Annual Financial Report

RNS Number : 7824H

Artemis Alpha Trust PLC

16 July 2012

 



Artemis Alpha Trust plc (the "Company")

Annual Financial Report for the year ended 30 April 2012

This announcement contains regulated information

Financial Highlights

Returns for the year ended 30 April 2012

	Year ended 30 April 2012	Year ended 30 April 2011
Total returns
Net asset value per ordinary share	(4.6)%	23.4%
Ordinary share price	(13.9)%	31.0%
FTSE All-Share Index	(2.0)%	13.7%
Revenue and dividends
Revenue earnings per ordinary share	1.76p	3.64p
Dividends per ordinary share	2.95p	2.85p
Total expense ratio (excluding performance fees)	1.0%	0.9%
Capital	As at 30 April 2012	As at 30 April 2011
Net asset value per ordinary share	307.64p	325.70p
Ordinary share price	283.25p	332.38p
Premium/(discount) to net asset value	(7.9)%	2.1%
Gearing	10.5%	17.6%

Total returns	3 years	5 years	Since 1 June 2003*
Net asset value per ordinary share	67.5%	37.5%	373.5%
Ordinary share price	64.8%	25.9%	350.1%
FTSE All-Share Index	52.2%	6.5%	105.8%

Source: Artemis/Datastream

* The date when Artemis was appointed as Investment Manager.

Chairman's Statement

Performance

The year to 30 April 2012 proved a challenging one for the Company and for stockmarkets generally.  Continuing uncertainty over the debt crisis in Europe, together with concerns over the rate of the global economic recovery, has resulted in volatile markets. Against this background, the Company's net asset value per ordinary share fell by 4.6 per cent on a total return basis, which compares to a fall of 2.0 per cent for the FTSE All-Share Index. The share price lagged the net asset value and fell 13.9 per cent.

Investments

The Company continues to maintain its large exposure to unquoted investments and, at a sector level, to oil & gas. As reported at the half year, various unquoted investments had to delay their planned flotations. This resulted, as a prudent measure, in some being written down in value. There was some more encouraging news in the second half of the year, with several companies raising additional capital at higher valuations. The oil & gas sector of the portfolio performed well over the year. It was particularly strong in the second half. A number of holdings reported significant new discoveries and this resulted in improved share price performance.

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

Dividends

In view of the challenging conditions faced by investee companies, the Board considered it prudent at the half year to maintain the first interim dividend at the same level as the previous year. Having now considered the revenue account for the year as a whole, and being mindful of the Company's objective to pay a growing dividend, your Board has declared a second interim dividend of 1.75p (2011: 1.65p) per ordinary share, bringing total dividends for the year ended 30 April 2012 to 2.95p (2011: 2.85p), an increase of 3.5 per cent. This dividend will be paid on 17 August 2012 to those shareholders on the register on 27 July 2012.

Discount and share capital

The Company's share price started the reporting period trading at a small premium to net asset value. However, following a period of disappointing performance in the first half of the year, and in line with a general widening of discounts across the AIC UK Growth sector, the share price then moved to a discount.

As shareholders are aware, the Company seeks to have its shares trading at a low and stable discount and, where appropriate, it will buy-back its own ordinary shares from time to time to achieve this. Accordingly it bought back 622,048 ordinary shares during the year at an average discount of 7.3 per cent to the net asset value prevailing at the time the shares were purchased.

At the year end, the share price stood at a discount of 7.9 per cent to the net asset value, having been at an average discount of approximately 3.5 per cent during the year. The AIC UK Growth sector average discount at 30 April 2012 was 12.8 per cent.

The Company issued 19,231 ordinary shares during the year, all of which were as a result of conversions of subscription shares.

Investment trust tax rules

New legislation for investment trusts has recently been introduced and one of the changes has resulted in the removal of the prohibition on the distribution of capital profits by way of dividend.

The Board therefore intends to seek shareholder approval at the Annual General Meeting to amend the Articles of Association to permit the distribution of capital profits by way of a dividend. It should be noted that this does not in any way indicate that there will be a change in the Company's dividend policy, or how profits for dividends are generated or calculated. The Board believes this change will provide greater flexibility for future dividends, in the context of the Company's objective of providing shareholders with a growing dividend. The forthcoming Annual General Meeting provides an appropriate opportunity for this change to be considered by shareholders.

Industry developments

There are a number of proposed regulatory changes which will have an impact on the Company. In particular, the introduction of the Alternative Investment Fund Managers Directive will result in the introduction of further regulatory oversight for investment trusts and other fund types. This is due to come into effect in 2013, and the final details of the directive are due to be published shortly.

The Retail Distribution Review will result in the removal of the payment of commission to advisers. This is generally viewed as a positive development for investment trusts. Your Board and Investment Manager will continue to monitor developments in this area in the lead up to its introduction on 1 January 2013.

Annual General Meeting ("AGM")

The Company's AGM will take place on Thursday, 13 September 2012 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, John Dodd and Adrian Paterson, will make a short presentation at the meeting. There will be light refreshments and a buffet lunch following the meeting, at which shareholders will have an opportunity to meet with the Directors and the fund managers. Should you be unable to attend the AGM in person, the Board would encourage you to use your proxy votes by completing and returning the form of proxy enclosed with the Annual Financial Report.

Investment Plan and ISA

Shareholders are reminded that the Investment Manager operates an Investment Plan and ISA which enables investors to acquire shares in the Company either through lump sum or regularly monthly investments.

Outlook

The debt crisis in the Eurozone remains unresolved and this continues to weigh heavily on markets. The UK is not immune to events in Europe and its economy has been adversely impacted.

Notwithstanding, many companies are in relatively good health, with reduced levels of debt and increased cash balances. Corporate activity in the last six months has helped the Company's performance and the Investment Manager expects this run to continue.

At the time of writing the Company's net asset value was 298.63p per ordinary share, with the share price at 270.00p resulting in a discount of 9.6 per cent.

And finally…

Your Board is always keen to hear from shareholders. Should you wish to do so, you can contact me at [e-mail]. You can find regularly updated information on the Company, including a factsheet and performance data, on the Company's dedicated web pages on the Investment Manager's website at artemisonline.co.uk.

Simon Miller

Chairman

16 July 2012

Investment Manager's Review

Performance

The performance of your Company over the year to 30 April 2012 saw the net asset value fall by 4.6 per cent against the fall in the FTSE All-Share Index of 2.0 per cent. Underlying the performance over the year was a sharp contrast between the disappointing first six months of the period, where we wrote down the value of a number of our unquoted investments, versus a much stronger second half performance. In the second half of the year, the net asset value increased by 13.7 per cent compared to a rise of 6.2 per cent in the FTSE All-Share Index. The portfolio's significant exposure to oil & gas and financials resulted in strong positive contributions to performance.

The Company's long term performance record remains good - as summarised below:

	3 years	5 years	Since 1 June 2003*
Net asset value	67.5%	37.5%	373.5%
Share price	64.8%	25.9%	350.1%
FTSE All-Share Index	52.2%	6.5%	105.8%

*The date when Artemis was appointed as Investment Manager. All figures are total return to 30 April 2012.

Our investment strategy continues to focus predominately on small and mid-cap companies and in sectors where we believe we can continue to add value. 

Review

The period under review was characterised by severe worries over the debt crisis in the peripheral countries in Europe and the extent to which contagion could damage "core" Europe and constrain global growth. Governments have changed across Europe and austerity measures have been implemented as countries have recognised the need to get public finances under control. Greece needed to be bailed out and far bigger economies, such as Spain and Italy, have seen their borrowing costs soar. This has all raised the spectre of the break-up of the Euro, something most politicians are keen to avoid.

We in the UK have not been immune from this. While our funding costs through the bond markets remain near record lows, George Osborne's efforts to cut government borrowing are leading to anaemic growth prospects here.

Even China has been showing signs of economic slowdown, as the government has had to deal with inflationary pressures and a property boom that is showing signs of unravelling. These concerns have been reflected in the weak performance of most mining shares. Nonetheless, growth in China's GDP of 7 per cent remains comfortably ahead of almost anywhere else in the world.

The one relative bright spot is in the US, where there are tentative signs of recovery in some of the economic data, indicating that this most flexible of economies will be the first to pull away from the recent turmoil.

In short, it has been a difficult 12 months with huge swings in both investor sentiment and stockmarkets.

Portfolio

Continued efforts have been made over the last 12 months to reduce the number of stocks in the portfolio which, following the merger with Gartmore Growth Opportunities in December 2010, reached a peak of 237 holdings. As at 30 April 2012 there were 118 positions in the portfolio. This number will continue to decrease in line with the philosophy of the fund managers - which is to manage a relatively concentrated portfolio.

Set out below are the five largest stock contributors and detractors to absolute performance over the year: 

Five largest stock contributors

Company	Market	Contribution %
Africa Oil	Toronto SE	3.6
Cove Energy	AIM	3.0
Providence Resources	AIM	2.9
Collins Stewart	LSE Main Market	1.3
Lansdowne Oil & Gas	AIM	0.8

Five largest stock detractors

Company	Market	Contribution %
The Hut Group	Unquoted	(3.5)
Vostok Energy	Unquoted	(3.4)
Reaction Engines	Unquoted	(1.3)
Noventa	AIM	(1.1)
Oxford Catalysts Group	AIM	(0.8)

Our greatest area of exposure over the period has remained oil & gas, where we have a diversified portfolio, including a number of exploration plays, which have assets with the potential to produce sizeable discoveries, as well as oil & gas producers and industry support service providers. Four of the five top performance contributors over the year were in this sector.

The stand-out performers over the year were three of the oil stocks: Africa Oil, Providence Resources and Cove Energy. Africa Oil announced that it had discovered oil at its Ngamia-1 exploration well in Kenya. This was the first well in a multiple well campaign and it is believed that this goes some way to de-risking the other nearby prospects which are due to be drilled. Providence Resources announced that it had found oil and gas at its Barryroe prospect in the southern Irish Sea and it appears that the potential quantities will be considerably greater than the pre-drill expectations. Cove Energy is in the middle of a ferocious bidding war between Shell and PTT over its highly prospective acreage off West Africa.

Elsewhere, among the main contributors to performance were: Collins Stewart, which was bid for by Canaccord Financial, a large Canadian financial institution which was attracted to Collins Stewart's wealth management business; and Mulberry, the luxury handbag maker which benefitted from the apparently insatiable demand for luxury goods from China and other parts of the Far East.

At the smaller end of the market cap spectrum, Telford Homes performed strongly as Asian and domestic buyers snapped up its east London developments. The company specialises in building apartments in this part of London; and the investment and infrastructure that has been put in place for the Olympics has generated considerable interest.

On the negative side, as indicated above and reported at the interim stage, we wrote down the carrying value in three of our unquoted holdings: Vostok, The Hut and Reaction Engines. This followed equity issues by each of the three companies at lower prices than they were being held at. The Company's policy is to update carrying values whenever there has been a significant issue of new equity or a secondary transaction in an unquoted investment. These three holdings reduced the net asset value return by 8.2 per cent.

In the case of Vostok, the funding, which was supported by existing investors and the directors, was required to provide further working capital to enable it to meet a number of operational commitments.

The Hut had a small equity injection funded by existing shareholders and management to strengthen its balance sheet. It is satisfying to note that, subsequent to this, the business has continued to grow strongly in what have been challenging times for all consumer-facing businesses.

As for Reaction Engines, there was a short-term funding requirement due to delays in finalising the prototype for testing the company's heat exchanging technology. The equity raised was fully underwritten by the chairman, and we stood our corner in the placing. The testing has recently been completed and we are awaiting the results.

While it is always disappointing to be reporting valuation declines, we continue to believe that our significant exposure to unquoted investments will, as it has to date, continue to produce positive results for shareholders. We anticipate that some of the more established companies in this part of the portfolio will move to IPO their businesses as and when some stability returns to markets. That will hopefully generate further value and an opportunity to realise part of this area of the portfolio.

Our second largest sector exposure is to financial services but, notably, this does not include any exposure to banks. As we have often commented before, we believe that most banks are impossible to analyse and it has proven to be wise to avoid them. We have preferred to invest in fund management companies, an industry in which we work and have a greater understanding. Over the period we made decent sized investments in Polar Capital, Brewin Dolphin, Ashcourt Rowan and Liontrust. Ashcourt Rowan and Brewin Dolphin, being wealth managers that are both undergoing internal restructurings, appear undervalued if one looks at their market capitalisations as percentages of their funds under management. Polar Capital and Liontrust are in much stronger growth modes, with strong inflows into their respective businesses and robust balance sheets.

The five largest sector contributors and detractors to performance are set out below:

Five largest sector contributors

Sector	Contribution %
Oil & Gas Producers	5.4
Financial Services	2.3
Software & Computer Services	0.4
Household Goods	0.4
Forestry & Paper	0.3

Five largest sector detractors

Sector	Contribution %
General Retailers	(3.5)
Mining	(2.7)
Aerospace & Defence	(1.6)
Equity Investment Instruments	(1.4)
Support Services	(0.9)

 

Gearing

Gearing continues to be a feature of the investment strategy. Over the first half of the year we reduced the level to around 9 per cent from 18 per cent at the start of the period, reflecting our concerns over the direction of equity markets. In the second half, as we have seen some improvement in markets, we started to re-deploy some of the borrowings into new opportunities and at 30 April 2012 gearing stood at just below 11 per cent.

Outlook

As we write, the problems posed by the over-indebtedness of southern Europe in particular seem intractable. Successive "solutions" have proved to be mere palliatives. Each new action by policy-makers and/or central banks has lifted confidence and markets for a shorter and shorter time. The bond market does not share politicians' emollience, nor electorates' distaste for austerity.

In short, the way out of this mess is far from patent. European federalism would - or will - take years. Until then, unless things end suddenly and badly with the enforced break-up of the eurozone, the best investors can hope for is more of the same: more emergency summits, and more actions by ill-defined acronyms like the ESM and the ESF. As the Americans say, more "kicking the can down the road".

If, in the meantime, the US recovery was to resume and China was to confound its critics, then this strategy (if it is one) might well work. That is, overall global growth might be enough to help resuscitate Europe. But macro-matters remain finely balanced.

Happily, your Company does not invest in economies or countries but in companies. In general, the corporate sector is in ruder health than it has been for two generations. Companies have responded to the shocks of 2008/09 by strengthening their balance sheets and stewarding their cash. Those that do need to borrow have, in the absence of bank lending, turned with success to the corporate bond market - where money is inexpensive.

And so we find in the investible universe of stocks many companies with excellent free cashflow, eminent positions in their sectors and strong and growing franchises. Nor are these companies expensive by historical standards. There are, in short, a wealth of investment opportunities. We intend to exploit these to the full.

John Dodd and Adrian Paterson

Fund Managers

Artemis Investment Management LLP

16 July 2012

 

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 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 28.0 per cent (2011: 29.7 per cent) of the Company's investments (at market value) 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 also have significant industry sector exposure from time to time. Risk will be 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 detailed 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 and Investment Manager to monitor ongoing compliance with 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. The Investment Manager has established a business continuity plan to facilitate continued operation in the event of a major service disruption or disaster.

•     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 IFRS 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 IFRS 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

16 July 2012

Consolidated Income Statement

For the year ended 30 April 2012

	Year ended 30 April 2012			Year ended 30 April 2011
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income	2,018	-	2,018	1,426	-	1,426
Other income	35	-	35	352	-	352
Total revenue	2,053	-	2,053	1,778	-	1,778
(Losses)/gains on investments	-	(7,274)	(7,274)	-	24,044	24,044
(Losses)/gains on current asset investments	(638)	-	(638)	72	-	72
Currency (losses)/gains	-	(68)	(68)	-	31	31
Total income/(loss)	1,415	(7,342)	(5,927)	1,850	24,075	25,925
Expenses
Investment management fee	(103)	(929)	(1,032)	(80)	(722)	(802)
Performance fee	40	363	403	(40)	(363)	(403)
Other expenses	(407)	(6)	(413)	(284)	(25)	(309)
Profit/(loss) before finance costs and tax	945	(7,914)	(6,969)	1,446	22,965	24,411
Finance costs	(63)	(568)	(631)	(53)	(474)	(527)
Profit/(loss) before tax	882	(8,482)	(7,600)	1,393	22,491	23,884
Tax	(24)	-	(24)	(39)	30	(9)
Profit/(loss) for the year	858	(8,482)	(7,624)	1,354	22,521	23,875
Earnings/(loss) per ordinary share (basic)	1.76p	(17.44)p	(15.68)p	3.64p	60.56p	64.20p
Earnings/(loss) per ordinary share (diluted)	1.76p	(17.44)p	(15.68)p	3.64p	60.56p	64.20p

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 2012

		Group 2012 £'000	Company 2012 £'000	Group 2011 £'000	Company 2011 £'000
	Non-current assets
	Investments	162,480	163,811	181,549	190,583
	Current assets
	Investments held by subsidiary	1,635	-	2,903	-
	Other receivables	664	853	4,593	4,579
	Cash and cash equivalents	404	517	-	-
		2,703	1,370	7,496	4,579
	Total assets	165,183	165,181	189,045	195,162
	Current liabilities
	Bank overdraft	-	-	(1,519)	(1,708)
	Other payables	(834)	(832)	(2,002)	(7,930)
	Bank loan	(16,000)	(16,000)	(26,500)	(26,500)
		(16,834)	(16,832)	(30,021)	(36,138)
	Net assets	148,349	148,349	159,024	159,024
	Equity attributable to equity holders
	Share capital	557	557	557	557
	Share premium	630	630	69,136	69,136
	Special reserve	69,649	69,649	2,807	2,807
	Capital redemption reserve	33	33	33	33
	Retained earnings - revenue	1,956	1,044	2,485	983
Retained earnings - capital		75,524	76,436	84,006	85,508
Total equity		148,349	148,349	159,024	159,024
Net asset value per ordinary share (basic)		307.64p		325.70p
	Net asset value per ordinary share (diluted)	307.64p		325.70p

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

16 July 2012 by:

Ian Dighé

Director

Statements of Changes in Equity

For the year ended 30 April 2012

											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 2012
At 1 May 2011	557		69,136		2,807		-		33		2,485		84,006		159,024
Total comprehensive income:
Profit/(loss) for the year	-		-		-		-		-		858		(8,482)		(7,624)
Transactions with owners recorded directly to equity:
Repurchase of ordinary shares into treasury	-		-		(1,730)		-		-		-		-		(1,730)
Conversion of subscription shares	-		66		-		-		-		-		-		66
Cancellation of share premium	-		(68,572)		68,572		-		-		-		-		-
Dividends paid	-		-		-		-		-		(1,387)		-		(1,387)
At 30 April 2012	557		630		69,649		-		33		1,956		75,524		148,349
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

						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 2012
At 1 May 2011	557	69,136	2,807	-	33	983	85,508	159,024
Total comprehensive income:
Profit/(loss) for the year	-	-	-	-	-	1,448	(9,072)	(7,624)
Transactions with owners recorded directly to equity:
Repurchase of ordinary shares into treasury	-	-	(1,730)	-	-	-	-	(1,730)
Conversion of subscription shares	-	66	-	-	-	-	-	66
Cancellation of share premium	-	(68,572)	68,572	-	-	-	-	-
Dividends paid	-	-	-	-	-	(1,387)	-	(1,387)
At 30 April 2012	557	630	69,649	-	33	1,044	76,436	148,349
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

Cash Flow Statements

For the year ended 30 April 2012

	Group 2012 £'000	Company 2012 £'000	Group 2011 £'000	Company 2011 £'000
Operating activities
(Loss)/profit before tax	(7,600)	(7,600)	23,884	23,884
Interest payable	631	631	527	527
Losses/(gains) on investments	7,274	7,864	(24,044)	(24,236)
Losses/(gains) on current asset investments	638	-	(72)	-
Currency losses/(gains)	68	68	(31)	(31)
Increase in other receivables	(87)	(90)	(231)	(217)
(Decrease)/increase in other payables	(441)	(422)	488	484
Net cash inflow from operating activities before interest and tax	483	451	521	411
Interest paid	(631)	(631)	(527)	(527)
Irrecoverable overseas tax suffered	(24)	(24)	(9)	(9)
Net cash outflow from operating activities	(172)	(204)	(15)	(125)
Investing activities
Purchases of investments	(53,526)	(51,082)	(100,348)	(95,397)
Sales of investments	69,240	73,325	75,319	72,267
Net cash inflow/(outflow) from investing activities	15,714	22,243	(25,029)	(23,130)
Financing activities
Repurchase of ordinary shares into treasury	(1,730)	(1,730)	(319)	(319)
Re-issue of ordinary shares from treasury	-	-	1,813	1,813
Conversion of subscription shares	66	66	28	28
Exercise of manager warrants	-	-	7,980	7,980
Costs of merger	-	-	(772)	(772)
Dividends paid	(1,387)	(1,387)	(839)	(839)
Decrease in inter-company loan	-	(6,195)	-	(1,789)
Net cash outflow/(inflow) from financing activities	(3,051)	(9,246)	7,891	6,102
Net decrease/(increase) in net debt	12,491	12,793	(17,153)	(17,153)
Net debt at the start of the year	(28,019)	(28,208)	(10,897)	(11,086)
Effect of foreign exchange rate changes	(68)	(68)	31	31
Net debt at the end of the year	(15,596)	(15,483)	(28,019)	(28,208)
Bank loans	(16,000)	(16,000)	(26,500)	(26,500)
Cash/(bank overdraft)	404	517	(1,519)	(1,708)
	(15,596)	(15,483)	(28,019)	(28,208)

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 EU. The Company's Financial Statements have also been prepared in accordance with IFRS 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

	2012 £'000	2011 £'000
Investment income*
UK dividend income	1,167	1,284
UK fixed interest	295	116
Overseas dividend income	485	26
UK REIT income	71	-
	2,018	1,426
Other income
Subsidiary undertaking's dealing profits	32	352
Bank interest	3	-
	35	352
Total income	2,053	1,778
Total income comprises:
Dividends and interest from investments	2,018	1,426
Bank interest	3	-
Other income and dealing profits	32	352
	2,053	1,778
Income from investments
UK quoted investments	1,253	1,165
UK unquoted investments	280	235
Overseas quoted investments	485	26
	2,018	1,426

*    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

	2012			2011
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment management fee	103	929	1,032	80	722	802
Performance fee	(40)	(363)	(403)	40	363	403

As at 30 April 2012, £322,000 was outstanding in respect of amounts due to the Investment Manager (2011: £786,000). The first performance fee period ran from 10 December 2010 to 30 April 2012. As the performance in this period did not meet the criteria required, no performance fee was due.

4.  Dividends paid and proposed

Dividends paid and proposed

	2012 £'000	2011 £'000
2011 second interim dividend of 1.65p per ordinary share (2010: 1.60p)	803	479
2012 first interim dividend of 1.20p per ordinary share (2011: 1.20p)	584	360
	1,387	839

Dividends payable in respect of the year

	2012 £'000	2011 £'000
First interim dividend of 1.20p per ordinary share (2011: 1.20p)	584	360
Second interim dividend of 1.75p per ordinary share (2011: 1.65p)	844	806
	1,428	1,166

 

5.  Earnings per ordinary share

The basic revenue return per ordinary share is based on the revenue profit for the year of £858,000 (2011: £1,354,000) and on 48,635,430 (2011: 37,189,744) ordinary shares, being the weighted average number of ordinary shares in issue during the year. The basic capital return per ordinary share is based on the capital loss for the year of £8,482,000 (2011: profit of £22,521,000) and on 48,635,430 (2011: 37,189,744) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

There was no dilution to the returns for the year ended 30 April 2012 (2011: none).

6.  Share capital

(a)       Share capital

	2012 Number	2012 £'000	2011 Number	2011 £'000
Allotted, called up and fully paid:
Ordinary shares of 1p each	48,222,422	482	48,825,239	488
Ordinary shares of 1p each held in treasury	622,048	6	-	-
Subscription shares of 1p each	6,867,134	69	6,886,365	69
		557		557

 (b)     Ordinary shares

	Number	£'000
Movements in ordinary shares during the year:
Ordinary shares in issue on 1 May 2011	48,825,239	488
Repurchase of ordinary shares into treasury	(622,048)	(6)
Issue of ordinary shares on exercise of subscription shares	19,231	-
Ordinary shares in issue on 30 April 2012	48,222,422	482

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

	2012		2011
	Number	£'000	Number	£'000
Balance brought forward	-	-	414,500	4
Repurchases	622,048	6	137,000	1
Re-issues	-	-	(551,500)	(5)
Balance carried forward	622,048	6	-	-

 (c)     Subscription shares

	Number	£'000
Issue of subscription shares	6,886,365	69
Conversion of subscription shares into ordinary shares	(19,231)	-
Balance carried forward	6,867,134	69

7.     Net asset value per ordinary share

The basic net asset value per ordinary share is based on net assets of £148,349,000 (2011: £159,024,000) and on 48,222,422 (2011: 48,825,239) ordinary shares, being the number of ordinary shares in issue at the year end.

The diluted net asset value per share has been calculated on the assumption that nil (2011: nil) subscription shares were exercised resulting in a total of 48,222,422 ordinary shares in issue (2011: 48,825,239).

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 no excess management expenses, without payment to Alpha Securities Trading Limited (2011: £445,000). 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 (2011: £nil).

9.         This Annual Financial Report announcement does not constitute the Company's statutory accounts for the years ended 30 April 2012 and 30 April 2011 but is derived from those accounts. Statutory accounts for the year ended 30 April 2011 have been delivered to the Registrar of Companies.  The statutory accounts for the year ended 30 April 2011 and the year ended 30 April 2012 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 2012 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 2012 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 Thursday, 13 September 2012.

For further information, please contact:

Artemis Investment Management LLP

Company Secretary

Telephone: [phone]

16 July 2012

 

END

 

 

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