REG-British & American Investment Trust Plc: Half-year Report
29/09/2023 10:00
Interim Report for the 6 months ended 30th June 2023
BRITISH & AMERICAN INVESTMENT TRUST PLC
FINANCIAL HIGHLIGHTS
For the six months ended 30 June 2023
Unaudited Unaudited Audited
6 monthsto 30 June 6 monthsto 30 June Year ended
2023 2022 31 December2022
£’000 £’000 £’000
Revenue
Return before tax 740 (193) 658
_________ _________ _________
Earnings/(loss) per £1 ordinary shares – basic (note 5) 2.29p (0.74)p 1.30p
_________ _________ _________
Earnings/(loss) per £1 ordinary shares – diluted (note 5) 2.14p (0.74)p 1.30p
_________ _________ _________
Capital
Total equity 8,749 6,131 7,091
_________ _________ _________
Revenue reserve (note 9) 766 (227) 19
_________ _________ _________
Capital reserve (note 9) (27,017) (28,642) (27,928)
_________ _________ _________
Net assets per ordinary share (note 6)
- Basic £0.25 £0.18 £0.20
_________ _________ _________
- Diluted £0.25 £0.18 £0.20
_________ _________ _________
Diluted net assets per ordinary share at 27 September 2023 £0.16
_________
Dividends*
Dividends per ordinary share (note 4) 1.75p 0.0p 1.75p
_________ _________ _________
Dividends per preference share (note 4) 1.75p 0.0p 1.75p
_________ _________ _________
Basic net assets per share are calculated using a value of fully diluted net
asset value for the preference shares.
Basic and diluted earnings per share calculated in accordance
with International Accounting Standard 33 ‘Earnings per Share’.
*Dividends declared for the period. Dividends shown in the accounts are, by
contrast, dividends paid or approved
in the period.
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 2023
Company Nature of Business Valuation Percentage of portfolio
£’000 %
Geron Corporation (USA)* Biomedical 4,041 28.03
Dunedin Income Growth Investment Trust 1,160 8.05
Lineage Cell Therapeutics (USA)** Biotechnology 632 4.38
abrdn Diversified Income & Growth Investment Trust 404 2.80
AgeX (USA) Biotechnology 72 0.50
ADVFN Other financial 26 0.18
Audioboom Media 16 0.11
Vodafone Telecommunications 15 0.10
IQE Semiconductors 13 0.09
Relief Therapeutics Healthcare 11 0.07
________ ________
10 Largest investments (excluding subsidiaries) 6,390 44.31
Investment in subsidiaries 8,014 55.59
Other investments (number of holdings: 7) 13 0.10
________ ________
Total investments 14,417 100.00
________ ________
* Total value of investment including held by
subsidiary companies - £8,567,000
** Total value of investment including held by subsidiary companies -
£2,508,000
Unaudited Interim Report
As at 30 June 2023
Registered number: 433137
Directors Registered office
David G Seligman (Chairman) Wessex House
Jonathan C Woolf (Managing Director) 1 Chesham Street
Julia Le Blan (Non-executive and Chairman of the Audit Committee) London SW1X 8ND
Alex Tamlyn (Non-executive) Telephone: 020 7201 3100
Website: www.baitgroup.co.uk
Chairman’s Statement
I report our results for the six months to 30 June 2023.
Revenue
The profit on the revenue account before tax amounted to £0.7 million (30
June 2022: loss £0.2 million). This increase was the result of a higher level
of income receipts from our subsidiary companies compared to the same six
month period in 2022.
Gross revenues totalled £0.9 million (30 June 2022: £0.08 million) during
the period. In addition, film income of £24,000 (30 June 2022: £47,000) was
received in our subsidiary companies. In accordance with IFRS10, film income
is not included within the revenue figures noted above.
A gain of £1.2 million (30 June 2022: £0.5 million loss) was registered on
the capital account before capitalised expenses and foreign exchange
gains/losses, comprising a realised gain of £0.4 million (30 June 2022: £0.2
million loss) and an unrealised gain of £0.8 million (30 June 2022: £0.3
million loss).
Revenue earnings per ordinary share were 2.14 pence on a fully diluted basis
(30 June 2022: loss 0.74 pence).
Net Assets and performance
Company net assets were £8.7 million (£7.1 million, at 31 December 2022), an
increase of 23.4 percent. Over the same six month period, the FTSE 100 index
increased by 1.1 percent and the All Share index increased by 0.5 percent.
As no dividends were paid during the period, the total return on net assets is
the same and the total return for the FTSE 100 and All Share indices was an
increase of 3.2 percent and an increase of 2.6 percent, respectively. The
net asset value per £1 ordinary share was 25.0 pence on a fully diluted
basis.
This out-performance in net assets over the period was the result of a
significant increase in the value of both our major US investments, Geron
Corporation Inc and Lineage Cell Therapeutics Inc, which increased by 32 and
20 percent respectively during the period and extends the outperformance of
the previous 12 month period. Over the past two 18 month reporting periods,
our portfolio has registered cumulative outperformance on a total return basis
of over 30 percent.
While the value of Lineage Cell Therapeutics has remained steady since the
period end, the value of our investment in Geron has inexplicably declined by
30 percent against general market movements and despite its announcement over
the summer of the excellent and long-awaited news of acceptance by the US
Federal Drugs Agency (FDA) of Geron’s final submission requesting marketing
authorisation (NDA) for its ground-breaking hematologic oncology drug,
Imetelstat. Further comment on this surprising price movement is made in the
managing director’s report below.
Leading equity markets in the UK and USA remained broadly stable over the
first half of 2023 with aggregate movements confined to no more than 6 to 8
percent over the period. Some brief instances of turbulence within this range
were seen as unexpected solvency vulnerabilities of certain large banks,
particularly in the USA, were revealed arising out of interest rate pressures.
This required prompt action from regulators to avoid systemic risk by
supporting or restructuring those large banks previously considered to be well
capitalised.
By contrast, the Nasdaq index of technology stocks registered a gain of 30
percent following its significant decline in the previous year as the large
capitalisation internet technology stocks (FAANGs) found favour again. The
weighting preponderance of these stocks in this index masked poorer
performance in the smaller capitalisation technology stocks, including biotech
stocks whose index declined 5 percent over the period. This highlights the
company specific outperformance of our two particular biotechnology
investments as noted above which has significantly benefited our NAV, despite
the headwind of the 5 percent fall in the US dollar versus the pound sterling
over the period.
This general stability in equity markets over the period has been achieved
despite the background of continuing high interest rates and forecasts of
further increases as central banks have grappled with stubbornly high and
persistent levels of inflation over the last 18 months. The always difficult
and delicate balancing act of reducing inflation without causing a painful
recession has dictated to some extent movements in equity markets and the
realisation since early this year that the US economy might be able to achieve
the desired ‘soft landing’ has supported equity prices over recent months.
Similarly in the UK, fears of recession which had predominated during the
course of last year were assuaged as the economy proved able to avoid the
expected downturn in the second half of 2022 and has managed to achieve
positive albeit very small growth since, thereby avoiding the declaration of a
technical recession. The same has not, however, been the case in Europe
where the larger countries and particularly Germany have seen repeated
quarters of albeit minimally negative growth this year.
Russia’s invasion and war in Ukraine has continued further into its second
year with as yet no end in sight. The human, social and economic impacts of
the war continue to be felt locally and throughout the world. Russia’s
latest tactic, in the face of strong resistance and now counter-offensive by
Ukrainian forces, has been to seek to destroy Ukraine’s economic productive
capacity, particularly in the area of agricultural production and exports
which represent over 10 percent of the country’s output. In doing so,
further economic and humanitarian damage is caused by Russia not only to
Ukraine but to poorer countries around the world relying on Ukraine’s grain
exports, spreading further misery and cost pressures to those least able to
bear them.
Dividends
We intend to pay an interim dividend of 1.75 pence per ordinary share for the
year to 31st December 2023 on
7 December 2023. This is the same level of dividend as was paid in calendar
2022. A preference dividend of 1.75 pence per preference share will be paid on
the same date.
This dividend payment represents a yield of approximately 10 percent on the
ordinary share price averaged over the first six month period of the year.
Audit
We have been notified by our auditor, Hazlewoods, that they are unable to
continue to act as our auditor because as a firm they are withdrawing from the
audit of listed companies. We have therefore been engaged on a formal tender
process to identify and appoint a new auditor and I am pleased to announce
that following this process we have appointed MHA Bakertilly to act as our
auditor. This appointment is being separately announced today and MHA
Bakertilly will therefore carry out the audit for the year to December 2023.
Hazelwoods has confirmed that there are no matters connected with its ceasing
to hold office that need to be brought to the attention of shareholders or
creditors for the purposes of section 519 of the Companies Act 2006 and the
board would like to thank Hazlewoods for its professional and diligent service
as auditor since 2017. In accordance with FCA Rule DTR 4.2.9, it is
confirmed that there will be no auditor review of this interim statement.
Outlook
With the many political, social, economic and indeed climatic uncertainties
facing the world today, both in the immediate future and in the longer-term,
it is difficult to be very positive about the investment climate going
forward. Inflationary pressures, while reduced, remain unconquered.
Counter-inflationary interest rate measures may not have peaked and, if
shortly to do so, might last longer than originally expected. The war in
Ukraine, together with its effect on world energy and food prices, is likely
to enter a third year and this year has brought numerous examples of
disruptive and destructive weather patterns world-wide which can only be
expected to worsen over the coming years. While the attempts to control the
generationally high levels of inflation have so far resulted in a generally
softer landing than originally feared, much of the higher than expected
economic activity, particularly in the retail, hospitality and travel sectors
could be the result of pent up demand following the Covid period and the
drawdown of savings built up during this latter period which may soon come to
an end.
Against the background of these uncertainties, and as the long period of
clinical drug development by our major US investment, Geron Corporation,
reaches its conclusion with the company’s anticipated transformation into a
commercially operating biopharma business in hematologic oncology, we will
continue to maintain the current profile of our portfolio and aim to capture
the market independent gains which such investment should provide.
As at 27 September, company net assets were £5.7 million, a decrease of 34.5
percent since the period end, and equivalent to 16.3 pence per share on a
fully diluted basis. Over the same period, the FTSE 100 index increased by
0.8 percent, the All Share index increased by 0.5 percent.
David Seligman
28 September 2023
Managing Director’s Report
In the first six months of 2023, our portfolio out-performed the benchmark
indices on a total return basis by over 20 percent, as noted in the
chairman’s statement above.
It is additionally worth noting that in the five years since 2018, the
portfolio has also out-performed the benchmarks on a total return basis by a
significant margin, outperforming the FTSE 100 index by 10 percent and the
FTSE All Share index by 12 percent over the period. Thus, while the
portfolio NAV might have declined in value over that time, when dividends paid
are taken into account, shareholders have received value considerably in
excess of returns offered by leading UK listed companies.
Given that the above results have been achieved prior to the soon to be
expected graduation of our major investment, Geron Corporation, from clinical
development to commercial sales, as noted above, a further period of
out-performance can be envisaged once Geron’s value is properly captured by
the market.
When considered against the very uncertain global outlook for investment noted
above by the chairman, the prospect of continued portfolio out-performance
which is not necessarily dependent upon general market trends and conditions
is to be welcomed.
Geron Corporation
Since we last reported, Geron announced in June the filing of and in August
the acceptance by the US Federal Drugs Agency (FDA) of Geron’s final
submission requesting marketing authorisation (NDA) for its ground-breaking
hematologic oncology drug, Imetelstat This penultimate stage in the drug
development process prior to commercialisation and marketing provides a strong
degree of affirmation for a new drug after many years of successful clinical
development and is normally the trigger for a significant increase in the
developer’s market value.
The fact that the reverse has happened in this case and strongly against the
trend in the NASDAQ and US Biotech indices over the period which have remained
stable, together with the fact that the FDA also granted Geron permission to
supply Imetelstat to patients prior to marketing authorisation in cases of
compassionate need, defies reasonable explanation in our view and underlines
the concerns we have expressed for many years in this report surrounding the
constant failure of this stock to demonstrate a normal and transparent level
of price discovery in the market.
The reasons for this, as more specifically described in the previous edition
of this report, have been generally ascribed over many years to poor investor
communications by management and their implementation of suboptimal financing
strategies; the inherent imbalance within the market between professional
equity finance providers and the long lead times of the biotechnology drug
development process which requires multiple periodic fundraising, giving such
providers the ability to pressure management and scope to operate to their own
financial advantage through short selling and options operations; the
significant salaries, bonuses and options entitlements which senior (and in
some cases only part-time) management award themselves while shareholder value
notably fails to match the annual increases in such management
compensation.
We are encouraged that the long-standing CFO responsible for financing
strategy has recently been replaced and it is to be strenuously hoped that one
day, once the conclusion of Geron’s clinical development stage has occurred
with its transition to product commercialisation, these value detractive
practices can be made a thing of the past with a new big pharma owner or the
replacement of the current senior management with a younger and more dynamic
management team.
Jonathan Woolf
28 September 2023
CONDENSED INCOME STATEMENT
Six months ended 30 June 2023
Unaudited Unaudited Audited
6 months to 30 June 2023 6 months to 30 June 2022 Year ended 31 December 2022
Note Revenue return£’000 CapitalReturn£’000 Total£’000 RevenueReturn£’000 CapitalReturn£’000 Total£’000 RevenueReturn£’000 CapitalReturn£’000 Total£’000
Investment income 3 944 - 944 79 - 79 1,156 - 1,156
Holding gains/(losses) on investments at fair value through profit or loss - 747 747 - (333) (333) - 579 579
Gains/(losses) on disposal of investments at fair value through profit or loss - 412 412 - (206) (206) - (294) (294)
Foreign exchange gains/(losses) 34 (113) (79) (39) 253 214 (40) 277 237
Expenses (219) (124) (343) (217) (124) (341) (424) (250) (674)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) before finance costs and tax 759 922 1,681 (177) (410) (587) 692 312 1,004
Finance costs (19) (11) (30) (16) (2) (18) (34) (10) (44)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) before tax 740 911 1,651 (193) (412) (605) 658 302 960
Taxation 7 - 7 9 - 9 16 - 16
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) for the period 747 911 1,658 (184) (412) (596) 674 302 976
_____ _____ _____ _____ _____ _____ _____ _____ _____
Earnings/(loss) per ordinary share 5
Basic 2.29p 3.64p 5.93p (0.74)p (1.65)p (2.39)p 1.30p 1.21p 2.51p
Diluted* 2.14p 2.60p 4.74p (0.74)p (1.65)p (2.39)p 1.30p 1.21p 2.51p
The company does not have any income or expense that is not included in profit
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.
*Calculated in accordance with International Accounting Standard 33
‘Earnings per Share’.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2023
Unaudited
Six months ended 30 June 2023
Sharecapital*£’000 CapitalReserve£’000 RetainedEarnings£’000 Total£’000
Balance at 31 December 2022 35,000 (27,928) 19 7,091
Profit for the period - 911 747 1,658
________ ________ ________ ________
Balance at 30 June 2023 35,000 (27,017) 766 8,749
________ ________ ________ ________
Unaudited
Six months ended 30 June 2022
Sharecapital*£’000 CapitalReserve£’000 RetainedEarnings£’000 Total£’000
Balance at 31 December 2021 35,000 (28,230) (43) 6,727
Loss for the period - (412) (184) (596)
________ ________ ________ ________
Balance at 30 June 2022 35,000 (28,642) (227) 6,131
________ ________ ________ ________
Audited
Year ended 31 December 2022
Sharecapital*£’000 CapitalReserve£’000 RetainedEarnings£’000 Total£’000
Balance at 31 December 2021 35,000 (28,230) (43) 6,727
Profit for the period - 302 674 976
Ordinary dividend paid - - (437) (437)
Preference dividend paid - - (175) (175)
________ ________ ________ ________
Balance at 31 December 2022 35,000 (27,928) 19 7,091
________ ________ ________ ________
*The company’s share capital comprises £35,000,000 (2022 - £35,000,000)
being 25,000,000 ordinary shares of £1 (2022 - 25,000,000) and 10,000,000
non-voting convertible preference shares of £1 each (2022 - 10,000,000).
CONDENSED BALANCE SHEET
As at 30 June 2023
Note Unaudited30 June2023 Unaudited30 June2022 Audited31 December2022
£’000 £’000 £’000
Non-current assets
Investments – fair value through profit or loss (note 1) 6,403 5,194 5,600
Subsidiaries – fair value through profit or loss 8,014 7,109 7,712
_________ _________ _________
14,417 12,303 13,312
Current assets
Receivables 374 487 442
Cash and cash equivalents 34 23 45
_________ _________ _________
408 510 487
_________ _________ _________
Total assets 14,825 12,813 13,799
_________ _________ _________
Current liabilities
Trade and other payables (1,092) (2,018) (1,794)
Bank credit facility (1,341) (814) (1,018)
_________ _________ _________
(2,433) (2,832) (2,812)
_________ _________ _________
Total assets less current liabilities 12,392 9,981 10,987
_________ _________ _________
Non – current liabilities (3,643) (3,850) (3,896)
_________ _________ _________
Net assets 8,749 6,131 7,091
_________ _________ _________
Equity attributable to equity holders
Ordinary share capital 25,000 25,000 25,000
Convertible preference share capital 10,000 10,000 10,000
Capital reserve (27,017) (28,642) (27,928)
Retained revenue earnings 766 (227) 19
_________ _________ _________
Total equity 8,749 6,131 7,091
_________ _________ _________
Net assets per ordinary share – basic 6 £0.25 £0.18 £0.20
_________ _________ _________
Net assets per ordinary share – diluted 6 £0.25 £0.18 £0.20
_________ _________ _________
CONDENSED CASHFLOW STATEMENT
Six months ended 30 June 2023
Unaudited6 months to30 June Unaudited6 months to30 June2022 AuditedYear ended31 December2022
2023 £’000 £’000
£’000
Cash flow from operating activities
Profit/(loss) before tax 1,651 (605) 960
Adjustment for:
(Gains)/losses on investments (1,159) 539 (285)
Proceeds on disposal of investments at fair value
through profit or loss 136 313 548
Purchases of investments at fair value
through profit or loss (450) (126) (441)
Interest (3) 18 44
________ ________ ________
Operating cash flows before movements
in working capital 175 139 826
Decrease/(increase) in receivables 108 (264) 109
(Decrease)/increase in payables (594) 49 (1,351)
________ ________ ________
Net cash from operating activities
before interest (311) (76) (416)
Interest paid (23) (4) (21)
________ ________ ________
Net cash flows from operating activities (334) (80) (437)
________ ________ ________
Cash flows from financing activities
Dividends paid on ordinary shares - - -
Dividends paid on preference shares - (175) -
________ ________ ________
Net cash used in financing activities - (175) -
________ ________ ________
Net decrease in cash and cash equivalents (334) (255) (437)
Cash and cash equivalents at beginning of period (973) (536) (536)
________ ________ ________
Cash and cash equivalents at end of period (1,307) (791) (973)
________ ________ ________
NOTES TO THE COMPANY’S CONDENSED FINANCIAL STATEMENT1. Accounting policies
Basis of preparation and statement of compliance
This interim report is prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ an International Financial Reporting Standard adopted by the
United Kingdom and on the basis of the accounting policies set out in the
company’s Annual Report and financial statements at 31 December 2022.
The company’s condensed financial statements should be read in conjunction
with the annual financial statements for the year ended 31 December 2022 which
are prepared in accordance with UK adopted International Financial Reporting
Standards (IFRS) and the Companies Act 2006.
The financial statements have not been audited or reviewed by the Auditor
pursuant to the Auditing Practices Board Guidance on 'Review of Interim
Financial Information'. The Financial Statements for the six months to 30 June
2023 have been prepared on the basis of the same accounting policies as set
out in the Company's Annual Report and Financial Statements at 31 December
2022.
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 2022 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 & 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
£nil value and a provision for liabilities is made on the balance sheet equal
to the value of the net liabilities of the subsidiary company where the
ultimate parent company has entered into a guarantee to pay the liabilities as
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% (2022 – 50%) to revenue and 50% (2022 – 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.
Going Concern
The directors have assessed the ability of the company to continue as a going
concern for a period of at least twelve months after the date of approval of
these financial statements. The directors are satisfied that a given the
assets of the company consist mainly of securities that are readily realisable
and has available a credit facility with Credit Suisse, it will have
sufficient resources to enable it to continue as a going concern.
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
information is provided.
3. Income
Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£’000 £’000 £’000
Income from investments 912 47 1,090
Other income 32 32 66
_________ _________ _________
944 79 1,156
_______ _______ _______
During the period the company received a dividend of £867,000 (30 June 2022
– £nil, 31 December 2022 – £1,101,000) from a subsidiary which was
generated from gains made on the realisation of investments held by that
company. As a result of the receipt of this dividend, a corresponding
reduction was recognised on the value of the investment in the subsidiary
company.
During the period the company recognised a foreign exchange loss of £147,000
(30 June 2022 – £291,000 gain, 31 December 2022 – £317,000 gain) on the
loan of $3,526,000 to a subsidiary. As a result of this loss, the
corresponding movement was recognised in the value of the investment in the
subsidiary company.
Under IFRS 10 the income analysis above includes the parent company only
rather than that of the group. In addition to the income above film revenues
of £24,000 (30 June 2022 – £47,000, 31 December 2022 –
£107,000) received by the subsidiary British & American Films Limited and
property unit trust income of £nil (30 June 2022 – £nil, 31 December 2022
– £1,000) was received by the subsidiary BritAm Investments Limited and
forms part of the net profit of those companies available for distribution to
the parent company.
4. Dividends
Unaudited6 months to 30 June 2023 Unaudited6 months to 30 June 2022 AuditedYear ended 31 December 2022
Interim Interim Final
Pence per share £’000 Pence per share £’000 Pence per share £’000
Ordinary shares - paid - - - - 1.75 437
Ordinary shares - proposed 1.75 437 - - - -
Preference shares –paid - - - - 1.75 175
Preference shares –proposed 1.75 175 - - - -
________ ________ ________
612 - 612
________ ________ ________
The dividends on ordinary shares are based on 25,000,000 ordinary £1 shares.
Dividends on preference shares are based on 10,000,000 non-voting 3.5%
convertible preference shares of £1.
The non-payment in December 2019, in December 2020 and in June 2022 of the
dividend of 1.75 pence per share on the 3.5% cumulative convertible preference
shares, consequent upon the non-payment of a final dividend on the Ordinary
shares for the year ended 31 December 2019, for the year ended 31 December
2020 and for the period ended 30 June 2022, has resulted in arrears of
£525,000 on the 3.5% cumulative convertible preference shares. These arrears
will become payable in the event that the ordinary shares receive, in any
financial year, a dividend on par value in excess of 3.5%.
Amounts recognised as distributions in respect of dividends paid in each
period:
Unaudited6 months to30 June 2023 Unaudited6 months to30 June 2022 AuditedYear ended31 December 2022
Pence per share £’000 Pence per share £’000 Pence per share £’000
Ordinary shares –Final - - - - - -
Ordinary shares –Interim - - - - 1.75 437
Preference shares –Fixed - - - - 1.75 175
_________ _________ _________
- - 612
_______ _______ _______
5. Earnings/(loss) per ordinary share
Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
£’000 £’000 £’000
Basic earnings/(loss) per share
Calculated on the basis of:
Net revenue profit/(loss) after preference dividends 572 (184) 324
Net capital gain/(loss) 911 (412) 302
_________ _________ _________
Net total earnings/(loss) after preference dividends 1,483 (596) 626
_______ _______ _______
Number’000 Number’000 Number’000
Ordinary shares in issue 25,000 25,000 25,000
_______ _______ _______
Diluted earnings/(loss) per share
Calculated on the basis of: £’000 £’000 £’000
Net revenue profit/(loss) 747 (184) 324
Net capital gain/(loss) 911 (412) 302
_________ _________ _________
Profit/(loss) after taxation 1,658 (596) 626
_______ _______ _______
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
2023 2022 2022
£’000 £’000 £’000
Total net assets 8,749 6,131 7,091
Less convertible preference shares at fully diluted value (2,500) (1,752) (2,026)
__________ __________ __________
Net assets attributable to ordinary shareholders 6,249 4,379 5,065
________ ________ ________
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 per share is calculated using a value of fully diluted net
asset value for the preference shares.
7. Non – current liabilities
Guarantee of subsidiary liability Unaudited Unaudited Audited
30 June 30 June 31 December
2023 2022 2022
£’000 £’000 £’000
Opening provision 3,896 3,974 3,974
(Decrease)/increase in period (367) 198 303
Transfer to allowance for doubtful debt 114 (322) (381)
__________ __________ __________
Closing provision 3,643 3,850 3,896
________ ________ ________
The provision relates to a guarantee made by the company in respect of amounts
owed by Second BritAm Investments Limited to BritAm Investments Limited and
British & American Films Limited. There is no current intention for these
liabilities to be called for immediate payment by the subsidiary companies.
During the year ended 31 December 2019 as part of a transaction to hedge the
company against exchange effects of the foreign currency loan, an amount
corresponding to the $USD value was loaned by British & American Investment
Trust PLC to Second BritAm Investments Limited. As a result of this, and other
related intercompany transactions, £2,860,000 of amounts previously
guaranteed became an asset of the company and the provision brought forward
against this has been transferred to become an allowance against doubtful
debt. During the period to 30 June 2022, an allowance against doubtful debt
has decreased by £114,000 (30 June 2022 - increased by £322,000 and 31
December 2022 - increased by £381,000).
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 and 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 £14,000 (30 June
2022 – £14,000 and 31 December 2022 – £28,000) 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 2023 were £194,000 (30 June 2022 –
£197,000 and 31 December 2022 – £397,000) in respect of salary costs and
£24,000 (30 June 2022 – £22,000 and 31 December 2022 – £42,000) in
respect of pensions.
At the period end an amount of £179,000 (30 June 2022 – £nil and 31
December 2022 – £nil) was due to Romulus Films Limited and the amount of
£nil was due from Romulus Films Limited (30 June 2023 – £26,000 and 31
December 2022 – £69,000) and £276,000 (30 June 2022 – £436,000 and 31
December 2022 – £313,000) was due to Remus Films Limited. At the period end
Other payables included amounts of £nil (30 June 2022 – £nil and 31
December 2022 – £294,705) due to Romulus Films Limited and £nil (30 June
2022 – £nil and 31 December 2022 – £137,703) due to Remus Films Limited.
During the period subsidiary BritAm Investments Limited paid dividends of
£867,000 (30 June 2022 – £nil and 31 December 2022 – £1,001,000) to the
parent company, British & American Investment Trust PLC.
British & American Investment Trust PLC has guaranteed the liabilities of
£5,670,000 (30 June 2022 – £4,417,000 and 31 December 2022 –
£5,519,000) due from Second BritAm Investments Limited to its fellow
subsidiaries if they should fall due.
During the period the company paid interest of £7,000 (30 June 2022 –
£15,000 and 31 December 2022 – £23,000) on the loan due to BritAm
Investments Limited.
During the period the company received interest of £nil (30 June 2022 –
£1,000 and 31 December 2022 – £2,000) from British & American Films
Limited and £32,000 (30 June 2022 – £31,000 and 31 December 2022 –
£64,000) from Second BritAm Investments Limited.
During the period the company entered into an investment transaction to sell
stock for £890,000 to British & American Films Limited (30 June 2022 –
£nil and 31 December 2022 – £nil).
During the period the company entered into investment transaction to purchase
stock for £890,000 from British & American Films Limited (30 June 2022 –
£nil and 31 December 2022 – £nil).
At 30 June 2023 £4,170,000 (30 June 2022 – £4,132,000 and 31 December 2022
– £4,132,000) was owed by British & American Films Limited to Romulus Films
Limited and £44,000 (30 June 2022 – £40,000 and 31 December 2022 –
£42,000) to Remus Films Limited. Interest was paid to Romulus Films Limited
of £80,000 (30 June 2022 – £45,000 and 31 December 2022 – £121,000) at
the rate of 2.5% per annum starting on 1 April 2023 (30 June 2022 – 1.5%
over the UK Bank Rate per annum and 31 December 2022 – 1.5% over the UK Bank
Rate per annum). The loan is repayable at not less than one year’s notice.
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£’000
£’000
1 January 2023 (27,928) 19
Allocation of profit for the period 911 747
_________ _________
At 30 June 2023 (27,017) 766
_______ _______
The capital reserve includes £218,000 of investment holding gains (30 June
2022 – £2,999,000 loss, 31 December 2022 – £1,854,000 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 at fair value through profit or loss at 30 June 2023 Level 1£’000 Level 2£’000 Level 3£’000 Total£’000
Investments:
Investments held at fair value through profit or loss 6,402 - 1 6,403
Subsidiary held at fair value through profit or loss - - 8,014 8,014
Total financial assets and liabilities carried at fair value 6,402 - 8,015 14,417
With the exception of the 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
£’000
Opening fair value at 1 January 2023 7,713
Investment holding gains 302
Closing fair value at 30 June 2023 8,015
Subsidiaries
The fair value of the subsidiaries is determined to be equal to the net asset
values of the subsidiaries at period end plus the uplift in the revaluation of
film rights in British & American Films Limited, a subsidiary of BritAm
Investments Limited.
The directors of British & American Films Limited have determined a
conservative valuation of £2 million for the five feature films in the
library. This valuation has been arrived at from a combination of discounting
expected cash flows over the full period of copyright at current long term
interest rates and a recently received independent third party professional
valuation.
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.
11. Financial information
The financial information contained in this report does not constitute
statutory accounts as defined in Section 435 of the Companies Act 2006. The
financial information for the period ended 30 June 2023 and 30 June 2022 have
not been audited by the Company’s Auditor pursuant to the Auditing Practices
Board guidance. The information for the year to 31 December 2022 has been
extracted from the latest published Annual Report and Financial Statements,
which have been lodged with the Registrar of Companies, contained an
unqualified auditors’ report and did not contain a statement required under
Section 498(2) or (3) of the Companies Act 2006.
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 2022.
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 28 September 2023 and the
above responsibility statement was signed on its behalf by:
Jonathan C Woolf
Managing Director
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