Final Results

Bankers Investment Trust PLC 11 December 2000 EMBARGOED FOR RELEASE AT 7.00 AM ON MONDAY 11 DECEMBER 2000 THE BANKERS INVESTMENT TRUST PLC HENDERSON GLOBAL INVESTORS THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 11 December 2000 Highlights * Net asset value per share up 13.9% to 360.1p * Total dividend per share increased 5.8% to 6.35p * Forecast minimum dividend per share increase of 3.3% to 6.56p Chairman's Statement Assets I am pleased to report that the first year of the new millennium has been a rewarding one for shareholders. The Company's net asset value per share increased by 13.9% which compares with a rise of 6.0% for our principal benchmark the FTSE All-Share Index. This has been a good year to be an 'actively managed' international investment trust and it is gratifying to report that most of our performance was generated from good sector and stock selection in our three major markets; the UK, Europe and USA. Currencies were a feature but played very little part in our performance as the 13% rise in the US dollar against sterling was mostly offset by weakness in European currencies with the Euro falling by 9%. The biggest disappointment was Japan, where a positive performance was reversed in the last two months of our financial year. For much of our year the economic background has been most favourable with higher than expected economic growth in the USA and Europe and consumer price inflation remaining low despite a significant rise in the price of oil. The risk of future inflation has prompted central bankers to raise interest rates in the first half of our financial year particularly in the USA. Any review of the past year in equity markets has to focus on technology stocks. The three months either side of the end of the twentieth century saw one of the most dynamic equity booms ever witnessed in the history of world stock markets. The excitement generated by the rapid advance of consumer electronics and the internet generated a massive level of emotional enthusiasm for all stocks and sectors connected with the 'new economy'. Also, the rapid growth of the internet convinced many analysts that well established industries would be significantly disadvantaged by the new economy encouraging a dramatic switch by investors from old to new. The mania for almost any company connected to the new economy and an equally scathing view of the old economy caused a massive bubble in the share prices of technology, media and telecom stocks (TMT) which finally boiled over in the middle of March. As a consequence of our 'value' based investment style we chose to avoid a high weighting in technology stocks. Our TMT weightings have been biased towards well established leaders in the USA, Europe and Japan and we have been suspicious of the significant premiums paid for UK TMT stocks. Throughout the year we have remained positively geared and have tended to favour the UK, Europe and Japan in contrast to the USA. - MORE - - 2 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Dividends Last year we modified our accounting policy. This is the first year that earnings are stated under our new accounting policy where investment management fees and interest payable on loans and debentures are allocated 30% to revenue and 70% to capital. In view of the strong revenue reserves we are recommending a final dividend of 1.70p making a total dividend of 6.35p, an increase of 5.8%. This is the thirty-third consecutive annual increase in the dividend. It remains the Board's intention to increase the annual dividend above the rate of UK inflation for the foreseeable future. For the year to 31 October 2001 we are forecasting, subject to unforeseen circumstances, a minimum total dividend of 6.56p per share, an increase of 3.3%. This Company is one of a very small number of investment trusts to pay a quarterly dividend. A dividend of 1.64p will be paid at the end of May, August and November with a minimum final dividend of 1.64p payable in February 2002. Share Buy-Backs Over the financial year we have bought back 13,451,015 ordinary shares for cancellation at a cost of £39.6m. A significant portion of the shares was purchased from the Prudential in January which reduced their holding from 8.6% to 1.8% in the Company. The shares were re-purchased at an average discount of 14.5% which has enhanced net assets by approximately £6.7m, equivalent to 4.6p per share. At this year's Annual General Meeting the Board will be seeking to renew the authority to purchase up to 14.99% of the existing issued shares for cancellation. This percentage is the maximum permitted by the UK Listing Authority. Outlook World GDP growth for the year 2000 is likely to have been the strongest since 1987. OECD export volume growth averaged 14% in the first quarter of the year which was stronger than for any period in the last twenty years. However, there is little doubt that the first half of this year marked a peak in the rate of global growth and the US economy has been in a consumer led slowdown for the past six months. For central bankers, particularly the US Federal Reserve Board, the current slowdown is welcome and if economic growth continues to weaken US short term interest rates could be cut as early as the first quarter of 2001. The UK and the leading economies in Europe are also experiencing an economic slowdown but at a more gradual pace than in the USA. By contrast in Japan the slow but steady economic recovery continues to exceed expectations and some inflation would almost be welcome there. Global equity markets are having to adjust to a reduction in global growth, a squeeze on profit margins, reduced earnings growth expectations and a contraction in credit for many medium-sized and smaller businesses. Many equity markets are now significantly below their earlier peaks. It is no surprise to find that investors have switched from high growth to defensive investments with financials, pharmaceuticals and utilities showing strong relative outperformance. The rapid correction in 'new economy' stocks and consequent re-appreciation of the merits of solid old economy companies has re-introduced more realistic equity ratings and a much more balanced understanding that both new and old economy companies need each other to survive and prosper. In a low inflationary environment economic slowdowns can be short-lived as even small movements in interest rates can have a significant effect on economic activity. - MORE - - 3 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Wall Street inevitably will have a great influence on all financial markets. Any evidence of a severe slowdown in the US economy would make us more concerned about prospects. However, we expect stock markets to react favourably to any interest rate reductions in the coming year. Requisition The Company announced on 5 December 2000 that it had received a requisition on behalf of ST Partners L.P. ('ST Partners'). This requires the Company to put a resolution to shareholders urging the Board to formulate proposals for a tender offer to repurchase up to 70 per cent. of the Company's shares at a price equal to 98 per cent. of the net asset value per share. This resolution will be included with the notice of the Annual General Meeting to be sent to shareholders shortly. The Board has considered this resolution and has concluded that ST Partners' proposals would not be in the best interests of the Company or shareholders as a whole. Accordingly, the Board will be recommending to shareholders that they vote against the resolution. A number of shareholders have expressed to the Board the wish that the Company should continue in its current form, and the Board would like to thank these shareholders for their support. The Board intends to continue its share buy-back programme. Further details of the Board's views will be circulated to shareholders in due course. For further information, please contact: Michael Moule Vicki Staveacre The Bankers Investment Trust PLC Henderson Press Office Telephone: 020 7410 4378 Telephone: 020 7410 4028 Stephen Westwood Alex Child-Villiers Head of Investment Trusts Financial Dynamics Henderson Global Investors Telephone: 020 7269 7107 Telephone: 020 7477 5517 - MORE - - 4 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Highlights of the Year 31 October 31 October Change 2000 1999 % Assets Total assets less current liabilities £536,360,000 £513,827,000 +4.4 Net asset value per ordinary share 360.1p 316.1p +13.9 Ordinary share mid-market price 309.5p 273.5p +13.2 Discount (Share Price to Net Asset Value) 14.1% 13.5% Revenue Gross revenue £14,306,000 £15,265,000* -6.3 Earnings per ordinary share 7.33p 7.40p* -0.9 Dividends per ordinary share 6.35p 6.00p +5.8 Indices FTSE All-Share Index 3,078.21 2,904.38 +6.0 Standard & Poor's Composite Index 1,429.39 1,362.92 +18.5+ FTSE World Europe (ex UK) Index (£) 351.72 306.80 +14.6 TOPIX (Tokyo First Section Index) 1,379.96 1,563.89 -4.7+ FTSE World (ex UK) Index (£) 355.63 307.82 +15.5 50/50 FTSE All-Share/ 221.60 200.00 +10.8 FTSE World (ex UK) Index (£) Retail Price Index 171.6 166.5 +3.1 + £ adjusted * Restated for change in accounting policies, see note 2. Currencies 31 October 2000 31 October 1999 US Dollar 1.4521 1.6409 Yen 158.549 171.244 Euro 1.7131 1.5612 - MORE - - 5 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Group Statement of Total Return (incorporating the revenue account) Restated* Year ended 31 October Year ended 31 October 2000 1999 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital gains from - 59,372 59,372 - 68,730 68,730 investments Income from fixed asset 12,647 - 12,647 13,428 - 13,428 investments Other interest receivable and 1,659 - 1,659 1,837 - 1,837 similar income ---------- ---------- ---------- ---------- ---- Gross revenue and capital gains 14,306 59,372 73,678 15,265 68,730 83,995 Management fee (1,260) (1,103) (2,363) (1,139) (998) (2,137) Other administrative expenses (753) - (753) (583) - (583) ---------- ---------- ---------- ---------- ---- Net return on ordinary activities before interest payable and 12,293 58,269 70,562 13,543 67,732 81,275 taxation Interest payable (723) (1,688) (2,411) (731) (1,706) (2,437) ---------- ---------- ---------- ---------- ---- Net return on ordinary activities before taxation 11,570 56,581 68,151 12,812 66,026 78,838 Taxation on net return on (982) 712 (270) (1,310) 822 (488) ordinary activities ---------- ---------- ---------- ---------- ---- Net return on ordinary activities after taxation 10,588 57,293 67,881 11,502 66,848 78,350 Appropriations - Dividends Cumulative preference stock - - - (38) - (38) ---------- ---------- ---------- ---------- ---- Available for ordinary 10,588 57,293 67,881 11,464 66,848 78,312 shareholders Ordinary Shares: Three interims of 1.55p (1999: (6,457) - (6,457) (6,920) - (6,920) 1.49p) Proposed final of 1.70p (1999: (2,369) - (2,369) (2,360) - (2,360) 1.53p) ---------- ---------- ---------- ---------- ---- (8,826) - (8,826) (9,280) - (9,280) ---------- ---------- ---------- ---------- ---- Transfer to reserves 1,762 57,293 59,055 2,184 66,848 69,032 ====== ====== ====== ====== ====== ====== Return per ordinary share (note 7.33p 39.65p 46.98p 7.40p 43.14p 50.54p 1) ====== ====== ====== ====== ====== ====== The revenue columns of this statement represent the revenue accounts of the Group. * Restated for changes in accounting policies, see note 2. - MORE - - 6 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Balance Sheets at 31 October 2000 Restated Restated * * Group Group Company Company 2000 1999 2000 1999 £'000 £'000 £'000 £'000 Fixed assets investments: Listed at market value In Great Britain 279,023 267,414 279,023 267,414 Outside Great Britain 233,063 221,084 233,063 221,084 Other quoted funds 6,787 4,879 6,787 4,879 Investment in subsidiary undertaking - - 629 595 ---------- ---------- ---------- --- Total fixed asset investments 518,873 493,377 519,502 493,972 ---------- ---------- ---------- --- Current Assets Investments 39 42 - - Debtors 2,967 3,980 2,901 3,921 Bank balances and short term deposits 36,197 40,031 36,156 40,009 ---------- ---------- ---------- --- 39,203 44,053 39,057 43,930 Creditors: amounts falling due within one (21,716) (23,603) (22,199) (24,075) year ---------- ---------- ---------- --- Net current assets 17,487 20,450 16,858 19,855 ---------- ---------- ---------- --- Total assets less current liabilities 536,360 513,827 536,360 513,827 Creditors: amounts falling due after more (29,453) (26,300) (29,453) (26,300) than one year Provisions for liabilities and charges - (66) - (66) ---------- ---------- ---------- --- Total net assets 506,907 487,461 506,907 487,461 ====== ====== ====== ====== Capital and reserves Called up share capital 35,192 38,555 35,192 38,555 Share premium account 452 452 452 452 Other capital reserves 454,967 433,920 455,596 434,515 Revenue reserve 16,296 14,534 15,667 13,939 ---------- ---------- ---------- --- Shareholders' funds (all equity) 506,907 487,461 506,907 487,461 ====== ====== ====== ====== Net asset value per ordinary share 360.1p 316.1p 360.1p 316.1p ---------- ---------- ---------- --- * Restated for changes in accounting policies, see note 2. - MORE - - 7 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Group Cash Flow Statement For the year ended 31 October 2000 2000 2000 1999 1999 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 9,826 12,700 Servicing of finance Debenture interest paid (2,302) (2,302) Bank and loan interest paid (114) (160) Dividends paid on preference stock - (59) ---------- ---------- Net cash outflow from servicing of finance (2,416) (2,521) Taxation UK tax recovered (including ACT) 454 142 Withholding and income tax recovered 493 864 ---------- ---------- Net tax recovered 947 1,006 Financial Investment Purchase of investments (129,438) (158,188) Sales of investments 165,727 171,620 ---------- ---------- Net cash inflow from financial investment 36,289 13,432 Equity dividends paid (8,932) (9,044) Management of liquid resources Cash withdrawn from/(placed on) deposit 3,704 (1,252) ---------- ------- Net cash inflow before financing 39,418 14,321 Financing Purchase of ordinary shares (39,609) (2,448) Purchase of preference stock - (1,430) Expenses paid in respect of share buy-backs (56) (61) Drawdown/(repayment) of loans 22 (13) ----------- ---------- Net cash outflow from financing (39,643) (3,952) ---------- ------- (Decrease)/increase in cash (225) 10,369 ====== ====== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash as above (225) 10,369 Net cash (inflow)/outflow from (increase)/ (22) 13 decrease in loans Cash (inflow)/outflow from movement in (3,704) 1,252 liquid resources --------- -------- Change in net debt resulting from cash flows (3,951) 11,634 Exchange movements (1,053) (2,004) --------- -------- Movement in net debt in the year (5,004) 9,630 Net debt at 1 November (2,766) (12,396) ---------- ------- Net debt at 31 October (7,770) (2,766) ====== ====== - MORE - - 8 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Notes: 1. Return Per Ordinary Share Revenue return per ordinary share is based on earnings attributable to ordinary shares of £10,588,000 (1999: £11,464,000 - as restated), and on the weighted average number of ordinary shares in issue during the year of 144,498,237 (1999: 154,950,329). Capital return per ordinary share is based on earnings attributable to ordinary shares of £57,293,000 (1999: £66,848,000 - as restated) and on the weighted average number of ordinary shares in issue during the year of 144,498,237 (1999: 154,950,329). 2. Changes in accounting policies On the basis of the Board's expected long term split of returns between capital gains and income, the Company charges 70% of its interest payable and management fee (insofar as they relate to the maintenance or enhancement of the value of investments) to capital. This represents a change in accounting policy from prior periods in which management expenses and borrowing costs were charged wholly to revenue. The comparatives for the year ended 1999 have been restated accordingly, the effect of this change is that net revenue on ordinary activities after taxation is increased by £2,079,000 (1999: £ 1,882,000). The Company has adopted Financial Reporting Standard (FRS) 16 'Current Tax' under which dividend income should be accounted for net of the attributable tax credits. The comparative figures for the year ended 31 October 1999 have been restated accordingly. The effect of this change is that net return on ordinary activities before taxation is reduced to £1,068,000 (1999: £1,192,000). However, there is no effect on the revenue or capital returns per ordinary share, nor on the net asset value per ordinary share. 3. 1999 Accounts The figures and financial information for the year ended 31 October 1999 are extracted from the latest published accounts of the Company as restated and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement either under Section 237(2) or 237(3) of the Companies Act 1985. 4. 2000 Accounts The preliminary figures for the year ended 31 October 2000 have been extracted from the latest Group accounts. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 5. Dividend A final dividend of 1.70p per ordinary share will, if approved by shareholders, be paid on 28 February 2001 to shareholders on the register on 26 January 2001. The Company's shares go ex-dividend on 22 January 2001. - MORE - - 9 - THE BANKERS INVESTMENT TRUST PLC Preliminary Unaudited Results for the Year Ended 31 October 2000 Largest Investments at 31 October 2000 The 40 largest investments (convertibles and all classes of equity in any one company being treated as one investment) were as follows: Market Market Value Value 31 Oct 31 Oct 2000 2000 £'000 £'000 Vodafone 16,547 Diageo 3,643 BP Amoco 14,788 Abbey National 3,519 Shell Transport & Trading 12,199 Pharmacia 3,514 Glaxo Wellcome 11,110 Aventis 3,465 British Telecommunications 9,454 Nestle 3,426 HSBC 9,132 Exxon Mobil 3,412 Philips Electronics 8,839 Reuters 3,355 Royal Bank of Scotland 7,271 Pfizer 3,333 Lloyds TSB 6,739 Irish Life 3,243 SmithKline Beecham 6,408 Novartis 3,240 Barclays 6,310 ABN-Amro 3,187 Henderson American Smaller 5,783 Cisco Systems 3,135 Companies Fund Total Fina 5,706 Alcatel 3,100 AstraZeneca 5,165 Richemont 3,090 Cable & Wireless 4,680 Pearson 3,059 Siemens 4,641 ENI 2,972 VNU 4,536 US Treasury 3.625% Infl 2,838 Index 15/04/28 Marconi 4,002 Unilever 2,797 CGNU 3,780 Dexia 2,795 General Electric 3,718 Prudential 2,781 These investments total £214,712,000 or 41.4% of the portfolio. Changes in Investments Valuation Purchases Sales Appreciation/ Valuation 1999 (Depreciation) 2000 £'000 £'000 £'000 £'000 £'000 United Kingdom 261,737 35,894 55,648 32,828 274,811 Europe 87,259 25,026 29,594 15,349 98,040 North America 71,256 41,362 48,688 15,414 79,344 Japan 40,819 25,430 21,494 (5,465) 39,290 Hong Kong 6,430 1,025 2,519 1,080 6,016 Australia 8,871 - 939 (61) 7,871 Far East 6,063 - 1,145 (399) 4,519 Latin America 3,313 1,140 1,565 1,477 4,365 Other Countries 3,669 97 1,810 (177) 1,779 Fixed Interest 3,960 - 1,501 379 2,838 ---------- ---------- ---------- ---------- ---------- 493,377 129,974 164,903 60,425 518,873 ====== ====== ====== ====== ====== - ENDS -

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