Interim Results
Legg Mason Investrs AIM DistTst PLC
27 November 2003
Legg Mason Investors AIM Distribution Trust plc
Interim Statement for the six months ended 30 September 2003
FINANCIAL HIGHLIGHTS
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
Net asset value £10,657,245 £9,522,867 £7,597,778
Net asset value per share 64.14p 56.99p 45.73p
Total gain/(loss) after tax £3,059,647 (£3,546,587) (£5,435,921)
Total return/(loss) per share * 18.42p (21.23p) (32.60p)
Movement in net asset value per share 40.27% (27.14%) (41.50%)
Movement in FTSE AIM Index 38.53% (28.10%) (35.50%)
Movement in FTSE All-share Index 16.82% (29.60%) (32.13%)
Cumulative dividends per share 47.80p 47.80p 47.80p
* Total return represents the total profit/(loss) on ordinary activities
together with profit/(loss) on investments.
CHAIRMAN'S STATEMENT
On behalf of your Board, I present the interim report and accounts for the six
months ended 30 September 2003.
Global markets have shown a significant improvement over the period, following
the end of the war in Iraq and signs of economic improvement, in particular in
the US and Asia, are now in evidence. The net asset value of the Company has
also shown a marked upturn over the six month period.
Balance sheet and net assets
Over the six months ended 30 September 2003 the net asset value of the Company
rose by 40.3% from 45.73p to 64.14p. This compares with a rise of 38.5% in the
FTSE AIM index and a 13.2% increase in the FTSE 100 index. This highlights the
impact the global downturn has had on smaller companies which, having been hit
much harder in the downturn, are now recovering at a relatively higher rate.
Subsequent to the period end this improvement has continued, with the AIM index
standing at 810.8 on 26 November 2003, an increase of 7.8% over the 30 September
2003 level of 751.9.
During the period under review new issue activity has started to pick up,
following a slow year ended 31 March 2003. Despite this, the Company only made
two small additions to VCT qualifying investments, believing instead that the
existing portfolio stood to benefit significantly from market improvements,
which on the whole proved to be the case.
At 30 September 2003, 82.8% of the portfolio by tax book cost was invested in
VCT qualifying companies, comfortably in excess of the required 70% level. The
Directors continue to believe that it is important to maintain a comfortable
margin over the 70% level.
Results and dividend
Revenue from investments during the period amounted to £81,911 (2002: £112,414).
The fall in the level of income is consistent with the lower level of dividends
from smaller companies in general, due to the economic environment over the past
year. Whilst the current period has seen a significant unrealised gain on
investments, only one investment was disposed of in the period. As a result
realised gains were at a low level. The timing and level of future capital
distributions will continue to depend on market recovery and capital
realisations. Consequently, the Directors do not propose to pay an interim
dividend for the six months ended 30 September 2003.
Investment management arrangements
As already announced, I am pleased to report that with effect from 1 October
2003 we have appointed Rathbone Investment Management Limited as investment
manager to the Company.
The Board has also appointed Grant Whitehouse as the Company Secretary with
effect from the same date.
Following the change in investment manager, it is proposed to change the name of
the Company to The AIM Distribution Trust PLC.
Further details of these changes are set out in a separate circular to
shareholders, which will accompany these results.
Future prospects
Since the end of the reporting period, UK equity markets have continued to move
modestly higher. This has been reflected in the Company's net asset value, which
at 31 October 2003 had risen to 68.74p per has share. Despite this, investors
are still showing signs of nervousness, due to uncertainty over whether
performance can be maintained and in particular the impact of the interest rate
cycle over the coming year.
Your Board believes that when markets recover sufficiently the Company will
again be able to distribute realised capital gains to shareholders.
Sir Aubrey Brocklebank
Chairman
INVESTMENT ADVISER'S REPORT
Market review
Towards the end of the previous accounting period, market sentiment towards
AIM-listed companies reached its lowest ebb, and the FTSE AIM Index hit an
all-time low of 542.4 on 1 April 2003. However, the major markets had moved
strongly in mid March following the end of the war in Iraq, and after those
companies with higher market capitalisations had started to improve, the
market's focus turned to smaller companies. The FTSE AIM Index proceeded to
recover strongly from its low to post an increase of 38.5% for the six month
period.
The lack of liquidity that has been a drag in the bear market over the last two
years is now working in the other direction, and some of the individual share
price movements have been quite dramatic. Improving economic news, more
confident statements accompanying results and an upturn in corporate activity
all helped support this turnaround in sentiment.
Portfolio review
Aero Inventory announced a new procurement and inventory management contract
with Swiss based SR Technics, which gives the company a significant presence in
Europe and which, going forward, will more double the size of the business. For
the year to June 2003 turnover and pre-tax profits increased by 74%.
Atlantic Global announced interim results to June that showed encouraging
progress and at the same time announced several large new blue chip customers.
The shares have made remarkable progress since the annual report, more than
trebling from their lows in March.
Cardpoint owns and operates freestanding ATMs. Since the annual report Cardpoint
has acquired PT Distribution, an electronic mobile top up operator. The company
has good synergies with Cardpoint's existing business and fits in with the
stated aim of diversifying its revenue streams.
Connaught continues to trade well, with social housing in particular providing
strong growth. The company's interim results showed both turnover and pre-tax
profit up in excess of 40%.
CRC Group announced, in early June, a restructuring programme in response to
deteriorating conditions in their core mobile phone repair business. The shares
initially fell sharply but following a statement of support from its major
customer, Nokia, bounced strongly and regained most of the lost ground.
Cobra Bio-Manufacturing produce DNA for clinical trials. The sharp growth in
gene-based therapies puts Cobra in a strong position to be a key supplier of DNA
material. The company announced interim results to March that showed good
increases in the revenue line and a move into profit at the pre-tax level. They
also announced a placing, raising £4.65m net to fund the purchase and conversion
of an additional manufacturing facility to meet growing demand for their
products.
Huveaux was established to make acquisitions in niche areas of the publishing
and media arenas. It owns both Lonsdale (publisher of school revision guides for
UK and in English-speaking schools overseas) and Vacher Dod (publishers of
parliamentary guides) and has announced the acquisition of PPP, which publishes
Le Trombinoscope (French parliamentary guides). It recently announced a
successful placing to finance the acquisition of Fenman, a leading publisher of
training materials.
PM Group design, manufacture and service on-board vehicle weighing systems. The
company announced its full year results to June showing an increase in profits
of 15% and, underlining its confidence in the future, announced a maiden final
dividend.
Vianet has announced an agreement with Alcatel whereby Alcatel will market and
distribute vOpen and vPayment telemetry services for an initial 5 year period
under a revenue sharing agreement.
Portfolio activity
We participated in a £1.49 million fund raising by Xpertise, barely 7 months
after the acquisition of PowerEd. However, there are some good signs,
particularly on the size of contracts that the company is now securing. As
regards the market we are now seeing a number of smaller players pull out and
Xpertise should be well placed with or without a market recovery.
The Highland Timber 5% Convertible stock matured during the period realising
£750,000.
Within the non-qualifying portion of the portfolio we participated in a rescue
rights issue for Inter Alliance. We also booked the profit in Jacques Vert,
selling the entire holding during June.
New issue activity across the market has picked up markedly over the past six
months. In particular numbers of qualifying issues have built up over the
summer months and there is now a good pipeline that should ensure a regular flow
over the coming months.
Legg Mason Investments (Europe) Limited
PORTFOLIO OF INVESTMENTS
as at 30 September 2003
Market % of total
value investments and
£ cash
Equities traded on Aim, OFEX or listed on The London Stock
Exchange
Ten largest holdings
Atlantic Global plc 1,206,575 11.32%
Connaught plc 905,433 8.49%
Huveaux plc 618,930 5.81%
Inter-Alliance Group plc 412,500 3.87%
PM Group plc 377,000 3.54%
Aero Inventory plc 362,100 3.40%
Printing.com plc + 316,250 2.97%
Tepnel Life Sciences plc 305,940 2.87%
The Medical House plc 291,666 2.74%
XKO Group plc * 258,806 2.43%
5,055,200 47.44%
Other equity holdings 3,705,402 34.73%
8,760,602 82.17%
Unlisted equities 53,280 0.50%
Convertible stock of AIM companies 155,465 1.46%
Bonds listed on the London Stock Exchange 1,063,250 9.97%
Total investments 10,032,597 94.10%
Cash at bank 628,755 5.90%
Total investments and cash 10,661,352 100.0%
Key:
+ Traded on OFEX
* Listed on the London Stock Exchange
UNAUDITED STATEMENT OF TOTAL RETURN
(incorporating the revenue account)
for the six months ended 30 September 2003
(Unaudited)
Six months ended 30 September 2003
Revenue Capital Total
£ £ £
Gains/(losses) on investments - 3,146,417 3,146,417
Income 81,911 - 81,911
Investment management fees (22,537) (67,610) (90,147)
Other expenses (78,534) - (78,534)
Return/(loss) on ordinary activities (19,160) 3,078,807 3,059,647
before finance costs and taxation
Interest on bank overdrafts - - -
Return/(loss) on ordinary activities (19,160) 3,078,807 3,059,647
before taxation
Taxation on ordinary activities - - -
Return/(loss) attributable to equity (19,160) 3,078,807 3,059,647
shareholders
Dividends in respect of equity shares - - -
Transfer to/(from) reserves (19,160) 3,078,807 3,059,647
Return/(loss) per ordinary share (0.12p) 18.54p 18.42p
(Unaudited)
Six months ended 30 September 2002
Revenue Capital Total
£ £ £
Gains/(losses) on investments - (3,493,284) (3,493,284)
Income 112,414 - 112,414
Investment management fees (23,425) (70,275) (93,700)
Other expenses (70,529) - (70,529)
Return/(loss) on ordinary activities 18,460 (3,563,559) (3,545,099)
before finance costs and taxation
Interest on bank overdrafts (1,488) - (1,488)
Return/(loss) on ordinary activities before
taxation 16,972 (3,563,559) (3,546,587)
Taxation on ordinary activities - - -
Return/(loss) attributable to equity
shareholders 16,972 (3,563,559) (3,546,587)
Dividends in respect of equity shares - - -
Transfer to/(from) reserves 16,972 (3,563,559) (3,546,587)
Return/(loss) per ordinary share 0.10p (21.33p) (21.23p)
(Audited)
Year ended 31 March 2003
Revenue Capital Total
£ £ £
Gains/(losses) on investments - (5,330,366) (5,330,366)
Income 202,979 - 202,979
Investment management fees (42,482) (127,447) (169,929)
Other expenses (136,991) - (136,991)
Return/(loss) on ordinary activities 23,506 (5,457,813) (5,434,307)
before finance costs and taxation
Interest on bank overdrafts (1,614) - (1,614)
Return/(loss) on ordinary activities 21,892 (5,457,813) (5,435,921)
before taxation
Taxation on ordinary activities - - -
Return/(loss) attributable to equity 21,892 (5,457,813) (5,435,921)
shareholders
Dividends in respect of equity shares - - -
Transfer to/(from) reserves 21,892 (5,457,813) (5,435,921)
Return/(loss) per ordinary share 0.13p (32.73p) (32.60p)
In order to enable the Company to make capital distributions, the Company has
revoked its investment company status and is accordingly unable to take
advantage of the accounting exemptions that status permits. The results of the
Company set out on page 10 have been prepared in accordance with the
requirements of Schedule IV of the Companies Act 1985, which requires that all
realised gains and losses, including those arising from the disposal of
investments, are included in the results for the year, and the unrealised
capital gains are excluded from the profit and loss account for the year.
UNAUDITED PROFIT AND LOSS ACCOUNT
for the six months ended 30 September 2003
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£ £ £
Income received on investments 81,911 112,414 202,979
Administrative expenses
Investment management fees (90,147) (93,700) (169,929)
Other expenses (78,534) (70,529) (136,991)
Net loss (86,770) (51,815) (103,941)
Income from fixed asset investments
Gains/(losses) on investments 81,916 (290,285) (687,483)
Loss before interest and taxation (4,854) (342,100) (791,424)
Interest payable and similar charges - (1,488) (1,614)
Loss before taxation (4,854) (343,588) (793,038)
Tax on ordinary activities - - -
Loss on ordinary activities after (4,854) (343,588) (793,038)
taxation
Dividends
Revenue - - -
Retained loss (4,854) (343,588) (793,038)
Transfer (to)/from capital reserve (14,306) 360,560 814,930
Retained revenue (19,160) 16,972 21,892
Earnings per share (See Note 3) (0.03p) (2.06p) (4.76p)
All returns are derived from continuing operations.
The company has only one class of business and derives its income from
investments made in shares, securities and bank deposits.
UNAUDITED STATEMENT OF
TOTAL RECOGNISED GAINS AND LOSSES
for the six months ended 30 September 2003
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March 2003
2003 2002
£ £ £
Loss for the period (4,854) (343,588) (793,038)
Unrealised gains/(losses) for the 3,064,501 (3,202,999) (4,642,883)
period
Total recognised gains/(losses) 3,059,647 (3,546,587) (5,435,921)
during the period
Total recognised gains/(losses) 18.42p (21.23p) (32.60p)
per share
UNAUDITED BALANCE SHEET
as at 30 September 2003
(Unaudited) (Unaudited) (Audited)
As at As at As at
30 30 31
September September March
2003 2002 2003
£ £ £
Fixed assets
Investments 10,032,597 9,389,289 7,476,482
Current assets
Debtors 73,038 70,779 55,316
Cash at bank and in hand 628,755 150,470 141,583
701,793 221,249 196,899
Creditors: amounts falling due (77,145) (87,671) (75,603)
within one year
Net current assets 624,648 133,578 121,296
10,657,245 9,522,867 7,597,778
Net assets
Capital and reserves
Called up share capital 4,153,675 4,177,174 4,153,675
Special reserve
12,292,427 12,328,362 12,292,607
Capital reserve - realised (637,732) (98,194) (652,038)
Capital reserve - unrealised (5,315,781) (7,039,872) (8,380,282)
Capital redemption reserve 47,249 23,750 47,249
Revenue reserve 117,407 131,647 136,567
10,657,245 9,522,867 7,597,778
Net asset value per share 64.14p 56.99p 45.73p
Ordinary shares (See Note 4)
UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2003
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£ £ £
Operating activities
Investment income received 79,784 98,551 189,442
Deposit interest received 102 9,554 9,759
Investment management fees paid (78,414) (106,892) (190,398)
Other expenses paid (106,569) (69,952) (130,815)
Net cash outflow from operating (105,097) (68,739) (122,012)
activities
Servicing of finance
Interest paid - (1,488) (1,614)
Taxation
Income tax recovered - 25,429 25,448
Capital expenditure
Purchase of investments (389,467) (1,543,350) (1,901,928)
Proceeds on disposal of investments 981,916 1,307,147 1,745,973
Net cash inflow/(outflow) 592,449 (236,203) (155,955)
Equity distributions paid - (58,820) (58,820)
Net cash inflow/(outflow) before 487,352 (339,821) (312,953)
financing
Financing
Cost of share repurchase (180) - (35,755)
Net cash outflow from financing (180) - (35,755)
Increase/(decrease) in cash (See Note 487,172 (339,821) (348,708)
6)
NOTES TO THE ACCOUNTS
1 Accounts
The unaudited financial statements set out within this document 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
financial information has been prepared on the basis of the accounting policies
set out in the Financial Statements for the year ended 31 March 2003.
2 Investments
Investments are treated as fixed assets and are shown in the balance sheet at
Directors' valuation on the following basis:
Listed investments, including those traded on the Alternative Investment Market
('AIM') and off-exchange ('OFEX'), are valued at mid-market price at the balance
sheet date. The Directors are conscious of the fact that because shares are
traded on AIM and OFEX this does not guarantee their liquidity. The nature of
AIM and OFEX investments is such that the prices can be volatile and realisation
may not achieve current book value, especially when such a sale represents a
significant proportion of that company's market capital. Nevertheless, on the
grounds that the investments are not intended for immediate realisation, they
regard mid-market price as the most objective and appropriate method of
valuation.
In determining the valuation of unquoted investments the Directors adopt the
mid-market price where a dealing facility exists and apply a discount if
considered appropriate. Where no dealing facility exists the factors which the
Directors have regard to include, inter alia, the earnings record and growth
prospects of the security, the rating of comparable listed companies, the yield
of the security where appropriate and any recent transactions.
3 Earnings per share
Basic loss per ordinary share is based on the loss on ordinary activities after
taxation of £4,854 (period ended 30 September 2002: £343,588; year ended 31
March 2003: £793,038) divided by the weighted average number of shares in issue
during the period of 16,614,701 (period ended 30 September 2002: 16,708,698;
year ended 31 March 2003: 16,676,250).
4 Net asset value per share
Basic net asset value per share is based on the net assets attributable to
ordinary shareholders of £10,657,245 (period ended 30 September 2002:
£9,522,867; year ended 31 March 2003: £7,597,778) dividend by the ordinary
shares in issue at the period end of 16,614,701 (period ended 30 September 2002:
16,708,698; year ended 31 March 2003: 16,614,701).
5 Comparative information
The comparative figures are in respect of the six months ended 30 September 2002
and the year ended 31 March 2003. The figures for the year ended 31 March 2003
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.
6 Analysis of net funds
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 September 30 September 31 March
2003 2002 2003
£ £ £
Beginning of period 141,583 490,291 490,291
Net cash inflow/ 487,172 (339,821) (348,708)
(outflow)
End of period 628,755 150,470 141,583
This information is provided by RNS
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