British & American Annual Financial Report

 
TIDMBAF 
 
British & American Investment Trust PLC 
 
Annual Financial Report 
for the year ended 31 December 2016 
 
Registered number: 00433137 
 
 
 
Directors                                  Registered office 
 
J Anthony V Townsend (Chairman)            Wessex House 
 
Jonathan C Woolf (Managing Director)       1 Chesham Street 
 
Dominic G Dreyfus (Non-executive)          London SW1X 8ND 
 
Ronald G Paterson (Non-executive)          Telephone: [phone] 
 
                                           Registered in England 
 
                                           No.433137 
 
                                           28 April 2017 
 
This is the Annual Financial Report as required to be published under DTR 4 of 
the UKLA Listing Rules. 
 
Financial Highlights 
 
For the year ended 31 December 2016 
 
 
                           2016                              2015 
 
 
                              Revenue     Capital      Total    Revenue     Capital       Total 
                               return      return                return      return 
 
                                 GBP000        GBP000       GBP000       GBP000        GBP000        GBP000 
 
(Loss)/profit before tax -      1,474                (1,028)      2,701                   1,482 
realised                                  (2,502)                           (1,219) 
 
(Loss)/profit before tax -          -     (4,134)    (4,134)          -       3,925       3,925 
unrealised 
 
                           __________  __________ __________ __________  __________  __________ 
 
(Loss)/profit before tax -      1,474     (6,636)    (5,162)      2,701       2,706       5,407 
total 
 
                           __________  __________ __________ __________  __________  __________ 
 
Earnings per GBP1 ordinary 
share - basic                   4.63p    (26.55)p   (21.92)p      9.51p      10.83p      20.34p 
 
                           __________  __________ __________ __________  __________  __________ 
 
Earnings per GBP1 ordinary 
share - diluted                 4.31p    (18.96)p   (14.65)p      7.80p       7.73p      15.53p 
 
                           __________   _________ __________ __________   _________  __________ 
 
Net assets                                            22,682                             30,211 
 
                                                  __________                         __________ 
 
Net assets per ordinary 
share 
 
- deducting preference 
   shares at par                                         51p                                81p 
 
                                                  __________                         __________ 
 
- diluted                                                65p                                86p 
 
                                                  __________                         __________ 
 
                                                         67p 
Diluted net asset value 
per ordinary share at 25 
April 2017 
 
                                                  __________ 
 
Dividends declared or 
proposed for the period 
 
per ordinary share 
 
- interim paid                                          2.7p                               2.7p 
 
- final proposed                                        5.7p                               5.5p 
 
per preference share                                    3.5p                               3.5p 
 
 
Basic net assets and earnings per share are calculated using a value of par for 
the preference shares. 
Consequently, when the net asset value attributed to ordinary shares remains 
below par the diluted net asset value will show a higher value than the basic 
net asset value. 
 
 
Chairman's Statement 
 
I report our results for the year ended 31 December 2016. 
 
Revenue 
 
The return on the revenue account before tax amounted to GBP1.5 million (2015:  GBP 
2.7 million), a decrease of 44 percent. A significant portion of this decline 
was due to a lower level of dividend receipts from subsidiary companies 
compared to the previous year, whereas external dividends received by the 
parent company were slightly higher compared to the previous year. 
 
Gross revenues totalled GBP2.3 million (2015:  GBP3.2 million). Film income of GBP 
85,000 (2015:  GBP88,000) and property unit trust income of GBP15,000 (2015:  GBP 
17,000) was received in our subsidiary companies. In accordance with IFRS10, 
these income streams are not included within the revenue figures noted above. 
 
The total return before tax amounted to a loss of GBP5.2 million (2015:  GBP5.4 
million gain), which comprised net revenue of GBP1.5 million, a realised loss of 
GBP2.1 million and an unrealised loss of GBP4.1 million. The revenue return per 
ordinary share was 4.6p (2015:  9.5p) on an undiluted basis and 4.3p (2015: 
7.8p) on a diluted basis. 
 
Net Assets and Performance 
 
Net assets at the year end were GBP22.7 million (2015:  GBP30.2 million), a 
decrease of 24.9 percent. This compares to increases in the FTSE 100 and All 
Share indices of 14.4 percent and 12.5 percent, respectively, over the period. 
On a total return basis, after adding back dividends paid during the year, our 
net assets decreased by 16.6 percent compared to a 19.1 percent increase and a 
16.8 percent increase in the FTSE 100 and All Share indices, respectively. This 
significant underperformance was due to a fall in the value of our largest US 
investment, Geron Corporation, of almost 60 percent.   This large fall occurred 
in the early part of 2016 as reported at the interim stage and had followed a 
significant rise of almost 80 percent at the end of the previous year. Our 
other two US investments also showed weakness following a substantial fall in 
the NASDAQ market at the beginning of the year but had recovered some of the 
declines by year end, unlike Geron which had not. More detailed information on 
the reasons for these large movements in Geron's stock price and current 
prospects are set out in the Managing Director's report below. 
 
More generally in 2016, the UK and US equity markets had shown meaningful, if 
somewhat erratic, growth in the first half increasing by approximately 3.7 
percent and 2.9 percent respectively in response to looser than expected 
monetary policy from the central banks as anticipated levels of growth in the 
USA and China brought forward from the previous year started to be doubted. As 
a result the expected frequency of US dollar interest rate rises had not 
occurred which supported equity markets in the first half. This firmness was 
then rudely interrupted at the end of June by the surprising result of the UK's 
Brexit referendum, presaging the UK's exit from the European Union. This had an 
immediate impact on the pound sterling which fell 14 percent against the US 
dollar and the UK equity market which initially fell 3 percent. However, the UK 
equity market recovered within days as investors realised that the substantial 
fall in sterling would assist UK exports and those many FTSE companies whose 
earnings were generated significantly in foreign currencies. The fall in 
sterling did not, however, reverse and in fact it fell a further 7 percent 
towards the end of the year to an over 30 year low against the US dollar when 
the new UK Prime Minister indicated that the exit from the EU was likely to 
entail exit from the EU single market trading area. The US and other 
international equity markets similarly fell on the news of Brexit but also 
recovered relatively quickly to continue their upward movement until the second 
shock event of the year, namely the unexpected result of the US Presidential 
election in November. This had a galvanising effect on equity prices worldwide 
as the fiscally and economically expansionary policies of the incoming Trump 
administration were seen to be strongly beneficial for US companies and by 
extension other international markets. The UK and US equity indices rose by a 
further 5 percent and 8 percent in the final six weeks of the year to end up 
14.4 percent and 12.2 percent overall. At the same time, the US dollar, which 
had continued its appreciation throughout 2016 rose a further 4 percent in its 
traded weighted basket to a high not seen since 2002. 
 
The net asset value per ordinary share decreased to 65p (2015:  86p) on a 
diluted basis. Deducting prior charges at par, the net asset value per ordinary 
share decreased to 51p (2015: 81p). 
 
Dividend 
 
We are pleased to recommend an increased final dividend of 5.7p per ordinary 
share, which together with the interim dividend makes a total payment for the 
year of 8.4p (2015:  8.2p) per ordinary share. This represents an increase of 
2.4 percent over the previous year's total dividend and a yield of 8.8 percent 
based on the share price of 95p at the end of the year. The final dividend will 
be payable on 29 June 2017 to shareholders on the register at 26 May 2017. A 
dividend of 1.75p will be paid to preference shareholders resulting in a total 
payment for the year of 3.5p per share. 
 
We are pleased to have been named as a 'Dividend Hero' by the Association of 
Investment Companies this year as one of the 20 investment trusts which have 
maintained a consistent 20 year record of increasing dividends. This is 
obviously good news for the company and shareholders alike. 
 
Investment Policy 
 
We propose to make a modification to our published investment policy to take 
into account movements in our portfolio over recent periods. 
 
As shareholders are aware, in recent years the company has invested in certain 
US quoted companies. These investments were in furtherance of the company's 
published investment policy in relation to growth. Over time, these 
investments, particularly in Geron Corporation and latterly in Biotime Inc and 
Asterias Biotherapeutics (which was spun out of Geron in 2014) have taken on a 
greater significance within the portfolio both in terms of value and strategic 
importance as core holdings. These investments accounted for 33.4 percent of 

assets as at the date of our last published Annual Report to 31/12/2015 and 
33.3 percent of assets as at the date of our last Interim Statement to 30/6/ 
2016. 
 
The background to and evolution of our investments in these US companies has 
been discussed at length in our annual and interim reports over recent years. 
An update on the current investments in these companies and their prospects is 
set out more fully in the Managing Director's report below. 
 
In order to provide investors with a clear understanding of our current 
portfolio positioning and investment strategy we propose now to add specific 
mention of US stocks to our published investment strategy, which will be as 
follows: 
 
"To invest predominantly in investment trusts and other leading UK and 
US-quoted companies to achieve a balance of income and growth". 
 
A more detailed statement of our investment policy and the proposed changes to 
it is set out in the Investment policy section in the Business Review of the 
Annual Report. 
 
This proposal will be submitted for shareholder approval at the forthcoming 
AGM. 
 
Change of Auditors 
 
Following a review and formal tender process which took place in November last 
year, we have decided to appoint Hazlewoods LLP as our auditors for the 2017 
financial year. We thank Grant Thornton who have been our auditors since 2006 
for the diligent work they have done for us over many years. 
 
Outlook 
 
The strong upward movement in global equity prices and the US dollar persisted 
through into the first quarter of 2017 as the reflationary programme of the 
incoming Trump administration galvanised the animal spirits of investors which 
had been absent since the recession of 2008/9. All time record highs were 
reached by the leading indices in the UK and USA in early March after extended 
periods of daily gains not seen for many years. This momentum lasted until the 
end of March when markets began to doubt the administration's ability to 
deliver its programme after it failed to persuade a Republican controlled 
Congress to pass its first measure relating to public healthcare. This serious 
setback created doubts over the implementation of the other two fundamental 
areas of the programme which had driven the market forward, namely tax cuts and 
infrastructure investment. As a result, the almost 7 percent rise in the US 
market seen up to that point was reduced to 4 percent by quarter end. 
 
When these programme uncertainties in the USA and an avowed protectionist 
agenda are combined with the prospect of equally important changes of a 
political nature in Europe (Brexit and multiple European elections with the 
potential for more populist anti-government results), the recently called and 
unexpected general election in the UK, it is difficult for investors to know 
how markets will react over the medium term to these imminent and non-financial 
drivers. The trends of recent years, involving a slow recovery from recession 
over a considerable period of time and US dollar strength were set to continue 
until the surprising events of 2016. However, these events suddenly galvanised 
markets and would have set a new long term direction for them had not the 
recently revealed weakness of the Trump administration and a disunited 
Republican party put this new dynamic for markets in doubt. Like 2016, it would 
appear that 2017 may have a similar capacity to surprise and wrong foot 
markets. Consequently we will continue with our current strategy of investing 
for growth and income from our UK and US equity investments. 
 
As at 25 April 2017, our net assets had increased to GBP23.6 million, an increase 
of 3.9 percent since the beginning of the calendar year. This is equivalent to 
54 pence per share (prior charges deducted at par) and 67 pence per share on a 
diluted basis. Over the same period the FTSE 100 increased 1.9 percent and the 
All Share Index increased 3.1 percent. 
 
Anthony Townsend 
 
28 April 2017 
 
Managing Director's report 
 
Two wholly unexpected and market altering events occurred in 2016: the result 
of the Brexit referendum in the UK in June and the election of Donald Trump as 
US president in November. 
 
Prior to these two events, financial markets had been experiencing a softening 
in the pace of recovery from the recession of earlier years, as reported on at 
the interim stage. Weakness in commodity prices and particularly oil which 
reached multi-year lows in the first half of 2016, together with slowing growth 
in China had sown doubts on the strength of the recovery in the USA and the 
expected pace of increase in US dollar interest rates over the year. As a 
result, a return to safety began to be seen with US treasury bonds and the US 
dollar being favoured again. However, with the prospect of interest rates 
continuing lower for longer as a result, particularly in the US, liquidity 
found its way into equity markets, which although sluggish over the first half 
of the year, remained supported ending up by 3 percent at end June. 
 
The result of the Brexit referendum in June had an immediate and significant 
effect on both the UK and global markets as its implications and wider 
ramifications were digested and speculated on by the investment and currency 
markets. In the UK, the equity market dropped by 3 percent on the day and GBP 
sterling dropped by 14 percent to its lowest level against the US dollar for 
over 30 years. These reactions in the immediate aftermath were based on the 
shock of the result and understandable concerns going forward that leaving 
Europe would place a burden on the UK's economic prospects for a considerable 
period of time while the disengagement process was worked through and new 
economic and trading paradigms were introduced. 
 
While GBP sterling did not recover from this large drop for the rest of the year, 
UK equity markets did recover quite strongly and quickly as it was perceived, 
certainly in the short term, that the collapse in GBP sterling would offer a 
considerable boost to UK exports and encourage foreign investment into newly 
devalued UK assets. This effect was particularly evident in the value of FTSE 
100 companies which tend to generate a significant proportion of their income 
in foreign currencies. The FTSE100 index rose by 10 percent in the second half 
of the year. 
 
The second unexpected event of the year in the USA, the election of Donald 
Trump, had a similar galvanising effect on the US dollar and equity markets as 
his expansionary if isolationist policies of stimulating growth through 
infrastructure investment, cutting taxes and reducing financial regulation 
boosted the dollar and the US equity market considerably. US banks and 
corporates would be clear beneficiaries of these policies and the 
countervailing concerns of new trade barriers, increased budget deficits and 
government debt, higher interest rates and an unhelpfully stronger dollar were 
drowned out by the exuberance of the moment which prevailed through to 2017. 
 
As noted in the Chairman's statement, the significant portfolio 
underperformance which we reported at the interim stage carried through to the 
full year. The 60 percent drop in the US dollar price of our largest US 
investment, Geron Corporation, which had occurred in the early months of 2016 
after a sharp rise at the end of 2015 tracked a rise of 11 percent and then 
fall of 15 percent in the NASDAQ index over the change of year. The strength of 
the US dollar against a significantly weakened GBP sterling in 2016 mitigated to 
some extent this severe drop in the US dollar value of this investment. 
Although the NASDAQ recovered during 2016, Geron's price did not. However the 
prices of our other two US investments, Biotime and Asterias were able to 
recover part of the similar declines they experienced at the beginning of 2016 
by the year end.  Our UK portfolio investments, being mostly invested in 
investment trusts, tracked more closely market movements over the year. We also 
took the opportunity in the second part of the year to sell down a significant 
proportion of our fixed interest investments which had seen good increases in 
capital values over recent years as by then market expectations of firming long 
term interest rates had begun to take hold and were indeed followed up by 
actual increases. 
 
US Investments 
 
Over recent years, our investments in US biotechnology companies have taken on 
an increasingly important role in our portfolio. Because these investments now 
represent a significant proportion of our portfolio (33 percent as at 31 
December 2016) and are expected to continue to grow in size as their 
development cycles progress and attract further value as the technology is 
validated, we have as noted above decided to modify our published investment 
policy to include US stocks as a fundamental part of the policy. 
 
Geron Corporation 
 
As we have reported in recent years, our investment in Geron Corporation has 
grown to become the largest single position in our portfolio. This was further 
added to when in 2014, Geron's world-leading regenerative medicine business was 
spun off into a new listed vehicle, Asterias Biotherapeutics, and we 
participated in this process. In addition, we have invested in Asterias' parent 
company, Biotime Inc, which partnered in the spin-off operation. 
 
The original and ongoing purpose of the investment in these US biotechnology 
and bio-pharma companies was in furtherance of the capital growth element of 
our investment strategy. As these companies pass through the multi-year stages 
in their pre-clinical and clinical testing cycles to final approval and 
commercialisation, they can produce substantial levels of capital growth of 
many times their original values. In the case of the three companies we have 
invested in, Geron, Asterias and Biotime, we believe that the particular areas 
of oncology and regenerative medicine in which they operate and to which they 
bring their novel and increasingly validated science and technology will offer 

ground-breaking remedies to a wide range of important and presently untreatable 
conditions from which these companies will derive substantial value. 
 
However, the share price volatility of early stage biotechnology stocks can 
also be very high and prices can move considerably more than even the generally 
volatile NASDAQ Biotech sector index as eagerly awaited trial result success or 
failures are announced or anticipated. We have experienced this ourselves to 
the full in recent years and most notably  2015/6. In Geron's case, for 
instance, the share price rose 80 percent at the end of 2015, partly in 
response to a substantial rise in the NASDAQ at that time, but also because of 
very promising news confirming efficacy and safety of Immetelstat, its lead 
drug in two haematological myeloid malignancies, Myelofibrosis (MF) and 
Myelodysplastic syndrome (MDS). Then, early in 2016, the price fell abruptly by 
60 percent, again tracking a fall in the NASDAQ. However, while the NASDAQ 
recovered during 2016 along with the main market, Geron's stock price did not, 
mainly as a result of a lack of any further news during the year on the 
progress of its clinical trials being run since 2015 by Johnson & Johnson, the 
world's largest pharmaceutical company. News is the lifeblood of early stage 
biotech companies which typically have no income to rely on for support in the 
market, just the anticipation of progress towards the eventual success of 
commercialisation. While admittedly no news can sometimes be positively 
construed in the absence of bad news if the clinical trials are proceeding on 
their planned course without needing adjustment for efficacy or safety reasons, 
early stage biotech companies usually try hard to keep investors abreast on 
trial progress on a regular basis in order to keep market interest in their 
stocks alive. Unfortunately, during the year Geron management have not been at 
all proactive in this respect and as a result allowed the market to speculate 
negatively on the stock in 2016. 
 
Furthermore, in September 2016, Geron's management issued an emergency 
announcement over a weekend to say that the lower level dose of Immetelstat in 
the Johnson & Johnson trial was being discontinued, although the higher level 
dose, which was always intended to be the level expected to provide efficacy 
was being continued. As might have been foreseen,  the market took this widely 
criticised announcement very badly and Geron's share price has remained 
marooned at two year lows since then. 
 
More recently, however, a positive trial update was released by Johnson & 
Johnson earlier this month at a leading US haematology conference confirming 
good progress of the trials with continued indications of efficacy and the 
development of plans to take the drug through to the final and important Phase 
3 stage which precedes the approval process. Geron's share price reacted 
favourably to this good news, increasing by 20 percent on the day. 
 
This illustrates admirably the susceptibility of biotech companies to high 
levels of volatility in their journeys towards market acceptance and 
recognition of their true value. It also, however, provides investors such as 
ourselves with opportunities to capture substantial levels of capital growth in 
well selected stocks. 
 
This pattern of volatility with potential for significant capital growth is 
also well demonstrated in the cases of our two other US biotech investments: 
 
Asterias Biotherapeutics 
 
In 2014, Geron spun out its regenerative medicine business into Asterias which 
was floated in early 2015. The initial stock price of $3.90 grew to over $10 
within two months as investors scrambled to buy in to the world-leading 
regenerative medicine technology of this tightly held company and we realised 
substantial profits at that time on part of the holding.  Over the subsequent 
year the stock price drifted down to $4 but we still record a capital return of 
20 percent over our investment cost as at the year end. Over that time, the 
management of Asterias has provided regular and positive updates on the 
progress of its stem cell technology in its first and world-exclusive spinal 
cord injury trials in the USA which are on track to offer real hope to 
quadriplegics who would otherwise be totally paralysed for life. Of the six 
patients treated in the recent trial, all have regained sufficient movement and 
sensation to be able to use/feel their hands and arms to a greater or lesser 
extent, a development which is fundamental to the quality of life of a 
quadriplegic person. Asterias is also initiating an important oncology trial in 
lung and breast cancer with Cancer Research UK based on its stem cell 
technology. 
 
Biotime Inc 
 
Biotime, which is also majority controller of Asterias and therefore itself set 
to capture the gains Asterias is expected to make, is pursuing a number of 
clinical trials based on its wide ranging pluripotent stem cell technology, 
initially in the areas of macular degeneration and facial lipotrophy where it 
is offering solutions to ailments such as Dry Eye AMD and AIDS related facial 
disfiguration which have hitherto had no effective treatment with high numbers 
of sufferers worldwide. The latter treatment if successful will then also be 
applied to the multi-billion dollar worldwide facial aesthetics market. 
 
Biotime also has a number of other ground-breaking initiatives based on its 
human genome analysis technology which are likely to provide important medical 
innovations in the areas of cancer testing, disease taxonomy and e-medicine 
based on big data analysis (the latter in collaboration with Apple Inc). 
Biotime has also recently announced the formation of a new subsidiary, AgeX 
Therapeutics, to capitalise on its proprietary stem cell IP in various areas of 
age-related disease modification using a newly developed cell renewal 
technology call iTR (Induced Tissue Regeneration) through which, for instance, 
diseased heart muscle cells are given a new lease of life through the injection 
of rejuvenated cells using this process. 
 
Biotime's stock price has been equally volatile over the years, but for us 
value accretive with a capital return of 35 percent on our investment cost as 
at the year end. 
 
Outlook 
 
In the UK, the economic reaction to the Brexit vote has not been as feared by 
the Bank of England which in the immediate aftermath of the vote had provided 
considerable levels of liquidity to the market to avoid an anticipated slump in 
growth. Instead, consumer spending remained strong for the rest of 2016 and 
into 2017, reflecting a release of animal spirits in the economy at the 
prospect of leaving the EU. The collapse in sterling also galvanised the export 
industry and manufacturing which has shown its best growth in 7 years. This 
performance has also been further boosted by the strongest growth in the UK's 
major trading partners in the Eurozone countries for 6 years. While sterling's 
weakness is now starting to show through in higher rates of inflation in the UK 
which has started to impact consumers' spending patterns, continued firm levels 
of consumer spending, manufacturing and exports are still expected over the 
coming period until more detail on the likely terms of the UK's exit from the 
EU are made clear. 
 
There is thus now an interim period when growth and financial markets in the UK 
are expected to remain generally firm; however, within the course of the 
current year, many factors both domestically and internationally are looming 
which have the potential to affect this scenario detrimentally, not least the 
outlook for UK's departure from the EU and the prospects of it retaining 
relatively friction free trade with its soon to be erstwhile European partners. 
The recently announced snap general election in the UK will clearly be a factor 
in the outcome of this process. There is also the concern surrounding the 
continued resilience of the Trump reflation effect which has boosted markets in 
both the US and worldwide to levels which might not be sustainable over the 
longer term. Added to this are growing geopolitical concerns as the new Trump 
administration strives to calibrate coherent responses to the many economic and 
strategic issues which are currently confronting world leaders in many parts of 
the globe. 
 
Despite these uncertainties for the medium term, markets continue steady at the 
moment with no particular signals being given that the current long term bull 
cycle is about to end and with most developed and developing country economies 
showing renewed levels of growth. Nevertheless, a period of considerably higher 
volatility can be expected after a number of years when volatility levels have 
been abnormally subdued, as has already begun to be seen over the last quarter. 
 
Jonathan Woolf 
 
28 April 2017 
 
Income statement 
 
For the year ended 31 December 2016 
 
 
                               2016                       2015 
 
 
                                Revenue  Capital    Total  Revenue   Capital    Total 
                                 return   return            return    return 
 
                                  GBP 000    GBP 000    GBP 000    GBP 000     GBP 000    GBP 000 
 
Investment income (note 2)        2,263        -    2,263    3,206         -    3,206 
 
Holding (losses)/gains on                (4,134)  (4,134)              3,925    3,925 
investments at fair value             -                          - 
through profit or loss 
 
Losses on disposal of 
investments at fair value             -  (2,081)  (2,081)        -     (927)    (927) 
through profit or loss 
 
Foreign exchange losses           (143)    (138)    (281)     (53)      (47)    (100) 
 
Expenses                          (596)    (267)    (863)    (417)     (231)    (648) 
 
                               ________ ________ ________ ________  ________ ________ 
 
(Loss)/profit before finance      1,524  (6,620)  (5,096)    2,736 2,720        5,456 
costs and tax 
 
Finance costs                      (50)     (16)     (66)     (35)      (14)     (49) 
 

                               ________ ________ ________ ________  ________ ________ 
 
(Loss)/profit before tax          1,474  (6,636)  (5,162)    2,701     2,706    5,407 
 
Tax                                  33        -       33       28         -       28 
 
                               ________ ________ ________ ________  ________ ________ 
 
(Loss)/profit for the period      1,507  (6,636)  (5,129)    2,729     2,706    5,435 
 
                               ________ ________ ________ ________  ________ ________ 
 
Earnings per share 
 
Basic - ordinary shares           4.63p (26.55)p (21.92)p    9.51p    10.83p   20.34p 
 
                               ________ ________ ________ ________  ________ ________ 
 
Diluted - ordinary shares         4.31p (18.96)p (14.65)p    7.80p     7.73p   15.53p 
 
                               ________ ________ ________ ________  ________ ________ 
 
The company does not have any income or expense that is not included in the 
(loss)/profit for the period. Accordingly, the '(Loss)/profit for the period' 
is also the 'Total Comprehensive Income for the period' as defined in IAS 1 
(revised) and no separate Statement of Comprehensive Income has been presented. 
 
The total column of this statement represents the Income Statement, prepared in 
accordance with IFRS. The supplementary revenue return and capital return 
columns are both prepared under guidance published by the Association of 
Investment Companies. All items in the above statement derive from continuing 
operations. 
 
All profit and total comprehensive income is attributable to the equity holders 
of the company. 
 
Statement of changes in equity 
For the year ended 31 December 2016 
 
                                          Share    Capital  Retained Total 
                                          capital  reserve  earnings 
 
 
                                             GBP 000    GBP 000    GBP 000    GBP 000 
 
Balance at 31 December 2014                 35,000 (10,294)    2,420   27,126 
 
Changes in equity for 2015 
 
Profit for the period                            -    2,706    2,729    5,435 
 
Ordinary dividend paid (note 4)                  -        -  (2,000)  (2,000) 
 
Preference dividend paid (note                   -        -    (350)    (350) 
4) 
 
                                          ________ ________ ________ ________ 
 
Balance at 31 December 2015                 35,000  (7,588)    2,799   30,211 
 
Changes in equity for 2016 
 
(Loss)/profit for the period                     -  (6,636)    1,507  (5,129) 
 
Ordinary dividend paid (note 4)                  -        -  (2,050)  (2,050) 
 
Preference dividend paid (note                   -        -    (350)    (350) 
4) 
 
                                          ________ ________ ________ ________ 
 
Balance at 31 December 2016                 35,000 (14,224)    1,906   22,682 
 
                                          ________ ________ ________ ________ 
 
Registered number: 00433137 
 
Balance Sheet 
For the year ended 31 December 2016 
 
                                                     2016           2015 
 
                                                     GBP 000          GBP 000 
 
Non-current assets 
 
Investments - fair value through                             23,654         37,497 
profit or loss 
 
Subsidiaries - fair value through                             6,058          6,789 
profit or loss 
 
                                                         __________     __________ 
 
                                                             29,712         44,286 
Current assets 
 
Receivables                                                   1,469          1,587 
 
Cash and cash equivalents                                       423            344 
 
                                                         __________     __________ 
 
                                                              1,892          1,931 
 
                                                         __________     __________ 
 
Total assets                                                 31,604         46,217 
 
                                                         __________     __________ 
 
Current liabilities 
 
Trade and other payables                                      1,000          9,124 
 
Bank loan                                                     3,490          2,339 
 
                                                         __________     __________ 
 
                                                            (4,490)       (11,463) 
 
                                                         __________     __________ 
 
 
Total assets less current liabilities                        27,114         34,754 
 
                                                         __________     __________ 
 
Non - current liabilities                                   (4,432)        (4,543) 
 
Net assets                                                   22,682         30,211 
 
                                                         __________     __________ 
 
Equity attributable to equity holders 
 
Ordinary share capital                                       25,000         25,000 
 
Convertible preference share capital                         10,000         10,000 
 
Capital reserve                                            (14,224)        (7,588) 
 
Retained revenue earnings                                     1,906          2,799 
 
                                                         __________     __________ 
 
Total equity                                                 22,682         30,211 
 
                                                         __________     __________ 
 
Approved: 28 April 2017 
 
Cash flow statement 
 
For the year ended 31 December 2016 
 
                                                        Year ended  Year ended 
                                                              2016        2015 
 
                                                       GBP 000       GBP 000 
 
CASH FLOWS FROM OPERATING ACTIVITIES 
 
(Loss)/profit before tax                               (5,162)     5,407 
 
Adjustments for: 
 
Losses/(profits) on investments                        6,215       (2,998) 
 
Scrip dividends                                        (4)         (397) 
 
Proceeds on disposal of investments at fair            31,918      14,596 
value through profit and loss 
 
Purchases of investments at fair value through         (23,689)    (13,349) 
profit and loss 
 
Finance costs                                          66          49 
 
                                                        __________  __________ 
 
Operating cash flows before movements in working       9,344       3,308 
capital 
 
Decrease/(increase) in receivables                     141         (181) 
 
Decrease in payables                                   (8,138)     (258) 
 
                                                        __________  __________ 
 
NET CASH FROM OPERATING ACTIVITIES BEFORE                    1,347       2,869 
INTEREST 
 
Interest paid                                          (52)        (49) 
 
                                                        __________  __________ 
 
NET CASH FROM OPERATING ACTIVITIES AFTER                     1,295       2,820 
INTEREST BEFORE TAXATION 
 
Taxation                                                        33          28 
 
                                                        __________  __________ 
 
NET CASH FROM OPERATING ACTIVITIES                           1,328       2,848 
 
CASH FLOWS FROM FINANCING ACTIVITIES 
 
Dividends paid on ordinary shares                          (2,050)     (2,000) 
 
Dividends paid on preference shares                          (350)       (350) 
 
Bank loan                                                    1,151       (404) 
 
                                                        __________  __________ 
 
NET CASH USED IN FINANCING ACTIVITIES                      (1,249)     (2,754) 
 
                                                        __________  __________ 
 
NET INCREASE IN CASH AND CASH EQUIVALENTS                       79          94 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 
                                                               344         250 
 
                                                        __________  __________ 
 
CASH AND CASH EQUIVALENTS AT OF YEAR 
                                                               423         344 
 
                                                        __________  __________ 
 
Purchases and sales of investments are considered to be operating activities of 
the company, given its purpose, rather than investing activities. 
 
1 Basis of preparation and going concern 
 
The financial information set out above contains the financial information of 
the company for the year ended 31 December 2016. The company has prepared its 
financial statements under IFRS. The financial statements have been prepared on 
a going concern basis adopting the historical cost convention except for the 
measurement at fair value of investments, derivative financial instruments and 
subsidiaries. 
 
The information for the year ended 31 December 2016 is an extract from the 
statutory accounts to that date. Statutory company accounts for 2015, which 
were prepared under IFRS as adopted by the EU, have been delivered to the 
registrar of companies and company statutory accounts for 2016, prepared under 
IFRS as adopted by the EU, will be delivered in due course. 
 
The auditors have reported on the 31 December 2016 year end accounts and their 
reports were unqualified and did not include references to any matters to which 
the auditors drew attention by way of emphasis without qualifying their reports 
and did not contain statements under section 498(2) or (3) of the Companies Act 
2006. 
 
The directors, having made enquiries, consider that the company has adequate 
financial resources to enable it to continue in operational existence for the 

foreseeable future. Accordingly, the directors believe that it is appropriate 
to continue to adopt the going concern basis in preparing the company's 
accounts. 
 
2 Income 
 
 
                                                             2016       2015 
 
                                                       GBP 000      GBP 000 
 
Income from investments 
 
UK dividends                                               1,951      1,725 
 
Overseas dividends                                           214        348 
 
Scrip and in specie dividends                                  4        397 
 
Dividend from subsidiary                                       -        580 
 
Interest on fixed income                                      70        134 
securities 
 
                                                       __________ __________ 
 
                                                            2,239      3,184 
 
                                                       __________ __________ 
 
Other income                                                   24         22 
 
                                                       __________ __________ 
 
Total income                                                2,263      3,206 
 
                                                       __________ __________ 
 
Total income comprises: 
 
Dividends                                                  2,169      3,050 
 
Interest                                                      70        134 
 
Other interest                                                24         22 
 
                                                       __________ __________ 
 
                                                            2,263      3,206 
 
                                                       __________ __________ 
 
Dividends from investments 
 
Listed investments                                         2,169      2,470 
 
Unlisted investments                                           -        580 
 
                                                       __________ __________ 
 
                                                           2,169       3,050 
 
                                                       __________ __________ 
 
Of the GBP2,169,000 (2015 - GBP3,050,000) dividends received, GBP1,693,000 (2015 - GBP 
1,586,000) related to special and other dividends received from investee 
companies that were bought after the dividend announcement. There was a 
corresponding capital loss of GBP1,976,000 (2015 - GBP869,000), on these 
investments. 
 
Under IFRS 10 the income analysis is for the parent company only rather than 
that of the consolidated group. Thus film revenues of GBP85,000 (2015 - GBP88,000) 
received by the subsidiary British and American Films Limited and property unit 
trust income of GBP15,000 (2015 - GBP17,000) received by the subsidiary BritAm 
Investments Limited are shown separately in this paragraph. 
3 Earnings per ordinary share 
 
The calculation of the basic (after deduction of preference dividend) and 
diluted earnings per share is based on the following data: 
 
 
           2016                             2015 
 
              Revenue    Capital      Total    Revenue    Capital       Total 
               return     return                return     return 
 
 
           GBP 000      GBP 000      GBP 000      GBP 000      GBP 000 
                                                                  GBP 000 
 
Earnings: 
 
Basic           1,157    (6,636)    (5,479)      2,379      2,706       5,085 
 
Preference 
dividend         350          -        350        350          -         350 
 
           __________ __________ __________ __________ __________  __________ 
 
Diluted         1,507    (6,636)    (5,129)      2,729      2,706       5,435 
 
           __________ __________ __________ __________ __________  __________ 
 
Basic revenue, capital and total return per ordinary share is based on the net 
revenue, capital and total return for the period after tax and after deduction 
of dividends in respect of preference shares and on 25 million (2015: 25 
million) ordinary shares in issue. 
 
The diluted revenue, capital and total return is based on the net revenue, 
capital and total return for the period after tax and on 35 million (2015: 35 
million) ordinary and preference shares in issue. 
 
4 Dividends 
 
                                                   2016        2015 
 
                                                   GBP 000       GBP 000 
 
Amounts recognised as distributions to equity 
holders in the period: 
 
Dividends on ordinary shares: 
 
Final dividend for the year ended 31 December 2015 
of 5.5p (2014:5.3) per share                             1,375       1,325 
 
Interim dividend for the year ended 31 December 
2016 of 2.7p                                               675         675 
(2015:2.7p) per share 
 
                                                    __________  __________ 
 
                                                         2,050       2,000 
 
                                                    __________  __________ 
 
Proposed final dividend for the year ended 31 
December 2016 of 5.7p (2015:5.5p) per share              1,425       1,375 
 
                                                    __________  __________ 
 
Dividends on 3.5% cumulative convertible 
preference shares: 
 
Preference dividend for the 6 months ended 31 
December 2015 of 1.75p (2014:1.75p) per share              175         175 
 
Preference dividend for the 6 months ended 30 June 
2016 of 1.75p (2015:1.75p) per share                       175         175 
 
                                                    __________  __________ 
 
                                                           350         350 
 
                                                    __________  __________ 
 
Proposed preference dividend for the 6 months 
ended 31 December 2016 of 1.75p (2015:1.75p) per           175         175 
share 
 
                                                    __________  __________ 
 
 
The proposed final dividend is subject to approval by shareholders at the 
Annual General Meeting and has not been included as a liability in these 
financial statements in accordance with IFRS. 
 
We have set out below the total dividend payable in respect of the financial 
year, which is the basis on which the retention requirements of Section 1158 of 
the Corporation Tax Act 2010 are considered. 
 
Dividends proposed for the period 
 
 
                                                          2016        2015 
 
                                                         GBP 000       GBP 000 
 
Dividends on ordinary shares: 
 
Interim dividend for the year ended 31 December 
2016 of 2.7p (2015:2.7p) per share                         675         675 
 
Proposed final dividend for the year ended 31 
December 2016 of 5.7p (2015:5.5p) per share              1,425       1,375 
 
                                                    __________  __________ 
 
                                                         2,100       2,050 
 
                                                    __________  __________ 
 
Dividends on 3.5% cumulative convertible 
preference shares: 
 
Preference dividend for the year ended 31 December 
2016 of 1.75p (2015:1.75p) per share                       175         175 
 
Proposed preference dividend for the year ended 31 
December 2016 of 1.75p (2015:1.75p) per share              175         175 
 
                                                    __________  __________ 
 
                                                           350         350 
 
                                                    __________  __________ 
 
5 Net asset values 
 
                                Net asset                      Net assets 
                                value per                    attributable 
                                    share 
 
                  2016        2015               2016        2015 
 
                  GBP           GBP                  GBP 000       GBP 000 
 
Ordinary shares 
 
Undiluted         0.51        0.81               12,682      20,211 
 
Diluted           0.65        0.86               22,682      30,211 
 
The undiluted and diluted net asset values per GBP1 ordinary share are based on 
net assets at the year end and 25 million (undiluted) ordinary and 35 million 
(diluted) ordinary and preference shares in issue. 
 
The undiluted net asset value per convertible GBP1 preference share is the par 
value of GBP1. The diluted net asset value per ordinary share assumes the 
conversion of the preference shares to ordinary shares. 
 
Principal risks and uncertainties 
 
The principal risks facing the company relate to its investment activities and 
include market risk (other price risk, interest rate risk and currency risk), 
liquidity risk and credit risk. The other principal risks to the company are 
loss of investment trust status and operational risk. These will be explained 
in more detail in the notes to the 2016 Annual Report and Accounts, but remain 
unchanged from those published in the 2015 Annual Report and Accounts. 
 
Related party transactions 
 
The company rents its offices from Romulus Films Limited, and is also charged 
for its office overheads. 
 
The salaries and pensions of the company's employees, except for the three 
non-executive directors, are paid by Remus Films Limited and Romulus Films 
Limited and are recharged to the company. 
 
During the year the company entered into a number of investment transactions to 
sell stock for GBP163,497 to BritAm Investments Limited. 
 
During the year the company entered into a number of investment transactions 
with Geminion Investments Limited, a company in which Mr J C Woolf has an 
interest and is a director. The purpose of these transactions, which were all 
conducted through a London Stock Exchange broker, was for the company to 
purchase cum dividend stocks and sell these stocks ex dividend so as to capture 

the associated dividends as disclosed in Note 2 of the financial statements to 
generate distributable reserves to achieve the company's objective to sustain a 
progressive dividend policy. The aggregate value of these transactions were 
purchases of GBP20,788,000 (31 December 2015 - GBP19,923,000), dividends received 
of GBP1,484,000 (31 December 2015 - GBP1,586,000) and sales of GBP19,017,000 (31 
December 2015 - GBP18,791,000) giving a net loss of GBP287,000 (31 December 2015 - 
GBP454,000 gain). 
 
There have been no other related party transactions during the period, which 
have materially affected the financial position or performance of the company. 
 
Capital Structure 
 
The company's capital comprises GBP35,000,000 (2015 - GBP35,000,000) being 
25,000,000 ordinary shares of GBP1 (2015 - 25,000,000) and 10,000,000 non-voting 
convertible preference shares of GBP1 each (2015 - 10,000,000). The rights 
attaching to the shares will be explained in more detail in the notes to the 
2016 Annual Report and Accounts, but remain unchanged from those published in 
the 2015 Annual Report and Accounts. 
 
Directors' responsibility statement 
 
The directors are responsible for preparing the financial statements in 
accordance with applicable law and regulations. The directors confirm that to 
the best of their knowledge the financial statements prepared in accordance 
with the applicable set of accounting standards, give a true and fair view of 
the assets, liabilities, financial position and the (loss)/profit of the 
company and that the Chairman's Statement, Managing Director's Report and the 
Directors' report include a fair review of the information required by rules 
4.1.8R to 4.2.11R of the FSA's Disclosure and Transparency Rules, together with 
a description of the principal risks and uncertainties that the company faces. 
 
Annual General Meeting 
 
This year's Annual General Meeting has been convened for Tuesday 27 June 2017 
at 12.15pm at Wessex House, 1 Chesham Street, London SW1X 8ND. 
 
 
 
END 
 

(END) Dow Jones Newswires

April 28, 2017 05:49 ET (09:49 GMT)