RNS Number:5245T
Bankers Investment Trust PLC
22 December 2003
THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
19 December 2003
Highlights
* NAV per share rose 13.6% compared to a rise of 9.6% in the
benchmark FTSE All- Share Index
* 35th consecutive year of dividend increases. 4% increase for the
year, making the total dividend payment 7.05p per share
* Forecast dividend for 2004 to rise by 4%
Extracts from the Chairman's Statement
I am very pleased to report that the recovery in stock markets around the world
has resulted in both the net asset value and share price rising over the past
year. The net asset value per share rose 13.6%, which compares very favourably
with a 9.6% rise in the main benchmark, the FTSE All-Share Index. Overseas stock
markets have generally outpaced the UK in terms of performance; this has been
further compounded by the weakness of sterling against most currencies other
than the US dollar. I can also report another increase in dividends, our 35th
consecutive year of delivering a rising distribution to shareholders. This
year's total dividend will rise by 4.0% and we anticipate being able to further
increase the dividend in 2004.
Assets
It may be a cliche, but it is true to say that over the past year investing in
equities really has been a game of two halves. At the interim stage we reported
a fall in net assets of 2.1%, whereas the second half of the year saw a dramatic
recovery resulting in a rise in net assets of 16.0%. The war in Iraq proved the
turning point for markets, but it was not just a case of easing investors' worst
fears; a string of positive economic news has been driving equity markets
forward.
The US policy makers have been the most active, in providing both fiscal and
monetary stimulus in order to stop their economy slipping into recession.
Negative real interest rates and huge tax rebates have helped to keep consumer
confidence buoyant. The downside has been an unprecedented level of government
borrowing and a ballooning US budget deficit, resulting in a weaker dollar.
Currency moves have been particularly volatile this year: the euro strengthened
by 7.6% relative to sterling, while the South African rand rose by 25.3% and the
Australian dollar by 15.1%.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Extracts from Chairman's Statement cont'd
The Company's gearing peaked at 16.6% in March, partly as a result of lower
share prices but also due to the increased investment in equities. As the market
rose over the summer further investments were made, particularly in the Far
East, resulting in gearing of approximately 12% at the October year-end. Over
the year gearing has had a positive impact on the Company's net asset value. The
European, UK, Far Eastern and Emerging Markets' portfolios all added value and
the overall asset allocation was also a key driver of performance.
We remained wary of the US equity market over the year, based upon the expensive
valuation of shares and a negative stance on the US dollar. We kept faith with
Japan, which was the top perfoming major stock market in 2003 and overseas
investors flocked back looking for bargains, especially amongst the exporters
and the banks. The increased interest in Japan forced an appreciation of the
yen, the Central Bank of Japan proving ineffective at limiting the rise. We
maintained significant exposure to Europe that proved to be a volatile, but
ultimately rewarding, market to be invested in. Europe is rich in cyclical and
recovery stocks that prospered well in the second half of the year. The UK
market was dull by comparison; the economy grew by 2% (below its trend rate) and
shows little sign of accelerating faster. However the UK portfolio contained an
above average mixture of smaller and medium sized companies that outperformed
the general market. Over the year, we have switched money from the mature
western markets, increasing the Far East (ex Japan) element of the portfolio
from 3.4% to 5.4%. Our favoured companies are capitalising on China's growing
emergence in world trade and exploiting increased outsourcing from US companies.
Earnings and Dividends
The earnings per share increased by 1.4% to 7.12p per share. While reduced
expenses and a lower management fee have helped, gross revenue was broadly flat
due to lower interest rates impacting interest received. Dividend growth was
restrained by increased investment in lower yielding parts of the world and the
continued, albeit at a reduced frequency, dividend cuts in the UK. The weakness
of the US dollar has also affected income from the UK portfolio. Companies such
as BP, HSBC and BHP Billiton now declare their dividend in US dollars,
comprising together almost a quarter of the FTSE All-Share Index dividend. The
year ahead should see some improvement, as dividend growth in most markets is
forecast at 5% or better.
We are proposing a final dividend of 1.83p per share, making a total of 7.05p,
an increase of 4.0% for the year and comfortably ahead of the current rate of
inflation. For the current year we are forecasting a minimum rise in the total
dividend per share of 4.0% to 7.33p. A quarterly dividend of 1.83p will be paid
at the end of May, August and November with a minimum final of 1.84p payable in
February 2005.
We recognise the importance of dividends to shareholders, which is shown in the
record of increasing dividends every year since 1967. Despite a difficult period
when many companies reduced or in extreme cases omitted dividends, we have
continued to increase distributions without the need for a transfer from the
revenue reserves. Shareholders should be comforted that the Company has revenue
reserves to help us meet our objective to achieve regular dividend growth.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Extract from Chairman's Statement cont'd
New Zealand
In 1995 Bankers Investment Trust was listed on the New Zealand Stock Exchange
and started to pay dividends to local investors directly in New Zealand dollars.
The New Zealand register has grown rapidly and now accounts for over 4% of our
shares in issue. We are very grateful for this support from New Zealand and hope
that the Company's attractions gather more investors. We are examining ways of
improving the service to New Zealand shareholders: our portfolio manager has
made his first, of what will hopefully be regular, marketing trips to New
Zealand and the appointment of First NZ Securities as our local broker, is an
indication of our commitment to this market.
Outlook
The good news is that the global economic cycle has clearly turned. The very
strong economic recovery in the USA is perhaps unsurprising given interest rates
as low as 1% and strong government spending. This begs the question of how long
can these levels of stimulus persist before inflationary pressures reappear. We
feel that GDP growth will moderate from the large increase in the third quarter
towards above trend growth through 2004. Inflation should slowly pick up due
partly to the weakness of the US dollar. However, the US Federal Reserve has
clearly indicated that interest rates will be kept low for longer in order to
firmly establish growth and job creation. A supportive US economy should set the
tone for global stock markets given its scale and consumption of the world's
goods and services.
Valuations are undoubtedly less attractive now that stock markets have
recovered. The average US stock is trading on a P/E ratio of 18x, which compares
with 12 to 13x for UK and European stocks. Also stock market indices in the USA
such as Value Line, which weight each company equally, indicate that the US
market is hitting new highs; therefore much of the recovery and maybe more is
already factored into prices. Prospects for mainland Europe could prove to be
the most appealing, especially at such an early stage in its recovery.
Elsewhere, the UK is cheap on a valuation basis and should deliver solid
performance. Japan and the Far East should continue to attract overseas
investors seeking the heady mix of recovery and explosive growth respectively.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Extract from Chairman's Statement cont'd
It would be imprudent of me to say that the stockmarket outlook is without risk.
Geopolitical risk is not so dominant in investors' minds as it was in the
aftermath of 11 September 2001 and the run up to the Iraq war but it still
remains a concern. The weakness of the US dollar particularly against the euro
probably is welcome. The question is whether the trend will be gradual and
manageable, helping to rebalance global demand or rapid and severe, spreading
fear among investors. However, we consider that investors have not yet fully
bought into a sustainable global recovery with improving corporate
profitability. On balance we expect that 2004 should be a favourable year to be
invested in equities.
Andrew Barker
Chairman
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 Stephen Phillips
Head of Investment Trusts Associate Director
Henderson Global Investors Henderson Global Investors
Tel: 020 7818 5517 Tel: 020 7818 6417
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Highlights of the Year
31 October 2003 31 October 2002 Change
%
Assets
Total assets less current liabilities #383,449,000 #340,887,000 +12.5
Net asset value per ordinary share 283.1p 249.3p +13.6
Ordinary share mid-market price 265.5p 233.8p +13.6
Discount (Share Price to Net Asset Value) 6.2% 6.2%
Revenue
Gross revenue #12,194,000 #12,303,000 -0.9
Earnings per ordinary share 7.12p 7.02p +1.4
Dividends per ordinary share 7.05p 6.78p +4.0
Indices
FTSE All-Share Index 2,125.37 1,938.71 +9.6
Standard & Poor's Composite Index 1,050.71 885.76 +9.4*
FTSE World Europe (ex UK) Index (#) 233.01 202.24 +15.2
TOPIX (Tokyo First Section Index) 1,043.36 862.24 +24.3*
FTSE World (ex UK) Index (#) 230.99 203.88 +13.3
50/50 FTSE All-Share/ +11.5
222.90 200.00+
FTSE World (ex UK) Index (#)
Retail Prices Index 182.6 177.9 +2.6
*# adjusted
+ rebased as at 31/10/02
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Group Statement of Total Return (incorporating the revenue account)
for the year ended 31 October 2003
Year ended 31 October 2003 Year ended 31 October 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Total capital gains/(losses) from - 44,605 44,605 - (61,161) (61,161)
investments
Income from fixed asset investments 11,719 - 11,719 11,579 - 11,579
Other interest receivable and similar 475 - 475 724 - 724
income
---------- ---------- ---------- ---------- ---------- ----------
Gross revenue and capital gains/ 12,194 44,605 56,799 12,303 (61,161) (48,858)
(losses)
Management fee (1,051) (937) (1,988) (1,265) (1,128) (2,393)
Other administrative expenses (622) - (622) (627) - (627)
---------- ---------- ---------- ---------- ---------- ----------
Net return/(loss) on ordinary
activities
before interest payable and taxation 10,521 43,668 54,189 10,411 (62,289) (51,878)
Interest payable (717) (1,672) (2,389) (722) (1,685) (2,407)
---------- ---------- ---------- ---------- ---------- ----------
Net return/(loss) on ordinary
activities
before taxation 9,804 41,996 51,800 9,689 (63,974) (54,285)
Taxation on net return on ordinary (823) 480 (343) (831) 494 (337)
activities
---------- ---------- ---------- ---------- ---------- ----------
Available for ordinary shareholders 8,981 42,476 51,457 8,858 (63,480) (54,622)
---------- ---------- ---------- ---------- ---------- ----------
Dividends on Ordinary Shares:
Three interims of 1.74p (2002: 1.68p) (6,586) - (6,586) (6,359) - (6,359)
Proposed final of 1.83p (2002: 1.74p) (2,309) - (2,309) (2,195) - (2,195)
---------- ---------- ---------- ---------- ---------- ----------
(8,895) - (8,895) (8,554) - (8,554)
---------- ---------- ---------- ---------- ---------- ----------
Transfer to/(from) reserves 86 42,476 42,562 304 (63,480) (63,176)
====== ====== ====== ====== ====== ======
Return/(loss) per ordinary share (note 7.12p 33.66p 40.78p 7.02p (50.31)p (43.29)p
1)
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 2003
Balance Sheets
at 31 October 2003
Group Group Company Company
2003 2002 2003 2002
#'000 #'000 #'000 #'000
Fixed asset investments
Listed at market value
in the UK 224,749 202,917 224,749 202,917
outside the UK 166,332 139,136 166,332 139,136
Other quoted funds 1,337 3,370 1,337 3,370
Unquoted investments 750 1,125 750 1,125
Investment in subsidiary undertaking - - 709 705
---------- ---------- ---------- ----------
Total fixed asset investments 393,168 346,548 393,877 347,253
---------- ---------- ---------- ----------
Current assets
Debtors 4,550 8,367 4,550 8,350
Bank balances and short term deposits 11,480 11,215 11,275 11,027
---------- ---------- ---------- ----------
16,030 19,582 15,825 19,377
Creditors: amounts falling due within one year (25,749) (25,243) (26,253) (25,743)
---------- ---------- ---------- ----------
Net current liabilities (9,719) (5,661) (10,428) (6,366)
---------- ---------- ---------- ----------
Total assets less current liabilities 383,449 340,887 383,449 340,887
Creditors: amounts falling due after more than one year (26,300) (26,300) (26,300) (26,300)
---------- ---------- ---------- ----------
Total net assets 357,149 314,587 357,149 314,587
====== ====== ====== ======
Capital and reserves
Called up share capital 31,542 31,542 31,542 31,542
Share premium account 452 452 452 452
Other reserves 307,689 265,213 308,398 265,918
Revenue reserve 17,466 17,380 16,757 16,675
---------- ---------- ---------- ----------
Shareholders' funds (all equity) 357,149 314,587 357,149 314,587
====== ====== ====== ======
Net asset value per ordinary share (note 2) 283.1p 249.3p 283.1p 249.3p
====== ====== ====== ======
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Group Cash Flow Statement
For the year ended 31 October 2003
2003 2003 2002 2002
#'000 #'000 #'000 #'000
Net cash inflow from operating activities 9,314 8,794
Servicing of finance
Debenture interest paid (1,177) (2,302)
Bank and loan interest paid (83) (122)
---------- ----------
Net cash outflow from servicing of finance (1,260) (2,424)
Taxation
UK tax paid - (54)
Withholding tax recovered 162 208
---------- ----------
Net tax recovered 162 154
Financial investment
Cash received under futures contracts 38 133
Purchases of investments (61,567) (86,209)
Sales of investments 61,627 78,541
---------- ----------
Net cash inflow/(outflow) from financial investment 98 (7,535)
Equity dividends paid (8,705) (8,403)
Management of liquid resources
Cash (placed on)/withdrawn from deposit (318) 1,757
---------- ----------
Net cash outflow before financing (709) (7,657)
Financing
Drawdown of loans 1,099 3,117
---------- ----------
Net cash inflow from financing 1,099 3,117
---------- ----------
Increase/(decrease) in cash 390 (4,540)
====== ======
Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash as above 390 (4,540)
Net cash inflow from increase in loans (1,099) (3,117)
Cash outflow/(inflow) from movement in liquid resources 318 (1,757)
---------- ----------
Change in net debt resulting from cash flows (391) (9,414)
Exchange movements (81) 1,306
---------- ----------
Movement in net debt in the year (472) (8,108)
Net debt at 1 November (31,772) (23,664)
---------- ----------
Net debt at 31 October (32,244) (31,772)
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Notes:
1. Return/(loss) per Ordinary Share
Revenue return per ordinary share is based on earnings attributable to ordinary shares of #8,981,000 (2002:
#8,858,000), and on the number of ordinary shares in issue during the year of 126,169,781 (2002: 126,169,781).
Capital gain per ordinary share is based on gains attributable to ordinary shares of #42,476,000 (2002: losses
of #63,480,000), and on the number of ordinary shares in issue during the year of 126,169,781 (2002:
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 #357,149,000
(2002: #314,587,000) and on the 126,169,781 ordinary shares in issue at 31 October 2003 (2002: 126,169,781).
3. Preliminary Results
The preliminary figures for the year ended 31 October 2003 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. 2002 Report and Accounts
The figures and financial information for the year ended 31 October 2002 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. 2003 Report and Accounts
Copies of the Report and Accounts will be posted to shareholders in January 2004 and will thereafter be
available from the Secretary at 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held at the
Drapers' Hall, Throgmorton Avenue, London EC2 on Friday 20 February 2004 at 12 noon.
6. Dividend
A final dividend of 1.83p per ordinary share will, if approved by shareholders, be paid on 27 February 2004 to
shareholders on the register on 30 January 2004. The Company's shares go ex-dividend on 28 January 2004.
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THE BANKERS INVESTMENT TRUST PLC
Unaudited Preliminary Results
for the Year Ended 31 October 2003
Largest Investments
at 31 October 2003
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
Rank 31 Oct 2003 Rank 31 Oct
2003
(2002) #'000 (2002) #'000
1 (2) BP 15,174 21 (30) Tesco 2,906
2 (3) HSBC 13,452 22 (15) British American Tobacco 2,900
3 (1) GlaxoSmithKline 12,898 23 (*) AP Moller-Maersk 2,848
4 (5) Vodafone 8,353 24 (17) Novartis 2,784
5 (4) Shell Transport & Trading 7,323 25 (*) BHP Billiton 2,716
6 (7) Royal Bank of Scotland 5,321 26 (35) Anglo American 2,701
7 (6) Barclays 5,144 27 (29) Prudential 2,675
8 (9) Total Fina Elf 4,851 28 (32) ABN-Amro 2,473
9 (10) HBOS 4,732 29 (*) Yell 2,437
10 (8) Lloyds TSB 4,502 30 (*) Deutsche Boerse 2,379
11 (12) AstraZeneca 4,429 31 (*) Carnival 2,331
12 (18) BT Group 3,896 32 (*) Man Group 2,318
13 (19) Philips Electronics 3,685 33 (37) ICAP 2,310
14 (13) Diageo 3,604 34 (*) Galen 2,262
15 (22) Irish Life & Permanent 3,410 35 (*) Dexia 2,230
16 (20) Unibail 3,255 36 (21) Aventis 2,183
17 (16) ENI 3,183 37 (23) Allied Irish Banks 2,169
18 (11) Unilever 3,116 38 (*) ISS International 2,157
19 (14) Nestle 3,111 39 (39) Richemont 2,120
20 (28) Samsung Electronics 3,000 40 (*) Greene King & Sons 2,032
These investments total #165,370,000 or 42.1% of the portfolio.
(*) Not in the top 40 largest investments last year.
Changes in Investments
Valuation Purchases Sales Appreciation Valuation
2002 Proceeds 2003
#'000 #'000
#'000 #'000 #'000
United Kingdom 201,366 28,120 28,639 21,655 222,502
Europe 60,916 3,538 8,842 11,980 67,592
North America 42,372 15,482 12,510 592 45,936
Japan 24,367 2,614 2,616 4,130 28,495
Pacific (ex Japan) 11,730 10,270 5,130 4,434 21,304
Emerging Markets 5,797 - 340 1,882 7,339
---------- ---------- ---------- ---------- ----------
346,548 60,024 58,077 44,673 393,168
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This information is provided by RNS
The company news service from the London Stock Exchange
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