REG-British & American Investment Trust Plc: Half-year Report
27/09/2024 13:00
Half-year Report
BRITISH & AMERICAN INVESTMENT TRUST PLC
FINANCIAL HIGHLIGHTS
For the six months ended 30 June 2024
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 June 30 June 31 December
2024 2023 2023
£’000 £’000 £’000
Revenue
Return before tax 412 740 797
_________ _________ _________
Earnings per £1 ordinary shares – basic (note 5) 1.00p 2.29p 1.86p
_________ _________ _________
Earnings per £1 ordinary shares – diluted (note 5)* 1.00p 2.14p 1.86p
_________ _________ _________
Capital
Total equity 9,697 8,749 4,512
_________ _________ _________
Revenue reserve (note 9) 646 766 221
_________ _________ _________
Capital reserve (note 9) (25,949) (27,017) (30,709)
_________ _________ _________
Net assets per ordinary share (note 6)
- Basic (deducting preference shares at fully diluted net asset value)** £0.28 £0.25 £0.13
_________ _________ _________
- Diluted £0.28 £0.25 £0.13
_________ _________ _________
Diluted net assets per ordinary share at 24 September 2024 £0.27
_________
Dividends***
Dividends per ordinary share (note 4) 1.75p 1.75p 1.75p
_________ _________ _________
Dividends per preference share (note 4) 1.75p 1.75p 1.75p
_________ _________ _________
*Calculated in accordance with International Accounting Standard 33
‘Earnings per Share’.
**Basic net assets per share are calculated using a value of fully diluted net
asset value for the preference shares.
***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 2024
Company Nature of Business Valuation Percentage of portfolio
£’000 %
Geron Corporation (USA)* Biomedical 5,494 33.01
Dunedin Income Growth Investment Trust 1,078 6.48
Lineage Cell Therapeutics (USA)** Biotechnology 449 2.70
abrdn Diversified Income & Growth Investment Trust 400 2.40
Serina Therapeutics (USA) Biotechnology 22 0.13
ADVFN Other financial 16 0.10
Vodafone Telecommunications 14 0.08
Audioboom Media 13 0.08
IQE Semiconductors 6 0.04
Relief Therapeutics Healthcare 4 0.02
________ ________
10 Largest investments (excluding subsidiaries) 7,496 45.04
Investment in subsidiaries 8,660 54.89
Other investments (number of holdings: 8) 12 0.07
________ ________
Total investments 16,168 100.00
________ ________
* Total value of investment including held by subsidiary companies -
£11,245,000
** Total value of investment including held by subsidiary companies
- £1,781,000
Unaudited Interim Report
As at 30 June 2024
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 Chair 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 2024.
Revenue
The profit on the revenue account before tax amounted to £0.4 million (30
June 2023: profit £0.7 million). This decrease was the result of a lower
level of income receipts from our subsidiary companies compared to the same
six month period in 2023.
Gross revenues totalled £0.7 million (30 June 2023: £0.9 million) during the
period. In addition, film income of £29,000 (30 June 2023: £24,000) was
received in our subsidiary companies. In accordance with IFRS10, film income
is not included within the revenue figures noted above.
A gain of £4.9 million (30 June 2023: £1.2 million gain) was registered on
the capital account before capitalised expenses and foreign exchange
gains/losses, comprising a realised gain of £0.2 million (30 June 2023: £0.4
million gain) and an unrealised gain of £4.7 million (30 June 2023: £0.8
million gain).
Revenue earnings per ordinary share were 1.00 pence on a fully diluted basis
(30 June 2023: 2.14 pence).
Net Assets and performance
Company net assets were £9.7 million (£4.5 million, at 31 December 2023), an
increase of 114.9 percent. Over the same period, the FTSE 100 index
increased by 5.6 percent and the All Share index increased by 5.2 percent.
With no dividend paid during the period, the total return on net assets
remains unchanged and the total return for the FTSE 100 and All Share indices
were increases of 7.9 percent and 7.4 percent, respectively. The net asset
value per £1 ordinary share was 28.0 pence on a fully diluted basis.
This substantial out-performance in net assets over the period was the result
of an increase of 101 percent in the value of our major US investment, Geron
Corporation Inc. This uplift follows the long-awaited and much-anticipated
clearance by the US FDA of Geron’s haematological cancer drug, Rytelo, its
first such approval, on 7th June this year. This represents a significant
milestone in our long history of investment in this company and more detailed
comment on this pleasing development is made in the Managing Director’s
report below.
Our strong six-month performance noted above extends the cumulative
outperformance of our portfolio in total return over the last two years to
over 50 percent.
In my last statement in April commenting on equity markets in 2023 and the
first 4 months of 2024, I noted the strength and resilience of these markets
over the period as investors saw sustained reductions in inflation leading to
interest rate cuts from the US Federal Reserve and other central banks.
These cuts had originally been expected to commence in the second half of
2023 but the first such cuts only started with the Bank of England and the
European Central Bank, together with Canada and Sweden in June and July of
this year. The US Federal Reserve has only now this month made its first cut
by a larger than usual initial amount of 0.5 percent following some recent
single month indications of weakness in growth and employment. Despite this
delay to expectations, however, equity markets have continued not only to be
strong but in both the UK and the USA have attained all time highs over the
past few months. These strong levels have been sustained despite increased
volatility over the summer months, as the rare occurrence of a soft landing in
the USA without a return to recession is believed to be in prospect.
In April I also commented on the worrying economic, social, geopolitical and
climatic developments around the world which without improvement could only
pose a long-term risk to growth and stability in markets and therefore to
investment returns in the future.
To be added now to this long list of concerns is the result of the recent
general election in the UK. With the Labour party being returned to
government with an overwhelming but numerically unrepresentative majority,
their proposals for radical change will inevitably have a substantial effect
on the future economic and social well-being of the UK. While professing a
single-minded focus on economic growth coupled with fiscal responsibility in
their campaign and manifesto, their actions in the two months since the
election, their already announced policies and their expected budget plans in
the autumn are conversely anti-growth and pro-inflation in nature. This has
included or foreshadowed above-inflation public sector pay awards, weakening
of industrial relations legislation, tightening of employment laws, directing
new housing development to areas of lower economic activity and job-related
desirability, reduction in pension contribution reliefs to the long-term
detriment of national savings rates and retirement balances thereby negatively
impacting investment markets, raising taxes on wealth-creators, discouragement
of private investment in capital creation and enterprise through increased
capital or proxy taxes, accelerated wind-down of national oil assets in the
North Sea, placing added burdens on landlords in the private rental market,
the effect of which will be to restrict rental housing supply and raise rents,
the lack of an immigration or asylum control plan, the early release of
prisoners and a squeeze on pensioners. More generally, the approach of this
government appears to be decidedly interventionist, redistributive and
collectivist in nature, to the extent that in the short period of time since
its election, the medium to long-term prospects for the UK in terms of its
economy, inflation, interest rates, currency, investment prospects and social
cohesion appear to have taken a worrying turn for the worse.
Dividends
We intend to pay an interim dividend of 1.75 pence per ordinary share for the
year to 31st December 2024 on
5 December 2024. This is the same level of dividend as was paid in calendar
2023. 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.
Outlook
As previously noted, with the many political, social, economic, security 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 outlook going forward. And given the specific comments made above
in relation to the United Kingdom, the investment climate for equities in the
UK is not expected to be favourable in the period to come, as it has not been,
relatively speaking, for some time now.
We have maintained a full investment policy over the course of many years,
with an increasing focus over the last decade on US-based investments in the
biotechnology sector. Latterly, these investments have enabled us to
outperform our benchmarks on a total return basis, as noted above. As and
when these investments approach and reach maturity, we will examine how best
to pivot our investment activity into those areas and asset classes which we
consider are best placed to respond to the many international and regional
concerns we perceive which might adversely affect investment performance in
the future.
As at 24 September, company net assets were £9.6 million, a decrease of 1.1
percent since the period end, and equivalent to 27.0 pence per share on a
fully diluted basis. This small decrease was due entirely to the 5.5 percent
increase in sterling against the US dollar over the period. On a constant
exchange rate basis, the net assets would have increased by approximately 7.0
percent. Over the same period, the FTSE 100 index increased by 1.5 percent and
the All Share index increased by 1.6 percent.
David Seligman
27 September 2024
Managing Director’s Report
On 7(th) June this year, the US FDA granted formal approval to Geron
Corporation, our largest US investment, to market their new and
ground-breaking haematological cancer drug, “Rytelo” (previously known as
Imetelstat), in the USA.
This is a long awaited development and marks an important milestone not just
for Geron, allowing it to commence sales of the drug immediately and establish
a real value both in the market and for potential pharma acquirers or
partners, but also for our own portfolio and investment strategy from the
initial modest investment in this company over 20 years ago to its position
now as our largest single investment.
The extreme share price volatility shown by this stock over many years has
made it a difficult stock to hold, but equally these price fluctuations, which
did not necessarily reflect its true value and potential, enabled us over time
to build up our investment in a cost effective way, even though on many
occasions its poor performance has weighed heavily on our own portfolio
performance. Nevertheless, as noted in the Chairman’s statement, this
investment has enabled our portfolio to register outperformance in total
return of over 50 percent against our benchmarks over the last two years.
Additionally, our portfolio has also outperformed our benchmarks on the same
basis by over 20 percent over both the last 3 years and 5 years.
The approval obtained in June resulted in a further increase in Geron’s
share price, building on the rise of 80 percent reported in April in our 2023
final report when the approval was heralded by the FDA’s committee in March,
to show an increase of 101 percent for the six month period to 30(th) June as
a whole. In relation to book cost, the value of the holding stood at a
premium to cost of 35 percent at the period end, although down from the
premium of 70 percent on the price registered immediately after the approval
announcement. At the date of this report, the premium to book cost has risen
to 50 percent.
Geron was able to report encouraging sales within the first few weeks
following approval, for which it had already built up a substantial sales,
marketing and distribution team. It will be a few months before real
visibility on sales levels and prospective revenues can be determined and an
appropriate value attributed to the stock price. Given the long period of
perceived undervaluation of this stock, an as yet unrevealed interest in the
stock by big pharma, the ongoing trials of Rytelo in other haematological
indications and imminently expected news of similar approvals from the UK and
European Union to follow that from the USA, we believe that considerable
further value remains to be captured by this investment which we will continue
to hold until an appropriate level of value and return has been achieved.
Investment climate outlook
The Chairman has commented above and in previous reports on the risks
perceived to future investment activity and returns posed by the many
political, social, economic, security and indeed climatic uncertainties facing
the world today. These concerns are considered to be significant and
wide-ranging and do not even take into account those unknown and
unquantifiable risks which can arise unexpectedly, so called ‘black swan’
events such as for example the Covid pandemic in 2020, and which can cause
extreme damage to systems, markets, economies, social practices, nations and
indeed the world with severe consequences for asset values and investment
returns. The outbreak of full-scale war in Europe or in the South China Sea,
for example, or a major failure in the global digital architecture such as in
the internet cloud or even the breaking of encryption security by advances in
quantum computing would be examples of other such unanticipated but seriously
destabilising events.
Some future risks, whether immediate or long-term in nature, can also be the
result of deliberate but misguided policy, as with the potential for
substantial economic damage here in the UK resulting from errors made by the
new Labour government. It remains to be seen just how damaging they will be
to the economic and financial recovery from Covid and inflation which had
begun to be established over the last year or so and how much they will embed
lower rates of economic growth and even higher rates of tax over the longer
term.
It is against that background of multiple uncertainty and the attendant risks
to long-term investment in equities in particular that we will judge the
re-calibration of our currently equity-heavy portfolio as the value of our
investment in Geron reaches its perceived potential. A return to a more
traditionally balanced and diversified portfolio across a full range of asset
classes and currencies is anticipated.
Jonathan Woolf
27 September 2024
CONDENSED INCOME STATEMENT
Six months ended 30 June 2024
Unaudited Unaudited Audited
6 months to 30 June 2024 6 months to 30 June 2023 Year ended 31 December 2023
Note Revenue return Capital Total Revenue Capital Total Revenue Capital Total
£’000 Return £’000 Return Return £’000 Return Return £’000
£’000 £’000 £’000 £’000 £’000
Investment income 3 665 - 665 944 - 944 1,264 - 1,264
Holding gains/(losses) on investments at fair value through profit or loss - 4,695 4,695 - 747 747 - (2,196) (2,196)
Gains/(losses) on disposal of investments at fair value through profit or loss - 193 193 - 412 412 - (175) (175)
Foreign exchange gains/(losses) (4) 15 11 34 (113) (79) 36 (119) (83)
Expenses (219) (125) (344) (219) (124) (343) (453) (255) (708)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) before finance costs and tax 442 4,778 5,220 759 922 1,681 847 (2,745) (1,898)
Finance costs (30) (18) (48) (19) (11) (30) (50) (36) (86)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) before tax 412 4,760 5,172 740 911 1,651 797 (2,781) (1,984)
Taxation 13 - 13 7 - 7 17 - 17
_____ _____ _____ _____ _____ _____ _____ _____ _____
Profit/(loss) for the period 425 4,760 5,185 747 911 1,658 814 (2,781) (1,967)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Earnings/(loss) per ordinary share 5
Basic 1.00p 19.04p 20.04p 2.29p 3.64p 5.93p 1.86p (11.12)p (9.26)p
Diluted* 1.00p 19.04p 20.04p 2.14p 2.60p 4.74p 1.86p (11.12)p (9.26)p
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’. Conversion of the preference shares will have an
antidilutive effect. Upon conversion of the preference
shares to ordinary shares the anti-diluted earnings per share would be 1.22p
(31 December 2023 – 2.33p) (revenue return) (Note 5).
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2024
Unaudited
Six months ended 30 June 2024
Share Capital Retained Total
capital* Reserve Earnings £’000
£’000 £’000 £’000
Balance at 31 December 2023 35,000 (30,709) 221 4,512
Return for the period - 4,760 425 5,185
________ ________ ________ ________
Balance at 30 June 2024 35,000 (25,949) 646 9,697
________ ________ ________ ________
Unaudited
Six months ended 30 June 2023
Share Capital Retained Total
capital* Reserve Earnings £’000
£’000 £’000 £’000
Balance at 31 December 2022 35,000 (27,928) 19 7,091
Return for the period - 911 747 1,658
________ ________ ________ ________
Balance at 30 June 2023 35,000 (27,017) 766 8,749
________ ________ ________ ________
Audited
Year ended 31 December 2023
Share Capital Retained Total
capital* Reserve Earnings £’000
£’000 £’000 £’000
Balance at 31 December 2022 35,000 (27,928) 19 7,091
(Loss)/return for the period - (2,781) 814 (1,767)
Ordinary dividend paid - - (437) (437)
Preference dividend paid - - (175) (175)
________ ________ ________ ________
Balance at 31 December 2023 35,000 (30,709) 221 4,512
________ ________ ________ ________
*The company’s share capital comprises £35,000,000 (2023 - £35,000,000)
being 25,000,000 ordinary shares of £1 (2023 - 25,000,000) and 10,000,000
non-voting convertible preference
shares of £1 each (2023 - 10,000,000).
CONDENSED BALANCE SHEET
As at 30 June 2024
Note Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December
£’000 £’000 2023
£’000
Non-current assets
Investments – at fair value through profit or loss (note 1) 7,508 6,403 4,895
Investment in subsidiaries – at fair value through profit or loss 8,660 8,014 6,665
_________ _________ _________
16,168 14,417 11,560
Current assets
Receivables 364 374 362
Cash and cash equivalents 12 34 39
_________ _________ _________
376 408 401
_________ _________ _________
Total assets 16,544 14,825 11,961
_________ _________ _________
Current liabilities
Trade and other payables (1,665) (1,092) (2,008)
Bank credit facility (1,235) (1,341) (1,235)
_________ _________ _________
(2,900) (2,433) (3,243)
_________ _________ _________
Total assets less current liabilities 13,644 12,392 8,718
_________ _________ _________
Non – current liabilities (3,947) (3,643) (4,206)
_________ _________ _________
Net assets 9,697 8,749 4,512
_________ _________ _________
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 (25,949) (27,017) (30,709)
Retained revenue earnings 646 766 221
_________ _________ _________
Total equity 9,697 8,749 4,512
_________ _________ _________
Net assets per ordinary share – basic 6 £0.28 £0.25 £0.13
_________ _________ _________
Net assets per ordinary share – diluted 6 £0.28 £0.25 £0.13
_________ _________ _________
CONDENSED CASHFLOW STATEMENT
Six months ended 30 June 2024
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 June 30 June 31 December 2023
2024 2023 £’000
£’000 £’000
Cash flow from operating activities
Profit/(loss) before tax 5,172 1,651 (1,984)
Adjustment for:
(Gains)/losses on investments (4,888) (1,159) 2,371
Proceeds on disposal of investments at fair value
through profit or loss 89 136 136
Purchases of investments at fair value
through profit or loss - (450) (536)
Interest 36 (3) 73
________ ________ ________
Operating cash flows before movements
in working capital 409 175 60
(Increase)/decrease in receivables (56) 108 97
Increase/(decrease) in payables 88 (594) (127)
________ ________ ________
Net cash from operating activities
before interest 441 (311) 30
Interest paid (36) (23) (73)
________ ________ ________
Net cash flows from operating activities 405 (334) (43)
________ ________ ________
Cash flows from financing activities
Dividends paid on ordinary shares (257) - (180)
Dividends paid on preference shares (175) - -
________ ________ ________
Net cash used in financing activities (432) - (180)
________ ________ ________
Net decrease in cash and cash equivalents (27) (334) (223)
Cash and cash equivalents at beginning of period (1,196) (973) (973)
________ ________ ________
Cash and cash equivalents at end of period (1,223) (1,307) (1,196)
________ ________ ________
NOTES TO THE COMPANY’S CONDENSED FINANCIAL STATEMENT
1. AccouNting Policies
Basis of preparation and statement of compliance
This interim report is prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ 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 2023.
The company’s condensed financial statements should be read in conjunction
with the annual financial statements for the year ended 31 December 2023 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
2024 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
2023.
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 2023 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 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% (2023 – 50%) to revenue and 50% (2023 – 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
2024 2023 2023
£’000 £’000 £’000
Income from investments 617 912 961
Other income 48 32 303
_________ _________ _________
665 944 1,264
_______ _______ _______
During the period the company received a dividend of £578,000 (30 June 2023
– £867,000, 31 December 2023 – £867,000) 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 gain of £19,000
(30 June 2023 – £147,000 loss, 31 December 2023 – £154,000 loss) on the
loan of $3,526,000 to a subsidiary. As a result of this gain, 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 £29,000 (30 June 2023 – £24,000,
31 December 2023 – £74,000) received by the subsidiary British & American
Films Limited forms part of the net profit of those companies available for
distribution to the parent company.
4. Dividends
Unaudited Unaudited Audited Year ended
6 months to 6 months to 31 December
30 June 2024 30 June 2023 2023
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 1.75 437 - -
Preference shares -paid - - - - 1.75 175
Preference shares -proposed 1.75 175 1.75 175 - -
________ ________ ________
612 612 612
________ ________ ________
The directors have declared an interim dividend of 1.75p (2023 – 1.75p) per
ordinary share for the year to 31 December 2024 payable on 5 December 2024 to
shareholders registered on 15 November 2024. The shares will be quoted
ex-dividend on 14 November 2024.
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 holders of the 3.5% convertible preference shares will be paid a dividend
of £175,000 being 1.75p per share. The payment will be made on the same date
as the dividend to the ordinary shareholders.
The non-payment in December 2019, December 2020, June 2022 and December 2023
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, for the period ended 30 June 2022 and for the year ended 31
December 2023, has resulted in arrears of £700,000 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%.
5. Earnings/(loss) per ordinary share
Unaudited Unaudited Audited
6 months 6 months Year ended
to 30 June to 30 June 31 December
2024 2023 2023
£’000 £’000 £’000
Basic earnings/(loss) per share
Calculated on the basis of:
Net revenue profit after preference dividends 250 572 464
Net capital gain/(loss) 4,760 911 (2,781)
_________ _________ _________
Net total earnings/(loss) after preference dividends 5,010 1,483 (2,317)
_______ _______ _______
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 250 747 464
Net capital gain/(loss) 4,760 911 (2,781)
_________ _________ _________
Profit/(loss) after taxation 5,010 1,658 (2,317)
_______ _______ _______
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
2024 2023 2023
£’000 £’000 £’000
Total net assets 9,697 8,749 4,512
Less convertible preference shares at fully diluted value (2,771) (2,500) (1,289)
__________ __________ __________
Net assets attributable to ordinary shareholders 6,926 6,249 3,223
________ ________ ________
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
2024 2023 2023
£’000 £’000 £’000
Opening provision 4,206 3,896 3,896
(Decrease)/increase in period (191) (367) 220
Transfer (from)/to allowance for doubtful debt (68) 114 90
__________ __________ __________
Closing provision 3,947 3,643 4,206
________ ________ ________
The provision is in respect of a guarantee made by the company for the
liabilities of Second BritAm Investments Limited owed to the company’s other
wholly owned subsidiaries, BritAm Investments Limited and British & American
Films Limited. The guarantee is to pay out the liabilities of Second BritAm
Investments Limited if they fall due. There is no current intention for these
liabilities to be called.
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 2024, an allowance against doubtful debt
has increased by £68,000 (30 June 2023 - decreased by £114,000 and 31
December 2023 - decreased by £90,000).
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 £13,000 (30 June
2023 – £14,000 and 31 December 2023 – £27,000) 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 2024 were £202,000 (30 June 2023 –
£194,000 and 31 December 2023 – £404,000) in respect of salary costs and
£25,000 (30 June 2023 – £24,000 and 31 December 2023 – £45,000) in
respect of pensions.
At the period end an amount of £393,000 (30 June 2023 – £179,000 and 31
December 2023 – £342,000) was due to Romulus Films Limited and £367,000
(30 June 2023 – £276,000 and 31 December 2023 – £333,000) was due to
Remus Films Limited. At the period end Other payables included amounts of
£nil (30 June 2023 – £nil and 31 December 2023 – £294,705) due to
Romulus Films Limited and £nil (30 June 2023 – £nil and 31 December 2023
– £137,703) due to Remus Films Limited.
During the period subsidiary BritAm Investments Limited paid dividends of
£578,000 (30 June 2023 – £867,000 and 31 December 2023 – £867,000) to
the parent company, British & American Investment Trust PLC.
British & American Investment Trust PLC has guaranteed the liabilities of
£5,642,000 (30 June 2023 – £5,670,000 and 31 December 2023 –
£4,961,000) due from Second BritAm Investments Limited to its fellow
subsidiaries if they should fall due.
During the period the company paid interest of £11,000 (30 June 2023 –
£7,000 and 31 December 2023 – £13,000) on the loan due to BritAm
Investments Limited and £858 (30 June 2023 – £nil and 31 December 2023 –
£nil) on the loan due to British & American Films Limited.
During the period the company received interest of £nil (30 June 2023 –
£nil and 31 December 2023 – £257) from British & American Films Limited
and £48,000 (30 June 2023 – £32,000 and 31 December 2023 – £64,000)
from Second BritAm Investments Limited.
During the period the company did not enter into any investment transactions
to sell stock to British & American Films Limited (30 June 2023 – £890,000
and 31 December 2023 – £890,000).
During the period the company did not enter into any investment transactions
to purchase stock from British & American Films Limited (30 June 2023 –
£890,000 and 31 December 2023 – £890,000).
At 30 June 2024 £4,853,000 (30 June 2023 – £4,170,000 and 31 December 2023
– £4,414,000) was owed by British & American Films Limited to Romulus Films
Limited and £49,000 (30 June 2023 – £44,000 and 31 December 2023 –
£47,000) to Remus Films Limited. Interest was paid to Romulus Films Limited
of £63,000 (30 June 2023 – £80,000 and 31 December 2023 – £133,000) at
the rate of 2.5% per annum (30 June 2023 – 1.5% over the UK Bank Rate per
annum and 31 December 2023 – 1.5% over the UK Bank Rate per annum to 31
March 2023 and at the rate of 2.5% per annum starting on 1 April 2023). 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 2024 (30,709) 221
Allocation of profit for the period 4,760 425
_________ _________
At 30 June 2024 (25,949) 646
_______ _______
The capital reserve includes £1,936,000 of investment holding gains (30 June
2023 – £218,000 gain, 31 December 2023 – £2,725,000 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 2024 Level 1 Level 2 Level 3 Total
£’000 £’000 £’000 £’000
Investments:
Investments held at fair value through profit or loss 7,506 - 2 7,508
Subsidiary held at fair value through profit or loss - - 8,660 8,660
Total financial assets and liabilities carried at fair value 7,506 - 8,662 16,168
With the exception of the Sarossa Capital, Sherborne Investments (Guernsey),
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 2024 6,667
Investment holding gains 1,995
Closing fair value at 30 June 2024 8,662
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 £1.8 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 2024 and 30 June 2023 have
not been audited by the Company’s Auditor pursuant to the Auditing Practices
Board guidance. The information for the year to 31 December 2023 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 2023.
The Chairman’s Statement and Managing Director’s report include commentary
on the main factors affecting the investment portfolio during the period and
the outlook for the remainder of the year.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the half-yearly report in
accordance with applicable law and regulations. The Directors confirm that to
the best of their knowledge the interim financial statements, within the
half-yearly report, have been prepared in accordance with IAS 34 'Interim
Financial Reporting'. The Directors are required to prepare the financial
statements on the going concern basis unless it is inappropriate to presume
that the company will continue in business. The Directors further confirm that
the Chairman’s Statement and Managing Director's Report includes a fair
review of the information required by 4.2.7R and 4.2.8R of the FCA’s
Disclosure and Transparency Rules.
The Directors of the company are listed in the section preceding the
Chairman’s Statement.
The half-yearly report was approved by the Board on 27 September 2024 and the
above responsibility statement was signed on its behalf by:
Jonathan C Woolf
Managing Director
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