Final Results

RNS Number : 9468E

Monks Investment Trust PLC

08 June 2012

 



Press Release

The Monks Investment Trust PLC

In the year to 30 April 2012 Monks net asset value total return per share (including capital and income) was minus 4.5% and the share price total return was minus 6.2%. On the same basis the FTSE World Index in sterling terms returned minus 2.6%.

Over 5 years Monks net asset value total return was 19.8%, the share price total return was 20.4% and the FTSE All World Index returned 18.6%.

¾ During the period the external environment was difficult and it was frustrating that, while steps had been taken to mitigate some of the problems that materialised, there were unexpected knock-on effects in places far from the epicentre of events.

¾ Earnings per share were 5.35p compared to 4.06p last year and a final dividend for the year of 3.45p is proposed (2.50p in the previous year), making the total dividend for the year 3.95p (3.00p in the previous year). 

¾ Companies outside the financial sector are generally enjoying high levels of profitability and balance sheets are strong but the financial system is far from healthy in some major economies where there are unsustainable public debt burdens and budget deficits.

¾ Notwithstanding the attraction of many individual investment opportunities, significant risks remain of a systemic nature. This is reflected in the lack of gearing and a desire to maintain some protection against a significant fall in markets.

7  June 2012

The Monks Investment Trust PLC invests internationally in order to achieve capital growth, which takes priority over income and dividends. Monks is managed by Baillie Gifford & Co, the independent Edinburgh based fund management group with around £74 billion under management and advice as at 7 June 2012.

Past performance is not a guide to future performance. Monks is listed on the stock market. As a result, the value of the shares, and any income from them, can fall as well as rise and investors may not get back the amount invested.  As Monks invests in overseas securities, changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up. As the aim of Monks is to achieve capital growth you should not expect a significant, or steady, annual income from the shares.  Investment Trusts are UK public listed companies and are not authorised or regulated by the Financial Services Authority.

For further information please contact:

James Budden, Baillie Gifford & Co  

Tel: [phone] or 07507 201208

Roland Cross, Director, Broadgate Mainland

Tel: [phone] or 07831 401309

Chairman's Statement

Performance

The year to 30 April 2012 was a difficult and frustrating one: difficult because of the external environment and frustrating because, while we anticipated some of the problems that materialised, and took steps to mitigate their impact, we suffered from unexpected knock-on effects in places far from the epicentre of events. The net asset value total return, with borrowings at fair value, was minus 4.5% and the share price total return was minus 6.2% while the FTSE World Index in sterling terms returned minus 2.6%. For both our portfolio and the markets in which we invest the second half of the year was better than the first. For the first half of the year the net asset value total return was minus 9.9% and the share price total return was minus 9.8% while the comparative index returned minus 8.8%. For the second half the net asset value total return was 6.0%, the share price total return was 4.0% and the index returned 6.8%. The share price ended the Company's year at 338.5p, 7.0% lower than at the end of the previous year.  Over the five years to 30 April 2012 the net asset value total return was 19.8% and the share price total return was 20.4% while the comparative index returned 18.6%.

There were a number of notable events during the Company's year. These included political stalemate in the United States that inhibited progress on resolving that country's structural budget deficit and at one point threatened a default of the US government, a disruption to oil supplies as a result of events in Libya and the continuation of the crisis in the eurozone. It is tempting to attribute the weakness of markets to these developments, but there were quite a number of equally dramatic events, including the Japanese earthquake, tsunami and nuclear accident which disrupted industrial production around the world, in the previous twelve months, and despite this most markets rose during that period.

Monetary policy changes may explain the different response of markets to events. The ending of the second round of quantitative easing by the US Federal Reserve was followed shortly by a sharp fall in markets as the European crisis entered a new phase and the global financial system once again tottered as European banks found it hard to secure funding. Markets then stabilised and recovered some of the lost ground following the decision of the European Central Bank to offer unlimited amounts of low cost three year funding to European banks.

For sterling based investors the US equity market produced the best returns of the major markets helped by the strength of company profits, the safe haven status of the US dollar and some signs of improvement in the performance of the American economy. Unsurprisingly, most European markets fared less well. For example, the Greek market more than halved in value and there were also large falls in Italy and Spain. Many emerging markets also suffered from the withdrawal of European bank funding and the negative impact of this on their currencies. The Brazilian currency was particularly adversely affected, depreciating by nearly 15% against sterling over the year.

The Managers' Report contains more detail on the individual investments that made the greatest positive and negative contributions to performance. Of particular note are the positive contribution made by IP Group and the negative contribution made by our holdings of gold miners. The difference between the net asset value total return and that of the comparative index over the year arises largely from a lower contribution to total return from the re-investment of income. Another way of looking at this is that our portfolio did not generate sufficiently superior capital performance to offset the lower level of income generated when compared to the FTSE World Index. Our relatively high exposure to Emerging Markets and relatively low exposure to the United States contributed to this outcome.

Earnings and Dividend

Earnings per share were 5.35p compared with 4.06p last year, an increase of 31.8%. The most significant factors behind this increase were a rise in dividend income and a modest fall in total expenses. Monks invests with the aim of achieving capital growth rather than income and all costs are charged to the Revenue Account.

The Board is recommending a final dividend of 3.45p, which together with the interim (0.50p) already paid, would make the total dividend for the year 3.95p, an increase of 31.7% from the 3.00p paid last year.

Long Term Borrowing

The 11% debenture stock matured on 1 June 2012 and has been repaid. This has reduced long term borrowing since the Company's year end by £40m. It was partly in anticipation of the maturity of this debenture and partly in recognition of the low level of current interest rates in an historical context that we took out additional borrowings of £80m during the previous two years. There have been no additional borrowings since then.

Investment Activity

Over the course of the year there was a small net disinvestment of £1.2m, comprising a net investment of £11.0m in equities and net sales of £12.2m of bonds. There were net purchases of equities in North America, United Kingdom and Japan and net sales elsewhere, notably in Emerging Markets.

The level of gearing is managed in various ways, including through the sale of futures and the purchase of options. This is less costly than buying and selling individual shares. In early July gearing was reduced by the sale of equity index futures. At the same time potential losses on these futures positions were capped by the purchase of call options. The purpose of these transactions was to provide some protection against a big fall in markets. The indices chosen in July were those measuring the US, eurozone and UK markets. In February the position in US futures was closed and replaced with positions in indices covering the Brazilian market and Chinese shares listed in Hong Kong in order to achieve a better match between the distribution of our investments and the hedge. This hedging has had the effect of reducing the magnitude of the decline in net asset value during periods of general market weakness.

At the year end holdings of equities amounted to 104.6% of shareholders' funds and holdings of equities and bonds together to 112.0% but when the effects of holding options and selling futures are taken into account the effective gearing was equivalent to 93% of shareholders' funds.

Discount and Buybacks

The discount (at fair value) widened to 11.6% from 9.9% over the course of the year. The Board considers the level of discount and has authorised the repurchase of shares when this will be of benefit to continuing shareholders as well as being in the interest of those shareholders who may need to sell some or all of their shares.

During the year to 30 April 2012 £15.3m was spent on the repurchase of 4,640,000 shares. Since the power to buy back shares was first granted in 1999, 131.8m shares have been bought back and cancelled, representing 34% of the share capital at the start of that period. The Board will continue to buy back shares if suitable opportunities appear.

Outlook

Companies are generally enjoying high levels of profitability and balance sheets are strong. Interest rates are low and expected to stay low for the foreseeable future. Overall growth in the global economy is reasonable and technological breakthroughs such as the unlocking of gas and oil from shale prove that innovation can overcome supposed limitations to growth. If current levels of profitability can be sustained, shares in most markets around the world look reasonably valued, especially when compared to the prospective returns from government bonds. Corporate bonds are also priced to offer a decent premium over government bonds and cash. If we could end the list of factors likely to affect future investment returns here the outlook would appear rosy.

Unfortunately, the mirror image of the healthy corporate balance sheets can be found in the form of unsustainable public debt burdens and budget deficits not only in Europe and the United Kingdom but also in the United States. The financial system is also far from healthy in these major economies and, as we saw both in 2008 and on a smaller scale in 2011, problems in one part of the world economy tend to be rapidly transmitted through the global banking system with adverse effects even on those countries with more robust public finances, low levels of household debt and high sustainable growth rates.

By printing money and engaging in a range of unconventional policies, central banks have bought time for other participants to put their houses in order. Companies operating outside the financial sector seem to have generally used this breathing space well but many banks remain undercapitalised and overleveraged. It is far from clear that politicians will instigate necessary but unpopular reforms in Europe, Japan or the United States and, even if they do, that the public at large will accept them. So, notwithstanding the attractions of many individual investment opportunities, significant risks remain of a systemic nature. This is reflected in our lack of gearing and desire to maintain some protection against a significant fall in markets rather than in the selection of individual investments, where the focus remains on potential returns rather than perceived defensive characteristics. There is sufficient excitement in our portfolio of investments without adding gearing.

AGM

I hope shareholders will come to the Annual General Meeting, which will be held on 7 August 2012 at 11.00am at the Hotel Russell. Our manager will give a short presentation and there will be an opportunity to ask questions.

James Ferguson

Chairman

Past performance is not a guide to future performance.

Managers' Portfolio Review

This year we have slightly altered the way in which we present information about the geographical distribution of assets, grouping together Asian Emerging Markets with other Emerging Markets instead of with the developed markets of the Asia Pacific region excluding Japan as in previous years. We hope this gives a clear picture of exposure of the portfolio to Emerging and Developed Markets. In terms of changes made over the year there was a net reduction in our exposure to Emerging Markets as sales of equities in these countries exceeded purchases and there were also reductions in Europe and Developed Asia (including Australia). These net sales were more than offset by net purchases of equities in North America, the United Kingdom and Japan. Our already small position in bonds was reduced, mainly as a result of profit taking in our holding of the Athena Debt Opportunities Fund.

In early July 2011 we decided to hedge part of the portfolio against the rising risk of a sharp fall in markets owing to the unhealthy combination of mounting concerns about the ability of Europe's politicians to find a solution to the crisis in the eurozone, deadlock in the US Congress over the issuance of debt and the ending of support for the markets from quantitative easing in America. We did this through sales of futures contracts based on the S&P 500, FTSE 100 and Eurostoxx 50 indices, representing the US, UK and European markets respectively, in order to provide a proxy for shares in general around the world and at the same time protected ourselves against the possibility of a large rise in markets by purchasing call options on the same indices. This strategy proved effective in July and August when markets around the world suffered large declines but it did have the by-product of reducing our already relatively small effective exposure to the US further and it was not a perfect match for our portfolio as it did not include any Emerging Market indices in the hedge. For this reason we adjusted the position in February 2012 by closing the S&P 500 futures and options and replacing them with corresponding positions on the Brazilian Bovespa Index and the Hang Seng China Enterprises Index, an index made up from Chinese companies listed in Hong Kong. The hedge provides some mitigation of losses in the event of market falls at a modest cost in terms of potential upside forgone. Had it not been in place the net asset value per share would have been 1.2% lower at the year end.

A less successful strategy was our addition to holdings of shares of gold mining companies made in September and October 2011. The gold price had been rising up to that point but the shares of gold miners had not followed suit - with funds flowing instead into exchange traded funds. We took the view that the divergence between the growing profits and cash flow of the miners and their falling share prices would ultimately be corrected as it was cheaper to buy gold reserves in the stock market than to explore for them on the ground. Instead the gap has widened as the prices of a number of the shares we bought in September have subsequently greatly underperformed the falling price of bullion.

Performance was also adversely affected by the weakness of a number of Emerging Market currencies, notably the Brazilian real, following the withdrawal of European banks from their previous role as recyclers of global savings into Emerging Markets. On a more positive note a number of our holdings produced excellent results during the year while the set-backs for Emerging Markets are likely to prove temporary given their lower levels of debt and superior growth prospects.

The ten largest positive and negative individual stock contributors to performance are described below. In aggregate the top ten positive contributions outweighed the top ten negative contributions even though for the portfolio as a whole the balance was tilted in the other direction. Two of the largest positive contributors to performance, Aggreko and Seadrill, were also in the top ten positive contributors last year. One of this year's largest negative contributors, Renhe, was also on the list of largest negative contributors for the previous year and another of the largest negative contributors, Digital Garage, was on the list of last year's largest positive contributors.

Largest positive contributions to performance:

IP Group is a venture fund listed on the London Stock Exchange. It has partnerships with departments of twelve leading United Kingdom universities to commercialise discoveries made by their researchers. A notable recent success has been Oxford Nanopore, a currently unlisted company that has developed a highly promising new approach to the analysis of DNA that should dramatically reduce the cost of gene sequencing. The share price has reacted favourably to announcements made by Oxford Nanopore but we believe that it still represents excellent value given the potential of both Oxford Nanopore and its broader portfolio of investments.

Seadrill is the owner of one of the world's largest fleets of deepwater drilling rigs and vessels and has more of the most modern types of equipment than any other company. Seadrill has benefited from the global trend towards drilling for oil and gas in ever deeper water and more difficult environments as sources of more accessible oil are exhausted. It has also benefited from the greater focus on safety following the Gulf of Mexico disaster as oil companies have been willing to pay more to use the most modern rigs.

Aggreko is a leading electrical generator and cooling equipment rental company. It operates in more than 100 countries around the world and supplies temporary power generating equipment to a wide range of different customers including utility companies and organisers of sporting events. In aggregate, demand for temporary generating equipment displays reasonably steady growth but it is irregular at the level of individual customers and locations. Aggreko's great skill has been in managing its inventory of equipment, predicting changes in demand ahead of time and responding flexibly to unexpected events. As a result it has exceeded expectations for sales and earnings for several years in succession.

O'Reilly Automotive sells car parts, tools and accessories through a network of stores throughout the United States. Demand for replacement parts and tools from both professional mechanics and owners who carry out their own repairs is closely related to the average age of cars and this has been rising. Competition from franchised dealers has also diminished following the pruning of sales networks in the wake of the 2008 financial crisis and the company has also successfully integrated an earlier acquisition in California.

TJX sells discounted clothing and home furnishings. It includes the T.K.Maxx and HomeSense chains in Europe as well as T.J.Maxx, Marshalls and HomeGoods in the United States. Its offering of discontinued designer label products appeals to cost conscious shoppers and it has been able to expand during what has been a difficult time for many other retailers.

Samsung Electronics is well-known as one of the world's leading consumer electronics companies but it is also the world's largest manufacturer of some of the most important types of computer memory chips and a significant manufacturer of microprocessor logic chips. It is a key supplier to Apple as well as a competitor to it in mobile phones and tablets. Its significant investment in research and development, manufacturing capacity and brand advertising make it a formidable competitor and should help to keep it at the forefront of developments in the industry.

The Biotech Growth Trust is an investment trust that invests in emerging biotechnology companies, most of which are listed in the United States. The biotechnology sector returned to favour following a period of poor performance triggered by a combination of the confounding of previous unrealistic expectations and concerns about the impact of healthcare reforms in the United States. The development of new tools and techniques and greater understanding of the genetic basis of many disorders suggest that the best period for biotechnology companies may be ahead of us rather than in the past and valuations are now much more reasonable than during earlier periods of hype and excessive valuations. We also own a number of direct holdings in this area.

Credicorp is a Peruvian financial conglomerate. It owns the largest Peruvian bank, Banco de Credito del Peru. It also has insurance and brokerage businesses in Peru and has recently announced an acquisition that will expand its operations into Chile. It can trace its origins back to 1889 and has a reputation as a well managed and prudent institution. We see considerable potential for loan growth in Peru and we used the opportunity provided by the election of a radical president to take a holding at a depressed price. Post the election the business environment proved to be more favourable than many feared and the share price rose.

EOG Resources is an oil and gas company that pioneered the production of gas from shale formations using the techniques of horizontal drilling and hydraulic fracturing ("fracking") in the United States. Since then it has successfully applied the same approach to the production of oil from similar shale formations and its production of oil has been rising rapidly. We had sold out of EOG Resources several years ago as it and others had been so successful in developing new gas fields in the United States that the gas price was in danger of collapsing. We bought it back in October 2011 when the share price fell back sharply to its 2005 level despite a significant increase in its reserves. The shares were subsequently sold at a higher price.

Quanta Computer is the world's largest manufacturer of notebook, or laptop, computers. It makes notebooks for many leading brands, including Apple. The notebook market has suffered from the explosive growth of tablet computers, notably Apple's iPad, which is not made by Quanta. Concerns about the decline of the notebook business created an attractive opportunity for us to take a holding in a well run and adaptable Taiwanese company that has been developing new products rather than standing still in the face of this development. It has established a strong position in bespoke servers for use in cloud computing applications and also now manufactures Amazon's Kindle tablet. Its notebook sales are also proving more resilient than many had feared and these factors contributed to a rise in the share price.

Largest negative contributors to performance:

Sino-Forest is a Chinese forestry company listed in Canada. The shares collapsed in value following a report from a short seller that publishes reports under the name Muddy Waters. The specific allegations in the initial Muddy Waters report related to overstatement of the value of the company's forestry assets in China and irregularities in its relationships with intermediaries, but did not back up the headline claims that the entire company was a fraud. An investigation ordered by the company's independent directors failed to get to the bottom of the murky world of forestry rights and transfers in China and establish the truth of the matter. This in turn led to the company being unable to file accounts on time and so breaching covenants on its bonds. The shares have been suspended from trading and the value of the holding has been written off in its entirety as it is unlikely that the equity holders will receive anything in a liquidation involving the fire sale of assets.

Research in Motion is the maker of the Blackberry smart phones popular with both Chief Executives and urban rioters. It has been losing market share to Apple's iPhone and Android based smart phones produced by companies such as Samsung Electronics in North America but it has continued to grow rapidly in many other markets, including some of the most populous and rapidly growing countries of the world. Our investment case was premised on this growth outside North America and the United Kingdom continuing to be driven by a combination of network effects from the Blackberry messenger system, superior battery life and reception and low handset cost in markets where these are not subsidised by network operators. The company seems to have badly misjudged the introduction of a new operating system and failed to introduce features to attract and retain customers in a world dominated by Apple and Android. The shares were sold during the year.

Aixtron is a German manufacturer of equipment which is mainly used to make light emitting diodes (LEDs). LEDs are used in a variety of products but the most important are televisions, computer displays and low-energy lighting. Demand for low-energy lighting in particular should result in a demand for a large amount of new LED manufacturing capacity. China has ambitious plans to introduce low-energy lighting and this resulted in a big rise in demand for Aixtron. This came to a sudden stop when it became clear that Chinese buyers had more machines than they had trained operators and progress in other markets has been limited by the high cost of low energy bulbs. While these are likely to be temporary factors, as changes are driven by legislation, we are concerned that the management has blamed all of the shortfall in demand on these factors while it appears that competition is also a factor, both from their main established competitor and from potential new entrants. As a result we sold the holding.

Digital Garage is a Japanese internet incubator company. Its main assets are cash and quoted investments, including a large stake in Japan's leading price comparison website, plus stakes in Twitter Japan and Twitter Inc, the US unquoted parent company. The share price is influenced by changing perceptions of the value of the stake in Twitter and tends to be somewhat volatile. In the previous year it was one of the largest positive contributors to performance but it reversed almost all of those gains for a sterling investor in the last year, not helped by raising capital without giving a convincing reason. It remains a holding.

Dart Energy is an Australian oil and gas company that extracts gas from coal seams. It was spun out of Arrow Energy when this was taken over by Shell and Petrochina and had been for a while a successful investment. They have possibly over expanded by acquiring coal bed methane assets in countries with widely differing regulatory regimes thus stretching management resources and their operations in China have been disappointing. The final straw was a change in the regulatory environment in Australia that will raise costs substantially and at that point we sold the holding.

Eldorado Gold is a Canadian gold mining company with operations in a number of countries the most important of which are in China and Turkey. In common with our other gold mining holdings, it has massively underperformed the price of gold, failing to rise with it to its record high in September 2011 and then falling by far more than the price of gold in the subsequent correction. The size of the holding increased when it acquired one of our other gold mining holdings, European Goldfields, largely for shares and has been reduced since the year end.

Samsung Heavy Industries is a leading Korean shipbuilder with a particularly strong position in sophisticated drill ships needed for oil exploration in extremely deep water. It is also one of the leading producers of very large container ships. Demand in both of these segments has been strong, in line with our investment case, but management fear that their competitive advantages are eroding rapidly and this is leading to questionable attempts to diversify the business.  The holding was sold during the year.

Renhe develops and operates underground shopping centres in Chinese cities. It has a unique business model that involves building defence shelters that double up as shopping malls. This enables Chinese cities to fulfil government requirements for bomb shelters while giving Renhe prime sites for only the cost of construction. The company sells the units in these centres to wealthy private investors who are attracted to the rental yields available and this provides financing for further expansion. These investors are feeling the effects of the slowdown in the Chinese property market and some of them are finding it difficult to pay for their purchases. Renhe guarantees the loans made to purchase the units and there is a risk of downward spiral which could threaten the viability of the company. We therefore sold the holding.

IAM Gold is a Canadian gold mining company with assets in a number of regions including West Africa and the Americas. In addition to experiencing the same underperformance of the gold price exhibited by our other gold mining holdings it has also fallen short of expectations operationally and has indicated that it is looking to make a major acquisition. In the light of these operational failings and questionable strategy the holding was sold.

Jain Irrigation Systems is an Indian company that sells micro-irrigation systems to the country's farmers. Indian agriculture is very inefficient, farmers can make significant productivity gains by installing micro-irrigation systems and there are government subsidies to encourage its adoption. Jain has found it necessary to provide credit to its customers as subsidies are slow in coming and the benefits to farmers' cash flow only materialise at the time of the next harvest. This has created a working capital problem for the company. The bulk of the holding had been sold at the year end leaving only an insignificant rump.

Gerald Smith

Baillie Gifford & Co

Distribution of Assets (unaudited)

At 30 April 2012

		At 30 April 2012		At 30 April 2011
		Total Assets %	Effective Exposure* %	Total Assets %	Effective Exposure* %
Equities:	North America	21.2	25.4	17.4	14.5
	United Kingdom	24.6	21.6	16.6	13.5
	Emerging Markets	23.1	19.2	31.5	32.4
	Developed Asia	1.5	1.8	3.0	3.0
	Continental Europe	13.4	8.8	16.3	13.1
	Japan	6.4	11.4	5.3	13.4
		90.2	88.2	90.1	89.9
Bonds		6.3	7.6	7.7	7.8
Net liquid assets		3.5	4.2	2.2	2.3
		100.0	100.0	100.0	100.0

*        The effective exposure takes into account the exposure of derivative holdings which may differ substantially from their market value. The Trust’s derivative holdings include sales of index futures and purchases of index call options.

Thirty largest equity holdings (unaudited)

Name	Region	Business	2012 Value £'000		2012% of total assets	2011 Value £'000
IP Group	United Kingdom	Venture fund	34,741	3.0		-
Aggreko	United Kingdom	Temporary power units	31,849	2.8		30,298
Seadrill	Continental Europe	Contract drilling services	29,597	2.6		33,461
Eldorado Gold	North America	Gold mining	22,916	2.0		17,316
Odontoprev	Emerging Markets	Health care providers and services	18,935	1.6		18,337
Samsung Electronics	Emerging Markets	Electronic goods	17,492	1.5		-
Petrofac	United Kingdom	Oilfield services company	16,528	1.4		17,480
The Biotech Growth Trust	United Kingdom	Investment trust	16,181	1.4		11,195
Quanta Computer	Emerging Markets	Electronic equipment	15,517	1.4		7,298
Mercadolibre	Emerging Markets	Online trading	15,463	1.3		5,386
TJX	North America	Clothing store	15,360	1.3		9,608
McDonald's	North America	Fast food restaurants	15,117	1.3		12,722
O'Reilly Automotive	North America	Auto parts supplier	15,086	1.3		9,043
Credicorp	Emerging Markets	Banking	15,078	1.3		10,826
Naspers	Emerging Markets	Media company	14,696	1.3		14,211
BIM Birlesik Magazalar	Emerging Markets	Discount food and consumer goods	14,346	1.2		11,645
MMX	Emerging Markets	Port royalties	14,290	1.2		-
Dragon Oil	Emerging Markets	Oil and gas exploration and production	13,905	1.2		15,495
Genus	United Kingdom	Agricultural services	13,897	1.2		9,867
Yingde Gases Group	Emerging Markets	Industrial gases	13,589	1.2		-
Harley-Davidson	North America	Manufacture motorcycles	13,578	1.2		-
Kone	Continental Europe	Lifts	13,561	1.2		13,387
Kunlun Energy Company	Emerging Markets	Oil and gas company	13,461	1.2		13,184
National Oilwell Varco	North America	Drilling equipment manufacturer	13,460	1.2		15,958
Vale	Emerging Markets	Diversified mining group	13,397	1.2		21,014
IHS	North America	Information services	12,812	1.1		-
Seek	Developed Asia	Online recruitment	12,678	1.1		-
Drax Group	United Kingdom	Electricity	12,487	1.1		12,016
Doric Nimrod Air Two	United Kingdom	Aircraft leasing	12,480	1.1		-
YOOX	Continental Europe	Online apparel sales	12,444	1.1		7,962
			494,941	43.0		317,709

Income statement (unaudited)

The following is the unaudited preliminary statement for the year to 30 April 2012 which was approved by the Board on 7 June 2012.  The Directors of The Monks Investment Trust PLC are recommending to the Annual General Meeting of the Company to be held on 7 August 2012 the payment of a final dividend of 3.45p (2.50p  last year) per ordinary share, making a total of 3.95p (3.00p last year) per ordinary share for the year ended 30 April 2012.

	For the year ended 30 April 2012			For the year ended 30 April 2011
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
(Losses)/gains on investments	-	(61,063)	(61,063)	-	94,317	94,317
Currency (losses)/ gains	-	(890)	(890)	-	1,042	1,042
Income (note 2)	31,424	-	31,424	27,366	-	27,366
Investment management fee	(5,087)	-	(5,087)	(5,075)	-	(5,075)
Other administrative expenses	(1,013)	-	(1,013)	(1,172)	-	(1,172)
Net return before finance costs and  taxation	25,324	(61,953)	(36,629)	21,119	95,359	116,478
Finance costs of borrowings	(10,434)	-	(10,434)	(9,374)	-	(9,374)
Net return on ordinary activities before taxation	14,890	(61,953)	(47,063)	11,745	95,359	107,104
Tax on ordinary activities	(1,001)	-	(1,001)	(1,145)	-	(1,145)
Net return on ordinary activities after taxation	13,889	(61,953)	(48,064)	10,600	95,359	105,959
Net return per ordinary share (note 3)	5.35p	(23.86p)	(18.51p)	4.06p	36.56p	40.62p
Dividends paid and payable in respect of the year (note 4)	3.95p			3.00p

The total column of this statement is the profit and loss account of the Company.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

Balance sheet (unaudited)

	At 30 April 2012 £'000	At 30 April 2011 £'000
Fixed assets
Investments held at fair value through profit or loss	1,098,327	1,193,261
Current assets
Debtors	37,107	20,789
Investments held at fair value through profit or loss	10,553	-
Cash and deposits	39,519	18,912
	87,179	39,701
Creditors
Amounts falling due within one year (note 5)	(116,140)	(52,469)
Net current liabilities	(28,961)	(12,768)
Total assets less current liabilities	1,069,366	1,180,493
Creditors
Amounts falling due after more than one year (note 5)	(79,647)	(119,614)
Total net assets	989,719	1,060,879
Capital and reserves
Called up share capital	12,806	13,038
Share premium	11,100	11,100
Capital redemption reserve	6,592	6,360
Capital reserve	915,546	992,780
Revenue reserve	43,675	37,601
Shareholders' funds	989,719	1,060,879
Net asset value per ordinary share (after deducting borrowings at fair value)	382.8p	403.9p
Net asset value per ordinary share (after deducting borrowings at par)	386.3p	406.7p
Ordinary shares in issue (note 6)	256,124,859	260,764,859

Reconciliation of movements in shareholders' funds (unaudited)

For the year ended 30 April 2012

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2011	13,038	11,100	6,360	992,780	37,601	1,060,879
Net return on ordinary activities after taxation	-	-	-	(61,953)	13,889	(48,064)
Shares purchased for cancellation	(232)	-	232	(15,281)	-	(15,281)
Dividends paid during the year	-	-	-	-	(7,815)	(7,815)
Shareholders' funds at 30 April 2012	12,806	11,100	6,592	915,546	43,675	989,719

For the year ended 30 April 2011

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2010	13,051	11,100	6,347	898,228	29,610	958,336
Net return on ordinary activities after taxation	-	-	-	95,359	10,600	105,959
Shares purchased for cancellation	(13)	-	13	(807)	-	(807)
Dividends paid during the year	-	-	-	-	(2,609)	(2,609)
Shareholders' funds at 30 April 2011	13,038	11,100	6,360	992,780	37,601	1,060,879

Condensed cash flow statement (unaudited)

	Year to 30 April 2012 £'000            £'000		Year to  30 April 2011 £'000            £'000
Net cash inflow from operating activities		24,825		5,270
Servicing of finance
Interest paid	(10,498)		(9,461)
Net cash outflow from servicing of finance		(10,498)		(9,461)
Taxation
Overseas tax incurred	(972)		(1,188)
Total tax paid		(972)		(1,188)
Financial investment
Acquisitions of investments	(448,147)		(491,755)
Disposals of investments	477,577		463,417
Forward currency contracts	(1,518)		2,329
Net cash inflow/(outflow) from financial investment		27,912		(26,009)
Equity dividends paid		(7,815)		(2,609)
Net cash inflow/(outflow) before financing		33,452		(33,997)
Financing
Shares purchased for cancellation	(10,478)		(807)
Bank loans drawn	-		40,000
Net cash (outflow)/inflow from financing		(10,478)		39,193
Increase in cash		22,974		5,196
Reconciliation of net cash flow to movement in net debt
Increase in cash in the year		22,974		5,196
Translation difference		(2,367)		(733)
Net cash inflow from bank loans		-		(40,000)
Other non-cash changes		(33)		(32)
Movement in net debt in the year		20,574		(35,569)
Net debt at 1 May		(140,702)		(105,133)
Net debt at 30 April		(120,128)		(140,702)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		(36,629)		116,478
Losses/(gains) on investments		61,063		(94,317)
Currency losses/(gains)		890		(1,042)
Amortisation of fixed interest book cost		(986)		(988)
Decrease/(increase) in accrued income		398		(312)
Decrease/(increase) in debtors		175		(14,716)
(Decrease)/increase in creditors		(86)		167
Net cash inflow from operating activities		24,825		5,270

Notes to the condensed financial statements (unaudited)

 Capital return per ordinary share is based on the net capital loss for the financial year of £61,953,000 (2011 - gain of £95,359,000) and on 259,692,291 (2011 - 260,870,338) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

There are no dilutive or potentially dilutive shares in issue.

1.	The financial information within this preliminary announcement has been extracted from the unaudited financial statements for the year to 30 April 2012 which have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 30 April 2011.
2.	Income	2012 £'000				2011 £'000
	Income from investments and interest receivable	31,415				27,134
	Other income	9				232
		31,424				27,366
3.	Net Return per Ordinary Share	2012				2011
	Revenue return	5.35p				4.06p
	Capital return	(23.86p)				36.56p
	Total return	(18.51p)				40.62p
	Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £13,889,000 (2011 - £10,600,000) and on 259,692,291 (2011 - 260,870,338) ordinary shares of 5p, being the weighted average number of ordinary shares in issue during the year.
4.	Ordinary Dividends		2012	2011			2012 £'000	2011 £'000
	Amounts recognised as distributions in the year:
	Previous year's final (paid 5 August 2011)		2.50p	0.50p			6,519	1,305
	Interim  (paid 30 January 2012)		0.50p	0.50p			1,296	1,304
			3.00p	1.00p			7,815	2,609
	We also set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1158 of the Corporation Tax Act 2010 are considered.  The revenue available for distribution by way of dividend for the year is £13,889,000 (2011 - £10,600,000).

4	Ordinary Dividends (Ctd)	2012	2011	2012 £'000	2011 £'000
	Dividends paid and payable in respect of the financial year:
	Interim  (paid 30 January 2012)	0.50p	0.50p	1,296	1,304
	Proposed final (payable 13 August 2012)	3.45p	2.50p	8,836	6,519
		3.95p	3.00p	10,132	7,823
	If approved the recommended final dividend will be paid on 13 August 2012 to shareholders on the register at the close of business on 13 July 2012.  The ex-dividend date is 11 July 2012. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for elections for this dividend is 23 July 2012.
5.	At 30 April 2012, the Company's bank loans comprised a £40m loan drawn down under a one year floating rate loan facility and a £40m three year fixed rate loan repayable in February 2014. The Company's debentures comprise a £40m 11% stock, repaid on 1 June 2012, and a £40m 6 3/8% stock repayable in 2023. The fair value of borrowings at 30 April 2012 was £168.9m (30 April 2011 - £167.2m).
6.	In the year to 30 April 2012 the Company bought back 4,640,000 ordinary shares with a nominal value of £232,000 at a total cost of £15,281,000. At 30 April 2012 the Company had authority to buy back a further 34,448,652 ordinary shares, being 13.4% of the shares in issue at the year end.
7.	The Report and Accounts will be available on the Managers' website www.monksinvestmenttrust.co.uk‡ on or around 28 June 2012.
8.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 April 2012.  The financial information for 2011 is derived from the statutory accounts for 2011 which have been delivered to the Registrar of Companies.  The Auditors have reported on the 2011 accounts; their report was unqualified and it did not contain a statement under section 498(2) or (3) of the Companies Act 2006.  The statutory accounts for 2012 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
9.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

‡      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.

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