Artemis Alpha Trust plc (the 'Company') LEI: 549300MQXY2QXEIL3756 Annual Report for the year ended 30 April 2024 Financial Highlights Year ended Year ended 30 April 2024 30 April 2023 Total returns Net asset value per ordinary share* 15.1% 1.3% Ordinary share price* 12.3% (1.2)% FTSE All-Share Index 7.5% 6.0% Revenue and dividends Revenue earnings per ordinary share 7.89p 6.74p Dividends per ordinary share 6.80p 6.20p Ongoing charges* 1.06% 1.08% As at As at 30 April 2024 30 April 2023 Capital Net Assets (£'000) 135,329 119,817 Net asset value per ordinary share 413.68p 366.02p Ordinary share price 351.00p 319.00p Net gearing* 13.1% 13.4% Total returns to 3 years 5 years 10 years Since 1 June 2003** 30 April 2024 Net asset value (8.9)% 26.0% 43.3% 652.0% per ordinary share* Ordinary share (16.5)% 32.1% 39.9% 574.6% price* FTSE All-Share 23.9% 30.1% 75.8% 371.2% Index ** The date when Artemis was appointed as Investment Adviser * Alternative Performance Measure Source: Artemis/Datastream Chairman's statement Performance During the year ended 30 April 2024 your Company's net asset value per share rose by 15.1% and the share price by 12.3% (on a total return basis). In comparison the benchmark FTSE All- Share Index rose by 7.5%. During the second half of the year your portfolio enjoyed a stronger absolute and relative performance after a difficult first half dominated by uncertainty and volatility. In the six months to the end of April 2024 the net asset value per share rose by 27.3% and the share price by 34.2% versus 14.2% for the benchmark. Although the FTSE All-Share Index is our formal benchmark, a significant proportion of the companies in the portfolio form part of the FTSE 250 Index which rose by 6.3% over the year and 18.8% for the last 6 months. As we have reminded shareholders in the past, the portfolio bears little relationship to the FTSE All-Share and the stock-selection is not constrained by it. As the last three years have shown, short-term performance is likely to bear very little resemblance to the benchmark; our aim remains to out-perform it over the long term. Portfolio The year to 30 April 2024 was good for equities globally as a consequence of lower inflation and improving economic conditions, thereby reducing concerns over the likelihood of stagflation. The fading impact of the shock to energy and commodity markets which followed Russia's 2022 invasion of Ukraine has been an important contributor to the improved macro outlook. Investor confidence has increased as expectations over the future path of interest rates has become clearer, even if its timing remains uncertain. In addition, corporate earnings have been stronger than expected, leading to an increase in equity valuations. The Manager remains optimistic about the UK and the prospects for consumer spending in particular. Although the portfolio includes some international names (such as Alphabet, Nintendo and Universal Music), about half of your Company's net assets are invested in companies which are primarily exposed to the UK economy. A combination of improving macro conditions and a more positive outlook for UK corporate earnings has drawn attention to the low valuations placed on many UK companies such as banks and housebuilders, as evidenced by the spate of takeovers in the latter sector. While portfolio turnover has been slow, recent additions such as Rolls-Royce and Alphabet have helped to deliver positive returns. Many of our investee companies stand to benefit from the improved prospects for consumer spending reinforced by clear competitive advantages, going some way to vindicating the thesis for selecting them. In addition, the prospect of a more stable political environment after the election may help to improve the rating of UK companies, a process which has already become evident. Revenue earnings and dividends We are pleased to be able to deliver growth in dividends at a rate in excess of inflation, in line with our policy. The Board has declared a final dividend of 4.26p (2023: 3.87p) per share, which will be subject to approval by shareholders at the Company's Annual General Meeting on 17 October 2024. The final dividend, once approved by shareholders, will be paid on 25 October 2024 to those shareholders on the register at 20 September 2024, with an ex-dividend date of 19 September 2024. Total dividends declared for the year will therefore amount to 6.80p per share (2023: 6.20p), an increase of 9.7% on the previous year and ahead of the increase in the Consumer Prices Index (8.7% as at April 2023), in line with our target. Investment income from our investee companies increased significantly during the year by 18.5%. The subsidiary company continues to have healthy reserves with which to support the Company's earnings and dividends, if required. Revenue earnings per share stand at 7.89p for the year to 30 April 2024, an increase of 17.1% on the 6.74p of the prior year. Share buy backs/discount We have maintained a pragmatic approach to buying back our shares throughout the year, aiming to do so when we believe this is in the best interests of our shareholders. Adverse market conditions and sentiment have resulted in wider discounts amongst our peer group and in the investment trust sector generally. Despite a widening in the Company's discount, from 12.8% to 15.2%, particularly towards the end of 2023, buyback activity was limited. Our judgement was that the risk of impacting the liquidity in our shares was likely to outweigh the scope to create material accretion in net asset value per share. The Company bought back 21,756 shares at a total cost of £70,075 and an average discount of 13.0%. The discount to underlying asset value averaged 14.2% over the course of the year, ranging from 8% to 22%, and at the year-end stood at 15.2%. As at 28th June 2024, the share price stood at 366p, representing a discount of 11.6%. Triennial liquidity events Under the arrangements approved by shareholders in 2021, a tender offer for up to 25% of the Company's shares is due to take place later this year, subject to the level of the discount prevailing at that time as well as shareholder approval. We will be writing to shareholders nearer the time to outline our plans. Annual General Meeting Your Company's Annual General Meeting ("AGM") will take place on Thursday, 17 October 2024 at 10.00 a.m. at the London offices of Artemis Fund Managers, Cassini House, 57 St. James's Street, London, SW1A 1LD. The Directors look forward to welcoming shareholders. The Investment Manager will make a presentation and answer any questions on the portfolio performance and strategy. I would encourage you to make use of your proxy votes by completing and returning the form of proxy enclosed with this report. Outlook I am pleased that we have been able to deliver stronger returns for shareholders, particularly during the second half of the year. The Manager remains optimistic about the prospects for the stocks which are held in the portfolio; current conditions appear to offer an improved environment in which our investee companies can thrive. Board succession During the year the Board will be looking for a successor to take over from me as Chairman as I will have completed the recommended tenure for that role. In the meantime I look forward to being able to report further progress for your Company. Contact us Shareholders can keep up to date with Company performance by visiting artemisalphatrust.co.uk where you will find information on the Company, a monthly factsheet and detailed quarterly updates from the Investment Manager. The Board is always keen to hear from shareholders. Should you wish to, I can be contacted by email on alpha.chairman@artemisfunds.com. Duncan Budge Chairman 1 July 2024 Investment Manager's Review In the 12-month period ending 30th April 2024, the Trust's NAV increased by 15.1% (net of fees) compared to a 7.5% rise in the FTSE-All Share Index. Returns for the year were driven primarily by strong performance in the second half, a period in which the Trust's NAV rose by 27.3% compared to a 14.2% rise in the FTSE-All Share. A number of holdings contributed over 1% each to NAV performance including Ryanair (+32.7%/+2.1%), Alphabet (+53.0%/+2.0%), Plus500 (+39.9%/+1.8%), Nintendo (+18.7/+1.3%), Redrow (+29.8%/+1.3%), Rolls-Royce (+32.4%/+1.3%), Frasers Group (+6.2%/+1.2%), and NatWest (+26.9%/+1.2%). A positive aspect of the year's performance, which is evident from the names above, was that it came from a wide variety of industries driven by different factors. Another is the validation of our activity, as NatWest (September 2022), Alphabet (November 2022), and Rolls Royce (January 2024) are all large holdings that were purchased recently. The year witnessed a rise in stock prices even as bond yields increased. Several factors contributed to this outcome. Inflation indicators moderated as pressures diminished, resulting in less uncertainty about the future path of interest rates. This happened without a significant deceleration in economic activity, which meant corporate earnings were stronger than expected. Also, continued hope for the benefits of artificial intelligence lifted stock performance, especially in the US market. We are optimistic about the portfolio's potential returns, based on a combination of bottom-up and top-down factors that can be summarised as follows: · Macro headwinds to UK corporate earnings and confidence are set to ease. · Low valuations in UK domestic assets (e.g. Housebuilding/ Banking) should lead to high future returns. · "Wide moat" businesses (e.g. Technology/Media) continue to offer up attractive opportunities. · Capital intensive industries (e.g. Retail/Aerospace) are benefitting from a capital cycle. In the following sections, we review the reasoning behind these views, major events in the year, and any adjustments to positioning. Compared to the prior year, our views are broadly unchanged and if anything, conviction has been strengthened by recent developments. For this reason, portfolio turnover has been low. UK macro headwinds are set to ease For all that has been written about the inexpensiveness of UK stocks (including by us), it is a fair challenge to highlight that corporate earnings growth has been challenged. We think that some of the headwinds faced are easing, and this increases the possibility of more robust earnings growth. One main reason for this view is improved prospects for consumer spending. UK consumers spent 2% less than they did in 2019, while US consumers spent 14% more (as of Q4 2023). People have saved more after facing higher energy prices, inflation and interest rates. The energy shock hit the UK and Europe harder than the US. According to the Bank of England, UK utility bills went up to more than twice 2019 levels, while the US bills increased by only 30%. In Europe, unlike the United States, gas prices set electricity prices, and in August 2022, gas prices soared to $600 per barrel of oil equivalent because of problems and fear from Russia/Ukraine. This was almost 10 times higher than in the US. Gas prices have fallen to more normal levels owing to lower demand in Europe, better use of gas storage facilities, and improved LNG supply. UK utility prices are still high because of the price cap system that the UK uses. This is forecast to fall by about £500 in 2024. This, along with rising wages and the cut to national insurance, means that spending is likely to rebound, which should provide a tailwind to corporate profits. Another reason is the prospect of a more stable political environment. Betfair odds suggest that Labour is more than 90% likely to win the next election, probably with a large majority. Both the Conservative and Labour parties have moved to the centre lately. This makes the set-up for the upcoming election very different from 2019, where voters were divided and policies were wildly divergent. The rise in mergers and acquisitions activity shows growing confidence in UK assets returns. Our holdings in Redrow, Hargreaves Lansdown and Currys have recently received offers. For the last two, we think this shows value in our portfolio and the wider market, as the potential buyer was a financial sponsor willing to pay a significant premium even without synergies. UK discounted assets to benefit from reduced risk premium Approximately 50% of NAV is invested in companies primarily exposed to the UK in Housebuilding (Redrow/Bellway/ Berkeley/Springfield), Retail (Frasers/Currys), Banking (NatWest/Lloyds) and Financial Services (Hargreaves Lansdown/Singer). These are all sectors that are geared to an improving economy. We also have a stake in the end-of-life industry through Castelnau, which is a unique opportunity with excellent potential returns as it changes its business to leverage its strong position in a resilient and growing industry. The Labour party is placing housebuilding at the centre of its policy with an aim of increasing build rates. As the CMA's lengthy investigation recently noted, the complex and difficult planning system is the key factor that drives high returns for incumbent housebuilders. An improvement in planning processing should be a positive for all industry participants through improving returns on capital. A relaxation to the point that would encourage new entrants or create excess supply seems unlikely. The recent depressed market has only served to compound the undersupply of housing in the UK. This accumulated deficit of over 1 million homes underpins long-term demand for new homes. Housebuilders trade at book value, scarcely above the liquidation value of their physical assets, and yet their franchises are likely to offer double digit cash returns for years to come. UK bank stock prices have trailed behind those of other European banks as their earnings have not felt the full positive effect of higher interest rates yet owing to their practice of hedging against interest rate changes. We think that it is improbable that interest rates will go back to zero, and so our opinion is that UK banks have experienced a lasting boost in their returns, which is only temporarily obscured. The low valuation of UK banks (earnings yields in excess of 15%) is also anomalous given that asset quality and capital ratios have been steadily improving. This is something that Andrew Bailey, Governor of the Bank of England acknowledged in a speech in February when he said, "(compensation for) the cost of risk - the return equity investors demand - does not seem to have fallen in line with what appears to be greater stability and lower risk per unit of equity." UK banks are trading at discounts of greater than 20% to tangible equity and are targeting returns on that equity of about 15%. With limited reinvestment opportunities, earnings are distributed to shareholders through share buybacks and dividends. As we believe targeted returns to be achievable, we expect returns of close to 20% (15%/0.8x) with greater upside in the short-term if valuation multiples were to rise. For these reasons, we increased our position in NatWest during the year. Wide moat businesses offer attractive returns Approximately 30% of the Trust's assets are invested in businesses that are characterised by their visible competitive advantage. This includes holdings in Technology and Media (Alphabet/UMG/Autotrader), Video Games & Hobbies (Nintendo), Pharmaceuticals & Staples (GSK/Haleon) and Infrastructure (Vinci/AENA). A holding was purchased in Alphabet in 2022 and increased significantly in early 2023 as concerns over the potential impact of OpenAI on Google's market position led to share price weakness. Alphabet's share price has recovered as product releases such as Gemini have demonstrated its advantages in AI as a first mover and with vertical integration (semiconductors, products, and distribution). Earnings have also been supported by a greater focus on cost efficiency. Despite its share price performance, we continue to see attractive returns in Alphabet, supported by a reasonable starting valuation (20x PE) and strong earnings growth prospects. In a similar vein, Universal Music Group (UMG) suffered price weakness as concerns grew that generative AI would impact industry revenue adversely as the shift to online streaming did in the early 2000s. We purchased a holding in May 2023 as we felt this risk was overstated. AI may increase the supply of music, but it is unlikely to change how it is distributed, with distribution dominated by a handful of digital service platforms who can ensure copyright is enforced. Music preferences are slow to change because of the human phenomenon of "ear worm" (the experience of a song or melody becoming stuck in the brain). This means that UMG in effect owns a royalty on the music industry, which is growing as streaming penetration continues to grow and we were able to purchase it an attractive price due to the opportunity created by AI uncertainty. The trust has been invested in Nintendo since 2016 and it has been a major holding since 2021. We have always believed that the fluctuations in earnings from the video gaming cycle have caused the market to undervalue its intellectual property, as it hides both the potential and the longevity of its earnings. The most important development for Nintendo in the year was the successful launch of its Mario movie, which earned over $1.3bn in the box office (as the second biggest animated film ever) and was watched by over 169m people. This showed more evidence of the company's ability to make money from its IP beyond video games. Nintendo has a market value of $64bn and net cash of $15bn, so its enterprise value is less than $50bn, which is significantly lower than the price Microsoft paid for Activision even though Nintendo makes almost 2x the operating profit of Activision at the time of acquisition. Capital cycles leading to improved profitability Approximately 30% of the Trust's capital is invested in sectors benefitting from a capital cycle that should lead to improved profitability. This includes Airlines (Easyjet/Ryanair), Aerospace (Rolls Royce) and Food Delivery (Delivery Hero/ Just Eat). The pandemic had a severe effect on the aerospace industry as it caused huge cash losses and supply chain problems. Boeing and Airbus made nearly 2,000 fewer planes during this time, which together with ageing fleets and now resurgent demand, have resulted in plane order books being full until the end of the decade. Supply chain challenges have been hard to overcome. Pratt and Whitney's troubles with the GTF engine and Boeing's production difficulties mean that no amount of money can resolve the capacity shortage that has emerged in recent years. We think this will likely increase the earnings power of our positions in low-cost carriers Ryanair and Easyjet as it implies that the outlook for yields is robust. Easyjet in particular, is trading at an attractive valuation as its market value is barely more than the total value of its £1bn of net cash and owned Airbus planes. We began investing in Rolls Royce at the beginning of 2024 because we think it is benefitting from similar dynamics. Engine makers have unmatched ability to increase prices because demand exceeds supply, meaning they do not need to compete for market share. Aftermarket pricing increased by more than 10% in 2023 and peer Safran has guided for future increases to be 3-4% ahead of inflation. As aftermarket spare parts typically have a gross margin of 60%, price increases have a geared impact on profitability, especially for Rolls Royce where the starting point is an 11% operating margin. The food delivery industry has seen valuations fall sharply as the cost of capital has risen. This is leading to market rationalisation and consolidation. Since fixed capital investments are low, capacity should adapt to market changes, and increase profitability. We still think that the service is in the beginning stages of adoption and so industry growth rates will improve. John Dodd and Kartik Kumar Fund Managers Artemis Fund Managers Limited 1 July 2024 Current positioning April 2024 - Key Sector Exposures 2024 2023 Sector Companies 13.3% 13.2% Housebuilding Redrow, Bellway, Berkeley, Springfield 13.2% 14.8% General Retail Frasers Group, Currys 12.5% 6.1% Financial Plus500, Hargreaves Services Lansdown, Singer Capital Markets 12.0% 12.8% Airlines easyJet, Ryanair 10.8% 7.7% Banking Lloyds, NatWest 9.5% 5.4% Aerospace & Reaction Engines, Rolls Defence Royce, Melrose Industries 8.7% 9.1% Video Games & Nintendo, Hornby Hobbies 8.6% 5.9% Technology & Alphabet, Universal Music, Media Auto Trader 6.5% 4.1% Pharmaceuticals GSK, Haleon & Staples 6.1% 6.8% Funeral Castelnau Services 5.5% 6.2% Food Delivery Delivery Hero, Just Eat Takeaway 4.6% 2.1% Infrastructure Vinci, AENA Source: Artemis ESG & Stewardship at Artemis Introduction Artemis believes stewardship activities contribute to improvement in company performance and to consequently higher returns for our clients. At Artemis, ESG analysis and integration is the responsibility of each individual fund management team. Whilst individual strategies are distinctive, views and ideas are shared across investment teams. The Stewardship team provides a dedicated resource to support and challenge our investment teams, on ESG integration, engagement, voting and related activities. As part of the Net Zero Asset Managers initiative, in November 2022, Artemis initially committed 80% of assets under management to be in-scope. Developed market equities and all equity and fixed income assets within funds designated SFDR Article 8 & 9 and those funds with a sustainability objective are included in our in-scope assets. Additionally, we have submitted our 2023 Stewardship Report to the Financial Reporting Council (FRC), our fourth submission under the new Stewardship Code. Our 2020, 2021 and 2022 reports received signatory status. We use a number of data service providers to support our stewardship activities and have developed internal tools to inform and guide our stewardship focus and continue to strengthen our controls and processes. Approach to stewardship Our Stewardship team is specifically dedicated to supporting our fund managers by providing insight, research and analysis, discussion, and challenge on ESG and stewardship matters including: · Identifying and incorporating a wider set of risks and opportunities into investment processes including ESG factors · Monitoring and escalating issues with companies and exercising shareholder rights at company meetings, and · Working collaboratively to develop and promote best practice internally and across the industry. Artemis Alpha stewardship approach The Company employs a long-term value investing strategy to pick stocks. The framework is based on valuing companies using fundamental analysis and sizing positions according to the attractiveness of share prices relative to our view of their value. The Company's strategy is underpinned by a core principle that the key driver of long-term value is achieving a high and sustainable return on capital employed. Investee companies that do not adhere to strong governance, look after their employees, or fail to recognise environmental and societal harm risk inhibiting their long-term potential. The investment process requires a focus on the ESG risks and opportunities present in each business and industry. Risk mitigation Our view is that ESG factors are most pertinent in their contribution when creating the risk of a permanent loss of capital, usually through obsolescence, excessive leverage, misjudged investment value, misallocations of capital, and regulation. This is evident in the portfolio where we are significantly underweight controversial sectors (as defined by ESG data providers), and therefore are less exposed to key ESG risks that may affect the prospects of these businesses. We actively monitor ESG risks and opportunities primarily through our fundamental and bottom-up driven research process for monitoring existing and evaluating prospective investments. We frequently engage with management teams on strategy, capital allocation, incentive alignment and communication. Engagement and voting The Fund Manager continues to engage with current and potential holdings, ensuring appropriate monitoring and due diligence for the portfolio. During the year, the Fund Manager conducted 119 (vs 220 last year) company meetings, 42 with existing and 77 with prospective investments. During the year we engaged with Ryanair and easyJet on actions being taken to meet transition plan targets. Areas of focus are on aircraft fleet renewal and other operational efficiencies, sustainable aviation fuel (SAF) capacity in the short to medium term (next 10 years), and the role of new technology in the longer term. This is a challenging sector to decarbonise which is also reliant on behaviour change and Government policy support to deliver the right incentives. We will continue to engage on both the short and longer-term transition strategies. Additionally, at the end of 2023, we conducted a thematic review of the largest UK listed banks including Lloyds Banking Group and NatWest Group, which included analysis of disclosure, and then direct engagement on their approaches to sustainability but with a specific focus on climate change risks and opportunities and how this could impact the investment case. The underlying investment thesis in this context is that financing the transition to a low -carbon economy will require large amounts of capital. Our analysis and engagement provided further insight on some of the detailed work banks are doing on climate related risks and opportunities, areas for further development and the challenges to delivering on their plans. We will continue to monitor overall disclosure on target setting, transition plans, and progress on those plans. Portfolio carbon emissions The portfolio's carbon emissions relative to its benchmark, the FTSE All-Share Index, have remained elevated since the onset of COVID-19 in early 2020. This is because our airline holdings are still recovering from depressed revenues that penalised their carbon intensity statistics based on emissions per revenue. Furthermore, expectations of a strong recovery in revenue have resulted in increases in their share prices, leading to an increased weighting in the portfolio of their temporarily inflated carbon intensity figures. We expect this measure to normalise somewhat as airline revenues fully recover in 2024. The chart below shows that the Company's carbon intensity excluding its airlines weighting is significantly better than that of the benchmark. Strategy and Business Review Culture, Purpose & Values The Directors drive the culture, purpose and values of Artemis Alpha Trust plc ("the Company") and by doing so seek to ensure that these three elements underpin the delivery of strategy. Culture The Company is an externally managed investment trust and as such its culture is created by the Board of Directors and the Investment Manager, Artemis Fund Managers Limited. Purpose Our purpose is to provide our shareholders, large or small, with a diversified and cost-effective investment opportunity to achieve long-term growth. Values The Company provides access to a portfolio of investments which the Board expects to be managed with integrity, transparency and accountability and with appropriate due diligence to environmental, social and governance matters. The constructive and openly discursive nature of the relationship between the Board and the Investment Manager helps ensure their respective values are aligned and focused on delivering the strategy for our shareholders. The core values that contribute to the Board culture include: · Integrity: the Board seeks to comply with all applicable laws and regulations, both to the letter and in spirit. · Accountability: the Board recognises the need to explain the Company's performance to investors and to highlight the risks in a clear and open manner. The Board has a key role to encourage and challenge the performance of its Investment Manager and its other service providers to help ensure the Company continues to provide shareholder value. · Respect & Transparency: the Board seeks to communicate clearly and openly with shareholders and service providers respecting individual opinions and expectations. Contact by shareholders via the Chairman's email address is welcomed. · Environmental, Social and Governance ("ESG") issues: We are stewards of our shareholders' capital; both the Board and Investment Manager recognise that this comes with responsibilities. ESG considerations are integrated within the investment process. An overview of the Investment Manager's culture, values and stewardship activities can be found on the website at www.artemisfunds.com. Corporate strategy & policy The Company is incorporated in England as a public company limited by shares. Its business as an investment trust is to buy and sell investments with the aim of achieving the investment objective and in accordance with the policy set out in the Annual Report. Gearing The Company uses gearing (i.e. borrowing) as part of its investment strategy. The Company's Articles of Association limit borrowing to 50 per cent of the Company's net assets. However, the investment policy limits this to 25 per cent of net assets. Subject to compliance with this restriction, the level of borrowing is a matter for the Board, whilst the utilisation of borrowings is delegated to the Investment Manager. This utilisation may be subject to specific guidelines established by the Board from time to time. The current guidelines permit the Investment Manager to employ borrowings of up to 20 per cent of net assets. The Company had no borrowing facility as at 30 April 2024 or the prior year. The use of gearing by the Investment Manager will vary from time to time, reflecting its views on the potential returns from stock markets. The Company's gearing is reviewed by the Board and Investment Manager on an ongoing basis. At the year end, net gearing was created through the use of contracts for difference and stood at 13.1 per cent (13.4 per cent as at 30 April 2023). Leverage Leverage is defined in the Alternative Investment Fund Manager Directive ("AIFMD") as any method by which the Company can increase its exposure by borrowing cash or securities, or from leverage that is embedded in derivative positions. The Company has an agreement with Northern Trust to utilise contracts for difference as a form of leverage. A result of 100 per cent indicates that no leverage has been used. The Company is permitted by its Articles to borrow up to 50 per cent; however the Company's investment policy restricts this to 25 per cent. The Company is permitted to have additional leverage of up to 100 per cent of its net assets, which results in permitted total leverage of 225 per cent under both ratios. Artemis as the Alternative Investment Fund Manager ("AIFM"), monitors leverage limits on a daily basis and reviews them annually. No changes have been made to these limits during the year. At 30 April 2024, the Company's leverage was 124.8 per cent (134.2 per cent as at 30 April 2023) as determined using the gross method and 115.1 per cent (115.7 per cent as at 30 April 2023) under the commitment method (refer to the Glossary in the Annual Report). The Investment Manager requires prior Board approval to: · enter into any stock lending agreements; · borrow money against the security of the Company's · investments; or · create any charges over any of the Company's investments. Operating environment The Company operates as an investment trust company and is an investment company within the meaning of section 833 of the Companies Act 2006 (the "Act"). The Company has been approved as an investment trust in accordance with the requirements of section 1158 of the Corporation Taxes Act 2010 which remains subject to the Company continuing to meet the eligibility conditions and ongoing requirements of the regulations. The Board will manage the Company so as to continue to meet these conditions. The Company has no employees and delegates most of its operational functions to service providers. Current & future developments A summary of the Company's developments during the year ended 30 April 2024, together with its prospects for the future, is set out in the Chairman's Statement and the Investment Manager's Review. The Board's principal focus is the delivery of positive long-term returns for shareholders and this will be dependent on the success of the investment strategy. The investment strategy, and factors that may have an influence on it, such as economic and stock market conditions, are discussed regularly by the Board and the Investment Manager. The Board regularly considers the ongoing development and strategic direction of the Company, including its promotion and the effectiveness of communication with shareholders. Key Performance Indicators ("KPIs") The performance of the Company is reviewed regularly by the Board and it uses a number of KPIs to assess the Company's success in meeting its objective. The KPIs which have been established for this purpose and remain unchanged from the prior year are Discrete annual total returns Year ended 30 April Net asset value* Share price* FTSE All-Share Index 2019 (8.6)% (8.9)% 2.6% 2020 (11.3)% (12.5)% (16.7)% 2021 56.0% 80.8% 26.0% 2022 (21.9)% (24.8)% 8.7% 2023 1.3% (1.2)% 6.0% 2024 15.1% 12.3% 7.5% Source: Artemis/Datastream * Alternative Performance Measure Dividends per ordinary share Year Ordinary Special Total pence Ordinary Total ended 30 per ordinary increase increase/ April (decrease) share 2019 5.00p 0.50p 5.50p 5.3% (13.4)% 2020 5.20p - 5.20p 4.0% (5.5)% 2021 5.30p - 5.30p 1.9% 1.9% 2022 5.60p - 5.60p 5.7% 5.7% 2023 6.20p - 6.20p 10.7% 10.7% 2024 6.80p - 6.80p 9.7% 9.7% Ongoing charges as a proportion of shareholders' funds As at 30 April Ongoing charges* 2019 0.93% 2020 0.95% 2021 0.93% 2022 1.01% 2023 1.08% 2024 1.06% * Alternative Performance Measure Discount management In addition to the above KPIs, the Board monitors the discount to the underlying net asset value at which the shares trade. The discount levels throughout the financial year are shown within the Financial Highlights. No specific discount target has been set, but the Board sets the share buyback policy and has given the Investment Manager discretion to exercise the Company's authority to buyback its own shares from time to time to address any imbalances between the supply and demand in the Company's shares or at times where it is believed this is the best use of available capital to increase NAV per share. This is reviewed regularly by the Board. The Board will also use its authority to issue new ordinary shares from time to time should there be excess demand for the Company's shares. The Company will also provide tender offers every three years. The first tender offer was due in 2021, for 25 per cent of the ordinary shares then in issue. However, following a shareholder vote, this did not take place. The next proposal for a tender offer will be in 2024 Principal risks and risk management As required by the 2018 UK Code of Corporate Governance, the Board has carried out a robust assessment of the principal and emerging risks facing the Company. Following consideration of the investment, regulatory and operational risks, the Board has concluded that there are no emerging risks facing the Company that require to be added to the principal risks. The Board, in conjunction with the Investment Manager, has developed a risk map which sets out the principal risks faced by the Company and the controls established to mitigate these risks. This is an ongoing process and the risk map, including any emerging risks, is formally reviewed every six months. The Board has given particular attention to those risks that might threaten the long -term viability of the Company. Further information on the Company's internal controls is set out in the corporate governance section. As an investment company the main risks relate to the nature of the individual investments and the investment activities generally; these include market price risk, foreign currency risk, interest rate risk, credit risk and liquidity risk. A summary of the key areas of risk, their movement during the year and their mitigation is set out below: Movement Principal Mitigation/control risk Increased Strategic The investment objective and policy of the Company is risk set by the Board and is subject to ongoing review and monitoring in conjunction with the Investment Investment Manager. Views expressed by the Company's objective shareholders are also taken into account. and policy are not The Investment Manager reviews the absolute level of appropriate discount and relative discount against the sector. in the The Company is authorised to buy back its own shares current and an agreed buy back policy has been established by market and the Board and communicated to shareholders. not favoured by The Company operates a triennial liquidity event for investors. shareholders. The tender offers may be made every three years, with the next event due in 2024, subject The share to the level of the discount prevailing at that time price as well as shareholder approval. performance lags net The Board regularly reviews the Company's overall asset value strategy, its net assets and ongoing running costs. performance Going concern and viability assessments are resulting in considered at each period end. widening discount. The Company's net assets decline to a level where it becomes uneconomic to continue. No change Investment The Board considers that this risk is justified by risk the longer-term nature of the investment objective and the Company's closed-ended structure, and that The such investments should be a source of positive Company's returns for shareholders. Risks are diversified investments through having a range of investments in the are selected portfolio covering various sectors. The Board on their discusses the investment portfolio and performance individual with the Investment Manager at each Board meeting, merits and and at each month end between Board meetings, and the part of this discussion includes a detailed review of performance the Company's unquoted investments, their valuations of the and future prospects together with their portfolio portfolio is weighting. not likely to track the The Board receives management information concerning wider UK the geographical sector split of the portfolio. market (FTSE All-Share All borrowing arrangements entered into require the Index). prior approval of the Board and gearing levels, Whilst the provided by the use of contracts for difference, are focus is on regularly discussed and reviewed by the Board and large cap Investment Manager. companies the Company also invests in small cap (listed), AIM traded and unquoted investments which can be subject to a higher degree of risk than that of larger quoted investments. From time to time, the Company may also have significant exposure to particular industry sectors. The Investment Manager's high conviction approach leads to a concentrated portfolio, typically containing between 25 and 60 stocks, carrying a higher degree of stock -specific risk than a more diversified portfolio. The Company is dependent upon the Investment Manager's ability to create an investment portfolio capable of generating attractive returns. Failure to do so may mean the Company becomes unattractive to investors. The Company's functional and reporting currency is Sterling. However, the investment objective and policy may result in a proportion of the Company's portfolio being invested in overseas equities denominated in currencies other than Sterling. As a result, movements in exchange rates may affect the Sterling value of these investments and their returns. The Company may borrow money for investment purposes or use derivatives to similarly increase exposure. If the investments fall in value, any borrowings/us e of derivatives will magnify the extent of the losses. No change Legal and The Investment Manager provides investment, company regulatory secretarial, administration and accounting services risk through the use of qualified professionals. A breach of The Board receives internal control reports from the s1158 Investment Manager confirming compliance with Corporation regulations. These reports also highlight any matter Tax Act 2010 that the Compliance team feel should be brought to could lead the Board's attention along with any items discussed to a loss of during internal audit review. investment trust status The Board meets each year with the Risk and and the Compliance team to discuss the areas of risk resultant appropriate to the Company and the control taxation of environment. realised capital gains. The principal laws and regulations the Company is required to comply with are the Companies Act 2006, the Alternative Investment Fund Managers' Directive, the Market Abuse Regulation, the UK Listing Rules and the Disclosure Guidance and Transparency Rules. A breach of the FCA listing rules could lead to suspension of the Company's shares. A breach of the Companies Act 2006 could lead to criminal proceedings and reputational and financial damage No change Operational Both the Investment Manager and the Administrator risk have established business continuity plans to facilitate continued operation in the event of a Disruption major service disruption or disaster. to, or failure of, All of the Investment Manager's and Administrator's the staff can work from home with no impact to operations Investment Manager's The Investment Manager has a breadth of expertise and/or any across the fund management team with appropriate other third succession plans in place. Regular engagement is had -party with the Board to allow consideration of any change service and discussion on continued support of the Investment providers' Manager as necessary. systems which could result in an inability to report accurately and monitor the Company's financial position. The Investment Manager loses the portfolio manager or other key staff. No change Cyber risk The Company benefits from the cyber security precautions in place at the Investment Manager and Failure or also those in place at the third party suppliers such disruption as the registrar and depositary. of the Investment The Board receives regular updates from the Manager's Investment Manager and its service providers which and/ or any describe the protective measures taken to enhance other third security -party service providers' systems as a result of a cyber -attack, data theft, service disruption, etc. Whilst the risk of a direct financial loss by the Company is low, the risk of reputational damage and the risk of loss of control of sensitive information is more significant No change Climate The Investment Manager takes such risks into account, change along with the downside risk to any company (whether in the form of its business prospects or market Globally, valuation or sustainability of dividends) that is climate perceived to be making a detrimental contribution to change climate change. The Company invests in a broad effects are portfolio of businesses with operations spread already geographically, which should limit the impact of emerging in location- specific weather events the form of changing weather patterns. Extreme weather events could potentially impair the operations of individual investee companies, potential investee companies, their supply chains and their customers. Increased Geopolitical The Board discusses such risks as they arise and risk continues to monitor the impact on the Company and its investments through discussion with the There Investment Manager as and when required. remains a risk to The Company does have one holding in an area market operating in a conflict, Plus 500 (Israel), however, stability the Investment Manager is comfortable that there are from geo contingencies and robust systems in place to cope -political with such a period. conflicts, such as the The Board is provided with information from the Middle East, Investment Manager on the measures it takes to assess Russia and the potential impact of geopolitical events, both on Ukraine. itself and other service providers, and any action taken. Increased Inflationary The Board and its Investment Manager have regular risk discussions to assess the likely impact of inflation rates on the economy, corporate profitability and Central Bank asset prices. decisions, the war in Ukraine or any other economic or political factors or global events, may result in increasing levels of inflation directly affecting economic growth and the underlying investment values. Further information on risks and the management of them are set out in the notes to the financial statements Long-term Viability Viability statement In accordance with the Association of Investment Companies (the "AIC") Code of Corporate Governance, the Board has considered the longer-term prospects for the Company beyond the twelve months required by the going concern basis of accounting. The period assessed is for five years to 30 April 2029. The Board has concluded that this period is appropriate, carefully taking into account the inherent risk with equities and the long-term investor outlook. As part of its assessment of the viability of the Company, the Board has discussed and considered each of the principal risks, including matters relating to geopolitical events and inflationary pressures and their impact on the Company. Although the damage to the economy through the total impact of inflation and the geopolitical effect of Russia/Ukraine and ongoing conflict in the Middle East cannot be known with certainty, the Board has considered these risks and does not believe they affect the long-term viability of the Company and its portfolio. The Investment Manager carried out stress testing scenarios in connection with a longer-lasting damage to the economy, of the withdrawal of liquidity by the financial authorities and of a significant and sustained fall in markets. The Board has also considered the liquidity of the Company's portfolio to ensure that it will be able to meet its liabilities, as they fall due. The results demonstrated the impact on the Company's NAV throughout the five year period and on its expenses and liabilities. The Board have concluded, given the realisable nature of the majority of the investments, the level of ongoing expenses and the availability of gearing that the Company will continue to be in a position to cover its liabilities. The Board also made the below assumptions when considering the viability of the Company: · Investors will continue to wish to have exposure to UK listed companies · There will be continued demand for investment trusts · Regulation will not increase to such an extent as to hinder operational efficiency The Directors do not expect there to be any significant change in the current principal risks and the associated mitigating controls. The Directors also do not envisage any change in strategy or objectives that would prevent the Company from continuing to operate over the five-year period. The Company's assets are liquid, its commitments limited, and it intends to continue as an investment trust. The tender offers in 2024 and 2027 of up to 25% of the share capital have been considered by the Board when assessing the continuing viability of the Company. Taking into account the results of the above review, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period to 30 April 2029. Life of the Company The Company operates a triennial liquidity event for shareholders. The tender offers may be made every three years, with the next event due in 2024, subject to shareholder approval. Each tender offer will be for up to 25 per cent of the ordinary shares then in issue (excluding Treasury Shares), save that the Board may, at its sole discretion, decide not to proceed with the tender offer if the ordinary shares are trading at a premium to the estimated tender price. The tender price will be the prevailing NAV (cum-income) per ordinary share (or, if the Board elects to use a tender realisation pool, the net proceeds of realising the assets in that pool) less the tender offer costs and less a discount of 3 per cent. Share capital Shareholders authorised the Company to buyback up to 14.99 per cent of the shares in issue at the 2023 AGM. During the year, the Company bought back 21,756 ordinary shares. As at 30 April 2024, 4,547,322 ordinary shares are held in treasury. A resolution to renew the Company's buyback authority will be put to shareholders at the AGM on 17 October 2024. No ordinary shares were issued during the year. Duty to Promote the Success of the Company How the Directors discharge their duties under s172 of the Companies Act Under section 172 of the Companies Act 2006, the Directors have a duty to act in a way they consider, in good faith, would be likely to promote the success of the Company for the benefit of its shareholders as a whole, and in doing so have regard to: a) the likely consequences of any decision in the long term; b) the interests of the Company's employees; c) the need to foster the Company's business relationships with suppliers, customers and others; d) the impact of the Company's operations on the community and the environment; e) the desirability of the Company maintaining a reputation for high standards of business conduct; and f) the need to act fairly as between members of the Company. As an externally managed investment trust, the Company has no employees or physical assets, our stakeholders include our shareholders and service providers, such as the Investment Manager. The below tables describe the impact of engagement with our stakeholders that has taken place during the year: Engagement with key stakeholders Stakeholders Engagement Impact Shareholders and potential The Board is responsible for Through the investors promoting the long-term publication sustainable success and of the Annual strategic direction of the Report and Company for the benefit of the the Half Company's shareholders. Whilst -Yearly certain responsibilities are Report, delegated, Directors' monthly responsibilities are set out in factsheets the schedule of matters reserved and Fund for the Board and the terms of Manager reference of its committees, updates to which are reviewed regularly by the Company's the Board. website, shareholders are kept informed of Company performance and portfolio activities. Shareholders are encouraged to raise questions and communicate with the Chairman and the Fund Manager. To help the Board in its aim to act fairly as between the Company's members, it welcomes communications with all shareholders and encourages attendance at the AGM. The Annual and Half-Yearly reports are issued to shareholders and are available on the Investment Manager's website together with other relevant information including monthly factsheets. The Board receives regular feedback on shareholder meetings from the Company's broker and any shareholder communications are reviewed and discussed by the Board to ensure that shareholder views are taken into consideration as part of any decisions taken by the Board. The Chairman is available to contact via email: alpha.chairman@artemisfunds.com. The Board considers communication with shareholders an important function and Directors are always available to respond to shareholder queries. For further information see `Relations with shareholders'. Artemis as Investment Manager The Board has set the parameters During the within which the Investment year, the · Fund management Manager operates and these are performance · Company secretarial set out in the Investment of the · Financial reporting Management Agreement and agreed Company rose · Sales & marketing by the Board. significantly · Compliance and internal versus its control functions The Board receives regular benchmark. · Internal audit updates from the Investment Buybacks were · Investment administration Manager and other service limited (outsourced to Northern Trust) providers and ensures that during the information pertaining to its year as stakeholders is provided, as adverse required, as part of the market information presented in regular conditions Board meetings. During the year, and sentiment additional monthly performance resulted in updates were held between the wider Board and Investment Manager to discounts discuss the continuing impact of across the geopolitical, inflationary and investment market movements events on the trust sector. Company and its portfolio. The It was felt Board, with the support of its that Management Engagement Committee, additional regularly reviews the buybacks may performance of the Investment have limited Manager and other service impact on providers to ensure that material NAV services provided to the Company accretion are managed efficiently and with the effectively for the benefit of potential the Company's shareholders. risk of reducing The Board has reviewed and liquidity in discussed plans for the future the market marketing and development of the for the Company with the Investment Company's Manager during the year. shares, which marginally increased on the prior year. Further detail can be found within the Chairman's Statement and Investment Manager's Review. The Fund Manager worked on a number of initiatives to raise the profile of the Company and generate interest with new investors; taking part in various shareholder in-person events and webinars during the year. Other third-party service As an investment company, all The providers services are outsourced to third performance -party service providers. The of the third · Northern Trust as Board considers the Depositary, -party Depositary and Custodian the Custodian, the Broker, the service · Singer Capital Markets as Registrar and Auditor to be key providers is Broker stakeholders. continually · Link Group as Registrar monitored · Johnston Carmichael LLP The Board relies on the throughout as Auditor Investment Manager to work the year. alongside these key stakeholders Assurance is to meet the requirements of the sought Company. The Management through Engagement Committee reviews the regular due performance of these service diligence to providers, along with their fee ensure high levels, and provides standards of recommendations to the Board as governance required. are in place. Cost The Investment Manager has effectiveness constant interaction with the is also service providers and provides tracked feedback to and from the Board through as required. regular benchmarking. Annual assurance reports are As and when received to assist the review of appropriate, the internal control third-party environments of the Depositary providers and Custodian. present to the Board. Reporting from the Company's broker, auditor and Company Following Secretary alerts the Board to formal review proposed changes in regulations by the and market practice. This helps Management the Board plan and manage risks Engagement as well as complying with Committee and relevant regulations. Board at the year end, it was concluded that the service providers were operating effectively and provided a good level of service. Investee companies The Board sets the investment The objective and discusses stock engagement of selection, asset allocation, and the Fund the ESG qualities of investee Manager with companies with the Fund Manager the investee at each Board meeting. companies aids The Fund Manager often engages awareness and with the investee companies, understanding prior to investment and on an on of the ESG -going basis. environment in operation The Fund Manager has as well as discretionary powers to exercise the valuation the Company's voting rights on and prospects resolutions proposed by the of their investee companies within the businesses. Company's portfolio. During the The Fund Manager has a dedicated year, the Stewardship Team which supports Fund Manager the Fund Manager in the voted at investment process. shareholder meetings The Association of Investment The Company is a member of the The Board Companies ("AIC") AIC which is an organisation chooses to that represents the interests of report under investment trusts, VCTs and the AIC Code other closed-end funds. of Corporate Governance. This Code better reflects the nature of an investment trust in the context of good corporate governance. Board discussions and decisions The following are the key discussions and decisions made by the Board during the year ended 30 April 2024: Topic Background & Decision discussion Share buyback policy The level of The Board weighs up the effectiveness of buybacks and the buyback policy in helping to their effect maintain/reduce the discount to NAV on the against its impact on the Company and discount is the liquidity in its shares. In light of discussed at the intended tender offer in 2024, the each Board Board decided to continue its current meeting. strategy and continue to monitor the level of discount in line with discount The Board and liquidity requirements. discussed the current strategy in relation to buybacks and the proposed tender offer. Triennial Tender Offer The Board The Company broker was approached to discussed discuss actions required. the proposed tender offer Discussions on this are on-going. for 2024, which was in line with its objective to provide such a mechanism every three years. Discussions were held to plan any steps required to complete this corporate action such as potential costs of third parties, timetable and the movement in the share price discount during the year. Gearing The Board The Board decided that this policy discussed continues to provide gearing at a the current reduced cost compared to a conventional policy of bank loan. providing gearing through Contracts for Difference. Internal audit The Audit The Audit Committee and Board continue Committee to believe that the Company should regularly continue to place reliance on the discusses internal audit function performed by the the Investment Manager. possibility of the Company having its own internal audit function. Board structure and The Board The Board acknowledged that it had not Director succession continued to been compliant with the gender diversity discuss the guidelines during the year, reiterating structure of its commitment to return to a position the Board of compliance as part of its succession and plan. succession of Directors taking into account the number of years served, the mix of skills required to perform the role and the diversity requirements of the new legislation. Administrator, The The Board concluded that it was Custodian, Depositary, Management satisfied that the services were being Banker Engagement provided in accordance with the agreed Committee KPIs. and the Board discussed each of the new service providers to the Company to ensure service level agreement KPIs were being met. The Board's primary focus is to promote the long-term success of the Company for the benefit of the Company's shareholders. In doing so, the Board has regard to the impact of its actions on other stakeholders as described above. Directors & Diversity The Directors of the Company and their biographical details are set out in the Annual Report. No Director has a contract of service with the Company. The Board supports the recommendations of the Hampton-Alexander Review on gender diversity and the Parker Review on ethnic representation on Boards. The Board recognises the principles of diversity in the boardroom and acknowledges the benefits of having greater diversity, including gender, social and ethnic backgrounds, and cognitive and personal strengths. When setting a new appointment brief, the Nomination Committee considers diversity alongside seeking to ensure that the overall balance of skills and knowledge that the Board has remains appropriate, so that it can continue to operate effectively. The Board's Director selection policy will, first and foremost, seek to identify the person best qualified to become a Director of the Company, based on merit and objective criteria. The Board is currently comprised of four male Directors and one female Director. The FCA announced a new policy statement on diversity and inclusion on company boards in April 2022. Companies are required to comply with the targets or explain the reasons for non-compliance. Outlined below is an overview of the targets and the Company's compliance as at 30 April 2024 in accordance with Listing Rule 9.8.6R(9): · 40% of the Board is represented by women: As at 30 April 2024, and during the year, 20% of the individuals on the Board were women and therefore, the Company does not meet this diversity target and a further explanation is given in the Annual Report. · One woman in a senior position: as at 30 April 2024 one woman was in a senior position. In the absence of Executive roles, the Company considers the role of Senior Independent Director, to qualify as a senior position. Mrs Stewart held the role of Senior Independent Director from 28 June 2023. · One individual from a minority ethnic background: as at 30 April 2024, no individuals on the Board are from a minority ethnic background. The Company does not therefore meet this diversity target. The following tables set out the data on the diversity of the Directors on the Company's Board in accordance with Listing Rule 9.8.6R(10) as at 30 April 2024. This data has been collected through consultation with the Board. Subsequent to the record date of 30 April 2024, Mrs Stewart became the Senior Independent Director. Number of Percentage Number of senior Number in Percentage of Board of the positions on the executive executive members Board Board management2 management2 Men 4 80% 11 N/A N/A Women 1 20% 1 N/A N/A Not N/A N/A N/A N/A N/A specified/ prefer not to say 1 Mr Duncan Budge is the Chairman of the Board, a senior position as defined by the Listing Rules and Mrs Victoria Stewart is the Senior Independent Director. 2 Not applicable as the Company does not have an executive management team. Number of Percentage Number of senior Number in Percentage of of the positions on the executive executive Board Board Board management1 management1 members White 5 100% 2 N/A N/A British or other White Mixed/Mult 0 0% 0 N/A N/A iple ethnic groups Asian/Asia 0 0% 0 N/A N/A n British Black/Afri 0 0% 0 N/A N/A can/Carib bean/Black British Other 0 0% 0 N/A N/A ethnic group, including Arab Not N/ N/A N/A N/A N/A specified/ A prefer not to say 1 Not applicable as the Company does not have an executive management team. Modern Slavery Act 2015 The Company does not fall within the scope of the Modern Slavery Act 2015 as its turnover is less than £36m. Therefore, no slavery and human trafficking statement is included in the Annual Report. Sustainability and Environmental, social and governance (`ESG') matters The Board recognises that the most material way in which the Company can have an impact on ESG is through responsible ownership of its investments. The Board has appointed Artemis as Investment Manager, who engages actively with investee companies undertaking extensive evaluation and engagement on a variety of matters such as strategy, performance, risk, dividend policy, governance and remuneration. All risks and opportunities are considered as part of the investment process in the context of enhancing the long-term value of shareholders' investments. This will include matters relating to material environmental, human rights and social considerations that will ultimately impact the profitability of a company or its stock market rating and hence these matters are an integral part of Artemis' thinking as investors. The ESG and stewardship engagement of Artemis is detailed in the Annual Report. Financial Statements The financial statements of the Company are included in the Annual Report. For and on behalf of the Board Duncan Budge Chairman 1 July 2024 Statement of Directors' Responsibilities in respect of the Annual Report Management report Listed companies are required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rules (the "Rules") to include a management report in their annual financial statements. The information required to be in the management report for the purpose of the Rules is included in the Strategic Report. Therefore no separate management report has been included. Statement of Directors' responsibilities The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they are required to prepare the financial statements in accordance with UK-adopted international accounting standards. 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 Company and of their profit or loss for that period. In preparing each of the 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 UK-adopted international accounting standards; and · prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the 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 Company and to prevent and detect fraud and other irregularities. Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that comply with that law and those regulations. The financial statements are published on a website, artemisalphatrust.co.uk, maintained by the Company's Investment Manager, Artemis. Responsibility for the maintenance and integrity of the corporate and financial information relating to the Company on this website has been delegated to the Investment Manager by the Directors. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Directors' confirmations Each of the Directors confirm that, to the best of their knowledge: · the financial statements, prepared in accordance with the applicable set of UK-adopted international accounting standards, give a true and fair view of the assets, liabilities and financial position of the Company as at 30 April 2024, and of the profit or loss of the Company for the year then ended; · the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces; and · the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy. In the case of each Director in office at the date the Directors' Report is approved: · in so far as the Director is aware, there is no relevant audit information of which the Company's Auditor is unaware; and · they have taken all steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information. For and on behalf of the Board Duncan Budge Chairman 1 July 2024 Financial Statements Statement of Comprehensive Income For the year ended 30 April 2024 Year Year ended ended 30 30 April April 2024 2023 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Investment 3,617 - 3,617 3,052 - 3,052 income Total revenue 3,617 - 3,617 3,052 - 3,052 Gains/(losses) - 13,261 13,261 - (4,609) (4,609) on investments Net gains on - 3,511 3,511 - 4,134 4,134 derivatives Currency - (65) (65) - 140 140 (losses)/gains Total income 3,617 16,707 20,324 3,052 (335) 2,717 Expenses Investment (155) (619) (774) (154) (615) (769) management fee Other expenses (502) (4) (506) (456) (8) (464) Profit/(loss) 2,960 16,084 19,044 2,442 (958) 1,484 before finance costs and tax Finance costs (247) (986) (1,233) (115) (461) (576) Profit/(loss) 2,713 15,098 17,811 2,327 (1,419) 908 before tax Tax (131) - (131) (101) - (101) Profit and 2,582 15,098 17,680 2,226 (1,419) 807 total comprehensive income/(expense) for the year Earnings per 7.89p 54.05p 6.74p (4.30p) 2.44p ordinary share 46.15p 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. Statement of Financial Position As at 30 April 2024 2024 2023 £'000 £'000 Non-current assets Investments 132,752 109,979 Investments in subsidiary undertaking 4,548 4,264 137,300 114,243 Current assets Derivative assets 6 2,187 Other receivables 1,590 2,208 Cash and cash equivalents 1,685 7,653 Total assets 140,581 126,291 Current liabilities Derivative liabilities (227) Collateral pledged (280) (1,930) Other payables (4,745) (4,438) Total liabilities (5,252) (6,474) Net assets 135,329 119,817 Equity attributable to equity holders Share capital 373 Share premium 676 676 Special reserve 18,709 18,779 Capital redemption reserve 217 217 Retained earnings - revenue 3,921 3,437 Retained earnings - capital 111,433 96,335 Total equity 135,329 119,817 Net asset value per ordinary share 413.68p 366.02p These financial statements were approved by the Board of Directors and signed on its behalf on 1 July 2024. Duncan Budge Chairman Statement of Changes in Equity For the year ended 30 April 2024 Share Share Special Capital Retained capital premium reserve redemption earnings £'000 £'000 £'000 reserve £'000 Revenue Capital Total £'000 £'000 £'000 For the year ended 30 April 2024 At 1 May 2023 373 676 18,779 217 3,437 96,335 119,817 Total comprehensive income: Profit for - - - - 2,582 15,098 17,680 the year Transactions with owners recorded directly to equity: Repurchase of - - (70) - - - (70) ordinary shares into treasury Dividends - - - - (2,098) - (2,098) paid At 30 April 373 676 18,709 217 3,921 111,433 135,329 2024 For the year ended 30 April 2023 At 1 May 2022 373 676 21,964 217 3,117 97,754 124,101 Total comprehensive income: Profit/(loss) - - - - 2,226 (1,419) 807 for the year Transactions with owners recorded directly to equity: Repurchase of - - (3,185) - - - (3,185) ordinary shares into treasury Dividends - - - - (1,906) - (1,906) paid At 30 April 373 676 18,779 217 3,437 96,335 119,817 2023 For the year ended 30 April 2024 The notes in the Annual Report form part of these financial statements. Statement of Cash Flows For the year ended 30 April 2024 2024 2023 £'000 £'000 Operating activities Profit before tax 17,811 908 Interest payable 1,233 576 (Gains)/losses on investments (13,261) 4,609 Net gains on derivatives (3,511) (4,134) Currency losses/(gains) 65 (140) Increase in other receivables (255) (6) Increase/(decrease) in accrued 51 (12) expenses Net cash inflow from operating 2,133 1,801 activities before interest and tax Interest paid (1,233) (576) Irrecoverable overseas tax (138) (101) expense Net cash inflow from operating 762 1,124 activities Investing activities Purchase of investments (31,032) (24,601) Sale of investments 22,272 28,584 Sale of derivatives 5,586 583 Collateral pledged (1,650) 3,900 Net cash (outlow)/inflow from (4,824) 8,466 investing activities Financing activities Repurchase of ordinary shares (70) (3,251) into treasury Dividends paid (2,098) (1,906) Increase in intercompany loan 327 691 Net cash outflow from financing (1,841) (4,466) activities Net (decrease)/increase in net (5,904) 5,124 funds Net funds at the start of the 7,653 2,389 year Effect of foreign exchange rate (65) 140 changes Net funds at the end of the year 1,685 7,653 Cash and cash equivalents 1,685 7,653 Notes to the Financial Statements 1. Accounting policies The financial statements have been prepared on a going concern basis under the historical cost convention modified by the revaluation of financial assets and liabilities held at fair value through profit or loss, in accordance with UK -adopted international accounting standards ("IFRSs") which comprise standards and interpretations issued by the International Accounting Standards Board ("IASB"), as applied in accordance with the provisions of the Companies Act 2006. The principal accounting policies adopted by the Company are set out below. Where presentational guidance set out in the Statement of Recommended Practice ("SORP") for investment trusts and venture capital trusts issued by the Association of Investment Companies ("AIC") in July 2022 is consistent with the requirements of IFRS, the financial statements have been prepared in accordance with the SORP. The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended 30 April 2024 have been applied consistently, other than where new policies have been adopted. The financial statements are presented in Sterling, which is the currency of the primary environment in which the Company operates. All values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated. 2. Income Year ended Year ended 30 April 30 April 2024 2023 £'000 £'000 Investment income* UK dividend income 1,970 1,812 Overseas dividend income 797 662 2,767 2,474 Other income Bank interest 42 62 Derivative income 606 507 Liquidity fund income 202 9 850 578 Total income 3,617 3,052 * All investments are designated at fair value through profit or loss on initial recognition, therefore all investment income arises on investments at fair value through profit or loss. A number of UK quoted investments are domiciled in other countries for tax purposes. 3. Dividends paid and proposed Set out below are the total dividends recognised in respect of the financial year ended 30 April 2024. Year ended Year ended 30 April 30 April 2024 2023 £'000 £'000 2023 final dividend of 3.87p 1,267 1,140 per ordinary share (2022: 3.46p) 2024 interim dividend of 2.54p 831 766 per ordinary share (2023: 2.33p) 2,098 1,906 Dividends are recognised in the period in which they are due to be paid and are shown through the Statement of Changes in Equity. Therefore, the Statement of Changes in Equity for the year ended 30 April 2024 reflects the final dividend for the year ended 30 April 2023 which was paid on 29 September 2023. For the year ended 30 April 2024, a first interim dividend of 2.54p has been paid on 31 January 2024 and a final dividend of 4.26p has been proposed for payment on 25 October 2024. The final dividend is proposed for approval by the shareholders at the forthcoming AGM. Set out below are the total dividends paid/proposed in respect of the financial year ended 30 April 2024. Year ended Year ended 30 April 30 April 2023 2024 £'000 £'000 First interim dividend of 2.54p 831 766 per ordinary share (2023:2.33p) Final dividend of 4.26p per 1,394 1,267 ordinary share (2023: 3.87p) 2,225 2,033 4. Earnings/(loss) per share The revenue earnings per ordinary share is based on the revenue profit for the year of £2,582,000 (2023: £2,226,000) and on 32,713,342 (2023: 33,033,940) ordinary shares, being the weighted average number of ordinary shares, excluding Treasury Shares, in issue during the year. The capital gain per ordinary share is based on the capital gain for the year of £15,187,000 (2023: £1,419,000 capital loss) and on 32,713,342 (2023: 33,033,940) ordinary shares, being the weighted average number of ordinary shares, excluding Treasury Shares, in issue during the year. 5. Share capital (a) Share capital 2024 2024 2023 2023 Shares £'000 Shares £'000 Allotted, called up and fully paid: Ordinary shares of 1p 32,713,152 327 32,734,908 327 each Ordinary shares of 1p 4,547,322 46 4,525,566 46 each held in treasury 37,260,474 373 37,260,474 373 (b) Ordinary shares Shares £'000 Movements in ordinary shares during the year: Ordinary shares in issue on 1 May 2023 32,734,908 327 Repurchase of ordinary shares into treasury (21,756) - Ordinary shares in issue on 30 April 2024 32,713,152 327 The movements in ordinary shares held in treasury during the year are as follows: 2024 2024 2023 2023 Shares £'000 Shares £'000 Balance brought forward 4,525,566 46 3,505,800 35 Repurchases of ordinary shares 21,756 - 1,019,766 11 Balance carried forward 4,547,322 46 4,525,566 46 During the year ended 30 April 2024, the Company repurchased 21,756 shares into treasury (2023: 1,019,766). There were no subscription shares in issue at 30 April 2024 (2023: nil). 6. Net asset value per ordinary share The net asset value per share is based on the net assets of £135,329,000 (2023: £119,817,000) and on 32,713,152 (2023: 32,734,908) ordinary shares, being the number of ordinary shares in issue at the year end, excluding Treasury Shares. 7. Transactions with the Investment Manager and related parties The amounts paid to the Investment Manager and amounts outstanding at the year -end are disclosed in this Annual Report. 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. Fees payable during the year to the Directors and their interest in shares of the Company are considered to be related party transactions and are disclosed within the Directors Remuneration Report. All transactions with subsidiary undertakings were on an arm's length basis. During the year, transactions in securities between the Company and its subsidiary undertakings amounted to £nil (2023: £nil). The subsidiary did not pay a dividend to Artemis Alpha Trust plc during the year to 30 April 2024 (2023: £nil). Interest payable by Artemis Alpha Trust to Alpha Securities Trading in respect of the intercompany loan over the period is recognised based on Bank of England official Bank Rate. 8. Events after the reporting period As a consequence of company activities, the Company's investment in Rated People was written down by 40% from £500,000 at year end to £300,000. 9. Annual Report This Annual Report announcement does not constitute the Company's statutory accounts for the years ended 30 April 2024 and 30 April 2023 but is derived from those accounts. Statutory accounts for the year ended 30 April 2023 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 30 April 2024 and the year ended 30 April 2023 both received an audit report which was unqualified and did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not include statements under section 498 of the Companies Act 2006. The statutory accounts for the year ended 30 April 2024 have not yet been delivered to the Registrar of Companies and will be delivered following the Annual General Meeting. The audited Annual Report for the year ended 30 April 2024 will be available to shareholders shortly. Copies may be obtained from the Company's registered office at Cassini House, 57-59 St James's Street, London SW1A 1LD or at the website atartemisalphatrust.co.uk (http://www.artemisonline.co.uk/). A copy of the Annual Report will also be submitted to the FCA's National Storage Mechanism and will soon be available for inspection at: https://data.fca.org.uk/nsm/nationalstoragemechanism The Annual General Meeting of the Company will be held onThursday, 17 October 2024at 10:00a.m. For further information, please contact: Artemis Fund Managers Limited Company Secretary Telephone: 0131 225 7300 2 July 2024 This information was brought to you by Cision http://news.cision.com
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