Interim Results - 6 Months to 31 March 2000

British Assets Trust PLC 28 April 2000 Interim Results in respect of the six months ended 31 March 2000 Strong Investment Performance - Net Asset value total return of 14.0 per cent ahead of the UK Stockmarket Total Return British Assets Trust's net asset value total return of 14.0% over the six months ended 31 March 2000 was ahead of the total return of the UK stockmarket (11.2%), as measured by the FTSE All-Share Index, and in line with the total return of its composite benchmark index (14.0%) weighted 75% FTSE All-Share Index and 25% FTSE World (ex UK) Index. Investment Performance The performance of the UK stockmarket over the six month period has been driven by low yielding stocks that are expected to benefit from the developing new technologies. Against this background, the Company did well to perform in line with its benchmark given its income requirement and the widening of the discount of the Investors Capital Trust ('ICT') units from 12.6% to 15.0%. Stock selection added value in overseas equity markets, particularly in Continental Europe where the portfolio produced a total return of 38.2% compared with its local benchmark of 21.9%. The Pacific (ex Japan) and Japanese portfolios also outperformed their local benchmarks. ICT (the Company's largest investment at 28.5% of total assets) produced a net asset value total return of 9.2% over the six months ended 31 March 2000. The Company values ICT at market price and with the volatility of the ICT discount continuing over the period this resulted in a share price total return of 6.2%. ICT has outperformed the average UK income growth trust over the last 1, 3 and 5 years. Earnings and Dividend Earnings per share for the six months to 31 March 2000 were 2.76p. The Board has declared a second interim dividend of 1.26125p on the ordinary shares of the Company (1999-1.24625p), and this will be paid on 7 July 2000 to ordinary shareholders on the register on 9 June 2000. As stated in the 1999 Annual Report ,the first three interim dividends will be paid at the rate of 1.26125p per ordinary share, being 25 per cent of the total dividend paid in respect of the year ended 30 September 1999. In the absence of unforeseen circumstances it is intended that the fourth interim dividend will be paid at a rate consistent with the objective of achieving real growth in income payable to ordinary shareholders. Revenue reserves at 31 March 2000 amounted to 5.79p per ordinary share representing 115 per cent of a year's total dividend. Gearing The level of gearing has been increased to 112% at 31 March 2000 following the drawdown of a three year Yen 4.25 billion (£24 million) loan at a fixed rate of 1.26% to finance the purchase of a portfolio of Japanese equities. Buy-Backs The Company has now bought back £30.1 million of its ordinary and growth shares since it commenced its buy back facility in May 1999. Over the reporting period, the Company bought back 10.6 million ordinary shares, 4.0 million growth shares and 8.8 million warrants, bringing the total repurchased for cancellation to 4.5%, 12.2% and 90.6% of the respective classes of security. The buy-backs are estimated to have added more than 1.2p per share to net asset value. Retail Sales The Company supported the 'its' campaign of the AITC, whose objective is to increase the public's awareness of the significant attractions of investment trusts. Over the six month period, a combination of sales to IFA clients through Friends Provident Investments products and directly through the Company's ZeroCharge Individual Savings Account and Investment Plans began to bear fruit with demand more than twice that of the corresponding period last year. Prospects Economic growth is strengthening almost everywhere and consensus forecasts are continuing to be revised upwards. Japan may prove to be an exception, but even there recent indicators are more encouraging and suggest an improvement during the first half of this year. Inflationary pressures remain muted, except in commodity markets such as oil. Even in the USA, where the current expansion is the longest on record, most key measures of inflation, including wages, remain encouraging. However, central banks are concerned about the imbalances in the economy and are expected to raise rates further as a precautionary step to prevent the emergence of inflationary pressures. The relationship between growth and inflation appears to have changed for the better. Technological change, due to the internet and e-commerce, is expected to raise the sustainable growth rate of the global economy over a prolonged period of time. Currently, we are at the early stages of the process, particularly outside the USA. In practice, provided that monetary and fiscal policy is managed responsibly, this should result in higher growth without higher inflation. This has major implications for equity markets. Under such conditions it should be possible for companies overall to sustain a high rate of earnings growth and this encourages us in our optimistic medium term view of equity markets. For further information please contact: John Stubbs: 0207 506 1100 Gordon Humphries : 0131 465 1000 Friends Ivory and Sime plc Unaudited Statement of Total Return (Incorporating the revenue account) for the 6 Months ended 31 March 2000 2000 2000 2000 Revenue Capital Total Pds '000 Pds '000 Pds '000 Gains/(losses) on investments - 69,691 69,691 Warrants purchased for cancellation - (4,251) (4,251) Exchange differences - (2,376) (2,376) Equities Index Unsecured Loan Stock - (3,169) (3,169) Income (note 7) 11,219 - 11,219 Investment management fee: Basic (421) (631) (1,052) Performance - - - Other expenses (406) - (406) --------- --------- --------- Net revenue before finance costs & taxation 10,392 59,264 69,656 Finance Costs: EIULS (345) - (345) 6.625% Bond 2008 (807) (1,212) (2,019) Other (13) (18) (31) --------- --------- --------- Return on ordinary activities before tax 9,227 58,034 67,261 Tax on ordinary activities (note 7) (517) 371 (146) --------- --------- --------- Return on ordinary activities after tax 8,710 58,405 67,115 Dividends in respect of non -equity shares - - - --------- --------- --------- Return attributable to equity shareholders 8,710 58,405 67,115 Dividends in respect of equity shares (7,766) - (7,766) --------- --------- --------- Transfer to reserves 944 58,405 59,349 --------- --------- --------- Return per ordinary share (p): Basic 2.76 15.73 18.49 Diluted - (FRS 14) 2.73 15.56 18.29 Return per growth share (p): Basic - 15.73 15.73 Diluted - (FRS 14) - 15.56 15.56 Unaudited Statement of Total Return (Incorporating the revenue account) for the 6 Months ended 31 March 1999 1999 1999 1999 Revenue Capital Total (restated) (restated) Pds '000 Pds '000 Pds '000 Gains/(losses) on investments - 110,026 110,026 Warrants purchased for cancellation - (238) (238) Exchange differences - 141 141 Equities Index Unsecured Loan Stock - (6,292) (6,292) Income (note 7) 12,213 17 12,230 Investment management fee: Basic (368) (552) (920) Performance - (33) (33) Other expenses (408) - (408) --------- --------- --------- Net revenue before finance costs & taxation 11,437 103,069 114,506 Finance Costs: EIULS (481) - (481) 6.625% Bond (807) (1,212) (2,019) Other - - - --------- --------- --------- Return on ordinary activities before tax 10,149 101,857 112,006 Tax on ordinary activities (note 7) (594) 521 (73) --------- --------- --------- Return on ordinary activities after tax 9,555 102,378 111,933 Dividends in respect of non -equity shares (88) - (88) --------- --------- --------- Return attributable to equity shareholders 9,467 102,378 111,845 Dividends in respect of equity shares (8,040) - (8,040) --------- --------- --------- Transfer to reserves 1,427 102,378 103,805 --------- --------- --------- Return per ordinary share (p): Basic 2.93 26.66 29.59 Diluted - (FRS 14) 2.90 26.38 29.28 Return per growth share (p): Basic - 26.66 26.66 Diluted - (FRS 14) - 26.38 26.38 Statement of Total Return (Incorporating the revenue account) for the Year ended 30 September 1999 1999 1999 1999 Revenue Capital Total (restated) (restated) Pds '000 Pds '000 Pds '000 Gains/(losses) on investments - 78,716 78,716 Warrants purchased for cancellation - (481) (481) Exchange differences - 56 56 Equities Index Unsecured Loan Stock - (5,535) (5,535) Income (note 7) 24,369 336 24,705 Investment management fee: Basic (785) (1,210) (1,995) Performance - - - Other expenses (581) (182) (763) ________ ________ ________ Net revenue before finance costs & taxation 23,003 71,700 94,703 Finance Costs: EIULS (887) - (887) 6.625% Bond (1,615) (2,423) (4,038) Other (7) (65) (72) ________ ________ ________ Return on ordinary activities before tax 20,494 69,212 89,706 Tax on ordinary activities (note 7 (1,291) 977 (314) ________ ________ ________ Return on ordinary activities after tax for the financial year 19,203 70,189 89,392 Dividends in respect of non - equity shares (88) - (88) ________ ________ ________ Return attributable to equity shareholders 19,115 70,189 89,304 Dividends in respect of equity shares (16,194) - (16,194) ________ ________ ________ Transfer to reserves 2,921 70,189 73,110 ________ ________ ________ Return per ordinary share (p): Basic 5.93 18.42 24.35 Diluted - (FRS 14) 5.86 18.21 24.07 Return per growth share (p): Basic - 18.42 18.42 Diluted - (FRS 14) - 18.21 18.21 Unaudited Balance Sheet As At As At As At 31.03.00 30.09.99 31.03.99 Pds '000 Pds '000 Pds '000 Fixed Assets Investments 722,865 663,210 705,231 Current Assets Debtors 24,017 12,659 13,797 Cash at bank and on deposit 17,354 5,590 4,951 --------- --------- --------- 41,371 18,249 18,748 Creditors: Amounts falling due within one year (26,806) (12,456) (12,705) ---------- ---------- ---------- Net Current Assets 14,565 5,793 6,043 --------- --------- --------- Total Assets less Current Liabilities 737,430 669,003 711,274 Creditors: amounts falling due after more than one year: 6.625% Bond 2008 (59,495) (59,464) (59,432) Equities Index Unsecured Loan Stock 2005 (34,651) (31,482) (33,116) Yen Loan 2003 (25,974) - - ---------- ---------- ---------- (120,120) (90,946) (92,548) --------- --------- --------- Total Shareholders' Funds 617,310 578,057 618,726 --------- --------- --------- Equity Shareholders' Funds 617,310 578,057 618,726 --------- --------- --------- Net Asset Value per Ordinary and Growth Share: Basic 170.6p 153.5p 161.1p Fully Diluted 169.2p 151.4p 158.6p Diluted - (FRS 14) 169.6p 151.9p 159.4p Summarised Unaudited Statement of Cash Flows Six months to Six months to Year to 31 March 31 March 30 September 2000 1999 1999 £'000 £'000 £'000 Net cash flow from operating a activities 9,876 7,603 21,485 Servicing of finance (2,288) (2,569) (4,972) Taxation 144 (432) 175 Financial investments 13,917 (7,018) 730 Equity dividends paid (8,138) (8,298) (16,338) Net cash flow before financing 13,511 (10,714) 1,080 Financing (1,443) (5,488) (16,558) Increase/(decrease) in cash 12,068 (16,202) (15,478) Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash 12,068 (16,202) (15,478) Yen 4.25 billion loan drawn down (23,902) - - Equities index loan stock purchases for cancellation - - 877 Currency (losses)/gains (2,376) 141 56 Increase in equities index loan stock liability (3,169) (6,292) (5,535) Increase in 6.625% bonds liability (31) (31) (63) Movement in net debt (17,410) (22,384) (20,143) Net debt at 1 October (85,356) (65,213) (65,213) Net debt at 31 March/30 September (102,766) (87,597) (85,356) Reconciliation of operating profit to net cash Six months to Six months to Year to flow from operating activities 31 March 31 March 30 September 2000 1999 1999 (restated) (restated) £'000 £'000 £'000 Net return before finance costs and taxation 10,392 11,437 23,003 Management fee and other expenses charged to capital (631) (585) (1,392) Stock dividends (31) (67) (100) Tax on investment income (178) (106) (483) Changes in working capital and other non-cash items 324 (3,076) 457 Net cash flow from operating activities 9,876 7,603 21,485 Notes: 1. The unaudited interim results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 30 September 1999, except as noted in note 7 below. 2. Basic revenue return per ordinary share is based on a weighted average number of ordinary shares in issue of 315,105,778 (1999: 322,560,000). Basic capital return per ordinary and growth share is based on a weighted average number of 371,409,509 ordinary and growth shares in issue (1999: 384,000,000). Diluted return per ordinary and growth share has been calculated in accordance with FRS 14 (earnings per share). 3. Earnings for the first six months should not be taken as a guide to the results of the full year. 4. The second interim dividend of 1.26125p per ordinary share will be paid on 7 July 2000 to shareholders on the register on 9 June 2000. 5. The Company has the following equity or equity related securities in issue as at 31 March 2000: 307,966,212 Ordinary Shares 53,966,726 Growth Shares 7,188,143 Warrants to subscribe for Ordinary Shares at 101 pence during the period commencing 1 July 2001 and ending on 30 September 2001. Growth Shares rank pari passu with the Ordinary Shares, except that they are not entitled to receive any dividends. Growth Shares automatically convert back to Ordinary Shares on 30 September 2001. Net Asset Value per Share is based on 361,932,938 Shares in issue, being the total number of Ordinary Shares and Growth Shares in issue. Fully diluted net asset value assumes the exercise of the warrants outstanding. The diluted net asset values are calculated in accordance with FRS 14. 6. During the six months ended 31 March 2000, the Company bought in for cancellation 10,583,788 ordinary shares for a total consideration of PDS 14,903,000: 3,958,570 growth shares for a total consideration of PDS 5,193,000 and 8,848,212 warrants for a total consideration of PDS 4,251,000. 7. In accordance with FRS 16 (current tax), franked investment income is now shown excluding any associated tax credit with a subsequent reduction in the amount of the tax charge. The effect of this change in policy is to decrease franked investment income and the tax charge by £675,000 (31 March 1999 - £1,215,000, 30 September 1999 - £2,168,000). There is no change to the return attributable to equity shareholders for any of the periods. 8. The Company's geographic exposure as a percentage of shareholders' funds at 31 March 2000 was as follows (comparative figures are for 30 September 1999). 31 March 2000 30 September 1999 UK (less Equities Index Unsecured Loan Stock) 74.8 77.5 North America 13.8 13.6 Europe 11.0 10.7 Pacific (ex Japan) 2.1 2.0 Japan 4.2 3.0 Fixed Interest/ Liquidity (5.9) (6.8) ____ ____ 100.0 100.0 9. These are not full statutory accounts in terms of Section 240 of the Companies Act 1985. The full audited accounts for the year to 30 September 1999, which were unqualified, have been lodged with the Registrar of Companies. A full interim report will be sent to shareholders in May 2000. The interim report will be available for inspection at One Charlotte Square, Edinburgh, the registered office of the Company.

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