Final Results
Bankers Investment Trust PLC
20 December 2004
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
20 December 2004
Highlights
* NAV per share rose by 7.4% compared to a rise of 5.6% in the
composite index which reflects global markets and 8.1% in the benchmark FTSE
All-Share Index
* 36th consecutive year of dividend increases. 6.0% increase for the
year, making the total dividend payment 7.47p per share
* Forecast dividend for 2005 to rise by 4.4%
Extracts from the Chairman's Statement:-
In my last report as Chairman, I am pleased to announce an increase in asset
value over the year. The net asset value per share rose 7.4% over the year to
31 October 2004. This result, while returning slightly less than the FTSE
All-Share Index rise of 8.1%, was a good performance given dull overseas
returns. The portfolio performance was ahead of the 5.6% returned by our
composite index; this index reflects global markets and is more representative
of where our assets are invested. The strengthening of sterling, linked to a
weak US dollar, depressed returns from the major equity markets in the US and
Japan.
Despite the strength of sterling the earnings per share have exceeded our
expectation and enable us to pay a larger than forecast final dividend. This
year's total dividend will rise by 6.0% and we anticipate being able to further
increase the dividend by a minimum of 4.4% in 2005.
Assets
Economic growth was better than expected and stock markets continued their
recovery of the previous year. Investment returns in the major western markets
were broadly similar in local currency terms, evidence that the major
influencing factors were global in nature. The oil price and US interest rates
dominated the main stock markets, with only Japan affected by purely domestic
issues. Commodity prices and the oil price rose strongly over the year and
higher oil prices could potentially have a very big economic impact, although
opinions differ strongly amongst commentators as to whether the rise in oil
prices will cause inflationary or deflationary pressures in the developed
economies. Either way, the surge in prices created uncertainty about the
outlook for both consumers and capital spending. The share prices of companies
such as airlines and electricity generators that might struggle to pass on these
price increases suffered accordingly.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
The long expected increase in US interest rates finally occurred in July. The US
election may have delayed the decision to raise rates and subsequently there may
be further increases in the New Year. We maintained a low weighting in US
equities throughout the year as we considered that both the stock market and the
US dollar were over-valued. Our view of the currency proved to be correct but
share valuations remained high. Corporate earnings and dividend growth were
strong, with even major technology companies such as Microsoft finally
recognising that dividends are an important element of shareholder return.
A well-timed purchase of Japanese equities in February raised our exposure to
the region from 7% of assets to 9% by the year end. However, after a number of
good years our managers underperformed the local stock market this year. The
view that economic growth and domestic consumption were strengthening led our
managers to purchase companies that would benefit from these factors. However,
in the summer economic growth was not as strong as expected and consumer
expenditure softened resulting in defensive shares being the best performers.
We believe that stronger economic growth will come through in due course but it
will take longer than we first anticipated.
The UK and European portfolios are the largest in size and, in both, our
managers did better than the stock market indices albeit by a smaller margin
than they have achieved in the previous two years.
Elsewhere, the Pacific (ex Japan) portfolio performed very well. A profitable
exit from the Chinese investments and a concentration on asset rich property and
oil stocks were the major factors behind the result. The Emerging Markets
portfolio lacked exposure to Eastern Europe, which boosted the benchmark
performance. We believe that heightened political and terrorist risk in many
emerging markets makes them unattractive and we will continue to be wary of
rushing in to chase appreciating share prices.
We maintained some gearing in rising equity markets. During the year Japanese
yen loans were repaid and partially replaced by US dollar borrowings, which have
been to the advantage of shareholders as the US dollar has been weak. At the
end of the year the gearing invested in equities represented 8% of assets.
Earnings and Dividends
This year's rise in earnings per share of 13.1% to 8.05p should be taken in the
context of last year's small rise of 1.4%. Bankers' expenses including
management fees are little changed from last year but dividend growth this year
has been better than expected and has exceeded our own forecast made earlier in
the year. This year's rise is attributable to a number of factors, not just the
better dividend growth experienced from the overseas holdings, particularly in
Asia. In addition, costs have been well contained as evidenced by the total
expense ratio falling to 0.68% from 0.78% over the year.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
As earnings are better, we are proposing to increase the final dividend to a
greater extent than indicated in our forecast. We are proposing a final
dividend of 1.98p per share, making a total of 7.47p, an increase of 6.0% for
the year and comfortably ahead of the current rate of inflation.
We are proud of our record of increasing dividends to shareholders every year
since 1967 and we wish to maintain our position amongst global investment trusts
of delivering consistent dividend growth. Looking forward, we expect dividend
growth to be strong especially from our overseas holdings. However, the benefit
will be partly offset by a rise in management expenses, which is essentially a
function of the increase in the value of the assets under management. For the
current year therefore we are forecasting a minimum rise in the total dividend
per share of 4.4% to 7.80p. A quarterly dividend of 1.94p will be paid at the
end of May, August and November with a minimum final of 1.98p payable in
February 2006.
The Board, Buy Backs and Annual General Meeting
As mentioned in my Chairman's Statement last year, I will be retiring from the
Board at the forthcoming AGM.
I have very much enjoyed my long association with Bankers and our Manager,
Henderson Global Investors. I would particularly like to mention Michael Moule
as my relationship with him goes back even earlier to the days of Touche
Remnant. Michael, who retired from Henderson Global Investors in 2003, has
decided not to seek re-election at the AGM in February 2006. I would like to
thank everybody concerned for making my role as Chairman a relatively easy one.
Richard Brewster succeeds me as Chairman, Francis Sumner will be the senior
independent director and James Morley has recently taken over from Richard as
Chairman of the Audit Committee. I have great confidence in Richard as Chairman
and our team at Henderson Global Investors led by Alex Crooke, who succeeded
Michael as our manager, from 2002.
At this year's AGM we will be seeking further authority to buy back shares for
cancellation, up to 14.99% of the issued share capital. In our financial year
ended 31 October 2004, 2,638,841 ordinary shares were bought back and since then
a further 120,000 have been repurchased. We will continue to use these powers
selectively.
Outlook
Interest rates appear to have peaked in the UK, long bond yields remain low and
corporate earnings look set for another year of growth. These should be good
indicators for further gains in share prices but there remains a concern about
the financial strength of the consumer and the outlook for spending. With so
many areas of the market affected by consumer spending from the banking sector
to retailers and house builders, it will be important that confidence about jobs
and the direction of interest rates is maintained.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Equity valuations continue to look attractive, but an absence of catalysts may
limit market progress. Some weakness in both the UK and global economies looks
set to restrain both earnings and investor enthusiasm, but these are to a great
extent already reflected in current market expectations. Rebuilt balance sheets
and lower debt are leading to a strong market for cash takeovers, corporate
share buy backs and increasing dividends. Cash balances will be rising for
investors and should slowly find their way into equities, given their relative
attraction to bonds in most markets.
Global economic growth remains healthy but currently the positive factors are
not there to drive the main stock markets significantly higher. We are not
however, pessimistic about the outlook and, in fact, we consider that 2005 will
be another favourable year to be invested in equities. I will miss my
association with Bankers. I do believe Bankers is in a strong position going
forward with a broadly diversified portfolio, strong balance sheet and revenue
reserve and I expect our managers to make many profitable investments for us.
Bankers has an impressive record and I see no reason why good results cannot be
achieved in the future.
For further information, please contact:
Alex Crooke Vicki Staveacre
Fund Manager Press Office
The Bankers Investment Trust PLC Henderson Global Investors
Tel: 020 7818 4447 Tel: 020 7818 4442
Stephen Westwood
Head of Investment Trusts
Henderson Global Investors
Tel: 020 7818 5517
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Highlights of the Year
31 October 2004 31 October 2003 Change
%
Assets
Total assets less current liabilities £401,864,000 £383,449,000 +4.8
Net asset value per ordinary share 304.0p 283.1p +7.4
Ordinary share mid-market price 262.0p 265.5p -1.3
Discount (Share Price to Net Asset Value) 13.8% 6.2%
Revenue
Gross revenue £12,902,000 £12,194,000 +5.8
Earnings per ordinary share 8.05p 7.12p +13.1
Dividends per ordinary share 7.47p 7.05p +6.0
Indices
FTSE All-Share Index 2,297.66 2,125.37 +8.1
S&P 500 Composite Index 1,130.20 1,050.71 -0.4#
FTSE World Europe (ex UK) Index (£) 259.00 233.01 +11.2
TOPIX (Tokyo First Section Index) 1,085.43 1,043.36 -0.3#
FTSE World (ex UK) Index (£) 237.96 230.99 +3.0
Composite Index
50/50 FTSE All-Share/ 211.20 200.00* +5.6
FTSE World (ex UK) Index (£)
Retail Prices Index 188.60 182.60 +3.3
#£ adjusted
* rebased as at 31 October 2003
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Group Statement of Total Return (incorporating the revenue account)
for the year ended 31 October 2004
Year ended 31 October 2004 Year ended 31 October 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital gains from investments - 27,043 27,043 - 44,605 44,605
Income from fixed asset investments 12,482 - 12,482 11,719 - 11,719
Other interest receivable and similar 420 - 420 475 - 475
income
--------- --------- --------- ---------- ---------- ----------
Gross revenue and capital gains 12,902 27,043 39,945 12,194 44,605 56,799
Management fee (993) (886) (1,879) (1,051) (937) (1,988)
Other administrative expenses (615) - (615) (622) - (622)
-------- --------- --------- ---------- ---------- ----------
Net return on ordinary activities
before interest payable and taxation 11,294 26,157 37,451 10,521 43,668 54,189
Interest payable (722) (1,685) (2,407) (717) (1,672) (2,389)
--------- ---------- ---------- ---------- ---------- ----------
Net return on ordinary activities
before taxation 10,572 24,472 35,044 9,804 41,996 51,800
Taxation on net return on ordinary (448) - (448) (823) 480 (343)
activities
--------- --------- --------- ---------- ---------- ----------
Available for ordinary shareholders 10,124 24,472 34,596 8,981 42,476 51,457
--------- --------- --------- ---------- ---------- ----------
Dividends on Ordinary Shares:
Three interims of 1.83p (2003: 1.74p) (6,867) - (6,867) (6,586) - (6,586)
Proposed final of 1.98p (2003: 1.83p) (2,444) - (2,444) (2,309) - (2,309)
---------- --------- ---------- ---------- ---------- ----------
(9,311) - (9,311) (8,895) - (8,895)
---------- ---------- ---------- ---------- ---------- ----------
Transfer to reserves 813 24,472 25,285 86 42,476 42,562
====== ====== ====== ====== ====== ======
Return per ordinary share (Note 1) 8.05p 19.45p 27.50p 7.12p 33.66p 40.78p
The revenue columns of this statement represent the profit and loss accounts of
the Group.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Balance Sheets
at 31 October 2004
Group Group Company Company
2004 2003 2004 2003
£'000 £'000 £'000 £'000
Fixed asset investments
Listed at market value
in the UK 235,603 224,749 235,603 224,749
outside the UK 168,328 166,332 168,328 166,332
Other quoted funds 1,489 1,337 1,489 1,337
Unquoted investments 1,050 750 1,050 750
Investment in subsidiary undertaking - - 711 709
---------- ---------- ----------- ----------
Total fixed asset investments 406,470 393,168 407,181 393,877
---------- ---------- ----------- ----------
Current assets
Debtors 1,311 4,550 1,311 4,550
Bank balances and short term deposits 3,069 11,480 2,861 11,275
--------- ---------- ----------- ----------
4,380 16,030 4,172 15,825
Creditors: amounts falling due within one year (8,986) (25,749) (9,489) (26,253)
--------- ---------- ----------- ----------
Net current liabilities (4,606) (9,719) (5,317) (10,428)
--------- ---------- ----------- ----------
Total assets less current liabilities 401,864 383,449 401,864 383,449
Creditors: amounts falling due after more than one year (26,300) (26,300) (26,300) (26,300)
---------- ---------- ----------- ----------
Total net assets 375,564 357,149 375,564 357,149
====== ====== ====== ======
Capital and reserves
Called up share capital 30,883 31,542 30,883 31,542
Share premium account 452 452 452 452
Other reserves 325,950 307,689 326,661 308,398
Revenue reserve 18,279 17,466 17,568 16,757
---------- ---------- ---------- ----------
Shareholders' funds (all equity) 375,564 357,149 375,564 357,149
====== ====== ====== ======
Net asset value per ordinary share (Note 2) 304.0p 283.1p 304.0p 283.1p
====== ====== ====== ======
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Group Cash Flow Statement
For the year ended 31 October 2004
2004 2004 2003 2003
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 10,218 9,314
Servicing of finance
Debenture interest paid (3,427) (1,177)
Bank and loan interest paid (104) (83)
---------- ----------
Net cash outflow from servicing of finance (3,531) (1,260)
Taxation
Withholding tax recovered 209 162
----------- ----------
Net tax recovered 209 162
Financial investment
Cash received under futures contracts - 38
Purchases of investments (80,672) (61,567)
Sales of investments 94,405 61,627
---------- ----------
Net cash inflow from financial investment 13,733 98
Equity dividends paid (9,111) (8,705)
Management of liquid resources
Cash withdrawn from/(placed on) deposit 3,597 (318)
--------- ----------
Net cash inflow/(outflow) before financing 15,115 (709)
Financing
Purchase of ordinary shares (6,865) -
Repayment of Yen loans (16,712) 1,099
Drawdown of US Dollar loan 3,558 -
----------- ---------
Net cash (outflow)/inflow from financing (20,019) 1,099
----------- ----------
(Decrease)/increase in cash (4,904) 390
====== ======
Reconciliation of net cash flow to movements in net debt
(Decrease)/increase in cash as above (4,904) 390
Net cash outflow/(inflow)from decrease/(increase) in loans 13,154 (1,099)
Cash (inflow)/outflow from movement in liquid resources (3,597) 318
---------- ----------
Change in net debt resulting from cash flows 4,653 (391)
Translation gains/(losses) on foreign currency loans and 813 (81)
cash
---------- ----------
Movement in net debt in the year 5,466 (472)
Net debt at 1 November (32,244) (31,772)
----------- ----------
Net debt at 31 October (26,778) (32,244)
====== ======
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Notes:
1. Return per Ordinary Share
Revenue return per ordinary share is based on earnings attributable to ordinary shares of £10,124,000
(2003: £8,981,000), and on the weighted average number of ordinary shares in issue during the year of
125,810,998 (2003: 126,169,781).
Capital gains per ordinary share is based on gains attributable to ordinary shares of £24,472,000 (2003:
£42,476,000), and on the weighted average number of ordinary shares in issue during the year of 125,810,998
(2003: 126,169,781).
2. Net Asset Value per Ordinary Share
The net asset value per ordinary share is based on net assets attributable to ordinary shares of
£375,564,000 (2003: £357,149,000) and on the 123,530,940 ordinary shares in issue at 31 October 2004 (2003:
126,169,781).
3. Preliminary Results
The preliminary figures for the year ended 31 October 2004 have been extracted from the latest Group
accounts and do not constitute statutory accounts as defined by Section 240 of the Companies Act 1985.
These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet
reported on them.
4. 2003 Report and Accounts
The figures and financial information for the year ended 31 October 2003 are extracted from the latest
published accounts of the Company and do not constitute statutory accounts for that year. Those accounts
have been delivered to the Registrar of Companies and included the report of the auditors which was
unqualified and did not contain a statement either under Section 237(2) or 237(3) of the Companies Act
1985.
5. 2004 Report and Accounts
Copies of the Report and Accounts will be posted to shareholders in January 2005 and will thereafter be
available from the Secretary at 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held at
Drapers' Hall, Throgmorton Avenue, London EC2 on Friday 18 February 2005 at 12 noon.
6. Dividend
A final dividend of 1.98p per ordinary share will, if approved by shareholders, be paid on 28 February 2005
to shareholders on the register on 28 January 2005. The Company's shares go ex-dividend on 26 January
2005.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2004
Largest Investments
at 31 October 2004
The 40 largest investments (convertibles and all classes of equity in any one
company being treated as one investment) were as follows:
Market Market
Value Value
31 Oct 31 Oct
2004 2004
Rank Rank
(2003) £'000 (2003) £'000
1 (1) BP 20,256 21 (24) Novartis 3,218
2 (2) HSBC 13,368 22 (20) Samsung Electronics 3,178
3 (3) GlaxoSmithKline 9,428 23 (*) Ito-Yokado 2,677
4 (5) Shell Transport & Trading 8,532 24 (26) Anglo American 2,675
5 (4) Vodafone 8,300 25 (*) ITV 2,653
6 (6) Royal Bank of Scotland 7,961 26 (*) General Electric 2,644
7 (9) HBOS 6,130 27 (*) QBE Insurance 2,634
8 (10) Lloyds TSB 5,689 28 (35) Dexia 2,621
9 (7) Barclays 5,506 29 (28) ABN-Amro Holdings 2,603
10 (14) Diageo 4,517 30 (*) Warner Chilcott 2,583
11 (12) BT Group 3,901 31 (19) Nestle 2,576
12 (16) Unibail 3,867 32 (*) Eircom 2,570
13 (17) ENI 3,852 33 (*) National Grid Transco 2,557
14 (15) Irish Life & Permanent 3,780 34 (*) Rio Tinto 2,549
15 (11) AstraZeneca 3,571 35 (*) NTT Docomo 2,506
16 (21) Tesco 3,530 36 (23) AP Moller - Maersk 2,468
17 (22) British American Tobacco 3,337 37 (39) Richemont 2,466
18 (8) Total Fina Elf 3,281 38 (*) Mitsubishi UFJ Holdings 2,453
19 (25) BHP Billiton 3,249 39 (27) Prudential 2,433
20 (31) Carnival 3,246 40 (*) Codan 2,404
These investments total £177,769,000 or 43.73% of the portfolio.
(*) Not in the top 40 largest investments last year.
Changes in Investments
Valuation Purchases Sales Appreciation Valuation
2003 Proceeds 2004
£'000 £'000 £'000 £'000 £'000
United Kingdom 222,502 26,926 35,565 16,899 230,762
Europe 67,592 8,166 15,796 7,202 67,164
North America 45,936 24,308 26,160 1,927 46,011
Japan 28,495 18,589 10,336 (1,784) 34,964
Pacific (ex Japan) 21,304 580 3,640 1,899 20,143
Emerging Markets 7,339 - - 87 7,426
---------- ---------- ---------- ---------- ----------
393,168 78,569 91,497 26,230 406,470
====== ====== ====== ====== ======
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