Half-yearly report
The AIM Distribution Trust plc
Half Yearly Financial Report for the six months ended 30 September
2008
RECENT PERFORMANCE SUMMARY
30 Sept 31 Mar 30 Sept
2008 2008 2007
Pence pence pence
Net asset value per share 42.5 50.3 65.3
Cumulative distributions per share 55.8 55.8 53.8
Total return per share 98.3 106.1 119.1
CHAIRMAN'S STATEMENT
The period covered by these accounts has seen growing concern about
the state of the economy, continuing selling pressure on small
company shares and increasing difficulties in the financial sector,
culminating, since the period end, in the part nationalisation of
several banks. It has been a particularly poor period in which to
announce any shortfall of previous expectations. Although smaller
growing companies cannot reasonably be expected always to comply with
their business plan, some share price reactions in the market as a
whole have been very savage.
Needless to say, your company's portfolio has not been immune from
these conditions. The net asset value per share ("NAV") decreased by
15.5% to 42.5p during the period. Against the backdrop of a 35% fall
in the FTSE AIM All Share index during the period, your Board
believes that this is a reasonable performance under the
circumstances.
VCT Investment Portfolio
The Company is essentially fully invested so investment activity has
been at a relatively low level. During the period, the Company
invested �100,000 in one new investment and �101,000 in follow-on
investments. The Company also made a small number of part disposals
generating proceeds of �426,000.
The new investment was in Hoole Hall Spa and Leisure Limited, an
unquoted business which is developing spa and leisure facilities on a
site near Chester. The Board feels that, in the current climate,
investments such as this, which have substantial fixed assets, may
provide more stability than AIM-quoted investments which are directly
affected by volatile stock market conditions.
The main follow-on investment of �100,000 was made in Hill Station
plc. The AIM-quoted ice cream manufacturer required additional
funding in January 2008 to execute a revised strategy.
Unfortunately, the business did not develop to plan and was put into
administration in October 2008, producing an unrealised loss in the
period of �398,000.
Of the investments held throughout the period, almost all those
quoted on AIM showed falls in value. Overall the venture capital
portfolio produced realised gains of �124,000 and unrealised losses
of �959,000.
Fixed interest securities and other investments
The Company holds a non VCT-qualifying portfolio comprising of three
hedge funds and a holding of permanent interest bearing shares
(PIBS). At the period end, the portfolio was valued at �1,270,000
with unrealised losses of �160,000 and realised losses of �1,000
thereon.
Results and Dividend
The return on ordinary activities after taxation for the period was
�1,043,000 comprising a revenue loss of �8,000 and a capital loss of
�1,035,000.
As the Company has historical realised gains available for
distribution, the Board has decided to declare an interim dividend of
2p per share. This will be paid on 27 March 2009 to Shareholders on
the register at 27 February 2009.
Repurchase of shares
The Company has operated a policy, subject to certain restrictions,
of buying its own shares that become available in the market. During
the period the Company repurchased 445,637 Ordinary shares at an
average price of 44.6p per share, being approximately a 10% discount
to the latest published NAV at the time of purchase. These shares
were subsequently cancelled.
The Board notes that several AIM-focussed VCTs have now suspended
their share buyback policies or have increased the discounts at which
they are prepared to buy in shares. The Board has reviewed the
situation and concluded that, under the present conditions, the lack
of liquidity in the stock market would mean that to raise cash would
require the sale of the best companies in the portfolio and this
would likely be at a discount to their current share price. Under
more normal circumstances, buying in shares at a discount benefits
the fund as a whole but this is clearly not currently the case.
Furthermore such transactions would jeopardise the ability to pay
dividends. The Board has therefore decided not to undertake any
further share buybacks at the current time.
Risk and uncertainties
Under the Disclosure and Transparency Directive, the Board is now
required, in the Company's half year results, to report on principal
risks and uncertainties facing the Company over the remainder of the
financial year.
The Board has concluded that the key risks are:
(i) investment risk associated with investing in young businesses;
(ii) investment risk arising from market volatility; and
(iii) failure to maintain approval as a VCT.
In the case of (i) and (ii) the Board is satisfied with the Company's
approach to these risks. As an AIM-focused VCT, the Company, by
definition, has significant exposure to the relatively immature
businesses quoted on AIM. However, by seeking to hold a
well-diversified portfolio of businesses with strong management
teams, the impact of falling markets and challenging economic
conditions should be mitigated as much as possible given the
Company's status as a VCT and its investment policy.
The Company's compliance with the VCT regulations is continually
monitored by the Administrator, who regularly reports to the Board on
the current position. The Company also retains
PricewaterhouseCoopers to provide regular reviews and advice in this
area. The Board considers that this approach reduces the risk of a
breach of the VCT regulations to a minimal level.
Shareholder Questionnaire
Recent investment performance, along with the effects of undertaking
share buybacks and the policy of paying a reasonable level of annual
dividends, has reduced your Company's net assets to, what is now, a
low level for a VCT. At this level, running costs, many of which are
fixed costs, start to become a significant burden. The Board is
therefore undertaking a review to establish a suitable strategy for
the future.
Some of the options for future strategy might have tax implications
for certain shareholders. The Board has produced a short
questionnaire, the results of which will be considered as part of the
review. The questionnaire will be sent to shareholders with the
printed version of this report.
Outlook
Since the period end, there has been a massive escalation of the
global financial crisis with government having to nationalise banks
and the IMF having to bail out countries. This has fuelled further
falls in stock market prices. At 31 October 2008, the Company's NAV
had fallen to 37.8p per share.
The prices of all shares and in particular those on AIM clearly
discount a deep and prolonged recession. As a fully invested VCT,
there is little action that can be taken to reduce the Company's
exposure to the AIM market. The Board therefore does not expect to
see any significant improvement in the Company's performance until
markets begin to show signs of recovery.
Sir Aubrey Brocklebank
Chairman
INCOME STATEMENT
for the six months ended 30 September 2008
Six months ended
30 September 2008
Revenue Capital Total
�'000 �'000 �'000
Income 85 - 85
(Losses)/gains investments - (996) (996)
85 (996) (911)
Investment management fees (13) (39) (52)
Other expenses (80) - (80)
Return on ordinary activities before (8) (1,035) (1,043)
taxation
Taxation - - -
Return attributable to equity (8) (1,035) (1,043)
shareholders
Return per share (0.1p) (7.7p) (7.8p)
Six months ended Year ended
30 September 2007 31 March 2008
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Income 110 - 110 218
(Losses)/gains investments - 196 196 (1,574)
110 196 306 (1,356)
Investment management fees (18) (51) (69) (134)
Other expenses (83) - (83) (164)
Return on ordinary activities 9 145 154 (1,654)
before taxation
Taxation - - - -
Return attributable to equity 9 145 154 (1,654)
shareholders
Return per share 0.1p 1.0p 1.1p (11.8p)
All Revenue and Capital items in the above statement derive from
continuing operations. The total column within the Income Statement
represents the profit and loss account of the Company.
A Statement of Total Recognised Gains and Losses has not been
prepared as all gains/losses are recognised in the Income Statement
as noted above.
UNAUDITED SUMMARISED BALANCE SHEET
as at 30 September 2008
30 Sept 2008 30 Sept 2007 31 Mar 2008
�'000 �'000 �'000
Fixed assets
Investments 5,264 9,006 6,749
Current assets
Debtors 196 87 191
Cash at bank and in hand 183 109 42
379 196 233
Creditors: amounts falling due (53) (61) (150)
within one year
Net current assets 326 135 83
Net assets 5,590 9,141 6,832
Capital and reserves
Called up share capital 3,285 3,500 3,396
Capital redemption reserve 1,126 911 1,015
Share premium 348 348 348
Capital reserve - unrealised (5,052) (1,676) (4,076)
Capital reserve - realised 5,835 6,019 6,093
Revenue reserve 48 39 56
Equity shareholder's funds 5,590 9,141 6,832
Basic and diluted net asset 42.5p 65.3p 50.3p
value per share
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
30 Sept 2008 30 Sept 2007 31 Mar 2008
�'000 �'000 �'000
Opening shareholders' funds 6,832 9,108 9,108
Purchase of own shares (199) (121) (346)
Total recognised (losses)/gains (1,043) 154 (1,654)
for the period
Distributions paid - - (276)
Closing shareholders' funds 5,590 9,141 6,832
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2008
Six Six
months Months Year
ended ended ended
30 Sept 30 Sept 31 Mar
2008 2007 2008
Note �'000 �'000 �'000
Cash outflow from operating
activities and returns on 1
investments (79) (52) (88)
Capital expenditure
Purchase of investments (201) (1,509) (2,438)
Sale of investments 703 727 2,044
Net cash inflow/(outflow) from capital 502 (782) (394)
expenditure
Equity distributions paid - - (276)
Net cash (outflow)/inflow before 423 (834) (758)
financing
Financing
Purchase of own shares (199) (210) (436)
Net cash outflow from financing (199) (210) (436)
Increase/(decrease) in cash 2 224 (1,044) (1,194)
Notes to the cash flow statement:
1 Cash outflow from operating
activities and returns on
investments
Loss on ordinary activities before (1,043) 154 (1,654)
taxation
Losses/(gains) on investments 996 (196) 1,574
(Increase)/decrease in other debtors (17) 8 2
(Decrease)/increase in other (15) (18) (10)
creditors
Net cash outflow from operating (79) (52) (88)
activities
2 Analysis of net funds
Beginning of period (41) 1,153 1,153
Net cash inflow/(outflow) 224 (1,044) (1,194)
End of period 183 109 (41)
SUMMARY OF INVESTMENT PORTFOLIO
as at 30 September 2008
Unrealised
gain/(loss) % of
Cost Valuation in period portfolio
�'000 �'000 �'000 by value
Twenty largest VCT
investments (by value)
ANS Group plc ** 253 593 25 10.9%
Connaught plc * 30 449 (5) 8.2%
Spice plc * 256 385 71 7.1%
Cadbury House Limited *** 319 319 - 5.9%
Doubletake Portraits 250 250 - 4.6%
Limited ***
Atlantic Global plc 310 223 62 4.1%
Printing.com plc 179 208 (53) 3.8%
Supporta plc 250 178 39 3.3%
Aero Inventory plc 115 176 (122) 3.2%
Deltex Medical Group plc 233 130 (42) 2.4%
Clerkenwell Ventures plc 175 126 9 2.3%
Hoole Hall Spa and Leisure 100 100 - 1.8%
Limited ***
Huveaux plc 283 100 20 1.8%
Keycom plc ** 408 93 (12) 1.7%
Glisten plc 84 86 (36) 1.6%
Richoux Holdings plc
(formerly Gourmet 250 83 (28) 1.5%
Holdings)
Sanastro plc *** 200 70 - 1.3%
The Medical House plc 223 56 (23) 1.0%
Aortech International plc 569 52 (15) 1.0%
AT Communications plc 178 51 (85) 0.9%
4,665 3,728 (195) 68.4%
Other VCT investments 4,255 266 (764) 4.8%
Listed fixed income
securities 558 455 (114) 8.4%
Other investments 838 815 (46) 15.0%
10,316 5,264 (1,119) 96.6%
Cash at bank and in hand 224 3.4%
Total investments 5,488 100.0%
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
*** Unquoted
SUMMARY OF INVESTMENT MOVEMENTS
for the six months ended 30 September 2008
Additions
�'000
Venture Capital investments
Hill Station plc 100
Hoole Hall Spa and Leisure Limited 100
Sundry investments 1
201
Disposals
Market Gain/
value at (loss) in
1 March Disposal period Realised
Cost 2008 proceeds vs cost gain/(loss)
�'000 �'000 �'000 �'000 �'000
Part disposals
Aero Inventory plc 22 57 55 33 (2)
Connaught plc 5 76 77 72 1
Printing.com plc 5 9 10 5 1
Spice plc 47 58 71 24 13
Straight plc 33 13 23 (10) 10
112 213 236 124 23
Takeovers
Triple Arc plc 247 12 49 (198) 37
Xpertise Group plc 81 77 141 60 64
328 89 190 (138) 101
Other investments
Barclays Bank GAM
Diversity Tracker 228 218 217 (11) (1)
BlueCrest AllBlue
Fund Limited 26 29 30 4 1
Goldman Sachs
Dynamic Opps Ltd 16 17 16 - (1)
270 264 263 (7) (1)
710 566 689 (21) 123
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. The unaudited half yearly financial results cover the six
months to 30 September 2008 and have been prepared in accordance with
the accounting policies set out in the statutory accounts for the
year ended 31 March 2008 which were prepared under UK Generally
Accepted Accounting Practice ("UK GAAP") and in accordance with the
Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" revised December 2005 ("SORP").
2. All revenue and capital items in the Income Statement derive
from continuing operations.
3. The Company has only one class of business and derives its
income from investments made in shares, securities and bank deposits.
4. The comparative figures were in respect of the year ended 31
March 2008 and the six months ended 30 September 2007 respectively.
5. Return per share for the period has been calculated on
13,459,101 shares, being the weighted average number of shares in
issue during the period.
6. Net Asset Value per share for the period has been calculated
on 13,140,436 shares, being the number of shares in issue at the
period end.
7. Dividends
30 Sept 2008 31 Mar 2008
Revenue Capital Total Total
�'000 �'000 �'000 �'000
Paid in period
2008 interim - - - 276
8. Reserves
Capital Capital Capital
redemption Share Special reserve reserve Revenue
reserve premium reserve - - reserve
unrealised realised
�'000 �'000 �'000 �'000 �'000 �'000
At 1 April 2008 1,015 348 - (4,076) 6,093 56
Repurchase of 111 - (199) - - -
shares
Expenses - - - - (39) -
capitalised
Gains on - - - (1,119) 123 -
investments
Transfer between - - 199 143 (342) -
reserves
Retained net - - - - - (8)
revenue
At 30 September 1,126 348 - (5,052) 5,835 48
2008
The Special Reserve, Capital Reserve - realised and Revenue Reserve
are all distributable reserves.
9. The unaudited financial statements set out herein do not
constitute statutory accounts within the meaning of Section 240 of
the Companies Act 1985 and have not been delivered to the Registrar
of Companies. The figures for the year ended 31 March 2008 have been
extracted from the financial statements for that year, which have
been delivered to the Registrar of Companies; the auditors' report on
those financial statements was unqualified.
10. The Directors confirm that, to the best of their knowledge, the
half yearly financial report has been prepared in accordance with the
"Statement: Half Yearly Financial Reports" issued by the UK
Accounting Standards Board and the half yearly financial report
includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements, and a description of the principal risks
and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place during the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period, and any changes in the related party transactions
described in the last annual report that could do so.
11. Copies of the unaudited half yearly financial results will be
sent to Shareholders shortly. Further copies can be obtained from the
Company's Registered Office and will be available for download from
www.downing.co.uk.
---END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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