Interim Results

Interim Report 30 June 2003 Registered number : 433137 Directors Jonathan C Woolf (Chairman and Managing Director) Dominic G Dreyfus (Non-executive) J Anthony V Townsend (Non-executive) Ronald G Paterson (Non-executive) Registered office Wessex House 1 Chesham Street London SW1X 8ND Telephone: 020 7201 3100 Chairman's Statement I report our results for the 6 months to 30 June 2003. The return on revenue account before tax amounted to £0.7million (£0.8 million). This decline was largely due to a fall in film revenues over the period as a result of a periodic upgrading of film materials by distributors to meet new transmission standards. Total return before taxation, which includes both realised and unrealised capital appreciation, recorded an increase of £1.9million (£2.9 million deficit), reflecting the recovery in equity valuations over the period, noted below. The revenue return per ordinary share was 2.1 pence on an undiluted basis (2.5 pence) and 2.0 pence on a fully diluted basis (2.3 pence). Group net assets were £30.0 million (£28.7 million at 31 December 2002), an increase of 4.4 percent. This compares to an increase over the same six month period of 2.3 percent in the FTSE 100 share index and 4.1 percent in the FTSE All Share index. The net asset value per £1 ordinary share on a fully diluted basis was 86 pence, equivalent to 80 pence (prior charges deducted at par). We intend to pay an interim dividend of 2.0 pence per ordinary share on 13 November 2003 to shareholders on the register at 17 October 2003. This represents an increase of 5.3 percent from last year's interim dividend. A preference dividend of 1.75 pence will be paid to preference shareholders on the same date. In the six months to 30 June 2003, the UK equity market experienced two distinct phases, falling by 10 percent in the first quarter to a 5 year low and recovering in the second quarter to record a small increase over the period. As already reported to you, the decline in the early part of 2003, coming after a sustained period of decline in previous years, could be primarily attributed to the hostilities in the Middle East. Following the conclusion of hostilities in the second quarter and an improvement in sentiment for growth in the USA, markets in the US and UK reversed their first quarter declines. In the UK, this improvement was particularly evident in the valuations of cyclical and second line stocks as can be seen from the relative out-performance of the FTSE All Share index compared to the FTSE 100 index noted above. Sectors which particularly benefited from this turnaround were communications, technology and retailing. Financials also recovered in anticipation of firmer markets following a general acknowledgement that the multi-year declines in equity prices had been halted. However, prices of service sector companies with exposure to the travel and hospitality industries as well as industrials and utilities remained weak. The recovery has continued strongly since the end of the second quarter with the same sectors mentioned above continuing to outperform. The improvement has been further underpinned in the USA by confirmation of the growth expectations in a number of improved profit reports and forecasts from US companies in recent weeks. The recovery is expected to be sustained in the absence of any unexpected shocks against the current background of generally favourable economic and political circumstances. As at 23 September, group net assets, after deducting the interim dividend declared today, were £32.8 million, an increase of 9.2 percent since 30 June. This compares with an increase of 4.7 percent in the FTSE 100 index and 6.1 percent in the All Share index over the same period, and is equivalent to 91 pence per share (prior charges deducted at par) and 94 pence per share on a fully diluted basis. Jonathan C Woolf 26 September 2003 6 months to 30 6 months to Year June 30 ended 31 2003 December June 2002 £'000 2002 £'000 £'000 Return before taxation 713 831 1,476 Earnings per £1 ordinary shares 2.14p - basic 2.50p 3.54p Earnings per £1 ordinary shares 2.03p - fully diluted 2.29p 3.52p Investments at valuation and 30,526 36,249 29,848 cash at bank Interim dividend per ordinary 2.0p 1.9p share 1.9p Net assets per ordinary share - Basic £0.80 £1.01 £0.75 - Fully diluted £0.86 £1.01 £0.82 Fully diluted net assets per ordinary share at 23 September 2003 £0.94 BRITISH & AMERICAN INVESTMENT TRUST PLC INDEPENDENT REVIEW REPORT Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2003 which comprises the consolidated statement of total return, group investment portfolio, the group balance sheet, the group cash flow statement and related notes 1 to 7. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which requires that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom auditing standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2003. Deloitte & Touche LLP Chartered Accountants and Registered Auditors London 26 September 2003 6 months to 30 June 2003 6 months to 30 June 2002 Year ended 31 December 2002 Note Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Income 2 903 - 903 1,055 - 1,055 1,819 - 1,819 Realised gains on investments - 145 145 - 80 80 - 726 726 Increase in unrealised depreciation - 1,093 1,093 - (3,799) (3,799) - (10,445) (10,445) Other expenses (160) - (160) (215) - (215) (331) - (331) Net return before finance costs and 743 1,238 1,981 840 (3,719) (2,879) 1,488 (9,719) (8,231) taxation Interest payable and similar (30) - (30) (9) - (9) (12) - (12) charges Return before taxation 713 1,238 1,951 831 (3,719) (2,888) 1,476 (9,719) (8,243) Taxation (2) - (2) (30) - (30) (242) - (242) Return on ordinary activities after 711 1,238 1,949 801 (3,719) (2,918) 1,234 (9,719) (8,485) tax Dividend and other appropriations in respect of preference shares (175) - (175) (175) - (175) (350) - (350) Return attributable to ordinary 536 1,238 1,774 626 (3,719) (3,093) 884 (9,719) (8,835) shareholders Dividend in respect of ordinary 3 (500) - (500) (475) - (475) (1,225) - (1,225) shares Transfer to reserves after dividends paid and proposed 36 1,238 1,274 151 (3,719) (3,568) (341) (9,719) (10,060) Return per ordinary share Basic 5.0p 7.1p (14.8)p (12.3)p (38.9)p (35.4)p 2.1p 2.5p 3.5p Fully diluted 4 3.6p 5.6p (10.6)p (8.3)p (27.8)p (24.3)p 2.0p 2.3p 3.5p Company Nature of Business Percentage of Valuation portfolio £'000 % Liberty International plc Property 3,903 13.19 Prudential plc Life Assurance 2,937 9.93 The Alliance Trust plc Investment Trust 2,034 6.87 Securities Trust of Scotland plc Investment Trust 1,832 6.19 Dunedin Income Growth Investment Investment Trust 1,640 5.54 Trust plc RIT Capital Partners plc Investment Trust 1,573 5.32 British Assets Trust plc Investment Trust 1,500 5.07 Electra Investment Trust plc Investment Trust 1,353 4.57 Matrix Chatham Maritime Trust Enterprise Zone Trust 1,250 4.22 St. James Place Capital - Unit Trust Unit Trust 860 2.91 Atrium Underwriting plc Insurance 763 2.58 Great Portland Estates plc Property 749 2.53 Murray International Trust plc Investment Trust 688 2.33 The Scottish American Investment Investment Trust 541 1.83 Company plc Rothschilds Continuation Finance - Financial 462 1.56 Notes The Rank Group Plc - Preference Leisure 439 1.48 Invesco Convertible Trust plc Investment Trust 417 1.41 Shires Income plc Investment Trust 413 1.40 The Throgmorton Trust plc Investment Trust 350 1.18 Abbey National plc - Non Cumulative Banks Retail 349 1.18 Preference 20 Largest investments 24,053 81.29 Other investments (number of 5,535 18.71 holdings : 75) Total investments 29,588 100.00 30 30 31 June December 2003 June 2002 £'000 2002 £'000 £'000 FIXED ASSETS Investments 29,588 35,922 28,404 CURRENT ASSETS Debtors 554 324 323 Cash at bank and in hand 722 327 1,794 1,276 651 2,117 CREDITORS: amounts falling due within one year (849) (1,339) (1,779) NET CURRENT ASSETS/(LIABILITIES) 427 (688) 338 CREDITORS: Amounts falling due after more than one year - - - Net assets 30,015 35,234 28,742 30,015 35,234 28,742 CAPITAL AND RESERVES Called up share capital - ordinary 25,000 25,000 25,000 - preference 10,000 10,000 10,000 Capital reserve - realised 14,595 12,842 14,309 Capital reserve - unrealised (21,388) (14,872) (22,339) Profit and loss account 1,808 2,264 1,772 30,015 35,234 28,742 6 months 6 months Year to 30 to 30 ended 31 June December 2003 June 2002 £'000 2002 £'000 £'000 Net cash inflow from operating 473 726 1,444 activities Servicing of finance - interest paid (30) (9) (13) - preference dividends paid (175) (175) (350) Taxation (paid)/recovered (246) 34 21 Investment purchases (1,635) (316) (2,438) Investment sales 1,291 767 4,665 Equity dividends paid (750) (1,375) (1,850) Financing - - - (Decrease)/increase in cash (1,072) (348) 1,479 1. ACCOUNTING POLICIES The results are based on unaudited Group consolidated accounts prepared under the historical cost convention as modified by the revaluation of investments. The results have been prepared in accordance with applicable Accounting Standards, with the Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies' and accounting policies consistent with preceding annual accounts. 2. TOTAL INCOME 6 months 6 months Year to 30 to 30 ended 31 June December 2003 June 2002 £'000 2002 £'000 £'000 Turnover - film revenue 69 140 243 Income from investments 765 859 1,437 Interest receivable 18 5 38 Other income 51 51 101 903 1,055 1,819 3. DIVIDENDS 6 months to 30 June 6 months to 30 June 2003 2002 Pence per Pence per share share £ £ Ordinary shares - interim 2.0 500,000 1.9 475,000 Preference shares - fixed 1.75 175,000 1.75 175,000 675,000 650,000 The dividends on ordinary shares are based on 25,000,000 ordinary £1 shares. Dividends on preference shares are based on 10,000,000 non-voting 3.5% convertible preference shares of £1. The holders of the 3.5% convertible preference shares will be paid a dividend of £175,000 being 1.75p per share. The payment will be made on the same date as the dividend to the ordinary shareholders. 4. RETURN PER ORDINARY SHARE 6 months 6 months Year to 30 to 30 ended 31 June December 2003 June 2002 £'000 2002 £'000 £'000 Standard earnings per share Calculated on the basis of: Return after taxation and preference 536 626 884 dividends Ordinary shares in issue 25,000 25,000 25,000 Fully diluted earnings per share Calculated on the basis of: Return after taxation 711 801 1,234 Ordinary and preference shares in issue 35,000 35,000 35,000 Diluted earnings per share is calculated taking into account the preference shares which are convertible, under certain conditions, at any time during the period 1 January 2006 to 31 December 2025 (both dates inclusive). 5. NET ASSET VALUE ATTRIBUTABLE TO EACH SHARE Basic net asset value attributable to each share has been calculated by reference to 25,000,000 ordinary shares, and group net assets attributable to shareholders as follows: 30 30 31 June December 2003 June 2002 £'000 2002 £'000 £'000 Total net assets 30,015 35,234 28,742 Less preference shares (10,000) (10,000) (10,000) Net assets attributable to ordinary 20,015 25,234 18,742 shareholders In both cases the effective net assets of the group have been calculated taking investments at their market value. Diluted net asset value is calculated taking into account the preference shares which are convertible, under certain conditions, at any time during the period 1 January 2006 to 31 December 2025 (both dates inclusive). 6. The financial information set out above is unaudited and does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 December 2002, which received an unqualified auditors' report, have been filed with the Registrar of Companies. 7. A copy of this statement has been sent today to the company's shareholders, and members of the public may obtain a copy on application to the company's registered office.

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