Final Results

Merrill Lynch World Mining Tst PLC 14 February 2007 14 February 2007 MERRILL LYNCH WORLD MINING TRUST plc Preliminary announcement of results in respect of the year ended 31 December 2006 Performance to 31 December 2006 1 year 3 years 5 years (with net income and warrant proceeds reinvested) Undiluted net asset value per share +32.9% +125.0% +361.8% Ordinary share price +29.1% +116.2% +406.3% HSBC Global Mining Index* +21.8% +101.5% +205.4% *adjusted for exchange rates relative to sterling. Performance based on mid-market values with net income reinvested on ex-dividend date. Source: BlackRock Investment Management (UK) Limited, Datastream. • A 61% increase in total dividends declared of 4.50p (comprising an ordinary dividend of 2.50p and a special dividend of 2.00p). • Group earnings increased by an exceptional 159% during the year. • The undiluted net asset value per share at 31 December 2006 was 516.07p (2005: 397.03p). • Eight consecutive years of dividend growth; reflecting good cash flows in the sector. For further information please contact the following: Jonathan Ruck Keene 020 7743 2178 Managing Director, Investment Trust Division BlackRock Investment Management (UK) Limited Graham Birch 020 7743 2690 Fund Manager BlackRock Investment Management (UK) Limited Nigel Webb 020 7743 5938 Public Relations BlackRock Investment Management (UK) Limited William Clutterbuck 020 7379 5151 Maitland Consultancy The Chairman, Anthony Lea, comments: 'Performance Over the second half of the year the undiluted net asset value increased by 11.2% and the share price by 9.4% (all percentages calculated on the basis that dividend income is reinvested, and that the 2006 warrant entitlements per share were sold and the proceeds reinvested on the first day of trading). For the year as a whole the undiluted net asset value increased by 32.9% and the share price by 29.1% (with net income and warrant proceeds reinvested). This is our sixth consecutive year of growth: since the tender offer in 1999 at 63.28p, the share price has risen by over 700% whilst the earnings per share have increased by 780% from 1p in 1999 to 8.8p in 2006. Performance to 31 December 2006 One year Five years Net asset value per share: - capital only 30.0% 335.6% - with net income and 1/5 warrant reinvested 32.9% 361.8% Ordinary share price: - capital only 26.3% 360.1% - with net income and 1/5 warrant reinvested 29.1% 406.3% HSBC Global Mining Index*: - capital only 19.4% 171.7% - with net income reinvested 21.8% 205.4% * Adjusted for exchange rates relative to sterling. Sources: BlackRock Merrill Lynch Investment Managers, Datastream. 'True to its character the mining sector was volatile throughout the year. Global economic growth was once again led by China, despite the notable slowdown in the US. Commodity prices continued to rise and the sector was further boosted by a marked increase in takeover activity. 'Earnings and dividends The Group's earnings per share rose from 3.4p to 8.8p, an increase of 159% reflecting strong cash flows generated within the sector. I am delighted to report the eighth consecutive year of dividend growth, which this year will be 2.50p plus a special dividend of 2.00p. 'Awards At the annual Investment Week Investment Trust awards your Company was honoured, for a third time, with the Best Specialist Trust award. We were also delighted to receive the award for the Best Report & Accounts (Specialist) from the Association of Investment Companies in respect of the 2005 Annual Report. 'Discounts The discount to net asset value at which the shares traded during the year ranged from 5.3% to 16.2% and stood at 14.0% at the year end. The tender offer of 1999 had no lasting effect on discount levels. Mindful of this we have sought to increase the capital base of the Company, to provide greater market liquidity and to generate more interest from existing and potential investors, through bonus warrant issues. 'The first exercise date for the bonus warrants issued last year is 28 February 2007 and warrant holders should have received a reminder letter posted on 26 January 2007. 'Outlook We anticipate another positive year for the sector albeit one with reduced momentum given moderating US growth. Slow supply side progress and strong global growth should prove supportive and we expect continuing corporate activity. Commenting upon the outlook for the Company, Graham Birch of BlackRock Merrill Lynch Investment Managers, the Investment Manager, notes: 'At the interim stage last year we argued that 2006 would be another record year for the mining industry and this has proved to be the case. 2007 has started with a downward move in base metal prices, but stronger bulk commodity and precious metal prices so far this year mean we expect more records to be broken in due course, albeit with reduced positive earnings momentum. 'Although China remains the most important demand side factor in the natural resources industry, it is the sluggish US economy that is most important to market sentiment at the moment. Although the Federal Reserve has halted, at least for now, its rate raising activities, analysts remain concerned about possible economic weakness ahead. We believe that weakness in the US housing market may dent, but not derail, the US economy due to reasonable job and real wage growth. We expect US growth of 2% to 21/2%. Global growth is likely to remain strong (4% to 41/2% in real terms) but below the 5% enjoyed in 2006. 'Project delays together with escalating capital funding requirements for new ' green field' mines continue to act as a headwind for the industry and have helped to defer the supply side response to higher commodity prices that many analysts predicted. As a result, we believe that most industrial commodity supply/demand balances will remain favourable this year despite a slower rate of global economic growth. 2007 may well prove therefore to be another year in which cash accumulates on the corporate balance sheets at a quicker rate than it can be deployed on new projects. Given that many balance sheets are already strong there is a likelihood that these strong cash flows will translate into higher dividends and more share buy backs. There is also the possibility of additional 'corporate activity' providing further support for the market as cash flow multiples within the sector remain modest. 'We expect to see an uptrend in gold. Mine supply is likely to remain stagnant while investment demand has grown and net Central Bank sales may even have declined. This is a good environment for gold especially as many commentators expect further weakness in the dollar. 'The main risk to this scenario is, unexpectedly, severe economic deceleration or an external shock to the global economy from a major terrorist atrocity or an escalation of Middle East violence, leading to higher oil prices. 'While we are not brave enough to predict that returns in 2007 will match the very strong outturn of 2006, never mind 2005, we would not be surprised to see the mining sector continue to generate attractive returns - especially if price earnings ratios increase a little, as seems likely. CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2006 Revenue return 2006 2005 £'000 £'000 (unaudited) (audited) Notes Income Income from investments held at fair value through profit or loss 3 22,872 13,620 Other income 3 7,593 2,477 ---------- ---------- Total revenue 30,465 16,097 ---------- ---------- Gains on investments held at fair value through profit or loss - - Realised gains/(losses) on foreign exchange - - ---------- ---------- 30,465 16,097 Expenses Management fees 4 (10,186) (6,841) Other expenses 5 (998) (797) ---------- ---------- Profit before finance costs and taxation 19,281 8,459 Finance costs 6 (564) (1,509) ---------- ---------- Profit before taxation 18,717 6,950 Taxation 7 (3,935) (1,308) ---------- ---------- Profit for the year 14,782 5,642 ---------- ---------- Return per ordinary share - basic and diluted 9 8.78p 3.39p ====== ====== The total column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the Consolidated Income Statement derive from continuing operations. No operations were acquired or disposed of during the year. All income is attributable to the equity holders of Merrill Lynch World Mining Trust plc. There are no minority interests. CONSOLIDATED INCOME STATEMENT - continued for the year ended 31 December 2006 Capital return 2006 2005 £'000 £'000 (unaudited) (audited) Notes Income Income from investments held at fair value through profit or loss 3 - - Other income 3 - - ------------ --------- Total revenue - - ------------ --------- Gains on investments held at fair value through profit or loss 189,814 257,320 Realised gains/(losses) on foreign exchange 697 (861) ------------ ------------ 190,511 256,459 Expenses Management fees 4 - - Other expenses 5 - - ------------ ------------ Profit before finance costs and taxation 190,511 256,459 Finance costs 6 - - ------------ ------------ Profit before taxation 190,511 256,459 Taxation 7 - - ------------ ------------ Profit for the year 190,511 256,459 ------------ ------------ Return per ordinary share - basic and diluted 9 113.20p 154.02p ======= ======= The total column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the Consolidated Income Statement derive from continuing operations. No operations were acquired or disposed of during the year. All income is attributable to the equity holders of Merrill Lynch World Mining Trust plc. There are no minority interests. CONSOLIDATED INCOME STATEMENT - continued for the year ended 31 December 2006 Total 2006 2005 £'000 £'000 (unaudited) (audited) Notes Income Income from investments held at fair value through profit or loss 3 22,872 13,620 Other income 3 7,593 2,477 ------------ ------------ Total revenue 30,465 16,097 ------------ ------------ Gains on investments held at fair value through profit or loss 189,814 257,320 Realised gains/(losses) on foreign exchange 697 (861) ------------ ------------ 220,976 272,556 Expenses Management fees 4 (10,186) (6,841) Other expenses 5 (998) (797) ------------ ------------ Profit before finance costs and taxation 209,792 264,918 Finance costs 6 (564) (1,509) ------------ ------------ Profit before taxation 209,228 263,409 Taxation 7 (3,935) (1,308) ------------ ------------ Profit for the year 205,293 262,101 ------------ ------------ Return per ordinary share - basic and diluted 9 121.98p 157.41p ======= ======= The total column of this statement represents the Group's Income Statement, prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the Consolidated Income Statement derive from continuing operations. No operations were acquired or disposed of during the year. All income is attributable to the equity holders of Merrill Lynch World Mining Trust plc. There are no minority interests. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2006 Ordinary Share Special Capital Capital Total share premium reserve redemption reserve Revenue £'000 capital account reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 For the year ended 31 December 2005 At 31 December 2004 8,140 - 203,244 22,779 153,478 10,488 398,129 Profit for the year - - - - 256,459 5,642 262,101 Exercise of warrants 275 11,767 - - - - 12,042 Dividends paid and declared* - - - - - (4,070) (4,070) ------- --------- ----------- --------- ----------- --------- ----------- At 31 December 2005 8,415 11,767 203,244 22,779 409,937 12,060 668,202 ===== ====== ======= ====== ======== ====== ======== For the year ended 31 December 2006 At 31 December 2005 8,415 11,767 203,244 22,779 409,937 12,060 668,202 Profit for the year - - - - 190,511 14,782 205,293 Dividends paid and declared# - - - - - (4,712) (4,712) Warrant issue costs - - - - (238) - (238) ------- --------- ----------- -------- ----------- --------- ----------- At 31 December 2006 8,415 11,767 203,244 22,779 600,210 22,130 868,545 ===== ====== ======= ====== ======== ======= ======== * The final and special dividends for the year ended 31 December 2004, declared on 14 February 2005 and paid on 31 March 2005. # The final and special dividends for the year ended 31 December 2005, declared on 9 February 2006 and paid on 24 March 2006. CONSOLIDATED BALANCE SHEET as at 31 December 2006 2006 2005 £'000 £'000 (unaudited) (audited) Notes Non current assets Investments held at fair value through profit or loss 867,959 669,497 ------------ ------------ Current assets Investments 13,607 2,118 Other receivables 1,558 976 Cash and cash equivalents - 30 ------------ ------------ 15,165 3,124 ------------ ------------ Total assets 883,124 672,621 ------------ ------------ Current liabilities Other payables (6,282) (4,309) Bank overdrafts (8,156) - ------------ ------------ (14,438) (4,309) ------------ ------------ Total assets less current liabilities 868,686 668,312 Non current liabilities Deferred tax (141) (110) ------------- ------------- Net assets 868,545 668,202 ======== ======= Equity attributable to equity holders Ordinary share capital 10 8,415 8,415 Share premium account 11,767 11,767 Special reserve 203,244 203,244 Capital redemption reserve 22,779 22,779 Retained earnings: Capital reserve 600,210 409,937 Revenue reserve 22,130 12,060 ------------- ------------ Total equity 868,545 668,202 ======== ======== Net asset value per ordinary share - undiluted 11 516.07p 397.03p ======== ======== Net asset value per ordinary share - diluted 11 503.23p - ======== ======== CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2006 2006 2005 £'000 £'000 (unaudited) (audited) Operating activities Profit before tax 209,228 263,409 Add back interest paid 564 1,509 Gains on investments held at fair value through profit or loss (189,814) (257,320) Net (gains)/losses on currency deals (697) 861 Net (purchases)/sales of current asset investments by subsidiaries (4,902) 4,286 Sales of investments held at fair value through profit or loss 158,210 128,677 Purchases of investments held at fair value through profit or loss (166,858) (124,034) Losses on forward currency contracts - (499) Increase in other receivables (351) (297) (Increase)/decrease in amounts due from brokers (215) 1,301 Increase/(decrease) in other payables 555 (869) Decrease in amounts due to brokers (1,163) (556) Dealing profits (6,587) (1,518) ---------- ----------- Net cash (outflow)/inflow from operating activities before interest and taxation (2,030) 14,950 ---------- ----------- Interest paid (564) (1,509) Tax paid (175) (376) Tax deducted from overseas income (1,164) (843) ---------- ----------- Net cash (outflow)/inflow from operating activities (3,933) 12,222 ---------- ----------- Financing activities Exercise of warrants - 12,042 Warrant issue costs (238) - Dividends paid (4,712) (4,070) ---------- ----------- Net cash (outflow)/inflow from financing (4,950) 7,972 ---------- ----------- (Decrease)/increase in cash and cash equivalents (8,883) 20,194 Cash and cash equivalents at start of the year 30 (19,802) Effect of foreign exchange rate changes 697 (362) ----------- ----------- (Bank overdrafts)/cash and cash equivalents at end of the year (8,156) 30 ====== ====== Comprised of: Cash and cash equivalents - 30 Bank overdrafts (8,156) - ---------- --------- Total (8,156) 30 ====== ====== NOTES TO THE PRELIMINARY RESULTS 1. Principal activity The principal activity of the Company is that of an investment trust company within the meaning of section 842 of the Income and Corporation Taxes Act 1988. The principal activity of the two subsidiary undertakings, Merrill Lynch Gold Limited and World Mining Investment Company Limited, is investment dealing. 2. Basis of preparation The Group and Parent Company financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 1985. The Company has taken advantage of the exemption provided under section 230 of the Companies Act 1985 not to publish its individual income statement and related notes. The Group's financial statements are presented in sterling, which is the currency of the primary economic environment in which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated. Insofar as the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Trust Companies ('AITC'), now known as the Association of Investment Companies ('AIC'), revised in December 2005 is compatible with IFRS, the financial statements have been prepared in accordance with guidance set out in the SORP. 3. Income 2006 2005 £'000 £'000 (unaudited) (audited) Investment income: UK listed dividends 3,338 2,481 UK listed special dividends 2,252 - Overseas listed dividends 14,674 10,069 Overseas listed special dividends 2,471 230 Overseas unlisted dividends - 572 Bond interest 137 268 --------- --------- 22,872 13,620 --------- --------- Other operating income: Deposit interest 296 54 Dealing profits 6,587 1,518 Underwriting commission 171 - Option premium income 539 905 --------- --------- 7,593 2,477 --------- --------- Total income 30,465 16,097 ====== ====== Total income comprises: Dividends 22,735 13,352 Deposit interest 296 54 Bond interest 137 268 Other income 7,297 2,423 --------- --------- 30,465 16,097 ====== ====== Dealing profits are presented after deducting transaction costs incurred on the purchase and sale of investments. 4. Management fees 2006 2005 £'000 £'000 (unaudited) (audited) Investment management fees 9,887 6,342 Irrecoverable VAT 299 499 --------- --------- 10,186 6,841 ====== ====== The investment management fee is levied quarterly, based on the value of the gross assets on the last day of each quarter. All investment management fees are charged to revenue. 5. Other expenses 2006 2005 £'000 £'000 (unaudited) (audited) Custody fee 202 173 Administration fee 467 327 Auditor's remuneration: - audit services 18 18 - non audit services 4 27 Registrar's fee 80 49 Directors' remuneration 85 92 Other administrative costs 142 111 ------ ------ 998 797 ==== ==== The Company's total expense ratio, calculated as a percentage of average net assets, and using expenses, excluding interest costs, after relief from taxation, was: 1.0% 1.0% ==== ==== The administration fee is levied quarterly, based on 0.05% of gross assets. Expenses of £238,000 charged to capital in the Statement of Changes in Equity relate to the cost of issuing warrants on 20 March 2006. These expenses included remuneration of £25,000 paid to the Auditor for services provided in relation to the warrant issue. 6. Finance costs 2006 2005 £'000 £'000 (unaudited) (audited) Interest on bank overdrafts 564 1,509 ===== ===== 7. Taxation 2006 2005 £'000 £'000 (unaudited) (audited) Corporation tax 3,951 1,263 Double taxation relief (1,090) (739) --------- --------- 2,861 524 Overseas tax 1,095 759 Prior year adjustment (52) - --------- --------- Total current tax 3,904 1,283 Deferred tax 31 25 --------- --------- Total tax 3,935 1,308 ====== ====== The tax assessed for the year is lower than the standard rate of corporation tax of 30% (2005: 30%). The differences are explained below: 2006 2005 £'000 £'000 (unaudited) (audited) Income from operations before tax 209,228 263,409 ------------ ----------- Return on ordinary activities multiplied by standard rate of corporation tax (30%) 62,768 79,023 Effects of: Non taxable UK dividends (1,629) (736) Withholding tax suffered 1,095 759 Double taxation relief (1,090) (739) Gains on investments held at fair value through profit or loss (57,153) (76,938) Income taxable in different periods (35) (86) Prior year adjustment (52) - --------- --------- Current tax charge 3,904 1,283 Deferred tax 31 25 --------- --------- Total tax charge 3,935 1,308 ====== ====== Investment trusts are exempt from corporation tax on capital gains provided the Company obtains agreement from HM Revenue & Customs that section 842 ICTA tests have been met. 8. Dividends Under IFRS, final dividends are not recognised until approved by shareholders, and special dividends are not recognised until they are paid. They are also debited directly to reserves. Amounts recognised as distributable to ordinary shareholders for the period to 31 December 2006 were as follows: 2006 2005 £'000 £'000 (unaudited) (audited) Final ordinary dividend in respect of the year to 31 December 2005 of 1.80p, approved by shareholders on 17 March 2006 3,029 - Declared special dividend in respect of the year to 31 December 2005 of 1.00p, paid on 24 March 2006 1,683 - Final ordinary dividend in respect of the year to 31 December 2004 of 1.75p, approved by shareholders on 17 March 2005 - 2,849 Declared special dividend in respect of the year to 31 December 2004 of 0.75p, paid on 31 March 2005 - 1,221 -------- -------- 4,712 4,070 ====== ====== The total dividends payable for the period which form the basis of section 842 of the Income and Corporation Taxes Act 1988 are set out below: 2006 2005 £'000 £'000 (unaudited) (audited) Dividends on equity shares: Proposed final ordinary dividend of 2.50p (2005: 1.80p) 4,207 3,029 Declared special dividend of 2.00p (2005: 1.00p) 3,366 1,683 -------- -------- 7,573 4,712 -------- -------- 9. Return per ordinary share 2006 2005 (unaudited) (audited) Net revenue return attributable to ordinary shareholders (£'000) 14,782 5,642 Net capital return attributable to ordinary shareholders (£'000) 190,511 256,459 ------------ ------------ Total return attributable to ordinary shareholders (£'000) 205,293 262,101 ------------ ------------ The weighted average number of ordinary shares in issue during each year, on which the return per ordinary share was calculated, was: 168,298,906 166,506,112 Revenue return per share 8.78p 3.39p Capital return per share 113.20p 154.02p ---------- ---------- Total return per share 121.98p 157.41p ======= ======= There is no dilution to returns for the year ended 31 December 2006 as the average share price was below the warrant exercise price. 10. Share capital 31 December 2006 31 December 2005 Number £'000 Number £'000 Authorised share capital comprised: Ordinary shares of 5p each 750,000,000 37,500 750,000,000 37,500 Allotted, issued and fully paid: Ordinary shares of 5p each 168,298,906 8,415 168,298,906 8,415 During the year, the Company issued 33,659,228 warrants to subscribe for ordinary shares in three tranches at 439p, 478p and 565p per share. At 31 December 2006, all warrants remain unexercised. 11. Net asset value per ordinary share 2006 2005 (unaudited) (audited) Net assets attributable to ordinary shareholders (£'000) 868,545 668,202 The actual number of ordinary shares in issue at the year end, on which the net asset value per ordinary share was calculated, was 168,298,906 168,298,906 Number of ordinary shares in issue for diluted net asset value 201,958,134 - Net asset value per ordinary share - undiluted 516.07p 397.03p Net asset value per ordinary share - fully diluted 503.23p - Share price 444.00p 351.50p Warrant price 48.75p - The fully diluted net asset value per share at 31 December 2006 of 503.23p is calculated by adjusting equity shareholders' funds for consideration receivable on the exercise of all warrants assuming an exercise price of 439p, and dividing by the total number of shares that would have been in issue at 31 December 2006 had all warrants been exercised. There was no dilution at 31 December 2005 as the Company did not have warrants in issue at that date (see note 10). 12. Publication of non statutory accounts The financial information contained in this preliminary statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The 2006 annual report will be filed with the Registrar of Companies after the Annual General Meeting. Copies of the annual report will be sent to members shortly and will be available from the registered office, c/o The Company Secretary, Merrill Lynch World Mining Trust plc, 33 King William Street, London EC4R 9AS. This report will also be available on the BlackRock Investment Management's website at www.blackrock.co.uk/its. The Annual General Meeting of the Company will be held at the offices of BlackRock Investment Management (UK) Limited, 33 King William Street, London EC4R 9AS on Thursday 22 March 2007 at 11.30 a.m. 14 February 2007 33 King William Street London EC4R 9AS This information is provided by RNS The company news service from the London Stock Exchange

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