Final Results
Monks Investment Trust PLC
07 June 2006
THE MONKS INVESTMENT TRUST PLC
Results for the year to 30 April 2006
Over the year Monk's net asset value per share(1) rose by 46.7%. The share price
rose by 57.2% and in the last month of the financial year reached an all time
high. Over the same period the FTSE World Index rose by 30.4% (in sterling
terms). During the period, the continuing exposure to overseas listed oil and
gas companies and a timely increase in the size of the Japanese portfolio were
significant contributors to the outperformance.
• Investment policy. Exposure to equities was increased, notably with
additional purchases being made in Japan.
• Borrowings. Additional borrowings of Y16.6bn, equivalent to about £80m,
were taken out at a rate of 1.4% repayable in 2010.
• Purchase of Swap Rate Linked Note. In the second half, £25m was invested
in a Credit Suisse 0% Swap Rate Linked Note 2013. The investment reflects
the view that long term interest rates in the UK are likely to
rise over time.
• Dividend. Earnings per share were 2.20p (1.73p in previous year) and a
final dividend of 1.40p (1.20p) is being recommended to bring the total to
1.90p (1.70p).
• Second Half Results. In the second half net asset value per share 1 rose
by 20.2% while the comparative index (2) rose by 13.0%.
• Outlook. Despite recent market turbulence, the Managers continue to
identify suitable long-term investment opportunities.
Monks, with total assets of £1,095 million, invests internationally in order to
achieve capital growth. Monks is managed by Baillie Gifford & Co, the
independent Edinburgh based fund management group with around £44 billion under
management and advice at 6 June 2006.
Past performance is no guarantee of future performance. The value of an
investment and any income from it is not guaranteed and may go down as well as
up and investors may not get back the amount invested. This is because the share
price is determined by the changing conditions in the relevant stockmarkets in
which the Company invests and by the supply and demand for the Company's shares.
Investment in investment trusts should be regarded as medium to long-term. You
can find up to date performance information about Monks on the Baillie Gifford
website at www.bailliegifford.com.
- ends -
For further information please contact:
Gerald Smith, Manager
The Monks Investment Trust PLC 0131 275 2000
Robert O'Riordan 0131 275 3181
Baillie Gifford & Co 07730 412007
Mike Lord, Director
Broadgate Marketing 020 7726 6111
THE MONKS INVESTMENT TRUST PLC
PERFORMANCE ATTRIBUTION (in sterling terms)
for the year to 30 April 2006
Computed relative to the FTSE World Index (in sterling terms) with net income
reinvested.
Monks Contribution
Index Allocation Asset Allocation Performance * Contribution attributable to:
to relative Stock Asset +
return selection
Portfolio 30.04.05 30.04.06 30.04.05 30.04.06 Monks Index allocation
breakdown % % % % % % % % %
UK 10.2 10.0 21.1 15.4 30.8 30.5 (0.3) - (0.3)
Europe ex. UK 19.0 19.7 11.2 11.3 47.3 41.8 (0.1) 0.4 (0.5)
North America 54.0 50.1 39.8 38.1 38.1 24.2 5.3 4.3 1.0
Japan 8.6 10.5 12.2 25.0 54.7 51.1 1.7 0.4 1.3
Asia Pacific 6.3 6.9 12.7 13.0 54.7 45.3 1.4 0.8 0.6
Other Emerging
Markets 1.9 2.8 3.4 6.9 134.9 73.4 2.1 0.5 1.6
Bonds - - 3.6 6.7 7.5 - (0.7) - (0.7)
Cash and Forward
Contracts - - 8.3 0.8 0.7 - (2.1) - (2.1)
Borrowings - - (12.3) (17.2) 9.2 - 2.6 - 2.6
Total 100.0 100.0 100.0 100.0 46.7 33.2 10.1 6.6 3.3
Past performance is no guarantee of future performance.
Source: HSBC/Baillie Gifford & Co
Contributions cannot be added together, as they are geometric; for example to
calculate how a return of 46.7% against an index return of 33.2% translates into
a relative return of 10.1%, divide the portfolio return of 146.7 by the index
return of 133.2 and subtract one.
* The above returns are calculated on a total return basis with net
income reinvested and debentures valued at par. Monks' figures represent the
returns on the Company's portfolio and the index figures for each geographical
area represent the return on the appropriate FTSE World Index.
+ Asset allocation includes the contribution attributable to currency
movements.
THE MONKS INVESTMENT TRUST PLC
The following is the unaudited preliminary statement for the year to 30 April
2006 which was approved by the Board on 6 June 2006. The Directors of The Monks
Investment Trust PLC are recommending to the Annual General Meeting of the
Company to be held on 1 August 2006 the payment of a final dividend of 1.40p net
(1.20p net last year) per ordinary share, making a total of 1.90p net (1.70p
net last year) per ordinary share for the year ended 30 April 2006.
INCOME STATEMENT
(unaudited*)
For the year ended For the year ended
30 April 2006 30 April 2005
Revenue Capital Total Revenue Capital Total
Restated+ Restated+
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 297,083 297,083 - 39,512 39,512
Currency (losses)/gains - (5,989) (5,989) - 1,228 1,228
Income (note 2) 20,085 - 20,085 16,955 - 16,955
Investment management fee (4,506) - (4,506) (3,428) - (3,428)
Other administrative expenses (937) - (937) (711) - (711)
Net return before finance costs
and taxation 14,642 291,094 305,736 12,816 40,740 53,556
Finance costs of borrowings (7,443) - (7,443) (6,982) - (6,982)
Return on ordinary activities
before taxation 7,199 291,094 298,293 5,834 40,740 46,574
Tax on ordinary activities (847) - (847) (770) - (770)
Return on ordinary activities
after taxation 6,352 291,094 297,446 5,064 40,740 45,804
Return per ordinary share 2.20p 100.75p 102.95p 1.73p 13.96p 15.69p
(note 3)
* The total column of the Income Statement is the profit and loss account of the
Company.
+ Various changes in accounting policies, as described in note 1, have had the
cumulative effect of increasing reported
net assets for the year ended 30 April 2005 by £2,729,000.
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.
THE MONKS INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 30 April 2006
(unaudited)
30 April 2006 30 April 2005
Restated+
£'000 £'000
Net assets
Investments at fair value 1,084,498 675,883
Net liquid assets 10,122 55,417
Total assets (before deduction of borrowings) 1,094,620 731,300
Loans and debentures (note 5) (159,422) (79,419)
935,198 651,881
Capital and Reserves
Called-up share capital 14,368 14,568
Share premium 11,100 11,100
Capital redemption reserve 5,030 4,830
Capital reserve - realised 519,996 468,408
Capital reserve - unrealised 362,574 132,270
Revenue reserve 22,130 20,705
Equity shareholders' funds 935,198 651,881
Net asset value per ordinary share 319.6p 217.9p
(after deducting borrowings at fair value)
Net asset value per ordinary share 325.3p 223.5p
(after deducting borrowings at par)
+ See note 1.
THE MONKS INVESTMENT TRUST PLC
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(unaudited)
For the year ended 30 April 2006
Share Share Capital Capital Capital Revenue Total
capital premium redemption reserve - reserve - reserve shareholders'
reserve realised unrealised funds
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at
1 May 2005 as
previously reported 14,568 11,100 4,830 468,408 133,037 17,209 649,152
Prior year adjustments:
Revaluation of
investments at bid
prices - - - - (767) - (767)
Reversal of provision
of final dividend - - - - - 3,496 3,496
Shareholders' funds at
1 May 2005 as restated 14,568 11,100 4,830 468,408 132,270 20,705 651,881
Return on ordinary
activities after
taxation - - - 60,790 230,304 6,352 297,446
Shares purchased for
cancellation (200) - 200 (9,202) - - (9,202)
Dividends paid during
the year - - - - - (4,927) (4,927)
Shareholders' funds at
30 April 2006 14,368 11,100 5,030 519,996 362,574 22,130 935,198
For the year ended 30 April 2005
Share Share Capital Capital Capital Revenue Total
capital premium redemption reserve - reserve - reserve shareholders'
reserve realised unrealised funds
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Shareholders' funds at
1 May 2004 as
previously reported 14,718 11,100 4,680 466,425 98,752 17,098 612,773
Prior year adjustments:
Revaluation of
investments at bid
prices - - - - (380) - (380)
Reversal of provision
of final dividend - - - - - 1,913 1,913
Shareholders' funds at
1 May 2004 as restated 14,718 11,100 4,680 466,425 98,372 19,011 614,306
Return on ordinary
activities after
taxation - - - 6,842 33,898 5,064 45,804
Shares purchased for
cancellation (150) - 150 (4,859) - - (4,859)
Dividends paid during
the year - - - - - (3,370) (3,370)
Shareholders' funds at
30 April 2005 14,568 11,100 4,830 468,408 132,270 20,705 651,881
THE MONKS INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
For the year ended For the year ended
30 April 2006 30 April 2005
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 12,669 12,855
Net cash outflow from servicing of finance (6,971) (6,949)
Total tax paid (779) (773)
Net cash (outflow)/inflow from financial investment (96,338) 47,346
Equity dividends paid (4,927) (3,370)
Net cash (outflow)/inflow before use of liquid resources
and financing (96,346) 49,109
Net cash inflow/(outflow) from use of liquid resources 18,000 (18,000)
FINANCING
Shares purchased for cancellation (9,202) (4,859)
Bank loans drawn down 78,866 -
Net cash inflow/(outflow) from financing 69,664 (4,859)
(Decrease)/increase in cash (8,682) 26,250
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash in the year (8,862) 26,250
(Decrease)/increase in short term deposits (18,000) 18,000
Net inflow from bank loans (78,866) -
Exchange movement on bank loans (1,105) -
Other non-cash changes (32) (33)
Movement in net debt in the year (106,685) 44,217
Net debt at 1 May (23,648) (67,865)
Net debt at 30 April (130,333) (23,648)
Reconciliation of net return before finance costs and
taxation to net cash inflow from operating activities
Net return on ordinary activities before finance costs and 305,736 53,556
taxation
Gains on investments (297,083) (39,512)
Currency losses/(gains) 5,989 (1,228)
Amortisation of fixed interest book cost (22) -
Changes in debtors and creditors (1,568) (178)
Income tax (incurred)/refunded (383) 217
Net cash inflow from operating activities 12,669 12,855
THE MONKS INVESTMENT TRUST PLC
DISTRIBUTION OF ASSETS
at 30 April 2006
(unaudited)
30 April 2006 30 April 2005
% Restated+
%
Equities: United Kingdom 13.1 18.7
Continental Europe 9.6 9.9
North America 32.4 35.4
Japan 21.3 10.9
Asia Pacific 11.1 11.3
Other Emerging Markets 5.9 3.0
93.4 89.2
Bonds: United Kingdom 4.3 3.0
Overseas 1.4 0.2
Net liquid assets 0.9 7.6
Total assets (before deduction of borrowings) 100.0 100.0
+ See note 1
THE MONKS INVESTMENT TRUST PLC
THIRTY LARGEST EQUITY HOLDINGS
at 30 April 2006
2006 2005
Name Region Business Fair value % of Fair value
total
£'000 assets £'000
Baillie Gifford Pacific
Fund Asia Pacific Investment fund 75,013 6.9 49,814
Suncor Energy North America Integrated oil 35,246 3.2 14,534
Petrobras Other Emerging Markets Integrated oil 34,905 3.2 14,006
Encana North America Oil and gas exploration 25,789 2.4 15,777
Golden West Financial North America Savings and loans 24,432 2.2 22,841
EOG Resources North America Natural gas 24,120 2.2 12,438
Sasol Other Emerging Markets Oil and gas 22,437 2.0 5,540
Moody's North America Bond rating agency 17,972 1.7 19,299
Baillie Gifford Japanese
Smaller Companies Fund Japan Investment fund 17,733 1.6 4,862
Altria North America Tobacco and food 17,704 1.6 14,956
Canon Japan Copiers and cameras 17,330 1.6 7,236
Mitsubishi UFJ Japan Banking 15,453 1.4 5,399
Wellpoint North America Managed care 14,841 1.4 6,684
Nissan Motor Japan Car manufacturer 14,274 1.3 3,401
Mitsui Japan Diversified trading house 13,589 1.2 4,921
Schlumberger North America Oilfield services 12,931 1.2 -
Total Fina Elf Continental Europe Integrated oil 12,724 1.2 9,760
GlaxoSmithKline United Kingdom Ethical pharmaceuticals 12,354 1.1 10,409
Omnicom North America Advertising agency 12,131 1.1 5,208
BHP Billiton Asia Pacific Diversified resources 11,855 1.1 8,918
Walgreen North America Pharmacy chain 11,762 1.1 11,496
Mohawk Industries North America Carpets 11,731 1.1 12,213
Asahi Glass Japan Glass 11,620 1.1 6,170
Royal Bank of Scotland United Kingdom Banking 11,098 1.0 9,753
Barclays United Kingdom Banking 10,963 1.0 8,587
Atlas Copco Continental Europe Engineering 10,940 1.0 4,226
Praxair North America Atmospheric gas producer
and distributor 10,343 0.9 -
Getty Images North America Internet based image 10,313 0.9 3,745
library
Svenska Handelsbanken Continental Europe Retail banking 10,240 0.9 5,861
CNOOC Asia Pacific Oil and gas production 10,215 0.9 6,499
542,058 49.5 304,553
+ See note 1.
THE MONKS INVESTMENT TRUST PLC
NOTES
1. A number of new UK Financial Reporting Standards have been introduced
which the Company must comply with this year. These standards are part of
the UK convergence programme with International Accounting Standards and as
such have required most UK listed companies to restate prior year figures to
reflect the new accounting treatment. These financial statements have been
prepared on the basis of the accounting policies set out in the Company's
Annual Financial Statements at 30 April 2005 except as detailed below:
• Investments have been valued at fair value through profit or
loss in accordance with FRS 26 ' Financial Instruments:
Measurement'. The effect is to move from a mid price to a bid
price basis of valuation, resulting in a reduction in the value
of investments and unrealised capital reserves of £605,000
(2005 - £767,000);
• In compliance with FRS 21 'Events after the Balance Sheet Date',
dividends declared after the period end are no longer treated
as a liability at the period end. The effect is to reduce
creditors and increase revenue reserves by £4,023,000
(2005 - £3,496,000).
The implementation of FRS 25 and the 2005 Statement of Recommended Practice
'Financial Statements of Investment Trust Companies' (SORP) has resulted in
changes in the presentation of total returns. Previously dividend distributions
in respect of a year were disclosed on the Statement of Total Return and the
revenue column of that statement was deemed to be the profit and loss account of
the Company. We now present an Income Statement which does not show the
distribution in respect of equity shares and, whilst it still shows information
on capital and revenue returns, it is the total return column which is regarded
as the profit and loss account of the Company. Dividend distributions are now
shown in the Reconciliation of Movements in Shareholders' Funds and in the Notes
to the Accounts.
The overall effect of these changes in shareholders' funds and reserves is
detailed below:
2006 2005
£'000 £'000
Effect on shareholders' funds:
Investments (605) (767)
Creditors: dividends payable 4,023 3,496
3,418 2,729
2. Income
Income from investments 18,120 14,607
Other income 1,965 2,348
20,085 16,955
3. Return per ordinary share
Revenue return 2.20p 1.73p
Capital return 100.75p 13.96p
Revenue return per ordinary share is based on the net revenue on ordinary
activities after taxation of £6,352,000 (2005 - £5,064,000) and on 288,939,679
(2005 - 291,979,953) ordinary shares of 5p, being the weighted average number of
ordinary shares in issue during the year.
Capital return per ordinary share is based on the net capital gain for the
financial year of £291,094,000 (2005 - £40,740,000) and on 288,939,679 (2005 -
291,979,953) 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.
THE MONKS INVESTMENT TRUST PLC
NOTES
2006 2005 2006 2005
Restated+ Restated+
£'000 £'000
4. Ordinary Dividends
Amounts recognised as distributions in the
period:
Previous year's final (paid 5 August 2005) 1.20p 0.65p 3,490 1,913
Interim (paid 31 January 2006) 0.50p 0.50p 1,437 1,457
1.70p 1.15p 4,927 3,370
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 £6,352,000 (2005
- £5,064,000).
2006 2005 2006 2005
£'000 £'000
Dividends paid and proposed in the period:
Adjustment to provision for 2005 final
dividend re shares bought back
- - (6) -
Interim dividend per ordinary share (paid 31
January 2006)
0.50p 0.50p 1,437 1,457
Proposed final dividend per ordinary share
(payable 4 August 2006)
1.40p 1.20p 4,023 3,496
1.90p 1.70p 5,454 4,953
If approved the final dividend will be paid on 4 August 2006 to all shareholders on the register at the
close of business on 14 July 2006. The ex-dividend date is 12 July 2006.
5. Loans and debentures include two 5 year fixed rate yen loans of Y8,200 million
and Y8,400 million maturing on 6 December 2010 and 13 December 2010 respectively
(2005 - nil).
Net asset value per share (after deducting debentures and loans at fair value)
was 319.6p (2005 - 217.9p). The fair value of the debenture stocks at 30 April
2006 was £96,900,000 (2005 - £96,508,000). The fair value of the loans was
£79,376,000 (2005 - nil).
6. In the year to 30 April 2006 the Company bought back 3,995,000 ordinary
shares with a nominal value of £199,750 at a total cost of £9,202,000. At 30
April 2006 the Company had authority to buy back a further 39,604,958 ordinary
shares.
7. The financial information set out above does not constitute the Company's
statutory accounts for the year ended 30 April 2006. The financial information
for 2005 is derived from the statutory accounts for 2005, as restated for the
changes to accounting practices detailed in note 1 above. The statutory
accounts for 2005 have been delivered to the Registrar of Companies. The
Auditors have reported on the 2005 accounts; their report was unqualified and it
did not contain a statement under section 237(2) or (3) of the Companies Act
1985. The statutory accounts for 2006 will be finalised on the basis of the
financial information presented in this preliminary announcement and will be
delivered to the Registrar of Companies following the Company's Annual General
Meeting.
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
+ See note 1.
--------------------------
(1) With the borrowings at fair value
(2) FTSE World Index in sterling terms
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