Interim Results

BRITISH & AMERICAN INVESTMENT TRUST PLC

1

Unaudited Interim Report

30 June 2005

Registered number : 433137

Directors
J Anthony V Townsend (Chairman)
Jonathan C Woolf (Managing Director)
Dominic G Dreyfus (Non-executive)
Ronald G Paterson (Non-executive)

Registered office
Wessex House
1 Chesham Street
London SW1X 8ND
Telephone: [phone]

Chairman's Statement

I report our results for the 6 months to 30 June 2005.
These  interim  accounts are the first accounts in which we, as a listed PLC group, are obliged to  report  our
results  under the new International Financial Reporting Standards (IFRS). In terms of presentation, these  new
standards introduce a new primary financial statement entitled the "Statement of Changes in Equity" which shows
cash  flow  information in respect of shareholders' funds. There are also some changes  in  the  treatment  and
presentation of other major items such as dividends for the period, which are now no longer shown on  the  face
of  the  Income Statement or accrued. In addition, the company's investment portfolio is now valued, where  not
already  the  case, at bid rather than mid market price. Although the impact of this is minor in terms  of  our
total portfolio valuation (approximately 0.2 percent), it nevertheless requires that these interim accounts and
the  full year accounts include a restatement of previous period results and a reconciliation thereof. You will
note,  therefore,  that  the accounts are considerably longer this year than usual. The  impact  of  these  new
standards  is discussed in more detail in the Managing Director's report below. We are not convinced that,  for
an  investment  trust,  the  new  standards  provide any benefits  to  shareholders  in  terms  of  clarity  or
transparency, and in some important areas are actually less informative or even confusing. We have,  therefore,
added  back  in  the notes those items of information which we consider are important to allow shareholders  to
understand fully the operations and performance of the company.

The  profit on revenue account before tax amounted to £1.1million (30 June 2004: £0.7 million), an increase  of
62  percent. This represents a welcome return to revenue growth as UK companies resume dividend growth patterns
and  previous  year  declines in dividend receipts fall out of the comparisons. In addition,  the  increase  in
revenue reflects the receipt of special dividends from a number of our investee companies over the period.

Total profit before taxation, which includes income and both realised and unrealised capital appreciation,  was
£3.0  million  (£1.1 million), reflecting the continued recovery in equity valuations over  the  period,  noted
below. The capital element of this total was represented by £0.2 million of realised gains and £1.8 million  of
unrealised gains.

The  earnings  per  ordinary share was 3.5 pence on an undiluted basis (1.9 pence) and 3.0  pence  on  a  fully
diluted basis (1.9 pence).

Group  net  assets  were £40.0 million (£37.9 million, at 31 December 2004), an increase of 5.5  percent.  This
compares to an increase over the same six month period of 6.2 percent in both the FTSE 100 share and All  Share
indices. The net asset value per £1 ordinary share was 120 pence (prior charges deducted at par) and 114  pence
on a fully diluted basis.

We intend to pay an interim dividend of 2.3 pence per ordinary share on 17 November 2005 to shareholders on the
register  at  21 October 2005. This represents an increase of 9.5 percent from last year's interim dividend.  A
preference  dividend of 1.75 pence will be paid to preference shareholders on the same date.  In  addition,  we
intend  to  pay  a  special dividend of 1 penny per ordinary share on 15 December 2005 to shareholders  on  the
register  at 21 October 2005 in recognition of the special dividends received from investee companies over  the
period.

As  at  23  September,  group net assets (valued on mid-market basis where necessary) were  £42.4  million,  an
increase of 6.0 percent since 30 June. This compares with an increase of 5.9 percent in the FTSE 100 index  and
6.0  percent  in  the  All Share index over the same period, and is equivalent to 129 pence  per  share  (prior
charges deducted at par) and 121 pence per share on a fully diluted basis.

Anthony Townsend

MANAGING DIRECTOR'S REPORT

International Financial Reporting Standards

These  interim accounts adopt the rules and format required by the International Financial Reporting  Standards
(IFRS).  These new standards have been introduced for all publicly quoted company groups reporting with  effect
from  1st  January,  2005  with  the  aim of providing greater clarity and transparency  in  the  accounts  for
shareholders. In the case of investment trusts such as ourselves, however, the new format is, in many respects,
inappropriate and actually reduces the amount and clarity of important information for shareholders and in some
cases can even be confusing. For example:

-  revenue  and  capital  gains/losses are now only shown as a single item on the balance  sheet  (as  retained
earnings).  This obscures the value of carried forward earnings reserves which are an indicator  of  investment
trusts'  (or  indeed any investment company's) dividend paying capacity going forward, which is  a  fundamental
measure of investment trust analysis.

-  the  split  between realised and unrealised gains/losses (both in the period and in reserves) is  no  longer
shown. This obscures the sensitivity of the portfolio to future market movements and the potential exposure  to
tax in the event of loss of investment trust status. It also impedes the analysis of performance over time.

-  the  dividend  for the period is no longer shown or accrued, but confusingly the dividend for  the  previous
period  is  shown. Consequently, shareholders are no longer able to relate the dividend payment to  the  income
from which it is earned.

-  the  quantum  and  split of investment purchases and sales is no longer shown. This obscures  the  level  of
activity  over  the  period which is a measure of the fund manager's performance and  also  impacts  long  term
performance criteria.

-  the  proportion  of revenue attributable to income from securities is no longer shown on  the  face  of  the
accounts. This figure is used to calculate one of the criteria of investment trust status.

The  items listed above are not only important general measures of investment trust performance over the period
or  over time but in some cases are vital indicators of trusts' compliance with the rules governing their  very
qualification  as  investment  trusts  (Section 842, Income and Corporation  Taxes  Act  1988)  and  consequent
liability to tax on capital gains.  We have, therefore, retained and shown in the notes to the accounts  or  in
the  operations  summary  all  that  previously  reported information  considered  important  to  shareholders'
understanding of the operations of the company.

It  is naturally disappointing to see that mandatory changes to accounting presentation and policy have, in the
case  of our industry, served to obscure or restrict the quality of information made available to shareholders.
Notwithstanding  the fact that these changes add little or no value to the understanding of our  accounts,  the
requirement to reformat and restate previous years' results has inevitably involved the company in considerable
additional professional costs and, in the current year, a report of almost double the size.

Performance

In  the  six months to 30 June 2005, the UK equity market advanced by 6 percent, showing consistent gains  over
the  period  with particularly strong growth in the latter part of the second quarter. These gains consolidated
the  substantial  improvements in equity prices of the previous year and reflected the  continued  recovery  in
corporate  profitability  across  most sectors against the generally benign  global  economic  backdrop.   Most
particularly, however, exceptional growth and price advances were seen in the oil and natural resources sectors
in response to high demand from newly industrialised countries, particularly China and India. These sectors now
account  for  in  excess of 25 percent of the FTSE 100 index, and their growth has served  to  magnify  overall
market  performance. Both the general market index and the leading companies index performed equally well  over
the period.

Our  portfolio slightly underperformed the market over the period by 0.7 percent.  However, on a  total  return
basis,  after  adding  back dividends paid in the period, the portfolio returned 8.0 percent  compared  to  7.7
percent from the leading stocks index.

In  the  USA,  the  leading index finished the period approximately 4 percent lower after fluctuating  modestly
throughout the first six months of the year, although a decline of almost 10 percent occurred at the end of the
first  quarter which defined the overall performance for the period. This mid-period decline coincided  with  a
rise  in  the  price of crude oil to over $40 a barrel. The generally more subdued performance  of  the  equity
market  in the USA compared with the UK reflected in part the programme of steady monetary tightening initiated
by  the  Federal Reserve in 2004.  This programme is itself a response to the record and still growing  current
account and trade imbalances being experienced in the USA. Furthermore, these imbalances are not helped by  the
economic  consequences of other non-economic events such as the continuing conflict in Iraq and  more  recently
the  effects  of hurricane Katrina in the Gulf of Mexico. General stock market performance also reflects  these
economic realities and the inevitable effects on investor sentiment of such record structural imbalances.

In the third quarter, UK and US equity markets have continued their growth pattern with US stock prices growing
more  steadily than in the first two quarters.  For the time being, the US market has not reacted significantly
to  the  consequences of hurricane Katrina or the recent strong upward pressure on crude oil and petrol  prices
and  stands  approximately 1.4 percent ahead of its levels at the half year.  In the UK, the leading  companies
index  has  advanced 5.9 percent over the same period, again reflecting the proportion of  oil  stocks  in  the
index, and the general market index has shown equal growth at 6.0 percent.

Against  this  background,  we will continue to maintain our generalist investment approach  in  the  UK  while
continuing  to  target specifically identified stocks in the USA.  Given the economic and geo-political  issues
noted  above  and the declines in projected growth rates in the developed economies, we have retained  slightly
higher  levels  of  cash  than usual over the past year.  This, together with some underweighting  in  oil  and
commodity stocks, may tend to result in modest capital underperformance in rising markets, however, as seen  in
the period under review, after taking income into account, outperformance on a total return basis was achieved.

In  accordance  with  the  SORP,  and as noted in my report for the year ended  31  December  2004,  investment
management  and related expenses have been split 50% to capital and 50% to revenue with effect from  1  January
2005.

Jonathan C Woolf
28 September 2005
                                                                        Unaudited                           Unaudited                         Unaudited+
                                                                6 months to 30 June 2005            6 months to 30 June 2004          Year ended 31 December 2004
                                                                                                      Restated (see note 9)              Restated (see note 8)
                                                      Note     Revenue     Capital                Revenue     Capital                 Revenue     Capital            
                                                                return      return       Total     return      return       Total      return      return       Total
                                                                 £'000       £'000       £'000      £'000       £'000       £'000       £'000       £'000       £'000

Investment income                                   2        1,202       -           1,202       847         -           847         1,864       -           1,864
Gains on fair value through profit or loss assets            -           2,050       2,050       -           400         400         -           3,935       3,935
Cost of investment transactions                              -           (11)        (11)        -           (8)         (8)         -           (19)        (19)
Other expenses                                               (134)       (66)        (200)       (186)       -           (186)       (377)       -           (377)

Profit before tax                                            1,068       1,973       3,041       661         392         1,053       1,487       3,916       5,403
Taxation                                                     (6)         -           (6)         (7)         -           (7)         (55)        -           (55)

Profit for the period                                        1,062       1,973       3,035       654         392         1,046       1,432       3,916       5,348

Earnings per ordinary share                         4                                                                                                        
Basic                                                             3.5p                                1.9p   1.6p        3.5p             4.3p   15.7p       20.0p
                                                                       7.9p        11.4p
Fully diluted                                                     3.0p                                1.9p   1.1p        3.0p             4.1p   11.2p       15.3p
                                                                       5.7p        8.7p
The total column of this statement is the Group's Income Statement, prepared in accordance with IFRS.
The supplementary revenue return and capital return columns are both prepared under guidelines published by the
Association of Investment Trust Companies.
All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of the parent company. There are no minority interests.

British & American Investment Trust Plc