Final Results
Bankers Investment Trust PLC
09 January 2006
Page 1 of 11
9 January 2006
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Highlights
* NAV per share rose by 19.5% compared to a rise of 16.0% in the
benchmark FTSE All-Share Index
* 37th consecutive year of dividend increases. 10.4% increase for the
year, making a total dividend payment of 8.25p per share
* Forecast dividend for 2006 to rise by 10.0%
Extracts from the Chairman's Statement
This is my first annual report to shareholders since I became Chairman. I am
pleased to be able to comment on a solid year of performance. The net asset
value per share rose 19.5% over the year to 31 October 2005. This return
exceeded the rise of 16.0% in the FTSE All-Share Index. The improving revenue
account allows us to declare a total dividend increase of 10.4%. The revenue
outlook is positive and we are forecasting a minimum total dividend increase of
a further 10.0% for 2006.
Assets
Weaker sterling improved the return from overseas markets and our selection of
regions and mix of overseas investments were the main contributors to
outperformance. Overall economic conditions and low real interest rates around
the world have been supportive for equities during 2005. Investment returns
were higher in all regions, with particularly strong performance in developing
markets and Japan. Refined petroleum products and certain commodities such as
copper are in structural short supply such that gently rising demand has led to
higher prices. All markets have had to contend with the sharply rising oil and
commodity prices affecting company and country prospects to varying degrees.
The gearing of the Company has risen modestly during the year from 8.2% to 10.0%
at the year end. At the start of the year our bank borrowings were drawn in US
dollars, taking advantage of interest rates below 2%. However, in the first half
of the year the decision was taken to repay these loans and draw down a mixture
of sterling and Swiss francs. The US dollar subsequently rallied against
sterling and the switch in loans, effectively removing the hedge on the US
portfolio, has been beneficial. Gearing is reviewed at all board meetings and
we retain an active policy in respect of both the level of gearing and the
currency in which we borrow.
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Page 2 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
For the first time in recent years major markets are dancing to varying tunes.
Japan is cheered on by an apparent end to deflation while Western markets are
fearful of inflation. Interest rates have been cut in the UK while America is
still raising interest rates. Consumers are being urged to spend more in Europe
and Asia whilst showing early signs of reigning in spending in the UK and
America. This demonstrates that major markets are at different stages of their
economic cycles and that careful asset allocation and stock picking remains
important. Our historically low commitment to the US equity market has been
vindicated, as returns lagged behind all other markets again. Without the
strengthening currency, domestic returns in dollar terms amounted to only 6.8%.
In the past, periods of US interest rate tightening have led to slower economic
growth; this scenario does not appear to be reflected in the full valuation of
the US stock market. However, in selective industries interesting investments
can be found and we have committed some new funds to the US portfolio during the
year.
Emerging markets and the Pacific proved to be the best performing of our
portfolios. A focussed approach in these markets has again yielded performance
above the relevant benchmarks. With hindsight we should have committed further
funds to these markets, but by nature they are volatile and it is rare that
these stocks rise in price when the US are tightening interest rates. A degree
of caution is probably appropriate for these areas over the coming year.
The UK portfolio has performed broadly in line with the underlying market. Good
performance from our holdings in medium and smaller companies was diluted by an
underweight position in the largest companies, especially the pharmaceuticals
and energy stocks. The UK market has over 22% of its value in the energy and
mining sectors, and these sectors have dominated performance during the year.
Rising European stock markets continue to confound the sluggish growth forecasts
from top-down economists. We have adopted a very stock specific investment
strategy focussing on service industries and companies with superior management
teams. This has led to another excellent year of performance. European
companies that have the ability to restructure, move manufacturing eastwards and
cut costs are finding that sluggish growth is not a hindrance to growing
profits. We continue to find mainland Europe an attractive market despite the
recently announced interest rate rise.
Finally to Japan, which is showing the earliest signs of an end to the
deflationary trends that have lasted over a decade. It feels premature to
herald a return to a growth path for Japan but job creation, housing prices and
wage inflation are all rising and signalling that negative real interest rates
may finally be working. Our exposure to Japan was increased to above 10% of the
portfolio early in the year before some profits were taken in October. We
remain committed to our investment in Japan but are looking for a better point
to reinvest in a market that in the short term looks to be overbought.
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Page 3 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Revenue and Dividends
This year's revenue return per ordinary share has risen by 12.7% over last year,
to 9.07p. While there are some special dividends boosting income, the majority
of the increase is due to better than expected dividend income from our
investments. Dividend growth in the UK has averaged 10% year on year and this
has been matched in Asia and our emerging market investments. Even America,
typically a low payout equity market, has contributed with companies such as
Microsoft paying a special dividend for the first time. Our forecasts indicate
that companies in general are struggling to find profitable new projects for the
cash they are generating.
To reflect the improved earnings of the Company, we are proposing a final
dividend of 2.43p, making a total of 8.25p, an increase of 10.4% for the year.
Following two years of strong growth in the earnings of the Company, at this
early stage of the year we are forecasting a minimum rise in the total dividend
per share of 10.0%.
The Board and Annual General Meeting
As indicated last year, Michael Moule has decided to retire from the board at
the forthcoming AGM. Michael's contribution to the Company over 26 years as our
fund manager and 24 years as a director has been immense. His talent for
spotting value in areas ignored by others and his insight into how markets
behave, has been an inspiration to all of us. We are particularly fortunate
that Alex Crooke succeeded Michael as manager of Bankers as he learned so much
from working closely with him over many years. We will miss Michael's incisive
thoughts on investment matters delivered with boundless energy, wit and
enthusiasm not just for Bankers but for the investment trust industry as a
whole.
As we say 'au revoir' to one master of his trade I am particularly pleased to
announce that we have persuaded another doyen of the global growth investment
trust sector to join our Board. Richard Burns has agreed to become a director
with effect from 24 February 2006 as Michael steps down. Richard Burns is joint
senior partner of Baillie Gifford and currently the fund manager of Monks
Investment Trust which like Bankers has a fine record. Richard will be
relinquishing his fund management duties and retiring from Baillie Gifford in
April and his extensive knowledge of global markets and overall investment trust
experience will be of great benefit to our Company.
In the financial year ended 31 October 2005, 4,969,571 ordinary shares were
bought back and cancelled and since the year end a further 354,170 ordinary
shares have been bought back. These repurchases at a discount to net asset value
per share have added value for ongoing shareholders; we will continue to use
these powers to selectively enhance the asset value per share. At this year's
AGM we will again be seeking authority to buy back shares for cancellation, up
to 14.99% of the issued share capital.
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Page 4 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Outlook
Economic conditions are tightening as a result of the steady rise in US interest
rates, the effect of which is felt all around the world. The US consumer has a
vital role to play in global markets being the ultimate buyer of a large
percentage of manufactured goods in the world and the financial health of US
consumers will be critical in maintaining the current supportive backdrop for
continued global economic growth. Fears of a housing bubble in the United States
may be misplaced but we believe that the key risk to our optimism next year is a
slowing in spending patterns and tightening of credit.
Investor sentiment can swing wildly on news of terrorism, surging oil prices or
catastrophic natural events. The last year has contained more than its usual
share of such events. However share prices have continued to rise, climbing
this wall of worry. It is easy to be swung by negative news but what ultimately
drives share prices is their valuation. The marked increase in takeover bids,
linked to strong corporate balance sheets and under invested private capital
funds, is a sign that share valuations are still low. This gives me some
confidence that stock markets can continue to move higher in 2006. The ability
of a global growth trust to spread risks and move between markets has shown its
benefit last year and I believe the same advantages of flexibility and income
generation should be seen again this year.
For further information, please contact:
Alex Crooke Sarah Gibbons-Cook
Fund Manager Investor Relations and PR Manager
The Bankers Investment Trust PLC Henderson Global Investors
Tel: 020 7818 4447 Tel: 020 7818 3198
James de Sausmarez
Head of Investment Trusts
Henderson Global Investors
Tel: 020 7818 3349
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Page 5 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Highlights of the Year
31 October 2005 31 October 2004 Change
%
Assets
Total assets less current liabilities (£'000) £456,974 £401,864 +13.7
Net asset value per ordinary share 363.2p 304.0p +19.5
Ordinary share mid-market price 313.3p 262.0p +19.6
Discount (Share Price to Net Asset Value) 13.7% 13.8%
Revenue
Gross revenue (£'000) £13,940 £12,902 +8.0
Revenue return per ordinary share 9.07p 8.05p +12.7
Dividends per share 8.25p 7.47p +10.4
Indices (Capital Return)
FTSE All-Share Index 2,664.40 2,297.66 +16.0
S&P 500 Composite Index 1,207.01 1,130.20 +10.5#
FTSE World Europe (ex UK) Index (£) 307.34 259.00 +18.7
TOPIX (Tokyo First Section Index) 1,444.73 1,085.43 +25.7#
FTSE World (ex UK) Index (£) 277.41 237.96 +16.6
Composite Index (Capital Return)
50/50 FTSE All-Share/FTSE World (ex UK) Index (£) 232.60 200.00* +16.3
Retail Prices Index 193.30 188.60 +2.5
# £ adjusted
* rebased as at 31 October 2004
Total Expense Ratio 0.62% 0.68%
Total Expense Ratio is defined here as the total annual pre tax operating
expenses (management fee and other administration costs) expressed as a
percentage of average shareholders' funds over the year.
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Page 6 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Group Statement of Total Return (incorporating the revenue account)
for the year ended 31 October 2005
(Unaudited) (Audited)
Year ended 31 October 2005 Year ended 31 October 2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital gains from investments - 71,921 71,921 - 27,043 27,043
Income from fixed asset investments 13,587 - 13,587 12,482 - 12,482
Other interest receivable and similar income 353 - 353 420 - 420
--------- --------- --------- --------- --------- ---------
Gross revenue and capital gains 13,940 71,921 85,861 12,902 27,043 39,945
Management fee (1,026) (911) (1,937) (993) (886) (1,879)
Other administrative expenses (556) - (556) (615) - (615)
-------- --------- --------- -------- --------- ---------
Net return on ordinary activities
before interest payable and taxation 12,358 71,010 83,368 11,294 26,157 37,451
Interest payable (819) (1,911) (2,730) (722) (1,685) (2,407)
--------- ---------- ---------- --------- ---------- ----------
Net return on ordinary activities
before taxation 11,539 69,099 80,638 10,572 24,472 35,044
Taxation on net return on ordinary (478) (54) (532) (448) - (448)
activities
--------- --------- --------- --------- --------- ---------
Available for ordinary shareholders 11,061 69,045 80,106 10,124 24,472 34,596
--------- --------- --------- --------- --------- ---------
Dividends on Ordinary Shares:
Three interims of 1.94p (2004: 1.83p) (7,006) - (7,006) (6,867) - (6,867)
Proposed final of 2.43p (2004: 1.98p) (2,881) - (2,881) (2,444) - (2,444)
---------- --------- ---------- ---------- --------- ----------
(9,887) - (9,887) (9,311) - (9,311)
---------- ---------- ---------- ---------- ---------- ----------
Transfer to reserves 1,174 69,045 70,219 813 24,472 25,285
====== ====== ====== ====== ====== ======
Return per ordinary share (Note 1) 9.07p 56.65p 65.72p 8.05p 19.45p 27.50p
The revenue columns of this statement represent the profit and loss accounts of
the Group.
All revenue and capital items in the above statement derive from continuing
operations.
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Page 7 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Balance Sheets
at 31 October 2005
(Unaudited) (Audited) (Unaudited) (Audited)
Group Group Company Company
2005 2004 2005 2004
£'000 £'000 £'000 £'000
Fixed asset investments
Listed at market value:
In the UK 267,798 235,603 267,798 235,603
Outside the UK 201,881 168,328 201,881 168,328
AIM quoted investments at market value 1,288 - 1,288 -
Other quoted fund 1,904 1,489 1,904 1,489
Unquoted investment 729 1,050 729 1,050
Investment in subsidiary undertaking - - 846 711
---------- ---------- ----------- -----------
Total fixed asset investments 473,600 406,470 474,446 407,181
---------- ---------- ----------- -----------
Current assets
Investments 144 - - -
Debtors 1,364 1,311 1,395 1,311
Bank balances and short term deposits 6,940 3,069 6,207 2,861
--------- --------- ----------- -----------
8,448 4,380 7,602 4,172
Creditors: amounts falling due within one year (25,074) (8,986) (25,074) (9,489)
--------- --------- ----------- -----------
Net current liabilities (16,626) (4,606) (17,472) (5,317)
--------- --------- ----------- -----------
Total assets less current liabilities 456,974 401,864 456,974 401,864
Creditors: amounts falling due after more than one year
(26,300) (26,300) (26,300) (26,300)
---------- ---------- ----------- -----------
Total net assets 430,674 375,564 430,674 375,564
====== ====== ====== ======
Capital and reserves
Called up share capital 29,640 30,883 29,640 30,883
Share premium account 452 452 452 452
Other reserves 381,129 325,950 381,975 326,661
Revenue reserve 19,453 18,279 18,607 17,568
---------- ---------- ---------- ----------
Shareholders' funds (all equity) 430,674 375,564 430,674 375,564
====== ====== ====== ======
Net asset value per ordinary share (Note 2) 363.2p 304.0p 363.2p 304.0p
====== ====== ====== ======
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Page 8 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Group Cash Flow Statement
For the year ended 31 October 2005
(Unaudited) (Audited)
2005 2005 2004 2004
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 10,899 10,218
Servicing of finance
Debenture interest paid (2,302) (3,427)
Bank and loan interest paid (421) (104)
---------- ----------
Net cash outflow from servicing of finance (2,723) (3,531)
Taxation
Withholding tax recovered 142 209
----------- -----------
Net tax recovered 142 209
Financial investment
Purchases of investments (88,483) (80,672)
Sales of investments 95,158 94,405
---------- ----------
Net cash inflow from financial investment 6,675 13,733
Equity dividends paid (9,411) (9,111)
Cash withdrawn from short term deposit - 3,597
--------- ---------
Net cash inflow before financing 5,582 15,115
Financing
Purchase of ordinary shares (15,062) (6,865)
Repayment of Yen loans - (16,712)
(Repayment)/drawdown of US Dollar loan (4,471) 3,558
Drawdown of Sterling loan 9,900 -
Drawdown of Swiss Franc loan 3,744 -
----------- -----------
Net cash outflow from financing (5,889) (20,019)
----------- -----------
Decrease in cash in the year (307) (4,904)
====== ======
Reconciliation of net cash flow to movements in net debt
Decrease in cash as above (307) (4,904)
Net cash (inflow)/outflow from (increase)/decrease in loans (9,173) 13,154
Cash inflow from movement in liquid resources - (3,597)
---------- ----------
Change in net debt resulting from cash flows (9,480) 4,653
Translation (losses)/gains on foreign currency loans and cash (1,072) 813
---------- ----------
Movement in net debt in the year (10,552) 5,466
Net debt at 1 November (26,778) (32,244)
----------- -----------
Net debt at 31 October (37,330) (26,778)
====== ======
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Page 9 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Notes:
1. Return per Ordinary Share
Revenue return per ordinary share is based on earnings attributable to
ordinary shares of £11,061,000 (2004: £10,124,000), and on the weighted
average number of ordinary shares in issue during the year of
121,894,238 (2004: 125,810,998).
Capital return per ordinary share is based on gains attributable to
ordinary shares of £69,045,000 (2004: £24,472,000), and on the weighted
average number of ordinary shares in issue during the year of
121,894,238 (2004: 125,810,998).
2. Net Asset Value per Ordinary Share
The net asset value per ordinary share is based on net assets
attributable to ordinary shares of £430,674,000 (2004: £375,564,000) and
on the 118,561,369 ordinary shares in issue at 31 October 2005
(2004: 123,530,940).
3. Group Reconciliation of Movement in Shareholders' Funds
2005 2004
£'000 £'000
Net revenue on ordinary activities after taxation 11,061 10,124
Dividends (9,887) (9,311)
--------- ---------
1,174 813
Increase in other reserves 69,045 24,472
Buy back of ordinary shares (15,109) (6,870)
--------- ---------
Net increase in shareholders' funds 55,110 18,415
Shareholders' funds at 1 November 375,564 357,149
--------- ---------
Shareholders' funds at 31 October 430,674 375,564
====== ======
4. Preliminary Results
The preliminary figures for the year ended 31 October 2005 have been
extracted from the latest Group accounts and do not constitute statutory
accounts as defined by Section 240 of the Companies Act 1985.
These accounts have not yet been delivered to the Registrar of Companies,
nor have the auditors yet reported on them.
5. 2004 Report and Accounts
The figures and financial information for the year ended 31 October 2004
are extracted from the latest published accounts of the Company 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.
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Page 10 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
6. 2005 Report and Accounts
Copies of the Report and Accounts will be posted to shareholders by the
end of January 2006 and will thereafter be available from the Secretary
at 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held
at the Chartered Accountants' Hall, 1 Moorgate Place, London EC2 on
Friday 24 February 2006 at 3.00 pm.
7. Dividend
A final dividend of 2.43p per ordinary share will, if approved by
shareholders, be paid on 28 February 2006 to shareholders on the register
on 27 January 2006. The Company's shares go ex-dividend on
25 January 2006.
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Page 11 of 11
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2005
Largest Investments
at 31 October 2005
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
2005 2005
Rank Rank
(2004) £'000 (2004) £'000
1 (1) BP 22,838 21 (*) Reckitt Benckiser 3,585
2 (2) HSBC 13,505 22 (18) Total Fina Elf 3,541
3 (3) GlaxoSmithKline 12,075 23 (27) QBE Insurance 3,529
4 (6) Royal Bank of Scotland 10,729 24 (37) Richemont 3,439
5 (4) Royal Dutch Shell 10,538 25 (*) Aviva 3,346
6 (5) Vodafone 8,821 26 (*) Gallaher Group 3,291
7 (9) Barclays 6,916 27 (20) Carnival 3,252
8 (8) Lloyds TSB 6,098 28 (*) Petroleo Brasilieros 3,248
9 (11) BT 5,538 29 (*) Reuters 3,233
10 (22) Samsung Electronics 5,091 30 (21) Novartis 3,155
11 (17) British American Tobacco 5,059 31 (38) Mitsubishi UFJ Financial 3,117
12 (7) HBOS 4,676 32 (*) Deutsche Postbank 3,097
13 (19) BHP Billiton 4,335 33 (10) Diageo 3,090
14 (13) ENI 4,145 34 (*) Rolls-Royce 3,055
15 (15) AstraZeneca 4,053 35 (31) Nestle 3,027
16 (34) Rio Tinto 3,856 36 (*) Allied Irish Banks 2,980
17 (14) Irish Life & Permanent 3,831 37 (*) Inditex 2,953
18 (12) Unibail 3,797 38 (28) Dexia 2,926
19 (24) Anglo American 3,741 39 (*) ICAP 2,885
20 (16) Tesco 3,699 40 (25) ITV 2,867
These investments total £206,957,000 or 43.7% of the portfolio.
(*) Not in the top 40 largest investments last year.
Changes in Investments
Valuation Purchases Sales Appreciation Valuation
2004 Proceeds 2005
£'000 £'000 £'000 £'000 £'000
United Kingdom 230,762 28,473 27,694 36,235 267,776
Europe 67,164 14,146 23,282 14,472 72,500
North America 46,011 41,652 28,447 6,353 65,569
Japan 34,964 4,919 15,215 6,998 31,666
Pacific 20,143 88 90 5,692 25,833
Emerging Markets 7,426 - 359 3,189 10,256
---------- ---------- ---------- ---------- ----------
406,470 89,278 95,087 72,939 473,600
====== ====== ====== ====== ======
- ENDS -
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