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Dirs' Dealing InvTst (DDIT)

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Friday 26 February, 2010

Dirs' Dealing InvTst

Half-yearly Report


The Directors' Dealing Investment Trust plc (the "Company")

Half-Yearly Report for the six months ended 31 December 2009

Investment Policy

The Company's investment policy is to achieve returns for
shareholders, primarily through capital appreciation, by investing in
companies listed on regulated exchanges in the United Kingdom.

The investment policy of the Company will be achieved through
investment in companies identified by the Investment Manager as having
patterns of directors' dealing which suggest that the Company could achieve
attractive returns. It is contemplated that when fully invested in accordance
with this policy the Company will have holdings in between 40 and 80
companies.

The Company will not generally be investing in any companies which
are not listed on a regulated stock exchange in the United Kingdom (which
means that the Company will not generally be investing in companies listed on
AIM) nor, generally, in companies whose market capitalisation at the time of
investment is less than £25m. If, in the view of the Directors, securities in
smaller companies generally are especially illiquid, then the Directors may
increase the minimum size threshold until such time as the Directors believe
that sufficient liquidity has returned to the market. At present the Company
is only investing in companies with a market capitalisation of £150m or more.

The investment portfolio will be managed with a view to maintaining
an adequate spread of investment risk in terms of the concentration and in
terms of the size of its investments. No holding in a company or group
(including UK listed closed-ended investment funds and investment trusts) will
represent more than 15 per cent of the value of the Company's total assets (at
the time the investment is made).

The Company may from time to time invest in contracts for
differences, options and/or futures and may hedge relevant FTSE indices
(whether real or synthetic). The Company may use gearing and the Directors
reserve the right to borrow up to a maximum of 30 per cent of the Company's
gross assets (at the time of drawdown).

Performance Statistics: Net Asset Value (capital growth)

                                                   
                                   Six months to  Twelve months to  Three year to  Five years to
                                     31 December      31 December     31 December    31 December
                                            2009             2009            2009           2009

                                               %              %              %              %
 
Basic NAV                                    4.8           29.9             (26.1)         (2.1)
 
FTSE All-Share Index (excluding
investment Companies) *                     27.2           24.7             (14.4)          14.1

                                            
(Underperformance)/outperformance          (22.4)           5.2             (11.7)         (16.2)
 
* The Company's benchmark


Chairman's Statement

Over the last six months, your Company's net asset value per share
("NAV") increased by 4.8 per cent compared with a gain in the benchmark Index
of 27.2 per cent. This means that the Company's NAV has underperformed its
benchmark Index by 22.4 per cent over the six months ended 31 December 2009.

During the period under review, the Company has seen many changes.
Following the resignations from the Board of Nicholas Jeffrey on 28 October
2009, and Jonathan Carr and Garth Milne on 2 December 2009, myself and Brett
Miller were appointed to the Board as Directors of the Company. In addition,
the period has seen the termination of Knox D'Arcy Asset Management Ltd's
appointment as Investment Manager of the Company and the subsequent
appointment of Midas Investment Management Ltd ("Midas") as the new Investment
Manager, and the resignation of Arbuthnot Securities Ltd as the Company's
broker and appointment of Fairfax I.S. PLC as their replacement.

From the 4 December 2009, the date of the appointment of Midas as
Investment Manager, to 31 December 2009, your Company's net asset value per
share ("NAV") increased by 1.3 per cent compared with a gain in the benchmark
Index of 1.6 per cent.

Following the appointment of myself and Mr Miller to the Board, and
the appointment of Midas as Investment Manager, a review was undertaken of the
Company's existing cost structure, with a view to reducing non-essential
costs. The initial result of this is an estimated reduction of £500,000 per
annum. We continue to review the cost structure on an ongoing basis with a
view to further reductions.

In October 2009 the previous Board placed proposals before
shareholders which in summary, involved:

- a further tender offer, applicable to shareholders on the
register as at the close of business on 14 October 2009, which enabled the
Company to repurchase up to 41 per cent of the issued share capital for
cancellation at a price representing a five per cent discount to the unaudited
net asset value per share as at the calculation date of 30 September 2009; and

— an amendment to article 120 of the Company's articles of
association, in order to ratify and allow capital profits to be applied in the
purchase of the Company's own shares.

These proposals were voted on and passed at a General Meeting of
the Company held on 10 November 2009. The result of the Tender Offer and the
subsequent cancellation of the tendered shares and those previously held in
Treasury was a reduction in the issued share capital in the Company to
5,727,694 Ordinary shares.

The investment premise of The Directors' Dealing Investment Trust Plc remains
that directors of listed companies are better informed than the market generally 
and therefore their investments in the companies they manage are expected to outperform 
the market.

The Directors' Dealing Investment Trust Plc will continue to invest in shares of 
UK listed companies which are identified as having patterns of directors' trading, 
which suggest that following such patterns may lead to attractive investment returns. 
These patterns have been combined to form various trading strategies which have 
historically outperformed the relevant FTSE index.

Liam Murray.

Chairman.

26 February 2010.

Investment Manager's Report

During the six month period, the Company's net asset value per
share ("NAV") increased by 4.8 per cent, compared with an increase in the FTSE
All-Share Index (excl. investment companies) of 27.2 per cent. On a total
return basis, including the dividend of 13p paid on 4 January 2010, the
Company's return was 8.8 per cent. However, although the Company
underperformed during the period to 31 December 2009, the Company is now
outperforming the market since the appointment of Midas as Investment Manager.

Shareholders will be aware that a number of changes have been made to the Company, 
including the appointment of Midas as Investment Manager, replacing the previous 
Investment Manager, Knox D'Arcy Asset Management Ltd ("Knox D'Arcy").

In the short time following our appointment as Investment Manager, our first task 
was to work with the new Board to look at ways of significantly reducing the high 
costs with which the Company had been encumbered.  This cost review led to the 
termination of a number of material contracts, resulting in an annualised cost 
saving to the Company going forward of approximately £500,000 per annum.  We continue 
to work closely with the members of the Board to make further cost savings for the 
Company.


Legacy portfolio

Since our appointment as Investment Manager, we have reduced the
value in the legacy portfolio from £4.3m to £3.6m (as at 31 December 2009),
with key disposals so far being Advance Value Realisation Company Limited and
Inland plc. We continue to seek ways of further reducing this portfolio and as
at the date of publishing, the value of the legacy portfolio has dropped
further to £1.9m.

Directors' Dealing portfolio

During the period under review, we have carefully analysed this
section of the portfolio and increased the Company's positions in Barratt
Developments Plc, Quintain Estates and Development plc and SDL Plc.

New material positions have been taken in Shanks Group Plc,
Hamworthy Plc, Raven Russia Ltd and Weir Group Plc.

We have also taken the opportunity to reduce several positions
being Carpetright Plc, Computacenter UK Ltd, GKN Plc, Northern Foods Plc,
Psion Plc and Qinetiq Group Plc.

We have increased the weighted average market capitalisation of the
portfolio's holdings from £417m to over £1bn as at the date of this report
which is an approximate increase of 140 per cent in underlying liquidity in
the portfolio.

We are attempting to reposition the portfolio to increase liquidity
and to reduce risk whilst reducing corporate costs to ensure that income can
be distributed to shareholders rather than being absorbed by advisers' fees.

Interim Management Report

The important events that have occurred during the period under
review are set out in the Investment Manager's Report, which also includes the
key factors influencing the financial statements.

The Directors do not consider that the principal risks and
uncertainties have changed since the publication of the annual report for the
year ended 30 June 2009. The principal risks are set out on pages 14 and 15 of
the annual report which is available at http://www.directorsdealing.co.uk.

Portfolio Review

Portfolio breakdown by market capitalisation as at 31 December 2009

Number of companies                           Total

£150m+                                           25
£100-150m                                         3
£50-100m                                          0
£25-50m                                           1
£0-25m                                           14
UK Treasury Gilts                                 1

Percentage of portfolio                           %
£150m+                                         59.6
£100-150m                                       3.4
£50-100m                                        0.0
£25-50m                                         4.3
£0-25m                                         16.0
UK Treasury Gilts                              16.7

                                              100.0
 
Number of companies                              44

Number of declarable (3% and over)                9
holdings


Sector analysis of portfolio as at 31 December 2009

Sector weightings                      Market Value
                                                  %

Support Services                               22.5
UK Gilts                                       16.7
Real Estate                                     8.8
Software & Computer Services                    5.9
General Financial                               5.2
General Retailers                               4.9
Household Goods & Home Construction             4.8
Equity Investment Instruments                   4.5
Food Producers                                  3.6
General Industrials                             3.5
Health Care Equipment & Services                2.6
Chemicals                                       2.5
Travel & Leisure                                2.4
Gas, Water & Multi-utilities                    2.2
Technology Hardware & Equipment                 1.9
Beverages                                       1.8
Oil & Gas Producers                             1.7
Personal Goods                                  1.6
Industrial Engineering                          1.5
Media                                           1.2
Non Life Insurance                              0.2
 
Total                                         100.0


The portfolio consists entirely of UK quoted equity investments and UK
Treasury Gilts.

Twenty largest holdings as at 31 December 2009

Classification and main activities

UK Treasury Gilts *
Conventional UK Government Gilts
 
Barratt Developments                  Household Goods and Home Construction

The Company builds and sells developments through a network of 25
housebuilding divisions located throughout Great Britain. Additional
services include the provision of homes for rent and shared ownership.
 
Property Recycling                    Real Estate

The Company identifies and acquires previously developed land, referred to
as brownfield sites, where it can see the opportunity to improve valuation
through remediation and planning gain.
 
Rapid Realisations Fund               Equity Investment Instruments

An investment fund with an aim of exploiting the investment opportunity
represented by companies in pre-IPO and other late stage situations, with
a view to arbitraging differences in public and private company
valuations.
 
OpSec Security Group                  Support Services

The Group provides governments and corporations worldwide with
anti-counterfeiting technologies, solutions and services.
 
Zetar *                               Food Producers

Manufacturer of novelty and niche chocolate, dried fruit and nut products,
sold under private label or other chocolate manufacturers' brands within
the UK, Australia and other export markets.
 
Halfords Group                        General Retailers

High street retailer geared towards car maintenance including parts,
services and body repairs, car enhancements including in-car entertainment
systems and cleaning products and leisure products such as bicycles and
accessories.
 
RPC Group *                           General Industrials

Supplier of rigid plastic packaging across Europe.
 
Aggreko                               Support Services

Global provider of rental equipment for power and temperature control.
 
Galiform *                            Support Services

The Company is engaged in the manufacture, distribution and sale of
kitchens and joinery products to the building trade.
 
Mouchel Group                         Support Services

A consulting and business services group that works with government
agencies, local authorities, government-regulated industries and the
private sector in order to provide safe, reliable roads and railways,
well-managed education and civic infrastructure, clean water, and
cost-effective energy.
 
Shanks Group                          Support Services

Independent waste management company offering waste solutions tailored to
individual customer needs in the UK, the Netherlands, Belgium and Canada.
 
Tullett Prebon                        General Financial

The Company acts as an intermediary in wholesale financial markets,
facilitating the trading activities of its clients, in particular
commercial and investment banks.
 
Southern Cross Healthcare Group       Healthcare Equipment and Services

The Group is a provider of care homes for the elderly in the UK, and a
major provider of specialist services for people with physical and/or
learning disabilities.
 
WSP Group *                           Support Services

Global business group for the provision of management and consultancy
services, operating in four core divisions, Property, Transport &
Infrastructure, Environment & Energy and Management & Industrial.
 
Croda International                   Chemicals

The Company produces natural based speciality chemicals which are sold to
a wide range of markets ranging from Personal Care to Health Care and from
Crop Care to Polymers and Coatings. Its activities can be classed in two
sectors, Consumer Care and Industrial Specialities.
 
Rank Group                            Travel and Leisure

UK based European gaming, betting and bingo company, with established
brands such as Grosvenor Casinos and Mecca Bingo.
 
Phoenix IT Group *                    Software and Computer Services

The Company provides a range of IT services to a network of partners to
support them in delivering high quality, competitive services to
enterprises throughout the UK and Europe.
 
Northumbrian Water Group *            Gas, Water and Multi-utilities

The companies within the Group provide UK water supply and waste water
services, water and waste water contracts and also provide technical and
consultancy services focusing on water and environmental issues.
 
Close Bros Group                      General Financial

An independent merchant banking group based in London, providing
market-making and corporate finance services.

* Holding now disposed of.



Principal portfolio investments
as at 31 December 2009

                                               Market          % of         Market
                                                value     portfolio capitalisation
                                                £'000                           £m
 
UK Gilts                                        2,930          16.7              -
Barratt Developments                              836           4.8          1,197
Property Recycling                                794           4.5              5
Rapid Realisations Fund                           747           4.3             48
OpSec Security Group                              668           3.8             10
Zetar                                             633           3.6             23
Halfords Group                                    631           3.6            840
RPC Group                                         617           3.5            237
Aggreko                                           616           3.5          2,543
Galiform                                          556           3.2            469
Mouchel Group                                     550           3.1            294
Shanks Group                                      497           2.8            530
Tullett Prebon                                    463           2.6            601
Southern Cross Healthcare Group                   459           2.6            261
WSP Group                                         455           2.6            175
Croda International                               447           2.6          1,090
Rank Group                                        431           2.5            324
Phoenix IT Group                                  390           2.2            199
Northumbrian Water Group                          382           2.2          1,402
Close Bros Group                                  366           2.1            997
 
Total                                          13,468          76.8



The above holdings are in the ordinary shares of investee companies or in
Treasury Bills.

The 20 principal investments represent 76.8 per cent of the
investment portfolio.

Related Parties

Under the Listing Rules, the Investment Manager is regarded as a
related party of the Company. The amount paid to Midas, the current Investment
Manager, during the period was £nil. The amount paid to the previous
Investment Manager, Knox D'Arcy, during the period was £242,000 (31 December
2008: £20,000; 30 June 2009: £270,000). Full details of the investment
management fees payable during the current period are set out in note 6.

Responsibility Statement

The Directors confirm that to the best of their knowledge:

- the condensed set of financial statements has been prepared in accordance
with the Statement on Half-Yearly Financial Reports issued by the UK
Accounting Standards Board;

- the interim management 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 in 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.

This Half-Yearly Report was approved by the Board of Directors on 26 February
2010 and the above Responsibility Statement was signed on its behalf by Liam
Murray, Chairman.

Income statement

(incorporating the profit and loss account*) of the Company for the six months
to 31 December 2009

                          Six months to           Year ended              Six months to
                        31 December 2009         30 June 2009           31 December 2008
                           (unaudited)             (audited)          (unaudited) restated
                 Note Revenue Capital Total Revenue Capital   Total Revenue  Capital    Total

                        £'000   £'000 £'000   £'000   £'000   £'000   £'000    £'000    £'000
Gains/(losses)
on investments
at fair value               -   2,845 2,845       - (8,383) (8,383)        - (12,284) (12,284)
 
Income                    400       -   400   1,438       -   1,438     885        -      885
 
Investment
management fee    6     (121)   (121) (242)   (121)   (121)   (242)       3        3        6
 
VAT reclaimed on
investment
management fees             -       -     -     450     450     900       -        -        -
 
Professional
fees              7      (94)       -  (94)       -       -       -       -        -        -
 
Other expenses          (464)       - (464)   (946)   (199) (1,145)    (855)       -     (855)
 
Net return on
ordinary
activities
before and after
finance costs
and taxation            (279)   2,724 2,445     821 (8,253) (7,432)      33  (12,281) (12,248)
 
Return per
Ordinary share
(pence)                (3.52)   34.37 30.85    4.35 (43.73) (39.38)    0.15   (55.51)  (55.36)
 

* The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and capital columns are prepared under
guidance issued by the Association of Investment Companies' (`AIC').

All recognised gains and losses in the period are disclosed in the revenue and
capital column of the Income Statement and as a consequence no Statement of
Total Recognised Gains and Losses has been presented.

No operations were acquired or discontinued during the period.

All revenue and capital items in the above statement derive from continuing
operations.

These accounts are unaudited and are not the Company's statutory accounts.



Reconciliation of movements in shareholders' funds
for the six months to 31 December 2009

                               Own
                            shares    Share             Capital  Capital
                    Share  held in  premium  Special redemption  reserve Revenue Warrant
                  capital Treasury  account  reserve    reserve          reserve reserve    Total

                    £'000    £'000    £'000    £'000      £'000    £'000   £'000   £'000    £'000
Six months ended
31 December 2009
(unaudited)
 
30 June 2009        2,444        -        -        -      5,520   16,382   4,525      26   28,897
 
Net return after
taxation for the
period                  -        -        -        -          -        -   (279)       -     (279)
 
Net losses on
realisation of
investments             -        -        -        -          -   (3,841)    -         -    (3,841)

 
                        
Dividend paid and
declared                -        -        -        -          -        -   (745)       -     (745)

                         
Fair value
movement in
investments             -        -        -        -          -    6,686       -       -     6,686
 
Cost of shares
purchased for
cancellation            -        -        -        -          -   (11,036)     -       -   (11,036)

 
                        
Nominal value of
shares purchased
for cancellation     (1,012)    -         -         -        1,012      -      -       -        -

 
                     
Costs allocated
to capital           -        -        -          -          -      (121)       -      -     (121)

                         
Expense of
warrants granted    -        -         -          -          -        -         -     171      171
                       
 
31 December 2009    1,432        -        -        -        6,532    8,070     3,501    197  19,732
 
Year ended 30
June 2009
(audited)
 
30 June 2008        6,126  (8,847)   28,319        -        1,838   39,763   3,704       -   70,903
 
Net return after
taxation for the
year                    -        -        -        -          -        -       821       -      821
 

Net losses on
realisation of
investments            -        -        -        -          -      (4,425)       -       -  (4,425)

                        
Transfer between
reserves               -       3,650 (28,319)   28,319        -      (3,650)       -      -     -

                         
Fair value
movement in
investments             -        -        -        -          -      (3,958)       -     -   (3,958)
 
Costs allocated
to capital              -        -        -        -          -          130       -     -      130

                         
Cost of shares 
held in Treasury        -     5,197       -        -          -            -       -    -      5,197

                        
Cost of shares
purchased for
cancellation            -        -         -    (28,319)       -      (11,478)     -    -    (39,797)

 
                        
Nominal value of
shares purchased
for cancellation    (3,682)        -        -        -      3,682        -       -       -        -
 
Warrants granted          -        -        -        -          -        -       -      26       26
 
30 June 2009          2,444        -        -        -      5,520   16,382   4,525      26   28,897
 


                               Own
                            shares   Share            Capital  Capital
                    Share  held in premium Special redemption  reserve Revenue Warrant
                  capital Treasury account reserve    reserve          reserve reserve    Total

                    £'000    £'000   £'000   £'000      £'000    £'000   £'000   £'000    £'000
Six months ended
31 December 2008
(unaudited)
 
30 June 2008        6,126  (8,847)  28,319       -      1,838   39,763   3,704       -   70,903
 
Net return after
taxation for the
period                  -        -       -       -          -        -      33       -       33
 
Net losses on
realisation of
investments
 
                        -        -       -       -          -    (758)       -       -    (758)
 
Fair value
movement in
investments             -        -       -       -          - (11,526)       -       - (11,526)
 
Costs allocated
to capital
                        -        -       -       -          -        3       -       -        3
 
31 December 2008    6,126  (8,847)  28,319       -      1,838   27,482   3,737       -   58,655
 


Balance sheet
as at 31 December 2009

                                         As at        As at            As at
                              31 December 2009 30 June 2009 31 December 2008
                                         £'000        £'000            £'000

                                   (unaudited)    (audited)      (unaudited)
Fixed assets
Investments at fair
value                                   17,540       18,848           56,552
 
Current assets
Debtors                                    188          554              461
Cash at bank                             2,627        9,656            1,904
                                         2,815       10,210            2,365
 
Creditors - amounts
falling due within one
year
Creditors                                (367)            -                -
Accruals                                 (256)        (161)            (262)
                                         (623)        (161)            (262)
Net current assets                       2,192       10,049            2,103
Net assets                              19,732       28,897           58,655
 
Share capital and
reserves
Called up share capital                  1,432        2,444            6,126
Own shares held in
Treasury                                     -            -          (8,847)
Share premium account                        -            -           28,319
Capital redemption
reserve                                  6,532        5,520            1,838
Capital reserve                          8,070       16,382           27,482
Revenue reserve                          3,501        4,525            3,737
Warrant reserve                            197           26                -
Shareholders' funds -
equity interests                        19,732       28,897           58,655
 
Total net assets for the
purposes of calculating
net asset values -
including current period
revenue                                 19,732       28,897           58,655
 
Net asset value per
Ordinary share                         344.50p      328.67p          265.12p
 
Number of Ordinary
shares in issue
(excluding shares held
in Treasury)                         5,727,694    8,792,049       22,123,926
 


Statement of cash flows
for the six months to 31 December 2009

                             Six months to 31   Year ended   Six months to
                                                                        31
                                December 2009 30 June 2009   December 2008
                                        £'000        £'000           £'000

                                  (unaudited)    (audited)     (unaudited)
Operating activities
 
Investment income received                232          610             423
Deposit interest received                   1          758             590
Treasury interest purchased                 -            -           (172)
Treasury interest received                140          322               -
VAT refund and interest                     -        1,035               -
Investment management fees
paid                                    (230)        (477)           (469)
Secretarial fees paid                    (28)         (69)            (37)
Other cash payments                     (218)      (1,115)           (808)
 
Net cash (outflow)/inflow
from operating activities               (103)        1,064           (473)
 
Capital expenditure and
financial investment
Purchases of investments             (21,815)     (36,021)        (32,475)
Sales of investments                   26,729       47,236           2,605
 
Net cash inflow/(outflow)
from capital expenditure and
financial investment                    4,914       11,215        (29,870)
 
Equity dividends paid                   (745)            -               -
 
Financing
Reorganisation costs                        -        (242)              92
Shares purchased for
cancellation                         (11,095)     (34,919)           (383)
Shares purchased for
Treasury                                    -            -               -
 
Net cash outflow from
financing                            (11,095)     (35,161)           (291)
 
Decrease in cash                      (7,029)     (22,882)        (30,634)


Notes to the accounts
as at 31 December 2009

1. Financial information

The financial information contained in this report does not
constitute full statutory accounts as defined in Section 434 of the Companies
Act 2006. The financial information for the six months ended 31 December 2009
and 31 December 2008 has not been audited nor reviewed by the Company's
Auditor pursuant to the Auditing Practices Board guidance on such reviews.

The information for the year ended 30 June 2009 has been extracted
from the latest published audited financial statements, which have been filed
with the Registrar of Companies. The report of the Auditors on those financial
statements contained no qualification or statement under Sections 498(2) or
(3) of the Companies Act 2006.

2. Accounting policies

The financial statements are prepared under the historical cost
convention as modified by the revaluation of fixed asset investments and in
accordance with UK applicable accounting standards and the Statement of
Recommended Practice regarding the Financial Statements of Investment Trust
Companies and Venture Capital Trusts ("SORP") issued in January 2009.

The financial statements are prepared on the basis of the
accounting policies set out in note 1 of the annual financial statements for
the year ended 30 June 2009.

All investments held by the Company are classified as `fair value
through profit or loss'. For investments actively traded in organised
financial markets, fair value is generally determined by reference to Stock
Exchange quoted market bid prices or last traded prices at the close of
business on the balance sheet date.

3. Net asset value per share

These net asset values have been calculated in accordance with the accounting
policies set out in note 2.

                31 December 2009      30 June 2009   31 December 2008
                  £'000    pence    £'000    pence     £'000    pence
Net asset
value*           19,732   344.50   28,897   328.67    58,655   265.12

* including current period revenue.

4. Taxation

The Company is subject to corporation tax at 28 per cent (2008: 28 per cent).
Certain re-organisation costs may not be deductible for corporation tax.
However, UK dividends are not subject to corporation tax and use of brought
forward losses covers any current taxable income of the Company and, as a
result, there is no taxation charge.

                                         Six months to           Year ended              Six months to
                                       31 December 2009         30 June 2009           31 December 2008
                                     Revenue Capital Total Revenue Capital   Total Revenue  Capital    Total
                                       £'000   £'000 £'000   £'000   £'000   £'000   £'000    £'000    £'000
 
(Loss)/profit on ordinary activities   (279)   2,724 2,445     821 (8,253) (7,432)      33 (12,281) (12,248)
before tax
 
Net revenue return on ordinary
activities multiplied by the
standard rate of corporation tax in
the UK of 28% (2008: 28%)
                                        (78)     763   685     230 (2,311) (2,081)       9  (3,439)  (3,430)
 
(Gains)/losses on investments              -   (797) (797)       -   2,347   2,347       -    3,439    3,439
 
UK dividends not chargeable to                               (130)       -   (130)    (74)        -     (74)
corporation tax                         (70)       -  (70)
 
Expenses not deductible for tax                                182      56     238     197        -      197
purposes                                   9       -     9
 
Excess management expenses
carried/(brought) forward
                                         139      34   173   (282)    (92)   (374)   (132)        -    (132)
 
Total current tax                          -       -     -       -       -       -       -        -        -


5. Reconciliation of net revenue before finance costs and taxation to net cash
(outflow)/inflow from operating activities

                                      Six months to   Year ended   Six months to
                                                 31                           31
                                      December 2009 30 June 2009   December 2008
                                              £'000        £'000           £'000
 
Net revenue before finance costs              2,445      (7,432)        (12,248)
and taxation
Subtract/ add back: (Gains)/losses          (2,845)        8,383          12,284
on investments
Increase/(decrease) in creditors                153        (494)           (463)
and accruals
(Increase)/decrease in prepayments              (8)          237           (204)
and accrued income
(Increase)/decrease in dividends               (19)          145             158
receivable
Add back: capital related expenses                -          199               -
Add back: management warrant                    171           26               -
expenses
 
                                              (103)        1,064           (473)
6. Investment management Fee

The investment management fee was £242,000 for the period (Year ended 30 June
2009: £494,000, December 2008: £246,000)

                        Revenue   Capital      Total

                          £'000     £'000      £'000

Investment management       121       121        242
fee
 
Of these, the amounts payable to Investment Managers, throughout the period
were as follows:

                          Six months to   Year ended    Six months to
                       31 December 2009 30 June 2009 31 December 2008

                                  £'000        £'000            £'000

Unicorn                               -          224              226
Knox D'Arcy                         242          270               20
Unwinding of provision
for unexpired period
of notice (Unicorn)
 
                                      -        (252)            (252)
                                    242          242              (6)
7. Professional fees

During the six months ended 31 December 2009, a total of £94,000 (inclusive of
irrecoverable VAT) was spent on non-recurring advisers' fees.

8. Share Buybacks

During the period the Company purchased for cancellation 3,064,355 Ordinary
Shares under a Tender Offer for a total consideration of £10,645,218.
Inclusive of all expenses, the total cost of the tender offer was £11,036,376.

In addition, on 4 December 2009 the Company cancelled 982,000 Ordinary shares
held in Treasury. The Company no longer holds any shares in Treasury.

9. Management Warrants

(a) During the period to 30 June 2009, the former investment
manager, Knox D'Arcy Asset Management Ltd ("KDAM") was awarded 19,201 warrants
convertible into the Company's Ordinary shares ("Management Warrants").
Management Warrants entitle the holder to subscribe at par for one Ordinary
share for every Management Warrant held. The Management Warrants are
exercisable at the end of the period at 25p. The Management Warrants once
issued have a remaining contractual life or exercise period of 10 years.

Fair value of Management Warrants:

The former directors considered the Black-Scholes model to be the
appropriate method to calculate the fair value of the Management Warrants.
Based on this model, the fair value per Management Warrant was 135.03p with a
total fair value of £25,927 for the 19,201 Management Warrants granted as at
the 30 June 2009.

The inputs to the model included the share price at the grant date,
an adjusted share price that takes into account the additional Ordinary shares
which would be issued on exercise of the Management Warrants, volatility, an
expected dividend yield deemed to be 5% and a risk free rate of return derived
from the yield on an appropriate 10-year UK gilt. Other inputs include the
number of Management Warrants and the number of Ordinary shares outstanding.

The effect of expected early exercise had been incorporated by
using an exercise period of five years compared to the actual 10 year life of
the Management Warrants. The expected volatility has been determined by
considering the volatility of the daily share price return over the 12 months
preceding the Balance sheet date. Market conditions had been taken into
account by using publicly quoted share prices and publicly quoted gilt
interest yields for the relevant dates.

The total expense of £25,927 for the year to 30 June 2009 arising
from the granting of Management Warrants had been recognised in the Income
statement. The full amount is accounted for as equity-settled share-based
payment transactions. An equal amount of £25,927 has been credited to a
Warrant reserve on the Balance sheet. At the 30 June 2009 the price of
Ordinary shares was 260p. Based on the exercise price of 25p, the intrinsic
value of one Management Warrant was therefore 235p.

Whilst the current Directors feel that the Black-Scholes model is a
valid valuation model for these warrants, they believe a valuation method
based on intrinsic value using the Company's share price is more prudent.
American warrants are often valued using a binomial model that values warrants
at the higher of the Black-Scholes method and the intrinsic value for the sake
of prudence. This leads to a higher valuation for the warrants previously
issued which are now valued at £41,474 compared to a valuation of £25,927 at
30 June 2009. At 31 December 2009 the price of an Ordinary share was 241p.

(b) In addition, for the period to the 3 December 2009, KDAM has
been issued a further 71,750 Management Warrants which have been valued
intrinsically at £154,980.

(c) The combination of the charging of the new Management Warrants
and the movement on the previously issued Management Warrants results in a
charge through the profit and loss in the year of £170,527.

(d) The Company is aware that KDAM is contesting the amount of the
management fees paid to KDAM on termination of the investment management
agreement between the Company and KDAM (the "Management Agreement"). Although
the Company has received no claim from KDAM, the Company understands that KDAM
may argue that it is entitled to an additional £170,000 of management fees
following termination of the Management Agreement.

In addition, although the Company has received no claim from KDAM,
the Company understands that KDAM may assert that it is entitled to an
additional 117,693 Management Warrants following termination of the Management
Agreement pursuant to the terms of the management warrants deed between the
Company and KDAM.

The Company has received legal advice that any claim by KDAM for
additional management fees and warrants would be unlikely to succeed. However,
using the same intrinsic valuation methodology as at 31 December above, the
warrants would be worth £254,217 which, in aggregate with the disputed
management fees, would amount to a further aggregate charge of £424,217. This
aggregate amount is disclosed for information purposes only but has been not
charged through the accounts as the Company does not believe that it is valid.

10. VAT reclaimed on investment management fees

Note 4 to the accounts for the financial year ended 30 June 2009
set out details of the Company's claims against Unicorn Asset Management
Limited ("Unicorn") relating to the reclaim of VAT paid by the Company to
Unicorn during Unicorn's tenure as investment manager to the Company.

The Company has entered into a deed of settlement ("Settlement")
with Unicorn dated 25 February 2010 which, subject to the following
paragraphs, provides for the overall satisfaction and settlement of the
Company's claims against Unicorn.

As disclosed at Note 4 to the accounts for the financial year ended
30 June 2009, the Company took out an After the Event insurance policy (the
"ATE Policy") which provided protection against adverse cost awards of up to
£500,000 in the event that the Court ruled against the Company in relation to
injunction proceedings taken by the Company against Unicorn. The ATE Policy
was taken out with Templeton Insurance Limited ("Templeton"), a company of
which Nicholas Jeffrey, then a director of the Company, is a director and
which is owned by an associated company of KAM.

The cost of the ATE Policy has not been agreed by Unicorn as part
of the Settlement and, accordingly, the cost of the ATE Policy will be
assessed by the Court.

Directors and Advisers

Directors:             Liam Murray (Chairman)
                       Brett Miller
 
Company Secretary      Capita Sinclair Henderson    Tel: 01392 412 122
                       Limited
and Registered Office: Trading as Capita Financial  Fax: 01392 253 282
                       Group
                       - Specialist Fund Services
                       Beaufort House
                       51 New North Road
                       Exeter EX4 4EP
 
Registrar:             Equiniti Limited             Tel: 0871 384 2030
                       Aspect House                 Fax: 0871 384 2100
                       Spencer Road                 www.shareview.co.uk
                       Lancing
                       West Sussex BN99 6DA
 
Investment Manager     Midas Investment Management  Tel: 0161 228 1709
                       Ltd
                       2nd Floor, Arthur House      Fax: 0161 228 2510
                       Chorlton Street              www.midasim.co.uk
                       Manchester, M1 3FH


Sources of further information

The Company's shares are listed on the London Stock Exchange. The
Company has its own website at www.directorsdealing.co.uk.

Frequency of NAV publication

The Company's net asset value is released to the Stock Exchange weekly.

Banker:  National Westminster Bank       Solicitors:      Stephenson Harwood
         PLC                                              One, St Paul's Churchyard
         11 Spring Gardens                                London EC4M 8SH
         Manchester M60 2DB    
                               
Auditor: KPMG Audit PLC                  Sponsor &        Fairfax I.S. PLC
         100 Temple Street               Broker:          46 Berkeley Square
         Bristol BS1 6AG                                  Mayfair
                                                          London, W1J 5AT
                                                          
 
An investment company as defined under section 833 of the Companies Act 2006.

Registered in England No. 2812946

                                                                                                                                                                                                                                      

a d v e r t i s e m e n t