Interim Results
Monks Investment Trust PLC
26 November 2002
THE MONKS INVESTMENT TRUST PLC
Results for the six months to 31 October 2002
During six months which saw some of the weakest stockmarkets for a generation,
Monks net asset value per share fell by 23.5%, just ahead of its comparative
index, the FTSE World Index in sterling terms, which fell by 23.6%.
• Apart from two rallies in July and October, markets were driven down by unrelenting selling pressure
including forced and voluntary selling from British and European life assurance companies.
During the six month period stock selection in the UK was good. The UK element of the portfolio
outperformed the index by 2.3%. In the Americas and Japan stock selection was in line with the index
while it lagged for Europe and Asia.
The portfolio is now positively geared to equities which accounted for 88.8% of gross assets at the
end of October against 84.1% at the end of April. Net investment of £37m was made into equities by
buying into falling markets and £20m was spent on buy backs. These were funded by reductions in
overseas index linked and conventional fixed interest holdings.
The move to a more fully invested position has resulted in a drop in investment income and net
earnings per share halved from 0.83p to 0.41p A similar outcome is expected for the full year and an
interim dividend of 0.40p, down from 0.60p, has been declared.
Monks, with total assets of £611 million, invests internationally in order to
achieve capital growth. An ISA and a Share Plan are available. Monks is managed
by Baillie Gifford & Co., the leading independent Edinburgh based fund
management group with around £19 billion under management and advice.
26 November 2002.
- ends -
For further information please contact:
Richard Burns, Manager
The Monks Investment Trust PLC 0131 222 4000
Robert O'Riordan
Baillie Gifford & Co. 0131 474 3267
Mike Lord, Director
Broadgate Marketing 020 7726 6111
Baillie Gifford & Co. is regulated by the FSA.
THE MONKS INVESTMENT TRUST PLC
Interim Report 31 October 2002
The six month period to 31 October 2002 has seen some of the weakest
stockmarkets for a generation. After two years of declining markets and an
increasing flood of revelations about fraud, excessive greed and management
malfeasance, investors seemed to give up hope in late May. Apart from a brief
rally in late July, and a stronger one in October, downward pressure has been
unrelenting, with a particular feature being selling, both forced and voluntary,
by British and Continental life assurance companies.
Against this background Monks' net asset value per share (NAV) fell by 23.5% to
169.5p from 221.5p. This decline was slightly less than the fall in the FTSE
World Index in sterling terms, which fell by 23.6%. We are disappointed with
this outcome as after five months of the reporting period, NAV had declined
significantly less than the index and at the start of October the portfolio was
positively geared into equities. However, our stock selection has been, and
remains, heavily skewed to defensive stocks such as mortgage banks and tobacco
companies, and NAV only rose by 4.8% in October against 7.9% for the index.
The main positive factors in our performance were stock selection in the UK,
where our portfolio outperformed the index by 2.3%, and our holdings of fixed
interest, which largely offset the gearing effect of our long term debentures.
Stock selection was in line with the indices in the Americas and Japan, but
lagged in Europe and Asia. In aggregate, stock selection was marginally positive
for the half year.
As can be seen from the 'Distribution of Assets' table, there have been a number
of changes in our investment policy over the last six months. We made a net
investment of £37m into equities, buying into falling markets, and as noted
below, spent £20m on share buy backs. These moves were financed by reductions in
our holdings of overseas fixed interest stocks, both index linked and
conventional. The overall result has been to increase our equity weighting from
84.1% of gross assets at the end of April to 88.8% at the end of October.
The move to a more fully invested position has meant a drop in investment income
and, although there has been a somewhat smaller drop in overall expenses, at the
net level earnings per share have halved, at 0.41p compared with 0.83p a year
ago. At this stage we expect a similar outcome in the second half of the year,
and the Board has therefore decided to reduce the interim dividend to 0.40p,
down from 0.60p last year. This dividend will be paid on 31 January 2003.
The weak markets this summer have seen discounts in investment trusts tending to
widen. In our case, we have seen the effect of some of the forced selling by
insurance companies noted above, and we have used part of the buy back authority
granted us by shareholders. During the six months to 31 October 10,775,000
ordinary shares were bought back at a cost of £20m. Renewed authority to buy
back up to 14.99% of the issued share capital (44,123,858 shares) was granted at
the AGM on 29 July, and at the date of this report that remains the amount of
the authority outstanding.
By order of the Board
Baillie Gifford & Co.
26 November 2002
The following is the interim statement for the six months ended 31 October 2002
which has been neither reviewed nor audited by the auditors. This statement is
being printed and will be sent to all shareholders on 11 December 2002. Copies
will be available for inspection at the Registered Office of the Company or may
be obtained on request from the Managers and Secretaries after that date.
THE MONKS INVESTMENT TRUST PLC
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
for the six months ended for the six months ended for the year ended
31 October 2002 31 October 2001 30 April 2002
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Realised (losses)/gains on
investments - (24,546) (24,546) - 1,258 1,258 - (17,030) (17,030)
Unrealised losses on - (130,769) (130,769) - (137,606) (137,606) - (62,895) (62,895)
investments
Currency losses - (1,081) (1,081) - (208) (208) - (201) (201)
Income (note 1) 7,384 - 7,384 9,305 - 9,305 18,497 - 18,497
Investment management fee (1,523) - (1,523) (1,839) - (1,839) (3,721) - (3,721)
Other administrative (357) - (357) (322) - (322) (593) - (593)
expenses
Net return before finance
costs and taxation 5,504 (156,396) (150,892) 7,144 (136,556) (129,412) 14,183 (80,126) (65,943)
Finance costs of (4,139) - (4,139) (4,276) - (4,276) (8,351) - (8,351)
borrowings
Return on ordinary
activities before taxation 1,365 (156,396) (155,031) 2,868 (136,556) (133,688) 5,832 (80,126) (74,294)
Tax on ordinary activities (160) - (160) (334) - (334) (923) - (923)
Return on ordinary
activities after taxation 1,205 (156,396) (155,191) 2,534 (136,556) (134,022) 4,909 (80,126) (75,217)
Dividends in respect of
equity shares (1,070) - (1,070) (1,831) - (1,831) (4,882) - (4,882)
Transfer to/(from) 135 (156,396) (156,261) 703 (136,556) (135,853) 27 (80,126) (80,099)
reserves
Return per ordinary share 0.41p (52.67p) (52.26p) 0.83p (44.75p) (43.92p) 1.61p (26.26p) (24.65p)
(note 2)
Dividend per ordinary
share (note 3) 0.40p 0.60p 1.60p
* The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operations.
THE MONKS INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 31 October 2002
(unaudited)
31 October 2002 31 October 2001 30 April
2002
£'000 £'000 £'000
NET ASSETS
Fixed asset investments 607,152 721,577 784,323
Net liquid assets 3,408 9,331 2,305
Total assets (before deduction of loans and debentures) 610,560 730,908 786,628
Loans and debentures (note 4) (110,987) (110,271) (110,237)
499,573 620,637 676,391
CAPITAL AND RESERVES
Called-up share capital 14,718 15,257 15,257
Capital reserves 467,609 587,593 644,023
Revenue reserve 17,246 17,787 17,111
EQUITY SHAREHOLDERS' FUNDS 499,573 620,637 676,391
NET ASSET VALUE PER ORDINARY SHARE
169.5p 203.2p 221.5p
(after deducting prior charges at par)
Ordinary shares in issue (note 5)
294,355,295 305,130,295 305,130,295
DISTRIBUTION OF ASSETS
at 31 October 2002
(unaudited)
31 October 2002 31 October 2001 30 April
% % 2002
%
Equities: United Kingdom 25.6 21.6 22.8
Continental Europe 11.4 10.6 10.7
North America 36.6 33.7 36.1
Japan 7.4 7.7 6.0
Asia Pacific 6.7 5.8 7.0
Other Emerging Markets 1.1 1.3 1.5
Total equities 88.8 80.7 84.1
Sterling bonds 6.7 2.0 3.7
Euro bonds 3.9 9.9 6.3
US dollar bonds - 6.1 5.6
Net liquid assets 0.6 1.3 0.3
Total assets (before deduction of loans and debentures) 100.0 100.0 100.0
THE MONKS INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Six months to Six months to Year to
31 October 2002 31 October 2001 30 April 2002
£'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 8,906 8,170 13,409
NET CASH OUTFLOW FROM SERVICING OF FINANCE (3,679) (4,256) (8,262)
TOTAL TAX PAID (462) (392) (702)
FINANCIAL INVESTMENT
Acquisitions of investments (178,491) (170,984) (270,630)
Disposals of investments 194,001 171,851 259,436
Realised currency losses (347) (222) (266)
NET CASH INFLOW/(OUTFLOW) FROM FINANCIAL INVESTMENT 15,163 645 (11,460)
EQUITY DIVIDENDS PAID (2,944) (3,661) (5,492)
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 16,984 506 (12,507)
FINANCING
Shares purchased for cancellation (20,557) - -
NET CASH OUTFLOW FROM FINANCING (20,557) - -
(DECREASE)/INCREASE IN CASH (3,573) 506 (12,507)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
(Decrease)/increase in cash in the period (3,573) 506 (12,507)
Exchange movement on loans (734) 14 65
Other non-cash changes (16) (16) (33)
MOVEMENT IN NET DEBT IN THE PERIOD (4,323) 504 (12,475)
NET DEBT AT START OF PERIOD (105,855) (93,380) (93,380)
NET DEBT AT END OF PERIOD (110,178) (92,876) (105,855)
THE MONKS INVESTMENT TRUST PLC
TWENTY LARGEST EQUITY HOLDINGS
at 31 October 2002
Market value % of total
Name Business £'000 assets
Baillie Gifford Pacific Fund Investment fund - Asia 34,129 5.6
* Philip Morris Tobacco, food and beer 20,837 3.4
* Freddie Mac Residential mortgage investor 19,680 3.2
* Golden West Financial Residential mortgage lender 17,657 2.9
* Suncor Energy Integrated oil 16,036 2.6
* Pfizer Pharmaceuticals 14,215 2.3
GlaxoSmithKline Pharmaceuticals 10,980 1.8
Barclays Banking 9,602 1.6
* Burlington Resources Natural Gas 9,480 1.6
* EOG Resources Natural Gas 9,231 1.5
Vodafone Mobile telecommunications services 8,704 1.4
Wolseley Building material distributor 8,560 1.4
Royal Bank of Scotland Banking 8,272 1.4
* Total Fina Elf Integrated oil 7,995 1.3
* Walgreen Pharmacy chain 7,550 1.2
Diageo Branded spirits 7,392 1.2
* Marsh & McLennan Insurance broking and fund management 7,165 1.2
Lloyds TSB Banking 7,150 1.2
* Eli Lilly Pharmaceuticals 7,095 1.2
BP Integrated oil 6,576 1.1
238,306 39.1
* Primary listing outwith the UK
THE MONKS INVESTMENT TRUST PLC
NOTES
31 October 31 October 30 April
2002 2001 2002
£'000 £'000 £'000
1. Income
Income from investments and interest receivable 7,291 9,305 18,478
Other income 93 Nil 19
2. Return per ordinary share
Revenue return 1,205 2,534 4,909
Capital return (156,396) (136,556) (80,126)
Return per ordinary share is based on the above totals of revenue and capital and on 296,931,925 (31 October 2001
and 30 April 2002 - 305,130,295) ordinary shares, being the weighted average number of ordinary shares in issue
during the period.
3. The interim dividend will be paid on 31 January 2003 to all shareholders on the register at the close of business
on 17 January 2003.
4. Loans and debentures include €50 million drawn down under short term multi-currency loan facilities (31 October
2001 and 30 April 2002 - €50 million). The market value of debenture stocks at 31 October 2002 was £94,356,000
(31 October 2001 - £96,712,000; 30 April 2002 - £90,927,000).
5. During the period under review 10,775,000 ordinary shares with a nominal value of £538,750 were bought back for a
total consideration of £20,557,000 in accordance with the authority granted at the AGM in July 2001.
At the AGM in July 2002 shareholders approved the renewal of the Company's authority to buy back its own ordinary
shares in respect of 44,123,858 ordinary shares of 5p each (equivalent to 14.99% of its share capital at that
date). No ordinary shares have been bought back since the AGM and, therefore, at 31 October 2002 the Company's
authority to buy back its own shares remained unchanged at 44,123,858 ordinary shares.
6. The financial information for the year ended 30 April 2002 has been extracted from the statutory accounts, which
have been filed with the Registrar of Companies and contain an unqualified Auditor's Report.
7. The accounting policies applied in calculating the interim figures were consistent with those used in the Annual
Financial Statements. The Interim Report was approved by the Board on 26 November 2002.
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