Interim Results
Monks Investment Trust PLC
29 November 2005
THE MONKS INVESTMENT TRUST PLC
Results for the six months to 31 October 2005
An increase in Monks' exposure to Japan and the continued strength of the oil
price were the main contributors to a 22.0% increase in net asset value*. By
comparison, the FTSE World Index rose by 15.4% in sterling terms. The share
price rose by 25.2%.
• In the first half of the year satisfactory returns were made by stock markets. There was little
inflationary pressure and interest rates were low and stable apart from in the United States where they
were increased in a series of 1/4% rises.
• The Japanese element was increased from 10.9% to 18.0% of total assets during the period as a result of
£50m of net purchases and a 24% rise in the Japanese market in sterling terms. The optimistic view of
Japan was reinforced by Mr Koizumi's election victory on a reformist platform.
• Performance was also boosted by heavy exposure to oil and gas producers which continued to benefit from
the high oil price.
• Earnings per share were 0.57p (0.50p) and an unchanged interim dividend of 0.50p has been declared.
*Net asset values have been calculated after deducting debentures at market
value.
Past performance is no guarantee of future performance. The value of an
investment and any income from it is not guaranteed and may go down as well as
up and investors may not get back the amount invested. This is because the share
price is determined by the changing conditions in the relevant stock markets in
which the Company invests and by the supply and demand for the Company's shares.
As the Company invests in overseas securities, changes in the rates of exchange
may also cause the value of an investment (and any income it may pay), to go
down or up.
Monks, with total assets of £863 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 £40.5 billion under
management and advice.
29 November 2005
- ends -
For further information please contact:
Richard Burns, Manager
The Monks Investment Trust PLC 0131 275 2000
(mobile) 07703 439 226
Robert O'Riordan
Baillie Gifford & Co 07730 412007
Mike Lord, Director
Broadgate Marketing 020 7726 6111
THE MONKS INVESTMENT TRUST PLC
Monks Interim Report
The first half of the Company's financial year was a period of satisfactory
returns in stock markets. With little sign of inflationary pressure, interest
rates have been low and stable, except in the United States where there has been
a steady series of 1/4% rises in the Fed funds rate. The FTSE World Index
rose by 15.4% in sterling terms, with the best performance being seen in the
Japanese market, which rose by 27.9% in yen terms and by 24.3% in sterling. By
contrast, Wall Street was up by only 4.3%, though a sharp rise in the dollar
from $1.91 to $1.77, saw this translate to a 12.6% increase in sterling. The
UK market was up by 11.2%, Continental Europe by 14.6% and Pacific ex Japan by
14.4%.
Against this background, Monks' net asset value, with the debentures valued at
market, rose by 22%, from 217.9p to 265.9p, at which level it was 28.3% ahead of
the figure twelve months ago. The World Index, our principal comparative
index, was up 16.5% over the twelve months.
There were two principal reasons why we performed better than the index over the
half year. The first was having begun the period with 10.9% of the fund in
Japan, a larger position than the 8.6% in the index, a bullish stance which we
reinforced by further purchases in June and in September, following Mr Koizumi's
victory on a reformist platform in the Diet elections. The other positive
factor was our continued heavy exposure to producers of oil and gas, which have
benefited both in profits and sentiment terms from the high oil price
experienced this year. In addition, we have enjoyed positive results from
stock selection in all markets except the UK.
During the period, as noted above, we made a significant increase to our
position in Japan, with net purchases totalling £50m. This was financed by
sales of almost £12m in the United States and £5.5m in the UK, and a reduction
in our holdings of cash. Transactions elsewhere in the portfolio were broadly
in balance. The analysis below shows that the combination of net investment
and strong market performance has resulted in a big increase in the percentage
of assets in Japan, mainly at the expense of cash.
As far as the revenue account is concerned, dividend income has more than offset
the drop in deposit interest received and the higher management fee resulting
from the strong increase in assets. Earnings per share have come out at 0.57p,
compared to last year's 0.50p, and the Board has declared an unchanged dividend
of 0.50p, which will be paid in January 2006.
By order of the Board
Baillie Gifford & Co
29 November 2005
The following is the interim statement for the six months ended 31 October 2005
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 2005. 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 2005 31 October 2004 30 April 2005
Revenue Capital Total Revenue Restated+ Restated+ Revenue Restated+ Restated+
£'000 £'000 £'000 £'000 Capital Total £'000 Capital Total
£'000 £'000 £'000 £'000
Realised gains on
investments - 18,663 18,663 - 284 284 - 6,822 6,822
Unrealised gains on
investments - 128,391 128,391 - 10,140 10,140 - 32,690 32,690
Currency (losses)/gains - (4,760) (4,760) - 137 137 - 1,228 1,228
Income (note 2) 8,006 - 8,006 7,397 - 7,397 16,955 - 16,955
Investment management
fee (2,052) - (2,052) (1,691) - (1,691) (3,428) - (3,428)
Other administrative
expenses (453) - (453) (398) - (398) (711) - (711)
Net return before
finance costs and
taxation 5,501 142,294 147,795 5,308 10,561 15,869 12,816 40,740 53,556
Finance costs of
borrowings (3,491) - (3,491) (3,491) - (3,491) (6,982) - (6,982)
Return on ordinary
activities before
taxation 2,010 142,294 144,304 1,817 10,561 12,378 5,834 40,740 46,574
Tax on ordinary
activities (363) - (363) (357) - (357) (770) - (770)
Return on ordinary
activities after
taxation 1,647 142,294 143,941 1,460 10,561 12,021 5,064 40,740 45,804
Return per ordinary
share
(note 3) 0.57p 48.98p 49.55p 0.50p 3.61p 4.11p 1.73p 13.96p 15.69p
Note:
Dividends paid and
proposed per ordinary
share (note 4) 0.50p 0.50p 1.70p
All revenue and capital items in this statement derive from continuing
operations.
* The total column of this statement is the profit and loss account of the
Company.
+ See note 1
THE MONKS INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 31 October 2005
(unaudited)
Restated+ Restated+
31 October 2005 31 October 2004 30 April
2005
£'000 £'000 £'000
Fixed assets
Investments 857,315 637,566 675,883
Current assets
Debtors 2,339 2,424 6,483
Cash and short term deposits 6,830 62,228 55,771
9,169 64,652 62,254
Creditors
Amounts falling due within one year (3,919) (3,261) (6,837)
Net current assets 5,250 61,391 55,417
Total assets less current liabilities 862,565 698,957 731,300
Debentures (note 5) (79,435) (79,402) (79,419)
783,130 619,555 651,881
Capital and reserves
Called-up share capital 14,368 14,568 14,568
Capital reserves 749,900 586,428 616,608
Revenue reserve 18,862 18,559 20,705
Equity shareholders' funds 783,130 619,555 651,881
Net asset value per ordinary share
(after deducting debentures at market value) 265.9p 207.2p 217.9p
Net asset value per ordinary share
(after deducting debentures at par) 272.3p 212.4p 223.5p
Ordinary shares in issue (note 6) 287,360,295 291,355,295 291,355,295
STATEMENT OF CHANGES IN EQUITY
(unaudited)
Restated + Restated +
Six months to Six months to Year to
31 October 31 October 2004 30 April
2005 £'000 2005
£'000 £'000
Balance at 30 April 2005/2004 (restated) 651,881 614,306 614,306
Net profit on ordinary activities after taxation 143,941 12,021 45,804
Dividends recognised as distributions in the period (note 4) (3,490) (1,913) (3,370)
Buyback of ordinary shares (9,202) (4,859) (4,859)
BALANCE AT 31 OCTOBER / 30 APRIL 783,130 619,555 651,881
+ See note 1
THE MONKS INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 October 2005 31 October 2004 30 April 2005
£'000 £'000 £'000
Net cash inflow from operating activities (note 7) 7,165 6,740 12,855
Net cash outflow from servicing of finance (3,475) (3,475) (6,949)
Total tax paid (359) (366) (773)
Net cash (outflow)/inflow from financial investment (39,580) 54,580 47,346
Equity dividends paid (3,490) (1,913) (3,370)
Net cash (outflow)/inflow before use of liquid (39,739) 55,566 49,109
resources and financing
Net cash inflow/(outflow) from use of liquid resources 18,000 (16,000) (18,000)
Shares purchased for cancellation (9,202) (4,859) (4,859)
(Decrease)/increase in cash (30,941) 34,707 26,250
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the period (30,941) 34,707 26,250
(Decrease)/increase in short term deposits (18,000) 16,000 18,000
Other non-cash changes (16) (16) (33)
Movement in net debt in the period (48,957) 50,691 44,217
Net debt at start of the period (23,648) (67,865) (67,865)
Net debt at end of the period (72,605) (17,174) (23,648)
THE MONKS INVESTMENT TRUST PLC
THIRTY LARGEST EQUITY HOLDINGS
at 31 October 2005
(unaudited)
Name Region Business Market % of
value total
£'000 assets
Baillie Gifford Pacific Fund Asia Pacific Investment fund 56,270 6.5
Encana North America Oil and gas exploration and 24,309 2.8
production
Moody's North America Bond rating agency 23,613 2.7
Petrobras Other Emerging Mkts Integrated oil 23,170 2.7
Suncor Energy North America Integrated oil 22,682 2.6
Golden West Financial North America Savings and loans 20,474 2.4
EOG Resources North America Natural gas 19,093 2.2
Altria North America Tobacco and food 18,643 2.2
Burlington Resources North America Natural gas 18,516 2.1
Baillie Gifford Japanese Smaller
Japan Investment fund 14,852 1.7
Companies Fund
Sasol Other Emerging Mkts Oil and gas 13,388 1.5
Walgreen North America Pharmacy chain 13,068 1.5
Vodafone United Kingdom Mobile telecommunication services 12,305 1.4
Total Fina Elf Europe Integrated oil 11,861 1.4
Mohawk Industries North America Carpets 11,746 1.4
GlaxoSmithKline United Kingdom Ethical pharmaceuticals 11,664 1.4
Mitsui Japan Diversified trading house 11,318 1.3
Royal Bank of Scotland United Kingdom Banking 9,691 1.1
Asahi Glass Japan Specialist glass 9,128 1.1
Mitsui Sumitomo Insurance Japan Insurance 9,114 1.1
Barclays United Kingdom Banking 8,947 1.0
BHP Billiton Asia Pacific Diversified resources 8,720 1.0
Mitsubishi UFJ Japan Banking 8,549 1.0
Australia and New Zealand Asia Pacific Banking 8,466 1.0
Banking
Wellpoint North America Managed care 8,428 1.0
Microsoft North America Software and computer technology 8,417 1.0
CNOOC Asia Pacific Oil and gas production 8,392 1.0
Wolseley United Kingdom Builders' merchant 8,388 1.0
Fastenal North America Industrial supplies distributor 8,308 1.0
Danske Bank Europe Banking 8,245 1.0
439,765 51.1
DISTRIBUTION OF ASSETS
at 31 October 2005
(unaudited)
31 October 2005 30 April
% 2005
%
Equities: United Kingdom 16.9 18.7
Continental Europe 9.9 9.9
North America 36.3 35.5
Japan 18.0 10.9
Asia Pacific 10.8 11.2
Other Emerging Markets 4.7 3.0
Total equities 96.6 89.2
Bonds 2.8 3.2
Net liquid assets 0.6 7.6
Total assets (before deduction of borrowings) 100.0 100.0
THE MONKS INVESTMENT TRUST PLC
NOTES
1. A number of new UK Financial Reporting Standards have been introduced with which the Company must comply
by its 30 April 2006 financial year end. These standards are part of the UK convergence programme with
International Accounting Standards and as such have required most UK listed companies to restate prior
year figures to reflect the new accounting treatment. The financial statements for the six months to 31
October 2005 have been prepared on the basis of the accounting policies set out in the Company's Annual
Financial Statements at 30 April 2005 except as detailed below:
(a) investments have been valued at fair value through profit or loss in accordance with FRS 26 '
Financial Instruments: Measurement'. The effect is to move from a mid to a bid basis of valuation,
resulting in a reduction in the value of investments and unrealised capital reserves of £905,000 (31
October 2004 - £617,000; 30 April 2005 - £767,000);
(b) in compliance with FRS 21 'Events after the Balance Sheet Date', dividends declared after the
period end are no longer treated as a liability at the period end. The effect is to reduce creditors and
increase revenue reserves by £1,437,000 (31 October 2004 - £1,456,000; 30 April 2005 - £3,496,000);
The overall effect of these changes on shareholders' funds is detailed below:
At At At
31 October 31 October 30 April
2005 2004 2005
£'000 £'000 £'000
Investments/Capital reserve - unrealised (905) (617) (767)
Creditors: dividends payable/Revenue reserve 1,437 1,456 3,496
532 839 2,729
Under the new standards dividends may no longer be charged though the Statement of Total Return but
should be included in the Statement of Changes in Equity. Dividends paid and proposed are disclosed in
note 4.
Restated+ Restated+
Six months to Six months to Year to
31 October 31 October 30 April
2005 2004 2005
£'000 £'000 £'000
2. Income
Income from investments and interest receivable 7,955 7,346 16,852
Other income 51 51 103
3. Return per ordinary share
Revenue return 1,647 1,460 5,064
Capital return 142,294 10,561 40,740
Return per ordinary share is based on the above totals of revenue and capital and on 290,493,311 (31
October 2004 - 292,594,425 and 30 April 2005 - 291,979,953) ordinary shares, being the weighted average
number of ordinary shares in issue during each period.
Restated+ Restated+
Six months to Six months to Year to
31 October 31 October 30 April
2005 2004 2005
£'000 £'000 £'000
4. Dividends
Amounts recognised as distributions in the
period:
Final dividend for the year ending 30 April 2005
of 1.20p (2004 - 0.65p), paid 5 August 2005 3,490 1,913 1,913
Interim dividend for the year ending 30 April
2005 of 0.50p, paid 31 January 2005 - - 1,457
3,490 1,913 3,370
Interim dividend for the year ending 30 April
2006 of 0.50p (2005 - 0.50p) 1,437 1,457 1,457
The interim dividend was declared after the period end date and has therefore not been included as a
liability in the balance sheet. It is payable on 31 January 2006 to shareholders on the register at the
close of business on 13 January 2006. The ex dividend date is 11 January 2006.
5. The market value of debentures at 31 October 2005 was £98.4m (31 October 2004 - £95.2m and 30 April 2005
- £96.5m).
6. During the period under review the Company bought back 3,995,000 ordinary shares with a nominal value of
£199,750 for a total consideration of £9,202,000. At 31 October 2005 the Company had the authority to
buy back a further 40,099,958 shares.
Six months to Six months to Year to
31 October 31 October 30 April
2005 2004 2005
£'000 £'000 £'000
7. Reconciliation of net revenue before finance
costs and taxation to net cash inflow from
operating activities
Net revenue before finance costs and taxation 5,501 5,308 12,816
Decrease/(increase) in accrued income 1,725 1,768 (16)
Decrease/(increase) in other debtors 39 75 (28)
Increase/(decrease) in creditors 194 (136) (134)
Income tax (incurred)/refunded (294) (275) 217
Net cash inflow from operating activities 7,165 6,740 12,855
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
2005 has been extracted from the statutory accounts and restated as disclosed in note 1. Those accounts,
which contain an unqualified Auditors' Report and do not contain a statement under sections 237(2) or (3)
of the Companies Act 1985, have been filed with the Registrar of Companies.
9. The Interim Report was approved by the Board on 29 November 2005. None of the views expressed in this
document should be construed as advice to buy or sell a particular investment.
+ See note 1
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