The Bankers Investment Trust PLC
Update for the half year ended 30 April 2024
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Performance Highlights
Total return performance for the six months to 30 April 2024
NAV1 | Benchmark2 | Share price3 |
17.5% | 16.6% | 21.5% |
NAV per share4 | Share price |
122.7p 30 Apr 2024
112.3p (30 Apr 2023)
Revenue return per share
1.31p 30 Apr 2024
1.29p (30 Apr 2023)
Total return performance to 30 April 2024
112.2p 30 Apr 2024
100.6p (30 Apr 2023)
Dividends paid or declared in respect of the period5
1.344p 30 Apr 2024
1.24p (30 Apr 2023)
(including dividends reinvested and excluding transaction costs)
6 months | 1 year | 3 years | 5 years | 10 years | |
% | % | % | % | % | |
NAV1 | 17.5 | 14.3 | 17.0 | 50.5 | 174.0 |
FTSE World Index2 | 16.6 | 19.1 | 30.4 | 72.8 | 149.4 |
Share price3 | 21.5 | 14.4 | 5.2 | 38.4 | 154.5 |
- Net asset value total return per share with income reinvested and with debt at fair value
- For 10 years, the benchmark is a composite of the FTSE World Index and the FTSE All-Share Index
- Share price total return using mid-market closing price
- Net asset value per share with debt at par
- The first interim dividend for 2024 was paid on 31 May 2024; the second interim dividend has been declared and will be paid on 30 August 2024
Sources: Janus Henderson, Morningstar Direct and LSEG Datastream
The Bankers Investment Trust PLC Half Year Update 2024
Chair's Statement
Dear shareholder
Performance
Your Company has delivered a strong net asset value total return over the six months ended
30 April 2024 of 17.5% (2023: 8.1%) and a share
price total return of 21.5% (2023: 5.4%), both returns outperforming the FTSE World Index total return of 16.6% (2023: 3.5%). Stock markets around the world rose in value principally due to solid corporate profit recovery exceeding forecasts by analysts. The anticipated tailwind of interest rate cuts from central banks never materialised as inflation remained higher than expected. The Fund Manager discusses the key drivers of performance in the period in more detail in his report.
Following a strategic review, our Manager has started a process of concentrating the portfolio into four regional portfolios and reducing the number of holdings to approximately 100. This will direct
a greater amount of the Company's capital into the portfolio managers' best investment ideas and bring greater focus to the regional portfolios. The reduction in portfolios from six to four will create a Pan European portfolio, incorporating the UK, and a Pan Asian (ex Japan) portfolio, including the Chinese A shares. This will reduce the overlap within these regions and remove potential conflicts. We continue to believe in the value of regional specialists with access to stock markets right across the globe.
We are also pleased to announce that Jamie Ross, our European portfolio manager, will assume the role of Deputy Fund Manager, following the recent retirement of Mike Kerley. Jamie has over 17 years of financial industry experience and has been
a member of the Company's investment team since late 2018. We look forward to working more closely with Jamie alongside our Fund Manager, Alex Crooke.
Revenue
Our net revenue for the six months was
£15.9 million (2023: £16.5 million), equivalent to
1.31p per share (2023: 1.29p). The reduction in revenue was a result of lower interest income, partially offset by a lower finance cost following the repayment of the 8% 2023 debenture on
31 October 2023. A reduced share count following share buybacks resulted in the earnings per share increasing by 1.6% over the period.
A first interim dividend of 0.672p per share (2023: 0.62p) was paid on 31 May 2024. The Board has declared a second interim dividend of 0.672p
(2023: 0.62p) per share, an increase of 8.4%, which will be payable on 30 August 2024 to shareholders on the register on 26 July 2024.
The Board's current expectation is that the dividend for the full year will be at least 5% above the total dividend paid in 2023. This continues the Company's progressive dividend policy of successive annual dividend growth which it has achieved over the past 57 years.
Share buy-backs
The Company's share price has continued to trade at a wide discount to its net asset value and we have taken advantage of this opportunity to buy back shares from the market. This activity is beneficial to ongoing shareholders, as shares are only purchased when the Company's shares are trading at a discount to NAV, thereby enhancing shareholder value.
A total of 49,748,991 shares were bought back at an average discount of 12.3% to the net asset value in the six months ended 30 April 2024 (2023: 24,080,927 shares bought back at an average discount of 9.0%) for a total consideration of £53.4 million (2023: £24.9 million). The discount at 30 April 2024 was 8.6% (2023: 10.4%).
Board changes
As mentioned at the year end, Julian Chillingworth retired from the Board at the Annual General Meeting in February 2024, having served as a Director for nine years, and as Senior Independent Director for the latter five years of his tenure. Richard West, who joined the Board on 1 April 2020, was appointed as the Company's Senior Independent Director on 23 April 2024.
Outlook
Economic recovery is now under way in the European and Chinese markets while growth remains robust in the US and Japan. Corporate earnings should therefore be expected to continue to grow, supported at some point by interest cuts later this year or next. While share price returns to date have discounted some of this positive outlook, valuations do not look stretched, which will ensure that your Company is well placed to continue to grow.
Simon Miller
Chair
25 June 2024
The Bankers Investment Trust PLC Half Year Update 2024 1
Portfolio Information as at 30 April 2024
Sector Analysis
As a percentage of the investment portfolio excluding cash
25 | ||||||||||
22.3 | ||||||||||
20 | 19.4 | |||||||||
16.3 | 16.9 | 17.2 | ||||||||
15.716.0 | ||||||||||
15 | 14.4 | |||||||||
12.6 | ||||||||||
10.9 | ||||||||||
10 | 9.5 | |||||||||
7.7 | ||||||||||
5 | 3.7 | 3.9 | 3.3 | |||||||
2.8 | 2.5 | |||||||||
1.2 | 1.1 | |||||||||
0 | 1.0 | 0.9 | 0.7 | |||||||
Technology Financials Consumer Industrials | Health | Consumer Energy | Basic | Utilities Telecoms | Real | ||
Discretionary | Care | Staples | Materials | Estate | |||
As at 30 April 2024 | As at 31 October 2023 | ||||||
Source: Janus Henderson
Geographical Analysis
Equities excluding cash held
2 | 0 | ||
2 | |||
2 | 0 | 4 | |
2 | |||
3 |
Revenue Generated
2 | ||
0 | ||
2 | 2 | |
4 | ||
0 | ||
2 | ||
3 |
30 April 2024 | 31 Oct 2023 | 30 April 2024 | 30 April 2023 | ||||
(%) | (%) | (£m) | (£m) | ||||
UK | 13.9 | 15.1 | UK | 4.4 | 4.7 | ||
Europe (ex UK) | 17.1 | 16.7 | Europe (ex UK) | 3.5 | 3.1 | ||
North America | 42.4 | 40.2 | North America | 5.6 | 5.4 | ||
Japan | 13.1 | 13.1 | Japan | 2.2 | 2.4 | ||
Pacific (ex Japan and China) | 7.6 | 9.9 | Pacific (ex Japan and China) | 2.8 | 3.4 | ||
China | 4.6 | 5.0 | China | 0.3 | 0.1 | ||
Emerging Markets | 1.3 | - | Emerging Markets | 0.3 | - | ||
Source: Janus Henderson | Source: Janus Henderson |
2 The Bankers Investment Trust PLC Half Year Update 2024
Fund Manager's Report
Market Review
The six month period to the end of April 2024 has been a good time to be invested in equity markets, as a strong recovery in share prices led to most markets reaching new all-time highs. Investors were optimistic that fading price inflation would lead to the tight monetary policy being eased by rate cuts. However, as it turned out, rates were not cut during the period in any major market and instead it was the delivery of stronger-than- expected corporate profits that underpinned higher share prices. In most sectors, companies experienced improving margins as higher prices stuck and energy costs fell.
The US market was marginally the better performer during the period, closely followed by Europe, Japan and the UK. The best performing stocks continued to be those focused on delivering artificial intelligence ('AI') solutions, particularly in the US market. However, recovery was fairly broad based in most markets as financials, industrials and retail exposed companies performed best, while energy, utilities and telecoms were laggards.
Performance
As indicated in the Annual Report, a number of new holdings were purchased in zero yielding US technology companies, including Alphabet, Amazon and Meta. Results from these companies were well received during the period, as margins grew strongly on the back of reducing costs
by closing loss-making divisions and growing revenues. The technology exposure in the overall portfolio was increased from 16.3% to 22.3%. Despite these new additions, performance in the US portfolio continued to lag the benchmark, driven principally by lack of exposure to Nvidia. There is exposure to semiconductor manufacture across a wide spectrum of technologies in each of the Japanese, US, Asian and European portfolios. However, Nvidia is garnering all the exposure, and investors chasing returns. Undoubtedly they are the leader in developing AI chips, but we do have concerns that new orders will start to plateau leading to pricing pressure, ultimately impacting their share price.
Performance in the Japanese portfolio was considerably better than the benchmark, delivering a return nearly 5% ahead. This was driven by recovery in financials as the Bank of Japan raised interest rates for the first time since 2007, ending the period of negative interest rates. The Yen weakened over the period but the stock market
recovery more than made up for this, delivering a total return of 20.2% over the period. The European, Asian and Chinese portfolios also delivered returns in excess of their benchmarks.
Portfolio
The portfolio has grown in both the number of regions and stocks over the past decade, delivering diversification and access to new markets such as China and India. However this has thrown up conflicts as companies can be dual listed and choices within sectors have narrowed due to consolidation by merger or acquisition. We have therefore decided to consolidate the number of regions to four: North America, Pan Europe (to include the UK), Pan Asia (ex Japan) and Japan. We will continue to invest directly in the UK and Chinese markets but with a single investment team overseeing these regions with greater scope to invest more capital in the best companies across wider regions. Jamie Ross, supported by myself, will manage the Pan European portfolio and Sat Duhra will manage the Pan Asian portfolio.
Additionally, we have conducted a careful review of stock selection and portfolio construction. The conclusion of this work was that smaller holdings were not improving performance and by concentrating the portfolios, we would have a higher active stance, an indicator of greater divergence from the index. We therefore intend to increase the amount of capital in our best ideas by reducing the number of holdings towards 100. We will target regional portfolios of 20 investments with slightly more in the US, as it is a market with significantly more listed companies and therefore investment opportunities. We expect the tighter concentrated portfolio to be substantially implemented by the end of October 2024.
Outlook
We are excited by the prospect of a focused portfolio, investing more in our best ideas. In meetings with our investee companies, we are hearing positive messages about orders improving, restocking from customers and margins holding up. Inflation has fallen close to central bank targets and the first interest rate cuts have started in major economic regions. The overall outlook is more positive than six months ago and should support the increase in share prices we have seen this year.
Alex Crooke
Fund Manager
25 June 2024
The Bankers Investment Trust PLC Half Year Update 2024 3
Portfolio Information
50 Largest Investments at 30 April 2024
Rank | Rank | Valuation | Sales | Appreciation/ | Valuation | |||
30 Apr | 31 Oct | 31 Oct 2023 | Purchases | proceeds | (depreciation) | 30 Apr 2024 | ||
2024 | 2023 | Company | Country | £'000 | £'000 | £'000 | £'000 | £'000 |
1 | 1 | Microsoft | US | 57,500 | - | - | 6,649 | 64,149 |
2 | 5 | KLA Corp | US | 20,579 | - | - | 8,645 | 29,224 |
3 | 12 | American Express | US | 14,457 | 4,827 | - | 8,814 | 28,098 |
4 | 3 | Accenture | US | 28,251 | - | - | (520) | 27,731 |
5 | # | Amazon | US | - | 25,028 | - | 741 | 25,769 |
6 | # | Alphabet | US | - | 21,730 | - | 3,641 | 25,371 |
7 | 7 | Visa | US | 19,047 | 4,132 | - | 1,974 | 25,153 |
8 | 4 | UnitedHealth | US | 21,616 | 2,681 | - | (2,845) | 21,452 |
9 | 2 | Apple | US | 30,506 | - | (8,857) | (368) | 21,281 |
10 | 18 | CME | US | 12,928 | 8,491 | - | (412) | 21,007 |
11 | 10 | Toyota Motor | Japan | 16,790 | - | (1,176) | 5,215 | 20,829 |
12 | 11 | Novo Nordisk | Denmark | 15,734 | - | - | 4,853 | 20,587 |
13 | # | Morgan Stanley | US | 8,831 | 7,819 | - | 2,550 | 19,200 |
14 | 20 | Chevron | US | 12,592 | 5,343 | - | 1,105 | 19,040 |
15 | 9 | TotalEnergies | France | 16,810 | - | - | 1,075 | 17,885 |
16 | # | Meta | US | - | 15,320 | - | 2,009 | 17,329 |
17 | 13 | McDonald's | US | 13,802 | 3,030 | - | (53) | 16,779 |
18 | 19 | Deere | US | 12,667 | 3,115 | - | 530 | 16,312 |
19 | 15 | Texas Instruments | US | 13,412 | - | - | 2,722 | 16,134 |
20 | 21 | Oracle | US | 12,288 | 1,269 | - | 861 | 14,418 |
21 | # | ASML | Netherlands | 8,770 | 1,731 | - | 3,883 | 14,384 |
22 | 47 | BP | UK | 9,198 | 4,651 | (832) | 884 | 13,901 |
23 | 17 | Procter & Gamble | US | 13,092 | - | - | 710 | 13,802 |
24 | 37 | Starbucks | US | 9,785 | 4,476 | - | (940) | 13,321 |
25 | 8 | AstraZeneca | UK | 17,286 | - | (6,140) | 2,172 | 13,318 |
All securities are equity investments
# Not in top 50 at 31 October 2023
Convertibles and all classes of equity in any one company being treated as one investment
4 The Bankers Investment Trust PLC Half Year Update 2024
Portfolio Information (continued)
50 Largest Investments at 30 April 2024
Rank | Rank | Valuation | Sales | Appreciation/ | Valuation | |||
30 Apr | 31 Oct | 31 Oct 2023 | Purchases | proceeds | (depreciation) | 30 Apr 2024 | ||
2024 | 2023 | Company | Country | £'000 | £'000 | £'000 | £'000 | £'000 |
26 | 40 | Marriott | US | 9,608 | 1,620 | - | 2,059 | 13,287 |
27 | 32 | Lloyds Banking | UK | 10,370 | 438 | (773) | 3,153 | 13,188 |
28 | # | Lam Research | US | 8,660 | 298 | - | 4,181 | 13,139 |
29 | 41 | Eli Lilly | US | 9,556 | - | - | 3,509 | 13,065 |
30 | # | Hershey | US | 7,789 | 5,021 | - | 145 | 12,955 |
31 | 33 | Hitachi | Japan | 10,313 | - | (2,309) | 4,435 | 12,439 |
32 | 28 | Nike | US | 10,765 | 3,233 | - | (1,656) | 12,342 |
33 | # | Daiichi Sankyo | Japan | 8,892 | 1,228 | (755) | 2,738 | 12,103 |
34 | 27 | Abbott Laboratories | US | 11,026 | 114 | - | 956 | 12,096 |
35 | # | Constellation Brands | US | 4,707 | 6,778 | - | 471 | 11,956 |
36 | # | Marsh & McLennan | US | 6,101 | 5,290 | - | 401 | 11,792 |
37 | # | Broadcom | US | 7,203 | 801 | - | 3,620 | 11,624 |
38 | 29 | Shin-Etsu Chemical Japan | 10,628 | - | (2,251) | 3,034 | 11,411 | |
39 | 43 | Safran | France | 9,490 | - | (1,524) | 3,435 | 11,401 |
40 | # | Unicredit | Italy | 7,812 | - | - | 3,379 | 11,191 |
41 | # | Taiwan Semiconductor | Taiwan | 8,214 | - | (1,094) | 4,048 | 11,168 |
Manufacturing | ||||||||
42 | 35 | Honeywell | US | 9,925 | 1,035 | - | 143 | 11,103 |
43 | 30 | Sanofi | France | 10,419 | - | - | 669 | 11,088 |
44 | # | Samsung Electronics | South | 6,752 | 6,613 | (3,194) | 820 | 10,991 |
Korea | ||||||||
45 | 44 | SAP | Germany | 9,364 | - | (1,528) | 2,949 | 10,785 |
46 | 42 | Sumitomo Mitsui | Japan | 9,538 | 755 | (1,091) | 1,493 | 10,695 |
47 | # | IBM | US | 6,998 | 2,726 | - | 641 | 10,365 |
48 | 49 | AbbVie | US | 9,136 | - | - | 1,061 | 10,197 |
49 | 48 | ADP | US | 9,158 | 298 | - | 694 | 10,150 |
50 | # | Siemens | Denmark | - | 10,304 | - | (162) | 10,142 |
598,365 | 160,195 | (31,524) | 100,111 | 827,147 |
All securities are equity investments
# Not in top 50 at 31 October 2023
Convertibles and all classes of equity in any one company being treated as one investment
The Bankers Investment Trust PLC Half Year Update 2024 5
Financial summary
Extract from the Condensed Statement of | 30 April 2024 | 30 April 2024 | 30 April 2024 | 30 April 2023 | |
Revenue return | Capital return | Total | Total | ||
Comprehensive Income (unaudited) | £'000 | £'000 | £'000 | £'000 | |
Gains on investments held at | |||||
fair value through profit or loss | - | 177,057 | 177,057 | 93,419 | |
Investment income | 19,107 | - | 19,107 | 19,070 | |
Other operating income | 567 | - | 567 | 1,073 | |
Gross revenue and | 113,562 | ||||
capital gains | 19,674 | 177,057 | 196,731 | ||
Expenses, finance costs and taxation | (3,733) | (3,333) | (7,066) | (7,244) | |
Profit for the period | 15,941 | 173,724 | 189,665 | 106,318 | |
Earnings per ordinary share | 1.31p | 14.31p | 15.62p | 8.26p | |
Extract from the Condensed Statement of Financial | As at | As at | As at | ||
30 April 2024 | 30 April 2023 | 31 October 2023 | |||
Position (unaudited except October 2023 figures) | £'000 | £'000 | £'000 | ||
Total assets | 1,588,357 | 1,573,697 | 1,475,429 | ||
Current liabilities | (10,604) | (21,801) | (17,006) | ||
Total assets less current liabilities | 1,577,753 | 1,551,896 | 1,458,423 | ||
Non-current liabilities | (124,159) | (125,328) | (124,900) | ||
Net assets | 1,453,594 | 1,426,568 | 1,333,523 | ||
Net asset value per ordinary share | 122.7p | 112.3p | 108.0p | ||
Share Capital
At 30 April 2024 there were 1,315,102,830 ordinary shares of 2.5p each in issue of which 130,619,544 were held in treasury (with no voting rights) (30 April 2023: 1,315,102,830 of which 44,332,551 shares were held in treasury; 31 October 2023: 1,315,102,830 of which 80,870,553 shares were held in treasury). During the half-year ended 30 April 2024, 49,748,991 shares were bought back into treasury at a total cost of £53,389,000 (half year to 30 April 2023: 24,080,927 shares were bought back into treasury for a total cost of £24,881,000; year to 31 October 2023: 60,618,929 shares were bought back into treasury for a total cost of £60,484,000). Since the period end, the Company has bought back 11,181,474 shares for a total cost of £12,625,000.
Dividends
A first interim dividend of 0.672p (2023: 0.62p) per ordinary share was paid on 31 May 2024 to shareholders registered on 26 April 2024. The shares were quoted ex-dividend on 25 April 2024. Based on the number of ordinary shares in issue at 25 April 2024 (excluding the shares held in treasury) of 1,184,483,286 the cost of this dividend was £7,960,000.
The Directors have declared a second interim dividend of 0.672p (2023: 0.62p) per ordinary share which will be payable on 30 August 2024 to shareholders on the register on 26 July 2024. The shares will be quoted ex-dividend on 25 July 2024. Based on the number of shares in issue, excluding shares held in treasury, at 25 June 2024 of 1,173,301,812 the cost of this dividend will be £7,885,000.
6 The Bankers Investment Trust PLC Half Year Update 2024
Additional Information
Managing our Risks
The principal and emerging risks and uncertainties associated with the Company's business are divided into the following main areas:
- Investment Activity and Performance Risks
- Portfolio and Market Risks
- Tax, Legal, Regulatory and Governance Risks
- Financial Risks
- Operational and Cyber Risks
- Risks associated with climate change
Information on these risks and uncertainties and how they are managed are given in the Annual Report for the year ended 31 October 2023. Following a recent review, the Board has amended Tax, Legal and Regulatory Risk to include Governance. All other principal and emerging risks at the year-end remain and are as applicable to the remaining six months of the financial year as they were to the six months under review.
Going Concern
In assessing the Company's going concern, the Directors have considered among other things, cash flow forecasts, a review of covenant compliance including the headroom above the most restrictive covenants, an assessment of the liquidity of the portfolio and the impact of the war in Ukraine and the Gaza-Israel conflict. The assets of the Company consist mainly of securities that are listed and readily realisable. Thus, after making due enquiry, the Directors believe that the Company has adequate financial resources to meet its financial obligations, including the repayment of any borrowings, and to continue in operational existence for at least 12 months from the date of approval of the financial statements. Accordingly, the Directors continue to adopt the going concern basis in preparing the financial statements.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge:
-
the unaudited condensed set of financial statements has been prepared in accordance with IAS 34 - Interim Financial Reporting ('IAS 34') and gives a true and fair view of the assets, liabilities, financial position and profit or loss
of the Company as required by Disclosure Guidance and Transparency Rule 4.2.4R; - the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
- the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the Company during the period; and any changes in related party transactions described in the latest annual report that could have an impact in the first six months of the current financial year).
On behalf of the Board Simon Miller
Chair
25 June 2024
The Bankers Investment Trust PLC Half Year Update 2024 7
Corporate Information
Registered office
201 Bishopsgate, London EC2M 3AE
Service providers
Alternative Investment Fund Manager
Janus Henderson Fund Management UK Limited
201 Bishopsgate London EC2M 3AE
Corporate Secretary
Janus Henderson Secretarial Services UK Limited
201 Bishopsgate London EC2M 3AE Telephone: 020 7818 1818
Depositary and Custodian
BNP Paribas Trust Corporation UK Limited
and BNP Paribas SA
10 Harewood Avenue
London NW1 6AA
Stockbrokers
UK
JP Morgan Cazenove | Peel Hunt LLP |
25 Bank Street | 7th Floor |
Canary Wharf | 100 Liverpool Street |
London E14 5JP | London EC2M 2AT |
Registrar
UK
Equiniti Limited
Aspect House
Spencer Road
Lancing, West Sussex BN99 6DA
Telephone: 0371 384 2471 (or +44 121 415 7047 if calling from overseas). Lines are open 8.30 am to 5.30 pm, UK time Monday to Friday excluding public holidays in England and Wales.
New Zealand
Computershare Investor Services Limited
Private Bag 92119
Victoria Street West
Auckland 1142, New Zealand
Telephone: (New Zealand) (64) 09 488 8777
Independent Auditor
Ernst & Young LLP
25 Churchill Place
London E14 5EY
New Zealand
Craigs Investment Partners Limited
Head Office
P.O. Box 13155
Tauranga 3141
New Zealand
Information sources
For more information about The Bankers Investment Trust PLC, visit the website at www.bankersinvestmenttrust.com.
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8 The Bankers Investment Trust PLC Half Year Update 2024
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The Bankers Investment Trust plc published this content on 03 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 July 2024 14:06:05 UTC.