BRITISH & AMERICAN INVESTMENT TRUST PLC - Annual Financial Report

BRITISH & AMERICAN INVESTMENT TRUST PLC - Annual Financial Report

PR Newswire

London, May 27

British & American Investment Trust PLC

Annual Financial Report
for the year ended 31 December 2020

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)	Telephone: [phone]
Alex Tamlyn (Non-executive)	Registered in England
	No.00433137
	27 May 2021

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 2020

	2020			2019
	Revenue return	Capital return	Total	Revenue return	Capital return	Total
	£000	£000	£000	£000	£000	£000
Profit/(loss) before tax - realised	879	(1,230)	(351)	862	(1,461)	(599)
Profit before tax - unrealised	-	1,388	1,388	-	1,657	1,657
	__________	__________	__________	__________	__________	__________
Profit before tax - total	879	158	1,037	862	196	1,058
	__________	__________	__________	__________	__________	__________
Earnings per £1 ordinary share - basic	2.23p	0.63p	2.86p	2.26p	0.78p	3.04p
	__________	__________	__________	__________	__________	__________
Earnings per £1 ordinary share - diluted	2.59p	0.45p	3.04p	2.61p	0.56p	3.17p
	__________	_________	__________	__________	_________	__________
Net assets			6,720			6,504
			__________			__________
Net assets per ordinary share
- deducting preference shares at fully diluted net asset value*			19p			19p
			__________			__________
- diluted			19p			19p
			__________			__________
Diluted net asset value per ordinary share at 21 May 2021			21p
			__________
Dividends declared or proposed for the period:
per ordinary share
- interim paid			2.7p			2.7p
- final proposed			0.0p			0.0p
per preference share			1.75p			1.75p
Dividends declared after the period:
per ordinary share - 1st interim			2.7p
per preference share			1.75p
1st interim dividend declared for the year ended 31 December 2021 of 2.7 pence per ordinary share payable on 24 June 2021 to shareholders on the register at 11 June 2021. A preference dividend of 1.75 pence will be paid to preference shareholders on the same date. *Basic net assets are calculated using a value of fully diluted net asset value for the preference shares.

Chairman's Statement

I report our results for the year ended 31 December 2020. As announced on 22nd April, we have delayed the release of these results by one month in accordance with the current guidance of the Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) concerning the reporting by listed companies of their results in the context of the ongoing Covid-19 pandemic.

Our interim results to 30^thJune 2020 were reported on a delayed basis at the end of October 2020 and at the time we explained in some detail the how the Covid-19 pandemic was impacting our operations in various ways, including in terms of the corporate reporting timetable, disruption to general business activity, markets, investment valuations and dividends.

Revenue

The return on the revenue account before tax amounted to £0.9 million (2019: £0.9 million), unchanged from 2019 but a significantly lower level from prior years when higher levels of dividends from external investments were being received. In 2020, dividend income was severely impacted by the Covid-19 pandemic as companies cut or skipped payments altogether; however, this impact was partially reduced by dividends received from our subsidiary companies during the year.

Gross revenues totalled £1.4 million (2019: £1.2 million). In addition, film income of £84,000 (2019: £106,000) and property unit trust income of £14,000 (2019: £14,000) was received in our subsidiary companies. 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 £1.0 million (2019: £1.1 million profit), which comprised net revenue of £0.9 million, a realised loss of £1.2 million and an unrealised gain of £1.3 million. The revenue return per ordinary share was 2.2p (2019: 2.3p) on an undiluted basis and 2.6p (2019: 2.6p) on a diluted basis.

Net Assets and Performance

Net assets at the year end were £6.7 million (2019: £6.5 million), an increase of 3.3 percent, after payment of £0.9 million in dividends to shareholders during the year. This compares to decreases in the FTSE 100 and All Share indices of 14.3 percent and 12.5 percent, respectively, over the period. On a total return basis, after adding back dividends paid during the year, our net assets increased by 16.4 percent compared to decreases of 11.5 percent and 9.8 percent in the FTSE 100 and All Share indices, respectively.

This substantial outperformance in total return of 25 percent against the benchmark indices was principally the result of gains of 12 percent in sterling terms in the value of our largest US investment, Geron Corporation, and of 90 percent in our second largest US investment, Lineage Cell Therapeutics Inc (a combination of two previously held regenerative medicine stem cell companies, Biotime Inc and Asterias Biotherapeutics Inc). By contrast, our UK stock investments declined in line with the widespread falls in the UK market due to the unprecedented effects the Covid-19 pandemic felt throughout the year.

More generally, the economic shock of the Covid-19 pandemic completely overshadowed all other considerations in 2020. In our last report in October, we described in some detail the nature and extent of the damage which the pandemic had caused globally to a vast array of activities worldwide. These included corporate activity and profits, employment levels, working practices, basic social interactions, GDP, government debt, economic stimulus measures and interest rates.

At that time, the first wave of the pandemic had passed through most countries and a second winter wave whose likely effect was not fully known was expected. As reported, equity markets had begun to recover by the summer from the precipitous declines of the first quarter and by the year end the US market had regained its year-opening level, while in the UK almost half of the 35 percent drop in March had been retraced.

The effect of the lockdowns in the first half on GDP was severe, with falls of 23 percent in the UK and 35 percent in the USA being recorded. As the economies began to be opened up in the summer, these falls were reduced to 10 percent and 4 percent for the year as a whole, respectively. These are nevertheless extremely large declines which have never before been experienced in peacetime and in the UK not for 300 years. As a result, similarly unprecedented effects were seen on other major economic metrics such as government borrowing and levels of debt as governments introduced unprecedented measures to support their citizenry and businesses. In the UK, total government borrowing jumped by 300 percent to £300 billion and debt rose to over £2 trillion, representing 100 percent of GDP, the highest level since the Second World War.

When it arrived at year-end, the winter wave of the pandemic, which was augmented by more virulent variants of the virus, turned out to be even more disruptive than the first wave with a series of lockdowns being imposed in most developed countries. Numbers of infections and deaths spiked in the UK in the first quarter of 2021 at levels considerably higher than in the first wave in 2020. Despite this, the periods of reopening in the second half of 2020, a better understanding of how to manage the virus and the implementation of a highly successful vaccination programme have allowed the UK economy to avoid the damage of a double dip recession which supported equity markets through to the New Year.

Dividend

Due to the unprecedented disruption caused to markets by the Covid-19 pandemic in 2020 and the severe decline in dividends paid by companies last year, we do not recommend the payment of a final dividend for the 2020 financial year.

We do, however, intend to pay a first interim dividend of 2.70 pence per ordinary share for the year to 31^stDecember 2021, payable on 24^th June, which is approximately the date on which a final dividend would have been paid. This is to take account of the timing of income receipts this year into our distributable reserves.

When added to the dividend of 2.70 pence paid in December 2020, this represents a yield of approximately 18 percent on the ordinary share price averaged over a period of 12 months.

Although we have regrettably not been able to continue for the time being the policy of progressive dividend payments which we had followed for many years, this level of yield has nevertheless sustained significant market interest in our stock in recent months, with the shares trading at a significant premium to NAV and higher than average daily volumes being seen.

As noted in last year's annual report, it is our intention to resume our normal dividend payments as soon as possible, as and when circumstances permit. We will also endeavour, through ad hoc interim payments not necessarily on our normal dividend timetable, to catch up when and if possible on withheld or reduced payments.

Recent events and outlook

Despite the severity of the winter phase of the pandemic during the first quarter of 2021, equity markets in the USA and UK have risen steadily this year, building on the positive momentum which followed the election of President Biden in November, with the US market pulling steadily ahead of the record high achieved in December 2020. For some time now, markets have been looking forward to the economic recovery expected as the pandemic wanes and lockdowns or restrictions are finally lifted or reduced. Company profits are beginning to grow again and a very large retail savings balance has been built up over the past year, ready to be spent when restrictions are lifted.

While the near term prospects for markets and businesses appear favourable, therefore, this may only be temporary until the longer term damage caused by the pandemic in terms of permanently lost GDP and jobs becomes evident. While a strong bounce in GDP is still forecast for 2021 despite the considerably longer than expected duration of the pandemic, economic activity is unlikely to return to its pre-2020 levels until 2022 and will not account for the lost production in the meantime. Also, long term damage to jobs which for the time being has been disguised by governments' emergency support schemes is likely to become evident later in the year as these schemes are withdrawn.

For these reasons and their resulting effects on other important economic indicators such as government deficits, borrowing levels, interest rates and inflation, the medium term outlook for markets and investment looks very uncertain.

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 21 May 2021, our net assets had increased to £7.4 million, an increase of 9.6 percent since the beginning of the calendar year. This is equivalent to 21.0 pence per share (prior charges deducted at fully diluted value) and 21.0 pence per share on a diluted basis. Over the same period the FTSE 100 increased 8.6 percent and the All Share Index increased 9.0 percent.

David Seligman

27 May 2021

Managing Director's report

As reported above, equity markets in the USA and UK rebounded strongly by the end of 2020 following precipitous drops at the end of the first quarter as economies were shut down to combat the Covid-19 pandemic. In the USA, the market rose 65 percent from its lows in March, regaining its year opening level by September and reaching an all time high by year end, returning the market to its 12 year bull run since the financial crisis of 2008/9.

US equity prices have continued to push forward strongly into 2021 following the election of President Biden and the passing in Congress of his multi-trillion dollar "American Rescue" and "American Family" plans to support businesses and citizens out of the economic crisis caused by the pandemic. Continued substantial and long-term monetary support from the Federal Reserve through ultra-low interest rates and quantitative easing programmes have also underpinned equities. Added to which, the rapid acceleration of the highly successful vaccine programme in the first quarter has paved the way for a re-opening of the economy with a major boost to corporate investment and retail spending.

Consequently, equities look set to benefit for some time from a return to normal activity, with the only major cloud on the horizon being the risk of growing inflation indications leading to an earlier than expected end to the highly accommodative monetary policy of recent years, which had been extended over the past year by the pandemic. Recent comments from the new Secretary of Finance, Janet Yellen, who used to be Federal Reserve Chairman did in fact refer to just such an eventuality. As has been seen many times, long-term bull markets based on monetary stimulus can react quite suddenly and violently to even the discussion of such pivot points in interest rate trends, as was notably the case in 2013 with the 'taper tantrum' in the bond markets when US treasury yields surged abruptly. In recent months, yields in the US bond market have also risen out of concern at the enormous government spending commitments of the recovery plans and usually such movements eventually result in equity market weakness as bond and equity yields rebalance, particularly so given the continuing lower levels of dividends being paid by companies. This result may take longer than usual to appear under current circumstances as the pent up post-pandemic demand in the economy is released and the stimulus of the administration's 'Build Back Better' infrastructure investment programme washes through the economy. However, higher levels of equity market volatility in recent weeks could presage the beginning of this process.

In the UK, the equity market followed a similar pattern in 2020, although it did not enjoy a similar level of rebound from the March lows, regaining only 50 percent of its 35 percent drop by the third quarter and ending the year down by 14 percent. The market had drifted down during the second half as discussions with the EU on a post Brexit trade agreement remained unresolved and then the prospect of a second winter lockdown loomed as post-summer Covid-19 infection rates began to rise considerably. It was not until November that this steady decline reversed, rallying by 15 percent following the election of President Biden and the strongly positive response shown by the US equities.

Since the year end, the UK market has risen a further 10 percent, an increase of 35 percent since its 2020 low and now just 6 percent below its 2020 high. The highly effective and world-beating vaccine rollout of the last few months, resulting in substantially lower levels of Covid-19 infections, hospitalisations and deaths has significantly boosted confidence of a gradual return to normality and equity markets have reacted accordingly. Businesses, particularly in the travel and retail sectors, are also preparing for substantially higher levels of activity in the months to come as the high levels of savings built up over the past year are expected to be drawn down in a retail spending boom.

Comments made above in relation to the medium term prospects for equities in the USA are likely to apply also to the UK. The question for the medium term, assuming the virus is kept under control through vaccinations, is how the various balances in returning the economy and business to normal will play out over the coming years. The sizeable pent up demand and relief will boost business activity significantly in the short term and UK GDP is now thought likely to return to pre-pandemic levels somewhat earlier than expected. However, pressure will be put on prices, as is already beginning to be seen in the USA, presaging a return to more normal levels of interest rates which would be negative for equities.

At the same time, however, as the government removes its emergency support and stimulus measures later in the year, the true extent of the damage wreaked by the pandemic over the last year on businesses and employment is likely to be revealed, placing downward pressure on the economy and sentiment. Further such pressure is also likely to arrive in the form of additional taxes yet to be announced to repair the historically high levels of deficit and debt run up by the government to combat the pandemic. As in the USA, however, the UK government has a long term programme of infrastructure renewal and investment, in the UK's case its 'Levelling up' programme, which should add substantial stimulus to the economy as a whole. This may be sufficient over the medium term to counterbalance the permanently lost growth of the past 18 months due to the pandemic. Thus, an overall picture of short-term strength in equity markets followed by a period of retrenchment and weakness can realistically be envisaged.

As noted above, our portfolio strongly outperformed the benchmarks in 2020, primarily due to our long term investments in US biotech stocks, despite a headwind presented by a weaker US dollar over the year.

In the case of Geron, the ongoing recovery in Geron's share price reflected the company's efforts to demonstrate that its clinical oncology drug programme remains on track with ever improving results. During 2020, a number of positive developments occurred, including the announcement of FDA agreement for a second Phase 3 trial in Myelofibrosis (MF), which has now commenced enrolment, to add to its continuing Phase 3 trial in Myelodysplastic Syndrome (MDS) and the completion of a $140 million equity fundraising in which leading biotech sector investment funds took large positions. In addition, over the past year, further high level technical personnel hires have been made from leading pharma companies, including from previous partner Johnson & Johnson, accompanied by the award of substantial new employee inducement shares, which are an indication of the confidence such new employees have in Geron's future prospects.

In the case of Lineage Cell Therapeutics Inc, our second largest US biotechnology investment, its share price has now risen by over 200 percent since the beginning of 2020, recovering to its pre-2019 levels when it combined with our previously third largest biotechnology investment, Asterias Biotherapeutics Inc, both being stem cell based regenerative medicine companies. At the same time, it spun off a third smaller company, Agex Therapeutics Inc, in which we remain invested. The market has re-rated this stock following the re-organisation and favourable Phase 2 clinical trial results which have improved the prospects for its two principal stem cell programmes. The first in spinal cord injury repair which was acquired with Asterias Biotherapeutics and the second, its own trial in Dry AMD, a widespread degenerative condition of the retina causing blindness with no currently approved or effective treatment.

Jonathan Woolf

27 May 2021

Income statement

For the year ended 31 December 2020

	2020			2019
	Revenue return	Capital return	Total	Revenue return	Capital return	Total
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
Investment income (note 2)	1,372	-	1,372	1,243	-	1,243
Holding gains on investments at fair value through profit or loss	-	1,388	1,388	-	1,657	1,657
Losses on disposal of investments at fair value through profit or loss*	-	(960)	(960)	-	(1,113)	(1,113)
Foreign exchange (losses)/gains	(44)	(13)	(57)	53	(57)	(4)
Expenses	(400)	(242)	(642)	(381)	(242)	(623)
	________	________	________	________	________	________
Profit before finance costs and tax	928	173	1,101	915	245	1,160
Finance costs	(49)	(15)	(64)	(53)	(49)	(102)
	________	________	________	________	________	________
Profit before tax	879	158	1,037	862	196	1,058
Tax	29	-	29	52	-	52
	________	________	________	________	________	________
Profit for the year	908	158	1,066	914	196	1,110
	________	________	________	________	________	________
Earnings per share
Basic - ordinary shares	2.23p	0.63p	2.86p	2.26p	0.78p	3.04p
	________	________	________	________	________	________
Diluted - ordinary shares	2.59p	0.45p	3.04p	2.61p	0.56p	3.17p
	________	________	________	________	________	________

The company does not have any income or expense that is not included in the profit for the year. Accordingly, the 'Profit for the year' is also the 'Total Comprehensive Income for the year' as defined in IAS 1 (revised) and no separate Statement of Comprehensive Income has been presented.

The total column of this statement represents the 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 profit and total comprehensive income is attributable to the equity holders of the company.

*Losses on disposal of investments at fair value through profit or loss include Losses on sales of £613,000 (2019 - £1,274,000 losses) and Losses on provision for liabilities and charges of £347,000 (2019 - £161,000 gains).

Statement of changes in equity

For the year ended 31 December 2020

		Share capital	Capital reserve	Retained earnings	Total
		£ 000	£ 000	£ 000	£ 000
Balance at 31 December 2018		35,000	(28,802)	1,721	7,919
Changes in equity for 2019
Profit for the period		-	196	914	1,110
Ordinary dividend paid (note 4)		-	-	(2,175)	(2,175)
Preference dividend paid (note 4)		-	-	(350)	(350)
		________	________	________	________
Balance at 31 December 2019		35,000	(28,606)	110	6,504
Changes in equity for 2020
Profit for the period		-	158	908	1,066
Ordinary dividend paid (note 4)		-	-	(675)	(675)
Preference dividend paid (note 4)		-	-	(175)	(175)
		________	________	________	________
Balance at 31 December 2020		35,000	(28,448)	168	6,720
		________	________	________	________

Registered number: 00433137

Balance Sheet

At 31 December 2020

		2020	2019
		£ 000	£ 000
Non-current assets
Investments - fair value through profit or loss		6,436	6,704
Subsidiaries - fair value through profit or loss		5,719	5,335
		__________	__________
Current assets		12,155	12,039
Receivables		1,605	1,588
Cash and cash equivalents		394	2,504
		__________	__________
		1,999	4,092
		__________	__________
Total assets		14,154	16,131
		__________	__________
Current liabilities
Trade and other payables		3,003	3,617
Bank loan		687	2,635
		__________	__________
		(3,690)	(6,252)
		__________	__________
Total assets less current liabilities		10,464	9,879
		__________	__________
Non - current liabilities		(3,744)	(3,375)
		__________	__________
Net assets		6,720	6,504
		__________	__________
Equity attributable to equity holders
Ordinary share capital		25,000	25,000
Convertible preference share capital		10,000	10,000
Capital reserve		(28,448)	(28,606)
Retained revenue earnings		168	110
		__________	__________
Total equity		6,720	6,504
		__________	__________

Approved: 27 May 2021

Cash flow statement

For the year ended 31 December 2020

		Year ended 2020	Year ended 2019
		£ 000	£ 000
Cash flows from operating activities
Profit before tax		1,037	1,058
Adjustments for:
Gains on investments		(428)	(544)
Proceeds on disposal of investments at fair value through profit and loss		2,619	16,316
Purchases of investments at fair value through profit and loss		(2,415)	(14,521)
Finance costs		64	102
		__________	__________
Operating cash flows before movements in working capital		877	2,411
Decrease in receivables		34	2,417
Decrease in payables		(192)	(363)
		__________	__________
Net cash from operating activities before interest		719	4,465
Interest paid		(31)	(97)
		__________	__________
Net cash from operating activities		688	4,368
Cash flows from financing activities
Dividends paid on ordinary shares		(675)	(1,778)
Dividends paid on preference shares		(175)	(175)
Bank loan		(1,948)	(155)
		__________	__________
Net cash used in financing activities		(2,798)	(2,108)
		__________	__________
Net (decrease)/increase in cash and cash equivalents		(2,110)	2,260
Cash and cash equivalents at beginning of year		2,504	244
		__________	__________
Cash and cash equivalents at end of year		394	2,504
		__________	__________

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 and going concern

The financial information set out above contains the financial information of the company for the year ended 31 December 2020. The company has prepared its financial statements under IFRS. The financial statements have been prepared on a going concern basis adopting the historical cost convention except for the measurement at fair value of investments, derivative financial instruments and subsidiaries.

The information for the year ended 31 December 2020 is an extract from the statutory accounts to that date. Statutory company accounts for 2019, which were prepared under IFRS as adopted by the EU, have been delivered to the registrar of companies and company statutory accounts for 2020, prepared under IFRS as adopted by the EU, will be delivered in due course.

The auditors have reported on the 31 December 2020 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 498(2) or (3) of the Companies Act 2006.

The directors, having made enquiries, consider that the company has adequate financial resources to enable it to continue in operational existence for the foreseeable future. Accordingly, the directors believe that it is appropriate to continue to adopt the going concern basis in preparing the company's accounts.

2 Income

					2020	2019
					£ 000	£ 000
Income from investments
UK dividends					221	938
Overseas dividends					-	173
Dividend from subsidiary					1,066	74
					_________	__________
					1,287	1,185
Other income					85	58
					_________	__________
Total income					1,372	1,243
					_________	__________
Total income comprises:
Dividends					1,287	1,185
Other interest					85	58
					_________	__________
					1,372	1,243
					_________	__________
Dividends from investments
Listed investments					221	1,111
Unlisted investments					1,066	74
					_________	__________
					1,287	1,185
					_________	__________

Of the £1,287,000 (2019 - £1,185,000) dividends received, £90,000 (2019 - £879,000) related to special and other dividends received from investee companies that were bought after the dividend announcement. There was a corresponding capital loss of £324,000 (2019 - £1,027,000), on these investments.

Under IFRS 10 the income analysis is for the parent company only rather than that of the consolidated group. Thus film revenues of £84,000 (2019 - £106,000) received by the subsidiary British & American Films Limited and property unit trust income of £14,000 (2019 - £14,000) received by the subsidiary BritAm Investments Limited are shown separately in this paragraph.
3 Earnings per ordinary share

The calculation of the basic (after deduction of preference dividend) and diluted earnings per share is based on the following data:

	2020			2019
	Revenue return	Capital return	Total	Revenue return	Capital return	Total
	£ 000	£ 000	£ 000	£ 000	£ 000	£ 000
Earnings:
Basic	558	158	716	564	196	760
Preference dividend	350	-	350	350	-	350
	__________	__________	__________	__________	__________	__________
Diluted	908	158	1,066	914	196	1,110
	__________	__________	__________	__________	__________	__________

Basic revenue, capital and total return per ordinary share is based on the net revenue, capital and total return for the period after tax and after deduction of dividends in respect of preference shares and on 25 million (2019: 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 after tax and on 35 million (2019: 35 million) ordinary and preference shares in issue.

4 Dividends

	2020	2019
	£ 000	£ 000
Amounts recognised as distributions to equity holders in the period
Dividends on ordinary shares:
Final dividend for the year ended 31 December 2019 of 0.0p (2018: 6.0p) per share	-	1,500
Interim dividend for the year ended 31 December 2020 of 2.7p (2019: 2.7p) per share	675	675
	__________	__________
	675	2,175
	__________	__________
Proposed final dividend for the year ended 31 December 2020 of 0.0p (2019: 0.0p) per share	-	-
	__________	__________
Dividends on 3.5% cumulative convertible preference shares:
Preference dividend for the 6 months ended 31 December 2019 of 0.00p (2018: 1.75p) per share	-	175
Preference dividend for the 6 months ended 30 June 2020 of 1.75p (2019: 1.75p) per share	175	175
	__________	__________
	175	350
	__________	__________
Proposed preference dividend for the 6 months ended 31 December 2020 of 0.00p (2019: 0.00p) per share	-	-
	__________	__________

We have set out below the total dividend payable in respect of the financial year, which is the basis on which the retention requirements of Section 1158 of the Corporation Tax Act 2010 are considered.

Dividends proposed for the period
	2020	2019
	£ 000	£ 000
Dividends on ordinary shares:
Interim dividend for the year ended 31 December 2020 of 2.7p (2019: 2.7p) per share	675	675
Proposed final dividend for the year ended 31 December 2020 of 0.0p (2019: 0.0p) per share	-	-
	__________	__________
	675	675
	__________	__________
Dividends on 3.5% cumulative convertible preference shares:
Preference dividend for the year ended 31 December 2020 of 1.75p (2019: 1.75p) per share	175	175
Proposed preference dividend for the year ended 31 December 2020 of 0.00p (2019: 0.00p) per share	-	-
	__________	__________
	175	175
	__________	__________

The non-payment in December 2019 and in December 2020 of the dividend of 1.75 pence per share on the 3.5% cumulative convertible preference shares, consequent upon the non-payment of a final dividend on the ordinary shares for the year ended 31 December 2019 and for the year ended 31 December 2020, has resulted in arrears of £350,000 on the 3.5% cumulative convertible preference shares.

1st interim dividend declared for the year ended 31 December 2021 of 2.7 pence per ordinary share payable on 24 June 2021 to shareholders on the register at 11 June 2021. A preference dividend of 1.75 pence will be paid to preference shareholders on the same date.

5 Net asset values

		Net asset value per share
	2020	2019
Ordinary shares	£	£
Diluted	0.19	0.19
Undiluted	0.19	0.19
		Net asset attributable
	2020	2019
	£ 000	£ 000
Total net assets	6,720	6,504
Less convertible preference shares at fully diluted value	(1,920)	(1,858)
	__________	__________
Net assets attributable to ordinary shareholders	4,800	4,646
	__________	__________

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.

Principal risks and uncertainties

The principal risks facing the company relate to its investment activities and include market risk (other price risk, interest rate risk and currency risk), liquidity risk and credit risk. The other principal risks to the company are loss of investment trust status and operational risk. These will be explained in more detail in the notes to the 2020 Annual Report and Accounts, but remain unchanged from those published in the 2019 Annual Report and Accounts.

Related party transactions

The company rents its offices from Romulus Films Limited, and is also charged for its office overheads.

The salaries and pensions of the company's employees, except for the three non-executive directors and one employee are paid by Remus Films Limited and Romulus Films Limited and are recharged to the company.

During the year the company entered into the investment transactions to sell stock for £nil (2019 - £540,141) to British & American Films Limited and for £455,000 (2019 - £ nil) to BritAm Investments Limited.

There have been no other related party transactions during the period, which have materially affected the financial position or performance of the company.

Capital Structure

The company's capital comprises £35,000,000 (2019 - £35,000,000) being 25,000,000 ordinary shares of £1 (2019 - 25,000,000) and 10,000,000 non-voting convertible preference shares of £1 each (2019 - 10,000,000). The rights attaching to the shares will be explained in more detail in the notes to the 2020 Annual Report and Accounts, but remain unchanged from those published in the 2019 Annual Report and Accounts.

Directors' responsibility statement

The directors are responsible for preparing the financial statements in accordance with applicable law and regulations. The directors confirm that to the best of their knowledge the financial statements prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and the (loss)/profit of the company and that the Chairman's Statement, Managing Director's Report and the Directors' report include a fair review of the information required by rules 4.1.8R to 4.2.11R of the FSA's Disclosure and Transparency Rules, together with a description of the principal risks and uncertainties that the company faces.

Annual General Meeting

This year's Annual General Meeting has been convened for Tuesday 29 June 2021 at 12.15pm at Wessex House, 1 Chesham Street, London SW1X 8ND.