DDV1.L Regulatory News (DDV1)

9 Dec 2005 12:48

AIM Distribution Trust PLC (The)09 December 2005 The AIM Distribution Trust plc Interim Statement for the six months ended 30 September 2005 RECENT PERFORMANCE SUMMARY 30 Sept 31 Mar 30 Sept 2005 2005 2004 pence pence pence (Restated)Net asset value per Ordinary share 70.2 68.0 66.0Cumulative distributions per Ordinary share 49.8 49.8 47.8Total return per Ordinary share 120.0 117.8 113.8 CHAIRMAN'S STATEMENT I present the interim statement for the six months ended 30 September 2005. TheAIM market has experienced mixed fortunes over the period under review, with theFTSE AIM All-Share Index falling sharply in the early part of the period butrecovering in the later part. Against this background, it is satisfying to beable to report an increase in the Company's Net Asset Value per Ordinary share("NAV") over the six months. Net Asset Value At 30 September 2005, the Company's NAV stood at 70.2p, an increase of 2.2p or3.2% compared to the NAV at 31 March 2005. As a result of the introduction of FRS 26, the Company now has to value quotedinvestments at bid prices. If mid-market prices had continued to be used at 30September 2005, the valuation of the Company's investments would have been£230,000 higher (equivalent to 1.5p per share) and the increase in NAV over theperiod would have been 3.7p per share or 5.4%. VCT investments The Company made five new investments and one follow-on investment during theperiod, totalling £978,000. These are summarised as follows: £'000 New investments Cadbury House (Unquoted) 225 A country club with health club, banqueting and conferencefacilities, which has raised funds for a majorredevelopment of its premises. Waterline Group (AIM) 200 The largest independent supplier of third party and ownbrand kitchen furniture and related products in the UK. Cellcast (AIM) 194 Interactive television and mobile programming provider. Neurahealth (AIM) 173 Developer and distributor of natural healthcare products. Dipford Group (AIM) 136 Business broker for small business transfers. Follow-on investmentKeycom (Ofex) 50 978 There were also two part disposals during the period realising a profit againstcarrying value of £54,000. Overall, the VCT investment portfolio gave rise to an unrealised gain of£384,000 for the six months. Format of accounts Since the Company revoked investment company status in 2000 in order to be ableto pay a capital dividend, it has presented its accounts in a standard CompaniesAct format, including a profit and loss account. In recent years, it has becomecommon for VCTs to report their results in accordance with Investment TrustStatement of Recommended Practice ("SORP") even though they have revokedinvestment company status. The Board considers that the SORP format is muchclearer to Shareholders and other users of the Company's accounts and hastherefore decided to revert to the SORP format. Further details are given inthe accounting policies note set out below. Results and Dividend The Company incurred a revenue loss of £9,000 (2004: £Nil) for the period. Nointerim dividend will be paid. It remains the Board's target to pay dividendsof at least 2p per share per year. 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. Outlook Since the period end there has been mixed news for the Company's investments.During October, the AIM market experienced a general fall in value and, inparticular, CRC Group plc's share price fell significantly following a profitswarning. In November, there was positive news when New Star Asset Managementplc floated on AIM at a healthy premium to its previous carrying value. At 30November 2005, the Company's NAV stood at 67.7p. Despite this overall fallsince the period end, the Investment Manager and Board believe that the Companynow has a well-balanced portfolio with good long-term prospects. With a fair level of cash and liquid funds available, the Investment Manager iscontinuing to seek suitable new investment opportunities. Although deal flowcontinues to be strong, careful selection of the best quality opportunitiesremains the key to success. Sir Aubrey Brocklebank Chairman UNAUDITED SUMMARISED BALANCE SHEET as at 30 September 2005 30 Sept 30 Sept 31 March 2005 2004 2005 (Restated) £'000 £'000 £'000Fixed assetsInvestments 11,357 9,716 9,142 Net current assets 527 1,125 1,904 Net assets 11,884 10,841 11,046 Capital and reservesCalled up share capital 4,232 4,105 4,063Capital redemption reserve 179 96 138Share premium 348 - -Special reserve 1,457 2,387 1,607Capital reserve - unrealised (577) (1,726) (901)Revenue Account 6,245 5,979 6,139 11,884 10,841 11,046 Net asset value per share 70.2p 66.0p 68.0p UNAUDITED STATEMENT OF TOTAL RETURN (incorporating the revenue account) for the six months ended 30 September 2005 Six months ended 30 September 2005 Revenue Capital Total £'000 £'000 £'000 Income 92 - 92 Gains/(losses) on investments:- Realised - 54 54- Unrealised - 384 384 92 438 530 Investment management fees (17) (50) (67) Other expenses (84) - (84) Return on ordinary activities before taxation (9) 388 (379) Tax on ordinary activities - - - Return attributable to equity shareholders (9) 388 (379) Distributions - - - Transfer to/(from) reserves (9) 388 (379) Return per Ordinary share (0.1p) 2.3p 2.2p Six months ended Year ended 30 September 2004 31 March 2005 (Restated) Revenue Capital Total Total £'000 £'000 £'000 £'000 Income 108 - 108 209 Gains/(losses) on investments:- Realised - 42 42 156- Unrealised - (199) (199) 360 108 (157) (49) 725 Investment management fees (14) (41) (55) (109) Other expenses (94) (2) (96) (183) Return on ordinary activities before - (200) (200) 433taxation Tax on ordinary activities - - - - Return attributable to equity - (200) (200) 433shareholders Distributions - - - (328) Transfer to/(from) reserves - (200) (200) 105 Return per Ordinary share - (1.2p) (1.2p) 2.6p The revenue column of this statement is the profit and loss account of theCompany. All revenue and capital items in the above statement derive from continuingoperations. The Company has only one class of business and derives its income frominvestments made in shares, securities and bank deposits. The comparative figures are in respect of the six months ended 30 September 2004and the year ended 31 March 2005 respectively. UNAUDITED CASHFLOW STATEMENT for the six months ended 30 September 2005 Six months Six ended months ended Year ended 30 Sept 30 Sept 31 March 2005 2004 2005 Note £'000 £'000 £'000Cash outflow from operating activities and returns on (44) (65) (107)investments 1 Capital expenditure Purchase of investments (1,982) (2,249) (3,070) Proceeds on disposal of VCT investments 205 1,902 3,970 Net cash (outflow)/inflow from capital expenditure (1,777) (347) 900 Equity distributions paid - - (328) Net cash (outflow)/inflow before financing (1,821) (412) 465 Financing Application for share issues 271 - 340Share issue costs (22) - (31)Purchase of own shares (121) (77) (155)Net cash inflow/(outflow) from financing 128 (77) 154 (Decrease)/increase in cash 2 (1,693) (489) 619 Notes to the cashflow statement: 1 Cash outflow from operating activities and returnson investmentsNet revenue before taxation (9) - 1Expenses charged to capital (50) (43) (84)Decrease in other debtors 11 6 13Increase/(decrease) in other creditors 4 (28) (37)Net cash outflow from operating activities (44) (65) (107) 2 Analysis of net fundsBeginning of period 2,237 1,618 1,618Net cash (outflow)/inflow (1,693) (489) 619End of period 544 1,129 2,237 SUMMARY OF INVESTMENT PORTFOLIOas at 30 September 2005 Bid % of Cost Valuation portfolio £'000 £'000 by valueTop ten VCT investmentsConnaught plc 150 936 8.3%CRC Group plc 170 512 4.5%Supporta plc 250 506 4.5%Printing.com plc 199 496 4.4%Neutec Pharma plc 208 480 4.2%XKO Group plc 492 459 4.0%Huveaux plx 299 441 3.9%Aero Inventory plc 196 412 3.6%Associated Network Solutions plc * 250 390 3.4%Cardpoint plc 341 272 2.4% 2,555 4,904 43.2% Other VCT investments 7,817 4,769 42.0% Listed fixed income securities 1,562 1,684 14.8% Total Investments 11,934 11,357 100.0% All VCT investments are quoted on AIM unless otherwise stated. * Quoted on OFEX NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The above financial information has been prepared on the basis of theaccounting policies set out below. 2. Adoption of FRS 21 These accounts have been prepared in accordance with FRS 21, which requires theCompany to account for dividends in the period they are liable to be paid ratherthan in respect of the period in respect for which they are declared.Comparative figures have been restated accordingly. The effect of the abovechange on the reported net assets and net asset per share is as follows: 30 September 30 September 31 March 2005 2004 2005 Net Net Net asset asset asset Net Net Net assets value assets value assets value per per per share share share £'000 p £'000 p £'000 p As reported (pre FRS 21) 10,153 70.2 10,512 64.0 11,046 68.0Add: proposed dividends not accounted for untildeclared and paid - - 329 2.0 - - As reported under FRS 21 10,562 70.2 10,841 66.0 11,046 68.0 3. As a result of the introduction of FRS 26, the Company is now requiredto value quoted investments at bid prices, where previously it valued them atmid-market prices. The change to bid prices has reduced the Company's Net AssetValue by £230,000 as at 30 September 2005, equivalent to 1.4p per share. 4. The calculation of the revenue and capital return per share for theperiod is based upon the net revenue loss and capital gain after tax of £9,000and £388,000 respectively, divided by the weighted average number of shares inissue during the period of 16,924,454. 5. 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 31 March 2005 have been extracted from the financial statements forthat year, which have been delivered to the Registrar of Companies; theauditors' report on those financial statements was unqualified. 6. Copies of the unaudited interim results will be sent to shareholdersshortly. Further copies can be obtained from the Company's Registered Office. PRINCIPAL ACCOUNTING POLICIES The financial statements are prepared in accordance with applicable UnitedKingdom accounting standards and with the Statement of Recommended Practice ("SORP") "Financial Statements of Investment Trust Companies" in all materialrespects. The particular accounting policies are set out below: Accounting convention The financial statements have been prepared under the historical cost conventionas modified by the revaluation of investments. True and fair override The Company is no longer an investment company within the meaning of Section266, Companies Act 1985, having revoked investment company status on 24 February2000 in order to pay a capital dividend. However, the Company continues toconduct its affairs as a venture capital trust for taxation purposes unders842AA of the Income and Corporation Taxes Act 1988. The financial statements are prepared in accordance with applicable AccountingStandards and with the Statement of Recommended Practice "Financial Statementsof Investment Trust Companies" ("SORP"). Ordinarily, the absence of Section 266status would require the Company to adopt a different presentation of theaccounts than that recommended by the Association of Investment Trust Companies. However, the Directors consider it appropriate to present the accounts inaccordance with the SORP. Under the SORP, the financial performance of theCompany is presented in a Statement of Total Return in which the revenue columnis the profit and loss account of the Company. The revenue column excludescertain capital items, which in the absence of investment company status, theCompanies Act 1985, would ordinarily require to be included in the profit andloss account: net profits on disposal of investments, calculated by reference totheir previous carrying amount, permanent diminution in value of investments,management expenses charged to capital less tax relief thereon and thedistribution of capital profits. The presentation adopted enables the Company to report in a manner consistentwith the sector within which it operates. The Directors therefore consider thatthese departures from the specific provisions of Schedule 4 of the Companies Actrelating to the form and content of accounts for companies other than investmentcompanies and these departures from accounting standards are necessary to give atrue and fair view. The departures have no effect on the total return orbalance sheet. The particular accounting policies adopted are described below. Investments Listed fixed income securities and investments quoted on the AlternativeInvestment Market ("AIM") and OFEX are stated at bid prices at the end of theaccounting period. The Board has taken the decision to adopt BVCA guidelines in respect of valuingquoted investments. This means that the quoted investments, including thosetraded on the Alternative Investment Market ("AIM") and OFEX, are now valued atbid-price rather than at mid-market price as at the Balance Sheet date. Theeffect on the financial statement is that the investments are valued at £230,000less than if they had been valued using mid-prices. The Directors are conscious of the fact that because shares are traded on AIMand OFEX this does not guarantee their liquidity. The nature of AIM and OFEXinvestments is such that the prices can be volatile and realisation may notachieve current book value, especially when such a sale represents a significantproportion of that company's market capital. In determining the valuation of unquoted investments the Directors adopt the bidprice where a dealing facility exists and apply a discount if consideredappropriate. Where no dealing facility exists the factors which the Directorshave regard to include, inter alia, the earnings record and growth prospects ofthe security, the rating of comparable quoted companies, the yield of thesecurity where appropriate and any recent transactions. Revenue Dividends due on quoted equity shares and undated non-equity shares are broughtinto account on the ex-dividend date. Fixed returns on non-equity shares arerecognised on a time apportionment basis so as to reflect the effective yield onthe shares. The return on fixed interest securities is recognised on a timeapportionment basis from the date of purchase so as to reflect the effectiveyield on the securities. Expenses All expenses are accounted for on an accruals basis. Expenses are recognised inthe profit and loss account except as follows: - Expenses which are incidental to the acquisition of an investment areincluded within the cost of the investment; - Expenses which are incidental to the disposal of an investment arededucted from the disposal proceeds of the investment. Deferred Taxation Deferred taxation is provided on all timing differences that have originated butnot reversed at the balance sheet date other than those differences recorded aspermanent differences. Deferred tax is provided at the average rate of taxexpected to apply. Deferred tax assets and liabilities are not discounted toreflect the time value of money. Deferred tax assets are only recognised to theextent that they are regarded as recoverable. Foreign currency assets and liabilities Assets and liabilities denominated in foreign currencies are translated at therate of exchange ruling at the balance sheet date. Transactions in foreigncurrencies are recorded at the rate ruling at the date of the transaction. Alldifferences are taken to the profit and loss account. This information is provided by RNS The company news service from the London Stock Exchange