000 (2022: £4,500,000), the weighted average interest of the convertible loan interest is 3.87% (2022: Nil%). The details of the convertible loan notes’ terms of agreement, fair value, interest chargeable and provisions are noted in the Investment Portfolio on pages 14 to 16. Changes in interest rates will impact the fair value of the convertible loan notes due to the changes in inputs changing the present value of future payments and the benchmarking to similar convertible loan notes. A change in market inputs, through changes in interest rates, that would result in a 1% decrease in the fair value of convertible loan notes at 31 January 2023 would have decreased the net assets attributable to the Company’s shareholders and increased the loss for the year by £46,000 (31 January 2022: £45,000); an equal change in the opposite direction would have increased the net assets attributable to the Company’s shareholders and reduced the loss for the year by an equal amount. The convertible loan notes are ﬁxed interest. The Company held a cash balance at 31 January 2023 of £59,595,000 (2022: £31,833,000). If the level of cash was maintained for a year, a 1% increase in interest rates would increase the revenue return and net assets by £596,000 (2022: £318,000). Management proactively manages cash balances. If there were a fall of 1% in interest rates, it would potentially impact the Company by turning positive interest to negative interest. The total effect would be a revenue reduction/cost increase of £596,000 (2022: £318,000). 17 Credit Risk Credit risk is the risk that the counterparty to a ﬁnancial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The carrying amount of ﬁnancial assets best represents the maximum credit risk exposure at the balance sheet date. At 31 January 2023, the ﬁnancial assets exposed to credit risk, representing convertible loan stock instruments, amounts due from brokers, accrued income and cash amounted to £64,474,000 (31 January 2022: £38,267,000). The convertible loan in Sorbic International plc is secured over the buildings and land use rights of the companies. Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved, the high credit quality of the brokers used and the fact that almost all transactions are on a ‘delivery versus payment’ basis. The Manager monitors the quality of service provided by the brokers used to further mitigate this risk. All the assets of the Company which are tradeable on AIM are held by The Bank of New York Nominees, the Company’s custodian. Bankruptcy or insolvency of the custodian may cause the Company’s rights with respect to securities held by the custodian to be delayed or limited. At 31 January 2023, cash held by the Company was held by The Bank of New York Mellon. Bankruptcy or insolvency of the institutions may cause the Company’s rights with respect to the cash held by it to be delayed or limited. Should the credit quality or the ﬁnancial position of the institutions deteriorate signiﬁcantly the Company has the ability to move the cash at short notice. The Board monitor the credit worthiness of BNYM, currently rated at Aa2 (Moody’s). There were no signiﬁcant concentrations of credit risk to counterparties at 31 January 2023 or 31 January 2022. Amati AIM VCT plc Annual Report & Financial Statements 2023 74 18 Liquidity Risk The Company’s ﬁnancial instruments include investments in unlisted equity investments which are not traded in an organised public market and which generally may be illiquid. As a result, the Company may not be able to quickly liquidate some of its investments in these instruments at an amount close to their fair value in order to meet its liquidity requirements, or to respond to speciﬁc events such as deterioration in the creditworthiness of any particular issuer. The proportion of the portfolio invested in unlisted equity investments is not considered signiﬁcant given the amount of investments in readily realisable securities. The Company’s liquidity risk is managed on an ongoing basis by the Manager in accordance with policies and procedures in place as described in the Strategic Report on pages 21 to 24. The Company’s overall liquidity risks are monitored on a quarterly basis by the Board. The Company maintains sufﬁcient investments in cash and readily realisable securities to pay accounts payable and accrued expenses. At 31 January 2023, these investments were valued at £123,326,000 (31 January 2022: £132,107,000). The Directors consider that frequently traded AIM investments with a market capitalisation of greater than £200m represent readily realisable securities. The Company is a closed-end fund, assets do not need to be liquidated to meet redemptions, and sufﬁcient liquidity is maintained to meet obligations as they fall due. 19 Capital Management Policies and Procedures The Company’s capital management objectives are: • to ensure that it will be able to continue as a going concern; • to satisfy the relevant HMRC requirements; and • to maximise the income and capital return to its shareholders. As a VCT, the Company must have, within 3 years of raising its capital, at least 80% by value of its investments in VCT qualifying holdings, which are relatively high-risk UK smaller companies. In addition at least 30% of new money raised during an accounting period must be invested in qualifying holdings within 12 months of the end of the ﬁnancial year in which the funds are raised. In satisfying these requirements, the Company’s capital management scope is restricted. The Company does have the option of maintaining or adjusting its capital structure by varying dividends, returning capital to shareholders, issuing new shares or selling assets to maintain a certain level of liquidity. There has been no change in the objectives, policies or processes for managing capital from the previous year. The structure of the Company’s capital is described in note 11 and details of the Company’s reserves are shown in the Statement of Changes in Equity on pages 56 and 57. The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes: • the need to buy back equity shares for cancellation, which takes account of the difference between the net asset value per share and the share price (i.e. the premium or discount); • the need for new issues of shares; and • the extent to which revenue in excess of that which is to be distributed should be retained. The Company is subject to externally imposed capital requirements: a. as a public limited company, the Company is required to have a minimum share capital of £50,000; and b. in accordance with the provisions of the Income Tax Act 2007, the Company as a Venture Capital Trust: i) is required to make a distribution each year such that it does not retain more than 15% of income from shares and securities; and ii) is required to derive 70% of its income from shares and securities. These requirements are unchanged since last year and the Company has complied with them at all times. Notes to the Financial Statements (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 75 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Financial Statements Highlights 20 Post Balance Sheet Events The following transactions have taken place between 31 January 2023 and the date of this report: 498,817 shares bought back On 2 March 2023 Flylogix Limited, an unquoted investment within the Company’s portfolio, was placed into administration. 21 Related Parties The Company retains Amati Global Investors as its Manager. Details of the agreement with the Manager are set out on page 20. The number of ordinary shares in the Company (all of which are held beneﬁcially) by certain members of the management team are: 31 January 31 January 31 January 31 January 2023 2023 2022 2022 shares held % shares held shares held % shares held Paul Jourdan 596,806 0.39% 723,985 0.53% David Stevenson 26,753 0.02% 26,753 0.02% Anna Macdonald 15,930 0.01% 7,855 0.01% * includes 24,781 shares held by a Person Closely Associated to Paul Jourdan The remuneration of the Directors, who are key management personnel of the Company, is disclosed in the Directors’ Remuneration Report on page 44, and in note 4 on page 65. Amati AIM VCT plc Annual Report & Financial Statements 2023 76 Share Price The Company’s shares are listed on the London Stock Exchange. The bid price of the Company’s shares can be found on Amati Global Investors’ website: www.amatiglobal.com. Net Asset Value per Share The Company’s net asset value per share as at 31 January 2023 was 132.8p. The Company normally announces its net asset value on a weekly basis. Net asset value per share information can be found on the Amati Global Investors’ website: www.amatiglobal.com. Dividends As disclosed in the Interim Report, the Company has now moved to paying all cash dividends by bank transfer rather than by cheque. Shareholders have the following options available for future dividends: • Complete a bank mandate form and receive dividends via direct credit to a UK domiciled bank account • Re-invest the dividends for additional shares in the Company through the Dividend Re-investment Scheme (DRIS) Shareholders who wish to complete a bank mandate form are advised to contact The City Partnership on 01484 240910 or by email: [email protected]. Shareholders may also register their bank account details and register for the Dividend Re-investment Scheme themselves in the Amati Investor Hub at https://amati-aim-vct.cityhub.uk.com. Dividend Re-Investment Scheme Shareholders who wish to have future dividends re- invested in the Company’s shares should contact The City Partnership (UK) Ltd on 01484 240 910 or email [email protected]. Shareholders may also register for the Dividend Re-investment Scheme themselves in the Amati Investor Hub at https://amati-aim-vct.cityhub.uk.com/ Financial Calendar September 2023 Half-yearly Report for the six months ending 31 July 2023 to be circulated to shareholders 31 January 2024 Year-end Annual General Meeting The Annual General Meeting of the Company will be held on 15 June 2023 at the Barber-Surgeons’ Hall, Monkwell Square, Wood Street, Barbican, London EC2Y 5BL starting at 2pm. The notice of the meeting is included at pages 79 to 84 of this report. Shareholder Information Table of Historic Returns from launch to 31 January 2023 attributable to shares issued by the original VCTs which have made up Amati AIM VCT Numis NAV Total NAV Total Alternative Return with Return with Markets dividends dividends not Total Return Launch date Merger date re-invested re-invested Index Singer & Friedlander AIM 3 VCT (‘C’ shares) 4 April 2005 8 December 2005 39.1% 19.9% 9.9% Amati VCT plc 24 March 2005 4 May 2018 122.7% 71.9% 5.9% Invesco Perpetual AIM VCT 30 July 2004 8 November 2011 23.1% -9.0% 34.6% Singer & Friedlander AIM 3 VCT* 29 January 2001 n/a 26.8% 8.9% -21.1% Singer & Friedlander AIM 2 VCT 29 February 2000 22 February 2006 -2.8% -16.6% -59.7% Singer & Friedlander AIM VCT 28 September 1998 22 February 2006 -33.7% -21.6% 22.6% * Singer & Friedlander AIM 3 VCT changed its name to ViCTory VCT on 22 February 2006, to Amati VCT 2 on 9 November 2011 and to Amati AIM VCT plc on 4 May 2018. Amati AIM VCT plc Annual Report & Financial Statements 2023 77 An Alternative Performance Measure (“APM”) is a numerical measure of the Company’s current, historical or future ﬁnancial performance, ﬁnancial position or cash ﬂows, other than a ﬁnancial measure deﬁned or speciﬁed in the applicable ﬁnancial framework. The Company uses the following Alternative Performance Measures: Net Asset Value (“NAV”) per share The NAV per share of the Company is the sum of the underlying assets less the liabilities of the Company divided by the total number of shares in issue. NAV calculation 31 January 2023 31 January 2022 Net assets (£’000) 201,281 247,074 (a) Number of Ordinary shares in issue 151,548,993 136,720,797 (b) NAV (c = (a/b) * 100) 132.8p 180.7p (c) Discount/Premium The price of a share is derived from buyers and sellers agreeing a price at which to trade their shares. For Venture Capital Trusts the company is the principal buyer of the shares of sellers via buybacks (see Capital Management in note 19). The share price may not be identical to the NAV per share of the underlying assets less liabilities of the Company. If the share price is lower than the NAV per share, the shares are trading at a discount. Shares trading at a price above NAV per share are said to be at a premium. Discount calculation 31 January 2023 31 January 2022 Closing NAV per share (p) 132.8 180.7 (a) Closing share price (p) 123.5 166.5 (b) Discount (c = ((a-b)/a)) 7.0% 7.9% (c) Ongoing charges ratio All operating costs, of a capital or revenue nature, payable by the Company and expected to be regularly incurred. These exclude the costs of acquisition or disposal of investments, ﬁnancing charges, and gains or losses on investments. They are the best estimate of future costs. The ongoing charges ratio is the annualised operating costs divided by the average NAV over the period. Ongoing charges calculation 31 January 2023 31 January 2022 Management fee (£’000) 3,718 4,460 Other administrative expenses (£’000) 588 514 Total management fee and other administrative expenses (£’000) 4,306 4,974 (a) Average net assets in the year (£) 223,528,425 265,497,028 (b) Ongoing charges (c = a/b) 1.9% 1.9% (c) Alternative Performance Measures Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Information for Shareholders Highlights Amati AIM VCT plc Annual Report & Financial Statements 2023 78 Total Return The return to shareholders calculated on a per share basis by adding dividends paid in the period to the increase or decrease in the Share price or NAV per share in the period. The dividends are assumed to have been re-invested in the form of shares or net assets respectively, on the date on which the shares were quoted ex-dividend and this is accounted for in the “Compounding effect from re-investing dividends line”. NAV total return calculation 31 January 2023 31 January 2022 Closing NAV per share (p) 132.8 180.7 Add back ﬁnal dividend for the year ended 31 January 2022 (2021)(p) 4.5 7.0 Add back interim dividend for the year ended 31 January 2023 (2022)(p) 3.5 4.5 Compounding effect from re-investing dividends (p) -0.2 -1.6 Re-stated closing NAV per share assuming dividends re-invested (p) 140.6 190.6 (a) Opening NAV per share (p) 180.7 206.1 (b) NAV total return (c = ((a - b)/b)) (%) -22.2% -7.5% (c) Alternative Performance Measures (continued) Amati AIM VCT plc Annual Report & Financial Statements 2023 79 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Information for Shareholders Highlights This document is important and requires your immediate attention. If you are in any doubt about any aspect of the proposals referred to in this document or about the action which you should take, you should seek your own advice immediately from a stockbroker, solicitor, accountant or other independent professional adviser. If you have sold or otherwise transferred all of your shares, please pass this document, together with the accompanying documents, to the purchaser or transferee, or to the person who arranged the sale or transfer, so they can pass these documents to the person who now holds the shares. It is the Board’s opinion that all Resolutions are in the best interests of shareholders as a whole and the Board unanimously recommends that shareholders should vote in favour of all Resolutions. Attendance at the meeting The Company intends for the Annual General Meeting (the “Meeting” or “AGM”) to be held in person. The AGM will also be live-streamed for those who wish to view it but cannot attend in person. As is our normal practice, there will be live voting for those physically present at the AGM. Shareholders are advised that it will not be possible to vote or ask questions virtually during the live-stream and we therefore request that all shareholders, and particularly those who cannot attend physically, submit their votes by proxy, ahead of the deadline of 2.00 pm on Tuesday 13 June 2023 to ensure that their vote counts at the AGM. If you hold your shares in a nominee account, such as through a share dealing service or platform, you will need to contact your provider and ask them to submit the proxy votes on your behalf. For further instructions on proxy voting, please refer to the notes on pages 82 to 84 of this document. Shortly ahead of the AGM, the Company’s Manager will post a link and instructions on how to join the event on its homepage at www.amatiglobal.com. Shareholders who are unable to join the Meeting physically can email any questions they may have either on the business of the AGM or the portfolio to [email protected] 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 and/or the Company’s Manager (as appropriate) will reply to any individual shareholder questions submitted by the deadline of 9 June 2023, before the AGM. Notice is hereby given that the Annual General Meeting of Amati AIM VCT plc (the “Company”) will be held at the Barber-Surgeons’ Hall, Monkwell Square, Wood Street, Barbican, London EC2Y 5BL on Thursday 15 June 2023 at 2.00 pm for the transaction of the following business: ORDINARY BUSINESS To consider, and if thought ﬁt, to pass the following Resolutions 1 to 9 (inclusive) as Ordinary Resolutions of the Company: Ordinary Resolutions 1. To receive and adopt the Directors’ Report and audited Financial Statements of the Company for the ﬁnancial year ended 31 January 2023, together with the Independent Auditor’s Report thereon. 2. To receive and approve the Directors’ Remuneration Report for the ﬁnancial year ended 31 January 2023. 3. To declare a ﬁnal dividend for the ﬁnancial year ended 31 January 2023 of 3.5p per ordinary share payable on 21 July 2023 to shareholders on the register as at the close of business on 16 June 2023. 4. To re-appoint BDO LLP as auditors of the Company to hold ofﬁce from the conclusion of the Meeting until the conclusion of the next annual general meeting of the Company. 5. To authorise the Directors to ﬁx the remuneration of the auditors of the Company. 6. To re-elect Fiona Wollocombe as a Director of the Company. 7. To re-elect Julia Henderson as a Director of the Company. 8. To re-elect Brian Scouler as a Director of the Company. Notice of Annual General Meeting Amati AIM VCT plc Annual Report & Financial Statements 2023 80 Notice of Annual General Meeting (continued) 9. THAT, in substitution for all subsisting authorities to the extent unused, the Directors of the Company be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the “Act”), to exercise all the powers of the Company to allot ordinary shares of 5 pence each in the capital of the Company (“Ordinary Shares”) and to grant rights to subscribe for or to convert any security into Ordinary Shares (“Rights”) up to an aggregate nominal value of £2,266,000 (being equal to approximately 30 per cent. of the Company’s issued share capital (excluding treasury shares) as at 17 April 2023, being the latest practicable date prior to the date of the notice of this Meeting), provided that: i. the authority hereby conferred by this Resolution shall expire (unless previously renewed, varied or revoked by the Company in general meeting) on the earlier of the date of the annual general meeting of the Company to be held in 2024 and the date which is 15 months after the date on which this Resolution is passed; and ii. this authority shall allow the Company to make, before the expiry of this authority, offers or agreements which would or might require Ordinary Shares to be allotted or Rights to be granted after such expiry and the Directors shall be entitled to allot Ordinary Shares or grant Rights pursuant to any such offers or agreements as if the power conferred by this Resolution had not expired. SPECIAL BUSINESS To consider, and if thought ﬁt, to pass the following Resolution 10 (disapplication of pre-emption rights), Resolution 11 (share buy-backs) and Resolution 12 (authority to hold a general meeting on short notice) as Special Resolutions of the Company: Special Resolutions 10. THAT, subject to the passing of Resolution 9 set out in the notice of this Meeting and in substitution for all subsisting authorities to the extent unused, the Directors be and are hereby empowered, pursuant to sections 570 and 573 of the Companies Act 2006 (the “Act”) to allot or make offers or agreements to allot equity securities (which expression shall have the meaning ascribed to it in section 560 of the Act) for cash pursuant to the authority given pursuant to Resolution 9 set out in the notice of this Meeting, and/or by way of a sale of treasury shares, as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power: i. shall be limited to the allotment of equity securities and/or the sale of treasury shares for cash up to an aggregate nominal amount of £1,964,000 (representing approximately 26 per cent. of the issued share capital of the Company (excluding treasury shares) as at 17 April 2023) pursuant to one or more offers for subscription of the Company; ii. shall be limited to the allotment of equity securities and/or the sale of treasury shares for cash up to an aggregate nominal amount of £302,000 (representing approximately 4 per cent. of the issued share capital of the Company (excluding treasury shares) as at 17 April 2023) pursuant to the dividend reinvestment scheme operated by the Company; and iii. shall expire (unless previously renewed, varied or revoked by the Company in general meeting) on the earlier of the date of the annual general meeting of the Company to be held in 2024 and the date which is 15 months after the date on which this Resolution is passed, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted or treasury shares to be sold after such expiry and the Directors may allot equity securities or sell ordinary shares of 5 pence each in the capital of the Company from treasury in pursuance of such an offer or agreement as if the power conferred by this Resolution had not expired. 11. THAT, in substitution for existing authorities, the Company be and is hereby empowered to make one or more market purchases within the meaning Amati AIM VCT plc Annual Report & Financial Statements 2023 81 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Information for Shareholders Highlights of Section 701 of the Companies Act 2006 (the “Act”), of ordinary shares of 5 pence each in the capital of the Company (“Ordinary Shares”) (either for cancellation or for the retention of treasury shares for future re-issue or transfer) provided that: i. the maximum aggregate number of Ordinary Shares authorised to be purchased is such number thereof being 14.99% of the issued Ordinary Share capital of the Company as at the date of this Resolution; ii. the minimum price which may be paid per Ordinary Share is 5p per share, the nominal amount thereof; iii. the maximum price (exclusive of expenses) which may be paid per Ordinary Share is an amount equal to 105% of the average of the middle market quotation of such Ordinary Share taken from the London Stock Exchange Daily Ofﬁcial List for the ﬁve business days immediately preceding the day on which such Ordinary Share is to be purchased; iv. the authority hereby conferred shall expire on the earlier of the annual general meeting of the Company to be held in 2024 and the date which is 15 months after the date on which this Resolution is passed; and v. the Company may make a contract to purchase its own Ordinary Shares under the authority conferred by this Resolution prior to the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority and may make a purchase of such Ordinary Shares pursuant to any such contract. 12. THAT a general meeting (other than an annual general meeting) may be called on not less than 14 clear days’ notice, provided that this authority shall expire at the conclusion of the next annual general meeting of the Company. By order of the Board LDC Nominee Secretary Limited Company Secretary Registered ofﬁce: 8th ﬂoor, 100 Bishopsgate, London EC2N 4AG 17 April 2023 Amati AIM VCT plc Annual Report & Financial Statements 2023 82 Notice of Annual General Meeting (continued) Notes 1. A member entitled to attend and vote at the Meeting convened by the above Notice of Meeting is entitled to appoint one or more proxies to attend and to vote in the member’s place. A proxy need not be a member of the Company. 2. To appoint a proxy you may use the Form of Proxy enclosed with this Notice of Meeting. To be valid, the Form of Proxy, together with the power of attorney or other written authority (if any) under which it is signed or a notarially certiﬁed or ofﬁce copy of the same, must be deposited by 2.00 pm on 13 June 2023 to The City Partnership (UK) Ltd, The Mending Rooms, Park Valley Mills, Meltham Road, Huddersﬁeld HD4 7BH (the “Registrar”). Completion of the Form of Proxy will not prevent you from attending and voting in person. 3. Pursuant to regulation 41 of the Uncertiﬁcated Securities Regulations 2001, only shareholders registered in the register of members of the Company at 6.00pm on 13 June 2023 shall be entitled to attend and vote at the Annual General Meeting in respect of the number of shares registered in their name at such time. If the Meeting is adjourned, the time by which a person must be entered on the register of members of the Company in order to have the right to attend and vote at the adjourned Meeting is 48 hours before the time appointed for the adjourned Meeting. Changes to the register of members after the relevant times shall be disregarded in determining the rights of any person to attend and vote at the Meeting. 4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact the Registrar by email to [email protected] for (an) additional form(s), or you may photocopy this form. Please indicate in the box next to the proxy holder’s name the number of securities in relation to which they are authorised to act as your proxy. Please also indicate by ticking the box provided if the proxy instruction is one of multiple instructions being given. All forms must be signed and returned together in the same envelope. A reply-paid Form of Proxy is enclosed with members’ copies of this document. To be valid, the Form of Proxy must be sent or delivered to the Registrar at The City Partnership (UK) Ltd, The Mending Rooms, Park Valley Mills, Meltham Road, Huddersﬁeld HD4 7BH or sent to the Registrar by scan and email to [email protected] (please include Amati AIM VCT plc and your name in the subject line of your email) so as to be received not later than 48 hours before the time appointed for the Meeting or any adjourned meeting or, in the case of a poll taken subsequent to the date of the Meeting or adjourned meeting, so as to be received no later than 24 hours before the time appointed for taking the poll. 5. Alternatively, shareholders may vote online by visiting https://proxy-amati.cpip.io. Shareholders will need to use their City Investor Number (CIN) and AGM Access Code, which will be provided to shareholders separately. Votes lodged through the online facility must be received by the Registrar not later than 48 hours (excluding non-working days) before the start of the Meeting or any adjournment thereof. 6. Shareholders who hold their shares electronically may submit their votes through CREST, by submitting the appropriate and authenticated CREST message so as to be received by The City Partnership (UK) Ltd not later than 48 hours (excluding non-working days) before the start of the Meeting. Instructions on how to vote through CREST can be found by accessing the following website: www.euroclear.com. Please see above at Note 5 for an alternative method of electronic submission of proxies. 7. If you are a CREST system user (including a CREST personal member) you can appoint one or more proxies or give an instruction to a proxy by having an appropriate CREST message transmitted. To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by The City Partnership (UK) Ltd (ID number 8RA57) not later than 48 hours (excluding non-working days) before the time appointed for holding the Meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which the Registrar is able to retrieve the message. CREST personal members or other CREST sponsored members should contact their CREST sponsor for assistance with appointing proxies via CREST. For further information on CREST procedures, Amati AIM VCT plc Annual Report & Financial Statements 2023 83 Information for Shareholders Financial Statements Reports from the Directors Strategic Report Highlights Information for Shareholders Highlights limitations and system timings please refer to the CREST Manual. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)(a) of the Uncertiﬁcated Securities Regulations 2001. 8. In the case of joint holders, where more than one of the joint holders purports to appoint one or more proxies, only the purported appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of joint holders appear in the Company’s register of members in respect of the joint holding (the ﬁrst named being the most senior). 9. Any corporation which is a member can appoint one or more corporate representatives. Members can only appoint more than one corporate representative where each corporate representative is appointed to exercise rights attached to different shares. Members cannot appoint more than one corporate representative to exercise the rights attached to the same share(s). 10. As at 17 April 2023 (being the last practicable date prior to the publication of this Notice) the Company’s issued share capital consists of 151,050,176 ordinary shares of 5p each, carrying one vote each. The Company does not hold any ordinary shares in treasury. Therefore, the total voting rights in the Company as at 17 April 2023 are 151,050,176. 11. The appointment of a proxy will not preclude a member from subsequently attending, voting and speaking at the Meeting should the member subsequently decide to do so. You can only appoint a proxy using the procedures set out in these notes and the notes to the Form of Proxy. 12. Any person to whom this Notice is sent who is a person nominated under section 146 of the Companies Act 2006 (the "2006 Act") to enjoy information rights (a “Nominated Person”) may, under an agreement between the Nominated Person and the member by whom he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. 13. The statement of the rights of members in relation to the appointment of proxies in Notes 2 to 5 above does not apply to Nominated Persons. The rights described in these paragraphs can only be exercised by members of the Company. 14. Copies of the Directors’ letters of appointment will be available for inspection at the Meeting. 15. Except as provided above, members who have general queries about the Meeting should use the following means of communication (no other methods of communication will be accepted): • Calling Amati Global Investors on 0131 503 9115; or • emailing Amati Global Investors at [email protected]. You may not use any electronic address provided either in this Notice or any related documents (including the chairman’s letter and Form of Proxy) to communicate with the Company for any purpose other than those expressly stated. 16. A copy of the Notice of the Annual General Meeting and the information required by Section 311A of the 2006 Act is included on the Manager’s website at https://www.amatiglobal.com/fund/amati-aim- vct/literature. 17. Members should note that it is possible that, pursuant to requests made by members of the Company under section 527 of the 2006 Act, the Company may be required to publish on a website a statement setting out any matter relating to: (a) the audit of the Company’s accounts (including the Auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (b) any circumstance connected with an auditor of the Company ceasing to hold ofﬁce since the previous meeting at which annual accounts and reports were laid in accordance with section 437 of the 2006 Act. The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the 2006 Act. Where the Company is required to place a statement on a website under section 527 of the 2006 Act, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt Amati AIM VCT plc Annual Report & Financial Statements 2023 84 with at the Annual General Meeting includes any statement that the Company has been required under section 527 of the 2006 Act to publish on a website. 18. Under Section 338 and Section 338A of the 2006 Act, members meeting the threshold requirements in those sections have the right to require the Company (a) to give to members of the Company entitled to receive notice of the Meeting, notice of any resolution which may properly be moved and is intended to be moved at the Meeting and/or (b) to include in the business to be dealt with at the Meeting any matter (other than a proposed resolution) which may be properly included in the business. A resolution may properly be moved or a matter may properly be included in the business unless (a) (in the case of resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than 4 May 2023, being the date six weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request. 19. Personal data provided by shareholders at or in relation to the Meeting will be processed in line with the Manager’s privacy policy which is available via the following link https://www.amatiglobal.com/page/privacy-policy. 20. In accordance with section 319A of the 2006 Act, the Company must cause to be answered at the Annual General Meeting any question relating to the business being dealt with at the Annual General Meeting which is put by a member attending the Meeting, except in certain circumstances, including if it is undesirable, in the interests of the Company or the good order of the Meeting, that the question be answered or if to do so would involve the disclosure of conﬁdential information. 21. Any person holding 3 per cent. or more of the total voting rights of the Company who appoints a person other than the Chair of the meeting as his/her proxy will need to ensure that both he/she and his/her proxy complies with their respective disclosure obligations under the UK Disclosure Guidance and Transparency Rules. Notice of Annual General Meeting (continued) Corporate Information Directors Fiona Wollocombe Julia Henderson Brian Scouler all of: 8th Floor 100 Bishopsgate London United Kingdom EC2N 4AG Secretary LDC Nominee Secretary Limited 8th Floor, 100 Bishopsgate London EC2N 4AG Fund Manager Amati Global Investors Limited 8 Coates Crescent Edinburgh EH3 7AL VCT Status Adviser Philip Hare & Associates LLP 6 Snow Hill London EC1A 2AY Registrar The City Partnership (UK) Limited The Mending Rooms Park Valley Mills Meltham Road Huddersﬁeld HD4 7BH Auditor BDO LLP 55 Baker Street London W1U 7EU Solicitors Dickson Minto W.S. 16 Charlotte Square Edinburgh EH2 4DF Custodian The Bank of New York Mellon SA/NV London Branch 160 Queen Victoria Street London EC4V 4LA Amati Global Investors Limited 8 Coates Crescent Edinburgh EH3 7AL Tel: 0131 503 9100 Amati Global Investors Limited is authorised and regulated by the Financial Conduct Authority

AI Terminal

4808_10-k_2023-04-19_77e8e4ae-143f-40f8-aaf0-d7a9ffe0728b.xhtml

More from AMATI AIM VCT PLC

Talk to a Data Expert