Interim Results

Bankers Investment Trust PLC 26 June 2006 Page 1 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 HIGHLIGHTS * Net asset value rose over the period by 19.7% (FTSE All-Share 15.4%) * Forecast minimum annual dividend of 9.09p, an increase of 10.2% for the current year * Introduction of performance fee Extracts from the Chairman's Statement: Assets The first half of the year has coincided with a particularly strong period for equity share prices, although in recent weeks a portion of the gains have been given up. Only the US market produced a dull result, with most other stock markets around the world experiencing double digit growth in share prices through to the end of April. The net asset value per share rose by 19.7% during the period compared to a rise of 15.4% for the FTSE All-Share Index. The performance of our portfolios in every major region were above their respective indices. In addition, our asset allocation policy, investing away from US dollar assets benefited performance relative to our benchmark. A positive environment of stability and increasing economic growth has been beneficial for equity investors but rising interest rates in both Europe and the US has dampened down bond price performance in those countries. Europe in particular experienced strong returns, in sterling terms over the period, as illustrated by the rise of 20.7% in the FTSE World Europe (ex UK) Index. Consumer confidence in Germany has improved and the heart of Europe appears to be experiencing a resumption in economic growth that we believe can be sustained. Corporate activity has noticeably picked up in European retail and property sectors, with both corporate and private equity bidders supporting share prices. In all global markets certain sectors have made a significant contribution to overall performance, with mining, oil and cyclical industries being strong. Towards the end of the period, following strong performance, the Company reduced its exposure to mining shares in the UK, although we have retained the positions in the oil sector. The Company believes that the underlying price of oil is more sustainable compared to the recent dramatic rise in metal prices. Elsewhere, Japan has continued to surprise investors with economic growth and corporate profits being steadily upgraded. This has led to renewed enthusiasm for Japanese companies by overseas investors and we too have raised the exposure during the period. Emerging markets and most especially those countries with natural resources, such as Russia, South Africa and Latin America, experienced pronounced moves upward in share prices over our first half year. - MORE - Page 2 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 Revenue Return and Dividends Dividend income from our equity investments is showing good growth year on year and we have benefited from a number of special dividends from the mining sector. The trend over recent years of rising dividends is driven partly by higher levels of debt within certain sectors, a trend that cannot continue forever but also through higher profits and an increasing share of those corporate profits being returned to shareholders. This latter trend is very powerful and is expected to continue as management adjust their priorities between dividends, share buy-backs and reinvestment. Revenue return per share has increased by 17.6% to 5.01p per share during the half year. Based upon current estimates we are on target to pay a minimum total dividend per share of 9.09p for the current year, an increase of 10.2%. New IFRS Accounting Standards In common with all listed groups in the UK and Europe, we have adopted new IFRS accounting standards ('International Financial Reporting Standards') and these Interim Accounts have been produced on this basis. These standards are primarily designed to lead to more consistent accounting treatment and terminology across Europe, although for investment trust companies there is limited impact. The notes to the Accounts include reconciliations of the figures for the comparative periods to those reported previously. Whilst there are a number of minor presentational changes, two of the new requirements have an effect on the stated net asset value per share. Firstly, investments are valued at 'bid' or selling prices, as opposed to 'mid' prices previously. This has had the effect of reducing the valuation of investments by £232,000 or 0.05% (as at 31 October 2005). Secondly, dividends recommended by the Board are no longer included in the Accounts as payable until they have either been paid to, or approved by shareholders. These changes will not affect the operations of the Company. Changes to the Investment Management Contract During the period, the Board conducted a review of the Company's investment management contract and agreed with Henderson Global Investors that the contract should be revised to reduce the basic annual fee payable, introduce a further potential fee based on investment performance, and reduce the notice period for termination of the contract. The Board believes these changes are in the best interests of shareholders as they will make the remuneration of the Manager more dependent on the performance of the Company in terms of net asset value and share price. The maximum total fee (including performance element) payable in any one year will this year be limited to 0.50% and ultimately will be limited to 0.85% of gross assets. Due to the outperformance achieved in the first six months, a performance fee has been accrued in these Accounts, based on the full year effect of rewarding the Manager, under the terms of the new Management Agreement. The fee to be paid to the Manager will depend on actual performance over the full year to end October 2006. The full details of the new arrangements are listed on page 19. - MORE - Page 3 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 Outlook We have sought over the past year or more to position the portfolio into more defensive equity markets, while still recognising that conditions for equity investment have been positive. We have been sceptical of investors' increasingly dismissive attitude to the risk of investing in politically and economically unstable parts of the world, whereby the valuation discount to developed markets has largely been eliminated. Recent months have seen a level of exuberance amongst investors for commodities and companies exposed to mining, that is reminiscent of previous bubbles in other asset classes. The recent sell-off and increased volatility of share prices, could be construed as a dose of sanity returning to markets and maybe investment risk will be more fairly valued. The global economy has experienced one of its longest periods of stable growth and the rise in interest rates will ultimately temper those growth rates. Corporate profit growth must trend lower but this is reflected in moderate forward looking share price valuations and companies are proving very adept at adjusting to the new environment of higher energy costs and increased regulation. Seasonally, the summer months and early autumn have often not been the best time to increase gearing but despite the recent set back in markets we remain confident of the benefits of holding a broadly spread selective portfolio of shares over the longer term. For further information contact: Alex Crooke Richard Brewster Fund Manager Chairman The Bankers Investment Trust PLC The Bankers Investment Trust PLC Telephone: 07939 021208 Telephone: 020 7282 5959 James de Sausmarez Sarah Gibbons-Cook Director of Investment Trusts Investor Relations and PR Manager Henderson Global Investors Henderson Global Investors Telephone: 020 7818 3349 Telephone: 020 7818 3198 - MORE - Page 4 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 FINANCIAL HIGHLIGHTS (Unaudited) (Audited) 30 April 31 October % 2006 2005 Change Assets Net asset value per ordinary share (with debt at book value) 439.9p 367.4p + +19.7 Ordinary share mid-market price 385.0p 313.3p +22.9 Discount (share price to net asset value) 12.5% 14.7% Total assets less current liabilities (£'000) £544,092 £461,923 + +17.8 + Restated see note 4(a). Indices FTSE All-Share Index 3,074.26 2,664.40 +15.4 S&P 500 Composite Index 1,310.61 1,207.01 +5.8# FTSE World Europe (ex UK) Index (£) 371.06 307.34 +20.7 TOPIX (Tokyo First Section Index) 1,716.43 1,444.73 +17.9# FTSE World (ex UK) Index (£) 313.05 277.41 +12.8 50/50 FTSE All-Share/ FTSE World Index (ex UK) (£) 228.20 200.00* +14.1 # - £ adjusted *rebased as at 31 October 2005 (Unaudited) (Unaudited) Half year Half year ended ended 30 April 30 April % 2006 2005 Change Revenue Gross revenue (£'000) £7,236 £6,652 +8.8 Revenue return per ordinary share 5.01p 4.26p +17.6 - MORE - Page 5 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 CONSOLIDATED INCOME STATEMENT for the half year ended 30 April 2006 (Unaudited and restated (Audited and restated (Unaudited) see note 5) see note 4) Half year ended Half year ended Year ended 30 April 2006 30 April 2005 31 October 2005 Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment income 7,101 - 7,101 6,583 - 6,583 13,587 - 13,587 Other operating income 135 - 135 69 - 69 353 - 353 Gains on investments held at fair value through profit or loss - 86,822 86,822 - 19,854 19,854 - 71,981 71,981 --------- --------- --------- --------- --------- --------- --------- --------- --------- Total income 7,236 86,822 94,058 6,652 19,854 26,506 13,940 71,981 85,921 --------- --------- --------- --------- --------- --------- --------- --------- --------- Expenses Management fees (370) (328) (698) (515) (459) (974) (1,026) (911) (1,937) Provision for performance - (947) (947) - - - - - - fee Other expenses (322) - (322) (300) - (300) (556) - (556) --------- --------- --------- --------- --------- --------- --------- --------- --------- Profit before finance costs and taxation 6,544 85,547 92,091 5,837 19,395 25,232 12,358 71,070 83,428 Finance costs (451) (1,052) (1,503) (373) (871) (1,244) (819) (1,911) (2,730) --------- --------- --------- --------- --------- --------- --------- --------- --------- Profit before taxation 6,093 84,495 90,588 5,464 18,524 23,988 11,539 69,159 80,698 Taxation (180) - (180) (231) - (231) (478) (54) (532) --------- --------- --------- --------- --------- --------- ---------- ---------- --------- Profit for the period 5,913 84,495 90,408 5,233 18,524 23,757 11,061 69,105 80,166 ===== ===== ===== ===== ===== ===== ====== ====== ===== Earnings per ordinary share (note 2) 5.01p 71.53p 76.54p 4.26p 15.08p 19.34p 9.07p 56.70p 65.77p The total columns of this statement represents 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 Trust 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. - MORE - Page 6 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half year ended 30 April 2006 Called up Share Capital Other share premium redemption capital Retained capital account reserve reserves earnings Total Half year ended 30 April 2006 (unaudited) £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 October 2005 (note 4) 29,640 452 10,570 370,327 24,634 435,623 Buy back of 854,229 ordinary shares (213) - 213 (3,067) - (3,067) Net profit from ordinary activities - - - 84,495 5,913 90,408 Payment of 3rd interim dividend (1.94p) in respect of the year ended 31 October 2005 - - - - (2,300) (2,300) Payment of final dividend (2.43p) in respect of the year ended 31 October 2005 - - - - (2,872) (2,872) ---------- ---------- ---------- ---------- ---------- ---------- Balance at 30 April 2006 29,427 452 10,783 451,755 25,375 517,792 ====== ====== ====== ====== ====== ====== Called up Share Capital Other share premium redemption capital Retained capital account reserve reserves earnings Total Half year ended 30 April 2005 (unaudited) £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 October 2004 (note 6) 30,883 452 9,327 316,331 22,984 379,977 Buy back of 1,903,027 ordinary shares (476) - 476 (5,458) - (5,458) Net profit from ordinary activities - - - 18,524 5,233 23,757 Payment of 3rd interim dividend (1.83p) in respect of the year ended 31 October 2004 - - - - (2,261) (2,261) Payment of final dividend (1.98p) in respect of the year ended 31 October 2004 - - - - (2,437) (2,437) ---------- ---------- ---------- ---------- ---------- ---------- Balance at 30 April 2005 30,407 452 9,803 329,397 23,519 393,578 ====== ====== ====== ====== ====== ====== Called up Share Capital Other share premium redemption capital Retained capital account reserve reserves earnings Total Year ended 31 October 2005 (audited) £'000 £'000 £'000 £'000 £'000 £'000 Balance at 31 October 2004 (note 6) 30,883 452 9,327 316,331 22,984 379,977 Buy back of 4,969,571 ordinary shares (1,243) - 1,243 (15,109) - (15,109) Net profit from ordinary activities - - - 69,105 11,061 80,166 Payment of 3rd interim dividend (1.83p) in respect of the year ended 31 October 2004 - - - - (2,261) (2,261) Payment of final dividend (1.98p) in respect of the year ended 31 October 2004 - - - - (2,437) (2,437) Payment of 1st interim dividend (1.94p) in respect of the year ended 31 October 2005 - - - - (2,362) (2,362) Payment of 2nd interim dividend (1.94p) in respect of the year ended 31 October 2005 - - - - (2,351) (2,351) ---------- ---------- ---------- ---------- ---------- ---------- Balance at 31 October 2005 29,640 452 10,570 370,327 24,634 435,623 ====== ====== ====== ====== ====== ====== - MORE - Page 7 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 CONSOLIDATED BALANCE SHEETS at 30 April 2006 (Unaudited and (Audited and restated note 5) restated note 4) (Unaudited) At 30 April At 31 October 2005 At 30 April 2006 2005 £'000 £'000 £'000 Non-current assets Investments held at fair value through profit or loss 557,049 427,848 473,368 ---------- ---------- ---------- Current assets Cash and cash equivalents 1,243 1,969 6,940 Investments held at fair value through profit or loss - - 144 Sales for future settlement 6,574 1,388 327 Other receivables 3,322 2,926 1,037 ---------- ---------- ---------- 11,139 6,283 8,448 ---------- ---------- ---------- Total assets 568,188 434,131 481,816 ---------- ---------- ---------- Current liabilities Purchases for future settlement (3,010) (951) (1,015) Other payables (1,763) (369) (908) Bank loans and overdrafts (19,323) (12,933) (17,970) ---------- ---------- ---------- (24,096) (14,253) (19,893) ---------- ---------- ---------- Total assets less current liabilities 544,092 419,878 461,923 Non-current liabilities Debenture stocks (26,300) (26,300) (26,300) ---------- ---------- ---------- Net assets 517,792 393,578 435,623 ====== ====== ====== Equity attributable to equity shareholders Called up share capital 29,427 30,407 29,640 Share premium account 452 452 452 Capital redemption reserve 10,783 9,803 10,570 Other capital reserves 451,755 329,397 370,327 Retained earnings 25,375 23,519 24,634 ---------- ---------- ---------- Total equity 517,792 393,578 435,623 ====== ====== ====== Net asset value per ordinary share (pence) (note 3) 439.9p 323.6p 367.4p ====== ====== ====== - MORE - Page 8 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 CONSOLIDATED CASH FLOW STATEMENT for the half year ended 30 April 2006 (Unaudited and (Audited and restated see note restated see 5) note 4) (Unaudited) Half year ended Year Half year ended 30 April ended 30 April 2005 31 October 2005 2006 £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 581 (766) 14,993 ---------- ---------- ---------- Net cash inflow/(outflow) before financing 581 (766) 14,993 Net cash outflow from financing (1,970) (500) (15,300) ---------- ---------- ---------- Decrease in cash (1,389) (1,266) (307) Cash and cash equivalents at start of period 2,594 3,069 3,069 Realised profit/(loss) on foreign currency 36 166 (168) ---------- ---------- ---------- Cash and cash equivalents at end of period 1,241 1,969 2,594 ====== ====== ====== - MORE - Page 9 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 NOTES: 1. Accounting policies (a) Basis of preparation The consolidated financial information for the half year ended 30 April 2006 has been prepared using the accounting policies expected to be used in the Group's annual accounts for the year ending 31 October 2006. These accounting policies will be based on International Financial Reporting Standards ('IFRS'), comprising standards and interpretations approved by the International Accounting Standards Board ('IASB'), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the International Accounting Standards Committee ('IASC') that remain in effect, to the extent that IFRS have been adopted by the European Union for the Group's year ending 31 October 2006. The accounts have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. The principal accounting policies are set out below. Where presentational guidance set out in the revised Statement of Recommended Practice ('the SORP') for investment trusts issued by the Association of Investment Trust Companies ('the AITC') in December 2005 is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. (b) First time adoption of IFRS The IFRS accounting policies set out herein have been applied retrospectively to the opening balance sheet as at 1 November 2004 and all subsequent periods. The disclosures required by First Time Adoption of International Financial Reporting Standards ('IFRS 1') concerning the transition from UK GAAP to IFRS are given in notes 4, 5 and 6. (c) Basis of consolidation The Group accounts consolidate the accounts of the Company and of its wholly owned subsidiary undertaking, The Army & Navy Investment Company Limited. (d) Investments held at fair value through profit or loss All investments are designated upon initial recognition as held at fair value. Assets are de-recognised at the trade date of the disposal. Proceeds will be measured at fair value which will be regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments is based on their quoted bid market price at the balance sheet date without deduction for the estimated future selling costs. Unquoted investments are valued by the directors using primary valuation techniques such as earnings, multiples, recent transactions and net assets. Where fair value cannot reliably be measured the investment will be carried at the previous reporting date value unless there is evidence that the investment has since been impaired. In such a case the value will be reduced. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as 'Gains or losses on investments held at fair value through profit or loss'. Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. - MORE - Page 10 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 (e) Presentation of the income statement In order to better reflect the activities of an investment trust company, and in accordance with guidance issued by the AITC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been presented alongside the Income Statement. In accordance with the Company's status as a UK investment company under section 266 of the Companies Act 1985, net capital returns may not be distributed by way of dividend. Additionally, the net revenue is the measure the directors believe appropriate in assessing the Group's compliance with certain requirements set out in section 842 of the Income and Corporation Taxes Act 1988. (f) Income Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Income from fixed interest debt securities is recognised using the effective interest rate method. Bank deposit interest, underwriting commission and stock lending income is accounted for on an accruals basis. Special dividends are allocated as revenue return or capital return, depending on whether they are capital or income in nature. The trading profits of the subsidiary undertaking, which represent realised gains and losses on the sale of current assets held at fair value through profit or loss, are dealt with in the revenue column of the Income Statement as a revenue item. (g) Expenses and interest payable On the basis of the Board's long term split of total returns in the form of capital gains and income of 70% and 30% respectively, the Company charges 70% of its interest and investment management fee to capital return. The performance fee has been charged to other capital reserves. All administration expenses are charged to the revenue return. Expenses which are incidental to the purchase or sale of an investment are charged to the Income Statement and allocated to other capital reserves. All expenses and interest payable are accounted for on an accruals basis. (h) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that were applicable at the balance sheet date. In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns in the supplementary information in the Income Statement is the 'marginal basis'. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return column of the Income Statement, then no tax relief is transferred to the capital return column. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval as such under section 842 of the Income and Corporation Taxes Act 1988 are not liable for taxation on capital gains. - MORE - Page 11 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Income Statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. (i) Foreign currency For the purpose of the consolidated accounts, the results and financial position of each entity are expressed in pounds sterling, which is the functional currency of the Company and the presentational currency of the Group. Sterling is the functional currency because it is the currency of the primary economic environment in which the company operates. The United Kingdom is the company's country of incorporation and the primary location of the shareholder base. Sterling is the currency by which dividends are returned to shareholders, share buy-backs and share issues are conducted and is the currency of the cost base of the trust. Transactions recorded in overseas currencies during the year are translated into sterling at the appropriate daily exchange rates. Assets and liabilities denominated in overseas currencies at the balance sheet date are translated into sterling at the exchange rates ruling at that date. (j) Cash and cash equivalents Cash comprises cash in hand and demand deposits less bank overdrafts. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value. - MORE - Page 12 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 2. Earnings per ordinary share The earnings per ordinary share figure is based on the net gain for the half year of £90,408,000 (half year ended 30 April 2005: £23,757,000 as restated; year ended 31 October 2005: £80,166,000 as restated) and on 118,124,635 (half year ended 30 April 2005: 122,836,155; year ended 31 October 2005: 121,894,238) 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 and restated note 5) (Audited and (Unaudited) Half year ended restated note 4) Half year ended 30 April 2005 Year ended 30 April 2006 31 October 2005 £'000 £'000 £'000 Net revenue profit 5,913 5,233 11,061 Net capital profit 84,495 18,524 69,105 ---------- ---------- ---------- Net total profit 90,408 23,757 80,166 ====== ====== ====== Weighted average number of ordinary shares in issue during each period 118,124,635 122,836,155 121,894,238 Pence Pence Pence Revenue return per ordinary share 5.01 4.26 9.07 Capital return per ordinary share 71.53 15.08 56.70 ---------- ---------- ---------- Total earnings per ordinary share 76.54 19.34 65.77 ====== ====== ====== 3. Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to equity shareholders of £517,792,000 (30 April 2005: £393,578,000 as restated; 31 October 2005: £435,623,000 as restated) and on 117,707,140 (30 April 2005: 121,627,913; 31 October 2005: 118,561,369), being the number of ordinary shares in issue at the period end. - MORE - Page 13 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 4. (a) Restatement of balances as at and for the year ended 31 October 2005 At 1 November 2004 the company adopted International Financial Reporting Standards. In accordance with IFRS 1 (First Time Adoption of Financial Reporting Standards) the following is a reconciliation of the results as at and for the year ended 31 October 2005 previously reported under the applicable UK Accounting Standards and the SORP, to the restated IFRS results. (Audited) Previously reported Restated 31 October Effect of 31 October 2005 transition to 2005 IFRS Note £'000 £'000 £'000 Investments 1 473,600 (232) 473,368 Current assets 8,448 - 8,448 Creditors: amounts falling due within one year 2 (25,074) 5,181 (19,893) ----------- ----------- ----------- Total assets less current liabilities 456,974 4,949 461,923 Creditors: amounts falling due after more than one year (26,300) - (26,300) ----------- ----------- ----------- Net assets 430,674 4,949 435,623 ======= ======= ======= Capital and reserves Called up share capital 29,640 - 29,640 Share premium account 452 - 452 Capital redemption reserve 10,570 - 10,570 Other capital reserves 1 370,559 (232) 370,327 Revenue reserve/Retained earnings 2 19,453 5,181 24,634 ----------- ----------- ----------- Shareholders' funds 430,674 4,949 435,623 ======= ======= ======= Notes to the reconciliation 1. Investments are classified as held at fair value through profit or loss under IFRS and are carried at bid prices which equates to their fair value of £473,368,000. Previously, under UK GAAP, they were carried at mid prices. The aggregate difference being a revaluation downwards of £232,000, also decreases other capital reserves. 2. No provision has been made for the third interim and final dividend on ordinary shares for the year ended 31 October 2005 of £2,300,000 and £2,881,000 respectively. Under IFRS, dividends are not recognised until paid to, or approved by, shareholders. - MORE - Page 14 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 (b) Reconciliation of the Statement of Total Return to the Income Statement for the year ended 31 October 2005 Under IFRS the Income Statement is the equivalent of the Statement of Total Return as reported previously. EPS Impact pence Note £'000 Net return on ordinary activities after taxation per Statement of Total Return 80,106 Change from mid to bid basis at 31 October 2004 1 292 0.24 Change from mid to bid basis at 31 October 2005 1 (232) (0.19) ---------- Net profit per Income Statement 80,166 ====== Notes to the reconciliation 1. The portfolio valuations at 31 October 2004 and 31 October 2005 are required to be valued at fair value under IFRS. These values differ from the previous valuations by £292,000 and £232,000 respectively. (c) Reconciliation of the Group Cash Flow Statement for the year ended 31 October 2005 (Audited) Previously reported cash flows Effect of Adjusted cash 2005 transition to flows IFRS 2005 Note £'000 £'000 £'000 Net cash inflow from operating activities 1 10,899 4,094 14,993 Returns on investments and servicing of finance 1 (2,723) 2,723 - Taxation 1 142 (142) - Net cash inflow from financial investments 1 6,675 (6,675) - Equity dividends paid 2 (9,411) 9,411 - ---------- ---------- ---------- Net cash inflow before financing 5,582 9,411 14,993 Financing 2 (5,889) (9,411) (15,300) ---------- ---------- ---------- Decrease in cash and cash equivalents (307) - (307) ====== ====== ====== Notes to the reconciliation 1. Servicing of finance, taxation and net cash flow from financial investment have now been analysed within operating activities. 2. Equity dividends paid are now analysed within financing. - MORE - Page 15 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 5. (a) Restatement of balances as at and for the half year ended 30 April 2005 At 1 November 2004 the company adopted International Financial Reporting Standards. In accordance with IFRS 1 (First Time Adoption of Financial Reporting Standards) the following is a reconciliation of the results as at and for the half year ended 30 April 2005 previously reported under the applicable UK Accounting Standards and the SORP, to the restated IFRS results. (Unaudited) Previously reported 30 April Effect of Restated transition to 2005 IFRS 30 April 2005 Note £'000 £'000 £'000 Investments 1 428,127 (279) 427,848 Current assets 6,283 - 6,283 Creditors: amounts falling due within one year 2 (18,973) 4,720 (14,253) ---------- ---------- ---------- Total assets less current liabilities 415,437 4,441 419,878 Creditors: amounts falling due after more than one year 2 (26,300) - (26,300) ---------- ---------- ---------- Net assets 389,137 4,441 393,578 ====== ====== ====== Capital and reserves Called up share capital 30,407 - 30,407 Share premium account 452 - 452 Capital redemption reserve 9,803 - 9,803 Other capital reserves 1 329,676 (279) 329,397 Revenue reserve/Retained earnings 2 18,799 4,720 23,519 ---------- ---------- ---------- Shareholders' funds 389,137 4,441 393,578 ====== ====== ====== Notes to the reconciliation 1. Investments are classified as held at fair value through profit or loss under IFRS and are carried at bid prices which equates to their fair value of £427,848,000. Previously, under UK GAAP, they were carried at mid prices. The aggregate difference being a revaluation downwards of £279,000, also decreases other capital reserves. 2. No provision has been made for the first interim and second interim dividends on ordinary shares for the half year ended 30 April 2005 of £2,361,000 and £2,359,000 respectively. Under IFRS, interim dividends are not recognised until paid to shareholders. - MORE - Page 16 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 (b) Reconciliation of the Statement of Total Return to the Income Statement for the half year ended 30 April 2005 Under IFRS the Income Statement is the equivalent of the Statement of Total Return as reported previously. EPS Impact pence Note £'000 Net return on ordinary activities after taxation per Statement of Total Return 23,744 Change from mid to bid basis at 31 October 2004 1 292 0.24 Change from mid to bid basis at 30 April 2005 1 (279) (0.23) ---------- Net profit per Income Statement 23,757 ====== Notes to the reconciliation 1. The portfolio valuations at 31 October 2004 and 30 April 2005 are required to be valued at fair value under IFRS. These values differ from the previous valuations by £292,000 and £279,000 respectively. (c) Reconciliation of the Group Cash Flow Statement for the half year ended 30 April 2005 (Unaudited) Previously reported cash flows Effect of Adjusted cash transition to flows 2005 IFRS 2005 Note £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 1 2,974 (3,740) (766) Returns on investments and servicing of finance 1 (1,236) 1,236 - Taxation 1 66 (66) - Net cash outflow from financial investment 1 (2,570) 2,570 - Equity dividends paid 2 (4,698) 4,698 - ---------- ---------- ---------- Net cash outflow before financing (5,464) 4,698 (766) Net cash inflow/(outflow) from financing 2 4,198 (4,698) (500) ---------- ---------- ---------- Decrease in cash and cash equivalents (1,266) - (1,266) ====== ====== ====== Notes to the reconciliation 1. Servicing of finance, taxation and net cash flow from financial investment have now been analysed within operating activities. 2. Equity dividends paid are now analysed within financing. - MORE - Page 17 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 6. Restatement of opening balances as at 31 October 2004 At 1 November 2004 the company adopted International Financial Reporting Standards. In accordance with IFRS 1 (First Time Adoption of Financial Reporting Standards) the following is a reconciliation of the Balance Sheet as at 31 October 2004 previously reported under the applicable UK Accounting Standards and the SORP, to the restated IFRS results. (Unaudited) Previously reported Restated 31 October Effect of 31 October transition to 2004 IFRS 2004 Note £'000 £'000 £'000 Investments 1 406,470 (292) 406,178 Current assets 4,380 - 4,380 Creditors: amounts falling due within one year 2 (8,986) 4,705 (4,281) ---------- ---------- ---------- Total assets less current liabilities 401,864 4,413 406,277 Creditors: amounts falling due after more than one year (26,300) - (26,300) ---------- ---------- ---------- Net assets 375,564 4,413 379,977 ====== ====== ====== Capital and reserves Called up share capital 30,883 - 30,883 Share premium account 452 - 452 Capital redemption reserve 9,327 - 9,327 Other capital reserves 1 316,623 (292) 316,331 Revenue reserve/Retained earnings 2 18,279 4,705 22,984 ---------- ---------- ---------- Shareholders' funds 375,564 4,413 379,977 ====== ====== ====== Notes to the reconciliation 1. Investments are classified as held at fair value through profit or loss under IFRS and are carried at bid prices which equates to their fair value of £406,178,000. Previously, under UK GAAP, they were carried at mid prices. The aggregate difference being a revaluation downwards of £292,000, also decreases other capital reserves. 2. No provision has been made for the third interim and final dividend on ordinary shares for the year ended 31 October 2004 of £2,261,000 and £2,444,000 respectively. Under IFRS, dividends are not recognised until paid to, or approved by, shareholders. - MORE - Page 18 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 7. Reconciliation of profit before taxation to net cash inflow/(outflow) from operating activities (Restated see note 5) (Restated see note (Unaudited) (Unaudited) 4) Half year (Audited) Half year ended ended Year ended 30 April 30 April 31 October 2006 2005 2005 £'000 £'000 £'000 Profit before taxation 90,588 23,988 80,698 Gains on investments held at fair value (86,822) (19,854) (71,981) Net sales/(purchases) of investments by subsidiary undertaking 144 - (144) Increase in other receivables (2,279) (1,954) (53) Increase/(decrease) in other payables 241 (38) 445 Net sales/(purchases) of investments 3,145 (1,941) 5,907 (Increase)/decrease in sales settlement debtor (6,247) (990) 71 Increase in purchase settlement creditor 1,995 361 697 Tax on overseas investment income (184) (297) (549) Scrip dividends included in investment income - (41) (98) ---------- ---------- ---------- Net cash inflow/(outflow) from operating 581 (766) 14,993 activities ===== ===== ===== 8. Transaction costs Purchase transaction costs for the half year ended 30 April 2006 were £156,000 (half year ended 30 April 2005: £137,000; year ended 31 October 2005: £277,000). These comprise mainly stamp duty and commissions. Sales transaction costs for the half year ended 30 April 2006 were £128,000 (30 April 2005: £59,000; year ended 31 October 2005: £140,000). 9. Interim dividend The directors have declared a second interim dividend of 2.22p (2005: 1.94p) net per ordinary share, payable on 31 August 2006 to shareholders registered on 28 July 2006. The shares will be quoted ex-dividend on 26 July 2006. A first interim dividend of 2.22p (2005: 1.94p) was paid on 31 May 2006. 10. Comparative information The financial information contained in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half years ended 30 April 2006 and 2005 has not been audited. The information for the year ended 31 October 2005 has been extracted from the latest published audited financial statements and restated to comply with IFRS (see note 4). The audited financial statements for the year ended 2005 have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under section 237(2) or (3) of the Companies Act 1985. 11. Interim Report The Interim Report will be posted to shareholders in July and will be available from the Registered Office at 4 Broadgate, London EC2M 2DA thereafter. - MORE - Page 19 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 Management Fee Changes Under the revised arrangements which are effective from 1 November 2005: i) the basic annual management fee will be reduced from 0.45% to 0.3% of gross assets per annum; ii) the Manager will be eligible for a fee based on the degree of outperformance, calculated on the basis of the average net asset value total return over a rolling three year period compared to a composite index representing in equal proportions the FTSE All-Share Index and the FTSE World (ex UK) Index; iii) payment of a performance fee in any year will be subject to an outperformance hurdle rate of 1.5% per annum; iv) for the first 1% of outperformance in excess of the hurdle rate, a performance fee of 0.15% of gross assets will be paid, and in respect of each further 1% of outperformance, a fee of a further 0.2% of gross assets up to a maximum performance fee in any one year of 0.55% of gross assets, so that the maximum total fee payable in any one year is 0.85% of gross assets. This is subject to a transition arrangement whereby the maximum fees payable in the years to 31 October 2006 and 31 October 2007 are 0.5% and 0.675% respectively; v) no performance fee will be paid in any year if either the Company's net asset value or its share price is lower at the end of the financial year than at the end of the previous year; vi) no performance fee will be paid if in any financial year distributable income plus revenue reserves is lower than the gross dividends payable in the previous financial year; and vii) the notice period for termination of the contract will be reduced from twelve months to six months. - MORE - Page 20 of 20 THE BANKERS INVESTMENT TRUST PLC Unaudited Preliminary Results for the half year ended 30 April 2006 LARGEST INVESTMENTS at 30 April 2006 The 50 largest investments (convertibles and all classes of equity in any one company being treated as one investment) were as follows: Market value Market value £'000 £'000 BP 24,760 Man Group 4,043 HSBC 14,402 Aviva 4,018 GlaxoSmithKline 12,790 Kuehne & Nagel 3,977 Royal Bank of Scotland 12,286 Inditex 3,956 Royal Dutch Shell 11,213 Rolls Royce 3,952 Vodafone 8,568 Tesco 3,930 Barclays 8,460 Total 3,798 Lloyds TSB 7,042 Anglogold Ashanti 3,702 British American Tobacco 5,706 Reuters Group 3,501 BT Group 5,701 Christian Dior 3,489 Irish Life & Permanent 5,449 Dexia 3,485 HBOS 5,393 Impala Platinum 3,455 Petroleo Brasiliero 4,894 QBE Insurance 3,353 Unibail 4,877 Deutsche Postbank 3,339 AstraZeneca 4,848 Cranswick 3,325 BHP Billiton 4,764 Allied Irish Banks 3,318 ENI 4,621 Novartis 3,273 Richemont 4,547 Gallaher Group 3,266 Rio Tinto 4,494 Go-Ahead Group 3,245 ICAP 4,350 BAA 3,178 Mitsubishi UFJ Financial 4,236 BG Group 3,169 Reckitt Benckiser 4,198 ITV 3,167 Codan 4,190 Wolseley 3,158 Fresenius 4,066 Benfield Group 3,147 Anglo American 4,063 British Land 3,140 These investments total £267,302,000 which represents 48.0% of the portfolio. GEOGRAPHICAL DISTRIBUTION Valuation of investments Currency exposure 30 April 31 October 30 April 31 October 2006 2005 2006 2005 % % % % UK 55.5 56.5 53.7 53.5 Europe 15.4 15.3 14.9 15.7 North America 12.1 13.8 13.1 15.2 Japan 8.3 6.7 9.0 7.3 Pacific (ex Japan) 5.9 5.5 6.3 5.9 Emerging Markets 2.8 2.2 3.0 2.4 100.0 100.0 100.0 100.0 - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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