TIDMATS TIDMTTM
RNS Number : 7954V
Artemis Alpha Trust PLC
16 December 2021
ARTEMIS ALPHA TRUST PLC (the "Company")
LEI: 549300MQXY2QXEIL3756
Half-Yearly Financial Report for the six months ended 31 October
2021
This announcement contains regulated information
Chairman's Statement
In the half-year under review market volatility continued with
concerns over inflation and interest rates adding to the
uncertainty over new variants of the virus.
In the six months to 31 October 2021 your Company's net asset
value per share and share price (on a total return basis) fell by
5.4% and 2.1% respectively, ending the period at 447.13p (NAV per
share) and 430.5p (share price). The FTSE All-Share Index rose by
5.4% over the same period.
The challenging environment led to a dip in relative performance
over the period, with some of the stocks that had performed
strongly last year displaying weakness. Companies whose prospects
are dependent on the reopening of economies, such as airlines and
serviced offices, have generally performed poorly. Those companies
which have been beneficiaries of the pandemic, such as food
delivery, have also been marked down if the market's high
expectations have not been met.
More detailed information on the performance of our portfolio is
set out in the Investment Manager's Review which follows.
Earnings and dividends
Revenue earnings per share for the half-year were 3.22p, an
increase of 102.5% on the comparable period last year, reflecting a
recovery from the low levels of investment income received in 2020.
The Board has today declared a first interim dividend of 2.14p per
ordinary share (2020: 2.11p) which will be paid on 20 January 2022
to shareholders on the register as at 24 December 2021. This
increase of 1.5% over the equivalent interim dividend paid in
January 2021 keeps the Company on track with our policy of growing
dividends in line or at a rate greater than the UK CPI inflation
rate of the preceding financial year (1.5% as at 30 April
2021).
General Meeting / Triennial tender offer
On 11 November 2021, the Company held a General Meeting for
shareholders to consider the Board's recommendation to suspend the
2021 tender offer and, instead, implement a continuous share
repurchase programme. This was passed overwhelmingly with a 99.18%
vote in favour of the resolution. The Board believes that the more
dynamic and concerted programme which is now in place will provide
shareholders with more predictable liquidity and a more stable and
reduced discount.
Share buy backs
Over the period, the discount to NAV narrowed from 7.1% to 3.7%
at 31 October 2021. The Company bought back 2.5 million shares at a
total cost of GBP11.2 million and an average discount of 6.0%. One
million of those shares were repurchased in the week following the
announcement of the proposed suspension of the 2021 tender offer
and the new buy-back policy. The volume and frequency of buy-backs
reduced after the initial activity with a further 0.75 million
shares bought back after the period end.
At the date of this report, the share price stood at 395.50p,
representing a discount of 6.2%.
Gearing
During the half-year, the Company increased its use of contracts
for difference to achieve gearing, which stood at 13.1% at the
period end. This offers a more cost-efficient method than a more
conventional bank loan as well as providing a revenue stream.
Outlook
While many of the reasons for the volatility in markets over the
half-year are still evident, the new Omicron variant and heightened
geopolitical tensions have added to the sense of uncertainty
already prevalent. We expect the portfolio to continue to be
buffeted, in the short term, by the changes of mood in the market
place but anticipate equally that it will deliver better
performance over the medium to longer term.
Duncan Budge
Chairman
15 December 2021
Investment Manager's Review
In the six-month period, the Company's NAV declined by 5.4%
compared to a 5.4% increase in the FTSE All-Share index.
The macroeconomic environment was influenced by the following
factors:
-- Inflation - rising energy costs and mismatches in the labour
market have created shortages and higher-than-expected
inflation. Although some factors are proving transitory,
uncertainty remains over the persistency of higher inflation.
-- Interest rates - strong economies and supply-side bottlenecks
have brought forward expectations for interest-rate rises
with the potential to impact asset prices and consumer
incomes. Central bankers have (so far) demonstrated reluctance
to act.
-- Pandemic - the Delta variant delayed the reopening of many
economies and caused disruption to supply chains and labour
mobility. Booster roll-outs and the embracing of "endemic"
policies suggest that economies remain on a path towards
normality.
-- Chinese economy - slowed due to the adoption of 'zero-Covid'
policies and a regulatory shift that has had an impact
on a number of sectors, including real-estate and technology.
-- Corporate profitability - has remained strong; robust demand
has been an enabler of pricing power and efficiency improvements
have offset higher costs.
It was a challenging six-month period for performance. This was
not what one might have expected given that the portfolio is
balanced across a range of factors (e.g. UK domestic/overseas
earners, growth/value, and cyclicals/defensives).
The key factors impacting its performance were:
-- Cyclical holdings geared towards a reopening of economies
performed poorly as the return to normality was delayed
(easyJet, Ryanair and IWG)
-- Pandemic winners showing any weakness in their earnings
momentum or blemishes in their performance were punished
(Just Eat, Hornby, Delivery Hero and Nintendo)
-- UK housebuilders delivered strong earnings but their shares
failed to re-rate due to concerns over the impact of rising
interest rates (Redrow, Bellway and Springfield)
-- We had limited exposure to some of the best performing
sectors of the market (energy, mining and financials)
and an absence of takeover bids.
We have made only limited changes to our holdings; the portfolio
that has found this year difficult is broadly the same one that
performed strongly last year. Although we have undoubtedly made
mistakes (both recognised and yet-to-be revealed), we feel that
many of our holdings have been treated more harshly than their
fundamentals warrant. We have taken certain actions to enhance the
portfolio's value as we see it and retain considerable flexibility
in the form of liquidity to take further action as opportunities
arise.
Portfolio developments
Retail (14.3% of NAV) is our largest sector exposure following a
strong share-price performance from Frasers Group. The company's
core sports business (Sports Direct) is benefiting from its
multi-year efforts to elevate its branded product offering by
investing in digital and physical assets. Better access to popular
products is leading to rising sales densities at a time when
operating costs have been reduced through rent savings and
investments in warehouse automation. The company is successfully
leveraging its merchandising expertise and extensive infrastructure
to rapidly grow Flannels, its luxury retail fascia.
Currys is also benefiting from the investments it has made in
recent years to improve its customer value proposition, with recent
evidence of market-share gains indicating that the strategy is
proving successful. The company announced a target to deliver over
GBP250m in free cash flow per annum and a GBP75m share buyback
given its improving financial position.
Food delivery (12.2%) was our most costly sector exposure as
both Delivery Hero and Just Eat declined. Growth in this industry
has been more robust than many would have predicted given the
'reopening' of economies: Just Eat is forecast to grow orders by
45% in 2021 and Delivery Hero by 60%. Weakness in their shares
reflects concerns over rising competitive intensity and the return
on the significant investment that both businesses are making to
build their on-demand logistics networks. We continue to regard the
operating losses they incurred (less than 1.5% of gross platform
transaction value for both companies) as a long-term investment
made through the income statement. The industry remains early in
its adoption cycle and we see various levers for it to improve
profitability (such as dynamic delivery fees, advertising, and new
verticals) over time. Just Eat now trades on approximately 6x
underlying earnings assuming management's guidance for mature
margins.
Our positions in airlines (11.8%) have lagged the broader
cyclical recovery as the sector was hurt by travel restrictions,
particularly in the UK where testing requirements were onerous.
Although the recovery of the sector has been delayed, we continue
to see strong prospects for EasyJet and Ryanair. EasyJet raised
GBP1.2bn of equity in September, which we felt was more than
necessary at the time, but has left it well-capitalised with over
GBP4.4bn in liquidity. We increased the number of shares we held by
30% through selling some rights and adding 0.5% to the weighting.
The company has structurally reduced its cost base and made a
significant reallocation of planes towards higher-yielding routes
in its slot-restricted network. Ryanair, meanwhile, has
demonstrated remarkable resilience, which is testament to its
strong management and operating culture. The business has taken
advantage of the reduction in industry capacity to increase its own
growth plans, with guidance for passenger volumes in 2026 having
risen from 200m to 225m.
UK housebuilding (11.6%) has seen strong demand despite the end
of the stamp duty holiday and the curtailment of Help to Buy. This
points to a permanent benefit to the sector from hybrid working
habits. Supply chains are being well managed and overall cost
inflation has been offset by price increases. Both Redrow and
Bellway have seen earnings estimates revised positively through the
year (+36%/+23%). The strength of cash flow generation has been
such that despite higher investments in land to grow future
volumes, neither company carry debt. Share-price performance has
been lacklustre due to the prospect of rising interest rates and a
government levy for cladding. The latter was resolved with the
Autumn Budget (4% additional tax). Prospects for the sector appear
strong given low valuations and robust fundamentals.
Dignity (10.7%) has undergone significant strategic change in
the period. We supported a change in management and a revised
strategy that is aimed at leveraging the company's unique vertical
integration in the industry with its positions in pre-need
funerals, at-need funerals and crematoria. The revised strategy is
focused on improving value for customers to grow volume across all
three divisions. In May, we conducted several visits to Dignity
funeral branches and crematoria with members of its management
team. We came back with a stronger understanding of the quality of
the group's assets, many of which we feel are irreplicable, and
reassured that our assumptions for operational improvements are
reasonable. In our view, valuation and strategy should be
inextricably linked, and to this extent we have been disappointed
that the potential for the new strategy to create value is not
being reflected in the company's equity value.
Our positions in video games & hobbies (9.0%) were the
second-largest sector detractor, giving up last year's strong
performance. Nintendo felt the impact of chip shortages, which
constrained the supply of its hardware meaning there will be fewer
consoles sold this year (c24m) than last year (28m) despite robust
demand. Revisions to earnings have been limited as software volumes
have remained strong and the pipeline is promising. There have been
positive strategic developments and we feel the significance of
these may have been overlooked. The company executed a $1bn stock
repurchase in August and recently announced a multi-year $4.5bn
investment in software development and online subscription
capabilities. We find this encouraging in the context of concerns
that are often raised about the capital allocation efficiency of
Japanese corporates.
Hornby has seen some impact from higher shipping costs and from
bottlenecks delaying products. Demand for the group's hobby
products is growing from a higher base. The opportunity for it to
build direct relationships with its customers remains substantial
and nascent - direct-to-consumer sales account for less than 15% of
revenue. Investments made in product and technology over recent
years should start to drive this ratio higher, and bring with it
substantial profitability improvements.
Our investments in Chinese technology companies (8.5%) Alibaba
and Prosus have been hurt by negative developments in the Chinese
economy and in regulation. Both companies are highly innovative and
possess some of the strongest market positions in the digital
economy globally. We remain open-minded, but have so far retained
our view that greater regulation should not significantly damage
the values of their businesses as their high returns are derived
from visible network effects common to scaled platforms. Alibaba
continues to invest in its ecosystem of companies and Tencent to
re-deploy its profits into adjacent technology companies globally,
which we view as evidence that our investment thesis remains
intact.
UK banks (5.7%) performed well in the period. Credit impairment
remains benign and loan demand is steady, leading to strong capital
generation. Following last year's dividend hiatus, Lloyds has
considerable excess capital with a core equity tier 1 ratio of
17.2%. The investment case is evolving as expected, with the only
concern that a restoration of pricing power remains dependent on
interest-rate rises.
IWG (5.5%), the operator of serviced offices, continues to
recover albeit with occupancy and revenues improving at a slower
rate than first hoped. The company should be a net beneficiary of
increased hybrid working, although evidence in the short term
remains mixed. Management's intent to shift to a capital-light,
franchising strategy remains evident and could considerably
increase returns for the business.
GlaxoSmithKline (5.4%) has recovered encouragingly from a poor
first quarter as it became clear that volumes for the company's
leading shingles vaccine was being impacted by the rollout of Covid
vaccines. Cost reduction and management of input-price inflation
has led to better-than-expected earnings in recent quarters. The
company's capital markets day in June demonstrated the potential
for a more focused approach to investing in its pipeline to lead to
sustainable earnings growth in years to come. The combination of
self-help measures and pressure to demonstrate improvements from
activist investors means the company's prospects appear attractive
ahead of the spin-off of its consumer staples division in 2022.
Plus500 (5.4%) has reported robust results with revenues
remaining 50% ahead of pre-pandemic levels, indicating that
customers it acquired last year are staying with it for longer than
many expected. New management have increased levels of reinvestment
into the business from a position of strength, given that net cash
balances are over $780m.
Reaction Engines (4.0%, unquoted) was positively revalued after
a new institution invested in the company. Total funds raised in
the most recent round are in excess of 10% of the company's share
capital. The business is developing new applications for its heat
exchanger in decarbonisation technologies using ammonia and
hydrogen.
EssilorLuxottica (3.7%) has been a strong performer with sales
recovering to above 2019 levels sooner than expected. The deal to
acquire Grandivision, a large chain of retail stores across Europe,
is progressing. The developments in advancing augmented and virtual
reality technologies, particularly by Facebook, have the potential
to be a tailwind as the company is the largest manufacturer of
lenses globally.
Key Sector Exposures
Weighting Sector Companies
--------------------- -----------------------------
14.3% General retail Frasers Group, Currys
--------------------- -----------------------------
Delivery Hero, Just
12.2% Food delivery Eat Takeaway.com
--------------------- -----------------------------
11.8% Airlines Easyjet, Ryanair
--------------------- -----------------------------
11.6% Housebuilding Redrow, Bellway, Springfield
--------------------- -----------------------------
10.7% Funerals Dignity
--------------------- -----------------------------
9.0% Videogames & hobbies Nintendo, Hornby
--------------------- -----------------------------
8.5% China technology Prosus, Alibaba
--------------------- -----------------------------
5.7% Banking Lloyds
--------------------- -----------------------------
5.5% Serviced offices IWG
--------------------- -----------------------------
5.5% Pharmaceuticals GlaxoSmithKline
--------------------- -----------------------------
5.4% Trading platform Plus500
--------------------- -----------------------------
4.0% Defence Reaction Engines
--------------------- -----------------------------
3.7% Consumer staples EssilorLuxottica
--------------------- -----------------------------
2.4% Financial services Singer Capital Markets
--------------------- -----------------------------
Activity
We sold positions in Meta Platforms (formerly Facebook),
Fevertree and Barclays. Facebook and Fevertree were sold due to a
judgement that an increase in their valuation multiples had reduced
the potential upside, making alternatives more attractive. Barclays
was sold as our enthusiasm over the prospects for its investment
banking operations has waned and because we harbour some concerns
over the disruptive potential of 'buy-now, pay-later' companies on
its credit card division.
We increased positions in Alibaba, Prosus, Just Eat and Nintendo
as we felt that their share-price declines provided an attractive
opportunity for the reasons outlined above. We increased the
holding in Currys as we judged its fundamentals to be improving in
contrast to lacklustre share-price performance.
We did not start any new positions in the period and the number
of holdings in the portfolio has thus fallen to 25. We are actively
considering a number of positions and expect the number of holdings
to rise in time. Gearing levels have been maintained at
approximately 10% with the period-end figures being higher than
that due to the timing of share repurchases. The proportion of net
assets in liquid and very liquid holdings is 79%.
Outlook
The following working assumptions have informed portfolio
construction and will be subject to change in what has proven to be
a dynamic environment:
-- GDP growth - nominal GDP growth to remain resilient as
excess savings support consumption, particularly in the
UK.
-- Reopening - Covid will follow a bumpy path towards becoming
endemic with uncertainty over timing due to the Omicron
variant.
-- Interest rates - short-term movements are intertwined
with pandemic developments. In the medium-term, interest
rates are likely rise to reflect a normalisation of policy.
The key uncertainty is how far they will rise.
-- Digitalisation - will remain a key force for change across
most industries, with a risk that this factor is being
temporarily overlooked as pricing power for many industries
has been restored by the peculiar macroeconomic conditions
that currently prevail.
The key risks that we are monitoring are 1) the potential for
energy prices to rise further given tight markets and geopolitical
risks and 2) a loss of confidence in central bankers leading to a
material upward shift in real rates.
Overall, we believe the portfolio is well-positioned with its
mix of exposure to beneficiaries of reopening, UK consumption
plays, structural growth plays and idiosyncratic recovery stories.
Together, we think they trade at a significant discount to their
intrinsic value.
We have taken steps to enhance the portfolio's value in the year
to date, and retain considerable flexibility to respond to future
opportunities and risks with a liquid underlying portfolio. With
persistent uncertainty comes higher volatility and, historically,
these have been the situations in which we have added the most
value.
John Dodd, Kartik Kumar
Fund Managers
Artemis Fund Managers Limited
15 December 2021
Top 15 holdings
Valuation % of
Name Sector Shares Price (GBP) NAV
----------------------- ------------------------ ----------- ---------- ------------ -----
Dignity Consumer Discretionary 2,400,000 GBP7.08 16,992,000 10.7
Frasers Group Consumer Discretionary 2,500,000 GBP6.44 16,087,500 10.1
easyJet Consumer Discretionary 1,900,000 GBP6.23 11,837,000 7.4
Delivery Hero Consumer Discretionary 113,000 EUR107.35 10,241,167 6.4
Redrow Consumer Discretionary 1,475,000 GBP6.45 9,516,700 6.0
Just Eat Takeaway.com Technology 175,000 EUR52.40 9,170,000 5.8
Lloyds Banking
Group Financial 18,000,000 GBP0.50 9,039,600 5.7
IWG Industrials 2,825,000 GBP3.10 8,743,375 5.5
GlaxoSmithKline Health Care 575,000 GBP15.09 8,674,450 5.4
Plus500 Financials 650,000 GBP13.17 8,557,250 5.4
Nintendo, ADR Consumer Discretionary 200,000 $55.25 8,061,281 5.1
Alibaba Group Holding
(long CFD) General Retailers 59,000 $164.92 7,098,508 4.5
Ryanair Holdings Consumer Discretionary 490,000 EUR16.74 6,925,011 4.4
Household Goods &
Bellway (long CFD) Home Construction 200,000 GBP33.13 6,626,000 4.2
Reaction Engines Industrials 160,833 GBP40.00 6,433,320 4.0
----------------------- ------------------------ ----------- ---------- ------------ -----
Condensed income statement
Six months ended 31 October
2021 Six months ended 31 October 2020 Year ended 30 April 2021
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment
income 1,616 - 1,616 1,011 - 1,011 3,147 - 3,147
Total revenue 1,616 - 1,616 1,011 - 1,011 3,147 - 3,147
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
(Losses)/gains on
investments - (10,387) (10,387) - 18,550 18,550 - 59,998 59,998
Net
(losses)/gains
on derivatives - (454) (454) - (845) (845) - 4,767 4,767
Currency
(losses)/gains - (110) (110) - 368 368 - 609 609
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
Total
income/(loss) 1,616 (10,951) (9,335) 1,011 18,073 19,084 3,147 65,374 68,521
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
Expenses
Investment
management
fee (123) (491) (614) (81) (325) (406) (196) (785) (981)
Other expenses (235) (5) (240) (182) (7) (189) (411) (15) (426)
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
Profit/(loss)
before
finance costs
and
tax 1,258 (11,447) (10,189) 748 17,741 18,489 2,540 64,574 67,114
Finance costs (3) (15) (18) (3) (12) (15) (7) (28) (35)
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
Profit/(loss)
before
tax 1,255 (11,462) (10,207) 745 17,729 18,474 2,533 64,546 67,079
Tax (45) - (45) (114) - (114) (210) - (210)
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
Profit/ (loss)
and
total
comprehensive
income/(expense)
for the period 1,210 (11,462) (10,252) 631 17,729 18,360 2,323 64,546 66,869
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
Earnings/(loss)
for the period 3.22p (30.55)p (27.33)p 1.59p 44.79p 46.38p 5.92p 164.56p 170.48p
-------------------------- -------------------------- ---------------------- ----------------------- ----------------------- ---------------------- ----------------------- ----------------------- ----------------------
The total column of this statement represents the Statement of
Comprehensive Income of the Company, prepared in accordance with
International Financial Reporting Standards. The supplementary
revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies.
All items in the above statement derive from continuing
operations.
All income is attributable to the equity shareholders of Artemis
Alpha Trust plc. There are no minority interests.
Condensed statement of financial position
31 October 31 October 30 April
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Investments 150,887 138,752 175,991
Investment in subsidiary
undertaking 3,610 3,670 3,230
------------------------- -------------------------- ---------------------
154,497 142,422 179,221
Current assets
Derivative assets 355 309 162
Other receivables 2,512 548 848
Cash and cash equivalents 7,149 11 6,477
------------------------- -------------------------- ---------------------
10,016 868 7,487
------------------------- -------------------------- ---------------------
Total assets 164,513 143,290 186,708
========================= ========================== =====================
Current liabilities
Derivative liabilities (303) (57) (478)
Collateral pledged (2,030) (50) (830)
Other payables (3,016) (3,598) (3,572)
Total Liabilities (5,349) (3,705) (4,880)
------------------------- -------------------------- ---------------------
Net assets 159,164 139,585 181,828
------------------------- -------------------------- ---------------------
Equity attributable to equity
holders
Share capital 373 396 382
Share premium 676 676 676
Special reserve 29,515 46,181 40,738
Capital redemption reserve 217 194 208
Retained earnings - revenue 2,809 1,919 2,788
Retained earnings - capital 125,574 90,219 137,036
Total equity 159,164 139,585 181,828
------------------------- -------------------------- ---------------------
Net asset value per ordinary
share 447.15p 352.66p 476.17p
Condensed statement of changes in equity
Six months ended 31 October 2021 (unaudited)
------------------------------------------------------------------------
Retained earnings
-------- -------- -------- ----------- --------
Capital
Share Share Special redemption
capital premium reserve reserve Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- ----------- --------- -------- --------
At 1 May 2021 382 676 40,738 208 2,788 137,036 181,828
Total comprehensive
income:
Profit/(loss) for
the period - - - - 1,210 (11,462) (10,252)
Transactions with
owners recorded
directly to equity:
Repurchase and cancellation
of ordinary shares (9) - (4,091) 9 - - (4,091)
Repurchase of ordinary
shares into treasury - - (7,132) - - - (7,132)
Dividends paid - - - - (1,189) - (1,189)
-------- -------- -------- ----------- --------- -------- --------
At 31 October 2021 373 676 29,515 217 2,809 125,574 159,164
======== ======== ======== =========== ========= ======== ========
Six months ended 31 October 2020 (unaudited)
------------------------------------------------------------------------
Retained earnings
-------- -------- -------- ----------- --------
Capital
Share Share Special redemption
capital premium reserve reserve Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- ----------- --------- -------- --------
At 1 May 2020 396 676 46,181 194 2,517 72,490 122,454
Total comprehensive
income:
Profit for the
period - - - - 631 17,729 18,360
Transactions
with owners recorded
directly to equity:
Dividends paid - - - - (1,229) - (1,229)
-------- -------- -------- ----------- --------- -------- --------
At 31 October
2020 396 676 46,181 194 1,919 90,219 139,585
======== ======== ======== =========== ========= ======== ========
Year ended 30 April 2021 (audited)
----------------------------------------------------------------------------
Retained earnings
-------- -------- -------- --------
Capital
Share Share Special redemption
capital premium reserve reserve Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- ----------- ----------- ---------- --------
At 1 May 2020 396 676 46,181 194 2,517 72,490 122,454
Total comprehensive
income:
Profit for the
period - - - - 2,323 64,546 66,869
Transactions
with owners recorded
directly to equity:
Repurchase and
cancellation
of ordinary shares (14) - (5,443) 14 - - (5,443)
Dividends paid - - - - (2,052) - (2,052)
-------- -------- -------- ----------- ----------- ---------- --------
At 30 April 2021 382 676 40,738 208 2,788 137,036 181,828
======== ======== ======== =========== =========== ========== ========
Condensed statement of cash flows
Six months ended Six months ended Year ended
31 October 31 October 30 April
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating activities
(Loss)/profit before tax (10,207) 18,474 67,079
Interest payable 18 15 35
Losses/(gains) on investments 10,387 (18,550) (59,998)
Net losses/(gains) on derivatives 454 845 (4,767)
Currency losses/(gains) 110 (368) (609)
Increase in other receivables (79) (177) (307)
Increase/(decrease) in other payables 5 (23) 81
Net cash inflow from operating activities
before interest and tax 688 216 1,514
Interest paid (18) (15) (35)
Irrecoverable overseas tax suffered (45) (114) (210)
Net cash inflow from operating activities 625 87 1,269
Investing activities
Purchase of investments (13,101) (29,705) (51,278)
Sales of investments 27,097 24,739 51,912
(Purchase)/sales of derivatives (2,672) (471) 5,057
Collateral pledged 1,200 (170) 610
Net cash inflow)/(outflow) from investing
activities 12,524 (5,607) 6,301
Financing activities
Repurchase of ordinary shares into treasury (6,940) - -
Repurchase and cancellation of ordinary
shares (4,091) - (5,443)
Dividends paid (1,189) (1,229) (2,052)
(Decrease)/increase in inter-company
loan (147) 332 411
Utilisation of bank overdraft - 678 -
Net cash outflow from financing activities (12,367) (219) (7,084)
Net decrease/(increase) in net debt 782 (5,739) 486
Net funds at the start of the period 6,477 5,382 5,382
Effect of foreign exchange rate changes (110) 368 609
Net funds at the end of the period 7,149 11 6,477
Cash and cash equivalents 7,149 11 6,477
Notes to the half-yearly financial report
1. Accounting policies
The Half-Yearly Financial Report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial
Reporting', the provisions of the Companies Act 2006 and with the
guidance set out in the Statement of Recommended Practice for
Investment Trust Companies and Venture Capital Trusts ("SORP")
issued by the Association of Investment Companies in October
2019.
The accounting policies remain the same as disclosed in the
Annual Financial Statements for the year ended 30 April 2021.
2. Earnings/(loss) per ordinary share
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2021 2020 2021
----------- ----------- ----------
Earnings/(loss) per ordinary share is
based on:
Revenue earnings (GBP'000) 1,210 631 2,323
Capital (loss)/earnings (GBP'000) (11,462) 17,729 64,546
----------- ----------- ----------
Total (loss)/earnings (GBP'000) (10,252) 18,360 66,869
=========== =========== ==========
Weighted average number of ordinary shares
in issue during the period 37,522,202 39,580,474 39,224,610
=========== =========== ==========
3. Net asset value per ordinary share
As at As at As at
31 October 31 October 30 April
2021 2020 2021
----------- ----------- ----------
Net asset value per ordinary share is
based on:
Net assets (GBP'000) 159,164 139,585 181,828
----------- ----------- ----------
Number of shares in issue at the end
of the period 35,594,974 39,580,474 38,185,474
=========== =========== ==========
During the period, the Company repurchased and cancelled 925,000
shares and repurchased 1,665,500 shares into treasury (six months
ended 31 October 2020: no shares were repurchased or cancelled into
treasury and year ended 30 April 2021: repurchased and cancelled
1,395,000 shares).
4. Dividends
Six months Six months
ended ended Year ended
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------ ----------- ----------
Final dividend for the year
ended 1,189 1,229 1,229
30 April 2021 - 3.19p (2020:
3.10p)
First interim dividend for
the year ended - - 823
30 April 2021 - 2.11p
1,189 1,229 2,052
============ =========== ==========
A first interim dividend for the year ending 30 April 2022 of
2.14p per ordinary share has been declared. This will be paid on 20
January 2022 to those shareholders on the register at close of
business on 24 December 2021.
5. Analysis of retained earnings - capital
As at As at As at
31 October 31 October 30 April
2021 2020 2021
GBP'000 GBP'000 GBP'000
----------- ----------- ---------
Retained earnings - capital
(realised) 115,940 84,823 125,155
Retained earnings - capital
(unrealised) 9,634 5,396 11,881
----------- ----------- ---------
125,574 90,219 137,036
----------- ----------- ---------
6. Reconciliation of liabilities arising from financial activities
Balance at
1 May Transactions Cash flow 31 October
2021 in the period payments 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------- -------------- --------- -----------
Repurchase of shares
into treasury
treasury - 7,132 (6,940) 192
Repurchase of shares
for treasury
cancellation - 4,091 (4,091) -
Dividends paid - 1,189 (1,189) -
Intercompany loan - 147 (147) -
--------- -------------- --------- -----------
- 12,559 (12,367) 192
--------- -------------- --------- -----------
7. Comparative information
The financial information for the six months ended 31 October
2021 and 31 October 2020 has not been audited and does not
constitute statutory financial statements as defined in Section 234
of the Companies Act 2006.
The information for the year ended 30 April 2021 has been
extracted from the Audited Financial Statements for the year ended
30 April 2021. These financial statements contained an unqualified
auditor's report and have been lodged with the Registrar of
Companies and did not contain a statement required under Section
498 of the Companies Act 2006.
8. Related party transactions
The amounts paid to the Investment Manager are disclosed in the
Condensed income statement. However, the existence of an
independent Board of Directors demonstrates that the Company is
free to pursue its own financial and operating policies and
therefore, under IAS 24: Related Party Disclosures, the Investment
Manager is not considered to be a related party.
9. Fair value hierarchy
IFRS 7 'Financial Instruments: Disclosures' requires an entity
to provide an analysis of investments held at fair value through
profit and loss using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements of fair
value. The hierarchy used to analyse the fair values of financial
assets is set out below.
Level 1 - investments with quoted prices in an active
market;
Level 2 - investments, including contracts for difference, whose
fair value is based directly on observable current market prices or
is indirectly derived from market prices; and
Level 3 - investments whose fair value is determined using a
valuation technique based on assumptions that are not supported by
observable current market prices or are not based on observable
market data.
The investments held at the balance sheet date fell into the
categories, Level 1, Level 2 and Level 3. The values in these
categories are summarised as part of this note. Any investments
that are delisted or suspended from a listed stock exchange are
transferred from Level 1 to Level 3.
(Unaudited) (Unaudited) (Audited)
As at As at As at
31 October 31 October 30 April
2021 2020 2021
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- ------------- ----------- ------------- --------- -------------
Level 1 138,440 - 128,034 - 165,313 -
Level 2 355 (303) 309 (57) 162 (478)
Level 3 12,447 - 10,718 - 10,678 -
Total 151,242 (303) 139,061 (57) 176,153 (478)
=========== ============= =========== ============= ========= =============
The valuation of the Level 3 investments would not be
significantly different had reasonably possible alternative
valuation bases been applied.
Details of the movements in Level 3 assets during the
six months ended 31 October 2021 are set out in the table
below. GBP'000
-------
Level 3 investments
Opening book cost 16,221
Opening fair value adjustment (5,543)
-------
Opening valuation 10,678
=======
Movements in the period:
Purchases at cost 63
Sales - proceeds (57)
- realised losses on sales (2,258)
Increase in fair value adjustment 4,021
-------
Closing valuation 12,447
-------
Closing book cost 13,969
Closing fair value adjustment (1,522)
-------
12,447
=======
Statement of Principal Risks and Uncertainties
Pursuant to DTR 4.2.7R of the Disclosure Guidance and
Transparency Rules, the principal risks faced by the Company
include general market risk, regulatory, operational and financial
risks. These risks, which have not materially changed since the
Annual Financial Report for the year ended 30 April 2021, and the
way in which they are managed, are described in more detail in the
Annual Financial Report which is available at
artemisalphatrust.co.uk.
Responsibility Statement of the Directors in respect of the
Half-Yearly Financial Report
The Directors confirm that to the best of their knowledge, in
respect of the Half-Yearly Financial Report for the six months
ended 31 October 2021:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting'
issued by the International Accounting Standards Board
as adopted by the EU;
-- having considered the expected cash flows and operational
costs of the Company for the 18 months from the period
end, the Directors are satisfied that the Company has adequate
resources to continue in operational existence for the
foreseeable future. For this reason, the going concern
basis of accounting continues to be used in the preparation
of the Half-Yearly Financial Report;
-- the interim management report includes a fair review of
the information required by:
(a) Disclosure Guidance and Transparency Rule 4.2.7R (indication
of important events during the first six months; and a
description of the principal risks and uncertainties for
the remaining six months of the year); and
(b) Disclosure Guidance and Transparency Rule 4.2.8R (related
party transactions).
The Half-Yearly Financial Report for the six months ended 31
October 2021 was approved by the Board and the above responsibility
statement was signed on its behalf by:
Duncan Budge
Chairman
15 December 2021
Copies of the Half-Yearly Financial Report for the six months
ended 31 October 2021 will be sent to shareholders shortly and will
be available from the registered office at Cassini House, 57 St
James's Street, London SW1A 1LD as well as on the website,
artemisfunds.com .
A copy of the Half Yearly Financial Report will also be
submitted to the National Storage Mechanism and will soon be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Artemis Fund Managers Limited
Company Secretary
For further information, please contact:
Artemis Fund Managers Limited
Telephone: 0131 225 7300
16 December 2021
[END]
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