Final Results

RNS Number : 5519J

Mercantile Investment Trust(The)PLC

31 March 2010

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

THE MERCANTILE INVESTMENT TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31^ST JANUARY 2010

 

 

Chairman's Statement

Over the year to 31st January 2010, the 125th year since the Company was founded, the Company's total return on net assets (ie with net income reinvested) was 56.3%, which compares with a return of 57.6% from the Company's benchmark index, the FTSE All-Share (excluding FTSE 100 constituents and investment trusts).

Although this performance reflects a very substantial return, it is marginally behind the Company's performance benchmark. The reason for this is that dividends paid and accrued have necessitated a dip into reserves to the value of £13 million, which has reduced the total return on net assets by 2.0% thereby reducing the reported performance figure to a level below the benchmark.

As you will read in the Investment Managers' Statement, conditions in the financial markets globally have been extremely tough, though during the year the Stock Market has experienced its largest gain since 1993. The Company's performance has at certain points of the year looked strong against the benchmark, and at others, looked weak.

During the year Standard and Poor's reviewed the Company's credit rating in relation to its debenture and it remained unchanged at AA with a stable outlook reflecting the well diversified portfolio.

Returns and Dividends

Return per share decreased by 44.5% for the year, from 41.73p to 23.18p, due to a reduction in dividend income and a significantly lower level of deposit interest income. The successful underwriting of more than £300 million of new capital raisings assisted income by some £4.0 million (3.9p per share).

The Company has paid three interim dividends of 6.0p per ordinary share, and the Directors have declared a fourth quarterly interim dividend of 18.0p, giving a total dividend of 36.0p for the year, maintaining last year's dividend of 36.0p. The Board recognises, as in previous years, that it is essential to make an appropriate distribution, which both meets shareholders' legitimate expectations, and is prudent in the light of what may be continuing difficult times ahead.

The Board intends therefore to continue to pay three interim dividends at the current rate of 6.0p per ordinary share throughout the year ending 31st January 2011. The level of the fourth quarterly interim dividend will be determined by the Board based on the level of income received by the Company during the year and with regard to the Company's revenue reserve of 27.5p per share.

VAT Case

Following the recovery, in 2008, of just over £10 million, including interest, of VAT incorrectly paid to HMRC, there have been two further developments. A landmark case, VIC GLO, was decided in the High Court where the Court found that interest on incorrectly paid VAT should have been paid on a compound, rather than a simple basis, although in that particular case the taxpayer did not benefit owing to limitation issues. Given that some of your Company's refunds stretch back to 1990, the effect of compounding over such a long period, if the principles in the VIC GLO case are confirmed by higher courts, will add materially to the sums already recovered.

The second development has been the launch of an action against HMRC to recover the VAT that should never have been paid for the years 1997 to 2000 but which, so far, HMRC has refused to repay. Together with a number of other investment trusts, we are party to and are helping fund the action. As with the earlier case, it could well be five years or more before the matter is finally decided. Our costs are capped at a relatively modest fee, whilst the possible recovery could materially exceed £2 million plus interest. Although there is no guarantee of success, your Board decided that the risk/reward ratio was such that it was in the interests of shareholders to participate.

Share Price Discount

The share price rose by 45.1% during the year and, including dividends paid, the total return to shareholders was 51.6%. The discount to net asset value (with debt at fair value) at year end was 14.5% compared to 9.2% the previous year. The average daily discount, with debt at fair value, during the year, was 10.5%.

Share Repurchases

During the year under review a total of 374,000 shares were repurchased for cancellation, amounting to 0.37% of issued share capital at the beginning of the year, at a total cost of £3.3 million. Share repurchases during the year under review have added approximately 0.5 pence to the net asset value per share.

The Board's objective remains to use the share repurchase authority to manage imbalances between the supply and demand of the Company's shares, thereby reducing the volatility of the discount. The Board believes that, to date, this mechanism has been helpful and therefore proposes and recommends that the powers to repurchase up to 14.99% of the Company's shares for cancellation be renewed for a further period.

Gearing

The Company ended the year with gearing of 111.9%. During the year the gearing varied between 104% and 114%. It is the Board's intention to continue to operate within the range of 90% to 120% invested, under normal market conditions, although at the present time, the Board is maintaining gearing at the lower end of the range.

Board

Following the vacancy created by the sad loss of Richard Hambro in April 2009, the Board appointed Sir Richard Beckett QC as a Director with effect from 1st September 2009. The shareholders will be asked to elect Sir Richard at the forthcoming AGM. Sir Richard brings his legal knowledge and experience to the Board's affairs and has already proved to be a valuable member of the team.

This year Sandy Nairn and Ian Russell offer themselves for re-election by the shareholders at the forthcoming AGM, having last been re-elected three years ago. Sandy has a wealth of investment experience, and Ian, as Chairman of the Audit Committee and a Director carries out his role extremely effectively. I thoroughly recommend their re-election. Having been a Director for more than nine years, in accordance with the Board's policy, I offer myself for re-election on an annual basis, and will accordingly stand for re-election at the AGM.

The Board undertakes a formal and rigorous evaluation of its performance, and that of the individual Directors including myself as the Chairman, and the Board's Committees. The Directors conduct an assessment of performance each year, which is compiled into a report to the Nomination Committee.

Investment Managers

The Company's investment management team comprises Martin Hudson, who was appointed in 1993, and Jane Lennard, who was appointed in 2006.

The Board continues to monitor the performance of the Manager on a regular basis.

Annual General Meeting

The Company's one hundred and twenty fourth Annual General Meeting will be held at Trinity House, Tower Hill, London EC3N 4DH on Wednesday 19th May 2010 at 12 noon. In addition to the formal part of the meeting, there will be a presentation from the Investment Managers who will answer questions on the portfolio and performance. The meeting will be followed by a buffet lunch which will give shareholders an opportunity to meet the Board, the Investment Managers and representatives of JPMAM. I look forward to seeing as many of you as possible at the meeting.

Please submit in writing any detailed questions that you wish to raise at the AGM to the Company Secretary at Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ or via the website at www.mercantileit.co.uk (click on "AGM calendar"). Shareholders who are unable to attend the AGM in person are encouraged to use their proxy votes.

Outlook

The UK stock market performed strongly during the year for reasons which have little to do with the economic climate in the UK, but are due more to the fact that the market had fallen to completely unrealistic levels and the fiscal stimulus and quantitative easing programmes that the government has undertaken. The performance was also partly due to the fact that the banking system globally has stabilised somewhat. The main factors likely to affect markets in the UK over the coming year are the probable weakness of Sterling due to continuing gross fiscal imbalance and a lack of political will to resolve the position. Paradoxically this may help equity markets in the UK. By contrast, the continuing reluctance of the banking system to lend money will tend to restrict the normal growth of companies in the UK.

Hamish Leslie Melville

Chairman                                                                                                                     

31st March 2010

 

Investment Managers' Report

Market Background

During 2009 the UK stockmarket experienced its largest gain since 1993.

At the beginning of the year confidence remained low and fragile with the market fearing debt, depression and deflation. Global financial markets have endured the largest economic contraction since the Second World War. Since the onset of the crisis UK GDP has fallen by 6.2%, the most severe downturn since records began. Many jobs have been lost and the fiscal deficit in the UK has grown to £178 billion. However, fears of prolonged depression and deflation were exaggerated. The UK stockmarket raised £82 billion to repair the balance sheets of quoted companies. Wage freezes, cuts and reduced working hours meant that both employment and company profitability fell by less than expected. Governments and Central Banks around the World implemented stimulus packages and quantitative easing programmes. March 2009 signalled a turning point in investor risk appetite. As economic data improved and beat expectations the market built on its new found momentum.

Performance

The performance of small and mid sized UK companies for the year was greater than that for the stockmarket as a whole as investors' risk appetite increased and as the reported profits from small and mid sized companies started to exceed forecasts, mainly as a result of actions taken to cut costs. Last year saw the biggest rise in your Company's small and mid cap benchmark index since its introduction in 1994.

The total net asset value return at the portfolio level was 58.3% for the year ended 31st January 2010 which was ahead of the Company's benchmark index, the FTSE All-Share excluding FTSE 100 constituents and investment companies, which returned 57.6%. However, this was reduced to 56.3% after taking into account the proposed payment of part of the final dividend from reserves. This compares with a return of 33.2% for the broader FTSE All-Share Index. The contributors to performance are analysed in the table to the left.

The bar chart below shows the relative contributions to performance for the year for the five best and five worst sectors within the portfolio. The dark green bars to the right show the positive contributions to performance relative to the benchmark index and reflect both sector weightings and stock selection. The light blue bars to the left show the negative relative contributors.

Performance attribution for the year ended 31st January 2010

		1 Year
	%	%
Contributions to Total Returns
Benchmark total return		57.6
Allocation effect	-5.4
Selection effect	2.8
Gearing/cash effect	3.8
Portfolio total return		58.8
Fees/Expenses	-0.6
Share buybacks	0.1
Proposed dividend	-2.0
Net asset value total return		56.3
Effect of decrease/(increase) in discount	-2.5
Share price total return		51.6

Source: Xamin/JPMAM/AIC/Morningstar.

The table provides a breakdown, relative to the benchmark, of the contributions to total return.

This shows that the biggest contributor to performance was the Support Services sector. It is the biggest sector in our benchmark representing 15% of the index; many stocks in this sector are exposed to UK public sector spending. We have held an underweight position in the sector for the last two years, believing that these companies would not be as immune from the economic downturn as investors believed. During the year many Support Services companies lost their premium ratings as their earnings prospects deteriorated. The Food Producers and Industrial Transportation sectors benefited from strong contributions from Premier Foods and BBA respectively. Recapitalisations were a major theme last year and stocks such as GKN and Taylor Wimpey were strong contributors in the Automobiles and Parts and Household Goods sectors respectively. Mercantile participated in 24 sub-underwriting opportunities last year as £17 billion was raised in the stockmarket for small and mid sized UK companies. Because of the uncertainty in markets we were offered these opportunities on attractive terms of typically a 40% discount to the share price and we earned a sub-underwriting commission of 1.75%. This generated an income of £4 million for the Company.

Of the negative contributors to relative performance the worst sector was Mining where the majority of the underperformance was caused by not holding Lonmin which recovered very strongly and was promoted back into the FTSE 100 index in March. The portfolio was overweight in Travel and Leisure, which includes the bus and rail companies and Ladbrokes and William Hill the bookmakers. This detracted from performance as these stocks lagged the market recovery. The relative underperformance in the Technology, Hardware and Equipment sector resulted mainly from not holding ARM which was also promoted into the FTSE 100 index.

One of our advantages as an investment trust is to be able to use gearing, that is to invest borrowings in the stockmarket, and that added to performance last year as the stockmarket rose strongly.

Activity

Gearing was managed actively throughout the year. Having begun to reinvest our 10% net cash position in the stockmarket from September 2008 and starting this financial year with gearing of 103% we continued to increase gearing into the falling market in February believing the stockmarket was then fundamentally cheap and that long term value was present. By March we had increased gearing to 110% and it was then held in a range of approximately 110-112% for the remainder of the year. The investment managers have the flexibility to operate within a gearing range of 90%-120% invested and a more specific tactical range is agreed regularly with the Board.

The portfolio retains its style of board diversification across all sectors, and holds 120 stocks of which 80 are mid-sized and 40 are smaller companies. By value, approximately 80% of the portfolio is invested in mid sized stocks and 20% in smaller companies.

The table below shows that our holdings in companies which are larger than £1 billion in market capitalisation are greater than for the benchmark index. This reflects an overweight holding in those successful larger companies which are progressing towards inclusion in the FTSE 100 Index and also newer holdings in those out of favour companies which have recently fallen out of the FTSE 100 Index. The portfolio is also overweight in the very smallest companies. These can often offer the best growth opportunities.

Portfolio Size Distribution

	Benchmark
	index	Fund	Relative
Market	weighting	weighting	weighting
Capitalisation	%	%	%
More than £1.5bn	24.6	27.5	2.9
£1.0bn to £1.5bn	28.1	33.8	5.7
£500m to £1.0bn	23.9	15.8	-8.1
£300m to £500m	11.7	9.2	-2.5
£100m to £300m	9.9	6.5	-3.4
£50m to £100m	1.6	4.9	3.3
Less than £50m	0.2	2.3	2.1
Total	100.0	100.0	0.0

As at 31st January 2010

Our ten largest holdings reflect a repositioning of the portfolio during the year. Of the ten largest holdings as at 31st January 2010 only one, ITV, was in the top ten last year. Two, GKN and Songbird, were held in the portfolio a year ago and our holdings in them were increased on their re-capitalisations; the new holdings in Imagination Technologies and Misys represent an increase in our emphasis on growth technology stocks; and the new holdings in Drax and Pennon, which were both demoted from the FTSE 100, represent an increase in our holdings in Utilities.

During the year we met or visited more than 250 companies and this remains a key component in our process of evaluating companies. We believe that properly targeted company meetings can help us to analyse smaller companies that are often overlooked by the mainstream, evaluate managements and resolve issues. Our fundamental analysis of companies is aided by JPMorgan's in-house proprietary screening process which helps us to identify companies that exhibit the best value and growth characteristics.

Takeover activity was relatively low during the year, although Venture Production which was in last years top ten holdings was taken over by Centrica and Puma Brandenburg was taken over by Shore Capital. We expect takeover activity to increase in the current year and recapitalisations and rescue rights issues, which dominated last year, to reduce. There were very few Initial Public Offerings last year and we expect the level of activity to increase this year although we shall continue to reject highly priced low growth offerings from Private Equity sellers.

Outlook

The risk of a long depression in economic activity that would have resulted from the collapse of the banking system now seems to have been averted by a concerted global policy response of lower interest rates and easier fiscal policy. This, together with the recapitalisation of companies achieved in the stockmarket, allowed equities to be valued on a forward looking rather than a fearful basis and allowed us to buy strong companies at good valuations.

However, economic recovery will be slow and painful with a danger of set backs. The financial system remains undercapitalised, weighted down with doubtful assets and still needs taxpayer support.

Since the Company's year end we have reduced gearing towards 100% invested to reflect the substantial rise in share prices of small and mid sized companies in the stockmarket last year. That said, interest rates are likely to stay low for some time, economic activity is continuing to beat expectations and aggressive cost cutting by companies has limited the reduction in margins and supported profits. As the economy continues to stabilise, companies' profits will be able to recover. We remain positive on small and mid sized companies and we see the year ahead as being full of opportunities.

Martin Hudson

Jane Lennard

Investment Managers                                                                                                        

31^st March 2010

Principal Risks

With the assistance of the Manager, the Board has drawn up a risk matrix, which identifies the key risks to the Company. These key risks fall broadly under the following categories:

•   Investment and Strategy: An inappropriate investment strategy, for example asset allocation or the level of gearing, may lead to underperformance against the Company's benchmark index and peer companies, resulting in the Company's shares trading on a wider discount. The Board manages these risks by diversification of investments through its investment restrictions and guidelines which are monitored and reported by the Manager. JPMAM provides the Directors with timely and accurate management information, including performance data and attribution analyses, revenue estimates, liquidity reports and shareholder analyses. The Board monitors the implementation and results of the investment process with the Investment Managers, who attend all Board meetings, and reviews data which show statistical measures of the Company's risk profile. The Investment Managers employ the Company's gearing tactically, within a strategic range set by the Board.

•   Accounting, Legal and Regulatory: In order to qualify as an investment trust, the Company must comply with Section 842 of the Income and Corporation Taxes Act 1988 ('Section 842'). Details of the Company's approval are given under 'Business of the Company' above. Were the Company to breach Section 842, it might lose investment trust status and, as a consequence, gains within the Company's portfolio could be subject to Capital Gains Tax. The Section 842 qualification criteria are continually monitored by JPMAM and the results reported to the Board each month. The Company must also comply with the provisions of the Companies Acts and, since its shares are listed on the London Stock Exchange, the UKLA Listing Rules. A breach of the Companies Acts could result in the Company and/or the Directors being fined or the subject of criminal proceedings. Breach of the UKLA Listing Rules could result in the Company's shares being suspended from listing which in turn would breach Section 842. The Board relies on the services of its Company Secretary, JPMAM, to ensure compliance with The Companies Acts and The UKLA Listing Rules.

•   Corporate Governance and Shareholder Relations: Details of the Company's compliance with Corporate Governance best practice, including information on relations with shareholders, are set out in the Corporate Governance report in the Annual Report.

•   Operational: Disruption to, or failure of, JPMAM's accounting, dealing or payments systems or the custodian's records could prevent accurate reporting and monitoring of the Company's financial position. Details of how the Board monitors the services provided by JPMAM and its associates and the key elements designed to provide effective internal control are included within the Internal Control section of the Corporate Governance report in the Annual Report.

•   Financial: The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk and credit risk. Bank counterparties are subject to daily credit analysis by the Manager and regular consideration at meetings of the Board. In addition the Board receives regular reports on the Manager's monitoring and mitigation of credit risks on share transactions carried out by the Company. Further details are disclosed in note 22 in the Annual Report.

 

Directors' Responsibilities

The Directors each confirm to the best of their knowledge that:

(a) the accounts, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and return or loss of the Company; and

(b)   this Annual Report 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.

 

For and on behalf of the Board

Hamish Leslie Melville

Chairman

31^st March 2010

Please note that up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can be found at www.mercantileit.com.

For further information, please contact:

Juliet Dearlove

For and on behalf of

JPMorgan Asset Management (UK) Limited - Secretary

020 7742 6000

 

 Income Statement

for the year ended 31st January 2010

	2010			2009
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains/(losses) on investments held at fair value through profit or loss	-	362,020	362,020	-	(488,753)	(488,753)
Net foreign currency losses	-	(78)	(78)	-	(26)	(26)
Income from investments	27,899	-	27,899	39,601	-	39,601
Other interest receivable and similar income	4,349	-	4,349	12,149	-	12,149
Gross return/(loss)	32,248	361,942	394,190	51,750	(488,779)	(437,029)
Management fee	(1,971)	(1,971)	(3,942)	(2,187)	(2,187)	(4,374)
VAT recoverable	-	-	-	1,130	1,069	2,199
Other administrative expenses	(1,022)	-	(1,022)	(2,144)	-	(2,144)
Net return/(loss) on ordinary activities before finance costs and taxation	29,255	359,971	389,226	48,549	(489,897)	(441,348)
Finance costs	(5,489)	(5,489)	(10,978)	(5,502)	(5,502)	(11,004)
Net return/(loss) on ordinary activities before taxation	23,766	354,482	378,248	43,047	(495,399)	(452,352)
Taxation	(63)	-	(63)	(19)	-	(19)
Net return/(loss) on ordinary activities after taxation	23,703	354,482	378,185	43,028	(495,399)	(452,371)
Return/(loss) per share (note 2)	23.18p	346.63p	369.81p	41.73p	(480.45)p	(438.72)p

Dividends declared in respect of the financial year ended 31st January 2010 total 36.0p per share (2009: 36.0p per share) costing £36,753,000 (2009: £36,898,000) (note 3).

All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year.

The 'total' column of this statement is the profit and loss account of the Company, and the 'revenue' and 'capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. The total column represents all the information that is required to be disclosed in a Statement of Total Recognised Gains and Losses ('STRGL'). For this reason, a STRGL has not been presented.

Reconciliation of Movements in Shareholders' Funds

for the year ended 31st January 2010

	Called up		Capital
	share	Share	redemption	Capital	Revenue
	capital	premium	reserve	reserves	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
At 31st January 2008	26,075	23,459	10,695	1,090,587	57,334	1,208,150
Repurchase and cancellation of the Company's own shares	(495)	-	495	(17,586)	-	(17,586)
Net (loss)/return on ordinary activities	-	-	-	(495,399)	43,028	(452,371)
Dividends appropriated in the year	-	-	-	-	(40,895)	(40,895)
At 31st January 2009	25,580	23,459	11,190	577,602	59,467	697,298
Repurchase and cancellation of the Company's own shares	(93)	-	93	(3,299)	-	(3,299)
Net return on ordinary activities	-	-	-	354,482	23,703	378,185
Dividends appropriated in the year	-	-	-	-	(36,808)	(36,808)
At 31st January 2010	25,487	23,459	11,283	928,785	46,362	1,035,376

Balance Sheet

at 31st January 2010

	2010	2009
	£'000	£'000
Fixed assets
Investments held at fair value through profit or loss	1,158,236	716,891
Current assets
Debtors	19,647	1,786
Cash and short term deposits	40,225	171,392
	59,872	173,178
Creditors: amounts falling due within one year	(5,831)	(15,966)
Net current assets	54,041	157,212
Total assets less current liabilities	1,212,277	874,103
Creditors: amounts falling due after more than one year	(176,901)	(176,805)
Total net assets	1,035,376	697,298
Capital and reserves
Called up share capital	25,487	25,580
Share premium	23,459	23,459
Capital redemption reserve	11,283	11,190
Capital reserves	928,785	577,602
Revenue reserve	46,362	59,467
Shareholders' funds	1,035,376	697,298
Net asset value per share (note 4)	1,015.6p	681.5p

The Company's Registration Number is 20537

 

Cash Flow Statement

for the year ended 31st January 2010

	2010	2009
	£'000	£'000
Net cash inflow from operating activities	25,045	54,483
Servicing of finance
Interest paid	(10,882)	(10,898)
Net cash outflow from servicing of finance	(10,882)	(10,898)
Taxation
Overseas tax recovered	-	16
Financial investment
Purchases of investments	(1,019,054)	(1,320,325)
Sales of investments	912,996	1,217,694
Settlement of option contracts	-	975
Other capital charges	(24)	(31)
Net cash outflow from financial investment	(106,082)	(101,687)
Total dividends paid	(36,820)	(40,895)
Net cash outflow before financing	(128,739)	(98,981)
Financing
Repurchase and cancellation of the Company's own shares	(2,350)	(17,586)
Net cash outflow from financing	(2,350)	(17,586)
Decrease in cash in the year	(131,089)	(116,567)

Notes to the Accounts

for the year ended 31st January 2010

1.     Accounting Policies

The accounts are prepared in accordance with the Companies Act 2006. United Kingdom Generally Accepted Accounting Practice ('UK GAAP') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' (the 'SORP') issued by the Association of Investment Companies ('AIC') in January 2009. All of the Company's operations are of a continuing nature.

2.     Return/(loss) per share

The revenue return per share is based on the earnings attributable to the ordinary shares of £23,703,000 (2009: £43,028,000) and on the weighted average number of ordinary shares in issue during the year of 102,264,780 (2009: 103,110,703).

The capital return per share is based on the capital return attributable to the ordinary shares of £354,482,000 (2009: £495,399,000 loss) and on the weighted average number of ordinary shares in issue during the year of 102,264,780 (2009: 103,110,703).

The total return per share is based on the total return attributable to the ordinary shares of £378,185,000 (2009: £452,371,000 loss) and on the weighted average number of ordinary shares in issue during the year of 102,264,780 (2009: 103,110,703).

	2010	2009
	£'000	£'000
3. Dividends
Dividends paid and declared
Unclaimed dividends refunded to the Company	(12)	(10)
2009 fourth quarterly dividend of 18.0p (2008: 17.5p) paid to shareholders in May	18,418	18,253
2008 Special dividend of 4.0p paid to shareholders in May	-	4,172
First quarterly dividend of 6.0p (2009: 6.0p) paid to shareholders in August	6,139	6,186
Second quarterly dividend of 6.0p (2009: 6.0p) paid to shareholders in November	6,139	6,147
Third quarterly dividend of 6.0p (2009: 6.0p) paid to shareholders in February	6,124	6,147
Total dividends paid in the year	36,808	40,895

	2010	2009
	£'000	£'000
Fourth quarterly dividend of 18.0p (2009: 18.0p) payable to shareholders in May	18,351	18,418

The fourth quarterly dividend has been declared in respect of the year ended 31st January 2010. In accordance with the accounting policy of the Company, this dividend will be reflected in the accounts for the year ending 31st January 2011.

4.     Net asset value per share

The net asset value per share is based on the net assets attributable to the ordinary shareholders of £1,035,376,000 (2009: £697,298,000) and on the 101,947,968 (2009: 102,321,968) shares in issue at the year end.

5.     Status of announcement

2009 Financial Information

The figures and financial information for 2009 are extracted from the published Annual Report and Accounts for the year ended 31^st January 2009 and do not constitute the statutory accounts for that year.  The Annual Report and Accounts has been delivered to the Registrar of Companies and included the Report of the Independent Auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.

2010 Financial Information

The figures and financial information for 2010 are extracted from the Annual Report and Accounts for the year ended 31^st January 2010 and do not constitute the statutory accounts for the year.  The Annual Report and Accounts includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.  The Annual Report and Accounts will be delivered to the Registrar of Companies in due course.

Annual Report and Accounts

The Annual Report and Accounts will be posted to shareholders on or around 9^th April 2010 and will shortly be available on the Company's website (www.mercantileit.co.uk) or in hard copy format from the Company's Registered Office, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ.

JPMORGAN ASSET MANAGEMENT (UK) LIMITED

 

END

 

 

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