BRITISH &
AMERICAN INVESTMENT TRUST PLC |
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FINANCIAL HIGHLIGHTS |
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For the six months ended 30 June
2016 |
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Unaudited
6 months
to 30 June
2016
£’000 |
Unaudited
6 months
to 30 June
2015
£’000 |
Audited
Year ended
31 December
2015
£’000 |
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Revenue |
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Return before tax |
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1,179 |
679 |
2,701 |
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_________ |
_________ |
_________ |
Earnings per £1 ordinary shares –
basic (note 4) |
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4.06p |
2.06p |
9.51p |
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_________ |
_________ |
_________ |
Earnings per £1 ordinary shares –
diluted (note 4) |
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3.40p |
1.97p |
7.80p |
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_________ |
_________ |
_________ |
Capital |
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Total equity |
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21,377 |
28,568 |
30,211 |
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_________ |
_________ |
_________ |
Revenue reserve (note 8) |
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2,440 |
1,611 |
2,799 |
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_________ |
_________ |
_________ |
Capital reserve (note 8) |
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(16,063) |
(8,043) |
(7,588) |
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_________ |
_________ |
_________ |
Net assets per ordinary share (note
5) |
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- Basic |
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£0.46 |
£0.74 |
£0.81 |
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_________ |
_________ |
_________ |
- Diluted |
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£0.61 |
£0.82 |
£0.86 |
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_________ |
_________ |
_________ |
Diluted net assets per ordinary share at 23 August 2016 |
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£0.65 |
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_________ |
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Dividends* |
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Dividends per ordinary share (note
3) |
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2.7p |
2.7p |
8.2p |
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_________ |
_________ |
_________ |
Dividends per preference share (note
3) |
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1.75p |
1.75p |
3.5p |
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_________ |
_________ |
_________ |
* Dividends declared for the period. Dividends shown in
the accounts are, by contrast, dividends paid or
approved
in the period.
Basic net assets and earnings per share are calculated using a
value of par for the preference shares. Consequently, when the net
asset value attributed to ordinary shares remains below par the
diluted net asset value will show a higher value than the basic net
asset value.
Copies of this report will be posted to shareholders and be
available for download at the company’s website:
www.baitgroup.co.uk.
INVESTMENT PORTFOLIO |
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As at 30 June 2016 |
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Company |
Nature of Business |
Valuation
£’000 |
Percentage
of portfolio
% |
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Geron Corporation (USA) |
Biomedical |
6,264 |
21.67 |
Biotime Inc (USA) |
Biotechnology |
2,760 |
9.55 |
Dunedin Income Growth |
Investment Trust |
2,280 |
7.89 |
St. James’s Place Global Equity |
Unit Trust |
2,063 |
7.14 |
Blackrock Income Strategies
Trust |
Investment Trust |
1,725 |
5.97 |
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________ |
________ |
Scottish American Investment
Company |
Investment Trust |
1,148 |
3.97 |
Merchants Trust |
Investment Trust |
1,077 |
3.73 |
Invesco Income Growth Trust |
Investment Trust |
810 |
2.80 |
Prudential |
Life Assurance |
628 |
2.17 |
Asterias Biotherapeutics (USA) |
Pharmaceuticals |
605 |
2.09 |
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________ |
________ |
Royal & Sun Alliance Insurance
Group – 7.375% Cumulative irredeemable preference shares £1 |
Insurance – Non-Life |
511 |
1.77 |
Shires Income |
Investment Trust |
413 |
1.43 |
Enquest PLC 5.5% SNR EMTN
15/02/2022 |
Oil & Gas producers |
292 |
1.01 |
Jupiter Income Trust |
Unit Trust |
238 |
0.82 |
Rothschilds Cont. Finance – 9% Perp.
Sub. Gtd. Loan Notes |
Financial |
234 |
0.81 |
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________ |
________ |
Oncocyte (USA) |
Biotechnology |
187 |
0.65 |
RIT Capital Partners |
Investment Trust |
164 |
0.57 |
Angle |
Support Services |
155 |
0.54 |
Barclays – 6% Non-Cum. Callable
Pref.Shares |
Bank retail |
148 |
0.51 |
JZ Capital Partners |
Investment Trust |
125 |
0.43 |
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________ |
________ |
20 Largest investments (excluding
subsidiaries) |
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21,827 |
75.52 |
Investment in subsidiaries |
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6,269 |
21.68 |
Other investments (number of
holdings : 23) |
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814 |
2.80 |
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________ |
________ |
Total investments |
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28,910 |
100.00 |
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________ |
________ |
Unaudited Interim Report
As at 30 June 2016
Registered number : 433137
Directors |
Registered
office |
J Anthony V Townsend
(Chairman) |
Wessex House |
Jonathan C Woolf
(Managing Director) |
1 Chesham Street |
Dominic G Dreyfus
(Non-executive) |
London SW1X 8ND |
Ronald G Paterson
(Non-executive) |
Telephone: 020 7201
3100 |
|
Website:
www.baitgroup.co.uk |
Chairman’s Statement
I report our results for the 6 months to 30 June 2016.
Revenue
The profit on the revenue account before tax amounted to £1.2
million (30 June 2015: £0.7 million),
an increase of 74 percent. This significant increase reflects
in part a higher level of dividends received in the period.
However, as noted in my previous statements, due to the
introduction of new International Reporting Standard IFRS10 in
2015, reported profits (which are the profits of the parent company
only) are likely to show increased levels of volatility, as is the
case for this period.
To assist shareholders in forming some opinion on the earnings
performance of the group as a whole, we show in Note 2 to the
accounts the film and other income of our subsidiaries. This
shows that film income of £18,000 (30 June
2015: £29,000) and property unit trust income of £8,000
(30 June 2015: £10,000) was
received.
A loss of £8.3 million (30 June
2015: £2.4 million gain) was registered on the capital
account before capitalised expenses, incorporating a realised loss
of £2.1 million (30 June 2015: £0.4
million gain) and an unrealised loss of £6.2 million (30 June 2015: £2.0 million gain). This
significant unrealised loss was due to a fall in the value of our
principal investment, Geron Corporation, which declined almost 50
percent over the period.
Revenue earnings per ordinary share were 4.1 pence on an undiluted basis (30 June 2015: 2.1
pence) and 3.4 pence on a
fully diluted basis (30 June 2015:
2.0 pence).
Net Assets and performance
Company net assets were £21.4 million (£30.2 million, at
31 December 2015), a decrease of 29.2
percent. Over the same six month period, the FTSE 100 index
increased by 3.7 percent and the All Share index increased by 1.6
percent. On a total return basis, after adding back dividends
paid during the period, company net assets decreased by 24.1
percent compared to an increase of the total return on the FTSE 100
index of approximately 6.6 percent. The net asset value per
£1 ordinary share was 46 pence (prior
charges deducted at par) and 61 pence
on a fully diluted basis.
As noted above, the decrease in net assets relative to our
benchmark was largely due to the decrease in the value of our
principal investment, Geron Corporation. This decline occurred in
the first three months of the year concurrently with the large
falls in stock prices globally. However, US biotech company
share prices declined more significantly than other sectors and for
the most part did not recover into the second quarter along with
other stocks. In the absence of any corporate or clinical
trial news over the period, there was no catalyst for the Geron
stock price to outperform the sector at that time.
In the first half of 2016, the UK and global stock markets
experienced considerable volatility. The UK Equity market
fell by over 12 percent in the first quarter with a slump in oil
prices to multi year lows of below US$30 per barrel, indicating fears of a slowdown
in world economic activity and difficulties for certain highly
operationally geared oil producing companies going forward.
Markets stabilised somewhat in March and into the second quarter as
oil prices rose above their lows and settled at around US$50 per barrel. In the UK, however,
market movements remained volatile as the European Referendum
neared and stock prices reacted to the swings in the opinion
polls. The unexpected result to exit the European Union was a
shock to markets world wide and a substantial fall in global equity
markets occurred on 24th June after the result was
announced. Falls of 8 percent in a day were experienced as
the potential economic, trade and political ramifications were
digested. Despite considerable concerns being expressed and a sharp
fall of over 10 percent in the value of sterling, markets including
the leading UK stocks with high levels of foreign income recovered
relatively swiftly and by the half year had surpassed their
pre-referendum levels to finish up on the period.
As at 23 August, company net assets were £22.7 million, an increase
of 6.4 percent since 30 June. This compares with an increase
of 5.6 percent in the FTSE 100 index and an increase of 6.5 percent
in the All Share index over the same period, and is equivalent to
51 pence per share (prior charges
deducted at par) and 65 pence per
share on a fully diluted basis.
Dividend
We intend to pay an interim dividend of 2.7
pence per ordinary share on 10
November 2016 to shareholders on the register at
14 October 2016. This represents an
unchanged dividend from last year’s interim dividend. A preference
dividend of 1.75 pence will be paid
to preference shareholders on the same date.
Outlook
Many of the factors contributing to market instability noted in
my last year-end statement are still in evidence. Although
markets have been confronted by considerable levels of disruption
over the last 6 months, including the slump in oil prices, the UK’s
exit from the European Union, numerous acts of terror in European
countries and a great deal of uncertainty from the US Federal
reserve over the pace of increase in US dollar interest rates,
markets have nevertheless absorbed these concerns and enter the
second half ahead of their opening levels for the year.
As in previous years, the direction and longer term performance
of equity markets is likely to hinge on the expectation and pace of
interest rate rises in the US. Current expectations are now
for fewer rises this year, possibly only one around the year end as
was the case in 2015. This has been sufficient to support
markets in recent weeks without raising allied concerns of a
significant slowdown in US economic activity, and indeed, equity
markets in the USA have reached
new all time highs since the half year.
The UK, however, remains a special case as politicians begin to
address the ramifications of life outside the European Union and
new economic, fiscal and social policies are developed. It is
generally accepted that an economic shock to the system over the
short term will be experienced but hopefully the various advantages
in terms of new global alliances with faster growing economies and
other areas of economic and fiscal liberalisation will deliver
enhanced growth over the longer term. We do not expect to
undertake any new investment initiatives while the impact of these
major changes remain unclear.
Anthony Townsend
26 August 2016
Managing Director’s Report
In the first six months of 2016, our portfolio underperformed
our benchmark indices significantly. As noted above, this was
due to the substantial drop in the value of our largest US
investment, Geron Corporation. This was disappointing,
particularly after the significant outperformance this stock had
generated for the portfolio in 2015, both in terms of its share
price, which reflected a transformational corporate alliance with
Johnson & Johnson, and a significant strengthening in the US
dollar over the course of that year. In the absence of any
new corporate information or clinical trial updates to date in
2016, Geron’s share price proved unable to recover from the
significant drop experienced by most US biotech companies in the
first quarter of 2016. Nevertheless, the support given to the
company by the collaboration with Johnson & Johnson and the
expectation of clinical trial updates towards the end of the year
supports our expectation that the share price will return to the
levels seen after the collaboration with Johnson & Johnson was
announced in late 2014 to form a basis for future growth as the
results of the trials are released and a path to commercialisation
is developed.
As in previous years, the main drivers of market performance in
2016 have been the expectations surrounding and the subsequent
results of economic performance in the USA and China. Various indicators have
been taken as proxies for the outlook on this, primarily US dollar
interest rates and expected movements thereof, and latterly oil
prices.
As already described, oil prices fell to multi year lows in
early 2016 and this was judged to be symptomatic of poor world
growth particularly in China which
worried markets generally, resulting in a sharp sell off in equity
markets in the first quarter and a retreat from risk assets.
As a result, investment in low risk sovereign bonds increased
significantly and by the half year the bonds of most of the leading
sovereign issuers were trading at negative short term yields and at
historically low long term yields.
Early expectations in the year that the US Federal Reserve would
continue a gradual programme of increases in US dollar rates in
2016 after the first such rise in December
2015 were tempered as uncertainties over US and world growth
developed over the first half of 2016. This served to provide
some support to equity markets in the second quarter as the
prospect of higher rates receded that helped markets to recover
from the selloff in the first quarter and push forward over the
half year.
However, this has served to disguise somewhat the background
instability on a number of fronts which persist and which could
potentially have negative effects on growth and markets
generally. While the effect on markets of the
initial shock of the UK’s exit from the European Union has
dissipated, the longer term uncertainties remain. The
potential for European bank financial instability remains as does
the unsustainable level of certain EU country sovereign debt levels
when viewed in the context of continued poor levels of economic
growth in the Eurozone area. While the European Central Bank
continues its aggressive programme of monetary intervention, the
scope for effective results of this strategy by the ECB and other
central banks diminishes as time goes on. As rates fall
further into negative territory, this increases the pressure on
banks’ profitability and their ability and willingness to generate
growth through lending is reduced.
There is much uncertainty whether even the low levels of growth
experienced by the US, UK and other leading economies in recent
years following the recession of 2008/9 can now be sustained.
The results seen in the USA so far
this year have been erratic with a further weakening in growth
recently recorded for the second quarter. US corporates continue to
report earnings downgrades compared to the previous year although
the current quarter’s results have been marginally less negative.
The substantial Central Bank liquidity provision driving bond
markets forward and lowering investment grade yields has pushed
equity markets in the USA to
historical high levels since the half year. But it is not clear
whether the tempered pace of the Federal Reserve’s interest rate
programme will have any effect on economic growth beyond providing
some support to financial markets and asset prices in the short
term.
In the UK, as noted above, we have a very different set of
challenges to address in the context of the EU exit. Local
markets will inevitably remain hesitant until a path forward is
identified and then will price the likely success of its
implementation and longer term economic effects. For this
reason, there is likely to be a decoupling of UK markets and
sterling from movements elsewhere. While there is certainly much
potential for the UK to take advantage of a new start by entering
into new global trade alliances with those areas of the world
experiencing significantly faster growth than the sclerotic
European Union countries and a sense of revitalisation can be
generated from the liberalisation opportunities in the fiscal,
investment and social domains, such decoupling is more likely on
the downside initially until a new paradigm for the UK economy is
implemented.
Jonathan C Woolf
26 August 2016
CONDENSED INCOME STATEMENT |
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Six
months ended 30 June 2016 |
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Unaudited
6 months to 30 June 2016 |
Unaudited
6 months to 30 June 2015
|
Audited
Year ended 31 December 2015
|
|
Note |
Revenue
return
£’000 |
Capital
return
£’000 |
Total
£’000 |
Revenue
return
£’000 |
Capital
return
£’000 |
Total
£’000 |
Revenue
return
£’000 |
Capital
return
£’000 |
Total
£’000 |
|
|
|
|
|
|
|
|
|
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|
Investment
income |
2 |
1,696 |
- |
1,696 |
909 |
- |
909 |
3,206 |
- |
3,206 |
Holding (losses)/gains
on investments at fair value through profit or loss |
|
- |
(6,221) |
(6,221) |
- |
1,959 |
1,959 |
- |
3,925 |
3,925 |
(Losses)/gains on
disposal of investments at fair value through profit or loss |
|
- |
(2,068) |
(2,068) |
- |
398 |
398 |
- |
(927) |
(927) |
Foreign exchange
(losses)/gains |
|
(124) |
(55) |
(179) |
- |
18 |
18 |
(53) |
(47) |
(100) |
Expenses |
|
(366) |
(125) |
(491) |
(218) |
(110) |
(328) |
(417) |
(231) |
(648) |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
(Loss)/profit before
finance costs and tax |
|
1,206 |
(8,469) |
(7,263) |
691 |
2,265 |
2,956 |
2,736 |
2,720 |
5,456 |
|
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|
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|
Finance costs |
|
(27) |
(6) |
(33) |
(12) |
(14) |
(26) |
(35) |
(14) |
(49) |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
(Loss)/profit before tax |
|
1,179 |
(8,475) |
(7,296) |
679 |
2,251 |
2,930 |
2,701 |
2,706 |
5,407 |
Taxation |
|
12 |
- |
12 |
12 |
- |
12 |
28 |
- |
28 |
|
|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
(Loss)/profit for
the period |
|
1,191 |
(8,475) |
(7,284) |
691 |
2,251 |
2,942 |
2,729 |
2,706 |
5,435 |
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|
_____ |
_____ |
_____ |
_____ |
_____ |
|
_____ |
_____ |
_____ |
Earnings per
ordinary share |
4 |
|
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Basic |
|
4.06p |
(33.90)p |
(29.84)p |
2.06p |
9.01p |
11.07p |
9.51p |
10.83p |
20.34p |
Diluted |
|
3.40p |
(24.21)p |
(20.81)p |
1.97p |
6.43p |
8.40p |
7.80p |
7.73p |
15.53p |
The company does not have any income or expense that is not
included in loss for the period and all items derive from
continuing operations. Accordingly, the ‘(Loss)/profit’ for
the period is also the ‘Total Comprehensive Income for the period’
as defined in IAS 1(revised) and no separate Statement of
Comprehensive Income has been presented.
The total column of this statement is the company’s Income
Statement, prepared in accordance with IFRS. The
supplementary revenue return and capital return columns are both
prepared under guidelines published by the Association of
Investment Companies.
All profit and total comprehensive income is attributable to the
equity holders of the company.
CONDENSED STATEMENT
OF CHANGES IN EQUITY |
|
Six months ended 30 June
2016 |
|
|
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|
Unaudited
Six months ended 30 June 2016 |
|
|
Share
capital*
£’000 |
Capital
reserve
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
|
|
|
|
|
|
Balance at 31 December 2015 |
|
35,000 |
(7,588) |
2,799 |
30,211 |
(Loss)/profit for the period |
|
- |
(8,475) |
1,191 |
(7,284) |
Ordinary dividend paid |
|
- |
- |
(1,375) |
(1,375) |
Preference dividend paid |
|
- |
- |
(175) |
(175) |
|
|
________ |
________ |
________ |
________ |
Balance at 30 June 2016 |
|
35,000 |
(16,063) |
2,440 |
21,377 |
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Unaudited
Six months ended 30 June 2015
|
|
|
Share
capital*
£’000 |
Capital
reserve
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
|
|
|
|
|
|
Balance at 31 December 2014 |
|
35,000 |
(10,294) |
2,420 |
27,126 |
Profit for the period |
|
- |
2,251 |
691 |
2,942 |
Ordinary dividend paid |
|
- |
- |
(1,325) |
(1,325) |
Preference dividend paid |
|
- |
- |
(175) |
(175) |
|
|
________ |
________ |
________ |
________ |
Balance at 30 June 2015 |
|
35,000 |
(8,043) |
1,611 |
28,568 |
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Audited
Year ended 31 December 2015
|
|
|
Share
capital*
£’000 |
Capital
reserve
£’000 |
Retained
earnings
£’000 |
Total
£’000 |
|
|
|
|
|
|
Balance at 31 December 2014 |
|
35,000 |
(10,294) |
2,420 |
27,126 |
Profit for the period |
|
- |
2,706 |
2,729 |
5,435 |
Ordinary dividend paid |
|
- |
- |
(2,000) |
(2,000) |
Preference dividend paid |
|
- |
- |
(350) |
(350) |
|
|
________ |
________ |
________ |
________ |
Balance at 31 December 2015 |
|
35,000 |
(7,588) |
2,799 |
30,211 |
|
|
________ |
________ |
________ |
________ |
*The company’s share capital comprises £35,000,000 (2015 -
£35,000,000) being 25,000,000 ordinary shares of £1 (2015 -
25,000,000) and 10,000,000 non-voting convertible preference shares
of £1 each (2015 - 10,000,000).
CONDENSED BALANCE SHEET |
|
|
|
|
|
As at 30 June 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
30 June
2016
£’000 |
Unaudited
30 June
2015
£’000 |
Audited
31 December
2015
£’000 |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Investments – fair value through
profit or loss (note 1) |
|
|
22,641 |
27,788 |
37,497 |
Subsidiaries – fair value through
profit or loss |
|
|
6,269 |
6,207 |
6,789 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
28,910 |
33,995 |
44,286 |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Receivables |
|
|
2,739 |
1,337 |
1,587 |
Cash and cash equivalents |
|
|
137 |
1,190 |
344 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
2,876 |
2,527 |
1,931 |
|
|
|
|
|
|
|
|
|
_________ |
_________ |
_________ |
Total assets |
|
|
31,786 |
36,522 |
46,217 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
|
|
2,211 |
1,903 |
9,124 |
Bank loan |
|
|
3,579 |
1,724 |
2,339 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
(5,790) |
(3,627) |
(11,463) |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
Total assets less current
liabilities |
|
|
25,996 |
32,895 |
34,754 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
Non – current
liabilities |
|
|
(4,619) |
(4,327) |
(4,543) |
|
|
|
_________ |
_________ |
_________ |
Net assets |
|
|
21,377 |
28,568 |
30,211 |
|
|
|
_________ |
_________ |
_________ |
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 |
|
|
(16,063) |
(8,043) |
(7,588) |
Retained revenue earnings |
|
|
2,440 |
1,611 |
2,799 |
|
|
|
_________ |
_________ |
_________ |
Total equity |
|
|
21,377 |
28,568 |
30,211 |
|
|
|
_________ |
_________ |
_________ |
Net assets per ordinary share –
basic |
|
|
£0.46 |
£0.74 |
£0.81 |
|
|
|
_________ |
_________ |
_________ |
Net assets per ordinary share –
diluted |
|
|
£0.61 |
£0.82 |
£0.86 |
|
|
|
_________ |
_________ |
_________ |
CONDENSED CASHFLOW
STATEMENT |
|
|
|
|
|
Six months ended 30 June
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
6 months to
30 June
2016
£’000 |
Unaudited
6 months to
30 June
2015
£’000 |
Audited
Year ended
31 December
2015
£’000 |
|
|
|
|
|
|
Cash flow from operating
activities |
|
|
|
|
|
|
|
|
|
|
|
(Loss)/profit before
tax |
|
|
(7,296) |
2,930 |
5,407 |
|
|
|
|
|
|
Adjustment for: |
|
|
|
|
|
Losses/(profits) on investments |
|
|
8,289 |
(2,357) |
(2,998) |
Scrip dividends |
|
|
(4) |
(3) |
(397) |
Proceeds on disposal of investments
at fair value |
|
|
|
|
|
through profit or loss |
|
|
26,366 |
3,677 |
14,596 |
Purchases of investments at fair
value |
|
|
|
|
|
through profit or loss |
|
|
(27,060) |
(1,357) |
(13,349) |
Interest |
|
|
33 |
26 |
49 |
|
|
|
________ |
________ |
________ |
Operating cash flows before
movements |
|
|
|
|
|
in working capital |
|
|
328 |
2,916 |
3,308 |
Increase in receivables |
|
|
(76) |
(98) |
(181) |
(Decrease)/increase in payables |
|
|
(123) |
480 |
(258) |
|
|
|
________ |
________ |
________ |
Net cash from operating
activities |
|
|
|
|
|
before interest |
|
|
129 |
3,298 |
2,869 |
Interest paid |
|
|
- |
(26) |
(49) |
|
|
|
________ |
________ |
________ |
Net cash from operating
activities |
|
|
|
|
|
after interest before taxation |
|
|
129 |
3,272 |
2,820 |
Taxation |
|
|
- |
12 |
28 |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
Net cash flows from operating
activities |
|
|
129 |
3,284 |
2,848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow from financing
activities |
|
|
|
|
|
Dividends paid on ordinary
shares |
|
|
(1,375) |
(1,325) |
(2,000) |
Dividends paid on preference
shares |
|
|
(175) |
- |
(350) |
Bank loan |
|
|
1,240 |
(1,019) |
(404) |
Interest paid |
|
|
(26) |
- |
- |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
Net cash used in financing
activities |
|
|
(336) |
(2,344) |
(2,754) |
|
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
|
|
Net
(decrease)/increase in cash and cash
equivalents |
|
|
(207) |
940 |
94 |
|
|
|
|
|
|
Cash and cash equivalents at
beginning of period |
|
|
344 |
250 |
250 |
|
|
|
________ |
________ |
________ |
Cash and cash equivalents at end
of period |
|
|
137 |
1,190 |
344 |
|
|
|
________ |
________ |
________ |
NOTES TO THE COMPANY’S CONDENSED
FINANCIAL STATEMENT
1. Accounting policies
Basis of preparation
This interim report is prepared in accordance with IAS 34 ‘Interim
Financial Reporting’ and on the basis of the accounting policies
set out in the company’s annual Report and financial statements at
31 December 2015.
The annual financial statements of the company are prepared in
accordance with International Financial Reporting standards as
adopted by the European Union.
Basis of preparation and statement of
compliance
The company’s condensed financial statements have been prepared
in accordance with International Financial Reporting Standards
(IFRS), which comprise standards and interpretations approved by
the IASB and International Accounting Standards and Standing
Interpretations Committee interpretations approved by the IASC that
remain in effect, and to the extent they have been adopted by the
European Union.
The company used to publish group accounts for British &
American Investment Trust PLC Group which were prepared under IFRS.
Following an amendment introduced in IFRS 10 in December 2014, the group is no longer allowed to
consolidate its subsidiaries and therefore instead of preparing
group accounts it now prepares separate financial statements for
the parent entity only. In order to promote consistency with the
way that the group accounts were previously prepared, the company
changed from UK GAAP to IFRS in 2014.
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 2015 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 as at fair value through
profit or loss are included in net 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 bid prices or last traded prices,
depending upon the convention of the exchange on which the
investment is quoted at the close of business on the balance sheet
date. Investments in units of unit trusts or shares in OEICs are
valued at the closing price released by the relevant investment
manager.
In respect of unquoted investments, or where the market for a
financial instrument is not active, fair value is established by
using an appropriate valuation technique.
Investments of the company in subsidiary companies are held at
the fair value of their underlying assets and liabilities.
This includes the valuation of film rights in British and
American Films Limited and thus the fair value of its immediate
parent BritAm Investments Limited. In determining the fair value of
the film rights, estimates are made. These include future film
revenues which are estimated by the management. Estimations made
have taken into account historical results, current trends and
other relevant factors.
Where a subsidiary has negative net
assets it is included in investments at nil value and a provision
is made for it on the balance sheet where the ultimate parent
company has made a guarantee to pay the liabilities if they fall
due.
Dividend income from investments is recognised as income when the
shareholders’ rights to receive payment has been established,
normally the ex-dividend date.
Interest income on fixed interest securities is recognised on a
time apportionment basis so as to reflect the effective interest
rate of the security.
When special dividends are received, the underlying
circumstances are reviewed on a case by case basis in determining
whether the amount is capital or income in nature. Amounts
recognised as income will form part of the company's distribution.
Any tax thereon will follow the accounting treatment of the
principal amount.
All expenses are accounted for on an accruals basis. Expenses
are charged as revenue items in the income statement except as
follows:
– transaction costs which are incurred on the purchase or sale
of an investment designated as fair value through profit or loss
are expensed and included in the capital column of the income
statement;
– expenses are split and presented partly as capital items where
a connection with the maintenance or enhancement of the value of
the investments held can be demonstrated, and accordingly
investment management and related costs have been allocated 50%
(2015 – 50%) to revenue and 50% (2015 –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’ and
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.
Segmental reporting
The directors are of the opinion that the company is engaged in
a single segment of business, that is investment business, and
therefore no segmental reporting is provided.
2. Investment income
|
|
Unaudited
6 months
to 30 June
2016
£’000 |
Unaudited
6 months
to 30 June
2015
£’000 |
Audited
Year ended
31 December
2015
£’000 |
|
|
|
|
|
Income from investments |
|
1,683 |
898 |
3,184 |
Other income |
|
13 |
11 |
22 |
|
|
_________ |
_________ |
_________ |
|
|
1,696 |
909 |
3,206 |
|
|
_______ |
_______ |
_______ |
Of the £1,626,000 (30 June 2015 –
£826,000, 31 December 2015 –
£3,050,000) dividends received in the company accounts, £1,349,000
(30 June 2015 – £nil, 31 December 2015 – £1,586,000) related to special
and other dividends received from investee companies that were
bought after the dividend announcement. There was a corresponding
capital loss of £1,631,000 (30 June
2015 – £nil, 31 December 2015
– £869,000), on these investments.
Under IFRS 10 the income analysis is for the parent company only
rather than that of the consolidated group shown in previous
years. Thus film revenues of £18,000 (30 June 2015 - £29,000,
31 December 2015 - £88,000) received by the
subsidiary British & American Films Limited and property unit
trust income of £8,000 (30 June 2015
- £10,000, 31 December 2015 -
£17,000) received by the subsidiary BritAm Investments Limited are
shown separately in this paragraph for information purposes.
3. Proposed dividends
|
Unaudited
6 months to
30 June 2016 |
Unaudited
6 months to
30 June 2015 |
Audited
Year ended
31 December 2015 |
|
Interim |
Interim |
Final |
|
|
|
|
|
Pence per
share |
£’000 |
Pence per share |
£’000 |
Pence per share |
£’000 |
|
|
|
|
|
|
|
Ordinary shares |
2.7 |
675 |
2.7 |
675 |
5.5 |
1,375 |
Preference shares –
fixed |
1.75 |
175 |
1.75 |
175 |
1.75 |
175 |
|
|
_________ |
|
_________ |
|
_________ |
|
|
850 |
|
850 |
|
1,550 |
|
|
_______ |
|
_______ |
|
_______ |
The directors have declared an interim dividend of 2.7p (2015 –
2.7p) per ordinary share, payable on
10 November 2016 to shareholders
registered on 14 October 2016. The
shares will be quoted ex–dividend on 13
October 2016.
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.
Amounts recognised as distributions to ordinary shareholders in the
period:
|
Unaudited
6 months to
30 June 2016 |
Unaudited
6 months to
30 June 2015 |
Audited
Year ended
31 December 2015 |
|
|
|
|
|
|
|
|
Pence per
share |
£’000 |
Pence per share |
£’000 |
Pence per share |
£’000 |
|
|
|
|
|
|
|
Ordinary shares –
final |
5.5 |
1,375 |
5.3 |
1,325 |
5.3 |
1,325 |
Ordinary shares –
interim |
- |
- |
- |
- |
2.7 |
675 |
Preference shares –
fixed |
1.75 |
175 |
1.75 |
175 |
3.5 |
350 |
|
|
_________ |
|
_________ |
|
_________ |
|
|
1,550 |
|
1,500 |
|
2,350 |
|
|
_______ |
|
_______ |
|
_______ |
4. Earnings per ordinary share
|
|
Unaudited
6 months
to 30 June
2016
£’000 |
Unaudited
6 months
to 30 June
2015
£’000 |
Audited
Year ended
31 December
2015
£’000 |
Basic earnings per share |
|
|
|
|
Calculated on the basis of: |
|
|
|
|
Net revenue profit after preference
dividends |
|
1,016 |
516 |
2,379 |
Net capital (loss)/profit |
|
(8,475) |
2,251 |
2,706 |
|
|
_________ |
_________ |
_________ |
Net total earnings after preference
dividends |
|
(7,459) |
2,767 |
5,085 |
|
|
_______ |
_______ |
_______ |
Ordinary shares in issue |
|
25,000 |
25,000 |
25,000 |
|
|
_______ |
_______ |
_______ |
Diluted earnings per
share |
|
|
|
|
Calculated on the basis of: |
|
|
|
|
Net revenue profit |
|
1,191 |
691 |
2,729 |
Net capital (loss)/profit |
|
(8,475) |
2,251 |
2,706 |
|
|
_________ |
_________ |
_________ |
(Loss)/profit after taxation |
|
(7,284) |
2,942 |
5,435 |
|
|
_______ |
_______ |
_______ |
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).
5. 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
30 June
2016
£’000 |
Unaudited
30 June
2015
£’000 |
Audited
31 December
2015
£’000 |
|
|
|
|
Total net assets |
21,377 |
28,568 |
30,211 |
Less convertible preference
shares |
(10,000) |
(10,000) |
(10,000) |
|
__________ |
__________ |
__________ |
Net assets attributable to ordinary
shareholders |
11,377 |
18,568 |
20,211 |
|
________ |
________ |
________ |
Diluted net asset value is calculated on the total net assets in
the table above and on 35,000,000 shares, taking into account the
preference shares which are convertible to ordinary shares on a one
for one basis, under certain conditions, at any time during the
period 1 January 2006 to 31 December 2025 (both dates inclusive).
Basic net assets and earnings per share are calculated using a
value of par for the preference shares.
Consequently, when the net asset value attributed to ordinary
shares remains below par the diluted net asset value will show a
higher value than the basic net asset value.
6. Non – current liabilities
Guarantee of subsidiary
liability |
|
Unaudited
30 June
2016
£’000 |
Unaudited
30 June
2015
£’000 |
Audited
31 December
2015
£’000 |
|
|
|
|
|
Opening
provision |
|
4,543 |
4,293 |
4,293 |
Increase in period |
|
76 |
34 |
250 |
|
|
________ |
________ |
________ |
Closing provision |
|
4,619 |
4,327 |
4,543 |
|
|
______ |
______ |
______ |
|
|
|
|
|
The provision is in respect of a guarantee made by the company
for liabilities between its wholly owned subsidiaries, Second
BritAm Investments Limited, BritAm Investments Limited and British
and American Films Limited. The guarantee is to pay out the
liabilities of Second BritAm Investments Limited if they fall due.
There is no current intention for these liabilities to be
called.
7. Related party transactions
Romulus Films Limited and Remus Films Limited have significant
shareholdings in the company (6,902,812 (27.6%) ordinary shares
held by Romulus Films Limited, 7,868,750 (31.5%) ordinary shares
held by Remus Films Limited). Romulus Films Limited also holds
10,000,000 cumulative convertible preference shares.
The company rents its offices from Romulus Films Limited, and is
also charged for its office overheads. During the period the
company paid £9,309 (30 June 2015 –
£8,876 and 31 December 2015 –
£17,949) in respect of those services.
The salaries and pensions of the company’s employees, except for
the three non-executive directors, 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 2016 were £216,142 (30 June 2015 – £190,046 and 31 December 2015 – £418,571) in respect of salary
costs and £28,250 (30 June 2015 –
£24,000 and 31 December 2015 –
£43,400) in respect of pensions.
At the period end an amount of £15,577 (30 June 2015 – £11,978 and 31 December 2015 – £(155,018)) was due from/(to)
Romulus Films Limited and £39,829 (30 June
2015 – £44,027 and 31 December
2015 – £95,831) was due to Remus Films Limited.
During the period subsidiary BritAm Investments Limited paid
dividends of £nil (30 June 2015 –
£580,000 and 31 December 2015 –
£580,000) to the parent company, British & American Investment
Trust PLC.
British & American Investment Trust PLC has guaranteed the
liabilities of £4,619,000 (30 June
2015 – £4,327,000 and 31 December
2015 – £4,543,000) due from Second BritAm Investments
Limited to its fellow subsidiaries if they should fall due.
During the period the company paid interest of £7,357
(30 June 2015 – £10,533 and
31 December 2015 – £18,000) on the
loan due to BritAm Investments Limited.
During the period the company received interest of £8,890
(30 June 2015 – £9,778 and
31 December 2015 – £19,000) from
British and American Films Limited and £2,314 (30 June 2015 – £1,283 and 31 December 2015 – £3,000) from Second BritAm
Investments Limited.
All transactions with subsidiaries were made on an arm’s length
basis.
During the period the company entered into a number of
investment transactions with Geminion Investments Limited, a
company in which Mr J C Woolf has an interest and is a director.
The purpose of these transactions, which were all conducted through
a London Stock Exchange broker, was for the company to purchase cum
dividend stocks and sell these stocks ex dividend so as to capture
the associated dividends as disclosed in Note 2 of the financial
statements. The aggregate value of these transactions were
purchases of £18,272,000 (30 June
2015 – £nil and 31 December
2015 – £19,923,000), dividends received of £1,238,000
(30 June 2015 – £nil and 31 December 2015 – £1,586,000) and sales of
£16,748,000 (30 June 2015 – £nil and
31 December 2015 – £10,816,000) made
during the period and sales made after the period end of £nil
(30 June 2015 – £nil and 31 December 2015 – £7,975,000) giving a net loss
of £286,000 (30 June 2015 – £nil and
31 December 2015 – £454,000
gain).
Details of any past related party transactions are contained in
the company’s Annual Report for the year ended 31 December 2015.
8. Retained earnings
The table below shows the movement in the retained earnings
analysed between revenue and capital items.
|
Capital
reserve
£’000 |
Retained
earnings
£’000 |
|
|
|
1 January 2016 |
(7,588) |
2,799 |
Allocation of profit
for the period |
(8,475) |
1,191 |
Ordinary and
preference dividends paid |
- |
(1,550) |
|
_________ |
_________ |
At 30 June
2016 |
(16,063) |
2,440 |
|
________ |
________ |
The capital reserve includes £98,000 of investment holding
losses (30 June 2015 – £4,761,000
gain, 31 December 2015 – £6,733,000
gain).
9. 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 2016 |
Level
1
£’000 |
Level
2
£’000 |
Level
3
£’000 |
Total
£’000 |
Investments including
derivatives: |
|
|
|
|
Investments held at
fair value through profit or loss |
20,226 |
2,301 |
114 |
22,641 |
Subsidiary held at
fair value through profit or loss |
- |
- |
6,269 |
6,269 |
|
_________ |
_________ |
_________ |
_________ |
Total financial
assets and liabilities carried at fair value |
20,226 |
2,301 |
6,383 |
28,910 |
|
_______ |
_______ |
_______ |
_______ |
With the exception of the Biotime Promissory Note (30 June 2015 – Biotime Series A Convertible
Preferred Stock) and BritAm Investments Limited and Second BritAm
Investments Limited (unquoted subsidiaries) which are categorised
as Level 3 and two investments in Unit Trusts which is categorised
as Level 2 (2), all other investments are categorised as Level
1.
Biotime Promissory Note
To accommodate BioTime’s listing application to the Tel Aviv
Stock Exchange (TASE), the company elected and agreed to convert
40,000 Preferred Shares held into BioTime common shares on
August 14, 2015 at the conversion
price of $4.00 per common share. The
company received 500,000 common shares and a promissory note in an
amount of principal equal to $207,737
and bearing interest at the rate of 3% per annum. Repayments of the
principal and payments of interest are made six-monthly with the
final repayment of principal due on 4 March
2019.
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 2016 |
6,911 |
Purchases |
- |
Sales proceeds |
(20) |
Gains on sales |
2 |
Investment holding
losses |
(510) |
|
_________ |
Closing fair value at
30 June 2016 |
6,383 |
|
_________ |
Subsidiaries
The fair value of the subsidiaries is determined to be equal to
the net asset values of the subsidiaries at year end plus the
uplift in the revaluation of film rights in British and American
Films Limited, a subsidiary of BritAm Investments Limited.
The fair value of the film rights have been determined by
estimating the present value of the pre-tax film revenues in the
next 10 years discounted at a discount rate of 12%. The directors’
valuation of British & American Films Limited has been based on
pre-tax profits as sufficient group relief exists to mitigate the
tax effect.
There have been no transfers between levels of the fair value
hierarchy during the period. Transfers between levels of fair value
hierarchy are deemed to have occurred at the date of the event or
change in circumstances that caused the transfer.
DIRECTORS’ STATEMENT
Principal risks and uncertainties
The principal risks and uncertainties faced by the company
continue to be as described in the previous annual accounts.
Further information on each of these areas, together with the risks
associated with the company's financial instruments are shown in
the Directors' Report and notes to the financial statements within
the Annual Report and Accounts for the year ended 31 December 2015.
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 26 August 2016 and the above responsibility
statement was signed on its behalf by:
Jonathan C Woolf
Independent review report to the
members of British & American Investment Trust PLC
Introduction
We have been engaged by the company to review the condensed set of
financial statements in the half-yearly financial report of British
& American Investment Trust PLC for the six months ended
30 June 2016 which comprises the
Condensed Income Statement, the Condensed Statement of Changes in
Equity, the Condensed Balance Sheet, the Condensed Cashflow
Statement and related Notes to the Company results. We have read
the other information contained in the half-yearly financial report
being the Financial Highlights, the Chairman's Statement, the
Managing Director's Report, the Investment Portfolio and the
Directors' Statement, and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the company, in accordance with
International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial
Information performed by the Independent Auditor of the Entity'
issued by the Auditing Practices Board. Our review work has been
undertaken so that we might state to the company those matters we
are required to state to it in an independent review report and for
no other purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the company
for our review work, for this report, or for the conclusion we have
formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 1, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as
adopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed set
of financial statements in the half-yearly financial report based
on our review.
Scope of review
We conducted our review in accordance with International Standard
on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not enable us
to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes
us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2016 is not prepared, in all material
respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct
Authority.
GRANT THORNTON UK LLP
AUDITOR
London
26 August 2016