British & American Investment Trust : Reporting Dpcument

BRITISH & AMERICAN INVESTMENT TRUST PLC
FINANCIAL HIGHLIGHTS
For the six months ended 30 June 2021
	Unaudited	Unaudited	Audited
	6 months	6 months	Year ended
	to 30 June	to 30 June	31 December
	2021	2020	2020
	£'000	£'000	£'000
Revenue
Return before tax	1,056	989	879
	_________	_________	_________
Earnings per £1 ordinary shares - basic (note 5)	3.58p	3.31p	2.23p
	_________	_________	_________
Earnings per £1 ordinary shares - diluted (note 5)	3.06p	2.86p	2.59p
	_________	_________	_________
Capital
Total equity	7,169	7,888	6,720
	_________	_________	_________
Revenue reserve (note 9)	388	1,112	168
	_________	_________	_________
Capital reserve (note 9)	(28,219)	(28,224)	(28,448)
	_________	_________	_________
Net assets per ordinary share (note 6)
- Basic	£0.20	£0.23	£0.19
	_________	_________	_________
- Diluted	£0.20	£0.23	£0.19
	_________	_________	_________
Diluted net assets per ordinary share at 23 September 2021	£0.20
	_________
Dividends*
Dividends per ordinary share (note 4)	3.5p	2.7p	2.7p
	_________	_________	_________
Dividends per preference share (note 4)	3.5p	1.75p	1.75p
	_________	_________	_________

Basic net assets and earnings per share are calculated using a value of fully diluted net asset value for the preference shares.

*Dividends declared for the period. Dividends shown in the accounts are, by contrast, dividends paid or approved in the period.

Copies of this report will be posted to shareholders and be available for download at the company's website: www.baitgroup.co.uk.

INVESTMENT PORTFOLIO

As at 30 June 2021

Company	Nature of Business	Valuation	Percentage
			£'000	of portfolio
					%
Lineage Cell Therapeutics (USA)*	Biotechnology	2,997	23.30
Dunedin Income Growth	Investment Trust	1,575	12.25
Geron Corporation (USA)**	Biomedical	1,115	8.67
Aberdeen Diversified Income & Growth	Investment Trust	729	5.67
Relief Therapeutics (Switzerland)	Healthcare	117	0.91
		________		________
AgeX (USA)	Biotechnology	114	0.89
Audioboom Group	Media	90	0.70
ADVFN	Other financial	80	0.62
Braemar Shipping Services	Transport	79	0.61
Electra Private Equity	Investment Trust	78	0.60
		________		________
10 Largest investments (excluding subsidiaries)		6,974	54.22
Investment in subsidiaries		5,794	45.05
Other investments (number of holdings: 8)		94	0.73
		________		________
Total investments		12,862	100.00
			________			________

• Total value of investment within the group £4,674,000
• Total value of investment within the group £3,715,000

Unaudited Interim Report

As at 30 June 2021

Registered number: 433137

Directors	Registered office
David G Seligman (Chairman)	Wessex House
Jonathan C Woolf (Managing Director)	1 Chesham Street
Dominic G Dreyfus (Non-executive and Chairman of the Audit Committee)	London SW1X 8ND
Alex Tamlyn (Non-executive)	Telephone: [phone]
	Website: www.baitgroup.co.uk
CHAIRMAN'S STATEMENT
I report our results for the six months to 30 June 2021.
Revenue

The profit on the revenue account before tax amounted to £1.1 million (30 June 2020: £1.0 million), an increase of 6.8 percent and mainly comprised income received from our subsidiary companies.

Gross revenues totalled £1.29 million (30 June 2020: £1.27 million) during the period. In addition, film income of

£57,000 (30 June 2020: £29,000) and property unit trust income of £nil (30 June 2020: £7,000) was received in our subsidiary companies. In accordance with IFRS10, these income streams are not included within the revenue figures noted above.

A gain of £0.3 million (30 June 2020: £0.5 million gain) was registered on the capital account before capitalised

expenses and foreign exchange gains/losses, comprising a realised loss of £0.5 million (30 June 2020: £0.7 million

loss) and an unrealised gain of £0.8 million (30 June 2020: £1.2 million gain).

Revenue earnings per ordinary share were 3.6 pence on an undiluted basis (30 June 2020: 3.3 pence) and 3.1 pence

on a fully diluted basis (30 June 2020: 2.9 pence).

Net Assets and performance

Company net assets were £7.2 million (£6.7 million, at 31 December 2020), an increase of 6.7 percent. Over the same six month period, the FTSE 100 index increased by 8.9 percent and the All Share index increased by 9.3 percent. On a total return basis, after adding back dividends paid during the period, our net assets increased by 19.3 percent compared to equivalent increases of 10.5 percent and 11.0 percent in the FTSE 100 and All Share indices, respectively. The net asset value per £1 ordinary share was 20.5 pence on a fully diluted basis.

This total return outperformance was a function of both an increase of almost 50 percent in the price of our US investment Lineage Cell Therapeutics Inc (previously Biotime Inc) and the payment of a dividend for the 6 months at a rate of almost six times the equivalent yield on our benchmark indices. By contrast the value of our other large US investment Geron Corporation declined by 10 percent over the period, despite having advanced by up to 20 percent on two occasions during the period. The high levels of volatility which have been a hallmark of this stock for many years continued in the first half and on one occasion in June daily trading volume reached 150 times average levels over two days and the stock price increased by 60 percent. Perversely, the company's board chose not to comment on this most unusual and unexplained movement, thereby risking a false market in the stock at the time.

Despite the continuation of the worldwide Covid-19 crisis into a second year in 2021, and in many cases with an intensification of its reach and effects, equity markets in the USA and UK performed strongly in the first half of the year. The leading stocks index in the UK rose steadily from almost the beginning of the year, recovering from the severe Covid-19 induced falls of the second quarter of 2020 to regain a level only 10 percent below its all time high. In the USA, leading stocks had regained their all time high in November 2020 and have moved steadily up since, reaching new highs every month in 2021. By the half year, they had reached 17 percent above the previous all time high struck in February 2020, just before the Covid-19sell-off.

The enormous success of the worldwide Covid-19 vaccine programme, reducing infection rates and saving countless lives, has been the dominant driver of this continuing and somewhat surprising continued strength in equity markets, despite the arrival of new and more virulent virus variants and stubbornly high hesitancy in vaccine take-up in some places, including in the USA. In addition, central banks have kept interest rates at their historically low levels for a further and unexpectedly extended period of time to mitigate the damaging effects of the pandemic on businesses and societies worldwide.

This strong equities performance also reflects the bounce-back in developed economy GDP since the precipitous falls of 2020. Despite continuing systemic inefficiencies arising from home-working, disruption to trade and travel restrictions, corporate profitability in many sectors has begun to grow again, with the notable exception of the tourism and travel-related sectors and industries with particular trade or supply related problems such as semiconductors and as a consequence automobiles. Generally, however, and with some recalibration of the social effects of the pandemic, economies have gradually returned to a more normal basis of operation as the protection afforded by the vaccine programme has provided much needed confidence to businesses and individuals. This has been further supported by continued levels of government financial and fiscal support which have prevented many insolvencies and a collapse in employment levels. In fact in recent months, employment vacancies, particularly in the UK possibly also due to other factors such as Brexit, have grown strongly, surpassing pre-Covid-19 levels. Perversely, there are now concerns that these high levels of unfilled employment demand, particularly in the transport and hospitality sectors, will begin to adversely impact the economic recovery which in the UK was the strongest of all G7 countries in the second quarter.

These swift recoveries from the ravages caused by the Covid-19 pandemic are of course welcome. However, as this initial bounce-back from the worst of the pandemic eases, the disruption to the underlying global financial architecture which the pandemic has caused will remain to be tackled over the medium term and these are likely to put pressure on economic growth going forward. Unprecedented levels of government borrowing and fiscal deficits will have to be repaired with higher personal or more broadly based corporate taxes, and the now rapidly increasing levels of inflation will have to be tamed by increases in interest rates from their historic low levels and the withdrawal of quantitative easing measures after many years of highly accommodative monetary policy.

In addition to addressing these longer term economic and financial issues, there continues to be great and growing pressure on governments to address the other fundamental issues facing the world, such as climate change, energy and resource sustainability and security, the growing sense of social inequality and instability in international relations, all of which are likely to involve cost and drag on economic growth in the short to medium term until the undoubted long-term benefits of tackling these challenging issues can be reaped.

Dividends

We intend to pay a second interim dividend of 0.8 pence per ordinary share for the year to 31st December 2021 on 9th December 2021. When added to the first interim dividend of 2.7 pence per ordinary share paid on 24th June for the year to 31st December 2021 this totals 3.5 pence per ordinary share, equivalent to the annual dividend on our 3.5 percent preference shares. A preference dividend of 1.75 pence per preference share was also paid on 24th June 2021 and a further preference dividend of 1.75 pence per preference share will be paid on 9th December 2021.

The first interim dividend payment represents a yield of approximately 9 percent on the ordinary share price averaged over the first six month period of the year.

Outlook

As reported earlier in the year, developed economies face a plethora of challenges on multiple fronts in both the short and medium term with significant economic and investment impacts. Apart from the continued evolution of the Covid-19 pandemic and the possibility that the emergency responses which have been required in the past year and a half may have to be further extended, the recent strong advances in inflation, the unprecedented levels of government debt and deficits and growing geopolitical uncertainties at a time when the international policy and strategy of the new US administration is still being formed will likely weigh heavily on the prospects of a further long term bull market after the current Covid-19 shock recovery has run its course.

Having trimmed some of our general sterling based investments over the last two years which we do not expect to replace in the foreseeable future, our portfolio has become more focused on our US biopharma investments which do not tend to track general market movements and which we believe hold significant investment promise as they progress steadily towards commercialisation of their ground-breaking and valuable technologies.

As at 23 September, company net assets were £6.9 million, a decrease of 4.3 percent since 30 June. This compares with an increase in the FTSE 100 index of 0.6 percent and an increase of 1.7 percent in the All Share index over the same period, and is equivalent to 19.6 pence per share (prior charges deducted at fully diluted value) and 19.6 pence per share on a fully diluted basis.

David Seligman

29 September 2021