Artemis UK Future Leaders Plc - Annual Financial Report and Notice of Annual General Meeting
LEI: 549300K1D1P23R8U4U50
Annual Financial Report for the Year Ended
The following text is extracted from the Annual Financial Report of the Company for the year ended
Investment Objective
The Company is an investment trust whose investment objective is to achieve long-term total returns for shareholders primarily by investment in a broad cross-section of small to medium sized
Financial Highlights
Total Return Statistics (with dividends reinvested)
Change for the year (%) 2025 2024 Net asset value(1)(2) –2.4 –4.1 Share price(1)(2) –8.0 –1.8 Benchmark Index(2)(3) +7.8 –3.3
Capital Statistics
At 31 January 2025 2024 Change
Total shareholders’ funds (£’000) 136,644 161,395 (15.3)%
Net asset value (NAV) per share 449.88p 477.12p (5.7)%
Share price(1)(2) 375.00p 424.00p (11.6)%
Discount(1) (16.6)% (11.1)%
Gearing(1):
– gross gearing 9.0% 5.4%
– net gearing 7.2% 5.4%
Maximum authorised gearing 14.6% 9.3%
For the year ended 31 January 2025 2024
Return(1)and dividend per ordinary share:
Revenue return 13.02p 13.18p
Capital return (20.54)p (34.91)p
Total return (7.52)p (21.73)p
First interim dividend 3.85p 3.85p
Second interim dividend 3.85p 3.85p
Third interim dividend 3.85p 3.85p
Final dividend 3.45p 5.41p
Total dividends 15.00p 16.96p (11.6)%
Dividend Yield(1)(4) 4.0% 4.0%
Dividend payable for the year (£’000)(4):
– from current year net revenue 4,254 4,459
– from capital reserve 437 1,278
4,691 5,737
Capital dividend as a % of year end net assets(1)(4) 0.3% 0.8%
Capital returns paid in the year:
– Special dividend 484.85p —
Capital returns payable for the year (£’000):
– Special dividend 16,401 —
Ongoing charges(1) 1.03% 1.01%
Notes:
(1) Alternative Performance Measure (APM). See Glossary of Terms and Alternative Performance Measures on pages 65 to 68 of the financial report for details of the explanation and reconciliations of APMs.
(2) Source: LSEG Data & Analytics.
(3) The Benchmark Index of the Company is the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index with dividends reinvested.
(4)
Excludes the one-off elective special dividend (return of capital) of 484.85p paid to shareholders on 8
Chairman’s Statement
Dear Shareholders,
The last year, and particularly the last six months, have not been good for
The encouraging outperformance as reported in the last half-year statement did not continue throughout the remainder of the Company’s year and it has instead fallen behind the benchmark.
During the year, the Board was active in challenging the investment manager about performance. However, in the summer, it reached the conclusion that your Company could benefit from a change of management team.
In the autumn, the Board interviewed a selection of investment managers with an objective to find one who had demonstrated an ability to manage a portfolio of investments in
Looking back
Invesco performance
The NAV total return for the portfolio over the year was –2.4%, which is an underperformance of 10.2 percentage points when compared with the benchmark index, Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index which returned +7.8% on the same basis.
The manager, Invesco, highlights the reasons for this underperformance in its report.
Return of capital by way of elective special dividend
During the year, the Company had begun to trade on a discount of over 10% and therefore, on
Dividends and Dividend Policy
The Company’s regular dividend policy is to target a dividend yield of 4% of the year-end share price, paid from income earned within the portfolio and enhanced, as necessary, through the use of realised capital profits. In accordance with this policy, the Company has declared and paid three interim dividends of 3.85p which are in line with the amounts paid in 2023.
The Board has resolved that the Company will propose a final dividend payable in
Shareholders who hold shares on the main register and are residents of the
Looking forward
The Board is enthusiastic, based on current and past performance, to let shareholders know that their Company is being managed by a top-quality investment team at Artemis, who took over the portfolio on
Artemis’s performance record
Mark, William and their team currently manage a
First-class communications with shareholders and an ability to find new investors
The Board was impressed by the ability and enthusiasm of the whole team at Artemis and in particular felt that shareholders would benefit from their ability to communicate with all investors, be they institutional, wealth managers or private individuals. Over the last year, the
The investment managers and the Artemis team as a whole have committed to invest a significant amount of their own money into your Company.
A reduction in the investment management fee
As part of the negotiations with Artemis, the investment management fee has been reduced from 0.75% of gross assets (before expenses) to 0.65% per annum on the first £50 million of the net assets (after expenses) of the Company. The balance above £50 million will be charged at a reduced rate of 0.55% per annum. Shareholders will therefore receive a reduced rate applied to a lower asset value (net assets). Artemis has also agreed to a nine-month fee holiday which will end on 10
The main service providers to the Company have moved from
How your Company is being managed
For details on the change of strategy and how your Company is being managed, please see the Portfolio Managers’ Report.
Artemis expect that the transition of the current investment portfolio to their own portfolio is likely to be completed in the first half of the year. They would like to introduce some modest gearing because they believe that the
The Company has historically made use of traditional forms of bank debt to achieve gearing, however, currently there is no gearing in place due to conditions in the lending market making funding more difficult and expensive to obtain. The Board believes that the best method for gearing the company is to use Contracts for Difference (CFDs), often referred to as Equity Swaps. The cost of using CFDs to increase investment exposure is currently lower than the cost of traditional borrowing, and approximately 0.45% less than the previous facility.
Annual General Meeting
The next AGM will be held in the offices of Artemis at 12.00 noon on Thursday 5 June. The Portfolio Managers will make a short formal presentation before a question and answer session. The presentation will be made available on the website after the meeting for those who can’t attend.
The Board is proposing a modification to the Company’s investment policy to enable the Manager to achieve gearing as described in the section above. A resolution to allow for increased derivatives use for the specific purpose of investment in CFDs for gearing, not shorting, will be included in the Notice of the Annual General Meeting on pages 59 to 62. The Board recommend the proposed change and believe this should be non controversial.
Outlook
The transition of your portfolio under the management of Artemis is well underway. The recent short-term volatility we have seen, because of global trade tensions, has provided the Portfolio Managers with a number of opportunities during this time. Further details on the Artemis investment outlook for
Mark and William have previously pointed out that
On the subject of tariffs, they note that
I would like to thank you for your investment in the Company throughout this difficult period of performance and I hope to be able to provide a much more positive report to you at the end of this year.
Chairman
Portfolio Managers’ Report
Q What were the key influences on the market over the period?
A
It was a positive year for
The change in leadership in the US caused further uncertainty for markets, with the incoming Trump administration signalling its intention to impose import tariffs on a range of countries and goods.
Q How did the portfolio perform over the period?
A The NAV total return for the portfolio over the period was –2.4%, an underperformance of 10.2 percentage points when compared with its benchmark, the Deutsche
Numis Smaller Companies (excluding Investment Trusts) including AIM index, which returned +7.8% on the same basis.
Q Which stocks contributed to and detracted from performance?
A Financial administration business JTC (+25%) continued its impressive long-term record of organic growth. This was augmented with a number of acquisitions, notably in the US, where management sees a significant growth opportunity. Investment platform AJ Bell (+46%) benefitted from stronger stock markets, which boosted its fee income, and recovered as fears about the impact of new Consumer Duty regulations receded.
Defence company
The biggest detractor from performance in the period was veterinarian CVS (–41%). The shares fell following the commencement of a Competition and Markets Authority investigation into the sector triggered by rising vet bills.
Focusrite (–62%) is a music-technology business which experienced softer trading following a spike in demand during the pandemic. More recently, this has been exacerbated by destocking among its retail customers.
Film and TV equipment maker
Videndum
(–69%) had a tough year due to the impact of the
Portfolio Managers until
Introducing your new portfolio managers
Mark has managed Artemis‘ ‘UK smaller companies‘ strategy since joining the firm in 2007. He started his investment career in 1985 and has worked at firms including Invesco Perpetual and Standard Life.
William works alongside Mark in managing Artemis’ ‘UK smaller companies’ strategy. Prior to joining Artemis in 2015, William worked at Liberum and Citigroup where he analysed small and mid-cap companies.
Having taken over on the 10 March we are currently in the process of repositioning the portfolio so it more closely reflects our investment strategy. It would be unwise to give details on individual stocks until we have finished building up and selling down our positions, but we expect to update you in due course.
Our Approach
The aim of your Company remains to invest in smaller companies quoted on the
1. Capture this small-cap premium;
2. Add further outperformance from picking stocks that beat the small-cap benchmark index (we have beaten this by 2% to 3% per annum over the ten years we have been working together); and
3. Reduce the level of risk in the portfolio.
We hope to achieve the third aim – reduce the level of risk – by constructing a portfolio of companies with diverse end markets. We also look to avoid highly indebted companies and prefer those with market-leading positions and attractive valuations.
A key tenet of our approach is our valuation discipline. It is easy to get carried away with a great growth story in this area of the stock market, which can lead to investors paying ever higher prices. In turn, this can result in elevated investor expectations that all too frequently prove impossible for the Company to live up to. Having a strong valuation discipline helps to protect investors from this risk.
Another area of focus will be on company cash generation. It is relatively easy for company management to target profits to impress investors. It is far more difficult to alter the amount of cash they have in the bank. By focussing on cashflow, we seek to reduce the risk of falling prey to financial engineering or accounting scams. More often, cashflow can be an important ‘early warning’ of tougher trading – management teams will often seek to protect earnings ahead of cashflow.
Finally, we intend to retain the long-term investment horizon of the Company. This is a sector that – as it is currently – can remain out of favour for a considerable period of time. But performance, when it comes, can be substantial and rapid. This requires investor patience to maximise the full value of the small-cap premium.
Outlook
Investor sentiment has taken a hit following increases to corporate taxes announced in the Budget. The fear now is stagflation: no economic growth and higher inflation as companies try to recoup additional national insurance costs by raising prices. However, we are optimistic. Why? There are three main reasons.
•
• Businesses – Corporate balance sheets are strong. Now the interest rate cycle has turned, companies have the capacity to invest and the ability to withstand a tough backdrop.
•
Politics
– Stability is important. The
What’s been missing? Confidence: consumer confidence, business confidence and investor confidence. But confidence can change quickly. Given the low starting point, we don’t need a ‘good’ outlook, we just need one that is ‘less bad’ than feared. As confidence recovers, we expect increased consumer spending, a rebound in business investment and asset managers to start allocating money back to
With regards to the recent developments around tariffs it is impossible to be prescriptive as to the impact. For context, the fund derives the majority of its revenues from the
Portfolio Managers from
Principal Risks and Uncertainties
The Directors confirm that they have carried out a robust assessment of the emerging and principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity. Most of these risks are market related and are similar to those of other investment trusts investing primarily in listed markets. The Audit Committee reviews the Company’s risk control summary at each meeting, and as part of this process, gives consideration to identify emerging risks. Emerging risks, such as evolving cyber threat, geo-political tension and climate related risks, have been considered during the year as part of the Directors’ assessment.
Principal Risk Description Mitigating Procedures and Controls Market (Economic) Risk Factors such as fluctuations in stock The Directors have assessed the market markets, interest rates and exchange impact of the ongoing uncertainty from rates are not under the control of the the unfavourable developments globally Board or the Portfolio Managers, but through regular discussions with the may give rise to high levels of Portfolio Managers and the Corporate volatility in the share prices of Broker. The Company’s current portfolio investee companies, as well as consists of companies listed on the main affecting the Company’s own share priceUK equity market and those listed on and the discount to its NAV. The risk AIM. To a limited extent, futures can be could be triggered by unfavourable used to mitigate against market developments globally and/or in one or (economic) risk, as can the judicious more regions, contemporary examples holding of cash or other very liquid being the market uncertainty in assets. Futures are not currently being relation to the wider political used. developments inUkraine , theMiddle East and the worldwide tariffs implemented by theUSA . The Portfolio Managers seek to mitigate risk through holding an economically diversified portfolio without concentrated macroeconomic bets.UK Smaller Companies in aggregate earn approximately 60% of their revenues from the domesticUK economy so the portfolio will be sensitive to both theUK macro economic outlook and sentiment towards theUK . Artemis’ preference is to invest in companies with strong balance sheets and strong cash generation which should be relatively better positioned to withstand economic shocks. We like companies with market leading positions which tend to be better able to pass through price increases to mitigate cost inflation. The portfolio is constructed without reference to the benchmark. The weighting that a stock is given is a Investment Risk function of anticipated share price upside, the level of conviction and the The Company invests in small and riskiness of an investment. A single medium-sized companies traded on the holding will typically not exceed 5% ofLondon Stock Exchange or on AIM. By the portfolio. The factor profile of the their nature, these are generally portfolio is also principally driven by considered riskier than their larger bottom-up stock picking although our counterparts and their share prices can investment risk team generates factor be more volatile, with lower liquidity. analysis for the investment team to In addition, as smaller companies may review on a regular basis. not generally have the financial strength, diversity and resources of Sustainability analysis is a core part larger companies, they may find it more of our stock analysis in both assessing difficult to overcome periods of the opportunities and risks facing economic slowdown or recession. companies over the medium to long term. We identify key ESG metrics for each company and track the disclosure and trend of these. Disclosures by companies in the investment universe can often be poor, so this is an area we engage on. The Portfolio Managers remain cognisant at all times of the potential liquidity of the portfolio. There can be no guarantee that the Company’s strategy and business model will be successful in achieving its investment objective. The Board monitors the performance of the Company, giving due consideration to how the Manager has incorporated ESG considerations including climate change into their investment process. Further details can be found on pages 19 to 21. The Board also has guidelines in place to ensure that the Managers adhere to the approved investment policy. The continuation of the Manager’s mandate is reviewed annually. The Board reviews regularly the Company’s investment objective and strategy to ensure that it remains relevant, as well as reviewing the Shareholders’ Risk composition of the shareholder register, peer group performance on both a share The value of an investment in the price and NAV basis, and the Company’s Company may go down as well as up and share price discount to NAV per share. an investor may not get back the amount The Board and the Manager maintain an invested. active dialogue with the aim of ensuring that the market rating of the Company’s shares reflects the underlying NAV; both share buy back and issuance facilities are in place to help the management of this process. Reliance on the Investment Manager and other Third-Party Service Providers The Company has no employees and the Board comprises non-executive directors only. The Company is therefore reliant upon the performance of third-party service providers for its executive Third-party service providers are function and service provisions. The subject to ongoing monitoring by the Company’s operational structure means Manager and the Board. that all cyber risk (information and physical security) arises at its During the year, the performance of all third-party service providers, third-party providers was reviewed including fraud, sabotage or crime through formal and informal meetings. against the Company. The Company’s operational capability relies upon the The Audit Committee reviews regularly ability of its third-party service the performance and internal controls of providers to continue working the Manager and all third-party throughout the disruption caused by a providers through audited service major event such as the Covid-19 organisation control reports, together pandemic. Failure by any service with updates on information security, provider to carry out its obligations the results of which are reported to the to the Company in accordance with the Board. terms of its appointment could have a materially detrimental impact on the The Manager’s business continuity plans operation of the Company and could were reviewed on an ongoing basis during affect the ability of the Company to the year and the Directors were successfully pursue its investment satisfied that robust plans and policy. The Company’s main service infrastructure were in place to minimise providers, of which the Manager is the the impact on its operations so that the principal provider, are listed on page Company can continue to trade, meet 64. regulatory obligations, report and meet shareholder requirements. The Board The Manager may be exposed to received regular update reports from the reputational risks. In particular, the Manager and the other third-party Manager may be exposed to the risk that service providers on business continuity litigation, misconduct, operational processes and had been provided with failures, negative publicity and press assurance from them all insofar as speculation, whether or not it is possible that measures are in place for valid, will harm its reputation. Damage them to continue to provide contracted to the reputation of the Manager could services to the Company during the year. potentially result in counterparties and third parties being unwilling to deal with the Manager and by extension the Company, which carries the Manager’s name. This could have an adverse impact on the ability of the Company to pursue its investment policy successfully. Regulatory Risk The Company is subject to various laws The Manager reviews the level of and regulations by virtue of its status compliance with tax and other financial as an investment trust, its listing on regulatory requirements on a regular theLondon Stock Exchange and being an basis. The Board regularly considers allAlternative Investment Fund under the risks, the measures in place to controlUK AIFMD regime. A loss of investment them and the possibility of any other trust status could lead to the Company risks that could arise. During the year, being subject to corporation tax on the the Manager’s Compliance and Internal chargeable capital gains arising on the Audit team produced annual reports for sale of its investments. Other control review by the Company’s Audit Committee. failures, either by the Manager or any Further details of risks and risk other of the Company’s service management policies as they relate to providers, could result in operational the financial assets and liabilities of or reputational problems, erroneous the Company are detailed in note 16 of disclosures or loss of assets through this Annual Financial Report. fraud, as well as breaches of regulations.
Viability Statement
In accordance with provision 31 of the
The main risks to the Company’s continuation are: insufficient liquidity to meet liabilities as they fall due; poor investment performance over an extended period; shareholder dissatisfaction through failure to meet the Company’s investment objective; or the investment policy not being appropriate in prevailing market conditions. Accordingly, failure to meet the Company’s investment objective, and contributory market and investment risks are deemed by the Board to be principal risks of the Company and are given particular consideration when assessing the Company’s long term viability. Despite the current impact on global markets resulting from the ongoing political developments in
The investment objective of the Company has been substantially unchanged for many years. The 2015 amendment to the dividend policy gave some additional weight to targeting increased dividend income to shareholders. This change does not affect the total return sought or produced by the Manager but was designed to increase returns distributed to shareholders. The Board considers that the Company’s investment objective remains appropriate. This is confirmed by contact with major shareholders.
Performance derives from returns for risk taken. The Report from Artemis on page 10 sets out their current investment strategy. There has been no material change in the Company’s investment objective, however, an amendment to the investment policy is being proposed as detailed on page 11.
Demand for the Company’s shares and performance are not things that can be forecast, but there are no current indications that either or both of these may decline substantially over the next five years so as to affect the Company’s viability.
The Company is a closed end investment trust and can pursue a long term investment strategy and make use of gearing to enhance returns through investment cycles without the need to maintain liquidity for investor redemptions.
Based on the above analysis, including review of the revenue forecast for future years along with stress testing of the portfolio liquidity and dividend sensitivity analysis, the Directors confirm that they expect the Company will continue to operate and meet its liabilities, as they fall due, during the five years ending January 2030.
Investments in Order of Valuation at
Ordinary shares unless stated otherwise
Market
Value % of
Company Sector £’000 Portfolio
4imprint Media 7,318 5.1
JTC Investment Banking and 7,181 5.0
Brokerage Services
Alfa Financial Software Software and Computer Services 5,805 4.0
Hilton Food Food Producers 5,503 3.8
Hill & Smith Industrial Metals and Mining 5,373 3.7
AJ Bell Investment Banking and 4,654 3.2
Brokerage Services
Coats General Industrials 4,498 3.1
Chemring Aerospace and Defence 4,305 3.0
Advanced Medical SolutionsAIM Medical Equipment and Services 4,188 2.9
Hollywood Bowl Travel and Leisure 4,099 2.8
Top Ten Holdings 52,924 36.6
Avon Technologies
(formerly Avon Protection) Aerospace and Defence 3,445 2.4
Serco Industrial Support Services 3,351 2.3
Volution Construction and Materials 3,179 2.2
discoverIE Electronic and Electrical 2,851 2.0
Equipment
Auction Technology Software and Computer Services 2,757 1.9
The Gym Travel and Leisure 2,738 1.9
Wickes Retailers 2,725 1.9
GlobalDataAIM Media 2,561 1.8
Energean Oil, Gas and Coal 2,532 1.8
Genuit Construction and Materials 2,495 1.7
Top Twenty Holdings 81,558 56.5
CVSAIM Consumer Services 2,490 1.7
Mitchells & Butlers Travel and Leisure 2,487 1.7
Johnson ServiceAIM Industrial Support Services 2,481 1.7
Brooks MacdonaldAIM Investment Banking and 2,469 1.7
Brokerage Services
Aptitude Software Software and Computer Services 2,439 1.7
Marshalls Construction and Materials 2,397 1.7
Oxford Instruments Electronic and Electrical 2,381 1.7
Equipment
Tatton Asset ManagementAIM Investment Banking and 2,358 1.6
Brokerage Services
XP Power Electronic and Electrical 2,354 1.6
Equipment
Kainos Software and Computer Services 2,178 1.5
Top Thirty Holdings 105,592 73.1
Young & Co’s Brewery – Travel and Leisure 2,134 1.5
Non-VotingAIM
MJ Gleeson Household Goods and Home 2,095 1.5
Construction
Essentra Industrial Support Services 2,082 1.4
GB GroupAIM Software and Computer Services 1,957 1.4
Savills Real Estate Investment and 1,943 1.4
Services
Future Media 1,939 1.3
VP Industrial Transportation 1,804 1.3
Robert Walters Industrial Support Services 1,729 1.2
Workspace Real Estate Investment Trusts 1,660 1.2
Severfield Construction and Materials 1,541 1.1
Top Forty Holdings 124,476 86.4
MidwichAIM Industrial Support Services 1,539 1.1
Dunelm Retailers 1,421 1.0
M&C SaatchiAIM Media 1,413 1.0
Jadestone EnergyAIM Oil, Gas and Coal 1,408 1.0
NIOXAIM Medical Equipment and Services 1,404 1.0
Treatt Chemicals 1,266 0.9
Ricardo Construction and Materials 1,218 0.8
CLS Real Estate Investment and 1,148 0.8
Services
Secure Trust Bank Banks 1,125 0.8
RWSAIM Industrial Support Services 1,098 0.8
Top Fifty Holdings 137,516 95.6
Churchill ChinaAIM Household Goods and Home 1,027 0.7
Construction
FDM Industrial Support Services 976 0.7
Next Fifteen CommunicationsAIM Media 833 0.6
Topps Tiles Retailers 803 0.6
Videndum Industrial Engineering 724 0.5
Learning TechnologiesAIM Software and Computer Services 619 0.4
FocusriteAIM Leisure Goods 605 0.4
YouGovAIM Media 435 0.3
Genus Pharmaceuticals and 335 0.2
Biotechnology
ThruvisionAIM Electronic and Electrical 47 –
Equipment
Top Sixty Holdings 143,920 100.0
Total Investments: (60) 143,920 100.0
AIM Investments quoted on AIM.
The percentage of the portfolio by value invested in AIM stocks at the year end was 21.6% (2024: 29.9%). There were 19 AIM stocks held at the year end, representing 31.7% of the 60 stocks (2024: 24 AIM stocks held representing 36.4% of the 66 stocks held).
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Financial Report in accordance with
Company law requires the Directors to prepare financial statements for each financial year. Under the law the Directors have elected to prepare financial statements in accordance with
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
• present additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the group and company financial position and financial performance;
•
state whether
• prepare the financial statements on the 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 the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing the Strategic Report, a Corporate Governance Statement, a Directors’ Remuneration Report and a Directors’ Report that comply with the law and regulations.
The Directors of the Company each confirm to the best of their knowledge, that:
•
the financial statements, prepared in accordance with
• this Annual Financial 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
• they consider that this Annual Financial 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.
Signed on behalf of the Board of Directors
Chairman
Statement of Comprehensive Income
FOR THE YEAR ENDED 31 JANUARY
Year ended 31 January Year ended 31 January
2025 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Loss on investments 9 - (4,673) (4,673) - (11,138) (11,138)
held at fair value
Income 2 4,902 - 4,902 5,088 491 5,579
Investment management 3 (189) (1,072) (1,261) (182) (1,029) (1,211)
fees
Other expenses 4 (370) (466) (836) (424) (3) (427)
Loss before finance 4,343 (6,211) (1,868) 4,482 (11,679) (7,197)
costs and taxation
Finance costs 5 (89) (501) (590) (23) (130) (153)
Loss before taxation 4,254 (6,712) (2,458) 4,459 (11,809) (7,350)
Taxation 6 - - - - - -
Loss after taxation 4,254 (6,712) (2,458) 4,459 (11,809) (7,350)
Return per ordinary 7 13.02p (20.54)p (7.52)p 13.18p (34.91)p (21.73)p
share
The total columns of this statement represent the Company’s statement of comprehensive income, prepared in accordance with
Statement of Changes in Equity
Capital
Share Share Redemption Capital Revenue
Capital Premium Reserve Reserve Reserve Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
At 31 January 2023 10,642 22,366 3,386 137,004 1,517 174,915
Total comprehensive – – – (11,809) 4,459 (7,350)
loss for the year
Dividends paid 8 – – – (2,048) (4,122) (6,170)
At 31 January 2024 10,642 22,366 3,386 123,147 1,854 161,395
Total comprehensive – – – (6,712) 4,254 (2,458)
loss for the year
Dividends paid 8 – – – (1,278) (4,328) (5,606)
Shares bought back 12 – – – (286) – (286)
and held in treasury
Special dividend paid 8,12 (677) – 677 (16,401) – (16,401)
At 31 January 2025 9,965 22,366 4,063 98,470 1,780 136,644
The accompanying accounting policies and notes are an integral part of these financial statements.
Balance Sheet
As at As at
31 January 31 January
2025 2024
Notes £’000 £’000
Non-current assets
Investments held at fair value through profit or 9 143,920 169,481
loss
Current assets
Other receivables 10 2,839 932
Cash and cash equivalents 2,472 –
5,311 932
Total assets 149,231 170,413
Current liabilities
Other payables 11 (12,587) (9,018)
(12,587) (9,018)
Total assets less current liabilities 136,644 161,395
Net assets 136,644 161,395
Capital and reserves
Share capital 12 9,965 10,642
Share premium 13 22,366 22,366
Capital redemption reserve 13 4,063 3,386
Capital reserve 13 98,470 123,147
Revenue reserve 13 1,780 1,854
Total shareholders’ funds 136,644 161,395
Net asset value per ordinary share
Basic and diluted 14 449.88p 477.12p
The financial statements were approved and authorised for issue by the Board of Directors on
Signed on behalf of the Board of Directors
Chairman
The accompanying accounting policies and notes are an integral part of these financial statements.
Statement of Cash Flows
Year ended Year ended
31 January 31 January
2025 2024
£’000 £’000
Cash flow from operating activities
Loss before taxation (2,458) (7,350)
Add back finance costs 590 153
Adjustments for:
Purchase of investments (19,030) (32,646)
Sale of investments 37,995 21,263
18,965 (11,383)
Loss on investments held at fair value 4,673 11,138
Increase in receivables (32) (51)
Increase in payables 20 8
Net cash inflow/(outflow) from operating activities 21,758 (7,485)
Cash flow from financing activities
Finance cost paid (590) (153)
Dividends paid – note 8 (5,606) (6,170)
(Decrease)/increase in bank overdraft (8,753) 8,753
Bank facility drawdown 12,350 –
Shares bought back and held in treasury (286) –
Special dividend paid – note 8 (16,401) –
Net cash (outflow)/inflow from financing activities (19,286) 2,430
Net increase/(decrease) in cash and cash equivalents 2,472 (5,055)
Cash and cash equivalents at start of the year – 5,055
Cash and cash equivalents at the end of the year 2,472 –
Reconciliation of cash and cash equivalents to the Balance
Sheet is as follows:
Cash held at custodian 52 –
Invesco Liquidity Funds plc – Sterling, money market fund 2,420 –
Cash and cash equivalents 2,472 –
Cash flow from operating activities includes:
Dividends received 4,825 5,523
Interest received 5 3
As the Company did not have any long term debt at both the current and prior year ends, no reconciliation of the financial liabilities position is presented.
Notes to the Financial Statements
1. Principal Accounting Policies
Accounting policies describe the Company’s approach to recognising and measuring transactions during the year and the position of the Company at the year end.
The principal accounting policies adopted in the preparation of these financial statements together with the approach to recognition and measurement are set out below. These policies have been consistently applied during the current year and the preceding year, unless otherwise stated.
The financial statements have been prepared on a going concern basis on the grounds that the Company’s investment portfolio is sufficiently liquid and significantly exceeds all balance sheet liabilities, there are no unrecorded commitments or contingencies. The disclosure on going concern on page
28 in the Directors’ Report provides further detail. The Directors believe the Company has adequate resources to continue in operational existence for the foreseeable future and has the ability to meet its financial obligations as and when they fall due for a period until at least
(a) Basis of Preparation
(i) Accounting Standards Applied
The financial statements have been prepared on a historical cost basis, except for the measurement at fair value of investments which for the Company are quoted bid prices for investments in active markets at the Balance Sheet date and therefore reflect market participants’ view of climate change risk and in accordance with the applicable
Where presentational guidance set out in the Statement of Recommended Practice (‘SORP’) ‘Financial Statements of
The Directors have considered the impact of climate change on the value of the listed investments that the Company holds. In the view of the Directors, as the portfolio consists of listed equities, their market prices should reflect the impact, if any, of climate change and accordingly no adjustment has been made to take account of climate change in the valuation of the portfolio in these financial statements.
(ii) Critical Accounting Estimates and Judgements
The preparation of the financial statements may require the Directors to make estimations where uncertainty exists. It also requires the Directors to make judgements, estimates and assumptions, in the process of applying the accounting policies. There have been no significant judgements, estimates or assumptions for the current or preceding year.
(b) Foreign Currency and Segmental Reporting
(i) Functional and Presentation Currency
The financial statements are presented in Sterling, which is the Company’s functional and presentation currency and the currency in which the Company’s share capital and expenses are denominated, as well as a majority of its assets and liabilities.
(ii) Transactions and Balances
Foreign currency assets and liabilities are translated into Sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currency, are translated into Sterling at the rates of exchange ruling on the dates of such transactions, and profit or loss on translation is taken to revenue or capital depending on whether it is revenue or capital in nature. All are recognised in the statement of comprehensive income.
(iii) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business of investing in equity and debt securities, issued by companies operating and generating revenue mainly in the
(c) Financial Instruments
(i) Recognition of Financial Assets and Financial Liabilities
The Company recognises financial assets and financial liabilities when the Company becomes a party to the contractual provisions of the instrument. The Company offsets financial assets and financial liabilities if the Company has a legally enforceable right to set off the recognised amounts and interests and intends to settle on a net basis.
(ii) Derecognition of Financial Assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in the transferred financial asset that is created or retained by the Company is recognised as an asset.
(iii) Derecognition of Financial Liabilities
The Company derecognises financial liabilities when its obligations are discharged, cancelled or expired.
(iv) Trade Date Accounting
Purchases and sales of financial assets are recognised on trade date, being the date on which the Company commits to purchase or sell the assets.
(v) Classification of Financial Assets and Financial Liabilities
Financial assets
The Company classifies its financial assets as measured at amortised cost or measured at fair value through profit or loss on the basis of both: the entity’s business model for managing the financial assets; and the contractual cash flow characteristics of the financial asset.
Financial assets measured at amortised cost include cash and debtors.
A financial asset is measured at fair value through profit or loss if its contractual terms do not give rise to cash flows on specified dates that are solely payments of principal and interest (‘SPPI’) on the principal amount outstanding or it is not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. The Company’s equity investments are classified as fair value through profit or loss as they do not give rise to cash flows that are SPPI.
Financial assets held at fair value through profit or loss are initially recognised at fair value, which is usually the transaction price and are subsequently valued at fair value.
For investments that are actively traded in organised financial markets, fair value is determined by reference to stock exchange quoted bid prices at the balance sheet date.
Financial liabilities
Financial liabilities, including borrowings through the bank facility or formerly the bank overdraft, are initially measured at fair value, net of transaction costs and are subsequently measured at amortised cost using the effective interest method, where applicable.
(d) Cash and Cash Equivalents
Cash and cash equivalents include any cash held at custodian and approved depositories as well as holdings in
(e) Income
All dividends are taken into account on the date investments are marked ex-dividend; other income from investments is taken into account on an accruals basis. Where the Company elects to receive scrip dividends (i.e. in the form of additional shares rather than cash), the equivalent of the cash dividend foregone is recognised as income in the revenue account and any excess in value of the shares received over the amount of the cash divided recognised in capital. Deposit interest is taken into account on an accruals basis. Special dividends representing a return of capital are allocated to capital in the statement of comprehensive income and then taken to capital reserves. Dividends will generally be recognised as revenue however all special dividends will be reviewed, with consideration given to the facts and circumstances of each case, including the reasons for the underlying distribution, before a decision over whether allocation is to revenue or capital is made.
(f) Expenses and Finance Costs
All expenses and finance costs are accounted for in the statement of comprehensive income on an accruals basis.
The investment management fee and finance costs (including those related to the bank facility or formerly the bank overdraft) are allocated 85% to capital and 15% to revenue. This is in accordance with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the portfolio.
Investment transaction costs such as brokerage commission and stamp duty are recognised in capital in the statement of comprehensive income. Expenses incurred as a result of the special elective dividend and change of investment manager have been recognised as capital in the statement of comprehensive income. All other expenses are allocated to revenue in the statement of comprehensive income.
(g) Taxation
Tax represents the sum of tax payable, withholding tax suffered and deferred tax. Tax is charged or credited in the statement of comprehensive income. Any tax payable is based on taxable profit for the year, however, as expenses exceed taxable income no corporation tax is due. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantially enacted by the balance sheet date.
Deferred taxation is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the balance sheet date. This is subject to deferred tax assets only being recognised if it is considered probable that there will be suitable profits from which the future reversal of the temporary differences can be deducted. Deferred tax assets and liabilities are measured at the tax rates expected to apply in the period when the liability is settled or the asset realised.
Investment trusts which have approval under Section 1158 of the Corporation Tax Act 2010 are not liable for taxation on capital gains.
(h) Dividends
Dividends are not accrued in the financial statements, unless there is an obligation to pay the dividends at the balance sheet date. Proposed final dividends are recognised in the financial year in which they are approved by the shareholders.
2. Income
This note shows the income generated from the portfolio (investment assets) of the Company and income received from any other source.
2025 2024
£’000 £’000
Income from investments:
UK dividends 4,533 4,443
UK special dividends 262 511
Overseas dividends 102 131
Deposit interest 5 3
Total income 4,902 5,088
No special dividends have been recognised in capital during the year (2024: £491,000).
Overseas dividends include dividends received on
3. Investment Management Fee
This note shows the fees due to the Manager. These are made up of the management fee calculated and paid monthly and, for the previous year. This fee is based on the value of the assets being managed.
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 189 1,072 1,261 182 1,029 1,211
Details of the investment management and secretarial agreement are given on page 29 in the Directors’ Report.
At
4. Other Expenses
The other expenses of the Company are presented below; those paid to the Directors and auditor are separately identified.
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Directors’ remuneration(i) 132 – 132 125 – 125
Auditor’s fees(ii):
– for audit of the Company’s
annual financial statements 51 – 51 49 – 49
Other expenses(iii) 187 466 653 250 3 253
370 466 836 424 3 427
(i) The Director’s Remuneration Report provides further information on Directors’ fees.
(ii) Auditor’s fees include expenses but excludes VAT. The VAT is included in other expenses.
(iii) Other expenses include:
•
£12,500 (2024: £11,800) of employer’s
• custodian transaction charges of £1,700 (2024: £3,100). These are charged to capital.
• broker, registrar, legal and print costs in connection with the special dividend of £422,800 (2024: nil). These were charged to capital.
• legal costs in connection with the change of Investment Manager £42,000 (2024: nil). These were charged to capital.
5. Finance Costs
Finance costs arise on any borrowing facilities the Company has.
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Bank facility fee 1 7 8 – – –
Bank overdraft facility fee – – – 1 6 7
Interest on bank facility 51 286 337 – – –
Overdraft interest 37 208 245 22 124 146
89 501 590 23 130 153
6. Taxation
As an investment trust the Company pays no tax on capital gains and, as the Company invested principally in
(a) Tax charge
2025 2024
£’000 £’000
Overseas taxation – –
(b) Reconciliation of tax charge
2025 2024
£’000 £’000
Loss before taxation (2,458) (7,350)
Theoretical tax at the current UK Corporation Tax rate of 25% (615) (1,766)
(2024: 24.03%)
Effects of:
– Non-taxable UK dividends (1,102) (1,036)
– Non-taxable UK special dividends (65) (241)
– Non-taxable overseas dividends (24) (24)
– Non-taxable loss on investments 1,168 2,676
– Excess of allowable expenses over taxable income 521 390
– Disallowable expenses 117 1
Tax charge for the year – –
(c) Factors that may affect future tax changes
The Company has cumulative excess management expenses of £48,030,000 (2024: £45,945,000) that are available to offset future taxable revenue.
A deferred tax asset of £12,007,000 (2024: £11,486,000) at 25% (2024: 25%) has not been recognised in respect of these expenses since the Directors believe that there will be no taxable profits in the future against which the deferred tax assets can be offset.
The Finance Act 2021 increases the
7. Return per Ordinary Share
Return per ordinary share is the amount of gain or loss generated for the financial year divided by the weighted average number of ordinary shares in issue.
2025 2024
Revenue Capital Total Revenue Capital Total
Return £’000 4,254 (6,712) (2,458) 4,459 (11,809) (7,350)
Return per ordinary share 13.02p (20.54)p (7.52)p 13.18p (34.91)p (21.73)p
The returns per ordinary share are based on the weighted average number of shares in issue during the year of 32,686,825 (2024: 33,826,929).
8. Dividends on Ordinary Shares
The Company paid four dividends in the year – three interims and a final.
The final dividend shown below is based on shares in issue at the record date or, if the record date has not been reached, on shares in issue on the date the balance sheet is signed. The third interim and final dividends are paid after the balance sheet date.
2025 2024
Pence £’000 Pence £’000
Dividends paid from revenue in the year:
Third interim (prior year) 3.85 1,302 3.75 1,269
Final (prior year) 1.63 553 0.74 249
First interim 3.85 1,302 3.85 1,302
Second interim 3.85 1,171 3.85 1,302
Total dividends paid from revenue 13.18 4,328 12.19 4,122
Dividends paid from capital in the year:
Final (prior year) 3.78 1,278 6.05 2,048
Total dividends paid from capital 3.78 1,278 6.05 2,048
Total dividends paid in the year 16.96 5,606 18.24 6,170
2025 2024
Pence £’000 Pence £’000
Dividends payable in respect of the year:
First interim 3.85 1,302 3.85 1,302
Second interim 3.85 1,171 3.85 1,302
Third interim 3.85 1,170 3.85 1,302
Final 3.45 1,048 5.41 1,831
15.00 4,691 16.96 5,737
The third interim dividend of 3.85p per share, in respect of the year ended
2025 2024
£’000 £’000
Dividends in respect of the year:
– from revenue reserve 4,254 4,459
– from capital reserve 437 1,278
4,691 5,737
Dividend payable from the capital reserve of £437,000 (2024: capital reserve of £1,278,000) as a percentage of year end net assets of £136,644,000 (2024: £161,395,000) is 0.3% (2024: 0.8%). The Company has £112,136,000 (2024: £128,237,000) of realised distributable capital reserves at the year end.
2025 2024
Pence £’000 Pence £’000
Capital returns paid in the year:
Special Dividend 484.85 16,401 – –
484.85 16,401 – –
A return of capital was offered to Shareholders during the year ended
9. Investments Held at Fair Value Through Profit and Loss
The portfolio is made up of investments which are listed or traded on a primary stock exchange or AIM. Profit and losses in the year include:
• realised, usually arising when investments are sold; and
• unrealised, being the difference from cost on those investments still held at the year end.
2025 2024
£’000 £’000
Investments listed on a primary stock exchange 112,854 118,717
AIM quoted investments 31,066 50,764
143,920 169,481
Opening valuation 169,481 172,643
Movements in year:
Purchases at cost 18,982 29,720
Sales proceeds (39,870) (21,744)
Loss on investments in the year (4,673) (11,138)
Closing valuation 143,920 169,481
Closing book cost 157,586 174,572
Closing investment unrealised loss (13,666) (5,091)
Closing valuation 143,920 169,481
The transaction costs amount to £68,000 (2024: £90,000) on purchases and £20,000 (2024: £12,000) for sales. These amounts are included in determining the loss on investments held at fair value as disclosed in the Statement of Comprehensive Income.
The Company received £39,870,000 (2024: £21,744,000) from investments sold in the year. The book cost of these investments when they were purchased was £35,968,000 (2024: £24,989,000) realising a gain of £3,902,000 (2024: loss of £3,245,000). These investments have been revalued over time and until they were sold any unrealised profits/losses were included in the fair value of the investments.
10. Other Receivables
Other receivables are amounts which are due to the Company, such as monies due from brokers for investments sold and income which has been earned (accrued) but not yet received.
2025 2024
£’000 £’000
Amounts due from brokers 2,404 529
Overseas withholding tax recoverable – 30
Income tax recoverable – 4
Prepayments and accrued income 435 369
2,839 932
11. Other Payables
Other payables are amounts which must be paid by the Company, and include any amounts due to brokers for the purchase of investments, interest in respect of the bank facility or amounts owed to suppliers (accruals), such as the Manager and auditor.
The bank facility provided a specific amount of capital, up to £20 million, over a specified period of time (two years). Unlike a term loan, the revolving nature of the bank facility allowed the Company to drawdown, repay and re-draw loans.
2025 2024
£’000 £’000
Amounts due to brokers – 48
Bank facility 12,350 –
Bank overdraft – 8,753
Accruals 237 217
12,587 9,018
During the year to
12. Share Capital
Share capital represents the total number of shares in issue, including shares held in treasury.
(a) Allotted, called-up and fully paid
2025 2024
Number £’000 Number £’000
Allotted, called-up and fully paid
Ordinary shares of 20p each 30,373,362 6,075 33,826,929 6,765
Treasury shares of 20p each 19,453,074 3,890 19,382,155 3,877
49,826,436 9,965 53,209,084 10,642
(b) Share movements
2025 2024
Ordinary shares Treasury shares Ordinary shares Treasury shares
Number of shares
of 20p each at 33,826,929 19,382,155 33,826,929 19,382,155
start of year
Special dividend (3,382,648) – – –
paid
Shares bought
back and held in (70,919) 70,919 – –
treasury
Carried forward 30,373,362 19,453,074 33,826,929 19,382,155
During the year to
13. Reserves
This note explains the different reserves attributable to shareholders. The aggregate of the reserves and share capital (see previous note) make up total shareholders’ funds.
The share premium arises whenever shares are issued at a price above the nominal value plus any issue costs. The capital redemption reserve maintains the equity share capital and arises from the nominal value of shares repurchased and cancelled. The share premium and capital redemption reserve are non-distributable.
Capital investment gains and losses are shown in note 9, and form part of the capital reserve. The revenue reserve shows the net revenue retained after payment of dividends. The capital (to the extent that it constitutes realised profits) and revenue reserves are distributable by way of dividend. In addition, the capital reserve is also distributable by way of share buy backs.
14. Net Asset Value per Ordinary Share
The Company’s total net assets (total assets less total liabilities) are often termed shareholders’ funds and are converted into net asset value per ordinary share by dividing by the number of shares in issue.
The net asset value per share and the net asset values attributable at the year end were as follows:
Net asset Net assets
value
per ordinary attributable
share
2025 2024 2025 2024
Pence Pence £’000 £’000
Ordinary shares 449.88 477.12 136,644 161,395
Net asset value per ordinary share is based on net assets at the year end and on 30,373,362 (2024: 33,826,929) ordinary shares, being the number of ordinary shares in issue (excluding treasury) at the year end.
15. Risk Management, Financial Assets and Liabilities
Financial instruments comprise the Company’s investment portfolio as well as any cash, borrowings, other receivables and other payables.
Financial Instruments
The Company’s financial instruments comprise its investment portfolio (as shown on pages 22 and 23), cash, borrowings, other receivables and other payables that arise directly from its operations such as sales and purchases awaiting settlement and accrued income. The accounting policies in note 1 include criteria for the recognition and the basis of measurement applied for financial instruments. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised and measured.
Risk Management Policies and Procedures
The Directors have delegated to the Manager the responsibility for the day-to-day investment activities of the Company as more fully described in the Directors’ Report.
As an investment trust the Company invests in equities and other investments for the long-term, so as to meet its investment policy (incorporating the Company’s investment objective). In pursuing its investment objective, the Company is exposed to a variety of risks that could result in either a reduction in the Company’s net assets or a reduction of the profits available for dividends. Those related to financial instruments include market risk, liquidity risk and credit risk.
The main risk that the Company faces arising from its financial instruments is market risk – this risk is reviewed in detail below. Since the Company invests mainly in
Credit risk encompasses the failure by counterparties to deliver securities which the Company has paid for, or to pay for securities which the Company has delivered, and cash balances. Counterparty risk is minimised by using only approved counterparties. The Company’s ability to operate in the short-term may be adversely affected if the Company’s custodian suffers insolvency or other financial difficulties. The appointment of a depositary has substantially lessened this risk. The Board reviews the custodian’s annual controls report and the Manager’s management of the relationship with the custodian. This was
Market Risk
The fair value or future cash flows of a financial instrument may fluctuate because of changes in market prices. This market risk comprises three elements – currency risk, interest rate risk and other price risk. The Company’s Manager assesses the Company’s exposure when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. The Board meets at least quarterly to assess risk and review investment performance. The Company may utilise hedging instruments to manage market risk. Gearing is used to enhance returns, however, this will also increase the Company’s exposure to market risk and volatility.
1. Currency Risk
The exposure to currency risk is considered minor as the Company’s financial instruments are mainly denominated in Sterling. At the current and preceding year end, the Company held no foreign currency investments or cash, although a small amount of dividend income was received in foreign currency.
During this and the previous year, the Company did not use forward currency contracts to mitigate currency risk.
2. Interest Rate Risk
Interest rate movements will affect the level of income receivable on cash deposits and the interest payable on variable rate borrowings. When the Company has cash balances, they are held in variable rate bank accounts yielding rates of interest dependent on the base rate of the Custodians,
The Company had an uncommitted bank facility up to a maximum of 30% of the net asset value of the Company or £20
million (2024: uncommitted bank overdraft facility up to a maximum of 30% of the net asset value of the Company or £15 million), whichever was the lower; the interest rate was charged at a margin over the
At the year end £12.4 million of the bank facility was drawn down (2024: £8.8 million overdraft facility drawn). Based on the maximum amount that can be drawn down at the year end under the bank facility of £20 million (2024: overdraft facility of £15 million), the effect of a +/–
3.25% (2024:
+/– 3.25%) in the interest rate would result in an increase or decrease to the Company’s statement of comprehensive income of £650,000 (2024: £488,000). Subsequent to the year end, the bank facility was fully re-paid with effect
The Company’s portfolio is not directly exposed to interest rate risk.
3. Other Price Risk
Other price risks (i.e. the risk of changes in market prices, other than those arising from interest rates or currency) may affect the value of the investments.
Management of Other Price Risk
The Directors manage the market price risks inherent in the investment portfolio by meeting regularly to monitor on a formal basis the Manager’s compliance with the Company’s stated objectives and policies and to review investment performance.
The Company’s portfolio is the result of the Manager’s investment process and as a result is not correlated with the Company’s benchmark or the markets in which the Company invests. Therefore, the value of the portfolio will not move in line with the market but will move as a result of the performance of the company shares within the portfolio.
If the value of the portfolio fell by 10% at the balance sheet date, the loss after tax for the year would increase by £14 million (2024: loss after tax for the year would increase by £16 million). Conversely, if the value of the portfolio rose by 10%, the loss after tax would decrease (2024: loss after tax would decrease) by the same amount.
Concentration of exposure to market price risk
There is a concentration of exposure to the
Fair Values of Financial Assets and Financial Liabilities
The financial assets and financial liabilities are either carried in the balance sheet at their fair value (investments), or the balance sheet amount is a reasonable approximation of fair value (due from brokers, dividends receivable, accrued income, due to brokers, accruals, cash at bank and borrowings).
Fair Value Hierarchy Disclosures
All of the Company’s investments are in the Level 1 category as set out in IFRS 13, the three levels of which follow:
Level 1 – The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly.
Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset/liability.
16. Maturity Analysis of Contractual Liability Cash Flows
The contractual liabilities of the Company are shown in note 11 and comprise amounts due to brokers and accruals. All are paid under contractual terms. The bank facility (formerly bank overdraft) was repayable upon demand. For amounts due to brokers, this will generally be the purchase date of the investment plus two business days; accruals would generally be due within three months.
17. Capital Management
The Company’s capital, or equity, is represented by its net assets which are managed to achieve the Company’s investment objective set out on page 11.
The main risks to the Company’s investments are shown in the Strategic Report under the ‘Principal Risks and Uncertainties’ section on pages 12 to 14. These also explain that the Company is able to gear and that gearing will amplify the effect on equity of changes in the value of the portfolio.
The Board can also manage the capital structure directly since it determines dividend payments and has taken the powers, which it is seeking to renew, to buy-back shares, either for cancellation or to be held in treasury, and to issue new shares or sell shares held in treasury.
The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by s1158 Corporation Tax Act 2010 and by the Companies Act 2006, respectively, and with respect to the availability of the bank facility (formerly bank overdraft facility) and by the terms imposed by the lender. The Board regularly monitors, and has complied with, the externally imposed capital requirements. This is unchanged from the prior year.
Total equity at
18. Contingencies, Guarantees and Financial Commitments
Liabilities the Company is committed to honour but which are dependent on a future circumstance or event occurring would be disclosed in this note if any existed.
There were no contingencies, guarantees or other financial commitments of the Company as at
19. Related Party Transactions and Transactions with Manager
A related party is a company or individual who has direct or indirect control or who has significant influence over the Company.
Under
Details of the Manager’s services and fees are disclosed in the Directors’ Report on page 29 and in note 3.
20. Post Balance Sheet Events
On
–
the Company’s name changed to
–
the Company’s registered office has changed to
–
the Company’s fund administration service provider has changed to
–
the Company’s custody and depositary service provider has changed to
–
the Company’s corporate secretary has changed to
– the Company’s website changed to https://www.artemisfunds.com/futureleaders
On
2025 Financial Information
The figures and financial information for the year ended
2024 Financial Information
The figures and financial information for the year ended
Annual Financial Report
The audited 2025 annual financial report will be available to shareholders, and will be delivered to the Registrar of Companies, shortly.
Copies may be obtained during normal business hours from
A copy of the annual financial report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Notice of Annual General Meeting
THIS NOTICE OF ANNUAL GENERAL MEETING IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action to take, you should consult your stockbroker, solicitor, accountant or other appropriate independent professional adviser authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all your shares in
NOTICE IS GIVEN that the Annual General Meeting (‘AGM’) of
Ordinary Business
1.
To receive and consider the Annual Financial Report for the year ended
2. To approve the Directors’ Remuneration Policy.
3.
To approve the Annual Statement and Report on Remuneration for the year ended 31
4.
To approve the final dividend of 3.45p for the year ended
5.
To re-elect
6.
To re-elect
7.
To re-elect
8.
To re-elect
9.
To re-appoint the auditor,
10. To authorise the Audit Committee to determine the auditor’s remuneration.
11. To approve the Investment Policy of the Company.
Special Business
To consider and, if thought fit, to pass the following resolutions of which resolution 12 will be proposed as an ordinary resolution and resolutions 13 to 15 as special resolutions:
Authority to Allot Shares
12. That:
the Directors be generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 as amended from time to time prior to the date of the passing of this resolution (the ‘Act’) to exercise all powers of the Company to allot shares and grant rights to subscribe for, or convert any securities into, shares up to an aggregate nominal amount (within the meaning of Sections
551(3) and (6)
of the Act) of £607,467, this being 10% of the Company’s issued ordinary share capital (excluding Treasury Shares) as at 25
Disapplication of Pre-emption Rights
13. That:
the Directors be and are hereby empowered, in accordance with Sections 570 and 573 of the Act to allot equity securities (within the meaning of Section 560 (1), (2) and (3) of the Act) for cash, either pursuant to the authority given by resolution 12 set out above or (if such allotment constitutes the sale of relevant shares which, immediately before the sale, were held by the Company as treasury shares) otherwise, as if Section 561 of the Act did not apply to any such allotment, provided that this power shall be limited:
(a) to the allotment of equity securities in connection with a rights issue in favour of all holders of a class of equity securities where the equity securities attributable respectively to the interests of all holders of securities of such class are either proportionate (as nearly as may be) to the respective numbers of relevant equity securities held by them or are otherwise allotted in accordance with the rights attaching to such equity securities (subject in either case to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any territory or otherwise);
(b)
to the allotment (otherwise than pursuant to a rights issue) of equity securities up to an aggregate nominal amount of £607,467, this being 10% of the Company’s issued ordinary share capital (excluding Treasury Shares) as at 25
(c) to the allotment of equity securities at a price not less than the net asset value per share (as determined by the Directors), and this power shall expire at the conclusion of the next AGM of the Company or the date 15 months after the passing of this resolution, whichever is the earlier unless the authority is renewed or revoked at any other general meeting prior to such time, but so that this power shall allow the Company to make offers or agreements before the expiry of this power which would or might require equity securities to be allotted after such expiry as if the power conferred by this resolution had not expired; and so that words and expressions defined in or for the purposes of Part 17 of the Act shall bear the same meanings in this resolution.
Authority to Make Market Purchases of Shares
14. That:
the Company be generally and subject as hereinafter appears unconditionally authorised in accordance with Section 701 of the Act to make market purchases (within the meaning of Section 693(4) of the Act) of its issued ordinary shares of 20p each in the capital of the Company (‘Shares’).
PROVIDED ALWAYS THAT:
(a)
the maximum number of Shares hereby authorised to be purchased shall be 14.99% of the Company’s issued ordinary shares (excluding Treasury Shares), this being 4,552,967 as at 25
(b) the minimum price which may be paid for a Share shall be 20p;
(c)
the maximum price which may be paid for a Share must not be more than the higher of: (i)
5% above the average of the mid-market values of the Shares for the five business days before the purchase is made; and (ii) the higher of the price of the last independent trade in the Shares and the highest then current independent bid for the Shares on the
(d) any purchase of Shares will be made in the market for cash at prices below the prevailing net asset value per Share (as determined by the Directors);
(e) the authority hereby conferred shall expire at the conclusion of the next AGM of the Company or the date 15 months after the passing of this resolution, whichever is the earlier, unless the authority is renewed or revoked at any other general meeting prior to such time;
(f) the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract; and
(g)
any Shares so purchased shall be cancelled or, if the Directors so determine and subject to the provisions of Sections 724 to 731 of the Act and any applicable regulations of the
Period of Notice Required for General Meetings
15. THAT the period of notice required for general meetings of the Company (other than AGMs) shall be not less than 14 clear days.
Dated this
By order of the Board
Glossary of Terms and Alternative Performance Measures
Alternative Performance Measure (‘APM’)
An APM is a measure of performance or financial position that is not defined in applicable accounting standards and cannot be directly derived from the financial statements. The calculations shown in the corresponding tables are for the year ended 31 January 2025 and 2024. The APMs listed here are widely used in reporting within the investment company sector and consequently aid comparability.
Benchmark (or Benchmark Index)
A market index, which averages the performance of companies in any sector, giving a good indication of any rises or falls in the market. The benchmark used in these accounts is the Deutsche Numis Smaller Companies + AIM (excluding Investment Companies) Index, with dividends reinvested.
Capital dividend as a percentage of year end net assets (APM)
The percentage of year end net assets represented by a payment from revenue reserves and capital reserves to fund the annual dividend payable in respect of the year.
2025(1) 2024
£’000 £’000
Dividends paid from capital in respect of the year:
First interim – –
Second interim – –
Third interim – –
Final 437 1,278
a 437 1,278
Net Assets b 136,644 161,395
Capitaldividendasapercentageofyearendnetassets c = a/b 0.3% 0.8%
(1) Excludes the one-off elective special dividend (return of capital) of 484.85p paid to shareholders on 8 October 2024.
(Discount)/Premium (APM)
Discount is a measure of the amount by which the mid-market price of an investment company share is lower than the underlying net asset value (‘NAV’) of that share. Conversely, premium is a measure of the amount by which the mid-market price of an investment company share is higher than the underlying net asset value of that share. In this Annual Financial Report the discount is expressed as a percentage of the net asset value per share and is calculated according to the formula set out below. If the shares are trading at a premium the result of the below calculation will be positive and if they are trading at a discount it will be negative.
2025 2024
Share price a
375.00p 424.00p
Net asset value per share (note 14) b
449.88p 477.12p
Discount c = (a–b)/b (16.6)% (11.1)%
Dividend Yield (APM)
The annual dividend payable expressed as a percentage of the year end share price.
2025(1) 2024
Dividends per share payable in respect of the year (note 8) a
15.00p 16.96p
Share price b
375.00p 424.00p
DividendYieldc = a/b 4.0% 4.0%
(1) Excludes the one-off elective special dividend (return of capital) of 484.85p paid to shareholders on 8 October 2024.
Gearing (APM)
The gearing percentage reflects the amount of borrowings that a company has invested. This figure indicates the extra amount by which net assets, or shareholders’ funds, would move if the value of a company’s investments were to rise or fall. A positive percentage indicates the extent to which net assets are geared; a nil gearing percentage, or ‘nil’, shows a company is ungeared. A negative percentage indicates that a company is not fully invested and is holding net cash as described below.
There are several methods of calculating gearing and the following has been used in this report:
Gross Gearing (APM)
This reflects the amount of gross borrowings in use by a company and takes no account of any cash balances. It is based on gross borrowings as a percentage of net assets. As at 31 January 2025 the Company had gross borrowings of £12,350,000 (2024: £8,753,000).
2025 2024
£’000 £’000
Bank facility 12,350 –
Bank overdraft facility – 8,753
Gross borrowings a 12,350 8,753
Net asset value b 136,644 161,395
Grossgearing c = a/b 9.0% 5.4%
Net Gearing or Net Cash (APM)
Net gearing reflects the amount of net borrowings invested, i.e. borrowings less cash and cash equivalents (incl. investments in money market funds). It is based on net borrowings as a percentage of net assets. Net cash reflects the net exposure to cash and cash equivalents, as a percentage of net assets, after any offset against total borrowings.
2025 2024
£’000 £’000
Bank facility 12,350 –
Bank overdraft facility – 8,753
Less: cash and cash (2,472) –
equivalents
Net borrowings a 9,878 8,753
Net asset value b 136,644 161,395
Netgearing c = a/b 7.2% 5.4%
Maximum Authorised Gearing
This reflects the maximum authorised borrowings of a company taking into account both any gearing limits laid down in the investment policy and the maximum borrowings laid down in covenants under any borrowing facility and is calculated as follows:
2025 2024
£’000 £’000
Maximum authorised borrowings as laid down in:
Investment policy:
– lower of 30% of net asset value; and a = 30% x e 40,993 48,419
– £25 million b 25,000 25,000
Bank facility covenants: lower of 30% of net asset
value
and £20 million c 20,000 15,000
(31 January 2024 : bank overdraft facility covenants:
lower of 30% of net asset value and £15 million)
Maximum authorised borrowings (d = lower of a, b and d 20,000 15,000
c)
Net asset value e 136,644 161,395
Maximumauthorisedgearing f = d/e 14.6% 9.3%
Leverage
Leverage, for the purposes of the Alternative Investment Fund Managers Directive (‘AIFMD’), is not synonymous with gearing as defined above. In addition to borrowings, it encompasses anything that increases the Company’s exposure, including foreign currency and exposure gained through derivatives. Leverage expresses the Company’s exposure as a ratio of the Company’s net asset value. Accordingly, if a Company’s exposure was equal to its net assets it would have leverage of 100%. Two methods of calculating such exposure are set out in the AIFMD, gross and commitment. Under the gross method, exposure represents the aggregate of all the Company’s exposures other than cash balances held in base currency and without any offsetting. The commitment method takes into account hedging and other netting arrangements designed to limit risk, offsetting them against the underlying exposure (see page 69 for further detail on leverage at year end).
Market Capitalisation
Is calculated by multiplying the stockmarket price of an ordinary share by the number of ordinary shares in issue.
Net Asset Value (‘NAV’)
Also described as shareholders’ funds, the NAV is the value of total assets less liabilities. Liabilities for this purpose include current and long-term liabilities. The NAV per share is calculated by dividing the net asset value by the number of ordinary shares in issue (excluding shares held in treasury). For accounting purposes assets are valued at fair (usually market) value and liabilities are valued at amortised cost (their repayment – often nominal – value).
Ongoing Charges Ratio (APM)
The ongoing administrative costs of operating the Company are encapsulated in the ongoing charges ratio, which is calculated in accordance with guidance issued by the AIC. The calculation incorporates charges allocated to capital in the financial statements as well as those allocated to revenue, but excludes non-recurring costs, transaction costs of investments, finance costs, taxation, and the costs of buying back or issuing shares. The ongoing charges ratio is the aggregate of these costs expressed as a percentage of the daily average net asset value reported in the year.
2025 2024
£’000 £’000
Investment management fee 1,261 1,211
Other expenses 836 427
Less: costs in relation to
custody dealing charges
and one-off legal and (466) (35)
professional costs
Total recurring expenses a 1,631 1,603
Average daily net assets b 158,051 158,683
Ongoingchargesratio% c = a/b 1.03% 1.01%
Return
The return generated in a period from the investments including the increase and decrease in the value of investments over time and the income received.
Total Return
Total return is the theoretical return to shareholders that measures the combined effect of any dividends paid together with the rise or fall in the share price or NAV. In this Annual Financial Report these return figures have been sourced from LSEG Data & Analytics who calculate returns on an industry comparative basis. The figures calculated below are one year total returns, however the same calculation would be used for three, five and ten year total returns where quoted in this report, taking the respective NAVs and Share Prices period for the opening and closing periods and adding the impact of dividend reinvestments for the relevant periods.
Net Asset Value Total Return (APM)
Total return on net asset value per share, assuming dividends paid by the Company were reinvested into the shares of the Company at the NAV per share at the time the shares were quoted ex-dividend.
Share Price Total Return (APM)
Total return to shareholders, on a mid-market price basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the Company at the time the shares were quoted ex-dividend.
NetAsset Share
2025 Value Price
As at 31 January 2025 449.88p 375.00p
As at 31 January 2024 477.12p 424.00p
Change in year a –5.7% –11.6%
Impact of dividend reinvestments(1) b 3.3% 3.6%
Totalreturnfortheyear c = a+b –2.4% –8.0%
NetAsset Share
2024 Value Price
As at 31 January 2024 477.12p 424.00p
As at 31 January 2023 517.09p 451.00p
Change in year a –7.7% –6.0%
Impact of dividend reinvestments(1) b 3.6% 4.2%
Totalreturnfortheyear c = a+b –4.1% –1.8%
(1) Total dividends paid during the year of 16.96p (2024: 18.24p) reinvested at the NAV or share price on the ex-dividend date. NAV or share price falls subsequent to the reinvestment date consequently further reduce the returns, vice versa if the NAV or share price rises.
Benchmark
Total return on the benchmark is on a mid-market value basis, assuming all dividends received were reinvested, without transaction costs, into the shares of the underlying companies at the time the shares were quoted ex-dividend.
Volatility
Volatility refers to the amount of uncertainty or risk about the size of changes in a security’s value. It is a statistical measure of the dispersion of returns for a given security or market index measured by using the standard deviation or variance of returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.
