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RNS
Monks Investment Trust PLC   -  MNKS   

Final Results

Released 07:00 12-Jun-2019

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: 0131 275 2000

 

Roland Cross, Director, Four Broadgate

Tel: 0203 697 4200 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

1.2

MS&AD Insurance

1.2

Microsoft

1.2

Facebook

1.1

1.1

Kirby

1.1

Schindler

1.0

MarketAxess

1.0

1.1

BHP Billiton

0.9

Arthur J. Gallagher

1.0

Reliance Industries

1.0

0.9

Fairfax Financial

0.8

Resmed

1.0

Seattle Genetics

0.9

0.9

Sberbank of Russia

0.8

Verisk Analytics

0.9

Ryanair

0.8

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

0.7

 

 

Bureau Veritas

0.8

Trupanion

0.7

0.7

 

 

Waters

0.8

Ctrip.com International

0.7

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 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.

 

Third party data provider disclaimer

 

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data.

No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom. No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgements, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

 

FTSE Index data

FTSE International Limited ('FTSE') © FTSE 2019. 'FTSE®' is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.

 

Regulated Information Classification: Additional regulated information required to be disclosed under the laws of a Member State.

 

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