Artemis UK Future Leaders Plc - Annual Financial Report and Notice of Annual General Meeting

 

LEI: 549300K1D1P23R8U4U50

 

 

Artemis UK Future Leaders plc
Annual Financial Report for the Year Ended 31 January 2025 and Notice of Annual General Meeting

 

The following text is extracted from the Annual Financial Report of the Company for the year ended 31 January 2025. All page numbers below refer to the Annual Financial Report which will be made available on the Company's website.

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 UK quoted companies.

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   October 2024.

Chairman’s Statement

Dear Shareholders,

The last year, and particularly the last six months, have not been good for UK smaller companies investment trusts and the Board has been unhappy with the performance that has been generated from your Company’s portfolio.

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 UK smaller companies in difficult market conditions, communicate with all existing shareholders and market to new retail shareholders. They also had to be prepared to back the Company with their own money. One manager, Artemis, stood out. In December, the Board reached an agreement with Artemis to take over the running of your Company. The portfolio was handed over on 10 March 2025, after our financial year end.

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 22 May 2024, the Board announced a proposed elective return of capital to be offered to all shareholders in respect of up to 10% of the Company’s issued shares (excluding treasury shares), and at a 2.5% discount to net asset value. A circular was published providing context and options for shareholders. On 20   August 2024, your Board published the result of the elective special dividend offer, which was fully taken up. The special dividend was paid on 8 October 2024, resulting in 3,382,648 shares being cancelled for no consideration pursuant to the reduction of capital and an amount of £16,401,000 was paid to Shareholders who elected to receive the special dividend.

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 June 2025 of 3.45p per share to bring the total dividends paid for the year to 15.00p per share (2024: 16.96p). The final dividend will be payable on 12 June 2025, subject to shareholder approval, to shareholders on the register on 9   May 2025 and the shares will go ex-dividend on 8 May 2025. This represents all of the available revenue earned by the Company’s portfolio over the year, equating to 90.68% of the dividend payment, with the remainder being paid from realised capital reserves.

Shareholders who hold shares on the main register and are residents of the UK, Channel Islands or Isle of Man have the opportunity to reinvest their dividend via the Dividend Reinvestment Plan (‘DRIP’). Shareholders will need to submit an election by 17 May 2025. Further information can be found on the Company’s webpage: https://www.artemisfunds.com/futureleaders

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 10 March 2025.

Artemis UK Future Leaders plc

Your Company has been renamed as Artemis UK Future Leaders plc with a stock exchange ticker of AFL. The new managers of your Company are Mark Niznik and William Tamworth.

Artemis’s performance record

Mark, William and their team currently manage a UK smaller companies open-ended unit trust which over the year to the end of January 2025 produced positive performance of 9.1%. Over one year, three years, five and ten years, their performance has been consistently in the first quartile of their sector.

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 UK smaller companies sector saw significant net outflows, but Artemis was able to defy the trend and attract net new money to its smaller companies fund. During the last year, your Company has traded at a persistent discount of over 10% and one of the Board and managers’ objectives is to reduce this so it is closer to net asset value.

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   December 2025. This fee holiday offsets the termination fee paid to Invesco in lieu of notice plus an additional five months where no management fees will be paid.

The main service providers to the Company have moved from The Bank of New York Mellon, London Branch to Northern Trust and due to the re-negotiated management fee the ongoing charges ratio of the Company is projected to fall from 1.03% to 0.84% per annum.

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 UK market is very undervalued and small companies are especially undervalued. Currently, Artemis are seeing lots of investment opportunities in this market. The normal operating position for gearing would be between 0 to 10% with a hard governance limit of 15%. This is consistent with the level of gearing employed by the previous managers.

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 UK smaller companies can be found in the Portfolio Managers’ Report on page 10.

Mark and William have previously pointed out that UK small and mid-caps are seven years into a secular bear market (defined as an extended period in which stock price returns are significantly below the long-term average). Historically, buying after periods of such weak returns has resulted in strong future returns. We all believe that when confidence in UK companies begins to recover, then this will translate into a powerful recovery in the share prices of UK smaller companies.

On the subject of tariffs, they note that UK investors have become all too familiar with the concept of a ‘political risk premium’ ever since the vote to leave the EU. In contrast, the US has been blessed by a narrative of ‘US exceptionalism’. The recent BofA Global Fund Manager Survey provided an early indication that investors are starting to reappraise this received wisdom with a reduction in exposure to US equities in favour of cheaper markets such as the UK. Given the dominance of the US in global equity weightings, it would only take a small realignment to have a meaningful impact on UK equity valuations.

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.

 

Bridget Guerin

Chairman

28 April 2025

Portfolio Managers’ Report

Q   What were the key influences on the market over the period?

A   It was a positive year for UK equities, with falling inflation and three cuts to base rates offsetting increased political uncertainty.

Labour won the general election in July, with a substantial majority of 172. Claims of a £22 billion “black hole” in the public finances and a downbeat assessment of the UK by the new government negatively affected both consumer and business sentiment. The Budget in October resulted in a significantly increased tax burden for businesses, particularly in the leisure and retail sectors, further affecting sentiment. AIM-listed stocks were hit hard after the inheritance tax benefit previously enjoyed by this area of the market was halved.

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.

Keywords Studios (+46%) and Alpha Financial Markets Consulting (+36%) both received takeover approaches from private equity.

Defence company Avon Protection (+62%) benefitted from restructuring under its new management team. The business had previously lost it way but has significant recovery potential if margins return to historic levels.

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 Hollywood writers’ strike. Demand fell for an extended period, leaving the business in a difficult financial position.

 

Jonathan Brown & Robin West

Portfolio Managers until 9 March 2025

 

Introducing your new portfolio managers Mark Niznik and William Tamworth

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 UK stock market. We are passionate believers in the ‘small-cap premium’. This is the historic long-term outperformance of small caps over large caps of between 3% and 4% a year. Our aim is to:

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.

•   UK consumers – Consumers are generally in good shape, with full employment and decent wage growth fuelling increased disposable income. Savings that were built up through Covid remain unspent, while household debt as a proportion of income is at a 17-year low. Although we acknowledge the risk of job losses as companies seek to recoup higher taxes by cutting costs, this is likely to be more than offset by rising consumer spending as confidence improves.

•   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 UK has a relatively centrist government with a large majority that is likely to remain in place until 2029. As the 2024 Budget was the last time the government can (credibly) blame the previous one for unexpected funding gaps, the emphasis must now shift to growth. There are already some tentative positive signs, for example with regard to planning, potential changes to mortgages and pension reforms.

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 UK small caps. Given low valuations, we would expect that to translate into a powerful recovery.

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 UK (approximately 60%) with around 15% coming from the US. The UK is not a heavily export dependent economy and is more reliant on services than goods. The degree to which tariffs increase uncertainty, impact global growth and increase the chances of a UK recession, is likely to be more important than the direct consequences of the tariffs themselves on the portfolio (which we expect to be small). Currency movements will create winners as well as losers. In times of higher uncertainty the portfolio should benefit from our focus on companies with strong balance sheets. Historically small caps have proven to be nimble and have tended to bounce back strongly from periods of uncertainty.

 

Mark Niznik and William Tamworth

Portfolio Managers from 10 March 2025

 

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 markets, interest rates and exchange rates are not under the control of the Board or the Portfolio Managers, but may give rise to high levels of volatility in the share prices of investee companies, as well as affecting the Company’s own share price and the discount to its NAV. The risk could be triggered by unfavourable developments globally and/or in one or more regions, contemporary examples being the market uncertainty in relation to the wider political developments in Ukraine, the Middle East and the worldwide tariffs implemented by the USA.	The Directors have assessed the market impact of the ongoing uncertainty from the unfavourable developments globally through regular discussions with the Portfolio Managers and the Corporate Broker. The Company’s current portfolio consists of companies listed on the main UK equity market and those listed on AIM. To a limited extent, futures can be used to mitigate against market (economic) risk, as can the judicious holding of cash or other very liquid assets. Futures are not currently being used.
Investment Risk The Company invests in small and medium-sized companies traded on the London Stock Exchange or on AIM. By their nature, these are generally considered riskier than their larger counterparts and their share prices can be more volatile, with lower liquidity. In addition, as smaller companies may not generally have the financial strength, diversity and resources of larger companies, they may find it more difficult to overcome periods of economic slowdown or recession.	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 domestic UK   economy so the portfolio will be sensitive to both the UK macro economic outlook and sentiment towards the UK. 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 function of anticipated share price upside, the level of conviction and the riskiness of an investment. A single holding will typically not exceed 5% of the portfolio. The factor profile of the portfolio is also principally driven by bottom-up stock picking although our investment risk team generates factor analysis for the investment team to review on a regular basis. Sustainability analysis is a core part of our stock analysis in both assessing the opportunities and risks facing 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.
Shareholders’ Risk The value of an investment in the Company may go down as well as up and an investor may not get back the amount invested.	The Board reviews regularly the Company’s investment objective and strategy to ensure that it remains relevant, as well as reviewing the composition of the shareholder register, peer group performance on both a share price and NAV basis, and the Company’s share price discount to NAV per share. The Board and the Manager maintain an 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 function and service provisions. The Company’s operational structure means that all cyber risk (information and physical security) arises at its third-party service providers, including fraud, sabotage or crime against the Company. The Company’s operational capability relies upon the ability of its third-party service providers to continue working throughout the disruption caused by a major event such as the Covid-19 pandemic. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to successfully pursue its investment policy. The Company’s main service providers, of which the Manager is the principal provider, are listed on page 64. The Manager may be exposed to reputational risks. In particular, the Manager may be exposed to the risk that litigation, misconduct, operational failures, negative publicity and press speculation, whether or not it is valid, will harm its reputation. Damage to the reputation of the Manager could 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.	Third-party service providers are subject to ongoing monitoring by the Manager and the Board. During the year, the performance of all third-party providers was reviewed through formal and informal meetings. The Audit Committee reviews regularly the performance and internal controls of the Manager and all third-party providers through audited service organisation control reports, together with updates on information security, the results of which are reported to the Board. The Manager’s business continuity plans were reviewed on an ongoing basis during the year and the Directors were satisfied that robust plans and infrastructure were in place to minimise the impact on its operations so that the Company can continue to trade, meet regulatory obligations, report and meet shareholder requirements. The Board received regular update reports from the Manager and the other third-party service providers on business continuity processes and had been provided with assurance from them all insofar as possible that measures are in place for them to continue to provide contracted services to the Company during the year.
Regulatory Risk The Company is subject to various laws and regulations by virtue of its status as an investment trust, its listing on the London Stock Exchange and being an Alternative Investment Fund under the UK AIFMD regime. A loss of investment trust status could lead to the Company being subject to corporation tax on the chargeable capital gains arising on the sale of its investments. Other control failures, either by the Manager or any other of the Company’s service providers, could result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations.	The Manager reviews the level of compliance with tax and other financial regulatory requirements on a regular basis. The Board regularly considers all risks, the measures in place to control them and the possibility of any other risks that could arise. During the year, the Manager’s Compliance and Internal Audit team produced annual reports for review by the Company’s Audit Committee. Further details of risks and risk management policies as they relate to the financial assets and liabilities of the Company are detailed in note 16 of this Annual Financial Report.

 

Viability Statement

In accordance with provision 31 of the UK Corporate Governance Code 2018, the Directors have assessed the prospects of the Company over a longer period than 12 months. The Company is an investment trust, a collective investment vehicle designed and managed for long term investment. While the appropriate period over which to assess the Company’s viability may vary from year to year, the long term for the purpose of this viability statement is currently considered by the Board to be at least five   years, with the life of the Company not intended to be limited to that or any other period.

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 Ukraine, Israel and Palestine, and the USA, the Directors remain confident, in light of recent changes, that the Company’s investment strategy will continue to serve shareholders well over the longer term.

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 31 JANUARY 2025

 

Ordinary shares unless stated otherwise

		Market
		Value	% of
Company	Sector	£’000	Portfolio
4imprint	Media	7,318	5.1
JTC	Investment Banking and Brokerage Services	7,181	5.0
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 Brokerage Services	4,654	3.2
Coats	General Industrials	4,498	3.1
Chemring	Aerospace and Defence	4,305	3.0
Advanced Medical Solutions AIM	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 Equipment	2,851	2.0
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
GlobalData AIM	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
CVS AIM	Consumer Services	2,490	1.7
Mitchells & Butlers	Travel and Leisure	2,487	1.7
Johnson Service AIM	Industrial Support Services	2,481	1.7
Brooks Macdonald AIM	Investment Banking and Brokerage Services	2,469	1.7
Aptitude Software	Software and Computer Services	2,439	1.7
Marshalls	Construction and Materials	2,397	1.7
Oxford Instruments	Electronic and Electrical Equipment	2,381	1.7
Tatton Asset Management AIM	Investment Banking and Brokerage Services	2,358	1.6
XP Power	Electronic and Electrical Equipment	2,354	1.6
Kainos	Software and Computer Services	2,178	1.5
Top Thirty Holdings		105,592	73.1
Young & Co’s Brewery – Non-Voting AIM	Travel and Leisure	2,134	1.5
MJ Gleeson	Household Goods and Home Construction	2,095	1.5
Essentra	Industrial Support Services	2,082	1.4
GB Group AIM	Software and Computer Services	1,957	1.4
Savills	Real Estate Investment and Services	1,943	1.4
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
Midwich AIM	Industrial Support Services	1,539	1.1
Dunelm	Retailers	1,421	1.0
M&C Saatchi AIM	Media	1,413	1.0
Jadestone Energy AIM	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 Services	1,148	0.8
Secure Trust Bank	Banks	1,125	0.8
RWS AIM	Industrial Support Services	1,098	0.8
Top Fifty Holdings		137,516	95.6
Churchill China AIM	Household Goods and Home Construction	1,027	0.7
FDM	Industrial Support Services	976	0.7
Next Fifteen Communications AIM	Media	833	0.6
Topps Tiles	Retailers	803	0.6
Videndum	Industrial Engineering	724	0.5
Learning Technologies AIM	Software and Computer Services	619	0.4
Focusrite AIM	Leisure Goods	605	0.4
YouGov AIM	Media	435	0.3
Genus	Pharmaceuticals and Biotechnology	335	0.2
Thruvision AIM	Electronic and Electrical Equipment	47	–
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 United Kingdom applicable law and regulations.

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 UK-adopted international accounting standards. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

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 UK-adopted international accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

•   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 UK adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company;

•   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

 

Bridget Guerin

Chairman

28 April 2025

 

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 held at fair value	9	-	(4,673)	(4,673)	-	(11,138)	(11,138)
Income	2	4,902	-	4,902	5,088	491	5,579
Investment management fees	3	(189)	(1,072)	(1,261)	(182)	(1,029)	(1,211)
Other expenses	4	(370)	(466)	(836)	(424)	(3)	(427)
Loss before finance costs and taxation		4,343	(6,211)	(1,868)	4,482	(11,679)	(7,197)
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 share	7	13.02p	(20.54)p	(7.52)p	13.18p	(34.91)p	(21.73)p

 

The total columns of this statement represent the Company’s statement of comprehensive income, prepared in accordance with UK-adopted international accounting standards. The loss after taxation is the total comprehensive loss. The supplementary revenue and capital columns are both prepared in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies. All items in the above statement derive from continuing operations of the Company. No operations were acquired or discontinued in the year.

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 loss for the year		–	–	–	(11,809)	4,459	(7,350)
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 loss for the year		–	–	–	(6,712)	4,254	(2,458)
Dividends paid	8	–	–	–	(1,278)	(4,328)	(5,606)
Shares bought back and held in treasury	12	–	–	–	(286)	–	(286)
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 loss	9	143,920	169,481
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 28 April 2025.

Signed on behalf of the Board of Directors

Bridget Guerin

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 30 April 2026.

(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 UK-adopted international accounting standards. The standards are those that are effective at the Company’s financial year end.

Where presentational guidance set out in the Statement of Recommended Practice (‘SORP’) ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’, issued by the Association of Investment Companies in July 2022, is consistent with the requirements of UK-adopted international accounting standards, the Directors have prepared the financial statements on a basis compliant with the recommendations of the SORP. The supplementary information which analyses the statement of comprehensive income between items of a revenue and a capital nature is presented in accordance with the SORP.

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 UK.

(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 Invesco Liquidity Funds plc – Sterling, a triple-A rated money market fund. Cash and cash equivalents are defined as cash itself or being readily convertible to a known amount of cash and are subject to an insignificant risk of change in value with original maturities of three months or less.

(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 UK listed investments where the investee company is domiciled outside of the   UK.

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 31 January 2025, £93,000 (2024: £106,000) was accrued in respect of the investment management fee.

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 National Insurance payable on Directors’ remuneration. As at 31 January 2025, the amounts outstanding on employer’s National Insurance on Directors’ remuneration was £1,100 (2024: £1,000), the amounts outstanding for Directors’ fee was £11,200 (2024: £10,400).

•   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 UK equities, it has little overseas tax. In addition, no deferred tax is required to provide for tax that is expected to arise in the future due to differences in accounting and tax bases.

(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% (2024: 24.03%)	(615)	(1,766)
	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 UK Corporation Tax rate from 19% to 25% effective 1 April 2023. The Act received Royal Assent on 10 June 2021. Deferred tax assets and liabilities on balance sheets prepared after the enactment of the new tax rate must therefore be re-measured accordingly, so as a result the deferred tax asset has been calculated at 25%.

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 31 January 2025, was paid to shareholders on 7   March 2025. The Company’s dividend policy was changed in 2015 so that dividends will be paid firstly from current year revenue and any revenue reserves available, and thereafter from capital reserves. The amount payable in respect of the year is shown below:

	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 31 January 2025, in respect of up to 10% of the Company’s issued shares (excluding treasury shares). The return of capital was proposed by way of an elective special dividend, where all shareholders had an opportunity to elect in respect of each share held. The value of the special dividend of 484.85p was an amount per share which represented 97.5% of the published unaudited NAV per share of 497.29p as at the net asset value certification date (being 6.00 p.m. on 17 September 2024). The special dividend was paid on 8 October 2024, resulting in 3,382,648 shares being cancelled for no consideration pursuant to the reduction of capital and an amount of £16,401,000 was paid to Shareholders who elected to receive the special dividend.

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 31 January 2025 the Company’s £15 million overdraft facility was replaced with a new uncommitted £20 million sterling two year revolving credit facility (the 'bank facility') with The Bank of New York Mellon. Interest on the bank facility was payable based on the Adjusted Reference Rate (principally SONIA in respect of loans drawn) plus a facility fee of 0.05% per annum on the total amount of the facility. The bank facility covenants were based on the lower of 30% of net asset value and £20 million and required total assets to not fall below £50 million. Subsequent to the year end, the bank facility was fully re-paid with effect 26 February 2025 and the facility withdrawn.

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 start of year	33,826,929	19,382,155	33,826,929	19,382,155
Special dividend paid	(3,382,648)	–	–	–
Shares bought back and held in treasury	(70,919)	70,919	–	–
Carried forward	30,373,362	19,453,074	33,826,929	19,382,155

 

During the year to 31 January 2025, the Company bought back into treasury, 70,919 (2024: none) ordinary shares at a total cost of £286,000 (2024: nil). 3,382,648 shares were cancelled as part of the Special Dividend paid 8 October 2024. No shares have been bought back into treasury since 31 January 2025.

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 value		Net assets
	per ordinary share		attributable
	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 UK equities traded on the London Stock Exchange, liquidity risk and credit risk are not significant. Liquidity risk is minimised as the majority of the Company’s investments comprise a diversified portfolio of readily realisable securities which can be sold to meet funding commitments as necessary. In addition, a bank facility (formerly overdraft facility) provided short-term funding flexibility.

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 The Bank of New York Mellon (International) Limited, an A-1+ rated financial institution, until 9 March 2025. From 10 March 2025 the custodian was changed to Northern Trust Investor Services Limited, a similarly rated institution. Cash balances are limited to a   maximum of 2.5% of net assets with any one deposit taker, with only approved deposit takers being used. A maximum of 4.0% of net assets with The Bank of New York Mellon (International) Limited and a maximum of 7.5% of net assets for holdings in the Invesco Liquidity Funds plc – Sterling, a triple-A rated money market fund, were allowed during the period to 9   March 2025. Post transition, a maximum of 4.0% of net assets is allowed to be placed with Northern Trust Investor Services Limited with a further 10% maximum allowed to be invested in the Northern Trust Global Funds plc - Sterling money market fund.

  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 Bank of New York Mellon (International) Limited (until 9 March 2025) and Northern Trust Investor Services Limited (from 10 March 2025). Additionally, holdings in Invesco Liquidity Funds plc – Sterling and Northern Trust Global Funds plc - Sterling are both subject to interest rate changes.

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 Bank of England base rate. The Company used the facility when required, at levels that were approved and monitored by the Board.

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 26 February 2025 and the facility withdrawn.

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 UK, though it should be noted that the Company’s investments may not be entirely exposed to economic conditions in the UK, as many UK listed companies do much of their business overseas.

  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 31 January 2025, the composition of which is shown on the Balance Sheet on page 47, was £136,644,000 (2024: £161,395,000).

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 31 January 2025 (2024: nil).

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 UK-adopted international accounting standards the Company has identified the Directors as related parties. The Directors’ remuneration and interests have been disclosed on page 37 with additional disclosure in note 4. No other related parties have been identified.

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 10 March 2025, Artemis Fund Managers Limited (“Artemis”) was appointed as the Company’s Investment Manager and AIFM. The following changes have also taken effect:

–   the Company’s name changed to Artemis UK Future Leaders plc on 12 March 2025;

–   the Company’s registered office has changed to 50 Bank Street, Canary Wharf, London E14 5NT;

–   the Company’s fund administration service provider has changed to The Northern Trust Company;

–   the Company’s custody and depositary service provider has changed to Northern Trust Investor Services Limited;

–   the Company’s corporate secretary has changed to Northern Trust Secretarial Services (UK) Limited;

–   the Company’s website changed to https://www.artemisfunds.com/futureleaders

On 26 February 2025 the bank facility was fully re-paid and the facility withdrawn.

2025 Financial Information

The figures and financial information for the year ended 31 January 2025 are extracted from the Company's annual financial statements for that year and do not constitute statutory accounts. The Company's annual financial statements for the year to 31 January 2025 have been audited but have not yet been delivered to the Registrar of Companies.   The Auditor's report on the 2025 annual financial statements was unqualified, did not include a reference to any matter to which the Auditor drew attention without qualifying the report, and did not contain any statements under Section 498 of the Companies Act 2006.

2024 Financial Information

The figures and financial information for the year ended 31 January 2024 are compiled from an extract of the published accounts for that year and do not constitute statutory accounts.     Those accounts have been delivered to the Registrar of Companies   and included the report of the Auditor which was unqualified and did not contain a statement under Sections 498(2) or 498(3) of the Companies Act 2006.

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 Artemis Fund Managers Limited, Cassini House, 57 St James’s Street, London SW1A 1LD and via the Company’s website: www.artemisfunds.com/futureleaders

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 Artemis UK Future Leaders plc, please forward this document and the accompanying Form of Proxy to the person through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

NOTICE IS GIVEN that the Annual General Meeting (‘AGM’) of Artemis UK Future Leaders plc will be held at the offices of Artemis Fund Managers Limited at Cassini House, 57 St James’s Street, London SW1A 1LD at 12.00 noon on 5 June 2025 for the following purposes:

Ordinary Business

1.   To receive and consider the Annual Financial Report for the year ended 31 January 2025.

2.   To approve the Directors’ Remuneration Policy.

3.   To approve the Annual Statement and Report on Remuneration for the year ended 31   January 2025.

4.   To approve the final dividend of 3.45p for the year ended 31 January 2025.

5.   To re-elect Bridget Guerin as a Director of the Company.

6.   To re-elect Graham Paterson as a Director of the Company.

7.   To re-elect Mike Prentis as a Director of the Company.

8.   To re-elect Simon Longfellow as a Director of the Company.

9.   To re-appoint the auditor, Ernst & Young LLP.

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   April 2025, such authority to 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 authority shall allow the Company to make offers or agreements before the expiry of this authority which would or might require shares to be allotted, or rights to be granted, after such expiry as if the authority conferred by this resolution had not expired.

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   April 2025; and

(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   April 2025;

(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 London Stock Exchange;

(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 United Kingdom Listing Authority, be held (or otherwise dealt with in accordance with Section 727 or 729 of the Act) as treasury shares.

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 28 April 2025

By order of the Board

Northern Trust Secretarial Services (UK) Limited

Corporate Company Secretary

 

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
Capital dividend as a percentage of year end net assets	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.

 

Share price   a Net asset value per share (note 14)   b	2025 375.00p 449.88p	2024 424.00p 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.

 

Dividends per share payable in respect of the year (note 8)                                             a Share price                                                                                                                  b	2025 (1) 15.00p 375.00p	2024 16.96p 424.00p
Dividend Yield                                                                                              c = 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
Gross gearing	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 equivalents		(2,472)	–
Net borrowings	a	9,878	8,753
Net asset value	b	136,644	161,395
Net gearing	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 c)	d	20,000	15,000
Net asset value	e	136,644	161,395
Maximum authorised gearing	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 professional costs		(466)	(35)
Total recurring expenses	a	1,631	1,603
Average daily net assets	b	158,051	158,683
Ongoing charges ratio %	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.

 

		Net Asset	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%
Total return for the year	c = a+b	–2.4%	–8.0%

 

		Net Asset	Share
2024		Value	Price
As at 31 January 2024 As at 31 January 2023		477.12p 517.09p	424.00p 451.00p
Change in year	a	–7.7%	–6.0%
Impact of dividend reinvestments (1)	b	3.6%	4.2%
Total return for the year	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.