Interim Results
Merrill Lynch World Mining Tst PLC
02 August 2006
FOR IMMEDIATE RELEASE 2 August 2006
MERRILL LYNCH WORLD MINING TRUST plc
Interim Results for the six months ended 30 June 2006
Performance to 30 June 2006 Six months Five years
Net asset value per share:
- capital only 17.2% 261.3%
- with net income reinvested 19.6% 292.9%
Ordinary share price:
- capital only 15.5% 283.9%
- with net income reinvested 18.0% 322.5%
HSBC Global Mining Index*:
- capital only 15.1% 144.8%
- with net income reinvested 16.3% 176.8%
* Adjusted for exchange rates relative to sterling.
Performance is based on mid-market values. Dividends totalling 2.8p per share went ex-dividend on 22 February 2006.
Where performance has income included, it is reinvested on the ex-dividend date. Total return performance includes the
warrant reinvestment, assuming the 2004 and 2006 warrants were sold and the proceeds were reinvested on the first day
of trading.
Sources: Merrill Lynch Investment Managers, Datastream.
• As at 30 June 2006, the undiluted net asset value per share and share price were 465.16p and 406.00p
respectively (31 December 2005: NAV 397.03p; share price 351.50p).
• Anthony Lea succeeded Peter Wilmot-Sitwell as Chairman following the conclusion of the Annual General
Meeting held on 17 March 2006.
For further information please contact the following:
Jonathan Ruck Keene 020 7743 2178
Managing Director, Investment Trust Division
Merrill Lynch Investment Managers
Nigel Webb 020 7743 5938
Public Relations
Merrill Lynch Investment Managers
William Clutterbuck 020 7379 5151
Maitland Consultancy
The Chairman, Anthony Lea, comments:
'In my first statement to you as your Chairman I am pleased to report that despite the sharp correction experienced in
the Natural Resources Sector and throughout global equity markets in May and June, the Company's net asset value still
grew by 19.6% in the six months to 30 June 2006, having reached an all time high of 535.36p in May 2006. The share
price increased from 351.50p to 406.00p over the period.
'On 17 March shareholders approved a bonus issue of warrants, on the basis of one warrant for every five shares held on
15 March 2006. Initially these warrants traded at 29.5p and the price at 30 June 2006 had risen to 42p. The warrants
can be exercised either in February 2007 at 439p, February 2008 at 478p or February 2009 at 565p.
'The Board is pleased that the Company was recently honoured as the Best Specialist Investment Trust by 'What
Investment' magazine. The Company also won Best Report & Accounts for a Specialist Trust in the Association of
Investment Trust Companies' 'Best Information to Shareholders' awards.
'The outlook continues in similar vein to that expressed by my predecessor in the 2005 annual report. Recent weakness
in the sector appears to have been the result of some investors switching to other sectors triggered by concerns about
the strength of continuing demand for minerals. However, in general, valuations are not extended and inventory levels
remain very low. In the absence of a global profits recession, the prospects for your Company remain favourable.'
Commenting upon the outlook for the Company, Graham Birch of Merrill Lynch Investment Managers, the Investment Manager,
notes:
'2006 looks set to be another record year for the industry. Sentiment has gradually recovered after the late spring
sell-off in mining equities and at the time of writing the Company's NAV is 18.4% above the low reached near the end of
June. As was also the case twelve months ago, there is a likelihood that we will see further improvement in dividend
flow and more share buy backs in the sector, and both of these factors should help to support valuations (which are in
any case not demanding).
'Looking further ahead, we believe that it will be the skill of the world's leading central banks which will determine
the direction for the sector. So far, the authorities have done a good job of delivering satisfactory world economic
growth while at the same time restoring interest rates to less accommodating levels. If we remain on this 'middle path
' and avoid the need for more punitive tightening then the future for mining shares should remain attractive, as low
current ratings appear to leave room for further price appreciation.'
CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2006
Revenue Return £'000
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
Notes
Income from investments held at fair
value through profit or loss 3 13,530 6,572 13,620
Other operating income 3 1,949 1,543 2,477
---------- ---------- ----------
Total revenue 15,479 8,115 16,097
Gains on investments held at fair value
through profit or loss - - -
Gains/(losses) on foreign exchange - - -
---------- ---------- ----------
15,479 8,115 16,097
Expenses
Management fees 4 (4,907) (2,491) (6,841)
Other expenses 5 (439) (333) (797)
Finance costs (402) (713) (1,509)
---------- ---------- ----------
Total operating expenses (5,748) (3,537) (9,147)
Profit before tax 9,731 4,578 6,950
Tax (1,747) (1,000) (1,308)
---------- ---------- ----------
Net profit for the period 7,984 3,578 5,642
---------- ---------- ----------
Return per ordinary share - basic
and diluted 7 4.74p 2.17p 3.39p
===== ===== =====
The total column of this statement represents the Group's Consolidated Income Statement, prepared
in accordance with International Financial Reporting Standards ('IFRS'). The supplementary revenue
return and capital return columns are prepared under guidance published by the Association of
Investment Trust Companies ('AITC'). All items in the above statement derive from continuing
operations.
All income is attributable to the equity shareholders of the parent company. There are no minority
interests.
The final dividend of 1.80p and the special dividend of 1.00p in respect of the year ended 31
December 2005 were declared on 9 February 2006 and paid on 24 March 2006. These can be found in
the Statement of Changes in Equity for the six months ended 30 June 2006.
CONSOLIDATED INCOME STATEMENT- continued
for the six months ended 30 June 2006
Capital Return £'000
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
Notes
Income from investments held at fair
value through profit or loss 3 - - -
Other operating income 3 - - -
---------- ---------- ----------
Total revenue - - -
Gains on investments held at fair value
through profit or loss 110,667 39,982 257,320
Gains/(losses) on foreign exchange 832 94 (861)
---------- ---------- ----------
111,499 40,076 256,459
Expenses
Management fees 4 - - -
Other expenses 5 - - -
Finance costs - - -
---------- ---------- ----------
Total operating expenses - - -
Profit before tax 111,499 40,076 256,459
Tax - - -
----------- ---------- ----------
Net profit for the period 111,499 40,076 256,459
----------- ---------- ----------
Return per ordinary share - basic
and diluted 7 66.25p 24.34p 154.02p
===== ===== =====
The total column of this statement represents the Group's Consolidated Income Statement, prepared
in accordance with International Financial Reporting Standards ('IFRS'). The supplementary revenue
return and capital return columns are prepared under guidance published by the Association of
Investment Trust Companies ('AITC'). All items in the above statement derive from continuing
operations.
All income is attributable to the equity shareholders of the parent company. There are no minority
interests.
The final dividend of 1.80p and the special dividend of 1.00p in respect of the year ended 31
December 2005 were declared on 9 February 2006 and paid on 24 March 2006. These can be found in
the Statement of Changes in Equity for the six months year ended 30 June 2006.
CONSOLIDATED INCOME STATEMENT - continued
for the six months ended 30 June 2006
Total Return £'000
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
(unaudited) (unaudited) (audited)
Notes
Income from investments held at fair
value through profit or loss 3 13,530 6,572 13,620
Other operating income 3 1,949 1,543 2,477
---------- ---------- ----------
Total revenue 15,479 8,115 16,097
Gains on investments held at fair value
through profit or loss 110,667 39,982 257,320
Gains/(losses) on foreign exchange 832 94 (861)
---------- ---------- ----------
126,978 48,191 272,556
Expenses
Management fees 4 (4,907) (2,491) (6,841)
Other expenses 5 (439) (333) (797)
Finance costs (402) (713) (1,509)
---------- ---------- ----------
Total operating expenses (5,748) (3,537) (9,147)
Profit before tax 121,230 44,654 263,409
Tax (1,747) (1,000) (1,308)
----------- ---------- ----------
Net profit for the period 119,483 43,654 262,101
---------- ---------- ----------
Return per ordinary share - basic
and diluted 7 70.99p 26.51p 157.41p
===== ===== ======
The total column of this statement represents the Group's Consolidated Income Statement, prepared
in accordance with International Financial Reporting Standards ('IFRS'). The supplementary revenue
return and capital return columns are prepared under guidance published by the Association of
Investment Trust Companies ('AITC'). All items in the above statement derive from continuing
operations.
All income is attributable to the equity shareholders of the parent company. There are no minority
interests.
The final dividend of 1.80p and the special dividend of 1.00p in respect of the year ended 31
December 2005 were declared on 9 February 2006 and paid on 24 March 2006. These can be found in
the Statement of Changes in Equity for the six months ended 30 June 2006.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital
Share premium Special redemption Capital Revenue
capital account reserve reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 30 June 2006
At 31 December 2005 8,415 11,767 203,244 22,779 409,937 12,060 668,202
Profit for the period - - - - 111,499 7,984 119,483
Warrant issue costs - - - - (107) - (107)
Dividends paid - - - - - (4,712) (4,712)
--------- --------- ---------- --------- ---------- --------- ----------
At 30 June 2006 8,415 11,767 203,244 22,779 521,329 15,332 782,866
===== ===== ====== ===== ====== ===== ======
The transaction costs incurred on the acquisition and disposal of investments are included within the capital reserve.
Purchases and sales costs amounted to £292,000 and £274,000 respectively for the six months ended 30 June 2006 (six
months ended 30 June 2005: £226,000 and £96,000; year ended 31 December 2005: £335,000 and £234,000).
CONSOLIDATED BALANCE SHEET
as at 30 June 2006
30 June 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
Note (unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value through
profit or loss 757,702 477,781 669,497
Current assets
Investments 11,158 4,894 2,118
Other receivables 1,609 891 884
Amounts due from brokers - 592 92
Cash and cash equivalents 17,038 - 30
----------- ---------- ----------
29,805 6,377 3,124
----------- ---------- ----------
Total assets 787,507 484,158 672,621
Current liabilities
Other payables (4,242) (2,459) (3,146)
Amounts due to brokers (199) (950) (1,163)
Bank overdrafts - (30,918) -
----------- ---------- -----------
(4,441) (34,327) (4,309)
---------- ---------- -----------
Total assets less current liabilities 783,066 449,831 668,312
Non current liabilities
Deferred tax (200) (75) (110)
----------- ----------- -----------
Net assets 782,866 449,756 668,202
====== ====== ======
Equity attributable to equity holders
Ordinary share capital 8,415 8,415 8,415
Share premium account 11,767 11,767 11,767
Special reserve 203,244 203,244 203,244
Capital redemption reserve 22,779 22,779 22,779
Capital reserve 521,329 193,555 409,937
Revenue reserve 15,332 9,996 12,060
----------- ----------- -----------
Total equity 782,866 449,756 668,202
====== ====== ======
Net asset value per ordinary share -
basic 7 465.16p 267.24p 397.03p
====== ====== ======
Net asset value per ordinary share -
diluted 7 460.80p 267.24p 397.03p
====== ====== ======
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2006
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash inflow/(outflow) from operating
activities and before financing 20,995 (19,034) 12,222
Financing activities
Exercise of warrants - 12,042 12,042
Warrant issue costs (107) - -
Dividends paid (4,712) (4,070) (4,070)
---------- ---------- ----------
Net cash (outflow)/inflow from financing (4,819) 7,972 7,972
---------- ---------- ----------
Increase/(decrease) in cash and cash
equivalents 16,176 (11,062) 20,194
Effect of foreign exchange rate changes 832 (54) (362)
---------- ---------- ----------
Change in cash and cash equivalents 17,008 (11,116) 19,832
Cash, cash equivalents and bank overdrafts at
start of period 30 (19,802) (19,802)
---------- ---------- -----------
Cash, cash equivalents and bank overdrafts
at end of period 17,038 (30,918) 30
====== ====== ======
RECONCILIATION OF NET INCOME BEFORE TAX TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Profit before tax 121,230 44,654 263,409
Gains on investments held at fair value through
profit or loss including transaction costs (110,667) (39,982) (257,320)
Net (purchases)/sales of investments by (7,679) 738 4,286
subsidiaries
Increase in other receivables (685) (199) (297)
Increase/(decrease) in other payables 208 (1,592) (869)
Decrease/(increase) in sales settlement debtor 92 (769) 1,301
(Decrease)/increase in purchase settlement (964) 801 (556)
creditor
Net sales/(purchases) of investments 22,462 (20,914) 4,643
Losses on forward currency contracts - - (499)
Net (gains)/losses on foreign exchange (832) (94) 861
Net tax paid (83) (408) (376)
Tax on investment income included within
gross income (726) (523) (843)
Profit on investments held by subsidiaries (1,361) (746) (1,518)
----------- ----------- -----------
20,995 (19,034) 12,222
====== ====== ======
NOTES TO THE INTERIM 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 its two subsidiaries, Merrill Lynch Gold Limited and World Mining Investment Company Limited,
is investment dealing.
2. Accounting Policies
The Group's interim financial statements have been prepared in accordance with International Financial Reporting
Standards ('IFRS') as adopted by the European Union ('EU'). The Company's interim financial statements have been
prepared in accordance with IFRS as adopted by the EU and as applied in accordance with the provisions of the Companies
Act 1985 (the 'Act'). The principal accounting policies adopted by the Group and by the Company are set out below.
(a) Basis of preparation
The Group's interim financial statements are presented in sterling, which is the currency of the primary environment in
which the Group operates. All values are rounded to the nearest thousand pounds (£'000) except when otherwise
indicated.
The interim financial statements have been prepared in accordance with the guidance set out in the Statement of
Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Trust Companies ('AITC')
revised in December 2005.
(b) Basis of consolidation
The Group's interim financial statements consolidate the accounts of the Company and its wholly owned subsidiaries,
Merrill Lynch Gold Limited and World Mining Investment Company Limited.
(c) Presentation of the Consolidated Income Statement
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the
AITC, supplementary information which analyses the Consolidated Income Statement between items of a revenue and capital
nature has been presented alongside the Consolidated Income Statement. In accordance with the Company's status as a UK
investment company under section 266 of the Act, net capital returns may not be distributed by way of dividend.
(d) Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment of business being investment business.
(e) Income
Dividends receivable on equity shares are treated as revenue for the period on an ex-dividend basis. Where no
ex-dividend date is available dividends receivable on or before the period end are treated as revenue for the period.
Interest income is accounted for on an accruals basis.
(f) Expenses
All expenses, including interest expenses, are accounted for on an accruals basis. Expenses have been charged to
revenue with the exception of expenses which are incidental to the acquisition or disposal of an investment, which are
treated as capital and separately identified and disclosed as a footnote to the Consolidated Statement of Changes in
Equity.
(g) Investments designated as held at fair value through profit or loss
Purchases of investments are recognised on a trade date basis and designated upon initial recognition as held at fair
value through profit or loss. The sales of assets are recognised at the trade date of disposal. Proceeds will be
measured at fair value, which will be regarded as the proceeds of sale less any transaction costs. The fair value of
the financial instruments is based on their quoted bid price at the balance sheet date, without deduction for any
estimated future selling costs. Unquoted investments are valued by the Directors at fair value using International
Private Equity and Venture Capital Association guidelines. This policy applies to all current and non-current asset
investments held by the Group.
Changes in the value of investments held at fair value through profit and or loss and gains and losses on disposal are
recognised in the Consolidated Income Statement as 'Gains or losses on investments held at fair value through profit or
loss'. Also included within this heading are transaction costs in relation to the purchase or sale of investments.
(h) Other receivables and payables
Other receivables do not carry any interest and are short tem in nature and are accordingly stated at their nominal
value. Other payables are non interest bearing and are stated at their nominal value.
(i) Dividends payable
Under IFRS final dividends should not be accrued in the financial statements unless they have been approved by
shareholders before the balance sheet date. Interim and special dividends, if any, are recognised within the financial
statements when they are paid.
(j) Foreign currency translation
Transactions involving foreign currencies are converted at the rate ruling at the date of the transaction. Foreign
currency monetary assets and liabilities are translated into sterling at the rate ruling on the balance sheet date.
Foreign exchange differences arising on translation are recognised in the Consolidated Income Statement.
(k) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and that are subject to minimal risk of changes in value.
(l) Bank borrowings
Bank overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, including any
premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the
Consolidated Income Statement using the effective interest rate method and are added to the carrying amount of the
instrument to the extent that they are not settled in the period in which they arise.
3. Income
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment income:
UK listed dividends 3,908 1,245 2,481
Overseas listed dividends 9,622 5,327 10,299
Overseas unlisted dividends - - 572
Interest - - 268
--------- -------- ---------
13,530 6,572 13,620
--------- -------- ---------
Other operating income:
Deposit interest 188 797 54
Dealing profits 1,361 746 1,518
Option premium income 400 - 905
------- ------- --------
1,949 1,543 2,477
--------- ------- ---------
Total income 15,479 8,115 16,097
===== ==== =====
4. Investment management fees
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Investment management fees 4,879 2,431 6,342
Irrecoverable VAT thereon 28 60 499
------- ------- -------
4,907 2,491 6,841
==== ==== ====
The management fee was increased from 0.95% to 1.25% per annum of gross assets with effect from 1 May 2005. The
investment management fee is levied quarterly, on the last day of each quarter, and is charged wholly to the revenue
account.
5. Other expenses
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2006 2005 2005
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Custody fee 100 88 173
Administration fee 231 135 327
Registrar's fees and other administration
expenses 60
61 205
Directors' emoluments 48 49 92
------ ------ --------
439 333 797
=== === ====
6. Dividend
The Board has not declared an interim dividend, as dividends are considered and paid annually in respect of each
accounting period. The final (1.80p) and special (1.00p) dividends in respect of the year ended 31 December 2005 were
paid on 24 March 2006.
7. Return per share and net asset value per ordinary share
30 June 2006 30 June 2005 31 December 2005
(unaudited) (unaudited) (audited)
Net revenue attributable to ordinary
shareholders (£'000) 7,984 3,578 5,642
Net capital gains attributable to ordinary
shareholders (£'000) 111,499 40,076 256,459
----------- ----------- ------------
Total return attributable to ordinary
shareholders (£'000) 119,483 43,654 262,101
====== ====== =======
Equity shareholders' funds (£'000) 782,866 449,756 668,202
The weighted average number of ordinary
shares in issue during each period, on
which the return per ordinary share was
calculated, was: 168,298,906 164,683,603 166,506,112
The actual number of ordinary shares in
issue at the end of the period on which the 168,298,906 168,298,906 168,298,906
net asset value was calculated, was:
Warrants in issue 33,659,228 - -
Revenue return per share - basic and diluted 4.74p 2.17p 3.39p
Capital return per share 66.25p 24.34p 154.02p
---------- ----------- -----------
Total return per share 70.99p 26.51p 157.41p
====== ====== ======
Net asset value per share - basic 465.16p 267.24p 397.03p
Net asset value per share - diluted 460.80p 267.24p 397.03p
Share price 406.00p 234.25p 351.50p
The fully diluted net asset value per share of 460.80p has been calculated by adjusting equity
shareholders' funds for consideration receivable on the exercise of all warrants and dividing by the
total number of shares that would have been in issue had all the warrants been exercised at the exercise
price of 439p per share. Warrants are exercisable on 27 February 2007, 29 February 2008 or 28 February
2009 at exercise prices of 439p, 478p and 565p respectively. For indicative purposes, the base cost of
these warrants (for the purpose of calculating capital gains tax) for UK tax payers who acquired them on
issue on 20 March 2006 is 28.25p (per warrant). This figure has not been approved by HM Revenue &
Customs and is subject to its agreement with investors on a case-by-case basis.
The calculation of the fully diluted revenue and capital returns per ordinary share is carried out in
accordance with Financial Reporting Standard 14 Earnings per Share ('FRS 14'). For the purposes of
calculating diluted revenue and capital returns per ordinary share, the number of ordinary shares is the
weighted average used in the basic calculation plus the number of ordinary shares deemed to be issued
(for no consideration) on exercise of all warrants by reference to the average price of the ordinary
shares during the year. No fully diluted revenue and capital returns have been disclosed as the
calculations indicate that the warrants do not have a potentially dilutive effect for the six months
ended 30 June 2006.
8. Publication of non-statutory accounts
The financial information contained in this interim report does not constitute statutory accounts as defined in section
240 of the Act. The financial information for the six months ended 30 June 2006 and 2005 has not been audited.
The information for the year ended 31 December 2005 has been extracted from the latest published audited financial
statements which have been filed with the Registrar of Companies.
The report of the auditors on those accounts contained no qualification or statement under section 237(2) or (3) of the
Act.
9. Annual results
The Board expects to announce the annual results for the year ended 31 December 2006 in mid February 2007.
Copies of the preliminary announcement can be obtained from the Secretary on 020 7743 3000. The annual report should
be available by the end of February, with the Annual General Meeting being held in March 2007.
2 August 2006
33 King William Street
London EC4R 9AS
Trust/MLWMT/Stock Exchange Announcements/Interim June 2006
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