Annual Financial Report

RNS Number : 1881I

Amati AIM VCT PLC

13 April 2022

Amati AIM VCT plc (the "Company")

Legal Entity Identifier: 213800HAEDBBK9RWCD25

Annual Report & Financial Statements

For the year ended 31 January 2022

The Directors are pleased to present the Annual Financial Results of the Company for the year ended 31 January 2022.

The information set out below does not constitute the Company's full statutory accounts for the year ended 31 January 2022 in terms of Section 434 of the Companies Act 2006 but is derived from those accounts. Statutory accounts for the year ended 31 January 2022 will be posted to Shareholders and delivered to the Registrar of Companies, in due course. The Auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditors' report can be found in the Company's full Annual Report and Accounts. Audited statutory accounts for the year to 31 January 2021, which were unqualified, have been lodged with the Registrars of Companies.

OUR STRATEGY

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

DIVIDEND POLICY

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

Highlights

For the year ended 31 January 2022

NAV Total return

for the year

-7.5%

(2021: +38.9%)

£31.3m

invested in qualifying

holdings during the year

(2021: £16.0m)

Year end

Net Asset Value per share

180.7p

(2021: 206.1p)

£65m

The prospectus offer launched in July 2021 raised £65m by close of the offer in February 2022

Key data

	31/01/22	31/01/21
Net Asset Value ("NAV")	£247.1m	£238.3m
Shares in issue	136,720,797	115,589,550
NAV per share†	180.7p	206.1p
Share price	166.5p	190.5p
Market capitalisation	£227.6m	£220.2m
Share price discount to NAV†	7.9%	7.6%
NAV Total Return for the year
(assuming re-invested dividends)†	-7.5%	38.9%
Numis Alternative Markets
Total Return Index*	-3.5%	20.5%
Ongoing charges**†	1.9%	2.1%
Dividends paid and declared
in respect of the year	9.0p	10.5p

* Numis Alternative Markets Index is included as a 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.

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

Table of investor returns

to 31 January 2022

From	Date	NAV Total Return with dividends re-invested	Numis Alternative Markets Total Return Index
NAV following re-launch of the VCT under management of Amati Global
Investors ("Amati")	9 November 2011*	208.0%	65.2%
NAV following appointment of Amati
as Manager of the VCT, which was known as ViCTory VCT at the time	25 March 2010	223.1%	69.8%

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

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

Dividends paid and declared

-14.3%

2022 total dividends per share

9.0p

5% of NAV

Cumulative dividends per share

85.74p

Dividend history

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

Year ended 31 January	Total dividends per share** p	Cumulative dividends per share p
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

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

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

Fund performance

A graph depicting the Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from change of Manager on 19 March 2010 (first Net Asset Value calculated on 25 March 2010) to 31 January 2022 can be found on page 3 of the full Annual Report and Accounts.

Historic performance

A graph depicting the Amati AIM VCT NAV Total Return and Numis Alternative Markets Total Return Index from inception of fund to 31 January 2022 can be found on page 3 of the full Annual Report and Accounts.

Extracts from Strategic Report

Chairman's Statement

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

Overview and Investment Performance

Following a rise of almost 8% in the first half of the year, the performance of the portfolio fell away in the second half to close the year down 7.5%, on a NAV total return basis. Some of this fall was for company specific reasons, in particular Polarean Imaging and Frontier Developments, while some was due to a sharp deterioration in sentiment. This stemmed from inflation rising to much higher levels than forecast by central banks, bringing with it the prospect of higher interest rates, rising bond yields and the withdrawal of liquidity through the ending of quantitative easing. This has led to some significant de-ratings of many growth companies. On top of this, there was the deepening crisis caused by Russia's military build-up around Ukraine.

The Company made twelve new qualifying investments during the year. Having invested £19.7m in the first half, a total of £31.3m was invested across the year as a whole. Six of the new investments come under the broad category of environmental technology, being companies providing technologies, products and services which will help enable, in a myriad of different ways, both energy transition away from oil and gas and the reduction of greenhouse gas emissions. With high levels of capital being deployed to this end around the world, these are competitive areas. However, with such big changes to every aspect of our economy being required over the next 30 years to reach net zero emissions there are also abundant opportunities for new technology to be developed and commercialised and the UK provides fertile ground in which to create such companies. Healthcare also remained well represented amongst our new investments, with software and training companies also featuring. Fuller details of the new investments and of investment performance are given in the Manager's Review which follows.

Corporate Developments

The Board announced in April that it intended to launch a Prospectus Offer (the "Offer"). This opened on 30 July seeking to raise up to £40m with an over-allotment facility to raise up to a further £25m. This Offer saw strong demand and the initial £40m was raised after only four business days. On 15 December 2021, the Board announced that, as the Company had continued to identify attractive investment opportunities and having considered the current rate of investment activity, it intended to utilise the over-allotment facility of £25m and re-open the Offer in February 2022. This was confirmed by the Board in its announcement on 14 February this year, with the Offer re-opening on 16 February and closing on 21 February, having been fully subscribed.

Ahead of its new financial year, the Board took the decision to transfer its company secretarial services. LDC Nominee Secretary Limited, part of The Law Debenture Corporation p.l.c. ("Law Debenture") was appointed as Company Secretary on 1 February 2022. Contact details for Law Debenture are set out below.

At the AGM this year, shareholders are being asked to vote on a resolution to cancel the entire amount standing to the credit of the Company's share premium account as at the date the relevant Court order is made. Subject to confirmation by the High Court of Justice in London and the reduction in capital taking effect, the amount so cancelled will be credited to the Company's distributable reserves. This will improve the Company's distributable reserves position and will provide the Company with flexibility to support, amongst other things, share buy-backs and the payment of dividends or other distributions to shareholders in the future. Shareholders were last asked to approve such a resolution in 2018.

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 2022 the net asset value was 180.7p. In line with this, the Board is proposing a final dividend of 4.5p per share, to be paid on 22 July 2022 to shareholders on the register on 17 June 2022. When added to the interim dividend of 4.5p per share, this would make total dividends for the year 9.0p per share, which is 5% of year end NAV.

The Board would like to remind shareholders about the Dividend Re-investment Scheme ("DRIS"). This 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 benefits 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 16 June 2022. This will be followed by presentations from the Manager and investee companies, and the Amati Guildhall Creative Entrepreneurs Award. Details are being sent to you with this report.

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

At the date of this report, there are no UK Government imposed restrictions in connection with the Covid-19 pandemic on the holding of public gatherings that would affect the holding of the AGM in London. However, the situation relating to Covid-19 is constantly evolving and the UK Government may re-impose restrictions in connection with Covid-19 and/or implement further measures that affect the holding of shareholder meetings. Accordingly, it is possible that at the date of the AGM measures may be in place that would restrict attendance at the AGM.

The Board recognises that the Company's AGM represents an important forum for shareholders to put questions to the Directors, to express their views on governance and to become fully informed about matters relating to the AGM resolutions. It understands that attending in person may not be possible for all shareholders who wish to attend. Therefore, the Company intends to also make available a live stream facility to allow shareholders to watch and listen to the AGM and the investor event which follows. If shareholders wish to use this facility please register your interest by emailing info@amatiglobal.com and shortly ahead of the event the Company's Manager will post a link and instructions on how to join the event on its homepage at www.amatiglobal.com . Shareholders watching the AGM will not be counted towards the quorum of the meeting and will not be able to participate in the formal business of the meeting, including asking questions and voting on the day.

The Board encourages shareholders to engage with the Board and the Company's Manager. In addition to asking questions at the AGM, shareholders can email any questions they may have either on the business of the AGM or the portfolio to info@amatiglobal.com by 10 June 2022 . 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 10 June 2022, before the AGM.

The Board also encourages shareholders to exercise their votes in advance of the meeting. Shareholders are advised to vote through the Company Registrar's online voting facility (details of which can be found at page 82 of the full Annual Report and Accounts) or by form of proxy. Shareholders who hold their shares through an investment platform or other nominee service are also encouraged to contact their investment platform or other nominee service as soon as possible to arrange for votes to be lodged on their behalf.

Board Changes

In 2005, I was invited to join the board of Amati VCT plc at its foundation, when it was then, First State Investments AIM VCT plc, going on to chair first Amati VCT plc and then the Company after the merger with Amati VCT plc in 2018. Since its creation, I have seen the Company grow and develop to its current size and success. I shall be retiring from the Board after this year's AGM and I would like to thank all of my board colleagues, past and present and the Company's Manager, for their support and hard work throughout my tenure. After six years on the board, Susannah Nicklin also intends to retire from the board before the end of this year to devote more time to other interests and recent appointments.

During the year we appointed Fiona Wollocombe to the board with a view to addressing the board's succession plans and I am delighted that she has agreed to take over as Chair. With her experience of VCTs and the investment sector, I am confident that I leave your board and the Company in the best of hands. It has been a privilege to have played a part in the evolution of our VCT.

Outlook

Since the aggressive attack by Russia on the Ukraine, we have experienced extreme investor sentiments which have led to a dramatic fall in the FT Indices after our year end. Our well-balanced portfolio has not been immune to derating along with the market, even for those companies with high elements of service and technical expertise. With inflation, interest rates and energy prices rising, there are ongoing headwinds. Our portfolio contains a diverse range of well-resourced companies, mostly with high barriers to entry derived from intellectual property and specialist skills. It also consists of both early-stage companies with good cash resources addressing potentially large markets and, where we have held investments for longer periods, maturing businesses with typically low levels of debt. Most of these businesses should be well placed to perform in more difficult economic conditions. It is in the nature of VCT investing that if we exit positions in more mature companies we cannot buy them back again because they would no longer fit the qualifying VCT criteria, so we have a strong incentive to be long term investors. This has proven to be beneficial over the years. It might be expected that the more challenging market conditions allow us to make new investments at lower valuations, and we anticipate having opportunities to take this advantage and deploy our recently raised funds during the course of 2022.

We all hope for peace soon.

Peter A. Lawrence

Chairman

12 April 2022

For any matters relating to your shareholding in the Company, dividend payments, or the Dividend Re-investment Scheme, please contact The City Partnership (UK) Ltd on 01484 240 910, or by email at amativct@city.uk.com.

For any other matters please contact Amati Global Investors on 0131 503 9115 or by email at info@amatiglobal.com. Amati maintains an informative website for the Company - www.amatiglobal.com - on which monthly investment updates, performance information, and past company reports can be found.

Fund Manager's Review

Market Review

During the year under review, some light finally began to appear at the end of the Covid tunnel, with the global rollout of vaccination programmes now leading to greatly reduced rates of hospitalisations and deaths in most countries. Hopefully, we can now look towards a future with limited fear of further lockdowns and gradually falling levels of restrictions.

Despite this clear evidence of progress on the pandemic, it has been a mixed year for equity markets, with the strong returns reported in the first half unwinding during the second half. Investors are now focusing heavily on geo-political and economic factors which gave increasing cause for concern as we entered 2022. This has come at a time when equity valuations look stretched compared to history, especially in the US. In turn, this has led to market sentiment changing, with high growth sectors such as healthcare and technology seeing material profit taking, whilst out-of-favour sectors including oil and gas, mining and banking, have enjoyed a return to form after a number of fallow years.

The ever increasing build-up of Russian troops and armaments around the Russian-controlled borders of Ukraine became an ever more worrying development during the year. Relatively few commentators saw this as the pre-cursor to an all-out invasion of the kind that took place on 24 February 2022, but the level of geo-political risk was rising throughout the period.

The extraordinary level of quantitative easing to support pandemic policies during 2020 and 2021 has meant that we are now in an era of higher inflation and an upward trajectory to interest rates. Inflation rose to levels the likes of which younger investors will not have seen in their careers. Markets are increasingly coming to the view that inflation may be with us for some time. It is hard to escape the conclusion that central banks and finance ministers miscalculated in creating as much liquidity as they did in 2020 and 2021. Towards the end of 2021, we saw dramatic increases in global energy costs, led by rising oil and gas prices, leaving questions about ongoing energy security, particularly in the EU, but the UK has also paid little attention to this in recent years. This comes against ongoing and costly commitments to deliver reduced carbon levels post the COP26 conference.

Moving closer to home, it has been a disappointing year for AIM investors with the Numis Alternative Markets Total Return Index falling by 3.5%. This was materially below both the Numis Smaller Companies (plus AIM excluding Investment Companies) Index which rose by 11.6%, and the Numis Large Cap index which rose by 19.5%. The recent increases we have seen in bond yields and interest rate expectations have led to a more difficult environment for the valuation of early-stage companies in general. However, UK asset prices remain modest by international standards and the derating we have seen over the past few months has brought valuations back in line with longer term norms.

Performance

The VCT's NAV Total Return for the period was -7.5%. This underperformed the benchmark Numis Alternative Markets Total Return Index, which returned -3.5%.

After rising 7.9% in the first half, the tone of the market became increasingly negative in the second half of the year. In addition, a couple of the previously best performing investments in the portfolio hit some specific issues.

Saietta , which was bought as pre-IPO investment and then added to at the point of IPO, was the biggest positive contributor to performance during the period. Other recent IPOs such as Northcoders and Arecor Therapeutics have also done well, with more detail in the section on Portfolio Activity below. Corporate activity also boosted performance. Universe was acquired by Professional Data Solutions at a 129% premium, and Xplorer Capital Growth acquired CloudCall at a 76% premium. Water Intelligence, the water leak detection company predominantly operating via franchisees in the US, was also a significant contributor, rising by 73%. Earnings have grown rapidly over the last few years, as the company has been acquiring underperforming franchises to operate directly. It has also successfully developed a national sales channel to sell to insurers. Accesso Technology, a global leader in online ticketing and electronic queuing systems, rose by 83% after the company saw earnings upgrades as its customers made greater use of its products once lockdowns began to ease. Angle, the maker of Parsortix, a device which can isolate circulating tumour cells in blood samples for analysis, having raised £20m in July, rose strongly over the year, as did SRT Marine Systems as the company finally delivered on some contract wins, after several delays, exacerbated by Covid.

Frontier Developments , the video games developer, was the biggest negative contributor in the period, falling by 56%. The company's launch of Jurassic World Evolution 2 ("JWE2") undershot expectations, which had been set high. Whilst the launch was smooth and glitch-free, the game was released into a crowded Thanksgiving schedule, as several launches that had been delayed by Covid came to market at the same time. Additionally, JWE2 did not have the support of a concurrent cinema release, as the next instalment in the franchise has been pushed to June 2022. Revenues were also lower than expected from Elite Dangerous: Odyssey after the gameplay of the new release did not work well across different devices. The console release was also delayed. We are confident that Frontier remains a world-class video games developer, and the company continues to broaden its portfolio of games, creating a more diversified business. Nonetheless, developing video games always carries a degree of risk and unpredictability. Tristel fell by 29%, as further outbreaks of Covid reduced the number of elective surgeries taking place and consequently it sold fewer kits for sterilising surgical equipment.

Polarean Imaging ("Polarean") , which had risen strongly in the first half of the year, then fell sharply from its high of 110p in October 2021. The U.S. Food and Drug Administration ("FDA") responded to its application for approval of its medical device with a Complete Response Letter ("CRL") as they had additional questions about the submission. This was unexpected. We believe it was part of a wider phenomenon in 2021, where the FDA had devoted so much time to Covid related approvals, with reduced underlying capacity due to working from home and self-isolation, that it pushed approvals back using whatever means it could, using a CRL or just by responding later than the normal regulatory timetable specified. We had sold around 1m shares ahead of the approval, but this did not alter the fact that as Polarean was our largest holding, the fall had a big impact on the Fund's NAV. On the positive side, a recent study in Oxford has shown that Polarean's device can play a key role in diagnosing long Covid where this is caused by lung impairment.

Portfolio Activity

The Company made twelve new investments and two follow-on investments during the period. The new investments comprised eight Initial Public Offerings ("IPO"), one secondary placing, and three pre-IPO investments. The pre-IPO investments and several of the IPOs we took part in are focused on environmental technologies, or in other words, bringing new technologies to market which are important to the goal of reducing greenhouse gas emissions. The pre-IPO investments all took the form of convertible loans with a small amount of equity investment.

Pre-IPO Investments

In March, prior to its flotation, we invested an initial £2.6m in Saietta, which had developed a novel design for an axial flux electric motor. These motors have advantages over competitors in terms of torque density, power efficiency and low cost of manufacture. The first market to be targeted is for outboard motors in Europe, where the company has launched its first products under the brand Propel. The longer-term targets are the light motorbike market (125cc) in Asia, where countries are trying to improve air quality, and reduce pollution and carbon emissions, and also delivery and commercial vehicles and high-performance cars. When the company floated in June, we invested a further £2.5m, and the shares have performed strongly since then. In November, the company acquired the Dutch electric bus drive train designer and manufacturer, e-Traction, for very limited consideration in a distressed sale by Evergrande. This added a new engineering team, a range of patent protected designs, capability around inverter design, a European operating base, and an existing customer base for electric bus drive trains.

We invested £2m in EleXsys Energy in September. The company uses innovative technology to allow clean energy producers to feed multiple times more energy back into existing electricity distribution grids, and turns current one-way grids into two-way smart grids, without requiring significant spend on infrastructure or equipment. We invested £3m in Flylogix in November. Flylogix has developed remotely piloted small fixed-wing aircraft that can be used for monitoring purposes in remote locations at sea. Its initial focus is on the measurement of methane emissions from oil and gas infrastructure in the North Sea, but is expanding this service to other geographies, led by customer demand. It is also looking to enter the market for bird and mammal surveys for prospective wind farms around the UK. Remotely piloted aviation is safer, cheaper and has a much reduced carbon footprint versus conventional aviation. There are several demand drivers and applications worldwide for its technology, which has brought together smart software, 4G and satellite communications, and low-cost electronics to develop a new generation of smaller, more efficient aircraft.

IPO Investments

We supported three new healthcare IPOs. In May we invested £1.9m in Arecor Therapeutics, a drug development services company, which uses its Arestat platform to enhance the formulation of drugs to improve their therapeutic properties. Arecor has an impressive list of pharma, generic and biotech clients as well as potential significant upside from an internally developed pipeline of clinical programmes and has performed well since float. In the same month we invested £0.7m in Trellus Health, whose software platform provides expert personalised care for the treatment of Inflammatory Bowel Disease and other complex chronic conditions, aiming to cut healthcare costs by reducing hospital admissions and tailoring care to the individual patient to improve their resilience in the face of their symptoms. In December we invested £3.6m in Aptamer. The company develops affinity ligands, which are biological molecules that bind other molecules, in the way that antibodies do for example. Aptamers are very small in comparison, and their attributes offer benefits to cost, manufacturing and likelihood of binding. The company works with 75% of the world's top 20 pharma companies with repeat custom. Clients use Aptamers across healthcare applications, such as therapeutic delivery, purification, diagnostics and bioprocessing.

Three of the eight IPO investments added to our portfolio of software, training and ecommerce companies. In May we invested £3m in Glantus, which had developed software to automate the process of checking and auditing Accounts Payable items for large corporate customers. This is a function in the past that has often been taken on by specialist consultants. Glantus has acquired two such consultancy businesses, allowing it to gain from the efficiency that the software can bring, whilst broadening its customer reach. This is a competitive area, but one in which Glantus has a broad product set and customer base, with low levels of churn. In March we invested £1.7m in In the Style, an ecommerce retailer specialising in providing inclusive clothing collections by social media influencers. Sales have grown strongly during the pandemic, but supply chain issues brought margins down to hardly breakeven. After some disappointments, a change of management has seen the founder replaced as CEO, bringing in a more experienced pair of hands. Lastly, in July we invested £1.8m in Northcoders, which provides training to IT novices and junior software engineers. There continues to be an acute shortage of coders, programmers, and developers in the UK. Recently the company has expanded into providing apprenticeship courses. Northcoders' student numbers and revenues took an inevitable hit in 2020 from the impact of the pandemic, but the company reacted quickly and within six months it was able to transition its onsite offering into on-line courses. It can now offer a full range of onsite and hybrid-online content from its technology-based teaching platform. This operational leverage will drive EBITDA margins to more than 30%, and the IPO funds will enable the company to expand to new locations.

The remaining two IPOs were in buildings related products - and services which are coming to the fore for environmental reasons; we invested £0.75m in Zenova in July and £1.95m in Eneraqua in November. Zenova has developed an intriguing array of new fire safety, thermal insulation, and temperature management technologies in the form of paints, renders and sprays. The remarkable features of these products can be seen in demo videos on the company's website. Due to the early stage of the business, we made a small investment but with a right to subscribe for a further 6,578,947 shares up to 9 months after the IPO. Eneraqua designs and installs energy and water systems for large buildings in both the public and private sectors, involving ground and air source heat pumps. It has a patented device which overcomes variable mains pressure to provide constant water flow. This reduces water consumption which in turn reduces heating requirements and system costs. It is working with three utility companies and 28 local authorities and housing associations, on both new and replacement systems.

Secondary Placings and Follow-On Investments

In March, we invested £1.7m in another new holding, GeTech, through a secondary placing. GeTech's core business is based around its geoscience and geospatial database and software products. Historically, these have been sold principally to oil and gas and mining customers. In addition to detailed geological and gravity mapping, GeTech's data can show how the geology of any given location has been formed. Over the past few years, the company has focused on diversifying its revenue streams, applying its data sets to water, transportation, nuclear, pipeline and electricity infrastructure sectors. In 2021 it bought the rights to acquire H2 Green, a company developing UK sites as hydrogen hubs for industrial use, and the placing was used to fund the development of these projects.

Follow-on investments over the year included £1.5m in Cloudcall, the online consumer privacy and security software provider, which was subsequently bid for; £1m in Velocys, which is focused on technology for creating Sustainable Aviation Fuel from waste; and £1.3m in Polarean as part of a $25m total fundraise - the bulk of this was to enable the company to build sales and marketing capability ahead of anticipated FDA approval (which has since been delayed) as well as additional trials, EU expansion, and further R&D expenditure.

On the sell side, we took significant profits in Ilika, which had performed very strongly since our follow-on investment in 2020 and reduced holdings in Eden Research, Rua Life Sciences, Synairgen and Falanx.

Outlook

The outlook is overshadowed by the ongoing Russian invasion of Ukraine, which beyond creating countless human tragedies, weakens global stability significantly. With this act, Russia has done something that many in the West would have believed unthinkable, although, in reality, it has taken the pathway towards ever increasing aggression and willingness to use massive military force beyond its borders step-by-step over the last decade. In no small part, Russia's ability to become such a threat has been enabled through the vast income generated from sales of oil and gas to Europe. It is a classic case of the natural resources curse in action, as described eloquently in Leif Wenar's book, "Blood Oil: Tyrants, Violence, and the Rules that Run the World", written in 2016. The external oil and gas revenues coming to resource cursed countries in which a dictator has established absolute power with whatever level of violence is required, leads to a vicious circle in which the regime in power has no interest in cultivating civil society at home, because they can obtain vast wealth from abroad as long as any local opposition is suppressed. Wenar uses a poignant word taken from CIA circles to describe the consequences of Western powers choosing to ignore this phenomenon - "blowback". Unfortunately, this only stops when the regime changes or the natural resource revenues cease. With Russia owning close to a quarter of the world's natural gas reserves this is a big problem. Even a sea-change in mindset cannot suddenly provide a way out of European dependence on Russian gas; that will take 3-5 years or more.

This has served as a sharp reminder of just how much we still depend on oil and gas as crucial sources of energy, however much we might wish that this was not the case. This can't be changed simply by cutting supply, it can only be changed by changing the structure of demand. This in turn acts as a reminder of just how much there is to do to bring about the energy transition towards carbon-free alternatives. Step one of this transition is to avoid war and promote international co-operation, a step which now looks much more difficult to achieve. Step two is to develop the technologies to enable de-carbonisation, and that is an area we have been actively supporting through portfolio investments.

The companies in which the VCT invests are typically rich in intellectual property and specialist know-how, focused on products and services which are important to customers, and therefore should be able to maintain pricing power against an inflationary backdrop. However rising interest rates and the withdrawal of quantitative easing will continue to keep stock market ratings under pressure, so returns will need to come from positive earnings growth over the coming years, and we remain optimistic that the majority of portfolio companies should be well placed for this .

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

Amati Global Investors

12 April 2022

Investment Portfolio

as at 31 January 2022

Company name

Original

Amati VCT bookcost at 4 May 2018#

£'000

Cost*

£'000

Aggregate

Cost**

£'000

Valuation

£'000

Fair value

movement

in year

£'000

Market

Cap

£m

FTSE Sector

Dividend

Yield^NTM

of net

assets

TB Amati UK Smaller Companies Fund

3,331

6,261

9,592

15,387

Financials

1.2

6.2

Polarean Imaging plc¹

5,218

14,566

(2,637)

121.5

Health Care

0.0

5.9

Keywords Studios plc¹

323

4,851

5,174

12,808

(1,057)

1,923.3

Information Technology

0.1

5.2

Ideagen plc²

565

2,738

3,303

12,612

(952)

778.3

Information Technology

0.2

5.1

Learning Technologies Group plc¹

780

3,771

4,551

11,530

186

1,315.5

Information Technology

1.0

4.7

Saietta Group plc^1,3

5,100

11,265

6,165

178.6

Consumer Discretionary

0.0

4.5

Frontier Developments plc¹

341

4,357

4,698

8,628

(11,040)

545.2

Communication Services

0.0

3.5

Tristel plc²

542

2,747

3,289

7,560

(3,135)

193.5

Health Care

1.9

3.1

GB Group plc^{2, 3}

236

2,967

3,203

7,404

(2,243)

1,650.7

Information Technology

0.8

3.0

Water Intelligence plc²

180

1,038

1,218

6,925

2,933

147.6

Industrials

0.0

2.8

Largest ten investments

45,346

108,685

44.0

AB Dynamics plc¹

209

2,370

2,579

6,625

(1,954)

333.7

Industrials

0.4

2.7

Diurnal Group plc¹

732

3,508

4,240

5,130

(570)

91.3

Health Care

0.0

2.1

MaxCyte Inc.¹

449

1,535

1,984

4,552

(1,965)

459.5

Health Care

0.0

1.8

Craneware plc^2,3

298

3,601

3,899

4,189

(537)

692.8

Health Care

1.8

1.7

Aptamer Group plc¹

3,677

4,085

408

89.6

Health Care

0.0

1.7

Anpario plc²

276

1,553

1,829

3,786

196

134.8

Health Care

1.7

1.5

Angle plc¹

1,615

3,618

989

263.4

Health Care

0.0

1.5

Velocys plc¹

2,248

3,439

(552)

88.8

Energy

0.0

1.4

Sosandar plc¹

1,872

3,245

1,529

57.6

Consumer Discretionary

0.0

1.3

Northcoders Group plc¹

1,800

3,040

1,240

21.1

Consumer Discretionary

0.0

1.2

Largest twenty investments

71,089

150,394

60.9

Flylogix Limited Ordinary shares & 10% Convertible loan notes ^{1, 4}

3,000

Information Technology

0.0

1.2

Arecor Therapeutics plc¹

1,900

2,943

1,042

97.4

Health Care

0.0

1.2

Amryt Pharma plc ADR ^1,3

1,607

2,135

528

646.7

Health Care

0.0

0.9

Amryt Pharma plc Contingent Value Rights ("CVRs")³

711

(21)

Health Care

0.0

0.3

Quixant plc²

419

3,777

4,196

2,684

418

102.3

Consumer Discretionary

1.0

1.1

Ilika plc¹

131

646

777

2,677

(1,830)

219.6

Industrials

0.0

1.1

Synairgen plc¹

478

2,639

467

388.8

Health Care

0.0

1.1

Glantus Holdings plc¹

3,000

2,500

(500)

32.2

Financials

0.0

1.0

Intelligent Ultrasound plc¹

1,625

2,460

238

42.0

Health Care

0.0

1.0

Ixico plc¹

1,409

2,415

(1,711)

23.1

Health Care

0.0

1.0

Brooks Macdonald Group plc²

1,154

2,289

622

411.2

Financials

3.4

0.9

Getech Group plc¹

1,700

2,272

572

19.7

Energy

0.0

0.9

Solid State plc²

259

261

520

2,192

889

90.6

Industrials

1.8

0.9

Diaceutics plc¹

1,557

2,172

(697)

89.1

Health Care

0.0

0.9

Fusion Antibodies plc¹

565

1,779

2,344

2,154

(421)

23.9

Health Care

0.0

0.9

Belvoir Group plc¹

404

379

783

2,030

677

95.1

Real Estate

3.3

0.8

Elexsys Energy Ordinary shares & 8% Convertible loan notes ^{1, 4}

2,000

Information Technology

0.0

0.8

Science in Sport plc²

811

1,145

1,956

1,979

750

89.2

Consumer Staples

0.0

0.8

Eneraqua plc¹

1,955

1,821

(134)

85.7

Industrials

0.0

0.7

Verici Dx Limited¹

800

1,800

(1,200)

63.8

Health Care

0.0

0.7

SRT Marine Systems plc¹

709

465

1,174

1,733

308

73.9

Information Technology

0.0

0.7

Accesso Technology Group plc^1,3

221

1,659

752

309.5

Information Technology

0.0

0.7

Creo Medical Group plc^1,3

1,613

1,522

(1,084)

213.6

Health Care

0.0

0.6

Hardide plc¹

695

2,361

1,492

136

18.4

Materials

0.0

0.6

Rosslyn Data Technologies plc¹

614

1,308

1,922

1,199

(1,305)

11.6

Information Technology

0.0

0.5

One Media iP Group plc¹

1,240

1,151

14.5

Financials

0.0

0.5

Equals Group plc¹

1,137

1,130

654

136.3

Information Technology

0.0

0.5

Property Franchise Group plc (The)²

155

197

352

926

378

100.6

Real Estate

3.3

0.4

Byotrol plc¹

511

348

859

925

(700)

16.8

Materials

0.0

0.4

Eden Research plc¹

857

893

(1,077)

23.8

Materials

0.0

0.4

Kinovo plc²

676

1,005

1,681

862

280

24.9

Industrials

0.0

0.3

Falanx Group Limited¹

1,657

805

(167)

5.3

Industrials

0.0

0.3

Rua Life Sciences plc¹

1,690

775

(1,504)

12.2

Health Care

0.0

0.3

In Style Group plc¹

1,667

750

(917)

47.2

Consumer Discretionary

0.0

0.3

Trellus Health plc^1,3

700

648

(53)

59.8

Health Care

0.0

0.3

Zenova Group plc¹

750

592

(158)

14.0

Materials

0.0

0.2

Block Energy plc¹

3,000

588

(895)

7.5

Energy

0.0

0.2

Netcall plc²

110

428

104.8

Information Technology

0.6

0.2

Brighton Pier Group plc (The) ¹

314

175

489

337

235

33.2

Consumer Discretionary

0.0

0.1

MyCelx Technologies Corporation¹

440

205

645

295

206

14.2

Industrials

0.0

0.1

Velocity Composites plc¹

496

307

803

230

7.3

Industrials

0.0

0.1

LoopUp Group plc¹

476

2,027

2,503

135

(545)

14.1

Information Technology

0.0

0.1

Synectics plc²

342

123

(27)

16.0

Information Technology

1.3

FireAngel Safety Technology Group plc¹

690

(28)

26.3

Consumer Discretionary

0.0

Bonhill Group plc¹

670

9.9

Communication Services

0.0

Allergy Therapeutics plc¹

160.9

Health Care

0.0

Merit Group plc¹

596

(23)

10.3

Communication Services

0.0

Investments held at nil value

1,954

Total investments

135,562

214,737

86.9

Net current assets

32,337

13.1

Net assets

135,562

247,074

100.0

1 Qualifying holdings.

2 Part of holding qualifying, part is non-qualifying.

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

4 The investments of Ordinary Shares and Convertible loan notes:

Flylogix Limited ("Flylogix")

Consists of 392 Ordinary Shares in Flylogix at fair value of £300,000 and 10% Convertible Loan Notes at £2,700,000. The interest for 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. The Board are of the opinion Flylogix will list on AIM and the interest receivable of £66,000 to the Balance Sheet has therefore not been accrued.

Elexys Energy plc ("Elexys")

Consists of 202,737 Ordinary Shares in Elexys at fair value of £200,000 and 8% Convertible Loan Notes at £1,800,000. The interest for the year from the date of issue on the Convertible Loan Notes is waived if Elexys is admitted to AIM, subject to a minimum equity raise of £5m. The Convertible Loan Notes are convertible into Ordinary Shares after listing. If Elexys is not listed on AIM, interest is payable at 8% per annum for a term of 5 years. The Board are of the opinion Elexys will list in the next 12 months and the interest receivable of £48,000 to the Balance Sheet date has not been accrued.

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

* This column shows the book cost to the Company as a result of market trades and events or asset acquisition.

** This column shows the aggregate bookcost to the Company either as a result of market trades and events or asset acquisition.

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

All holdings are in ordinary shares unless otherwise stated.

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

As at the year end, the percentage of the Company's portfolio held in qualifying holdings for the purposes of Section 274 of the Income and Corporation Taxes Act 2007 was 90.01%.

Analysis as at 31 January 2022

Qualifying portfolio

The portfolio of qualifying investments in the Company as at 31 January 2022 is analysed in the graph which can be found on page 16 of the full Annual Report and Accounts, by date of initial investment and market capitalisation. The size of the circles represents the relative size of the holdings in the portfolio by value.

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

Sector split

The portfolio of investments in the Company as at 31 January 2022 is analysed in the graph by sector which can be found on page 16 of the full Annual Report and Accounts. This includes a sector split of the investments within the TB Amati UK Smaller Companies Fund which in the Investment Portfolio table above is classed as Financials.

Investment Policy, Company Objectives and Investment Strategy

Company Objectives

The 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 VCTs.

Investment Policy

The Company's 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)) in AIM-traded companies 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 objective is to make Qualifying Investments primarily in companies traded on AIM or on the Aquis stock exchange ("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 regulations, 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. For continued approval as a VCT under the ITA the Company must, within three years of raising funds, maintain at least 80% of its value (based on cost price, or last price paid per share if there is an addition to the holding) in qualifying investments. 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. 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 Smaller Companies Fund (which is a UCITS fund), or other UCITS funds approved by the Board;

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

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

Environmental, Social and Governance ("ESG") Policies

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

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

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

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

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

Board Diversity of Investee Companies

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

Key Performance Indicators

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

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

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

· Comparison against the Numis Alternative Markets Total Return Index. See graph on page 47 of the full Annual Report and Accounts ;

· Dividend distributions. See table of investor returns above;

· Share price. See key data above; and

· Ongoing charges ratio. See key data above.

Fund Management and Key Contracts

Management Agreement

Amati Global Investors was appointed as Manager to the Company on 19 March 2010. Under an Investment Management and Administration Agreement dated 19 March 2010, and subsequently revised and updated in two separate agreements, an Investment Management Deed ("IMA") and a Fund Administration, Secretarial Services and Fund Accounting Agreement ("FASSFAA"), on 30 September 2019, the Manager agreed to manage the investments and other assets of the Company on a discretionary basis subject to the overall policy of the Directors. The Company will pay to the Manager under the terms of the IMA a fee of 1.75% of the net asset value of the Company quarterly in arrears. In November 2014, with shareholder consent, the Company amended its non-qualifying investment policy to permit investment in the TB Amati UK 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 fund accounting services to the Company. The Company agreed to pay to the Investment Manager a fee of £92,800 (subject to an annual increase in line with the retail prices index) quarterly in arrears in respect of the provision of these services. With effect from 1 February 2021 the annual increase will be in line with the consumer prices index. The appointment of the Investment Manager as investment manager and/or administrator, company secretary and fund accountant 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.

Under the FASSFAA, the Manager has the right to appoint suitable representatives to provide administration, secretarial and fund accounting services to the Company. The Manager engaged The City Partnership (UK) Limited to act as company secretary and Link Alternative Fund Administrators Limited to act as fund administrator and accountant.

During the year the Manager and Board agreed that a new Company Secretary would be sought with whom the Company would contract directly. Law Debenture were appointed as Company Secretary of the Company from 1 February 2022.

Fund Manager's Engagement

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

VCT Status Adviser

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

Principal and Emerging Risks

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

Potential Risk

Potential Impact

Mitigation

Investment Risk

A substantial portion of the Company's investments are 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 will seek admission to AIM within two years of the initial investment, in order to de-risk the investment, to the extent that this is possible, within an acceptable time frame.

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.

A sunset clause was put in place in the VCT regime to secure ongoing EU approval at the time of the UK's departure from the European Union. At present it is not clear whether the UK Treasury will take action to amend the legislation to extend or remove the date of the sunset clause. Without an extension or removal there would be no initial income tax relief for new subscriptions after 5 April 2025. The absence of upfront tax relief may limit VCTs' ability to raise funds.

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. VCT boards and their managers are actively liaising with the UK Treasury to encourage the addressing of this issue.

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.

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 42 of the full Annual Report and Accounts .

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 below. The Company is financed through equity.

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 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.

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.

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 ten largest

investments account for almost 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.

Section 172 Statement

Directors' Duty to Promote the Success of the Company

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

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

· the interests of the Company's employees;

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

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

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

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

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

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

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

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 pages 39 to 40 in the Statement of Corporate Governance in the full Annual Report and Accounts .

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 below, the Manager was a Tier 1 signatory to the 2012 UK Stewardship Code and in March 2022 has been accepted as a signatory to the 2020 UK Stewardship Code. The Manager is also a signatory to 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.

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 investee company but does interact with Directors and senior management of investee companies regularly.

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.

Key decision making

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

Principal Decision

Long-term impact

Stakeholder Engagement

To issue new shares in the Company

Issuing new shares allows the Company to increase its liquidity, and the successful investment of the capital raised in new issuances will promote growth in the Company's NAV.

The Board considered the direction and future aims of the Company and the desire to continue to invest in growth businesses with the aim of benefiting all stakeholders. A key part of that is fundraising, to provide new funds for investment in new or existing investee companies (where allowed by VCT regulations). Aligned with this is the need to maintain sufficient cash balances to be able to take advantage of investment opportunities, to maintain stable and predictable dividends for investors, and to provide liquidity for shareholders by facilitating buybacks.

Following the successful prospectus offer that was launched in July 2021 and which raised £40m, the Board decided to re-open the Offer in February 2022 using the over-allotment facility owing to the strong demand seen from investors and raised its full £25m. This decision was taken on the basis of the deployment of funds and the pipeline of investment opportunities.

A resolution giving the Directors the authority to allot shares is voted upon by shareholders at the AGM each year and receives a high level of support from shareholders. Given the high demand seen for the latest Offer, a General Meeting was convened and held on 2 March 2022 at which shareholders again voted in favour of giving the Board authority to allot further shares.

To make new appointments to the Board

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 a non-executive director. She brings significant VCT experience to the Board. Fiona's appointment is made to promote the best long-term interests of the Company.

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. 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, was a Tier 1 signatory to the 2012 UK Stewardship Code and in March 2022 has been accepted as a signatory to the 2020 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 2021 the Manager voted in respect of 48 Amati AIM VCT holdings at 69 company meetings on a range of ESG issues.

Business Conduct

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

Global Greenhouse Gas Emissions

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

Other Matters

VCT Regulations

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

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

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

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

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

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

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

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

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

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

During 2018, HMRC stopped issuing pre-clearance letters for VCT investments. They are encouraging VCTs not to use the advance assurance service for investments and have stated that where a VCT has taken reasonable steps to ensure an investment is qualifying, the VCT status will not be withdrawn where an investment is ultimately found to be non-qualifying. The Manager and the Board rely on advice from Philip Hare & Associates regarding the qualifying status of new investments. The Manager monitors compliance with VCT qualifying rules on a day-to-day basis through a combination of automated and manual compliance checks in place within the business. Philip Hare & Associates also review the portfolio bi-annually to ensure the Manager has complied with regulations and has reported to the Board that the VCT has met the necessary requirements during the year.

PRIIPs Regulations

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

Statement on Long-term Viability

In accordance with the UK Corporate Governance Code published in July 2018 (the "Code"), the Directors have carried out a robust assessment of the prospects of the Company for the period to January 2027, 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 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 reasonable 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 and the effects of the COVID-19 pandemic.

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 five non-executive directors, two of whom are male and three are female.

On behalf of the Board

Peter A. Lawrence

Chairman

12 April 2022

Extracts from the Directors' Remuneration Report

Directors' Annual Report on Remuneration

Directors' fees for the year (Audited)

The fees payable to individual Directors in respect of the year ended 31 January 2022 are shown in the table below.

	Year ended 31 January 2022 (audited)
	Fees	Taxable benefits	Total	Total Fixed remuneration	Total variable 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

	Year ended 31 January 2021 (audited)
	Fees	Taxable benefits	Total	Total Fixed remuneration	Total variable remuneration
	£	£	£	£	£
Peter Lawrence	24,960	-	24,960	24,960	-
Julia Henderson	22,575	-	22,575	22,575	-
Susannah Nicklin	22,575	-	22,575	22,575	-
Brian Scouler	22,575	-	22,575	22,575	-
	92,685	-	92,685	92,685	-

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 2022, whether for loss of office or otherwise.

Directors' shareholdings (Audited)

The Directors who held office at 31 January 2022 and their interests in the shares of the Company (including beneficial and family interests) were:

	31 January 2022		31 January 2021
	Shares held	% of issued share capital	Shares held	% of issued share capital
Peter Lawrence	941,660	0.69	859,130	0.74
Julia Henderson	19,360	0.01	17,068	0.01
Susannah Nicklin	25,777	0.02	20,396	0.02
Brian Scouler	60,381	0.04	52,669	0.05
Fiona Wollocombe*	13,755	0.01	-	-

*appointed on 10 June 2021

Subsequent to the year end Fiona Wollocombe's beneficial interest increased by 6,008 shares and Susannah Nicklin's beneficial interest increased by 4,807 shares, both under the Offer on 2 March 2022.

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

On behalf of the Board

Susannah Nicklin

Chairman of the Remuneration Committee

12 April 2022

Statement of Directors' Responsibilities

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

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

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

· select suitable accounting policies and then apply them consistently;

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

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

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

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

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

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

Website Publication

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

Directors' responsibilities pursuant to DTR4

The Directors confirm to the best of their knowledge:

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

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

On behalf of the Board

Peter A. Lawrence

Chairman

12 April 2022

Income Statement

for the year ended 31 January 2022

	Note	2022 Revenue £'000	2022 Capital £'000	2022 Total £'000	2021 Revenue £'000	2021 Capital £'000	2021 Total £'000
(Loss)/gain on investments	8	-	(18,123)	(18,123)	-	69,766	69,766
Income	2	701	-	701	567	-	567
Investment management fees	3	(1,115)	(3,345)	(4,460)	(799)	(2,398)	(3,197)
Other expenses	4	(514)	-	(514)	(455)	-	(455)
(Loss)/profit on ordinary activities before taxation		(928)	(21,468)	(22,396)	(687)	67,368	66,681
Taxation on ordinary activities	5	-	-	-	-	-	-
(Loss)/profit and total comprehensive income attributable to shareholders		(928)	(21,468)	(22,396)	(687)	67,368	66,681
Basic and diluted (loss)/earnings per ordinary share	7	(0.73)p	(16.93)p	(17.66)p	(0.64)p	62.76p	62.12p

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

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

The notes below form part of these financial statements.

Statement of Changes in Equity

for the year ended 31 January 2022

	Non-distributable reserves					Distributable reserves
	Share capital £'000	Share premium £'000	Merger reserve £'000	Capital redemption reserve £'000	Capital reserve (non- distributable) £'000	Special reserve £'000	Capital reserve (distributable) £'000	Revenue reserve £'000	Total reserves £'000
Opening balance as at 1 February 2021	5,780	61,635	425	731	107,450	75,023	(11,420)	(1,345)	238,279
(Loss)/profit and total comprehensive income for the year	-	-	-	-	(26,784)	-	5,316	(928)	(22,396)
Contributions by and distributions to shareholders:
Repurchase of shares	(88)	-	-	88	-	(3,431)	-	-	(3,431)
Shares issued	1,144	48,216	-	-	-	-	-	-	49,360
Costs of share issues	-	(306)	-	-	-	-	-	-	(306)
Dividends paid	-	-	-	-	-	(14,432)	-	-	(14,432)
Total contributions by and distributions to shareholders	1,056	47,910	-	88	-	(17,863)	-	-	31,191
Closing balance as at 31 January 2022	6,836	109,545	425	819	80,666	57,160	(6,104)	(2,273)	247,074
for the year ended 31 January 2021
Opening balance as at 1 February 2020	4,703	26,084	425	629	35,762	86,479	(7,100)	(658)	146,324
Profit/(loss) and total comprehensive income for the year	-	-	-	-	71,688	-	(4,320)	(687)	66,681
Contributions by and distributions to shareholders:
Repurchase of shares	(102)	-	-	102	-	(3,170)	-	-	(3,170)
Shares issued	1,179	35,875	-	-	-	-	-	-	37,054
Costs of share issues	-	(324)	-	-	-	198	-	-	(126)
Dividends paid	-	-	-	-	-	(8,484)	-	-	(8,484)
Total contributions by and distributions to shareholders	1,077	35,551	-	102	-	(11,456)	-	-	25,274
Closing balance as at 31 January 2021	5,780	61,635	425	731	107,450	75,023	(11,420)	(1,345)	238,279

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

Balance Sheet

as at 31 January 2022

	Note	2022 £'000	2021 £'000
Fixed assets
Investments held at fair value	8	214,737	215,398

Current assets
Debtors	9	1,972	46
Cash at bank		31,833	24,967
Total current assets		33,805	25,013

Current liabilities
Creditors: amounts falling due within one year	10	(1,468)	(2,132)

Net current assets		32,337	22,881
Total assets less current liabilities		247,074	238,279

Capital and reserves
Called up share capital*	11	6,836	5,780
Share premium account*		109,545	61,635
Merger reserve*		425	425
Capital redemption reserve*		819	731
Capital reserve (non-distributable)*		80,666	107,450
Special reserve		57,160	75,023
Capital reserve (distributable)		(6,104)	(11,420)
Revenue reserve		(2,273)	(1,345)
Equity shareholders' funds		247,074	238,279

Net asset value per share	12	180.7p	206.1p

* These reserves are not distributable.

The financial statements above and below were approved and authorised for issue by the Board of Directors on 12 April 2022 and were signed on its behalf by

Peter A. Lawrence

Chairman

Company Number 04138683

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

Statement of Cash Flows

for the year ended 31 January 2022

	2022	2021
	£'000	£'000
Cash flows from operating activities
Investment income received	626	512
Investment management fees	(4,427)	(2,796)
Other operating costs	(485)	(449)
Net cash outflow from operating activities	(4,286)	(2,733)

Cash flows from investing activities
Purchases of investments	(32,872)	(15,991)
Disposals of investments	13,596	2,593
Net cash outflow from investing activities	(19,276)	(13,398)

Net cash outflow before financing	(23,562)	(16,131)

Cash flows from financing activities
Proceeds of share issues*	46,748	35,570
Cost of share issues	(306)	(126)
Payments for share buy-backs	(4,194)	(2,437)
Equity dividends paid*	(11,820)	(7,000)
Net cash inflow from financing activities	30,428	26,007
Increase in cash	6,866	9,876

Reconciliation of net cash flow to movement in net cash
Increase in cash during the year	6,866	9,876
Net cash at 1 February	24,967	15,091
Net cash at 31 January	31,833	24,967

Reconciliation of (Loss)/Profit on Ordinary Activities Before Taxation to Net Cash Outflow from Operating Activities
(Loss)/profit on ordinary activities before taxation	(22,396)	66,681
Net loss/(gain) on investments	18,123	(69,766)
Less dividends reinvested	(71)	(67)
Increase in creditors, excluding corporation tax payable	64	406
(Increase)/decrease in debtors	(6)	13

Net cash outflow from operating activities	(4,286)	(2,733)

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

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

Notes to the Financial Statements

1 Accounting Policies

Basis of Accounting

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

Basis of Preparation

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

Going Concern

The financial statements have been prepared on a going concern basis and on the basis that the Company maintains 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 and the effects of the COVID-19 pandemic 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 them 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 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 have been prepared on the going concern basis.

Segmental Reporting

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

Judgements and Key Sources of Estimation Uncertainty

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

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

Income

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

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

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

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

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.

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 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.

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 is a distributable reserve which was created by the authorised reduction of the share premium account and can be applied in any manner in which the Company's profits available for distribution (as determined in accordance with the Companies Act 2006) are able to be applied.

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 31 January 2022 £'000	Year to 31 January 2021 £'000
Income:
Dividends from UK companies	701	554
Interest from deposits	-	13
	701	567

3 Management Fees

The Manager provides investment management and administration, secretarial and fund accounting services to the Company under an Investment Management Agreement ("IMA") and a Fund Administration, Secretarial Services and Fund Accounting Agreement ("FASSFAA"). Details of these agreements are given above.

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 Smaller Companies Fund.

The investment management fee for the year was as follows:

	Year to 31 January 2022 £'000	Year to 31 January 2021 £'000
Due to the Manager by the Company at 1 February	1,016	615
Investment management fee charged to revenue and capital for the year	4,460	3,197
Fee paid to the Manager during the year	(4,427)	(2,796)
Due to the Manager by the Company at 31 January	1,049	1,016

In addition to the investment management fee the Manager also receives a secretarial and administration fee of £96,000 (2021: £95,000) paid quarterly in arrears. As detailed in the Fund Management and Key Contracts above, the original investment management agreement from 2010 was revised and updated in two separate agreements on 30 September 2019, a IMA and a FASSFAA. The FASSFAA's updated fee allowed for the costs incurred by the Manager for fund administration, secretarial services and fund accounting to be fully recovered from the Company where they had not been previously. The fee level in the FASSFAA is subject to an annual increase in line with the retail prices index; with effect from 01 February 2021 the annual increase will be in line with consumer price index. See note 4.

No performance fee is payable in respect of the year ended 31 January 2022, 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 31 January 2022 £'000	Year to 31 January 2021 £'000
Directors' remuneration	109	93
Directors' employer's national insurance	4	4
Directors' expenses	2	-
Auditor's remuneration - audit of statutory financial statements	35	30
Administration and secretarial services	94	94
Other expenses	270	234
	514	455

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 above and on page 45 of the full Annual Report and Accounts .

5 Tax on Ordinary Activities

5a Analysis of charge for the year

Year to

31 January

2022

£'000

Year to

31 January

2021

£'000

Charge for the year

5b Factors affecting the tax charge for the year

	Year to 31 January 2022 £'000	Year to 31 January 2021 £'000
(Loss)/profit on ordinary activities before taxation	(22,396)	66,681
Corporation tax at standard rate of 19% (2021: 19%)	(4,255)	12,669
Effect of:
Non-taxable dividends	(133)	(105)
Non-taxable losses/(gains) on investments	3,443	(13,255)
Movement in excess management expenses	945	691
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 net capital gains arising on the disposal of investments as such gains are not taxable.

No deferred tax asset has been recognised on surplus management expenses carried forward as it is not envisaged that future taxable profit will be available against which the Company can use the benefits. The amount of unrecognised deferred tax asset is £5,992,000 (31 January 2021: £3,609,000). These values reflect prospective corporate tax rates of 25% and 19% substantively enacted at the respective balance sheet dates.

6 Dividends

Amounts recognised as distributions from capital to equity holders during the year:

	2022 Revenue £'000	2022 Capital £'000	2021 Revenue £'000	2021 Capital £'000
Second interim dividend for the year ended 31 January 2020 of 4.25p per ordinary share paid on 24 July 2020	-	-	-	4,472
Interim dividend for the year ended 31 January 2021 of 3.50p per ordinary share paid on 27 November 2020	-	-	-	4,012
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	-	-
	-	14,432	-	8,484

Set out below are the interim and final dividends paid or proposed on ordinary shares in respect of the financial year:

	2022 Revenue £'000	2022 Capital £'000	2021 Revenue £'000	2021 Capital £'000
Interim dividend for the year ended 31 January 2022 of 4.50p per ordinary share (2021: 3.50p)	-	6,154	-	4,012
Declared final dividend for the year ended 31 January 2022 of 4.50p per ordinary share (2021: 7.00p)*	-	6,698	-	8,278
	-	12,852	-	12,290

* Based on shares in issue on 12 April 2022. The payment of a final dividend will, as always, be subject to ensuring that the Company has sufficient distributable reserves at the time of payment.

7 Earnings per Share

	2022			2021
	Net(loss) /profit £'000	Weighted average shares	Basic and diluted Earnings per share pence	Net(loss)/ profit £'000	Weighted average shares	Basic and diluted Earnings per share pence
Revenue	(928)		(0.73)p	(687)		(0.64)p
Capital	(21,468)		(16.93)p	67,368		62.76p
Total	(22,396)	126,840,235	(17.66)p	66,681	107,332,617	62.12p

8 Investments

	Level 1*	Level 2*	Level 3*	Total
	£'000	£'000	£'000	£'000
Opening cost as at 1 February 2021	107,385	-	2,054	109,439
Opening investment holding gains	107,381	-	69	107,450
Opening unrealised loss recognised in realised reserve	(228)	-	(1,263)	(1,491)
Opening fair value as at 1 February 2021	214,538	-	860	215,398
Analysis of transactions during the year:
Realised (losses)/gains on sales	(679)	-	744	65
Unrealised losses on investments	(18,167)	-	(21)	(18,188)
Purchases at cost	27,977	-	5,000	32,977
Sales proceeds received	(14,644)	-	(871)**	(15,515)
Closing fair value as at 31 January 2022	209,025	-	5,712	214,737
Closing cost as at 31 January 2022	128,607	-	6,955	135,562
Closing investment holding gains as at 31 January 2022	80,646	-	20	80,666
Closing unrealised loss recognised in realised reserve as at 31 January 2022	(228)	-	(1,263)	(1,491)
Closing fair value as at 31 January 2022	209,025	-	5,712	214,737
Equity shares	209,025	-	501	209,526
Preference shares	-	-	-	-
CVRs	-	-	711	711
Convertible loan notes	-	-	4,500	4,500
Closing fair value as at 31 January 2022	209,025	-	5,712	214,737

* Refer to note 14 for definitions

** Includes final repayment of China Food Company plc Loan Notes now fully disposed.

Holdings of ordinary shares in unquoted companies rank pari passu for voting purposes. Preference shares and CVRs have no voting rights.

The Company received £15,515,000 (2021: £2,381,000) from the sale of investments in the year. The bookcost of these investments when they were purchased was £6,855,000 (2021: £3,825,000). 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.

	2022 £'000	2021 £'000
Realised gains on disposal	65	911
Unrealised (losses)/gains on investments during the year	(18,188)	68,855
Net (losses)/gains on investments	(18,123)	69,766

Transaction Costs

During the year the Company incurred transaction costs of £44,000 (31 January 2021: £nil) and £8,000 (31 January 2021: £3,000) on purchases and sales of investments respectively. These amounts are included in the gain on investments as disclosed in the income statement.

9 Debtors

	2022 £'000	2021 £'000
Receivable for investments sold	1,919	-
Prepayments and accrued income	53	46
	1,972	46

10 Creditors: Amounts Falling due within One Year

	2022 £'000	2021 £'000
Payable for share buy-backs	249	1,012
Payable for investments bought	34	-
Other creditors	1,185	1,120
	1,468	2,132

11 Called Up Share Capital

	2022	2022	2021	2021
Ordinary shares (5p shares)	Number	£'000	Number	£'000
Allotted, issued and fully paid at 1 February	115,589,550	5,780	94,039,012	4,703
Issued during the year	22,880,426	1,144	23,589,915	1,179
Repurchase of own shares for cancellation	(1,749,179)	(88)	(2,039,377)	(102)
At 31 January	136,720,797	6,836	115,589,550	5,780

During the year a total of 1,749,179 ordinary shares of 5p each were purchased by the Company at an average price of 1.96p per share.

Further details of the Company's share capital and associated rights are shown in the Directors' Report on page 33 of the full Annual Report and Accounts.

12 Net Asset Value per Ordinary Share

2022

2021

Net

assets

£'000

Ordinary

NAV

per share

pence

Net assets

£'000

Ordinary

NAV

per share

pence

Ordinary share

247,074

136,720,797

180.7

238,279

115,589,550

206.1

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):

	Nominal	% held
Falanx Group Limited	80,500,000	15.3
Northcoders Group plc	1,000,000	14.4
Polarean Imaging plc	25,114,469	12.0
Getech Group plc	7,727,000	11.6
Leisurejobs.com Limited	58,688	11.4
Ixico plc	5,031,300	10.5
Rosslyn Data Technologies plc	35,274,692	10.4
Fusion Antibodies plc	2,341,463	9.0
Hardide plc	4,521,963	8.1
One Media iP Group plc	17,714,000	8.0
Block Energy plc	51,136,000	7.8
Glantus Holdings plc	2,941,176	7.8
Saeitta Group plc	5,364,232	6.3
Rua Life Sciences plc	1,358,348	6.1
Intelligent Ultrasound plc	15,869,000	5.9
Sosandar plc	12,480,000	5.6
Diurnal Group plc	9,500,000	5.6
Byotrol plc	25,000,001	5.5
Aptamer Group plc	3,142,042	4.6
Zenova Group plc	3,947,368	4.2
Water Intelligence plc	814,660	4.2
Tristel plc	1,844,046	3.9
Velocys plc	53,987,142	3.9
Eden Research plc	14,282,652	3.8
Kinovo plc	2,155,010	3.5
Velocity Composites plc	1,150,294	3.2
Arecor Therapeutics plc	840,708	3.0

14 Financial Instruments

The Company's financial instruments comprise equity, CVRs 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:

	2022 Book value £'000	2022 Fair value £'000	2021 Book value £'000	2021 Fair value £'000
Assets at fair value through profit or loss
Investments	214,737	214,737	215,398	215,398
Assets measured at amortised cost:
Accrued income and other debtors	1,972	1,972	46	46
Cash at bank	31,833	31,833	24,967	24,967
Liabilities (amounts due within one year) measured at amortised cost:
Payable for investments bought	(282)	(282)	(1,007)	(1,007)
Accrued expenses	(1,186)	(1,186)	(1,125)	(1,125)
Total for financial instruments	247,074	247,074	238,279	238,279

Investments (see note 8) are measured at fair value. For quoted securities this is generally the bid price or, in the case of SETS securities, the last traded price. As explained in note 8, unquoted investments are valued in accordance with the IPEV guidelines. Changing one or more inputs for level 3 assets would not have a significant impact on the valuation. For example, revenue multiple calculations are used to value some unquoted equity holdings. These multiples are derived from a basket of comparable quoted companies, with appropriate discounts applied. These discounts are subjective and based on the Manager's experience. In respect of unquoted investments, these are valued by the Directors using rules consistent with IPEV guidelines. Investments in TB Amati UK Smaller Companies Fund are based on the published fund mid-price NAV. The fair value of all other financial assets and liabilities is represented by their carrying value in the balance sheet.

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 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.

The Company's level 1 investments are AIM traded companies and fully listed companies.

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.

Financial assets at fair value

	Year ended 31 January 2022				Year ended 31 January 2021
	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000	Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
Equity shares	209,025	-	501	209,526	214,538	-	81	214,619
Preference shares	-	-	-	-	-	-	47	47
CVRs	-	-	711	711	-	-	732	732
Convertible loan notes	-	-	4,500	4,500	-	-	-	-
	209,025	-	5,712	214,737	214,538	-	860	215,398

Level 3 financial assets at fair value

	Year ended 31 January 2022					Year ended 31 January 2021
	Equity	Preference	Loan			Equity	Preference	Loan
	shares	shares	stock	CVR	Total	shares	shares	stock	CVR	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£000	£'000
Opening balance at 1 February	81	47	-	732	860	81	47	-	339	467
Purchases at cost	500	-	4,500	-	5,000	-	-	-	-	-
Disposal proceeds	(353)	(207)	(311)	-	(871)	-	-	(93)	-	(93)
Total net gains/(losses) recognised in the income statement	273	160	311	(21)	723	-	-	93	393	486
Closing balance at 31 January	501	-	4,500	711	5,712	81	47	-	732	860

The fair value of the Level 3 investments are derived as follows:

Equity shares are valued by using revenue multiples, net assets, discounted cashflows and industry valuation benchmarks.

Convertible Loan Notes (CLNs) are valued using the present value of future payments, benchmarking to a similar CLN. The value will also be referenced to the underlying assets held and disclosures made by the underlying investee company.

15 Risks

The risks identified 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 and exchange rate movements.

The Company's strategy on the management of market risk is driven by the Company's investment objective as outlined above. 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 2022 97.34% (31 January 2021: 99.60%) of the Company's investments are traded. A 30% decrease in stock prices as at 31 January 2022 would have decreased the net assets attributable to the Company's shareholders and increased the loss for the year by £62,708,000 (31 January 2021: £64,361,000); 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 2022 2.66% (31 January 2021: 0.40%) 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 2022 would have decreased the net assets attributable to the Company's shareholders and increased the loss for the year by £1,714,000 (31 January 2021: £258,000); 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.

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 USD consisted of investments of £2,846,000 (31 January 2021: £860,000).

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 £142,000 (2021: £43,000).

Interest Rate Risk

Interest rate movements may affect the level of income receivable on cash deposits and any fixed interest securities. The Company holds two fixed interest investments £4,500,000 (2020: £nil). Interest receivable is determined by whether the underlying investee companies of the Convertible Loan Notes held will list on AIM.

The Company holds a cash balance at 31 January 2022 of £31,833,000 (2021: £24,967,000). 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 £318,000 (2021: £249,000). 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 £318,000 (2021: £249,000).

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 2022, the financial assets exposed to credit risk, representing convertible loan stock instruments, amounts due from brokers, accrued income and cash amounted to £38,267,000 (31 January 2021: £25,013,000). 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 2022, 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 Aa1 (Moody's).

There were no significant concentrations of credit risk to counterparties at 31 January 2022 or 31 January 2021.

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 above. 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 2022, these investments were valued at £132,107,000 (31 January 2021: £159,776,000). 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 above.

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.

20 Post Balance Sheet Events

On 24 February 2022, following the Company's year end, in the largest conventional military attack in Europe since World War II, Russia began an invasion of Ukraine. Global markets reacted with shock, AIM itself fell by 3% in one day. Markets have fallen further with the effect of economic sanctions rolled out across the world, with AIM falling further since. This has had an inevitable impact on the Company's net asset value but the Directors continue to be of the view that the Company is a going concern that is viable into the longer term.

The Company announced the re-opening of the Offer on 16 February 2022 and raised a further £25,000,000 which was available under the over-allotment facility.

The following transactions have taken place between 31 January 2022 and the date of this report:

· 12,280,842 shares allotted

· 150,616 shares bought back

21 Related Parties

The Company retains Amati Global Investors as its Manager. Details of the agreement with the Manager are set out above. The number of ordinary shares in the Company (all of which are held beneficially) by certain members of the management team are:

	31 January 2022 shares held	31 January 2022 % shares held	31 January 2021 shares held	31 January 2021 % shares held
Paul Jourdan	723,985	0.53%	631,470	0.54%
David Stevenson	26,753	0.02%	17,583	0.02%
Anna Macdonald*	7,855	0.01%	n/a	n/a

*Subsequent to the year end Anna Macdonald's shareholding increased by 4,807 shares under the Offer on 2 March 2022.

The remuneration of the Directors, who are key management personnel of the Company, is disclosed in the Directors' Remuneration Report on page 45 of the full Annual Report and Accounts , and in note 4 above.

Corporate Information

Directors

Peter Lawrence

Julia Henderson

Susannah Nicklin

Brian Scouler

Fiona Wollocombe

all of:

27/28 Eastcastle Street

London

W1W 8DH

Secretary

LDC Nominee Secretary Limited

8^th 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

Hamilton House

1 Temple Avenue

London

EC4Y 0HA

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

Annual General Meeting

Attendance at the meeting

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 16 June 2022 starting at 2pm.

The Company intends for the meeting to be held in person, subject to any changes in guidance from the Government regarding the Covid-19 pandemic. 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 all shareholders, and particularly those who cannot attend physically, to submit their votes by proxy, ahead of the deadline of 2pm on Tuesday 14 June 2022 to ensure that their vote counts at the AGM.

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 info@amatiglobal.com by 10 June 2022. 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 10 June 2022, before the AGM.

The full audited Annual report and Accounts for the year ended 31 January 2022 will shortly be available on the Company's website www.amatiglobal.com . It will also be submitted to the National Storage Mechanism ("NSM") and will be available for inspection there, situated at:

https://data.fca.org.uk/#/nsm/nationalstoragemechanism

A copy of the Annual Report and Accounts, which includes the Notice of Annual General Meeting, will be posted to shareholders shortly.

For further information, please contact the investor line at Amati Global Investors on 0131 503 9115 or by email at info@amatiglobal.com .

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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END

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