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BAF British & American Investment Trust Plc

18.00
0.00 (0.00%)
Last Updated: 08:00:03
Delayed by 15 minutes
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 18.00 18.00 18.00 0.00 08:00:03
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Motion Pictures 1.68M 976k 0.0390 4.62 4.5M

British & American Annual Financial Report

03/05/2019 1:28pm

UK Regulatory


 
TIDMBAF 
 
British & American Investment Trust PLC 
 
Annual Financial Report 
for the year ended 31 December 2018 
 
Registered number: 00433137 
 
 
 
 
Directors                                                         Registered office 
 
David G Seligman (Chairman) - appointed as Chairman 1 January     Wessex House 
2018 
 
Jonathan C Woolf (Managing Director)                              1 Chesham Street 
 
Dominic G Dreyfus (Non-executive and Chairman of the Audit        Telephone: 020 7201 
Committee)                                                        3100 
 
Ronald G Paterson (Non-executive) - retired as Director 30 June 
2018 
 
Alex Tamlyn (Non-executive) - appointed as Director 1 July 2018   Registered in 
                                                                  England 
 
                                                                  No.00433137 
 
                                                                  30 April 2019 
 
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 2018 
 
 
                                                        2018                             2017 
 
 
                              Revenue     Capital      Total    Revenue     Capital       Total 
                               return      return                return      return 
 
                                 GBP000        GBP000       GBP000       GBP000        GBP000        GBP000 
 
Profit/(loss) before tax -      2,489                  (502)      2,210                     516 
realised                                  (2,991)                           (1,694) 
 
Loss before tax -                   -     (4,644)    (4,644)          -     (5,249)     (5,249) 
unrealised 
 
                           __________  __________ __________ __________  __________  __________ 
 
Profit/(loss) before tax -      2,489     (7,635)    (5,146)      2,210     (6,943)     (4,733) 
total 
 
                           __________  __________ __________ __________  __________  __________ 
 
Earnings per GBP1 ordinary 
share - basic                   8.68p    (30.54)p   (21.86)p      7.58p    (27.77)p    (20.19)p 
 
                           __________  __________ __________ __________  __________  __________ 
 
Earnings per GBP1 ordinary 
share - diluted                 7.21p    (21.81)p   (14.60)p      6.41p    (19.84)p    (13.43)p 
 
                           __________   _________ __________ __________   _________  __________ 
 
Net assets                                             7,919                             15,534 
 
                                                  __________                         __________ 
 
Net assets per ordinary 
share 
 
- deducting preference 
   shares at par                                          0p                                22p 
 
                                                  __________                         __________ 
 
- diluted                                                23p                                44p 
 
                                                  __________                         __________ 
 
                                                         34p 
Diluted net asset value 
per ordinary share at 26 
April 2019 
 
                                                  __________ 
 
Dividends declared or 
proposed for the period 
 
per ordinary share 
 
- interim paid                                          2.7p                               2.7p 
 
- final proposed                                        6.0p                               5.9p 
 
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 2018. 
 
Revenue 
 
The return on the revenue account before tax amounted to GBP2.5 million (2017:  GBP 
2.2 million), an increase of 13 percent. This increase was due to higher levels 
of dividends received from our subsidiary companies compared to the previous 
year. 
 
Gross revenues totalled GBP3.1 million (2017:  GBP2.7 million). In addition, film 
income of GBP92,000 (2017:  GBP101,000) and property unit trust income of GBP14,000 
(2017:  GBP15,000) 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 GBP5.1 million (2017:  GBP4.7 
million loss), which comprised net revenue of GBP2.5 million, a realised loss of 
GBP2.6 million and an unrealised loss of GBP4.6 million. The revenue return per 
ordinary share was 8.7p (2017: 7.6p) on an undiluted basis and 7.2p (2017: 
6.4p) on a diluted basis. 
 
Net Assets and Performance 
 
Net assets at the year end were GBP7.9 million (2017:  GBP15.5 million), a decrease 
of 49.0 percent. This compares to decreases in the FTSE 100 and All Share 
indices of 12.5 percent and 13.0 percent, respectively, over the period. On a 
total return basis, after adding back dividends paid during the year, our net 
assets decreased by 32.9 percent compared to 9.0 percent and 9.5 percent 
decreases in the FTSE 100 and All Share indices, respectively. 
 
This very poor end of year result followed the strong and market out-performing 
advance in net asset value which we were able to report at the half year stage 
of 12.8 percent and was the result of an unexpected setback in late September 
in the value of our largest US investment, Geron Corporation. Although the 
value of this investment had risen by 95 percent in the first 6 months of 2018 
and by 260 percent towards the end of the third quarter, the very unexpected 
decision by Johnson and Johnson on 27th September to discontinue its clinical 
trial collaboration with Geron resulted in a collapse of over 80 percent in 
Geron's stock price over the fourth quarter, and a fall of 44 percent for the 
year as a whole.  At the time, Johnson and Johnson cited general portfolio 
reasons for the discontinuation and not any perceived problems with the 
collaboration or the trials. This drop in Geron's stock price also coincided 
with a substantial reversal in US equity markets in December of 14 percent, 
which was the steepest intra-month fall in stock prices since the Great 
Recession of 2008. 
 
The circumstances surrounding this unfortunate development and the outlook are 
discussed in greater detail in the managing director's report below. The shock 
of the unexpected loss of Johnson and Johnson as Geron's collaborator resulted 
in the immediate and severe market downgrade in Geron's value noted above. 
However, the efficacy and potential of Geron's haematological cancer treatment, 
Imetelstat, was nevertheless publicly reconfirmed at the American Society of 
Haematology (ASH) international conference some two months later in December, 
since when the value of Geron has recovered significantly. Geron is continuing 
its plans to initiate Phase 3 clinical trials on its own by mid 2019, having 
recently added a number of highly regarded and experienced clinical trial 
executives to its team (including the executive at Johnson and Johnson who had 
led the collaboration). This should allow the stock price to consolidate its 
recovery and hopefully regain the price levels seen in mid 2018, particularly 
since Geron now once again owns 100 percent of the technology having received 
back Johnson and Johnson's 80 percent share. Since the year end, however, the 
value of Geron has recovered substantially and has made strong gains of 91 
percent, accounting for the substantial improvement in the company's net asset 
value as at 26 April 2019 shown below. 
 
More generally in 2018, equity markets in the USA and UK made little or no 
progress overall. In the USA, a substantial fall of 10 percent at the beginning 
of the year caused by market reaction to erratic policy making in international 
trade and foreign relations by the White House was gradually reversed over the 
following months as investors began to expect a moderation in the previously 
expected course of rising US dollar interest rates for the rest of the year. By 
mid-year the market regained its opening year values, which had represented 
multi-year highs, but from October declined dramatically again by almost 20 
percent to the end of the year as the continued war of words between the USA 
and China on trade policy and damaging trade sanctions between the two 
countries began to raise investor concerns about the impact on global growth 
levels going forward. 
 
In the UK, the equity market followed the pattern set by the US market to 
mid-year, then declined steadily to the year end, falling 12.5 percent in the 
second half. Market performance was completely dominated by the ongoing 
travails of Brexit and the concomitant movements in sterling. The ongoing lack 
of progress in negotiations and the inexorable approach of the exit date of end 
March 2019 heralding a hard and 'no deal' Brexit began to weigh on levels of 
corporate investment in the UK, unnerving investors. By contrast, however, as 
sterling weakened in response to these concerns, it provided some support to 
the market, as large corporates' foreign earnings streams became better valued. 
The downward trend over this period was therefore punctuated by periods of 
stabilisation, but the overall decline to the year end was maintained with no 
progress being made on finding a solution to the most significant political and 
economic event in the UK's history for generations. 
 
Dividend 
 
We are pleased to recommend an increased final dividend of 6.0p per ordinary 
share, which together with the interim dividend makes a total payment for the 
year of 8.7p (2017:  8.6p) per ordinary share. This represents an increase of 
1.2 percent over the previous year's total dividend and a yield of 18.3 percent 
based on the share price of 47.5p at the end of the year. The final dividend 
will be payable on 27 June 2019 to shareholders on the register at 24 May 2019. 
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 once again for the third year running as one of the 20 
investment trusts which have maintained a consistent 20 year record of 
increasing dividends. 
 
We have been able to maintain our progressive dividend policy over these years 
and particularly in recent years through an active programme of targeted 
investment at opportune times in higher yielding but mainstream investments 
together with the realisation of capital profits through our group subsidiary 
companies.  When such profits are realised in these companies they can be paid 
out to our shareholders in dividends, as was the case this past year for 
example, when we were able to realise profits on part of our holdings in Geron 
Corporation when its stock price rose substantially over the first three 
quarters of 2018. However, following the severe decline in Geron's stock price 
in the last quarter of 2018, the continued availability of profits from this 
source will be constrained unless the stock price returns to the levels seen in 
the earlier part of 2018.  Without this, it is unlikely that we will be able to 
maintain our progressive dividend policy going forward. 
 
Outlook 
 
The multiple economic and political uncertainties which currently present 
themselves would normally presage deep concerns for investors 
generally. However, although markets have now been showing considerably higher 
levels of volatility than in recent years, as already noted, they remain at 
around historically high levels and do not for the time being appear to show an 
appetite for a sustained retrenchment into bear market territory. This is 
likely to be the result of the continued overhang of the unprecedented monetary 
easing programmes of prior years and more recently some early and possibly 
politically-motivated policy modulations by the Federal Reserve and other 
central banks to address the slowdown in global growth which was beginning to 
be seen in 2018. Time will tell whether such monetary interventions or the 
forces of politics in fiscal and trade policy will have a greater effect on 
sustaining current and future levels of economic growth in the world. For the 
time being, however, and despite the headwinds of trade wars and Brexit, 
markets appear to have found a level with which they seem to be relatively 
comfortable. 
 
Against this background, we remain invested in our US biotechnology stocks 
waiting to capture the gains expected as their programmes advance and reach 
maturity but we do not expect to add to our other long term investments at this 
point. 
 
As at 26 April 2019, our net assets had increased to GBP11.8 million, an increase 
of 49.3 percent since the beginning of the calendar year due principally to the 
91.0 percent increase in the share price of Geron Corporation over this period. 
This is equivalent to 7.3 pence per share (prior charges deducted at par) and 
33.8 pence per share on a diluted basis. Over the same period the FTSE 100 
increased 10.4 percent and the All Share Index increased 10.8 percent. 
 
David Seligman 
 
30 April 2019 
 
Managing Director's report 
 
In 2018, our portfolio value was substantially affected by large positive and 
negative movements in the stock price of our largest investment, Geron 
Corporation. At the half year, we were able to report an increase in our NAV of 
12.8 percent, outperforming the market by over 20 percent on a total return 
basis. This was largely due to the 91 percent increase in Geron's stock price 
over that period. Geron's price then continued to increase to the end of 
September by a further 80 percent. However, on 27th September Geron's price 
dropped substantially for the reasons detailed below and the value of our 
portfolio dropped by over 60 percent in the final quarter, resulting in 
significant end of year underperformance, as already noted above. This drop in 
the fourth quarter was exacerbated by a sharp fall in US and UK equity markets 
generally over the same period of  20 percent and 14 percent, respectively, and 
particularly in December when the US market experienced its largest one month 
fall for over ten years. Our other substantial US investments were therefore 
also affected by this last quarter movement in stock prices, contributing 
further to the decline in our portfolio valuation. 
 
In the second half of 2018, it seemed as though the ten year bull market in US 
equities might reassert itself after a more volatile first half which had 
included at least two instances of technical correction. Despite the political 
headwinds emanating from the USA already noted above, economic strength and 
corporate profitability in the USA was persisting, buoyed along by the tax cuts 
of the previous year. For this reason, the Federal Reserve had mapped out a 
course of gradually increasing interest rates for 2018 which was generally 
being well digested by the market.  However, as the year developed and progress 
in resolving the US/China trade dispute remained stalled, real economic 
consequences began to be shown through lower levels of growth in China, an 
increased trade deficit in the USA and signs of lower levels of corporate 
investment. This sapped investor confidence in the fourth quarter resulting in 
the large market sell-off in the final three months. 
 
At the same time in the UK, no signs of a conclusion to the Brexit process was 
evident despite the looming approach of the 29th March 2019 exit deadline. 
Corporates were forced therefore to take contingency measures involving changes 
to their HQ or operational locations and emergency stock ordering programmes to 
guard against the disruption to their operations presented by a potential 
disorderly Brexit. The Government's own contingency preparations also attracted 
sustained criticism for inadequacies for example arrangements by the NHS to 
ensure adequate supplies of essential medicines or the availability of 
additional cross-Channel ferry freight operations. As the atmosphere of 
uncertainty increased during 2018, it transferred to the investment process 
generally in the UK, with corporates restraining their investment plans until a 
higher level of visibility was evident, the residential property market growing 
at its slowest rate for 6 years, in fact recording negative real annual growth 
for the first time since 2012, and financial investors showing little appetite 
for equities. The pound sterling was also under pressure at times when the path 
of the Brexit negotiations and the associated political dynamic indicated that 
the chances of a disorderly Brexit were becoming more likely. In the last few 
weeks, the previous March deadline has been extended by up to a further seven 
months, and the immediate pressure on corporates and politicians alike has been 
relieved with the likelihood of a disorderly Brexit now reduced. However, until 
a majority is able to be found in Parliament on a way forward, the basic 
questions surrounding the UK's relationship with its main trading partner will 
remain, prolonging the uncertainties for business and exposing the currently 
fractured and dysfunctional parliamentary setup. 
 
While these significant political and macro-economic uncertainties persist, our 
main focus remains on achieving our capital growth objectives through our 
exposure to our US biotechnology investments and our income objectives through 
our existing UK fund investments, capturing of special dividends and income 
received from group subsidiaries. 
 
Geron Corporation 
 
As reported in detail in last year's interim report, Geron's stock price 
increased substantially during the first part of 2018 to its highest level for 
over 10 years, resulting in a fourfold increase in its market capitalisation 
from $320 million to over $1.2 billion. This was a function of favourable 
clinical trial results news and a strong expectation in the market that Johnson 
and Johnson would confirm by the fourth quarter the continuation of their four 
year collaboration with Geron to take their jointly owned oncology drug, 
Imetelstat, through the final clinical trial stage and on to approval and 
marketing. This decision point was to be the catalyst for the payment of future 
milestones of almost $1 billion to Geron plus substantial future royalty 
payments based on the drug's revenues. 
 
Numerous indications of a positive continuation decision in the months leading 
up to the decision were evident from a number of sources. These included the 
acceleration by Johnson and Johnson earlier in the year of the decision date, 
positive interim clinical trial results published in early 2018, inclusion of 
Imetelstat as Johnson and Johnson's leading oncology drug candidate for 
approval in 2020 in their  corporate review in August 2018, inclusion of 
Imetelstat on Johnson and Johnson's list of compassionate use drugs, and 
numerous job postings by Johnson and Johnson worldwide for executives to work 
on pricing/marketing strategy for its Myelodysplastic Syndrome (MDS) product 
pipeline (Imetelstat being its only such candidate drug). 
 
The wholly unexpected decision by Johnson and Johnson on 27th September not to 
continue the collaboration for general portfolio reasons and with no 
explanation of substance being given at the time not surprisingly resulted in a 
large-scale sell off of the stock and a precipitous fall in the stock price. 
Without any confirmation, either from Johnson and Johnson or Geron, of the 
continued reliability of Imetelstat's previously published results and its 
continued viability, market confidence in Imetelstat was badly shaken. 
 
Geron's management had felt unable to provide even minimal confirmation of this 
at the time as the company was subject to an information embargo related to a 
number of important presentations due to be given at the prestigious American 
Society of Haematology  (ASH) conference some weeks later in early December. 
They were, however, able to announce that Geron intended to take the MDS trials 
forward themselves into the already planned Phase 3 phase by mid-2019. 
 
At the ASH conference, the reports by the leading clinical trial investigators 
on Imetelstat's efficacy in treating patients with MDS and MF were even better 
than expected, showing never before seen improvements in blood transfusion 
independence and overall survival in these two diseases.  The results showed 
that Imetelstat outperformed the current standard of care in the selected 
patient populations who rely on the drugs Jaka? in MF and Revlimid in MDS, 
which represent multi-billion dollar markets for their owners. Imetelstat was 
also shown to outperform another new drug in MDS, Luspatercept, for which 
Celgene is currently completing Phase 3 trials.  In early 2019, Celgene which 
also owns Revlimid received a takeover bid from Bristol-Myers Squibb valued at 
$75 billion, indicating the value levels placed on drugs which can stabilise if 
not cure MDS, an ultimately fatal haematological cancer with a 3 to 5 year life 
expectancy on currently available drugs. 
 
Geron's stock price remained weak through to the beginning of December awaiting 
clarity from the ASH presentations, with the stock trading only just above 
Geron's cash value of $185 million, thus effectively valuing the Imetelstat 
platform at close to zero. However, despite the excellent trial results 
announced at ASH, the value of Geron did not improve materially into the New 
Year and in fact reached a low around the Christmas week, accounting for the 
weakness in our portfolio value at the year end. The shock of Johnson and 
Johnson's unexpected decision and mistrust of management's ability to take the 
drug forward into the planned Phase 3 trials alone was sufficient to damage 
confidence in the stock despite it having the funding to do so. 
 
However, in February, Geron began to announce a series of important initiatives 
to underpin its plans to take Imetelstat forward into the Phase 3 trials this 
summer. It included the hiring of a number of highly experienced clinical trial 
executives, including the executive who until last September had led 
Imetelstat's clinical trials at Johnson and Johnson which had produced such 
impressive results at ASH in December. A world leading Contract Research 
Organisation (CRO) was also engaged to manage the regulatory and administrative 
aspects of the trial. 
 
These moves gave the market some confidence in Geron's ability to deliver on 
Imetelstat's clear potential by taking the drug through the final trial on to 
eventual approval and commercialisation. As a result, Geron's stock price has 
recovered by over 90 percent since the beginning of the year. 
 
Over the past year, our investment in Geron has proved to be even more volatile 
than usual, in both positive and negative senses. We nevertheless remain 
committed to this investment in which we continue to expect major upside 
potential in the near future. Geron now owns 100 percent of Imetelstat again 
with the 80 percent share previously transferred to Johnson and Johnson being 
returned to it as a result of the ending of the partnership last year.  This 
being the case, there would seem to be no reason why on valuation grounds the 
stock price of Geron should not return to at least those levels seen last year 
when the market was looking forward to positive final Phase 2 trial results, 
which have since been more than confirmed, and the anticipation of progress 
into Phase 3 and eventual approval and commercialisation. We also believe that 
given the circumstances of last year's discontinuation of the collaboration 
with Johnson and Johnson, the excellent Phase 2 trial results announced since 
then and the imminent commencement of Phase 3 trials, Geron should present an 
attractive and valuable target to other major pharmaceutical companies looking 
to consolidate or establish a position in the treatment of haematologic 
malignancies by acquiring or partnering with Geron's drug, Imetelstat, which is 
demonstrating results superior to other drugs currently or expected on the 
market. 
 
Jonathan Woolf 
 
30 April 2019 
 
Income statement 
 
For the year ended 31 December 2018 
 
 
                                                      2018                       2017 
 
 
                                 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)         3,056        -    3,056    2,732        -    2,732 
 
Holding losses on investments             (4,644)  (4,644)           (5,249)  (5,249) 
at fair value through profit or        -                          - 
loss 
 
Losses on disposal of 
investments at fair value              -  (2,647)  (2,647)        -  (1,442)  (1,442) 
through profit or loss* 
 
Foreign exchange (losses)/gains     (61)     (62)    (123)       53       53      106 
 
Expenses                           (457)    (237)    (694)    (526)    (272)    (798) 
 
                                ________ ________ ________ ________ ________ ________ 
 
Profit/(loss) before finance       2,538  (7,590)  (5,052)    2,259  (6,910)  (4,651) 
costs and tax 
 
Finance costs                       (49)     (45)     (94)     (49)     (33)     (82) 
 
                                ________ ________ ________ ________ ________ ________ 
 
Profit/(loss) before tax           2,489  (7,635)  (5,146)    2,210  (6,943)  (4,733) 
 
Tax                                   31        -       31       35        -       35 
 
                                ________ ________ ________ ________ ________ ________ 
 
Profit/(loss) for the year         2,520  (7,635)  (5,115)    2,245  (6,943)  (4,698) 
 
                                ________ ________ ________ ________ ________ ________ 
 
Earnings per share 
 
Basic - ordinary shares            8.68p (30.54)p (21.86)p    7.58p (27.77)p (20.19)p 
 
                                ________ ________ ________ ________ ________ ________ 
 
Diluted - ordinary shares          7.20p (21.81)p (14.61)p    6.41p (19.84)p (13.43)p 
 
                                ________ ________ ________ ________ ________ ________ 
 
The company does not have any income or expense that is not included in the 
profit/(loss) for the year. Accordingly, the 'Profit/(loss) for the year' is 
also the 'Total Comprehensive Income for the year' 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. 
 
*Losses on disposal of investments at fair value through profit or loss include 
Losses on sales of GBP917,000 (2017 - GBP1,208,000 losses) and Losses on provision 
for liabilities and charges of GBP1,730,000 (2017 - GBP234,000 losses). 
 
Statement of changes in equity 
 
For the year ended 31 December 2018 
 
                                                 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 
 
Changes in equity for 2017 
 
Profit/(loss) for the period                         -   (6,943)     2,245   (4,698) 
 
Ordinary dividend paid (note 4)                      -         -   (2,100)   (2,100) 
 
Preference dividend paid (note 4)                    -         -     (350)     (350) 
 
                                              ________  ________  ________  ________ 
 
Balance at 31 December 2017                     35,000  (21,167)     1,701    15,534 
 
Changes in equity for 2018 
 
Profit/(loss) for the period                         -   (7,635)     2,520   (5,115) 
 
Ordinary dividend paid (note 4)                      -         -   (2,150)   (2,150) 
 
Preference dividend paid (note 4)                    -         -     (350)     (350) 
 
                                              ________  ________  ________  ________ 
 
Balance at 31 December 2018                     35,000  (28,802)     1,721     7,919 
 
                                              ________  ________  ________  ________ 
 
Registered number: 00433137 
 
Balance Sheet 
 
At 31 December 2018 
 
                                                               2018           2017 
 
                                                              GBP 000          GBP 000 
 
Non-current assets 
 
Investments - fair value through                              8,722         15,565 
profit or loss 
 
Subsidiaries - fair value through                             5,269          5,277 
profit or loss 
 
                                                         __________     __________ 
 
                                                             13,991         20,842 
Current assets 
 
Receivables                                                   3,417          2,399 
 
Cash and cash equivalents                                       244          2,213 
 
                                                         __________     __________ 
 
                                                              3,661          4,612 
 
                                                         __________     __________ 
 
Total assets                                                 17,652         25,454 
 
                                                         __________     __________ 
 
Current liabilities 
 
Trade and other payables                                        547          1,010 
 
Bank loan                                                     2,790          4,244 
 
                                                         __________     __________ 
 
                                                            (3,337)        (5,254) 
 
                                                         __________     __________ 
 
 
Total assets less current liabilities                        14,315         20,200 
 
                                                         __________     __________ 
 
Non - current liabilities                                   (6,396)        (4,666) 
 
                                                         __________     __________ 
 
Net assets                                                    7,919         15,534 
 
                                                         __________     __________ 
 
Equity attributable to equity holders 
 
Ordinary share capital                                       25,000         25,000 
 
Convertible preference share capital                         10,000         10,000 
 
Capital reserve                                            (28,802)       (21,167) 
 
Retained revenue earnings                                     1,721          1,701 
 
                                                         __________     __________ 
 
Total equity                                                  7,919         15,534 
 
                                                         __________     __________ 
 
Approved: 30 April 2019 
 
Cash flow statement 
 
For the year ended 31 December 2018 
 
                                                        Year ended  Year ended 2017 
                                                              2018 
 
                                                             GBP 000            GBP 000 
 
Cash flows from operating activities 
 
Loss before tax                                            (5,146)          (4,733) 
 
Adjustments for: 
 
Losses on investments                                        7,291            6,691 
 
Dividends in specie                                         (290)                - 
 
Proceeds on disposal of investments at fair                 13,635           13,867 
value through profit and loss 
 
Purchases of investments at fair value through            (12,335)         (11,570) 
profit and loss 
 
Finance costs                                                   94               82 
 
                                                        __________       __________ 
 
Operating cash flows before movements in working             3,249            4,337 
capital 
 
Increase in receivables                                      (712)            (780) 
 
(Decrease)/increase in payables                              (773)                4 
 
                                                        __________       __________ 
 
Net cash from operating activities before                    1,764            3,561 
interest 
 
Interest paid                                                 (90)             (75) 
 
                                                        __________       __________ 
 
Net cash from operating activities                           1,674            3,486 
 
Cash flows from financing activities 
 
Dividends paid on ordinary shares                          (1,839)          (2,100) 
 
Dividends paid on preference shares                          (350)            (350) 
 
Bank loan                                                  (1,454) 
                                                                         754 
 
                                                        __________       __________ 
 
Net cash used in financing activities                      (3,643)          (1,696) 
 
                                                        __________       __________ 
 
Net (decrease)/increase in cash and cash                   (1,969)            1,790 
equivalents 
 
Cash and cash equivalents at beginning of year 
                                                             2,213              423 
 
                                                        __________       __________ 
 
Cash and cash equivalents at end of year 
                                                               244            2,213 
 
                                                        __________       __________ 
 
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 2018. 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 2018 is an extract from the 
statutory accounts to that date. Statutory company accounts for 2017, which 
were prepared under IFRS as adopted by the EU, have been delivered to the 
registrar of companies and company statutory accounts for 2018, prepared under 
IFRS as adopted by the EU, will be delivered in due course. 
 
The auditors have reported on the 31 December 2018 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 
 
 
                                                             2018       2017 
 
                                                            GBP 000      GBP 000 
 
Income from investments 
 
UK dividends                                               1,180      2,260 
 
Overseas dividends                                            92         44 
 
Scrip and in specie dividends                                290          - 
 
Dividend from subsidiary                                   1,445        400 
 
Interest on fixed income                                       1          3 
securities 
 
                                                       __________ __________ 
 
                                                            3,008      2,707 
 
                                                       __________ __________ 
 
Other income                                                   48         25 
 
                                                       __________ __________ 
 
Total income                                                3,056      2,732 
 
                                                       __________ __________ 
 
Total income comprises: 
 
Dividends                                                  3,007      2,704 
 
Interest                                                       1          3 
 
Other interest                                                48         25 
 
                                                       __________ __________ 
 
                                                            3,056      2,732 
 
                                                       __________ __________ 
 
Dividends from investments 
 
Listed investments                                         1,562      2,304 
 
Unlisted investments                                       1,445        400 
 
                                                       __________ __________ 
 
                                                           3,007      2,704 
 
                                                       __________ __________ 
 
Of the GBP3,007,000 (2017 - GBP2,704,000) dividends received, GBP997,000 (2017 - GBP 
1,891,000) related to special and other dividends received from investee 
companies that were bought after the dividend announcement. There was a 
corresponding capital loss of GBP1,007,000 (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. Thus film revenues of GBP92,000 (2017 - GBP101,000) 
received by the subsidiary British and American Films Limited and property unit 
trust income of GBP14,000 (2017 - GBP15,000) 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: 
 
 
           2018                             2017 
 
              Revenue    Capital      Total    Revenue    Capital       Total 
               return     return                return     return 
 
 
                GBP 000      GBP 000      GBP 000      GBP 000      GBP 000 
                                                                        GBP 000 
 
Earnings: 
 
Basic           2,170    (7,635)    (5,465)      1,895    (6,943)     (5,048) 
 
Preference 
dividend         350          -        350        350          -         350 
 
           __________ __________ __________ __________ __________  __________ 
 
Diluted         2,520    (7,635)    (5,115)      2,245    (6,943)     (4,698) 
 
           __________ __________ __________ __________ __________  __________ 
 
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 (2017: 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 (2017: 35 
million) ordinary and preference shares in issue. 
 
4 Dividends 
 
                                                          2018        2017 
 
                                                         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 2017 
of 5.9p (2016:5.7p) per share                            1,475       1,425 
 
Interim dividend for the year ended 31 December 
2018 of 2.7p                                               675         675 
(2017:2.7p) per share 
 
                                                    __________  __________ 
 
                                                         2,150       2,100 
 
                                                    __________  __________ 
 
Proposed final dividend for the year ended 31 
December 2018 of 6.0p (2017:5.9p) per share              1,500       1,475 
 
                                                    __________  __________ 
 
Dividends on 3.5% cumulative convertible 
preference shares: 
 
Preference dividend for the 6 months ended 31 
December 2017 of 1.75p (2016:1.75p) per share              175         175 
 
Preference dividend for the 6 months ended 30 June 
2018 of 1.75p (2017:1.75p) per share                       175         175 
 
                                                    __________  __________ 
 
                                                           350         350 
 
                                                    __________  __________ 
 
Proposed preference dividend for the 6 months 
ended 31 December 2018 of 1.75p (2017:1.75p) 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 
 
 
                                                          2018        2017 
 
                                                         GBP 000       GBP 000 
 
Dividends on ordinary shares: 
 
Interim dividend for the year ended 31 December 
2018 of 2.7p (2017:2.7p) per share                         675         675 
 
Proposed final dividend for the year ended 31 
December 2018 of 6.0p (2017:5.9p) per share              1,500       1,475 
 
                                                    __________  __________ 
 
                                                         2,175       2,150 
 
                                                    __________  __________ 
 
Dividends on 3.5% cumulative convertible 
preference shares: 
 
Preference dividend for the year ended 31 December 
2018 of 1.75p (2017:1.75p) per share                       175         175 
 
Proposed preference dividend for the year ended 31 
December 2018 of 1.75p (2017:1.75p) per share              175         175 
 
                                                    __________  __________ 
 
                                                           350         350 
 
                                                    __________  __________ 
 
5 Net asset values 
 
                                    Net asset                         Net asset 
                                    value per                      attributable 
                                        share 
 
                            2018         2017                 2018         2017 
 
                               GBP            GBP                GBP 000        GBP 000 
 
Ordinary shares 
 
Undiluted                      -         0.22                             5,534 
                                                                 - 
 
Diluted                     0.23         0.44                7,919       15,534 
 
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 2018 Annual Report and Accounts, but remain 
unchanged from those published in the 2017 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 four 
non-executive directors and one employee are paid by Remus Films Limited and 
Romulus Films Limited and are recharged to the company. 
 
During the year the company entered into the investment transactions to sell 
stock for GBP346,709 (2017 - GBPnil) to Second BritAm Investments Limited and for GBP 
2,472 (2017 - GBPnil) to BritAm Investments Limited. 
 
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 (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). The rights 
attaching to the shares will be explained in more detail in the notes to the 
2018 Annual Report and Accounts, but remain unchanged from those published in 
the 2017 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 Wednesday 26 June 2019 
at 12.15pm at Wessex House, 1 Chesham Street, London SW1X 8ND. 
 
 
 
END 
 

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