TIDMBAF
British & American Investment Trust PLC
Annual Financial Report
for the year ended 31 December 2018
Registered number: 00433137
Directors Registered office
David G Seligman (Chairman) - appointed as Chairman 1 January Wessex House
2018
Jonathan C Woolf (Managing Director) 1 Chesham Street
Dominic G Dreyfus (Non-executive and Chairman of the Audit Telephone: 020 7201
Committee) 3100
Ronald G Paterson (Non-executive) - retired as Director 30 June
2018
Alex Tamlyn (Non-executive) - appointed as Director 1 July 2018 Registered in
England
No.00433137
30 April 2019
This is the Annual Financial Report as required to be published under DTR 4 of
the UKLA Listing Rules.
Financial Highlights
For the year ended 31 December 2018
2018 2017
Revenue Capital Total Revenue Capital Total
return return return return
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit/(loss) before tax - 2,489 (502) 2,210 516
realised (2,991) (1,694)
Loss before tax - - (4,644) (4,644) - (5,249) (5,249)
unrealised
__________ __________ __________ __________ __________ __________
Profit/(loss) before tax - 2,489 (7,635) (5,146) 2,210 (6,943) (4,733)
total
__________ __________ __________ __________ __________ __________
Earnings per GBP1 ordinary
share - basic 8.68p (30.54)p (21.86)p 7.58p (27.77)p (20.19)p
__________ __________ __________ __________ __________ __________
Earnings per GBP1 ordinary
share - diluted 7.21p (21.81)p (14.60)p 6.41p (19.84)p (13.43)p
__________ _________ __________ __________ _________ __________
Net assets 7,919 15,534
__________ __________
Net assets per ordinary
share
- deducting preference
shares at par 0p 22p
__________ __________
- diluted 23p 44p
__________ __________
34p
Diluted net asset value
per ordinary share at 26
April 2019
__________
Dividends declared or
proposed for the period
per ordinary share
- interim paid 2.7p 2.7p
- final proposed 6.0p 5.9p
per preference share 3.5p 3.5p
Basic net assets and earnings per share are calculated using a value of par for
the preference shares.
Consequently, when the net asset value attributed to ordinary shares remains
below par the diluted net asset value will show a higher value than the basic
net asset value.
Chairman's Statement
I report our results for the year ended 31 December 2018.
Revenue
The return on the revenue account before tax amounted to GBP2.5 million (2017: GBP
2.2 million), an increase of 13 percent. This increase was due to higher levels
of dividends received from our subsidiary companies compared to the previous
year.
Gross revenues totalled GBP3.1 million (2017: GBP2.7 million). In addition, film
income of GBP92,000 (2017: GBP101,000) and property unit trust income of GBP14,000
(2017: GBP15,000) was received in our subsidiary companies. In accordance with
IFRS10, these income streams are not included within the revenue figures noted
above.
The total return before tax amounted to a loss of GBP5.1 million (2017: GBP4.7
million loss), which comprised net revenue of GBP2.5 million, a realised loss of
GBP2.6 million and an unrealised loss of GBP4.6 million. The revenue return per
ordinary share was 8.7p (2017: 7.6p) on an undiluted basis and 7.2p (2017:
6.4p) on a diluted basis.
Net Assets and Performance
Net assets at the year end were GBP7.9 million (2017: GBP15.5 million), a decrease
of 49.0 percent. This compares to decreases in the FTSE 100 and All Share
indices of 12.5 percent and 13.0 percent, respectively, over the period. On a
total return basis, after adding back dividends paid during the year, our net
assets decreased by 32.9 percent compared to 9.0 percent and 9.5 percent
decreases in the FTSE 100 and All Share indices, respectively.
This very poor end of year result followed the strong and market out-performing
advance in net asset value which we were able to report at the half year stage
of 12.8 percent and was the result of an unexpected setback in late September
in the value of our largest US investment, Geron Corporation. Although the
value of this investment had risen by 95 percent in the first 6 months of 2018
and by 260 percent towards the end of the third quarter, the very unexpected
decision by Johnson and Johnson on 27th September to discontinue its clinical
trial collaboration with Geron resulted in a collapse of over 80 percent in
Geron's stock price over the fourth quarter, and a fall of 44 percent for the
year as a whole. At the time, Johnson and Johnson cited general portfolio
reasons for the discontinuation and not any perceived problems with the
collaboration or the trials. This drop in Geron's stock price also coincided
with a substantial reversal in US equity markets in December of 14 percent,
which was the steepest intra-month fall in stock prices since the Great
Recession of 2008.
The circumstances surrounding this unfortunate development and the outlook are
discussed in greater detail in the managing director's report below. The shock
of the unexpected loss of Johnson and Johnson as Geron's collaborator resulted
in the immediate and severe market downgrade in Geron's value noted above.
However, the efficacy and potential of Geron's haematological cancer treatment,
Imetelstat, was nevertheless publicly reconfirmed at the American Society of
Haematology (ASH) international conference some two months later in December,
since when the value of Geron has recovered significantly. Geron is continuing
its plans to initiate Phase 3 clinical trials on its own by mid 2019, having
recently added a number of highly regarded and experienced clinical trial
executives to its team (including the executive at Johnson and Johnson who had
led the collaboration). This should allow the stock price to consolidate its
recovery and hopefully regain the price levels seen in mid 2018, particularly
since Geron now once again owns 100 percent of the technology having received
back Johnson and Johnson's 80 percent share. Since the year end, however, the
value of Geron has recovered substantially and has made strong gains of 91
percent, accounting for the substantial improvement in the company's net asset
value as at 26 April 2019 shown below.
More generally in 2018, equity markets in the USA and UK made little or no
progress overall. In the USA, a substantial fall of 10 percent at the beginning
of the year caused by market reaction to erratic policy making in international
trade and foreign relations by the White House was gradually reversed over the
following months as investors began to expect a moderation in the previously
expected course of rising US dollar interest rates for the rest of the year. By
mid-year the market regained its opening year values, which had represented
multi-year highs, but from October declined dramatically again by almost 20
percent to the end of the year as the continued war of words between the USA
and China on trade policy and damaging trade sanctions between the two
countries began to raise investor concerns about the impact on global growth
levels going forward.
In the UK, the equity market followed the pattern set by the US market to
mid-year, then declined steadily to the year end, falling 12.5 percent in the
second half. Market performance was completely dominated by the ongoing
travails of Brexit and the concomitant movements in sterling. The ongoing lack
of progress in negotiations and the inexorable approach of the exit date of end
March 2019 heralding a hard and 'no deal' Brexit began to weigh on levels of
corporate investment in the UK, unnerving investors. By contrast, however, as
sterling weakened in response to these concerns, it provided some support to
the market, as large corporates' foreign earnings streams became better valued.
The downward trend over this period was therefore punctuated by periods of
stabilisation, but the overall decline to the year end was maintained with no
progress being made on finding a solution to the most significant political and
economic event in the UK's history for generations.
Dividend
We are pleased to recommend an increased final dividend of 6.0p per ordinary
share, which together with the interim dividend makes a total payment for the
year of 8.7p (2017: 8.6p) per ordinary share. This represents an increase of
1.2 percent over the previous year's total dividend and a yield of 18.3 percent
based on the share price of 47.5p at the end of the year. The final dividend
will be payable on 27 June 2019 to shareholders on the register at 24 May 2019.
A dividend of 1.75p will be paid to preference shareholders resulting in a
total payment for the year of 3.5p per share.
We are pleased to have been named as a 'Dividend Hero' by the Association of
Investment Companies once again for the third year running as one of the 20
investment trusts which have maintained a consistent 20 year record of
increasing dividends.
We have been able to maintain our progressive dividend policy over these years
and particularly in recent years through an active programme of targeted
investment at opportune times in higher yielding but mainstream investments
together with the realisation of capital profits through our group subsidiary
companies. When such profits are realised in these companies they can be paid
out to our shareholders in dividends, as was the case this past year for
example, when we were able to realise profits on part of our holdings in Geron
Corporation when its stock price rose substantially over the first three
quarters of 2018. However, following the severe decline in Geron's stock price
in the last quarter of 2018, the continued availability of profits from this
source will be constrained unless the stock price returns to the levels seen in
the earlier part of 2018. Without this, it is unlikely that we will be able to
maintain our progressive dividend policy going forward.
Outlook
The multiple economic and political uncertainties which currently present
themselves would normally presage deep concerns for investors
generally. However, although markets have now been showing considerably higher
levels of volatility than in recent years, as already noted, they remain at
around historically high levels and do not for the time being appear to show an
appetite for a sustained retrenchment into bear market territory. This is
likely to be the result of the continued overhang of the unprecedented monetary
easing programmes of prior years and more recently some early and possibly
politically-motivated policy modulations by the Federal Reserve and other
central banks to address the slowdown in global growth which was beginning to
be seen in 2018. Time will tell whether such monetary interventions or the
forces of politics in fiscal and trade policy will have a greater effect on
sustaining current and future levels of economic growth in the world. For the
time being, however, and despite the headwinds of trade wars and Brexit,
markets appear to have found a level with which they seem to be relatively
comfortable.
Against this background, we remain invested in our US biotechnology stocks
waiting to capture the gains expected as their programmes advance and reach
maturity but we do not expect to add to our other long term investments at this
point.
As at 26 April 2019, our net assets had increased to GBP11.8 million, an increase
of 49.3 percent since the beginning of the calendar year due principally to the
91.0 percent increase in the share price of Geron Corporation over this period.
This is equivalent to 7.3 pence per share (prior charges deducted at par) and
33.8 pence per share on a diluted basis. Over the same period the FTSE 100
increased 10.4 percent and the All Share Index increased 10.8 percent.
David Seligman
30 April 2019
Managing Director's report
In 2018, our portfolio value was substantially affected by large positive and
negative movements in the stock price of our largest investment, Geron
Corporation. At the half year, we were able to report an increase in our NAV of
12.8 percent, outperforming the market by over 20 percent on a total return
basis. This was largely due to the 91 percent increase in Geron's stock price
over that period. Geron's price then continued to increase to the end of
September by a further 80 percent. However, on 27th September Geron's price
dropped substantially for the reasons detailed below and the value of our
portfolio dropped by over 60 percent in the final quarter, resulting in
significant end of year underperformance, as already noted above. This drop in
the fourth quarter was exacerbated by a sharp fall in US and UK equity markets
generally over the same period of 20 percent and 14 percent, respectively, and
particularly in December when the US market experienced its largest one month
fall for over ten years. Our other substantial US investments were therefore
also affected by this last quarter movement in stock prices, contributing
further to the decline in our portfolio valuation.
In the second half of 2018, it seemed as though the ten year bull market in US
equities might reassert itself after a more volatile first half which had
included at least two instances of technical correction. Despite the political
headwinds emanating from the USA already noted above, economic strength and
corporate profitability in the USA was persisting, buoyed along by the tax cuts
of the previous year. For this reason, the Federal Reserve had mapped out a
course of gradually increasing interest rates for 2018 which was generally
being well digested by the market. However, as the year developed and progress
in resolving the US/China trade dispute remained stalled, real economic
consequences began to be shown through lower levels of growth in China, an
increased trade deficit in the USA and signs of lower levels of corporate
investment. This sapped investor confidence in the fourth quarter resulting in
the large market sell-off in the final three months.
At the same time in the UK, no signs of a conclusion to the Brexit process was
evident despite the looming approach of the 29th March 2019 exit deadline.
Corporates were forced therefore to take contingency measures involving changes
to their HQ or operational locations and emergency stock ordering programmes to
guard against the disruption to their operations presented by a potential
disorderly Brexit. The Government's own contingency preparations also attracted
sustained criticism for inadequacies for example arrangements by the NHS to
ensure adequate supplies of essential medicines or the availability of
additional cross-Channel ferry freight operations. As the atmosphere of
uncertainty increased during 2018, it transferred to the investment process
generally in the UK, with corporates restraining their investment plans until a
higher level of visibility was evident, the residential property market growing
at its slowest rate for 6 years, in fact recording negative real annual growth
for the first time since 2012, and financial investors showing little appetite
for equities. The pound sterling was also under pressure at times when the path
of the Brexit negotiations and the associated political dynamic indicated that
the chances of a disorderly Brexit were becoming more likely. In the last few
weeks, the previous March deadline has been extended by up to a further seven
months, and the immediate pressure on corporates and politicians alike has been
relieved with the likelihood of a disorderly Brexit now reduced. However, until
a majority is able to be found in Parliament on a way forward, the basic
questions surrounding the UK's relationship with its main trading partner will
remain, prolonging the uncertainties for business and exposing the currently
fractured and dysfunctional parliamentary setup.
While these significant political and macro-economic uncertainties persist, our
main focus remains on achieving our capital growth objectives through our
exposure to our US biotechnology investments and our income objectives through
our existing UK fund investments, capturing of special dividends and income
received from group subsidiaries.
Geron Corporation
As reported in detail in last year's interim report, Geron's stock price
increased substantially during the first part of 2018 to its highest level for
over 10 years, resulting in a fourfold increase in its market capitalisation
from $320 million to over $1.2 billion. This was a function of favourable
clinical trial results news and a strong expectation in the market that Johnson
and Johnson would confirm by the fourth quarter the continuation of their four
year collaboration with Geron to take their jointly owned oncology drug,
Imetelstat, through the final clinical trial stage and on to approval and
marketing. This decision point was to be the catalyst for the payment of future
milestones of almost $1 billion to Geron plus substantial future royalty
payments based on the drug's revenues.
Numerous indications of a positive continuation decision in the months leading
up to the decision were evident from a number of sources. These included the
acceleration by Johnson and Johnson earlier in the year of the decision date,
positive interim clinical trial results published in early 2018, inclusion of
Imetelstat as Johnson and Johnson's leading oncology drug candidate for
approval in 2020 in their corporate review in August 2018, inclusion of
Imetelstat on Johnson and Johnson's list of compassionate use drugs, and
numerous job postings by Johnson and Johnson worldwide for executives to work
on pricing/marketing strategy for its Myelodysplastic Syndrome (MDS) product
pipeline (Imetelstat being its only such candidate drug).
The wholly unexpected decision by Johnson and Johnson on 27th September not to
continue the collaboration for general portfolio reasons and with no
explanation of substance being given at the time not surprisingly resulted in a
large-scale sell off of the stock and a precipitous fall in the stock price.
Without any confirmation, either from Johnson and Johnson or Geron, of the
continued reliability of Imetelstat's previously published results and its
continued viability, market confidence in Imetelstat was badly shaken.
Geron's management had felt unable to provide even minimal confirmation of this
at the time as the company was subject to an information embargo related to a
number of important presentations due to be given at the prestigious American
Society of Haematology (ASH) conference some weeks later in early December.
They were, however, able to announce that Geron intended to take the MDS trials
forward themselves into the already planned Phase 3 phase by mid-2019.
At the ASH conference, the reports by the leading clinical trial investigators
on Imetelstat's efficacy in treating patients with MDS and MF were even better
than expected, showing never before seen improvements in blood transfusion
independence and overall survival in these two diseases. The results showed
that Imetelstat outperformed the current standard of care in the selected
patient populations who rely on the drugs Jaka? in MF and Revlimid in MDS,
which represent multi-billion dollar markets for their owners. Imetelstat was
also shown to outperform another new drug in MDS, Luspatercept, for which
Celgene is currently completing Phase 3 trials. In early 2019, Celgene which
also owns Revlimid received a takeover bid from Bristol-Myers Squibb valued at
$75 billion, indicating the value levels placed on drugs which can stabilise if
not cure MDS, an ultimately fatal haematological cancer with a 3 to 5 year life
expectancy on currently available drugs.
Geron's stock price remained weak through to the beginning of December awaiting
clarity from the ASH presentations, with the stock trading only just above
Geron's cash value of $185 million, thus effectively valuing the Imetelstat
platform at close to zero. However, despite the excellent trial results
announced at ASH, the value of Geron did not improve materially into the New
Year and in fact reached a low around the Christmas week, accounting for the
weakness in our portfolio value at the year end. The shock of Johnson and
Johnson's unexpected decision and mistrust of management's ability to take the
drug forward into the planned Phase 3 trials alone was sufficient to damage
confidence in the stock despite it having the funding to do so.
However, in February, Geron began to announce a series of important initiatives
to underpin its plans to take Imetelstat forward into the Phase 3 trials this
summer. It included the hiring of a number of highly experienced clinical trial
executives, including the executive who until last September had led
Imetelstat's clinical trials at Johnson and Johnson which had produced such
impressive results at ASH in December. A world leading Contract Research
Organisation (CRO) was also engaged to manage the regulatory and administrative
aspects of the trial.
These moves gave the market some confidence in Geron's ability to deliver on
Imetelstat's clear potential by taking the drug through the final trial on to
eventual approval and commercialisation. As a result, Geron's stock price has
recovered by over 90 percent since the beginning of the year.
Over the past year, our investment in Geron has proved to be even more volatile
than usual, in both positive and negative senses. We nevertheless remain
committed to this investment in which we continue to expect major upside
potential in the near future. Geron now owns 100 percent of Imetelstat again
with the 80 percent share previously transferred to Johnson and Johnson being
returned to it as a result of the ending of the partnership last year. This
being the case, there would seem to be no reason why on valuation grounds the
stock price of Geron should not return to at least those levels seen last year
when the market was looking forward to positive final Phase 2 trial results,
which have since been more than confirmed, and the anticipation of progress
into Phase 3 and eventual approval and commercialisation. We also believe that
given the circumstances of last year's discontinuation of the collaboration
with Johnson and Johnson, the excellent Phase 2 trial results announced since
then and the imminent commencement of Phase 3 trials, Geron should present an
attractive and valuable target to other major pharmaceutical companies looking
to consolidate or establish a position in the treatment of haematologic
malignancies by acquiring or partnering with Geron's drug, Imetelstat, which is
demonstrating results superior to other drugs currently or expected on the
market.
Jonathan Woolf
30 April 2019
Income statement
For the year ended 31 December 2018
2018 2017
Revenue Capital Total Revenue Capital Total
return return return return
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
Investment income (note 2) 3,056 - 3,056 2,732 - 2,732
Holding losses on investments (4,644) (4,644) (5,249) (5,249)
at fair value through profit or - -
loss
Losses on disposal of
investments at fair value - (2,647) (2,647) - (1,442) (1,442)
through profit or loss*
Foreign exchange (losses)/gains (61) (62) (123) 53 53 106
Expenses (457) (237) (694) (526) (272) (798)
________ ________ ________ ________ ________ ________
Profit/(loss) before finance 2,538 (7,590) (5,052) 2,259 (6,910) (4,651)
costs and tax
Finance costs (49) (45) (94) (49) (33) (82)
________ ________ ________ ________ ________ ________
Profit/(loss) before tax 2,489 (7,635) (5,146) 2,210 (6,943) (4,733)
Tax 31 - 31 35 - 35
________ ________ ________ ________ ________ ________
Profit/(loss) for the year 2,520 (7,635) (5,115) 2,245 (6,943) (4,698)
________ ________ ________ ________ ________ ________
Earnings per share
Basic - ordinary shares 8.68p (30.54)p (21.86)p 7.58p (27.77)p (20.19)p
________ ________ ________ ________ ________ ________
Diluted - ordinary shares 7.20p (21.81)p (14.61)p 6.41p (19.84)p (13.43)p
________ ________ ________ ________ ________ ________
The company does not have any income or expense that is not included in the
profit/(loss) for the year. Accordingly, the 'Profit/(loss) for the year' is
also the 'Total Comprehensive Income for the year' as defined in IAS 1
(revised) and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Income Statement, prepared in
accordance with IFRS. The supplementary revenue return and capital return
columns are both prepared under guidance published by the Association of
Investment Companies. All items in the above statement derive from continuing
operations.
All profit and total comprehensive income is attributable to the equity holders
of the company.
*Losses on disposal of investments at fair value through profit or loss include
Losses on sales of GBP917,000 (2017 - GBP1,208,000 losses) and Losses on provision
for liabilities and charges of GBP1,730,000 (2017 - GBP234,000 losses).
Statement of changes in equity
For the year ended 31 December 2018
Share Capital Retained Total
capital reserve earnings
GBP 000 GBP 000 GBP 000 GBP 000
Balance at 31 December 2016 35,000 (14,224) 1,906 22,682
Changes in equity for 2017
Profit/(loss) for the period - (6,943) 2,245 (4,698)
Ordinary dividend paid (note 4) - - (2,100) (2,100)
Preference dividend paid (note 4) - - (350) (350)
________ ________ ________ ________
Balance at 31 December 2017 35,000 (21,167) 1,701 15,534
Changes in equity for 2018
Profit/(loss) for the period - (7,635) 2,520 (5,115)
Ordinary dividend paid (note 4) - - (2,150) (2,150)
Preference dividend paid (note 4) - - (350) (350)
________ ________ ________ ________
Balance at 31 December 2018 35,000 (28,802) 1,721 7,919
________ ________ ________ ________
Registered number: 00433137
Balance Sheet
At 31 December 2018
2018 2017
GBP 000 GBP 000
Non-current assets
Investments - fair value through 8,722 15,565
profit or loss
Subsidiaries - fair value through 5,269 5,277
profit or loss
__________ __________
13,991 20,842
Current assets
Receivables 3,417 2,399
Cash and cash equivalents 244 2,213
__________ __________
3,661 4,612
__________ __________
Total assets 17,652 25,454
__________ __________
Current liabilities
Trade and other payables 547 1,010
Bank loan 2,790 4,244
__________ __________
(3,337) (5,254)
__________ __________
Total assets less current liabilities 14,315 20,200
__________ __________
Non - current liabilities (6,396) (4,666)
__________ __________
Net assets 7,919 15,534
__________ __________
Equity attributable to equity holders
Ordinary share capital 25,000 25,000
Convertible preference share capital 10,000 10,000
Capital reserve (28,802) (21,167)
Retained revenue earnings 1,721 1,701
__________ __________
Total equity 7,919 15,534
__________ __________
Approved: 30 April 2019
Cash flow statement
For the year ended 31 December 2018
Year ended Year ended 2017
2018
GBP 000 GBP 000
Cash flows from operating activities
Loss before tax (5,146) (4,733)
Adjustments for:
Losses on investments 7,291 6,691
Dividends in specie (290) -
Proceeds on disposal of investments at fair 13,635 13,867
value through profit and loss
Purchases of investments at fair value through (12,335) (11,570)
profit and loss
Finance costs 94 82
__________ __________
Operating cash flows before movements in working 3,249 4,337
capital
Increase in receivables (712) (780)
(Decrease)/increase in payables (773) 4
__________ __________
Net cash from operating activities before 1,764 3,561
interest
Interest paid (90) (75)
__________ __________
Net cash from operating activities 1,674 3,486
Cash flows from financing activities
Dividends paid on ordinary shares (1,839) (2,100)
Dividends paid on preference shares (350) (350)
Bank loan (1,454)
754
__________ __________
Net cash used in financing activities (3,643) (1,696)
__________ __________
Net (decrease)/increase in cash and cash (1,969) 1,790
equivalents
Cash and cash equivalents at beginning of year
2,213 423
__________ __________
Cash and cash equivalents at end of year
244 2,213
__________ __________
Purchases and sales of investments are considered to be operating activities of
the company, given its purpose, rather than investing activities.
1 Basis of preparation and going concern
The financial information set out above contains the financial information of
the company for the year ended 31 December 2018. The company has prepared its
financial statements under IFRS. The financial statements have been prepared on
a going concern basis adopting the historical cost convention except for the
measurement at fair value of investments, derivative financial instruments and
subsidiaries.
The information for the year ended 31 December 2018 is an extract from the
statutory accounts to that date. Statutory company accounts for 2017, which
were prepared under IFRS as adopted by the EU, have been delivered to the
registrar of companies and company statutory accounts for 2018, prepared under
IFRS as adopted by the EU, will be delivered in due course.
The auditors have reported on the 31 December 2018 year end accounts and their
reports were unqualified and did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying their reports
and did not contain statements under section 498(2) or (3) of the Companies Act
2006.
The directors, having made enquiries, consider that the company has adequate
financial resources to enable it to continue in operational existence for the
foreseeable future. Accordingly, the directors believe that it is appropriate
to continue to adopt the going concern basis in preparing the company's
accounts.
2 Income
2018 2017
GBP 000 GBP 000
Income from investments
UK dividends 1,180 2,260
Overseas dividends 92 44
Scrip and in specie dividends 290 -
Dividend from subsidiary 1,445 400
Interest on fixed income 1 3
securities
__________ __________
3,008 2,707
__________ __________
Other income 48 25
__________ __________
Total income 3,056 2,732
__________ __________
Total income comprises:
Dividends 3,007 2,704
Interest 1 3
Other interest 48 25
__________ __________
3,056 2,732
__________ __________
Dividends from investments
Listed investments 1,562 2,304
Unlisted investments 1,445 400
__________ __________
3,007 2,704
__________ __________
Of the GBP3,007,000 (2017 - GBP2,704,000) dividends received, GBP997,000 (2017 - GBP
1,891,000) related to special and other dividends received from investee
companies that were bought after the dividend announcement. There was a
corresponding capital loss of GBP1,007,000 (2017 - GBP1,949,000), on these
investments.
Under IFRS 10 the income analysis is for the parent company only rather than
that of the consolidated group. Thus film revenues of GBP92,000 (2017 - GBP101,000)
received by the subsidiary British and American Films Limited and property unit
trust income of GBP14,000 (2017 - GBP15,000) received by the subsidiary BritAm
Investments Limited are shown separately in this paragraph.
3 Earnings per ordinary share
The calculation of the basic (after deduction of preference dividend) and
diluted earnings per share is based on the following data:
2018 2017
Revenue Capital Total Revenue Capital Total
return return return return
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
GBP 000
Earnings:
Basic 2,170 (7,635) (5,465) 1,895 (6,943) (5,048)
Preference
dividend 350 - 350 350 - 350
__________ __________ __________ __________ __________ __________
Diluted 2,520 (7,635) (5,115) 2,245 (6,943) (4,698)
__________ __________ __________ __________ __________ __________
Basic revenue, capital and total return per ordinary share is based on the net
revenue, capital and total return for the period after tax and after deduction
of dividends in respect of preference shares and on 25 million (2017: 25
million) ordinary shares in issue.
The diluted revenue, capital and total return is based on the net revenue,
capital and total return for the period after tax and on 35 million (2017: 35
million) ordinary and preference shares in issue.
4 Dividends
2018 2017
GBP 000 GBP 000
Amounts recognised as distributions to equity
holders in the period:
Dividends on ordinary shares:
Final dividend for the year ended 31 December 2017
of 5.9p (2016:5.7p) per share 1,475 1,425
Interim dividend for the year ended 31 December
2018 of 2.7p 675 675
(2017:2.7p) per share
__________ __________
2,150 2,100
__________ __________
Proposed final dividend for the year ended 31
December 2018 of 6.0p (2017:5.9p) per share 1,500 1,475
__________ __________
Dividends on 3.5% cumulative convertible
preference shares:
Preference dividend for the 6 months ended 31
December 2017 of 1.75p (2016:1.75p) per share 175 175
Preference dividend for the 6 months ended 30 June
2018 of 1.75p (2017:1.75p) per share 175 175
__________ __________
350 350
__________ __________
Proposed preference dividend for the 6 months
ended 31 December 2018 of 1.75p (2017:1.75p) per 175 175
share
__________ __________
The proposed final dividend is subject to approval by shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements in accordance with IFRS.
We have set out below the total dividend payable in respect of the financial
year, which is the basis on which the retention requirements of Section 1158 of
the Corporation Tax Act 2010 are considered.
Dividends proposed for the period
2018 2017
GBP 000 GBP 000
Dividends on ordinary shares:
Interim dividend for the year ended 31 December
2018 of 2.7p (2017:2.7p) per share 675 675
Proposed final dividend for the year ended 31
December 2018 of 6.0p (2017:5.9p) per share 1,500 1,475
__________ __________
2,175 2,150
__________ __________
Dividends on 3.5% cumulative convertible
preference shares:
Preference dividend for the year ended 31 December
2018 of 1.75p (2017:1.75p) per share 175 175
Proposed preference dividend for the year ended 31
December 2018 of 1.75p (2017:1.75p) per share 175 175
__________ __________
350 350
__________ __________
5 Net asset values
Net asset Net asset
value per attributable
share
2018 2017 2018 2017
GBP GBP GBP 000 GBP 000
Ordinary shares
Undiluted - 0.22 5,534
-
Diluted 0.23 0.44 7,919 15,534
The undiluted and diluted net asset values per GBP1 ordinary share are based on
net assets at the year end and 25 million (undiluted) ordinary and 35 million
(diluted) ordinary and preference shares in issue.
The undiluted net asset value per convertible GBP1 preference share is the par
value of GBP1. The diluted net asset value per ordinary share assumes the
conversion of the preference shares to ordinary shares.
Principal risks and uncertainties
The principal risks facing the company relate to its investment activities and
include market risk (other price risk, interest rate risk and currency risk),
liquidity risk and credit risk. The other principal risks to the company are
loss of investment trust status and operational risk. These will be explained
in more detail in the notes to the 2018 Annual Report and Accounts, but remain
unchanged from those published in the 2017 Annual Report and Accounts.
Related party transactions
The company rents its offices from Romulus Films Limited, and is also charged
for its office overheads.
The salaries and pensions of the company's employees, except for the four
non-executive directors and one employee are paid by Remus Films Limited and
Romulus Films Limited and are recharged to the company.
During the year the company entered into the investment transactions to sell
stock for GBP346,709 (2017 - GBPnil) to Second BritAm Investments Limited and for GBP
2,472 (2017 - GBPnil) to BritAm Investments Limited.
There have been no other related party transactions during the period, which
have materially affected the financial position or performance of the company.
Capital Structure
The company's capital comprises GBP35,000,000 (2017 - GBP35,000,000) being
25,000,000 ordinary shares of GBP1 (2017 - 25,000,000) and 10,000,000 non-voting
convertible preference shares of GBP1 each (2017 - 10,000,000). The rights
attaching to the shares will be explained in more detail in the notes to the
2018 Annual Report and Accounts, but remain unchanged from those published in
the 2017 Annual Report and Accounts.
Directors' responsibility statement
The directors are responsible for preparing the financial statements in
accordance with applicable law and regulations. The directors confirm that to
the best of their knowledge the financial statements prepared in accordance
with the applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and the (loss)/profit of the
company and that the Chairman's Statement, Managing Director's Report and the
Directors' report include a fair review of the information required by rules
4.1.8R to 4.2.11R of the FSA's Disclosure and Transparency Rules, together with
a description of the principal risks and uncertainties that the company faces.
Annual General Meeting
This year's Annual General Meeting has been convened for Wednesday 26 June 2019
at 12.15pm at Wessex House, 1 Chesham Street, London SW1X 8ND.
END
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