British & American Investment Trust : Reporting Dpcument

British & American Investment Trust PLC

Annual Financial Report for the year ended 31 December 2021

Registered number: 00433137

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 until 7 February	Telephone: [phone]
2022)
Alex Tamlyn (Non-executive and acting Chairman of the Audit Committee)	Registered in England
Julia Le Blan (Non-executive from 1 June 2022)	No.00433137
28 April 2022

This is the Annual Financial Report as required to be published under DTR 4 of the UKLA Listing Rules.

Financial Highlights

For the year ended 31 December 2021

2021

2020

Profit/(loss) before tax - realised

Profit before tax - unrealised

Profit before tax - total

Earnings per £1 ordinary share - basic

Earnings per £1 ordinary share - diluted

Net assets

Net assets per ordinary share

• - deducting preference shares at fully diluted net asset value*

• - diluted

Diluted net asset value per ordinary share at 25 April 2022

Dividends declared or proposed for the period: per ordinary share - interim paid - final proposed per preference share

Revenue return £000 978

- __________

978 __________

2.66p __________

2.90p __________

Capital return £000

(810)

£000 168 1,028

TotalRevenue return £000 879

__________ __________ __________

1,028

-

__________ __________ __________

218

1,196

879

__________ __________ __________

0.87p

3.53p

2.23p

_________ __________ __________

0.62p

1,388 1,388 __________ __________

158 1,037 __________ __________

0.63p 2.86p __________ __________

3.52p

2.59p

0.45p 3.04p _________ __________

__________

6,727 6,720

__________

__________ __________

19p 19p

19p 19p

17p __________

3.5p 2.7p

0.0p 0.0p

3.5p 1.75p

*Basic net assets are calculated using a value of fully diluted net asset value for the preference shares.

Capital returnTotal

£000 £000

(1,230) (351)

__________ __________

Chairman's Statement

I report our results for the year ended 31 December 2021.

Revenue

The return on the revenue account before tax amounted to £1.0 million (2020: £0.9 million), similar to 2020 but a significantly lower level from prior years when higher levels of dividends from external investments were being received and the portfolio value was higher. In 2021, a large majority of dividend income was received from our subsidiary companies in accordance with our strategy of realising gains when available on our principal US investments for later distribution as dividends.

Gross revenues totalled £1.4 million (2020: £1.4 million). In addition, film income of £171,000 (2020: £84,000) and property unit trust income of £2,000 (2020: £14,000) was received in our subsidiary companies. This reduction in property income reflected the sale of one of our investments during the year. In accordance with IFRS10, these income streams are not included within the revenue figures noted above.

The total return before tax amounted to a profit of £1.2 million (2020: £1.0 million profit), which comprised net revenue of £1.0 million, a realised loss of £0.8 million and an unrealised gain of £1.0 million. The revenue return per ordinary share was 2.7p (2020: 2.2p) on an undiluted basis and 2.9p (2020: 2.6p) on a diluted basis.

Net Assets and Performance

Net assets at the year end were £6.7 million (2020: £6.7 million), unchanged after payment of £0.9 million in dividends to shareholders during the year. This compares to increases in the FTSE 100 and All Share indices of 14.3 percent and 14.5 percent, respectively, over the period. On a total return basis, after adding back dividends paid during the year, our net assets increased by 18.3 percent compared to increases of 18.4 percent and 18.3 percent in the FTSE 100 and All Share indices, respectively.

During this second year of significant disruption due to the Covid pandemic, when markets rallied strongly from the substantial falls of the previous year, we were able to match these gains on a total return basis while also returning cash via dividends to shareholders at more than three times the market level of return. This was made possible by a second year of substantial gains in sterling terms (over 40 percent in 2021 and 60 percent in 2020) in one of our two largest US investments, Lineage Cell Therapeutics Inc (a combination of two previously held regenerative medicine stem cell companies, Biotime Inc and Asterias Biotherapeutics Inc). This was despite losses of over 20 percent in the year in the value of our other large US investment, Geron Corporation. In addition, a periodic and independent revaluation of the feature films held in our subsidiary company, yielded a favourable upwards revaluation based on the strength and consistency of historic revenues and the buoyant market conditions in recent years for intellectual copyright content such as films and music.

More generally, equity markets in the USA and UK continued to build strongly and consistently in the second half of 2021 on the recovery seen in the first half, as reported on at length at the interim stage. The highly successful global vaccination programme initiated at the beginning of the year allowed the social and corporate disruptions of the previous year gradually to bemitigated and markets and leading economy GDPs mostly regained their pre-Covid levels, which at the time had been at all time highs, at varying stages during the year. In addition, central banks kept interest rates at their historically low levels for longer than expected and only in recent months have begun what is likely to be an extended process of returning rates closer to more normal levels.

The list of structural damage and disruption to economies and societies caused by the Covid pandemic is extremely long and widespread. It includes permanently lost production, substantially increased levels of government and private debt, increased fiscal deficits, higher taxes, significantly higher levels of inflation leading to severe cost of living pressures particularly related to energy prices, employment shortages, long-term disruption or alteration to supply lines, trade, travel, working practices and the creation of asset bubbles in sectors such as housing and natural resources.

However, all consideration of these many problems has been recently and substantially overshadowed by Russia's invasion of Ukraine in February 2022, representing an unacceptable and unprovoked challenge to the global rules-based system which has been in place since the Second World War. The immediately resulting economic and humanitarian effects have already been substantial. The unprecedentedly severe sanctions swiftly imposed by Western countries on Russia in response to limit and ultimately deter its illegal war of aggression will inevitably have substantial global consequences for a considerable period to come, whatever the final military outcome. This includes a major recalibration after many years of relative weakness in the West's defensive posture through NATO and a potential re-alignment of global alliances and operations giving rise to political, strategic, economic and social effects for years if not generations to come, even if a more wide-scale European conflict can be avoided.

Dividend

In 2021, dividends of 3.5 pence per ordinary share and 3.5 pence per preference share were paid as two interim payments during the year. This represented an increase of 30 percent for ordinary shareholders over the previous year and a yield of approximately 11 percent on the ordinary share price averaged over a period of 12 months.

It is our intention to pay further interim dividends this year as close as possible in amount and timing to the dividends paid in 2021, as and when the profitable sales of investments permit. The position regarding these investments is set out in more detail in the Managing Director's report below.

Board of Directors

On 10th February 2022, we sadly announced the untimely death of Dominic Dreyfus, non-executive director since 1995 and chairman of the Audit Committee since its formation in 2001.

He had battled for some time with his illness and throughout continued to show the great sense of duty, commitment and professionalism which had marked his long and successful time on our board and as an exceptional chairman of our Audit Committee. He will be greatly missed by the board and his other colleagues.

On 27th April 2022, we were pleased to announce the appointment of Julia Le Blan as a non-executive director and chairman of the Audit Committee with effect from 1st June 2022. Julia is achartered accountant and has worked in the financial services industry for over 30 years. She was formerly a partner at Deloitte with particular familiarity with the investment trust industry, having sat for two terms on the AIC's technical committee. Julia is currently a director of the Biotech Growth Trust plc and Aberforth Smaller Companies Trust plc.

Recent events and outlook

The long list of problems enumerated above which have piled up following two years of Covid pandemic would have provided uncertainty enough from an investment perspective, but now markets are faced with the first major war of aggression on the continent of Europe by a nuclear-armed superpower, seemingly intent on prosecuting its aims at no matter what cost to civilians, the world order, peace and indeed itself.

Even at this early stage it is evident that very little will stay the same in terms of global relationships, trade and supply lines which have formed the engine of world growth over the last decades. Recent projections from the World Trade Organisation (WTO) and the IMF, for example, cut their estimates of world trade growth for the current year by between a third and a half due to the war and are forecasting a cut to world GDP of approximately 1 percent, representing a decline of over one quarter. And there is no reason to expect that such effect on world growth will be limited to the current year given the likely long term and widespread effects of the war on so many aspects of international behaviour and endeavour.

Nevertheless, after a short and sharp reversal of up to 8 percent in February at the outbreak of the war, equity markets (except in Russia and in China for other reasons) resumed their steady climb by the end of the first quarter to regain their pre-Covid levels in the UK if not exactly so in the USA. The continued ultra-low interest rate regimes in developed countries and a newly adopted expectation that rates may not now be raised as high or as quickly as previously thought to combat the currently high levels of inflation because of the war has contributed to this persistent strength in the markets.

Despite this seeming steadfastness in major markets in the face of these challenges, to say nothing of the fact that Covid continues to remain a strong and disruptive threat in many parts of the world, particularly in China, we cannot ignore these major challenges going forward and will continue to limit our activities and major focus to our US biopharma investments which do not tend to track general market movements and which we believe hold significant investment promise as they progress ever closer towards commercialisation of their ground-breaking and valuable technologies.

As at 25 April 2022, our net assets had decreased to £6.0 million, a decrease of 10.8 percent since the beginning of the calendar year. This is equivalent to 17.1 pence per share (prior charges deducted at fully diluted value) and 17.1 pence per share on a diluted basis. Over the same period the FTSE 100 decreased 0.1 percent, the All Share Index decreased 2.4 percent and NASDAQ decreased 18.8 percent.

David Seligman

28 April 2022