Interim Results
BRITISH & AMERICAN INVESTMENT TRUST PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED BALANCE SHEET
As at 30 June 2006
Unaudited Unaudited 30 Audited
30 June June 31 December
2006 2005 2005
£'000 £'000 £'000
Non-current assets
Investments - fair value through profit or
loss (note 1) 41,801 36,524
42,369
Current assets
Receivables 389 391
3,379
Cash and cash equivalents 1,376 3,495
3,263
1,765 3,886
6,642
Total assets 43,566 40,410
49,011
Current liabilities (396) (456)
(6,246)
Total assets less current liabilities 43,170 39,954
42,765
Net assets 43,170 39,954
42,765
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 - realised 15,343 14,693
15,141
Capital reserve - unrealised (9,837) (12,399) (9,676)
Retained earnings 2,664 2,660
2,300
Total equity 43,170 39,954
42,765
Net assets per ordinary share - basic £1.33 £1.20 £1.31
Net assets per ordinary share - diluted £1.23 £1.14 £1.22
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 June 2006
Unaudited Unaudited Audited
6 months to 6 months Year ended
30 June to 30 June 31December
2006 2005 2005
£'000 £'000 £'000
Cash flow from operating activities
Profit before tax 1,401 3,041 6,903
Adjustment for:
Gains on investments (116) (2,039) (5,283)
Scrip dividends (2) (2) (4)
Film income tax deducted at source (4) (1) (4)
Proceeds on disposal of investments at fair value
through profit or loss 14,778 5,470 6,406
Purchases of investments at fair value
through profit or loss (14,527) (4,383) (7,552)
Operating cash flows before movements
in working capital 1,530 2,086 466
Decrease/(increase) in receivables 108 (197) (52)
(Decrease)/increase in payables (2,523) 327 2,576
Net cash from operating activities
before income taxes (885) 2,216 2,990
Income taxes (paid)/received (15) 2 (4)
Net cash from operating activities (900) 2,218 2,986
Cash flow from financing activities
Dividends paid on ordinary shares (812) (775) (1,600)
Dividends paid on preference shares (175) (175) (350)
Net cash used in financing activities (987) (950) (1,950)
Net (decrease)/increase in cash and cash equivalents (1,887) 1,268 1,036
Cash and cash equivalents at beginning of period 3,263 2,227 2,227
Cash and cash equivalents at end of period 1,376 3,495 3,263
1. ACCOUNTING POLICIES
Basis of preparation
This interim report has been prepared in accordance with IAS 34.
The accounting policies are consistent with the preceding annual accounts.
The results are based on unaudited Group consolidated accounts prepared under the historical
cost basis except where IFRS require an alternative treatment, principally relating to
financial instruments (IAS 32 and 39).
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the company
and its subsidiary undertakings made up to 31 December each year. Control is achieved where
the company has the power to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Significant accounting policies
In order better to reflect the activities of an investment trust company and in accordance
with guidance issued by the Association of Investment Trust Companies (AITC), supplementary
information which analyses the income statement between items of a revenue and capital
nature has been presented alongside the income statement. In accordance with the company's
status as a UK investment company under section 266 of the Companies Act 1985, net capital
returns may not be distributed by way of dividend.
Investments held at fair value through profit or loss are initially recognised at fair
value. Investments are classified as either fair value through profit or loss or available-
for-sale. 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 entity 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.
After initial recognition, investments, which are designated as at fair value through profit
or loss, are measured at fair value. Gains or losses on investments designated as at fair
value through profit or loss are included in net profit or loss as a capital item, and
material transaction costs on acquisition and disposal of investments are expensed and
included in the capital column of the income statement. For investments that are actively
traded in organised financial markets, fair value is determined by reference to Stock
Exchange quoted market bid prices or last traded prices, depending upon the convention of
the exchange on which the investment is quoted at the close of business on the balance sheet
date. Investments in units of unit trusts or shares in OEICs are valued at the closing price
released by the relevant investment manager.
In respect of unquoted investments, or where the market for a financial instrument is not
active, fair value is established by using an appropriate valuation technique. Where no
reliable fair value can be estimated for such unquoted equity instruments, they are carried
at cost, subject to any provision for impairment.
Investments in subsidiary companies are held at directors' valuation.
All purchases and sales of investments are recognised on the trade date i.e. the date that
the group commits to purchase or sell an asset.
Realised gains on sales of investments in the group financial statements are based on
historical cost to the group and on brought forward market value.
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.
Property unit trust income is recognised on the date the distribution is receivable. Film
royalty income is recognised on receipt of royalty statements covering periods ending in the
financial year.
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:
- material 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% (2005 - 50%) to
revenue and 50% (2005 - 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 -
Disclosure and Presentation' and FRS 25 as the company has no contractual obligation to
redeem the preference shares for cash or pay preference dividends unless similar dividends
are declared to ordinary shareholders.
Segmental reporting
The directors are of the opinion that the Group is engaged in a single segment of business,
that is investment business, and therefore no segmental reporting is provided.
2. INVESTMENT INCOME
Unaudited Unaudited Audited
6 months to 6 months to Year ended
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Income from investments 1,455 1,138
1,885
Other income 55 64
147
1,510 1,202
2,032
3. PROPOSED DIVIDENDS*
Unaudited Unaudited
6 months to 30 June 2006 6 months to 30 June 2005
Pence per Pence per
share £ share £
Ordinary shares - interim 2.5 625,000 2.3 575,000
Ordinary shares - special 1.0 250,000 1.0 250,000
Preference shares - fixed 1.75 175,000 1.75 175,000
1,050,000 1,000,000
The directors have declared an interim dividend of 2.5p (2005 - 2.3p) per ordinary share,
payable on 16 November 2006 to shareholders registered on 20 October 2006. The shares will
be quoted ex-dividend on 18 October 2006.
The directors have further declared a special dividend of 1.0p (2005 - 1.0p) per ordinary
share, payable on 14 December 2006 to shareholders registered on 20 October 2006. The shares
will be quoted ex-dividend on 18 October 2006.
The dividends on ordinary shares are based on 25,000,000 ordinary £1 shares. Dividends on
preference shares are based on 10,000,000 non-voting 3.5% convertible preference shares of
£1.
The holders of the 3.5% convertible preference shares will be paid a dividend of £175,000
being 1.75p per share. The payment will be made on the same date as the dividend to the
ordinary shareholders.
*Dividends shown in the statement of changes in equity are those paid or approved in the
period rather than proposed.
4. EARNINGS PER ORDINARY SHARE
Unaudited Unaudited Audited
6 months to 6 months Year ended
30 June to 30 June 31 December
2006 2005 2005
£'000
£'000 £'000
Basic earnings per share
Calculated on the basis of:
Net revenue profit after preference dividends 1,176 887 1,352
Net capital profit 41 1,973 5,144
Net total earnings after preference dividends 1,217 2,860 6,496
Ordinary shares in issue 25,000 25,000 25,000
Diluted earnings per share
Calculated on the basis of:
Net revenue profit 1,351 1,062 1,702
Net capital profit 41 1,973 5,144
Profit after taxation 1,392 3,035 6,846
Ordinary and preference shares in issue 35,000 35,000 35,000
DILUTED EARNINGS PER SHARE IS CALCULATED TAKING INTO ACCOUNT THE PREFERENCE SHARES WHICH ARE
CONVERTIBLE TO ORDINARY SHARES ON A ONE FOR ONE BASIS, UNDER CERTAIN CONDITIONS, AT ANY TIME
DURING THE PERIOD 1 JANUARY 2006 TO 31 DECEMBER 2025 (BOTH DATES INCLUSIVE).
5. NET ASSET VALUE ATTRIBUTABLE TO EACH SHARE
Basic net asset value attributable to each share has been calculated by reference to
25,000,000 ordinary shares, and group net assets attributable to shareholders as follows:
Unaudited Unaudited
30 June 30 June Audited
2005 31 December
2006 2005
£'000
£'000 £'000
Total net assets 43,170 39,954
42,765
Less convertible preference shares (10,000) (10,000)
(10,000)
Net assets attributable to ordinary shareholders 33,170 29,954
32,765
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).
6. FINANCIAL INFORMATION
This interim statement is not the company's statutory accounts. The statutory accounts for
the year 31 December 2005 have been delivered to the Registrar of Companies and received an
audit report which was unqualified, did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying the report, and did not
contain statements under section 237(2) and (3) of the Companies Act 1985.
The Interim Report will be sent to the company's shareholders shortly, and members of the
public may obtain a copy at that time on application to the company's registered office.
7. RETAINED EARNINGS
The table below shows the movement in the retained earnings analysed between revenue and
capital items.
Unaudited Unaudited Unaudited Unaudited
Capital Capital Revenue Total
reserve reserve
- realised -unrealised
£'000 £'000 £'000 £'000
At 1 January 2006 15,141 (9,676) 2,300 7,765
Movement during the period:
Net profit for the period (317) 358 1,351 1,392
Transfer on disposal between reserves 519 (519) - -
Dividends paid on ordinary shares - - (812) (812)
Dividends paid on preference shares - - (175) (175)
At 30 June 2006 15,343 (9,837) 2,664 8,170
Independent Review Report to British & American Investment Trust PLC
Introduction
We have been instructed by the company to review the financial information for the six months
ended 30 June 2006 which comprises the consolidated income statement, the consolidated statement
of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and
related notes 1 to 7. We have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material inconsistencies with the
financial information.
This report is made solely to the company in accordance with Bulletin 1999/4 issued by the
Auditing Practices Board. Our work has been undertaken so that we might state to the company those
matters we are required to state to them in an independent review report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other
than the company and the company's shareholders as a body, for our audit work, for this report, or
for the opinions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility
of, and has been approved by, the directors. The directors are responsible for preparing the
interim report in accordance with the Listing Rules of the Financial Services Authority. The
directors are also responsible for ensuring that the accounting policies and presentation applied
to the interim figures are consistent with those applied in preparing the preceding annual
accounts except where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the
Auditing Practices Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the financial information and
underlying financial data and, based thereon, assessing whether the accounting policies and
presentation have been consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and transactions. It
is substantially less in scope than an audit performed in accordance with International Standards
on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to
the financial information as presented for the six months ended 30 June 2006.
RSM Robson Rhodes LLP
Chartered Accountants
London, England
28 September 2006
British & American Investment Trust Plc
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