Final Results
THE AIM DISTRIBUTION TRUST PLC
UNAUDITED PRELIMINARY ANNOUNCEMENT OF RESULTS
FOR THE YEAR ENDED 31 MARCH 2007
FINANCIAL SUMMARY
Unaudited Audited
Year Year
ended ended
31 March 31 March
2007 2006
Pence pence
Net asset value (per share) 64.1 70.0
Cumulative distributions paid since launch 53.8 51.8
Total return (net asset value plus cumulative 117.9 121.8
distributions paid)
Interim distribution paid (per share) 2.0 2.0
The statement to shareholders by the Chairman, Sir Aubrey
Brocklebank, includes the following comments:
Performance of your Company over the year ended 31 March 2007 has
been a little disappointing, although the second half of the year has
seen an increase in NAV after the fall that was experienced in the
first half.
Net Asset Value
At 31 March 2007, the Net Asset Value per share ("NAV") stood at
64.1p. This represents a decrease of 3.9p or 5.5% since the previous
year-end after adjusting for the 2p dividend paid in March 2007,
although is an increase of 0.6p (0.9%) per share since the half year
date also after adjusting for the dividend paid.
VCT investments
The Company has been effectively fully invested throughout the year,
so investment activity has been relatively low. There were however
two follow-on investments made at a total cost of £175,000.
A number of realisations occurred during the year, which produced
cash proceeds of £2.3 million. The most significant was that of
Neutec Pharma, which was the subject of a cash offer and produced a
realised gain of £512,000 in the year from an investment with an
original cost of £210,000.
As I highlighted in my statement with the interim results, the
Company's performance has been held back by the poor performance of a
small number of investments. Cellcast, Chariot (UK), Hill Station and
PM Group were the most notable poor performers. The holding in PM
Group has now been sold and Chariot (UK) has effectively failed,
however Hill Station and Cellcast have reacted to the difficulties
they faced earlier in the year and there are now prospects for at
least a partial recovery for both businesses.
Overall the investment portfolio showed net realised gains of
£546,000 and net unrealised losses of £1.2 million.
Results and Dividend
The loss on ordinary activities after taxation was £786,000 (2006
profit: £862,000), comprising a revenue profit of £18,000 and a
capital loss of £804,000.
An interim dividend of 2p per share (2006: 2p per share) was paid on
29 March 2007. The Directors are not proposing to declare any
further dividends in respect of the year to 31 March 2007.
Fixed interest securities
During the year, the Company's fixed interest securities realised a
small loss of £6,000 against cost. At the year end, the Company
continued to hold one fixed interest security, which had a value of
£661,000.
Share buybacks
The Board is conscious that the Company's share price is affected by
the illiquidity of its shares in the market. In line with widespread
practice amongst VCTs, the Company has a policy of purchasing its own
shares.
During the year, the Company acquired 2,378,417 shares at an average
price of 59.4p per share. This unusually high level of buybacks
resulted from a sizeable disposal by a group of institutional
investors. Although this transaction absorbed a significant amount
of the Company's liquid funds, the fact that it was undertaken at
approximately a 10% discount to NAV meant that the transaction
resulted in a small uplift in NAV for remaining shareholders.
The Board intends to continue with the policy of buying in shares at
approximately a 10% discount to the latest published NAV (subject to
regulatory and other restrictions) and a special resolution to that
end is proposed for the forthcoming AGM.
Future of the Company
It is now five years since Shareholders voted for the Company to
continue as a VCT. In accordance with Article 26 of the Company's
Articles of Association, a resolution will again be put to
Shareholders as to whether the Company should continue for another 5
years.
The Board have given consideration to options available, paying
particular attention to the situations of many Shareholders. As
winding up the Company is likely to crystallise a capital gains tax
liability for many Shareholders, the Board is firmly of the opinion
that the Company should continue as a VCT, and recommend that
Shareholders vote in favour of resolution 6 at the forthcoming Annual
General Meeting.
Annual General Meeting
The Annual General Meeting of the Company will be held at Port of
Liverpool Building, Pier Head, Liverpool, L3 1NW at 12 noon on 10
September 2007.
Outlook
The number of investments showing significant falls in the first half
of the year was a concern for the Board, however the slightly
improved performance in the second half provides evidence that the
Company's diversified portfolio includes some investments with good
growth prospects that can deliver improved performance as they
mature.
UNAUDITED INCOME STATEMENT
for the year ended 31 March 2007
Unaudited Audited
Year ended 31 March 2007 Year ended 31 March 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income 220 - 220 168 - 168
(Losses)/gains on - (686) (686) - 1,014 1,014
investments
220 (686) (466)
168 1,014 1,182
Investment (39) (118) (157) (39) (117) (156)
management fees
Other expenses (163) - (163) (164) - (164)
Return on
ordinary 18 (804) (786) (35) 897 862
activities
before tax
Tax on ordinary - - - - - -
activities
Return
attributable to 18 (804) (786) (35) 897 862
equity
shareholders
Return per share 0.1p (5.3p) (5.2p) (0.2p) 5.3p 5.1p
The revenue and capital movements in the year relate to 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 and losses are recognised within the Income
Statement as noted above.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
for the year ended 31 March 2007
Unaudited Audited
Year ended Year ended
31 March 2007 31 March 2006
£'000 £'000
Opening shareholders' funds 11,602 10,831
Issue of shares - 611
Share issue costs - (53)
Purchase of own shares (1,421) (313)
Total recognised (losses)/gains for the (786) 862
year
Distributions paid (287) (336)
Closing shareholders' funds 9,108 11,602
BALANCE SHEET Unaudited Audited
at 31 March 2007 2007 2006
£'000 £'000 £'000 £'000
Fixed assets
Investments 7,848 11,638
Current assets
Debtors 276 51
Cash at bank and in hand 1,153 47
1,429 98
Creditors: amounts falling due within (169) (134)
one year
Net current assets/(liabilities) 1,260 (36)
Net assets 9,108 11,602
Capital and reserves
Called up share capital 3,551 4,145
Capital redemption reserve 860 266
Share premium 348 348
Special reserve - 1,176
Capital reserve - unrealised (1,730) (812)
Capital reserve - realised 6,049 6,467
Revenue reserve 30 12
Equity shareholders' funds 9,108 11,602
Net asset value per share 64.1p 70.0p
CASH FLOW STATEMENT
for the year ended 31 March
2007
Unaudited Audited
Year ended Year
31 March ended
2007 31 March
2006
£'000 £'000 £'000 £'000
Net cash outflow from operating (150) (120)
activities
Capital expenditure
Purchase of investments (231) (2,807)
Sale of investments 3,106 1,159
Net cash inflow/(outflow) from 2,875 (1,648)
capital expenditure
Equity distributions paid (287) (336)
Net cash inflow/(outflow) 2,438 (2,104)
before financing
Financing
Applications for share issue - 271
Share issue costs - (22)
Purchase of own shares (1,332) (335)
Net cash outflow from financing (1,332) (86)
Increase/(decrease) in cash in 1,106 (2,190)
the year
NOTES TO THE UNAUDITED PRELIMINARY ANNOUNCEMENT
for the year ended 31 March 2007
1. Accounting policies
Basis of accounting
The Company has prepared its financial statements 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").
The financial statements are prepared under the historical cost
convention except for the revaluation of certain financial
instruments.
Presentation of Income Statement
In order to better reflect the activities of a Venture Capital Trust
and in accordance with guidance issued by the Association of
Investment Companies ("AIC"), supplementary information which
analyses the income statement between items of a revenue and capital
nature has been presented alongside the Income Statement. The net
revenue is the measure the Directors believe appropriate in assessing
the Company's compliance with certain requirements set out in Section
842 Income and Corporation Taxes Act 1988.
Investments
Venture capital investments are designated as "fair value through
profit or loss" assets and are initially measured at cost. Thereafter
the investments are measured at subsequent reporting dates at fair
value.
Listed fixed income investments, investments quoted on AIM and those
traded on the PLUS Market (formerly OFEX) are measured using bid
prices with marketability discounts applied where deemed appropriate,
in accordance with the International Private Equity and Venture
Capital Valuation Guidelines.
In respect of unquoted instruments, fair value is established by
using International Private Equity and Venture Capital Valuation
Guidelines. Where no reliable fair value can be estimated for such
unquoted equity investments they are carried at cost, subject to any
provision for impairment. Where an investee company has gone into
receivership or liquidation the investment, although not physically
disposed of, is treated as being realised.
Gains and losses arising from changes in fair value are included in
the income statement as a capital item and transaction costs on
acquisition or disposal of the investment expensed.
It is not the Company's policy to exercise either significant or
controlling influence over investee companies. Therefore the results
of these companies are not incorporated into the revenue account
except to the extent of any income accrued.
Income
Dividend income from investments is recognised when the shareholders'
rights to receive payment has been established, normally the ex
dividend date.
Interest income is accrued on a timely basis, by reference to the
principal outstanding and at the effective interest rate applicable,
which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to that
asset's net carrying amount, and only where there is reasonable
certainty of collection.
Expenses
All expenses are accounted for on an accruals basis. In respect of
the analysis between revenue and capital items presented within the
income statement, all expenses have been presented as revenue items
except as follows:
* Expenses which are incidental to the disposal of an
investment are deducted from the disposal proceeds of the
investment.
* Expenses are split and presented partly as capital items
where a connection with the maintenance or enhancement of the value
of the investments held can be demonstrated and accordingly the
investment management fee and finance costs have been allocated 25%
to revenue and 75% to capital, in order to reflect the Directors'
expected long-term view of the nature of the investment returns of
the Company.
Taxation
The tax effects on different items in the Income Statement are
allocated between capital and revenue on the same basis as the
particular item to which they relate using the Company's effective
rate of tax for the accounting period.
Due to the Company's status as a Venture Capital Trust and the
continued intention to meet the conditions required to comply with
Section 842AA of the Income and Corporation Taxes Act (1988), no
provision for taxation is required in respect of any realised or
unrealised appreciation of the Company's investments which arises.
Deferred taxation is provided in full on timing differences that
result in an obligation at the balance sheet date to pay more tax, or
a right to pay less tax, at a future date, at rates expected to apply
when they crystallise based on current tax rates and law. Timing
differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different from those
in which they are included in the accounts.
2. Return per share
Revenue return per ordinary share is based on the net revenue return
after taxation of £18,000 (2006: loss £35,000) in respect of
15,229,480 ordinary shares (2006: 16,881,512), being the weighted
average number of ordinary shares in issue during the year.
Capital return per ordinary share is based on the net capital loss
for the financial year of £804,000 (2006: profit £897,000) in respect
of 15,229,480 ordinary shares (2006: 16,881,512), being the weighted
average number of ordinary shares in issue during the year.
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on return per ordinary share.
The return per share disclosed therefore represents both basic and
diluted return per ordinary share.
3. Net asset value per ordinary share
2007 2006
Net asset Net asset
value value
per share Net asset per share Net asset
value value
pence £'000 pence £'000
Ordinary 64.1 9,108 70.0 11,602
shares
Net asset value per ordinary share is based on net assets at the
year-end, and on 14,203,875 ordinary shares (2006: 16,582,292), being
the number of ordinary shares in issue at the year-end.
As the Company has not issued any convertible securities or share
options, there is no dilutive effect on net asset value per ordinary
share. The net asset value per share disclosed therefore represents
both basic and diluted net asset value per ordinary share.
4. Reconciliation of net revenue return before taxation to net cash
flow from operating activities
2007 2006
£'000 £'000
Revenue/(loss) return on ordinary activities before tax 18 (35)
Expenses charged to capital (118) (117)
(Increase)/decrease in prepayments and accrued income (45) 13
(Decrease)/increase in accruals and deferred income (5) 19
Net cash outflow from operating activities (150) (120)
5. Analysis of changes in cash during the period
2007 2006
£'000 £000
Beginning of year 47 2,237
Net cash inflow/(outflow) 1,106 (2,190)
End of year 1,153 47
Announcement based on unaudited accounts
The financial information set out in the announcement does not
constitute the Company's statutory accounts in accordance with
section 240 Companies Act 1985 for the year ended 31 March 2007. The
statutory accounts for the year ended 31 March 2007 will be finalised
on the basis of the financial information presented by the Directors
in this preliminary announcement and will be delivered to the
Registrar of Companies following the Company's Annual General
Meeting. The statutory accounts for the year ended 31 March 2006
have been delivered to the Register of Companies and received an
Auditor's Report which was unqualified and did not contain statements
under s237 (2) and (3) of the Companies Act 1985.
A copy of the full annual report and financial statements for the
year ended 31 March 2007 will be printed and posted to shareholders.
Copies will also be available to the public at the registered office
of the Company at Kings Scholars House, 230 Vauxhall Bridge Road,
London, SW1V 1AU.
The financial information contained within this Preliminary
Announcement was approved by the Board on 23 July 2007.
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