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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Monks Investment Trust Plc | LSE:MNKS | London | Ordinary Share | GB0030517261 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 18.00 | 1.61% | 1,134.00 | 1,130.00 | 1,136.00 | 1,138.00 | 1,126.00 | 1,128.00 | 103,753 | 14:31:57 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | -47.92M | -67.84M | -0.3025 | -37.42 | 2.54B |
TIDMMNKS
RNS Number : 4443J
Monks Investment Trust PLC
05 December 2018
RNS Announcement -------------------------------------------------------------------------------- The Monks Investment Trust PLC ================================================================================== Legal Entity Identifier: 213800MRI1JTUKG5AF64 Regulated Information Classification: Half Yearly Financial Report. Results for the six months to 31 October 2018 ==================================================================================== Over the six month period, the Company produced a negative net asset value (NAV)* return of 0.9% compared to an increase of 4.5% for the FTSE World Index (in sterling), both in total return terms. The share price total return for the same period declined 1.9% and the shares ended the period trading at a premium of 2.4% to the Company's NAV*. 3/4 Anthem and Amazon were the notable positive contributors to absolute returns in the period. Naspers and Prudential were the largest detractors. 3/4 Earnings per share were 2.54p compared to 1.77p in the corresponding period. No interim dividend is to be paid. 3/4 The Managers remain optimistic about the potential future returns from long-term equity investing and the portfolio remains well diversified by geography and industry, with exposure to a broad range of strong growth companies. *With borrowings deducted at fair value. Past performance is not a guide to future performance. Total return information is sourced from Baillie Gifford /Morningstar. See disclaimer at the end of this announcement. For a definition of terms see Glossary of Terms at the end of this announcement.
The Monks Investment Trust PLC invests globally in order to achieve capital growth. This takes priority over income and dividends. Monks is managed by Baillie Gifford, an independent fund management group with over GBP185 billion under management and advice as at 3 December 2018.
Monks is a listed UK company. The value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested. The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority. You can find up to date performance information about Monks at www.monksinvestmenttrust.co.uk(++) . Past performance is not a guide to future performance. See disclaimer at the end of this announcement.
++ Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.
4 December 2018
For further information please contact:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Roland Cross, Director, Four Broadgate
Tel: 0203 697 4200 or 07831 401
The following is the unaudited Interim Financial Report for the six months to 31 October 2018.
Responsibility statement ========================
We confirm that to the best of our knowledge:
a) the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';
b) the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (indication of important events during the first six months, and their impact on the Financial Statements, and a description of principal risks and uncertainties for the remaining six months of the year); and
c) the Interim Financial Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).
On behalf of the Board
JGD Ferguson
Chairman
4 December 2018
Interim Management Report ============================
After a period of generally steadily rising markets, the past six months have seen a return of volatility and a shift in market sentiment. This is far from unusual or unhealthy as markets rarely move in straight lines and are subject to unpredictable mood swings. The managers are bottom-up investors who do not attempt to time or forecast market moves but who instead focus on identifying and holding a portfolio of the best growth companies from around the world. They believe that retaining a long-term view that focuses on corporate fundamentals is the best way to produce superior returns.
During the period, the Company produced a negative net asset value (NAV)* return of 0.9% compared to an increase of 4.5% for the comparative index (FTSE World in sterling), both in total return terms. Over the period, the share price total return declined by 1.9% with the premium to NAV* falling from 3.4% to 2.4%. While this was evidently not a profitable period for the Company, the board and managers believe that performance should be judged over the longer term. Since the current team took over management of Monks Investment Trust on 27 March 2015, the comparative index total return has been 46.7%, the NAV* total return 56.0% and the share price total return 82.4%.
Not surprisingly given the market volatility and performance described above, several holdings in the portfolio saw material share price declines. A number of Asian consumer holdings got caught up in the negative sentiment towards Emerging Markets, which in turn was partly driven by trade war rhetoric. Whilst, as described below, the managers have been diversifying the portfolio somewhat in recent months, they have retained their enthusiasm for Asian companies which they believe offer exceptional long-term growth prospects, but in the short term have held back portfolio performance.
Portfolio Changes
The turnover of holdings in the portfolio was low and is consistent with a near six year holding period. During the period, ten new holdings were purchased and eight sold. In general, there are three broad themes reflecting a desire for greater diversification in the portfolio.
First, over the long term the portfolio has benefited from many profitable investments in 'online platforms'. Within this area the managers have been recycling money away from the biggest technology platforms which have been amongst the outstanding past performers into smaller and less established online companies which are believed to have the potential for rapid growth. Since mid-2017, the position in Amazon (online retail and cloud computing) has been trimmed four times (twice during the reporting period) with the total number of shares held reduced by around one-third.
Successful platforms often bring together buyers and sellers at scale, offering a better selection of products or services and lowering prices. These features are clear in online food delivery. GrubHub, the dominant US player, has been held since 2015. It is delivering on its potential and the position has been trimmed to help fund a new holding in Just Eat, which leads in markets such as the UK, Canada, Australia and Brazil. A position was also initiated in Meituan Dianping, which offers food delivery and other local services in China. Meituan has 310 million customers in 2,800 cities.
Banking is another sector which is likely to see a lot of disruption from platforms over the coming decade. In mature economies, these 'Fintech' disruptors are often using the established credit card infrastructure, hence the continued ownership of Visa and Mastercard. China is different: the managers invested in the unlisted Ant International, which was spun out from Alibaba in 2014 and offers the largest mobile payment app in China. In 2017 Ant processed transactions worth over U$9 trillion, up over 50% on a year earlier. By comparison, Visa and Mastercard's combined transaction values in 2017 were U$12.5 trillion and grew by 20%.
Secondly, exposure was reduced where share prices have been unusually strong, notably in semiconductors which can be a viciously cyclical industry. The holdings in Samsung Electronics and NVIDIA were sold and the positions in Advanced Micro Devices and TSMC reduced. Elsewhere, Abiomed, the manufacturer of the world's smallest heart pump, is a good example of shares moving much faster than fundamentals. Abiomed was purchased in early 2017 on the premise that it was capable of growing its earnings 30%-35% per annum for a decade. However, the shares rose three and a half times in just over 18 months and the valuation moved from high to stratospheric, so the position was sold.
Another area where it was felt that valuations had become stretched was in US domestic cyclicals. The exposure here has been reduced through the complete sale of Lincoln Electric (welding equipment), the reduction of Royal Caribbean Cruises for the third time in just over a year, and the reduction of SiteOne Landscape Supply (a distributor to professional landscaping contractors) whose shares had nearly doubled since the initial purchase in 2017.
Thirdly, the managers have looked to diversify the portfolio into stocks which are uncorrelated with the rest of the portfolio. Mining and oil production have both suffered from lower commodity prices in recent years and a consequent cutback in capital expenditure. Companies have stopped spending on new projects and this should eventually lead to better supply/demand characteristics, rising prices, more respectable returns and ultimately a new investment cycle. Recent purchases include BHP Billiton (a diversified miner) and Albemarle (lithium mining). Additions have been made to Epiroc (a spin out from Atlas Copco, involved in mining equipment) and Kirby, which is a barge operator moving petro-chemicals around US waterways. Positions have also been initiated in Chipotle Mexican Grill, a fast-casual dining chain, and Service Corp International, the dominant US funeral operator.
Gearing
The level of actual gearing at the period end stood at 6.6%, compared to 4.6% six months earlier. We increased borrowings moderately during the period by drawing on our existing facilities. It is expected that gearing will be maintained in the range of minus 15% to plus 15%, with the intention of plus 10% as a long-term neutral position.
Dividend
No interim dividend is being paid. A single final dividend will typically be paid after the full year results, reflecting the Company's focus on capital growth.
Current Positioning and Outlook
The managers remain optimistic about the long-term opportunities afforded by the companies held in the portfolio. The operating performance of the vast majority of these investments remains strong.
The managers retain great enthusiasm for Asian growth and the portfolio contains many exciting technology and consumer companies across the region. During the period two new Asian insurance holdings were purchased. Ping An Insurance, which brings exposure to mainland China, and ICICI Prudential in India. This, along with Prudential PLC and AIA, brings the number of Asian insurance focused holdings to four. This enthusiasm is based on an Asian middle-class population which is around six times the size of that of the G7, but where spending on social welfare is only one-sixth of western levels.
Technology, disruption and innovation also remain at the heart of the portfolio. Many of the holdings are seeking to disrupt traditional business models and benefit from the huge growth in cloud computing and storage. Diversification remains a key portfolio characteristic, which we believe will support the performance of the portfolio through a range of economic and market environments.
The principal risks and uncertainties facing the Company are set out in note 12.
On behalf of the Board
JGD Ferguson
Chairman
4 December 2018
*With borrowings deducted at fair value.
Past performance is not a guide to future performance.
For a definition of terms used see Glossary of Terms at the end of this announcement.
Total return information is sourced from Baillie Gifford /Morningstar and relevant underlying index providers. See disclaimer at the end of this announcement.
The Managers' Core Investment Beliefs ========================================
We believe the following features of Monks provide a sustainable basis for adding value for shareholders.
Active Management
3/4 We invest in attractive companies using a 'bottom-up' investment process. Macroeconomic forecasts are of relatively little interest to us.
3/4 High active share(*) provides the potential for adding value.
3/4 We ignore the structure of the index - for example the location of a company's HQ and therefore its domicile are less relevant to us than where it generates sales and profits.
3/4 Large swathes of the market are unattractive and of no interest to us. 3/4 As index agnostic global investors we can go anywhere and only invest in the best ideas.
3/4 As the portfolio is very different from the index, we expect portfolio returns to vary - sometimes substantially and often for prolonged periods.
Committed Growth Investors
3/4 In the long run, share prices follow fundamentals; growth drives returns.
3/4 We aim to produce a portfolio of stocks with above average growth - this in turn underpins the ability of Monks to add value.
3/4 We have a differentiated approach to growth, focusing on the type of growth that we expect a company to deliver. All holdings fall into one of four growth categories - as set out in the Portfolio by Growth Category table below.
3/4 The use of these four growth categories ensures a diversity of growth drivers within a disciplined framework.
Long-Term Perspective
3/4 Long-term holdings mean that company fundamentals are given time to drive returns.
3/4 We prefer companies that are managed with a long-term mindset, rather than those that prioritise the management of market expectations.
3/4 We believe our approach helps us focus on what is important during the inevitable periods of underperformance. 3/4 Short-term portfolio results are random.
3/4 As longer-term shareholders we are able to have greater influence on environmental, social and governance matters.
Dedicated Team with Clear Decision-making Process
3/4 Senior and experienced team drawing on the full resources of Baillie Gifford.
3/4 Alignment of interests - the investment team responsible for Monks all own shares in the Company.
Portfolio Construction
3/4 Investments are held in three broad holding sizes - as set out in the Portfolio by Growth Category table below.
3/4 This allows us to back our judgement in those stocks for which we have greater conviction, and to embrace the asymmetry of returns through 'incubator' positions in higher risk/return stocks.
3/4 'Asymmetry of returns': some of our smaller positions will struggle and their share prices will fall; those that are successful may rise many fold. The latter should outweigh the former.
Low Cost
Hot Features
Premium
3/4 Investors should not be penalised by high management fees.
3/4 Low turnover and trading costs benefit shareholders.
* See Glossary of Terms at the end of this announcement.
Portfolio by Growth Category as at 31 October 2018
==================================================
Holding Growth Stalwarts % Rapid Growth % Cyclical Growth % Latent Growth %
Size
(c.10%p.a. earnings (c.15% to 25% (c.10% to 15% (earnings growth
growth) p.a. earnings p.a. earnings to accelerate
growth) growth through over
a cycle) time)
---------------------- ---- ---------------- ---- ---------------- ---- ----------------- ----
Company Company Company Company
Characteristics Characteristics Characteristics Characteristics
3/4 Durable 3/4 Early stage 3/4 Subject to 3/4 Company
franchise businesses with macroeconomic specific
3/4 Deliver vast growth and capital catalyst will
robust opportunity cycles drive
profitability 3/4 Innovators with above average
in most attacking significant earnings
macroeconomic existing structural in future
environments profit pools growth 3/4
3/4 Competitive or creating new prospects Unspectacular
advantage markets 3/4 Strong recent
includes management operational
dominant local teams highly performance and
scale, customer skilled therefore
loyalty and at capital out of favour
strong allocation
brands
---------------------- ---- ---------------- ---- ---------------- ---- ----------------- ----
Highest
conviction
holdings
c.2.0%
each
Total:
29.0% Prudential 2.6 Amazon.com 3.6 TSMC 1.9 Apache 1.9
Anthem 2.5 Naspers 2.1 Banco Bradesco 1.7
AIA 1.9 Alphabet 2.1
MasterCard 1.8 Alibaba 1.8
SAP 1.7
Moody's 1.7
Visa 1.7
Average
sized
holdings
c.1.0%
each
Total: Thermo Fisher
46.1% Scientific 1.3 ICICI Bank 1.4 CRH 1.4 MS&AD Insurance 1.3
Sumitomo Mitsui
Ping An Trust
Resmed 1.1 Insurance 1.4 Markel 1.1 Holdings 1.0
Royal Caribbean Fairfax
Verisk Analytics 1.1 HDFC 1.2 Cruises 1.1 Financial 1.0
Martin Marietta
Schindler 1.1 MarketAxess 1.1 Materials 1.1 BHP Billiton 0.9
Fiat Chrysler
Service Corp International 1.0 Ryanair 1.0 EOG Resources 0.9 Autos 0.9
Arthur J. Gallagher 1.0 Facebook 1.0 Richemont 0.9 Kirby 0.9
Pernot Ricard 0.9 Chegg 0.9 TD Ameritrade 0.8 Bank of Ireland 0.7
First Republic Sberbank of
Bureau Veritas 0.8 Baidu 0.8 Bank 0.8 Russia 0.7
CH Robinson
Waters 0.8 Zillow 0.8 Worldwide 0.7 Signify 0.7
Olympus 0.8 GrubHub 0.8 SMC 0.7
Jeffries
Seattle Financial
Genetics 0.8 Group 0.7
Tesla 0.8 Deutsche Boerse 0.7
LendingTree 0.8 Wabtec 0.7
Myriad Genetics 0.8
Schibsted 0.8
CyberAgent 0.7
Renishaw 0.7
iRobot 0.7
-------------------------------------- ---- ---------------- ---- ---------------- ---- ----------------- ----
Holding Growth Stalwarts % Rapid Growth % Cyclical Growth % Latent Growth %
Size % % % %
(c.10%p.a. (c.15% to 25% (c.10% to 15% (earnings growth
earnings p.a. earnings p.a. to accelerate
growth) growth) earnings growth over
through a cycle) time)
------------------- ----- ----------------- ----- ----------------- ----- ------------------ -----
Incubator
Holdings
c.0.5%
each Lindblad
Total: Expeditions
24.9% Kansai Paint 0.3 58.com 0.6 Atlas Copco 0.6 Holdings 0.6
MercadoLibre 0.6 Hays 0.6 AP Moller-Maersk 0.6
Svenska
Spotify 0.6 Handelsbanken 0.5 Toyota Tsusho 0.6
Netflix 0.6 Albemarie 0.5 Stericycle 0.6
Trupanion 0.6 Advantest 0.5 DistributionNOW 0.6
Ctrip.com Iida Group
International 0.6 Teradyne 0.5 Holdings 0.5
Ritchie Bros ICICI Prudential
Autohome 0.6 Auctioneers 0.5 Life Insurance 0.5
Jardine
Strategic
B3 Group 0.6 Holdings 0.5 Howard Hughes 0.5
Ant
International 0.5 Epiroc 0.5 MRC Global 0.5
M3 0.5 Persol Holdings 0.4 Rohm 0.4
Interactive
Brokers 0.5 PageGroup 0.4 Tsingtao Brewery 0.4
Infineon Advanced Micro
Technologies 0.5 Orica 0.4 Devices 0.4
SiteOne
Chipotle Mexican Landscape
Grill 0.4 Supply 0.4 Veeco Instruments 0.3
Ferro Alloy
Shopify 0.4 Sands China 0.3 Resources 0.2
Silk Invest
Africa
GRAIL 0.4 Food Fund 0.2
Just Eat 0.4 HTC 0.2
Mail.ru Group 0.4
Meituan Dianping 0.4
Alnylam
Pharmaceuticals 0.4
NetEase 0.4
Genmab 0.3
Line 0.3
IP Group 0.3
China Biologic -
Products
Total 24.1 Total 37.0 Total 21.8 Total 17.1
Portfolio Positioning as at 31 October 2018
===========================================
Thematic Exposure
At 31 October 2018
Category % %
========================================== ========== ===========
New Economy 31.0
========================================== ========== ===========
Internet Winners 18.9
Developed World 13.9
Emerging World 5.0
Innovation 12.1
Semi-conductor Chips 4.2
Disruptive Health 3.3
Other Innovation 4.6
Developed Market Growth 27.1
========================================== ========== ===========
Industrial 8.5
Consumer 5.2
Capital Markets/Asset Inflation 4.2
Japanese Reflation 3.2
Interest Rate Normalisation 3.1
Resources 2.9
========================================= ========== ===========
Developing Economies 22.9
========================================== ========== ===========
Emerging Markets Middle Classes 17.9
Emerging Markets Financial Development 11.3
Emerging Markets Consumer Catch-up 6.6
Resources 3.4
Industrial 1.6
========================================= ========== ===========
Economically Agnostic 18.5
========================================== ========== ===========
Stalwarts 15.5
Insurance Cycle 3.0
Net Liquid Assets 0.5
========================================== ========== ===========
Total Assets 100.0
========================================== ========== ===========
Portfolio Positioning as at 31 October 2018 (Ctd)
=================================================
Geographical
At At
31 October 30 April 2018
2018
% %
==================== ============ ===============
North America 48.2 44.7
Emerging Markets 19.2 19.4
Continental Europe 15.1 17.0
Japan 8.1 8.5
United Kingdom 5.8 5.3
Developed Asia 3.1 3.5
Net Liquid Assets 0.5 1.6
Total Assets 100.0 100.0
==================== ============ ===============
Sectoral
At At
31 October 30 April 2018
2018
% %
=========== =========== ============ ===============
Financials
Consumer Services
Industrials
Technology
Health Care
Consumer Goods
Oil and Gas
Basic Materials
Telecommunications 31.4 28.6
========================
20.6 19.9
=======================
16.4 15.3
11.6 13.8
8.4 9.0
5.0 6.7
3.8 3.8
2.3 1.1
- 0.2
======================= ============ ===============
99.5 98.4
Net Liquid Assets 0.5 1.6
Total Assets 100.0 100.0
======================== ============ ===============
Thirty largest holdings as at 31 October 2018
=============================================
Growth % of
Name Category Business Description Fair Value GBP'000 Total Assets
=========================== =========== ========================================= ================== =============
Amazon.com Rapid Online retailer 62,698 3.6
Prudential Stalwart International life insurance 46,085 2.6
Anthem Stalwart Healthcare insurer 44,251 2.5
Naspers Rapid Media and e-commerce company 36,955 2.1
Alphabet Rapid Online search engine 36,297 2.1
AIA Stalwart Asian life insurer 33,977 1.9
TSMC Cyclical Semiconductor manufacturer 33,738 1.9
Apache Latent Oil exploration and production 32,590 1.9
Alibaba Rapid Online commerce company 30,947 1.8
Electronic payments network and related
MasterCard Stalwart services 30,715 1.7
SAP Stalwart Enterprise software provider 30,339 1.7
Banco Bradesco Cyclical Brazilian commercial bank 29,303 1.7
Moody's Stalwart Credit rating agency 28,970 1.6
Electronic payments network and related
Visa Stalwart services 28,963 1.6
ICICI Bank Rapid Indian retail and corporate bank 25,342 1.4
CRH Cyclical Diversified building materials company 25,097 1.4
Ping An Insurance Rapid Life insurance services 24,803 1.4
MS&AD Insurance Latent Japanese insurer 23,374 1.3
Scientific instruments, consumables and
Thermo Fisher Scientific Stalwart chemicals 22,003 1.3
HDFC Rapid Indian mortgage provider 21,531 1.2
Develops and manufactures medical
Resmed Stalwart equipment 19,623 1.1
Markets and underwrites speciality
Markel Cyclical insurance products 19,547 1.1
Risk assessment services and decision
Verisk Analytics Stalwart analytics 19,435 1.1
Schindler Stalwart Elevator and escalator company 19,362 1.1
MarketAxess Rapid Electronic board trading platform 18,894 1.1
Royal Caribbean Cruises Cyclical Global cruise company 18,816 1.1
Martin Marietta Materials Cyclical Cement and aggregates manufacturer 18,698 1.1
Service Corp International Stalwart Death care services 18,298 1.0
Ryanair Rapid Low cost European airline 17,459 1.0
Arthur J. Gallagher Stalwart Insurance broker 17,266 1.0
835,376 47.4
================================================================================= ================== =============
Income Statement (unaudited)
============================
(Audited)
For the six months ended For the six months ended For the year ended
31 October 2018 31 October 2017 30 April 2018
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
======================== ========= ========= ======== ========= ========= ======== ======== ======== ========
(Losses)/gains on
investments (note 3) - (18,725) (18,725) - 185,930 185,930 - 211,299 211,299
Currency (losses)/gains - (4,510) (4,510) - 1,174 1,174 - 3,216 3,216
Income from investments
and interest receivable 13,513 - 13,513 10,681 - 10,681 19,759 - 19,759
Investment management
fee (note 4) (3,471) - (3,471) (3,198) - (3,198) (6,568) - (6,568)
Other administrative
expenses (832) - (832) (689) - (689) (1,598) - (1,598)
======================== ========= ========= ======== ========= ========= ======== ======== ======== ========
Net return before
finance costs and
taxation 9,210 (23,235) (14,025) 6,794 187,104 193,898 11,593 214,515 226,108
Finance costs of
borrowings (2,617) - (2,617) (2,176) - (2,176) (4,410) - (4,410)
======================== ========= ========= ======== ========= ========= ======== ======== ======== ========
Net return on ordinary
activities before
taxation 6,593 (23,235) (16,642) 4,618 187,104 191,722 7,183 214,515 221,698
Tax on ordinary
activities (1,080) - (1,080) (831) - (831) (1,595) - (1,595)
======================== ========= ========= ======== ========= ========= ======== ======== ======== ========
Net return on ordinary
activities after
taxation 5,513 (23,235) (17,722) 3,787 187,104 190,891 5,588 214,515 220,103
======================== ========= ========= ======== ========= ========= ======== ======== ======== ========
Net return per ordinary
share (note 5) 2.54p (10.68p) (8.14p) 1.77p 87.45p 89.22p 2.61p 100.08p 102.69p
======================== ========= ========= ======== ========= ========= ======== ======== ======== ========
The total column of this statement is the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance by the Association of Investment Companies.
All revenue and capital items in this statement derive from continuing operations.
A Statement of Comprehensive Income is not required as the Company does not have any other
comprehensive income and the net return of ordinary activities after taxation is both the
profit and comprehensive income for the period. Balance Sheet (unaudited)
==========================================================================================
(Audited)
At 31 October 2018 At 30 April 2018
GBP'000 GBP'000
Fixed assets
Investments held at fair value through profit or loss (note 7) 1,749,179 1,730,513
=============================================================== ==================== =================
Current assets
Debtors 3,571 9,009
Cash and short term deposits 8,479 22,974
=============================================================== ==================== =================
12,050 31,983
=============================================================== ==================== =================
Creditors
Amounts falling due within one year:
Bank loans (note 8) (77,480) (63,165)
Other creditors (2,432) (2,955)
=============================================================== ==================== =================
(79,912) (66,120)
Net current liabilities (67,862) (34,137)
=============================================================== ==================== =================
Total assets less current liabilities 1,681,317 1,696,376
=============================================================== ==================== =================
Creditors
Amounts falling due after more than one year:
Debenture stock (note 8) (39,859) (39,842)
=============================================================== ==================== =================
1,641,458 1,656,534
=============================================================== ==================== =================
Capital and reserves
Share capital 10,891 10,857
Share premium account 41,632 35,973
Capital redemption reserve 8,700 8,700
Capital reserve 1,526,316 1,549,551
Revenue reserve 53,919 51,453
=============================================================== ==================== =================
Shareholders' funds (note 9) 1,641,458 1,656,534
=============================================================== ==================== =================
Shareholders' funds per ordinary share
(after deducting borrowings at book value) (note 9) 753.6p 762.9p
=============================================================== ==================== =================
Net asset value per ordinary share
(after deducting borrowings at par) (note 9) 753.5p 762.8p
=============================================================== ==================== =================
Net asset value per ordinary share
(after deducting borrowings at fair value) (note 8) 750.7p 759.0p
=============================================================== ==================== =================
Ordinary shares in issue (note 10) 217,818,859 217,143,859
=============================================================== ==================== =================
Statement of Changes in Equity (unaudited)
==========================================
For the six months ended 31 October 2018
Share Share premium Capital redemption Shareholders'
capital account reserve Capital reserve* Revenue reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== ======== ================== ================== ================ =============== =============
Shareholders'
funds at 1 May
2018 10,857 35,973 8,700 1,549,551 51,453 1,656,534
Net return on
ordinary
activities after
taxation - - - (23,235) 5,513 (17,722)
Ordinary shares
issued (note 10) 34 5,659 - - - 5,693
Dividends paid
during the period
(note 6) - - - - (3,047) (3,047)
================== ======== ================== ================== ================ =============== =============
Shareholders'
funds at 31
October 2018 10,891 41,632 8,700 1,526,316 53,919 1,641,458
================== ======== ================== ================== ================ =============== =============
For the six months ended 31 October 2017
Share Share premium Capital redemption Shareholders'
capital account reserve Capital reserve* Revenue reserve funds
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== ======== ================== ================== ================ =============== =============
Shareholders'
funds at 1 May
2017 10,698 11,100 8,700 1,335,036 48,540 1,414,074
Net return on
ordinary
activities after
taxation - - - 187,104 3,787 190,891
Dividends paid
during the period
(note 6) - - - - (2,675) (2,675)
================== ======== ================== ================== ================ =============== =============
Shareholders'
funds at 31
October 2017 10,698 11,100 8,700 1,522,140 49,652 1,602,290
================== ======== ================== ================== ================ =============== =============
* The Capital Reserve balance at 31 October 2018 includes holding gains on investments of GBP477,012,000 (31 October 2017 - gains of GBP596,685,000).
Condensed cash flow statement (unaudited)
=========================================
Six months to Six months to
31 October 2018 31 October 2017
GBP'000 GBP'000
Cash flows from operating activities
Net return on ordinary activities before taxation (16,642) 191,722
Net losses/(gains) on investments 18,725 (185,930)
Currency losses/(gains) 4,510 (1,174)
Amortisation of fixed income book cost - (169)
Finance costs of borrowings 2,617 2,176
Overseas tax incurred (1,090) (811)
Changes in debtors and creditors 1,099 287
==================================================== ================ ================
Cash from operations(*) 9,219 6,101
Interest paid (2,578) (2,153)
---------------------------------------------------- ---------------- ----------------
Net cash inflow from operating activities 6,641 3,948
---------------------------------------------------- ---------------- ----------------
Net cash outflow from investing activities (35,546) (310)
==================================================== ================ ================
Cash flow from financing activities
Equity dividends paid (note 6) (3,047) (2,675)
Ordinary shares issued 7,651 -
Borrowings drawn down 9,055 -
Net cash inflow/(outflow) from financing activities 13,659 (2,675)
(Decrease)/increase in cash and cash equivalents (15,246) 963
Exchange movements 751 (557) Cash and cash equivalents at start of period 22,974 15,208 ==================================================== ================ ================ Cash and cash equivalents at end of period 8,479 15,614 ==================================================== ================ ================
* Cash from operations includes dividends received of GBP14,836,000 (31 October 2017 - GBP10,957,000) and interest received of GBP83,000 (31 October 2017 - GBP27,000).
Notes to the condensed financial statements (unaudited)
=======================================================
1. The condensed Financial Statements for the six months to 31 October 2018 comprise the Statements
set out in the previous pages together with the related notes below. They have been prepared
in accordance with FRS 104 'Interim Financial Reporting' and the AIC's Statement of Recommended
Practice issued in November 2014 and updated in February 2018 with consequential amendments.
They have not been audited or reviewed by the Auditor pursuant to the Auditing Practices Board
Guidance on 'Review of Interim Financial Information'. The Financial Statements for the six
months to 31 October 2018 have been prepared on the basis of the same accounting policies
set out in the Company's Annual Report and Financial Statements at 30 April 2018.
Going Concern
Having considered the Company's principal risks and uncertainties, as set out in note 11 below,
together with its current position, investment objective and policy, the level of demand for
the Company's shares, the nature of its assets, its liabilities and projected income and expenditure,
it is the Directors' opinion that the Company has adequate resources to continue in operational
existence for the foreseeable future. The vast majority of the Company's investments are readily
realisable and can be sold to meet its liabilities as they fall due. Accordingly, the Directors
consider it appropriate to adopt the going concern basis of accounting in preparing these
Financial Statements and confirm that they are not aware of any material uncertainties which
may affect the Company's ability to continue to do so over a period of at least twelve months
from the date of approval of these Financial Statements.
2. The financial information contained within this Interim Financial Report does not constitute
statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial
information for the year ended 30 April 2018 has been extracted from the statutory accounts
which have been filed with the Registrar of Companies. The Auditor's Report on those accounts
was unqualified, did not include a reference to any matters to which the Auditor drew attention
by way of emphasis without qualifying its report, and did not contain statements under sections
498 (2) or (3) of the Companies Act 2006.
3. (Losses)/gains on investments Six months to Six months to Year to
31 October 31 October 30 April 2018
2018 2017 (audited)
GBP'000 GBP'000 GBP'000
========================================================== =============== ============== ================
Realised gains/(losses) on sales 71,810 42,395 96,901
Movement in investment holding gains and (losses) (90,535) 143,535 114,398
============================================================== =============== ============== ================
(18,725) 185,930 211,299
============================================================== =============== ============== ================
Transaction costs on purchases amounted to GBP315,000 (31 October 2017 - GBP132,000; 30 April
2018 - GBP258,000) and transaction costs on sales amounted to GBP154,000 (31 October 2017
- GBP55,000; 30 April 2018 - GBP166,000).
=================================================================================================================
4. Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been
appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary.
The investment management function has been delegated to Baillie Gifford & Co. The management
agreement can be terminated on six months' notice. With effect from 1 May 2018, the annual
management fee is 0.45% on the first GBP750 million of total assets, 0.33% on the next GBP1
billion of total assets and 0.30% on the remaining total assets, where total assets is defined
as the total value of all assets held less all liabilities (other than any liability in the
form of debt intended for investment purposes). In the year to 30 April 2018 the annual management
fee was 0.45% on the first GBP750 million of total assets and 0.33% on the remaining total
assets and prior to that was 0.45% of total assets less current liabilities.
=============================================================================================================
Notes to the condensed financial statements (unaudited) (Ctd)
=============================================================
1.
1.
5.
5.
5.
5.
5.
5. Net return per ordinary share Six months to Six months to Year to
31 October 31 October 30 April 2018
2018 2017 (audited)
GBP'000 GBP'000 GBP'000
============================================== ============== ======================= ==============
Revenue return on ordinary activities after
taxation 5,513 3,787 5,588
Capital return on ordinary activities after
taxation (23,235) 187,104 214,515
================================================== ============== ======================= ==============
Total net return (17,722) 190,891 220,103
================================================== ============== ======================= ==============
Net return per ordinary share is based on the above totals of revenue and capital and on 217,580,408
(31 October 2017 - 213,963,859; 30 April 2018 - 214,344,215) ordinary shares, being the weighted
average number of ordinary shares in issue during the period.
There are no dilutive or potentially dilutive shares in issue.
=======================================================================================================
6. Dividends Year to
Six months to Six months to 30 April
31 October 31 October 2018
2018 2017 (audited)
GBP'000 GBP'000 GBP'000
============================================== ============== ======================= ==============
Amounts recognised as distributions in the
period:
Previous year's final dividend of 1.40p (2017 -
1.25p), paid 7 September 2018 3,047 2,675 2,675
Amounts paid and payable in respect of the
period:
Final Dividend (2018 - 1.40p) - - 3,040
No interim dividend has been declared in respect of the current period.
7. Fair Value Hierarchy
The Company's investments are financial assets held at fair value through profit or loss.
The fair value hierarchy used to analyse the basis on which the fair values of such financial
instruments are measured is described below. Fair value measurements are categorised on the
basis of the lowest level input that is significant to the fair value measurement.
Level 1 - using unadjusted quoted prices for identical instruments in an active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that are directly
or indirectly observable (based
on market data); and
Level 3 - using inputs that are unobservable (for which market data is unavailable).
An analysis of the Company's financial asset investments based on the fair value hierarchy
described above is shown below. During the period, an investment with a book cost of GBP6,274,000
was transferred from Level 2 to Level 1 following the resumption of trading in its shares,
which had been temporarily suspended due to an impending corporate action.
As at 31 October 2018 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
============================================== ============== ======== ============= ==============
Listed equities 1,724,691 - - 1,724,691
Unlisted equities - - 24,488 24,488
Total financial asset investments 1,724,691 - 24,488 1,749,179
================================================== ============== ======== ============= ==============
Notes to the condensed financial statements (unaudited) (Ctd)
=============================================================
5.
5.
5.
1.
1.
5.
As at 30 April 2018 (audited) Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------------- --------- --------- --------------
Listed equities 1,693,072 23,190 - 1,716,262
Unlisted equities - - 14,251 14,251
Total financial asset investments 1,693,072 23,190 14,251 1,730,513
-------------------------------------------------- ------------------- --------- --------- --------------
The fair value of listed investments is either bid price or last traded price depending on
the convention of the exchange on which the investment is listed. Listed investments are categorised
as Level 1 if they are valued using unadjusted quoted prices for identical instruments in
an active market and as Level 2 if they do not meet all these criteria but are, nonetheless,
valued using market data. Unlisted investments are valued at fair value by the Directors following
a detailed review and appropriate challenge of the valuations proposed by the Managers. The
Managers' unlisted investment policy applies methodologies consistent with the International
Private Equity and Venture Capital Valuation guidelines ('IPEV'). These methodologies can
be categorised as follows: (a) market approach (price of recent investment, multiples, industry
valuation benchmarks and available market prices); (b) income approach (discounted cash flows);
and (c) replacement cost approach (net assets). The Company's holdings in unlisted investments
are categorised as level 3 as unobservable data is a significant input to their fair value
measurements.
8. At 31 October 2018 the total book value of the Company's borrowings amounted to GBP117,339,000
(30 April 2018 - GBP103,007,000). This comprised a GBP40m 6 (3) /(8) % debenture stock repayable
in 2023 (30 April 2018 - GBP40m) and a short term bank loan of US$99m (30 April 2018 - US$87m).
The fair value of borrowings at 31 October 2018 was GBP123,680,000 (30 April 2018 - GBP111,365,000).
9. Shareholders' Funds and Net Asset Value
Shareholders' funds have been calculated in accordance with the provisions of FRS 104. However,
the net asset value figures in the table below have been calculated on the basis of shareholders'
rights to reserves as specified in the Company's Articles of Association. A reconciliation
of the two figures is as follows:
At 30 April 2018
At 31 October 2018 (audited)
=============================================
GBP'000 Per share GBP'000 Per share
============================================= =================== ========= ========= ==============
Shareholders' funds 1,641,458 753.6p 1,656,534 762.9p
Balance of debenture issue expenses not yet
amortised (141) (0.1p) (158) (0.1p)
========= =========
Net asset value (after deducting borrowings at
par) 1,641,317 753.5p 1,656,376 762.8p
================================================== =================== ========= ========= ==============
The per share figures above are based on 217,818,859 (30 April 2018 - 217,143,859) ordinary
shares of 5p, being the number of ordinary shares in issue at the period end.
10. In the six months to 31 October 2018 the Company issued 675,000 ordinary shares (nominal value
of GBP33,750) at a premium to net asset value, raising net proceeds of GBP5,693,000. No shares
were bought back during the period and no shares were held in treasury at 31 October 2018.
At 31 October 2018, the Company had authority to buy back 32,564,854 shares and to allot or
sell from treasury 17,541,380 shares.
11. Related Party Transactions
There have been no transactions with related parties during the first six months of the current
financial year that have materially affected the financial position or the performance of
the Company during that period and there have been no changes in the related party transactions
described in the last Annual Report and Financial Statements that could have had such an effect
on the Company during that period.
12. Principal Risks and Uncertainties
The principal risks facing the Company, which have not changed since the date of the Company's
Annual Report and Financial Statements for the year ended 30 April 2018, are financial risk,
investment strategy risk, regulatory risk, custody and depositary risk, operational risk,
discount risk, political risk and leverage risk. An explanation of these risks and how they
are managed is set out on pages 16 and 17 of that report, which is available on the Company's
website: www.monksinvestmenttrust.co.uk.++
None of the views expressed in this document should be construed as advice to buy or sell a particular investment.
The printed version of the Interim Financial Report will be sent to shareholders and will be available on the Monks' page of the Managers' website www.monksinvestmenttrust.co.uk ++ on or around 17 December 2018.
++ Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.
Glossary of Terms =================
Total Assets
The total value of all assets held less all liabilities (other than liabilities in the form of borrowings).
Shareholders' Funds and Net Asset Value
Shareholders' Funds is the value of all assets held less all liabilities, with borrowings deducted at book cost. Net Asset Value (NAV) is the value of all assets held less all liabilities, with borrowings deducted at either fair value or par value as described below. Per share amounts are calculated by dividing the relevant figure by the number of ordinary shares in issue.
Borrowings at Fair Value
Borrowings are valued at an estimate of their market worth. The fair value of the Company's 6 (3) /(8) % debenture stock 2023 is based on the closing market offer price on the London Stock Exchange. The fair value of the Company's short term bank borrowings is equivalent to its book value.
Borrowings at Par Value
Borrowings are valued at nominal par value.
Discount/Premium
As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.
Net Liquid Assets
Net liquid assets comprise current assets less current liabilities (excluding borrowings).
Total Return
The total return is the return to shareholders after reinvesting the dividend on the date that the share price goes ex-dividend.
Ongoing Charges
The total expenses (excluding borrowing costs) incurred by the Company as a percentage of the average net asset value (with debt at fair value).
Active Share
Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.
Gearing
At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the sensitivity of the value of the portfolio to changes in the level of markets.
Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.
Invested gearing is the Company's borrowings at par less cash and cash equivalents expressed as a percentage of shareholders' funds.
Automatic Exchange of Information =================================
In order to fulfil its obligations under UK tax legislation relating to the automatic exchange of information, the Company is required to collect and report certain information about certain shareholders.
The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, the Company will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities.
Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.
For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders https://www.gov.uk/government/publications/exchange-of-information-account-holders.
Third party data provider disclaimer ====================================
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No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.
No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.
Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgments, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.
FTSE Index data ===============
FTSE International Limited ('FTSE') (c) FTSE 2017. 'FTSE(R) ' is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.
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END
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