Final Results

RNS Number : 1283M

Bankers Investment Trust PLC

23 January 2009

 



Page 1 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

This announcement contains regulated information

MANAGEMENT REPORT

Extracts from the Chairman's Statement:

This past year has proved to be one of the most difficult and frustrating in living memory for equity investors. The speed with which the economy and banking system contracted has been breathtaking and has led to almost all investment asset classes becoming unpopular. While our own performance has been better than that of the FTSE All-Share Index, a decline of 36.8%, the absolute fall in Net Asset Value over the twelve month period of 31.9% is substantial and is only offset in a small way by the Company's annual dividend being increased by 8%. Notwithstanding the likely reduction in dividend income for the Trust over the coming months, the strong revenue reserves we have built up in recent years give us the confidence to forecast further dividend growth for Bankers' shareholders of 3% for 2009.

Performance

The fragile confidence in markets that I mentioned in last year's report was brutally shattered by the near complete collapse of the Western banking system in the Autumn. The write down of problem loans and a lack of commercial funding resulted in emergency action from governments which had little alternative but to guarantee deposits and provide equity and debt funding directly to banks. The aftermath of these actions is now being felt in terms of restricted credit.  How the various factors play out will determine whether we experience a slowdown in economic activity similar to that of the early 1990's or what now seems more likely the worst recession in post war history.

Economies have taken some time to react to the growing problems in capital markets. Corporate profits were still rising in June and demand was strong in the Far East and China. The oil price hit $147 a barrel and the European Central Bank even put interest rates up in July to counter inflationary pressures across their markets.  

The Company has avoided some of the bubbles that built up over the first half of the year; we reduced our mining exposure to a low level and reduced investments in oil stocks. We cut back further the bank investments, retreated from emerging markets back to developed economies and reduced exposure to sterling assets.  As a result of these actions, the Company's balance sheet changed from being 2% geared at the beginning of the financial year to having net cash of 3% at the end and equity investments represented only 93% of the net assets at the year end, down from 102% twelve months earlier. It was hoped that these actions would have led to greater protection of shareholder funds but the pronounced reduction in share prices across all sectors and countries showed that there were few safe havens for investors.  

- MORE -

Page 2 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

It has proved difficult to make much sense of individual share price falls, but the fact that the dispersion of both sector and country performance is so narrow points to the fall being influenced by forced selling of shares. To some extent the equity market has suffered because of one of its most attractive attributes, namely its liquidity. While property and bond markets have stagnated because of almost non-existent trading, equities have clearly been used as a source of cash for fearful investors facing redemptions, future commitments (notably private equity) or simply to raise cash balances.

The huge volatility in markets and the tight correlation of sector performance has not been an easy combination for our portfolio managers. Notable performance was achieved in both the European and Japanese portfolios; the latter fell only 5.4% over the year, 13% better than its index. In the US portfolio it was principally the oil and energy holdings that held back performance, despite a low exposure to US financials. The sharp fall in share prices during the last month of our year was unfortunate, and resulted in both the US and Far East Asian portfolios underperforming their local indices. Our asset allocation decisions have largely added value relative to our composite index through the year, namely reducing UK from 52% to 45% of net assets, increasing the US portfolio, maintaining Japan at 12% and raising cash.

The US economy faces huge challenges, which make the recent rapid appreciation of the US dollar and the appetite for US government debt somewhat perverse. A significant factor is the repatriation of US investors' assets from overseas markets, as the US dollar is viewed as a safe haven in troubled times. The Federal Reserve and US government have followed the policy that most economists cite to avoid a deflationary depression by injecting money directly into the economy, as well as by slashing interest rates. These actions have yet to show much impact, but perhaps the economy would have been in a worse state without them. A new President and the Federal Reserve's zero interest rate policy make the US economy an interesting proposition for 2009.

In terms of their economic cycles, Europe and the UK appear to be six months to a year behind the US. Interest rates were late in being cut and strong currencies have been limiting economic growth for the past few years. The dependence on housing and consumers' level of debt varies enormously throughout the European region and those countries with the most overvalued property markets have suffered the most.  Sterling's recent weakness should help the UK economy in due course, but the high levels of consumer debt and heavy reliance on the financial services sector may lead to a sharp slowdown that could take some time to recover. Savings rates need to rise and levels of debt to fall, which will not be easy to establish when unemployment is rising sharply. Our portfolio has been focussed on companies with low debt and defensive profits. This has led to better performance in mainland Europe than the UK, where the market has been overly reliant on mining shares, which has distorted market returns. However, as this has unwound, our relative performance in the UK has improved.

Japan remains an enigma. For a market that does not have credit issues or banks that have required government bailouts, the stock market performance has been disappointing.  A political vacuum, combined with a soaring currency has restricted growth and hurt exporters in the automotive and electronic sectors. The Japanese stock market is now trading at a price to book value of less than one, a level it has never traded at before. The ageing population and spread of wealth in the economy will restrict the potential for economic growth but there are still some fine companies in Japan, now trading at inexpensive prices.

- MORE - 

  Page 3 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

The Asian markets have been held up as being able to withstand the global slowdown, through internally generated consumer demand and high levels of currency reserves. While this looked likely for a time, investors did not hang around to find out and the resulting selling pressure on currencies will soak up reserves as governments try to stabilise capital outflows. The region remains attractive over the medium term but in the short term will suffer from the downturn in demand for manufactured goods from developed countries. We have been active in the region, reducing Chinese exposure early in the year and have recently been rebuilding holdings, after that market has fallen 60% since the end of December 2007.

As cash has been realised during the year and with interest rates falling, we have built a modest holding of UK corporate bonds. These bonds look attractive both from a high running yield and also the potential capital appreciation when the yield premium over gilts falls. This premium has widened to levels not seen since the great depression in the 1930's and reflects the relative illiquidity and forced selling by leveraged funds rather than realistic expectations of default rates. The realisation of the apparent value may well be slow, but with double digit running yields we are being paid to wait, and the coupons will make a useful contribution to our income account.

Revenue and Dividends

For the 42nd consecutive year we have been able to increase dividends to shareholders. We are recommending a final dividend of 2.93p, making a total of 11.06p, an increase of 8% for the year. For a fifth consecutive year the Company's revenue return per ordinary share has grown, helped by contributions from the bonds and translation benefits of overseas income back into sterling. These two factors will help underpin income into 2009 but there are an increasing number of companies reducing their payouts and dividends will probably be lower in 2009 than in the year just ended. We are attempting to reduce the impact on our income account by avoiding those companies under most pressure to cut dividends but the opportunities for other companies to grow distributions will be limited in the shorter term.

Our revenue reserves have been built up over recent years, in order to help sustain our distributions in the difficult years. We anticipate dipping into these reserves in the next couple of years before underlying corporate profits recover and distributions begin to grow once more. With revenue reserves equivalent to two and a half times our total annual dividend, we are in a strong position going into this slowdown. At this stage, we are forecasting a rise in the Company's total dividend per share of a further 3% in 2009.

Board Changes

We are pleased to announce that Matthew Thorne has been appointed to the Board as a non-executive director and in addition joins the audit committee. Matthew is a qualified Chartered Accountant and has significant experience as a finance director, predominantly in the property sector. His appointment broadens the skills and experience of the Board and I am sure he will make a significant contribution over the coming years.

- MORE - 

  Page 4 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Annual General Meeting

The Annual General Meeting this year will be held at the new offices of Henderson Global Investors, 201 Bishopsgate, London on Thursday 26 February 2009 at 12 noon.  Henderson's new premises can now accommodate a meeting of our size.  As usual our manager, Alex Crooke, and his team will be making a presentation with regard to investment and all shareholders are most welcome to attend. 

Outlook

It is clear that many economies are now in recession and that overall global economic growth will exhibit a marked slowdown. This recession will be unlike any since the 1940's because it has been accompanied by a primary banking crisis and a withdrawal of credit. However, we must remember that we are in the second year of this credit crisis and that there has been a firm commitment by governments to support banks and restart lending. 

Offsetting the bad news, central banks have cut interest rates and banks have been recapitalised more quickly than happened in the US in the 1930's or in Japan in the early 1990's. These actions will take some time to show results and it is likely that there will be further corporate casualties in the coming year. Share prices have not risen in line with corporate earnings over the last five years and following the big fall in share prices, valuation ratings today are at a level not seen by investors for a generation. In our view this reflects both a gloomy outlook and the high level of redemptions from traditional and hedge fund investors. Confidence levels are equally depressed and just as it was hard to find a bearish analyst two years ago, it is hard to find an optimistic one today.

Bear markets are characterised by their volatility and there will be sharp moves both up and down this year.  We expect to be redeploying our cash balances in 2009 but are wary about making our move too early. Stock markets have traditionally bottomed some time between when the pace of profit downgrades eases and before they move into positive territory.  In the meantime we feel it is right to keep dividends moving upwards for our shareholders, by using revenue reserves to compensate for corporate dividend cuts.  Equities should outperform other asset classes over time and your Company's global mandate gives the manager considerable flexibility in seeking the best investments to maintain its long term growth record. In fact, over the past ten years your Company's NAV total return has grown by 53.6% as compared to the FTSE All-Share Index total return of +18.0%.

- MORE -

Page 5 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Principal Risks and Uncertainties

The Board has drawn up a matrix of risks facing the Company and has put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy, in order to mitigate these risks as far as practicable. The principal risks which have been identified and the steps taken by the Board to mitigate these are as follows:

• Portfolio and market

Although the Company invests almost entirely in securities that are quoted on recognised markets, share prices may move sharply. The companies in which investments are made may operate unsuccessfully, or fail entirely. A fall in the market value of the Company's portfolio would have an adverse effect on the shareholders' funds. The Board reviews the portfolio each month and mitigates this risk through diversification of investments in the portfolio.

• Investment activity and performance

An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in underperformance against the Company's benchmark index and the companies in its peer group. The Board monitors investment performance at each Board meeting and regularly reviews the extent of its borrowings.

• Tax and regulatory risks

A breach of Section 842 of the Income and Corporation Taxes Act 1988 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the UKLA Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Acts 1985 and 2006 could lead to criminal proceedings, or financial or reputational damage. The Company must also ensure compliance with the listing rules of the New Zealand Stock Exchange.  The Manager has contracted to provide investment, company secretarial, administration and accounting services through qualified professionals. The Board receives internal control reports produced by the Manager on a quarterly basis, which confirmed regulatory compliance during the year.

• Financial

By its nature as an investment trust, the Company's business activities are exposed to market risk (including currency risk, interest rate risk and market price risk), liquidity risk, and credit and counterparty risk. Details of these risks and how they are managed are contained in the notes in the Annual Report and Financial Statements.

• Operational

Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its suppliers may not provide the required level of service.  Details of how the Board monitors the services provided by the Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement in the Annual Report and Financial Statements.

- MORE -

  Page 6 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Related Party Transactions

Investment management, accounting, company secretarial and administration services are provided to the Group by wholly owned subsidiary companies of Henderson Global Investors (Holdings) plc ('Henderson'). Global custody services are provided by BNP Paribas Securities Services. These are the only related party transactions currently in place. There have been no material transactions with these related parties which have affected the financial position or performance of the Company in the financial year.

Statement of Directors' Responsibilities 

In accordance with Disclosure and Transparency Rule 4.1.12, the Directors confirm to the best of their knowledge that:

(a) the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group; and

(b) the Report of the Directors includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board of Directors

R D Brewster

Chairman

For further information contact:                        

Alex Crooke Fund Manager The Bankers Investment Trust PLC Telephone: [phone]	Richard Brewster Chairman The Bankers Investment Trust PLC Telephone: [phone]
James de Sausmarez Director of Investment Trusts Henderson Global Investors Telephone: [phone]	Sarah Gibbons-Cook  Investor Relations and PR Manager  Henderson Global Investors  Telephone: [phone]

- MORE -

  Page 7 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

SUMMARY OF THE YEAR

	31 October 2008		31 October 2007		Change %
Consolidated Assets
Total assets less current liabilities (£'000)	410,661		596,020		-31.1
Net asset value per ordinary share	340.8p		500.1p		-31.9
Ordinary share mid-market price	305.0p		439.0p		-30.5
Discount (share price to net asset value)	10.5%		12.2%
Consolidated Revenue
Gross revenue (£'000)	18,613		16,437		+13.2
Revenue earnings per ordinary share	12.76p		11.32p		+12.7
Dividends paid/payable per share	11.06p		10.24p		+8.0
Indices (capital return)
FTSE All-Share Index	2,183.69		3,454.12		-36.8
S&P 500 Composite Index	968.75		1,549.38		-19.6	#
FTSE World Europe (ex UK) Index (£)	283.83		439.31		-35.4
TOPIX (Tokyo First Section Index)	867.12		1,620.07		-19.3	#
FTSE World (ex UK) Index (£)	249.12		341.41		-27.0
Composite Index (capital return)
50/50 FTSE All-Share Index/   FTSE World (ex UK) Index (£)	136.19		200.00	*	-31.9
Total Expense Ratio (including performance fee and excluding VAT)	0.47%		0.71%
Retail Prices Index	217.70		208.90		+4.2
# £ adjusted
*rebased as at 31 October 2007

- MORE -

Page 8 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

AUDITED CONSOLIDATED INCOME STATEMENT 

for the year ended 31 October 2008

		Year ended 31 October 2008			Year ended 31 October 2007
	Notes	Revenue return  £'000	Capital return  £'000	Total  £'000	Revenue return  £'000	Capital return  £'000	Total  £'000
(Losses)/gains on investments held at fair value through profit or loss		-	(183,058)	(183,058)	-	66,505	66,505
Investment income	2	17,773	-	17,773	15,943	-	15,943
Other operating income	3	840	-	840	494	-	494
		---------	------------	---------	---------	---------	---------
Total income/(loss)		18,613	(183,058)	(164,445)	16,437	66,505	82,942
		---------	------------	---------	---------	---------	---------
Expenses
Management fees	4	(959)	(436)	(1,395)	(619)	(1,884)	(2,503)
Other expenses		(531)	-	(531)	(566)	-	(566)
		---------	------------	---------	---------	---------	---------
Profit/(loss) before finance costs and taxation		17,123	(183,494)	(166,371)	15,252	64,621	79,873
Finance costs		(715)	(1,668)	(2,383)	(699)	(1,632)	(2,331)
		---------	------------	---------	---------	---------	---------
Profit/(loss) before taxation		16,408	(185,162)	(168,754)	14,553	62,989	77,542
Taxation	5	(1,935)	1,283	(652)	(1,475)	897	(578)
		---------	------------	---------	---------	---------	---------
Profit/(loss) attributable to equity shareholders		14,473	(183,879)	(169,406)	13,078	63,886	76,964
		=====	=======	======	=====	=====	=====
Earnings/(loss) per ordinary share	6	12.76p	(162.16p)	(149.40p)	11.32p	55.29p	66.61p

The total column of this statement represents the Group's Income Statement, prepared in accordance with IFRS as adopted by the European Union. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

All income is attributable to the equity shareholders of The Bankers Investment Trust PLC. There are no minority interests.

- MORE -

Page 9 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

AUDITED CONSOLIDATED AND PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

for the year ended 31 October 2008

Consolidated year ended 31 October 2008	Called up  share capital £'000	Share premium  account £'000	Capital redemption  reserve £'000	Other capital  reserves £'000	Revenue reserve £'000	Total £'000
Balance at 31 October 2007	28,544	452	11,666	502,803	27,555	571,020
Buy back of 1,015,740 ordinary shares	(254)	-	254	(4,141)	-	(4,141)
Net (loss)/profit from ordinary activities after tax	-	-	-	(183,879)	14,473	(169,406)
Ordinary dividends paid	-	-	-	-	(11,812)	(11,812)
	----------	----------	----------	----------	----------	----------
Balance at 31 October 2008	28,290	452	11,920	314,783	30,216	385,661
	======	======	======	======	======	======

Consolidated year ended  31 October 2007	Called up  share capital £'000	Share premium  account £'000	Capital redemption  reserve £'000	Other capital  reserves £'000	Revenue reserve £'000	Total £'000
Balance at 31 October 2006	29,115	452	11,095	448,547	26,154	515,363
Buy back of 2,285,576 ordinary shares	(571)	-	571	(9,630)	-	(9,630)
Net profit from ordinary activities after tax	-	-	-	63,886	13,078	76,964
Ordinary dividends paid	-	-	-	-	(11,677)	(11,677)
	----------	----------	----------	----------	----------	----------
Balance at 31 October 2007	28,544	452	11,666	502,803	27,555	571,020
	======	======	======	======	======	======

Company year ended 31 October 2008	Called up share capital £’000	Share premium account £’000	Capital  redemption reserve £’000	Other capital reserves £’000	Revenue reserve £’000	Total £’000
Balance at 31 October 2007	28,544	452	11,666	503,709	26,649	571,020
Buy back of 1,015,740 ordinary shares	(254)	-	254	(4,141)	-	(4,141)
Net (loss)/profit from ordinary activities after tax	-	-	-	(183,879)	14,473	(169,406)
Ordinary dividends paid	-	-	-	-	(11,812)	(11,812)
	----------	----------	----------	----------	----------	----------
Balance at 31 October 2008	28,290	452	11,920	315,689	29,310	385,661
	======	======	======	======	======	======

 

Company year ended 31 October 2007	Called up share capital £’000	Share premium account £’000	Capital  redemption reserve £’000	Other capital reserves £’000	Revenue reserve £’000	Total £’000
Balance at 31 October 2006	29,115	452	11,095	449,453	25,248	515,363
Buy back of 2,285,576 ordinary shares	(571)	-	571	(9,630)	-	(9,630)
Net profit from ordinary activities after tax	-	-	-	63,886	13,078	76,964
Ordinary dividends paid	-	-	-	-	(11,677)	(11,677)
	----------	----------	----------	----------	----------	----------
Balance at 31 October 2007	28,544	452	11,666	503,709	26,649	571,020
	======	======	======	======	======	======

 

 

- MORE -

Page 10 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

AUDITED CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS

at 31 October 2008

	Consolidated 2008 £'000	Consolidated 2007 £'000	Company 2008 £'000	Company 2007 £'000
Non-current assets
Investments held at fair value through profit or loss	375,516	582,724	376,422	583,630
	----------	----------	----------	----------
Current assets
Other receivables	15,332	5,575	15,332	5,575
Cash and cash equivalents	21,882	10,660	21,878	10,656
	----------	----------	----------	----------
	37,214	16,235	37,210	16,231
	----------	----------	----------	----------
Total assets	412,730	598,959	413,632	599,861
	----------	----------	----------	----------
Current liabilities
Other payables	(2,069)	(2,939)	(2,971)	(3,841)
	----------	----------	----------	----------
Total assets less current liabilities	410,661	596,020	410,661	596,020
Non-current liabilities
Debenture stocks	(25,000)	(25,000)	(25,000)	(25,000)
	----------	----------	----------	----------
Net assets	385,661	571,020	385,661	571,020
	======	======	======	======
Equity attributable to equity shareholders
Called up share capital	28,290	28,544	28,290	28,544
Share premium account	452	452	452	452
Capital redemption reserve	11,920	11,666	11,920	11,666
Retained earnings:
Other capital reserves	314,783	502,803	315,689	503,709
Revenue reserve	30,216	27,555	29,310	26,649
	----------	----------	----------	----------
Total equity	385,661	571,020	385,661	571,020
	======	======	======	======
Net asset value per ordinary share (pence) (Note 7)	340.8p	500.1p	340.8p	500.1p
	======	======	======	======

- MORE -

  Page 11 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

AUDITED CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS

for the year ended 31 October 2008

Reconciliation of operating revenue to net cash inflow from operating activities	Consolidated 2008 £'000	Company 2008 £'000	Consolidated 2007 £'000	Company 2007 £'000
Net (loss)/profit before tax	(168,754)	(168,754)	77,542	77,542
Add back interest paid	2,383	2,383	2,332	2,332
Add/(less): losses/(gains) on investments held at fair value through profit or loss	183,058	183,058	(66,505)	(66,505)
Increase in accrued income	(660)	(660)	(912)	(912)
Decrease/(increase) in other debtors	824	824	(2,103)	(2,103)
(Decrease)/increase in other creditors	(1,831)	(1,831)	824	824
Net sales of investments	23,516	23,516	21,816	21,816
Increase in amounts due from brokers	(9,793)	(9,793)	(1,327)	(1,327)
Increase in amounts due to brokers	1,038	1,038	806	806
Stock dividends included in investment income	(258)	(258)	(39)	(39)
	----------	----------	----------	----------
Net cash inflow from operating activities before interest and taxation	29,523	29,523	32,434	32,434
Interest paid	(2,383)	(2,383)	(2,332)	(2,332)
Taxation on investment income	(780)	(780)	(696)	(696)
	----------	----------	----------	----------
Net cash inflow from operating activities	26,360	26,360	29,406	29,406
Financing activities
Equity dividends paid	(11,812)	(11,812)	(11,677)	(11,677)
Purchase of ordinary shares	(4,218)	(4,218)	(9,553)	(9,553)
	----------	----------	----------	----------
Net cash used in financing	(16,030)	(16,030)	(21,230)	(21,230)
	----------	----------	----------	----------
Increase in cash	10,330	10,330	8,176	8,176
Cash and cash equivalents at start of year	10,660	10,656	2,923	2,919
Exchange movements	892	892	(439)	(439)
	----------	----------	----------	----------
Cash and cash equivalents at end of year	21,882	21,878	10,660	10,656
	======	======	======	======

- MORE -

  Page 12 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

NOTES:

1.	Accounting policies
	The financial statements have been prepared on the basis of the accounting policies set out in the Group's financial statements for the year ended 31 October 2007.

		2008	2007
2.	Investment income	£'000	£'000
	UK dividend income:
	Listed	9,398	9,446
	Listed special dividends	34	247
		--------	--------
		9,432	9,693
		--------	--------
	Unfranked:
	Listed investments:
	Dividend income	7,293	5,969
	Special dividends	121	235
	Interest income	669	7
	Stock dividends	258	39
		--------	--------
		8,341	6,250
		--------	--------
		17,773	15,943
		=====	=====
	Analysis of investment income by geographical region:
	UK	10,559	10,060
	Europe (ex UK)	2,291	2,515
	North America	1,243	864
	Japan	1,385	694
	Pacific (ex Japan)	1,826	1,285
	Emerging Markets	469	525
		---------	---------
		17,773	15,943
		=====	=====

		2008	2007
3.	Other operating income	£'000	£'000
	Bank interest	376	298
	Interest on VAT refund	215	-
	Stock lending fees	139	190
	Underwriting commission	110	6
		--------	---------
		840	494
		=====	=====

At 31 October 2008 the total value of securities on loan by the Group for stock lending purposes was £30,114,000 (2007: £54,509,000).  The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2008 was £83,485,000 (2007: £115,681,000). The Group's agent holds collateral, which is reviewed on a daily basis, comprising Crest Delivery by Value ('DBV's') with a market value of 105% of the market value of any securities on loan.

- MORE -

  Page 13 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

4.	Management fees	Revenue  return 2008 £'000	Capital return 2008 £'000	Total 2008 £'000	Revenue  return 2007 £'000	Capital return 2007 £'000	Total 2007 £'000
	Investment management	255	597	852	229	536	765
	Accounting, secretarial and administration	853	-	853	765	-	765
	Irrecoverable VAT thereon	-	-	-	101	54	155
	Performance fee	-	-	-	-	1,785	1,785
	Irrecoverable VAT thereon	-	-	-	-	11	11
	Write back of VAT	(149)	(161)	(310)	(476)	(502)	(978)
		-------	-------	-------	-------	-------	-------
		959	436	1,395	619	1,884	2,503
		====	====	====	====	====	====

5.	Taxation	Revenue  return 2008 £'000	Capital return 2008 £'000	Total 2008 £'000	Revenue  return 2007 £'000	Capital return 2007 £'000	Total 2007 £'000
	(a) Analysis of the charge for the year
	UK Corporation tax at 28.83% (2007: 30%)	585	-	585	530	-	530
	Double taxation relief	(585)	-	(585)	(530)	-	(530)
	Overseas tax reclaimable	(220)	-	(220)	(188)	-	(188)
	Tax relief on expenses charged to capital	1,283	(1,283)	-	897	(897)	-
		-------	-------	-------	-------	-------	-------
		1,063	(1,283)	(220)	709	(897)	(188)
	Overseas tax suffered	872	-	872	766	-	766
		-------	-------	-------	-------	-------	-------
	Taxation	1,935	(1,283)	652	1,475	(897)	578
		====	====	====	====	====	====

- MORE -

  Page 14 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

(b) Factors affecting the tax charge for the year UK corporation tax rate was 30% until 31 March 2008 and 28% from 1 April 2008 giving an effective rate of 28.83%. The differences are explained below:

		Revenue  return 2008 £'000	Capital return 2008 £'000	Total 2008 £'000	Revenue  return 2007 £'000	Capital return 2007 £'000	Total 2007 £'000
	Profit/(loss) before taxation	16,408	(185,162)	(168,754)	14,553	62,989	77,542
		--------	-----------	-----------	---------	---------	---------
	Corporation tax at 28.83% (2007: 30%)	4,730	(53,382)	(48,652)	4,366	18,897	23,263
	Non taxable UK dividends	(2,720)	-	(2,720)	(2,908)	-	(2,908)
	Non taxable scrip dividends and other income	(125)	-	(125)	(42)	-	(42)
	Tax relief on expenses charged to capital	(1,798)	-	(1,798)	(1,316)	-	(1,316)
	Income taxable in different years	(38)	-	(38)	(81)	-	(81)
	Overseas withholding tax suffered	600	-	600	539	-	539
	Expenses not deductible for tax purposes	3	-	3	20	-	20
	Tax charged/(credited) for use of capital expenses	1,283	(1,283)	-	897	(897)	-
	Capital losses/(gains) not subject to tax	-	53,382	53,382	-	(18,897)	(18,897)
		--------	---------	---------	---------	---------	---------
		1,935	(1,283)	652	1,475	(897)	578
		====	=====	=====	====	====	====

	(c) Provision for deferred taxation No provision for deferred taxation has been made in the current year or in the prior year.  The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company.
	(d) Factors that may affect future tax charges The Company has not recognised a deferred tax asset of £2,629,000 (2007: £3,656,000) arising as a result of Eligible Unrelieved Foreign Tax and loan relationship deficits. These expenses will only be utilised if the Group has profits chargeable to corporation tax in the future.

- MORE -

  Page 15 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

6.	Earnings/(loss) per ordinary share
	The total earnings per ordinary share is based on the net losses attributable to the ordinary shares of £169,406,000 (2007: profits of £76,964,000) and on 113,394,414 ordinary shares (2007: 115,549,347) being the weighted average number of shares in issue during the year.   The total earnings can be further analysed as follows:

		2008	2007
		£'000	£'000
	Revenue earnings	14,473	13,078
	Capital (loss)/profits	(183,879)	63,886
		-----------	---------
	(Loss)/profit for the year	(169,406)	76,964
		=======	=====
	Weighted average number of ordinary shares	113,394,414	115,549,347
		---------------	---------------
	Revenue earnings per ordinary share	12.76p	11.32p
	Capital (loss)/profits per ordinary share	(162.16)p	55.29p
		-----------	---------
	(Loss)/earnings per ordinary share	(149.40)p	66.61p
		=======	=====
	The Company does not have any dilutive securities, therefore basic and dilutive earnings are the same.
7.	Net asset value per ordinary share
	The net asset value per ordinary share is based on net assets attributable to ordinary shares of £385,661,000 (2007: £571,020,000) and on the 113,159,824 ordinary shares in issue at 31 October 2008 (2007: 114,175,564).

		£'000
	Net assets attributable to ordinary shares at 1 November 2007	571,020
	Total net loss on ordinary activities after taxation	(169,406)
	Dividends paid	(11,812)
	Buy back of ordinary shares	(4,141)
		------------
	Net assets attributable to ordinary shares at 31 October 2008	385,661
		=======

8.	Called up share capital
		2008 £'000	2007 £'000
	Authorised:
	186,280,000 ordinary shares of 25p each	46,570	46,570
		---------	---------
	Allotted, issued and fully paid:
	113,159,824 (2007: 114,175,564) ordinary shares of 25p each	28,290	28,544
		=====	=====
	During the year 1,015,740 (2007: 2,285,576) ordinary shares were bought back for cancellation at a cost of £4,141,000 (2007: £9,630,000).

- MORE -

  Page 16 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

9.	2008 financial information
	The figures and financial information for 2008 are extracted from the Annual Report and Financial Statements for the year ended 31 October 2008 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. The Annual Report and Financial Statements has not yet been delivered to the Registrar of Companies.
10.	2007 financial information
	The figures and financial information for 2007 are extracted from the published Annual Report and Financial Statements for the year ended 31 October 2007 and do not constitute the statutory accounts for that year. The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.
11.	Annual report and financial statements
	Copies of the Annual Report and Financial Statements will be posted to shareholders by the end of January 2009 and will be available on the Company's website (www.bankersinvestmenttrust.com) or in hard copy format from the Registered Office, 201 Bishopsgate, London EC2M 3AE.   The Annual General Meeting will be held at that address on Thursday 26 February 2009 at 12 noon.
12.	Dividend
	A final dividend of 2.93p per ordinary share will be paid, if approved by shareholders at the AGM, on 27 February 2009 to shareholders on the register on 6 February 2009. The Company's shares go exߛdividend on 4 February 2009.

- MORE -

  Page 17 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2008

LARGEST INVESTMENTS at 31 October 2008

The 25 largest investments (convertibles and all classes of equity in any one company being treated as one investment) were as follows:

Rank	(2007)		Valuation 2007 £'000	Purchases £'000	Sales proceeds £'000	(Depreciation)/ Appreciation £'000	Valuation 2008 £'000
1	(1)	BP	26,938	-	(7,994)	(3,727)	15,217
2	(2)	HSBC	16,357	-	(4,389)	(3,434)	8,534
3	(3)	Vodafone	10,941	1,590	-	(4,445)	8,086
4	(5)	Royal Dutch Shell	10,408	-	(911)	(2,032)	7,465
5	(7)	GlaxoSmithKline	7,700	-	-	(255)	7,445
6	(10)	British American Tobacco	7,448	-	-	(529)	6,919
7	(*)	Catlin	1,521	5,950	-	(1,483)	5,988
8	(6)	Petroleo Brasileiros	8,261	-	-	(2,279)	5,982
9	(16)	BG	5,604	-	-	148	5,752
10	(*)	National Grid	3,798	1,547	-	(253)	5,092
11	(*)	Scottish & Southern Energy	3,890	1,838	-	(872)	4,856
12	(8)	Aviva	7,567	1,151	(1,017)	(3,638)	4,063
13	(*)	Jardine Lloyd Thompson	1,724	1,572	-	664	3,960
14	(19)	Mitsubushi UFJ Financial	5,355	410	(1,034)	(909)	3,822
15	(*)	De La Rue	2,832	624	-	247	3,703
16	(12)	Rolls-Royce	6,721	-	(498)	(2,634)	3,589
17	(22)	Fresenius	4,882	-	(1,365)	40	3,557
18	(*)	Nestlé	3,992	-	(773)	234	3,453
19	(*)	High Tech Computer	3,383	17	-	(97)	3,303
20	(*)	Novartis	2,661	-	-	549	3,210
21	(*)	Yamato	3,261	1,661	(1,790)	5	3,137
22	(*)	Reckitt Benckiser	3,347	-	-	(215)	3,132
23	(*)	ENI	3,943	-	(377)	(612)	2,954
24	(*)	Seven & I	2,416	735	(1,168)	923	2,906
25	(*)	QBE Insurance	3,759	63	-	(1,047)	2,775
			----------	----------	----------	----------	----------
			158,709	17,158	(21,316)	(25,651)	128,900
			======	======	======	======	======

These investments total 34.3% of the portfolio.

(*) Not in the top 25 largest investments last year.

DISTRIBUTION OF ASSETS AND LIABILITIES at 31 October 2008

	Equities	Fixed  interest	Current assets	Total assets		Total liabilities	Geographical exposure of operational assets
	£'000	£'000	£'000	£'000	%	£'000	£'000	%
United Kingdom	170,608	16,036	23,036	209,680	50.8	(26,625)	183,055	47.5
Europe	40,685	-	3,542	44,227	10.7	-	44,227	11.5
North America	70,539	-	3,263	73,802	17.9	(444)	73,358	19.0
Japan	43,627	-	4,328	47,955	11.6	-	47,955	12.4
Pacific (ex Japan)	24,067	-	2,153	26,220	6.4	-	26,220	6.8
Emerging Markets	9,954	-	892	10,846	2.6	-	10,846	2.8
	---------	---------	-------	---------	------	---------	----------	-------
Total	359,480	16,036	37,214	412,730	100.0	(27,069)	385,661	100.0
	======	======	=====	======	====	======	======	====
Percentage	93.2%	4.2%	9.6%	107.0%		(7.0%)	100.0%

Expense debtors and creditors have been allocated to sterling for the purposes of this table.

- ENDS -

 

END

 

 

FR UUUWRKSRAUAR