Interim Results

Legg Mason Investrs AIM DistTst PLC 21 November 2002 LEGG MASON INVESTORS AIM DISTRIBUTION TRUST PLC PRELIMINARY ANNOUNCEMENT FOR THE SIX MONTHS TO 30 SEPTEMBER 2002 CHAIRMAN'S STATEMENT Introduction On behalf of your Board, I present the interim report and accounts for the six months ended 30 September 2002. Global markets have continued to experience turbulence and decline over the period. Following a short period of apparent stability during April and May they have fallen dramatically in subsequent months. The FTSE 100 Index recorded a six-year low on 25 September 2002 and the FTSE AIM Index an all-time low of 582.9 on 10 October 2002, 47.5% lower than on 3 June 1996, the date on which the Company made its first investment. Against this backdrop, a shareholder who claimed both income tax relief and capital gains tax deferral, has generated an estimated internal rate of return of 11% compound per annum. For shareholders who did not defer capital gains tax the return is equivalent to 5.3% compound per annum. These shareholder returns support our strategy of having distributed realised capital gains. Balance sheet and net assets Over the six months ended 30 September 2002 the net asset value per share of the Company fell 27.1% from 78.22p to 56.99p. This compares with a fall of 28.1% in the FTSE AIM Index. At 19 November 2002 the AIM Index stood at 592.30 having fallen from 605.10 on 30 September 2002 and from 820.48 on 30 September 2001. During the period under review there has been a steady stream of companies coming to AIM although not all were of the high standard which we are seeking. We have had the opportunity to invest selectively at realistic prices, and seven qualifying investments were made during the period at a cost of £1.03m. At 30 September 2002, 87% of the portfolio by 'tax book cost' was invested in VCT qualifying companies, comfortably in excess of the required 70% level. The Board believes that the high level of qualifying investment is justified in these turbulent markets, as smaller companies risk suffering disproportionately in any market downturn, which would then impact on this level. The supply of VCT investments has dwindled since the period end, below the level experienced earlier in the year. Results and dividend Revenue from investments during the period amounted to £112,414 (2001: £175,911). The fall in the level of income is in line with markets in general, which has affected smaller companies in particular. As a result of the accumulated capital losses, a capital distribution cannot be paid. The timing and level of future capital distributions will depend upon a market recovery, in order to recoup the current level of unrealised capital losses and enable capital realisations. Consequently, the Directors do not propose to pay an interim dividend for the six months ended 30 September 2002. Future of the Company I am pleased to report that the resolution that the Company should continue as a VCT for a further five years was passed at the Annual General Meeting on 21 August 2002 by an overwhelming majority. Shareholder relations Shareholders who wish to know the latest published net asset value or share price at any time may call Legg Mason Investments on 020 7070 7400. Future prospects The Manager adopts a strategy of investing in companies which, in its view, have significant competitive advantages which should sustain long-term growth. The markets have affected the share prices of most such companies but we believe that when the market recovers their true value will be reflected in their share price. With concerns over the direction of the US economy and possible deflationary pressures in Europe it is very difficult to predict where markets will go from here and when recovery may occur. However we believe that the depressed state of the market will provide opportunities to invest at favourable prices. Your Board believes that when markets recover the Company will again be able to distribute realised capital gains to shareholders. In addition, the Company will continue to have advantageous tax breaks in respect of revenue and capital distributions. Sir Aubrey Brocklebank Chairman 20 November 2002 Statement of revenue and capital returns (unaudited) for the six months ended 30 September 2002 (incorporating the revenue account of the Company) (Unaudited) Six months ended 30 September 2002 Revenue Capital Total £ £ £ Losses on investments - (3,493,284) (3,493,284) Income 112,414 - 112,414 Investment management fees (23,425) (70,275) (93,700) Movement in provision for incentive fee - - - Other expenses (70,529) - (70,529) -------------- -------------- -------------- Return/(loss) on ordinary activities before finance 18,460 (3,563,559) (3,545,099) costs and taxation Interest payable and similar charges (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 (21.33)p (21.23)p ============== ============== ============== The Company's results have been prepared in accordance with the requirements of Schedule IV of the Companies Act 1985, which requires that realised gains and losses, including those arising from the disposal of investment, are included in the profit for the period, and the unrealised capital gains are excluded from the profit for the period. (Unaudited) (Audited) Six months ended 30 September 2001 Year ended 31 March 2002 Revenue Capital Total Revenue Capital Total £ £ £ £ £ £ Losses on investments - (6,634,997) (6,634,997) - (6,674,212) (6,674,212) Income 175,911 - 175,911 299,224 - 299,224 Investment management (34,778) (104,333) (139,111) (65,203) (195,610) (260,813) fees Movement in provision for - 318,984 318,984 - 318,984 318,984 incentive fee Other expenses (68,838) - (68,838) (143,587) - (143,587) -------------- -------------- -------------- -------------- -------------- -------------- Return/(loss) on ordinary activities before finance costs and taxation 72,295 (6,420,346) (6,348,051) 90,434 (6,550,838) (6,460,404) Interest payable and (14) - (14) (14) - (14) similar charges -------------- -------------- -------------- -------------- -------------- -------------- Return/(loss) on ordinary activities before taxation 72,281 (6,420,346) (6,348,065) 90,420 (6,550,838) (6,460,418) Taxation on ordinary - (43,048) (43,048) - - - activities -------------- -------------- -------------- -------------- -------------- -------------- Return/(loss) attributable to equity shareholders 72,281 (6,463,394) (6,391,113) 90,420 (6,550,838) (6,460,418) Dividends in respect of - - - (58,480) - (58,480) equity shares -------------- -------------- -------------- -------------- -------------- -------------- Transfer to/(from) 72,281 (6,463,394) (6,391,113) 31,940 (6,550,838) (6,518,898) reserves ============== ============== ============== ============== ============== ============== Return/(loss) per 0.43p (38.68)p (38.25)p 0.54p (39.21)p (38.67)p ordinary share ============== ============== ============== ============== ============== ============== Profit and loss account (unaudited) for the six months ended 30 September 2002 (Unaudited) (Unaudited) (Audited) Six months ended 30 Six months ended 30 Year ended September 2002 September 2001 31 March 2002 £ £ £ Notes Revenue received on investments 112,414 175,911 299,224 Administrative expenses Investment management fees (93,700) (139,111) (260,813) Movement in provision of incentive - 318,984 318,984 fee Other expenses (70,529) (68,838) (143,587) ---------------- ---------------- ---------------- Net (expenses)/revenue (51,815) 286,946 213,808 Income from fixed asset investments Losses on investments (290,285) (461,514) (1,073,114) ---------------- ---------------- ---------------- Loss on ordinary activities before (342,100) (174,568) (859,306) interest and taxation Interest payable and similar charges (1,488) (14) (14) ---------------- ---------------- ---------------- Loss on ordinary activities before (343,588) (174,582) (859,320) taxation Taxation on ordinary activities - (43,048) - ---------------- ---------------- ---------------- Loss on ordinary activities after (343,588) (217,630) (859,320) taxation ---------------- ---------------- ---------------- Dividends Revenue dividends - - (58,480) ---------------- ---------------- ---------------- Retained loss (343,588) (217,630) (917,800) Transfer from capital reserve 360,560 289,911 949,740 ---------------- ---------------- ---------------- Retained revenue profits 16,972 72,281 31,940 ================ ================ ================ Loss per share 1 (2.06)p (1.30)p (5.14)p ================ ================ ================ All returns are derived from continuing activities. Statement of total recognised gains and losses (unaudited) for the six months ended 30 September 2002 (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 30 September 2002 30 September 2001 31 March 2002 £ £ £ Loss for the period (343,588) (217,630) (859,320) Unrealised losses for the period (3,202,999) (6,173,483) (5,601,098) ----------------- ----------------- ----------------- Total recognised losses during the (3,546,587) (6,391,113) (6,460,418) period ----------------- ----------------- ----------------- Total recognised loss per share (21.23)p (38.25)p (38.67)p ================= ================= ================= All returns are derived from continuing activities. Balance sheet (unaudited) as at 30 September 2002 (Unaudited) (Unaudited) (Audited) As at As at As at 30 September 2002 30 September 2001 31 March 2002 £ £ £ Notes Fixed assets Investments 9,389,289 12,017,710 12,638,260 Current assets Debtors 70,779 516,554 94,879 Cash at bank and in hand 150,470 765,542 490,291 -------------- -------------- -------------- 221,249 1,282,096 585,170 Creditors: amounts falling due (87,671) (102,567) (153,976) within one year -------------- -------------- -------------- Net current assets 133,578 1,179,529 431,194 -------------- -------------- -------------- Net assets 9,522,867 13,197,239 13,069,454 -------------- -------------- -------------- Capital and reserves Called up share capital 4,177,174 4,177,174 4,177,174 Special reserve 12,328,362 12,328,362 12,328,362 Capital reserve - realised (98,194) 2,615,187 2,573,714) Capital reserve- unrealised (7,039,872) (6,102,250) (6,148,221) Capital redemption reserve 23,750 23,750 23,750 Revenue reserve 131,647 155,016 114,675 ---------------- ---------------- ---------------- Equity shareholders' funds 9,522,867 13,197,239 13,069,454 Net asset value per ordinary 2 56.99p 78.98p 78.22p share ================ ================ ================ Cash flow statement (unaudited) for the six months ended 30 September 2002 (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31 March 30 September 2002 30 September 2001 2002 £ £ £ Operating activities Investment income received 98,551 109,886 218,540 Deposit interest received 9,554 69,299 78,077 Underwriting commission received - 193 193 Investment management fees paid (106,892) (350,913) (473,095) Other expenses paid (69,952) (90,005) (149,091) --------------- --------------- --------------- Net cash outflow from operating activities (68,739) (261,540) (325,376) --------------- --------------- --------------- Servicing of finance Interest paid (1,488) - (14) --------------- --------------- --------------- Taxation Income tax recovered 25,429 237,414 237,414 --------------- --------------- --------------- Capital expenditure and financial investment (236,203) 555,147 343,427 --------------- --------------- --------------- Dividends Equity dividends paid (58,820) (1,671,189) (1,670,870) --------------- --------------- --------------- Decrease in cash (339,821) (1,140,168) (1,415,419) =============== =============== =============== Reconciliation of net cash flow to net funds Net cash outflow (339,821) (1,140,168) (1,415,419) --------------- --------------- --------------- Change in net funds (339,821) (1,140,168) (1,415,419) Opening net funds 490,291 1,905,710 1,905,710 --------------- --------------- --------------- Closing net funds 150,470 765,542 490,291 =============== =============== =============== NOTES TO THE ACCOUNTS 1. Loss per ordinary share Basic loss per ordinary share is based on the net loss on ordinary activities after taxation of £343,588 (six months ended 30 September 2001: £217,630; year ended 31 March 2002: £859,320) and on 16,708,698 (six months ended 30 September 2001:16,708,698; year ended 31 March 2002: 16,708,698) ordinary shares, being the number of ordinary shares in issue during the six months ended 30 September 2002. 2. Net asset value per ordinary share Basic net asset value per share is based on the net assets attributable to ordinary shareholders of £9,522,867 (30 September 2001: £13,197,239; 31 March 2002: £13,069,454) and on 16,708,698 (30 September 2001:16,708,698; 31 March 2002: 16,708,698) ordinary shares in issue at 30 September 2002. 3. Comparative information The information for the year ended 31 March 2002 has been extracted from the latest published audited accounts which have been filed with the Registrar of Companies. The accounts for the year ended 31 March 2002 included the report of the auditors which was unqualified and did not contain a statement under wither section 237(2) or 237(3) of the Companies Act 1985. The information for the six months ended 30 September 2002 and 30 September 2001 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim report will be sent to shareholders in December 2002 and further copies will be available from the Company Secretary. Cogent Secretarial Services Limited Secretary 55 Moorgate, London EC2R 6PA Telephone: 020 7477 5777 Email: cogentsecretarialservice@cogent.com This information is provided by RNS The company news service from the London Stock Exchange

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