REG-British & American: Annual Financial Report
29/06/2020 15:20
British & American Investment Trust PLC
Annual Financial Report for the year ended 31 December 2019
Registered number: 00433137
Directors Registered office
David G Seligman (Chairman) Wessex House
Jonathan C Woolf (Managing Director) 1 Chesham Street
Dominic G Dreyfus (Non-executive and Chairman of the Audit Committee) Telephone: 020 7201 3100
Alex Tamlyn (Non-executive) Registered in England
No.00433137
29 June 2020
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 2019
2019 2018
Revenue return Capital return Total Revenue return Capital return Total
£000 £000 £000 £000 £000 £000
Profit/(loss) before tax – realised 862 (1,461) (599) 2,489 (2,991) (502)
Profit/(loss) before tax – unrealised – 1,657 1,657 – (4,644) (4,644)
__________ __________ __________ __________ __________ __________
Profit/(loss) before tax – total 862 196 1,058 2,489 (7,635) (5,146)
__________ __________ __________ __________ __________ __________
Earnings per £1 ordinary share – basic 2.26p 0.78p 3.04p 8.68p (30.54)p (21.86)p
__________ __________ __________ __________ __________ __________
Earnings per £1 ordinary share – diluted 2.61p 0.56p 3.17p 7.20p (21.81)p (14.61)p
__________ _________ __________ __________ _________ __________
Net assets 6,504 7,919
__________ __________
Net assets per ordinary share
– deducting preference shares at fully diluted net asset value* 19p 23p
__________ __________
– diluted 19p 23p
__________ __________
Diluted net asset value per ordinary share at 22 June 2020 22p
__________
Dividends declared or proposed for the period
per ordinary share
– interim paid 2.7p 2.7p
– final proposed 0.0p 6.0p
per preference share 1.75p 3.5p
*Basic net assets are calculated using a value of fully diluted net asset value for the preference shares. Basic net assets per ordinary share at 31 December 2018 have been restated using a value of fully diluted net asset value for the preference shares instead of using a value of par for the preference shares.
Chairman’s Statement
I report our results for the year ended 31 December 2019.
As announced on 7th April, we have delayed the release of these results by two
months in response to the Coronavirus (COVID-19) pandemic which broke out in
the UK in March, at which time the Financial Conduct Authority (FCA) put in
place extensions to listed company reporting deadlines.
This delay has allowed us to reduce as much as possible employee exposure to
the virus through reduced work travel and professional adviser contact, and to
minimise onward transmission at a time when maximum pressure on hospitals and
the NHS was expected.
This later reporting date also enables us to report to shareholders in a
fuller and more informed way when more has become known about the progression
and effects of the pandemic and the impact on the markets and our portfolio of
the government's unprecedented social and financial response to the pandemic.
To complement the extension to the deadline for reporting listed company
annual results, regulations have also been put in place to extend the
deadlines for the filing of Annual Returns at Companies House, the holding of
AGMs and the release of interim results during the current year. Accordingly,
our Annual General Meeting will now be held on 24th September 2020 and our
interim results to 30th June 2020 will be published by end-October 2020.
Revenue
The return on the revenue account before tax amounted to £0.9 million (2018:
£2.5 million), a decrease of 65 percent. This decrease was due a reduction in
income received from subsidiary companies and from external investments. The
reduced rate of subsidiary company income was a function of the lower asset
prices and sales in those companies which reduced available distributable
reserves in those companies.
Gross revenues totalled £1.2 million (2018: £3.1 million). In addition, film
income of £106,000 (2018: £92,000) and property unit trust income of
£14,000 (2018: £14,000) 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 profit of £1.1 million (2018: £5.1
million loss), which comprised net revenue of £0.9 million, a realised loss
of £1.1 million and an unrealised gain of £1.7 million. The revenue return
per ordinary share was 2.3p (2018: 8.7p) on an undiluted basis and 2.6p (2018:
7.2p) on a diluted basis.
Net Assets and Performance
Net assets at the year end were £6.5 million (2018: £7.9 million), a
decrease of 18.0 percent and reflects the payment of £2.5 million in
dividends to shareholders during the year. This compares to increases in the
FTSE 100 and All Share indices of 12.1 percent and 14.2 percent, respectively,
over the period. On a total return basis, after adding back dividends paid
during the year, our net assets increased by 14.0 percent compared to 16.5
percent and 18.0 percent increases in the FTSE 100 and All Share indices,
respectively.
At the half year, we reported substantial outperformance against the benchmark
indices on a total return basis by approximately 12 percent. This was
principally the result of solid gains of 40 percent in sterling terms in the
value of our largest US investment, Geron Corporation. By year end, however,
that increase had reduced somewhat to a gain of 30 percent, reflecting also a
weakening of the US dollar over the period, and as a result our total return
for the full year registered a modest underperformance against the benchmark
indices on the same basis.
The growth in Geron Corporation’s share price over the year reflected the
beginning of a recovery in market perception of the company following the
sudden and unexpected withdrawal of its partner Johnson & Johnson in September
2018. This had precipitated a collapse of over 80 percent in Geron’s stock
price in the fourth quarter of that year. It was the shock of this withdrawal
and not any underlying problem with Geron’s haematological cancer drug,
Imetelstat, or the ongoing clinical trial programmes which engendered this
decline in market value. As this shock began to dissipate in 2019 and
encouraging results of the clinical trials were released during the year, the
share price began to recover accordingly. Further important developments in
Geron’s business have occurred recently, including a major fundraising, the
addition of a second Phase 3 clinical trial to its programme and further high
level technical personnel hires from leading pharma companies. These have
added to the continued recovery in Geron’s share price and are discussed in
more detail in the managing director’s report below.
More generally, there was no absence of major themes and events driving
investment sentiment in the UK and USA in 2019, many of them with competing
effects on investment and markets. In the USA, these included the economic
and market stimulating effects of the Trump administration’s fiscal stimulus
programme through corporate tax reductions, the contrastingly depressing
effects of the ever developing and vacillating trade war with China, changes
in the direction in the Federal Reserve’s US dollar interest rate policy as
economic growth prospects varied with each new and erratic White House policy
initiative, and large movements in US dollar exchange rates as interest rates
across the maturity spectrum tumbled to historic lows, presaging the advent
of recession.
In the UK, these themes included the difficult and protracted Brexit
negotiations, with missed and extended deadlines and the prospect of a no-deal
exit from the European Union, dysfunction in parliament with the opposition
taking control of the order paper and an unprecedented series of heavy
government defeats, the end of the 10 year economic growth cycle which had
been in place since the financial crisis of 2008 and finally the resignation
of the prime minister as the impasse in Brexit overwhelmed the parliamentary
process leading to the appointment of Boris Johnson who brought some order to
the process at the last moment at the end of the year.
Not surprisingly, all these competing events resulted in multiple swings in
sentiment and direction in equity markets and currencies during the year. The
rising trend of the first half of the year, itself a recovery from the falls
of the previous year and based on the provision of central bank liquidity
through substantial interest rate reductions, dissipated in the second half of
the year as investors’ resilience to the events noted above evaporated.
Investors’ appetite was also finally further constrained by other worrying
global developments which had been growing over time, including the mass and
uncontrolled migration of peoples from Africa/the Middle East into Europe and
from Central America in to the USA, the rising and increasingly domineering
assertiveness of China politically and economically, the interference by
Russia in the elections, sovereignty and security of other countries and the
gradual erosion of norms relating to the international rules based system
through popularism.
Notwithstanding all of the above, equity markets finished the year with
sizeable gains as high liquidity levels continued to provide support in the
absence of acceptable alternative yield-generating investments.
Dividend
As announced on 7th April, we do not to recommend the payment of a final
dividend for the 2019 financial year.
In December 2019, we paid a half-year interim dividend on our ordinary shares
of 2.70 pence, representing a yield of approximately 5.6 percent on the
ordinary share price at the time of announcement and of approximately 6.5
percent averaged over the year as a whole.
This decision is made in the context of the economic and investment realities
arising out of the COVID-19 pandemic, as explained in more detail in the
managing director’s report below. Additionally, however, as already
announced in our 2019 interim statement and 2018 annual report, the
continuation of our progressive dividend policy, which had been in place for
over twenty years, would depend on a return in the share price of our major
investment, Geron Corporation, to levels closer to those seen in 2018 to
enable us to generate distributable income internally within our group. To
date this has not occurred, although the recent improvements in the share
price and in the company’s general prospects as already noted bode well for
a return to those former price levels at a date hopefully in the not too
distant future.
Within these constraints and although the generation of reliable dividend
income from external sources has now been placed in doubt for a time due to
the COVID-19 pandemic, it is our intention to resume our dividend payments as
soon as possible, as and when circumstances permit, potentially through ad hoc
interim payments not necessarily on our normal dividend timetable, and
eventually to catch up when and if possible on with-held or reduced payments.
In the first instance, we intend to pay an initial interim dividend of at
least 1.75 pence per share in respect of the six months to 30th June 2020.
Recent events and outlook
The COVID-19 pandemic and the social, financial and economic policy responses
put in place to minimise infections and deaths around the world have dominated
the first six months of this year in a way which has been completely
unimaginable to people, companies and governments.
With infection rates and deaths having finally plateaued and started to fall
towards the end of the second quarter, the immediate and dramatic effect on
equity markets seen in March, when markets fell by over 30 percent over 10
days, has now stabilised and a recovery of over 50 percent of those falls has
now been seen.
Now the difficult task for governments of managing the safe release from
lockdown and other social and work constraints is underway, together with
plans to start reducing the many and unprecedented financial and fiscal
support programmes which governments have put in place in most leading
economies.
The long term effect of the pandemic in terms of damage to businesses and jobs
and the prospects for economic recovery will not be evident for some time and
will depend in part on whether a second wave of infections materialises this
year, together with the success and timing of the development of vaccines or
treatments to combat the disease.
With the current partial recovery in markets noted above, investors have been
taking a relatively optimistic view of prospects for recovery, particularly
given the high market levels seen just prior to the outbreak of the pandemic,
despite the accumulation of worrying economic and political trends over the
past two years.
Having divested the portfolio out of some of our general sterling-based fund
investments over the past two years, our increased exposure to US biopharma
investments which do not tend track general market movements so closely,
should provide some element of protection against the continued anticipated
volatility in equity markets over the coming period in what will hopefully be
the wake of the COVID-19 pandemic. In the meantime, we pursue the aims of
our investment programme to capture capital growth from the continued market
re-rating of those biopharma company investments as they progress steadily
towards commercialisation of their ground-breaking and valuable technologies.
As at 22 June 2020, our net assets had increased to £7.7 million, an increase
of 18.0 percent since the beginning of the calendar year due principally to
the 43.4 percent increase in the share price of Geron Corporation over this
period. This is equivalent to 21.9 pence per share (prior charges deducted at
fully diluted value) and 21.9 pence per share on a diluted basis. Over the
same period the FTSE 100 decreased 17.2 percent and the All Share Index
decreased 17.5 percent.
David Seligman
29 June 2020
Managing Director's report
With most of the world’s largest economies effectively closed down for
months in the second quarter of 2020 and possibly longer due to the medical
emergency caused by the COVID-19 pandemic, the economic trends and themes
which had been in place since the financial crisis of 2008 have been suddenly
and violently interrupted.
In 2019, the 10 year recovery in equity and financial markets was still
continuing, fuelled latterly by substantial corporate tax cuts in the USA and
the maintenance of multi-year liquidity provision by central banks to keep an
anaemic and slow recovery from the 2008 Great Recession in place, despite ever
increasing economic and geo-political concerns which have been referred to
here over the last two years.
At this point, with no effective treatments or vaccines available or in
immediate prospect, the short term and unprecedented hit to jobs, business and
economic growth will no doubt extend into the medium term to a greater or
lesser extent, as the massive financial and fiscal support measures put in
place by governments in recent months can only be sustained for a limited
period of time. Most leading economies are likely to suffer larger and
swifter declines in GDP in the current year than they experienced in 2008 and
it is not yet clear when and in what form the eventual recovery can begin.
As noted above, our portfolio outperformed the benchmarks in the first half of
2019, principally due to a recovery in the value of our largest US investment,
Geron Corporation, from its large fall at the end of 2018, but slightly
underperformed by year end as Geron’s recovery weakened somewhat while the
US dollar strengthened by 7 percent. With Geron and our other US biopharma
investments now representing a larger percentage of our portfolio (60 percent
at 31st December 2019) following a reduction in our UK denominated fund
investments over the past two years, the portfolio’s exposure to movements
in the US dollar exchange rate is somewhat greater than hitherto, although it
is partly offset by a US dollar cash hedge.
In terms of income, our policy over the past few years of generating income
from external investments and profitable asset sales in our subsidiary
companies has become more difficult over time. Paying ever higher levels of
dividend each year out of a shrinking asset base, due both to shareholder
payments and asset values which have not performed in line with expectations,
has become an increasing strain.
Additionally and recently in respect of our externally received income, a new
constraint on corporate dividend payments has now arisen out of the COVID-19
pandemic. In late March, the major UK banks announced the cancellation of
their 2020 dividends in the face of government pressure. This measure was to
ensure the conservation of bank resources in furtherance of the government’s
emergency financial support programmes to companies and individuals. Since
then, many other leading companies have similarly cancelled or suspended their
dividend payments to protect their balance sheets and conserve cash resources,
particularly in those industries with operations or revenues badly disrupted
by the pandemic's effects, including transport, leisure, hospitality, energy,
manufacturing and utilities. These have included many FTSE 100 index stocks
and hitherto decades-long dividend paying companies. Currently, around 50
percent of FTSE index companies have now cut or cancelled their dividends,
covering over £30 billion of dividends and representing more than 40 percent
of the annual FTSE 100 and FTSE 250 dividend payment, with more cuts expected
as the year progresses.
This systemic reduction in dividend payments will have a significant effect in
the short to medium term on those savings institutions relying on investment
income generation for their operations, including pension funds, assurance and
other investment vehicles, such as ourselves. It is partly for this reason
that we have judged it prudent not to pay a final dividend this year.
In relation to income generated internally from our subsidiaries, the level of
distributable reserves in those subsidiaries is now insufficient to continue
the quantum of distributions seen in earlier years, due principally to the
disappointing performance of our US biopharma investments over the recent
period. As and when these values return to expected and previously achieved
levels, we will be able to recommence the generation of internal income for
onward distribution to shareholders.
In this context, an appraisal of the current circumstances and prospects of
our largest such holding, Geron Corporation, is set out below.
Geron Corporation
We are hopeful that our long-held and sometimes difficult strategic investment
in Geron Corporation may soon reach a level of maturity. Although this
seemed to be the case in 2018 when its five year collaboration with Johnson &
Johnson was yielding encouraging Phase 2 trial results in the run-up to a
contractual continuation point and the share price had increased by over 200
percent in anticipation of this in the first part of the year, it was not to
be the case when Johnson & Johnson withdrew unexpectedly in September of that
year.
In the time since, Geron Corporation has worked steadily to prove that Johnson
& Johnson’s withdrawal was not related to any underlying problem with its
oncology drug or the clinical trials by continuing to publish ever improving
trial results. This culminated in a successful Phase 2 clinical trial
conclusion at the end of 2019 with excellent results in terms of blood
transfusion free periods and patient life extension, outperforming all other
available treatment options for the two haematological cancer conditions under
investigation, Myelodysplastic Syndrome (MDS) and Myelofibrosis (MF).
Furthermore, Geron has recently announced FDA agreement for its second Phase 3
trial (in MF) which is another important milestone and most significantly has
raised US$150 million through an equity issue which will provide sufficient
funds to take it through both of its Phase 3 trials. Three large
institutional investors, including two leading biotech sector investment
funds, took significant positions in the issue which was very well received by
the market with the share price since trading well above the issue price.
Latterly, all of the major market analysts covering Geron have re-iterated the
stock as a buy with a price target of 150 percent of its current level.
It is hoped, therefore, that this sufficiency of funding and the support of
these large funds will deter further activity by professional short sellers of
Geron stock, which through their large positions held over many years and
which have regularly exceeded over 35 percent of total shares issued, have for
so long prevented the true underlying value and future prospects of Geron
being fairly recognised in the market. Instructively, regulatory reporting
since the share issue last month shows a significant reduction in the
outstanding short position of almost 50 percent to the lowest level seen for
over 10 years.
Industries such as biotech, which by their nature in their early stages
generate little income and whose futures depend entirely on the binary and
time-consuming outcome of their drug development and clinical testing
programmes, can be the victim of concerted and often unscrupulous short
selling activities by professional traders and funds. They struggle as a
result to make progress and to raise funds for their development over the long
term in the face of these market activities. It is highly regrettable that
potentially very successful enterprises, and particularly in a sector devoted
to the development of life improving or saving medicines which are designed to
benefit us all, should be faced with these additional and unnecessary
challenges to their success.
Jonathan Woolf
29 June 2020
Income statement
For the year ended 31 December 2019
2019 2018
Revenue return Capital return Total Revenue return Capital return Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Investment income (note 2) 1,243 - 1,243 3,056 - 3,056
Holding gains/(losses) on investments at fair value through profit or loss - 1,657 1,657 - (4,644) (4,644)
Losses on disposal of investments at fair value through profit or loss* - (1,113) (1,113) - (2,647) (2,647)
Foreign exchange (losses)/gains 53 (57) (4) (61) (62) (123)
Expenses (381) (242) (623) (457) (237) (694)
________ ________ ________ ________ ________ ________
Profit/(loss) before finance costs and tax 915 245 1,160 2,538 (7,590) (5,052)
Finance costs (53) (49) (102) (49) (45) (94)
________ ________ ________ ________ ________ ________
Profit/(loss) before tax 862 196 1,058 2,489 (7,635) (5,146)
Tax 52 - 52 31 - 31
________ ________ ________ ________ ________ ________
Profit/(loss) for the year 914 196 1,110 2,520 (7,635) (5,115)
________ ________ ________ ________ ________ ________
Earnings per share
Basic – ordinary shares 2.26p 0.78p 3.04p 8.68p (30.54)p (21.86)p
________ ________ ________ ________ ________ ________
Diluted – ordinary shares 2.61p 0.56p 3.17p 7.20p (21.81)p (14.61)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 £1,274,000 (2018 – £917,000 losses) and Gains
on provision for liabilities and charges of £161,000 (2018 – £1,730,000
losses).
Statement of changes in equity
For the year ended 31 December 2019
Share capital Capital reserve Retained earnings Total
£ 000 £ 000 £ 000 £ 000
Balance at 31 December 2017 35,000 (21,167) 1,701 15,534
Changes in equity for 2018
(Loss)/profit 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
Changes in equity for 2019
Profit for the period - 196 914 1,110
Ordinary dividend paid (note 4) - - (2,175) (2,175)
Preference dividend paid (note 4) - - (350) (350)
________ ________ ________ ________
Balance at 31 December 2019 35,000 (28,606) 110 6,504
________ ________ ________ ________
Registered number: 00433137
Balance Sheet
At 31 December 2019
2019 2018
£ 000 £ 000
Non-current assets
Investments - fair value through profit or loss 6,704 8,722
Subsidiaries - fair value through profit or loss 5,335 5,269
__________ __________
Current assets 12,039 13,991
Receivables 1,588 3,417
Cash and cash equivalents 2,504 244
__________ __________
4,092 3,661
__________ __________
Total assets 16,131 17,652
__________ __________
Current liabilities
Trade and other payables 3,617 547
Bank loan 2,635 2,790
__________ __________
(6,252) (3,337)
__________ __________
Total assets less current liabilities 9,879 14,315
__________ __________
Non - current liabilities (3,375) (6,396)
__________ __________
Net assets 6,504 7,919
__________ __________
Equity attributable to equity holders
Ordinary share capital 25,000 25,000
Convertible preference share capital 10,000 10,000
Capital reserve (28,606) (28,802)
Retained revenue earnings 110 1,721
__________ __________
Total equity 6,504 7,919
__________ __________
Approved: 29 June 2020
Cash flow statement
For the year ended 31 December 2019
Year ended 2019 Year ended 2018
£ 000 £ 000
Cash flows from operating activities
Profit/(loss) before tax 1,058 (5,146)
Adjustments for:
(Gains)/losses on investments (544) 7,291
Dividends in specie - (290)
Proceeds on disposal of investments at fair value through profit and loss 16,316 13,635
Purchases of investments at fair value through profit and loss (14,521) (12,335)
Finance costs 102 94
__________ __________
Operating cash flows before movements in working capital 2,411 3,249
Decrease/(increase) in receivables 2,417 (712)
Decrease in payables (363) (773)
__________ __________
Net cash from operating activities before interest 4,465 1,764
Interest paid (97) (90)
__________ __________
Net cash from operating activities 4,368 1,674
Cash flows from financing activities
Dividends paid on ordinary shares (1,778) (1,839)
Dividends paid on preference shares (175) (350)
Bank loan (155) (1,454)
__________ __________
Net cash used in financing activities (2,108) (3,643)
__________ __________
Net increase/(decrease) in cash and cash equivalents 2,260 (1,969)
Cash and cash equivalents at beginning of year 244 2,213
__________ __________
Cash and cash equivalents at end of year 2,504 244
__________ __________
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 2019. 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 2019 is an extract from the
statutory accounts to that date. Statutory company accounts for 2018, which
were prepared under IFRS as adopted by the EU, have been delivered to the
registrar of companies and company statutory accounts for 2019, prepared under
IFRS as adopted by the EU, will be delivered in due course.
The auditors have reported on the 31 December 2019 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
2019 2018
£ 000 £ 000
Income from investments
UK dividends 938 1,180
Overseas dividends 173 92
Scrip and in specie dividends - 290
Dividend from subsidiary 74 1,445
Interest on fixed income securities - 1
__________ __________
1,185 3,008
__________ __________
Other income 58 48
__________ __________
Total income 1,243 3,056
__________ __________
Total income comprises:
Dividends 1,185 3,007
Interest - 1
Other interest 58 48
__________ __________
1,243 3,056
__________ __________
Dividends from investments
Listed investments 1,111 1,562
Unlisted investments 74 1,445
__________ __________
1,185 3,007
__________ __________
Of the £1,185,000 (2018 – £3,007,000) dividends received, £879,000 (2018
– £997,000) related to special and other dividends received from investee
companies that were bought after the dividend announcement. There was a
corresponding capital loss of £1,027,000 (2018 – £1,007,000), 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 £106,000 (2018 –
£92,000) received by the subsidiary British and American Films Limited and
property unit trust income of £14,000 (2018 – £14,000) 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:
2019 2018
Revenue return Capital return Total Revenue return Capital return Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Earnings:
Basic 564 196 760 2,170 (7,635) (5,465)
Preference dividend 350 - 350 350 - 350
__________ __________ __________ __________ __________ __________
Diluted 914 196 1,110 2,520 (7,635) (5,115)
__________ __________ __________ __________ __________ __________
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 (2018: 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 (2018: 35
million) ordinary and preference shares in issue.
4 Dividends
2019 2018
£ 000 £ 000
Amounts recognised as distributions to equity holders in the period:
Dividends on ordinary shares:
Final dividend for the year ended 31 December 2018 of 6.0p (2017:5.9p) per share 1,500 1,475
Interim dividend for the year ended 31 December 2019 of 2.7p (2018:2.7p) per share 675 675
__________ __________
2,175 2,150
__________ __________
Proposed final dividend for the year ended 31 December 2019 of 0.0p (2018:6.0p) per share - 1,500
__________ __________
Dividends on 3.5% cumulative convertible preference shares:
Preference dividend for the 6 months ended 31 December 2018 of 1.75p (2017:1.75p) per share 175 175
Preference dividend for the 6 months ended 30 June 2019 of 1.75p (2018:1.75p) per share 175 175
__________ __________
350 350
__________ __________
Proposed preference dividend for the 6 months ended 31 December 2019 of 0.00p (2018:1.75p) per share - 175
__________ __________
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
2019 2018
£ 000 £ 000
Dividends on ordinary shares:
Interim dividend for the year ended 31 December 2019 of 2.7p (2018:2.7p) per share 675 675
Proposed final dividend for the year ended 31 December 2019 of 0.0p (2018:6.0p) per share - 1,500
__________ __________
675 2,175
__________ __________
Dividends on 3.5% cumulative convertible preference shares:
Preference dividend for the year ended 31 December 2019 of 1.75p (2018:1.75p) per share 175 175
Proposed preference dividend for the year ended 31 December 2019 of 0.00p (2018:1.75p) per share - 175
__________ __________
175 350
__________ __________
5 Net asset values
Net asset value per share
2019 2018
Ordinary shares £ £ restated
Diluted 0.19 0.23
Undiluted 0.19 0.23*
Net asset attributable
2019 2018
£ 000 £ 000 restated
Total net assets 6,504 7,919
Less convertible preference shares at fully diluted value (1,858) (2,263)
__________ __________
Net assets attributable to ordinary shareholders 4,646 5,656*
__________ __________
The undiluted and diluted net asset values per £1 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.
*Net assets attributable to ordinary shareholders at 31 December 2018 have
been restated using a value of fully diluted net asset value for the
preference shares instead of using a value of par for the preference 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 2019 Annual Report and Accounts, but remain
unchanged from those published in the 2018 Annual Report and Accounts.
Related party transactions
The company rents its offices from Romulus Films Limited, and is also charged
for its office overheads.
The salaries and pensions of the company’s employees, except for the three
non-executive directors 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 £nil (2018 – £346,709) to Second BritAm Investments Limited, for
£540,141 (2018 – £nil) to British & American Films Limited and for £nil
(2018 – £2,472) 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 £35,000,000 (2018 – £35,000,000) being
25,000,000 ordinary shares of £1 (2018 – 25,000,000) and 10,000,000
non-voting convertible preference shares of £1 each (2018 – 10,000,000).
The rights attaching to the shares will be explained in more detail in the
notes to the 2019 Annual Report and Accounts, but remain unchanged from those
published in the 2018 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 Thursday 24
September 2020 at 12.15pm at Wessex House, 1 Chesham Street, London SW1X 8ND.
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