Final Results

RNS Number : 5474C

Bankers Investment Trust PLC

19 January 2015

 



Page 1 of 18     

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

This announcement contains regulated information

Chairman's Statement

·     Net asset value increase of 1.5%.

·     48^th consecutive year of dividend increase.

·     Forecast increase in 2015 dividend of 4.7%.

Performance

In my report to shareholders last year I suggested that after the strong year in 2013 it might be sensible to be cautious for the prospects for global equity markets in the year ahead, albeit that many positive factors remained in place. As the above net asset value return suggests the confidence that I expressed has not been demonstrably translated into returns for shareholders despite a strong performance from the North American equity markets. Elsewhere the majority of global equity market returns, when adjusted for currency movements, have been negative for a sterling investor.

It is against this generally poor set of returns from global equity markets that the moderate increase in net asset value must be assessed. Our net asset value rose by 1.5% compared to a negative 2.3% return for the FTSE All-Share Index. Our Fund Manager has again been able to navigate the global equity markets successfully to generate not just a positive sterling return but also a further increase in the income generated from our portfolio. For this we must thank the fund management team responsible. Further detail as to individual geographic market reports can be found in the Fund Manager Reports section in the Annual Report and financial statements.

Revenue and Dividends

The underlying portfolio has continued to demonstrate healthy revenue growth helped by a significant increase in the number of special dividends being paid by companies within our UK equity section. In continuing the policy of paying out to shareholders substantially all the distributable income, through the quarterly dividend, the Board is pleased to be able to recommend a final dividend of 3.8p per share. This increase, if approved by shareholders, will result in the total pay-out for the year rising to 14.8p, an increase of 4.7% which compares favourably to the RPI increase over the same period of 2.3%. 

The strength of our revenue reserve is a key element in the Board's approach to dividend policy. During more 'normal' market conditions we are always seeking to distribute substantially all of our income for the year in the knowledge that if we were to experience more difficult market conditions we would have the ability to pay out of reserves a maintained or increased dividend. This prudent approach to dividend policy over the years has created flexibility which, whilst not unique to Bankers, is a key strength of the Company. Reflecting this confidence the Board feels able to forecast a dividend per share for the year ahead of not less than 15.5p per share, an increase of 4.7%.

Share Buy-Back and Management Fee Changes

During the year the shares of the Company have, at times, traded at a premium to net asset value. This has allowed the Board to issue new shares when there has been the demand from the market so as to help provide extra liquidity. The Board recognises that when the shares trade at an attractive discount we will sanction the manager to repurchase shares at his discretion. We have

Page 2 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

not, nor do we intend to implement, a formal buy-back policy but I felt it important to re-iterate our stance on this important aspect of the Investment Trust structure.

In further discussion with Henderson we have refined our management fee arrangements as of 1 November 2014. The revised arrangements introduce a tiering scale of fees when the Company achieves a certain net asset value milestone. As such the management fee has been agreed as 0.45% of net assets up to a value of £750m and 0.4% on any net asset value above this threshold.

Board Changes

Richard Burns is approaching his tenth year on the Board having joined Bankers in 2005. Richard indicated to me in 2014 that, in deference to best Corporate Governance policy, he wished to step

down from the Board at the forthcoming AGM. Richard has served the Board and shareholders impeccably over the years both as a member of the audit committee and, more recently, as the Senior Independent Director. Richard's knowledge of global equity markets and his perceptive views of key global issues will be a loss to the Company. On behalf of the Board and shareholders I would like to thank Richard for his contribution to the success of the Company during this period.

When someone of Richard's stature and knowledge leaves a Board it is always difficult to find a worthy successor. After a thorough review process by the Board, however, I am delighted that Julian Chillingworth has decided to join the Board. Julian is the current Chief Investment Officer of Rathbone Brothers PLC, a leading discretionary private client manager. Julian has had a long and successful career in the City, primarily on the investment side of the business, and thus ensures that the professional background of your Board remains both diverse and applicable to the underlying business of the Company. Julian's appointment will be subject to shareholder approval at the forthcoming AGM.

Audit Tender

At the last AGM shareholders gave approval for PricewaterhouseCoopers LLP to remain as Auditor until another audit firm could be appointed. After a review undertaken by the Audit Committee, Grant Thornton UK LLP has been appointed as our new Auditor. I would like to place on record my thanks to PricewaterhouseCoopers LLP and welcome Grant Thornton as our new Auditor. This is the first time that we have changed Auditor in our 126 year history.

Regulatory & Alternative Investment Fund Managers Directive ('AIFMD')

In accordance with the AIFMD the Company has appointed Henderson Investment Funds Limited to act as its Alternative Investment Fund Manager. BNP Paribas Securities Services has been appointed as the Company's Custodian and Depositary. The work associated with the implementation of the AIFMD was completed in due time with the support of Henderson.

Annual General Meeting ("AGM")

The Annual General Meeting will this year be held at 12 noon at Trinity House, London, EC3N 4DH on 25 February 2015. Full details of the business to be conducted at the meeting are set out in the Notice of Meeting which will be sent to shareholders with the Annual Report. Directions and a map showing the location of the AGM can also be found in the Notice of Meeting. The Board and I look forward to seeing many of you at this meeting at which Alex Crooke and his investment team will be making a presentation on their investment views and how these are being reflected in the composition of the Company's portfolio. Following the formal business of the meeting light refreshments will be served.

Page 3 of 18 

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

Outlook

The global economic outlook is more polarised than for some time. Strong growth is being witnessed in both North America and the United Kingdom, whilst Continental Europe and many emerging markets continue to suffer downgrades to growth expectations. Japan seems to oscillate on a quarterly basis between growth and recession. Headwinds of deflation are now apparent to all central banks, albeit the policy response is far from uniform (if indeed it is in evidence at all). Corporate profit expectations for 2015 are slowly being reined in as these competitive pressures create an unhelpful backdrop for earnings growth. Valuations, even with flat market levels, are becoming more stretched as corporate profit warnings become more prevalent.

Against this broad macro economic scenario it is difficult for even the most optimistic of Chairman to be more than cautiously optimistic for the year ahead. If policy makers do halt the advance of deflation, if the decline in the oil price does help western economic growth, if China is able to maintain its current GDP growth rates and if the various elections result in investor friendly governments then we could witness better markets next year, especially in the second half. The problem remains that there are a lot of 'ifs'. Patience and careful stock consideration will again be a key requisite for outperformance in the year ahead.

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 meeting 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 various indices 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

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.  Any such breaches could also lead to financial or reputational damage. The Company must also ensure compliance with the listing rules of the New Zealand Stock Exchange.  Henderson has contracted to provide investment, company secretarial, administration and accounting services through qualified professionals. The Board receives internal control reports produced by Henderson 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 financial statements.

Page 4 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

• Operational

Disruption to, or failure of, Henderson 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 Hendersn and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section in the Annual Report and financial statements.

Related Party Transactions

The Company's current related parties are its Directors and Henderson.There have been no material transactions between the Company and its Directors during the year and the only amounts paid to them were in respect of Directors' remuneration for which there were no outstanding amounts payable at the year end. In relation to the provision of services by Henderson, other than fees payable by the Company in the ordinary course of business and the provision of marketing services, there have been no material transactions with Henderson affecting the financial position of the Company during the year under review.

Statement of Directors' Responsibilities under DTR 4.1.12

Each of the Directors confirms that, to the best of his or her knowledge:

• the Company 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 Company; and

• the Strategic Report in this Annual Report and financial statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board of Directors

Richard Killingbeck

Chairman

For further information contact:                                             

Alex Crooke Fund Manager The Bankers Investment Trust PLC Telephone: [phone]	Richard Killingbeck 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]

Page 5 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

Fund Manager's Report

After the strong stock market returns delivered in 2013 there was a high level of optimism amongst investors that 2014 would be the year when economic activity around the world recovered decisively. This confidence was well placed in America but the recovery remained elusive in most other regions. The overwhelming weight of national debt and a dysfunctional banking system in many areas resulted in stagnation in economic activity and an overall lack of demand kept inflation low. The absence of growth in mainland Europe, Asia and Japan affected many of the largest companies and therefore profit growth was scarce. The situation in America was markedly different as low energy prices and bank lending allowed consumers to increase spending and new jobs were created. The quantitative easing by the Federal Reserve undoubtedly aided the economy although it was all but curtailed by the end of October. The better economic conditions in

America created the backdrop for the US equity market to move to new heights and the US returned nearly 17% over the year. We have pushed up the US exposure in the portfolio but, at 22%, it remains lower than both our peers and broader global indices. The US market, however, has never delivered a significant dividend yield and we have, in general, preferred to overweight Asian exposure, as that region trades on more attractive valuations and generates greater income, while also participating in US growth through exports. This strategy fell a little short this year but our Pacific equity performance still delivered the second highest return of our regional portfolios.

We have made two key strategic shifts in the portfolio this year. We switched the management of the US portfolio to Ian Warmerdam who has worked at Henderson for over thirteen years and currently manages global growth portfolios. This change was executed in February and since then performance has stabilised and is broadly in line with our US benchmark. The portfolio is now orientated towards companies with higher growth characteristics and in sectors where secular growth is expected to transform industries such as paperless payment systems and health care. In our opinion there are currently fewer opportunities available to a value orientated investment approach for US stock picking whereas overall returns for growth companies appear attractive. Although we have switched to a more growth investment style in the US we have maintained discipline in terms of the valuations we will tolerate and kept a focus on companies that can grow dividends.

Elsewhere the other major change has been to start investment directly into Chinese 'A' shares following the granting of a quota to participate in local markets by the Chinese authorities. The China 'A' share portfolio allows us to access more domestically exposed companies and participate, over time, in the growth of Chinese consumer spending. An initial $25m investment was deployed over the first six months of our financial year and, after a volatile few months, we have been pleased with performance. The overall weighting within the portfolio allocated to China (Hong Kong and mainland China) is now 8% and, despite slowing economic growth, the market remains attractive due to the low valuations available.

Over the year the UK, Pacific and emerging market portfolios outperformed their respective benchmarks, adding value to the Company. We were fractionally behind the benchmark in Europe, while the US (for the full year) and Japan also lagged local indices. In terms of asset allocation, the overall NAV performance exceeded our objective of outperforming the FTSE All-Share Index but the strong performance of America, relative to other regions, overwhelmed all other tactical repositioning of the portfolio. Our gradual increase in the allocation to the US, Pacific, China and emerging markets, combined with a reduction in the UK and Europe added value. Generally, we were disappointed with the performance of the UK market which was clearly affected by the strengthening value of sterling and political pronouncements. At present though, UK domestic stocks do not look expensive and international companies listed in London trade on significant discounts to their peers. There will hopefully be better opportunities in the coming year to increase international exposure and reduce the UK portfolio.

Page 6 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

We used gearing tactically during the year but it was rarely above 5%, reflecting the limited potential for share prices to appreciate. The short lived drop in prices during early October allowed us to increase net gearing, which ending the year at 2.6%. The Company has an expensive £10 million 10.5% debenture, maturing in October 2016, and in the coming year the Board and I will be considering what form of borrowings we should employ to replace this debenture. Current borrowing costs are significantly lower than those on this maturing debenture whether we borrow short or long. The revenue account will benefit from the restructuring of the debt facilities, and should offset some of the pressure exerted by sterling's strength over the last year. Despite the rise in sterling, and the increased allocation into the US, the revenue earnings per share rose by 4.2% which reflects our efforts to invest in companies with the potential to grow dividends and an increased level of special dividends. It is likely that special dividends will remain a feature of markets because many companies have steadily reduced levels of debt thus reducing gearing and are becoming more disposed to returning cash to shareholders.

Alex Crooke

Fund Manager

Page 7 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

Performance Highlights	31 October   2014	Change in total return since 31 October 2013
Net Asset Value total return per share(1)	23.17p	+4.2%
FTSE All-Share Index total return	5,380.7p	+1.0%
Revenue return per share	15.1p	+4.2%
Net Asset Value per share	596.0p	+1.5%
Share price total return	587.67p	-0.4%
Dividend for year	14.8p	+4.7%
	31 October 2014	31 October 2013
Dividend yield (2)	2.6%	2.4%
Net gearing	2.6%	0.2%
Discount at year end	5.5%	1.3%
Total Assets (less current liabilities)	£693.2m	£678.6m
Ongoing charge(3)	0.53%	0.45%
Retail Prices Index	2.3%	2.6%

⁽¹⁾   Net asset value total return (including dividends reinvested).

⁽²⁾   Based on the share price at the year end.

⁽³⁾   Calculated using published daily NAVs including current year revenue.

Sources: Morningstar for the AIC, Henderson, Datastream.

Page 8 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 October 2014

		2014			2013
	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		-	11,615	11,615	-	126,782	126,782
Investment income	2	20,577	-	20,577	19,515	-	19,515
Other operating income	3	171	-	171	174	-	174
		---------	---------	---------	---------	---------	---------
Total income		20,748	11,615	32,363	19,689	126,782	146,471
		---------	---------	---------	---------	---------	---------
Expenses
Management fees	4	(1,726)	(929)	(2,655)	(1,282)	(690)	(1,972)
Other expenses		(720)	-	(720)	(791)	-	(791)
		---------	---------	---------	---------	-----------	---------
Profit before finance costs and taxation		18,302	10,686	28,988	17,616	126,092	143,708
Finance costs		(685)	(1,598)	(2,283)	(691)	(1,612)	(2,303)
		---------	---------	---------	---------	-----------	---------
Profit before taxation		17,617	9,088	26,705	16,925	124,480	141,405
Taxation	5	(775)	-	(775)	(896)	-	(896)
		---------	---------	---------	---------	-----------	---------
Profit for the year and total comprehensive income		16,842	9,088	25,930	16,029	124,480	140,509
		=====	======	======	=====	======	======
Earnings per ordinary share - basic and diluted	6	15.05p	8.12p	23.17p	14.45p	112.18p	126.63p

The total columns of this statement represent the Statement of Comprehensive Income, prepared in accordance with IFRSs 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. 

Page 9 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

STATEMENT OF CHANGES IN EQUITY

Year ended 31 October 2014	Called up share capital £'000	Share premium account £'000	Capital  redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total equity £'000
Total equity at 1 November 2013	27,814	2,352	12,483	578,656	32,256	653,561
Total comprehensive income:
Profit for the year	-	-	-	9,088	16,842	25,930
Transactions with owners, recorded directly to equity:
Issue of 850,000 ordinary shares	213	4,701	-	-	-	4,914
Ordinary dividends paid	-	-	-	-	(16,209)	(16,209)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2014	28,027	7,053	12,483	587,744	32,889	668,196
	======	======	======	======	======	======

Year ended 31 October 2013	Called up share capital £'000	Share premium account £'000	Capital  redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total equity £'000
Total equity at 1 November 2012	27,727	452	12,483	454,176	31,376	526,214
Total comprehensive income:
Profit for the year	-	-	-	124,480	16,029	140,509
Transactions with owners, recorded directly to equity:
Issue of 350,000 ordinary shares	87	1,900	-	-	-	1,987
Ordinary dividends paid	-	-	-	-	(15,149)	(15,149)
	-----------	-----------	----------	----------	----------	----------
Total equity at 31 October 2013	27,814	2,352	12,483	578,656	32,256	653,561
	======	======	======	======	======	======

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

STATEMENT OF FINANCIAL POSITION

			As at 31 October 2014 £'000	As at 31 October 2013 £'000
Non-current assets
Investments held at fair value through profit or loss			685,456	655,008
			-----------	----------
Current assets
Investments held at fair value through profit or loss			3,896	21
Other receivables			3,685	17,800
Cash and cash equivalents			5,023	14,130
			-----------	----------
			12,604	31,951
			-----------	-----------
Total assets			698,060	686,959
			-----------	-----------
Current liabilities
Bank loans			(2,788)	-
Other payables			(2,076)	(8,398)
			----------	----------
			(4,864)	(8,398)
			----------	----------
Total assets less current liabilities			693,196	678,561
			-----------	-----------
Non-current liabilities
Debenture stocks			(25,000)	(25,000)
			-----------	-----------
Net assets			668,196	653,561
			=======	=======
Equity attributable to equity shareholders
Share capital (note 7)			28,027	27,814
Share premium account			7,053	2,352
Capital redemption reserve			12,483	12,483
Retained earnings:
Other capital reserves			587,744	578,656
Revenue reserve			32,889	32,256
			-----------	-----------
Total equity			668,196	653,561
			=======	=======
Net asset value per ordinary share (pence)  - basic and diluted (Note 8)			596.0p	587.4p
			======	======

Page 11 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

CASH FLOW STATEMENT

Reconciliation of profit before taxation to net cash flow from operating activities	As at 31 October 2014 £'000	As at 31 October 2013 £'000
Profit before taxation	26,705	141,405
Add interest payable ('finance costs')	2,283	2,303
Less gains on investments held at fair value through profit or loss	(11,615)	(126,782)
(Increase)/decrease in accrued income	(345)	239
Decrease/ (increase) in other receivables	12	(9)
Increase in other payables	50	167
Purchases of investments	(319,724)	(137,900)
Sales of investments	301,007	156,843
Purchases of current asset investments	(24,770)	(1,500)
Sales of current asset investments	20,895	2,780
Decrease/(increase) in securities sold for future settlement	14,553	(16,147)
(Decrease)/increase in securities purchased for future settlement	(6,373)	7,153
	------------	-----------
Net cash inflow from operating activities before interest and taxation	2,678	28,552
Interest paid	(2,282)	(2,303)
Taxation on investment income	(880)	(733)
	------------	-----------
Net cash (outflow)/inflow from operating activities	(484)	25,516
Financing activities
Equity dividends paid	(16,209)	(15,149)
Issue of ordinary shares	4,914	1,987
Drawdown/(repayment) of loan	2,874	(1,000)
Amounts received from subsidiary undertaking	-	205
	------------	-----------
Net cash outflow from financing activities	(8,421)	(13,957)
	------------	-----------
(Decrease)/increase) in cash	(8,905)	11,559
Cash and cash equivalents at start of the year	14,130	2,825
Exchange movements	(202)	(254)
	------------	-----------
Cash and cash equivalents at end of the year	5,023	14,130
	========	=======

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

NOTES:

1.

Accounting policies

The financial statements for the year ended 31 October 2014 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 measurement at fair value of investments. The principal accounting policies adopted are set out in the audited accounts and have been applied consistently throughout the year.  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.

		2014	2013
2.	Investment income	£'000	£'000
	UK dividend income  - listed	8,490	8,459
	UK dividend income  - special dividends	638	333
	Overseas dividend income - listed	11,115	10,308
	Overseas dividend income - special dividends	206	186
	Property income distributions	128	133
	Income from subsidiary undertaking	-	96
		--------	--------
		20,577	19,515
		=====	=====
	Analysis of investment income by geographical region:
	UK	11,119	9,857
	Europe (ex UK)	2,271	2,679
	North America	1,734	2,550
	Japan	1,304	1,123
	Pacific (ex Japan)	3,666	3,062
	Emerging markets	483	244
		--------	---------
		20,577	19,515
		=====	=====

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

		2014	2013
3.	Other operating income	£'000	£'000
	Bank interest	19	18
	Underwriting revenue	69	87
	Stock lending revenue	83	69
		--------	--------
		171	174
		=====	=====

At 31 October 2014 the total value of securities on loan by the Company for stock lending purposes was £31,281,000 (2013: £12,134,000). The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2014 was £38,547,000 (2013: £38,775,000). The Company's agent held collateral at 31 October 2014 with a value of £32,955,000 (2013: £12,871,000) in respect of securities on loan. The value of securities held on loan is reviewed on a daily basis, comprising CREST Delivery By Value ('DBVs') and Government Bonds with a market value of 105% (2013: 106%) of the market value of any securities on loan.

4.	Management fees	Revenue return 2014 £'000		Capital return 2014 £'000		Total 2014 £'000		Revenue return 2013 £'000	Capital return 2013 £'000	Total 2013 £'000
	Investment management	398		929		1,327		296	690	986
	Accounting, secretarial and administration	1,328		-		1,328		986	-	986
		-------		-------		-------		-------	-------	-------
		1,726		929		2,655		1,282	690	1,972
		====		====		====		====	====	====
	A summary of the terms of the management agreement is given in the Strategic Report in the Annual Report and financial statements.
5.	Taxation		Revenue return 2014 £'000		Capital return 2014 £'000		Total 2014 £'000	Revenue return 2013 £'000	Capital return 2013 £'000	Total 2013 £'000
	(a) Analysis of the charge for the year
	Overseas tax suffered		906		-		906	964	-	964
	Overseas tax reclaimable		(131)		-		(131)	(68)	-	(68)
			-------		-------		-------	-------	-------	-------
	Taxation		775		-		775	896	-	896
			====		====		====	====	====	====

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

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

		Revenue return 2014 £'000	Capital return 2014 £'000	Total 2014 £'000	Revenue return 2013 £'000	Capital return 2013 £'000	Total 2013 £'000
	Profit before taxation	17,617	9,088	26,705	16,925	124,480	141,405
		---------	-----------	-----------	---------	-----------	-----------
	Corporation tax at 21.83% (2013: 23.42%)	3,846	1,984	5,830	3,964	29,153	33,117
	Non taxable UK dividends	(1,970)	-	(1,970)	(2,055)	-	(2,055)
	Non taxable scrip dividends and other income	(2,422)	-	(2,422)	(2,420)	-	(2,420)
	Income taxable in different years	(2)	-	(2)	(7)	-	(7)
	Overseas withholding tax suffered	775	-	775	896	-	896
	Excess management expenses and loan relationships	548	552	1,100	518	539	1,057
	Capital gains not subject to tax	-	(2,536)	(2,536)	-	(29,692)	(29,692)
		--------	-----------	-----------	--------	---------	---------
		775	-	775	896	-	896
		====	======	=====	====	=====	=====

	(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, which it intends to maintain for the foreseeable future.
	(d) Factors that may affect future tax charges The Company has not recognised a deferred tax asset of £5,374,000 (2013: £4,362,000) arising as a result of having unutilised management expenses £9,658,000 (2013: £6,834,000) and loan relationship deficits of £17,210,000 (2013: £14,983,000). These expenses will only be utilised, to any material extent, if changes are made either to the tax treatment of the capital gains made by investment trusts or to the Company's investment profile which require them to be used. The standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014. Accordingly, the Company's profits for this accounting period are taxed at the effective rate of tax of 21.83%.

6.	Earnings per ordinary share
	The total earnings per ordinary share is based on the net profit attributable to the ordinary shares of £25,930,000 (2013: £140,509,000) and on 111,898,962 ordinary shares (2013: 110,958,620), being the weighted average number of shares in issue during the year.

Page 15 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

The total earnings can be further analysed as follows:

		2014	2013
		£'000	£'000
	Revenue profit	16,842	16,029
	Capital profit	9,088	124,480
		----------	-----------
	Profit for the year	25,930	140,509
		----------	-----------
	Weighted average number of ordinary shares	111,898,962	110,958,620
		----------------	----------------
	Revenue earnings per ordinary share	15.05p	14.45p
	Capital earnings per ordinary share	8.12p	112.18p
		----------	-----------
	Earnings per ordinary share	23.17p	126.63p
		=======	=======
	The Company does not have any dilutive securities, therefore basic and diluted earnings are the same.

7.	Called up share capital	2014 £'000	2013 £'000
	Authorised, allotted, issued and fully paid:
	112,106,839 (2013: 111,256,839) ordinary shares of 25p each	28,027	27,814
		=====	=====
	During the year, 850,000 ordinary shares were issued for net proceeds of £4,914,000 (2013: 350,000 issued for net proceeds of £1,987,000)

8.

Net asset value per ordinary share

The net asset value per ordinary share is based on net assets attributable to ordinary shares of £668,196,000 (2013: £653,561,000) and on the 112,106,839 ordinary shares in issue at 31 October 2014 (2013: 111,256,839). 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:

		2014	2013
		£'000	£'000
	Net assets attributable to ordinary shares at start of year	653,561	526,214
	Total net profit on ordinary activities after taxation	25,930	140,509
	Dividends paid	(16,209)	(15,149)
	Issue of ordinary shares	4,914	1,987
		------------	------------
	Net assets attributable to ordinary shares at end of year	668,196	653,561
		======	=======

Page 16 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

9.	Going Concern Statement
	The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, that the Company has adequate financial resources to continue in operational existence for the foreseeable future. In reviewing the position as at the date of this report, the Board has considered 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009', published by the Financial Reporting Council in October 2009.
10.	2014 Financial Information
	The figures and financial information for the year ended 31 October 2014 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 2014 have been audited but have not yet been delivered to the Registrar of Companies.  The Auditors' report on the 2014 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.	2013 Financial Information
	The figures and financial information for the year ended 31 October 2013 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 3.80p per ordinary share will be paid, if approved by shareholders at the AGM, on 27 February 2015 to shareholders on the register on 30 January 2015.   The Company's shares go ex‑dividend on 29 January 2015.
13.	Annual Report and Financial Statements
	Copies of the Annual Report and financial statements will be posted to shareholders by the end of January 2015 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 Wednesday 25 February 2015 at 12 noon at Trinity House, London, EC3N 4DH.

Page 17 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

LARGEST INVESTMENTS at 31 October 2014

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

Rank	(2013)		Valuation 2013 £'000	Purchases £'000	Sales proceeds £'000	Appreciation £'000	Valuation 2014 £'000
1	(1)	BP	16,486	-	-	(1,151)	15,335
2	(6)	British American Tobacco	9,621	-	-	311	9,932
3	(7)	Catlin	9,446	-	-	452	9,898
4	(*)	Walt Disney	-	7,184	-	2,102	9,286
5	(5)	Sports Direct International	9,847	-	-	(781)	9,066
6	(*)	Delphi Automotive	4,022	2,882	-	1,397	8,301
7	(4)	HSBC	10,435	-	(1,586)	(675)	8,174
8	(9)	Royal Dutch Shell	7,558	-	-	536	8,094
9	(*)	American Tower	3,875	3,306	(695)	1,604	8,090
10	(8)	Galliford Try	8,909	-	(1,501)	605	8,013
11	(10)	ITV	7,531	-	-	478	8,009
12	(*)	Barclays	3,682	4,285	-	(172)	7,795
13	(*)	Apple	4,255	6,389	(5,632)	2,623	7,635
14	(*)	BorgWarner	-	6,902	-	655	7,557
15	(*)	Comcast	-	6,908	-	607	7,515
16	(*)	AmerisourceBergen	-	7,611	(2,372)	2,227	7,466
17	(*)	BT	3,780	3,179	-	(84)	6,875
18	(*)	American Express	-	6,706	-	116	6,822
19	(13)	Prudential	6,029	-	-	770	6,799
20	(18)	Fisher (James) & Sons	5,755	-	-	1,004	6,759
21	(2)	GlaxoSmithKline	12,688	-	(4,354)	(1,758)	6,576
22	(*)	Oracle	-	5,878	-	513	6,391
23	(11)	Jardine Lloyd Thompson	6,628	-	-	(321)	6,307
24	(16)	Reckitt Benckiser	5,818	-	-	482	6,300
25	(24)	SK Telecom	5,331	-	-	749	6,080
			-----------	-----------	-----------	-----------	-----------
			141,696	61,230	(16,140)	12,289	199,075
			======	======	======	======	======

 (*) Not in the top 25 last year.

Page 18 of 18

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2014

CHANGES IN INVESTMENTS at 31 October 2014

	Valuation 2013 £'000	Purchases£'000	Sales proceeds £'000	Appreciation/ (depreciation) £'000	Valuation 2014 £'000
United Kingdom	294,768	40,219	(48,249)	(5,139)	281,599
Europe (ex UK)	75,177	19,767	(13,714)	(3,195)	78,035
North America	133,924	179,096	(176,882)	17,787	153,925
Japan	63,293	12,525	(13,454)	(2,077)	60,287
Pacific (ex Japan)	73,094	59,270	(43,388)	3,513	92,489
Emerging markets	14,752	8,847	(5,320)	842	19,121
	-----------	-----------	------------	-----------	-----------
	655,008	319,724	(301,007)	11,731	685,456
	======	======	=======	======	======

- 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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