Interim Results

Artemis Alpha Trust PLC 21 December 2005 ARTEMIS ALPHA TRUST PLC Preliminary Unaudited Results for the six months ended 31st October 2005 Chairman's Statement Performance Over the six months to 31st October 2005 your Company's basic net asset value fell by 5.5% (diluted down 5.0%) which compared to a rise in the capital value of the benchmark index, the FTSE All Share, of 11.2%. Whilst it is always disappointing to report a period of underperformance, the objective of the Company is to achieve above average rates of return over the longer term. This has been achieved, with the net asset value rising by some 151.4% since May 2003 when Artemis Investment Management was appointed Manager. This compares with a rise in the benchmark of 35.3% over the same period. Dividends Your Board has declared a maintained first interim dividend of 1.0 pence per ordinary share for the year ended 30th April 2006. This dividend will be paid on 3rd February 2006 to shareholders on the register at the close of business on 6th January 2006. It is intended that any increase in total dividends for the year to 30th April 2006 will be reflected in the second dividend for the year. Accounting Standards Shareholders will be aware that many UK listed companies are now adopting International Financial Reporting Standards ('IFRS') for the preparation of their financial statements. Your Company has adopted IFRS for the first time in this accounting period and the interim financial statements and related notes reflect the requirements of these new standards. The two main changes in the Company's financial statements are, firstly, the change in the basis of valuing the listed investments, which is now done using bid prices as opposed to mid prices, and secondly, the timing of recognition of dividends, which will now be done when the dividend is paid. Previously dividends were included on an accrual basis. Accordingly, the first interim dividend cost of £333,000 has not been deducted from the Company's net assets at 31st October 2005. Further information on these new standards is set out in the notes to the financial statements. Investment Plan The Investment Plan is now fully operational and your Board considers that it provides shareholders and new investors with a cost effective way to acquire the Company's shares. Documentation for the Investment Plan is available on the Manager's website (www.artemisonline.co.uk/pdf/brochures/ alphatrustinvestmentplan.pdf) or by contacting the Manager on 0800 092 2051. Manager Warrants As the Board indicated previously, it undertook to review the level of Manager Warrants from time to time to ensure that the Manager was being incentivised fairly in light of the assets being managed. Having recently reviewed the position, the Board has concluded that it is now appropriate to offer further Manager Warrants to Artemis. The issue of additional Manager Warrants will be subject to shareholder approval and you will find enclosed with the Interim Report, a Chairman's letter setting out more fully the background to the proposal, together with the notice convening an Extraordinary General Meeting of the Company. Outlook The continuing high price of oil and the affect this may have on inflation, coupled with a general slowdown in consumer spending, are a concern for stockmarkets. However, there remains a significant amount of institutional money waiting to be invested and this may provide a certain level of support for equities. Your Board believes that your Company's wide investment policy and the Manager's ability to identify companies and sectors that offer the prospect of good returns will continue to produce positive returns for shareholders over the longer term. Subsequent event In March this year, your Company acquired a 1.9% holding in the Manager, Artemis Investment Management. Following a recent third party transaction in the underlying shares of Artemis, in which Artemis Alpha Trust reduced its holding, the Board has revalued the remaining shares (with effect from close of business yesterday), on the basis of an appropriate discount to the transaction price. The combined effect of the disposal and revaluation has been to add 14 pence to the Company's basic net asset value per Ordinary share. As at close of business on 20th December 2005 the basic net asset value per Ordinary share was 205.4 pence (diluted: 191.0 pence). Further details will be contained in the Annual Report & Accounts. Simon Miller Chairman 21st December 2005 Consolidated Income Statement For the six months ended 31st October 2005 1st May 2005 to 31st October 2005 1st May 2004 to 31st October 2004 (Restated see note 2) Revenue Capital Total Revenue Capital Total Notes £'000 £'000 £'000 £'000 £'000 £'000 Gains/(losses) on 32 (3,358) (3,326) 214 5,045 5,259 investments Exchange loss - (37) (37) - (17) (17) Investment income 596 - 596 482 - 482 Subsidiary's realised 148 - 148 58 - 58 dealing profits Other income - - - 16 - 16 776 (3,395) (2,619) 770 5,028 5,798 Expenses Management fees (28) (249) (277) (18) (161) (179) Other operating (164) - (164) (147) - (147) expenses Finance costs (34) (305) (339) (15) (138) (153) (226) (554) (780) (180) (299) (479) Profit /(loss) before 550 (3,949) (3,399) 590 4,729 5,319 taxation Taxation (40) 40 - (9) - (9) Profit /(loss) for the 510 (3,909) (3,399) 581 4,729 5,310 period Earnings per Ordinary 3 (10.20)p 17.36p share (basic) Return per Ordinary 3 (9.49)p 16.80p share (diluted) Consolidated Income Statement For the six months ended 31st October 2005 Year ended 30th April 2005 Restated (see note 2) Revenue Capital Total Notes £'000 £'000 £'000 Gains/(losses) on investments 334 19,389 19,723 Exchange loss - (13) (13) Investment income 799 - 799 Subsidiary's realised dealing profits 400 - 400 Other income 16 - 16 1,549 19,376 20,925 Expenses Management fees (44) (389) (433) Other operating expenses (301) (60) (361) Finance costs (42) (374) (416) (387) (823) (1,210) Profit (loss) before taxation 1,162 18,553 19,715 Taxation (82) 63 (19) Profit (loss) for the period 1,080 18,616 19,696 Earnings per Ordinary share (basic) 3 63.71p Earnings per ordinary share (diluted) 3 60.13p The total column of this statement represents the Income Statement of the Group, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Trust Companies. All items in the above statement derive from continuing operations. Consolidated Balance Sheet (unaudited) As at 31st October 2005 31st October 31st October 2005 2004 (Restated - see note 2) Notes £'000 £'000 Non-current assets Investments 69,838 50,211 Current Assets Investments held by subsidiary 1,246 817 Cash and cash equivalents 3,285 1,027 Due from brokers - 168 Trade and other receivables 237 159 4,768 2,171 Current liabilities Payable to brokers (1,096) (48) Bank loan (11,500) (4,800) Other payables (810) (2,187) (13,406) (7,035) Net current liabilities (8,638) (4,864) Net assets 61,200 45,347 Equity Called-up share capital 333 306 Share premium account 23,912 18,431 Special reserve 8,208 8,208 Warrant reserve 1,101 1,101 Capital redemption reserve 2 2 Retained earnings 6 27,644 17,299 Equity shareholders' funds 61,200 45,347 Net asset value per ordinary share (basic) 3 183.67p 148.22p 30th April 2005 (Restated - see note 2) Notes £'000 Non-current assets Investments 74,415 Current Assets Investments held by subsidiary 654 Cash and cash equivalents 2,907 Due from brokers 716 Trade and other receivables 121 4,398 Current liabilities Payable to brokers - Bank loan (11,500) Other payables (2,378) (13,878) Net current liabilities (9,480) Net assets 64,935 Equity Called-up share capital 333 Share premium account 23,912 Special reserve 8,208 Warrant reserve 1,101 Capital redemption reserve 2 Retained earnings 6 31,379 Equity shareholders' funds 64,935 Net asset value per ordinary share (basic) 3 194.88p Consolidated Statement of Changes in Equity (unaudited) For the six months ended 31st October 2005 Share capital Share Special Warrant Capital Retained Total £'000 premium reserve reserve redemption earnings £'000 £'000 £'000 reserve £'000 £'000 £'000 Net assets at 30th April 2005 (as restated - 333 23,912 8,208 1,101 2 31,379 64,935 see note 2) Dividends paid - - - - - (336) (336) and declared Net loss on ordinary - - - - - (3,399) (3,399) activities after taxation Net assets at 31st October 2005 333 23,912 8,208 1,101 2 27,644 61,200 For the six months ended 31st October 2004 Share capital Share premium Special Warrant Capital Retained Total £'000 £'000 reserve reserve redemption earnings £'000 £'000 reserve £'000 £'000 £'000 Net assets at 30th April 2004 (as restated - 306 18,431 8,208 367 2 12,120 39,434 see note 2) Issue of - - - 734 - - 734 warrants Dividends paid - - - - - (131) (131) and declared Net profit on ordinary - - - - - 5,310 5,310 activities after taxation Net assets at 31st October 2004 306 18,431 8,208 1,101 2 17,299 45,347 For the year ended 30th April 2005 Share capital Share premium Special Warrant Capital Retained Total £'000 £'000 reserve reserve redemption earnings £'000 £'000 reserve £'000 £'000 £'000 Net assets at 30th April 2004 (as restated - 306 18,431 8,208 367 2 12,120 39,434 see note 2) Issue of - - - 734 - - 734 warrants Issue of shares 27 5,493 - - - - 5,520 Expense of - (12) - - - - (12) share issues Dividends paid - - - - - (437) (437) and declared Net profit on ordinary - - - - - 19,696 5,310 activities after taxation Net assets at 333 23,912 8,208 1,101 2 31,379 64,935 30th April 2005 Consolidated Cash Flow Statement (unaudited) For the six months ended 31st October 2005 1st May 2005 to 1st May 2004 to Year ended 31st October 31st October 30th April 2005 2004 2005 (restated - see note 2) (restated - see note 2 £'000 £'000 £'000 Operating activities Investment Income received 615 496 1,169 Interest received 11 38 53 Investment management fees paid (234) (157) (327) Other cash payments (284) (194) (317) Interest paid (311) (164) (425) Net cash (outflow)/inflow from operating (203) 19 153 activities Investing activities Purchases of investments (15,516) (28,925) (51,480) Sales of investments 17,985 22,534 40,925 Net cash inflow/(outflow) from investing 2,469 (6,391) (10,555) activities Financing activities Amounts drawn under revolving credit - 2,000 6,700 facility Expenses of share issue (12) - - Proceeds from issue of warrants - 734 734 Dividends paid on Ordinary Shares (336) (130) (436) Net cash (outflow)/inflow from financing (348) 2,604 6,998 activities Net increase/(decrease) in cash and cash 1,918 (3,768) (3,404) equivalents Cash and cash equivalents at start of 1,404 4,795 4,795 period Effect of foreign exchange rate changes (37) - 13 Cash and cash equivalents at end of period 3,285 1,027 1,404 Notes 1. Accounting Policies The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB), and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB (IFRIC). These are the Group's first financial statements prepared in accordance with IFRS and IFRS1, First Time Adoption, has been applied. Previously the financial statements were prepared in accordance with UK Generally Accepted Accounting Principles (UK GAAP). UK GAAP differs in certain respects from IFRS. In preparing the financial statements under IFRS, the Directors have amended certain accounting and valuation methods applied under UK GAAP. Reconciliations concerning the transition to IFRS are shown in note 2. (a) Basis of Preparation EU law requires that the annual consolidated financial statements of the Group for the year ended 30 April 2006 be prepared in accordance with accounting standards adopted for use in the EU. These interim financial statements have been prepared on the basis of the recognition and measurement requirements of IFRS in issue that either are adopted by the EU and effective (or available for early adoption) or are expected to be adopted and effective (or available for early adoption) at 30 April 2006. The financial statements are prepared on an historical cost basis, except for the measurement at fair value of investments and derivative instruments. (b) Investments Investments are all held at fair value through profit or loss. Listed investments are measured initially at cost, and are recognised at trade date. For financial assets acquired, the cost is the fair value of the consideration. Subsequent to initial recognition, all listed investments are measured at their quoted bid prices without deduction for the estimated future selling costs. Unlisted investments are valued by the directors using primary valuation methodologies such as earnings multiples, recent transactions and net assets. Where fair value cannot reliably be measured the investment will be carried at the previous reporting date value unless there is evidence that the investment has since been impaired. In such cases the value will be reduced to reflect the estimated extent of impairment. Assets are derecognised at the trade date of the disposal. Proceeds will be measured at fair value which will be regarded as the proceeds of sale less any transaction costs. (c) Movements in Fair Value Changes in the fair value of all held-at-fair-value assets are taken to the Consolidated Income Statement. On disposal, realised gains and losses are also recognised in the Consolidated Income Statement. (d) Income Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the year. Provision is made for any dividends not expected to be received. Income from fixed interest securities is recognised on an effective yield basis. Interest receivable from cash and short term deposits and interest payable is recognised on an accruals basis. (e) Expenses All expenses are accounted for on an accruals basis. Expenses have been charged to the revenue column in the Consolidated Income Statement except as follows: • expenses which are incidental to the acquisition or disposal of an investment are treated as capital. • expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. As a result management fees and finance costs are allocated on the basis of 10% to revenue and 90% to capital. (f) Taxation Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the temporary differences can be deducted. (g) Cash and Cash Equivalents Cash comprises current deposits and overdrafts with banks. These are subject to an insignificant risk of changes in value, and are held for the purpose of meeting short-term cash commitments rather than for investment or other purpose. (h) Dividends Payable Dividends are recognised from the date on which they are irrevocably committed to payment. (i) Foreign Currency Translation Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign currency monetary assets and liabilities are translated into Sterling at the rate ruling on the balance sheet date. Foreign exchange differences arising on translation are recognised in the Consolidated Income Statement. 2. Transition to IFRS Reconciliation a) Reconciliation of Equity at 31st October 2004 At 1st May 2004 the Company adopted International Financial Reporting Standards. In accordance with IFRS 1 First Time Adoption of International Financial Reporting Standards the following are reconciliations of the figures previously reported under the applicable UK Accounting Standards. Previously reported Restated 31st October IFRS adjustments 31st October 2004 2004 Notes £'000 £'000 £'000 Fixed assets Investments i 50,323 (112) 50,211 Current assets ii 1,915 256 2,171 Creditors : amounts falling due within one year iii (7,341) 306 (7,035) ---------- ---------- ---------- Total assets less current liabilities 44,897 450 45,347 ---------- ---------- ---------- Capital and reserves Called up share capital 306 - 306 Share premium 18,431 - 18,431 Special reserve 8,208 - 8,208 Warrant reserve 1,101 - 1,101 Capital redemption reserve 2 - 2 Capital reserve - realised iv 8,794 (8,794) - Capital reserve - unrealised iv 7,787 (7,787) - Revenue reserve/retained earnings iv 268 17,031 17,299 ---------- ---------- ---------- 44,897 450 45,347 ---------- ---------- ---------- Net asset value per Ordinary share 146.75p 1.47p 148.22p b) Reconciliation of the Consolidated Statement of Total Return to the Consolidated Income Statement for the six months ended 31st October 2004 Under IFRS the Consolidated Income Statement is the equivalent of the Consolidated Statement of Total Return as reported previously. £'000 Total transfer to reserve per Consolidated Statement of Total Return 4,739 Add back dividends proposed on Ordinary shares 306 Change from mid to bid basis at 30th April 2004 143 Change from mid to bid basis at 31st October 2004 (112) Change in valuation of current asset investments at 30th April 2004 (22) Change in valuation of current asset investments at 31st October 2004 256 ---------- Net gain per Consolidated Income Statement 5,310 c) Reconciliation of the Consolidated Cash Flow Statement for the six months ended 31st October 2004 Previously Effect of Adjusted cash reported cash transition to flows flows IFRSs 2004 2004 Notes £'000 £'000 £'000 Net cash inflow from operating activities v 183 (164) 19 Returns on investments and servicing of finance v (6,555) 164 (6,391) Equity dividends paid vi (130) 130 - ---------- ---------- ---------- Net cash inflow before financing (6,502) 130 (6,372) Financing vi 2,734 (130) 2,604 ---------- ---------- ---------- Increase in cash (3,768) - (3,768) d) Reconciliation of Equity at 30th April 2005 Previously Restated reported 30th April IFRS adjustments 30th April 2005 2005 Notes £'000 £'000 £'000 Fixed assets Investments i 74,593 (178) 74,415 Current assets ii 4,058 340 4,398 Creditors : amounts falling due within one year iii (14,214) 336 (13,878) ---------- ---------- ---------- Total assets less current liabilities 64,437 498 64,935 Capital and reserves Called up share capital 333 - 333 Share premium 23,912 - 23,912 Special reserve 8,208 - 8,208 Warrant reserve 1,101 - 1,101 Capital redemption reserve 2 - 2 Capital reserve - realised iv 13,178 (13,178) - Capital reserve - unrealised iv 17,378 (17,378) - Revenue reserve/retained earnings iv 325 31,054 31,379 ---------- ---------- ---------- 64,437 498 64,935 Net asset value per Ordinary share 193.38p 1.50p 194.88p e) Reconciliation of the Consolidated Statement of Total Return to the Consolidated Income Statement for the year ended 30th April 2005 Under IFRS the Consolidated Income Statement is the equivalent of the Consolidated Statement of Total Return as reported previously. £'000 Total transfer to reserve per Statement of Total Return 18,771 Add back dividends proposed on Ordinary shares 642 Change from mid to bid basis at 30th April 2004 143 Change from mid to bid basis at 30th April 2005 (178) Change in valuation of current asset investments at 30th April 2004 (22) Change in valuation of current asset investments at 30th April 2005 340 ---------- Net gain per Consolidated Income Statement 19,696 f) Reconciliation of the Consolidated Cash Flow Statement for the year ended 30th April 2005 Previously reported cash Effect of Adjusted cash flows flows transition to IFRSs 2005 2005 Notes £'000 £'000 £'000 Net cash inflow from operating activities v 578 (425) 153 Returns on investments and servicing of finance v (10,980) 425 (10,555) Equity dividends paid vi (436) 436 - ---------- ---------- ---------- Net cash inflow before financing (10,838) 436 (10,402) Financing vi 7,434 (436) 6,998 ---------- ---------- ---------- Decrease in cash (3,404) - (3,404) g) Reconciliation of Equity at 30th April 2004 Previously Restated reported 30th April IFRS 30th April 2004 Adjustments 2004 Notes £'000 £'000 £'000 Fixed assets Investments i 39,742 (143) 39,599 Current assets ii 5,873 22 5,895 Creditors : amounts falling due within one year iii (6,191) 131 (6,060) ---------- ---------- ---------- Total assets less current liabilities 39,424 10 39,434 Capital and reserves Called up share capital 306 - 306 Share premium 18,431 - 18,431 Special reserve 8,208 - 8,208 Warrant reserve 367 - 367 Capital redemption reserve 2 - 2 Capital reserve - realised iv 4,655 (4,655) - Capital reserve - iv - unrealised 7,228 (7,228) Revenue reserve/retained earnings iv 227 11,893 12,120 ---------- ---------- ---------- 39,424 10 39,434 ---------- ---------- ---------- Net asset value per Ordinary share 128.86p 0.04p 128.90p Notes to the Reconciliation i. Non-current asset investments are all classified as held-at-fair-value under IFRS and are carried at bid prices which equates to their fair value. They were previously carried at mid-market value. The resultant difference is included in Retained earnings. ii. Current asset investments are classified as held at fair value under IFRS and are carried at bid prices which equates to their fair value. They were previously carried at the lower of cost or mid-market value. The resultant difference is included in retained earnings. iii. No provision has been made for the dividends relating to the period ends as these were not declared until after the balance sheet date. Under IFRS the dividend is not recognised until paid. This is therefore added to retained earnings. iv. Under IFRS, there is no differentiation between 'capital' and 'revenue gains /losses'. The previous headings of 'Capital reserve - realised' and 'Capital reserve-unrealised' are now included under the heading Retained earnings. v. Bank interest paid is now shown under operating activities rather than servicing of finance. vi. Equity dividends paid are now disclosed under financing. 3. Earnings per Ordinary Share and Net Asset Value per Ordinary Share 31st October 31st October 30th April 2005 2004 2005 Net revenue attributable to Ordinary shareholders £510,000 £581,000* £1,080,000* Net capital (losses)/gains attributable to Ordinary shareholders £(3,909,000) £4,729,000* £18,616,000* Equity shareholders funds £61,200,000 £45,347,000* £64,935,000* The weighted average number of Ordinary shares in issue during each period, on which the return per Ordinary share was calculated, was: 33,320,799 30,593,452 30,914,756 The actual number of Ordinary shares in issue at the end of the period on which the net asset value was calculated, was: 33,320,799 30,593,452 33,320,799 Revenue earnings per Ordinary share 1.53p 1.90p* 3.49p* Capital earnings per Ordinary share (11.73p) 15.46p* 60.22p* ---------- ---------- ---------- Total earnings per Ordinary share (10.20p) 17.36p* 63.71p* ---------- ---------- ---------- Net asset value per Ordinary share 183.67p 148.22p* 194.88p* Revenue earnings per share (diluted) 1.42p 1.84p* 3.30p* Capital earnings per share (diluted) (10.91p) 14.96p* 56.83p* ---------- ---------- ---------- Total earnings per share (diluted) (9.49p) 16.80p* 60.13p* ---------- ---------- ---------- Asset value per share (diluted) 172.62p 142.26p* 182.09p* ---------- ---------- ---------- * Restated see note 2. The calculation of the fully diluted revenue and capital returns per Ordinary share are carried out in accordance with International Accounting Standard 33 'Earnings per Share.' For the purposes of calculating the diluted revenue and capital returns per Ordinary share, the number of Ordinary shares is the weighted average used in the basic calculation plus the number of Ordinary shares deemed to be issued for no consideration on exercise of all Manager Warrants by reference to the average share price of the Ordinary shares during the period. The calculation indicates that the exercise of Manager Warrants would result in an increase in the weighted average of Ordinary shares of 2,494,670 (31st October 2004: 1,024,458; 30th April 2005: 1,844,066). The diluted net asset value per Ordinary share has been calculated on the assumption that the warrants of 6,118,689 (31st October 2004: 6,118,689, 30th April 2005: 6,118,689) were exercised on the first day of the financial period resulting in a total of 39,439,488 Ordinary shares (31st October 2004: 36,712,141, 30th April 2005: 39,439,488). 4. Comparative Information The above financial information does not constitute statutory financial statements as defined in Section 240 of the Companies Act 1985. Information for the year ended 30th April 2005 has been extracted from the audited financial statements for the year ended 30th April 2005 and restated to comply with IFRS. These financial statements contained an unqualified auditor's report, have been lodged with the Registrar of Companies and did not contain a statement required under Section 237 (2) or (3) of the Companies Act 1985. 5. Interim Dividend Dividends on Ordinary shares deducted from reserves are analysed below: Six months Six months Year ended ended ended 31st October 31st October 30th April 2005 2004 2005 £'000 £'000 £'000 Second interim dividend for year ended 30th April 2004 - 1.0p - 131 131 First interim dividend for year ended 30th April 2005 - 1.0p - - 306 Second interim dividend for year ended 30th April 2005 - 1.1p 336 - - ---------- ---------- ---------- 336 131 437 A first interim dividend for the year ended 30th April 2006 of £333,000 (1.0 pence per Ordinary share) is proposed. This will be paid on 3rd February 2006. 6. Analysis of Retained Earnings 31st October 31st October 30th April 2005 2004 2005 £'000 £'000 £'000 Retained earnings - Capital Reserve (realised) 15,634 8,794 13,178 Retained earnings - Capital Reserve (unrealised) 10,835 7,931 17,200 Retained earnings - Revenue 1,175 574 1,001 ---------- ---------- ---------- 27,644 17,299 31,379 7. Transaction costs During the period transaction costs were incurred on purchases and sales of investments as follows: Six months ended Six months ended Year ended 31st October 2005 31st October 2004 30th April 2005 £'000 £'000 £'000 Purchases 8 101 150 Sales 42 69 127 ---------- ---------- --------- 50 170 277 8. It is anticipated that copies of the interim report will be sent to shareholders in December 2005 and will be available from the Company Secretary. BNP Paribas Secretarial Services Limited Secretary 21st December 2005 For further information please contact: Mr W. A. Aitken 0131 718 0405 Artemis Investment Management Ltd This information is provided by RNS The company news service from the London Stock Exchange IR PKDKKABDDNBB
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