Results for the six months to 31 October 2015
RNS Announcement
The Monks Investment Trust PLC
Results for the six months to 31 October 2015
Over the six month period, the Company's net asset value total return was minus 3.5% compared to a total return of minus 4.3% for the FTSE World Index (in sterling terms). The share price total return for the same period was minus 6.9%.
¾ Royal Caribbean Cruises, Amazon and Alphabet (the search engine formerly known as Google) were the notable positive contributors to absolute returns in the period.
¾ Equity turnover for the six months was 6%, with the portfolio focussed on companies which should grow at an above average rate over the long term.
¾ Earnings per share were 0.89p compared to 2.26p in the corresponding period. The interim dividend is 0.50p per share (0.50p in the corresponding period).
The Monks Investment Trust PLC invests globally in order to achieve capital growth. This takes priority over income and dividends. Monks is managed by Baillie Gifford, the independent Edinburgh based fund management group with around £119 billion under management and advice as at 30 November 2015.
Past performance is not a guide to future performance. Monks is a listed UK company. The value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested. The Company is listed on the UK Stock Exchange and is not authorised or regulated by the Financial Conduct Authority.
You can find up to date performance information about Monks at www.monksinvestmenttrust.co.uk‡
‡ 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:
Anzelm Cydzik, Baillie Gifford & Co
Tel: 0131 275 2000
Roland Cross, Director, Four Broadgate
Tel: 0203 697 4200 or 07831 401309
The Monks Investment Trust PLC
The following is the unaudited Interim Financial Report for the six months to 31 October 2015.
Responsibility statement
We confirm that to the best of our knowledge:
a) the condensed set of financial statements has been prepared in accordance with FRS 104 'Interim Financial Reporting';
b) the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.7R (indication of important events during the first six months, and their impact on the financial statements, and a description of principal risks and uncertainties for the remaining six months of the year); and
c) the Interim Financial Report includes a fair review of the information required by Disclosure and Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein).
By order of the Board
JGD Ferguson
Chairman
1 December 2015
The Monks Investment Trust PLC
Interim management report
Investment approach
Following a change of management team in March this year, the annual report provided a detailed description of our new investment approach. It also set out our core investment beliefs, which are reproduced in this report below. To recap:
¾ Active management. The portfolio differs significantly from the composition of world equity markets. This differentiation ensures the potential to deliver superior returns over time;
¾ Growth. We believe that stock prices are ultimately driven by business fundamentals. We therefore search 'bottom-up' for investment opportunities in individual companies able to deliver above average earnings growth, thereby underpinning attractive shareholder returns;
¾ Patience. In the real world, businesses rarely increase their profits smoothly. We expect to hold stocks on average for about five years, increasing the chance of capturing earnings growth whenever it comes through, and we will hold many for multiples of that period.
Portfolio construction flows from these three beliefs. We manage a distinctive portfolio through our categorisation of equities into one of four growth categories; Stalwart, Rapid, Cyclical or Latent. Thus a diversified range of stocks are held, and the categories provide us with a clear framework for monitoring the long term performance of each. The categories are also an informative way of setting out the whole portfolio in practice - this is shown in the Equity Portfolio by Growth Category table below.
At the period end the equity portfolio contained 115 stocks. Careful consideration is given to the holding size of each. We use three: high conviction (c2%), mid sized (c1%) and incubator (c0.5%). While each stock only makes it into the portfolio after rigorous analysis, we are prepared to back our judgement with bigger positions - especially in longer standing and successful holdings - and to hold a range of higher-risk-higher-return stocks in the smaller incubator-sized position. This approach to portfolio construction is also shown in the Equity Portfolio by Growth Category table below.
Results
The period under review was a volatile one for stock markets; investors were preoccupied with issues such as Chinese economic growth and whether the US Federal Reserve would raise interest rates (or not). The net result has been one in which markets have fallen; over the six months to 31 October Monks net asset value total return (capital and income), with borrowings deducted at fair value was -3.5% and the FTSE World Index total return was
-4.3%. Monks share price total return over the same period was -6.9%. As we note in our core investment beliefs, we normally regard short term results to be random and this period supports that view. A diverse range of stocks has contributed to returns, with particularly helpful performance from a number of US stocks including Royal Caribbean Cruises, Amazon.com and Alphabet (the search engine formerly known as Google). While there will be stand-out stock returns like this over most periods, it is the aggregate outcome that matters: shareholders will only enjoy above average returns if the portfolio as a whole delivers sustainable above average growth. On this front we are confident that underlying progress is superior to that of the market.
It was flagged at the time of the final results in June that earnings per share were expected to fall in this financial year as a function of the restructuring, following the change of management team, towards stocks with higher growth prospects and typically lower dividends. This change in emphasis reflects a preference for growth stocks that reinvest more of their cashflows back into their businesses to drive future growth, rather than paying it out as dividends. Earnings per share for Monks for the period of 0.89p are therefore lower than the 2.26p for the corresponding period a year ago.
Dividend
The Board has decided to pay an interim dividend of 0.50p per share, which will be paid in January 2016. The objective of Monks is to deliver long term capital growth, which takes priority over income and dividends. The restructuring of the portfolio, described above, in part means that the final dividend due to be paid in 2016 will be lower than in 2015.
Changes to the equity portfolio
Following the major portfolio reorganisation in late March and April, activity over the period was limited: equity turnover for the six months was just 6%. Within this, there were five new purchases and one stock was sold completely.
The new purchases included three stocks operating in 'emerging markets': Autohome (a Chinese on-line car retailer), MTN (an African mobile phone network) and Sands China (casinos in Macao). All three have exciting long term growth prospects but also face a range of more proximate operational and macro economic risks which have contributed to share price weakness and created a buying opportunity. All entered the portfolio as incubator sized positions, an approach which already appears a sensible precaution in the case of MTN, which at the end of the period announced it was facing a significant regulatory fine in Nigeria. We also added to China's leading e-commerce operator Alibaba, again following share price weakness caused by macro concerns. The one complete sale was of China Resource Enterprise after its parent company bought control of its retail assets; the residual rump business holds less appeal following a rerating.
Gearing and borrowings
At the period end the portfolio was only modestly geared (2% of shareholders' funds) into equities. We think that over the long term equity markets are likely to rise and as such shareholders should benefit from positive gearing. We are therefore actively seeking opportunities to apply the fund's borrowings and would expect, under normal conditions, to be approximately 10% geared to equity investments. We had begun to buy equities in early September but the market's subsequent rally has led us to pause for the time being, awaiting a better opportunity.
We have sold the US Treasury bond and, since the end of the period, have used the proceeds to reduce our outstanding borrowings.
Share capital
In future, any shares that the Company buys back from the market are likely to be held in Treasury rather than cancelled automatically as has been the case to date. At present, the Company does not have the power to resell shares from Treasury; it will seek shareholder authority to do so at the next Annual General Meeting in August 2016. It is intended that any shares held in Treasury would have an indefinite life and would only be re-sold at a premium to net asset value (when calculated at par cum income and after associated costs).
Current positioning and outlook
We have a differentiated approach when thinking about the thematic exposures across the portfolio, as we do not believe the index-led region/country and sector/industry classifications provide helpful insight. The Thematic Risk Categories table below highlights the four key areas which account for the bulk of the Company's investments. The largest, at 39.0% of the portfolio, comprises those stocks that we consider to be less sensitive to the progress of the overall economy. This includes technology stocks as well as consumer staples. The next biggest area is US economic re-emergence, which captures a range of industrial and consumer stocks as well as some potential beneficiaries of higher interest rates. The balance of the portfolio is linked to the continuing progress of emerging markets and the prospect of economic recovery in Europe and Japan.
That we have been able to identify attractive investments across most parts of the world illustrates both the range of growth opportunities available and the extent of the diversification resulting from our 'bottom-up' stock selection process. In short, some six years past the nadir of the global financial crisis, and despite some near term anxieties, we are inclined to an optimistic view of the future.
The principal risks and uncertainties facing the Company are set out in note 11.
By order of the Board
JGD Ferguson
Chairman
1 December 2015
Past performance is not a guide to future performance.
The Monks Investment Trust PLC
The Managers' Core Investment Beliefs
We believe the following features of Monks provide a sustainable basis for adding value for shareholders.
Active Management
¾ We invest in attractive companies using a 'bottom-up' investment process. Macroeconomic forecasts are of little interest to us and do not influence the selection of stocks.
¾ High active share* provides the potential for adding value.
¾ We ignore the structure of the index - for example the location of a company's HQ and therefore its domicile are less relevant to us than where it generates sales and profits.
¾ Large swathes of the market are unattractive and of no interest to us.
¾ As index agnostic global investors we can go anywhere and only invest in the best ideas.
¾ As the portfolio is very different from the index, we expect portfolio returns to vary - sometimes substantially and often for prolonged periods.
Committed Growth Investors
¾ In the long run, share prices follow fundamentals; growth drives returns.
¾ We aim to produce a portfolio of stocks with above average growth - this in turn underpins the ability of Monks to add value.
¾ We have a differentiated approach to growth, focusing on the type of growth that we expect a company to deliver. All holdings fall into one of four growth categories - as set out in the Equity Portfolio by Growth Category table below
¾ The use of these four growth categories ensures a diversity of growth drivers within a disciplined framework.
Long Term Perspective
¾ Long term holdings mean that company fundamentals are given time to drive returns.
¾ We prefer companies that are managed with a long term mindset, rather than those that prioritise the management of market expectations.
¾ We believe our approach helps us focus on what is important during the inevitable periods of underperformance.
¾ Short term portfolio results are random.
¾ As longer term shareholders we are able to have greater influence on environmental, social and governance matters.
Dedicated Team with Clear Decision-making Process
¾ Senior and experienced team drawing on the full resources of Baillie Gifford.
¾ Alignment of interests - the investment team responsible for Monks all own shares in the Company.
Portfolio Construction
¾ Stocks are held in three broad holding sizes - as set out in the Equity Portfolio by Growth Category table below.
¾ This allows us to back our judgement in those stocks for which we have greater conviction, and to embrace the asymmetry of returns through 'incubator' positions in higher risk/return stocks.
¾ 'Asymmetry of returns': some of our smaller positions will struggle and their share prices will fall; those that are successful may rise, many fold. The latter should outweigh the former.
Low Cost
¾ Investors should not be penalised by high management fees.
¾ Low turnover and trading costs benefit shareholders.
* Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.
The Monks Investment Trust PLC
|
Equity Portfolio by Growth Category as at 31 October 2015 |
|
Holding Size |
Growth Stalwarts 23.7% |
% |
Rapid Growth 31.4% |
% |
Cyclical Growth 31.2% |
% |
Latent Growth 13.7% |
% |
|
|
(c.10%p.a. earnings growth)
|
|
(c.15% to 25% p.a. earnings growth) |
|
(c.10% to 15% p.a. earnings growth through a cycle)
|
|
(earnings growth to accelerate over time)
|
|
|
|
Company Characteristics ¾ Durable franchise ¾ Deliver robust profitability in most macroeconomic environments ¾ Competitive advantage includes dominant local scale, customer loyalty and strong brands
|
|
Company Characteristics ¾ Early stage businesses with vast growth opportunity ¾ Innovators attacking existing profit pools or creating new markets |
|
Company Characteristics ¾ Subject to macroeconomic and capital cycles with significant structural growth prospects ¾ Strong management teams highly skilled at capital allocation |
|
Company Characteristics ¾ Company specific catalyst will drive above average earnings in future ¾ Unspectacular recent operational performance and therefore out of favour |
|
|
Highest conviction holdings c.2.0% each
Total: 31.9% |
Prudential |
3.6 |
Amazon.com |
3.0 |
Royal Caribbean Cruises |
3.7 |
CRH |
2.0 |
|
SAP |
2.0 |
Naspers |
2.5 |
Markel |
1.8 |
MS&AD Insurance |
1.8 |
|
|
Anthem |
1.9 |
Alphabet |
2.4 |
TSMC |
1.7 |
|
|
|
|
|
|
Ryanair |
2.2 |
TD Ameritrade |
1.7 |
|
|
|
|
|
|
|
|
First Republic Bank |
1.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sized holdings c.1.0% each
Total: 38.8% |
Nestlé |
1.5 |
AIA |
1.4 |
Carmax |
1.4 |
Samsung Electronics |
1.1 |
|
Visa |
1.3 |
|
1.1 |
M&T Bank |
1.3 |
Fairfax Financial |
1.0 |
|
|
MasterCard |
1.2 |
Baidu |
1.1 |
Wolseley |
1.2 |
Inpex |
0.8 |
|
|
Moody's |
1.2 |
Alibaba |
1.1 |
Martin Marietta Materials |
1.1 |
Bank of Ireland |
0.8 |
|
|
Schindler |
1.2 |
TripAdvisor |
1.0 |
EOG Resources |
1.1 |
Sumitomo Mitsui Trust Bank |
0.8 |
|
|
Waters |
1.0 |
IP Group |
1.0 |
Harley-Davidson |
1.0 |
|
|
|
|
American Express |
1.0 |
Schibsted |
1.0 |
Svenska Handelsbanken |
1.0 |
|
|
|
|
Shiseido |
0.9 |
Myriad Genetics |
1.0 |
Atlas Copco |
0.9 |
|
|
|
|
Shimano |
0.8 |
Seattle Genetics |
0.9 |
CH Robinson Worldwide |
0.8 |
|
|
|
|
Monsanto |
0.8 |
MercadoLibre |
0.8 |
Teradyne |
0.8 |
|
|
|
|
Colgate-Palmolive |
0.8 |
|
|
SMC |
0.8 |
|
|
|
|
Xilinx |
0.8 |
|
|
|
|
|
|
|
|
Incubator Holdings c.0.5% each
Total: 29.3% |
Qualcomm |
0.6 |
PayPal |
0.7 |
Lincoln Electric |
0.7 |
Silk Invest Africa Food Fund |
0.7 |
|
Olympus |
0.6 |
ICICI Bank |
0.7 |
Deutsche Boerse |
0.7 |
Carlsberg |
0.7 |
|
|
Dia |
0.6 |
Tesla Motors |
0.7 |
Brambles |
0.7 |
Fiat Chrysler Autos |
0.6 |
|
|
Praxair |
0.6 |
Autohome |
0.6 |
Man Group |
0.7 |
Howard Hughes |
0.6 |
|
|
eBay |
0.6 |
Yandex |
0.6 |
Victrex |
0.7 |
Toyota Tsusho |
0.5 |
|
|
Coca Cola HBC |
0.4 |
MarketAxess |
0.6 |
Rolls Royce |
0.7 |
Dolby Laboratories |
0.5 |
|
|
Tsingtao Brewery |
0.3 |
Japan Exchange |
0.5 |
Richemont |
0.6 |
Rhom |
0.4 |
|
|
|
|
iRobot |
0.5 |
THK |
0.6 |
Banco Popular Español |
0.4 |
|
|
|
|
Renishaw |
0.5 |
Jardine Matheson |
0.6 |
MTN |
0.3 |
|
|
|
|
Cyberagent |
0.5 |
Hays |
0.5 |
Juridica Investments |
0.3 |
|
|
|
|
Softbank |
0.5 |
Ritchie Bros Auctioneers |
0.5 |
Ultra Petroleum |
0.2 |
|
|
|
|
M3 |
0.4 |
Volvo |
0.5 |
FLIR Systems |
0.1 |
|
|
|
|
GrubHub |
0.4 |
DistributionNOW |
0.4 |
Doric Nimrod Air One |
0.1 |
|
|
|
|
Qiagen |
0.4 |
Sands China |
0.4 |
NBNK Investments |
- |
|
|
|
|
Financial Engines |
0.4 |
Leucadia National |
0.4 |
|
|
|
|
|
|
Zillow |
0.4 |
SK Hynix |
0.3 |
|
|
|
|
|
|
Mindray Medical International |
0.4 |
Aggrekko |
0.2 |
|
|
|
|
|
|
HDFC |
0.4 |
Ferro Alloy Resources |
0.1 |
|
|
|
|
|
|
Alnylam Pharmaceuticals |
0.4 |
|
|
|
|
|
|
|
|
Nanocco |
0.3 |
|
|
|
|
|
|
|
|
BMF Bovespa |
0.3 |
|
|
|
|
|
|
|
|
Intuitive Surgical |
0.3 |
|
|
|
|
|
|
|
|
Stratasys |
0.2 |
|
|
|
|
|
|
|
|
|
0.2 |
|
|
|
|
The Monks Investment Trust PLC
|
Portfolio Positioning as at 31 October 2015 |
Thematic Risk Categories
|
Category |
At 31 October 2015 % |
|
|
Economically Agnostic |
39.0 |
|
|
|
Internet Winners |
15.8 |
|
|
Innovation |
13.8 |
|
|
Consumer Stalwarts |
7.9 |
|
|
Idiosyncratic |
1.5 |
|
US Re-emergence |
23.2 |
|
|
|
Consumer |
8.4 |
|
|
Normalisation |
6.0 |
|
|
Industrial |
4.8 |
|
|
Capital Cycle |
2.0 |
|
|
Government Budgets |
2.0 |
|
European and Japanese Healing |
15.3 |
|
|
|
Consumer |
5.2 |
|
|
Abenomics |
4.8 |
|
|
Industrial |
2.8 |
|
|
Normalisation |
2.5 |
|
Developing Market Growth |
12.4 |
|
|
|
Consumer Catch-Up |
9.2 |
|
|
Commodities |
1.8 |
|
|
Industrial |
1.4 |
|
Bonds and Net Liquid Assets |
9.0 |
|
|
|
Net Liquid Assets |
8.4 |
|
|
Bonds |
0.6 |
|
Other |
1.1 |
|
|
Total Assets |
100.0 |
|
The Monks Investment Trust PLC
|
Portfolio Positioning as at 31 October 2015 (Ctd) |
Geographical Analysis
|
|
At 31 October 2015 % |
At 30 April 2015 % |
|
North America |
42.4 |
38.7 |
|
Continental Europe |
15.9 |
14.0 |
|
Emerging Markets |
12.0 |
13.7 |
|
Japan |
9.0 |
9.3 |
|
United Kingdom |
8.9 |
10.7 |
|
Developed Asia |
2.8 |
2.7 |
|
Bonds |
0.6 |
6.5 |
|
Net Liquid Assets |
8.4 |
4.4 |
|
Total Assets |
100.0 |
100.0 |
Sectoral Analysis
|
|
|
At 31 October 2015 % |
At 30 April 2015 % |
|
Equities: |
Oil and Gas |
2.3 |
4.4 |
|
|
Basic Materials |
1.2 |
1.4 |
|
|
Industrials |
13.3 |
14.3 |
|
|
Consumer Goods |
10.3 |
10.2 |
|
|
Health Care |
6.3 |
6.0 |
|
|
Consumer Services |
17.1 |
14.6 |
|
|
Financials |
27.4 |
26.6 |
|
|
Technology |
12.4 |
11.2 |
|
|
Telecommunications |
0.7 |
0.4 |
|
|
91.0 |
89.1 |
|
|
Bonds |
0.6 |
6.5 |
|
|
Net Liquid Assets |
8.4 |
4.4 |
|
|
Total Assets |
100.0 |
100.0 |
|
The Monks Investment Trust PLC
Thirty largest equity holdings at 31 October 2015
|
Name |
Growth Category |
Business |
Value £'000 |
% of |
|
Royal Caribbean Cruises |
Cyclical |
Cruise line operator |
37,605 |
3.4 |
|
Prudential |
Stalwart |
International financial services |
36,424 |
3.3 |
|
Amazon.com |
Rapid |
Online retailer |
30,446 |
2.8 |
|
Naspers |
Rapid |
Media and e-commerce |
25,328 |
2.3 |
|
Alphabet |
Rapid |
Online search engine |
23,868 |
2.2 |
|
Ryanair |
Rapid |
Low cost airline |
22,411 |
2.0 |
|
SAP |
Stalwart |
Enterprise software |
20,226 |
1.8 |
|
CRH |
Latent |
Diversified building materials |
19,962 |
1.8 |
|
Anthem |
Stalwart |
Healthcare insurer |
19,112 |
1.7 |
|
MS&AD Insurance |
Latent |
Non-life insurer |
18,202 |
1.6 |
|
Markel |
Cyclical |
Speciality insurance |
17,776 |
1.6 |
|
TSMC |
Cyclical |
Semiconductor manufacturer |
17,286 |
1.6 |
|
TD Ameritrade |
Cyclical |
Online brokerage |
16,884 |
1.5 |
|
First Republic Bank |
Cyclical |
Retail bank |
16,189 |
1.5 |
|
Nestlé |
Stalwart |
Food and beverage producer |
15,202 |
1.4 |
|
AIA |
Rapid |
Insurance |
14,298 |
1.3 |
|
Carmax |
Cyclical |
Sells and retails new and used cars and light trucks |
13,753 |
1.2 |
|
Visa |
Stalwart |
Global electronic payments network |
12,846 |
1.2 |
|
M&T Bank |
Cyclical |
Retail and commercial bank |
12,539 |
1.1 |
|
MasterCard |
Stalwart |
Global electronic payments network |
12,110 |
1.1 |
|
Moody's |
Stalwart |
Credit rating agency |
12,093 |
1.1 |
|
Wolseley |
Cyclical |
Building materials distributor |
11,994 |
1.1 |
|
Schindler |
Stalwart |
Elevator and escalator manufacturer |
11,734 |
1.1 |
|
|
Rapid |
Social networking |
11,519 |
1.0 |
|
Martin Marietta Materials |
Cyclical |
Cement and aggregates producer |
11,510 |
1.0 |
|
Baidu |
Rapid |
Chinese internet search engine |
11,420 |
1.0 |
|
Alibaba |
Rapid |
Online and mobile commerce |
11,391 |
1.0 |
|
Samsung Electronics |
Latent |
Consumer and industrial electronic equipment |
11,160 |
1.0 |
|
EOG Resources |
Cyclical |
Natural gas explorer and producer |
11,037 |
1.0 |
|
TripAdvisor |
Rapid |
Online travel review platform |
10,436 |
0.9 |
|
|
|
|
516,761 |
46.6 |
The Monks Investment Trust PLC
Income statement (unaudited)
|
|
For the six months ended 31 October 2015 |
For the six months ended 31 October 2014 |
For the year ended 30 April 2015 |
||||||
|
|
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
Gains on sales of investments |
- |
11,056 |
11,056 |
- |
30,760 |
30,760 |
- |
245,937 |
245,937 |
|
Changes in investment holding gains and (losses) |
- |
(49,791) |
(49,791) |
- |
7,291 |
7,291 |
- |
(146,662) |
(146,662) |
|
Currency gains |
- |
1,104 |
1,104 |
- |
2,063 |
2,063 |
- |
4,892 |
4,892 |
|
Income from investments and interest receivable |
6,925 |
- |
6,925 |
9,647 |
- |
9,647 |
20,215 |
- |
20,215 |
|
Investment management fee (note 3) |
(2,316) |
- |
(2,316) |
(2,292) |
- |
(2,292) |
(4,668) |
- |
(4,668) |
|
Other administrative expenses |
(566) |
- |
(566) |
(516) |
- |
(516) |
(1,087) |
- |
(1,087) |
|
Net return before finance costs and taxation |
4,043 |
(37,631) |
(33,588) |
6,839 |
40,114 |
46,953 |
14,460 |
104,167 |
118,627 |
|
Finance costs of borrowings |
(1,604) |
- |
(1,604) |
(1,291) |
- |
(1,291) |
(2,846) |
- |
(2,846) |
|
Net return on ordinary activities before taxation |
2,439 |
(37,631) |
(35,192) |
5,548 |
40,114 |
45,662 |
11,614 |
104,167 |
115,781 |
|
Tax on ordinary activities |
(545) |
- |
(545) |
(433) |
- |
(433) |
(1,065) |
- |
(1,065) |
|
Net return on ordinary activities after taxation |
1,894 |
(37,631) |
(35,737) |
5,115 |
40,114 |
45,229 |
10,549 |
104,167 |
114,716 |
|
Net return per ordinary share (note 4) |
0.89p |
(17.59p) |
(16.70p) |
2.26p |
17.74p |
20.00p |
4.74p |
46.84p |
51.58p |
|
Note: Dividends per share paid and payable in respect of the period (note 5) |
0.50p |
|
|
0.50p |
|
|
3.95p |
|
|
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.
The Monks Investment Trust PLC
Balance sheet (unaudited)
|
|
At 31 October 2015 £'000 |
At 30 April 2015 £'000 |
|
Fixed assets |
|
|
|
Investments held at fair value through profit or loss (note 6) |
1,010,404 |
1,096,625 |
|
Current assets |
|
|
|
Debtors |
4,408 |
2,032 |
|
Cash and short term deposits |
90,998 |
50,815 |
|
|
95,406 |
52,847 |
|
Creditors |
|
|
|
Amounts falling due within one year: |
|
|
|
Bank loan (note 7) |
(83,168) |
(84,284) |
|
Other creditors |
(2,409) |
(1,852) |
|
|
(85,577) |
(86,136) |
|
Net current assets/(liabilities) |
9,829 |
(33,289) |
|
Total assets less current liabilities |
1,020,233 |
1,063,336 |
|
Creditors |
|
|
|
Amounts falling due after more than one year: |
|
|
|
Debenture stock (note 7) |
(39,761) |
(39,745) |
|
Net assets |
980,472 |
1,023,591 |
|
|
|
|
|
Capital and reserves |
|
|
|
Called up share capital |
10,698 |
10,698 |
|
Share premium |
11,100 |
11,100 |
|
Capital redemption reserve |
8,700 |
8,700 |
|
Capital reserve |
906,327 |
943,958 |
|
Revenue reserve |
43,647 |
49,135 |
|
Shareholders' funds |
980,472 |
1,023,591 |
|
Net asset value per ordinary share (after deducting borrowings at fair value) (note 7) |
455.9p |
476.0p |
|
Net asset value per ordinary share (after deducting borrowings at par) |
458.1p |
478.3p |
|
Ordinary shares in issue (note 8) |
213,963,859 |
213,963,859 |
The Monks Investment Trust PLC
Statement of Changes in Equity (unaudited)
For the six months ended 31 October 2015
|
|
Share £'000 |
Share premium £'000 |
Capital redemption reserve £'000 |
Capital reserve* £'000 |
Revenue reserve £'000 |
Shareholders' £'000 |
|
Shareholders' funds at 1 May 2015 |
10,698 |
11,100 |
8,700 |
943,958 |
49,135 |
1,023,591 |
|
Net return on ordinary activities after taxation |
- |
- |
- |
(37,631) |
1,894 |
(35,737) |
|
Shares purchased for cancellation (note 8) |
- |
- |
- |
- |
- |
- |
|
Dividends paid during the period (note 5) |
- |
- |
- |
- |
(7,382) |
(7,382) |
|
Shareholders' funds at 31 October 2015 |
10,698 |
11,100 |
8,700 |
906,327 |
43,647 |
980,472 |
For the six months ended 31 October 2014
|
|
Share £'000 |
Share premium £'000 |
Capital redemption reserve £'000 |
Capital reserve* £'000 |
Revenue reserve £'000 |
Shareholders' £'000 |
|
Shareholders' funds at 1 May 2014 |
11,394 |
11,100 |
8,004 |
894,882 |
47,516 |
972,896 |
|
Net return on ordinary activities after taxation |
- |
- |
- |
40,114 |
5,115 |
45,229 |
|
Shares purchased for cancellation |
(208) |
- |
208 |
(15,905) |
- |
(15,905) |
|
Dividends paid during the period (note 5) |
- |
- |
- |
- |
(7,824) |
(7,824) |
|
Shareholders' funds at 31 October 2014 |
11,186 |
11,100 |
8,212 |
919,091 |
44,807 |
994,396 |
* The Capital Reserve balance at 31 October 2015 includes holding gains on investments of £26,924,000 (31 October 2014 - gains of £230,668,000).
The Monks Investment Trust PLC
Condensed cash flow statement (unaudited)
|
|
Six months to 31 October 2015 £'000 |
Six months to 31 October 2014 £'000 |
|
Cash flows from operating activities |
|
|
|
Net return on ordinary activities before taxation |
(35,192) |
45,662 |
|
Net losses/(gains) on investments |
38,735 |
(38,051) |
|
Currency gains |
(1,104) |
(2,063) |
|
Amortisation of fixed income book cost |
(159) |
(235) |
|
Finance costs of borrowings |
1,604 |
1,291 |
|
Overseas tax incurred |
(527) |
(430) |
|
Changes in debtors and creditors |
103 |
(80) |
|
Cash from operations |
3,460 |
6,094 |
|
Interest paid |
(1,451) |
(1,275) |
|
Net cash inflow from operating activities |
2,009 |
4,819 |
|
Net cash inflow from investing activities |
45,568 |
21,001 |
|
Equity dividends paid (note 5) |
(7,382) |
(7,824) |
|
Shares bought back |
- |
(14,094) |
|
Net cash outflow from financing activities |
(7,382) |
(21,918) |
|
Increase in cash and cash equivalents |
40,195 |
3,902 |
|
Exchange movements |
(12) |
2,063 |
|
Cash and cash equivalents at start of period |
50,815 |
41,592 |
|
Cash and cash equivalents at end of period* |
90,998 |
47,557 |
* Cash and cash equivalents represent cash at bank and in short term money markets deposits repayable on demand.
The Monks Investment Trust PLC
Notes to the condensed financial statements (unaudited)
|
1. |
The condensed financial statements for the six months to 31 October 2015 comprise the statements set out in the previous pages together with the related notes below. They have been prepared in accordance with FRS 104 'Interim Financial Reporting' and the AIC's Statement of Recommended Practice issued in November 2014 and have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance 'Review of Interim Financial Information'. The Company has adopted FRS 102 for its financial year ending 30 April 2016. The application of the new reporting standards and the AIC's issued Statement of Recommended Practice has had no impact on the Company's Income Statement, Balance Sheet or Statement of Changes in Equity (previously called the Reconciliation of Movements in Shareholders' Funds) for periods previously reported. The Condensed Cash Flow Statement has been restated to reflect presentational changes required and does not include any other material changes. The Financial Statements for the six months to 31 October 2015 have been prepared on the basis of the same accounting policies as set out in the Company's Annual Report and Financial Statements at 30 April 2015.
Going Concern Having considered the nature of the Company's assets, its liabilities, projected income and expenditure together with the Company's investment objectives and principal risks and uncertainties, as set out in note 11 below, it is the Directors' opinion that the Company has adequate resources to continue in operational existence for the foreseeable future. The Company's assets, the majority of which are investments in quoted securities which are readily realisable, exceed its liabilities significantly. All borrowings require the prior approval of the board. The Board approves borrowing and gearing limits and reviews regularly the amounts of any borrowings and the level of gearing as well as compliance with borrowing covenants. Accordingly, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing these financial statements and confirm that they are not aware of any material uncertainties which may affect its ability to continue to do so. |
|||
|
2. |
The financial information contained within this Interim Financial Report does not constitute statutory accounts as defined in sections 434 to 436 of the Companies Act 2006. The financial information for the year ended 30 April 2015 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was unqualified and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006. |
|||
|
3. |
Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed by the Company as its Alternative Investment Fund Manager (AIFM) and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. The management agreement can be terminated on six months' notice. The annual management fee is 0.45% of total assets less current liabilities, calculated quarterly.
|
|||
|
4. |
Net return per ordinary share |
Six months to 31 October 2015 £'000 |
Six months to 31 October 2014 £'000 |
Year to 30 April 2015 £'000 |
|
Revenue return on ordinary activities after taxation |
1,894 |
5,115 |
10,549 |
|
|
Capital return on ordinary activities after taxation |
(37,631) |
40,114 |
104,167 |
|
|
Total net return |
(35,737) |
45,229 |
114,716 |
|
|
Net return per ordinary share is based on the above totals of revenue and capital and on 213,963,859 (31 October 2014 - 226,115,154; 30 April 2015 - 222,374,615) ordinary shares, being the weighted average number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue. |
||||
The Monks Investment Trust PLC
Notes to the condensed financial statements (unaudited) (ctd)
|
5. |
Dividends |
Six months to 31 October 2015 £'000 |
Six months to 31 October 2014 £'000 |
Year to 30 April 2015 £'000 |
|
| Amounts recognised as distributions in the period: |
|
|
|
||
| Previous year's final dividend of 3.45p (2014 - 3.45p), paid 7 August 2015 |
7,382 |
7,824 |
7,824 |
||
| Interim dividend for the year ended 30 April 2015 of 0.50p, paid 30 January 2015 |
- |
- |
1,106 |
||
|
7,382 |
7,824 |
8,930 |
|||
| Amounts paid and payable in respect of the period: |
|
|
|
||
| Adjustment to previous year's final dividend re shares bought back |
- |
(38) |
(38) |
||
| Interim dividend for the year ending 30 April 2016 of 0.50p (2015 - 0.50p) |
1,070 |
1,119 |
1,106 |
||
| Final Dividend (2015 - 3.45p) |
- |
- |
7,382 |
||
|
1,070 |
1,081 |
8,450 |
|||
|
|
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 29 January 2016 to shareholders on the register at the close of business on 8 January 2016. The ex dividend date is 7 January 2016. The Company operates a Dividend Reinvestment Plan and the final date for elections for reinvestment of this dividend is 15 January 2016. |
||||
|
6. |
Fair Value Hierarchy The Company's investments are financial assets designated at fair value through profit or loss on initial recognition. In accordance with FRS102 and FRS104, fair value measurements have been classified using the following fair value hierarchy: Level A - Quoted prices for identical instruments in active markets; Level B - Prices of a recent transaction for identical instruments; Level C - Valuation techniques that use: (i) observable market data; or (ii) non-observable data. An analysis of the Company's financial asset investments based on the fair value hierarchy described above is shown below. |
||||
|
|
Investments held at fair value through profit or loss |
|
|
|
|
|
|
As at 31 October 2015 |
Level A £'000 |
Level B £'000 |
Level C £'000 |
Level C £'000 |
| Listed equities |
994,764 |
- |
- |
994,764 |
|
| Unlisted equities |
- |
- |
8,483 |
8,483 |
|
| Unlisted debt securities |
- |
- |
7,157 |
7,157 |
|
| Total financial asset investment |
994,764 |
- |
15,640 |
1,010,404 |
|
|
|
|
|
|
|
|
The Monks Investment Trust PLC
Notes to the condensed financial statements (unaudited) (ctd)
|
|
As at 30 April 2015 |
Level A £'000 |
Level B £'000 |
Level C £'000 |
Total £'000 |
| Listed equities |
1,012,525 |
464 |
- |
1,012,989 |
|
| Listed debt securities |
55,123 |
- |
- |
55,123 |
|
| Unlisted equities |
- |
- |
9,241 |
9,241 |
|
| Unlisted debt securities |
- |
- |
19,272 |
19,272 |
|
| Total financial asset investment |
1,067,648 |
464 |
28,513 |
1,096,625 |
|
|
|
There have been no transfers between levels of the fair value hierarchy during the period. The fair value of listed investments is bid price or, in the case of FTSE 100 constituents or holdings on certain recognised overseas exchanges, last traded price. They are categorised as level A if they trade in an active market and level B if they are traded on a market which is not considered to be active. The fair value of unlisted investments is determined using valuation techniques, determined by the Directors, based upon observable and/or non-observable data such as latest dealing prices, stockbroker valuations, net asset values and other information, as appropriate. The Company's holdings in unlisted investments are categorised as level C (ii) as the valuation techniques applied include the use of non-observable data. |
||||
|
7. |
At 31 October 2015 the book value of the Company's borrowings amounted to £123m (30 April 2015 - £124m). This comprised a £40m 6 3/8% debenture stock repayable in 2023 (30 April 2015 - £40m) and a short term bank loan of ¥15.5bn (30 April 2015 - ¥15.5bn), of which ¥10bn was repaid shortly after the period end. The fair value of borrowings at 31 October 2015 was £128m (30 April 2015 - £129m). |
||||
|
8. |
The Company did not buy back any ordinary shares during the period under review. At 31 October 2015 the Company had the authority to buy back a further 32,073,182 shares. |
||||
|
9. |
Transaction costs on purchases amounted to £166,000 (31 October 2014 - £141,000; 30 April 2015 - £1,154,000) and transaction costs on sales amounted to £40,000 (31 October 2014 - £105,000; 30 April 2015 - £471,000). |
||||
|
10. |
Shareholders will be notified on or around 14 December 2015 that the Interim Financial Report has been published and will be available on the Monks' page of the Managers' website www.monksinvestmenttrust.co.uk ‡ |
||||
|
11. |
Principal Risks and Uncertainties The principal risks facing the Company are financial risk, regulatory risk, operational risk, discount volatility and leverage risk. An explanation of these risks and how they are managed is set out on pages 15 and 16 of the Company's Annual Report and Financial Statements for the year to 30 April 2015 which is available on the Company's website: www.monksinvestmenttrust.co.uk.‡ The principal risks and uncertainties have not changed since the date of that report. |
||||
|
12. |
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.
1 December 2015
- ends -
This information is provided by RNS
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