Half Yearly Report

RNS Number : 1516U

Bankers Investment Trust PLC

19 June 2009

 



Page 1 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

This announcement contains regulated information

Interim Management Report:

Review of the period including material events and transactions

The performance over the first half of our financial year appears to have been fairly muted; the Net Asset Value per share rose by 2.9% compared to a fall in the FTSE All-Share Index of 0.5% and a rise of 1.9% in the 50/50 Composite Index. This result though hides a truly turbulent period for share prices, as major stock market indices fell to their lowest levels for over a decade in early March, before staging a sharp rally in the run up to our half year end.

The after effects of last October's bankruptcy of Lehman Brothers and the withdrawal of liquidity to the commercial banking system led to both consumer and corporate sentiment crumbling further and a collapse in economic activity in the last quarter of 2008. As credit was withdrawn, car and truck sales evaporated, housing transactions fell to the lowest level for 40 years and unemployment rose sharply. After the New Year, with trading losses increasing and new capital proving difficult to procure, it became apparent that the banking sector in Western markets needed further underpinning. Governments and central banks in the US and Europe required many banks to accept new capital from the State and in some cases banks were effectively nationalised. These actions, combined with tax cuts and quantitative easing (effectively printing new money), appear to have been the turning point for confidence and ultimately share prices. The cost of these programmes may well take decades to work through but they appear to have averted the threat of a global depression.  

In recent months manufacturing orders have turned positive month on month but remain at much lower levels compared to a year ago. Corporate results are also down. However, significant cost cutting by management has led to profits and margins falling less than many commentators predicted. Capital markets have also resumed more normal levels of activity and companies are increasingly able to refinance and access the historically low level of interest rates. 

Throughout the period under review, the Company has maintained its cash balances around £36m but there has been some rotation within the portfolio, as the exposure to UK quoted assets was further reduced. Over the last twelve months we have reduced UK equities from 53% of the portfolio to 43%. This realignment should now stabilise, as the recent depreciation of sterling may make the UK an attractive base for overseas companies to access Europe and will help British companies become more competitive as global economic growth resumes.

Within the overseas element of the portfolio we have been increasing investment in the US and Asian region, in particular making more investments in Chinese stocks listed in Hong Kong. The US portfolio has, over twelve months, been steadily increased reflecting a view that the US dollar would stabilise and that economic growth would be re-established following the fiscal and monetary stimulus. The Asian investments have increased from 6.4% of the portfolio to over 10% and may rise further. The Chinese have implemented a significant investment programme to accelerate infrastructure spending which is likely to see further opportunities for growth and investment into this region. Domestic demand in the wider region has been robust and when exports to Western countries pick up, corporate profits growth should return.

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Page 2 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

Revenue return and dividends

I have commented before that an increasing number of companies are likely to reduce their dividends in the face of lower profits during this economic slowdown. Compared to previous recessions, dividend cuts have been greater this time because of the need to conserve cash to service pension deficits and bank debt. The greatest impact has been in the financial sectors where many banks have stopped paying dividends. We understand how important our own dividend distributions are to shareholders and our managers have worked hard to minimise the impact of cuts to income through careful portfolio construction (including the holding of some fixed interest securities).

As mentioned earlier, the weakness of sterling has had a favourable effect on income received over the first half, increasing the translation value of overseas dividends and helping first half earnings per share rising by 4% over the same period last year. This currency effect is likely to diminish modestly in the second half but the changes in tax and asset allocations should limit the impact of dividend cuts. Based upon our current projections we are able to maintain our forecast to pay a minimum total dividend per share of 11.39p for the current year, an increase of 3%. The second interim dividend of 2.75p per ordinary share will be paid on 28 August 2009.

Related party transactions

Details of related party transactions are contained in the annual report. There have been no material transactions with our related parties during the six-month period other than the investment in the Henderson Liquid Assets Fund, a money market fund (see note 3).

Outlook (including principal risks and uncertainties) for the six months to 31 October 2009

Since the Spring there has been much talk of the green shoots of recovery and investors have switched focus from responding to bad news toward looking for recovery potential in stocks. Certainly economies are now contracting at a slower pace but year on year growth is unlikely until at least the last quarter of 2009. The Chinese stimulus has done much to fuel a rise in oil and metal prices and the quoted companies in these segments have risen sharply in value. The recent market recovery has been narrowly focused on cyclical companies and those distressed as a result of their debt burden. In order for us to be convinced that this sharp upward movement is more than a bear market rally we need to see more sectors experience a recovery in share prices.

The huge scale of liquidity provided to the financial sector should avert a global depression, but the world is still experiencing a severe downturn in terms of corporate profitability. The core question for investors will be the pace at which profits and revenues can recover lost ground. The drivers for recovery are unclear as consumers are unlikely to rediscover their appetite for debt in the light of the falls in house prices and nor do banks have enough capital to support rapid lending growth. Low interest rates will help support spending and it is hoped that they remain low to stimulate demand without causing inflation to flare up. 

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Page 3 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

Over the coming months economic news should continue to get less bad and ultimately towards the end of the year genuine growth should be established, leading to an end to the recession. However, we expect the recovery to be slow and a number of the currently favoured recovery stocks to falter and disappoint those investors expecting a sharp rise in profits. In previous periods of economic recovery, corporate insolvencies actually rose as companies could not fund increased levels of working capital or banks foreclosed in the belief that they would find buyers for assets. There remains a considerable opportunity for genuine stock picking by actively managed trusts such as Bankers to add considerable value when compared with buying index constituents in the belief that they may recover to previous levels.

We intend to gradually increase investment into equities and reduce levels of cash within the Company. Our favoured stocks will be stable, well funded and cash generative companies in those regions with the best potential for economic growth. Investors seeking to restore wealth will be attracted back to equities over time, initially focussing on those quality names on cheap valuations. The risk of investing in equities is easing and, despite dividend cuts, the yield available from equities looks attractive against holding cash at low interest rate levels.  

For further information contact:                        

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

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  Page 4 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

FINANCIAL HIGHLIGHTS

	(Unaudited)		(Audited)
	30 April		31 October		%
	2009		2008		Change
Assets
Net asset value per ordinary share (with debt at book value)	350.7p		340.8p		2.9
Ordinary share mid-market price	326.0p		305.0p		6.9
Discount (share price to net asset value)	7.0%		10.5%
Total assets less current liabilities (£'000)	£421,646		£410,661		2.7
Indices
FTSE All-Share Index	2,173.06		2,183.69		-0.5
S&P 500 Composite Index	872.81		968.75		-1.8	#
FTSE World Europe (ex UK) Index (£)	298.29		283.83		5.1
TOPIX (Tokyo First Section Index)	837.79		867.12		5.3	#
FTSE World (ex UK) Index (£)	259.65		249.12		4.2
50/50 FTSE All-Share Index/
FTSE World (ex UK) Index (£)	203.80		200.00	*	1.9
# - £ adjusted
* - rebased as at 31 October 2008
	(Unaudited)		(Unaudited)
	Half year  ended		Half year ended
	30 April		30 April		%
	2009		2008		Change
Revenue
Gross revenue (£'000)	£8,364		£8,178		2.3
Earnings per ordinary share	5.84p		5.62p		3.9

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Page 5 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

CONSOLIDATED INCOME STATEMENT 

for the half year ended 30 April 2009 

	(Unaudited) Half year ended 30 April 2009			(Unaudited) Half year ended  30 April 2008			(Audited) Year ended  31 October 2008
	Revenue return  £'000	Capital return  £'000	Total  £'000	Revenue return £'000	Capital return  £'000	Total  £'000	Revenue return  £'000	Capital return  £'000	Total  £'000
Gains/(losses) on investments held at fair value through profit or loss	-	11,809	11,809	-	(37,108)	(37,108)	-	(183,058)	(183,058)
Investment income	7,829	-	7,829	7,885	-	7,885	17,773	-	17,773
Other operating income	535	-	535	293	-	293	840	-	840
	---------	---------	---------	--------	---------	---------	---------	----------	----------
Total income	8,364	11,809	20,173	8,178	(37,108)	(28,930)	18,613	(183,058)	(164,445)
	---------	---------	---------	--------	---------	---------	---------	----------	----------
Expenses
Management fees	(491)	(264)	(755)	(554)	(298)	(852)	(959)	(436)	(1,395)
Other expenses	(291)	-	(291)	(281)	-	(281)	(531)	-	(531)
	---------	---------	---------	--------	---------	---------	---------	----------	----------
Profit/(loss) before finance costs and taxation	7,582	11,545	19,127	7,343	(37,406)	(30,063)	17,123	(183,494)	(166,371)
Finance costs	(338)	(790)	(1,128)	(357)	(834)	(1,191)	(715)	(1,668)	(2,383)
	---------	---------	---------	--------	---------	---------	---------	----------	----------
Profit/(loss) before taxation	7,244	10,755	17,999	6,986	(38,240)	(31,254)	16,408	(185,162)	(168,754)
Taxation	(643)	401	(242)	(601)	371	(230)	(1,935)	1,283	(652)
	---------	---------	---------	--------	---------	---------	---------	----------	----------
Profit/(loss) for the period	6,601	11,156	17,757	6,385	(37,869)	(31,484)	14,473	(183,879)	(169,406)
	=====	=====	=====	=====	======	======	======	======	=======
Earnings/(loss) per ordinary share (note 2)	5.84p	9.86p	15.70p	5.62p	(33.34p)	(27.72p)	12.76p	(162.16p)	(149.40p)

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

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

The accompanying condensed notes are an integral part of the financial statements.

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  Page 6 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the half year ended 30 April 2009

	Called up  share capital	Share premium  account	Capital redemption  reserve	Other capital  reserves	Revenue reserve	Total
Half year ended 30 April 2009 (Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 October 2008	28,290	452	11,920	314,783	30,216	385,661
Buy back of 50,000 ordinary shares	(13)	-	13	(142)	-	(142)
Net profit from ordinary activities after tax	-	-	-	11,156	6,601	17,757
Payment of 3rd interim dividend (2.93p) in respect of the year ended 31 October 2008	-	-	-	-	(3,316)	(3,316)
Payment of final dividend (2.93p) in respect of the year ended 31 October 2008	-	-	-	-	(3,314)	(3,314)
	----------	----------	----------	----------	----------	----------
Balance at 30 April 2009	28,277	452	11,933	325,797	30,187	396,646
	======	======	======	======	======	======
	Called up  share capital	Share premium  account	Capital redemption  Reserve	Other capital  reserves	Revenue reserve	Total
Half year ended 30 April 2008 (Unaudited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 October 2007	28,544	452	11,666	502,803	27,555	571,020
Buy back of 765,740 ordinary shares	(191)	-	191	(3,151)	-	(3,151)
Net (loss)/profit from ordinary activities after tax	-	-	-	(37,869)	6,385	(31,484)
Payment of 3rd interim dividend (2.60p) in respect of the year ended 31 October 2007	-	-	-	-	(2,969)	(2,969)
Payment of final dividend (2.60p) in respect of the year ended 31 October 2007	-	-	-	-	(2,951)	(2,951)
	----------	----------	----------	----------	----------	----------
Balance at 30 April 2008	28,353	452	11,857	461,783	28,020	530,465
	======	======	======	======	======	======
	Called up  share capital	Share premium  account	Capital redemption  reserve	Other capital  reserves	Revenue reserve	Total
Year ended 31 October 2008 (Audited)	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 October 2007	28,544	452	11,666	502,803	27,555	571,020
Buy back of 1,015,740 ordinary shares	(254)	-	254	(4,141)	-	(4,141)
Net (loss)/profit from ordinary activities after tax	-	-	-	(183,879)	14,473	(169,406)
Payment of 3rd interim dividend (2.60p) in respect of the year ended 31 October 2007	-	-	-	-	(2,969)	(2,969)
Payment of final dividend (2.60p) in respect of the year ended 31 October 2007	-	-	-	-	(2,951)	(2,951)
Payment of 1st interim dividend (2.60p) in respect of the year ended 31 October 2008	-	-	-	-	(2,950)	(2,950)
Payment of 2nd interim dividend (2.60p) in respect of the year ended 31 October 2008	-	-	-	-	(2,942)	(2,942)
	----------	----------	----------	----------	----------	----------
Balance at 31 October 2008	28,290	452	11,920	314,783	30,216	385,661
	======	======	======	======	======	======

The accompanying condensed notes are an integral part of the financial statements.

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Page 7 of 11

THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

CONSOLIDATED BALANCE SHEET

as at 30 April 2009

	(Unaudited)  30 April 2009	(Unaudited) 30 April  2008	(Audited) 31 October  2008
	£'000	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss	380,534	566,283	375,516
	----------	----------	----------
Current assets
Investment in cash fund (note 3)	25,000	-	-
Other receivables	3,942	8,006	15,332
Cash and cash equivalents	13,461	377	21,882
	----------	----------	----------
	42,403	8,383	37,214
	----------	----------	----------
Total assets	422,937	574,666	412,730
	----------	----------	----------
Current liabilities
Other payables	(1,291)	(7,193)	(2,069)
Bank loans and overdrafts	-	(12,008)	-
	----------	----------	----------
	(1,291)	(19,201)	(2,069)
	----------	----------	----------
Total assets less current liabilities	421,646	555,465	410,661
Non-current liabilities
Debenture stocks	(25,000)	(25,000)	(25,000)
	----------	----------	----------
Net assets	396,646	530,465	385,661
	======	======	======
Equity attributable to equity shareholders
Called up share capital	28,277	28,353	28,290
Share premium account	452	452	452
Capital redemption reserve	11,933	11,857	11,920
Retained earnings:
Other capital reserves	325,797	461,783	314,783
Revenue reserve	30,187	28,020	30,216
	----------	----------	----------
Total equity	396,646	530,465	385,661
	======	======	======
Net asset value per ordinary share (note 4)	350.7p	467.7p	340.8p
	======	======	======

The accompanying condensed notes are an integral part of the financial statements.

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THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

CONSOLIDATED CASH FLOW STATEMENT

for the half year ended 30 April 2009

	(Unaudited) Half year ended  30 April  2009	(Unaudited) Half year ended 30 April  2008	(Audited) Year  ended 31 October 2008
	£'000	£'000	£'000
Net profit/(loss) before taxation	17,999	(31,254)	(168,754)
Add back interest paid	1,128	1,191	2,383
(Less)/Add: (gains)/losses on investments held at fair value through profit or loss	(11,809)	37,108	183,058
Increase in accrued income	(1,298)	(2,558)	(660)
Decrease in other debtors	1,271	1,137	824
Decrease in other creditors	(28)	(1,222)	(1,831)
Net sales/(purchases) of investments	6,373	(21,187)	23,516
Purchase of cash fund	(25,000)	-	-
Decrease/(increase) in amounts due from brokers	11,395	(928)	(9,793)
(Decrease)/increase in amounts due to brokers	(750)	5,330	1,038
Scrip dividends included in investment income	-	-	(258)
	----------	----------	----------
Net cash (outflow)/inflow from operating activities before interest and taxation	(719)	(12,383)	29,523
Interest paid	(1,128)	(1,178)	(2,383)
Taxation on investment income	(220)	(312)	(780)
	----------	----------	----------
Net cash (outflow)/inflow from operating activities	(2,067)	(13,873)	26,360
Financing activities
Equity dividends paid	(6,630)	(5,920)	(11,812)
Purchase of ordinary shares	(142)	(3,018)	(4,218)
Drawdown of loans	-	11,000	-
	----------	----------	----------
Net cash used in financing	(6,772)	2,062	(16,030)
	----------	----------	----------
(Decrease)/increase in cash	(8,839)	(11,811)	10,330
Cash and cash equivalents at start of period	21,882	10,660	10,660
Realised profit on foreign currency	418	520	892
	----------	----------	----------
Cash and cash equivalents at end of period	13,461	(631)	21,882
	======	======	======

The accompanying condensed notes are an integral part of the financial statements.

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THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

NOTES:

1.	Accounting policies
	The condensed half year financial statements have been prepared on the basis of the accounting policies set out in the Group's financial statements for the year ended 31 October 2008 and in accordance with IAS 34. The tax charge is based on overseas tax suffered during the period.
2.	Earnings per ordinary share
	The earnings per ordinary share figure is based on the net gain for the half year of £17,757,000 (half year ended 30 April 2008: net loss £31,484,000; year ended 31 October 2008: net loss £169,406,000) and on 113,119,216 (half year ended 30 April 2008: 113,570,650; year ended 31 October 2008: 113,394,414) ordinary shares, being the weighted average number of ordinary shares in issue during the period.
	The return per share detailed above can be further analysed between revenue and capital, as below.

		(Unaudited) Half year ended  30 April 2009	(Unaudited) Half year ended 30 April 2008	(Audited)  Year ended  31 October 2008
		£'000	£'000	£'000
	Net revenue profit	6,601	6,385	14,473
	Net capital profit/(loss)	11,156	(37,869)	(183,879)
		----------	----------	----------
	Net total profit/(loss)	17,757	(31,484)	(169,406)
		======	======	======
	Weighted average number of ordinary    shares in issue during each period	113,119,216	113,570,650	113,394,414
		Pence	Pence	Pence
	Revenue earnings per ordinary share	5.84	5.62	12.76
	Capital earnings/(loss) per ordinary share	9.86	(33.34)	(162.16)
		----------	----------	----------
	Total earnings/(loss) per ordinary share	15.70	(27.72)	(149.40)
		======	======	======

3.	Current asset investments
	The Group has a holding in Henderson Liquid Assets Fund, a money market fund that is used to hold what would otherwise be short term cash balances. At 30 April 2009 this holding had a value of £25,000,000 (30 April 2008 £nil; 31 October 2008 £nil).
4.	Net asset value per ordinary share
	The net asset value per ordinary share is based on the net assets attributable to equity shareholders of £396,646,000 (30 April 2008: £530,465,000; 31 October 2008: £385,661,000) and on 113,109,824 (30 April 2008: 113,409,824; 31 October 2008: 113,159,824), being the number of ordinary shares in issue at the period end.
5.	Interim dividend
	The directors have declared a second interim dividend of 2.75p (2008: 2.60p) net per ordinary share, payable on 28 August 2009 to shareholders registered on 24 July 2009. The shares will be quoted ex-dividend on 22 July 2009.  Based on the number of ordinary shares in issue at 18 June 2009 of 113,109,824 the cost of this dividend will be £3,111,000.  A first interim dividend of 2.75p (2008: 2.60p) was paid on 29 May 2009 at a total cost of £3,111,000.

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THE BANKERS INVESTMENT TRUST PLC

Unaudited Results for the half year ended 30 April 2009

6.	Comparative information
	The financial information contained in this half year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half years ended 30 April 2009 and 2008 has not been audited or reviewed by the auditors.   The information for the year ended 31 October 2008 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 31 October 2008 have been filed with the Registrar of Companies. The report of the auditors on those financial statements contained no qualification or statement under section 237(2) or (3) of the Companies Act 1985.
7.	Half year report
	A copy of the  report for the half year ended 30 April 2009 will be posted to shareholders in July and will be available on the Company's website (www.bankersinvestmenttrust.com).  Copies can also be requested thereafter from the Secretary at the Registered Office at 201 Bishopsgate, London EC2M 3AE.

DIRECTORS' RESPONSIBILITY STATEMENT

The directors confirm that, to the best of their knowledge:
(a)	the condensed set of financial statements has been prepared in accordance with IAS 34;
(b)	the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c)	the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

On behalf of The Bankers Investment Trust PLC

R D Brewster, Chairman

18 June 2009

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THE BANKERS INVESTMENT TRUST PLC

Unaudited Preliminary Results for the half year ended 30 April 2009

LARGEST INVESTMENTS 

at 30 April 2009

The 50 largest investments (convertibles, fixed interest and all classes of equity in any one company being treated as one investment) were as follows:

	Market value £'000			Market value £'000
BP	14,475		China Mobile	2,794
Catlin	8,590		Impala Platinum	2,766
Vodafone	8,466		Shire	2,764
Petroleo Brasileiros	8,156		Smiths News	2,746
GlaxoSmithKline	8,098		BAE Systems	2,687
HSBC	7,624		Novartis	2,674
Royal Dutch Shell	7,007		Bank of China	2,651
BG	6,886		DBS	2,608
British American Tobacco	6,671		De La Rue	2,567
Barclays*	5,238		Anglogold Ashanti	2,468
Scottish & Southern Energy	4,432		Xstrata	2,460
High Tech Computer	4,094		Tullow Oil	2,420
Aviva*	4,088		Imperial Tobacco*	2,417
National Grid	4,086		Keppel	2,378
Mitsubishi UFJ Financial	3,991		Sanofi-Aventis	2,372
Jardine Lloyd Thompson	3,978		Yamato	2,339
Wetherspoon (J.D.)	3,757		Quorum Oil & Gas Technology	2,329
Rolls-Royce	3,718		Hunting	2,324
Reckitt Benckiser	3,200		Secom	2,318
Fresenius	3,147		China Communications Construction	2,308
ICAP	3,125		Fisher (J) & Sons	2,303
ENI	3,006		Total	2,297
QBE Insurance	2,953		Cranswick	2,259
Energy Resources of Australia	2,946		Mitsui Sumitomo Insurance	2,244
BHP Billiton	2,848		Pepsico	2,235

These investments total £196,308,000 which represents 51.6% of the portfolio. 

*Includes fixed interest.

GEOGRAPHICAL DISTRIBUTION

	Valuation of investments		Currency exposure of operational assets
	30 April 2009 %	31 October 2008 %	30 April 2009 %	31 October 2008 %
UK	43.4	45.4	43.4	43.3
Europe	9.6	10.8	10.4	11.5
North America	18.8	18.8	18.6	19.0
Japan	11.1	11.6	10.7	12.4
Pacific (ex Japan)	10.0	6.4	10.0	6.8
Emerging Markets	3.8	2.7	3.7	2.8
Fixed Interest	3.3	4.3	3.2	4.2
	------	------	------	------
	100.0	100.0	100.0	100.0
	====	====	====	====

- ENDS -

 

END

 

 

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