Half Yearly Report

RNS Number : 3444U

BACIT Limited

29 November 2013

 



BACIT LIMITED

INTERIM REPORT AND UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS TO 30 SEPTEMBER 2013

The Company has today released its Interim Unaudited Financial Report for the period ended 30 September 2013. The Interim Unaudited Financial Report will shortly be available from the Company's website www.bacitltd.com.

SUMMARY INFORMATION

Structure

The Company was incorporated in Guernsey on 14 August 2012 as a registered closed-ended investment company under the name Battle Against Cancer Investment Trust Limited. On 20 August 2012, the Company changed its name to BACIT Limited.

The Company makes its investments through BACIT Investments LP Incorporated (the "Partnership"), in which the Company is the sole limited partner and the general partner is BACIT GP Limited (the "General Partner"), a wholly owned subsidiary of the Company (collectively referred to as the "Group").

The Company's Ordinary Shares were listed on the premium segment of the London Stock Exchange ("LSE") on 26 October 2012.

Since incorporation up to 30 September 2013 the Company has raised the following share capital.

	£
Capital raised at launch of the Company	206,734,775

Shares in issue at 30 September 2013

	Number of shares
Ordinary shares	206,734,775

At the Extraordinary General Meeting ("EGM") held on 22 October 2013, Shareholders authorised the Board to allot and issue 200 million C shares for the period expiring 31 December 2013. On 28 October 2013, the C Shares were listed on the premium segment of the LSE. The Company raised £200 million during the listing.

Investment Objective and Policy

The Group's investment objective is to deliver superior returns from investments in leading long-only and alternative investment funds across multiple asset classes and targets an annualised return per Share in the range of 10% to 15% per annum on the offer price of the Shares. Investments will only be made in cases where the relevant investment manager provides investment capacity on a ''gross return'' basis, meaning that the Group does not bear the impact of management or performance fees on the relevant investment. This is achieved by the relevant manager or fund agreeing with the Group not to charge management or performance fees, by rebating or donating back to the Group any management or performance fees charged or otherwise arranging for the Group to be directly or indirectly compensated so as effectively to increase its investment return on the relevant investment by the amount of any such fees.

The Group intends to achieve the investment objective primarily through investments in long-only funds, hedge funds, private equity funds and real estate funds. The Group may be permitted to borrow and invest in long and short positions in quoted and unquoted equities, fixed income securities, options, warrants, futures, commodities, currency forwards, over the counter derivative instruments (such as swaps), securities that lack active public markets, private securities, repurchase agreements, preferred stocks, convertible bonds and other financial instruments or real estate as well as cash and cash equivalents. The Group may invest on a global basis.

The Group intends to invest up to 1% of Net Asset Value ("NAV") each year to acquire interests in drug development and medical innovation projects undertaken by the Institute of Cancer Research ("ICR") or its subsidiaries which have the potential for commercial development and application.

Charitable Donations

The Group makes an annual aggregate donation ("Charitable Donation"), in arrears, of 1% of the average monthly period end NAV to charities, with half donated to the Institute of Cancer Research ("ICR") and half donated to the BACIT Foundation for onward distribution among other charities in proportions which are determined each year by the Shareholders.

Manager and Investment Advisor

The management team of the General Partner (the "Management Team") manages the Partnership's investment portfolio and investment decisions regarding the investment portfolio are taken by the Management Team with the benefit of advice from a Strategic Advisory Committee to the Partnership.

Ongoing Charges

In accordance with the recommended methodology set out by the Association of Investment Companies ("AIC"), Ongoing Charges were calculated based on weighted average NAV. The Ongoing Charges ratio of the Group for the period ended 30 September 2013 was 1.25% (31 March 2013: 1.41%) including charitable donations and 0.26% (31 March 2013: 0.34%) excluding charitable donations. Ongoing charges do not include management fees and performance fees or any rebates and donations from the underlying funds or their managers, as there are no such fees payable by the Group. Other operating costs may be charged by the underlying funds which are not readily available and are immaterial and are therefore also excluded in the calculation of Ongoing Charges.

CHAIRMAN'S STATEMENT

Dear shareholders,

In the six months to 30 September 2013 BACIT produced a total return of 0.1%, including a dividend of 1.0 pence per share. The net asset value per share fell by 0.8% to £1.10 and the share price rose by 1.6% to £1.14. Since listing on 26 October 2012 the net asset value return has been 12.85% which is equivalent to an annualised return of 14.1%. At 30 September 2013 BACIT was 95.4% invested in 28 funds from 19 managers.

On 22 October 2013 we announced that we had raised £200m in our C share issue. We would like to thank existing shareholders who supported the issue and welcome our new shareholders. At the date of this report more than 70% of the proceeds of the C share issue has been invested and we expect the C shares to convert into ordinary shares in December 2013.

As we explained in the C share prospectus we have made an investment in the first of what we hope will be many commercial cancer drug development and medical innovation projects. We have also continued to develop our relationship with the Institute of Cancer Research ("ICR").

We were delighted in September to be able to make our first donations to charity which were payable at 31 March 2013. We made payments of £492,829 to the ICR, and donated as much again to the BACIT Foundation, which distributed that amount among the charities set out in the 2013 charitable allocation form. Information about the individual donations is available on BACIT's website. We are very grateful to those shareholders who participated in that process to make us aware of how the part of the donation that corresponds to their individual shareholding should be allocated. Next year we will aim to improve the process, to encourage a larger portion of the shareholder base to take part.

Your company now has assets of nearly £400m invested in a diversified portfolio with high quality managers and is well placed to increase its assets and charitable donations over the long term.

Jeremy Tigue

Chairman

29 November 2013

REPORT OF THE MANAGEMENT TEAM OF THE GENERAL PARTNER

During the six month financial period from 1 April to 30 September 2013, the total return of BACIT Limited (the "Company") was 0.14%, including the £0.01 dividend paid out during that time. The Net Asset Value ("NAV") decreased by 0.76% from £1.11 to £1.10, while the FTSE All-Share (£, TR) rose by 3.84%. The HFRI Fund of Funds Strategic Index fell by 3.48% in Sterling, and rose by 2.79% in US Dollars.

The Company started the financial period with 95% of its assets committed, of which 85.5% had been invested across 26 underlying funds and 19 managers, and ended the period with 95.4% invested across 28 funds. The Company has one additional commitment which currently remains undrawn.

We were not obviously rewarded for the risk we took during this financial period, which generated some volatility of returns but netted out to little gain. The underlying managers performed well, making almost 4%, but the strengthening of Sterling against the US Dollar detracted from this performance. Over half the Company's portfolio is invested in unhedged US Dollar denominated share classes, which decreased in value as Sterling strengthened by 6.6%, from $1.518 to $1.619 during the period. The Company's Euro exposure is hedged back into Sterling.

We added two funds to the BACIT portfolio, SWMC Emerging European Fund and WyeTree European Recovery Fund, both managed by existing managers, which tilted the Company's focus towards the European recovery. We also built up the Company's holding of the Majedie Asset UK Equity Fund, the WyeTree RRETRO position (US housing recovery), the Tower Fund (sub-Saharan African consumer and South African miners) and Sinfonietta (Pacific Rim macro).

In summary, BACIT made money in rising equity markets, including both of the emerging markets it is exposed to, but also in asset classes where indices fell, namely in credit and commodities.

Consolidated Portfolio Statement: Category Descriptions

Equity Funds (27.8% at 30 September 2013 vs. 23.3% at 31 March 2013)

We added to our UK equity exposure in early June as the accelerating UK recovery became apparent, but otherwise there have been no changes to this group of funds. Performance has increased the Company's position in Japanese equities from 5.8% at 1 November 2012 to 9.6% of the portfolio by the end of the period. We remain encouraged by changes Abenomics is engendering in that economy, and are thus content for the Company to have this larger exposure. The Company's positions in Russian equities both made money in a market that did not. We continue to note the gradual institutionalisation of the Russian capital markets, the relative strength of Russian economy, and the large discount to most other emerging markets. All of the funds in this group enjoyed positive performance during the period.

Equity Hedge Funds (25.8% vs. 23.9%)

The managers in this group expose the Company to Europe, Australia and southern Africa, as well as to mining and tech stocks. We added to our long-short African manager but otherwise left this part of the portfolio unchanged. Generally it worked well in protecting the downside and making money when opportunity arose, most apparently during the volatile second quarter of the calendar year. Six of the seven funds were broadly flat or made money during the period.

Commodity Funds (11.5% vs. 12.2%)

We made no changes to this part of the portfolio during the period. The Company is exposed through this group to globally traded agricultural commodities, northern European electricity prices, gold, and the equity of companies mining base and precious metals. The asset prices in this subset are volatile and these funds' risk management is of paramount importance. The managers' performances have historically been uncorrelated with one another, and this has continued since the Company's investment, muting the volatility of the aggregate returns of this group. Against a backdrop in which the CRB Commodities index declined by 3.7%, and the Junior Gold Miners index by 39.2%, four of the five funds made money during the period.

Credit Funds (13.1% vs. 9.5%)

The price, and therefore performance, of the less liquid credit that we have targeted for this part of the portfolio tends to be less correlated to equity markets and more dependent on its own idiosyncratic drivers than its more liquid counterparts. We have focussed on credit which will benefit from the US recovery and from the changes to bank regulation following the Global Financial Crisis. The Company added to its US subprime exposure, and in late September initiated a position in European mortgage-backed securities. Notwithstanding the extreme volatility in some credit markets during the period, this group of funds contributed positively to returns.

Other Strategies (17.2% vs. 16.6%)

This group includes four funds following such diverse strategies as convertible bond arbitrage, long-only inflation-linked bonds, global macro with a Pacific Rim focus and investing in private infrastructure opportunities. The long-short funds both contributed positively to returns, as did the infrastructure investment, which was initiated during February 2013. The government bond portfolio outperformed its index and offers the Company a hedge in the event that inflation returns to the forefront of the Market's concerns.

Since the Period End

As the Chairman has stated, since the period end the Company has completed a £200m capital raise of which we have invested £141m as at 1 November 2013. With these investments we will have taken up all of the capacity so generously offered to us in 17 of the funds by 15 of the managers. Amongst these we now have a €20m commitment to Permira V, which has announced its first acquisitions, Dr Martens footwear in late October and Bestinvest private client wealth management in early November. Permira has indicated that capital will be called before the end of the first quarter of 2014.

With the investment of the C share issue, we welcome three new managers to BACIT. We sometime use the analogy of an orchestra when describing BACIT's portfolio. As conductor, our role is to ensure that the sections - the funds - are likely to perform independently of one another, as different movements - or conditions - in markets play to each one's strengths. The new managers' activities will complement those already in the portfolio. With Salt Rock Capital Partners we will add global macro with a North Atlantic focus to the line-up; Hall Commodities brings long experience in oil and metals trading and a way to invest in the rebalancing of the Chinese economy which is not correlated to the volatile equity markets; and Portland Hill Capital expands the portfolio's exposure to European event-driven equity trades and the European recovery.

The UK's economic data continues to be stronger than we anticipated and the chaos in Washington from the dysfunctional government more severe than we expected. Notwithstanding the delay in tapering QE asset purchases, market expectations of inflation remain below ours.  We are watching these situations closely.

The Company is positioned to enjoy continued and accelerating recoveries in the developed markets of the northern hemisphere, but there is substantial hedging capability within the portfolio. This is intended to diminish the impact of market volatility which may well be triggered by the Fed tapering QE, under either Chairman Bernanke this year, or his successor Janet Yellen thereafter, and to make the most of the opportunities provided by what is clearly not a straight line recovery.

The Company, BACIT's Drug Advisory Committee and the Institute of Cancer Research ("ICR") have been working since launch to identify drug and med tech prospects within the ICR for the Company to invest up to 1% of NAV into each year. BACIT is in the final stages of making its first investment into the drug portfolio, and assuming the drug's progress hits certain milestones, the remainder of this investment will be made over the course of the next two years.

BACIT continued to perform strongly during October, the thirteenth month of operations, and at 31 October the NAV was 113.30p, and Total Return for the period from October 2012 to October 2013 was 15.93%. The Company set a challenging target at inception, which was to be an all-weather investment vehicle with 10-15% annualised returns across the cycle. It is testament to the skill, dedication and indeed generosity of our managers that the Company has delivered towards the top end of that range. We thank them all.

Management Team

BACIT GP Limited

29 November 2013

PRINCIPAL RISKS AND UNCERTAINTIES

The Group's assets comprise mainly investments in hedge funds, private equity funds, real estate funds and derivative financial assets. Its principal risks are therefore economic, performance and financial in nature. These risks, and the way in which they are managed, are described in more detail under the heading "Principal Risks and Uncertainties" within the Directors' report in the Group's Annual Report for the period ended 31 March 2013. The Group's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remainder of the Group's financial year.

STATEMENT OF DIRECTORS' RESPONSIBILITY IN RESPECT OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS

We confirm to the best of our knowledge:

- so far as each of the Directors is aware, there is no relevant audit information of which the Company's Auditor is unaware, and each has taken all the steps he ought to have taken as a Director to make himself aware of any relevant information and to establish that the Company's Auditor is aware of that information;

- the Condensed set of Financial Statements have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union;

- the Chairman's Statement and the Report of the Management Team of the General Partner meet the requirement of an interim management report, and include a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

Signed on behalf of the Board by:

Jeremy Tigue                                                                        Jon Moulton

29 November 2013

CONSOLIDATED PORTFOLIO STATEMENT (UNAUDITED)

As at 30 September 2013

							% of Total		% of Total
							Value of		Value of
					Fair Value		Group as at		Group as at
					£'000		30.09.13		31.03.13
Equity Funds
BlackRock UK Special Situations Fund UK equities					11,635		5.1%
Majedie Asset UK Equity Fund UK equities					19,350		8.5%
Polar Capital Japan Alpha Fund Japanese large and mid cap equities					10,104		4.4%
Prosperity Russia Domestic Fund Limited Russian equities with a domestic focus					3,247		1.4%
Russian Prosperity Fund Russian equities					5,187		2.3%
SWMC Emerging European Fund Emerging European equities (Long/Short)					1,981		0.9%
The SFP Value Realization Fund Ltd Small and mid-cap Japanese equities					11,771		5.2%
					63,275		27.8%		23.3%
Equity Hedge Funds
Maga Smaller Companies Fund Limited European equities (Long/Short)					14,461		6.3%
Optimal Australia Absolute Fund Australian listed equities (Long/Short)					2,970		1.3%
Polygon European Equity Opportunity Fund European event driven equities (Long/Short)					7,609		3.3%
Polygon Mining Opportunity Fund Long gold miners, hedged with commodities and equities					7,796		3.4%
S.W. Mitchell European Limited European equities (Long/Short)					9,077		4.0%
Thyra Global Technology Fund Ltd Global tech equities (Long/Short)					5,699		2.5%
Tower Fund Ltd South African listed equities (Long/Short)					11,263		5.0%
					58,875		25.8%		23.9%
Commodity Funds
Armajaro AIMS Diversified Fund Global exchange traded agricultural commodities (Long/Short)					8,863		3.9%
BlackRock Natural Resources Growth & Income Fund Global Resource companies' equities					3,813		1.7%
Cumulus Energy Fund Class* Northern European energy (Long/Short)					8,263		3.6%
Genus Dynamic Gold Fund Gold Miners' equities					1,720		0.8%
Henderson Agricultural Fund Ltd Global exchange traded agricultural commodities (Long/Short)					3,519		1.5%
					26,178		11.5%		12.2%
Credit Funds
Chenavari Multi Strategy Credit Fund Limited Class - DX European corporate credit through private transactions					8,899		3.9%
Chenavari Multi Strategy Credit Fund Limited Class - RX European real estate debt, through private and public transactions					4,553		2.0%
Residential Real Estate Total Return Opportunities Fund Ltd US subprime mortgage backed securities					7,092		3.1%
Wyetree Yield Distribution Fund Subprime mortgage backed securities					6,324		2.8%
Wyetree European Recovery Fund European residential mortgage backed securities					3,091		1.3%
					29,959		13.1%		9.5%
Other Strategies
CG Portfolio Fund Plc US TIPs (inflation linked government bonds)					14,506		6.4%
Infracapital Partners (NT) II LP Private investments in European infrastructure					6,286		2.7%
Polygon Convertible Opportunity Fund US & European convertible arbitrage					6,970		3.1%
Sinfonietta Equities, rates, FX and commodities, with an Asian focus (Long/Short)					11,402		5.0%
					39,164		17.2%		16.6%
Investment in Drug Development					798		0.4%		0.00%
Total Investments					218,249		95.8%		85.5%

*Fair valued based on estimates.

INDEPENDENT REVIEW REPORT TO THE MEMBERS OF BACIT LIMITED

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 which comprises the Consolidated Portfolio Statement, Condensed Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Financial Position, the Condensed Consolidated Statement of Changes in Net Assets Attributable to Holders of Ordinary Shares, the Condensed Consolidated Statements of Cash Flows and related notes 1 to 18. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" 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 it 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, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

St Peter Port

29 November 2013

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months to 30 September 2013

									Unaudited 01.04.13 to
									30.09.13
				Notes	Revenue		Capital		Total
					£'000		£'000		£'000
Investment income
Bank interest income					92		-		92
Rebates and donations				4	-		775		775
Other income					193		-		193
Total investment income					285		775		1,060
Net gains on financial assets at fair value through profit or loss				5	-		631		631
Net gains on forward currency contracts				6	-		232		232
Losses on foreign exchange				6	-		(101)		(101)
Total gain					-		762		762
Expenses
Charitable donation				7	1,173		-		1,173
Administration fee				8	93		-		93
Custody fee				9	60		-		60
Directors' fees				14	51		-		51
Other expenses					101		-		101
Total expenses					1,478		-		1,478
Profit for the period					(1,193)		1,537		344
Earnings per Ordinary Share				13	(1.00)p		1.00p		0.00p

The total column of this statement represents the Group's consolidated statement of comprehensive income, prepared in accordance with IFRS as adopted by the EU and interpretations adopted by the International Accounting Standards Board (IASB). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

The Profit for the period is the "total comprehensive income" as defined by IAS 1. There is no other comprehensive income as defined by IFRS.

All the items in the above statement derive from continuing operations.

AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period from 26 October 2012 to 31 March 2013

									Audited
									26.10.12 to
									31.03.13
				Notes	Revenue		Capital		Total
					£		£		£
Investment income
Rebates and donations				4	-		468		468
Other income					27		-		27
Total investment income					27		468		495
Net gains on financial assets at fair value through profit or loss				5	-		27,077		27,077
Net losses on forward currency contracts				6	-		(433)		(433)
Losses on foreign exchange				6	-		(291)		(291)
Total gain					-		26,353		26,353
Expenses
Charitable donation				7	986		-		986
Administration fee				8	74		-		74
Custody fee				9	49		-		49
Directors' fees				14	63		-		63
Other expenses					128		-		128
Total expenses					1,300		-		1,300
Profit for the period					(1,273)		26,821		25,548
Earnings per Ordinary Share				13	(1.00)p		13.00p		12.00p

The total column of this statement represents the Group's consolidated statement of comprehensive income, prepared in accordance with IFRS as adopted by the EU and interpretations adopted by the International Accounting Standards Board (IASB). The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.

The Profit for the period is the "total comprehensive income" as defined by IAS 1. There is no other comprehensive income as defined by IFRS.

All the items in the above statement derive from continuing operations.

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF ORDINARY SHARES

For the six months to 30 September 2013

			Share
			Capital		Capital		Revenue
			Account		Reserves		Reserves		Total
		Notes	£'000		£'000		£'000		£'000
Balance at the beginning of the period			204,061		26,821		(1,273)		229,609
Total Comprehensive Income for the period			-		1,537		(1,193)		344
Transactions with Shareholders:
Distributions		3	(2,067)				-		(2,067)
Balance at the end of the period			201,994		28,358		(2,466)		227,886

For the period from 26 October 2012 to 31 March 2013

			Share
			Capital		Capital		Revenue
			Account		Reserves		Reserves		Total
		Notes	£'000		£'000		£'000		£'000
Balance at the beginning of the period			-		-		-		-
Total Comprehensive Income for the period			-		26,821		(1,273)		25,548
Transactions with Shareholders:
Issuance of shares		13	206,735		-		-		206,735
Share issue costs		13	(2,674)		-		-		(2,674)
Balance at the end of the period			204,061		26,821		(1,273)		229,609

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 September 2013

				Unaudited		Audited
				30.09.13		31.03.13
		Notes		£ '000		£ '000
ASSETS
Non-current assets
Financial assets at fair value through profit or loss		10		218,249		196,308
Current assets
Bank and cash deposits				11,231		34,330
Unrealised gains on forward currency contracts				326		-
Trade and other receivables		11		212		181
Total assets				230,018		230,819
LIABILITIES AND EQUITY
Current liabilities
Unrealised losses on forward currency contracts				-		46
Trade and other payables		12		2,132		1,164
Total liabilities				2,132		1,210
EQUITY
Share capital account		13		201,994		204,061
Distributable Reserves				25,892		25,548
Total equity				227,886		229,609
Total liabilities and equity				230,018		230,819
Total net assets attributable to holders of Ordinary Shares
				227,886		229,609
Number of Ordinary Shares in Issue		13		206,734,776		206,734,776
Net assets attributable to holders of
Ordinary Shares (per share)				1.10		1.11

The unaudited condensed consolidated Financial Statements were approved on 29 November 2013 and signed on behalf of the Board of Directors by:

Jeremy Tigue

Jon Moulton

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months to 30 September 2013

				Unaudited		Audited
				01.04.13 to		26.10.12 to
				30.09.13		31.03.13
		Notes		£'000		£'000
Cash flows from operating activities
Profit for the period				344		25,548
Adjusted for:
Gains on financial assets at fair value through profit or loss				(631)		(27,077)
Exchange losses on foreign currency translation				101		291
Operating cash flows before movements in working capital				(186)		(1,238)
Increase in other receivables				(31)		(181)
Increase in other payables				170		1,154
Unrealised (gains)/loss on forward currency contracts				(372)		46
Net cash used in operating activities				(419)		(219)
Cash flows from investing activities
Purchase of financial assets at fair value through profit or loss		10		(22,545)		(169,231)
Adjustment to commitments				2,021		-
Return on Capital		10		12		-
Net cash used in investing activities				(20,512)		(169,231)
Cash flows from financing activities
Issuance of shares		13		-		206,735
Share issue costs		13		-		(2,664)
Distribution		13		(2,067)		-
Net cash (used in)/generated from financing activities				(2,067)		204,071
Net (decrease)/increase in cash and cash equivalents				(22,998)		34,621
Cash and cash equivalents at beginning of period				34,330		-
Effects of exchange rate changes				(101)		(291)
Cash and cash equivalents at end of period				11,231		34,330

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months to 30 September 2013

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

Basis of Preparation

The Financial Statements for the six months ended 30 September 2013 have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union, the Listing Rules of the London Stock Exchange ("LSE") and applicable legal and regulatory requirements of the Companies (Guernsey) Law, 2008.

The information for the period ended 31 March 2013 does not constitute statutory accounts as defined by the Companies (Guernsey) Law, 2008. A copy of the statutory accounts for the period has been delivered to the Shareholders. The auditor's report on those accounts was unmodified.

The accounting policies have been applied consistently in dealing with items which are considered to be material in relation to the Group's unaudited condensed consolidated interim financial statements (the "Financial Statements"). The accounting policies applied by the Group in these Financial Statements are consistent with those applied by the Group in its financial statements for the period ended 31 March 2013. The Group's first accounting reference date was changed from the 31 March 2013 to 25 October 2012 and thereafter the Group reverted to a 31 March accounting reference date. As a result of this there was no comparative half year information and therefore we have utilised the 31 March 2013 audited financial information for comparative information purposes.

New standards, amendments and interpretations adopted by the Group

The Group applies, for the first time, IFRS 13 Fair Value Measurement, which became effective 31 January 2013.

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7 Financial Instruments: Disclosures. Some of the required disclosures are reflected in note 16.

In accordance with the transitional provisions of IFRS 13, the Company has applied the new fair value measurement guidance prospectively, and has not provided any comparative information for new disclosures. Notwithstanding the above, the change had no impact on the measurements of the Company's assets and liabilities.

2. TAXATION

The Company is exempt from taxation in Guernsey under the provisions of The Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and has paid an annual exemption fee of £600.

BACIT Investments LP Incorporated is transparent for taxation purposes. BACIT GP Limited is subject to tax in Guernsey at the standard rate of 0%.

3. DISTRIBUTION TO SHAREHOLDERS

The Company may pay a dividend at the discretion of the Board. The Board is targeting a dividend of 2% per annum of NAV, payable annually. The Group also proposes to offer a scrip dividend alternative, under which Shareholders may elect to receive new Shares in place of a cash dividend, subject to Shareholder approval, so that the cash that otherwise would have been distributed can be used for investment purposes. The Directors intend to seek Shareholder approval at each annual general meeting to offer a scrip dividend alternative. New Shares issued pursuant to any election for a scrip dividend shall be issued at the applicable NAV per Share. The scrip dividends are recognised as incurred where the dividend declaration allows for cash alternative. During the period ended 30 September 2013, the Company paid a dividend of £2,067,000 relating to the period ended 31 March 2013.

The above distribution policy was revised following the EGM on 22 October 2013. Refer to note 18 for details.

4. REBATES AND DONATIONS

All investments made by the Group either (a) will not be subject to any management or performance fees or (b) will be made on the basis the Group is effectively reimbursed the amount of any such fees by rebate, donation back to the Group or other arrangements.

Rebates and donations received or receivable in cash are recognised in the Condensed Consolidated Statement of Comprehensive Income under Rebates and Donations. Rebates and donations received through additional shares of the relevant underlying funds are included in Rebates and Donations at their fair value and the subsequent movements in value are included in the Net Gains on Financial Assets at Value Through Profit or Loss in the Condensed Consolidated Statement of Comprehensive Income. Performance fee rebates are adjusted to the fair value of the investments until they are crystallised. Crystallised performance fee rebates are recognised in the Statement of Comprehensive Income under Rebates and/or Donations.

During the period, rebates and donations earned amounted to £775,000 (31 March 2013: £468,000), of which £162,000 (31 March 2013: £170,000) remained receivable at 30 September 2013. Of the 28 (31 March 2013: 26) underlying funds in the Consolidated Portfolio Statement, 20 (31 March 2013: 19) of these underlying funds are invested in a fee free share class and the remaining 8 (31 March 2013: 7) apply rebates and/or donations.

5. NET GAINS ON FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

						Unaudited		Audited
						01.04.13 to		26.10.12 to
						30.09.13		31.03.13
						£'000		£'000
Increase in unrealised appreciation during the period						631		27,077
Net gains on financial assets at fair value through profit or loss						631		27,077

6. GAINS/(LOSSES) ON FOREIGN EXCHANGE

						Unaudited		Audited
						01.04.13 to		26.10.12 to
						30.09.13		31.03.13
						£'000		£'000
Realised losses on forward currency contracts						(94)		(387)
Unrealised gain/(losses) on forward currency contracts						326		(46)
Net exchange losses on foreign currency translation						(101)		(291)
						131		(724)

 7. CHARITABLE DONATION

In accordance with the Framework Agreement entered into between the Company and the ICR on 1 October 2012, the Group has an obligation to make an annual donation to charity, paid in arrears, of 1% of the average monthly period end NAV, half of which is donated to the ICR and the other half to the BACIT Foundation. The BACIT Foundation will grant those funds to charities named in a list proposed annually by the BACIT Foundation which will include the ICR, in proportions determined each year by Shareholders of the Company.

As per the revised Articles amended on 22 October 2013, the total NAV used in determining the aggregate annual donation will include the total NAV attributable to both the Ordinary Shares and C Shares. Further, the calculation of the total NAV for donation purposes, previously determined on an annual basis, will now be determined on a monthly basis effective 1 April 2013.

As at 31 March 2013, the total NAV used for the purpose of the first donation was the partial year end total NAV. From 1 April 2013 onwards, the total NAV used is determined on a monthly basis. Refer to note 18 for details.

During the period, charitable donations amounted to £1,173,000 (31 March 2013: £986,000) of which £1,173,000 (31 March 2013: £986,000) remained payable at 30 September 2013.

8. ADMINISTRATION FEE

During the period ended 30 September 2013, administration fees of £93,000 (31 March 2013: £74,000) were charged by Northern Trust International Fund Administration Services (Guernsey) Limited to the Group and £46,000 (31 March 2013: £39,000) remained payable at 30 September 2013.

9. CUSTODIAN FEE

During the period ended 30 September 2013, custodian fees of £60,000 (31 March 2013: £49,000) were charged by Northern Trust (Guernsey) Limited to the Group and £21,000 (31 March 2013: £19,000) remained payable as at 30 September 2013.

10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

						Unaudited		Audited
						30.09.13		31.03.13
						£'000		£'000
Cost at the start of the period						169,231		-
Purchases during the period						23,343		169,231
Return on capital						(12)		-
Reduction in investment (note 17)						(2,021)		-
Cost of Investments at the end of the period						190,541		169,231
Net unrealised gains on investments end of the period						27,708		27,077
Financial assets at fair value through profit or loss
at the end of the period						218,249		196,308

 11. TRADE AND OTHER RECEIVABLES

						Unaudited		Audited
						30.09.13		31.03.13
						£'000		£'000
Investment income receivable						10		-
Rebates and donations receivable (note 4)						162		170
Prepayments						40		11
Cash due on Deferred Share (note 13)						-		-
						212		181

12. TRADE AND OTHER PAYABLES

						Unaudited		Audited
						30.09.13		31.03.13
						£'000		£'000
Charitable donations payable (note 7)						1,173		986
Directors' fee payable (note 14)						25		24
Administration fee payable (note 8)						46		39
Custodian fee payable (note 9)						21		19
Audit fee payable						55		38
Security purchase payable (note 16)						798		-
Other payables						14		58
						2,132		1,164

13. SHARE CAPITAL ACCOUNT

A. Authorised Share Capital

The Company is authorised to issue an unlimited number of shares, which may have a par value or no par value, as the Directors see fit. The shares can be issued as Ordinary Shares, C Shares or other such classes and in any currency at the discretion of the Board.

As the Company's Shares have no par value, the share price consists solely of share premium and the amounts received for issued shares are recorded in the Share Capital Account in accordance with the Companies (Guernsey) Law, 2008.

Ordinary Shares of each class carry the right to receive all income of the Group attributable to the Ordinary Shares of such class and to participate in any distribution of such income made by the Group, pro-rata to the relative calculated NAV of each of the classes of Ordinary Shares and within each such class income shall be divided pari passu among the holders of Ordinary Shares of that class in proportion to the number of Ordinary Shares of such class held by them. 

The Founder Share issued at the date of incorporation was redesignated by special resolution dated 28 September 2012, as a Deferred Share and transferred to the BACIT Foundation. This non-participating non-redeemable Deferred Share has no other rights to assets or dividends.

						Unaudited		Audited
						01.04.13 to		26.10.12 to
						30.09.13		31.03.13
						£'000		£'000
Deferred Share (1 Share issued at £1)						-		-
Ordinary Share Capital
Balance at the start of the period						204,061		-
Issued during the period						-		206,735
Share issue costs						-		(2,674)
Distribution						(2,067)		-
Balance at the end of the period						201,994		204,061
						Unaudited		Audited
						01.04.13 to		26.10.12 to
Ordinary Share Capital						30.09.13		31.03.13
						Shares		Shares
Balance at the start of the period						206,734,775		-
Issued during the period						-		206,734,775
Balance at the end of the period						206,734,775		206,734,775

 B. Capital Reserves

Gains and losses recorded on the realisation of investments, realised exchange differences, unrealised gains and losses recorded on the revaluation of investments held at the period end and unrealised exchange differences of a capital nature are transferred to Capital Reserves.

C. Basic and Diluted Earnings per Share

The calculations for the basic and diluted earnings per share attributable to the Ordinary Shares of the Group are based on the following data:

						Unaudited		Audited
						01.04.13 to		26.10.12 to
						30.09.13		31.03.13
Earnings for the purposes of earnings per share						343,668		25,548,063
Weighted average number of shares						206,734,775		206,734,775
Basic and diluted earnings per share						0.00p		12.00p

D. C Shares

Following the EGM on 22 October 2013, C Shares were issued subsequent to the period ended 30 September 2013. Refer to note 18 for details.

14. RELATED PARTY TRANSACTIONS

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions.

The Company has seven non-executive directors. All the Directors of the Company also serve as Directors of the General Partner.

Each of the Directors is entitled to receive a fee of £20,000 per annum, except for the Chairman who is entitled to receive a fee of £30,000 per annum. Mr Tigue and Mr Henderson have agreed to waive their right to receive their fees.

Directors' fees for the period to 30 September 2013, including outstanding Directors' fees at the end of the period, are set out below.

						Unaudited		Audited
						30.09.13		31.03.13
						£'000		£'000
Directors' fees for the period						51		63
Payable at end of period						25		24

Director and other interests

As at 30 September 2013, the Directors of the Company held the following Ordinary Shares beneficially:

	Shares
Director	30.09.13
	in 000's
Jeremy Tigue	250
Peter Hames	50
Tom Henderson	15,000
Colin Maltby	50
Jon Moulton	1,000
Martin Thomas	50

The Management Team of the General Partner provides management services to the Partnership free of charge.

In accordance with the Deed entered into between the Company, the General Partner and Mr Henderson, Mr Henderson agrees to provide office space and equipment for the Management Team and to either pay directly or reimburse the Group in respect of specific overheads of the Management Team up to an amount equal to £210,000 per annum.

Total expenses paid for by Mr Henderson during the period amounted to £365,000 (31 March 2013: £560,000).

In accordance with the Group's Articles of Incorporation, 50% of the Charitable Donations are made to The BACIT Foundation. The BACIT Foundation is incorporated in England and Wales, with exclusively charitable purposes and holds the Group's Deferred Share. Refer to note 7.

During the period under review the following shares were held by members of the Management team:

										Number of Shares
										in 000's
Thomas Henderson										15,000
John McDonald										200
Arabella Cecil										200
Fenella Dernie										5

Significant agreements

Northern Trust International Fund Administration Services (Guernsey) Limited performs administrative duties to the Group. Please refer to note 8.

Northern Trust (Guernsey) Limited also serves as custodian to the Group. Please refer to note 9.

15. OPERATING SEGMENTS

The Board has considered the requirements of IFRS 8 'Operating Segments' and concluded that the Group's activities form a single segment under the standard, being investments in a diversified portfolio of hedge, equity and long-term alternative investment funds across multiple asset classes. From a geographical perspective, the Group's investments are managed on a global basis. The Board, as a whole, has been determined as constituting the chief decision maker of the Group. The key measure of performance used by the Board to assess the Group's performance and to allocate resources is the total return based on the NAV per share, as calculated under IFRS.

16. FINANCIAL INSTRUMENTS

The financial instruments held by the Group are comprised principally of hedge, equity and long-term alternative investment funds.

Details of the Group's significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of its financial assets and liabilities are disclosed in note 1.

The table below analyses the carrying amounts of the financial assets and liabilities by category as defined in IAS 39 - "Financial Instruments: Recognition and Measurement".

											Unaudited		Audited
											30.09.13		31.03.13
											Fair Value		Fair Value
											£000		£000
Financial assets designated at fair value through profit or loss
Listed Investments											73,452		69,132
Unlisted investments											144,797		127,176
Unrealised gains on open forward foreign currency contracts											326		-
Total financial assets designated at fair value through profit or loss											218,575		196,308
Other financial assets											11,443		34,511
											30.09.13		31.03.13
											Fair Value		Fair Value
											£000		£000
Financial liabilities designated at fair value through profit or loss
Unrealised losses on open forward foreign currency contracts											-		(46)
Other financial liabilities											(2,132)		(1,164)

Financial Risk Management

The Group's financial risk management objectives and policies are unchanged from those disclosed in the annual audited consolidated financial statements as at and for the period ended 31 March 2013.

Fair Value Hierarchy

IFRS 13 requires the Group to establish a fair value hierarchy that prioritises the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under IFRS 13 are set as follows:

Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability either directly (that is, as prices) or indirectly (that is, derived from prices); and

Level 3 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgment by the Group. The Group considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following table presents the Group's financial assets and liabilities by level within the valuation hierarchy as of 30 September 2013:

													Unaudited
													30.09.13
							Level 1		Level 2		Level 3		Total
Assets							£'000		£'000		£'000		£'000
Financial assets at fair value
through profit or loss:
Investments in underlying funds							73,452		137,714		7,083		218,249
Unrealised gains on open forward  foreign currency contracts							-		326		-		326
Total assets							73,452		138,040		7,083		218,575

													Audited
													31.03.13
							Level 1		Level 2		Level 3		Total
Assets							£'000		£'000		£'000		£'000
Financial assets at fair value
through profit or loss:
Investments in underlying funds							69,132	119,401			7,775	196,308
Total assets							69,132	119,401			7,775	196,308
Liabilities
Financial liabilities at fair value through profit or loss:
Unrealised losses on open forward foreign currency contracts							-		(46)		-		(46)
Total liabilities							-		(46)		-		(46)

Assets classified as Level 2 investments are underlying funds fair-valued using the latest available NAV of each fund as reported by each fund's independent administrator.

Assets classified as Level 3 investments are underlying funds for which prices are not traded. The fair value of these assets is derived from quarterly statements provided by the fund's independent administrator.

There were no transfers between levels during the period.

The following table presents the movements in level 3 investment for the period ended 30 September 2013:

											Unaudited		Audited
											30.09.13		31.03.13
											£'000		£'000
Opening balance											7,775		-
Purchases											798		7,880
Reduction in investment											(2,021)		-
Gain/(loss) on financial assets at fair value through profit or loss											531		(105)
Closing balance											7,083		7,775

The net gain for the period included in the Consolidated Statement of Comprehensive Income held at period end amounted to £531,000 (31 March 2013: £105,000 loss).

The following table summarises the valuation methodologies used for the Group's investments categorised in level 3 as of 30 September 2013:

Security description		Fair Value £'000		Valuation methodology		Unobservable inputs		Ranges
Infracapital Partners (NT) II LP		6,286		NAV		None		N/A
Investment in Drug Development		798		Cost		None		N/A

Infracapital Partners (NT) II LP values its investments in accordance with the International Private Equity and Venture Capital ("IPEVC") guidelines. In line with the recent investment methodology outlined in the IVCPE guidance, new investments are valued equivalent to the cost of the investments. The Group does not have transparency over the inputs of this valuation.

On 23 September 2013, the Group entered into an agreement with other parties to invest in a drug development project. Initial overall project costs are estimated at £8,000,000 for all parties, of which 27.5% has been committed to by the Group. The project will be funded in three tranches. The first tranche was called on 24 September 2013 amounting to £798,000 and is due to be paid in December 2013. Investment in Drug Development is valued at cost in accordance with IPEVC guidelines.

17. COMMITMENTS

The Group had the following commitments as at 30 September 2013:

Unaudited

30.09.13

Security description

Currency

Total Commitment

Drawn Commitment

Undrawn Commitment

in 000's

in 000's

in 000's

Infracapital Partners (NT) II LP

Sterling

£15,000

£5,859*

£9,141

Investment in Drug Development

Sterling

£2,063

£798

£1,265

Permira V

Euro

€18,700

-

€18,700

Audited

31.03.13

Security description

Currency

Total Commitment

Drawn Commitment

Undrawn Commitment

in 000's

in 000's

in 000's

Infracapital Partners (NT) II LP

Sterling

£15,000

£7,880

£7,120

*During the period to 30 September 2013 the drawn commitment decreased due to Infracapital Partners (NT) II LLP accepting new investors and issuing existing investors with an equalisation notice totalling £2,021,000.

There were no other contingent liabilities as at 30 September 2013.

18. SUBSEQUENT EVENTS

These Consolidated Financial Statements were approved for issuance by the Board on 29 November 2013. Subsequent events have been evaluated until this date.

Issuance of C Shares

At the EGM held on 22 October 2013, Shareholders authorised the Board to allot and issue 200 million C shares for the period expiring 31 December 2013. On 28 October 2013, the C Shares were listed on the Premium Segment of the LSE. The Company raised £200 million gross during the listing. Share issue costs in relation to the issuance of C Shares amounted to £2,230,000.

The C Shares are a transient class of Shares. The Company shall in relation to each class of C Shares procure that the Company's and the Partnership's records and bank accounts shall be operated so that the assets attributable to the relevant class of C Shares can, at all times, be separately identified and allocated to the assets attributable to each class of C Shares such proportion of the income, expenses or liabilities of the Company or the Limited Partnership incurred or accrued between the Issue Date and the Calculation Time as the Directors consider fairly attributable to such class of C Shares. Each class of C Shares shall be converted into New Ordinary Shares at the Conversion Time designated by the Directors for that class of C Shares. The C Shares will convert into New Ordinary Shares on a Net Asset Value for Net Asset Value basis at the time of conversion. The New Ordinary Shares arising on Conversion shall be divided amongst the former holders of the relevant class of C Shares pro rata according to their respective former holdings of the relevant class of C Shares. C Shareholders will be entitled to receive such dividends.

Distribution Policy

Following the EGM on 22 October 2013, the Company's distribution policy was amended so that each dividend paid by the Company will be in the form of scrip as a default, with a cash dividend alternative, under which shareholders may elect to receive cash in place of new shares.

Charitable Donation

As per the revised Articles amended on 22 October 2013, the total NAV used in determining the aggregate annual donation will include the total NAV attributable to both the Ordinary Shares and C Shares. Further, the calculation of the total NAV for donation purposes, previously determined on an annual basis, will now be determined on a monthly basis effective 1 April 2013.

Investment in Drug Development

On 8 November 2013, BACIT CHK1 Investment Limited, a new BACIT limited liability subsidiary, was incorporated in the United Kingdom to be the contracting party for the Group's share of the investment in a drug development project (see Note 16).

Other than the above, no other significant post period end events have occurred in respect of the Group that are considered material to the understanding of these Financial Statements.

 

END

 

 

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