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British & American (BAF)

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Tuesday 29 April, 2008

British & American

Final Results


British & American Investment Trust PLC

Preliminary Announcement

for the year ended 31 December 2007

Registered number: 433137

Directors                               Registered office                      
                                                                               
J Anthony V Townsend (Chairman)         Wessex House                           
                                                                               
Jonathan C Woolf (Managing Director)    1 Chesham Street                       
                                                                               
Dominic G Dreyfus (Non-executive)       London SW1X 8ND                        
                                                                               
Ronald G Paterson (Non-executive)       Telephone: 020 7201 3100               
                                                                               
                                        Registered in England                  
                                                                               
                                        No.433137                              
                                                                               
                                        29 April 2008                          

Financial Highlights

For the year ended 31 December 2007

                                                2007                           2006  
                                                                                     
                       Revenue    Capital      Total    Revenue    Capital      Total
                        return     return                return     return           
                                                                                     
                          £000       £000       £000       £000       £000       £000
                                                                                     
Return before tax -      1,640      (422)      1,218      1,829       (53)      1,776
realised                                                                             
                                                                                     
Return before tax -          -    (7,278)    (7,278)          -      5,159      5,159
unrealised                                                                           
                                                                                     
                    __________ __________ __________ __________ __________ __________
                                                                                     
Return before tax -      1,640    (7,700)    (6,060)      1,829      5,106      6,935
total                                                                                
                                                                                     
                    __________ __________ __________ __________ __________ __________
                                                                                     
Earnings per £1                                                                      
ordinary share -         4.98p   (30.80)p   (25.82)p      5.85p     20.43p     26.28p
basic                                                                                
                                                                                     
                    __________ __________ __________ __________ __________ __________
                                                                                     
Earnings per £1                                                                      
ordinary share -         4.56p   (22.00)p   (17.44)p      5.18p     14.59p     19.77p
diluted                                                                              
                                                                                     
                    __________  _________ __________ __________  _________ __________
                                                                                     
Net assets                                    39,643                           47,647
                                                                                     
                                          __________                       __________
                                                                                     
Net assets per                                                                       
ordinary share                                                                       
                                                                                     
- deducting                                                                          
preference                                      119p                             151p
shares at par                                                                        
                                                                                     
                                          __________                       __________
                                                                                     
- diluted                                       113p                             136p
                                                                                     
                                          __________                       __________
                                                                                     
                                                110p                                 
Diluted net asset                                                                    
value per ordinary                                                                   
share at 25 April                                                                    
2008                                                                                 
                                                                                     
                                          __________                                 
                                                                                     
Dividends declared                                                                   
or proposed for the                                                                  
period                                                                               
                                                                                     
per ordinary share                                                                   
                                                                                     
- interim paid                                  2.7p                             2.5p
                                                                                     
- final proposed                                3.7p                             3.5p
                                                                                     
- special paid                                  0.0p                             1.0p
                                                                                     
per preference                                  3.5p                             3.5p
share                                                                                

Chairman's Statement

I report our results for the year ended 31 December 2007.

Revenue

The return on the revenue account before tax amounted to £1.6 million (2006: £
1.8 million). Gross income amounted to £1.9 million (2006: £2.1 million), of
which £1.5 million (2006: £1.7 million) represented income from investments and
£0.4 million (2006: £0.4 million) film, property and other income. The slightly
lower level of income from investments arose from the lower level of special
dividends received compared to the previous year.

The return before tax, which includes realised and unrealised capital
appreciation, amounted to a loss of £6.1 million (2006: £6.9 million profit)
reflecting in part a decline in the value of our US investments and weakness in
the US dollar over the year, as discussed below. The capital element of this
total was represented by £0.2 million of realised losses and £7.3 million of
unrealised losses. This is a disappointing result which is further explained in
the Managing Director's Report.

The revenue return per ordinary share was 5.0p (2006: 5.8p) on an undiluted
basis and 4.6p (2006: 5.2p) on a diluted basis.

Net Assets

Group net assets at the year end were £39.6 million (2006: £47.6 million), a
decrease of 16.8 percent. This compares to increases in the FTSE 100 and All
Share indices of 4.5 percent and 2.6 percent, respectively, over the period. On
a total return basis, after adding back dividends paid in the year, our
portfolio returned a decrease of 12.8 percent. This compares to an increase
over the same period of 7.5 percent (dividends reinvested) in the FTSE 100
share index and 5.6 percent (dividends reinvested) in the All Share index. The
net asset value per ordinary share decreased to 113p (2006: 136p) on a diluted
basis. Deducting prior charges at par, the net asset value per ordinary share
decreased to 119p (2006: 151p).

Dividends

We are pleased to recommend an increased final dividend of 3.7p per ordinary
share, which together with the interim dividend makes a total payment for the
year of 6.4p (2006: 6.0p) per ordinary share. This represents an increase of
6.7 percent over the previous year's total dividend, excluding special
dividends. The final dividend will be payable on 26 June 2008 to shareholders
on the register at 30 May 2008. A dividend of 1.75p will be paid to preference
shareholders resulting in a total payment for the year of 3.5p per share.

Shares and performance

The discount to NAV at which our shares trade in the market widened during the
year to approximately 15 percent, continuing the trend reported at the interim
stage. Widening discounts have been experienced generally in the investment
trust sector as levels of investment and confidence have fallen as a
consequence of the unprecedented credit crisis experienced in financial markets
in the second half of 2007. As noted above, our performance based on net assets
fell significantly behind our benchmarks over the period. A significant
contributor to this was the fall in the value of Geron Corporation, our largest
US based investment and, to a lesser extent by year end, the value of the
dollar against sterling. In the months since the year end, however, a modest
recovery in these valuations has been seen, allowing our NAV to recover some
ground lost against the benchmarks. The Managing Director gives an overview of
Geron Corporation in the investment focus that follows.

Outlook

With the turmoil in credit markets continuing for longer than perhaps expected
despite early and significant intervention by the authorities in the USA, the
short term outlook remains decidedly uncertain for almost all forms of
investment as confidence even between leading lending institutions remains
extremely fragile. It is clear from recent actions that the financial
authorities in the USA will take all and any measures necessary to ensure that
financial markets stabilise and reopen for normal business; however, until a
degree of clarity emerges in the exposures of lending institutions to doubtful
debts and investments, financial markets will remain extremely difficult and
volatile. This situation could easily continue for the greater part of the
current year. Our own equity-focused investment strategy is based on long-term
and income generating strategies in the UK and USA in quoted investments with
underlying exposures to many world economies. This strategy remains relevant in
current conditions and we look forward to the eventual return to normality in
financial markets.

As at 25 April 2008, group net assets had decreased to £38.5 million, a
decrease of 2.8 percent since the beginning of the calendar year. This is
equivalent to 114 pence per share (prior charges deducted at par) and 110 pence
per share on a diluted basis. Over the same period the FTSE 100 decreased 6.3
percent and the All Share Index decreased 6.3 percent.

Anthony Townsend

29 April 2008

Managing Director's report

Performance

As reported at the interim stage, strong gains in equity returns in the UK and
USA were recorded in the first half of 2007 of 6 and 8 percent, respectively.
However, growing concerns surrounding the US housing market and the
widely-traded structured loan market based thereon began to be foreshadowed at
the time through a significant rise in equity market volatility. These fears
were finally realised in August when credit markets in the USA and the UK
seized up as the extent of banks' exposures to and potential losses on these -
and later other - structured investments began to be made known. A serious
collapse in market confidence followed, resulting in the UK in the first run on
a major retail bank for almost 100 years. This deteriorating situation prompted
a series of emergency monetary interventions by the Federal Reserve, the Bank
of England and the European Central Bank in the Autumn and into 2008 on a scale
and in a fashion not seen before. These measures were designed to restore
confidence and provide liquidity to banks and financial institutions which were
unwilling to lend to each other. However, what started as a liquidity crisis
developed towards the end of the year into a solvency crisis as banks were
forced to write down the value of their exposures to these and other structured
investments. This provoked the failure of a small number of banks and some
hedge funds in the UK, USA and Europe and the central banks sought to restore
confidence and prevent further bank failures through large-scale operations in
the wholesale financial markets. This included acquiring for cash previously
unacceptable assets, underwriting the takeover of some weaker institutions and,
in the case of the UK, publicly acquiring one of the largest high street
mortgage banks. In addition, some of the most affected banks including the
world's largest commercial and investment banks, sought large capital
injections from new investors including for the first time sovereign wealth
funds.

Against this backdrop of disruption in the credit markets in the second half of
the year, equity markets in the UK and USA gained by 4.5 percent and 6.4
percent, respectively, for the year as a whole. This growth was provided almost
totally by the commodities and oils sectors in the face of significant declines
in most other sectors, particularly financials and retailers as the effects of
the financial crisis and its subsequent effects on the real economies began to
be understood. Given the high weightings of commodities stocks in the leading
companies indices and also a noticeable move by investors towards higher
capitalisation stocks in times of investment uncertainty, the FTSE 100 index in
the UK outperformed the All Share index in 2007 for the first time in over 10
years.

Under the circumstances, this overall result in equity markets was unexpectedly
firm. The performance of investment funds, however, including investment
trusts, significantly lagged the main equity benchmarks for the year with the
generalist investment trust index falling by approximately 4 percent as retail
investment inflows began to falter. As noted above, our portfolio declined by
16.8 percent, the main contributor to this being a drop in value of Geron
Corporation, our largest investment, by 38% in US$ terms and 2% in respect of
weakness in the US dollar, giving rise to significant underperformance by the
portfolio overall. Since the year end the valuation of Geron has outperformed
the benchmark and has allowed our overall portfolio valuation to recover some
of the ground lost to the benchmarks in 2007.

Outlook

Since the year end, the continuing disruption in credit markets has resulted in
steep falls in all developed country equity markets. In the first quarter,
equity markets in the US and UK fell by approximately 7.6 percent and 12.3
percent, respectively. At the time of writing, transparency in banks' exposures
to derivative investment losses has not yet been fully achieved and further
rounds of asset value writedowns by leading banks are still expected by the
markets. As a result, the major credit markets remain disrupted and equity
markets continue to show extreme volatility. Although central banks and
particularly the Federal Reserve remain ready to continue an aggressive
programme of intervention, many traditional measures such as discount/bank rate
reductions are not being fully reflected in the retail credit markets because
of the lack of confidence in the interbank market. In addition, further
aggressive loosening of monetary policy is constrained by above target and
growing levels of inflation. Investors, therefore, both in securities and real
assets are finding continuing difficulty in financing their operations and
central banks are increasingly relying more on non-traditional avenues to
stabilise the market such as opening the discount windows to a wider range of
assets and lending institutions. Furthermore, governments, particularly in the
UK, also find themselves with fewer alternatives to control events through
fiscal intervention because of constraints imposed by the budgetary imbalances
which have built up over recent years. Against this background and the lower
levels of economic activity expected in the coming year as already seen in the
increased numbers of profit warnings from major corporates including
non-financials, equity markets are likely to remain uncertain for a
considerable period in the current year. With the likely continued reduction in
interest rates and other monetary loosening over the coming months, value
should return as the disruption to the credit markets subsides and companies
can focus again on the medium term. At that time, opportunities to lock in good
long-term investment returns should present themselves again.

Investment Focus

Set out below are brief comments on three of the largest holdings in the
portfolio which are considered core holdings:

Geron Corporation Inc is a NASDAQ listed bio-medical company based in
California and currently represents 15.85 percent of the portfolio. The market
capitalisation is US$ 395 million. As an early stage bio-pharmaceutical company
with limited current earnings, Geron's share price has been subject to
considerable volatility. The 12 and 36 month share price highs have been $9.32
and $11.22, and lows $4.12 and $4.12, respectively, compared to the current
price of $5.05.

Over a period of 15 years, the company has discovered and patented a new form
of science based around embryonic stem cell technology which has the potential
to revolutionise the practice of medicine in the coming years, in particular in
the areas of oncology and regenerative medicine. Geron's technology covers a
broad range of platforms to treat a wide range of conditions including multiple
cancer types, spinal cord injury, heart failure, diabetes, Parkinson's disease
and HIV. Geron is currently conducting multiple clinical trials in the USA of
both its cancer vaccine and inhibition technologies and is expected this year
to commence the world's first embryonic stem cell trial for spinal cord injury.

In addition, through its ownership of the cloning technology used in the
creation of Dolly the sheep, Geron has licensed rights to the procedures
involved in the globally important markets of animal reproduction,
bio-agribusiness, and other biotechnology sourced products and medicines.
Following recent clearance by the FDA in the USA after a multi-year
investigation into the safety of foods originated from cloned animals, the
market for such products is now expected to commence in earnest and grow
substantially.

The company's discoveries are protected by a world-wide patent estate and it
has already concluded collaborative/licensing agreements with a number of
leading international pharmaceutical and biomedical companies and institutions
including Merck, Roche, Procter & Gamble, Corning and Edinburgh and Oxford
Universities. Stem cell science is still in its infancy and, in the USA in
particular, has been subject to a large amount of adverse political pressure
from an anti-science administration. This interference has had the effect of
holding back the industry in the USA by a considerable number of years but
ironically it has also allowed Geron to pursue, develop and patent its
discoveries using its own private resources and thereby gain a pre-eminent
position in this new market which would have been impossible if the usual
supply of public and university funding had been allowed to be applied to this
new branch of medicine. Your company remains convinced that Geron is therefore
in a unique position to capitalise on what is expected to be a very significant
and highly valuable new branch of medical science and we intend to hold this
investment until its potential is recognised in its market value.

Prudential PLC is one of the largest UK listed life assurance companies
operating in the UK and internationally in savings, pension provision and fund
management with a market capitalisation of £16 billion. Our investment
represents 10.61 percent of the portfolio. The 12 and 36 month share price
highs have been 811p and 811p and lows 573p and 463p, respectively, compared to
the current price of 700p, yielding 2.6 percent and a P/E of 21.2.

Prudential derives 34% of its long-term operating profits in the UK, 25% in the
USA and 41% in Asia. In the UK it has £167 billion of funds under management
through M&G Investments.

Life assurance, pension provision and fund management are recognised to be
global growth industries as populations worldwide increase, mature and age. The
fast pace of population development in the Far East in particular and the
growing shift of global capital away from the West to the East is likely to
yield significant growth opportunities for financial service companies in the
East and Prudential is well represented in all the major countries of the
region including, Hong Kong and China, India, Japan, Korea Malaysia, Singapore
and Thailand to take advantage of this.

Finally, in addition to the fundamental growth potential of this investment
noted above, there remains the possibility that the significant inherited
estate in the UK life assurance company may be reattributed between policy
holders and shareholders, yielding a substantial windfall bonus to shareholders
at some date in the future.

RIT Capital Partners plc (`RIT') is a UK listed investment trust investing to
deliver long-term capital growth in a widely diversified international
portfolio of both quoted and unquoted investments and third party funds. As at
30th September 2007 funds under management totalled £1.9 billion. The current
share price premium is 2.8 percent, which compares to an average discount of
5.7 percent for its AIC sector and is an indication of investor esteem placed
in this company. The 12 and 36 month share price highs have been £11.98 and £
11.98, and lows £9.85 and £6.86, respectively, compared to the current price of
£11.68 yielding 0.3 percent.

RIT has significantly outperformed the AIC international growth sector and its
benchmarks of Morgan Stanley Capital International and FTSE All Share indices
over 1,3,5 and 10 years and is placed in the top two of its AIC grouping over
all periods.

As at the last report date, the majority of the portfolio (51%) was invested in
quoted investments, 22% in unquoted securities and partnerships, 15% in long
equity funds and 8% in government securities, money market funds and property.
Individual investments vary widely in terms of their underlying industry,
currency, investment type and nationality and together make up a portfolio of
widely diversified international holdings which have served to outperform
consistently all relevant capital growth indices for many years.

Jonathan Woolf

29 April 2008

Consolidated income statement

For the year ended 31 December 2007

                                                   2007                       2006
                                                                                  
                             Revenue  Capital    Total  Revenue  Capital    Total 
                              return   return            return   return          
                                                                                  
                                £000     £000     £000     £000     £000     £000 
                                                                                  
Investment income (note 2)     1,939        -    1,939    2,105        -    2,105 
                                                                                  
(Losses)/gains on fair                                                            
value through profit or            -  (7,278)  (7,278)        -    5,159    5,159 
loss assets - unrealised                                                          
                                                                                  
(Losses)/gains on fair                                                            
value through profit or            -    (264)    (264)        -       97       97 
loss assets - realised                                                            
                                                                                  
Expenses                       (299)    (158)    (457)    (276)    (150)    (426) 
                                                                                  
                            ________ ________ ________ ________ ________ ________ 
                                                                                  
                                                                                  
(Loss)/profit before tax       1,640  (7,700)  (6,060)    1,829    5,106    6,935 
                                                                                  
Tax                             (44)        -     (44)     (15)        -     (15) 
                                                                                  
                            ________ ________ ________ ________ ________ ________ 
                                                                                  
                                                                                  
(Loss)/profit for the          1,596  (7,700)  (6,104)    1,814    5,106    6,920 
period                                                                            
                                                                                  
                            ________ ________ ________ ________ ________ ________ 
                                                                                  
Earnings per share                                                                
                                                                                  
Basic - ordinary shares        4.98p (30.80)p (25.82)p    5.85p   20.43p   26.28p 
                                                                                  
                            ________ ________ ________ ________ ________ ________ 
                                                                                  
Diluted - ordinary shares      4.56p (22.00)p (17.44)p    5.18p   14.59p   19.77p 
                                                                                  
                            ________ ________ ________ ________ ________ ________ 
                                                                                  

The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS. The supplementary revenue return and capital
return columns are both prepared under guidance published by the Association of
Investment Companies. All items in the above statement derive from continuing
operations.

All income is attributable to the equity holders of the parent company. There
are no minority interests.

Consolidated statement of changes in equity

For the year ended 31 December 2007

                                      Share  Capital    Capital Retained    Total
                                    capital  reserve    reserve earnings         
                                            realised unrealised                  
                                                                                 
                                       £000     £000       £000     £000     £000
                                                                                 
Balance at 31 December 2005          35,000   15,141    (9,676)    2,300   42,765
                                                                                 
Changes in equity for 2006                                                       
                                                                                 
Profit for the period                     -    2,013      3,093    1,814    6,920
                                                                                 
Ordinary dividend paid (note              -        -          -  (1,688)  (1,688)
4)                                                                               
                                                                                 
Preference dividend paid                  -        -          -    (350)    (350)
(note 4)                                                                         
                                                                                 
                                   ________ ________   ________ ________ ________
                                                                                 
Balance at 31 December 2006          35,000   17,154    (6,583)    2,076   47,647
                                                                                 
Changes in equity for 2007                                                       
                                                                                 
Profit for the period                     -    1,126    (8,826)    1,596  (6,104)
                                                                                 
Ordinary dividend paid (note              -        -          -  (1,550)  (1,550)
4)                                                                               
                                                                                 
Preference dividend paid                  -        -          -    (350)    (350)
(note 4)                                                                         
                                                                                 
                                   ________ ________   ________ ________ ________
                                                                                 
Balance at 31 December 2007                                                      
                                     35,000   18,280   (15,409)    1,772   39,643
                                                                                 
                                   ________ ________   ________ ________ ________

Consolidated Balance Sheet

For the year ended 31 December 2007

                                                                          Group
                                                                               
                                                          2007             2006
                                                                               
                                                          £000             £000
                                                                               
Non-current assets                                                             
                                                                               
Investments - fair value through profit or              37,901           45,876
loss                                                                           
                                                                               
                                                                               
Current assets                                                                 
                                                                               
Receivables                                              1,073              553
                                                                               
Cash and cash equivalents                                1,846            1,554
                                                                               
                                                    __________       __________
                                                                               
                                                         2,919            2,107
                                                                               
                                                    __________       __________
                                                                               
Total assets                                            40,820           47,983
                                                                               
                                                    __________       __________
                                                                               
Current liabilities                                    (1,177)            (336)
                                                                               
                                                    __________       __________
                                                                               
Total assets less current liabilities                   39,643           47,647
                                                                               
                                                    __________       __________
                                                                               
Net assets                                              39,643           47,647
                                                                               
                                                    __________       __________
                                                                               
Equity attributable to equity holders                                          
                                                                               
Ordinary share capital                                  25,000           25,000
                                                                               
Convertible preference share capital                    10,000           10,000
                                                                               
Capital reserve - realised                              18,280           17,154
                                                                               
Capital reserve - unrealised                          (15,409)          (6,583)
                                                                               
Retained earnings                                        1,772            2,076
                                                                               
                                                    __________       __________
                                                                               
Total equity                                            39,643           47,647
                                                                               
                                                    __________       __________

Approved: 29 April 2008

Consolidated cash flow statement

For the year ended 31 December 2007

                                                          Year ended Year ended
                                                                2007       2006
                                                                               
                                                                £000       £000
                                                                               
CASH FLOWS FROM OPERATING ACTIVITIES                                           
                                                                               
(Loss)/profit before tax                                     (6,060)      6,935
                                                                               
Adjustments for:                                                               
                                                                               Loss/(gain) on investments                                     7,542    (5,256)
                                                                               
Scrip dividends and interest                                     (6)       (27)
                                                                               
Film income tax deducted at source                               (3)        (4)
                                                                               
Proceeds on disposal of investments                           13,864     20,510
at fair value through profit and loss                                          
                                                                               
Purchases of investments at fair                            (12,867)   (19,452)
value through profit and loss                                                  
                                                                               
                                                          __________ __________
                                                                               
Operating cash flows before movements                          2,470      2,706
in working capital                                                             
                                                                               
(Increase)/decrease in receivables                             (115)         13
                                                                               
Decrease in payables                                           (148)    (2,305)
                                                                               
                                                          __________ __________
                                                                               
Net cash from operating activities                             2,207        414
before income taxes                                                            
                                                                               
Income taxes paid                                               (15)       (85)
                                                                               
                                                          __________ __________
                                                                               
NET CASH FLOWS FROM OPERATING                                  2,192        329
ACTIVITIES                                                                     
                                                                               
                                                          __________ __________
                                                                               
CASH FLOWS FROM FINANCING ACTIVITIES                                           
                                                                               
Dividends paid on ordinary shares                            (1,550)    (1,688)
                                                                               
Dividends paid on preference shares                            (350)      (350)
                                                                               
                                                          __________ __________
                                                                               
NET CASH USED IN FINANCING ACTIVITIES                        (1,900)    (2,038)
                                                                               
                                                          __________ __________
                                                                               
NET INCREASE/(DECREASE) IN CASH AND                                            
CASH EQUIVALENTS                                                 292    (1,709)
                                                                               
CASH AND CASH EQUIVALENTS AT                                                   
BEGINNING OF YEAR                                              1,554      3,263
                                                                               
                                                          __________ __________
                                                                               
CASH AND CASH EQUIVALENTS AT END OF                                            
YEAR                                                           1,846      1,554
                                                                               
                                                          __________ __________

Purchases and sales of investments are considered to be operating activities of
the company, given its purpose, rather than investing activities.

1 Basis of preparation

The financial information set out above contains the financial information of
the company and its subsidiaries (together referred to as the "Group") for the
year ended 31 December 2007. The financial statements have been prepared on the
historical cost basis except for the measurements at fair value of investments
and derivative financial instruments and the inclusion of a subsidiary at cost.
The same accounting policies as those published in the statutory accounts for
31 December 2006 have been applied.

The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2007 or 2006. Statutory
accounts for 2006, which were prepared under IFRS as adopted by the EU, have
been delivered to the registrar of companies and those for 2007, prepared under
IFRS as adopted by the EU, will be delivered in due course.

The auditors have reported on the 31 December 2007 year end accounts and their
reports were unqualified and did not include references to any matters to which
the auditors drew attention by way of emphasis without qualifying their reports
and did not contain statements under section 237(2) or (3) of the Companies Act
1985.

2 Income

                                                                              
                                                              2007        2006
                                                                              
                                                              £000        £000
                                                                              
Income from investments                                                       
                                                                              
UK dividends (cash and specie)                              1,296       1,590 
                                                                              
Overseas dividends                                             11          11 
                                                                              
Scrip dividends                                                 4           4 
                                                                              
Interest on fixed income                                      153         130 
securities                                                                    
                                                                              
Rental income (PID)                                            59           - 
                                                                              
Property unit trust income                                    101         100 
                                                                              
Film revenues                                                 238         185 
                                                                              
                                                        __________  __________
                                                                              
                                                             1,862       2,020
                                                                              
                                                        __________  __________
                                                                              
Other income                                                                  
                                                                              
Deposit interest                                               95         101 
                                                                              
Other                                                         (18)        (16)
                                                                              
                                                        __________  __________
                                                                              
                                                                77          85
                                                                              
                                                        __________  __________
                                                                              
Total income                                                 1,939       2,105
                                                                              
                                                        __________  __________
                                                                              
                                                                              
                                                                              
Total income comprises:                                                       
                                                                              
Dividends                                                   1,370       1,605 
                                                                              
Interest                                                      248         231 
                                                                              
Film revenues                                                 238         185 
                                                                              
Property unit trust income                                    101         100 
                                                                              
Loss on foreign exchange                                      (18)        (16)
                                                                              
                                                        __________  __________
                                                                              
                                                             1,939       2,105
                                                                              
                                                        __________  __________
                                                                              
Income from investments                                                       
                                                                              
Listed investments                                          1,469       1,664 
                                                                              
Unlisted investments                                          393         356 
                                                                              
                                                        __________  __________
                                                                              
                                                             1,862       2,020
                                                                              
                                                        __________  __________

Of the £1,311,000 (2006: £1,605,000) dividends received in the group accounts,
£468,000 (2006: £686,000) related to special dividends received from investee
companies. There was a corresponding capital loss of £445,000 (2006: £587,000).

3 Earnings per ordinary share

The calculation of the basic and diluted earnings per share is based on the
following data:

                                        2007                                2006
                                                                                
               Revenue    Capital      Total     Revenue     Capital       Total
                return     return                 return      return            
                                                                                
                  £000       £000       £000        £000        £000        £000
                                                                                
Earnings:                                                                       
                                                                                
Basic           1,246    (7,700)    (6,454)       1,464       5,106       6,570 
                                                                                
Preference                                                                      
dividend          350          -        350         350           -         350 
                                                                                
            __________ __________ __________  __________  __________  __________
                                                                                
Diluted          1,596    (7,700)    (6,104)       1,814       5,106       6,920
                                                                                
            __________ __________ __________  __________  __________  __________

Basic revenue, capital and total return per ordinary share is based on the net
revenue, capital and total return for the period and after deduction of
dividends in respect of preference shares and on 25 million (2006: 25 million)
ordinary shares in issue.

The diluted revenue, capital and total return is based on the net revenue,
capital and total return for the period and on 35 million (2006: 35 million)
ordinary and preference shares in issue.

4 Dividends

                                                              2007        2006
                                                                              
                                                              £000        £000
                                                                              
Amounts recognised as distributions to equity holders                         
in the period:                                                                
                                                                              
Dividends on ordinary shares:                                                 
                                                                              
Final dividend for the year ended 31 December 2006 of                         
3.5p (2005:3.25p) per share                                    875         813
                                                                              
Interim dividend for the year ended 31 December 2007                          
of 2.7p                                                        675         625
(2006:2.5p) per share                                                         
                                                                              
Special dividend for the year ended 31 December 2007                          
of 0.0p (2006:1.0p) per share                                    -         250
                                                                              
                                                        __________  __________
                                                                              
                                                             1,550       1,688
                                                                              
                                                        __________  __________
                                                                              
Proposed final dividend for the year ended 31 December                        
2007 of 3.7p (2006:3.5p) per share                             925         875
                                                                              
                                                        __________  __________
                                                                              
Dividends on 3.5% cumulative convertible preference                           
shares:                                                                       
                                                                              
Preference dividend for the 6 months ended 31 December                        
2006 of 1.75p (2005:1.75p) per share                           175         175
                                                                              
Preference dividend for the 6 months ended 30 June                            
2007 of 1.75p (2006:1.75p) per share                           175         175
                                                                              
                                                        __________  __________
                                                                              
                                                               350         350
                                                                              
                                                        __________  __________
                                                                              
Proposed preference dividend for the 6 months ended 31                        
December 2007 of 1.75p (2006:1.75p) per share                  175         175
                                                                              
                                                        __________  __________
                                                                              

The proposed final dividend is subject to approval by shareholders at the
Annual General Meeting and has not been included as a liability in these
financial statements in accordance with IFRS.

We also set out below the total dividend payable in respect of the financial
year, which is the basis on which the retention requirements of Section 842
Income and Corporation Taxes Act 1988 are considered.

                                                                              
                                                              2007        2006
                                                                              
                                                              £000        £000
                                                                              
Dividends on ordinary shares:                                                 
                                                                              
Interim dividend for the year ended 31 December 2007                          
of 2.7p (2006:2.5p) per share                                  675         625
                                                                              
Special dividend for the year ended 31 December 2007                          
of 0.0p (2006:1.0p) per share                                    -         250
                                                                              
Proposed final dividend for the year ended 31 December                        
2007 of 3.7p (2006:3.5p) per share                             925         875
                                                                              
                                                        __________  __________
                                                                              
                                                             1,600       1,750
                                                                              
                                                        __________  __________
                                                                              
Dividends on 3.5% cumulative convertible preference                           
shares:                                                                       
                                                                              
Preference dividend for the 6 months ended 30 June                            
2007 of 1.75p (2006:1.75p) per share                           175         175
                                                                              
Proposed preference dividend for the 6 months ended 31                        
December 2007 of 1.75p (2006:1.75p) per share                  175         175
                                                                              
                                                        __________  __________
                                                                              
                                                               350         350
                                                                              
                                                        __________  __________

5 Net asset values

                                               Net asset              Net assets
                                               value per            attributable
                                                   share                        
                                                                                
                                         2007       2006       2007         2006
                                                                                
                                            £          £       £000         £000
                                                                                
Ordinary shares                                                                 
                                                                                
Undiluted                                1.19       1.51     29,643       37,647
                                                                                
Diluted                                  1.13       1.36     39,643       47,647

The undiluted and diluted net asset values per £1 ordinary share are based on
net assets at the year end and 25 million (undiluted) ordinary and 35 million
(diluted) ordinary and preference shares in issue.

British & American Investment Trust PLC

British & American Investment Trust PLC


                                                                                     

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