TIDMATS
RNS Number : 9322Z
Artemis Alpha Trust PLC
16 December 2014
ARTEMIS ALPHA TRUST PLC (the "Company")
Half-Yearly Financial Report for the six months ended 31 October
2014
This announcement contains regulated information
Chairman's Statement
I am pleased to present my first half-yearly report to
shareholders, following my appointment as Chairman on 2 October
2014. Simon Miller retired at this time, and my fellow directors
and I would like to thank him for his outstanding stewardship of,
and contribution to, the Company over his eleven year tenure as
chairman and director.
Performance
Although markets had been quiet for much of the summer, concerns
over deflation in Europe, coupled with the end of quantitative
easing in the US and slowing growth in China, took hold in
mid-September, prompting a rise in volatility. Geopolitical issues
didn't help either. The market initially fell by about 10 per cent
but recovered much of the loss before the end of the review period.
The Company continues to have a significant part of its portfolio
invested in small-cap and AIM-listed companies. These areas of the
market performed particularly poorly, with the FTSE Small Cap Index
falling by 6.0 per cent and the FTSE AIM All-Share Index falling by
11.9 per cent. Against this background, the Company's net asset
value per ordinary share increased by 1.8 per cent. This compares
favourably with a 1.6 per cent fall in the FTSE All-Share
Index.
Performance benefitted from positive contributions from two of
our unquoted investments: Lynton Holding Asia, which sold its
investment in an aviation business, and The Hut Group, where part
of the Company's investment was sold to a private equity group. It
is expected that Lynton will return proceeds from its sale to
shareholders in the near future, so we can look forward to a
significant cash inflow. The proceeds from The Hut Group,
meanwhile, were used to reduce the Company's gearing level.
Borrowings were reduced from GBP26.5 million at 30 April to GBP12.5
million as at 31 October.
More details on performance are included in the Investment
Manager's Review.
Earnings & dividends
Revenue earnings for the six months to 31 October 2014 were
1.87p (2013: 2.29p). The Board has declared a first interim
dividend of 1.25p per ordinary share. This is an increase of 4.1
per cent over the equivalent dividend last year (2013: 1.20p). This
will be paid on 30 January 2015 to shareholders on the register as
at 5 January 2015.
Share capital
During the period, the Company bought back 118,200 ordinary
shares at an average discount of 12.4 per cent. 1,258 subscription
shares were exercised and the same number of ordinary shares issued
in respect of these.
Regulatory changes
The Company became subject to the Alternative Investment Fund
Managers Directive ("AIFMD") on 21 July 2014. As indicated in the
Annual Report, Artemis Fund Managers Limited was appointed as
Investment Manager and Alternative Investment Fund Manager to the
Company, while J.P. Morgan Europe Limited was appointed as
depositary.
Outlook
The UK continues to be one of the better performing economies in
the developed world. The wider global environment, however, is
mixed, with increasing tensions in Ukraine and Syria. Combine this
with the forthcoming general election in the UK and the associated
uncertainty over the UK's future relationship with the European
Union, and the backdrop for investing is challenging. That said,
where there is uncertainty there is opportunity. I expect that the
Investment Manager's stock-picking approach will identify
investment opportunities and thereby continue to produce long-term
returns for the Company's shareholders.
Communication with shareholders
The Board is always interested to hear the views of
shareholders, and it was pleasing to see many of you at the annual
general meeting in October 2014. The Company's contact details are
set out in the Half-Yearly Financial Report, and further
information can be found on the website of the Investment Manager -
artemis.co.uk - which is updated monthly.
Duncan Budge
Chairman
16 December 2014
Investment Manager's Review
Performance
During the reporting period, investors braced themselves for an
end to quantitative easing in the US and for a slowdown in some of
the world's largest economies. In the UK, meanwhile, fears that
Scotland might break away from the United Kingdom led to a brief
period of uncertainty, sending share prices - and sterling - lower.
It was, then, a challenging six months for equity markets. Despite
this, the Company's net asset value rose by 1.8 per cent on a
total-return basis. This compares favourably with a loss of 1.6 per
cent from the FTSE All-Share Index.
Review
The diversity of the Company's portfolio reflects its bottom-up,
stock-picking style. At the same time, however, it retains some
concentration in two core themes: online businesses and other
financials. As we noted in the annual report, we took a decision
some months ago to reduce our exposure to the oil & gas sector
substantially; it now represents just 11.9 per cent of the
Company's portfolio. In hindsight, this decision was well-timed.
The sector has subsequently struggled as the oil price
weakened.
The main positive contributor to returns was an unquoted holding
in The Hut Group. After a period of strong trading, it attracted
private equity group KKR as a new investor. This enabled some of
the company's existing shareholders to realise part of their
investments. We realised 60 per cent of the Company's shareholding
at roughly double its previous carrying value and three times its
cost. This added 4.9 per cent to the Company's NAV and brought in
GBP9 million of cash.
The other major positive among the Company's unquoted holdings
was Lynton Holding Asia, which became a cash shell following the
sale of its stake in Hawker Pacific. This added 2.5 per cent to the
Company's NAV and will, in due course, lead to a sizeable cash
realisation.
Five largest stock contributors
Contribution
%
The Hut Group 4.9
Lynton Holding Asia 2.5
Skyepharma 1.5
Telford Homes 0.8
New Britain Palm Oil 0.8
Five largest stock detractors
Contribution
%
Africa Oil (1.7)
Gresham Computing (1.0)
Providence Resources (1.0)
Eland Oil & Gas (0.7)
Liontrust Asset Management (0.6)
Successes in the quoted portfolio included Skyepharma, which
successfully raised equity to pay off expensive debt, and New
Britain Palm Oil, which was bought by Sime Darby at a substantial
premium. After a period of prolonged weakness in the underlying
commodity price, the palm oil sector has seen a spate of
consolidation. Another of our palm-oil holdings, Asian Plantations,
was also acquired during the review period. Elsewhere, Gaming
Realms, an online bingo business, performed particularly well as it
continued its strategy of selective acquisitions.
As mentioned above, the oil & gas sector struggled and the
main negatives for the Company were the holdings in Africa Oil,
Providence Resources and Eland Oil & Gas. The declines in the
share prices of all three companies can, at least in part, be
explained by the weakness in the oil price. In two of these cases,
however (Africa Oil and Providence Resources), there is a need for
new funding to take forward their substantial exploration
programmes. Hurricane Energy also needs further funding following
the success of test drilling off the west coast of Scotland. All
three companies have made large discoveries but are struggling to
access capital to exploit them due to the depressed price of crude
oil.
The Company's other strugglers were Gresham Computing and
Liontrust Asset Management. Gresham, which supplies software to
financial services companies, issued a profit warning following
contract delays. Liontrust, meanwhile, succumbed to profit-taking
following a strong run. We remain supportive of both
businesses.
In terms of transactions, our largest purchase was Booker Group,
an operator of cash-and-carry outlets and an internet-enabled
grocery wholesaler to independent retailers. This is a business we
have known for a long time and it is managed by the excellent
Charles Wilson, formerly of Marks & Spencer. In a highly
fragmented market there is huge potential for Booker to grow. Other
new investments over the period included Fox Marble, the owner of a
number of marble quarries, and Essenden, which operates a number of
ten-pin bowling centres in the UK.
We sold the entirety of our holdings in Salamander Energy, an
oil & gas company, and Real Estate Investors, a Midlands-based
property company. There were partial sales in City of London
Investment Group and Summit Corp, following strong share price
appreciation.
Outlook
Given that there has been a great deal for markets to worry
about, and that any pockets of cheer have been isolated, the
resilience of most equities over the period was welcome. Will that
continue? From geopolitical concerns to the end of quantitative
easing in the US, worries are plentiful. Moreover, on the whole the
valuations of equities have risen more rapidly than their
cashflows, and so could be especially vulnerable to any sudden
shock.
Yet investors may take comfort from the fact that interest rates
look set to remain low for the foreseeable future. In general,
corporate results have been positive, and in the last few weeks
there has been a pick up in takeover activity.
In any case, this remains a stock-picking Company. We feel
confident that the two main themes we are investing in - online
businesses and other financials - have enormous potential over the
medium and longer term, even if there are short-term set-backs. And
so we continue to concentrate on stock selection, believing that
this, rather than analysing macro-economic or geopolitical issues,
will reward our shareholders.
John Dodd & Adrian Paterson
Fund managers
Artemis Fund Managers Limited
16 December 2014
Responsibility Statement of the Directors in respect of the
Half-Yearly Financial Report
We confirm that to the best of our knowledge, in respect of the
Half-Yearly Financial Report for thesix months ended 31 October
2014:
-- 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;
-- the interim management report includes a fair review of the
information required by:
(a) Disclosure 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 and Transparency Rule 4.2.8R (related party
transactions).
For and on behalf of the Board
Duncan Budge
Chairman
16 December 2014
Condensed Consolidated Income Statement
For the six months ended 31 October 2014
Six months ended Six months ended Year ended
31 October 2014 31 October 2013 30 April 2014
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment
income 1,174 - 1,174 935 - 935 2,280 - 2,280
Other income (109) - (109) 12 - 12 710 - 710
Total revenue 1,065 - 1,065 947 - 947 2,990 - 2,990
Gains on
investments - 3,126 3,126 - 15,897 15,897 - 15,054 15,054
Gains on
current asset
investments 28 - 28 366 - 366 392 - 392
Currency
(losses)/gains - (2) (2) - 2 2 (4) (3) (7)
Total income 1,093 3,124 4,217 1,313 15,899 17,212 3,378 15,051 18,429
Expenses
Investment
management
fee (49) (436) (485) (47) (426) (473) (96) (864) (960)
Other expenses (207) (10) (217) (206) (6) (212) (403) (29) (432)
Profit before
finance costs
and tax 837 2,678 3,515 1,060 15,467 16,527 2,879 14,158 17,037
Finance costs (28) (252) (280) (26) (220) (246) (59) (511) (570)
Profit before
tax 809 2,426 3,235 1,034 15,247 16,281 2,820 13,647 16,467
Tax (3) - (3) (7) - (7) (98) - (98)
Profit for
the period 806 2,426 3,232 1,027 15,247 16,274 2,722 13,647 16,369
Earnings
per ordinary
share (pence) 2 1.87p 5.62p 7.49p 2.29p 34.10p 36.39p 6.16p 30.90p 37.06p
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.
Condensed Consolidated Balance Sheet
As at 31 October 2014
31 October 31 October
2014 2013 30 April 2014
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Non-current assets
Investments 156,492 168,508 167,207
Current assets
Investments held by
subsidiary 813 1,014 1,263
Other receivables 286 287 551
Cash and cash equivalents 1,050 3,044 1,437
2,149 4,345 3,251
Total assets 158,641 172,853 170,458
Current liabilities
Other payables (444) (543) (274)
Bank loan (12,500) (26,500) (26,500)
(12,944) (27,043) (26,774)
Net assets 145,697 145,810 143,684
Equity attributable
to equity holders
Share capital 520 543 539
Share premium 640 636 636
Special reserve 55,290 57,345 55,649
Capital redemption reserve 70 47 51
Retained earnings -
revenue 2,936 1,824 2,994
Retained earnings -
capital 5 86,241 85,415 83,815
Total equity 145,697 145,810 143,684
Net asset value per
ordinary share (pence) 3 338.12p 333.16p 332.55p
Condensed Consolidated Statement of Changes in Equity
For the six months ended 31 October 2014
Six months ended 31 October 2014 (unaudited)
Capital
Share Share Special redemption Retained earnings
capital premium reserve reserve Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May
2014 539 636 55,649 51 2,994 83,815 143,684
Total comprehensive
income:
Profit for
the period - - - - 806 2,426 3,232
Transactions
with owners
recorded
directly
to equity:
Repurchase
of ordinary
shares into
treasury - - (359) - - - (359)
Cancellation
of ordinary
shares from
treasury (19) - - 19 - - -
Conversion
of subscription
shares - 4 - - - - 4
Dividends
paid - - - - (864) - (864)
At 31 October
2014 520 640 55,290 70 2,936 86,241 145,697
Six months ended 31 October 2013 (unaudited)
Capital
Share Share Special redemption Retained earnings
capital premium reserve reserve Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May
2013 554 635 65,334 36 1,621 70,168 138,348
Total comprehensive
income:
Profit for
the period - - - - 1,027 15,247 16,274
Transactions
with owners
recorded
directly
to equity:
Repurchase
of ordinary
shares into
treasury - - (7,989) - - - (7,989)
Cancellation
of ordinary
shares from
treasury (11) - - 11 - - -
Conversion
of subscription
shares - 1 - - - - 1
Dividends
paid - - - - (824) - (824)
At 31 October
2013 543 636 57,345 47 1,824 85,415 145,810
Year ended 30 April 2014 (audited)
Capital
Share Share Special redemption Retained earnings
capital premium reserve reserve Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 May
2013 554 635 65,334 36 1,621 70,168 138,348
Total comprehensive
income:
Profit for
the year - - - - 2,722 13,647 16,369
Transactions
with owners
recorded
directly
to equity:
Repurchase
of ordinary
shares into
treasury - - (9,685) - - - (9,685)
Cancellation
of ordinary
shares from
treasury (15) - - 15 - - -
Conversion
of subscription
shares - 1 - - - - 1
Dividends
paid - - - - (1,349) - (1,349)
At 30 April
2014 539 636 55,649 51 2,994 83,815 143,684
Condensed Consolidated Cash Flow Statement
For the six months ended 31 October 2014
Six months Six months
ended ended
31 October 31 October Year ended
2014 2013 30 April
(unaudited) (unaudited) 2014 (audited)
GBP'000 GBP'000 GBP'000
Operating activities
Profit before tax 3,235 16,281 16,467
Interest payable 280 246 705
Gains on investments (3,126) (15,897) (15,054)
Gains on current asset investments (28) (366) (392)
Currency losses/(gains) 2 (2) 3
Decrease/(increase) in other receivables 14 55 (136)
Increase/(decrease) in other payables 268 (29) (311)
Net cash inflow from operating activities before interest and tax 645 288 1,282
Interest paid (280) (246) (705)
Irrecoverable overseas tax suffered (3) (7) (98)
Net cash inflow from operating activities 362 35 479
Investing activities
Purchases of investments (12,580) (16,518) (39,556)
Sales of investments 27,150 25,807 48,922
Net cash inflow from investing activities 14,570 9,289 9,366
Financing activities
Repurchase of ordinary shares into treasury (457) (7,989) (9,587)
Conversion of subscription shares 4 1 1
Dividends paid (864) (824) (1,349)
Net cash outflow from financing activities (1,317) (8,812) (10,935)
Net increase/(decrease) in
cash and cash equivalents 13,615 512 (1,090)
Cash and cash equivalents at the start of the period (25,063) (23,970) (23,970)
Effect of foreign exchange rate changes (2) 2 (3)
Cash and cash equivalents at the end of the period (11,450) (23,456) (25,063)
Bank loan (12,500) (26,500) (26,500)
Cash 1,050 3,044 1,437
(11,450) (23,456) (25,063)
Notes
1. Accounting policies
The Group's 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 issued by
the Association of Investment Companies in January 2009.
The Half-Yearly Financial Report has been prepared under the
same accounting policies as the Annual Financial Statements for the
year ended 30 April 2014.
2. Earnings per ordinary share
Six months Six months
ended ended
31 October 31 October Year ended
2014 2013 30 April 2014
Earnings per ordinary share
is based on:
Revenue earnings (GBP'000) 806 1,027 2,722
Capital earnings (GBP'000) 2,426 15,247 13,647
Total earnings (GBP'000) 3,232 16,274 16,369
Weighted average number
of ordinary shares in issue
during the period (basic) 43,164,248 44,719,128 44,162,066
Weighted average number
of ordinary shares in issue
during the period (diluted) 43,164,248 44,719,128 44,162,066
3. Net asset value per ordinary share
As at
As at 31 October As at
31 October 2014 2013 30 April 2014
Net asset value per ordinary
share is based on:
Net assets (GBP'000) 145,697 145,810 143,684
Number of ordinary shares
in issue at the end of the
period (basic) 43,089,843 43,765,162 43,206,785
Number of ordinary shares
in issue at the end of the
period (diluted) 43,089,843 43,765,162 43,206,785
During the period the Company bought back 118,200 ordinary
shares into treasury. 1,258 subscription shares were exercised and
the same number of ordinary shares were issued in respect of
these.
4. Dividends
Six months
ended
Six months ended 31 October Year ended
31 October 2014 2013 30 April 2014
GBP'000 GBP'000 GBP'000
Second interim dividend
for the
year ended 30 April 2013
- 1.85p - 824 824
First interim dividend for
the
year ended 30 April 2014
- 1.20p - - 525
Second interim dividend
for the
year ended 30 April 2014
- 2.00p 864 - -
864 824 1,349
A first interim dividend for the year ending 30 April 2015 of
GBP540,000 (1.25p per ordinary share) has been declared. This will
be paid on 30 January 2015 to those shareholders on the register at
close of business on 5 January 2015.
5. Analysis of retained earnings - capital
31 October 31 October
2014 2013 30 April 2014
GBP'000 GBP'000 GBP'000
Retained earnings - capital
(realised) 76,830 65,123 68,835
Retained earnings - capital
(unrealised) 9,411 20,292 14,980
86,241 85,415 83,815
6. Comparative information
The financial information for the six months ended 31 October
2014 and 31 October 2013 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 2014 has been
extracted from the Audited Financial Statements for the year ended
30 April 2014. 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.
7. Principal risks and uncertainties
Pursuant to DTR 4.2.7R of the Disclosure and Transparency Rules,
the principal risks faced by the Company include general market
price risk, liquidity risk, regulatory, and financial risks.
These risks, which have not materially changed since the Annual
Report for the year ended 30 April 2014, and the way in which they
are managed, are described in more detail in the Annual Report for
the year ended 30 April 2014 which is available on the Investment
Manager's website at artemis.co.uk.
8. Related party transactions
There were no related party transactions during the period. 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.
Copies of the Half-Yearly Financial Report for the six months
ended 31 October 2014 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 investment
manager's website, artemis.co.uk.
Artemis Fund Managers Limited
Company Secretary
For further information, please contact:
Billy Aitken at Artemis Fund Managers Limited
Telephone: 0131 225 7300
16 December 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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