Final Results

RNS Number : 6039Z

Bankers Investment Trust PLC

17 January 2011

 



Page 1 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

This announcement contains regulated information

MANAGEMENT REPORT

Extracts from the Chairman's Statement:

Chairman's Statement

It is pleasing to report that your Company has recovered significantly again this year.  From the low point two years ago the net asset value has increased by 49% and this growth arises despite our "value" investment style currently not being in fashion. In the last 12 months our Manager has delivered further solid growth in net asset value of 13%. As I said last year, the Manager's style has helped protect shareholders in these fragile markets by maintaining a conservative investment policy of selecting well managed and fairly valued companies thus minimising risk.  Our solid revenue reserves and a growing level of income support our forecast of continued growth in our annual dividends of 5% in 2011.

Performance and Markets

We have long considered that a value based approach to stock selection delivers the least volatile and most consistent approach to investment. A concentration on not over paying for growth and a focus on cash generation and dividends characterises our investment philosophy. The results this year have not matched the benchmark, with the Net Asset Value total return rising 15.9%, compared to the composite benchmark index rising 17.5% on a similar basis.  Whilst disappointing, this is only the second year since 1999 that our NAV return, with dividends reinvested, has not exceeded the benchmark.  The major contributing factors to the underperformance include an underweight position in the US market, where returns were stronger than in other markets, and a limited exposure to growth stocks which were more in favour than value stocks.

Following the strong recovery in share prices last year, it might have been expected that we would enter a period of consolidation which should have favoured our investment style. However, in general, companies have been adept at seeking new markets in the Far East, paying down debt and keeping a tight control on costs in order to increase profits. These actions have led to corporate earnings growing strongly over the past year, favouring a growth rather than a value orientated investment portfolio.

It has been said that share prices "climb a wall of worry" and despite the bailout of Greece, and subsequently Ireland, austerity programmes in Europe and quantitative easing, it has not been a bad environment for investment in most asset classes. With interest rates in many developed nations remaining near zero, capital has sought better returns and flowed into bonds, equities, commodities and gold. In addition, China has significantly increased bank lending and government investment in order to offset sluggish demand from the West for its products, further stimulating the demand for commodities and food.  We have moved rapidly from a fear of deflation and stagnation to a period where inflationary pressures have returned and will be hard to contain.

As our confidence in a broad based economic recovery has grown, we have steadily invested our cash balances and switched bond investments into equities in order to capture higher returns.  The financial bonds we purchased at distressed prices in late 2008 appreciated materially and have provided much needed income at a time when some companies suspended or cut dividends. Our gearing at the period end was 4%, having increased the European, UK and Asian portfolios over the year.  The new investments in both the UK and Europe have focussed on exporters or companies with significant exposure to Asian and Chinese growth.

For some years we have been reducing exposure to Europe and we only increased it when we felt that sentiment was at its lowest point at the time of the Greek refinancing.  We have focussed on Northern Europe and at the year end did not own any equities in Ireland, Greece or Portugal.  The prospects for Germany appear encouraging, based upon the weakness of the euro combined with booming exports, leading to solid growth from the corporate sector.  Following a focus on quality shares, while avoiding financial and southern Mediterranean stocks, our performance has been 11% greater than the European benchmark index.

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Page 2 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

A headwind for our overall performance has been the strength of the US market relative to other developed markets and our underweight position in that area. The US Government's strategy for recovery has been to stimulate demand whilst the US Federal Bank has provided huge liquidity to the financial sector, culminating in a second round of quantitative easing which, in general, has been beneficial for US equities and bonds alike.   The mid term elections in the US have reduced the ability of the Democrat administration to enact policy but the economy appears to be making steady, albeit slow progress.

In Asia, there appears less appetite for austerity and in some countries inflation is becoming a problem. The property market in many Asian countries has been buoyant and bank lending equally strong, stimulating domestic demand and starting the process of re-orientating economies from being export led to a more balanced model.  The increase in earnings from Asian companies has surpassed the rise in share prices in the region, meaning that valuations are now lower than a year ago, supporting 12.7% of our portfolio being committed to the region.  We are, though, alert to the risks of the economies overheating and we are keeping a watching eye on the region.

In the UK, we have failed to match the performance of the FTSE All-Share Index.  The majority of this relative underperformance can be attributed to being underweight in the mining sector.  Metal prices have been buoyant which has led to significant share price appreciation.  We have had a better experience in the oil exploration sector, which has performed well, culminating in a takeover of Dana Petroleum.  The UK stock market provides access to companies doing business all over the world and increasingly has less exposure to the domestic economy.  New holdings this year like Essar Energy and iEnergizer, for instance, are listed in London but operate entirely in India.  Our intention, over the medium term, is to continue our commitment to these international companies listed in London, which is likely to lead to a reduction in our exposure to mainly UK orientated businesses.

Our emerging market investments have been heavily concentrated in certain countries and sectors.  Over the past few years this focus has delivered very good performance but over the last twelve months the holdings in South Africa and Brazil have not helped overall performance.  As emerging market economies, like Latin America and Eastern Europe, develop and grow, we are adjusting our investment strategy to gain access to these new opportunities.

Revenue and Dividends

I am pleased to report that the outlook for dividends is beginning to pick up and we are finding more of our equity investments growing their distributions.  In the last couple of years our investment income has suffered a significant drop but we have managed to offset this by switching investment into bonds and increasing underwriting income.  We have also benefited from the recent change in the tax treatment of our overseas investments.  It is a great testimony to the resilience of our income that despite the loss of dividends from our BP holding, our dividend is still covered. We believe that BP will resume dividends in 2011 and have confidence that there will be continuing income growth from our underlying investments over the coming year.

We are recommending a final dividend of 3.1p, making a total of 12.1p, an increase of 5.2% for the year.  This level of dividend is higher than our forecast and represents an increase above the level of RPI.  Importantly, this increase is one of our key objectives and continues our record of raising dividends to shareholders each year for the last 44 years.  We recognise that regular growth in income is a major attraction to investors.  Looking to 2011, we are forecasting a dividend per share of not less than 12.7p, an increase of 5.0%.

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Page 3 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Board Succession and new Director

Francis Sumner steps down from the Board at the AGM after serving 14 years as a Director. In recent years he has been both our Senior Independent Director and a key member of all major committees and has therefore been at the heart of nearly every decision made by the Board. He has been a source of invaluable advice for very many years as well as being a close colleague to all Directors. We thank him for his unstinting service and wish him every happiness for the future.

As one door closes another one opens and I am pleased to advise you that at the AGM we shall be asking shareholders to approve the appointment of Peter Sullivan as a new Director. Peter brings to the Board new talents with commercial knowledge gained from both his business career and his extensive time working in the Far East. It was felt appropriate for Bankers, as a global investor, to find a new director with considerable international experience. Peter was formerly Executive Director & CEO (Hong Kong) at Standard Chartered Bank Limited and is a non-Executive Director of a number of companies involved in the Far East. We look forward to working with Peter in the years ahead.

Annual General Meeting

The Annual General Meeting this year will be held at the offices of Henderson Global Investors, 201 Bishopsgate, London EC2M 3AE on Tuesday 22 February 2011 at 2.30 pm.

Outlook

The coming year will undoubtedly entail more major challenges and continuing stress as some countries struggle under the strains of too much debt.  Policy makers across the globe will be encouraging economic growth, consumer confidence and reflation in order to drive higher levels of GDP.  The principal concern is the artificial nature of their actions and their sustainability if these policies fail to create a supportive environment for increased investment.  What we need to see is the private sector increasing investment and creating jobs.

We remain optimistic that we can continue to deliver growth in both net asset value and dividends but retain our cautious spread of investments in order to navigate the difficult global issues that will continue to overshadow stock markets. Current equity valuations do not price in a full recovery and there is scope for share prices to continue their upward trend should the reduction in government spending be matched by an increase in corporate investment.  If so, the benefit to the overall global economy will be far greater than most commentators are predicting and may well be sufficient to boost demand and push growth above trend.

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Page 4 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

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 objectives 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 1158 of the Corporation Taxes Act 2010 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 Act 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 market price risk, currency risk and interest rate 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 in the Annual Report and Financial Statements.

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Page 5 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Related Party Transactions

Investment management, accounting, company secretarial and administration services are provided to the Group by wholly owned subsidiary companies of Henderson Group plc ("Henderson").    This is the only related party arrangement currently in place.  Other than the fees payable by the Company in the ordinary course of business, and the investment in the Henderson Liquid Assets Fund, a money market fund, there have been no material transactions with this related party which has affected the financial position or performance of the Company in the financial year.  Global custody services are provided by BNP Paribas Securities Services.

Statement of Directors' Responsibilities under DTR 4.1.12

Each of the directors confirm that, to the best of their knowledge:

• the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

• 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]

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Page 6 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

SUMMARY OF THE YEAR

	31 October 2010		31 October 2009		Change %
Consolidated Assets
Total assets less current liabilities (£'000)	526,955		473,863		+11.2
Net asset value per ordinary share	451.9p		399.9p		+13.0
Ordinary share mid-market price	379.9p		347.5p		+9.3
Discount (Share Price to Net Asset Value)	15.9%		13.1%
Consolidated Revenue
Gross revenue (£'000)	16,478		16,866		-2.3
Revenue earnings per ordinary share	12.26p		11.83p		+3.6
Dividends per ordinary share in respect of the year	12.10p		11.50p		+5.2
Total Return
Total return per ordinary share	63.39p		70.18p
Indices (capital return)
FTSE All-Share Index	2,936.15		2,584.59		+13.6
S&P 500 Composite Index	1,183.26		1,036.19		+17.7	#
FTSE World Europe (ex UK) Index (£)	377.71		353.12		+7.0
TOPIX (Tokyo First Section Index)	810.91		894.67		+5.0	#
FTSE World (ex UK) Index (£)	333.23		290.33		+14.8
Composite Index (capital return)
50/50 FTSE All-Share Index/     FTSE World (ex UK) Index (£)	228.40		200.00	*	+14.2
Total Expense Ratio**	0.42%		0.50%
Retail Prices Index	225.80		216.00		+4.5

# £ adjusted

* rebased as at 31 October 2009

** excluding borrowing costs and VAT write-back

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Page 7 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 October 2010

		Year ended 31 October 2010			Year ended 31 October 2009
	Notes	Revenue Return £'000	Capital Return £'000	Total £'000	Revenue Return £'000	Capital Return £'000	Total £'000
Gains on investments held at fair value through profit or loss		-	59,081	59,081	-	66,848	66,848
Investment income	2	16,108	-	16,108	15,596	-	15,596
Other operating income	3	370	-	370	893	-	893
Interest on VAT refunds	3	-	-	-	377	-	377
		---------	------------	---------	---------	------------	---------
Total income		16,478	59,081	75,559	16,866	66,848	83,714
		---------	------------	---------	---------	------------	---------
Expenses
Management fees	4	(862)	(464)	(1,326)	(982)	(529)	(1,511)
Write back of prior years' VAT	4	-	-	-	525	-	525
Other expenses		(655)	-	(655)	(562)	-	(562)
		---------	------------	---------	---------	------------	---------
Profit before finance costs and taxation		14,961	58,617	73,578	15,847	66,319	82,166
Finance costs		(684)	(1,596)	(2,280)	(676)	(1,578)	(2,254)
		---------	------------	---------	---------	------------	---------
Profit before taxation		14,277	57,021	71,298	15,171	64,741	79,912
Taxation	5	(608)	-	(608)	(1,797)	1,240	(557)
		---------	------------	---------	---------	------------	---------
Profit for the year and total comprehensive income		13,669	57,021	70,690	13,374	65,981	79,355
		=====	=======	======	=====	=======	======
Earnings per ordinary share	6	12.26p	51.13p	63.39p	11.83p	58.35p	70.18p

The total columns of this statement represents the Consolidated Statement of Comprehensive Income, 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 non-controlling interests.

As permitted by the Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income.  The net profit of the Company for the year was £70,690,000 (2009: £79,355,000). 

The Group does not have any other comprehensive income hence the net profit for the year as above is the same as the Group's total comprehensive income.

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Page 8 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

AUDITED CONSOLIDATED AND PARENT COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 October 2010

Consolidated year ended 31 October 2010	Called up share capital £'000	Share premium account £'000	Capital  redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 October 2009	28,062	452	12,148	377,462	30,739	448,863
Total comprehensive income:
Profit for the year	-	-	-	57,021	13,669	70,690
Transactions with owners, recorded directly to equity:
Buy back of 1,160,211 ordinary shares	(290)	-	290	(4,197)	-	(4,197)
Ordinary dividends paid	-	-	-	-	(13,401)	(13,401)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2010	27,772	452	12,438	430,286	31,007	501,955
	======	======	======	======	======	======

Consolidated year ended 31 October 2009	Called up share capital £'000	Share premium account £'000	Capital  redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 October 2008	28,290	452	11,920	314,783	30,216	385,661
Total comprehensive income:
Profit for the year	-	-	-	65,981	13,374	79,355
Transactions with owners, recorded directly to equity:
Buy back of 913,774 ordinary shares	(228)	-	228	(3,302)	-	(3,302)
Ordinary dividends paid	-	-	-	-	(12,851)	(12,851)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2009	28,062	452	12,148	377,462	30,739	448,863
	======	======	======	======	======	======

Company year ended 31 October 2010	Called up share capital £'000	Share premium account £'000	Capital  redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 October 2009	28,062	452	12,148	378,368	29,833	448,863
Total comprehensive income:
Profit for the year	-	-	-	57,100	13,590	70,690
Transactions with owners, recorded directly to equity:
Buy back of 1,160,211 ordinary shares	(290)	-	290	(4,197)	-	(4,197)
Ordinary dividends paid	-	-	-	-	(13,401)	(13,401)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2010	27,772	452	12,438	431,271	30,022	501,955
	======	======	======	======	======	======

Company year ended 31 October 2009	Called up share capital £'000	Share premium account £'000	Capital  redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 October 2008	28,290	452	11,920	315,689	29,310	385,661
Total comprehensive income:
Profit for the year	-	-	-	65,981	13,374	79,355
Transactions with owners, recorded directly to equity:
Buy back of 913,774 ordinary shares	(228)	-	228	(3,302)	-	(3,302)
Ordinary dividends paid	-	-	-	-	(12,851)	(12,851)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2009	28,062	452	12,148	378,368	29,833	448,863
	======	======	======	======	======	======

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Page 9 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

AUDITED CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS

at 31 October 2010

	Consolidated 2010 £'000	Consolidated 2009 £'000	Company 2010 £'000	Company 2009 £'000
Non-current assets
Investments held at fair value through profit or loss	522,112	452,962	523,097	453,868
	----------	----------	----------	----------
Current assets
Investments held at fair value through profit or loss	6,949	13,500	6,300	13,500
Other receivables	3,831	2,207	7,949	2,207
Cash and cash equivalents	8,910	5,989	3,845	5,985
	----------	----------	----------	----------
	19,690	21,696	18,094	21,692
	----------	----------	----------	----------
Total assets	541,802	474,658	541,191	475,560
	----------	----------	----------	----------
Current liabilities
Other payables	(14,847)	(795)	(14,236)	(1,697)
	----------	----------	----------	----------
Total assets less current liabilities	526,955	473,863	526,955	473,863
Non-current liabilities
Debenture stocks	(25,000)	(25,000)	(25,000)	(25,000)
	----------	----------	----------	----------
Net assets	501,955	448,863	501,955	448,863
	======	======	======	======
Equity attributable to equity shareholders
Called up share capital (Note 7)	27,772	28,062	27,772	28,062
Share premium account	452	452	452	452
Capital redemption reserve	12,438	12,148	12,438	12,148
Retained earnings:
Other capital reserves	430,286	377,462	431,271	378,368
Revenue reserve	31,007	30,739	30,022	29,833
	----------	----------	----------	----------
Total equity	501,955	448,863	501,955	448,863
	======	======	======	======
Net asset value per Ordinary share (Note 8)	451.9p	399.9p	451.9p	399.9p
	======	======	======	======

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Page 10 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

AUDITED CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS

for the year ended 31 October 2010

Reconciliation of operating revenue to net cash flow from operating activities	Consolidated 2010 £'000	Company 2010 £'000	Consolidated 2009 £'000	Company 2009 £'000
Net profit before tax	71,298	71,298	79,912	79,912
Add interest payable ("finance costs")	2,280	2,280	2,254	2,254
Less: gains on investments held at fair value through profit or loss	(59,081)	(59,180)	(66,848)	(66,848)
Decrease in accrued income	570	570	439	439
(Increase)/decrease in other debtors	(2)	(2)	1,278	1,278
Increase/(decrease) in other creditors and accruals	162	162	(33)	(33)
Purchases of investments	(119,885)	(119,885)	(104,123)	(104,123)
Sales of investments	110,009	110,009	93,214	93,214
Amounts paid to subsidiary undertaking	-	(5,000)	-	-
Purchases of current asset investments	(47,002)	(46,010)	(29,650)	(29,650)
Sales of current asset investments	53,652	53,210	16,150	16,150
(Increase)/decrease in amounts due from brokers	(2,096)	(2,096)	11,395	11,395
Increase/(decrease) in amounts due to brokers	9,869	9,258	(1,241)	(1,241)
Stock dividends included in investment income	-	-	(22)	(22)
Dealing profits	(99)	-	-	-
	----------	----------	----------	----------
Net cash inflow from operating activities before interest and taxation	19,675	14,614	2,725	2,725
Interest paid	(2,259)	(2,259)	(2,254)	(2,254)
Taxation on investment income	(704)	(704)	(544)	(544)
	----------	----------	----------	----------
Net cash inflow/(outflow) from operating activities	16,712	11,651	(73)	(73)
Financing activities
Equity dividends paid	(13,401)	(13,401)	(12,851)	(12,851)
Purchase of ordinary shares	(4,197)	(4,197)	(3,302)	(3,302)
Drawdown of loan	4,000	4,000	-	-
	----------	----------	----------	----------
Net cash outflow from financing activities	(13,598)	(13,598)	(16,153)	(16,153)
	----------	----------	----------	----------
Increase/(decrease) in cash	3,114	(1,947)	(16,226)	(16,226)
Cash and cash equivalents at start of the year	5,989	5,985	21,882	21,878
Exchange movements	(193)	(193)	333	333
	----------	----------	----------	----------
Cash and cash equivalents at end of the year	8,910	3,845	5,989	5,985
	======	======	======	======

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Page 11 of 16

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

NOTES:

1.

Accounting policies

The consolidated and parent company financial statements for the year ended 31 October 2010 have been prepared in accordance with the International Financial Reporting Standards ("IFRSs") as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs.  IFRSs comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee ("IASC") that remain in effect, to the extent that IFRSs have been adopted by the European Union. The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial instruments.  The principal accounting policies are set out in the audited accounts.  Where presentational guidance set out in the Statement of Recommended Practice ("the SORP") for investment trusts issued by the Association of Investment Companies ("the AIC") in January 2009 is consistent with the requirements of IFRSs, the directors have sought to prepare the financial statements on a basis consistent with the recommendations of the SORP.

		2010	2009
2.	Investment income	£'000	£'000
	UK dividend income  - listed	7,661	6,894
	Overseas dividend income - listed	7,516	7,012
	Property income distributions	99	-
	Income from fixed interest securities	832	1,668
	Stock dividends	-	22
		--------	--------
		16,108	15,596
		=====	=====
	Analysis of investment income by geographical region:
	UK	9,475	9,313
	Europe (ex UK)	1,523	1,799
	North America	1,203	1,294
	Japan	1,057	975
	Pacific (ex Japan)	2,423	1,722
	Emerging Markets	427	493
		---------	---------
		16,108	15,596
		=====	=====

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

		2010	2009
3.	Other operating income	£'000	£'000
	Bank interest	4	122
	Stock lending revenue	107	119
	Underwriting commission	160	652
	Dealing profits	99	-
		--------	--------
		370	893
	Interest on VAT refund	-	377
		--------	--------
		370	1,270
		=====	=====

At 31 October 2010 the total value of securities on loan by the Group for stock lending purposes was £35,227,000 (2009: £11,583,000).  The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2010 was £53,835,000 (2009: £41,347,000).  The Group's agent holds collateral, which is reviewed on a daily basis, comprising Government Bonds with a market value of 105% of the market value of any securities on loan.

4.	Management fees	Revenue Return 2010 £'000	Capital Return 2010 £'000	Total 2010 £'000	Revenue Return 2009 £'000	Capital Return 2009 £'000	Total 2009 £'000
	Investment management	199	464	663	226	529	755
	Accounting, secretarial and administration	663	-	663	756	-	756
		-------	-------	-------	-------	-------	-------
		862	464	1,326	982	529	1,511
	Write back of VAT	-	-	-	(525)	-	(525)
		-------	-------	-------	-------	-------	-------
		862	464	1,326	457	529	986
		====	====	====	====	====	====

5.	Taxation	Revenue Return 2010 £'000	Capital Return 2010 £'000	Total 2010 £'000	Revenue Return 2009 £'000	Capital Return 2009 £'000	Total 2009 £'000
	(a) Analysis of the charge for the year
	UK Corporation tax at 28% (2009: 28%)	-	-	-	549	7	556
	Double taxation relief	-	-	-	(549)	(7)	(556)
	Overseas tax reclaimable	(129)	-	(129)	(93)	(9)	(102)
	Tax relief on expenses charged to capital	-	-	-	1,247	(1,247)	-
		-------	-------	-------	-------	-------	-------
		(129)	-	(129)	1,154	(1,256)	(102)
	Overseas tax suffered	737	-	737	643	16	659
		-------	-------	-------	-------	-------	-------
	Taxation	608	-	608	1,797	(1,240)	557
		====	====	====	====	====	====

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

(b) Factors affecting the tax charge for the year The differences are explained below:

		Revenue Return 2010 £'000	Capital Return 2010 £'000	Total 2010 £'000	Revenue Return 2009 £'000	Capital Return 2009 £'000	Total 2009 £'000
	Profit before taxation	14,277	57,021	71,298	15,171	64,741	79,912
		--------	-----------	-----------	--------	-----------	-----------
	Corporation tax at 28% (2009: 28%)	3,997	15,966	19,963	4,248	18,127	22,375
	Non taxable UK dividends	(2,098)	-	(2,098)	(1,930)	-	(1,930)
	Non taxable scrip dividends and other income	(2,006)	-	(2,006)	(711)	-	(711)
	Tax relief on expenses charged to capital	112	-	112	(1,813)	-	(1,813)
	Income taxable in different years	(5)	-	(5)	195	-	195
	Overseas withholding tax suffered	608	-	608	549	7	556
	Special dividend taken to capital	-	-	-	12	-	12
	Tax charged/(credited) for use of capital expenses	-	-	-	1,247	(1,247)	-
	Capital gains not subject to tax	-	(15,966)	(15,966)	-	(18,127)	(18,127)
		--------	---------	---------	--------	---------	---------
		608	-	608	1,797	(1,240)	557
		====	=====	=====	====	=====	=====

	(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 totalling £2,706,000 (2009: £2,118,000) arising as a result of having unutilised non trade loan relationship deficits of £2,355,000 (2009: £2,118,000), excess management expenses of £351,000 (2009: £nil) and deferred tax liability of £321,000 on offshore funds.  These expenses will only be utilised if the Group has profits chargeable to corporation tax in the future.

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

6.	Earnings per ordinary share
	The total earnings per ordinary share is based on the net profits attributable to the ordinary shares of £70,690,000 (2009: £79,355,000) and on 111,521,997 ordinary shares (2009: 113,068,847) being the weighted average number of shares in issue during the year.  The total earnings can be further analysed as follows:

		2010	2009
		£'000	£'000
	Revenue earnings	13,669	13,374
	Capital earnings	57,021	65,981
		-----------	-----------
	Earnings for the year	70,690	79,355
		-----------	-----------
	Weighted average number of ordinary shares	111,521,997	113,068,847
		---------------	---------------
	Revenue earnings per ordinary share	12.26p	11.83p
	Capital earnings per ordinary share	51.13p	58.35p
		-----------	-----------
	Earnings per ordinary share	63.39p	70.18p
		=======	=======
	The Company does not have any dilutive securities, therefore basic and dilutive earnings are the same.

7.	Called up share capital	2010 £'000	2009 £'000
	Allotted, issued and fully paid:
	111,085,839 (2009: 112,246,050) ordinary shares of 25p each	27,772	28,062
		=====	=====
	During the year, 1,160,211 (2009: 913,774) ordinary shares were bought back for cancellation at a cost of £4,197,000 (2009: £3,302,000).

8.

Net asset value per ordinary share

The net asset value per ordinary share is based on net assets attributable to ordinary shares of £501,955,000 (2009: £448,863,000) and on the 111,085,839 ordinary shares in issue at 31 October 2010 (2009: 112,246,050).  The Company has no securities in issue that could dilute the net asset value per ordinary share. The movements during the year in net assets attributable to the ordinary shares were as follows:

		£'000
	Net assets attributable to ordinary shares at 1 November 2009	448,863
	Total net profit on ordinary activities after taxation	70,690
	Dividends paid	(13,401)
	Buy back of ordinary shares	(4,197)
		------------
	Net assets attributable to ordinary shares at 31 October 2010	501,955
		=======

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

9.	VAT on Management Fees
	Following the 2007 decision by the European Court of Justice that Value Added Tax ("VAT") should not be charged on fees paid for management services provided to investment trust companies, over the previous three financial years the Company received in total £1,813,000 in VAT reclaims (relating to management fees paid during the periods 1 January 1990 to 4 December 1996 and 1 October 2000 to 30 June 2007) and £592,000 of simple interest on those VAT reclaims.  No further reclaims of VAT or interest were expected or received during the year under review.
10.	2010 financial information
	The figures and financial information for the year ended 31 October 2010 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts.  The Company's annual financial statements for the year to 31 October 2010 have been audited but have not yet been delivered to the Registrar of Companies.  The auditors' report on the 2010 annual financial statements was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under section 498 of the Companies Act 2006.
11.	2009 financial information
	The figures and financial information for the year ended 31 October 2009 are compiled from an extract of the published accounts for that year and do not constitute statutory accounts.  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 under sections 498(2) or 498(3) of the Companies Act 2006.
12.	Dividend
	A final dividend of 3.10p per ordinary share will be paid, if approved by shareholders at the AGM, on 28 February 2011 to shareholders on the register on 4 February 2011.   The Company's shares go ex‑dividend on 2 February 2011.
13.	Annual report and financial statements
	Copies of the Annual Report and Financial Statements will be posted to shareholders by the end of January 2011 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.
14.	Annual General Meeting The Annual General Meeting will be held on Tuesday 22 February 2011 at 2.30 pm at 201 Bishopsgate, London EC2M 3AE.

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2010

LARGEST INVESTMENTS at 31 October 2010

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

Rank	(2009)		Valuation 2009 £'000	Purchases £'000	Sales Proceeds £'000	(Depreciation)/ Appreciation £'000	Valuation 2010 £'000
1	(1)	BP	20,030	2,844	(4,675)	(3,656)	14,543
2	(5)	Vodafone	9,134	-	-	2,397	11,531
3	(2)	HSBC	10,689	-	-	(390)	10,299
4	(7)	British American Tobacco	7,908	-	-	1,779	9,687
5	(4)	GlaxoSmithKline	9,650	-	-	(224)	9,426
6	(6)	Royal Dutch Shell	7,920	-	-	1,073	8,993
7	(8)	Catlin	7,889	-	-	447	8,336
8	(3)	Petroleo Brasileiros	10,081	-	-	(2,407)	7,674
9	(9)	BG	6,647	-	-	1,011	7,658
10	(10)	Rolls-Royce	4,970	-	-	2,153	7,123
11	(*)	Essar Energy	-	5,002	-	1,423	6,425
12	(13)	National Grid	4,390	970	-	619	5,979
13	(16)	Jardine Lloyd Thompson	4,084	-	-	1,244	5,328
14	(11)	Aviva	4,830	-	-	182	5,012
15	(19)	Xstrata	3,573	-	-	1,325	4,898
16	(14)	Scottish & Southern Energy	4,316	-	-	296	4,612
17	(17)	Bank of China	3,731	471	-	320	4,522
18	(*)	BHP Billiton	3,287	-	-	1,140	4,427
19	(*)	Christian Dior	2,911	-	-	1,420	4,331
20	(*)	Barclays	2,941	2,148	-	(833)	4,256
21	(*)	Kasikornbank	2,408	-	-	1,812	4,220
22	(18)	Reckitt Benckiser	3,642	-	-	547	4,189
23	(21)	DBS	3,402	-	-	725	4,127
24	(*)	Petrofac	2,636	-	-	1,460	4,096
25	(*)	Impala Platinum	2,909	-	-	942	3,851
			----------	----------	----------	----------	----------
			143,978	11,435	(4,675)	14,805	165,543
			======	======	======	======	======

These investments total 31.7% of the portfolio.

(*) Not in the top 25 last year.

DISTRIBUTION OF ASSETS AND LIABILITIES at 31 October 2010

	Equities	Fixed Interest	Current Assets	Total Assets		Total Liabilities	Geographical Exposure of Net Assets
	£'000	£'000	£'000	£'000	%	£'000	£'000	%
United Kingdom	242,310	3,582	14,062	259,954	48.0	(34,502)	225,452	44.9
Europe	68,309	-	1,411	69,720	12.9	(4,674)	65,046	13.0
North America	84,280	-	3,417	87,697	16.2	(671)	87,026	17.3
Japan	41,479	-	322	41,801	7.7	-	41,801	8.3
Pacific (ex Japan)	66,100	-	478	66,578	12.3	-	66,578	13.3
Emerging Markets	16,052	-	-	16,052	2.9	-	16,052	3.2
	-----------	-----------	-----------	----------	-------	-----------	-----------	-------
Total	518,530	3,582	19,690	541,802	100.0	(39,847)	501,955	100.0
	======	======	======	======	====	======	======	====
Percentage	103.3%	0.7%	3.9%	107.9%		(7.9%)	100.0%

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

- ENDS -

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

END

 

 

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