Interim Results
BRITISH & AMERICAN INVESTMENT TRUST PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited
Six months ended 30 June 2005
Retained
Share earnings Total
£'000 £'000
capital
£'000
Balance at 31 December 2004 35,000 2,869 37,869
Profit for the period - 3,035 3,035
Ordinary dividend paid - (775) (775)
Preference dividend paid - (175) (175)
Balance at 30 June 2005 35,000 4,954 39,954
Unaudited
Six months ended 30 June 2004
Restated (see note 9)
Retained
Share earnings Total
£'000 £'000
capital
£'000
Balance at 31 December 2003 35,000 (854) 34,146
Profit for the period - 1,046 1,046
Ordinary dividend paid - (750) (750)
Preference dividend paid - (175) (175)
Balance at 30 June 2004 35,000 (733) 34,267
Unaudited+
Year ended 31 December
2004
Restated (see note 8)
Retained
Share earnings Total
£'000 £'000
capital
£'000
Balance at 31 December 2003 35,000 (854) 34,146
Profit for the period - 5,348 5,348
Ordinary dividend paid - (1,275) (1,275)
Preference dividend paid - (350) (350)
Balance at 31 December 2004 35,000 2,869 37,869
Unaudited Unaudited 30 Unaudited+
30 June June 31 December
2005 2004 2004
Restated Restated
(see note 9) (see note 8)
£'000 £'000 £'000
Non current assets
Investments - fair value through profit or
loss (note 1) 36,524 33,469
35,610
Current assets
Other receivables 391 229
187
Cash and cash equivalents 3,495 1,183
2,227
3,886 1,412
2,414
Total assets 40,410 34,881
38,024
Current liabilities
Other payables (456) (614)
(155)
Total assets less current liabilities 39,954 34,267
37,869
Net assets 39,954 34,267
37,869
Equity attributable to equity holders
Called up ordinary share capital 25,000 25,000
25,000
Convertible preference share capital 10,000 10,000
10,000
Retained earnings 4,954 (733)
2,869
Total equity 39,954 34,267
37,869
Unaudited Unaudited Unaudited+
6 months to 6 months Year
30 June to 30 June ended
2005 2004 31 December
Restated 2004
£'000 £'000 Restated
£'000
Net cash inflow from operating activities 1,131 613
(note 11) 1,458
Net cash inflow/(outflow) from investing
activities 1,087 (86)
813
Net cash inflow before financing 2,218 527
2,271
Net cash outflow from financing activities (950) (925) (1,625)
Net increase/(decrease) in cash and cash 1,268 (398)
equivalents 646
Cash and cash equivalents at start of period 2,227 1,581
1,581
Cash and cash equivalents at end of period 3,495 1,183
2,227
1. ACCOUNTING POLICIES
Basis of preparation
The results are based on unaudited Group consolidated accounts prepared under the historical
cost convention as modified by the revaluation of investments. The results have been
prepared in accordance with applicable International Financial Reporting Standards (IFRS),
with the Statement of Recommended Practice, "Financial Statements of Investment Trust
Companies" and accounting policies consistent with preceding annual accounts except as noted
below.
The disclosure required by IFRS 1 concerning the transition from UK GAAP to IFRS is given in
notes 8, 9 and 10. These financial statements are presented in pounds sterling as this is
the currency of primary economic environment in which the Group operates. The financial
statements of the Group for the year ending 31 December 2005 will also be prepared in
accordance with IFRS.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the company and
the entities controlled by the company (its subsidiaries) made up to 31 December each year.
All intra-group transactions, balances, income and expenses are eliminated on consolidation.
Significant accounting policies
In accordance with the expected long term division of returns 50% (2004 - 100%) of
investment management and related costs for the year is charged to the revenue account and
50% (2004 - nil%) is charged to capital reserves, net of any incremental corporation tax
relief.
Changes in accounting policies
In order to better reflect the activities of an investment trust company, and in accordance
with guidance issued by the 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. Additionally, the net revenue is the measure the directors believe appropriate in
assessing the Group's compliance with certain requirements set out in section 842 of the
Income and Corporation Taxes Act 1988.
Investments have been valued at fair value through profit and loss in accordance with IAS 39
'Financial Instruments: Recognition and Measurement'. The effect is to move from a mid to
bid basis of valuation for quoted investments with closing prices for SETS stocks being
sourced from The London Stock Exchange. Fair value for unquoted investments is established
using various valuation techniques. Where no reliable fair value can be estimated for
unquoted investments they are carried at cost less any provision for impairment. This change
has resulted in a reduction in value of investments and retained earnings of £36,000 (30
June 2004 - £60,000; 31 December 2004 - £53,000). Changes in the fair value of all
investments held at fair value are recognised in the Income Statement. On disposal, realised
gains and losses are also recognised in the Income Statement. Derivatives designated as fair
value through profit and loss with a negative value are included in current liabilities.
In compliance with IAS 10 'Events after the Balance Sheet Date', ordinary and preference
dividends declared after the period end are no longer treated as a liability at the period
end. The effect is to reduce creditors and increase revenue retained earnings by £1,000,000
(30 June 2004 - £700,000; 31 December 2004 - £950,000).
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 Unaudited+
6 months to 6 months to Year ended
30 June 30 June 31 December
2005 2004 2004
Restated Restated
£'000 £'000 £'000
Turnover - film revenue 72 71
197
Income from investments 1,015 694
1,513
Interest receivable 56 34
62
Other income 59 48
92
1,202 847
1,864
3. DIVIDENDS*
Unaudited Unaudited
6 months to 30 June 2005 6 months to 30 June 2004
Pence per Pence per
share £ share £
Ordinary shares - interim 2.3 575,000 2.1 525,000
Ordinary shares - special 1.0 250,000 0.0 -
Preference shares - fixed 1.75 175,000 1.75 175,000
1,000,000 700,000
The directors have declared an interim dividend of 2.3p (2004 - 2.1p) per ordinary share,
payable on 17 November 2005 to shareholders registered on 21 October 2005. The shares will
be quoted ex-dividend on 19 October 2005.
The directors have further declared a special dividend of 1.0p (2004 - nil) per ordinary
share, payable on 15 December 2005 to shareholders registered on 21 October 2005. The shares
will be quoted ex-dividend on 19 October 2005.
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 declared.
4. EARNINGS PER ORDINARY SHARE
Unaudited Unaudited Unaudited+
6 months to 6 months Year ended
30 June to 30 June 31 December
2005 2004 2004
Restated Restated
(see note 9) (see note 8)
£'000 £'000 £'000
Basic earnings per share
Calculated on the basis of:
Net profit after preference dividends 887 479
1,082
Net capital profit 1,973 392
3,916
Net total earnings after preference dividends 2,860 871
4,998
Ordinary shares in issue 25,000 25,000
25,000
Fully diluted earnings per share
Calculated on the basis of:
Net revenue profit 1,062 654
1,432
Net capital profit 1,973 392
3,916
Profit after taxation 3,035 1,046
5,348
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 Unaudited+
30 June 30 June 31 December
2004 2004
2005 Restated Restated
£'000 £'000
£'000
Total net assets 39,954 34,267
37,869
Less convertible preference shares (10,000) (10,000)
(10,000)
Net assets attributable to ordinary shareholders 29,954 24,267
27,869
In both cases the effective net assets of the group have been calculated taking investments
at their market value. Diluted net asset value 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).
The 3.5% cumulative convertible preference shares issued by the company have been classified
as equity instruments in accordance with IAS 32 - 'Financial Instruments - Disclosure and
Presentation'. The directors are of the opinion that due to the fact the company has an
unconditional right to avoid paying the preference dividend, the company has no contractual
obligation to pay these dividends and thus they are correctly classified as equity and do
not represent a financial liability.
6. COMPARATIVE INFORMATION
The financial information for the year ended 31 December 2004 has been derived from audited
UK GAAP information adjusted for the impact of IFRS and is therefore unaudited. The
financial information for the period ended 30 June 2004 has been derived from unaudited UK
GAAP information adjusted for the impact of IFRS. The interim information, together with the
comparative information contained in this report for the year ended 31 December 2004, does
not constitute statutory accounts within the meaning of section 240 of the Companies Act
1985. However, the information has been reviewed by the Company's auditors, Deloitte &
Touche LLP, and their report appears on page 21. The UK GAAP statutory accounts for the
year ended 31 December 2004 have been reported on by the Company's auditors, Deloitte &
Touche LLP, and delivered to the Registrar of Companies. The report of the auditors on those
accounts was unqualified and did not contain a statement under section 237(2) or (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
Revenue Capital Total
£'000 £'000 £'000
At 1 January 2005 (as restated) 2,548 321 2,869
Movement during the period:
Net profit for the period 1,062 1,973 3,035
Dividends paid on ordinary shares (775) - (775)
Dividends paid on preference shares (175) - (175)
At 30 June 2005 2,660 2,294 4,954
Analysis of capital item Unaudited Unaudited Unaudited
Realised Unrealised Total
£'000 £'000 £'000
At 1 January 2005 (as restated) 13,114 (12,793) 321
Movement during the period:
Net profit for the period 198 1,775 1,973
At 30 June 2005 13,312 (11,018) 2,294
8. Restatement of balances for the year ended 31 December 2004
Balance Sheet
Audited
Previously
reported Effect of Restated
(UKGAAP) transition
31 December to (IFRS)
2004 IFRS 31 December
Notes £'000 2004
£'000 £'000
Non current investments 1 (53)
35,663 35,610
Current assets -
2,414 2,414
Current liabilities 2 950
(1,105) (155)
Total assets less current liabilities
36,972 37,869
Net assets
36,972 37,869
Equity attributable to equity holders
Called up share capital
- ordinary shares -
25,000 25,000
- preference shares -
10,000 10,000
Capital reserves - realised 3 (13,114)
13,114 -
Capital reserves - unrealised 3 12,740
(12,740) -
Revenue reserve/Retained earnings 1,2,3 1,271
1,598 2,869
Total equity
36,972 37,869
Notes
1. Investments (excluding derivatives) are designated as held at fair value under IFRS and
are carried at bid prices. Previously, under UK GAAP approximately 77 percent by value were
already carried at bid equivalent with the balance being carried at mid prices or cost. This
results in a downward revaluation of £53,000 in investments and a decrease in retained earnings.
2. No provision has been made for the final dividend on the ordinary and preference shares
for the year ended 31 December 2004 of £950,000. Under IFRS the final dividend is not recognised
until approved by shareholders.
3. Under IFRS there is no differentiation between capital and revenue gains and losses. The
previous headings of Capital reserve - realised and Capital reserve - unrealised are now included
under the heading Retained earnings.
8. Restatement of balances for the year ended 31 December 2004 (continued)
Reconciliation of the Statement of Total Return to the 2004
Income Statement for the year ended 31 December 2004 Notes £'000
Total transfer to reserves per the Statement of Total Return (UKGAAP) 3,728
Add back ordinary and preference dividends paid and proposed 1 1,650
Investments held at fair value changed from mid to bid basis at 23
31 December 2003
Investments held at fair value changed from mid to bid basis at 2 (53)
31 December 2004
Net return per the Income Statement (IFRS) 5,348
Notes
1. Under IFRS ordinary and preference dividends declared and paid during the period are dealt
with through the Statement of Changes in Equity.
2. The investment valuations at 31 December 2003 and 31 December 2004 are valued at fair
value under IFRS calculated at bid price rather than mid price where not already the case. These
values are different from the previous valuations by £23,000 and £53,000 respectively.
Reconciliation of the Cash Flow Statement Audited
for the year ended 31 December 2004 Previously
reported Effect of Adjusted
(UKGAAP) transition cash flows
cash flows to (IFRS)
2004 IFRS 2004
£'000 £'000
Notes £'000
Net cash inflow from operating activities 1 1,458 - 1,458
Returns on investments and servicing of 2 (350) 350 -
finance
Taxation - - -
Net cash inflow from financial investment 813 - 813
Equity dividends paid 2 (1,275) 1,275 -
Net cash inflow before financing 646 1,625 2,271
Financing 2 - (1,625) (1,625)
Increase in cash 646 - 646
Notes
1. Bank interest and taxation are now analysed within operating activities.
2. Ordinary and preference dividends paid are now analysed within financing.
9. Restatement of balances for the period ended 30 June 2004
Balance Sheet Audited
Previously
reported Effect of Restated
(UKGAAP) transition (IFRS)
30 June to 30 June
2004 IFRS 2004
£'000 £'000
Notes £'000
Non current investments 1 33,529 (60) 33,469
Current assets 1,412 - 1,412
Current liabilities 2 (1,314) 700 (614)
Total assets less current liabilities 33,627 34,267
Net assets 33,627 34,267
Equity attributable to equity holders
Called up share capital
- ordinary shares 25,000 - 25,000
- preference shares 10,000 - 10,000
Capital reserves - realised 3 12,065 (12,065) -
Capital reserves - unrealised 3 (15,208) 15,208 -
Revenue reserve/Retained earnings 1,2,3 1,770 (2,503) (733)
Total equity 33,627 34,267
Notes
1. Investments (excluding derivatives) are designated as held at fair value under IFRS and
are carried at bid prices. Previously, under UK GAAP approximately 76 percent by value were
already carried at bid equivalent with the balance being carried at mid prices or cost. This
results in a downward revaluation of £60,000 in investments and a decrease in retained earnings.
2. No provision has been made for the interim dividend on the ordinary and preference shares
for the period ended 30 June 2004 of £700,000 as this was not declared until after the balance
sheet date. Under IFRS the interim dividend is not recognised until declared.
3. Under IFRS there is no differentiation between capital and revenue gains and losses. The
previous headings of Capital reserve - realised and Capital reserve - unrealised are now included
under the heading Retained earnings.
9. Restatement of balances for the period ended 30 June 2004 (continued)
Reconciliation of the Statement of Total Return to the 2004
Income Statement for the period ended 30 June 2004 Notes £'000
Total transfer to reserves per the Statement of Total Return (UKGAAP) 383
Add back ordinary and preference dividends paid and proposed 1 700
Investments held at fair value changed from mid to bid basis at 23
31 December 2003
Investments held at fair value changed from mid to bid basis at 2 (60)
30 June 2004
Net return per the Income Statement (IFRS) 1,046
Notes
1. Under IFRS ordinary and preference dividends declared and paid during the period are dealt
with through the Statement of Changes in Equity.
2. The investment valuations at 31 December 2003 and 30 June 2004 are valued at fair value
under IFRS calculated at bid price rather than mid price where not already the case. These values
are different from the previous valuations by £23,000 and £60,000 respectively.
Reconciliation of the Cash Flow Statement Audited
for the period ended 30 June 2004 Previously
reported Effect of Adjusted
(UKGAAP) transition cash flows
cash flows to (IFRS)
2004 IFRS 2004
£'000 £'000
Notes £'000
Net cash inflow from operating activities 1 613 - 613
Returns on investments and servicing of 2 (175) 175 -
finance
Taxation - - -
Net cash outflow from financial investment (86) - (86)
Equity dividends paid 2 (750) 750 -
Net cash (outflow)/inflow before financing (398) 925 527
Financing 2 - (925) (925)
Decrease in cash (398) - (398)
Notes
1. Bank interest and taxation are now analysed within operating activities.
2. Ordinary and preference dividends paid are now analysed within financing.
10. Restatement of opening balances as at 31 December 2003
Balance Sheet
Audited
Previously Effect of
reported transition Restated
(UKGAAP) to (IFRS)
31 December IFRS 31 December
2003 2003
Notes £'000 £'000 £'000
Non current investments 1 (23)
32,482 32,459
Current assets -
1,743 1,743
Current liabilities 2 925
(981) (56)
Total assets less current liabilities
33,244 34,146
Net assets
33,244 34,146
Equity attributable to equity holders
Called up share capital
- ordinary shares -
25,000 25,000
- preference shares -
10,000 10,000
Capital reserves - realised 3 (14,824)
14,824 -
Capital reserves - unrealised 3 18,396
(18,396) -
Revenue reserve/Retained earnings 1,2,3 (2,670)
1,816 (854)
Total equity
33,244 34,146
Notes
1. Investments (excluding derivatives) are designated as held at fair value under IFRS and
are carried at bid prices. Previously, under UK GAAP approximately 76 percent were already carried
at bid equivalent with the balance being carried at mid prices or cost. This results in a downward
revaluation of £23,000 in investments and a decrease in retained earnings.
2. No provision has been made for the final dividend on the ordinary and preference shares
for the year ended 31 December 2003 of £925,000. Under IFRS the final dividend is not recognised
until approved by shareholders.
3. Under IFRS there is no differentiation between capital and revenue gains and losses. The
previous headings of Capital reserve - realised and Capital reserve - unrealised are now included
under the heading Retained earnings.
11. Reconciliation of profit before tax to net cash inflow from operating activities
Unaudited Unaudited Unaudited+
6 months 6 months Year ended 31
to 30 June to 30 June December 2004
2005 2004 Restated
Restated (see note 8)
(see note 9) £'000
£'000 £'000
Profit on ordinary activities before tax 3,041 1,053
5,403
Gains on investments designated as fair value through (2,039) (392)
profit or loss* (3,916)
Scrip dividends (2) (2)
(4)
Increase in payables 327 2
19
Increase in receivables (197) (46)
(40)
Tax on film revenue (1) (2)
(4)
UK tax recovered 2 -
-
Net cash inflow from operating activities 1,131 613
1,458
* The gains on investments held at fair value are after deducting purchase transaction
costs.
These costs are separately identified in the Income Statement.
Introduction
We have been instructed by the company to review the financial information for the six
months ended 30 June 2005 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 11. 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, for our review work, for this report, or
for the conclusions 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 which requires 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.
International Financial Reporting Standards
As disclosed in note 1, the next annual financial statements of the Group will be prepared
in accordance with International Financial Reporting Standards as adopted for use in the EU.
Accordingly, the interim report has been prepared in accordance with the recognition and
measurement criteria of IFRS and the disclosure requirements of the Listing Rules.
Review work performed
We conducted our review in accordance with the 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 2005.
Deloitte & Touche LLP
Chartered Accountants
London
28 September 2005
British & American Investment Trust Plc
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