TIDMMNKS
RNS Number : 6677F
Monks Investment Trust PLC
11 July 2023
The Monks Investment Trust PLC (MNKS)
Legal Entity Identifier: 213800MRI1JTUKG5AF64
Regulated Information Classification: Annual Financial and Audit
Reports
Annual Report and Financial Statements
Further to the preliminary statement of audited annual results
announced to the Stock Exchange on 20 June 2023, The Monks
Investment Trust PLC ("the Company") announces that the Company's
Annual Report and Financial Statements for the year ended 30 April
2023, including the Notice of Annual General Meeting, has today
been posted to shareholders and submitted electronically to the
National Storage Mechanism where it will shortly be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
It is also available on the Company page of the Baillie Gifford
website at: www.monksinvestmenttrust.co.uk (as is the preliminary
statement of audited annual results announced by the Company on 20
June 2023).
Arrangements for the Annual General Meeting (AGM)
The Annual General Meeting of the Company will be held at the
Institute of Directors, 116 Pall Mall, London SW1Y 5ED on Thursday,
7 September 2023, at 11.00am. To accurately reflect the views of
shareholders of the Company, the Board intends to hold the AGM
voting on a poll, rather than on a show of hands as has been
customary. The Board encourages all shareholders to complete and
return the form of proxy enclosed with the Annual Report to ensure
that your votes are represented at the meeting (whether or not you
intend to attend in person). Shareholders are recommended to
monitor the Company's website, www.monksinvestmenttrust.co.uk ,
where any updates will be posted.
Should shareholders have questions for the Board or the Managers
or any queries as to how to vote, they are welcome as always to
submit them by email to trustenquiries@bailliegifford.com or call
0800 917 2112. Baillie Gifford may record your call.
Responsibility Statement of the Directors in respect of the
Annual Financial Report
The Directors confirm that, to the best of their knowledge:
3/4 the Financial Statements set out in the Annual Report and
Financial Statements, which have been prepared in accordance with
applicable law and United Kingdom Accounting Standards (United
Kingdom Generally Accepted Accounting Practice) including FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland', give a true and fair view of the assets, liabilities,
financial position and net return of the Company;
3/4 the Annual Report and Financial Statements taken as a whole
is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company's performance,
business model and strategy; and
3/4 the Strategic Report set out in the Annual Report and
Financial Statements includes a fair review of the development and
performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that it faces (as also set out below).
Principal Risks relating to the Company
As explained on page 30 of the Annual Report and Financial
Statements there is an ongoing process for identifying, evaluating
and managing the risks faced by the Company on a regular basis. The
Directors have carried out a robust assessment of the principal and
emerging risks facing the Company, including those that would
threaten its business model, future performance, solvency or
liquidity. A description of these risks and how they are being
managed or mitigated is set out below.
The Board considers the aftermath of the Covid-19 pandemic,
geopolitical tensions arising from the Russian war in Ukraine, and
the impact of global inflationary pressures to be factors which
exacerbated existing risks, rather than discrete risks, within the
context of an investment trust. Their impact is considered within
the relevant risks.
Financial Risk - the Company's assets consist mainly of listed
securities and its principal and emerging financial risks are
therefore market related and include market risk (comprising
currency risk, interest rate risk and other price risk), liquidity
risk and credit risk. An explanation of those risks and how they
are managed is contained in note 19 to the Financial Statements on
pages 58 to 64 of the Annual Report and Financial Statements. The
Board has, in particular, considered the impact of heightened
market volatility following the Covid-19 pandemic and owing to
macroeconomic and geopolitical concerns including the
Russia-Ukraine war, US-China and China-Taiwan tensions and global
inflationary pressures. To mitigate these risks, the composition
and diversification of the portfolio by geography, industry, growth
category, holding size and thematic risk category are considered at
each Board meeting along with sales and purchases of investments.
Individual investments are discussed with the investment managers
together with their general views on the various investment markets
and sectors. A strategy meeting is held annually.
Investment Strategy Risk - pursuing an investment strategy to
fulfil the Company's objective which the market perceives to be
unattractive or inappropriate, or the ineffective implementation of
an attractive or appropriate strategy, may lead to reduced returns
for shareholders and, as a result, a decreased demand for the
Company's shares. This may lead to the Company's shares trading at
a widening discount to their Net Asset Value. To mitigate this
risk, the Board regularly reviews and monitors: the Company's
objective and investment policy and strategy; the investment
portfolio and its performance; the level of discount/premium to Net
Asset Value at which the shares trade; and movements in the share
register, and raises any matters of concern with the Manager.
Climate and Governance Risk - as investors place increased
emphasis on Environmental, Social and Governance (ESG) issues,
perceived problems on ESG matters in an investee company could lead
to that company's shares being less attractive to investors,
adversely affecting its share price, in addition to potential
valuation issues arising from any direct impact of the failure to
address the ESG weakness on the operations or management of the
investee company (for example in the event of an industrial
accident or spillage). Repeated failure by the Manager to identify
ESG weaknesses in investee companies could lead to the Company's
own shares being less attractive to investors, adversely affecting
its own share price. This is mitigated by the Manager's strong ESG
stewardship and engagement policies, which have been endorsed by
the Company, and which are fully integrated into the investment
process, as well as the extensive up-front and ongoing due
diligence which the Manager undertakes on each investee company.
This due diligence includes assessment of the risks inherent in
climate change (see page 32 of the Annual Report and Financial
Statements).
Regulatory Risk - failure to comply with applicable legal and
regulatory requirements such as the tax rules for investment trust
companies, the FCA Listing rules and the Companies Act could lead
to the Company being subject to tax on capital gains, suspension of
the Company's Stock Exchange listing, financial penalties or a
qualified audit report. To mitigate this risk, Baillie Gifford's
Business Risk, Internal Audit and Compliance Departments provide
regular reports to the Audit Committee on Baillie Gifford's
monitoring programmes. Major regulatory change could impose
disproportionate compliance burdens on the Company. In such
circumstances representation is made to
ensure that the special circumstances of investment trusts are
recognised. Shareholder documents and announcements, including the
Company's published Interim and Annual Report and Financial
Statements, are subject to stringent review processes and
procedures are in place to ensure adherence to the Transparency
Directive and the Market Abuse Directive with reference to inside
information.
Custody and Depositary Risk - safe custody of the Company's
assets may be compromised through control failures by the
Depositary, including breaches of cyber security. To mitigate this
risk, the Board receives six-monthly reports from the Depositary
confirming safe custody of the Company's assets held by the
Custodian. Cash and portfolio holdings are independently reconciled
to the Custodian's records by the Manager. The Custodian's assured
internal controls reports are reviewed by Baillie Gifford's
Business Risk Department and a summary of the key points is
reported to the Audit Committee and any concerns investigated.
Operational Risk - failure of Baillie Gifford's systems or those
of other third party service providers could lead to an inability
to provide accurate reporting and monitoring or a misappropriation
of assets. To mitigate this risk, Baillie Gifford has a
comprehensive business continuity plan which facilitates continued
operation of the business in the event of a service disruption or
major disaster. Following the Covid-19 pandemic, Baillie Gifford is
operating a hybrid model, with staff determining the most
appropriate split between working from home and working in the
office, which ensures ongoing resilience by maintaining the ability
to fall back to remote working should that be required. The Board
reviews Baillie Gifford's Report on Internal Controls and the
reports by other third party providers are reviewed by Baillie
Gifford on behalf of the Board. The other key third party service
providers have not experienced operational difficulties affecting
their respective services to the Company.
Discount Risk - the discount/premium at which the Company's
shares trade relative to its Net Asset Value can change. The risk
of widening discount is that it may undermine investor confidence
in the Company. To manage this risk, the Board monitors the level
of discount/premium at which the shares trade and the Company has
authority to buy back its existing shares when deemed by the Board
to be in the best interests of the Company and its
shareholders.
Political and Associated Economic Risk - political change in
areas in which the Company invests or may invest may increasingly
have practical consequences for the Company. To mitigate this risk,
developments are closely monitored and considered by the Board. The
Board has particular regard to repercussions from the Russian war
in Ukraine, and ongoing tensions between the US and China, and
monitors portfolio diversification by revenue stream as well as by
investee companies' primary location, to mitigate against the
negative impact of military action or trade barriers.
Leverage Risk - the Company may borrow money for investment
purposes (sometimes known as 'gearing' or 'leverage'). If the
investments fall in value, any borrowings will magnify the extent
of this loss. If borrowing facilities are not renewed, the Company
may have to sell investments to repay borrowings. The Company can
also make use of derivative contracts. To mitigate this risk all
borrowings require the prior approval of the Board and leverage
levels are discussed by the Board and investment managers at every
meeting. Covenant levels are monitored regularly. The majority of
the Company's investments are in quoted securities that are readily
realisable. Further information on leverage can be found on page 70
of the Annual Report and Financial Statements and in the Glossary
of Terms and Alternative Performance Measures on pages 72 to 74 of
the Annual Report and Financial Statements.
Emerging Risks - as explained on page 30 of the Annual Report
and Financial Statements the Board has regular discussions on
principal risks and uncertainties, including any risks which are
not an immediate threat but could arise in the longer term. The
Board considers that the key emerging risks arise from the
interconnectedness of global economies and the related exposure of
the investment portfolio to emerging threats such as the societal
and financial implications of global inflationary pressures, cyber
risk including developing AI and quantum computing capabilities,
and new coronavirus variants or similar public health threats.
These are mitigated by the Manager's close links to the investee
companies and their ability to ask questions on contingency plans.
The Manager believes the impact of such events may be to slow the
pace of growth rather than to invalidate the investment rationale
over the long term.
Baillie Gifford & Co Limited
Company Secretaries
11 July 2023
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END
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July 11, 2023 06:31 ET (10:31 GMT)
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