Half-year Report

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 £11.2 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 £250m in free cash flow per annum and a £75m 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 £1.2bn of equity in September, which we felt was more than necessary at the time, but has left it well-capitalised with over £4.4bn 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
12.2%	Food delivery	Delivery Hero, Just 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	(£)	NAV
Dignity	Consumer Discretionary	2,400,000	£7.08	16,992,000	10.7
Frasers Group	Consumer Discretionary	2,500,000	£6.44	16,087,500	10.1
easyJet	Consumer Discretionary	1,900,000	£6.23	11,837,000	7.4
Delivery Hero	Consumer Discretionary	113,000	€107.35	10,241,167	6.4
Redrow	Consumer Discretionary	1,475,000	£6.45	9,516,700	6.0
Just Eat Takeaway.com	Technology	175,000	€52.40	9,170,000	5.8
Lloyds Banking Group	Financial	18,000,000	£0.50	9,039,600	5.7
IWG	Industrials	2,825,000	£3.10	8,743,375	5.5
GlaxoSmithKline	Health Care	575,000	£15.09	8,674,450	5.4
Plus500	Financials	650,000	£13.17	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	€16.74	6,925,011	4.4
Bellway (long CFD)	Household Goods & Home Construction	200,000	£33.13	6,626,000	4.2
Reaction Engines	Industrials	160,833	£40.00	6,433,320	4.0

Condensed income statement  

	Six months ended 31 October 2021 (unaudited)			Six months ended 31 October 2020 (unaudited)			Year ended 30 April 2021 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'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 2021 (unaudited) £'000	31 October 2020 (unaudited) £'000	30 April 2021 (audited) £'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)
	Share capital £'000	Share premium £'000	Special reserve £'000	Capital redemption reserve £'000	Retained earnings		Total £'000
					Revenue £'000	Capital £'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)
	Share capital £'000	Share premium £'000	Special reserve £'000	Capital redemption reserve £'000	Retained earnings		Total £'000
					Revenue £'000	Capital £'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)
	Share capital £'000	Share premium £'000	Special reserve £'000	Capital redemption reserve £'000			Retained earnings			Total £'000
							Revenue £'000		Capital £'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 31 October 2021 (unaudited) £'000		Six months ended 31 October 2020 (unaudited) £'000	Year ended 30 April 2021 (audited) £'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 ended 31 October 2021	Six months ended 31 October 2020		Year ended 30 April 2021
Earnings/(loss) per ordinary share is based on:
Revenue earnings (£'000)	1,210	631	2,323
Capital (loss)/earnings (£'000)	(11,462)	17,729	64,546
Total (loss)/earnings (£'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 31 October 2021	As at 31 October 2020	As at 30 April 2021
Net asset value per ordinary share is based on:
Net assets (£'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 ended 31 October 2021 £'000	Six months ended 31 October 2020 £'000	Year ended 30 April 2021 £'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 31 October 2021 £'000	As at 31 October 2020 £'000	As at 30 April 2021 £'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

	1 May 2021 £'000		Transactions in the period £'000	Cash flow payments £'000	Balance at 31 October 2021 £'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) As at 31 October 2021 Assets £'000	Liabilities £'000	(Unaudited) As at 31 October 2020 Assets £'000	Liabilities £'000	(Audited) As at 30 April 2021 Assets £'000	Liabilities
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.	£'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: [phone]

16 December 2021

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