BIT- Annual Financial Report

LEGAL ENTITY IDENTIFIER: 213800B9YWXL3X1VMZ69


THE BANKERS INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 October 2019

This announcement contains regulated information







(1)
Share price is the mid-market closing price

(2)
This represents the four ordinary dividends recommended or paid for the year (see the Annual Report for more details)

(3)
Based on the mid-market closing price
(4)
Net (cash)/gearing is calculated in accordance with the gearing definition in the alternative performance measures in the Annual Report
(5)
Capital return excludes all dividends
(6)
For the 3, 5 and 10 years this is a composite of the FTSE World Index and the FTSE All-Share Index
(7)
Total return assumes dividends reinvested

Sources: Morningstar for the AIC, Janus Henderson, Datastream.



Performance Highlights 31 October 2019 31 October 2018
Net Asset Value per ordinary share

- With debt at par
948.7p
865.8p
- With debt at market value 945.7p
862.8p
Share price at year end
(1)
927.5p
835.0p
Dividend per share for year
(2)
20.90p
19.72p


31 October 2019

31 October 2018
Dividend growth 6.0%
6.0%
Ongoing charge for year 0.52%
0.50%
Discount at year end
(3)
2.2%
3.6%
Net (cash)/gearing at year end
(4)
(3.0%)
2.4%
Long term growth record to 31 October 2019
1 year
%
3 years
%
5 years
%
10 years
%
Capital return
(5)


Net asset value
9.6
25.8 59.0 140.1
Share price 11.0
34.4 64.7 166.8
FTSE World Index
(6)
8.9
21.6 30.7 77.2
Total return
(7)



Net asset value 12.1
34.6 78.7 208.7
Share price 13.6
43.9 85.7 248.3
FTSE World Index
(6)
11.7
32.6 53.3 146.8



Dividend

6.0
22.9 41.2 81.7
Retail Price Index

2.1
9.7 12.7 34.4

CHAIRMAN’S STATEMENT

• Net asset value total return increase of 12.1%.

• Share price total return increase of 13.6%.

• Average discount to net asset value of 1.5%.

• Dividend increase of 6% to 20.90p per share.

• Forecast increase in 2020 dividend of 3%.

Performance
I am pleased to report, for the year ended 31 October 2019, strong absolute returns for shareholders. The
Company’s net asset value per share (‘NAV’) increased by 9.6% in capital terms over the year. With
dividends reinvested, the NAV total return per share was 12.1%, marginally outperforming the FTSE World
Index total return of 11.7% (in sterling terms). Our share price total return was higher, at 13.6%, due to the
narrowing of the discount to NAV at which our shares traded. At 31 October 2019, the discount stood at 2.2%
(2018: 3.6%), having averaged 1.5% over the year.

It was a challenging year for investment with a variety of macro factors and geopolitical tensions resulting in
significant volatility in global equity markets. Early in the financial year, the US Federal Reserve’s hawkish
policy, which suggested further interest rates rises were likely in 2019, led to a sharp sell-off, although this
was quickly reversed when the US Federal Reserve back-tracked in late December. More dovish central
bank policy followed in 2019, including three US Federal Reserve interest rate cuts and indications of the
willingness of major central banks to resume or continue supplying liquidity, which provided further support
for real asset prices. The US-China trade dispute oscillated between positive indications that an agreement
would be reached and further escalation of the dispute. There were signs of slowing global economic growth,
with weakened global activity, mainly in the manufacturing sector of the advanced economies, leading to
gross domestic product growth forecasts for the calendar year being downgraded on several occasions. The
Eurozone and UK were particularly affected and only narrowly avoided technical recessions. When the yield
on long-term US Treasury bonds fell below that for short-term ones concerns grew that a US recession was
on its way. However, these concerns began to subside later in the year as investors questioned whether, with
accommodative central bank policy, yield inversion was still a reliable indicator of a forthcoming recession.
Over the financial year, the US equity market was the strongest performing market, whilst the UK market was
one of the weakest, as the ongoing uncertainty regarding the UK’s exit from the European Union continued to
weigh on business prospects and investor sentiment.

Given the relatively high valuations of most equity markets, our Manager took the opportunity to realise some
profits. In addition, as explained in the Interim Report, we concluded that our direct Emerging Markets
(excluding emerging Asia) portfolio had not contributed meaningfully to the Company’s returns and should be
sold down. This was completed before the financial year end, raising cash ultimately for reallocation to other
regions. Since the financial year end, our Manager has begun reinvesting our cash when suitable
opportunities have arisen.


All of our continuing regional portfolios delivered strong absolute returns and outperformed their respective
local benchmarks over the financial year. Notwithstanding this, our allocations, relative to the FTSE World
Index, of being overweight UK (with its higher dividend yield) and underweight the US, held back the
Company’s relative performance in the final quarter of our financial year, giving up much of our relative
outperformance earlier in the year.

Further details of the performance of the Company and its regional portfolios during the year are included in
the Fund Managers’ reports in the Annual Report.

Revenue and dividends
It was another solid year for our revenue account. Earnings per share increased by 4.0% to 21.61p (2018:
20.78p), driven principally by continuing dividend growth and further special dividends from the Company’s
investments. This performance has enabled the Board to recommend a final quarterly dividend of 5.35p per
share, to be paid on 28 February 2020 to shareholders on the register of members at close of business on 24
January 2020. If approved by shareholders at the forthcoming AGM, this will result in a total dividend
payment for the year of 20.90p (2018: 19.72p), an increase of 6.0%, which is in line with our forecast for the
year, compares very favourably with the 2.1% rise in the Retail Price Index and extends our long record of
dividend growth in real terms.

After taking into account the recommended final 2019 dividend payment, if approved, approximately £0.7
million will be transferred to our revenue reserve, which, at the year-end, after payment of the third interim
and final dividends, represented 1.2 times the cost of the 2019 annual dividend. The revenue reserve
enables the Company to hold back some income in years of strong corporate dividend growth to pay it out in
leaner ones when corporate profits are under pressure (and, hence, dividend payments from our investments
may be lower).

The Company has grown its annual dividend for each of the last 53 financial years, making it one of the
leading AIC ‘dividend heroes’. The Board recognises the importance of delivering a reliable and growing
income to shareholders. The Board intends to use the revenue reserve when required to continue to achieve
this, as it has done from time to time over the past 53 years. This will allow, in leaner years, our Manager to
continue to invest the Company’s portfolio with the objective of achieving the best NAV total return for
shareholders.

Lower corporate earnings growth and any significant increase in the value of sterling are headwinds that may
result in the Company’s earnings per share in the current financial year being less than last year. The
revenue reserve gives the Board confidence, despite these headwinds, to forecast dividend growth of
approximately 3% for the current financial year.

Borrowings
As stated in the Interim Report, the Company refinanced its short-term borrowings by agreeing a new two
year £20 million borrowing facility with Sumitomo Mitsui Banking Corporation Europe Ltd in February 2019.
The Company continually reviews opportunities to deploy gearing and the short-term facility gives our
Manager additional flexibility to invest and create returns for shareholders. The facility remained undrawn
throughout the year, and currently remains undrawn.

Share issues and buy-backs
The Company did not issue or buy back any shares during the financial year. Since the year end, the shares
reverted to trading at a premium and we have sold all of the shares held in treasury and issued new shares to
meet market demand (see the Annual Report for details).

The Company will only issue shares (or sell shares out of treasury) at a premium (after costs) to net asset
value. The Company remains prepared to buy back shares, taking account of prevailing market conditions
(which are not under the Board’s control), the level of the discount (both absolute and relative to the
Company’s closest peers) and the impact on the net asset value per share.

Board changes
As mentioned in the Interim Report, Richard Killingbeck retired as Chairman and stepped down from the
Board at the conclusion of the Annual General meeting in February 2019 following 15 years as a Director.
The Board is in the final stages of an extensive process, carried out in conjunction with an experienced
independent external search consultancy, to recruit a new non-executive Director to provide additional
investment knowledge and expects to announce an appointment shortly.

Annual General Meeting (‘AGM’)
This year’s AGM will again be held at Trinity House, London, EC3N 4DH on 26 February 2020 at 12 noon.
Full details of the business to be conducted at the meeting are set out in the Notice of Meeting which has
been sent to shareholders with the Annual Report. Directions and a map showing the location of the AGM
can also be found in the Notice of Meeting. In addition to the formal part of the meeting, Alex Crooke will
present his investment views and how these are reflected in the portfolio and there will be an opportunity for
shareholders to ask questions. Light refreshments will be served following the conclusion of the meeting. The
Board looks forward to seeing many of you at the AGM.

Outlook
Since the end of our last financial year, and particularly in December, global equity markets have rallied
strongly and achieved record highs. This further upward momentum has been driven primarily by the
announcement of the first phase of a trade deal between the US and China lifting prospects for the global
economy, in conjunction with the expectation that major central banks will continue to pursue loose monetary
policy. In addition, the Conservative Party’s convincing win in the December general election provided some
relief for investors in UK equities. However, some of the key geopolitical tensions and macro factors that
influenced global equity markets during the last financial year remain unresolved.

A final resolution of the US-China trade dispute still seems some way off, despite their interim trade deal
announced in December 2019. Until a final resolution has been reached, the dispute is likely to continue to
be a significant driver of investor sentiment. President Trump is unpredictable and up for re-election this year,
so further escalations of trade tensions cannot be ruled out.

The UK is now set to leave the European Union at the end of this month, but the nature of any trading
arrangement between the UK and the European Union has still to be agreed and a ‘hard Brexit’ when the
transitional period expires on 31 December 2020 remains a real possibility. Accordingly, Brexit is likely to
remain a major concern for UK markets and a driving factor for sterling.

Global economic growth remains positive, but appears to be slowing. Corporate earnings growth stalled in
2019, but is currently expected to regain some momentum in 2020. Central banks have adopted a more
accommodative stance to counter rising risks to growth and elusive inflationary pressures, but they cannot
remain accommodative indefinitely and the long term consequences of their policies are unknown. The risk of
an imminent recession now seems low, but cannot be completely discounted.


Sue Inglis
Chairman
15 January 2020

FUND MANAGER’S REPORT
Performance
The year has turned out well with positive returns from all major equity markets despite predictions from
many that share prices were expensive. At the start of our financial year in November 2018 stock markets
were weak and fell sharply before turning more positive in late December. The stimulus for the market’s
positive momentum came initially from the US Federal Reserve’s (‘Fed’) statement in December 2018
signalling that risks were now balanced within the US economy and that they were prepared to react to any
economic weakness ahead. Ultimately the Fed cut interest rates three times in 2019 and the resulting
injection of liquidity into bond markets was followed by the European Central Bank resuming bond purchases
which forced long term interest rates lower lending support to real asset prices around the world.

My own forecast was for a year of two halves with many of the uncertainties that were troubling investors
getting resolved from the summer onwards. My optimism proved premature, while there were plenty of tweets
from the US President about the state of trade discussions between the US and China, there were no formal
agreements by our year end. Similarly Brexit negotiations within the UK parliament could find no consensus
between politicians and the UK stock market’s relatively lacklustre performance reflected investors
frustrations. The lack of progress on both fronts clearly had a real economic impact during the year, as
evidenced by stagnation in Chinese industrial orders and companies in Europe and the UK citing the
uncertainty for delaying investment decisions.

Ironically the two best performing regions of the portfolio, being the US and China, were the two embroiled in
establishing their future trading relationship. Our stock selection in these two markets has been a significant
contributor to performance both last year and in recent years; however the US performance could have been
better but for under performance in September and October following an apparent shift in sentiment from
growth investing to value. Our view is that this was not a shift to value but an indication that investors were
questioning the growth at any price strategy, typified by the office space letting company WeWork. Although
we experienced some relative underperformance in our US investments, we have limited exposure to such
companies in the portfolio and prefer companies with a solid path to profitability. Overall we had another good
year for stock picking with all our regional portfolios beating their benchmarks. The NAV total return for the
year was also ahead of the FTSE World benchmark despite giving up some relative performance in the last
quarter.

Asset Allocation
The sharp increase in share prices over the year was not matched by higher corporate profits meaning that
share price valuations were stretched higher. Our managers are sensitive to the value of investments and as
price targets are exceeded it is natural to see them to be selling holdings. As indicated in the Interim Report
we also began divesting the holdings in the Latin American and African regions and all had been sold by the
year end, however we continue to retain significant investments in emerging Asia, including China. It has
been taking a little longer this year to find new investments to replace these holdings and therefore we have
ended the year with a net cash position within the Company of 3%.

In terms of the investment team, James Ross has settled in well and has had a successful year
outperforming his European benchmark by 4.1%. Additionally, I am pleased to welcome Gordon Mackay who
has taken over the US portfolio from Ian Warmerdam following his retirement from the industry. Gordon has
over 20 years of investment experience and worked alongside Ian for the last three years. There will be no
change to the investment process that we have been employing to select US stocks.

Outlook
Markets have a habit of discounting both good and bad news well before events unfold. So while the outlook
for the year ahead has improved in recent months much of this is priced into shares given market movements
since our year end. We expect corporate earnings to resume growth on the back of a resolution of US trade
discussions and greater certainty around the United Kingdom’s status outside Europe. With little prospect of
interest rates rising and further support from central banks, it seems likely that corporates will continue using
cheap borrowings to buy ever more of their stock for cancellation. The supply of new equity remains low by
historical standards and the wall of money that is committed by private equity investors must surely start to be
deployed taking listed companies private. It is therefore not difficult to paint a positive story of increasing
demand over supply
for listed equities.

Dividend growth from our investments has slowed in the past year reflecting lower corporate earnings and we
may experience a further headwind if sterling returns to its pre referendum levels. We have built revenue
reserves in recent years to cope with the fluctuations of currencies or the need to prioritise asset allocation
decisions towards lower yielding markets.

Overall we see the supportive background for equities, both from a liquidity point of view and increased
earnings, being countered by the elevated level of valuations relative to history. There is certainly potential for
the cash we currently hold to be positively deployed and we will continue to focus our efforts on not
overpaying for investments while seeking out companies with genuine prospects for profit growth.

Alex Crooke
Fund Manager
15 January 2020

LARGEST INVESTMENTS at 31 October 2019

Ranking
2019
Ranking
2018



Company



Country
Valuation
2018
£’000
Purchases
£’000
Sales
proceeds
£’000
Appreciation/
(depreciation)
£’000
Valuation
2019
£’000
1 1
Microsoft
US
21,422 - (1,695) 6,563
26,290
2 7
Estée Lauder
US
16,930 3,055 (1,553) 6,624
25,056
3 3
American Express
US
20,174 - - 2,583
22,757
4 11
American Tower
US
14,412 - - 5,510
19,922
5 9
Visa
US
14,938 - - 4,207
19,145
6 14
MasterCard
US
13,742 - - 5,266
19,008
7 6
Berkshire Hathaway
US
18,089 - - 411
18,500
8 8
Alphabet
US
15,886 - - 2,394
18,280
9 12
Comcast
US
14,272 1,292 - 2,518
18,082
10 17
GlaxoSmithKline
UK
12,710 1,858 - 2,323
16,891
11 16
Aptiv
US
12,901 - - 1,961
14,862
12 18
Diageo
UK
11,987 - - 2,018
14,005
13 21 Intercontinental
Exchange
US 11,189 -
-
2,331
13,520
14 #
Adobe Systems
US
-
11,144
- 2,031
13,175
15 4
Union Pacific
US
19,776 -
(8,337) 1,517
12,956
16 10
Royal Dutch Shell
UK
14,926 -
- (2,020)
12,906
17 22
Xylem
US
11,167 - - 1,727
12,894
18 15
ICON
US
13,216 3,172 (5,010) 1,341
12,719
19 24
The Cooper Companies
US
10,814 - - 1,214
12,028
20 #
Intuit
US
- 12,966 - (1,063)
11,903
21 #
Electronic Arts
US
8,211 - - 2,912
11,123
22 20 Taiwan Semiconductor
Manufacturing
Taiwan 11,715 - (3,634) 2,728
10,809
23 2
Apple
US
21,285 - (8,031) (2,655)
10,599
24 #
Roper Technologies
US
8,301 - - 1,464
9,765
25 #
Reckitt Benckiser
UK
8,217 2,012 - (541)
9,688


----------- ----------- ----------- ----------- -----------


326,280 35,499 (28,260) 53,364 386,883


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


All securities are equity investments
# Not in the top 25 last year
Convertibles and all classes of equity in any one company are treated as one investment




CHANGES IN INVESTMENTS at 31 October

Valuation
2018
£’000
Purchases
£’000
Sales proceeds
£’000
Appreciation/
(depreciation)
£’000
Valuation
2019
£’000
United Kingdom 273,533 45,584 (40,399) 9,675
288,393
Europe (ex UK) 162,081 53,295 (78,264) 17,435
154,547
North America 343,056 49,525 (61,460) 41,595
372,716
Japan 127,575 30,947 (32,806) 9,682
135,398
Pacific (ex Japan, China) 95,121 54,115 (48,660) 14,393
114,969
China 58,422 41,421 (51,334) 13,987
62,496
Emerging Markets
1
27,245 6,447 (32,801) (891)
-
-------------- ----------- ------------ ------------
--------------
1,087,033 281,334 (345,724) 105,876 1,128,519
======== ====== ======= =======
========


(1)
The Emerging Markets portfolio was closed during the year

MANAGING OUR RISKS
The Board, with the assistance of Janus Henderson, has carried out a robust assessment of the principal
risks and uncertainties facing the Company that would threaten its business model, future performance,
solvency and liquidity. This included consideration of the market uncertainty arising from the United
Kingdom’s negotiations and now expected conclusion to leave the European Union (‘Brexit’).

We regularly consider the principal risks facing the Company and have drawn up a matrix of risks facing the
Company. The Board has put in place a schedule of investment limits and restrictions, appropriate to the
Company’s investment objective and policy, in order to mitigate these risks as far as practicable. The Board
monitors the Manager, its other service providers and the internal and external environments in which the
Company operates to identify new and emerging risks.

It is the Board’s view that the changing nature of the retail shareholder base, demographical changes
(needing to make sure there is demand from the younger generation), technological changes (primarily
artificial intelligence) and environmental sustainability (shareholder expectations and regulation affecting
portfolio companies/stock selection and the Company’s performance and demand for its shares) are
emerging risks.

The Board pro-actively monitors all of these factors and has a strong focus on continuing to educate itself
about any relevant issues. Details of how the Board monitors the services provided by Janus Henderson and
its other suppliers, and the key elements designed to provide effective internal control, are explained further
in the internal controls section of the Corporate Governance Statement in the Annual Report. Further details
of the Company’s exposure to market risk (including market price risk, currency risk and interest rate risk),
liquidity risk and credit and counterparty risk and how they are managed are contained in note 16 in the
Annual Report.

The Board’s policy on risk management has not materially changed during the course of the reporting period
and up to the date of this report. The principal risks which have been identified and the steps taken by the
Board to mitigate these are as follows:

Principal risks Mitigation measure
Investment Activity and Performance Risks
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 the
Company’s borrowings.
Portfolio and Market Risks
Although the Company invests almost entirely in
securities that are listed on recognised markets,
share prices may move rapidly. The companies in
which investments are made may operate
unsuccessfully, or fail entirely. Macro matters (such
as trade wars, the conclusion of the UK’s
negotiations to leave the European Union and the
global economic outlook) are expected to lead to
continued volatility in the markets. This is likely to
impact share prices of investments in the portfolio,
to the extent not already factored into current prices.
A fall in the market value of the Company’s portfolio
would have an adverse effect on shareholders’
funds.


The Fund Manager seeks to maintain a diversified
portfolio to mitigate against this risk. The Board regularly
reviews the portfolio, investment activity and
performance.

Tax, Legal and Regulatory Risks
A breach of s.1158/9 could lead to the loss of
investment trust status, resulting in capital gains
realised within the portfolio being subject to
corporation tax. A breach of the FCA’s Rules could
result in suspension of the Company’s shares, while
a breach of the Companies Act could lead to
criminal proceedings. All breaches could result in
financial or reputational damage. The Company
must also ensure compliance with the Listing Rules
of the New Zealand Stock Exchange.

Janus Henderson has been contracted to provide
investment, company secretarial, administration and
accounting services through qualified professionals. The
Board receives internal control reports produced by
Janus Henderson on a quarterly basis, which confirm
tax, legal and regulatory compliance both in the UK and
New Zealand.
Financial Risks
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.

The Company has a diversified portfolio which
comprises mainly investments in large and medium-
sized companies and mitigates the Company’s exposure
to liquidity risk. The Company minimises the risk of a
counterparty failing to deliver securities or cash by
dealing through organisations that have undergone
rigorous due diligence by Janus Henderson. Further
information on the mitigation of financial risks is included
in note 16 in the Annual Report.
Operational and Cyber Risks
Disruption to, or failure of, Janus Henderson’s
accounting, dealing or payment systems or the
Depositary’s records could prevent the accurate
reporting and monitoring of the Company’s financial
position. The Company is also exposed to the
operational and cyber risks that one or more of its
service providers may not provide the required level
of service.

The Board monitors the services provided by Janus
Henderson, the Depositary and its other suppliers and
receives reports on the key elements in place to provide
effective internal control.

THE COMPANY’S VIABILITY
The UK Corporate Governance Code requires the Board to assess the future prospects for the Company,
and report on the assessment within the Annual Report.

The Board considered that certain characteristics of the Company’s business model and strategy were
relevant to this assessment:

• The Board looks to ensure the Company seeks to only deliver positive long term performance.

• The Company’s investment objective, strategy and policy, which are subject to regular Board
monitoring, mean that the Company is invested normally only in readily realisable, listed securities
and that the level of borrowings is restricted.

• The Company is a closed-ended investment company and therefore does not suffer from the liquidity
issues arising from unexpected redemptions.

Also relevant were a number of aspects of the Company’s operational arrangements:

• The Company retains title to all assets held by the Custodian under the terms of formal agreements
with the Custodian and Depositary.

• Long term borrowing is in place, being the £15 million 8% debenture stock 2023 and £50 million
3.68% loan notes 2035 which are also subject to formal agreements, including financial covenants
with which the Company complied in full during the year. The value of long term borrowing is
relatively small in comparison to the value of net assets being 5.6%.

• Short term borrowing of £20 million with Sumitomo Mitsui Banking Corporation Europe Ltd. The
facility was not drawn down at the year end and expires in February 2021.

• Revenue and expenditure forecasts are reviewed by the Directors at each Board meeting.

• Cash is held with approved banks.

In addition, the Directors carried out a robust assessment of the principal risks and uncertainties which could
threaten the Company’s business model, including future performance, liquidity and solvency. These risks,
their mitigations and processes for monitoring them are set out in the Annual Report.

The principal risks identified as relevant to the viability assessment were those relating to investment portfolio
performance and its effect on the net asset value, share price and dividends, and threats to security over the
Company’s assets. The Board took into account the liquidity of the Company’s portfolio, the existence of the
long term fixed rate borrowings, the effects of any significant future falls in investment values and income
receipts on the ability to repay and re-negotiate borrowings, growing dividend payments, the desire to retain
investors and the potential need for share buy backs. The Directors assess viability over three year rolling
periods, taking account of foreseeable severe but plausible scenarios. The Directors believe that a rolling
three year period best balances the Company’s long term objective, its financial flexibility and scope with the
difficulty in forecasting economic conditions affecting the Company and its shareholders.

Based on their assessment, and in the context of the Company’s business model, strategy and operational
arrangements set out above, the Directors have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the three year period to October 2022.

RELATED PARTY TRANSACTIONS
The Company’s transactions with related parties in the year were with its Directors and Janus Henderson.
There were no material transactions between the Company and its Directors during the year other than the
amounts paid to them in respect of Directors’ remuneration for which there were no outstanding amounts
payable at the year end. In relation to the provision of services by the Manager, other than fees payable by
the Company in the ordinary course of business and the provision of marketing services, there were no
transactions with the Manager affecting the financial position of the Company during the year. More details
on transactions with the Manager, including amounts outstanding at the year end, are given in the Annual
Report.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES UNDER DISCLOSURE GUIDANCE AND
TRANSPARECY RULE 4.1.12

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

• the Company’s financial statements, which have been prepared in accordance with IFRSs as adopted by
the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

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

For and on behalf of the Board

Sue Inglis
Chairman
15 January 2020

STATEMENT OF COMPREHENSIVE INCOME



Year ended 31 October 2019
Year ended 31 October 2019


Notes
Revenue
return
£'000
Capital
return
£'000
Total
return
£'000
Revenu
e return
£'000
Capital
return
£'000
Total
return
£,000
Gains/ (losses) on
investments held at fair value
through profit or loss


- 105,376 105,376
- (12,611) (12,611)
Investment income 2
31,483 - 31,483
30,321 - 30,321
Other operating income 3
269 - 269
226 - 226
--------- --------- ---------
--------- --------- ---------
Total income 31,752 105,376 137,128
30,547 (12,611) 17,936

--------- --------- ---------
--------- --------- ---------
Expenses

Management fees 4
(1,437) (3,352) (4,789)
(1,344) (3,136) (4,480)
Other expenses
(1,009) - (1,009)
(990) - (990)

--------- --------- ---------
--------- --------- ---------
Profit/(loss) before finance
costs and taxation

29,306 (102,024) 131,330
28,213 (15,747) 12,466
Finance costs
(911) (2,126) (3,037)
(917) (2,141) (3,058)

--------- ---------- ---------
--------- ---------- ---------
Profit/(loss) before
taxation

28,395 99,898 128,293
27,296 (17,888) 9,408




--------- ---------- ---------
--------- ---------- ---------
Taxation 5
(1,898) (3) (1,901)
(1,823) – (1,823)

--------- --------- ---------
--------- --------- ---------
Profit/(loss) for the year
and total comprehensive
income

26,497 99,895 126,392
25,473 (17,888) 7,585
===== ====== ======
===== ====== ======
Earnings per ordinary
share – basic and diluted
6
21.61p 81.48p 103.09p
20.78p (14.59p) 6.19p






The total columns of this statement represent the Statement of Comprehensive Income, prepared in
accordance with IFRSs as adopted by the European Union. The revenue return and capital return columns
are supplementary to this and are prepared under guidance published by the Association of Investment
Companies.

STATEMENT OF CHANGES IN EQUITY

Year ended 31 October 2019




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 1 November 2018 30,986 78,541 12,489 897,318 42,249 1,061,583
Total comprehensive income:
profit for the year - - - 99,895 26,497 126,392
Ordinary dividends paid - - - - (24,766) (24,766)
---------- ---------- ---------- ---------- ---------- -------------
Total equity at 31 October 2019 30,986 78,541 12,489 997,213 43,980 1,163,209


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

Year ended 31 October 2018


Year ended
31 October 2018
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 1 November 2017 30,986 78,541 12,489 915,206 40,341 1,077,563
Total comprehensive income:
(Loss)/Profit for the year - - - (17,888) 25,473 7,585
Ordinary dividends paid - - - - (23,565) (23,565)
---------- ---------- ---------- ---------- ---------- -------------
Total equity at 31 October 2018 30,986 78,541 12,489 897,318 42,249 1,061,583
====== ====== ====== ====== ====== =======

STATEMENT OF FINANCIAL POSITION










At 31 October
2019
£'000
At 31 October
2018
£'000


Non-current assets

Investments held at fair value through profit or loss
1,128,519
1,087,033

--------------
--------------


Current assets

Investments held at fair value through profit or loss
44,993
18,005
Other receivables
4,134
4,667
Cash and cash equivalents
54,944
20,075

--------------
--------------
104,071
42,747

--------------
--------------
Total assets 1,232,590
1,129,780

--------------
--------------
Current liabilities

Other payables
(4,558)
(3,370)

------------
------------

(4,558)
(3,370)

-------------
-------------
Total assets less current liabilities 1,228,032
1,126,410

--------------
--------------
Non-current liabilities

Debenture stock
(15,000) (15,000)
Unsecured loan notes
(49,823) (49,827)

--------------
--------------

(64,823) (64,827)

--------------
--------------
Net assets 1,163,209
1,061,583
========
========



Equity attributable to equity shareholders

Share capital
30,986
30,986
Share premium account
78,541
78,541
Capital redemption reserve
12,489
12,489
Retained earnings:


Other capital reserves
997,213
897,318
Revenue reserve
43,980
42,249

-------------
-------------
Total equity 1,163,209
1,061,583
=======
=======
Net asset value per ordinary share 948.7p
865.8p
=======
=======

CASH FLOW STATEMENT



Reconciliation of profit before taxation to
net cash flow from operating activities
Year ended 31
October
2019
£’000
Year ended 31
October
2018
£'000
Operating activities

Profit before taxation
128,293
9,408
Add back interest payable (‘finance costs’)
3,037
3,058
Less/add: (losses)/gains on investments held at fair value through profit
or loss
(105,376)
12,611
(Increase)/decrease in accrued income
(42)
113
Increase in other receivables
(46)
(12)
Increase in other payables
253
82
Purchases of investments
(281,334)
(335,454)
Sales of investments
345,724
337,755
Purchases of current asset investments
(66,609)
(46,003)
Sales of current asset investments
39,621
51,250
Decrease/(Increase) in securities sold for future settlement
854
(1,834)
Increase/(decrease) in securities purchased for future settlement
935
(6,163)

--------------
--------------


Net cash inflow from operating activities before interest and
taxation
1
65,310
--------------
24,811
--------------
Interest paid
(3,037)
(3,058)
Taxation on investment income
(2,138)
(2,083)

--------------
--------------
Net cash inflow from operating activities 60,135
19,670

--------------
--------------
Financing activities

Equity dividends paid (net of refund of unclaimed distributions)
(24,766)
(23,565)
Drawdown of bank loan
-
2,005
Repayment of bank loan
-
(2,005)

-------------
-------------
Net cash outflow from financing activities (24,766)
(23,565)

-------------
-------------



Increase/(decrease) in cash
35,369
(3,895)
Cash and cash equivalents at the start of the year
20,075
24,102
Exchange movements
(500)
(132)

-----------
-----------
Cash and cash equivalents at the end of the year
54,944
20,075
=======
=======

1
In accordance with IAS 7.31 cash inflow from dividends was £31,164,000 (2018: £30,398,000) and
cash inflow from interest was £158,000 (2018: £62,000).

NOTES:

1.
Accounting policies
The Bankers Investment Trust PLC is a company incorporated and domiciled in the United Kingdom
under the Companies Act 2006. The financial statements of the Company for the year ended 31
October 2019 have been prepared in accordance with 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. These 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 IFRS Interpretations
Committee (‘IFRS IC’) 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 held at fair value through profit or loss. The
principal accounting policies adopted are set out in the Annual Report. These policies have been
applied consistently throughout the year. Where presentational guidance set out in the Statement of
Recommended Practice (the ‘SORP’) for investment companies issued by the Association of
Investment Companies (the ‘AIC’) in November 2014 and updated in February 2018 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.

The assets of the Company consist mainly of securities that are listed and readily realisable and,
accordingly, the Directors believe that the Company has adequate financial resources to continue in
operational existence for at least twelve months from the date of approval of the financial statements.
Having assessed these factors, the principal risks and other matters discussed in connection with the
Viability Statement, the Directors have decided that it is appropriate for the financial statements to be
prepared on a going concern basis.



2019
2018
2. Investment income £’000
£’000
UK dividend income - listed
11,751
10,718
UK dividend income - special dividends
430
329
Overseas dividend income - listed
18,692
18,930
Overseas dividend income - special dividends
460
205
Property income distributions
150
139


----------- -----------

31,483
30,321

======
======
Analysis of investment income by geographical region:


UK
12,876 11,641
Europe (ex UK)
4,956 5,215
North America
3,151 3,077
Japan
3,112 2,825
China
1,734 1,413
Pacific (ex Japan, China)
5,070 5,183
Emerging Markets
584 967

-----------
-----------

31,483
30,321

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

2019
2018
3. Other operating income £’000
£’000
Bank interest
181
64
Underwriting income
3
24
Stock lending revenue
72
135
Other income
13
3

-----
-----

269
226

===
===
At 31 October 2019 the total value of securities on loan by the Company for stock lending purposes was
£65,895,000 (2018: £42,093,000). The maximum aggregate value of securities on loan at any one time
during the year ended 31 October 2019 was £104,529,000 (2018: £159,687,000). The Company’s
agent (BNP Paribas Securities Services) held collateral at 31 October 2019 with a value of £69,457,000
(2018: £44,402,000) in respect of securities on loan. The value of securities held on loan, comprising
Corporate and Government Bonds with a minimum market value of 105% (2018: 105%) of the market
value of any securities on loan, is reviewed on a daily basis.


2019
2018


4.


Management fees
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Investment management
1,437 3,352 4,789
1,344 3,136 4,480

------- ------- -------
------- ------- -------

1,437 3,352 4,789
1,344 3,136 4,480

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

A summary of the terms of the management agreement is given in the Annual Report.


2019
2018


5.


Taxation
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000

a) Analysis of the charge for
the year





Overseas tax suffered
2,291 3 2,294
2,121 - 2,121
Overseas tax reclaimable
(393) - (393)
(295) - (295)
Income tax recovered
- - -
(3) - (3)
------- ------- ------- ------- ------- -------

Total tax charge for the year 1,898 3 1,901
1,823 - 1,823
==== ==== ==== ==== ==== ====

b) Factors affecting the tax charge for the year
The differences are explained below:
2019
2018
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Revenue
return
£’000
Capital
return
£’000
Total
return
£’000
Profit/(loss) before taxation
28,395 99,898 128,293
27,296 (17,888) 9,408
Corporation tax for the year
at 19.00% (2018: 19.00%) 5,395 18,981 24,376 5,186 (3,400) 1,786
Non taxable UK dividends
(2,281) - (2,281) (2,112) - (2,112)
Overseas income and non
taxable scrip dividends (3,414) - (3,414) (3,493) - (3,493)
Overseas withholding tax
suffered 1,898 3 1,901 1,826 - 1,826
Income tax recovered
- - - (3) - (3)
Excess management
expenses and loan
relationships
259 956 1,215
371 897 1,268
Interest capping restriction
41 85 126 48 106 154
Capital (gains)/ losses not
subject to tax - (20,022) (20,022) - 2,397 2,397

-------- ----------- -----------
-------- ----------- -----------

1,898 3 1,901
1,823 - 1,823

===== ====== =====
===== ====== =====
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, which it intends to maintain for the foreseeable future.

d) Factors that may affect future tax charges
The Company has not recognised a deferred tax asset totalling £9,432,000 (2018: £8,263,000) based
on a prospective corporation tax rate of 17.0% (2018: 17.0%). The deferred tax asset arises as a result
of having unutilised management expenses and unutilised non-trade loan relationship deficits. These
expenses will only be utilised, to any material extent, if the Company has profits chargeable to
corporation tax in the future because changes are made either to the tax treatment of the capital gains
made by investment trusts or to the Company’s investment profile which require them to be used.

6. Earnings per ordinary share
The total earnings per ordinary share is based on the net profit attributable to the ordinary shares of
£126,392,000 (2018: £7,585,000) and on 122,606,783 ordinary shares (2018: 122,606,783), being the
weighted average number of shares in issue during the year. The total earnings can be further analysed
as follows:

2019
2018

£’000
£’000
Revenue profit
26,497
25,473
Capital (loss)/profit
99,895
(17,888)

----------------
----------------
Profit for the year
126,392
7,585

----------------
----------------
Weighted average number of ordinary shares
122,606,783
122,606,783

-----------------
-----------------
Revenue earnings per ordinary share
21.61p
20.78p
Capital earnings per ordinary share
81.48p
(14.59p)

-------------
-------------
Earnings per ordinary share
103.09p
6.19p

=======
=======
The Company does not have any dilutive securities, therefore basic and diluted earnings are the same.

8. Net asset value per ordinary share
The net asset value per ordinary share is based on net assets attributable to ordinary shares of
£1,163,209,000 (2018: £1,061,583,000) and on 122,606,783 ordinary shares in issue at 31 October
2019 (2018: 122,606,783). 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:


2019
2018


£’000
£’000

Net assets attributable to ordinary shares at start of year
1,061,583
1,077,563

Total net profit on ordinary activities after taxation
126,392
7,585

Dividends paid
(24,766)
(23,565)


-------------
-------------
Net assets attributable to ordinary shares at end of year 1,163,209
1,061,583


=======
======
9. Dividend
A final dividend of 5.35p per share, if approved by shareholders at the Annual General Meeting, will be
paid on 28 February 2020 to shareholders on the register on 24 January 2020. The shares go ex-
dividend on 23 January 2020. This final dividend, together with the three interim dividends already paid
brings the total dividend for the year to 20.90p.

10. 2019 Financial Information
The figures and financial information for the year ended 31 October 2019 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 2019 have been audited but have not
yet been delivered to the Registrar of Companies. The Auditor’s report on the 2019 annual financial
statements was unqualified, did not include a reference to any matter to which the Auditor drew
attention without qualifying the report, and did not contain any statements under Section 498 of the
Companies Act 2006.


7.
Called up share capital
Number of
shares held in
treasury
Number of
shares entitled
to dividend
Total n
Total number
of shares

Nominal value
of shares
£’000
Ordinary shares of 25p each
At 1 November 2018 1,338,509 122,606,783 123,945,292 30,986


----------------- ----------------- ----------------- -----------
At 31 October 2019 1,338,509 122,606,783 123,945,292 30,986
========= ========== =========== ======



Number of
shares held in
treasury


Number of
shares entitled
to dividend
Total n

Total
number
of shares

Nominal value
of shares
£’000

Ordinary shares of 25p each

At 1 November 2017 1,338,509 122,606,783 123,945,292 30,986

----------------- ----------------- ----------------- -----------

At 31 October 2018 1,338,509 122,606,783 123,945,292 30,986

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




During the year, no ordinary shares were issued or purchased. In the year ended 31 October 2019, no
ordinary shares were issued or purchased.

Since the year end, the Company has sold out of treasury 1,338,509 shares and has issued 1,011,491
new shares for a total consideration of £23,481,000.

11. 2018 Financial Information
The figures and financial information for the year ended 31 October 2018 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 Auditor which was
unqualified and did not contain a statement under Sections 498(2) or 498(3) of the Companies Act
2006.

12. Annual Report
Copies of the Annual Report will be posted to shareholders by the end of January 2020 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.

13. Annual General Meeting
The Annual General Meeting will be held on Wednesday 26 February 2020 at 12 noon at Trinity House,
London, EC3N 4DH.

For further information contact:

Alex Crooke
Fund Manager
The Bankers Investment Trust PLC
Telephone: 020 7818 4447

Sue Inglis
Chairman
The Bankers Investment Trust PLC
Telephone: 020 7818 4233
James de Sausmarez
Director and Head of Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 3349
Laura Thomas
Investment Trust PR Manager
Janus Henderson Investors
Telephone: 020 7818 2636

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.