DDV1.L Regulatory News (DDV1)

18 Dec 2006 16:40

AIM Distribution Trust PLC (The)18 December 2006 The AIM Distribution Trust plc Interim Statement for the six months ended 30 September 2006 Recent performance summary 30 Sept 31 Mar 30 Sept 2006 2006 2005 pence pence pence Net asset value per share 65.1 70.0 70.2Cumulative distributions per share 51.8 51.8 49.8Total return per share 116.9 121.8 120.0 CHAIRMAN'S STATEMENT The six month period ended 30 September 2006 has been a disappointing one foryour Company. Although many of the investments in the portfolio performedsatisfactorily over the period, a small number performed poorly which hasimpacted on the Company's Net Asset Value per share ("NAV"). Net Asset Value At 30 September 2006, the Company's Net Asset Value ("NAV") stood at 65.1p, adecrease of 4.9p or 7% compared to the NAV at 31 March 2006. VCT Investment Portfolio As the Company is well above the VCT qualifying target of having 70% of itsfunds in VCT qualifying investments, new investment activity has been limited,with one follow-on investment of £25,000 being made during the period. There was one major disposal during the period. Neutec Pharma was the subjectof an offer which produced a realised gain for your Company of £512,000 againstthe valuation at the previous year end and £828,000 against original cost. Within the remaining VCT Investment Portfolio, there were a number of poorperformers. Cellcast plc, Chariot (UK) plc, Hill Station plc, PM Group plc andPrinting.com plc all experienced significant falls in their share prices as aresult of a specific difficulties faced by each of those companies. Thoseinvestments together accounted for unrealised losses of £916,000 over theperiod. Overall, the VCT Investment Portfolio gave rise to an unrealised loss of£1,290,000 and a realised gain £519,000 for the six months. Results and Dividend The loss on ordinary activities after taxation for the period was £846,000comprising a revenue loss of £10,000 and a capital loss of £836,000. As the Company has made some further realised gains in the period, the Board hasdecided to pay an interim dividend of 2p per share. This will be paid on 29March 2007 to Shareholders on the register at 2 March 2007. Repurchase of shares The Directors are conscious that the Company's share price is affected by theilliquidity of its shares in the market resulting from the fact that investorspurchasing "second-hand" shares do not benefit from income tax relief on theirinvestment. The Directors continue to monitor the market in the Company's shares to ensurethere is liquidity for Shareholders wishing to dispose of their holding. In linewith the general trend in the VCT market, in future, the Board intends to buy inshares at approximately a 10% discount to the latest published NAV. This will,however, be subject to regulatory and other restrictions, such as close periodswhere the Company is generally prohibited from buying its own shares. During the period the Company repurchased 1,982,944 ordinary shares at anaverage price of 59.6p per share. This level of share purchases is unusuallyhigh and mostly resulted from a group of institutional shareholders who disposedof their holdings in the Company. The Board do not expect share repurchases tooccur at this level in the future. As the share buybacks were carried out at a10% discount to NAV, the effect has been an uplift of approximately £130,000 forthe Company's remaining shareholders. Outlook Although the performance has been disappointing over the last six months, theCompany continues to hold a large and diverse portfolio of mainly AIM-quotedinvestments. In most cases, the Investment Manager and Directors believe thesecompanies have strong management teams who should be able to develop theirbusinesses and deliver rewards to investors in the medium term. I hope to beable to report on more evidence of this in the second half of the year. Sir Aubrey Brocklebank Chairman UNAUDITED SUMMARISED BALANCE SHEETas at 30 September 2006 30 Sept 2006 30 Sept 2005 31 Mar 2006 £'000 £'000 £'000 Fixed assetsInvestments 9,496 11,357 11,638 Net current assets/(liabilities) 71 527 (36) Net assets 9,567 11,884 11,602 Capital and reservesCalled up share capital 3,650 4,232 4,145Capital redemption reserve 761 179 266Share premium 348 348 348Special reserve - 1,457 1,176Capital reserve - realised 7,269 6,206 6,467Capital reserve - unrealised (2,463) (577) (812)Revenue reserve 2 39 12 Total equity 9,567 11,884 11,602 Net asset value per share 65.5p 70.2p 70.0p RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 30 Sept 2006 30 Sept 2005 31 Mar 2006 £'000 £'000 £'000 Opening shareholders' funds 11,602 10,831 10,831Issue of shares - 611 611Share issue costs - (53) (53)Repurchase of own shares (1,189) (99) (313)Total recognised gains for the period (846) 594 862Distributions paid in period - - (336) Closing shareholders' funds 9,567 11,884 11,602 INCOME STATEMENTfor the six months ended 30 September 2006 Six months ended 30 September 2006 Revenue Capital Total £'000 £'000 £'000 Income 94 - 94 Gains on investments- Realised - 518 518- Unrealised - (1,290) (1,290) 94 (772) (678) Investment management fees (21) (64) (85)Other expenses (83) - (83) Return on ordinary activities before taxation (10) (836) (846) Taxation - - - Return attributable to equity shareholders (10) (836) (846) Return per share (0.1p) (5.2p) (5.3p) Six months ended Year ended 30 September 2005 31 March 2006 (as restated) Revenue Capital Total Total £'000 £'000 £'000 £'000 Income 92 - 92 168 Gains on investments- Realised - 58 58 552- Unrealised - 595 595 462 92 653 745 1,182 Investment management fees (17) (50) (67) (156)Other expenses (84) - (84) (164) Return on ordinary activities before taxation (9) 603 594 862 Taxation - - - - Return attributable to equity shareholders (9) 603 594 862 Return per share (0.1p) 3.6p 3.5p 5.1p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the six months ended 30 September 2006 Six months ended 30 September 2006 Revenue Capital Total £'000 £'000 £'000 Return attributable to equity shareholders (10) (836) (846) Total recognised gains for the period (10) (836) (846) Six months ended Year ended 30 September 2005 31 March 2006 (as restated) Revenue Capital Total Total £'000 £'000 £'000 £'000 Return attributable to equity shareholders (9) 603 594 862 Total recognised gains for the period (9) 603 594 862 Prior year adjustment - (215) (215) (215) Total recognised gains and losses since last report (9) 338 379 647 UNAUDITED CASH FLOW STATEMENTfor the six months ended 30 September 2006 Six Six months months Year ended ended ended 30 Sept 30 Sept 31 Mar 2006 2005 2006 Note £'000 £'000 £'000 Cash outflow from operating activities and returns on investments 1 (99) (44) (120) Capital expenditure Purchase of investments (80) (1,982) (2,807) Proceeds on disposal of investments 1,399 205 1,159 Net cash inflow/(outflow) from capital expenditure 1,319 (1,777) (1,648) Equity dividends paid 1 - (336) Net cash inflow/(outflow) before financing 1,221 (1,821) (2,104) Financing Proceeds of share issue - 271 271 Share issue costs - (22) (22) Purchase of own shares (1,176) (121) (335)Net cash (outflow)/inflow from financing (1,176) 128 (86) Increase/(decrease) in cash 2 45 (1,693) (2,190) Notes to the cash flow statement: 1 Cash outflow from operating activities andreturns on investmentsNet loss before taxation (9) (9) (35)Expenses charged to capital (64) (50) (117)(Increase)/decrease in other debtors (14) 11 13(Decrease)/increase in other creditors (12) 4 19 Net cash inflow/(outflow) from operating activities (99) (44) (120) 2 Analysis of net fundsBeginning of period 47 2,237 2,237Net cash inflow/(outflow) 45 (1,693) (2,190)End of period 92 544 47 SUMMARY OF INVESTMENT PORTFOLIOas at 30 September 2006 Unrealised gain/(loss) % of Cost Valuation in period portfolio £'000 £'000 £'000 by valueTwenty largest VCT investments (byvalue)Connaught plc* 77 648 87 6.8%Supporta plc 250 494 (92) 5.2%Huveaux plc 299 479 38 5.0%Associated Network Solutions plc** 251 466 65 4.9%XKO Group plc 493 425 (91) 4.4%Printing.com plc 200 368 (160) 3.8%Aero Inventory plc 196 328 (22) 3.4%Glisten plc 178 294 45 3.1%Cadbury House Hotel & Country Club Ltd*** 225 293 67 3.1%Blooms of Bressingham Holdings plc 590 284 (18) 3.0%Hill Station Public Limited Company 250 271 (167) 2.8%Keycom plc** 277 259 (5) 2.7%Waterline Group plc 244 256 42 2.7%OMG plc 570 222 40 2.3%Straight plc 105 219 32 2.3%Sanastro Limited *** 200 200 - 2.1%Neutrahealth plc 173 197 8 2.1%Deltex Medical Group plc 258 196 (15) 2.0%Gourmet Holdings plc 250 187 (7) 2.0%AT Communications plc 178 174 (30) 1.8% 5,264 6,260 (183) 65.5% Other VCT investments 5,335 1,742 (1,115) 18.2% Listed fixed income securities 1,361 1,494 8 15.6% Net current assets (including cash at bank) 71 - 0.7% 11,960 9,567 (1,290) 100.0% All VCT investments are quoted on AIM unless otherwise stated. * Listed on the Main Market of the London Stock Exchange ** Quoted on the PLUS Market (formerly known as OFEX) *** Unquoted NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. Accounting policies Basis of accounting The Company has prepared its financial statements under UK Generally AcceptedAccounting Practice ("UK GAAP") and in accordance with the Statement ofRecommended Practice "Financial Statements of Investment Trust Companies"revised December 2005 ("SORP"). The financial statements are prepared under the historical cost conventionexcept for the revaluation of certain financial instruments. Presentation of Income Statement In order to better reflect the activities of a venture capital trust and inaccordance with guidance issued by the Association of Investment Companies ("AIC"), supplementary information which analyses the income statement between itemsof a revenue and capital nature has been presented alongside the incomestatement. The net revenue is the measure the directors believe appropriate inassessing the Company's compliance with certain requirements set out in Section842 Income and Corporation Taxes Act 1988. Investments All investments are designated as "fair value through profit or loss" assets andare initially measured at cost. Thereafter the investments are measured atsubsequent reporting dates at fair value. Listed fixed income investments and investments quoted on AIM are valued usingbid prices with illiquidity discounts applied where deemed appropriate. In respect of unquoted instruments, fair value is established by usingInternational Private Equity and Venture Capital Valuation Guidelines. Where noreliable fair value can be estimated for such unquoted equity investments theyare carried at cost, subject to any provision for impairment. Where an investeecompany has gone into receivership or liquidation the investment, although notphysically disposed of, is treated as being realised. Gains and losses arising from changes in fair value are included in the incomestatement for the year as a capital item and transaction costs on acquisition ordisposal of the investment expensed. It is not the Company's policy to exercise either significant or controllinginfluence over investee companies. Therefore the results of these companies arenot incorporated into the revenue account except to the extent of any incomeaccrued. Income Dividend income from investments is recognised when the shareholders' rights toreceive payment has been established, normally the ex dividend date. Interest income is accrued on a timely basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount, and only where thereis reasonable certainty of collection. Expenses All expenses are accounted for on an accruals basis. In respect of the analysisbetween revenue and capital items presented within the income statement, allexpenses have been presented as revenue items except as follows: • Expenses which are incidental to the disposal of an investment are deductedfrom the disposal proceeds of the investment. • Expenses are split and presented partly as capital items where a connectionwith the maintenance or enhancement of the value of the investments held can bedemonstrated and accordingly the investment management fee and finance costshave been allocated 25% to revenue and 75% to capital, in order to reflect thedirectors expected long-term view of the nature of the investment returns of theCompany. Issue costs Issue costs have been deducted from the share premium account. Deferred Taxation Deferred taxation is provided in full on timing differences that result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in the accounts. 2. All revenue and capital items in the Income Statement derive fromcontinuing operations. 3. The Company has only one class of business and derives its income frominvestments made in shares, securities and bank deposits. 4. The comparative figures were in respect of the year ended 31 March 2006 andthe period ended 30 September 2005 respectively. 5. Return per share for the period has been calculated on 15,962,536 shares,being the weighted average number of shares in issue during the period. 6. Dividends 30 Sept 2006 31 Mar 2006 Revenue Capital Total Total £'000 £'000 £'000 £'000Paid in period/year2006 interim 2p - - - 336 - - - 336 7. Reserves Capital Capital Capital Share Share redemption reserve reserve Revenue premium reserve reserve - unrealised - realised reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2006 348 1,176 266 (812) 6,467 12Repurchase of shares - (1,189) 495 - - -Expenses capitalised - - - - (64) -Gains/(losses) on investments - - - (1,290) 518 -Transfer between reserves - 13 - (361) 348 -Retained net revenue for the year - - - - - (10)At 30 September 2006 348 - 761 (2,463) 7,269 2 The Special Reserve, Capital Reserve - realised and Revenue Reserve areall distributable reserves. 8. The unaudited financial statements set out herein do not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985and have not been delivered to the Registrar of Companies. The figures for theyear ended 30 September 2005 have been extracted from the financial statementsfor that year, which have been delivered to the Registrar of Companies; theauditors' report on those financial statements was unqualified. 9. Copies of the unaudited interim results will be sent to shareholdersshortly. Further copies can be obtained from the Company's Registered Office andwill be available for download from www.downing.co.uk. This information is provided by RNS The company news service from the London Stock Exchange