Interim Results

JPMorgan Fleming Mercantile IT PLC 27 September 2006 LONDON STOCK EXCHANGE ANNOUNCEMENT JPMORGAN FLEMING MERCANTILE INVESTMENT TRUST PLC PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS The Company's net asset value total return for the first half was +6.0% which was ahead of the comparable return of +3.1% from our small and mid cap benchmark index, the FTSE All Share (excluding FTSE 100 constituents and investment companies). After a strong start to the year, the stock market suffered a sharp correction in May. This setback recognised the reality that inflation had been rising, partly as a result of higher oil prices, and that interest rates in the US and UK would have to be increased, which could reduce economic growth. That said, the corporate sector remains strong, with increasing confidence being apparent in several sectors and, more recently, the stock market has begun to regain its poise. Because the stock market was so strong at the beginning of the year, the opportunity was taken to sell holdings in those metals and energy stocks which were promoted into the FTSE 100: Corus, Drax, Lonmin and Kazakhmys, and, also, to reduce the number of smaller illiquid stocks, which can be difficult investments in weak markets. With gearing thus reduced, the Company's investment managers were then able to take advantage of the market volatility over the summer to use the available gearing to add to the Company's portfolio. They continue to see greater opportunities to pick outperforming stocks in the mid and small cap universe and, in particular, remain positive on the outlook for house builders. Already this year there have been a number of takeover approaches for companies within the portfolio such as De Vere, AB Ports, Mitchells and Butlers, Kesa, Body Shop, Signet, Morgan Crucible and Cambridge Antibody Technology and corporate activity is expected to remain strong. With this background and corporate confidence strong, the Board remains positive on the outlook for the rest of the year. Dividends A second interim dividend of 4.50 pence per share has been declared by the Board, payable on 1st November 2006 to shareholders on the register as at the close of business on 6th October 2006. Together with the first interim dividend of 4.50 pence paid on 1st August 2006, this brings the total dividend for the year to date to 9.00 pence (2005: 8.50 pence). The Board has increased the level of the first two interim dividends in order to distribute income to shareholders more evenly throughout the year. Share Repurchases The Board has maintained its active approach towards share repurchases in order to enhance the net asset value and minimise the absolute level and volatility of the discount on the Company's shares. In the six months to 31st July 2006, 6,554,966 shares were repurchased for cancellation at a total cost of £65,132,000. Those purchases added approximately 1.96 pence to the net asset value per share and the discount, with debt at fair value, has ranged between 12.2% and 8.2% in the period from 1st February to 25th September 2006. The average discount during that period was 10.2%. Hamish Leslie Melville Chairman 27th September 2006 For further information please contact: Jonathan Latter JPMorgan Asset Management (UK) Limited - Secretary 020 7742 6000 JPMorgan Fleming Mercantile Investment Trust plc Unaudited figures for the six months ended 31st July 2006 Income Statement (Unaudited) (Unaudited) (Audited) Six months ended 31st July Six months ended 31st July Year ended 31st January 2006 2006 2005 Revenue Capital Total Revenue Capital Total Revenue Capital Total return return return return return return return return return £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains from investments held at fair value through profit or loss - 56,081 56,081 - 40,782 40,782 - 345,305 345,305 Income from investments 22,688 - 22,688 21,334 - 21,334 37,617 - 37,617 Other interest receivable and similar income 1,349 - 1,349 805 - 805 2,282 - 2,282 _______ _______ ______ ______ _______ _______ _______ _______ _______ Gross return 24,037 56,081 80,118 22,139 40,782 62,921 39,899 345,305 385,204 Management fee (1,913) (1,913) (3,826) (1,550) (1,550) (3,100) (3,264) (3,264) (6,528) Other administrative (455) - (455) (444) - (444) (784) - (784) expenses _______ _______ ______ ______ _______ _______ _______ _______ _______ Net return on ordinary activities before finance costs and taxation 21,669 54,168 75,837 20,145 39,232 59,377 35,851 342,041 377,892 Finance costs (2,907) (2,907) (5,814) (3,304) (3,304) (6,608) (6,478) (6,478) (12,956) _______ _______ ______ ______ _______ _______ _______ _______ _______ Net return on ordinary activities before taxation 18,762 51,261 70,023 16,841 35,928 52,769 29,373 335,563 364,936 Taxation - - - - - - - - - ______ _______ ______ ______ _______ _______ _______ _______ _______ Net return on ordinary activities after taxation 18,762 51,261 70,023 16,841 35,928 52,769 29,373 335,563 364,936 ===== ===== ===== ===== ===== ===== ===== ===== ===== Return per share 14.54p 39.72p 54.26p 12.51p 26.70p 39.21p 21.79p 248.92p 270.71p JPMorgan Fleming Mercantile Investment Trust plc Unaudited figures for the six months ended 31st July 2006 Reconciliation of Movements in Shareholders' Funds (unaudited) Called up Share Capital redemption share premium reserve Capital Revenue capital reserve account reserve Total £'000 £'000 £'000 £'000 £'000 £'000 At 31st January 2005 (as restated)* 33,957 4,361 2,170 1,068,890 35,155 1,144,533 Adjustment to opening shareholders funds at 1st February 2005 to reflect the adoption of bid prices - - - (7,938) - (7,938) Shares bought back and cancelled (1,477) - 1,477 (49,754) - (49,754) Shares issued 643 19,098 - - - 19,741 Total return from ordinary activities - - - 335,563 29,373 364,936 Dividends appropriated in the year - - - - (26,524) (26,524) _______ _______ ________ ________ ________ ________ At 31st January 2006 33,123 23,459 3,647 1,346,761 38,004 1,444,994 Shares bought back and cancelled (1,637) - 1,637 (65,132) - (65,132) Total return from ordinary activities - - - 51,261 18,762 70,023 Dividends appropriated in the period - - - - (17,352) (17,352) _______ _______ ________ ________ ________ ________ At 31st July 2006 31,486 23,459 5,284 1,332,890 39,414 1,432,533 ===== ===== ===== ===== ===== ===== * Restated following the issue of FRS 21. Under this standard, dividends are accounted for in the period in which they are paid. Hence the fourth quarterly dividend originally accrued at 31st January 2005 has been added back to the revenue reserve. JPMorgan Fleming Mercantile Investment Trust plc Unaudited figures for the six months ended 31st July 2006 Balance Sheet (Unaudited) (Unaudited) (Audited) 31st July 2006 31st July 2005 31st January 2006 £'000 £'000 £'000 Fixed assets Investments at fair value through profit or loss 1,610,457 1,340,831 1,607,071 Current assets Debtors 19,027 18,230 37,408 Cash and short term deposits 26,336 20,950 2 _______ _______ _______ 45,363 39,180 37,410 Creditors: amounts falling due within one year (46,722) (32,546) (22,970) ______ _______ _______ Net current (liabilities) / assets (1,359) 6,634 14,440 _______ _______ _______ Total assets less current liabilities 1,609,098 1,347,465 1,621,511 Creditors: amounts falling due after more than (176,565) (176,469) (176,517) one year _______ _______ _______ Total net assets 1,432,533 1,170,996 1,444,994 ======= ======= ======= Capital and reserves Called up share capital 31,486 33,850 33,123 Share premium account 23,459 404 23,459 Capital redemption reserve 5,284 2,920 3,647 Capital reserve 1,332,890 1,096,879 1,346,761 Revenue reserve 39,414 36,943 38,004 _______ _______ _______ Equity shareholders' funds 1,432,533 1,170,996 1,444,994 ======= ======= ======= Net asset value per share 1,137.5p 864.8p 1,090.6p Cash Flow Statement (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st July 31st July 31st January 2006 2005 2006 £'000 £'000 £'000 Net cash inflow from operating activities 18,315 16,907 31,624 Net cash outflow from returns on investments and servicing of finance (5,784) (6,560) (13,071) Net cash inflow from capital expenditure and financial investment 112,425 14,340 32,230 Dividends paid (17,352) (15,053) (26,524) Net cash outflow from financing (73,364) (22,962) (58,533) _______ ______ ______ Increase/(decrease) in cash for the period 34,240 (13,328) (34,274) ====== ====== ===== Notes to the Accounts 1. Accounting policies The accounts have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' dated 31st December 2005. All of the Company's operations are of a continuing nature. The accounting policies applied to these interim accounts are consistent with those applied in the accounts for the year ended 31st January 2006. 2. Dividends (Unaudited) (Unaudited) (Audited) Six months ended Six months ended Year ended 31st July 2006 31st July 2005 31st January 2006 £'000 £'000 £'000 Unclaimed dividends refunded to the Company (43) - - Fourth quarterly dividend of 9.00p paid May (2005: 7.00p) 11,728 9,298 9,298 First quarterly dividend of 4.50p paid August (2005: 4.25p) 5,667 5,755 5,755 Second quarterly dividend of 4.25p paid November N/a N/a 5,755 Third quarterly dividend of 4.25p paid February N/a N/a 5,716 _______ _______ _______ 17,352 15,053 26,524 ======= ======= ======= A second quarterly dividend of 4.50p per share, amounting to £5,667,000, has been declared payable in respect of the six months ended 31st July 2006. The above financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31st January 2006 have been delivered to the Registrar of Companies. JPMORGAN ASSET MANAGEMENT (UK) LIMITED This information is provided by RNS The company news service from the London Stock Exchange

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