Annual Financial Report

RNS Number : 5591V

Bankers Investment Trust PLC

13 January 2012

 



Page 1 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

This announcement contains regulated information

MANAGEMENT REPORT

Extracts from the Chairman's Statement:

Chairman's Statement

I am pleased to report that the Company out performed its benchmark by 1% whilst retaining its prudent and diversified investment policy. The combination of a focus on quality companies and those that have solid dividend yields has allowed us to protect shareholders' investments in what have been very difficult markets during 2011. Despite these markets the total return has increased by 1.5% and supported a dividend increase of 5% whilst net assets remained broadly stable over the year. This performance was against a backdrop of economic stagnation and political inaction where markets fell by 9% in Europe and 5% in Asia.

Performance and Markets

It is frustrating that many of the key challenges to global economic growth that I highlighted in my outlook last year have not been addressed by policy makers and, in certain cases, their inaction has created deeper and more serious issues.  Sustainable policies for job creation, rebuilding consumer confidence and encouraging companies to invest have been undermined by a lack of political courage and leadership.  European politicians have made little progress over the year to solve the Euro region's sovereign debt crisis and the lack of a consensus on the solution has affected investment markets, both in fixed interest bonds and equities.  As the crisis spread to countries such as Italy and Spain, equity investors took flight and share prices fell heavily through the second half of our year, with a brief and short lived rally in October.  For the full year the net asset value total return was 1.5%, compared to 0.5% for the composite benchmark index.

Our outperformance of the benchmark index was due to good stock selection, where our underlying regional portfolios in the UK, US, Europe and Japan all outperformed their respective local indices.  This justifies our Managers' value based stock picking investment style and they are to be congratulated.  The performance in Japan and Europe was particularly strong, based on purchasing companies with global footprints and well positioned products or services but also careful avoidance of both financials and cyclicals.  Our geographic asset allocation has not been as successful principally due to our underweight position in the US, although a strategic re-positioning over the year did partially offset this.  We increased our investment in America earlier in the year and in Japan following the earthquake in March.  Our overweight position in Asia, which I am confident is correct for the long term, has, in the short term, had an adverse affect on performance, as the region suffered an economic slowdown due to policies enacted in China to control inflation.

The year end net gearing position of 3% was roughly the same as at the end of last year but we did increase exposure to equities earlier in the year by drawing down on the bank facility and switching our remaining bonds into equities.  Both these activities enhanced performance up to the April half year, when the net asset value per share had risen by 8.5%.  However markets suffered a sharp setback in the second half and during October we made a number of sales to bring gearing down in order to take advantage of possible buying opportunities in the year ahead.

Page 2 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

The stubborn nature of inflation is becoming apparent in all major markets.  Demand from emerging economies for raw materials, energy and foods is driving prices higher despite weak demand in western markets.  Price rises are limiting discretionary spending by consumers and compounding  weak demand caused by high unemployment and the lack of investment spending by companies.  These effects are most apparent in the UK, where the Bank of England has adopted further quantitative easing, effectively printing money, to stimulate activity.  Our stock selection in the UK has mostly avoided banks, which are still reducing lending, and consumer related stocks affected by weak demand. The most rewarding investments have been utilities and telecoms, sectors with limited growth but scope to increase margins and generous dividend distributions.

Europe has been affected by fears that the harsh budget cuts and austerity measures being enacted in Greece, Portugal, Spain, Italy and Ireland may lead to a fracturing of Europe and certain countries leaving the Euro. We have selected Northern European countries and those sectors with growth or export led opportunities. Investments in Scandinavia, Germany and Switzerland have performed markedly better than those in the south, although even they have suffered a significant de-rating in valuation terms as earnings growth has not been rewarded by share price appreciation.

In North America, we have consolidated the portfolio and performance has beaten all other regions, with a total return of 8.2%.  We increased the North American exposure to 20% of the portfolio, as we believe the region has the best prospect of pulling out of the stagnation affecting other economies.  There are promising signs of recovering retail sales, improving new housing starts and increasing manufacturing activity.  We have focused on medium sized companies with innovative products or services.  The natural optimism and entrepreneurial spirit of Americans combined with the corporate sector beginning to invest seem to be pulling the US economy forward despite the inability of politicians to agree key policies such as raising the debt ceiling.  The petty squabbling of politicians in the US has not helped progress and voters may show their displeasure in the coming elections.

The Japanese people have suffered greatly this year, with the devastating earthquake and resulting tsunami threatening the safety of a large part of the population, through the flooding of a nuclear power plant.  The Japanese have always shown a resilience and strong spirit to rebuild and, in our opinion, markets overreacted immediately after the quake. We increased investment at that time, focusing on infrastructure spending and domestically orientated businesses.  The recovery has been impressive, although share prices have not responded so quickly, with the majority of returns being generated by the appreciation of the yen.  We remain optimistic about the country and the wider Asian region.   Many of the global problems involving high levels of debt and under capitalised banks are not issues for the Asian countries.  We believe markets will respond positively when China signals that it has finished tightening economic policy to stem inflationary pressures. 

Revenue and Dividends

The positive outlook for dividends that I alluded to last year has gained strength during 2011. The de-leveraging of balance sheets and low payout ratios have prompted companies to increase  dividends at a greater pace than the growth in earnings.  Managements have sought to reassure shareholders of the sound nature of their businesses by increasing distributions, and in some cases, paying special dividends or indicating that these will be paid in coming years. Our Company's substantial revenue reserves which we have built up over the years and are now equivalent to two years' dividends which continues to allow us to strategically re-position the portfolio whilst maintaining our progressive dividend policy. The revenue for the full year  has reduced marginally

due to  the sale of our remaining bonds with higher yields than equities and the decision to increase

Page 3 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

exposure to lower yielding regions like the US and Japan at the expense of higher yielding regions such as  the UK and Asia. This asset re-allocation has already added value this year and a greater exposure to equities should enhance returns in the years ahead.

We are recommending a final dividend of 3.175p, making a total of 12.7p, an increase of 5% for the year, building on our long term commitment to growing dividends. We are proud of our record of having done this for the last 45 years. Looking to 2012, the year has started well, with a substantial special dividend of £270,000 from Vodafone, and we are forecasting a dividend per share for 2012 of not less than 13.2p, an increase of 4%.

Annual General Meeting

The Annual General Meeting this year will be held at the Stationers' Hall, Ave Maria Lane, EC4M 7DD on Thursday 23 February 2012 at 12  noon. 

Outlook

Sentiment for the future is at an extremely low level and while it may seem odd to make a virtue out of such a depressing position, it would take a very little good news to motivate marginal buyers of  equities.  Where might good news come from?  China could, for instance, cut interest rates or signal an increase in lending activity as the inflationary pressures in the economy are clearly easing.  The US economy could surprise on the upside, especially if house prices stop falling.  After falls of 40% or more, house prices are at affordability levels not seen for a generation and an increase in residential building and housing activity would stimulate broad swathes of the US economy.

Europe remains the region with the most troubled outlook.  I see only two paths. Either certain indebted countries need to leave the Euro or the European Central Bank needs to step in and print money, allowing banks to recapitalise. Unfortunately, both options are costly and the pain will not be shared equally. Ultimately markets will force a resolution by closing bond markets or creating a crisis for banks. It must be pointed out that much of this is already reflected in share prices and any resolution could well create a rally in asset prices based on sheer relief.

While the outlook remains uncertain in the short term, equity shares have de-rated over the past year as increased earnings and dividends have been overlooked. It may be that some economies contract over the coming year but a fall in corporate earnings would still result in many sound companies trading on yields over 5% and single figure P/E's. Valuations are the key to future returns and whilst we maintain a cautious stance, we have faith that our portfolio will reward patient investors over the coming years.

Page 4 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

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 controls section in the Annual Report and Financial Statements.

Page 5 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

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 Deutsche Bank Liquidity Fund (formerly 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. 

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

Richard 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]

Page 6 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

SUMMARY OF THE YEAR

	31 October 2011	31 October 2010	Change %
Consolidated Assets
Total assets less current liabilities (£'000)	521,331	526,955	-1.1
Net asset value per ordinary share	446.9p	451.9p	-1.1
Ordinary share mid-market price	385.0p	379.9p	+1.3
Discount (Share Price to Net Asset Value)	13.9%	15.9%
Consolidated Revenue
Gross revenue (£'000)	16,431	16,478	-0.3
Revenue earnings per ordinary share	11.98p	12.26p	-2.3
Dividends per ordinary share in respect of the year	12.70p	12.10p	+5.0
Total Return
Total return per ordinary share	7.51p	63.39p
Indices (capital return)
FTSE All-Share Index	2,860.86	2,936.15	-2.6
S&P 500 Composite Index	1,253.30	1,183.26	+4.9	#
FTSE All-World Developed Europe (ex UK) Index (£)	120.7	137.7	-12.4
TOPIX (Tokyo First Section Index)	764.06	810.91	-5.8	#
FTSE World (ex UK) Index (£)	325.93	333.23	-2.2
Composite Index (capital return)
50/50 FTSE All-Share Index/     FTSE World (ex UK) Index (£)	195.2	200.00*	-2.4
Total Expense Ratio**	0.45%	0.42%
Retail Prices Index	238.00	225.80	+5.4

# £ adjusted

* rebased as at 31 October 2010

** excluding borrowing costs

Page 7 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 October 2011

		Year ended 31 October 2011			Year ended 31 October 2010
	Notes	Revenue Return £'000	Capital Return £'000	Total £'000	Revenue Return £'000	Capital Return £'000	Total £'000
(Losses)/gains on investments held at fair value through profit or loss		-	(2,786)	(2,786)	-	59,081	59,081
Investment income	2	15,988	-	15,988	16,108	-	16,108
Other operating income	3	443	-	443	370	-	370
		---------	---------	---------	---------	------------	---------
Total income/ (Loss)		16,431	(2,786)	13,645	16,478	59,081	75,559
		---------	---------	---------	---------	------------	---------
Expenses
Management fees	4	(979)	(528)	(1,507)	(862)	(464)	(1,326)
Other expenses		(738)	-	(738)	(655)	-	(655)
		---------	------------	---------	---------	------------	---------
Profit/(loss) before finance costs and taxation		14,714	(3,314)	11,400	14,961	58,617	73,578
Finance costs		(706)	(1,647)	(2,353)	(684)	(1,596)	(2,280)
		---------	------------	---------	---------	------------	---------
Profit/(loss) before taxation		14,008	(4,961)	9,047	14,277	57,021	71,298
Taxation	5	(701)	-	(701)	(608)	-	(608)
		---------	------------	---------	---------	------------	---------
Profit/(loss) for the year and total comprehensive income		13,307	(4,961)	8,346	13,669	57,021	70,690
		=====	=======	======	=====	=======	======
Earnings/(loss) per ordinary share	6	11.98p	(4.47p)	7.51p	12.26p	51.13p	63.39p

The total column 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 £8,346,000 (2010: £70,690,000). 

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.

Page 8 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

AUDITED CONSOLIDATED AND PARENT COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 October 2011

Consolidated year ended 31 October 2011	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 2010	27,772	452	12,438	430,286	31,007	501,955
Total comprehensive income:
(Loss)/profit for the year	-	-	-	(4,961)	13,307	8,346
Transactions with owners, recorded directly to equity:
Buy back of 34,000 ordinary shares	(9)	-	9	(140)	-	(140)
Ordinary dividends paid	-	-	-	-	(13,830)	(13,830)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2011	27,763	452	12,447	425,185	30,484	496,331
	======	======	======	======	======	======

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
	======	======	======	======	======	======

Company year ended 31 October 2011	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 2010	27,772	452	12,438	431,271	30,022	501,955
Total comprehensive income:
(Loss)/profit for the year	-	-	-	(4,759)	13,105	8,346
Transactions with owners, recorded directly to equity:
Buy back of 34,000 ordinary shares	(9)	-	9	(140)	-	(140)
Ordinary dividends paid	-	-	-	-	(13,830)	(13,830)
	----------	----------	----------	----------	----------	----------
Total equity at 31 October 2011	27,763	452	12,447	426,372	29,297	496,331
	======	======	======	======	======	======

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
	======	======	======	======	======	======

Page 9 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

AUDITED CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS

at 31 October 2011

	Consolidated 2011 £'000	Consolidated 2010 £'000	Company 2011 £'000	Company 2010 £'000
Non-current assets
Investments held at fair value through profit or loss	512,257	522,112	513,444	523,097
	----------	----------	----------	----------
Current assets
Investments held at fair value through profit or loss	3,650	6,949	3,650	6,300
Other receivables	2,628	3,831	2,809	7,949
Cash and cash equivalents	6,360	8,910	4,992	3,845
	----------	----------	----------	----------
	12,638	19,690	11,451	18,094
	----------	----------	----------	----------
Total assets	524,895	541,802	524,895	541,191
	----------	----------	----------	----------
Current liabilities
Other payables	(3,564)	(14,847)	(3,564)	(14,236)
	----------	----------	----------	----------
Total assets less current liabilities	521,331	526,955	521,331	526,955
Non-current liabilities
Debenture stocks	(25,000)	(25,000)	(25,000)	(25,000)
	----------	----------	----------	----------
Net assets	496,331	501,955	496,331	501,955
	======	======	======	======
Equity attributable to equity shareholders
Called up share capital	27,763	27,772	27,763	27,772
Share premium account	452	452	452	452
Capital redemption reserve	12,447	12,438	12,447	12,438
Retained earnings:
Other capital reserves	425,185	430,286	426,372	431,271
Revenue reserve	30,484	31,007	29,297	30,022
	----------	----------	----------	----------
Total equity	496,331	501,955	496,331	501,955
	======	======	======	======
Net asset value per Ordinary share (pence)  (Note 8)	446.9p	451.9p	446.9p	451.9p
	======	======	======	======

Page 10 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

AUDITED CONSOLIDATED AND PARENT COMPANY CASH FLOW STATEMENTS

for the year ended 31 October 2011

Reconciliation of operating revenue to net cash flow from operating activities	Consolidated 2011 £'000	Company 2011 £'000	Consolidated 2010 £'000	Company 2010 £'000
Net profit before tax	9,047	9,047	71,298	71,298
Add interest payable ("finance costs")	2,353	2,353	2,280	2,280
Add/(less): loss/(gains) on investments held at fair value through profit or loss	2,786	2,521	(59,081)	(59,180)
Decrease in accrued income	383	383	570	570
Increase in other debtors	(7)	(7)	(2)	(2)
Increase in other creditors and accruals	23	23	162	162
Purchases of investments	(114,549)	(114,549)	(119,885)	(119,885)
Sales of investments	121,530	121,530	110,009	110,009
Amounts received/(paid) from/(to) subsidiary undertaking	-	4,000	-	(5,000)
Purchases of current asset investments	(35,682)	(34,975)	(47,002)	(46,010)
Sales of current asset investments	39,242	37,625	53,652	53,210
Decrease/(increase) in amounts due from brokers	767	767	(2,096)	(2,096)
(Decrease)/increase in amounts due to brokers	(7,285)	(6,674)	9,869	9,258
Dealing profits	(261)	-	(99)	-
	----------	----------	----------	----------
Net cash inflow from operating activities before interest and taxation	18,347	22,044	19,675	14,614
Interest paid	(2,374)	(2,374)	(2,259)	(2,259)
Taxation on investment income	(641)	(641)	(704)	(704)
	----------	----------	----------	----------
Net cash inflow from operating activities	15,332	19,029	16,712	11,651
Financing activities
Equity dividends paid	(13,830)	(13,830)	(13,401)	(13,401)
Purchase of ordinary shares	(140)	(140)	(4,197)	(4,197)
(Repayment)/drawdown of loan	(4,000)	(4,000)	4,000	4,000
	----------	----------	----------	----------
Net cash outflow from financing activities	(17,970)	(17,970)	(13,598)	(13,598)
	----------	----------	----------	----------
(Decrease)/increase in cash	(2,638)	1,059	3,114	(1,947)
Cash and cash equivalents at start of the year	8,910	3,845	5,989	5,985
Exchange movements	88	88	(193)	(193)
	----------	----------	----------	----------
Cash and cash equivalents at end of the year	6,360	4,992	8,910	3,845
	======	======	======	======

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

NOTES:

1.

Accounting policies

The consolidated and parent company financial statements for the year ended 31 October 2011 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.

		2011	2010
2.	Investment income	£'000	£'000
	UK dividend income  - listed	7,506	7,661
	Overseas dividend income - listed	8,268	7,516
	Property income distributions	125	99
	Income from fixed interest securities	89	832
		--------	--------
		15,988	16,108
		=====	=====
	Analysis of investment income by geographical region:
	UK	8,459	9,475
	Europe (ex UK)	2,351	1,523
	North America	1,433	1,203
	Japan	971	1,057
	Pacific (ex Japan)	2,367	2,423
	Emerging Markets	407	427
		---------	---------
		15,988	16,108
		=====	=====

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

		2011	2010
3.	Other operating income	£'000	£'000
	Bank interest	15	4
	Stock lending revenue	167	107
	Underwriting commission	-	160
	Dealing profits from subsidiary	261	99
		--------	--------
		443	370
		=====	=====

At 31 October 2011 the total value of securities on loan by the Group for stock lending purposes was £37,200,000 (2010: £35,227,000).  The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2011 was £45,800,000 (2010: £53,835,000).  The Group's agent holds collateral, which is reviewed on a daily basis, comprising CREST Delivery By Value ("DBVs") and Government Bonds with a market value of 105% of the market value of any securities on loan.

4.	Management fees	Revenue Return 2011 £'000	Capital Return 2011 £'000	Total 2011 £'000	Revenue Return 2010 £'000	Capital Return 2010 £'000	Total 2010 £'000
	Investment management	226	528	754	199	464	663
	Accounting, secretarial and administration	753	-	753	663	-	663
		-------	-------	-------	-------	-------	-------
		979	528	1,507	862	464	1,326
		====	====	====	====	====	====

5.	Taxation	Revenue Return 2011 £'000	Capital Return 2011 £'000	Total 2011 £'000	Revenue Return 2010 £'000	Capital Return 2010 £'000	Total 2010 £'000
	(a) Analysis of the charge for the year
	UK Corporation tax at 26.83% (2010: 28%)	-	-	-	-	-	-
	Double taxation relief	-	-	-	-	-	-
	Overseas tax reclaimable	(173)	-	(173)	(129)	-	(129)
	Tax relief on expenses charged to capital	-	-	-	-	-	-
		-------	-------	-------	-------	-------	-------
		(173)	-	(173)	(129)	-	(129)
	Overseas tax suffered	874	-	874	737	-	737
		-------	-------	-------	-------	-------	-------
	Taxation	701	-	701	608	-	608
		====	====	====	====	====	====

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THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

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

		Revenue Return 2011 £'000	Capital Return 2011 £'000	Total 2011 £'000	Revenue Return 2010 £'000	Capital Return 2010 £'000	Total 2010 £'000
	Profit before taxation	14,008	(4,961)	9,047	14,277	57,021	71,298
		--------	-----------	-----------	--------	-----------	-----------
	Corporation tax at 26.83% (2010: 28%)	3,760	(1,332)	2,428	3,997	15,966	19,963
	Non taxable UK dividends	(1,988)	-	(1,988)	(2,098)	-	(2,098)
	Non taxable scrip dividends and other income	(2,119)	-	(2,119)	(2,006)	-	(2,006)
	Tax relief on expenses charged to capital	-	-	-	112	-	112
	Income taxable in different years	-	-	-	(5)	-	(5)
	Overseas withholding tax suffered	701	-	701	608	-	608
	Excess management expenses	347	-	347	-	-	-
	Capital losses/(gains) not subject to tax	-	1,332	1,332	-	(15,966)	(15,966)
		--------	---------	---------	--------	---------	---------
		701	-	701	608	-	608
		====	=====	=====	====	=====	=====

	(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 £3,373,000 (2010: £2,706,000) arising as a result of having unutilised non trade loan relationship deficits of £2,639,000 (2010: £2,355,000), excess management expenses of £734,000 (2010: £351,000) and deferred tax liability of £nil (2010: £321,000) on offshore funds.  These expenses will only be utilised if the Group has profits chargeable to corporation tax in the future.

6.	Earnings per ordinary share
	The total earnings per ordinary share is based on the net profits attributable to the ordinary shares of £8,346,000 (2010: £70,690,000) and on 111,072,713 ordinary shares (2010: 111,521,997) being the weighted average number of shares in issue during the year.  The total earnings can be further analysed as follows:

Page 14 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

		2011	2010
		£'000	£'000
	Revenue earnings	13,307	13,669
	Capital (loss)/earnings	(4,961)	57,021
		-----------	-----------
	Earnings for the year	8,346	70,690
		-----------	-----------
	Weighted average number of ordinary shares	111,072,713	111,521,997
		---------------	---------------
	Revenue earnings per ordinary share	11.98p	12.26p
	Capital (loss)/earnings per ordinary share	(4.47p)	51.13p
		-----------	-----------
	Earnings per ordinary share	7.51p	63.39p
		=======	=======
	The Company does not have any dilutive securities, therefore basic and dilutive earnings are the same.

7.	Called up share capital	2011 £'000	2010 £'000
	Allotted, issued and fully paid:
	111,051,839 (2010: 111,085,839) ordinary shares of 25p each	27,763	27,772
		=====	=====
	During the year, 34,000 (2010:  1,160,211) ordinary shares were bought back for cancellation at a cost of £140,000 (2010:  £4,197,000).

8.

Net asset value per ordinary share

The net asset value per ordinary share is based on net assets attributable to ordinary shares of £496,331,000 (2010: £501,955,000) and on the 111,051,839 ordinary shares in issue at 31 October 2011 (2010: 111,085,839).  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:

		£'000
	Net assets attributable to ordinary shares at 1 November 2010	501,955
	Total net profit on ordinary activities after taxation	8,346
	Dividends paid	(13,830)
	Buy back of ordinary shares	(140)
		------------
	Net assets attributable to ordinary shares at 31 October 2011	496,331
		=======

Page 15 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

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, it 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 the "Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009", published by the Financial Reporting Council in October 2009.
10.	2011 financial information
	The figures and financial information for the year ended 31 October 2011 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 2011 have been audited but have not yet been delivered to the Registrar of Companies.  The auditors' report on the 2011 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.	2010 financial information
	The figures and financial information for the year ended 31 October 2010 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 3.175p per ordinary share will be paid, if approved by shareholders at the AGM, on 28 February 2012 to shareholders on the register on 3 February 2012.   The Company's shares go ex‑dividend on 1 February 2012.
13.	Annual report and financial statements
	Copies of the Annual Report and Financial Statements will be posted to shareholders by the end of January 2012 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 Thursday 23 February 2012 at 12 noon at the Stationers' Hall, Ave Maria Lane, London  EC4M 7DD.

Page 16 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

LARGEST INVESTMENTS at 31 October 2011

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

Rank	(2010)		Valuation 2010 £'000	Purchases £'000	Sales proceeds £'000	Appreciation/ (depreciation) £'000	Valuation 2011 £'000
1	(1)	BP	14,543	-	-	1,202	15,745
2	(2)	Vodafone	11,531	-	-	204	11,735
3	(4)	British American Tobacco	9,687	-	-	1,972	11,659
4	(5)	GlaxoSmithKline	9,426	-	-	1,382	10,808
5	(6)	Royal Dutch Shell	8,993	-	-	1,067	10,060
6	(7)	Catlin	8,336	-	-	1,157	9,493
7	(3)	HSBC	10,299	-	-	(1,653)	8,646
8	(9)	BG	7,658	-	-	888	8,546
9	(13)	Jardine Lloyd Thompson	5,328	-	-	1,157	6,485
10	(12)	National Grid	5,979	-	-	279	6,258
11	(8)	Petroleo Brasileiros	7,674	-	-	(1,650)	6,024
12	(15)	Xstrata	4,898	1,389	-	(746)	5,541
13	(*)	Apple	3,140	420	-	1,126	4,686
14	(*)	Shire	3,236	-	-	1,056	4,292
15	(14)	Aviva	5,012	-	-	(721)	4,291
16	(*)	Amcor	3,800	-	-	468	4,268
17	(19)	Christian Dior	4,331	-	-	(88)	4,243
18	(*)	Anadarko Petroleum	1,579	2,156	-	504	4,239
19	(*)	Taiwan Semiconductor Manufacturing	3,648	-	-	535	4,183
20	(10)	Rolls-Royce	7,123	-	(3,046)	94	4,171
21	(21)	Kasikornbank	4,220	-	-	(161)	4,059
22	(24)	Petrofac	4,096	-	-	(75)	4,021
23	(*)	Microsoft	2,924	1,104	-	(62)	3,966
24	(*)	Wetherspoon (J.D.)	3,757	-	-	194	3,951
25	(18)	BHP Billiton	4,427	-	-	(492)	3,935
			----------	----------	----------	----------	----------
			155,645	5,069	(3,046)	7,637	165,305
			======	======	======	======	======

These investments total 32.3% of the portfolio.

(*) Not in the top 25 last year.

Page 17 of 17

THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2011

CHANGES IN INVESTMENTS at 31 October 2011

	Valuation 2010	Purchases	Sales proceeds	Appreciation/ (depreciation)	Valuation 2011
	£'000	£'000	£'000	£'000	£'000
United Kingdom	242,310	11,790	(21,981)	1,070	233,189
Europe (ex UK)	68,309	6,122	(11,248)	(1,441)	61,742
North America	84,280	64,188	(51,662)	5,334	102,140
Japan	41,479	16,166	(10,432)	1,386	48,599
Pacific (ex Japan)	66,100	15,280	(18,359)	(6,501)	56,520
Emerging Markets	16,052	1,003	(4,460)	(2,626)	9,969
Fixed Interest	3,582	-	(3,388)	(96)	98
	-----------	-----------	----------	-----------	-----------
Total	522,112	114,549	(121,530)	(2,874)	512,257
	======	======	======	======	======

- 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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