Annual Financial Report

RNS Number : 8319J

Artemis Alpha Trust PLC

05 July 2011

 



Artemis Alpha Trust plc (the "Company")

Annual Financial Report for the year ended 30 April 2011

This announcement contains regulated information

Financial Highlights

Returns for the year ended 30 April 2011

	Year ended 30 April 2011	Year ended 30 April 2010
Total Returns
Net asset value per ordinary share	23.4%	42.0%
Ordinary share price	31.0%	46.0%
FTSE All-Share Index	13.7%	36.6%
Revenue and dividends
Revenue earnings per ordinary share	3.64p	3.58p
Dividends per ordinary share	2.85p	2.75p
Total expense ratio (excluding performance fees)	0.9%	1.1%
Capital	As at 30 April 2011	As at 30 April 2010
Net asset value per ordinary share	325.70p	266.77p
Ordinary share price	332.38p	256.50p
Premium/(discount) to net asset value	2.1%	(3.8)%
Gearing	17.6%	12.0%

Total Returns	3 years	5 years	Since launch*
Net asset value per ordinary share	33.2%	50.1%	396.5%
Ordinary share price	49.6%	49.8%	422.8%
FTSE All-Share Index	13.6%	22.4%	110.0%

Source: Artemis/Datastream

* Since 1 June 2003 - the date when Artemis was appointed as Investment Manager.

Chairman's Statement

Performance

The year ended 30 April 2011 was another good one for your Company. I am pleased to report an increase of 23.4 per cent in the Company's net asset value, and an even better return for shareholders, with a total return of 31.0 per cent. By comparison, the FTSE All-Share Index was up 13.7 per cent over the same period.

The year was also marked by a substantial increase in the Company's capital, with net assets of £159m at the year end. This reflected the period of good performance and the successful merger with Gartmore Growth Opportunities plc ("GGO") in December 2010. Further details on the merger with GGO are set out in the Directors' Report in the Annual Financial Report.

Investments

Following the GGO merger, the Company now has a larger number of investments and the Investment Manager has made good progress in both integrating the portfolios and reducing some of the smaller positions.

The portfolio has continued to have a strong bias towards oil & gas; and unquoted investments remain a prominent feature. Our largest holdings continue to be in unquoted companies. A number of these have made strong contributions to performance. Hurricane Exploration successfully raised further funds in March 2011 at a higher price than the previous carrying value. These funds will enable it to continue its exploration activities in the West of Shetland basin. As noted in the interim report, the value of Lynton Holding Asia was increased after a corporate transaction.

Eland Oil & Gas, which has invested in an oil exploration licence in Nigeria, is a significant new investment by the Company and it is considering a flotation on AIM later this year. Finally, Vostok Energy has seen its first gas revenues in the year and is targeting a listing of its shares towards the end of 2011.

Further details on the portfolio and investment focus can be found in the Investment Manager's Review which follows.

Dividends

The increase in the size of the Company over the year and the additional shares issued in the period has made the management of the revenue account harder. The yield on the Company's portfolio remains quite low, given the large weightings in oil & gas exploration companies and in small and unquoted investments. Your Board and the Investment Manager are committed to meeting the Company's objective of providing a growing dividend stream - as has been done successfully since Artemis Investment Management's ("Artemis") appointment. Annual dividends have grown each year by an average of 5.5 per cent since Artemis was appointed Investment Manager in 2003.

To date, the Company has been able to maintain its growing dividend by drawing on investment gains generated by its subsidiary dealing company to supplement the Company's portfolio income, where necessary. The Board and Investment Manager are mindful that as returns are not guaranteed, this may not always be the case. The Board will try to ensure that sufficient income continues to be generated to cover a growing dividend.

For the year ended 30 April 2011 your Board has declared a second interim dividend of 1.65p (2010: 1.60p) per ordinary share, bringing total dividends for the year ended 30 April 2011 to 2.85p (2010: 2.75p), an increase of 3.6 per cent. This dividend will be paid on 19 August 2011 to those shareholders on the register on 1 July 2011.

Share capital

As a result of the merger with GGO and related matters, the Company issued a number of new ordinary shares, and had a one-for-seven bonus issue of subscription shares. Full details of the Company's capital are set out in the Directors' Report in the Annual Financial Report.

The Company also continued its policy of buying back ordinary shares where appropriate to maintain a balance between supply and demand for the Company's shares. Accordingly it bought back 137,000 shares during the year at an average discount of 8.0 per cent to the net asset value prevailing at the time the shares were purchased. However, following a re-rating of the Company's ordinary shares, these shares, along with the balance already held in treasury, totalling 551,500 shares, were reissued to meet demand at a premium of 2.1 per cent in March 2011.

The ordinary shares stood at a premium of 2.1 per cent to the net asset value at the year end, having been at an average discount of approximately 4.3 per cent during the year.

Annual General Meeting ("AGM")

The Company's AGM will take place on Wednesday, 14 September 2011 at 12.30 pm at the offices of Artemis Investment Management LLP, Cassini House, 57 St James's Street, London SW1A 1LD. The Notice of Meeting, containing full details of the business to be conducted at the meeting, is included in the Annual Financial Report.

The Directors look forward to welcoming you to the AGM. The fund managers will make a short presentation at the meeting, which will be followed by a buffet lunch which provides shareholders with a good opportunity to meet with the Directors and the fund managers. Should you be unable to attend the AGM in person, your Board would encourage you to use your proxy votes by completing and returning the form of proxy enclosed with the Annual Financial Report.

Board Changes

Following the merger with GGO, Ian Dighé, who served as a director of GGO, was appointed as a Director of the Company. Charles Peel retired from the Board in December 2010, having served since the appointment of Artemis in 2003 and fulfilled the role of the senior independent director ("SID"). During his time as a Director he proved to be a highly effective member of the Board and made a tremendous contribution to the success of your Company. I, and my fellow Directors, would like to record our thanks for his work over the years.

Following Mr Peel's retirement, the Directors have considered the position of the SID and it was agreed that Mr Barron will now undertake this role for the Board.

Outlook

The burdens of government debt still weigh heavily on the world's economy. Governments are facing difficult choices, and their decisions seem increasingly unpalatable to their electorates. Meanwhile, the dramatic events across the Arab world and in Japan in the first months of 2011 have added to the uncertainty ahead.

That said, markets held up well in the period under review. Current market valuations are not particularly demanding. There will be volatility, but your Board remains confident that the Investment Manager can take advantage of the many opportunities available.

And finally…

Your Board is always keen to hear from shareholders and you can contact me at [e-mail]. You will also find information on the Company, including a monthly fact sheet and performance data, on the Company's dedicated web pages at artemisonline.co.uk.

Simon Miller

Chairman

5 July 2011

Investment Manager's Review

Performance

Your Company's longer-term performance record remains excellent. It is summarised in the table below.

	3 years	5 years	Launch*
Net asset value	33.2%	50.1%	396.5%
Share price	49.6%	49.8%	422.8%
FTSE All-Share Index	13.6%	22.4%	110.0%

* Since 1 June 2003 - the date when Artemis was appointed as Investment Manager. All figures are total return to 30 April 2011.

Our investment strategy continues to focus on mid and small cap companies, where we believe we can add value for shareholders.

The completion of the merger with GGO in December 2010 resulted in a considerably larger number of holdings. At the time of the merger, the Company's portfolio contained 89 holdings. This increased to 237 following the merger. This enlarged portfolio also adjusted the sector weightings. Since the merger we have made good progress in selling the very smallest holdings. We will continue to orientate the portfolio towards our historic style.

The Chairman's Statement highlights the changes to the Company's share capital and full details are included in note 6. As part of the GGO transaction, the Artemis investment team exercised all its manager warrants at a cost of £7.9m. Their aggregate interest in the Company now stands at 18 per cent, and the named managers (John Dodd and Adrian Paterson) own 8 per cent in aggregate.

Portfolio

The merger of GGO modestly diluted our large sector positions, but has brought a much improved balance and liquidity to the portfolio. Set out below are the five largest contributors and detractors to absolute performance over the year.

Five largest stock contributors

Company	Market	Contribution %
Lynton Holding Asia	Unquoted	4.1
Hurricane Exploration	Unquoted	3.5
Cove Energy	AIM	2.3
New Britain Palm Oil	LSE Main Market	2.3
R.E.A. Holdings	LSE Main Market	1.5

Five largest stock detractors

Company	Market	Contribution %
Aethra Asset Management	Unquoted	(1.3)
Madagascar Oil	AIM	(1.0)
Vostok Energy	Unquoted	(1.0)
CVS Group	AIM	(0.9)
Maxima Holdings	AIM	(0.9)

The largest area of focus remains, as the Chairman has observed, the oil & gas sector, where 33 per cent of the portfolio was invested at the year end. This weighting has added 5.4 per cent to the overall performance, with the largest contribution coming from the increased valuation of the unquoted Hurricane Exploration, following further appraisal of its Lancaster prospect in the West of Shetland Basin and subsequent fund-raising. The company remains well funded for the next phase of appraisal/drilling; and if stockmarket conditions permit, a listing is anticipated towards the fourth quarter of the calendar year. The other major investment in the sector remains the unquoted Vostok Energy where, at an operational level, the business continues to perform well, but we remain frustrated that the company's IPO has been delayed. The current prediction is the fourth quarter of the calendar year.

At the listed level, both Cove Energy and Africa Oil have continued to deliver positive performance, following further discoveries off the east coast of Africa. We continue to favour exploration assets in Africa.

On the negative side, our modest holding in Madagascar Oil, which was suspended from trading, resulted in our holding being written down to nil. This conservative attitude reflects our caution on the company's value. Following a recent trip to meet the relevant officials from Madagascar's government, we were reassured about a re-listing, which has now happened. The company's shares began trading on AIM with effect from 27 June 2011.

The length of investment cycle in the oil industry is often much longer than originally forecast, reflecting the time required to interpret seismic, discover a commercial success and actually getting it out of the ground. A good example would be Providence Resources which we added to during the year. The company has spent a considerable amount of time in preparing the best prospects and we anticipate a steady flow of news in the coming months. The other main new holding is Faroe Petroleum, which has prospects in the Atlantic margin of the North Sea and across to the Norwegian sector. Its more balanced portfolio will provide positive news flow over the next year, as it has an extensive drilling programme. Our largest purchase in the period was in an unquoted company, Eland Oil & Gas. The company is in the process of acquiring onshore producing assets in Nigeria. We anticipate a listing of the company later this year.

In the short term we have seen increased volatility in the crude oil price, following the unrest in certain northern African countries. We believe, however, that many of our investments in the sector will be re-rated by specific events towards the end of the year. We remain confident that there will be a very positive contribution to performance from these investments.

The other sector that has provided a positive contribution to performance has been the palm oil sector. New Britain Palm Oil, R.E.A. Holdings and Asian Plantations have all risen on the back of recovering palm oil prices, reflecting material increases in Asian demand. Good levels of rainfall have supported encouraging crop levels. We remain optimistic about further price rises. We would like to assure shareholders that these investments are well established businesses that only plant on previously cleared land which has been designated for this type of agriculture with no clearing at all of virgin/primary rainforest. The companies' environmental policies and approach are most stringent and each company has social welfare programmes bringing clean drinking water, schools and medical facilities to their areas.

Our exposure to other financials continued to perform well with positive contributions from emerging markets fund managers Ashmore and City of London. A new investment made in this area was SVG Capital, a private equity investment company trading at a substantial discount to net asset value.

We have commented on our two largest unquoted investments above, but elsewhere in this section of the portfolio we saw an increase in the value of our holding in Lynton Holding Asia, following a significant equity investment in its single underlying investment, Hawker Pacific, at a valuation higher than previously recognised (as commented upon in the interim report). This added 4.1 per cent to performance. We have seen good progress with the other unquoted investments, with some successfully completing additional fund raisings at higher prices than we held them at.

Our investment in The Hut Group has continued to perform strongly and your Company was able to write up the value of the holding following the acquisition of MyProtein.com, the UK's leading online distributor of sports nutrition products. The deal should produce synergies; and MyProtein is forecasting strong sales growth in 2011. The Hut Group continues to follow its route of expansion through acquisition and remains one of the fastest growing digital companies in Europe. We expect the company to seek a listing later in the year.

In line with our prudent valuation policy for unquoted investments, we have written the value of our holding in Aethra Asset Management down to nil. That is because it became clear that reflecting the current difficult market conditions, there was a lack of traction in building funds under management.

We remain optimistic that we will see further value for shareholders from our unquoted investments. We expect to see a number of flotations over the next 12 months.

Set out below is a summary of the best and worst performing sectors in the portfolio over the year to 30 April 2011 and how they have contributed/detracted from the absolute performance of the Company.

Five largest sector contributors

Sector	Contribution %
Aerospace & Defence	5.4
Oil & Gas Producers	5.4
Food Producers	5.2
Financial Services	3.0
Industrial Engineering	2.0

Five largest sector detractors

Sector	Contribution %
Household Goods & Home Construction	(0.8)
General Retailers	(0.7)
Real Estate Investment & Services	(0.7)
Travel & Leisure	(0.6)
Electricity	(0.3)

Gearing

We have continued to use gearing during the year. This has made a positive contribution of 2.1 per cent to performance. At 30 April 2011, the Company's borrowing facility remained fully drawn down and gearing stands at 17.6 per cent. We will continue to monitor our gearing in the context of our view of stockmarkets over the coming months. We will always employ it where we believe it will enhance the returns from the portfolio.

Outlook

At the time of writing we have seen a fall in the oil price, reflecting the International Energy Agency's release of extra oil onto the market. This short term posturing reflects a reaction to OPEC's refusal to increase production. We continue to believe that in the medium term, with limited global supply, against even lowered world growth targets, oil prices will rise. 

European sovereign debt issues will continue to weigh on investors' minds and the problem will not be resolved easily. Against this backdrop, and combined with slower growth and further inflationary pressures, what can we do to create positive returns? Our oil & gas holdings have a series of specific events happening in the latter half of the year and news flow will push prices higher. We remain confident of the prospects for the palm oil sector, which is driven by the increasing demand from India and China. The unquoted investments will continue to have specific positive news flow and will, as they have done historically, contribute to performance.

The management team represents the largest group of shareholders in the Company and we continue to back our judgement with our own funds.

John Dodd and Adrian Paterson

Fund Managers
Artemis Investment Management LLP

5 July 2011

 

Principal Risks and Risk Management

The Board, in conjunction with the Investment Manager, has developed a risk map which sets out the principal risks faced by the Company. It is used on an on-going basis to monitor the risks faced by the Company and to review the effectiveness of the controls established to mitigate them.

As an investment company the main risks relate to the nature of the individual investments and the investment activities generally. These include market price risk, foreign currency risk, interest rate risk, credit risk and liquidity risk.

A summary of the key areas of risk are set out below:

·           Investment: the Company's investments are selected on their individual merits and the performance of the portfolio is not likely to track the wider UK market (FTSE All-Share Index). The Board believes this approach will continue to generate good long-term returns for shareholders. Currently 34 per cent (2010: 33 per cent) of the Company's net assets is represented by unquoted companies and these investments carry higher liquidity and realisation risks. The Board considers that these risks are justified by the longer term nature of the investments and the Company's closed-ended structure, and that such investments will continue to be a source of positive returns for shareholders. The Company may have significant industrial sector exposure from time to time and risk is diversified through a broad range of investments being held. The Board discusses the investment portfolio with the Investment Manager at each Board meeting and part of this discussion includes a review of the Company's unquoted investments and their valuations.

·           Regulatory: failure to comply with the requirements of a framework of regulation and legislation, within which the Company operates. The Company relies on the services of the Company Secretary/Investment Manager to monitor the ongoing compliance with the relevant regulations and legislation.

·           Operational: failure of the Investment Manager's and/or any third party service providers' systems which could result in an inability to accurately report and monitor the Company's financial position.

·           Financial: any failings in the Investment Manager's and/or third party service providers' controls which could lead to the Company's assets being misappropriated. Failure to comply with appropriate accounting standards could result in a reporting error or breach of regulations or legislation.

Statement of Directors' Responsibilities in respect of the Annual Financial Report

The Directors are responsible for preparing the Annual Financial Report and the group and parent company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under that law they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.

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 group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the Directors are required to:

·           select suitable accounting policies and then apply them consistently;

·           make judgements and estimates that are reasonable and prudent;

·           state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

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

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The financial statements are published on a website, artemisonline.co.uk, maintained by the Company's Investment Manager, Artemis Investment Management LLP. The maintenance and integrity of the corporate and financial information relating to the Company is the responsibility of the Investment Manager. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

We confirm that to the best of our knowledge:

(a)      the Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities and financial position of the Company and the Group, and of the profit or loss of the Group; and

(b)      the Report of the Directors includes a fair review of the development and performance of the business and the position of the Company and the Group, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

Simon Miller

Chairman

5 July 2011

Consolidated Income Statement
For the year ended 30 April 2011

	Year ended 30 April 2011			Year ended 30 April 2010
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income	1,426	-	1,426	1,085	-	1,085
Other income	352	-	352	560	-	560
Total revenue	1,778	-	1,778	1,645	-	1,645
Gains on investments	-	24,044	24,044	-	28,331	28,331
Gains on current asset investments	72	-	72	109	-	109
Currency gains	-	31	31	-	20	20
Total income	1,850	24,075	25,925	1,754	28,351	30,105
Expenses
Investment management fee	(80)	(722)	(802)	(50)	(450)	(500)
Performance fee	(40)	(363)	(403)	-	-	-
Other expenses	(284)	(25)	(309)	(338)	-	(338)
Profit before finance costs and tax	1,446	22,965	24,411	1,366	27,901	29,267
Finance costs	(53)	(474)	(527)	(17)	(16)	(177)
Profit before tax	1,393	22,491	23,884	1,349	27,741	29,090
Tax	(39)	30	(9)	(157)	125	(32)
Profit for the year	1,354	22,521	23,875	1,192	27,866	29,058
Earnings per ordinary share (basic)	3.64p	60.56p	64.20p	3.93p	91.83p	95.76p
Earnings per ordinary share (diluted)	3.64p	60.56p	64.20p	3.58p	83.75p	87.33p

The total column of this statement represents the Statement of Comprehensive Income of the Group, 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.

Balance Sheets
As at 30 April 2011

	Group 2011 £'000	Company 2011 £'000	Group 2010 £'000	Company 2010 £'000
Non-current assets
Investments	181,549	190,583	100,480	109,322
Current assets
Investments held by subsidiary	2,903	-	1,133	-
Other receivables	4,593	4,579	315	315
Cash and cash equivalents	-	-	603	414
	7,496	4,579	2,051	729
Total assets	189,045	195,162	102,531	110,051
Current liabilities
Bank overdraft	(1,519)	(1,708)	-	-
Other payables	(2,002)	(7,930)	(1,213)	(8,733)
Bank loan	(26,500)	(26,500)	(11,500)	(11,500)
	(30,021)	(36,138)	(12,713)	(20,233)
Net assets	159,024	159,024	89,818	89,818
Equity attributable to equity holders
Share capital	557	557	305	305
Share premium	69,136	69,136	24,116	24,116
Special reserve	2,807	2,807	1,910	1,910
Warrant reserve	-	-	1,278	1,278
Capital redemption reserve	33	33	32	32
Retained earnings - revenue	2,485	983	1,970	630
Retained earnings - capital	84,006	85,508	60,207	61,547
Total equity	159,024	159,024	89,818	89,818
Net asset value per ordinary share (basic)	325.70p		298.47p
Net asset value per ordinary share (diluted)	325.70p		266.77p

These financial statements were approved by the Board of Directors and signed on its behalf on

5 July 2011 by:

David Barron

Director

Statements of Changes in Equity

For the year ended 30 April 2011

						Retained earnings
	Share capital	Share premium	Special reserve	Warrant reserve	Capital redemption reserve	Revenue	Capital	Total
Group	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the year ended 30 April 2011
At 1 May 2010	305	24,116	1,910	1,278	32	1,970	60,207	89,818
Total comprehensive income:
Profit for the year	-	-	-	-	-	1,354	22,521	23,875
Transactions with owners recorded directly to equity:
Issue of ordinary shares	117	37,323	-	-	-	-	-	37,440
Costs of merger	-	(772)	-	-	-	-	-	(772)
Repurchase of ordinary shares into treasury	-	-	(319)	-	-	-	-	(319)
Re-issue of ordinary shares from treasury	-	527	1,286	-	-	-	-	1,813
Exercise of manager warrants	66	7,914	-	(1,278)	-	-	1,278	7,980
Bonus issue of subscription shares	70	-	(70)	-	-	-	-	-
Cancellation of subscription shares	(1)	-	-	-	1	-	-	-
Conversion of subscription shares	-	28	-	-	-	-	-	28
Dividends paid	-	-	-	-	-	(839)	-	(839)
At 30 April 2011	557	69,136	2,807	-	33	2,485	84,006	159,024
For the year ended 30 April 2010
At 1 May 2009	327	23,984	2,878	1,299	9	1,584	32,320	62,401
Total comprehensive income:
Profit for the year	-	-	-	-	-	1,192	27,866	29,058
Transactions with owners recorded directly to equity:
Repurchase of ordinary shares into treasury	(23)	-	(968)	-	23	-	-	(968)
Exercise of manager warrants	1	132	-	(21)	-	-	21	133
Dividends paid	-	-	-	-	-	(806)	-	(806)
At 30 April 2010	305	24,116	1,910	1,278	32	1,970	60,207	89,818
						Retained earnings
	Share capital	Share premium	Special reserve	Warrant reserve	Capital redemption Reserve	Revenue	Capital	Total
Company	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
For the year ended 30 April 2011
At 1 May 2010	305	24,116	1,910	1,278	32	630	61,547	89,818
Total comprehensive income:
Profit for the year	-	-	-	-	-	1,192	22,683	23,875
Transactions with owners recorded directly to equity:
Issue of ordinary shares	117	37,323	-	-	-	-	-	37,440
Costs of merger	-	(772)	-	-	-	-	-	(772)
Repurchase of ordinary shares into treasury	-	-	(319)	-	-	-	-	(319)
Re-issue of ordinary shares from treasury	-	527	1,286	-	-	-	-	1,813
Exercise of manager warrants	66	7,914	-	(1,278)	-	-	1,278	7,980
Bonus issue of subscription shares	70	-	(70)	-	-	-	-	-
Cancellation of subscription shares	(1)	-	-	-	1	-	-	-
Conversion of subscription shares	-	28	-	-	-	-	-	28
Dividends paid	-	-	-	-	-	(839)	-	(839)
At 30 April 2011	557	69,136	2,807	-	33	983	85,508	159,024
For the year ended 30 April 2010
At 1 May 2009	327	23,984	2,878	1,299	9	591	33,313	62,401
Total comprehensive income:
Profit for the year	-	-	-	-	-	845	28,213	29,058
Transactions with owners recorded directly to equity:
Repurchase of ordinary shares into treasury	(23)	-	(968)	-	23	-	-	(968)
Exercise of manager warrants	1	132	-	(21)	-	-	21	133
Dividends paid	-	-	-	-	-	(806)	-	(806)
At 30 April 2010	305	24,116	1,910	1,278	32	630	61,547	89,818

Cash Flow Statements
For the year ended 30 April 2011

	Group 2011 £'000	Company 2011 £'000	Group 2010 £'000	Company 2010 £'000
Operating activities
Profit before tax	23,884	23,884	29,090	29,090
Interest payable	527	527	177	177
Gains on investments	(24,044)	(24,236)	(28,331)	(28,803)
Gains on current asset investments	(72)	-	(109)	-
Currency gains	(31)	(31)	(20)	(20)
(Increase)/decrease in other receivables	(231)	(217)	376	376
Increase in other payables	488	484	201	200
Net cash inflow from operating activities before interest and tax	521	411	1,384	1,020
Interest paid	(527)	(527)	(177)	(177)
Corporation tax paid	-	-	-	-
Irrecoverable overseas tax suffered	(9)	(9)	(32)	(32)
Net cash (outflow)/inflow from operating activities	(15)	(125)	1,175	811
Investing activities
Purchases of investments	(100,348)	(95,397)	(63,528)	(59,181)
Sales of investments	75,319	72,267	50,062	46,536
Net cash outflow from investing activities	(25,029)	(23,130)	(13,466)	(12,645)
Financing activities
Repurchase of ordinary shares into treasury	(319)	(319)	(968)	(968)
Exercise of manager warrants	7,980	7,980	133	133
Re-issue of ordinary shares from treasury	1,813	1,813	-	-
Costs of merger	(772)	(772)	-	-
Conversion of subscription shares	28	28	-	-
Dividends paid	(839)	(839)	(806)	(806)
Decrease in inter-company loan	-	(1,789)	-	(457)
Net cash inflow/(outflow) from financing activities	7,891	6,102	(1,641)	(2,098)
Net increase in net debt	(17,153)	(17,153)	(13,932)	(13,932)
Net debt at the start of the year	(10,897)	(11,086)	3,015	2,826
Effect of foreign exchange rate changes	31	31	20	20
Net debt at the end of the year	(28,019)	(28,208)	(10,897)	(11,086)
Bank loans	(26,500)	(26,500)	(11,500)	(11,500)
(Bank overdraft)/cash	(1,519)	(1,708)	603	414
	(28,019)	(28,208)	(10,897)	(11,086)

Notes:

1.  Accounting policies

Basis of preparation

The Group's Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The Company's Financial Statements have also been prepared in accordance with IFRSs as adopted by the EU and in accordance with the provisions of the Companies Act 2006 (the "Act").

The Company has taken advantage of the exemption provided under Section 408 of the Act not to publish its Income Statement and related notes.

2.  Income

	2011 £'000	2010 £'000
Investment income*
UK dividend income	1,284	719
UK fixed interest	116	51
Overseas dividend income	26	315
Overseas fixed interest	-	-
	1,426	1,085
Other income
Subsidiary undertaking's dealing profits	352	515
Bank interest	-	27
Other	-	18
	352	560
Total income comprises
Dividends and interest from investments	1,426	1,085
Bank interest	-	27
Other income and dealing profits	352	533
	1,778	1,645
Income from investments
UK quoted investments	1,165	770
UK unquoted investments	235	-
Overseas quoted investments	26	315
	1,426	1,085

*   All investments are designated at fair value through profit or loss on initial recognition, therefore all investment income arises on investments at fair value through profit or loss.

3.  Investment management and performance fees

	2011			2010
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment management fee	80	722	802	50	450	500
Performance fee	40	363	403	-	-	-

As at 30 April 2011, £786,000 was outstanding in respect of amounts due to the Investment Manager (2010: £318,000).

4.  Dividends

Dividends paid and proposed

	2011 £'000	2010 £'000
2010 second interim dividend of 1.60p per ordinary share (2009: 1.50p)	479	456
2011 first interim dividend of 1.20p per ordinary share (2010: 1.15p)	360	350
	839	806

Dividends payable in respect of the year

	2011 £'000	2010 £'000
First interim dividend of 1.20p per ordinary share (2010: 1.15p)	360	350
Second interim dividend of 1.65p per ordinary share (2010: 1.60p)	806	479
	1,166	829

 

5.  Earnings per ordinary share

The basic revenue return per share is based on the revenue profit for the year of £1,354,000 (2010: £1,192,000) and on 37,189,744 (2010: 30,345,066) shares, being the weighted average number of shares in issue during the year. The basic capital return per share is based on the capital profit for the year of £22,521,000 (2010: £27,866,000) and on 37,189,744 (2010: 30,345,066) shares, being the weighted average number of shares in issue during the year.

There was no dilution to the returns for the year ended 30 April 2011.

6.  Share capital

(a)       Share capital

	2011 Number	2011 £'000	2010 Number	2010 £'000
Allotted, called up and fully paid:
Ordinary shares of 1p each	48,825,239	488	30,093,203	301
Ordinary shares of 1p each held in treasury	-	-	414,500	4
Subscription shares of 1p each	6,886,365	69	-	-
		557		305

 (b)     Ordinary shares

	Number	£'000
Movements in ordinary shares during the year
Ordinary shares in issue on 1 May 2010	30,093,203	301
Issue of ordinary shares	11,740,581	117
Issue of ordinary shares on exercise of manager warrants	6,568,982	66
Issue of ordinary shares on exercise of subscription shares	7,973	-
Repurchase of ordinary shares into treasury	(137,000)	(1)
Re-issue of ordinary shares from treasury	551,500	5
Ordinary shares in issue on 30 April 2011	48,825,239	488

The movements in shares held in treasury during the year are as follows:

	2011		2010
	Number	£'000	Number	£'000
Balance brought forward	414,500	4	2,263,500	23
Cancellations	-	-	(2,263,500)	(23)
Repurchases	137,000	1	414,500	4
Re-issues	(551,500)	(5)	-	-
Balance carried forward	-	-	414,500	4

 (c)     Subscription shares

	Number	£'000
Issue of subscription shares	6,973,123	70
Cancellation of subscription shares	(78,785)	(1)
Conversion of subscription shares into ordinary shares	(7,973)	-
Balance carried forward	6,886,365	69

7.     Net asset value per share

The basic net asset value per ordinary share is based on net assets of £159,024,000 (2010: £89,818,000) and on 48,825,239 (2010: 30,093,203) shares, being the number of shares in issue at the year end.

The diluted net asset value per share has been calculated on the assumption that nil subscription shares (2010: 6,568,982 manager warrants) were exercised resulting in a total of 48,825,239 shares in issue (2010: 36,662,185).

8.     Transactions with the Investment Manager and related parties

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. The Company surrendered £445,000 (2010: £630,000) excess management expenses without payment to Alpha Securities Trading Limited. All other transactions with subsidiary undertakings were on an arms length basis. During the year transactions in securities between the Company and its subsidiary undertakings amounted to £nil (2010: £nil).

9.         This Annual Financial Report announcement does not constitute the Company's statutory accounts for the years ended 30 April 2011 and 30 April 2010 but is derived from those accounts. Statutory accounts for the year ended 30 April 2010 have been delivered to the Registrar of Companies.  The statutory accounts for the year ended 30 April 2010 and the year ended 30 April 2011 both received an audit report which was unqualified and did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not include statements under section 498 of the Companies Act 2006. The statutory accounts for the year ended 30 April 2011 have not yet been delivered to the Registrar of Companies and will be delivered following the Annual General Meeting.

The audited Annual Financial Report for the year ended 30 April 2011 will be available to shareholders shortly. Copies may be obtained from the Company's registered office at Cassini House, 57 St James's Street, London, SW1A 1LD or at the Investment Manager's website at artemisonline.co.uk.

The Annual General Meeting of the Company will be held on Wednesday, 14 September 2011.

For further information, please contact:

Artemis Investment Management LLP

Company Secretary

Telephone: [phone]

5 July 2011

 

END

 

 

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