Half-yearly report

The AIM Distribution Trust plc Half-Yearly Report for the six months ended 30 September 2009 PERFORMANCE SUMMARY 30 31 30 Sept Mar Sept 2009 2009 2008 Pence Pence Pence Net asset value per share 39.5 33.6 42.5 Cumulative distributions per share 55.8 55.8 55.8 Total return per share 95.3 89.4 98.3 CHAIRMAN'S STATEMENT Introduction The six-months ended 30 September 2009 has seen fairly steady general increases in share prices, including AIM-quoted stocks. This has helped your Company to achieve a reasonable increase in its Net Asset Value per share ("NAV") over the period. However, the increases seen recently are small compared to the level of falls which accumulated in the AIM market since autumn 2007. Net Asset Value As at 30 September 2009, the Company's NAV stood at 39.5p, an increase of 5.9p, equivalent to 17.6%, since 31 March 2009. VCT Investment Portfolio There was a limited amount of investment activity during the period. The Company invested £92,000 in two new investments and one follow-on investment of £20,000 was also made. £50,000 was invested into Financial News Publishing Limited, a financial publisher which has arisen from Sanastro Limited, a previous investment which eventually failed. An investment of £42,000 was also made in Tristel plc, a manufacturer of infection control products. The follow-on investment was made in Hoole Hall Spa and Leisure Limited. There were a small number of realisations in the period, generating proceeds of £151,000 and realised losses of £14,000. The existing quoted portfolio showed a increase in value over the six months of £531,000. The most notable risers were Connaught plc, Printing.com plc and Spice plc. As usual, the Board also reviewed the valuation of the unquoted investments the period end and made a small number of changes to previous carrying values. The net movement on the unquoted valuations was an increase of £161,000, such that total unrealised gains across the VCT portfolio for the six-months were £692,000. Summary details of the portfolio together with the additions and disposals in the period are shown below. Other investments The Company holds a small portfolio of non-VCT-qualifying investments comprising two hedge funds and a holding of permanent interest bearing shares (PIBS). At the period end, the portfolio was valued at £726,000 with unrealised gains over the period of £123,000. Results The return on ordinary activities after taxation for the period was £774,000 comprising a revenue loss of £1,000 and a capital return of £775,000. Dividend Shareholders will be aware of the fact that the Company had intended to pay a dividend of 2p per share on 27 March 2009. However the Board had to cancel the dividend as the fall in the Company's NAV would have resulted in the Company having insufficient distributable reserves. I am pleased to report that the increase in NAV experienced over the last 6 months has, to some extent, corrected this position. Accordingly, the Company is declaring an interim dividend of 1.75p per share to be paid on 23 December 2009 to Shareholders on the register at 11 December 2009. Shares buybacks The Company has currently suspended its share buyback policy while it reviews its future plans. Future The Board has spent some considerable time reviewing options for the future of the Company and believes that it has identified a path which best satisfies the needs of a wide range of Shareholders. The Company has today announced it has, in principle, agreed terms for a merger with two other VCTs (Pennine AIM VCT 6 plc and Pennine AIM VCT 5 plc). If the merger proceeds it will be effected by way of a scheme of reconstruction (which would be outside the City Code on Takeovers and Mergers) and will be subject to Shareholder approval. Full details will be sent to Shareholders as soon as any formal proposals are available. Risk and Uncertainties Under the Disclosure and Transparency Directive, the Board is 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 small 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 small 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. Outlook The improved market conditions have been a welcome relief, however the Company's NAV, much like the FTSE AIM All-Share Index, is still well below its levels of two years ago. The Company remains at an uneconomic size for a VCT and accordingly the Board believes that the merger discussions mentioned above may lead to a satisfactory solution. Since the period end, one of the Company's investments, Aero Inventory plc, announced that it had identified some stock valuation issues whilst preparing to move from AIM to the Official List. Very shortly afterwards, the Company was forced to appoint administrators after losing the support of its bankers. This is a big disappointment and illustrates how vulnerable even relatively strong companies can be in the current climate. A full provision against this investment will be equivalent to a fall in NAV of approximately 1p per share. Although the general economic outlook is brighter than it has been for some time, there are still concerns that there may be further difficulties ahead. A merger, such as the one being discussed, would not necessarily provide Shareholders with protection from further falls in stock prices should they arise, however, as part of a larger entity, the Board believes the Company would be better positioned to endure difficult conditions. For this reason among several others, the Board hopes to be able to put formal proposals to Shareholders in the very near future. Sir Aubrey Brocklebank Chairman INCOME STATEMENT for the six months ended 30 September 2009 Six months ended 30 September 2009 Revenue Capital Total £'000 £'000 £'000 Income 87 - 87 Gains/(losses) on investments - 801 801 87 801 888 Investment management fees (8) (26) (34) Other expenses (80) - (80) Return/(loss) on ordinary activities before (1) 775 774 taxation Taxation - - - Return/(loss) attributable to equity (1) 775 774 shareholders Return per share - 5.9p 5.9p Six months ended Year ended 30 September 2008 31 March 2009 Revenue Capital Total Total £'000 £'000 £'000 £'000 Income 85 - 85 146 Gains/(losses) on - (996) (996) (2,121) investments 85 (996) (911) (1,975) Investment management fees (13) (39) (52) (90) Other expenses (80) - (80) (155) Return/(loss) on ordinary (8) (1,035) (1,043) (2,220) activities before taxation Taxation - - - - Return/(loss) attributable (8) (1,035) (1,043) (2,220) to equity shareholders Return per share (0.1p) (7.7p) (7.8p) (16.7p) 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 and losses are recognised in the Income Statement as noted above. UNAUDITED SUMMARISED BALANCE SHEET as at 30 September 2009 30 Sept 2009 30 Sept 2008 31 Mar 2009 £'000 £'000 £'000 Fixed assets Investments 4,369 5,264 3,978 Current assets Debtors 53 196 53 Cash at bank and in hand 812 183 435 865 379 488 Creditors: amounts falling due (47) (53) (53) within one year Net current assets 818 326 435 Net assets 5,187 5,590 4,413 Capital and reserves Called up share capital 3,285 3,285 3,285 Capital redemption reserve 1,126 1,126 1,126 Share premium 348 348 348 Investment holding losses (4,671) (5,052) (5,825) Capital reserve - realised 5,075 5,835 5,454 Revenue reserve 24 48 25 Equity shareholders' funds 5,187 5,590 4,413 Basic and diluted net asset 39.5p 42.5p 33.6p value per share RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 30 Sept 2009 30 Sept 2008 31 Mar 2009 £'000 £'000 £'000 Opening shareholders' funds 4,413 6,832 6,832 Purchase of own shares - (199) (199) Total recognised gains/(losses) 774 (1,043) (2,220) for the period Closing shareholders' funds 5,187 5,590 4,413 UNAUDITED CASH FLOW STATEMENT for the six months ended 30 September 2009 Six Six months months Year ended ended ended 30 Sept 30 Sept 31 Mar 2009 2008 2009 Note £'000 £'000 £'000 Cash outflow from operating activities and returns on investments 1 (33) (79) (129) Capital expenditure Purchase of investments 523 (201) (201) Sale of investments (113) 703 1,005 Net cash inflow from capital 410 502 804 expenditure Equity distributions paid - - - Net cash inflow before financing 377 423 675 Financing Purchase of own shares - (199) (199) Net cash outflow from financing - (199) (199) Increase in cash 2 377 224 476 Notes to the cash flow statement: 1 Cash outflow from operating activities and returns on investments Return/(loss) on ordinary activities before taxation 774 (1,043) (2,220) (Gains)/losses on investments (801) 996 2,121 Decrease/(increase) in other debtors 1 (17) (16) Decrease in other creditors (7) (15) (14) Net cash outflow from operating (33) (79) (129) activities 2 Analysis of net funds Beginning of period 435 (41) (41) Net cash inflow 377 224 476 End of period 812 183 435 SUMMARY OF INVESTMENT PORTFOLIO as at 30 September 2009 Unrealised gain/(loss) % of Cost Valuation in period portfolio £'000 £'000 £'000 by value Top ten largest VCT investments (by value) ANS Group plc ** 201 511 52 9.7% Connaught plc *** 30 485 123 9.4% Doubletake Portraits Limited * 250 358 108 6.9% Cadbury House Limited * 319 319 - 6.2% Spice plc 256 296 95 5.7% Printing.com plc 178 240 85 4.6% Atlantic Global plc 310 198 (50) 3.8% Aero Inventory plc 115 137 67 2.6% Hoole Hall Spa and Leisure 120 120 - 2.3% Limited * Supporta plc 250 105 7 2.0% 2,029 2,769 487 53.2% Other VCT investments 6,050 874 205 17.1% Listed fixed income securities 558 287 42 5.5% Other investments 403 439 81 8.5% 9,040 4,369 815 84.3% Cash at bank and in hand 812 15.7% Total investments 5,181 100.0% All VCT investments are quoted on AIM unless otherwise stated. * Unquoted ** Quoted on the PLUS Market *** Listed on the Main Market of the London Stock Exchange SUMMARY OF INVESTMENT MOVEMENTS for the six months ended 30 September 2009 Additions £'000 VCT investments Financial News Publishing Limited 50 Hoole Hall Spa and Leisure Limited 20 Tristel plc 42 Sundry investments 1 113 Disposals Market Gain/ Realised value at (loss) in gain/ 1 March Disposal Period (loss) Cost 2009 proceeds vs cost £'000 £'000 £'000 £'000 £'000 Disposals in the market ANS Group plc 51 114 127 76 13 Ludorum plc 2 2 2 - - The Medical House plc 52 13 22 (30) 9 Liquidations and dissolutions Dipford Group plc 136 - - (136) - Sanastro Limited 200 36 - (200) (36) Other investments Barclays Bank GAM Tracker 435 372 372 (63) - 876 537 523 (353) (14) NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. The unaudited half yearly financial results cover the six months to 30 September 2009 and have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 March 2009 which were prepared under UK Generally Accepted Accounting Practice and in accordance with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" January 2009. 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 2009 and the six months ended 30 September 2008 respectively. 5. Return per share for the period has been calculated on 13,140,436 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. No dividends were paid or declared in the period under review. 8. Reserves Capital Unrealised Capital Redemption Share Special holding reserve Revenue reserve premium reserve losses - realised reserve £'000 £'000 £'000 £'000 £'000 £'000 At 1 April 2009 1,126 348 - (5,825) 5,454 25 Expenses - - - - (26) - capitalised Gains on - - - 815 (14) - investments Transfer between - - - 339 (339) - reserves Retained net revenue - - - - - (1) loss At 30 September 1,126 348 - (4,671) 5,075 24 2009 The special reserve is available to the Company to enable the purchase of its own shares in the market without affecting its ability to pay dividends/capital distributions. Distributable reserves comprise the special reserve, capital reserve - realised, revenue reserve and investment holding losses of £4,779,000. At the period end there were £320,000 of reserves available for distribution. 9. The unaudited financial statements set out herein do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have not been delivered to the Registrar of Companies. The figures for the year ended 31 March 2009 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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