Annual Financial Report

RNS Number : 6798U

Monks Investment Trust PLC

29 June 2009

 



THE MONKS INVESTMENT TRUST PLC

ANNUAL FINANCIAL REPORT AND PROPOSED AMENDED MEMORANDUM AND NEW MEMORANDUM AND ARTICLES OF ASSOCIATION

Copies of the Annual Report and Financial Statements for the year ended 30 April 2009 and the proposed amended Memorandum and new Memorandum and Articles of Association of Monks have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:

Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS

Tel: [phone]

The Annual Report and Financial Statements for the year ended 30 April 2009 is also available on Monks page of the Baillie Gifford website at:

http://www.bailliegifford.com/pages/documentgateway.aspx?d=72849

At the Annual General Meeting to be held on 4 August 2009, it is proposed that the objects clause of the Company's Memorandum is amended to permit a broader use of derivative instruments in accordance with the Company's investment policy. In addition, it is proposed that new Memorandum and Articles of Association be adopted in order to update the Company's existing Articles of Association to take account of changes in UK company law brought about by the further implementation of the Companies Act 2006 on 1 October 2009.  More detail on the proposed changes to the Memorandum and Articles of Association is set out in the Directors' Report and the Notice of Annual General Meeting within the Annual Report and Financial Statements for the year ended 30 April 2009.  Copies of the amended Memorandum and new Memorandum and Articles of Association are available for inspection at Royal London House, 22-25 Finsbury Square, London EC2A 1DX and Calton Square, 1 Greenside Row, Edinburgh EH1 3AN.

The unedited full text of those parts of the Annual Report and Financial Statements for the year ended 30 April 2009 which require to be published by DTR 4.1 is set out on the following pages. 

Baillie Gifford & Co

Company Secretaries

29 June 2009

CHAIRMAN'S STATEMENT

Performance

In the year to 30 April 2009 net asset value per share, with borrowings at fair value, fell by 34.0% and the FTSE World Index in sterling terms fell by 20.8%. Performance stabilised in the second half after a very poor period in September and October, during which the net asset value fell by approximately 36% while the comparative index fell by 20%. In the first half of the Company's year net asset value per share fell by 38.9% and the index fell by 23.6%. In the second half, net asset value per share rose by 7.9% and the index rose by 3.6%. The share price ended the year at 236.5p, 32.0% lower than at the end of the previous year. The performance in the last year has eroded a good part of the gains of previous years, but over the five years to 30 April 2009 the net asset value has still risen by 25.2% and the share price by 36.7% while the comparative index has only risen by 8.0%. Performance over the year was clearly disappointing and came about despite the elimination of effective gearing and the steps taken to reduce exposure to overstretched consumers and excessively leveraged and imprudent lenders during the previous year.

In very broad terms, the explanation is that stock selection was influenced by, what turned out to be, an inaccurate view of the world; namely that while the financial systems of many countries were in a critical condition and over-indebted consumers in countries such as the United States and the United Kingdom would need to start saving more and spending less, a catastrophic failure of the banking system would be prevented and growth elsewhere in the world would support demand for goods and services in general and for energy in particular. The failure of Lehman Brothers in September 2008 demonstrated that one at least of these assumptions was incorrect, as the global financial system suffered something akin to a heart attack. This seizure rapidly affected those areas of economic activity most heavily reliant on the provision of credit, including global trade as well as the purchases of homes and consumer goods such as motor vehicles. The result was an almost unprecedented contraction in real economic activity within a very short period, a collapse in share prices and a breakdown of many parts of the market for corporate bonds and similar securities. Our portfolio was incorrectly positioned for these moves and the poor performance in September and October was the result. The Managers' Report in the Annual Report contains more detail on the individual investments that had the greatest positive and negative impact on performance.

Earnings and Dividend

Earnings per share were 6.97p compared with 4.53p last year, an increase of 53.9%, mainly as a result of increased income from bonds and shares and reduced management fees. Earnings this year and last include the recovery of VAT paid in previous years: further information is included in note 3 below. Excluding the impact of the recovery of VAT from both periods, earnings per share were 6.50p and the increase over the previous year was 53.7%.

Monks invests with the aim of achieving capital growth rather than income and all costs are charged to the Revenue Account. As a result, earnings may fluctuate considerably from year to year and the Board takes this into account in recommending dividends. Earnings in the year to 30 April 2009 benefited from an unusually high level of income from bonds and increased dividend payments from a number of holdings, reflecting the fact that many of the companies in which we invest were highly profitable despite the deterioration in the global economic background. Given the general economic downturn and the restricted availability of credit, dividend cuts have to be expected and income from bonds with coupons linked to short term interest rates is also falling, as official interest rates have been cut and short term rates charged by banks to each other have also declined. The Board feels it would therefore be unwise to project the earnings for last year into the future. Owing to a large increase in income at the half year stage, it was clear that an increase in the dividend for the full year would be necessary to maintain the Company's status as an investment trust and in the light of this the Board decided to increase the interim dividend to 1.00p from 0.50p. The Board is now recommending a final dividend of 5.00p compared with 3.20p for the previous year. If approved, this will make the total dividend for the year 6.00p, an increase of 62.2% from the 3.70p paid last year.

For the Company's year to 30 April 2010 the Board will consider the payment of a second interim dividend in April.

Investment Activity

During the year we made a number of changes to the portfolio as events unfolded. Net sales of equities of £59.3m were offset by £72.5m of net purchases of bonds. There was a small decline in the amount in net current assets (mainly consisting of cash) but these remain in excess of the fair value of outstanding debt. At the year end, equities as a percentage of shareholders' funds were 74% and equities and bonds together were 98%. While both shares and bonds have fallen in price during the last year, and both fell rapidly in the immediate aftermath of the collapse of Lehman Brothers, the market for corporate bonds of various types, including convertible bonds, has for most of the year seemed to be pricing in a more disastrous outcome in terms of company failures than has been reflected in the price of many equities and, as a consequence, we have been net buyers of bonds and net sellers of equities. The sales of equities involved repositioning the portfolio to reflect a much bleaker outlook for investment spending than we had previously expected. We have, however, maintained a large position in oil service companies as, despite evidence of falling capital spending in the oil and gas industry, many of the companies we hold have relatively secure revenues based on contracts and order backlogs and the decline rate of existing oil and gas fields means that investment can only be postponed. We have, however, made some changes in this area to reflect the more difficult environment for pricing.

An extreme period in financial markets is likely to throw up opportunities to make investments at attractive prices owing to the presence of forced sellers and the absence of buyers. We have made a number of opportunistic investments of this sort, some of which are explained in more detail in the Managers' Portfolio Review. Not all of these have been successful, most notably we made some purchases of bank shares with very mixed results, but some have already generated attractive returns and we have a number of others which look promising.

Since the year end the proportion of the portfolio invested in equities has increased and at 10 June equities were 84% of shareholders' funds.

Discount and buybacks

The discount (at fair value) narrowed from 10.0% to 7.3% over the course of the year. The Board considers the level of discount and has authorised the repurchase of shares when this will be of benefit to continuing shareholders as well as being in the interest of those shareholders who may not have the luxury of choosing the optimum time to sell some or all of their shares.

During the year to 30 April 2009 £2.0m was spent on the repurchase of 535,000 shares. Since the power to buy back shares was first granted in 1999, 124.3m shares have been bought back and cancelled, representing 32% of the share capital at the start of that period. The Board will continue to buy back shares if suitable opportunities appear.

Outlook

Forecasting financial market returns over short time periods is difficult, and it is made more difficult than usual by the uncertain economic outlook, but based on current valuations there is some cause for optimism about prospective returns from equities and selected corporate bonds. This optimism has, however, to be tempered by the prospect of falling earnings, dividend cuts and heavy issuance of new shares and government bonds.

Central Banks around the world have cut interest rates to extremely low levels and begun to print money in order to stabilise their banking systems. Banks and insurance companies have also been recapitalised with taxpayers' money and deposits and borrowings have been guaranteed by governments. While bad debts continue to rise and it remains to be seen whether in all cases the amount of new capital injected will provide a sufficient cushion against future losses, these measures have helped to restore some stability and confidence in the banking system. Banks have become more willing to lend to each other and runs on banks have been averted. The ability and willingness of banks to lend varies greatly around the world and with governments now influencing lending decisions in favour of domestic borrowers this may well become an increasingly important determinant of relative economic success. In this context some of the Emerging Markets, such as China and Brazil appear better placed than the United Kingdom or many other developed economies. Many governments are also engaged on fiscal stimulus programmes at a time when tax revenues are falling and as a result government bond issuance is increasing at an unusually rapid rate. 

This combination of measures appears to have helped to arrest the rate of economic contraction in much of the developed world and to have mitigated the impact of declining exports on the Chinese economy. They may, however, be creating new problems of unsustainably large budget deficits and accelerating inflation in the future. 

AGM

At the Annual General Meeting the Company is putting forward resolutions to amend the Company's Memorandum and Articles of Association. Further information in respect of these resolutions can be found in the Directors' Report in the Annual Report.

I hope shareholders will come to the Annual General Meeting, which will be held on 4 August 2009 at 11.00am at the RSA. Our manager will give a short presentation and there will be an opportunity to ask questions.

MANAGERS' PORTFOLIO REVIEW

We started the year with a substantial cash position and by the year end this had risen as a percentage of shareholders' funds as the value of other assets has declined but we did not increase it in absolute terms and there was in fact a small reduction in net liquid assets during the year. At the start of the year we had almost no exposure to banks or other companies closely associated with the growing problems in the financial sector but there were significant positions in other economically sensitive areas. Exposure to miners was reduced early in the year but we maintained a large exposure to energy-related shares and largely avoided traditional 'defensives' such as beer, tobacco and pharmaceuticals on valuation grounds. 

In his statement above, the Chairman has explained that changes that were made to the portfolio in response to mounting evidence that the global economy was not simply growing more slowly but instead heading into the worst recession since the end of the Second World War. We believe that spending on new plant and equipment is likely to fall substantially and will be slow to recover, owing to the combination of excess capacity and financing constraints. 

In the immediate aftermath of the failure of Lehman Brothers, most share prices fell and those of companies perceived to be the most economically sensitive tended to fall more than most. Despite this, market expectations for the likely fall in earnings and the timing of the subsequent recovery appeared to be based on a mild decline in investment rather than a large fall. We made sales of companies whose fortunes are closely tied to capital expenditure as, even though their share prices had fallen, they did not appear to have fallen enough to reflect the deterioration in their prospects. Unsurprisingly companies in this category dominate the list of largest negative contributors to performance. The positive side of the weakness in markets is that it has thrown up some opportunities to make new investments at attractive prices and a number of these appear in the list of the largest positive contributors to performance. 

We have also bought holdings in companies that are likely to benefit in a period of greater austerity and cost cutting such as the American supermarket Kroger and the car parts retailer O'Reilly. In aggregate the net value of sales of equities exceeded that of purchases during the year, mainly because we were finding more attractive opportunities in bonds. 

One of the more unusual features of this crisis has been the greater degree of future financial distress implied by the prices of corporate bonds than reflected in share prices. The widespread use of borrowed money to fund investment in corporate bonds and the withdrawal of investment banks from active market-making have contributed to a breakdown of large parts of this market and from time to time bonds have become available at distressed prices. The lack of liquidity and transparency in this market create practical difficulties for investors but we have accumulated positions in a number of bonds that should generate returns similar or in some cases greater than typical returns from investing in shares. 

The ten largest positive and negative contributors to performance are described below. In aggregate the negative contributions outweighed the positive ones by a considerable margin but we believe that the portfolio is now better positioned for the year ahead.

Largest positive contributions to performance:

OGX is a Brazilian oil and gas exploration company and at the year end it was our largest single stock position. It is a relatively new company established by a leading Brazilian businessman, Eike Batista, who hired some of the most successful and knowledgeable staff from the exploration department of the state oil company, Petrobras, for his new company. Armed with their knowledge of offshore areas explored by Petrobras in the past they were successful in acquiring at auction some highly prospective acreage at a low cost. The Company listed on the Brazilian market in June 2008 at a time when oil prices were high, and widely expected to rise further, and the perception of Brazil as an attractive location for oil and gas exploration had been enhanced by major discoveries by Petrobras. The listing raised sufficient funds to finance the planned exploration and development work, which can now be seen as a major advantage. While we admired the company, we thought the shares were fully valued at the time of the listing and so did not participate in the public offering. The shares initially rose after listing but the subsequent fall in the oil price and rise in risk aversion resulted in the price falling substantially. We accumulated our holding in September and October when the price had fallen by 60% from its listing price and two-thirds from its high point, at which point we thought it represented extremely good value, and it subsequently appreciated.

Imperial Energy was a London-listed oil company operating in Russia. It had attractive assets in the Tomsk region where oil had been discovered but not exploited during the Soviet era. Despite this, it nearly fell victim to the global financial crisis as it found itself unable to secure bank financing to fund its development programme and had to raise money in a one for one rights issue instead. We took up our rights and it was subsequently taken over by the Indian oil company ONGC at a significant premium to the rights issue price. 

Credit Suisse 0% Swap Rate Linked Note 2013. This is a bond whose value on maturity in 2013 is linked to the 30-year sterling interest rate at that time. It was purchased in 2006 and still has several years to run, but its market value rose over the Company's year as the rate used to discount a payment in 2013 fell by more than longer term interest rates and the volatility of long term interest rates increased.

Reinet is a new investment holding company formed as part of the re-organisation of the Rupert family's Richemont holding company forced by changes in taxation. The main assets of Richemont were a variety of luxury good business and shares in BAT and, as part of the re-organisation, shareholders in Richemont received BAT shares and a small holding in Reinet, whose assets consisted of BAT shares and cash, plus warrants to subscribe for more Reinet shares using BAT shares. Essentially this boiled down to an opportunity to acquire shares in BAT at a discounted price and the discount subsequently narrowed.

Bay Haven C is what is known as a catastrophe bond. It pays a high rate of interest but capital could be wiped out if losses from more than three major natural disasters from a list including US hurricanes, European windstorms and earthquakes in the United States and Japan rise above set levels or are greater than a set level of magnitude within a specified period. No events of sufficient size have so far occurred and the probability of a loss of capital has diminished as the bonds approach maturity. 

Dragon Oil is an oil and gas exploration and production company whose principal assets are in Turkmenistan. Emirates National Oil Company owns a majority of the shares and the company benefits from its expertise and connections. Production is forecast to rise by around 15% a year out to 2011. We took a holding in January 2009 when the share price was depressed by the presence of a forced seller.

Brazil CPI linked bonds 2045 are Brazilian index-linked government bonds denominated in the local currency. Real interest rates are high in Brazil but have been falling and are likely to continue to fall. The only government bonds we hold anywhere are index-linked bonds, the other holdings being US and Japanese government bonds.

Goldman Sachs is one of the leading investment banks in the world and, following the disappearance of Lehman Brothers and the retrenchment of many of its other rivals, it is well placed to benefit from the large amount of fee income generated by bond and share issues as companies restructure their balance sheets. This holding was one of a small number of bank holdings purchased in the immediate aftermath of the collapse of Lehman Brothers and the only one that can really be classified as a success so far.

Tokyu REIT is a Japanese real estate investment trust. The sector has been out of favour with investors for most of the year despite low vacancy rates and the high yields available on Japanese REITs, probably owing to concerns about the ability of trusts to roll over maturing debts. Tokyu REIT appears to have benefited from a 'flight to quality' within the sector and was re-rated relative to its peers. The holding was sold and the proceeds reinvested in other Japanese REITs.

Fording Canadian Coal Trust was a Canadian company with attractive coking coal assets that was subject to a takeover bid from another Canadian mining company, Teck Resources. The holding was sold in July 2008. 

Largest negative contributions to performance:

Maritime Capital Shipping is an unquoted bulk shipping company. A planned initial public offering in July 2008 had to be abandoned as a result of difficult market conditions. It has continued to trade profitably since then but it has been adversely affected by a combination of falling freight rates and ship prices and its prospects do not appear good. In the light of the deteriorating outlook, the value of the investment has been written down. 

United States Steel is a leading American steel company. It had been benefiting from access to low cost supplies of iron ore and coking coal at a time when competitors were facing large increases in these raw material costs. We took some profits in June 2008 but the majority of the holding was sold at a loss following the sharp downturn in the global economy.

Norilsk Nickel is a Russian mining company that mainly produces nickel and palladium. Demand for nickel is driven by stainless steel production, which in turn is highly dependent on investment in new manufacturing capacity. In addition to facing a sudden collapse in demand, the company became embroiled in a complicated dispute between its major shareholders and we became concerned about the treatment of minority shareholders in any re-organisation and so sold the holding.

Arcelor Mittal is the world's largest steel maker. The investment case was based on increasingly rational pricing in a consolidating industry. This investment case was undermined by an unexpectedly large collapse in demand and the holding was sold.

Aker Kvaerner is a Norwegian oil services company. It has strong positions in a number of attractive areas including drilling equipment for deepwater drilling rigs and equipment located on the seabed used in the production of oil from deepwater fields. Unfortunately it has proved itself unable to manage a number of contracts effectively and it is also exposed to a decline in investment spending in the oil industry. It was sold in November 2008.

Baillie Gifford Pacific Fund is a pooled fund through which Monks has the bulk of its exposure to the markets of the Asia-Pacific region excluding Japan, Australia and New Zealand, and for which the manager receives no additional fees. It performed poorly during the year as it contained a large proportion of stocks which were sensitive to global growth.

Pacific Basin Shipping is a Hong Kong based bulk shipping company with an excellent track record in managing its fleet though business cycles. The company strengthened its balance sheet ahead of the downturn, in part by issuing a convertible bond, and should be able to ride out the current severe downturn. Despite this there has been a substantial fall in the price of its shares. Part of the holding was switched into the convertible bond in November 2008. 

National Oilwell Varco is an oil services company with strong market positions in a range of products for the oil and gas industry. It is currently working through a large backlog of orders and is extremely profitable but it is unlikely to be immune from the difficulties being experienced by many of its customers and the share price fell substantially during the year.

TMK is a Russian supplier of pipes to the oil and gas industry. Its Russian customers are suffering from the combined effects of low oil prices and an unfavourable tax system and investment spending is suffering. The holding was sold over a period of several months starting in November 2008.

Reliance Industries is an Indian oil company with an attractive exploration and production business that is growing from a small base but in the more immediate future profitability is likely to suffer from a decline in margins in other parts of the business. The holding was sold in November 2008.

Other notable positions:

In addition to those mentioned above, we have a number of other holdings in the oil and gas industry. These are: Petrobras, the Brazilian government controlled integrated oil company with large reserves and rising production; Diamond Offshore, Transocean and Seadrill, owners and operators of deepwater drilling rigs which remain in short supply and revenues are underpinned by long term contracts; Schlumberger, the world's largest oil service company; Cameron International, a supplier of vital equipment to the oil industry; Petrofac, which builds oil and gas related industrial plants; and Wellstream, a supplier of flexible pipes and one of whose major customers is Petrobras.

Athena Debt Opportunities Fund is a fund set up to make selective investments in oversold securitised debts. The investment was made in three stages starting in May 2008 and ending in September 2008. Since then prices of such securities have fallen further but the portfolio has not suffered from significant defaults and if this continues to be the case it should generate an attractive return in the long run.

While individual holdings tend to be small, we also have a reasonably substantial investment in corporate bonds of various sorts. This is an area of the markets where valuations reached a point at which an unprecedented level of defaults was implied. By the end of the Company's year there were some signs of improvement and we were able to take some profits.

DISTRIBUTION OF ASSETS

at 30 April 2009

				30 April 2009 %		30 April 2008 %
Equities:	United Kingdom			7.8		10.3
	Continental Europe			10.8		17.5
	North America			21.2		19.2
	Japan			3.6		6.3
	Asia Pacific			11.4		15.5
	Other Emerging Markets			12.0		12.7
				66.8		81.5
Bonds:    United Kingdom				6.3		5.2
Overseas				14.3		4.4
Net liquid assets				12.6		8.9
Total assets (before deduction of borrowings)				100.0		100.0

THIRTY LARGEST EQUITY HOLDINGS  at 30 April 2009
			2009		2008
Name	Region	Business	Value £'000	% of total assets	Value £'000
Baillie Gifford Pacific Fund	Asia Pacific	Investment fund	54,593	7.2	79,956
OGX	Other Emerging Markets	Oil and gas exploration and production	30,726	4.0	-
Petrobras	Other Emerging Markets	Integrated oil	22,071	2.9	56,229
Goldman Sachs	North America	Diversified banking	13,376	1.8	-
Diamond Offshore Drilling	North America	Offshore drilling	11,197	1.5	17,722
Transocean	North America	Offshore drilling contractor	11,015	1.4	-
Aggreko	United Kingdom	Temporary power units	10,290	1.4	10,504
Nestle	Continental Europe	Food and consumer products	10,262	1.3	11,164
Schlumberger	North America	Oilfield services	10,141	1.3	32,962
Cameron International	North America	Oilfield equipment    manufacturer	9,428	1.2	15,712
Berkshire Hathaway	North America	Insurance	9,086	1.2	3,080
National Oilwell Varco	North America	Drilling equipment    manufacturer	8,934	1.2	25,708
Canon	Japan	Copiers/printers and cameras	8,470	1.1	10,516
Seadrill	Continental Europe	Contract drilling services	8,469	1.1	17,654
Kellog	North America	Food manufacturer	8,281	1.1	-
Alstom	Continental Europe	Power generation and    transport equipment	8,148	1.1	11,156
Medco Health Solutions	North America	Pharmacy benefit manager	7,657	1.0	-
BHP Billiton	Asia Pacific	Diversified resources	7,624	1.0	18,900
Solera Holdings	North America	Transactional software	7,575	1.0	-
Juridica	United Kingdom	Investment trust	7,550	1.0	-
Partnerre	North America	Multi-line reinsurance	7,533	1.0	-
Praxair	North America	Industrial gas producer	7,399	1.0	6,775
Dragon Oil	Other Emerging Markets	Oil and gas exploration and    production	7,218	0.9	-
Total	Continental Europe	Oil and gas producer	7,025	0.9	-
Wal Mart Stores	North America	General retailer	6,725	0.9	5,789
Atlas Copco	Continental Europe	Industrial compressors and    mining equipment	6,702	0.9	16,136
Petrofac	United Kingdom	Oilfield services company	6,650	0.9	-
Banco Santander	Continental Europe	International bank	6,628	0.9	-
Ishares MSCI Taiwan	Asia Pacific	Investment fund	6,620	0.9	-
Royal Dutch Shell B	United Kingdom	Oil and gas producer	6,502	0.9	-
			333,895	44.0	339,963

RELATED PARTY TRANSACTIONS

The Directors' fees for the year are detailed in the Directors' Remuneration Report. No Director has a contract of service with the Company. During the year no Director was interested in any contract or other matter requiring disclosure under the Companies Act. Baillie Gifford & Co are employed by the Company as Managers and Secretaries under a management agreement which is terminable on not less than 12 months notice, or on shorter notice in certain circumstances. The fee in respect of each quarter is 0.1125% of the total assets less current liabilities. The management fee is levied on all assets, including holdings in collective investment schemes (OEICs) managed by Baillie Gifford & Co. However the class of shares in OEICs held by the Company does not attract a management fee. The details of the management fee are as follows:

	2009 £'000		2008 £'000
Investment management fee	3,637		5,095
VAT suffered	-		153
	3,637		5,248

Investment management fees net of the recoverable VAT recognised during the year of £1,738,000 (2008 - £1,164,000), as detailed in note 3 below, amounted to £1,899,000 (2008 - £4,084,000).

PRINCIPAL RISKS AND UNCERTAINTIES

As an investment trust, the Company invests in equities and makes other investments so as to secure its investment objective of capital growth. The Company borrows money when the Board and Managers have sufficient conviction that the assets funded by borrowed monies will generate a return in excess of the cost of borrowing. In pursuing its investment objective, the Company is exposed to a variety of risks that cause short term variation in the Company's net assets and could result in either a reduction in the Company's net assets or a reduction in the profits available for dividend.

These risks are categorised here as market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. The Board monitors closely the Company's exposures to these risks but does so in order to reduce the likelihood of a permanent reduction in the Company's net assets rather than to minimise the short term volatility.

The risk management policies and procedures outlined in this note have not changed substantially from the previous accounting period.

Market Risk

The fair value or future cash flows of a financial instrument or other investment held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - currency risk, interest rate risk and other price risk. The Board reviews and agrees policies for managing these risks and the Company's Investment Manager both assesses the exposure to market risk when making individual investment decisions and monitors the overall level of market risk across the investment portfolio on an ongoing basis.

Details of the Company's investment portfolio are shown in Note 9 in the Annual Report. Details of derivative financial instruments outstanding at the balance sheet date are shown below.

Currency Risk

Certain of the Company's assets, liabilities and income are denominated in currencies other than sterling (the Company's functional currency and that in which it reports its results). Consequently, movements in exchange rates may affect the sterling value of those items. 

The Investment Manager monitors the Company's exposure to foreign currencies and reports to the Board on a regular basis. The Investment Manager assesses the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and income of a movement in the rates of exchange to which the Company's assets, liabilities, income and expenses are exposed. However, the currency in which a company's share price is quoted is not necessarily the one in which it earns its profits. The movement in exchange rates on overseas earnings may have a more significant impact upon a company's valuation than a simple translation of the currency in which the share price of the company is quoted.

Foreign currency borrowings and forward currency contracts are used periodically to limit the Company's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. Where appropriate, they are used also to achieve the portfolio characteristics that assist the Company in meeting its investment objectives. Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below. The main change to net currency exposure during the year has been an increase in the US dollar exposure relative to other currencies, mainly due to net investment in US dollar denominated bonds and, to a lesser extent, US equities.

Exposure to currency risk through asset allocation, which is calculated by reference to the currency in which the asset or liability is quoted, is shown below.

At 30 April 2009	Investments £'000		Cash and Deposits £'000		Loans and Debentures £'000		Other debtors and creditors* £'000		Net Exposure £'000
US dollar	261,974		40,583		-		(5,003)		297,554
Euro	68,629		1,645		-		775		71,049
Japanese yen	38,713		-		-		616		39,329
Other overseas currencies	119,543		55,474		-		642		175,659
Total exposure to currency risk	488,859		97,702		-		(2,970)		583,591
Sterling	175,768		1,256		(79,549)		(310)		97,165
	664,627		98,958		(79,549)		(3,280)		680,756

 * Includes non-monetary assets of £50,000.

At 30 April 2008	Investments £'000		Cash and Deposits £'000		Loans and Debentures £'000		Other debtors and creditors* £'000		Net Exposure £'000
US dollar	326,712		-		-		791		327,503
Euro	112,647		46,640		-		711		159,998
Japanese yen	70,901		(1,456)		-		4,468		73,913
Other overseas currencies	217,826		41,708		-		5,812		265,346
Total exposure to currency risk	728,086		86,892		-		11,782		826,760
Sterling	282,968		1,124		(79,516)		(484)		204,092
	1,011,054		88,016		(79,516)		11,298		1,030,852

* Includes non-monetary assets of £16,000.

Currency Risk Sensitivity

At 30 April 2009, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return on ordinary activities would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the financial statement amounts. The analysis is performed on the same basis for 2008.

	2009 £'000		2008 £'000
US dollar	14,878		16,375
Euro	3,552		8,000
Japanese yen	1,966		3,696
Other overseas currencies	8,783		13,267
	29,179		41,338

Interest Rate Risk

Interest rate movements may affect directly:

• the fair value of the investments in fixed interest rate securities;

• the level of income receivable on cash deposits;

• the fair value of the Company's fixed-rate borrowings; and

• the interest payable on any variable rate borrowings which the Company may take out.

Interest rate movements may also impact upon the market value of the Company's investments other than its fixed income securities. The effect of interest rate movements upon the earnings of a company may have a significant impact upon the valuation of that company's equity. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and when entering borrowing agreements. The Board reviews on a regular basis the amount of investments in cash and fixed income securities and the income receivable on cash deposits, floating rate notes and other similar investments. The Company finances part of its activities through borrowings at approved levels. The amount of such borrowings and the approved levels are monitored and reviewed regularly by the Board.

Movements in interest rates, to the extent that they affect the fair value of the Company's fixed rate borrowings, may also affect the amount by which the Company's share price is at a discount or a premium to the net asset value (assuming that the Company's share price is unaffected by movements in interest rates). 

The interest rate risk profile of the Company's financial assets and liabilities at 30 April is shown below.

Financial assets	2009			2008
	Fair value £'000	Weighted average interest rate	Weighted average period until maturity	Fair value £'000	Weighted average interest rate	Weighted average period until maturity
Fixed rate:
UK bonds*	19,490	16.8%	9 years	22,367	7.4%	10 years
European bonds	9,909	11.1%	16 years	-	-	-
US bonds	22,563	28.0%	8 years	-	-	-
UK swap rate linked note†	12,062	5.6%	4 years	11,425	5.6%	5 years
Floating rate:
UK bonds (interest rate linked to sterling LIBOR)	3,654	3.1%	2 years	9,497	2.4%	58 years
European bonds (interest rate linked to Euro LIBOR)	18,989	10.7%	8 years	30,484	8.0%	9 years
Brazilian bonds (interest rate linked to Brazilian CPI)	11,634	11.6%	36 years	11,281	6.6%	37 years
US bonds (interest rate linked to US dollar LIBOR)	26,704	6.2%	13 years	5,049	16.1%	2 years
Japanese bond (interest rate linked to Japanese CPI)	10,811	3.2%	9 years	-	-	-
UK swap rate linked note†	12,538	n/a	4 years	8,833	n/a	5 years
Fixed interest collective investment schemes:
UK fund	-	-	n/a	6,570	8.3%	n/a
US dollar denominated fund	9,262	8.0%	n/a	-	-	-

The main change to the interest rate risk profile of the Company's financial assets during the year has been a net investment of £74.3m into bonds, of which £55.6m was invested in US dollar denominated fixed and floating rate bonds. The Company also closed out the hedge on its sterling denominated fixed rate investment grade bonds against the risk of a general rise in yields, realising a loss of £48,000 (fair value at 30 April 2008 - gain of £526,000; see details below).

* The fair value of the fixed rate UK bonds at 30 April 2008 excludes the fair value of the hedge described in the paragraph above.

†  This instrument comprises a zero coupon note issued by Credit Suisse and an option on sterling interest rate swaps. The zero coupon element has a redemption value of £15 million (fair value - £12.1 million) and the redemption value of the interest rate swap element (fair value - £12.5 million) is based on a formula linked to thirty year sterling interest swap rates with higher amounts payable as rates rise. Prior to redemption, the value of the interest rate swap element will vary depending on several factors such as the level of swap rates and the implied volatility of interest rate swap options.

Financial Liabilities	2009 £'000	2008 £'000
The interest rate risk profile of the Company's financial liabilities at 30 April was:
Fixed rate - sterling	79,549	79,516

The maturity profile of the Company's financial liabilities at 30 April was:
In two to five years	40,000	40,000
In more than five years (14 years)	39,549	39,516
	79,549	79,516

Interest Rate Risk Sensitivity

An increase of 100 basis points in bond yields as at 30 April 2009 would have increased total net assets and total return on ordinary activities by £2,145,000 (2008 - £13,836,000) and would have increased the net asset value per share (with debentures at fair value) by 2.6p (2008 - 7.2p). A decrease of 100 basis points would have decreased total net assets and total return on ordinary activities by £2,145,000 (2008 - £5,444,000) and would have decreased net asset value per share (with debentures at fair value) by 2.6p (2008 - 4.1p).

Other Price Risk

Changes in market prices other than those arising from interest rate risk or currency risk may also affect the value of the Company's net assets. The Board manages the market price risks inherent in the investment portfolio by ensuring full and timely access to relevant information from the Investment Manager. The Board meets regularly and at each meeting reviews investment performance, the investment portfolio and the rationale for the current investment positioning to ensure consistency with the Company's objective and investment policy.

Other Price Risk Sensitivity

A full list of the Company's investments is shown on pages 12 to 16 of the Annual Report. In addition, a geographical analysis of the portfolio (shown above), an analysis of the portfolio by broad industrial or commercial sector and a list of the 30 largest equity investments (shown above) are contained in the Managers' Portfolio Review section of the Annual Report. 74.4% of the Company's net assets are invested in quoted equities (2008 - 86.3%). A 5% increase in quoted equity valuations at 30 April 2009 would have increased total assets and total return on ordinary activities by £25,314,000 (2008 - £44,478,000). A decrease of 5% would have had an equal but opposite effect.

Liquidity Risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk is not significant as the majority of the Company's assets are investments in quoted securities that are readily realisable. The Board also sets parameters for the degree to which the Company's net assets are invested in quoted equities. The Company has the power to take out borrowings, which give it access to additional funding when required. The Company's borrowing facilities are detailed below and the maturity profile of its borrowings is set out above.

	Nominal rate	Effective rate	2009 £'000	2008 £'000
Debenture stocks:
£40 million 11% debenture stock 2012	11.0%	11.0%	40,000	40,000
£40 million 6 3/8% debenture stock 2023	6.375%	6.5%	39,549	39,516
			79,549	79,516

The debenture stocks are stated at amortised cost (see note 1(g) on page 32 of the Annual Report); the cumulative effect is to decrease the carrying amount of borrowings by £451,000 (2008 - £484,000). The debenture stocks are secured by a floating charge over the assets of the Company. Under the terms of the Debenture Agreement, total borrowings should not exceed net assets and the Company cannot undertake share buy-backs if this would result in total borrowings exceeding 66.67%.

The weighted average interest rate of the debenture stocks is 8.7% (2008 - 8.7%).

Credit Risk

This is the risk that a failure of a counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. This risk is managed as follows:

• where the Investment Manager makes an investment in a bond or other security with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question;

• the Company's listed investments are held on its behalf by Bank of New York Mellon, the Company's custodian. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held by the custodian to be delayed. The Investment Manager monitors the Company's risk by reviewing the custodian's internal control reports and reporting its findings to the Board;

• investment transactions are carried out with a large number of brokers whose creditworthiness is reviewed by the Investment Manager. Transactions are ordinarily done on a delivery versus payment basis whereby the Company's custodian bank ensures that the counterparty to any transaction entered into by the Company has delivered on its obligations before any transfer of cash or securities away from the Company is completed;

• the credit worthiness of the counterparty to transactions involving derivatives, structured notes and other arrangements, wherein the creditworthiness of the entity acting as broker or counterparty to the transaction is likely to be of sustained interest, are subject to rigorous assessment by the Investment Manager; and

• cash is only held at banks that have been identified by the Managers as reputable and of high credit quality.

Credit Risk Exposure

The exposure to credit risk at 30 April was:

	2009 £'000	2008 £'000
Fixed Interest investments	157,616	106,032
Cash and short term deposits	98,958	88,016
Debtors and prepayments	9,438	17,245
	266,012	211,293

None of the Company's financial assets are past due or impaired.

Fair value of financial assets and financial liabilities

The Directors are of the opinion that the financial assets and liabilities of the Company are stated at fair value in the balance sheet with the exception of the long term borrowings which are stated at amortised cost in accordance with FRS 26. The fair values of the long term borrowings are shown below. 

	2009			2008
	Nominal £'000	Book £'000	Fair £'000	Nominal £'000	Book £'000	Fair £'000
11% debenture stock 2012	40,000	40,000	48,036	40,000	40,000	47,889
6 3/8% debenture stock 2023	40,000	39,549	39,904	40,000	39,516	41,371
	80,000	79,549	87,940	80,000	79,516	89,260

The following financial instrument was in position as at 30 April 2008 as a hedge against movements in bond yields. It was closed during the year, realising a loss of £48,000:

Gains and losses on hedges

At 30 April 2008 Futures sold	Contracts	Counterparty	Contracted amount £'000	Notional amount £'000	Fair value £'000
Liffe Long Gilt future 10 year June 2008	181	UBS	(20,127)	(19,601)	526
					526

Hedge accounting was not adopted for this derivative.

Capital Management

The Company does not have any externally imposed capital requirements other than the debenture covenants outlined above. The capital of the Company is the ordinary share capital. It is managed in accordance with its investment policy in pursuit of its investment objective, both of which are detailed on page 19 of the Annual Report. Shares may be repurchased as explained on page 23 of the Annual Report.

Other Risks

Other risks faced by the Company include the following:

Regulatory Risk

Failure to comply with applicable legal and regulatory requirements could lead to suspension of the Company's Stock Exchange Listing, financial penalties or a qualified audit report. Breach of section 842 of the Income and Corporation Taxes Act 1988 could lead to the Company being subject to tax on capital gains. 

Baillie Gifford's Heads of Business Risk & Internal Audit and Regulatory Risk provide regular reports to the Audit Committee on Baillie Gifford's monitoring programmes. The Managers monitor investment movements and the level of forecast income and expenditure to ensure the provisions of section 842 are not breached.

Operational/Financial Risk

Failure of the Managers' accounting systems or those of other third party service providers could lead to an inability to provide accurate reporting and monitoring or a misappropriation of assets. The Board reviews the Managers' Report on Internal Controls and the Reports by other third party providers are reviewed by the Manager on behalf of the Board.

Gearing Risk

The Company may borrow money for investment purposes (sometimes known as 'gearing'). If the investments fall in value, any borrowings will magnify the extent of this loss. If borrowing facilities are not renewed, the Company may have to sell investments to repay borrowings. 

All borrowings require the prior approval of the Board and gearing levels are discussed by the Board and Managers at every meeting. The majority of the Company's investments are in quoted securities that are readily realisable.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements respectively; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors have delegated responsibility to the Managers for the maintenance and integrity of the Company's page of the Managers' website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed within the Directors and Management section confirm that, to the best of their knowledge:

• the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and loss of the Company; and

• the Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

By order of the Board

JGD FERGUSON

12 June 2009

INCOME STATEMENT

	For the year ended 30 April 2009				For the year ended 30 April 2008
	Revenue £'000	Capital £'000	Total £'000		Revenue £'000	Capital £'000	Total  £'000
(Losses)/gains on investments	-	(361,428)	(361,428)		-	118,594	118,594
Currency gains/(losses)	-	6,011	6,011		-	(67)	(67)
Income*(note 2)	33,949	-	33,949		28,735	-	28,735
Investment management fee	(3,637)	-	(3,637)		(5,248)	-	(5,248)
Recoverable VAT (note 3)	1,738	-	1,738		1,164	-	1,164
Other administrative expenses	(914)	-	(914)		(1,018)	-	(1,018)
Net return before finance costs and taxation	31,136	(355,417)	(324,281)		23,633	118,527	142,160
Finance costs of borrowings	(6,982)	-	(6,982)		(7,872)	-	(7,872)
Net return on ordinary activities before taxation	24,154	(355,417)	(331,263)		15,761	118,527	134,288
Tax on ordinary activities	(5,770)	-	(5,770)		(3,476)	-	(3,476)
Net return on ordinary activities after taxation	18,384	(355,417)	(337,033)		12,285	118,527	130,812
Net return per ordinary share (note 4)	6.97p	(134.79p)	(127.82p)		4.53p	43.68p	48.21p
Dividends paid and proposed per ordinary share (note 5)	6.00p				3.70p

* Income includes interest on VAT recovered (see note 2 on page 33 of the Annual Report).

The total column of the Income Statement is the profit and loss account of the Company.

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

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

BALANCE SHEET

		At 30 April 2009		At 30 April 2008
		£'000		£'000
Fixed assets
Investments		664,627		1,011,054
Current assets
Debtors		9,438		17,245
Cash and deposits		98,958		88,016
		108,396		105,261
Creditors
Amounts falling due within one year		(11,895)		(4,997)
Net current assets		96,501		100,264
Total assets less current liabilities		761,128		1,111,318
Creditors
Amounts falling due after more than one year (note 6)		(79,549)		(79,516)
Provisions for liabilities and charges
Deferred taxation		(823)		(950)
Total net assets		680,756		1,030,852
Capital and Reserves
Called-up share capital		13,182		13,209
Share premium		11,100		11,100
Capital redemption reserve		6,216		6,189
Capital reserve - realised		616,368		695,683
Capital reserve - unrealised		(4,881)		273,211
Revenue reserve		38,771		31,460
Equity shareholders' funds		680,756		1,030,852
Net asset value per ordinary share		255.0p		386.5p
(after deducting borrowings at fair value)
Net asset value per ordinary share		258.0p		390.0p
(after deducting borrowings at par)
Ordinary shares in issue (note 7)		263,644,859		264,179,859

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

For the year ended 30 April 2009

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 May 2008	13,209	11,100	6,189	695,683	273,211	31,460	1,030,852
Net return on ordinary activities after taxation	-	-	-	(77,325)	(278,092)	18,384	(337,033)
Shares purchased for cancellation	(27)	-	27	(1,990)	-	-	(1,990)
Dividends paid during the year	-	-	-	-	-	(11,073)	(11,073)
Shareholders' funds at 30 April 2009	13,182	11,100	6,216	616,368	(4,881)	38,771	680,756

For the year ended 30 April 2008

	Share capital £'000	Share premium £'000	Capital redemption reserve £'000	Capital reserve - realised £'000	Capital reserve - unrealised £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 May 2007	14,033	11,100	5,365	632,275	272,795	27,869	963,437
Net return on ordinary activities after taxation	-	-	-	118,111	416	12,285	130,812
Shares purchased for cancellation	(824)	-	824	(54,703)	-	-	(54,703)
Dividends paid during the year	-	-	-	-	-	(8,694)	(8,694)
Shareholders' funds at 30 April 2008	13,209	11,100	6,189	695,683	273,211	31,460	1,030,852

CASH FLOW STATEMENT
	For the year ended 30 April 2009			For the year ended 30 April 2008
	£'000	£'000			£'000	£'000
Net cash inflow from operating activities		29,056				21,486
Net cash outflow from servicing of finance		(6,950)				(8,222)
Taxation
Corporation tax paid	(3,458)				-
Overseas tax incurred	(1,114)				(1,080)
Income tax refunded/(incurred)	41				(82)
Total tax paid		(4,531)				(1,162)
Financial investment
Acquisitions of investments	(414,273)				(454,078)
Disposals of investments	414,692				564,380
Forward currency contracts	-				130
Currency gains	2,117				3,171
Net cash inflow from financial investment		2,536				113,603
Equity dividends paid		(11,073)				(8,694)
Net cash inflow before use of liquid resources and financing		9,038				117,011
Liquid resources
Decrease in short term deposits	19,638				11,555
Net cash inflow from use of liquid resources		19,638				11,555
Financing
Shares purchased for cancellation	(1,990)				(54,706)
Bank loans repaid	-				(81,216)
Net cash outflow from financing		(1,990)				(135,922)
Increase/(decrease) in cash		26,686				(7,356)
Reconciliation of net cash flow to movement in net funds
Increase/(decrease) in cash in the year		26,686				(7,356)
Decrease in short term deposits		(19,638)				(11,555)
Net cash outflow from bank loans		-				81,216
Exchange movement on short term deposits		3,894				8,477
Exchange movement on bank loans		-				(11,758)
Other non-cash changes		(33)				(32)
Movement in net funds in the year		10,909				58,992
Net funds/(debt) at 1 May		8,500				(50,492)
Net funds at 30 April		19,409				8,500
Reconciliation of net return before finance costs and taxation to net cash inflow from operating activities
Net return before finance costs and taxation		(324,281)				142,160
Losses/(gains) on investments		361,428				(118,594)
Currency (gains)/losses		(6,011)				67
Amortisation of fixed interest book cost		(1,855)				(632)
Increase in accrued income		(922)				(411)
Decrease/(increase) in debtors		1,089				(1,111)
(Decrease)/increase in creditors		(392)				7
Net cash inflow from operating activities		29,056				21,486

NOTES

1.	The financial statements for the year to 30 April 2009 have been prepared on the basis of the accounting policies set out in the Company's Annual Financial Statements at 30 April 2009, which are unchanged from the prior year and have been applied consistently.
			2009					2008
			£'000					£'000
2.	Income
	Income from investments and interest receivable		33,890					28,667
	Other income		59					68
			33,949					28,735
3.	Recoverable VAT
	In 2007 the European Court of Justice ruled that investment management fees should be exempt from VAT. Since then, HMRC has accepted the Managers' repayment claims for the periods from 1990 to 1996 and from 2000 to 2007. During the period the Company received a reimbursement of £2,902,000 in this regard of which £1,164,000 had been recognised in the year to 30 April 2008, with the balance of £1,738,000 being recognised in the current period together with interest thereon of £1,078,000.
			2009					2008
4.	Net return per ordinary share
	Revenue return		6.97p					4.53p
	Capital return		(134.79p)					43.68p
	Total return		(127.82p)					48.21p
	Revenue return per ordinary share is based on the net revenue on ordinary activities after taxation of £18,384,000 (2008 - £12,285,000) and on 263,678,571 (2008 - 271,319,153) 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 loss for the financial year of £355,417,000 (2008 - gain of £118,527,000) and on 263,678,571 (2008 - 271,319,153) 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.
		2009		2008		2009 £'000				2008 £'000
5.	Ordinary Dividends
	Amounts recognised as distributions in the year:
	Previous year's final (paid 8 August 2008)	3.20p		2.65p		8,437				7,371
	Interim (paid 30 January 2009)	1.00p		0.50p		2,636				1,323
		4.20p		3.15p		11,073				8,694
	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 842 of the Income and Corporation Taxes Act 1988 are considered. The revenue available for distribution by way of dividend for the year is £18,384,000 (2008 - £12,285,000).

		2009		2008		2009 £'000		2008 £'000
5.	Ordinary Dividends (Ctd)
	Dividends paid and proposed in respect of the financial year:
	Adjustment to previous year's final dividend re shares bought back					(17)		(66)
	Interim dividend per ordinary share (paid 30 January 2009)	1.00p		0.50p		2,636		1,323
	Proposed final dividend per ordinary share (payable 7 August 2009)	5.00p		3.20p		13,182		8,454
		6.00p		3.70p		15,801		9,711
	If approved the final dividend will be paid on 7 August 2009 to all shareholders on the register at the close of business on 10 July 2009. The ex-dividend date is 8 July 2009.
6.	The fair value of borrowings at 30 April 2009 was £87,940,000 (2008 - £89,260,000).
7.	In the year to 30 April 2009 the Company bought back 535,000 ordinary shares with a nominal value of £27,000 at a total cost of £1,990,000. At 30 April 2009 the Company had authority to buy back a further 30,520,364 ordinary shares.
8.	The Report and Accounts will be available on the Managers' website www.bailliegifford.com on or around
9.	The financial information set out above does not constitute the Company's statutory accounts for the year ended  30 April 2009. The financial information for 2008 is derived from the financial statements for 2008 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2008 and 2009 accounts; their reports for both years was unqualified and, for the 2008 accounts, did not contain a statement under section 237(2) or (3) of the Companies Act 1985 and, for the 2009 accounts, did not contain a statement under sections 495 to 497 of the Companies Act 2006. The statutory accounts for 2009 will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
10.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

END

 

 

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