TIDMBAF
British & American Investment Trust PLC
Annual Financial Report
for the year ended 31 December 2019
Registered number: 00433137
Directors Registered office
David G Seligman (Chairman) Wessex House
Jonathan C Woolf (Managing Director) 1 Chesham Street
Dominic G Dreyfus (Non-executive and Chairman of the Audit Telephone: 020 7201
Committee) 3100
Alex Tamlyn (Non-executive) Registered in
England
No.00433137
29 June 2020
This is the Annual Financial Report as required to be published under DTR 4 of
the UKLA Listing Rules.
Financial Highlights
For the year ended 31 December 2019
2019 2018
Revenue Capital Total Revenue Capital Total
return return return return
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Profit/(loss) before tax - 862 (599) 2,489 (502)
realised (1,461) (2,991)
Profit/(loss) before tax - - 1,657 1,657 - (4,644) (4,644)
unrealised
__________ __________ __________ __________ __________ __________
Profit/(loss) before tax - 862 196 1,058 2,489 (7,635) (5,146)
total
__________ __________ __________ __________ __________ __________
Earnings per GBP1 ordinary
share - basic 2.26p 0.78p 3.04p 8.68p (30.54)p (21.86)p
__________ __________ __________ __________ __________ __________
Earnings per GBP1 ordinary
share - diluted 2.61p 0.56p 3.17p 7.20p (21.81)p (14.61)p
__________ _________ __________ __________ _________ __________
Net assets 6,504 7,919
__________ __________
Net assets per ordinary
share
- deducting preference
shares 19p 23p
at fully diluted net
asset value*
__________ __________
- diluted 19p 23p
__________ __________
22p
Diluted net asset value per
ordinary share at 22 June
2020
__________
Dividends declared or
proposed for the period
per ordinary share
- interim paid 2.7p 2.7p
- final proposed 0.0p 6.0p
per preference share 1.75p 3.5p
*Basic net assets are calculated using a value of fully diluted net asset value
for the preference shares. Basic net assets per ordinary share at 31 December
2018 have been restated using a value of fully diluted net asset value for the
preference shares instead of using a value of par for the preference shares.
Chairman's Statement
I report our results for the year ended 31 December 2019.
As announced on 7th April, we have delayed the release of these results by two
months in response to the Coronavirus (COVID-19) pandemic which broke out in
the UK in March, at which time the Financial Conduct Authority (FCA) put in
place extensions to listed company reporting deadlines.
This delay has allowed us to reduce as much as possible employee exposure to
the virus through reduced work travel and professional adviser contact, and to
minimise onward transmission at a time when maximum pressure on hospitals and
the NHS was expected.
This later reporting date also enables us to report to shareholders in a fuller
and more informed way when more has become known about the progression and
effects of the pandemic and the impact on the markets and our portfolio of the
government's unprecedented social and financial response to the pandemic.
To complement the extension to the deadline for reporting listed company annual
results, regulations have also been put in place to extend the deadlines for
the filing of Annual Returns at Companies House, the holding of AGMs and the
release of interim results during the current year. Accordingly, our Annual
General Meeting will now be held on 24th September 2020 and our interim results
to 30th June 2020 will be published by end-October 2020.
Revenue
The return on the revenue account before tax amounted to GBP0.9 million (2018: GBP
2.5 million), a decrease of 65 percent. This decrease was due a reduction in
income received from subsidiary companies and from external investments. The
reduced rate of subsidiary company income was a function of the lower asset
prices and sales in those companies which reduced available distributable
reserves in those companies.
Gross revenues totalled GBP1.2 million (2018: GBP3.1 million). In addition, film
income of GBP106,000 (2018: GBP92,000) and property unit trust income of GBP14,000
(2018: GBP14,000) was received in our subsidiary companies. In accordance with
IFRS10, these income streams are not included within the revenue figures noted
above.
The total return before tax amounted to a profit of GBP1.1 million (2018: GBP5.1
million loss), which comprised net revenue of GBP0.9 million, a realised loss of
GBP1.1 million and an unrealised gain of GBP1.7 million. The revenue return per
ordinary share was 2.3p (2018: 8.7p) on an undiluted basis and 2.6p (2018:
7.2p) on a diluted basis.
Net Assets and Performance
Net assets at the year end were GBP6.5 million (2018: GBP7.9 million), a decrease
of 18.0 percent and reflects the payment of GBP2.5 million in dividends to
shareholders during the year. This compares to increases in the FTSE 100 and
All Share indices of 12.1 percent and 14.2 percent, respectively, over the
period. On a total return basis, after adding back dividends paid during the
year, our net assets increased by 14.0 percent compared to 16.5 percent and
18.0 percent increases in the FTSE 100 and All Share indices, respectively.
At the half year, we reported substantial outperformance against the benchmark
indices on a total return basis by approximately 12 percent. This was
principally the result of solid gains of 40 percent in sterling terms in the
value of our largest US investment, Geron Corporation. By year end, however,
that increase had reduced somewhat to a gain of 30 percent, reflecting also a
weakening of the US dollar over the period, and as a result our total return
for the full year registered a modest underperformance against the benchmark
indices on the same basis.
The growth in Geron Corporation's share price over the year reflected the
beginning of a recovery in market perception of the company following the
sudden and unexpected withdrawal of its partner Johnson & Johnson in September
2018. This had precipitated a collapse of over 80 percent in Geron's stock
price in the fourth quarter of that year. It was the shock of this withdrawal
and not any underlying problem with Geron's haematological cancer drug,
Imetelstat, or the ongoing clinical trial programmes which engendered this
decline in market value. As this shock began to dissipate in 2019 and
encouraging results of the clinical trials were released during the year, the
share price began to recover accordingly. Further important developments in
Geron's business have occurred recently, including a major fundraising, the
addition of a second Phase 3 clinical trial to its programme and further high
level technical personnel hires from leading pharma companies. These have added
to the continued recovery in Geron's share price and are discussed in more
detail in the managing director's report below.
More generally, there was no absence of major themes and events driving
investment sentiment in the UK and USA in 2019, many of them with competing
effects on investment and markets. In the USA, these included the economic and
market stimulating effects of the Trump administration's fiscal stimulus
programme through corporate tax reductions, the contrastingly depressing
effects of the ever developing and vacillating trade war with China, changes in
the direction in the Federal Reserve's US dollar interest rate policy as
economic growth prospects varied with each new and erratic White House policy
initiative, and large movements in US dollar exchange rates as interest rates
across the maturity spectrum tumbled to historic lows, presaging the advent of
recession.
In the UK, these themes included the difficult and protracted Brexit
negotiations, with missed and extended deadlines and the prospect of a no-deal
exit from the European Union, dysfunction in parliament with the opposition
taking control of the order paper and an unprecedented series of heavy
government defeats, the end of the 10 year economic growth cycle which had been
in place since the financial crisis of 2008 and finally the resignation of the
prime minister as the impasse in Brexit overwhelmed the parliamentary process
leading to the appointment of Boris Johnson who brought some order to the
process at the last moment at the end of the year.
Not surprisingly, all these competing events resulted in multiple swings in
sentiment and direction in equity markets and currencies during the year. The
rising trend of the first half of the year, itself a recovery from the falls of
the previous year and based on the provision of central bank liquidity through
substantial interest rate reductions, dissipated in the second half of the year
as investors' resilience to the events noted above evaporated. Investors'
appetite was also finally further constrained by other worrying global
developments which had been growing over time, including the mass and
uncontrolled migration of peoples from Africa/the Middle East into Europe and
from Central America in to the USA, the rising and increasingly domineering
assertiveness of China politically and economically, the interference by Russia
in the elections, sovereignty and security of other countries and the gradual
erosion of norms relating to the international rules based system through
popularism.
Notwithstanding all of the above, equity markets finished the year with
sizeable gains as high liquidity levels continued to provide support in the
absence of acceptable alternative yield-generating investments.
Dividend
As announced on 7th April, we do not to recommend the payment of a final
dividend for the 2019 financial year.
In December 2019, we paid a half-year interim dividend on our ordinary shares
of 2.70 pence, representing a yield of approximately 5.6 percent on the
ordinary share price at the time of announcement and of approximately 6.5
percent averaged over the year as a whole.
This decision is made in the context of the economic and investment realities
arising out of the COVID-19 pandemic, as explained in more detail in the
managing director's report below. Additionally, however, as already announced
in our 2019 interim statement and 2018 annual report, the continuation of our
progressive dividend policy, which had been in place for over twenty years,
would depend on a return in the share price of our major investment, Geron
Corporation, to levels closer to those seen in 2018 to enable us to generate
distributable income internally within our group. To date this has not
occurred, although the recent improvements in the share price and in the
company's general prospects as already noted bode well for a return to those
former price levels at a date hopefully in the not too distant future.
Within these constraints and although the generation of reliable dividend
income from external sources has now been placed in doubt for a time due to the
COVID-19 pandemic, it is our intention to resume our dividend payments as soon
as possible, as and when circumstances permit, potentially through ad hoc
interim payments not necessarily on our normal dividend timetable, and
eventually to catch up when and if possible on with-held or reduced payments.
In the first instance, we intend to pay an initial interim dividend of at least
1.75 pence per share in respect of the six months to 30th June 2020.
Recent events and outlook
The COVID-19 pandemic and the social, financial and economic policy responses
put in place to minimise infections and deaths around the world have dominated
the first six months of this year in a way which has been completely
unimaginable to people, companies and governments.
With infection rates and deaths having finally plateaued and started to fall
towards the end of the second quarter, the immediate and dramatic effect on
equity markets seen in March, when markets fell by over 30 percent over 10
days, has now stabilised and a recovery of over 50 percent of those falls has
now been seen.
Now the difficult task for governments of managing the safe release from
lockdown and other social and work constraints is underway, together with plans
to start reducing the many and unprecedented financial and fiscal support
programmes which governments have put in place in most leading economies.
The long term effect of the pandemic in terms of damage to businesses and jobs
and the prospects for economic recovery will not be evident for some time and
will depend in part on whether a second wave of infections materialises this
year, together with the success and timing of the development of vaccines or
treatments to combat the disease.
With the current partial recovery in markets noted above, investors have been
taking a relatively optimistic view of prospects for recovery, particularly
given the high market levels seen just prior to the outbreak of the pandemic,
despite the accumulation of worrying economic and political trends over the
past two years.
Having divested the portfolio out of some of our general sterling-based fund
investments over the past two years, our increased exposure to US biopharma
investments which do not tend track general market movements so closely, should
provide some element of protection against the continued anticipated volatility
in equity markets over the coming period in what will hopefully be the wake of
the COVID-19 pandemic. In the meantime, we pursue the aims of our investment
programme to capture capital growth from the continued market re-rating of
those biopharma company investments as they progress steadily towards
commercialisation of their ground-breaking and valuable technologies.
As at 22 June 2020, our net assets had increased to GBP7.7 million, an increase
of 18.0 percent since the beginning of the calendar year due principally to the
43.4 percent increase in the share price of Geron Corporation over this period.
This is equivalent to 21.9 pence per share (prior charges deducted at fully
diluted value) and 21.9 pence per share on a diluted basis. Over the same
period the FTSE 100 decreased 17.2 percent and the All Share Index decreased
17.5 percent.
David Seligman
29 June 2020
Managing Director's report
With most of the world's largest economies effectively closed down for months
in the second quarter of 2020 and possibly longer due to the medical emergency
caused by the COVID-19 pandemic, the economic trends and themes which had been
in place since the financial crisis of 2008 have been suddenly and violently
interrupted.
In 2019, the 10 year recovery in equity and financial markets was still
continuing, fuelled latterly by substantial corporate tax cuts in the USA and
the maintenance of multi-year liquidity provision by central banks to keep an
anaemic and slow recovery from the 2008 Great Recession in place, despite ever
increasing economic and geo-political concerns which have been referred to here
over the last two years.
At this point, with no effective treatments or vaccines available or in
immediate prospect, the short term and unprecedented hit to jobs, business and
economic growth will no doubt extend into the medium term to a greater or
lesser extent, as the massive financial and fiscal support measures put in
place by governments in recent months can only be sustained for a limited
period of time. Most leading economies are likely to suffer larger and swifter
declines in GDP in the current year than they experienced in 2008 and it is not
yet clear when and in what form the eventual recovery can begin.
As noted above, our portfolio outperformed the benchmarks in the first half of
2019, principally due to a recovery in the value of our largest US investment,
Geron Corporation, from its large fall at the end of 2018, but slightly
underperformed by year end as Geron's recovery weakened somewhat while the US
dollar strengthened by 7 percent. With Geron and our other US biopharma
investments now representing a larger percentage of our portfolio (60 percent
at 31st December 2019) following a reduction in our UK denominated fund
investments over the past two years, the portfolio's exposure to movements in
the US dollar exchange rate is somewhat greater than hitherto, although it is
partly offset by a US dollar cash hedge.
In terms of income, our policy over the past few years of generating income
from external investments and profitable asset sales in our subsidiary
companies has become more difficult over time. Paying ever higher levels of
dividend each year out of a shrinking asset base, due both to shareholder
payments and asset values which have not performed in line with expectations,
has become an increasing strain.
Additionally and recently in respect of our externally received income, a new
constraint on corporate dividend payments has now arisen out of the COVID-19
pandemic. In late March, the major UK banks announced the cancellation of
their 2020 dividends in the face of government pressure. This measure was to
ensure the conservation of bank resources in furtherance of the government's
emergency financial support programmes to companies and individuals. Since
then, many other leading companies have similarly cancelled or suspended their
dividend payments to protect their balance sheets and conserve cash resources,
particularly in those industries with operations or revenues badly disrupted by
the pandemic's effects, including transport, leisure, hospitality, energy,
manufacturing and utilities. These have included many FTSE 100 index stocks and
hitherto decades-long dividend paying companies. Currently, around 50 percent
of FTSE index companies have now cut or cancelled their dividends, covering
over GBP30 billion of dividends and representing more than 40 percent of the
annual FTSE 100 and FTSE 250 dividend payment, with more cuts expected as the
year progresses.
This systemic reduction in dividend payments will have a significant effect in
the short to medium term on those savings institutions relying on investment
income generation for their operations, including pension funds, assurance and
other investment vehicles, such as ourselves. It is partly for this reason
that we have judged it prudent not to pay a final dividend this year.
In relation to income generated internally from our subsidiaries, the level of
distributable reserves in those subsidiaries is now insufficient to continue
the quantum of distributions seen in earlier years, due principally to the
disappointing performance of our US biopharma investments over the recent
period. As and when these values return to expected and previously achieved
levels, we will be able to recommence the generation of internal income for
onward distribution to shareholders.
In this context, an appraisal of the current circumstances and prospects of our
largest such holding, Geron Corporation, is set out below.
Geron Corporation
We are hopeful that our long-held and sometimes difficult strategic investment
in Geron Corporation may soon reach a level of maturity. Although this seemed
to be the case in 2018 when its five year collaboration with Johnson & Johnson
was yielding encouraging Phase 2 trial results in the run-up to a contractual
continuation point and the share price had increased by over 200 percent in
anticipation of this in the first part of the year, it was not to be the case
when Johnson & Johnson withdrew unexpectedly in September of that year.
In the time since, Geron Corporation has worked steadily to prove that Johnson
& Johnson's withdrawal was not related to any underlying problem with its
oncology drug or the clinical trials by continuing to publish ever improving
trial results. This culminated in a successful Phase 2 clinical trial
conclusion at the end of 2019 with excellent results in terms of blood
transfusion free periods and patient life extension, outperforming all other
available treatment options for the two haematological cancer conditions under
investigation, Myelodysplastic Syndrome (MDS) and Myelofibrosis (MF).
Furthermore, Geron has recently announced FDA agreement for its second Phase 3
trial (in MF) which is another important milestone and most significantly has
raised US$150 million through an equity issue which will provide sufficient
funds to take it through both of its Phase 3 trials. Three large institutional
investors, including two leading biotech sector investment funds, took
significant positions in the issue which was very well received by the market
with the share price since trading well above the issue price. Latterly, all
of the major market analysts covering Geron have re-iterated the stock as a buy
with a price target of 150 percent of its current level.
It is hoped, therefore, that this sufficiency of funding and the support of
these large funds will deter further activity by professional short sellers of
Geron stock, which through their large positions held over many years and which
have regularly exceeded over 35 percent of total shares issued, have for so
long prevented the true underlying value and future prospects of Geron being
fairly recognised in the market. Instructively, regulatory reporting since the
share issue last month shows a significant reduction in the outstanding short
position of almost 50 percent to the lowest level seen for over 10 years.
Industries such as biotech, which by their nature in their early stages
generate little income and whose futures depend entirely on the binary and
time-consuming outcome of their drug development and clinical testing
programmes, can be the victim of concerted and often unscrupulous short selling
activities by professional traders and funds. They struggle as a result to
make progress and to raise funds for their development over the long term in
the face of these market activities. It is highly regrettable that potentially
very successful enterprises, and particularly in a sector devoted to the
development of life improving or saving medicines which are designed to benefit
us all, should be faced with these additional and unnecessary challenges to
their success.
Jonathan Woolf
29 June 2020
Income statement
For the year ended 31 December 2019
2019 2018
Revenue 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) 1,243 - 1,243 3,056 - 3,056
Holding gains/(losses) on 1,657 1,657 (4,644) (4,644)
investments at fair value - -
through profit or loss
Losses on disposal of
investments at fair value - (1,113) (1,113) - (2,647) (2,647)
through profit or loss*
Foreign exchange (losses)/ 53 (57) (4) (61) (62) (123)
gains
Expenses (381) (242) (623) (457) (237) (694)
________ ________ ________ ________ ________ ________
Profit/(loss) before finance 915 245 1,160 2,538 (7,590) (5,052)
costs and tax
Finance costs (53) (49) (102) (49) (45) (94)
________ ________ ________ ________ ________ ________
Profit/(loss) before tax 862 196 1,058 2,489 (7,635) (5,146)
Tax 52 - 52 31 - 31
________ ________ ________ ________ ________ ________
Profit/(loss) for the year 914 196 1,110 2,520 (7,635) (5,115)
________ ________ ________ ________ ________ ________
Earnings per share
Basic - ordinary shares 2.26p 0.78p 3.04p 8.68p (30.54)p (21.86)p
________ ________ ________ ________ ________ ________
Diluted - ordinary shares 2.61p 0.56p 3.17p 7.20p (21.81)p (14.61)p
________ ________ ________ ________ ________ ________
The company does not have any income or expense that is not included in the
profit/(loss) for the year. Accordingly, the 'Profit/(loss) for the year' is
also the 'Total Comprehensive Income for the year' as defined in IAS 1
(revised) and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Income Statement, prepared in
accordance with IFRS. The supplementary revenue return and capital return
columns are both prepared under guidance published by the Association of
Investment Companies. All items in the above statement derive from continuing
operations.
All profit and total comprehensive income is attributable to the equity holders
of the company.
*Losses on disposal of investments at fair value through profit or loss include
Losses on sales of GBP1,274,000 (2018 - GBP917,000 losses) and Gains on provision
for liabilities and charges of GBP161,000 (2018 - GBP1,730,000 losses).
Statement of changes in equity
For the year ended 31 December 2019
Share Capital Retained Total
capital reserve earnings
GBP 000 GBP 000 GBP 000 GBP 000
Balance at 31 December 2017 35,000 (21,167) 1,701 15,534
Changes in equity for 2018
(Loss)/profit for the period - (7,635) 2,520 (5,115)
Ordinary dividend paid (note 4) - - (2,150) (2,150)
Preference dividend paid (note 4) - - (350) (350)
________ ________ ________ ________
Balance at 31 December 2018 35,000 (28,802) 1,721 7,919
Changes in equity for 2019
Profit for the period - 196 914 1,110
Ordinary dividend paid (note 4) - - (2,175) (2,175)
Preference dividend paid (note 4) - - (350) (350)
________ ________ ________ ________
Balance at 31 December 2019 35,000 (28,606) 110 6,504
________ ________ ________ ________
Registered number: 00433137
Balance Sheet
At 31 December 2019
2019 2018
GBP 000 GBP 000
Non-current assets
Investments - fair value through 6,704 8,722
profit or loss
Subsidiaries - fair value through 5,335 5,269
profit or loss
__________ __________
12,039 13,991
Current assets
Receivables 1,588 3,417
Cash and cash equivalents 2,504 244
__________ __________
4,092 3,661
__________ __________
Total assets 16,131 17,652
__________ __________
Current liabilities
Trade and other payables 3,617 547
Bank loan 2,635 2,790
__________ __________
(6,252) (3,337)
__________ __________
Total assets less current liabilities 9,879 14,315
__________ __________
Non - current liabilities (3,375) (6,396)
__________ __________
Net assets 6,504 7,919
__________ __________
Equity attributable to equity holders
Ordinary share capital 25,000 25,000
Convertible preference share capital 10,000 10,000
Capital reserve (28,606) (28,802)
Retained revenue earnings 110 1,721
__________ __________
Total equity 6,504 7,919
__________ __________
Approved: 29 June 2020
Cash flow statement
For the year ended 31 December 2019
Year ended Year ended
2019 2018
GBP 000 GBP 000
Cash flows from operating activities
Profit/(loss) before tax 1,058 (5,146)
Adjustments for:
(Gains)/losses on investments (544) 7,291
Dividends in specie - (290)
Proceeds on disposal of investments at fair 16,316 13,635
value through profit and loss
Purchases of investments at fair value through (14,521) (12,335)
profit and loss
Finance costs 102 94
__________ __________
Operating cash flows before movements in working 2,411 3,249
capital
Decrease/(increase) in receivables 2,417 (712)
Decrease in payables (363) (773)
__________ __________
Net cash from operating activities before 4,465 1,764
interest
Interest paid (97) (90)
__________ __________
Net cash from operating activities 4,368 1,674
Cash flows from financing activities
Dividends paid on ordinary shares (1,778) (1,839)
Dividends paid on preference shares (175) (350)
Bank loan (155) (1,454)
__________ __________
Net cash used in financing activities (2,108) (3,643)
__________ __________
Net increase/(decrease) in cash and cash 2,260 (1,969)
equivalents
Cash and cash equivalents at beginning of year
244 2,213
__________ __________
Cash and cash equivalents at end of year
2,504 244
__________ __________
Purchases and sales of investments are considered to be operating activities of
the company, given its purpose, rather than investing activities.
1 Basis of preparation and going concern
The financial information set out above contains the financial information of
the company for the year ended 31 December 2019. The company has prepared its
financial statements under IFRS. The financial statements have been prepared on
a going concern basis adopting the historical cost convention except for the
measurement at fair value of investments, derivative financial instruments and
subsidiaries.
The information for the year ended 31 December 2019 is an extract from the
statutory accounts to that date. Statutory company accounts for 2018, which
were prepared under IFRS as adopted by the EU, have been delivered to the
registrar of companies and company statutory accounts for 2019, prepared under
IFRS as adopted by the EU, will be delivered in due course.
The auditors have reported on the 31 December 2019 year end accounts and their
reports were unqualified and did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying their reports
and did not contain statements under section 498(2) or (3) of the Companies Act
2006.
The directors, having made enquiries, consider that the company has adequate
financial resources to enable it to continue in operational existence for the
foreseeable future. Accordingly, the directors believe that it is appropriate
to continue to adopt the going concern basis in preparing the company's
accounts.
2 Income
2019 2018
GBP 000 GBP 000
Income from investments
UK dividends 938 1,180
Overseas dividends 173 92
Scrip and in specie dividends - 290
Dividend from subsidiary 74 1,445
Interest on fixed income securities - 1
__________ __________
1,185 3,008
__________ __________
Other income 58 48
__________ __________
Total income 1,243 3,056
__________ __________
Total income comprises:
Dividends 1,185 3,007
Interest - 1
Other interest 58 48
__________ __________
1,243 3,056
__________ __________
Dividends from investments
Listed investments 1,111 1,562
Unlisted investments 74 1,445
__________ __________
1,185 3,007
__________ __________
Of the GBP1,185,000 (2018 - GBP3,007,000) dividends received, GBP879,000 (2018 - GBP
997,000) related to special and other dividends received from investee
companies that were bought after the dividend announcement. There was a
corresponding capital loss of GBP1,027,000 (2018 - GBP1,007,000), on these
investments.
Under IFRS 10 the income analysis is for the parent company only rather than
that of the consolidated group. Thus film revenues of GBP106,000 (2018 - GBP92,000)
received by the subsidiary British and American Films Limited and property unit
trust income of GBP14,000 (2018 - GBP14,000) received by the subsidiary BritAm
Investments Limited are shown separately in this paragraph.
3 Earnings per ordinary share
The calculation of the basic (after deduction of preference dividend) and
diluted earnings per share is based on the following data:
2019 2018
Revenue Capital Total Revenue Capital Total
return return return return
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
GBP 000
Earnings:
Basic 564 196 760 2,170 (7,635) (5,465)
Preference
dividend 350 - 350 350 - 350
__________ __________ __________ __________ __________ __________
Diluted 914 196 1,110 2,520 (7,635) (5,115)
__________ __________ __________ __________ __________ __________
Basic revenue, capital and total return per ordinary share is based on the net
revenue, capital and total return for the period after tax and after deduction
of dividends in respect of preference shares and on 25 million (2018: 25
million) ordinary shares in issue.
The diluted revenue, capital and total return is based on the net revenue,
capital and total return for the period after tax and on 35 million (2018: 35
million) ordinary and preference shares in issue.
4 Dividends
2019 2018
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 2018
of 6.0p (2017:5.9p) per share 1,500 1,475
Interim dividend for the year ended 31 December
2019 of 2.7p 675 675
(2018:2.7p) per share
__________ __________
2,175 2,150
__________ __________
Proposed final dividend for the year ended 31
December 2019 of 0.0p (2018:6.0p) per share - 1,500
__________ __________
Dividends on 3.5% cumulative convertible
preference shares:
Preference dividend for the 6 months ended 31
December 2018 of 1.75p (2017:1.75p) per share 175 175
Preference dividend for the 6 months ended 30 June
2019 of 1.75p (2018:1.75p) per share 175 175
__________ __________
350 350
__________ __________
Proposed preference dividend for the 6 months
ended 31 December 2019 of 0.00p (2018:1.75p) per - 175
share
__________ __________
We have set out below the total dividend payable in respect of the financial
year, which is the basis on which the retention requirements of Section 1158 of
the Corporation Tax Act 2010 are considered.
Dividends proposed for the period
2019 2018
GBP 000 GBP 000
Dividends on ordinary shares:
Interim dividend for the year ended 31 December
2019 of 2.7p (2018:2.7p) per share 675 675
Proposed final dividend for the year ended 31
December 2019 of 0.0p (2018:6.0p) per share - 1,500
__________ __________
675 2,175
__________ __________
Dividends on 3.5% cumulative convertible
preference shares:
Preference dividend for the year ended 31 December
2019 of 1.75p (2018:1.75p) per share 175 175
Proposed preference dividend for the year ended 31
December 2019 of 0.00p (2018:1.75p) per share - 175
__________ __________
175 350
__________ __________
5 Net asset values
Net asset
value per share
2019 2018
GBP GBP
Ordinary shares restated
Diluted 0.19 0.23
Undiluted 0.19 0.23*
Net asset
attributable
2019 2018
GBP 000 GBP 000
restated
Total net assets 6,504 7,919
Less convertible preference shares at (1,858) (2,263)
fully diluted value
__________ __________
Net assets attributable to ordinary 4,646 5,656*
shareholders
__________ __________
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.
*Net assets attributable to ordinary shareholders at 31 December 2018 have been
restated using a value of fully diluted net asset value for the preference
shares instead of using a value of par for the preference shares.
Principal risks and uncertainties
The principal risks facing the company relate to its investment activities and
include market risk (other price risk, interest rate risk and currency risk),
liquidity risk and credit risk. The other principal risks to the company are
loss of investment trust status and operational risk. These will be explained
in more detail in the notes to the 2019 Annual Report and Accounts, but remain
unchanged from those published in the 2018 Annual Report and Accounts.
Related party transactions
The company rents its offices from Romulus Films Limited, and is also charged
for its office overheads.
The salaries and pensions of the company's employees, except for the three
non-executive directors and one employee are paid by Remus Films Limited and
Romulus Films Limited and are recharged to the company.
During the year the company entered into the investment transactions to sell
stock for GBPnil (2018 - GBP346,709) to Second BritAm Investments Limited, for GBP
540,141 (2018 - GBPnil) to British & American Films Limited and for GBPnil (2018 -
GBP2,472) to BritAm Investments Limited.
There have been no other related party transactions during the period, which
have materially affected the financial position or performance of the company.
Capital Structure
The company's capital comprises GBP35,000,000 (2018 - GBP35,000,000) being
25,000,000 ordinary shares of GBP1 (2018 - 25,000,000) and 10,000,000 non-voting
convertible preference shares of GBP1 each (2018 - 10,000,000). The rights
attaching to the shares will be explained in more detail in the notes to the
2019 Annual Report and Accounts, but remain unchanged from those published in
the 2018 Annual Report and Accounts.
Directors' responsibility statement
The directors are responsible for preparing the financial statements in
accordance with applicable law and regulations. The directors confirm that to
the best of their knowledge the financial statements prepared in accordance
with the applicable set of accounting standards, give a true and fair view of
the assets, liabilities, financial position and the (loss)/profit of the
company and that the Chairman's Statement, Managing Director's Report and the
Directors' report include a fair review of the information required by rules
4.1.8R to 4.2.11R of the FSA's Disclosure and Transparency Rules, together with
a description of the principal risks and uncertainties that the company faces.
Annual General Meeting
This year's Annual General Meeting has been convened for Thursday 24 September
2020 at 12.15pm at Wessex House, 1 Chesham Street, London SW1X 8ND.
END
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