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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| British & American Investment Trust Plc | LSE:BAF | London | Ordinary Share | GB0000653112 | ORD SHS #1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 18.00 | 16.00 | 20.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Motion Pictures | 1.68M | 976k | 0.0390 | 4.62 | 4.5M |
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TIDMBAF
BRITISH & AMERICAN INVESTMENT TRUST PLC
FINANCIAL HIGHLIGHTS
For the six months ended 30 June 2018
Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Revenue
Return before tax 864 1,152 2,210
_________ _________ _________
Earnings per GBP1 ordinary shares - basic 2.81p 3.97p 7.58p
(note 5)
_________ _________ _________
Earnings per GBP1 ordinary shares - diluted 2.51p 3.34p 6.41p
(note 5)
_________ _________ _________
Capital
Total equity 17,518 21,863 15,534
_________ _________ _________
Revenue reserve (note 9) 929 1,474 1,701
_________ _________ _________
Capital reserve (note 9) (18,411) (14,611) (21,167)
_________ _________ _________
Net assets per ordinary share (note 6)
- Basic GBP0.30 GBP0.47 GBP0.22
_________ _________ _________
- Diluted GBP0.50 GBP0.62 GBP0.44
_________ _________ _________
Diluted net assets per ordinary share at GBP0.75
25 September 2018
_________
Dividends*
Dividends per ordinary share (note 4) 2.7p 2.7p 8.6p
_________ _________ _________
Dividends per preference share (note 4) 1.75p 1.75p 3.5p
_________ _________ _________
* Dividends declared for the period. Dividends shown in the accounts are, by
contrast, dividends paid or approved
in the period.
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.
Copies of this report will be posted to shareholders and be available for
download at the company's website: www.baitgroup.co.uk.
INVESTMENT PORTFOLIO
As at 30 June 2018
Company Nature of Business Valuation Percentageof
GBP'000 portfolio
%
Geron Corporation (USA) Biomedical 6,822 30.67
Dunedin Income Growth Investment Trust 2,560 11.51
Biotime Inc (USA) Biotechnology 2,169 9.75
Asterias Biotherapeutics (USA) Pharmaceuticals 1,123 5.05
Merchants Trust Investment Trust 1,060 4.76
________ ________
Aberdeen Diversified Income & Growth Investment Trust 860 3.87
Invesco Income Growth Trust Investment Trust 580 2.61
JZ Capital Partners Investment Trust 146 0.66
Braemar Shipping Services Transport 120 0.54
Invesco Perpetual Enhanced Investment Trust 84 0.38
________ ________
B.S.D. Crown Software and computer 67 0.30
services
OncoCyte (USA) Biotechnology 59 0.26
Angle Pharmaceuticals & 50 0.23
Biotechnology
ADVFN Other financial 38 0.17
City Merchants High Yield Trust Investment Trust 32 0.14
________ ________
Biotime Promissory Note (USA) Biotechnology 30 0.14
Audioboom Group Media 19 0.09
Walker Crips Group Financial services 15 0.07
Sherborne Investors Financial services 12 0.05
Sarossa Capital Biotechnology 5 0.02
________ ________
20 Largest investments (excluding 15,851 71.27
subsidiaries)
Investment in subsidiaries 6,375 28.66
Other investments (number of 15 0.07
holdings : 6)
________ ________
Total investments 22,241 100.00
________ ________
Unaudited Interim Report
As at 30 June 2018
Registered number: 433137
Directors Registered office
David G Seligman (Chairman) Wessex House
Jonathan C Woolf (Managing Director) 1 Chesham Street
Dominic G Dreyfus (Non-executive and Chairman of the London SW1X 8ND
Audit Committee)
Ronald G Paterson (Non-executive) - retired 30 June Telephone: 020 7201 3100
2018
Alex Tamlyn (Non-executive) - appointed as Director 1 Website:
July 2018 www.baitgroup.co.uk
Chairman's Statement
I report our results for the 6 months to 30 June 2018.
Revenue
The profit on the revenue account before tax amounted to GBP0.9 million (30 June
2017: GBP1.2 million), a decrease of 25.0 percent. This difference was primarily
due to a reduction in investment income received during the period, with costs
decreasing by a relatively similar amount of 22.0 percent compared to the
previous year.
The figures presented above relate to the parent company only and not to the
consolidated group, as required by accounting rule IFRS10. For information
purposes, we show in Note 3 to the accounts the film and other income of our
subsidiaries. This shows that film income of GBP36,000 (30 June 2017: GBP36,000)
and property unit trust income of GBP7,000 (30 June 2017: GBP7,000) was received.
A gain of GBP2.8 million (30 June 2017: GBP0.3 million loss) was registered on the
capital account before capitalised expenses, comprising a realised loss of GBP0.6
million (30 June 2017: GBP1.5 million loss) and an unrealised gain of GBP3.4
million (30 June 2017: GBP1.2 million gain).
Revenue earnings per ordinary share were 2.8 pence on an undiluted basis (30
June 2017: 4.0 pence) and 2.5 pence
on a fully diluted basis (30 June 2017: 3.3 pence).
Net Assets and performance
Company net assets were GBP17.5 million (GBP15.5 million, at 31 December 2017), an
increase of 12.8 percent. Over the same six month period, the FTSE 100 index
decreased by 0.7 percent and the All Share index decreased by 0.5 percent. On
a total return basis, after adding back dividends paid during the period,
company net assets increased by 23.4 percent compared to an increase of the
total return on the FTSE 100 index of approximately 1.5 percent. The net asset
value per GBP1 ordinary share was 30 pence (prior charges deducted at par) and 50
pence on a fully diluted basis.
The increase in net assets relative to our benchmark reflected gains of 91
percent in the value of our largest US holding, Geron Corporation. As noted in
my statement of 27th April, Geron's share price had increased substantially in
the first quarter of 2018 by 136 percent and these significant gains were
largely retained by the period end. The increase in Geron's value reflected a
positive update of Geron's clinical trials and an accelerated third quarter
2018 date for the final decision by Johnson & Johnson, Geron's development
partner, on taking forward its commitment to develop and commercialise Geron's
oncology drug, Imetelstat. This outstanding performance by our largest
investment, more than reversing the declines of 2017, overshadowed that of our
other investments. In the UK, our investments broadly tracked our benchmark
index, while our other two major US investments performed weakly following
capital raising exercises, although this was not sufficient to offset
significantly the strong performance by Geron. In the period since the half
year, Geron's value has risen by a further 86 percent to its highest level for
9 years in anticipation of the imminent decision by Johnson & Johnson by the
current quarter end.
More generally, the multi-year pattern of growth in equity markets in the UK
and USA broke down in the first half of 2018. The extraordinarily long period
of low volatility seen in 2017 in particular, which had delivered steadily and
strongly rising markets throughout the year, came to an abrupt halt in the
first quarter of 2018 as the markets experienced two corrections of around 10
percent. Erratic policy making in trade and foreign relations from a White
House under considerable political and legal investigatory pressure and, in the
UK, a strong headwind in the Brexit negotiations with the EU Commission,
weighed on sentiment despite continued strong performance from corporates in
the USA. The artificial boost to economic growth in the USA provided by the
administration's reduction in taxes at a time of relatively robust growth,
raised the prospect of higher interest rates to curb anticipated inflation
concerns and, for the longer term, an unsustainable increase in the already
high US government deficit. This caused equity markets to falter and the US
dollar yield curve to flatten in anticipation of recessionary conditions ahead
in the medium term.
Equity markets in the USA and UK ended the period relatively unchanged as
prices recovered their poise towards the end of the second quarter. In the UK
however, the main driver of this recovery related to the decrease in the value
of sterling following its rapid rise in the first quarter to a high of GBP1.43
against the US dollar, which was equivalent to the level prevailing immediately
prior to the announcement of the Brexit referendum result in June 2016. Since
that time, UK equity market prices have tracked closely changes in Sterling's
value as FTSE index companies derive a significant proportion of their earnings
and therefore valuations in foreign currencies.
Dividend
We intend to pay an interim dividend of 2.7 pence per ordinary share on 29
November 2018 to shareholders on the register at 9 November 2018. This
represents an unchanged dividend from last year's interim dividend. A
preference dividend of 1.75 pence will be paid to preference shareholders on
the same date.
Board
I am very pleased to welcome Alex Tamlyn who joins our board on 1st July
following Ronald Paterson's retirement on 30th June. The board and I thank
Ronald for his many years of service and experience which has been of great
value to the company.
Alex is a Partner and Head of Capital Markets EMEA at DLA Piper where he
specialises in corporate finance, UK and international securities offerings,
schemes of arrangement, corporate governance and securities. As with Ronald
before him, Alex will bring to the board many years of experience in corporate
finance and securities regulation.
Outlook
The uncertainties for equity markets which have characterised 2018 to date are
likely to continue for some time, despite continued strength being shown in
corporate profitability. We are currently focused on the important near term
inflection point in our largest investment's fortunes which will inform our
investment strategy over the medium and longer term.
As at 25 September, company net assets were GBP26.1 million, an increase of 49.2
percent since 30 June. This compares with a decrease in the FTSE 100 index of
1.7 percent and a decrease of 1.7 percent in the All Share index over the same
period, and is equivalent to 65 pence per share (prior charges deducted at par)
and 75 pence per share on a fully diluted basis.
David Seligman
27 September 2018
Managing Director's Report
The erratic positions on world trade being taken by the White House,
threatening a trade war between the world's two largest trading blocks, the USA
and China, together with further threats against the third largest block, the
European Union, produced two episodes of correction (10 percent) in the first
quarter of 2018 in equity markets in the USA and the UK. By the end of second
quarter, however, these markets had recovered to their end 2017 levels which
themselves represented historic highs and the culmination of 10 years of steady
growth since the recession of 2008/9. This has equated to the longest equity
bull market period in history as these markets progressed steadily upwards
without a decrease of at least 20 percent during that time.
In the UK, short term movements in the equity market, in addition to reflecting
volatile events in international affairs, have also reacted to the ebbs and
flows of the Brexit negotiations. At times when the negotiations were
proceeding steadily, with a so-called soft Brexit in prospect, GBP sterling would
firm and the UK equity market would soften as the value of UK leading stocks
reflects the high content (75 percent) of their foreign currency earnings.
Conversely, at time when the negotiations have stalled or are proceeding badly,
which has been the pattern of the last few months, GBP sterling has fallen and
the equity market has risen in anticipation of the future costs of a no-deal
Brexit together with the prospect of lower interest rates to offset an
anticipated economic downturn.
During this long and unprecedented period of capital growth in the two equity
markets in which we invest, our portfolio has tracked these markets on a total
return basis, despite the value of our largest investment over that period,
Geron Corporation, having badly languished. The significant drag that this has
represented on our performance has, however, been largely offset by our
programme to enhance income over the period.
With the substantial recovery in the value of Geron's stock price since the
first half of 2018 to levels last seen in 2009, our portfolio has now performed
better in terms of capital growth and our investment in Geron now stands at a
profit in our books.
As already reported, this recovery in Geron's share price has been the result
of a positive update in the first quarter of Geron's clinical trials and an
accelerated third quarter 2018 date for the final decision by Johnson &
Johnson, Geron's development partner, on taking forward its commitment to
develop and commercialise Geron's oncology drug, Imetelstat. These
developments were announced in March of this year and since then there have
been a number of other indications which suggest that the imminent decision by
Johnson & Johnson is likely to be favourable. Such a decision would also
indicate Johnson & Johnson's confidence not only in the efficacy of Imetelstat
but also in its ability to obtain regulatory clearance to market it.
Consequently, investors have been pushing the price of Geron stock forward over
the past few months, despite the existence of a substantial position of short
sold stock which has accumulated over the years and which, in recent months,
has risen dramatically to over 60 million shares, representing one third of all
of Geron's issued stock.
The ultimate value of Geron will depend on the nature of the marketing
clearance it obtains and the number of cancer indications which it will
cover. Currently, the clinical trials cover two hematologic (blood) cancer
indications with unmet medical need, MF (Myelofibrosis) and MDS
(Myelodysplastic syndrome), each with a $1billion dollar market. Johnson &
Johnson has also let it be known in its presentations that it plans to trial
Imetelstat for AML (Acute Myeloid Leukemia), a blood cancer with an even larger
patient population and a $2 billion market. Furthermore, as Johnson & Johnson
has acquired exclusive world rights from Geron covering all cancer types, solid
tumours as well as liquid (blood) tumours, there may also be other substantial
patient populations in the future which Imetelstat could serve, including the
possibility of combination therapies with other already approved oncology
drugs. A foretaste of this possibility has already been seen in combination
trials with the chemotherapy drug Paclitaxel (or Taxol) for breast and other
cancers (developed by Bristol Myers Squib and marketed by many leading pharma
companies, including Pfizer) and a number of patents applications filed by
other leading pharma compnies, such as Abbvie, Novartis and Johnson & Johnson
itself, to cover the use of Imetelstat as a combination with their own oncology
drugs such Venetoclax, a blockbuster AML cancer drug. The progress of these
developments and their likely impact on Imetelstat's prospects over the coming
years will inform our own strategy with regard to Geron as our largest and
strategic portfolio investment.
In the meantime, against the generally uncertain background described above
arising out of the exceptionally long bull market in equities and instability
in international economic affairs precipitated by erratic policy making by the
USA, we have continued to make modest reductions in our investments in other
areas to take advantage of high historic valuations and have taken the
opportunity over the period to reduce our levels of gearing.
Jonathan C Woolf
27 September 2018
CONDENSED INCOME STATEMENT
Six months ended 30 June
2018
Unaudited Unaudited Audited
6 months to 30 June 6 months to 30 June Year ended 31 December
2018 2017 2017
Revenue Capital Revenue Capital Revenue Capital
Note return return Total return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 3 1,104 - 1,104 1,420 - 1,420 2,732 - 2,732
Holding gains/ - 3,549 3,549 - 1,230 1,230 - (5,249) (5,249)
(losses) on
investments at fair
value through profit
or loss
Losses on disposal - (643) (643) - (1,487) (1,487) - (1,442) (1,442)
of investments at
fair value through
profit or loss
Foreign exchange (12) (24) 17 34 53 106
gains/(losses) (12) 17 53
Expenses (203) (116) (319) (258) (133) (391) (526) (272) (798)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) 889 2,778 3,667 1,179 (373) 806 2,259 (6,910) (4,651)
before finance
costs and tax
Finance costs (25) (22) (47) (27) (14) (41) (49) (33) (82)
_____ _____ _____ _____ _____ _____ _____ _____ _____
864 2,756 3,620 1,152 (387) 765 2,210 (6,943) (4,733)
Profit/(loss)
before tax
Taxation 14 - 14 16 - 16 35 - 35
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) for 878 2,756 3,634 1,168 (387) 781 2,245 (6,943) (4,698)
the period
_____ _____ _____ _____ _____ _____ _____ _____ _____
Earnings per 5
ordinary share
Basic 2.81p 11.03p 13.84p 3.97p (1.55)p 2.42p 7.58p (27.77)p (20.19)
p
Diluted 2.51p 7.87p 10.38p 3.34p (1.11)p 2.23p 6.41p (19.84)p (13.43)
p
The company does not have any income or expense that is not included in profit/
(loss) for the period and all items derive from continuing operations.
Accordingly, the 'Profit/(loss)' 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 is the company's Income Statement, prepared
in accordance with IFRS. The supplementary revenue return and capital return
columns are both prepared under guidelines published by the Association of
Investment Companies.
All profit and total comprehensive income is attributable to the equity holders
of the company.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2018
Unaudited
Six months ended 30 June 2018
Share Capital Retained Total
capital* reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2017 35,000 (21,167) 1,701 15,534
Profit for the period - 2,756 878 3,634
Ordinary dividend paid - - (1,475) (1,475)
Preference dividend paid - - (175) (175)
________ ________ ________ ________
Balance at 30 June 2018 35,000 (18,411) 929 17,518
________ ________ ________ ________
Unaudited
Six months ended 30 June 2017
Share Capital Retained Total
capital* reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2016 35,000 (14,224) 1,906 22,682
Profit/(loss) for the period - (387) 1,168 781
Ordinary dividend paid - - (1,425) (1,425)
Preference dividend paid - - (175) (175)
________ ________ ________ ________
Balance at 30 June 2017 35,000 (14,611) 1,474 21,863
________ ________ ________ ________
Audited
Year ended 31 December 2017
Share Capital Retained Total
capital* reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 December 2016 35,000 (14,224) 1,906 22,682
Profit/(loss) for the period - (6,943) 2,245 (4,698)
Ordinary dividend paid - - (2,100) (2,100)
Preference dividend paid - - (350) (350)
________ ________ ________ ________
Balance at 31 December 2017 35,000 (21,167) 1,701 15,534
________ ________ ________ ________
*The company's share capital comprises GBP35,000,000 (2017 - GBP35,000,000) being
25,000,000 ordinary shares of GBP1 (2017 - 25,000,000) and 10,000,000 non-voting
convertible preference shares of GBP1 each (2017 - 10,000,000).
CONDENSED BALANCE SHEET
As at 30 June 2018
Note Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Non-current assets
Investments - fair value through
profit or loss (note 1) 15,866 24,408 15,565
Subsidiaries - fair value through 6,375 6,569 5,277
profit or loss
_________ _________ _________
22,241 30,977 20,842
Current assets
Receivables 4,055 2,089 2,399
Cash and cash equivalents 725 789 2,213
_________ _________ _________
4,780 2,878 4,612
_________ _________ _________
Total assets 27,021 33,855 25,454
_________ _________ _________
Current liabilities
Trade and other payables (2,006) (2,512) (1,010)
Bank loan (2,717) (4,363) (4,244)
_________ _________ _________
(4,723) (6,875) (5,254)
_________ _________ _________
Total assets less current 22,298 26,980 20,200
liabilities
_________ _________ _________
Non - current liabilities (4,780) (5,117) (4,666)
_________ _________ _________
Net assets 17,518 21,863 15,534
_________ _________ _________
Equity attributable to equity
holders
Ordinary share capital 25,000 25,000 25,000
Convertible preference share 10,000 10,000 10,000
capital
Capital reserve (18,411) (14,611) (21,167)
Retained revenue earnings 929 1,474 1,701
_________ _________ _________
Total equity 17,518 21,863 15,534
_________ _________ _________
Net assets per ordinary share - 6 GBP0.30 GBP0.47 GBP0.22
basic
_________ _________ _________
Net assets per ordinary share - 6 GBP0.50 GBP0.62 GBP0.44
diluted
_________ _________ _________
CONDENSED CASHFLOW STATEMENT
Six months ended 30 June 2018
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Profit/(loss) before tax 3,620 765 (4,733)
Adjustment for:
(Gains)/losses on investments (2,906) 257 6,691
Proceeds on disposal of investments at
fair value
through profit or loss 7,699 7,186 13,867
Purchases of investments at fair value
through profit or loss (5,967) (7,686) (11,570)
Interest 47 41 82
________ ________ ________
Operating cash flows before movements
in working capital 2,493 563 4,337
Increase in receivables (269) (254) (780)
(Decrease)/increase in payables (491) 820 4
________ ________ ________
Net cash from operating activities
before interest 1,733 1,129 3,561
Interest paid (44) (36) (75)
________ ________ ________
Net cash flows from operating activities 1,689 1,093 3,486
________ ________ ________
Cash flows from financing activities
Dividends paid on ordinary shares (1,475) (1,425) (2,100)
Dividends paid on preference shares (175) (175) (350)
Bank loan (1,527) 873 754
________ ________ ________
Net cash used in financing activities (3,177) (727) (1,696)
________ ________ ________
Net (decrease)/increase in cash and cash (1,488) 366
equivalents 1,790
Cash and cash equivalents at beginning of 2,213 423 423
period
________ ________ ________
Cash and cash equivalents at end of period 725 789 2,213
________ ________ ________
NOTES TO THE COMPANY'S CONDENSED FINANCIAL STATEMENT
1. Accounting policies
Basis of preparation and statement of compliance
This interim report is prepared in accordance with IAS 34 'Interim Financial
Reporting' and on the basis of the accounting policies set out in the company's
Annual Report and financial statements at 31 December 2017.
The company's condensed financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the
European Union, which comprise standards and interpretations approved by the
IASB and International Accounting Standards and Standing Interpretations
Committee interpretations approved by the IASC that remain in effect, and to
the extent they have been adopted by the European Union.
In accordance with IFRS 10, the group does not consolidate its subsidiaries and
therefore instead of preparing group accounts it prepares separate financial
statements for the parent entity only.
The financial statements have been prepared on the historical cost basis except
for the measurement at fair value of investments, derivative financial
instruments, and subsidiaries. The same accounting policies as those published
in the statutory accounts for 31 December 2017 have been applied.
Significant accounting policies
In order to better reflect the activities of an investment trust company and in
accordance with guidance issued by the Association of Investment Companies
(AIC), supplementary information which analyses the income statement between
items of a revenue and capital nature has been presented alongside the income
statement.
As the entity's business is investing in financial assets with a view to
profiting from their total return in the form of interest, dividends or
increases in fair value, listed equities and fixed income securities are
designated as fair value through profit or loss on initial recognition. The
company manages and evaluates the performance of these investments on a fair
value basis in accordance with its investment strategy, and information about
the group is provided internally on this basis to the entity's key management
personnel.
Investments held at fair value through profit or loss, including derivatives
held for trading, are initially recognised at fair value.
All purchases and sales of investments are recognised on the trade date.
After initial recognition, investments, which are designated as at fair value
through profit or loss, are measured at fair value. Gains or losses on
investments designated at fair value through profit or loss are included in
profit or loss as a capital item, and material transaction costs on acquisition
and disposal of investments are expensed and included in the capital column of
the income statement. For investments that are actively traded in organised
financial markets, fair value is determined by reference to Stock Exchange
quoted market closing prices or last traded prices, depending upon the
convention of the exchange on which the investment is quoted at the close of
business on the balance sheet date. Investments in units of unit trusts or
shares in OEICs are valued at the closing price released by the relevant
investment manager.
In respect of unquoted investments, or where the market for a financial
instrument is not active, fair value is established by using an appropriate
valuation technique.
Investments of the company in subsidiary companies are held at the fair value
of their underlying assets and liabilities.
This includes the valuation of film rights in British and American Films
Limited and thus the fair value of its immediate parent BritAm Investments
Limited. In determining the fair value of the film rights, estimates are made.
These include future film revenues which are estimated by the management.
Estimations made have taken into account historical results, current trends and
other relevant factors.
Where a subsidiary has negative net assets it is included in investments at GBP
nil value and a provision is made for it on the balance sheet where the
ultimate parent company has entered into a guarantee to pay the liabilities if
they fall due.
Dividend income from investments is recognised as income when the shareholders'
rights to receive payment has been established, normally the ex-dividend date.
Interest income on fixed interest securities is recognised on a time
apportionment basis so as to reflect the effective interest rate of the
security.
When special dividends are received, the underlying circumstances are reviewed
on a case by case basis in determining whether the amount is capital or income
in nature. Amounts recognised as income will form part of the company's
distribution. Any tax thereon will follow the accounting treatment of the
principal amount.
All expenses are accounted for on an accruals basis. Expenses are charged as
revenue items in the income statement except as follows:
- transaction costs which are incurred on the purchase or sale of an investment
designated as fair value through profit or loss are expensed and included in
the capital column of the income statement;
- expenses are split and presented partly as capital items where a connection
with the maintenance or enhancement of the value of the investments held can be
demonstrated, and accordingly investment management and related costs have been
allocated 50% (2017 - 50%) to revenue and 50% (2017 - 50%) to capital, in order
to reflect the directors' long-term view of the nature of the expected
investment returns of the company.
The 3.5% cumulative convertible non-redeemable preference shares issued by the
company are classified as equity instruments in accordance with IAS 32
'Financial Instruments - Presentation' as the company has no contractual
obligation to redeem the preference shares for cash or pay preference dividends
unless similar dividends are declared to ordinary shareholders.
2. Segmental reporting
The directors are of the opinion that the company is engaged in a single
segment of business, that is investment business, and therefore no segmental
reporting is provided.
3. Income
Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 June to 30 June 31
2018 2017 December
GBP'000 GBP'000 2017
GBP'000
Income from investments 1,083 1,407 2,707
Other income 21 13 25
_________ _________ _________
1,104 1,420 2,732
_______ _______ _______
Of the GBP783,000 (30 June 2017 - GBP1,406,000, 31 December 2017 - GBP2,304,000)
dividends received from listed investments in the company accounts, GBP641,000
(30 June 2017 - GBP860,000, 31 December 2017 - GBP1,891,000) related to special and
other dividends received from investee companies that were bought after the
dividend announcement. There was a corresponding capital loss of GBP573,000 (30
June 2017 - GBP898,000, 31 December 2017 - GBP1,949,000), on these investments.
Under IFRS 10 the income analysis is for the parent company only rather than
that of the consolidated group shown in previous years. Thus film revenues of GBP
36,000 (30 June 2017 - GBP36,000, 31 December 2017- GBP101,000) received
by the subsidiary British & American Films Limited and property unit trust
income of GBP7,000 (30 June 2017 - GBP7,000, 31 December 2017 - GBP15,000) received
by the subsidiary BritAm Investments Limited are shown separately in this
paragraph for information purposes.
4. Proposed dividends
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 June 2018 30 June 2017 31 December 2017
Interim Interim Final
Pence per GBP'000 Pence per GBP'000 Pence per GBP'000
share share share
Ordinary shares 2.7 675 2.7 675 5.9 1,475
Preference shares
- 1.75 175 1.75 175 1.75 175
fixed
_________ _________ _________
850 850 1,650
_______ _______ _______
The directors have declared an interim dividend of 2.7p (2017 - 2.7p) per
ordinary share, payable on 29 November 2018 to shareholders registered on 9
November 2018. The shares will be quoted ex-dividend on 8 November 2018.
The dividends on ordinary shares are based on 25,000,000 ordinary GBP1 shares.
Dividends on preference shares are based on 10,000,000 non-voting 3.5%
convertible preference shares of GBP1.
The holders of the 3.5% convertible preference shares will be paid a dividend
of GBP175,000 being 1.75p per share. The payment will be made on the same date as
the dividend to the ordinary shareholders.
Amounts recognised as distributions to ordinary shareholders in the period:
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 June 2018 30 June 2017 31 December 2017
Pence per GBP'000 Pence per GBP'000 Pence per GBP'000
share share share
Ordinary shares -
final 5.9 1,475 5.7 1,425 5.7 1,425
Ordinary shares -
interim - - - - 2.7 675
Preference shares
- 1.75 175 1.75 175 3.5 350
fixed
_________ _________ _________
1,650 1,600 2,450
_______ _______ _______
5. Earnings per ordinary share
Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Basic earnings per share
Calculated on the basis of:
Net revenue profit after preference 703 993 1,895
dividends
Net capital gain/(loss) 2,756 (387) (6,943)
_________ _________ _________
Net total earnings after preference 3,459 606 (5,048)
dividends
_______ _______ _______
Number'000 Number'000 Number'000
Ordinary shares in issue 25,000 25,000 25,000
_______ _______ _______
Diluted earnings per share
Calculated on the basis of:
Net revenue profit 878 1,168 2,245
Net capital gain/(loss) 2,756 (387) (6,943)
_________ _________ _________
Profit/(loss) after taxation 3,634 781 (4,698)
_______ _______ _______
Number'000 Number'000 Number'000
Ordinary and preference shares in issue 35,000 35,000 35,000
_______ _______ _______
Diluted earnings per share is calculated taking into account the preference
shares which are convertible to ordinary shares on a one for one basis, under
certain conditions, at any time during the period 1 January 2006 to 31 December
2025 (both dates inclusive).
6. Net asset value attributable to each share
Basic net asset value attributable to each share has been calculated by
reference to 25,000,000 ordinary shares, and company net assets attributable to
shareholders as follows:
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Total net assets 17,518 21,863 15,534
Less convertible preference shares (10,000) (10,000) (10,000)
__________ __________ __________
Net assets attributable to ordinary 7,518 11,863 5,534
shareholders
________ ________ ________
Diluted net asset value is calculated on the total net assets in the table
above and on 35,000,000 shares, taking into account the preference shares which
are convertible to ordinary shares on a one for one basis, under certain
conditions, at any time during the period 1 January 2006 to 31 December 2025
(both dates inclusive).
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.
7. Non - current liabilities
Guarantee of subsidiary liability Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
Opening provision 4,666 4,432 4,432
Increase in period 114 685 234
__________ __________ __________
Closing provision 4,780 5,117 4,666
________ ________ ________
The provision is in respect of a guarantee made by the company for liabilities
between its wholly owned subsidiaries, Second BritAm Investments Limited,
BritAm Investments Limited and British and American Films Limited. The
guarantee is to pay out the liabilities of Second BritAm Investments Limited if
they fall due. There is no current intention for these liabilities to be
called.
8. Related party transactions
Romulus Films Limited and Remus Films Limited have significant shareholdings in
the company 6,902,812 (27.6%) ordinary shares held by Romulus Films Limited,
7,868,750 (31.5%) ordinary shares held by Remus Films Limited). Romulus Films
Limited also holds 10,000,000 cumulative convertible preference shares.
The company rents its offices from Romulus Films Limited, and is also charged
for its office overheads. During the period the company paid GBP17,000 (30 June
2017 - GBP11,000 and 31 December 2017 - GBP24,000) in respect of those services.
The salaries and pensions of the company's employees, except for the three
non-executive directors and one employee, are paid by Remus Films Limited and
Romulus Films Limited and are recharged to the company. Amounts charged by
these companies in the period to 30 June 2018 were GBP172,000 (30 June 2017 - GBP
236,000 and 31 December 2017 - GBP473,000) in respect of salary costs and GBP23,000
(30 June 2017 - GBP33,000 and 31 December 2017 - GBP58,000) in respect of pensions.
At the period end an amount of GBP44,000 (30 June 2017 - GBP370,000 and 31 December
2017 - GBP28,000) was due to Romulus Films Limited and GBP8,000 (30 June 2017 - GBP
389,000 and 31 December 2017 - GBP153,000) was due to Remus Films Limited.
During the period subsidiary BritAm Investments Limited paid dividends of GBP
300,000 (30 June 2017 - GBP300,000 and 31 December 2017 - GBP400,000) to the parent
company, British & American Investment Trust PLC.
British & American Investment Trust PLC has guaranteed the liabilities of GBP
4,780,000 (30 June 2017 - GBP5,117,000 and 31 December 2017 - GBP4,666,000) due
from Second BritAm Investments Limited to its fellow subsidiaries if they
should fall due.
During the period the company paid interest of GBPnil (30 June 2017 - GBP5,000 and
31 December 2017 - GBP5,000) and GBP3,000 (30 June 2017 - GBPnil and 31 December 2017
- GBP2,000) on the loan due to BritAm Investments Limited and Second BritAm
Investments Limited respectively and which are included in the balances at 30
June 2018.
During the period the company received interest of GBP7,000 (30 June 2017 - GBP
8,000 and 31 December 2017 - GBP16,000) from British and American Films Limited,
GBPnil (30 June 2017 - GBP4,000 and 31 December 2017 - GBP4,000) from Second BritAm
Investments Limited and GBP14,000 (30 June 2017 - GBPnil and 31 December 2017 - GBP
5,000) from BritAm Investments Limited.
All transactions with subsidiaries were made on an arm's length basis.
9. Retained earnings
The table below shows the movement in the retained earnings analysed between
revenue and capital items.
Capital Retained
reserve earnings
GBP'000 GBP'000
1 January 2018 (21,167) 1,701
Allocation of profit for the period 2,756 878
Ordinary and preference dividends paid - (1,650)
_________ _________
At 30 June 2018 (18,411) 929
_______ _______
The capital reserve includes GBP2,624,000 of investment holding losses (30 June
2017 - GBP2,307,000 gain, 31 December 2017 - GBP5,653,000 loss).
10. Financial instruments
Financial instruments carried at fair value
All investments are carried at fair value. Other financial assets and
liabilities of the company are held at amounts that approximate to fair value.
The book value of cash at bank and bank loans included in these financial
statements approximate to fair value because of their short-term maturity.
Fair value hierarchy
The table below analyses recurring fair value measurements for financial assets
and financial liabilities.
These fair value measurements are categorised into different levels in the fair
value hierarchy based on the inputs to valuation techniques used. The different
levels are defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the company can access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly:
1. Prices of recent transactions for identical instruments.
2. Valuation techniques using observable market data.
Level 3: Unobservable inputs for the asset or liability.
Financial assets and financial liabilities Level 1 Level 2 Level 3 Total
at fair value through profit or loss at 30 GBP'000 GBP'000 GBP'000 GBP'000
June 2018
Investments including derivatives:
Investments held at fair value through 15,831 - 35 15,866
profit or loss
Subsidiary held at fair value through - - 6,375 6,375
profit or loss
_________ _________ _________ _________
Total financial assets and liabilities 15,831 - 6,410 22,241
carried at fair value
_______ _______ _______ _______
With the exception of the Biotime Promissory Note, Sarossa Capital, BritAm
Investments Limited (unquoted subsidiary) and Second BritAm Investments Limited
(unquoted subsidiary), which are categorised as Level 3, all other investments
are categorised as Level 1.
Fair Value Assets in Level 3
The following table shows the reconciliation from the opening balances to the
closing balances for fair value measurement in Level 3 of the fair value
hierarchy.
Level 3
GBP'000
Opening fair value at 1 January 2018 5,333
Purchases -
Sales proceeds (22)
Gain on sales 4
Investment holding gains 1,095
_________
Closing fair value at 30 June 2018 6,410
_______
Subsidiaries
The fair value of the subsidiaries is determined to be equal to the net asset
values of the subsidiaries at year end plus the uplift in the revaluation of
film rights in British and American Films Limited, a subsidiary of BritAm
Investments Limited.
The fair value of the film rights have been determined by estimating the
present value of the pre-tax film revenues in the next 10 years discounted at a
discount rate of 5%. The directors' valuation of British & American Films
Limited has been based on pre-tax profits as sufficient group relief exists to
mitigate the tax effect.
There have been no transfers between levels of the fair value hierarchy during
the period. Transfers between levels of fair value hierarchy are deemed to have
occurred at the date of the event or change in circumstances that caused the
transfer.
DIRECTORS' STATEMENT
Principal risks and uncertainties
The principal risks and uncertainties faced by the company continue to be as
described in the previous annual accounts. Further information on each of these
areas, together with the risks associated with the company's financial
instruments are shown in the Directors' Report and notes to the financial
statements within the Annual Report and Accounts for the year ended 31 December
2017.
The Chairman's Statement and Managing Director's report include commentary on
the main factors affecting the investment portfolio during the period and the
outlook for the remainder of the year.
Directors' Responsibilities Statement
The Directors are responsible for preparing the half-yearly report in
accordance with applicable law and regulations. The Directors confirm that to
the best of their knowledge the interim financial statements, within the
half-yearly report, have been prepared in accordance with IAS 34 'Interim
Financial Reporting'. The Directors are required to prepare the financial
statements on the going concern basis unless it is inappropriate to presume
that the company will continue in business. The Directors further confirm that
the Chairman's Statement and Managing Director's Report includes a fair review
of the information required by 4.2.7R and 4.2.8R of the FCA's Disclosure and
Transparency Rules.
The Directors of the company are listed in the section preceding the Chairman's
Statement.
The half-yearly report was approved by the Board on 27 September 2018 and the
above responsibility statement was signed on its behalf by:
Jonathan C Woolf
Independent review report to the members of British & American Investment Trust
PLC
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report of British & American Investment
Trust PLC for the six months ended 30 June 2018 which comprises the Condensed
Income Statement, the Condensed Statement of Changes in Equity, the Condensed
Balance Sheet, the Condensed Cashflow Statement and related Notes to the
Company results. We have read the other information contained in the
half-yearly financial report being the Financial Highlights, the Chairman's
Statement, the Managing Director's Report, the Investment Portfolio and the
Directors' Statement, and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the company, in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information performed by the Independent Auditor of the Entity'
issued by the Auditing Practices Board. Our review work has been undertaken so
that we might state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company for our review work, for this report, or for the conclusion we
have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the company are
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union. The condensed set of financial statements
included in this half-yearly financial report has been prepared in accordance
with International Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority. HAZLEWOODS LLP AUDITOR Cheltenham 27 September 2018 END
(END) Dow Jones Newswires
September 27, 2018 06:42 ET (10:42 GMT)
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