REG - Monks Inv.Trust - Monks Investment Trust PLC Half-year Report
07/12/2022 07:01
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RNS Number : 8166I Monks Investment Trust PLC 07 December 2022
RNS Announcement
The Monks Investment Trust PLC (MNKS)
Legal Entity Identifier: 213800MRI1JTUKG5AF64
Results for the six months to 31 October 2022
The following is the unaudited Interim Financial Report for the six months to
31 October 2022 which was approved by the Board on 6 December 2022.
Interim Management Report
The performance of the Monks portfolio over the past six months has been
disappointing. The backdrop of an ongoing war in Europe between Russia and
Ukraine, rising inflation, and aggressive central bank rate rises have done
little to ease investor nervousness. Investors' appetite for risk has been
reduced, their timeframes have shrunk, and the value the market is prepared to
place on future profits has fallen. The sort of structurally expanding
businesses Monks invests in, particularly those where profits lie a few years
out, remain out of favour.
During the first half of our financial year, the Company produced a negative
net asset value (NAV)* total return of -5.2% compared to -0.3% for the
comparative index (FTSE World in sterling). The share price total return was
-7.6%. Since the Global Alpha team took over the management of the portfolio
in March 2015, the Company has produced a NAV total return of +118.4% compared
to +119.7% for the comparative index. The share price total return was
+129.7%.
Resilience, quality, growth
Given ongoing market challenges, it is important we reconfirm to shareholders
our convictions. Our confidence in the portfolio is underpinned by the
underlying holdings' superior resilience, quality, and growth characteristics.
The portfolio holdings remain significantly less indebted (Net Debt to Equity
10% versus 50% for the market) and have higher margin structures (for example,
gross margins of 40% versus 29%) than the broader market. These are desirable
in a world where both input and funding costs are rising and the demand
environment for companies is less certain. The operational performance of
investee companies remains strong. In aggregate, revenue and earnings growth
has outpaced the broader market by a considerable margin (annualised revenue
and earnings growth has been 60% and 30% faster, respectively, in the five
years to end October). As we look forward, revenue and earnings are forecast
to grow twice as fast as the market average over the next year - our
conviction strengthens over longer periods.
Portfolio activity
Year-to-date, we have sold 20 holdings and established nine new ones. The
greater number of sales reflects a proactive and ruthless portfolio 'weeding'
exercise. These sales can be broadly categorised into three main groups.
The first comprises companies that we believe to be materially challenged in
an inflationary environment or that are exposed to a potential tapering of
consumer demand. Positions sold include Peloton (home fitness), Carvana
(online used car retail) and Teladoc (telemedicine). Peloton and Carvana have
been disappointingly short-lived holdings. In Peloton's case, it became clear
that the company had mismanaged the hardware side of its business,
significantly overestimating demand for its exercise bikes. This necessitated
the appointment of a new CEO and a period of stabilisation. We moved on as our
confidence in management had been undermined and our original thesis
overwhelmed. Carvana buys its inventory (used cars) on credit and sells to
consumers who are often reliant on credit. In a period of rising interest
rates and weakening demand for highly discretionary goods, our view is that
Carvana's probability of success is narrowing. Teladoc had been a longer-term
holding (purchased in September 2019). A combination of slowing growth, and
significant write-downs relating to an acquisition, undermined our confidence
in the long-term investment case. We continue to contemplate the long-term
implications for the likes of Wayfair (online furniture retail), Oscar Health
(health insurance) and Adidas (sports apparel).
The second group is Chinese companies. Positions in Brilliance China
Automotive (auto retail), KE Holdings (online property), Tencent Music
Entertainment (online music and entertainment) and Naspers (South African
investment company, included here due to its significant stake in Chinese
gaming business, Tencent) have been sold. For each company, there are
fundamental reasons behind our decision to sell. For example, emerging
competition in the cases of KE Holdings and TME and governance concerns at
Brilliance China Automotive. However, it is important to recognise the
prevailing regulatory environment for private enterprise in China. We believe
that it is increasingly difficult for private enterprises in China to generate
supernormal profits of the sort that we seek for Monks' portfolio. Therefore,
a more modest overall exposure to China better reflects our view of the
potential upside.
The third group is where the investment case has played out or where we have
been disappointed by management's ability to execute. In the former camp,
Hays, Page Group (both recruitment) and ICICI Bank (retail banking), have
delivered operationally and in share price terms. In Hays and Page Groups'
case, the future threat of online platforms like LinkedIn compelled us to move
on, whilst ICICI Bank has grown its loan book, asset quality and net interest
margins strongly. In the latter camp, Lyft (ride hailing), Stericyle (waste
management) and Vimeo (video software) failed either to meet our ambitions for
their business or underwhelmed operationally.
Reward seeking
The significant markdown in share prices that we have seen this year has
brought valuations of many attractive growth companies into our purview. We
have begun to take advantage of this by investing in companies we have long
admired. Examples include the purchases of Adobe (digital content), Analog
Devices (semiconductors), and Royalty Pharma (healthcare funding) in the first
half of the calendar year. In the last six months, we have purchased new
holdings in Eaton (electrical power equipment) and Shiseido (cosmetics). Eaton
is a manufacturer of vital electrical power management equipment and has a
strong track record of operational efficiency. We believe that the structural
trend toward digitalisation and an increased focus on higher-margin products
should underpin strong growth in the future. Shiseido is a Japanese cosmetics
manufacturer with a portfolio of high-end brands. Whilst pandemic lockdowns
across Asia have stymied growth, we believe that over the long term the
emerging middle classes are likely to underpin attractive returns for
Shiseido. Elsewhere, we have been able to add to existing positions where we
think that the share price falls are unjustified. This has been the case for
Farfetch (online luxury), Coupang (ecommerce) and Chewy (online pet supplies).
We believe that the portfolio is opportunistically poised to deploy capital
from the 'Stalwarts' (which have held up well in relative terms and account
for nearly 40% of the portfolio) into selective opportunities where the
relative return potential is greater. We have been preparing the ground for
this by looking both at potential cyclical opportunities and, against a
background of scarcer capital, companies that have capital readily available
to deploy. We are excited about the abundance of opportunities and are
building conviction in several names.
Back on the road
We have been energised by the return of in-person meetings with investee
companies and prospective holdings. We have been able to travel both locally
and further afield, including to the US and Latin America. We met with a
variety of existing and potential holdings across a diverse range of sectors
and industries.
Indeed, we were fortunate to spend significant time with the founder and four
members of the executive management team of holding MercadoLibre. This access
afforded us a better understanding of the depth of MercadoLibre's executive
talent pool and the future drivers of growth for the business. Likewise, we
spent a day with Farfetch, which helped further our understanding of the
business and the likelihood of it becoming the predominant global ecommerce
platform for luxury goods.
The value of these in-person conversations should not be underestimated. Not
only were we able to directly address questions about the competitive
landscape for MercadoLibre's ecommerce platform and the stability of its
financing arm, but our broader view of where there may be structural growth
opportunities was enriched. Our recent trip involved meetings with several
innovative financial disruptors and a venture capital provider. The financial
sector in many Latin American countries appears ripe for disruption given the
egregious fees charged by incumbent banks. We were left in no doubt about the
potential for disruption, and that this area could be subject to significant
change and opportunity in the future.
Independent Investment Trust
In early November the Monks portfolio received £173m of assets following the
voluntary liquidation and rollover of The Independent Investment Trust PLC.
This was made up of around £100m in equity investment holdings, which have
been reviewed and assessed for fit with Monks' portfolio, and £73m in cash.
The stocks inherited are a mix of cyclical companies such as UK housebuilders
Persimmon, Redrow, and Bellway and early-stage growth companies like Midwich,
a distributor of audiovisual equipment, and Bytes Technology, a software
solutions provider. Benefits to shareholders include increased scale,
resulting in an estimated reduction to its ongoing charges ratio of two basis
points, and cash at an advantageous point in the performance cycle.
Gearing
The level of invested gearing at the period end stood at 8.6%, compared to
7.3% six months earlier. The modest increase in gearing levels reflects the
fall in NAV and deployment of cash into equity markets. Over the medium term,
and where the appropriate opportunity presents itself, we would expect to move
the gearing level towards the intended long-term target position of 10%.
Dividend
No interim dividend is being paid. A single final dividend will typically be
paid after the AGM, reflecting the Company's focus on capital growth.
Outlook
Consistency of investment approach, particularly through difficult times, is
of utmost importance. Our investment edge remains in identifying and owning
growth companies for the long term. The purpose of this is to allow the power
of compound growth in revenues, earnings, and cashflows to drive share price
appreciation - shareholders should rightly challenge us if we appear to be
veering off course. Operating conditions for companies change. We recognise
this. This has prompted us to spend considerable time assessing where there
may be quality cyclical opportunities - we are deepening our conviction in
several names. We are confident that we own a collection of companies that
should be well-placed to navigate a period of rising costs and potentially
weaker demand. Indeed, the financial characteristics and the competitive
positions of a vast majority of holdings lead us to believe many will
outcompete their peers and emerge stronger.
* With debt at fair value
The principal risks and uncertainties facing the Company are set out at the
end of this document.
6 December 2022
For a definition of terms see Glossary of Terms and Alternative Performance
Measures at the end of this document
Total return information sourced from Refinitiv/Baillie Gifford. See
disclaimer at end of this document.
Past performance is not a guide to future performance.
The Managers' Core Investment Beliefs
We believe the following features of Monks provide a sustainable basis for
adding value for shareholders.
Active Management
- We invest in attractive companies using a 'bottom-up' investment
process. Macroeconomic forecasts are of relatively little interest to us.
- High active share* provides the potential for adding value.
- 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.
- Large swathes of the market are unattractive and of no interest to
us.
- As index agnostic global investors we can go anywhere and only
invest in the best ideas.
- As the portfolio is very different from the index, we expect
portfolio returns to vary - sometimes substantially and often for prolonged
periods.
Committed Growth Investors
- In the long run, share prices follow fundamentals; growth drives
returns.
- We aim to produce a portfolio of stocks with above average growth
- this in turn underpins the ability of Monks to add value.
- 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
three growth categories - as set out below.
- The use of these three growth categories ensures a diversity of
growth drivers within a disciplined framework.
Long-Term Perspective
- Long-term holdings mean that company fundamentals are given time
to drive returns.
- We prefer companies that are managed with a long-term mindset,
rather than those that prioritise the management of market expectations.
- We believe our approach helps us focus on what is important during
the inevitable periods of underperformance.
- Short-term portfolio results are random.
- As longer-term shareholders we are able to have greater influence
on environmental, social and governance matters.
Dedicated Team with Clear Decision-making Process
- Senior and experienced team drawing on the full resources of
Baillie Gifford.
- Alignment of interests - the investment team responsible for Monks
all own shares in the Company.
Portfolio Construction
- Investments are held in three broad holding sizes - as set out
below.
- 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.
- '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
- Investors should not be penalised by high management fees.
- Low turnover and trading costs benefit shareholders.
For a definition of terms see Glossary of Terms and Alternative Performance
Measures at the end of this document
Responsibility Statement
We confirm that to the best of our knowledge:
a) the condensed set of Financial Statements has been prepared in
accordance with FRS 104 'Interim Financial Reporting';
b) the Interim Management Report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.7R (indication of important
events during the first six months, their impact on the condensed set of
Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the year); and
c) the Interim Financial Report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.8R (disclosure of related
party transactions and changes therein).
By order of the Board
KS Sternberg
Chairman
6 December 2022
Thirty Largest Holdings as at 31 October 2022
Fair value % of total assets *
Growth category £'000
Name Business description
Elevance Health Stalwart Healthcare insurer 116,152 4.8
Martin Marietta Materials Cyclical Cement and aggregates manufacturer 69,112 2.8
Reliance Industries Rapid Indian energy conglomerate 67,944 2.8
Microsoft Stalwart Software and cloud computing enterprise 64,818 2.7
The Schiehallion Fund* Rapid Global unlisted growth equity investment company 35,234 1.5
The Schiehallion Fund - C Shares* Rapid Global unlisted growth equity investment company 27,058 1.1
62,292 2.6
Arthur J. Gallagher Stalwart Insurance broker 62,122 2.5
Alphabet Stalwart Online search engine 60,729 2.5
Moody's Stalwart Credit rating agency 58,574 2.4
Service Corporation International Stalwart Death care services 56,697 2.3
Prosus Rapid Media and ecommerce company 54,518 2.2
Olympus Stalwart Optoelectronic products 49,051 2.0
MasterCard Stalwart Electronic payments network and related services 46,753 1.9
Pernod Ricard Stalwart Global spirits manufacturer 46,748 1.9
Royalty Pharma Cyclical Biopharmaceutical royalties portfolio 45,050 1.9
CRH Cyclical Diversified building materials company 43,596 1.8
Thermo Fisher Scientific Stalwart Scientific instruments, consumables and chemicals 41,764 1.7
Amazon.com Rapid Online retailer 41,559 1.7
Ryanair Cyclical Low cost European airline 40,965 1.7
BHP Group Cyclical Mineral exploration and production 40,867 1.7
Albemarle Cyclical Speciality chemicals 36,357 1.5
Charles Schwab Cyclical Online savings and trading platform 36,307 1.5
Alnylam Pharmaceuticals Rapid RNA interference based biotechnology 35,991 1.5
AIA Stalwart Asian life insurer 34,523 1.4
Rio Tinto Cyclical Global commodities businesses 31,966 1.3
Moderna Rapid Drug discovery using mRNA technology 30,809 1.3
Prudential Stalwart International life insurance 30,465 1.3
HDFC Rapid Indian mortgage provider 29,797 1.2
Estee Lauder Stalwart Global cosmetic brands business 29,294 1.2
B3 Group Rapid Brazilian stock exchange operator 28,389 1.2
TSMC Cyclical Semiconductor manufacturer 27,790 1.1
1,420,999 58.4
For a definition of terms see Glossary of Terms and Alternative Performance
Measures at the end of this document
Investment Portfolio by Growth Category as at 31 October 2022*
Holding Size Growth Stalwarts % Rapid Growth % Cyclical 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)
Company Characteristics Company Characteristics Company Characteristics
¾ Durable franchise ¾ Early stage businesses with vast growth opportunity ¾ Subject to macroeconomic and capital cycles with significant
structural growth prospects
¾ Deliver robust profitability in most macroeconomic environments ¾ Innovators attacking existing profit pools or creating new markets
¾ Strong management teams highly skilled at capital allocation
¾ Competitive advantage includes dominant local scale, customer loyalty
and strong brands
Highest conviction holdings Elevance Health 4.8 Reliance Industries 2.8 Martin Marietta Materials 2.9
c.2.0% each
Total: 47.7%
Microsoft 2.7 Prosus 2.3 Royalty Pharma 1.9
Arthur J. Gallagher 2.6 Amazon.com 1.7 CRH 1.8
Alphabet 2.5 Alnylam Pharmaceuticals 1.5 Ryanair 1.7
Moody's 2.4 The Schiehallion Fund 1.5 BHP Group 1.7
Service Corporation International 2.4 Albemarle 1.5
Olympus 2.0 Charles Schwab 1.5
MasterCard 1.9
Pernod Ricard 1.9
Thermo Fisher Scientific 1.7
Average sized holdings AIA 1.4 Moderna 1.3 Rio Tinto 1.3
c.1.0% each
Total: 33.3%
Prudential 1.3 HDFC 1.2 TSMC 1.2
Estee Lauder 1.2 B3 Group 1.2 Markel 1.1
S&P Global 1.1 The Schiehallion Fund - C Shares 1.1 Booking Holdings 1.1
Broadridge Financial Solutions 1.1 The Trade Desk 1.1 Richemont 0.9
CoStar 0.9 Tesla 1.1 Teradyne 0.9
Shiseido 0.9 Illumina 0.9 CBRE Group 0.9
Analog Devices 0.7 Epic Games Atlas Copco 0.8
Sysmex 0.7
MercadoLibre 0.8 SMC 0.7
ByteDance 0.7 Deutsche Boerse 0.7
Genmab 0.7 SiteOne Landscape Supply 0.7
Coupang LLC 0.7 Nexans 0.7
Alibaba 0.7
Shopify 0.7
Incubator Holdings Adobe Systems 0.6 Axon Enterprise 0.6 Epiroc 0.6
c.0.5% each
Total: 19.0%
Chewy Inc 0.6 Farfetch 0.6 DENSO 0
.
5
Meta Platforms Inc 0.6 Ping An Insurance 0.6 Eaton 0
.
5
adidas 0.4 Schibsted 0.6 Howard Hughes 0
.
4
Topicus.com 0.4 Abiomed 0.5 Woodside Energy Group 0
.
3
Certara 0.3 Cloudflare 0.5 Sands China 0
.
2
Hoshizaki Corp 0.3 Snowflake 0.5 Silk Invest Africa Food Fund 0
.
2
Sea Limited 0.5 Wizz Air Holdings 0
.
2
ICICI Prudential Life Insurance 0.5 IAC/Interactivecorp 0
.
2
Netflix 0.5 Sberbank of Russia 0
.
0
Adyen 0.5
Lemonade 0.5
CyberAgent 0.4
Staar Surgical 0.4
Renishaw 0.4
Twilio 0.4
Novocure 0.4
Bumble 0.4
Doordash 0.4
Li Auto 0.4
Trupanion 0.4
Datadog 0.4
Adevinta Asa 0.3
Meituan 0.3
Space Exploration Technologies 0.3
Chegg 0.2
Spotify 0.2
Exact Sciences 0.2
Stripe 0.2
Ant International 0.2
Wayfair 0.2
Oscar Health 0.1
Illumina CVR 0.1
Total 37.4 Total 35.5 Total 27.1
* Excludes net liquid assets.
Portfolio Positioning as at 31 October 2022*
Thematic Exposure - Risks and Opportunities
At 31 October 2022
Category % % %
New Economy 36.7
Innovation 15.4
Transformational Health 6.7
Enterprise Cloud 3.5
Chips 2.7
Other Innovation 2.5
Platform Crush 9.2
Regulation/Anti-trust 8.9
Transformative/Unproven Model 3.2
Developing Economies 16.0
Emerging Markets Middle Classes 9.7
Emerging Markets Consumer Catch-up 3.9
Emerging Markets Financial Development 5.8
Carbon Heavy 5.3
Lending/Underwriting Risk 0.6
Industrial Demand 0.4
Economically Agnostic 29.5
Highly Valued Compounders 17.3
Idiosyncratic 8.5
Insurance Cycle 3.7
Developed Market Growth 17.0
Consumer Demand 4.0
Industrial Demand 6.7
Capital Markets/Asset Inflation 3.5
Carbon Pricing 2.8
Net Liquid Assets(†) 0.8
Total Assets 100.0
Geographical
At At
31 October 2022 30 April 2022
% %
North America 57.9 54.0
Continental Europe 14.0 14.5
United Kingdom 6.3 8.7
China 2.9 4.1
Emerging Markets ex China 8.4 8.1
Japan 5.5 4.5
Developed Asia 4.2 4.9
Total Investments 99.2 98.8
Net Liquid Assets(†) 0.8 1.2
Total Assets 100.0 100.0
Sectoral
At At
31 October 2022 30 April 2022
% %
Financials 20.5 21.1
Technology 18.5 20.6
Consumer Discretionary 19.1 19.5
Healthcare 17.2 14.5
Industrials 12.1 10.6
Consumer Staples 1.9 2.0
Basic Materials 4.5 5.0
Energy 3.1 2.8
Real Estate 2.3 2.7
Total Investments 99.2 98.8
Net Liquid Assets† 0.8 1.2
Total Assets 100.0 100.0
* Expressed as a percentage of total assets.
(†)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 six months ended For the six months ended For the year ended
31 October 2022 31 October 2021 30 April 2022 (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments - (164,112) (164,112) - 203,591 203,591 - (631,829) (631,829)
Currency losses - (120) (120) - (383) (383) - (308) (308)
Income from investments and interest receivable 15,932 - 15,932 16,018 - 16,018 27,811 - 27,811
Investment management fee (note 3) (4,419) - (4,419) (5,719) - (5,719) (10,465) - (10,465)
Other administrative expenses (1,000) - (1,000) (869) - (869) (1,888) - (1,888)
Net return before finance costs and taxation 10,513 (164,232) (153,719) 9,430 203,208 212,638 15,458 (632,137) (616,679)
Finance costs of borrowings (3,515) - (3,515) (2,507) - (2,507) (5,298) - (5,298)
Net return on ordinary activities before taxation 6,998 (164,232) (157,234) 6,923 203,208 210,131 10,160 (632,137) (621,977)
Tax on ordinary activities (note 4) (863) (183) (1,046) (910) (793) (1,703) (1,516) 293 (1,223)
Net return on ordinary activities after taxation 6,135 (164,415) (158,280) 6,013 202,415 208,428 8,644 (631,844) (623,200)
Net return per ordinary share (note 5) 2.75p (73.78p) (71.03p) 2.54p 85.61p 88.15p 3.67p (268.58p) (264.91p)
The total column of this statement is the profit and loss account of the
Company. The supplementary revenue and capital return 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
period.
Balance Sheet (unaudited)
Notes At 31 October At 30 April
2022 2022
(audited)
£'000
£'000
Fixed assets
Investments held at fair value through profit or loss 7 2,410,723 2,662,015
Current assets
Debtors 2,200 8,072
Cash and cash equivalents 23,365 35,879
25,565 43,951
Creditors
Amounts falling due within one year:
National Australia Bank Limited Loan (75,000) (75,000)
Debenture stock (39,989) (39,973)
Other creditors (4,115) (11,284)
(119,104) (126,257)
Net current liabilities (93,539) (82,306)
Total assets less current liabilities 2,317,184 2,579,709
Creditors
Amounts falling due after more than one year:
Loan notes 8 (99,855) (99,853)
Provision for tax liability 9 (875) (692)
(100,730) (100,545)
2,216,454 2,479,164
Capital and reserves
Share capital 11,823 11,823
Share premium account 261,635 262,183
Capital redemption reserve 8,700 8,700
Capital reserve 1,866,453 2,129,483
Revenue reserve 67,843 66,975
Shareholders' funds 10 2,216,454 2,479,164
Shareholders' funds per ordinary share 10 1,017.4p 1,089.0p
(borrowings at book value)
Net asset value per ordinary share* 1,017.4p 1,089.0p
(borrowings at par value)
Net asset value per ordinary share* 1,040.1p 1,099.8p
(borrowings at fair value)
Ordinary shares in issue 10 217,849,065 227,645,309
* See Glossary of Terms and Alternative Performance Measures at the
end of this announcement.
The accompanying notes on the following pages are an integral part of the
Financial Statements
Statement of Changes in Equity (unaudited)
For the six months ended 31 October 2022
Notes Called up share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve * reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 May 2022 11,823 262,183 8,700 2,129,483 66,975 2,479,164
Net return on ordinary activities after taxation - - - (164,415) 6,135 (158,280)
Ordinary shares issued/bought back 11,14 - (548) - (98,615) - (99,163)
Dividends paid during the period 6 - - - - (5,267) (5,267)
Shareholders' funds at 31 October 2022 11,823 261,635 8,700 1,866,453 67,843 2,216,454
For the six months ended 31 October 2021
Notes Called up share Share Capital Capital Revenue Shareholders'
capital premium redemption reserve * reserve funds
£'000 account reserve £'000 £'000 £'000
£'000 £'000
Shareholders' funds at 1 May 2021 11,823 262,183 8,700 2,859,214 63,060 3,204,980
Net return on ordinary activities after taxation - - - 202,415 6,013 208,428
Dividends paid during the period 6 - - - - (4,729) (4,729)
Shareholders' funds at 31 October 2021 11,823 262,183 8,700 3,061,629 64,344 3,408,679
* The Capital Reserve balance at 31 October 2022 includes holding
gains on investments of £598,370,000 (31 October 2021 - gains of
£1,608,092,000).
The accompanying notes on the following pages are an integral part of the
Financial Statements
Cash Flow Statement (unaudited)
Notes Six months to Six months to
31 October 31 October
2022 2021
£'000 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation (157,234) 210,131
Net losses/(gains) on investments 164,112 (203,591)
Currency losses 120 383
Finance costs of borrowings 3,515 2,507
Overseas tax incurred (894) (1,010)
Changes in debtors and creditors 1,308 1,392
Cash from operations* 10,927 9,812
Interest paid (3,443) (2,477)
Net cash inflow from operating activities 7,484 7,335
Net cash inflow/(outflow) from investing activities 90,862 (32,210)
Cash flow from financing activities
Equity dividends paid 6 (5,267) (4,729)
Ordinary shares bought back (105,473) -
Net cash outflow from financing activities (110,740) (4,729)
Decrease in cash and cash equivalents (12,394) (29,604)
Exchange movements (120) (383)
Cash and cash equivalents at start of period 35,879 108,723
Cash and cash equivalents at end of period 23,365 78,736
* Cash from operations includes dividends received of £17,838,000
(31 October 2021 - £17,208,000) and interest received of £94,000 (31 October
2021 - nil).
The accompanying notes are an integral part of the Financial Statements.
Notes to the Condensed Financial Statements (unaudited)
1. The condensed Financial Statements for the six months to 31 October
2022 comprise the statements set out above together with the related notes
below. They have been prepared in accordance with FRS 104 'Interim Financial
Reporting' and the AIC's Statement of Recommended Practice issued in November
2014 and updated in April 2021 with consequential amendments. They have not
been audited or reviewed by the Auditor pursuant to the Auditing Practices
Board Guidance on 'Review of Interim Financial Information'. The Financial
Statements for the six months to 31 October 2022 have been prepared on the
basis of the same accounting policies as set out in the Company's Annual
Report and Financial Statements at 30 April 2022.
Going Concern
The Directors have considered the Company's principal risks and uncertainties,
together with the Company's current position, investment objective and policy,
the level of demand for the Company's shares, the nature of its assets, its
liabilities and projected income and expenditure. The Board has, in
particular, considered the impact of market volatility following the Covid-19
pandemic and, over recent months, owing to macroeconomic and geopolitical
concerns, including the Russian invasion of Ukraine, energy supply and
supply-chain constraints. It is the Directors' opinion that the Company has
adequate resources to continue in operational existence for the foreseeable
future. The vast majority of the Company's investments are readily realisable
and can be sold to meet its liabilities as they fall due. All borrowings
require the prior approval of the Board. Gearing levels and compliance with
covenants are reviewed by the Board on a regular basis. The Company has
continued to comply with the investment trust status requirements of section
1158 of the Corporation Tax Act 2010 and the Investment Trust (Approved
Company) Regulations 2011. Accordingly, the Directors consider it appropriate
to adopt the going concern basis of accounting in preparing these Financial
Statements and confirm that they are not aware of any material uncertainties
which may affect the Company's ability to continue to do so over a period of
at least twelve months from the date of approval of these Financial
Statements.
2. The financial information contained within this Interim Financial
Report does not constitute statutory accounts as defined in sections 434 to
436 of the Companies Act 2006. The financial information for the year ended 30
April 2022 has been extracted from the statutory accounts which have been
filed with the Registrar of Companies. The Auditor's Report on those accounts
was not qualified, did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying its report, and
did not contain statements under sections 498(2) or (3) of the Companies Act
2006.
3. Baillie Gifford & Co Limited, a wholly owned subsidiary of
Baillie Gifford & Co, has been appointed by the Company as its Alternative
Investment Fund Manager (AIFM) and Company Secretary. The investment
management function has been delegated to Baillie Gifford & Co. The
management agreement can be terminated on six months' notice. The annual
management fee 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.
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
holdings 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. Tax on ordinary activities
The revenue tax charge arises from withholding tax suffered on overseas
dividends.
The capital tax charge results from the Provision for Tax Liability in respect
of Indian capital gains tax as detailed in note 9.
5. Net return per ordinary share
Six months to Six months to Year to
31 October 31 October 30 April 2022 (audited)
2022 2021 £'000
£'000 £'000
Revenue return on ordinary activities after taxation 6,135 6,013 8,644
Capital return on ordinary activities after taxation (164,415) 202,415 (631,844)
Total net return (158,280) 208,428 (623,200)
Net return per ordinary share is based on the above totals of revenue and
capital and on 222,840,019 (31 October 2021 - 236,453,859; 30 April 2022 -
235,252,716) ordinary shares, being the weighted average number of ordinary
shares in issue during the period.
There are no dilutive or potentially dilutive shares in issue.
6. Dividends
Six months to Six months to Year to
31 October 31 October 30 April 2022 (audited)
2022 2021 £'000
£'000 £'000
Amounts recognised as distributions in the period:
Previous year's final dividend of 2.35p (2021 - 2.00p), paid 9 September 2022 5,267 4,729 4,729
Amounts paid and payable in respect of the period:
Final dividend (2022 - 2.35p) - - 5,267
No interim dividend has been declared in respect of the current period.
7. Fair Value Hierarchy
The Company's investments are financial assets held at fair value through
profit or loss. The fair value hierarchy used to analyse the basis on which
the fair values of such financial instruments are measured is described below.
Fair value measurements are categorised on the basis of the lowest level input
that is significant to the fair value measurement.
Level 1 - using unadjusted quoted prices for identical instruments in an
active market;
Level 2 - using inputs, other than quoted prices included within Level 1, that
are directly or indirectly observable (based on market data); and
Level 3 - using inputs that are unobservable (for which market data is
unavailable).
An analysis of the Company's financial asset investments based on the fair
value hierarchy described above is shown below.
As at 31 October 2022 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed equities 2,290,318 62,292 - 2,352,610
Unlisted securities - - 58,113 58,113
Total financial asset investments 2,290,318 62,292 58,113 2,410,723
As at 30 April 2022 (audited) Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Listed and suspended equities 2,479,464 120,306 5,636 2,605,406
Unlisted securities - - 56,609 56,609
Total financial asset investments 2,479,464 120,306 62,245 2,662,015
The fair value of listed investments is either bid price or last traded price
depending on the convention of the exchange on which the investment is listed.
Listed Investments are categorised as Level 1 if they are valued using
unadjusted quoted prices for identical instruments in an active market and as
Level 2 if they do not meet all these criteria but are, nonetheless, valued
using market data. Unlisted investments are valued at fair value by the
Directors following a detailed review and appropriate challenge of the
valuations proposed by the Managers. The Managers' unlisted investment policy
applies methodologies consistent with the International Private Equity and
Venture Capital Valuation Guidelines ('IPEV'). These methodologies can be
categorised as follows: (a) market approach (multiples, industry valuation
benchmarks and available market prices); (b) income approach (discounted cash
flows); and (c) replacement cost approach (net assets). The Company's holdings
in unlisted investments are categorised as Level 3 as unobservable data is a
significant input to their fair value measurements.
8. At 31 October 2022 the total book value of the Company's borrowings
amounted to £214,844,000 (30 April 2022 - £214,826,000). This comprised a
£40m 63/8% debenture stock repayable in 2023 (30 April 2022 - £40m), loan
notes of £60m repayable in 2054 (30 April 2022 - £60m), loan notes of
£40m repayable in 2045 (30 April 2022 - £40m) and £75m drawn under the
revolving credit facility with National Australia Bank Limited (30 April 2022
- £75m).
The fair value of borrowings at 31 October 2022 was £165,377,000 (30 April
2022 - £190,308,000).
The fair value of the borrowings at 31 October 2022 was £165,377,000 (30
April 2022 - £190,308,000).
9. Provision for Tax Liability
The tax liability provision at 31 October 2022 of £875,000 (30 April 2022 -
£692,000) relates to a potential liability for Indian capital gains tax that
may arise on the Company's Indian investments should they be sold in the
future, based on the net unrealised taxable capital gain at the period end and
on enacted Indian tax rates. The amount of any future tax amounts payable may
differ from this provision, depending on the value and timing of any future
sales of such investments and future Indian tax rates.
10. Shareholders' Funds
31 October 30 April
2022
2022
Shareholders' funds £2,216,454,000 £2,479,164,000
Number of ordinary shares in issue excluding treasury shares 217,849,065 227,645,309
Shareholders' funds per ordinary share 1,017.4p 1,089.0p
The shareholders' funds figures above have been calculated after deducting
borrowings at book value, in accordance with the provisions of FRS 104.
Reconciliations between shareholders' funds and net asset values, calculated
after deducting borrowings at par value and fair value, are shown in the
Glossary of Terms and Alternative Performance Measures below.
11. In the six months to 31 October 2022 the Company bought back 9,796,244
ordinary shares into treasury (31 October 2021 - no shares issued or bought
back). No shares were issued during the period and 18,604,794 shares were held
in treasury at 31 October 2022. At 31 October 2022, the Company had authority
to buy back 30,318,989 shares and to allot, or sell from treasury, 22,480,758
shares.
12. Transaction costs on purchases amounted to £29,000 (31 October 2021 -
£73,000; 30 April 2022 - £374,000) and transaction costs on sales amounted
to £120,000 (31 October 2021 - £69,000; 30 April 2022 - £173,000). Total
transaction costs were £149,000 (31 October 2021 - £142,000; 30 April 2022 -
£547,000).
13. Related Party Transactions
There have been no transactions with related parties during the first six
months of the current financial year that have materially affected the
financial position or the performance of the Company during that period and
there have been no changes in the related party transactions described in the
last Annual Report and Financial Statements that could have had such an effect
on the Company during that period.
14. Post Balance Sheet Event
On 8 November 2022, the Company issued 16,717,601 new ordinary shares to
former shareholders of The Independent Investment Trust PLC ('IIT'), in
accordance with the Scheme of Reconstruction as set out in the Circular and
Prospectus dated 6 October 2022. The Company received £173 million of assets,
comprising equity investments and cash, as consideration for the new shares,
the entitlements of which were calculated in accordance with the Scheme, being
the relative FAVs at market close on 2 November 2022 of 454.237179 pence for
IIT and 1,035.305776 pence for the Company, producing a conversion ratio of
0.438747 new share for every IIT share rolling over. Following this issuance
there were 234,566,666 ordinary shares in issue, excluding treasury shares. At
31 October 2022 £548,000 of Scheme transaction costs were incurred or accrued
and these are reflected in the Statement of Changes in Equity, as a charge to
the Share Premium Account. Baillie Gifford & Co Limited have waived their
management fee on the £173 million rolled into the Company as a result of
this transaction, for the six months to 30 April 2023.
15. Principal Risks and Uncertainties
The principal risks facing the Company, which have not changed since the date
of the Company's Annual Report and Financial Statements for the year ended 30
April 2022, are financial risk, investment strategy risk, climate and
governance risk, regulatory risk, custody and depositary risk, operational
risk, discount risk, political and associated economic risk and leverage risk.
An explanation of these risks and how they are managed is set out on pages 19
and 20 of that report, which is available on the Company's website:
monksinvestmenttrust.co.uk. (‡)
(‡) 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.
Valuing Private Companies
We aim to hold our private company investments at 'fair value' i.e., the price
that would be paid in an open-market transaction. Valuations are adjusted both
during regular valuation cycles and on an ad hoc basis in response to 'trigger
events'. Our valuation process ensures that private companies are valued in
both a fair and timely manner.
The valuation process is overseen by a valuations committee at Baillie Gifford
which takes advice from an independent third party (S&P Global). The
portfolio managers feed into the process, but the valuations committee owns
the process and the portfolio managers only receive final valuation
notifications once they have been applied.
We revalue the private holdings on a three-month rolling cycle, with one-third
of the holdings reassessed each month. The prices are also reviewed twice per
year by the Monks Board and are subject to the scrutiny of external auditors
in the annual audit process.
Recent market volatility has meant that recent pricing has moved much more
frequently than would have been the case with the quarterly valuations cycle.
Beyond the regular cycle, the valuations committee also monitors the portfolio
for certain 'trigger events'. These may include: changes in fundamentals; a
takeover approach; an intention to carry out an Initial Public Offering (IPO);
or changes to the valuation of comparable public companies.
The valuations committee also monitors relevant market indices on a weekly
basis and update valuations in a manner consistent with our external valuer's
(S&P Global) most recent valuation report where appropriate. When market
volatility is particularly pronounced the team undertake these checks daily.
Any ad hoc change to the fair valuation of any holding is implemented swiftly
and reflected in the next published NAV. There is no delay.
The Monks Investment Trust
Percentage of portfolio in direct private company holdings 2.4%
Instruments valued 8
Revaluations performed 33
Percentage of private company portfolio revalued 3+ times 87%
Year to date, most revaluations have been decreases. A handful of companies
have raised capital at an increased valuation. The average movement in both
valuation and private company share price for those which have decreased in
value is shown below.
Average movement in investee company valuation* Average movement in investee company share price
Monks* (8.2%) (4.0%)
* Data reflecting period 1 May 2022 - 31 October 2022 to align with the
Company's reporting period end
Private company share prices have decreased less than headline valuations
because Monks typically holds preference stock, which provides downside
protection. The private company share price movement reflects a probability
weighted average of both the regular valuation, which would be realised in an
IPO, and the downside protected valuation, which would be normally be
triggered in the event of a corporate sale or liquidation.
In addition to the 2.4% of the portfolio holdings in direct private company
investments, 2.6% of the portfolio is in The Schiehallion Fund, a closed ended
investment company investing predominantly in private companies, which Monks
values by reference to its market price.
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.
31 October 2022 31 October 2022 30 April 30 April
2022
2022
£'000 per share
£'000 per share
Shareholders' funds (borrowings at book value) 2,216,454 1,017.4p 2,479,164 1,089.0p
Add: book value of borrowings 214,844 98.6p 214,826 94.4p
Less: par value of borrowings (215,000) (98.6p) (215,000) (94.4p)
Net asset value (borrowings at par value) 2,216,298 1,017.4p 2,478,990 1,089.0p
The per share figures above are based on 217,849,065 (30 April 2022 -
227,645,309) ordinary shares of 5p, being the number of ordinary shares in
issue at the period end excluding treasury shares.
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 calculated using a comparable debt
approach and/or broker quotes where available. The fair values of the loan
notes are calculated using a comparable debt approach, by reference to a
basket of corporate debt. 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.
31 October 2022 31 October 2022 30 April 30 April
2022
2022
£'000 per share
per share
£'000
Shareholders' funds (borrowings at book value) 2,216,454 1,017.4p 2,479,164 1,089.0p
Add: book value of borrowings 214,844 98.6p 214,826 94.4p
Less: fair value of borrowings (165,377) (75.9p) (190,308) (83.6p)
Net asset value (borrowings at fair value) 2,265,921 1,040.1p 2,503,682 1,099.8p
The per share figures above are based on 217,849,065 (30 April 2022 -
227,645,309) ordinary shares of 5p, being the number of ordinary shares in
issue at the period end excluding treasury shares.
Net Liquid Assets
Net liquid assets comprise current assets less current liabilities (excluding
borrowings) and provisions for deferred liabilities.
Discount/Premium (APM)
As stock markets 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.
31 October 2022 30 April 2022
Closing NAV per share (borrowings at par) a 1,017.4p 1,089.0p
Closing NAV per share (borrowings at fair value) b 1,040.1p 1,099.8p
Closing share price c 968.5p 1,051.0p
Discount to NAV with borrowings at par (c - a) ÷ a (4.8%) (3.5%)
Discount to NAV with borrowings at fair value (c - b) ÷ b (6.9%) (4.4%)
Active Share (APM)
Active share, a measure of how actively a portfolio is managed, is the
percentage of the listed equity 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 net
dividend on the date that the share price goes ex-dividend, as detailed below.
Net Asset Value Total Return
31 October 2022 31 October 2022
NAV (par) NAV (fair)
Closing NAV per share a 1,017.4p 1,040.1p
Dividend adjustment factor* b 1.0022 1.0021
Adjusted closing NAV per share c = a x b 1,019.6p 1,042.3p
Opening NAV per share d 1,089.0p 1,099.8p
Total return (c ÷ d) -1 (6.4%) (5.2%)
* The dividend adjustment factor is calculated on the assumption
that the dividend of 2.35p paid by the Company during the period was
reinvested into shares of the Company at the cum income NAV at the ex-dividend
date.
Share Price Total Return
31 October 2022
Share price
Closing share price a 968.5p
Dividend adjustment factor* b 1.0023
Adjusted closing share price c = a x b 970.7p
Opening share price d 1,051.0p
Total return (c ÷ d) -1 (7.6%)
* The dividend adjustment factor is calculated on the assumption
that the dividend of 2.35p paid by the Company during the period was
reinvested into shares of the Company at the share price at the ex-dividend
date.
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.
Gross gearing, also referred to as potential gearing is the Company's
borrowings expressed as a percentage of shareholders' funds (a ÷ c in the
table below).
Net gearing, also referred to as invested gearing is borrowings at book value
less cash and cash equivalents (any certificates of deposit are not deducted)
and brokers' balances expressed as a percentage of shareholders' funds (b ÷ c
in the table below)*.
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*.
* As adjusted to take into account the gearing impact of any
derivative holdings.
31 October 2022 30 April 2022
Borrowings (at book cost) a £214,544,000 £214,826,000
Less: cash and cash equivalents (£23,365,000) (£35,879,000)
Less: sales for subsequent settlement (£226,000) (£4,741,000)
Add: purchases for subsequent settlement - £7,045,000
Adjusted borrowings b £190,953,000 £181,251,000
Shareholders' funds c £2,216,454,000 £2,479,164,000
Gross (potential) gearing a ÷ c 9.7% 8.7%
Net (invested) gearing b ÷ c 8.6% 7.3%
Unlisted, Unquoted and Private Company Investments
'Unlisted', 'Unquoted' and 'Private Company' investments are investments in
securities not traded on a recognised exchange.
Treasury Shares
The Company has the authority to make market purchases of its ordinary shares
for retention as treasury shares for future reissue, resale, transfer, or for
cancellation. Treasury shares do not receive distributions and the Company is
not entitled to exercise the voting rights attaching to them.
Turnover (APM)
Turnover is a measure of portfolio change or trading activity. Monthly
turnover is calculated as the minimum of purchases and sales in a month,
divided by the average market value of the fund. Monthly numbers are added
together to get the rolling 12 month turnover data.
None of the views expressed in this document should be construed as advice to
buy or sell a particular investment.
The printed version of the Interim Financial Report will be sent to
shareholders and will be available on the Monks' page of the Managers' website
monksinvestmenttrust.co.uk ‡ on or around 16 December 2022.
‡ 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.
Monks is managed by Baillie Gifford & Co, the Edinburgh based fund
management group with around £230 billion under management and advice in
active equity and bond portfolios for clients in the UK and throughout the
world (as at 6 December 2022).
Investment Trusts are UK public limited companies and are not authorised or
regulated by the Financial Conduct Authority.
Past performance is not a guide to future performance. The value of an
investment and any income from it is not guaranteed and may go down as well as
up and investors may not get back the amount invested. This is because the
share price is determined by the changing conditions in the relevant stock
markets in which the Company invests and by the supply and demand for the
Company's shares.
7 December 2022
For further information please contact:
Client Relations, Baillie Gifford & Co
Tel: 0131 275 2000
Jonathan Atkins, Four Communications
Tel: 0203 920 0555 or 07872 495396
Automatic Exchange of Information
In order to fulfil its obligations under UK tax legislation relating to the
automatic exchange of information, the Company is required to collect and
report certain information about certain shareholders. The legislation
requires investment trust companies to provide personal information to HMRC on
certain investors who purchase shares in investment trusts. Accordingly, the
Company will have to provide information annually to the local tax authority
on the tax residencies of a number of non-UK based certificated shareholders
and corporate entities.
Shareholders, excluding those whose shares are held in CREST, who come on to
the share register will be sent a certification form for the purposes of
collecting this information.
For further information, please see HMRC's Quick Guide: Automatic Exchange of
Information - information for account holders
gov.uk/government/publications/exchange-of- information-account-holders.
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
London Stock Exchange Group plc and its group undertakings (collectively, the
'LSE Group'). © LSE Group 2022. FTSE Russell is a trading name of certain of
the LSE Group companies. 'FTSE®' 'Russell®', FTSE Russell ®, is/are a trade
mark(s) of the relevant LSE Group companies and is/are used by any other LSE
Group company under license. All rights in the FTSE Russell indexes or data
vest in the relevant LSE Group company which owns the index or the data.
Neither LSE Group nor its licensors accept any liability for any errors or
omissions in the indexes or data and no party may rely on any indexes or data
contained in this communication.
No further distribution of data from the LSE Group is permitted without the
relevant LSE Group company's express written consent. The LSE Group does not
promote, sponsor or endorse the content of this communication.
Sustainable Finance Disclosure Regulation ('SFDR')
The EU Sustainable Finance Disclosure Regulation ('SFDR') does not have a
direct impact in the UK due to Brexit, however, it applies to third-country
products marketed in the EU. As The Monks Investment Trust PLC is marketed in
the EU by the AIFM, BG & Co Limited, via the National Private Placement
Regime ('NPPR') the following disclosures have been provided to comply with
the high-level requirements of SFDR.
The AIFM has adopted Baillie Gifford & Co's Governance and Sustainable
Principles and Guidelines as its policy on integration of sustainability risks
in investment decisions.
Baillie Gifford & Co's approach to investment is based on identifying and
holding high quality growth businesses that enjoy sustainable competitive
advantages in their marketplace. To do this it looks beyond current financial
performance, undertaking proprietary research to build up an in-depth
knowledge of an individual company and a view on its long-term prospects. This
includes the consideration of sustainability factors (environmental, social
and/or governance matters) which it believes will positively or negatively
influence the financial returns of an investment.
More detail on the Investment Manager's approach to sustainability can be
found in the Governance and Sustainability Principles and Guidelines document,
available publicly on the Baillie Gifford website bailliegifford.com.
Taxonomy Regulation
The Taxonomy Regulation establishes an EU-wide framework or criteria for
environmentally sustainable economic activities in respect of six
environmental objectives. It builds on the disclosure requirements under SFDR
by introducing additional disclosure obligations in respect of Alternative
Investment Funds that invest in an economic activity that contributes to an
environmental objective.
The Company does not commit to make sustainable investments as defined under
SFDR. As such, the underlying investments do not take into account the EU
criteria for environmentally sustainable economic activities.
-ends-
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