Annual Financial Report

RNS Number : 1437P

Artemis Alpha Trust PLC

09 July 2010

 



ARTEMIS ALPHA TRUST PLC (the "Company")

Annual Financial Report Announcement for the year ended 30 April 2010

This announcement contains regulated information.

Financial Highlights

Total Returns	Year ended 30 April 2010	Year ended 30 April 2009	Since launch*
Net asset value - basic Net asset value - diluted Share price FTSE All-Share Index	46.7% 42.0% 46.0% 36.6%	(26.0)% (24.2)% (21.8)% (26.9)%	348.0% 302.4% 299.0% 84.7%
Capital	As at 30 April 2010	As at 30 April 2009
Net assets Net asset value per share - basic Net asset value per share - diluted Share price Discount to diluted net asset value Net gearing (as a % of net assets)	£89.8m 298.47p 266.77p 256.50p (3.8)% 12.0%	£62.4m 205.23p 189.69p 178.00p (6.2)% -
Returns for the year	Year ended 30 April 2010	Year ended 30 April 2009
Revenue earnings per share - basic Revenue earnings per share - diluted Dividends per share Total expense ratio	3.93p 3.58p 2.75p 1.1%	1.58p 1.47p 2.60p 1.1%

Source: Artemis/Datastream

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

Chairman's Statement

Performance

Over the Company's reporting period, markets continued their recovery. This began back in March 2009, and was aided by the enormous monetary stimulus packages provided by governments around the world, as well as by growing confidence that economic conditions were improving. However the strength of this recovery has not been beyond doubt. Increasing concerns about the levels of sovereign debt, especially within the Eurozone, have led to increased volatility in recent weeks and to a decline in markets.

Your Company benefited from the upturn in markets and has outperformed the wider UK market, as represented by the FTSE All-Share Index. The market rose by 36.6 per cent over the year to 30 April 2010, while the Company's diluted net asset value increased by 42.0 per cent and its share price by 46.0 per cent.

Investments

Your Company's broad investment policy allows your Investment Manager the flexibility to be selective and to identify investments which have, in the Investment Manager's view, the best chance of long-term returns for shareholders. The portfolio has continued to have a significant weighting in certain sectors, particularly oil & gas and financials, which represent 50 per cent of the portfolio. It has also maintained its exposure to unquoted companies. As at 30 April 2010, the value of these represented 33 per cent of the Company's net assets.

Your Company's two largest investments, Vostok Energy and Hurricane Exploration, continue to make progress with their businesses. One notable development was with Hurricane Exploration, which recently completed an equity fund-raising to provide it with working capital to develop its drilling licences in its West of Shetland operations. The funding was done at a significantly higher price than the then carrying value in the Company's portfolio. The holding has been written up to reflect the price at which the shares were issued.

Dividends

The investment objective requires the Company to provide shareholders with a growing dividend stream. In accordance with this, your Board has declared a second interim dividend of 1.60p (2009: 1.50p) per share, bringing total dividends for the year ended 30 April 2010 to 2.75p (2009: 2.60p), an increase of 5.8 per cent. This dividend will be paid on 20 August 2010 to those shareholders on the register on 23 July 2010.

Share capital and buy-backs

The Directors believe it is in shareholders' best interests to maintain a stable discount through the management of the supply and demand for the Company's shares. Accordingly, the Company has continued to make periodic purchases of its own shares during the year. A total of 414,500 shares were bought back during the year at a cost of £968,000. These shares are currently held in treasury.

Your Board is proposing an amendment to its policy for the issuing of shares from treasury and will be seeking shareholder approval of the revised policy at the Annual General Meeting ("AGM"). It is proposed that treasury shares can be re-issued at a discount to the prevailing diluted net asset value at the time of issue, providing always that this discount is less than the discount at which the shares were bought into treasury at, so as to ensure that all buy-backs into and re-issues from treasury add value for shareholders. The previous policy was to issue them at no less than the diluted net asset value. Your Board believes that having such a policy provides an additional flexibility in managing the supply and demand in the Company's shares and hence the discount to net asset value at which they trade.

The shares stood at a discount of 3.8 per cent to the diluted net asset value at the year end, having been at an average discount of approximately 7.0 per cent during the year.

Articles of Association, share capital and regulatory matters

The Company is proposing to update its Articles of Association principally to reflect the changes to company law, as a result of the implementation of the final phase of the Companies Act 2006, and the implementation of the Companies (Shareholders' Rights) Regulations 2009. A special resolution to approve these changes and adopt the new Articles of Association is being proposed at the AGM.

As stated above, your Board continues to believe that it is in shareholders' best interests to retain the flexibility to be able to issue and buy-back the Company's shares. Accordingly, resolutions are being put forward at the AGM to seek authority to continue to be able to do this.

In addition, the Company is seeking shareholder approval to cancel the Company's share premium account in order to establish a special reserve, which may be treated as distributable profits for all purposes, including the financing of share buy-backs. This is subject both to shareholder approval and the approval of the High Court.

Shareholders may be aware of proposed new legislation from the European Union aimed at seeking to regulate certain fund managers. The Alternative Investment Fund Manager Directive ("AIFM") will see investment companies falling within its scope and as drafted, the AIFM could have far reaching consequences for the industry. Our trade body, the Association of Investment Companies, continues to lobby EU policy-makers to seek to reduce the compliance and administrative burdens the AIFM could place on investment companies. The final legislation is likely to come into effect in 2012 or 2013. Your Board will continue to monitor the developments and provide appropriate updates to shareholders in future reports.

Annual General Meeting

The Company's AGM will take place on Wednesday, 8 September 2010 at 12.30 pm at the offices of Artemis Investment Management Limited, Cassini House, 57 St James's Street, London SW1A 1LD.

The meeting will be followed by a buffet lunch which will provide shareholders with a good opportunity to meet with the Directors and the Investment Managers. The Directors look forward to welcoming you to the AGM. Should you be unable to attend the AGM in person, your Board would encourage you to use your proxy votes.

Investment Plan

The Investment Manager operates an Investment Plan which enables investors to acquire shares in the Company either through lump sum investments or regular monthly investments. Further details on this, and how to obtain documentation, are available from the Investment Manager.

Outlook

As stated above, markets have recently given back some of their gains, as uncertainties facing the Eurozone economies, the strength of demand from China and the USA's recovery weigh on investors' minds. The transfer of debt from the corporate sector to the state during the credit crisis has taken its toll on many countries, and now significant steps need to be taken to reduce overall levels of debt and budget deficits.

The UK has a large budget deficit. Addressing this is the priority for the new coalition government, which has started to make the difficult decisions required. It is likely that markets will remain volatile over the coming months until there are signs that the actions being taken by governments appear to be working and that continuing economic growth is evident.

Although the Company's portfolio is made up primarily of UK-based or listed companies, many of these are international businesses or have their focus on different parts of the world. So the portfolio is not overly dependent on the UK economy. Your Board believes that this approach should continue to benefit the Company in meeting its objectives over the longer-term.

Your Board is always keen to hear the views of shareholders and you can now contact me at the following email address - [e-mail]. A direct link to this address can also be found on the Company's dedicated web pages at www.artemisonline.co.uk/investor/products/artemis-alpha-trust-plc. You will also find here further information on the Company, including a monthly fact sheet and performance data, to enable you to keep up to date with its developments. There will also be a video update by the Investment Manager added to the web page in the near future.

Simon Miller

Chairman

9 July 2010

Investment Manager's Review

Performance and Portfolio Analysis

Over the year to 30 April 2010, the Company's diluted net asset value increased by 42.0 per cent. This compares well to the FTSE All-Share Index which rose by 36.6 per cent over the same period. Your Company's longer-term performance record remains excellent and this is summarised in the table below.

	3 years	5 years	Launch*
Net asset value - diluted	16.8%	55.3%	302.4%
FTSE All-Share Index	(4.4)%	42.5%	84.7%

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

Our strategy of focusing on mid and small capitalisation companies has continued to produce positive contributions to performance. Over the year we have seen some exceptional periods of performance, with a strong re-rating of many companies in these sectors. The portfolio is managed by me and Adrian Paterson, but we also draw upon the considerable experience of the rest of Artemis' investment team.

During the year, members of Artemis' management team and Affiliated Managers Group acquired all of the equity of Artemis Investment Management Limited from Fortis Bank. So once again Artemis is owned by its employees, who now have a substantial equity interest in the business. This aligns their interests with Artemis' clients. The Investment Managers of the Company are further aligned with shareholders, having a considerable investment in the Company's shares. The overall interests of the Artemis investment team in the Company, which increased over the year, stands at 24.0 per cent (on a diluted basis).

Portfolio

The largest area of focus remains the oil & gas sector, which represented 40.5 per cent of the portfolio at the year end. The background to global energy demand, particularly for oil & gas, remains positive, driven by demand from countries such as China and India. We do not expect this to change over the short-term.

Our strategy has been to seek out small to mid capitalisation companies whose exploration potential will result in a meaningful change in their share price. Examples are Cove Energy, whose shares were re-rated following a discovery in offshore East Africa, and Geopark, whose production and exploration portfolio in Southern Chile has been very successful in reaching its targets. We have subsequently sold this holding to buy Valiant Petroleum, a North Sea producer and explorer, which has recently made a discovery in its Tybalt prospect.

Other new holdings include Providence Resources, an Irish exploration company whose interests include gas storage in the offshore Southern Irish sector and, Igas, an onshore coal bed methane business whose assets are concentrated in the Midlands in the UK. Igas is a good example of how a large sector weight, in terms of risk management, can be offset by the stability of onshore gas yet still benefit from the upward trends in energy demand.

Among our long-term listed holdings, Salamander Energy has made the greatest contribution over the year. Its production and exploration assets are focused in South-East Asia and it offers the opportunity to benefit from an extensive drilling program for the year ahead, with potentially exciting wells planned in Vietnam.

The Company's largest investments in this sector, both of which are unquoted, are Vostok Energy and Hurricane Exploration. Both companies have made positive progress during the year. Vostok Energy has completed its link into the main Gazprom pipeline and we expect its gas processing plant to come on-stream in the final quarter of this year. During the reporting period the company secured financing from the European Bank for Reconstruction and Development and the valuation remains at the price at which it raised this capital. Hurricane Exploration discovered light oil in the West of Shetland basin. Having raised sufficient funds for working capital, it is currently drilling further prospects and news on the drilling progress is imminent.

We will continue with the current level of exposure to the sector as we anticipate the oil price environment to remain positive, with rising demand likely to push prices firmer. That said, over the coming months we will also keep our position in this area under review and make decisions accordingly to improve shareholder value.

We re-entered the commercial property sector by investing in Hansteen Holdings and New River Retail. Both companies are led by management teams that called the property cycle correctly and sold out. We believe their specialist sectors of European industrial and secondary retail offer excellent re-rating opportunities.

Many of our investment themes have remained unchanged. We continue to favour palm oil companies such as New Britain Palm Oil, which has recently completed its UK oil processing facility in order that its clients can buy product grown ethically and with proof of accountability. REA Holdings has exceeded expectations and remains a core holding. We have added to our exposure through the purchase of Asian Plantations which has acreage in the East of Malaysia.

Within the financial sector we have sold BlueBay Asset Management, Close Brothers and F&C Asset Management which have all provided positive contributions to performance. We have no exposure to the main banks, as we still find it difficult to value these. Our fund management exposure is now focused on a new holding in Ashmore, the leading credit asset manager specialising in emerging financial markets. We have also made an investment in a new fund management company called Aethra Asset Management. This is a Dutch-based start up led by a highly motivated and well regarded management team who are in the process of building an active European equities franchise.

One of the worst investments has been Handmade Films, which was diversifying its historical film library business into a series of joint ventures for children's films, alongside National Geographic. In the space of a number of months, the company ran out of money, which raises serious questions over the management team and its control of the business. Since the year end, the company has been bid for, however, it has been, nevertheless, a salutary and painful lesson.

Among the Company's unquoted holdings we have recently had positive news from TSI and Reaction Engines, with the latter having just raised further capital at a higher price than our investment cost. The unquoted portion of the portfolio represents 33 per cent of the net assets of the Company, and as such these investments are regularly monitored. Each quarter the Board and Investment Manager discuss the developments within the businesses of each of these companies and also formally consider the Investment Manager's recommendations on valuation.

Over 75 per cent of the portfolio is a beneficiary of global growth. Our broad mandate has allowed us to weather the difficult times of the last two years as we have sought out above average growth opportunities outside the UK. Good examples of these types of business include Weir Group and Spirax-Sarco, which have been constantly exceeding expectations and benefiting from upgrades.

Outlook

Having peaked at the start of the year, stockmarkets around the world have recently fallen, reflecting investor concerns over sovereign debt and the stability of economic recovery.

The portfolio is positioned to take advantage of world growth. In particular, our large overweight position in oil & gas is there to take advantage of a rising global demand for energy.

The question remains as to whether we have passed the worst and whether the massive fiscal and monetary stimulus has been enough - or whether we are heading into a 'double dip' recession.

Even against this uncertain background, there are a plethora of undervalued situations for the Company to take advantage of.

John Dodd and Adrian Paterson

Artemis Investment Management Limited
Investment Manager

9 July 2010

Principal Risks and Risk Management

The Board, in conjunction with the Investment Manager, has developed a risk map which sets out the principal risks faced by the Company. It is used on an on-going basis to monitor the risks faced by the Company, together with 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 and 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 market (FTSE All-Share Index). The Board believes this approach will continue to generate good long-term returns for shareholders. Currently 33 per cent (2009: 33 per cent) of the Company's net assets is represented by unquoted companies and these investments carry higher liquidity and realisation risks. The Board considers that these risks are justified by the longer-term nature of the investments and the Company's closed-ended structure, and that such investments will produce good returns for shareholders. Risk is diversified through a broad range of investments being held in the portfolio. The Board discusses the investment portfolio with the Investment Manager at each Board meeting and part of this discussion includes a review of the Company's unquoted investments and their valuations.

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

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

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

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

The Directors are responsible for preparing the Annual Financial Report, the Directors' Remuneration 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 International Financial Reporting Standards ("IFRSs") as adopted by the EU and applicable law and have elected to prepare the Parent Company Financial Statements on the same basis.

Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In preparing each of the Group and Parent Company Financial Statements, the Directors are required to:

•           select suitable accounting policies and then apply them consistently;

•           make judgements and estimates that are reasonable and prudent;

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

•           prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business.

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

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

The Financial Statements are published on the website www.artemisonline.co.uk, maintained by the Company's Investment Manager, Artemis Investment Management Limited. The maintenance and integrity of the corporate and financial information relating to the Group and Company is the responsibility of the Investment Manager. Visitors to the website should note that 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

9 July 2010

Audited Consolidated Income Statement

For the year ended 30 April 2010

		Year ended 30 April 2010			Year ended 30 April 2009
		Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income		1,085	--	1,085	723	--	723
Other income		560	--	560	42	--	42
Total revenue		1,645	--	1,645	765	--	765
Gains/(losses) on investments		--	28,331	28,331	--	(24,528)	(24,528)
Gains on current asset investments		109	--	109	169	--	169
Currency gains/(losses)		--	20	20	--	(61)	(61)
Total income/(loss)		1,754	28,351	30,105	934	(24,589)	(23,655)
Expenses
Investment management fees		(50)	(450)	(500)	(43)	(388)	(431)
VAT recoverable on investment management fees		--	--	--	24	215	239
Other expenses		(338)	--	(338)	(332)	--	(332)
Profit/(loss) before finance costs and tax		1,366	27,901	29,267	583	(24,762)	(24,179)
Finance costs		(17)	(160)	(177)	(32)	(285)	(317)
Profit/(loss) before tax		1,349	27,741	29,090	551	(25,047)	(24,496)
Tax		(157)	125	(32)	(49)	11	(38)
Profit/(loss) for the year		1,192	27,866	29,058	502	(25,036)	(24,534)
Earnings/(loss) per share (basic)		3.93p	91.83p	95.76p	1.58p	(78.80p)	(77.22p)
Earnings/(loss) per share (diluted)		3.58p	83.75p	87.33p	1.47p	(73.43p)	(71.96p)

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.

Audited Balance Sheets

As at 30 April 2010

		Group 2010 £'000	Company 2010 £'000	Group 2009 £'000	Company 2009 £'000
Non-current assets
Investments		100,480	109,322	59,285	67,655
Current assets
Investments held by subsidiary		1,133	--	--	--
Other receivables		315	315	791	791
Cash and cash equivalents		603	414	3,015	2,826
		2,051	729	3,806	3,617
Total assets		102,531	110,051	63,091	71,272
Current liabilities
Other payables		(1,213)	(8,733)	(690)	(8,871)
Bank loan		(11,500)	(11,500)	--	--
		(12,713)	(20,233)	(690)	(8,871)
Net assets		89,818	89,818	62,401	62,401
Equity attributable to equity holders
Share capital		305	305	327	327
Share premium		24,116	24,116	23,984	23,984
Special reserve		1,910	1,910	2,878	2,878
Warrant reserve		1,278	1,278	1,299	1,299
Capital redemption reserve		32	32	9	9
Retained earnings -- revenue		1,970	630	1,584	591
Retained earnings -- capital		60,207	61,547	32,320	33,313
Total equity		89,818	89,818	62,401	62,401
Net asset value per share (basic)		298.47p		205.23p
Net asset value per share (diluted)		266.77p		189.69p

Audited Statements of Changes in Equity

For the year ended 30 April 2010

Group	Share capital £'000	Share premium £'000	Special reserve £'000	Warrant reserve £'000	Capital redemption reserve £'000		Retained earnings - revenue £'000	Retained earnings - capital £'000		Total £'000
For the year ended 30 April 2010
At 1 May 2009	327	23,984	2,878	1,299	9		1,584	32,320	62,401
Total comprehensive income: Profit for the year	--	--	--	--	--		1,192	27,866	29,058
Transactions with owners recorded directly to equity: Repurchase of own shares	(23)	--	(968)	--	23		--	--	(968)
Exercise of manager warrants	1	132	--	(21)	--		--	21	133
Dividends paid	--	--	--	--	--		(806)	--	(806)
At 30 April 2010	305	24,116	1,910	1,278	32	1,970		60,207	89,818
For the year ended 30 April 2009
At 1 May 2008	334	23,984	6,762	1,299	2		1,888	57,356	91,625
Total comprehensive income: Profit/(loss) for the year	--	--	--	--	--		502	(25,036)	(24,534)
Transactions with owners recorded directly to equity: Repurchase of own shares	(7)	--	(3,884)	--	7		--	--	(3,884)
Dividends paid	--	--	--	--	--		(806)	--	(806)
At 30 April 2009	327	23,984	2,878	1,299	9		1,584	32,320	62,401
Company	Share capital £'000	Share premium £'000	Special reserve £'000	Warrant reserve £'000	Capital redemption reserve £'000		Retained earnings - revenue £'000	Retained earnings - capital £'000	Total £'000
For the year ended 30 April 2010
At 1 May 2009	327	23,984	2,878	1,299	9		591	33,313	62,401
Total comprehensive income: Profit for the year	--	--	--	--	--		845	28,213	29,058
Transactions with owners recorded directly to equity: Repurchase of own shares	(23)	--	(968)	--	23		--	--	(968)
Exercise of manager warrants	1	132	--	(21)	--		--	21	133
Dividends paid	--	--	--	--	--		(806)	--	(806)
At 30 April 2010	305	24,116	1,910	1,278	32		630	61,547	89,818
For the year ended 30 April 2009
At 1 May 2008	334	23,984	6,762	1,299	2		531	58,713	91,625
Total comprehensive income: Profit/(loss) for the year	--	--	--	--	--		866	(25,400)	(24,534)
Transactions with owners recorded directly to equity: Repurchase of own shares	(7)	--	(3,884)	--	7		--	--	(3,884)
Dividends paid	--	--	--	--	--		(806)	--	(806)
At 30 April 2009	327	23,984	2,878	1,299	9		591	33,313	62,401

Audited Cash Flow Statements

For the year ended 30 April 2010

		Group 2010 £'000	Company 2010 £'000	Group 2009 £'000	Company 2009 £'000
Operating activities
Profit/(loss) before tax		29,090	29,090	(24,496)	(24,496)
Interest payable		177	177	317	317
(Gains)/losses on investments		(28,331)	(28,803)	24,528	24,880
Gains on current asset investments		(109)	--	(169)	--
Currency (gains)/losses		(20)	(20)	61	61
Decrease/(increase) in other receivables		376	376	(228)	(229)
Increase/(decrease) in other payables		201	200	(37)	(39)
Net cash inflow/(outflow) from operating activities before interest and tax		1,384	1,020	(24)	494
Interest paid		(177)	(177)	(371)	(371)
Corporation tax paid		--	--	(1)	--
Irrecoverable overseas tax suffered		(32)	(32)	(38)	(38)
Net cash inflow/(outflow) from operating activities		1,175	811	(434)	85
Investing activities
Purchases of investments		(63,528)	(59,181)	(22,854)	(22,566)
Sales of investments		50,062	46,536	42,058	40,972
Net cash (outflow)/inflow from investing activities		(13,466)	(12,645)	19,204	18,406
Financing activities
Repurchase of own shares		(968)	(968)	(3,884)	(3,884)
Exercise of manager warrants		133	133	--	--
Dividends paid		(806)	(806)	(806)	(806)
(Decrease)/increase in inter-company loan		--	(457)	--	277
Net cash outflow from financing activities		(1,641)	(2,098)	(4,690)	(4,413)
Net (decrease)/increase in cash and cash equivalents		(13,932)	(13,932)	14,080	14,078
Cash and cash equivalents at the start of the year		3,015	2,826	(11,004)	(11,191)
Effect of foreign exchange rate changes		20	20	(61)	(61)
Cash and cash equivalents at the end of the year		(10,897)	(11,086)	3,015	2,826
Bank loans		(11,500)	(11,500)	--	--
Cash		603	414	3,015	2,826
		(10,897)	(11,086)	3,015	2,826

Notes

1. Accounting policies

Basis of preparation

The Group's Financial Statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union. The Company's Financial Statements have also been prepared in accordance with IFRSs as adopted by the EU and in accordance with the provisions of the Companies Act 2006 (the "Act"). The Company has taken advantage of the exemption provided under Section 408 of the Act not to publish its Income Statement and related notes.

2. Income 

	2010 £'000	2009 £'000
Investment income*
UK dividend income	719	490
UK fixed interest	51	64
Overseas dividend income	315	350
Overseas fixed interest	--	(181)
	1,085	723
Other income
Subsidiary undertaking's dealing profits/(losses)	515	(131)
Bank interest	27	173
Other	18	-
	1,645	765

* All investments have been designated as 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 fees

	Revenue	2010 Capital	Total	Revenue	2009 Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fees	50	450	500	43	388	431

4. Dividends

Dividends paid and proposed in the year

	2010 £'000	2009 £'000
2009 second interim dividend of 1.50p per share (2008: 1.40p) 2010 first interim dividend of 1.15p per share (2009: 1.10p)	456 350	457 349
	806	806

Dividends payable in respect of the year

	2010 £'000	2009 £'000
First interim dividend paid at 1.15p per share (2009: 1.10p) Second interim dividend payable at 1.60p per share (2009: 1.50p)	350 481	349 456
	831	805

5. Earnings per share

The basic revenue return per share is based on the revenue profit for the year of £1,192,000 (2009: £502,000) and on 30,345,066 (2009: 31,769,952) shares, being the weighted average number of shares in issue during the year. The basic capital return per share is based on the capital profit for the year of £27,866,000 (2009: loss of £25,036,000) and on 30,345,066 (2009: 31,769,952) shares, being the weighted average number of shares in issue during the year.

For the purposes of calculating diluted revenue and capital returns per share, the number of shares is the weighted average used in the basic calculation plus the number of shares deemed to be issued for no consideration on exercise of manager warrants by reference to the average price for the year. The exercise of warrants would result in an increase in the weighted average number of shares of 2,928,079 (2009: 2,323,430).

6. Share capital and manager warrants

(a) Share capital

	2010 £'000	2009 £'000
Authorised:
60,000,000 shares of 1p each (2009: 60,000,000)	600	600
Allotted, called up and fully paid:
30,093,203 shares of 1p each (2009: 30,404,988)	301	304
414,500 treasury shares of 1p each (2009: 2,263,500)	4	23
	305	327

	Number	£'000
Movements in share capital during the year Shares in issue on 1 May 2009 Purchased for placement in treasury during the year Shares in issue in respect of manager warrants exercised	30,404,988 (414,500) 102,715	304 (4) 1
Shares in issue on 30 April 2010	30,093,203	301

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

	Number	2010 £'000	Number	2009 £'000
Balance brought forward	2,263,500	23	690,000	7
Purchases	414,500	4	2,263,500	23
Cancellations	(2,263,500)	(23)	(690,000)	(7)
Balance carried forward	414,500	4	2,263,500	23

(b) Manager warrants

	Number	Issue price (pence)	Exercise price (pence)
Issued on 27 October 2003	2,609,939	14.0736	87.96
Issued on 7 October 2004	3,406,035	20.9104	130.69
Issued on 24 March 2006	553,008	35.8016	223.76
Manager warrants in issue on 30 April 2010	6,568,982

7. Net asset value per share

The basic net asset value per share is based on net assets of £89,818,000 (2009: £62,401,000) and on 30,093,203 (2009: 30,404,988) shares, being the number of shares in issue at the year end.

The diluted net asset value per share has been calculated on the assumption that 6,568,982 (2009: 6,118,689) manager warrants were exercised resulting in a total of 36,662,185 shares in issue (2009: 36,523,677).

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 £630,000 (2009: £41,000) excess management expenses without payment to Alpha Securities Trading Limited. All other transactions with subsidiary undertakings were on an arms length basis. During the year transactions in securities between the Company and its subsidiary undertakings amounted to £nil (2009: £nil).

9. This Annual Financial Report announcement does not constitute the Company's statutory accounts for the years ended 30 April 2010 and 30 April 2009 but is derived from those accounts. Statutory accounts for year ended 30 April 2009 have been delivered to the Registrar of Companies.  The statutory accounts for the year ended 30 April 2009 and the year ended 30 April 2010 both received an audit report which was unqualified and did not include a reference to any matters to which the auditors 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 2010 have not yet been delivered to the Registrar of Companies and will be delivered following the Annual General Meeting.

The audited Annual Report will be available to shareholders shortly. Copies may be obtained during normal business hours from the Company's registered office at Cassini House, 57 St James's Street, London SW1A 1LD or at the Company's website at www.artemisonline.co.uk and will be lodged at the UK Listing Authority's Document Viewing Facility shortly.

The Annual General Meeting of the Company will be held on Wednesday, 8 September 2010.

Artemis Investment Management Limited

Company Secretary

9 July 2010

For further information, please contact:

Artemis Investment Management Limited, Company Secretary

Telephone: [phone]

 

END

 

 

FR RLMITMBMMBBM