Final Results

RNS Number : 3052J

Monks Investment Trust PLC

11 June 2014

 



RNS Announcement: Preliminary Results

The Monks Investment Trust PLC

Results for the year to 30 April 2014

¾ Net asset value total return (capital and income) was 5.2% and the share price total return was 5.4%.  The comparative index total return was 6.8%. 

¾ A final dividend of 3.45p makes for an unchanged total dividend of 3.95p (3.95p).

¾ Performance in the first half was better than in the second half when there were some extreme share price moves in the last two months. Net asset value per share reached a record month-end high in February. 

¾ Monks has a distinctive style - opportunistic growth. Whilst potentially volatile over shorter time periods, the Managers believe this approach offers the greatest prospect of superior long term returns.

11 June 2014

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 £108 billion under management and advice as at 9 June 2014.

Past performance is not a guide to future performance. Monks is listed on the London Stock Exchange. 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.  Monks is a UK public listed company and as such complies with the requirements of the UK Listing Authority. It 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^‡

‡    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.

For further information please contact:

James Budden, Baillie Gifford & Co

Tel: [phone] or 07507 201208

Roland Cross, Director, Broadgate Mainland

Tel: [phone] 

Chairman's Statement

Performance

In the year to 30 April 2014 the net asset value total return, with borrowings at fair value, was 5.2% and the share price total return was 5.4%. Over the same period the total return for the FTSE World Index was 6.8%. During the second half of the Company's year the net asset value per share reached a record month-end high at the end of February 2014 but performance deteriorated from this point as growth stocks suffered a setback. Performance was well ahead of the comparative index until the last two months of the Company's year.

Last year the Board and the Managers undertook a thorough review of the causes of performance in recent years and actions were taken to address these, including the strengthening of the team managing the portfolio with the appointment of Tom Walsh as Deputy Manager alongside Gerald Smith. The success of these steps cannot be evaluated over a period as short as a year, given the Company's objective of capital appreciation over the long term, but there have been encouraging signs of an improvement in trend, notwithstanding the influence of some extreme share price moves in the last two months of the period.

The Managers' Portfolio Review below contains more detail on the individual investments that made the greatest positive and negative contributions to performance as well as descriptions of the ten largest holdings.

Earnings and Dividend

Earnings per share were 4.87p compared with 4.68p, an increase of 4.1%. The increase in earnings per share was a result of the reduced number of shares in issue. Income from fixed income investments was lower than in the previous year as a result of investment changes and this more than offset an increase in dividend income from the equity holdings and a reduction in finance costs. 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, unchanged from the previous year.

Investment Activity

Over the course of the year there was a net disinvestment of £91.1m comprising £85.4m in net sales of equities and £5.7m in net sales of bonds. There were net purchases of equities in Europe and Australasia and net sales in all other regions. The proceeds of these sales were mainly used to repay debt and repurchase shares for cancellation. A £40m three year loan was repaid on maturity at the end of February.

The level of gearing is managed in various ways, including through the use of exchange-traded derivative contracts and adjustments to the level of borrowings and cash. At the start of the year the effective gearing, taking into account futures and options positions, was 1% of shareholders' funds. Effective gearing has been maintained at close to 0% throughout the year. At the end of April the remaining debt was offset by cash and a single put option position on the index of Chinese companies listed in Hong Kong resulting in year end effective gearing of -1%.

Buybacks and Discount

During the year to 30 April 2014 £44.1m was spent on the repurchase of 12.4m shares, representing 5.2% of the shares in issue at the start of the year. Since the power to buy back shares was first granted in 1999, 160m shares have been bought back and cancelled, representing 41% of the share capital at the start of that period. The Board will continue to buy back shares if suitable opportunities appear.

The discount (at fair value) of 13.0% is unchanged from the previous year end.  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.

Outlook

The period since what has become known as the Global Financial Crisis has been in many ways an abnormal one owing to the novelty of the policy responses. This has involved reducing interest rates to extremely low levels.  For example, the Bank of England's policy rate is the lowest since it was founded in 1694. It has also involved the direct intervention of central banks in financial markets through the purchase of government bonds and various forms of asset-backed securities. There have been more conventional Keynesian style attempts to stimulate demand through government spending in some countries while other countries have adopted austerity programmes in an effort to rein in explosive growth in government debt. The United States has even managed to do both, initially combining pump priming at the Federal level with severe austerity at the State and municipal level and then cutting spending at the Federal level as a result of political deadlock.

The net result of these various actions has been extremely beneficial for the holders of most forms of financial assets, including shares, government and corporate bonds and property as well as for the value of substitutes such as fine art and other collectables. The more important benefit is probably harder to see, namely what the aggressive action of central banks, and to a lesser extent governments, prevented from happening. Were it not for these various interventions we could have been tipped into a vicious downwards spiral of the sort experienced in the 1930s. This at least is the argument advanced by those responsible for decisions that have punished prudent savers depending on income from deposit accounts or forced to buy unattractive annuities in order to bail out imprudent borrowers and lenders. With some signs of a return to more normal conditions emerging in a number of countries, most notably the United States, it appears to be only a matter of time before interest rates start to revert to more normal levels and the direct intervention in financial markets comes to an end. While this may promise some relief for small savers and pensioners, it raises a question about the future direction of financial asset prices that have been boosted by the abnormal policies in place over the last five years.

With this shadow hanging over markets it does not seem prudent to borrow money to invest in equities, especially as valuations are on some measures at the upper end of historic ranges. The alternatives to equity investment, however, tend to look much worse in terms of high valuations and consequent low expected future returns. The owners of equity in companies may rank last after the lenders have been paid what is due to them, but they also get to participate in the growth of cash flows whereas lenders are currently being promised very little for the use of their money and the risk of not getting all of it back. The return to normality may be delayed by the need to combat the risk of deflation taking hold in the Eurozone and by the acceleration of asset purchases by the Bank of Japan. The US Federal Reserve and the Bank of England have also indicated that they expect to move very gradually. It is therefore difficult to make a strong case for holding a large amount of cash at present and as a result we remain more or less fully invested, but not geared, with almost all of our investments in shares.

Our portfolio is diversified across a range of different types of shares, but is biased away from the very largest companies at present. This is a time of rapid change, when traditional business models face increased risk of disruption from new entrants, often making better use of the possibilities created by the internet, and our managers believe that there are better growth prospects among the disrupters than are generally to be found among the incumbents. In the short term, the share prices of the newer entrants tend to be more volatile, making returns on an annual basis less predictable, but the long run return should be better.

AIFMD

As mentioned last year, the Company is required to comply with the EU Alternative Investment Fund Managers Directive (AIFMD). The Directive requires the Company to appoint an Alternative Investment Fund Manager (AIFM) which will be responsible for portfolio and risk management and will be regulated under the Directive. The Board has agreed to appoint Baillie Gifford & Co Limited, a wholly owned subsidiary of the Baillie Gifford & Co partnership, as the AIFM with effect from 1 July 2014. The Directive also requires the Company to appoint a Depositary and the Board has agreed to appoint Bank of New York Mellon to fulfil this function.

The Board

Mr Karl Sternberg joined the Board on 1 July 2013 and was elected at the AGM on 2 August 2013. He has brought extensive and relevant investment experience to the Board. We expect to appoint an additional director in the first half of this financial year.

AGM

I hope shareholders will come to the Annual General Meeting, which will be held on 5 August 2014 at 11.00am at the Institute of Directors. Our managers will give a short presentation and there will be an opportunity to ask questions.

James Ferguson

Chairman

10 June 2014

Past performance is not a guide to future performance.

Managers' Portfolio Review

To end the year with a total return of 5.2% compared to the 6.8% total return on the FTSE World Index was undoubtedly disappointing, especially given the position as recently as the end of February 2014 when year to date the net asset per share total return was in double digits and more than five percentage points ahead of the comparative index. Over the last two months of the year there was a sharp reversal of fortune, exaggerated by the share price volatility of a number of our holdings and the very significant differences between the portfolio and composition of the comparative index.

The short-term behaviour of markets is almost impossible to predict and frequently hard to explain. We have no better explanation for the curious movements of share prices over this period other than there was a change in sentiment towards the shares of rapidly growing companies. Over the longer term, returns depend more on the cash flows generated by the underlying businesses. We have confidence that in aggregate the businesses making up the Company's portfolio are well placed to deliver better than average growth in sales, earnings and cash flow with lower than average use of debt and that this will be reflected in returns to shareholders over the long run.

Over the course of the year our purchases and sales have altered the balance of the portfolio away from Emerging Markets and towards the United States. This has been an incremental change based on a combination of finding interesting opportunities in the American market and increasing headwinds for companies operating in a number of Emerging Markets arising from a poor mix of macroeconomic policies. It does not represent a change in our long-held view that there are greater longer-term growth opportunities in the most rapidly growing economies and the balance may well shift back the other way before long. Another long-standing bias has been the almost complete absence of banks from the portfolio. This remains the case. We also continue to prefer the providers of services to the oil and gas industry to the major integrated oil and gas companies, but we have trimmed back positions in service companies a little during the course of the year.

In the paragraphs that follow we describe the five largest positive and five largest negative contributors to absolute performance over the full year. A number of the holdings that fell the most during March and April, Alnylam Pharmaceuticals, Sky Deutschland and Xero, also appear on the list of top positive contributors over the full year as the sharp falls in the final two months of the year only partly reversed earlier more substantial gains.

Largest positive contributors to performance

Sky Deutschland

Sky Deutschland is a provider of pay television services to the German market. Majority owned by US media conglomerate, 21^st Century Fox, the business was acquired from private equity owners in 2008 after several difficult years. It was rebranded as Sky Deutschland in 2009 and since that time has worked hard to replicate the success its sister business, BSkyB, has enjoyed in the UK market. We have been encouraged by the evidence of progress suggested by various of the business's key operating metrics and believe we could be approaching the point at which years of investment start to convert into meaningful profit growth.

Alnylam Pharmaceuticals

Alnylam Pharmaceuticals is developing a new class of innovative medicines based on a breakthrough discovery in biology known as RNA interference, or RNAi. This approach attempts to treat genetically defined diseases by addressing the behaviour of the defective genes that cause the disorder. The last year has seen a number of positive clinical developments moving potential drugs closer to final approval and in January 2014 the company secured a $700m equity investment from Sanofi, the French pharmaceutical manufacturer. This investment has strengthened Alnylam's balance sheet and provides some external validation of its technology platform.

Facebook

Facebook is the world's largest internet social network, with over 1 billion monthly active users. Despite its dominant market position the site has continued to grow strongly over the last year, further increasing its user base and engagement levels even in relatively mature markets such as the US and more rapidly across Asia and the Emerging Markets. The company has also enjoyed considerable success in migrating its user base away from desktop computers and towards the faster growing mobile computing segment. Facebook already generates considerable revenue and profit but we believe it remains relatively early in the process of maximising the earnings potential that its unparalleled customer data set offers.

Zillow

Zillow operates a real estate website offering the aggregation of US property listings for the consumer (as seller and buyer) and advertising and lead generation for real estate brokers. Although the independent real estate aggregator model is quite well established in some markets around the world, it remains in its early stages in the USA with a handful of operators still vying to become the dominant player. Zillow is emerging as a potential winner of this battle. While the peculiarities of the US real estate industry may mean the online aggregators do not consolidate in quite the same way as has been the case in countries like the UK and France, the scale of the total US opportunity looks to be far larger, suggesting substantial revenue and profit growth potential ahead.

Xero Ltd

Xero is a provider of "cloud-based" accounting software for small businesses and independent traders. Small business accounting software has for a long time proved to be an extremely profitable business for those that provide it but has traditionally been based on purchasing software on a disk and installing it on a desk based computer. Xero's internet based product offers a user friendly option for those that need it. Although early in its development, the company is showing encouraging signs of penetrating markets dominated by more traditional incumbents.

Largest negative contributors to performance

Nanoco Group

Nanoco is a manufacturer of tiny semi-conductor crystals, known as "quantum dots", which have the potential for widespread application in television displays, LED lighting and solar panels as well as many other areas. The company's greatest distinction comes from its patented method for manufacturing these crystals in volume but without the use of the toxic metal cadmium. Early last year the company signed a licensing agreement with Dow Electronic Materials under which Dow will build a facility in South Korea to produce quantum dots using Nanoco's patented process. We believe the prospects for more widespread adoption of quantum dots remain good however delays to Dow facility mean it will not now open until early 2015 at the earliest. Given Nanoco's immaturity and lack of alternative cash generation this delay has had a material impact on the share price though it remains a holding given the huge opportunity that still lies ahead.

Kunlun Energy

Kunlun Energy is a Chinese oil and gas company with particular exposure to the development of the Chinese natural gas market through its collection of pipelines, liquefied natural gas terminals, processing plants and natural gas vehicle re-fuelling stations. The company has benefited for many years from its close relationship with Petrochina and the Chinese state oil company CNPC. We sold the holding during the year following the sudden resignation of the company's Chairman amid allegations of corruption involving senior members of the management team at Kunlun Energy and Petrochina.

Imagination Technologies

Imagination Technologies specialises in the design of semiconductor chips used for the processing of graphics on electronic products such as smartphones, tablet computers and gaming devices. The company does not manufacture the chips itself, but licenses its intellectual property to third parties who then integrate it into their own unique designs. The company has endured a difficult period of late, with growing competitive pressure in its core markets the most likely explanation for slower than expected sales and profit progression. The holding was sold during the year.

Ocwen Financial

Ocwen Financial is a US mortgage servicing company acting on behalf of the loan owner to collect interest and capital repayments from mortgagees. It is the largest specialist servicer in the US, having invested heavily in a proprietary technology platform that has resulted in industry leading cost efficiency, loan modification and re-default performance. Whilst the mortgage servicing business has continued to trade well, the expected growth opportunity offered by the acquisition of new loan servicing rights has been curtailed, for now at least, by the New York regulator indefinitely suspending the agreed purchase of a $39bn mortgage servicing rights portfolio from Wells Fargo. It remains a holding as many of the factors driving growth in specialist mortgage servicing remain in place but the position is being kept under review.

Westport Innovations

Westport Innovations is a designer and manufacturer of natural gas combustion engines and associated components, including storage systems. Whilst the use of natural gas in vehicles traditionally powered by petrol or diesel combustion engines looks likely to rise materially from current levels, it has become unclear whether Westport's engine technology will be the long term solution for this market and whether its complex operating structure will allow it to generate attractive returns for its shareholders. The holding was sold during the year.

Top Ten Holdings at 30 April 2014

The ten largest holdings in the portfolio are described below. Together they make up 20.3% of gross assets. Holding sizes are relatively evenly distributed across the portfolio and future performance is not solely dependent on the fortunes of these ten investments but the Managers believe that these ten represent particularly attractive long-term investment opportunities.

IP Group

IP Group specialises in the development and commercialisation of ideas and innovations generated within the university sector. The company has exclusive arrangements with a number of the UK's leading research-intensive universities. These long-term partnerships provide IP Group with preferential access to the brightest and best new ideas but also benefit the universities and academics by providing them with access to the financial, technical and organisational help that is so essential in converting early stage innovations into real world commercial opportunities. The company has had a busy year, bringing a number of portfolio businesses to market, acquiring one of its UK based peers and venturing into North America for the first time through pilot commercialisation agreements with three universities.

Harley Davidson

Harley Davidson is a manufacturer of heavy motorcycles. The company has been dominant in its US market niche for many years but suffered through the economic downturn in 2008/09; as sales volumes dropped dramatically it struggled with a relatively inflexible cost base and poor inventory control. A new management team arrived in 2009 and has worked hard to restructure the manufacturing base and inventory management. Margins have recovered substantially but volumes remain well below their 2006 peak, suggesting material upside to profits as consumer spending starts to recover in the US and overseas.

Sky Deutschland

See above.

Seek

Seek operates an online job board covering both temporary and permanent roles, predominantly in the white collar sector. It dominates its core markets of Australia and New Zealand but also has leading positions in China and a number of other South East Asian countries as well as in Brazil. Whilst its core markets may now be relatively mature, the strength of Seek's position should support attractive returns for some time to come, providing funding to further strengthen its position in emerging markets, where the long term growth potential looks enormous.

Enquest

Enquest is an oil and gas exploration and production company focused predominantly on the UK North Sea. The company specialises in acquiring mature fields where production volumes have been declining but where the application of new capital and the latest technology can improve recovery rates materially. As a smaller operator, it benefits from its size as these incremental improvements are often too small to be material at the group level for larger oil majors. We believe Enquest is well-positioned to benefit from a steady stream of available assets as these larger players depart mature and heavily exploited areas, like the North Sea, and with a high level of share ownership amongst senior management we believe they are well incentivised to invest for long term value creation.

Taiwan Semiconductor Manufacturing Co (TSMC)

TSMC is the world's largest semiconductor foundry. As semiconductor manufacture has become more complex and capital intensive, TSMC has benefited from the trend amongst chip designers to outsource the manufacturing process. Through a process of steady investment and strong operational execution the company has grown to be multiples of the size of its nearest competitor, positioning it to reap a disproportionate amount of industry profits for many years to come.

Fuchs Petrolub

Fuchs Petrolub is the world's largest independent lubricant supplier with a particular focus on specialist lubricants, where it is the market leader. Although specialist lubricants is a far smaller market than commodity lubricants, where large integrated oil companies tend to dominate, Fuchs has enjoyed steady growth over the last decade in volumes and pricing. As it has grown, it has strengthened its advantage over smaller independent competitors whilst tightening relationships with major customers. Although growth is unlikely to be extremely rapid, we think the combination of a strong competitive position and steady underlying growth in demand for specialist lubricants places the company in a strong position for long term profit growth.

IG Group

IG Group is a leading provider of financial spread betting products and contracts for difference, predominantly sold to retail customers. The company has particular strength in the UK and Australian markets, where it is the clear number one player. Although these markets appear relatively mature, the company's steady investment in technology should enable them to sustain their lead whilst generating cash that can be invested in faster growing but less mature markets.

Kone

Kone is one of the world's leading lift and elevator manufacturers, operating in a global market that has grown strongly over the last decade but which remains dominated by just a few companies. The lift industry has proved remarkably resilient over the years, benefiting from relatively high barriers to entry for new competitors, rational behaviour from existing players and the high proportion of profits derived from maintenance contracts rather than initial installations. This resilience has been reflected in Kone's results, even as global economic growth has faltered. With the company now well established in key emerging markets, we see potential for many more years of growth, with profitability aided by the shift in its revenue base towards maintenance contracts as recent installations mature.

Samsung Electronics

Samsung Electronics is a vertically integrated consumer electronics company with leading positions in various end markets including smartphones and flat-screen televisions. A willingness to invest heavily for the long term has enabled Samsung to build dominant market shares in areas where scale economies enable the number one player to extract the lion's share of industry profits. Although the business is inherently cyclical we believe the company's dominance in its core markets should enable it to generate attractive returns over the cycle whilst providing surplus cash to invest into new areas where it sees potential to disrupt incumbents and capture market share.

Gerald Smith

Baillie Gifford & Co

10 June 2014

Past performance is not a guide to future performance.

Distribution of Assets (unaudited)

		At 30 April 2014		At 30 April 2013
		Total Assets %	Effective Exposure* %	Total Assets %	Effective Exposure* %
Equities:	North America	32.4	32.7	28.2	29.3
	United Kingdom	21.6	21.8	23.4	22.8
	Continental Europe	18.5	18.6	14.6	13.9
	Emerging Markets	10.5	9.9	18.9	18.4
	Japan	5.2	5.1	5.7	5.9
	Developed Asia	3.8	3.9	1.9	2.0
		92.0	92.0	92.7	92.3
Bonds		4.1	4.1	4.5	4.7
Net liquid assets		3.9	3.9	2.8	3.0
		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.

Thirty largest equity holdings (unaudited)

Name	Region	Business	2014 Value £'000		2014% of total assets	2013 Value £'000
IP Group	United Kingdom	Intellectual property commercialisation	36,487	3.6		40,774
Harley-Davidson	North America	Motorcycle manufacturer	22,720	2.2		14,789
Sky Deutschland	Continental Europe	German pay television services	22,491	2.2		21,202
Seek	Developed Asia	Online recruitment	19,570	1.9		20,699
Enquest	United Kingdom	Oil and gas exploration and production	18,784	1.9		5,584
Taiwan Semiconductor   Manufacturing Co	Emerging Markets	Semiconductor manufacturer	18,333	1.8		14,561
Fuchs Petrolub	Continental Europe	Speciality industrial and automotive lubricants	17,921	1.8		17,982
IG Group	United Kingdom	Spread betting	17,696	1.7		12,885
Kone	Continental Europe	Elevator manufacture and servicing	16,343	1.6		20,213
Samsung Electronics	Emerging Markets	Consumer and industrial electronic equipment	16,104	1.6		20,494
First Republic Bank	North America	Banking	15,986	1.6		14,302
TripAdvisor	North America	Online travel review platform	15,664	1.6		11,824
Seadrill	Continental Europe	Offshore drilling services	15,123	1.5		22,091
Go-Ahead Group	United Kingdom	Bus and rail operator	15,115	1.5		10,501
Novozymes	Continental Europe	Enzyme manufacturer	14,974	1.5		14,360
Visa Inc - Class A Shares	North America	Global electronic payments network and   related services	14,535	1.4		12,114
Kraft Foods Group	North America	Food and beverage manufacturer	14,231	1.4		-
Nanoco Group	United Kingdom	Quantum dot manufacturer	14,203	1.4		22,963
The Priceline Group Inc	North America	Online travel agent	14,203	1.4		11,009
TJX Companies	North America	Apparel and home fashion retailer	13,999	1.4		14,161
Burger King Worldwide	North America	Fast food restaurants	13,683	1.4		10,240
Martin Marietta Materials	North America	Cement and aggregates producer	13,449	1.3		-
Novo Nordisk	Continental Europe	Pharmaceutical company	13,168	1.3		-
Coloplast B	Continental Europe	Manufacturer of medical consumable products	12,912	1.3		-
Zillow	North America	Online real estate services	12,701	1.3		-
Alnylam Pharmaceuticals	North America	Biotechnology - RNA interference	12,608	1.2		9,750
Seattle Genetics	North America	Biotechnology - antibody drug conjugates	12,543	1.2		17,423
Renishaw	United Kingdom	Measurement and calibration equipment	12,299	1.2		11,101
Shimano	Japan	Bicycle and fishing equipment manufacturer	11,738	1.2		11,090
North Atlantic Drilling	Continental Europe	Offshore drilling services	11,691	1.1		9,884
			481,274	47.5		391,996

Income statement (unaudited)

The following is the unaudited preliminary statement for the year to 30 April 2014 which was approved by the Board on 10 June 2014. The Directors of The Monks Investment Trust PLC are recommending to the Annual General Meeting of the Company to be held on 5 August 2014 the payment of a final dividend of 3.45p (3.45p last year) per ordinary share, making a total of 3.95p (3.95p last year) per ordinary share for the year ended 30 April 2014.

	For the year ended 30 April 2014			For the year ended 30 April 2013
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments	-	31,448	31,448	-	50,194	50,194
Currency losses	-	(2,799)	(2,799)	-	(3,117)	(3,117)
Income (note 2)	21,585	-	21,585	22,983	-	22,983
Investment management fee	(4,778)	-	(4,778)	(4,648)	-	(4,648)
Other administrative expenses	(903)	-	(903)	(907)	-	(907)
Net return before finance costs and taxation	15,904	28,649	44,553	17,428	47,077	64,505
Finance costs of borrowings	(3,783)	-	(3,783)	(4,929)	-	(4,929)
Net return on ordinary activities before taxation	12,121	28,649	40,770	12,499	47,077	59,576
Tax on ordinary activities	(940)	-	(940)	(721)	-	(721)
Net return on ordinary activities after taxation	11,181	28,649	39,830	11,778	47,077	58,855
Net return per ordinary share (note 3)	4.87p	12.49p	17.36p	4.68p	18.72p	23.40p
Note: Dividends per share paid and payable in respect of the year (note 4)	3.95p			3.95p

The total column of this statement represents 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 2014 £'000	At 30 April 2013 £'000
Fixed assets
Investments held at fair value through profit or loss	973,559	1,023,427
Current assets
Debtors	2,139	5,735
Investments held at fair value through profit or loss	-	12,341
Cash and deposits	41,592	38,591
	43,731	56,667
Creditors
Amounts falling due within one year (note 5)	(4,682)	(54,188)
Net current assets	39,049	2,479
Total assets less current liabilities	1,012,608	1,025,906
Creditors
Amounts falling due after more than one year (note 5)	(39,712)	(39,679)
Net assets	972,896	986,227
Capital and reserves
Called up share capital	11,394	12,017
Share premium	11,100	11,100
Capital redemption reserve	8,004	7,381
Capital reserve	894,882	910,342
Revenue reserve	47,516	45,387
Shareholders' funds	972,896	986,227
Net asset value per ordinary share (after deducting borrowings at fair value)	425.2p	408.1p
Net asset value per ordinary share (after deducting borrowings at par)	426.8p	410.2p
Ordinary shares in issue (note 6)	227,887,859	240,331,859

Reconciliation of movements in shareholders' funds (unaudited)

For the year ended 30 April 2014

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2013	12,017	11,100	7,381	910,342	45,387	986,227
Net return on ordinary activities after taxation	-	-	-	28,649	11,181	39,830
Shares purchased for cancellation (note 6)	(623)	-	623	(44,109)	-	(44,109)
Dividends paid during the year (note 4)	-	-	-	-	(9,052)	(9,052)
Shareholders' funds at 30 April 2014	11,394	11,100	8,004	894,882	47,516	972,896

For the year ended 30 April 2013

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2012	12,806	11,100	6,592	915,546	43,675	989,719
Net return on ordinary activities after taxation	-	-	-	47,077	11,778	58,855
Shares purchased for cancellation	(789)	-	789	(52,281)	-	(52,281)
Dividends paid during the year (note 4)	-	-	-	-	(10,066)	(10,066)
Shareholders' funds at 30 April 2013	12,017	11,100	7,381	910,342	45,387	986,227

Condensed cash flow statement (unaudited)

		Year to 30 April 2014		Year to 30 April 2013
		£'000	£'000	£'000	£'000
Net cash inflow from operating activities			15,903		17,645
Servicing of finance
Interest paid		(3,743)		(6,969)
Net cash outflow from servicing of finance			(3,743)		(6,969)
Taxation
UK income tax recovered		-		380
Overseas tax incurred		(955)		(777)
Total tax paid			(955)		(397)
Financial investment
Acquisitions of investments		(280,577)		(242,196)
Disposals of investments		375,942		370,561
Forward currency contracts		-		2,346
Net cash inflow from financial investment			95,365		130,711
Equity dividends paid			(9,052)		(10,066)
Net cash inflow before financing			97,518		130,924
Financing
Shares purchased for cancellation		(51,718)		(49,475)
Borrowings repaid		(40,000)		(80,000)
Net cash outflow from financing			(91,718)		(129,475)
Increase in cash			5,800		1,449
Reconciliation of net cash flow to movement in net funds/(debt)
Increase in cash in the year			5,800		1,449
Translation difference			(2,799)		(2,377)
Net cash outflow from borrowings repaid			40,000		80,000
Other non-cash changes			(33)		(32)
Movement in net funds/(debt) in the year			42,968		79,040
Net debt at 1 May			(41,088)		(120,128)
Net funds/(debt) at 30 April			1,880		(41,088)
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation			44,553		64,505
Gains on investments			(31,448)		(50,194)
Currency losses			2,799		3,117
Amortisation of fixed interest book cost			(974)		(2,014)
Decrease in accrued income			574		2,212
(Increase)/decrease in debtors			(78)		146
Increase/(decrease) in creditors			477		(127)
Net cash inflow from operating activities			15,903		17,645
	Notes to the condensed financial statements (unaudited)

1.		The financial information within this preliminary announcement has been extracted from the unaudited financial statements for the year to 30 April 2014 which have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 30 April 2013.
2.		Income		2014 £'000				2013 £'000
		Income from investments and interest receivable		21,585				22,983
		Other income		-				-
				21,585				22,983
3.		Net Return per Ordinary Share		2014				2013
		Revenue return		4.87p				4.68p
		Capital return		12.49p				18.72p
		Total return		17.36p				23.40p
		Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £11,181,000 (2013 - £11,778,000) and on 229,470,589 (2013 - 251,551,655) ordinary shares of 5p, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share is based on the net capital gain for the financial year of £26,649,000 (2013 - £47,077,000) and on 229,470,589 (2013 - 251,551,655) 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.
4.		Ordinary Dividends Amounts recognised as distributions in the year:			2014	2013			2014 £'000		2013 £'000
		Previous year's final (paid 9 August 2013)			3.45p	3.45p			7,911		8,820
		Interim (paid 31January 2014)			0.50p	0.50p			1,141		1,246
					3.95p	3.95p			9,052		10,066
		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 £11,181,000 (2013 - £11,778,000).
			Ordinary Dividends Amounts paid and payable in respect of the financial year:		2014	2013			2014 £'000		2013 £'000
			Adjustment to previous year's final dividend re shares bought back		-	-			(380)		(16)
			Interim (paid 31 January 2014)		0.50p	0.50p			1,141		1,246
			Proposed final (payable 8 August 2014)		3.45p	3.45p			7,862		8,291
					3.95p	3.95p			8,623		9,521
			If approved the recommended final dividend will be paid on 8 August 2014 to shareholders on the register at the close of business on 11 July 2014. The ex-dividend date is 9 July 2014. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for elections for this dividend is18 July 2014.
	Notes to the condensed financial statements (unaudited) (ctd)

5.	At 30 April 2014 the Company's borrowings comprised a £40m 6 3/8% debenture stock repayable in 2023. During the year the Company repaid its £40m three year fixed rate loan with Scotiabank. The fair value of borrowings at 30 April 2014 was £43.6m (30 April 2013 - £85.2m).
6.	In the year to 30 April 2014 the Company bought back 12,444,000 ordinary shares with a nominal value of £623,000 at a total cost of £44,109,000. At 30 April 2014 the Company had authority to buy back a further 32,961,749 ordinary shares, being 14.5% 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 26 June 2014.
8.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 April 2014. The financial information for 2013 is derived from the statutory accounts for 2013 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2012 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 2014 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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