Artemis Alpha Trust PLC

Interim / Quarterly Report • Dec 19, 2019

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RNS Number : 3975X

Artemis Alpha Trust PLC

19 December 2019

ARTEMIS ALPHA TRUST PLC (the "Company")

LEI: 549300MQXY2QXEIL3756

Half-Yearly Financial Report for the six months ended 31 October 2019

This announcement contains regulated information

Chairman's Statement

Performance

In the six months to 31 October 2019 the Company's net asset value per share and share price rose by 2.9% and 3.4% respectively on a total return basis. The FTSE All-Share Index rose by 0.4% over the same period.

Although the UK market continued to be unpredictable and volatile, with political uncertainties once again dominating sentiment, it ended the period at much the same level as it started. The portfolio remains biased toward UK-facing companies which represent about half the portfolio.

More detailed information on performance is set out in the Investment Manager's Review which follows.

Investments

The Investment Manager has continued to align the portfolio in line with the revised policy which was approved by shareholders in June last year. The number of investments continues to decrease as the portfolio becomes more focussed, as does the weighting of unquoted investments which has been reduced to 8.4%. Two holdings, in Reaction Engines and N+1 Singers, now account for most of this exposure. Both companies made good progress in the period under review.

The Board and Investment Manager remain committed to improving the liquidity of the portfolio. Progress has been made to this end with an increased weighting to mid- and large-cap companies which currently stands at nearly two thirds of the portfolio. This process is continuing with particular focus on some of the less liquid holdings in smaller companies.

More details on the portfolio and its performance are included in the Investment Manager's Review.

Earnings & dividends

Revenue earnings per share for the six months to 31 October 2019 were 2.74p (2018: 3.02p), a decrease of 9.3% owing to a decline in investment income combined with the change made to the expense and finance costs accounting policy, as detailed in the Half-Yearly Financial Report. The Board has today declared a first interim dividend of 2.10p per ordinary share (2018: 2.00p) which will be paid on 24 January 2020 to shareholders on the register as at 3 January 2020. This is an increase of 5.0% over the equivalent dividend last year. The Board targets an annual increase in the dividend in excess of the increase in the level of the Consumer Prices Index, which was 2.0% for the relevant period.

Discount and share buy backs

The discount has widened over the last six months and stood at 18.0% at 31 October. During this period, the Company bought back 1.2 million shares at a total cost of £3.4 million and an average discount of 20%.

Since the period end there have been no further buy backs and the discount today has narrowed to 15.8%.

The Company will continue to consider buying back shares when this is necessary to address imbalances between supply and demand.

Gearing

No gearing was employed during the six month period. In November the existing borrowing facility with the Royal Bank of Scotland was not renewed.

The Board approved the replacement of this facility by an agreement with JP Morgan to make use of "contracts for difference". These will be used only to achieve gearing when this is deemed appropriate. These instruments offer a cost saving when compared with a traditional loan facility but achieve a similar result. Further information on this is contained within the Investment Manager's Review.

Outlook

As stated in the 2019 Annual Report, we remain focused on delivering improved returns to shareholders. Although it is still early days, some progress has been made in this direction, as set out in the Manager's Review.

Until recently the possibility of a full US/China trade war and of a 'hard' Brexit or a hung Parliament were unsettling investors.  However, the commanding Conservative majority in the recent election and some progress on trade talks have offered at least the prospect of resolutions. As a result, we would expect markets to return to focusing more on corporate fundamentals, presenting our Manager with an opportunity.   

Duncan Budge

Chairman

18 December 2019

Investment Manager's Review

·      Net asset value rises by 2.9% vs 0.4% for the All-Share.

·      Portfolio increasingly liquid and focused.

·      We expect further volatility - and opportunity.

Overview 

Over the period financial markets have been more volatile than normal with sharp declines in May and August followed by strong rallies. Investors have fluctuated between being concerned about political uncertainty and weakening economies on the one hand, and on the other, being reassured by continued low interest rates and by reasonably steady corporate earnings. 

The Company's NAV per share increased by 2.9% against a 0.4% rise in the FTSE All-Share. The performance was aided by our decision to increase our investments in UK-centric companies during market weakness in May and August. The largest contributors to overall performance were Plus500 (+1.6%) which rose 53%, low cost airlines (+1.1%) as Ryanair and easyJet have recovered strongly from earlier falls, and IWG (+0.8%) which appreciated by 13%. The main detractors were Dignity (-1.0%) which fell 20% following its half year results, Hornby (-0.8%) which fell 22% on no significant news, and Fitbit (-0.6%) after weak Q3 results.

Review

Activity

Our activity increased as we observed significant changes in share prices which were far in excess of our assessment of changes in underlying values. For example, the price of easyJet fell and rose by more than 25% twice over just six months. Our largest additions were to low cost airlines (3.7%) and to other Brexit-sensitive companies such as Barclays (1.5%), Redrow (1.4%) and Capital and Counties (0.9%). We sold Inmarsat (2.5%) following a third-party bid, and reduced existing positions in MJ Gleeson (1.6%), Vectura (1.5%) and Liontrust (1.3%).

The shape of the portfolio has continued to develop as we envisaged. Our portfolio is increasingly liquid and focused. We have found opportunities primarily in mid/large cap equities which now represent 65.7% of the portfolio. We have continued to reduce the number of holdings, selling out of eight positions in the period and initiating two new positions. We have 48 holdings and the weighting of our top 15 holdings has risen from 58% to 64%.

As a consequence of the portfolio's improved liquidity, we have taken the opportunity to replace our banking facility with RBS with an agreement to use contracts for difference with JP Morgan. In practice, little will change as our overall approach and limits to gearing are unchanged. However, the means of implementation are more cost-efficient as borrowing costs are effectively zero when unutilised and approximately 25% lower when utilised (in contrast to the fees charged by banks). We are increasingly minded to employ a modest level of gearing in the company if opportunities arise in liquid and stable companies. This is a result of the declining risk profile of the portfolio and the availability of low cost borrowing.

We invested 2.4% of NAV in acquiring 1.2m of our own shares at an average price of 278p, a 23.0% discount to period end NAV. We did not think the Company's price discount reflected the significant changes made or potential value we see within the portfolio. Overall we made more investments than sales, with the result that our cash position fell from 3.7% to 0.6%.

We first invested in Ryanair and easyJet in December 2018 and subsequently increased our investment in May and August 2019. This sector is now our largest exposure at 8.4% of NAV, following share price rises. Our original premise was that both businesses are able to achieve high returns on capital in a growing industry owing to company-specific competitive advantages: Ryanair's low cost base and easyJet's slot-constrained network. In our view, these returns were being obscured by temporary industry headwinds which resulted in low valuations.

Investors have found confidence recently in evidence that the capital cycle is working in the favour of dominant incumbents. The bankruptcy of Thomas Cook followed the demise of Monarch, Air Berlin, Aigle Azur and XL Airways. We expect more casualties if oil prices rise. Surviving companies with strong balance sheets such as easyJet and Ryanair should prosper over the long term as indicated by the following quotation from Ryanair's CEO, Michael O'Leary:

"Fares in Europe are terrible which is great for our business… more airlines will disappear… You can never have enough competition - anything that's good for the consumer - it is a bit like, as Buffett says, you wait until the tide goes out and you see who is wearing speedos and who is naked, we've got long-johns on at Ryanair."

We increased our position in Just Eat materially on share price weakness in May and October, having started a position in October 2018. Combined with our position in Delivery Hero, our investments in food delivery platforms account for 7.2% of NAV, our third largest sector weighting. Our positive view on the sector is based on the existence of strong network effects and the potential for the industry to be larger and more disruptive over the long term than is widely thought. This point was well articulated by the CEO of Naspers (prior to their cash bid for Just Eat): 

"The notion that people gather a bunch of ingredients from a shop and put things together three times a day, 30 times a month - that's not the way things are going to work anymore"… "And we believe that we're seeing online food at a really early stage, I think similar to where Amazon was in the early 2000s when it was mainly focussed on books and media".

The move by Naspers to bid for Just Eat followed an all-share offer from Takeaway.com. We think a variety of outcomes remain possible (including a failure to conclude any deal); but think the episode underlines strategic value in the sector.

Dignity's share price fell as the death-rate was unexpectedly low in the first half and the company suspended its dividend. Operating metrics continue to progress in line with our expectations. We think the company has long-term potential that stems from its unique market positions and acyclical exposures to a growing end-market. We increased our holding as the share price fell. 

Developments

Plus500 recovered following half-year results which, in line with results from peers, indicated that customers are adapting well to regulatory changes. The company announced a $50m buyback, and its entire management made material share purchases. Given its strong balance sheet and low-cost operations, we think the company remains well placed to navigate and benefit from changes in the industry. From a portfolio perspective, we find it attractive that the company's earnings are positively correlated with volatility and provide a 9% yield. We had doubled our position earlier in the year when investors' confidence was low and the company's share price was depressed.

Sports Direct announced full year results in July which drew significant media attention as the company delayed its results, struggled to appoint a new auditor and disclosed a potential tax dispute. Behind the noise, the company's operating results were encouraging with EBITDA (a crude proxy for operating cash flow) excluding House of Fraser (HoF) up 11% and losses in HoF reducing over the last six months. In a tough retail environment, the company's resilient performance supports our view that it operates one of the few scale and low cost retail platforms in the UK, alongside the likes of Next and Primark. We believe misperceptions about the business and its corporate governance have created a compelling opportunity. Shortly after the period end, the company announced half year results which were well received by the market. The Belgian tax issue has largely been resolved with no material impact and the company has guided for growth in profits due to the continued success of its elevation strategy.

IWG continues to demonstrate strong momentum. Following the end of the period, the company announced a re-franchising of its business in Switzerland, following transactions in Taiwan and Japan earlier in the year. These three businesses accounted for 5.1% of group sales and will have brought in disposal proceeds of £437m, representing 14% of the company's market cap. We are increasingly confident that re-franchising will accelerate the growth of the company's network. Simultaneously, the strengthening of the company's balance sheet from franchise sales is coming at a time when WeWork and other industry participants are struggling. This should provide opportunities from consolidation and we have been encouraged to see IWG make small acquisitions of distressed businesses in recent months.

Hornby and Hurricane Energy were two examples of companies suffering from share price declines (22% and 9% respectively) when we consider fundamentals to be improving. Hurricane's share price is below where it was trading before it had announced its first oil discovery. In the last six months, it has had one positive and one negative well test result, but, importantly, operational results from its producing wells have been encouraging. Hornby has gone through a painful process to rebuild its foundations for sustainable growth. New product launches have been well received by customers, and we expect momentum to continue in the second half of 2019.

Elsewhere in the portfolio, we note company performance is better than we expected from GlaxoSmithKline, Facebook and Nintendo. This improvement has been rewarded with strong share price performance. Progress has been less pleasing in Dixons Carphone, iGas and Fitbit. Google bid for Fitbit shortly after we sold the holding. The strategic value of the company's data was one of the reasons we were attracted to the investment, but we became cautious on its independent future after its strategy to lower prices failed to generate sales. Miton Group received an all-share offer from Premier Asset Management, which will conclude shortly after the period end.

Reaction Engines and N+1 Singers, which account for the majority of our unquoted equity exposure, made good progress in the period. Reaction Engines successfully tested its pre-cooler technology at a speed of Mach 5 which should support future commercialisation. N+1 continues to produce consistent operating results in a tough environment for UK broking.

Weaker results from smaller holdings meant that the unquoted portfolio as a whole subtracted 0.4% from performance. The period was a quiet one for realisations and we expect greater activity over the next 6-12 months. Our total exposure is 8.4% of NAV and is no longer a strain on capital or resource. 

Outlook

Uncertainty over Brexit has impacted the UK stockmarket since 2016. This has created negative sentiment and in our view, compelling value in fundamentally strong businesses. Our positioning remains biased towards the UK with 50% of the portfolio on an underlying basis being exposed to domestic companies.

December's General Election appears to have led to a resolution in uncertainty. Although the actual terms of Brexit have yet to be agreed, a major concern for investors has been much reduced, if not removed, and we expect investors to resume concentrating on companies, rather than on political matters.

The flexibility of the portfolio continues to improve with increased underlying liquidity and optionality to employ gearing. This means we are well prepared to adapt to changing market conditions. We aim to remain patient, unemotional and, most importantly, opportunistic.

John Dodd, Kartik Kumar

Fund Managers

Artemis Fund Managers Limited

18 December 2019

Condensed income statement

	Six months ended 31 October 2019 (unaudited)			Six months ended 31 October 2018 (unaudited)			Year ended 30 April 2019 (audited)
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment income	1,501	-	1,501	1,566	-	1,566	3,347	-	3,347
Other income	12	-	12	12	-	12	-	-	-
Total revenue	1,513	-	1,513	1,578	-	1,578	3,347	-	3,347
Gains/(losses) on investments	-	2,251	2,251	-	(15,184)	(15,184)	-	(15,072)	(15,072)
Currency gains/ (losses)	-	2	2	-	15	15	-	(41)	(41)
Total income/(loss)	1,513	2,253	3,766	1,578	(15,169)	(13,591)	3,347	(15,113)	(11,766)
Expenses
Investment management fee	(86)	(343)	(429)	(52)	(469)	(521)	(95)	(854)	(949)
Other expenses	(240)	(2)	(242)	(227)	(88)	(315)	(451)	(101)	(552)
Profit/(loss) before finance costs and tax	1,187	1,908	3,095	1,299	(15,726)	(14,427)	2,801	(16,068)	(13,267)
Finance costs	-	(1)	(1)	(17)	(150)	(167)	(28)	(253)	(281)
Profit/(loss) before tax	1,187	1,907	3,094	1,282	(15,876)	(14,594)	2,773	(16,321)	(13,548)
Tax	(74)	-	(74)	(46)	-	(46)	(132)	-	(132)
Profit/ (loss) and total comprehensive income/(expense) for the period	1,113	1,907	3,020	1,236	(15,876)	(14,640)	2,641	(16,321)	(13,680)
Earnings/(loss) for the period	2.74p	4.71p	7.45p	3.02p	(38.74)p	(35.72)p	6.44p	(39.83)p	(33.39)p

The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with International Financial Reporting Standards. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations.

All income is attributable to the equity shareholders of Artemis Alpha Trust plc. There are no minority interests.

Condensed statement of financial position

		31 October 2019 (unaudited) £'000	31 October 2018 (unaudited) £'000	30 April 2019 (audited) £'000
Non-current assets
Investments		141,518	141,482	139,179
Investment in subsidiary undertaking		3,111	3,368	3,193
		144,629	144,850	142,372
Current assets
Other receivables		597	376	908
Cash and cash equivalents		892	6,252	4,556
		1,489	6,628	5,464
Total assets		146,118	151,478	147,836
Current liabilities
Other payables		(2,685)	(1,351)	(2,570)
Bank loan		-	(5,000)	-
		(2,685)	(6,351)	(2,570)
Net assets		143,433	145,127	145,266
Equity attributable to equity holders
Share capital		405	410	410
Share premium		676	676	676
Special reserve		46,698	50,134	50,133
Capital redemption reserve		185	180	180
Retained earnings - revenue		2,498	2,218	2,803
Retained earnings - capital		92,971	91,509	91,064
Total equity		143,433	145,127	145,266
Net asset value per ordinary share		360.86p	354.13p	354.47p

Condensed statement of changes in equity

	Six months ended 31 October 2019 (unaudited)
	Share capital £'000	Share premium £'000	Special reserve £'000	Capital redemption reserve £'000	Retained earnings		Total £'000
Revenue £'000	Capital £'000
At 1 May 2019	410	676	50,133	180	2,803	91,064	145,266
Total comprehensive income:
Profit for the period	-	-	-	-	1,113	1,907	3,020
Transactions with owners recorded directly to equity:
Repurchase of shares for cancellation	(5)	-	(1,290)	5	-	-	(1,290)
Repurchase of ordinary shares into treasury	-	-	(2,145)	-	-	-	(2,145)
Dividends paid	-	-	-	-	(1,418)	-	(1,418)
At 31 October 2019	405	676	46,698	185	2,498	92,971	143,433

	Six months ended 31 October 2018 (unaudited)
	Share capital £'000	Share premium £'000	Special reserve £'000	Capital redemption reserve £'000	Retained earnings		Total £'000
Revenue £'000	Capital £'000
At 1 May 2018	480	676	50,202	110	2,867	107,385	161,720
Total comprehensive income/(expense):
Profit/(loss) for the period	-	-	-	-	1,236	(15,876)	(14,640)
Transactions with owners recorded directly to equity:
Cancellation of ordinary shares from treasury	(1)	-	-	1	-	-	-
Conversion of subscription shares to deferred shares	(69)	-	-	69	-	-	-
Repurchase of deferred shares	-	-	(68)	-	-	-	(68)
Dividends paid	-	-	-	-	(1,885)	-	(1,885)
At 31 October 2018	410	676	50,134	180	2,218	91,509	145,127

	Year ended 30 April 2019 (audited)
	Share capital £'000	Share premium £'000	Special reserve £'000	Capital redemption reserve £'000			Retained earnings			Total £'000
Revenue £'000		Capital £'000
At 1 May 2018	480	676	50,202	110			2,867		107,385	161,720
Total comprehensive income/(expense):
Profit/(loss) for the year	-	-	-	-			2,641		(16,321)	(13,680)
Transactions with owners recorded directly to equity:
Cancellation of ordinary shares from treasury	(1)	-	-		1		-		-	-
Conversion of subscription shares to deferred shares	(69)	-	-		69		-		-	-
Repurchase of deferred shares	-	-	(69)		-		-		-	(69)
Dividends paid	-	-	-		-		(2,705)		-	(2,705)
At 30 April 2019	410	676	50,133			180		2,803	91,064	145,266

Condensed statement of cash flows

	Six months ended 31 October 2019 (unaudited) £'000		Six months ended 31 October 2018 (unaudited) £'000	Year ended 30 April 2019 (audited) £'000
Operating activities
Profit/(loss) before tax	3,094		(14,594)	(13,548)
Interest payable	1		167	281
(Gains)/losses on investments	(2,251)		15,184	15,072
Currency (gains)/losses	(2)		(15)	41
Decrease/(increase) in other receivables	147		199	(2)
(Decrease)/increase in other payables	(33)		20	(13)
Net cash inflow from operating activities before interest and tax		956	961	1,831
Interest paid		(1)	(167)	(281)
Irrecoverable overseas tax suffered		(74)	(46)	(132)
Net cash inflow from operating activities		881	748	1,418
Investing activities
Purchase of investments		(18,957)	(25,788)	(49,775)
Sales of investments		19,170	38,105	64,347
Net cash inflow from investing activities		213	12,317	14,572
Financing activities
Repurchase of ordinary shares into treasury		(2,145)	-	-
Repurchase of shares for cancellation		(1,290)	-	-
Repurchase of deferred shares		-	(69)	(69)
Dividends paid		(1,418)	(1,885)	(2,705)
Increase in inter-company loan		93	-	1,255
Net cash outflow from financing activities		(4,760)	(1,954)	(1,519)
Net (increase)/decrease in net debt		(3,666)	11,111	14,471
Net debt at the start of the period		4,556	(9,874)	(9,874)
Effect of foreign exchange rate changes		2	15	(41)
Net funds at the end of the period		892	1,252	4,556
Bank loan		-	(5,000)	-
Cash and cash equivalents		892	6,252	4,556
		892	1,252	4,556

Notes to the half-yearly financial report

1.       Accounting policies

The Half-Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', the provisions of the Companies Act 2006 and with the guidance set out in the Statement of Recommended Practice for Investment Trust Companies and Venture Capital Trusts ("SORP") issued by the Association of Investment Companies in November 2014 and updated in February 2018.

The 'Expenses and finance costs' accounting policy was updated from 1 May 2019, following Board discussion, to allocate investment management fees, performance fees and finance costs on the basis of 20% to revenue and 80% to capital (previously 10% revenue;90% capital).

All other accounting policies remain the same as disclosed in the Annual Financial Statements for the year ended 30 April 2019.

2.       Earnings/(loss) per ordinary share

	Six months ended 31 October 2019	Six months ended 31 October 2018		Year ended 30 April 2019
Earnings/(loss) per ordinary share is based on:
Revenue earnings (£'000)	1,113	1,236	2,641
Capital earnings/(loss) (£'000)	1,907	(15,876)	(16,321)
Total earnings/(loss) (£'000)	3,020	(14,640)	(13,680)
Weighted average number of ordinary shares in issue during the period	40,529,556	40,980,974	40,980,974

3.       Net asset value per ordinary share

	As at 31 October 2019	As at 31 October 2018	As at 30 April 2019
Net asset value per ordinary share is based on:
Net assets (£'000)	143,433	145,127	145,266
Number of shares in issue at the end  of the period	39,747,474	40,980,974	40,980,974

During the period the Company repurchased 1,233,500 shares into treasury and immediately cancelled 462,500 shares from treasury (six months ended 31 October 2018 and year ended 30 April 2019: cancelled 152,500 shares from treasury). There were no subscription shares in issue at 31 October 2019 (six months ended 31 October 2018 and year ended 30 April 2019: 6,853,639 subscription shares were converted into deferred shares, repurchased for par value and immediately cancelled during the period).

4.       Dividends

	Six months ended 31 October 2019 £'000	Six months ended 31 October 2018 £'000	Year ended 30 April 2019 £'000
Second interim dividend for the year ended	-	1,229	1,229
30 April 2018 - 3.00p
First interim dividend for the year ended	-	-	820
30 April 2019 - 2.00p
Second interim dividend for the year ended	1,215	-	-
30 April 2019 - 3.00p
Special dividend for the year ended
30 April 2019 - 0.50p  (2018: 1.60p)	203	656	656
	1,418	1,885	2,705

A first interim dividend for the year ending 30 April 2020 of 2.10p per ordinary share has been declared. This will be paid on 24 January 2020 to those shareholders on the register at close of business on 3 January 2020.

5.       Analysis of retained earnings - capital

	As at 31 October 2019 £'000	As at 31 October 2018 £'000	As at 30 April 2019 £'000
Retained earnings - capital (realised)	102,275	100,191	98,978
Retained earnings - capital (unrealised)	(9,304)	(8,682)	(7,914)
	92,971	91,509	91,064

6.       Comparative information

The financial information for the six months ended 31 October 2019 and 31 October 2018 has not been audited and does not constitute statutory financial statements as defined in Section 234 of the Companies Act 2006.

The information for the year ended 30 April 2019 has been extracted from the Audited Financial Statements for the year ended 30 April 2019. These financial statements contained an unqualified auditor's report and have been lodged with the Registrar of Companies and did not contain a statement required under Section 498 of the Companies Act 2006.

7.       Principal risks and uncertainties

Pursuant to DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, the principal risks faced by the Company include general market price risk, liquidity risk, regulatory, and financial risks.

These risks, which have not materially changed since the Annual Financial Report for the year ended 30 April 2019, and the way in which they are managed, are described in more detail in the Annual Financial Report for the year ended 30 April 2019 which is available on the website artemisalphatrust.co.uk.

8.       Related party transactions

The amounts paid to the Investment Manager are disclosed in the Condensed income statement. However, the existence of an independent Board of Directors demonstrates that the Company is free to pursue its own financial and operating policies and therefore, under IAS 24: Related Party Disclosures, the Investment Manager is not considered to be a related party.

9.       Valuation of investments

IFRS 7 'Financial Instruments: Disclosures' requires an entity to provide an analysis of investments held at fair value through profit and loss using a fair value hierarchy that reflects the significance of the inputs used in making the measurements of fair value. The hierarchy used to analyse the fair values of financial assets is set out below.

Level 1 - investments with quoted prices in an active market;

Level 2 - investments whose fair value is based directly on observable current market prices or is indirectly derived from market prices; and

Level 3 - investments whose fair value is determined using a valuation technique based on assumptions that are not supported by observable current market prices or are not based on observable market data.

The investments held at the balance sheet date fell into the categories, Level 1, Level 2 and Level 3. The values in these categories are summarised as part of this note. Any investments that are delisted or suspended from a listed stock exchange are transferred from Level 1 to Level 3.

	As at 31 October 2019 £'000	As at 31 October 2018 £'000	As at 30 April 2019 £'000
UK quoted investments (Level 1)
- UK listed	87,249	63,075	75,757
- AIM quoted	23,240	40,297	27,602
Overseas quoted investments (Level 1)	18,814	21,136	23,152
Forward foreign exchange contracts (Level 2)	173	-	-
Warrants (Level 2)	-	45	35
Unquoted investments (Level 3)
- Equities and warrants	11,276	15,819	11,867
- Fixed interest	200	200	200
- Preference shares	566	910	566
	141,518	141,482	139,179

The valuation of the Level 3 investments would not be significantly different had reasonably possible alternative valuation bases been applied.

Details of the movements in Level 3 assets during the six months ended 31 October 2019 are set out in the table below.	£'000
Level 3 investments
Opening book cost	28,600
Opening fair value adjustment	(15,967)
Opening valuation	12,633
Movements in the period:
Purchases at cost	-
Sales - proceeds	(1)
- realised losses on sales	(246)
Decrease in fair value adjustment	(344)
Closing valuation	12,042
Closing book cost	28,353
Closing fair value adjustment	(16,311)
	12,042

Responsibility Statement of the Directors in respect of the Half-Yearly Financial Report

The Directors confirm that to the best of their knowledge, in respect of the Half-Yearly Financial Report for the six months ended 31 October 2019:

·  the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' issued by the International Accounting Standards Board as adopted by the EU;

·  having considered the expected cash flows and operational costs of the Company for the 18 months from the period end, the Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the going concern basis of accounting continues to be used in the preparation of the Half-Yearly Financial Report;

·  the interim management report includes a fair review of the information required by:

(a)      Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months; and a description of the principal risks and uncertainties for the remaining six months of the year); and

(b)      Disclosure Guidance and Transparency Rule 4.2.8R (related party transactions).

The Half-Yearly Financial Report for the six months ended 31 October 2019 was approved by the Board and the above responsibility statement was signed on its behalf by:

Duncan Budge

Chairman

18 December 2019

Copies of the Half-Yearly Financial Report for the six months ended 31 October 2019 will be sent to shareholders shortly and will be available from the registered office at Cassini House, 57 St James's Street, London SW1A 1LD as well as on the website, artemisalphatrust.co.uk.

Artemis Fund Managers Limited

Company Secretary

For further information, please contact:

Artemis Fund Managers Limited

Telephone: 0131 225 7300

19 December 2019

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