Interim Results
Monks Investment Trust PLC
30 November 2004
THE MONKS INVESTMENT TRUST PLC
Results for the six months to 31 October 2004
Helped by exposure to oil and gas producers, Monks' net asset value per share
rose by 2.0% over the six months to 31 October 2004, while over the same period
the FTSE World Index rose by 0.4%.
• Over the 12 months from 1 November 2003, net asset value per share is up by
8.9%, while the FTSE World Index has risen by 3.5%.
• Taking the view that markets were unlikely to prove sufficiently rewarding
to justify borrowing to invest, the Company reduced its effective gearing
during the period. Currently holdings in cash and bonds broadly match the
long term debenture debt.
• Due to the increase in cash deposits, earnings for the six months were
higher at 0.5p (0.3p) and an interim dividend of 0.5p (0.4p) has been
declared.
• Due to concerns about further weakening of the US dollar, the Company has
partially protected its position by hedging half of the value of its US
portfolio into sterling (about US$200m).
Monks, with total assets of £698 million, invests internationally in order to
achieve capital growth. Monks is managed by Baillie Gifford & Co., the
independent Edinburgh based fund management group with over £31 billion under
management and advice.
30 November 2004
- ends -
For further information please contact:
Richard Burns, Manager
The Monks Investment Trust PLC 0131 275 2000
Mike Lord, Director
Broadgate Marketing 020 7726 6111
THE MONKS INVESTMENT TRUST PLC
Interim Report 31 October 2004
The first six months of the Company's financial year have been a quiet period in
stock markets. The FTSE World Index rose by only 0.4% in sterling terms, with
two of the biggest components of that index, the United States and Japan,
showing declines to sterling based investors. In the case of the US this fall,
of 1.2%, is entirely attributable to the decline in the dollar from $1.77 to the
£ to $1.83; in local terms the S&P 500 index rose by 2.1%. By contrast the
Tokyo market was noticeably weak, falling by 8.5% in yen and by 8.0% in
sterling. Other markets did much better. The British market rose by 2.7%,
Pacific ex Japan by 2.3% and continental Europe by 3.6%.
Against this background, Monks' net asset value per share rose to 212.2p, at
which level it was 2.0% ahead of the figure at 1 May but up by 8.9% over the
twelve months from 1 November 2003. The FTSE World Index, our principal
comparative index, has risen by 0.4% over the six months, as noted above, and by
3.5% over the last twelve months.
The main reason why we have performed better than the index over the half year
was our exposure to producers of oil and gas, which in turn contributed to good
overall stock selection figures in the US and Asia. We were also helped by
having substantially more than the World Index in the UK. By contrast our stock
picking in Japan was a noticeable drag.
The only policy change during the period was to reduce the Company's effective
gearing by making sales of some £53m, mainly in early June. This cash-raising,
from equities in the UK, the US, and Europe, brought our holdings of cash and
bonds up to a level which broadly matched our £80m of long term debenture debt.
This was done on the view that markets were likely to prove insufficiently
rewarding to justify borrowing to invest in them.
The combination of these sales and the poor returns in Japan has resulted in a
fall in the percentage invested in each type of investment except equities in
Asia Pacific and Emerging Markets and a big rise in net liquid assets. In
sectoral terms, the main change of note is the increase in the exposure to
natural resources; this is mainly due to the strong performance of our energy
shares.
The increase in cash deposits and, to a much lesser extent, improved dividend
rates have produced earnings per share of 0.50p as against last year's 0.30p.
Estimates for the full year suggest a better outcome than last year's 1.02p and
the Board has declared an interim dividend of 0.50p, an increase of 0.10p on
last year's 0.40p. This will be paid on 31 January 2005.
Due to concerns about further weakening of the US dollar, the Company has
partially protected its position by hedging half of the value of its US
portfolio into sterling (about US$200m).
By order of the Board
Baillie Gifford & Co.
30 November 2004
The following is the interim statement for the six months ended 31 October 2004
which has been neither reviewed nor audited by the auditors. This statement is
being printed and will be sent to all shareholders on 16 December 2004. Copies
will be available for inspection at the Registered Office of the Company or may
be obtained on request from the Managers and Secretaries after that date.
THE MONKS INVESTMENT TRUST PLC
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
for the six months ended for the six months ended for the year ended
31 October 2004 31 October 2003 30 April 2004
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised gains/ (losses)
on investments - 284 284 - (2,482) (2,482) - (4,328) (4,328)
Unrealised gains on - 10,377 10,377 - 82,316 82,316 - 120,187 120,187
investments
Currency gains - 137 137 - 1,050 1,050 - 3,317 3,317
Income (note 2) 7,397 - 7,397 7,123 - 7,123 15,611 - 15,611
Investment management fee(1,691) - (1,691) (1,639) - (1,639) (3,311) - (3,311)
Other administrative (398) - (398) (358) - (358) (824) - (824)
expenses
Net return before finance
costs and taxation 5,308 10,798 16,106 5,126 80,884 86,010 11,476 119,176 130,652
Finance costs of (3,491) - (3,491) (3,682) - (3,682) (7,315) - (7,315)
borrowings
Return on ordinary
activities before
taxation 1,817 10,798 12,615 1,444 80,884 82,328 4,161 119,176 123,337
Tax on ordinary (357) - (357) (559) - (559) (1,160) - (1,160)
activities
Return on ordinary
activities after taxation 1,460 10,798 12,258 885 80,884 81,769 3,001 119,176 122,177
Dividends in respect of
equity shares
(1,456) - (1,456) (1,177) - (1,177) (3,091) - (3,091)
Transfer to/(from) 4 10,798 10,802 (292) 80,884 80,592 (90) 119,176 119,086
reserves
Return per ordinary share
(note 3) 0.50p 3.69p 4.19p 0.30p 27.48p 27.78p 1.02p 40.49p 41.51p
Dividend per ordinary
share (note 4) 0.50p 0.40p 1.05p
* The revenue 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.
THE MONKS INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 31 October 2004
(unaudited)
31 October 2004 31 October 2003 30 April 2004
£'000 £'000 £'000
Fixed assets
Investments 638,183 672,439 681,256
Current assets
Debtors 2,424 7,918 3,982
Cash and short term deposits 62,228 11,432 11,521
64,652 19,350 15,503
Creditors
Amounts falling due within one year (4,717) (38,140) (4,600)
Net current assets/(liabilities) 59,935 (18,790) 10,903
Total assets less current liabilities 698,118 653,649 692,159
Debentures (note 5) (79,402) (79,370) (79,386)
618,716 574,279 612,773
Capital and reserves
Called-up share capital 14,568 14,718 14,718
Capital reserves 587,046 542,665 580,957
Revenue reserve 17,102 16,896 17,098
Equity shareholders' funds 618,716 574,279 612,773
Net asset value per ordinary share
(after deducting debentures at par) 212.2p 194.9p 208.0p
Net asset value per ordinary share
(after deducting debentures at market value) 206.9p 190.9p 203.7p
Ordinary shares in issue (note 6) 291,355,295 294,355,295 294,355,295
DISTRIBUTION OF ASSETS
at 31 October 2004
(unaudited)
31 October 2004 31 October 2003 30 April 2004
% % %
Equities: United Kingdom 18.8 22.6 21.4
Continental Europe 9.1 12.4 11.8
North America 34.6 35.7 36.7
Japan 11.8 9.4 13.0
Asia Pacific 10.3 10.0 9.3
Other Emerging Markets 2.7 1.4 1.5
Total equities 87.3 91.5 93.7
Bonds 4.1 6.5 4.7
Net liquid assets 8.6 2.0 1.6
Total assets (before deduction of borrowings) 100.0 100.0 100.0
THE MONKS INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 October 31 October 30 April
2004 2003 2004
£'000 £'000 £'000
Net cash inflow from operating activities (note 7) 6,740 7,059 11,958
Net cash outflow from servicing of finance (3,475) (3,669) (7,316)
Total tax paid (366) (481) (816)
Net cash inflow from financial investment 54,580 6,484 37,462
Equity dividends paid (1,913) (1,913) (3,091)
Net cash inflow before use of liquid resources and 55,566 7,480 38,197
financing
Net cash outflow from use of liquid resources (16,000) - -
Shares purchased for cancellation (4,859) - -
Net cash outflow from bank loans - - (30,628)
Increase in cash 34,707 7,480 7,569
Reconciliation of net cash flow to movement in net
debt
Increase in cash in the period 34,707 7,480 7,569
Increase in short term deposits 16,000 - -
Net cash outflow from bank loans - - 30,628
Exchange movement on bank loans - 1,055 2,935
Other non-cash changes (16) (16) (32)
Movement in net debt in the period 50,691 8,519 41,100
Net debt at start of the period (67,865) (108,965) (108,965)
Net debt at end of the period (17,174) (100,446) (67,865)
THE MONKS INVESTMENT TRUST PLC
THIRTY LARGEST EQUITY HOLDINGS
at 31 October 2004
(unaudited)
Market
value % of total
Name Region Business £'000 assets
Baillie Gifford Pacific Fund Asia Pacific Investment fund 47,175 6.8
Suncor Energy North America Oil company 27,953 4.0
Golden West Financial North America Savings and loans 22,334 3.2
Moody's North America Bond rating agency 19,110 2.7
Altria North America Tobacco and food 14,546 2.1
Mohawk Industries North America Carpets 13,930 2.0
Burlington Resources North America Natural gas 13,589 1.9
Vodafone United Kingdom Mobile telecommunications services 11,579 1.7
GlaxoSmithKline United Kingdom Pharmaceuticals 11,493 1.6
Royal Bank of Scotland United Kingdom Banking 9,951 1.4
Total Fina Elf Europe Integrated oil 9,478 1.4
Aberforth Limited Partnership United Kingdom Active value fund 9,417 1.3
Freddie Mac North America Mortgages 9,087 1.3
EOG Resources North America Natural gas 9,081 1.3
Petrobras Other Emerging Mkts Integrated oil 8,973 1.3
Barclays United Kingdom Banking 8,515 1.2
HSBC United Kingdom Banking 8,355 1.2
BHP Billiton Asia Pacific Diversified resources 7,749 1.1
Walgreen North America Pharmacy chain 6,856 1.0
Baillie Gifford British
Smaller Companies Fund United Kingdom Small companies fund 6,637 1.0
Wyeth North America Pharmaceuticals 6,492 0.9
CNOOC Asia Pacific Oil and gas exploration 6,461 0.9
Toyota Motor Japan Car manufacturer 6,128 0.9
State Street North America Custodian bank 5,901 0.8
Wolseley United Kingdom Builders' merchant 5,646 0.8
Hiscox Insurance Fund North America Global insurance fund 5,607 0.8
Wellpoint North America Managed care 5,330 0.8
Asahi Glass Japan Glass 5,321 0.8
British Land United Kingdom Property 5,215 0.7
Omnicom North America Advertising agency 5,167 0.7
333,076 47.6
THE MONKS INVESTMENT TRUST PLC
NOTES
1. The financial statements for the six months to 31 October 2004 have been
prepared on the basis of the accounting policies set out in the Company's
Annual Financial Statements at 30 April 2004.
The Interim Report was approved by the Board on 30 November 2004.
None of the views expressed in this document should be construed as advice
to buy or sell a particular investment.
Six months to Six months to Year to
31 October 31 October 30 April
2004 2003 2004
£'000 £'000 £'000
2. Income
Income from investments and interest receivable 7,346 7,072 15,508
Other income 51 51 103
3. Return per ordinary share
Revenue return 1,460 885 3,001
Capital return 10,798 80,884 119,176
Return per ordinary share is based on the above totals of revenue and
capital and on 292,594,425 (31 October 2003 and 30 April 2004 -
294,355,295) ordinary shares, being the weighted average number of ordinary
shares in issue during each period.
4. The interim dividend will be paid on 31 January 2005 to all shareholders on
the register at the close of business on 14 January 2005. The ex dividend
date is 12 January 2005.
5. The market value of debentures at 31 October 2004 was £95.2m (31 October
2003 - £91.6m and 30 April 2004 - £92.5m).
6. During the period under review the Company bought back 3,000,000 ordinary
shares with a nominal value of £150,000 for a total consideration of
£4,859,000. At 31 October 2004 the Company had the authority to buy back a
further 43,674,158 shares.
Six months to Six months to Year to
31 October 31 October 30 April
2004 2003 2004
£'000 £'000 £'000
7. Reconciliation of net revenue before finance
cost and taxation to net cash inflow from
operating activities
Net revenue before finance costs and taxation 5,308 5,126 11,476
Decrease in accrued income 1,768 2,244 375
Decrease/(increase) in other debtors 75 4 (9)
(Decrease)/increase in creditors (136) 56 265
Income tax incurred (275) (371) (149)
Net cash inflow from operating activities 6,740 7,059 11,958
8. The financial information contained within this interim report does not
constitute statutory accounts as defined in section 240 of the Companies
Act 1985. The financial information for the year ended 30 April 2004 has
been extracted from the statutory accounts which have been filed with the
Registrar of Companies and which contain an unqualified Auditors' Report
and do not contain a statement under sections 237(2) or 3) of the Companies
Act 1985.
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