Artemis Alpha narrows discount by more than half during strong-performing year – Artemis Alpha (ATS) has released its full year results for the year to 30 April 2021, during which time it delivered a share price return of 81% and an NAV return of 56%. significantly outperforming its FTSE All-Share benchmark return of 26%. Over the year, the discount narrowed from 19.5% to 7.0%, supported by strong performance and share buy backs.
The board declared a final dividend of 3.19p per share, subject to approval by shareholders at ATS’s upcoming AGM in October. Total dividends declared for the year will amount to 5.3p per share, an increase of 1.9% on the previous year and ahead of the increase in the Consumer Prices Index of 1.5%, in line with the company’s target.
Earnings this year were supported by the payment of a £725,000 dividend from ATS’ subsidiary, which resulted in earnings per share increasing by 20.8% to 5.92p from 4.9p last year.
Statement from the chair:
The year under review has been one of extraordinary market volatility: deep pessimism and uncertainty were met with unprecedented stimulus measures and replaced by euphoria on the news of vaccines. The valuation of sectors and companies oscillated dramatically as “winners” or “losers” were identified.
Earnings and dividends
As a result of the pandemic, dividend receipts from the investment portfolio were significantly lower than the previous year, reducing our earnings and the ability to pay dividends to our own shareholders. One of the advantages of the investment trust structure is that dividends can be supported in such challenging times by revenue reserves, which currently amount to 12.23p per share (including subsidiary reserves).
Share buy backs/discount
A welcome improvement in the Company’s rating has taken place over the year, with the discount to the underlying asset value reducing from 19.5% to 7.0%.
During the year, the Company bought back 1,395,000 ordinary shares for cancellation at a cost of £5.4 million and an average discount of 10.4%, adding approximately 1.75p to the net asset value per share. We believe that this, in combination with the excellent recent performance, has contributed to the narrowing of the discount. We intend to continue for the foreseeable future this policy of buying back shares when we believe that it is in shareholders’ interests and, in particular, to address any imbalance in the supply and demand for our shares.
Triennial tender offer
Under the arrangements approved by shareholders two years ago, a tender offer for up to 25% of the Company’s shares is due to take place later this year, subject to the level of the discount prevailing at that time as well as shareholder approval. We will be writing to shareholders nearer the time to outline our plans.
Outlook
The uncertainties of the last year have been replaced by different challenges: massive reflationary initiatives funded by increased government debt, the reappearance of inflation and the remaining threat from the coronavirus around the world. It remains to be seen whether governments and central banks can manage these stimulus measures successfully.
ATS : Artemis Alpha narrows discount by more than half during strong-performing year