DDV1.L Regulatory News (DDV1)

8 Jun 2006 07:01

AIM Distribution Trust PLC (The)08 June 2006 THE AIM DISTRIBUTION TRUST PLCPRELIMINARY ANNOUNCEMENT OF RESULTSFOR THE YEAR ENDED 31 MARCH 2006 FINANCIAL HIGHLIGHTS 2006 2005 pence pence (Restated) Net asset value (per share) 70.0 66.6 Interim distribution (per share) 2.0 2.0 Cumulative gross distributions paid since launch 51.8 49.8 Total return (net asset value plus cumulative distributions paid) 121.8 116.4 The statement to shareholders by the Chairman, Sir Aubrey Brocklebank, includesthe following comments: Introduction The year to 31 March 2006 has seen a mixed performance by the Company'sinvestments. However, the better performers have outweighed the poorer ones toproduce a positive result for the year. Net Asset Value At 31 March 2006, the Net Asset Value per share ("NAV") stood at 70.0p. Thisrepresents an increase of 5.4p or 8.1% since the previous year-end (includingthe 2p dividend paid during the year). Format of Accounts When the Company revoked investment company status in order to pay a capitaldividend. It adopted the standard Companies Act format for its accounts, whichincluded a Profit and Loss account. It has now become common practice forVenture Capital Trusts to continue to present their accounts in accordance withthe Statement of Recommended Practice for Investment Trusts ("SORP"), eventhough they may have revoked investment company status. The Board feels thatthe SORP presentation is much more useful to readers of the accounts and,therefore, these and future accounts will be prepared in accordance with theSORP, an updated version of which was published in December 2005. The most noticeable change to the accounts as a result of these changes is thatthe Company is presenting an Income Statement (analysed between Revenue andCapital) rather than a Profit and Loss account. For this accounting period, your Company is required to adopt FRS 21, underwhich dividends have to be accounted for in the period in which they are liableto be paid, rather than the period in respect of which they are declared. The Company has also had to adopt FRS 26, which requires quoted investments tobe valued at bid-prices. Previously the Company valued quoted investments atmid-market prices. The comparative figures for 2005 have been restated. As aresult, the NAV at 28 February 2005 has been reduced from 68.0p, as previouslyreported, to 66.6p. VCT Qualifying investments With a significant number of disposals taking place in the previous year, theCompany has been active in making new investments in the year under review. Atotal of nine new VCT qualifying investments were made at a total cost of £1.6million. The Company also made a small number of disposals and part disposals ofholdings, which generated proceeds of £1.2 million and realised gains of£522,000. Results and Dividend The return on ordinary activities after taxation was £862,000 (2005: £522,000),comprising a revenue loss of £35,000 and a capital surplus of £897,000. On 1 March 2006, the Company declared an interim tax-free distribution ofrealised gains of 2p per share (2005: 2p per share) in respect of the year ended31 March 2006. This was paid on 29 March 2006. The Directors are not proposingto declare any further dividends in respect of the year to 31 March 2006. Non-VCT Qualifying investments The Company has historically held a proportion of its funds in fixed incomesecurities. At 31 March 2006, the Company held gilts and bonds with a totalvalue of £1.7 million. The VCT regulations significantly restrict the type of investments which can bemade by the Company, meaning that some attractive investment opportunities whichthe Manager might otherwise recommend cannot form part of the Qualifyingportfolio. The Manager has consistently been able to keep this Qualifyingportfolio well within the limits prescribed by VCT regulations, therefore theBoard has asked the Manager to take a more active role with some non-VCTqualifying investments. This should allow the Company to benefit more fully fromthe Manager's specialist expertise, thereby enhancing returns for shareholderswhilst retaining the Company's VCT tax status. Share buybacks The Board is conscious that the Company's share price is affected by theilliquidity of its shares in the market. In line with widespread practiceamongst VCTs, the Company has a policy of purchasing its own shares. During theyear the Directors used this power to acquire 511,853 shares at an average priceof 60.8p per share. The Board intends to continue with the policy of buying inshares at approximately a 10% discount to the latest published NAV (subject toregulatory and other restrictions) and a special resolution is proposed for theforthcoming AGM. Annual General Meeting The Annual General Meeting of the Company will be held at Port of LiverpoolBuilding, Pier Head, Liverpool, L3 1NW at 2.00 pm on 6 July 2006. Outlook The Company now has a well-balanced and diversified investment portfolio, with agood mix of younger and more developed companies. With some commentators nowexpressing uncertainty about the short-term prospects for equity markets, theCompany is in a better position than previously to weather more difficult timesshould they arise. With a lower level of cash resources than at this time last year, there islikely to be a reduced number of new investments made in the forthcoming year.The Board will, however, continue to encourage the Investment Manager to seekprofit-taking opportunities from the existing portfolio and also hopes to seepositive results from a more active approach to its non-VCT qualifyinginvestment portfolio. INCOME STATEMENTfor the year ended 31March 2006 Year ended 31 March 2006 Year ended 31 March 2005 (as restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Income 168 - 168 209 - 209 Gains on investments - 1,014 1,014 - 605 605 168 1,014 1,182 209 605 814 Investment management fees (39) (117) (156) (27) (82) (109) Other expenses (164) - (164) (181) (2) (183) Return on ordinary activities before tax (35) 897 862 1 521 522 Tax on ordinary activities - - - - - - Return attributable to equity (35) 897 862 1 521 522shareholders Return per share (0.2p) 5.3p 5.1p - 3.2p 3.2p The revenue and capital movements in the year relate to continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Year ended 31 March 2006 Year ended 31 March 2005 (as restated) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Return attributable to equity shareholders (35) 897 862 1 521 522 Total recognised gains/(losses) for theyear (35) 897 862 1 521 522 Prior year adjustment (note b) - (215) (215) Total recognised gains and losses sincelast annual report (35) 682 647 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Year ended Year ended 31 March 31 March 2006 2005 (as restated) £'000 £'000 Opening shareholders' funds 10,831 11,118Prior year adjustment (note b) - (304)Issue of shares 611 -Share issue costs (53) -Purchase of own shares (313) (177)Total recognised gains/(losses) for the year 862 522Distributions paid (336) (328) Closing shareholders' funds 11,602 10,831 BALANCE SHEETat 31 March 2006 2006 2005 (as restated) £'000 £'000 £'000 £'000 Fixed assetsInvestments 11,638 8,927 Current assetsDebtors 51 94Cash at bank and in hand 47 2,237 98 2,331 Creditors: amounts falling due within one year (134) (427) Net current (liabilities)/assets (36) 1,904 Net assets 11,602 10,831 Capital and reservesCalled up share capital 4,145 4,063Capital redemption reserve 266 138Share premium 348 -Special reserve 1,176 1,607Capital reserve - unrealised (812) (1,116)Capital reserve - realised 6,467 6,092Revenue reserve 12 47 Equity shareholders' funds 11,602 10,831 Net asset value per share 70.0p 66.6p CASHFLOW STATEMENTfor year ended 31 March 2006 Year ended Year ended 31 March 2006 31 March 2005 £'000 £'000 £'000 £'000 Net cash outflow from operating activities (120) (107) Capital expenditurePurchase of investments (2,807) (3,070)Sale of investments 1,159 3,970 Net cash (outflow)/inflow from capital expenditure (1,648) 900 Equity distributions paid (336) (328) Net cash (outflow)/inflow before financing (2,104) 465 FinancingApplications for share issue 271 340Share issue costs (22) (31)Purchase of own shares (335) (155)Net cash inflow/(outflow) from financing (86) 154 (Decrease)/increase in cash in the year (2,190) 619 Reconciliation of net cash flow to movement in netfunds 2006 2005 £'000 £'000 (Decrease)/increase in cash during the year (2,190) 619Net funds at 1 April 2005 2,237 1,618 Net funds at 31 March 2006 47 2,237 NOTES Accounting policies a. Basis of accounting The Company has prepared its financial statements under UK Generally AcceptedAccounting Practice ("UK GAAP"). Where presentation guidance set out in theStatement of Recommended Practice "Financial Statements of Investment TrustCompanies" revised December 2005 ("SORP") is consistent with the requirements ofUK GAAP, the Directors have sought to prepare the financial statements on abasis compliant with the recommendations of the SORP. The financial statements are prepared under the historical cost conventionexcept for the revaluation of certain financial instruments. b. Restatement of accounts The comparative figures have been restated as a result of the Company adoptingthe new applicable Financial Reporting Standards (FRS). Accordingly the netassets for 2005 have been decreased by £215,000 as follows: Prior year adjustment £'000Restatement of investments held at 1 April 2004 to bid price (304)Net effect on reserves at 1 April 2004 (304) Unrealised and realised movements on investments restated to bid price 89 (215) c. Presentation of Income Statement In order to better reflect the activities of an investment trust company and inaccordance with guidance issued by the AITC, supplementary information whichanalyses the income statement between items of a revenue and capital nature hasbeen presented alongside the income statement. The net revenue is the measurethe directors believe appropriate in assessing the Company's compliance withcertain requirements set out in Section 842 Income and Corporation Taxes Act1988. d. Investments All investments are designated as "fair value through profit or loss" assets andare initially measured at cost. Thereafter the investments are measured atsubsequent reporting dates at fair value. Listed fixed income investments and investments quoted on the AlternativeInvestment Market ("AIM") are designated measured using bid prices withilliquidity discounts applied where deemed appropriate. In respect of unquoted instruments, fair value is established by usingInternational Private Equity and Venture Capital Valuation Guidelines. Where noreliable fair value can be estimated for such unquoted equity investments theyare carried at cost, subject to any provision for impairment. Where an investeecompany has gone into receivership or liquidation the investment, although notphysically disposed of, is treated as being realised. Gains and losses arising from changes in fair value are included in the incomestatement for the year as a capital item and transaction costs on acquisition ordisposal of the investment expensed. It is not the Company's policy to exercise either significant or controllinginfluence over investee companies. Therefore the results of these companies arenot incorporated into the revenue account except to the extent of any incomeaccrued. e. Income Dividend income from investments is recognised when the shareholders' rights toreceive payment has been established, normally the ex dividend date. Interest income is accrued on a timely basis, by reference to the principaloutstanding and at the effective interest rate applicable, which is the ratethat exactly discounts estimated future cash receipts through the expected lifeof the financial asset to that asset's net carrying amount, and only where thereis reasonable certainty of collection. f. Expenses All expenses are accounted for on accruals basis. In respect of the analysisbetween revenue and capital items presented within the income statement, allexpenses have been presented as revenue items except that expenses which areincidental to the disposal of an investment are deducted from the disposalproceeds of the investment. g. Deferred taxation Deferred taxation is provided in full on timing differences that result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in financial statements. Announcement based on draft accounts (unqualified audit report) The financial information set out in the announcement does not constitute theCompany's statutory accounts in accordance with s240 CA85 for the year ended 31March 2006. The statutory accounts for the year ended 31 March 2006 will befinalised on the basis of the financial information presented by the directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting. A copy of the full annual report and financial statements for the year ended 31March 2006 will be printed and posted to shareholders. Copies will also beavailable to the public at the registered office of the Company at 69 EcclestonSquare, London SW1V 1PJ. This information is provided by RNS The company news service from the London Stock Exchange