Interim Management Statement

RNS Number : 0201K

Amati VCT 2 plc

19 June 2014

Amati VCT 2 plc

INTERIM MANAGEMENT STATEMENT

FOR THE PERIOD FROM 1 FEBRUARY 2014 TO 30 APRIL 2014

To the members of Amati VCT 2 plc

This interim management statement, which relates to the period from 1 February 2014 to 30 April 2014 and contains information up to the date of release of the statement, has been prepared solely to provide additional information to shareholders to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules, and should not be relied on by any other party or for any other purpose.

This statement also considers the future of the fund and, as such, forward-looking assertions have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. It should therefore be treated with caution due to the inherent uncertainties of the effect of both economic and business risk factors in considering forward-looking information.

Our operations

The objective of Amati VCT 2 plc ("the Company") is to provide shareholders with an attractive and competitive investment return from a portfolio of companies whose shares are primarily traded on the Alternative Investment Market ("AIM"). The Manager's continuing objective is to manage the current portfolio so as to maximise returns for investors for their 5 year qualifying period and beyond.

Performance during the period from 1 February 2014 to 30 April 2014

The Net Asset Value ("NAV") (Total Return) for the period was up 4.1%. This was significantly ahead of the FTSE AIM All-Share Total Return Index, which ended the period down 3.9%. The Index suffered as some of its largest constituents, notably ASOS and Quindell, and some of the strongest risers of last year, such as Blur and WANdisco, posted heavy falls.

The portfolio benefited from the strong performance of holdings such as: Frontier Developments, which announced the release of the latest development version of the Elite:Dangerous video game; Quixant, the provider of computing platforms for casino gaming machines, which announced that it will supply its largest current customer with platforms for its next generation of gaming machines until 2019; and Brooks Macdonald, the wealth management group, which reported excellent earnings per share growth in its half year results, as well as a small acquisition of a Channel Islands-based wealth manager.

The most disappointing performer was Accesso, which saw its share price perform poorly in April despite further progress with trading and new contract wins. Amati Global Investors Limited ("the Manager") remains confident that Accesso's recent acquisitions stand the business in good stead for further growth into the provision of theme park and ski resort ticketing, payment and queuing solutions. Belvoir Lettings, the residential lettings franchisor, also fell back from recent highs following disappointing results which it blamed on additional costs incurred in its newly acquired network of corporate offices. The price/earnings rating of Belvoir has been pared back to more realistic levels, and the founder has returned to the Chief Executive Officer role, which the Manager views positively.

There were several new additions to the qualifying portfolio. We invested in three unlisted companies during the period. These were all businesses where the Manager recognised attractive valuation opportunities and the opportunity to realise these investments within two years. The first was DXI, a provider of internet-based telephony systems for contact centres, in which we took a significant position by way of an equity stake and a convertible loan. DXI is leading the structural shift in the contact centre industry from hardware to software based telephony systems. The second unlisted company investment was in MirriAd, which has developed a technology platform that allows product placements to be seamlessly integrated into existing video content across multiple formats. The company has deals with major US studios and works with some of the world's leading brands, content owners and distributors. The third unlisted company investment was in Nujira, a company that has established itself as a world leader in the field of Envelope Tracking, a technology that increases energy efficiency in mobile phone handsets and other wireless devices, thereby significantly improving battery life. Envelope Tracking is being adopted across the smartphone industry, providing a lucrative potential market for Envelope Tracking chips.

We also made four new qualifying investments. These were: Ilika, a materials discovery company that has created a new technology for the production of high performance solid state cell batteries suitable for use in consumer electronics; Futura Medical, which raised funds for the development and commercialisation of a strong pipeline of consumer sexual healthcare and pain relief products; Rame Energy, an energy consultant with part ownership of a wind power project in Chile and an ambition to create an operational portfolio of 300MW in South America within 3 years; and Science in Sport, the UK's leading provider of nutrition to professional and keen amateur athletes, especially runners, cyclists, triathletes and rowers.

In the non-qualifying portfolio new holdings were acquired in: Cineworld, which raised funds as part of a combination with Cinema City International, a leading operator of cinemas in Central and Eastern European and Israel, to create the second largest cinema business in Europe; Regenersis, the outsourcing partner to mobile phone handset firms, which undertook a fundraising in order to acquire Blancco, a complementary business providing software for the erasure of data from phones; and two IPOs, being DX, the parcel delivery service, and Boohoo, the online retailer (since exited).

During the period we exited from several non-qualifying investments including Elementis and Skil Ports and Logistics. We also sold our remaining holding in Asian Citrus, the Manager having concluded that we were very unlikely to see the potential in the business realised and the value in the assets unlocked. We reduced some core qualifying positions for portfolio management reasons, to avoid over-exposure to any specific holdings.

Rosslyn Data Technologies, a private, pre-IPO investment that was concluded in November 2013, floated on AIM in April, raising £10m of new money in the process. We have retained our holding in this company.

	As at 30 April 2014	As at 31 January 2014
	("unaudited")	("audited")
Total NAV	£36.6m	£34.5m
Shares in issue	28,448,138	27,893,328
NAV per share **	128.8p	123.7p

* taking account of amounts receivable or chargeable to the VCT's income account.

The top ten investments in the Company's portfolio are listed below.

Top ten holdings as at 30 April 2014

	Percentage of
	the fund's net
	asset value as
	at
	30 April 2014
Prezzo plc	4.5
Accesso Technology Group plc	4.5
Brooks Macdonald Group plc	4.2
IDOX plc	3.9
Frontier Developments plc	3.6
Quixant plc	3.3
Fox Marble Holdings plc	3.1
TLA Worldwide plc	3.1
Anpario plc	3.0
Polyhedra Group plc	3.0
	36.2