Final Results

RNS Number : 8774B

Monks Investment Trust PLC

12 June 2019

 

RNS Announcement: Preliminary Results

The Monks Investment Trust PLC

Legal Entity Identifier: 213800MRI1JTUKG5AF64

Unaudited Preliminary Results for the year to 30 April 2019

Over the year to 30 April 2019, the Company's net asset value (NAV) total return* was 12.0% compared to a total return of 11.7% for the FTSE World Index (in sterling terms). The share price total return for the same period was 12.7%.

¾  Examples of strong performers included several well-known online technology companies. On average Facebook, Amazon, Netflix, Alphabet (Google), Baidu, Alibaba and Tencent (which we own through the South African media company, Naspers) grew revenues by 34%. 

¾  Portfolio turnover for the 12 months was 16% and the Company's invested gearing stood at 6.4% at the financial year end.

¾  A single final dividend of 1.85p is being recommended, compared to 1.40p last year. This is the minimum required to maintain the Company's investment trust status, reflecting its priority which is capital growth.

¾  Over the period, 1,450,000 shares were issued at a premium to NAV, being 0.7% of the Company's share capital, raising £12m. The share price ended the year at a 4.0% premium to NAV*.

¾  Ongoing charges for the year to 30 April 2019 were 0.50%, down from 0.52% in the prior year.

¾  The managers continue to see a broad spread of new ideas coming forward, from a range of different industries and geographies, and remain optimistic for future portfolio returns.

¾  Since the change in approach in March 2015 the NAV total return at fair value has been 76.8% and the share price total return 107.8% against the comparative index at 56.7%^#.

* With borrowings deducted at fair value

^# Total returns from 31 March 2015 to 30 April 2019.

Past performance is not a guide to future performance. Total return information is sourced from Baillie Gifford /Refinitiv. See disclaimer at the end of this announcement. For a definition of terms see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 

The Monks Investment Trust PLC invests globally in order to achieve capital growth. This takes priority over income and dividends. Monks is managed by Baillie Gifford, an independent fund management group, which has around £200 billion under management and advice as at 10 June 2019.

Monks is a listed UK company. The value of its shares and any income from them can fall as well as rise and investors may not get back the amount invested. The Company is listed on the London Stock Exchange and is not authorised or regulated by the Financial Conduct Authority. You can find up to date performance information about Monks at www.monksinvestmenttrust.co.uk^‡. Past performance is not a guide to future performance. See disclaimer at the end of this announcement.

‡    Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

11 June 2019

For further information please contact:

Jon Henry, Baillie Gifford & Co

Tel: [phone]

Roland Cross, Director, Four Broadgate

Tel: [phone] or 07831 401309

The following is the unaudited preliminary statement of annual results for the year to 30 April 2019 which was approved by the Board on 11 June 2019.

Chairman's Statement

In the year to 30 April 2019 Monks produced a satisfactory return after a weak first half and a second half recovery, with the net asset value (NAV) and share price reaching an all-time high shortly before the year end.  This supported the Board's view that short-term volatility, while inevitable, is of little relevance to long-term returns.

The managers continue to build a strong track record, based on a consistent investment approach and a clear exposition of their investment beliefs.  This approach is founded on long-term perspectives which result in low stock turnover and a differentiated actively managed portfolio, with exposure to a range of companies with above average growth.  The Managers' Report highlights that fundamental revenue and profit growth by the underlying holdings has again been the main determinant of returns. 

The consistency of investment approach combined with an increase in marketing efforts has contributed to a material change in the Monks share register over recent years.  Intermediaries such as discretionary wealth managers and individuals have increased their combined shareholding from 61.7% in April 2015 to 83% currently.  This is gratifying, as the Board believes that Monks represents a sound long-term savings vehicle for such investors, who benefit from high quality professional portfolio management together with independent board oversight at a competitive cost.

Performance

The Board believes that performance should only be assessed over longer term periods, ideally of five years or more but is encouraged to note that in the year to 30 April 2019 the NAV total return, with borrowings calculated at fair value, was 12.0% and the share price total return was 12.7%, while the FTSE World Index returned 11.7%.  Since the change in investment approach implemented in March 2015 the NAV total return at fair value has been 76.8% against the comparative index at 56.7%*. Over the same period the share price total return was 107.8%, benefiting from the closing of the discount to NAV at which the shares had previously traded.

Share Issuance

Share issuance is only undertaken at a premium to the NAV so as to benefit existing investors. As a result of our shares consistently trading close to NAV during the year the Company was able to issue 1,450,000 new shares at a premium to NAV, being 0.7% of Monks share capital and raising £12m of new funds for investment. The premium to NAV with borrowings calculated at fair value stood at 4.0% at 30 April 2019, up from 3.4% at the start of the year.

Borrowings and Gearing

Among the advantages of investment trusts over other forms of collective investment is the ability to invest borrowed funds to enhance shareholder returns over the long term.  At the financial year end, the invested gearing was 6.4% which remains below the 10% level that the Board and managers believe should be the long-term neutral position.  The managers stand ready to take advantage of attractive investment opportunities with flexible short-term bank facilities in place.

Management Expenses

Monks aims to be competitive on fees and expenses, which helps to enhance returns to shareholders.  Having agreed two reductions in the management fee in recent years the total ongoing charges ratio for the year to 30 April 2019 was 0.50%, down from 0.52% in the prior year and 0.58% at April 2015.  The current tiered management fee scale (see note 3 below) should ensure that shareholders will benefit from economies of scale should Monks continue to grow.   

Unquoted Investments

The managers believe that a growing part of Monks investment opportunities consist of companies which are not yet listed and that investment in such private companies has the potential to enhance future returns, especially as more successful growth companies are remaining private for longer.  The Board has increased the limit on private company exposure to 5% of the portfolio (from 2%) and has approved an investment of 2% of assets in The Schiehallion Fund, a listed Baillie Gifford managed vehicle dedicated to investing in late-stage high-growth private businesses. This will give Monks exposure to a wider range of investment opportunities in such businesses than would otherwise be the case.  Schiehallion will not charge any fee on uninvested funds and the value of our investment will be excluded from calculation of Monks own fee. 

Earnings and Dividend

Monks invests with the aim of maximising capital growth rather than income and all costs are charged to the Revenue Account.  The Board is recommending that a single final dividend of 1.85p should be paid, compared to 1.40p last year. This is the minimum required to maintain investment trust status. Retained earnings are reinvested in the portfolio to benefit future capital returns.

The Board

Douglas McDougall is retiring from the Board at the AGM. He has been a Director since 1999 and was the manager of Monks from 1984 to 1999. In both capacities he has made a major contribution to the development and success of Monks. We are very grateful to him for many years of wise investment advice. It is our intention to recruit a new Director in the near future.

Outlook

Recent years have been characterised by a plethora of economic anxieties, especially relating to the possible impact of rising interest rates on asset prices around the world.  A decade on from the depths of the financial crisis, these rates remain close to trough levels and inflation is subdued, reflecting weak economic momentum.  Yet at the same time the growth opportunity for many companies is expanding dramatically, as new technologies totally transform the way that business is conducted.  This is creating new corporate champions across a widening swathe of markets and industries, at a pace and to a scale which may be unprecedented.  Monks is well placed to benefit from such opportunities whilst also holding a balanced and diversified portfolio of growth stocks which should prosper, whatever the prevailing macro-economic backdrop. 

Annual General Meeting

I would encourage shareholders to attend the Annual General Meeting, which will be held on 3 September 2019 at 11.00am at the Institute of Directors. Our managers will give a presentation and there will be an opportunity to ask questions and to meet them and the Directors informally.

James Ferguson

Chairman

11 June 2019

*   Total returns from 31 March 2015 to 30 April 2019.

Past performance is not a guide to future performance.

Total return information is sourced from Baillie Gifford /Refinitiv. See disclaimer at the end of this announcement.

For a definition of terms used see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

The Managers' Core Investment Beliefs

We believe the following features of Monks provide a sustainable basis for adding value for shareholders.

Active Management

¾ We invest in attractive companies using a 'bottom-up' investment process. Macroeconomic forecasts are of relatively little interest to us.

¾ High active share^* provides the potential for adding value.

¾ We ignore the structure of the index - for example the location of a company's HQ and therefore its domicile are less relevant to us than where it generates sales and profits.

¾ Large swathes of the market are unattractive and of no interest to us.

¾ As index agnostic global investors we can go anywhere and only invest in the best ideas.

¾ As the portfolio is very different from the index, we expect portfolio returns to diverge - sometimes substantially and often for prolonged periods.

Committed Growth Investors

¾ In the long run, share prices follow fundamentals; growth drives returns.

¾ We aim to produce a portfolio of stocks with above average growth - this in turn underpins the ability of Monks to add value.

¾ We have a differentiated approach to growth, focusing on the type of growth that we expect a company to deliver. All holdings fall into one of four growth categories - as set out in the Investment Portfolio by Growth Category table below.

¾ The use of these four growth categories ensures a diversity of growth drivers within a disciplined framework.

Long-Term Perspective

¾ Long-term holdings mean that company fundamentals are given time to drive returns.

¾ We prefer companies that are managed with a long-term mindset, rather than those that prioritise the management of market expectations.

¾ We believe our approach helps us focus on what is important during the inevitable periods of underperformance.

¾ Short-term portfolio results are random.

¾ As longer-term shareholders we are able to have greater influence on environmental, social and governance matters.

Dedicated Team with Clear Decision-making Process

¾ Senior and experienced team drawing on the full resources of Baillie Gifford.

¾ Alignment of interests - the investment team responsible for Monks all own shares in the Company.

Portfolio Construction

¾ Investments are held in three broad holding sizes - as set out in the Investment Portfolio by Growth Category table below.

¾ This allows us to back our judgement in those stocks for which we have greater conviction, and to embrace the asymmetry of returns through 'incubator' positions in higher risk/return stocks.

¾ 'Asymmetry of returns': some of our smaller positions will struggle and their share prices will fall; those that are successful may rise many fold. The latter should outweigh the former.

Low Cost

¾ Investors should not be penalised by high management fees.

¾ Low turnover and trading costs benefit shareholders.

*    For a definition of terms used see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 

Managers' Report

Background

The financial year to end April 2019 saw global markets agitated by fears over trade wars, the mis-use of technology and data and the possible stalling of a ten-year bull market. Such fears calmed during the early months of 2019 and markets recovered somewhat.  In truth, the economic background has remained largely unchanged from a year ago, with a familiar list of concerns juxtaposed with continuing good progress from companies around the world.  As previously, the headlines are dominated by the macro concerns, whereas we believe the progress of the corporate sector is far more important to long-term value creation.

Performance

During the year the Company's net asset value (NAV), with borrowings at fair value, returned 12.0%, in line with the FTSE World Index at 11.7%.   The market's behaviour was typical of any short-run 'random walk'. Indeed, as any dog owner will know, the distance travelled and directions taken by a dog during its daily meanderings are of little consequence to the result, which is that both dog and owner arrive at the same destination at the same time. The dog has been distracted by many sights and smells along the way while the owner has stuck to the path and expended far less energy.

As investment managers, we identify with the dog's owner and we stick to the path of a tried and tested investment philosophy and process which seeks to identify outstanding growth businesses, defined by long-term progress in profit and cashflows. The stock market is represented by the dog - it gets distracted by Mr Trump's tweets, Brexit deliberations, economic statistics, commodity prices and all manner of other influences. When markets are choppy, as they have been, we remain firmly focused on company fundamentals.  In our view the return earned by Monks over the year was fully justified by the underlying growth delivered by the portfolio holdings.

Examples of strong performers included several well-known online technology companies. On average Facebook, Amazon, Netflix, Alphabet (Google), Baidu, Alibaba and Tencent (which we own through the South African media company, Naspers) grew revenues by 34% despite significant investment in the future.  These stocks accounted for 13.9% of total assets at the year end.

Over the past two years we have tended to reinvest some of the gains from these technology leaders towards newer, more specialist online operators. Many of these are also growing very rapidly, such as LendingTree (US financials services aggregator), MercadoLibre (Latin American e-commerce), Chegg (US online education) and Shopify.  Headquartered in Ottawa and founded by a German, Tobias Lütke, Shopify offers a platform for small businesses to sell their goods and services online. A sole trader can buy a domain name, create a website, take orders, arrange delivery and use Shopify's back office accounting and inventory software to create an impressive online presence. Shopify is also increasingly attracting mid and large sized customers as it expands its capabilities with businesses such as Budweiser, Penguin Books and The Lady Gaga Official Shop using its platform.

A key attribute of the Monks portfolio is 'balance and diversification'. Whilst online technology is exciting, we also value proven business models which we think won't get disrupted by online revolutionaries. In Emerging Markets, we have seen impressive progress from Banco Bradesco (Brazil) and ICICI Bank (India). In the US, Visa and Mastercard are the rails on which so many financial transactions rest, and continue to prosper with both seeing 2018 earnings rise by more than 30%. Moody's also fared well despite cyclical headwinds in its traditional bond ratings business, as Moody's Analytics continued to grow steadily and is now incorporating data analytics to help companies understand and mitigate risks.

As always there were inevitably some holdings that produced less pleasing performance. Apache was hit by lower oil and gas prices and has not yet developed the infrastructure to get its large reserves from its Texan oil fields to market. Ryanair has made several gaffes, notably the piloting rota errors, which forced a strategic re-think of its decision not to employ unionised workers. Ryanair's success in disrupting the European airline industry has been based on an unconventional approach with a relentless focus on low costs. Success brings responsibility to employees, customers and other stakeholders and we have engaged with the board on how best to get through the current growing pains.  A new chairman will arrive in 2020 and we believe the company is already demonstrating a more mature attitude.

To demonstrate that online technology companies do not all grow consistently in a straight line, Grubhub, CyberAgent and Zillow each had a more difficult year. Zillow has immense promise as a disruptor in the inefficient and expensive US real estate market but it continues to evolve as it seeks to find the optimal business model.  CyberAgent is also attempting to grow in new directions, through developing a totally new and original mobile TV service in Japan, whose route to profitability is as yet unproven.  Grubhub, which was among our very strongest investments in the previous year, suffered from an increase in competitive heat.

Over the last five years the share price of Prudential has been somewhat disappointing despite strong operational performance and we have used periods of weakness to build our position to a point where it is now one of our very largest holdings. Our rationale is simple: at least half of its value comes from its under-appreciated yet fast growing Asian operations; it trades on a significant discount to fair value; it is hard to disrupt with many years of growth potential ahead and it is well run. Prudential's new business profits in Asia have compounded at 18% and 19% respectively over the last 5 and 10 years. It is interesting to note that Ping An and AIA, both of which are pure Asian insurance companies, were among our top contributors to performance over the past twelve months.

Portfolio Changes

During the year we purchased eighteen new holdings and sold eighteen. These transactions are summarised below. Portfolio turnover fell modestly from 20% to 16%.   This equates to a holding period of six years and is consistent with our long-term time horizon.

We categorise our holdings into four growth categories - Stalwarts, Rapid, Cyclical and Latent. These titles reflect the way we expect our holdings to grow over the long term. The year end weights in each category and the individual holdings can be seen below.   Over the past three years there has been a notable reduction in the exposure to Cyclical Growth stocks (from 29.3% to 17.9%) and a similar increase in Rapid Growth companies (from 32.8% to 41.5%).

The Interim Report mentioned a number of new buys, so here we focus on some of the holdings bought since then.  In the Stalwart category we purchased Microsoft. This company is still early in a period of rejuvenation under the current CEO, Satya Nadella, who has brought a new dynamism to what was always a famously strong business.  Cloud computing and the shift to a subscription model are opening up many new growth opportunities which should help Microsoft to accelerate revenue growth and more than double its earnings over the next five years. 

Three new Rapid Growth holdings are worthy of mention. We have re-purchased Abiomed which makes the world's smallest heart pump. We held it briefly in 2017 and 2018 during which time the shares rose 350%, so we sold on valuation grounds. The fundamentals remain excellent for this company which has a strong competitive advantage but the shares declined significantly in late 2018 and we have, once again, taken a holding. Illumina is the leading manufacturer of gene sequencing technology and the key enabler of the revolution in better understanding of human biology, improved diagnosis and personalised medicine. The company has executed admirably as it has scaled up its activities and we have bought a holding.  We also took a position in Reliance Industries. This Indian company is best known for its giant, modern and highly efficient oil refineries which account for 80%+ of the firm's profits today. However, the cash flows from this division are now being re-directed into two businesses with huge potential in India. First, Reliance has become the country's largest formal retailer by revenue (grocery, fashion and consumer electronics), having grown at high rates over the last four years. Second, it has built up the world's largest mobile data network, Reliance Jio, which offers free voice calls and has added a remarkable 250 million subscribers in just two years, disrupting the incumbent industry.  The future should see Reliance combine these two activities to form India's leading e-commerce and data infrastructure company.

A noteworthy addition to the portfolio is a holding in The Schiehallion Fund, a Baillie Gifford managed vehicle dedicated to investing in late-stage high-growth private businesses. Companies are staying private for longer given lower capital and regulatory requirements and the fund seeks to generate attractive returns from this growing and exciting opportunity set. This complements three directly held unquoted investments, including, GRAIL Inc, the gene sequencing business, and Ant Financial, the Chinese payment and savings platform.

Recent sales include some investments which had disappointed relative to our expectations and where we lost confidence in their ability to deliver the quantum of growth necessary to support strong returns to investors. These included Line, IP Group, NetEase, HTC, MTN and Rohm which are all in the broad area of technology.  Technology companies tend to be subject to myriad challengers and often rapidly shifting industry dynamics, so it is not surprising that many struggle to realise their full potential. We also sold some more traditional businesses that had generally fared better including US industrial cyclical companies Lincoln Electric and CH Robinson. We follow a disciplined process through monitoring each investment's progress against our long-term expectations; when this breaks down over a meaningful time period we re-evaluate and sell if the prospects are not seen to be improving.

New Purchases	Complete Sales
Abiomed	Abiomed
Albemarle	Advanced Micro Devices
Ant International	CH Robinson Worldwide
Axon Enterprise	China Biologic Products
BHP Biliton	Dia
Chipotle Mexican Grill	HTC
ICICI Prudential Life Insurance	IP Group
Illumina	Kansai Paint
Istyle	Lincoln Electric
Just East	Line
Meituan Dianping	MTN
Microsoft	NetEase
Novocure	NVIDIA
Ping An Insurance	OC Oerlikon
Reliance Industries	Rohm
Service Corporation International	Samsung Electronics
Shopify	Svenska Handelsbanken
The Schiehallion Fund	Yandex

Outlook

The Monks Investment Trust is managed in accordance with four overriding themes.  As mentioned, we believe in the benefits of 'balance and diversification'.  We are also 'reward seeking'; we invest for long-term upside potential and look to own companies where there is a strong chance that we can double your money in five years. We also seek to 'embrace asymmetry'; stock market returns are not normally distributed but are heavily skewed towards a small minority of companies that produce disproportionate gains, such as Amazon and Microsoft in the current era.  We are ambitious in our approach.  Last but not least, an increasingly important factor which we have always focused on is being 'long-term stewards of capital'.  We see our role as helping companies to realise their full potential, by encouraging good governance, growth-focused capital allocation and consideration of broader sustainability factors.  Exceptional investments tend to be ambitious, bold, flexible and long term in focus; we believe successful investors need similar qualities.

We continue to focus on individual companies which have strong competitive advantages in growth markets and the skills to capitalise on those opportunities. Politicians, economists, Tweeters and headline writers will no doubt frequently throw markets off the scent of the steady path to success. We intend to stick to our tried and tested philosophy and process to keep the Monks portfolio on track and we remain excited by the opportunities that continue to present themselves to help us in that endeavour.

Charles Plowden,

Spencer Adair

Malcolm MacColl

11 June 2019

Past performance is not a guide to future performance.

Total return information is sourced from Baillie Gifford/Refinitive. See disclaimer at the end of this announcement.

For a definition of terms used see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

Investment Portfolio by Growth Category* as at 30 April 2019 (unaudited)

Holding Size	Growth Stalwarts	%	Rapid Growth	%	Cyclical Growth	%	Latent Growth	%
	(c.10% p.a. earnings growth)		(c.15% to 25% p.a. earnings growth)		(c.10% to 15% p.a. earnings growth through a cycle)		(earnings growth to accelerate over time)
	Company Characteristics ¾    Durable franchise ¾    Deliver robust profitability in most macroeconomic environments ¾    Competitive advantage includes dominant local scale, customer loyalty and strong brands		Company Characteristics ¾    Early stage businesses with vast growth opportunity ¾    Innovators attacking existing profit pools or creating new markets		Company Characteristics ¾    Subject to macroeconomic and capital cycles with significant structural growth prospects ¾    Strong management teams highly skilled at capital allocation		Company Characteristics ¾    Company specific catalyst will drive above average earnings in future ¾    Unspectacular recent operational performance and therefore out of favour
Highest conviction holdings c.2.0% each Total: 30.2%	Prudential	3.3	Naspers	3.6
	AIA	2.3	Amazon.com	3.3
	Anthem	2.1	Alibaba	2.8
	MasterCard	1.9	The Schiehallion Fund	2.1
	Moody's	1.9	Alphabet	2.0
	Visa	1.7	Ping An Insurance	1.6
	SAP	1.6
Average sized holdings c.1.0% each Total: 43.2%	Pernod Ricard	1.4	ICICI Bank	1.5	CRH	1.4	Apache	1.4
	Thermo Fisher Scientific	1.3	HDFC	1.3	Martin Marietta Materials	1.2	MS&AD Insurance	1.2
	Microsoft	1.2	Facebook	1.1	Banco Bradesco	1.1	Kirby	1.1
	Schindler	1.0	MarketAxess	1.0	Royal Caribbean Cruises	1.1	BHP Billiton	0.9
	Arthur J. Gallagher	1.0	Reliance Industries	1.0	Markel	0.9	Fairfax Financial	0.8
	Resmed	1.0	Seattle Genetics	0.9	TSMC	0.9	Sberbank of Russia	0.8
	Verisk Analytics	0.9	Ryanair	0.8	SMC	0.8	Sumitomo Mitsui Trust Hldgs	0.7
	Service Corporation International	0.9	LendingTree	0.8	Richemont	0.7	Signify	0.7
			MercadoLibre	0.8	EOG Resources	0.7	Lindblad Expeditions Holdings	0.7
	Olympus	0.9	Autohome	0.8	TD Ameritrade	0.7
	Bureau Veritas	0.8	Trupanion	0.7	First Republic Bank	0.7
	Waters	0.8	Ctrip.com International	0.7	Advantest	0.7
			Netflix	0.7
			iRobot	0.7

Investment Portfolio by Growth Category* as at 30 April 2019 (unaudited) (Ctd)

Holding Size	Growth Stalwarts	%	Rapid Growth	%	Cyclical Growth	%	Latent Growth	%
	(c.10% p.a. earnings growth)		(c.15% to 25% p.a. earnings growth)		(c.10% to 15% p.a. earnings growth through a cycle)		(earnings growth to accelerate over time)
Incubator Holdings c.0.5% each Total: 26.6%			Shopify	0.6	Atlas Copco	0.6	Stericycle	0.6
			Chegg	0.6	Teradyne	0.6	Tsingtao Brewery	0.6
			Baidu	0.6	Deutsche Boerse	0.6	Bank of Ireland	0.6
			Renishaw	0.6	Jefferies Financial Group	0.6	DistributionNOW	0.6
			58.com	0.6	Wabtec	0.5	AP Moller-Maersk	0.5
			Zillow	0.6	Epiroc	0.5	ICICI Prudential Life   Insurance	0.5
			B3 Group	0.6	Hays	0.5
			CyberAgent	0.6	Jardine Strategic Holdings	0.5	Toyota Tsusho	0.5
			Chipotle Mexican Grill	0.6	Ritchie Bros Auctioneers	0.4	MRC Global	0.4
			Grubhub	0.5	PageGroup	0.4	Howard Hughes	0.4
			Schibsted	0.5	Sands China	0.4	Iida Group Holdings	0.4
			Tesla	0.5	Orica	0.4	Fiat Chrysler Autos	0.4
			M3	0.5	Persol Holdings	0.4	Veeco Instruments	0.4
			Spotify	0.5	Albemarle	0.3	Silk Invest Africa Food   Fund	0.2
			Myriad Genetics	0.5	SiteOne Landscape Supply	0.3
			Istyle	0.5			Multichoice Group	0.1
			Ant International	0.5			Ferro Alloy Resources	0.1
			Infineon Technologies	0.5
			Alnylam Pharmaceuticals	0.4
			Interactive Brokers Group	0.4
			Just Eat	0.4
			GRAIL	0.4
			Genmab	0.4
			Meituan Dianping	0.3
			Illumina	0.3
			Mail.ru Group	0.3
			Novocure	0.2
			Adevinta Asa	0.2
			Abiomed	0.1
			Axon Enterprise	-
	Total	26.0	Total	41.5	Total	17.9	Total	14.6

*      Excludes net liquid assets.

Portfolio Positioning as at 30 April 2019 (unaudited)

Thematic Exposure

			At 30 April 2019
Category			%	%
Developed Market Growth				24.2
	Industrial			7.8
	Consumer			5.0
	Capital Markets/Asset Inflation			3.7
	Japanese Reflation			2.7
	Interest Rate Normalisation			2.6
	Resources			2.4
Developing Economies				24.4
	Emerging Markets Middle Classes			20.0
		EM Financial Development	11.6
		EM Consumer Catch-up	8.4
	Resources			2.9
	Industrial			1.5
New Economy				31.7
	Internet Winners			19.6
		Developed World	13.8
		Emerging World	5.8
	Innovation			12.1
		Other Innovation	5.9
		Disruptive Health	3.6
		Semi-Conductor Chips	2.6
Economically Agnostic				18.6
	Stalwarts			15.9
	Insurance Cycle			2.7
Net Liquid Assets				1.1
Total Assets				100.0

Portfolio Positioning as at 30 April 2019 (unaudited) (Ctd)

Geographical Analysis

	At 30 April 2019 %	At 30 April 2018 %
North America	45.8	44.7
Continental Europe	13.6	17.0
Emerging Markets	21.0	19.4
United Kingdom	8.1	5.3
Japan	7.0	8.5
Developed Asia	3.4	3.5
Net Liquid Assets	1.1	1.6
Total Assets	100.0	100.0

Sectoral Analysis

		At 30 April 2019 %	At 30 April 2018 %
Oil and Gas		4.1	3.8
Basic Materials		1.7	1.1
Industrials		15.5	15.3
Consumer Goods		4.6	6.7
Health Care		8.3	9.0
Consumer Services		18.6	19.9
Financials		32.0	28.6
Technology		14.1	13.8
Telecommunications		-	0.2
Total Investments		98.9	98.4
Net Liquid Assets		1.1	1.6
Total Assets		100.0	100.0

 

List of Investments at 30 April 2019 (unaudited)

Name	Business	Growth category	Fair value £'000	% of total assets	Cumulative % of total assets
Naspers	Media and e-commerce company	Rapid	71,043	3.5
Amazon.com	Online retailer	Rapid	66,143	3.3
Prudential	International life insurance	Stalwart	65,190	3.3
Alibaba	Online commerce company	Rapid	54,687	2.7
AIA	Asian life insurer	Stalwart	44,826	2.2
Anthem	Healthcare insurer	Stalwart	41,388	2.1
The Schiehallion Fund	Global unlisted growth equity investment   company	Rapid	41,002	2.0
Alphabet	Online search engine	Rapid	39,115	2.0
MasterCard	Electronic payments network and related   services	Stalwart	38,711	1.9
Moody's	Credit rating agency	Stalwart	38,373	1.9		24.9
Visa	Electronic payments network and related   services	Stalwart	33,858	1.7
SAP	Enterprise software provider	Stalwart	31,573	1.6
Ping An Insurance	Life insurance services	Rapid	31,089	1.6
ICICI Bank	Indian retail and corporate bank	Rapid	29,191	1.5
Apache	Oil and gas exploration and production	Latent	27,771	1.4
CRH	Diversified building materials company	Cyclical	27,363	1.4
Pernod Ricard	Global spirits manufacturer	Stalwart	27,314	1.4
Thermo Fisher Scientific	Scientific instruments, consumables and   chemicals	Stalwart	25,619	1.3
HDFC	Indian mortgage provider	Rapid	25,299	1.3
Microsoft	Software and cloud computing enterprise	Stalwart	23,782	1.2		39.3
Martin Marietta Materials	Cement and aggregates manufacturer	Cyclical	23,753	1.2
MS&AD Insurance	Japanese insurer	Latent	23,432	1.2
Kirby	US barge operator	Latent	22,580	1.1
Banco Bradesco	Brazilian commercial bank	Cyclical	22,308	1.1
Royal Caribbean Cruises	Global cruise company	Cyclical	21,295	1.1
Facebook	Social networking website	Rapid	21,102	1.1
MarketAxess	Electronic bond trading platform	Rapid	20,048	1.0
Reliance Industries	Indian energy conglomerate	Rapid	19,733	1.0
Schindler	Elevator and escalator company	Stalwart	19,405	1.0
Arthur J. Gallagher	Insurance broker	Stalwart	19,119	1.0		50.1
Resmed	Develops and manufactures medical equipment	Stalwart	18,986	0.9
Verisk Analytics	Risk assessment services and decision   analytics	Stalwart	18,796	0.9
Markel	Markets and underwrites speciality insurance    products	Cyclical	18,710	0.9
BHP Billiton	Minerals exploration and production	Latent	18,075	0.9
Service Corporation   International	Death care services	Stalwart	17,991	0.9
Olympus	Optoelectronic products	Stalwart	17,804	0.9
TSMC	Semiconductor manufacturer	Cyclical	17,494	0.9
Seattle Genetics	Antibody based therapies	Rapid	17,253	0.9
Ryanair	Low cost European airline	Rapid	16,841	0.8
LendingTree	US online loan marketplace	Rapid	16,711	0.8		58.9
MercadoLibre	Latin American e-commerce platform	Rapid	16,364	0.8
Bureau Veritas	Global testing services company	Stalwart	16,294	0.8
Fairfax Financial	Commercial insurance	Latent	16,044	0.8
Waters	Liquid chromatography products and services	Stalwart	15,596	0.8
Autohome	Chinese online automobile website	Rapid	15,442	0.8
SMC	Producer of factory automation equipment	Cyclical	15,100	0.8
Richemont	Luxury goods company	Cyclical	15,021	0.7
Sberbank of Russia	Russian commercial bank	Latent	14,920	0.7
EOG Resources	Natural gas explorer and producer	Cyclical	14,614	0.7
TD Ameritrade	Online brokerage firm	Cyclical	14,558	0.7		66.5

List of Investments at 30 April 2019 (unaudited) (Ctd)

Name	Business	Growth category	Fair value £'000	% of total assets	Cumulative % of total assets
Sumitomo Mitsui Trust Holdings	Japanese trust bank and investment manager	Latent	14,549	0.7
Signify	Lighting products, systems and services	Latent	13,895	0.7
Trupanion	Pet health insurance provider	Rapid	13,838	0.7
Ctrip.com International	Online travel agency	Rapid	13,836	0.7
First Republic Bank	US retail bank	Cyclical	13,681	0.7
Advantest	Semiconductor testing services	Cyclical	13,516	0.7
Lindblad Expeditions Holdings	Specialist vacation operator	Latent	13,322	0.7
Netflix	Subscription service for TV shows and movies	Rapid	13,241	0.7
iRobot	Domestic and military robot manufacturer	Rapid	13,168	0.7
Shopify	Online commerce platform	Rapid	12,838	0.6	73.4
Chegg	Online educational platform	Rapid	12,743	0.6
Baidu	Chinese online search engine	Rapid	12,684	0.6
Atlas Copco	Industrial equipment	Cyclical	12,523	0.6
Renishaw	World leading metrology company	Rapid	12,433	0.6
58.com	Chinese online marketplace	Rapid	12,043	0.6
Teradyne	Semiconductor testing equipment manufacturer	Cyclical	12,028	0.6
Zillow	US online real estate services	Rapid	11,982	0.6
Deutsche Boerse	Stock exchange operator	Cyclical	11,932	0.6
Stericycle	Regulated medical waste management services	Latent	11,809	0.6
Tsingtao Brewery	Chinese brewer	Latent	11,709	0.6	79.4
B3 Group	Brazilian stock exchange operator	Rapid	11,418	0.6
Bank of Ireland	Irish bank	Latent	11,393	0.6
CyberAgent	Japanese internet advertising and content	Rapid	11,344	0.6
Chipotle Mexican Grill	Fast casual Tex-Mex restaurants	Rapid	11,117	0.6
DistributionNOW	Oilfield drilling equipment distributor	Latent	11,049	0.5
Jefferies Financial Group	Investment bank	Cyclical	10,981	0.5
AP Moller-Maersk	Transport and logistics company	Latent	10,730	0.5
Grubhub	US online food service	Rapid	10,311	0.5
Schibsted	Media and classified advertising platforms	Rapid	10,248	0.5
ICICI Prudential Life Insurance	Life insurance services	Latent	10,182	0.5	84.8
Wabtec	Rail and transit products and services	Cyclical	10,110	0.5
Tesla	Electric cars and renewable energy solutions	Rapid	9,953	0.5
M3	Online medical services	Rapid	9,813	0.5
Spotify	Online music streaming service	Rapid	9,802	0.5
Myriad Genetics	Genetic testing company	Rapid	9,712	0.5
Istyle	Japanese cosmetics business	Rapid	9,595	0.5
Toyota Tsusho	African auto distributor	Latent	9,246	0.5
Ant Internationalu	Chinese online payments and financial services   business	Rapid	9,205	0.5
Epiroc	Construction and mining machinery	Cyclical	9,137	0.5
Infineon Technologies	German semiconductor manufacturer	Rapid	9,050	0.5	89.8
Hays	Recruitment consultancy	Cyclical	9,017	0.4
Jardine Strategic Holdings	Asian retail/auto dealerships and property	Cyclical	8,918	0.4
Alnylam Pharmaceuticals	RNA interference based biotechnology	Rapid	8,694	0.4
MRC Global	Oilfield drilling equipment distributor	Latent	8,636	0.4
Interactive Brokers Group	Global electronic trading platform	Rapid	8,622	0.4
Howard Hughes	US real estate developer	Latent	8,389	0.4
Just Eat	Online takeaway ordering service	Rapid	8,230	0.4
Ritchie Bros Auctioneers	Industrial equipment auctioneer	Cyclical	8,135	0.4
Iida Group Holdings	Japanese house builder	Latent	8,118	0.4
PageGroup	Recruitment consultancy	Cyclical	7,855	0.4	93.8
Sands China	Macau casino operator	Cyclical	7,659	0.4
Fiat Chrysler Autos	Automobile manufacturer	Latent	7,615	0.4
Orica	Australian industrial explosives company	Cyclical	7,614	0.4
Persol Holdings	Employment and outsourcing services	Cyclical	7,409	0.4

 

List of Investments at 30 April 2019 (unaudited) (Ctd)

Name	Business	Growth category	Fair value £'000		% of total assets	Cumulative % of total assets
Veeco Instruments	Semiconductor equipment company	Latent	7,205	0.4
GRAILu	Blood testing for early cancer detection	Rapid	7,119	0.4
Genmab	Biotechnology company	Rapid	6,991	0.3
Meituan Dianping	Online commerce platform	Rapid	6,986	0.3
Albermarle	Speciality chemicals	Cyclical	6,939	0.3
Illumina	Gene sequencing business	Rapid	6,823	0.3		97.4
SiteOne Landscape   Supply	US distributor of landscaping supplies	Cyclical	6,714	0.3
Mail.ru Group	Russian internet and communication services	Rapid	5,640	0.3
Novocure	Biotechnology company focusing on solid tumour treatment	Rapid	4,919	0.2
Silk Invest Africa Food   Fundu	Africa focused private equity fund	Latent	4,137	0.2
Adevinta Asa	Media and classified advertising platforms	Rapid	4,084	0.2
Multichoice Group	Aftican pay-TV business	Latent	2,480	0.1
Ferro Alloy Resources	Vanadium mining	Latent	2,140	0.1
Abiomed	Medical implant manufacturer	Rapid	1,240	0.1
Axon Enterprise	Manufacturer of law enforcement devices	Rapid	560	-
Total Investments			1,979,780		98.9	98.9
Net Liquid Assets*			22,197		1.1
Total Assets*			2,001,977		100.0	100.0

^u      Denotes unlisted security.

*    For a definition of terms used see Glossary of Terms and Alternative Performance Measures at the end of this announcement.

 

Income statement (unaudited)

	For the year ended 30 April 2019			For the year ended 30 April 2018
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains on investments (note 2)	-	194,084	194,084	-	211,299	211,299
Currency (losses)/gains	-	(4,049)	(4,049)	-	3,216	3,216
Income	23,268	-	23,268	19,759	-	19,759
Investment management fee (note 3)	(6,992)	-	(6,992)	(6,568)	-	(6,568)
Other administrative expenses	(1,673)	-	(1,673)	(1,598)	-	(1,598)
Net return before finance costs and taxation	14,603	190,035	204,638	11,593	214,515	226,108
Finance costs of borrowings	(5,518)	-	(5,518)	(4,410)	-	(4,410)
Net return on ordinary activities before taxation	9,085	190,035	199,120	7,183	214,515	221,698
Tax on ordinary activities	(1,899)	-	(1,899)	(1,595)	-	(1,595)
Net return on ordinary activities after taxation	7,186	190,035	197,221	5,588	214,515	220,103
Net return per ordinary share (note 4)	3.30p	87.23p	90.53p	2.61p	100.08p	102.69p
Note: Dividends per share paid and payable in respect of the year (note 5)	1.85p			1.40p

The total column of this statement represents the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.

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

A Statement of Comprehensive Income is not required as the Company does not have any other comprehensive income and the net return on ordinary activities after taxation is both the profit and total comprehensive income for the year.

 

Balance sheet (unaudited)

	At 30 April 2019 £'000	At 30 April 2018 £'000
Fixed assets
Investments held at fair value through profit or loss	1,979,780	1,730,513
Current assets
Debtors	7,617	9,009
Cash and cash equivalents	25,919	22,974
	33,536	31,983
Creditors
Amounts falling due within one year (note 6)	(110,626)	(66,120)
Net current liabilities	(77,090)	(34,137)
Total assets less current liabilities	1,902,690	1,696,376
Creditors
Amounts falling due after more than one year (note 6)	(39,875)	(39,842)
	1,862,815	1,656,534
Capital and reserves
Share capital	10,930	10,857
Share premium account	48,007	35,973
Capital redemption reserve	8,700	8,700
Capital reserve	1,739,586	1,549,551
Revenue reserve	55,592	51,453
Shareholders' funds	1,862,815	1,656,534
Shareholders' funds per ordinary share (note 7) (after deducting borrowings at book value)	852.2p	762.9p
Net asset value per ordinary share (note 8) (after deducting borrowings at par)	852.1p	762.8p
Net asset value per ordinary share (note 8) (after deducting borrowings at fair value)	848.9p	759.0p
Ordinary shares in issue (note 9)	218,593,859	217,143,859

 

Statement of changes in equity (unaudited)

For the year ended 30 April 2019

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2018	10,857	35,973	8,700	1,549,551	51,453	1,656,534
Net return on ordinary activities after taxation	-	-	-	190,035	7,186	197,221
Ordinary shares issued (note 9)	73	12,034	-	-	-	12,107
Dividends paid during the year (note 5)	-	-	-	-	(3,047)	(3,047)
Shareholders' funds at 30 April 2019	10,930	48,007	8,700	1,739,586	55,592	1,862,815

For the year ended 30 April 2018

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 May 2017	10,698	11,100	8,700	1,335,036	48,540	1,414,074
Net return on ordinary activities after taxation	-	-	-	214,515	5,588	220,103
Ordinary shares issued	159	24,873	-	-	-	25,032
Dividends paid during the year (note 5)	-	-	-	-	(2,675)	(2,675)
Shareholders' funds at 30 April 2018	10,857	35,973	8,700	1,549,551	51,453	1,656,534

*      The Capital Reserve balance at 30 April 2019 includes holding gains on investments of £653,406,000 (2018 - gains of £567,547,000).

 

Cash flow statement (unaudited)

	Year ended 30 April 2019		Year ended 30 April 2018
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Net return on ordinary activities before taxation		199,120		221,698
Net (gains) on investments		(194,084)		(211,299)
Currency losses/(gains)		4,049		(3,216)
Amortisation of income from fixed interest investments		-		(170)
Finance costs of borrowings		5,518		4,410
Overseas tax incurred		(1,905)		(1,536)
Changes in debtors and creditors		40		(1,069)
Cash from operations*		12,738		8,818
Interest paid		(5,372)		(4,347)
Net cash inflow from operating activities		7,366		4,471
Cash flows from investing activities
Acquisitions of investments	(320,097)		(331,951)
Disposals of investments	273,472		315,713
Net cash outflow from investing activities		(46,625)		(16,238)
Cash flows from financing activities
Equity dividends paid	(3,047)		(2,675)
Ordinary shares issued	13,177		23,074
Borrowings drawn down	32,133		-
Net cash inflow from financing activities		42,263		20,399
Increase in cash and cash equivalents		3,004		8,632
Exchange movements		(59)		(866)
Cash and cash equivalents at 1 May		22,974		15,208
Cash and cash equivalents at 30 April		25,919		22,974

*    Cash from operations includes dividends received of £23,153,000 (2018 - £18,613,000) and interest received of £196,000 (2018 - £78,000).

 

Notes to the condensed financial statements (unaudited)

1.	The unaudited preliminary financial results for the year to 30 April 2019 have been prepared in accordance with FRS 102, 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. The accounting policies adopted are consistent with those of the previous financial year.
2. 3.	Gains on investments	2019 £'000				2018 £'000
	Realised gains on sales	108,225				96,901
	Changes in investment holding gains	85,859				114,398
	Total gains on investments	194,084				211,299
	Baillie Gifford & Co Limited, a wholly owned subsidiary of Baillie Gifford & Co, has been appointed as the Company's Alternative Investment Fund Manager (AIFM) and Company Secretary. The investment management function has been delegated to Baillie Gifford & Co. With effect from 1 May 2018, the annual management fee payable to Baillie Gifford & Co Limited is 0.45% on the first £750 million of total assets, 0.33% on the next £1 billion of total assets and 0.30% on the remaining total assets. In the year to 30 April 2018 the annual management fee was 0.45% on the first £750 million of total assets and 0.33% on the remaining total assets. For fee purposes, total assets is defined as the total value of all assets held less all liabilities (other than any liability in the form of debt intended for investment purposes) and excludes the value of the Company's holding in The Schiehallion Fund, a closed-ended investment company managed by Baillie Gifford & Co. The Company does not currently hold any other collective investment vehicles managed by Baillie Gifford & Co. Where the Company holds investments in open-ended collective investment vehicles managed by Baillie Gifford, such as OEICs, Monks' share of any fees charged within that vehicle will be rebated to the Company. All debt drawn down during the periods under review is intended for investment purposes.
4.	Net Return per Ordinary Share	2019				2018
	Revenue return	3.30p				2.61p
	Capital return	87.23p				100.08p
	Total return	90.53p				102.69p
	Revenue return per ordinary share is based on the net revenue return on ordinary activities after taxation of £7,186,000 (2018 - £5,588,000) and on 217,844,955 (2018 - 214,344,215) 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 £190,035,000 (2018 - gain of £214,515,000) and on 217,844,955 (2018 - 214,344,215) 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.
5.	Ordinary Dividends		2019	2018			2019 £'000	2018 £'000
	Amounts recognised as distributions in the year:
	Previous year's final (paid 7 September 2018)		1.40p	1.25p			3,047	2,675
	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 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £7,186,000 (2018 - £5,588,000).

Notes to the condensed financial statements (unaudited) (ctd)

5.	Ordinary Dividends (Ctd)	2019		2018		2019 £'000		2018 £'000
	Amounts paid and payable in respect of the financial year:
	Proposed final (payable 6 September 2019)	1.85p		1.40p		4,044		3,047
	If approved, the recommended final dividend on ordinary shares will be paid on 6 September 2019 to shareholders on the register at the close of business on 2 August 2019. The ex-dividend date is 1 August 2019. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for elections for this dividend is 15 August 2019.
6.	At 30 April 2019 the book value of the Company's borrowings amounted to £139m (2018 - £103m), comprising a £40m   6 3/8% debenture stock repayable in 2023 (2018 - £40m) and short-term bank loans of US$129m (2018 - US$87m). The fair value of borrowings at 30 April 2019 was £146m (2018 - £111m).
7.	Shareholders' Funds per ordinary share				2019		2018
	Shareholders' funds				£1,862,815,000		£1,656,534,000
	Number of ordinary shares in issue at the year end				218,593,859		217,143,859
	Shareholders' funds per ordinary share				852.2p		762.9p
	The shareholders' funds figures above have been calculated after deducting borrowings at book value, in accordance with the provisions of FRS 102. The net asset value figures in note 8 have been calculated after deducting borrowing at either par value or fair value. Reconciliations between shareholders' funds and both NAV measures are shown in the Glossary of Terms and Alternative Performance Measures at the end of this announcement.
8.	Net Asset Value per Ordinary Share
	The net asset value figures with borrowings deducted at par value and fair value at the year end are set out in the table below. Reconciliations between both NAV measures and shareholders' funds, which is calculated after deducting borrowings at book value in accordance with the provisions of FRS 102, are shown in the Glossary of Terms and Alternative Performance Measures at the end of this announcement.
	2019 £'000 2019 per share 2018 £'000 2018 per share Net asset value (after deducting borrowings at par value) 1,862,690 852.1p 1,656,376 762.8p Net asset value (after deducting borrowings at fair value) 1,855,690 848.9p 1,648,176 759.0p
	The per share figures above are based on 218,593,859 (2018 - 217,143,859) ordinary shares of 5p, being the number of ordinary shares in issue at the year end. Deducting borrowings at fair value would have the effect of reducing net asset value per ordinary share from 852.1p to 848.9p. Taking the market price of the ordinary shares at 30 April 2019 of 883.0p, this would have given a premium to net asset value of 4.0% as against 3.6% on a par basis. At 30 April 2018 the effect would have been to reduce net asset value per ordinary share from 762.8p to 759.0p. Taking the market price of the ordinary shares at 30 April 2018 of 785.0p, this would have given a discount to net asset value of 3.4% as against 2.9% on a par basis.
9.	In the year to 30 April 2019, the Company issued 1,450,000 ordinary shares (nominal value of £73,000) at a premium to net asset value, raising net proceeds of £12,107,000 (2018 - £25,032,000). No shares were bought back during the year and no shares are held in treasury. At 30 April 2019 the Company had authority to buy back 32,564,854 ordinary shares and to allot or sell from treasury 16,766,380 ordinary shares without application of pre-emption rights. Under the provisions of the Company's Articles of Association share buy-backs are funded from the capital reserve.
10.	The financial information set out above does not constitute the Company's statutory accounts for the year ended 30 April 2019. The financial information for 2018 is derived from the financial statements for 2018 which have been delivered to the Registrar of Companies. The Auditors have reported on the 2018 accounts; their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498 (2) or 498(3) of the Companies Act 2006. The statutory accounts for 2019 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. The Auditors have advised the Company that they do not expect their report on the 2019 statutory accounts to include any modification or emphasis of matter statements.
11.	The Report and Accounts will be available on the Managers' website www.monksinvestmenttrust.co.uk‡ on or around 27 June 2019.

‡      Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

 

Glossary of Terms and Alternative Performance Measures (APM)

Total Assets

The total value of all assets held less all liabilities (other than liabilities in the form of borrowings).

Shareholders' Funds

Shareholders' Funds is the value of all assets held less all liabilities, with borrowings deducted at book cost.

Net Asset Value (APM)

Net Asset Value (NAV) is the value of all assets held less all liabilities, with borrowings deducted at either par value or fair value as described below. Per share amounts are calculated by dividing the relevant figure by the number of ordinary shares in issue.

Net Asset Value (Borrowings at Par Value) (APM)

Borrowings are valued at nominal par value.

A reconciliation from shareholders' funds (borrowings at book value) to net asset value after deducting borrowings at par value is provided below:

	2019 £'000	2019 per share	2018 £'000	2018 per share
Shareholders' funds (borrowings at book value)	1,862,815	852.2p	1,656,534	762.9p
Add: book value of borrowings	139,162	63.6p	103,007	47.4p
Less: par value of borrowings	(139,287)	(63.7p)	(103,165)	(47.5p)
Net asset value (borrowings at par value)	1,862,690	852.1p	1,656,376	762.8p

The per share figures above are based on 218,593,859 (2018 - 217,143,859) ordinary shares of 5p, being the number of ordinary shares in issue at the year end.

Net Asset Value (Borrowings at Fair Value) (APM)

Borrowings are valued at an estimate of market worth. The fair value of the Company's 6 ³/₈% debenture stock 2023 is based on the closing market offer price on the London Stock Exchange.  The fair value of the Company's short term bank borrowings is equivalent to its book value.

A reconciliation from shareholders' funds (borrowings at book value) to net asset value after deducting borrowings at fair value is provided below:

	2019 £'000	2019 per share	2018 £'000	2018 per share
Shareholders' funds (borrowings at book value)	1,862,815	852.2p	1,656,534	762.9p
Add: book value of borrowings	139,162	63.6p	103,007	47.4p
Less: fair value of borrowings	(146,287)	(66.9p)	(111,365)	(51.3p)
Net asset value (borrowings at fair value)	1,855,690	848.9p	1,648,176	759.0p

The per share figures above are based on 218,593,859 (2018 - 217,143,859) ordinary shares of 5p, being the number of ordinary shares in issue at the year end.

Discount/Premium (APM)

As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium.

Net Liquid Assets

Net liquid assets comprise current assets less current liabilities (excluding borrowings).

Active Share (APM)

Active share, a measure of how actively a portfolio is managed, is the percentage of the portfolio that differs from its comparative index. It is calculated by deducting from 100 the percentage of the portfolio that overlaps with the comparative index. An active share of 100 indicates no overlap with the index and an active share of zero indicates a portfolio that tracks the index.

Total Return (APM)

The total return is the return to shareholders after reinvesting the dividend on the date that the share price goes ex-dividend, as detailed below.

		2019 NAV (par)	2019 NAV (fair)	2019 Share Price	2018 NAV (par)	2018 NAV (fair)	2018 Share Price
Closing NAV per share/share price	(a)	852.1p	848.9p	883.0p	762.8p	759.0p	785.0p
Dividend adjustment factor*	(b)	1.0017	1.0017	1.0016	1.0018	1.0018	1.0018
Adjusted closing NAV per share/share price	(c = a x b)	853.5p	850.3p	884.4p	764.2p	760.4p	786.4p
Opening NAV per share/share price	(d)	762.8p	759.0p	785.0p	660.8p	656.8p	653.0p
Total return	(c ÷ d) - 1	11.9%	12.0%	12.7%	15.6%	15.8%	20.4%

* The dividend adjustment factor is calculated on the assumption that the dividend of 1.40p (2018 - 1.25p) paid by the Company during the year was reinvested into shares of the Company at the cum income NAV/share price, as appropriate, at the ex-dividend date.

Ongoing Charges (APM)

The total expenses (excluding dealing and borrowing costs) incurred by the Company as a percentage of the daily average net asset value (with borrowings at fair value), as detailed below.

		2019	2018
Investment management fee		£6,992,000	£6,568,000
Other administrative expenses		£1,673,000	£1,598,000
Total expenses	(a)	£8,665,000	£8,166,000
Average net asset value (with borrowings deducted at fair value)	(b)	£1,727,928,000	£1,570,354,000
Ongoing Charges	a÷b	0.50%	0.52%

Gearing (APM)

At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. The level of gearing can be adjusted through the use of derivatives which affect the sensitivity of the value of the portfolio to changes in the level of markets.

Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds.

Invested gearing is the Company's borrowings at par less cash and brokers' balances expressed as a percentage of shareholders' funds*.

Effective gearing, as defined by the Board and Managers of Monks, is the Company's borrowings at par less cash, brokers' balances and investment grade bonds maturing within one year, expressed as a percentage of shareholders' funds*.

Equity gearing is the Company's borrowings at par less cash, brokers' balances and all bonds, expressed as a percentage of shareholders' funds*.

*As adjusted to take into account the gearing impact of any derivative holdings.

Leverage (APM)

For the purposes of the Alternative Investment Fund Managers (AIFM) Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Compound Annual Return (APM)

The compound annual return converts the return over a period of longer than one year to a constant annual rate of return applied to the compounded value at the start of each year.

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FTSE Index data

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