British &
American Investment Trust PLC |
Annual Financial
Report
for the year ended 31 December 2019 |
Registered number:
00433137 |
Directors |
Registered
office |
David G Seligman
(Chairman) |
Wessex House |
Jonathan C Woolf
(Managing Director) |
1 Chesham Street |
Dominic G Dreyfus
(Non-executive and Chairman of the Audit Committee) |
Telephone: 020 7201
3100 |
Alex Tamlyn
(Non-executive) |
Registered in
England |
|
No.00433137 |
|
29 June 2020 |
This is the Annual Financial Report as required to be published
under DTR 4 of the UKLA Listing Rules.
Financial Highlights
For the year ended 31 December
2019
|
2019
|
2018
|
|
|
Revenue
return |
Capital
return |
Total |
Revenue
return |
Capital
return |
Total |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
Profit/(loss) before tax –
realised |
862 |
(1,461) |
(599) |
2,489 |
(2,991) |
(502) |
Profit/(loss) before tax –
unrealised |
– |
1,657 |
1,657 |
– |
(4,644) |
(4,644) |
|
__________ |
__________ |
__________ |
__________ |
__________ |
__________ |
Profit/(loss) before tax –
total |
862 |
196 |
1,058 |
2,489 |
(7,635) |
(5,146) |
|
__________ |
__________ |
__________ |
__________ |
__________ |
__________ |
Earnings per £1 ordinary share –
basic |
2.26p |
0.78p |
3.04p |
8.68p |
(30.54)p |
(21.86)p |
|
__________ |
__________ |
__________ |
__________ |
__________ |
__________ |
Earnings per £1 ordinary share –
diluted |
2.61p |
0.56p |
3.17p |
7.20p |
(21.81)p |
(14.61)p |
|
__________ |
_________ |
__________ |
__________ |
_________ |
__________ |
Net assets |
|
|
6,504 |
|
|
7,919 |
|
|
|
__________ |
|
|
__________ |
Net assets per ordinary share |
|
|
|
|
|
|
– deducting preference
shares
at fully diluted net asset value* |
|
|
19p |
|
|
23p |
|
|
|
__________ |
|
|
__________ |
– diluted |
|
|
19p |
|
|
23p |
|
|
|
__________ |
|
|
__________ |
Diluted net asset value per ordinary share at 22 June 2020 |
|
|
22p |
|
|
|
|
|
|
__________ |
|
|
|
Dividends declared or
proposed for the period |
|
|
|
|
|
|
per ordinary share |
|
|
|
|
|
|
– interim paid |
|
|
2.7p |
|
|
2.7p |
– final proposed |
|
|
0.0p |
|
|
6.0p |
per preference
share |
|
|
1.75p |
|
|
3.5p |
*Basic net assets are calculated using a value of fully diluted net
asset value for the preference shares. Basic net assets per
ordinary share at 31 December 2018 have been restated using a value
of fully diluted net asset value for the preference shares instead
of using a value of par for the preference shares. |
|
|
|
|
|
|
|
|
Chairman’s Statement
I report our results for the year ended 31 December 2019.
As announced on 7th April, we have delayed the release of these
results by two months in response to the Coronavirus (COVID-19)
pandemic which broke out in the UK in March, at which time the
Financial Conduct Authority (FCA) put in place extensions to listed
company reporting deadlines.
This delay has allowed us to reduce as much as possible employee
exposure to the virus through reduced work travel and professional
adviser contact, and to minimise onward transmission at a time when
maximum pressure on hospitals and the NHS was expected.
This later reporting date also enables us to report to
shareholders in a fuller and more informed way when more has become
known about the progression and effects of the pandemic and the
impact on the markets and our portfolio of the government's
unprecedented social and financial response to the pandemic.
To complement the extension to the deadline for reporting listed
company annual results, regulations have also been put in place to
extend the deadlines for the filing of Annual Returns at Companies
House, the holding of AGMs and the release of interim results
during the current year. Accordingly, our Annual General Meeting
will now be held on 24th September
2020 and our interim results to 30th
June 2020 will be published by end-October 2020.
Revenue
The return on the revenue account before tax amounted to £0.9
million (2018: £2.5 million), a decrease of 65 percent. This
decrease was due a reduction in income received from subsidiary
companies and from external investments. The reduced rate of
subsidiary company income was a function of the lower asset prices
and sales in those companies which reduced available distributable
reserves in those companies.
Gross revenues totalled £1.2 million (2018: £3.1 million). In
addition, film income of £106,000 (2018: £92,000) and property unit
trust income of £14,000 (2018: £14,000) was received in our
subsidiary companies. In accordance with IFRS10, these income
streams are not included within the revenue figures noted
above.
The total return before tax amounted to a profit of £1.1 million
(2018: £5.1 million loss), which comprised net revenue of £0.9
million, a realised loss of £1.1 million and an unrealised gain of
£1.7 million. The revenue return per ordinary share was 2.3p (2018:
8.7p) on an undiluted basis and 2.6p (2018: 7.2p) on a diluted
basis.
Net Assets and Performance
Net assets at the year end were £6.5 million (2018: £7.9
million), a decrease of 18.0 percent and reflects the payment of
£2.5 million in dividends to shareholders during the year. This
compares to increases in the FTSE 100 and All Share indices of 12.1
percent and 14.2 percent, respectively, over the period. On a total
return basis, after adding back dividends paid during the year, our
net assets increased by 14.0 percent compared to 16.5 percent and
18.0 percent increases in the FTSE 100 and All Share indices,
respectively.
At the half year, we reported substantial outperformance against
the benchmark indices on a total return basis by approximately 12
percent. This was principally the result of solid gains of 40
percent in sterling terms in the value of our largest US
investment, Geron Corporation. By year end, however, that increase
had reduced somewhat to a gain of 30 percent, reflecting also a
weakening of the US dollar over the period, and as a result our
total return for the full year registered a modest underperformance
against the benchmark indices on the same basis.
The growth in Geron Corporation’s share price over the year
reflected the beginning of a recovery in market perception of the
company following the sudden and unexpected withdrawal of its
partner Johnson & Johnson in September
2018. This had precipitated a collapse of over 80 percent in
Geron’s stock price in the fourth quarter of that year. It was the
shock of this withdrawal and not any underlying problem with
Geron’s haematological cancer drug, Imetelstat, or the ongoing
clinical trial programmes which engendered this decline in market
value. As this shock began to dissipate in 2019 and
encouraging results of the clinical trials were released during the
year, the share price began to recover accordingly. Further
important developments in Geron’s business have occurred recently,
including a major fundraising, the addition of a second Phase 3
clinical trial to its programme and further high level technical
personnel hires from leading pharma companies. These have added to
the continued recovery in Geron’s share price and are discussed in
more detail in the managing director’s report below.
More generally, there was no absence of major themes and events
driving investment sentiment in the UK and USA in 2019, many of them with competing
effects on investment and markets. In the USA, these included the economic and market
stimulating effects of the Trump administration’s fiscal stimulus
programme through corporate tax reductions, the contrastingly
depressing effects of the ever developing and vacillating trade war
with China, changes in the
direction in the Federal Reserve’s US dollar interest rate policy
as economic growth prospects varied with each new and erratic White
House policy initiative, and large movements in US dollar exchange
rates as interest rates across the maturity spectrum tumbled to
historic lows, presaging the advent of recession.
In the UK, these themes included the difficult and
protracted Brexit negotiations, with missed and extended
deadlines and the prospect of a no-deal exit from the European
Union, dysfunction in parliament with the opposition taking control
of the order paper and an unprecedented series of heavy government
defeats, the end of the 10 year economic growth cycle which had
been in place since the financial crisis of 2008 and finally the
resignation of the prime minister as the impasse in Brexit
overwhelmed the parliamentary process leading to the appointment of
Boris Johnson who brought some order
to the process at the last moment at the end of the year.
Not surprisingly, all these competing events resulted in
multiple swings in sentiment and direction in equity markets and
currencies during the year. The rising trend of the first half of
the year, itself a recovery from the falls of the previous year and
based on the provision of central bank liquidity through
substantial interest rate reductions, dissipated in the second half
of the year as investors’ resilience to the events noted above
evaporated. Investors’ appetite was also finally further
constrained by other worrying global developments which had been
growing over time, including the mass and uncontrolled migration of
peoples from Africa/the
Middle East into Europe and from Central America in to the USA, the rising and increasingly domineering
assertiveness of China politically
and economically, the interference by Russia in the elections, sovereignty and
security of other countries and the gradual erosion of norms
relating to the international rules based system through
popularism.
Notwithstanding all of the above, equity markets finished the
year with sizeable gains as high liquidity levels continued to
provide support in the absence of acceptable alternative
yield-generating investments.
Dividend
As announced on 7th April, we do not to recommend the payment of
a final dividend for the 2019 financial year.
In December 2019, we paid a
half-year interim dividend on our ordinary shares of 2.70 pence, representing a yield of approximately
5.6 percent on the ordinary share price at the time of announcement
and of approximately 6.5 percent averaged over the year as a
whole.
This decision is made in the context of the economic and
investment realities arising out of the COVID-19 pandemic, as
explained in more detail in the managing director’s report
below. Additionally, however, as already announced in our
2019 interim statement and 2018 annual report, the continuation of
our progressive dividend policy, which had been in place for over
twenty years, would depend on a return in the share price of our
major investment, Geron Corporation, to levels closer to those seen
in 2018 to enable us to generate distributable income internally
within our group. To date this has not occurred, although the
recent improvements in the share price and in the company’s general
prospects as already noted bode well for a return to those former
price levels at a date hopefully in the not too distant future.
Within these constraints and although the generation of reliable
dividend income from external sources has now been placed in doubt
for a time due to the COVID-19 pandemic, it is our intention to
resume our dividend payments as soon as possible, as and when
circumstances permit, potentially through ad hoc interim payments
not necessarily on our normal dividend timetable, and eventually to
catch up when and if possible on with-held or reduced payments.
In the first instance, we intend to pay an initial interim
dividend of at least 1.75 pence per
share in respect of the six months to 30th
June 2020.
Recent events and outlook
The COVID-19 pandemic and the social, financial and economic
policy responses put in place to minimise infections and deaths
around the world have dominated the first six months of this year
in a way which has been completely unimaginable to people,
companies and governments.
With infection rates and deaths having finally plateaued and
started to fall towards the end of the second quarter, the
immediate and dramatic effect on equity markets seen in March, when
markets fell by over 30 percent over 10 days, has now stabilised
and a recovery of over 50 percent of those falls has now been
seen.
Now the difficult task for governments of managing the safe
release from lockdown and other social and work constraints is
underway, together with plans to start reducing the many and
unprecedented financial and fiscal support programmes which
governments have put in place in most leading economies.
The long term effect of the pandemic in terms of damage to
businesses and jobs and the prospects for economic recovery will
not be evident for some time and will depend in part on whether a
second wave of infections materialises this year, together with the
success and timing of the development of vaccines or treatments to
combat the disease.
With the current partial recovery in markets noted above,
investors have been taking a relatively optimistic view of
prospects for recovery, particularly given the high market levels
seen just prior to the outbreak of the pandemic, despite the
accumulation of worrying economic and political trends over the
past two years.
Having divested the portfolio out of some of our general
sterling-based fund investments over the past two years, our
increased exposure to US biopharma investments which do not tend
track general market movements so closely, should provide some
element of protection against the continued anticipated volatility
in equity markets over the coming period in what will hopefully be
the wake of the COVID-19 pandemic. In the meantime, we
pursue the aims of our investment programme to capture capital
growth from the continued market re-rating of those biopharma
company investments as they progress steadily towards
commercialisation of their ground-breaking and valuable
technologies.
As at 22 June 2020, our net assets
had increased to £7.7 million, an increase of 18.0 percent since
the beginning of the calendar year due principally to the 43.4
percent increase in the share price of Geron Corporation over this
period. This is equivalent to 21.9
pence per share (prior charges deducted at fully diluted
value) and 21.9 pence per share on a
diluted basis. Over the same period the FTSE 100 decreased 17.2
percent and the All Share Index decreased 17.5 percent.
David Seligman
29 June 2020
Managing Director's report
With most of the world’s largest economies effectively closed
down for months in the second quarter of 2020 and possibly longer
due to the medical emergency caused by the COVID-19 pandemic, the
economic trends and themes which had been in place since the
financial crisis of 2008 have been suddenly and violently
interrupted.
In 2019, the 10 year recovery in equity and financial markets
was still continuing, fuelled latterly by substantial corporate tax
cuts in the USA and the
maintenance of multi-year liquidity provision by central banks to
keep an anaemic and slow recovery from the 2008 Great Recession in
place, despite ever increasing economic and geo-political concerns
which have been referred to here over the last two years.
At this point, with no effective treatments or vaccines
available or in immediate prospect, the short term and
unprecedented hit to jobs, business and economic growth will no
doubt extend into the medium term to a greater or lesser extent, as
the massive financial and fiscal support measures put in place by
governments in recent months can only be sustained for a limited
period of time. Most leading economies are likely to suffer
larger and swifter declines in GDP in the current year than they
experienced in 2008 and it is not yet clear when and in what form
the eventual recovery can begin.
As noted above, our portfolio outperformed the benchmarks in the
first half of 2019, principally due to a recovery in the value of
our largest US investment, Geron Corporation, from its large fall
at the end of 2018, but slightly underperformed by year end as
Geron’s recovery weakened somewhat while the US dollar strengthened
by 7 percent. With Geron and our other US biopharma investments now
representing a larger percentage of our portfolio (60 percent at
31st December 2019) following a
reduction in our UK denominated fund investments over the past two
years, the portfolio’s exposure to movements in the US dollar
exchange rate is somewhat greater than hitherto, although it is
partly offset by a US dollar cash hedge.
In terms of income, our policy over the past few years of
generating income from external investments and profitable asset
sales in our subsidiary companies has become more difficult over
time. Paying ever higher levels of dividend each year out of a
shrinking asset base, due both to shareholder payments and asset
values which have not performed in line with expectations, has
become an increasing strain.
Additionally and recently in respect of our externally received
income, a new constraint on corporate dividend payments has now
arisen out of the COVID-19 pandemic. In late March, the major
UK banks announced the cancellation of their 2020 dividends in the
face of government pressure. This measure was to ensure the
conservation of bank resources in furtherance of the government’s
emergency financial support programmes to companies and
individuals. Since then, many other leading companies have
similarly cancelled or suspended their dividend payments to protect
their balance sheets and conserve cash resources, particularly in
those industries with operations or revenues badly disrupted by the
pandemic's effects, including transport, leisure, hospitality,
energy, manufacturing and utilities. These have included many FTSE
100 index stocks and hitherto decades-long dividend paying
companies. Currently, around 50 percent of FTSE index companies
have now cut or cancelled their dividends, covering over £30
billion of dividends and representing more than 40 percent of the
annual FTSE 100 and FTSE 250 dividend payment, with more cuts
expected as the year progresses.
This systemic reduction in dividend payments will have a
significant effect in the short to medium term on those savings
institutions relying on investment income generation for their
operations, including pension funds, assurance and other investment
vehicles, such as ourselves. It is partly for this reason
that we have judged it prudent not to pay a final dividend this
year.
In relation to income generated internally from our
subsidiaries, the level of distributable reserves in those
subsidiaries is now insufficient to continue the quantum of
distributions seen in earlier years, due principally to the
disappointing performance of our US biopharma investments over the
recent period. As and when these values return to expected
and previously achieved levels, we will be able to recommence the
generation of internal income for onward distribution to
shareholders.
In this context, an appraisal of the current circumstances and
prospects of our largest such holding, Geron Corporation, is set
out below.
Geron Corporation
We are hopeful that our long-held and sometimes difficult
strategic investment in Geron Corporation may soon reach a level of
maturity. Although this seemed to be the case in 2018 when
its five year collaboration with Johnson & Johnson was yielding
encouraging Phase 2 trial results in the run-up to a contractual
continuation point and the share price had increased by over 200
percent in anticipation of this in the first part of the year, it
was not to be the case when Johnson & Johnson withdrew
unexpectedly in September of that year.
In the time since, Geron Corporation has worked steadily to
prove that Johnson & Johnson’s withdrawal was not related to
any underlying problem with its oncology drug or the clinical
trials by continuing to publish ever improving trial results.
This culminated in a successful Phase 2 clinical trial conclusion
at the end of 2019 with excellent results in terms of blood
transfusion free periods and patient life extension, outperforming
all other available treatment options for the two haematological
cancer conditions under investigation, Myelodysplastic Syndrome
(MDS) and Myelofibrosis (MF).
Furthermore, Geron has recently announced FDA agreement for its
second Phase 3 trial (in MF) which is another important milestone
and most significantly has raised US$150
million through an equity issue which will provide
sufficient funds to take it through both of its Phase 3
trials. Three large institutional investors, including two
leading biotech sector investment funds, took significant positions
in the issue which was very well received by the market with the
share price since trading well above the issue price.
Latterly, all of the major market analysts covering Geron have
re-iterated the stock as a buy with a price target of 150 percent
of its current level.
It is hoped, therefore, that this sufficiency of funding and the
support of these large funds will deter further activity by
professional short sellers of Geron stock, which through their
large positions held over many years and which have regularly
exceeded over 35 percent of total shares issued, have for so long
prevented the true underlying value and future prospects of Geron
being fairly recognised in the market. Instructively,
regulatory reporting since the share issue last month shows a
significant reduction in the outstanding short position of almost
50 percent to the lowest level seen for over 10 years.
Industries such as biotech, which by their nature in their early
stages generate little income and whose futures depend entirely on
the binary and time-consuming outcome of their drug development and
clinical testing programmes, can be the victim of concerted and
often unscrupulous short selling activities by professional traders
and funds. They struggle as a result to make progress and to
raise funds for their development over the long term in the face of
these market activities. It is highly regrettable that potentially
very successful enterprises, and particularly in a sector devoted
to the development of life improving or saving medicines which are
designed to benefit us all, should be faced with these additional
and unnecessary challenges to their success.
Jonathan Woolf
29 June 2020
Income statement
For the year ended 31 December
2019
|
2019
|
2018
|
|
Revenue
return |
Capital
return |
Total |
Revenue
return |
Capital
return |
Total |
|
£ 000 |
£ 000 |
£ 000 |
£ 000 |
£ 000 |
£ 000 |
Investment income
(note 2) |
1,243 |
- |
1,243 |
3,056 |
- |
3,056 |
Holding gains/(losses)
on investments at fair value through profit or loss |
- |
1,657 |
1,657 |
- |
(4,644) |
(4,644) |
Losses on disposal of
investments at fair value through profit or loss* |
- |
(1,113) |
(1,113) |
- |
(2,647) |
(2,647) |
Foreign exchange
(losses)/gains |
53 |
(57) |
(4) |
(61) |
(62) |
(123) |
Expenses |
(381) |
(242) |
(623) |
(457) |
(237) |
(694) |
|
________ |
________ |
________ |
________ |
________ |
________ |
Profit/(loss) before finance
costs and tax |
915 |
245 |
1,160 |
2,538 |
(7,590) |
(5,052) |
Finance costs |
(53) |
(49) |
(102) |
(49) |
(45) |
(94) |
|
________ |
________ |
________ |
________ |
________ |
________ |
Profit/(loss) before tax |
862 |
196 |
1,058 |
2,489 |
(7,635) |
(5,146) |
Tax |
52 |
- |
52 |
31 |
- |
31 |
|
________ |
________ |
________ |
________ |
________ |
________ |
Profit/(loss) for the
year |
914 |
196 |
1,110 |
2,520 |
(7,635) |
(5,115) |
|
________ |
________ |
________ |
________ |
________ |
________ |
Earnings per share |
|
|
|
|
|
|
Basic – ordinary shares |
2.26p |
0.78p |
3.04p |
8.68p |
(30.54)p |
(21.86)p |
|
________ |
________ |
________ |
________ |
________ |
________ |
Diluted – ordinary shares |
2.61p |
0.56p |
3.17p |
7.20p |
(21.81)p |
(14.61)p |
|
________ |
________ |
________ |
________ |
________ |
________ |
The company does not have any income or expense that is not
included in the profit/(loss) for the year. Accordingly, the
‘Profit/(loss) for the year’ is also the ‘Total Comprehensive
Income for the year’ as defined in IAS 1 (revised) and no separate
Statement of Comprehensive Income has been presented.
The total column of this statement represents the Income
Statement, prepared in accordance with IFRS. The supplementary
revenue return and capital return columns are both prepared under
guidance published by the Association of Investment Companies. All
items in the above statement derive from continuing operations.
All profit and total comprehensive income is attributable to the
equity holders of the company.
*Losses on disposal of investments at fair value through profit
or loss include Losses on sales of £1,274,000 (2018 – £917,000
losses) and Gains on provision for liabilities and charges of
£161,000 (2018 – £1,730,000 losses).
Statement of changes in equity
For the year ended 31 December
2019
|
|
Share
capital |
Capital
reserve
|
Retained
earnings |
Total
|
|
|
£ 000 |
£ 000 |
£ 000 |
£ 000 |
Balance at 31 December 2017 |
|
35,000 |
(21,167) |
1,701 |
15,534 |
Changes in equity
for 2018 |
|
|
|
|
|
(Loss)/profit for the
period |
|
- |
(7,635) |
2,520 |
(5,115) |
Ordinary dividend paid
(note 4) |
|
- |
- |
(2,150) |
(2,150) |
Preference dividend paid (note
4) |
|
- |
- |
(350) |
(350) |
|
|
________ |
________ |
________ |
________ |
Balance at 31
December 2018 |
|
35,000 |
(28,802) |
1,721 |
7,919 |
Changes in equity for
2019 |
|
|
|
|
|
Profit for the period |
|
- |
196 |
914 |
1,110 |
Ordinary dividend paid (note 4) |
|
- |
- |
(2,175) |
(2,175) |
Preference dividend paid (note
4) |
|
- |
- |
(350) |
(350) |
|
|
________ |
________ |
________ |
________ |
Balance at 31 December
2019 |
|
35,000 |
(28,606) |
110 |
6,504 |
|
|
________ |
________ |
________ |
________ |
Registered number: 00433137
Balance Sheet
At 31 December 2019
|
|
2019 |
2018 |
|
|
|
|
|
|
£ 000 |
£ 000 |
Non-current assets |
|
|
|
Investments - fair value through
profit or loss |
|
6,704 |
8,722 |
Subsidiaries - fair value through
profit or loss |
|
5,335 |
5,269 |
|
|
__________ |
__________ |
Current assets |
|
12,039 |
13,991 |
Receivables |
|
1,588 |
3,417 |
Cash and cash
equivalents |
|
2,504 |
244 |
|
|
__________ |
__________ |
|
|
4,092 |
3,661 |
|
|
__________ |
__________ |
Total assets |
|
16,131 |
17,652 |
|
|
__________ |
__________ |
Current liabilities |
|
|
|
Trade and other payables |
|
3,617 |
547 |
Bank loan |
|
2,635 |
2,790 |
|
|
__________ |
__________ |
|
|
(6,252) |
(3,337) |
|
|
__________ |
__________ |
|
|
|
|
Total assets less current
liabilities |
|
9,879 |
14,315 |
|
|
__________ |
__________ |
|
|
|
|
Non - current
liabilities |
|
(3,375) |
(6,396) |
|
|
__________ |
__________ |
Net assets |
|
6,504 |
7,919 |
|
|
__________ |
__________ |
Equity attributable to equity
holders |
|
|
|
Ordinary share capital |
|
25,000 |
25,000 |
Convertible preference share
capital |
|
10,000 |
10,000 |
Capital reserve |
|
(28,606) |
(28,802) |
Retained revenue earnings |
|
110 |
1,721 |
|
|
__________ |
__________ |
Total equity |
|
6,504 |
7,919 |
|
|
__________ |
__________ |
Approved: 29
June 2020
Cash flow statement
For the year ended 31 December
2019
|
|
Year
ended 2019 |
Year
ended 2018 |
|
|
£ 000 |
£ 000 |
Cash flows from operating
activities |
|
|
|
Profit/(loss) before
tax |
|
1,058 |
(5,146) |
Adjustments for: |
|
|
|
(Gains)/losses on
investments |
|
(544) |
7,291 |
Dividends in
specie |
|
- |
(290) |
Proceeds on disposal of
investments at fair value through profit and loss |
|
16,316 |
13,635 |
Purchases of
investments at fair value through profit and loss |
|
(14,521) |
(12,335) |
Finance costs |
|
102 |
94 |
|
|
__________ |
__________ |
Operating cash flows before
movements in working capital |
|
2,411 |
3,249 |
Decrease/(increase) in
receivables |
|
2,417 |
(712) |
Decrease in
payables |
|
(363) |
(773) |
|
|
__________ |
__________ |
Net cash from operating
activities before interest |
|
4,465 |
1,764 |
Interest paid |
|
(97) |
(90) |
|
|
__________ |
__________ |
Net cash from operating
activities |
|
4,368 |
1,674 |
Cash flows from financing
activities |
|
|
|
Dividends paid on ordinary
shares |
|
(1,778) |
(1,839) |
Dividends paid on preference
shares |
|
(175) |
(350) |
Bank loan |
|
(155) |
(1,454) |
|
|
__________ |
__________ |
Net cash used in financing
activities |
|
(2,108) |
(3,643) |
|
|
__________ |
__________ |
Net increase/(decrease) in cash
and cash equivalents |
|
2,260 |
(1,969) |
Cash and cash equivalents at
beginning of year |
|
244 |
2,213 |
|
|
__________ |
__________ |
Cash and cash equivalents at end
of year |
|
2,504 |
244 |
|
|
__________ |
__________ |
Purchases and sales of investments are considered to be
operating activities of the company, given its purpose, rather than
investing activities.
1 Basis of preparation and going
concern
The financial information set out above contains the financial
information of the company for the year ended 31 December 2019. The company has prepared its
financial statements under IFRS. The financial statements have been
prepared on a going concern basis adopting the historical cost
convention except for the measurement at fair value of investments,
derivative financial instruments and subsidiaries.
The information for the year ended 31
December 2019 is an extract from the statutory accounts to
that date. Statutory company accounts for 2018, which were prepared
under IFRS as adopted by the EU, have been delivered to the
registrar of companies and company statutory accounts for 2019,
prepared under IFRS as adopted by the EU, will be delivered in due
course.
The auditors have reported on the 31
December 2019 year end accounts and their reports were
unqualified and did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying
their reports and did not contain statements under section 498(2)
or (3) of the Companies Act 2006.
The directors, having made enquiries, consider that the company
has adequate financial resources to enable it to continue in
operational existence for the foreseeable future. Accordingly, the
directors believe that it is appropriate to continue to adopt the
going concern basis in preparing the company's accounts.
2 Income
|
|
|
2019 |
2018 |
|
|
|
£ 000 |
£ 000 |
Income from
investments |
|
|
|
|
|
|
|
|
|
UK dividends |
|
|
938 |
1,180 |
Overseas dividends |
|
|
173 |
92 |
Scrip and in specie
dividends |
|
|
- |
290 |
Dividend from
subsidiary |
|
|
74 |
1,445 |
Interest on fixed income
securities |
|
|
- |
1 |
|
|
|
__________ |
__________ |
|
|
|
1,185 |
3,008 |
|
|
|
|
|
__________ |
__________ |
|
|
|
|
|
Other income |
|
|
58 |
48 |
|
|
|
|
|
__________ |
__________ |
Total income |
|
|
1,243 |
3,056 |
|
|
|
|
|
__________ |
__________ |
|
|
|
|
|
Total income
comprises: |
|
|
|
|
|
|
|
|
|
Dividends |
|
|
1,185 |
3,007 |
Interest |
|
|
- |
1 |
Other interest |
|
|
58 |
48 |
|
|
|
__________ |
__________ |
|
|
|
1,243 |
3,056 |
|
|
|
|
|
__________ |
__________ |
Dividends from
investments |
|
|
|
|
|
|
|
|
|
Listed investments |
|
|
1,111 |
1,562 |
Unlisted
investments |
|
|
74 |
1,445 |
|
|
|
__________ |
__________ |
|
|
|
1,185 |
3,007 |
|
|
|
|
|
__________ |
__________ |
Of the £1,185,000 (2018 – £3,007,000) dividends received,
£879,000 (2018 – £997,000) related to special and other dividends
received from investee companies that were bought after the
dividend announcement. There was a corresponding capital loss of
£1,027,000 (2018 – £1,007,000), on these investments.
Under IFRS 10 the income analysis is for the parent company only
rather than that of the consolidated group. Thus film revenues of
£106,000 (2018 – £92,000) received by the subsidiary British and
American Films Limited and property unit trust income of £14,000
(2018 – £14,000) received by the subsidiary BritAm Investments
Limited are shown separately in this
paragraph.
3 Earnings per ordinary share
The calculation of the basic (after deduction of preference
dividend) and diluted earnings per share is based on the following
data:
|
2019 |
2018 |
|
Revenue
return
|
Capital
return |
Total |
Revenue
return
|
Capital
return |
Total |
|
£ 000 |
£ 000 |
£ 000 |
£ 000 |
£ 000 |
£ 000 |
Earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
564 |
196 |
760 |
2,170 |
(7,635) |
(5,465) |
Preference dividend |
350 |
- |
350 |
350 |
- |
350 |
|
__________ |
__________ |
__________ |
__________ |
__________ |
__________ |
Diluted |
914 |
196 |
1,110 |
2,520 |
(7,635) |
(5,115) |
|
__________ |
__________ |
__________ |
__________ |
__________ |
__________ |
Basic revenue, capital and total return per ordinary share is
based on the net revenue, capital and total return for the period
after tax and after deduction of dividends in respect of preference
shares and on 25 million (2018: 25 million) ordinary shares in
issue.
The diluted revenue, capital and total return is based on the
net revenue, capital and total return for the period after tax and
on 35 million (2018: 35 million) ordinary and preference shares in
issue.
4 Dividends
|
2019 |
2018 |
|
£ 000 |
£ 000 |
Amounts recognised as distributions
to equity holders in the period: |
|
|
Dividends on ordinary shares: |
|
|
Final dividend for the year ended 31
December 2018 of 6.0p (2017:5.9p) per share |
1,500 |
1,475 |
Interim dividend for the year ended
31 December 2019 of 2.7p
(2018:2.7p) per share |
675 |
675 |
|
|
|
|
__________ |
__________ |
|
2,175 |
2,150 |
|
__________ |
__________ |
Proposed final dividend for the year
ended 31 December 2019 of 0.0p (2018:6.0p) per share |
- |
1,500 |
|
__________ |
__________ |
|
|
|
Dividends on 3.5% cumulative
convertible preference shares: |
|
|
Preference dividend for the 6 months
ended 31 December 2018 of 1.75p (2017:1.75p) per share |
175 |
175 |
Preference dividend for the 6 months
ended 30 June 2019 of 1.75p (2018:1.75p) per share |
175 |
175 |
|
__________ |
__________ |
|
350 |
350 |
|
__________ |
__________ |
Proposed preference dividend for the
6 months ended 31 December 2019 of 0.00p (2018:1.75p) per
share |
- |
175 |
|
__________ |
__________ |
|
|
|
We have set out below the total dividend payable in respect of
the financial year, which is the basis on which the retention
requirements of Section 1158 of the Corporation Tax Act 2010 are
considered.
Dividends proposed for
the period |
|
|
|
2019 |
2018 |
|
£ 000 |
£ 000 |
Dividends on ordinary shares: |
|
|
Interim dividend for the year ended
31 December 2019 of 2.7p (2018:2.7p) per share |
675 |
675 |
|
|
|
Proposed final dividend for the year
ended 31 December 2019 of 0.0p (2018:6.0p) per share |
- |
1,500 |
|
__________ |
__________ |
|
675 |
2,175 |
|
__________ |
__________ |
Dividends on 3.5% cumulative
convertible preference shares: |
|
|
Preference dividend for the year
ended 31 December 2019 of 1.75p (2018:1.75p) per share |
175 |
175 |
Proposed preference dividend for the
year ended 31 December 2019 of 0.00p (2018:1.75p) per share |
- |
175 |
|
__________ |
__________ |
|
175 |
350 |
|
__________ |
__________ |
5 Net asset values
|
|
Net
asset
value per share |
|
2019 |
2018 |
Ordinary shares |
£ |
£
restated |
Diluted |
0.19 |
0.23 |
Undiluted |
0.19 |
0.23* |
|
|
Net
asset
attributable |
|
2019 |
2018 |
|
£ 000 |
£ 000
restated |
Total net assets |
6,504 |
7,919 |
Less convertible
preference shares at fully diluted value |
(1,858) |
(2,263) |
|
__________ |
__________ |
Net assets
attributable to ordinary shareholders |
4,646 |
5,656* |
|
__________ |
__________ |
The undiluted and diluted net asset values per £1 ordinary share
are based on net assets at the year end and 25 million (undiluted)
ordinary and 35 million (diluted) ordinary and preference shares in
issue.
*Net assets attributable to ordinary shareholders at
31 December 2018 have been restated
using a value of fully diluted net asset value for the preference
shares instead of using a value of par for the preference
shares.
Principal risks and uncertainties
The principal risks facing the company relate to its investment
activities and include market risk (other price risk, interest rate
risk and currency risk), liquidity risk and credit risk. The other
principal risks to the company are loss of investment trust status
and operational risk. These will be explained in more detail in the
notes to the 2019 Annual Report and Accounts, but remain unchanged
from those published in the 2018 Annual Report and Accounts.
Related party transactions
The company rents its offices from Romulus Films Limited, and is
also charged for its office overheads.
The salaries and pensions of the company’s employees, except for
the three non-executive directors and one employee are paid by
Remus Films Limited and Romulus Films Limited and are recharged to
the company.
During the year the company entered into the investment
transactions to sell stock for £nil (2018 – £346,709) to Second
BritAm Investments Limited, for £540,141 (2018 – £nil) to British
& American Films Limited and for £nil (2018 – £2,472) to BritAm
Investments Limited.
There have been no other related party transactions during the
period, which have materially affected the financial position or
performance of the company.
Capital Structure
The company's capital comprises £35,000,000 (2018 – £35,000,000)
being 25,000,000 ordinary shares of £1 (2018 – 25,000,000) and
10,000,000 non-voting convertible preference shares of £1 each
(2018 – 10,000,000). The rights attaching to the shares will be
explained in more detail in the notes to the 2019 Annual Report and
Accounts, but remain unchanged from those published in the 2018
Annual Report and Accounts.
Directors’ responsibility
statement
The directors are responsible for preparing the financial
statements in accordance with applicable law and regulations. The
directors confirm that to the best of their knowledge the financial
statements prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets,
liabilities, financial position and the (loss)/profit of the
company and that the Chairman’s Statement, Managing Director's
Report and the Directors’ report include a fair review of the
information required by rules 4.1.8R to 4.2.11R of the FSA’s
Disclosure and Transparency Rules, together with a description of
the principal risks and uncertainties that the company faces.
Annual General Meeting
This year’s Annual General Meeting has been convened for
Thursday 24 September 2020 at
12.15pm at Wessex House, 1 Chesham
Street, London SW1X 8ND.