BRITISH &
AMERICAN INVESTMENT TRUST
PLC |
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FINANCIAL
HIGHLIGHTS |
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For the six months
ended 30 June 2023 |
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Unaudited
6 monthsto 30 June
2023
£’000 |
Unaudited
6 monthsto 30 June
2022
£’000 |
Audited
Year ended
31 December2022
£’000 |
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Revenue |
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Return before
tax |
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740 |
(193) |
658 |
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_________ |
_________ |
_________ |
Earnings/(loss) per £1
ordinary shares – basic (note
5) |
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2.29p |
(0.74)p |
1.30p |
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_________ |
_________ |
_________ |
Earnings/(loss) per £1
ordinary shares – diluted (note
5) |
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2.14p |
(0.74)p |
1.30p |
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_________ |
_________ |
_________ |
Capital |
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Total
equity |
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8,749 |
6,131 |
7,091 |
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_________ |
_________ |
_________ |
Revenue reserve (note
9) |
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766 |
(227) |
19 |
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_________ |
_________ |
_________ |
Capital reserve (note
9) |
|
(27,017) |
(28,642) |
(27,928) |
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_________ |
_________ |
_________ |
Net assets per ordinary
share (note 6) |
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-
Basic |
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£0.25 |
£0.18 |
£0.20 |
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_________ |
_________ |
_________ |
-
Diluted |
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£0.25 |
£0.18 |
£0.20 |
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_________ |
_________ |
_________ |
Diluted net assets per
ordinary share at 27 September
2023 |
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£0.16 |
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_________ |
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Dividends* |
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Dividends per ordinary
share (note 4) |
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1.75p |
0.0p |
1.75p |
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_________ |
_________ |
_________ |
Dividends per preference
share (note 4) |
|
1.75p |
0.0p |
1.75p |
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_________ |
_________ |
_________ |
Basic net assets per share
are calculated using a value of fully diluted net asset value for
the preference shares.
Basic and diluted earnings
per share calculated in accordance with International Accounting Standard 33
‘Earnings per Share’.
*Dividends
declared for the period. Dividends shown in the accounts
are, by contrast, dividends paid or approved
in the period.
Copies of this report will
be posted to shareholders and be available for download at the
company’s website:
www.baitgroup.co.uk.
INVESTMENT
PORTFOLIO |
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As at 30 June
2023 |
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Company |
Nature of
Business |
Valuation
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Percentage of
portfolio
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£’000 |
% |
Geron Corporation
(USA)* |
Biomedical |
4,041 |
28.03 |
Dunedin Income
Growth |
Investment
Trust |
1,160 |
8.05 |
Lineage Cell Therapeutics
(USA)** |
Biotechnology |
632 |
4.38 |
abrdn Diversified Income
& Growth |
Investment
Trust |
404 |
2.80 |
AgeX
(USA) |
Biotechnology |
72 |
0.50 |
ADVFN |
Other
financial |
26 |
0.18 |
Audioboom |
Media |
16 |
0.11 |
Vodafone |
Telecommunications |
15 |
0.10 |
IQE |
Semiconductors |
13 |
0.09 |
Relief
Therapeutics |
Healthcare |
11 |
0.07 |
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________ |
________ |
10 Largest investments
(excluding subsidiaries) |
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6,390 |
44.31 |
Investment in
subsidiaries |
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8,014 |
55.59 |
Other investments (number
of holdings: 7) |
|
13 |
0.10 |
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________ |
________ |
Total
investments |
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14,417 |
100.00 |
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________ |
________ |
*
Total value of investment including held by subsidiary
companies - £8,567,000
** Total value of
investment including held by subsidiary companies -
£2,508,000
Unaudited Interim
Report
As at 30 June
2023
Registered number:
433137
Directors |
Registered
office |
David G Seligman
(Chairman) |
Wessex
House |
Jonathan C Woolf (Managing
Director) |
1 Chesham
Street |
Julia Le Blan (Non-executive and Chairman
of the Audit
Committee) |
London SW1X
8ND |
Alex Tamlyn
(Non-executive) |
Telephone: 020 7201
3100 |
|
Website:
www.baitgroup.co.uk |
Chairman’s
Statement
I report our results for the six months to
30 June 2023.
Revenue
The profit on the
revenue account before tax amounted to £0.7 million (30 June 2022:
loss £0.2 million). This increase was the result of a higher level
of income receipts from our subsidiary companies compared to the
same six month period in
2022.
Gross revenues totalled £0.9 million (30 June 2022: £0.08 million) during the period.
In addition, film income of £24,000 (30 June
2022: £47,000) was received in our subsidiary companies. In
accordance with IFRS10, film income is not included within the
revenue figures noted
above.
A gain of £1.2 million (30
June 2022: £0.5 million loss) was registered on the capital
account before capitalised expenses and foreign exchange
gains/losses, comprising a realised gain of £0.4 million
(30 June 2022: £0.2 million loss) and
an unrealised gain of £0.8 million (30 June
2022: £0.3 million
loss).
Revenue earnings
per ordinary share were 2.14 pence on
a fully diluted basis (30 June 2022:
loss 0.74
pence).
Net Assets and
performance
Company net assets were £8.7 million (£7.1 million,
at 31 December 2022), an increase of
23.4 percent. Over the same six month period, the FTSE 100
index increased by 1.1 percent and the All Share index increased by
0.5 percent. As no dividends were paid during the period, the
total return on net assets is the same and the total return for the
FTSE 100 and All Share indices was an increase of 3.2 percent and
an increase of 2.6 percent, respectively. The net asset value
per £1 ordinary share was 25.0 pence
on a fully diluted
basis.
This
out-performance in net assets over the period was the result of a
significant increase in the value of both our major US investments,
Geron Corporation Inc and Lineage Cell Therapeutics Inc, which
increased by 32 and 20 percent respectively during the period and
extends the outperformance of the previous 12 month period. Over
the past two 18 month reporting periods, our portfolio has
registered cumulative outperformance on a total return basis of
over 30
percent.
While the value of
Lineage Cell Therapeutics has remained steady since the period end,
the value of our investment in Geron has inexplicably declined by
30 percent against general market movements and despite its
announcement over the summer of the excellent and long-awaited news
of acceptance by the US Federal Drugs Agency (FDA) of Geron’s final
submission requesting marketing authorisation (NDA) for its
ground-breaking hematologic oncology drug, Imetelstat. Further
comment on this surprising price movement is made in the managing
director’s report
below.
Leading equity
markets in the UK and USA remained
broadly stable over the first half of 2023 with aggregate movements
confined to no more than 6 to 8 percent over the period. Some brief
instances of turbulence within this range were seen as unexpected
solvency vulnerabilities of certain large banks, particularly in
the USA, were revealed arising out
of interest rate pressures. This required prompt action from
regulators to avoid systemic risk by supporting or restructuring
those large banks previously considered to be well
capitalised.
By contrast, the
Nasdaq index of technology stocks registered a gain of 30 percent
following its significant decline in the previous year as the large
capitalisation internet technology stocks (FAANGs) found favour
again. The weighting preponderance of these stocks in this index
masked poorer performance in the smaller capitalisation technology
stocks, including biotech stocks whose index declined 5 percent
over the period. This highlights the company specific
outperformance of our two particular biotechnology investments as
noted above which has significantly benefited our NAV, despite the
headwind of the 5 percent fall in the US dollar versus the pound
sterling over the
period.
This general
stability in equity markets over the period has been achieved
despite the background of continuing high interest rates and
forecasts of further increases as central banks have grappled with
stubbornly high and persistent levels of inflation over the last 18
months. The always difficult and delicate balancing act of reducing
inflation without causing a painful recession has dictated to some
extent movements in equity markets and the realisation since early
this year that the US economy might be able to achieve the desired
‘soft landing’ has supported equity prices over recent months.
Similarly in the UK, fears of recession which had predominated
during the course of last year were assuaged as the economy proved
able to avoid the expected downturn in the second half of 2022 and
has managed to achieve positive albeit very small growth since,
thereby avoiding the declaration of a technical recession.
The same has not, however, been the case in Europe where the larger countries and
particularly Germany have seen
repeated quarters of albeit minimally negative growth this
year.
Russia’s invasion
and war in Ukraine has continued
further into its second year with as yet no end in sight. The
human, social and economic impacts of the war continue to be felt
locally and throughout the world. Russia’s latest tactic, in
the face of strong resistance and now counter-offensive by
Ukrainian forces, has been to seek to destroy Ukraine’s economic
productive capacity, particularly in the area of agricultural
production and exports which represent over 10 percent of the
country’s output. In doing so, further economic and
humanitarian damage is caused by Russia not only to Ukraine but to poorer countries around the
world relying on Ukraine’s grain exports, spreading further misery
and cost pressures to those least able to bear
them.
Dividends
We intend to pay an
interim dividend of 1.75 pence per
ordinary share for the year to 31st December
2023 on
7 December 2023. This
is the same level of dividend as was paid in calendar 2022. A
preference dividend of 1.75 pence per
preference share will be paid on the same
date.
This dividend payment represents a yield of
approximately 10 percent on the ordinary share price averaged over
the first six month period of the
year.
Audit
We have been notified by
our auditor, Hazlewoods, that they are unable to continue to act as
our auditor because as a firm they are withdrawing from the audit
of listed companies. We have therefore been engaged on a formal
tender process to identify and appoint a new auditor and I am
pleased to announce that following this process we have appointed
MHA Bakertilly to act as our auditor. This appointment is
being separately announced today and MHA Bakertilly will therefore
carry out the audit for the year to December 2023. Hazelwoods
has confirmed that there are no matters connected with its ceasing
to hold office that need to be brought to the attention of
shareholders or creditors for the purposes of section 519 of the
Companies Act 2006 and the board would like to thank Hazlewoods for
its professional and diligent service as auditor since 2017.
In accordance with FCA Rule DTR 4.2.9, it is confirmed that there
will be no auditor review of this interim
statement.
Outlook
With the many political, social, economic
and indeed climatic uncertainties facing the world today, both in
the immediate future and in the longer-term, it is difficult to be
very positive about the investment climate going forward.
Inflationary pressures, while reduced, remain unconquered.
Counter-inflationary interest rate measures may not have peaked
and, if shortly to do so, might last longer than originally
expected. The war in Ukraine, together with its effect on world
energy and food prices, is likely to enter a third year and this
year has brought numerous examples of disruptive and destructive
weather patterns world-wide which can only be expected to worsen
over the coming years. While the attempts to control the
generationally high levels of inflation have so far resulted in a
generally softer landing than originally feared, much of the higher
than expected economic activity, particularly in the retail,
hospitality and travel sectors could be the result of pent up
demand following the Covid period and the drawdown of savings built
up during this latter period which may soon come to an
end.
Against the background of these
uncertainties, and as the long period of clinical drug development
by our major US investment, Geron Corporation, reaches its
conclusion with the company’s anticipated transformation into a
commercially operating biopharma business in hematologic oncology,
we will continue to maintain the current profile of our portfolio
and aim to capture the market independent gains which such
investment should
provide.
As at 27 September, company net assets were
£5.7 million, a decrease of 34.5 percent since the period end, and
equivalent to 16.3 pence per share on
a fully diluted basis. Over the same period, the FTSE 100
index increased by 0.8 percent, the All Share index increased by
0.5 percent.
David
Seligman
28
September 2023
Managing
Director’s Report
In the first six months of
2023, our portfolio out-performed the benchmark indices on a total
return basis by over 20 percent, as noted in the chairman’s
statement above.
It is additionally worth
noting that in the five years since 2018, the portfolio has also
out-performed the benchmarks on a total return basis by a
significant margin, outperforming the FTSE 100 index by 10 percent
and the FTSE All Share index by 12 percent over the period.
Thus, while the portfolio NAV might have declined in value over
that time, when dividends paid are taken into account, shareholders
have received value considerably in excess of returns offered by
leading UK listed companies.
Given that the above
results have been achieved prior to the soon to be expected
graduation of our major investment, Geron Corporation, from
clinical development to commercial sales, as noted above, a further
period of out-performance can be envisaged once Geron’s value is
properly captured by the
market.
When considered against
the very uncertain global outlook for investment noted above by the
chairman, the prospect of continued portfolio out-performance which
is not necessarily dependent upon general market trends and
conditions is to be
welcomed.
Geron
Corporation
Since we last reported,
Geron announced in June the filing of and in August the acceptance
by the US Federal Drugs Agency (FDA) of
Geron’s final submission requesting marketing authorisation (NDA)
for its ground-breaking hematologic oncology drug, Imetelstat This
penultimate stage in the drug development process prior to
commercialisation and marketing provides a strong degree of
affirmation for a new drug after many years of successful clinical
development and is normally the trigger for a significant increase
in the developer’s market
value.
The fact that the reverse has happened in this case
and strongly against the trend in the NASDAQ and US Biotech indices
over the period which have remained stable, together with the fact
that the FDA also granted Geron permission to supply Imetelstat to
patients prior to marketing authorisation in cases of compassionate
need, defies reasonable explanation in our view and underlines the
concerns we have expressed for many years in this report
surrounding the constant failure of this stock to demonstrate a
normal and transparent level of price discovery in the
market.
The reasons for this, as more specifically described
in the previous edition of this report, have been generally
ascribed over many years to poor investor communications by
management and their implementation of suboptimal financing
strategies; the inherent imbalance within the market between
professional equity finance providers and the long lead times of
the biotechnology drug development process which requires multiple
periodic fundraising, giving such providers the ability to pressure
management and scope to operate to their own financial advantage
through short selling and options operations; the significant
salaries, bonuses and options entitlements which senior (and in
some cases only part-time) management award themselves while
shareholder value notably fails to match the annual increases in
such management
compensation.
We are encouraged that the long-standing CFO
responsible for financing strategy has recently been replaced and
it is to be strenuously hoped that one day, once the conclusion of
Geron’s clinical development stage has occurred with its transition
to product commercialisation, these value detractive practices can
be made a thing of the past with a new big pharma owner or the
replacement of the current senior management with a younger and
more dynamic management
team.
Jonathan Woolf
28
September 2023
CONDENSED INCOME
STATEMENT |
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Six months ended
30 June 2023 |
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Unaudited
6 months to 30 June 2023 |
Unaudited
6 months to 30 June
2022 |
Audited
Year ended 31 December
2022
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Note |
Revenue
return£’000 |
CapitalReturn£’000 |
Total£’000 |
RevenueReturn£’000 |
CapitalReturn£’000 |
Total£’000 |
RevenueReturn£’000 |
CapitalReturn£’000 |
Total£’000 |
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Investment
income |
3 |
944 |
- |
944 |
79 |
- |
79 |
1,156 |
- |
1,156 |
Holding gains/(losses) on
investments at fair value through profit or
loss |
|
- |
747 |
747 |
- |
(333) |
(333) |
- |
579 |
579 |
|
Gains/(losses) on disposal
of investments at fair value through profit or
loss |
|
- |
412 |
412 |
- |
(206) |
(206) |
- |
(294) |
(294) |
|
Foreign exchange
gains/(losses) |
|
34 |
(113) |
(79) |
(39) |
253 |
214 |
(40) |
277 |
237 |
|
Expenses |
|
(219) |
(124) |
(343) |
(217) |
(124) |
(341) |
(424) |
(250) |
(674) |
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|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
|
Profit/(loss)
before finance costs and
tax |
|
759 |
922 |
1,681 |
(177) |
(410) |
(587) |
692 |
312 |
1,004 |
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|
Finance
costs |
|
(19) |
(11) |
(30) |
(16) |
(2) |
(18) |
(34) |
(10) |
(44) |
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|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
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Profit/(loss)
before tax |
|
740 |
911 |
1,651 |
(193) |
(412) |
(605) |
658 |
302 |
960 |
|
Taxation |
|
7 |
- |
7 |
9 |
- |
9 |
16 |
- |
16 |
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|
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
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Profit/(loss) for
the period |
|
747 |
911 |
1,658 |
(184) |
(412) |
(596) |
674 |
302 |
976 |
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_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
_____ |
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Earnings/(loss)
per ordinary share |
5 |
|
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Basic |
|
2.29p |
3.64p |
5.93p |
(0.74)p |
(1.65)p |
(2.39)p |
1.30p |
1.21p |
2.51p |
|
Diluted* |
|
2.14p |
2.60p |
4.74p |
(0.74)p |
(1.65)p |
(2.39)p |
1.30p |
1.21p |
2.51p |
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The company does not have
any income or expense that is not included in profit for the period
and all items derive from continuing operations. Accordingly, the
‘Profit/(loss) for the period’ is also the ‘Total Comprehensive
Income for the period’ as defined in IAS 1 (revised) and no
separate Statement of Comprehensive Income has been
presented.
The total column of this
statement is the company’s Income Statement, prepared in accordance
with IFRS. The supplementary revenue return and capital return
columns are both prepared under guidelines published by the
Association of Investment
Companies.
All profit and total
comprehensive income is attributable to the equity holders of the
company.
*Calculated in accordance
with International
Accounting Standard 33 ‘Earnings per Share’.
CONDENSED
STATEMENT OF CHANGES IN
EQUITY |
|
Six months ended
30 June 2023 |
|
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Unaudited
Six months ended 30 June
2023 |
|
|
Sharecapital*£’000 |
CapitalReserve£’000 |
RetainedEarnings£’000 |
Total£’000 |
|
|
|
|
|
|
Balance at 31 December
2022 |
|
35,000 |
(27,928) |
19 |
7,091 |
Profit for the
period |
|
- |
911 |
747 |
1,658 |
|
|
________ |
________ |
________ |
________ |
Balance at 30 June
2023 |
|
35,000 |
(27,017) |
766 |
8,749 |
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Unaudited
Six months ended 30 June
2022 |
|
|
Sharecapital*£’000 |
CapitalReserve£’000 |
RetainedEarnings£’000 |
Total£’000 |
|
|
|
|
|
|
Balance at 31 December
2021 |
|
35,000 |
(28,230) |
(43) |
6,727 |
Loss for the
period |
|
- |
(412) |
(184) |
(596) |
|
|
________ |
________ |
________ |
________ |
Balance at 30 June
2022 |
|
35,000 |
(28,642) |
(227) |
6,131 |
|
|
________ |
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
Audited
Year ended 31 December
2022
|
|
|
Sharecapital*£’000 |
CapitalReserve£’000 |
RetainedEarnings£’000 |
Total£’000 |
|
|
|
|
|
|
Balance at 31 December
2021 |
|
35,000 |
(28,230) |
(43) |
6,727 |
Profit for the
period |
|
- |
302 |
674 |
976 |
Ordinary dividend
paid |
|
- |
- |
(437) |
(437) |
Preference dividend
paid |
|
- |
- |
(175) |
(175) |
|
|
________ |
________ |
________ |
________ |
Balance at 31 December
2022 |
|
35,000 |
(27,928) |
19 |
7,091 |
|
|
________ |
________ |
________ |
________ |
*The company’s share
capital comprises £35,000,000 (2022 - £35,000,000) being 25,000,000
ordinary shares of £1 (2022 - 25,000,000) and 10,000,000 non-voting
convertible preference shares of £1 each (2022 -
10,000,000).
CONDENSED BALANCE
SHEET |
|
|
|
|
|
As at 30 June
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
Note |
|
Unaudited30 June2023
£’000 |
Unaudited30
June2022
£’000 |
Audited31
December2022
£’000 |
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
Investments – fair value
through profit or loss (note
1) |
|
|
6,403 |
5,194 |
5,600 |
Subsidiaries – fair value
through profit or loss |
|
|
8,014 |
7,109 |
7,712 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
14,417 |
12,303 |
13,312 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Receivables |
|
|
374 |
487 |
442 |
Cash and cash
equivalents |
|
|
34 |
23 |
45 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
408 |
510 |
487 |
|
|
|
|
|
|
|
|
|
_________ |
_________ |
_________ |
Total
assets |
|
|
14,825 |
12,813 |
13,799 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and other
payables |
|
|
(1,092) |
(2,018) |
(1,794) |
Bank credit
facility |
|
|
(1,341) |
(814) |
(1,018) |
|
|
|
_________ |
_________ |
_________ |
|
|
|
(2,433) |
(2,832) |
(2,812) |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
Total assets less
current
liabilities |
|
|
12,392 |
9,981 |
10,987 |
|
|
|
_________ |
_________ |
_________ |
|
|
|
|
|
|
Non – current
liabilities |
|
|
(3,643) |
(3,850) |
(3,896) |
|
|
|
_________ |
_________ |
_________ |
Net
assets |
|
|
8,749 |
6,131 |
7,091 |
|
|
|
_________ |
_________ |
_________ |
Equity
attributable to equity
holders |
|
|
|
|
|
Ordinary share
capital |
|
|
25,000 |
25,000 |
25,000 |
Convertible preference
share capital |
|
|
10,000 |
10,000 |
10,000 |
Capital
reserve |
|
|
(27,017) |
(28,642) |
(27,928) |
Retained revenue
earnings |
|
|
766 |
(227) |
19 |
|
|
|
_________ |
_________ |
_________ |
Total
equity |
|
|
8,749 |
6,131 |
7,091 |
|
|
|
_________ |
_________ |
_________ |
Net assets per ordinary
share – basic |
6 |
|
£0.25 |
£0.18 |
£0.20 |
|
|
|
_________ |
_________ |
_________ |
Net assets per ordinary
share – diluted |
6 |
|
£0.25 |
£0.18 |
£0.20 |
|
|
|
_________ |
_________ |
_________ |
CONDENSED CASHFLOW
STATEMENT |
|
|
|
|
Six months ended
30 June 2023 |
|
|
|
|
|
|
|
|
|
|
|
Unaudited6 months to30 June
2023
£’000 |
Unaudited6
months to30
June2022
£’000 |
AuditedYear
ended31
December2022
£’000 |
|
|
|
|
|
Cash flow from
operating
activities |
|
|
|
|
|
|
|
|
|
Profit/(loss) before
tax |
|
1,651 |
(605) |
960 |
|
|
|
|
|
Adjustment
for: |
|
|
|
|
(Gains)/losses on
investments |
|
(1,159) |
539 |
(285) |
Proceeds on disposal of
investments at fair value |
|
|
|
|
through profit or
loss |
|
136 |
313 |
548 |
Purchases of investments
at fair value |
|
|
|
|
through profit or
loss |
|
(450) |
(126) |
(441) |
Interest |
|
(3) |
18 |
44 |
|
|
________ |
________ |
________ |
Operating cash flows
before movements |
|
|
|
|
in working
capital |
|
175 |
139 |
826 |
Decrease/(increase) in
receivables |
|
108 |
(264) |
109 |
(Decrease)/increase in
payables |
|
(594) |
49 |
(1,351) |
|
|
________ |
________ |
________ |
Net cash from operating
activities |
|
|
|
|
before
interest |
|
(311) |
(76) |
(416) |
Interest
paid |
|
(23) |
(4) |
(21) |
|
|
________ |
________ |
________ |
|
|
|
|
|
Net cash flows
from operating
activities |
|
(334) |
(80) |
(437) |
|
|
________ |
________ |
________ |
|
|
|
|
|
Cash flows from
financing
activities |
|
|
|
|
Dividends paid on ordinary
shares |
|
- |
- |
- |
Dividends paid on
preference shares |
|
- |
(175) |
- |
|
|
________ |
________ |
________ |
|
|
|
|
|
Net cash used in
financing
activities |
|
- |
(175) |
- |
|
|
________ |
________ |
________ |
|
|
|
|
|
|
|
|
|
|
Net decrease in
cash and cash
equivalents |
|
(334) |
(255) |
(437) |
|
|
|
|
|
Cash and cash
equivalents at beginning of
period |
|
(973) |
(536) |
(536) |
|
|
________ |
________ |
________ |
Cash and cash
equivalents at end of
period |
|
(1,307) |
(791) |
(973) |
|
|
________ |
________ |
________ |
NOTES
TO THE COMPANY’S CONDENSED FINANCIAL
STATEMENT1.
Accounting policies
Basis of
preparation and statement of
compliance
This interim report is
prepared in accordance with IAS 34 ‘Interim Financial Reporting’ an
International Financial Reporting Standard adopted by the
United Kingdom and on the basis of
the accounting policies set out in the company’s Annual Report and
financial statements at 31 December
2022.
The company’s condensed
financial statements should be read in conjunction with the annual
financial statements for the year ended 31
December 2022 which are prepared in accordance with UK
adopted International Financial Reporting Standards (IFRS) and the
Companies Act 2006.
The financial statements
have not been audited or reviewed by the Auditor pursuant to the
Auditing Practices Board Guidance on 'Review of Interim Financial
Information'. The Financial Statements for the six months to
30 June 2023 have been prepared on
the basis of the same accounting policies as set out in the
Company's Annual Report and Financial Statements at 31 December 2022.
In accordance with IFRS
10, the group does not consolidate its subsidiaries and therefore
instead of preparing group accounts it prepares separate financial
statements for the parent entity
only.
The financial statements
have been prepared on the historical cost basis except for the
measurement at fair value of investments, derivative financial
instruments and subsidiaries. The same accounting policies as those
published in the statutory accounts for 31
December 2022 have been
applied.
Significant
accounting policies
In order to better reflect
the activities of an investment trust company and in accordance
with guidance issued by the Association of Investment Companies
(AIC), supplementary information which analyses the income
statement between items of a revenue and capital nature has been
presented alongside the income
statement.
As the entity’s business
is investing in financial assets with a view to profiting from
their total return in the form of interest, dividends or increases
in fair value, listed equities and fixed income securities are
designated as fair value through profit or loss on initial
recognition. The company manages and evaluates the performance of
these investments on a fair value basis in accordance with its
investment strategy, and information about the group is provided
internally on this basis to the entity’s key management
personnel.
Investments held at fair
value through profit or loss, including derivatives held for
trading, are initially recognised at fair
value.
All purchases and sales of
investments are recognised on the trade
date.
After initial recognition,
investments, which are designated as at fair value through profit
or loss, are measured at fair value. Gains or losses on investments
designated at fair value through profit or loss are included in
profit or loss as a capital item, and material transaction costs on
acquisition and disposal of investments are expensed and included
in the capital column of the income statement. For investments that
are actively traded in organised financial markets, fair value is
determined by reference to Stock Exchange quoted market closing
prices or last traded prices, depending upon the convention of the
exchange on which the investment is quoted at the close of business
on the balance sheet date. Investments in units of unit trusts or
shares in OEICs are valued at the closing price released by the
relevant investment manager.
In respect of unquoted investments, or where the market for a
financial instrument is not active, fair value is established by
using an appropriate valuation technique.
Investments of the company
in subsidiary companies are held at the fair value of their
underlying assets and liabilities.
This includes the
valuation of film rights in British & American Films Limited
and thus the fair value of its immediate parent BritAm Investments
Limited. In determining the fair value of the film rights,
estimates are made. These include future film revenues which are
estimated by the management. Estimations made have taken into
account historical results, current trends and other relevant
factors.
Where a subsidiary has
negative net assets it is included in investments at £nil value and
a provision for liabilities is made on the balance sheet equal to
the value of the net liabilities of the subsidiary company where
the ultimate parent company has entered into a guarantee to pay the
liabilities as they fall
due.
Dividend income from investments is recognised as income when the
shareholders’ rights to receive payment has been established,
normally the ex-dividend
date.
Interest income on fixed interest securities is recognised on a
time apportionment basis so as to reflect the effective interest
rate of the security.
When special dividends are
received, the underlying circumstances are reviewed on a case by
case basis in determining whether the amount is capital or income
in nature. Amounts recognised as income will form part of the
company's distribution. Any tax thereon will follow the accounting
treatment of the principal amount.
All expenses are accounted
for on an accruals basis. Expenses are charged as revenue items in
the income statement except as follows:
– transaction costs which
are incurred on the purchase or sale of an investment designated as
fair value through profit or loss are expensed and included in the
capital column of the income statement;
– expenses are split and
presented partly as capital items where a connection with the
maintenance or enhancement of the value of the investments held can
be demonstrated, and accordingly investment management and related
costs have been allocated 50% (2022 – 50%) to revenue and 50% (2022
– 50%) to capital, in order to reflect the directors' long-term
view of the nature of the expected investment returns of the
company.
The 3.5% cumulative
convertible non-redeemable preference shares issued by the company
are classified as equity instruments in accordance with IAS 32
‘Financial Instruments – Presentation’ as the company has no
contractual obligation to redeem the preference shares for cash or
pay preference dividends unless similar dividends are declared to
ordinary shareholders.
Going
Concern
The directors have
assessed the ability of the company to continue as a going concern
for a period of at least twelve months after the date of approval
of these financial statements. The directors are satisfied that a
given the assets of the company consist mainly of securities that
are readily realisable and has available a credit facility with
Credit Suisse, it will have sufficient resources to enable it to
continue as a going concern.
2. Segmental
reporting
The directors are of the
opinion that the company is engaged in a single segment of
business, that is investment business, and therefore no segmental
information is provided.
3.
Income
|
|
Unaudited
6 months
to 30 June
2023
£’000 |
Unaudited
6 months
to 30 June
2022
£’000 |
Audited
Year ended
31 December
2022
£’000 |
|
|
|
|
|
Income from
investments |
|
912 |
47 |
1,090 |
Other
income |
|
32 |
32 |
66 |
|
|
_________ |
_________ |
_________ |
|
|
944 |
79 |
1,156 |
|
|
_______ |
_______ |
_______ |
During the period the company received a dividend
of £867,000 (30 June 2022 –
£nil, 31 December 2022 – £1,101,000)
from a subsidiary which was generated from gains made on the
realisation of investments held by that company. As a result of the
receipt of this dividend, a corresponding reduction was recognised
on the value of the investment in the subsidiary
company.
During the period the company recognised a
foreign exchange loss of £147,000 (30
June 2022 – £291,000 gain, 31
December 2022 – £317,000 gain) on the loan of $3,526,000 to a subsidiary. As a result of this
loss, the corresponding movement was recognised in the value of the
investment in the subsidiary
company.
Under IFRS 10 the income
analysis above includes the parent company only rather than that of
the group. In addition to the income above film revenues of £24,000
(30 June 2022 – £47,000,
31 December
2022 – £107,000) received by the subsidiary British &
American Films Limited and property unit trust income of £nil
(30 June 2022 – £nil, 31 December 2022 – £1,000) was received by the
subsidiary BritAm Investments Limited and forms part of the net
profit of those companies available for distribution to the parent
company.
4.
Dividends
|
Unaudited6 months to 30 June 2023 |
Unaudited6
months to 30 June
2022 |
AuditedYear
ended 31 December
2022 |
|
Interim |
Interim |
Final |
|
|
|
|
|
Pence per
share |
£’000 |
Pence per
share |
£’000 |
Pence per
share |
£’000 |
|
|
|
|
|
|
|
Ordinary shares -
paid |
- |
- |
- |
- |
1.75 |
437 |
Ordinary shares -
proposed |
1.75 |
437 |
- |
- |
- |
- |
Preference shares
–paid |
- |
- |
- |
- |
1.75 |
175 |
Preference shares
–proposed |
1.75 |
175 |
- |
- |
- |
- |
|
|
________ |
|
________ |
|
________ |
|
|
612 |
|
- |
|
612 |
|
|
________ |
|
________ |
|
________ |
The dividends on ordinary
shares are based on 25,000,000 ordinary £1 shares. Dividends on
preference shares are based on 10,000,000 non-voting 3.5%
convertible preference shares of £1.
The non-payment in
December 2019, in December 2020 and in June
2022 of the dividend of 1.75
pence per share on the 3.5% cumulative convertible
preference shares, consequent upon the non-payment of a final
dividend on the Ordinary shares for the year ended 31 December 2019, for the year ended 31 December 2020 and for the period ended
30 June 2022, has resulted in arrears
of £525,000 on the 3.5% cumulative convertible preference shares.
These arrears will become payable in the event that the ordinary
shares receive, in any financial year, a dividend on par value in
excess of 3.5%.
Amounts recognised as
distributions in respect of dividends paid in each
period:
|
Unaudited6 months to30 June 2023 |
Unaudited6
months to30 June
2022 |
AuditedYear
ended31 December
2022 |
|
|
|
|
|
|
|
|
Pence per
share |
£’000 |
Pence per
share |
£’000 |
Pence per
share |
£’000 |
|
|
|
|
|
|
|
Ordinary shares
–Final |
- |
- |
- |
- |
- |
- |
Ordinary shares
–Interim |
- |
- |
- |
- |
1.75 |
437 |
Preference shares
–Fixed |
- |
- |
- |
- |
1.75 |
175 |
|
|
_________ |
|
_________ |
|
_________ |
|
|
- |
|
- |
|
612 |
|
|
_______ |
|
_______ |
|
_______ |
5.
Earnings/(loss) per ordinary
share
|
|
Unaudited
6 months
to 30 June
2023
£’000 |
Unaudited
6 months
to 30 June
2022
£’000 |
Audited
Year ended
31 December
2022
£’000 |
Basic
earnings/(loss) per share |
|
|
|
|
Calculated on the basis
of: |
|
|
|
|
Net revenue profit/(loss)
after preference dividends |
|
572 |
(184) |
324 |
Net capital
gain/(loss) |
|
911 |
(412) |
302 |
|
|
_________ |
_________ |
_________ |
Net total earnings/(loss)
after preference dividends |
|
1,483 |
(596) |
626 |
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
Number’000 |
Number’000 |
Number’000 |
|
|
|
|
|
Ordinary shares in
issue |
|
25,000 |
25,000 |
25,000 |
|
|
_______ |
_______ |
_______ |
Diluted
earnings/(loss) per share |
|
|
|
|
Calculated on the basis
of: |
|
£’000 |
£’000 |
£’000 |
Net revenue
profit/(loss) |
|
747 |
(184) |
324 |
Net capital
gain/(loss) |
|
911 |
(412) |
302 |
|
|
_________ |
_________ |
_________ |
Profit/(loss) after
taxation |
|
1,658 |
(596) |
626 |
|
|
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
Number’000 |
Number’000 |
Number’000 |
|
|
|
|
|
Ordinary and preference
shares in issue |
|
35,000 |
35,000 |
35,000 |
|
|
_______ |
_______ |
_______ |
Diluted earnings per share
is calculated taking into account the preference shares which are
convertible to ordinary shares on a one for one basis, under
certain conditions, at any time during the period 1 January 2006 to 31
December 2025 (both dates
inclusive).
6. Net
asset value attributable to each
share
Basic net asset value
attributable to each share has been calculated by reference to
25,000,000 ordinary shares, and company net assets attributable to
shareholders as follows:
|
Unaudited
30 June
2023
£’000 |
Unaudited
30 June
2022
£’000 |
Audited
31 December
2022
£’000 |
|
|
|
|
Total net
assets |
8,749 |
6,131 |
7,091 |
Less convertible
preference shares at fully diluted
value |
(2,500) |
(1,752) |
(2,026) |
|
__________ |
__________ |
__________ |
Net assets attributable to
ordinary shareholders |
6,249 |
4,379 |
5,065 |
|
________ |
________ |
________ |
Diluted net asset value is
calculated on the total net assets in the table above and on
35,000,000 shares, taking into account the preference shares which
are convertible to ordinary shares on a one for one basis, under
certain conditions, at any time during the period 1 January 2006 to 31
December 2025 (both dates
inclusive).
Basic net assets per share
is calculated using a value of fully diluted net asset value for
the preference shares.
7. Non – current
liabilities
Guarantee of subsidiary
liability |
Unaudited
30 June
2023
£’000 |
Unaudited
30 June
2022
£’000 |
Audited
31 December
2022
£’000 |
|
|
|
|
Opening
provision |
3,896 |
3,974 |
3,974 |
(Decrease)/increase in
period |
(367) |
198 |
303 |
Transfer to allowance for
doubtful debt |
114 |
(322) |
(381) |
|
__________ |
__________ |
__________ |
Closing
provision |
3,643 |
3,850 |
3,896 |
|
________ |
________ |
________ |
The provision relates to a
guarantee made by the company in respect of amounts owed by Second
BritAm Investments Limited to BritAm Investments Limited and
British & American Films Limited. There is no current intention
for these liabilities to be called for immediate payment by the
subsidiary companies.
During the year ended
31 December 2019 as part of a
transaction to hedge the company against exchange effects of the
foreign currency loan, an amount corresponding to the $USD value
was loaned by British & American Investment Trust PLC to Second
BritAm Investments Limited. As a result of this, and other related
intercompany transactions, £2,860,000 of amounts previously
guaranteed became an asset of the company and the provision brought
forward against this has been transferred to become an allowance
against doubtful debt. During the period to 30 June 2022, an allowance against doubtful debt
has decreased by £114,000 (30 June
2022 - increased by £322,000 and 31
December 2022 - increased by
£381,000).
8. Related party
transactions
Romulus Films Limited and
Remus Films Limited have significant shareholdings in the company:
6,902,812 (27.6%) ordinary shares held by Romulus Films Limited and
7,868,750 (31.5%) ordinary shares held by Remus Films Limited).
Romulus Films Limited also holds 10,000,000 cumulative convertible
preference shares.
The company rents its
offices from Romulus Films Limited, and is also charged for its
office overheads. During the period the company paid £14,000
(30 June 2022 – £14,000 and
31 December 2022 – £28,000) in
respect of those services.
The salaries and pensions
of the company’s employees, except for the three non-executive
directors and one employee, are paid by Remus Films Limited and
Romulus Films Limited and are recharged to the company. Amounts
charged by these companies in the period to 30 June 2023 were £194,000 (30 June 2022 – £197,000 and 31 December 2022 – £397,000) in respect of salary
costs and £24,000 (30 June 2022 –
£22,000 and 31 December 2022 –
£42,000) in respect of pensions.
At the period end an
amount of £179,000 (30 June 2022 –
£nil and 31 December 2022 – £nil) was
due to Romulus Films Limited and the amount of £nil was due from
Romulus Films Limited (30 June 2023 –
£26,000 and 31 December 2022 –
£69,000) and £276,000 (30 June 2022 –
£436,000 and 31 December 2022 –
£313,000) was due to Remus Films Limited. At the period end Other
payables included amounts of £nil (30 June
2022 – £nil and 31 December
2022 – £294,705) due to Romulus Films Limited and £nil
(30 June 2022 – £nil and 31 December 2022 – £137,703) due to Remus Films
Limited.
During the period
subsidiary BritAm Investments Limited paid dividends of £867,000
(30 June 2022 – £nil and 31 December 2022 – £1,001,000) to the parent
company, British & American Investment Trust
PLC.
British & American
Investment Trust PLC has guaranteed the liabilities of £5,670,000
(30 June 2022 – £4,417,000 and
31 December 2022 – £5,519,000) due
from Second BritAm Investments Limited to its fellow subsidiaries
if they should fall due.
During the period the
company paid interest of £7,000 (30 June
2022 – £15,000 and 31 December
2022 – £23,000) on the loan due to BritAm Investments
Limited.
During the period the
company received interest of £nil (30 June
2022 – £1,000 and 31 December
2022 – £2,000) from British & American Films Limited and
£32,000 (30 June 2022 – £31,000 and
31 December 2022 – £64,000) from
Second BritAm Investments Limited.
During the period the
company entered into an investment transaction to sell stock for
£890,000 to British & American Films Limited (30 June 2022 – £nil and 31
December 2022 – £nil).
During the period the
company entered into investment transaction to purchase stock for
£890,000 from British & American Films Limited (30 June 2022 – £nil and 31
December 2022 – £nil).
At 30 June 2023 £4,170,000 (30 June 2022 – £4,132,000 and 31 December 2022 – £4,132,000) was owed by
British & American Films Limited to Romulus Films Limited and
£44,000 (30 June 2022 – £40,000 and
31 December 2022 – £42,000) to Remus
Films Limited. Interest was paid to Romulus Films Limited of
£80,000 (30 June 2022 – £45,000 and
31 December 2022 – £121,000) at the
rate of 2.5% per annum starting on 1 April
2023 (30 June 2022 – 1.5% over
the UK Bank Rate per annum and 31 December
2022 – 1.5% over the UK Bank Rate per annum). The loan is
repayable at not less than one year’s
notice.
All transactions with
subsidiaries were made on an arm’s length
basis.
9. Retained
earnings
The table below shows the
movement in the retained earnings analysed between revenue and
capital items.
|
Capital
reserve
£’000 |
Retained
earnings£’000 |
1 January
2023 |
(27,928) |
19 |
Allocation of profit for
the period |
911 |
747 |
|
_________ |
_________ |
At 30 June
2023 |
(27,017) |
766 |
|
_______ |
_______ |
The capital reserve
includes £218,000 of investment holding gains (30 June 2022 – £2,999,000 loss, 31 December 2022 – £1,854,000
loss).
10. Financial
instruments
Financial
instruments carried at fair value
All investments are
carried at fair value. Other financial assets and liabilities of
the company are held at amounts that approximate to fair value. The
book value of cash at bank and bank loans included in these
financial statements approximate to fair value because of their
short-term maturity.
Fair value
hierarchy
The table below analyses
recurring fair value measurements for financial assets and
financial liabilities.
These fair value
measurements are categorised into different levels in the fair
value hierarchy based on the inputs to valuation techniques used.
The different levels are defined as
follows:
Level 1: Quoted prices
(unadjusted) in active markets for identical assets or liabilities
that the company can access at the measurement
date.
Level 2: Inputs other than
quoted prices included within Level 1 that are observable for the
asset or liability, either directly or
indirectly:
-
Prices of recent
transactions for identical
instruments.
-
Valuation techniques using
observable market
data.
Level 3: Unobservable
inputs for the asset or liability.
Financial assets and
financial liabilities at fair value through profit or loss at 30
June 2023 |
Level
1£’000 |
Level
2£’000 |
Level
3£’000 |
Total£’000 |
Investments: |
|
|
|
|
Investments held at fair
value through profit or loss |
6,402 |
- |
1 |
6,403 |
Subsidiary held at fair
value through profit or loss |
- |
- |
8,014 |
8,014 |
|
|
|
|
|
Total financial assets and
liabilities carried at fair
value |
6,402 |
- |
8,015 |
14,417 |
|
|
|
|
|
With the exception of the
Sarossa Capital, BritAm Investments Limited (unquoted subsidiary)
and Second BritAm Investments Limited (unquoted subsidiary), which
are categorised as Level 3, all other investments are categorised
as Level 1.
Fair Value Assets in Level
3
The following table shows
the reconciliation from the opening balances to the closing
balances for fair value measurement in Level 3 of the fair value
hierarchy.
|
Level
3 |
|
£’000 |
Opening fair value at 1
January 2023 |
7,713 |
Investment holding
gains |
302 |
|
|
Closing fair value at 30
June 2023 |
8,015 |
|
|
Subsidiaries
The fair value of the
subsidiaries is determined to be equal to the net asset values of
the subsidiaries at period end plus the uplift in the revaluation
of film rights in British & American Films Limited, a
subsidiary of BritAm Investments Limited.
The directors of British
& American Films Limited have determined a conservative
valuation of £2 million for the five feature films in the library.
This valuation has been arrived at from a combination of
discounting expected cash flows over the full period of copyright
at current long term interest rates and a recently received
independent third party professional
valuation.
There have been no
transfers between levels of the fair value hierarchy during the
period. Transfers between levels of fair value hierarchy are deemed
to have occurred at the date of the event or change in
circumstances that caused the transfer.
11. Financial
information
The financial information
contained in this report does not constitute statutory accounts as
defined in Section 435 of the Companies Act 2006. The financial
information for the period ended 30 June 2023 and 30 June 2022 have
not been audited by the Company’s Auditor pursuant to the Auditing
Practices Board guidance. The information for the year to 31
December 2022 has been extracted from the latest published Annual
Report and Financial Statements, which have been lodged with the
Registrar of Companies, contained an unqualified auditors’ report
and did not contain a statement required under Section 498(2) or
(3) of the Companies Act 2006.
DIRECTORS’
STATEMENT
Principal risks
and uncertainties
The principal risks and
uncertainties faced by the company continue to be as described in
the previous annual accounts. Further information on each of these
areas, together with the risks associated with the company's
financial instruments are shown in the Directors' Report and notes
to the financial statements within the Annual Report and Accounts
for the year ended 31 December
2022.
The Chairman’s Statement
and Managing Director’s report include commentary on the main
factors affecting the investment portfolio during the period and
the outlook for the remainder of the
year.
Directors’
Responsibilities Statement
The Directors are
responsible for preparing the half-yearly report in accordance with
applicable law and regulations. The Directors confirm that to the
best of their knowledge the interim financial statements, within
the half-yearly report, have been prepared in accordance with IAS
34 'Interim Financial Reporting'. The Directors are required to
prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in
business. The Directors further confirm that the Chairman’s
Statement and Managing Director's Report includes a fair review of
the information required by 4.2.7R and 4.2.8R of the FCA’s
Disclosure and Transparency Rules.
The Directors of the
company are listed in the section preceding the Chairman’s
Statement.
The half-yearly report was
approved by the Board on 28 September 2023 and the above
responsibility statement was signed on its behalf
by:
Jonathan C
Woolf
Managing
Director